Chapter 3

Ownership and Pay

Hamilton Lane is a controlled company. Through an "Up-C" dual-class structure, executives and directors hold about 64% of the vote on roughly 25% of the economics, and a single Rogers-controlled vehicle directs about half the vote on 15% of the economics [1]. Pay is cash-modest but equity-heavy and performance-gated: the co-CEOs' largest awards vest only if the shares roughly double and they stay five years [2]. A tax receivable agreement routes cash to pre-IPO owners.

The alignment here is real — founders own far more of the business than they are paid to run it — but it comes bundled with control that leaves public Class A holders a governance-passive minority. That is the tension a well-aligned-compounder thesis has to hold in one hand.

Control on a quarter of the economics

Hamilton Lane carries two classes of common stock. Class A — the listed shares — carry one vote each. Class B shares, which are not publicly traded, carry ten votes each until a "sunset" tied to the tenure of Executive Co-Chairmen Hartley Rogers and Mario Giannini, and collectively hold 73.0% of the combined voting power [3]. A stockholders agreement binds most of those Class B holders to vote as instructed by HLA Investments, LLC ("HLAI"), the company's controlling stockholder; the parties to that agreement control roughly 74.0% of the vote [4].

The gap between votes and money is the whole point of the structure. As a group, current executive officers and directors held 3.3 million Class A shares (8% of the class) and 10.0 million Class B shares (84% of the class) as of the July 13, 2026 record date — 64% of the total vote against a 25% economic interest in the underlying operating company, HLA [5]. HLAI alone holds 8.1 million Class B units: 50% of the vote on 15% of the economics [6].

Sources: 2026 Proxy Statement, Ownership of Common Stock [7]; FY2026 Form 10-K, Voting Rights [8].

The same asymmetry runs the other way for outside institutions. BlackRock owned 4.0 million Class A shares — 10% of the class and 7% of the economics — but only 2% of the vote; Kayne Anderson Rudnick's 3.4 million shares translate to 6% of the economics and 2% of the vote [9]. Money without votes on one side; votes without proportionate money on the other.

Source: 2026 Proxy Statement, Ownership of Common Stock [10].

Because HLAI and the stockholders-agreement group control a majority of the vote, Hamilton Lane qualifies as a Nasdaq "controlled company" and has elected the exemptions that go with it: it is not required to maintain a majority-independent board, an independent nominating process, or a fully independent compensation committee [11]. The compensation committee is in fact chaired by Rogers, a non-independent executive officer, under that exemption [12]. The certificate of incorporation also carves HLAI and its affiliates out of the anti-takeover protection that would otherwise apply to a 15%-plus "interested stockholder," so the control block can add to its position without the restrictions that constrain an outside acquirer [13]. For a public holder, the practical reading is simple: you own economics and the right to be carried along, not a vote that decides anything.

Skin in the game, not just control

Control and alignment are not the same thing, and Hamilton Lane is a case where they mostly point the same way. The pre-IPO owners — Rogers, Hirsch, Kramer and others — hold the substantial majority of their stake as Class B and Class C units of the operating company rather than as listed HLI stock, and those units exchange one-for-one into Class A shares [14]. Rogers' 12% economic interest in HLA dwarfs his cash pay by orders of magnitude [15]. Every equity award and open-market purchase by a named executive since the IPO has been denominated in the same Class A stock public holders own [16]. The people running the firm are, first and foremost, its largest shareholders — which is the version of insider control a long-term owner would prefer to the alternative.

Pay: cash-modest, equity-gated

Headline cash compensation is restrained for a firm of this size. For fiscal 2026 co-CEO Erik Hirsch earned $3.46 million and co-CEO Juan Delgado-Moreira $2.69 million — each a $325,000 salary plus a discretionary cash bonus and carried-interest distributions, with no new stock awards recorded in the year [17]. That "no equity" line is a timing artifact rather than a policy: it sits between two large equity events.

Source: 2026 Proxy Statement, Summary Compensation Table [18].

The fiscal 2025 numbers are not a typo. Each co-CEO was granted roughly $76 million of stock that year — the 2024 Performance Awards, made when Hirsch and Delgado-Moreira stepped up to run the firm [19]. These are not ordinary time-vesting shares. Each award covers about 544,000 shares that vest only as the stock's 20-day average closing price reaches $150, $190 and $230 — in thirds — within seven years, and only if the executive is still employed at least five years after grant [20]. The first two price hurdles were touched during the late-2024 share-price spike, but the five-year service clock had not run as of March 31, 2026, and the $230 tranche remains unmet [21]. With the shares back near $83, the top tranche is deep out of the money and the whole award pays fully only if the stock roughly triples off the recent price and the co-CEOs stay through the end of the decade.

The performance discipline extends below the top. A new form of award introduced in September 2025 — granted to the CFO, COO, General Counsel and Chief Accounting Officer — forfeits entirely unless total shareholder return compounds at 8% a year over five years [22]. And the co-CEOs receive a separate series of five annual grants of 30,000 restricted shares each; the second, valued at $79.92 a share, was granted in May 2026 and will land in fiscal 2027 pay — which is why fiscal 2026 shows zero [23].

One feature cuts against the "clean, recurring-fee" reading of the business a value investor might want. The discretionary bonus pool is sized in part by the company's incentive-fee revenue and investment gains on its own balance sheet — the lumpy lines [24]. And carried-interest distributions, reported in "All Other Compensation," rose and fell with realizations: Hirsch's other compensation was $1.87 million in fiscal 2025 and $0.62 million in fiscal 2026 [25]. Management pay, like the earnings, has a variable, market-sensitive component sitting inside an otherwise steady structure.

The tax receivable agreement

The Up-C structure carries a standing cash claim by the pre-IPO owners. When Hamilton Lane bought HLA units at the IPO, and each time a legacy holder later exchanges units for stock, the company picks up additional tax basis that reduces its future cash taxes. Under the tax receivable agreement, 85% of those tax savings are paid back to the legacy members; the company and its public stockholders keep the remaining 15% [26].

The recorded obligation was $235.4 million at March 31, 2026, little changed from $240.6 million a year earlier [27], and each new exchange adds to it — fiscal 2026 exchanges established a further $10.3 million of liability [28]. That balance is about a quarter of the company's $915 million of equity. In practice the drain is gradual: a portion of the individually named fiscal-2026 payments went to insiders and other pre-IPO owners, led by Giannini ($3.19 million), Rogers ($2.20 million, plus $1.21 million to his HRHLA vehicle) and Hirsch ($1.18 million) [29].

Source: 2026 Proxy Statement, Certain Relationships and Related-Party Transactions [30].

Two features deserve a professional buyer's attention. First, the payments are self-funding in the ordinary case: they equal 85% of a tax saving that the structure itself creates, so absent taxable income the company generally owes nothing that year — this is a share of a benefit, not incremental leverage [31]. Second, a change of control accelerates the whole obligation into a lump-sum present value of anticipated future benefits, computed on assumptions that could exceed the cash taxes actually saved [32]. Stacked on HLAI's voting control, that acceleration is another reason the company is effectively unsellable without insider consent — a point that matters for anyone underwriting a takeover premium into the case.

What it means, and what to watch

The evidence points to genuine alignment sitting inside firm insider control. Management's wealth is overwhelmingly in the same stock public holders own, and the largest pay awards only pay if the shares roughly double or triple and the executives stay for years [33]. The strongest fact against reading that as unambiguously shareholder-friendly is structural, not behavioral: a public Class A holder has no effective vote, cannot force a sale, and funds an 85% tax-savings stream to the pre-IPO owners that stands ahead of them — a modest but permanent economic toll of roughly a quarter of book equity today [34].

What would change the read, in either direction, is checkable on the tape. Sustained insider selling through unit exchanges would signal a quiet sell-down; the same exchanges enlarge the tax receivable liability, so the two move together. A downward reset of the co-CEOs' $230 price hurdle or the 8% TSR threshold after the de-rating would weaken the pay-for-performance story that currently looks tight. And the annual cadence of tax-receivable payments, set against the roughly $425 million of operating cash flow the business now generates [35], is the line that shows whether the structure's cost to public holders stays modest as more units convert. For now, the company is buying back stock — the board lifted the repurchase authorization to $100 million in May 2026 — and raised the quarterly dividend to $0.60, so cash is still reaching Class A holders even as it flows to the pre-IPO owners [36].