Form 4: Houlihan Lokey Co-Chairman Irwin Gold Receives Significant Stock Grants

Houlihan Lokey, Inc. Co-Chairman Irwin Gold was granted 4,790 shares of Class B Common Stock, including performance-based awards, as part of the company's 2016 Incentive Award Plan.

Summary

• Irwin Gold, Co-Chairman, Director, and 10% Owner of Houlihan Lokey, Inc. (HLI), received grants of Class B Common Stock on May 22, 2025.
• He was granted 1,972 shares of Class B Common Stock, which will vest in four equal annual installments following the grant date.
• Additionally, he received 2,818 performance shares of Class B Common Stock, also vesting in four equal annual installments, contingent on achieving specific revenue growth performance goals.
• A total of 4,790 shares (1,972 time-based + 2,818 performance-based) were deposited into the HL Voting Trust.
• Mr. Gold is a trustee of the HL Voting Trust, holding shared voting control over the deposited shares, while retaining pecuniary interest and investment control.
• Following these transactions, Mr. Gold indirectly beneficially owns 1,088,196 shares of Class B Common Stock through the HL Voting Trust.
• Class B Common Stock is convertible into Class A Common Stock on a one-for-one basis at the option of the holder.

Sentiment

Score: 6

Explanation: The document reports routine executive compensation through stock grants, which is a neutral to slightly positive event as it aligns executive interests with shareholders. There are no negative financial implications or unexpected disclosures.

Positives

• The granting of stock to a key executive like the Co-Chairman aligns his interests directly with those of shareholders, promoting long-term value creation.
• The inclusion of performance-based shares (2,818 shares) ties a portion of the executive's compensation directly to the company's revenue growth, incentivizing strong financial performance.
• The grants are part of an established 2016 Incentive Award Plan, indicating a structured and transparent approach to executive compensation.

Risks

• The 2,818 performance shares are subject to forfeiture if specific revenue growth performance goals are not achieved, posing a risk to the executive's full compensation realization.

Future Outlook

The grants include shares that vest over four equal annual installments, with performance shares contingent on future revenue growth goals, indicating a forward-looking compensation structure designed to incentivize long-term performance and align executive interests with company growth.

Management Comments

• "On May 22, 2025, the Issuer granted 1,972 shares of Class B Common Stock to the reporting person pursuant to its 2016 Incentive Award Plan, which vest in four equal annual installments following the grant date."
• "On May 22, 2025, the Issuer granted 2,818 performance shares of Class B Common Stock to the reporting person pursuant to its 2016 Incentive Award Plan, which 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."

Industry Context

This Form 4 filing reflects a standard practice in the financial services industry, where executive compensation often includes equity grants to align management incentives with shareholder value creation. Houlihan Lokey, as an investment bank, utilizes such plans to retain and motivate key personnel in a competitive talent market.

Comparison to Industry Standards

• The use of stock grants and performance-based equity awards is a common and widely accepted practice for executive compensation across publicly traded companies, including those in the financial advisory and investment banking sectors.
• Companies like Goldman Sachs, Morgan Stanley, and Lazard also frequently use similar equity incentive plans to compensate their senior executives, tying a significant portion of their pay to company performance and long-term shareholder returns.
• The vesting schedule over four years is typical for long-term incentive plans, promoting executive retention and sustained focus on company growth.

Corporate Governance

Related Party Transactions

• The grants of Class B Common Stock to Irwin Gold, a Co-Chairman, Director, and 10% owner, constitute a related party transaction as it involves compensation from the company to an insider.

Stakeholder Impact

• Shareholders: The grants, particularly the performance-based ones, aim to align the Co-Chairman's incentives with shareholder value creation through revenue growth. The deposit into a voting trust maintains a structured ownership and voting arrangement.
• Employees: The incentive plan may set a precedent for performance-based compensation across the organization.

Next Steps

• Vesting of 1,972 shares of Class B Common Stock in four equal annual installments following May 22, 2025.
• Vesting of 2,818 performance shares of Class B Common Stock in four equal annual installments following May 22, 2025, contingent on achieving revenue growth performance goals.

Key Dates

Recommendation

Keywords

Houlihan Lokey, HLI, Irwin Gold, Form 4, insider transaction, executive compensation, stock grant, Class B Common Stock, Class A Common Stock, beneficial ownership, incentive award plan, performance shares