Scott Adelson
HOULIHAN LOKEYAbout Scott Adelson
Scott J. Adelson, 64, is Chief Executive Officer of Houlihan Lokey (HLI) since June 10, 2024 and has served on the board since January 2015; he previously was Co‑President (2013–2024) and Global Co‑Head of Corporate Finance, with 38+ years at the firm. He holds a B.A. from USC and an MBA from the University of Chicago Booth School of Business . Under his leadership, HLI delivered record FY2025 revenue of $2.39B and raised the quarterly dividend to $0.60 at the beginning of FY2026; FY2025 pay‑versus‑performance shows TSR growth to $314 on an initial $100 investment, net income of ~$400M, and revenue of $2,389M .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Houlihan Lokey | Co‑President | 2013–2024 | Led firmwide strategy, client development, integration of acquisitions; co‑managed Office of the Executives |
| Houlihan Lokey | Global Co‑Head, Corporate Finance | Prior to 2013 (years not disclosed) | Drove M&A, LBOs, capital issuance across sectors |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Various public and private companies | Director (unspecified companies) | Not disclosed | Broader governance exposure and information flow |
Fixed Compensation
Multi‑year CEO compensation summary (fiscal years ended March 31):
| Year | Salary ($) | All Other Compensation ($) | Total ($) |
|---|---|---|---|
| FY2023 | 500,000 | — | 7,400,000 |
| FY2024 | 500,000 | — | 5,000,000 |
| FY2025 | 500,000 | 329,033 (travel stipend $154,058 + tax gross‑up $174,975) | 11,329,033 |
Key observations:
- Base salary was steady at $500k across FY2023–FY2025 .
- FY2025 includes tax gross‑ups on travel stipends, a shareholder‑unfriendly feature and potential red flag .
Performance Compensation
HLI uses revenue‑linked annual bonus pools and a mix of cash, time‑vesting restricted stock, and performance‑vesting shares. FY2025 program and awards:
| Component | Metric/Mechanics | Target/Thresholds | Actual/Payout | Vesting |
|---|---|---|---|---|
| Annual bonus pool sizing | Company revenue vs three‑year average revenue ($2.00B) | Max pool = 4.0% of FY revenue at ≥100% of average; stepdowns at 90/80/70/60% (3.5/3.0/2.5/2.0%) | FY2025 revenue $2.39B → pool $95,576,640 (4.0%) | Committee allocates at discretion |
| CEO FY2025 aggregate award | Committee judgment on firm and individual performance (record revenue, acquisitions/integrations) | Not individually formulaic | $10.5M: cash $8.25M; time‑based equity $1.75M; PSA $0.5M | Time‑based and PSAs vest over 4 years |
| Time‑based shares (FY2025 program) | Dollar value converted to shares based on post‑earnings 10‑day avg price | $1.75M | 9,864 shares granted 5/22/2025 | 25% on each May 15 of 2026–2029 |
| PSAs (FY2025 program) | Vesting contingent on employment in good standing and firm achieving 7% annual revenue CAGR above FY2025 base | 7% revenue CAGR test each FY2026–FY2029 | 2,818 shares granted 5/22/2025 | 25% on each May 15 of 2026–2029, subject to metric |
| FY2024 awards granted in FY2025 | Prior year program equity (time‑based + PSAs) | PSA 7% revenue CAGR above FY2024 base | Time‑based: 6,701 shares ($898,470); PSAs: 3,697 shares ($495,694) | 25% on each May 15 of 2025–2028 (employment + metric) |
FY2024 NEO incentives (pre‑CEO year) for context:
- Adelson FY2024 aggregate award: $4.0M (cash $3,093,750, equity $906,250) .
Equity Ownership & Alignment
- Voting control: HL Voting Trust holds 100% of Class B (15,983,668 shares) and ~74.6% total voting power; trustees include Adelson, Beiser, Gold .
- Adelson personal economic stake: disclaims beneficial ownership of Trust shares except to the extent of 878,921 shares held by the Adelson Stock Trust (disposition power) . Prior year disclosure: 824,742 shares .
- Anti‑hedging/pledging: Insider trading policy prohibits hedging and pledging of Company stock, reducing alignment risk .
- Director ownership guidelines: Outside directors must hold stock equal to 4x annual cash retainer; all directors are in compliance (Adelson does not receive director pay as an employee director) .
Outstanding and vesting schedules (as of March 31, 2025):
| Grant Date | Unvested Time‑Based Shares (#) | Market Value ($) | Earned PSAs Unvested (#) | Unearned PSAs (#) | Notes |
|---|---|---|---|---|---|
| 5/26/2021 | 9,695 | 1,565,743 | — | — | Remaining unvested vested on 5/15/2025 |
| 5/27/2022 | 25,252 | 4,078,198 | — | — | 50% vested 5/15/2025; 50% scheduled 5/15/2026 |
| 5/24/2023 | 10,195 | 1,646,493 | — | — | 1/3 vested 5/15/2025; 1/3 5/15/2026; 1/3 5/15/2027 |
| 5/23/2024 (FY2024 time‑based) | 6,701 | 1,082,212 | — | — | 25% vested 5/15/2025; then annually thru 2028 |
| 5/23/2024 (FY2024 PSAs) | — | — | 924 | 2,773 | Earned tranche vested 5/15/2025; remaining subject to metric |
| Note: Market values use $161.50 Class A close on 3/31/2025 . |
Fiscal 2025 vesting activity:
- Shares acquired on vesting: 30,320; value realized: $4,127,462 .
This underscores recurring vesting events (May 15 annually) that can be relevant for trading liquidity monitoring.
Employment Terms
- Transition Program (adopted May 2022): If an executive resigns into a limited role, the new agreement provides a 4‑year term, salary $250,000 per year (or $200,000 for departing CFO/GC), continued vesting of unvested equity, benefits as for managing directors, and non‑compete during employment term .
- Termination after transition: On death/disability or Company termination without cause, outstanding equity vests in full; Company pays COBRA premiums for up to 18 months or balance of the 4‑year term, subject to a release .
- Severance/change‑in‑control: Company otherwise does not provide severance or change‑in‑control payments .
- Clawback: NYSE Rule 10D‑1 compliant recovery policy effective October 2, 2023 for erroneously awarded incentive compensation upon restatement .
Board Governance
- Board service: Adelson is a Class III director with term expiring at the 2027 annual meeting; he is not compensated for director service as an employee director .
- Leadership structure: CEO is separate from Chairman (Irwin Gold); Lead Independent Director presides over executive sessions (Robert A. Schriesheim) .
- Controlled company: Due to HL Voting Trust, HLI is a “controlled company” under NYSE rules; after the 2025 annual meeting the board will not have a majority of independent directors, though committees meet independence requirements .
- Committees: Audit (Schriesheim—chair, Zuber, Kosecoff, Zucker); Compensation (Zucker—chair, Bassey, Schriesheim); Nominating & Governance (Walker—chair, Kosecoff, Zuber) .
- Attendance: Each director attended ≥75% of board/committee meetings in FY2025; board held 4 meetings; Compensation 6; Audit 8; Nominating 4 .
Director Compensation
- Outside director program (FY2025): Annual cash retainer $100,000; annual fully vested stock award $100,000; committee chair awards: Audit $50,000; Compensation and Nominating $30,000; director stock ownership requirement = 4x annual cash compensation; all directors in compliance .
- Employee directors (incl. Adelson) received no director compensation .
Compensation Peer Group and Say‑on‑Pay
- Peer groups used by WTW: “Boutique” peers Evercore, Lazard, Moelis & Company, Perella Weinberg Partners, Piper Sandler; “Bulge bracket” Barclays, Citigroup, Bank of America, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley, UBS; no targeted percentile .
- Say‑on‑pay: ~97% approval at 2024 annual meeting, indicating strong shareholder support for pay program . Pay‑versus‑performance disclosure highlights CAP vs TSR, net income, and revenue for FY2021–FY2025, with FY2025 TSR at $314, net income ~$400M, revenue $2,389M .
Related Party Transactions and Risk Indicators
- Related party: Since April 1, 2023 HLI paid $251,267 to Antica Terra Winery (~14% indirectly owned by Adelson) for wine and events; Adelson’s approximate indirect interest was ~$35,000; Audit Committee reviewed and ratified, citing discounted pricing .
- Tax gross‑ups: FY2025 includes travel stipends and tax gross‑ups ($329,033 total), a governance red flag .
- No options: Company does not grant options or option‑like awards; equity compensation is in restricted stock and PSAs .
- Hedging/pledging prohibited: Policy reduces alignment risks .
- Controlled voting structure: Trustees’ discretion over Class B voting may raise independence concerns for some investors .
Vesting Schedules and Potential Selling Pressure
Upcoming scheduled vesting events for Adelson’s recent awards:
- FY2024 program grants (granted 5/23/2024): Time‑based 6,701 shares vest 25% each May 15 of 2025–2028; PSAs 3,697 shares vest 25% each May 15 of 2025–2028, contingent on employment and 7% revenue CAGR above FY2024 base .
- FY2025 program grants (granted 5/22/2025): Time‑based 9,864 shares vest 25% each May 15 of 2026–2029; PSAs 2,818 shares vest 25% each May 15 of 2026–2029, contingent on employment and 7% revenue CAGR above FY2025 base .
These dates can be monitored for periodic supply effects; note hedging/pledging prohibitions and insider trading policy constraints .
Employment Contracts, Severance, and Change‑of‑Control Economics
| Provision | Terms |
|---|---|
| Transition Program | 4‑year term; $250k salary ($200k for CFO/GC); continued vesting of outstanding equity; MD‑level benefits; non‑compete during term |
| Termination after transition | Death/disability/Company without cause → full equity vest; COBRA premiums up to 18 months or remainder of term; subject to release |
| Severance/CIC | No separate severance or change‑in‑control payments |
| Clawback | NYSE 10D‑1 compliant; recovery of erroneously awarded incentive pay upon restatements |
Performance & Track Record
- FY2025 highlights: Record revenue $2.39B; dividend increased to $0.60 at start of FY2026; 37 new MD hires and 16 MD promotions; acquisitions of Prytania Solutions and Waller Helms; integrations of 7 Mile Advisors and Triago .
- FY2024 highlights: Second‑highest revenue $1.91B; dividend increased to $0.57 at start of FY2025; acquisitions of 7 Mile Advisors and Triago; Corporate Finance strength .
Compensation Structure Analysis
- Heavy variable pay: CEO FY2025 pay mostly incentive‑based; pool tied to revenue; equity split between time‑based and PSAs .
- Strong revenue linkage: Bonus pool tiers and PSA CAGR hurdle emphasize top‑line growth .
- Discretionary allocation: Committee discretion in pool allocation can introduce subjectivity; however, pay‑versus‑performance and high say‑on‑pay support mitigate concern .
- Governance trade‑offs: Controlled company status and trustee voting may dilute independence; presence of Lead Independent Director and separate Chairman provides checks .
Board Service History and Dual‑Role Implications
- Adelson serves concurrently as CEO and director; he is also a trustee of the HL Voting Trust that controls ~74.6% voting power, which may raise independence/entrenchment concerns despite separation of CEO and Chairman roles and use of a Lead Independent Director .
- He is not on board committees; independent directors chair key committees .
Investment Implications
- Alignment: Significant ongoing equity vesting and PSA revenue CAGR hurdles align incentives with growth; anti‑hedging/pledging policy strengthens alignment .
- Retention risk: Transition Program provides a defined path to reduced role with continued vesting, lowering abrupt departure risk; absence of severance/CIC payments reduces “pay for failure” risk .
- Trading signals: Annual May 15 vesting dates and scheduled cash bonus installments (e.g., a portion payable 11/30/2025 subject to good‑standing) can be monitored for potential selling pressure or liquidity events .
- Governance watch‑items: Tax gross‑ups and a small related‑party transaction (wine services) are modest red flags but disclosed and ratified; controlled company status warrants continued scrutiny of board independence and pay decisions .