Form 4: Houlihan Lokey Co-Chairman Granted Performance Shares Tied to Revenue Growth

Houlihan Lokey's Co-Chairman, Paul Eric Siegert, was granted 2,818 performance shares of Class B Common Stock, vesting annually based on the achievement of revenue growth targets.

Summary

• Paul Eric Siegert, Co-Chairman of Houlihan Lokey, Inc. (HLI), received a grant of 2,818 performance shares of Class B Common Stock on July 18, 2025.
• The grant was made pursuant to the company's 2016 Incentive Award Plan.
• These shares are scheduled to vest in four equal annual installments following the grant date, contingent upon the achievement of specific revenue growth performance goals.
• If the defined performance criteria are not met on a vesting date, the corresponding annual installment of shares will be forfeited.
• Class B Common Stock is convertible into Class A Common Stock on a one-for-one basis at the holder's option or automatically upon the Final Conversion Date, and it has no expiration date.
• Following this transaction, Mr. Siegert directly beneficially owns 2,818 shares of Class B Common Stock and indirectly owns 424,657 shares of Class B Common Stock through the HL Voting Trust, over which he retains investment control and dispositive power.

Sentiment

Score: 7

Explanation: The grant of performance shares to a key executive is generally a positive signal, as it aligns management's interests with the company's performance and long-term growth, specifically tied to revenue. The forfeiture condition adds a layer of accountability, reinforcing performance-based incentives.

Positives

• The grant of 2,818 performance shares directly aligns the Co-Chairman's incentives with the company's financial performance, specifically revenue growth.
• The Class B Common Stock's convertibility into Class A Common Stock provides potential for future liquidity and value realization for the executive.
• The reporting person retains investment control and dispositive power over the shares held in the HL Voting Trust, maintaining influence over these holdings.

Negatives

• The vesting of the performance shares is conditional on achieving specific revenue growth goals, introducing a risk of forfeiture if these targets are not met.

Risks

• Risk of forfeiture of the annual installments of performance shares if the specified revenue growth performance goals are not achieved.

Future Outlook

The granted performance shares are designed to vest in four equal annual installments following the grant date, contingent upon the achievement of undisclosed revenue growth performance goals, indicating a forward-looking incentive structure.

Management Comments

• The Issuer granted 2,818 performance shares of Class B Common Stock to the reporting person pursuant to its 2016 Incentive Award Plan.
• These shares vest in four equal annual installments following the grant date if certain performance goals based upon revenue growth are achieved.
• If on vesting date such performance criteria are not achieved, the annual installment of shares will be forfeited.
• The reporting person retains investment control and dispositive power over the shares deposited into the Voting Trust.

Industry Context

This grant of performance shares is a standard practice in the financial services industry for executive compensation, aiming to align executive incentives with long-term shareholder value creation and company performance, particularly revenue growth, which is a key metric for investment banking and advisory firms.

Comparison to Industry Standards

• The use of performance-based equity awards, specifically tied to revenue growth, is a common and accepted practice in executive compensation across the financial advisory and investment banking sectors.
• Companies such as Goldman Sachs, Morgan Stanley, and Lazard frequently employ similar long-term incentive plans to motivate and retain key executives, often linking vesting to financial metrics like revenue, profit, or total shareholder return.
• A four-year vesting schedule, as outlined for these shares, is also typical for such performance-based awards in the industry.

Corporate Governance

Related Party Transactions

• The transaction involves the grant of shares from Houlihan Lokey, Inc. (the issuer) to Paul Eric Siegert (a key officer), which is a standard related-party transaction within the scope of executive compensation.

Stakeholder Impact

• **Shareholders**: Potential positive impact as executive incentives are directly aligned with revenue growth, which could lead to increased shareholder value if performance goals are met.
• **Management**: Direct impact on the reporting person's compensation structure, providing a strong incentive for achieving revenue growth targets.

Next Steps

• Annual assessment of revenue growth performance against the defined goals for the vesting of the performance shares over the next four years.

Key Dates

Recommendation

Keywords

Houlihan Lokey, HLI, SEC Form 4, Paul Eric Siegert, performance shares, executive compensation, Class B Common Stock, incentive award plan, revenue growth, stock grant, corporate governance