UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ý☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 20182020
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                 to
Commission file number 000-29961
ALLIANCEBERNSTEIN L.P.
(Exact name of registrant as specified in its charter)
Delaware13-4064930
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1345 Avenue of the Americas, New York, N.Y.10,105
(Address of principal executive offices)
1345 Avenue of the Americas, New York, NY  10105
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (212) 969-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of ClassTrading SymbolName of each exchange on which registered
unitsUnits of limited partnership interestLimited Partnership InterestNoneNone
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes ý☒  No o☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes o☐  No ý☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes ý☒  No o☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ý☒  No o☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer☐Accelerated filer☐
Non-accelerated filer☒Smaller reporting company☐
Emerging growth company☐
Large accelerated filer  o
Accelerated filer   o
Non-accelerated filer  x
Smaller reporting company  o
EmergingIf an emerging growth company, oindicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

If an emerging growth company, indicateIndicate by check mark ifwhether the registrant has elected notfiled a report on and attestation to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)its management's assessment of the Exchange Act. oeffectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒  No ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes o☐  No ý☒
The number of units of limited partnership interest outstanding as of December 31, 20182020 was 268,850,276.270,509,658.
DOCUMENTS INCORPORATED BY REFERENCE
This Form 10-K does not incorporate any document by reference.


Table of Contents
ii
Part I
Item 1.
ii1
Part I
Item 1.1A.
117
Item 1A.1B.
16
Item 1B.
Unresolved Staff Comments
2628
Item 2.
2729
Item 3.
2729
Item 4.
2729
Part II
Item 5.
2830
Item 6.
3032
Item 7.
5558
Item 7A.
5760
Item 8.
5861
Item 9.
89
Item 9A.
107112
Item 9B.
108113
Part III
Item 10.
109114
Item 11.
117123
Item 12.
137147
Item 13.
142151
Item 14.
144153
Part IV
Item 15.
145154
Item 16.
147157
147158

i
Table of Contents

Glossary of Certain Defined Terms


“AB” – AllianceBernstein L.P. (Delaware limited partnership formerly known as Alliance Capital Management L.P., “Alliance Capital”), the operating partnership, and its subsidiaries and, where appropriate, its predecessors, AB Holding and ACMC, Inc. and their respective subsidiaries.


“AB Holding” – AllianceBernstein Holding L.P. (Delaware limited partnership).


“AB Holding Partnership Agreement” – the Amended and Restated Agreement of Limited Partnership of AB Holding, dated as of October 29, 1999 and as amended February 24, 2006.


“AB Holding Units” – units representing assignments of beneficial ownership of limited partnership interests in AB Holding.


“AB Partnership Agreement” – the Amended and Restated Agreement of Limited Partnership of AB, dated as of October 29, 1999 and as amended February 24, 2006.


“AB Units” – units of limited partnership interest in AB.


“AUM” – AB's assets under management.


“AXA” – AXA (société anonyme organized under the laws of France) is the holding company for the AXA Group, a worldwide leader in financial protection. AXA operates primarily in Europe, North America, the Asia/Pacific regions and, to a lesser extent, in other regions, including the Middle East, Africa and Latin America. AXA has five operating business segments: Life and Savings, Property and Casualty, International Insurance, Asset Management and Banking.


“AXA Equitable” – AXA Equitable Life Insurance Company (New York stock life insurance company), a subsidiary of AXA Equitable Holdings, and its subsidiaries other than AB and its subsidiaries.

“AXA Equitable Holdings” or “EQH” – AXA Equitable Holdings, Inc. (Delaware corporation), a 59.2%-owned subsidiary of AXA S.A., and its subsidiaries other than AB and its subsidiaries.

“Bernstein Transaction” – AB's acquisition of the business and assets of SCB Inc., formerly known as Sanford C. Bernstein Inc., and the related assumption of the liabilities of that business, completed on October 2, 2000.


“Equitable America” – Equitable Financial Insurance Company of America (f/k/a MONY Life Insurance Company of America, an Arizona corporation) and a subsidiary of Equitable Holdings.

“Equitable Financial” – Equitable Financial Life Insurance Company (New York stock life insurance company), a subsidiary of Equitable Holdings, and its subsidiaries other than AB and its subsidiaries.

“Equitable Holdings” or “EQH” – Equitable Holdings, Inc. (Delaware corporation) and its subsidiaries other than AB and its subsidiaries.

“Exchange Act” – the Securities Exchange Act of 1934, as amended.


“ERISA” – the Employee Retirement Income Security Act of 1974, as amended.


"GAAP" – U.S. Generally Accepted Accounting PrinciplesPrinciples.


“General Partner” – AllianceBernstein Corporation (Delaware corporation), the general partner of AB and AB Holding and a subsidiary of AXA Equitable Holdings, and, where appropriate, ACMC, LLC, its predecessor.


“Investment Advisers Act” – the Investment Advisers Act of 1940, as amended.


“Investment Company Act” – the Investment Company Act of 1940, as amended.


“NYSE” – the New York Stock Exchange, Inc.


“Partnerships” – AB and AB Holding together.


“SEC” – the United States Securities and Exchange Commission.


“Securities Act” – the Securities Act of 1933, as amended.





ii
Table of Contents

PART I


Item 1.Business


The words “we” and “our” in this Form 10-K refer collectively to AB Holding and AB and its subsidiaries, or to their officers and employees. Similarly, the words “company” and “firm” refer to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which company is being discussed. Cross-references are in italics.


We use “global” in this Form 10-K to refer to all nations, including the United States; we use “international” or “non-U.S.” to refer to nations other than the United States.


We use “emerging markets” in this Form 10-K to refer to countries included in the Morgan Stanley Capital International (“MSCI”) emerging markets index, which are, as of December 31, 2018,2020: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates.


Clients


We provide research, diversified investment management, research and related services globally to a broad range of clients through our three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and our sell-side business, Bernstein Research Services.  See “Distribution Channels” in this Item 1 for additional information.


As of December 31, 2018, 20172020, 2019 and 2016,2018, our AUM were approximately $516$686 billion, $554$623 billion and $480$516 billion, respectively, and our net revenues were approximately $3.7 billion, $3.5 billion and $3.4 billion, as of December 31, 2020, 2019 and 2018, 2017 and 2016 were approximately $3.4 billion, $3.3 billion and $3.0 billion, respectively.AXA, EQH (our parent company) and their respectiveits subsidiaries, whose AUM consist primarily of fixed income investments, together constituteis our largest client. Our EQH affiliates represented approximately 24%19%, 23%18% and 24%18% of our AUM as of December 31, 2018, 20172020, 2019 and 2016,2018, and we earned approximately 5%3% of our net revenues from services we provided to our affiliatesthem in each of those years. Also, AXA and its subsidiaries represented approximately 3%, 5% and 6% of our AUM as of December 31, 2020, 2019 and 2018, and we earned approximately 2% of our net revenues from services we provided to them in each of those years. See “Distribution Channels” below and “Assets Under Management” and “Net Revenues” in Item 7 for additional information regarding our AUM and net revenues.


Generally, we are compensated for our investment services on the basis of investment advisory and services fees calculated as a percentage of AUM. For additional information about our investment advisory and services fees, including performance-based fees, see “Risk Factors” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7.


Research


Our high-quality, in-depth research is the foundation of our business. We believe that our global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives us a competitive advantage in achieving investment success for our clients. We also have experts focused on multi-asset strategies, wealth management, environmental, social and governance (“ESG”) and alternative investments.


Corporate Responsibility
At AB, we constantly are working to become a better firm. To us, this means giving back to the communities in which we work through our firm-wide philanthropic initiative, AB Gives Back, and reducing our environmental footprint by increasing our use of “green buildings,” such as our new headquarters in Nashville, Tennessee. Additionally, by promoting diversity and inclusion, we are afforded different perspectives and ways of thinking, which can lead to better outcomes for our clients (See Diversity and Inclusion below).

Also, striving to be more responsible gives us a richer perspective for evaluating other companies. As longtime fundamental investors with a strong research heritage, we have integrated ESG considerations into various processes. This helps us make fully informed risk/return assessments and draw insightful investment conclusions. Our investors — research analysts and portfolio managers — understand the companies and industries they cover in-depth. This positions them well to determine which ESG issues are material to particular companies, to determine the financial impact of an ESG issue and to incorporate that insight into their cash-flow, earnings and credit models. And, we continue to invest in technology and innovation to further enable our investment teams to formalize their ESG evaluations and share insights from our engagements with other companies.

1
Table of Contents
COVID-19 has caused vast suffering and disruption to the global economy, while also causing significant volatility in the financial markets through much of 2020. As a firm, AB has adapted rapidly to protect our employees' health and welfare, support our communities and ensure we can continue managing clients' investments safely and securely. Furthermore, COVID-19 has become a prominent theme in engagement: it not only impacts business models but also highlights corporate ESG practices. We are advocating that issuers be responsible corporate citizens, and we are working to better understand opportunities and threats created by the pandemic.

We provide additional information in this regard in our corporate responsibility report, which is entitled "Advancing Responsible Investing" and can be found under “Corporate Responsibility - Overview” on www.alliancebernstein.com.

Investment Services


OurWe provide a broad range of investment services includes:
with expertise in:
•Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
•Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;
•Passive management, including index and enhanced index strategies;
•
Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity (e.g., direct lending); and
equity;
•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds.funds, and
•Some passive management, including index and enhanced index strategies.

Our services span various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-, intermediate- and short-duration debt securities), and geographic location (e.g., U.S., international, global, emerging markets, regional and local), in major markets around the world.





Our AUM by client domicile and investment service as of December 31, 2018, 20172020, 2019 and 20162018 were as follows:


By Client Domicile ($ in billions):ablp-20201231_g1.jpg

aumcharts.jpg







2
Table of Contents
By Investment Service ($ in billions):
ablp-20201231_g2.jpg
aumcharts2.jpg


Distribution Channels


Institutions


We offer to our institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as AXA, EQH and their respectiveits subsidiaries, separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“Institutional Services”).


We manage the assets of our institutional clients pursuant to written investment management agreements or other arrangements,  which generally are terminable at any time or upon relatively short notice by either party. In general, our written investment management agreements may not be assigned without the client's consent. For information about our institutional investment advisory and services fees, including performance-based fees, see “Risk Factors” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7.


AXA, EQH and their respectiveits subsidiaries together constitute our largest institutional client. TheirEQH and its subsidiaries combined AUM accounted for approximately 37%29%, 34%28% and 35%26% of our institutional AUM as of December 31, 2018, 20172020, 2019 and 2016,2018, respectively, and approximately 27%18%, 25%17% and 28%16% of our institutional revenues for 2020, 2019 and 2018, 2017respectively. Also, AXA and 2016,its subsidiaries combined AUM accounted for approximately 5%, 10% and 11% of our institutional AUM as of December 31, 2020, 2019 and 2018, respectively, and approximately 12%, 11% and 11% of our institutional revenues for 2020, 2019 and 2018, respectively. No single institutional client other than EQH, AXA or EQH and their respective subsidiaries accounted for more than approximately 1% of our net revenues for the year ended December 31, 2018.2020.



3
Table of Contents
As of December 31, 2018, 20172020, 2019 and 2016,2018, Institutional Services represented approximately 48%46%, 48%45% and 50%48%, respectively, of our AUM, and the fees we earned from providing these services represented approximately 14% of our net revenues for each of those years. Our AUM and revenues are as follows:


Institutional Services Assets Under Management
(by Investment Service)

December 31,% Change
2020201920182020-192019-18
(in millions)
Equity Actively Managed:
U.S.$17,435 $13,861 $9,629 25.8 %44.0 %
Global & Non-US42,632 30,767 23,335 38.6 31.8 
Total60,067 44,628 32,964 34.6 35.4 
Equity Passively Managed(1):
U.S.23,806 21,349 17,481 11.5 22.1 
Global & Non-US4,067 3,951 3,174 2.9 24.5 
Total27,873 25,300 20,655 10.2 22.5 
Total Equity87,940 69,928 53,619 25.8 30.4 
Fixed Income Taxable:
U.S.115,488 107,436 96,913 7.5 10.9 
Global & Non-US48,560 50,281 51,156 (3.4)(1.7)
Total164,048 157,717 148,069 4.0 6.5 
Fixed Income Tax-Exempt:
U.S.1,271 1,209 1,046 5.1 15.6 
Global & Non-US— — — — — 
Total1,271 1,209 1,046 5.1 15.6 
Fixed Income Passively Managed(1):
U.S.74 69 73 7.2 (5.5)
Global & Non-US10 20 15 (50.0)33.3 
Total84 89 88 (5.6)1.1 
Total Fixed Income165,403 159,015 149,203 4.0 6.6 
Alternatives/Multi-Asset Solutions(2):
U.S.6,104 5,568 5,024 9.6 10.8 
Global & Non-US56,151 48,179 38,433 16.5 25.4 
Total Alternatives/Multi-Asset Solutions62,255 53,747 43,457 15.8 23.7 
Total:
U.S.164,178 149,492 130,166 9.8 14.8 
Global & Non-US151,420 133,198 116,113 13.7 14.7 
Total$315,598 $282,690 $246,279 11.6 14.8 
Affiliated - EQH$91,396 $78,506 $64,447 16.4 21.8 
AXA16,448 27,136 25,948 (39.4)4.6 
Non-affiliated207,754 177,048 155,884 17.3 13.6 
Total$315,598 $282,690 $246,279 11.6 14.8 

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services.

4
 December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in millions)    
Equity Actively Managed:         
U.S.$9,629
 $10,521
 $8,792
 (8.5)% 19.7 %
Global & Non-US23,335
 22,577
 18,215
 3.4
 23.9
Total32,964
 33,098
 27,007
 (0.4) 22.6
Equity Passively Managed(1):
         
U.S.17,481
 18,515
 16,135
 (5.6) 14.8
Global & Non-US3,174
 3,521
 3,467
 (9.9) 1.6
Total20,655
 22,036
 19,602
 (6.3) 12.4
Total Equity53,619
 55,134
 46,609
 (2.7) 18.3
Fixed Income Taxable:         
U.S.96,913
 103,073
 97,610
 (6.0) 5.6
Global & Non-US51,156
 60,233
 52,598
 (15.1) 14.5
Total148,069
 163,306
 150,208
 (9.3) 8.7
Fixed Income Tax-Exempt:         
U.S.1,046
 1,051
 1,819
 (0.5) (42.2)
Global & Non-US—
 —
 —
 —
 —
Total1,046
 1,051
 1,819
 (0.5) (42.2)
Fixed Income Passively Managed(1):
         
U.S.73
 66
 1,305
 10.6
 (94.9)
Global & Non-US15
 20
 15
 (25.0) 33.3
Total88
 86
 1,320
 2.3
 (93.5)
Total Fixed Income149,203
 164,443
 153,347
 (9.3) 7.2
Other(2):
         
U.S.5,024
 5,258
 3,831
 (4.5) 37.2
Global & Non-US38,433
 44,442
 35,477
 (13.5) 25.3
Total43,457
 49,700
 39,308
 (12.6) 26.4
Total:         
U.S.130,166
 138,484
 129,492
 (6.0) 6.9
Global & Non-US116,113
 130,793
 109,772
 (11.2) 19.1
Total$246,279
 $269,277
 $239,264
 (8.5) 12.5
Affiliated$90,395
 $91,903
 $82,721
 (1.6) 11.1
Non-affiliated155,884
 177,374
 156,543
 (12.1) 13.3
Total$246,279
 $269,277
 $239,264
 (8.5) 12.5
Table of Contents

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.

Revenues from Institutional Services
(by Investment Service)

Years Ended December 31,% Change
2020201920182020-192019-18
(in thousands)
Equity Actively Managed:
U.S.$66,118 $62,252 $60,465 6.2 %3.0 %
Global & Non-US104,684 98,169 103,763 6.6 (5.4)
Total170,802 160,421 164,228 6.5 (2.3)
Equity Passively Managed(1):
U.S.3,677 3,846 3,713 (4.4)3.6 
Global & Non-US2,174 1,992 1,880 9.1 6.0 
Total5,851 5,838 5,593 0.2 4.4 
Total Equity176,653 166,259 169,821 6.3 (2.1)
Fixed Income Taxable:
U.S.103,414 103,735 102,356 (0.3)1.3 
Global & Non-US90,612 100,352 106,314 (9.7)(5.6)
Total194,026 204,087 208,670 (4.9)(2.2)
Fixed Income Tax-Exempt:
U.S.1,355 1,309 1,217 3.5 7.6 
Global & Non-US— — — — — 
Total1,355 1,309 1,217 3.5 7.6 
Fixed Income Passively Managed(1):
U.S.47 86 49 (45.3)75.5 
Global & Non-US35 21 28 66.7 (25.0)
Total82 107 77 (23.4)39.0 
Fixed Income Servicing(2):
U.S.14,108 13,215 12,708 6.8 4.0 
Global & Non-US— — — — — 
Total14,108 13,215 12,708 6.8 4.0 
Total Fixed Income209,571 218,718 222,672 (4.2)(1.8)
Alternatives/Multi-Asset Solutions(3):
U.S.52,222 54,582 52,131 (4.3)4.7 
Global & Non-US73,354 39,405 33,530 86.2 17.5 
Total Alternatives/Multi-Asset Solutions125,576 93,987 85,661 33.6 9.7 
Total Investment Advisory and Services Fees:
U.S.240,941 239,025 232,639 0.8 2.7 
Global & Non-US270,859 239,939 245,515 12.9 (2.3)
Consolidated company-sponsored investment funds— — (372)— 100.0 
Total511,800 478,964 477,782 6.9 0.2 
Distribution Revenues588 704 757 (16.5)(7.0)
Shareholder Servicing Fees526 476 529 10.5 (10.0)
Total$512,914 $480,144 $479,068 6.8 0.2 
Affiliated - EQH(4)
$90,101 $82,413 $78,011 9.3 5.6 
AXA62,999 55,135 53,745 14.3 2.6 
Non-affiliated(4)
359,814 342,596 347,312 5.0 (1.4)
Total$512,914 $480,144 $479,068 6.8 0.2 

(1)Includes index and enhanced index services.
(2)Fixed Income Servicing includes advisory-related services fees that are not based on AUM, including derivative transaction fees, capital purchase program-related advisory services and other fixed income advisory services.
(3)Includes certain multi-asset solutions and services not included in equity or fixed income services.
(4)Amounts in 2019 and 2018 have been reclassified to conform to the current period's presentation.
5
 Years Ended December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in thousands)    
Equity Actively Managed:         
U.S.$60,465
 $53,352
 $49,369
 13.3 % 8.1 %
Global & Non-US103,763
 88,676
 75,815
 17.0
 17.0
Total164,228
 142,028
 125,184
 15.6
 13.5
Equity Passively Managed(1):
         
U.S.3,713
 3,721
 2,964
 (0.2) 25.5
Global & Non-US1,880
 1,882
 2,345
 (0.1) (19.7)
Total5,593
 5,603
 5,309
 (0.2) 5.5
Total Equity169,821
 147,631
 130,493
 15.0
 13.1
Fixed Income Taxable:         
U.S.102,356
 107,262
 101,874
 (4.6) 5.3
Global & Non-US106,314
 112,294
 111,602
 (5.3) 0.6
Total208,670
 219,556
 213,476
 (5.0) 2.8
Fixed Income Tax-Exempt:         
U.S.1,217
 1,989
 2,591
 (38.8) (23.2)
Global & Non-US—
 —
 —
 —
 —
Total1,217
 1,989
 2,591
 (38.8) (23.2)
Fixed Income Passively Managed(1):
         
U.S.49
 202
 322
 (75.7) (37.3)
Global & Non-US28
 16
 1
 75.0
 1,500.0
Total77
 218
 323
 (64.7) (32.5)
Fixed Income Servicing(2):
         
U.S.12,708
 13,597
 12,718
 (6.5) 6.9
Global & Non-US—
 (14) 1,530
 (100.0) (100.9)
Total12,708
 13,583
 14,248
 (6.4) (4.7)
Total Fixed Income222,672
 235,346
 230,638
 (5.4) 2.0
Other(3):
         
U.S.52,131
 63,192
 34,577
 (17.5) 82.8
Global & Non-US33,530
 38,153
 25,162
 (12.1) 51.6
Total85,661
 101,345
 59,739
 (15.5) 69.6
          
Total Investment Advisory and Services Fees:         
U.S.232,639
 243,315
 204,415
 (4.4) 19.0
Global & Non-US245,515
 241,007
 216,455
 1.9
 11.3
Consolidated company-sponsored investment funds(372) (8,717) 27
 n/m
 n/m
 477,782
 475,605
 420,897
 0.5
 13.0
Distribution Revenues757
 1,047
 684
 (27.7) 53.1
Shareholder Servicing Fees529
 488
 479
 8.4
 1.9
Total$479,068
 $477,140
 $422,060
 0.4
 13.1
Affiliated$130,766
 $120,925
 $116,392
 8.1
 3.9
Non-affiliated348,302
 356,215
 305,668
 (2.2) 16.5
Total$479,068
 $477,140
 $422,060
 0.4
 13.1
Table of Contents

(1)Includes index and enhanced index services.
(2)Fixed Income Servicing includes advisory-related services fees that are not based on AUM, including derivative transaction fees, capital purchase program-related advisory services and other fixed income advisory services.

(3)Includes certain multi-asset solutions and services and certain alternative services.

Retail


We provide investment management and related services to a wide variety of individual retail investors, both in the U.S. and internationally, through retail mutual funds we sponsor, mutual fund sub-advisory relationships, separately-managed account programs (see below), and other investment vehicles (“Retail Products and Services”).


We distribute our Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act (“U.S. Funds”), or (ii) not registered under the Investment Company Act and generally not offered to U.S. persons (“Non-U.S. Funds” and, collectively with the U.S. Funds, “AB Funds”). They also include separately-managed account programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. In addition, we provide distribution, shareholder servicing, transfer agency services and administrative services for our Retail Products and Services. See “Net Revenues – Investment Advisory and Services Fees” in Item 7 for information about our retail investment advisory and services fees. See Note 2 to AB’s consolidated financial statements in Item 8 for a discussion of the commissions we pay to financial intermediaries in connection with the sale of open-end AB Funds.


Fees paid by the U.S. Funds are reflected in the applicable investment management agreement, which generally must be approved annually by the boardsboard of directors or trustees of those funds, including by a majority vote of the independent directors or trustees. Increases in these fees must be approved by fund shareholders; decreases need not be, including any decreases implemented by a fund’s directors or trustees. In general, each investment management agreement with the U.S. Funds provides for termination by either party,at any time, upon 60 days’ notice.


Fees paid by Non-U.S. Funds are reflected in management agreements that continue until they are terminated. Increases in these fees generally must be approved by the relevant regulatory authority, depending on the domicile and structure of the fund, and Non-U.S. Fund shareholders must be given advance notice of any fee increases.


The mutual funds we sub-advise for AXA, EQH and their respectiveits subsidiaries together constitute our largest retail client. TheyEQH and its subsidiaries accounted for approximately 19%14%, 19%14% and 21%16% of our retail AUM as of December 31, 2018, 20172020, 2019 and 2016,2018, respectively, and approximately 4%1%, 2% and 2% of our retail net revenues in each of those years.

Certain subsidiaries offor the years ended December 31, 2020, 2019 and 2018, respectively. Also, AXA and EQH, including AXA Advisors, LLC (“AXA Advisors”)its subsidiaries accounted for approximately 2%, were responsible for2% and 3% of our retail AUM as of December 31, 2020, 2019 and 2018, respectively, and approximately 1%, 1% and 2% of totalour retail net revenues for the years ended December 31, 2020, 2019 and 2018, respectively.

HSBC was responsible for approximately 6%, 14% and 7% of our open-end mutual fund sales of shares of open-end AB Funds in 2020, 2019 and 2018, 2017 and 2016, respectively. Our affiliates areHSBC is not under any obligation to sell a specific amount of AB Fund shares and also sell shares of mutual funds that they sponsor and that are sponsored by unaffiliated organizations. No entity accounted for 10% or more ofis not our open-end AB Fund sales in 2018.affiliate.


Most open-end U.S. Funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and service fees for the distribution and sale of its shares (“Rule 12b-1 Fees”). The open-end U.S. Funds have entered into such agreements with us, and we have entered into selling and distribution agreements pursuant to which we pay sales commissions to the financial intermediaries that distribute our open-end U.S. Funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares.


As of December 31, 2018,2020, retail U.S. Fund AUM were approximately $43$62 billion, or 24%23% of retail AUM, as compared to $47$55 billion, or 25%23%, as of December 31, 2017,2019, and $41$43 billion, or 26%24%, as of December 31, 2016.2018. Non-U.S. Fund AUM, as of December 31, 2018,2020, totaled $71$110 billion, or 39%41% of retail AUM, as compared to $76$103 billion, or 40%43%, as of December 31, 2017,2019, and $59$71 billion, or 37%39%, as of December 31, 2016.2018.


6
Table of Contents
Our Retail Services represented approximately 35%39%, 35%39% and 33%35% of our AUM as of December 31, 2018, 20172020, 2019 and 2016,2018, respectively, and the fees we earned from providing these services represented approximately 44%49%, 43%46% and 42%44% of our net revenues for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. Our AUM and revenues are as follows:



Retail Services Assets Under Management
(by Investment Service)

December 31,% Change
2020201920182020-192019-18
(in millions)
Equity Actively Managed:
U.S.$79,569 $57,125 $41,450 39.3 %37.8 %
Global & Non-US27,297 24,497 19,475 11.4 25.8 
Total106,866 81,622 60,925 30.9 34.0 
Equity Passively Managed(1):
U.S.28,937 27,153 22,658 6.6 19.8 
Global & Non-US7,058 7,530 6,697 (6.3)12.4 
Total35,995 34,683 29,355 3.8 18.2 
Total Equity142,861 116,305 90,280 22.8 28.8 
Fixed Income Taxable:
U.S.8,510 9,093 7,029 (6.4)29.4 
Global & Non-US76,144 79,315 53,413 (4.0)48.5 
Total84,654 88,408 60,442 (4.2)46.3 
Fixed Income Tax-Exempt:
U.S.23,167 20,706 16,403 11.9 26.2 
Global & Non-US35 44 42 (20.5)4.8 
Total23,202 20,750 16,445 11.8 26.2 
Fixed Income Passively Managed(1):
U.S.4,460 5,031 4,965 (11.3)1.3 
Global & Non-US3,771 3,794 3,964 (0.6)(4.3)
Total8,231 8,825 8,929 (6.7)(1.2)
Total Fixed Income116,087 117,983 85,816 (1.6)37.5 
Alternatives/Multi-Asset Solutions(2):
U.S.3,071 2,470 2,476 24.3 (0.2)
Global & Non-US3,321 2,408 2,197 37.9 9.6 
Total Alternatives/Multi-Asset Solutions6,392 4,878 4,673 31.0 4.4 
Total:
U.S.147,714 121,578 94,981 21.5 28.0 
Global & Non-US117,626 117,588 85,788 — 37.1 
Total$265,340 $239,166 $180,769 10.9 32.3 
Affiliated - EQH$36,765 $34,448 $29,206 6.7 17.9 
AXA6,150 5,680 5,471 8.3 3.8 
Non-affiliated222,425 199,038 146,092 11.8 36.2 
Total$265,340 $239,166 $180,769 10.9 32.3 

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services.

7
 December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in millions)    
Equity Actively Managed:         
U.S.$41,450
 $37,720
 $31,717
 9.9 % 18.9 %
Global & Non-US19,475
 20,274
 12,514
 (3.9) 62.0
Total60,925
 57,994
 44,231
 5.1
 31.1
Equity Passively Managed(1):
         
U.S.22,658
 23,294
 20,997
 (2.7) 10.9
Global & Non-US6,697
 8,758
 7,025
 (23.5) 24.7
Total29,355
 32,052
 28,022
 (8.4) 14.4
Total Equity90,280
 90,046
 72,253
 0.3
 24.6
          
Fixed Income Taxable:         
U.S.7,029
 7,699
 6,175
 (8.7) 24.7
Global & Non-US53,413
 65,963
 54,328
 (19.0) 21.4
Total60,442
 73,662
 60,503
 (17.9) 21.7
Fixed Income Tax-Exempt:         
U.S.16,403
 15,654
 13,579
 4.8
 15.3
Global & Non-US42
 53
 10
 (20.8) 430.0
Total16,445
 15,707
 13,589
 4.7
 15.6
Fixed Income Passively Managed(1):
         
U.S.4,965
 5,173
 5,216
 (4.0) (0.8)
Global & Non-US3,964
 4,250
 4,041
 (6.7) 5.2
Total8,929
 9,423
 9,257
 (5.2) 1.8
Total Fixed Income85,816
 98,792
 83,349
 (13.1) 18.5
Other(2):
         
U.S.2,476
 2,799
 3,229
 (11.5) (13.3)
Global & Non-US2,197
 1,311
 1,339
 67.6
 (2.1)
Total4,673
 4,110
 4,568
 13.7
 (10.0)
Total:         
U.S.94,981
 92,339
 80,913
 2.9
 14.1
Global & Non-US85,788
 100,609
 79,257
 (14.7) 26.9
Total$180,769
 $192,948
 $160,170
 (6.3) 20.5
Affiliated$34,677
 $36,965
 $33,774
 (6.2) 9.4
Non-affiliated146,092
 155,983
 126,396
 (6.3) 23.4
Total$180,769
 $192,948
 $160,170
 (6.3) 20.5
Table of Contents

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.

Revenues from Retail Services
(by Investment Service)

Years Ended December 31,% Change
2020201920182020-192019-18
(in thousands)
Equity Actively Managed:
U.S.$346,538 $283,461 $235,611 22.3 %20.3 %
Global & Non-US162,435 153,156 149,995 6.1 2.1 
Total508,973 436,617 385,606 16.6 13.2 
Equity Passively Managed(1):
U.S.9,004 9,179 8,901 (1.9)3.1 
Global & Non-US5,343 6,994 7,861 (23.6)(11.0)
Total14,347 16,173 16,762 (11.3)(3.5)
Total Equity523,320 452,790 402,368 15.6 12.5 
Fixed Income Taxable:
U.S.25,127 26,963 25,194 (6.8)7.0 
Global & Non-US509,037 479,886 438,048 6.1 9.6 
Total534,164 506,849 463,242 5.4 9.4 
Fixed Income Tax-Exempt:
U.S.70,661 65,375 58,824 8.1 11.1 
Global & Non-US73 99 132 (26.3)(25.0)
Total70,734 65,474 58,956 8.0 11.1 
Fixed Income Passively Managed(1):
U.S.6,037 5,972 6,086 1.1 (1.9)
Global & Non-US6,192 6,133 6,809 1.0 (9.9)
Total12,229 12,105 12,895 1.0 (6.1)
Total Fixed Income617,127 584,428 535,093 5.6 9.2 
Alternatives/Multi-Asset Solutions(2):
U.S.57,069 51,958 63,232 9.8 (17.8)
Global & Non-US12,723 8,946 8,575 42.2 4.3 
Total Alternatives/Multi-Asset Solutions69,792 60,904 71,807 14.6 (15.2)
Total Investment Advisory and Services Fees:
U.S.514,436 442,908 397,848 16.1 11.3 
Global & Non-US695,803 655,214 611,420 6.2 7.2 
Consolidated company-sponsored investment funds733 883 1,047 (17.0)(15.7)
Total1,210,972 1,099,005 1,010,315 10.2 8.8 
Distribution Revenues522,056 447,050 411,996 16.8 8.5 
Shareholder Servicing Fees78,920 73,777 72,134 7.0 2.3 
Total$1,811,948 $1,619,832 $1,494,445 11.9 8.4 
Affiliated - EQH$27,130 $27,737 $27,814 (2.2)(0.3)
AXA23,762 23,293 24,946 2.0 (6.6)
Non-affiliated1,761,056 1,568,802 1,441,685 12.3 8.8 
Total$1,811,948 $1,619,832 $1,494,445 11.9 8.4 

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services.

8
 Years Ended December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in thousands)    
Equity Actively Managed:         
U.S.$235,611
 $204,363
 $186,442
 15.3 % 9.6 %
Global & Non-US149,995
 114,277
 92,953
 31.3
 22.9
Total385,606
 318,640
 279,395
 21.0
 14.0
Equity Passively Managed(1):
         
U.S.8,901
 8,508
 7,670
 4.6
 10.9
Global & Non-US7,861
 6,636
 5,267
 18.5
 26.0
Total16,762
 15,144
 12,937
 10.7
 17.1
Total Equity402,368
 333,784
 292,332
 20.5
 14.2
Fixed Income Taxable:         
U.S.25,194
 23,142
 16,993
 8.9
 36.2
Global & Non-US438,048
 454,613
 373,997
 (3.6) 21.6
Total463,242
 477,755
 390,990
 (3.0) 22.2
Fixed Income Tax-Exempt:         
U.S.58,824
 54,106
 52,847
 8.7
 2.4
Global & Non-US132
 120
 63
 10.0
 90.5
Total58,956
 54,226
��52,910
 8.7
 2.5
Fixed Income Passively Managed(1):
         
U.S.6,086
 6,055
 6,105
 0.5
 (0.8)
Global & Non-US6,809
 7,567
 7,815
 (10.0) (3.2)
Total12,895
 13,622
 13,920
 (5.3) (2.1)
Total Fixed Income535,093
 545,603
 457,820
 (1.9) 19.2
Other(2):
         
U.S.63,232
 59,751
 52,025
 5.8
 14.9
Global & Non-US8,575
 6,583
 6,672
 30.3
 (1.3)
Total71,807
 66,334
 58,697
 8.3
 13.0
Total Investment Advisory and Services Fees:         
U.S.397,848
 355,925
 322,082
 11.8
 10.5
Global & Non-US611,420
 589,796
 486,767
 3.7
 21.2
Consolidated company-sponsored investment funds1,047
 1,005
 105
 4.2
 857.1
 1,010,315
 946,726
 808,954
 6.7
 17.0
Distribution Revenues411,996
 405,939
 379,881
 1.5
 6.9
Shareholder Servicing Fees72,134
 71,225
 73,072
 1.3
 (2.5)
Total$1,494,445
 $1,423,890
 $1,261,907
 5.0
 12.8
Affiliated$52,760
 $50,162
 $46,045
 5.2
 8.9
Non-affiliated1,441,685
 1,373,728
 1,215,862
 4.9
 13.0
Total$1,494,445
 $1,423,890
 $1,261,907
 5.0
 12.8
Table of Contents

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.

Private Wealth Management


We offer to our private wealth clients, which include high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, separately-managed accounts, hedge funds, mutual funds and other investment vehicles (“Private Wealth Services”).


We manage these accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any party, and may not be assigned without the client's consent. For information about our investment advisory and services fees, including performance-based fees, see “Risk Factors” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7.


Our Private Wealth Services represented approximately 15%, 16% and 17% of our AUM as of December 31, 2020, 2019 and 2018, 2017 and 2016, and therespectively. The fees we earned from providing these services represented approximately 26%24%, 24%26% and 23%26% of our net revenues for 2018, 20172020, 2019 and 2016,2018, respectively. Our AUM and revenues are as follows:


Private Wealth Services Assets Under Management
(by Investment Service)

December 31,% Change
2020201920182020-192019-18
(in millions)
Equity Actively Managed:
U.S.$28,135 $26,840 $22,504 4.8 %19.3 %
Global & Non-US22,719 24,094 19,809 (5.7)21.6 
Total50,854 50,934 42,313 (0.2)20.4 
Equity Passively Managed(1):
U.S.641 142 113 n/m25.7 
Global & Non-US25 32 42 (21.9)(23.8)
Total666 174 155 n/m12.3 
Total Equity51,520 51,108 42,468 0.8 20.3 
Fixed Income Taxable:
U.S.9,293 7,583 7,022 22.6 8.0 
Global & Non-US5,222 4,587 4,154 13.8 10.4 
Total14,515 12,170 11,176 19.3 8.9 
Fixed Income Tax-Exempt:
U.S.25,749 25,102 24,129 2.6 4.0 
Global & Non-US15 15 15 — — 
Total25,764 25,117 24,144 2.6 4.0 
Fixed Income Passively Managed(1):
U.S.— — 11 — (100.0)
Global & Non-US195 372 404 (47.6)(7.9)
Total195 372 415 (47.6)(10.4)
Total Fixed Income40,474 37,659 35,735 7.5 5.4 
Alternatives/Multi-Asset Solutions(2):
U.S.5,927 6,808 5,762 (12.9)18.2 
Global & Non-US7,064 5,484 5,340 28.8 2.7 
Total Alternatives/Multi-Asset Solutions12,991 12,292 11,102 5.7 10.7 
Total:
U.S.69,745 66,475 59,541 4.9 11.6 
Global & Non-US35,240 34,584 29,764 1.9 16.2 
Total$104,985 $101,059 $89,305 3.9 13.2 

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services.
9
 December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in millions)    
Equity Actively Managed:         
U.S.$22,504
 $26,492
 $23,857
 (15.1)% 11.0 %
Global & Non-US19,809
 21,880
 16,851
 (9.5) 29.8
Total42,313
 48,372
 40,708
 (12.5) 18.8
          
Equity Passively Managed(1):
         
U.S.113
 130
 193
 (13.1) (32.6)
Global & Non-US42
 51
 208
 (17.6) (75.5)
Total155
 181
 401
 (14.4) (54.9)
          
Total Equity42,468
 48,553
 41,109
 (12.5) 18.1
          
Fixed Income Taxable:         
U.S.7,022
 6,772
 6,674
 3.7
 1.5
Global & Non-US4,154
 4,141
 3,528
 0.3
 17.4
Total11,176
 10,913
 10,202
 2.4
 7.0
          
Fixed Income Tax-Exempt:         
U.S.24,129
 23,636
 21,501
 2.1
 9.9
Global & Non-US15
 18
 3
 (16.7) 500.0
Total24,144
 23,654
 21,504
 2.1
 10.0
          
Fixed Income Passively Managed(1):
         
U.S.11
 —
 18
 100.0
 (100.0)
Global & Non-US404
 401
 468
 0.7
 (14.3)
Total415
 401
 486
 3.5
 (17.5)
          
Total Fixed Income35,735
 34,968
 32,192
 2.2
 8.6
          
Other(2):
         
U.S.5,762
 3,606
 2,650
 59.8
 36.1
Global & Non-US5,340
 5,139
 4,816
 3.9
 6.7
Total11,102
 8,745
 7,466
 27.0
 17.1
          
Total:         
U.S.59,541
 60,636
 54,893
 (1.8) 10.5
Global & Non-US29,764
 31,630
 25,874
 (5.9) 22.2
Total$89,305
 $92,266
 $80,767
 (3.2) 14.2

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.

Revenues Fromfrom Private Wealth Services
(by Investment Service)

Years Ended December 31, % ChangeYears Ended December 31,% Change
2018 2017 2016 2018-17 2017-162020201920182020-192019-18
(in thousands)    (in thousands)
Equity Actively Managed:         Equity Actively Managed:
U.S.$274,320
 $272,577
 $255,902
 0.6 % 6.5 %U.S.$262,885 $267,671 $274,320 (1.8)%(2.4)%
Global & Non-US240,332
 212,021
 176,169
 13.4
 20.4
Global & Non-US(3)
Global & Non-US(3)
225,014 243,240 240,332 (7.5)1.2 
Total514,652
 484,598
 432,071
 6.2
 12.2
Total487,899 510,911 514,652 (4.5)(0.7)
Equity Passively Managed(1):
         
Equity Passively Managed(1):
U.S.117
 206
 423
 (43.2) (51.3)U.S.1,053 144 117 n/m23.1 
Global & Non-US254
 510
 1,053
 (50.2) (51.6)Global & Non-US60 190 254 (68.4)(25.2)
Total371
 716
 1,476
 (48.2) (51.5)Total1,113 334 371 n/m(10.0)
Total Equity515,023
 485,314
 433,547
 6.1
 11.9
Total Equity489,012 511,245 515,023 (4.3)(0.7)
Fixed Income Taxable:         Fixed Income Taxable:
U.S.33,034
 34,173
 35,756
 (3.3) (4.4)U.S.36,789 34,546 33,034 6.5 4.6 
Global & Non-US28,358
 26,425
 23,384
 7.3
 13.0
Global & Non-US34,786 29,418 28,358 18.2 3.7 
Total61,392
 60,598
 59,140
 1.3
 2.5
Total71,575 63,964 61,392 11.9 4.2 
Fixed Income Tax-Exempt:         Fixed Income Tax-Exempt:
U.S.118,811
 114,974
 111,304
 3.3
 3.3
U.S.123,871 122,350 118,811 1.2 3.0 
Global & Non-US109
 88
 31
 23.9
 183.9
Global & Non-US81 97 109 (16.5)(11.0)
Total118,920
 115,062
 111,335
 3.4
 3.3
Total123,952 122,447 118,920 1.2 3.0 
Fixed Income Passively Managed(1):
         
Fixed Income Passively Managed(1):
U.S.156
 58
 38
 169.0
 52.6
U.S.6 13 156 (53.8)(91.7)
Global & Non-US5,312
 4,059
 3,336
 30.9
 21.7
Global & Non-US(3)
Global & Non-US(3)
2,885 4,462 5,312 (35.3)(16.0)
Total5,468
 4,117
 3,374
 32.8
 22.0
Total2,891 4,475 5,468 (35.4)(18.2)
Total Fixed Income185,780
 179,777
 173,849
 3.3
 3.4
Total Fixed Income198,418 190,886 185,780 3.9 2.7 
Other(2):
         
Alternatives/Multi-Asset Solutions(2):
Alternatives/Multi-Asset Solutions(2):
U.S.122,686
 67,019
 41,595
 83.1
 61.1
U.S.109,169 123,216 122,686 (11.4)0.4 
Global & Non-US51,839
 49,365
 54,629
 5.0
 (9.6)
Total174,525
 116,384
 96,224
 50.0
 21.0
Global & Non-US(3)
Global & Non-US(3)
76,065 68,728 51,839 10.7 32.6 
Total Alternatives/Multi-Asset SolutionsTotal Alternatives/Multi-Asset Solutions185,234 191,944 174,525 (3.5)10.0 
Total Investment Advisory and Services Fees:         Total Investment Advisory and Services Fees:
U.S.549,124
 489,007
 445,018
 12.3
 9.9
U.S.533,773 547,940 549,124 (2.6)(0.2)
Global & Non-US326,204
 292,468
 258,602
 11.5
 13.1
Global & Non-US338,891 346,135 326,204 (2.1)6.1 
Consolidated company-sponsored investment funds(1,214) (2,501) —
 n/m
 n/m
Consolidated company-sponsored investment funds— — (1,214)— 100.0 
Total874,114
 778,974
 703,620
 12.2
 10.7
Total872,664 894,075 874,114 (2.4)2.3 
Distribution Revenues5,809
 5,077
 3,840
 14.4
 32.2
Distribution Revenues7,137 7,289 5,809 (2.1)25.5 
Shareholder Servicing Fees3,311
 3,311
 4,139
 —
 (20.0)Shareholder Servicing Fees2,871 3,141 3,311 (8.6)(5.1)
Total$883,234
 $787,362
 $711,599
 12.2
 10.6
Total$882,672 $904,505 $883,234 (2.4)2.4 

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.not included in equity or fixed income services.

(3)Amounts in 2019 have been reclassified to conform to the current period's presentation.
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Bernstein Research Services


We offer high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options to institutional investors, such as pension fund, hedge fund and mutual fund managers, and other institutional investors (“Bernstein Research Services”). We serve our clients, which are based in the United States and in other major markets around the world, through our trading professionals, who are primarily are based in New York, London and Hong Kong, and our sell-side analysts, who provide fundamental company and industry research along with quantitative research into securities valuation and factors affecting stock-price movements.


We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser but increasing extent, by paying us directly for research through commission sharing agreements or cash payments. Bernstein Research Services accounted for approximately 13%12%, 14%12% and 16%13% of our net revenues as of December 31, 2018, 20172020, 2019 and 2016,2018, respectively.


For information regarding trends in fee rates charged for brokerage transactions, see “Risk Factors” in Item 1A.


Our Bernstein Research Services revenues are as follows:


Revenues Fromfrom Bernstein Research Services

 Years Ended December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in thousands)  
  
Bernstein Research Services$439,432
 $449,919
 $479,875
 (2.3)% (6.2)%

Years Ended December 31,% Change
2020201920182020-192019-18
(in thousands)  
Bernstein Research Services$459,744 $407,911 $439,432 12.7 %(7.2)%
Custody


Our U.S.-basedU.S. based broker-dealer subsidiary acts as custodian for the majority of our Private Wealth Management AUM and some of our InstitutionsInstitutional AUM. Other custodialcustodian arrangements, are maintaineddirected by client-designatedclients, include banks, trust companies, brokerage firms and other financial institutions.

Human Capital Management

As a leading global investment-management and research firm, we bring together a wide range of insights, expertise and innovations to advance the interests of our clients around the world. The intellectual capital of our employees is collectively the most important asset of our firm, so the long-term sustainability of our firm is heavily dependent on our people. We are constantly focused on:
•fostering an inclusive culture by incorporating diversity and inclusion in all levels of our business;
•encouraging innovation;
•developing, retaining and recruiting high-quality talent; and
•aligning employees’ incentives and risk taking with those of the firm.

As a result, we have a strong firm culture that helps us maximize performance and drive excellence. Further, our firm’s role as a fiduciary is embedded in our culture. As a fiduciary, our firm’s primary objective is to help our clients reach their financial goals.

Also, our Board of Directors and committees of the Board, particularly our Compensation and Workplace Practices Committee, provide oversight into various human capital matters, including emerging human capital management risks and strategies to mitigate our exposure to those risks. Furthermore, our Board and Board committees evaluate the overall effectiveness of our social responsibility policies, goals and programs and recommend changes to management as necessary. These collaborative efforts contribute to the overall framework that guides how AB attracts, retains and develops a workforce that supports our values and strategic initiatives.

Talent Acquisition
AB seeks to achieve excellence in business and investment performance by recruiting and hiring a workforce with diversity of thought, backgrounds and experiences. We believe that diverse and inclusive teams generate better ideas and reach more balanced decisions. We seek to leverage the unique backgrounds of our employees to meet the needs of a broad range of clients
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and engage with the communities in which we operate. We engage several external organizations to assist in attracting and recruiting top talent at all levels, with a particular focus on attracting diverse talent. We have a sizable group of internal human capital associates focused on recruiting, and we have implemented various human capital initiatives to develop and provide for a balanced workforce. Additionally, we offer internship programs for students to work in positions across functional areas of the firm; an important part of our college recruitment strategy is to convert a high percentage of our interns into full-time employees.

Employee Engagement
We believe a workforce is most productive, effective and highly engaged when they feel connected to our business and culture. We seek to provide diverse work experiences, professional development opportunities, competitive compensation and benefits, an inclusive and diverse culture and social engagement projects to keep our employees motivated, connected to our firm and engaged throughout their careers. We strive to create a culture of intellectual curiosity and collaboration, creating an environment where our employees can thrive and do their best work. We foster growth and advancement through different training avenues to develop skill sets, create opportunities for networking, both internally and externally, and we encourage internal mobility as a part of our employees' career trajectory. It is important that our employees are not only connected to our business but also to the communities in which we operate. As such, AB offers many opportunities for our employees to volunteer in the communities in which we serve including our firm-wide philanthropic initiative, AB Gives Back. Other initiatives in support of these objectives include a five-year refresh award for employees that mark a five-year anniversary are eligible to receive two additional weeks off. In addition, we utilize AB Voice, a periodic survey designed to measure employee satisfaction and engagement, allowing us to identify and address performance gaps.

Diversity and Inclusion
As noted previously, we believe that diverse and inclusive teams generate better ideas and best serve the needs of our clients. As such, we strive to cultivate a dynamic, diverse and inclusive workplace where employees feel challenged and valued for their contributions. We offer leadership development programs that cater to the needs of various groups, including an African American Leadership program, an Asian Leadership program, a Women's leadership program and a variety of Employee Resource Groups ("ERGs"). These ERG programs, which are central to our diversity and inclusion efforts, share a common purpose, interest and backgrounds and accelerate the advancement of our employees from traditionally underrepresented groups. Our ERG groups are spread across seven categories, including AB Asians, Black ERG, Family Matters, AB Veterans, AB Out (LGBTQ), Synergy (Women) and Adelante (Latinx). These groups serve as a source of inclusion, and they help to support our acquisition of diverse talent. Our senior leadership is committed to our diversity and inclusion efforts and is active in a variety of coalitions pledging to advance diversity and inclusion. Additionally, the Firm has implemented several measures to help ensure accountability for contributing to our diversity and inclusion initiatives. For instance, our senior business leaders have diversity and inclusion objectives embedded in their annual performance goals.

Compensation and Benefits
We have demonstrated a history of investing in our workforce by offering competitive compensation. We utilize a variety of compensation elements, including base salaries, annual short-term compensation awards (i.e., cash bonuses) and, for those of our employees who earn more than $200,000 annually, a long-term compensation award program. Long-term incentive compensation awards generally are denominated in restricted AB Holding Units.We utilize this structure to foster a stronger sense of ownership and align the interests of our employees directly with the interests of our Unitholders and indirectly with the interests of our clients, as strong performance for our clients generally contributes directly to increases in assets under management and improved financial performance for the firm. Furthermore, we offer health and welfare, 401(k) profit-sharing and other benefits programs to all eligible employees.In the U.S. (and elsewhere, although benefits may differ by jurisdiction):
•We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location;
•We engage nationally recognized outside compensation and benefits consulting firms to independently evaluate the effectiveness of our executive compensation and benefit programs, as well as consulting services relating to the amount and form of compensation paid to employees other than executives, and to provide benchmarking against our peers;
•We provide merit-based and performance-based annual increases and incentive compensation, which are communicated to employees at the time of hiring and documented through our talent management process as part of our annual review procedures and upon internal transfer and/or custodians.promotion; and

•The firm makes benefits available to all eligible employees, including, health insurance, paid and unpaid leaves, a retirement plan and life and disability/accident coverage. We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs, including flexible time-off, telemedicine, paid parental leave,
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adoption assistance, prescription savings solutions, Veterans' Health Administration coverage in U.S. medical plans, a personalized wellness program and a financial wellness program.

Health and Safety
The health and safety of our employees is our highest priority and is evident in our response to the COVID-19 pandemic around the globe. At the initial onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., EMEA (including the U.K., Luxembourg, France and other jurisdictions), Hong Kong, Shanghai, Singapore and Taiwan. We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which has remained in place (except in our Asia offices, most of which have reopened), to ensure operating continuity for all critical functions. We also instituted a confidential notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and advised of key developments. Additionally, we continue to monitor communications from the World Health Organization and the U.S. Centers for Disease Control and Prevention to ensure we have current information. We have also instituted various other protocols in response to the COVID-19 pandemic, such as increased cleaning protocols, modifying workspaces to allow for social distancing and requiring masks to be worn in all office locations when social distancing cannot be maintained.

Employees

As of December 31, 2018,2020, our firm had 3,6413,929 full-time employees, representing a 5.0%3.1% increase compared to the end of 2017. 2019.


New York state law requires that private sector businesses with 50 or more full-timeAs of December 31, 2020, our employees inreflected the state give early warning of plant closings, layoffs, relocationsfollowing by gender and other covered reductions in work hours. This notification, known as the Worker Adjustment and Retraining Notification (“WARN”) notice, must be provided to affected employees and their representatives, the New York State Department of Labor and the Local Workforce Investment Board, for relocations that affect 25 or more employees. region:
Region:Female% FemaleMale% MaleGrand Total% of Total
Americas1,08437 %1,87163 %2,95575 %
Asia ex Japan21052 %19748 %40710 %
EMEA17536 %30764 %48212 %
Japan4148 %4452 %852 %
Grand Total1,51038 %2,41962 %3,929100 %


In connection with the ongoing relocationour establishing 1,250 roles in Nashville, Tennessee, we have relocated many of 1,050 rolesour employees from our White Plains and New York City locationsand White Plains, New York, locations. Employees whose roles are in-scope for the move, but who are not relocating, will receive a separation package. We expect layoffs to Nashville, Tennessee, wecontinue on a rolling basis until all in-scope roles are requiredfilled in Nashville.

Information about our Executive Officers
Please refer to file a series of WARN notices throughout the process, which began in the second half of 2018. We will continue"Item 10. Directors, Executive Officers and Corporate Governance" below for information relating to file these notices as these qualifying events occur, with the majority expected in 2019 and 2020.our firm's executive officers.
Service Marks


We have registered a number of service marks with the U.S. Patent and Trademark Office and various foreign trademark offices, including the mark “AllianceBernstein.”  The logo set forth below and “Ahead is a service mark of Tomorrow” are service marks of AB:
ablp-20201231_g3.jpg
In January 2015, we established a new brand identity by prominently incorporating “AB” into our brand architecture, while maintaining the legal names of our corporate entities. With this and other related refinements, our company, and our Institutional and Retail businesses, now are referred to as “AllianceBernstein (AB)” or simply “AB.” Private Wealth Management and Bernstein

Research Services now are referred to as “AB Bernstein.” Also, we adopted the logo and “Ahead of Tomorrow” service marks mark described above.


In connection with the Bernstein Transaction, we acquired all of the rights in, and title to, the Bernstein service marks, including the mark “Bernstein.”

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In connection with an acquisition we completed in 2013, we acquired all of the rights in, and title to, the W.P. Stewart & Co. service marks, including the logo “WPSTEWART.”


Service marks are generally valid and may be renewed indefinitely, as long as they are in use and/or their registrations are properly maintained.

Regulation


Virtually all aspects of our business are subject to various federal and state laws and regulations, rules of various securities regulators and exchanges, and laws in the foreign countries in which our subsidiaries conduct business. These laws and regulations primarily are intended to protect clients and fund shareholders and generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations. Possible sanctions that may be imposed on us include the suspension of individual employees, limitations on engaging in business for specific periods, the revocation of the registration as an investment adviser or broker-dealer, censures and fines.


AB, AB Holding, the General Partner and sixfive of our subsidiaries (Sanford C. Bernstein & Co., LLC (“SCB LLC”), AllianceBernstein Global Derivatives Corporation,AB Broadly Syndicated Loan Manager LLC, AB Custom Alternative Solutions LLC, AB Private Credit Investors LLC, W.P. Stewart & Co., LLC and W.P. Stewart Asset Management LLC) are registered with the SEC as investment advisers under the Investment Advisers Act. Additionally, AB Holding is an NYSE-listed company and, accordingly, is subject to applicable regulations promulgated by the NYSE. Also, AB, SCB LLC and AB Custom Alternative Solutions LLC are registered with the Commodity Futures Trading Commission (“CFTC”) as commodity pool operators and commodity trading advisers; SCB LLC also is registered with the CFTC as a commodities introducing broker.


Each U.S. Fund is registered with the SEC under the Investment Company Act and each Non-U.S. Fund is subject to the laws in the jurisdiction in which the fund is registered. For example, our platform of Luxembourg-based funds operates pursuant to Luxembourg laws and regulations, including Undertakings for the Collective Investment in Transferable Securities Directives, and is authorized and supervised by the Commission de Surveillance du Secteur Financier (“CSSF”), the primary regulator in Luxembourg. AllianceBernstein Investor Services, Inc., one of our subsidiaries, is registered with the SEC as a transfer and servicing agent.


SCB LLC and another of our subsidiaries, AllianceBernstein Investments, Inc., are registered with the SEC as broker-dealers, and both are members of the Financial Industry Regulatory Authority. In addition, SCB LLC is a member of the NYSE and other principal U.S. exchanges.


Many of our subsidiaries are subject to the oversight of regulatory authorities in the jurisdictions outside the United States in which they operate, including the Ontario Securities Commission, the Investment Industry Regulatory Organization of Canada, the European Securities and Markets Authority, the Financial Conduct Authority in the U.K., the CSSF in Luxembourg, the Financial Services Agency in Japan, the Securities & Futures Commission in Hong Kong, the Monetary Authority of Singapore, the Financial Services Commission in South Korea, and the Financial Supervisory Commission in Taiwan.Taiwan and The Securities and Exchange Board of India. While these regulatory requirements often may be comparable to the requirements of the SEC and other U.S. regulators, they are sometimes more restrictive and may cause us to incur substantial expenditures of time and money related to our compliance efforts. For additional information relating to the regulations that impact our business, please refer to "Risk Factors" in Item 1A.


Iran Threat Reduction and Syria Human Rights Act

AB, AB Holding and their global subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and Syria Human Rights Act, nor were they involved in the AXA Group matters described immediately below.

The non-U.S. based subsidiaries of AXA operate in compliance with applicable laws and regulations of the various jurisdictions in which they operate, including applicable international (United Nations and European Union) laws and regulations. While AXA Group companies based and operating outside the United States generally are not subject to U.S. law, as an international group, AXA has in place policies and standards (including the AXA Group International Sanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law. For additional information regarding AXA, see "Principal Security Holders" in Item 12.


AXA has informed us that AXA Konzern AG, an AXA insurance subsidiary organized under the laws of Germany, provides car, accident and health insurance to diplomats based at the Iranian Embassy in Berlin, Germany. The total annual premium of these policies is approximately $139,700 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $24,272.

AXA also has informed us that AXA Belgium, an AXA insurance subsidiary organized under the laws of Belgium, has two policies providing for car insurance for Global Trading NV, which was designated on May 17, 2018 under (E.O.) 13224 and subsequently changed its name to Energy Engineers & Construction on August 20, 2018. The total annual premium of these policies is approximately $6,559 before tax and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $983.

In addition, AXA has informed us that AXA Insurance Ireland, an AXA insurance subsidiary, provides statutorily required car insurance under four separate policies to the Iranian Embassy in Dublin, Ireland. AXA has informed us that compliance with the Declined Cases Agreement of the Irish Government prohibits the cancellation of these policies unless another insurer is willing to assume the coverage. The total annual premium for these policies is approximately $7,115 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $853.

Also, AXA has informed us that AXA Sigorta, a subsidiary of AXA organized under the laws of the Republic of Turkey, provides car insurance coverage for vehicle pools of the Iranian General Consulate and the Iranian Embassy in Istanbul, Turkey. Motor liability insurance coverage is compulsory in Turkey and cannot be canceled unilaterally. The total annual premium in respect of these policies is approximately $3,150 and the annual net profit, which is difficult to calculate with precision, is estimated to be $473.

Additionally, AXA has informed us that AXA Winterthur, an AXA insurance subsidiary organized under the laws of Switzerland, provides Naftiran Intertrade, a wholly-owned subsidiary of the Iranian state-owned National Iranian Oil Company, with life, disability and accident coverage for its employees. In addition, AXA Winterthur also provides car and property insurance coverage for the Iranian Embassy in Bern. The provision of these forms of coverage is mandatory in Switzerland. The total annual premium of these policies is approximately $396,597 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $59,489.

Also, AXA has informed us that AXA Egypt, an AXA insurance subsidiary organized under the laws of Egypt, provides the Iranian state-owned Iran Development Bank, two life insurance contracts, covering individuals who have loans with the bank. The total annual premium of these policies is approximately $19,839 and annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $2,000.

Furthermore, AXA has informed us that AXA XL, which AXA acquired during the third quarter of 2018, through various non-U.S. subsidiaries, provides insurance to marine policyholders located outside of the U.S. or reinsurance coverage to non-U.S. insurers of marine risks as well as mutual associations of ship owners that provide their members with protection and liability coverage. The provision of these coverages may involve entities or activities related to Iran, including transporting crude oil, petrochemicals and refined petroleum products. AXA XL’s non-U.S. subsidiaries insure or reinsure multiple voyages and fleets containing multiple ships, so they are unable to attribute gross revenues and net profits from such marine policies to activities with Iran. As the activities of these insureds and re-insureds are permitted under applicable laws and regulations, AXA XL intends for its non-U.S. subsidiaries to continue providing such coverage to its insureds and re-insureds to the extent permitted by applicable law.

Lastly, a non-U.S. subsidiary of AXA XL provided accident & health insurance coverage to the diplomatic personnel of the Embassy of Iran in Brussels, Belgium during the third quarter of 2018. AXA XL’s non-U.S. subsidiary received aggregate payments for this insurance from inception through December 31, 2018 of approximately $73,451. Benefits of approximately $2,994 were paid to beneficiaries during 2018. These activities are permitted pursuant to applicable law. The policy has been canceled and is no longer in force.

The aggregate annual premium for the above-referenced insurance policies is approximately $646,411, representing approximately 0.0007% of AXA’s 2018 consolidated revenues, which we expect will exceed $100 billion. The related net profit, which is difficult to calculate with precision, is estimated to be $88,070, representing approximately 0.002% of AXA’s expected 2018 aggregate net profit.



History and Structure


We have been in the investment research and management business for more than 50 years. Bernstein was founded in 1967;1967. Alliance Capital was founded in 1971 when the investment management department of Donaldson, Lufkin & Jenrette, Inc. (since November 2000, a part of Credit Suisse Group) merged with the investment advisory business of Moody’s Investors Service, Inc.


In April 1988, AB Holding “went public” as a master limited partnership. AB Holding Units, which trade under the ticker symbol “AB,” have been listed on the NYSE since that time.


In October 1999, AB Holding reorganized by transferring its business and assets to AB, a newly-formed operating partnership, in exchange for all of the AB Units (“Reorganization”). Since the date of the Reorganization, AB has conducted the business formerly conducted by AB Holding and AB Holding’s activities have consisted of owning AB Units and engaging in related
14
activities. Unlike AB Holding Units, AB Units do not trade publicly and are subject to significant restrictions on transfer. The General Partner is the general partner of both AB and AB Holding.


In October 2000, our two legacy firms, Alliance Capital and Bernstein, combined, bringing together Alliance Capital’s expertise in growth equity and corporate fixed income investing and its family of retail mutual funds, with Bernstein’s expertise in value equity investing, tax-exempt fixed income management, and its Private Wealth Management and Bernstein Research Services businesses.


As of December 31, 2018,2020, the condensed ownership structure of AB is as follows (for a more complete description of our ownership structure, see “Principal Security Holders” in Item 12):

ablp-20201231_g4.jpg
ownershipchart.jpg

The General Partner owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB. Including these general partnership interests, EQH, directly and through certain of its subsidiaries (see “Principal Security Holders” in Item 12), had an approximate 65.2%64.8% economic interest in AB as of December 31, 2018.2020.


Competition

We compete in all aspects of our business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations, and other financial institutions that often provide investment products that havewith similar features and objectives as those we offer. Our competitors offer a wide range of financial services to the same customers that we seek to serve. Some of our competitors are larger, have a broader range of product choices and investment capabilities, conduct business in more markets, and have substantially greater resources than we do. These

factors may place us at a competitive disadvantage, and we can give no assurance that our strategies and efforts to maintain and enhance our current client relationships, and create new ones, will be successful.


In addition, AXA, EQH and their respectiveits subsidiaries provide financial services, some of which compete with those we offer. The AB Partnership Agreement specifically allows AXAEQH and its subsidiaries (other than the General Partner) to compete with AB and to pursue opportunities that may be available to us. AXA, EQH and certain of their respectiveits subsidiaries have substantially greater financial resources than we do and are not obligated to provide resources to us.


To grow our business, we believe we must be able to compete effectively for AUM. Key competitive factors include:
15
•our investment performance for clients;
•our commitment to place the interests of our clients first;
•the quality of our research;
•our ability to attract, motivate and retain highly skilled, and often highly specialized, personnel;
•the array of investment products we offer;
•the fees we charge;
•Morningstar/Lipper rankings for the AB Funds;
•our ability to sell our actively-managed investment services despite the fact that many investors favor passive services;
•our operational effectiveness;
•our ability to further develop and market our brand; and
•our global presence.

Competition is an important risk that our business faces and should be considered along with the other factors we discuss in “Risk Factors” in Item 1A.


Available Information


AB and AB Holding file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to such reports, and other reports (and amendments thereto) required to comply with federal securities laws, including Section 16 beneficial ownership reports on Forms 3, 4 and 5, registration statements and proxy statements. We maintain an Internet site (http://www.alliancebernstein.com) where the public can view these reports, free of charge, as soon as reasonably practicable after each report is filed with, or furnished to, the SEC. In addition, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.




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Item 1A.Risk Factors


Please consider this section along with the description of our business in Item 1, the competition section immediately above and AB’s financial information contained in Items 6, 7 and 8. The majority of the risk factors discussed below directly affect AB. These risk factors also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB. See also “Cautions Regarding Forward-Looking Statements” in Item 7.


Business-related Risks, including risks relating to COVID-19


Our revenues and results of operations depend on the market value and composition of our AUM, which can fluctuate significantly based on various factors, including many factors outside of our control.


We derive most of our revenues from investment advisory and services fees, which typically are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of the account and the total amount of assets we manage for a particular client. The value and composition of our AUM can be adversely affected by several factors, including:


•Market Factors. The dramatic securities market declines experienced during March 2020, which resulted from the global effects of COVID-19, caused a significant reduction in our AUM. Markets and AUM levels have since recovered to new highs following unprecedented, coordinated monetary and fiscal policy support and, more recently, the approval of vaccines to help remedy the global pandemic. However, we recognize that, due to continued uncertainty associated with these circumstances, markets may remain volatile and, accordingly, there remains risk of a significant reduction in our revenues and net income in future periods, particularly if the negative effects on the global economy from COVID accelerate.
Global equityeconomies and financial markets were quite strong throughout 2018 before finishingare increasingly interconnected, which increases the year dramatically lower. Markets sold offprobability that conditions in one country or region might adversely impact a different country or region. Conditions affecting the general economy, including political, social or economic instability at the local, regional or global level, such as the civil unrest centered around racial inequity experienced across the U.S. during the second, third and fourth quarters of 2020, and the riot experienced in Washington D.C. in January 2021 surrounding the transition to a new Presidential administration, may also affect the market value of our AUM. Health crises, such as the COVID-19 pandemic, as well as other incidents that interrupt the expected course of events, such as natural disasters, war or civil disturbance, acts of terrorism (whether foreign or domestic), power outages and other unforeseeable and external events, and the public response to or fear of such diseases or events, have had and may in the fourth quarter duefuture have a significant adverse effect on financial markets and our AUM, revenues and net income. Furthermore, the preventative and protective health-related actions, such as business activity suspensions and population lock-downs, that governments have taken, and may continue to investor concerns over rising U.S. interest rates, a slowdowntake, in Europeanresponse to COVID-19 have resulted, and may continue to result, in periods of business confidence, weaker Chinese growthinterruption, inability to obtain raw materials, supplies and rising geopolitical uncertainty, including Brexit implementationcomponent parts, and ongoing trade tensions betweenreduced or disrupted operations. These circumstances have caused, and may continue to cause, significant economic disruption and high levels of unemployment, which will adversely affect the U.S.financial condition and China. Global fixed income markets were mixed for the year, with higher returns for less-risky government bonds and negative credit market returns. In the U.S., while tax cuts enacted at the endresults of 2017 helped spur growth and corporate earnings in 2018, the benefit is unlikely to continue in 2019, and investors are focused on the lengthoperations of many of the companies in which we invest, and likely reduce the market value of their securities and thus our AUM and revenues. Furthermore, the significant market volatility and uncertainty, and reductions in the availability of margin financing, we experienced during the first quarter of 2020 severely limited the liquidity of certain asset backed and other securities, making it at times impossible to sell these securities at prices reflecting their true economic cycle. Thevalue. While liquidity conditions have improved considerably since the first quarter following the stimulus programs announced by the U.S. Federal Reserve announced its fourth interest rate increase in December, as expected, but revised its guidance onand U.S. Treasury, we recognize the number of rate increases in 2019 from three to two. Oil prices fell sharplypossibility that conditions could deteriorate in the fourth quarter which, when combined with higher U.S. interest ratesfuture. Lack of liquidity makes it more difficult for our funds to meet redemption requests. If liquidity were to worsen, this may have a significant adverse effect on our AUM, revenues and slowing growth, could impact the economies of some emerging markets. In Europe, the Central Bank ended its quantitative easing program in December despite the slowdown in growth, and ongoing uncertainty around Brexit negotiations weighed on business and consumer confidencenet income in the U.K. In China, monetary policy is easing in response to slowing growth and U.S. trade tariff headwinds. These factors, and the market volatility they cause, may adversely affect our AUM and revenues.
future.
•Client Preferences. Generally, our clients may withdraw their assets at any time and on short notice. Also, changing market dynamics and investment trends, particularly with respect to sponsors of defined benefit plans choosing to invest in less risky investments and the ongoing shift to lower-fee passive services described below, may continue to reduce interest in some of the investment products we offer, and/or clients and prospects may continue to seek investment products that we may not currently offer. Loss of, or decreases in, AUM reduces our investment advisory and services fees and revenues.
•Our Investment Performance.  Our ability to achieve investment returns for clients that meet or exceed investment returns for comparable asset classes and competing investment services is a key consideration when clients decide to keep their assets with us or invest additional assets, and when a prospective client is deciding whether to invest with
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us. Poor investment performance, both in absolute terms and/or relative to peers and stated benchmarks, may result in clients withdrawing assets and prospective clients choosing to invest with competitors.
•Investing Trends. Our fee rates can vary significantly among the various investment products and services we offer to our clients (see “Net Revenues” in Item 7 for additional information regarding our fee rates); our fee realization rate fluctuates as clients shift assets between accounts or products with different fee structures.
•Service Changes. We may be required to reduce our fee levels, restructure the fees we charge and/or adjust the services we offer to our clients because of, among other things, regulatory initiatives (whether industry-wide or specifically targeted), changing technology in the asset management business (including algorithmic strategies and emerging financial technology), court decisions and competitive considerations. A reduction in fee levels would reduce our revenues.
A decrease in the value of our AUM, a decrease in the amount of AUM we manage, an adverse mix shift in our AUM and/or a reduction in the level of fees we charge would adversely affect our investment advisory fees and revenues. A reduction in revenues, without a commensurate reduction in expenses, adversely affects our results of operations.



The industry-wide shift from actively-managed investment services to passive services has adversely affected our investment advisory and services fees, revenues and results of operations, and this trend may continue.

Our competitive environment has become increasingly difficult over the past decade, as active managers, which invest based on individual security selection, have, on average, consistently underperformed passive services, which invest based on market indices. WhileActive performance relative to benchmarks in the weak and volatile market environment in 2018 provided ample opportunities for stock selection, it was another challenging year for active equity fund managers. Only 42%first half of 2020 remained mixed, with 51% of active managers beatoutperforming their passive benchmarks for the full year,six months ended June 30, 2020 (latest data available). Non-U.S. stock active funds fared better with 60% outperforming benchmarks, while 48% of U.S. stock active funds outperformed and just 40% of active bond funds outperformed their benchmarks. Also, results varied results among growth, value and core managers. Despite the more volatile markets, demand
Demand for passive strategies persisted, albeit at a slower pace, and while active equity managers struggledcontinued to struggle to attract net new assets.assets, flows to active fixed income managers remained positive. In the U.S., total industry-wide active mutual fund inflowsoutflows of $67$196 billion in 2017 reversed to2020 increased from net outflows of $302$12 billion in 2018.2019. Active equity U.S. mutual fund outflows of $259$338 billion in 20182020 increased by 33% year-over-year as the pace of outflows accelerated in the fourth quarter, particularly in December. Further, after $221 billion of active23% year-over-year. Active fixed income U.S. mutual fundfunds showed continued strength with inflows of $246 billion in 2017,2020, though they decreased 9% from $271 billion in 2019. Fixed income active flows slowed dramaticallywere positive in 2018 to $13 billion. Meanwhile, totaleach quarter in 2020 following the sell-off in March 2020. Total industry-wide passive mutual fund inflows of $451$361 billion were down 35%declined by 20% from last year's record $692inflows of $450 billion. The most recent data available for U.S. institutions (through September 30, 2018) is more negative. Total industry active equity and fixed income net outflows for the year-to-date through September 30, 2018 were $254 billion, triple the total for 2017. In this environment, organic growth through positive net inflows is difficult to achieve for active managers, such as AB, and requires taking market share from other active managers.
The significant shift from active services to passive services adversely affects Bernstein Research Services revenues as well. GlobalWhile global market trading volumes have declinedincreased in 2020 due to higher market volatility, predominantly relating to COVID, the broader trend in recent years andhas been declines, which we would expect this to continue, fueled by persistent active equity outflows and passive equity inflows. As a result, portfolio turnover has decreaseddeclined and investors hold fewer shares that are actively traded by managers.
Our reputation could suffer if we are unable to deliver consistent, competitive investment performance.


Our business is based on the trust and confidence of our clients. Damage to our reputation, resulting from poor or inconsistent investment performance, among other factors, can reduce substantially our AUM and impair our ability to maintain or grow our business.


Maintaining adequate liquidity for our general business needs depends on certain factors, including operating cash flowsEQH and our accessits subsidiaries, and to credit on reasonable terms.

Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow AUM and other factors beyond our control. Our ability to issue public or private debt on reasonable terms may be limited by adverse market conditions, our profitability, our creditworthiness as perceived by lenders and changes in government regulations, including tax rates and interest rates. Furthermore, our access to credit on reasonable terms is partially dependent on our firm’s credit ratings.

Both Moody’s Investors Service, Inc. and Standard & Poor's Rating Service recently affirmed AB’s long-term and short-term credit ratings and indicated a stable outlook in 2018. Future changes in our credit ratings are possible and any downgrade to our ratings is likely to increase our borrowing costs and limit our access to the capital markets. If this occurs, we may be forced to incur unanticipated costs or revise our strategic plans, which could have a material adverse effect on our financial condition, results of operations and business prospects.
lesser extent AXA and its affiliates, including AXA Equitable Holdings,subsidiaries, provide a significant amount of our AUM and fund a significant portion of our seed investments, and if our agreements with them terminate or they withdraw capital support, whether as a result of AXA Equitable Holdings' initialEQH's public offering ("IPO") inofferings since 2018 or another factor, it could have a material adverse effect on our business, results of operations and/or financial condition.
AXAEQH (our parent company) and its affiliates, including AXA Equitable Holdings, collectively aresubsidiaries is our largest client. AXA Equitable HoldingsOur EQH affiliates represented 18.1%approximately 19%, of our total AUM as of December 31, 20182020, and 3.1%we earned approximately 3% of our net revenues for the year ended December 31, 2018.from services we provided to them in 2020. Also, AXA and its affiliates other than AXA Equitable Holdingssubsidiaries represented 6.1%approximately 3% of our total AUM as of December 31, 20182020, and 2.4%we earned approximately 2% of our net revenues for the year ended December 31, 2018.from services we provided to them in 2020. Our related investment management agreements with these affiliates are terminable at any time or on short notice by either party, and none of these affiliates areneither EQH nor AXA is under any obligation to maintain any level of AUM with us. A material adverse effect on our business, results of operations and/or financial condition could result if AXA Equitable Holdings or AXA and its other affiliatesEQH were to terminate theirits investment management agreements with us.
Further, while to date
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During the second quarter of 2018, AXA completed the sale of a minority stake in EQH through an initial public offering ("IPO"). Since then, AXA has completed additional offerings and taken other steps, most recently during the fourth quarter of 2019. As a result, AXA owned less than 10% of the outstanding common stock of EQH as of December 31, 2020.

While we have not experienced adverse effects from the IPO and we currently cannot at this time predict the eventualfull impact if any, on usAB of the IPO,this transaction, such impact could includehas included a reduction in the support AXA has provided to usAB in the past with respect to ourAB's investment management business, resulting in a modest decrease toin our revenues and ability to initiate new investment services. Also,

we rely AB relies on AXA, including its subsidiary, AXA Business Services, for a number ofseveral significant services, and we benefitAB has benefited from ourits affiliation with AXA in certain common vendor relationships. TheseSome of these arrangements mayhave changed, and others are expected to change, with possible negativeimmaterial financial implications for us.AB.
We may be unable to continue to attract, motivate and retain key personnel, and the cost to retain key personnel could put pressure on our adjusted operating margin.

Our business depends on our ability to attract, motivate and retain highly skilled, and often highly specialized, technical, investment, managerial and executive personnel and there is no assurance that we will be able to do so.

The market for these professionals is extremely competitive. They often maintain strong, personal relationships with investors in our products and other members of the business community so their departure may cause us to lose client accounts or result in fewer opportunities to win new business, either of which factors could have a material adverse effect on our results of operations and business prospects.

Additionally, a decline in revenues may limit our ability to pay our employees at competitive levels, and maintaining (or increasing) compensation without a revenue increase, in order to retain key personnel, may adversely affect our adjusted operating margin. As a result, we remain vigilant about aligning our cost structure (including headcount) with our revenue base. For additional information regarding our compensation practices, see "Compensation Discussion and Analysis" in Item 11.

Our process of relocating our headquarters may not be executed as we envision.

On May 2, 2018, we announced that we will establish our corporate headquarters in and relocate approximately 1,050 jobs located in the New York metropolitan area to Nashville, Tennessee (for additional information, see “Relocation Strategy” in Item 7). Although the eventual impact on AB from this process is not yet known, the uncertainty created by these circumstances could have a significant adverse effect on AB’s ability to motivate and retain current employees. Further significant managerial and operational challenges could arise, such as ineffective transfer of institutional knowledge from current employees to newly-hired employees, if AB experiences significantly greater attrition among current employees than the firm anticipates in connection with the relocation and/or if the firm encounters more difficulty than expected in hiring qualified employees to help staff our Nashville headquarters.

Additionally, our estimates for both the transition costs and the corresponding expense savings relating to our headquarters relocation, which we discuss in more detail in “Relocation Strategy” in Item 7, are based on our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs. If our assumptions turn out to be inaccurate, our adjusted net revenues and adjusted operating income could be adversely affected.


Our business is dependent on investment advisory agreements with clients, and selling and distribution agreements with various financial intermediaries and consultants, which generally are subject to termination or non-renewal on short notice.
 
We derive most of our revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds and private wealth clients, and selling and distribution agreements with financial intermediaries that distribute AB Funds. Generally, the investment management agreements (and other arrangements), including our agreements with AXA, EQH and their respectiveits subsidiaries, are terminable at any time or upon relatively short notice by either party. The investment management agreements pursuant to which we manage the U.S. Funds must be renewed and approved by the Funds’ boards of directors annually. A significant majority of the directors are independent. Consequently, there can be no assurance that the board of directors of each fund will approve the fund’s investment management agreement each year, or will not condition its approval on revised terms that may be adverse to us. In addition, investors in AB Funds can redeem their investments without notice. Any termination of, or failure to renew, a significant number of these agreements, or a significant increase in redemption rates, could have a material adverse effect on our results of operations and business prospects.


Similarly, the selling and distribution agreements with securities firms, brokers, banks and other financial intermediaries are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. These intermediaries generally offer their clients investment products that compete with our products. In addition, certain institutional investors rely on consultants to advise them about choosing an investment adviser and some of our services may not be considered among the best choices by these consultants. As a result, investment consultants may advise their clients to move their assets invested with us to other investment advisers, which could result in significant net outflows.



Lastly, our Private Wealth Services rely on referrals from financial planners, registered investment advisers and other professionals. We cannot be certain that we will continue to have access to, or receive referrals from, these third parties. Loss of such access or referrals could have a material adverse effect on our results of operations and business prospects.


Performance-based fee arrangements with our clients may cause greater fluctuations in our net revenues.


We sometimes charge our clients performance-based fees, whereby we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account under-performs relative to its performance target (whether in absolute terms or relative to a specified benchmark), it must gain back such under-performance before we can collect future performance-based fees. Therefore, if we fail to achieve the performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired.


We are eligible to earn performance-based fees on 7.3%6.0%, 7.8%8.5% and 0.9%0.8% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 5.1%4.4% of our AUM). If the percentage of our AUM subject to performance-based fees increases, seasonality and volatility of revenue and earnings are likely to become more significant. Our performance-based fees in 2018, 2017were $132.6 million, $99.6 million and 2016 were $118.1 million $94.8 millionin 2020, 2019 and $32.8 million,2018, respectively.


An impairment of goodwillThe revenues generated by Bernstein Research Services may occur.

Determining whether an impairment of the goodwill asset exists requires management to exercise a substantial amount of judgment. In addition, to the extent that securities valuations are depressed for prolonged periods of time and/or market conditions deteriorate, or if we experience significant net redemptions, our AUM, revenues, profitability and unit price will be adversely affected. Althoughaffected by circumstances beyond our control, including declines in brokerage transaction rates, declines in global market volumes, failure to settle our trades by significant counterparties and the effects of MiFID II.

Electronic, or “low-touch,” trading represents a significant percentage of buy-side trading activity and typically produces transaction fees that are significantly lower than the price of an AB Holding Unit is just one factor in the calculation of fair value, if AB Holding Unit price levels decline significantly, reaching the conclusion that fair value exceeds carrying value will, over time, become more difficult. In addition, control premiums, industry earnings multiples and discount rates are impacted by economic conditions.traditional full service fee rates. As a result, subsequent impairment testsblended pricing throughout our industry is lower now than it was historically, and price declines may occur more frequently continue. In addition, fee rates we charge
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and be based on more negative assumptionscharged by other brokers for brokerage services have historically experienced price pressure, and future cash flow projections,we expect these trends to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may result in an impairmentnot continue.

In addition, the failure or inability of goodwill. An impairment may result in a material charge to our earnings. For additional information about our impairment testing, see Item 7.

We may engage in strategic transactions that could pose risks.

As partany of our business strategy, we consider potential strategic transactions, including acquisitions, dispositions, mergers, consolidations, joint venturesbroker-dealer's significant counterparties to perform could expose us to substantial expenditures and similar transactions, some of which may be material. These transactions, if undertaken, may involve various risks and present financial, managerial and operational challenges, including:.

adverse effects on our earnings if acquired intangible assets or goodwill become impaired;
existence of unknown liabilities or contingencies that arise after closing;
potential disputes with counterparties; and
potential dilution to our existing unitholders, if we fund the purchase price of a transaction with AB Units or AB Holding Units.
Acquisitions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. Additionally, the loss of investment personnel poses the risk that we may lose the AUM we expected to manage, which could adversely affect our resultsrevenues. For example, SCB LLC, as a member of operations. Furthermore, strategic transactions may requireclearing and settlement organizations, would be required to settle open trades of any non-performing counterparty. This exposes us to increasethe mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Also, our leverage or, if we issue AB Units or AB Holding Unitsability to fund an acquisition, would diluteaccess liquidity in such situations may be limited by what our funding relationships are able to offer us at such times.

We discuss the holdingsrisks associated with the second installment of our existing Unitholders.the Markets in Financial Instruments Directive II (“MiFID II”) below in "Legal and Regulatory-related Risks" in this Item 1A.


Fluctuations in the exchange rates between the U.S. dollar and various other currencies can adversely affect our AUM, revenues and results of operations.operations.


Although significant portions of our net revenues and expenses, as well as our AUM, presently are denominated in U.S. dollars, we have subsidiaries and clients outside of the United States with functional currencies other than the U.S. dollar. Weakening of these currencies relative to the U.S. dollar adversely affects the value in U.S. dollar terms of our revenues and our AUM denominated in these other currencies. Accordingly, fluctuations in U.S. dollar exchange rates affect our AUM, revenues and reported financial results from one period to the next.



We may not be successful in our efforts to hedge our exposure to such fluctuations, which could negatively impact our revenues and reported financial results.


Our seed capital investments are subject to market risk. While we enter into various futures, forwards, swap and option contracts to economically hedge many of these investments, we also may be exposed to market risk and credit-related losses in the event of non-performance by counterparties to these derivative instruments.


We have a seed investment program for the purpose of building track records and assisting with the marketing initiatives pertaining to our firm's new products. These seed capital investments are subject to market risk. Our risk management team oversees a seed hedging program that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, and in those cases we are exposed to market risk. In addition, we may be subject to basis risk in that we cannot always hedge with precision our market exposure and, as a result, we may be subject to relative spreads between market sectors. As a result, volatility in the capital markets may cause significant changes in our period-to-period financial and operating results.


We use various derivative instruments, including futures, forwards, swap and option contracts, in conjunction with our seed hedging program.  While in most cases broad market risks are hedged, our hedges are imperfect and some market risk remains. In addition, our use of derivatives results in counterparty risk (i.e., the risk that we may be exposed to credit-related losses in the event of non-performance by counterparties to these derivative instruments), regulatory risk (e.g., short selling restrictions) and cash/synthetic basis risk (i.e., the risk that the underlying positions do not move identically to the related derivative instruments).


The revenues generated by Bernstein Research ServicesWe may engage in strategic transactions that could pose risks.

As part of our business strategy, we consider potential strategic transactions, including acquisitions, dispositions, mergers, consolidations, joint venture partnerships and similar transactions, some of which may be adversely affected by circumstances beyondmaterial. These transactions, if undertaken, may involve various risks and present financial, managerial and operational challenges, including:.

•adverse effects on our control, including declines in brokerage transaction rates, declines in global market volumes, failureearnings if acquired intangible assets or goodwill become impaired;
•existence of unknown liabilities or contingencies that arise after closing;
•potential disputes with counterparties; and
•the possible need for us to settleincrease our trades by significant counterparties andfirm's leverage or, if we fund the effects of MiFID II.

Electronic, or “low-touch”, trading represents a significant percentage of buy-side trading activity and typically produces transaction fees that are significantly lower than thepurchase price of traditional full service fee rates. As a result, blended pricing throughouttransaction with AB Units or AB Holding Units, likely dilution to our industry is lower now than it was historically, and price declinesexisting unitholders.
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Acquisitions also pose the risk that any business we acquire may continue. In addition, fee rateslose customers or employees or could under-perform relative to expectations. Additionally, the loss of investment personnel poses the risk that we charge and charged by other brokers for brokerage services have historically experienced price pressure, andmay lose the AUM we expect these trendsexpected to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may not continue.

In addition, the failure or inability of any of our broker-dealer's significant counterparties to performmanage, which could expose us to substantial expenditures and adversely affect our revenues. For example, SCB LLC, as a memberresults of clearing and settlement organizations, would be required to settle open trades of any non-performing counterparty. This exposes us to the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Also, our ability to access liquidity in such situations may be limited by what our funding relationships are able to offer us at such times.operations.

We discuss the risks associated with the second installment of the Markets in Financial Instruments Directive II (“MiFID II”) below in this Item 1A.
The individuals, third-party vendors or issuers on whom we rely to perform services for us or our clients may be unable or unwilling to honor their contractual obligations to us.

We rely on various counterparties and other third-party vendors to augment our existing investment, operational, financial and technological capabilities, but the use of a third-party vendor does not diminish AB's responsibility to ensure that client and regulatory obligations are met. Default rates, credit downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress. Disruptions in the financial markets and other economic challenges may cause our counterparties and other third-party vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs and impair our ability to conduct business.

Weaknesses or failures within a third-party vendor's internal processes or systems, or inadequate business continuity plans, can materially disrupt our business operations. Also, third-party vendors may lack the necessary infrastructure or resources to effectively safeguard our confidential data. If we are unable to effectively manage the risks associated with such third-party relationships, we may suffer fines, disciplinary action and reputational damage.






We may not accurately value the securities we hold on behalf of our clients or our company investments.


In accordance with applicable regulatory requirements, contractual obligations or client direction, we employ procedures for the pricing and valuation of securities and other positions held in client accounts or for company investments. We have established a Valuation Committee, composedconsisting of senior officers and employees, which oversees pricing controls and valuation processes. If market quotations for a security are not readily available, the Valuation Committee determines a fair value for the security.


Extraordinary volatility in financial markets, significant liquidity constraints or our failure to adequately consider one or more factors when determining the fair value of a security based on information with limited market observability could result in our failing to properly value securities we hold for our clients or investments accounted for on our balance sheet. Improper valuation likely would result in our basing fee calculations on inaccurate AUM figures, our striking incorrect net asset values for company-sponsored mutual funds or hedge funds or, in the case of company investments, our inaccurately calculating and reporting our financial condition and operating results. Although the overall percentage of our AUM that we fair value based on information with limited market observability is not significant, inaccurate fair value determinations can harm our clients, create regulatory issues and damage our reputation.


We may not have sufficient information to confirm or review the accuracy of valuations provided to us by underlying external managers for the funds in which certain of our alternative investment products invest.


Certain of our alternative investment services invest in funds managed by external managers (“External Managers”) rather than investing directly in securities and other instruments. As a result, our abilities will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete, accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, we may not have sufficient information to confirm or review the accuracy of valuations provided to us by External Managers. In addition, we will be required to rely on External Managers’ compliance with any applicable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or to provide accurate information with respect to the investment could subject our alternative investment products to losses and cause damage to our reputation.
 
The quantitative models we use in certain of our investment services may contain errors, resulting in imprecise risk assessments and unintended output.


We use quantitative models in a variety of our investment services, generally in combination with fundamental research. These models are developed by senior quantitative professionals and typically are implemented by IT professionals. Our Model Risk Oversight Committee oversees the model governance framework and associated model review activities, which are then executed by our Model Risk Team. However, due to the complexity and large data dependency of such models, it is possible that errors in the models could exist and our controls could fail to detect such errors. Failure to detect errors could result in client losses and reputational damage.


The financial services industry is intensely competitive.

We may not always successfully manage actualcompete on the basis of a number of factors, including our investment performance for our clients, our array of investment services, innovation, reputation and potential conflicts of interest that ariseprice. By having a global presence, we often face competitors with more experience and more established relationships with clients, regulators and industry participants in our business.

Increasingly, we must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interestrelevant market, which could adversely affect our reputation,ability to expand. Furthermore, if we are unable to maintain and/or continue to improve our investment performance, our client flows may be adversely affected, which may make it more difficult for us to compete effectively.
Also, increased competition could reduce the demand for our products and services, which could have a material adverse effect on our financial condition, results of operations and business prospects. For additional information regarding competitive factors, see “Competition” in Item 1.




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Human Capital-related Risks

We may be unable to continue to attract, motivate and retain key personnel, and the cost to retain key personnel could put pressure on our adjusted operating margin.

Our business depends on our ability to attract, motivate and retain highly skilled, and often highly specialized, technical, investment, managerial and executive personnel, and there is no assurance that we will be able to do so.

The market for these professionals is extremely competitive. They often maintain strong, personal relationships with investors in our products and other members of the business community so their departure may cause us to lose client accounts or result in fewer opportunities to win new business, either of which factors could have a material adverse effect on our results of operations and business prospects.


Additionally, a decline in revenues may limit our ability to pay our employees at competitive levels, and maintaining (or increasing) compensation without a revenue increase, in order to retain key personnel, may adversely affect our adjusted operating margin. As a result, we remain vigilant about aligning our cost structure (including headcount) with our revenue base. For additional information regarding our compensation practices, see "Compensation Discussion and Analysis" in Item 11.

Our process of relocating our headquarters may not be executed as we envision.

We have proceduresannounced that we will establish our corporate headquarters in and controls thatrelocate approximately 1,250 jobs located in the New York metropolitan area to Nashville, Tennessee (for additional information, see “Relocation Strategy” in Item 7). Although the eventual impact on AB from this process is not yet known, the uncertainty created by these circumstances could have a significant adverse effect on AB’s ability to motivate and retain current employees. Further significant managerial and operational challenges could arise, such as ineffective transfer of institutional knowledge from current employees to newly-hired employees, if AB experiences significantly greater attrition among current employees than the firm anticipates in connection with the relocation and/or if the firm encounters more difficulty than expected in hiring qualified employees to help staff our Nashville headquarters.

Additionally, our estimates for both the transition costs and the corresponding expense savings relating to our headquarters relocation, which we discuss in more detail in “Relocation Strategy” in Item 7, are designedbased on our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs. If our assumptions turn out to identifybe inaccurate, our adjusted net revenues and mitigate conflicts of interest, including those designed to prevent the improper sharing of information. However, appropriately managing conflicts of interest is complex. Our reputationadjusted operating income could be damagedadversely affected.

Operational, Technology and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail, or appear to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.Cyber-related Risks


Technology failures and disruptions, including failures to properly safeguard confidential information, can significantly constrain our operations and result in significant time and expense to remediate, which could result in a material adverse effect on our results of operations and business prospects.


We are highly dependent on software and related technologies throughout our business, including both proprietary systems and those provided by third-party vendors. We use our technology to, among other things, obtain securities pricing information, process client transactions, store and maintain data, and provide reports and other services to our clients. Despite our protective measures, including measures designed to effectively secure information through system security technology and established and tested business continuity plans, we may still experience system delays and interruptions as a result of natural disasters, hardware failures,

software defects, power outages, acts of war and third-party failures. We cannot predict with certainty all of the adverse effects that could result from our failure, or the failure of a third party, to efficiently address and resolve these delays and interruptions. These adverse effects could include the inability to perform critical business functions or failure to comply with financial reporting and other regulatory requirements, which could lead to loss of client confidence, reputational damage, exposure to disciplinary action and liability to our clients.


Many of the software applications that we use in our business are licensed from, and supported, upgraded and maintained by, third-party vendors. A suspension or termination of certain of these licenses or the related support, upgrades and maintenance could cause temporary system delays or interruption. Additionally, technology rapidly evolves and we cannot guarantee that our competitors may not implement more advanced technology platforms for their products and services, which may place us at a competitive disadvantage and adversely affect our results of operations and business prospects.


Also, we could be subject to losses if we fail to properly safeguard sensitive and confidential information. As part of our normal operations, we maintain and transmit confidential information about our clients as well as proprietary information relating to
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our business operations. Although we take protective measures, our systems still could be vulnerable to cyber attack or other forms of unauthorized access (including computer viruses) that have a security impact, such as an authorized employee or vendor inadvertently or intentionally causing us to release confidential or proprietary information. Such disclosure could, among other things, allow competitors access to our proprietary business information and require significant time and expense to investigate and remediate the breach. Moreover, loss of confidential client information could harm our reputation and subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of revenues.


Any significant security breach of our information and cyber security infrastructure, as well as our failure to properly escalate and respond to such an incident, may significantly harm our operations and reputation.
It is critical that we ensure the continuity and effectiveness of our information and cyber security infrastructure, policies, procedures and capabilities to protect our computer and telecommunications systems and the data that reside on or are transmitted through them and contracted third-party systems. Although we take protective measures, including measures to effectively secure information through system security technology, our technology systems may still be vulnerable to unauthorized access, supply chain attacks, computer viruses or other events that have a security impact, such as an external attack by one or more cyber criminals (including phishing attacks attempting to obtain confidential information and ransomware attacks attempting to block access to a computer system until a sum of money is paid), which could materially harm our operations and reputation. Additionally, while we take precautions to password protect and encrypt our laptops and sensitive information on our other mobile electronic devices, if such devices are stolen, misplaced or left unattended, they may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly actions by us.
Furthermore, although we maintain a robust cyber security infrastructure and incident preparedness strategy, which we test periodically, we may be unable to respond, both internally and externally, to a cyber incident in a sufficiently expeditious manner. Any such failure could cause significant harm to our reputation and result in litigation, regulatory scrutiny and/or significant remediation costs.
Unpredictable events, including climate change, outbreak of infectious disease, natural disaster, dangerous weather conditions, technology failure, terrorist attack and political unrest, may adversely affect our ability to conduct business.


War, terrorist attack, political unrest, power failure, climate change, natural disaster and rapid spread of infectious diseasesdisease (such as the ongoing COVID-19 pandemic) could interrupt our operations by:


•causing disruptions in global economic conditions, thereby decreasing investor confidence and making investment products generally less attractive;
•inflicting loss of life;
•triggering large-scale technology failures or delays;
•breaching our information and cyber security infrastructure; and
•requiring substantial capital expenditures and operating expenses to remediate damage and restore operations.
Despite the contingency plans and facilities we have in place, including system security measures, information back-up and disaster recovery processes, our ability to conduct business, including in key business centers where we have significant operations, such as New York City, London, England, and Nashville, Tennessee, may be adversely affected by a disruption in the infrastructure that supports our operations and the communities in which they are located. This may include a disruption involving electrical, communications, transportation or other services we may use or third parties with which we conduct business. If a disruption occurs in one location and our employees in that location are unable to occupy our offices or communicate with or travel to other locations, our ability

to conduct business with and on behalf of our clients may suffer, and we may not be able to successfully implement contingency plans that depend on communication or travel. Furthermore, unauthorized access to our systems as a result of a security breach, the failure of our systems, or the loss of data could give rise to legal proceedings or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, and damage our reputation.


Our operations require experienced, professional staff. Loss of a substantial number of such persons or an inability to provide properly equipped places for them to work may, by disrupting our operations, adversely affect our financial condition, results of operations and business prospects. In addition, our property and business interruption insurance may not be adequate to compensate us for all losses, failures or breaches that may occur.


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Our own operational failures or those of third parties on which we rely, including failures arising out of human error, could disrupt our business, damage our reputation and reduce our revenues.


Weaknesses or failures in our internal processes or systems could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Our business is highly dependent on our ability to process, on a daily basis, large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal and regulatory standards.


Our obligations to clients require us to exercise skill, care and prudence in performing our services. Despite our employees being highly trained and skilled, the large number of transactions we process makes it highly likely that errors will occasionally occur. If we make a mistake in performing our services that causes financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, results of operations and business prospects.


The individuals, third-party vendors or issuers on whom we rely to perform services for us or our clients may be unable or unwilling to honor their contractual obligations to us.

We rely on various counterparties and other third-party vendors to augment our existing investment, operational, financial and technological capabilities, but the use of a third-party vendor does not diminish AB's responsibility to ensure that client and regulatory obligations are met. Default rates, credit downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress. Disruptions in the financial markets and other economic challenges may cause our counterparties and other third-party vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs and impair our ability to conduct business.

Weaknesses or failures within a third-party vendor's internal processes or systems, or inadequate business continuity plans, can materially disrupt our business operations. Also, third-party vendors may lack the necessary infrastructure or resources to effectively safeguard our confidential data. If we are unable to effectively manage the risks associated with such third-party relationships, we may suffer fines, disciplinary action and reputational damage.

We may not always successfully manage actual and potential conflicts of interest that arise in our business.

Increasingly, we must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect our reputation, results of operations and business prospects.

We have procedures and controls that are designed to identify and mitigate conflicts of interest, including those designed to prevent the improper sharing of information. However, appropriately managing conflicts of interest is complex. Our reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail, or appear to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions.

Maintaining adequate liquidity for our general business needs depends on certain factors, including operating cash flows and our access to credit on reasonable terms.

Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow AUM and other factors beyond our control. Our ability to issue public or private debt on reasonable terms may be limited by adverse market conditions, our profitability, our creditworthiness as perceived by lenders and changes in government regulations, including tax rates and interest rates. Furthermore, our access to credit on reasonable terms is partially dependent on our firm’s credit ratings.

Both Moody’s Investors Service, Inc. and Standard & Poor's Rating Service affirmed AB’s long-term and short-term credit ratings and indicated a stable outlook in 2020. Future changes in our credit ratings are possible and any downgrade to our ratings is likely to increase our borrowing costs and limit our access to the capital markets. If this occurs, we may be forced to incur unanticipated costs or revise our strategic plans, which could have a material adverse effect on our financial condition, results of operations and business prospects.




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An impairment of goodwill may occur.

Determining whether an impairment of the goodwill asset exists requires management to exercise a substantial amount of judgment. In addition, to the extent that securities valuations are depressed for prolonged periods of time and/or market conditions deteriorate, or if we experience significant net redemptions, our AUM, revenues, profitability and unit price will be adversely affected. Although the price of an AB Holding Unit is just one factor in the calculation of fair value, if AB Holding Unit price levels decline significantly, reaching the conclusion that fair value exceeds carrying value will, over time, become more difficult. In addition, control premiums, industry earnings multiples and discount rates are impacted by economic conditions. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and future cash flow projections, and may result in an impairment of goodwill. An impairment may result in a material charge to our earnings. For additional information about our impairment testing, see Item 7.

The insurance that we maintain may not fully cover all potential exposures.


We maintain professional liability, fidelity, cyber, property, casualty, business interruption and other types of insurance, but such insurance may not cover all risks associated with the operation of our business. Our coverage is subject to exclusions and limitations, including high self-insured retentions or deductibles and maximum limits and liabilities covered. In addition, from time to time, various types of insurance may not be available on commercially acceptable terms or, in some cases, at all. We can make no assurance that a claim or claims will be covered by our insurance policies or, if covered, will not exceed our available insurance coverage, or that our insurers will remain solvent and meet their obligations.
In the future, we may not be able to obtain coverage at current levels, if at all, and our premiums may increase significantly on coverage that we maintain. Also, we currently are party to certain joint insurance arrangements with subsidiaries of EQH. If our affiliates choose not to include us as insured parties under any such policies, we may need to obtain stand-alone insurance coverage, which could have coverage terms that are less beneficial to us and/or cost more.
Legal and Regulatory-related Risks

Our business is subject to pervasive, complex and continuously evolving global regulation, compliance with which involves substantial expenditures of time and money, and violation of which may result in material adverse consequences.


Virtually all aspects of our business are subject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws and regulations in the foreign jurisdictions in which our subsidiaries conduct business. If we violate these laws or regulations, we could be subject to civil liability, criminal liability or sanction, including restriction or revocation of our and our subsidiaries’ professional licenses or registrations, revocation of the licenses of our employees, censures, fines, or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a material adverse effect on our financial condition, results of operations and business prospects. A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanction, could require substantial expenditures of time and money and could potentially damage our reputation.


In recent years, global regulators have substantially increased their oversight of financial services. Some of the newly-adopted and proposed regulations are focused on investment management services. Others, while more broadly focused, nonetheless impact our business. Moreover, the adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will continue to affect, our business, including making our efforts to comply more expensive and time-consuming.


For example, in 2015 the Financial Supervisory Commission in Taiwan (“(the “FSC”) implemented as of January 1, 2015, new limits on the degree to which local investors can own an offshore investment product.  While certain exemptions have been available to us, should we not continue to qualify, the FSC’s rules could force some of our local resident investors to redeem their investments in our funds sold in Taiwan (and/or prevent further sales of those funds in Taiwan), some of which funds have local ownership levels

substantially above the FSC limits. This could lead to significant declines in our investment advisory and services fees and revenues earned from these funds.


In Europe, MiFID II, which became effective onin January 3, 2018, makes significant modifications to the manner in which European broker-dealers can be compensated for research. These modifications have reduced, and are believed to have significantly reduced, the overall research spend by European buy-side firms, which has decreased the revenues we derive from our European clients. Our European clients may continue to reduce their research budgets, which could result in a significant decline in our sell-side revenues.
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Also, while MiFID II is not applicable to firms operating outside of Europe, competitive and client pressures increasingly may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions. IfTo the extent that occurs, we would expect that research budgets from those clients will decrease further, which could result in an additional significant decline in our sell-side revenues. Additionally, these competitive and client pressures may result in our buy-side operation paying for research out of our own resources instead of through bundled trading commissions, which could increase our firm's expenses and decrease our operating income.


Additionally, in July 2017 the Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates the London Interbank Offered Rate, or “LIBOR,” as a “benchmark” or “reference rate” for various interest rate calculations, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of the LIBOR benchmark after 2021. In November 2020, the ICE Benchmark Administration Limited announced a plan to extend the date as of which most U.S. LIBOR values would cease being computed from December 31, 2021 to June 30, 2023. Although financial regulators and industry working groups have suggested alternative reference rates, global consensus on alternative rates is lacking and the process for amending existing contracts or instruments to transition away from LIBOR remains unclear. The elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates may adversely affect the amount of interest payable or interest receivable on certain of our firm's portfolio investments. These changes may also impact the market liquidity and market value of these portfolio investments. We are finalizing our global assessment of exposure in relation to funds utilizing LIBOR based instruments and benchmarks.  Further, we are prioritizing the mitigation of risks associated with the forecast changes to financial instruments and performance benchmarks referencing existing LIBOR rates, and concurrently any impact on AB portfolios and investment strategies.

Lastly, it also is uncertain how regulatory trends will further evolve, underboth in the current U.S. President's administration and abroad. For example, following the Brexit referendum in June 2016, a narrow majority of voters in athe U.K. referendum voted to exit's departure from the European Union (“Brexit”(the "EU"), but it remains unclear exactly how resulted in the U.K.’s status in relation leaving the EU Single Market on December 31, 2020. While the U.K. and the EU have agreed to a trade deal, which took effect on January 1, 2021, this deal does not include specific arrangements for financial services. Accordingly, since the European Union ("EU") will change if and when it ultimately leaves. Accordingly,start of 2021, our U.K.-based buy-side and sell-side subsidiaries are implementinghave implemented alternative arrangements in EU jurisdictions in order(utilizing AB's EU-based subsidiaries) to ensure continued operations in the Eurozone, includingEU Single Market. These arrangements are subject to potential change due to ongoing negotiations between the U.K. and the EU on future regulatory cooperation, and it is difficult to ascertain how any such changes may impact the ability of our continued abilityU.K.-based subsidiaries to market and sell various investment productsprovide services to EU-based clients in the Eurozone. In addition, any other changes in the composition of the EU’s member states may add further complexity to our global risks and operations.future.


We are involved in various legal proceedings and regulatory matters and may be involved in such proceedings in the future, any one or combination of which could have a material adverse effect on our reputation, financial condition, results of operations and business prospects.


We may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which allege significant damages, and we may be involved in additional matters in the future. Litigation is subject to significant uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, the litigation is in its early stages, or when the litigation is highly complex or broad in scope.


The financial services industry is intensely competitive.

We compete on the basis of a number of factors, including our investment performance for our clients, our array of investment services, innovation, reputation and price. By having a global presence, we often face competitors with more experience and more established relationships with clients, regulators and industry participants in the relevant market, which could adversely affect our ability to expand. Furthermore, if we are unable to maintain and/or continue to improve our investment performance, our client flows may be adversely affected, which may make it more difficult for us to compete effectively.
Also, increased competition could reduce the demand for our products and services, which could have a material adverse effect on our financial condition, results of operations and business prospects. For additional information regarding competitive factors, see “Competition” in Item 1.

Structure-related Risks


The partnership structure of AB Holding and AB limits Unitholders’ abilities to influence the management and operation of AB’s business and is highly likely to prevent a change in control of AB Holding and AB.


The General Partner, as general partner of both AB Holding and AB, generally has the exclusive right and full authority and responsibility to manage, conduct, control and operate their respective businesses, except as otherwise expressly stated in their respective Amended and Restated Agreements of Limited Partnership. AB Holding and AB Unitholders have more limited voting rights on matters affecting AB than do holders of common stock in a corporation. Both Amended and Restated Agreements of Limited Partnership provide that Unitholders do not have any right to vote for directors of the General Partner and that Unitholders only can vote on certain extraordinary matters (including removal of the General Partner under certain extraordinary circumstances). Additionally, the AB Partnership Agreement includes significant restrictions on the transfer of AB Units and provisions that have the practical effect of preventing the removal of the General Partner, which provisions are highly likely to prevent a change in control of AB’s management.


AB Units are illiquid and subject to significant transfer restrictions.


There is no public trading market for AB Units and we do not anticipate that a public trading market will develop. The AB Partnership Agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providing that any transfer that may cause AB to be classified as a “publicly traded partnership” (“PTP”) as defined in
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Section 7704 of the Internal Revenue Code of 1986, as amended (“(the “Code”), shall be deemed void and shall not be recognized by AB. In addition, AB Units are subject to significant restrictions on transfer, such as obtaining the written consent of AXA EquitableEQH and the General Partner pursuant to the AB Partnership Agreement. Generally, neither AXA EquitableEQH nor the General Partner will permit any transfer that it believes would create a risk that AB would be treated as a corporation for tax purposes. AXA EquitableEQH and the General Partner have implemented a transfer program that requires a seller to locate a purchaser and imposes annual volume restrictions on transfers. You may request a copy of the transfer program from our Corporate Secretary (corporate_secretary@alliancebernstein.com). Also, we have filed the transfer program as Exhibit 10.1510.07 to this Form 10-K.


Changes in the partnership structure of AB Holding and AB and/or changes in the tax law governing partnerships would have significant tax ramifications.


AB Holding, having elected under Section 7704(g) of the Code to be subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business, is a “grandfathered” PTP for federal income tax purposes. AB Holding is also subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB. In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management seeks to ensure that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. A “new line of business” includes any business that is not closely related to AB’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or uses more than 15% of its total assets in, the new line of business.


AB is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, AB is subject to the 4.0% UBT. Domestic corporate subsidiaries of AB, which are subject to federal, state and local income taxes, generally are included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Each of AB's non-U.S. corporate subsidiaries generally is subject to taxes in the foreign jurisdiction where it is located. If our business increasingly operates in countries other than the U.S., AB’s effective tax rate will increase as our international subsidiaries are subject to corporate taxes in the jurisdictions where they are located.


In order to preserve AB’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. If such units were to be considered readily tradable, AB would be subject to federal and state corporate income tax on its net income. Furthermore, as noted above, should AB enter into a substantial new line of business, AB Holding, by virtue of its ownership of AB, would lose its status as a grandfathered PTP and would become subject to corporate income tax as set forth above. If AB and AB Holding were to become subject to corporate income tax as set forth above, their net income and quarterly distributions to Unitholders would be materially reduced. For information about the significant restrictions on transfer of AB Units, see the risk factor immediately above.


If, pursuant to the Bipartisan Budget Act of 2015 ("2015 Act"), any audit by the Internal Revenue Service ("IRS") of our income tax returns for any of our taxable years beginning after December 31, 2017 results in any adjustments, the IRS may collect any resulting taxes, including any applicable penalties and interest, directly from us, in which case our net income and the cash available for quarterly Unitholder distributions may be substantially reduced.


Although the IRS, under current law, generally determines tax adjustments at the partnership level when it audits the income tax return of a partnership, the IRS, with respect to taxable years beginning on or before December 31, 2017, is required to collect any additional taxes, interest and penalties from the partnership's individual partners.  The 2015 Act modifies this procedure for audits of a partnership’s taxable years beginning after December 31, 2017 and, if a partnership meets certain requirements and makes a proper election, for audits of a partnership’s taxable years beginning before January 1, 2018. We may choose to make such an election if we receive a written notice of selection for examination for an eligible taxable year or if we file, on or after January 1, 2018, an administrative adjustment request for an eligible taxable year and otherwise qualify to make such an election.


Generally, we will have the ability to collect tax liability from our Unitholders in accordance with their percentage interests during the year under audit, but there can be no assurance that we will elect to do so or be able to do so under all circumstances. If we do not collect such tax liability from our Unitholders in accordance with their percentage interests in the tax year under audit, our net income and the available cash for quarterly distributions to current Unitholders may be substantially reduced.  Accordingly, our current Unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such Unitholders did not own Units during the tax year under audit. In particular, as a publicly traded partnership, our Partnership Representative

(as (as defined below) may, in certain instances, request that any “imputed underpayment” resulting from an audit be adjusted by amounts of certain of our passive losses. If we successfully make such a request, we would have to reduce suspended passive loss carryovers in a manner which is binding on the partners.


In August and December, 2018, the IRS issued final regulations providing rules relating to the operation
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For taxable years beginning after December 31, 2017, a "partnership representative" that we will be required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative (“(a “Partnership Representative”) and we will no longer have a “tax matters partner.” The Partnership Representative will have the sole authority to act on our behalf for purposes of, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS. If we do not make such a designation, the IRS can select any person as the Partnership Representative. Any actions taken by us or by the Partnership Representative on our behalf with respect to, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS, will be binding on us and our unitholders.Unitholders.


In addition, the Final Regulations clarified the procedure under which a partnershipfor taxable years beginning after December 31, 2017, we may, electbut are not required to, make an election to require its unitholdersour Unitholders to take into account on their income tax returns an audit adjustment made to the partnership’sour income tax items.  We may, but are not required to, make suchitems, also known as a “push-out” election. In addition,Also, a partnership that is a partner of another partnership may elect to have its unitholders take an audit adjustment of the lower-tier partnership into account (i.e., the upper-tier partnership may push adjustments received from the lower-tier partnership through to the partners of the upper-tier partnership). The upper-tier partnership must timely complete the “push-out” of the adjustment in order for it to be effective. Under the Final Regulations, suchSuch election must be made by the extended due date for the return for the adjustment year of the audited partnership, regardless of whether the audited partnership is required to file a return for the adjustment year or timely files a request for an extension for its return.  The Final Regulations set forthThere are a number of requirements to make a “push-out” election and we may be unable or unwilling to comply with such requirements. If we do not make a “push-out” election, we would be required to pay any tax resulting from the adjustments to our income tax items, and the cash available for distribution to unitholders would be substantially reduced.


Non-U.S. Unitholdersunitholders may be subject to a 10% withholding tax on the sale of their AB Units or AB Holding Units, which could reduce the value of such Units.


Under the 2017 Tax Cuts and Jobs Act, gainGain or loss from the sale or exchange of partnership units after November 27, 2017 by a non-U.S. unitholder are treated as effectively connected with a U.S. trade or business to the extent that the non-U.S. unitholder would have had effectively connected gain or loss on a hypothetical sale by the partnership of all of its assets at fair market value as of the date of the sale or exchange of the partnership units. The Tax Cuts and Jobs Act also imposed certain withholding requirements for the sale of partnership units by a non-U.S. unitholder and authorized the IRS to issue regulations to carry out the withholding rules in the case of publicly traded partnerships.  No such regulations have been issued.  Instead,The requirement to withhold on amounts realized in December 2017,connection with the IRS issued a notice suspending the application of these new withholding rules to thesale, exchange or disposition of certain interests in a publicly traded partnership units until(including by brokers) is suspended under Notice 2018-08 for transfers that occur before January 1, 2022, and therefore no withholding will apply. On November 30, 2020, the IRS issued related guidance. We cannot predict when or if the IRS will issue suchpublished final regulations or other guidance or what the regulations or other guidance will say. If the guidance generally subjects(the "1446 Final Regulations") that address withholding tax and information reporting with respect to interests in publicly traded partnerships to the same rules as other partnerships, then we would be subject to two different withholding regimes. Under the first regime, the recipient of the units being transferred generally will be required to withhold 10% of the amount realized by the transferring unitholder, unless the transferring unitholder provides the recipient unitholder with either proper documentation proving that the transferring unitholder is not a nonresident alien individual or foreign corporation, or with certain other statements or certifications describedengaged in IRS Notice 2018-29 that limit or relieve the recipient unitholder’s withholding obligation. Under the second regime, if the recipient unitholder fails to properly withhold, then we generally would be obligated to deduct and withhold from distributions to the recipient unitholder a tax in an amount equal to the amount the transferring unitholder failed to withhold (plus interest). Whether or not these withholding rules apply does not affect the characterization of gain or loss from the sale or exchange of partnership units by a non-U.S. unitholder as effectively connected with a U.S. trade or business. The 1446 Final Regulations end the suspension of withholding on the sale, exchange or disposition of certain interests in a publicly traded partnership, effective January 1, 2022, but place the primary responsibility for such withholding obligations for transfers effected through brokers on the broker, and not the publicly trade partnership. However, a publicly traded partnership may be liable for any under-withholding by a broker that relies on a qualified notice for which the publicly traded partnership failed to make a reasonable estimate of the amounts required for determining the applicability of the "ten percent exception." The "ten percent exception" applies if, either (1) the publicly traded partnership was not engaged in a U.S. trade or business during a specified period of time, or (2) upon a hypothetical sale of the publicly traded partnership's assets at fair market value, (i) the amount of net gain that would have been effectively connected with the conduct of a trade or business within the United States would be less than 10 percent of the total net gain, or (ii) no gain would have been effectively connected with the conduct of a trade or business in the United States.


We may be liable for any under-withholding by nominees on our Unitholder distributions after January 1, 2022.

Under the 1446 Final Regulations, for distributions made after January 1, 2022, a publicly traded partnership must post on its primary public website (and keep accessible for 10 years), and deliver to any registered holder that is a nominee, a qualified notice that states the amount of a distribution that is attributable to each type of income group specified in the 1446 Final Regulations. If the qualified notice is incorrect such that it causes a broker to under-withhold with respect to an amount in excess of cumulative net income, the publicly traded partnership is liable for any under-withholding on such amount.

Item 1B.Unresolved Staff Comments
We have no unresolved comments from the staff of the SEC to report.

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Item 2.Properties


Our principal executive offices located at 1345 Avenue of the Americas, New York, New York are occupied pursuant to a lease expiring in 2024. At this location, we currently lease 992,043999,963 square feet of space, within which we currently occupy approximately 523,373512,284 square feet of space and have sub-let (or are seeking to sub-let) approximately 468,670487,679 square feet of space. We also lease space at one other location in New York City with a lease expiration of December 31, 2019.
 
In addition, we lease approximately 229,147 square feet of space at One North Lexington, White Plains, New York under a lease expiring in 2021 with options to extend to 2031.2021. At this location, we currently do not occupy approximately 69,013 square feet ofany space and have sub-let (or are seeking to sub-let) approximately 160,134the full 229,147 square feet of space.


We entered into a 20-year lease agreement in New York, New York, at 66 Hudson Boulevard, for 190,000 square feet that is expected to commence in 2024. During the fourth quarter of 2020, we exercised an option whereby we were able to reduce our committed footprint by half a floor, reducing our square feet commitment from 190,000 square feet to approximately 166,000 square feet.

We entered into short-term leaseleases for office space in Nashville, Tennessee during the construction of our new corporate headquarters at 501 Commerce Street, which we will vacate upon completion of 501 Commerce Street.


We entered into a 15-year lease agreement in Nashville, Tennessee, at 501 Commerce Street, for 205,000218,976 square feet that is expected to commencecommenced in Julythe fourth quarter of 2020.
 
We also lease 92,06750,792 square feet of space in San Antonio, Texas under a lease expiring in 2019April 30, 2029 with options to extend to 2029.  At this location, we currently occupy approximately 59,004 square feet of space and have sub-let approximately 33,063 square feet of space. We have renewed 50,792 square feet for ten years, expiring in 2029.through 2039. 
 
In addition, we lease less significant amounts of space in 2123 other cities in the United States.
 
Our subsidiaries lease space in 2830 cities outside the United States, the most significant of which are in London, England, under a lease expiring in 2022, and in Hong Kong, China, under a lease expiring in 2027. In London, we currently lease 65,488 square feet of space, within which we currently occupy approximately 54,746 square feet of space and have sub-let approximately 10,742 square feet of space. In Hong Kong, we currently lease and occupy 35,878 square feet of space.


Item 3.Legal Proceedings


With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.


WeAB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that we could incur losses pertaining to these matters, but currently we cannot currently estimate any such losses.


Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period.


Item 4.Mine Safety Disclosures
Not applicable.

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PART II
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities


Market for AB Holding Units and AB Units; Cash Distributions


AB Holding Units are listed on the NYSE and trade publicly under the ticker symbol “AB”. There is no established public trading market for AB Units, which are subject to significant restrictions on transfer.  For information about these transfer restrictions, see “Structure-related Risks” in Item 1A.


AB Holding’s principal source of income and cash flow is attributable to its limited partnership interests in AB.


Each of AB Holding and AB distributes on a quarterly basis all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement and the AB Partnership Agreement, respectively, to its Unitholders and the General Partner. For additional information concerning distribution of Available Cash Flow by AB Holding, see Note 2 to AB Holding’s financial statements in Item 8. For additional information concerning distribution of Available Cash Flow by AB, see Note 2 to AB’s consolidated financial statements in Item 8.


On December 31, 2018, the last trading day during 2018,2020, the closing price of an AB Holding Unit on the NYSE was $27.32$33.77 per Unit. On December 31, 2018,2020, there were (i) 929974 AB Holding Unitholders of record for approximately 79,00081,000 beneficial owners, and (ii) 381378 AB Unitholders of record (we do not believe there are substantial additional beneficial owners).


Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities


We did not engage in any unregistered sales of our securities during the years ended December 31, 2018, 20172020, 2019 and 2016.2018.


Purchases of Equity Securities by the Issuer and Affiliated Purchasers


Each quarter since the third quarter of 2011, AB has implemented plans to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act. The plan adopted during the fourth quarter of 20182020 expired at the close of business on February 12, 2019.10, 2021.  AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under the firm’s incentive compensation award program and for other corporate purposes. For additional information about Rule 10b5-1 plans, see “Units Outstanding” in Item 7.


AB Holding Units bought by us or one of our affiliates during the fourth quarter of 20182020 are as follows:


Issuer Purchases of Equity Securities
PeriodTotal
Number of
AB Holding
Units
Purchased		Average
Price Paid
Per AB
Holding Unit,
net of
Commissions		Total
Number of
AB Holding
Units
Purchased as
Part of
Publicly
Announced
Plans or
Programs		Maximum
Number (or
Approximate
Dollar Value)
of AB
Holding
Units that
May Yet Be
Purchased
Under the
Plans or
Programs
10/1/20-10/31/20(1)(2)
109,738 $27.95 — — 
11/1/20-11/30/20(1)(2)
490,480 30.97 — — 
12/1/20-12/31/20(1)(2)
2,343,310 32.58 — — 
Total2,943,528 32.14 — — 

(1)During the fourth quarter of 2020, we purchased 2,221,913 AB Holding Units from employees to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards.
(2)During the fourth quarter of 2020, we purchased 721,615 AB Holding Units on the open market pursuant to a Rule 10b5-1 plan to help fund anticipated obligations under our incentive compensation award program.
30
 
Total
Number of
AB Holding
Units
Purchased
 
Average
Price Paid
Per AB
Holding Unit,
net of
Commissions
 
Total
Number of
AB Holding
Units
Purchased as
Part of
Publicly
Announced
Plans or
Programs
 
Maximum
Number (or
Approximate
Dollar Value)
of AB
Holding
Units that
May Yet Be
Purchased
Under the
Plans or
Programs
Period       
10/1/18-10/31/18(1)
632,466
 $29.59
 —
 —
11/1/18-11/30/18(1)
881,840
 29.56
 —
 —
12/1/18-12/31/18(1)
4,973,748
 28.16
 —
 —
Total6,488,054
 $28.49
 —
 —

(1)During the fourth quarter of 2018, we purchased 2,781,168 AB Holding Units from employees to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards.
(2)During the fourth quarter of 2018, we purchased 3,706,886 AB Holding Units on the open market pursuant to a Rule 10b5-1 plan to help fund anticipated obligations under our incentive compensation award program.


AB Units bought by us or one of our affiliates during the fourth quarter of 20182020 are as follows:


Issuer Purchases of Equity Securities 
PeriodTotal Number
of
AB
Units
Purchased		Average
Price Paid
Per
AB
Unit, net of
Commissions		Total
Number of
AB
Units Purchased as
Part of
Publicly
Announced
Plans or
Programs		Maximum
Number (or
Approximate
Dollar Value)
of AB
Units that
May Yet Be
Purchased
Under the
Plans or
Programs
10/1/20-10/31/20— — — — 
11/1/20-11/30/20— — — — 
12/1/20-12/31/20(1)
800 32.57 — — 
Total800 $32.57 — — 

(1)During December 2020, we purchased 800 AB Units in a private transaction.

31
 
Total Number
of
AB
Units
Purchased
 
Average
Price Paid
Per
AB
Unit, net of
Commissions
 
Total
Number of
AB
Units Purchased as
Part of
Publicly
Announced
Plans or
Programs
 
Maximum
Number (or
Approximate
Dollar Value)
of AB
Units that
May Yet Be
Purchased
Under the
Plans or
Programs
Period       
10/1/18-10/31/18—
 $—
 —
 —
11/1/18-11/30/18—
 —
 —
 —
12/1/18-12/31/18800
 29.78
 —
 —
Total800
 $29.78
 —
 —

(1)During December 2018, we purchased 800 AB Units in a private transaction.


Item 6.Selected Financial Data
Selected Consolidated Financial Data
 
Years Ended December 31,(1)
 2018 2017 2016 2015 2014
 (in thousands, except per unit amounts and unless otherwise indicated)
INCOME STATEMENT DATA: 
Revenues:         
Investment advisory and services fees$2,362,211
 $2,201,305
 $1,933,471
 $1,973,837
 $1,958,250
Bernstein research services439,432
 449,919
 479,875
 493,463
 482,538
Distribution revenues418,562
 412,063
 384,405
 427,156
 444,970
Dividend and interest income98,226
 71,162
 46,939
��24,872
 22,322
Investment gains (losses)2,653
 92,102
 93,353
 3,551
 (9,076)
Other revenues98,676
 97,135
 99,859
 101,169
 108,788
Total revenues3,419,760
 3,323,686
 3,037,902
 3,024,048
 3,007,792
Less: interest expense52,399
 25,165
 9,123
 3,321
 2,426
Net revenues3,367,361
 3,298,521
 3,028,779
 3,020,727
 3,005,366
          
Expenses: 
        
Employee compensation and benefits:         
Employee compensation and benefits1,378,811
 1,313,469
 1,229,721
 1,267,926
 1,265,664
Promotion and servicing: 
    
    
Distribution-related payments427,186
 411,467
 363,603
 384,425
 404,213
Amortization of deferred sales commissions21,343
 31,886
 41,066
 49,145
 41,508
Trade execution, marketing, T&E and other222,630
 213,275
 216,542
 232,023
 233,417
General and administrative: 
  
  
    
General and administrative448,996
 481,488
 426,147
 431,635
 426,960
Real estate charges7,160
 36,669
 17,704
 998
 52
Contingent payment arrangements(2,219) 267
 (20,245) (5,441) (2,782)
Interest on borrowings10,359
 8,194
 4,765
 3,119
 2,797
Amortization of intangible assets27,781
 27,896
 26,311
 25,798
 24,916
Total expenses2,542,047
 2,524,611
 2,305,614
 2,389,628
 2,396,745
Operating income825,314
 773,910
 723,165
 631,099
 608,621
Income taxes45,816
 53,110
 28,319
 44,797
 44,304
Net income779,498
 720,800
 694,846
 586,302
 564,317
Net income of consolidated entities attributable to non-controlling interests21,910
 58,397
 21,488
 6,375
 456
Net income attributable to AB Unitholders$757,588
 $662,403
 $673,358
 $579,927
 $563,861
Basic net income per AB Unit$2.79
 $2.46
 $2.48
 $2.11
 $2.07
Diluted net income per AB Unit$2.78
 $2.45
 $2.47
 $2.10
 $2.07
Operating margin(2)
23.9% 21.7% 23.2% 20.7% 20.2%
CASH DISTRIBUTIONS PER AB UNIT(3)
$2.96
 $2.57
 $2.15
 $2.11
 $2.08
BALANCE SHEET DATA AT PERIOD END: 
  
  
  
  
Total assets$8,789,098
 $9,282,734
 $8,741,158
 $7,433,721
 $7,375,621
Debt$546,267
 $565,745
 $512,970
 $581,700
 $486,156
Total capital$3,916,209
 $4,063,304
 $4,068,189
 $4,017,221
 $4,084,840
ASSETS UNDER MANAGEMENT AT PERIOD END (in millions)$516,353
 $554,491
 $480,201
 $467,440
 $474,027
 Years Ended December 31,
 20202019201820172016
 (in thousands, except per unit amounts and unless otherwise indicated)
INCOME STATEMENT DATA:
Revenues:
Investment advisory and services fees$2,595,436 $2,472,044 $2,362,211 $2,201,305 $1,933,471 
Bernstein research services459,744 407,911 439,432 449,919 479,875 
Distribution revenues529,781 455,043 418,562 412,063 384,405 
Dividend and interest income50,923 104,421 98,226 71,162 46,939 
Investment (losses) gains(16,401)38,659 2,653 92,102 93,353 
Other revenues104,703 97,559 98,676 97,135 99,859 
Total revenues3,724,186 3,575,637 3,419,760 3,323,686 3,037,902 
Less: interest expense15,650 57,205 52,399 25,165 9,123 
Net revenues3,708,536 3,518,432 3,367,361 3,298,521 3,028,779 
Expenses:  
Employee compensation and benefits:
Employee compensation and benefits1,494,198 1,442,783 1,378,811 1,313,469 1,229,721 
Promotion and servicing:  
Distribution-related payments569,283 487,965 427,186 411,467 363,603 
Amortization of deferred sales commissions27,355 15,029 21,343 31,886 41,066 
Trade execution, marketing, T&E and other189,787 219,860 222,630 213,275 216,542 
General and administrative: 
General and administrative485,544 484,750 448,996 481,488 426,147 
Real estate charges5,526 3,324 7,160 36,669 17,704 
Contingent payment arrangements1,855 (510)(2,219)267 (20,245)
Interest on borrowings6,180 13,035 10,359 8,194 4,765 
Amortization of intangible assets21,372 28,759 27,781 27,896 26,311 
Total expenses2,801,100 2,694,995 2,542,047 2,524,611 2,305,614 
Operating income907,436 823,437 825,314 773,910 723,165 
Income taxes45,653 41,754 45,816 53,110 28,319 
Net income861,783 781,683 779,498 720,800 694,846 
Net (loss) income of consolidated entities attributable to non-controlling interests(4,169)29,641 21,910 58,397 21,488 
Net income attributable to AB Unitholders$865,952 $752,042 $757,588 $662,403 $673,358 
Basic net income per AB Unit$3.19 $2.78 $2.79 $2.46 $2.48 
Diluted net income per AB Unit$3.19 $2.78 $2.78 $2.45 $2.47 
Operating margin(1)
24.6 %22.6 %23.9 %21.7 %23.2 %
CASH DISTRIBUTIONS PER AB UNIT(2)
$3.20 $2.82 $2.96 $2.57 $2.15 
BALANCE SHEET DATA AT PERIOD END:  
Total assets$9,697,840 $8,706,092 $8,789,098 $9,282,734 $8,741,158 
Debt$675,000 $560,000 $546,267 $565,745 $512,970 
Total capital$4,111,523 $4,017,101 $3,916,209 $4,063,304 $4,068,189 
ASSETS UNDER MANAGEMENT AT PERIOD END (in millions)$685,923 $622,915 $516,353 $554,491 $480,201 
(1)
Certain prior-year amounts have been reclassified to conform to our 2018 presentation; see Note 2 to AB's financial statements in Item 8 for a discussion of reclassifications.
(2)Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.
(3) (1)Operating income excluding net (loss) income attributable to non-controlling interests as a percentage of net revenues.
(2) Cash distributions per AB unitUnit reflect the impact of AB's non-GAAP adjustments. Refer to Item 7 for additional information concerning our non-GAAP adjustments.



32
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Percentage change figuresImpact of COVID-19
General Economic Conditions
During the first quarter of 2020, COVID-19 significantly impacted the global economy. The impact has been profound, has continued through the fourth quarter of 2020 and is likely to persist for months to come. While many businesses have re-opened, vaccinations have begun and leading economic indicators are calculated usingshowing signs of improvement, the overall extent and duration of COVID-19's impact on businesses and economic activity generally remains unclear. A recession in the near term remains possible. Economic effects from COVID-19, which have impacted virtually all countries and industries, include:
•Many small and large businesses being forced to interrupt their operations and as a result, lay off employees or even close;
•The re-opening and subsequent shuttering again of certain businesses in various countries around the world;
•Temporary large-scale population lock-downs, domestic and international travel restrictions and social-distancing measures were implemented, driving sharp declines in consumer and business spending. Further, while many businesses have re-opened, some are only allowing limited capacity, imposing social distancing restrictions and providing limited hours of operation, and while consumer spending has improved during the second half of 2020, uncertainty remains;
•Schools, many of which were shuttered during the first quarter, have allowed students to return to in-person instruction, but the constant concern and uncertainty of whether an outbreak may occur, have forced many schools to re-implement remote instruction, creating significant strain and uncertainty for working parents, which may slow or reverse the economicrecovery;
•Significant declines and increased volatility impacted global financial markets during the first quarter, including 23.2% and 20.0% declines in the Dow Jones Industrial Average (“Dow”) and S&P 500 Index (“S&P”), respectively. Although the financial markets recovered their first quarter losses to new highs in the months since, the prospect of continued volatility remains, especially given the uncertainty surrounding the continued economic effects of the virus (please see "Market Environment" below for additional details).
•The initial distribution of multiple COVID-19 vaccinations was initiated in the later part of the fourth quarter, but the speed, selective nature and logistical challenges of distribution, and the concerns in some communities around the safety and efficacy of the vaccine, have caused turmoil for many, further heightening the anxiety around the virus.

Governments around the world have responded to COVID-19 with economic stimulus measures, including a $2 trillion emergency relief bill passed in the U.S during the first quarter of 2020 and an additional $900 billion in aid passed during the fourth quarter of 2020. Similar fiscal stimulus was passed by many governments around the world. These measures and possible additional stimulus and aid measures are intended to steady businesses and consumers until economic activity meaningfully recovers. The timing and magnitude of any such recovery, however, remains uncertain.
Various countries around the world have continued to experience surges in the rates of COVID-19 infections, which are likely the result of greatly increased social interactions, including at colleges and universities, after re-opening of economies, as well as more contagious strains of the virus. As a result, several countries have paused the continued progression of their re-openings or re-imposed closing mandates on certain businesses, such as bars, restaurants and entertainment venues. These circumstances may adversely affect consumer sentiment and the pace of business re-openings, and they also may delay any economic recovery.
AB Impact
At the initial onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., the U.K., Hong Kong, Shanghai, Singapore and Taiwan. We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which has remained in place (except in our Asia offices, most of which have reopened) throughout the second, third and fourth quarters, to ensure operating continuity for all critical functions. We also instituted a notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and advise of key developments. Additionally, we continue to monitor communications from the World Health Organization and the U.S. Centers for Disease Control and Prevention to ensure we have current information.
33
We have continued to enhance our technology, which has increased the effectiveness of our remote work force. We have also continued to enhance our virtual programs to support business functions, such as training on cybersecurity and enhancements to our existing technology platforms. There has been a heightened focus on the emotional well-being of our employees, and we have provided regular touch points with employees through virtual town halls and management communications. Additionally, we have maintained regular communications and updates on the virus and the Company's response, which are posted on the Company's internal website, to ensure transparent communication with our employees. If any of our employees test positive for COVID-19 or interact with someone who has the virus, they are required to contact AB immediately for support and contact-tracing.
We continue to consider, and in some cases methodically implement, return to office programs for our U.S., European and Asia offices. However, we continue to monitor the daily evolution of the crisis in order to ensure the health and safety of our employees remains our top priority. We will modify our return to office plans, as needed, to ensure the safety of our employees and to ensure that the highest safety and cleanliness protocols are followed. We believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees working remotely.
Asset managers, such as AB, rely heavily on the performance of the financial markets largely to determine assets under management rounded(“AUM”) and revenues. Our results during the first quarter of 2020 were strong, which was primarily a reflection of financial market conditions during January and February, which were not adversely affected by COVID-19. Market conditions deteriorated dramatically during March, which negatively impacted our performance in that month. Financial markets, and hence our performance, rebounded during the ensuing months, primarily due to a U.S. Federal Government stimulus package and U.S. Treasury programs, which were instituted during March 2020 and throughout the second quarter. These programs renewed confidence in the financial markets by introducing liquidity through government purchasing of financial instruments. As various states and countries around the world eased restrictions on business and lockdown protocols during the second quarter and increasingly throughout the third and fourth quarters, increases in consumer spending, decreases in the unemployment rate and improvement in other leading economic indicators have stimulated domestic and global financial market performance. As a result of these developments, our AUM has increased in the second, third and fourth quarters. However, as U.S. states and countries globally have continued to ease restrictions, there has been a resurgence in the spread of the virus, causing certain states and countries to, among other things, shutter some businesses again or impose new social distancing restrictions. As a result, market volatility continues.
The economic impact of COVID-19 and any additional declines in the financial markets could have a significant adverse effect on our AUM and revenues, particularly if economic activity does not continue to recover. Although countries throughout the world continue to grapple with re-opening their economies, this will continue to be a gradual process, and there is a significant risk that the opening process may be further interrupted if infection rates increase. Also, although unemployment rates have declined, they are still considered high and any reluctance of consumers to resume spending will do long-term damage to the nearest millionglobal economy, which would have an adverse effect on our business. Additionally, as most of our workforce is working remotely, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions.
Ultimately, the return to normal business and financial statement amounts roundedeconomic activity will likely require the broad application of effective vaccines. Although the distribution of multiple vaccines was initiated towards the end of the fourth quarter, the speed, selective nature of those who are eligible to receive the nearest thousand.vaccination, as well as logistical challenges regarding availability and distribution of the vaccines, could mean many months until the general population has been vaccinated.
Executive Overview
Percentage change figures are calculated using assets under management rounded to the nearest million and financial statement amounts rounded to the nearest thousand.
Our total assets under management ("AUM") as of December 31, 20182020 were $516.4$685.9 billion, down $38.1up $63.0 billion, or 6.9%10.1%, during 2018.2020. The decreaseincrease was driven primarily by market depreciationappreciation of $30.0$65.4 billion, partially offset by net outflows of $2.6 billion (due to Private Wealth Management net outflows of $2.0 billion and Retail net outflows of $1.6 billion, offset by Institutional net inflows of $1.0 billion). Excluding AXA's redemption of low-fee fixed income mandates of $11.8 billion, the firm generated net inflows of $9.2 billion in 2020.
Institutional AUM increased $32.9 billion, or 11.6%, to $315.6 billion during 2020, primarily due to market appreciation of $30.5 billion and net outflowsinflows of $8.1 billion (primarily due to Institutional outflows of $10.0 billion).
Institutional AUM decreased $23.0 billion, or 8.5%, to $246.3 billion during 2018, due to market depreciation of $13.2 billion and net outflows of $10.0$1.0 billion. Gross sales increased $12.7$13.8 billion, (of which $7.4 billion related to Customized Retirement Strategies ("CRS") fundings) from $13.4$17.1 billion in 20172019 to $26.1$30.9 billion in 2018.2020. Redemptions and terminations increased $18.6$11.3 billion, (of which $14.1 billion related to CRS redemptions) from $11.5$12.0 billion in 20172019 to $30.1$23.3 billion in 2018.2020. Excluding AXA's redemption of low-fee fixed income mandates of $11.8 billion, institutional net inflows were $12.8 billion in 2020.
Retail AUM decreased $12.1increased $26.1 billion, or 6.3%10.9%, to $180.8$265.3 billion during 2018,2020, primarily due to market depreciationappreciation of $12.3$28.1 billion, and flatpartially offset by net flows.outflows of $1.6 billion. Gross sales increased $0.4$3.6 billion, from $53.8$75.3 billion in 20172019 to $54.2 $78.9
34
billion in 2018.2020. Redemptions and terminations increased $7.9$25.5 billion, from $38.6$44.0 billion in 20172019 to $46.5$69.5 billion in 2018.2020, due to record first quarter 2020 redemptions, reflecting the financial market sell-off in March amidst the onset of COVID-19.

Private Wealth Management AUM decreased $3.0increased $4.0 billion, or 3.2%3.9%, to $89.3$105.0 billion during 2018,2020, primarily due to market depreciationappreciation of $4.5$6.8 billion, partially offset by net inflowsoutflows of $1.9$2.0 billion. Gross sales increased $2.0$3.0 billion, from $11.5$11.3 billion in 20172019 to $13.5$14.3 billion in 2018.2020. Redemptions and terminations increased $0.4$4.1 billion, from $10.6$12.4 billion in 20172019 to $11.0$16.5 billion in 2018.2020.
Bernstein Research Services revenue decreased $10.5increased $51.8 million, or 2.3%12.7%, in 2018.2020. The decreaseincrease was driven by a reduction in commission rates due to higher market volatility, particularly between March and June 2020, primarily as a result of COVID-19, which led to higher customer activity and greater global trading volumes. We expect customer activity and trading volumes to gradually decrease in 2021 and to normalize in 2022, as the unbundlingvolatility surrounding COVID-19 begins to decline. Any decreases in customer activity and trading volumes will have a corresponding effect on Bernstein Research services revenue. Furthermore, all of research services and a volume mix shift to lower fee electronic trading across all regions, partially offset by a weaker U.S. dollar.2020 reflects the inclusion of revenues from our acquisition of Autonomous Research ("Autonomous"), which closed on April 1, 2019.
Our 20182020 net revenues of $3.4$3.7 billion increased $0.1 billion,$190.1 million, or 2.1%5.4%, compared to the prior year's net revenues of $3.3 billion.revenues. The most significant contributors to the increase were higher base advisory fees of $137.5$90.4 million, higher performance-based fees of $23.4 million and higher distribution revenues of $6.5$74.7 million, offset by lower investment gains revenue of $89.4 million and lowerhigher Bernstein Research Services revenue of $10.5$51.8 million and higher performance-based fees of $33.0 million, partially offset by higher investment losses of $55.1 million and lower net dividend and interest income of $11.9 million. Our operating expenses of $2.5$2.8 billion increased $17.4$106.1 million, or 0.7%3.9%, compared to the prior year's expenses. The increase primarily was due to higher promotion and servicing expenses of $63.6 million, higher employee compensation and benefits of $65.3$51.4 million and higher promotion and servicing expenses of $14.5 million, offset by lower general and administrative expenses (excluding(including real estate charges) of $32.5$3.0 million, partially offset by lower amortization of intangible assets of $7.4 million and lower real estate chargesinterest on borrowings of $29.5$6.9 million. Our operating income increased $51.4$84.0 million, or 6.6%10.2%, to $825.3$907.4 million from $773.9$823.4 million in 20172019 and our operating margin increased from 21.7%22.6% in 20172019 to 23.9%24.6% in 2018.2020.
Market Environment
GlobalDespite 2020 being a year marked by a global pandemic, record-breaking recession and unemployment levels, and a contentious U.S. presidential election, equity markets finished lower in 2018, the result of a fourth quarter sell-off driven by investor concerns over rising U.S. interest rates, a slowdown in European business confidence, weaker Chinese growth and rising geopolitical uncertainty, including Brexit implementation and ongoing trade tensions between the U.S. and China. Global fixed income markets were mixed forclosed the year with higher returnssolid gains. The S&P 500, Dow Jones Industrial Average and Nasdaq each rallied for less-risky government bonds and negative credit market returns.most of the fourth quarter, finishing the year in positive territory. In the U.S., while tax cuts enacted at the endpresidential election passed with a market-friendly outcome, the distribution of 2017 helped spur growthmultiple COVID-19 vaccines was initiated and corporate earnings in 2018, the benefit may not continue throughout 2019, and investors are focused on the lengthunemployment rate continued to decline. Meanwhile, after months of the economic cycle. The U.S. Federal Reserve announced its fourth interest rate increase in December, as expected, but revised its guidance on the number of rate hikes in 2019 from three to two. Oil prices fell sharplydeadlock, a COVID-19 relief package was passed in the fourth quarter, which, when combinedconsisting of direct payments, unemployment benefits and small business aid. However, even with higherthe increasing likelihood of COVID-19 vaccines potentially boosting activity in 2021, significant slack in the economy and labor market by the end of this year are likely. As a result, the U.S. Federal Reserve will likely keep interest rates near zero as the economy improves.

In the U.K., COVID-19 and slowing growth, could be problematic for some emerging markets. In Europe, the Central Bank ended its quantitative easing program in December despite the slowdown in growth, and ongoingBrexit uncertainty around Brexit negotiations weighed on business and consumer confidenceresulted in the United Kingdom.worst performing year for its equity market since the 2008 financial crisis. However, with a Brexit deal reached in the final days of 2020 between the U.K. and the E.U. and the distribution of a COVID-19 vaccine, the U.K. economy may rebound in 2021. The Bank of England is likely to keep rates on hold during the recovery phase. In China, monetarythe economy has returned to almost pre-pandemic output levels. Chinese efforts to re-center the economy on a consumer-led model are expected to continue and fiscal policy is easingwill likely remain supportive through 2021. More stimulus may be announced in responsethe first quarter of 2021 as the government continues to slowing growth and U.S. trade tariff headwinds.
support consumption. While the weakeconomic outlook for China in 2021 appears positive, one big unknown is the future of the relationship between China and volatile market environment in 2018 provided ample opportunities for stock selection, it was another challenging year for active equity fund managers. Only 42% of active managers beat their benchmarks for the full year, with varied results among growth, value and core managers. Despite the more volatile markets, demand for passive strategies persisted, albeit at a slower pace, and active managers struggled to attract net new assets. In the U.S., total industry-wide active mutual fund inflows of $67 billion in 2017 reversed to net outflows of $302 billion in 2018. Active equity U.S. mutual fund outflows of $259 billion in 2018 increased by 33% year-over-year as the pace of outflows accelerated in the fourth quarter, particularly in December. After $221 billion of active fixed income U.S. mutual fund inflows in 2017, flows slowed dramatically in 2018 to $13 billion. Meanwhile, total industry-wide passive mutual fund inflows of $451 billion were down 35% from last year's record $692 billion.administration.


MiFID II
In Europe, MiFID II, which became effective on January 3, 2018, makeshas made significant modifications to the manner in which European broker-dealers can be compensated for research. These modifications have reduced, and are believed to have significantly reduced the overall research spend by European buy-side firms, which has decreased the revenues we derive from our European clients. Our European clients may continue to reduce their research budgets, which could result in a significant decline in our sell-side revenues.

Also, while MiFID II is not applicable to firms operating outside of Europe, competitive and client pressures may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions. If that occurs, we would expect that research budgets from those clients will decrease further, which could result in an additional significant decline in our sell-side revenues. Additionally, these competitive and client pressures may result in our buy-side operation paying for research out of our own resources instead of through bundled trading commissions, which could increase our firm's expenses and decrease our operating income.

35

The ultimate impact of MiFID II on payments for research globally currently isremains uncertain.
AXA Equitable Holdings IPO
During 2017,the second quarter of 2018, AXA S.A. ("AXA"AXA") announced its intention to pursue completed the sale of a minority stake in AXA Equitable Holdings, Inc. ("EQH"(“EQH”), the holding company for a diversified financial services organization, through an initial public offering (("IPO"IPO"). During the second quarter of 2018, EQHSince then, AXA has completed the IPOadditional offerings and taken other steps, most recently during the fourth quarter completed a secondary offering.of 2019. As a result, AXA owns 59.2%owned less than 10% of the outstanding common stock of EQH as of December 31, 2018. EQH and its subsidiaries have an approximate 65.2% economic interest in AB as of December 31, 2018. AXA has announced its intention to sell its entire remaining interest in EQH over time, subject to market conditions and other factors. AXA is under no obligation to do so and retains the sole discretion to determine the timing of any future sales of shares of EQH common stock.2020.

While to date we have not experienced adverse effects from the IPO and we cannot at this time predict the eventualfull impact if any, on AB of this transaction, such impact could includehas included a reduction in the support AXA has provided to AB in the past with respect to AB's investment management business, resulting in a modest decrease in our revenues and ability to initiate new investment services. Also, AB relies on AXA, including its subsidiary, AXA Business Services, for a number ofseveral significant services and AB benefitshas benefited from its affiliation with AXA in certain common vendor relationships. Some of these arrangements have changed, and others are expected to change, with possible negativeimmaterial financial implications for AB.
By letter dated March
Our ending AUM at December 31, 2018, AXA advised us2020 reflects $11.8 billion in 2020 outflows resulting from AXA's redemption of their current intentioncertain low-fee fixed income mandates. We expect these redemptions to continue using AB fortotal approximately $14 billion, with the foreseeable future as a preferred providerremaining redemptions expected to be completed during the first half of asset2021. The revenue we earn from the management services and to continue making commercial and seed investments that suit AXA from an investment perspective, in each case (i) consistent with past practice, (ii) subject to investment performance/returns and (iii) subject to applicable fiduciary duties.of these assets is not significant.
Relocation Strategy
On May 2, 2018, we announced that we would establish our corporate headquarters in, and relocate approximately 1,050 jobs located in the New York metro area to, Nashville, TN. Subsequently, on January 14, 2020, we announced our plans to relocate an additional 200 jobs to Nashville thereby increasing the total relocated jobs to 1,250. The decision to add the additional jobs was the result of the growth in our business, select investments we are making, and the in-sourcing of roles typically performed by consultants. Our Nashville headquarters will house Finance, IT, Operations, Legal, Compliance, Internal Audit, Human Capital, and Sales and Marketing. We have begunbeen actively relocating jobs and expect this transition to take several years. We will continue to maintain a principal location in New York City, which will house our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses.


We believe relocating our corporate headquarters to Nashville will afford us the opportunity to provide an improved quality of life alternative for our employees and enable us to attract and recruit new talented employees to a highly desirable location while improving the long-term cost structure of the firm.


During the transition period, which began in 2018 and is expected to continue through 2024, we currently estimate that we will incur transition costs of approximately $145 million to $155 million, which is less than our previous estimate of $155 million to $165 million. These costs include employee relocation, severance, recruitment, and overlapping compensation and occupancy costs. Over this same period, we expect to realize total expense savings of approximately $190$205 million to $200$215 million, which is greater than our previous estimate of $185 million to $195 million, and is an amount greater than the total transition costs. However, we willdid incur some transition costs before we beginbegan to realize expense savings. WeFor the period beginning in 2018 and ending in 2020, we incurred $10$70 million of cumulative transition costs compared to $46 million of cumulative savings. In 2020, expense savings of $30 million were greater than transition costs of $26 million, resulting in 2018. We currently anticipate that the largest reductiona net increase of $0.01 in net income per unit ("EPU"“EPU”) during the transition period will be. We currently anticipate an EPU increase in 2021 of approximately $0.07 in 2019. We$0.02 and expect to achieve a slight increase in EPU in 2021 and then achieveincreasing EPU accretion in each year thereafter. Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings towards the upper end of approximately $70the range of $75 million to $75$80 million, which will result from a combination of occupancy and compensation-related savings. Our estimates for both the transition

costs and the corresponding expense savings are based upon our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs. In addition, our estimates for both the timing of when we incur transition costs and realize the related expense savings isare based on our current relocation implementation plan and the timing for execution of each phase. The actual total charges we eventually record, the related expense savings we realize, and timing of EPU impact are expected tomay differ from our current estimates as we implement each phase of our headquarters relocation.


During October 2018, we signed a lease, which commencescommenced in mid-2020,the fourth quarter of 2020, relating to 205,000218,976 square feet of space at our new Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is approximately $125$134 million.


36
Although we have presented our transition costs and annual expense savings with numerical specificity, and we believe these targets to be reasonable as of the date of this report, the uncertainties surrounding the assumptions we discuss above create a significant risk that these targets may not be achieved.  Accordingly, the expenses we actually incur and the savings we actually realize may differ from our targets, particularly if actual events adversely differ from one or more of our key assumptions.  The transition costs and expense savings, together with their underlying assumptions, are Forward-Looking Statements and can be affected by any of the factors discussed in “Risk Factors” and “Cautions Regarding Forward-Looking Statements” in this 10-K.  We strongly caution investors not to place undue reliance on any of these assumptions or our cost and expensesexpense targets.  Except as may be required by applicable securities laws, we are not under any obligation, and we expressly disclaim any obligation, to update or alter any assumptions, estimates, financial goals, targets, projections or other related statements that we may make.


Adjusted Operating Margin Target
We previously adopted a goal of increasing our adjusted operating margin to a target of 30% by 2020 (the “2020 Margin Target”), subject to the assumptions, factors and contingencies described as part of theour initial disclosure of this target. Our adjusted operating margin, which was 27.5% for 2018 was 29.1%.
Significant declines in the equity and certain fixed income markets during the fourth quarter of 2018, most notably in December 2018, reduced2019, increased to 30.1% for 2020, achieving our AUM by $34.0 billion, or 6.2%, during the fourth quarter to $516.4 billion from $550.4 billion at the end of the third quarter of 2018. Given the impact we expect this lower AUM will have on our ability to generate the level of investment advisory fee revenues we initially forecast when establishing the 2020 Margin Target, presently wetarget. We do not believe that achieving the 2020 Margin Target is likely. However, we are taking additional actionscurrently expect to better align our expenses with these lower AUM and expected revenues. We remain committed to achieving anset a new adjusted operating margin target going forward.
Our AUM and, therefore, our investment advisory revenues, including performance-based fee revenues, are heavily dependent on the level and volatility of 30% in years subsequentthe financial markets, which ended 2020 favorably. Despite the challenges faced from the COVID-19 pandemic (please refer to 2020“Impact of COVID-19” above and will take continued actions “Risk Factors” in this regard, subject to prevailing market conditions and the evolution Item 1A), we benefited from certain of our business mix.adjusted operating expenses declining significantly, such as costs associated with travel and entertainment and client meetings during 2020. We do not anticipate the COVID-19-related cost-savings or market tailwinds to be indicative of future performance. We also expect continued investments in growth initiatives for our firm. Considering these factors, our adjusted operating margin may be less favorable in future periods, although we will continue to strive for improvement over the long-term.








37
Assets Under Management
Assets under management by distribution channel are as follows: 
As of December 31,     % Change   As of December 31,    % Change  
2018 2017 2016 2018-17 2017-16 2020201920182020-192019-18
(in billions)      
  
 (in billions)      
Institutions$246.3
 $269.3
 $239.3
 (8.5)% 12.5%Institutions$315.6 $282.7 $246.3 11.6 %14.8 %
Retail180.8
 192.9
 160.2
 (6.3) 20.5
Retail265.3 239.2 180.8 10.9 32.3 
Private Wealth Management89.3
 92.3
 80.7
 (3.2) 14.2
Private Wealth Management105.0 101.0 89.3 3.9 13.2 
Total$516.4
 $554.5
 $480.2
 (6.9) 15.5
Total$685.9 $622.9 $516.4 10.1 20.6 
Assets under management by investment service are as follows:
 As of December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in billions)  
  
Equity       
  
Actively Managed$136.2
 $139.4
 $111.9
 (2.3)% 24.6 %
Passively Managed (1)
50.2
 54.3
 48.1
 (7.6) 13.0
Total Equity186.4
 193.7
 160.0
 (3.8) 21.1
          
Fixed Income 
  
  
    
Actively Managed 
  
  
    
Taxable219.7
 247.9
 220.9
 (11.4) 12.2
Tax-exempt41.7
 40.4
 36.9
 3.0
 9.5
 261.4
 288.3
 257.8
 (9.4) 11.8
Passively Managed (1)
9.4
 9.9
 11.1
 (4.8) (10.4)
Total Fixed Income270.8
 298.2
 268.9
 (9.2) 10.9
          
Other (2)
         
Actively Managed58.3
 61.9
 50.8
 (5.8) 21.7
Passively Managed (1)
0.9
 0.7
 0.5
 39.7
 37.0
Total Other59.2
 62.6
 51.3
 (5.3) 21.8
Total$516.4
 $554.5
 $480.2
 (6.9) 15.5
 As of December 31,% Change
 2020201920182020-192019-18
 (in billions)  
Equity  
Actively Managed$217.8 $177.2 $136.2 22.9 %30.1 %
Passively Managed (1)
64.5 60.1 50.2 7.3 19.9 
Total Equity282.3 237.3 186.4 19.0 27.4 
Fixed Income   
Actively Managed   
Taxable263.2 258.3 219.7 1.9 17.6 
Tax-exempt50.3 47.1 41.7 6.7 13.1 
 313.5 305.4 261.4 2.6 16.9 
Passively Managed (1)
8.5 9.3 9.4 (8.4)(1.5)
Total Fixed Income322.0 314.7 270.8 2.3 16.2 
Alternatives/Multi-Asset Solutions(2)
Actively Managed79.1 69.3 58.3 14.2 18.8 
Passively Managed (1)
2.5 1.6 0.9 54.1 76.8 
Total Other81.6 70.9 59.2 15.1 19.7 
Total$685.9 $622.9 $516.4 10.1 20.6 
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.

(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services.

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Table of Contents
Changes in assets under management during 20182020 and 20172019 are as follows:
 Distribution Channel
 Institutions Retail 
Private
Wealth
Management
 Total
 (in billions)
Balance as of December 31, 2017$269.3
 $192.9
 $92.3
 $554.5
Long-term flows: 
  
  
  
Sales/new accounts26.1
 54.2
 13.5
 93.8
Redemptions/terminations(30.1) (46.5) (11.0) (87.6)
Cash flow/unreinvested dividends(6.0) (7.7) (0.6) (14.3)
Net long-term (outflows) inflows(10.0) —
 1.9
 (8.1)
Transfers0.2
 0.2
 (0.4) —
Market depreciation(13.2) (12.3) (4.5) (30.0)
Net change(23.0) (12.1) (3.0) (38.1)
Balance as of December 31, 2018$246.3
 $180.8
 $89.3
 $516.4
        
Balance as of December 31, 2016$239.3
 $160.2
 $80.7
 $480.2
Long-term flows: 
  
  
  
Sales/new accounts13.4
 53.8
 11.5
 78.7
Redemptions/terminations(11.5) (38.6) (10.6) (60.7)
Cash flow/unreinvested dividends1.7
 (6.3) (0.2) (4.8)
Net long-term inflows3.6
 8.9
 0.7
 13.2
Market appreciation26.4
 23.8
 10.9
 61.1
Net change30.0
 32.7
 11.6
 74.3
Balance as of December 31, 2017$269.3
 $192.9
 $92.3
 $554.5

 Investment Service
 
Equity
Actively
Managed
 
Equity
Passively
Managed(1)
 
Fixed
Income
Actively
Managed
- Taxable
 
Fixed
Income
Actively
Managed -
Tax-
Exempt
 
Fixed
Income
Passively
Managed(1)
 
Other(2)
 Total
 (in billions)
Balance as of December 31, 2017$139.4
 $54.3
 $247.9
 $40.4
 $9.9
 $62.6
 $554.5
Long-term flows: 
  
  
    
  
  
Sales/new accounts36.7
 4.0
 27.6
 7.9
 0.1
 17.5
 93.8
Redemptions/terminations(22.2) (0.6) (40.8) (6.7) (0.6) (16.7) (87.6)
Cash flow/unreinvested dividends(3.7) (3.6) (6.2) (0.4) 0.2
 (0.6) (14.3)
Net long-term inflows (outflows)10.8
 (0.2) (19.4) 0.8
 (0.3) 0.2
 (8.1)
Market (depreciation) appreciation(14.0) (3.9) (8.8) 0.5
 (0.2) (3.6) (30.0)
Net change(3.2) (4.1) (28.2) 1.3
 (0.5) (3.4) (38.1)
Balance as of December 31, 2018$136.2
 $50.2
 $219.7
 $41.7
 $9.4
 $59.2
 $516.4
              
Balance as of December 31, 2016$111.9
 $48.1
 $220.9
 $36.9
 $11.1
 $51.3
 $480.2
Long-term flows: 
  
  
    
  
  
Sales/new accounts21.9
 1.1
 41.1
 7.9
 0.1
 6.6
 78.7
Redemptions/terminations(19.0) (1.4) (29.8) (5.9) (1.8) (2.8) (60.7)
Cash flow/unreinvested dividends(2.1) (4.0) 1.5
 (0.1) —
 (0.1) (4.8)
Net long-term inflows (outflows)0.8
 (4.3) 12.8
 1.9
 (1.7) 3.7
 13.2
Market appreciation26.7
 10.5
 14.2
 1.6
 0.5
 7.6
 61.1
Net change27.5
 6.2
 27.0
 3.5
 (1.2) 11.3
 74.3
Balance as of December 31, 2017$139.4
 $54.3
 $247.9
 $40.4
 $9.9
 $62.6
 $554.5
 Distribution Channel
 InstitutionsRetailPrivate
Wealth
Management		Total
 (in billions)
Balance as of December 31, 2019$282.7 $239.2 $101.0 $622.9 
Long-term flows:    
Sales/new accounts30.9 78.9 14.3 124.1 
Redemptions/terminations(23.3)(69.5)(16.5)(109.3)
Cash flow/unreinvested dividends(6.6)(11.0)0.2 (17.4)
Net long-term inflows (outflows)(2)
1.0 (1.6)(2.0)(2.6)
Acquisitions— 0.2 — 0.2 
Transfers1.4 (0.6)(0.8)— 
Market appreciation30.5 28.1 6.8 65.4 
Net change32.9 26.1 4.0 63.0 
Balance as of December 31, 2020$315.6 $265.3 $105.0 $685.9 
Balance as of December 31, 2018$246.3 $180.8 $89.3 $516.4 
Long-term flows:
Sales/new accounts17.1 75.3 11.3 103.7 
Redemptions/terminations(12.0)(44.0)(12.4)(68.4)
Cash flow/unreinvested dividends(2.7)(7.5)0.1 (10.1)
Net long-term inflows (outflows)2.4 23.8 (1.0)25.2 
Adjustments(1)
— — (0.9)(0.9)
Transfers— 0.1 (0.1)— 
Market appreciation34.0 34.5 13.7 82.2 
Net change36.4 58.4 11.7 106.5 
Balance as of December 31, 2019$282.7 $239.2 $101.0 $622.9 
(1)Approximately $900 million of non-investment management fee earning taxable and tax-exempt money market assets
    were removed from assets under management during the second quarter of 2019.
(2)Institutional net flows for 2020 include $11.8 billion of AXA redemptions of certain low-fee fixed income mandates.
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Table of Contents
 Investment Service
 Equity
Actively
Managed
Equity
Passively
Managed(1)
Fixed
Income
Actively
Managed
- Taxable		Fixed
Income
Actively
Managed -
Tax-
Exempt
Fixed
Income
Passively
Managed(1)
Alternatives/Multi-Asset Solutions(2)
Total
(in billions)
Balance as of December 31, 2019$177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 
Long-term flows:      
Sales/new accounts51.4 1.7 54.3 10.3 — 6.4 124.1 
Redemptions/terminations(36.7)(1.9)(58.3)(9.5)(0.3)(2.6)(109.3)
Cash flow/unreinvested dividends(7.3)(4.4)(5.8)0.2 (1.3)1.2 (17.4)
Net long-term inflows (outflows)(3)
7.4 (4.6)(9.8)1.0 (1.6)5.0 (2.6)
Acquisition— — — — — 0.2 0.2 
Market appreciation33.2 9.0 14.7 2.2 0.8 5.5 65.4 
Net change40.6 4.4 4.9 3.2 (0.8)10.7 63.0 
Balance as of December 31, 2020$217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 
Balance as of December 31, 2018$136.2 $50.2 $219.7 $41.7 $9.4 $59.2 $516.4 
Long-term flows:      
Sales/new accounts34.7 0.5 53.0 10.0 0.1 5.4 103.7 
Redemptions/terminations(26.4)(0.8)(31.5)(6.8)(0.4)(2.5)(68.4)
Cash flow/unreinvested dividends(4.3)(3.8)(2.8)(0.2)(0.6)1.6 (10.1)
Net long-term inflows (outflows)4.0 (4.1)18.7 3.0 (0.9)4.5 25.2 
Adjustments(4)
— — (0.4)(0.5)— — (0.9)
Market (depreciation) appreciation37.0 14.0 20.3 2.9 0.8 7.2 82.2 
Net change41.0 9.9 38.6 5.4 (0.1)11.7 106.5 
Balance as of December 31, 2019$177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.


(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in equity or fixed income services.
(3)Fixed income – taxable investment service net flows for 2020 include $11.8 billion of AXA redemptions of certain low-fee fixed income mandates.
(4)Approximately $900 million of non-investment management fee earning taxable and tax-exempt money market assets
    were removed from assets under management during the second quarter of 2019.
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Table of Contents

Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services during 20182020 and 20172019 are as follows:
 Years Ended December 31,
 20202019
 (in billions)
Actively Managed
  Equity$7.4 $4.0 
 Fixed Income(8.8)21.7 
 Alternatives/Multi-Asset Solutions4.5 4.0 
3.1 29.7 
Passively Managed  
  Equity(4.6)(4.1)
 Fixed Income(1.6)(0.9)
Alternatives/Multi-Asset Solutions0.5 0.5 
 (5.7)(4.5)
Total net long-term (outflows) inflows$(2.6)$25.2 
 Years Ended December 31,
 2018 2017
 (in billions)
Actively Managed   
  Equity$10.8
 $0.8
 Fixed Income(18.6) 14.7
 Other(0.1) 3.6
 (7.9) 19.1
Passively Managed 
  
  Equity(0.2) (4.3)
 Fixed Income(0.3) (1.7)
 Other0.3
 0.1
 (0.2) (5.9)
Total net long-term (outflows) inflows$(8.1) $13.2


Average assets under management by distribution channel and investment service are as follows:
 Years Ended December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in billions)  
  
Distribution Channel:       
  
Institutions$258.1
 $253.8
 $243.4
 1.7 % 4.3 %
Retail191.8
 177.5
 157.7
 8.1
 12.6
Private Wealth Management94.3
 86.7
 78.9
 8.8
 9.8
Total$544.2
 $518.0
 $480.0
 5.1
 7.9
          
Investment Service: 
  
  
  
  
Equity Actively Managed$146.4
 $125.6
 $109.4
 16.6
 14.8
Equity Passively Managed(1)
53.8
 50.8
 46.5
 5.9
 9.3
Fixed Income Actively Managed – Taxable230.3
 236.3
 221.5
 (2.5) 6.6
Fixed Income Actively Managed – Tax-exempt41.3
 38.8
 36.3
 6.4
 7.0
Fixed Income Passively Managed(1)
9.8
 10.3
 11.0
 (4.3) (6.4)
Other(2)
62.6
 56.2
 55.3
 11.3
 1.7
Total$544.2
 $518.0
 $480.0
 5.1
 7.9
 Years Ended December 31,% Change
 2020201920182020-192019-18
 (in billions)  
Distribution Channel:  
Institutions$285.9 $265.4 $258.1 7.7 %2.8 %
Retail236.5 212.3 191.8 11.4 10.7 
Private Wealth Management97.1 96.5 94.3 0.7 2.3 
Total$619.5 $574.2 $544.2 7.9 5.5 
Investment Service:
Equity Actively Managed$179.8 $158.4 $146.4 13.5 8.2 
Equity Passively Managed(1)
57.1 56.4 53.8 1.2 4.8 
Fixed Income Actively Managed – Taxable254.4 239.7 230.3 6.2 4.1 
Fixed Income Actively Managed – Tax-exempt47.9 44.6 41.3 7.5 8.0 
Fixed Income Passively Managed(1)
9.4 9.4 9.8 0.2 (4.4)
Alternatives/Multi-Asset Solutions(2)
70.9 65.7 62.6 7.8 5.1 
Total$619.5 $574.2 $544.2 7.9 5.5 
(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services and certain alternative investments.
As a result of the significant market declines(1)Includes index and enhanced index services.
(2)Includes certain multi-asset solutions and services not included in the fourth quarter of 2018, AUM as of December 31, 2018 is lower than AUM as of December 31, 2017 in all three distribution channels; however, average AUM during 2018 is higher than average AUM during 2017 in all three distribution channels, reflecting our strong performance through the first nine months of 2018.equity or fixed income services.


During 2018,2020, our Institutional channel average AUM of $258.1$285.9 billion increased $4.3$20.5 billion, or 1.7%7.7%, compared to 2017; however, our Institutional channel2019, primarily due to this AUM decreased $23.0increasing $32.9 billion, or 8.5%11.6%, to $246.3$315.6 billion over the last twelve months. The $23.0$32.9 billion decreaseincrease in AUM resulted primarily from market depreciationappreciation of $13.2$30.5 billion (with $11.6 million of the deprecation occurring in the fourth quarter of 2018) and net outflowsinflows of $10.0$1.0 billion. During 2017,2019, our Institutional channel average AUM of $253.8$265.4 billion increased $10.4$7.3 billion, or 4.3%2.8%, compared to 2016,2018, primarily due to our Institutionalthis AUM increasing $30.0$36.4 billion, or 12.5%14.8%, to $269.3$282.7 billion during 2017.2019. The $30.0$36.4 billion increase in AUM primarily resulted from market appreciation of $26.4$34.0 billion and net inflows of $3.6$2.4 billion.


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Table of Contents
During 2018,2020, our Retail channel average AUM of $191.8$236.5 billion increased $14.3$24.2 billion, or 8.1%11.4%, compared to 2017; however, our Retail channel2019, primarily due to this AUM decreased $12.1increasing $26.1 billion, or 6.3%10.9%, to $180.8$265.3 billion over the last twelve months. The $12.1$26.1 billion decreaseincrease in AUM resulted primarily from market depreciationappreciation of $12.3$28.1 billion, (with $16.4 millionpartially offset by net outflows of the deprecation occurring in the fourth quarter of 2018).$1.6 billion. During 2017,2019, our Retail channel average AUM of $177.5$212.3 billion increased $19.8$20.5 billion, or 12.6%10.7%, compared to 2016,2018, primarily due to our Retail channelthis AUM increasing $32.7$58.4 billion, or 20.5%32.3%, to $192.9$239.2 billion during 2017.2019. The $32.7$58.4 billion increase in AUM for 2017 resulted primarily from market appreciation of $23.8$34.5 billion and net inflows of $8.9$23.8 billion.
During 2018,2020, our Private Wealth Management channel average AUM of $94.3$97.1 billion increased $7.6$0.6 billion, or 8.8%0.7%, compared to 2017; however, Private Wealth Management2019, primarily due to this AUM decreased $3.0increasing $4.0 billion, or 3.2%3.9%, to $89.3$105.0 billion over the last twelve months. The $3.0$4.0 billion decreaseincrease in AUM resulted primarily from market depreciationappreciation of $4.5$6.8 billion, (with $6.8 million of the deprecation occurring in the fourth quarter of 2018),partially offset by net inflowsoutflows of $1.9$2.0 billion. During 2017,2019, our Private Wealth Management channel average AUM of $86.7$96.5 billion increased $7.8$2.2 billion, or 9.8%2.3%, compared to 2016,2018, primarily due to our Private Wealth Managementthis AUM increasing $11.6$11.7 billion, or 14.2%13.2%, to $92.3$101.0 billion during 2017.2019. The $11.6$11.7 billion increase in AUM for 2017 resulted from market appreciation of $10.9$13.7 billion, partially offset by net outflows of $1.0 billion and net inflowsan adjustment of $0.7 billion.$0.9 billion in the second quarter of 2019 relating to the removal of non-investment management fee earning assets.


Absolute investment composite returns, gross of fees, and relative performance as of December 31, 20182020 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows:
 1-Year3-Year5-Year
Global High Income - Hedged (fixed income)
Absolute return3.6 %4.7 %7.8 %
Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)(2.1)(0.6)(0.1)
Global Plus - Hedged (fixed income)
Absolute return5.9 5.3 5.1 
Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)0.3 0.1 0.6 
Intermediate Municipal Bonds (fixed income)
Absolute return4.3 3.9 3.1 
Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)0.9 0.8 0.7 
U.S. Strategic Core Plus (fixed income)
Absolute return8.0 5.7 5.3 
Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)0.5 0.4 0.8 
Emerging Market Debt (fixed income)
Absolute return8.3 5.3 8.1 
Relative return (vs. JPM EMBI Global/JPM EMBI)2.4 0.3 1.2 
Sustainable Global Thematic
Absolute return40.9 19.0 18.3 
Relative return (vs. MSCI ACWI Index)24.6 8.9 6.1 
International Strategic Core Equity
Absolute return6.9 5.5 8.3 
Relative return (vs. MSCI EAFE Index)(0.9)1.2 0.9 
42
Table of Contents
 1-Year 3-Year 5-Year
      
Global High Income - Hedged (fixed income)     
Absolute return(4.0)% 6.8 % 4.0 %
Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)(1.3) (0.0)
 (0.4)
U.S. High Yield (fixed income)     
Absolute return(2.8) 6.5
 3.7
Relative return (vs. Bloomberg Barclays U.S. Corp. High Yield Index)(0.7) (0.8) (0.1)
Global Plus - Hedged (fixed income)     
Absolute return1.4
 3.7
 4.0
Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)(0.4) 0.7
 0.5
Intermediate Municipal Bonds (fixed income)     
Absolute return1.4
 1.8
 2.5
Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)0.4
 0.5
 0.7
U.S. Strategic Core Plus (fixed income)     
Absolute return0.2
 3.1
 3.4
Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)0.2
 1.0
 0.9
Emerging Market Debt (fixed income)     
Absolute return(6.1) 5.9
 4.1
Relative return (vs. JPM EMBI Global/JPM EMBI)(1.5) 1.1
 (0.0)
Emerging Markets Value     
Absolute return(17.8) 7.2
 1.0
Relative return (vs. MSCI EM Index)(3.2) (2.0) (0.7)

 1-Year3-Year5-Year
U.S. Small & Mid Cap Value
Absolute return4.6 2.8 9.3 
Relative return (vs. Russell 2500 Value Index)(0.3)(1.6)(0.1)
U.S. Strategic Value
Absolute return1.8 2.0 6.4 
Relative return (vs. Russell 1000 Value Index)(1.0)(4.0)(3.3)
U.S. Small Cap Growth
Absolute return55.6 28.8 25.6 
Relative return (vs. Russell 2000 Growth Index)20.9 12.6 9.3 
U.S. Large Cap Growth
Absolute return35.4 23.4 21.0 
Relative return (vs. Russell 1000 Growth Index)(3.1)0.4 — 
U.S. Small & Mid Cap Growth
Absolute return54.0 25.1 22.5 
Relative return (vs. Russell 2500 Growth Index)13.5 5.2 3.8 
Concentrated U.S. Growth
Absolute return21.6 20.5 18.4 
Relative return (vs. S&P 500 Index)3.2 6.3 3.2 
Select U.S. Equity
Absolute return16.5 13.4 14.7 
Relative return (vs. S&P 500 Index)(1.9)(0.8)(0.6)
Strategic Equities
Absolute return18.2 13.6 14.2 
Relative return (vs. Russell 3000 Index)(2.6)(0.8)(1.2)
Global Core Equity
Absolute return11.2 11.1 13.5 
Relative return (vs. MSCI ACWI Index)(5.0)1.0 1.2 
U.S. Strategic Core Equity
Absolute return8.2 12.0 12.5 
Relative return (vs. S&P 500 Index)(10.2)(2.1)(2.7)
Select U.S. Equity Long/Short
Absolute return11.6 9.7 10.0 
Relative return (vs. S&P 500 Index)(6.8)(4.4)(5.2)
43
 1-Year 3-Year 5-Year
Global Strategic Value     
Absolute return(18.5) 3.0
 2.5
Relative return (vs. MSCI ACWI Index)(9.1) (3.6) (1.8)
U.S. Small & Mid Cap Value     
Absolute return(14.3) 7.2
 5.2
Relative return (vs. Russell 2500 Value Index)(2.0) 0.6
 1.1
U.S. Strategic Value     
Absolute return(13.8) 3.5
 3.1
Relative return (vs. Russell 1000 Value Index)(5.5) (3.5) (2.8)
U.S. Small Cap Growth     
Absolute return0.1
 13.6
 7.8
Relative return (vs. Russell 2000 Growth Index)9.4
 6.4
 2.7
U.S. Large Cap Growth     
Absolute return2.8
 12.3
 12.8
Relative return (vs. Russell 1000 Growth Index)4.3
 1.2
 2.4
U.S. Small & Mid Cap Growth     
Absolute return(3.6) 10.8
 7.2
Relative return (vs. Russell 2500 Growth  Index)3.9
 2.7
 1.0
Concentrated U.S. Growth     
Absolute return2.2
 10.8
 9.7
Relative return (vs. S&P 500 Index)6.6
 1.6
 1.2
Select U.S. Equity     
Absolute return(4.1) 9.3
 8.8
Relative return (vs. S&P 500 Index)0.3
 (0.0)
 0.3
Strategic Equities     
Absolute return(4.2) 8.3
 8.3
Relative return (vs. Russell 3000 Index)1.1
 (0.7) 0.4
Global Core Equity     
Absolute return(4.4) 9.6
 5.7
Relative return (vs. MSCI ACWI Index)5.1
 3.0
 1.4
Table of Contents

Consolidated Results of Operations
 Years Ended December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in thousands, except per unit amounts)  
  
Net revenues$3,367,361
 $3,298,521
 $3,028,779
 2.1 % 8.9 %
Expenses2,542,047
 2,524,611
 2,305,614
 0.7
 9.5
Operating income825,314
 773,910
 723,165
 6.6
 7.0
Income taxes45,816
 53,110
 28,319
 (13.7) 87.5
Net income779,498
 720,800
 694,846
 8.1
 3.7
Net income of consolidated entities attributable to non-controlling interests21,910
 58,397
 21,488
 (62.5) 171.8
Net income attributable to AB Unitholders$757,588
 $662,403
 $673,358
 14.4
 (1.6)
Diluted net income per AB Unit$2.78
 $2.45
 $2.47
 13.5
 (0.8)
Distributions per AB Unit$2.96
 $2.57
 $2.15
 15.2
 19.5
Operating margin(1)
23.9% 21.7% 23.2%  
  
 Years Ended December 31,% Change
 2020201920182020-192019-18
 (in thousands, except per unit amounts)  
Net revenues$3,708,536 $3,518,432 $3,367,361 5.4 %4.5 %
Expenses2,801,100 2,694,995 2,542,047 3.9 6.0 
Operating income907,436 823,437 825,314 10.2 (0.2)
Income taxes45,653 41,754 45,816 9.3 (8.9)
Net income861,783 781,683 779,498 10.2 0.3 
Net (loss) income of consolidated entities attributable to non-controlling interests(4,169)29,641 21,910 n/m35.3 
Net income attributable to AB Unitholders$865,952 $752,042 $757,588 15.1 (0.7)
Diluted net income per AB Unit$3.19 $2.78 $2.78 14.7 — 
Distributions per AB Unit$3.20 $2.82 $2.96 13.5 (4.7)
Operating margin(1)
24.6 %22.6 %23.9 %  
(1)Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.

(1)Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.

Net income attributable to AB Unitholders for the year ended December 31, 20182020 increased $95.2$113.9 million from the year ended December 31, 2017.2019. The increase primarily is due to (in millions):
Higher base advisory fees$90.4 
Higher distribution revenues74.7 
Higher Bernstein Research Services revenue51.8 
Higher net loss of consolidated entities attributable to non-controlling interest33.8 
Higher performance-based fees33.0 
Lower amortization of intangible assets7.4 
Lower interest on borrowings6.9 
Higher promotion and servicing expenses(63.6)
Higher investment losses(55.1)
Higher employee compensation and benefits(51.4)
Lower net dividend and interest income(11.9)
Higher general and administrative expenses (including real estate charges)(3.0)
Other0.9 
$113.9 
44
Higher base advisory fees$137.5
Lower general and administrative expenses (including real estate charges)62.0
Lower net income of consolidated entities attributable to non-controlling interest36.5
Higher performance-based fees23.4
Lower income tax expenses7.3
Higher distribution revenues6.5
Changes in contingent payment arrangements2.5
Lower investment gains(89.4)
Higher employee compensation and benefits(65.3)
Higher promotion and servicing expenses(14.5)
Lower Bernstein Research Services revenue(10.5)
Other(0.8)
 $95.2

Net income attributable to AB Unitholders for the year ended December 31, 20172019 decreased $11.0$5.5 million from the year ended December 31, 2016.2018. The decrease primarily was due to (in millions):
Higher employee compensation and benefits$(64.0)
Higher promotion and servicing expenses(51.7)
Higher general and administrative expenses (including real estate charges)(31.9)
Lower Bernstein Research Services revenue(31.5)
Lower performance-based fees(18.5)
Higher net income of consolidated entities attributable to non-controlling interest(7.7)
Higher base advisory fees128.4 
Higher distribution revenues36.5 
Higher investment gains36.0 
Other(1.1)
$(5.5)
Higher employee compensation and benefits$(83.7)
Higher other general and administrative expenses(55.3)
Higher net income of consolidated entities attributable to non-controlling interest(36.9)
Higher promotion and servicing expenses(35.4)
Lower Bernstein Research Services revenue(30.0)
Higher income tax expenses(24.8)
Lower adjustments to contingent payment arrangements(20.5)
Higher real estate charges(19.0)
Higher base advisory fees204.9
Higher performance-based fees62.0
Higher distribution revenues27.7
 $(11.0)

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which outlines a single comprehensive revenue recognition model for all contracts with customers and supersedes most of the existing revenue recognition requirements. We adopted this new standard on January 1, 2018 on a modified retrospective basis for contracts that were not completed as of the date of adoption. This adoption method required an adjustment to the 2018 opening balance of partners’ capital for the cumulative effect of initially applying the new standard.

The new standard did not change the timing of revenue recognition for our base fees, distribution revenues, shareholder servicing fees and broker-dealer revenues. However, performance-based fees, which, prior to the adoption of ASC 606, were recognized at the end of the applicable measurement period when no risk of reversal remained, and carried-interest distributions received (considered performance-based fees), recorded as deferred revenues until no risk of reversal remained, are recognized earlier under the new standard, if it is probable that significant reversal of performance-based fees recognized will not occur.

On January 1, 2018, we recorded a cumulative effect adjustment, net of tax, of $35.0 million to partners’ capital in the condensed consolidated statement of financial condition. This amount represents carried interest distributions of $77.9 million previously received, net of revenue sharing payments to investment team members of $42.7 million, with respect to which it is probable that significant reversal will not occur. These amounts were included in adjusted net revenues and adjusted operating income in the first quarter of 2018. During 2018, we recognized $12.9 million of performance-based fees from a fund in liquidation that was not probable of significant reversal, that under the previous revenue accounting standard would not be recognized until final liquidation.

Real Estate Charges

Since 2010, we have sub-leased over one million square feet of office space.

During 2016, we recorded pre-tax real estate charges of $17.7 million, resulting from new charges of $22.8 million relating to the further consolidation of office space at our New York offices, offset by changes in estimates related to previously recorded real estate charges of $5.1 million, which reflected the shortening of the lease term of our New York City location from 2029 to 2024.
During 2017, we recorded pre-tax real estate charges of $36.7 million, resulting from new charges of $40.2 million primarily relating to the further consolidation of office space at our New York offices, offset by changes in estimates pertaining to previously recorded real estate charges of $3.5 million.
During the 2018, we recorded pre-tax real estate charges of $7.2 million, resulting from changes in estimates pertaining to previously recorded real estate charges.



Units Outstanding
Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on our behalf in accordance with the terms ofand limitations specified in the plan. Repurchases are subject to regulations promulgated by the SEC, as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the fourth quarter of 20182020 expired at the close of business on February 12, 2019.10, 2021. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes.
Cash Distributions
We are required to distribute all of our Available Cash Flow, as defined in the AB Partnership Agreement, to our Unitholders and the General Partner. Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to our consolidated financial statements contained in Item 8 for a description of Available Cash Flow.
Management Operating Metrics
We are providing the non-GAAP measures “adjusted net revenues”,revenues,” “adjusted operating income” and “adjusted operating margin” because they are the principal operating metrics management uses in evaluating and comparing period-to-period operating performance. Management principally uses these metrics in evaluating performance because they present a clearer picture of our operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, real estate consolidation charges and other adjustment items. Similarly, we believe that these management operating metrics help investors better understand the underlying trends in our results and, accordingly, provide a valuable perspective for investors.
These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both accounting principles generally accepted in the United States of America ("US GAAP") and non-GAAP measures in evaluating our financial performance. The non-GAAP measures alone may pose limitations because they do not include all of our revenues and expenses.

45
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
Net revenues, US GAAP basis$3,367,361
 $3,298,521
 $3,028,779
Net revenues, US GAAP basis$3,708,536 $3,518,432 $3,367,361 
Adjustments: 
  
  
Adjustments:
Distribution-related adjustments:Distribution-related adjustments:
Distribution revenuesDistribution revenues(529,781)(455,043)(418,562)
Investment advisory services feesInvestment advisory services fees(66,858)(47,951)(29,967)
Pass through adjustments:Pass through adjustments:
Investment advisory services feesInvestment advisory services fees(18,279)(20,914)(4,395)
Other revenuesOther revenues(39,333)(35,926)(35,824)
Impact of consolidated company-sponsored fundsImpact of consolidated company-sponsored funds954 (33,044)(38,142)
Long-term incentive compensation-related investment gains and dividend and interestLong-term incentive compensation-related investment gains and dividend and interest(6,772)(8,939)3,509 
Write-down on investmentWrite-down on investment859 — 3,733 
Impact of adoption of revenue recognition standard ASC 60677,844
 —
 —
Impact of adoption of revenue recognition standard ASC 606— — 77,844 
Distribution-related payments(427,186) (411,467) (363,603)
Amortization of deferred sales commissions(21,343) (31,886) (41,066)
Pass-through fees and expenses(40,219) (40,531) (43,808)
Impact of consolidated company-sponsored funds(38,142) (87,255) (24,889)
Loss (gain) on sale of software technology3,733
 (4,592) —
Long-term incentive compensation-related investment losses (gains) and dividends and interest3,509
 (9,891) (2,822)
Gain on sale of investment carried at cost—
 —
 (75,273)
Other47
 —
 —
Other— — 47 
Adjusted net revenues$2,925,604
 $2,712,899
 $2,477,318
Adjusted net revenues$3,049,326 $2,916,615 $2,925,604 
     
Operating income, US GAAP basis$825,314
 $773,910
 $723,165
Operating income, US GAAP basis$907,436 $823,437 $825,314 
Adjustments: 
  
  
Adjustments:
Real estateReal estate2,880 2,623 7,160 
Long-term incentive compensation-related itemsLong-term incentive compensation-related items(83)1,217 3,064 
CEO's EQH award compensationCEO's EQH award compensation802 1,125 — 
Write-down of investmentWrite-down of investment859 — 3,733 
Acquisition-related expensesAcquisition-related expenses3,301 6,734 1,924 
Contingent payment arrangementsContingent payment arrangements(1,366)(3,051)(2,429)
Impact of adoption of revenue recognition standard ASC 60635,156
 —
 —
Impact of adoption of revenue recognition standard ASC 606— — 35,156 
Real estate charges7,160
 36,669
 17,704
Acquisition-related expenses1,924
 2,012
 1,057
Loss (gain) on sale of software technology3,733
 (4,592) —
Long-term incentive compensation-related items3,064
 709
 720
Gain on sale of investment carried at cost—
 —
 (75,273)
Contingent payment arrangements(2,429) (193) (21,483)
Other47
 —
 —
Other— — 47 
Sub-total of non-GAAP adjustments48,655
 34,605
 (77,275)Sub-total of non-GAAP adjustments6,393 8,648 48,655 
Less: Net income of consolidated entities attributable to non-controlling interests21,910
 58,397
 21,488
Less: Net (loss) income of consolidated entities attributable to non-controlling interestsLess: Net (loss) income of consolidated entities attributable to non-controlling interests(4,169)29,641 21,910 
Adjusted operating income852,059
 750,118
 624,402
Adjusted operating income917,998 802,444 852,059 
Adjusted income taxes47,289
 56,709
 44,559
Adjusted income taxes46,176 40,684 47,289 
Adjusted net income$804,770
 $693,409
 $579,843
Adjusted net income$871,822 $761,760 $804,770 
     
Diluted net income per AB Unit, GAAP basis2.78
 2.45
 2.47
Diluted net income per AB Unit, GAAP basis$3.19 $2.78 $2.78 
Impact of non-GAAP adjustments0.18
 0.12
 (0.34)Impact of non-GAAP adjustments0.02 0.03 0.18 
Adjusted diluted net income per AB Unit$2.96
 $2.57
 $2.13
Adjusted diluted net income per AB Unit$3.21 $2.81 $2.96 
     
Adjusted operating margin29.1% 27.7% 25.2%Adjusted operating margin30.1 %27.5 %29.1 %
Adjusted operating income for the year ended December 31, 20182020 increased $101.9$115.6 million, or 13.6%14.4%, from the year ended December 31, 2017,2019, primarily due to higher investment advisory base fees of $139.3$74.1 million, higher Bernstein Research Services revenue of $51.8 million, lower promotion and servicing expenses of $33.4 million, higher performance-based fees of $90.7$33.2 million, lower amortization of intangibles of $7.4 million and lower general and administrative expensesinterest on borrowings of $19.1$6.9 million, partially offset by higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $119.6$56.1 million, higher net investment losses of $22.8 million, lower Bernstein Research Services revenuenet dividend and interest income of $10.5 million, lower investments gains and losses revenue of $9.5$8.5 million and higher promotiongeneral and servicingadministrative expenses of $8.6 million. $8.2 million.
Adjusted operating income for the year ended December 31, 2017 increased $125.72019 decreased $49.6 million, or 20.1%5.8%, from the year ended December 31, 2016,2018, primarily due to higher investment advisory base fees of $207.9 million and higherlower performance-based fees of $72.4$99.3 million, offset bylower Bernstein Research Services
46
revenue of $31.5 million, higher general and administrative expenses of $29.3 million and higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $76.7$8.3 million, offset by higher general and administrative expensesinvestment advisory base fees of $32.2 million, lower Bernstein Research Services revenue of $30.0$95.5 million and higher net distribution expensesinvestments gains and losses revenue of $12.0$22.4 million.

On January 1, 2018, as a result of our adoption of ASC 606, we recorded a cumulative effect adjustment, net of tax, of $35.0 million to partners’ capital in the condensed consolidated statement of financial condition. This amount representsrepresented carried interest distributions of $77.9 million previously received, net of revenue sharing payments to investment team members, of $42.7 million, with respect to which it iswas probable that significant reversal willwould not occur. These amounts were included in adjusted net revenues and adjusted operating income in the first quarter of 2018.
Adjusted Net Revenues
Adjusted netNet Revenue, as adjusted, is reduced to exclude all of the company's distribution revenues, offset distribution-related payments to third partieswhich are recorded as a separate line item on the consolidated statement of income, as well as amortizationa portion of deferred sales commissions againstinvestment advisory services fees received that is used to pay distribution revenues.and servicing costs. For certain products, based on the distinct arrangements, certain distribution fees are collected by us and passed through to third-party client intermediaries, while for certain other products, we collect investment advisory services fees and a portion is passed through to third-party client intermediaries. In both arrangements, the third-party client intermediary owns the relationship with the client and is responsible for performing services and distributing the product to the client on our behalf. We believe offsetting netdistribution revenues by distribution-related paymentsand certain investment advisory services fees is useful for our investors and other users of our financial statements because such presentation appropriately reflects the nature of these costs as pass-through payments to third parties whothat perform functions on behalf of our sponsored mutual funds and/or shareholders of these funds. We offsetDistribution-related adjustments fluctuate each period based on the type of investment products sold, as well as the average AUM over the period. Also, we adjust distribution revenues for the amortization of deferred sales commissions against net revenues because suchas these costs, over time, essentiallywill offset our distributionsuch revenues.
We also exclude additional pass-through expenses we incur (primarilyadjust investment advisory and services fees and other revenues for pass through costs, primarily related to our transfer agency) that are reimbursedagent and recorded as fees in revenues.shareholder servicing fees. These fees do not affect operating income, but they do affect our operating margin. As such, we exclude these fees from adjusted net revenues.
We adjust for the revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such consolidated company-sponsored investment funds and AB's investment gains and losses on its investments in such consolidated company-sponsored investment funds that were eliminated in consolidation.
Adjusted
Also, adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments.
AdjustedDuring the first quarter of 2020, we wrote-off an investment that had been received in exchange for the sale of software technology, bringing the balance to zero. Previously, we had been excluding the value of this investment from adjusted net revenues.
Lastly, adjusted net revenues include the impact of our adoption of revenue recognition standard ASC 606 during the first quarter of 2018, asdiscussed above.
During 2017, we excluded a realized gain of $4.6 million on the exchange of software technology for an ownership stake in a third party provider of financial market data and trading tools. During 2018, we decreased our valuation of this investment by $3.7 million.
In 2016, we excluded a realized gain of $75.3 million resulting from the liquidation of an investment in Jasper Wireless Technologies, Inc. ("Jasper"), which was acquired by Cisco Systems, Inc., because these transactions are not part of our core operating results.
Adjusted Operating Income
Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) acquisition-related expenses, (3) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) our CEO's EQH award compensation, as discussed below, (4) the impactwrite-down of consolidated company-sponsoredan investment funds,(discussed immediately above), (5) loss (gain) on software technology investment,acquisition-related expenses, (6) adjustments to contingent payment arrangements, and (7) the impact of consolidated company-sponsored investment funds; provided, however, that adjusted operating income includes the revenues and expenses associated with theour implementation of ASC 606 during the first quarter of 2018 discussed above.
Real estate charges (credits) have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers.
Acquisition-related expenses have been However, beginning in the fourth quarter of 2019, real estate charges (credits), while excluded because theyin the period in which the charges (credits) are not considered part of our core operating results when comparing financial results from period to period and to industry peers.recorded, are included ratably over the remaining applicable lease term.
Prior to 2009, a significant portion of employee compensation was in the form of long-term incentive compensation awards that were notionally invested in AB investment services and generally vested over a period of four years. AB economically hedged
47
the exposure to market movements by purchasing and holding these investments on its balance sheet. All such investments had vested as of year-end 2012 and the investments have been delivered to the participants, except for those investments with respect to which the participant elected a long-term deferral. Fluctuation in the value of these investments, which also impacts compensation expense, is recorded within investment gains and losses on the income statement and also impacts compensation expense.statement. Management believes it is useful to reflect the offset achieved from economically hedging the market exposure of these investments in the calculation of adjusted operating income and adjusted operating margin. The non-GAAP measures exclude gains and losses and dividends and interest on employee long-term incentive compensation-related investments included in revenues and compensation expense.
The board of directors of EQH granted to Seth P. Bernstein (“CEO”), our President and Chief Executive Officer, equity awards in connection with EQH's IPO and Mr. Bernstein's membership on the EQH Management Committee. Mr. Bernstein may receive additional equity or cash compensation from EQH in the future related to his service on the Management Committee. Any awards granted to Mr. Bernstein by EQH are recorded as compensation expense in AB’s consolidated statement of income. The compensation expense associated with these awards has been excluded from our non-GAAP measures because they are non-cash and are based upon EQH's, and not AB's, financial performance.

The write-off of the investment discussed above in Adjusted Net Revenues has been excluded due to its non-recurring nature and because it is not part of our core operating results.

Acquisition-related expenses have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers. During 2020, these expenses included an intangible asset impairment charge of $1.5 million relating to our 2016 acquisition.

The recording of changes in estimates of contingent consideration payable with respect to contingent payment arrangements associated with our acquisitions are not considered part of our core operating results and, accordingly, have been excluded.
Adjusted net revenues include the impact of our adoption of revenue recognition standard ASC 606 during the first quarter of 2018, as discussed above.
We adjusted for the operating income impact of consolidating certain company-sponsored investment funds by eliminating the consolidated company-sponsored funds' revenues and expenses and including AB's revenues and expenses that were eliminated in consolidation. We also excluded the limited partner interests we do not own.

Gains and losses on the software technology investment have been excluded due to their non-recurring nature and because they are not part of our core operating results.
The recording of changes in estimates of contingent consideration payable with respect to contingent payment arrangements associated with our acquisitions are not considered part of our core operating results and, accordingly, have been excluded.
A realized gain on the liquidation of our Jasper investment during 2016 was excluded due to its non-recurring nature and because it was not part of our core operating results.
Adjusted Net Income and Adjusted Diluted Net Income per AB Unit
As previously discussed, our quarterly distribution is typically our adjusted diluted net income per unit (which is derived from adjusted net income) for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. Adjusted income taxes, used in calculating adjusted net income, are calculated using the GAAP effective tax rate adjusted for non-GAAP income tax adjustments.
Adjusted Operating Margin
Adjusted operating margin allows us to monitor our financial performance and efficiency from period to period without the volatility noted above in our discussion of adjusted operating income and to compare our performance to industry peers on a basis that better reflects our performance in our core business. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenues.

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Net Revenues
The adoption of ASC 606 had no significant impact on revenue recognition during 2018, except for the recognition of $12.9 million of performance-based fees during 2018 from a fund in liquidation, which recognition was not probable of significant reversal. Under the previous revenue accounting standard, this performance-based fee would not have been recognized until final liquidation of the fund.
The components of net revenues are as follows:
 Years Ended December 31,% Change
 2020201920182020-192019-18
 (in thousands)  
Investment advisory and services fees:  
Institutions:  
Base fees$458,449 $451,125 $444,884 1.6 %1.4 %
Performance-based fees53,351 27,839 32,898 91.6 (15.4)
 511,800 478,964 477,782 6.9 0.2 
Retail: 
Base fees1,186,560 1,076,495 992,037 10.2 8.5 
Performance-based fees24,412 22,510 18,278 8.4 23.2 
 1,210,972 1,099,005 1,010,315 10.2 8.8 
Private Wealth Management: 
Base fees817,801 844,809 807,147 (3.2)4.7 
Performance-based fees54,863 49,266 66,967 11.4 (26.4)
 872,664 894,075 874,114 (2.4)2.3 
Total: 
Base fees2,462,810 2,372,429 2,244,068 3.8 5.7 
Performance-based fees132,626 99,615 118,143 33.1 (15.7)
 2,595,436 2,472,044 2,362,211 5.0 4.6 
Bernstein Research Services459,744 407,911 439,432 12.7 (7.2)
Distribution revenues529,781 455,043 418,562 16.4 8.7 
Dividend and interest income50,923 104,421 98,226 (51.2)6.3 
Investment (losses) gains(16,401)38,659 2,653 n/mn/m
Other revenues104,703 97,559 98,676 7.3 (1.1)
Total revenues3,724,186 3,575,637 3,419,760 4.2 4.6 
Less: Interest expense15,650 57,205 52,399 (72.6)9.2 
Net revenues$3,708,536 $3,518,432 $3,367,361 5.4 4.5 
 Years Ended December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in thousands)  
  
Investment advisory and services fees:       
  
Institutions:       
  
Base fees$444,884
 $430,446
 $403,503
 3.4 % 6.7 %
Performance-based fees32,898
 45,159
 17,394
 (27.2) 159.6
 477,782
 475,605
 420,897
 0.5
 13.0
Retail: 
  
  
    
Base fees992,037
 922,510
 805,621
 7.5
 14.5
Performance-based fees18,278
 24,216
 3,333
 (24.5) 626.6
 1,010,315
 946,726
 808,954
 6.7
 17.0
Private Wealth Management: 
  
  
    
Base fees807,147
 753,569
 691,595
 7.1
 9.0
Performance-based fees66,967
 25,405
 12,025
 163.6
 111.3
 874,114
 778,974
 703,620
 12.2
 10.7
Total: 
  
  
    
Base fees2,244,068
 2,106,525
 1,900,719
 6.5
 10.8
Performance-based fees118,143
 94,780
 32,752
 24.6
 189.4
 2,362,211
 2,201,305
 1,933,471
 7.3
 13.9
Bernstein Research Services439,432
 449,919
 479,875
 (2.3) (6.2)
Distribution revenues418,562
 412,063
 384,405
 1.6
 7.2
Dividend and interest income98,226
 71,162
 46,939
 38.0
 51.6
Investment gains2,653
 92,102
 93,353
 (97.1) (1.3)
Other revenues98,676
 97,135
 99,859
 1.6
 (2.7)
Total revenues3,419,760
 3,323,686
 3,037,902
 2.9
 9.4
Less: Interest expense52,399
 25,165
 9,123
 108.2
 175.8
Net revenues$3,367,361
 $3,298,521
 $3,028,779
 2.1
 8.9
Investment Advisory and Services Fees
Investment advisory and services fees are the largest component of our revenues. These fees generally are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of account and the total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as AUM increase or decrease and is affected by market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existing accounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, shifts of assets between accounts or products with different fee structures, and acquisitions. Our average basis points realized (investment advisory and services fees divided by average AUM) generally approximate 4030 to 110 basis points for actively-managed equity services, 10 to 75 basis points for actively-managed fixed income services and 2 to 20 basis points for passively-managed services. Average basis points realized for other services could range from 54 basis points for certain Institutional asset allocationthird party managed services to over 100 basis points for certain Retail and Private Wealth Management alternative services. These ranges include all-inclusive fee arrangements (covering investment management, trade execution and other services) for our Private Wealth Management clients.
We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures;

evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models evaluation of assets versus liabilities or any other
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methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for more information regarding our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.
The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments.
We sometimes charge our clients performance-based fees. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible to earn performance-based fees on 7.3%6.0%, 7.8%8.5% and 0.9%0.8% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 5.1%4.4% of our AUM).
Our investment advisory and services fees increased by $160.9$123.4 million, or 7.3%5.0%, in 2018,2020, due to a $90.4 million, or 3.8%, increase in base fees and a $33.0 million increase in performance-based fees. The increase in base fees is primarily due to an 7.9% increase in average AUM, partially offset by a $137.5lower portfolio fee rate. Our investment advisory and services fees increased by $109.8 million, or 6.5%4.6%, in 2019, due to a $128.4 million, or 5.7%, increase in base fees, which primarily resulted from a 5.1%5.5% increase in average AUM and the impact of a slight shift in distribution channelproduct mix from Institutionsfixed income to Retail and Private Wealth Management. Also,equities, which generally have higher fees. This increase was partially offset by an $18.5 million decrease in performance-based fees increased by $23.4 million. Our investment advisory and services fees increased by $267.8 million, or 13.9%, in 2017, primarily due to a $205.8 million, or 10.8%, increase in base fees, which primarily resulted from a 7.9% increase in average AUM and the impact of a shift in distribution channel mix from Institutions to Retail and Private Wealth Management. Also, performance-based fees increased $62.0 million from the prior year.fees.


Institutional investment advisory and services fees increased $2.2$32.8 million, or 0.5%6.9%, in 2018,2020, due to an increase in performance-based fees of $25.5 million and an increase in base fees of $7.3 million, or 1.6%. The increase in base fees is primarily due to an 7.7% increase in average AUM, partially offset by a lower portfolio fee rate. Institutional investment advisory and services fees increased $1.2 million, or 0.2%, in 2019, due to an increase in base fees of $14.4$6.2 million, or 3.4%1.4%, primarily resulting from a 1.7% increase in average AUM and the impact of higher fees from alternatives and a shift in product mix to active equities, which generally have higher fees. The increase was partially offset by a decrease in performance-based fees of $12.3$5.0 million. InstitutionalThe increase in base fees was primarily due to a 2.8% increase in average AUM, partially offset by the impact of lower fee realization from active equities.
Retail investment advisory and services fees increased $54.7$112.0 million, or 13.0%10.2%, in 2017, primarily2020, due to an increase in base fees of $26.9$110.1 million, or 6.7%10.2%, and a $1.9 million increase in performance-based fees. The increase in base fees is primarily resultingdue to a 11.4% increase in average AUM, partially offset by a lower portfolio fee rate. Retail investment advisory and services fees increased $88.7 million, or 8.8%, in 2019, due to an increase in base fees of $84.5 million, or 8.5%, and a $4.2 million increase in base fees. The increase in base fees was primarily due to a 10.7% increase in average AUM, partially offset by the impact of lower fee realization from active equities.

Private Wealth Management investment advisory and services fees decreased by $21.4 million, or 2.4%, in 2020, due to a 4.3%decrease in base fees of $27.0 million, or 3.2%, partially offset by a $5.6 million increase in performance-based fees. The decrease in base fees is primarily due to the impact of a lower portfolio fee rate, as well as a product mix shift with high fee value equity strategies now representing a lower percentage of our total AUM than in prior periods. Private Wealth Management investment advisory and services fees increased $20.0 million, or 2.3%, in 2019, due to an increase in base fees of $37.7 million, or 4.7%, partially offset by a decrease in performance-based fees of $17.7 million. The increase in base fees was primarily due to a 2.3% increase in average AUM and the impact of a shift in product mix to active equities,alternatives, which generally have higher fees. In addition, performance-based fees increased by $27.8 million.
Retail investment advisory and services fees increased $63.6 million, or 6.7%, in 2018, primarily due to an increase in base fees of $69.5 million, or 7.5%, primarily resulting from an 8.1% increase in average AUM. The increase was partially offset by a decrease in performance-based fees of $5.9 million. Retail investment advisory and services fees increased $137.8 million, or 17.0%, in 2017, primarily due to an increase in base fees of $116.9 million, or 14.5%, primarily resulting from a 12.6% increase in average AUM and higher fee rate realization. In addition, performance-based fees increased by $20.9 million.

Private Wealth Management investment advisory and services fees increased by $95.1 million, or 12.2%, in 2018, due to an increase in base fees of $53.6 million, or 7.1%, primarily resulting from an 8.8% increase in average AUM. In addition, performance-based fees increased $41.6 million. Private Wealth Management investment advisory and services fees increased $75.4 million, or 10.7%, in 2017, due to an increase in base fees of $62.0 million, or 9.0%, resulting from a 9.8% increase in average AUM and a $13.4 million increase in performance-based fees.
Bernstein Research Services
We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser extent, but increasingly, by paying us directly for research through commission sharing agreements or cash payments.
Revenues from Bernstein Research Services decreased $10.5increased $51.8 million, or 2.3%12.7%, in 2018.2020. The decreaseincrease was driven by a reduction in commission rates due to higher market volatility in 2020, particularly between March and June 2020, primarily as a result of the unbundlingCOVID-19 pandemic, which led to
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higher customer activity and greater global trading volumes. We expect customer activity and trading volumes to gradually decrease in 2021 and to normalize in 2022, as the volatility surrounding COVID-19 begins to decline. Any decreases in customer activity and trading volumes will have a corresponding effect on Bernstein Research services and a volume mix shift to lower fee electronic trading acrossrevenue. Furthermore, all regions, partially offset by a weaker U.S. dollar.

of 2020 reflects the inclusion of revenues from our acquisition of Autonomous (which closed on April 1, 2019).
Revenues from Bernstein Research Services decreased $30.0$31.5 million, or 6.2%7.2%, in 2017.2019. The decrease was driven by a decline in clientdue to lower global customer activity in the U.S. and a volume mix shift to electronic trading in Europe. The decrease wascommissions, partially offset by increased client activity in Asia and a weaker U.S. dollar year-over-year.the inclusion of revenues from our acquisition of Autonomous (which closed on April 1, 2019).
Distribution Revenues
Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur. Period-over-period fluctuations of distribution revenues typically are in line with fluctuations of the corresponding average AUM of these mutual funds.
Distribution revenues increased $6.5$74.7 million, or 1.6%16.4%, in 2018,2020, primarily due to the corresponding average AUM of these mutual funds increasing 4.5%, offset by the impact of a shift in product mix. During 2018, average AUM for Japan and Taiwan domiciled funds increased 35.1%, while average AUM of B-share and C-share mutual funds (which have higher distribution rates than A-share mutual funds, as well as other funds not domiciled in the U.S. or Luxembourg) decreased 22.5%13.2%.
Distribution revenues increased $27.7$36.5 million, or 7.2%8.7%, in 2017,2019, primarily due to the corresponding average AUM of these mutual funds increasing 11.2%10.0%, offset by the impact of a shift in product mix. During 2017, average AUM of A-sharemix from mutual funds (whichthat have higher distribution rates to mutual funds with lower distribution fee rates than B-share and C-share mutual funds) increased 21.5%, while average AUM of B-share and C-share mutual funds decreased by 13.5%.rates.
Dividend and Interest Income and Interest Expense
Dividend and interest income consists primarily of investment income and interest earned on customer margin balances and U.S. Treasury Bills as well as dividend and interest income in our consolidated company-sponsored investment funds. Interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts.
Dividend and interest income net of interest expense, decreased $0.2$53.5 million, or 0.4%51.2%, in 2018. Dividend and interest income, net of interest expense, increased $8.2 million, or 21.6%, in 2017,2020, primarily due to higherlower interest earned on customer margin balances and U.S. Treasury Bills, as well as lower dividend and interest income in our consolidated company-sponsored investment funds. Interest expense decreased $41.6 million, or 72.6%, in 2020, due to lower interest paid on cash balances in customers' brokerage accounts.
Dividend and interest income increased $6.2 million, or 6.3%, in 2019, primarily due to higher interest earned on customer margin balances and U.S. Treasury Bills, offset by lower dividend and interest income in our consolidated company-sponsored investment funds. Interest expense increased $4.8 million, or 9.2%, in 2019, due to higher interest paid on cash balances in customers' brokerage accounts.
Investment Gains (Losses)
Investment gains (losses) consist primarily of realized and unrealized investment gains or losses on: (i) employee long-term incentive compensation-related investments, (ii) U.S. Treasury Bills, (iii) market-making in exchange-traded options and equities, (iv) seed capital investments, (v) derivatives and (vi) investments in our consolidated company-sponsored investment funds. Investment gains (losses) also include equity in earnings of proprietary investments in limited partnership hedge funds that we sponsor and manage.











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Investment gains (losses) are as follows:
Years Ended December 31,
202020192018
(in thousands)
Long-term incentive compensation-related investments:Long-term incentive compensation-related investments:
Realized gainsRealized gains$2,655 $1,672 $2,512 
Unrealized gains (losses)Unrealized gains (losses)2,914 5,859 (8,032)
Years Ended December 31,
2018 2017 2016
(in thousands)
Long-term incentive compensation-related investments     
Realized gains$2,512
 $2,214
 $1,463
Investments held by consolidated company-sponsored investment funds:Investments held by consolidated company-sponsored investment funds:
Realized gains (losses) Realized gains (losses)3,357 9,378 (1,134)
Unrealized (losses) gains(8,032) 5,723
 (288) Unrealized (losses) gains(854)36,150 14,217 
     
Investments held by consolidated company-sponsored investment funds     
Realized (losses) gains(1,134) 59,669
 (8,482)
Unrealized gains14,217
 36,340
 28,437
     
Seed capital and other investments 
  
  
Seed capital investments:Seed capital investments: 
Realized gains (losses) 
  
  
Realized gains (losses) 
Seed capital and other(943) 24,822
 67,778
Seed capital and other25,002 17,301 (943)
Derivatives7,001
 (22,395) (15,207)Derivatives(30,343)(30,320)7,001 
Unrealized gains (losses) 
  
  
Unrealized (losses) gainsUnrealized (losses) gains 
Seed capital and other(15,003) (9,713) 24,976
Seed capital and other(12,387)7,510 (15,003)
Derivatives5,384
 (1,478) (311)Derivatives(5,220)(8,013)5,384 
     
Brokerage-related investments 
  
  
Realized losses(1,410) (2,796) (5,057)
Unrealized gains (losses)61
 (284) 44
Brokerage-related investments:Brokerage-related investments: 
Realized (losses)Realized (losses)(1,188)(1,209)(1,410)
Unrealized (losses) gainsUnrealized (losses) gains(337)331 61 
$2,653
 $92,102
 $93,353
 $(16,401)$38,659 $2,653 
Other Revenues
Other revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration and recordkeeping services provided to company-sponsored mutual funds and the general accounts of AXA, EQH and their respectiveits subsidiaries, and other miscellaneous revenues. Other revenues increased $1.5$7.1 million, or 1.6%7.3%, in 2018,2020, primarily due to higher shareholder servicing fees, higher brokerage income and higher mutual fund reimbursements.reimbursements, partially offset by lower investment income related to our consolidated company-sponsored investment funds. Other revenues decreased $2.7$1.1 million, or 2.7%1.1%, in 2017,2019, primarily due to lower shareholder servicing fees, partlybrokerage income and lower investment income related to our consolidated company-sponsored investment funds, partially offset by higher mutual fund reimbursements.shareholder servicing fees.

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Table of Contents
Expenses
The components of expenses are as follows:
 Years Ended December 31,% Change
 2020201920182020-192019-18
 (in thousands)  
Employee compensation and benefits$1,494,198 $1,442,783 $1,378,811 3.6 %4.6 %
Promotion and servicing:     
Distribution-related payments569,283 487,965 427,186 16.7 14.2 
Amortization of deferred sales commissions27,355 15,029 21,343 82.0 (29.6)
Trade execution, marketing, T&E and other189,787 219,860 222,630 (13.7)(1.2)
 786,425 722,854 671,159 8.8 7.7 
General and administrative:     
General and administrative485,544 484,750 448,996 0.2 8.0 
Real estate charges5,526 3,324 7,160 66.2 (53.6)
 491,070 488,074 456,156 0.6 7.0 
Contingent payment arrangements1,855 (510)(2,219)n/m(77.0)
Interest on borrowings6,180 13,035 10,359 (52.6)25.8 
Amortization of intangible assets21,372 28,759 27,781 (25.7)3.5 
Total$2,801,100 $2,694,995 $2,542,047 3.9 6.0 
 Years Ended December 31, % Change
 2018 2017 2016 2018-17 2017-16
 (in thousands)  
  
Employee compensation and benefits$1,378,811
 $1,313,469
 $1,229,721
 5.0 % 6.8 %
Promotion and servicing: 
  
  
  
  
Distribution-related payments427,186
 411,467
 363,603
 3.8
 13.2
Amortization of deferred sales commissions21,343
 31,886
 41,066
 (33.1) (22.4)
Trade execution, marketing, T&E and other222,630
 213,275
 216,542
 4.4
 (1.5)
 671,159
 656,628
 621,211
 2.2
 5.7
General and administrative: 
  
  
  
  
General and administrative448,996
 481,488
 426,147
 (6.7) 13.0
Real estate charges7,160
 36,669
 17,704
 (80.5) 107.1
 456,156
 518,157
 443,851
 (12.0) 16.7
Contingent payment arrangements(2,219) 267
 (20,245) (931.1) n/m
Interest10,359
 8,194
 4,765
 26.4
 72.0
Amortization of intangible assets27,781
 27,896
 26,311
 (0.4) 6.0
Total$2,542,047
 $2,524,611
 $2,305,614
 0.7
 9.5
Employee Compensation and Benefits
Employee compensation and benefits consist of base compensation (including salaries and severance), annual short-term incentive compensation awards (cash bonuses), annual long-term incentive compensation awards, commissions, fringe benefits and other employment costs (including recruitment, training, temporary help and meals).
Compensation expense as a percentage of net revenues was 40.9%40.3%, 39.8%41.0% and 40.6%40.9% for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. Compensation expense generally is determined on a discretionary basis and is primarily a function of our firm’s current-year financial performance. The amounts of incentive compensation we award are designed to motivate, reward and retain top talent while aligning our executives' interests with the interests of our Unitholders. Senior management, with the approval of the Compensation Committee of the Board of Directors of AllianceBernstein Corporation (“Compensation Committee”), periodically confirms that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues. Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented as a non-GAAP measure (discussed earlier in this Item 7). Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were 0.9%, 1.2% and 1.1% of adjusted net revenues for 2020, 2019 and 2018, 2017 and 2016)respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments.investments and the amortization expense associated with the awards issued by EQH to our firm's CEO relating to his role as a member of the EQH Management Committee. Senior management, with the approval of the Compensation Committee, has established as an objective that adjusted employee compensation and benefits expense generally should not exceed 50% of our adjusted net revenues, except in unexpected or unusual circumstances. Our ratios of adjusted compensation expense as a percentage of adjusted net revenues were 47.5%47.9%, 47.1%47.9% and 48.5%47.5%, respectively, for the years ended December 31, 2018, 20172020, 2019 and 2016.2018.
In 2018,2020, employee compensation and benefits expense increased $65.3$51.4 million, or 5.0%3.6%, primarily due to higher incentive compensation of $19.3$58.8 million higher commissions of $19.0 million,and higher base compensation of $14.7$13.5 million which primarily resulted from(primarily higher salaries, and higherbase salaries), offset by lower fringes of $7.4$8.5 million, lower commissions of $6.2 million and lower other employment costs of $6.2 million. In 2017,2019, employee compensation and benefits expense increased $83.7$64.0 million, or 6.8%4.6%, primarily due to higher base compensation of $34.1 million (primarily higher salaries), higher incentive compensation of $68.4 million, higher base compensation of $5.4 million, which primarily resulted from higher severance, higher commissions of $4.8$17.4 million and higher fringes of $4.1$15.6 million, partially offset by lower commissions of $3.2 million.

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Promotion and Servicing
Promotion and servicing expenses include distribution-related payments to financial intermediaries for distribution of AB mutual funds and amortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load shares of AB mutual funds. Also included in this expense category are costs related to travel and entertainment, advertising and promotional materials.
Promotion and servicing expenses increased $14.5$63.6 million, or 2.2%8.8%, in 2018.2020. The increase primarily was due to higher distribution-related payments of $15.7$81.3 million, higher marketing expensesamortization of $4.5deferred sales commissions of $12.3 million, and higher trade execution and clearance expenses of $4.5$7.9 million and higher transfer fees of $4.8 million, offset by lower travel and entertainment expenses of $34.3 million and lower marketing expenses of $8.4 million. The decrease in travel and entertainment and marketing expense is primarily a result of cost savings associated with the COVID-19 pandemic and we expect these costs to increase in 2021 and further normalize in 2022, as the pandemic recedes. Promotion and servicing expenses increased $51.7 million, or 7.7%, in 2019. The increase primarily was due to higher distribution-related payments of $60.8 million and higher travel and entertainment expenses of $3.2 million, offset by lower amortization of deferred sales commissions of $10.5 million. Promotion$6.3 million, lower trade execution and servicingclearance expenses increased $35.4 million, or 5.7%, in 2017. The increase primarily was due to higher distribution-related payments of $47.9 million, offset by lower amortization of deferred sales commissions of $9.2$3.7 million and lower travel and entertainment costsmarketing expenses of $2.6$2.5 million.
General and Administrative
General and administrative expenses include portfolio services expenses, technology expenses, professional fees and office-related expenses (occupancy, communications and similar expenses). General and administrative expenses as a percentage of net revenues were 13.5% (13.3%13.2% (13.1% excluding real estate charges), 15.7% (14.6%13.9% (13.8% excluding real estate charges) and 14.7% (14.1%13.5% (13.3% excluding real estate charges) for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. General and administrative expenses decreased $62.0increased $3.0 million, or 12.0%0.6%, during 2018,2020, primarily due to lowerhigher technology fees of $4.7 million, higher charitable contributions of $3.9 million, higher portfolio service fees of $3.6 million, higher real estate charges of $29.5$2.2 million the lackand higher other taxes of a $19.7$1.6 million, vendor termination fee we recorded in 2017,partially offset by lower rent expenseprofessional fees of $5.0 million, lower exchange rate losses of $2.8$9.1 million and lower errorsoffice-related expenses of $2.7$3.5 million. General and administrative expenses increased $74.3$31.9 million, or 16.7%7.0%, during 2017,2019, primarily due to higher expenses related to our consolidated company-sponsored investment fundsportfolio service fees of $25.5 million, a vendor termination accrual of $19.7$11.2 million, higher real estate chargestechnology fees of $19.0$11.0 million and higher professional fees of $6.5$7.0 million.
Contingent Payment Arrangements
Contingent payment arrangements reflect changes in estimates of contingent payment liabilities associated with acquisitions in previous periods, as well as accretion expense of these liabilities. The expense of $1.9 million for 2020 reflects accretion expense of $3.3 million, offset by the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $1.4 million. The credit of $0.5 million for 2019 reflects the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $3.1 million, offset by accretion expenses of $2.6 million. The credit of $2.2 million for 2018 reflects the change in estimate of the contingent consideration payable relating to our 20102016 acquisition of $2.4 million, offset by accretion expenses of $0.2 million. The expense of $0.3 million for 2017 reflects accretion expenses of $0.5 million, offset by a change in estimate of the contingent consideration payable relating to our 2010 acquisition of $0.2 million. The credit to operating expenses of $20.2 million in 2016 reflects changes in estimates of contingent consideration payable of $21.5 million relating to our 2013 and 2010 acquisitions, offset by the accretion expense of $1.3 million.
Interest on Borrowings
Interest expense increased 26.4% and 72.0%decreased 52.6% in 2018 and 2017, respectively,2020, reflecting lower interest rates partially offset by higher weighted average interest rates on commercial paper borrowings. Average daily borrowings for both the EQH facility and commercial paper were $554.0 million at a weighted average interest rate of 0.5% during 2020 compared to $436.9 million and 2.5% during 2019. Interest expense increased 25.8% in 2019, reflecting both higher weighted average borrowings and interest rates. Average daily borrowings for both the EQH facility and commercial paper were $436.9 million at a weighted average interest rate of 2.5% during 2019 compared to $350.3 million and 2.0% for commercial paper during 2018, 2017 and 2016 were $350.3 million, $482.2 million and $422.9 million, respectively, with weighted average interest rates of 2.0%, 1.2% and 0.6%, respectively.2018.
Income Taxes
AB, a private limited partnership, is not subject to federal or state corporate income taxes, buttaxes. However, AB is subject to a 4.0% New York City unincorporated business tax (“UBT”). Our domestic corporate subsidiaries are subject to federal, state and local income taxes, and generally are included in the filing of a consolidated federal income tax return. Separate state and local income tax returns also are filed. Foreign corporate subsidiaries generally are subject to taxes in the jurisdictions where they are located.
Income tax expense increased $3.9 million, or 9.3%, in 2020 compared to 2019. This increase is due to higher pre-tax book income, offset by a slightly lower effective tax rate in 2020 of 5.0% compared to 5.1% in 2019. The decrease in our effective tax rate was driven by a reduction of one-time discrete items.
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Income tax expense decreased $7.3$4.1 million, or 13.7%8.9%, in 20182019 compared to 2017.2018. This decrease is due to a lower effective tax rate in 20182019 of 5.6%5.1% compared to 6.9%5.6% in 2017 and higher pre-tax income.2018. The decrease in our effective tax rate was driven by the impact of tax reform in the prior year, offset by one-time discrete items.
Income tax expense increased $24.8 million, or 87.5%, in 2017 compared to 2016. The increase is due to a higher effective tax rate in 2017 of 6.9%, compared to 3.9% in 2016, and higher pre-tax income. The significant increase in our effective tax rate was driven by the deemed repatriation tax on foreign earnings, the tax associated with the remeasurement of deferred tax items, and the unfavorablemore favorable mix of earnings across the AB tax filing groups.groups and a reduction of one-time discrete items.
Net Income (Loss) of Consolidated Entities Attributable to Non-Controlling Interests
Net income (loss) of consolidated entities attributable to non-controlling interests primarily consists of limited partner interests owned by other investors in our consolidated company-sponsored investment funds. In 2018, 2017, and 2016,2020, we had $21.9$4.2 million $58.4of net losses of consolidated entities attributable to non-controlling interests, primarily due to losses on investments held by our consolidated company-sponsored investment funds. In 2019 and 2018, we had $29.6 million and $21.5$21.9 million, respectively, of net gains of consolidated entities attributable to non-controlling interests, primarily

due to gains on investments held by our consolidated company-sponsored investment funds. Fluctuations period-to-period are driven byresult primarily from the number of consolidated company-sponsored investment funds and their respective market performance.
Capital Resources and Liquidity
Cash flows from operating activities primarily include the receipt of investment advisory and services fees and other revenues offset by the payment of operating expenses incurred in the normal course of business. Our cash flows from operating activities have historically been positive and sufficient in supporting our operations. We do not anticipate this to change in the foreseeable future. Cash flows from investing activities generally consist of small capital expenditures and, when applicable, business acquisitions. Cash flows from financing activities primarily consist of issuance and repayment of debt and the repurchase of AB Holding units to fund our long-term deferred compensation plans. We are required to distribute all of our Available Cash Flow to our Unitholders and the General Partner.

During 2018,2020, net cash provided by operating activities was $1.3$1.5 billion, compared to $645.5$827.5 million during 2017.2019. The change primarily was due to net activity of our consolidated company-sponsored investment funds of $468.2 million, an increase in broker-dealer related payables (net of receivable and segregated U.S. Treasury Bills activity) of $618.8$368.0 million, a decrease in net activityother assets of our consolidated company-sponsored investment funds$92.3 million, an increase in accounts payable and accrued expenses of $467.3$67.2 million and higher cash provided by net incomean increase in accrued compensation of $75.5$54.4 million, partially offset by higher net purchases of broker-dealer investments of $294.7 million and an increase in broker dealer deposits with clearing organizations of $150.5$454.1 million.During 2017,2019, net cash provided by operating activities was $645.5$827.5 million, compared to $1.5$1.3 billion during 2016.2018. The change primarily was due to a decrease in net activity of our consolidated company-sponsored investment funds of $466.5 million, a decrease in broker-dealer related payables (net of receivable and segregated U.S. Treasury Bills activity) of $376.3$754.8 million and lower net redemptionsactivity of seed capital and higherour consolidated company-sponsored investment funds of $427.6 million, offset by lower net purchases of broker-dealer investments of $187.5 million, offset by an increase in cash provided by net income of $86.5$754.7 million.
During 2018,2020, net cash used in investing activities was $32.8$59.1 million, compared to $39.3$23.0 million during 2017.2019. The change is primarily reflects lowerdue to $13.6 millions paid for acquisitions, net of cash acquired, $4.1 million paid for equity method investments and higher purchases of furniture, equipment and leasehold improvements of $6.6$13.2 million. During 2017,2019, net cash used in investing activities was $39.3$23.0 million, compared to $59.4$32.8 million during 2016.2018. The change is primarily reflectsdue to the $20.5 million spent in 2016 to purchase a business.acquisition of Autonomous, net of cash acquired, of $5.3 million.

During 2018,2020, net cash used in financing activities was $1.6$1.1 billion, compared to $623.9$775.0 million during 2017.2019. The change reflects the nethigher redemptions of non-controlling interests of consolidated company-sponsored investment funds in 2018 as compared to net purchases of consolidated company-sponsored investment funds in 2017 (impact of $635.3 million),$369.1 million and higher distributions to the General Partner and Unitholders of $214.1$133.4 million, partially offset by higher net proceeds of debt of $112.9 million and net repaymentsan increase in overdrafts payable of bank loans in 2018 as compared to net proceeds from bank loans in 2017 (impact of $125.0 million).$47.3 million.During 2017,2019, net cash used in financing activities was $623.9$775.0 million, compared to $1.1$1.6 billion during 2016.2018. The change reflects the net purchases of non-controlling interests of consolidated company-sponsored investment funds in 20172019 as compared to net redemptions of non-controlling interests of consolidated company-sponsored investment funds in 20162018 (impact of $296.0$622.2 million), a net increase in overdrafts payable of $147.9 million, proceeds from bank loans of $75.0 million and lower net repayments of commercial paper of $43.5 million, offset by higher distributions to the General Partner and Unitholders of $106.6$154.7 million and lower net purchases of AB Holding Units to fund long-term incentive compensation plan awards of $95.5 million.
As of December 31, 2018,2020, AB had $640.2 million$1.0 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds), all of which is available for liquidity consistingbut consist primarily of cash on deposit for our broker-dealers related to comply with various customer clearing activities, and cash held by foreign subsidiaries of $418.0$586.3 million.
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Debt and Credit Facilities
As of December 31, 2018 and 2017, AB had $523.2 million and $491.8 million, respectively,See Note 12 to our consolidated financial statements in commercial paper outstanding with weighted average interest rates of approximately 2.7% and 1.6%, respectively. Debt included in the statement of financial condition is presented net of issuance costs of $1.9 million and $1.1 million as of December 31, 2018 and 2017, respectively. The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper during 2018 and 2017 were $350.3 million and $482.2 million, respectively, with weighted average interest rates of approximately 2.0% and 1.2%, respectively.
On September 27, 2018, AB amended and restated the existing $1.0 billion committed, unsecured senior revolving credit facility (the "Credit Facility") with a group of commercial banks and other lenders, reducing the principal amount to $800.0 million and extending the maturity to September 27, 2023. The Credit Facility providesItem 8 for possible increases in the principal amount by up to an aggregate incremental amount of $200.0 million; any such increase is subject to the consent of the affected lenders. The Credit Facility is available for AB and Sanford C. Bernstein & Co., LLC ("SCB LLC") business purposes, including the support of AB’s commercial paper program. Both AB and SCB LLC can draw directly under the Credit Facility and management may draw on the Credit Facility from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Credit Facility.
The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of December 31, 2018, we were in compliance with these covenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under the Credit Facility would automatically become immediately due and payable, and the lender’s commitments automatically would terminate.

Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepayments and commitment reductions requested by us are permitted at any time without a fee (other than customary breakage costsdisclosures relating to the prepayment of any drawn loans) upon proper noticeour debt and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.facilities.
As of December 31, 2018 and 2017, we had no amounts outstanding under the Credit Facility. During 2018 and 2017, we did not draw upon the Credit Facility.
On November 16, 2018, AB amended and restated its existing $200.0 million committed, unsecured senior revolving credit facility (the "Revolver") with a leading international bank, extending the maturity date of the Revolver from November 28, 2018 to November 16, 2021. There were no other material changes included in the amendment. The Revolver is available for AB's and SCB LLC's business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC's operations. Both AB and SCB LLC can draw directly under the Revolver and management expects to draw on the Revolver from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Revolver. The Revolver contains affirmative, negative and financial covenants which are identical to those of the Credit Facility. As of December 31, 2018 and December 31, 2017, we had $25.0 million and $75.0 million outstanding under the Revolver, respectively, with interest rates of 3.4% and 2.4%, respectively. Average daily borrowings for 2018 and 2017 were $19.4 million and $21.4 million, respectively, with weighted average interest rates of 2.8% and 2.0%, respectively.

In addition, SCB LLC currently has three uncommitted lines of credit with three financial institutions. Two of these lines of credit permit us to borrow up to an aggregate of approximately $175.0 million, with AB named as an additional borrower, while the other line has no stated limit. As of December 31, 2018 and 2017, SCB LLC had no bank loans outstanding. Average daily borrowings of bank loans during 2018 and 2017 were $2.7 million and $4.5 million, respectively, with weighted average interest rates of approximately 1.6% and 1.4%, respectively.
Our financial condition and access to public and private debt markets should provide adequate liquidity for our general business needs. Management believes that cash flow from operations and the issuance of debt and AB Units or AB Holding Units will provide us with the resources we need to meet our financial obligations. See “Risk Factors” in Item 1A and “Cautions Regarding Forward-Looking Statements” in this Item 7 for a discussion of credit markets and our ability to renew our credit facilities at expiration.
Off-Balance Sheet Arrangements and Aggregate Contractual Obligations
Guarantees
Under various circumstances, AB guarantees the obligations of its consolidated subsidiaries.
AB maintains guarantees in connection with the Credit Facility (the "Credit Facility") and Revolver.Revolver (the "Revolver"). If SCB LLC is unable to meet its obligations, AB will pay the obligations when due or on demand. In addition, AB maintains guarantees totaling $375$365.0 million for SCB LLC’s three uncommitted lines of credit.
AB maintains a guarantee with a commercial bank, under which we guarantee the obligations in the ordinary course of business of each of SCB LLC, our U.K.-based broker-dealer and our Cayman subsidiary. We also maintain fourthree additional guarantees with other commercial banks under which we guarantee approximately $366$294.7 million of obligations for our U.K.-based broker-dealer and $99$99.0 million of obligations for our India-based broker-dealer. In the event that any of these fourthree entities is unable to meet its obligations, AB will pay the obligations when due or on demand.
We also have two smaller guarantees with a commercial bank totaling approximately $1.5$2.1 million, under which we guarantee certain obligations in the ordinary course of business of one of our foreign subsidiaries.
We have not been required to perform under any of the above agreements and currently have no liability in connection with these agreements.

Aggregate Contractual Obligations
Our contractual obligations as of December 31, 20182020 are as follows:
 Payments Due by Period
 Total 
Less than
1 Year
 1-3 Years 3-5 Years 
More than
5 Years
 (in millions)
Commercial paper$523.2
 $523.2
 $—
 $—
 $—
Line of Credit25.0
 25.0
 —
 —
 —
Operating leases, net of sublease commitments578.8
 84.3
 158.4
 136.0
 200.1
Funding commitments15.3
 6.9
 1.8
 1.2
 5.4
Accrued compensation and benefits255.6
 171.1
 49.5
 15.0
 20.0
Unrecognized tax benefits(1)
3.9
 —
 1.1
 —
 2.8
Federal transition tax (1)
21.8
 1.9
 3.8
 5.4
 10.7
Total$1,423.6
 $812.4
 $214.6
 $157.6
 $239.0
Payments Due by Period
TotalLess than 1 Year1-3 Years3-5 YearsMore than 5 Years
(in millions)
EQH credit facility$675.0 $675.0 $— $— $— 
Leases, net of sublease commitments851.4 79.9 137.2 107.7 526.6 
Funding commitments9.1 9.1 — — — 
Accrued compensation and benefits309.3 221.7 63.9 10.4 13.3 
FIN 48 reserve2.8 — — 2.8 — 
Federal transition tax14.9 1.6 4.6 8.7 — 
Total$1,862.5 $987.3 $205.7 $129.6 $539.9 
(1)See Note 21 to our consolidated financial statements in Item 8 for discussion of unrecognized tax benefits and federal transition tax.

During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (“Real Estate Fund”), we committed to invest $25$25.0 million in the Real Estate Fund. As of December 31, 2018,2020, we had funded $22.4 million of this commitment. During 2014, as general partner of AllianceBernstein U.S. Real Estate II L.P. (“Real Estate Fund II”), we committed to invest $28.0$27.3 million, as amended in 2015,2020, in the Real Estate Fund II. As of December 31, 2018,2020, we had funded $15.3$20.8 million of this commitment.
Accrued compensation and benefits amounts in the table above exclude our accrued pension obligation. Offsetting our accrued compensation obligations are long-term incentive compensation-related investments and money market investments we funded totaling $57.7$67.0 million, which are included in our consolidated statement of financial condition. Any amounts reflected on the
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consolidated statement of financial condition as payables (to broker-dealers, brokerage clients and company-sponsored mutual funds) and accounts payable and accrued expenses (excluding the tax obligations above) are excluded from the table above.above.
We expect to make contributions to our qualified profit sharing plan of approximately $14$15 million in each of the next four years. We do not currently estimateanticipate that we will contribute $4million to the Retirement Plan during 2019.2021.

The 2017 Tax Act (enacted in the U.S. on December 22, 2017) imposed a federal transition tax on mandatory deemed repatriation of certain deferred foreign earnings. Management elected to pay the transition tax in installments over an eight-year period from 2018 to 2025. The federal transition tax obligation is recorded to income tax payable on our consolidated statement of financial condition. See Note 20 to our consolidated financial statements in Item 8 for further discussion of our taxes.

During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our newly constructed Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134.0 million. During April 2019, we signed a lease, which commences in 2024, relating to approximately 190,000 square feet of newly constructed space in New York City. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20-year lease term is approximately $448.0 million. During the fourth quarter of 2020, we exercised an option to return a half floor of this space, which reduced our square footage from approximately 190,000 to 166,000 square feet and our base rent obligation from $448.0 million to $393.0 million. See Note 13 to our consolidated financial statements in Item 8 for discussion of our leases.

See Note 12 to our consolidated financial statements in Item 8 for a discussion of our debt.

Contingencies
See Note 14 to our consolidated financial statements in Item 8 for a discussion of our commitments and contingencies.
Critical Accounting Estimates
The preparation of the consolidated financial statements and notes to consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.
Management believes that the critical accounting policies and estimates discussed below involve significant management judgment due to the sensitivity of the methods and assumptions used.
Goodwill
As of December 31, 2018,2020, we had goodwill of $3.1 billion on the consolidated statement of financial condition. We have determined that AB has only one reporting segment and reporting unit. We test our goodwill annually, as of September 30, for impairment. As of September 30, 2018,2020, the impairment test indicated that goodwill was not impaired. The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as significant declines in AUM, revenues, earnings or the price of an AB Holding Unit.

On an annual basis, or when circumstances warrant, we perform step one of our two-step goodwill impairment test. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of AB, the reporting unit, with its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill is not considered to be impaired and the second step of thetested for impairment test is not performed. However, if the carrying value of the reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step compares the implied fair value of the reporting unit to the aggregated fair values of its individual assets and liabilities to determine the amount of impairment, if any.
AB estimates its fair value under bothutilizing the market approach and income approach. Under the market approach,where the fair value of the reporting unit is based on its unadjusted market valuation (AB Units outstanding multiplied by the price of an AB Holding Unit) and adjusted market valuations assuming a control premiumHolding's Unit price) and earnings multiples. The price of a publicly-traded AB Holding Unit serves as a reasonable starting point for valuing an AB Unit because each represents the same fractional interest in our underlying business. Our market approach analysis also includes control premiums, which are based on an analysis of control premiums for relevant recent acquisitions, and comparable industry earnings multiples applied to our earnings forecast. Underforecast and assumes a control premium (when applicable).
Throughout the income approach,year, the carrying value of goodwill is also reviewed for impairment if certain events or changes in circumstances occur, and trigger whether an interim impairment test may be required. Such changes in circumstances may include, but are not limited to, a sustained decrease in the price of an AB Unit or declines in AB’s market capitalization that would suggest that the fair value of the reporting unit is based onless than the present valuecarrying amount; significant and unanticipated declines in AB’s assets under management or revenues; and/or lower than expected earnings per unit. Any of estimated future cash flows. Determining estimated fair value using a discounted cash flow valuation technique consiststhese changes in circumstances could suggest the possibility that goodwill is impaired, but none of applying business growth rate assumptions overthese events or circumstances by itself would indicate that it is more likely than not that goodwill is impaired. Instead, they are merely recognized as triggering events for the estimated lifeconsideration of impairment and must be viewed in combination with any mitigating or positive factors. A holistic evaluation of all events since the most recent quantitative impairment test must be done to determine whether it is more likely than not that the reporting unit is impaired.
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As of January 1, 2020, we adopted ASU 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removed Step 2 of the goodwill asset and then discounting the resulting expected cash flows using an estimated weighted average cost of capital of market participants to arrive atimpairment test, which had required a present value amount that approximates fair value.
Real Estate Charges
Since 2010, in connection with our workforce reductions and in an effort to reduce our global real estate footprint, we have implemented a global office space consolidation.hypothetical purchase price allocation. As a result we have sub-leased over one million square feet of office space.
We recorded real estate charges that reflect the net present value of the difference betweenrevised guidance, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of our on-going contractual lease obligations forgoodwill. Under this guidance, the vacated floorsgoodwill impairment test no longer includes a determination by management of whether a decline in fair value is temporary; however, it is important to consider the impact of changing market conditions, including the severity and our estimateanticipated duration, is reflected in management's determination of current market rental rates for such floors. The charges we recorded were based on current assumptions at the time of the charges regarding sublease marketing periods, costs to prepare the properties to market, market rental rates, broker commissions and subtenant allowances/incentives, all of which are factors largely beyond our control. If our assumptions prove to be incorrect, we may need to record additional charges or reduce previously recorded charges. We review the assumptions and estimates we used in recording these charges on a quarterly basis.fair value.
Loss Contingencies
Management continuously reviews with legal counsel the status of regulatory matters and pending or threatened litigation. We evaluate the likelihood that a loss contingency exists and record a loss contingency if it is both probable and reasonably estimable as of the date of the financial statements. See Note 14 to our consolidated financial statements in Item 8.
Accounting Pronouncements
See Note 2 to our consolidated financial statements in Item 8.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Item 1A. Any or all of the forward-looking statements that we make in this Form 10-K, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects.

The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding:
•Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.


•Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates.


•The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a pending or future legal proceeding could be significant, and could have such an effect.


•The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.
58


•Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues:Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.

•Our Relocation Strategy:While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include:

•the amount and timing of employee relocation costs, severance, and overlapping compensation and occupancy costs we experience; and
•the timing for execution of each phase of our relocation implementation plan.
Our 2020 Margin Target: We previously adopted a goal•The Adverse Impact of increasing our adjusted operating margin to a target of 30% by 2020, subject to the assumptions, factors and contingencies described as partCOVID-19: The severity of the initial disclosure of this target. Our adjusted operating margin for 2018 was 29.1%.
Significant declines in the equity and fixed income markets during the fourth quarter of 2018, most notably in December 2018, reducedexpected adverse impact on our AUM by $34.0 billion, or 6.2%, during the fourth quarter to $516.4 billion from $550.4 billion at the endand revenues of the third quartereconomic downturn caused by the COVID-19 pandemic will depend on the depth and length of 2018. Given the downturn and its impact on the companies in which we expect this lower AUM will haveinvest. Our conclusions about the possible continuing significant adverse impact on us is based on our ability to generateassumptions that the level of investment advisory fee revenues we initially forecast when establishing the 2020 Margin Target, presently we do notrecovery will be gradual and that there will be lasting high unemployment and economic damage. We believe that achieving the 2020 Margin Target is likely. However, wethese assumptions are taking additional actions to better alignreasonable, but they may not be correct and economic conditions likely will differ from our expenses with these lower AUM and expected revenues. We remain committed to achieving an adjusted operating marginassumptions.



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Table of 30% in years subsequent to 2020 and will take continued actions in this regard, subject to prevailing market conditions and the evolution of our business mix.Contents


Item 7A.Quantitative and Qualitative Disclosures about Market Risk
Market Risk, Risk Management and Derivative Financial Instruments
Our investments consist of trading and other investments. Trading investments include U.S. Treasury Bills, mutual funds, exchange-traded options and various separately-managed portfolios consisting of equity securities. Trading investments are purchased for short-term investment, principally to fund liabilities related to long-term incentive compensation plans and to seed new investment services. Other investments include investments in hedge funds we sponsor and other private equity investment vehicles.
We enter into various futures, forwards, swaps and options primarily to economically hedge our seed capital investments. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging. See Note 87 to our consolidated financial statements in Item 8.
Trading and Non-Trading Market Risk Sensitive Instruments
Investments with Interest Rate Risk—Fair Value
The table below provides our potential exposure with respect to our fixed income investments, measured in terms of fair value, to an immediate 100 basis point increase in interest rates at all maturities from the levels prevailing as of December 31, 20182020 and 2017.2019. Such a fluctuation in interest rates is a hypothetical rate scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of interest rate sensitivity of our investments in fixed income mutual funds and fixed income hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments in response to our assessment of changing market conditions and available investment opportunities:
As of December 31, As of December 31,
2018 2017 20202019
Fair Value 
Effect of
+100
Basis Point
Change
 Fair Value 
Effect of
+100
Basis Point
Change
 Fair ValueEffect of
+100
Basis Point
Change		Fair ValueEffect of
+100
Basis Point
Change
(in thousands) (in thousands)
Fixed Income Investments:       Fixed Income Investments:
Trading$435,020
 $(28,668) $137,002
 $(8,987)Trading$35,555 $(2,457)$36,122 $(2,445)
Investments with Equity Price Risk—Fair Value
Our investments also include investments in equity securities, mutual funds and hedge funds. The following table provides our potential exposure with respect to our equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing as of December 31, 20182020 and 2017.2019. A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of equity price sensitivity of our investments in equity securities, mutual funds and hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to our assessment of changing market conditions and available investment opportunities:
 As of December 31,
 20202019
 Fair ValueEffect of -10%
Equity Price
Change		Fair ValueEffect of -10%
Equity Price
Change
 (in thousands)
Equity Investments:
Trading$137,529 $(13,753)$151,140 $(15,114)
Other investments80,291 (8,029)79,532 (7,953)
60
 As of December 31,
 2018 2017
 Fair Value 
Effect of -10%
Equity Price
Change
 Fair Value 
Effect of -10%
Equity Price
Change
 (in thousands)
Equity Investments:       
Trading$178,215
 $(17,822) $214,172
 $(21,417)
Other investments101,109
 (10,111) 92,415
 (9,242)
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Item 8.Financial Statements and Supplementary Data
Item 8.Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the General Partner and Unitholders of
AllianceBernstein L.P.:

Opinions on the Financial Statements and Internal Control over Financial Reporting


We have audited the accompanying consolidated statements of financial condition of AllianceBernstein L.P. and its subsidiaries (the “Company”) as of December 31, 20182020 and 2017,2019, and the related consolidated statements of income, of comprehensive income, of changes in partners’ capital and of cash flows for each of the three years in the period ended December 31, 2018,2020, including the related notes and financial statement schedule listed in the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control - Integrated Framework(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20182020 and 2017,2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20182020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO.


Basis for Opinions


The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management'sManagement’s Report on Internal Control overOver Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.


Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.


Definition and Limitations of Internal Control over Financial Reporting


A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.



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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Performance-Based Fees

As described in Notes 2 and 3 to the consolidated financial statements, performance-based fees earned were $132.6 million for the year ended December 31, 2020. The transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee. With respect to the constraining factors related to the fund’s market value, management measures assets under management (AUM) using established market-based valuation methods and fair valuation (non-observable market) methods. Fair valuation methods, including discounted cash flow models and other methods, are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The principal considerations for our determination that performing procedures relating to performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management's estimate of the funds' market value where fair valuation methods are used.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM. These procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees. In evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges. Developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities.


/s/ PricewaterhouseCoopersPricewaterhouseCooper LLP
New York, New York
February 13, 201911, 2021


We have served as the Company’s auditor since2006.



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AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Financial Condition
December 31,
20202019
(in thousands,
except unit amounts)
ASSETS
Cash and cash equivalents$1,037,400 $679,738 
Cash and securities segregated, at fair value (cost $1,752,483 and $1,090,443)1,753,478 1,094,866 
Receivables, net:  
Brokers and dealers92,638 97,966 
Brokerage clients1,713,377 1,536,674 
AB funds fees325,407 261,588 
Other fees148,746 148,744 
Investments:  
Long-term incentive compensation-related60,114 50,902 
Other193,261 215,892 
Assets of consolidated company-sponsored investment funds:
   Cash and cash equivalents36,506 11,433 
   Investments302,582 581,004 
   Other assets12,244 19,810 
Furniture, equipment and leasehold improvements, net147,874 145,251 
Goodwill3,082,778 3,076,926 
Intangible assets, net44,496 55,366 
Deferred sales commissions, net64,066 36,296 
Right-of-use assets418,455 362,693 
Other assets264,418 330,943 
Total assets$9,697,840 $8,706,092 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL
Liabilities:  
Payables:  
Brokers and dealers$216,403 $201,778 
Securities sold not yet purchased17,791 30,157 
Brokerage clients3,440,266 2,531,946 
AB mutual funds65,550 71,142 
Accounts payable and accrued expenses197,657 192,110 
Lease liabilities505,549 468,451 
Liabilities of consolidated company-sponsored investment funds30,620 31,017 
Accrued compensation and benefits335,122 276,829 
Debt675,000 560,000 
Total liabilities5,483,958 4,363,430 
63
 December 31,
 2018 2017
 (in thousands,
except unit amounts)
ASSETS   
Cash and cash equivalents$640,206
 $671,930
Cash and securities segregated, at fair value (cost $1,169,461 and $816,350)1,169,554
 816,350
Receivables, net: 
  
Brokers and dealers197,048
 199,690
Brokerage clients1,718,629
 1,647,059
AB funds fees217,470
 212,115
Other fees127,462
 130,119
Investments: 
  
Long-term incentive compensation-related52,429
 66,034
Other661,915
 377,555
Assets of consolidated company-sponsored investment funds:   
   Cash and cash equivalents13,118
 326,518
   Investments351,696
 1,246,283
   Other assets22,840
 35,397
Furniture, equipment and leasehold improvements, net155,519
 157,569
Goodwill3,066,700
 3,066,700
Intangible assets, net79,424
 105,784
Deferred sales commissions, net17,148
 30,126
Other assets297,940
 193,505
Total assets$8,789,098
 $9,282,734
    
LIABILITIES AND CAPITAL 
  
Liabilities: 
  
Payables: 
  
Brokers and dealers$290,960
 $237,861
Securities sold not yet purchased8,623
 29,961
Brokerage clients3,095,458
 2,229,371
AB mutual funds74,599
 82,967
Accounts payable and accrued expenses412,313
 503,227
Liabilities of consolidated company-sponsored investment funds22,610
 698,101
Accrued compensation and benefits273,250
 270,610
Debt546,267
 565,745
Total liabilities4,724,080
 4,617,843
Commitments and contingencies (See Note 14)

 

Redeemable non-controlling interest148,809
 601,587
Capital: 
  
General Partner40,240
 41,221
Limited partners: 268,850,276 and 268,659,333 units issued and outstanding4,075,306
 4,168,841
Receivables from affiliates(11,430) (11,494)
AB Holding Units held for long-term incentive compensation plans(77,990) (42,688)
Accumulated other comprehensive loss(110,866) (94,140)
Partners’ capital attributable to AB Unitholders3,915,260
 4,061,740
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AllianceBernstein L.P. and Subsidiaries

 December 31,
 2018 2017
Non-redeemable non-controlling interests in consolidated entities949
 1,564
Total capital3,916,209
 4,063,304
Total liabilities and capital$8,789,098
 $9,282,734
December 31,
20202019
Commitments and contingencies (See Note 14)
00
Redeemable non-controlling interest102,359 325,561 
Capital:  
General Partner41,776 41,225 
Limited partners: 270,509,658 and 270,380,314 units issued and outstanding4,229,485 4,174,201 
Receivables from affiliates(8,316)(9,011)
AB Holding Units held for long-term incentive compensation plans(57,219)(76,310)
Accumulated other comprehensive loss(94,203)(113,004)
Partners’ capital attributable to AB Unitholders4,111,523 4,017,101 
Total liabilities, redeemable non-controlling interest and capital$9,697,840 $8,706,092 
See Accompanying Notes to Consolidated Financial Statements.

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AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Income
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Revenues:     Revenues:
Investment advisory and services fees$2,362,211
 $2,201,305
 $1,933,471
Investment advisory and services fees$2,595,436 $2,472,044 $2,362,211 
Bernstein research services439,432
 449,919
 479,875
Bernstein research services459,744 407,911 439,432 
Distribution revenues418,562
 412,063
 384,405
Distribution revenues529,781 455,043 418,562 
Dividend and interest income98,226
 71,162
 46,939
Dividend and interest income50,923 104,421 98,226 
Investment gains (losses)2,653
 92,102
 93,353
Investment (losses) gainsInvestment (losses) gains(16,401)38,659 2,653 
Other revenues98,676
 97,135
 99,859
Other revenues104,703 97,559 98,676 
Total revenues3,419,760
 3,323,686
 3,037,902
Total revenues3,724,186 3,575,637 3,419,760 
Less: Interest expense52,399
 25,165
 9,123
Less: Interest expense15,650 57,205 52,399 
Net revenues3,367,361
 3,298,521
 3,028,779
Net revenues3,708,536 3,518,432 3,367,361 
     
Expenses: 
  
  
Expenses:   
Employee compensation and benefits1,378,811
 1,313,469
 1,229,721
Employee compensation and benefits1,494,198 1,442,783 1,378,811 
Promotion and servicing: 
  
  
Promotion and servicing:   
Distribution-related payments427,186
 411,467
 363,603
Distribution-related payments569,283 487,965 427,186 
Amortization of deferred sales commissions21,343
 31,886
 41,066
Amortization of deferred sales commissions27,355 15,029 21,343 
Trade execution, marketing, T&E and other222,630
 213,275
 216,542
Trade execution, marketing, T&E and other189,787 219,860 222,630 
General and administrative: 
  
  
General and administrative:   
General and administrative448,996
 481,488
 426,147
General and administrative485,544 484,750 448,996 
Real estate charges7,160
 36,669
 17,704
Real estate charges5,526 3,324 7,160 
Contingent payment arrangements(2,219) 267
 (20,245)Contingent payment arrangements1,855 (510)(2,219)
Interest on borrowings10,359
 8,194
 4,765
Interest on borrowings6,180 13,035 10,359 
Amortization of intangible assets27,781
 27,896
 26,311
Amortization of intangible assets21,372 28,759 27,781 
Total expenses2,542,047
 2,524,611
 2,305,614
Total expenses2,801,100 2,694,995 2,542,047 
     
Operating income825,314
 773,910
 723,165
Operating income907,436 823,437 825,314 
     
Income tax45,816
 53,110
 28,319
Income tax45,653 41,754 45,816 
     
Net income779,498
 720,800
 694,846
Net income861,783 781,683 779,498 
     
Net income of consolidated entities attributable to non-controlling interests21,910
 58,397
 21,488
Net (loss) income of consolidated entities attributable to non-controlling interestsNet (loss) income of consolidated entities attributable to non-controlling interests(4,169)29,641 21,910 
     
Net income attributable to AB Unitholders$757,588
 $662,403
 $673,358
Net income attributable to AB Unitholders$865,952 $752,042 $757,588 
     
Net income per AB Unit: 
  
  
Net income per AB Unit:   
Basic$2.79
 $2.46
 $2.48
Basic$3.19 $2.78 $2.79 
Diluted$2.78
 $2.45
 $2.47
Diluted$3.19 $2.78 $2.78 
See Accompanying Notes to Consolidated Financial Statements.

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AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Comprehensive Income
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
Net income$779,498
 $720,800
 $694,846
Net income$861,783 $781,683 $779,498 
Other comprehensive (loss) income:     
Other comprehensive income:Other comprehensive income:
Foreign currency translation adjustments, before reclassification and tax:(19,337) 28,123
 (19,849)Foreign currency translation adjustments, before reclassification and tax:23,882 5,986 (19,337)
Less: reclassification adjustment for losses included in net income upon liquidation(100) —
 (6)Less: reclassification adjustment for losses included in net income upon liquidation(216)0 (100)
Foreign currency translation adjustments, before tax(19,237) 28,123
 (19,843)Foreign currency translation adjustments, before tax24,098 5,986 (19,237)
Income tax expense620
 —
 —
Income tax (expense) benefitIncome tax (expense) benefit(854)(383)620 
Foreign currency translation adjustments, net of tax(18,617) 28,123
 (19,843)Foreign currency translation adjustments, net of tax23,244 5,603 (18,617)
Unrealized gains on investments:     
Unrealized gains arising during period—
 6
 10
Less: reclassification adjustment for losses included in net income—
 —
 (6)
Changes in unrealized gains on investments—
 6
 16
Income tax benefit (expense)—
 3
 (7)
Unrealized gains on investments, net of tax—
 9
 9
Changes in employee benefit related items: 
  
  
Changes in employee benefit related items:   
Amortization of prior service cost24
 24
 93
Amortization of prior service cost24 24 24 
Recognized actuarial gain (loss)1,586
 (3,190) (3,043)
Recognized actuarial (loss) gainRecognized actuarial (loss) gain(4,280)(7,891)1,586 
Changes in employee benefit related items1,610
 (3,166) (2,950)Changes in employee benefit related items(4,256)(7,867)1,610 
Income tax expense(139) (27) (22)
Income tax benefit (expense)Income tax benefit (expense)(187)274 (139)
Employee benefit related items, net of tax1,471
 (3,193) (2,972)Employee benefit related items, net of tax(4,443)(7,593)1,471 
Other374
 —
 —
Other0 0 374 
Other comprehensive (loss) gain(16,772) 24,939
 (22,806)
Less: Comprehensive income in consolidated entities attributable to non-controlling interests21,864
 59,379
 21,426
Other comprehensive gain (loss)Other comprehensive gain (loss)18,801 (1,990)(16,772)
Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interestsLess: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests(4,169)29,788 21,864 
Comprehensive income attributable to AB Unitholders$740,862
 $686,360
 $650,614
Comprehensive income attributable to AB Unitholders$884,753 $749,905 $740,862 
See Accompanying Notes to Consolidated Financial Statements.

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Consolidated Statements of Changes in Partners’ Capital
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
General Partner’s Capital     General Partner’s Capital
Balance, beginning of year$41,221
 $41,100
 $40,498
Balance, beginning of year$41,225 $40,240 $41,221 
Impact of adoption of revenue recognition standard ASC 606349
 —
 —
Net income7,576
 6,624
 6,733
Net income8,660 7,521 7,576 
Cash distributions to General Partner(8,608) (6,449) (5,384)Cash distributions to General Partner(8,376)(7,042)(8,608)
Long-term incentive compensation plans activity(39) 211
 58
Long-term incentive compensation plans activity(23)149 (39)
(Retirement) issuance of AB Units, net(256) (266) (805)
Issuance (retirement) of AB Units, netIssuance (retirement) of AB Units, net290 357 (256)
Impact of adoption of revenue recognition standard ASC 606Impact of adoption of revenue recognition standard ASC 6060 0 349 
Other(3) 1
 —
Other0 0 (3)
Balance, end of year40,240
 41,221
 41,100
Balance, end of year41,776 41,225 40,240 
Limited Partners' Capital     Limited Partners' Capital
Balance, beginning of year4,168,841
 4,154,810
 4,091,433
Balance, beginning of year4,174,201 4,075,306 4,168,841 
Impact of adoption of revenue recognition standard ASC 60634,601
 —
 —
Net income750,012
 655,779
 666,625
Net income857,292 744,521 750,012 
Cash distributions to Unitholders(849,585) (637,690) (532,180)Cash distributions to Unitholders(828,503)(696,470)(849,585)
Long-term incentive compensation plans activity(3,880) 20,859
 5,802
Long-term incentive compensation plans activity(2,147)14,741 (3,880)
(Retirement) issuance of AB Units, net(25,486) (27,339) (80,084)
Issuance (retirement) of AB Units, netIssuance (retirement) of AB Units, net28,642 35,259 (25,486)
Impact of adoption of revenue recognition standard ASC 606Impact of adoption of revenue recognition standard ASC 6060 0 34,601 
Other803
 2,422
 3,214
Other0 844 803 
Balance, end of year4,075,306
 4,168,841
 4,154,810
Balance, end of year4,229,485 4,174,201 4,075,306 
Receivables from Affiliates     Receivables from Affiliates
Balance, beginning of year(11,494) (12,830) (14,498)Balance, beginning of year(9,011)(11,430)(11,494)
Capital contributions from General Partner19
 344
 1,200
Capital contributions from General Partner0 0 19 
Compensation plan accrual352
 156
 313
Compensation plan accrual0 0 352 
Long-term incentive compensation awards expenseLong-term incentive compensation awards expense802 1,125 0 
Capital contributions from AB Holding(307) 836
 155
Capital contributions from AB Holding(107)1,294 (307)
Balance, end of year(11,430) (11,494) (12,830)Balance, end of year(8,316)(9,011)(11,430)
AB Holding Units held for Long-term Incentive Compensation Plans     AB Holding Units held for Long-term Incentive Compensation Plans
Balance, beginning of year(42,688) (32,967) (29,332)Balance, beginning of year(76,310)(77,990)(42,688)
Purchases of AB Holding Units to fund long-term compensation plans, net(267,427) (219,627) (235,893)Purchases of AB Holding Units to fund long-term compensation plans, net(148,624)(171,930)(267,427)
Retirement (issuance) of AB Units, net25,589
 26,603
 80,515
(Issuance) retirement of AB Units, net(Issuance) retirement of AB Units, net(28,696)(35,736)25,589 
Long-term incentive compensation awards expense187,514
 185,234
 152,012
Long-term incentive compensation awards expense194,840 207,057 187,514 
Re-valuation of AB Holding Units held in rabbi trust19,022
 (1,931) (269)Re-valuation of AB Holding Units held in rabbi trust1,556 (4,403)19,022 
OtherOther15 6,692 0 
Balance, end of year(77,990) (42,688) (32,967)Balance, end of year(57,219)(76,310)(77,990)
Accumulated Other Comprehensive Income (Loss)     Accumulated Other Comprehensive Income (Loss)
Balance, beginning of year(94,140) (118,096) (95,353)Balance, beginning of year(113,004)(110,866)(94,140)
Unrealized gain (loss) on investments, net of tax—
 9
 9
Foreign currency translation adjustment, net of tax(18,571) 27,140
 (19,780)Foreign currency translation adjustment, net of tax23,244 5,455 (18,571)
Changes in employee benefit related items, net of tax1,471
 (3,193) (2,972)Changes in employee benefit related items, net of tax(4,443)(7,593)1,471 
Unrealized gain on investments, net of taxUnrealized gain on investments, net of tax0 0 0 
Other374
 —
 —
Other0 0 374 
Balance, end of year(110,866) (94,140) (118,096)Balance, end of year(94,203)(113,004)(110,866)
Total Partners' Capital attributable to AB Unitholders3,915,260
 4,061,740
 4,032,017
Total Partners' Capital attributable to AB Unitholders4,111,523 4,017,101 3,915,260 
Non-redeemable Non-controlling Interests in Consolidated Entities 
  
  
Non-redeemable Non-controlling Interests in Consolidated Entities   
Balance, beginning of year1,564
 36,172
 24,473
Balance, beginning of year0 949 1,564 
Net income69
 9,632
 11,398
Net income0 91 69 
Foreign currency translation adjustment(46) 983
 (63)Foreign currency translation adjustment0 147 (46)
Purchase of non-controlling interest—
 (2,006) —
Purchase of non-controlling interest0 (1,187)0 
Distributions (to) from non-controlling interests of our consolidated venture capital fund activities(638) (43,217) 364
Distributions (to) non-controlling interests of our consolidated venture capital fund activitiesDistributions (to) non-controlling interests of our consolidated venture capital fund activities0 0 (638)
Balance, end of year949
 1,564
 36,172
Balance, end of year0 0 949 
Total Capital$3,916,209
 $4,063,304
 $4,068,189
Total Capital$4,111,523 $4,017,101 $3,916,209 
See Accompanying Notes to Consolidated Financial Statements.

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Consolidated Statements of Cash Flows
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
Cash flows from operating activities:     Cash flows from operating activities:
Net income$779,498
 $720,800
 $694,846
Net income$861,783 $781,683 $779,498 
Adjustments to reconcile net income to net cash provided by operating activities:     Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions21,343
 31,886
 41,066
Amortization of deferred sales commissions27,355 15,029 21,343 
Non-cash long-term incentive compensation expense187,514
 185,234
 152,162
Non-cash long-term incentive compensation expense195,642 208,182 187,514 
Depreciation and other amortization70,000
 66,999
 59,026
Depreciation and other amortization138,240 166,542 70,000 
Unrealized losses (gains) on investments23,164
 3,554
 (28,204)Unrealized losses (gains) on investments10,405 (13,431)23,164 
Unrealized (gains) on investments of consolidated company-sponsored investment funds(14,217) (36,340) (29,121)Unrealized (gains) on investments of consolidated company-sponsored investment funds(854)(36,150)(14,217)
Losses on real estate asset write-offs38
 8,161
 5,456
Other, net(6,484) 5,028
 3,629
Other, net(2,914)10,281 (6,446)
Changes in assets and liabilities:     Changes in assets and liabilities:
Consolidation of cash and cash equivalents of consolidated company-sponsored investment funds—
 —
 358,534
(Increase) decrease in securities, segregated(353,204) 129,747
 (380,823)(Increase) decrease in securities, segregated(658,612)74,688 (353,204)
(Increase) decrease in receivables(207,000) 67,539
 (296,233)(Increase) decrease in receivables(182,684)223,137 (207,000)
(Increase) decrease in investments(294,383) 293
 187,752
Decrease (increase) in investmentsDecrease (increase) in investments7,597 460,347 (294,383)
Decrease (increase) in investments of consolidated company-sponsored investment funds908,804
 (639,067) (342,938)Decrease (increase) in investments of consolidated company-sponsored investment funds279,276 (193,158)908,804 
(Increase) decrease in deferred sales commissions(8,365) 1,878
 (5,886)
(Increase) decrease in other assets(152,726) (2,255) 13,517
(Decrease) increase in other assets and liabilities of consolidated company-sponsored investment funds(662,934) 417,674
 229,524
(Increase) in deferred sales commissions(Increase) in deferred sales commissions(55,125)(34,177)(8,365)
(Increase) in right-of-use assets(Increase) in right-of-use assets(131,765)(11,141)— 
Decrease (increase) in other assetsDecrease (increase) in other assets69,160 (23,140)(152,726)
Increase (decrease) in other assets and liabilities of consolidated company-sponsored investment funds, netIncrease (decrease) in other assets and liabilities of consolidated company-sponsored investment funds, net7,169 11,437 (662,934)
Increase (decrease) in payables1,024,317
 (338,523) 886,520
Increase (decrease) in payables861,502 (641,369)1,024,317 
(Decrease) increase in accounts payable and accrued expenses(11,225) 10,657
 2,459
Increase (decrease) in lease liabilitiesIncrease (decrease) in lease liabilities37,695 (107,276)— 
Increase (decrease) in accounts payable and accrued expensesIncrease (decrease) in accounts payable and accrued expenses10,666 (56,518)(11,225)
Increase (decrease) in accrued compensation and benefits4,341
 12,187
 (3,238)Increase (decrease) in accrued compensation and benefits46,885 (7,486)4,341 
Net cash provided by operating activities1,308,481
 645,452
 1,548,048
Net cash provided by operating activities1,521,421 827,480 1,308,481 
     
Cash flows from investing activities:     Cash flows from investing activities:
Purchases of investments—
 (12) —
Proceeds from sales of investments—
 11
 372
Purchases of equity method investmentsPurchases of equity method investments(4,079)0 0 
Purchases of furniture, equipment and leasehold improvements(32,789) (39,417) (36,728)Purchases of furniture, equipment and leasehold improvements(41,504)(28,303)(32,789)
Proceeds from sales of furniture, equipment and leasehold improvements—
 75
 15
Purchase of intangible asset—
 —
 (2,500)
Purchase of businesses, net of cash acquired—
 —
 (20,541)
Acquisition of businesses, net of cash acquiredAcquisition of businesses, net of cash acquired(13,552)5,255 0 
Net cash used in investing activities(32,789) (39,343) (59,382)Net cash used in investing activities(59,135)(23,048)(32,789)
     
Cash flows from financing activities:     Cash flows from financing activities:
Issuance (repayment) of commercial paper, net24,546
 (28,553) (72,003)
(Repayment) proceeds from bank loans(50,000) 75,000
 —
Increase (decrease) in overdrafts payable3,273
 63,393
 (84,512)
Proceeds (repayment) of debtProceeds (repayment) of debt115,000 2,105 (25,454)
(Decrease) increase in overdrafts payable(Decrease) increase in overdrafts payable(12,633)(59,924)3,273 
Distributions to General Partner and Unitholders(858,193) (644,139) (537,564)Distributions to General Partner and Unitholders(836,879)(703,512)(858,193)
Capital contributions (to) from non-controlling interests in consolidated entities(638) (43,217) 364
(Redemptions) purchases of non-controlling interests of consolidated company-sponsored investment funds, net(472,143) 163,164
 (132,837)
Capital contributions (to) non-controlling interests in consolidated entitiesCapital contributions (to) non-controlling interests in consolidated entities0 0 (638)
(Redemptions) subscriptions of non-controlling interests of consolidated company-sponsored investment funds, net(Redemptions) subscriptions of non-controlling interests of consolidated company-sponsored investment funds, net(219,033)150,091 (472,143)
Capital contributions (to) from affiliates(1,421) 366
 1,000
Capital contributions (to) from affiliates(867)269 (1,421)
Payments of contingent payment arrangements/purchase of shares(1,093) (7,592) (5,545)
Interest accretion, net of (payments) on contingent payment arrangementsInterest accretion, net of (payments) on contingent payment arrangements1,921 (1,991)(1,093)
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units16,589
 20,110
 6,108
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units147 11,511 16,589 
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net(267,427) (219,627) (235,893)Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net(148,624)(171,930)(267,427)
Purchases of AB Units(153) (1,003) (374)
Other(1,998) (1,833) (22)Other(1,615)(1,580)(2,151)
Net cash used in financing activities(1,608,658) (623,931) (1,061,278)Net cash used in financing activities(1,102,583)(774,961)(1,608,658)
Effect of exchange rate changes on cash and cash equivalents(12,158) 21,760
 (10,178)Effect of exchange rate changes on cash and cash equivalents23,032 8,376 (12,158)
Net (decrease) increase in cash and cash equivalents(345,124) 3,938
 417,210
Net increase (decrease) in cash and cash equivalentsNet increase (decrease) in cash and cash equivalents382,735 37,847 (345,124)
Cash and cash equivalents as of beginning of the period998,448
 994,510
 577,300
Cash and cash equivalents as of beginning of the period691,171 653,324 998,448 
Cash and cash equivalents as of end of the period$653,324
 $998,448
 $994,510
Cash and cash equivalents as of end of the period$1,073,906 $691,171 $653,324 
     
Cash paid:     Cash paid:
Interest paid$60,286
 $30,975
 $11,148
Interest paid$18,858 $66,002 $60,286 
Income taxes paid41,946
 67,421
 27,387
Income taxes paid59,791 52,444 41,946 
     
Non-cash investing activities:     Non-cash investing activities:
Fair value of assets acquired—
 —
 33,583
Fair value of assets acquired (excluding cash acquired of $0.6 million and $11.8 million)Fair value of assets acquired (excluding cash acquired of $0.6 million and $11.8 million)18,389 28,966 0 
Fair value of liabilities assumed—
 —
 1,149
Fair value of liabilities assumed437 16,837 0 
Non-cash financing activities:     Non-cash financing activities:
Payables recorded under contingent payment arrangements—
 —
 11,893
Payables recorded under contingent payment arrangements4,400 17,384 0 
See Accompanying Notes to Consolidated Financial Statements.

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Notes to Consolidated Financial Statements
The words “we” and “our” refer collectively to AllianceBernstein L.P. and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to AB. Cross-references are in italics.
1. Business Description and Organization
We provide research, diversified investment management, research and related services globally to a broad range of clients. Our principal services include:
•Institutional Services—servicing our institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as AXA S.A. ("AXA"), AXA Equitable Holdings, Inc. ("EQH") and their respectiveits subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.
•Retail Services—servicing our retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.
•Private Wealth Management Services—servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.
•Bernstein Research Services—servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.
We also provide distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds we sponsor.
Our high-quality, in-depth research is the foundation of our business. Our research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, we have experts focused onexpertise in multi-asset strategies, wealth management, environmental, social and corporate governance ("ESG") and alternative investments.
We provide a broad range of investment services with expertise in:
•Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
equities;
•Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;
Passive management, including index and enhanced index strategies;
•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity (e.g., direct lending); and
equity;

•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds.funds; and
Our services span various investment disciplines,
•Some passive management, including market capitalization (e.g., large-, mid-index and small-cap equities), term (e.g., long-, intermediate- and short-duration debt securities), and geographic location (e.g., U.S., international, global, emerging markets, regional and local), in major markets around the world.enhanced index strategies.

Organization

During the second quarter of 2018, AXA S.A. ("AXA")completed the sale of a minority stake in EQH the holding company for a diversified financial services organization, conductedthrough an initial public offering.offering ("IPO"). Since then, AXA has completed additional offerings and taken other steps, most recently during the fourth quarter of 2019. As a French holding company forresult, AXA Group, a worldwide leader in life, property and casualty and health insurance and asset management, owns 59.2%owned less than 10% of the outstanding common stock of EQH as of December 31, 2018. AXA has announced its intention to sell its entire remaining interest in EQH over time, subject to market conditions and other factors. AXA is under no obligation to do so and retains the sole discretion to determine the timing of any future sales of shares of EQH common stock.2020.
As of December 31, 2018,2020, EQH ownsowned approximately 4.2%4.1% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AllianceBernstein

Holding L.P. (“AB Holding”) and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB.
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As of December 31, 2018,2020, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1% interest, iswas as follows:
EQH and its subsidiaries63.663.3 %
AB Holding35.636.0 
Unaffiliated holders0.80.7 
100.0%
Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 65.2%64.8% economic interest in AB as of December 31, 2018.2020.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“("US GAAP”GAAP"). The preparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include AB and its majority-owned and/or controlled subsidiaries, and the consolidated entities that are considered to be variable interest entities ("VIEs") and voting interest entities ("VOEs") in which AB has a controlling financial interest. Non-controlling interests on the consolidated statements of financial condition include the portion of consolidated company-sponsored investment funds in which we do not have direct equity ownership. All significant inter-company transactions and balances among the consolidated entities have been eliminated.
Reclassifications
During 2018, to conform to the current period's presentation, prior period amounts for:
revenues related to our middle market lending business previously presented as other revenues are now presented as investment advisory and services fees in the consolidated statements of income;
payments to financial intermediaries for administrative services, sub-accounting services and maintenance of books and records for certain funds previously presented as distribution-related payments are now presented as trade execution, marketing, T&E and other expenses in the consolidated statements of income;
research and miscellaneous fees related to our brokers dealers previously presented as other assets are now presented as other fees receivables in the consolidated statements of financial condition; and
income tax payable and receivable as well as deferred tax assets and liabilities are now shown net by jurisdiction in the consolidated statements of financial condition.
Recently Adopted Accounting Pronouncements


In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, which outlines a single comprehensive revenue recognition model for all contracts with customers and supersedes most of the existing revenue recognition requirements. We adopted this new standard on January 1, 2018 on a modified retrospective basis for contracts that were not completed as of the date of adoption.

The new standard did not change the timing of revenue recognition for our base fees, distribution revenues, shareholder servicing fees and broker-dealer revenues. However, performance-based fees, which, prior to the adoption of ASC 606, were recognized at the end of the applicable measurement period when no risk of reversal remained, and carried-interest distributions received (considered performance-based fees), recorded as deferred revenues until no risk of reversal remained, may in certain instances

be recognized earlier under the new standard, if it is probable that significant reversal of performance-based fees recognized will not occur.

On January 1, 2018, we recorded a cumulative effect adjustment, net of tax, of a $35.0 million increase to partners’ capital in the consolidated statement of financial condition. This amount represents carried interest distributions of $77.9 million previously received, net of revenue sharing payments to investment team members of $42.7 million, with respect to which it is probable that significant reversal will not occur.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. The amendment addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. We adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). The amendment is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. We adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The new standard requires that the statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Companies are also required to reconcile such total amounts in the statement of financial condition and disclose the nature of the restrictions. We adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In March 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The amendment requires that an employer disaggregate the service cost component from the other components of net benefit costs on the income statement. We adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation, Scope of Modification Accounting. The amendment provides clarity and reduces both diversity in practice and cost and complexity when applying the guidance in Topic 718, Compensation - Stock Compensation, to a change to the terms or conditions of a share-based payment award. We adopted this standard on January 1, 2018. The adoption of this standard did not have a material impact on our financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted in 2018

In February 2016, the FASB issued ASU 2016-02, Leases. This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-02, requires lessees to record most leases on their balance sheet while also disclosing key information about those lease arrangements. The classification criteria to distinguish between finance and operating leases are generally consistent with the classification criteria to distinguish between capital and operating leases under existing lease accounting guidance. This pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018. We adopted the new standard for our fiscal year beginning January 1, 2019, using the simplified transition method. The adoption of this standard is not expected to have a material impact on our results of operations. Our future financial statements will include additional disclosures as required by ASU 2016-02.
As of January 1, 2019, we expect to record an increase in assets ranging between $430 million to $440 million and an increase in liabilities ranging between $560 million to $570 million, respectively, on our statement of financial condition as a result of recognizing right-of-use assets and lease liabilities for our lease portfolio (primarily real estate leases). The right-of-use assets recognized as of January 1, 2019 are net of deferred rent and liabilities associated with previously recognized impairments as of December 31, 2018. These estimated ranges were based on our lease portfolio as of January 1, 2019, and it did not include the potential impacts of re-measurement due to changes in our assessment of the lease term subsequent to our adoption of the standard.
In June 2016, the FASB issued ASU 2016-03, 2016-13, Financial Instruments - Credit Losses (Topic 326). This new guidance relatesrelated to the accounting for credit losses on financial instruments. The new guidance introducesinstruments and introduced an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. We adopted this standard prospectively on January 1, 2020. The new guidance is effective for financial statements issued for fiscal years ending after December 15, 2019, with early adoption permitted. Management currently is evaluating the impact that adoption of this standard willdid not have a material impact on our consolidated financial statements.condition or results of operations.


In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removesremoved Step 2 of the goodwill impairment test, which requireshad required a hypothetical purchase price allocation. As a result of the revised guidance, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The revised guidance will be appliedWe adopted this standard prospectively and is effective inon January 1, 2020. The revised guidance isadoption of this standard did not expected to have a material impact on our financial condition or results of operations.
In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which permits a company to reclassify the disproportionate income tax effects of the 2017 Tax Cuts and Job Act ("2017 Tax Act") on items within Accumulated Other Comprehensive Income ("AOCI") to retained earnings. The FASB refers to these amounts as "stranded tax effects." The ASU also requires certain new disclosures, some of which are applicable for all companies. The guidance is effective for all companies for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Companies may adopt the new guidance using one of two transition methods: (1) retrospective to each period (or periods) in which the income tax effect of the 2017 Tax Act related to items remaining in AOCI are recognized, or (2) at the beginning of the period of adoption. We adopted this standard on January 1, 2019. The adoption of this standard is not expected to have a material impact on our financial condition or results of operations.
In August 2018, the FASB issued ASU 2018-13,Fair Value Measurement (Topic 820): Disclosure Framework-Changes to theDisclosure Requirements for Fair Value Measurement. The amendment modifiesmodified the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. We adopted this standard prospectively on January 1, 2020. The revised guidance is effective for all companies for fiscal years beginning after December 15, 2019, and interim periods within those years. Companies are permitted to early adopt any eliminated or modified disclosure requirements and delay adoption of the additional disclosure requirements until their effective date. The removed and modified disclosures will be adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The revised guidance isthis standard did not expected to have a material impact on our financial condition or results of operations.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendment aligned the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements that currently exist in GAAP for capitalizing implementation costs incurred to develop or obtain internal-use software. Implementation costs are either capitalized or expensed as incurred depending on the project stage. All costs in the preliminary and post-implementation project stages are expensed as incurred, while certain costs within the application development stage are capitalized. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

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In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment was intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance was effective beginning on March 12, 2020, and can be applied to amendments prospectively through December 31, 2022. An entity may elect to apply the amendments in this update, as well as amendments include in ASU 2021-01 issued in January 2021, as of the beginning of the interim period that includes March 12, 2020. We adopted these standards prospectively on January 1, 2020. The adoption of these standards did not have a material impact on our financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted in 2020

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20). The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirementpost-retirement plans. The revised guidance is effective for financial statements issued for fiscal years endingbeginning after December 15, 2020, with early adoption permitted.2020. The revised guidance iswill not expected to have a material impact on our financial condition or results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2020. The revised guidance will not have a material impact on our financial condition or results of operations.

Revenue Recognition


Investment advisory and services fees
AB provides asset management services by managing customer assets and seeking to deliver investment returns to investors. Each investment management contract between AB and a customer creates a distinct, separately identifiable performance obligation for each day the customer’s assets are managed as the customer can benefit from each day of service. In accordance with ASC 606, a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer are treated as a single performance obligation. Accordingly, we have determined that our investment and advisory services are performed over time and entitle us to variable consideration earned based uponon the value of the investors’ assets under management (“AUM”).


We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models evaluation of assets versus liabilities or any other methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for additional information about our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.


The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments.


We record as revenue investment advisory and services base fees, which we generally calculate as a percentage of AUM. At month-end, all the components of the transaction price (i.e., the base fee calculation) are no longer variable and the value of the consideration is determined. These fees are not subject to claw back and there is minimal probability that a significant reversal of the revenue recorded will occur. 



The transaction price for the asset management performance obligation for certain investment advisory contracts, including those associated with hedge funds or other alternative investments, provide for a performance-based fee (including carried interest), in addition to a base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees
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are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. At each reporting date, we evaluate the constraining factors, discussed below, surrounding the variable consideration to determine the extent to which, if any, revenues associated with the performance-based fee can be recognized.


Constraining factors impacting the amount of variable consideration included in the transaction price include: the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value, the level at which the fund’s value exceeds the contractual threshold required to earn such a fee, and the materiality of the amount being evaluated.

Prior to the adoption of ASC 606 on January 1, 2018, we recognized performance-based fees at the end of the applicable measurement period when no risk of reversal remained, and carried-interest distributions received as deferred revenues until no risk of reversal remained.


Bernstein Research Services
Bernstein Research Services revenue consists principally of commissions received, and to a lesser but increasing extent, direct payments for trade execution services and providing equity research services to institutional clients. Brokerage commissions for trade execution services and related expenses are recorded on a trade-date basis when the performance obligations are satisfied. Generally, the transaction price is agreed upon at the point of each trade and based upon the number of shares traded or the value of the consideration traded. Research revenues are recognized when the transaction price is quantified, collectability is assured and significant reversal of such revenue is not probable.


Distribution Revenues
Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur. Depending uponThe variable consideration can be determined in different ways, as discussed below, as we satisfy the performance obligation depending on the contractual arrangements with the customer and the specific product sold, the variable consideration can be determined in different ways, as discussed below, as we satisfy the performance obligation.sold.


Most open-end U.S. funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and service fees for the distribution and sale of its shares (“Rule 12b-1 Fees”). The open-end U.S. funds have such agreements with us, and we have selling and distribution agreements pursuant to which we pay sales commissions to the financial intermediaries that distribute our open-end U.S. funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares.


We record 12b-1 fees monthly based upon a percentage of the net asset value (“NAV”) of the funds. At month-end, the variable consideration of the transaction price is no longer constrained as the NAV can be calculated and the value of consideration is determined. These services are separate and distinct from other asset management services as the customer can benefit from these services independently of other services. We accrue the corresponding 12b-1 fees paid to sub-distributors monthly as the expenses are incurred. We are acting in a principal capacity in these transactions; as such, these revenues and expenses are recorded on a gross basis.


We offer back-end load shares in limited instances and charge the investor a contingent deferred sales charge (“CDSC”) if the investment is redeemed within a certain period. The variable consideration for these contracts is contingent uponon the timing of the redemption by the investor and the value of the sale proceeds. Due to these constraining factors, we exclude the CDSC fee from the transaction price until the investor redeems the investment. Upon redemption, the cash consideration received for these contractual arrangements are recorded as reductions of unamortized deferred sales commissions.


Our Luxembourg subsidiary, the management company for most of our non-U.S. funds, earns a management fee whichthat is accrued daily and paid monthly, at an annual rate, based on the average daily net assets of the fund. With respect to certain share classes, the management fee may also contain a component that is paid to distributors and other financial intermediaries and service providers to cover shareholder servicing and other administrative expenses (also referred to as an All-in-Fee). As we have concluded that asset management is distinct from distribution, we allocate a portion of the investment and advisory fee to distribution revenues for the servicing component based on standalone selling prices.



Other Revenues
Revenues from contracts with customers include a portion of other revenues, which consists primarily of shareholder servicing fees, as well as mutual fund reimbursements and other brokerage income.


We provide shareholder services, which include transfer agency, administrative and recordkeeping services provided to company-sponsored mutual funds. The consideration for these services is based on a percentage of the NAV of the fund or a fixed-fee based on the number of shareholder accounts being serviced. The revenues are recorded at month-end when the constraining factors involved with determining NAV or the number of shareholders’ accounts are resolved.

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Non-Contractual RevenuesLoss Contingencies
DividendManagement continuously reviews with legal counsel the status of regulatory matters and pending or threatened litigation. We evaluate the likelihood that a loss contingency exists and record a loss contingency if it is both probable and reasonably estimable as of the date of the financial statements. See Note 14 to our consolidated financial statements in Item 8.
Accounting Pronouncements
See Note 2 to our consolidated financial statements in Item 8.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Item 1A. Any or all of the forward-looking statements that we make in this Form 10-K, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects.
The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding:
•Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.

•Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest incomerates.

•The outcome of litigation: Litigation is accruedinherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a legal proceeding could be significant, and could have such an effect.

•The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.
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•Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.

•Our Relocation Strategy: While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as earned. Investment gainsof the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include:
•the amount and lossestiming of employee relocation costs, severance, and overlapping compensation and occupancy costs we experience; and
•the timing for execution of each phase of our relocation implementation plan.
•The Adverse Impact of COVID-19: The severity of the expected adverse impact on our AUM and revenues of the economic downturn caused by the COVID-19 pandemic will depend on the condenseddepth and length of the downturn and its impact on the companies in which we invest. Our conclusions about the possible continuing significant adverse impact on us is based on our assumptions that the recovery will be gradual and that there will be lasting high unemployment and economic damage. We believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions.



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Item 7A.Quantitative and Qualitative Disclosures about Market Risk
Market Risk, Risk Management and Derivative Financial Instruments
Our investments consist of trading and other investments. Trading investments include U.S. Treasury Bills, mutual funds, exchange-traded options and various separately-managed portfolios consisting of equity securities. Trading investments are purchased for short-term investment, principally to fund liabilities related to long-term incentive compensation plans and to seed new investment services. Other investments include investments in hedge funds we sponsor and other investment vehicles.
We enter into various futures, forwards, swaps and options primarily to economically hedge our seed capital investments. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging. See Note 7 to our consolidated financial statements in Item 8.
Trading and Non-Trading Market Risk Sensitive Instruments
Investments with Interest Rate Risk—Fair Value
The table below provides our potential exposure with respect to our fixed income investments, measured in terms of fair value, to an immediate 100 basis point increase in interest rates at all maturities from the levels prevailing as of December 31, 2020 and 2019. Such a fluctuation in interest rates is a hypothetical rate scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of interest rate sensitivity of our investments in fixed income mutual funds and fixed income hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments in response to our assessment of changing market conditions and available investment opportunities:
 As of December 31,
 20202019
 Fair ValueEffect of
+100
Basis Point
Change		Fair ValueEffect of
+100
Basis Point
Change
 (in thousands)
Fixed Income Investments:
Trading$35,555 $(2,457)$36,122 $(2,445)
Investments with Equity Price Risk—Fair Value
Our investments also include investments in equity securities, mutual funds and hedge funds. The following table provides our potential exposure with respect to our equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing as of December 31, 2020 and 2019. A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of equity price sensitivity of our investments in equity securities, mutual funds and hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to our assessment of changing market conditions and available investment opportunities:
 As of December 31,
 20202019
 Fair ValueEffect of -10%
Equity Price
Change		Fair ValueEffect of -10%
Equity Price
Change
 (in thousands)
Equity Investments:
Trading$137,529 $(13,753)$151,140 $(15,114)
Other investments80,291 (8,029)79,532 (7,953)
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Item 8.Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the General Partner and Unitholders of AllianceBernstein L.P.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of AllianceBernstein L.P. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, include unrealized gainsof comprehensive income, of changes in partners’ capital and losses of tradingcash flows for each of the three years in the period ended December 31, 2020, including the related notes and private equity investments stated at fair value, equityfinancial statement schedule listed in earnings of our limited partnership hedge fund investments, and realized gains and losses on investments sold.
Contract Assets and Liabilities

the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We usealso have audited the practical expedient for contracts that have an original duration of one year or less. Accordingly, we do not consider the time value of money and, instead, accrue the incremental costs of obtaining the contract when incurred. AsCompany's internal control over financial reporting as of December 31, 2018,2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the balancesCommittee of contract assetsSponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and contract liabilities are not considered material and, accordingly, no further disclosures are necessary.
Consolidation of company-sponsored investment funds
For legal entities (company-sponsored investment funds) evaluated for consolidation, we first determine whether the fees we receive2019, and the interests we hold qualify as a variable interestresults of its operations and its cash flows for each of the three years in the entity, including an evaluationperiod ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of fees paidAmerica. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to us asexpress opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a decision maker or service provider to the entity being evaluated. Fees received by us are not variable interests if (i) the fees are compensation for services provided and are commensuratepublic accounting firm registered with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions or amounts thatPublic Company Accounting Oversight Board (United States) (PCAOB) and are customarily present in arrangements for similar services negotiated at arm’s length, and (iii) our other economic interests in the entity held directly and indirectly through our related parties, as well as economic interests held by related parties under common control, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits.
For those entities in which we have a variable interest, we perform an analysis to determine whether the entity is a VIE by considering whether the entity’s equity investment at risk is insufficient, whether the investors lack decision making rights proportional to their ownership percentage of the entity, and whether the investors lack the obligation to absorb an entity’s expected losses or the right to receive an entity’s expected income.
A VIE must be consolidated by its primary beneficiary, which generally is defined as the party that has a controlling financial interest in the VIE. We are deemed to have a controlling financial interest in a VIE if we have (i) the power to direct the activities of the VIE that most significantly affect the VIE's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive income from the VIE that could potentially be significant to the VIE. For purposes of evaluating (ii) above, fees paid to us as a decision maker or service provider are excluded if the amount of fees is commensurate with the level of effort required to be performedindependent with respect to the Company in accordance with the U.S. federal securities laws and the arrangement includes only customary terms, conditions or amounts present in arrangements for similar services negotiated at arm’s length. The primary beneficiary evaluation generally is performed qualitatively based on all factsapplicable rules and circumstances, as well as quantitatively, as appropriate.
If we have a variable interest in an entity that is determined not to be a VIE, the entity is then evaluated for consolidation under the VOE model. For limited partnerships and similar entities, we are deemed to have a controlling financial interest in a VOE, and would be required to consolidate the entity, if we own a majorityregulations of the entity’s kick-out rights through voting limited partnership interestsSecurities and limited partners do not hold substantive participating rights (or other rights that would indicateExchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we do notplan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the entity). For entities other than limited partnerships, we are deemedconsolidated financial statements included performing procedures to haveassess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a controlling financial interest in a VOE if we own a majority voting interest in the entity.
The analysis performedtest basis, evidence regarding the determination of variable interests held, whether entities are VIEs or VOEs,amounts and whether we have a controlling financial interest in such entities requires the exercise of judgment. The analysis is updated continuously as circumstances change or new entities are formed.

Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value (and considered Level 1 securities in the fair value hierarchy). During 2017, the majority of our consolidated VIEs' cash and cash equivalents is pledged as collateral for short positions in equities.
Fees Receivable, Net
Fees receivable are shown net of allowances. An allowance for doubtful accounts related to investment advisory and services fees is determined through an analysis of the aging of receivables, assessments of collectability based on historical trends and other qualitative and quantitative factors, including our relationship with the client, the financial health (or ability to pay) of the client, current economic conditions and whether the account is active or closed. The allowance for doubtful accounts is not material to fees receivable.
Brokerage Transactions
Customers’ securities transactions are recorded on a settlement date basis, with related commission income and expenses reported on a trade date basis. Receivables from and payables to clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral for receivables; such collateral is not reflecteddisclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Performance-Based Fees

As described in Notes 2 and 3 to the consolidated financial statements, performance-based fees earned were $132.6 million for the year ended December 31, 2020. The transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee. With respect to the constraining factors related to the fund’s market value, management measures assets under management (AUM) using established market-based valuation methods and fair valuation (non-observable market) methods. Fair valuation methods, including discounted cash flow models and other methods, are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The principal considerations for our determination that performing procedures relating to performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management's estimate of the funds' market value where fair valuation methods are used.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM. These procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees. In evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges. Developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities.


/s/PricewaterhouseCooper LLP
New York, New York
February 11, 2021

We have served as the abilityCompany’s auditor since 2006.

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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Financial Condition
December 31,
20202019
(in thousands,
except unit amounts)
ASSETS
Cash and cash equivalents$1,037,400 $679,738 
Cash and securities segregated, at fair value (cost $1,752,483 and $1,090,443)1,753,478 1,094,866 
Receivables, net:  
Brokers and dealers92,638 97,966 
Brokerage clients1,713,377 1,536,674 
AB funds fees325,407 261,588 
Other fees148,746 148,744 
Investments:  
Long-term incentive compensation-related60,114 50,902 
Other193,261 215,892 
Assets of consolidated company-sponsored investment funds:
   Cash and cash equivalents36,506 11,433 
   Investments302,582 581,004 
   Other assets12,244 19,810 
Furniture, equipment and leasehold improvements, net147,874 145,251 
Goodwill3,082,778 3,076,926 
Intangible assets, net44,496 55,366 
Deferred sales commissions, net64,066 36,296 
Right-of-use assets418,455 362,693 
Other assets264,418 330,943 
Total assets$9,697,840 $8,706,092 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL
Liabilities:  
Payables:  
Brokers and dealers$216,403 $201,778 
Securities sold not yet purchased17,791 30,157 
Brokerage clients3,440,266 2,531,946 
AB mutual funds65,550 71,142 
Accounts payable and accrued expenses197,657 192,110 
Lease liabilities505,549 468,451 
Liabilities of consolidated company-sponsored investment funds30,620 31,017 
Accrued compensation and benefits335,122 276,829 
Debt675,000 560,000 
Total liabilities5,483,958 4,363,430 
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AllianceBernstein L.P. and Subsidiaries
December 31,
20202019
Commitments and contingencies (See Note 14)
00
Redeemable non-controlling interest102,359 325,561 
Capital:  
General Partner41,776 41,225 
Limited partners: 270,509,658 and 270,380,314 units issued and outstanding4,229,485 4,174,201 
Receivables from affiliates(8,316)(9,011)
AB Holding Units held for long-term incentive compensation plans(57,219)(76,310)
Accumulated other comprehensive loss(94,203)(113,004)
Partners’ capital attributable to AB Unitholders4,111,523 4,017,101 
Total liabilities, redeemable non-controlling interest and capital$9,697,840 $8,706,092 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Income
Years Ended December 31,
202020192018
(in thousands, except per unit amounts)
Revenues:
Investment advisory and services fees$2,595,436 $2,472,044 $2,362,211 
Bernstein research services459,744 407,911 439,432 
Distribution revenues529,781 455,043 418,562 
Dividend and interest income50,923 104,421 98,226 
Investment (losses) gains(16,401)38,659 2,653 
Other revenues104,703 97,559 98,676 
Total revenues3,724,186 3,575,637 3,419,760 
Less: Interest expense15,650 57,205 52,399 
Net revenues3,708,536 3,518,432 3,367,361 
Expenses:   
Employee compensation and benefits1,494,198 1,442,783 1,378,811 
Promotion and servicing:   
Distribution-related payments569,283 487,965 427,186 
Amortization of deferred sales commissions27,355 15,029 21,343 
Trade execution, marketing, T&E and other189,787 219,860 222,630 
General and administrative:   
General and administrative485,544 484,750 448,996 
Real estate charges5,526 3,324 7,160 
Contingent payment arrangements1,855 (510)(2,219)
Interest on borrowings6,180 13,035 10,359 
Amortization of intangible assets21,372 28,759 27,781 
Total expenses2,801,100 2,694,995 2,542,047 
Operating income907,436 823,437 825,314 
Income tax45,653 41,754 45,816 
Net income861,783 781,683 779,498 
Net (loss) income of consolidated entities attributable to non-controlling interests(4,169)29,641 21,910 
Net income attributable to AB Unitholders$865,952 $752,042 $757,588 
Net income per AB Unit:   
Basic$3.19 $2.78 $2.79 
Diluted$3.19 $2.78 $2.78 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31,
202020192018
(in thousands)
Net income$861,783 $781,683 $779,498 
Other comprehensive income:
Foreign currency translation adjustments, before reclassification and tax:23,882 5,986 (19,337)
Less: reclassification adjustment for losses included in net income upon liquidation(216)0 (100)
Foreign currency translation adjustments, before tax24,098 5,986 (19,237)
Income tax (expense) benefit(854)(383)620 
Foreign currency translation adjustments, net of tax23,244 5,603 (18,617)
Changes in employee benefit related items:   
Amortization of prior service cost24 24 24 
Recognized actuarial (loss) gain(4,280)(7,891)1,586 
Changes in employee benefit related items(4,256)(7,867)1,610 
Income tax benefit (expense)(187)274 (139)
Employee benefit related items, net of tax(4,443)(7,593)1,471 
Other0 0 374 
Other comprehensive gain (loss)18,801 (1,990)(16,772)
Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests(4,169)29,788 21,864 
Comprehensive income attributable to AB Unitholders$884,753 $749,905 $740,862 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Changes in Partners’ Capital
Years Ended December 31,
202020192018
(in thousands)
General Partner’s Capital
Balance, beginning of year$41,225 $40,240 $41,221 
Net income8,660 7,521 7,576 
Cash distributions to General Partner(8,376)(7,042)(8,608)
Long-term incentive compensation plans activity(23)149 (39)
Issuance (retirement) of AB Units, net290 357 (256)
Impact of adoption of revenue recognition standard ASC 6060 0 349 
Other0 0 (3)
Balance, end of year41,776 41,225 40,240 
Limited Partners' Capital
Balance, beginning of year4,174,201 4,075,306 4,168,841 
Net income857,292 744,521 750,012 
Cash distributions to Unitholders(828,503)(696,470)(849,585)
Long-term incentive compensation plans activity(2,147)14,741 (3,880)
Issuance (retirement) of AB Units, net28,642 35,259 (25,486)
Impact of adoption of revenue recognition standard ASC 6060 0 34,601 
Other0 844 803 
Balance, end of year4,229,485 4,174,201 4,075,306 
Receivables from Affiliates
Balance, beginning of year(9,011)(11,430)(11,494)
Capital contributions from General Partner0 0 19 
Compensation plan accrual0 0 352 
Long-term incentive compensation awards expense802 1,125 0 
Capital contributions from AB Holding(107)1,294 (307)
Balance, end of year(8,316)(9,011)(11,430)
AB Holding Units held for Long-term Incentive Compensation Plans
Balance, beginning of year(76,310)(77,990)(42,688)
Purchases of AB Holding Units to fund long-term compensation plans, net(148,624)(171,930)(267,427)
(Issuance) retirement of AB Units, net(28,696)(35,736)25,589 
Long-term incentive compensation awards expense194,840 207,057 187,514 
Re-valuation of AB Holding Units held in rabbi trust1,556 (4,403)19,022 
Other15 6,692 0 
Balance, end of year(57,219)(76,310)(77,990)
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of year(113,004)(110,866)(94,140)
Foreign currency translation adjustment, net of tax23,244 5,455 (18,571)
Changes in employee benefit related items, net of tax(4,443)(7,593)1,471 
Unrealized gain on investments, net of tax0 0 0 
Other0 0 374 
Balance, end of year(94,203)(113,004)(110,866)
Total Partners' Capital attributable to AB Unitholders4,111,523 4,017,101 3,915,260 
Non-redeemable Non-controlling Interests in Consolidated Entities   
Balance, beginning of year0 949 1,564 
Net income0 91 69 
Foreign currency translation adjustment0 147 (46)
Purchase of non-controlling interest0 (1,187)0 
Distributions (to) non-controlling interests of our consolidated venture capital fund activities0 0 (638)
Balance, end of year0 0 949 
Total Capital$4,111,523 $4,017,101 $3,916,209 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31,
202020192018
(in thousands)
Cash flows from operating activities:
Net income$861,783 $781,683 $779,498 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions27,355 15,029 21,343 
Non-cash long-term incentive compensation expense195,642 208,182 187,514 
Depreciation and other amortization138,240 166,542 70,000 
Unrealized losses (gains) on investments10,405 (13,431)23,164 
Unrealized (gains) on investments of consolidated company-sponsored investment funds(854)(36,150)(14,217)
Other, net(2,914)10,281 (6,446)
Changes in assets and liabilities:
(Increase) decrease in securities, segregated(658,612)74,688 (353,204)
(Increase) decrease in receivables(182,684)223,137 (207,000)
Decrease (increase) in investments7,597 460,347 (294,383)
Decrease (increase) in investments of consolidated company-sponsored investment funds279,276 (193,158)908,804 
(Increase) in deferred sales commissions(55,125)(34,177)(8,365)
(Increase) in right-of-use assets(131,765)(11,141)— 
Decrease (increase) in other assets69,160 (23,140)(152,726)
Increase (decrease) in other assets and liabilities of consolidated company-sponsored investment funds, net7,169 11,437 (662,934)
Increase (decrease) in payables861,502 (641,369)1,024,317 
Increase (decrease) in lease liabilities37,695 (107,276)— 
Increase (decrease) in accounts payable and accrued expenses10,666 (56,518)(11,225)
Increase (decrease) in accrued compensation and benefits46,885 (7,486)4,341 
Net cash provided by operating activities1,521,421 827,480 1,308,481 
Cash flows from investing activities:
Purchases of equity method investments(4,079)0 0 
Purchases of furniture, equipment and leasehold improvements(41,504)(28,303)(32,789)
Acquisition of businesses, net of cash acquired(13,552)5,255 0 
Net cash used in investing activities(59,135)(23,048)(32,789)
Cash flows from financing activities:
Proceeds (repayment) of debt115,000 2,105 (25,454)
(Decrease) increase in overdrafts payable(12,633)(59,924)3,273 
Distributions to General Partner and Unitholders(836,879)(703,512)(858,193)
Capital contributions (to) non-controlling interests in consolidated entities0 0 (638)
(Redemptions) subscriptions of non-controlling interests of consolidated company-sponsored investment funds, net(219,033)150,091 (472,143)
Capital contributions (to) from affiliates(867)269 (1,421)
Interest accretion, net of (payments) on contingent payment arrangements1,921 (1,991)(1,093)
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units147 11,511 16,589 
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net(148,624)(171,930)(267,427)
Other(1,615)(1,580)(2,151)
Net cash used in financing activities(1,102,583)(774,961)(1,608,658)
Effect of exchange rate changes on cash and cash equivalents23,032 8,376 (12,158)
Net increase (decrease) in cash and cash equivalents382,735 37,847 (345,124)
Cash and cash equivalents as of beginning of the period691,171 653,324 998,448 
Cash and cash equivalents as of end of the period$1,073,906 $691,171 $653,324 
Cash paid:
Interest paid$18,858 $66,002 $60,286 
Income taxes paid59,791 52,444 41,946 
Non-cash investing activities:
Fair value of assets acquired (excluding cash acquired of $0.6 million and $11.8 million)18,389 28,966 0 
Fair value of liabilities assumed437 16,837 0 
Non-cash financing activities:
Payables recorded under contingent payment arrangements4,400 17,384 0 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Notes to Consolidated Financial Statements
The words “we” and “our” refer collectively to AllianceBernstein L.P. and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to AB. Cross-references are in italics.
1. Business Description and Organization
We provide diversified investment management, research and related services globally to a broad range of clients. Our principal services include:
•Institutional Services—servicing our institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as Equitable Holdings, Inc. ("EQH") and its subsidiaries, by contractmeans of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.
•Retail Services—servicing our retail clients, primarily by means of retail mutual funds sponsored by AB or customan affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.
•Private Wealth Management Services—servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.
•Bernstein Research Services—servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.
We also provide distribution, shareholder servicing, transfer agency services and administrative services to sell or re-pledge this collateral,the mutual funds we sponsor.
Our high-quality, in-depth research is the foundation of our business. Our research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, we have done so at various times. expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ("ESG") and alternative investments.
We provide a broad range of investment services with expertise in:
•Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
•Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;

•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;

•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and

•Some passive management, including index and enhanced index strategies.

Organization

During the second quarter of 2018, AXA S.A. ("AXA")completed the sale of a minority stake in EQH through an initial public offering ("IPO"). Since then, AXA has completed additional offerings and taken other steps, most recently during the fourth quarter of 2019. As a result, AXA owned less than 10% of the outstanding common stock of EQH as of December 31, 2020.
As of December 31, 2020, EQH owned approximately 4.1% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AllianceBernstein Holding L.P. (“AB Holding”) and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB.
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As of December 31, 2020, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1% interest, was as follows:
EQH and its subsidiaries63.3 %
AB Holding36.0 
Unaffiliated holders0.7 
100.0%
Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 64.8% economic interest in AB as of December 31, 2020.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The preparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include AB and its majority-owned and/or controlled subsidiaries, and the consolidated entities that are considered to be variable interest entities ("VIEs") and voting interest entities ("VOEs") in which AB has a controlling financial interest. Non-controlling interests on the consolidated statements of financial condition include the portion of consolidated company-sponsored investment funds in which we do not have direct equity ownership. All significant inter-company transactions and balances among the consolidated entities have been eliminated.
Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This new guidance related to the accounting for credit losses on financial instruments and introduced an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removed Step 2 of the goodwill impairment test, which had required a hypothetical purchase price allocation. As a result of the revised guidance, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to theDisclosure Requirements for Fair Value Measurement. The amendment modified the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendment aligned the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements that currently exist in GAAP for capitalizing implementation costs incurred to develop or obtain internal-use software. Implementation costs are either capitalized or expensed as incurred depending on the project stage. All costs in the preliminary and post-implementation project stages are expensed as incurred, while certain costs within the application development stage are capitalized. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

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In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment was intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance was effective beginning on March 12, 2020, and can be applied to amendments prospectively through December 31, 2022. An entity may elect to apply the amendments in this update, as well as amendments include in ASU 2021-01 issued in January 2021, as of the beginning of the interim period that includes March 12, 2020. We adopted these standards prospectively on January 1, 2020. The adoption of these standards did not have a material impact on our financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted in 2020

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20). The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2020. The revised guidance will not have a material impact on our financial condition or results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2020. The revised guidance will not have a material impact on our financial condition or results of operations.

Revenue Recognition

Investment advisory and services fees
AB provides asset management services by managing customer assets and seeking to deliver investment returns to investors. Each investment management contract between AB and a customer creates a distinct, separately identifiable performance obligation for each day the customer’s assets are managed as the customer can benefit from each day of service. In accordance with ASC 606, a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer are treated as a single performance obligation. Accordingly, we have determined that our investment and advisory services are performed over time and entitle us to variable consideration earned based on the value of the investors’ assets under management (“AUM”).

We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for additional information about our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments.

We record as revenue investment advisory and services base fees, which we generally calculate as a percentage of AUM. At month-end, all the components of the transaction price (i.e., the base fee calculation) are no longer variable and the value of the consideration is determined. These fees are not subject to claw back and there were no re-pledged securities. Principal securities transactionsis minimal probability that a significant reversal of the revenue recorded will occur. 

The transaction price for the asset management performance obligation for certain investment advisory contracts, including those associated with hedge funds or other alternative investments, provide for a performance-based fee (including carried interest), in addition to a base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees
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are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. At each reporting date, we evaluate the constraining factors, discussed below, surrounding the variable consideration to determine the extent to which, if any, revenues associated with the performance-based fee can be recognized.

Constraining factors impacting the amount of variable consideration included in the transaction price include: the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value, the level at which the fund’s value exceeds the contractual threshold required to earn such a fee, and the materiality of the amount being evaluated.

Bernstein Research Services
Bernstein Research Services revenue consists principally of commissions received, and to a lesser but increasing extent, direct payments for trade execution services and providing equity research services to institutional clients. Brokerage commissions for trade execution services and related expenses are recorded on a trade date basis.
Securities borrowed and securities loaned by our broker-dealer subsidiariestrade-date basis when the performance obligations are recordedsatisfied. Generally, the transaction price is agreed upon at the amountpoint of cash collateral advancedeach trade and based upon the number of shares traded or received in connection with the transaction and are included in receivables from and payables to brokers and dealers in the consolidated statements of financial condition. Securities borrowed transactions require us to deposit cash collateral with the lender. With respect to securities loaned, we receive cash collateral from the borrower. See Note 9 for securities borrowed and loaned amounts recorded in our consolidated statements of financial condition as of December 31, 2018 and 2017. The initial collateral advanced or received approximates or is greater than the fair value of securities borrowed or loaned. We monitor the fair value of the securities borrowedconsideration traded. Research revenues are recognized when the transaction price is quantified, collectability is assured and loanedsignificant reversal of such revenue is not probable.

Distribution Revenues
Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur. The variable consideration can be determined in different ways, as discussed below, as we satisfy the performance obligation depending on the contractual arrangements with the customer and the specific product sold.

Most open-end U.S. funds have adopted a daily basisplan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and request additional collateral or return excess collateral, as appropriate. As of December 31, 2018 and 2017, there is no allowance provision requiredservice fees for the collateral advanced. Income or expense is recognized over the lifedistribution and sale of the transaction.
As of December 31, 2018 and 2017, we had $196.9 million and $42.9 million, respectively, of cash on deposit with clearing organizations for trade facilitation purposes which are reported in other assets in our consolidated statements of financial condition. In addition, as of December 31, 2018 and 2017, we held U.S. Treasury Bills with values totaling $392.4 million and $52.6 million, respectively, in our investment account that are pledged as collateral with clearing organizations which are reported in other investments in our consolidated statements of financial condition. These clearing organizations have the ability by contract or custom to sell or re-pledge this collateral.
Furniture, Equipment and Leasehold Improvements, Net
Furniture, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation is recognized on a straight-line basis over the estimated useful lives of eight years for furniture and three to six years for equipment and software. Leasehold improvements are amortized on a straight-line basis over the lesser of their estimated useful lives or the terms of the related leases.
Goodwill
In 2000, AB acquired SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc.its shares (“BernsteinRule 12b-1 Fees”). The Bernstein acquisition was accounted for underopen-end U.S. funds have such agreements with us, and we have selling and distribution agreements pursuant to which we pay sales commissions to the purchase methodfinancial intermediaries that distribute our open-end U.S. funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares.

We record 12b-1 fees monthly based upon a percentage of the net asset value (“NAV”) of the funds. At month-end, the variable consideration of the transaction price is no longer constrained as the NAV can be calculated and the costvalue of consideration is determined. These services are separate and distinct from other asset management services as the customer can benefit from these services independently of other services. We accrue the corresponding 12b-1 fees paid to sub-distributors monthly as the expenses are incurred. We are acting in a principal capacity in these transactions; as such, these revenues and expenses are recorded on a gross basis.

We offer back-end load shares in limited instances and charge the investor a contingent deferred sales charge (“CDSC”) if the investment is redeemed within a certain period. The variable consideration for these contracts is contingent on the timing of the acquisition was allocated onredemption by the basis ofinvestor and the estimated fair value of the assets acquired andsale proceeds. Due to these constraining factors, we exclude the liabilities assumed. The excess ofCDSC fee from the purchasetransaction price overuntil the fair value of identifiable assets acquired, net of liabilities assumed, resulted ininvestor redeems the recognition of goodwill of approximately $3.0 billion.
As of December 31, 2018, goodwill of $3.1 billion oninvestment. Upon redemption, the consolidated statement of financial condition included $2.8 billion as a result of the Bernstein acquisition and $266 million in regard to various smaller acquisitions. We have determined that AB has only one reporting segment and reporting unit.

We test our goodwill annually, as of September 30,cash consideration received for impairment. As of September 30, 2018, the impairment test indicated that goodwill was not impaired. We also review the carrying value of goodwill if facts and circumstances occur that suggest possible impairment, such as significant declines in AUM, revenues, earnings or the price of an AB Holding Unit. There were no facts or circumstances occurring in the fourth quarter of 2018 suggesting possible impairment.
Intangible Assets, Net
Intangible assets consist primarily of costs assigned to acquired investment management contracts of Bernstein based on their estimated fair value at the time of acquisition, less accumulated amortization. Intangible assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life ranging from six years to 20 years.
As of December 31, 2018, intangible assets, net of accumulated amortization, of $79.4 million on the consolidated statement of financial condition consists of $65.9 million of finite-lived intangible assets subject to amortization, of which $36.2 million relates to the Bernstein acquisition, and $13.5 million of indefinite-lived intangible assets not subject to amortization in regard to other acquisitions. As of December 31, 2017, intangible assets, net of accumulated amortization, of $105.8 million on the consolidated statement of financial condition consisted of $92.3 million of finite-lived intangible assets subject to amortization, of which $56.9 million related to the Bernstein acquisition, and $13.5 million of indefinite-lived intangible assets not subject to amortization in regard to other acquisitions. The gross carrying amount of finite-lived intangible assets totaled $475.1 million as of December 31, 2018 and $473.7 million as of December 31, 2017, and accumulated amortization was $409.2 million as of December 31, 2018 and $381.4 million as of December 31, 2017. Amortization expense was $27.8 million for 2018, $27.9 million for 2017 and $26.3 million for 2016. Estimated annual amortization expense for 2019 is approximately $28 million, $21 million in year two, $5 million for year three, then approximately $4 million in years four and five.
We periodically review indefinite-lived intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value exceeds fair value, we perform additional impairment tests to measure the amount of the impairment loss, if any.
Deferred Sales Commissions, Net
We pay commissions to financial intermediaries in connection with the sale of shares of open-end company-sponsored mutual funds sold without a front-end sales charge (“back-end load shares”). These commissions are capitalized as deferred sales commissions and amortized over periods not exceeding five and one-half years for U.S. fund shares and four years for Non-U.S. Fund shares, the periods of time during which deferred sales commissions generally are recovered. We recover these commissions from distribution services fees received from those funds and from contingent deferred sales commissions (“CDSC”) received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveriescontractual arrangements are recorded as reductions of unamortized deferred sales commissions when received. Since January 31, 2009,commissions.

Our Luxembourg subsidiary, the management company for most of our U.S.non-U.S. funds, earns a management fee that is accrued daily and paid monthly, at an annual rate, based on the average daily net assets of the fund. With respect to certain share classes, the management fee may also contain a component that is paid to distributors and other financial intermediaries and service providers to cover shareholder servicing and other administrative expenses (also referred to as an All-in-Fee). As we have concluded that asset management is distinct from distribution, we allocate a portion of the investment and advisory fee to distribution revenues for the servicing component based on standalone selling prices.

Other Revenues
Revenues from contracts with customers include a portion of other revenues, which consists primarily of shareholder servicing fees, as well as mutual funds have not offered back-end load shares to new investors. As of December 31, 2016, our Non-U.S. Funds are no longer offering back-end load shares, except in isolated instances.fund reimbursements and other brokerage income.

We periodically review the deferred sales commission assetprovide shareholder services, which include transfer agency, administrative and recordkeeping services provided to company-sponsored mutual funds. The consideration for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If these factors indicate impairment in value, we compare the carrying value to the undiscounted cash flows expected to be generated by the asset over its remaining life. If we determine the deferred sales commission assetservices is not fully recoverable, the asset will be deemed impaired andbased on a loss will be recorded in the amount by which the recorded amountpercentage of the asset exceeds its estimated fair value. There were no impairment chargesNAV of the fund or a fixed-fee based on the number of shareholder accounts being serviced. The revenues are recorded during 2018at month-end when the constraining factors involved with determining NAV or 2017.the number of shareholders’ accounts are resolved.
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Loss Contingencies
Management continuously reviews with legal counsel the status of regulatory matters and pending or threatened litigation. We evaluate the likelihood that a loss contingency exists and record a loss contingency if it is both probable and reasonably estimable as of the date of the financial statements. See Note 14 to our consolidated financial statements in Item 8.
Accounting Pronouncements
See Note 2 to our consolidated financial statements in Item 8.
Cautions Regarding Forward-Looking Statements
Certain statements provided by management in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Item 1A. Any or all of the forward-looking statements that we make in this Form 10-K, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects.
The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding:
•Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control.

•Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates.

•The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a legal proceeding could be significant, and could have such an effect.

•The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases.
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•Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues.

•Our Relocation Strategy: While the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include:
•the amount and timing of employee relocation costs, severance, and overlapping compensation and occupancy costs we experience; and
•the timing for execution of each phase of our relocation implementation plan.
•The Adverse Impact of COVID-19: The severity of the expected adverse impact on our AUM and revenues of the economic downturn caused by the COVID-19 pandemic will depend on the depth and length of the downturn and its impact on the companies in which we invest. Our conclusions about the possible continuing significant adverse impact on us is based on our assumptions that the recovery will be gradual and that there will be lasting high unemployment and economic damage. We believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions.



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Item 7A.Quantitative and Qualitative Disclosures about Market Risk
Market Risk, Risk Management and Derivative Financial Instruments
Our investments consist of trading and other investments. Trading investments include U.S. Treasury Bills, mutual funds, exchange-traded options and various separately-managed portfolios consisting of equity securities. Trading investments are purchased for short-term investment, principally to fund liabilities related to long-term incentive compensation plans and to seed new investment services. Other investments include investments in hedge funds we sponsor and other investment vehicles.
We enter into various futures, forwards, swaps and options primarily to economically hedge our seed capital investments. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging. See Note 7 to our consolidated financial statements in Item 8.
Trading and Non-Trading Market Risk Sensitive Instruments
Investments with Interest Rate Risk—Fair Value
The table below provides our potential exposure with respect to our fixed income investments, measured in terms of fair value, to an immediate 100 basis point increase in interest rates at all maturities from the levels prevailing as of December 31, 2020 and 2019. Such a fluctuation in interest rates is a hypothetical rate scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of interest rate sensitivity of our investments in fixed income mutual funds and fixed income hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments in response to our assessment of changing market conditions and available investment opportunities:
 As of December 31,
 20202019
 Fair ValueEffect of
+100
Basis Point
Change		Fair ValueEffect of
+100
Basis Point
Change
 (in thousands)
Fixed Income Investments:
Trading$35,555 $(2,457)$36,122 $(2,445)
Investments with Equity Price Risk—Fair Value
Our investments also include investments in equity securities, mutual funds and hedge funds. The following table provides our potential exposure with respect to our equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing as of December 31, 2020 and 2019. A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of equity price sensitivity of our investments in equity securities, mutual funds and hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to our assessment of changing market conditions and available investment opportunities:
 As of December 31,
 20202019
 Fair ValueEffect of -10%
Equity Price
Change		Fair ValueEffect of -10%
Equity Price
Change
 (in thousands)
Equity Investments:
Trading$137,529 $(13,753)$151,140 $(15,114)
Other investments80,291 (8,029)79,532 (7,953)
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Item 8.Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the General Partner and Unitholders of AllianceBernstein L.P.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial condition of AllianceBernstein L.P. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, of comprehensive income, of changes in partners’ capital and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedule listed in the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Performance-Based Fees

As described in Notes 2 and 3 to the consolidated financial statements, performance-based fees earned were $132.6 million for the year ended December 31, 2020. The transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee. With respect to the constraining factors related to the fund’s market value, management measures assets under management (AUM) using established market-based valuation methods and fair valuation (non-observable market) methods. Fair valuation methods, including discounted cash flow models and other methods, are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The principal considerations for our determination that performing procedures relating to performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management's estimate of the funds' market value where fair valuation methods are used.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM. These procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees. In evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges. Developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities.


/s/PricewaterhouseCooper LLP
New York, New York
February 11, 2021

We have served as the Company’s auditor since 2006.

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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Financial Condition
December 31,
20202019
(in thousands,
except unit amounts)
ASSETS
Cash and cash equivalents$1,037,400 $679,738 
Cash and securities segregated, at fair value (cost $1,752,483 and $1,090,443)1,753,478 1,094,866 
Receivables, net:  
Brokers and dealers92,638 97,966 
Brokerage clients1,713,377 1,536,674 
AB funds fees325,407 261,588 
Other fees148,746 148,744 
Investments:  
Long-term incentive compensation-related60,114 50,902 
Other193,261 215,892 
Assets of consolidated company-sponsored investment funds:
   Cash and cash equivalents36,506 11,433 
   Investments302,582 581,004 
   Other assets12,244 19,810 
Furniture, equipment and leasehold improvements, net147,874 145,251 
Goodwill3,082,778 3,076,926 
Intangible assets, net44,496 55,366 
Deferred sales commissions, net64,066 36,296 
Right-of-use assets418,455 362,693 
Other assets264,418 330,943 
Total assets$9,697,840 $8,706,092 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL
Liabilities:  
Payables:  
Brokers and dealers$216,403 $201,778 
Securities sold not yet purchased17,791 30,157 
Brokerage clients3,440,266 2,531,946 
AB mutual funds65,550 71,142 
Accounts payable and accrued expenses197,657 192,110 
Lease liabilities505,549 468,451 
Liabilities of consolidated company-sponsored investment funds30,620 31,017 
Accrued compensation and benefits335,122 276,829 
Debt675,000 560,000 
Total liabilities5,483,958 4,363,430 
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AllianceBernstein L.P. and Subsidiaries
December 31,
20202019
Commitments and contingencies (See Note 14)
00
Redeemable non-controlling interest102,359 325,561 
Capital:  
General Partner41,776 41,225 
Limited partners: 270,509,658 and 270,380,314 units issued and outstanding4,229,485 4,174,201 
Receivables from affiliates(8,316)(9,011)
AB Holding Units held for long-term incentive compensation plans(57,219)(76,310)
Accumulated other comprehensive loss(94,203)(113,004)
Partners’ capital attributable to AB Unitholders4,111,523 4,017,101 
Total liabilities, redeemable non-controlling interest and capital$9,697,840 $8,706,092 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Income
Years Ended December 31,
202020192018
(in thousands, except per unit amounts)
Revenues:
Investment advisory and services fees$2,595,436 $2,472,044 $2,362,211 
Bernstein research services459,744 407,911 439,432 
Distribution revenues529,781 455,043 418,562 
Dividend and interest income50,923 104,421 98,226 
Investment (losses) gains(16,401)38,659 2,653 
Other revenues104,703 97,559 98,676 
Total revenues3,724,186 3,575,637 3,419,760 
Less: Interest expense15,650 57,205 52,399 
Net revenues3,708,536 3,518,432 3,367,361 
Expenses:   
Employee compensation and benefits1,494,198 1,442,783 1,378,811 
Promotion and servicing:   
Distribution-related payments569,283 487,965 427,186 
Amortization of deferred sales commissions27,355 15,029 21,343 
Trade execution, marketing, T&E and other189,787 219,860 222,630 
General and administrative:   
General and administrative485,544 484,750 448,996 
Real estate charges5,526 3,324 7,160 
Contingent payment arrangements1,855 (510)(2,219)
Interest on borrowings6,180 13,035 10,359 
Amortization of intangible assets21,372 28,759 27,781 
Total expenses2,801,100 2,694,995 2,542,047 
Operating income907,436 823,437 825,314 
Income tax45,653 41,754 45,816 
Net income861,783 781,683 779,498 
Net (loss) income of consolidated entities attributable to non-controlling interests(4,169)29,641 21,910 
Net income attributable to AB Unitholders$865,952 $752,042 $757,588 
Net income per AB Unit:   
Basic$3.19 $2.78 $2.79 
Diluted$3.19 $2.78 $2.78 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Comprehensive Income
Years Ended December 31,
202020192018
(in thousands)
Net income$861,783 $781,683 $779,498 
Other comprehensive income:
Foreign currency translation adjustments, before reclassification and tax:23,882 5,986 (19,337)
Less: reclassification adjustment for losses included in net income upon liquidation(216)0 (100)
Foreign currency translation adjustments, before tax24,098 5,986 (19,237)
Income tax (expense) benefit(854)(383)620 
Foreign currency translation adjustments, net of tax23,244 5,603 (18,617)
Changes in employee benefit related items:   
Amortization of prior service cost24 24 24 
Recognized actuarial (loss) gain(4,280)(7,891)1,586 
Changes in employee benefit related items(4,256)(7,867)1,610 
Income tax benefit (expense)(187)274 (139)
Employee benefit related items, net of tax(4,443)(7,593)1,471 
Other0 0 374 
Other comprehensive gain (loss)18,801 (1,990)(16,772)
Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests(4,169)29,788 21,864 
Comprehensive income attributable to AB Unitholders$884,753 $749,905 $740,862 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Changes in Partners’ Capital
Years Ended December 31,
202020192018
(in thousands)
General Partner’s Capital
Balance, beginning of year$41,225 $40,240 $41,221 
Net income8,660 7,521 7,576 
Cash distributions to General Partner(8,376)(7,042)(8,608)
Long-term incentive compensation plans activity(23)149 (39)
Issuance (retirement) of AB Units, net290 357 (256)
Impact of adoption of revenue recognition standard ASC 6060 0 349 
Other0 0 (3)
Balance, end of year41,776 41,225 40,240 
Limited Partners' Capital
Balance, beginning of year4,174,201 4,075,306 4,168,841 
Net income857,292 744,521 750,012 
Cash distributions to Unitholders(828,503)(696,470)(849,585)
Long-term incentive compensation plans activity(2,147)14,741 (3,880)
Issuance (retirement) of AB Units, net28,642 35,259 (25,486)
Impact of adoption of revenue recognition standard ASC 6060 0 34,601 
Other0 844 803 
Balance, end of year4,229,485 4,174,201 4,075,306 
Receivables from Affiliates
Balance, beginning of year(9,011)(11,430)(11,494)
Capital contributions from General Partner0 0 19 
Compensation plan accrual0 0 352 
Long-term incentive compensation awards expense802 1,125 0 
Capital contributions from AB Holding(107)1,294 (307)
Balance, end of year(8,316)(9,011)(11,430)
AB Holding Units held for Long-term Incentive Compensation Plans
Balance, beginning of year(76,310)(77,990)(42,688)
Purchases of AB Holding Units to fund long-term compensation plans, net(148,624)(171,930)(267,427)
(Issuance) retirement of AB Units, net(28,696)(35,736)25,589 
Long-term incentive compensation awards expense194,840 207,057 187,514 
Re-valuation of AB Holding Units held in rabbi trust1,556 (4,403)19,022 
Other15 6,692 0 
Balance, end of year(57,219)(76,310)(77,990)
Accumulated Other Comprehensive Income (Loss)
Balance, beginning of year(113,004)(110,866)(94,140)
Foreign currency translation adjustment, net of tax23,244 5,455 (18,571)
Changes in employee benefit related items, net of tax(4,443)(7,593)1,471 
Unrealized gain on investments, net of tax0 0 0 
Other0 0 374 
Balance, end of year(94,203)(113,004)(110,866)
Total Partners' Capital attributable to AB Unitholders4,111,523 4,017,101 3,915,260 
Non-redeemable Non-controlling Interests in Consolidated Entities   
Balance, beginning of year0 949 1,564 
Net income0 91 69 
Foreign currency translation adjustment0 147 (46)
Purchase of non-controlling interest0 (1,187)0 
Distributions (to) non-controlling interests of our consolidated venture capital fund activities0 0 (638)
Balance, end of year0 0 949 
Total Capital$4,111,523 $4,017,101 $3,916,209 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31,
202020192018
(in thousands)
Cash flows from operating activities:
Net income$861,783 $781,683 $779,498 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of deferred sales commissions27,355 15,029 21,343 
Non-cash long-term incentive compensation expense195,642 208,182 187,514 
Depreciation and other amortization138,240 166,542 70,000 
Unrealized losses (gains) on investments10,405 (13,431)23,164 
Unrealized (gains) on investments of consolidated company-sponsored investment funds(854)(36,150)(14,217)
Other, net(2,914)10,281 (6,446)
Changes in assets and liabilities:
(Increase) decrease in securities, segregated(658,612)74,688 (353,204)
(Increase) decrease in receivables(182,684)223,137 (207,000)
Decrease (increase) in investments7,597 460,347 (294,383)
Decrease (increase) in investments of consolidated company-sponsored investment funds279,276 (193,158)908,804 
(Increase) in deferred sales commissions(55,125)(34,177)(8,365)
(Increase) in right-of-use assets(131,765)(11,141)— 
Decrease (increase) in other assets69,160 (23,140)(152,726)
Increase (decrease) in other assets and liabilities of consolidated company-sponsored investment funds, net7,169 11,437 (662,934)
Increase (decrease) in payables861,502 (641,369)1,024,317 
Increase (decrease) in lease liabilities37,695 (107,276)— 
Increase (decrease) in accounts payable and accrued expenses10,666 (56,518)(11,225)
Increase (decrease) in accrued compensation and benefits46,885 (7,486)4,341 
Net cash provided by operating activities1,521,421 827,480 1,308,481 
Cash flows from investing activities:
Purchases of equity method investments(4,079)0 0 
Purchases of furniture, equipment and leasehold improvements(41,504)(28,303)(32,789)
Acquisition of businesses, net of cash acquired(13,552)5,255 0 
Net cash used in investing activities(59,135)(23,048)(32,789)
Cash flows from financing activities:
Proceeds (repayment) of debt115,000 2,105 (25,454)
(Decrease) increase in overdrafts payable(12,633)(59,924)3,273 
Distributions to General Partner and Unitholders(836,879)(703,512)(858,193)
Capital contributions (to) non-controlling interests in consolidated entities0 0 (638)
(Redemptions) subscriptions of non-controlling interests of consolidated company-sponsored investment funds, net(219,033)150,091 (472,143)
Capital contributions (to) from affiliates(867)269 (1,421)
Interest accretion, net of (payments) on contingent payment arrangements1,921 (1,991)(1,093)
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units147 11,511 16,589 
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net(148,624)(171,930)(267,427)
Other(1,615)(1,580)(2,151)
Net cash used in financing activities(1,102,583)(774,961)(1,608,658)
Effect of exchange rate changes on cash and cash equivalents23,032 8,376 (12,158)
Net increase (decrease) in cash and cash equivalents382,735 37,847 (345,124)
Cash and cash equivalents as of beginning of the period691,171 653,324 998,448 
Cash and cash equivalents as of end of the period$1,073,906 $691,171 $653,324 
Cash paid:
Interest paid$18,858 $66,002 $60,286 
Income taxes paid59,791 52,444 41,946 
Non-cash investing activities:
Fair value of assets acquired (excluding cash acquired of $0.6 million and $11.8 million)18,389 28,966 0 
Fair value of liabilities assumed437 16,837 0 
Non-cash financing activities:
Payables recorded under contingent payment arrangements4,400 17,384 0 
See Accompanying Notes to Consolidated Financial Statements.
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AllianceBernstein L.P. and Subsidiaries
Notes to Consolidated Financial Statements
The words “we” and “our” refer collectively to AllianceBernstein L.P. and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to AB. Cross-references are in italics.
1. Business Description and Organization
We provide diversified investment management, research and related services globally to a broad range of clients. Our principal services include:
•Institutional Services—servicing our institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as Equitable Holdings, Inc. ("EQH") and its subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles.
•Retail Services—servicing our retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles.
•Private Wealth Management Services—servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles.
•Bernstein Research Services—servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options.
We also provide distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds we sponsor.
Our high-quality, in-depth research is the foundation of our business. Our research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, we have expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ("ESG") and alternative investments.
We provide a broad range of investment services with expertise in:
•Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities;
•Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies;

•Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity;

•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and

•Some passive management, including index and enhanced index strategies.

Organization

During the second quarter of 2018, AXA S.A. ("AXA")completed the sale of a minority stake in EQH through an initial public offering ("IPO"). Since then, AXA has completed additional offerings and taken other steps, most recently during the fourth quarter of 2019. As a result, AXA owned less than 10% of the outstanding common stock of EQH as of December 31, 2020.
As of December 31, 2020, EQH owned approximately 4.1% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “General Partner”) is the general partner of both AllianceBernstein Holding L.P. (“AB Holding”) and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB.
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As of December 31, 2020, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1% interest, was as follows:
EQH and its subsidiaries63.3 %
AB Holding36.0 
Unaffiliated holders0.7 
100.0%
Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 64.8% economic interest in AB as of December 31, 2020.
2. Summary of Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). The preparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements include AB and its majority-owned and/or controlled subsidiaries, and the consolidated entities that are considered to be variable interest entities ("VIEs") and voting interest entities ("VOEs") in which AB has a controlling financial interest. Non-controlling interests on the consolidated statements of financial condition include the portion of consolidated company-sponsored investment funds in which we do not have direct equity ownership. All significant inter-company transactions and balances among the consolidated entities have been eliminated.
Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This new guidance related to the accounting for credit losses on financial instruments and introduced an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removed Step 2 of the goodwill impairment test, which had required a hypothetical purchase price allocation. As a result of the revised guidance, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to theDisclosure Requirements for Fair Value Measurement. The amendment modified the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. The amendment aligned the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements that currently exist in GAAP for capitalizing implementation costs incurred to develop or obtain internal-use software. Implementation costs are either capitalized or expensed as incurred depending on the project stage. All costs in the preliminary and post-implementation project stages are expensed as incurred, while certain costs within the application development stage are capitalized. We adopted this standard prospectively on January 1, 2020. The adoption of this standard did not have a material impact on our financial condition or results of operations.

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In March 2020, FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment was intended to provide temporary optional expedients and exceptions to the U.S. GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. This guidance was effective beginning on March 12, 2020, and can be applied to amendments prospectively through December 31, 2022. An entity may elect to apply the amendments in this update, as well as amendments include in ASU 2021-01 issued in January 2021, as of the beginning of the interim period that includes March 12, 2020. We adopted these standards prospectively on January 1, 2020. The adoption of these standards did not have a material impact on our financial condition or results of operations.

Accounting Pronouncements Not Yet Adopted in 2020

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20). The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2020. The revised guidance will not have a material impact on our financial condition or results of operations.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2020. The revised guidance will not have a material impact on our financial condition or results of operations.

Revenue Recognition

Investment advisory and services fees
AB provides asset management services by managing customer assets and seeking to deliver investment returns to investors. Each investment management contract between AB and a customer creates a distinct, separately identifiable performance obligation for each day the customer’s assets are managed as the customer can benefit from each day of service. In accordance with ASC 606, a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer are treated as a single performance obligation. Accordingly, we have determined that our investment and advisory services are performed over time and entitle us to variable consideration earned based on the value of the investors’ assets under management (“AUM”).

We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee (see paragraph immediately below for additional information about our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities.

The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments.

We record as revenue investment advisory and services base fees, which we generally calculate as a percentage of AUM. At month-end, all the components of the transaction price (i.e., the base fee calculation) are no longer variable and the value of the consideration is determined. These fees are not subject to claw back and there is minimal probability that a significant reversal of the revenue recorded will occur. 

The transaction price for the asset management performance obligation for certain investment advisory contracts, including those associated with hedge funds or other alternative investments, provide for a performance-based fee (including carried interest), in addition to a base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees
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are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. At each reporting date, we evaluate the constraining factors, discussed below, surrounding the variable consideration to determine the extent to which, if any, revenues associated with the performance-based fee can be recognized.

Constraining factors impacting the amount of variable consideration included in the transaction price include: the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value, the level at which the fund’s value exceeds the contractual threshold required to earn such a fee, and the materiality of the amount being evaluated.

Bernstein Research Services
Bernstein Research Services revenue consists principally of commissions received, and to a lesser but increasing extent, direct payments for trade execution services and providing equity research services to institutional clients. Brokerage commissions for trade execution services and related expenses are recorded on a trade-date basis when the performance obligations are satisfied. Generally, the transaction price is agreed upon at the point of each trade and based upon the number of shares traded or the value of the consideration traded. Research revenues are recognized when the transaction price is quantified, collectability is assured and significant reversal of such revenue is not probable.

Distribution Revenues
Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur. The variable consideration can be determined in different ways, as discussed below, as we satisfy the performance obligation depending on the contractual arrangements with the customer and the specific product sold.

Most open-end U.S. funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and service fees for the distribution and sale of its shares (“Rule 12b-1 Fees”). The open-end U.S. funds have such agreements with us, and we have selling and distribution agreements pursuant to which we pay sales commissions to the financial intermediaries that distribute our open-end U.S. funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares.

We record 12b-1 fees monthly based upon a percentage of the net asset value (“NAV”) of the funds. At month-end, the variable consideration of the transaction price is no longer constrained as the NAV can be calculated and the value of consideration is determined. These services are separate and distinct from other asset management services as the customer can benefit from these services independently of other services. We accrue the corresponding 12b-1 fees paid to sub-distributors monthly as the expenses are incurred. We are acting in a principal capacity in these transactions; as such, these revenues and expenses are recorded on a gross basis.

We offer back-end load shares in limited instances and charge the investor a contingent deferred sales charge (“CDSC”) if the investment is redeemed within a certain period. The variable consideration for these contracts is contingent on the timing of the redemption by the investor and the value of the sale proceeds. Due to these constraining factors, we exclude the CDSC fee from the transaction price until the investor redeems the investment. Upon redemption, the cash consideration received for these contractual arrangements are recorded as reductions of unamortized deferred sales commissions.

Our Luxembourg subsidiary, the management company for most of our non-U.S. funds, earns a management fee that is accrued daily and paid monthly, at an annual rate, based on the average daily net assets of the fund. With respect to certain share classes, the management fee may also contain a component that is paid to distributors and other financial intermediaries and service providers to cover shareholder servicing and other administrative expenses (also referred to as an All-in-Fee). As we have concluded that asset management is distinct from distribution, we allocate a portion of the investment and advisory fee to distribution revenues for the servicing component based on standalone selling prices.

Other Revenues
Revenues from contracts with customers include a portion of other revenues, which consists primarily of shareholder servicing fees, as well as mutual fund reimbursements and other brokerage income.

We provide shareholder services, which include transfer agency, administrative and recordkeeping services provided to company-sponsored mutual funds. The consideration for these services is based on a percentage of the NAV of the fund or a fixed-fee based on the number of shareholder accounts being serviced. The revenues are recorded at month-end when the constraining factors involved with determining NAV or the number of shareholders’ accounts are resolved.
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Non-Contractual Revenues
Dividend and interest income is accrued as earned. Investment gains and losses on the consolidated statements of income include unrealized gains and losses of trading and private equity investments stated at fair value, equity in earnings of our limited partnership hedge fund investments, and realized gains and losses on investments sold.
Contract Assets and Liabilities
We use the practical expedient for contracts that have an original duration of one year or less. Accordingly, we do not consider the time value of money and, instead, accrue the incremental costs of obtaining the contract when incurred. As of December 31, 2020, the balances of contract assets and contract liabilities are not considered material and, accordingly, no further disclosures are necessary.
Consolidation of company-sponsored investment funds
For legal entities (company-sponsored investment funds) evaluated for consolidation, we first determine whether the fees we receive and the interests we hold qualify as a variable interest in the entity, including an evaluation of fees paid to us as a decision maker or service provider to the entity being evaluated. Fees received by us are not variable interests if (i) the fees are compensation for services provided and are commensurate with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions or amounts that are customarily present in arrangements for similar services negotiated at arm’s length, and (iii) our other economic interests in the entity held directly and indirectly through our related parties, as well as economic interests held by related parties under common control, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits.
For those entities in which we have a variable interest, we perform an analysis to determine whether the entity is a VIE by considering whether the entity’s equity investment at risk is insufficient, whether the investors lack decision making rights proportional to their ownership percentage of the entity, and whether the investors lack the obligation to absorb an entity’s expected losses or the right to receive an entity’s expected income.
A VIE must be consolidated by its primary beneficiary, which generally is defined as the party that has a controlling financial interest in the VIE. We are deemed to have a controlling financial interest in a VIE if we have (i) the power to direct the activities of the VIE that most significantly affect the VIE's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive income from the VIE that could potentially be significant to the VIE. For purposes of evaluating (ii) above, fees paid to us as a decision maker or service provider are excluded if the amount of fees is commensurate with the level of effort required to be performed and the arrangement includes only customary terms, conditions or amounts present in arrangements for similar services negotiated at arm’s length. The primary beneficiary evaluation generally is performed qualitatively based on all facts and circumstances, as well as quantitatively, as appropriate.
If we have a variable interest in an entity that is determined not to be a VIE, the entity is then evaluated for consolidation under the VOE model. For limited partnerships and similar entities, we are deemed to have a controlling financial interest in a VOE, and would be required to consolidate the entity, if we own a majority of the entity’s kick-out rights through voting limited partnership interests and limited partners do not hold substantive participating rights (or other rights that would indicate that we do not control the entity). For entities other than limited partnerships, we are deemed to have a controlling financial interest in a VOE if we own a majority voting interest in the entity.
The analysis performed regarding the determination of variable interests held, whether entities are VIEs or VOEs, and whether we have a controlling financial interest in such entities, requires the exercise of judgment. The analysis is updated continuously as circumstances change or new entities are formed.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value (and considered Level 1 securities in the fair value hierarchy).
Fees Receivable, Net
Fees receivable are shown net of allowances. An allowance for doubtful accounts related to investment advisory and services fees is determined through an analysis of the aging of receivables, assessments of collectability based on historical trends and other qualitative and quantitative factors, including our relationship with the client, the financial health (or ability to pay) of the client, current economic conditions and whether the account is active or closed. The allowance for doubtful accounts is not material to fees receivable.
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Brokerage Transactions
Customers’ securities transactions are recorded on a settlement date basis, with related commission income and expenses reported on a trade date basis. Receivables from and payables to clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral for receivables; such collateral is not reflected in the consolidated financial statements. We have the ability by contract or custom to sell or re-pledge this collateral, and have done so at various times. As of December 31, 2020, there were 0 re-pledged securities. Principal securities transactions and related expenses are recorded on a trade date basis.
Securities borrowed and securities loaned by our broker-dealer subsidiaries are recorded at the amount of cash collateral advanced or received in connection with the transaction and are included in receivables from and payables to brokers and dealers in the consolidated statements of financial condition. Securities borrowed transactions require us to deposit cash collateral with the lender. With respect to securities loaned, we receive cash collateral from the borrower. See Note 8 for securities borrowed and loaned amounts recorded in our consolidated statements of financial condition as of December 31, 2020 and 2019. The initial collateral advanced or received approximates or is greater than the fair value of securities borrowed or loaned. We monitor the fair value of the securities borrowed and loaned on a daily basis and request additional collateral or return excess collateral, as appropriate. As of December 31, 2020 and 2019, there is 0 allowance provision required for the collateral advanced. Income or expense is recognized over the life of the transaction.
As of December 31, 2020 and 2019, we had $130.0 million and $204.0 million, respectively, of cash on deposit with clearing organizations for trade facilitation purposes, which are reported in other assets in our consolidated statements of financial condition. As of December 31, 2020 and 2019, we held 0 U.S. Treasury bills pledged as collateral. These clearing organizations have the ability by contract or custom to sell or re-pledge the collateral, if any.
Current Expected Credit Losses- Receivables from Brokerage clients
Receivables from clients is primarily composed of margin loan balances. The value of the securities owned by clients and held as collateral for these receivables is not reflected in the Consolidated Financial Statements and the collateral was not repledged or sold as of December 31, 2020 and 2019. We consider these financing receivables to be of good credit quality due to the fact that these receivables are primarily collateralized by the related client investments.
To estimate expected credit losses on margin loans, we applied the collateral maintenance practical expedient by comparing the amortized cost basis of the margin loans with the fair value of the collateral at the reporting date. Margin loans are limited to a percentage of the total value of the securities held in the client's account against those loans. AB requires, in the event of a decline in the market value of the securities in a margin account, the client to deposit additional securities or cash so that, at all times, the value of the securities in the account, at a minimum, cover the loan to the client. As such, AB reasonably expects that the borrower will be able to continually replenish collateral securing the financial asset and does not expect the fair value of collateral to fall below the amortized cost bases of the margin loans and, as a result, we consider the credit risk associated with these receivables to be minimal. In circumstances when a loan becomes undercollateralized and the client fails to deposit additional securities or cash, AB reserves the right to liquidate the account.

Current Expected Credit Losses - Receivables from Revenue Contracts with Customers
The majority of our revenue receivables are from investment advisory and service fees, and distribution revenues, that are typically paid out of the client accounts or third-party products consisting of cash and securities. Due to the size of the fees in relation to the value of the cash and securities in account or funds, the account value always exceeds the amortized cost basis of the receivables, resulting in a remote risk of loss. These receivables have a short duration, generally due within 30-90 days and there is minimal historical evidence of non-payment or market declines that would cause the fair value of the underlying securities to decline below the amortized cost of the receivables. AB maintains an allowance for credit losses based upon an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Once determined uncollectible, aged balances are written off as credit loss expense. This determination is based on careful analysis of individual receivables and aging schedules, and generally occurs when the receivable becomes over 360 days past due. Our aged receivables and amounts written off related to credit losses in any year are not material.
Furniture, Equipment and Leasehold Improvements, Net
Furniture, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation is recognized on a straight-line basis over the estimated useful lives of eight years for furniture and three to six years for equipment and software. Leasehold improvements are amortized on a straight-line basis over the lesser of their estimated useful lives or the terms of the related leases.
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Goodwill
In 2000, AB acquired SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc. (“Bernstein”). The Bernstein acquisition was accounted for under the purchase method, and the cost of the acquisition was allocated on the basis of the estimated fair value of the assets acquired and the liabilities assumed. The excess of the purchase price over the fair value of identifiable assets acquired, net of liabilities assumed, resulted in the recognition of goodwill of approximately $3.0 billion.
As of December 31, 2020, goodwill of $3.1 billion on the consolidated statement of financial condition included $2.8 billion as a result of the Bernstein acquisition and $282 million in regard to various smaller acquisitions. We have determined that AB has only 1 reporting segment and reporting unit.
Goodwill is tested annually, as of September 30, for impairment utilizing the market approach where the fair value of the reporting unit is based on its unadjusted market valuation (AB Units outstanding multiplied by AB Holding's Unit price) and adjusted market valuations assuming a control premium (when applicable). The price of a publicly-traded AB Holding Unit serves as a reasonable starting point for valuing an AB Unit because each represents the same fractional interest in our underlying business. Throughout the year, the carrying value of goodwill is also reviewed for impairment if certain events or changes in circumstances occur, and trigger whether an interim impairment test may be required. Such changes in circumstances may include, but are not limited to, a sustained decrease in the price of an AB Holding Unit or declines in AB’s market capitalization that would suggest that the fair value of the reporting unit is less than the carrying amount; significant and unanticipated declines in AB’s assets under management or revenues; and/or lower than expected earnings per unit. Any of these changes in circumstances could suggest the possibility that goodwill is impaired, but none of these events or circumstances by itself would indicate that it is more likely than not that goodwill is impaired. Instead, they are merely recognized as triggering events for the consideration of impairment and must be viewed in combination with any mitigating or positive factors. A holistic evaluation of all events since the most recent quantitative impairment test must be done to determine whether it is more likely than not that the reporting unit is impaired. As of September 30, 2020, the impairment test indicated that goodwill was not impaired. There were no facts or circumstances occurring in the fourth quarter of 2020 suggesting possible impairment.
As of January 1, 2020, we adopted ASU 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removed Step 2 of the goodwill impairment test, which had required a hypothetical purchase price allocation. As a result of the revised guidance, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Under this guidance, the goodwill impairment test no longer includes a determination by management of whether a decline in fair value is temporary; however, it is important to consider the impact of changing market conditions, including the severity and anticipated duration, is reflected in management's determination of fair value.

Intangible Assets, Net
Intangible assets consist primarily of costs assigned to acquired investment management contracts based on their estimated fair value at the time of acquisition, less accumulated amortization. Intangible assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life ranging from six years to 20 years.
As of December 31, 2020, intangible assets, net of accumulated amortization, of $44.5 million on the consolidated statement of financial condition consists of $29.2 million of finite-lived intangible assets subject to amortization and $15.3 million of indefinite-lived intangible assets not subject to amortization. As of December 31, 2019, intangible assets, net of accumulated amortization, of $55.4 million on the consolidated statement of financial condition consisted of $41.9 million of finite-lived intangible assets subject to amortization, of which $15.5 million related to the Bernstein acquisition (which was fully amortized as of December 31, 2020), and $13.5 million of indefinite-lived intangible assets not subject to amortization in regard to other acquisitions. The gross carrying amount of finite-lived intangible assets totaled $65.1 million as of December 31, 2020 and $468.9 million as of December 31, 2019, and accumulated amortization was $35.9 million as of December 31, 2020 and $427.0 million as of December 31, 2019. Amortization expense was $21.4 million for 2020, $28.8 million for 2019 and $27.8 million for 2018. Estimated annual amortization expense for 2021 is approximately $6 million, $5 million in years two through four, then approximately $4 million in year five.
We periodically review indefinite-lived intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value exceeds fair value, we perform additional impairment tests to measure the amount of the impairment loss, if any. During the fourth quarter of 2020, we recorded an impairment of $1.5 million relating to our 2016 acquisition of Ramius Alternative Solutions LLC. Due to the loss of acquired investment management contracts during 2020, the carrying value of the finite-lived intangible assets exceeded the fair value of the
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contracts. We determined the fair value of the contracts using a discounted cashflow model. The impairment charge was recorded in general and administrative expenses in the consolidated statements of income.
Deferred Sales Commissions, Net
We pay commissions to financial intermediaries in connection with the sale of shares of open-end company-sponsored mutual funds sold without a front-end sales charge (“back-end load shares”). These commissions are capitalized as deferred sales commissions and amortized over periods not exceeding one year for U.S. fund shares and four years for Non-U.S. Fund shares, the periods of time during which deferred sales commissions generally are recovered. We recover these commissions from distribution services fees received from those funds and from CDSC received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions of unamortized deferred sales commissions when received. Since January 31, 2009, our U.S. mutual funds have not offered back-end load shares to new investors.
We periodically review the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If these factors indicate impairment in value, we compare the carrying value to the undiscounted cash flows expected to be generated by the asset over its remaining life. If we determine the deferred sales commission asset is not fully recoverable, the asset will be deemed impaired and a loss will be recorded in the amount by which the recorded amount of the asset exceeds its estimated fair value. There were 0 impairment charges recorded during 2020 or 2019.
Leases
We determine if an arrangement is a lease at inception. Both operating and finance leases are included in the right-of-use (“ROU”) assets and lease liabilities in our consolidated statement of financial condition.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use our incremental borrowing rate based on the information available as of the lease commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis, and the ROU assets and lease liabilities are adjusted when it is reasonably certain that an option will be exercised.

When calculating the measurement of ROU assets and lease liabilities, we utilize the fixed payments associated with the lease and do not include other variable contractual obligations, such as operating expenses, real estate taxes and employee parking. These costs are accounted for as period costs and expensed as incurred.

Additionally, we exclude any intangible assets such as software licensing agreements as stated in ASC 842-10-15-1. These arrangements will continue to follow the guidance of ASC 350, Intangibles - Goodwill and Other.
Loss Contingencies
With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss.
Contingent Payment Arrangements
We periodically enter into contingent payment arrangements in connection with our business combinations. In these arrangements, we agree to pay additional consideration to the sellers to the extent that certain performance targets are achieved. We estimate the fair value of these potential future obligations at the time a business combination is consummated and record a liability on our

consolidated statements of financial condition. We then accrete the obligation to its expected payment amount over the measurement period. If our expected payment amount subsequently changes, the obligation is modified in the current period resulting in a gain or loss. Both gains and losses resulting from changes to expected payments and the accretion of these obligations to their expected payment amounts are reflected within contingent payment arrangements in our consolidated
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statements of income. During the fourth quarter of 2020, we recorded an impairment of the contingent consideration payable of $1.4 million relating to our 2016 acquisition of Ramius Alternative Solutions LLC.
Mutual Fund Underwriting Activities
Purchases and sales of shares of company-sponsored mutual funds in connection with the underwriting activities of our subsidiaries, including related commission income, are recorded on the trade date. Receivables from brokers and dealers for sale of shares of company-sponsored mutual funds generally are realized within three business days from the trade date, in conjunction with the settlement of the related payables to company-sponsored mutual funds for share purchases. Distribution plan and other promotion and servicing payments are recognized as expense when incurred.
Long-term Incentive Compensation Plans
We maintain several unfunded, non-qualified long-term incentive compensation plans, under which we grant annual awards to employees, generally in the fourth quarter, and to members of the Board of Directors of the General Partner, who are not employed by our company or by andany of our affiliates ("Eligible Directors").
Awards granted in December 2018, 20172020, 2019 and 20162018 allowed employee participants to allocate their awards between restricted AB Holding Units and deferred cash. Participants (except certain members of senior management) generally could allocate up to 50% of their awards to deferred cash, not to exceed a total of $250,000 per award. Each of our employees based outside of the United States (other than expatriates), who received an award of $100,000 or less, could have allocated up to 100% of his or her award to deferred cash. Participants allocated their awards prior to the date on which the Compensation Committee granted awards in December 2018, 20172020, 2019 and 2016.2018. For these awards, the number of AB Holding Units awarded was based on the closing price of an AB Holding Unit on the grant date. For awards granted in 2018, 20172020, 2019 and 2016:2018:
•We engage in open-market purchases of AB Holding Units or purchase newly-issued AB Holding Units from AB Holding that are awarded to participants and keep them in a consolidated rabbi trust.
•Quarterly distributions on vested and unvested AB Holding Units are paid currently to participants, regardless of whether or not a long-term deferral election has been made.
•Interest on deferred cash is accrued monthly based on our monthly weighted average cost of funds.
We recognize compensation expense related to equity compensation grants in the financial statements using the fair value method. Fair value of restricted AB Holding Unit awards is the closing price of an AB Holding Unit on the grant date; fair value of options is determined using the Black-Scholes option valuation model. Under the fair value method, compensatory expense is measured at the grant date based on the estimated fair value of the award and is recognized over the required service period. For year-end long-term incentive compensation awards, employees who resign or are terminated without cause may retain their awards, subject to compliance with certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictions on competition and employee and client solicitation, and a claw-back for failing to follow existing risk management policies. Because there is no service requirement, we fully expense these awards on the grant date. Most equity replacement, sign-on or similar deferred compensation awards included in separate employment agreements or arrangements include a required service period. Regardless of whether or not the award agreement includes employee service requirements, AB Holding Units typically are delivered to employees ratably over four years, unless the employee has made a long-term deferral election.
Grants of restricted AB Holding Units can be awarded to Eligible Directors. Generally, these restricted AB Holding Units vest ratably over four years. These restricted AB Holding Units are not forfeitable (except if the Eligible Director is terminated for “Cause,” as that term is defined in the applicable award agreement). We fully expense these awards on grant date, as there is no service requirement.
We fund our restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping all of these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the Amended and Restated Agreement of Limited Partnership of AB (“AB Partnership Agreement”), when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB.
During each
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Table of 2018 and 2017, we purchased 9.3 millionContents
Repurchases of AB Holding Units for $268.0 millionthe years ended December 31, 2020 and $220.2 million, respectively (on2019 consisted of the following:
Years Ended December 31,
20202019
(in millions)
Total amount of AB Holding Units Purchased (1)
5.4 6.0 
Total Cash Paid for AB Holding Units Purchased(1)
$149.0 $172.6 
Open Market Purchases of AB Holding Units Purchased (2)
3.1 2.9 
Total Cash Paid for Open Market Purchases of AB Holding Units (2)
$74.0 $82.7 
(1) Purchased on a trade date basis). These amounts reflect open-market purchases of 6.5 million and 5.2 million AB Holding Units for $183.2basis.

million and $117.1 million, respectively, with the(2) The remainder relatingrelated to purchases of AB Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards. Purchases of AB Holding Units reflected on the consolidated statements of cash flows are net of AB Holding Units purchased by employees as part of a distribution reinvestment election.
Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on our behalf in accordance with the terms ofand limitations specified in the plan. Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the fourth quarter of 20182020 expired at the close of business on February 12, 2019.10, 2021. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes.
During 2018,2020, we granted to employees and Eligible Directors 8.75.7 million restricted AB Holding Units (including 6.25.0 million granted in December for 20182020 year-end awards to employees). During 2017,2019, we granted to employees and Eligible Directors 8.67.7 million restricted AB Holding Units (including 6.45.4 million granted in December for 20172019 year-end awards to employees). We used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards.
During 20182020 and 2017,2019, AB Holding issued 0.9 million5,182 and 1.20.5 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $16.6$0.1 million and $20.1$11.5 million, respectively, received from employeesaward recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.
Foreign Currency Translation and Transactions
Assets and liabilities of foreign subsidiaries are translated from functional currencies into United States dollars (“US$”) at exchange rates in effect at the balance sheet dates, and related revenues and expenses are translated into US$ at average exchange rates in effect during each period. Net foreign currency gains and losses resulting from the translation of assets and liabilities of foreign operations into US$ are reported as a separate component of other comprehensive income in the consolidated statements of comprehensive income. Net foreign currency transaction gains (losses)losses were $0.6$3.3 million, $(2.9)$2.0 million and $1.6$0.1 million for 2018, 20172020, 2019 and 2016,2018, respectively, and are reported in general and administrative expenses on the consolidated statements of income.
Cash Distributions
AB is required to distribute all of its Available Cash Flow, as defined in the AB Partnership Agreement, to its Unitholders and to the General Partner. Available Cash Flow can be summarized as the cash flow received by AB from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB for use in its business, or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.
Typically, Available Cash Flow has been the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will be based on adjusted diluted net income per unit, unless management determines, with the concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation.
On February 13, 2019,11, 2021, the General Partner declared a distribution of $0.71$1.05 per AB Unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2018.2020. The General Partner, as a result of its 1% general partnership interest, is entitled to receive 1% of each distribution. The distribution is payable on March 7, 20194, 2021 to holders of record on February 25, 2019.22, 2021.
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Total cash distributions per Unit paid to the General Partner and Unitholders during 2020, 2019 and 2018 2017were $3.08, $2.60 and 2016 were $3.16, $2.39 and $1.98, respectively.
Comprehensive Income
We report all changes in comprehensive income in the consolidated statements of comprehensive income. Comprehensive income includes net income, as well as unrealized gains and losses on investments classified as available-for-sale (for 2017 and 2016), foreign currency translation adjustments, actuarial gains (losses) and prior service cost. Deferred taxes were not recognized on foreign currency translation adjustments for foreign subsidiaries which had earnings that were considered permanently invested outside the United States.

3. Revenue Recognition


See Note 2, Significant Accounting Policies, Revenue Recognition, for descriptions of revenues presented in the table below. The adoption of ASC 606 had no significant impact on revenue recognition during 2018, except for the recognition of $12.9 million of performance-based fees in 2018 from a fund in liquidation, which recognition was not probable of significant reversal. Under the previous revenue accounting standard, this performance-based fee would not have been recognized until final liquidation of the fund. Revenues for the years ended December 31, 2018, 20172020, 2019 and 20162018 consisted of the following:

Year Ended December 31,
202020192018
(in thousands)
Subject to contracts with customers:
    Investment advisory and services fees
        Base fees$2,462,810 $2,372,429 $2,244,068 
        Performance-based fees132,626 99,615 118,143 
    Bernstein research services459,744 407,911 439,432 
    Distribution revenues
        All-in-management fees331,268 291,999 254,477 
        12b-1 fees75,973 80,268 87,166 
        Other122,540 82,776 76,919 
    Other revenues
        Shareholder servicing fees82,317 77,394 75,974 
        Other21,240 17,924 19,211 
3,688,518 3,430,316 3,315,390 
Not subject to contracts with customers:
    Dividend and interest income, net of interest expense35,273 47,216 45,827 
    Investment (losses) gains(16,401)38,659 2,653 
    Other revenues1,146 2,241 3,491 
20,018 88,116 51,971 
Total net revenues$3,708,536 $3,518,432 $3,367,361 
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  Year Ended December 31,
  2018 2017 2016
 (in thousands)
Subject to contracts with customers:      
    Investment advisory and services fees      
        Base fees $2,244,068
 $2,106,525
 $1,900,719
        Performance-based fees 118,143
 94,780
 32,752
    Bernstein research services 439,432
 449,919
 479,875
    Distribution revenues      
        All-in-management fees 254,477
 245,367
 197,766
        12b-1 fees 87,166
 94,972
 114,641
        Other 76,919
 71,724
 71,998
    Other revenues      
        Shareholder servicing fees 75,974
 75,024
 77,690
        Other 19,211
 17,838
 16,703
  3,315,390
 3,156,149
 2,892,144
Not subject to contracts with customers:      
    Dividend and interest income, net of interest expense 45,827
 45,997
 37,816
    Investment gains (losses) 2,653
 92,102
 93,353
    Other revenues 3,491
 4,273
 5,466
  51,971
 142,372
 136,635
Total net revenues $3,367,361
 $3,298,521
 $3,028,779


4. Real Estate Charges
Since 2010, we have sub-leased over one million square feet of office space. The activity in the liability account relating to our global space consolidation initiatives for the following periods is:
 Year Ended December 31,
 2018 2017
 (in thousands)
Balance as of January 1,$113,635
 $112,932
Expense incurred7,122
 28,507
Deferred rent—
 7,083
Payments made (net)(39,345) (39,122)
Interest accretion4,412
 4,235
Balance as of end of period$85,824
 $113,635

5. Net Income Per Unit
Basic net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the basic weighted average number of limited partnership units outstanding for each year. Diluted net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the total of the diluted weighted average number of limited partnership units outstanding for each year.
Year Ended December 31,
202020192018
(in thousands, except per unit amounts)
Net income attributable to AB Unitholders$865,952 $752,042 $757,588 
Weighted average units outstanding—basic269,058 268,075 269,236 
Dilutive effect of compensatory options to buy AB Holding Units27 44 251 
Weighted average units outstanding—diluted269,085 268,119 269,487 
Basic net income per AB Unit$3.19 $2.78 $2.79 
Diluted net income per AB Unit$3.19 $2.78 $2.78 
Years Ended December 31,
202020192018
Anti-dilutive options excluded from diluted net income29,056 29,056 49,784 

 Year Ended December 31,
 2018 2017 2016
 (in thousands, except per unit amounts)
Net income attributable to AB Unitholders$757,588
 $662,403
 $673,358
      
Weighted average units outstanding—basic269,236
 266,955
 269,084
Dilutive effect of compensatory options to buy AB Holding Units251
 430
 554
Weighted average units outstanding—diluted269,487
 267,385
 269,638
      
Basic net income per AB Unit$2.79
 $2.46
 $2.48
Diluted net income per AB Unit$2.78
 $2.45
 $2.47
We excluded 49,784 options in 2018, 1,970,741 options in 2017 and 2,873,106 options in 2016, from the diluted net income per unit computation due to their anti-dilutive effect.

6.5. Cash and Securities Segregated Under Federal Regulations and Other Requirements
As of December 31, 20182020 and 2017, $1.22019, $1.8 billion and $0.8$1.1 billion, respectively, of U.S. Treasury Bills were segregated in a special reserve bank custody account for the exclusive benefit of our brokerage customers under Rule 15c3-3 of the Exchange Act.
7.6. Investments
Investments consist of:
December 31,
December 31,20202019
2018 2017(in thousands)
(in thousands)
   
U.S. Treasury Bills$392,424
 $52,609
Equity securities:   Equity securities:
Long-term incentive compensation-related38,883
 51,758
Long-term incentive compensation-related$34,351 $36,665 
Seed capital105,951
 160,672
Seed capital75,766 70,464 
Other73,409
 81,154
Other55,439 73,202 
Exchange-traded options2,568
 4,981
Exchange-traded options7,527 6,931 
Investments in limited partnership hedge funds:   Investments in limited partnership hedge funds:
Long-term incentive compensation-related13,546
 14,276
Long-term incentive compensation-related25,762 14,237 
Seed capital67,153
 22,923
Seed capital16,646 33,124 
Private equity (seed capital)—
 38,186
Time deposits8,783
 5,138
Time deposits18,602 18,281 
Other11,627
 11,892
Other19,282 13,890 
Total investments$714,344
 $443,589
Total investments$253,375 $266,794 
Total investments related to long-term incentive compensation obligations of $52.4$60.1 million and $66.0$50.9 million as of December 31, 20182020 and 2017,2019, respectively, consist of company-sponsored mutual funds and hedge funds. For long-term incentive compensation awards granted before 2009, we typically made investments in company-sponsored mutual funds and
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hedge funds that were notionally elected by plan participants and maintained them (and continue to maintain them) in a consolidated rabbi trust or separate

custodial account. The rabbi trust and custodial account enable us to hold such investments separate from our other assets for the purpose of settling our obligations to participants. The investments held in the rabbi trust and custodial account remain available to the general creditors of AB.
The underlying investments of hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including various agency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). These investments are valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of the underlying funds.
We allocate seed capital to our investment teams to help develop new products and services for our clients. A portion of our seed capital trading investments are equity and fixed income products, primarily in the form of separately-managed account portfolios, U.S. mutual funds, Luxembourg funds, Japanese investment trust management funds or Delaware business trusts. We also may allocate seed capital to investments in private equity funds. During the fourth quarter of 2018, we sold our ownership in a private equity investment ($37.2 million as of December 31, 2017) to a third-party. In regard to our seed capital investments, the amounts above reflect those funds in which we are not the primary beneficiary of a VIE or hold a controlling financial interest in a VOE. During 2018, our seed capital in limited partnership hedge funds increased $44.2 million primarily due to the deconsolidation of a fund in which we have a seed investment of $42.5 million due to no longer having a controlling financial interest. See Note 15, Consolidated Company-Sponsored Investment Funds, for a description of the seed capital investments that we consolidated. As of December 31, 20182020 and 2017,2019, our total seed capital investments were $391.6$310.3 million and $523.2$358.1 million, respectively. Seed capital investments in unconsolidated company-sponsored investment funds are valued using published net asset values or non-published net asset values if they are not listed on an active exchange but have net asset values that are comparable to funds with published net asset values and have no redemption restrictions.
In addition, we also have long positions in corporate equities and long exchange-traded options traded through our options desk.
The portion of unrealized gains (losses) related to equity securities, as defined by ASU 2016-01,ASC 321-10, held as of December 31, 20182020 and 20172019 were as follows:
December 31,
20202019
(in thousands)
Net gain (losses) recognized during the period$17,927 $31,890 
Less: net gains recognized during the period on equity securities sold during the period27,357 18,138 
Unrealized gains (losses) recognized during the period on equity securities held$(9,430)$13,752 
 December 31,
 2018 2017
 (in thousands)
Net (loss) gain recognized during the period$(21,797) $20,873
Less: net gains recognized during the period on equity securities sold during the period1,515
 24,594
Unrealized losses recognized during the period on equity securities held$(23,312) $(3,721)
8.7. Derivative Instruments
See Note 15, Consolidated Company-Sponsored Investment Funds, for disclosure of derivative instruments held by our consolidated company-sponsored investment funds.
We enter into various futures, forwards, options and swaps to economically hedge certain seed capital investments. Also, we have currency forwards that help us to economically hedge certain balance sheet exposures. In addition, our options desk trades long and short exchange-traded equity options. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging.

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The notional value, fair value and gains and losses recognized in investment gains (losses) as of December 31, 20182020 and 20172019 for derivative instruments (excluding derivative instruments relating to our options desk trading activities discussed below) not designated as hedging instruments were as follows:
Notional
Value		Derivative
Assets		Derivative
Liabilities		Gains
(Losses)
Notional
Value
 
Derivative
Assets
 
Derivative
Liabilities
 
Gains
(Losses)
(in thousands)
(in thousands)
December 31, 2018       
December 31, 2020December 31, 2020
Exchange-traded futures$218,657
 $1,594
 $2,534
 $3,515
Exchange-traded futures$142,886 $118 $1,834 $(15,743)
Currency forwards87,019
 7,647
 7,582
 379
Currency forwards63,906 8,576 8,451 (1,779)
Interest rate swaps112,658
 1,649
 1,959
 (125)Interest rate swaps60,997 2,043 2,955 (347)
Credit default swaps94,657
 2,888
 2,685
 335
Credit default swaps167,649 10,910 13,304 (104)
Total return swaps99,038
 3,301
 62
 8,246
Total return swaps52,061 94 1,847 (15,242)
Option swapsOption swaps2,486 0 2,146 (2,374)
Total derivatives$612,029
 $17,079
 $14,822
 $12,350
Total derivatives$489,985 $21,741 $30,537 $(35,589)
December 31, 2017       
December 31, 2019December 31, 2019
Exchange-traded futures$242,355
 $948
 $2,540
 $(15,343)Exchange-traded futures$171,112 $939 $871 $(10,840)
Currency forwards126,503
 8,306
 8,058
 (457)Currency forwards60,809 8,545 8,633 738 
Interest rate swaps43,309
 951
 870
 (137)Interest rate swaps92,756 1,746 2,254 (616)
Credit default swaps74,600
 1,247
 2,465
 (1,757)Credit default swaps168,303 2,151 5,611 (6,413)
Total return swaps68,106
 167
 390
 (6,167)Total return swaps91,201 110 1,764 (21,164)
Option swapsOption swaps354 0 126 (126)
Total derivatives$554,873
 $11,619
 $14,323
 $(23,861)Total derivatives$584,535 $13,491 $19,259 $(38,421)
As of December 31, 20182020 and 2017,2019, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on our consolidated statements of financial condition. Gains and losses on derivative instruments are reported in investment gains (losses) on the consolidated statements of income.
We may be exposed to credit-related losses in the event of nonperformancenon-performance by counterparties to derivative financial instruments. We minimize our counterparty exposure through a credit review and approval process. In addition, we have executed various collateral arrangements with counterparties to the over-the-counter derivative transactions that require both pledging and accepting collateral in the form of cash. As of December 31, 20182020 and 2017,2019, we held $4.8$0.4 million and $0.5$0.3 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers and dealers in our consolidated statements of financial condition.
Although notional amount is the most commonly used measure of volume in the derivatives market, it is not used as a measure of credit risk. Generally, the current credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received. A derivative with positive value (a derivative asset) indicates existence of credit risk because the counterparty would owe us if the contract were closed. Alternatively, a derivative contract with negative value (a derivative liability) indicates we would owe money to the counterparty if the contract were closed. Generally, if there is more than one derivative transaction with a single counterparty, a master netting arrangement exists with respect to derivative transactions with that counterparty to provide for aggregate net settlement.
Certain of our standardized contracts for over-the-counter derivative transactions (“ISDA Master Agreements”) contain credit risk related contingent provisions pertaining to each counterparty's credit rating. In some ISDA Master Agreements, if the counterparty’s credit rating, or in some agreements, our AUM, falls below a specified threshold, either a default or a termination event permitting the counterparty to terminate the ISDA Master Agreement would be triggered. In all agreements that provide for collateralization, various levels of collateralization of net liability positions are applicable, depending on the credit rating of the counterparty. As of December 31, 20182020 and 2017,2019, we delivered $4.5$6.4 million and $8.8$4.3 million, respectively, of cash collateral into brokerage accounts. We report this cash collateral in cash and cash equivalents in our consolidated statements of financial condition.
As of December 31, 20182020 and 2017,2019, we held $2.6$7.5 million and $5.0$6.9 million, respectively, of long exchange-traded equity options, which are included in other investments on our consolidated statements of financial condition. In addition, as of December 31, 20182020 and 2017,2019, we held $3.8$12.5 million and $13.6$12.3 million, respectively, of short exchange-traded equity options,
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which are included in securities sold not yet purchased on our consolidated statements of financial condition. Our options desk provides our clients with equity derivative strategies and execution for exchange-traded options on single stocks, exchange-traded funds and indices. While predominately agency-based, the options desk may commit capital to facilitate a client's transaction. Our options desk

hedges the risk associated with this activity by taking offsetting positions in equities. For the years ended December 31, 20182020 and 20172019 we recognized $7.9$11.9 million and $27.8$22.2 million, respectively, of losses on equity options activity. These losses are recognized in investment gains (losses) in the consolidated statements of income.
9.8. Offsetting Assets and Liabilities
See Note 15, Consolidated Company-Sponsored Investment Funds, for disclosure of offsetting assets and liabilities of our consolidated company-sponsored investment funds.
Offsetting of assets as of December 31, 20182020 and 20172019 was as follows:
Gross
Amounts of
Recognized
Assets		Gross
Amounts
Offset in the
Statement
of Financial
Condition		Net
Amounts of
Assets
Presented in
the
Statement of
Financial
Condition		Financial
Instruments Collateral		Cash Collateral
Received		Net
Amount
(in thousands)
December 31, 2020
Securities borrowed$7,808 $0 $7,808 $(7,344)$0 $464 
Derivatives$21,741 $0 $21,741 $0 $(380)$21,361 
Long exchange-traded options$7,527 $0 $7,527 $0 $0 $7,527 
December 31, 2019
Securities borrowed$38,993 $0 $38,993 $(38,993)$0 $0 
Derivatives$13,491 $0 $13,491 $0 $(251)$13,240 
Long exchange-traded options$6,931 $0 $6,931 $0 $0 $6,931 
 Gross
Amounts of
Recognized
Assets		 Gross
Amounts
Offset in the
Statement
of Financial
Condition		 Net
Amounts of
Assets
Presented in
the
Statement of
Financial
Condition		 Financial
Instruments		 Cash Collateral
Received		 Net
Amount
 (in thousands)
December 31, 2018           
Securities borrowed$64,856
 $—
 $64,856
 $(64,217) $—
 $639
Derivatives$17,079
 $—
 $17,079
 $—
 $(4,831) $12,248
Long exchange-traded options$2,568
 $—
 $2,568
 $—
 $—
 $2,568
December 31, 2017           
Securities borrowed$85,371
 $—
 $85,371
 $(82,353) $—
 $3,018
Derivatives$11,619
 $—
 $11,619
 $—
 $(519) $11,100
Long exchange-traded options$4,981
 $—
 $4,981
 $—
 $—
 $4,981
Offsetting of liabilities as of December 31, 20182020 and 20172019 was as follows:
Gross
Amounts of
Recognized
Liabilities		Gross
Amounts
Offset in the
Statement
of
Financial
Condition		Net
Amounts
of Liabilities
Presented in
the
Statement
of Financial
Condition		Financial
Instruments Collateral		Cash Collateral
Pledged		Net
Amount
Gross
Amounts of
Recognized
Liabilities		 Gross
Amounts
Offset in the
Statement
of
Financial
Condition		 Net
Amounts
of Liabilities
Presented in
the
Statement
of Financial
Condition		 Financial
Instruments		 Cash Collateral
Pledged		 Net
Amount		(in thousands)
December 31, 2020December 31, 2020
(in thousands)
December 31, 2018           
Securities loaned$59,526
 $—
 $59,526
 $(59,526) $—
 $—
Derivatives$14,822
 $—
 $14,822
 $—
 $(4,458) $10,364
Derivatives$30,537 $0 $30,537 $0 $(6,374)$24,163 
Short exchange-traded options$3,782
 $—
 $3,782
 $—
 $—
 $3,782
Short exchange-traded options$12,486 $0 $12,486 $0 $0 $12,486 
December 31, 2017           
Securities loaned$37,960
 $—
 $37,960
 $(37,922) $—
 $38
December 31, 2019December 31, 2019
Derivatives$14,323
 $—
 $14,323
 $—
 $(8,794) $5,529
Derivatives$19,259 $0 $19,259 $0 $(4,276)$14,983 
Short exchange-traded options$13,585
 $—
 $13,585
 $—
 $—
 $13,585
Short exchange-traded options$12,348 $0 $12,348 $0 $0 $12,348 
Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.

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9. Fair Value
See Note 15, Consolidated Company-Sponsored Investment Funds, for disclosure of fair value of our consolidated company-sponsored investment funds.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The three broad levels of fair value hierarchy are as follows:
•Level 1—Quoted prices in active markets are available for identical assets or liabilities as of the reported date.
•Level 2—Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date.
•Level 3—Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Valuation of our financial instruments by pricing observability levels as of December 31, 20182020 and 20172019 was as follows (in thousands):
 Level 1Level 2Level 3
NAV Expedient(1)
OtherTotal
December 31, 2020:
Money markets$130,675 $0 $0 $— $— $130,675 
Securities segregated (U.S. Treasury Bills)0 1,752,906 0 — — 1,752,906 
Derivatives118 21,623 0 — — 21,741 
Investments:
      Equity securities147,705 17,565 125 161 — 165,556 
      Long exchange-traded options7,527 0 0 — — 7,527 
      Limited partnership hedge
      funds(2)
— — — — 42,408 42,408 
        Time deposits(3)
— — — — 18,602 18,602 
        Other investments7,011 — — — 12,271 19,282 
Total investments162,243 17,565 125 161 73,281 253,375 
Total assets measured at fair value$293,036 $1,792,094 $125 $161 $73,281 $2,158,697 
Securities sold not yet purchased:    
Short equities – corporate$5,305 $0 $0 $— $— $5,305 
Short exchange-traded options12,486 0 0 — — 12,486 
Derivatives1,834 28,703 0 — — 30,537 
Contingent payment arrangements0 0 27,750 — — 27,750 
Total liabilities measured at fair value$19,625 $28,703 $27,750 $— $— $76,078 
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Level 1Level 2Level 3
NAV Expedient(1)
OtherTotal
Level 1 Level 2 Level 3 
NAV Expedient(1)
 Other Total
December 31, 2018:           
December 31, 2019:December 31, 2019:
Money markets$102,888
 $—
 $—
 $—
 $—
 $102,888
Money markets$126,401 $0 $0 $— $— $126,401 
Securities segregated (U.S. Treasury Bills)—
 1,169,554
 —
 —
 —
 1,169,554
Securities segregated (U.S. Treasury Bills)0 1,094,866 0 — — 1,094,866 
Derivatives1,594
 15,485
 —
 —
 —
 17,079
Derivatives939 12,552 0 — — 13,491 
Investments           
U.S. Treasury Bills—
 392,424
 —
 —
 —
 392,424
Investments:Investments:
Equity securities209,414
 8,372
 142
 315
 —
 218,243
 Equity securities170,946 8,952 119 314 — 180,331 
Long exchange-traded options2,568
 —
 —
 —
 —
 2,568
 Long exchange-traded options6,931 0 0 — — 6,931 
Limited partnership hedge
funds(2)
—
 —
 —
 —
 80,699
 80,699
Limited partnership hedge
funds(2)
0 — — — 47,361 47,361 
Time deposits(3)
—
 —
 —
 —
 8,783
 8,783
Time deposits(3)
— — — — 18,281 18,281 
Other investments4,269
 —
 —
 —
 7,358
 11,627
 Other investments5,883 — — — 8,007 13,890 
Total investments216,251
 400,796
 142
 315
 96,840
 714,344
Total investments183,760 8,952 119 314 73,649 266,794 
Total assets measured at fair value$320,733
 $1,585,835
 $142
 $315
 $96,840
 $2,003,865
Total assets measured at fair value$311,100 $1,116,370 $119 $314 $73,649 $1,501,552 
           
Securities sold not yet purchased 
  
  
      
Securities sold not yet purchased:Securities sold not yet purchased:    
Short equities – corporate$4,841
 $—
 $—
 $—
 $—
 $4,841
Short equities – corporate$17,809 $0 $0 $— $— $17,809 
Short exchange-traded options3,782
 —
 —
 —
 —
 3,782
Short exchange-traded options12,348 0 0 — — 12,348 
Derivatives2,534
 12,288
 —
 —
 —
 14,822
Derivatives871 18,388 0 — — 19,259 
Contingent payment arrangements—
 —
 7,336
 —
 —
 7,336
Contingent payment arrangements0 0 22,911 — — 22,911 
Total liabilities measured at fair value$11,157
 $12,288
 $7,336
 $—
 $—
 $30,781
Total liabilities measured at fair value$31,028 $18,388 $22,911 $— $— $72,327 

 Level 1 Level 2 Level 3 
NAV Expedient(1)
 Other Total
December 31, 2017:           
Money markets$62,071
 $—
 $—
 $—
 $—
 $62,071
Securities segregated (U.S. Treasury Bills)—
 816,350
 —
 —
 —
 816,350
Derivatives948
 10,671
 —
 —
 —
 11,619
Investments           
      U.S. Treasury Bills—
 52,609
 —
 —
 —
 52,609
      Equity securities273,674
 19,699
 117
 94
 —
 293,584
      Long exchange-traded options4,981
 —
 —
 —
 —
 4,981
      Limited partnership hedge
      funds(2)
—
 —
 —
 —
 37,199
 37,199
        Private equity—
 —
 954
 37,232
 —
 38,186
        Time deposits(3)
—
 —
 —
 —
 5,138
 5,138
        Other investments—
 —
 —
 —
 11,892
 11,892
Total investments278,655
 72,308
 1,071
 37,326
 54,229
 443,589
Total assets measured at fair value$341,674
 $899,329
 $1,071
 $37,326
 $54,229
 $1,333,629
            
Securities sold not yet purchased 
  
  
      
Short equities – corporate$16,376
 $—
 $—
 $—
 $—
 $16,376
Short exchange-traded options13,585
 —
 —
 —
 —
 13,585
Derivatives2,540
 11,783
 —
 —
 —
 14,323
Contingent payment arrangements—
 —
 10,855
 —
 —
 10,855
Total liabilities measured at fair value$32,501
 $11,783
 $10,855
 $—
 $—
 $55,139

(1)Investments measured at fair value using NAV (or its equivalent) as a practical expedient.
(2)Investments in equity method investees that are not measured at fair value in accordance with GAAP.
(3)Investments carried at amortized cost that are not measured at fair value in accordance with GAAP.

During 2018, we sold one of our private equity investments (which had previously been measured using NAV as a practical expedient), which was a venture capital fund. This fund had a fair value of $37.2 million at December 31, 2017. This partnership invested in communications, consumer, digital media, healthcare and information technology markets. The fair value of this investment was estimated using the capital account balances provided by the partnership.
Other investments include (i) an investment in a start-upsoftware publishing company that does not have a readily available fair value ($0.92.1 million and $4.6$1.0 million as of December 31, 20182020 and 2017,2019, respectively), (ii) an investmentinvestments in anstart-up companies that do not have a readily available fair value (these investments were $0.3 million and $0.9 million as of December 31, 2020 and 2019, respectively), (iii) investments in equity method investeeinvestees that isare not measured at fair value in accordance with GAAP ($3.46.5 million and $4.1$2.9 million as of December 31, 20182020 and 2017,2019, respectively), and (iii)(iv) broker dealer exchange memberships that are not measured at fair value in accordance with GAAP ($3.13.3 million and $3.2 million as of December 31, 20182020 and 2017,2019, respectively).
We provide below a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy:
•Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are included in Level 1 of the valuation hierarchy.
•Treasury Bills: We hold U.S. Treasury Bills, which are primarily segregated in a special reserve bank custody account as required by Rule 15c3-3 of the Exchange Act. These securities are valued based on quoted yields in secondary markets and are included in Level 2 of the valuation hierarchy.
•Equity securities: Our equity securities consist principally of company-sponsored mutual funds with NAVs and various separately-managed portfolios consisting primarily of equity and fixed income mutual funds with quoted prices in active

markets, which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy.
•Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy. In addition, we also hold currency forward contracts, interest rate swaps, credit default swaps, option swaps
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and total return swaps with counterparties that are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy.
•Options: We hold long exchange-traded options that are included in Level 1 of the valuation hierarchy.
Private equity: Generally, the valuation of private equity investments requires significant management judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such investments. Private equity investments are valued initially at cost. The carrying values of private equity investments are adjusted either up or down from cost to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing review in accordance with our valuation policies and procedures. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation, including current operating performance and future expectations of investee companies, industry valuations of comparable public companies, changes in market outlooks, and the third party financing environment over time. In determining valuation adjustments resulting from the investment review process, particular emphasis is placed on current company performance and market conditions. For these reasons, which make the fair value of private equity investments unobservable, equity investments are included in Level 3 of the valuation hierarchy. If private equity investments become publicly traded, they are included in Level 1 of the valuation hierarchy; provided, however, if they contain trading restrictions, publicly-traded equity investments are included in Level 2 of the valuation hierarchy until the trading restrictions expire.
•Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy.
•Contingent payment arrangements: Contingent payment arrangements relate to contingent payment liabilities associated with various acquisitions. At each reporting date, we estimate the fair values of the contingent consideration expected to be paid upon probability-weighted AUM and revenue projections, using observableunobservable market data inputs, which are included in Level 3 of the valuation hierarchy.
During the years ended December 31, 20182020 and 2017,2019, there were no0 transfers between Level 1 and Level 2 securities nor between Level 2 and Level 3 securities.
The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as private equity and equity securities, is as follows:
December 31, 2020December 31, 2019
(in thousands)
Balance as of beginning of period$119 $142 
Purchases0 0 
Sales0 0 
Realized gains (losses), net0 0 
Unrealized (losses) gains, net6 (23)
Balance as of end of period$125 $119 
 December 31, 2018 December 31, 2017
 (in thousands)
Balance as of beginning of period$1,071
 $5,023
Purchases—
 —
Sales—
 —
Realized gains, net—
 —
Unrealized (losses) gains, net(929) (3,952)
Balance as of end of period$142
 $1,071
Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the consolidated statements of income.
As part of December 31, 2017,acquisitions made by the Company, we had an investment in a private equity fund focused exclusively on the energy sector (fair value of $1.0 million) that was classified as Level 3 and written off during the second quarter of 2018. This investment’s valuation was based on a market approach, considering recent transactions in the fund and the industry.

We acquired Ramius Alternative Solutions LLC in 2016, CPH Capital Fondsmaeglerselskab A/S in 2014 and SunAmerica's alternative investment group in 2010, all of which includedmay enter into contingent consideration arrangements as part of the purchase price.

The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as contingent payment arrangements, is as follows:
December 31, 2020December 31, 2019
(in thousands)
Balance as of beginning of period$22,911 $7,336 
Addition4,400 17,384 
Accretion3,105 2,542 
Changes in estimates(1,366)(3,051)
Payments(1,300)(1,300)
Balance as of end of period$27,750 $22,911 
 December 31, 2018 December 31, 2017
 (in thousands)
Balance as of beginning of period$10,855
 $17,589
Addition—
 —
Accretion210
 460
Changes in estimates(2,429) (193)
Payments(1,300) (7,001)
Balance as of end of period$7,336
 $10,855
During 2017, we made the final contingent consideration payment relating to our 2014 acquisition and recorded a change in estimate and wrote off the remaining contingent consideration payable relating to our 2010 acquisition.
During 2018, we amended the contingent payment relating to our 2016 acquisition by modifying the earnout structure and extending it one year. As part of this amendment, we recorded a change in estimate and wrote off $2.4 million related to the contingent consideration. As of December 31, 2018 and 2017, one acquisition-related contingent consideration liability of $7.3 million and $10.9 million, respectively, remains relating to our 2016 acquisition, which wasThe liabilities were valued as of December 31, 2018 using aexpected revenue growth rate of 18%rates and a discount rate ranging from 3.2% to 3.7%. This acquisition was valued as of December 31, 2017 using arates. The expected revenue growth raterates range from 0.7% to 50.0%, with a weighted average of 31%4.9%, calculated using cumulative revenues and range of revenue growth rates (excluding revenue growth from additional AUM contributed from existing clients). The discount rates ranged from 1.9% to 10.4%, with a weighted average of 8.0%, calculated using total contingent liabilities and range of discount rate ranging from 1.4% to 2.3%.rates.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
We did not have any material assets or liabilities that were measured at fair value for impairment on a nonrecurring basis during the years ended December 31, 20182020 or 2017.2019.
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10. Furniture, Equipment and Leasehold Improvements, Net
Furniture, equipment and leasehold improvements, net consist of:
December 31,December 31,
2018 201720202019
(in thousands)(in thousands)
Furniture and equipment$561,816
 $551,502
Furniture and equipment$556,966 $575,378 
Leasehold improvements253,439
 245,841
Leasehold improvements284,080 266,365 
815,255
 797,343
841,046 841,743 
Less: Accumulated depreciation and amortization(659,736) (639,774)Less: Accumulated depreciation and amortization(693,172)(696,492)
Furniture, equipment and leasehold improvements, net$155,519
 $157,569
Furniture, equipment and leasehold improvements, net$147,874 $145,251 
Depreciation and amortization expense on furniture, equipment and leasehold improvements were $34.2$39.2 million, $32.8$38.1 million and $29.4$34.2 million for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively.
During 2018, 2017 and 2016, we recorded $7.2 million, $36.7 million and $17.7 million, respectively, in pre-tax real estate charges. See Note 4 for further discussion of the real estate charges.

12.11. Deferred Sales Commissions, Net


The components of deferred sales commissions, net for the years ended December 31, 20182020 and 20172019 were as follows (excluding amounts related to fully amortized deferred sales commissions):
December 31,
20202019
(in thousands)
Carrying amount of deferred sales commissions$116,484 $68,371 
Less: Accumulated amortization(30,001)(19,348)
Cumulative CDSC received(22,417)(12,727)
Deferred sales commissions, net$64,066 $36,296 
 December 31,
 2018 2017
 (in thousands)
Carrying amount of deferred sales commissions$926,188
 $911,852
Less: Accumulated amortization(618,910) (597,566)
Cumulative CDSC received(290,130) (284,160)
Deferred sales commissions, net$17,148
 $30,126


Amortization expense was $21.3$27.4 million, $31.9$15.0 million and $41.1$21.3 million for the years ended December 31, 2018, 20172020, 2019 and 2016,2018, respectively. Estimated future amortization expense related to the December 31, 20182020 net asset balance, assuming no additional CDSC is received in future periods, is as follows (in thousands):
2021$28,980 
202223,631 
202310,787 
2024668 
$64,066 

87
2019$9,675
20204,561
20212,608
2022237
202351
202416
 $17,148
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13.12. Debt
As of December 31, 2018 and 2017, AB had $523.2has an $800.0 million and $491.8 million, respectively, in commercial paper outstanding with weighted average interest rates of approximately 2.7% and 1.6%, respectively. Debt included in the statement of financial condition is presented net of issuance costs of $1.9 million and $1.1 million as of December 31, 2018 and 2017, respectively. The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper during 2018 and 2017 were $350.3 million and $482.2 million, respectively, with weighted average interest rates of approximately 2.0% and 1.2%, respectively.
On September 27, 2018, AB amended and restated the existing $1.0 billion committed, unsecured senior revolving credit facility (the “"Credit Facility”") with a group of commercial banks and other lenders, reducing the principal amount to $800.0 million and extending the maturity towhich matures on September 27, 2023. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $200.0 million; any such increase is subject to the consent of the affected lenders. The Credit Facility is available for AB and Sanford C. Bernstein & Co., LLC ("SCB LLC") business purposes, including the support of AB’s commercial paper program. Both AB and SCB LLC can draw directly under the Credit Facility and management may draw on the Credit Facility from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Credit Facility.
The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of December 31, 2018,2020, we were in compliance with these covenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under the Credit Facility would automatically become immediately due and payable, and the lender’s commitments automatically would terminate.
Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepayments and commitment reductions requested by us are permitted at any time without a fee (other than customary breakage costs relating to the prepayment of any drawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.

As of December 31, 20182020 and 2017,2019, we had no0 amounts outstanding under the Credit Facility. During 20182020 and 2017,2019, we did not0t draw upon the Credit Facility.
OnAB also has a $900.0 million committed, unsecured senior credit facility (“EQH Facility”) with EQH. The EQH Facility matures on November 16, 2018,4, 2024 and is available for AB's general business purposes. Borrowings under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates.
The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated.
Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. AB amendedor EQH may reduce or terminate the commitment at any time without penalty upon proper notice. EQH also may terminate the facility immediately upon a change of control of our general partner.
As of December 31, 2020 and restated2019, AB had $675.0 million and $560.0 million outstanding under the EQH Facility with interest rates of approximately 0.2% and 1.6%, respectively. Average daily borrowings on the EQH Facility during 2020 and for the 57 days it was available in 2019 were $470.8 million and $358.6 million, respectively, with weighted average interest rates of approximately 0.5% and 1.6%, respectively.
In addition to the EQH Facility, on September 1, 2020, AB established a new $300.0 million uncommitted, unsecured senior credit facility (“EQH Uncommitted Facility”) with EQH. The EQH Uncommitted Facility matures on September 1, 2024 and is available for AB's general business purposes. Borrowings under the EQH Unsecured Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Uncommitted Facility contains affirmative, negative and financial covenants which are substantially similar to those in the EQH Facility. As of December 31, 2020, we had 0 amounts outstanding on the EQH Uncommitted Facility and have 0t drawn on it since its existinginception.
As of both December 31, 2020 and 2019, we had 0 commercial paper outstanding. The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper for 2020 were $83.2 million with a weighted average interest rate of 0.4%. Average daily borrowings of commercial paper for the 317 days commercial paper was outstanding in 2019 were $438.6 million with a weighted average interest rate of approximately 2.6%.
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AB has a $200.0 million committed, unsecured senior revolving credit facility (the "Revolver") with a leading international bank, extending the maturity date from November 28, 2018 towhich matures on November 16, 2021. There were no other material changes included in the amendment. The Revolver is available for AB's and SCB LLC's business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC's operations. Both AB and SCB LLC can draw directly under the Revolver and management expects to draw on the Revolver from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Revolver. The Revolver contains affirmative, negative and financial covenants whichthat are identical to those of the Credit Facility. Borrowings under the Revolver bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate. As of both December 31, 20182020 and December 31, 2017,2019 we had $25.0 million and $75.0 million0 amounts outstanding under the Revolver, respectively, with interest rates of 3.4% and 2.4%, respectively.Revolver. Average daily borrowings for 20182020 and 20172019 were $19.4$16.5 million and $21.4$23.5 million, respectively, with weighted average interest rates of 2.8%1.6% and 2.0%3.2%, respectively.

In addition, SCB LLC currently has three3 uncommitted lines of credit with three3 financial institutions. TwoNaN of these lines of credit permit us to borrow up to an aggregate of approximately $175.0$165.0 million, with AB named as an additional borrower, while the other line has no stated limit. As of December 31, 20182020 and 2017,2019, SCB LLC had no bank loans outstanding.0 outstanding balance on these lines of credit. Average daily borrowings on the lines of bank loanscredit during 20182020 and 20172019 were $2.7$0.9 million and $4.5$1.9 million, respectively, with weighted average interest rates of approximately 1.6% and 1.4%1.9%, respectively.

13. Leases
We lease office space, office equipment and technology under various operating and financing leases. Our current leases have remaining lease terms of one year to 15 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year.
Since 2010, we have sub-leased over 1000000 square feet of office space. On January 1, 2019, the previously recorded liability related to our global space consolidation initiatives of $85.8 million was offset as a reduction to our operating right-of-use assets.
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Leases included in the consolidated statements of financial condition as of December 31, 2020 and 2019 were as follows:
ClassificationDecember 31, 2020December 31, 2019
(in thousands)
Operating Leases
Operating lease right-of-use assetsRight-of-use assets$416,007 $360,185 
Operating lease liabilitiesLease liabilities503,174 465,907 
Finance Leases
Property and equipment, grossRight-of-use assets5,167 3,825 
Amortization of right-of-use assetsRight-of-use assets(2,719)(1,317)
Property and equipment, net2,448 2,508 
Finance lease liabilitiesLease liabilities2,375 2,544 
The components of lease expense included in the consolidated statements of income for the years ended December 31, 2020 and 2019 were as follows:
Year Ended December 31,
Classification20202019
(in thousands)
Operating lease costGeneral and administrative$90,212 $106,085 
Financing lease cost:
Amortization of right-of-use assetsGeneral and administrative1,755 1,317 
Interest on lease liabilitiesInterest expense86 71 
Total finance lease cost1,841 1,388 
Variable lease cost (1)
General and administrative38,208 40,786 
Sublease incomeGeneral and administrative(38,622)(55,522)
Net lease cost$91,639 $92,737 
(1)Variable lease expense includes operating expenses, real estate taxes and employee parking.
The sublease income represents all revenues received from sub-tenants. It is primarily fixed base rental payments combined with variable reimbursements such as operating expenses, real estate taxes and employee parking.  The vast majority of sub-tenant income is derived from our New York metro sub-tenant agreements. Sub-tenant income related to base rent is recorded on a straight-line basis. 
Maturities of lease liabilities are as follows:
Operating LeasesFinancing LeasesTotal
Year ending December 31,(in thousands)
2021$110,046 $1,142 $111,188 
2022100,631 757 101,388 
202393,379 526 93,905 
202490,359 23 90,382 
202525,516 0 25,516 
Thereafter136,759 0 136,759 
Total lease payments556,690 2,448 $559,138 
Less interest(53,516)(73)
Present value of lease liabilities$503,174 $2,375 
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During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our newly constructed Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134.0 million. During April 2019, we signed a lease, which commences in 2024, relating to approximately 190,000 square feet of space in New York City. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20 year lease term is approximately $448.0 million. During the fourth quarter of 2020, we exercised an option to return a half floor of this space, which reduced our square footage from approximately 190,000 to 166,000 square feet and our base rent obligation from $448.0 million to $393.0 million.
Lease term and discount rate:
Weighted average remaining lease term (years):
Operating leases7.13
Finance leases2.46
Weighted average discount rate:
Operating leases3.12 %
Finance leases2.64 %
Supplemental cash flow information related to leases are as follows:
Year Ended December 31,
20202019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$115,684 $132,669 
Operating cash flows from financing leases86 71 
Financing cash flows from finance leases1,864 1,281 
Right-of-use assets obtained in exchange for lease obligations(1):
Operating leases(2)
135,919 11,108 
Finance leases1,695 1,469 

(1) Represents non-cash activity and, accordingly, is not reflected in the consolidated statements of cash flows.
(2)Represents net non-cash activity of new lease obligations, extensions and reductions of existing lease obligations.

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14. Commitments and Contingencies
Operating Leases
We lease office space, furniture and office equipment and technology under various operating leases.leasing arrangements. The future minimum payments under non-cancelable leases, sublease commitments and related payments we are obligated to make, net of sublease commitments of third-partythird party lessees to make payments to us, as of December 31, 2018,2020, are as follows:
PaymentsSublease ReceiptsNet Payments
(in millions)
2021$115.4 $35.5 $79.9 
2022103.8 31.8 72.0 
202396.5 31.3 65.2 
202493.1 30.8 62.3 
202545.4 0 45.4 
2026 and thereafter526.6 0 526.6 
Total future minimum payments$980.8 $129.4 $851.4 
 Payments Sublease
Receipts		 Net
Payments
 (in millions)
2019$131.4
 $47.1
 $84.3
2020112.6
 34.1
 78.5
2021111.7
 31.8
 79.9
202299.5
 28.4
 71.1
202392.8
 27.9
 64.9
2024 and thereafter227.5
 27.4
 200.1
Total future minimum payments$775.5
 $196.7
 $578.8
Office leases contain escalation clauses that provide for the pass through of increases in operating expenses and real estate taxes. Rent expense, which is amortized on a straight-line basis over the life of the lease, was $60.6 million, $65.2 million and $68.1 million, respectively, for the years ended December 31, 2018, 2017 and 2016, net of sublease income of $0.5 million, $0.5 million and $2.5 million, respectively, for the years ended December 31, 2018, 2017 and 2016. See Note 413 for further discussion of the real estate charges.material lease commitments.
Legal Proceedings
AB may be involved in various matters, including regulatory inquires, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that we could incur losses pertaining to these matters, but we cannot currently estimate any such losses.
Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period.


Other
AsDuring 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (“Real Estate Fund”), we committed to invest $25.0 million in the Real Estate Fund. As of December 31, 2018,2020, we had funded $22.4 million of this commitment. AsDuring 2014, as general partner of AllianceBernstein U.S. Real Estate II L.P. (“Real Estate Fund II”), we committed to invest $28.0$27.3 million, as amended in 2020, in the Real Estate Fund II. As of December 31, 2018,2020, we had funded $15.3$20.8 million of this commitment.
15. Consolidated Company-Sponsored Investment Funds
We regularly provide seed capital to new company-sponsored investment funds. As such, we may consolidate or de-consolidate a variety of company-sponsored investment funds each quarter. Due to the similarity of risks related to our involvement with each company-sponsored investment fund, disclosures required under the VIE model are aggregated, such as disclosures regarding the carrying amount and classification of assets.
We are not required to provide financial support to company-sponsored investment funds and only the assets of such funds are available to settle each fund's own liabilities. Our exposure to loss in regard to consolidated company-sponsored investment funds is limited to our investment in, and our management fee earned from, such funds. Equity and debt holders of such funds have no recourse to AB’s assets or to the general credit of AB.
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The balances of consolidated VIEs and VOEs included in our consolidated statements of financial condition were as follows:
December 31, 2020December 31, 2019
 December 31, 2018 December 31, 2017(in thousands)
 (in thousands)
 VIEs VOEs Total VIEs VOEs TotalVIEsVOEsTotalVIEsVOEsTotal
Cash and cash equivalents $11,880
 $1,238
 $13,118
 $326,158
 $360
 $326,518
Cash and cash equivalents$36,370 $136 $36,506 $9,623 $1,810 $11,433 
Investments 217,840
 133,856
 351,696
 1,189,835
 56,448
 1,246,283
Investments242,541 60,041 302,582 404,624 176,380 581,004 
Other assets 6,024
 16,816
 22,840
 33,931
 1,466
 35,397
Other assets4,859 7,385 12,244 9,618 10,192 19,810 
Total assets $235,744
 $151,910
 $387,654
 $1,549,924
 $58,274
 $1,608,198
Total assets$283,770 $67,562 $351,332 $423,865 $188,382 $612,247 
            
Liabilities $5,215
 $17,395
 $22,610
 $695,997
 $2,104
 $698,101
Liabilities$7,741 $22,879 $30,620 $12,147 $18,870 $31,017 
Redeemable non-controlling interest 117,523
 28,398
 145,921
 596,241
 (18) 596,223
Redeemable non-controlling interest82,753 19,606 102,359 273,219 52,342 325,561 
Partners' capital attributable to AB Unitholders 113,006
 106,117
 219,123
 256,929
 56,188
 313,117
Partners' capital attributable to AB Unitholders193,276 25,077 218,353 138,499 117,170 255,669 
Non-redeemable non-controlling interests in consolidated entities —
 —
 —
 757
 —
 757
Total liabilities, redeemable non-controlling interest and partners' capital $235,744
 $151,910
 $387,654
 $1,549,924
 $58,274
 $1,608,198
Total liabilities, redeemable non-controlling interest and partners' capital$283,770 $67,562 $351,332 $423,865 $188,382 $612,247 
During 2018,2020, we deconsolidated a fund5 funds in which we havehad a seed investment of $42.5approximately $94.6 million due to no longer having a controlling financial interest. This VIEThese funds had significant consolidated assets and liabilities as of December 31, 2017.2019.

Fair Value
Cash and cash equivalents include cash on hand, demand deposits, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value.


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Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of December 31, 20182020 and 20172019 was as follows (in thousands):
 Level 1Level 2Level 3Total
December 31, 2020:
  Investments - VIEs$73,909 $168,114 $518 $242,541 
  Investments - VOEs0 59,940 101 60,041 
  Derivatives - VIEs442 2,782 0 3,224 
  Derivatives - VOEs0 464 0 464 
Total assets measured at fair value$74,351 $231,300 $619 $306,270 
Derivatives - VIEs$1,649 $5,244 $0 $6,893 
  Derivatives - VOEs0 664 0 664 
Total liabilities measured at fair value$1,649 $5,908 $0 $7,557 
December 31, 2019:
  Investments - VIEs$28,270 $375,559 $795 $404,624 
  Investments - VOEs104,069 72,252 59 176,380 
  Derivatives - VIEs139 4,694 0 4,833 
  Derivatives - VOEs76 4,263 0 4,339 
Total assets measured at fair value$132,554 $456,768 $854 $590,176 
Derivatives - VIEs$835 $3,724 $0 $4,559 
  Derivatives - VOEs101 4,982 0 5,083 
Total liabilities measured at fair value$936 $8,706 $0 $9,642 
 Level 1 Level 2 Level 3 NAV Expedient Total
December 31, 2018:         
  Investments - VIEs$22,149
 $187,626
 $8,065
 $—
 $217,840
  Investments - VOEs68,063
 65,485
 308
 —
 133,856
  Derivatives - VIEs1,486
 1,924
 —
 —
 3,410
  Derivatives - VOEs124
 3,692
 —
 —
 3,816
Total assets measured at fair value$91,822
 $258,727
 $8,373
 $—
 $358,922
          
Derivatives - VIEs$72
 $3,819
 $—
 $—
 $3,891
  Derivatives - VOEs197
 3,633
 —
 —
 3,830
Total liabilities measured at fair value$269
 $7,452
 $—
 $—
 $7,721
          
December 31, 2017:         
  Investments - VIEs$1,053,824
 $133,796
 $2,205
 $10
 $1,189,835
  Investments - VOEs5,491
 50,898
 59
 —
 56,448
  Derivatives - VIEs252
 30,384
 —
 —
 30,636
  Derivatives - VOEs49
 251
 —
 —
 300
Total assets measured at fair value$1,059,616
 $215,329
 $2,264
 $10
 $1,277,219
          
Short equities - VIEs$669,258
 $—
 $—
 $—
 $669,258
Derivatives - VIEs421
 21,820
 —
 —
 22,241
  Derivatives - VOEs12
 619
 —
 —
 631
Total liabilities measured at fair value$669,691
 $22,439
 $—
 $—
 $692,130


See Note 109 for a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.


The change in carrying value associated with Level 3 financial instruments carried at fair value within consolidated company-sponsored investment funds was as follows:
 December 31,
 20202019
 (in thousands)
Balance as of beginning of period$854 $8,373 
Deconsolidated funds(135)0 
Transfers (out) in552 (9,445)
Purchases259 9,213 
Sales(571)(7,467)
Realized (losses) gains, net(99)14 
Unrealized (losses) gains, net(242)143 
Accrued discounts1 23 
Balance as of end of period$619 $854 
  December 31,
  2018 2017
  (in thousands)
     
Balance as of beginning of period $2,264
 $5,741
Deconsolidated funds —
 (7,267)
Transfers in 259
 480
Purchases 9,354
 6,127
Sales (3,086) (3,120)
Realized (losses) gains, net (100) 2
Unrealized (losses) gains, net (331) 286
Accrued discounts 13
 15
Balance as of end of period $8,373
 $2,264


The Level 3 securities primarily consist of corporate bonds that are vendor priced with no ratings available, bank loans, non-agency collateralized mortgage obligations and asset-backed securities.


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Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the consolidated statements of income.


Derivative Instruments
As of December 31, 20182020 and 2017,2019, the VIEs held $0.5$3.7 million and $8.4$0.3 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the years ended December 31, 20182020 and 2017, respectively2019, we recognized $1.5 million and $21.5$0.6 million of losses and $3.3 million of gains, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the consolidated statements of income.
As of December 31, 20182020 and 2017,2019, the VIEs held $0.9$0.5 million and $0.2$1.6 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our consolidated statements of financial condition.
As of December 31, 20182020 and 2017,2019, the VIEs delivered $0.8$4.2 million and $2.9$3.2 million, respectively, of cash collateral into brokerage accounts. The VIEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our consolidated statements of financial condition.
As of December 31, 20182020 and 2017,2019, the VOEs held $14.0 thousand$0.2 million and $0.3$0.7 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the years ended December 31, 20182020 and 2017,2019, we recognized a gain of $1.9$0.2 million and a loss$0.5 million of $0.4 million,gains, respectively, on these derivatives. These gains and losses are recognized in the investment gains (losses) in the consolidated statements of income.
As of December 31, 2018,2020 and 2019, the VOEs held $0.20 and $0.5 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our consolidated statements of financial condition.
As of December 31, 20182020 and 2017,2019, the VOEs delivered $0.5$0.1 million and $0.2$1.2 million, respectively, of cash collateral into brokerage accounts. The VOEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our consolidated statements of financial condition.


Offsetting Assets and Liabilities
Offsetting of derivative assets of consolidated company-sponsored investment funds as of December 31, 20182020 and 20172019 was as follows:
 
 Gross Amounts of Recognized AssetsGross Amounts Offset in the Statement of Financial ConditionNet Amounts of Assets Presented in the Statement of Financial ConditionFinancial
Instruments		Cash Collateral
Received		Net
Amount
 (in thousands)
December 31, 2020:
Derivatives - VIEs$3,224 $0 $3,224 $0 $(513)$2,711 
Derivatives - VOEs$464 $0 $464 $0 $0 $464 
December 31, 2019:
Derivatives - VIEs$4,833 $0 $4,833 $0 $(1,631)$3,202 
Derivatives - VOEs$4,339 $0 $4,339 $0 $(534)$3,805 

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 Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition 
Financial
Instruments
 
Cash Collateral
Received
 
Net
Amount
 (in thousands)
December 31, 2018:           
Derivatives - VIEs$3,410
 $—
 $3,410
 $—
 $(856) $2,554
Derivatives - VOEs$3,816
 $—
 $3,816
 $—
 $(225) $3,591
December 31, 2017:           
Derivatives - VIEs$30,636
 $—
 $30,636
 $—
 $(194) $30,442
Derivatives - VOEs$300
 $—
 $300
 $—
 $(37) $263
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Offsetting of derivative liabilities of consolidated company-sponsored investment funds as of December 31, 20182020 and 20172019 was as follows:
 Gross Amounts of Recognized LiabilitiesGross Amounts Offset in the Statement of Financial ConditionNet Amounts of Liabilities Presented in the Statement of Financial ConditionFinancial
Instruments		Cash Collateral
Pledged		Net Amount
 (in thousands)
December 31, 2020:
Derivatives - VIEs$6,893 $0 $6,893 $0 $(4,201)$2,692 
Derivatives - VOEs$664 $0 $664 $0 $(138)$526 
December 31, 2019:
Derivatives - VIEs$4,559 $0 $4,559 $0 $(3,155)$1,404 
Derivatives - VOEs$5,083 $0 $5,083 $0 $(1,201)$3,882 
 Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition 
Financial
Instruments
 
Cash Collateral
Pledged
 Net Amount
 (in thousands)
December 31, 2018:           
Derivatives - VIEs$3,891
 $—
 $3,891
 $—
 $(829) $3,062
Derivatives - VOEs$3,830
 $—
 $3,830
 $—
 $(547) $3,283
December 31, 2017:           
Derivatives - VIEs$22,241
 $—
 $22,241
 $—
 $(2,884) $19,357
Derivatives - VOEs$631
 $—
 $631
 $—
 $(228) $403


Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.
Non-Consolidated VIEs
As of December 31, 2018,2020, the net assets of company-sponsored investment products that are non-consolidated VIEs are approximately $44.3$73.4 billion, and our maximum risk of loss is our investment of $5.7$7.1 million in these VIEs and our advisory fee receivablesfees receivable from these VIEs which are not material.$77.6 million.
16. Net Capital
SCB LLC is registered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the U.S. Securities and Exchange Commission ("SEC"). SCB LLC computes its net capital under the alternative method permitted by the applicable rule, which requires that minimum net capital, as defined, equals the greater of $1 million or two2 percent of aggregate debit items arising from customer transactions, as defined. As of December 31, 2018,2020, SCB LLC had net capital of $258.4$277.0 million, which was $223.5$243.0 million in excess of the minimum net capital requirement of $34.9$34.0 million. Advances,

dividend payments and other equity withdrawals by SCB LLC are restricted by regulations imposed by the SEC, the Financial Industry Regulatory Authority, Inc., and other securities agencies.
Our U.K.-based broker-dealer is a member of the London Stock Exchange. As of December 31, 2018,2020, it was subject to financial resources requirements of $23.2$47.5 million imposed by the Financial Conduct Authority of the United Kingdom and had aggregate regulatory financial resources of $56.4$53.4 million, an excess of $33.2 million.$5.9 million over the required level.
AllianceBernstein Investments, Inc., another one of our subsidiaries and the distributor and/or underwriter for certain company-sponsored mutual funds, is registered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the SEC. As of December 31, 2018,2020, it had net capital of $23.9$32.1 million, which was $23.6$31.8 million in excess of its required net capital of $0.3 million.
Many of our subsidiaries around the world are subject to minimum net capital requirements by the local laws and regulations to which they are subject. As of December 31, 2018,2020, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement.
17. Counterparty Risk
Customer Activities
In the normal course of business, brokerage activities involve the execution, settlement and financing of various customer securities trades, which may expose our broker-dealer operations to off-balance sheet risk by requiring us to purchase or sell securities at prevailing market prices in the event the customer is unable to fulfill its contractual obligations.
Our customer securities activities are transacted on either a cash or margin basis. In margin transactions, we extend credit to the customer, subject to various regulatory and internal margin requirements. These transactions are collateralized by cash or
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securities in the customer’s account. In connection with these activities, we may execute and clear customer transactions involving the sale of securities not yet purchased. We seek to control the risks associated with margin transactions by requiring customers to maintain collateral in compliance with the aforementioned regulatory and internal guidelines. We monitor required margin levels daily and, pursuant to such guidelines, require customers to deposit additional collateral, or reduce positions, when necessary. A majority of our customer margin accounts are managed on a discretionary basis whereby we maintain control over the investment activity in the accounts. For these discretionary accounts, our margin deficiency exposure is minimized throughby our maintaining a diversified portfolio of securities in the accounts, and by virtue of our discretionary authority and our U.S-based broker-dealer's role as custodian.
In accordance with industry practice, we record customer transactions on a settlement date basis, which generally is two business days after trade date for our U.K. and U.S. operations. We are exposed to risk of loss on these transactions in the event of the customer’s or broker’s inability to meet the terms of their contracts, in which case we may have to purchase or sell financial instruments at prevailing market prices. The risks we assume in connection with these transactions are not expected to have a material adverse effect on our financial condition or results of operations.
Other Counterparties
We are engaged in various brokerage activities on behalf of clients, in which counterparties primarily include broker-dealers, banks and other financial institutions. In the event these counterparties do not fulfill their obligations, we may be exposed to loss. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is our policy to review, as necessary, each counterparty’s creditworthiness.
In connection with security borrowing and lending arrangements, we enter into collateralized agreements, which may result in potential loss in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Security borrowing arrangements require us to deposit cash collateral with the lender. With respect to security lending arrangements, we receive collateral in the form of cash in amounts generally in excess of the market value of the securities loaned. We attempt to mitigate credit risk associated with these activities by establishing credit limits for each broker and monitoring these limits on a daily basis. Additionally, security borrowing and lending collateral is marked to market on a daily basis, and additional collateral is deposited by or returned to us as necessary.
We enter into various futures, forwards, options and swaps primarily to economically hedge certain of our seed money investments. We may be exposed to credit losses in the event of nonperformance by counterparties to these derivative financial instruments. See Note 8,7, Derivative Instruments for further discussion.

18. Qualified Employee Benefit Plans
We maintain a qualified profit sharing plan covering U.S. employees and certain foreign employees. Employer contributions are discretionary and generally limited to the maximum amount deductible for federal income tax purposes. Aggregate contributions for 2018, 2017 and 2016 were $15.0$15.6 million, $14.4 million and $14.3$15.0 million for 2020, 2019 and 2018, respectively.
We maintain several defined contribution plans for foreign employees working for our subsidiaries in the United Kingdom, Australia, Japan and other locations outside the United States. Employer contributions generally are consistent with regulatory requirements and tax limits. Defined contribution expense for foreign entities was $8.4 million, $7.7 million and $7.1 million $6.8 millionin 2020, 2019 and $6.8 million in 2018, 2017 and 2016, respectively.
We maintain a qualified, noncontributory, defined benefit retirement plan (“Retirement Plan”) covering current and former employees who were employed by AB in the United States prior to October 2, 2000. Benefits are based on years of credited service, average final base salary (as defined in the Retirement Plan) and primary Social Security benefits. Service and compensation after December 31, 2008 are not taken into account in determining participants’ retirement benefits.
Our policy is to satisfy our funding obligation for each year in an amount not less than the minimum required by the Employee Retirement Income Security Act of 1974, as amended, and not greater than the maximum amount we can deduct for federal income tax purposes. We contributed $5.0 milliondid 0t make a contribution to the Retirement Plan during 2018.2020. We do not currently estimateanticipate that we will contribute $4.0 million to the Retirement Plan during 2019.2021. Contribution estimates, which are subject to change, are based on regulatory requirements, future market conditions and assumptions used for actuarial computations of the Retirement Plan’s obligations and assets. Management, at the present time, has not determined the amount, if any, of additional future contributions that may be required.
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The Retirement Plan’s projected benefit obligation, fair value of plan assets and funded status (amounts recognized in the consolidated statements of financial condition) were as follows:
Years Ended December 31,Years Ended December 31,
2018 201720202019
(in thousands)(in thousands)
Change in projected benefit obligation:   Change in projected benefit obligation:
Projected benefit obligation at beginning of year$125,200
 $111,315
 Projected benefit obligation at beginning of year$136,113 $116,233 
Interest cost4,771
 4,999
 Interest cost4,443 4,944 
Actuarial (gain) loss(9,918) 12,617
Actuarial loss (gain) Actuarial loss (gain)16,131 20,411 
Benefits paid(3,820) (3,731) Benefits paid(5,563)(5,475)
Projected benefit obligation at end of year116,233
 125,200
 Projected benefit obligation at end of year151,124 136,113 
Change in plan assets:   Change in plan assets:
Plan assets at fair value at beginning of year100,706
 86,699
 Plan assets at fair value at beginning of year114,080 98,584 
Actual return on plan assets(3,302) 13,738
 Actual return on plan assets16,505 16,971 
Employer contribution5,000
 4,000
 Employer contribution0 4,000 
Benefits paid(3,820) (3,731) Benefits paid(5,563)(5,475)
Plan assets at fair value at end of year98,584
 100,706
 Plan assets at fair value at end of year125,022 114,080 
Funded status$(17,649) $(24,494)Funded status$(26,102)$(22,033)
Effective December 31, 2015, the Retirement Plan was amended to change the actuarial basis used for converting a life annuity benefit to optional forms of payment and converting benefits payable at age 65 to earlier commencement dates. This prior service cost will be amortized over future years.

The amounts recognized in other comprehensive income (loss) for the Retirement Plan for 2018, 20172020, 2019 and 20162018 were as follows:
202020192018
(in thousands)
Unrecognized net (loss) gain from experience different from that assumed and effects of changes and assumptions$(4,089)$(7,934)$1,870 
Prior service cost24 24 24 
(4,065)(7,910)1,894 
Income tax (expense) benefit(216)312 (207)
Other comprehensive (loss) income$(4,281)$(7,598)$1,687 
 2018 2017 2016
 (in thousands)
Unrecognized net gain (loss) from experience different from that assumed and effects of changes and assumptions$1,870
 $(3,043) $(3,115)
Prior service cost24
 24
 93
 1,894
 (3,019) (3,022)
Income tax expense(207) (49) (10)
Other comprehensive income (loss)$1,687
 $(3,068) $(3,032)
The loss of $4.3 million recognized in 2020 was primarily due to changes in the discount rate and lump sum interest rates ($16.7 million), offset by actual earnings exceeding expected earnings on plan assets ($10.4 million), changes in the mortality assumption ($1.0 million), the recognized actuarial loss ($1.4 million) and changes in the census data ($0.4 million). The loss of $7.6 million recognized in 2019 was primarily due to changes in the discount rate and lump sum interest rates ($21.7 million), offset by actual earnings exceeding expected earnings on plan assets ($11.3 million), changes in the mortality assumption ($1.2 million), the recognized actuarial loss ($1.1 million) and changes in the census data ($0.1 million). The gain of $1.7 million recognized in 2018 primarily was due to changes in the discount rate and lump sum interest rates ($9.7 million), the recognized actuarial loss ($1.1 million) and changes in the mortality assumption ($0.4 million), offset by actual earnings exceeding expected earnings on plan assets ($9.2 million), and changes in the census data ($0.2 million). The loss
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Table of $3.1 million recognized in 2017 primarily was due to changes in the discount rate and lump sum interest rates ($11.9 million) and changes in the census data ($1.4 million), offset by actual earnings exceeding expected earnings on plan assets ($8.5 million), the recognized actuarial loss ($1.1 million) and changes in the mortality assumption ($0.7 million). The loss of $3.0 million recognized in 2016 primarily was due to expected earnings on plan assets exceeding actual earnings ($1.8 million) and changes in the discount rate and lump sum interest rates ($3.5 million), offset by changes in the mortality assumption ($1.7 million).Contents
Foreign retirement plans and an individual's retirement plan maintained by AB are not material to AB's consolidated financial statements. As such, disclosure for these plans is not necessary. The reconciliation of the 20182020 amounts recognized in other comprehensive income for the Retirement Plan as compared to the consolidated statement of comprehensive income ("OCI Statement") is as follows:
Retirement PlanRetired Individual PlanForeign Retirement PlansOCI Statement
Retirement Plan Retired Individual Plan Foreign Retirement Plans OCI Statement(in thousands)
(in thousands)
Recognized actuarial gain (loss)$1,870
 $53
 $(337) $1,586
Recognized actuarial (loss) gainRecognized actuarial (loss) gain$(4,089)$(56)$(135)$(4,280)
Amortization of prior service cost24
 —
 —
 24
Amortization of prior service cost24 0 0 24 
Changes in employee benefit related items1,894
 53
 (337) 1,610
Changes in employee benefit related items(4,065)(56)(135)(4,256)
Income tax (expense) benefit(207) (2) 70
 (139)Income tax (expense) benefit(216)(2)31 (187)
Employee benefit related items, net of tax$1,687
 $51
 $(267) $1,471
Employee benefit related items, net of tax$(4,281)$(58)$(104)$(4,443)
The amounts included in accumulated other comprehensive income (loss) for the Retirement Plan as of December 31, 20182020 and 20172019 were as follows:
2018 201720202019
(in thousands)(in thousands)
Unrecognized net loss from experience different from that assumed and effects of changes and assumptions$(47,603) $(49,473)Unrecognized net loss from experience different from that assumed and effects of changes and assumptions$(59,625)$(55,537)
Prior service cost(755) (779)Prior service cost(707)(731)
(48,358) (50,252)(60,332)(56,268)
Income tax benefit201
 408
Income tax benefit296 513 
Accumulated other comprehensive loss$(48,157) $(49,844)Accumulated other comprehensive loss$(60,036)$(55,755)
The amortization period over which we are amortizing the loss for the Retirement Plan from accumulated other comprehensive income is 31.629.9 years. The estimated prior service cost and amortization of loss for the Retirement Plan that will be amortized from accumulated other comprehensive income over the next year are $24 thousand and $1.1$1.5 million, respectively.
The accumulated benefit obligation for the plan was $116.2$151.1 million and $125.2$136.1 million as of December 31, 20182020 and 2017,2019, respectively.

The discount rates used to determine benefit obligations as of December 31, 20182020 and 20172019 (measurement dates) were 4.40%2.55% and 3.90%3.35%, respectively.
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Benefit payments are expected to be paid as follows (in thousands):
2019$7,309
20206,138
20216,126
2021$7,606 
20227,942
20229,373 
20236,473
20237,782 
2024-202840,196
202420247,811 
2025202510,055 
2026 - 20302026 - 203045,955 
Net expense under the Retirement Plan consisted of:
Year Ended December 31,Year Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
Interest cost on projected benefit obligations$4,771
 $4,999
 $4,972
Interest cost on projected benefit obligations$4,443 $4,944 $4,771 
Expected return on plan assets(5,893) (5,261) (5,407)Expected return on plan assets(6,084)(5,639)(5,893)
Amortization of prior service cost24
 24
 24
Amortization of prior service cost24 24 24 
Recognized actuarial loss1,146
 1,097
 959
Recognized actuarial loss1,386 1,146 1,146 
Net pension expense$48
 $859
 $548
Net pension expense$(231)$475 $48 
Actuarial computations used to determine net periodic costs were made utilizing the following weighted-average assumptions:
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
Discount rate on benefit obligations3.90% 4.55% 4.75%Discount rate on benefit obligations3.35 %4.40 %3.90 %
Expected long-term rate of return on plan assets5.75% 6.00% 6.50%Expected long-term rate of return on plan assets5.50 %5.75 %5.75 %
In developing the expected long-term rate of return on plan assets of 5.75%5.50%, management considered the historical returns and future expectations for returns for each asset category, as well as the target asset allocation of the portfolio. The expected long-term rate of return on assets is based on weighted average expected returns for each asset class.
As of December 31, 2018,2020, the mortality projection assumption has been updated to use the generational MP-2018MP-2020 improvement scale. Previously, mortality was projected generationally using the MP-2017MP-2019 improvements scale. The base mortality assumption remains atused is the RP-2014 white-collarSociety of Actuaries Pri-2012 base mortality table for males and females adjusted back to 2006private sector plans, with a white-collar adjustment, using the MP-2014 improvement scale.contingent annuitant table for beneficiaries of deceased participants.
The Internal Revenue Service (“IRS”) recently updated the mortality tables used to determine lump sums. For fiscal year-end 2018,2020, we reflected the most recently published IRS table for lump sums assumed to be paid in 2019.2022. We projected future mortality for lump sums assumed to be paid after 20192022 using the current base mortality tables (RP-2014 backed off to 2006) and projection scalesscale of MP-2018.MP-2020.
The Retirement Plan’s asset allocation percentages consisted of:
December 31,December 31,
2018 201720202019
Equity43% 66%Equity55 %47 %
Debt securities41
 15
Debt securities36 41 
Other16
 19
Other9 12 
100% 100%100 %100 %
The guidelines regarding allocation of assets are formalized in the Investment Policy Statement adopted by the Investment Committee for the Retirement Plan. The objective of the investment program is to enhance the portfolio of the Retirement Plan through total return (capital appreciation and income), thereby promoting the ongoing ability of the plan to meet future liabilities and obligations, while minimizing the need for additional contributions. The guidelines specify an allocation
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weighting of 10% to 35% for liability hedging investments (target of 20%), 15% to 40% for return seeking investments (target of 27%), 5% to 35% for risk mitigating investments (target of 14%), 10% to 35% for diversifying investments (target of 21%) and 5% to 35% for dynamic asset allocation (target of 18%). Investments in mutual funds, hedge funds (and other alternative investments), and other commingled investment vehicles are permitted under the guidelines. Investments are permitted in overlay portfolios (regulated mutual funds), which are designed to manage short-term portfolio risk and mitigate the effect of extreme outcomes by varying the asset allocation of a portfolio.
See Note 10,9, Fair Value for a description of how we measure the fair value of our plan assets.
The valuation of our Retirement Plan assets by pricing observability levels as of December 31, 20182020 and 20172019 was as follows (in thousands):
Level 1Level 2Level 3Total
December 31, 2020
Cash$458 $0 $0 $458 
U.S. Treasury Strips0 26,599 0 26,599 
Fixed income mutual funds17,834 0 0 17,834 
Equity mutual fund44,020 0 0 44,020 
Equity securities14,376 0 0 14,376 
Total assets in the fair value hierarchy76,688 26,599 0 103,287 
Investments measured at net assets value— — — 21,735 
Investments at fair value$76,688 $26,599 $0 $125,022 
 Level 1 Level 2 Level 3 Total
December 31, 2018       
Cash$238
 $—
 $—
 $238
U.S. Treasury Strips—
 22,355
 —
 22,355
Fixed income mutual funds18,362
 —
 —
 18,362
Equity mutual fund26,508
 —
 —
 26,508
Equity securities8,970
 —
 —
 8,970
Total assets in the fair value hierarchy54,078
 22,355
 —
 76,433
Investments measured at net assets value—
 —
 —
 22,151
Investments at fair value$54,078
 $22,355
 $—
 $98,584

Level 1Level 2Level 3Total
December 31, 2017       
December 31, 2019December 31, 2019
Cash$91
 $—
 $—
 $91
Cash$230 $0 $0 $230 
U.S. Treasury StripsU.S. Treasury Strips0 27,318 0 27,318 
Fixed income mutual funds23,696
 —
 —
 23,696
Fixed income mutual funds19,518 0 0 19,518 
Equity mutual fund29,352
 —
 —
 29,352
Equity mutual fund33,875 0 0 33,875 
Equity securities25,191
 —
 —
 25,191
Equity securities11,182 0 0 11,182 
Total assets in the fair value hierarchy78,330
 —
 —
 78,330
Total assets in the fair value hierarchy64,805 27,318 0 92,123 
Investments measured at net assets value—
 —
 —
 22,376
Investments measured at net assets value— — — 21,957 
Investments at fair value$78,330
 $—
 $—
 $100,706
Investments at fair value$64,805 $27,318 $0 $114,080 
During 2018,2020 and 2019, the Retirement Plan's investments include the following:
•U.S. Treasury strips;strips, (zero-coupon bonds);
two•2 fixed income mutual funds, which seek to generate income consistent with preservation of capital. OneNaN fund invests in a portfolio of investment-grade securities primarily in the U.S. with additional non-U.S. securities. The secondNaN fund invests in inflation-indexed fixed-income securities and similar bonds issued by non-U.S. governments and various commodities;
seven•7 equity mutual funds, four4 of which focus on U.S.-based equity securities of various capitalization sizes ranging from small to large capitalizations and diversified portfolios within those capitalization ranges; and three3 funds whichthat focus on non-U.S. based equity securities of various capitalization sizes ranging from small to large capitalizations and diversified portfolios therein across non-U.S. regions;
•separate equity and fixed income mutual funds, which seek to moderate the volatility of equity and fixed income oriented asset allocation over the long term, as part of the overall asset allocation managed by AB;

•a multi-style, multi-cap integrated portfolio adding U.S. equity diversification to its value and growth equity selections, designed to deliver a long-term premium to the S&P 500 with greater consistency across a range of market environments; and
•investments measured at net asset value, including three3 hedge funds whichthat seek to provide attractive risk-adjusted returns over full market cycles with less volatility than the broad equity markets by allocating all or substantially all of
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their assets among portfolio managers through portfolio funds that employ a broad range of investment strategies; one1 private investment trust whichthat invests primarily in equity securities of non-U.S. companies located in emerging market countries; and one1 collective investment trust whichthat invests in U.S. and non-U.S. equities of various capitalization sizes.
During 2017, the Retirement Plan’s investments included the following:
two fixed income mutual funds, each of which seeks to generate income consistent with preservation of capital. One mutual fund invests in a portfolio of fixed income securities of U.S. and non-U.S. companies and U.S. and non-U.S. government securities and supranational entities, including lower-rated securities, while the second fund invests in a broad range of fixed income securities in both developed and emerging markets with a range of maturities from short- to long-term;
three equity mutual funds, one of which invests primarily in a diversified portfolio of equity securities of small- to mid-capitalization U.S. companies, the second which invests primarily in a diversified portfolio of equity securities with relatively smaller capitalizations as compared to the overall U.S market, and the third which primarily invests in equity securities of small capitalization companies or other securities or instruments with similar economic characteristics;
separate equity and fixed income mutual funds, which seek to moderate the volatility of equity and fixed income oriented asset allocation over the long term, as part of the overall asset allocation managed by AB;
a multi-style, multi-cap integrated portfolio adding U.S. equity diversification to its value and growth equity selections, designed to deliver a long-term premium to the S&P 500 with greater consistency across a range of market environments; and
investments measured at net asset value, including two equity private investment trusts, one of which invests primarily in equity securities of non-U.S. companies located in emerging market countries, and the other of which invests in equity securities of established non-U.S. companies located in the countries comprising the MSCI EAFE Index, plus Canada; and a hedge fund that seeks to provide attractive risk-adjusted returns over full market cycles with less volatility than the broad equity markets by allocating all or substantially all of its assets among portfolio managers through portfolio funds that employ a broad range of investment strategies.
19. Long-term Incentive Compensation Plans
We maintain an unfunded, non-qualified incentive compensation program known as the AllianceBernstein Incentive Compensation Award Program (“Incentive Compensation Program”), under which annual awards may be granted to eligible employees. See Note 2, "Summary of Significant Accounting Policies – Long-Term Incentive Compensation Plans" for a discussion of the award provisions.
Under the Incentive Compensation Program, we made awards in 2020, 2019 and 2018 2017 and 2016 aggregating $183.3$177.4 million, $168.2$175.5 million and $157.8$183.3 million, respectively. The amounts charged to employee compensation and benefits for the years ended December 31, 2020, 2019 and 2018 2017were $176.8 million, $177.2 million and 2016 were $161.0 million, $172.8 million and $153.8 million, respectively.
Effective as of September 30, 2017, we established the AB 2017 Long Term Incentive Plan (“2017 Plan”), which was adopted at a special meeting of AB Holding Unitholders held on September 29, 2017. The following forms of awards may be granted to employees and Eligible Directors under the 2017 Plan: (i) restricted AB Holding Units or phantom restricted AB Holding Units (a “phantom” award is a contractual right to receive AB Holding Units at a later date or upon a specified event); (ii) options to buy AB Holding Units; and (iii) other AB Holding Unit-based awards (including, without limitation, AB Holding Unit appreciation rights and performance awards). The purpose of the 2017 Plan is to promote the interest of AB by: (i) attracting and retaining talented officers, employees and directors, (ii) motivating such officers, employees and directors by means of performance-related incentives to achieve longer-range business and operational goals, (iii) enabling such officers, employees and directors to participate in the long-term growth and financial success of AB, and (iv) aligning the interests of such officers, employees and directors with those of AB Holding Unitholders. The 2017 Plan will expire on September 30, 2027, and no awards under the 2017 Plan will be made after that date. Under the 2017 Plan, the aggregate number of AB Holding Units with respect to which awards may be granted is 60 million, including no more than 30 million newly-issued AB Holding Units.

As of December 31, 2018, no2020, 0 options to buy AB Holding Units had been granted and 14,352,74024,444,406 AB Holding Units, net of withholding tax requirements, were subject to other AB Holding Unit awards made under the 2017 Plan or the AllianceBernstein 2010 Long Term Incentive Plan, as amended, an equity compensation plan with similar terms that was canceled on September 30, 2017. AB Holding Unit-based awards (including options) in respect of 45,647,26035,555,594 AB Holding Units were available for grant under the 2017 Plan as of December 31, 2018.2020.
Option Awards
We did not grant any options to buy AB Holding Units during 20182020, 2019 or 2017.2018. Historically, options granted to employees generally were exercisable at a rate of 20% of the AB Holding Units subject to such options on each of the first five anniversary dates of the date of grant; options granted to Eligible Directors generally were exercisable at a rate of 33.3% of the AB Holding Units subject to such options on each of the first three anniversary dates of the date of grant. During 2016, we granted 54,546 options to Eligible Directors with a grant date value
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Table of $2.75, determined using the Black-Scholes option valuation model with the following assumptions:Contents
2016
Risk-free interest rate1.3%
Expected cash distribution yield7.1%
Historical volatility factor31.0%
Expected term6.0 years
The risk-free interest rate is based on the U.S. Treasury Bond yield for the appropriate expected term. The expected cash distribution yield is based on the average of our distribution yield over the past four quarters. The historical volatility factor represents our historical Unit price over the same period as our expected term. Due to a lack of sufficient historical data, we have chosen to use the simplified method to calculate the expected term of options.
The option-related activity in our equity compensation plans during 20182020 is as follows:
Options to Buy
AB Holding
Units		Weighted
Average
Exercise 
Price
Per Option		Weighted
Average
Remaining
Contractual
Term (Years)		Aggregate
Intrinsic
Value
Options to Buy
AB Holding
Units
 
Weighted
Average
Exercise 
Price
Per Option
 
Weighted
Average
Remaining
Contractual
Term (Years)
 
Aggregate
Intrinsic
Value
Outstanding as of December 31, 20173,082,470
 $52.37
 1.2  
Outstanding as of December 31, 2019Outstanding as of December 31, 2019159,349 $23.93 2.1
Granted—
 —
  Granted0 0 
Exercised(889,119) 18.66
  Exercised(5,182)28.46 
Forfeited—
 —
  Forfeited0 0 
Expired(1,522,108) 85.09
  Expired(5,182)28.46 
Outstanding as of December 31, 2018671,243
 22.83
 1.6 $3.0
Exercisable as of December 31, 2018634,877
 22.84
 1.5 2.8
Vested or expected to vest as of December 31, 2018671,243
 22.83
 1.6 3.0
Outstanding as of December 31, 2020Outstanding as of December 31, 2020148,985 23.61 1.2$1.5 
Exercisable as of December 31, 2020Exercisable as of December 31, 2020148,985 23.61 1.21.5 
Vested or expected to vest as of December 31, 2020Vested or expected to vest as of December 31, 2020148,985 23.61 1.21.5 
The total intrinsic value of options exercised during 2020, 2019 and 2018 2017 and 2016 was $8.9 million, $8.3$32,368, $3.7 million and $2.1$8.9 million, respectively.
Under the fair value method, compensation expense is measured at the grant date based on the estimated fair value of the options awarded (determined using the Black-Scholes option valuation model) and is recognized over the requiredrequisite service period. We recorded no0 compensation expense related to option grants in 2020, 2019 or 2018 and 2017 as no0 options were granted. We recorded compensation expense relating to option grants of $0.2 million in 2016. As of December 31, 2018,2020, there was no0 compensation expense related to unvested option grants not yet recognized in the consolidated statement of income.
Restricted AB Holding Unit Awards

In 2018, 20172020, 2019 and 2016,2018, the Board granted restricted AB Holding Unit awards to Eligible Directors. These AB Holding Units give the Eligible Directors, in most instances, all the rights of other AB Holding Unitholders, subject to such restrictions on transfer as the Board may impose.
We awarded 53,720, 50,252 and 46,382award restricted AB Holding Units respectively, in 2018, 2017 and 2016 with grant date fair values per restricted AB Holding Unit of $26.90 in 2018, $21.25 and $24.80 in 2017 and $22.64 in 2016. All of the restricted AB Holding Unitsthat vest ratably over three or four years. We fully expensed these awards on each grant date, as there is no service requirement. We recorded compensation expense relatingGrant details related to these awards of $1.4 million, $1.1 million and $1.1 million, respectively, for the years ended December 31, 2018, 2017 and 2016.is as follows:
On April 28, 2017, the Board removed Peter S. Kraus from his position as Chairman of the Board and Chief Executive Officer ("CEO"). As part of his June 2012 employment agreement he was granted 2.7 million restricted AB Holding Units, which were scheduled
202020192018
Restricted Units Awarded50,232 45,420 53,720 
Weighted Average Grant Date Fair Value(1)
$23.69 $29.33 $26.90 
Compensation Expense (in millions)$1.2 $1.3 $1.4 
(1) Prior period amounts have been adjusted to vest ratably over the employment term (January 3, 2014 through January 2, 2019). Under US GAAP, the compensation expense for the AB Holding Unit award under the June 2012 employment agreement of $33.1 million (based on the $12.17 grant date AB Holding Unit price) was being amortized on a straight-line basis over 6.5 years, beginning on the grant date. As a result of his removal we accelerated the vesting on his remaining two tranches and delivered the AB Holding Units to him in June 2017. We recorded compensation expense relating to Mr. Kraus's restricted AB Holding Unit grants of $10.2 million and $5.1 million for the years ended December 31, 2017 and 2016, respectively.conform with current period presentation.
On April 28, 2017, Seth P. Bernstein was appointed President and CEO to provide servicesChief Executive Officer ("CEO") pursuant to an employment agreement, effective May 1, 2017. In connection with the commencement of his employment, Mr. Bernstein was granted restricted AB Holding Units with a grant date fair value of $3.5 million (164,706 AB Holding Units based on the $21.25 grant date AB Holding Unit price on May 16, 2017) and a four-year service requirement. Mr. Bernstein's restricted AB Holding Units vest ratably on each of the first four anniversaries of his commencement date and will be delivered to Mr. Bernstein as soon as administratively feasible after May 1, 2021, subject to accelerated vesting clauses in his employment agreement. We recorded compensation expense relating to Mr. Bernstein's restricted AB Holding Unit grants of $0.9 million and $0.6 million for each of the years ended December 31, 2020, 2019 and 2018, and 2017, respectively.
Under the Incentive Compensation Program, we awarded 5.3 million restricted AB Holding Units in 2020 (which included 5.0 million restricted AB Holding Units in December for the 2020 year-end awards as well as 0.3 million additional restricted AB Holding Units granted earlier during the year relating to the 2019 year-end awards), with grant date fair values per restricted AB holding unit ranging between $28.75 to $32.10.
We awarded 5.8 million restricted AB Holding Units in 2019 (which included 5.4 million restricted AB Holding Units in December for the 2019 year-end awards as well as 0.4 million additional restricted AB Holding Units granted earlier during the year relating to the 2018 year-end awards), with grant date fair values per restricted AB holding unit ranging between $26.69 to $30.01.
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We awarded 6.5 million restricted AB Holding Units in 2018 (which included 6.2 million restricted AB Holding Units in December for the 2018 year-end awards as well as 0.3 million additional restricted AB Holding Units granted earlier during the year relatingrelated to the 2017 year-end awards), 6.3 million restricted AB Holding Units in 2017 (which included 6.1 million restricted AB Holding Units in December for the 2017 year-end awards as well as 0.2 million additional restricted AB Holding Units granted earlier during the year relating to the 2016 year-end awards), and 6.1 million restricted AB Holding Units in 2016 (substantially all of which were restricted AB Holding Units granted in December for the 2016 year-end awards as well as minimal restricted AB Holding Units granted earlier during the year relating to the 2015 year-end awards). Thewith grant date fair values per restricted AB Holding Unit rangedholding unit ranging between $24.95 and $26.69 in 2018, $23.00 and $24.95 in 2017, and were $19.45 and $23.20 in 2016. to $26.69.
Restricted AB Holding Units awarded under the Incentive Compensation Program generally vest in 25% increments on December 1st1st of each of the four years immediately following the year in which the award is granted.
We also award restricted AB Holding Units in connection with certain employment and separation agreements, as well as relocation-related performance awards, with vesting schedules ranging between two and five years. Grant details related to these awards is as follows:
202020192018
(in millions excluding share prices)
Restricted Units Awarded0.4 1.9 2.6 
Grant Date Fair Value Range$18.80 - $35.42$27.32 - $30.85$25.05 - $30.25
Compensation Expense$32.1 $36.7 $32.2 
The fair value of the restricted AB Holding Units is amortized over the requiredrequisite service period as employee compensation expense. We awarded 2.6 million, 1.8 million and 1.0 million restricted AB Holding Units in 2018, 2017 and 2016, respectively, with grant date fair values per restricted AB Holding Unit ranging between $25.05 and $30.25 in 2018, $21.25 and $25.65 in 2017 and $18.67 and $25.34 in 2016. We recorded compensation expense relating to restricted AB Holding Unit grants in connection with certain employment and separation agreements of $32.2 million, $21.6 million and $11.2 million, respectively, for the years ended December 31, 2018, 2017 and 2016.
Changes in unvested restricted AB Holding Units during 20182020 are as follows:
AB Holding
Units		Weighted Average
Grant Date Fair
Value per AB Holding
Unit
AB Holding
Units
 
Weighted Average
Grant Date Fair
Value per AB Holding
Unit
Unvested as of December 31, 201719,072,910
 $23.82
Unvested as of December 31, 2019Unvested as of December 31, 201919,287,080 $26.88 
Granted9,123,321
 26.64
Granted5,702,830 31.66 
Vested(7,128,611) 23.72
Vested(5,946,667)26.07 
Forfeited(853,231) 24.02
Forfeited(178,669)26.50 
Unvested as of December 31, 201820,214,389
 25.12
Unvested as of December 31, 2020Unvested as of December 31, 202018,864,574 28.58 
The total grant date fair value of restricted AB Holding Units that vested during 2018, 2017was $155.0 million, $201.4 million and 2016 was $169.1 million $177.0 millionduring 2020, 2019 and $159.4 million,2018, respectively. As of December 31, 2018,2020, the 20,214,38918,864,574 unvested restricted AB Holding Units consist of 15,380,54913,957,907 restricted AB Holding Units that do not have a service requirement and have been fully expensed on the grant date and 4,883,8404,906,667 restricted AB Holding Units that have a service requirement and will be expensed over the required service period. As of December 31, 2018,2020, there was $87.1$68.7 million of compensation expense related to unvested restricted AB Holding Unit awards granted and not yet recognized in the consolidated statement of income. We expect to recognize the expense over a weighted average period of 3.62.9 years.
20. Units Outstanding
Changes in AB Units outstanding for the years ended December 31, 20182020 and 20172019 were as follows:
20202019
Outstanding as of January 1,270,380,314 268,850,276 
Options exercised5,182 511,894 
Units issued3,363,132 4,833,715 
Units retired(1)
(3,238,970)(3,815,571)
Outstanding as of December 31,270,509,658 270,380,314 
 2018 2017
Outstanding as of January 1,268,659,333
 268,893,534
Options exercised889,119
 1,179,860
Units issued6,153,320
 5,546,695
Units retired(1)
(6,851,496) (6,960,756)
Outstanding as of December 31,268,850,276
 268,659,333
(1)During 20182020 and 2017,2019, we purchased 5,3461,500 and 44,0003,782 AB Units, respectively, in private transactions and retired them.
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21. Income Taxes
AB is a private partnership for federal income tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB is subject to a 4.0% New York City unincorporated business tax (“UBT”). Domestic corporate subsidiaries of AB, which are subject to federal, state and local income taxes, generally are included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located.
In order to preserve AB’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. The AB Partnership Agreement provides that all transfers of AB Units must be approved by AXA Equitable Life Insurance Company (a subsidiary of EQH “AXA Equitable”) and the General Partner; AXA EquitableEQH and the General Partner approve only those transfers permitted pursuant to one or more of the safe harbors contained in the relevant Treasury regulations. If AB Units were considered readily tradable, AB’s net income would be subject to federal and state corporate income tax, significantly reducing its quarterly distributions to AB Holding. Furthermore, should AB enter into a substantial new line of business, AB Holding, by virtue of its ownership of AB, would lose its status as a “grandfathered” publicly-traded partnership and would become subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.
The 2017 Tax Act was enacted in the U.S. on December 22, 2017. The 2017 Tax Act reduced the U.S. federal corporate income tax rate to 21% from 35%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and created new taxes on certain foreign-sourced earnings. In 2017, we recorded provisional amounts for certain enactment-date effects of the 2017 Tax Act by applying the guidance in SAB 118 because we had not yet completed our enactment-date accounting for these effects. In 2018, we completed our assessment and recorded adjustments to our initial provisional amounts.

The provisions of the 2017 Tax Act that had a significant impact on our income tax balance sheet and income statement accounts are as follows:

We recorded an approximate $22.5 million charge to our 2017 income tax expense to account for deemed repatriation of foreign earnings. As a result of our completed analysis in 2018, we recorded an additional $1.1 million to our income tax expense. Management elected to pay the federal transition tax over a period of eight years as permitted by the 2017 Tax Act. During 2018, we paid $1.8 million of the $23.6 million transition tax. The remaining $21.8 million is recorded to income tax payable on our consolidated statement of financial condition and will be paid out over the next seven years.

We recorded an approximate $3.3 million charge to our 2017 income tax expense to reduce our net deferred tax assets due to the lower corporate income tax rate. We completed our analysis in 2018 and determined no adjustment was necessary.


We analyzed the impact of the tax on global intangible low-taxed income (“GILTI”) and elected to treat GILTI as a period cost. In 2018, management's estimate of tax on GILTI income was fully offset by available foreign tax credits. As a result of our completed analysis in 2018, there was no period cost required.

We analyzed the impact of the base erosion anti-abuse tax (“BEAT”), which taxes certain payments between a U.S. corporation and its foreign subsidiaries. Based on current guidance in 2018, it was determined that we will not be subject to BEAT.

We recorded a $2.3 million charge to our 2018 income tax expense as a result of our evaluation of the reversal of the indefinite reinvestments assertions for certain non-U.S. corporate subsidiaries.

Earnings before income taxes and income tax expense consist of:
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
Earnings before income taxes:     Earnings before income taxes:
United States$672,221
 $634,515
 $614,261
United States$743,687 $697,501 $672,221 
Foreign153,093
 139,395
 108,904
Foreign163,749 125,936 153,093 
Total$825,314
 $773,910
 $723,165
Total$907,436 $823,437 $825,314 
Income tax expense:     Income tax expense:
Partnership UBT$5,251
 $2,986
 $5,363
Partnership UBT$3,356 $9,196 $5,251 
Corporate subsidiaries:     Corporate subsidiaries:
Federal(4,030) 18,079
 291
Federal1,495 (943)(4,030)
State and local2,888
 803
 1,064
State and local904 975 2,888 
Foreign36,529
 29,365
 28,158
Foreign44,086 32,290 36,529 
Current tax expense40,638
 51,233
 34,876
Current tax expense49,841 41,518 40,638 
Deferred tax (benefit)5,178
 1,877
 (6,557)
Deferred taxDeferred tax(4,188)236 5,178 
Income tax expense$45,816
 $53,110
 $28,319
Income tax expense$45,653 $41,754 $45,816 
The principal reasons for the difference between the effective tax rates and the UBT statutory tax rate of 4.0% are as follows:
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Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
UBT statutory rate$33,012
 4.0 % $30,956
 4.0 % $28,927
 4.0 %UBT statutory rate$36,297 4.0 %$32,937 4.0 %$33,012 4.0 %
Corporate subsidiaries' federal, state, and local1,522
 0.2
 2,558
 0.3
 5,820
 0.8
Corporate subsidiaries' federal, state, and local2,025 0.2 4,000 0.5 1,522 0.2 
Foreign subsidiaries taxed at different rates30,689
 3.7
 25,406
 3.3
 23,646
 3.3
Foreign subsidiaries taxed at different rates33,969 3.7 26,719 3.3 30,689 3.7 
2017 Tax Act1,155
 0.1
 25,846
 3.3
 —
 —
2017 Tax Act0 0 0 0 1,155 0.1 
FIN 48 release(5,177) (0.6) (3,318) (0.4) —
 —
FIN 48 reserve (release)FIN 48 reserve (release)(1,886)(0.2)2,765 0.3 (5,177)(0.6)
UBT business allocation percentage rate change2,657
 0.3
 —
 —
 —
 —
UBT business allocation percentage rate change8 0 (79)0 2,657 0.3 
Deferred tax and payable write-offs2,932
 0.4
 (9,542) (1.2) (14,883) (2.1)Deferred tax and payable write-offs(887)(0.1)314 0 2,932 0.4 
Foreign outside basis difference2,273
 0.3
 —
 —
 —
 —
Foreign outside basis difference3 0 155 0 2,273 0.3 
Amended 2017 returnAmended 2017 return(221)0 (3,853)(0.5)0 0 
Effect of ASC 740 adjustments, miscellaneous taxes, and other(2,521) (0.3) 1,903
 0.2
 2,254
 0.3
Effect of ASC 740 adjustments, miscellaneous taxes, and other2,654 0.3 2,305 0.3 (2,521)(0.3)
Income not taxable resulting from use of UBT business apportionment factors and effect of compensation charge(20,726) (2.5) (20,699) (2.6) (17,445) (2.4)Income not taxable resulting from use of UBT business apportionment factors and effect of compensation charge(26,309)(2.9)(23,509)(2.8)(20,726)(2.5)
Income tax expense and effective tax rate$45,816
 5.6
 $53,110
 6.9
 $28,319
 3.9
Income tax expense and effective tax rate$45,653 5.0 $41,754 5.1 $45,816 5.6 
We recognize the effects of a tax position in the financial statements only if, as of the reporting date, it is “more likely than not” to be sustained based on its technical merits and their applicability to the facts and circumstances of the tax position. In making this assessment, we assume that the taxing authority will examine the tax position and have full knowledge of all relevant information.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
Balance as of beginning of period$8,478
 $12,596
 $12,004
Balance as of beginning of period$5,706 $3,893 $8,478 
Additions for prior year tax positions—
 —
 —
Additions for prior year tax positions0 1,813 0 
Reductions for prior year tax positions—
 (1,849) —
Reductions for prior year tax positions0 0 0 
Additions for current year tax positions—
 —
 592
Additions for current year tax positions0 0 0 
Reductions for current year tax positions—
 —
 —
Reductions for current year tax positions0 0 0 
Reductions related to closed years/settlements with tax authorities(4,585) (2,269) —
Reductions related to closed years/settlements with tax authorities(2,868)0 (4,585)
Balance as of end of period$3,893
 $8,478
 $12,596
Balance as of end of period$2,838 $5,706 $3,893 
The amount of unrecognized tax benefits as of December 31, 2018, 20172020, 2019 and 2016,2018, when recognized, is recorded as a reduction to income tax expense and reduces the company’s effective tax rate.
Interest and penalties, if any, relating to tax positions are recorded in income tax expense on the consolidated statements of income. The total amount of interest expense (credit) recorded in income tax expense (credit) during 2020, 2019 and 2018 2017was $(0.4) million, $0.7 million and 2016 was $0.1 million, $0.3 million and $0.7 million, respectively. As of December 31, 2020, there is 0 accrued interest recorded on the consolidated statements of financial condition. The total amount of accrued interest recorded on the consolidated statements of financial condition as of December 31, 2019 and 2018 2017 and 2016 is $0.3 million, $0.7was $1.1 million and $1.7$0.3 million, respectively. There were no0 penalties accrued as of December 31, 2020. There was $0.2 million of penalties accrued as of December 31, 2019 and there were 0 accrued penalties as of December 31, 2018, 2017 or 2016.2018.
Generally, the company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for any year prior to 2014,2016, except as set forth below.
As a result of the settlement of the New York City UBT tax audit for the years 2013 through 2016, the gross unrecognized tax benefit was reduced by approximately $2.9 million. The company also reduced the amount of accrued interest and penalties by $1.3 million.
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During the thirdfourth quarter of 2018,2020, the City of New York notified us of an examination of AB's UBT returns for the years 20132017 through 2016.2019. The examination is ongoing.ongoing and no provision with respect to this examination has been recorded.
As a result of the expiration of the statute of limitations on an acquisition goodwill reserve, the full gross unrecognized tax benefit of approximately $4.6 million was released. The company also released the full accrued interest amount of $0.6 million.
Currently, there are no income tax examinations at our significant non-U.S. subsidiaries. Years that remain open and may be subject to examination vary under local law and range from one to seven years.
At December 31, 2018,2020, it is not reasonably possible that any of our unrecognized tax benefits will change within the next twelve months due to completion of tax authority exams.

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effect of significant items comprising the net deferred tax asset (liability) is as follows:
December 31,
20202019
(in thousands)
Deferred tax asset:
Differences between book and tax basis:
Benefits from net operating loss carryforwards$7,112 $5,551 
Long-term incentive compensation plans22,363 20,907 
Investment basis differences5,256 4,376 
Depreciation and amortization2,065 1,554 
Lease liability5,994 6,409 
Other, primarily accrued expenses deductible when paid4,737 3,106 
47,527 41,903 
Less: valuation allowance(3,025)(2,026)
Deferred tax asset44,502 39,877 
Deferred tax liability:  
Differences between book and tax basis:  
Intangible assets7,933 8,013 
Investment in foreign subsidiaries3,048 2,191 
Right-of-use asset4,975 5,191 
Other1,760 1,672 
Deferred tax liability17,716 17,067 
Net deferred tax asset$26,786 $22,810 
 December 31,
 2018 2017
 (in thousands)
Deferred tax asset:   
Differences between book and tax basis:   
Benefits from net operating loss carryforwards$2,518
 $3,405
Long-term incentive compensation plans22,342
 21,204
Investment basis differences3,606
 5,967
Depreciation and amortization1,248
 2,214
Other, primarily accrued expenses deductible when paid3,903
 3,601
 33,617
 36,391
Less: valuation allowance(490) (497)
Deferred tax asset33,127
 35,894
Deferred tax liability: 
  
Differences between book and tax basis: 
  
Intangible assets6,852
 6,286
Investment in foreign subsidiaries1,653
 —
Other1,758
 1,007
Deferred tax liability10,263
 7,293
Net deferred tax asset$22,864
 $28,601
Valuation allowances of $0.5$3.0 million and $2.0 million were established as of both December 31, 20182020 and 2017,2019, respectively, primarily due to realizing certain deferred compensation awards and the uncertainty ofsignificant negative evidence that net operating loss ("NOL") carryforwards will not be utilized, given the future losses expected to be incurred by the applicable subsidiaries. We had NOL carryforwards at December 31, 20182020 and December 31, 20172019 of approximately $32.4$51.0 million and $38.7$46.2 million, respectively, in certain foreign locations with an indefinite expiration.expiration period.
The net deferred tax asset is included in other assets on thein our consolidated statement of financial condition. Management has determined that realization ofbelieves there will be sufficient future taxable income to realize the tax benefits related to the remaining net deferred tax asset is more likely thanassets recognized that are not based on anticipated future taxable income.subject to valuation allowances.
The company provides income taxes on the unremitted earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are indefinitely reinvested outside the United States. As of December 31, 2018, $28.62020, $29.6 million of undistributed earnings of non-U.S. corporate subsidiaries were permanentlyindefinitely invested outside the U.S. At existing applicable income tax rates, additional taxes of approximately $6.0$6.4 million would need to be providedpaid if such earnings are remitted.

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22. Business Segment Information
Management has assessed the requirements of ASC 280, Segment Reporting, and determined that, because we utilize a consolidated approach to assess performance and allocate resources, we have only one1 operating segment. Enterprise-wide disclosures as of and for the years ended December 31, 2018, 20172020, 2019 and 20162018 were as follows:
Services
Net revenues derived from our investment management, research and related services were as follows:
Years Ended December 31,Years Ended December 31,
2018 2017 2016202020192018
(in thousands)(in thousands)
Institutions$479,068
 $477,140
 $422,060
Institutions$512,914 $480,144 $479,068 
Retail1,494,445
 1,423,890
 1,261,907
Retail1,811,948 1,619,832 1,494,445 
Private Wealth Management883,234
 787,362
 711,599
Private Wealth Management882,672 904,505 883,234 
Bernstein Research Services439,432
 449,919
 479,875
Bernstein Research Services459,744 407,911 439,432 
Other123,581
 185,375
 162,461
Other56,908 163,245 123,581 
Total revenues3,419,760
 3,323,686
 3,037,902
Total revenues3,724,186 3,575,637 3,419,760 
Less: Interest expense52,399
 25,165
 9,123
Less: Interest expense15,650 57,205 52,399 
Net revenues$3,367,361
 $3,298,521
 $3,028,779
Net revenues$3,708,536 $3,518,432 $3,367,361 
Our AllianceBernstein Global High Yield Portfolio, an open-end fund incorporated in Luxembourg (ACATEUH: LX), generated approximately 10%8%, 11%9% and 10% of our investment advisory and service fees and 10%8%, 12%9% and 10% of our net revenues during 2018, 20172020, 2019 and 2016,2018, respectively.
Geographic Information
Net revenues and long-lived assets, related to our U.S. and international operations, as of and for the years ended December 31, were as follows:
2018 2017 2016202020192018
(in thousands)(in thousands)
Net revenues:     Net revenues:
United States$1,940,267
 $1,958,844
 $1,901,571
United States$1,959,528 $1,975,105 $1,940,267 
International1,427,094
 1,339,677
 1,127,208
International1,749,008 1,543,327 1,427,094 
Total$3,367,361
 $3,298,521
 $3,028,779
Total$3,708,536 $3,518,432 $3,367,361 
Long-lived assets: 
  
  
Long-lived assets:   
United States$3,262,722
 $3,313,958
  
United States$3,285,761 $3,259,490  
International56,069
 46,221
  
International53,453 54,349  
Total$3,318,791
 $3,360,179
  
Total$3,339,214 $3,313,839  
Major Customers
Company-sponsored mutual funds are distributed to individual investors through broker-dealers, insurance sales representatives, banks, registered investment advisers, financial planners and other financial intermediaries. Certain subsidiaries of AXA and EQH, including AXA Advisors, LLC, have entered into selected dealer agreementsHSBC (not affiliated with AllianceBernstein Investments and have beenAB) was responsible for 1%approximately 6%, 1%14% and 2%7% of our open-end mutual fund sales in 2018, 20172020, 2019 and 2016,2018, respectively. HSBC was responsible for approximately 7%, 9% and 12% of our open-end mutual fund sales in 2018, 2017 and 2016, respectively. Neither AXA, EQH nor HSBC is not under any obligation to sell a specific amount of AB Fund shares and each also sells shares of mutual funds that it sponsors and that are sponsored by unaffiliated organizations.shares.
AXA, EQH and the general and separate accounts of AXA Equitable Financial Life Insurance Company ("Equitable Financial") (including investments by the separate accounts of AXA Equitable Financial in the funding vehicle EQ Advisors Trust) accounted for approximately 5%3% of our total revenues for each of the years ended December 31, 2018, 20172020, 2019 and 2016.2018. AXA and its subsidiaries accounted for approximately 2% of our total revenues for each of the years ended December 31, 2020, 2019 and 2018. No single institutional client other than EQH, AXA EQH and thetheir respective subsidiaries accounted for more than 1% of our total revenues for the years ended December 31, 2018, 20172020, 2019 and 2016.2018.


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23. Related Party Transactions
Mutual Funds
We provide investment management, distribution, shareholder, administrative and brokerage services to individual investors by means of retail mutual funds sponsored by our company, our subsidiaries and our affiliated joint venture companies. We provide substantially all of these services under contracts that specify the services to be provided and the fees to be charged. The contracts are subject to annual review and approval by each mutual fund’s board of directors or trustees and, in certain circumstances, by the mutual fund’s shareholders.
Revenues for services provided or related to the mutual funds are as follows:
Years Ended December 31,
202020192018
(in thousands)
Investment advisory and services fees$1,368,484 $1,275,677 $1,207,086 
Distribution revenues516,336 441,437 403,965 
Shareholder servicing fees79,394 75,122 74,019 
Other revenues8,314 7,303 7,262 
Bernstein Research Services3 2 33 
$1,972,531 $1,799,541 $1,692,365 
 Years Ended December 31,
 2018 2017 2016
 (in thousands)
Investment advisory and services fees$1,207,086
 $1,148,467
 $998,892
Distribution revenues403,965
 397,674
 371,604
Shareholder servicing fees74,019
 73,310
 76,201
Other revenues7,262
 6,942
 6,253
Bernstein Research Services33
 13
 5
EQH, AXA EQH and their respective Subsidiaries
We provide investment management and certain administration services to EQH, AXA EQH and their respective subsidiaries. In addition, EQH, AXA EQH and their respective subsidiaries distribute company-sponsored mutual funds, for which they receive commissions and distribution payments. Sales of company-sponsored mutual funds through EQH and its subsidiaries aggregated approximately $0.4 billion, $0.5 billion and $0.8 billion for the years ended December 31, 2018, 2017 and 2016, respectively. Also, we are covered by various insurance policies maintained by EQH and itd subsidiaries and we pay fees for technology and other services provided by EQH, AXA EQH and their respective subsidiaries. Additionally, see Note 12, Debt,for disclosures related to our credit facility with EQH.

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Aggregate amounts included in the consolidated financial statements for transactions
with EQH, AXA EQH and their respective subsidiaries, as of and for the years ended December 31, are as follows:
EQHAXA
2018 2017 2016202020192018202020192018
(in thousands)(in thousands)
Revenues:     Revenues:
Investment advisory and services fees$169,157
 $157,430
 $150,016
Investment advisory and services fees$115,901 $109,316 $104,810 $73,482 $65,086 $64,347 
Bernstein Research Services134
 403
 583
Bernstein Research Services0 0 0 23 45 134 
Distribution revenues13,897
 13,387
 12,145
Distribution revenues0 0 0 12,925 12,968 13,897 
Other revenues1,729
 1,130
 969
Other revenues1,330 1,013 1,104 353 482 625 
$184,917
 $172,350
 $163,713
$117,231 $110,329 $105,914 $86,783 $78,581 $79,003 
Expenses: 
  
  
Expenses:   
Commissions and distribution payments to financial intermediaries$21,567
 $19,202
 $16,077
Commissions and distribution payments to financial intermediaries$3,952 $3,956 $3,964 $14,848 $16,693 $17,603 
General and administrative15,006
 12,428
 16,315
General and administrative2,281 2,466 2,615 8,928 11,501 12,391 
Other(1)1,485
 1,696
 1,653
5,463 3,644 1,485 0 0 0 
$38,058
 $33,326
 $34,045
$11,696 $10,066 $8,064 $23,776 $28,194 $29,994 
Balance Sheet: 
  
  Balance Sheet:  
Institutional investment advisory and services fees receivable$17,612
 $13,806
  Institutional investment advisory and services fees receivable$8,343 $8,716 $5,262 $10,842 
Prepaid expenses364
 2,905
  Prepaid expenses404 238 0 0 
Other due to AXA, EQH and their subsidiaries(7,259) (19,666)  
Other due to EQH, AXA and their respective subsidiariesOther due to EQH, AXA and their respective subsidiaries(1,280)(2,111)(4,703)(5,234)
EQH FacilityEQH Facility(675,000)(560,000)0 0 
$10,717
 $(2,955)  $(667,533)$(553,157)$559 $5,608 

(1) Prior period EQH 2019 is now presented to conform to current periods presentation.
Other Related Parties
The consolidated statements of financial condition include a net receivable from AB Holding as a result of cash transactions for fees and expense reimbursements. The net receivable balance included in the consolidated statements of financial condition as of December 31, 20182020 and 20172019 was $11.4$10.2 million and $11.1$10.1 million, respectively.

Related Party Master Repurchase Agreement
24. Acquisitions
Acquisitions are accounted for under ASC 805, Business Combinations.
On November 20, 2018,During April 2020, we made an offerprovided a $125 million credit facility, through a Master Repurchase Agreement ("MRA"), to acquire 100%one of our sponsored private investment funds, of which $30 million was drawn upon as of April 28, 2020 and repaid in full in May 2020. NaN additional amounts were drawn during the remainder of 2020. The amounts drawn upon the MRA, which were payable on demand, were collateralized by assets of the partnership interests in Autonomous Research ("Autonomous"), an institutional research firm. The acquisition is expectedfund, could have been repaid at any time prior to close inmaturity and bore interest based upon the second quarterinterest rate established at the time of 2019.
On September 23, 2016, we acquired a 100% ownership interest in Ramius Alternative Solutions LLC ("RASL"), a global alternative investment management business that, as of the acquisition date, had approximately $2.5 billion in AUM. RASL offers a range of customized alternative investment and advisory solutions to a global institutional client base. On the acquisition date, we made a cash payment of $20.5 million and recorded a contingent consideration payable of $11.9 million basedeach borrowing. This credit facility expired on projected fee revenues over a five-year measurement period. The excess of the purchase price over the current fair value of identifiable net assets acquired resulted in the recognition of $21.9 million of goodwill. We recorded $10.0 million of finite-lived intangible assets relating to investment management contracts.
On June 20, 2014, we acquired an 81.7% ownership interest in CPH Capital Fondsmaeglerselskab A/S (“CPH”), a Danish asset management firm that managed approximately $3 billion in global core equity assets for institutional investors, for a cash payment of $64.4 million and a contingent consideration payable of $9.4 million based on projected assets under management levels over a three-year measurement period. The excess of the purchase price over the fair value of identifiable assets acquired resulted in the recognition of $58.1 million of goodwill. We recorded $24.1 million of finite-lived intangible assets relating to separately-managed account relationships and $3.5 million of indefinite-lived intangible assets relating to an acquired fund’s investment contract. We also recorded redeemable non-controlling interests of $16.5 million relating to the fair value of the portion of CPH we did not own. During 2018, 2017, and 2016, we purchased additional shares of CPH, bringing our ownership interest to 96.8% as of December 31, 2018.2020.
The 2016 acquisition has not had a significant impact on 2018, 2017 or 2016 revenues and earnings. As a result, we have not provided supplemental pro forma information.

25.
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24. Non-controlling Interests
Non-controlling interest in net income for the years ended December 31, 2018, 20172020, 2019 and 20162018 consisted of the following:
202020192018
(in thousands)
Non-redeemable non-controlling interests:
    Consolidated company-sponsored investment funds$0 $0 $(119)
    Other0 92 188 
Total non-redeemable non-controlling interest0 92 69 
Redeemable non-controlling interests:
    Consolidated company-sponsored investment funds(4,169)29,549 21,841 
Total non-controlling interest in net income (loss)$(4,169)$29,641 $21,910 
 2018 2017 2016
 (in thousands)
      
Non-redeemable non-controlling interests:     
    Consolidated company-sponsored investment funds(119) 9,353
 11,086
    Other188
 279
 312
Total non-redeemable non-controlling interest69
 9,632
 11,398
Redeemable non-controlling interests:     
    Consolidated company-sponsored investment funds21,841
 48,765
 10,090
Total non-controlling interest in net income (loss)$21,910
 $58,397
 $21,488

Non-redeemable non-controlling interest as of December 31, 2018 and 2017 consisted of the following:
 2018 2017
 (in thousands)
    
Consolidated company-sponsored investment funds$—
 $757
CPH949
 807
Total non-redeemable non-controlling interest$949
 $1,564



Redeemable non-controlling interest as of December 31, 20182020 and 20172019 consisted of the following:
20202019
(in thousands)
Consolidated company-sponsored investment funds$102,359 $325,561 
Total redeemable non-controlling interest$102,359 $325,561 


 2018 2017
 (in thousands)
    
Consolidated company-sponsored investment funds$145,921
 $596,223
CPH2,888
 5,364
Total redeemable non-controlling interest$148,809
 $601,587



26.25. Quarterly Financial Data (Unaudited)
Quarters Ended 2020
December 31September 30June 30March 31
(in thousands, except per unit amounts)
Net revenues$1,062,893 $900,038 $871,449 $874,156 
Net income attributable to AB Unitholders$286,335 $207,976 $177,321 $194,320 
Basic net income per AB Unit(1)
$1.06 $0.77 $0.65 $0.71 
Diluted net income per AB Unit(1)
$1.06 $0.77 $0.65 $0.71 
Cash distributions per AB Unit(2)(3)
$1.05 $0.76 $0.68 $0.71 
 Quarters Ended 2018
 December 31 September 30 June 30 March 31
 (in thousands, except per unit amounts)
Net revenues$804,660
 $850,176
 $844,738
 $867,787
Net income attributable to AB Unitholders$188,053
 $203,674
 $181,665
 $184,196
Basic net income per AB Unit(1)
$0.70
 $0.75
 $0.66
 $0.68
Diluted net income per AB Unit(1)
$0.70
 $0.75
 $0.66
 $0.68
Cash distributions per AB Unit(2)(3)
$0.71
 $0.76
 $0.69
 $0.80
 Quarters Ended 2017
 December 31 September 30 June 30 March 31
 (in thousands, except per unit amounts)
Net revenues$919,141
 $812,150
 $802,313
 $764,917
Net income attributable to AB Unitholders$246,409
 $140,954
 $135,103
 $139,937
Basic net income per AB Unit(1)
$0.92
 $0.53
 $0.50
 $0.52
Diluted net income per AB Unit(1)
$0.92
 $0.52
 $0.50
 $0.51
Cash distributions per AB Unit(2)(3)
$0.91
 $0.58
 $0.56
 $0.52
Quarters Ended 2019
December 31September 30June 30March 31
(in thousands, except per unit amounts)
Net revenues$987,304 $877,867 $857,799 $795,462 
Net income attributable to AB Unitholders$248,865 $187,811 $166,252 $149,114 
Basic net income per AB Unit(1)
$0.92 $0.69 $0.61 $0.55 
Diluted net income per AB Unit(1)
$0.92 $0.69 $0.61 $0.55 
Cash distributions per AB Unit(2)(3)
$0.93 $0.70 $0.63 $0.56 
(1)Basic and diluted net income per unit are computed independently for each of the periods presented. Accordingly, the sum of the quarterly net income per unit amounts may not agree to the total for the year.
(2)Declared and paid during the following quarter.
(3)Cash distributions reflect the impact of our non-GAAP adjustments.

(1)Basic and diluted net income per unit are computed independently for each of the periods presented. Accordingly, the sum of the quarterly net income per unit amounts may not agree to the total for the year.

(2)Declared and paid during the following quarter.
(3)Cash distributions reflect the impact of our non-GAAP adjustments.

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Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
We did not have any changes in or disagreements with accountants in respect of accounting or financial disclosure.
Item 9A.Controls and Procedures
Disclosure Controls and Procedures
Each of AB Holding and AB maintains a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported in a timely manner, and (ii) accumulated and communicated to management, including the Chief Executive Officer ("CEO") and the Chief Financial Officer ("CFO"), to permit timely decisions regarding our disclosure.
As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the CEO and the CFO, of the effectiveness of the design and operation of disclosure controls and procedures. Based on this evaluation, the CEO and the CFO concluded that the disclosure controls and procedures are effective.
Management’s Report on Internal Control Over Financial Reporting
Management acknowledges its responsibility for establishing and maintaining adequate internal control over financial reporting for each of AB Holding and AB.
Internal control over financial reporting is a process designed by, or under the supervision of, a company’s CEO and CFO, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“USGAAP”) and includes those policies and procedures that:
•Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP and receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those internal control systems determined to be effective can provide only reasonable assurance with respect to the reliability of financial statement preparation and presentation. Because of these inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness of internal control to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of AB Holding’s and AB’s internal control over financial reporting as of December 31, 2018.2020. In making its assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework(2013) (“COSO criteria”).
Based on its assessment, management concluded that, as of December 31, 2018,2020, each of AB Holding and AB maintained effective internal control over financial reporting based on the COSO criteria.
PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the 20182020 financial statements included in this Form 10-K, has issued an attestation report on the effectiveness of each of AB Holding’s and AB’s internal control over financial reporting as of December 31, 2018.2020. The report pertaining to AB can be found in Item 8. The report pertaining to AB Holding can be found in Item 8 of AB Holding's Form 10-K for the year ended December 31, 2018.2020.
Changes in Internal Control Over Financial Reporting
No changes in our internal control over financial reporting occurred during the fourth quarter of 20182020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Item 9B.Other Information
We reported all information required to be disclosed on Form 8-K during the fourth quarter of 2018.2020.

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PART III


Item 10.    10. Directors, Executive Officers and Corporate Governance


We use “Internet Site” in Items 10 and 11 to refer to our company’s internet site, public website, www.alliancebernstein.com.


To contact our company’s Corporate Secretary, you may send an email to corporate_secretary@alliancebernstein.com or write to Corporate Secretary, AllianceBernstein L.P., 1345 Avenue of the Americas, New York, New York 10105.


General Partner


The Partnerships’ activities are managed and controlled by the General Partner. The Board of the General Partner acts as the Board of each of the Partnerships. Neither AB Unitholders nor AB Holding Unitholders have any rights to manage or control the Partnerships or to elect directors of the General Partner. The General Partner is a wholly-owned subsidiary of EQH.


The General Partner does not receive any compensation from the Partnerships for services rendered to them as their general partner. The General Partner holds a 1% general partnership interest in AB and 100,000 units of general partnership interest in AB Holding. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit.


The General Partner is entitled to reimbursement by AB for any expenses it incurs in carrying out its activities as general partner of the Partnerships, including compensation paid by the General Partner to its directors and officers (to the extent such persons are not compensated directly by AB).


Board of Directors


Our Board currently consists of 1112 directors, including eight independent directors (including our Chairman of the Board), our President and CEO, our Chairman of the Board, the Chairman of the Board of AXA, twoand three senior executives of EQH, and six independent directors.EQH. While we do not have a formal, written diversity policy in place, we believe that an effective board consists of a diverse group of individuals who collectively possess a variety of complementary skills, personal experiences and perspectives and who will work together to provide a board with the needed leadership and experience to successfully guide our company. As set forth in its charter, the Corporate Governance Committee of the Board (“(the “Governance Committee”) assists the Board in identifying and evaluating such candidates, determining Board composition, developing and monitoring a process to assess Board effectiveness, developing and implementing corporate governance guidelines, and reviewing programs relating to matters of corporate responsibility.


As we indicate below, our directors have a combined wealth of leadership experience derived from extensive service leading large, complex organizations in their roles as either senior executives or board members, as well as in government and academia. Each of our directors has the integrity, business judgment, collegiality and commitment that are among the essential characteristics for a member of our Board. Collectively, they have substantive knowledge and skills applicable to our business, including expertise in areas such as regulation; public accounting and financial reporting; finance; risk management; business development; operations; information technology;technology and security; strategic planning; management development, succession planning and compensation; corporate governance; public policy; and international matters.


As of February 13, 2019,11, 2021, our directors are as follows:


Robert B. Zoellick
Mr. Zoellick, age 65, was appointed Non-Executive Chairman of the Board in April 2017. He also serves as a Senior Counselor of the Brunswick Group and on the boards of Temasek (a sovereign fund of Singapore) and Twitter. He is a member of the Swiss Re International Advisers and a Senior Fellow at The Belfer Center at Harvard University. From 2013 to 2016, Mr. Zoellick chaired Goldman Sachs Group’s International Advisors. From 2007 to 2012, he served as the 11th president of the World Bank, and from 2006 to 2007, was vice chairman, international, of Goldman Sachs Group and chairman of Goldman Sachs's International Advisors. Mr. Zoellick served as Deputy Secretary of the U.S. Department of State from 2005 to 2006, and was U.S. Trade Representative from 2001 to 2005. He also held several positions in the Reagan and George H. W. Bush administrations, serving as Under Secretary of State for Economic and Agricultural Affairs, Counselor of the State Department, White House Deputy Chief of Staff, Counselor to the Secretary of the Treasury, and Deputy Assistant Secretary of the Treasury for Financial Institutions Policy. From 1993 to 1997, Mr. Zoellick was executive vice president for Housing and Law at Fannie Mae. Mr. Zoellick has served on the Board of Directors of Temasek, since 2013, and as a Senior Fellow at The Belfer Center, since 2012.


Mr. Zoellick brings to the Board the in-depth knowledge of world affairs and financial services he has developed through his years of service with the U.S. government, as the former president of the World Bank and through the various positions he held with Goldman Sachs.
Seth P. Bernstein
Mr. Bernstein, age 57, was appointed President and Chief Executive Officer in April 2017 and began serving in this role on May 1, 2017. Prior to his appointment, he had a distinguished 32 year career at JPMorgan Chase, most recently as managing director and global head of Managed Solutions and Strategy at J.P. Morgan Asset Management. In this role, Mr. Bernstein was responsible for the management of all discretionary assets within the Private Banking client segment. Among other roles, he served as managing director and global head of Fixed Income and Currency for 10 years, concluding in 2012. Prior to that, Mr. Bernstein held the position of chief financial officer at JPMorgan Chase’s Investment Management and Private Banking division. Mr. Bernstein is a member of the Management Committee of EQH and the Board of Managers of Haverford College, Pennsylvania.

Mr. Bernstein brings to the Board the diverse financial services experience he developed through his extensive service at JPMorgan Chase.
Paul L. Audet
Mr. Audet, age 65, was appointed a director of AB in November 2017. He is the Co-Founder and Managing Member of Symmetrical Ventures LLC, a venture capital firm organized in 2015 and specializing in capital investments in start-ups and development stage companies. The firm evaluates investment opportunities in enterprises that aim to transform traditional business models through disruptive technologies. Previously, Mr. Audet served as a senior managing director at BlackRock, retiring in 2014 after a 35-year career in the financial services industry. During his BlackRock tenure, he held a number of executive leadership roles, including chief financial officer for nine years and head of the company’s U.S. active mutual funds, global real estate and global cash-management businesses. Mr. Audet’s affiliation with BlackRock started in 1994 when, as director of mergers and acquisitions for PNC Financial Services, he led the acquisition of BlackRock. He began his professional career in 1977 at PricewaterhouseCoopers and worked at PaineWebber and First Fidelity Bancorporation before moving on to BlackRock and PNC.

Mr. Audet brings to the Board the extensive financial services experience he has developed through his executive leadership roles at BlackRock.
Ramon de Oliveira
Mr. de Oliveira, age 64,66, was appointed a director of AB in April 2017.2017 and, since April 2019, has served as Chairman of the Board of AB. Since March 2019, he has served as Chairman of the Board of EQH, Equitable Financial and Equitable America. Mr. de Oliveira served as director of EQH from April 2018 until being appointed Chairman in 2019. He also previously served as a director of Equitable Financial and Equitable America from 2011 to 2018. He has been a director of EQH since April 2018, AXA since 2010, and AXA Equitable and MONY Life Insurance Company of America since 2011.2010. Additionally, he serves as Managing DirectorPartner of the consulting firm Investment Audit Practice.Practice, LLC. Previously, Mr. de Oliveira held several executive positions at J.P. Morgan & Co. over the course of a 24-year tenure, including five years as chairman and chief executive officerChief Executive Officer of J.P. Morgan Investment Management. He was also a member of J.P. Morgan’s Management Committee from its inception in 1995.


Mr. de Oliveira brings to the Board the extensive buy-side and sell-side financial services experience, key leadership skills and sharp analytical skills he has developed through his executive leadership roles at JPMorgan Chase and Investment Audit Practice.
Denis Duverne
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Seth P. Bernstein
Mr. Duverne,Bernstein, age 65,59, was electedappointed President and Chief Executive Officer in April 2017 and began serving in this role on May 1, 2017. He also has served as Senior Executive Vice President and Head of Investment Management and Research of EQH since April 2018. Prior to these appointments, Mr. Bernstein had a distinguished 32-year career at JPMorgan Chase, most recently as managing director and global head of Managed Solutions and Strategy at J.P. Morgan Asset Management. In this role, Mr. Bernstein was responsible for the management of all discretionary assets within the Private Banking client segment. Among other roles, he served as Managing Director and Global Head of Fixed Income and Currency for 10 years, concluding in 2012. Prior to that, Mr. Bernstein held the position of Chief Financial Officer at JPMorgan Chase’s Investment Management and Private Banking division. Mr. Bernstein is a member of the Management Committee of EQH and the Board of Managers of Haverford College, Pennsylvania.

Mr. Bernstein brings to the Board the diverse financial services experience he developed through his extensive service at JPMorgan Chase and more recent career at AB.
Paul L. Audet
Mr. Audet, age 67, was appointed a director of AB in February 1996. On September 1, 2016,November 2017. He is the Co-Founder and Managing Member of Symmetrical Ventures LLC, a venture capital firm organized in 2015 and specializing in capital investments in start-ups and development stage companies. The firm evaluates investment opportunities in enterprises that aim to transform traditional business models through disruptive technologies. Previously, Mr. Audet served as a senior managing director at BlackRock, retiring in 2014 after a 35-year career in the financial services industry. During his BlackRock tenure, he was appointed Chairmanheld a number of executive leadership roles, including Chief Financial Officer for nine years and head of the Boardcompany’s U.S. active mutual funds, global real estate and global cash-management businesses. Mr. Audet’s affiliation with BlackRock started in 1994 when, as director of AXA after having served as Deputy CEOmergers and acquisitions for PNC Financial Services, he led the acquisition of AXABlackRock. He began his professional career in 1977 at PricewaterhouseCoopers and a member of the Board of Directors of AXA since April 2010, when AXA changed its governance structure. Mr. Duverne was a member of the AXA Management Board from February 2003 through April 2010. He was CFO of AXA from May 2003 through December 2009. From January 2000worked at PaineWebber and First Fidelity Bancorporation before moving on to May 2003, Mr. Duverne served as Group Executive Vice President-Finance, ControlBlackRock and Strategy. Mr. Duverne joined AXA as Senior Vice President in 1995.PNC.


Mr. DuverneAudet brings to the Board the highly diverseextensive financial services experience he has attained from the many keydeveloped through his executive leadership roles he has served for AXA.at BlackRock.

Barbara Fallon-WalshNella L. Domenici
Ms. Fallon-Walsh,Domenici, age 66,60, was appointed a director of AB in January 2020. She is currently Chief Financial Officer and member of the Executive Committee at Dataminr, a leading AI company that is late-stage venture backed. In her broad leadership role, which she began in 2020, Ms. Domenici is responsible for various strategic, operational and administrative functions. From 2015 to 2018, Ms. Domenici served as Chief Financial Officer and member of the Operating Committee at Bridgewater Associates, a hedge fund with more than $160 billion in AUM. Prior thereto, Ms. Domenici held various senior managerial, investment banking and strategic positions with firms including Citadel Investment Group, Credit Suisse and The Monitor Consulting Group. In addition, she is a proven entrepreneur, having founded a successful consulting firm that advised many family-owned, private equity, venture-backed and real estate companies.

Ms. Domenici is an active leader for charitable and public health causes. She co-founded the Excellent Schools of New Mexico, a non-profit organization that supports charter schools in underserved communities, and she serves on the board of Regis High School in New York City. Ms. Domenici is a member of the Bipartisan Policy Center Behavioral Health Integration Task Force, where she champions initiatives focused on mental illness. She also serves on the advisory board of the International Folk-Art Market, which focuses on economic opportunities for folk artists worldwide, particularly women in developing countries. Until 2020, Ms. Domenici had served on the board of One World Surgery, which provides access to quality surgical care globally.

Ms. Domenici brings to the Board her seasoned business acumen and her extensive global experience in strategic financial management, corporate strategy and operations.
Jeffrey J. Hurd
Mr. Hurd, age 54, was appointed a director of AB in April 2017,2019. He has served as Senior Executive Vice President and Chief Operating Officer of EQH, and as a member of the EQH Management Committee, since 2018. In this role, Mr. Hurd has been a director Banc of California since September 2018. Shestrategic oversight for EQH's Human Resources, Information Technology and Communications departments. He also is responsible for EQH's Transformation Office, which encompasses key functional areas, including operations, procurement and corporate real estate. Mr. Hurd also has served as a directorSenior Executive Director and Chief Operating Officer of MONY Life Insurance CompanyEquitable Financial since 2018.

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Prior to joining Equitable Financial, Mr. Hurd served as a directorExecutive Vice President and Chief Operating Officer at American International Group, Inc. ("AIG"), where he amassed deep financial services industry experience during his 20-year tenure. While at AIG, Mr. Hurd served as Chief Human Resources Officer, Chief Administrative Officer, Deputy General Counsel and Head of AXA Investment Managers, AXA IM and AXA Rosenberg Group. Before that, Ms. Fallon-Walsh held several executive positions at the Vanguard Group between 1995 and her retirement in 2012. She began her career and held various executive positions at Security Pacific Bank, which was acquired by Bank of America in 1992.Asset Management Restructuring.


Ms. Fallon-WalshMr. Hurd brings to the Board thehis extensive experience in financial services and insurance experience she has developed through herstrategic insights as a senior executive leadership roles at various AXA subsidiariesEQH and, the Vanguard Group.formerly, at AIG.


Daniel G. Kaye
Mr. Kaye, age 64,66, was appointed a director of AB in April 2017. He has been a director of AXA Equitable HoldingsEQH since AprilMay 2018 and a director of AXA Equitable Financial and MONY Life Insurance Company ofEquitable America since September 2015. Also, since May 2019, Mr. Kaye has been a director of CME Group, Inc. (NASDAQ: CME), where he serves as Chair of the Audit Committee. From January 2013 to May 2014, heMr. Kaye served as interim chief financial officerChief Financial Officer and treasurerTreasurer of HealthEast Care System. Mr. Kaye retiredHe held this post after retiring in 2012 from a 35-year career at Ernst & Young in 2012 after a 35-year career,LLP ("E&Y"), including 25 years as an audit partner. During his tenure at E&Y, Mr. Kaye served as the New England Area Managing Partner and the Midwest Area Managing Partner of Assurance. Mr. Kaye is a Certified Public Accountant and a National Association of Corporate Directors Board Leadership Fellow.


Mr. Kaye brings to the Board the extensive financial expertise he developed through his career at Ernst & YoungE&Y and his directorships at CME, EQH and certain of itsEQH's subsidiaries.
Shelley B. LeibowitzNick Lane
Ms. Leibowitz,Mr. Lane, age 57,47, was appointed a director of AB in November 2017. A leader among technology professionals, she currently serves as an advisor to senior executives and boards of directors in the areas of technology oversight and cybersecurity best practices. Prior to starting her current firm, SL Advisory, sheApril 2019. He has served as group chief information officer for the World Bank, where she directed all aspectsSenior Executive Vice President and Head of technology (including strategy, innovationRetirement, Wealth Management & Protection Solutions of EQH, and support) across the bank’s more than 180 group offices based in Washington, DC, and around the world. Ms. Leibowitz has also served as chief information officer at Investment Risk Management, Morgan Stanley, Greenwich Capital Markets and other financial institutions. She currently sits on the board, as well as the Risk Oversight and Governance Committees, of E*TRADE Financial Corp. and serves as an Advisor to security intelligence firm Endgame. Ms. Leibowitz is a member of the Council on Foreign Relations,EQH Management Committee, since May 2018. Also, since February 2019, Mr. Lane has served as President of Equitable Financial, leading that company's Retirement, Wealth Management & Protection Solutions businesses and onalso leading its Marketing and Digital functions.
Mr. Lane held various leadership roles with AXA and Equitable Financial since joining Equitable Financial (then a subsidiary of AXA) in 2005 as Senior Vice President of the Visiting CommitteeStrategic Initiatives Group. He has served as President and CEO of AXA Japan, Senior Executive Director at Equitable Financial with responsibilities across commercial divisions, and Head of AXA Global Strategy overseeing AXA's five-year strategic plan across 60 countries. Prior to joining Equitable Financial, Mr. Lane was a consultant for McKinsey & Company and a Captain in the Center for Development EconomicsUnited States Marine Corps.
Mr. Lane brings to the Board the outstanding experience and leadership qualities he has developed in various senior roles at Williams College.AXA, EQH and various subsidiaries, and as an officer in the United States Marine Corps.

Kristi A. Matus
Ms. LeibowitzMatus, age 53, was appointed a director of AB in July 2019. She has been a director and member of various board committees at EQH and Equitable America since March 2019 and at Equitable Financial since September 2015. Ms. Matus joined Buckle, a tech-enabled financial services company, as Chief Financial Officer and Chief Operating Officer in October 2020 and has served as director and Audit Committee Chair of Cerence, Inc., a leading provider of automotive technology, since October 2019. Formerly, Ms. Matus had been Chair of the Compensation Committee at Tru Optik Data Corp., a digital media intelligence company, from September 2016 to October 2020, an executive advisor to Thomas H. Lee Partners L.P., a private equity firm, from October 2017 to October 2020, and a director and the Audit Committee Chair at Nextech Systems, a provider of healthcare technology solutions, from June 2019 to October 2020.

Ms. Matus served as Executive Vice President and Chief Financial & Administrative Officer at athenahealth, Inc. ("athena") from July 2014 to May 2016. Before joining athena, Ms. Matus served as Executive Vice President of Governance Services at Aetna, Inc. from February 2012 to July 2013. Previously, she held several leadership roles at United Services Automobile Association and USAA.

Ms. Matus brings to the Board her extensive experience in financial services as a seasoned chief information officerfinance, risk management, compliance and audit functions, investor relations, human capital, real estate and IT, gained through her track record of strategy formulationleadership roles at technology, healthcare and effective execution in the public and private sectors.insurance companies.
Anders Malmstrom
Mr. Malmstrom, age 51, was appointed a director of AB in April 2017. He is Senior Executive Vice President and Chief Financial Officer of AXA Equitable Holdings and AXA Equitable. Mr. Malmstrom is also a member of EQH's Management Committee. He joined AXA in 2012 from AXA Winterthur in Switzerland, where he was a member of the Executive Board and head of the Life Department. Before joining AXA Winterthur in 2009, Mr. Malmstrom was head of product management, Group Life Insurance, at Swiss Life in Zurich.

Mr. Malmstrom brings to the Board the significant experience in insurance and financial services he has developed in senior executive roles with various AXA entities and at Swiss Life.


Das Narayandas
Mr. Narayandas, age 58,60, was appointed a director of AB in November 2017. He is the Edsel Bryant Ford Professor of Business Administration at Harvard Business School ("HBS"), where he has been a faculty member since 1994. Mr. Narayandas also currently serves as the Senior Associate Dean and Chairman of Harvard Business School Publishing, and as the Senior Associate Dean of HBS External Relations. He previously served as the senior associate dean of HBS Executive Education, and as chair of the HBS Executive Education Advanced Management Program and the Program for Leadership Development, as
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well as course head of the required first-year marketing course in the MBA program. Mr. Narayandas has received the award for teaching excellence from the graduating HBS MBA class on several occasions. Other awards he has received include the Robert F. Greenhill Award for Outstanding Service to the HBS Community, the Charles M. Williams Award for Excellence in Teaching and the Apgar Award for Innovation in Teaching. His scholarship has focused on market-facing issues in traditional business-to-business marketing and professional service firms, including client management strategies, delivering service excellence, product-line management and channel design. Mr. Narayandas currently serves on the board of Titan Company Limited, a leading Indian brand marketer operating in the watch, jewelry, eyewear and wearable accessories segments.


Mr. Narayandas brings to the Board his wealth of experience at the highest level of academia in the U.S.
Mark Pearson
Mr. Pearson, age 60,62, was electedappointed a director of AB in February 2011. In January 2011, he becameHe has served as director of AXA Equitable Holdings and currently serves as President and Chief Executive Officer.CEO of EQH since May 2018. Mr. Pearson also serves as Chairman and CEO of AXA Equitable and as a member of EQH's Management Committee. Additionally, Mr. Pearson serves as CEO of Equitable Financial and Equitable America, and he has been a director of MONY Life Insurance Company of Americaboth companies since January 2011.


Mr. Pearson joined AXA in 1995 when AXA acquired National Mutual Funds Management Limited (presently AXA Asia Pacific Holdings Limited) and was appointed Regional Chief Executive of AXA Asia Life in 2001. From 2008 to 2011, Mr. Pearson was named President and CEOChief Executive Officer of AXA Japan Holding Co., Ltd. (“AXA Japan”). Prior to joining AXA, Mr. Pearson spent approximately

20 years in the insurance sector, holding several senior management positions at Hill Samuel, Schroders, National Mutual Holdings and Friends Provident. Mr. Pearson is a Fellow of the Chartered Public Association of Certified Public Accountants and is a director of the American Council of Life Insurers.


Mr. Pearson brings to the Board the diverse financial services experience he has developed through his service as an executive, including as CEO,Chief Executive Officer, with EQH, AXA Japan and other AXA affiliates.


Bertram L. Scott
Mr. Scott, age 69, was appointed a director of AB in September 2020. He has been a director and member of various board committees of EQH, Equitable America and Equitable Financial since March 2019. He had previously served as director of Equitable America and Equitable Financial from May 2012 to May 2018. Mr. Scott is currently the 2019-21 Chairman of the Board of the American Heart Association. Mr. Scott retired in May 2019 as Senior Vice President of Population Health Management of Novant Health, Inc. after having served since February 2015. From October 2012 to November 2015, Mr. Scott served as President and Chief Executive Officer at Affinity Health Plan. Prior to joining Affinity, he served as President, U.S. Commercial of CIGNA Corporation from June 2010 to December 2011. Prior to joining CIGNA, Mr. Scott was Executive Vice President and Chief Institutional Development & Sales Officer at TIAA-CREF; he had joined TIAA-CREF in 2000.

Mr. Scott is a director and Audit Committee Chair at Becton, Dickinson and Company (NYSE: BDX), a director and Audit Committee Chair at Lowe's Companies, Inc. (NYSE: LOW) and a director of Tufts Health Plan.

Mr. Scott brings to the Board his audit committee financial expertise and strong strategic and operational experience developed through a variety of executive roles at insurance and financial services companies as well as his service on the boards of other U.S. public companies.

Charles G.T. Stonehill
Mr. Stonehill, age 62, was appointed a director of AB in April 2019. He has been a director and member of various board committees at EQH and Equitable America since March 2019, and at Equitable Financial since November 2017. In January 2021, Mr. Stonehill joined the board of Constellation Acquisition Corp I, a blank check company that targets disruptive innovation across various segments of the global economy. In addition, Mr. Stonehill is the Founding Partner of Green & Blue Advisors LLC, having started this advisory firm that provides financial advice to clean-tech and other environmentally-minded companies in 2011. He also has served as director and member of the supervisory board of Deutsche Boerse AG, a capital market company, since 2019, director of Play Magnus AS, a chess app company, since 2016, and non-executive vice chairman of Julius Baer Group Ltd., a global private banking company based in Switzerland, since 2009.

Mr. Stonehill has over 30 years' experience in energy markets, investment banking and capital markets, including leadership positions at Lazard Freres & Co. LLC, Credit Suisse and Morgan Stanley & Co. He also served as Chief Financial Officer at Better Place Inc., an electric vehicle start-up, from 2009 to 2011, where he oversaw global financial strategy and capital raising.

Mr. Stonehill brings to the Board his extensive expertise and distinguished track record in the financial services industry and over 30 years' experience in energy markets, investment banking and capital markets.

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Executive Officers (other than Mr. Bernstein)


Kate C. Burke, Head of Human Capital and Chief Talent OfficerCOO
Ms. Burke, age 47, has49, was appointed as our firm's Chief Operating Officer in July 2020 after having been appointed Chief Administrative Officer in May 2019. Previously, she served as Head of Human Capital and Chief Talent Officer sincefrom February 2016. She2016 to May 2019. Ms. Burke joined our firm in 2004 as an institutional equity salesperson with Bernstein Research Services and has held various managerial roles since that time. Prior to joining AB, Ms. Burke was a consultant at A.T. Kearney, where she focused on strategy, organizational design and change management.


Laurence E. Cranch, General CounselChief Legal Officer
Mr. Cranch, age 72,74, has been our Chief Legal Officer (formerly known as General CounselCounsel) since he joined our firm in 2004. Prior to joining AB, Mr. Cranch was a partnerPartner of Clifford Chance, an international law firm. Mr. Cranch joined Clifford Chance in 2000 when Rogers & Wells, a New York law firm of which he was Managing Partner, merged with Clifford Chance.


James A. Gingrich, COOAli Dibadj, Head of Finance and Strategy
Mr. Gingrich,Dibadj, age 60, joined our firm45, was appointed Head of Finance (and later CFO-designate) and Head of Strategy in 1999April 2020. He co-led the firm's Strategy Committee in 2019, was designated a portfolio manager focusing on improving operations, ESG and capital allocation of companies in 2017, and served as a senior research analyst with Bernstein Research Servicesfrom 2006 to 2020. During Mr. Dibadj's time as a senior research analyst, he was ranked #1 on 12 occasions and has been our firm’s COO since December 2011.was inducted into the Institutional Investor Hall of Fame. Prior to becoming COO,joining AB, Mr. Gingrich held senior managerial positions in Bernstein Research Services,Dibadj spent approximately a decade consulting with McKinsey & Company and Mercer on topics including Chairmanstrategy, M&A, efficiency and CEO from February 2007 to November 2011 and Global Director of Research from December 2002 to January 2007.governance. He also worked at Skadden Arps, a global law firm.


John C. Weisenseel, CFO (outgoing)
Mr. Weisenseel, age 59,61, joined our firm in May 2012 as Senior Vice President and CFO.Chief Financial Officer. He will retire from AB in September 2021 after transitioning his responsibilities for Finance to Mr. Dibadj and his responsibilities for administrative services to Ms. Burke in February 2021. From 2004 to April 2012, heMr. Weisenseel worked at The McGraw Hill Companies (“McGraw Hill”), where he served initially as Senior Vice President and Corporate Treasurer and, from 2007 to April 2012, as CFOChief Financial Officer of the firm’s Standard & Poor’s subsidiary.  Prior to joining McGraw Hill, Mr. Weisenseel was Vice President and Corporate Treasurer for Barnes & Noble, Inc.  Prior to joining Barnes & Noble, he spent ten years in various derivatives trading and financial positions at Citigroup.  A Certified Public Accountant, Mr. Weisenseel also has worked at KPMG LLP.


Changes in Directors and Executive Officers


There have been noThe following changes in our directors and executive officers occurred since we filed our Form 10-K for the year ended December 31, 2017.2019:


Directors

•Mr. Scott joined the Board, effective September 23, 2020.

Executive Officers

•Ms. Burke was appointed Chief Operating Officer, effective July 1, 2020;
•James M. Gingrich retired as Chief Operating Officer, effective June 30, 2020; and
•Mr. Dibadj was appointed Head of Finance (and later CFO-designate) and Head of Strategy in April 2020.

Board Meetings


In 2018,2020, the Board held:
•regular meetings in February, April, May, July, September and November; and
•a special meeting in December.

Generally,held regular meetings in February, May, September and November. In addition, the Board holds sixconvened a special meeting in March 2020.

The Board has established a calendar consisting of four regular meetings, annually:which are held in February, April, May, July or August, September or October, and November. In addition, the Board holds special meetings or takes action by unanimous written consent as circumstances warrant. The Board has standing Executive, Audit and Risk, Compensation and Workplace Practices, and Governance Committees, each of which is described in further detail below. Each member of the Board except for Mr. Malmstrom, attended 75% or more of the aggregate of all Board and committee meetings that he or she was entitled to attend in 2018.2020.





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Committees of the Board


The Executive Committee of the Board (“Executive Committee”) consists of Messrs. Bernstein, de Oliveira Duverne, Pearson(Chair), Bernstein and Zoellick (Chair).Pearson.


The Executive Committee exercises all of the powers and authority of the Board (with limited exceptions) when the Board is not in session, or when it is impractical to assemble the full Board. Typically, the Executive Committee determines quarterly unitholder distributions, as applicable. The Executive Committee held threefour meetings in 2018.2020.


The Audit and Risk Committee of the Board (“Audit Committee”) consists of Ms. Leibowitz and Messrs.Mr. Stonehill (Chair), Mr. Audet and Kaye (Chair).Ms. Domenici. The primary purposes of the Audit Committee are to:
•assist the Board in its oversight of:
•the integrity of the financial statements of the Partnerships;
•the effectiveness of the Partnerships' internal control over financial reporting and the Partnerships' risk management framework and risk mitigation processes;
•the Partnerships’ status and system of compliance with legal and regulatory requirements and business conduct;
•the independent registered public accounting firm’s qualification and independence; and
•the performance of the Partnerships’ internal audit function; and
•oversee the appointment, retention, compensation, evaluation and termination of the Partnerships’ independent registered public accounting firm.

Consistent with these functions, the Audit Committee encourages continuous improvement of, and fosters adherence to, the Partnerships’ policies, procedures and practices at all levels. With respect to these matters, the Audit Committee provides an open avenue of communication among the independent registered public accounting firm, senior management, the Internal Audit Department, the Chief Compliance Officer, the Chief Risk Officer and the Board. The Audit Committee held seveneight regular meetings and one special meeting in 2018.2020.


The Compensation and Workplace Practices Committee ("Compensation Committee") consists of Ms. Fallon- WalshMatus (Chair) and Messrs. Audet, de Oliveira, Kaye, PearsonScott and Zoellick; Mr. Pearson replaced Denis Duverne on the Compensation Committee as of February 12, 2019.Pearson. The Compensation Committee held threefour regular meetings and two special meetings in 2018.2020.  For additional information about the Compensation Committee, see “Compensation Discussion and Analysis—Compensation Committee”Committee; Process for Determining Executive Compensation” in Item 11.


Also, in February 2019 the Compensation Committee has established the Section 16 Subcommittee to ensure we can continue to utilize the short-swing trading exemption set forth in Section 16b-3 under the Exchange Act. Under this exemption, equity grants to our firm's executive officers are exempt from short-swing trading rules if each such grant is approved by the full Board or a committee of the Board consisting entirely of “non-employee” directors (generally, directors who are not officers of the company or an affiliate). The Section 16 Subcommittee consists of Ms. Fallon-WalshMatus (Chair) and Messrs. Audet, de Oliveira, Kaye and Kaye.Scott.


The Governance Committee consists of Ms. Fallon-WalshMatus (Chair) and Messrs. Bernstein, Duverne, Narayandas and Zoellick.Pearson. The Governance Committee:
•assists the Board and the sole stockholder of the General Partner in:
•identifying and evaluating qualified individuals to become Board members; and
•determining the composition of the Board and its committees, and
•assists the Board in:
•developing and monitoring a process to assess Board effectiveness;
•developing and implementing our Corporate Governance Guidelines; and
•reviewing our policies and programs that relate to matters of corporate responsibility of the General Partner and the Partnerships.

The Governance Committee held two meetingsone meeting in 2018.2020.


The functions of each of the Board committees discussed above are more fully described in each committee’s charter. The charters are available on our Internet Site.



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Audit Committee Financial Experts; Financial Literacy


Audit Committee Financial Expertise

In January 2018,February 2020, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Ms. Domenici and Messrs. Audet and Kaye was an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K.  The Board so determined at its regular meeting held in February 2018.

In January 2019, the Governance Committee, after reviewing material prepared by management, recommended that the Board determine that each of Messrs. Audet and KayeStonehill is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K.  The Board so determined at its regular meeting held in February 2019.2020.


Financial Literacy

In January 2018,February 2020, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Mses. Fallon-Walsh and Leibowitz and Messrs.Ms. Domenici, Mr. Audet and KayeMr. Stonehill each is financially literate and possesses accounting or related financial management expertise, as contemplated by Section 303A.07(a) of the NYSE Listed Company Manual (“Financially Literate”).  The Board so determined at its regular meeting held in February 2018.2020.


In January 2019,September 2020, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Ms. Leibowitz and Messrs. Audet and KayeMr. Scott is Financially Literate.  The Board so determined at its regular meeting held in February 2019.September 2020.


Independence of Certain Directors


In January 2018, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Mses. Fallon-Walsh and Leibowitz and Messrs. Audet, de Oliveira, Kaye and Narayandas is independent. The Board determined, at its February 2018 regular meeting, that each of Mses. Fallon-Walsh and Leibowitz and Messrs. Audet, de Oliveira, Kaye and Narayandas is independent within the meaning of the relevant rules.

In January 2019,2020, the Governance Committee, after reviewing material prepared by management, recommended that the Board determine that each of Mses. Fallon-WalshDomenici and LeibowitzMatus and Messrs. Audet, de Oliveira, Kaye, Narayandas and NarayandasStonehill is independent. The Board determined, at its February 20192020 regular meeting, that each of Mses. Fallon-Walsh and Leibowitz and Messrs. Audet, de Oliveira, Kaye and Narayandasthese directors is independent within the meaning of the relevant rules.


In September 2020, the Governance Committee, after reviewing material prepared by management, recommended that the Board determine that Mr. Scott is independent. The Board determined, at its September 2020 regular meeting, that Mr. Scott is independent within the meaning of the relevant rules.

Board Leadership Structure and Role in Risk Oversight


Leadership


The Board, together with the Governance Committee, is responsible for reviewing the Board’s leadership structure. In determining the appropriate individuals to serve as our Chairman and our CEO, the Board and the Governance Committee consider, among other things, the composition of the Board, our company’s strong corporate governance practices, and the challenges and opportunities specific to AB.


Contacting our Board


Interested parties wishing to communicate directly with our Chairman or the other members of our Board may send an e-mail, with “confidential” in the subject line, to our Corporate Secretary or address mail to Mr. Zoellickde Oliveira in care of our Corporate Secretary. Our Corporate Secretary will promptly forward such e-mail or mail to Mr. Zoellick.de Oliveira. We have posted this information in the “Management &“Corporate Responsibility - Corporate Governance” section of our Internet Site.


Risk Oversight


The Board, together with the Audit Committee, has oversight for our company’s risk management framework, which includes investment risk, credit and counterparty risk, and operational risk (includes legal/regulatory risk, and cyber security risk and climate risk), and is responsible for helping to ensure that these risks are managed in a sound manner. The Board has delegated to the Audit Committee, which consists entirely of independent directors, the responsibility to consider our company’s policies and practices with respect to investment, credit and counterparty, and operational risk assessment and risk management, including discussing with management the major financial, operational and reputational risk exposures and the steps taken to monitor and control such exposures. Members of the company's risk management team (including our Chief Information Security Officer), who are responsible for identifying, managing and controlling the array of risks inherent in our company’s business and operations, make quarterly reports to the Audit Committee, which address investment, credit and counterparty, and operational risk identification, assessment and monitoring. The Chief Risk Officer whose expertise encompasses both quantitative research and associated

investment risks, makes periodicquarterly presentations to the Board and/orAudit Committee and has reporting lines to the Audit Committee. He reports directly to our CEO and since 2013, has had a reporting line to the Audit Committee.


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The Board has determined that its leadership and risk oversight are appropriate for our company. Mr. Bernstein’s in-depth knowledge of financial services and extensive executive experience in the investment management industry make him suited to serve as our President and CEO, while Mr. Zoellick’sde Oliveira’s in-depth knowledge of world affairsinvestment management, investment banking and financial services developed through his years of service with the U.S. governmentinsurance have proved invaluable at enhancing the overall functioning of the Board. The Board believes that the combination of a separate Chairman and CEO, the Audit Committee, a specialized risk management team and significant involvement from our largest Unitholder (EQH) provide the appropriate leadership to help ensure effective risk oversight by the Board.oversight.


Code of Ethics and Related Policies


All of ourOur directors, officers and employees are subject to our Code of Business Conduct and Ethics. The code is intended to comply with Section 303A.10 of the NYSE Listed Company Manual, Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, as well as with recommendations issued by the Investment Company Institute regarding, among other things, practices and standards with respect to securities transactions of investment professionals. The Code of Business Conduct and Ethics establishes certain guiding principles for all of our employees, including sensitivity to our fiduciary obligations and ensuring that we meet those obligations. In addition, the Code, together with our firm's insider trading policy, restricts employees from trading when in possession of material non-public information of any kind, which can include the existence of a significant cybersecurity incident at our firm. Our Code of Business Conduct and Ethics may be found in the “Management &“Corporate Responsibility - Corporate Governance” section of our Internet Site.


We have adopted a Code of Ethics for the CEO and Senior Financial Officers, which is intended to comply with Section 406 of the Sarbanes-Oxley Act of 2002 (“Item 406 Code”). The Item 406 Code, which may be found in the “Management &“Corporate Responsibility - Corporate Governance” section of our Internet Site, was adopted in October 2004 by the Executive Committee. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding certain amendments to, or waivers from, provisions of the Item 406 Code that apply to the CEO, the CFO and the Chief Accounting Officer by posting such information on our Internet Site. To date, there have been no such amendments or waivers.


NYSE Governance Matters


Section 303A.00 of the NYSE Listed Company Manual exempts limited partnerships from compliance with the following sections of the Manual, some of which we comply with voluntarily: Section 303A.01 (board must have a majority of independent directors), 303A.04 (corporate governance committee must have only independent directors as its members and must have a charter that addresses, among other things, the committee’s purpose and responsibilities), and 303A.05 (compensation committee must have only independent directors as its members and must have a charter that addresses, among other things, the committee’s purpose and responsibilities).


AB Holding is a limited partnership (as is AB). In addition, because the General Partner is a subsidiary of EQH, and the General Partner controls AB Holding (and AB), we believe we also would qualify for the “controlled company” exemption. However, we comply voluntarily with the charter requirements set forth in Sections 303A.04 and 303A.05.


Our Corporate Governance Guidelines (“Guidelines”) promote the effective functioning of the Board and its committees, promote the interests of the Partnerships’ respective Unitholders (with appropriate regard to the Board’s duties to the sole stockholder of the General Partner), and set forth a common set of expectations as to how the Board, its various committees, individual directors and management should perform their functions. The Guidelines may be found in the “Management &“Corporate Responsibility - Corporate Governance” section of our Internet Site.


The Governance Committee is responsible for considering any request for a waiver under the Code of Business Conduct and Ethics, the Item 406 Code the AXA Group Compliance and Ethics Guide, and the EQH Policy Statement on Ethics from any director or executive officer of the General Partner. No such waiver has been granted to date and, if a waiver is granted in the future, such waiver would be described in the “Management &“Corporate Responsibility - Corporate Governance” section of our Internet Site.


OurWe include in the “Corporate Responsibility - Corporate Governance,” section of our Internet Site, under the heading “Contact our Directors,” providessite an e-mail address for any interested party, including Unitholders, to communicate with the Board. Our Corporate Secretary reviews e-mails sent to that address and has some discretion in determining how or whether to respond, and in determining to whom such e-mails should be forwarded. In our experience, substantially all of the e-mails received are ordinary client requests for administrative assistance that are best addressed by management, or solicitations of various kinds.


Certifications by our CEO and CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 have been furnished as exhibits to this Form 10-K.


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AB Holding Unitholders and AB Unitholders may request a copy of any committee charter, the Guidelines, the Code of Business Conduct and Ethics, and the Item 406 Code by contacting our Corporate Secretary. The charters and memberships of the Executive, Audit, Governance and Compensation Committees may be found in the “Management &“Corporate Responsibility - Corporate Governance” section of our Internet Site.


Fiduciary Culture


We maintain a robust fiduciary culture and, as a fiduciary, we place the interests of our clients first and foremost. We are committed to the fair and equitable treatment of all our clients, and to compliancewith all applicable rules and regulations and internal policies to which our business is subject. We pursue these goals through education of our employees to promote awareness of our fiduciary obligations, incentives that align employees’ interests with those of our clients, and a range of measures, including active monitoring, to ensure regulatory compliance. Our compliance framework includes:
•
the Code of Ethics Oversight Committee (“Ethics Committee”) and the Internal Compliance Controls Committee (“Compliance Committee”), each of which consists of our executive officers and other senior executives;
•an ombudsman office, where employees and others can voice concerns on a confidential basis;
•firm-wide compliance and ethics training programs; and
•a Conflicts Officer and a Conflicts Committee, which help to identify and mitigate conflicts of interest.

The Ethics Committee oversees all matters relating to issues arising under our Code of Business Conduct and Ethics and meets on a quarterly basis and at such other times as circumstances warrant. The Ethics Committee and its subcommittee, the Personal Trading Subcommittee, have oversight of personal trading by our employees.


The Compliance Committee reviews compliance issues throughout our firm, endeavors to develop solutions to those issues as they may arise from time to time and oversees implementation of those solutions. The Compliance Committee meets on a quarterly basis and at such other times as circumstances warrant.


Section 16(a) Beneficial Ownership Reporting Compliance


Section 16(a) of the Exchange Act requires directors of the General Partner and executive officers of the Partnerships, and persons who own more than 10% of the AB Holding Units or AB Units, to file with the SEC initial reports of ownership and reports of changes in ownership of AB Holding Units or AB Units. To the best of our knowledge, during 2018,2020, we complied with all Section 16(a) filing requirements, except that Forms 4 relating to year-end AB Holding Unit awards to Mr. Bernstein, Ms. Burke, Mr. Cranch, Mr. Weisenseel and William R. Siemers (our firm's Chief Accounting Officer) were filed late.requirements. Our Section 16 filings can be found under “Investor & Media Relations” / “ReportsRelations - Reports & SEC Filings” on our Internet Site.

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Item 11.Executive Compensation


Compensation Discussion and Analysis (“CD&A”)
In this CD&A, we provide an overview and analysis of our executive compensation philosophy, address the principal elements used to compensate our executive officers and explain how our executive compensation program aligns with AB’s strategic objectives. Additionally, we discuss 2020 incentive compensation recommendations and decisions made by our Compensation Committee for our named executive officers (“NEOs”). This CD&A should be read together with the compensation tables that follow this section. Our NEOs for 2020 are:
Seth P. Bernstein President and Chief Executive Officer ("CEO")
John C. Weisenseel Chief Financial Officer ("CFO")
Kate C. Burke Chief Operating Officer ("COO")
Ali DibadjHead of Finance and Strategy
Laurence E. Cranch Chief Legal Officer

Compensation Philosophy and Goals

The intellectual capital of our employees is collectively the most important asset of our firm. We invest in people – we hire qualified people, train them, encourage them to give their best thinking to the firm and our clients, and compensate them in a manner designed to motivate, reward and retain them while aligning their interests with the interests of our Unitholders.Unitholders and clients.
We structure
Furthermore, our named executive officer compensation programs withpractices are structured to help the intent of enhancingfirm realize its long-term growth strategy (“Growth Strategy”), which includes firm-wide and individual performance and Unitholder value. Our “named executive officers” are:initiatives to:

Chief Executive Officer (“CEO”)
Seth P. Bernstein
Chief Financial Officer (“CFO”)
John C. Weisenseel
Three other most highly-compensated executive officers
James A. Gingrich, Chief Operating Officer ("COO")
Kate C. Burke, Head of Human Capital and Chief Talent Officer Laurence E. Cranch, General Counsel
•Deliver superior investment solutions to our clients;


•Develop high-quality differentiated services; and

•Maintain strong incremental margins.

We also are focused on ensuring that our compensation practices are competitive with industry peers and provide sufficient potential for wealth creation for our named executive officersNEOs and our employees generally, which we believe will enable us to meet the following key compensation goals:

•attract, motivate and retain highly-qualified executive talent;
•reward prior year performance;
•incentivize future performance;
••attract, motivate and retain highly-qualified executive talent;

•reward prior year performance;

•incentivize future performance;

•recognize and support outstanding individual performance and behaviors that demonstrate and foster our firm’s primary objective of helping our clients reach their financial goals; and

•align our executives’ long-term interests with those of our Unitholders and clients.





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Progress in Advancing our Growth Strategy in 2020

In 2020, the firm’s results demonstrated meaningful progress in executing on our Growth Strategy. Below are key metrics related to the three pillars of the Growth Strategy:

Deliver superior investment solutions to our clients:
Investment Performance
The firm’s investment teams continue to focus on consistently delivering differentiated return streams to our clients. We believe that, over time, the ability to produce idiosyncratic returns that cannot be easily replicated will be central to sustaining our competitive advantage. In 2020, performance in our Fixed Income suite of products was mixed, as a strong recovery in risk assets followed a dramatic sell-off in March, with 43% of assets in outperforming services for the one-year period ended December 31, 2020, while our long-term performance remains strong given 62% for the three-year period and 79% for the five-year period.Our U.S. retail fixed income mutual funds with AUM greater than $1 billion that placed in the top quartile of performance for the three-year period ended December 31, 2020 are: AB Intermediate Diversified Muni, AB High Income Municipal, AB Intermediate New York Municipal, AB Intermediate California Municipal and AB Municipal Bond Inflation Strategies. Our Non-U.S. fixed income funds with AUM greater than $1 billion that placed in the top quartile over the same three-year period are: AB American Income, AB European Income and AB Short Duration High Yield (this performance data reflects percentage of active fixed income and equity assets in institutional services that outperformed their benchmark, gross of fees, and percentage of active fixed income and equity assets in retail advisor and I share class funds ranked in the top half of their Morningstar category; if no advisor class exists, we used A share class).

In active equity, 41% of assets were in outperforming services for the one-year period, 61% for the three-year period and 53% for the five-year period ended December 31, 2020. Our U.S. retail equity mutual funds with AUM greater than $1 billion that placed in the top quartile of performance for the three-year period ended December 31, 2020 are: AB Large Cap Growth, AB Discovery Growth, AB Small Cap Growth and AB Sustainable Global Thematic. Our Non-U.S. equity funds with AUM greater than $1 billion that placed in the top quartile over the same period are: AB Global Core Equity, AB International Technology and AB Sustainable Global Thematic (information sourced from Morningstar).

Additionally, at year-end 2020, 68% of U.S. Fund assets and 56% of Non-U.S. Fund assets were rated either 4 or 5-stars by Morningstar.

Net Flows
Scaling our proven investment services remains a key focus of our firm. In 2020, we generated an active organic growth rate of 1.0%, or 3.0% excluding low-fee AXA redemptions we had been expecting and previously disclosed. In our Retail channel, record gross sales of $79 billion increased 5% year-over-year, reflecting strong growth in the U.S. and Japan. This growth primarily resulted from Active Equities, which experienced gross sales of $36 billion, or 64% greater than the prior year. Retail redemptions increased from 2019 due to the industry-wide sell-off related to the global onset of COVID-19 during the first quarter. Our Retail Active Equity products grew organically for a fourth consecutive year, generating $5.5 billion in net inflows, or a 7% organic growth rate. In our Institutional channel, gross sales were $30.8 billion, increasing 81% compared to 2019 and representing the firm's highest level of institutional gross sales in 12 years. The firm generated institutional active equity flows of $7.2 billion in 2020, or a 16% organic growth rate. Our pipeline of $12.2 billion in AUM compared with $15.1 billion a year ago, reflecting strong funding during the fourth quarter of 2020. Active Equities and Alternatives represented over 80% of the pipeline fee base at year-end. In Private Wealth, gross sales in 2020 of $14.3 billion increased 26% year-over-year, representing our best production since 2007. And, we continued to expand our use of innovative product offerings, including a diverse set of Alternatives, ESG-related offerings and tax-sensitive vehicles such as our proprietary SMA Tax Loss Harvesting Portfolio.

Develop high-quality differentiated services:
Growing the diversity of our offerings to meet the needs of an evolving, complex global client base remains a key focus. In 2020, our Sustainable Investing platform experienced strong growth, with $16.5 billion of AUM at year-end, up 60% year-over-year. In our Multi-Asset group, we launched six new funds, including Global Macro, Event and Merger Arbitrage, ESG, China and low-volatility focused products.

Additionally, we continued to successfully develop and raise capital for new Alternatives offerings, which we are offering across our buy-side distribution channels. Launches in 2020 included: a new European Commercial Real Estate Debt platform, which we are launching with the key support of EQH; our first Collateralized Loan Obligation fund; a Term Asset-Backed Securities Loan Facility offering; and a fund of funds joint venture with Abbott Capital Management, LLC. We also completed
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two acquisitions in 2020: Asturias, a long/short equity manager focused on the technology, telecom and media sector; and AnchorPath, a risk-managed solutions provider.

We remain focused on expanding opportunistically, both inside and outside the U.S., to support long-term growth. We have efforts underway to expand our range of services and capabilities in China, other Asian nations and select European markets.

Lastly, in Bernstein Research, we continue to invest in Hong Kong and India, where investments to date have come to fruition.

Maintain strong incremental margins:
We remain focused on managing costs to help ensure that we generate strong incremental operating margins. In 2020, we continued to make substantial progress on a key pillar of this strategy, which we initially announced in 2018: the relocation of our corporate headquarters from New York, NY to Nashville, TN. We expect to occupy in 2021 our newly constructed Nashville headquarters building, which will house approximately 1,250 employees over time. We continue to seek efficiencies and manage various operating expenses to help ensure that we drive operating leverage on incremental revenues.

In 2020, total adjusted compensation and benefits was 47.9% of adjusted revenues, flat compared to 2019. Excluding the impact of higher performance-based fees in 2020, compensation costs as a percentage of revenues declined by 0.6% to 47.3%. Our adjusted operating margin increased by 260 basis points to 30.1% in 2020 compared to 27.5% in 2019. The increase resulted from a 5% increase in adjusted revenues, driven by higher base fees, higher performance-based fees and higher Bernstein Research revenues, partially offset by a 1% increase in adjusted operating expenses compared to 2019. We provide additional information regarding our adjusted compensation ratio below in this Compensation Discussion & Analysis, and we provide additional information about our adjusted operating margin in Management's Discussion and Analysis of Financial Condition and Results of Operations above in Item 7.

Overview of 2020 Incentive Compensation Program

When reflecting on 2020 performance and pay, each of our NEOs received a portion of his or her year-end incentive compensation in the form of an annual cash bonus and a portion in the form of long-term incentive compensation awards. The split between the annual cash bonus and long-term incentive compensation varied depending on the NEO's total compensation, with lower-paid executives receiving a greater percentage of their incentive compensation as cash bonuses than more highly-paid executives. (For additional information about these compensatory elements, see “Compensation Elements for NEOs” below.) For Mr. Bernstein, his 2020 incentive compensation award was based generally on the terms set forth in the CEO Employment Agreement (as defined below) and review of his performance during 2020 by the Compensation Committee. As part of the Committee's evaluation of Mr. Bernstein's performance, the Committee reviewed AB's financial results and a performance scorecard (the "Scorecard"), which reflected our Growth Strategy and included actual results relative to target metrics across the following measures:
•financial goals, including peer results, adjusted operating margin, adjusted revenue growth and operating efficiency targets (see our discussion of “Management Operating Metrics” in Item 7 for a reconciliation between our results pursuant to US GAAP and our adjusted results);
•strategic focus areas, including investment performance, client retention and demonstrable progress of strategic priorities; and
•organizational leadership, including employee engagement and leadership transitions.
In 2021 and future years, we expect to utilize a similar Scorecard in assessing the performance of each of the firm's executives. The recent adoption of this tool has initiated a broad and diverse approach to reward and recognition processes at the firm, beginning with Mr. Bernstein in 2020. The Scorecard serves to shift our executives' priorities from a primarily revenue-based model to a broad leadership mindset. Priorities, including progress compared to ESG measures in the Scorecard, and the needs of clients are paralleled with the expectation of creating long-term value for all of our stakeholders and becoming a guiding example for employees while complementing revenue expectations.
We do not utilize quantitative formulas or targets when determining the incentive compensation of our NEOs. Instead, we rely on our assessment of each executive's performance relative to business, operational and cultural goals established at the beginning of the year and reviewed in the context of the current-year financial performance of the firm. The amount of incentive compensation paid to our NEOs continues to be determined on a discretionary basis by the Compensation Committee.
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Additionally, incentive compensation reflects an executive's achievements throughout the year. Amounts are awarded to help us achieve our goal of attracting, motivating and retaining top talent while also helping to ensure that our NEOs' goals are appropriately aligned with the goal of increasing our Unitholders’ return on their investment.
Mr. Bernstein and Ms. Burke, with the approval of the Compensation Committee, confirmed that the appropriate metric to consider in determining the amount of incentive compensation paid to all employees, including our NEOs, in respect of 2020 performance is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues, which terms are described immediately below:
•
Adjusted employee compensation and benefits expense is our total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals, and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments.
•
Adjusted net revenues (see our discussion of “Management Operating Metrics” in Item 7 for a reconciliation between our results pursuant to US GAAP and our adjusted results)exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments. In addition, adjusted net revenues offset distribution-related payments to third parties as well as amortization of deferred sales commissions against distribution revenues. We also exclude additional pass-through expenses we incur (primarily through our transfer agent) that are reimbursed and recorded as fees in revenues. Additionally, we adjust for the revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such funds, and AB's investment gains and losses on its investment in such funds, that were eliminated in consolidation.
In addition, Mr. Bernstein and Ms. Burke, with the approval of the Compensation Committee, determined that the firm’s adjusted employee compensation and benefits expense generally should not exceed 50.0% of our adjusted net revenues, except in unexpected or unusual circumstances. As the table below indicates, in 2020, adjusted employee compensation and benefits expense amounted to approximately 47.9% of our adjusted net revenues (in thousands):
Net Revenues$3,708,536 
Adjustments (see above)
(659,210)
Adjusted Net Revenues$3,049,326
Employee Compensation & Benefits Expense$1,494,198 
Adjustments (see above)
(34,889)
Adjusted Employee Compensation & Benefits Expense$1,459,309
Adjusted Compensation Ratio47.9%
Our 2020 adjusted compensation ratio of approximately 47.9% reflects a balancing of the need to keep compensation levels competitive with industry peers in order to attract, motivate and retain highly-qualified talent with the need to maintain strong operating leverage in our business. The Compensation Committee works with management to help ensure both needs are sufficiently addressed.

Compensation Committee; Process for Determining Executive Compensation

The Compensation Committee consists of Ms. Matus (Chair) and Messrs. Audet, de Oliveira, Kaye, Pearson and Scott. The Compensation Committee held four regular meetings in 2020.

As discussed in “NYSE Governance Matters” in Item 10, AB Holding, as a limited partnership, is exempt from NYSE rules that require public companies to have a compensation committee consisting solely of independent directors. EQH owns, directly and through various subsidiaries, an approximate 64.8% economic interest in AB (as of December 31, 2020), and compensation expense is a significant component of our financial results. For these reasons, Mr. Pearson, director and President and CEO of EQH, is a member of the Compensation Committee, and any action taken by the Compensation Committee requires his affirmative vote or consent. Given this structure, the Compensation Committee has established a sub-committee consisting entirely of non-management directors (i.e., Ms. Matus and Messrs. Audet, de Oliveira, Kaye and Scott). This “Section 16 Sub-Committee” approves awards of restricted AB Holding Units to NEOs.




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The Compensation Committee has general oversight of compensation and compensation-related matters, including:
•determining cash bonuses;
•determining contributions and awards under incentive plans or other compensation arrangements (whether qualified or non-qualified) for employees of AB and its subsidiaries, and amending or terminating such plans or arrangements or any welfare benefit plan or arrangement or making recommendations to the Board with respect to adopting any new incentive compensation plan, including equity-based plans;
•reviewing and approving the compensation of our CEO, evaluating his performance, and determining and approving his compensation level based on this evaluation; and
•reviewing and discussing the CD&A and recommending to the Board its inclusion in each of AB’s and AB Holding’s Form 10-K and, when applicable, proxy statements.
The Compensation Committee has developed a comprehensive process for:
•reviewing our executive compensation program to ensure it is aligned with our firm’s philosophy and strategic objectives;
•evaluating performance by our NEOs against goals and objectives established at the beginning of the year; and
•setting compensation for the NEOs and other senior executives.

The Compensation Committee’s year-end process generally focuses on the cash bonuses and long-term incentive compensation awards granted to NEOs and other senior executives. Mr. Bernstein, working with Ms. Burke and other senior executives, provides recommendations for individual executive awards to the Compensation Committee for its consideration. As part of this process, Ms. Burke provides the Committee with compensation benchmarking data from one or more compensation consultants. For 2020, we paid $48,150 to McLagan Partners (“McLagan”) for executive compensation benchmarking data and trend forecasting.

Management periodically reviews with the Compensation Committee the firm’s expected adjusted financial and operating results, the firm’s actual results and management’s year-end compensation expectations, as they evolve throughout the year. Management accomplished these reviews during regular meetings of the Compensation Committee held in February, May, September and November 2020. The Compensation Committee then approved the firm's final year-end compensation recommendations during December 2020.

The Compensation Committee did not retain its own consultants in 2020.

Additional information regarding the Compensation Committee’s functions can be found in the Committee's charter, which is available online in the “Corporate Responsibility - Corporate Governance” section of our Internet Site.

Benchmarking Data

In 2020, we engaged McLagan to provide compensation benchmarking data for our NEOs (“2020 Benchmarking Data”). The 2020 Benchmarking Data summarized 2019 compensation levels and 2020 salaries at selected asset management companies comparable to ours in terms of size and business mix (“Comparable Companies”), to assist us in determining the appropriate level of compensation for our NEOs.
The 2020 Benchmarking Data provided ranges of compensation levels at the Comparable Companies for executive positions like those held by our NEOs, including base salary and total compensation.
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The Comparable Companies, which management selected with input from McLagan, included:
Eaton Vance Corp.Franklin Templeton InvestmentsGoldman Sachs Asset Management
Invesco Ltd.JP Morgan Asset ManagementLegg Mason, Inc.
MFS Investment ManagementMorgan Stanley Investment ManagementNeuberger Berman LLC
Nuveen Investments / TIAAPIMCO LLCPrudential Investments
T. Rowe Price, Inc.The Vanguard Group, Inc.
The 2020 Benchmarking Data indicated that the total compensation paid to each of our NEOs in 2020 fell within or below the ranges of total compensation paid to executives at the Comparable Companies.
The Compensation Committee considered this information in concluding that the compensation levels paid in 2020 to our NEOs were appropriate and reasonable.
Other Factors Considered When Determining NEO Compensation

For 2020, Mr. Bernstein and Ms. Burke, and the Compensation Committee, based decisions about the incentive compensation of our NEOs primarily on an assessment of each executive’s leadership, operational performance and potential to enhance investment returns and service for clients, all of which contribute to long-term Unitholder value. Quantitative formulas are not utilized when determining the incentive compensation of our NEOs. Instead, Mr. Bernstein and Ms. Burke, and the Compensation Committee, rely on judgment about each executive’s performance in light of business and operational goals established at the beginning of the year and reviewed in the context of the current-year financial performance of the firm and the firm's progress in advancing its Growth Strategy. Mr. Bernstein and Ms. Burke begin the award determination process, working with other members of senior management, by determining the total incentive compensation amounts available for a particular year (as more fully explained above in “Overview of 2020 Incentive Compensation Program”).
Mr. Bernstein and Ms. Burke, and the Compensation Committee, then consider many key factors for each of the NEOs. Specific factors will vary among business units, among individuals and during different business cycles, so we do not adopt any specific weighting or formula under which these metrics are applied. Key factors are:
•the firm’s financial performance in the current year and the executive's contribution to such financial performance;
•the firm's progress in advancing its Growth Strategy;
•the NEO's performance compared to individual business and operational goals established at the beginning of the year;
•total compensation awarded to the NEO in the prior year;
•the increase or decrease in the current year’s total incentive compensation amounts available;
•the nature, scope and level of responsibilities of the NEO;
•the NEO’s execution of our firm’s culture of "Relentless Ingenuity," which includes the core competencies of relentlessness, ingeniousness, collaborationRelentless Ingenuity; and accountability; and
•align our executives’ long-term interests with those of our Unitholdersthe NEO’s management effectiveness, talent development, focus on diversity and clients.inclusion initiatives, and adherence to risk management and regulatory compliance.

Mr. Bernstein and Ms. Burke then provided specific incentive compensation recommendations to the Compensation Committee, which recommendations were supported by the factors listed above, each NEO's individual achievements, as listed below and, for Mr. Bernstein, a summary of his performance compared with metrics included in the Scorecard. They also provided the Compensation Committee with the 2020 Benchmarking Data, which was not used in a formulaic or mechanical way to determine NEO compensation levels, but rather, as noted above, provided the Compensation Committee with a reference point for the compensation levels paid to executives at the Comparable Companies. The Compensation Committee then made the final incentive compensation decisions for each NEO.
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We have described below each NEO’s individual achievements in 2020 given each officer’s role and the firm's business and operational goals:
Seth P. Bernstein
Role
•Leadership, responsibility and performance as President and CEO.

Individual Achievements

•Led the firm’s efforts in achieving an approximate 5% year-over-year increase in adjusted net revenues, firm-wide client net inflows of $9.2 billion, excluding AXA's redemption of low-fee fixed income mandates, resulting in an active organic growth rate of 3.0%; higher revenues and lower non-compensation related expenses, in part due to COVID-19 pandemic-related travel restrictions, led to an increase in adjusted operating margin of 260 basis points to 30.1%.

•Successfully managed the firm through an unprecedented year via the strength of our leadership team and technology platform, which enabled us to transition working remotely seamlessly, allowing us to support our people and clients.

•Led the continued focus on investment results; while challenged in the short term, longer term investment performance remains competitive. As of December 31, 2020, fixed income services, as a percentage of assets outperforming applicable benchmarks for the one-, three- and five-year periods, achieved 43%, 62% and 79%, respectively, while equities services achieved 41%, 61% and 53%, respectively.

•Drove meaningful progress on key strategic growth initiatives, including build-out of our operation in China and our responsible investment platform, enhancing collaboration with EQH and establishing a comprehensive inorganic growth strategy: AB added four new businesses in 2020.

•Improved engagement metrics in AB’s employee survey and supported the firm’s diversity and inclusion initiatives, including adding diverse perspectives to the firm's Operating Committee and adding two diverse Board members.

•Conducted meetings globally with current and prospective clients to deepen AB’s relationships and appreciation of evolving client priorities.

•Made significant progress in transition of the firm's senior leadership team.

•Advanced our firm's headquarters transition to Nashville, with the relocation and hiring of new staff and the continued construction of our new, state-of-the-art corporate headquarters.

Kate C. Burke
Role
•Leadership, responsibility and performance as COO.

Individual Achievements

•Led AB's response to the COVID-19 pandemic by establishing and quickly mobilizing the firm's Pandemic Response Team, which consists of Technology, Operations, Administrative Services, Human Capital, Risk Management, Security and Corporate Communications, to execute a coordinated global response that enabled the firm to seamlessly provide exceptional client service and investment advice, meet fiduciary obligations and prioritize the health and safety of AB's 3,929 employees as the firm adjusted to working remotely.

•Advanced AB's headquarters transition to Nashville, resulting in 789 employees on the ground as of December 31, 2020; despite the challenges presented by remote working, the firm continued to hire, onboard and train 166 new employees in Nashville in 2020, maintaining the firm's pace to achieve 1,250 employees by 2024. Also, created various engagement strategies to advance AB's culture, community and philanthropic activities in Nashville.

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•Led firm-wide cost savings initiatives to drive greater efficiency and automation, managed compensation and headcount, and captured additional savings to improve AB's adjusted operating margin by 260 basis points to 30.1%.

•Reviewed existing and new business initiatives and aligned resources to invest in organic and inorganic growth opportunities, including the build-out of our operation in China, our responsible investment platform, our private wealth capabilities, and our public and private alternatives platforms.

•Championed our firm's diversity and inclusion efforts through a period of civil unrest around racial inequity, supported AB's employees and provided opportunities to share and learn together while also delivering concrete actions resulting in increased diverse representation on the Board and the firm's Operating Committee, and added resources to support the development and retention of AB's diverse talent.

•Supported Mr. Bernstein in the succession planning of critical leadership roles, including the planned retirement of Mr. Weisenseel and the Head of AB's Client Group, and the successful selection and transition of new leaders onto the firm's executive team.

•Completed transition to the role of COO in July 2020 and worked closely with Mr. Weisenseel throughout 2020 to transition administrative services to the office of the COO by February 2021.

•Advanced AB's operating model to increase transparency and accountability around key business and financial metrics, enhanced collaboration within the firm's Operating Committee to support enterprise initiatives around expanding product, distribution and infrastructure capabilities, and supported AB's talent and cultural initiatives.

Ali Dibadj
Role
•Leadership, responsibility and performance as Head of Finance and Strategy, including ensuring a seamless transition to the role of CFO and Head of Strategy.
Individual Achievements
•Supported the Board, Mr. Bernstein, other NEOs and various Heads of Strategic Business Units to define, articulate and execute our Growth Strategy, including:
◦developing new alternatives, responsible investing, equities, multi-asset and fixed income products;
◦evolving our firm's approach to servicing new and existing clients in private wealth, retail and institutional globally; and
◦hiring and retaining colleagues to support a continuously-improving organization.
•Collaborated with colleagues to help translate those strategies and initiatives into delivery of strong 2020 financial results.
•Partnered closely with Mr. Weisenseel to ensure a smooth transition of the CFO role, including building relationships within our firm's Finance organization and AB employees more broadly.
•Began building AB's Strategy & Corporate Development team, including making key hires and establishing processes.
•Led inorganic growth efforts at AB, which added four new businesses in 2020 and several other important capabilities.
•Conducted competitive and industry analysis to help guide business decisions.
•Led furthering of intra-firm transparency, teamwork and efficiency by improving information management system tools, metrics and processes.
•Established relationships with key external partners, such as clients, consultants, our communities, investors, analysts and the media, among others.
•Deepened AB's partnership with EQH, leading to new business opportunities and a closer operating relationship.



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Laurence E. Cranch
Role
•Leadership, responsibility and performance as Chief Legal Officer.

Individual Achievements
•Successfully implemented compliance solutions in response to new compliance requirements that became effective in 2020.

•Received favorable feedback from AB business leaders relating to the quality of service of the Legal and Compliance department.

•Ensured no regulatory examination resulted in a material adverse finding or enforcement proceeding.

•Ensured the firm remained free of material litigation, reflecting our pragmatic and aggressive program to avoid situations that are likely to produce disputes and, where disputes do arise, resolve them on favorable terms.

•Successfully completed the relocation of most of the New York-based Legal and Compliance department to Nashville, including the selection and retention of employees relocating, and the recruitment of qualified individuals to fill open positions in the location.

•Successfully controlled outside counsel expenses, with respect to ongoing and routine legal matters.
John C. Weisenseel
Role
•Leadership, responsibility and performance as CFO, including seamless transition of his responsibilities to Ms. Burke and Mr. Dibadj.
Individual Achievements
•Successfully managed the firm's liquidity profile, which enabled the firm to navigate the extreme market volatility experienced during 2020.

•Oversaw the achievement of our 30% adjusted operating margin target (actual of 30.1%) by limiting expense growth to maximize operating leverage of the business.

•Successfully completed the relocation of the Finance department to Nashville, achieving expense savings in excess of target and improved diversity.

•Provided accounting, tax and structuring guidance on several business development opportunities, including the launch of AB's collateralized loan obligation and European debt real estate businesses.

•Maintained active discussions with AB’s investor community and credit rating agencies.

•Successfully transitioned finance responsibilities to Mr. Dibadj and administrative services responsibilities to Ms. Burke.

The compensation of each of these NEOs reflected the Compensation Committee’s judgment (and Mr. Bernstein’s judgment, with respect to each executive other than himself) in assessing the importance of the executive's achievements in the context of our firm’s adjusted financial results and progress in advancing our Growth Strategy.






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Compensation Elements for Named Executive OfficersNEOs


We utilize a variety of compensation elements to achieve the goals described above, consisting of base salary, annual short-term incentive compensation awards (cash bonuses), a long-term incentive compensation award program, a defined contribution plan and certain other benefits, each of which we discuss in detail below:


Base Salaries
Base salaries comprise a relatively small portion of our named executive officers’NEOs’ total compensation. We consider individual experience, responsibilities and tenure with the firm when determining the narrow range of base salaries paid to our named executive officersNEOs (please refer to “Overview of Our President and CEO’s Compensation”Mr. Bernstein's Employment Agreement” below for information relating to Mr. Bernstein’s base salary and other compensation elements).
Annual Short-Term Incentive Compensation Awards (Cash Bonuses)
We provide our named executive officersNEOs with annual short-term incentive compensation awards in the form of cash bonuses.
We believe that annual cash bonuses, which generally reflect individual performance and the firm’s current year financial performance, provide a short-term retention mechanism for our named executive officersNEOs because such bonuses typically are paid during the last week of the year.
Annual cash bonuses in respect of 20182020 performance for each named executive officer (other than Mr. Bernstein)NEO were determined and paid in late December 2018.2020. These bonuses, and the 20182020 long-term incentive compensation awards described immediately below, were based on management’s evaluation, subject to the Compensation Committee’s review and approval, of each named executive officer’sNEO’s performance during the year, the firm's progress in advancing its Growth Strategy during the year, the performance of the named executive officer’sNEO’s business unit or function compared to business and operational goals established at the beginning of the year and the firm’s current-year financial

performance. For more information regarding the factors considered when determining cash bonuses for named executive officers, NEOs, see “Other Factors Considered When Determining Named Executive OfficerNEO Compensation” belowabove.
In respect of 2018,2020, Mr. Bernstein received a cash bonus of $3,500,000$4,015,000 in accordance with the terms of the employment agreement into which he entered with the General Partner, AB and AB Holding as of May 1, 2017 (“CEO Employment Agreement”) and after review of Mr. Bernstein's performance during 20182020 by the Compensation Committee and other directors. Committee. Please refer to “Overview of Our President and CEO’s Compensation”Mr. Bernstein's Employment Agreement” below for additional information relating to Mr. Bernstein’s cash bonus and other compensation elements.
On February 13, 2017, the Board approved a grant to Mr. Gingrich of 883,653 restricted AB Holding Units with a grant date fair value of approximately $21 million, in lieu of cash bonus and year-end long-term incentive compensation awards for 2017, 2018 and 2019 for which Mr. Gingrich otherwise would have been eligible under our firm's Incentive Compensation Award Program ("ICAP"); provided, Mr. Gingrich is eligible to receive at the end of each such year an additional cash bonus, but only to the extent approved by the Compensation Committee. The Compensation Committee determined that a special cash bonus was warranted for Mr. Gingrich's performance in 2018 and awarded him a $1,000,000 cash bonus in recognition of his achievements during 2018, as described below in "Other Factors Considered When Determining Named Executive Officer Compensation."

Long-Term Incentive Compensation Awards
Long-term incentive compensation awards generally are denominated in restricted AB Holding Units. We utilize this structure to align our named executive officers’NEOs’ long-term interests directly with the interests of our Unitholders and indirectly with the interests of our clients, as strong performance for our clients generally contributes directly to increases in assets under managementAUM and improved financial performance for the firm.
We believe that annual long-term incentive compensation awards provide a long-term retention mechanism for our named executive officersNEOs because such awards generally vest ratably over four years. For 20182020 performance, these awards were granted in December 20182020 to each of Ms. Burke and Messrs. Bernstein, Cranch, Dibadj and Weisenseel pursuant to the AB 2020 Incentive Compensation Award Program ("ICAP"), an unfunded, non-qualified incentive compensation plan, and the AB 2017 Long Term Incentive Plan, our equity compensation plan (“2017 Plan”). Mr. Gingrich did not receive a year-end award in December 2018 due to the terms set forth in his agreement relating to the above-described equity award he was granted in February 2017; please see "Chief Operating Officer Equity Award" below regarding an award he was granted in April 2018.
Prior to the date on which an award vests, the AB Holding Units underlying an award are restricted and are not permitted to be transferred. Upon vesting, the AB Holding Units underlying an award generally are distributed,delivered, unless the award recipient has, in advance, voluntarily elected to defer receipt to future periods or the award is structured with a delayed delivery date. Quarterly cash distributions on vested and unvested restricted AB Holding Units are delivered to award recipients when cash distributions are paid generally to Unitholders.
An award recipient who resigns or is terminated without cause prior to the vesting date is eligible to continue to vest in his or her long-term incentive compensation award subject to compliance with the restrictive covenants set forth in the applicable award agreement, including restrictions on competition, and restrictions on employee and client solicitation. In addition,Commencing in 2018, the award agreement also provides for continued vesting in the event of an award recipient's retirement, subject to applicable restrictive covenants. To be eligible for retirement, an award recipient must provide notice of retirement, enter into a retirement agreement and satisfy a "Rule of 70," whereby the sum of the recipient's age and years of service must equal at least 70. The award agreement provided to each recipient of restricted AB Holding Units as part of year-end incentive compensation
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in 2018 amended the recipient's prior awards granted under ICAP to provide for this vesting treatment in the event of retirement.
Clawbacks
The award agreement permits AB to claw-back the unvested portion of an award if the recipient fails to adhere to our risk management policies. As such, for accounting purposes, there is no employee service requirement and awards are fully expensed when granted. As used in this Item 11, “vest” refers to the time at which the awards are no longer subject to forfeiture for breach of these restrictions or risk management policies, which we discuss further below in “Consideration of Risk Matters in Determining Compensation.”
Chief Operating Officer Equity Award
In April 2018, Mr. Gingrich was granted a special restricted AB Holding Unit award with a grant date fair value of $14,000,000 in recognition of Mr. Gingrich’s continuing efforts to manage AB’s operations in a cost-effective manner, including his continuing leadership role in relocating our firm’s headquarters to Nashville. Mr. Gingrich's special award vests in four equal installments on December 1 of each of 2019, 2020, 2021 and 2022 based on Mr. Gingrich's continued service to AB and his moving to, and establishing his principal residence in Nashville, TN (subject to certain exceptions set forth in his award agreement), but no AB Holding Units are delivered until after December 1, 2022.
Relocation-related Performance Awards
In April 2018, Ms. Burke, Mr. Cranch and Mr. Weisenseel each was granted a special restricted AB Holding Unit award with a grant date fair value of $4,000,000. Each award vests on December 1, 2022, and the underlying AB Holding Units are delivered promptly thereafter provided each executive continues to be employed by AB and each executive moves to and establishes his

or her principal residence in Nashville.Nashville, TN. Vesting of each executive’s AB Holding Units also is contingent on an assessment by the Compensation Committee, with appropriate input from the CEO,Mr. Bernstein, as to whether, and the extent to which:
•our firm’s headquarters relocation initiative is executed without significant disruption or reputational damage to AB;
•AB’s targets for cost savings and implementation costs for the relocation have been achieved; and

•the level of workplace talent and diversity in Nashville is satisfactory.


With respect to each of the above-referenced factors,criteria, the Compensation Committee, with appropriate input from our CEO, shall assessMr. Bernstein, assesses achievement of the factorscriteria both within the executive's business unit and with respect to our firm overall. TheIn December 2019 and 2020, Mr. Bernstein, on behalf of the Compensation Committee, shall, in each of December 2019, 2020 and 2021, adviseadvised each executive as to whetherthat his or her performance generally was progressing well with respect to each of the above-referenced criteria. A similar process is expected to be followed in December 2021.

CFO Retirement Agreement

As announced in a Form 8-K we filed on track forAugust 26, 2020, Mr. Weisenseel will retire from AB, effective September 30, 2021 (the "Retirement Date"). He is transitioning his Finance responsibilities to Mr. Dibadj, who will assume the executiverole of CFO, and his Administrative Services responsibilities to receiveMs. Burke, effective on or about February 12, 2021 (the first business day after we file this 10-K). Mr. Weisenseel will serve in a senior advisory role from February 12, 2021 until his Retirement Date.

The compensatory benefits under the full numberretirement agreement to which Mr. Weisenseel is entitled include:

•a lump sum cash payment of $250,000 (less applicable tax withholding and other payroll deductions) to be made in the first pay period immediately after the Retirement Date;

•the vesting on the Retirement Date and, per Mr. Weisenseel's election, delivery on March 31, 2027 of 113,266 AB Holding Units, which represents a pro rata vesting through the Retirement Date of the restricted AB Holding Units awarded.described immediately above in "Relocation-related Performance Awards;" and


•until the Retirement Date and continuing for a period of 26 weeks thereafter, his base salary shall continue to be paid, through regular payroll on regular payroll dates, at the rate of $375,000 (less applicable tax withholding and other payroll deductions.

Defined Contribution Plan

U.S. employees of AB, including each of our named executive officers,NEOs, are eligible to participate in the Profit Sharing Plan for Employees of AB (as amended and restated as of January 1, 2015, as further amended as of January 1, 2017 and as further amended as of April 1, 2018, the “Profit Sharing Plan”), a tax-qualified retirement plan. The Compensation Committee determines the amount of company contributions (both the level of annual matching by the firm of an employee’s pre-tax salary deferral contributions and the annual company profit sharing contribution, if any).

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With respect to 2018,2020, the Compensation Committee determined in December 2020 that employee deferral contributions would be matched on a dollar-for-dollar basis up to 5% of eligible compensation and that there would be no profit sharing contribution.


Other Benefits

Change in Control Plan
In December 2020, the Compensation Committee approved the AllianceBernstein Change in Control Plan for Executive Officers (the "CIC Plan"). The purpose of the CiC Plan is to provide certain benefits for each individual designated by our CEO as an executive officer (an "Executive Officer") in the event of a change in control ("CIC") of AB. The CIC Plan contains a change in control provision substantially similar to the change in control provision included in Mr. Bernstein's employment agreement (as described below in "Overview of Mr. Bernstein's Employment Agreement"). The provisions under the CIC Plan also are described in a compensatory table below entitled, “Potential Payments upon Termination or Change in Control.”

The CIC Plan provides that, in the event of a CIC, unless prior to the CIC, any unvested restricted unit awards (including ICAP awards) then held by an Executive Officer are honored or assumed, or new rights are substituted therefore, so that the Executive Officer's rights and entitlements after the CIC are substantially equivalent to or better than the Executives Officer's rights and entitlements under the award, each award will, prior to the CIC, immediately and fully vest and no longer be subject to forfeiture.

In addition, (i) if the Executive Officer's employment is terminated by AB, other than for cause, (ii) the Executive Officer resigns with good reason (as defined in the CIC Plan), or (iii) the Executive Officer dies or becomes disabled, within 12 months following a CIC, the Executive Officer will be entitled to receive the sum of (a) the Executives Officer's annual base salary at the time of his or her termination, and (b) the Executive Officer's most recent annual cash incentive compensation award, multiplied by two.

The CIC Plan defines CIC to include any transaction as a result of which EQH ceases to control AB, or a successor entity that conducts the business of AB. However, there would not be a CIC unless, as a result of the transaction, an entity other than EQH controls AB (or a successor to its business).

Life Insurance
Our firm pays the premiums associated with life insurance policies purchased on behalf of our named executive officers.NEOs.


OverviewConsideration of 2018Risk Matters in Determining Compensation

In 2020, we considered whether our compensation practices for employees, including our NEOs, encourage unnecessary or excessive risk-taking and whether any risks arising from our compensation practices are reasonably likely to have a material adverse effect on our firm. For the reasons set forth below, we have determined that our current compensation practices do not create risks that are reasonably likely to have a material adverse effect on our firm.

As described above in “Compensation Elements for NEOs – Long-Term Incentive Compensation Program

In respect of 2018 performance, each of our named executive officers who was employed on December 31, 2018 (other than Mr. Gingrich) received a portion of his or her year-end incentive compensation in the form of an annual cash bonus and a portion in the form ofAwards,” long-term incentive compensation awards. The split betweenawards generally are denominated in AB Holding Units that are not distributed until subsequent years, so the annual cash bonus and long-term incentive compensation varied dependingultimate value that the employee derives from the award depends on the named executive officer’s total compensation, with lower-paid executives receiving a greater percentage of their incentive compensation as cash bonuses than more highly-paid executives. (For additional information about these compensatory elements, see “Compensation Elements for Named Executive Officers” above.) For Mr. Bernstein, his 2018 incentive compensation components were based generally on the terms set forth in the CEO Employment Agreement and review of his performance during 2018 by the Compensation Committee and other directors.
Although estimates are developed for budgeting and strategic planning purposes, our named executive officers’ incentive compensation is not correlated with meeting any specific targets. Instead, the aggregate amount of incentive compensation paid to our named executive officers, other than Messrs. Bernstein and Gingrich for 2018, generally is determined on a discretionary basis and primarily is a function of our firm’s current year financial performance but takes into account the performance goals described below. Amounts are awarded to help us achieve our goal of attracting, motivating and retaining top talent while also helping to ensure that our named executive officers’ goals are appropriately aligned with the goal of increasing our Unitholders’ return on their investment.
Senior management, with the approval of the Compensation Committee, confirmed that the appropriate metric to consider in determining the amount of incentive compensation paid to all employees, including our named executive officers, in respect of 2018 performance is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues, which term are described immediately below:
Adjusted employee compensation and benefits expense is our total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals, and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments
Adjusted net revenues (see our discussion of “Management Operating Metrics” in Item 7)exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments. In addition, adjusted net revenues offset distribution-related payments to third parties as well as amortization of deferred sales commissions against distribution revenues. We also exclude additional pass-through expenses we incur (primarily through our transfer agent) that are reimbursed and recorded as fees in revenues. Additionally, we adjust for the

revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such funds, and AB's investment gains and losses on its investment in such funds, that were eliminated in consolidation. Lastly, we include the impact of adoption of a revenue recognition accounting standard.
In addition, senior management, with the approval of the Compensation Committee, determined that the firm’s adjusted employee compensation and benefits expense generally should not exceed 50.0% of our adjusted net revenues, except in unexpected or unusual circumstances. As the table below indicates, in 2018, adjusted employee compensation and benefits expense amounted to approximately 47.5% of our adjusted net revenues (in thousands):
Net Revenues$3,367,361
Adjustments (see above)
(441,757)
Adjusted Net Revenues$2,925,604
  
Employee Compensation & Benefits Expense$1,378,811
Adjustments (see above)
9,551
Adjusted Employee Compensation & Benefits Expense$1,388,362
Adjusted Compensation Ratio47.5%

Our 2018 adjusted compensation ratio of approximately 47.5% reflects the need to keep compensation levels competitive with industry peers in order to attract, motivate and retain highly-qualified talent.

Benchmarking

In 2018, management engaged McLagan Partners (“McLagan”) to provide compensation benchmarking data for our named executive officers (“2018 Benchmarking Data”). The 2018 Benchmarking Data summarized 2017 compensation levels and 2018 salaries at selected asset management companies and banks comparable to ours in terms of size and business mix (“Comparable Companies”), to assist us in determining the appropriate level of compensation for the firm’s named executive officers.
The 2018 Benchmarking Data provided ranges of compensation levels at the Comparable Companies for executive positions similar to those held by each of our named executive officers, including base salary and total compensation.
Mr. Bernstein’s 2018 compensation was established pursuant to the CEO Employment Agreement and review of his performance during 2018 by the Compensation Committee and other directors (as discussed more fully below in “Overview of Our President and CEO’s Compensation”). Mr. Gingrich's 2018 long-term incentive compensation was established in connection with his relocation-related performance award, as discussed more fully above in "Long-Term Incentive Compensation Awards - Relocation-related Performance Awards.
The Comparable Companies, which management selected with input from McLagan, included:
Eaton Vance Corp.Franklin Resources, Inc.Goldman Sachs Asset Management, L.P.
Invesco Ltd.JPMorgan Asset Management Inc.Legg Mason, Inc.
MFS Investment ManagementMorgan Stanley Investment Management Inc.Neuberger Berman LLC
Oppenheimer Funds Distributor, Inc.PIMCO LLCPrudential Investments
T. Rowe Price Group, Inc.TIAA Group / Nuveen InvestmentsThe Vanguard Group, Inc.
The 2018 Benchmarking Data indicated that the total compensation paid to our named executive officers in 2018 generally fell within or below the ranges of total compensation paid to executives at the Comparable Companies.
The Compensation Committee considered this information in concluding that the compensation levels paid in 2018 to our named executive officers were appropriate and reasonable.



Other Factors Considered When Determining Named Executive Officer Compensation

For 2018, we based decisions about the incentive compensation of our named executive officers primarily on our assessment of each executive’s leadership, operational performance, and potential to enhance investment returns and service for our clients, all of which contribute to long-term Unitholder value. We do not utilize quantitative formulas when determining the incentive compensation of our named executive officers. Instead, we rely on our judgment about each executive’s performance in light of business and operational goals established at the beginning of the year and reviewed in the context of the current-year financial performance of the firm. We beginDenominating the award determination process, whichin restricted AB Holding Units and deferring their delivery is conducted by our CEOintended to sensitize employees to risk outcomes and COO working with other membersdiscourage them from taking excessive risks, whether relating to investments, operations, regulatory compliance and/or cyber security, that could lead to a decrease in the value of senior management, by determining the totalAB Holding Units and/or an adverse effect on the firm's long-term prospects. Furthermore, and as noted above in “Compensation Elements for NEOs – Long-Term Incentive Compensation Awards,” generally all outstanding long-term incentive compensation amounts available forawards include a particular year (as more fully explained above in “Overviewprovision permitting us to “claw-back” the unvested portion of 2018 Incentive Compensation Program”).
Our CEO and COO, as well asan employee’s long-term incentive compensation award if the Compensation Committee then considerdetermines that (i) the employee failed to adhere to existing risk management policies and (ii) as a number of key factors for eachresult of the named executive officers, other than foremployee’s failure, there has been or reasonably could be expected to be a material adverse impact on our CEO. Specific factors will vary amongfirm or the employee’s business units, among individuals and during different business cycles, so we do not adopt any specific weighting or formula under which these metrics are applied. Key factors are:
unit.
•the firm’s financial performance in the current year;
•the named executive officer’s performance compared to individual business and operational goals established at the beginning of the year;
•the firm’s strategic and operational considerations;
•total compensation awarded to the named executive officer in the previous year;
•the increase or decrease in the current year’s total incentive compensation amounts available;
•the contribution of the named executive officer to our overall financial results;
•the nature, scope and level of responsibilities of the named executive officer;
•the named executive officer’s execution of our firm’s culture of Relentless Ingenuity; and
•the named executive officer’s management effectiveness, talent development, and adherence to risk management and regulatory compliance.
Our CEO and COO then provided specific incentive compensation recommendations to the Compensation Committee, which recommendations were supported by the factors listed above. They also provided the Compensation Committee with the 2018 Benchmarking Data, which was not used in a formulaic or mechanical way to determine named executive officer compensation levels, but rather, as noted above, provided the Compensation Committee with a reference point for the compensation levels paid to executives at the Comparable Companies. The Compensation Committee then made the final incentive compensation decisions for Ms. Burke and Messrs. Gingrich, Cranch and Weisenseel. In addition, the Compensation Committee, as described above in “Annual Short-Term Incentive Compensation Awards (Cash Bonuses),” determined to award Mr. Gingrich a cash bonus of $1,000,000 in recognition of his achievements during 2018, as described below in the table below.

We have described in the table below the business and operational goals established at the beginning of 2018 for our named executive officers, other than Mr. Bernstein, and their achievements during 2018:
Named Executive Officer2018 Business and Operational Goals2018 Achievements
James A. Gingrich
COO
1. increase operating efficiency/margins;
2. optimize strategy and sales efforts of Retail, Institutions and Private Wealth;
3. enhance planning and organizational processes;
4. optimize revenue and profitability of Bernstein Research Services;
5. foster a culture of meritocracy, empowerment and accountability among business leaders; and
6. recruit and retain top talent.
1. improved and diversified client flows across channels and services;
2. contained operating costs and improved adjusted operating margin;
3. conceived and led relocation of corporate headquarters, and identified significant new opportunities to improve cost structure both in 2018 and future years;
4. oversaw development and commercialization of previously acquired alternatives teams (e.g., Arya Partners); and
5. oversaw organizational, technology and process changes within distribution functions designed to enhance effectiveness and productivity.
Kate C. Burke
Head of Human Capital and Chief Talent Officer
1. implement initial phase of headquarters relocation initiative, including communication, recruiting, compensation, culture and community relations strategies;
2. enhance recognition culture to drive engagement;
3. develop and retain high performing talent;
4. review U.S. medical and pharmacy plans to ensure competitiveness and attractiveness of AB's benefit offerings;
5. incorporate more formalized diversity and inclusion strategies across Human Capital Department processes to foster an environment in which diverse talent thrives and progresses;
6. expand performance rating pilot to improve transparency and performance culture; and
                                                                                                  7. continue to refine the firm’s Human Capital operating model.
1. successfully built talent acquisition and local Human Capital team to support headquarters relocation initiative;
2. maintained low voluntary turnover among high-performing employees;
3. implemented development programs to provide coaching and skill enhancement to select employees;
4. implemented new mobile employee recognition program that enables employees across the firm to assess the contributions of colleagues in real time;
5. completed a comprehensive review of U.S. medical plans, resulting in a change of carriers, improved benefits and cost savings;
6. implemented diversity and inclusion best practices in talent acquisition, development and benefits, and completed inclusiveness training to global SVP population;
7. expanded performance rating pilot globally to multiple business units; and
8. continued to strengthen key processes and systems under “Center of Excellence” model.

Laurence E. Cranch
General Counsel
1. address new compliance challenges and maintain and improve the firm's good compliance record;
2. improve the level of service to internal clients at AB;
3. proactively manage AB's various legal and regulatory risks;
4. continue to develop and retain high quality talent in the Legal and Compliance Department; and
5. continue aggressive expense management.
1. provided leadership in successfully implementing compliance solutions in response to each new compliance requirement that became effective in 2018;
2. received complementary feedback from AB business leaders relating to the level and quality of service of the Legal and Compliance Department, particularly relating to work supporting the firm's headquarters relocation initiative and legal work required to help facilitate the EQH's IPO and secondary offering;
3. underwent several significant regulatory examinations, none of which resulted in any significant adverse findings or enforcements proceedings;
4. remained free of significant litigation, reflecting our pragmatic and aggressive program to avoid situations that could produce disputes and, where disputes do arise, resolve them on favorable terms;
5. conducted extensive work on the selection and retention process required to form the group of employees relocating to Nashville and on the recruitment of qualified individuals locally to staff open positions; and
6. overall, with respect to ongoing and routine legal matters, successfully maintained outside counsel expense within a tight budget set at the beginning of 2018.

John C. Weisenseel
CFO
1. increase the firm’s profitability by controlling expenses;
2. assess capital requirements across domestic and international entities and reduce excess capital where warranted, thereby increasing the efficiency of the firm's global cash utilization;
3. manage business funding requirements within the context of the firm’s capital and liquidity;
4. continue to streamline the firm’s office footprint and related cost structure;
5. evaluate and support new business development opportunities;
6. continue communications with the firm’s investors and credit rating agencies; and
7. identify and develop the next generation of leaders in the Finance and Administrative Services Departments.
1. increased adjusted operating margin by 140 basis points compared to 2017;
2. increased cash utilization by reducing capital held in legal entities and repatriating foreign cash dividends to the U.S. without a significant increase in taxes and reducing average debt outstanding by over $130 million, or approximately 27%, to $350 million;
3. renewed and decreased to $800 million the credit facility supporting the firm's commercial paper program, resulting in lower upfront and ongoing fees while securing sufficient funding liquidity;
4. played a key role in the firm's relocation initiative, including selection of the permanent site in Nashville, negotiation of state and city incentives, modeling the transaction costs and ongoing expense savings, and proactively leading the relocation of the Accounting and Tax Departments;
5. provided accounting and tax guidance related to our firm's expected acquisition of an institutional research firm;
6. maintained active discussion with AB’s investor community and credit rating agencies and participated in asset management industry investor conferences; and
7. implemented several staffing changes, particularly relating to the relocation initiative, resulting in selectively upgrading the talent pool and diversity within the pool, while ultimately reducing the associated compensation costs.

As indicated in the table above, each of the named executive officers included in the table successfully achieved his or her goals in 2018. The compensation of each of these named executive officers reflected Mr. Bernstein’s and the Compensation Committee’s judgment in assessing the importance of the officer's achievements to our firm’s financial results.


Overview of Our President and CEO’s CompensationMr. Bernstein's Employment Agreement


Pursuant to the CEO Employment Agreement, Mr. Bernstein is servingserved as our President and CEO for aan initial term that commenced on May 1, 2017 and endsended on May 1, 2020, provided that the2020. The initial term shall automatically extendwas extended for one additional year on May 1, 2020 and will automatically extend each anniversaryMay thereafter, beginning May 1, 2021, unless the CEO Employment Agreement is terminated in accordance with its terms (“Employment Term”).

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The terms of the CEO Employment Agreement were the result of arm’s length negotiations between Mr. Bernstein and senior executives at AXA.AXA and EQH. The Board then approved the CEO Employment Agreement after having considered, among other things, the compensation package provided to Mr. Bernstein’s predecessor, the 2016 compensation and 2017 expected compensation of AB’s other executive officers and Mr. Bernstein’s compensation at his former employer.


The Compensation Committee, during its regular meeting held on December 11, 2018, amended Mr. Bernstein's employment agreementthe CEO Employment Agreement such that notwithstanding any contrary or inconsistent provision set forth in the employment agreement, any annual

equity award granted to Mr. Bernstein under Section 4(c)(ii) of the employment agreement, which section relates to equity awards made in 2018 and subsequent years during the Employment Term shallwill be granted in all respects in accordance with AB's compensation practices and policies generally applicable to AB's executive officers as in effect from time to time ("SPB First Amendment").


Additionally, the Compensation Committee, during its regular meeting held on December 10, 2019, further amended the CEO Employment Agreement by:

•increasing Mr. Bernstein’s severance payments if his employment is terminated involuntarily, without cause, from one year’s base salary and bonus to one and a half year’s base salary and bonus;

•excluding from the definition of change in control AB Holding ceasing to be publicly traded;

•removing from the circumstances that give rise to Mr. Bernstein’s ability to terminate the agreement for “good reason” his ceasing to be the CEO of a publicly traded entity; and

•eliminating Mr. Bernstein’s entitlement to a gross-up for any excise tax on his parachute payments, which would have been pertinent only if Mr. Bernstein had been terminated involuntarily prior to December 31, 2019.

Elements of Mr. Bernstein’s Compensation


Base Salary
Mr. Bernstein’s annual base salary under the CEO Employment Agreement has been, and continues to be, $500,000. This amount is consistent with our firm’s policy to keep base salaries of executives and other highly-compensated employees low in relation to total compensation. Any future increase to Mr. Bernstein's base salary is entirely inat the discretion of the Compensation Committee.


Cash Bonus
Under the CEO Employment Agreement, Mr. Bernstein was entitled to be paid a cash bonus at a target level of $3,000,000 in 2018,2020, subject to review and increase from time to time by the Compensation Committee, in its sole discretion. As a result of a review of Mr. Bernstein's performance during 20182020 by the Compensation Committee, and other directors, Mr. Bernstein was paid a cash bonus of $3,500,000.$4,015,000. In determining Mr. Bernstein's cash bonus, the Compensation Committee considered the progress AB made acrossin advancing its three firm-wide initiatives in 2018, which are:

deliver differentiated return streams to clients;
commercialize and scale our suite of services; and
continue our rigorous focus on expense management.  

The firm's highlights during 2018 included active equity net inflows in our retail and institutional channels, the highest amount of gross sales in our private wealth channel in 10 years, and an expansion of our firm's adjusted operating margin by 140 bps to 29.1%. The Compensation Committee also consideredGrowth Strategy, Mr. Bernstein's leadershipperformance in our firm's continuing processlight of relocating its headquarters to Nashville, TN.the target metrics included in the Scorecard and Mr. Bernstein's individual achievements during 2020, as described above.


Restricted AB Holding Units
Commencing in 2018 and during the remainder of the Employment Term, Mr. Bernstein is eligible to receive annual equity awards with a grant date fair value equal to $3,500,000, subject to review and increase by the Compensation Committee, in its sole discretion, in accordance with AB’s compensation practices and policies generally applicable to the firm’s executive officers as in effect from time to time. The Compensation Committee approved an equity award to Mr. Bernstein with a grant date fair value equal to $4,000,000$3,835,000 during its regular meeting held on December 11, 2018.2020. The Compensation Committee determined Mr. Bernstein's equity award based on the review process described immediately above. As a result of the SPB First Amendment, the equity award granted to Mr. Bernstein in December 2020 is subject to the same ICAP-related terms and conditions as awards granted to other executive officers at that time, which terms and conditions are described above in "Compensation Elements for NEOs - Long-Term Incentive Compensation Awards."


Perquisites and Benefits


Under the CEO Employment Agreement, Mr. Bernstein is eligible to participate in all benefit plans available to executive officers and, for his safety and accessibility, a company car and driver for business and personal use.




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Severance and Change in Control Benefits


The CEO Employment Agreement includes severance and change-in-control provisions, which are highlighted below and. These provisions also are described in a compensatory table below under the headingentitled, “Potential Payments upon Termination or Change in Control.” We believe that these severance and change-in-control provisions assist in retaining our CEO and, in the event of a change in control, provide protection to Mr. Bernstein so he is not distracted by personal or financial situations at a time when AB needs him to remain focused on his responsibilities.



If Mr. Bernstein is terminated without “cause” or resigns for “good reason” (as such terms are defined in the CEO Employment Agreement), and he signs and does not revoke a waiver and release of claims, he will receive the following:
Ÿif Mr. Bernstein resigns for "good reason," a cash payment equal to the sum of (a) his current base salary and (b) his bonus opportunity amount;
Ÿif Mr. Bernstein's employment is terminated other than for "cause," or because of his death or disability, a cash payment equal to the sum of (a) his current base salary and (b) his bonus opportunity amount, multiplied by 1.5;
a pro rata bonus based on actual performance for the fiscal year in which the termination occurs;
Ÿimmediate vesting of the outstanding portion of the equity award he was granted in May 2017;
Ÿdelivery of AB Holding Units in respect of the equity award he was granted in May 2017 (subject to any withholding requirements);
Ÿmonthly payments equal to the cost of COBRA coverage for the COBRA coverage period; and
Ÿfollowing the COBRA coverage period, access to participation in AB’s medical plans as in effect from time to time at Mr. Bernstein’s (or his spouse’s) sole expense.

As a result of the SPB Amendment, the equity award granted to Mr. Bernstein in December 2018 is subject to the same ICAP-related terms and conditions as awards awards granted to other executive officers at that time, which terms and conditions are described above in "Compensation Elements for Named Executive Officers - Long-Term Incentive Compensation Awards."

If, during the 12 months following a change in control, Mr. Bernstein is terminated without cause or resigns for good reason, he will receive the amounts described above, except that he will receive a cash payment equal to two times the sum of (a) his current base salary and (b) his bonus opportunity amount.


In the event of a change in control or in the event that Mr. Bernstein’s employment is terminated because the CEO Employment Agreement is not renewed (other than for cause), the equity award he was granted in May 2017 will immediately vest and AB Holding Units in respect of any such award shallwill be delivered by AB to him (subject to any withholding obligations).


In the event any payments constitute “golden parachute payments” within the meaning of Section 280G of the Code and would be subject to an excise tax imposed by Section 4999 of the Code, such payments shallwill be reduced to the maximum amount that does not result in the imposition of such excise tax, but only if such reduction results in Mr. Bernstein receiving a higher net-after tax amount than he would receive absent such reduction. If a change in control occurs prior to January 1, 2020, to the extent that payments to Mr. Bernstein would be subject to the excise tax under Section 4999 of the Code, Mr. Bernstein shall be entitled to a gross-up payment to ensure that he will retain an amount equal to the excise tax imposed upon such payments, but if the payments do not exceed 110% of the statutory limit imposed by Section 280G of the Code, the payments shall be reduced to the maximum amount that does not result in the imposition of such excise tax.


Mr. Bernstein is subject to a confidentiality provision, in addition to covenants with respect to non-competition during his employment and six months thereafter and non-solicitation of customers and employees for 12 months following his termination of employment.


A change in control is defined as, among other things:things, EQH and its majority-owned subsidiaries ceasing to control the election of a majority of the Board.

ŸEQH and its majority-owned subsidiaries ceasing to control the election of a majority of the Board; or
ŸAB Holding, or any successor thereto, ceasing to be a publicly traded entity.

Mr. Bernstein negotiated the severance and change-in-control provisions described immediately above to have the security and flexibility to focus on the business and preserve the value of his long-term incentive compensation. The Board, AXA and AXAEQH determined that these provisions were reasonable and appropriate because they were necessary to recruit and retain Mr. Bernstein and provided Mr. Bernstein with effective incentives for future performance. The Board and AXA determined to limit the applicability of the excise tax gross-up provision as the application of the excise tax is more burdensome on newly hired employees.



The Board, AXA and AXAEQH also concluded that the change-in-control and termination provisions in the CEO Employment Agreement fit within AB’s overall compensation objectives because these provisions, which align with AB’s goal of providing its executives with effective incentives for future performance, also:
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Ÿ•permitted AB to recruit and retain a highly-qualified CEO;
Ÿ•aligned Mr. Bernstein’s long-term interests with those of AB’s Unitholders and clients;
Ÿ•were consistent with AXA’s, EQH's and the Board’s expectations with respect to the manner in which AB and AB Holding would be operated during Mr. Bernstein’s tenure; and
Ÿ•were consistent with the Board’s expectations that Mr. Bernstein would not be terminated without cause and that no steps would be taken that would provide him with the ability to terminate the agreement for good reason.

Compensation awarded by EQH to Mr. Bernstein
AXA Equitable Holdings Compensation
TheIn 2020, the board of directors of EQH granted to Mr. Bernstein, in 2018 connection with his membership on the EQH Management Committee:

•a transaction incentiverestricted stock unit award (for EQH common stock) with a grant date fair value of $740,000 in connection$250,019;

•a performance share award (for EQH common stock) with EQH's IPOa grant date fair value of $500,031, approximately half of which can be earned subject to EQH’s performance against specified non-GAAP financial targets and Mr. Bernstein's membership on thehalf of which can be earned subject to EQH’s total shareholder return relative to its peer group; and

•stock options (for EQH Management Committee. common stock) with a grant date fair value of $250,003.

Mr. Bernstein may receive additional equity or cash compensation from AXA Equitable HoldingsEQH in the future related to his service on the ExecutiveEQH Management Committee. Any amounts paid to Mr. Bernstein by AXA Equitable Holdings, including the 2018 award, do not impact AB’s compensation expenses.


CEO Pay Ratio


In 2018,2020, the compensation of Mr. Bernstein, our President and CEO, was approximately 5861 times the median pay of our employees, resulting in a 58: 61:1 CEO Pay Ratio.


We identified our median employee by examining 20182020 total compensation for all individuals, excluding Mr. Bernstein, who were employed by our firm as of December 31, 2018,2020, the last day of our payroll year. We included all of our employees in this process, whether employed on a full-time or part-time basis. We did not make any assumptions or estimates with respect to total compensation, but we did adjust compensation paid to our non-U.S. employees during our 20182020 fiscal year based on the average monthly exchange rates for the 12-month period ending September 30, 20182020 (data compiled in fourth quarter) between the local currencies in which such employees are paid and U.S dollars. We define “total compensation” as the aggregate of base salary (plus overtime, as applicable), commissions (as applicable), cash bonus and the grant date fair value of long-term incentive compensation awards.


After identifying the median employee based on total compensation, we calculated total compensation in 20182020 for such employee using the same methodology we use for our named executive officers NEOs as set forth below in the Summary Compensation Table for 20182020.


As illustrated in the table below, our 20182020 CEO Pay Ratio is 58: 61:1:
Seth BernsteinMedian Employee Seth BernsteinMedian Employee
Base salary ($)500,000
142,835
 Base salary ($)500,000 127,750 
Cash bonus ($)3,500,000
13,093
 Cash bonus ($)4,015,000 20,250 
Stock awards ($)4,740,000
—
 
All other compensation ($) (1)
344,847
—
 
Stock awards ($) (1)
Stock awards ($) (1)
4,835,054 — 
All other compensation ($) (2)
All other compensation ($) (2)
52,509 5,513 
  
Total ($)9,084,847
155,928
 Total ($)9,402,563 153,513 
  
2018 CEO Pay Ratio 58: 1
2020 CEO Pay Ratio2020 CEO Pay Ratio61:1
_____________________
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(1) Includes (i) an award granted by AB of restricted AB Holding Units with a grant date fair value of $3,835,000 and (ii) awards granted by EQH with an aggregate grant date fair value of $1,000,053, as more fully described above in “Compensation awarded by EQH to Mr. Bernstein.” For additional information, please refer to the compensatory tables below in this Item 11.

(2)For a description of Mr. Bernstein’s other compensation, please refer to the Summary Compensation Table for 20182020 below.

Compensation Committee

The Compensation Committeemedian employee's other compensation consists of Ms. Fallon-Walsh (Chair) and Messrs. Audet, de Oliveira, Kaye, Pearson and Zoellick. The Compensation Committee held three regular meetings and two special meetings in 2018.a $5,513 profit sharing plan contribution.


As discussed in “NYSE Governance Matters” in Item 10, AB Holding, as a limited partnership, is exempt from NYSE rules that require public companies to have a compensation committee consisting solely of independent directors. EQH owns, directly and through various subsidiaries, an approximate 65.2% economic interest in AB (as of December 31, 2018), and compensation expense is a significant component of our financial results. For these reasons, Mr. Pearson, director and President and CEO of EQH, was elected as a member of the Compensation Committee as of February 12, 2019, and any action taken by the Compensation Committee requires his affirmative vote or consent.

The Compensation Committee has general oversight of compensation and compensation-related matters, including:
Ÿdetermining cash bonuses;
Ÿdetermining contributions and awards under incentive plans or other compensation arrangements (whether qualified or non-qualified) for employees of AB and its subsidiaries, and amending or terminating such plans or arrangements or any welfare benefit plan or arrangement or making recommendations to the Board with respect to adopting any new incentive compensation plan, including equity-based plans;
Ÿreviewing and approving the compensation of our CEO, evaluating his performance, and determining and approving his compensation level based on this evaluation; and
Ÿreviewing and discussing the CD&A, and recommending to the Board its inclusion in each of AB’s and AB Holding’s Form 10-K and, when applicable, proxy statements.

The Compensation Committee’s year-end process generally has focused on the cash bonuses and long-term incentive compensation awards granted to senior management. Mr. Bernstein, working with Mr. Gingrich and other members of senior management, provides recommendations for individual employee awards to the Compensation Committee for its consideration. As part of this process, management provides the committee with compensation benchmarking data from one or more compensation consultants. For 2018, we paid $32,100 to McLagan for executive compensation benchmarking data and an additional $278,334 for survey and consulting services relating to the amount and form of compensation paid to employees other than executives.

The Compensation Committee held its regularly-scheduled meeting regarding year-end compensation on December 11, 2018, at which meeting it discussed and approved senior management’s compensation recommendations. The Compensation Committee did not retain its own consultants.

The Compensation Committee’s functions are more fully described in the committee’s charter, which is available on-line in the “Management & Governance” section of our Internet Site.


Other Compensation-Related Matters


AB and AB Holding are, respectively, private and public limited partnerships, andpartnerships. They are subject to taxes other than federal and state corporate income tax (see “Structure-related Risks” in Item 1A and Note 21 to AB’s consolidated financial statements in Item 8). Accordingly, Section 162(m) of the Code, which limits tax deductions relating to executive compensation otherwise available to an entity taxed as a corporation, is not applicable to either AB or AB Holding for 2018.2020.


Compensation Committee Interlocks and Insider Participation


Mr. Pearson is a director and the President and CEO of EQH, the parent company of the General Partner.


No executive officer of AB serves as (i) a member of a compensation committee or (ii) a director of another entity, an executive officer of which serves as a member of AB’s Compensation Committee.


Compensation Committee Report


The members of the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth above and, based on such review and discussion, recommended to the Board its inclusion in this Form 10-K.

Barbara Fallon-WalshKristi Matus (Chair)Paul L. Audet
Ramon de OliveiraDaniel G. Kaye
Mark PearsonRobert B. ZoellickBertram Scott






Consideration























138

In 2018, we considered whether our compensation practices for employees, including our named executive officers, encourage unnecessary or excessive risk-taking and whether any risks arising from our compensation practices are reasonably likely to have a material adverse effect on our firm. For the reasons set forth below, we have determined that our current compensation practices do not create risks that are reasonably likely to have a material adverse effect on our firm.

As described above in “Compensation Elements for Named Executive Officers – Long-Term Incentive Compensation Awards,” long-term incentive compensation awards generally are denominated in AB Holding Units that are not distributed until subsequent years, so the ultimate value that the employee derives from the award depends on the long-term performance of the firm. Denominating the award in restricted AB Holding Units and deferring their delivery is intended to sensitize employees to risk outcomes and discourage them from taking excessive risks, whether relating to investments, operations, regulatory compliance and/or cyber security, that could lead to a decrease in the value of the AB Holding Units and/or an adverse effect on the firm's long-term prospects. Furthermore, and as noted above in “Compensation Elements for Named Executive Officers – Long-Term Incentive Compensation Awards,” generally all outstanding long-term incentive compensation awards include a provision permitting us to “claw-back” the unvested portion of an employee’s long-term incentive compensation award if the Compensation Committee determines that (i) the employee failed to adhere to existing risk management policies and (ii) as a result of the employee’s failure, there has been or reasonably could be expected to be a material adverse impact on our firm or the employee’s business unit.

Summary Compensation Table for 20182020


Total compensation of our named executive officersNEOs for 2018, 20172020, 2019 and 2016,2018, as applicable, is as follows:
Name and
Principal  Position
 Year Salary($) Bonus($) 
Stock Awards(1)(2)
($)
 
All Other
Compensation ($)
 Total($)
Seth P. Bernstein(3)(4)
 2018 500,000
 3,500,000
 4,740,000
 344,847
 9,084,847
President and CEO 2017 334,615
 3,000,000
 3,500,003
 148,274
 6,982,892
             
James A. Gingrich(5)(6)(7)
 2018 400,000
 1,000,000
 14,000,019
 39,912
 15,439,931
Chief Operating Officer 2017 400,000
 1,000,000
 20,986,759
 37,801
 22,424,560
  2016 400,000
 3,540,000
 3,260,000
 36,645
 7,236,645
             
Laurence E. Cranch(8)
 2018 400,000
 940,000
 4,660,009
 92,276
 6,092,285
General Counsel 2017 400,000
 940,000
 660,000
 17,208
 2,017,208
  2016 400,000
 890,000
 610,000
 18,441
 1,918,441
             
John C. Weisenseel(8)
 2018 375,000
 1,147,500
 4,842,509
 68,433
 6,433,442
CFO 2017 375,000
 1,090,000
 785,000
 15,177
 2,265,177
  2016 375,000
 977,500
 672,500
 14,927
 2,039,927
             
Kate C. Burke(8)(9)
 2018 300,000
 785,000
 4,440,009
 14,200
 5,539,209
Head of Human Capital & Chief Talent Officer 2017 300,000
 740,000
 410,000
 14,266
 1,464,266
             
Name and
Principal  Position		YearSalary($)Bonus($)
Stock Awards(1)(2)
($)
Option Awards(2)(3) ($)
All Other
Compensation ($)		Total($)
Seth P. Bernstein(4)(5)
2020500,000 4,015,000 4,585,051 250,003 52,509 9,402,563 
President and CEO2019500,000 3,850,000 4,750,026 250,004 94,859 9,444,889 
2018500,000 3,500,000 4,740,000 — 71,623 8,811,623 
Kate C. Burke(6)
2020300,000 1,665,000 1,285,000 — 19,517 195173,269,517 
Chief Operating Officer2019300,000 1,415,000 1,035,000 — 60,716 2,810,716 
2018300,000 785,000 4,440,009 — 14,200 5,539,209 
Ali Dibadj(7)
2020400,000 945,000 665,000 — 14,880 2,024,880 
Head of Finance and Strategy
Laurence E. Cranch(6)
2020400,000 940,000 660,000 — 17,958 2,017,958 
General Counsel2019400,000 940,000 660,000 — 17,708 2,017,708 
2018400,000 940,000 4,660,009 — 92,276 6,092,285 
John C. Weisenseel(6)
2020375,000 1,147,500 842,500 — 16,824 2,381,824 
CFO2019375,000 1,147,500 842,500 — 15,677 2,380,677 
2018375,000 1,147,500 4,842,509 — 68,433 6,433,442 

(1)
The figures in the “Stock Awards” column provide the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determining these values, see Note 18 to AB’s consolidated financial statements in Item 8.
(2)
See “Grants of Plan-based Awards in 2018” below for information regarding the 2018 long-term incentive compensation awards granted to our named executive officers.
(3)
See "Overview of Our President and CEO's Compensation" above for a description of Mr. Bernstein's compensatory elements.
(4)The "Stock Awards" column includes the grant date fair value of the transaction incentive award Mr. Bernstein received from EQH in May 2018. EQH granted to Mr. Bernstein 18,500 restricted EQH stock units under the EQH 2018 Omnibus Equity Incentive Plan, which had a grant date fair value of $740,000.
(5)
See "Chief Operating Officer Equity Award" above for a description of the restricted AB Holding Unit award granted to Mr. Gingrich in April 2018.
(6)On February 6, 2018, it was agreed that Mr. Gingrich's eventual retirement from AB shall be treated as a "termination without cause" with respect to the continued vesting of long-term compensation awards granted in years prior to 2017 under AB's Incentive Compensation Award Program.
(7)On February 13, 2017, the Board approved a grant to Mr. Gingrich of 883,653 restricted AB Holding Units with a grant date fair value of approximately $21 million (based on the average closing price on the NYSE of an AB Holding Unit for the period covering the four trading days immediately preceding the grant date, the grant date and the five trading days immediately following the grant date), in lieu of cash bonus and year-end long-term incentive compensation awards for 2017, 2018 and 2019 for which Mr. Gingrich otherwise would have been eligible under the Incentive Compensation Program; provided, Mr. Gingrich is eligible to receive at the end of each such year an additional cash bonus, but only to the extent approved by the Compensation Committee. Mr. Gingrich's restricted AB Holding Units vested one-third on each of December 1, 2017 and 2018 and the remaining units will vest on December 1, 2019, provided, with respect to each installment, Mr. Gingrich continues to be employed by our firm.
(8)
See "Relocation-related Performance Awards" above for a description of the restricted AB Holding Unit awards granted to Ms. Burke, Mr. Cranch and Mr. Weisenseel in April 2018.
(9)We have not provided 2016 compensation for Ms. Burke as she was not a named executive officer in 2016.

(1)The figures in the “Stock Awards” column provide the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determining the AB Holding Unit award values, see Note 19 to AB’s consolidated financial statements in Item 8.

(2)See “Grants of Plan-based Awards in 2020” below for information regarding the 2020 option award granted by EQH to Mr. Bernstein.
(3)The figures in the "Option Awards" column provides the grant date fair values of Mr. Bernstein's awards (which were issued by EQH) calculated in accordance with FASB ASC Topic 718. The fair value of EQH stock options is calculated by EQH using the Black-Scholes option pricing model. The expected EQH dividend rate is based on market consensus. EQH share price volatility is estimated on the basis of implied volatility, which is checked by EQH against an analysis of historical volatility to ensure consistency. The effect of expected early exercise is accounted for through the use of an expected life assumption based on historical data.
(4)See "Overview of Mr. Bernstein's Employment Agreement" and "Compensation Awarded by EQH to Mr. Bernstein" above for a description of Mr. Bernstein's compensatory elements. Mr. Bernstein's compensation also is disclosed by EQH.
(5)The "Stock Awards" column for 2020 includes the grant date fair value of the restricted stock unit award (grant date fair value of $250,019) and the performance share award (grant date fair value of $500,031) Mr. Bernstein received from EQH in February 2020. The "Stock Awards" column for 2019 includes the grant date fair value of the restricted stock unit award (grant date fair value of $250,010) and the performance share award (grant date fair value of $500,016) Mr. Bernstein received from EQH in February 2019. The "Stock Awards" column for 2018 includes the grant date fair value of the transaction incentive award Mr. Bernstein received from EQH in May 2018, which had a grant date fair value of $740,000.
(6)See "Relocation-related Performance Awards" above for a description of the restricted AB Holding Units awards granted to Ms. Burke, Mr. Cranch and Mr. Weisenseel.
(7)We have not provided 2019 or 2018 compensation for Mr. Dibadj as he was not a named executive officer in those years.






139
The “All Other Compensation” column includes the aggregate incremental cost to our company of certain other expenses and perquisites. For 2018,2020, this column includes the following:
Name 
Personal Use of Car and Driver
($)
 Contributions to Profit Sharing Plan ($) 
Life Insurance Premiums
($)
 
Relocation and/or Financial Planning Assistance
($)
 Other ($)NamePersonal Use of Car and Driver
($)		Contributions to Profit Sharing Plan ($)Life Insurance Premiums
($)
Relocation and/or Financial Planning Assistance(2)
($)
Other ($)
Seth P. Bernstein 320,685
(1) 
12,500
 2,322
 9,340
 —
Seth P. Bernstein11,007 (1)14,250 2,322 24,930 — 
James A. Gingrich —
 13,750
 2,772
 23,390
 —
Kate C. BurkeKate C. Burke— 14,250 450 4,817 — 
Ali DibadjAli Dibadj— 14,250 630 — — 
Laurence E. Cranch —
 13,750
 3,708
 74,818
 —
Laurence E. Cranch— 14,250 3,708 — — 
John C. Weisenseel —
 13,750
 1,677
 53,006
 —
John C. Weisenseel— 14,250 2,574 — — 
Kate C. Burke —
 13,750
 450
 —
 —

(1)Includes auto lease costs ($16,689) and driver compensation and other car-related expenses ($303,996).

(1)The amount reflects the incremental cost to us attributable to commuting and other non-business use. We made available to Mr. Bernstein in the first half of 2020 a car and driver for security and business purposes. Car and driver services were contracted through a third party. The cost of providing a car is determined annually and includes, as applicable, driver compensation, annual car lease, insurance cost and various miscellaneous expenses such as fuel and car maintenance.
(2)    The amount set forth in the table for Mr. Bernstein relates to financial/tax planning services, while the amount set forth in the table for Ms. Burke relates to our headquarters relocation to Nashville, TN.

Grants of Plan-based Awards in 20182020


Grants of awards under the 20182017 Plan, our equity compensation plan, during 20182020 made to our named executive officersNEO are as follows:follows (we also discuss awards issued by EQH to Mr. Bernstein):
NameNameGrant DateAll Other Stock Awards:
Number of Shares of Stock
or Units (#)
Grant Date Fair Value
of Stock Awards(1) ($)
Seth P. Bernstein(2)(3)
Seth P. Bernstein(2)(3)
12/11/2020119,471 3,835,000 
2/26/202010,786 250,019 
2/26/202010,452 250,012 
Name Grant Date 
All Other Stock Awards:
Number of Shares of Stock
or Units (#)
 
Grant Date Fair Value
of Stock Awards(1) ($)
Seth P. Bernstein(2)
 12/11/2018 149,868
 4,000,000
James A. Gingrich(2)
 4/24/2018 531,310
 14,000,019
Laurence E. Cranch(2)
 4/24/2018 151,803
 4,000,009
 12/11/2018 24,729
 660,000
John C. Weisenseel(2)
 4/24/2018 151,803
 4,000,009
 12/11/2018 31,567
 842,500
2/26/202010,786 250,019 
Kate C. Burke(2)
 4/24/2018 151,803
 4,000,009
Kate C. Burke(2)
12/11/202040,032 1,285,000 
 12/11/2018 16,486
 440,000
Ali Dibadj(2)
Ali Dibadj(2)
12/11/202020,717 665,000 
Laurence E. Cranch(2)
Laurence E. Cranch(2)
12/11/202020,561 660,000 
John C. Weisenseel(2)
John C. Weisenseel(2)
12/11/202026,247 842,500 

(1)
This column provides the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determining these values, see Note 19 to AB's consolidated financial statements in Item 8.
(2)
As discussed above in “Overview of 2018 Incentive Compensation Program” and “Compensation Elements for Named Executive Officers—Long-Term Incentive Compensation Awards,” long-term incentive compensation awards granted in 2018 to our named executive officers were denominated in restricted AB Holding Units. These awards are shown in the “All Other Stock Awards” column of this table, the “Stock Awards” column of the Summary Compensation Table and the “AB Holding Unit Awards” columns of the Outstanding Equity Awards at 2018 Fiscal Year-End Table.

(1)This column provides the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determining the AB Holding Unit values, see Note 19 to AB's consolidated financial statements in Item 8.
(2)As discussed above in “Overview of 2020 Incentive Compensation Program” and “Compensation Elements for NEOs—Long-Term Incentive Compensation Awards,” long-term incentive compensation awards granted in 2020 to our NEOs were denominated in restricted AB Holding Units. These awards are shown in the “All Other Stock Awards” column of this table, the “Stock Awards” column of the Summary Compensation Table for 2020 and the “AB Holding Unit Awards” columns of the Outstanding Equity Awards at 2020 Fiscal Year-End Table.
(3)    In 2018,February 2020, EQH granted to Mr. Bernstein (i) a restricted stock award with a grant date fair value of $250,019 and (ii) a performance share award with a grant date fair value of $500,031, approximately half of which can be earned subject to EQH's performance against specified non-GAAP financial targets and half of which can be earned subject to EQH's total shareholder return relative to its peer group.

In 2020, the number of restricted AB Holding Units comprising long-term incentive compensation awards granted to each named executive officerNEO was determined based on the closing price of an AB Holding Unit as reported for NYSE composite transactions on December 11, 2018 and April 24, 2018,2020, the dates ondate as of which the Compensation Committee approved the awards. At the time of these awards, the Compensation Committee consisted of Ms. Fallon-WalshMatus (Chair) and Messrs. Audet, de Oliveira, Duverne,Kaye, Pearson and Scott; the Section 16 Subcommittee, which approved awards to our NEOs, consisted of Ms. Matus (Chair) and Messrs. Audet, de Oliveira, Kaye and Zoellick.Scott. For further information regarding the material terms of such awards, including the vesting terms and the formulas or criteria to be applied in determining the amounts payable, please refer to "Overview of 20182020 Incentive Compensation
140
Program," "Compensation Elements for Named Executive Officers-Long-Term Incentive Compensation Awards" and "Other Factors Considered When Determining Named Executive Officer Compensation"NEO Compensation," and "Compensation Elements for NEOs" above.









Outstanding Equity Awards at 20182020 Fiscal Year-End


Outstanding equity awards held by our named executive officersNEOs as of December 31, 20182020 are as follows:
 
 Option AwardsAB Holding Unit and/or EQH Awards
NameNumber of Securities
Underlying Unexercised
Options Exercisable (#)		Number of Securities Underlying Unexercised Options Unexercisable (#)Option Exercise Price ($)Option Expiration DateNumber of Shares
or Units of Stock That
Have Not Vested (#)
Market 
Value of Shares or
Units of
Stock That Have Not Vested(8) ($)
Seth P. Bernstein(1)(2)(3)
21,816 43,630 $18.742/14/2029339,929 11,479,408 
— 57,209 23.18 2/26/2030139,719 3,575,409 
Kate C. Burke(4)
— — — — 231,185 7,807,123 
Ali Dibadj(5)
— — — — 20,717 699,597 
Laurence E. Cranch(6)
— — — — 208,559 7,043,022 
John C. Weisenseel(7)
— — — — 185,139 6,252,150 

(1)Subject to accelerated vesting clauses in the CEO Employment Agreement (e.g., immediate vesting upon a “change in control” of our firm), the award granted to Mr. Bernstein in May 2017 vests ratably on each of the first four anniversaries of May 1, 2017, commencing May 1, 2018, provided, with respect to each installment, Mr. Bernstein continues to be employed by AB on the vesting date. However, Mr. Bernstein elected to delay delivery of all of the restricted AB Holding Units until May 1, 2021, the final vesting date, subject to acceleration upon a “change in control” of our firm and certain qualifying events of termination of employment. Additionally, Mr. Bernstein was awarded: (i) 119,471 restricted AB Holding Units in December 2020, which are scheduled to vest in equal increments on each of December 1, 2021, 2022, 2023 and 2024; (ii) 139,131 restricted AB Holding Units in December 2019, of which 25% vested on December 1, 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021, 2022 and 2023; and (iii) 149,868 restricted AB Holding Units in December 2018, of which 25% vested on each of December 1, 2019 and 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021 and 2022. For further information, see “Overview of Mr. Bernstein's Employment Agreement” above.
(2)EQH awarded to Mr. Bernstein: (i) in February 2020, options to buy 57,209 EQH shares, which are scheduled to vest in equal increments on each of February 26, 2021, 2022 and 2023; and, in February 2019, options to buy 65,446 EQH shares, of which one-third vested in February 2020 and the remainder of which is scheduled to vest in equal increments on each of February 14, 2021 and 2022.
(3)For further information regarding the equity awards granted to Mr. Bernstein by EQH, please see "Compensation awarded by EQH to Mr. Bernstein" above.
(4)Ms. Burke was awarded: (i) 40,032 restricted AB Holding Units in December 2020, which are scheduled to vest in equal increments on each of December 1, 2021, 2022, 2023 and 2024; (ii) 36,000 restricted AB Holding Units in December 2019, of which 25% vested on December 1, 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021, 2022 and 2023; (iii) 16,486 restricted AB Holding Units in December 2018, of which 25% vested on each of December 1, 2019 and 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021 and 2022; (iv) 151,803 restricted AB Holding Units in April 2018, which are scheduled to cliff vest on December 1, 2022; and (v) 16,433 restricted AB Holding Units in December 2017, of which 25% vested on each of December 1, 2018, 2019 and 2020 and the remainder of which is scheduled to vest on December 1, 2021.
(5)Mr. Dibadj was awarded 20,717 restricted AB Holding Units in December 2020, which are scheduled to vest in equal increments on each of December 1, 2021, 2022, 2023 and 2024.
(6)Mr. Cranch was awarded: (i) 20,561 restricted AB Holding Units in December 2020, which are scheduled to vest in equal increments on each of December 1, 2021, 2022, 2023 and 2024; (ii) 22,957 restricted AB Holding Units in December 2019, of which 25% vested on December 1, 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021, 2022 and 2023; (iii) 24,728 restricted AB Holding Units in December 2018, of which 25% vested on each of December 1, 2019 and 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021 and 2022; (iv) 151,803 restricted AB Holding Units in April 2018, which are scheduled to cliff vest on December 1, 2022; and (v) 26,453 restricted AB Holding Units in December 2017, of which 25% vested on each of December 1, 2018, 2019 and 2020 and the remainder of which is scheduled to vest on December 1, 2021.
(7)Mr. Weisenseel was awarded: (i) 26,247 restricted AB Holding Units in December 2020, which are scheduled to vest in equal increments on each of December 1, 2021, 2022, 2023 and 2024; (ii) 29,305 restricted AB Holding Units in December 2019, of which 25% vested on
141
  Option Awards AB Holding Unit Awards
Name 
Number of Securities
Underlying Unexercised
Options Exercisable (#)
 Number of Securities Underlying Unexercised Options Unexercisable (#) Option Exercise Price ($) Option Expiration Date 
Number of Shares
or Units of Stock That
Have Not Vested (#)
 
Market 
Value of Shares or
Units of
Stock That Have Not Vested(6) ($)
Seth P. Bernstein(1)
 —
 —
 —
 —
 273,398
 7,469,243
James A. Gingrich(2)
 —
 —
 —
 —
 935,868
 25,567,905
Laurence E. Cranch(3)
 —
 —
 —
 —
 216,414
 5,912,424
John C. Weisenseel(4)
 —
 —
 —
 —
 228,085
 6,231,269
Kate C. Burke(5)
 —
 —
 —
 —
 189,745
 5,183,841
December 1, 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021, 2022 and 2023; (iii) 31,566 restricted AB Holding Units in December 2018, of which 25% vested on each of December 1, 2019 and 2020 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2021 and 2022; (iv) 151,803 restricted AB Holding Units in April 2018, of which 113,266 AB Holding Units shall vest on September 30, 2021 and the remainder of which shall be forfeited as of that date pursuant to Mr. Weisenseel's retirement agreement (filed as an exhibit to Form 8-K filed with the SEC on August 26, 2020), and (v) 31,463 restricted AB Holding Units in December 2017, 25% of which vested on each of December 1, 2018, 2019 and 2020 and the remainder of which is scheduled to vest on December 1, 2021.

(1)
Subject to accelerated vesting clauses in the CEO Employment Agreement (e.g., immediate vesting upon a “change in control” of our firm), the award granted to Mr. Bernstein in May 2017 vests ratably on each of the first four anniversaries of May 1, 2017, commencing May 1, 2018, provided, with respect to each installment, Mr. Bernstein continues to be employed by AB on the vesting date. However, Mr. Bernstein elected to delay delivery of all of the restricted AB Holding Units until May 1, 2021, the final vesting date, subject to acceleration upon a “change in control” of our firm and certain qualifying events of termination of employment. Additionally, Mr. Bernstein was awarded 149,868 restricted AB Holding Units in December 2018, which are scheduled to vest in equal annual increments on each of December 1, 2019, 2020, 2021 and 2022. For further information, see “Overview of Our President and CEO’s Compensation” above.
(2)Mr. Gingrich was awarded (i) 531,310 restricted AB Holding Units in April 2018, which are scheduled to vest in equal increments on each of December 1, 2019, 2020, 2021 and 2022, (ii) 883,653 restricted AB Holding Units in February 2017, of which 33.3% vested on each of December 1, 2017 and 2018 and the remainder of which is scheduled to vest on December 1, 2019, (iii) 140,517 restricted AB Holding Units in December 2016, of which 25% vested on each of December 1, 2017 and 2018 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2019 and 2020, and (iv) 158,992 restricted AB Holding Units in December 2015, of which 25% vested on each of December 1, 2016, 2017 and 2018 and the remainder of which is scheduled to vest on December 1, 2019.
(3)Mr. Cranch was awarded (i) 24,728 restricted AB Holding Units in December 2018, which are scheduled to vest in equal increments on each of December 1, 2019, 2020, 2021 and 2022, (ii) 151,803 restricted AB Holding Units in April 2018, which are scheduled to cliff vest on December 1, 2022, (iii) 26,453 restricted AB Holding Units in December 2017, of which 25% vested on December 1, 2018 and the remainder is scheduled to vest in equal increments on each of December 1, 2019, 2020 and 2021, (iv) 26,293 restricted AB Holding Units in December 2016, of which 25% vested on each of December 1, 2017 and 2018 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2019 and 2020, and (v) 27,585 restricted AB Holding Units in December 2015, of which 25% vested on each December 1, 2016, 2017 and 2018 and the remainder of which is scheduled to vest on December 1, 2019.
(4)Mr. Weisenseel was awarded (i) 31,566 restricted AB Holding Units in December 2018, which are scheduled to vest in equal increments on each of December 1, 2019, 2020, 2021 and 2022, (ii) 151,803 restricted AB Holding Units in April 2018, which are scheduled to cliff vest on December 1, 2022, (iii) 31,463 restricted AB Holding Units in December 2017, 25% of which vested on December 1, 2018 and the remainder of which are scheduled to vest in equal increments on each of December 1, 2019, 2020 and 2021, (iv) 28,987 restricted AB Holding Units in December 2016, of which 25% vested on each of December 1, 2017 and 2018 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2019 and 2020, and (v) 26,499 restricted AB Holding Units in December 2015, of which 25% vested on each of December 1, 2016, 2017 and 2018 and the remainder of which is scheduled to vest on December 1, 2019.
(5)Ms. Burke was awarded (i) 16,486 restricted AB Holding Units in December 2018, which are scheduled to vest in equal increments on each of December 1, 2019, 2020, 2021 and 2022, (ii) 151,803 restricted AB Holding Units in April 2018, which are scheduled to cliff vest on December 1, 2022, (iii) 16,433 restricted AB Holding Units in December 2017, of which 25% vested on December 1, 2018 and the remainder of which are scheduled to vest in equal increments on each of December 1, 2019, 2020 and 2021, (iv) 14,224 restricted AB Holding Units in December 2016, of which 25% vested on each of December 1, 2017 and 2018 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2019 and 2020, and (iii) 8,080 restricted AB Holding Units in December 2015, of which 25% vested on each of December 1, 2016, 2017 and 2018 and the remainder of which is scheduled to vest on December 1, 2019.

(8)The market values of restricted AB Holding Units set forth in this column were calculated assuming a price per AB Holding Unit of $33.77, which was the closing price on the NYSE of an AB Holding Unit on December 31, 2020, the last trading day of AB's last completed fiscal year.
(6)The market values of restricted AB Holding Units set forth in this column were calculated assuming a price per AB Holding Unit of $27.32, which was the closing price on the NYSE of an AB Holding Unit on December 31, 2018, the last trading day of AB's last completed fiscal year.


Option Exercises and AB Holding Units Vested in 20182020


AB Holding Units held by our named executive officersNEOs that vested during 20182020 are as follows:
 
 AB Holding Option AwardsAB Holding Unit Awards
NameNumber of AB Holding Units Acquired on Exercise (#)Value Realized on Exercise ($)Number of AB
Holding
Units Acquired on
Vesting (#)		Value Realized on
Vesting ($)
Seth P. Bernstein— — 72,250 2,355,350 
Kate C. Burke— — 20,786 677,624 
Ali Dibadj— — 71,574 2,333,312 
Laurence E. Cranch— — 25,108 818,521 
John C. Weisenseel— — 30,330 988,758 
  AB Holding Option Awards AB Holding Unit Awards
Name Number of AB Holding Units Acquired on Exercise (#) Value Realized on Exercise ($) 
Number of AB
Holding
Units Acquired on
Vesting (#)
 
Value Realized on
Vesting ($)
Seth P. Bernstein —
 —
 41,177
 1,115,883
James A. Gingrich —
 —
 407,176
 12,300,783
Laurence E. Cranch 78,348
 723,789
 26,632
 804,546
John C. Weisenseel —
 —
 26,894
 812,466
Kate C. Burke —
 —
 11,396
 344,282
William R. Siemers —
 —
 2,523
 76,218



Pension Benefits for 2018


None of our named executive officers are entitled to benefits under the Amended and Restated Retirement Plan for Employees of AB (as amended and restated as of January 1, 2016 and as further amended as of April 1, 2018, “Retirement Plan”), our company pension plan. For additional information regarding the Retirement Plan, including interest rates and actuarial assumptions, see Note 18 to AB’s consolidated financial statements in Item 8.


Non-Qualified Deferred Compensation for 2018


Vested and unvested non-qualified deferred compensation contributions, earnings and distributions of our named executive officers during 2018 and their non-qualified deferred compensation plan balances as of December 31, 2018 are as follows:



Name 
Executive
Contributions in Last FY ($)
 
Aggregate
Earnings in Last FY ($)
 
Aggregate
Withdrawals/
Distributions ($)
 
Aggregate
Balance at
Last FYE ($)
Seth P. Bernstein —
 —
 —
 —
James A. Gingrich(1)
 —
 (46,772) (226,620) 848,746
Laurence E. Cranch —
 —
 —
 —
John C. Weisenseel —
 —
 —
 —
Kate C. Burke —
 —
 —
 —


(1)
Amounts shown reflect Mr. Gingrich's interests from pre-2009 awards under the predecessor plan to the Incentive Compensation Program, under which plan participants were permitted to allocate their awards (i) among notional investments in AB Holding Units, certain of the investment services we provided to clients and a money market fund, or (ii) under limited circumstances, in options to buy AB Holding Units. For additional information about the Incentive Compensation Program, see Notes 2 and 19 to AB’s consolidated financial statements in Item 8.








Potential Payments upon Termination or Change in Control


Estimated payments and benefits to which our named executive officersNEOs would have been entitled upon a change in control of AB or the specified qualifying events of termination of employment as of December 31, 20182020 are as follows:
142
Name 
Cash
Payments(1) ($)
 
Acceleration of Restricted
AB Holding Unit
Awards(2) ($)
 Other Benefits ($)
Seth P. Bernstein      
Change in control —
 3,374,826
 13,610
Termination by Mr. Bernstein for good reason or by AB without cause and within 12 months of change in control (2017 Award)(3)
 7,000,000
 3,374,826
 13,610
Termination by Mr. Bernstein for good reason or by AB without cause (2017 Award)(3)
 3,500,000
 3,374,826
 13,610
Termination by reason of non-extension of initial 3-year employment term (2017 Award)(3)
 —
 3,374,826
 13,610
Death or disability (2017 Award)(3)(4)(5)
 —
 3,374,826
 13,610
Resignation (complies with applicable agreements and restrictive covenants) under ICAP (2018 Award)(2)
 —
 4,094,417
 —
Death or disability under ICAP (2018 Award)(6)
 —
 4,094,417
 —
James A. Gingrich  
  
  
Termination by AB without cause (2017 RSU grant)(7)
 —
 670,594
 —
Death or disability (2017 RSU grant)(7)
 —
 670,594
 —
Termination by AB without cause; death or disability (2018 RSU grant)(7)
 —
 2,166,090
 —
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP(2)
 —
 3,005,382
 —
Death or disability under ICAP(6)
 —
 3,005,382
 —
Laurence E. Cranch    
  
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants)(2)
 —
 1,765,166
 —
Death or disability(6)
 —
 1,765,166
 —
Termination by AB without cause; death or disability (2018 RSU grant)(8)
 —
 618,883
 —
John C. Weisenseel    
  
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants)(2)
 —
 2,084,011
 —
Death or disability(6)
 —
 2,084,011
 —
Termination by AB without cause; death or disability (2018 RSU grant)(8)
 —
 618,883
 —
Kate C. Burke    
  
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants)(2)
 —
 1,036,583
 —
Death or disability(6)
 —
 1,036,583
 —
Termination by AB without cause; death or disability (2018 RSU grant)(8)
 —
 618,883
 —
Name and Reason for Employment Termination
Cash
Payments(1) ($)
Acceleration of Restricted
AB Holding Unit
Awards(2)($)
Other Benefits (3)($)
Seth P. Bernstein
Change in control— 11,479,408 — 
Termination by Mr. Bernstein for good reason(4)
3,500,000 11,479,408 22,631 
Termination of Mr. Bernstein's employment by AB other than for Cause or due to Death or Disability (including 2017 Award)(4)(5)(6)
5,250,000 11,479,408 22,631 
Change in control + termination by Mr. Bernstein for good reason or termination of Mr. Bernstein's employment without cause(4)
7,000,000 11,479,408 22,631 
Resignation (complies with applicable agreements and restrictive covenants) under ICAP(2)
— 10,088,877— 
Death or disability(7)
— 11,479,04822,631 
Kate C. Burke
Change in control— 7,807,123 — 
Change in control + employment terminated by AB other than for cause, termination by Ms. Burke for good reason, or termination due to death or disability3,930,000 7,807,123 — 
Resignation, retirement or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP; death or disability under ICAP; excludes 2018 RSU award)(2)
— 2,680,735 — 
Termination by AB without cause; death or disability (2018 RSU award)(8)
— 2,992,932 — 
Ali Dibadj
Change in control— 699,597 — 
Change in control + employment terminated by AB other than for cause, termination by Mr. Dibadj for good reason, or termination due to death or disability2,690,000 699,597 — 
Resignation, retirement or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP; death or disability under ICAP(2)
— 699,597 — 
Laurence E. Cranch
Change in control— 7,043,022 — 
Change in control + employment terminated by AB other than for cause, termination by Mr. Cranch for good reason, or termination due to death or disability2,680,000 7,043,022 — 
Resignation, retirement or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP; death or disability under ICAP; excludes 2018 RSU award(2)
— 1,916,635 — 
Termination by AB without cause; death or disability (2018 RSU award)(8)
— 2,992,932 — 
John C. Weisenseel(9)
Change in control— 7,553,544 — 
Change in control + employment terminated by AB other than for cause, termination by Mr. Weisenseel for good reason, or termination due to death or disability3,045,000 7,553,544 — 
Resignation, retirement or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP; death or disability under ICAP; excludes 2018 RSU award(2)
— 2,427,157 — 
Termination by AB without cause; death or disability (2018 RSU award)(8)
— 2,992,932 — 

(1)It is possible that each NEO could receive a cash severance payment on the termination of his or her employment. The amounts of any such cash severance payments would be determined at the time of such termination (other than for Mr. Bernstein), so we are unable to
143
estimate such amounts. The amounts shown for Mr. Bernstein are described in the CEO Employment Agreement. The amount shown for Mr. Weisenseel is taken from his retirement agreement, into which he entered in August 2020 and with respect to which his retirement date has been set as September 30, 2021.
(2)See Notes 2 and 19 in AB’s consolidated financial statements in Item 8 and “Compensation Elements for NEOs – Long-Term Incentive Compensation Awards” above for a discussion of the terms set forth in long-term incentive compensation award agreements relating to termination of employment.
(3)Reflects the value of group medical coverage to which Mr. Bernstein would be entitled.
(4)See "Overview of Mr. Bernstein's Employment Agreement" above for a discussion of the terms set forth in the CEO Employment Agreement relating to termination of employment.
(5)The CEO Employment Agreement defines “Disability” as a good faith determination by AB that Mr. Bernstein is physically or mentally incapacitated and has been unable for a period of 180 days in the aggregate during any 12-month period to perform substantially all of the duties for which he is responsible immediately before the commencement of the incapacity.
(6)Under the CEO Employment Agreement, upon termination of Mr. Bernstein’s employment due to death or disability, and after the COBRA period, AB will provide Mr. Bernstein and his spouse with access to participation in AB’s medical plans at Mr. Bernstein’s (or his spouse’s) sole expense based on a reasonably determined fair market value premium rate.
(7)“Disability” is defined in the ICAP award agreements of each NEO as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12 months, as determined by the carrier of the long-term disability insurance program maintained by AB or its affiliate that covers the NEO.
(8)For additional information relating to the restricted AB Holding Unit award issued to each of Ms. Burke, Mr. Cranch and Mr. Weisenseel in April 2018, please refer to "Relocation-related Performance Awards" above.
(9)For information relating to Mr. Weisenseel's compensatory benefits under his retirement agreement, which contemplates his retiring as of September 30, 2021, please refer to "CFO Retirement Agreement" above.

Additionally, estimated payments and benefits to which Mr. Bernstein would have been entitled upon a change in control of EQH or the specified qualifying events of termination of employment as of December 31, 2020 are as follows (these amounts would be payable by EQH):
(1)Reason for Employment TerminationIt is possible that each named executive officer could receive a cash severance payment on the terminationAcceleration of his or her employment. The amounts of any such cash severance payments would be determined at the time of such termination (other than for Mr. Bernstein), so we are unable to estimate such amounts. The amounts shown for Mr. Bernstein are described in the CEO Employment Agreement.EQH Option and Share Awards ($)
Death (1)
2,891,836 
(2)
Disability (1)
See Notes 2 and 19 in AB’s consolidated financial statements in Item 8 and “Compensation Elements for Named Executive Officers – Long-Term Incentive Compensation Awards” above for a discussion of the terms set forth in long-term incentive compensation award agreements relating to termination of employment.

2,891,836 
(3)
Involuntary termination (no change in control) (2)
262,895 
See "OverviewChange in control (without termination of Our President and CEO's Compensation" above for a discussion of the terms set forth in the CEO Employment Agreement relating toemployment) (3)
2,282,165 
Involuntary termination of employment which pertain to the restricted AB Holding Unit awardor termination by Mr. Bernstein receivedfor good reason (no change in May 2017.control) (3)
2,282,165 
(4)The CEO Employment Agreement defines “Disability” as a good faith determination by AB that Mr. Bernstein is physically or mentally incapacitated and has been unable for a period of 180 days in the aggregate during any 12-month period to perform substantially all of the duties for which he is responsible immediately before the commencement of the incapacity.
(5)Under the CEO Employment Agreement, upon termination of Mr. Bernstein’s employment due to death or disability, and after the COBRA period, AB will provide Mr. Bernstein and his spouse with access to participation in AB’s medical plans at Mr. Bernstein’s (or his spouse’s) sole expense based on a reasonably determined fair market value premium rate.
(6)“Disability” is defined in the Incentive Compensation Program award agreements of each named executive officer as the inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12 months, as determined by the carrier of the long-term disability insurance program maintained by AB or its affiliate that covers the named executive officer.
(7)
For additional information relating to the restricted AB Holding Unit award Mr. Gingrich received in February 2017, please refer to "Annual Short-Term Incentive Compensation Awards (Cash Bonuses)" above. For additional information relating to the restricted AB Holding Unit award Mr. Gingrich received in April 2018, please refer to "Chief Operating Officer Equity Award" above in this Item 11.

(1)Reflects the combined value, as of December 31, 2020, associated with Mr. Bernstein's: (i) transaction incentive award in 2018; (ii) restricted stock unit award, performance share award and option award in 2019; and (ii) restricted stock unit award, performance share award and option award in 2020. For additional information regarding these awards, please see the Summary Compensation Table in 2020, the Grant of Plan-based Awards table in 2020 and the Outstanding Equity at 2020 Fiscal Year End table above in this Item 11.
(2)Reflects the value, as of December 31, 2020, associated with Mr. Bernstein's transaction incentive award in 2018.
(3)Reflects, as of December 31, 2020, (i) the full value associated with Mr. Bernstein's option awards in 2019 and 2020, and (ii) pro-rated portions of Mr. Bernstein's transaction incentive award in 2018 and, in 2019 and 2020, his restricted stock unit awards and performance share awards based on the terms and conditions of these awards.












144
(8)
For additional information relating to the restricted AB Holding Unit award received by each of Ms. Burke, Mr. Cranch and Mr. Weisenseel in April 2018, please refer to "Relocation-related Performance Awards" above in this Item 11.

Director Compensation in 20182020


During 2018,2020, we compensated our directors, who are not employed by our company or by any of our affiliates (“Eligible Directors”), as follows (Mr. Zoellick is our Non-Executive Chairman; the other directors listed in the table below each satisfiessatisfied applicable NYSE and SEC standards relating to independence (“Independent Directors”)):, as follows:
Name Fees Earned or Paid in Cash($) 
Stock
Awards(1)(2)
($)
 Total($)
Robert B. Zoellick 425,000
 425,000
 850,000
Paul L. Audet 105,500
 170,000
 275,500
Ramon de Oliveira 97,000
 170,000
 267,000
Barbara Fallon-Walsh 129,125
 170,000
 299,125
Daniel G. Kaye 132,500
 170,000
 302,500
Shelley B. Leibowitz 99,500
 170,000
 269,500
Das Narayandas 88,000
 170,000
 258,000
NameFees Earned or Paid in Cash($)
Stock
Awards(1)(2)
($)
Total($)
Ramon de Oliveira152,000 170,000 322,000 
Paul Audet108,500 170,000 278,500 
Nella Domenici102,500 240,860 343,360 
Daniel Kaye96,000 170,000 266,000 
Kristi Matus127,000 170,000 297,000 
Das Narayandas96,000 170,000 266,000 
Bertram Scott24,481 111,860 136,341 
Charles Stonehill127,500 170,000 297,500 

(1)The aggregate number of restricted AB Holding Units underlying awards outstanding but not yet distributed at December 31, 2018 was: for Mr. Zoellick, 30,800 AB Holding Units; for each of Ms. Fallon-Walsh and Messrs. de Oliveira and Kaye, 9,850 AB Holding Units; and for each of Ms. Leibowitz and Messrs. Audet and Narayandas, 8,589 AB Holding Units.
(2)
Reflects the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determining these values, see Note 19 to AB’s consolidated financial statements in Item 8.

(1)The aggregate number of restricted AB Holding Units underlying awards outstanding but not yet distributed at December 31, 2020 was: for: Ms. Domenici, 9,520 AB Holding Units; Ms. Matus, 10,739 AB Holding Units; for each of Messrs. de Oliveira and Kaye, 14,694 AB Holding Units; for each of Messrs. Audet and Narayandas, 15,451 AB Holding Units; and for Mr. Stonehill, 11,534 AB Holding Units.
(2)Reflects the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determining these values, see Note 19 to AB’s consolidated financial statements in Item 8.

Independent Director Compensation


The Board has approved the compensation elements described immediately below for Independent Directors and has agreed to re-consider such compensation elements no less frequently than every five years (with the next such reconsideration scheduled for 2020):periodically:


•an annual retainer of $85,000 (paid quarterly after any quarter during which an Independent Director serves on the Board; annual retainers relating to Committee service, as described below, are paid quarterly in arrears as well);
•a fee of $5,000 for participating in any meeting of the Board, whether in person or by telephone, in excess of the sixfour regularly-scheduled Board meetings each year;
•a fee of $2,000 for participating in any meeting of any duly constituted committee of the Board, whether in person or by telephone, in excess of the number of regularly-scheduled committee meetings each year (i.e., in excess of seveneight meetings of the Audit Committee and threefour meetings of each of the Executive Committee, the Compensation Committee and the Governance Committee);

•an annual retainer of $50,000 for acting as Independent Chair of the Board;
•an annual retainer of $25,000 for acting as Chair of the Audit Committee;
•an annual retainer of $12,500 for acting as Chair of the Compensation Committee;
•an annual retainer of $12,500 for acting as Chair of the Governance Committee;
•an annual retainer of $12,500 for serving as a member of the Audit Committee;
•an annual retainer of $6,000 for serving as a member of the Executive Committee;
•an annual retainer of $6,000 for serving as a member of the Compensation Committee;
•an annual retainer of $6,000 for serving as a member of the Governance Committee; and
•
an annual equity-based grantunder an equity compensation plan consisting of restricted AB Holding Units with a grant date fair value of $170,000.

•an annual equity-based grantunder an equity compensation plan consisting of restricted AB Holding Units with a grant date fair value of $170,000.

At the regular meeting of the Board held in May 2018,2020, the Board granted to each Independent Director (Mses. Fallon-Walshthen serving (which included Mses. Domenici and Leibowitz andMatus and Messrs. Audet, de Oliveira, Kaye, Narayandas and Narayandas) 6,320Stonehill) 7,176 restricted AB Holding Units. The number of AB Holding Units granted was determined by dividing the $170,000 grant date fair value noted above by the closing price of an AB Holding Unit on the date of the May 20182020 Board Meeting, or $26.90$23.69 per unit. These awards vest ratably on each of the first four anniversaries of the grant date, which generally is consistent with AB employee equity awards.


Additionally, the Board granted to Mr. Scott, who joined the Board as of September 23, 2020, 4,750 restricted AB Holding Units. The number of AB Holding Units granted was determined by dividing the grant date fair value (a pro-rated version of the
145
$170,000 typically awarded based on the date as of which Mr. Scott joined the Board) by the closing price of an AB Holding Unit on September 23, 2020, or $27.01 per unit. This award vests ratably on each of the first four anniversaries of the grant date.

Also, at the regular meeting of the Board held in November 2019, the Board granted to Ms. Domenici, who joined the Board as of January 1, 2020, 2,344 restricted AB Holding Units. The number of AB Holding Units granted was determined by dividing the grant date fair value (a pro-rated version of the $170,000 typically awarded based on the date as of which Ms. Domenici joined the Board) by the closing price of an AB Holding Unit on January 2, 2020, or $30.23 per unit. This award also vests ratably on each of the first four anniversaries of the grant date.

Further, in order to avoid any perception that our directors’ exercise of their fiduciary duties might be impaired, restricted AB Holding Unit grants to Independent Directors are not forfeitable, except if the director is terminated for “Cause,” as that term is defined in the 2017 Plan or the applicable award agreement. Accordingly, restricted AB Holding Units generally are delivered as soon as administratively feasible following an EligibleIndependent Director’s resignation from the Board.


Equity grants to Independent Directors generally are made at the May meeting of the Board. The date of the May meeting is set by the Board the previous year.


The General Partner may reimburse any director for reasonable expenses incurred in connection with attendance at Board meetings as well as additional Board responsibilities. AB Holding and AB, in turn, reimburse the General Partner for expenses incurred by the General Partner on their behalf, including amounts in respect of directors’ fees and expenses. These reimbursements are subject to any relevant provisions of the AB Holding Partnership Agreement and the AB Partnership Agreement.

146
Non-Executive Chairman Compensation

Mr. Zoellick’s compensation, which was approved by the sole stockholder of the General Partner and by the Board in April 2017, consists of:

an annual retainer of $425,000 (paid quarterly after any quarter during which Mr. Zoellick serves as Non-Executive Chairman); and
an annual equity-based grant under an equity compensation plan consisting of restricted AB Holding Units with a grant date fair value of $425,000.

Restricted AB Holding Unit awards granted to Mr. Zoellick vest ratably on each of the first four anniversaries of the grant date.

The Board granted to Mr. Zoellick 15,800 restricted AB Holding Units at the May 2018 Board Meeting. The number of AB Holding Units granted was determined by dividing the $425,000 grant date fair value noted above by the May 2018 Price.


Item 12.    12.     Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters


Securities Authorized for Issuance under Equity Compensation Plans


AB Holding Units to be issued pursuant to our equity compensation plans as of December 31, 20182020 are as follows:


Equity Compensation Plan Information
 
Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted average exercise price of outstanding options, warrants and rights 
Number of securities remaining available for future issuance(1)
Plan CategoryNumber of securities to be issued upon exercise of outstanding options, warrants and rightsWeighted average exercise price of outstanding options, warrants and rights
Number of securities remaining available for future issuance(1)
Equity compensation plans approved by security holders 671,243
 $22.83
 45,647,260
Equity compensation plans approved by security holders148,985 $23.61 35,555,594 
Equity compensation plans not approved by security holders —
 —
 —
Equity compensation plans not approved by security holders— — — 
Total 671,243
 $22.83
 45,647,260
Total148,985 $23.61 35,555,594 

(1)All AB Holding Units remaining available for future issuance will be issued pursuant to the 2017 Plan, which was approved during a Special Meeting of AB Holding Unitholders held on September 29, 2017.

(1)All AB Holding Units remaining available for future issuance will be issued pursuant to the 2017 Plan, which was approved during a Special Meeting of AB Holding Unitholders held on September 29, 2017.

There are no AB Units to be issued pursuant to an equity compensation plan.


For information about our equity compensation plans, see Note 19 to AB’s consolidated financial statements in Item 8.


Principal Security Holders


As of December 31, 2018, we had no information that any person beneficially owned more than 5% of the outstanding AB Holding Units.

As of December 31, 2018,2020, we had no information that any person beneficially owned more than 5% of the outstanding AB Units, except as reported by AXA, EQH and certain of their respectiveits subsidiaries on Schedule 13D/A with the SEC on January 3,March 25, 2019 pursuant to the Exchange Act. We have prepared the following table, and the notesnote that follow,follows, in reliance on such filing:

Name and Address of  Beneficial Owner 
Amount and Nature of
Beneficial Ownership
Reported on Schedule
 Percent of Class
AXA(1)(2)(3)(4)
25 avenue Matignon 75008
Paris, France
 170,121,745
(3)(4) 
 63.3
(1)(4) 
AXA Equitable Holdings(1)(3)(4)
1290 Avenue of the Americas
New York, NY 10104
 170,121,745
(3)(4) 
 63.3
(1)(4) 
Name and Address of  Beneficial OwnerAmount and Nature of
Beneficial Ownership
Reported on Schedule		Percent of Class
Equitable Holdings(1)
1290 Avenue of the Americas
New York, NY 10104
170,121,745 (1)63.3 (1)

(1)Based on information included in Form S-4 filed with the SEC on December 6, 2018, AXA owns approximately 59.2% of the outstanding shares of EQH. Additionally, the percent of class included in the above table reflects issued and outstanding AB Units.
(2)
Based on information provided by AXA, as of December 31, 2018, 14.40% of the issued ordinary shares (representing 24.16% of the voting power) of AXA were owned directly and indirectly by two French mutual insurance companies (AXA Assurances IARD Mutuelle and AXA Assurances Vie Mutuelle) engaged in the Property & Casualty insurance business and the Life & Savings insurance business in France (“Mutuelles AXA”). The address of The Mutuelles AXA is 313 Terrasses de l'Arche 92727 Nanterre Cedex, France.


(3)By reason of their relationships, AXA, the Mutuelles AXA, AXA Equitable Holdings, AXA Equitable Financial Services, LLC (a subsidiary of EQH), AXA-IM Holding U.S. (a subsidiary of EQH), Alpha Units Holdings, Inc. (a subsidiary of EQH) and MLOA may be deemed to share the power to vote or to direct the vote and to dispose or direct the disposition of all or a portion of the 170,121,745 issued and outstanding AB Units.
(4)AXA, EQH and certain of their respective subsidiaries have reported on Schedule 13D/A dated as of January 3, 2019 that, by reason of AXA’s ownership of 59.2% of the outstanding shares of common stock of EQH, AXA may be deemed to beneficially own all of the issued and outstanding AB Units owned directly and indirectly by EQH.

(1)By reason of their relationships, EQH and its subsidiaries that hold AB Units may be deemed to share the power to vote or to direct the vote and to dispose or direct the disposition of all or a portion of the 170,121,745 issued and outstanding AB Units. The 63.3% includes the 1% general partnership interest held by EQH.

As of December 31, 2018,2020, AB Holding was the record owner of 96,658,278,98,322,942, or 36.0%36.3%, of the issued and outstanding AB Units.Units (or 36.0% including the 1% general partnership interest held by EQH).








147
Management


As of December 31, 2018,2020, the beneficial ownership of AB Holding Units by each director and named executive officerNEO of the General Partner and by all directors and executive officers as a group is as follows:
Name of Beneficial  Owner 
Number of AB
Holding Units and
Nature of
Beneficial
Ownership
 Percent of Class
Seth P. Bernstein(1)(2)
 314,574
 *
Robert B. Zoellick(1)
 47,100
 *
Paul L. Audet 9,345
 *
Ramon de Oliveira(1)
 13,379
 *
Denis Duverne(1)
 2,000
 *
Barbara Fallon-Walsh(1)
 13,379
 *
Daniel G. Kaye(1)
 13,379
 *
Shelley B. Leibowitz 16,145
 *
Anders Malmstrom(1)
 —
 *
Das Narayandas 9,345
 *
Mark Pearson(1)
 —
 *
James A. Gingrich(1)(3)
 1,784,907
 1.8
Laurence E. Cranch(1)(4)
 365,212
 *
John C. Weisenseel(1)(5)
 303,041
 *
Kate C. Burke(1)(6)
 208,643
  
All directors and executive officers as a group (16 persons)(7)(8)
 3,137,990
 3.2%
Name of Beneficial  OwnerNumber of AB
Holding Units and
Nature of
Beneficial
Ownership		Percent of Class
Ramon de Oliveira(1)
26,365 *
Seth P. Bernstein(1)(2)
569,663 *
Paul L. Audet22,331 *
Nella L. Domenici9,520 *
Jeffrey J. Hurd(1)
— *
Daniel G. Kaye(1)
26,365 *
Nick Lane(1)
— *
Kristi A. Matus(1)
11,926 *
Das Narayandas22,331 *
Mark Pearson(1)
— *
Bertram L. Scott(1)
4,142 *
Charles G.T. Stonehill(1)
12,986 *
Kate C. Burke(1)(3)
244,994 *
Ali Dibadj(1)(4)
128,345 *
Laurence E. Cranch(1)(5)
235,857 *
John C. Weisenseel(1)(6)
279,568 *
All directors and executive officers as a group (16 persons)(7)
1,594,393 1.6 %

*Number of AB Holding Units listed represents less than 1% of the Units outstanding.
(1)Excludes AB Holding Units beneficially owned by AXA, EQH and their respective subsidiaries. Ms. Fallon-Walsh and Messrs. Bernstein, de Oliveira, Duverne, Kaye, Malmstrom and Pearson are directors and/or officers of AXA, EQH, AXA Equitable and/or MLOA. Ms. Burke and Messrs. Bernstein, Zoellick, Gingrich, Cranch and Weisenseel are directors and/or officers of the General Partner.
(2)
Represents 314,574 restricted AB Holding Units that have not yet vested or with respect to which he has deferred delivery. See “Overview of Our President and CEO’s Compensation – Compensation Elements – Restricted AB Holding Units” in Item 11 for additional information.
*    Number of AB Holding Units listed represents less than 1% of the Units outstanding.
(1)Excludes AB Holding Units beneficially owned by EQH and its subsidiaries. Ms. Matus and Messrs. Bernstein, de Oliveira, Hurd, Kaye, Lane, Pearson, Scott and Stonehill each is a director and/or officer of EQH, Equitable Financial and/or Equitable America. Ms. Burke and Messrs. Bernstein, Dibadj, Cranch and Weisenseel each is a director and/or officer of the General Partner.
(2)Includes 538,392 restricted AB Holding Units that have not yet vested or with respect to which Mr. Bernstein has deferred delivery. See “Overview of Mr. Bernstein's Employment Agreement – Compensation Elements – Restricted AB Holding Units,” “Grants of Plan-based Awards in 2020” and “Outstanding Equity Awards at 2020 Fiscal Year-End” in Item 11 for additional information.
(3)Includes 231,185 restricted AB Holding Units that have not yet vested. For information regarding Ms. Burke's long-term incentive compensation awards, see “Relocation-related Performance Awards,” “Grants of Plan-based Awards in 2020” and “Outstanding Equity Awards at 2020 Fiscal Year-End” in Item 11.
(4)Includes 20,717 restricted AB Holding Units awarded to Mr. Dibadj that have not yet vested.  For information regarding Mr. Dibadj's long-term incentive compensation awards, see "Grants of Plan-based Awards in 2020” and “Outstanding Equity Awards at 2020 Fiscal Year-End” in Item 11.
(5)Includes 226,703 restricted AB Holding Units that have not yet vested or with respect to which he has deferred delivery. For information regarding Mr. Cranch's long-term incentive compensation awards, see “Relocation-related Performance Awards,” “Grants of Plan-based Awards in 2020” and “Outstanding Equity Awards at 2020 Fiscal Year-End” in Item 11.
(6)Includes 260,833 restricted AB Holding Units that have not yet vested or with respect to which he has deferred delivery.  For information regarding Mr. Weisenseel’s long-term incentive compensation awards, see “Relocation-related Performance Awards,” “Grants of Plan-based Awards in 2020” and “Outstanding Equity Awards at 2020 Fiscal Year-End” in Item 11.
(7)Includes 1,277,830 restricted AB Holding Units awarded to the executive officers as a group as long-term incentive compensation that have not yet vested and/or with respect to which the executive officer has deferred delivery.


148
(3)
Includes 1,695,216 restricted AB Holding Units awarded to Mr. Gingrich as long-term incentive compensation that have not yet vested or with respect to which he has deferred delivery. For information regarding Mr. Gingrich’s long-term incentive compensation awards, see “Grants of Plan-based Awards in 2018” and “Outstanding Equity Awards at 2018 Fiscal Year-End” in Item 11.
(4)
Includes 242,611 restricted AB Holding Units awarded to Mr. Cranch as long-term incentive compensation that have not yet vested or with respect to which he has deferred delivery. For information regarding Mr. Cranch's long-term incentive compensation awards, see “Grants of Plan-based Awards in 2018” and “Outstanding Equity Awards at 2018 Fiscal Year-End” in Item 11.

(5)
Includes 270,318 restricted AB Holding Units awarded to Mr. Weisenseel as long-term incentive compensation that have not yet vested or with respect to which he has deferred delivery.  For information regarding Mr. Weisenseel’s long-term incentive compensation awards, see “Grants of Plan-based Awards in 2018” and “Outstanding Equity Awards at 2018 Fiscal Year-End” in Item 11.
(6)
Includes 189,746 restricted AB Holding Units awarded to Ms. Burke as long-term incentive compensation that have not yet vested.  For information regarding Ms. Burke’s long-term incentive compensation awards, see “Grants of Plan-based Awards in 2018” and “Outstanding Equity Awards at 2018 Fiscal Year-End” in Item 11.
(7)Includes 2,712,465 restricted AB Holding Units awarded to the executive officers as a group as long-term incentive compensation that have not yet vested and/or with respect to which the executive officer has deferred delivery.

As of December 31, 2018,2020, our directors and executive officers did not beneficially own any AB Units.


As of December 31, 2018, the beneficial ownership of the common stock of AXA by each director and named executive officer of the General Partner and by all directors and executive officers as a group is as follows:

AXA Common Stock(1)

Name of Beneficial  Owner
Number of Shares and
Nature of Beneficial
Ownership
Percent of Class
Seth P. Bernstein—
*
Robert B. Zoellick—
*
Paul L. Audet—
*
Ramon de Oliveira(2)
38,536
*
Denis Duverne(3)
2,010,307
*
Barbara Fallon-Walsh(4)
29,340
*
Daniel G. Kaye11,634
*
Shelley B. Leibowitz—
*
Anders Malmstrom(5)
129,308
*
Das Narayandas—
*
Mark Pearson(6)
496,957
*
James A. Gingrich—
*
Laurence E. Cranch—
*
John C. Weisenseel—
*
Kate C. Burke—
*
All directors and executive officers as a group (16 persons)(7)
2,716,082
*

* Number of shares listed represents less than 1% of the outstanding AXA common stock.
(1)
Holdings of AXA American Depositary Shares (“ADS”) are expressed as their equivalent in AXA common stock. Each AXA ADS represents the right to receive one AXA ordinary share.
(2)Includes 4,361 shares Mr. de Oliveira can acquire within 60 days under option plans.
(3)Includes 415,045 shares Mr. Duverne can acquire within 60 days under option plans.
(4)Includes 2,127 shares Ms. Fallon-Walsh can acquire within 60 days under options plans.
(5)Includes 36,807 shares Mr. Malmstrom can acquire within 60 days under option plans. Also includes 62,654 unvested AXA performance shares, which are paid out when vested based on the share price of AXA at that time and are subject to achievement of internal performance conditions.
(6)Includes 48,486 shares Mr. Pearson can acquire within 60 days under options plans. Also includes 203,470 unvested AXA performance shares, which are paid out when vested based on the share price of AXA at that time and are subject to achievement of internal performance conditions.
(7)Includes 506,826 shares the directors and executive officers as a group can acquire within 60 days under option plans.


As of December 31, 2018,2020, the beneficial ownership of the common stock of EQH by each director and named executive officer of the General Partner and by all directors and executive officers as a group is as follows:


EQH Common Stock

Name of Beneficial  Owner
Number of Shares and

Nature of Beneficial

Ownership
Percent of Class
Ramon de Oliveira48,823 *
Seth P. Bernstein(1)
13,25086,547 
*
Robert B. Zoellick—
*
Paul L. Audet—
*
Ramon de OliveiraNella L. Domenici8,844— 
*
Denis Duverne
Jeffrey J. Hurd(2)
—305,635 
*
Barbara Fallon-Walsh5,844
*
Daniel G. Kaye10,84441,514 
*
Shelley B. Leibowitz—
*
Anders Malmstrom(2)Nick Lane(3)
53,983171,688 
*
Kristi A. Matus18,682 *
Das Narayandas2,000
*
Mark Pearson(3)(4)
136,187929,399 
*
James A. GingrichBertram L. Scott—21,514 
*
Charles G.T. Stonehill22,514 *
Kate C. Burke— *
Ali Dibadj— *
Laurence E. Cranch—
*
John C. Weisenseel—
*
Kate C. Burke—
*
All directors and executive officers as a group (16 persons)(4)(5)
230,9521,648,316 
*

* Number of shares listed represents less than 1% of the outstanding EQH common stock.
(1)Includes 9,250 restricted stock units that will vest within 60 days.
(2)Includes 33,483 unvested EQH performance shares and 18,500 restricted stock units that will vest within 60 days.
(3)Includes 85,937 unvested EQH performance shares and 46,250 restricted stock units that will vest within 60 days.
(4)Includes 119,420 unvested EQH performance shares and 64,750 restricted stock units that will vest within 60 days for the directors and executive officers as a group.

(1)Includes (i) 62,701 options Mr. Bernstein has the right to exercise within 60 days and (ii) 8,439 restricted stock units that will vest within 60 days and settle in EQH shares.
(2)Includes (i) 214,288 options Mr. Hurd has the right to exercise within 60 days, (ii) 23,370 restricted stock units that will vest within 60 days and settle in EQH shares and (iii) 43,184 EQH performance shares that will be paid out within 60 days.
(3)Includes (i) 121,037 options Mr. Lane has the right to exercise within 60 days and (ii) 27,012 restricted stock units that will vest within 60 days and settle in EQH shares.
(4)Includes (i) 601,308 options Mr. Pearson has the right to exercise within 60 days, (ii) 71,612 restricted stock units that will vest within 60 days and settle in EQH shares and (iii) 92,365 EQH performance shares that will be paid out within 60 days.
(5)Includes 999,334 options that may be exercised, 130,433 restricted stock units that will vest within 60 days and 135,549 EQH performance shares that will be paid out within 60 days for the directors and executive officers as a group.

Partnership Matters


The General Partner makes all decisions relating to the management of AB and AB Holding. The General Partner has agreed that it will conduct no business other than managing AB and AB Holding, although it may make certain investments for its own account. Conflicts of interest, however, could arise between AB and AB Holding, the General Partner and the Unitholdersof both Partnerships.


Section 17-403(b) of the Delaware Revised Uniform Limited Partnership Act (“Delaware Act”) states in substance that, except as provided in the Delaware Act or the applicable partnership agreement, a general partner of a limited partnership has the liabilities of a general partner in a general partnership governed by the Delaware Uniform Partnership Law (as in effect on July 11, 1999) to the partnership and to the other partners. In addition, as discussed below, Sections 17-1101(d) and 17-1101(f) of the Delaware Act generally provide that a partnership agreement may limit or eliminate fiduciary duties a partner may be deemed to owe to the limited partnership or to another partner, and any related liability, provided that the partnership agreement may not limit or eliminate the implied contractual covenant of good faith and fair dealing. Accordingly, while under Delaware
149
law a general partner of a limited partnership is liable as a fiduciary to the other partners, those fiduciary obligations may be altered by the terms of the applicable partnership agreement. Each of the AB Partnership Agreement and AB Holding Partnership Agreement (each, a “Partnership Agreement” and, together, the “Partnership Agreements”) sets forth limitations on the duties and liabilities of the General Partner. Each Partnership Agreement provides that the General Partner is not liable for monetary damages for errors in judgment or for breach of fiduciary duty (including breach of any duty of care or loyalty), unless it is established (the person asserting such liability having the burden of proof) that the General Partner’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury, with reckless disregard for the best interests of the Partnerships or with actual bad faith on the part of the General Partner, or constituted actual fraud. Whenever the Partnership Agreements provide that the

General Partner is permitted or required to make a decision (i) in its “discretion” or under a grant of similar authority or latitude, the General Partner is entitled to consider only such interests and factors as it desires and has no duty or obligation to consider any interest of or other factors affecting the Partnerships or any Unitholder of AB or AB Holding or (ii) in its “good faith” or under another express standard, the General Partner will act under that express standard and will not be subject to any other or different standard imposed by either Partnership Agreement or applicable law or in equity or otherwise. Each Partnership Agreement further provides that to the extent that, at law or in equity, the General Partner has duties (including fiduciary duties) and liabilities relating thereto to either Partnership or any partner, the General Partner acting under either Partnership Agreement, as applicable, will not be liable to the Partnerships or any partner for its good faith reliance on the provisions of the Partnership Agreement.


In addition, each Partnership Agreement grants broad rights of indemnification to the General Partner and its directors, officers and affiliates and authorizes AB and AB Holding to enter into indemnification agreements with the directors, officers, partners, employees and agents of AB and its affiliates and AB Holding and its affiliates. The Partnerships have granted broad rights of indemnification to officers and employees of AB and AB Holding. The foregoing indemnification provisions are not exclusive, and the Partnerships are authorized to enter into additional indemnification arrangements. AB and AB Holding have obtained directors and officers/errors and omissions liability insurance.


Each Partnership Agreement also allows transactions between AB and AB Holding and the General Partner or its affiliates, as we describe in “Policies and Procedures Regarding Transactions with Related Persons” in Item 13, so long as such transactions are on an arms-length basis. The Delaware courts have held that provisions in partnership or limited liability company agreements that permit affiliate transactions so long as they are on an arms-length basis operate to establish a contractually-agreed-to fiduciary duty standard of entire fairness on the part of the general partner or manager in connection with the approval of affiliate transactions. Also, each Partnership Agreement expressly permits all affiliates of the General Partner to compete, directly or indirectly, with AB and AB Holding, as we discuss in “Competition” in Item 1. The Partnership Agreements further provide that, except to the extent that a decision or action by the General Partner is taken with the specific intent of providing an improper benefit to an affiliate of the General Partner to the detriment of AB or AB Holding, there is no liability or obligation with respect to, and no challenge of, decisions or actions of the General Partner that would otherwise be subject to claims or other challenges as improperly benefiting affiliates of the General Partner to the detriment of the Partnerships or otherwise involving any conflict of interest or breach of a duty of loyalty or similar fiduciary obligation.


Section 17-1101(c) of the Delaware Act provides that it is the policy of the Delaware Act to give maximum effect to the principle of freedom of contract and to the enforceability of partnership agreements. Further, Section 17-1101(d) of the Delaware Act provides in part that to the extent that, at law or in equity, a partner has duties (including fiduciary duties) to a limited partnership or to another partner, those duties may be expanded, restricted, or eliminated by provisions in a partnership agreement (provided that a partnership agreement may not eliminate the implied contractual covenant of good faith and fair dealing). In addition, Section 17-1101(f) of the Delaware Act provides that a partnership agreement may limit or eliminate any or all liability of a partner to a limited partnership or another partner for breach of contract or breach of duties (including fiduciary duties); provided, however, that a partnership agreement may not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing. Decisions of the Delaware courts have recognized the right of parties, under the above provisions of the Delaware Act, to alter by the terms of a partnership agreement otherwise applicable fiduciary duties and liability for breach of duties. However, the Delaware courts have required that a partnership agreement make clear the intent of the parties to displace otherwise applicable fiduciary duties (the otherwise applicable fiduciary duties often being referred to as “default” fiduciary duties). Judicial inquiry into whether a partnership agreement is sufficiently clear to displace default fiduciary duties is necessarily fact driven and is made on a case by case basis. Accordingly, the effectiveness of displacing default fiduciary obligations and liabilities of general partners continues to be a developing area of the law and it is not certain to what extent the foregoing provisions of the Partnership Agreements are enforceable under Delaware law.

150

Item 13.Certain Relationships and Related Transactions, and Director Independence


Policies and Procedures Regarding Transactions with Related Persons


Each Partnership Agreement expressly permits AXA, EQH and theirits affiliates (collectively, “AXAEQH Affiliates”), to provide services to AB and AB Holding if the terms of the transaction are approved by the General Partner in good faith as being comparable to (or more favorable to each such Partnership than) those that would prevail in a transaction with an unaffiliated party. This requirement is conclusively presumed to be satisfied as to any transaction or arrangement that (i) in the reasonable and good faith judgment of the General Partner meets that unaffiliated party standard, or (ii) has been approved by a majority of those directors of the General Partner who are not also directors, officers or employees of an affiliate of the General Partner.


In practice, our management pricing committees review investment advisory agreements with AXAEQH Affiliates, which is the manner in which the General Partner reaches a judgment regarding the appropriateness of the fees. Other transactions with AXAEQH Affiliates are submitted to the Audit Committee for their review and approval. (See “Committees of the Board” in Item 10 for details regarding the Audit Committee.) We are not aware of any transaction during 20182020 between our company and any related person with respect to which these procedures were not followed.


Our relationships with AXAEQH Affiliates also are subject to applicable provisions of the insurance laws and regulations of New York and other states. Under such laws and regulations, the terms of certain investment advisory and other agreements we enter into with AXAEQH Affiliates are required to be fair and equitable and charges or fees for services performed must be reasonable. Also, in some cases, the agreements are subject to regulatory approval.


We have written policies regarding the employment of immediate family members of any of our related persons. Compensation and benefits for all of our employees is established in accordance with our human resources practices, taking into consideration the defined qualifications, responsibilities and nature of the role.


Financial Arrangements with EQH Affiliates, AXA Affiliatesand Certain of its Subsidiaries


The General Partner has, in its reasonable and good faith judgment (based on its knowledge of, and inquiry with respect to, comparable arrangements with or between unaffiliated parties), approved the following arrangements with AXAEQH Affiliates as being comparable to, or more favorable to AB than, those that would prevail in a transaction with an unaffiliated party.


TransactionsSee Note 12 to AB’s consolidated financial statements in Item 8 for disclosures related to our credit facility with EQH. Significant transactions between AB and related persons during 20182020 are as follows (the first table summarizes services we provide to related persons and the second table summarizes services our related persons provide to us):

Parties(1)
General Description of Relationship(2)
Amounts Received
or Accrued for in 2018
   
AXA Equitable(3)
We provide investment management services and ancillary accounting, valuation, reporting, treasury and other services to the general and separate accounts of AXA Equitable Holdings and its insurance company subsidiaries.$71,891,000
EQAT, AXA Enterprise Trust and AXA Premier VIP TrustWe serve as sub-adviser to these open-end mutual funds, each of which is sponsored by a subsidiary of AXA Equitable Holdings.$27,755,000
AXA Life InvestWe provide investment management, distribution and shareholder servicing-related services.$17,921,000
AXA Life Japan Limited(3)
 $15,089,000
AXA France(3)
 $10,533,000
AXA Switzerland Life(3)
 $8,912,000
AXA Rosenberg Asia Pacific(3)
 $6,206,000
AXA Germany(3)
 $5,597,000
AXA Re Arizona Company(3)
 $3,215,000
AXA Belgium(3)
 $3,137,000

Parties(1)
General Description of Relationship(2)
Amounts Received
or Accrued for in 2018
AXA Hong Kong Life(3)
 $2,400,000
AXA Insurance UK Non Direct Regulated(3)
 $2,291,000
MONY Life Insurance Company of America(3)
 $1,792,000
Architas Multi-Manager UK(3)
 $1,503,000
AXA Winterthur(3)
 $1,133,000
AXA Mediterranean(3)
 $843,000
AXA Insurance Ltd(3)
 $730,000
AXA U.K. Group Pension Scheme $591,000
AXA Switzerland Property and Casualty(3)
 $511,000
AXA Corporate Solutions(3)
 $428,000
AXA General Insurance Hong Kong Ltd(3)
 $397,000
U.S. Financial Life Insurance Company(3)
 $373,000
AXA Spain Property and Casualty(3)
 $364,000
AXA General Insurance Hong Kong Ltd.(3)
 $328,000
AXA Insurance Company(3)
 $222,000
AXA MPS (3)
 $222,000
AXA Equitable Holdings(3)
 $199,000
AXA Life Singapore (3)
 $136,000
AXA Investment Managers Ltd.(3)
 $109,000
XL Group Investments Ltd(3)
 $101,000
   
Parties(1)(3)
General Description of RelationshipAmounts Paid
or Accrued for in 2018
AXA AdvisorsDistributes certain of our Retail Products and provides Private Wealth Management referrals.$21,567,000
AXA Business Services Pvt. Ltd.Provides data processing services and support for certain investment operations functions.$6,815,000
AXA Equitable HoldingsWe are covered by various insurance policies maintained by AXA Equitable Holdings.$2,615,000
AXA Technology Services India Pvt.Provides certain data processing services and functions.$2,153,000
AXA XL InsuranceWe are covered by various E&O insurance policies maintained by AXA XL.$1,961,000
AXA AdvisorsSells shares of our mutual funds under Distribution Service and educational Support agreements.$1,485,000
AXA Group Solutions Pvt. Ltd.Provides maintenance and development support for applications.$1,038,000
GIE Informatique AXAProvides cooperative technology development and procurement services to us and to various other subsidiaries of AXA.$399,000

Parties(1)
AB
General Description of Relationship(2)
Amounts Received
or one of its subsidiaries is a party to each transaction.Accrued for in 2020
(2)Equitable FinancialWe provide investment management services unless otherwise indicated.and ancillary accounting, valuation, reporting, treasury and other services to the general and separate accounts of Equitable Financial and its insurance company subsidiaries.$87,388,000 
EQAT and Equitable Premier VIP TrustWe serve as sub-adviser to these open-end mutual funds, each of which is sponsored by a subsidiary of Equitable Holdings.$26,963,000 
AXA Life Invest(3)
We provide investment management, distribution and shareholder servicing-related services.$16,182,000 
AXA France(3)
$17,394,000 
AXA Life Japan Limited(3)
$14,942,000 
AXA Germany(3)
$7,835,000 
AXA Switzerland Life(3)
$5,979,000 
AXA Rosenberg Asia Pacific(3)
$5,878,000 
AXA Winterthur(3)
$3,514,000 
AXA Belgium(3)
$3,391,000 
151
(3)Equitable AmericaThis entity is a subsidiary$2,128,000 
AXA Hong Kong Life(3)
$2,018,000 
AXA Insurance UK Non Direct Regulated(3)
$1,851,000 
XL Group Investments Ltd(3)
$1,276,000 
Architas Multi-Manager UK(3)
$1,262,000 
AXA Mediterranean(3)
$1,589,000 
AXA U.K. Group Pension Scheme(3)
$837,000 
AXA Insurance Ltd(3)
$805,000 
AXA China(3)
$664,000 
AXA General Insurance Hong Kong Ltd(3)
$458,000 
AXA Corporate Solutions$455,000 
AXA Switzerland Property and Casualty(3)
$394,000 
AXA Insurance Company(3)
$287,000 
AXA Spain Property and Casualty(3)
$189,000 
AXA General Insurance Hong Kong Ltd.(3)
$175,000 
AXA Life Singapore (3)
$156,000 
Parties(1)
General Description of AXA.RelationshipAmounts Paid
or Accrued for in 2020
AXADistributes certain of our Retail Products and provides Private Wealth Management referrals.$14,848,000 
Equitable AdvisorsDistributes certain of our Retail Products and provides Private Wealth Management referrals.$3,952,000 
AXA Business Services Pvt. Ltd.(3)
Provides data processing services and support for certain investment operations functions.$6,799,000 
AXA Technology Services India Pvt.(3)
Provides certain data processing services and functions.$1,951,000 
Equitable AdvisorsSells shares of our mutual funds under Distribution Service and educational Support agreements.$5,463,000 
Equitable HoldingsWe are covered by various insurance policies maintained by Equitable Holdings.$2,281,000 
AXA Group Solutions(3)
Provides certain data processing services and functions.$150,000 


(1)AB or one of its subsidiaries is a party to each transaction.
(2)We provide investment management services unless otherwise indicated.
(3)This entity is a subsidiary of AXA.

Arrangements with Immediate Family Members of Related Persons


During 2018,2020, we did not have arrangements with immediate family members of our directors and executive officers.




Director Independence


See “Independence of Certain Directors” in Item 10.

152

Item 14.Principal Accounting Fees and Services


Fees for professional audit services rendered by PricewaterhouseCoopers LLP (“PwC”) for the audit of AB’s and AB Holding’s annual financial statements for 20182020 and 2017,2019, respectively, and fees for other services rendered by PwC are as follows:
2018 201720202019
(in thousands)(in thousands)
Audit fees(1)
$6,244
 $5,943
Audit fees(1)
$6,616 $6,263 
Audit-related fees(2)
3,259
 3,457
Audit-related fees(2)
3,188 3,130 
Tax fees(3)
2,001
 2,112
Tax fees(3)
1,222 1,320 
All other fees(4)
6
 189
All other fees(4)
6 6 
Total$11,510
 $11,701
Total$11,032 $10,719 

(1)Includes $58,447 and $57,010 paid for audit services to AB Holding in 2018 and 2017, respectively.
(2)Audit-related fees consist principally of fees for audits of financial statements of certain employee benefit plans, internal control reviews and accounting consultation.
(3)Tax fees consist of fees for tax consultation and tax compliance services.
(4)All other fees in 2018 and 2017 consisted of miscellaneous non-audit services.

(1)Includes $61,982 and $59,313 paid for audit services to AB Holding in 2020 and 2019, respectively.
(2)Audit-related fees consist principally of fees for audits of financial statements of certain employee benefit plans, internal control reviews and accounting consultation.
(3)Tax fees consist of fees for tax consultation and tax compliance services.
(4)All other fees in 2020 and 2019 consisted of miscellaneous non-audit services.

The Audit Committee has a policy to pre-approve audit and non-audit service engagements with the independent registered public accounting firm. The independent registered public accounting firm must provide annually a comprehensive and detailed schedule of each proposed audit and non-audit service to be performed. The Audit Committee then affirmatively indicates its approval of the listed engagements. Engagements that are not listed but that are of similar scope and size to those listed and approved may be deemed to be approved, if the fee for such service is less than $100,000. In addition, the Audit Committee has delegated to its chairman the ability to approve any permissible non-audit engagement where the fees are expected to be less than $100,000.



153
PART IV
Item 15. Exhibits, Financial Statement Schedules


(a)There is no document filed as part of this Form 10-K.

(a)There is no document filed as part of this Form 10-K.

Financial Statement Schedule.


Attached to this Form 10-K is a schedule describing Valuation and Qualifying Account-Allowance for Doubtful Accounts for the three years ended December 31, 2018, 20172020, 2019 and 2016.2018.


(b)Exhibits.

(b)Exhibits.

The following exhibits required to be filed by Item 601 of Regulation S-K are filed herewith or incorporated by reference herein, as indicated:
ExhibitDescription
3.01
3.02
3.03
3.04
3.05
3.06
3.07
3.08
10.014.01 
10.0210.01 
10.0310.02 
10.0410.03 
10.0510.04 
10.0610.05 

10.06 

10.07 
10.08 
10.09 
10.10
10.11 
10.0710.12 
154
Table of Contents
10.08Exhibit
Description
10.13 

10.0910.14 
10.1010.15 
10.1110.16 
10.1210.17 
10.1310.18 
10.14
Summary of AB's Lease at 501 Commerce Street, Nashville, Tennessee.
10.15
Guidelines for Transfer of AB Units.
10.16
Amended and Restated Revolving Credit Agreement, dated as of September 27, 2018 (incorporated by reference to ExhibitEx. 10.01 to Form 8-K, as filed October 3, 2018).

10.19 
ExhibitDescription
10.17
10.18
AB 2017 Long Term Incentive Plan (incorporated by reference to ExhibitEx. 10.06 to Form 10-K for the fiscal year ended December 31, 2017, as filed February 13, 2018).*
10.1910.20 
10.20
Employment Agreement among Seth P. Bernstein, AB, AB Holding and AllianceBernstein Corporation (incorporated by reference to ExhibitEx. 10.3 to Form 10-K,8-K, as filed May 1, 2017).*
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
21.01
23.01
31.01
31.02
32.01
32.02
101.INS
XBRL Instance Document.Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
155
Table of Contents
101.SCHExhibit
Description
101.SCHXBRL Taxonomy Extension Schema.
101.CAL
XBRL Taxonomy Extension Calculation Linkbase.
101.LAB
XBRL Taxonomy Extension Label Linkbase.
101.PRE
XBRL Taxonomy Extension Presentation Linkbase.
101.DEF
XBRL Taxonomy Extension Definition Linkbase.
*104 
The cover page from the Company's Annual Report on Form 10-K for the year ended December 31, 2020, formatted in Inline XBRL (included in Exhibit 101).
*Denotes a compensatory plan or arrangement

156


Item 16.Form 10-K Summary


Not applicable.None.


157
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AllianceBernstein L.P.
Date: February 13, 201911, 2021By:/s/ Seth P. Bernstein
Seth P. Bernstein
Chief Executive Officer
Pursuant to the requirements of the Exchange Act, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Date: February 11, 2021/s/ John C. Weisenseel
John C. Weisenseel
Chief Financial Officer
Date: February 11, 2021/s/ William R. Siemers
William R. Siemers
Controller and Chief Accounting Officer
158
Directors
/s/ Seth P. Bernstein/s/ Ramon de Oliveira
Seth P. BernsteinRamon de Oliveira
President and Chief Executive OfficerChairman of the Board
Date: February 13, 2019/s/ John C. WeisenseelPaul L. Audet/s/ Nella L. Domenici
Paul L. AudetJohn C. WeisenseelNella L. Domenici
DirectorChief Financial Officer
Director
Date: February 13, 2019/s/ William R. SiemersJeffrey J. Hurd/s/ Daniel G. Kaye
Jeffrey J. HurdWilliam R. SiemersDaniel G. Kaye
DirectorController and Chief Accounting Officer

Directors
Director
/s/ Seth P. BernsteinNick Lane/s/ Robert B. ZoellickKristi A. Matus
Seth P. BernsteinNick LaneRobert B. ZoellickKristi A. Matus
President and Chief Executive OfficerDirectorChairman of the BoardDirector
/s/ Paul L. Audet/s/ Ramon de Oliveira
Paul L. AudetRamon de Oliveira
DirectorDirector
/s/ Denis Duverne/s/ Barbara Fallon-Walsh
Denis DuverneBarbara Fallon-Walsh
DirectorDirector
/s/ Daniel G. Kaye/s/ Shelley B. Leibowitz
Daniel G. KayeShelley B. Leibowitz
DirectorDirector
/s/s Anders Malmstrom/s/ Das Narayandas
Anders MalmstromDas Narayandas
DirectorDirector
/s/ Mark Pearson
Das NarayandasMark Pearson
DirectorDirector
/s/ Bertram L. Scott/s/ Charles G.T. Stonehill
Bertram L. ScottCharles G. T. Stonehill
Director
Director

159
SCHEDULE I III
AllianceBernstein L.P.
Valuation and Qualifying Account - Allowance for Doubtful Accounts
For the Three Years Ending December 31, 2018, 20172020, 2019 and 20162018
DescriptionBalance at Beginning
of Period		Credited to
Costs and
Expenses		Deductions Balance at End
of Period
 (in thousands)
For the year ended December 31, 2020$309 $100 $98 (a)$311 
For the year ended December 31, 2019$395 $132 $218 (b)$309 
For the year ended December 31, 2018$411 $0 $16 (c)$395 
(a)Includes accounts written-off as uncollectible of $98.
(b)Includes accounts written-off as uncollectible of $218
(c)Includes accounts written-off as uncollectible of $16.
160
Description 
Balance at Beginning
of Period
 
Credited to
Costs and
Expenses
 Deductions   
Balance at End
of Period
  (in thousands)
For the year ended December 31, 2016 $552
 $—
 $39
 (a) $513
           
For the year ended December 31, 2017 $513
 $150
 $252
 (b) $411
           
For the year ended December 31, 2018 $411
 $—
 $—
 (c) $411
(a)
Includes accounts written-off as uncollectible of $39.
(b)Includes accounts written-off as uncollectible of $252.
(c)Includes accounts written-off as uncollectible of $0.

149