16. Commitments and Contingencies
Litigation
In the ordinary course of business, the Company may be subject to various legal, regulatory, and/or administrative proceedings from time to time. Although there can be no assurance of the outcome of such proceedings, in the opinion of management, the Company does not believe it is probable that any pending or, to its knowledge, threatened legal proceeding or claim would individually or in the aggregate materially affect its consolidated financial statements.
Incentive Fees
The Partnerships have allocated carried interest still subject to contingencies that did not meet the Company’s criteria for revenue recognition in the amounts of $1,260,277 and $1,221,488, net of amounts attributable to NCI, at March 31, 2025 and 2024, respectively.
If the Company ultimately receives the unrecognized carried interest, a total of $315,069 and $305,372 as of March 31, 2025 and 2024, respectively, would potentially be payable to certain employees and third parties pursuant to compensation arrangements related to carried interest profit-sharing plans. Such amounts have not been recorded in the Consolidated Balance Sheets or Consolidated Statements of Income as the payment is not yet probable.
Leases
The Company’s leases consist primarily of operating leases for office space and office equipment in various locations around the world, which have remaining lease terms of one year to 14 years. Some leases have the option to extend for an additional term or terminate early. Short-term lease costs are not material.
The following table shows lease costs and other supplemental information related to the Company’s operating leases:
| | | | | | | | | | | | | | | | | |
| Year Ended March 31, |
| 2025 | | 2024 | | 2023 |
| Operating lease costs | $ | 9,275 | | $ | 8,972 | | $ | 7,943 |
| Variable lease costs | $ | 1,961 | | $ | 1,442 | | $ | 1,475 |
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 9,012 | | $ | 8,995 | | $ | 8,302 |
| | | | | |
| Weighted average remaining lease term (in years) | 11.6 | | 12.6 | | 13.8 |
| Weighted average discount rate | 3.5% | | 3.5% | | 3.3% |
As of March 31, 2025, the maturities of operating lease liabilities were as follows:
| | | | | |
| For the fiscal year ending March 31, | |
| 2026 | $ | 9,211 | |
| 2027 | 9,117 |
| 2028 | 8,462 |
| 2029 | 7,668 |
| 2030 | 7,253 |
| Thereafter | 53,436 |
| Total lease payments | $ | 95,147 | |
| Less: imputed interest | (17,130) | |
| Total operating lease liabilities | $ | 78,017 | |
Commitments
The Company serves as the investment manager of the Partnerships. The general partner or managing member of each Partnership is generally a separate subsidiary of the Company and has agreed to invest funds on the same basis as the limited partners in most instances. The Company’s aggregate unfunded commitment to the Partnerships was $312,215 and $267,734 as of March 31, 2025 and 2024, respectively.
In connection with certain of the Company’s strategic technology investments, a percentage of realized gains will be paid to one of our Co-CEOs for overseeing the initial investments and up to 15% may be paid as a discretionary bonus to other employees as those gains are realized. The Company has an unrealized net gain on strategic investments of $34,058 as of March 31, 2025.
The Company offers an Employee Investment Program (“EIP”) through which certain employees are able to invest directly into certain Company managed funds as individual limited partners (“LPs”). The employees also have an option to enter into a loan agreement with the Company or a third-party lender to fund committed capital. The loan is collateralized by the underlying LP’s interest in the fund and return of capital distributions are utilized to pay the outstanding loan balance. The Company entered into a separate agreement with the third-party lender to backstop the employee’s performance under the loan with a commitment to purchase the LP interest from the lender at the greater of fair value or the outstanding balance of the loan in the event of a default by the employee. As of March 31, 2025, the total amount of outstanding loans at the third-party lender under the EIP was $1,280, and the Company believes the risk of default by an employee to be remote.