Peter Orszag: Well, I’ve spoken also before about those time lines. It does take time from conversation to announcement to completion. Each of those have variables and sometimes long lags between them. But we’re moving through that process. So again, I think we’re – the market has definitely turned. With regard to the kind of within the year, typically for example the first quarter is not the strongest quarter of the year and things and often the fourth quarter is the strongest quarter of the year. So if you just looked at history, I think that would be a reasonable pattern to project. And I guess there’s nothing we’re seeing that suggests that that typical historical pattern is not what to expect also in 2024.
Steven Chubak: Helpful color, Peter. Thanks for taking my questions.
Operator: Our next question comes from Brennan Hawken with UBS.
Peter Orszag: Hi, Brennan.
Brennan Hawken: Good morning. Thank you. Hey. How are you, Peter. Thanks for taking my questions. I’d love to — it’s very helpful to hear your productivity targets. So I’d like to drill down on maybe how to think about MD growth. So you gave some color on hiring and promotes here recently. We see that the MD head count is already down recently from the 1Q level. I know that 10% wasn’t about MDs and there’s — Mary Ann gave some color on the fact that there’s still some flow-through to happen for headcount. But how should we think about that flow through on the MD headcount number? And then how should we think about also the go-forward investing plans and any kind of like annual pace of net adds?
Peter Orszag: Sure. So I think maybe in the starting base you should project forward once we get through the year end process of — and some people who will be leaving Lazard are actually doing so you should start off in Financial Advisory at about 200 managing directors and build from there. And I think with regard to the piece in the sort of annual plan I think you should expect, obviously, there will be variations from year-to-year, but we’re planning and hoping to come in at around that 10 net add per year. It might be plus or minus a little, but depending on this is especially on lateral hires the matching function matters a lot and we want to make sure that we’re not just filling a quota on hitting a net out of 10, but rather getting the right people. So sometimes it will be more than that sometimes it will be less than that but I don’t think the variation will be that significant per year.
Brennan Hawken: Okay. Great. Great. Yes of course. But it will be around that’s…
Peter Orszag: Yes, around.
Brennan Hawken: Yes, hopeful to get a rough idea. I would love to drill on expenses because given your efficiency efforts and some of the moving pieces here this year how should we think about the fixed expense base going forward what kind of a delta versus where you were in 2023? And how much — sort of most importantly really how much of these changes increased your level of operating leverage to an environment that seems to be improving?
Peter Orszag: Yes. So I’ll start and then maybe Mary Ann will come in. Let’s separate them into — the fixed costs into two components. In the non-comp category, I think, you should think about non-comp being roughly flat in dollar terms just coming back to some of the earlier commentary. That’s a combination of some things that will respond to a stronger market travel and entertainment is a good example and other things where we think we could have some reductions in 2024. Professional services is a good example in that category. And then in the comp line, you should expect that fixed costs will go down as a result of the — as the head count reductions materialize. And then clearly the bonuses component will depend on how the business has performed throughout the year.
And Mary Ann will state in a little bit more detail perhaps. But the most important point is everything we’re doing here is to make Lazard more efficient and to put us on the path to raising productivity because that is the way to get operating leverage and we are pleased with the progress that we’re making. Mary Ann?
Mary Ann Betsch: Yes. I’ll just add a couple of things to that. And really focusing on the fixed portion of compensation costs, which you’ve got a couple of different components in there right? So you’ve got salaries which we will expect to come down sort of as we see the effects of the head count reductions come through. You’ve got benefits which for us are higher than most companies because of our presence in Europe benefits and social charges. And so — and those tend to vary with cash bonuses. So there’s some unpredictability there, but generally tend to go up over time. And then you’ve got amortization of prior year awards which as high awards have gone up in the past that we see the effects of those in future years as you know.
And the other element that is sort of impacting this year in particular is we’ve got a couple of pretty productive people who are becoming retirement eligible. And so you recognize their entire award in the year of the grant essentially because they’ve owned the whole thing and don’t have to stay through the service period.
Brennan Hawken: Got it. And just — sorry Mary Ann, just to clarify that comment on the retirement eligible those are the new folks who are retirement eligible this year so a delta versus what the impact was for?
Mary Ann Betsch: That’s right. That’s right.
Brennan Hawken: Okay. Great. Thanks for that color. Really appreciate it.
