Ken Worthington: Hi, good afternoon. Thanks for taking the question. Maybe for Joe, I wanted to dig into the compensation ratio and how most of this compensation could react to different environments. So most generated about $860 million of revenue last year, a compensation of $711 million. How clean is that $711 million? So you did a lot of hiring throughout the year. If you generated 860 million dollars of revenue again, I guess maybe first, what does comp look like in that in that environment for 24? And if and if the environment improves and revenue goes higher, how much of the incremental revenue actually gets paid out in compensation from here? So if you make another million dollars of revenue, how much goes to employees? How much goes to investors?
Ken Moelis: Joe, I think you’ve been doing some work around that. So let you deal with it.
Joe Simon: Yes. So the I think the best way to think about it is, I’d say for every $100 million increase in revenue from the $860 million starting point, we’re looking at kind of four to five points of comp leverage. So, in other words, if we go from $860 million to $960 million, I would imagine that 83 would turn into 78 to 79. And that progression would just happen along that along that route until we got to kind of 60 areas, at which point I don’t think it goes much around. It doesn’t go beyond that.
Ken Worthington: OK, great. Perfect. Thank you. And then just, again, another simple one for you, Joe, on the balance sheet, what was the compensation payable at the end of the year? And then how much of that payable is satisfied in cash?
Joe Simon: Well, the compensation payable is satisfied in cash. I don’t have that balance at my fingertips, but that’ll be in the K in the next couple of weeks.
Operator: Our next question is from the line of Brennan Hawking with UBS. Your line is live.
Brennan Hawking: Good evening. Thanks for taking my questions. Would love to hear you touched on this a little bit in the prepared marks in giving a little texture about restructuring. But is it possible to get the breakdown of advisory revenue for 2023 and the fourth quarter as far as restructuring and capital markets and how much that represented?
Ken Moelis: I think if I’m thinking of a full year, I think, Brandon, that it’s been in the mid 30s. Well, let me say this. We tend to think of capital markets and restructuring as a — we put them together, because I think, as I said, if you can move a restructuring into a capital markets, you haven’t failed. You’ve succeeded for your client. And that is really the goal, just to refinance debt and move it out. I think restructuring has been in the mid 20s and I think combined they’ve been in the mid 30s. And I believe that might be an annual number, though.
Joe Simon: Yes, a little higher than the mid 30s. But that’s, directionally right.
Brennan Hawking: Mid 30s in 2023?
Joe Simon: Yes, it’s combined. Those two combined. So, 25 areas for restructuring, 10%, maybe 12% on the capital market side combined kind of 35 to 37.
Brennan Hawking: Got it. OK, great. Thanks so much for that. And, Joe, in your comment on the comp leverage, which was which was helpful texture. Thanks for that. You indicated that bring it down to 60 and then stay there. Ken, when you went public, the general idea was that long term target for comp was 57 to 58. Is that now adjusting and now the new general standard or normalized level is more like a 60 number or is it that in for the next few years, given the quantum of recruiting you’ve done, it’s just going to be a little more elevated and it might take longer to get down to that high 50s?
Ken Moelis: Now, I think what Joe said that it was our feeling and we’ll see what happens, Brennan. But there’s been fairly large inflation in the non managing director, base go to mark, but base run the company vice presidents, associates. So I think our view is that might have eaten up a point or two of your overall ability on comp ratio. But again, where we still think we managed to a pre-tax margin that is 25% or better. That’s what we’re really aiming for. But we’ll see what the competitive environment is and what’s out there. But I will tell you that it we there was significant inflation in the in those ranks and as inflation is hard to get. It doesn’t come back quickly, rid of it.
Operator: Thanks for your questions. [Operator Instructions] Our next question is from the line of James Yaro with Goldman Sachs. Your line is live.
James Yaro: Good afternoon, Ken and Joe. And thanks for taking my questions. Maybe just turning to the senior banker base quickly. I think your net MDs were actually down by four sequentially. Maybe you just talk about, what drove the sequential step down and then, the three hires year to date. But I think you also commented that, it’s more about, bringing out your existing capabilities to clients. And maybe you could just help us understand, what the hiring backdrop is for 2024. I assume it’ll be substantially slower than in 2023?
Ken Moelis: I thought I’m surprised that our net MDs are down. I don’t have it right in front of me because it’s actually a canvas is all about, the there. There were a number of folks who were leaving, some of the actions took place in the first half. They leave in the second half. And so the net the net change in that between the third quarter and the fourth quarter was slightly down.
