Our goal remains to grow annual awarded compensation expense at a slower rate than revenue growth, and to achieve a compensation-to-revenue ratio over the cycle in the mid- to high-50s percentage range on both an awarded and adjusted GAAP basis 1, with discipline on deferrals.
For the third quarter of 2012, non-compensation expense was $95 million, on an adjusted basis
, 4% lower than the third quarter of 2011. The reduction in non-compensation expense was primarily driven by lower professional fees, as well as lower business development expenses, when compared to the prior-year period. The ratio of non-compensation expense to operating revenue was 21.5% in the quarter, compared to 21.1% in the third quarter of 2011
For the first nine months of 2012, non-compensation expense was $306 million, on an adjusted basis
, 5% higher than the first nine months of 2011. The increase in non-compensation expense was primarily due to higher occupancy costs and deal-related third-party fees partially offset by lower professional fees. The ratio of non-compensation expense to operating revenue was 21.9%, compared to 20.6% for the first nine months of 2011.
Our goal remains to achieve a non-compensation expense-to-revenue ratio over the cycle of 16% to 20%.
The provision for taxes, on an adjusted basis
, was $13 million for the third quarter and $38 million for the first nine months of 2012. The effective tax rate on such adjusted basis was 26.7% for the third quarter and 25.2% for the first nine months of 2012, compared to 23.8% and 21.3% for the respective 2011 periods.
CAPITAL MANAGEMENT AND BALANCE SHEET
Our primary capital management goals include reducing excess cash, managing debt, and increasing returns to shareholders through dividends and share repurchases.
Lazard has returned $432 million
to shareholders, year to date. This includes returning $200 million of surplus cash
to shareholders in advance of our year-end 2013 target.
We have paid $70 million to our shareholders for dividends declared in January, April and July; have repurchased, as of October 24, 2012, 11.6 million shares of our Class A common stock for $321 million, at an average price of $27.61 per share; and have satisfied employee tax obligations of $41 million in cash in lieu of share issuance upon vesting of equity grants. As announced earlier, approximately 4.5 million of these shares, repurchased at a cost of $120 million, served to directly offset the potential dilution from our 2011 year-end equity-based compensation awards, net of estimated forfeitures and tax withholding to be paid in cash by the Company in lieu of share issuances.