Turning now to our adjusted non-GAAP financial results, which should be considered in addition to and not a substitute for the corresponding GAAP financial measures. Net revenues of $457 million for the fourth quarter of 2023 increased 49% from the prior quarter, and 17% compared to the fourth quarter of last year. An excellent performance from our advisory business accounted for 62% of total net revenues, which drove the strong results. For the year, net revenues totaled $1.3 billion, down 7% compared to 2022. We generated solid operating results despite reduced market activity for much of the year, as well as a decline in market fee pools in most of our businesses. Turning to operating expenses and margin. Our compensation ratio for the fourth quarter of 2023 was 63.4%, lower compared to the sequential quarter, driven by increased revenues.
For 2023, our compensation ratio was 63.6%, a 110-basis point increase compared to 2022. Our compensation philosophy remains unchanged. We continue to balance employee retention and opportunities to invest in new talent with delivering appropriate operating margins and shareholder returns. Based on our current outlook of improving conditions, we expect our compensation ratio for 2024 to trend closer to 63%, absent significant hiring activity. Non-compensation expenses for the fourth quarter of 2023, excluding reimbursed deal expenses were $60 million, up 5% on a sequential basis. For the year, excluding reimbursed deal costs, non-compensation expenses totaled $243 million, up 3% compared to 2022, illustrating solid expense management in the face of inflationary pressures and a challenging operating environment.
Non-compensation expenses are a key driver of operating leverage, and we remain focused on managing the actionable expenses. Looking forward, we maintain our guidance of approximately $62 million per quarter, excluding reimbursed deal expenses, as business continues to improve. During the fourth quarter of 2023, we generated operating income of $99 million and an operating margin of 21.7%. For the year, operating income totaled $213 million with an operating margin of 16%, a solid result on an absolute basis. Our income tax rate was 26.7% for the fourth quarter of 2023 and 19.9% for the year. Income tax expense for the year was reduced by $17 million of tax benefits related to restricted stock vesting. Excluding these benefits, our 2023 tax rate was 27.9%.
We expect our tax rate for 2024 to be within a range of 27% to 29%, excluding the impact from stock vestings. During the fourth quarter of 2023, we generated net income of $72 million and diluted EPS of $4.03. For the year, net income totaled $166 million and diluted EPS was $9.28. Let me finish with an update on capital allocation. We remain committed to returning capital to shareholders through market cycles. Our earnings resilience and capacity, combined with our capital-light approach, enables us to generate meaningful amounts of excess cash to deploy through share repurchases, dividends and corporate development. During 2023, we returned an aggregate of $155 million to shareholders. We repurchased approximately 495,000 shares of our common stocks, or $71 million, which more than offset the share count dilution from this year’s annual stock grants.
We paid an aggregate of $84 million or $3.65 per share to our shareholders through our quarterly and special cash dividends. We also repaid the $125 million of our Class B notes upon maturity in October of 2023. Given our level of earnings, today, the Board approved a special cash dividend of $1 per share related to our 2023 full year results. Including the special dividend, our total dividend for fiscal year 2023 equals $3.40 per share of common stock or a payout ratio of 37% of adjusted net income. In addition, the Board approved a quarterly cash dividend of $0.60 per share. Both the special and the quarterly cash dividend will be paid on March 15 to shareholders of record as of the close of business on March 4. Our 2023 results demonstrate our firm’s resiliency during complicated market conditions.
As we look forward, we remain confident that the execution of our strategic priority will strengthen client engagement, drive durable revenue growth and provide strong returns for our shareholders. With that, we can open up the call for questions.
Operator: [Operator Instructions].
Devin Ryan: Good morning, everyone. Thanks for taking the question here. I just want to start on the fixed income brokerage business. You clearly — nice to see the improvement there and here the depositories are more active. In my sense, with that improvement kind of progressed through fourth quarter, so maybe the fourth quarter wasn’t even fully reflecting that improvement. So I’m just curious – if the fourth quarter level, is a big jumping off point. As we look to 2024, could it actually improve off of that? If you see more acceleration from depositories, just want to get it maybe sensitize a bit around what you guys saw during the fourth quarter, and then what that means for how to think about jumping off into 2024? Thanks.
Deb Schoneman: Yes. Hi, Devin. We did see that build in Q4, as you said, and I think a lot of that ended up being with banks at almost at the end of the year looking to get their balance sheets repositioned for the start of ’24, taking the loss trades, locking in higher yields. As we look to 2024, it ultimately is probably one of our harder businesses to predict, because what we’ve seen already in the first quarter. And one of the factors that seems to impact the business, is not just only level of rates, but rate volatility. And so, as we’ve seen rates move around a lot here again in January, we have seen it start off just a little slower. But when I step back and look at the whole year in total, we do expect that it’s going to be a better year.
