Lazard (LAZ) BMO Capital Markets 2026 Financials Conference summary

Compensation changes

• Deferral benchmarking primarily targets Financial Advisory peers; lower deferrals are expected across the firm, concentrated in higher-compensation Financial Advisory roles. Asset Management already has internal deferral caps.

• The multi-year compensation initiative has already shifted most vesting to one-third per year over three years; deferrals and retirement policies are also under review to support talent attraction and retention.

• Planned deferral changes, with the size still being determined, would create a U.S. GAAP compensation spike in 2026 and a quick decline in 2027; total awarded compensation would not increase, while the higher cash allocation is intended to persist.

• Compensation ratio noise from deferrals, the Financial Advisory hiring J-curve and Campbell Lutyens is expected to roll off by end-2028; management attributes about half of the 2026–2028 recovery to revenue growth and half to structural or accounting changes.

• Aim is to establish market-competitive deferral rates, then keep them stable to improve accounting clarity and investor understanding.

Operating efficiency

• Firm-wide redesign covers nearly all non-revenue functions; work is in the middle stage, with vendor negotiations and structural design underway. A key opportunity is reducing duplicated regional support functions.

• Plan targets year-over-year cash savings and modern, technology-enabled support services; structural redesign, rather than headcount cuts alone, is intended to contain future cost inflation and improve operating leverage.

• More detail is expected at year-end or, no later than, the first-quarter discussion, after solution design and contracting progress.

Revenue outlook and Campbell Lutyens

• Q4 is expected to be very solid, with the second half still expected to be stronger and activity somewhat more Q4-weighted; pipeline and backlog are building for Q4 2026 and 2027, making Q4 an important J-curve milestone for 2027–2028 earnings growth.

• Campbell Lutyens closed in early November, adding about two months of GAAP revenue in Q4; its seasonally strong period should contribute, and the business is outperforming its acquisition underwriting case.

• Combined private capital advisory revenue is about half primary and slightly less than half secondary; the combination broadens geographic, industry, product and client mix.

• Revenue opportunities include referrals, co-advisory on a unified platform and stronger market position; these were outside the underwriting case. Cost opportunities include real estate rationalization already achieved and back-office integration.