UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K


x☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the Fiscal Year Ended December 31, 20172019


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 001-09818


ALLIANCEBERNSTEIN HOLDING L.P.
(Exact name of registrant as specified in its charter)


Delaware 13-3434400
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
1345 Avenue of the Americas, New York, N.Y.10105
(Address of principal executive offices)(Zip Code)


1345 Avenue of the Americas, New York, NY10105
(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:


Title of Each ClassTrading Symbol Name of each exchangeEach Exchange on which registeredWhich Registered
units representing assignmentsUnits Rep. Assignments of beneficial ownershipBeneficial Ownership of limited partnership interestsLP Interests in AB Holding ("Units")AB New York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes x☒  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 x☒


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 x☒ No o☐


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 x☒  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.    x


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 filerx
☒
Accelerated filero
Non-accelerated filer  o
Smaller reporting company  o
☐
 
Non-accelerated filer☐Smaller reporting company☐
Emerging growth companyo☐
If an emerging growth company, indicate 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, indicate 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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes o☐  No x☒


The aggregate market value of the units representing assignments of beneficial ownership of limited partnership interests held by non-affiliates computed by reference to the price at which such units were last sold on the New York Stock Exchange as of June 30, 20172019 was approximately $2.2$2.7 billion.


The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of December 31, 20172019 was 96,461,989.98,192,098. (This figure includes 100,000 general partnership units having economic interests equivalent to the economic interests of the units representing assignments of beneficial ownership of limited partnership interests.)


DOCUMENTS INCORPORATED BY REFERENCE


This Form 10-K does not incorporate any document by reference.
 
 





Table of Contents


Glossary of Certain Defined Termsii
   
Part I  
Item 1.
Business
1
Item 1A.
Risk Factors
16
Item 1B.
Unresolved Staff Comments
27
Item 2.
Properties
2728
Item 3.
Legal Proceedings
2728
Item 4.
Mine Safety Disclosures
2728
   
Part II  
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
2829
Item 6.
Selected Financial Data
30
AB Holding
30
AB
31
AB Holding
31
AB
32
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
3334
 
Executive Overview
3334
 
AB Holding
36
 
AB
39
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
6261
 
AB Holding
6261
 
AB
6261
Item 8.
Financial Statements and Supplementary Data
6463
 
AB Holding
66
 
AB
7980
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
125129
Item 9A.
Controls and Procedures
125129
Item 9B.
Other Information
126130
   
Part III  
Item 10.
Directors, Executive Officers and Corporate Governance
127131
Item 11.
Executive Compensation
134140
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
155162
Item 13.
Certain Relationships and Related Transactions, and Director Independence
160166
Item 14.
Principal Accounting Fees and Services
163168
   
Part IV  
Item 15.
Exhibits, Financial Statement Schedules
164169
Item 16.
Form 10-K Summary
167172
Signatures
168173


i

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 Financial, and its subsidiaries other than AB and its subsidiaries.

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

“AXA Financial” – AXA Financial, Inc. (Delaware corporation), a subsidiary of AXA.

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

“Equitable Life” – AXA Equitable Life Insurance Company (New York stock life insurance company), a subsidiary of Equitable Holdings, 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 Principles.

“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.





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, 2017,2019: Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Pakistan, Peru, Pakistan, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and the United Arab Emirates.


Clients


We provide research, diversified investment management 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, 2017, 20162019, 2018 and 2015,2017, our AUM were approximately $554$623 billion, $480$516 billion and $467$554 billion, respectively, and our net revenues as of December 31, 2017, 20162019, 2018 and 20152017 were approximately $3.5 billion, $3.4 billion and $3.3 billion, $3.0 billionrespectively.EQH (our parent company), AXA and $3.0 billion, respectively.AXA, our parent company, and itstheir respective subsidiaries, whose AUM consist primarily of fixed income investments, together constitute our largest client.clients. Our EQH affiliates represented approximately 23%18%, 24%18% and 24%17% of our AUM as of December 31, 2017, 20162019, 2018 and 2015,2017, and we earned approximately 5%3% of our net revenues from services we provided to our affiliatesthem in each of those years. AXA and its subsidiaries represented approximately 5%, 6% and 6% of our AUM as of December 31, 2019, 2018 and 2017, 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 and alternative investments.

Corporate Responsibility
As a fiduciary, responsible investor and research firm, we believe that being a responsible company and investing responsibly are linked. The views of governments, communities, consumers and other stakeholders continue to evolve on responsible behavior, and firms are rethinking their purpose beyond maximizing shareholder value. Increasingly, investors are more closely scrutinizing companies, including investment managers (like us), to determine how committed they are to corporate responsibility.

At AB, we 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.

Also, striving to be more responsible gives us a richer perspective for evaluating other firms. As longtime fundamental investors with a strong research heritage, we have integrated environmental, social and governance (“ESG”) considerations into various processes. This helps us make fully informed risk/return assessments and draw insightful investment conclusions. Further, we

have invested in technology and innovation to enable our investment teams to formalize their ESG evaluations and share insights from our engagements with other companies.

We provide additional information in this regard in our corporate responsibility report, which can be found under “Corporate Responsibility - Overview” on our Internet site.

Investment Services


Our broad range of investment services includes:
•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 and private equity (e.g., direct real estate investingequity; and direct lending); and
•Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds.


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, 2017, 20162019, 2018 and 20152017 were as follows:


By Client Domicile ($ in billions):

chart1a02.jpg
By Investment Service ($ in billions):

chart2updatea01.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 various of our affiliates such as EQH and its 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.


AXAEQH and its subsidiaries together constitute our largest institutional client. AXA'sEQH and its subsidiaries combined AUM accounted for approximately 34%28%, 35%26% and 33%24% of our institutional AUM as of December 31, 2017, 20162019, 2018 and 2015,2017, respectively, and approximately 25%17%, 28%16% and 26%15% of our institutional revenues for 2019, 2018 and 2017, 2016respectively. Also, AXA and 2015,its subsidiaries combined AUM accounted for approximately 10%, 11% and 10% of our institutional AUM as of December 31, 2019, 2018 and 2017, respectively, and approximately 11%, 11% and 10% of our institutional revenues for 2019, 2018 and 2017, respectively. No single institutional client other than EQH, AXA and itstheir respective subsidiaries accounted for more than approximately 1% of our net revenues for the year ended December 31, 2017.2019.


As of December 31, 2017, 20162019, 2018 and 2015,2017, Institutional Services represented approximately 48%45%, 50%48% and 51%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, % ChangeDecember 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in millions)    (in millions)    
Equity Actively Managed:                  
U.S.$10,521
 $8,792
 $9,156
 19.7 % (4.0)%$13,861
 $9,629
 $10,521
 44.0 % (8.5)%
Global & Non-US22,577
 18,215
 16,705
 23.9
 9.0
30,767
 23,335
 22,577
 31.8
 3.4
Total33,098
 27,007
 25,861
 22.6
 4.4
44,628
 32,964
 33,098
 35.4
 (0.4)
Equity Passively Managed(1):
                  
U.S.18,515
 16,135
 15,573
 14.8
 3.6
21,349
 17,481
 18,515
 22.1
 (5.6)
Global & Non-US3,521
 3,467
 4,250
 1.6
 (18.4)3,951
 3,174
 3,521
 24.5
 (9.9)
Total22,036
 19,602
 19,823
 12.4
 (1.1)25,300
 20,655
 22,036
 22.5
 (6.3)
Total Equity55,134
 46,609
 45,684
 18.3
 2.0
69,928
 53,619
 55,134
 30.4
 (2.7)
Fixed Income Taxable:                  
U.S.103,073
 97,610
 88,997
 5.6
 9.7
107,436
 96,913
 103,073
 10.9
 (6.0)
Global & Non-US60,233
 52,598
 54,897
 14.5
 (4.2)50,281
 51,156
 60,233
 (1.7) (15.1)
Total163,306
 150,208
 143,894
 8.7
 4.4
157,717
 148,069
 163,306
 6.5
 (9.3)
Fixed Income Tax-Exempt:                  
U.S.1,051
 1,819
 1,920
 (42.2) (5.3)1,209
 1,046
 1,051
 15.6
 (0.5)
Global & Non-US—
 —
 —
 —
 —
—
 —
 —
 —
 —
Total1,051
 1,819
 1,920
 (42.2) (5.3)1,209
 1,046
 1,051
 15.6
 (0.5)
Fixed Income Passively Managed(1):
                  
U.S.66
 1,305
 64
 (94.9) 1,939.1
69
 73
 66
 (5.5) 10.6
Global & Non-US20
 15
 18
 33.3
 (16.7)20
 15
 20
 33.3
 (25.0)
Total86
 1,320
 82
 (93.5) 1,509.8
89
 88
 86
 1.1
 2.3
Total Fixed Income164,443
 153,347
 145,896
 7.2
 5.1
159,015
 149,203
 164,443
 6.6
 (9.3)
Other(2):
                  
U.S.5,258
 3,831
 2,939
 37.2
 30.4
5,568
 5,024
 5,258
 10.8
 (4.5)
Global & Non-US44,442
 35,477
 41,683
 25.3
 (14.9)48,179
 38,433
 44,442
 25.4
 (13.5)
Total49,700
 39,308
 44,622
 26.4
 (11.9)53,747
 43,457
 49,700
 23.7
 (12.6)
Total:                  
U.S.138,484
 129,492
 118,649
 6.9
 9.1
149,492
 130,166
 138,484
 14.8
 (6.0)
Global & Non-US130,793
 109,772
 117,553
 19.1
 (6.6)133,198
 116,113
 130,793
 14.7
 (11.2)
Total$269,277
 $239,264
 $236,202
 12.5
 1.3
$282,690
 $246,279
 $269,277
 14.8
 (8.5)
Affiliated$91,903
 $82,721
 $78,048
 11.1
 6.0
Affiliated - EQH$78,506
 $64,447
 $65,384
 21.8
 (1.4)
AXA27,136
 25,948
 26,519
 4.6

(2.2)
Non-affiliated177,374
 156,543
 158,154
 13.3
 (1.0)177,048
 155,884
 177,374
 13.6
 (12.1)
Total$269,277
 $239,264
 $236,202
 12.5
 1.3
$282,690
 $246,279
 $269,277
 14.8
 (8.5)

(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, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in thousands)    (in thousands)    
Equity Actively Managed:                  
U.S.$53,352
 $49,369
 $54,150
 8.1 % (8.8)%$62,252
 $60,465
 $53,352
 3.0 % 13.3 %
Global & Non-US88,676
 75,815
 88,096
 17.0
 (13.9)98,169
 103,763
 88,676
 (5.4) 17.0
Total142,028
 125,184
 142,246
 13.5
 (12.0)160,421
 164,228
 142,028
 (2.3) 15.6
Equity Passively Managed(1):
                  
U.S.3,721
 2,964
 2,824
 25.5
 5.0
3,846
 3,713
 3,721
 3.6
 (0.2)
Global & Non-US1,882
 2,345
 4,295
 (19.7) (45.4)1,992
 1,880
 1,882
 6.0
 (0.1)
Total5,603
 5,309
 7,119
 5.5
 (25.4)5,838
 5,593
 5,603
 4.4
 (0.2)
Total Equity147,631
 130,493
 149,365
 13.1
 (12.6)166,259
 169,821
 147,631
 (2.1) 15.0
Fixed Income Taxable:                  
U.S.107,262
 101,874
 94,272
 5.3
 8.1
103,735
 102,356
 107,262
 1.3
 (4.6)
Global & Non-US112,294
 111,602
 125,888
 0.6
 (11.3)100,352
 106,314
 112,294
 (5.6) (5.3)
Total219,556
 213,476
 220,160
 2.8
 (3.0)204,087
 208,670
 219,556
 (2.2) (5.0)
Fixed Income Tax-Exempt:                  
U.S.1,989
 2,591
 2,361
 (23.2) 9.7
1,309
 1,217
 1,989
 7.6
 (38.8)
Global & Non-US—
 —
 —
 —
 —
—
 —
 —
 —
 —
Total1,989
 2,591
 2,361
 (23.2) 9.7
1,309
 1,217
 1,989
 7.6
 (38.8)
Fixed Income Passively Managed(1):
                  
U.S.202
 322
 68
 (37.3) 373.5
86
 49
 202
 75.5
 (75.7)
Global & Non-US16
 1
 81
 1,500.0
 (98.8)21
 28
 16
 (25.0) 75.0
Total218
 323
 149
 (32.5) 116.8
107
 77
 218
 39.0
 (64.7)
Fixed Income Servicing(2):
                  
U.S.13,597
 12,718
 13,510
 6.9
 (5.9)13,215
 12,708
 13,597
 4.0
 (6.5)
Global & Non-US(14) 1,530
 1,715
 (100.9) (10.8)—
 —
 (14) n/m
 100.0
Total13,583
 14,248
 15,225
 (4.7) (6.4)13,215
 12,708
 13,583
 4.0
 (6.4)
Total Fixed Income235,346
 230,638
 237,895
 2.0
 (3.1)218,718
 222,672
 235,346
 (1.8) (5.4)
Other(3):
                  
U.S.62,287
 34,577
 23,130
 80.1
 49.5
54,582
 52,131
 63,192
 4.7
 (17.5)
Global & Non-US38,153
 25,162
 24,070
 51.6
 4.5
39,405
 33,530
 38,153
 17.5
 (12.1)
Total100,440
 59,739
 47,200
 68.1
 26.6
93,987
 85,661
 101,345
 9.7
 (15.5)
         
Total Investment Advisory and Services Fees:                  
U.S.242,410
 204,415
 190,315
 18.6
 7.4
239,025
 232,639
 243,315
 2.7
 (4.4)
Global & Non-US241,007
 216,455
 244,145
 11.3
 (11.3)239,939
 245,515
 241,007
 (2.3) 1.9
Consolidated company-sponsored investment funds(8,717) 27
 —
 n/m
 n/m
—
 (372) (8,717) 100.0

n/m
474,700
 420,897
 434,460
 12.8
 (3.1)
Total478,964
 477,782
 475,605
 0.2
 0.5
Distribution Revenues1,047
 684
 248
 53.1
 175.8
704
 757
 1,047
 (7.0) (27.7)
Shareholder Servicing Fees488
 479
 497
 1.9
 (3.6)476
 529
 488
 (10.0) 8.4
Total$476,235
 $422,060
 $435,205
 12.8
 (3.0)$480,144
 $479,068
 $477,140
 0.2
 0.4
Affiliated$120,925
 $116,392
 $113,187
 3.9
 2.8
Affiliated - EQH$81,605
 $77,021
 $72,082
 6.0
 6.9
AXA55,135
 53,745
 48,843
 2.6

10.0
Non-affiliated355,310
 305,668
 322,018
 16.2
 (5.1)343,404
 348,302
 356,215
 (1.4) (2.2)
Total$476,235
 $422,060
 $435,205
 12.8
 (3.0)$480,144
 $479,068
 $477,140
 0.2
 0.4

(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 EQH, AXA and itstheir respective subsidiaries together constitute our largest retail client. Theyclients. EQH and its subsidiaries accounted for approximately 19%14%, 21%16% and 22%16% of our retail AUM as of December 31, 2017, 20162019, 2018 and 2015,2017, respectively, and approximately 4%2% of our retail net revenues in each of those years. AXA and its subsidiaries accounted for approximately 2%, 3% and 3% of our retail AUM as of December 31, 2019, 2018 and 2017, 2016respectively, and 2015.

Certain subsidiaries of AXA, including AXA Advisors, LLC (“AXA Advisors”), a subsidiary of AXA Financial, were responsible for approximately 1%, 2% and 4%2% of total sales of shares of open-end AB Funds inour retail net revenues for the years ended December 31, 2019, 2018 and 2017, 2016 and 2015, respectively.

HSBC was responsible for approximately 9%14%, 7% and 12%9% of our open-end AB Fundmutual fund sales in 2019, 2018 and 2017, and 2016, respectively. Neither our affiliates nor HSBC areis 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. No other entity accounted for 10% or more ofis not our open-end AB Fund sales.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, 2017,2019, retail U.S. Fund AUM were approximately $47$55 billion, or 25%23% of retail AUM, as compared to $41$43 billion, or 26%24%, as of December 31, 2016,2018, and $45$47 billion, or 29%25%, as of December 31, 2015.2017. Non-U.S. Fund AUM, as of December 31, 2017,2019, totaled $76$103 billion, or 40%43% of retail AUM, as compared to $59$71 billion, or 37%39%, as of December 31, 2016,2018, and $52$76 billion, or 33%40%, as of December 31, 2015.2017.


Our Retail Services represented approximately 35%39%, 33%35% and 33%35% of our AUM as of December 31, 2017, 20162019, 2018 and 2015,2017, respectively, and the fees we earned from providing these services represented approximately 43%46%, 42%44% and 45%43% of our net revenues for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, respectively. Our AUM and revenues are as follows:



Retail Services Assets Under Management
(by Investment Service)


December 31, % ChangeDecember 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in millions)    (in millions)    
Equity Actively Managed:                  
U.S.$37,720
 $31,717
 $31,481
 18.9 % 0.7 %$57,125
 $41,450
 $37,720
 37.8 % 9.9 %
Global & Non-US20,274
 12,514
 14,810
 62.0
 (15.5)24,497
 19,475
 20,274
 25.8
 (3.9)
Total57,994
 44,231
 46,291
 31.1
 (4.5)81,622
 60,925
 57,994
 34.0
 5.1
Equity Passively Managed(1):
                  
U.S.23,294
 20,997
 19,483
 10.9
 7.8
27,153
 22,658
 23,294
 19.8
 (2.7)
Global & Non-US8,758
 7,025
 6,664
 24.7
 5.4
7,530
 6,697
 8,758
 12.4
 (23.5)
Total32,052
 28,022
 26,147
 14.4
 7.2
34,683
 29,355
 32,052
 18.2
 (8.4)
Total Equity90,046
 72,253
 72,438
 24.6
 (0.3)116,305
 90,280
 90,046
 28.8
 0.3
         
Fixed Income Taxable:                  
U.S.7,699
 6,175
 5,905
 24.7
 4.6
9,093
 7,029
 7,699
 29.4
 (8.7)
Global & Non-US65,963
 54,328
 47,891
 21.4
 13.4
79,315
 53,413
 65,963
 48.5
 (19.0)
Total73,662
 60,503
 53,796
 21.7
 12.5
88,408
 60,442
 73,662
 46.3
 (17.9)
Fixed Income Tax-Exempt:                  
U.S.15,654
 13,579
 11,601
 15.3
 17.1
20,706
 16,403
 15,654
 26.2
 4.8
Global & Non-US53
 10
 12
 430.0
 (16.7)44
 42
 53
 4.8
 (20.8)
Total15,707
 13,589
 11,613
 15.6
 17.0
20,750
 16,445
 15,707
 26.2
 4.7
Fixed Income Passively Managed(1):
                  
U.S.5,173
 5,216
 5,010
 (0.8) 4.1
5,031
 4,965
 5,173
 1.3
 (4.0)
Global & Non-US4,250
 4,041
 4,492
 5.2
 (10.0)3,794
 3,964
 4,250
 (4.3) (6.7)
Total9,423
 9,257
 9,502
 1.8
 (2.6)8,825
 8,929
 9,423
 (1.2) (5.2)
Total Fixed Income98,792
 83,349
 74,911
 18.5
 11.3
117,983
 85,816
 98,792
 37.5
 (13.1)
Other(2):
                  
U.S.2,799
 3,229
 5,116
 (13.3) (36.9)2,470
 2,476
 2,799
 (0.2) (11.5)
Global & Non-US1,311
 1,339
 1,903
 (2.1) (29.6)2,408
 2,197
 1,311
 9.6
 67.6
Total4,110
 4,568
 7,019
 (10.0) (34.9)4,878
 4,673
 4,110
 4.4
 13.7
Total:                  
U.S.92,339
 80,913
 78,596
 14.1
 2.9
121,578
 94,981
 92,339
 28.0
 2.9
Global & Non-US100,609
 79,257
 75,772
 26.9
 4.6
117,588
 85,788
 100,609
 37.1
 (14.7)
Total$192,948
 $160,170
 $154,368
 20.5
 3.8
$239,166
 $180,769
 $192,948
 32.3
 (6.3)
Affiliated$36,965
 $33,774
 $33,364
 9.4
 1.2
Affiliated - EQH$34,448
 $29,206
 $30,720
 17.9
 (4.9)
AXA5,680
 5,471
 6,245
 3.8

(12.4)
Non-affiliated155,983
 126,396
 121,004
 23.4
 4.5
199,038
 146,092
 155,983
 36.2
 (6.3)
Total$192,948
 $160,170
 $154,368
 20.5
 3.8
$239,166
 $180,769
 $192,948
 32.3
 (6.3)

(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, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in thousands)    (in thousands)    
Equity Actively Managed:                  
U.S.$204,363
 $186,442
 $182,802
 9.6 % 2.0 %$283,461
 $235,611
 $204,363
 20.3 % 15.3 %
Global & Non-US114,277
 92,953
 107,787
 22.9
 (13.8)153,156
 149,995
 114,277
 2.1
 31.3
Total318,640
 279,395
 290,589
 14.0
 (3.9)436,617
 385,606
 318,640
 13.2
 21.0
Equity Passively Managed(1):
                  
U.S.8,508
 7,670
 8,187
 10.9
 (6.3)9,179
 8,901
 8,508
 3.1
 4.6
Global & Non-US6,636
 5,267
 5,268
 26.0
 —
6,994
 7,861
 6,636
 (11.0) 18.5
Total15,144
 12,937
 13,455
 17.1
 (3.8)16,173
 16,762
 15,144
 (3.5) 10.7
Total Equity333,784
 292,332
 304,044
 14.2
 (3.9)452,790
 402,368
 333,784
 12.5
 20.5
Fixed Income Taxable:                  
U.S.23,142
 16,993
 15,842
 36.2
 7.3
26,963
 25,194
 23,142
 7.0
 8.9
Global & Non-US454,613
 373,997
 397,731
 21.6
 (6.0)479,886
 438,048
 454,613
 9.6
 (3.6)
Total477,755
 390,990
 413,573
 22.2
 (5.5)506,849
 463,242
 477,755
 9.4
 (3.0)
Fixed Income Tax-Exempt:                  
U.S.54,106
 52,847
 44,917
 2.4
 17.7
65,375
 58,824
 54,106
 11.1
 8.7
Global & Non-US121
 63
 73
 92.1
 (13.7)99
 132
 120
 (25.0) 10.0
Total54,227
 52,910
 44,990
 2.5
 17.6
65,474
 58,956
 54,226
 11.1
 8.7
Fixed Income Passively Managed(1):
                  
U.S.6,055
 6,105
 5,663
 (0.8) 7.8
5,972
 6,086
 6,055
 (1.9) 0.5
Global & Non-US7,567
 7,815
 8,198
 (3.2) (4.7)6,133
 6,809
 7,567
 (9.9) (10.0)
Total13,622
 13,920
 13,861
 (2.1) 0.4
12,105
 12,895
 13,622
 (6.1) (5.3)
Total Fixed Income545,604
 457,820
 472,424
 19.2
 (3.1)584,428
 535,093
 545,603
 9.2
 (1.9)
Other(2):
                  
U.S.59,751
 52,025
 71,129
 14.9
 (26.9)51,958
 63,232
 59,751
 (17.8) 5.8
Global & Non-US6,583
 6,672
 8,456
 (1.3) (21.1)8,946
 8,575
 6,583
 4.3
 30.3
Total66,334
 58,697
 79,585
 13.0
 (26.2)60,904
 71,807
 66,334
 (15.2) 8.3
Total Investment Advisory and Services Fees:                  
U.S.355,925
 322,082
 328,540
 10.5
 (2.0)442,908
 397,848
 355,925
 11.3
 11.8
Global & Non-US589,797
 486,767
 527,513
 21.2
 (7.7)655,214
 611,420
 589,796
 7.2
 3.7
Consolidated company-sponsored investment funds1,005
 105
 —
 857.1
 n/m
883
 1,047
 1,005
 (15.7) 4.2
946,727
 808,954
 856,053
 17.0
 (5.5)
Total1,099,005
 1,010,315
 946,726
 8.8
 6.7
Distribution Revenues405,939
 379,881
 423,410
 6.9
 (10.3)447,050
 411,996
 405,939
 8.5
 1.5
Shareholder Servicing Fees71,225
 73,072
 83,078
 (2.5) (12.0)73,777
 72,134
 71,225
 2.3
 1.3
Total$1,423,891
 $1,261,907
 $1,362,541
 12.8
 (7.4)$1,619,832
 $1,494,445
 $1,423,890
 8.4
 5.0
Affiliated$50,162
 $46,045
 $47,650
 8.9
 (3.4)
Affiliated - EQH$27,737
 $27,814
 $26,393
 (0.3) 5.4
AXA23,293
 24,946
 23,769
 (6.6) 5.0
Non-affiliated1,373,729
 1,215,862
 1,314,891
 13.0
 (7.5)1,568,802
 1,441,685
 1,373,728
 8.8
 4.9
Total$1,423,891
 $1,261,907
 $1,362,541
 12.8
 (7.4)$1,619,832
 $1,494,445
 $1,423,890
 8.4
 5.0

(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 17%16%, 17% and 16%17% of our AUM as of December 31, 2019, 2018 and 2017, 2016 and 2015, and therespectively. The fees we earned from providing these services represented approximately 24%26%, 23%26% and 23%24% of our net revenues for 2017, 20162019, 2018 and 2015,2017, respectively. Our AUM and revenues are as follows:



Private Wealth Services Assets Under Management
(by Investment Service)

December 31, % ChangeDecember 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in millions)    (in millions)    
Equity Actively Managed:                  
U.S.$26,492
 $23,857
 $22,873
 11.0 % 4.3 %$26,840
 $22,504
 $26,492
 19.3 % (15.1)%
Global & Non-US21,880
 16,851
 15,595
 29.8
 8.1
24,094
 19,809
 21,880
 21.6
 (9.5)
Total48,372
 40,708
 38,468
 18.8
 5.8
50,934
 42,313
 48,372
 20.4
 (12.5)
         
Equity Passively Managed(1):
                  
U.S.130
 193
 177
 (32.6) 9.0
142
 113
 130
 25.7
 (13.1)
Global & Non-US51
 208
 210
 (75.5) (1.0)32
 42
 51
 (23.8) (17.6)
Total181
 401
 387
 (54.9) 3.6
174
 155
 181
 12.3
 (14.4)
         
Total Equity48,553
 41,109
 38,855
 18.1
 5.8
51,108
 42,468
 48,553
 20.3
 (12.5)
         
Fixed Income Taxable:                  
U.S.6,772
 6,674
 6,742
 1.5
 (1.0)7,583
 7,022
 6,772
 8.0
 3.7
Global & Non-US4,141
 3,528
 3,053
 17.4
 15.6
4,587
 4,154
 4,141
 10.4
 0.3
Total10,913
 10,202
 9,795
 7.0
 4.2
12,170
 11,176
 10,913
 8.9
 2.4
         
Fixed Income Tax-Exempt:                  
U.S.23,636
 21,501
 19,973
 9.9
 7.7
25,102
 24,129
 23,636
 4.0
 2.1
Global & Non-US18
 3
 3
 500.0
 —
15
 15
 18
 —
 (16.7)
Total23,654
 21,504
 19,976
 10.0
 7.6
25,117
 24,144
 23,654
 4.0
 2.1
         
Fixed Income Passively Managed(1):
                  
U.S.—
 18
 4
 (100.0) 350.0
—
 11
 —
 (100.0) n/m
Global & Non-US401
 468
 372
 (14.3) 25.8
372
 404
 401
 (7.9) 0.7
Total401
 486
 376
 (17.5) 29.3
372
 415
 401
 (10.4) 3.5
         
Total Fixed Income34,968
 32,192
 30,147
 8.6
 6.8
37,659
 35,735
 34,968
 5.4
 2.2
         
Other(2):
                  
U.S.3,606
 2,650
 2,439
 36.1
 8.7
6,808
 5,762
 3,606
 18.2
 59.8
Global & Non-US5,139
 4,816
 5,429
 6.7
 (11.3)5,484
 5,340
 5,139
 2.7
 3.9
Total8,745
 7,466
 7,868
 17.1
 (5.1)12,292
 11,102
 8,745
 10.7
 27.0
         
Total:                  
U.S.60,636
 54,893
 52,208
 10.5
 5.1
66,475
 59,541
 60,636
 11.6
 (1.8)
Global & Non-US31,630
 25,874
 24,662
 22.2
 4.9
34,584
 29,764
 31,630
 16.2
 (5.9)
Total$92,266
 $80,767
 $76,870
 14.2
 5.1
$101,059
 $89,305
 $92,266
 13.2
 (3.2)

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

Revenues From Private Wealth Services
(by Investment Service)


Years Ended December 31, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in thousands)    (in thousands)    
Equity Actively Managed:                  
U.S.$272,577
 $255,902
 $260,706
 6.5 % (1.8)%$267,671
 $274,320
 $272,577
 (2.4)% 0.6 %
Global & Non-US212,021
 176,169
 171,101
 20.4
 3.0
246,930
 240,332
 212,021
 2.7
 13.4
Total484,598
 432,071
 431,807
 12.2
 0.1
514,601
 514,652
 484,598
 —
 6.2
Equity Passively Managed(1):
                  
U.S.206
 423
 1,229
 (51.3) (65.6)144
 117
 206
 23.1
 (43.2)
Global & Non-US510
 1,053
 834
 (51.6) 26.3
190
 254
 510
 (25.2) (50.2)
Total716
 1,476
 2,063
 (51.5) (28.5)334
 371
 716
 (10.0) (48.2)
Total Equity485,314
 433,547
 433,870
 11.9
 (0.1)514,935
 515,023
 485,314
 —
 6.1
Fixed Income Taxable:                  
U.S.34,173
 35,756
 36,689
 (4.4) (2.5)34,546
 33,034
 34,173
 4.6
 (3.3)
Global & Non-US26,425
 23,384
 20,488
 13.0
 14.1
29,418
 28,358
 26,425
 3.7
 7.3
Total60,598
 59,140
 57,177
 2.5
 3.4
63,964
 61,392
 60,598
 4.2
 1.3
Fixed Income Tax-Exempt:                  
U.S.114,974
 111,304
 106,162
 3.3
 4.8
122,350
 118,811
 114,974
 3.0
 3.3
Global & Non-US88
 31
 34
 183.9
 (8.8)97
 109
 88
 (11.0) 23.9
Total115,062
 111,335
 106,196
 3.3
 4.8
122,447
 118,920
 115,062
 3.0
 3.4
Fixed Income Passively Managed(1):
                  
U.S.58
 38
 11
 52.6
 245.5
13
 156
 58
 (91.7) 169.0
Global & Non-US4,059
 3,336
 4,299
 21.7
 (22.4)3,663
 5,312
 4,059
 (31.0) 30.9
Total4,117
 3,374
 4,310
 22.0
 (21.7)3,676
 5,468
 4,117
 (32.8) 32.8
Total Fixed Income179,777
 173,849
 167,683
 3.4
 3.7
190,087
 185,780
 179,777
 2.3
 3.3
Other(2):
                  
U.S.67,019
 41,595
 22,177
 61.1
 87.6
123,216
 122,686
 67,019
 0.4
 83.1
Global & Non-US49,365
 54,629
 59,594
 (9.6) (8.3)65,837
 51,839
 49,365
 27.0
 5.0
Total116,384
 96,224
 81,771
 21.0
 17.7
189,053
 174,525
 116,384
 8.3
 50.0
Total Investment Advisory and Services Fees:                  
U.S.489,007
 445,018
 426,974
 9.9
 4.2
547,940
 549,124
 489,007
 (0.2) 12.3
Global & Non-US292,468
 258,602
 256,350
 13.1
 0.9
346,135
 326,204
 292,468
 6.1
 11.5
Consolidated company-sponsored investment funds(2,501) —
 —
 n/m
 n/m
—
 (1,214) (2,501) 100.0
 51.5
Total778,974
 703,620
 683,324
 10.7
 3.0
894,075
 874,114
 778,974
 2.3
 12.2
Distribution Revenues5,077
 3,840
 3,498
 32.2
 9.8
7,289
 5,809
 5,077
 25.5
 14.4
Shareholder Servicing Fees3,311
 4,139
 3,031
 (20.0) 36.6
3,141
 3,311
 3,311
 (5.1) —
Total$787,362
 $711,599
 $689,853
 10.6
 3.2
$904,505
 $883,234
 $787,362
 2.4
 12.2

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

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 14%12%, 16%13% and 16%14% of our net revenues as of December 31, 2017, 20162019, 2018 and 2015,2017, 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 From Bernstein Research Services


 Years Ended December 31, % Change
 2017 2016 2015 2017-16 2016-15
 (in thousands)  
  
Bernstein Research Services$449,919
 $479,875
 $493,463
 (6.2)% (2.8)%
 Years Ended December 31, % Change
 2019 2018 2017 2019-18 2018-17
 (in thousands)  
  
Bernstein Research Services$407,911
 $439,432
 $449,919
 (7.2)% (2.3)%


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 custodial arrangements are maintained by client-designated banks, trust companies, brokerage firms or custodians.


Employees


As of December 31, 2017,2019, our firm had 3,4663,811 full-time employees, representing a 0.8%4.7% increase compared to the end of 2016.2018. 

New York state law requires that private sector businesses with 50 or more full-time employees in the state give early warning of plant closings, layoffs, relocations 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. In connection with our establishing 1,250 roles in Nashville, Tennessee (most of which are being relocated from our White Plains and New York City locations), we are required to file a series of WARN notices throughout the process, which began in the second half of 2018. We considerwill continue to file these notices as qualifying events occur.
Information about our employee relationsExecutive Officers
Please refer to be good."Item 10. Directors, Executive Officers and Corporate Governance" below for information relating to 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”.“AllianceBernstein.”  The logo set forth below and “Ahead of Tomorrow” are service marks of AB:
logoa07.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”.“AB.” Private Wealth Management and Bernstein Research Services now are referred to as “AB Bernstein”.Bernstein.”  Also, we adopted the logo and “Ahead of Tomorrow” service marks 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”.“Bernstein.”


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”.“WPSTEWART.”



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 sixfour of our subsidiaries (Sanford C. Bernstein & Co., LLC (“SCB LLC”), AllianceBernstein Global Derivatives Corporation, 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. We have provided the information below. as AXA and its subsidiaries remained our affiliates through early December 2019.

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 $181,000$109,150 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $18,385.
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 $26,900.$983. These policies were underwritten by a broker who specializes in providing insurance coverage for diplomats. Provision of motor vehicle insurance is mandatory in Germany and cannot be canceled until the policy expires.

cancelled during 2019.
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 $6,094$7,115 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $914.

$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 and compulsory earthquake coverage of the Iranian General Consulate and the Iranian Embassy in Istanbul, Turkey. Motor liability insurance coverage is mandatorycompulsory 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 Ukraine, an AXA insurance subsidiary, provides car insurance for the Attaché of the Iranian Embassy in Ukraine. Motor liability insurance coverage cannot be canceled under Ukrainian law. The total annual premium in respect of this policy is approximately $1,000 and the annual net profit, which is difficult to calculate with precision, is estimated to be $150.

AXA also has informed us that AXA Ubezpieczenia, an AXA insurance subsidiary organized under the laws of Poland, provides car insurance to two diplomats based at the Iranian embassy in Warsaw, Poland. Provision of motor vehicle insurance is mandatory in Poland. The total annual premium of these policies is approximately $676 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $101. This business had ceased by December 31, 2017.

In addition, 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 for employees in Switzerland. The total annual premium of these policies is approximately $373,668$396,597 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $56,000.$59,489.

Lastly,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 $34,446$20,650 and annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $3,500.$2,000.
In addition, AXA has informed us that AXA Hong Kong, an AXA insurance subsidiary organized under the laws of Hong Kong, provided the Iranian state-owned Hong Kong Branch of Melli Bank PLC, which was re-designated on November 5, 2018 pursuant to E.O. 13224, with group health insurance for its employees. This business has now been canceled. The total annual premium of these policies is approximately $27,122 and the annual net profit arising from these policies, which is difficult to calculate with precision, is estimated to be $4,339.
Lastly, 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.

The aggregate annual premium for the above-referenced insurance policies is approximately $600,034,$570,343, representing approximately 0.0006% of AXA’s 20172019 consolidated revenues, which are expected to exceed $100 billion. The related net profit, which is difficult to calculate with precision, is estimated to be $88,038,$86,522, representing approximately 0.001%0.002% of AXA’s 2017estimated 2019 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”,“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 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. For additional details about this business combination, see Note 2 to AB’s consolidated financial statements in Item 8.


As of December 31, 2017,2019, 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):


chart3.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, AXA,EQH, directly and through certain of its subsidiaries (see “Principal Security Holders” in Item 12), had an approximate 64.7%64.8% economic interest in AB as of December 31, 2017.2019.






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, AXAEQH and its 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, AXA Equitable Holdings, AXA Financial, AXA EquitableEQH 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:

•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.



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


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. AfterGlobal financial markets performed very well in 2019, supported by three 25 basis point interest rate cuts from the uncertaintiesU.S. Federal Reserve, which were designed to prevent negative impacts from global risks that emerged during the year.  Other central banks around the world also provided additional monetary accommodation, boosting global financial markets broadly even as aggregate growth slowed in 2019 relative to 2018.  Investor optimism about the eventual resolution of 2016,the trade dispute between the United States and China provided a significant boost to global equity markets increased substantiallyequities in 2017 while fixed income markets also rose,the fourth quarter of 2019.  In addition, the Federal Reserve resumed expansion of its balance sheet late in the year, which has been viewed by many financial market participants as indicative of the global economic recovery gained momentum and breadth. However, since the end of 2017, volatility has increased significantly as investors' concerns over risingcentral bank’s willingness to keep liquidity ample.  Subdued inflation kept interest rates and their effect on the pace ofgenerally low, which supported both economic growth have become more prevalent. Other issues continueand strong financial market performance.  Some key risks to concern global investors as well, including the effectmarket performance in 2020 we are considering include a resumption (or heightening) of new U.S. tax legislation, rising inflation, the Brexit negotiations, implementation of MiFID II and slowing asset purchases by the European Central Bank in Europe,/China trade tensions, geopolitical conflict and the pace of growth in China.U.S. election.  These factors, and the market volatility they may cause, may adversely affect our AUM and revenues.



•
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 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 feesfee levels would reduce our revenues.

A decrease in the value of our AUM, or a decrease in the amount of AUM we manage, or an adverse mix shift in our AUM and/or a reduction in the level of fees we charge would adversely affect our investment advisory and services 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. AlthoughFor the investment12-month period ended June 30, 2019, active equity fund managers, although they improved their relative performance compared to prior periods, generally continued to lag their key benchmarks, with 48% of active managers improved in 2017, theyoutperforming. Results varied among growth, value and core managers. Demand for passive strategies persisted, and while active equity managers continued to struggle to attract new assets, flows to active fixed income managers turned positive. In the U.S., total industry-wide active mutual fund outflows of $286 billion in 2018 improved to net outflows of $34 billion in 2019. Active equity U.S. mutual fund outflows of $289 billion in 2019 increased by 16% year-over-year as the popularitypace of passive strategies persisted.outflows steadily accelerated during the year. Active equity net outflows fromfixed income U.S. mutual funds recovered following significant outflows during the fourth quarter of $2012018, as inflows during 2019 of $272 billion, reflecting positive flows in 2017 were about one-third lower than theeach quarter of 2019, improved by $258 billion compared to 2018. Meanwhile, total in 2016, butindustry-wide passive equitymutual fund inflows of $464$453 billion increased 49% during 2017. In addition, in U.S. active fixed income funds, netwere up slightly from last year's inflows of $220 billion more than doubled compared to 2016, but U.S. fixed income passive net inflows, which totaled $215 billion, increased 40% in 2017. In total, U.S. retail passive net inflows of $692 billion in 2017 represented a new all-time high.$450 billion. The most recent data available for U.S. institutions (through September 30, 2017) indicates a similar trend.2019) is more negative. Total industry active equity and fixed income net outflows for the year-to-date throughnine months ended September 30, 20172019 were $69$481 billion, which, while down substantially compared to 2016, still resulted inapproximately 117% more than the active share of total industry assets decreasing from 76% to 75%. Further, passive inflows of $107 billion through September 30, 2017 already

had exceeded the full-year 2016 total of $85 billion and increased the passive share of total industry assets from 24% to 25%.same period a year ago. 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. Global market volumes have declined in recent years, and we 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 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 creditworthinessits subsidiaries, 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.
well as 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 they choose toour agreements with them terminate their investment advisory agreements or they withdraw capital support, whether as a result of AXA Equitable Holdings's planned initialEQH's public offering ("IPO")offerings since 2018 or another factor, it could have a material adverse effect on our business, results of operations and/or financial condition.
EQH (our parent company), AXA and its affiliates, including AXA Equitable Holdings, collectively aretheir respective subsidiaries constitute our largest client. AXA Equitable Holdingsclients. Our EQH affiliates represented 17%approximately 18%, of our total AUM as of December 31, 20172019, and we earned approximately 3% of our net revenues for the year ended December 31, 2017.from services we provided to them in 2019. AXA and its affiliates other than AXA Equitable Holdingssubsidiaries represented 6%approximately 5% of our total AUM as of December 31, 20172019, and we earned approximately 2% of our net revenues for the year ended December 31, 2017.from services we provided to them in 2019. 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 HoldingsEQH or AXA and its other affiliates were to terminate their investment management agreements with us.
Further, while we currently cannot predict the eventual impact if any, on us of AXA Equitable Holdings’s planned IPO,AXA's sale of its interest in EQH, such impact could include a reduction in the support AXA has provided to us in the past with respect to our investment management business, resulting in a decrease to our revenues and ability to initiate new investment services. Also, we rely on AXA, including its subsidiary AXA Business Services, for a number of significant services and we benefit from our affiliation with AXA in certain common vendor relationships. These arrangements may change with possible negative financial implications for us.
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.

Also, while the impact on AB from our firm’s relocation strategy (see “Relocation Strategy” in Item 7) 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 if AB experiences significantly greater attrition among current employees than the firm anticipates in connection with the relocation.

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 itstheir respective 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 (including our agreement with HSBC, with respect to which HSBC was responsible for approximately 9% of our open-end AB Fund sales in 2017) 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 underperformsunder-performs relative to its performance target (whether in absolute terms or relative to a specified benchmark), it must gain back such underperformanceunder-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 7.1%7.9%, 4.1%9.1% and 0.7% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 4.4%5.3% 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 2017, 2016were $99.6 million, $118.1 million and 2015 were $94.8 million $32.8 millionin 2019, 2018 and $23.7 million,2017, 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 frequentlycontinue. In addition, fee rates we charge 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 a number of 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).



We may engage in strategic transactions that could pose risks.


The revenues generated by Bernstein Research ServicesAs part of our business strategy, we consider potential strategic transactions, including acquisitions, dispositions, mergers, consolidations, joint ventures 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
potential dilution to settle our trades by significant counterparties andexisting unitholders, if we fund the effects of MiFID II.

Electronic, or “low-touch”, trading represents a significant percentage of buy-side trading activity and typically produce transaction fees for execution-only services that are approximately one-third thepurchase price of traditional full service fee rates. As a result, blended pricing throughout our industry is lower now than it was historically, and price declinestransaction with AB Units or AB Holding Units.
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 traditional 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 exchanges, would be required to settle open trades of any non-performing counterparty. This exposesoperations. Furthermore, strategic transactions may require us to increase our leverage or, if we issue AB Units or AB Holding Units to fund an acquisition, would dilute the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periodsholdings 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.

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.Unitholders.

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.

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 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, 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, 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 recent impact caused by the 2019 novel coronavirus) 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
•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.


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 2019. 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.

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 Equitable Holdings.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 (“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 addition, pending and newly-enacted regulations in the U.S. and Europe could pose significant challenges to AB, including the fiduciary duty rules adopted by the U.S. Department of Labor ("DOL"). A simplified version of these rules became effective during a transition period, which had been scheduled to conclude on January 1, 2018 but which the DOL extended through July 1, 2019. During the transition period, the only substantive requirement of the simplified rules is to act in the best interest of clients, charge reasonable fees and make no misleading statements. Implementation of the rules may impact how we compensate our financial advisors and the financial intermediaries that sell our investment funds, as well as increase the cost and complexity of our compliance efforts.


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 recognized in the industry as having the potentialbelieved to have significantly decreasereduced, the overall research spend by European buy-side firms. Consequently,firms, which has decreased the revenues we derive from our U.K.-based broker-dealer is considering new charging mechanisms for itsEuropean clients. Our European clients may continue to reduce their research in order to minimize this impact as part of its broader MiFID II implementation program. It is important to note, however, that our new charging mechanisms and other strategic decisions to address the new environment created by MiFID II, both in the Eurozone and globally, may not be successful,budgets, which could result in a significant decline in our sell-side revenues.
  
Also, althoughwhile MiFID II permitsis not applicable to firms operating outside of Europe, competitive and client pressures may force buy-side firms to purchase research through the useoperating outside of client-funded research payment accounts, most buy-side firms that operate in the Eurozone, including our U.K. buy-side subsidiaries, are using their own fundsEurope 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 the Eurozonean additional significant decline in order to avoid a potentially significantour sell-side revenues. Additionally, these competitive disadvantage. However, this practice

willand 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 research costsfirm's expenses and decrease our operating income.

Additionally, in July 2017 the Chief Executive of the U.K. Financial Conduct Authority (“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. Although financial regulators and industry working groups have suggested alternative reference rates, global consensus on alternative rates is lacking and the buy-sideprocess 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 significant operationalmarket 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 are required to implement the rule. The ultimatefinancial instruments and performance benchmarks referencing existing LIBOR rates, and concurrently any impact of MiFID II on payments for research globally is not yet certain.AB portfolios and investment strategies.


Lastly, it also is uncertain how regulatory trends will evolve under the current U.S. President's administration and abroad. For example, in June 2016, a narrow majority of voters in a U.K. referendum voted to exit the European Union (“Brexit”), but and, as of January 31, 2020, the U.K. did just that. However, it remains unclear exactly how the U.K.’s status in relation to the European Union ("EU") will change when it ultimately leaves.now that is has left. Accordingly, our U.K.-based buy-side and sell-side subsidiaries are consideringimplementing alternative arrangements in EU jurisdictions in order to ensure continued operations in the Eurozone, including our continued ability to market and sell various investment products 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.


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 Section 7704 of the Internal Revenue Code of 1986, as amended (“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 10.1210.07 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 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 June 2017, the IRS reissued proposed regulations (that had previously been issuedAugust and withdrawn) that implement the provisions of the 2015 Act (the “June 2017 Proposed Regulations”). In December, 2017,2018, the IRS issued additional proposedfinal regulations that clarifiedproviding rules relating to the June 2017 Proposed Regulations andoperation of the 2015 Actpartnership audit rules (the “December 2017 ProposedFinal Regulations”).  Pursuant to the 2015 Act the June 2017 Proposed Regulations and the December 2017 ProposedFinal Regulations, for taxable years beginning after December 31, 2017, we will be required to designate a partner, or other person, with a substantial presence in the United States as the partnership representative (“Partnership Representative”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.


In addition, the December 2017 ProposedFinal Regulations clarified thatthe procedure under which a partnership may elect to require its unitholders to take into account on their income tax returns an audit adjustment made to the partnership’s income tax items.  We may, but are not required to, make such a “push-out” election.  In addition, 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,effective. Under the Final Regulations, such 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 forth 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 December 2017 Proposed Regulations do not provide any procedurecash available for obtaining an extension.distribution to unitholders would be substantially reduced.

Newly enacted laws, such as Public Law No. Public Law No. 115-97 (the “Tax Cuts and Jobs Act”), or regulations and future changes in the U.S. taxation of businesses may adversely affect our business, financial condition and operating results.
On December 22, 2017, the President signed into law the Tax Cuts and Jobs Act, which significantly changed the Internal Revenue Code, including dramatic changes to the taxation of income earned from foreign sources and foreign subsidiaries. The Tax Cuts and Jobs Act also authorizes the Treasury Department to issue regulations with respect to the new provisions. We cannot predict how the changes in the Tax Cuts and Jobs Act, or regulations or other guidance issued under it, might affect us or our business. For additional information, please refer to Item 7 - "Income Taxes".
Non-U.S. unitholders may be subject to a 10% withholding tax on the sale of their units,AB Units or AB Holding Units, which could reduce the value of our units.such Units.


Under the Tax Cuts and Jobs Act, gainGain or loss from the sale or exchange of partnership interestsunits after November 27, 2017 by a non-U.S. unitholder will beare treated as effectively connected with a U.S. trade or business to the extent that the partnernon-U.S. unitholder would have had effectively connected gain or loss hadon a hypothetical sale by the partnership soldof all of its assets at fair market value as of the date of the sale or exchange.exchange of the partnership units. The lawTax Cuts and Jobs Act also introducesimposed certain withholding requirements for the sale of partnership interestsunits by a non-U.S. partner. The Tax Cutsunitholder and Jobs Act authorizesauthorized the IRS to issue regulations to carry out the withholding rules in the case of publicly traded partnerships, but such regulations have not yet been issued.partnerships.  In December 2017, the IRS issued a notice suspending the application of these new withholding rules to the

disposition of publicly traded partnership units until the IRS issued related guidance. In May 2019, the IRS issued proposed regulations ("Proposed Regulations") that would, if enacted, end the suspension of withholding rules with respect to the disposition of units in publicly traded partnerships by non-U.S. unitholders. Taxpayers are permitted to rely on the suspension provided by the earlier notice until finalized regulations are enacted, which the IRS intends to to be 60 days after the date that any such regulations are finalized. We cannot predict when or if the IRS will issue such regulationsfinalize the Proposed Regulations or release other guidance or what the finalized regulations or other guidance will say.indicate. If the guidanceProposed Regulations are finalized and enacted in their current form, they generally subjectswould subject publicly traded partnerships to the same rules as other partnerships, then any gain or loss from the hypothetical asset sale by usin which case we would be allocatedsubject to two different withholding regimes. Under the units being transferred in the same manner as non-separately stated income and loss andfirst regime, the recipient of the units being transferred, or the broker through which such transfer is effected, generally will be required to withhold 10% of the amount realized by the transferring unitholder, unless the transferring unitholder provides the recipient unitholder (or the broker, as applicable) with either proper documentation proving that the transferring unitholder is not a nonresident alien individual or foreign corporation. Ifcorporation, or with certain other statements or certifications described in the Proposed Regulations that limit or relieve the recipient ofunitholder’s (or the units being transferredbroker's, as applicable) withholding obligation. Under the second regime, if the recipient unitholder (or the broker, as applicable) fails to properly withhold, then we generally would be obligated to deduct and withhold from distributions to the recipient unitholder.


unitholder a tax in an amount equal to the amount the transferring unitholder (or the broker, as applicable) 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.
 
Item 1B.Unresolved Staff Comments


Neither AB nor AB Holding has unresolved comments from the staff of the SEC to report.



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 523,373 square feet of space and have sub-let (or are seeking to sub-let) approximately 468,670476,590 square feet of space. We also leaseleased space at twoone other locationslocation in New York City; we acquired one of these leases in connection with an acquisition,City, which lease expired as ofon December 31, 2017.2019.

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 occupy approximately 69,01355,921 square feet of space and have sub-let (or are seeking to sub-let) approximately 160,134173,226 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.

We entered into short-term leases 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 218,976 square feet that is expected to commence in July 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 28 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 other 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.



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”.“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.

The distributions of Available Cash Flow made by AB and AB Holding during 2017 and 2016 and the high and low sale prices of AB Holding Units reflected on the NYSE composite transaction tape during 2017 and 2016 are as follows:

 Quarters Ended 2017  
 
December
31
 
September
30
 
June
30
 
March
31
 Total
Cash distributions per AB Unit(1)
$0.91
 $0.58
 $0.56
 $0.52
 $2.57
Cash distributions per AB Holding Unit(1)
$0.84
 $0.51
 $0.49
 $0.46
 $2.30
AB Holding Unit prices:         
High$26.65
 $26.15
 $23.95
 $25.13
  
Low$24.01
 $22.55
 $20.40
 $21.35
  
 Quarters Ended 2016  
 
December
31
 
September
30
 
June
30
 
March
31
 Total
Cash distributions per AB Unit(1)
$0.73
 $0.51
 $0.46
 $0.45
 $2.15
Cash distributions per AB Holding Unit(1)
$0.67
 $0.45
 $0.40
 $0.40
 $1.92
AB Holding Unit prices:         
High$24.10
 $24.69
 $24.65
 $23.98
  
Low$20.75
 $21.29
 $21.49
 $16.11
  

(1)Declared and paid during the following quarter.


On December 29, 2017,31, 2019, the last trading day during 2017,2019, the closing price of an AB Holding Unit on the NYSE was $25.05$30.26 per Unit. On December 31, 2017,2019, there were (i) 908941 AB Holding Unitholders of record for approximately 80,00082,000 beneficial owners, and (ii) 389375 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, 2017, 20162019, 2018 and 2015.2017.


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 20172019 expired at the close of business on February 12, 2018.11, 2020. 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 20172019 are as follows:


Issuer Purchases of Equity Securities
 
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       
10/1/17-10/31/17(1)
103
 $24.10
 —
 —
11/1/17-11/30/17(1)
873,289
 25.90
 —
 —
12/1/17-12/31/17(1)
2,534,667
 24.85
 —
 —
Total3,408,059
 $25.12
 —
 —
 
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       
10/1/19-10/31/19(1)(2)
264,663
 $28.34
 —
 —
11/1/19-11/30/19(1)(2)
42,800
 29.00
 —
 —
12/1/19-12/31/19(1)(2)
2,821,051
 28.98
 —
 —
Total3,128,514
 $28.93
 —
 —

(1)
During the fourth quarter of 2017,2019, we purchased 3,408,0592,648,758 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 2019, we purchased 479,756 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 20172019 are as follows:


Issuer Purchases of Equity Securities
 
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       
10/1/17-10/31/17—
 $—
 —
 —
11/1/17-11/30/17(1)
400
 25.24
 —
 —
12/1/17-12/31/17—
 —
 —
 —
Total400
 $25.24
 —
 —
 
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       
10/1/19-10/31/19—
 —
 —
 —
11/1/19-11/30/19—
 —
 —
 —
12/1/19-12/31/19(1)
2,800
 28.85
 —
 —
Total2,800
 $28.85
 —
 —

(1)
During November 2017,December 2019, we purchased 4002,800 AB Units in a private transaction.



Item 6.Selected Financial Data


AllianceBernstein Holding L.P.


The follow selected financial data is derived from the consolidated financial statements of AllianceBernstein Holding L.P. and provides summary historical financial information for the periods ended and as of the dates indicated:
 Years Ended December 31,
 2017 2016 2015 2014 2013
 (in thousands, except per unit amounts)
INCOME STATEMENT DATA: 
Equity in net income (loss) attributable to AB Unitholders$232,393
 $239,389
 $210,084
 $200,931
 $184,778
Income taxes24,971
 22,803
 24,320
 22,463
 20,410
Net income (loss)$207,422
 $216,586
 $185,764
 $178,468
 $164,368
Basic net income (loss) per unit$2.19
 $2.24
 $1.87
 $1.84
 $1.70
Diluted net income (loss) per unit$2.19
 $2.23
 $1.86
 $1.84
 $1.70
CASH DISTRIBUTIONS PER UNIT(1)
$2.30
 $1.92
 $1.86
 $1.86
 $1.79
BALANCE SHEET DATA AT PERIOD END: 
  
  
  
  
Total assets$1,544,704
 $1,540,508
 $1,576,120
 $1,616,461
 $1,524,569
Partners’ capital$1,543,550
 $1,539,889
 $1,575,846
 $1,616,079
 $1,523,793
 Years Ended December 31,
 2019 2018 2017 2016 2015
 (in thousands, except per unit amounts)
Income statement data: 
Equity in net income attributable to AB Unitholders$266,292
 $270,647
 $232,393
 $239,389
 $210,084
Income taxes27,729
 28,250
 24,971
 22,803
 24,320
Net income$238,563
 $242,397
 $207,422
 $216,586
 $185,764
Basic net income per unit$2.49
 $2.50
 $2.19
 $2.24
 $1.87
Diluted net income per unit$2.49
 $2.50
 $2.19
 $2.23
 $1.86
Cash distributions per unit(1)
$2.53
 $2.68
 $2.30
 $1.92
 $1.86
Balance sheet data at period end: 
  
  
  
  
Total assets$1,554,264
 $1,490,701
 $1,544,704
 $1,540,508
 $1,576,120
Partners’ capital$1,552,538
 $1,490,057
 $1,543,550
 $1,539,889
 $1,575,846
________________________
(1)
AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders; for all years presented, the cash distributions per unit reflect the impact of AB’s non-GAAP adjustments.




AllianceBernstein L.P.

Selected Consolidated Financial Data
Years Ended December 31,Years Ended December 31,
2017 
2016(1)
 2015 2014 20132019 2018 2017 2016 2015
(in thousands, except per unit amounts and unless otherwise indicated)(in thousands, except per unit amounts and unless otherwise indicated)
INCOME STATEMENT DATA:  
Revenues:                  
Investment advisory and services fees$2,200,400
 $1,933,471
 $1,973,837
 $1,958,250
 $1,849,105
$2,472,044
 $2,362,211
 $2,201,305
 $1,933,471
 $1,973,837
Bernstein research services449,919
 479,875
 493,463
 482,538
 445,083
407,911
 439,432
 449,919
 479,875
 493,463
Distribution revenues412,063
 384,405
 427,156
 444,970
 465,424
455,043
 418,562
 412,063
 384,405
 427,156
Dividend and interest income71,162
 46,939
 24,872
 22,322
 19,962
104,421
 98,226
 71,162
 46,939
 24,872
Investment gains (losses)92,102
 93,353
 3,551
 (9,076) 33,339
38,659
 2,653
 92,102
 93,353
 3,551
Other revenues98,040
 99,859
 101,169
 108,788
 105,058
97,559
 98,676
 97,135
 99,859
 101,169
Total revenues3,323,686
 3,037,902
 3,024,048
 3,007,792
 2,917,971
3,575,637
 3,419,760
 3,323,686
 3,037,902
 3,024,048
Less: interest expense25,165
 9,123
 3,321
 2,426
 2,924
57,205
 52,399
 25,165
 9,123
 3,321
Net revenues3,298,521
 3,028,779
 3,020,727
 3,005,366
 2,915,047
3,518,432
 3,367,361
 3,298,521
 3,028,779
 3,020,727
                  
Expenses: 
  
  
  
  
 
  
      
Employee compensation and benefits:                  
Employee compensation and benefits1,313,469
 1,229,721
 1,267,926
 1,265,664
 1,212,011
1,442,783
 1,378,811
 1,313,469
 1,229,721
 1,267,926
Promotion and servicing: 
  
      
 
  
    
  
Distribution-related payments420,350
 371,607
 393,033
 413,054
 426,824
487,965
 427,186
 411,467
 363,603
 384,425
Amortization of deferred sales commissions31,886
 41,066
 49,145
 41,508
 41,279
15,029
 21,343
 31,886
 41,066
 49,145
Trade execution, marketing, T&E and other204,392
 208,538
 223,415
 224,576
 204,568
219,860
 222,630
 213,275
 216,542
 232,023
General and administrative: 
  
      
 
  
  
  
  
General and administrative481,488
 426,147
 431,635
 426,960
 423,043
484,750
 448,996
 481,488
 426,147
 431,635
Real estate charges36,669
 17,704
 998
 52
 28,424
3,324
 7,160
 36,669
 17,704
 998
Contingent payment arrangements267
 (20,245) (5,441) (2,782) (10,174)(510) (2,219) 267
 (20,245) (5,441)
Interest on borrowings8,194
 4,765
 3,119
 2,797
 2,962
13,035
 10,359
 8,194
 4,765
 3,119
Amortization of intangible assets27,896
 26,311
 25,798
 24,916
 21,859
28,759
 27,781
 27,896
 26,311
 25,798
Total expenses2,524,611
 2,305,614
 2,389,628
 2,396,745
 2,350,796
2,694,995
 2,542,047
 2,524,611
 2,305,614
 2,389,628
Operating income773,910
 723,165
 631,099
 608,621
 564,251
823,437
 825,314
 773,910
 723,165
 631,099
Income taxes53,110
 28,319
 44,797
 44,304
 40,113
41,754
 45,816
 53,110
 28,319
 44,797
Net income720,800
 694,846
 586,302
 564,317
 524,138
781,683
 779,498
 720,800
 694,846
 586,302
Net income (loss) of consolidated entities attributable to non-controlling interests58,397
 21,488
 6,375
 456
 9,746
Net income of consolidated entities attributable to non-controlling interests29,641
 21,910
 58,397
 21,488
 6,375
Net income attributable to AB Unitholders$662,403
 $673,358
 $579,927
 $563,861
 $514,392
$752,042
 $757,588
 $662,403
 $673,358
 $579,927
Basic net income per AB Unit$2.46
 $2.48
 $2.11
 $2.07
 $1.88
$2.78
 $2.79
 $2.46
 $2.48
 $2.11
Diluted net income per AB Unit$2.45
 $2.47
 $2.10
 $2.07
 $1.87
$2.78
 $2.78
 $2.45
 $2.47
 $2.10
Operating margin(2)(1)
21.7% 23.2% 20.7% 20.2% 19.0%22.6% 23.9% 21.7% 23.2% 20.7%
CASH DISTRIBUTIONS PER AB UNIT(3)(2)
$2.57
 $2.15
 $2.11
 $2.08
 $1.97
$2.82
 $2.96
 $2.57
 $2.15
 $2.11
BALANCE SHEET DATA AT PERIOD END: 
  
  
  
  

Years Ended December 31,
2019 2018 2017 2016 2015
BALANCE SHEET DATA AT PERIOD END: 
  
  
  
  
Total assets$9,295,167
 $8,741,158
 $7,433,721
 $7,375,621
 $7,383,899
$8,706,092
 $8,789,098
 $9,282,734
 $8,741,158
 $7,433,721
Debt$565,745
 $512,970
 $581,700
 $486,156
 $266,445
$560,000
 $546,267
 $565,745
 $512,970
 $581,700
Total capital$4,063,304
 $4,068,189
 $4,017,221
 $4,084,840
 $4,045,227
$4,017,101
 $3,916,209
 $4,063,304
 $4,068,189
 $4,017,221
ASSETS UNDER MANAGEMENT AT PERIOD END (in millions)$554,491
 $480,201
 $467,440
 $474,027
 $450,411
$622,915
 $516,353
 $554,491
 $480,201
 $467,440
 
(1)
Certain prior-year amounts have been reclassified to conform to our 2017 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) Cash distributions per AB unit
(2)
Cash distributions per AB Unit reflect the impact of AB's non-GAAP adjustments. Refer to Item 7 for additional information concerning our non-GAAP adjustments.



Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations


Percentage change figures are calculated using assets under management rounded to the nearest million and financial statement amounts rounded to the nearest thousand.


Executive Overview
Our total assets under management (“AUM”("AUM") as of December 31, 20172019 were $554.5$622.9 billion, up $74.3$106.5 billion, or 15.5%20.6%, during 2017.2019. The increase was driven primarily by market appreciation of $61.1$82.2 billion and net inflows of $13.2$25.2 billion (primarily(mainly due to Retail and Institutionalnet inflows of $8.9 billion and $3.6 billion, respectively)$23.8 billion).
Institutional AUM increased $30.0$36.4 billion, or 12.5%14.8%, to $269.3$282.7 billion during 2017,2019, due to market appreciation of $26.4$34.0 billion and net inflows of $3.6$2.4 billion. Gross sales decreased $8.2$9.0 billion or 38.1%, from $21.6$26.1 billion in 20162018 to $13.4$17.1 billion in 2017.2019. Redemptions and terminations decreased $4.2$18.1 billion or 27.3%, from $15.7$30.1 billion in 20162018 to $11.5$12.0 billion in 2017.2019. The declines in both sales and redemptions in 2019 were primarily driven by significant one-time fundings and terminations related to low-fee Customized Retirement Strategies, which occurred in 2018.
Retail AUM increased $32.7$58.4 billion, or 20.5%32.3%, to $192.9$239.2 billion during 2017,2019, primarily due to market appreciation of $23.8$34.5 billion and net inflows of $8.9$23.8 billion. Gross sales increased $12.6$21.1 billion or 30.5%, from $41.2$54.2 billion in 20162018 to $53.8$75.3 billion in 2017.2019. Redemptions and terminations decreased $2.2$2.5 billion or 5.4%, from $40.8$46.5 billion in 20162018 to $38.6$44.0 billion in 2017.2019.
Private Wealth Management AUM increased $11.6$11.7 billion, or 14.2%13.2%, to $92.3$101.0 billion during 2017,2019, primarily due to market appreciation of $10.9$13.7 billion, andoffset by net inflowsoutflows of $0.7$1.0 billion. Gross sales increased $1.3decreased $2.2 billion or 13.2%, from $10.2$13.5 billion in 20162018 to $11.5$11.3 billion in 2017.2019. Redemptions and terminations increased $1.3$1.4 billion or 14.2%, from $9.3$11.0 billion in 20162018 to $10.6$12.4 billion in 2017.2019.
Bernstein Research Services revenue 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 Research LLP ("Autonomous"). Our acquisition of Autonomous closed on April 1, 2019.
Our 20172019 net revenues of $3.3$3.5 billion increased $0.3 billion,$151.1 million, or 8.9%4.5%, compared to the prior year's net revenues of $3.0 billion.revenues. The most significant contributors to the increase were higher base advisory fees of $204.9$128.4 million, higher performance-based fees of $62.0 million and higher distribution revenues of $27.7$36.5 million and higher investment gains revenue of $36.0 million, offset by lower Bernstein Research Services revenue of $30.0$31.5 million and lower performance-based fees of $18.5 million. Our operating expenses of $2.5$2.7 billion increased $0.2 billion,$152.9 million, or 9.5%6.0%, compared to the prior year's expenses of $2.3 billion.expenses. The increase primarily was due to higher employee compensation and benefits of $83.7 million, higher general and administrative expenses (excluding real estate charges) of $55.3$64.0 million, higher promotion and servicing expenses of $35.4 million, lower adjustments to contingent payment arrangements of $20.5$51.7 million and higher general and administrative expenses (including real estate chargescharges) of $19.0$31.9 million. Our operating income increased $50.7decreased $1.9 million, or 7.0%0.2%, to $773.9$823.4 million from $723.2$825.3 million in 20162018 and our operating margin decreased from 23.2%23.9% in 20162018 to 21.7%22.6% in 2017 as higher expenses outpaced revenue growth.2019.
Market Environment
Global equityEquity markets increased substantiallyfinished positive in 2017,2019, keyed by reduction of trade tensions between the U.S. and fixed income markets rose as well, as the global recovery gained momentum and breadth throughout the year. For the first time in the past five years, non-U.S. stocks outperformed U.S. stocks, aided by a weaker dollar, and credit spreads tightened in a “risk-on” environment. After an uncertain and volatile 2016, U.S. market volatility was exceptionally low in 2017. While 2018 got off to a strong start, U.S. equity markets began to vacillate wildly in February, and volatility surged as a result of a sharp rise in investor concern over the pace of interest rate hikesChina, ongoing stimulus from Central Bank fiscal policies and the chances of rising inflation, which could slow economic growth. Theseresilient U.S. economy. Specifically, the S&P 500, the Dow Jones Industrial Average and the Nasdaq each rallied to finish the year with record high point gains. Despite a downturn in manufacturing and businesses generally being reluctant to invest, consumer spending has remained at a healthy level and the labor market has remained strong, with the unemployment rate at a 50-year low. Three rate cuts by the Federal Reserve during the year and new repurchase programs helped reduce stresses created uncertainty across globalin short term funding markets as well.
Despiteand unwind the strong run in the global markets, inflation so far remains low and Central Banks’ monetary policies continue to vary among developed and emerging markets. In the U.S., three interest rate increases occurred during 2017 and several more are predicted for 2018, particularly if the economyinverted yield curve. Inflation continues to exhibit low unemployment, ongoing growthapproximate the Federal Reserve’s target and, emerging evidence of rising inflation. It remains to be seen how new tax legislation enactedbarring a material deterioration in December 2017 will affect the U.S. economy, going forward.the Federal Reserve has indicated a pause in rate cuts.

Also, the improved global economic data and alleviated trade tensions sparked a rally in international equities and a weakening of the U.S. dollar. In Europe,the U.K., while the economic consequences of Brexit are still to be determined, the results of the special election held in December 2019 boosted the U.K. pound and the U.K. equity market. The era of negative rates in some European jurisdictions may be ending, and different approaches to improving liquidity, which may inure to the benefit of the banking system, are being considered. In Asia, markets remained relatively weak, and uncertainty surrounds the continued demonstrations in Hong Kong. China is earlierbalancing the short-term need for economic stimulus against the medium-term need to reduce debt levels in its economic recovery than the U.S., asset purchasesChinese economy. This analysis by the European Central Bank are expectedChinese will likely result in modest stimulus to end in 2018, Brexit negotiations are ongoing and MiFID II went into effect atboost the start of 2018. And in China, with the pace of growth slowing, “quality” of growth is increasing in importance.Chinese economy.
The challenges for active fund managers continued in 2017. While their investment performance improved on average in 2017, they still struggled to attract net new assets in the face of ongoing overwhelming demand for passive equity strategies and accelerating demand for passive fixed income strategies. In the U.S., where the shift from active to passive has been most prevalent, total industry-wide active mutual fund flows turned positive in 2017, with $56 billion, on strength in fixed income and international equity services. Active U.S. equity mutual funds, however, still sustained $201 billion in outflows for the year,

even though the percentage of outperforming active equity managers increased to 50%, versus 26% in 2016 and a long-term average of 34%. Meanwhile, total passive inflows continued to accelerate in 2017 and reached an all-time high of $692 billion.
MiFID II
The second installment of the Markets in Financial Instruments DirectiveIn Europe, MiFID II, (“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 are recognized inbelieved to have significantly reduced the industry as having the potential to significantly decrease the

overall research spend by European buy-side firms. Consequently,firms, which has decreased the revenues we derive from our U.K.-based broker-dealer is considering new charging mechanisms for itsEuropean clients. Our European clients may continue to reduce their research in order to minimize this impact as part of its broader MiFID II implementation program. It is important to note, however, that our new charging techniques and other strategic decisions to address the new environment created by MiFID II may not be successful,budgets, which could result in a significant decline in our sell-side revenues.


Also, althoughwhile MiFID II does permitis not applicable to firms operating outside of Europe, competitive and client pressures may force buy-side firms to purchase research through the useoperating outside of client-funded research payment accounts, most buy-side firms that operate in the Eurozone, including our U.K. buy-side subsidiaries, have decided to use their own fundsEurope 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 the Eurozone. This changean additional significant decline in practice willour 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 in the Eurozone and if this practice becomes more pervasive globally, it may have a significant adverse effect ondecrease our net income in future periods.operating income.


The ultimate impact of MiFID II on payments for research globally currently isremains uncertain.
AXA Equitable Holdings IPO
On May 10, 2017,During the second quarter of 2018, AXA S.A. (“AXA”("AXA") announced its intention to sell and list for tradingcompleted the sale of a minority stake of its U.S. operations (expected to consist of AXA’s U.S. Life & Savings businessin Equitable Holdings, Inc. (“EQH”) through an initial public offering ("IPO"). Since then, AXA has completed additional offerings and its interest in AB)taken other steps, most recently during the first halffourth quarter of 2018, subject to market conditions and SEC review process. 2019. As a result, AXA owned less than 10% of the outstanding common stock of EQH as of December 31, 2019.

While we cannot at this time predict the eventual impact if any, on AB of this proposed transaction, itsuch impact could include a reduction in the support AXA has provided to AB in the past with respect to AB's investment management business, resulting in a decrease toin our revenues and ability to initiate new investment services. Also, AB relies on AXA, including its subsidiary, AXA Business Services, for a number of significant services and benefitsAB has benefited from its affiliation with AXA in certain common vendor relationships. TheseSome of these arrangements also mayare expected to change with possible negative financial implications for AB.

AXA has notified us of their intent to terminate approximately $14 billion of fixed income investment mandates during the first half of 2020. The revenue we earn from the management of these assets is not significant.
Relocation Strategy
During 2017,On May 2, 2018, we began exploring several U.S. cities for the purpose of establishing a second principal U.S. location. We intend to transition a significant number ofannounced that we would establish our staffcorporate headquarters in, and relocate approximately 1,050 jobs located in ourthe New York metro officesarea 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 insourcing 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 been actively relocating jobs and expect this new location once we have finalized the city and secured office space. The transition period is expected to last a number oftake several years. We will continue to maintain an employee presencea principal location in New York City, which will remain a principal location.house our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses.

We believe a second principal locationrelocating 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. However, we expect to incur potentially material costs through

During the transition period, including relocation, severance,which began in 2018 and duplicative compensation and occupancyis expected to continue through 2024, we currently estimate that we will incur transition costs before realizing ongoing cost savings. We currently are unableof approximately $155 million to estimate either the transitional$165 million. These costs or the ongoing cost savings as we have not yet completed our search process or finalized the scale of our relocation strategy.
Adjusted Operating Margin Target
We have adopted a goal of increasing our adjusted operating margin from 27.7% (which we achieved for 2017) to a target of 30% by 2020 (the “2020 Margin Target”), subject to the assumptions, factors and contingencies discussed below.

Actual results related to this target may vary depending on various factors, including capital market outcomes, the global regulatory environment in which we operate, the performance of our investment services, the net flows experienced by our investment services and the successful management of our costs. Also, the anticipated establishment of a second principal location outside of the New York City metropolitan area, which is described immediately above, will likely involve substantial transitional costs, includinginclude employee relocation, severance, recruitment, and duplicativeoverlapping compensation and occupancy costs. Over this same period, we expect to realize total expense savings of approximately $180 million to $190 million, an amount greater than the total transition costs. However, we will incur some transition costs before we begin to realize expense savings. We incurred $10 million of transition costs in 2018 and approximately $33 million in 2019. With regard to 2019, this compares to estimated expense savings of approximately $16 million, resulting in a $0.06 reduction in net income per unit (“EPU”) in 2019. We currently anticipate a similar EPU reduction in 2020 of approximately $0.06. We also expect to achieve breakeven or a slight accretion in EPU in 2021 and then achieve EPU accretion in each year thereafter. Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings of approximately $75 million to $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 unable to estimate precisely these interim transitionalbased on our current assumptions of employee relocation costs, or the expected ongoing cost savings, orseverance and overlapping compensation, and occupancy costs. In addition, our estimates for both the timing of thesewhen we incur transition costs and realize the related expense savings asare based on our current relocation implementation plan and the timing for execution of each phase. The actual total charges we have not yet completed our search process or finalizedeventually record, the scale of our relocation strategy. If the transitional costs we incur in 2019 and 2020 significantly exceed any costrelated expense savings we realize, in those yearsand timing and magnitude of EPU impact are expected to differ from our relocation strategy,current estimates as we implement each phase of our actual adjusted operating margin for 2020 will be adversely affected and, as a result, we may not reach the 2020 Margin Target.headquarters relocation.


In settingDuring October 2018, we signed a lease, which commences in mid-2020, relating to 218,976 square feet of space at our 2020 Margin Target,new Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15 year initial lease term is $134 million.

Although we have made significant assumptions with respect to, among other things:

the levels of positive net flows intopresented our investment services;
the level of growth (in terms of additional AUM) in our alternatives product business;
the rate of increase in our fixedtransition costs due to inflation and similar factors, the transitional costs related to our relocation strategy and the timing of such costs, the success we have in achieving planned new cost reductions (including those relating to our relocation strategy) and the timing of such cost reductions, and the investments we make in our business; and
general conditions of the markets in which our business operates, including modest continued appreciation in both equity and fixed income total investment returns.

While our 2020 Margin Target is presentedannual expense savings with numerical specificity, and we believe the targetthese 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 assumptionstargets may not be realized.achieved.  Accordingly, the expenses we actually incur and the savings we actually realize may differ from our 2020 Margin Target may not be achieved,targets, particularly if actual events adversely differ from one or more of our key assumptions.  The 2020 Margin Targettransition costs and itsexpense 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 2020 Margin Target.cost and expense 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 the initial disclosure of this target. Our adjusted operating margin for 2019 was 27.5%.
Our AUM and, therefore, our investment advisory revenues, including performance-based fee revenues, are heavily dependent on the level and volatility of the financial markets. Based upon our current revenue and expense projections, we do not believe that achieving the 2020 Margin Target is likely. However, we are taking additional actions to better align our expenses with our expected revenues. We remain committed to achieving an adjusted operating margin 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.

AB Holding


AB Holding’s principal source of income and cash flow is attributable to its investment in AB Units. The AB Holding financial statements, notes to the financial statements and notes and management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with those of AB.


Results of Operations
Years Ended December 31, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in thousands, except per unit amounts)    (in thousands, except per unit amounts)    
Net income attributable to AB Unitholders$662,403
 $673,358
 $579,927
 (1.6)% 16.1 %$752,042
 $757,588
 $662,403
 (0.7)% 14.4%
Weighted average equity ownership interest35.1% 35.6% 36.2%    35.4% 35.7% 35.1%    
Equity in net income attributable to AB Unitholders$232,393
 $239,389
 $210,084
 (2.9) 13.9
$266,292
 $270,647
 $232,393
 (1.6) 16.5
Income taxes24,971
 22,803
 24,320
 9.5
 (6.2)27,729
 28,250
 24,971
 (1.8) 13.1
Net income of AB Holding$207,422
 $216,586
 $185,764
 (4.2) 16.6
$238,563
 $242,397
 $207,422
 (1.6) 16.9
Diluted net income per AB Holding Unit$2.19
 $2.23
 $1.86
 (1.8) 19.9
$2.49
 $2.50
 $2.19
 (0.4) 14.2
Distributions per AB Holding Unit (1)
$2.30
 $1.92
 $1.86
 19.8
 3.2
$2.53
 $2.68
 $2.30
 (5.6) 16.5
________________________
(1)
Distributions reflect the impact of AB’s non-GAAP adjustments.


AB Holding hashad net income of $207.4$238.6 million in 20172019 compared to $216.6$242.4 million in 2016,2018, reflecting lower net income attributable to AB Unitholders and lower weighted average equity ownership interest. AB Holding had net income of $216.6$242.4 million in 2016 as2018 compared to $185.8$207.4 million in 2015. The increase reflected2017, reflecting higher net income attributable to AB Unitholders offset by a lowerand higher weighted average equity ownership percentage.interest.


AB Holding's partnership gross income is derived from its interest in AB. AB Holding’s income taxes, which reflect a 3.5% federal tax on its partnership gross income from the active conduct of a trade or business, are computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership

interest in AB, multiplied by the 3.5% tax rate. AB Holding’s effective tax rate was 10.4% in 2019, 10.4% in 2018 and 10.7% in 2017, 9.5% in 2016 and 11.6% in 2015. 2017. See Note 6 to AB Holding’s financial statements in Item 8for a further description.


As supplemental information, AB provides the performance measures “adjusted net revenues”,revenues,” “adjusted operating income” and “adjusted operating margin”,margin,” which are the principal metrics management uses in evaluating and comparing the period-to-period operating performance of AB. Management principally uses these metrics in evaluating performance because they present a clearer picture of AB's 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, management believes that these management operating metrics help investors better understand the underlying trends in AB's results and, accordingly, provide a valuable perspective for investors. Such measures are not based on generally accepted accounting principles (“non-GAAP measures”). 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 GAAP and non-GAAP measures in evaluating the company’s financial performance. The non-GAAP measures alone may pose limitations because they do not include all of AB’s revenues and expenses. Further, adjusted diluted net income per AB Holding Unit is not a liquidity measure and should not be used in place of cash flow measures. See “Management Operating Metrics” in this Item 7.


The impact of these adjustments on AB Holding’s net income and diluted net income per AB Holding Unit are as follows:
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
AB non-GAAP adjustments, before taxes$34,605
 $(77,275) $(6,083)$8,648
 $48,655
 $34,605
Income tax (expense) benefit on non-GAAP adjustments(3,599) 5,332
 432
Income tax credit on AB's income tax provision—
 (21,572) —
AB Income tax benefit (expense) on non-GAAP adjustments1,070
 (1,473) (3,599)
AB non-GAAP adjustments, after taxes31,006
 (93,515) (5,651)9,718
 47,182
 31,006
AB Holding’s weighted average equity ownership interest in AB35.1% 35.6% 36.2%35.4% 35.7% 35.1%
Impact on AB Holding’s net income of AB non-GAAP adjustments$10,877
 $(33,246) $(2,047)$3,441
 $16,856
 $10,877
          
Net income - diluted, GAAP basis$208,102
 $217,464
 $187,147
$238,642
 $242,844
 $208,102
Impact on AB Holding’s net income of AB non-GAAP adjustments10,877
 (33,246) (2,047)3,441
 16,856
 10,877
Adjusted net income - diluted$218,979
 $184,218
 $185,100
$242,083
 $259,700
 $218,979
          
Diluted net income per AB Holding Unit, GAAP basis$2.19
 $2.23
 $1.86
$2.49
 $2.50
 $2.19
Impact of AB non-GAAP adjustments0.11
 (0.34) (0.02)0.03
 0.17
 0.11
Adjusted diluted net income per AB Holding Unit$2.30
 $1.89
 $1.84
$2.52
 $2.67
 $2.30
The degree to which AB’s non-GAAP adjustments impact AB Holding’s net income fluctuates based on AB Holding's ownership percentage in AB. The 2016 income tax credit on AB's income tax provision reflects a fourth quarter 2016 change in estimate made by AB to its income tax liability relating to a third quarter 2016 revision to income taxes ($13.3 million) and a reversal of a deferred tax liability relating to foreign translation adjustments ($8.2 million).


Proposed Tax Legislation


For a discussion of proposed tax legislation, see “Risk Factors - Structure-related Risks” in Item 1A.


Capital Resources and Liquidity


During the year ended December 31, 2017,2019, net cash provided by operating activities was $202.4$222.8 million, compared to $169.5$279.3 million during the corresponding 20162018 period. The decrease primarily resulted from lower cash distributions received from AB of $58.6 million. During the year ended December 31, 2018, net cash provided by operating activities was $279.3 million, compared to $202.4 million during the corresponding 2017 period. The increase primarily resulted from higher cash distributions received from AB of $34.9 million. During the year ended December 31, 2016, net cash provided by operating activities was $169.5 million, compared to $192.8 million during the corresponding 2015 period. The decrease primarily resulted from lower cash distributions received from AB of $25.1$81.2 million.


During the years ended December 31, 2017, 20162019, 2018 and 2015,2017, net cash used in investing activities was $20.1$11.5 million, $6.1$16.6 million and $9.2$20.1 million, respectively, reflecting investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units.


During the year ended December 31, 2017,2019, net cash used in financing activities was $182.3$211.2 million, compared to $163.4$262.7 million during the corresponding 20162018 period. The decrease primarily was due to lower cash distributions to Unitholders of $58.2 million, partially offset by lower proceeds from exercise of compensatory options to buy AB Holding Units of $5.1 million. During the year ended December 31, 2018, net cash used in financing activities was $262.7 million, compared to $182.3 million during the corresponding 2017 period. The increase primarily was due to higher cash distributions to Unitholders of $32.7$78.3 million offset by higherand lower proceeds from exercise of compensatory options to buy AB Holding Units of $14.0 million. During the year ended December 31, 2016, net cash used in financing activities was $163.4 million, compared to $183.6 million during the corresponding 2015 period. The decrease was due to lower cash distributions to Unitholders of $22.6 million, offset by lower proceeds from exercises of compensatory options to buy AB Holding Units of $3.1$3.5 million.


Management believes that AB Holding will have the resources it needs to meet its financial obligations as a result of the cash flow AB Holding realizes from its investment in AB.


Cash Distributions


AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders (including the General Partner). Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of units outstanding at the end of the quarter. 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 forto adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to AB Holding’s financial statements in Item 8 for a description of Available Cash Flow.


Commitments and Contingencies


For a discussion of commitments and contingencies, see Note 7 to AB Holding’s financial statements in Item 8.

AB


Assets Under Management
Assets under management by distribution channel are as follows: 
As of December 31,     % Change  As of December 31,     % Change  
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in billions)      
  
(in billions)      
  
Institutions$269.3
 $239.3
 $236.2
 12.5% 1.3%$282.7
 $246.3
 $269.3
 14.8% (8.5)%
Retail192.9
 160.2
 154.4
 20.5
 3.8
239.2
 180.8
 192.9
 32.3
 (6.3)
Private Wealth Management92.3
 80.7
 76.8
 14.2
 5.1
101.0
 89.3
 92.3
 13.2
 (3.2)
Total$554.5
 $480.2
 $467.4
 15.5
 2.7
$622.9
 $516.4
 $554.5
 20.6
 (6.9)
Assets under management by investment service are as follows:
As of December 31, % ChangeAs of December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in billions)  
  
(in billions)  
  
Equity       
  
       
  
Actively Managed$139.4
 $111.9
 $110.6
 24.6 % 1.2 %$177.2
 $136.2
 $139.4
 30.1 % (2.3)%
Passively Managed (1)
54.3
 48.1
 46.4
 13.0
 3.6
60.1
 50.2
 54.3
 19.9
 (7.6)
Total Equity193.7
 160.0
 157.0
 21.1
 1.9
237.3
 186.4
 193.7
 27.4
 (3.8)
                  
Fixed Income 
  
  
  
  
         
Actively Managed 
  
  
  
  
         
Taxable247.9
 220.9
 207.4
 12.2
 6.5
258.3
 219.7
 247.9
 17.6
 (11.4)
Tax-exempt40.4
 36.9
 33.5
 9.5
 10.2
47.1
 41.7
 40.4
 13.1
 3.0
288.3
 257.8
 240.9
 11.8
 7.0
305.4
 261.4
 288.3
 16.9
 (9.4)
Passively Managed (1)
9.9
 11.1
 10.0
 (10.4) 11.1
9.3
 9.4
 9.9
 (1.5) (4.8)
Total Fixed Income298.2
 268.9
 250.9
 10.9
 7.2
314.7
 270.8
 298.2
 16.2
 (9.2)
                  
Other (2)
                  
Actively Managed61.9
 50.8
 59.1
 21.7
 (14.0)69.3
 58.3
 61.9
 18.8
 (5.8)
Passively Managed (1)
0.7
 0.5
 0.4
 37.0
 30.4
1.6
 0.9
 0.7
 76.8
 39.7
Total Other62.6
 51.3
 59.5
 21.8
 (13.7)70.9
 59.2
 62.6
 19.7
 (5.3)
Total$554.5
 $480.2
 $467.4
 15.5
 2.7
$622.9
 $516.4
 $554.5
 20.6
 (6.9)
         
 
(1)
Includes index and enhanced index services.
(2)
Includes certain multi-asset solutions and services and certain alternative investments.

Changes in assets under management during 20172019 and 20162018 are as follows:
Distribution ChannelDistribution Channel
Institutions Retail 
Private
Wealth
Management
 TotalInstitutions Retail 
Private
Wealth
Management
 Total
(in billions)(in billions)
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
       
Balance as of December 31, 2015$236.2
 $154.4
 $76.8
 $467.4
Balance as of December 31, 2018$246.3
 $180.8
 $89.3
 $516.4
Long-term flows: 
  
  
  
 
  
  
  
Sales/new accounts21.6
 41.2
 10.2
 73.0
17.1
 75.3
 11.3
 103.7
Redemptions/terminations(15.7) (40.8) (9.3) (65.8)(12.0) (44.0) (12.4) (68.4)
Cash flow/unreinvested dividends(11.3) (5.2) (0.5) (17.0)(2.7) (7.5) 0.1
 (10.1)
Net long-term inflows (outflows)(5.4) (4.8) 0.4
 (9.8)2.4
 23.8
 (1.0) 25.2
Adjustments(3)
—
 —
 (0.9) (0.9)
Transfers—
 0.1
 (0.1) —
—
 0.1
 (0.1) —
Acquisition2.5
 —
 —
 2.5
AUM adjustment(3)
(3.0) —
 —
 (3.0)
Market (depreciation) appreciation9.0
 10.5
 3.6
 23.1
Market appreciation34.0
 34.5
 13.7
 82.2
Net change3.1
 5.8
 3.9
 12.8
36.4
 58.4
 11.7
 106.5
Balance as of December 31, 2016$239.3
 $160.2
 $80.7
 $480.2
Balance as of December 31, 2019$282.7
 $239.2
 $101.0
 $622.9
       
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

Investment ServiceInvestment 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
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)(in billions)
Balance as of December 31, 2016$111.9
 $48.1
 $220.9
 $36.9
 $11.1
 $51.3
 $480.2
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 accounts21.9
 1.1
 41.1
 7.9
 0.1
 6.6
 78.7
34.7
 0.5
 53.0
 10.0
 0.1
 5.4
 103.7
Redemptions/terminations(19.0) (1.4) (29.8) (5.9) (1.8) (2.8) (60.7)(26.4) (0.8) (31.5) (6.8) (0.4) (2.5) (68.4)
Cash flow/unreinvested dividends(2.1) (4.0) 1.5
 (0.1) —
 (0.1) (4.8)(4.3) (3.8) (2.8) (0.2) (0.6) 1.6
 (10.1)
Net long-term inflows (outflows)0.8
 (4.3) 12.8
 1.9
 (1.7) 3.7
 13.2
4.0
 (4.1) 18.7
 3.0
 (0.9) 4.5
 25.2
Adjustments(3)
—
 —
 (0.4) (0.5) —
 —
 (0.9)
Market appreciation26.7
 10.5
 14.2
 1.6
 0.5
 7.6
 61.1
37.0
 14.0
 20.3
 2.9
 0.8
 7.2
 82.2
Net change27.5
 6.2
 27.0
 3.5
 (1.2) 11.3
 74.3
41.0
 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
             
Balance as of December 31, 2017$139.4
 $54.3
 $247.9
 $40.4
 $9.9
 $62.6
 $554.5
$139.4
 $54.3
 $247.9
 $40.4
 $9.9
 $62.6
 $554.5
             
Balance as of December 31, 2015$110.6
 $46.4
 $207.4
 $33.5
 $10.0
 $59.5
 $467.4
Long-term flows: 
  
  
    
  
  
 
  
  
    
  
  
Sales/new accounts14.4
 0.5
 45.8
 8.5
 0.2
 3.6
 73.0
36.7
 4.0
 27.6
 7.9
 0.1
 17.5
 93.8
Redemptions/terminations(19.3) (1.0) (31.0) (5.0) (0.6) (8.9) (65.8)(22.2) (0.6) (40.8) (6.7) (0.6) (16.7) (87.6)
Cash flow/unreinvested dividends(2.7) (2.0) (9.1) (0.2) 1.1
 (4.1) (17.0)(3.7) (3.6) (6.2) (0.4) 0.2
 (0.6) (14.3)
Net long-term (outflows) inflows(7.6) (2.5) 5.7
 3.3
 0.7
 (9.4) (9.8)
Acquisition—
 —
 —
 —
 —
 2.5
 2.5
AUM adjustment(3)
—
 —
 —
 —
 —
 (3.0) (3.0)
Market appreciation8.9
 4.2
 7.8
 0.1
 0.4
 1.7
 23.1
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 change1.3
 1.7
 13.5
 3.4
 1.1
 (8.2) 12.8
(3.2) (4.1) (28.2) 1.3
 (0.5) (3.4) (38.1)
Balance as of December 31, 2016$111.9
 $48.1
 $220.9
 $36.9
 $11.1
 $51.3
 $480.2
Balance as of December 31, 2018$136.2
 $50.2
 $219.7
 $41.7
 $9.4
 $59.2
 $516.4
 
(1)
Includes index and enhanced index services.
(2)
Includes certain multi-asset solutions and services and certain alternative investments.
(3)
During the second quarterApproximately $900 million of 2016, we removed $3.0 billion of Customized Retirement Solutionsnon-investment management fee earning taxable and tax-exempt money market assets from AUM as our asset management services transitioned to consulting services. In addition, we previously made minor adjustments to reported AUM for reporting methodology changes that do not represent inflows or outflows.
were removed from assets under management during the second quarter of 2019.


Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services during 20172019 and 20162018 are as follows:
Years Ended December 31,Years Ended December 31,
2017 20162019 2018
(in billions)(in billions)
Actively Managed      
Equity$0.8
 $(7.6)$4.0
 $10.8
Fixed Income14.7
 9.0
21.7
 (18.6)
Other3.6
 (9.5)4.0
 (0.1)
19.1
 (8.1)29.7
 (7.9)
Passively Managed 
  
 
  
Equity(4.3) (2.5)(4.1) (0.2)
Fixed Income(1.7) 0.7
(0.9) (0.3)
Other0.1
 0.1
0.5
 0.3
(5.9) (1.7)(4.5) (0.2)
Total net long-term inflows$13.2
 $(9.8)
Total net long-term inflows (outflows)$25.2
 $(8.1)


Average assets under management by distribution channel and investment service are as follows:
Years Ended December 31, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in billions)  
  
(in billions)  
  
Distribution Channel:       
  
       
  
Institutions$253.8
 $243.4
 $242.9
 4.3 % 0.2 %$265.4
 $258.1
 $253.8
 2.8 % 1.7 %
Retail177.5
 157.7
 160.6
 12.6
 (1.8)212.3
 191.8
 177.5
 10.7
 8.1
Private Wealth Management86.7
 78.9
 77.2
 9.8
 2.2
96.5
 94.3
 86.7
 2.3
 8.8
Total$518.0
 $480.0
 $480.7
 7.9
 (0.1)$574.2
 $544.2
 $518.0
 5.5
 5.1
                  
Investment Service: 
  
  
  
  
         
Equity Actively Managed$125.6
 $109.4
 $113.2
 14.8
 (3.3)$158.4
 $146.4
 $125.6
 8.2
 16.6
Equity Passively Managed(1)
50.8
 46.5
 49.3
 9.3
 (5.7)56.4
 53.8
 50.8
 4.8
 5.9
Fixed Income Actively Managed – Taxable236.3
 221.5
 217.7
 6.6
 1.8
239.7
 230.3
 236.3
 4.1
 (2.5)
Fixed Income Actively Managed – Tax-exempt38.8
 36.3
 32.6
 7.0
 11.1
44.6
 41.3
 38.8
 8.0
 6.4
Fixed Income Passively Managed(1)
10.3
 11.0
 10.1
 (6.4) 8.4
9.4
 9.8
 10.3
 (4.4) (4.3)
Other(2)
56.2
 55.3
 57.8
 1.7
 (4.3)65.7
 62.6
 56.2
 5.1
 11.3
Total$518.0
 $480.0
 $480.7
 7.9
 (0.1)$574.2
 $544.2
 $518.0
 5.5
 5.1
 
(1)
Includes index and enhanced index services.
(2)
Includes certain multi-asset solutions and services and certain alternative investments.
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 over the last twelve months. The $30.0$36.4 billion increase in AUM resulted from market appreciation of $26.4$34.0 billion and net inflows of $3.6$2.4 billion. During 2016,2018, our Institutional channel average AUM of $243.4$258.1 billion increased $0.5$4.3 billion, or 0.2%1.7%, compared to 2015, primarily due to

our Institutional2017; however, this AUM increasing $3.1decreased $23.0 billion, or 1.3%8.5%, to $239.3$246.3 billion during 2016.2018. The $3.1$23.0 billion increasedecrease in AUM primarily resulted from market appreciationdepreciation of $9.0$13.2 billion offset by(with $11.6 billion of market deprecation occurring in the fourth quarter of 2018) and net outflows of $5.4$10.0 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 Retailthis AUM increasing $32.7$58.4 billion, or 20.5%32.3%, to $192.9$239.2 billion over the last twelve months. The $32.7$58.4 billion increase in AUM resulted primarily from market appreciation of $23.8$34.5 billion and net inflows of $8.9$23.8 billion. During 2016,2018, our Retail channel average AUM of $157.7$191.8 billion decreased $2.9increased $14.3 billion, or 1.8%8.1%, compared to 2015;2017; however, our Retail channelthis AUM increased $5.8decreased $12.1 billion, or 3.8%6.3%, to $160.2$180.8 billion during 2016.2018. The $5.8$12.1 billion increasedecrease in AUM for 2016resulted primarily resulted from market appreciationdepreciation of $10.5$12.3 billion offset by net outflows(with $16.4 billion of $4.8 billion.market deprecation occurring in the fourth quarter of 2018).
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 over the last twelve months. The $11.6$11.7 billion increase in AUM resulted primarily 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. During 2016,2018, our Private Wealth Management channel average AUM of $78.9$94.3 billion increased $1.7$7.6 billion, or 2.2%8.8%, compared to 2015, primarily due to our Private Wealth Management2017; however, this AUM increasing $3.9decreased $3.0 billion, or 5.1%3.2%, to $80.7$89.3 billion during 2016.2018. The $3.9$3.0 billion increasedecrease in AUM for 2016 primarily resulted from market appreciationdepreciation of $3.6$4.5 billion and(with $6.8 billion of market deprecation occurring in the fourth quarter of 2018), offset by net inflows of $0.4$1.9 billion.


As a result of the significant market declines in the fourth quarter of 2018, AUM as of December 31, 2018 was lower than AUM as of December 31, 2017 in all three distribution channels; however, average AUM during 2018 was higher than average AUM during 2017 in all three distribution channels, reflecting our strong performance through the first nine months of 2018. Conversely, the dynamic experienced in the fourth quarter of 2018 combined with positive market performance in 2019 resulted in the increases in our year-end AUM as of December 31, 2019 for all three distribution channels significantly outpacing the respective increases in average AUM during 2019.
Absolute investment composite returns, gross of fees, and relative performance as of December 31, 20172019 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows:
1-Year 3-Year 5-Year1-Year 3-Year 5-Year
          
Global High Income - Hedged (fixed income)          
Absolute return9.2 % 7.0 % 6.3 %15.3 % 6.5 % 6.3 %
Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged)0.8
 (0.6) —
1.9
 0.4
 (0.3)
U.S. High Yield (fixed income)     
Global Fixed Income - Unhedged (fixed income)     
Absolute return7.0
 5.9
 6.1
5.3
 4.1
 2.1
Relative return (vs. Bloomberg Barclays U.S. Corp. High Yield Index)(0.5) (0.5) 0.3
Relative return (vs. Bloomberg Barclays Global Treasury Index)(0.2) —
 —
Global Plus - Hedged (fixed income)          
Absolute return3.7
 3.5
 3.6
8.7
 4.5
 4.1
Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged)0.6
 0.8
 0.5
0.5
 0.2
 0.5
Intermediate Municipal Bonds (fixed income)          
Absolute return3.6
 2.2
 2.1
6.1
 3.7
 2.8
Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg)0.6
 0.7
 0.7
1.2
 0.7
 0.7
U.S. Strategic Core Plus (fixed income)          
Absolute return4.4
 3.3
 3.0
9.2
 4.6
 3.8
Relative return (vs. Bloomberg Barclays U.S. Aggregate Index)0.8
 1.1
 0.9
0.5
 0.5
 0.8
Emerging Market Debt (fixed income)          
Absolute return11.0
 7.3
 4.1
14.7
 6.1
 5.9
Relative return (vs. JPM EMBI Global/JPM EMBI)1.7
 0.4
 0.3
0.3
 0.1
 —
Emerging Markets Value     
U.S. Relative Value     
Absolute return29.9
 7.8
 3.6
24.5
 12.3
 10.2
Relative return (vs. MSCI EM Index)(7.4) (1.3) (0.8)
Global Strategic Value     
Absolute return22.4
 9.1
 13.6
Relative return (vs. MSCI ACWI Index)(1.5) (0.2) 2.7
U.S. Small & Mid Cap Value     
Absolute return14.0
 11.0
 15.9
Relative return (vs. Russell 2500 Value Index)3.6
 1.7
 2.7
Relative return (vs. Russell 1000 Value Index)(2.0) 2.6
 1.9

1-Year 3-Year 5-Year
International Strategic Core Equity     
Absolute return19.4
 11.4
 8.1
Relative return (vs. MSCI EAFE Index)(2.6) 1.8
 2.5
U.S. Small & Mid Cap Value     
Absolute return21.2
 5.8
 7.3
Relative return (vs. Russell 2500 Value Index)(2.4) (0.3) 0.1
U.S. Strategic Value          
Absolute return14.6
 6.1
 13.8
21.0
 6.2
 4.5
Relative return (vs. Russell 1000 Value Index)1.0
 (2.6) (0.2)(5.5) (3.5) (3.8)
U.S. Small Cap Growth          
Absolute return35.9
 13.6
 16.4
37.3
 23.2
 15.0
Relative return (vs. Russell 2000 Growth Index)13.8
 3.3
 1.2
8.8
 10.7
 5.7
U.S. Large Cap Growth          
Absolute return33.0
 15.5
 19.7
35.1
 22.7
 16.5
Relative return (vs. Russell 1000 Growth Index)2.7
 1.8
 2.4
(1.3) 2.2
 1.8
U.S. Small & Mid Cap Growth          
Absolute return33.5
 12.2
 15.5
31.7
 19.3
 12.4
Relative return (vs. Russell 2500 Growth Index)9.1
 1.3
 —
(0.9) 4.1
 1.5
Concentrated U.S. Growth          
Absolute return24.6
 10.7
 16.8
40.6
 21.4
 14.3
Relative return (vs. S&P 500 Index)2.7
 (0.7) 1.0
9.1
 6.2
 2.6
Select U.S. Equity          
Absolute return23.4
 11.5
 16.0
30.5
 15.6
 11.7
Relative return (vs. S&P 500 Index)1.5
 0.1
 0.2
(1.0) 0.3
 —
Strategic Equities          
Absolute return20.3
 11.1
 15.8
29.6
 14.3
 11.2
Relative return (vs. Russell 3000 Index)(0.8) —
 0.2
(1.4) (0.3) —
Global Core Equity          
Absolute return26.3
 10.6
 12.4
28.8
 15.9
 10.7
Relative return (vs. MSCI ACWI Index)2.4
 1.3
 1.6
2.2
 3.4
 2.3
U.S. Strategic Core Equity     
Absolute return32.1
 15.1
 12.7
Relative return (vs. S&P 500 Index)0.6
 (0.2) 1.0
Select U.S. Equity Long/Short     
Absolute return18.9
 10.6
 7.8
Relative return (vs. S&P 500 Index)(12.6) (4.7) (3.9)

Consolidated Results of Operations
Years Ended December 31, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in thousands, except per unit amounts)  
  
(in thousands, except per unit amounts)  
  
Net revenues$3,298,521
 $3,028,779
 $3,020,727
 8.9 % 0.3 %$3,518,432
 $3,367,361
 $3,298,521
 4.5 % 2.1 %
Expenses2,524,611
 2,305,614
 2,389,628
 9.5
 (3.5)2,694,995
 2,542,047
 2,524,611
 6.0
 0.7
Operating income773,910
 723,165
 631,099
 7.0
 14.6
823,437
 825,314
 773,910
 (0.2) 6.6
Income taxes53,110
 28,319
 44,797
 87.5
 (36.8)41,754
 45,816
 53,110
 (8.9) (13.7)
Net income720,800
 694,846
 586,302
 3.7
 18.5
781,683
 779,498
 720,800
 0.3
 8.1
Net income of consolidated entities attributable to non-controlling interests58,397
 21,488
 6,375
 171.8
 237.1
29,641
 21,910
 58,397
 35.3
 (62.5)
Net income attributable to AB Unitholders$662,403
 $673,358
 $579,927
 (1.6) 16.1
$752,042
 $757,588
 $662,403
 (0.7) 14.4
Diluted net income per AB Unit$2.45
 $2.47
 $2.10
 (0.8) 17.6
$2.78
 $2.78
 $2.45
 —
 13.5
Distributions per AB Unit$2.57
 $2.15
 $2.11
 19.5
 1.9
$2.82
 $2.96
 $2.57
 (4.7) 15.2
Operating margin(1)
21.7% 23.2% 20.7%  
  
22.6% 23.9% 21.7%  
  
 
(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, 20172019 decreased $11.0$5.5 million from the year ended December 31, 2016.2018. The decrease primarily is due to (in millions):
Higher employee compensation and benefits$(83.7)$(64.0)
Higher other general and administrative expenses(55.3)
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(36.9)(7.7)
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
128.4
Higher performance-based fees62.0
Higher distribution revenues27.7
36.5
Higher investment gains36.0
Other(1.1)
$(11.0)$(5.5)

Net income attributable to AB Unitholders for the year ended December 31, 20162018 increased $93.4$95.2 million from the year ended December 31, 2015.2017. The increase primarily was due to (in millions):
Higher investment gains$89.8
Lower employee compensation and benefits38.2
Lower income taxes16.5
Lower other promotion and servicing expenses14.9
Lower estimates for contingent payment arrangements14.8
Higher performance-based fees9.0
Lower other general and administrative expenses5.5
Lower base advisory fees(49.4)
Higher real estate charges(16.7)
Higher net income of consolidated entities attributable to non-controlling interests(15.1)
Lower Bernstein Research Services revenue(13.6)
Other(0.5)
 $93.4
Revenue Recognition

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which revises revenue recognition criteria for revenue arising from contracts with customers, requires certain costs to obtain and fulfill contracts with customers to be capitalized if they meet certain criteria, and expands disclosure requirements. We adopted this new accounting standard on January 1, 2018 on a modified retrospective basis, recognizing the cumulative effect of initial adoption in Partners’ Capital. Based on our analysis performed to-date, we do not expect any changes in the timing of revenue recognition for our base fees, distribution revenues, shareholder servicing revenues and broker-dealer revenues. However, performance-based fees, which are currently recognized at the end of the applicable measurement period when no risk of reversal remains, and carried-interest distributions received (considered performance-based fees), which are currently recorded as deferred revenues until no risk of reversal remains, 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. Currently, we expect the cumulative effect of initial adoption in partners' capital as of January 1, 2018 to be approximately $35 million. This amount represents carried-interest distributions previously received, net of revenue sharing payments to investment team members, with respect to which it is probable that significant reversal will not occur. Our future financial statements will include additional disclosures as required by ASU 2014-09.

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. As a result, we have sub-leased over one million square feet of office space.

During 2015, we recorded pre-tax real estate charges of $1.0 million, resulting from a change in estimates related to previously recorded real estate charges.
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 corporate headquarters 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.
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
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 20172019 expired at the close of business on February 12, 2018.11, 2020. 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.

Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Net revenues, US GAAP basis$3,298,521
 $3,028,779
 $3,020,727
$3,518,432
 $3,367,361
 $3,298,521
Adjustments: 
  
  
     
Long-term incentive compensation-related investment losses (gains)(7,937) (1,175) 1,903
Long-term incentive compensation-related dividends and interest(1,954) (1,647) (1,938)
Impact of adoption of revenue recognition standard ASC 606—
 77,844
 —
Distribution-related payments(420,350) (371,607) (393,033)(487,965) (427,186) (411,467)
Amortization of deferred sales commissions(31,886) (41,066) (49,145)(15,029) (21,343) (31,886)
Pass-through fees and expenses(40,531) (43,808) (47,479)(56,840) (40,219) (40,531)
Gain on sale of investment carried at cost—
 (75,273) —
Gain on sale of software technology(4,592) —
 —
90% of consolidated venture capital fund investment (gains)(9,558) (11,575) (7,117)
Impact of consolidated company-sponsored funds(77,697) (13,314) —
(33,044) (38,142) (87,255)
Long-term incentive compensation-related investment gains and dividend and interest(8,939) 3,509
 (9,891)
Loss (gain) on sale of software technology investment—
 3,733
 (4,592)
Other—
 47
 —
Adjusted net revenues$2,704,016
 $2,469,314
 $2,523,918
$2,916,615
 $2,925,604
 $2,712,899
          
Operating income, US GAAP basis$773,910
 $723,165
 $631,099
$823,437
 $825,314
 $773,910
Adjustments: 
  
  
     
Long-term incentive compensation-related items709
 720
 131
Gain on sale of investment carried at cost—
 (75,273) —
Gain on sale of software technology(4,592) —
 —
Impact of adoption of revenue recognition standard ASC 606—
 35,156
 —
Real estate charges36,669
 17,704
 998
2,623
 7,160
 36,669
Acquisition-related expenses2,012
 1,057
 —
6,734
 1,924
 2,012
Long-term incentive compensation-related items1,217
 3,064
 709
CEO's EQH award compensation1,125
 —
 —
Loss (gain) on sale of software technology investment—
 3,733
 (4,592)
Contingent payment arrangements(193) (21,483) (7,212)(3,051) (2,429) (193)
Other—
 47
 —
Sub-total of non-GAAP adjustments34,605
 (77,275) (6,083)8,648
 48,655
 34,605
Less: Net income of consolidated entities attributable to non-controlling interests58,397
 21,488
 6,375
29,641
 21,910
 58,397
Adjusted operating income750,118
 624,402
 618,641
802,444
 852,059
 750,118
Adjusted income taxes56,709
 44,559
 44,365
40,684
 47,289
 56,709
Adjusted net income$693,409
 $579,843
 $574,276
$761,760
 $804,770
 $693,409
     
Diluted net income per AB Unit, GAAP basis2.45
 2.47
 2.10
$2.78
 $2.78
 $2.45
Impact of non-GAAP adjustments0.12
 (0.34) (0.02)0.03
 0.18
 0.12
Adjusted diluted net income per AB Unit$2.57
 $2.13
 $2.08
$2.81
 $2.96
 $2.57
          
Adjusted operating margin27.7% 25.3% 24.5%27.5% 29.1% 27.7%
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 lower performance-based fees of $99.3 million, lower Bernstein Research Services revenue of $31.5 million, higher general and administrative expenses of $29.3 million, higher net distribution expenses of $17.8 million and higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $8.3 million, offset by higher investment advisory base fees of $113.3 million and higher investments gains and losses revenue of $22.4 million.Adjusted operating income for the year ended December 31, 2018 increased $101.9 million, or 13.6%, from the year ended December 31, 2017, primarily due to higher investment advisory base fees of $207.9$139.3 million, and higher performance-based fees of $72.4$90.7 million and lower general and administrative expenses of $19.1 million, offset by higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $76.7 million, higher general and administrative expenses of $32.2$119.6 million, lower Bernstein Research Services revenue of $30.0$10.5 million, lower investments gains and losses revenue of $9.5 million and higher net distribution expenses of $12.0 million. Adjusted operating income for the year ended December 31, 2016 increased $5.8 million, or 0.9%, from the year ended December 31, 2015, primarily due to lower employee compensation expense (excluding the impact of long-term incentive compensation-related items) of $42.1 million, lower promotion and servicing expenses of $14.1$8.6 million higher performance-based fees.
On January 1, 2018, as a result of $9.1our adoption of ASC 606, we recorded a cumulative effect adjustment, net of tax, of $35.0 million and lower general and administrative expensesto partners’ capital in the consolidated statement of $6.9 million, offset by lower investment advisory base fees of $46.4 million, lower Bernstein Research Services revenue of $13.6 million and higher net distribution expenses of $13.1 million.financial condition. This amount represented 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 was probable that significant reversal would not occur. These amounts were included in adjusted net revenues and adjusted operating income in the first quarter of 2018.
Adjusted Net Revenues
Adjusted net revenues 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 believe offsetting net revenues by distribution-related payments 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 who perform functions on behalf of our sponsored mutual funds and/or shareholders of these funds. We offset amortization of deferred sales commissions against net revenues because such costs, over time, essentially offset our distribution revenues. We also exclude additional pass-through expenses we incur (primarily through our transfer agency) that are reimbursed and recorded as fees in revenues. 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. In addition, in
Adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments.
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 cumulative 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 and in 2016tools. During 2018, we excluded a realized gaindecreased our valuation of $75.3 million resulting from the liquidation of anthis 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. Lastly, we exclude 90% of the investment gains and losses of our consolidated venture capital fund attributable to non-controlling interests.$3.7 million.
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, (2) the gain(4) our CEO's EQH award compensation, as discussed below, (5) loss (gain) on the sale of our investment in Jasper in 2016, (3) the gain on the sale ofa software technology during 2017, (4) real estate charges, (5) acquisition-related expenses,investment, (6) adjustments to contingent payment arrangements, and (7) the impact of consolidated company-sponsored investment funds.funds; provided, however, that adjusted operating income includes the revenues and expenses associated with our 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. However, beginning in the fourth quarter of 2019, real estate charges (credits), while excluded in the period in which the charges (credits) are recorded, are included ratably over the remaining applicable lease term.
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 2019, these expenses included an intangible asset impairment charge of $3.1 million relating to our 2016 acquisition.
Prior to 2009, a significant portion of employee compensation was in the form of employee 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 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 is recorded within investment gains and losses on the income statement and also impacts compensation expense. 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.
A realized gainThe board of directors of EQH granted to Seth P. Bernstein (“CEO”) equity awards in connection with EQH's IPO and Mr. Bernstein's membership on the liquidationEQH 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 Jaspernon-GAAP measures because they are non-cash and are based upon EQH's, and not AB's, financial performance.

The loss (gain) on the sale of a software technology investment during 2016 has been excluded due to its non-recurring nature and because it is not part of our core operating results.
A realized gain on the exchange of software technology for an ownership stake in a third party company during 2017 has been excluded due to its non-recurring nature and because it is not part of our core operating results.

Real estate charges 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 excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers.
The recording of changes in estimates of the 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.

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.

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.

Net Revenues
The components of net revenues are as follows:
Years Ended December 31, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in thousands)  
  
(in thousands)  
  
Investment advisory and services fees:       
  
       
  
Institutions:       
  
       
  
Base fees$429,541
 $403,503
 $421,964
 6.5 % (4.4)%$451,125
 $444,884
 $430,446
 1.4 % 3.4 %
Performance-based fees45,159
 17,394
 12,496
 159.6
 39.2
27,839
 32,898
 45,159
 (15.4) (27.2)
474,700
 420,897
 434,460
 12.8
 (3.1)478,964
 477,782
 475,605
 0.2
 0.5
Retail: 
  
  
     
  
  
    
Base fees922,510
 805,621
 847,246
 14.5
 (4.9)1,076,495
 992,037
 922,510
 8.5
 7.5
Performance-based fees24,216
 3,333
 8,807
 626.6
 (62.2)22,510
 18,278
 24,216
 23.2
 (24.5)
946,726
 808,954
 856,053
 17.0
 (5.5)1,099,005
 1,010,315
 946,726
 8.8
 6.7
Private Wealth Management: 
  
  
     
  
  
    
Base fees753,569
 691,595
 680,881
 9.0
 1.6
844,809
 807,147
 753,569
 4.7
 7.1
Performance-based fees25,405
 12,025
 2,443
 111.3
 392.2
49,266
 66,967
 25,405
 (26.4) 163.6
778,974
 703,620
 683,324
 10.7
 3.0
894,075
 874,114
 778,974
 2.3
 12.2
Total: 
  
  
     
  
  
    
Base fees2,105,620
 1,900,719
 1,950,091
 10.8
 (2.5)2,372,429
 2,244,068
 2,106,525
 5.7
 6.5
Performance-based fees94,780
 32,752
 23,746
 189.4
 37.9
99,615
 118,143
 94,780
 (15.7) 24.6
2,200,400
 1,933,471
 1,973,837
 13.8
 (2.0)2,472,044
 2,362,211
 2,201,305
 4.6
 7.3
Bernstein Research Services449,919
 479,875
 493,463
 (6.2) (2.8)407,911
 439,432
 449,919
 (7.2) (2.3)
Distribution revenues412,063
 384,405
 427,156
 7.2
 (10.0)455,043
 418,562
 412,063
 8.7
 1.6
Dividend and interest income71,162
 46,939
 24,872
 51.6
 88.7
104,421
 98,226
 71,162
 6.3
 38.0
Investment gains (losses)92,102
 93,353
 3,551
 (1.3) n/m
Investment gains38,659
 2,653
 92,102
 n/m
 (97.1)
Other revenues98,040
 99,859
 101,169
 (1.8) (1.3)97,559
 98,676
 97,135
 (1.1) 1.6
Total revenues3,323,686
 3,037,902
 3,024,048
 9.4
 0.5
3,575,637
 3,419,760
 3,323,686
 4.6
 2.9
Less: Interest expense25,165
 9,123
 3,321
 175.8
 174.7
57,205
 52,399
 25,165
 9.2
 108.2
Net revenues$3,298,521
 $3,028,779
 $3,020,727
 8.9
 0.3
$3,518,432
 $3,367,361
 $3,298,521
 4.5
 2.1
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 4035 to 110 basis points for actively-managed equity services, 10 to 7570 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 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 7.1%7.9%, 4.1%9.1% and 0.7% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 4.4%5.3% of our AUM).
During 2016 and 2017, we received carried interest distributions of $77.8 million, as general partner of our real estate fund. In accordance with our current revenue recognition policies, we did not recognize these carried interest distributions as performance-based fee revenues, instead recording a deferred revenue liability, because the distributions are subject to claw-back provisions. In addition, we have revenue-sharing arrangements whereby certain employees are entitled to a share of carried interest proceeds distributed by certain funds, including the real estate fund. As such, we distributed $42.7 million of these carried interest proceeds to certain real estate fund employees. We have recorded this payment, which, like our carried interest distribution, is subject to claw-back provisions, as an advance to employees and will recognize it as compensation expense in the period in which the applicable revenue is recognized. Currently, we expect the net effect of these items to be included in the cumulative effect of initial adoption of ASU 2014-09 as of January 1, 2018. See Revenue Recognition previously discussed.
Our investment advisory and services fees increased by $266.9$109.8 million, or 13.8%4.6%, in 2017,2019, primarily due to a $204.9$128.4 million, or 10.8%5.7%, increase in base fees, which primarily resulted from a 7.9%5.5% increase in average AUM and the impact of a slight shift in product mix from fixed income to equities, which generally have higher fees. This increase was partially offset by an $18.5 million decrease in performance-based fees. Our investment advisory and services fees increased by $160.9 million, or 7.3%, in 2018, primarily due to a $137.5 million, or 6.5%, increase in base fees, which primarily resulted from a 5.1% 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 by $62.0$23.4 million. Our investment advisory and services fees decreased by $40.4 million, or 2.0%, in 2016, primarily due to a $49.4 million, or 2.5%, decrease in base fees, which primarily resulted from the impact of a shift in product mix from active

equity products to active fixed income products, which generally have lower fees. However, our performance-based fees increased $9.0 million from the prior year.


Institutional investment advisory and services fees increased $53.8$1.2 million, or 12.8%0.2%, in 2017,2019, primarily due to an increase in base fees of $26.0$6.2 million, or 6.5%1.4%, primarily resulting from a 4.3%2.8% increase in average AUM, partially offset by a decrease in performance-based fees of $5.1 million and the impact of lower fee realization from active equities. Institutional investment advisory and services fees increased $2.2 million, or 0.5%, in 2018, primarily due to an increase in base fees of $14.4 million, or 3.4%, 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 million.
Retail investment advisory and services fees increased $88.7 million, or 8.8%, in 2019, primarily due to an increase in base fees of $84.5 million, or 8.5%, primarily resulting from a 10.7% increase in average AUM, partially offset by the impact of lower fee realization from active equities. Also, performance-based fees increased $4.2 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.

Private Wealth Management investment advisory and services fees increased by $20.0 million, or 2.3%, in 2019, due to an increase in base fees of $37.7 million, or 4.7%, primarily resulting from an 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 increasedThis increase was partially offset by $27.8 million. Institutional investment advisory and services fees decreased $13.6a $17.7 million or 3.1%, in 2016, primarily due to an $18.5 million, or 4.4%, decrease in baseperformance-based fees. The decrease in base fees resulted from a shift in product mix from active equities to active fixed income products, which generally have lower fees. However, performance-based fees increased $4.9 million from the prior year.
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. Retail investment advisory and services fees decreased $47.1 million, or 5.5%, in 2016, primarily due to a $41.6 million, or 4.9%, decrease in base fees. The decrease in base fees was due to a decrease in average AUM of 1.8% and the impact of a shift in product mix from non-U.S. global fixed income mutual funds, non-U.S. global equity mutual funds and other products to U.S. tax-exempt mutual funds, which generally have lower fees. Additionally, performance-based fees decreased $5.5 million from the prior year.

Private Wealth Management investment advisory and services fees increased by $75.4$95.1 million, or 10.7%12.2%, in 2017,2018, due to an increase in base fees of $62.0$53.6 million, or 9.0%7.1%, primarily resulting from a 9.8%an 8.8% increase in average AUM. In addition, performance-based fees increased $13.4$41.6 million. Private Wealth Management investment advisory and services fees increased $20.3 million, or 3.0%, in 2016, due to an increase in base fees of $10.7 million, or 1.6%, resulting from a 2.2% increase in average AUM and a $9.6 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 $30.0$31.5 million, or 6.2%7.2%, in 2017.2019. The decrease was due to lower global customer activity and trading commissions, partially offset by the inclusion of revenues from our acquisition of Autonomous (which closed on April 1, 2019).
Revenues from Bernstein Research Services decreased $10.5 million, or 2.3%, in 2018. The decrease was driven by a declinereduction in client activity incommission rates due to the U.S.unbundling of research services and a volume mix shift to lower fee electronic trading in Europe. The decrease wasacross all regions, partially offset by increased client activity in Asia and a weaker U.S. dollar year-over-year. Revenues from Bernstein Research Services decreased $13.6 million, or 2.8%, in 2016, as a result of lower market values and volumes in Europe and Asia and the discontinuation of our Equity Capital Market services.dollar.

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 $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 from mutual funds that have higher distribution rates to mutual funds with lower distribution rates.
Distribution revenues increased $6.5 million, or 1.6%, in 2018, 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 2017, averageAverage AUM of A-share mutualfor Japan and Taiwan domiciled funds (which have lower distribution fee rates than B-share and C-share mutual funds) increased 21.5%35.1%, while average AUM of B-share and C-share mutual funds decreased by 13.5%. Distribution revenues decreased $42.8 million, or 10.0%, in 2016, while the corresponding average AUM of these(which have higher distribution rates than A- share mutual funds, as well as other funds not domiciled in the U.S. or Luxembourg) decreased 8.0%22.5%.
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, increased $8.2$6.2 million, or 21.6%6.3%, in 2017,2019, 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.
Dividend and interest income net of interest expense, increased $16.3$27.1 million, or 75.5%38.0%, in 2016,2018, primarily due to the dividends relatedhigher interest earned on customer margin balances and U.S. Treasury Bills. Interest expense increased $27.2 million in 2018, due to our consolidated company-sponsored investment funds of $10.2 million and higher mutual fund dividends of $3.4 million.

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.

Investment gains (losses) are as follows:
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Long-term incentive compensation-related investments          
Realized gains (losses)$2,214
 $1,463
 $3,687
Unrealized gains (losses)5,723
 (288) (5,589)
     
Consolidated private equity fund investments     
Realized gains (losses)     
Non-public investments—
 —
 1,983
Public securities—
 —
 (5,500)
Unrealized gains (losses) 
  
  
Non-public investments—
 —
 1,396
Public securities—
 —
 10,028
Realized gains$1,672
 $2,512
 $2,214
Unrealized (losses) gains5,859
 (8,032) 5,723
          
Investments held by consolidated company-sponsored investment funds          
Realized gains (losses)59,669
 (8,482) —
Unrealized gains (losses)36,340
 28,437
 —
Realized (losses) gains9,378
 (1,134) 59,669
Unrealized gains36,150
 14,217
 36,340
          
Seed capital investments 
  
  
 
  
  
Realized gains (losses) 
  
  
 
  
  
Seed capital24,822
 67,778
 23,007
Seed capital and other17,301
 (943) 24,822
Derivatives(22,395) (15,207) 11,448
(30,320) 7,001
 (22,395)
Unrealized gains (losses) 
  
  
 
  
  
Seed capital(9,713) 24,976
 (34,830)
Seed capital and other7,510
 (15,003) (9,713)
Derivatives(1,478) (311) 3,724
(8,013) 5,384
 (1,478)
          
Brokerage-related investments 
  
  
 
  
  
Realized gains (losses)(2,796) (5,057) (5,653)
Realized losses(1,209) (1,410) (2,796)
Unrealized gains (losses)(284) 44
 (150)331
 61
 (284)
$92,102
 $93,353
 $3,551
$38,659
 $2,653
 $92,102
During 2017, we realized a gain of $4.6 million (included in realized gains of seed capital investments in table above) on the exchange of software technology for an ownership stake in a third party provider of financial market data and trading tools.
During the first quarter of 2016, we sold our investment in Jasper, a company in which we owned a 7.6% equity interest. We expect to receive a total of $85.5 million in cash, subject to final transaction costs and working capital adjustments. During March 2016, the transaction closed and we received $74.8 million in cash, recorded a $10.7 million receivable (of which we have received $10.2 million as of December 31, 2017) for the balance retained in escrow for 18 months and recorded an investment gain of $75.3 million (included in realized gains of seed capital investments in table above).

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 AXAEQH and its subsidiaries, and other miscellaneous revenues. Other revenues decreased $1.8$1.1 million, or 1.8%1.1%, in 2017,2019, primarily due to lower brokerage income and lower investment income related to our consolidated company-sponsored investment funds, partially offset by higher shareholder servicing fees. Other revenues increased $1.5 million, or 1.6%, in 2018, primarily due to higher shareholder servicing fees partly offset byand higher mutual fund reimbursements. Other revenues decreased $1.3 million, or 1.3%, in 2016, primarily due to lower shareholder servicing fees.

Expenses
The components of expenses are as follows:
Years Ended December 31, % ChangeYears Ended December 31, % Change
2017 2016 2015 2017-16 2016-152019 2018 2017 2019-18 2018-17
(in thousands)  
  
(in thousands)  
  
Employee compensation and benefits$1,313,469
 $1,229,721
 $1,267,926
 6.8 % (3.0)%$1,442,783
 $1,378,811
 $1,313,469
 4.6 % 5.0 %
Promotion and servicing: 
  
  
  
  
 
  
  
  
  
Distribution-related payments420,350
 371,607
 393,033
 13.1
 (5.5)487,965
 427,186
 411,467
 14.2
 3.8
Amortization of deferred sales commissions31,886
 41,066
 49,145
 (22.4) (16.4)15,029
 21,343
 31,886
 (29.6) (33.1)
Trade execution, marketing, T&E and other204,392
 208,538
 223,415
 (2.0) (6.7)219,860
 222,630
 213,275
 (1.2) 4.4
656,628
 621,211
 665,593
 5.7
 (6.7)722,854
 671,159
 656,628
 7.7
 2.2
General and administrative: 
  
  
  
  
 
  
  
  
  
General and administrative481,488
 426,147
 431,635
 13.0
 (1.3)484,750
 448,996
 481,488
 8.0
 (6.7)
Real estate charges36,669
 17,704
 998
 107.1
 n/m
3,324
 7,160
 36,669
 (53.6) (80.5)
518,157
 443,851
 432,633
 16.7
 2.6
488,074
 456,156
 518,157
 7.0
 (12.0)
Contingent payment arrangements267
 (20,245) (5,441) n/m
 272.1
(510) (2,219) 267
 (77.0) n/m
Interest8,194
 4,765
 3,119
 72.0
 52.8
Interest on borrowings13,035
 10,359
 8,194
 25.8
 26.4
Amortization of intangible assets27,896
 26,311
 25,798
 6.0
 2.0
28,759
 27,781
 27,896
 3.5
 (0.4)
Total$2,524,611
 $2,305,614
 $2,389,628
 9.5
 (3.5)$2,694,995
 $2,542,047
 $2,524,611
 6.0
 0.7
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 39.8%41.0%, 40.6%40.9% and 42.0%39.8% for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, 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 1.1%1.2%, 1.1% and 1.3%1.1% of adjusted net revenues for 2017, 20162019, 2018 and 2015,2017, 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 47.1%47.9%, 48.5%47.5% and 48.9%47.1%, respectively, for the years ended December 31, 2017, 20162019, 2018 and 2015.

2017.
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 $17.4 million and higher fringes of $15.6 million, partially offset by lower commissions of $3.2 million. In 2018, employee compensation and benefits expense increased $65.3 million, or 5.0%, primarily due to higher incentive compensation of $68.4$19.3 million, higher commissions of $19.0 million, higher base compensation of $5.4$14.7 million which primarily resulted from(primarily higher severance, higher commissions of $4.8 millionsalaries), and higher fringes of $4.1$7.4 million. In 2016, employee compensation and benefits expense decreased $38.2 million, or 3.0%, primarily due to lower incentive compensation of $33.6 million, lower fringes/other of $8.0 million and lower commissions of $6.4 million, partially offset by higher base compensation of $9.8 million reflecting higher severance costs.


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 $35.4$51.7 million, or 5.7%7.7%, in 2017.2019. The increase primarily was due to higher distribution-related payments of $48.7$60.8 million and higher travel and entertainment expenses of $3.2 million, offset by lower amortization of deferred sales commissions of $9.2$6.3 million, lower traveltrade execution and entertainment costsclearance expenses of $2.6$3.7 million and lower transfer feesmarketing expenses of $2.1$2.5 million. Promotion and servicing expenses decreased $44.4increased $14.5 million, or 6.7%2.2%, in 2016.2018. The decreaseincrease primarily was due to lowerhigher distribution-related payments of $21.4$15.7 million, higher marketing expenses of $4.5 million and higher trade execution and clearance expenses of $4.5 million, offset by lower amortization of deferred sales commissions of $8.1 million, lower travel and entertainment expenses of $6.3 million, lower marketing expenses of $5.1 million and lower transfer fees of $4.8$10.5 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 15.7% (14.6% excluding real estate charges)13.9%, 14.7% (14.1% excluding real estate charges)13.5% and 14.3%15.7% for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, respectively. 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$11.2 million, the vendor termination accrualhigher technology fees of $19.7 million we describe below, higher real estate charges of $19.0$11.0 million and higher professional fees of $6.5$7.0 million. General and administrative expenses increased $11.2decreased $62.0 million, or 2.6%12.0%, in 2016,during 2018, primarily due to higherlower real estate charges of $16.7$29.5 million, offset by lower professional feesthe lack of $6.3 million.
During the third quarter of 2017, we recorded a $19.7 million reserve for a payment we expect to make to a third-party vendor as a resulttermination fee recorded in 2017, lower rent expense of the early termination$5.0 million, lower exchange rate losses of an outsourcing contract relating to our trade settlement$2.8 million and reconciliation processes. We intend to transition these processes back to AB from our vendor within the next two years. As a resultlower errors of this transition, we expect to incur $2 million in additional transitional costs in 2018 and realize ongoing annual savings of approximately $11 million in general and administrative expenses beginning in 2019.

$2.7 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 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 2016 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. The credit to operating expenses of $5.4 million in 2015 reflects changes in estimate of the contingent consideration payable relating to our 2014 and 2010 acquisitions of $7.2 million recorded in the fourth quarter of 2015, offset by the accretion expense of $1.8 million.
Interest on Borrowings
Interest expense increased 72.0%25.8% in 2019, reflecting both higher weighted average borrowings and 52.8%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. Interest expense increased 26.4% in 2017 and 2016, respectively,2018, reflecting higher weighted average interest rates on commercial paper borrowings and higher average daily borrowings of commercial paper.borrowings. Average daily borrowings of commercial paper during 2018 and 2017 2016 and 2015 were $482.2 million, $422.9$350.3 million and $387.9$482.2 million, respectively, with weighted average interest rates of 2.0% and 1.2%, 0.6% and 0.3%, respectively.

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”(“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.
We determined reasonable estimates for certain effects of the Tax Cuts and Jobs Act (“2017 Tax Act”) enacted on December 22, 2017 and recorded those estimates as provisional amounts in our 2017 financial statements. In accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”), the adjustments to deferred tax assets and liabilities and the liability related to the transition tax are provisional amounts estimated based on information available as of December 31, 2017. These amounts are subject to change as we obtain information necessary to complete the calculations. We will recognize any changes to the provisional amounts as we refine our estimates and as the tax authorities issue further guidance and interpretations of the 2017 Tax Act.

The major provisions of the 2017 Tax Act that had, or could have, 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. The determination of the transition tax requires further analysis regarding the amount and composition of our historical foreign earnings.
We recorded an approximate $3.3 million charge to our 2017 income tax expense to reduce our deferred tax assets due to lower future corporate tax rates. We will recognize any changes to the provisional amounts as we refine our estimates of our cumulative temporary differences.
We are currently analyzing the possible impact on us of the tax on global intangible low-taxed income (“GILTI”), if any. The GILTI tax is effective in 2018; as such, we have not recorded any amounts in our 2017 financial statements for the GILTI provision.

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 unfavorable mix of earnings across the AB tax filing groups.
Income tax expense decreased $16.5$4.1 million, or 36.8%8.9%, in 20162019 compared to 2015 primarily2018. This decrease is due to a lower effective tax rate in 20162019 of 3.9%5.1% compared to 7.1%5.6% in 2015, offset by higher pre-tax income.2018. The significant decrease in our effective tax rate was driven by a fourth quarter 2016 change in estimate made to our incomemore favorable mix of earnings across the AB tax liability relating to the third quarter 2016 revision to income taxes ($13.3 million)filing groups and a reversalreduction of one-time discrete items.
Income tax expense decreased $7.3 million, or 13.7%, in 2018 compared to 2017. This decrease is due to a deferredlower effective tax liability relatingrate in 2018 of 5.6% compared to foreign translation adjustments ($8.2 million).6.9% in 2017 and higher pre-tax income. 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.



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 2019, 2018 and 2017, we had $29.6 million, $21.9 million and $58.4 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. In 2016, we had $21.5 millionFluctuations period-to-period result primarily from the number of net income of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds. In 2015, we had $6.4 million of net income of consolidated entities attributable to non-controlling interests, primarily due to a $7.9 million net investment gain attributable to our consolidated venture capital fund (of which 90% belongs to non-controlling interests)funds and management fees of $1.2 million.their respective market performance.
Capital Resources and Liquidity
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 broker-dealer related payables (net of receivable and segregated U.S. Treasury Bills activity) of $754.8 million and net activity of our consolidated company-sponsored investment funds of $491.7$427.6 million, a decreaseoffset by lower net purchases of broker-dealer investments of $754.7 million.During 2018, net cash provided by operating activities was $1.3 billion, compared to $645.5 million during 2017. The change primarily was due to an increase in broker-dealer payables (net of receivable and segregated U.S. Treasury Bills activity) of $376.3$618.8 million, a decrease in net activity of our consolidated company-sponsored investment funds of $467.3 million and lowerhigher cash provided by net redemptionsincome of seed capital and$75.5 million, offset by higher net purchases of broker-dealer investments of $162.3$294.7 million offset byand an increase in cash provided by net incomebroker dealer deposits with clearing organizations of $86.5$150.5 million. During 2016, net cash provided by operating activities was $1.5 billion, compared to $667.2 million during 2015. The change primarily was due to a significant increase in broker-dealer related payables, net of receivables and segregated U.S. Treasury Bills activity of $403.9 million, the impact of the consolidation of

company-sponsored investment funds of $270.3 million and higher seed capital net redemptions, offset by higher net broker-dealer purchases of $104.6 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 reflects $20.5 million spent in 2016due to purchase a business.the acquisition of Autonomous, net of cash acquired, of $5.3 million. During 2016,2018, net cash used in investing activities was $59.4$32.8 million, compared to $26.1$39.3 million during 2015.2017. The increasechange primarily resulted from the $20.5 million used to purchase a business and higherreflects lower purchases of furniture, equipment and leasehold improvements of $6.5$6.6 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 payablelower distributions to the General Partner and Unitholders of $147.9 million, proceeds from bank loans of $75.0$154.7 million and lower net repaymentspurchases of commercial paperAB Holding Units to fund long-term incentive compensation plan awards of $43.5$95.5 million.During 2018, net cash used in financing activities was $1.6 billion, compared to $623.9 million offset byduring 2017. The change reflects the net redemptions of non-controlling interests of consolidated company-sponsored investment funds in 2018 as compared to net purchases of non-controlling interests of consolidated company-sponsored investment funds in 2017 (impact of $635.3 million), higher distributions to the General Partner and Unitholders of $106.6 million. During 2016,$214.1 million and net cash usedrepayments of bank loans in financing activities was $1.1 billion, compared to $644.7 million during 2015. The change reflects the net repayment of commercial paper in 20162018 as compared to the net issuance of commercial paperproceeds from bank loans in 20152017 (impact of $165.9$125.0 million), a decrease in overdrafts payable of $164.1 million, redemptions of non-controlling interests in consolidated company-sponsored investments funds of $137.4 million and higher repurchases of AB Holding Units of $22.4 million, offset by lower distributions to the General Partner and Unitholders of $60.3 million as a result of lower earnings (distributions on earnings are paid one quarter in arrears).
As of December 31, 2017,2019, AB had $671.9$679.7 million of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds), all of which areis available for liquidity but 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 $469.9$448.4 million.
Debt and Credit Facilities
As of December 31, 2017 and 2016, AB had $491.8 million and $513.0 million, respectively, in commercial paper outstanding with weighted average interest rates of approximately 1.6% and 0.9%, 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 2017 and 2016 were $482.2 million and $422.9 million, respectively, with weighted average interest rates of approximately 1.2% and 0.6% respectively.
AB has a $1.0 billionan $800.0 million committed, unsecured senior revolving credit facility (the “"Credit Facility”") with a group of commercial banks and other lenders, which matures on October 22, 2019.September 27, 2023. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $250.0$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 $1.0 billion 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, 2017,2019, 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 automatically 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 indexes:indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.
As of December 31, 20172019 and 2016,2018, we had no amounts outstanding under the Credit Facility. During 20172019 and 2016,2018, we did not draw upon the Credit Facility.

In addition to the Credit Facility, on November 4, 2019, AB established a $900.0 million committed, unsecured senior credit facility (“EQH Facility”) with EQH. The EQH Facility matures on November 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.
OnThe 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 or 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 1, 2016,31, 2019, AB entered intohad $560.0 million outstanding under the EQH Facility with an interest rate of approximately 1.6%. Average daily borrowings on the EQH Facility during 2019 for the 57 days it was available were $358.6 million with a weighted average interest rate of approximately 1.6%.
As of December 31, 2019, we had no commercial paper outstanding. As of December 31, 2018, AB had $523.2 million in commercial paper outstanding with a weighted average interest rate of approximately 2.7%. 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 the 317 days commercial paper was outstanding in 2019 was $438.6 million with a weighted average interest rate of 2.6%. Average daily borrowings for 2018 were $350.3 million with a weighted average interest rate of approximately 2.0%.
AB has a $200.0 million committed, unsecured 364-day senior revolving credit facility (the “"Revolver”") with a leading international bank, and the other lending institutions that may be party thereto. Onwhich matures on November 29, 2017, as part of an amendment and restatement, the maturity date of the Revolver was extended from November 29, 2017 to November 28, 2018. There were no other significant changes included in the amendment.16, 2021. 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. As of December 31, 2017,2019 we had $75.0no amounts outstanding under the Revolver. As of December 31, 2018, we had $25.0 million outstanding under the Revolver with an interest rate of 2.4%3.4%. As of December 31, 2016, we had no amounts outstanding under the Revolver. Average daily borrowings for 20172019 and 20162018 were $21.4$23.5 million and $7.3$19.4 million, respectively, with a weighted average interest rates of 2.0%3.2% and 1.6%2.8%, 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, 20172019 and 2016,2018, SCB LLC had no bank loans outstanding.outstanding balance on these lines of credit. Average daily borrowings on the lines of bank loanscredit during 20172019 and 20162018 were $4.5$1.9 million and $4.4$2.7 million, respectively, with weighted average interest rates of approximately 1.4%1.9% and 1.1%1.6%, 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 and 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 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 threefour additional guarantees with other commercial banks under which we guarantee approximately $410$387 million of obligations for our U.K.-based broker-dealer and $99 million of obligations for our India-based broker-dealer. In the event that any of these threefour 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 $1.6$1.5 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, 20172019 are as follows:
 Payments Due by Period
 Total 
Less than
1 Year
 1-3 Years 3-5 Years 
More than
5 Years
 (in millions)
EQH credit facility$560.0
 $560.0
 $—
 $—
 $—
Leases, net of sublease commitments978.0
 83.3
 151.2
 124.3
 619.2
Funding commitments10.1
 10.1
 —
 —
 —
Accrued compensation and benefits254.8
 168.1
 54.3
 14.7
 17.7
Unrecognized tax benefits(1)
5.7
 2.9
 —
 2.8
 —
Federal transition tax (1)
16.5
 1.6
 3.2
 7.0
 4.7
Total$1,825.1
 $826.0
 $208.7
 $148.8
 $641.6
 Payments Due by Period
 Total 
Less than
1 Year
 1-3 Years 3-5 Years 
More than
5 Years
 (in millions)
Commercial paper$565.7
 $565.7
 $—
 $—
 $—
Operating leases, net of sublease commitments542.2
 87.4
 159.6
 139.9
 155.3
Funding commitments22.0
 9.3
 5.6
 3.0
 4.1
Accrued compensation and benefits246.1
 154.3
 45.2
 19.5
 27.1
Unrecognized tax benefits8.5
 4.6
 —
 1.1
 2.8
Total$1,384.5
 $821.3
 $210.4
 $163.5
 $189.3
(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 $25.0$25 million in the Real Estate Fund. As of December 31, 2017,2019, 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 million, as amended in 2015, in the Real Estate Fund II. As of December 31, 2017,2019, we had funded $10.4$19.9 million of this commitment.
During 2012, we entered into an investment agreement under which we committed to invest up to $8.0 million in an oil and gas fund over a three-year period. As of December 31, 2017, we had funded $6.2 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 $71.5$57.9 million, which are included in our consolidated statement of financial condition. Any amounts reflected on the 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.
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 $5 million to the Retirement Plan during 2018.2020.
During October 2018, we signed a lease, which commences in mid-2020, relating to 218,976 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 $134 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 million.



Contingencies
See Note 1314 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, 2017,2019, 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, 2017,2019, 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 the 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 both the market approach and income approach. Under the market approach, 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 premium 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. Under the income approach, the fair value of the reporting unit is based on the present value of estimated future cash flows. Determining estimated fair value using a discounted cash flow valuation technique consists of applying business growth rate assumptions over the estimated life 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 at 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. 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 between the amount of our on-going contractual lease obligations for the vacated floors and our estimate 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.
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 1314 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.
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.

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 2020 Margin Target: While our 2020 Margin Target is presented with numerical specificity, and we believe the target
•
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 of increasing our adjusted operating margin to a target of 30% by 2020, subject to the assumptions, factors and contingencies described as part of our initial disclosure of this target. Our adjusted operating margin for 2019 was 27.5%.
Our AUM and, therefore, our investment advisory revenues, including performance-based fee revenues, are heavily dependent on the level and volatility of the financial markets. Based upon our current revenue and expense projections, we do not believe that achieving the 2020 Margin Target is based create a significant risk that these assumptions may not be realized. These assumptions include:
the levelslikely. However, we are taking additional actions to better align our expenses with our expected revenues. We remain committed to achieving an adjusted operating margin of positive net flows into our investment services;
the level of growth (in terms of additional AUM)30% in our alternatives product business;
the rate of increaseyears subsequent to 2020 and will take continued actions in our fixed costs duethis regard, subject to inflation and similar factors, the transitional costs related to our relocation strategyprevailing market conditions and the timingevolution of such costs, the success we have in achieving planned new cost reductions (including those relating to our relocation strategy) and the timing of such cost reductions, and the investments we make in our business; and
general conditions of the markets in which our business operates, including modest continued appreciation in both equity and fixed income total investment returns.mix.




Item 7A.    7A. Quantitative and Qualitative Disclosures about Market Risk


AB Holding


Market Risk, Risk Management and Derivative Financial Instruments


AB Holding’s sole investment is AB Units. AB Holding did not own, nor was it a party to, any derivative financial instruments during the years ended December 31, 2017, 20162019, 2018 and 2015.2017.


AB
Market Risk, Risk Management and Derivative Financial Instruments
Our investments consist of trading available-for-sale investments and other investments. Trading and available-for-sale investments include U.S. Treasury Bills, mutual funds, exchange-traded options and various separately-managed portfolios consisting of equity and fixed income 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. Although available-for-sale investments are purchased for long-term investment, the portfolio strategy considers them available-for-sale from time to time due to changes in market interest rates, equity prices and other relevant factors. 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 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, 20172019 and 2016.2018. 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,
2017 20162019 2018
Fair Value 
Effect of
+100
Basis Point
Change
 Fair Value 
Effect of
+100
Basis Point
Change
Fair Value 
Effect of
+100
Basis Point
Change
 Fair Value 
Effect of
+100
Basis Point
Change
(in thousands)(in thousands)
Fixed Income Investments:              
Trading$136,980
 $(8,986) $120,529
 $(7,846)$36,122
 $(2,445) $435,020
 $(28,668)
Available-for-sale22
 (1) 22
 (1)

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, 20172019 and 2016.2018. 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,As of December 31,
2017 20162019 2018
Fair Value 
Effect of -10%
Equity Price
Change
 Fair Value 
Effect of -10%
Equity Price
Change
Fair Value 
Effect of -10%
Equity Price
Change
 Fair Value 
Effect of -10%
Equity Price
Change
(in thousands)(in thousands)
Equity Investments:              
Trading$214,095
 $(21,410) $180,330
 $(18,033)$151,140
 $(15,114) $178,215
 $(17,822)
Available-for-sale and other investments92,492
 (9,249) 163,450
 (16,345)
Other investments79,532
 (7,953) 101,109
 (10,111)



Item 8.Financial Statements and Supplementary Data


Report of Independent Registered Public Accounting Firm


To the General Partner and Unitholders of
AllianceBernstein Holding L.P.:
Opinions on the Financial Statements and Internal Control over Financial Reporting


We have audited the accompanying statements of financial condition of AllianceBernstein Holding L.P..L.P. (the “Company”) as of December 31, 20172019 and 2016,2018, and the related statements of income, of comprehensive income, of changes in partners’ capital and of cash flowsfor each of the three years in the period endedDecember 31, 2017,2019, including the related notes (collectively referred to as the “financial statements”).We also have audited the Company's internal control over financial reporting as of December 31, 2017,2019, 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 financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172019 and December 31, 2016, 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 20172019 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, 2017,2019, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.

Basis for Opinions

The Company's management is responsible for thesefinancial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, appearing under Item 9Aincluded in Management'sManagement’s Report on Internal Control overOver Financial Reporting.Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’sfinancial 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")(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 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 financial statements included performing procedures to assess the risks of material misstatement of the 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 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 thefinancial 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.


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 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 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 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.

Measurement of Equity in Net Income Attributable to AB Unitholders - Performance-Based Fees

As described in Notes 1, 2 and 4 to the financial statements, the Company’s principal source of income and cash flow is attributable to its investment in AllianceBernstein L.P. (AB) limited partnership interests. The equity in net income attributable to AB unitholders was $266.3 million for the year ended December 31, 2019. The Company records its investment in AB using the equity method of accounting. The Company’s investment is increased to reflect its proportionate share of income of AB, decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its unitholders and adjusted to reflect its proportionate share of certain capital transactions of AB. The Company’s proportionate share of income of AB includes performance-based fees recognized by AB. 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. As disclosed by management, 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 the measurement of equity in net income attributable to AB unitholders - performance-based fees is a critical audit matter are that there was significant judgment by management in assessing the probability that there will not be a significant reversal of the cumulative revenue recognized and in determining the fund’s market value where fair valuation methods are used. This in turn led to significant auditor judgment, subjectivity and effort in performing procedures relating to performance-based fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration.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 financial statements.These procedures included testing the effectiveness of controls relating to equity in net income attributable to AB Unitholders, including controls relating to AB’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM.These procedures 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. 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/ PricewaterhouseCoopers LLP
New York, New York
February 13, 201812, 2020

We have served as the Company’s auditor since2006.




AllianceBernstein Holding L.P.


Statements of Financial Condition


December 31,December 31,
2017 20162019 2018
(in thousands,
except unit amounts)
(in thousands,
except unit amounts)
ASSETS      
Investment in AB$1,544,704
 $1,540,508
$1,554,203
 $1,490,701
Other assets61
 —
Total assets$1,544,704
 $1,540,508
$1,554,264
 $1,490,701
LIABILITIES AND PARTNERS’ CAPITAL      
Liabilities:      
Other liabilities$1,154
 $619
$1,726
 $644
Total liabilities1,154
 619
1,726
 644
Commitments and contingencies (See Note 7)


 



 


Partners’ capital:      
General Partner: 100,000 general partnership units issued and outstanding1,411
 1,405
1,402
 1,385
Limited partners: 96,361,989 and 96,552,190 limited partnership units issued and outstanding1,590,776
 1,592,240
Limited partners: 98,092,098 and 96,558,278 limited partnership units issued and outstanding1,619,200
 1,555,892
AB Holding Units held by AB to fund long-term incentive compensation plans(15,174) (11,731)(27,436) (27,759)
Accumulated other comprehensive loss(33,463) (42,025)(40,628) (39,461)
Total partners’ capital1,543,550
 1,539,889
1,552,538
 1,490,057
Total liabilities and partners’ capital$1,544,704
 $1,540,508
$1,554,264
 $1,490,701


See Accompanying Notes to Financial Statements.

AllianceBernstein Holding L.P.


Statements of Income


Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Equity in net income attributable to AB Unitholders$232,393
 $239,389
 $210,084
$266,292
 $270,647
 $232,393
          
Income taxes24,971
 22,803
 24,320
27,729
 28,250
 24,971
          
Net income$207,422
 $216,586
 $185,764
$238,563
 $242,397
 $207,422
          
Net income per unit:          
          
Basic$2.19
 $2.24
 $1.87
$2.49
 $2.50
 $2.19
Diluted$2.19
 $2.23
 $1.86
$2.49
 $2.50
 $2.19


See Accompanying Notes to Financial Statements.

AllianceBernstein Holding L.P.


Statements of Comprehensive Income


Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Net income$207,422
 $216,586
 $185,764
$238,563
 $242,397
 $207,422
Other comprehensive income (loss): 
  
  
Other comprehensive (loss) income: 
  
  
Foreign currency translation adjustments, before reclassification and tax9,671
 (6,697) (5,508)1,900
 (6,884) 9,671
Less: reclassification adjustment for (losses) gains included in net income upon liquidation—
 (2) 561
Less: reclassification adjustment for (losses) included in net income upon liquidation—
 (36) —
Foreign currency translation adjustments, before tax9,671
 (6,695) (6,069)1,900
 (6,848) 9,671
Income tax (expense) benefit(161) 217
 3
Foreign currency translation adjustments, net of tax1,739
 (6,631) 9,674
Unrealized gains on investments: 
  
  
Unrealized gains arising during period—
 —
 2
Income tax benefit3
 56
 11
—
 —
 2
Foreign currency translation adjustments, net of tax9,674
 (6,639) (6,058)
Unrealized gains (losses) on investments: 
  
  
Unrealized gains (losses) arising during period2
 4
 (132)
Less: reclassification adjustments for (losses) gains included in net income—
 (2) 457
Changes in unrealized gains (losses) on investments2
 6
 (589)
Income tax benefit2
 —
 256
Unrealized gains (losses) on investments, net of tax4
 6
 (333)
Unrealized gains on investments, net of tax—
 —
 4
Changes in employee benefit related items: 
  
  
 
  
  
Amortization of prior service cost9
 40
 (326)6
 8
 9
Recognized actuarial (loss) gain(1,115) (737) 1,264
(3,011) 541
 (1,115)
Changes in employee benefit related items(1,106) (697) 938
(3,005) 549
 (1,106)
Income tax (expense)(10) (12) (61)
Income tax benefit (expense)99
 (49) (10)
Employee benefit related items, net of tax(1,116) (709) 877
(2,906) 500
 (1,116)
Other comprehensive income (loss)8,562
 (7,342) (5,514)
Other—
 133
 —
Other comprehensive (loss) income(1,167) (5,998) 8,562
Comprehensive income$215,984
 $209,244
 $180,250
$237,396
 $236,399
 $215,984


See Accompanying Notes to Financial Statements.

AllianceBernstein Holding L.P.


Statements of Changes in Partners’ Capital


Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
General Partner’s Capital          
Balance, beginning of year$1,405
 $1,357
 $1,363
$1,385
 $1,411
 $1,405
Net income219
 223
 187
249
 250
 219
Cash distributions to Unitholders(213) (175) (193)(232) (288) (213)
Impact of adoption of revenue recognition standard ASC 606—
 12
 —
Balance, end of year1,411
 1,405
 1,357
1,402
 1,385
 1,411
Limited Partners’ Capital 
  
  
 
  
  
Balance, beginning of year1,592,240
 1,619,841
 1,657,165
1,555,892
 1,590,776
 1,592,240
Net income207,203
 216,363
 185,577
238,314
 242,147
 207,203
Cash distributions to Unitholders(202,175) (169,556) (192,106)(222,253) (280,434) (202,175)
Retirement of AB Holding Units(162,206) (184,336) (155,073)(110,752) (194,544) (162,206)
Issuance of AB Holding Units to fund long-term incentive compensation plan awards135,604
 103,820
 115,045
146,488
 168,955
 135,604
Exercise of compensatory options to buy AB Holding Units20,110
 6,108
 9,233
11,511
 16,589
 20,110
Impact of adoption of revenue recognition standard ASC 606—
 12,536
 —
Other—
 (133) —
Balance, end of year1,590,776
 1,592,240
 1,619,841
1,619,200
 1,555,892
 1,590,776
AB Holding Units held by AB to fund long-term incentive compensation plans 
  
  
 
  
  
Balance, beginning of year(11,731) (10,669) (13,280)(27,759) (15,174) (11,731)
AB Holding Units held by AB to fund long-term incentive compensation plans(3,443) (1,062) 2,611
Change in AB Holding Units held by AB to fund long-term incentive compensation plans323
 (12,585) (3,443)
Balance, end of year(15,174) (11,731) (10,669)(27,436) (27,759) (15,174)
Accumulated Other Comprehensive Income (Loss) 
  
  
Accumulated Other Comprehensive (Loss) Income 
  
  
Balance, beginning of year(42,025) (34,683) (29,169)(39,461) (33,463) (42,025)
Unrealized gain (loss) on investments, net of tax4
 6
 (333)
Foreign currency translation adjustment, net of tax9,674
 (6,639) (6,058)1,739
 (6,631) 9,674
Changes in employee benefit related items, net of tax(1,116) (709) 877
(2,906) 500
 (1,116)
Unrealized gain on investments, net of tax—
 —
 4
Other—
 133
 —
Balance, end of year(33,463) (42,025) (34,683)(40,628) (39,461) (33,463)
Total Partners’ Capital$1,543,550
 $1,539,889
 $1,575,846
$1,552,538
 $1,490,057
 $1,543,550


See Accompanying Notes to Financial Statements.

AllianceBernstein Holding L.P.


Statements of Cash Flows


Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Cash flows from operating activities:          
Net income$207,422
 $216,586
 $185,764
$238,563
 $242,397
 $207,422
Adjustments to reconcile net income to net cash provided by operating activities:          
Equity in net income attributable to AB Unitholders(232,393) (239,389) (210,084)(266,292) (270,647) (232,393)
Cash distributions received from AB226,846
 191,989
 217,065
249,463
 308,042
 226,846
Changes in assets and liabilities:          
Decrease in other assets—
 —
 152
(Increase) in other assets(61) —
 —
Increase (decrease) in other liabilities535
 345
 (108)1,082
 (510) 535
Net cash provided by operating activities202,410
 169,531
 192,789
222,755
 279,282
 202,410
          
Cash flows from investing activities:          
Investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units(20,110) (6,108) (9,233)(11,511) (16,589) (20,110)
Net cash used in investing activities(20,110) (6,108) (9,233)(11,511) (16,589) (20,110)
          
Cash flows from financing activities:          
Cash distributions to Unitholders(202,388) (169,731) (192,299)(222,485) (280,722) (202,388)
Capital contributions (to) from AB(22) 200
 (490)(270) 1,440
 (22)
Proceeds from exercise of compensatory options to buy AB Holding Units20,110
 6,108
 9,233
11,511
 16,589
 20,110
Net cash used in financing activities(182,300) (163,423) (183,556)(211,244) (262,693) (182,300)
          
Change in cash and cash equivalents—
 —
 —
—
 —
 —
Cash and cash equivalents as of beginning of the year—
 —
 —
—
 —
 —
Cash and cash equivalents as of end of the year$—
 $—
 $—
$—
 $—
 $—
          
Cash paid:          
Income taxes$24,436
 $22,456
 $24,276
$26,650
 $28,766
 $24,436
          
Non-cash investing activities:          
Issuance of AB Holding Units to fund long-term incentive compensation plan awards135,604
 103,820
 115,045
146,488
 168,955
 135,604
Retirement of AB Holding Units(162,206) (184,336) (155,073)(110,752) (194,544) (162,206)


See Accompanying Notes to Financial Statements.

AllianceBernstein Holding L.P.


Notes to Financial Statements


The words “we” and “our” refer collectively to AllianceBernstein Holding L.P. (“AB Holding”) and AllianceBernstein L.P. and its subsidiaries (“AB”), or to their officers and employees. Similarly, the word “company” refers to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which of them is being discussed. Cross-references are in italics.


1. Business Description and Organization


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


AB provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include:


•
Institutional Services—servicing its 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.
Institutional Services—servicing its institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as AXA 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 its 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 its 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.


AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors.


AB’s high-quality, in-depth research is the foundation of its business. AB’s research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, AB has experts focused on multi-asset strategies, wealth management and alternative investments.


AB provides 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;


Passive management, including index and enhanced index strategies;


Alternative investments, including hedge funds, fund of funds, direct lending and private equity (e.g., direct real estate investingequity; and direct lending); and


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


AB’s 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.





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, 2019.

As of December 31, 2017, AXA, a société anonyme organized under the laws of France and the holding company for the AXA Group, a worldwide leader in financial protection, through certain of its subsidiaries (“AXA and its subsidiaries”)2019, EQH owns approximately 3.9%4.1% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“AB Holding Units”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of AXA,EQH, “General Partner”) is the general partner of both AB Holding and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB.


As of December 31, 2017,2019, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, iswas as follows:
AXAEQH and its subsidiaries63.3%
AB Holding35.536.0

Unaffiliated holders1.20.7

 100.0%



Including both the general partnership and limited partnership interests in AB Holding and AB, AXAEQH and its subsidiaries havehad an approximate 64.7%64.8% economic interest in AB as of December 31, 2017.2019.


2. Summary of Significant Accounting Policies


Basis of Presentation


The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the 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 financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.


AB Holding’s financial statements and notes should be read in conjunction with the consolidated financial statements and notes of AB, which are included in this Form 10-K.


Investment in AB


AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB.


Cash Distributions


AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding (“AB Holding Partnership Agreement”), to its Unitholders pro rata in accordance with their percentage interests in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow.


On February 13, 2018,12, 2020, the General Partner declared a distribution of $0.84$0.85 per unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2017.2019. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit. The distribution is payable on March 8, 20185, 2020 to holders of record at the close of business on February 23, 2018.24, 2020.


Total cash distributions per Unit paid to Unitholders during 2019, 2018 and 2017 2016were $2.32, $2.88 and 2015 were $2.13, $1.75 and $1.93, respectively.








Long-term Incentive Compensation Plans


AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“Eligible Directors”).


AB funds its 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 AB Holding 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 20172019 and 2016,2018, AB purchased 9.36.0 million and 10.59.3 million AB Holding Units for $220.2$172.6 million and $236.6$268.0 million, respectively (on a trade date basis). These amounts reflect open-market purchases of 5.22.9 million and 7.96.5 million AB Holding Units for $117.1$82.7 million and $176.1$183.2 million, respectively, with the remainder relating 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.


Each quarter, AB considers 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 selected by AB has the authority under the terms and limitations specified in the plan to repurchase AB Holding Units on AB’s behalf in accordance with the terms ofand limitations specified in the plan. Repurchases are subject to regulations promulgated by the U.S. Securities and Exchange Commission (“SEC”) as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during the fourth quarter of 20172019 expired at the close of business on February 12, 2018.11, 2020. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes.


During 2017,2019, AB granted to employees and Eligible Directors 8.37.7 million restricted AB Holding Units (including 6.15.4 million granted in December for 20172019 year-end awards). During 2016,2018, AB granted to employees and Eligible Directors 7.08.7 million restricted AB Holding Units (including 6.16.2 million granted in December for 20162018 year-end awards). AB used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund theses awards.


During 20172019 and 2016,2018, AB Holding issued 1.20.5 million and 0.40.9 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $20.1$11.5 million and $6.1$16.6 million, respectively, received from employeesaward recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.
 

3. Net Income Per Unit


Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each year. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“Net income - diluted”) and dividing by the diluted weighted average number of units outstanding for each year.



 Years Ended December 31,
 2019 2018 2017
 (in thousands, except per unit amounts)
Net income - basic$238,563
 $242,397
 $207,422
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options79
 447
 680
Net income - diluted$238,642
 $242,844
 $208,102
      
Weighted average units outstanding - basic95,884
 97,041
 94,733
Dilutive effect of compensatory options44
 251
 430
Weighted average units outstanding - diluted95,928
 97,292
 95,163
      
Basic net income per unit$2.49
 $2.50
 $2.19
Diluted net income per unit$2.49
 $2.50
 $2.19

 Years Ended December 31,
 2017 2016 2015
 (in thousands, except per unit amounts)
Net income - basic$207,422
 $216,586
 $185,764
Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options680
 878
 1,383
Net income - diluted$208,102
 $217,464
 $187,147
      
Weighted average units outstanding - basic94,733
 96,834
 99,475
Dilutive effect of compensatory options430
 554
 1,037
Weighted average units outstanding - diluted95,163
 97,388
 100,512
      
Basic net income per unit$2.19
 $2.24
 $1.87
Diluted net income per unit$2.19
 $2.23
 $1.86


We excluded 29,056 options in 2019, 49,784 options in 2018 and 1,970,741 options in 2017, 2,873,106 options in 2016 and 2,409,499 options in 2015, from the diluted net income per unit computation due to their anti-dilutive effect.


4. Investment in AB


Changes in AB Holding’s investment in AB for the years ended December 31, 20172019 and 20162018 are as follows:
 2019 2018
 (in thousands)
Investment in AB as of January 1,$1,490,701
 $1,544,704
Equity in net income attributable to AB Unitholders266,292
 270,647
Changes in accumulated other comprehensive (loss) income(1,167) (5,998)
Cash distributions received from AB(249,463) (308,042)
Additional investments with proceeds from exercises of compensatory options to buy AB Holding Units11,511
 16,589
Capital contributions to (from) AB270
 (1,440)
AB Holding Units retired(110,752) (194,544)
AB Holding Units issued to fund long-term incentive compensation plans146,488
 168,955
Change in AB Holding Units held by AB for long-term incentive compensation plans323
 (12,585)
Impact of AB's adoption of revenue recognition standard ASC 606—
 12,548
Other—
 (133)
Investment in AB as of December 31,$1,554,203
 $1,490,701
 2017 2016
 (in thousands)
Investment in AB as of January 1,$1,540,508
 $1,576,120
Equity in net income attributable to AB Unitholders232,393
 239,389
Changes in accumulated other comprehensive income (loss)8,562
 (7,342)
Cash distributions received from AB(226,846) (191,989)
Additional investments with proceeds from exercises of compensatory options to buy AB Holding Units, net20,110
 6,108
Capital contributions to (from) AB22
 (200)
AB Holding Units retired(162,206) (184,336)
AB Holding Units issued to fund long-term incentive compensation plans135,604
 103,820
Change in AB Holding Units held by AB for long-term incentive compensation plans(3,443) (1,062)
Investment in AB as of December 31,$1,544,704
 $1,540,508

 

5. Units Outstanding


Changes in AB Holding Units outstanding for the years ended December 31, 20172019 and 20162018 are as follows:
 2019 2018
Outstanding as of January 1,96,658,278
 96,461,989
Options exercised511,894
 889,119
Units issued4,833,715
 6,153,320
Units retired(3,811,789) (6,846,150)
Outstanding as of December 31,98,192,098
 96,658,278

 2017 2016
Outstanding as of January 1,96,652,190
 100,044,485
Options exercised1,179,860
 358,262
Units issued5,546,695
 4,455,944
Units retired(6,916,756) (8,206,501)
Outstanding as of December 31,96,461,989
 96,652,190


6. Income Taxes


AB Holding is a “grandfathered” publicly-traded partnership ("PTP") for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AB, and to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB. The Tax Cuts and Job Act enacted on December 22, 2017 did not impact AB Holding's 2017 income tax expense.


The principal reasons for the difference between AB Holding’s effective tax rates and the UBT statutory tax rate of 4.0% are as follows:
 Years Ended December 31,
 2019 2018 2017
 (in thousands)
UBT statutory rate$10,652
 4.0 % $10,826
 4.0 % $9,296
 4.0 %
Federal tax on partnership gross business income27,197
 10.2
 27,674
 10.2
 24,520
 10.5
State income taxes532
 0.2
 576
 0.2
 451
 0.2
Credit for UBT paid by AB(10,652) (4.0) (10,826) (4.0) (9,296) (4.0)
Income tax expense and effective tax rate$27,729
 10.4
 $28,250
 10.4
 $24,971
 10.7

 Years Ended December 31,
 2017 2016 2015
 (in thousands)
UBT statutory rate$9,296
 4.0 % $9,576
 4.0 % $8,403
 4.0 %
Federal tax on partnership gross business income24,520
 10.5
 22,342
 9.3
 23,845
 11.4
State income taxes451
 0.2
 461
 0.2
 475
 0.2
Credit for UBT paid by AB(9,296) (4.0) (9,576) (4.0) (8,403) (4.0)
Income tax expense and effective tax rate$24,971
 10.7
 $22,803
 9.5
 $24,320
 11.6


AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB.
 Years Ended December 31, % Change
 2019 2018 2017 2019-18 2018-17
 (in thousands)    
Net income attributable to AB Unitholders$752,042
 $757,588
 $662,403
 (0.7)% 14.4%
Multiplied by: weighted average equity ownership interest35.4% 35.7% 35.1%    
Equity in net income attributable to AB Unitholders$266,292
 $270,647
 $232,393
 (1.6) 16.5
          
AB qualifying revenues$2,640,169
 $2,647,254
 $2,407,212
 (0.3) 10.0
Multiplied by: weighted average equity ownership interest for calculating tax29.4% 29.9% 29.1%    
Multiplied by: federal tax3.5% 3.5% 3.5%    
Federal income taxes27,197
 27,674
 24,520
    
State income taxes532
 576
 451
    
Total income taxes$27,729
 $28,250
 $24,971
 (1.8) 13.1

 Years Ended December 31, % Change
 2017 2016 2015 2017-16 2016-15
 (in thousands)    
Net income attributable to AB Unitholders$662,403
 $673,358
 $579,927
 (1.6)% 16.1 %
Multiplied by: weighted average equity ownership interest35.1% 35.6% 36.2%    
Equity in net income attributable to AB Unitholders$232,393
 $239,389
 $210,084
 (2.9) 13.9
          
AB qualifying revenues$2,407,212
 $2,143,858
 $2,214,077
 12.3
 (3.2)
Multiplied by: weighted average equity ownership interest for calculating tax29.1% 29.8% 30.8%    
Multiplied by: federal tax3.5% 3.5% 3.5%    
Federal income taxes24,520
 22,342
 23,845
    
State income taxes451
 461
 475
    
Total income taxes$24,971
 $22,803
 $24,320
 9.5
 (6.2)


In order to preserve AB Holding’s status as a “grandfathered” PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. If AB Holding were to lose its status as a “grandfathered” PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders.


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 solely on its technical merits and their applicability to the facts and circumstances of the tax position.merits. In making this assessment, we assume that the taxing authority will examine the tax position and have full knowledge of all relevant information. Accordingly, we have no0 liability for unrecognized tax benefits as of December 31, 20172019 and 2016.2018. A liability for unrecognized tax benefits, if required, would be recorded in income tax expense and affect the company’s effective tax rate.


As of December 31, 2017,2019, AB Holding is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2014.2015.


7. Commitments and Contingencies


Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding’s investment in AB.


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.


AB may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that AB could incur additional losses pertaining to these matters, but currently management cannot currently estimate any such additional 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 the 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 operations, financial condition or liquidity in any future reporting period.



8. Quarterly Financial Data (Unaudited)
Quarters Ended 2017Quarters Ended 2019
December 31 September 30 June 30 March 31December 31 September 30 June 30 March 31
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Equity in net income attributable to AB Unitholders$85,725
 $49,055
 $47,947
 $49,666
$87,909
 $66,722
 $59,023
 $52,638
Net income$78,593
 $43,178
 $41,741
 $43,910
$80,022
 $59,828
 $52,274
 $46,439
Basic net income per unit(1)
$0.84
 $0.46
 $0.43
 $0.46
$0.84
 $0.62
 $0.54
 $0.49
Diluted net income per unit(1)
$0.84
 $0.46
 $0.43
 $0.46
$0.84
 $0.62
 $0.54
 $0.49
Cash distributions per unit(2)(3)
$0.84
 $0.51
 $0.49
 $0.46
$0.85
 $0.63
 $0.56
 $0.49
              
Quarters Ended 2016Quarters Ended 2018
December 31 September 30 June 30 March 31December 31 September 30 June 30 March 31
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Equity in net income attributable to AB Unitholders$78,630
 $55,925
 $44,657
 $60,177
$66,759
 $72,802
 $65,388
 $65,698
Net income$72,664
 $50,258
 $39,072
 $54,592
$59,880
 $65,900
 $58,457
 $58,160
Basic net income per unit(1)
$0.77
 $0.52
 $0.40
 $0.55
$0.63
 $0.68
 $0.59
 $0.60
Diluted net income per unit(1)
$0.77
 $0.52
 $0.40
 $0.55
$0.63
 $0.68
 $0.59
 $0.60
Cash distributions per unit(2)(3)
$0.67
 $0.45
 $0.40
 $0.40
$0.64
 $0.69
 $0.62
 $0.73
________________________
(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 AB’s non-GAAP adjustments.

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, 20172019 and 20162018, and the related consolidated statements of income, comprehensive income, changeof changes in partners’ capital and of cash flowsfor each of the three years in the period ended December 31, 2017,2019, 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, 2017,2019, 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 consolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172019 and December 31, 2016, 2018, and the results oftheir its operations and theirits cash flows for each of the three years in the period ended December 31, 20172019 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, 2017,2019, 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, appearing under Item 9Aincluded in Management'sManagement’s Report on Internal Control over Financial Reporting.Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidatedfinancial 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")(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 consolidatedfinancial 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 consolidatedfinancial statements included performing procedures to assess the risks of material misstatement of the consolidatedfinancial 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 consolidatedfinancial 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 consolidatedfinancial 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.

Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for Leases in 2019.
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.

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.




/s/ PricewaterhouseCoopers LLP
New York, New York
February 13, 201812, 2020

We have served as the Company’s auditor since2006.











AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Financial Condition
December 31,December 31,
2017 20162019 2018
(in thousands,
except unit amounts)		(in thousands,
except unit amounts)
ASSETS      
Cash and cash equivalents$671,930
 $656,985
$679,738
 $640,206
Cash and securities segregated, at fair value (cost $816,350 and $946,093)816,350
 946,097
Cash and securities segregated, at fair value (cost $1,090,443 and $1,169,461)1,094,866
 1,169,554
Receivables, net: 
  
 
  
Brokers and dealers199,690
 263,621
97,966
 197,048
Brokerage clients1,647,059
 1,513,656
1,536,674
 1,718,629
AB funds fees212,115
 238,062
261,588
 217,470
Other fees124,164
 104,376
148,744
 127,462
Investments: 
  
 
  
Long-term incentive compensation-related66,034
 67,761
50,902
 52,429
Other377,555
 373,344
215,892
 661,915
Assets of consolidated company-sponsored investment funds:      
Cash and cash equivalents326,518
 337,525
11,433
 13,118
Investments1,246,283
 570,876
581,004
 351,696
Other assets35,397
 48,480
19,810
 22,840
Furniture, equipment and leasehold improvements, net157,569
 159,564
145,251
 155,519
Goodwill3,066,700
 3,066,700
3,076,926
 3,066,700
Intangible assets, net105,784
 134,606
55,366
 79,424
Deferred sales commissions, net30,126
 63,890
36,296
 17,148
Right-of-use assets362,693
 —
Other assets211,893
 195,615
330,943
 297,940
Total assets$9,295,167
 $8,741,158
$8,706,092
 $8,789,098
      
LIABILITIES AND CAPITAL 
  
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL 
  
Liabilities: 
  
 
  
Payables: 
  
 
  
Brokers and dealers$237,861
 $239,578
$201,778
 $290,960
Securities sold not yet purchased29,961
 40,944
30,157
 8,623
Brokerage clients2,229,371
 2,360,481
2,531,946
 3,095,458
AB mutual funds82,967
 150,939
71,142
 74,599
Accounts payable and accrued expenses515,660
 430,569
192,110
 412,313
Lease liabilities468,451
 —
Liabilities of consolidated company-sponsored investment funds698,101
 293,510
31,017
 22,610
Accrued compensation and benefits270,610
 251,019
276,829
 273,250
Debt565,745
 512,970
Debt:   
EQH facility560,000
 —
Other—
 546,267
Total liabilities4,630,276
 4,280,010
4,363,430
 4,724,080
Commitments and contingencies (See Note 13)   
Redeemable non-controlling interest601,587
 392,959
Capital: 
  
General Partner41,221
 41,100
Limited partners: 268,659,333 and 268,893,534 units issued and outstanding4,168,841
 4,154,810
Receivables from affiliates(11,494) (12,830)
AB Holding Units held for long-term incentive compensation plans(42,688) (32,967)
Accumulated other comprehensive loss(94,140) (118,096)

December 31,
2019 2018
Commitments and contingencies (See Note 14)
   
Redeemable non-controlling interest325,561
 148,809
Capital: 
  
General Partner41,225
 40,240
Limited partners: 270,380,314 and 268,850,276 units issued and outstanding4,174,201
 4,075,306
Receivables from affiliates(9,011) (11,430)
AB Holding Units held for long-term incentive compensation plans(76,310) (77,990)
Accumulated other comprehensive loss(113,004) (110,866)
Partners’ capital attributable to AB Unitholders4,061,740
 4,032,017
4,017,101
 3,915,260
Non-redeemable non-controlling interests in consolidated entities1,564
 36,172
—
 949
Total capital4,063,304
 4,068,189
4,017,101
 3,916,209
Total liabilities and capital$9,295,167
 $8,741,158
Total liabilities, redeemable non-controlling interest and capital$8,706,092
 $8,789,098
See Accompanying Notes to Consolidated Financial Statements.



AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Income
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Revenues:          
Investment advisory and services fees$2,200,400
 $1,933,471
 $1,973,837
$2,472,044
 $2,362,211
 $2,201,305
Bernstein research services449,919
 479,875
 493,463
407,911
 439,432
 449,919
Distribution revenues412,063
 384,405
 427,156
455,043
 418,562
 412,063
Dividend and interest income71,162
 46,939
 24,872
104,421
 98,226
 71,162
Investment gains (losses)92,102
 93,353
 3,551
38,659
 2,653
 92,102
Other revenues98,040
 99,859
 101,169
97,559
 98,676
 97,135
Total revenues3,323,686
 3,037,902
 3,024,048
3,575,637
 3,419,760
 3,323,686
Less: Interest expense25,165
 9,123
 3,321
57,205
 52,399
 25,165
Net revenues3,298,521
 3,028,779
 3,020,727
3,518,432
 3,367,361
 3,298,521
          
Expenses: 
  
  
 
  
  
Employee compensation and benefits1,313,469
 1,229,721
 1,267,926
1,442,783
 1,378,811
 1,313,469
Promotion and servicing: 
  
  
 
  
  
Distribution-related payments420,350
 371,607
 393,033
487,965
 427,186
 411,467
Amortization of deferred sales commissions31,886
 41,066
 49,145
15,029
 21,343
 31,886
Trade execution, marketing, T&E and other204,392
 208,538
 223,415
219,860
 222,630
 213,275
General and administrative: 
  
  
 
  
  
General and administrative481,488
 426,147
 431,635
484,750
 448,996
 481,488
Real estate charges36,669
 17,704
 998
3,324
 7,160
 36,669
Contingent payment arrangements267
 (20,245) (5,441)(510) (2,219) 267
Interest on borrowings8,194
 4,765
 3,119
13,035
 10,359
 8,194
Amortization of intangible assets27,896
 26,311
 25,798
28,759
 27,781
 27,896
Total expenses2,524,611
 2,305,614
 2,389,628
2,694,995
 2,542,047
 2,524,611
          
Operating income773,910
 723,165
 631,099
823,437
 825,314
 773,910
          
Income tax53,110
 28,319
 44,797
41,754
 45,816
 53,110
          
Net income720,800
 694,846
 586,302
781,683
 779,498
 720,800
          
Net income of consolidated entities attributable to non-controlling interests58,397
 21,488
 6,375
29,641
 21,910
 58,397
          
Net income attributable to AB Unitholders$662,403
 $673,358
 $579,927
$752,042
 $757,588
 $662,403
          
Net income per AB Unit: 
  
  
 
  
  
Basic$2.46
 $2.48
 $2.11
$2.78
 $2.79
 $2.46
Diluted$2.45
 $2.47
 $2.10
$2.78
 $2.78
 $2.45
See Accompanying Notes to Consolidated Financial Statements.


AllianceBernstein L.P. and Subsidiaries

Consolidated Statements of Comprehensive Income
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Net income$720,800
 $694,846
 $586,302
$781,683
 $779,498
 $720,800
Other comprehensive (loss) income:          
Foreign currency translation adjustments, before reclassification and tax:28,123
 (19,849) (15,396)5,986
 (19,337) 28,123
Less: reclassification adjustment for (losses) gains included in net income upon liquidation—
 (6) 1,542
Less: reclassification adjustment for losses included in net income upon liquidation—
 (100) —
Foreign currency translation adjustments, before tax28,123
 (19,843) (16,938)5,986
 (19,237) 28,123
Income tax expense—
 —
 —
(383) 620
 —
Foreign currency translation adjustments, net of tax28,123
 (19,843) (16,938)5,603
 (18,617) 28,123
Unrealized gains (losses) on investments:     
Unrealized gains (losses) arising during period6
 10
 (357)
Less: reclassification adjustment for (losses) gains included in net income—
 (6) 1,256
Changes in unrealized gains (losses) on investments6
 16
 (1,613)
Income tax benefit (expense)3
 (7) 701
Unrealized gains (losses) on investments, net of tax9
 9
 (912)
Unrealized gains on investments:     
Unrealized gains arising during period—
 —
 6
Income tax benefit—
 —
 3
Unrealized gains on investments, net of tax—
 —
 9
Changes in employee benefit related items: 
  
  
 
  
  
Amortization of prior service cost24
 93
 (895)24
 24
 24
Recognized actuarial (loss) gain(3,190) (3,043) 3,267
(7,891) 1,586
 (3,190)
Changes in employee benefit related items(3,166) (2,950) 2,372
(7,867) 1,610
 (3,166)
Income tax expense(27) (22) (165)
Income tax benefit (expense)274
 (139) (27)
Employee benefit related items, net of tax(3,193) (2,972) 2,207
(7,593) 1,471
 (3,193)
Other comprehensive gain (loss)24,939
 (22,806) (15,643)
Other—
 374
 —
Other comprehensive (loss) gain(1,990) (16,772) 24,939
Less: Comprehensive income in consolidated entities attributable to non-controlling interests59,379
 21,426
 6,242
29,788
 21,864
 59,379
Comprehensive income attributable to AB Unitholders$686,360
 $650,614
 $564,417
$749,905
 $740,862
 $686,360
See Accompanying Notes to Consolidated Financial Statements.


AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Changes in Partners’ Capital
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
General Partner’s Capital          
Balance, beginning of year$41,100
 $40,498
 $41,071
$40,240
 $41,221
 $41,100
Net income6,624
 6,733
 5,799
7,521
 7,576
 6,624
Cash distributions to General Partner(6,449) (5,384) (5,986)(7,042) (8,608) (6,449)
Long-term incentive compensation plans activity211
 58
 14
149
 (39) 211
(Retirement) issuance of AB Units, net(266) (805) (400)
Issuance (retirement) of AB Units, net357
 (256) (266)
Impact of adoption of revenue recognition standard ASC 606—
 349
 —
Other1
 —
 —
—
 (3) 1
Balance, end of year41,221
 41,100
 40,498
41,225
 40,240
 41,221
Limited Partners' Capital          
Balance, beginning of year4,154,810
 4,091,433
 4,145,926
4,075,306
 4,168,841
 4,154,810
Net income655,779
 666,625
 574,128
744,521
 750,012
 655,779
Cash distributions to Unitholders(637,690) (532,180) (591,886)(696,470) (849,585) (637,690)
Long-term incentive compensation plans activity20,859
 5,802
 1,598
14,741
 (3,880) 20,859
(Retirement) issuance of AB Units, net(27,339) (80,084) (40,433)
Issuance (retirement) of AB Units, net35,259
 (25,486) (27,339)
Impact of adoption of revenue recognition standard ASC 606—
 34,601
 —
Other2,422
 3,214
 2,100
844
 803
 2,422
Balance, end of year4,168,841
 4,154,810
 4,091,433
4,174,201
 4,075,306
 4,168,841
Receivables from Affiliates          
Balance, beginning of year(12,830) (14,498) (16,359)(11,430) (11,494) (12,830)
Capital contributions from General Partner344
 1,200
 1,551
—
 19
 344
Compensation plan accrual156
 313
 (187)—
 352
 156
Long-term incentive compensation awards expense1,125
 —
 —
Capital contributions from AB Holding836
 155
 497
1,294
 (307) 836
Balance, end of year(11,494) (12,830) (14,498)(9,011) (11,430) (11,494)
AB Holding Units held for Long-term Incentive Compensation Plans          
Balance, beginning of year(32,967) (29,332) (36,351)(77,990) (42,688) (32,967)
Purchases of AB Holding Units to fund long-term compensation plans, net(219,627) (235,893) (216,970)(171,930) (267,427) (219,627)
Retirement (issuance) of AB Units, net26,603
 80,515
 40,028
(Issuance) retirement of AB Units, net(35,736) 25,589
 26,603
Long-term incentive compensation awards expense185,234
 152,012
 176,040
207,057
 187,514
 185,234
Re-valuation of AB Holding Units held in rabbi trust(1,931) (269) 7,921
(4,403) 19,022
 (1,931)
Other6,692
 —
 —
Balance, end of year(42,688) (32,967) (29,332)(76,310) (77,990) (42,688)
Accumulated Other Comprehensive Income (Loss)          
Balance, beginning of year(118,096) (95,353) (79,843)(110,866) (94,140) (118,096)
Unrealized gain (loss) on investments, net of tax9
 9
 (912)
Foreign currency translation adjustment, net of tax27,140
 (19,780) (16,805)5,455
 (18,571) 27,140
Changes in employee benefit related items, net of tax(3,193) (2,972) 2,207
(7,593) 1,471
 (3,193)
Unrealized gain on investments, net of tax—
 —
 9
Other—
 374
 —
Balance, end of year(94,140) (118,096) (95,353)(113,004) (110,866) (94,140)
Total Partners' Capital attributable to AB Unitholders4,061,740
 4,032,017
 3,992,748
4,017,101
 3,915,260
 4,061,740
Non-redeemable Non-controlling Interests in Consolidated Entities 
  
  
Balance, beginning of year36,172
 24,473
 30,396
Net income9,632
 11,398
 6,375
Foreign currency translation adjustment983
 (63) (133)
Purchase of non-controlling interest(2,006) —
 —
Distributions (to) from non-controlling interests of our consolidated venture capital fund activities(43,217) 364
 (12,165)
Balance, end of year1,564
 36,172
 24,473
Total Capital$4,063,304
 $4,068,189
 $4,017,221

 Years Ended December 31,
 2019 2018 2017
Non-redeemable Non-controlling Interests in Consolidated Entities 
  
  
Balance, beginning of year949
 1,564
 36,172
Net income91
 69
 9,632
Foreign currency translation adjustment147
 (46) 983
Purchase of non-controlling interest(1,187) —
 (2,006)
Distributions (to) non-controlling interests of our consolidated venture capital fund activities—
 (638) (43,217)
Balance, end of year—
 949
 1,564
Total Capital$4,017,101
 $3,916,209
 $4,063,304
See Accompanying Notes to Consolidated Financial Statements.


AllianceBernstein L.P. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Cash flows from operating activities:          
Net income$720,800
 $694,846
 $586,302
$781,683
 $779,498
 $720,800
Adjustments to reconcile net income to net cash provided by operating activities:          
Amortization of deferred sales commissions31,886
 41,066
 49,145
15,029
 21,343
 31,886
Non-cash long-term incentive compensation expense185,234
 152,162
 176,160
208,182
 187,514
 185,234
Depreciation and other amortization66,999
 59,026
 56,426
166,542
 70,000
 66,999
Unrealized losses (gains) on investments3,554
 (28,204) 29,281
Unrealized (gains) losses on investments(13,431) 23,164
 3,554
Unrealized (gains) on investments of consolidated company-sponsored investment funds(36,340) (29,121) —
(36,150) (14,217) (36,340)
Losses on real estate asset write-offs8,161
 5,456
 —
Other, net5,028
 3,629
 (2,888)10,281
 (6,446) 13,189
Changes in assets and liabilities:          
Consolidation of cash and cash equivalents of consolidated company-sponsored investment funds—
 358,534
 —
Decrease (increase) in segregated cash and securities129,747
 (380,823) (88,997)
Decrease (increase) in securities, segregated74,688
 (353,204) 129,747
Decrease (increase) in receivables65,982
 (295,677) (121,985)223,137
 (207,000) 67,539
Decrease in investments293
 187,752
 58,053
(Increase) in investments of consolidated company-sponsored investment funds(639,067) (342,938) —
Decrease (increase) in deferred sales commissions1,878
 (5,886) (29,925)
(Increase) decrease in other assets(13,131) 12,961
 (42,690)
Increase in other assets and liabilities of consolidated company-sponsored investment funds417,674
 229,524
 —
Decrease (increase) in investments460,347
 (294,383) 293
(Increase) decrease in investments of consolidated company-sponsored investment funds(193,158) 908,804
 (639,067)
(Increase) decrease in deferred sales commissions(34,177) (8,365) 1,878
(Increase) in right-of-use assets(11,141) —
 —
(Increase) in other assets(23,140) (152,726) (2,255)
Increase (decrease) in other assets and liabilities of consolidated company-sponsored investment funds, net11,437
 (662,934) 417,674
(Decrease) increase in payables(338,523) 886,520
 65,309
(641,369) 1,024,317
 (338,523)
Increase (decrease) in accounts payable and accrued expenses23,090
 2,459
 (32,372)
Increase (decrease) in accrued compensation and benefits12,187
 (3,238) (34,645)
(Decrease) in lease liabilities(107,276) —
 —
(Decrease) increase in accounts payable and accrued expenses(56,518) (11,225) 10,657
(Decrease) increase in accrued compensation and benefits(7,486) 4,341
 12,187
Net cash provided by operating activities645,452
 1,548,048
 667,174
827,480
 1,308,481
 645,452
          
Cash flows from investing activities:          
Purchases of investments(12) —
 (168)—
 —
 (12)
Proceeds from sales of investments11
 372
 4,240
—
 —
 11
Purchases of furniture, equipment and leasehold improvements(39,417) (36,728) (30,217)(28,303) (32,789) (39,417)
Proceeds from sales of furniture, equipment and leasehold improvements75
 15
 2
—
 —
 75
Purchase of intangible asset—
 (2,500) —
Purchase of businesses, net of cash acquired—
 (20,541) —
Acquisition of businesses, net of cash acquired5,255
 —
 —
Net cash used in investing activities(39,343) (59,382) (26,143)(23,048) (32,789) (39,343)
          
Cash flows from financing activities:     
(Repayment) issuance of commercial paper, net(28,553) (72,003) 93,867
Proceeds from bank loans75,000
 —
 —
Increase (decrease) in overdrafts payable63,393
 (84,512) 79,540

Years Ended December 31,
2019 2018 2017
Cash flows from financing activities:     
(Repayment) issuance of commercial paper, net(532,895) 24,546
 (28,553)
Proceeds from EQH facility560,000
 —
 —
(Repayment) proceeds from bank loans(25,000) (50,000) 75,000
(Decrease) increase in overdrafts payable(59,924) 3,273
 63,393
Distributions to General Partner and Unitholders(644,139) (537,564) (597,872)(703,512) (858,193) (644,139)
Capital contributions (to) from non-controlling interests in consolidated entities(43,217) 364
 (12,165)
Capital contributions (to) non-controlling interests in consolidated entities—
 (638) (43,217)
Purchases (redemptions) of non-controlling interests of consolidated company-sponsored investment funds, net163,164
 (132,837) —
150,091
 (472,143) 163,164
Purchase of non-controlling interest(1,833) —
 —
Capital contributions from affiliates366
 1,000
 2,041
Capital contributions from (to) affiliates269
 (1,421) 366
Payments of contingent payment arrangements/purchase of shares(7,592) (5,545) (5,027)(1,991) (1,093) (7,592)
Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units20,110
 6,108
 9,233
11,511
 16,589
 20,110
Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net(219,627) (235,893) (213,484)(171,930) (267,427) (219,627)
Purchases of AB Units(1,003) (374) (805)
Other—
 (22) (26)(1,580) (2,151) (2,836)
Net cash used in financing activities(623,931) (1,061,278) (644,698)(774,961) (1,608,658) (623,931)
Effect of exchange rate changes on cash and cash equivalents21,760
 (10,178) (10,353)8,376
 (12,158) 21,760
Net increase (decrease) in cash and cash equivalents3,938
 417,210
 (14,020)37,847
 (345,124) 3,938
Cash and cash equivalents as of beginning of the period994,510
 577,300
 555,503
653,324
 998,448
 994,510
Cash and cash equivalents as of end of the period$998,448
 $994,510
 $541,483
$691,171
 $653,324
 $998,448
     
Cash paid:          
Interest paid$30,975
 $11,148
 $3,984
$66,002
 $60,286
 $30,975
Income taxes paid67,421
 27,387
 25,999
52,444
 41,946
 67,421
     
Non-cash investing activities:          
Fair value of assets acquired—
 33,583
 —
Fair value of assets acquired (excluding cash acquired of $11.8 million)28,966
 —
 —
Fair value of liabilities assumed—
 1,149
 —
16,837
 —
 —
Fair value of redeemable non-controlling interest recorded—
 —
 —
Non-cash financing activities:          
Payables recorded under contingent payment arrangements—
 11,893
 —
17,384
 —
 —
See Accompanying Notes to Consolidated Financial Statements.



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 research, diversified investment management 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") 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.
•
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 experts focused on multi-asset strategies, wealth management 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 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 and private equity (e.g., direct real estate investingequity; and direct lending); and
Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds.
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.
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, 2019.
As of December 31, 2017, AXA, a société anonyme organized under the laws of France and the holding company for the AXA Group, a worldwide leader in financial protection, through certain of its subsidiaries (“AXA and its subsidiaries”) owns2019, EQH owned approximately 3.9%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 AXA,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.

As of December 31, 2017,2019, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1% interest, iswas as follows:
AXAEQH and its subsidiaries63.3%
AB Holding35.536.0

Unaffiliated holders1.20.7

 100.0%
Including both the general partnership and limited partnership interests in AB Holding and AB, AXAEQH and its subsidiaries had an approximate 64.7%64.8% economic interest in AB as of December 31, 2017.2019.
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 2017, to conform to the current period’s presentation, prior period amounts for:
our consolidated VOEs' investments previously presented as other investments are now presented as investments of consolidated company-sponsored investment funds in the consolidated statements of financial condition;
dividend and interest related to our consolidated company-sponsored investment funds previously presented as other revenues are now presented as dividend and interest income in the consolidated statements of income; and
certain derivatives previously included in investments of consolidated company-sponsored investment funds are now presented separately as derivative instruments and included in other assets and liabilities of consolidated company-sponsored investment funds in the consolidated statements of financial condition.
Lastly, all disclosures relating to the investments, derivatives and fair value of consolidated company-sponsored investment funds previously presented in Notes 6, 7, 8 and 9 are now separately disclosed in Note 14, Consolidated Company-Sponsored Investment Funds.

Recently Adopted Accounting Pronouncements

In MarchFebruary 2016, the Financial Accounting Standards Board (“FASB”"FASB") issued ASU 2016-02, Leases. This pronouncement, along with subsequent ASUs issued to clarify certain provisions of ASU 2016-02 is now referred to as Accounting Standards UpdateCodification 842 (“ASU”"ASC 842") 2016-07, Investments - Equity Method and Joint Ventures: Simplifying the Transition to the Equity Method of Accounting. The amendment eliminatesstandard requires a lessee to record most leases on its 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 current requirementclassification criteria to distinguish between capital and operating leases under previous lease accounting guidance. We adopted this new standard on January 1, 2019 using the modified retrospective method. Prior comparable periods will not be adjusted under this method.
We applied several practical expedients offered by ASC 842 upon adoption of this standard. These included continuing to account for existing leases based on judgments made under legacy US GAAP as it relates to determining classification of leases, unamortized initial direct costs and whether contracts are leases or contain leases. We also used a retroactive adjustmentpractical expedient to use hindsight in determining the lease terms (using knowledge and instead requires that the investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accountingexpectations as of the standard's adoption date the investment becomes qualified for equity method accounting. Additionally, the amendment requires that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the
date the investment becomes qualified for useinstead of the equity method.previous assumptions under legacy US GAAP) and evaluating impairment of our right-of-use assets in the transition period (using our most up-to-date information).
Adoption of this standard resulted in the recording of operating right-of-use assets and lease liabilities of $438.7 million and $574.5 million, respectively, and financing right-of-use assets and lease liabilities of $2.4 million as of January 1, 2019. The operating right-of-use assets recognized as of January 1, 2019 are net of deferred rent of $50.0 million and liabilities associated with previously recognized impairments of $85.8 million. See Note 13, Leases, for additional disclosures.
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. We adopted this standard on January 1, 2017.2019. The adoption of this standard didhad no impact on our financial condition or results of operations.





Accounting Pronouncements Not Yet Adopted in 2019

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326). This new guidance relates to the accounting for credit losses on financial instruments. The new guidance introduces 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. The new guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, with early adoption permitted. The new guidance will not have a material impact on our financial condition or results of operations.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting. The amendment includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements, including income tax effects of share-based payments, minimum statutory tax withholding requirements and forfeitures. We adopted this standard on January 1, 2017 on a prospective basis. 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 May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which revises revenue recognition criteria for revenue arising from contracts with customers, requires certain costs to obtain and fulfill contracts with customers to be capitalized if they meet certain criteria, and expands disclosure requirements. We adopted this new accounting standard on January 1, 2018 on a modified retrospective basis, recognizing the cumulative effect of initial adoption in Partners’ Capital. Based on our analysis performed to-date, we do not expect any changes in the timing of revenue recognition for our base fees, distribution revenues, shareholder servicing revenues and broker-dealer revenues. However, performance-based fees, which are currently recognized at the end of the applicable measurement period when no risk of reversal remains, and carried-interest distributions received (considered performance-based fees), which are currently recorded as deferred revenues until no risk of reversal remains, 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. Currently, we expect the pre-tax cumulative effect of initial adoption in partners' capital as of January 1, 2018 to be approximately $35 million. This amount represents carried-interest distributions previously received, net of revenue sharing payments to investment team members, with respect to which it is probable that significant reversal will not occur. Our future financial statements will include additional disclosures as required by ASU 2014-09.

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 and is effective for fiscal years (and interim periods within those years) beginning after December 15, 2017. The amendment will result in a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption, except for one provision relating to equity securities without readily determinable fair values, which provision will be applied prospectively. The amendment is not expected to have a material impact on our financial condition or results of operations.

In February 2016, the FASB issued ASU 2016-02, Leases. The amendment requires recognition of lease assets and lease liabilities on the statement of financial condition and disclosure of key information about leasing arrangements. Specifically, this guidance requires an operating lease lessee to recognize on the statement of financial condition a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. However, for leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. The amendment is effective for fiscal years (and interim periods within those years) beginning after December 15, 2018 and requires lessees to recognize and measure leases at the beginning of the earliest period presented in the financial statements using a modified retrospective approach. Management is currently evaluating the impact that the adoption of this standard will have on our consolidated financial statements.

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. The amendment is effective for fiscal years (and interim periods within those years) beginning after December 15, 2017 and should be applied using the retrospective transition method. The amendment is not expected to 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 removes Step 2 of the goodwill impairment test, which requires 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 applied prospectively and is effective in 2020.for financial statements issued for fiscal years beginning after December 15, 2019. The revised guidance iswill not expected to have a material impact on our financial condition or results of operations.

In March 2017,August 2018, the FASB issued ASU 2017-07, Improving2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit CostDisclosure Requirements for Fair Value Measurement. The amendment requires that an employer disaggregatemodifies the service cost component from the other components of net benefit costs on the income statement.disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendmentrevised guidance is effective for all companies for fiscal years (and interim periods

within those years) beginning after December 15, 20172019, and shouldinterim 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 applied retrospectively.adopted on a retrospective basis and the new disclosures will be adopted on a prospective basis. The amendment isrevised guidance will not expected to have a material impact on our financial condition or results of operations.

In May 2017,August 2018, the FASB issued ASU 2017-09, 2018-14,Compensation - Stock Compensation, Scope of Modification AccountingRetirement Benefits - Defined Benefit Plans - General (Topic 715-20). The amendment provides clarity and reduces both diversity in practice and cost and complexity when applyingmodifies the guidance in Topic 718, Compensation - Stock Compensation, to a change to the termsdisclosure requirements for employers that sponsor defined benefit pension or conditions of a share-based payment award. This amendmentother postretirement plans. The revised guidance is effective for annual periods, and interim periods within those annual periods,financial statements issued for fiscal years beginning after December 15, 2017 and2020, with early adoption permitted. The revised guidance will be applied prospectively to an award modified on or after the adoption date. This amendment is 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 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements that currently exist in US GAAP for capitalizing implementation costs incurred to develop or obtain internal-use software. Implementation costs would either be 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. The revised guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, with early adoption permitted. The revised guidance will be adopted prospectively and 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, with early adoption permitted. Management currently is evaluating the impact that adoption of this standard will have on our consolidated financial statements.
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 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 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.

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, 2019, 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
We adopted ASU 2015-02, Consolidation - Amendments to the Consolidation Analysis (“ASU 2015-02”) effective January 1, 2016.
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. The majority of our consolidated VIEs' cash and cash equivalents is pledged as collateral for short positionsvalue (and considered Level 1 securities in equities.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.
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, 2017,2019, there were no 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, 20172019 and 2016.2018. 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, 20172019 and 2016,2018, there is no allowance provision required for the collateral advanced. Income or expense is recognized over the life of the transaction.
As of December 31, 20172019 and 2016,2018, we had $42.9$204.0 million and $41.7$196.9 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, asAs of December 31, 2017 and 2016,2019, we held no U.S. Treasury bills pledged as collateral. As of December 31, 2018, we held U.S. Treasury Bills with valuesvalue totaling $52.6$392.4 million, and $28.9 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.
Investments
Investments include U.S. Treasury Bills, unconsolidated mutual funds and limited partnership hedge funds we sponsor and manage, various separately-managed portfolios consisting of equity and fixed income securities, exchange-traded options and investments owned by a consolidated venture capital fund in which we own a controlling interest as the general partner and a 10% limited partnership interest.
Investments in U.S. Treasury Bills, mutual funds, and equity and fixed income securities are classified as either trading or available-for-sale securities. Trading investments are stated at fair value with unrealized gains and losses reported in investment gains and losses on the consolidated statements of income. Available-for-sale investments are stated at fair value with unrealized gains and losses reported as a separate component of accumulated other comprehensive income in partners’ capital. Realized gains and losses on the sale of investments are reported in investment gains and losses on the consolidated statements of income. Average cost is used to determine realized gain or loss on investments sold.
We use the equity method of accounting for investments in limited partnership hedge funds. The equity in earnings of our limited partnership hedge fund investments is reported in investment gains and losses on the consolidated statements of income.
There are two private equity investments that we account for at fair value. Adjustments to fair value are reported in investment gains and losses on the consolidated statements of income.
See Note 9 for a description of how we measure the fair value of our investments.
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. (“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, 2017,2019, goodwill of $3.1 billion on the consolidated statement of financial condition included $2.8 billion as a result of the Bernstein acquisition and $266$276 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, for impairment. As of September 30, 2017,2019, 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 20172019 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, 2017,2019, intangible assets, net of accumulated amortization, of $105.8$55.4 million on the consolidated statement of financial condition consists of $92.3$41.9 million of finite-lived intangible assets subject to amortization, of which $56.9$15.5 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, 2016,2018, intangible assets, net of accumulated amortization, of $134.6$79.4 million on the consolidated statement of financial condition consisted of $121.1$65.9 million of finite-lived intangible assets subject to amortization, of which $77.6$36.2 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 $473.7$468.9 million as of December 31, 20172019 and $476.1$475.1 million as of December 31, 2016,2018, and accumulated amortization was $381.4$427.0 million as of December 31, 20172019 and $355.0$409.2 million as of December 31, 2016.2018. Amortization expense was $28.8 million for 2019, $27.8 million for 2018 and $27.9 million for 2017, $26.3 million for 2016 and $25.8 million for 2015.2017. Estimated annual amortization expense for each of the next two years2020 is approximately $28$21 million, then approximately $20$5 million in year three andtwo, then approximately $4 million in years four andthree through 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 2019, we recorded an impairment charge of $3.1 million relating to our 2016 acquisition of Ramius Alternative Solutions LLC. Due to the loss of acquired investment management contracts during 2019, the carrying value of the finite-lived intangible assets exceeded the fair value of the 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 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 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. As of December 31, 2016, our Non-U.S. Funds are no longer offering back-end load shares, except in isolated instances.
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 no impairment charges recorded during 20172019 or 2016.2018.
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.
Revenue Recognition
We record as revenue investment advisory and services fees, which we generally calculate as a percentage of AUM, as we perform the related services. Certain investment advisory contracts, including those associated with hedge funds or other alternative investments, provide for a performance-based fee, 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. We record performance-based fees as a component of revenue at the end of each contract’s measurement period. We initially record carried interest distributions as a deferred revenue liability when the carried interest distributions are subject to claw-back provisions. We recognize the carried interest distributions as revenues when the potential claw-back obligations are mathematically remote, which may not occur until at or near termination of the applicable fund.
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 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 by paying us directly for research through commission sharing agreements or cash payments.
Distribution revenues, shareholder servicing fees (included in other revenues), and dividend and interest income are accrued as earned.
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 statements of income.

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.quarter, and to members of the Board of Directors of the General Partner, who are not employed by our company or by any of our affiliates ("Eligible Directors").
Awards granted in December 2019, 2018 and 2017 2016 and 2015 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 2017, 20162019, 2018 and 2015.2017. 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 2017, 20162019, 2018 and 2015:2017:
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 members of the Board of Directors of the General Partner, who are not employed by our company or by any of our affiliates (“Eligible Directors”).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 20172019 and 2016,2018, we purchased 9.36.0 million and 10.59.3 million AB Holding Units for $220.2$172.6 million and $236.6$268.0 million, respectively (on a trade date basis). These amounts reflect open-market purchases of 5.22.9 million and 7.96.5 million AB Holding Units for $117.1$82.7 million and $176.1$183.2 million, respectively, with the remainder relating 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 20172019 expired at the close of business on February 12, 2018.11, 2020. 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 2017,2019, we granted to employees and Eligible Directors 8.37.7 million restricted AB Holding Units (including 6.15.4 million granted in December for 20172019 year-end awards to employees). During 2016,2018, we granted to employees and Eligible Directors 7.08.7 million restricted AB Holding Units (including 6.16.2 million granted in December for 20162018 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 20172019 and 2016,2018, AB Holding issued 1.20.5 million and 0.40.9 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $20.1$11.5 million and $6.1$16.6 million, respectively, received from employeesaward recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units.
Foreign Currency Translation and Transactions
Assets and liabilities of foreign subsidiaries are translated from functional currencies into United States dollars (“US$”) 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 (losses) gainslosses were $(2.9)$2.0 million, $1.6$0.1 million and $1.2$2.9 million for 2017, 20162019, 2018 and 2015,2017, 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, 2018,12, 2020, the General Partner declared a distribution of $0.91$0.93 per AB Unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2017.2019. 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 8, 20185, 2020 to holders of record on February 23, 2018.24, 2020.
Total cash distributions per Unit paid to the General Partner and Unitholders during 2019, 2018 and 2017 2016were $2.60, $3.16 and 2015 were $2.39, $1.98 and $2.18, 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), foreign currency translation adjustments, actuarial gains (losses) and unrecognized actuarial net losses and transition assets. During 2016 and 2015, deferredprior 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. Per SAB 118, we are still evaluating

3. Revenue Recognition

Revenues for the remaining income tax effects on the reversalyears ended December 31, 2019, 2018 and 2017 consisted of the indefinite reinvestment assertion as a result of the Tax Cuts and Jobs Act enacted on December 22, 2017. We will recognize deferred taxes on foreign currency translation adjustments recorded in comprehensive income as the effects are quantified.following:

3. 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. As a result, 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,
 2017 2016
 (in thousands)
Balance as of January 1,$112,932
 $123,912
Expense incurred28,507
 12,248
Deferred rent7,083
 4,930
Payments made(39,122) (32,988)
Interest accretion4,235
 4,830
Balance as of end of period$113,635
 $112,932
  Year Ended December 31,
  2019 2018 2017
 (in thousands)
Subject to contracts with customers:      
    Investment advisory and services fees      
        Base fees $2,372,429
 $2,244,068
 $2,106,525
        Performance-based fees 99,615
 118,143
 94,780
    Bernstein research services 407,911
 439,432
 449,919
    Distribution revenues      
        All-in-management fees 291,999
 254,477
 245,367
        12b-1 fees 80,268
 87,166
 94,972
        Other 82,776
 76,919
 71,724
    Other revenues      
        Shareholder servicing fees 77,394
 75,974
 75,024
        Other 17,924
 19,211
 17,838
  3,430,316
 3,315,390
 3,156,149
Not subject to contracts with customers:      
    Dividend and interest income, net of interest expense 47,216
 45,827
 45,997
    Investment gains (losses) 38,659
 2,653
 92,102
    Other revenues 2,241
 3,491
 4,273
  88,116
 51,971
 142,372
Total net revenues $3,518,432
 $3,367,361
 $3,298,521

4. 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,Year Ended December 31,
2017 2016 20152019 2018 2017
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Net income attributable to AB Unitholders$662,403
 $673,358
 $579,927
$752,042
 $757,588
 $662,403
          
Weighted average units outstanding—basic266,955
 269,084
 271,745
268,075
 269,236
 266,955
Dilutive effect of compensatory options to buy AB Holding Units430
 554
 1,037
44
 251
 430
Weighted average units outstanding—diluted267,385
 269,638
 272,782
268,119
 269,487
 267,385
          
Basic net income per AB Unit$2.46
 $2.48
 $2.11
$2.78
 $2.79
 $2.46
Diluted net income per AB Unit$2.45
 $2.47
 $2.10
$2.78
 $2.78
 $2.45
We excluded 29,056 options in 2019, 49,784 options in 2018 and 1,970,741 options in 2017, 2,873,106 options in 2016 and 2,409,499 options in 2015, from the diluted net income per unit computation due to their anti-dilutive effect.



5. Cash and Securities Segregated Under Federal Regulations and Other Requirements
As of December 31, 20172019 and 2016, $0.82018, $1.1 billion and $0.9$1.2 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.
During 2016, one of our subsidiaries, which serves as the distributor of our U.S. mutual funds, maintained several special bank accounts for the exclusive benefit of customers. As of December 31, 2016, $52.9 million of cash was segregated in these bank accounts. During the fourth quarter of 2017, these bank accounts were transferred to another AB subsidiary and no longer designated for the exclusive benefit of customers; as such, the bank accounts are no longer considered segregated cash.

6. Investments
Investments consist of:
December 31,December 31,
2017 20162019 2018
(in thousands)(in thousands)
Trading:   
   
U.S. Treasury Bills$52,609
 $28,937
$—
 $392,424
Equity securities:   
Long-term incentive compensation-related51,758
 50,935
36,665
 38,883
Seed capital160,573
 188,053
70,464
 105,951
Equities81,154
 6,602
Other73,202
 73,409
Exchange-traded options4,981
 3,106
6,931
 2,568
Investments in limited partnership hedge funds:      
Long-term incentive compensation-related14,276
 16,826
14,237
 13,546
Seed capital22,923
 23,704
33,124
 67,153
Private equity (seed capital)38,186
 45,278
Time deposits5,138
 70,097
18,281
 8,783
Other (including available-for-sale investments)11,991
 7,567
Other13,890
 11,627
Total investments$443,589
 $441,105
$266,794
 $714,344
Total investments related to long-term incentive compensation obligations of $66.0$50.9 million and $67.8$52.4 million as of December 31, 20172019 and 2016,2018, 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 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.
U.S. Treasury Bills, the majority of which are pledged as collateral with clearing organizations, are held in our investment account. These clearing organizations have the ability by contract or custom to sell or re-pledge this collateral.
We allocate seed capital to our investment teams to help develop new products and services for our clients. TheA 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, such as a third-party venture capital fund that invests in communications, consumer, digital media, healthcare and information technology markets.funds. 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. See Note 14, consolidated15, Consolidated Company-Sponsored Investment Funds, for a description of the seed capital investments that are consolidated entities.we consolidated. As of December 31, 20172019 and 2016,2018, our total seed capital investments were $523.2$358.1 million and $500.0$391.6 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.
Trading securitiesIn addition, we also includehave long positions in corporate equities and long exchange-traded options traded through our options desk.
Proceeds from sales of available-for-sale investments were approximately zero, $0.4 million and $4.2 million in 2017, 2016 and 2015, respectively. Realized gains from our sales of available-for-sale investments were zero in each of 2017 and 2016 and


$1.3 million in 2015. Realized losses from our sales of available-for-sale investments were zero in each of 2017, 2016 and 2015. We assess valuation declines to determine the extent to which such declines are fundamental to the underlying investment or attributable to temporary market-related factors. Based on our assessment as of December 31, 2017, we do not believe the declines are other than temporary.
The portion of tradingunrealized gains (losses) related to tradingequity securities, as defined by ASC 321-10, held as of December 31, 20172019 and 20162018 were as follows:
 December 31,
 2017 2016
 (in thousands)
Net gains recognized during the period$15,589
 $7,030
Less: net gains (losses) recognized during the period on trading securities sold during the period14,118
 (11,294)
Unrealized gains recognized during the period on trading securities held$1,471
 $18,324

 December 31,
 2019 2018
 (in thousands)
Net gain (losses) recognized during the period$31,890
 $(21,797)
Less: net gains recognized during the period on equity securities sold during the period18,138
 1,515
Unrealized gains (losses) recognized during the period on equity securities held$13,752
 $(23,312)
7. Derivative Instruments
See Note 14,15, 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 Accounting Standards Codification (“ASC”) 815-10, Derivatives and Hedging.
The notional value, fair value and gains and losses recognized in investment gains (losses) as of December 31, 20172019 and 20162018 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, 2017       
December 31, 2019       
Exchange-traded futures$171,112
 $939
 $871
 $(10,840)
Currency forwards60,809
 8,545
 8,633
 738
Interest rate swaps92,756
 1,746
 2,254
 (616)
Credit default swaps168,303
 2,151
 5,611
 (6,413)
Total return swaps91,201
 110
 1,764
 (21,164)
Option swaps354
 —
 126
 (126)
Total derivatives$584,535
 $13,491
 $19,259
 $(38,421)
December 31, 2018       
Exchange-traded futures$163,458
 $948
 $2,540
 $(15,343)$218,657
 $1,594
 $2,534
 $3,515
Currency forwards126,503
 8,306
 8,058
 (457)87,019
 7,647
 7,582
 379
Interest rate swaps43,309
 951
 870
 (137)112,658
 1,649
 1,959
 (125)
Credit default swaps74,600
 1,247
 2,465
 (1,757)94,657
 2,888
 2,685
 335
Total return swaps68,106
 167
 390
 (6,167)99,038
 3,301
 62
 8,246
Total derivatives$475,976
 $11,619
 $14,323
 $(23,861)$612,029
 $17,079
 $14,822
 $12,350
December 31, 2016       
Exchange-traded futures$103,108
 $1,224
 $1,092
 $(2,754)
Currency forwards180,820
 4,541
 4,711
 (2,028)
Interest rate swaps40,664
 940
 897
 (572)
Credit default swaps45,108
 1,205
 905
 (1,338)
Option swaps—
 —
 —
 (70)
Total return swaps90,043
 503
 1,044
 (8,766)
Total derivatives$459,743
 $8,413
 $8,649
 $(15,528)
As of December 31, 20172019 and 2016,2018, 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 and losses(losses) on the consolidated statements of income.

We may be exposed to credit-related losses in the event of nonperformance 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, 20172019 and 2016,2018, we held $0.5$0.3 million and $0.8$4.8 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, 20172019 and 2016,2018, we delivered $8.8$4.3 million and $6.2$4.5 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, 20172019 and 2016,2018, we held $5.0$6.9 million and $3.1$2.6 million, respectively, of long exchange-traded equity options, which are classified as trading investments and included in our other investments on our consolidated statements of financial condition. In addition, as of December 31, 20172019 and 2016,2018, we had $13.6held $12.3 million and $0.7$3.8 million, respectively, of short exchange-traded equity options, 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, 20172019 and 2016, respectively,2018 we recognized $27.8$22.2 million and $27.6$7.9 million, respectively, of losses on equity options activity. These losses are recognized in investment gains (losses) in the consolidated statements of income.

8. Offsetting Assets and Liabilities
See Note 14,15, 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, 20172019 and 20162018 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		 Cash Collateral
Received		 Net
Amount		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)(in thousands)
December 31, 2017           
December 31, 2019           
Securities borrowed$85,371
 $—
 $85,371
 $(82,353) $—
 $3,018
$38,993
 $—
 $38,993
 $(38,993) $—
 $—
Derivatives$11,619
 $—
 $11,619
 $—
 $(519) $11,100
$13,491
 $—
 $13,491
 $—
 $(251) $13,240
Long exchange-traded options$4,981
 $—
 $4,981
 $—
 $—
 $4,981
$6,931
 $—
 $6,931
 $—
 $—
 $6,931
December 31, 2016           
December 31, 2018           
Securities borrowed$82,814
 $—
 $82,814
 $(80,277) $—
 $2,537
$64,856
 $—
 $64,856
 $(64,217) $—
 $639
Derivatives$8,413
 $—
 $8,413
 $—
 $(810) $7,603
$17,079
 $—
 $17,079
 $—
 $(4,831) $12,248
Long exchange-traded options$3,106
 $—
 $3,106
 $—
 $—
 $3,106
$2,568
 $—
 $2,568
 $—
 $—
 $2,568

Offsetting of liabilities as of December 31, 20172019 and 20162018 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		 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)(in thousands)
December 31, 2017           
December 31, 2019           
Securities loaned$37,960
 $—
 $37,960
 $(37,922) $—
 $38
$—
 $—
 $—
 $—
 $—
 $—
Derivatives$14,323
 $—
 $14,323
 $—
 $(8,794) $5,529
$19,259
 $—
 $19,259
 $—
 $(4,276) $14,983
Short exchange-traded options$13,585
 $—
 $13,585
 $—
 $—
 $13,585
$12,348
 $—
 $12,348
 $—
 $—
 $12,348
December 31, 2016           
December 31, 2018           
Securities loaned$—
 $—
 $—
 $—
 $—
 $—
$59,526
 $—
 $59,526
 $(59,526) $—
 $—
Derivatives$8,649
 $—
 $8,649
 $—
 $(6,239) $2,410
$14,822
 $—
 $14,822
 $—
 $(4,458) $10,364
Short exchange-traded options$692
 $—
 $692
 $—
 $—
 $692
$3,782
 $—
 $3,782
 $—
 $—
 $3,782
Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.

9. Fair Value
See Note 14,15, 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, 20172019 and 20162018 was as follows (in thousands):
Level 1 Level 2 Level 3 
NAV Expedient(1)
 Other TotalLevel 1 Level 2 Level 3 
NAV Expedient(1)
 Other Total
December 31, 2017:           
December 31, 2019:           
Money markets$62,071
 $—
 $—
 $—
 $—
 $62,071
$126,401
 $—
 $—
 $—
 $—
 $126,401
Securities segregated (U.S. Treasury Bills)  816,350
 —
 —
 —
 816,350
—
 1,094,866
 —
 —
 —
 1,094,866
Derivatives948
 10,671
 —
 —
 —
 11,619
939
 12,552
 —
 —
 —
 13,491
Investments                      
Trading           
U.S. Treasury Bills—
 52,609
 —
 —
 —
 52,609
Equity securities208,910
 6
 117
 81
 —
 209,114
170,946
 8,952
 119
 314
 —
 180,331
Fixed income securities73,172
 11,186
 —
 13
 —
 84,371
Long exchange-traded options4,981
 —
 —
 —
 —
 4,981
6,931
 —
 —
 —
 —
 6,931
Limited partnership hedge funds(2)
—
 —
 —
 —
 37,199
 37,199
—
 —
 —
 —
 47,361
 47,361
Private equity—
 —
 954
 37,232
 —
 38,186
Time deposits(3)
—
 —
 —
 —
 5,138
 5,138
—
 —
 —
 —
 18,281
 18,281
Other           
Available-for-sale99
 —
 —
 —
 —
 99
Other investments(2)(4)
—
 —
 —
 —
 11,892
 11,892
Other investments5,883
 —
 —
 —
 8,007
 13,890
Total investments287,162
 63,801
 1,071
 37,326
 54,229
 443,589
183,760
 8,952
 119
 314
 73,649
 266,794
Total assets measured at fair value$350,181
 $890,822
 $1,071
 $37,326
 $54,229
 $1,333,629
$311,100
 $1,116,370
 $119
 $314
 $73,649
 $1,501,552
                      
Securities sold not yet purchased 
  
  
      
 
  
  
      
Short equities – corporate$16,376
 $—
 $—
 $—
 $—
 $16,376
$17,809
 $—
 $—
 $—
 $—
 $17,809
Short exchange-traded options13,585
 —
 —
 —
 —
 13,585
12,348
 —
 —
 —
 —
 12,348
Derivatives2,540
 11,783
 —
 —
 —
 14,323
871
 18,388
 —
 —
 —
 19,259
Contingent payment arrangements—
 —
 10,855
 —
 —
 10,855
—
 —
 22,911
 —
 —
 22,911
Total liabilities measured at fair value$31,028
 $18,388
 $22,911
 $—
 $—
 $72,327
           
           

Total liabilities measured at fair value$32,501
 $11,783
 $10,855
 $—
 $—
 $55,139
           Level 1 Level 2 Level 3 
NAV Expedient(1)
 Other Total
December 31, 2016:           
December 31, 2018:           
Money markets$107,250
 $—
 $—
 $—
 $—
 $107,250
$102,888
 $—
 $—
 $—
 $—
 $102,888
Securities segregated (U.S. Treasury Bills)—
 893,189
 —
 —
 —
 893,189
—
 1,169,554
 —
 —
 —
 1,169,554
Derivatives1,224
 7,189
 —
 —
 —
 8,413
1,594
 15,485
 —
 —
 —
 17,079
Investments                      
Trading           
U.S. Treasury Bills—
 28,937
 —
 —
 —
 28,937
—
 392,424
 —
 —
 —
 392,424
Equity securities148,128
 5,724
 110
 36
 —
 153,998
209,414
 8,372
 142
 315
 —
 218,243
Fixed income securities80,473
 11,107
 —
 12
 —
 91,592
Long exchange-traded options3,106
 —
 —
 —
 —
 3,106
2,568
 —
 —
 —
 —
 2,568
Limited partnership hedge funds(2)
—
 —
 —
 —
 40,530
 40,530
—
 —
 —
 —
 80,699
 80,699
Private equity—
 —
 4,913
 40,365
 —
 45,278
Time deposits(3)
—
 —
 —
 —
 70,097
 70,097
—
 —
 —
 —
 8,783
 8,783
Other           
Available-for-sale45
 —
 —
 —
 —
 45
Other investments(2)(4)
—
 —
 —
 —
 7,522
 7,522
Other investments4,269
 —
 —
 —
 7,358
 11,627
Total investments231,752
 45,768
 5,023
 40,413
 118,149
 441,105
216,251
 400,796
 142
 315
 96,840
 714,344
Total assets measured at fair value$340,226
 $946,146
 $5,023
 $40,413
 $118,149
 $1,449,957
$320,733
 $1,585,835
 $142
 $315
 $96,840
 $2,003,865
                      
Securities sold not yet purchased 
  
  
      
 
  
  
      
Short equities – corporate$40,252
 $—
 $—
 $—
 $—
 $40,252
$4,841
 $—
 $—
 $—
 $—
 $4,841
Short exchange-traded options692
 —
 —
 —
 —
 692
3,782
 —
 —
 —
 —
 3,782
Derivatives1,092
 7,557
 —
 —
 —
 8,649
2,534
 12,288
 —
 —
 —
 14,822
Contingent payment arrangements—
 —
 17,589
 —
 —
 17,589
—
 —
 7,336
 —
 —
 7,336
Total liabilities measured at fair value$42,036
 $7,557
 $17,589
 $—
 $—
 $67,182
$11,157
 $12,288
 $7,336
 $—
 $—
 $30,781

(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.
(4) Investments carried
Other investments include (i) an investment in a software publishing company that does not have a readily available fair value ($1.0 million as of December 31, 2019), (ii) an investment in a start-up company that does not have a readily available fair value ($0.9 million as of both December 31, 2019 and 2018), (iii) an investment in an equity method investee that is not measured at costfair value in accordance with GAAP ($2.9 million and $3.4 million as of December 31, 2019 and 2018, respectively), and (iv) broker dealer exchange memberships that are not measured at fair value in accordance with GAAP.

One of our private equity investments (measured at fair value using NAV as a practical expedient) is a venture capital fund with a fair value of $37.2GAAP ($3.2 million and no unfunded commitment$3.1 million as of December 31, 2017. This partnership invests in communications, consumer, digital media, healthcare2019 and information technology markets. The fair value of this investment has been estimated using the capital account balances provided by the partnership. The interest in this partnership cannot be redeemed without specific approval by the general partner.2018, 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:
•
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 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 exchange-traded options that are included in Level 1 of the valuation hierarchy.
•
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 unobservable market data inputs, which are included in Level 3 of the valuation hierarchy.
During the year ended December 31, 2019 we had transfers of $3.2 million from Level 2 to Level 1 ofsecurities. During 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 inyear ended December 31, 2018, we had no transfers from Level 2 of the valuation hierarchy.

Equity and fixed income securities: Our equity and fixed income securities consist principally of company-sponsored mutual funds with NAVs and various separately-managed portfolios consisting primarily of equity and fixed income securities with quoted prices in active markets, which are included into 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 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 observable market data inputs, which are included in Level 3 of the valuation hierarchy.
securities. During the years ended December 31, 20172019 and 2016,2018, there were no transfers between Level 12 and Level 23 securities.
The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as private equity and trading equity securities, is as follows:
December 31, 2017 December 31, 2016December 31, 2019 December 31, 2018
(in thousands)(in thousands)
Balance as of beginning of period$5,023
 $16,148
$142
 $1,071
Reclassification (see below)
—
 (9,532)
Purchases—
 —
—
 —
Sales—
 —
—
 —
Realized gains, net—
 —
Realized gains (losses), net—
 —
Unrealized (losses) gains, net(3,952) (1,593)(23) (929)
Balance as of end of period$1,071
 $5,023
$119
 $142
Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. We reclassified the investments of our consolidated private equity fund from investments to investments of consolidated company-sponsored investment funds on our consolidated statement of financial condition (see Note 14, Consolidated Company-Sponsored Investment Funds). 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 of December 31, 2017 and 2016,January 1, 2018 we havehad an investment in a private equity fund focused exclusively on the energy sector (fair value of $1.0 million and $4.9 million, respectively)million) that iswas classified as Level 3.3 and written down during the second quarter of 2018. This investment’s valuation iswas based on a market approach, considering recent transactions in the fund and the industry.


We acquired Autonomous Research LLP ("Autonomous") in 2019 and Ramius Alternative Solutions LLC in 2016, CPH Capital Fondsmaeglerselskab A/S in 2014, W.P. Stewart & Co., Ltd. in 2013 and SunAmerica's alternative investment group in 2010, allboth of which included 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, 2017 December 31, 2016December 31, 2019 December 31, 2018
(in thousands)(in thousands)
Balance as of beginning of period$17,589
 $31,399
$7,336
 $10,855
Addition—
 11,893
17,384
 —
Accretion460
 1,237
2,542
 210
Changes in estimates(193) (21,482)(3,051) (2,429)
Payments(7,001) (5,458)(1,300) (1,300)
Balance as of end of period$10,855
 $17,589
$22,911
 $7,336
During 2017,2019, we made the finalrecorded a $17.4 million contingent consideration payment relatingpayable for our 2019 acquisition based on projected fee revenues over a five-year measurement period. The liability was valued using expected revenue growth rates ranging from 0.7% to 2.5% and a discount rate of 10.4%, reflecting a 3.5% risk-free rate, based on our 2014 acquisitioncost of debt, and a 6.9% market price of risk adjustment rate. Additionally, we recorded a $3.1 million change in estimate and wrote offfor the remaing contingent consideration payable relating to our 20102016 acquisition. As of December 31, 2017, one acquisition-related contingent considerationThe liability of $10.9 million remains relating to our 2016 acquisition which was valued using a revised revenue growth rate of 31%50% over the remaining measurement periods and a 3.0% discount rate ranging from 1.4%rate.

During 2018, we amended the contingent payment relating to 2.3%.
Duringour 2016 acquisition by modifying the earnout structure and extending it one year. As part of this amendment, we recorded a change in estimate of $2.4 million related to the contingent consideration payable relating to our 2010 acquisition of $2.2 million. Additionally, we had recorded a contingent consideration payable for our 2013 acquisition relating to contingent value rights ("CVRs"). The CVRs would have entitled the shareholders to an additional $4 per share if the assets under management in the acquired investment services had exceeded $5 billion on or before the third anniversary of the acquisition date (December 12, 2016). The target was not met and, as a result, we reversed the contingent consideration payable of $19.3 million. consideration.
As of December 31, 2016, the three2019 and 2018, acquisition-related contingent consideration liabilities recorded had a combined fair value of $17.6were $22.9 million and were valued using a projected AUM weighted average growth rate of 18% for one acquisition, and revenue growth rates and discount rates ranging from 4% to 31% and 1.4% to 6.4%, respectively, for the three acquisitions.$7.3 million, respectively.
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, 20172019 or 2016.2018.
10. Furniture, Equipment and Leasehold Improvements, Net
Furniture, equipment and leasehold improvements, net consist of:
December 31,December 31,
2017 20162019 2018
(in thousands)(in thousands)
Furniture and equipment$551,502
 $535,890
$575,378
 $561,816
Leasehold improvements245,841
 247,121
266,365
 253,439
797,343
 783,011
841,743
 815,255
Less: Accumulated depreciation and amortization(639,774) (623,447)(696,492) (659,736)
Furniture, equipment and leasehold improvements, net$157,569
 $159,564
$145,251
 $155,519
Depreciation and amortization expense on furniture, equipment and leasehold improvements were $32.8$38.1 million, $29.4$34.2 million and $29.0$32.8 million for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, respectively.
During 2017, 2016 and 2015, we recorded $36.7 million, $17.7 million and $1.0 million, respectively, in pre-tax real estate charges. See Note 3 for further discussion of the real estate charges.

11. Deferred Sales Commissions, Net


The components of deferred sales commissions, net for the years ended December 31, 20172019 and 20162018 were as follows (excluding amounts related to fully amortized deferred sales commissions):
December 31,December 31,
2017 20162019 
2018 (1)
(in thousands)(in thousands)
Carrying amount of deferred sales commissions$911,852
 $903,252
$68,371
 $78,971
Less: Accumulated amortization(597,566) (565,681)(19,348) (40,506)
Cumulative CDSC received(284,160) (273,681)(12,727) (21,317)
Deferred sales commissions, net$30,126
 $63,890
$36,296
 $17,148

(1)Prior year amounts have been reclassified to conform to our 2019 presentation.

Amortization expense was $31.9$15.0 million, $41.1$21.3 million and $49.1$31.9 million for the years ended December 31, 2017, 20162019, 2018 and 2015,2017, respectively. Estimated future amortization expense related to the December 31, 20172019 net asset balance, assuming no additional CDSC is received in future periods, is as follows (in thousands):
2018$20,778
20196,343
20202,615
$17,049
2021344
11,666
202238
7,127
20238
454
$30,126
$36,296


12. Debt
As of December 31, 2017 and 2016, AB had $491.8 million and $513.0 million, respectively, in commercial paper outstanding with weighted average interest rates of approximately 1.6% and 0.9%, 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 2017 and 2016 were $482.2 million and $422.9 million, respectively, with weighted average interest rates of approximately 1.2% and 0.6%, respectively.
AB has a $1.0 billionan $800.0 million committed, unsecured senior revolving credit facility (“(the "Credit Facility”") with a group of commercial banks and other lenders, which matures on October 22, 2019.September 27, 2023. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $250.0$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 $1.0 billion 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, 2017,2019, 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, 20172019 and 2016,2018, we had no amounts outstanding under the Credit Facility. During 20172019 and 2016,2018, we did not draw upon the Credit Facility.
OnIn addition to the Credit Facility, on November 4, 2019, AB established a $900.0 million committed, unsecured senior credit facility (“EQH Facility”) with EQH. The EQH Facility matures on November 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 or 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 1, 2016,31, 2019, AB entered intohad $560.0 million outstanding under the EQH Facility with an interest rate of approximately 1.6%. Average daily borrowings on the EQH Facility during 2019 for the 57 days it was available were $358.6 million with a weighted average interest rate of approximately 1.6%.
As of December 31, 2019, we had no commercial paper outstanding. As of December 31, 2018, AB had $523.2 million in commercial paper outstanding with a weighted average interest rate of approximately 2.7%. 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 the 317 days commercial paper was outstanding in 2019 was $438.6

million with a weighted average interest rate of 2.6%. Average daily borrowings for 2018 were $350.3 million with a weighted average interest rate of approximately 2.0%.
AB also has a $200.0 million committed, unsecured 364-day senior revolving credit facility (the “"Revolver”") with a leading international bank, and the other lending institutions that may be party thereto. Onwhich matures on November 29, 2017, as part of an amendment and restatement, the maturity date of the Revolver was extended from November 29, 2017 to November 28, 2018. There were no other significant changes included in the amendment.16, 2021. 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. As of December 31, 2017,2019 we had $75.0no amounts outstanding under the Revolver. As of December 31, 2018, we had $25.0 million outstanding under the Revolver with an interest rate of 2.4%3.4%. As of December 31, 2016, we had no amounts outstanding under the Revolver. Average daily borrowings for 20172019 and 20162018 were $21.4$23.5 million and $7.3$19.4 million, respectively, with weighted average interest rates of 2.0%3.2% and 1.6%2.8%, 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, 20172019 and 2016,2018, SCB LLC had no bank loans outstanding.outstanding balance on these lines of credit. Average daily borrowings on the lines of bank loanscredit during 20172019 and 20162018 were $4.5$1.9 million and $4.4$2.7 million, respectively, with weighted average interest rates of approximately 1.4%1.9% and 1.1%1.6%, respectively.

13. Commitments and Contingencies
Operating Leases
We lease office space, furnitureoffice equipment and office equipmenttechnology under various operating and financing leases. Our current leases have remaining lease terms of one year to 11 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 one million square feet of office space. The liability relating to our global space consolidation initiatives was $85.8 million as of December 31, 2018. Upon adoption of ASC 842 on January 1, 2019, we recorded this liability as a reduction to our operating right-of-use assets.
Leases included in the consolidated statements of financial condition as of December 31, 2019 were as follows:
 Classification December 31, 2019
   (in thousands)
Operating Leases   
Operating lease right-of-use assetsRight-of-use assets $360,185
Operating lease liabilitiesLease liabilities 465,907
    
Finance Leases   
Property and equipment, grossRight-of-use assets 3,825
Amortization of right-of-use assetsRight-of-use assets (1,317)
Property and equipment, net  2,508
Finance lease liabilitiesLease liabilities 2,544

The components of lease expense included in the consolidated statements of income as of December 31, 2019 were as follows:
   Year Ended December 31,
 Classification 2019
   (in thousands)
Operating lease costGeneral and administrative $106,085
    
Financing lease cost:   
Amortization of right-of-use assetsGeneral and administrative 1,317
Interest on lease liabilitiesInterest expense 71
Total finance lease cost  1,388
Variable lease cost (1)
General and administrative 40,786
Sublease incomeGeneral and administrative (55,522)
Net lease cost  $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 Leases Financing Leases Total
Year ending December 31,(in thousands)
2020$110,178
 $1,385
 $111,563
2021104,644
 741
 105,385
202290,363
 356
 90,719
202382,806
 126
 82,932
202479,625
 23
 79,648
Thereafter43,162
 —
 43,162
Total lease payments510,778
 2,631
 $513,409
Less interest(44,871) (87)  
Present value of lease liabilities$465,907
 $2,544
  
During October 2018, we signed a lease, which commences in mid-2020, relating to 218,976 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 $134 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 million.
Lease term and discount rate
Weighted average remaining lease term (years):
Operating leases5.23
Finance leases2.37
Weighted average discount rate:
Operating leases3.51%
Finance leases3.02

Supplemental cash flow information related to leases are as follows:
 Year Ended December 31, 2019
 (in thousands)
Cash paid for amounts included in the measurement of lease liabilities: 
Operating cash flows from operating leases$132,669
Operating cash flows from financing leases71
Financing cash flows from finance leases1,281
Right-of-use assets obtained in exchange for lease obligations(1):
 
Operating leases11,108
Finance leases1,469
(1) Represents non-cash activity and, accordingly, is not reflected in the consolidated statements of cash flows.
14. Commitments and Contingencies
Leases
We lease office space, office equipment and technology under various 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 party lessees to make payments to us, as of December 31, 2017,2019, are as follows:
 Payments Sublease
Receipts		 Net
Payments
 (in millions)
2018$131.6
 $44.2
 $87.4
2019127.8
 46.0
 81.8
2020107.5
 29.7
 77.8
2021102.3
 28.4
 73.9
202291.3
 25.3
 66.0
2023 and thereafter204.2
 48.9
 155.3
Total future minimum payments$764.7
 $222.5
 $542.2
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 $65.2 million, $68.1 million and $70.7 million, respectively, for the years ended December 31, 2017, 2016 and 2015, net of sublease income of $0.5 million, $2.5 million and $2.9 million, respectively, for the years ended December 31, 2017, 2016 and 2015. See Note 3 for further discussion of the real estate charges.
 Payments Sublease Receipts Net Payments
 (in millions)
2020$117.1
 $33.8
 $83.3
2021115.1
 34.4
 80.7
2022102.0
 31.5
 70.5
202394.5
 31.0
 63.5
202491.2
 30.4
 60.8
2025 and thereafter619.2
 —
 619.2
Total future minimum payments$1,139.1
 $161.1
 $978.0
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 currently we cannot currently estimate any such additional 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
We entered into a subscription agreement, under which we committed to invest up to $35.0 million in a venture capital fund. As of December 31, 2017, we had funded all of this commitment.
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, 2017,2019, we had funded $22.4 million of this commitment. As general partner of AllianceBernstein U.S. Real Estate II L.P. (“Real Estate Fund II”), we committed to invest $28.0 million in the Real Estate Fund II. As of December 31, 2017,2019, we had funded $10.4$19.9 million of this commitment.
We entered into an investment agreement under which we committed to invest up to $8.0 million in an oil and gas fund. As of December 31, 2017, we had funded $6.2 million of this commitment.
14.15. 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.
The balances of consolidated VIEs and VOEs included in our condensed consolidated statements of financial condition were as follows:
 December 31, 2017 December 31, 2016
 (in thousands) December 31, 2019 December 31, 2018
             (in thousands)
 VIEs VOEs Total VIEs VOEs Total VIEs VOEs Total VIEs VOEs Total
Cash and cash equivalents $326,158
 $360
 $326,518
 $337,525
 $—
 $337,525
 $9,623
 $1,810
 $11,433
 $11,880
 $1,238
 $13,118
Investments 1,189,835
 56,448
 1,246,283
 547,650
 23,226
 570,876
 404,624
 176,380
 581,004
 217,840
 133,856
 351,696
Other assets 33,931
 1,466
 35,397
 48,480
 —
 48,480
 9,618
 10,192
 19,810
 6,024
 16,816
 22,840
Total assets $1,549,924
 $58,274
 $1,608,198
 $933,655
 $23,226
 $956,881
 $423,865
 $188,382
 $612,247
 $235,744
 $151,910
 $387,654
                        
Liabilities $695,997
 $2,104
 $698,101
 $293,510
 $—
 $293,510
 $12,147
 $18,870
 $31,017
 $5,215
 $17,395
 $22,610
Redeemable non-controlling interest 596,241
 (18) 596,223
 384,294
 —
 384,294
 273,219
 52,342
 325,561
 117,523
 28,398
 145,921
Partners' capital attributable to AB Unitholders 256,929
 56,188
 313,117
 221,229
 23,226
 244,455
 138,499
 117,170
 255,669
 113,006
 106,117
 219,123
Non-redeemable non-controlling interests in consolidated entities 757
 —
 757
 34,622
 —
 34,622
Total liabilities, redeemable non-controlling interest and partners' capital $1,549,924
 $58,274
 $1,608,198
 $933,655
 $23,226
 $956,881
 $423,865
 $188,382
 $612,247
 $235,744
 $151,910
 $387,654
            

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.


Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of December 31, 20172019 and 20162018 was as follows (in thousands):
Level 1 Level 2 Level 3 NAV Expedient TotalLevel 1 Level 2 Level 3 Total
December 31, 2017:         
December 31, 2019:       
Investments - VIEs$1,053,824
 $133,796
 $2,205
 $10
 $1,189,835
$28,270
 $375,559
 $795
 $404,624
Investments - VOEs5,491
 50,898
 59
 —
 56,448
104,069
 72,252
 59
 176,380
Derivatives - VIEs252
 30,384
 —
 —
 30,636
139
 4,694
 —
 4,833
Derivatives - VOEs49
 251
 —
 —
 300
76
 4,263
 —
 4,339
Total assets measured at fair value$1,059,616
 $215,329
 $2,264
 $10
 $1,277,219
$132,554
 $456,768
 $854
 $590,176
                
Short equities - VIEs$669,258
 $—
 $—
 $—
 $669,258
Derivatives - VIEs421
 21,820
 —
 —
 22,241
$835
 $3,724
 $—
 $4,559
Derivatives - VOEs12
 619
 —
 —
 631
101
 4,982
 —
 5,083
Total liabilities measured at fair value$669,691
 $22,439
 $—
 $—
 $692,130
$936
 $8,706
 $—
 $9,642
                
December 31, 2016:         
December 31, 2018:       
Investments - VIEs$341,849
 $199,978
 $5,741
 $82
 $547,650
$22,149
 $187,626
 $8,065
 $217,840
Investments - VOEs10,188
 12,061
 —
 977
 23,226
68,063
 65,485
 308
 133,856
Derivatives - VIEs58
 5,649
 —
 —
 5,707
1,486
 1,924
 —
 3,410
Derivatives - VOEs124
 3,692
 —
 3,816
Total assets measured at fair value$352,095
 $217,688
 $5,741
 $1,059
 $576,583
$91,822
 $258,727
 $8,373
 $358,922
                
Short equities - VIEs$248,419
 $—
 $—
 $—
 $248,419
Derivatives - VIEs67
 2,724
 —
 —
 2,791
$72
 $3,819
 $—
 $3,891
Derivatives - VOEs197
 3,633
 —
 3,830
Total liabilities measured at fair value$248,486
 $2,724
 $—
 $—
 $251,210
$269
 $7,452
 $—
 $7,721


See Note 9 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, December 31,
 2017 2016 2019 2018
 (in thousands) (in thousands)
        
Balance as of beginning of period $5,741
 $—
 $8,373
 $2,264
Impact of adoption of ASU 2015-02 —
 14,740
Deconsolidated funds (7,267) (368)
Transfers (out) in 480
 (24,605) (9,445) 259
Purchases 6,127
 3,032
 9,213
 9,354
Sales (3,120) (5,007) (7,467) (3,086)
Realized gains (losses), net 2
 (3,391) 14
 (100)
Unrealized gains (losses), net 286
 21,355
 143
 (331)
Accrued discounts 15
 (15) 23
 13
Balance as of end of period $2,264
 $5,741
 $854
 $8,373


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.


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 condensed consolidated statements of income.


Derivative Instruments
As of December 31, 20172019 and 2016,2018, the VIEs held $8.4$0.3 million and $2.9$0.5 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the years ended December 31, 20172019 and 2016, respectively2018, we recognized $21.5$3.3 million and $0.8$1.5 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, 20172019 and 2016,2018, the VIEs held $0.2$1.6 million and $0.5$0.9 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, 20172019 and 2016,2018, the VIEs delivered $2.9$3.2 million and $3.3$0.8 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, 2017,2019 and 2018, the VOEs held $0.3$0.7 million and $0.1 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the yearyears ended December 31, 20172019 and 2018, we recognized $0.4$0.5 million and $1.9 million of lossesgains, 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, 2017,2019 and 2018, the VOEs held $0.5 million and $0.2 million 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, 2019 and 2018, the VOEs delivered $1.2 million and $0.5 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, 20172019 and 20162018 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
 
Cash Collateral
Received
 
Net
Amount
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)(in thousands)
December 31, 2017:           
December 31, 2019:           
Derivatives - VIEs$30,636
 $—
 $30,636
 $—
 $(194) $30,442
$4,833
 $—
 $4,833
 $—
 $(1,631) $3,202
Derivatives - VOEs$300
 $—
 $300
 $—
 $(37) $263
$4,339
 $—
 $4,339
 $—
 $(534) $3,805
December 31, 2016:           
December 31, 2018:           
Derivatives - VIEs$5,707
 $—
 $5,707
 $—
 $(461) $5,246
$3,410
 $—
 $3,410
 $—
 $(856) $2,554
Derivatives - VOEs$3,816
 $—
 $3,816
 $—
 $(225) $3,591


Offsetting of derivative liabilities of consolidated company-sponsored investment funds as of December 31, 20172019 and 20162018 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
 
Cash Collateral
Pledged
 Net AmountGross 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)(in thousands)
December 31, 2017:           
December 31, 2019:           
Derivatives - VIEs$22,241
 $—
 $22,241
 $—
 $(2,884) $19,357
$4,559
 $—
 $4,559
 $—
 $(3,155) $1,404
Derivatives - VOEs$631
 $—
 $631
 $—
 $(228) $403
$5,083
 $—
 $5,083
 $—
 $(1,201) $3,882
December 31, 2016:           
December 31, 2018:           
Derivatives - VIEs$2,791
 $—
 $2,791
 $—
 $(2,791) $—
$3,891
 $—
 $3,891
 $—
 $(829) $3,062
Derivatives - VOEs$3,830
 $—
 $3,830
 $—
 $(547) $3,283


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, 2017,2019, the net assets of company-sponsored investment products that are non-consolidated VIEs are approximately $53.6$79.3 billion, and our maximum risk of loss is our investment of $7.9$8.4 million in these VIEs and advisory fee receivables from these VIEs, which are not material.
15.16. 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 two percent of aggregate debit items arising from customer transactions, as defined. As of December 31, 2017,2019, SCB LLC had net capital of $227.4$250.8 million, which was $194.9$219.6 million in excess of the minimum net capital requirement of $32.5$31.2 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, 2017,2019, it was subject to financial resources requirements of $25.6$14.9 million imposed by the Financial Conduct Authority of the United Kingdom and had aggregate regulatory financial resources of $56.1$30.2 million, an excess of $30.5$15.3 million.
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, 2017,2019, it had net capital of $15.6$22.1 million, which was $15.3$21.8 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, 2017,2019, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement.
16.17. 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 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 7, Derivative Instruments for further discussion.

17.18. 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 2017, 20162019, 2018 and 20152017 were $14.4 million, $14.3$15.0 million and $14.2$14.4 million, 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 $7.7 million, $7.1 million and $6.8 million $6.8 millionin 2019, 2018 and $7.9 million in 2017, 2016 and 2015, 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 $4.0 million to the Retirement Plan during 2017.2019. We do not currently estimateanticipate that we will contribute $5.0 million to the Retirement Plan during 2018.2020. 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.

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,
2017 20162019 2018
(in thousands)(in thousands)
Change in projected benefit obligation:      
Projected benefit obligation at beginning of year$111,315
 $107,784
$116,233
 $125,200
Interest cost4,999
 4,972
4,944
 4,771
Actuarial loss (gain)12,617
 1,794
20,411
 (9,918)
Benefits paid(3,731) (3,235)(5,475) (3,820)
Projected benefit obligation at end of year125,200
 111,315
136,113
 116,233
Change in plan assets:      
Plan assets at fair value at beginning of year86,699
 86,292
98,584
 100,706
Actual return on plan assets13,738
 3,642
16,971
 (3,302)
Employer contribution4,000
 —
4,000
 5,000
Benefits paid(3,731) (3,235)(5,475) (3,820)
Plan assets at fair value at end of year100,706
 86,699
114,080
 98,584
Funded status$(24,494) $(24,616)$(22,033) $(17,649)
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 2017, 20162019, 2018 and 20152017 were as follows:

2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Unrecognized net (loss) gain from experience different from that assumed and effects of changes and assumptions$(3,043) $(3,115) $2,882
$(7,934) $1,870
 $(3,043)
Prior service cost24
 93
 (895)24
 24
 24
(3,019) (3,022) 1,987
(7,910) 1,894
 (3,019)
Income tax expense(49) (10) (99)
Income tax benefit (expense)312
 (207) (49)
Other comprehensive (loss) income$(3,068) $(3,032) $1,888
$(7,598) $1,687
 $(3,068)
The loss of $7.6 million recognized in 2019 primarily was 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 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). The gain of $1.9 million in 2015 primarily was due to changes in the discount rate and lump sum interest rates ($5.6 million) and changes in the mortality assumption ($1.4 million), offset by expected earnings on plan assets exceeding actual earnings ($5.3 million).

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 20172019 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 Plan Retired Individual Plan Foreign Retirement Plans OCI StatementRetirement Plan Retired Individual Plan Foreign Retirement Plans OCI Statement
(in thousands)(in thousands)
Recognized actuarial (loss)$(3,043) $(20) $(127) $(3,190)
Recognized actuarial (loss) gain$(7,934) $(69) $112
 $(7,891)
Amortization of prior service cost24
 —
 —
 24
24
 —
 —
 24
Changes in employee benefit related items(3,019) (20) (127) (3,166)(7,910) (69) 112
 (7,867)
Income tax (expense) benefit(49) (1) 23
 (27)
Income tax benefit (expense)312
 3
 (41) 274
Employee benefit related items, net of tax$(3,068) $(21) $(104) $(3,193)$(7,598) $(66) $71
 $(7,593)
The amounts included in accumulated other comprehensive income (loss) for the Retirement Plan as of December 31, 20172019 and 20162018 were as follows:
2017 20162019 2018
(in thousands)(in thousands)
Unrecognized net loss from experience different from that assumed and effects of changes and assumptions$(49,473) $(46,430)$(55,537) $(47,603)
Prior service cost(779) (803)(731) (755)
(50,252) (47,233)(56,268) (48,358)
Income tax benefit408
 457
513
 201
Accumulated other comprehensive loss$(49,844) $(46,776)$(55,755) $(48,157)
The amortization period over which we are amortizing the loss for the Retirement Plan from accumulated other comprehensive income is 3230.9 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 $23,959$24 thousand and $1.1$1.4 million, respectively.
The accumulated benefit obligation for the plan was $125.2$136.1 million and $111.3$116.2 million respectively, as of December 31, 20172019 and 2016.2018, respectively.
The discount rates used to determine benefit obligations as of December 31, 20172019 and 20162018 (measurement dates) were 3.90%3.35% and 4.55%4.40%, respectively.

Benefit payments are expected to be paid as follows (in thousands):
2018$6,517
20197,076
20205,302
$5,868
20216,157
7,113
20228,040
9,202
2023-202739,643
20237,451
20247,538
2025-202945,048

Net (benefit) expense under the Retirement Plan consisted of:
Year Ended December 31,Year Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Interest cost on projected benefit obligations$4,999
 $4,972
 $4,816
$4,944
 $4,771
 $4,999
Expected return on plan assets(5,261) (5,407) (6,176)(5,639) (5,893) (5,261)
Amortization of prior service cost24
 24
 —
24
 24
 24
Recognized actuarial loss1,097
 959
 979
1,146
 1,146
 1,097
Net pension (benefit) expense$859
 $548
 $(381)
Net pension expense$475
 $48
 $859
Actuarial computations used to determine net periodic costs were made utilizing the following weighted-average assumptions:
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
Discount rate on benefit obligations4.55% 4.75% 4.3%4.40% 3.90% 4.55%
Expected long-term rate of return on plan assets6.0
 6.5
 7.0
5.75% 5.75% 6.00%
In developing the expected long-term rate of return on plan assets of 6.0%5.75%, 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, 2017,2019, the mortality projection assumption has been updated to use the generational MP-2017MP-2019 improvement scale. Previously, mortality was projected generationally using the MP-2016MP-2018 improvements scale. The base mortality assumption remains atwas updated to the Society of Actuaries Pri-2012 base mortality table for private sector plans, with a white-collar adjustment, using the contingent annuitant table for beneficiaries of deceased participants. Previously, the mortality assumption was the RP-2014 white-collar mortality table for males and females adjusted back to 2006 using the MP-2014 improvement scale.
The Internal Revenue Service (“IRS”) recently updated the mortality tables used to determine lump sums. For fiscal year-end 2017,2019, we reflected the actualmost recently published IRS table for 2018 withlump sums assumed annual updatesto be paid in 2020. We projected future mortality for years 2019 and later onlump sums assumed to be paid after 2020 using the current base tablemortality tables (RP-2014 backed off to 2006) with the assumedand projection scale of MP-2017.MP-2019.
The Retirement Plan’s asset allocation percentages consisted of:
December 31,December 31,
2017 20162019 2018
Equity66% 61%47% 43%
Debt securities15
 18
41
 41
Other19
 21
12
 16
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

weighting of 30%10% to 60%35% for liability hedging investments (target of 20%), 15% to 40% for return seeking investments (target of 40%27%), 10%5% to 30%35% for risk mitigating investments (target of 15%14%), 0%10% to 25%35% for diversifying investments (target of 17%21%) and 18%5% to 38%35% for dynamic asset allocation (target of 28%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 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, 20172019 and 20162018 was as follows (in thousands):
Level 1 Level 2 Level 3 TotalLevel 1 Level 2 Level 3 Total
December 31, 2017       
December 31, 2019       
Cash$91
 $—
 $—
 $91
$230
 $—
 $—
 $230
U.S. Treasury Strips—
 27,318
 —
 27,318
Fixed income mutual funds23,696
 —
 —
 23,696
19,518
 —
 —
 19,518
Equity mutual fund29,352
 —
 —
 29,352
33,875
 —
 —
 33,875
Equity securities25,191
 —
 —
 25,191
11,182
 —
 —
 11,182
Total assets in the fair value hierarchy78,330
 —
 —
 78,330
64,805
 27,318
 —
 92,123
Investments measured at net assets value—
 —
 —
 22,376
—
 —
 —
 21,957
Investments at fair value$78,330
 $—
 $—
 $100,706
$64,805
 $27,318
 $—
 $114,080


December 31, 2016       
Level 1 Level 2 Level 3 Total
December 31, 2018       
Cash$344
 $—
 $—
 $344
$238
 $—
 $—
 $238
U.S. Treasury Strips—
 22,355
 —
 22,355
Fixed income mutual funds21,441
 —
 —
 21,441
18,362
 —
 —
 18,362
Equity mutual fund25,037
 —
 —
 25,037
26,508
 —
 —
 26,508
Equity securities20,690
 —
 —
 20,690
8,970
 —
 —
 8,970
Total assets in the fair value hierarchy67,512
 —
 —
 67,512
54,078
 22,355
 —
 76,433
Investments measured at net assets value—
 —
 —
 19,187
—
 —
 —
 22,151
Investments at fair value$67,512
 $—
 $—
 $86,699
$54,078
 $22,355
 $—
 $98,584
TheDuring 2019 and 2018, the Retirement Plan’sPlan's investments include the following:
U.S. Treasury strips (zero-coupon bonds);
two fixed income mutual funds, each of which seeksseek to generate income consistent with preservation of capital. One mutual fund invests in a portfolio of fixed incomeinvestment-grade securities ofprimarily in the U.S. andwith additional non-U.S. companies and U.S. and non-U.S. government securities and supranational entities, including lower-rated securities, while thesecurities. The second fund invests in a broad range of fixed incomeinflation-indexed fixed-income securities in both developed and emerging markets with a range of maturities from short- to long-term;similar bonds issued by non-U.S. governments and various commodities;
threeseven equity mutual funds, onefour of which invests primarily in a diversified portfolio offocus on U.S.-based equity securities of small-various capitalization sizes ranging from small to mid-capitalization U.S. companies, the second which invests primarily in alarge capitalizations and diversified portfolio of equity securities with relatively smaller capitalizations as compared to the overall U.S market,portfolios within those capitalization ranges; and the third which primarily invests inthree funds that focus on non-U.S. based equity securities of various capitalization sizes ranging from small capitalization companies or other securities or instruments with similar economic characteristics;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 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 athree hedge fundfunds that seeksseek 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 itstheir assets among portfolio managers through portfolio funds that employ a broad range of investment strategies.strategies; one private investment trust that invests primarily in equity securities of non-U.S. companies located in emerging market countries; and one collective investment trust that invests in U.S. and non-U.S. equities of various capitalization sizes.

18.19. 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 2019, 2018 and 2017 2016 and 2015 aggregating $168.2$175.5 million, $157.8$183.3 million and $178.8$168.2 million, respectively. The amounts charged to employee compensation and benefits for the years ended December 31, 2019, 2018 and 2017 2016were $177.2 million, $161.0 million and 2015 were $172.8 million, $153.8 million and $171.7 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, 2017,2019, no options to buy AB Holding Units had been granted and 6,146,25620,602,674 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 inon September 30, 2017. AB Holding Unit-based awards (including options) in respect of 53,853,74439,397,326 AB Holding Units were available for grant under the 2017 Plan as of December 31, 2017.
The AllianceBernstein 2010 Long Term Incentive Plan, as amended, was canceled on September 30, 2017. The awards and terms under the 2010 Long Term Incentive Plan were substantially similar to the 2017 Plan.2019.
Option Awards
OptionsWe did not grant any options to buy AB Holding Units during 2019, 2018 or 2017. Historically, options granted to employees generally arewere 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 arewere 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. There were no options to buy AB Holding Units awarded during 2017, either to employees or Eligible Directors. Options to buy AB Holding Units (including grants to Eligible Directors) in prior years were granted as follows: 54,546 options were granted during 2016 and 29,056 options were granted during 2015. The weighted average fair value of options to buy AB Holding Units granted during 2016 and 2015 were $2.75 and $4.13, respectively, on the date of grant, determined using the Black-Scholes option valuation model with the following assumptions:
 2016 2015
Risk-free interest rate1.3% 1.5%
Expected cash distribution yield7.1% 7.1%
Historical volatility factor31.0% 32.1%
Expected term6.0 years
 6.0 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 20172019 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, 20165,085,043
 $49.45
 2.0  
Outstanding as of December 31, 2018671,243
 $22.83
 1.6  
Granted—
 —
  —
 —
  
Exercised(1,179,860) 17.04
  (511,894) 22.49
  
Forfeited—
 —
  —
 —
  
Expired(822,713) 84.96
  —
 —
  
Outstanding as of December 31, 20173,082,470
 52.37
 1.2 $—
Exercisable as of December 31, 20173,018,236
 52.97
 1.1 —
Vested or expected to vest as of December 31, 20173,082,470
 52.37
 1.2 —
Outstanding as of December 31, 2019159,349
 23.93
 2.1 $1.0
Exercisable as of December 31, 2019141,163
 24.09
 2.1 0.9
Vested or expected to vest as of December 31, 2019159,349
 23.93
 2.1 1.0
The aggregate intrinsic value as of December 31, 2017 of options outstanding, exercisable and expected to vest is negative, and is therefore presented as zero in the table above. The total intrinsic value of options exercised during 2019, 2018 and 2017 2016 and 2015 was $8.3$3.7 million, $2.1$8.9 million and $7.0$8.3 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 required service period. We recorded no compensation expense relatingrelated to option grants of zero, $0.2 million and $0.1 million, respectively, for the years ended December 31,in 2019, 2018 or 2017 2016 and 2015.as no options were granted. As of December 31, 2017,

2019, there was no compensation expense related to unvested option grants not yet recognized in the consolidated statement of income.
Restricted AB Holding Unit Awards
In 2017, 20162019, 2018 and 2015,2017, 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 50,252, 46,38245,420, 53,720 and 26,46850,252 restricted AB Holding Units, respectively, in 2017, 20162019, 2018 and 20152017 with grant date fair values per restricted AB Holding Unit of $29.26 and $29.90 in 2019, $26.90 in 2018, and $21.25 and $24.80 in 2017, $22.64 in 2016 and $31.74 in 2015.2017. All of the restricted AB Holding Units 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 relating to these awards of $1.1$1.3 million, $1.1$1.4 million and $0.8$1.1 million, respectively, for the years ended December 31, 2017, 20162019, 2018 and 2015.2017.
On April 28, 2017, the Board removed Peter S. Kraus from his position as Chairman of the Board and Chief Executive Officer (("CEO"CEO"). As part of his June 2012 employment agreement he was granted 2.7 million restricted AB Holding Units, which were scheduled 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 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 histhe remaining two tranches under his June 2012 employment agreement and delivered the AB Holding Units to him in June 2017. WeDuring 2017, we recorded $10.2 million of compensation expense relating to Mr. Kraus's restricted AB Holding Unit grants of $10.2 million, $5.1 million and $5.1 million for the years ended December 31, 2017, 2016 and 2015.grant.
On April 28, 2017, Seth P. Bernstein was appointed President and CEO to provide services 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 grantgrants of $0.9 million, $0.9 million and $0.6 million for the yearyears ended December 31, 2017.2019, 2018 and 2017, respectively.
Under the Incentive Compensation Program, 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), 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 relating to the 2017 year-end awards), and 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 relatingrelated to the 2016 year-end awards), 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 during the year relating to the 2015 year-end awards) and 7.2 million restricted AB Holding Units in 2015 (which included 7.0 million restricted AB Holding Units granted in December for the 2015 year-end awards and 0.2 million additional restricted AB Holding Units granted during the year relating to the 2014 year-end awards). The grant date fair values per restricted AB Holding Unit ranged between $26.69 and $30.01 in 2019, $24.95 and $26.69 in 2018, and $23.00 and $24.95 in 2017, and were $19.45 and $23.20 in 2016 and $23.02 and $24.24 in 2015.2017. Restricted AB Holding Units awarded under the Incentive Compensation Program generally vest in 25% increments on December 1st of each of the four years immediately subsequent tofollowing 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. The fair value of the restricted AB Holding Units is amortized over the required service period as employee compensation expense. We awarded 1.81.9 million, 1.02.6 million and 0.21.8 million restricted AB Holding Units in 2017, 20162019, 2018 and 2015,2017, respectively, with grant date fair values per restricted AB Holding Unit ranging between $27.32 and $30.85 in 2019, $25.05 and $30.25 in 2018, and $21.25 and $25.65 in 2017, $18.67 and $25.34 in 2016 and $25.36 and $32.71 in 2015.2017. We recorded compensation expense relating to restricted AB Holding Unit grants in connection with certain employment and separation agreements of $21.6$36.7 million, $11.2$32.2 million and $9.9$21.6 million, respectively, for the years ended December 31, 2017, 20162019, 2018 and 2015.2017.
Changes in unvested restricted AB Holding Units during 20172019 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, 201619,146,041
 $22.60
Unvested as of December 31, 201820,214,389
 $25.12
Granted8,325,381
 24.49
7,739,318
 28.75
Vested(8,170,527) 21.66
(8,260,466) 24.38
Forfeited(227,985) 23.14
(406,161) 25.86
Unvested as of December 31, 201719,072,910
 23.82
Unvested as of December 31, 201919,287,080
 26.88

The total grant date fair value of restricted AB Holding Units that vested during 2019, 2018 and 2017 2016 and 2015 was $177.0$201.4 million, $159.4$169.1 million and $156.4$177.0 million, respectively. As of December 31, 2017,2019, the 19,072,91019,287,080 unvested restricted AB Holding Units consist of 15,827,52414,752,831 restricted AB Holding Units that do not have a service requirement and have been fully expensed on the grant date and 3,245,3864,534,249 restricted AB Holding Units that have a service requirement and will be expensed over the required service period. As of December 31, 2017,2019, there was $56.8$101.5 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 3.03.6 years.
19.20. Units Outstanding
Changes in AB Units outstanding for the years ended December 31, 20172019 and 20162018 were as follows:
2017 20162019 2018
Outstanding as of January 1,268,893,534
 272,301,827
268,850,276
 268,659,333
Options exercised1,179,860
 358,262
511,894
 889,119
Units issued5,546,695
 4,455,944
4,833,715
 6,153,320
Units retired(1)
(6,960,756) (8,222,499)(3,815,571) (6,851,496)
Outstanding as of December 31,268,659,333
 268,893,534
270,380,314
 268,850,276
(1)During 20172019 and 2016,2018, we purchased 44,0003,782 and 15,9985,346 AB Units, respectively, in private transactions and retired them.

20.21. 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”(“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 AXA, “AXA Equitable”)EQH 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.
We determined reasonable estimates for certain effects of the Tax Cuts and Jobs Act (“2017 Tax Act”) enacted on December 22, 2017 and recorded those estimates as provisional amounts in our 2017 financial statements. In accordance with SEC Staff Accounting Bulletin No. 118 (“SAB 118”), the adjustments to deferred tax assets and liabilities and the liability related to the transition tax are provisional amounts estimated based on information available as of December 31, 2017. These amounts are subject to change as we obtain information necessary to complete the calculations. We will recognize any changes to the provisional amounts as we refine our estimates and as the tax authorities issue further guidance and interpretations of the 2017 Tax Act.

The major provisions of the 2017 Tax Act that had, or could have, 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. The determination of the transition tax requires further analysis regarding the amount and composition of our historical foreign earnings.
We recorded an approximate $3.3 million charge to our 2017 income tax expense to reduce our deferred tax assets due to lower future corporate tax rates. We will recognize any changes to the provisional amounts as we refine our estimates of our cumulative temporary differences.

Earnings before income taxes and income tax expense consist of:
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Earnings before income taxes:          
United States$634,515
 $614,261
 $520,282
$697,501
 $672,221
 $634,515
Foreign139,395
 108,904
 110,817
125,936
 153,093
 139,395
Total$773,910
 $723,165
 $631,099
$823,437
 $825,314
 $773,910
Income tax expense:          
Partnership UBT$2,986
 $5,363
 $8,027
$9,196
 $5,251
 $2,986
Corporate subsidiaries:          
Federal18,079
 291
 7,957
(943) (4,030) 18,079
State and local803
 1,064
 661
975
 2,888
 803
Foreign29,365
 28,158
 26,822
32,290
 36,529
 29,365
Current tax expense51,233
 34,876
 43,467
41,518
 40,638
 51,233
Deferred tax (benefit)1,877
 (6,557) 1,330
Deferred tax236
 5,178
 1,877
Income tax expense$53,110
 $28,319
 $44,797
$41,754
 $45,816
 $53,110
The principal reasons for the difference between the effective tax rates and the UBT statutory tax rate of 4.0% are as follows:
Years Ended December 31,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
UBT statutory rate$30,956
 4.0 % $28,927
 4.0 % $25,244
 4.0 %$32,937
 4.0 % $33,012
 4.0 % $30,956
 4.0 %
Corporate subsidiaries’ federal, state, local and foreign income taxes22,162
 2.9
 17,907
 2.5
 31,223
 4.9
2017 federal tax reform enactment25,846
 3.3
 —
 —
 —
 —
Corporate subsidiaries' federal, state, and local4,000
 0.5
 1,522
 0.2
 2,558
 0.3
Foreign subsidiaries taxed at different rates26,719
 3.3
 30,689
 3.7
 25,406
 3.3
2017 Tax Act—
 —
 1,155
 0.1
 25,846
 3.3
FIN 48 reserve (release)2,765
 0.3
 (5,177) (0.6) (3,318) (0.4)
UBT business allocation percentage rate change(79) —
 2,657
 0.3
 —
 —
Deferred tax and payable write-offs314
 —
 2,932
 0.4
 (9,542) (1.2)
Foreign outside basis difference155
 —
 2,273
 0.3
 —
 —
Amended 2017 return(3,853) (0.5) —
 —
 —
 —
Effect of ASC 740 adjustments, miscellaneous taxes, and other(5,155) (0.7) (1,070) (0.2) 2,965
 0.5
2,305
 0.3
 (2,521) (0.3) 1,903
 0.2
Income not taxable resulting from use of UBT business apportionment factors(20,699) (2.6) (17,445) (2.4) (14,635) (2.3)
Income not taxable resulting from use of UBT business apportionment factors and effect of compensation charge(23,509) (2.8) (20,726) (2.5) (20,699) (2.6)
Income tax expense and effective tax rate$53,110
 6.9
 $28,319
 3.9
 $44,797
 7.1
$41,754
 5.1
 $45,816
 5.6
 $53,110
 6.9
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,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Balance as of beginning of period$12,596
 $12,004
 $11,311
$3,893
 $8,478
 $12,596
Additions for prior year tax positions—
 —
 —
1,813
 —
 —
Reductions for prior year tax positions(1,849) —
 —
—
 —
 (1,849)
Additions for current year tax positions—
 592
 693
—
 —
 —
Reductions for current year tax positions—
 —
 —
—
 —
 —
Reductions related to closed years/settlements with tax authorities(2,269) —
 —
—
 (4,585) (2,269)
Balance as of end of period$8,478
 $12,596
 $12,004
$5,706
 $3,893
 $8,478
The amount of unrecognized tax benefits as of December 31, 2017, 20162019, 2018 and 2015,2017, 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 during 2019, 2018 and 2017 2016 and 2015 was $0.3 million, $0.7 million, $0.1 million and $0.4$0.3 million, respectively. The total amount of accrued interest recorded on the consolidated statements of financial condition as of December 31, 2019, 2018 and 2017 2016was $1.1 million, $0.3 million and 2015 is $0.7 million, $1.7respectively. There were $0.2 million and $1.0 million, respectively.of penalties accrued as of December 31, 2019. There were no accrued penalties as of December 31, 2017, 20162018 or 2015.2017.
As of December 31, 2017Generally, the company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for any year prior to 2013.2015, except as set forth below.
As a resultDuring the third quarter of 2018, the settlementCity of the New York Citynotified us of an examination of AB's UBT tax auditreturns for the years 2010 - 2012, the gross unrecognized tax benefit was reduced by approximately $2.3 million.2013 through 2016. The company also reduced the amount of accrued interest by $0.4 million.examination is ongoing.
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, 2017,2019, it is reasonably possible that $5.1$4.2 million of our unrecognized tax benefits will change within the next twelve months due to the expirationcompletion of the statute of limitations.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,December 31,
2017 20162019 2018
(in thousands)(in thousands)
Deferred tax asset:      
Differences between book and tax basis:      
Benefits from net operating loss carryforwards$3,405
 $4,441
$5,551
 $2,518
Long-term incentive compensation plans21,204
 25,263
20,907
 22,342
Investment basis differences/net unrealized losses6,079
 2,750
Investment basis differences4,376
 3,606
Depreciation and amortization2,026
 2,222
1,554
 1,248
Lease liability6,409
 —
Other, primarily accrued expenses deductible when paid3,378
 3,588
3,106
 3,903
36,092
 38,264
41,903
 33,617
Less: valuation allowance(497) (462)(2,026) (490)
Deferred tax asset35,595
 37,802
39,877
 33,127
Deferred tax liability: 
  
 
  
Differences between book and tax basis: 
  
 
  
Intangible assets6,103
 6,302
8,013
 6,852
Investment in foreign subsidiaries2,191
 1,653
Right-of-use asset5,191
 —
Other891
 1,960
1,672
 1,758
Deferred tax liability6,994
 8,262
17,067
 10,263
Net deferred tax asset$28,601
 $29,540
$22,810
 $22,864
Valuation allowances of $2.0 million and $0.5 million were established as of December 31, 20172019 and 2016,2018, respectively, primarily due to the uncertainty of realizing certainsignificant 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, 20172019 and 2018 of approximately $38.7$46.2 million in certainand $32.4 million, respectively. The majority of our foreign locations withNOL carryforwards have an indefinite expiration period. As of December 31, 2016, we had NOL carryforwards of approximately $43.1 million in certain foreign locations with an indefinite expiration period.
The 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 basedsubject to valuation allowances.
The company provides income taxes on anticipated future taxable income.
In accordance with the recently enacted 2017 Tax Act, we provided a $22.5unremitted 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, 2019, $29.6 million provisional charge to our 2017of undistributed earnings of non-U.S. corporate subsidiaries were indefinitely invested outside the U.S. At existing applicable income tax expense on the deemed repatriationrates, additional taxes of approximately $6.2 million would need to be paid if such earnings associated with non-U.S. corporate subsidiaries. Therefore, we are no longer asserting permanent reinvestment of earnings overseas. Per SAB 118, we are still evaluating the remaining income tax effects on the reversal of the indefinite reinvestment assertion as a result of the 2017 Tax Act. We will recognize any changes to the provisional amounts of income taxes recorded in 2017 as the effects are quantified.remitted.

21.22. 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 one operating segment. Enterprise-wide disclosures as of and for the years ended December 31, 2017, 20162019, 2018 and 20152017 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,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Institutions$476,235
 $422,060
 $435,205
$480,144
 $479,068
 $477,140
Retail1,423,891
 1,261,907
 1,362,541
1,619,832
 1,494,445
 1,423,890
Private Wealth Management787,362
 711,599
 689,853
904,505
 883,234
 787,362
Bernstein Research Services449,919
 479,875
 493,463
407,911
 439,432
 449,919
Other186,279
 162,461
 42,986
163,245
 123,581
 185,375
Total revenues3,323,686
 3,037,902
 3,024,048
3,575,637
 3,419,760
 3,323,686
Less: Interest expense25,165
 9,123
 3,321
57,205
 52,399
 25,165
Net revenues$3,298,521
 $3,028,779
 $3,020,727
$3,518,432
 $3,367,361
 $3,298,521
Our AllianceBernstein Global High Yield Portfolio, an open-end fund incorporated in Luxembourg (ACATEUH: LX), generated approximately 11%9%, 10% and 11% of our investment advisory and service fees and 12%9%, 10% and 12% of our net revenues during 2017, 20162019, 2018 and 2015,2017, 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:
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Net revenues:          
United States$1,958,844
 $1,901,571
 $1,829,518
$1,975,105
 $1,940,267
 $1,958,844
International1,339,677
 1,127,208
 1,191,209
1,543,327
 1,427,094
 1,339,677
Total$3,298,521
 $3,028,779
 $3,020,727
$3,518,432
 $3,367,361
 $3,298,521
Long-lived assets: 
  
  
 
  
  
United States$3,313,958
 $3,388,221
  
$3,259,490
 $3,262,722
  
International46,221
 36,539
  
54,349
 56,069
  
Total$3,360,179
 $3,424,760
  
$3,313,839
 $3,318,791
  
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, including AXA Advisors, LLC, have entered into selected dealer agreementsHSBC (not affiliated with AllianceBernstein Investments and have beenAB) was responsible for 1%approximately 14%, 2%7% and 4%9% of our open-end mutual fund sales in 2017, 20162019, 2018 and 2015,2017, respectively. HSBC was responsible for approximately 9% and 12% of our open-end mutual fund sales in 2017 and 2016, respectively. Neither AXA or 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.
AXAEQH and the general and separate accounts of AXA Equitable Life (including investments by the separate accounts of AXA Equitable Life in the funding vehicle EQ Advisors Trust) accounted for approximately 5%3% of our total revenues for each of the years ended December 31, 2017, 20162019, 2018 and 2015.2017. AXA and its subsidiaries accounted for approximately 2% of our total revenues for each of the years ended December 31, 2019, 2018 and 2017. No single institutional client other than EQH, AXA and itstheir respective subsidiaries accounted for more than 1% of our total revenues for the years ended December 31, 2017, 20162019, 2018 and 2015.

2017.
22.


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,Years Ended December 31,
2017 2016 20152019 2018 2017
(in thousands)(in thousands)
Investment advisory and services fees$1,148,467
 $998,892
 $1,056,227
$1,275,677
 $1,207,086
 $1,148,467
Distribution revenues397,674
 371,604
 415,380
441,437
 403,965
 397,674
Shareholder servicing fees73,310
 76,201
 85,207
75,122
 74,019
 73,310
Other revenues6,942
 6,253
 4,939
7,303
 7,262
 6,942
Bernstein Research Services13
 5
 4
2
 33
 13
EQH, AXA and itstheir respective Subsidiaries
We provide investment management and certain administration services to EQH, AXA and itstheir respective subsidiaries. In addition, EQH, AXA and itstheir respective subsidiaries distribute company-sponsored mutual funds, for which they receive commissions and distribution payments. Sales of company-sponsored mutual funds through AXA and its subsidiaries aggregated approximately $0.5 billion, $0.8 billion and $1.1 billion for the years ended December 31, 2017, 2016 and 2015, respectively. Also, we are covered by various insurance policies maintained by EQH, AXA and itstheir respective subsidiaries and we pay fees for technology and other services provided by EQH, AXA and itstheir respective subsidiaries. Additionally, see Note 12, Debt,for disclosures related to our credit facility with EQH.


Aggregate amounts included in the consolidated financial statements for transactions with EQH, AXA and itstheir respective subsidiaries, as of and for the years ended December 31, are as follows:
 2017 2016 2015
 (in thousands)
Revenues:     
Investment advisory and services fees$157,430
 $150,016
 $149,035
Bernstein Research Services403
 583
 694
Distribution revenues13,387
 12,145
 11,541
Other revenues1,130
 969
 912
 $172,350
 $163,713
 $162,182
Expenses: 
  
  
Commissions and distribution payments to financial intermediaries$19,202
 $16,077
 $16,140
General and administrative12,428
 16,315
 17,680
Other1,696
 1,653
 1,483
 $33,326
 $34,045
 $35,303
Balance Sheet: 
  
  
Institutional investment advisory and services fees receivable$13,806
 $11,826
  
Prepaid expenses2,905
 1,461
  
Other due to AXA and its subsidiaries(19,666) (5,325)  
 $(2,955) $7,962
  
AllianceBernstein Venture Fund I, L.P. was launched during 2006. It seeks to achieve its investment objective, which is long-term capital appreciation through equity and equity-related investments, by acquiring early-stage growth companies in private transactions. One of our subsidiaries is the general partner of the fund and, as a result, the fund is included in our consolidated financial statements, with approximately $0.1 million and $32.7 million of investments in the consolidated statements of

financial condition as of December 31, 2017 and 2016, respectively. AXA Equitable holds a 10% limited partnership interest in this fund.
We maintain an unfunded, non-qualified long-term incentive compensation plan known as the Capital Accumulation Plan and also have assumed obligations under contractual unfunded long-term incentive compensation arrangements covering certain former executives (“Contractual Arrangements”). The Capital Accumulation Plan was frozen on December 31, 1987, since which date no additional awards have been made. The Board may terminate the Capital Accumulation Plan at any time without cause, in which case our liability would be limited to benefits that have vested. Payment of vested benefits under both the Capital Accumulation Plan and the Contractual Arrangements generally will be made over a ten-year period commencing at retirement age. The General Partner is obligated to make capital contributions to AB in amounts equal to benefits paid under the Capital Accumulation Plan and the Contractual Arrangements. Amounts paid by the General Partner to AB for the Capital Accumulation Plan and the Contractual Arrangements for the years ended December 31, 2017, 2016 and 2015 were $0.3 million, $1.2 million and $1.6 million, respectively.
 EQH AXA
 2019 2018 2017 2019 2018 2017
 (in thousands)
Revenues:           
Investment advisory and services fees$109,316
 $104,810
 $98,450
 $65,086
 $64,347
 $58,980
Bernstein Research Services—
 —
 —
 45
 134
 403
Distribution revenues—
 —
 —
 12,968
 13,897
 13,387
Other revenues1,013
 1,104
 864
 482
 625
 266
 $110,329
 $105,914
 $99,314
 $78,581
 $79,003
 $73,036
Expenses: 
  
  
      
Commissions and distribution payments to financial intermediaries$3,956
 $3,964
 $3,828
 $16,693
 $17,603
 $15,374
General and administrative2,466
 2,615
 2,610
 11,501
 12,391
 9,818
Other2,759
 1,485
 1,696
 —
 —
 —
 $9,181
 $8,064
 $8,134
 $28,194
 $29,994
 $25,192
Balance Sheet: 
  
        
Institutional investment advisory and services fees receivable$8,716
 $9,751
   $10,842
 $7,861
  
Prepaid expenses238
 364
   —
 —
  
Other due to EQH, AXA and their respective subsidiaries(2,111) (1,842)   (5,234) (5,417)  
EQH Facility(560,000) —
   —
 —
  
 $(553,157) $8,273
   $5,608
 $2,444
  
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, 20172019 and 20162018 was $11.1$10.1 million and $12.0$11.4 million, respectively.
23.24. Acquisitions
Acquisitions are accounted for under ASC 805, Business Combinations.
On September 23, 2016,April 1, 2019, 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 globalAutonomous, an institutional client base.research firm. On the acquisition date, we made a cash payment of $20.5$6.5 million and recorded a contingent consideration payable of $11.9$17.4 million based 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 of $5.6 million resulted in the recognition of $21.9$10.2 million of goodwill. We recorded $10.0goodwill and $8.1 million of finite-lived intangible assets relating to investment management contracts.customer relationships and trademarks. Also, in accordance with US GAAP, additional cash payments and contingent consideration payable to the owners of Autonomous on the acquisition date are considered compensation expense to be amortized over two-year and five-year periods, respectively, not purchase price consideration, due to service conditions at the time of acquisition. The Autonomous acquisition did not have a material impact on our financial condition or results of operations. As a result, we have not provided supplemental pro forma information.


25. Non-controlling Interests
Non-controlling interest in net income for the years ended December 31, 2019, 2018 and 2017 consisted of the following:
 2019 2018 2017
 (in thousands)
      
Non-redeemable non-controlling interests:     
    Consolidated company-sponsored investment funds$—
 $(119) $9,353
    Other92
 188
 279
Total non-redeemable non-controlling interest92
 69
 9,632
Redeemable non-controlling interests:     
    Consolidated company-sponsored investment funds29,549
 21,841
 48,765
Total non-controlling interest in net income (loss)$29,641
 $21,910
 $58,397

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 inmanages global core equity assets for institutional investors, forinvestors. As a cash paymentresult 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 resultedadditional share purchases made 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 2017, 2016 andeach year since 2015, we purchased additional shares of CPH, bringing ourhave a 100% ownership interest to 93.6%in CPH as of December 31, 2017.2019.
The 2016 and 2014 acquisitions have not had a significant impact on 2017, 2016 or 2015 revenues and earnings. As a result, we have not provided supplemental pro forma information.

24. Non-controlling Interests
Non-controlling interest in net income for the years ended December 31, 2017, 2016 and 2015 consisted of the following:
 2017 2016 2015
 (in thousands)
      
Non-redeemable non-controlling interests:     
    Consolidated company-sponsored investment funds9,353
 11,086
 —
    Consolidated private equity fund—
 —
 5,940
    Other279
 312
 435
Total non-redeemable non-controlling interest9,632
 11,398
 6,375
Redeemable non-controlling interests:     
    Consolidated company-sponsored investment funds48,765
 10,090
 —
Total non-controlling interest in net income (loss)$58,397
 $21,488
 $6,375


Non-redeemable non-controlling interest as of December 31, 20172019 and 20162018 consisted of the following:
2017 20162019 2018
(in thousands)(in thousands)
      
Consolidated company-sponsored investment funds$757
 $34,622
$—
 $—
Other807
 1,550
CPH—
 949
Total non-redeemable non-controlling interest$1,564
 $36,172
$—
 $949


Redeemable non-controlling interest as of December 31, 20172019 and 20162018 consisted of the following:
2017 20162019 2018
(in thousands)(in thousands)
      
Consolidated company-sponsored investment funds$596,223
 $384,294
$325,561
 $145,921
CPH Capital Fondsmaeglerselskab A/S acquisition5,364
 8,665
CPH—
 2,888
Total redeemable non-controlling interest$601,587
 $392,959
$325,561
 $148,809


25.26. Quarterly Financial Data (Unaudited)
Quarters Ended 2017Quarters Ended 2019
December 31 September 30 June 30 March 31December 31 September 30 June 30 March 31
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Net revenues$919,141
 $812,150
 $802,313
 $764,917
$987,304
 $877,867
 $857,799
 $795,462
Net income attributable to AB Unitholders$246,409
 $140,954
 $135,103
 $139,937
$248,865
 $187,811
 $166,252
 $149,114
Basic net income per AB Unit(1)
$0.92
 $0.53
 $0.50
 $0.52
$0.92
 $0.69
 $0.61
 $0.55
Diluted net income per AB Unit(1)
$0.92
 $0.52
 $0.50
 $0.51
$0.92
 $0.69
 $0.61
 $0.55
Cash distributions per AB Unit(2)(3)
$0.91
 $0.58
 $0.56
 $0.52
$0.93
 $0.70
 $0.63
 $0.56
Quarters Ended 2016Quarters Ended 2018
December 31 September 30 June 30 March 31December 31 September 30 June 30 March 31
(in thousands, except per unit amounts)(in thousands, except per unit amounts)
Net revenues$786,256
 $747,591
 $725,806
 $769,126
$804,660
 $850,176
 $844,738
 $867,787
Net income attributable to AB Unitholders$224,538
 $158,035
 $124,501
 $166,284
$188,053
 $203,674
 $181,665
 $184,196
Basic net income per AB Unit(1)
$0.83
 $0.58
 $0.46
 $0.61
$0.70
 $0.75
 $0.66
 $0.68
Diluted net income per AB Unit(1)
$0.83
 $0.58
 $0.46
 $0.60
$0.70
 $0.75
 $0.66
 $0.68
Cash distributions per AB Unit(2)(3)
$0.73
 $0.51
 $0.46
 $0.45
$0.71
 $0.76
 $0.69
 $0.80
 
(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.


Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure


Neither AB nor AB Holding had 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, 2017.2019. 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, 2017,2019, 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 20172019 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, 2017.2019. These reports can be found in Item 8.



Changes in Internal Control Over Financial Reporting


No changes in our internal control over financial reporting occurred during the fourth quarter of 20172019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.Other Information
 
Both AB and AB Holding reported all information required to be disclosed on Form 8-K during the fourth quarter of 2017.2019.





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, 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 AXA.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 11 members,directors, including seven 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 AXA Equitable Holdings, 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 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 (“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; strategic planning; management development, succession planning and compensation; corporate governance; public policy; and international matters.


As of February 13, 2018,12, 2020, our directors are as follows:


Robert B. ZoellickRamon de Oliveira
Mr. Zoellick,de Oliveira, age 64,65, was appointed Non-Executivea director of AB in April 2017 and, since April 1, 2019, has served as Chairman of the Board in April 2017. From 2013 to 2016, Mr. Zoellick chaired Goldman Sachs Group’s International Advisors. From 2007 to 2012,of AB. Since March 2019, he has served as the 11th presidentChairman 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 DirectorsEQH, Equitable Life and Equitable America. Mr. de Oliveira served as director of Temasek,EQH from April 2018 until being appointed Chairman in 2019 and, similarly, served as director of each of Equitable Life and Equitable America until being appointed Chairman. He has been a sovereign wealth funddirector of Singapore,AXA since 2013,2010. Additionally, he serves as Managing Partner of the consulting firm Investment Audit 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 as Senior Fellow, Belfer Center, JFK SchoolChief Executive Officer of Government at Harvard University, since 2012.J.P. Morgan Investment Management. He was also a member of J.P. Morgan’s Management Committee from its inception in 1995.



Mr. Zoellickde Oliveira brings to the Board the in-depth knowledge of world affairsextensive buy-side and sell-side financial services experience, key leadership skills and sharp analytical skills he has developed through his years of service with the U.S. government, as the former president of the World Bankexecutive leadership roles at JPMorgan Chase and through the various positions he held with Goldman Sachs.Investment Audit Practice.



Seth P. Bernstein
Mr. Bernstein, age 56,58, 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 officerChief 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, New York.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 64,66, was appointed a Directordirector of AB in November 2017. He is the FounderCo-Founder and a Managing Member of Symmetrical Ventures LLC, a venture capital firm organized in 2015 and specializing in growth capital investments in the technology sector.start-ups and development stage companies. The firm evaluates investment opportunities in start-ups and development-stage 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 officerChief Financial Officer for nine years and head of the company’s USU.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 OliveiraNella L. Domenici
Mr. de Oliveira,Ms. Domenici, age 63,59, was appointed a Directordirector of AB in January 2020. Most recently, she served as Chief Financial Officer and member of the Operating Committee at Bridgewater Associates (“Bridgewater”), a hedge fund with more than $160 billion in AUM, from 2015 to 2018. In this role, Ms. Domenici was responsible for, among other things, financial planning and analysis, revenue management, corporate finance, strategic initiatives and technology investment. From 2012 to 2015, Ms. Domenici was a strategic advisor to Bridgewater’s Management Committee, in which role she led the evolution of the firm’s senior leadership organization structure. Prior thereto, Ms. Domenici held various senior strategic positions with Citadel Investment Group, from 2004 to 2005, Credit Suisse, from 1998 to 2004, and The Monitor Consulting Group, from 1996 to 1998. In addition, she is a proven entrepreneur, having founded a successful consulting firm that advises many family-owned, private equity, venture-backed and real estate companies.

Ms. Domenici serves on the Board of Regis High School and is the founder of Excellent Schools of New Mexico, a non-profit that supports charter schools in underserved communities. She also serves on the Board of One World Surgery, which provides access to quality surgical care globally and has been involved in major national efforts to support research and legislation related to mental illness. Additionally, Ms. Domenici serves on the Board of International Folk Art Market, which focuses on economic opportunities for folk artists worldwide, particularly women in developing countries.

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 53, was appointed a director of AB in April 2017,2019. He has served as Senior Executive Vice President and has been a DirectorChief Operating Officer of AXA S.A., AXA Financial, AXA EquitableEQH, and MONY Life Insurance Company of America since 2011. Additionally, he serves as Managing Director of the consulting firm Investment Audit Practice. 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 officer of J.P. Morgan Investment Management. He was also a member of J.P. Morgan’sthe EQH Management Committee, from its inception in 1995.since May 2018. In this role, Mr. Hurd has strategic 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, data and analytics, procurement and corporate real estate. Mr. Hurd also has served as Senior Executive Director and Chief Operating Officer of Equitable Life since January 2018.

Prior to joining Equitable Life, Mr. Hurd served as Executive 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 as Chief Human Resources Officer, Chief Administrative Officer, Deputy General Counsel and Head of Asset Management Restructuring.


Mr. de OliveiraHurd brings to the Board thehis extensive buy-side and sell-side financial services experience he has developed through his executive leadership roles at JPMorgan Chase and Investment Audit Practice.
Denis Duverne
Mr. Duverne, age 64, was elected a Director of the General Partner in February 1996. On September 1, 2016, he was appointed Chairman of the Board of AXA after having served as Deputy CEO of AXA 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 2000 to May 2003, Mr. Duverne served as Group Executive Vice President-Finance, Control and Strategy. Mr. Duverne joined AXA as Senior Vice President in 1995.

Mr. Duverne brings to the Board the highly diverse experience he has attained from the many key roles he has served for AXA.

Barbara Fallon-Walsh
Ms. Fallon-Walsh, age 65, was appointed a Director of AB in April 2017, and has been a Director of AXA Financial, AXA Equitable Life and MONY Life Insurance Company of America since 2012. She previously served as a director 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.

Ms. Fallon-Walsh brings to the Board the extensive 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 63,65, was appointed a Directordirector of AB in April 2017. He has been a Directordirector of AXA Insurance CompanyEQH since 2017May 2018 and a director of Equitable Life and Equitable America since September 2015. Also, since May 2019, Mr. Kaye has been is a Directordirector of AXA Financial, AXA Equitable and MONY Life Insurance CompanyCME Group, Inc., where he serves as a member of America since 2015.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, including 25 years as an audit partner. During his tenure at E&Y,EY, 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 & YoungEY and his directorships at various AXAEQH and certain of its subsidiaries.
Shelley B. LeibowitzNick Lane
Ms. Leibowitz,Mr. Lane, age 56,46, was appointed a Directordirector 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 of E*TRADE Financial 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 Life, 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 Life since joining Equitable Life 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 Life 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 Life, 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 52, 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 Life since September 2015. Ms. Matus has served as director and Chair of the Compensation Committee at Tru Optik Data Corp., a digital media intelligence company, since September 2016. She also has served as an executive advisor to Thomas H. Lee Partners L.P., a private equity firm, since October 2017 and, since October 2019, as director and Chair of the Audit Committee at Cerence, Inc., a provider of immersive experiences that seek to increase happiness and knowledge for people traveling in motor vehicles. Further, Ms. Matus has served as director and Chair of the Audit Committee at Nextech Systems, a provider of healthcare technology solutions, since June 2019.

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 healthcare and effective execution in the public and private sectors.insurance companies.
Anders Malmstrom
Das Narayandas
Mr. Malmstrom,Narayandas, age 49,59, was appointed a Director of AB in April 2017. He is Senior Executive Vice President and Chief Financial Officer of AXA Equitable Holdings, AXA Financial and AXA Equitable. Mr. Malmstrom is also a member of AXA Equitable's Executive 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 57, was appointed a Directordirector 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 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 59,61, was electedappointed a Directordirector of the General PartnerAB in February 2011. Also during FebruaryHe has served as director and as President and CEO of EQH since May 2018. Mr. Pearson also serves as a member of EQH's Management Committee. In January 2011, he became Directordirector of Equitable Life and currently serves as President and Chief Executive Officer. Additionally, he has been a director of AXA Equitable Holdings, Director, CEO and President of AXA Financial, and Chairman and CEO of AXA Equitable. In September 2013, Mr. Pearson became President of AXA Equitable and, in November 2017, be was named CEO of AXA Equitable Holdings. In addition, he is a member of AXA's current Management Committee, as established in July 2016.America 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. InFrom 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 AXA Financial,EQH, AXA Japan and other AXA affiliates.


Charles G.T. Stonehill
Mr. Stonehill, age 61, 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 Life since November 2017. Mr. Stonehill is the Founding Partner of Green & Blue Advisors LLC, having started this advisory firm that provides financial advice to cleantech 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, non-executive director of CommonBond LLC, an originator of student loans, since 2015, governor at Harrow School, a U.K. boarding school, since 2011, 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.

Executive Officers (other than Mr. Bernstein)


Kate C. Burke, Head of Human Capital and Chief TalentAdministrative Officer
Ms. Burke, age 46, has been48, was appointed Chief Administrative Officer in May 2019. Previously, she served as Head of Human Capital and Chief Talent Officer sincefrom February 2016.2016 to May 2019. She 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 Counsel
Mr. Cranch, age 71,73, has been our General Counsel 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, COO
Mr. Gingrich, age 59,61, joined our firm in 1999 as a senior research analyst with Bernstein Research Services and has been our firm’s COO since December 2011. Prior to becoming COO,Chief Operating Officer, Mr. Gingrich held senior managerial positions in Bernstein Research Services, including Chairman and CEOChief Executive Officer from February 2007 to November 2011 and Global Director of Research from December 2002 to January 2007.


John C. Weisenseel, CFO
Mr. Weisenseel, age 58,60, joined our firm in May 2012 as Senior Vice President and CFO.Chief Financial Officer.  From 2004 to April 2012, he 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


The following changes toin our directors and executive officers occurred since we filed our Form 10-K for the year ended December 31, 2016:2018:

•On April 28, 2017, the sole stockholder of the General Partner acted by written consent to remove the following nine directors from the Board: Christopher M. Condron, Steven G. Elliott, Deborah S. Hechinger, Weston M. Hicks, Heidi S. Messer, Scott A. Schoen, Lorie A. Slutsky, Joshua A. Weinreich and Peter S. Kraus.
•On April 28, 2017, the sole stockholder of the General Partner acted by written consent to elect the following six directors to the Board: Mr. Bernstein, Mr. de Oliveira, Ms. Fallon-Walsh, Mr. Kaye, Mr. Malmstrom and Mr. Zoellick.
•On November 14, 2017, the sole stockholder of the General Partner acted by written consent to elect the following three independent directors to the Board: Mr. Audet, Ms. Leibowitz and Mr. Narayandas.
Directors


Nella Domenici joined the Board, effective January 1, 2020.
Kristi Matus joined the Board, effective July 1, 2019.
Barbara Fallon-Walsh and Shelley Leibowitz each departed the Board, effective June 30, 2019.
Jeff Hurd, Nick Lane and Charles Stonehill each joined the Board, effective April 1, 2019.
Denis Duverne, Anders Malmstrom and Robert Zoellick each departed the Board, effective April 1, 2019.

Executive Officers

On January 13, 2020, we filed Form 8-K indicating that Jim Gingrich will retire from AB, effective December 31, 2020, and Kate Burke will assume the role of Chief Operating Officer, effective July 1, 2020.

Board Meetings


In 2017,2019, the Board held:
•held regular meetings in February, April, May, July, September and November; and
•special meetings in January, April and May.

Generally, the Board holds six meetings annually: in February, April, May, July or August,September and November.

During 2019, the Board established a calendar consisting of four regular meetings, which are held in February, May, September 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 attended 75% or more of the aggregate of all Board and committee meetings that he or she was entitled to attend in 2017.2019.


Committees of the Board


The Executive Committee of the Board (“Executive Committee”) consists of Messrs. Bernstein, de Oliveira Duverne(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 2017.2019.


The Audit and Risk Committee of the Board (“Audit Committee”) consists of Mses. Fallon-Walsh and 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 sevensix regular meetings in 2017.2019.

The Compensation and Workplace Practices Committee ("Compensation Committee") consists of Ms. Fallon- WalshMatus (Chair) and Messrs. Audet, de Oliveira, Duverne, Kaye and Zoellick.Pearson. The Compensation Committee held fourfive regular meetings in 2017.2019.  For additional information about the Compensation Committee, see “Compensation Discussion and Analysis—Compensation Committee”Committee; Process for Determining Executive Compensation” in Item 11.


Also, the Compensation Committee has established the Section 16 Subcommittee to ensure we can 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. Matus (Chair) and Messrs. Audet, de Oliveira and Kaye.

The Governance Committee consists of Ms. Fallon-WalshMatus (Chair) and Messrs. Bernstein, DuverneNarayandas 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 meetings in 2017.2019.


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.


Audit Committee Financial Experts; Financial Literacy


Audit Committee Financial Expertise

In January 2017,2019, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Messrs. Elliott and Schoen 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 2017.

The Board, after reviewing pertinent information, determined at its special meeting held in April 2017 that Mr. Kaye is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K.

The Board, after reviewing pertinent information, determined at its regular meeting held in November 2017 that Mr. Audet is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K.

In January 2018, the Governance Committee, after reviewing material prepared by management, recommended that the Board determine that each of Messrs. Audet and Kaye 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 2018.2019.


In January 2017,March 2019, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that eachMr. Stonehill is an “audit committee financial expert” within the meaning of Messrs. Elliott, Hicks, SchoenItem 407(d) of Regulation S-K.  The Board so determined at its regular meeting held in April 2019.

In November 2019, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that Ms. Domenici 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 November 2019.

Financial Literacy

In January 2019, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that Mr. Audet and WeinreichMr. Kaye 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 2017.2019.

The Board, after reviewing pertinent information, determined at its special meeting held in April 2017 that each of Ms. Fallon-Walsh and Messrs. de Oliveira and Kaye is Financially Literate.

The Board, after reviewing pertinent information, determined at its regular meeting held in November 2017 that each of Ms. Leibowitz and Mr. Audet is Financially Literate.


In January 2018,April 2019, 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 and KayeMr. Stonehill is Financially Literate.  The Board so determined at its regular meeting held in February 2018.April 2019.

Independence of Certain Directors


In January 2017,June 2019, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each of Mses. Hechinger, Messer and Slutsky and Messrs. Condron, Elliott, Hicks, Schoen and WeinreichMs. Matus is independent.Financially Literate.  The Board considered immaterial relationshipsso determined by unanimous written consent dated as of Mr. Hicks (relating to the fact that Alleghany Corporation is a Bernstein Research Services client) and Ms. Slutsky (relating to a contribution AB made to NYCT in February 2016), and determined, at its February 2017 regular meeting, that each of Mses. Hechinger, Messer and Slutsky and Messrs. Condron, Elliott, Hicks, Schoen and Weinreich is independent within the meaning of the relevant rules.July 1, 2019.

In November 2019, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that Ms. Domenici is Financially Literate.  The Board after reviewing pertinent information, determined at its special meeting held in April 2017 that each of Ms. Fallon-Walsh and Messrs. de Oliveira and Kaye is independent within the meaning of the relevant rules.

The Board, after reviewing pertinent information,so determined at its regular meeting held in November 2017 that each2019.

Independence of Ms. Leibowitz and Messrs. Audet and Narayandas is independent within the meaning of the relevant rules.Certain Directors


In January 2018,2019, the Governance Committee, after reviewing material 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 20182019 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 April 2019, the Governance Committee, after reviewing material prepared by management, recommended that the Board determine that Mr. Stonehill is independent. The Board determined, at its April 2019 regular meeting, that Mr. Stonehill is independent within the meaning of the relevant rules.

In June 2019, the Governance Committee, after reviewing material prepared by management, recommended that the Board determine that Ms. Matus is independent. The Board determined, by unanimous written consent dated as of July 1, 2019, that Ms. Matus is independent within the meaning of the relevant rules.

In November 2019, the Governance Committee, after reviewing material prepared by management, recommended that the Board determine that Ms. Domenici is independent. The Board determined, at its November 2019 regular meeting, that Ms. Domenici 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 - Committees of the Board - Management & 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, 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.Audit Committee. He reports directly to our CEO and, since 2013, has had a reporting line to the Audit Committee.


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 (AXA)(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 AXA,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 AXA FinancialEQH 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.


Our Internet Site, under the heading “Contact“Management - Committees of the Board - Contact our Directors”,Directors,” provides 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.

The 2017 Certification by our Former CEO under NYSE Listed Company Manual Section 303A.12(a) was submitted to the NYSE on February 22, 2017.


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.


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 & Governance”- Committees of the Board” 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 2017,2019, we complied with all Section 16(a) filing requirements. Our Section 16 filings can be found under “Investor & Media Relations” / “ReportsRelations - Reports & SEC Filings” on our Internet Site.

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 2019 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 2019 are:
Seth P. Bernstein President and Chief Executive Officer ("CEO")
John C. Weisenseel Chief Financial Officer ("CFO")
James A. Gingrich(1)                                                      Chief Operating Officer ("COO")
Kate C. Burke (1) Chief Administrative Officer
Laurence E. Cranch General Counsel
____________________________
(1)
As announced in a Form 8-K we filed on January 13, 2020, Mr. Gingrich will retire from AB, effective December 31, 2020, and Ms. Burke will assume the role of COO, effective as of July 1, 2020.
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 structureFurthermore, our named executive officer compensation programs withpractices are structured to help the intentfirm realize its long-term growth strategy (“Growth Strategy”), which includes firm-wide initiatives to:

Deliver differentiated return streams to our clients;

Continue to commercialize and scale our suite of enhancing firm-wideinvestment services; and individual performance

Continuously and Unitholder value. Our “named executive officers”(1) are:rigorously focus on expense management.

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
(1)
Prior to the cessation of his employment at AB on April 28, 2017, Peter S. Kraus served as our firm’s Chairman of the Board and Chief Executive Officer. We have included information concerning Mr. Kraus in the Summary Compensation Table and other related tables in accordance with SEC rules and regulations, and do not discuss matters relating to his compensation in this CD&A except where relevant.
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;
•recognize and support outstanding individual performance and behaviors that demonstrate and foster our firm’s culture of "Relentless Ingenuity", which includes the core competencies of relentlessness, ingeniousness, collaboration and accountability; and
•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 culture of "Relentless Ingenuity," which includes the core competencies of relentlessness, ingeniousness, collaboration and accountability; and

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

Compensation Elements for Named Executive Officers

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’ 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 officers (please refer to “Overview of Our President and CEO’s Compensation” 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 officers 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 officers because such bonuses typically are paid during the last week of the year.
Annual cash bonuses in respect of 2017 performance for each named executive officer (other than Mr. Bernstein) were determined and paid in late December 2017. These bonuses, and the 2017 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’s performance during the year, the performance of the named executive officer’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, except as described immediately below. For more information regarding the factors considered when determining cash bonuses for named executive officers, see “Other Factors Considered When Determining Named Executive Officer Compensation” below.
In respect of 2017, Mr. Bernstein received a cash bonus of $3,000,000 in accordance with the terms of the employment agreement entered into among him, the General Partner, AB and AB Holding as of May 1, 2017 (“CEO Employment Agreement”). Please refer to “Overview of Our President and CEO’s Compensation” below for additional information relating to Mr. Bernstein’s cash bonus and other compensation elements.
In February 2017, Mr. Gingrich was granted a special restricted AB Holding Unit award with a grant date fair value of $21,000,000, in lieu of eligibility to receive a cash bonus and long-term incentive compensation award pursuant to the annual compensation program award processes in respect of 2017, 2018 and 2019 performance; provided, however, that Mr. Gingrich is eligible to receive at the end of each such year, in connection with AB's year-end performance evaluation process, an additional cash bonus, but only to the extent approved by the Compensation Committee. Mr. Gingrich's special award vests in three equal installments on December 1 of each of 2017, 2018 and 2019 based on Mr. Gingrich's continued service to AB (subject to certain exceptions), but no AB Holding Units are delivered until December 1, 2019. The Compensation Committee determined that a special cash bonus was warranted for Mr. Gingrich's performance in 2017 and awarded him a $1,000,000 cash bonus in recognition of AB’s improving financial results, Mr. Gingrich’s continuing efforts to manage AB’s operations in a cost-effective manner and Mr. Gingrich’s critical contribution to the transition process to AB's new leadership.
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’ long-term interests directly with the interests of our Unitholders and indirectlyclients.


Progress in Advancing our Growth Strategy in 2019

In 2019, 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 differentiated return streams to clients:
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 2019, performance in our Fixed Income suite of products exhibited continued strength, with 86% of assets in outperforming services for the interestsone-year period, 81% for the three-year period and 92% for the five-year period ended December 31, 2019.Our U.S. retail fixed income mutual funds with AUM greater than $1 billion that placed in the top quartile 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.three-year period ended December 31, 2019 are: AB Income, AB Intermediate Diversified Muni, AB Municipal Income National, AB High Income 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 Mortgage Income (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, 43% of assets were in outperforming services for the one-year period, 62% for the three-year period and 84% for the five-year period ended December 31, 2019. 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, 2019 are: AB Large Cap Growth, AB Discovery Growth, AB Growth, AB Small Cap Growth, AB Relative Value, AB Sustainable Global Thematic and AB Global Core Equity. 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 American Growth and AB SICAV I Low Volatility Equity (information sourced from Morningstar).

Additionally, at year-end 2019, 69% of U.S. Fund assets and 66% of Non-U.S. Fund assets were rated either 4 or 5-stars by Morningstar.

Continue to commercialize and scale our suite of services:
Growing both the diversity of our offerings to meet the needs of an evolving, complex global client base, and scaling these services remains a key focus of our firm. In 2019, we generated an active organic growth rate of 6.5%, supported by success in fixed income and equities. In our Retail channel, we had record gross sales of $75 billion in 2019, up 39% year-over-year, with net flows positive across all regions. Also, we experienced record Retail net inflows of $24 billion in 2019, resulting in a 13% organic growth rate, driven by our Global Fixed Income service. Furthermore, our Equity products have generated 11 straight quarters of positive net flows. In our Institutional channel, the firm generated $2.9 billion of active equity net inflows, or a 9% organic growth rate, and our pipeline of $15.1 billion in AUM grew by 56% year-over-year, with a record annualized fee base greater than $40 million. In Private Wealth, while our gross sales in 2019 of $11.3 billion decreased year-over-year, we continued to make progress on improving our mix of ultra-high-net-worth accounts, with a 5% annual increase in new relationships with AUM of at least $20 million. Also, for a fifth consecutive year we experienced organic growth in client relationships with asset allocations that include Alternative offerings.

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 2019 included a fund of funds joint venture with Abbott Capital Management, LLC, our third U.S. real estate fund and three real estate co-investment funds.

Continuous and rigorous focus on expense management:
Expense management remains a key focus for us. In 2019 we made 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 believeexpect that annual long-termthe Nashville office will house approximately 1,250 employees over time.

We remain focused on other key financial metrics as well. In 2019, total adjusted compensation and benefits increased 0.6% compared to 2018, as higher base compensation and fringes were partially offset by lower incentive compensation awards provide a long-term retention mechanism for our named executive officers because such awards generally vest ratably over four years. For 2017 performance, these awards were grantedand commissions. Our adjusted operating margin was 27.5% in December 20172019 compared to each29.1% in 2018. The decline reflects the impact of Ms. Burke and Messrs. Cranch and Weisenseel pursuant to the Incentive Compensation Award Program, an unfunded, non-qualified incentive compensation plan,non-recurring performance-based fee revenues in 2018, lower Bernstein Research Services revenues and the AB 2017 Long Term Incentive Plan,timing of expenses associated with our equity compensation plan (“2017 Plan”). Mr. Bernstein did not receive an award in December 2017 as he received an award upon the commencement of his employment with us pursuant to the CEO Employment Agreement, and Mr. Gingrich did not receive an award in December 2017 as he was granted the special award described above in February 2017.
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, 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, the award agreement permits AB to claw-back 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, Nashville Relocation, which we discuss further belowdescribe in “Consideration of Risk Mattersgreater detail above in Determining Compensation.”Item 7.
Defined Contribution Plan
U.S. employees of AB, including each of our named executive officers, are eligible to participate in the Profit Sharing Plan for Employees of AB (as amended and restated as of January 1, 2015 and as further amended as of January 1, 2017, “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).


With respect to 2017, the Compensation Committee determined 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
Our firm pays the premiums associated with life insurance policies purchased on behalf of our named executive officers.

Overview of 20172019 Incentive Compensation Program


In respect of 20172019 performance, each of our named executive officers who was employed on December 31, 2017NEOs (other than Messrs. Bernstein andMr. 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 of long-term incentive compensation awards. The split between the annual cash bonus and long-term incentive compensation varied depending on the named executive officer’sNEO'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” aboveNEOs” below.) For Mr. Bernstein, his 2019 incentive compensation components were based generally on the terms set forth in the CEO Employment Agreement (as defined below) and review of his performance during 2019 by the Compensation Committee.
Although estimates are developed for budgeting and strategic planning purposes, our named executive officers’NEOs' incentive compensation is not correlated with meeting any specific targets. Instead, the aggregate amount of incentive compensation paid to our named executive officers,NEOs, other than Messrs. Bernstein andMr. Gingrich for 2017,2019, generally is determined on a discretionary basis and primarily is a function of our firm’s current year financial performance but takes into accountand progress in advancing our Growth Strategy. Additionally, incentive compensation reflects an executive's achievements throughout the performance goalsyear, as described below.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’NEOs' goals are appropriately aligned with the goal of increasing our Unitholders’ return on their investment.
Senior management,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 named executive officers,NEOs, in respect of 20172019 performance is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues, which terms are described immediately below: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


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. Lastly, we excluded a cumulative 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 as this was not part of our core operating results.

In addition, senior management,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 2017,2019, adjusted employee compensation and benefits expense amounted to approximately 47.1%47.9% of our adjusted net revenues (in thousands):
Net Revenues$3,298,521
$3,518,432
Adjustments (see above)
(594,505)(601,817)
Adjusted Net Revenues$2,704,016
$2,916,615
 
 
Employee Compensation & Benefits Expense$1,313,469
$1,442,783
Adjustments (see above)
(39,197)(44,835)
Adjusted Employee Compensation & Benefits Expense$1,274,272
$1,397,948
Adjusted Compensation Ratio47.1%47.9%



Our 20172019 adjusted compensation ratio of approximately 47.1%47.9% reflects the need to keep compensation levels competitive with industry peers in order to attract, motivate and retain highly-qualified talent.


Benchmarking

In 2017, management engaged McLagan Partners (“McLagan”) and Willis Towers Watson (“WTW”) to provide compensation benchmarking dataCompensation Committee; Process for our named executive officers (“2017 Benchmarking Data”). The 2017 Benchmarking Data summarized 2016 compensation levels and 2017 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 2017 Benchmarking Data provided ranges of compensation levels at the Comparable Companies for executive positions similar to those held by our named executive officers, including base salary and total compensation.
Mr. Bernstein’s 2017 compensation was established pursuant to the CEO Employment Agreement (as discussed more fully below in “Overview of Our President and CEO’s Compensation”) and Mr. Gingrich’s 2017 long-term incentive compensation was established in the agreement pursuant to which he was granted his special restricted AB Holding Unit award in February 2017 (as discussed more fully above in "Annual Short-Term Incentive Compensation Awards (Cash Bonuses)").
The Comparable Companies, which management selected with input from McLagan and WTW, 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 GroupThe Vanguard Group, Inc.
The 2017 Benchmarking Data indicated that the total compensation paid to our named executive officers in 2017 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 2017 to our named executive officers were appropriate and reasonable.
Other Factors Considered When Determining Named Executive Officer Compensation

For 2017, we based decisions about the incentive compensation of our named executive officers, other than Mr. Bernstein, 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 begin the award determination process, which is conducted by our CEO and COO 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 2017 Incentive Compensation Program”).
Our CEO and COO, as well as the Compensation Committee, then consider a number of key factors for each of the named executive officers, other than for our CEO. 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;
•
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 2017 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. 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 special cash bonus of $1,000,000.
We have described in the table below the business and operational goals established at the beginning of 2017 for our named executive officers, other than Mr. Bernstein, and their achievements during 2017:
Named Executive Officer2017 Business and Operational Goals2017 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 client flows across channels and services;
2. contained operating costs and improved adjusted operating margin;
3. identified significant new opportunities to reduce costs, both in 2017 and future years;
4. oversaw development and commercialization of previously acquired alternatives teams (e.g., Arya Partners);
5. oversaw organizational, technology and process changes within distribution functions designed to enhance effectiveness and productivity;
6. helped recruit new personnel in several key positions.

Kate C. Burke
Head of Human Capital and Chief Talent Officer
1. enhance feedback culture to strengthen employee development and engagement;
2. increase consistency in talent development processes across AB’s strategic business units (“SBUs”);
3. develop and retain high performing talent;
4. design new job architecture to provide more meaningful compensation analysis and leverage Human Resources Information Systems, or “HRIS”, technology;
5. enhance our firm’s diversity and inclusion efforts to foster an environment in which diverse talent thrives and progresses; and
6. continue to refine the firm’s Human Capital operating model.
1. modified mid-year and year-end evaluation processes to focus on more continuous feedback and career development;
2. completed bi-annual employee survey and identified programs to address key areas of concern;
3. piloted a new year-end performance scale, which included structured calibration in select SBUs;
4. reconfigured promotion criteria across all levels of the firm to improve evaluation consistency and alignment with AB’s strategy and goals;
5. maintained low voluntary turnover among high performing employees;
6. implemented job architecture framework, including career levels and bands, utilized additional salary benchmarking data and incorporated these metrics in year-end compensation process;
7. introduced diversity and inclusion training to global SVP population;
8. developed SBU-specific diversity goals focused on improving the firm’s diverse talent pipeline; and
9. continued to strengthen key processes and systems under “Center of Excellence” model.

Laurence E. Cranch
General Counsel
1. design and implement pragmatic compliance solutions for pending regulatory initiatives;
2. achieve favorable results on all regulatory exams;
3. continue to identify and implement ways to improve service using existing resources;
4. support product expansion initiatives in Retail and Alternatives;
5. identify opportunities to promote from within and add depth, and retain current talent;
6. proactively manage legal relationships to avoid future litigation; and
7. continue aggressive expense management.
1. provided leadership and extensive work with respect to several significant regulatory developments that required analysis and compliance program development, including particularly the January 1, 2018 effectiveness of MiFID II, the Department of Labor fiduciary duty rule (“DOL Rule”) and Brexit;
2. underwent several significant regulatory exams, none of which resulted in any significant adverse finding or enforcement proceedings;
3. successfully maintained the level and quality of service of the Legal and Compliance Department, despite an increased workload, by designing better processes to manage tasks and by automating certain processes, particularly with respect to derivatives;
4. supported the launch of numerous new investment products, including AB’s six flex fee funds, Real Estate Debt Fund III, and a number of new mutual fund share classes designed to respond to the impact of the DOL Rule;
5. continued to perform well in retaining best talent, including promoting from within when losing one senior professional;
6. reflecting a proactive and pragmatic approach, there has been no new significant litigation brought against AB during the past year; and
7. continued to aggressively manage outside counsel expenses through annual budgeting processes.

John C. Weisenseel
CFO
1. increase the firm’s profitability by controlling expenses;
2. increase the efficiency of global cash utilization by assessing capital requirements across domestic and international entities and reducing excess capital where possible;
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 240 basis points compared to 2016;
2. increased cash utilization by approximately $150 million by reducing capital held in legal entities and repatriating foreign cash dividends to the U.S. without a significant increase in taxes;
3. repurchased AB Holding Units to offset earnings per unit dilution, which otherwise would result from employee equity-based compensation awards;
4. sub-leased additional space in NY metro and relocated Hong Kong office to less expensive location generating over $10 million in combined annual occupancy savings, identified potential future office sites for two principal U.S. locations (one within New York metro and one located outside of New York metro in a lower cost region), and conducted RFP searches for both locations;
5. provided accounting and tax guidance in structuring our firm’s exchange of internally-developed software technology for an ownership stake in a third-party provider of financial market data and trading tools;
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 in the Finance and Administrative Services Departments, upgrading the talent pool while reducing headcount by 3%.

As indicated in the table above, each of the named executive officers included in the table successfully achieved his or her goals in 2017. 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 Compensation

Pursuant to the CEO Employment Agreement, Mr. Bernstein will serve as our President and CEO for a term commencing on May 1, 2017 and ending on May 1, 2020, provided that the term shall automatically extend for one additional year on May 1, 2020 and each anniversary thereafter, unless the CEO Employment Agreement is terminated in accordance with its terms (“Employment Term”).

The terms of the CEO Employment Agreement were the result of arm’s length negotiations between Mr. Bernstein and senior executives at AXA, AB’s parent company and majority unitholder. 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.


Elements of Mr. Bernstein’s Compensation

Base Salary
Mr. Bernstein’s annual base salary under the CEO Employment Agreement is $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 in the discretion of the Compensation Committee.

Cash Bonus
Under the CEO Employment Agreement, Mr. Bernstein was entitled to, and received, a cash bonus of $3,000,000 in 2017. During each subsequent year of the Employment Term, he is entitled to be paid a cash bonus at a target level of $3,000,000, subject to review and increase from time to time by the Compensation Committee, in its sole discretion.

Restricted AB Holding Units
On May 16, 2017, in connection with the commencement of Mr. Bernstein’s employment, Mr. Bernstein was granted restricted AB Holding Units with a grant date fair value of $3,500,003, or 164,706 restricted AB Holding Units (“CEO 2017 Award”), which, subject to accelerated vesting upon circumstances described in the CEO Employment Agreement, vest 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 our firm on the vesting date. Also, subject to accelerated delivery of the CEO 2017 Award upon circumstances described in the CEO Employment Agreement, the entire CEO 2017 Award, minus any AB Holding Units withheld to cover applicable taxes, will be delivered to Mr. Bernstein as promptly as possible after May 1, 2021. Mr. Bernstein will receive the cash distributions payable with respect to the unvested portion of the CEO 2017 Award and the vested but undelivered portion of the CEO 2017 Award on the same basis as cash distributions are paid to AB Holding Unitholders generally.

Commencing in 2018 and during the remainder of the Employment term, Mr. Bernstein will be 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.

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.

Severance and Change in Control Benefits

The CEO Employment Agreement includes severance and change-in-control provisions, which are highlighted below and also described below under the heading “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:
•a cash payment equal to the sum of (a) his current base salary and (b) his bonus opportunity amount;
•a pro rata bonus based on actual performance for the fiscal year in which the termination occurs;
Ÿimmediate vesting of any outstanding equity awards;
Ÿdelivery of AB Holding Units in respect of the CEO 2017 Award (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.

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 (provided that if the change in control occurs before May 1, 2018, the sum is multiplied by three).

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), his CEO 2017 Award will immediately vest and AB Holding Units in respect of any such award shall 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 shall 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:
•AXA Financial and its majority-owned subsidiaries ceasing to control the election of a majority of the Board; or
•AB 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 and AXA 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 and AXA 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:
•permitted AB to recruit and retain a highly-qualified CEO;
•aligned Mr. Bernstein’s long-term interests with those of AB’s Unitholders and clients;
•were consistent with AXA’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
•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.

AXA Equitable Holdings Compensation
As a member of the AXA Equitable Holdings Management Committee, Mr. Bernstein may receive equity or cash compensation from AXA Equitable Holdings in the future related to his service on the committee. Any amounts paid to Mr. Bernstein by AXA Equitable Holdings would not impact AB’s compensation expenses.
Compensation for Mr. Kraus

Mr. Kraus was compensated for his services through April 28, 2017 based upon the terms set forth in his employment agreement, dated as of June 21, 2012, at the annual base salary rate of $400,000 as set by the Compensation Committee. He did not receive a cash bonus or equity award for his performance in 2017. On April 28, 2017, Mr. Kraus’s service as CEO of AB and as a member of the Board ceased. In connection with the cessation of his employment, Mr. Kraus entered into a cooperation letter (“Kraus Cooperation Letter”) with AB and the General Partner, pursuant to which he is entitled to salary continuation payments through January 2, 2019, which is the date his employment agreement would have expired absent his cessation of employment. In addition, pursuant to his employment agreement, he is entitled to vest in previously granted equity

awards, monthly payments equal to the cost of COBRA coverage during the COBRA period and access to participation in AB’s medical plans at his (or his spouse’s) sole expense following the COBRA period.

On April 30, 2017, in connection with Mr. Kraus’s cessation of employment, AXA America Holdings, Inc. (which has changed its name to AXA Equitable Holdings), an indirect parent of Equitable Holdings, LLC, the sole shareholder of the General Partner, entered into a unit purchase agreement with Mr. Kraus covering all of the AB Holding Units beneficially owned by Mr. Kraus (the “Unit Purchase Agreement”). Under the Unit Purchase Agreement, AXA Equitable Holdings agreed to purchase from Mr. Kraus, and Mr. Kraus agreed to sell to AXA Equitable Holdings, on September 1, 2017, the AB Holding Units owned by Mr. Kraus as of the close of business on April 28, 2017 (i.e., 1,071,180 AB Holding Units)at a purchase price of $22.90 per unit (not including restricted AB Holding Units (the “Restricted Units”) to be delivered at specified future dates to Mr. Kraus in accordance with the terms of his employment agreement or with respect to which he had deferred delivery). As to the Restricted Units, AXA Equitable Holdings and Mr. Kraus agreed to call and put options, respectively, at specified future market prices if the AB Holding Units are trading at or between $22.90 and $32.90 and Mr. Kraus granted to AXA Equitable Holdings a right of first refusal on future sales of Restricted Units by Mr. Kraus if the market price of the AB Holding Units is outside the specified trading price range.

On December 12, 2017, AXA Equitable Holdings exercised its option to require Mr. Kraus to sell to AXA Equitable Holdings all of the remaining AB Holding Units (as defined in the Unit Purchase Agreement) delivered to Mr. Kraus on June 27, 2017 and November 1, 2017, after giving effect to withholding of applicable taxes, at the closing price of an AB Holding Unit on December 12, 2017 (i.e., 1,240,983 AB Holding Units at $24.95 per unit). As of the date this Form 10-K was filed, Mr. Kraus beneficially owned 544,410 AB Holding Units, a net amount of which is scheduled to be delivered to Mr. Kraus, after giving effect to withholding applicable taxes, on December 19, 2018.

CEO Pay Ratio

In 2017, the compensation of Mr. Bernstein, our President and CEO, was approximately 44 times the median pay of our employees, resulting in a 44: 1 CEO Pay Ratio.

We identified our median employee by examining 2017 total compensation for all individuals, excluding Mr. Bernstein, who were employed by our firm as of December 29, 2017, 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 2017 fiscal year based on the average monthly exchange rates for the 12-month period ending September 30, 2017 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 2017 for such employee using the same methodology we use for our named executive officers as set forth below in the Summary Compensation Table for 2017.

As illustrated in the table below, our 2017 CEO Pay Ratio is 44: 1:
 Seth BernsteinMedian Employee 
Base salary ($)334,615
132,500
 
Cash bonus ($)3,000,000
22,000
 
Stock awards ($)3,500,003
—
 
All other compensation ($) (1)148,274
3,474
 
    
Total ($)6,982,892
157,974
 
    
2017 CEO Pay Ratio  44: 1
_____________________
(1) For a description of Mr. Bernstein’s other compensation, please refer to the Summary Compensation Table for 2017 below. The Median Employee’s other compensation represents the employee’s match under our Profit Sharing Plan.

Compensation Committee


The Compensation Committee consists of Ms. Fallon-WalshMatus (Chair) and Messrs. Audet, de Oliveira, Duverne, Kaye and Zoellick.Pearson. The Compensation Committee held fourfive regular meetings in 2017.2019.

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. AXAEQH owns, indirectly,directly and through various subsidiaries, an approximate 64.7%64.8% economic interest in AB (as of December 31, 2017)2019), and compensation expense is a significant component of our financial results. For these reasons, Mr. Duverne, ChairmanPearson, director and President and CEO of the Board of AXA,EQH, is a member of the Compensation Committee, and any action taken by the Compensation Committee requires thehis affirmative vote or consentconsent. Given this structure, the Compensation Committee has established a sub-committee consisting entirely of an AXA representative.non-management directors (i.e., Ms. Matus and Messrs. Audet, de Oliveira and Kaye). This “Section 16 Sub-Committee” approves awards of restricted AB Holding Units to NEOs.


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 has focusedfocuses on the cash bonuses and long-term incentive compensation awards granted to NEOs and other senior management.executives. Mr. Bernstein, working with Mr. GingrichMs. Burke and other members of senior management,executives, provides recommendations for individual employeeexecutive awards to the Compensation Committee for its consideration. As part of this process, managementMs. Burke provides the committeeCommittee with compensation benchmarking data from one or more compensation consultants. For 2017,2019, we paid $29,425$13,910 to McLagan Partners (“McLagan”) for executive compensation benchmarking data and an additional $24,701$315,142 for survey and consulting services relating to the amount and form of compensation paid to employees other than executives. We also paid $158,000 to WTW for survey and consulting services relating to the amount and form of compensation paid to employees other than executives.


The Compensation Committee heldprovided its final approval of year-end compensation recommendations during its regularly-scheduled meeting regardingheld on December 10, 2019. Additionally, management periodically reviewed with the Compensation Committee the firm’s expected adjusted financial and operating results, the firm’s actual results and management’s year-end compensation on December 12, 2017, at which meeting it discussedexpectations, as they evolved throughout the year. Management accomplished these reviews during regular meetings of the Compensation Committee held in January, February, September and approved senior management’s compensation recommendations. November 2019.

The Compensation Committee did not retain its own consultants.consultants in 2019.


TheAdditional information regarding the Compensation Committee’s functions are more fully describedcan be found in the committee’sCommittee's charter, which is available on-line in the “Management &“Corporate Responsibility - Corporate Governance” section of our Internet Site.


Other Compensation-Related MattersBenchmarking Data


AB and AB Holding are, respectively, private and public limited partnerships, and are subjectIn 2019, we engaged McLagan to taxes other than federal and state corporate income tax (see “Structure-related Risks” in Item 1A and Note 19 to AB’s consolidated financial statements in Item 8provide compensation benchmarking data for our NEOs (“2019 Benchmarking Data”). Accordingly, Section 162(m)The 2019 Benchmarking Data summarized 2018 compensation levels and 2019 salaries at selected asset management companies comparable to ours in terms of size and business mix (“Comparable Companies”), to assist us in determining the Code, which limits tax deductions relating toappropriate level of compensation for our NEOs.
The 2019 Benchmarking Data provided ranges of compensation levels at the Comparable Companies for executive compensation otherwise available to an entity taxed as a corporation, is not applicable to either AB or AB Holding for 2017.

Compensation Committee Interlockspositions like those held by each of our NEOs, including base salary and Insider Participation

Mr. Duverne is the Chairman of the Board of AXA, the ultimate 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 Reporttotal compensation.

The membersComparable 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 / TIAAOppenheimer FundsPIMCO LLC
Prudential InvestmentsT. Rowe Price, Inc.The Vanguard Group, Inc.
The 2019 Benchmarking Data indicated that the total compensation paid to each of our NEOs in 2019 fell within 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 2019 to our NEOs (other than Mr. Gingrich) were appropriate and reasonable.
Other Factors Considered When Determining NEO Compensation

For 2019, Mr. Bernstein and Ms. Burke, and the Compensation Committee, reviewedbased decisions about the incentive compensation of our NEOs primarily on an assessment of each executive’s leadership, operational performance and discussed with managementpotential 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 DiscussionCommittee, rely on judgment about each executive’s performance in light of business and Analysis set forthoperational 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 2019 Incentive Compensation Program”).
Mr. Bernstein and based on such reviewMs. Burke, and discussion, recommended to the Board its inclusion in this Form 10-K.

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:
Barbara Fallon-Walsh (Chair)•Paul L. Audetthe firm’s financial performance in the current year and the executive's contribution to such financial performance;
Ramon de Oliveira•Denis Duvernethe firm's progress in advancing its Growth Strategy;
Daniel G. Kaye•Robert B. Zoellickthe 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; and
•the NEO’s management effectiveness, talent development, focus on diversity and 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 and each NEO's individual achievements, as listed below. They also provided the Compensation Committee with the 2019 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 (other than Mr. Gingrich, whose cash payment of $1,100,000 in December 2019 was stipulated in his retirement agreement, as discussed below in “Mr. Gingrich’s Compensation”).

We have described below each NEO’s individual achievements in 2019 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 net base fee adjusted revenues, firm-wide client net inflows of $25.2 billion, resulting in an active organic growth rate of 6.5%, and an adjusted operating margin of 27.5% (including Nashville Relocation costs).

Led the firm’s efforts in achieving competitive investment performance, with fixed income services, as a percentage of assets outperforming applicable benchmarks for the one-, three- and five-year periods ended December 31, 2019, of 86%, 81% and 92%, respectively; with regard to equities services, 43%, 62% and 84%, respectively.

Directed a firm-wide strategic review and ongoing execution of the firm’s Growth Strategy.

Improved engagement metrics in AB’s employee survey and supported the firm’s diversity and inclusion initiatives through the introduction of a career catalyst program.

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

Established a management operating committee to drive transparency and collaboration across business units.

Helped lead the firm’s significant progress in its first full year of operations in Nashville.

James A. Gingrich
Role
Leadership, responsibility and performance as COO, including working in partnership with Ms. Burke in accordance with Mr. Gingrich’s retirement agreement.

Individual Achievements
Successfully led first year of operations in Nashville.
Contributed to the firm’s strong year of client inflows and successful acquisition of Autonomous Research LLP.
Contributed to the firm’s strategic initiatives by helping to establish an SBU dedicated to private alternatives.
Successfully transitioned many responsibilities to Ms. Burke.

Kate C. Burke

Role
Leadership, responsibility and performance as Chief Administrative Officer.

Individual Achievements

Embraced new role as Chief Administrative Officer, increased familiarity with SBUs newly under her supervision and successfully transitioned former responsibilities as Head of Human Capital and Chief Talent Officer.

Established strategic quarterly business reviews to manage investment, talent and cost-savings programs.

Aligned resources to support key strategic initiatives and advance the firm’s Growth Strategy.

Coordinated activities of the firm’s newly-formed management operating committee to drive transparency and collaboration across business units.

Supported successful completion of the initial phases of Nashville Relocation for corporate functions.

Laurence E. Cranch
Role
Leadership, responsibility and performance as General Counsel.

Individual Achievements
Successfully implemented compliance solutions in response to each new compliance requirement that became effective in 2019.

Received uniformly positive feedback from AB business leaders relating to the quality of service of the Legal and Compliance Department.

No regulatory examination resulted in a significant adverse finding or enforcement proceeding.

Ensured the firm remained free of significant 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 initial phases of Nashville Relocation, continued work on the selection and retention process for employees relocating, and focused on recruitment of qualified individuals to fill open staff positions in Nashville.

Overall, with respect to ongoing and routine legal matters, successfully maintained outside counsel expenses within the aggressive budget adopted at the start of 2019.
John C. Weisenseel
Role
Leadership, responsibility and performance as CFO.
Individual Achievements
Limited the firm’s year-over-year combined increase in promotion & servicing and general administrative expenses to approximately 2%, excluding headquarters relocation and non-recurring expenses.

Implemented a five-year, $900,000,000 funding facility with EQH, providing AB with an additional, resilient funding source at a marginally lower funding cost than commercial paper.

Successfully completed the initial phases of Nashville Relocation, achieving expense savings and improved diversity.

Provided accounting, tax and structuring guidance on several business development opportunities, including the acquisition of Autonomous Research and the launch of AB’s collateral loan obligation business.

Maintained active discussions with AB’s investor community and credit rating agencies while also participating in asset management industry investor conferences.

Named finalist for Nashville CFO of the Year award.

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.

Compensation Elements for NEOs

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 NEOs’ total compensation. We consider individual experience, responsibilities and tenure with the firm when determining the narrow range of base salaries paid to our NEOs (please refer to “Overview of 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 NEOs 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 NEOs because such bonuses typically are paid during the last week of the year.
Annual cash bonuses in respect of 2019 performance for each NEO were determined and paid in December 2019 (other than for Mr. Gingrich, whose cash payment of $1,100,000 in December 2019 was established in his retirement agreement). These bonuses, and the 2019 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 NEO’s performance during the year, the firm's progress in advancing its Growth Strategy during the year, the performance of the NEO’s business unit or function compared to business and operational goals established at the beginning of the year (and, with respect to Ms. Burke, goals established when, during the second quarter of 2019, she assumed the role of Chief Administrative Officer), and the firm’s current-year financial performance. For more information regarding the factors considered when determining cash bonuses for NEOs, see “Other Factors Considered When Determining NEO Compensation” above.
In respect of 2019, Mr. Bernstein received a cash bonus of $3,850,000 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 2019 by the Compensation Committee. Please refer to “Overview of Mr. Bernstein's Employment Agreement” below for additional information relating to Mr. Bernstein’s cash bonus and other compensation elements.
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 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 AUM and improved financial performance for the firm.
We believe that annual long-term incentive compensation awards provide a long-term retention mechanism for our NEOs because such awards generally vest ratably over four years. For 2019 performance, these awards were granted in December 2019 to each of Ms. Burke and Messrs. Bernstein, Cranch and Weisenseel pursuant to the AB 2019 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 2019. For additional information regarding Mr. Gingrich's compensation, please see "Mr. Gingrich's Compensation" below.
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 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. 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 in 2018 amended the recipient's prior awards granted under ICAP to provide for this vesting treatment in the event of retirement.
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.”
Mr. Gingrich's Compensation
Mr. Gingrich received a cash payment of $1,100,000 in December 2019 and is entitled to a cash payment of $2,850,000 in December 2020 in accordance with the retirement agreement he signed in May 2019. This agreement contemplated that Mr. Gingrich would retire from AB no earlier than December 31, 2020 and no later than December 31, 2022. Under the agreement, until Mr. Gingrich's retirement date and for a period of 26 weeks thereafter, Mr. Gingrich is entitled to a base salary of $400,000 and group medical coverage. It has been determined that Mr. Gingrich will retire from AB as of December 31, 2020.

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 efforts to manage AB’s operations in a cost-effective manner, including his leadership role in relocating our firm’s headquarters to Nashville. The award agreement indicates that 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.

As noted above, Mr. Gingrich will retire from AB effective as of December 31, 2020. As a result, Mr. Gingrich will receive the portion of the restricted AB Holding Unit award that vested on December 1, 2019 and the portion scheduled to vest on December 1, 2020, subject to applicable withholdings, as promptly as possible after December 1, 2020. Mr. Gingrich will forfeit the portions of the special restricted AB Holding Unit award that had been scheduled to vest on each of December 1, 2021 and 2022.

In February 2017, Mr. Gingrich was granted a special restricted AB Holding Unit award with a grant date fair value of approximately $21,000,000, 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 ICAP; provided, Mr. Gingrich was 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 did not award a special cash bonus to Mr. Gingrich in 2019. The AB Holding Units subject to Mr. Gingrich’s 2017 award were delivered to Mr. Gingrich, after deducting applicable withholdings, in December 2019.

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, TN. Vesting of each executive’s AB Holding Units also is contingent on an assessment by the Compensation Committee, with appropriate input from 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 the above-referenced criteria, the Compensation Committee, with appropriate input from Mr. Bernstein, assesses achievement of the criteria both within the executive's business unit and with respect to our firm overall. In December 2019, Mr. Bernstein, on behalf of the Compensation Committee, advised each executive that 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 2020 and 2021.


Defined Contribution Plan

U.S. employees of AB, including each of our 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).

With respect to 2019, the Compensation Committee determined, during its regularly-scheduled meeting held on December 10, 2019, 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
Our firm pays the premiums associated with life insurance policies purchased on behalf of our NEOs.

Consideration of Risk Matters in Determining Compensation


In 2017,2019, we considered whether our compensation practices for employees, including our named executive officers,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 Named Executive OfficersNEOs – Long-Term Incentive Compensation Awards”,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.Units and/or an adverse effect on the firm's long-term prospects. Furthermore, and as noted above in “Compensation Elements for Named Executive OfficersNEOs – Long-Term Incentive Compensation Awards”,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.

Overview of Mr. Bernstein's Employment Agreement

Pursuant to the CEO Employment Agreement, Mr. Bernstein is serving as our President and CEO for an initial term that commenced on May 1, 2017 and ends on May 1, 2020, provided that the initial term will automatically extend for one additional year on May 1, 2020 and each anniversary thereafter, unless the CEO Employment Agreement is terminated in accordance with its terms (“Employment Term”).

The terms of the CEO Employment Agreement were the result of arm’s length negotiations between Mr. Bernstein and senior executives at 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 the CEO Employment Agreement such that any annual equity award granted to Mr. Bernstein in 2018 and subsequent years during the Employment Term will 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 at 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 2019, 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 2019 by the Compensation Committee, Mr. Bernstein was paid a cash bonus of $3,850,000. In determining Mr. Bernstein's cash bonus, the Compensation Committee considered the progress AB made in advancing its Growth Strategy and Mr. Bernstein's individual achievements during 2019, 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 during its regular meeting held on December 10, 2019. The Compensation Committee determined Mr. Bernstein's equity award based on the review process described above. As a result of the SPB First Amendment, the equity award granted to Mr. Bernstein in December 2019 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.

Severance and Change in Control Benefits

The CEO Employment Agreement includes severance and change-in-control provisions, which are highlighted below. These provisions also are described in a compensatory table below entitled, “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;
Ÿa 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.

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 will 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 will 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.

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, EQH and its majority-owned subsidiaries ceasing to control the election of a majority of the Board.

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 EQH 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, AXA and EQH 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:
•permitted AB to recruit and retain a highly-qualified CEO;
•aligned Mr. Bernstein’s long-term interests with those of AB’s Unitholders and clients;
•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
•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

In 2019, the board of directors of EQH granted to Mr. Bernstein, in connection with his membership on the EQH Management Committee:

a restricted stock unit award (for EQH common stock) with a grant date fair value of $250,010;

a performance share award (for EQH common stock) with a grant date fair value of $500,016, 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; and

stock options (for EQH common stock) with a grant date fair value of $250,004.

Mr. Bernstein may receive additional equity or cash compensation from EQH in the future related to his service on the EQH Management Committee.

CEO Pay Ratio

In 2019, the compensation of Mr. Bernstein, our President and CEO, was approximately 63 times the median pay of our employees, resulting in a 63:1 CEO Pay Ratio.

We identified our median employee by examining 2019 total compensation for all individuals, excluding Mr. Bernstein, who were employed by our firm as of December 31, 2019, 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 2019 fiscal year based on the average monthly exchange rates for the 12-month period ending September 30, 2019 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 2019 for such employee using the same methodology we use for our NEOs as set forth below in the Summary Compensation Table for 2019.

As illustrated in the table below, our 2019 CEO Pay Ratio is 63:1:
 Seth BernsteinMedian Employee
Base salary ($)500,000
127,300
Cash bonus ($)3,850,000
22,914
Stock awards ($) (1)
5,000,030
—
All other compensation ($) (2)
94,859
—
   
Total ($)9,444,889
150,214
   
2019 CEO Pay Ratio63:1
 
_____________________
(1) Includes (i) an award granted by AB of restricted AB Holding Units with a grant date fair value of $4,000,000 and (ii) awards granted by EQH with an aggregate grant date fair value of $1,000,030, 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 2019 below.

Other Compensation-Related Matters

AB and AB Holding are, respectively, private and public limited partnerships. 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 2019.

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.

Kristi A. Matus (Chair)Paul L. Audet
Ramon de OliveiraDaniel G. Kaye
Mark Pearson












Summary Compensation Table for 20172019


Total compensation of our named executive officersNEOs for 2017, 20162019, 2018 and 2015,2017, as applicable, is as follows:
Name and
Principal Position
 Year Salary($) Bonus($) 
Stock Awards(1)(2)
($)
 
All Other
Compensation ($)
 Total($) Year Salary($) Bonus($) 
Stock Awards(1)(2)
($)
 
Option Awards(2)(3) ($)
 
All Other
Compensation ($)
 Total($)
Seth P. Bernstein(3)(5)
 2017 334,615
 3,000,000
 3,500,003
 148,274
 6,982,892
 2019 500,000
 3,850,000
 4,750,026
 250,004
 94,859
 9,444,889
President and CEO         

 2018 500,000
 3,500,000
 4,740,000
 —
 71,623
 8,811,623
           2017 334,615
 3,000,000
 3,500,003
 —
 24,631
 6,859,249
James A. Gingrich(4)(5)(6)
 2017 400,000
 1,000,000
 20,986,759
 37,801
 22,424,560
            
James A. Gingrich(6)
 2019 400,000
 1,100,000
 —
 —
 140,025
 1,640,025
Chief Operating Officer 2016 400,000
 3,540,000
 3,260,000
 36,645
 7,236,645
 2018 400,000
 1,000,000
 14,000,019
 —
 39,912
 15,439,931
 2015 400,000
 3,940,000
 3,660,000
 34,830
 8,034,830
 2017 400,000
 1,000,000
 20,986,759
 —
 37,801
 22,424,560
                      
Laurence E. Cranch 2017 400,000
 940,000
 660,000
 17,208
 2,017,208
Kate C. Burke(7)
 2019 300,000
 1,415,000
 1,035,000
 —
 60,716
 2,810,716
Chief Administrative Officer 2018 300,000
 785,000
 4,440,009
 —
 14,200
 5,539,209
 2017 300,000
 740,000
 410,000
 —
 14,266
 1,464,266
            
Laurence E. Cranch(7)
 2019 400,000
 940,000
 660,000
 —
 17,708
 2,017,708
General Counsel 2016 400,000
 890,000
 610,000
 18,441
 1,918,441
 2018 400,000
 940,000
 4,660,009
 —
 92,276
 6,092,285
 2015 400,000
 915,000
 635,000
 16,450
 1,966,450
 2017 400,000
 940,000
 660,000
 —
 17,208
 2,017,208
                      
John C. Weisenseel 2017 375,000
 1,090,000
 785,000
 15,177
 2,265,177
John C. Weisenseel(7)
 2019 375,000
 1,147,500
 842,500
 —
 15,677
 2,380,677
CFO 2016 375,000
 977,500
 672,500
 14,927
 2,039,927
 2018 375,000
 1,147,500
 4,842,509
 —
 68,433
 6,433,442
 2015 375,000
 915,000
 610,000
 14,927
 1,914,927
 2017 375,000
 1,090,000
 785,000
 —
 15,177
 2,265,177
          
Kate C. Burke(7)
 2017 300,000
 740,000
 410,000
 14,266
 1,464,266
Head of Human Capital & Chief Talent Officer         —
          
          
Peter S. Kraus 2017 138,462
 —
 —
 399,395
 537,857
Former Chairman and CEO 2016 400,000
 —
 —
 238,367
 638,367
 2015 400,000
 —
 —
 240,355
 640,355

(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 1819 to AB’s consolidated financial statements in Item 8.
(2)
See “Grants of Plan-based Awards in 2017”2019” below for information regarding the 2017 long-term incentive compensation awards2019 option award granted by EQH to our named executive officers.Mr. Bernstein.
(3)
Mr. Bernstein’s annual base salary under the CEO Employment Agreement is $500,000. The salary figure in the table"Option Awards" column provides the grant date fair value of Mr. Bernstein's award (which was issued by EQH) calculated in accordance with FASB ASC Topic 718. The fair value of EQH stock options is pro ratedcalculated 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 datebasis 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 which his employment commenced (May 1, 2017).historical data.
(4)
On February 13, 2017, the Compensation Committee approved a grant
See "Overview of Mr. Bernstein's Employment Agreement" and "Compensation Awarded by EQH to Mr. GingrichBernstein" above for a description of 883,653Mr. Bernstein's compensatory elements. Mr. Bernstein's compensation also is disclosed by EQH.
(5)
The "Stock Awards" column for 2019 includes the grant date fair value of the restricted AB Holding Units withstock 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 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 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 December 1, 2017 and the remaining units will vest ratably on each of December 1, 2018 and 2019, provided, with respect to each installment, Mr. Gingrich continues to be employed by our firm.$740,000.
(5)
(6)
The
See "Long-Term Incentive Compensation Committee approvedAwards - Mr. Gingrich’s cash bonusGingrich's Compensation" above for a description of $1,000,000 in 2017 in recognition of AB’s improving financial results, Mr. Gingrich’s continuing efforts to manage AB’s operations in a cost-effective manner and Mr. Gingrich’s critical contribution to the transition process to AB's new leadership.Gingrich's compensatory elements.
(6)
(7)
On February 6, 2018, it was agreed that Mr. Gingrich's eventual retirement from
See "Relocation-related Performance Awards" above for a description of the restricted AB shall be treated as a "termination without cause" with respect to the continued vesting of long-term compensationHolding Unit awards granted in years prior to 2017 under AB's Incentive Compensation Award Program.
(7)We have not provided 2016 or 2015 compensation for Ms. Burke, as she was not a named executive officerMr. Cranch and Mr. Weisenseel in those years.April 2018.











The “All Other Compensation” column includes the aggregate incremental cost to our company of certain other expenses and perquisites. For 2017,2019, this column includes the following:
Name 
Personal Use of Car and Driver
($)
 Contributions to Profit Sharing Plan ($) 
Life Insurance Premiums
($)
 
Financial Planning Services
($)
 Other ($) 
Personal Use of Car and Driver
($)
 Contributions to Profit Sharing Plan ($) 
Life Insurance Premiums
($)
 
Relocation and/or Financial Planning Assistance
($)
 Other ($)
Seth P. Bernstein 146,845
(1) 
—
 1,429
 —
 —
 54,791
(1) 
14,000
 2,322
 23,747
 —
James A. Gingrich —
 13,500
 1,806
 22,495
 —
 —
 14,000
 2,772
 123,253
 —
Kate C. Burke —
 14,000
 450
 46,266
 —
Laurence E. Cranch —
 13,500
 3,708
 —
 —
 —
 14,000
 3,708
 —
 —
John C. Weisenseel —
 13,500
 1,677
 —
 —
 —
 14,000
 1,677
 —
 —
Kate C. Burke —
 13,500
 450
 —
 316
          
Peter S. Kraus(2)
 137,857
 —
 —
 —
 261,538

(1)
Includes auto lease costs ($10,493)The amount reflects the incremental cost to us attributable to commuting and other non-business use. We made available to Mr. Bernstein in 2019 a car and driver compensationfor security and other car-related expenses ($136,352).
(2)Mr. Kraus's "Personal Use ofbusiness purposes. Car and Driver"driver services were contracted through a third party. The cost of providing a car is determined annually and includes, auto lease costs ($5,141),as applicable, driver compensation, ($120,704)annual car lease, insurance cost and other car-related costs ($12,012), while his "Other" reflects salary continuation payments pursuant to the Kraus Cooperation Letter.various miscellaneous expenses such as fuel and car maintenance.


Grants of Plan-based Awards in 20172019


Grants of awards under the 2017 Plan, our equity compensation plan, during 20172019 made to our named executive officersNEO are as follows:follows (we also discuss awards issued by EQH to Mr. Bernstein):
Name Grant Date 
All Other Stock Awards:
Number of Shares of Stock
or Units (#)
 
Grant Date Fair Value
of Stock Awards(1) ($)
 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)(3)
 5/16/2017 164,706
 3,500,003
 12/10/2019 139,131
 4,000,000
 2/14/2019 13,341
 250,010
 2/14/2019 12,710
 250,006
 2/14/2019 13,341
 250,010
James A. Gingrich(2)
 2/13/2017 883,653
 20,986,759
 12/10/2019 —
 —
Kate C. Burke(2)
 12/10/2019 36,000
 1,035,000
Laurence E. Cranch(2)
 12/12/2017 26,453
 660,000
 12/10/2019 22,957
 660,000
John C. Weisenseel(2)
 12/12/2017 31,463
 785,000
 12/10/2019 29,305
 842,500
Kate C. Burke(2)
 12/12/2017 16,433
 410,000
    
Peter S. Kraus N/A —
 —

(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 1819 to AB's consolidated financial statements in Item 8.
(2)
As discussed above in “Overview of 20172019 Incentive Compensation Program” and “Compensation Elements for Named Executive Officers—NEOs—Long-Term Incentive Compensation Awards”,Awards,” long-term incentive compensation awards granted in 20172019 to our named executive officersNEOs 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 2019 and the “AB Holding Unit Awards” columns of the Outstanding Equity Awards at 20172019 Fiscal Year-End Table.
(3)
In February 2019, EQH granted to Mr. Bernstein (i) a restricted stock award with a grant date fair value of $250,010 and (ii) a performance share award with a grant date fair value of $500,016, 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 2017,2019, the number of restricted AB Holding Units comprising long-term incentive compensation awards granted to each named executive officer (other than Mr. Gingrich, who was granted an award in February 2017, and Mr. Bernstein, who was granted an award in May 2017)NEO was determined based on the closing price of an AB Holding Unit as reported for NYSE composite transactions on December 12, 2017,10, 2019, the date on which the Compensation Committee approved the awards. At the time of these awards, the Compensation Committee consisted of Ms. Matus (Chair) and Messrs. Audet, de Oliveira, Kaye and Pearson; the Section 16 Subcommittee consisted of Ms. Matus (Chair) and Messrs. Audet, de Oliveira and Kaye. 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 20172019 Incentive Compensation Program", "Compensation Elements for Named Executive Officers-Long-Term Incentive Compensation Awards" andProgram," "Other Factors Considered When Determining Named Executive Officer Compensation"NEO Compensation," and "Compensation Elements for NEOs" above.


Outstanding Equity Awards at 20172019 Fiscal Year-End


Outstanding equity awards held by our named executive officersNEOs as of December 31, 20172019 are as follows:
  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(7) ($)
Seth P. Bernstein(1)
 —
 —
 —
 —
 164,706
 4,125,885
James A. Gingrich(2)
 —
 —
 —
 —
 811,734
 20,333,925
Laurence E. Cranch(3)(4)
 78,348
 —
 17.05
 1/23/2019
 66,514
 1,666,180
John C. Weisenseel(5)
 —
 —
 —
 —
 71,609
 1,793,814
Kate C. Burke(6)
 —
 —
 —
 —
 32,853
 822,967
             
Peter S. Kraus —
 —
 —
 —
 —
 —
  Option Awards AB Holding Unit and/or EQH 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(8) ($)
Seth P. Bernstein(1)(2)(3)
 —
 65,446
 $18.74 2/14/2029
 333,885
 10,103,360
  —
 —
 —
 —
 39,392
 750,026
James A. Gingrich(4)
 —
 —
 —
 —
 433,612
 13,121,099
Kate C. Burke(5)
 —
 —
 —
 —
 211,940
 6,413,304
Laurence E. Cranch(6)
 —
 —
 —
 —
 213,106
 6,448,588
John C. Weisenseel(7)
 —
 —
 —
 —
 227,760
 6,892,018

(1)
Subject to accelerated vesting clauses in the CEO Employment Agreement (e.g., immediate vesting upon a “change in control” of our firm), the CEO 2017Awardaward 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. For further information regarding the restricted AB Holding Units awarded toAdditionally, Mr. Bernstein under the CEO Employment Agreement, see “Overview of Our President and CEO’s Compensation” above.
(2)Mr. Gingrich was awarded (i) 883,653139,131 restricted AB Holding Units in February 2017,December 2019, which are scheduled to vest in equal increments on each of December 1, 2020, 2021, 2022 and 2023 and (ii)149,868 restricted AB Holding Units in December 2018, of which 33.3%25% vested on December 1, 20172019 and the remainder of which is scheduled to vest in equal increments on each of December 1, 20182020, 2021 and 2019, (ii) 140,5172022. For further information, see “Overview of Mr. Bernstein's Employment Agreement” above.
(2)
EQH awarded to Mr. Bernstein options to buy 65,446 EQH shares, which are scheduled to vest in equal increments on each of February 14, 2020, 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)
Mr. Gingrich was awarded (i) 531,310 restricted AB Holding Units in December 2016,April 2018, of which 25% vested on December 1, 20172019 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2018, 20192020, 2021 and 2020, (iii) 158,9922022, and (ii) 140,517 restricted AB Holding Units in December 2015,2016, of which 25% vested on each of December 1, 20162017, 2018 and 20172019, and the remainder of which is scheduled to vest on December 1, 2020. See "Long-Term Incentive Compensation Awards - Mr. Gingrich's Compensation" above.
(5)
Ms. Burke was awarded (i) 36,000 restricted AB Holding Units in December 2019, which are scheduled to vest in equal increments on each of December 1, 2020, 2021, 2022 and 2023, (ii) 16,486 restricted AB Holding Units in December 2018, of which 25% vested on December 1, 2019 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2020, 2021 and 2022, (iii) 151,803 restricted AB Holding Units in April 2018, and 2019, andwhich are scheduled to cliff vest on December 1, 2022, (iv) 150,99216,433 restricted AB Holding Units in December 2014,2017, of which 25% vested on each of December 1, 2015, 20162018 and 2017, and the remainder of which is scheduled to vest on December 1, 2018.
(3)Mr. Cranch was awarded (i) 26,453 restricted AB Holding Units in December 2017 that are scheduled to vest in 25% increments on each of December 1, 2018, 2019 2020 and 2021, (ii) 26,293 restricted AB Holding Units in December 2016, of which 25% vested on December 1, 2017 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2018, 20192020 and 2020, (iii) 27,5852021, and (v) 14,224 restricted AB Holding Units in December 2015,2016, of which 25% vested on each of December 1, 2017, 2018 and 2019 and the remainder of which is scheduled to vest on December 1, 2020.
(6)
Mr. Cranch was awarded (i) 22,957 restricted AB Holding Units in December 2019, which are scheduled to vest in equal increments on each of December 1, 2020, 2021, 2022 and 2023, (ii) 24,728 restricted AB Holding Units in December 2018, of which 25% vested on December 1, 2019 and the remainder is scheduled to vest in equal increments on each of December 1, 2020, 2021 and 2022, (iii) 151,803 restricted AB Holding Units in April 2018, which are scheduled to cliff vest on December 1, 2022, (iv) 26,453 restricted AB Holding Units in December 2017, of which 25% vested on each of December 1, 2018 and 2019, and the remainder is scheduled to vest in equal increments on each of December 1, 2020 and 2021, and (v) 26,293 restricted AB Holding Units in December 2016, of which 25% vested on each of December 1, 2017, 2018 and 2019, and the remainder of which is scheduled to vest on December 1, 2020.
(7)
Mr. Weisenseel was awarded (i) 29,305 restricted AB Holding Units in December 2019, which are scheduled to vest in equal increments on each of December 1, 2020, 2021, 2022 and 2023, (ii) 31,566 restricted AB Holding Units in December 2018, of which 25% vested on December 1, 2019 and the remainder is scheduled to vest in equal increments on each of December 1, 2020, 2021 and 2022, (iii) 151,803 restricted AB Holding Units in April 2018, which are scheduled to cliff vest on December 1, 2022, (iv) 31,463 restricted AB Holding Units in December 2017, 25% of which vested on each of December 1, 2018 and 2019, and the remainder of which is scheduled to vest in equal increments on each of December 1, 2018 and 2019, and (iv) 26,197 restricted AB Holding Units in December 2014, of which 25% vested on each of December 1, 2015, 2016 and 2017, and the remainder of which is scheduled to vest on December 1, 2018.
(4)Mr. Cranch was granted 78,348 options to buy AB Holding Units in January 2009, which vested and became exercisable in 20% increments on each of January 23, 2010, 2011, 2012, 2013 and 2014.
(5)Mr. Weisenseel was awarded (i) 31,463 restricted AB Holding Units in December 2017 that are scheduled to vest in 25% increments on each of December 1, 2018, 2019, 2020 and 2021, (ii)and (v) 28,987 restricted AB Holding Units in December 2016, of which 25% vested on December 1, 2017 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2018, 2019 and 2020, (iii) 26,499 restricted AB Holding Units in December 2015, of which 25% vested on December 1, 2016 and 2017, and the remainder of which is scheduled to vest in equal increments on each of December 1, 2018 and 2019 and (iv) 20,628 restricted AB Holding Units in December 2014, of which 25% vested on each of December 1, 2015, 2016 and 2017, and the remainder of which is scheduled to vest on December 1, 2018.2020.
(6)Ms. Burke was awarded (i) 16,433 restricted AB Holding Units in December 2017 that are scheduled to vest in 25% increments on each of December 1, 2018, 2019, 2020 and 2021, (ii) 14,224 restricted AB Holding Units in December 2016, of which 25% vested on December 1, 2017 and the remainder of which is scheduled to vest in equal increments on each of December 1, 2018, 2019 and 2020, (iii) 8,080 restricted AB Holding Units in December 2015, of which 25% vested on December 1, 2016 and 2017 and the remainder of which is scheduled to vest in equal increments on each of

(8)
December 1, 2018 and 2019, and (iv) 6,848 restricted AB Holding Units in December 2014, of which 25% vested on each of December 1, 2015, 2016 and 2017, and the remainder of which is scheduled to vest on December 1, 2018.
(7)The market values of restricted AB Holding Units set forth in this column were calculated assuming a price per AB Holding Unit of $25.05,$30.26, which was the closing price on the NYSE of an AB Holding Unit on December 29, 2017,31, 2019, the last trading day of AB's last completed fiscal year.

Option Exercises and AB Holding Units Vested in 20172019


AB Holding Units held by our named executive officersNEOs that vested during 20172019 are as follows:
 
  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 —
 —
 —
 —
James A. Gingrich 263,533
 1,782,740
 449,400
 11,167,590
Laurence E. Cranch —
 —
 27,344
 679,498
John C. Weisenseel —
 —
 24,104
 598,984
Kate C. Burke —
 —
 8,613
 214,033
         
Peter S. Kraus —
 —
 1,088,821
 25,315,088

(1)Mr. Kraus's delivery of the 1,088,821 restricted AB Holding Units in June 2017 was pursuant to the terms of his employment agreement.

  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 —
 —
 37,467
 2,301,779
James A. Gingrich —
 —
 502,256
 14,550,356
Kate C. Burke —
 —
 13,806
 399,960
Laurence E. Cranch —
 —
 26,265
 760,897
John C. Weisenseel —
 —
 29,629
 858,352
Pension Benefits for 2017

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, “Retirement Plan”), our company pension plan. For additional information regarding the Retirement Plan, including interest rates and actuarial assumptions, see Note 17 to AB’s consolidated financial statements in Item 8.


Non-Qualified Deferred Compensation for 20172019


Vested and unvested non-qualified deferred compensation contributions, earnings and distributions of our named executive officersNEOs during 20172019 and their non-qualified deferred compensation plan balances as of December 31, 20172019 are as follows:


Name 
Executive
Contributions in Last FY ($)
 
Aggregate
Earnings in Last FY ($)
 
Aggregate
Withdrawals/
Distributions ($)
 
Aggregate
Balance at
Last FYE ($)
 
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)
 —
 89,642
 (210,655) 1,122,138
 —
 99,291
 (221,427) 726,610
Kate C. Burke —
 —
 —
 —
Laurence E. Cranch —
 —
 —
 —
 —
 —
 —
 —
John C. Weisenseel —
 —
 —
 —
 —
 —
 —
 —
Kate C. Burke —
 —
 —
 —
        
Peter S. Kraus —
 —
 —
 —



(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.


(ii) under limited circumstances, in options to buy AB Holding Units. For additional information about the Incentive Compensation Program, see Notes 2 and 18 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, 20172019 are as follows:
Name(1)
 
Cash
Payments(2) ($)
 
Acceleration of Restricted
AB Holding Unit
Awards(3) ($)
 Other Benefits ($)
Seth P. Bernstein(4)
      
Change in control —
 4,125,885
 —
Termination by Mr. Bernstein for good reason or by AB without cause prior to May 1, 2018 and within 12 months of a change in control 10,500,000
 4,125,885
 13,610
Termination by Mr. Bernstein for good reason or by AB without cause 3,500,000
 4,125,885
 13,610
Termination by reason of non-extension of initial 3-year employment term —
 4,125,885
 —
Death or disability(5)(6)
 —
 4,125,885
 13,610
James A. Gingrich  
  
  
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants)(2)
 —
 20,333,925
 —
Death or disability(7)
 —
 20,333,925
 —
Laurence E. Cranch    
  
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants)(2)
 —
 1,666,180
 —
Death or disability(7)
 —
 1,666,180
 —
John C. Weisenseel    
  
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants)(2)
 —
 1,793,814
 —
Death or disability(7)
 —
 1,793,814
 —
Kate C. Burke    
  
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants)(2)
 —
 822,967
 —
Death or disability(7)
 —
 822,967
 —
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 (2017 Award) —
 2,492,002
 21,263
Termination by Mr. Bernstein for good reason or by AB without cause and within 12 months of change in control (including 2017 Award)(4)
 7,000,000
 2,492,002
 21,263
Termination by Mr. Bernstein for good reason (including 2017 Award)(4)
 3,500,000
 2,492,002
 21,263
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
 2,492,002
 21,263
Termination by reason of non-extension of initial 3-year employment term (2017 Award)(4)
 —
 2,492,002
 21,263
Resignation (complies with applicable agreements and restrictive covenants) under ICAP (2018 and 2019 Awards)(2)
 —
 7,611,361
 21,263
Death or disability under ICAP (2018 and 2019 Awards)(7)
 —
 7,611,361
 21,263
James A. Gingrich      
Termination by AB without cause; death or disability (2018 RSU award)(8)
 —
 330,359
 —
Resignation or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP (2016 award)(2)
 —
 1,063,013
 —
Death or disability under ICAP (2016 award)(7)
 —
 1,063,013
 —
Kate C. Burke      
Resignation, retirement or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP(2)
 —
 1,819,735
 —
Death or disability under ICAP(7)
 —
 1,819,735
 —
Termination by AB without cause; death or disability (2018 RSU award)(9)
 —
 1,682,302
 —
Laurence E. Cranch      
Resignation, retirement or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP(2)
 —
 1,855,014
 —
Death or disability under ICAP(7)
 —
 1,855,014
 —
Termination by AB without cause; death or disability (2018 RSU award)(9)
 —
 1,682,302
 —
John C. Weisenseel      
Resignation, retirement or termination by AB without cause (complies with applicable agreements and restrictive covenants) under ICAP(2)
 —
 2,298,464
 —
Death or disability under ICAP(7)
 —
 2,298,464
 —
Termination by AB without cause; death or disability (2018 RSU award)(9)
 —
 1,682,302
 —

(1)
We have not included Mr. Kraus in this table because he was not employed by AB on December 31, 2017 and the amounts paid or payable in 2017 to Mr. Kraus in connection with his cessation of employment with AB are included in the 2017 Summary Compensation Table, the Option Exercises and AB Holding Units Vested in 2017 Table and the related discussion above, including the CD&A.
(2)It is possible that each named executive officerNEO 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 estimate such amounts. The amounts shown for Mr. Bernstein are described in the CEO Employment Agreement.

(3)
(2)
See Notes 2 and 1819 in AB’s consolidated financial statements in Item 8 and “Compensation Elements for Named Executive OfficersNEO – 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 Our President and CEO's Compensation"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 Incentive Compensation ProgramICAP award agreements of each of Ms. Burke and Messrs. Gingrich, Cranch and Weisenseel, and in the Special Option Program award agreement of Mr. Cranch,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 named executive officer.NEO.
(8)
For additional information relating to the restricted AB Holding Unit awards issued to Mr. Gingrich, please refer to "Long-Term Incentive Compensation Awards - Mr. Gingrich's Compensation" above.
(9)
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.


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, 2019 are as follows (these amounts would be payable by EQH):

Reason for Employment TerminationAcceleration of EQH Option and Share Awards ($)
Death (1)
1,993,387
Disability (1)
1,993,387
Involuntary termination (no change in control) (2)
150,905
Change in control (without termination of employment) (3)
1,188,971
Involuntary termination of employment or termination by Mr. Bernstein for good reason (no change in control) (3)
1,188,971

(1)
Reflects the combined value, as of December 31, 2019, associated with Mr. Bernstein's transaction incentive award in 2018 and, in 2019, his restricted stock unit award, performance share award and option award. For additional information regarding these awards, please see the Summary Compensation Table in 2019, the Grant of Plan-based Awards table in 2019 and the Outstanding Equity at 2019 Fiscal Year End table above in this Item 11.
(2)
Reflects the value, as of December 31, 2019, associated with Mr. Bernstein's transaction incentive award in 2018.
(3)
Reflects, as of December 31, 2019, the full value associated with Mr. Bernstein's option award in 2019 and pro-rated portions of Mr. Bernstein's transaction incentive award in 2018 and, in 2019, his restricted stock unit award and performance share award based on the terms and conditions of these awards.

Director Compensation in 20172019


During 2017,2019, we compensated our directors, who are not employed by our company or by anywere serving as of our affiliates (“Eligible Directors”), as follows (Mr. Zoellick is our Non-Executive Chairman; the other directors listed in the table below each satisfiesDecember 31, 2019 and satisfied applicable NYSE and SEC standards relating to independence (“Independent Directors”)): as follows:
Name Fees Earned or Paid in Cash($) 
Stock
Awards(1)(2)
($)
 Total($) Fees Earned or Paid in Cash($) 
Stock
Awards(1)(2)
($)
 Total($)
Robert B. Zoellick 318,750
 425,000
 743,750
Ramon de Oliveira 149,375
 170,000
 319,375
Paul L. Audet 23,375
 75,000
 98,375
 108,500
 170,000
 278,500
Ramon de Oliveira 70,125
 150,000
 220,125
Barbara Fallon-Walsh 93,375
 150,000
 243,375
Daniel G. Kaye 88,875
 150,000
 238,875
 119,876
 170,000
 289,876
Shelley B. Leibowitz 23,375
 75,000
 98,375
Kristi Matus 61,000
 142,000
 203,000
Das Narayandas 18,750
 75,000
 93,750
 91,000
 170,000
 261,000
Charles Stonehill 83,542
 170,000
 253,542


(1)
The aggregate number of restricted AB Holding Units underlying awards outstanding but not yet distributed at December 31, 20172019 was: for Mr. Zoellick, 20,000Ms. Matus, 4,750 AB Holding Units; for each of Ms. Fallon-Walsh and Messrs. de Oliveira and Kaye, 5,29412,315 AB Holding Units; for each of Messrs. Audet and Narayandas, 12,063 AB Holding Units; and for each of Ms. Leibowitz and Messrs. Audet and Narayandas, 3,025Mr. Stonehill, 5,810 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 1819 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 $75,000 (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);
•
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 eight meetings of the Audit Committee and four meetings of each of the Executive Committee, the Compensation Committee and the Governance Committee);
an annual retainer of $50,000 for acting as Independent Chairman 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 seven meetings of the Audit Committee and three meetings of each of the Executive Committee, the Compensation Committee and the Governance Committee);
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 grant under an equity compensation plan consisting of restricted AB Holding Units with a grant date fair value of $150,000.$170,000.




The Board also has approved, effective in 2018,At the following compensation increases:

an annual retainer of $85,000 (paid quarterly after any quarter during which the director serves on the Board); and
•
an annual equity-based grantunder an equity compensation plan consisting of restricted AB Holding Units with a grant date value of $170,000;

Prior to a regularly-scheduledregular meeting of the Board held in May 2017 (“May 2017 Board Meeting”), equity awards consisted of (at each Independent Director’s election):

restricted AB Holding Units with a grant date fair value of $150,000;
options to buy AB Holding Units with a grant date fair value of $150,000; or
restricted AB Holding Units with a grant date fair value of $75,000 and options to buy AB Holding Units with a grant date fair value of $75,000.

At the May 2017 Board Meeting, the Board modified the equity component of Independent Director compensation by requiring that all equity awards be denominated in restricted AB Holding Units. The Board approved this modification to ensure that the structure of Independent Director equity compensation is more consistent with AB employee equity awards generally.

Also at the May 2017 Board Meeting,2019, the Board granted to each Independent Director then serving at that time (Ms.(which included Barbara Fallon-Walsh and Shelley Leibowitz, each of whom departed the Board in June 2019, and Messrs. Audet, de Oliveira, Kaye, Narayandas and Kaye) 7,059Stonehill) 5,810 restricted AB Holding Units. The number of AB Holding Units granted was determined by dividing the $150,000$170,000 grant date fair value noted above by the closing price of an AB Holding Unit on the date of the May 20172019 Board Meeting, or $21.25 per unit (“May 2017 Price”). These awards vest over three years, with 25% of the AB Holding Units having vested on the grant date and the remaining portion of the award vesting ratably on each of the first three anniversaries of the grant date.

At the regular meeting of the Board held in November 2017 (“November 2017 Board Meeting”), the Board granted to each of the three Independent Directors who joined the Board at that time (Ms. Leibowitz and Messrs. Audet and Narayandas) 3,025 restricted AB Holding Units. The number of AB Holding Units granted was determined by dividing a pro-rated portion of the $150,000 grant date fair value noted above by the closing price of an AB Holding Unit on the date of the November 2017 Board Meeting, or $24.80$29.26 per unit. These awards vest ratably on each of the first four anniversaries of the grant date.

The Board, to ensure that vesting of Independent Director equity compensationdate, which generally is consistent with AB employee equity awards generally, hasawards.

Additionally, by unanimous written consent dated as of July 1, 2019, the Board granted to Ms. Matus, who joined the Board as of July 1, 2019, 4,750 restricted AB Holding Units. The number of AB Holding Units granted was determined that awards to Independent Directors in future years will vestby dividing the $142,000 grant date fair value (a pro-rated version of the $170,000 typically awarded based on the date as of which Ms. Matus joined the Board) by the closing price of an AB Holding Unit on July 1, 2019, or $29.90 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 Nella 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 $70,834 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”,“Cause,” as that term is defined in the 2010 Plan, 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.












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 20,000 restricted AB Holding Units at the May 2017 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 2017 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, 20172019 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)
 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)
Equity compensation plans approved by security holders 3,082,470
 $52.37
 53,853,744
 159,349
 $23.93
 39,397,326
Equity compensation plans not approved by security holders —
 —
 —
 —
 —
 —
Total 3,082,470
 $52.37
 53,853,744
 159,349
 $23.93
 39,397,326

(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 1819 to AB’s consolidated financial statements in Item 8.


Principal Security Holders


As of December 31, 2017,2019, we had no information that any person beneficially owned more than 5% of the outstanding AB Holding Units.


As of December 31, 2017,2019, we had no information that any person beneficially owned more than 5% of the outstanding AB Units, except as reported by AXAEQH and certain of its subsidiaries on Schedule 13D/A with the SEC on December 13, 2017March 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 
Amount and Nature of
Beneficial Ownership
Reported on Schedule
 Percent of Class
AXA(1)(2)(3)(4)(5)
25 avenue Matignon 75008
Paris, France
 170,121,745
(4)(5) 
 63.3
(4)(5) 
Equitable Holdings(1)
1290 Avenue of the Americas
New York, NY 10104
 170,121,745
(1) 
 63.3
(1) 


(1)
Based on information provided by AXA Financial, on December 31, 2017, AXA and certain of its subsidiaries beneficially owned all of AXA Financial’s outstanding common stock. For insurance regulatory purposes, the shares of common stock of AXA Financial beneficially owned by AXA and its subsidiaries have been deposited into a voting trust (“Voting Trust”), the term of which ends on April 29, 2021. The trustees of the Voting Trust (“Voting Trustees”) are Denis Duverne and Mark Pearson. Mr. Duverne serves on the Board of Directors of AXA, while Mr. Pearson serves on the Management Committee of AXA. The Voting Trustees have agreed to exercise their voting rights to protect the legitimate economic interests of AXA, but with a view to ensuring that certain minority shareholders of AXA do not exercise control over AXA Financial or certain of its insurance subsidiaries.
(2)
Based on information provided by AXA, as of December 31, 2017, 14.13% of the issued ordinary shares (representing 23.97% 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”).

(3)The Voting Trustees and the Mutuelles AXA, as a group, may be deemed to be beneficial owners of all AB Units beneficially owned by AXA and its subsidiaries. By virtue of the provisions of the Voting Trust Agreement, AXA may be deemed to have shared voting power with respect to the AB Units. AXA and its subsidiaries have the power to dispose or direct the disposition of all shares of the capital stock of AXA Financial deposited in the Voting Trust. The Mutuelles AXA, as a group, may be deemed to share the power to vote or to direct the vote and to dispose or to direct the disposition of all the AB Units beneficially owned by AXA and its subsidiaries. The address of each of AXA and Mr. Duverne is 25 avenue Matignon, 75008 Paris, France. The address of Mr. Pearson is 1290 Avenue of the Americas, New York, NY 10104. The address of the Mutuelles AXA is 313 Terrasses de l’Arche, 92727 Nanterre Cedex, France.
(4)By reason of their relationships, AXA, the Voting Trustees, the Mutuelles AXA, AXA Equitable Holdings,EQH, AXA Equitable Financial Services, LLC (a subsidiary of AXA Equitable Holdings)EQH), AXA-IM Holding U.S. (a 97.44%-owned subsidiary of AXA)EQH), AXA Financial, AXA Equitable, Coliseum Reinsurance CompanyAlpha Units Holdings, Inc. (a subsidiary of AXA Financial), ACMC, LLC (a subsidiary of AXA Equitable)EQH) and MLOAEquitable America 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.
(5)AXA and its subsidiaries have reported on Schedule 13D/A dated as of December 13, 2017 that, The 63.3% includes the 1% GP interest held by reason of AXA’s ownership of 100% of the outstanding shares of common stock of AXA America and its ownership of 97.44% of the outstanding shares of common stock of AXA-IM Holding U.S., AXA may be deemed to beneficially own all of the issued and outstanding AB Units owned directly and indirectly by AXA Equitable Holdings and AXA-IM Holding U.S.EQH.


As of December 31, 2017,2019, AB Holding was the record owner of 96,461,989,98,192,098, or 35.9%36.3%, of the issued and outstanding AB Units.






Management


As of December 31, 2017,2019, 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)
 164,706
 *
Robert B. Zoellick(1)
 31,300
 *
Paul L. Audet 3,025
 *
Ramon de Oliveira(1)
 7,059
 *
Denis Duverne(1)
 2,000
 *
Barbara Fallon-Walsh(1)
 7,059
 *
Daniel G. Kaye(1)
 7,059
 *
Shelley B. Leibowitz 9,825
 *
Anders Malmstrom(1)
 —
 *
Das Narayandas 3,025
 *
Mark Pearson(1)
 —
 *
James A. Gingrich(1)(3)
 1,286,869
 1.3
Laurence E. Cranch(1)(4)
 288,228
 *
John C. Weisenseel(1)(5)
 121,424
 *
Kate C. Burke(1)(6)
 44,710
  
All directors and executive officers as a group (15 persons)(7)(8)
 1,976,289
 2.0%
Name of Beneficial  Owner 
Number of AB
Holding Units and
Nature of
Beneficial
Ownership
 Percent of Class
Ramon de Oliveira(1)
 19,189
 *
Seth P. Bernstein(1)(2)
 453,704
 *
Paul L. Audet 15,155
 *
Nella L. Domenici —
 *
Jeffrey J. Hurd(1)
 —
 *
Daniel G. Kaye(1)
 19,189
 *
Nick Lane(1)
 —
 *
Kristi A. Matus(1)
 4,750
 *
Das Narayandas 15,155
 *
Mark Pearson(1)
 —
 *
Charles G.T. Stonehill(1)
 5,810
 *
James A. Gingrich(1)(3)
 1,195,885
 1.2%
Kate C. Burke(1)(4)
 221,184
 *
Laurence E. Cranch(1)(5)
 230,165
 *
John C. Weisenseel(1)(6)
 299,622
 *
All directors and executive officers as a group (16 persons)(7)
 2,494,451
 2.5%

*Number of AB Holding Units listed represents less than 1% of the Units outstanding.
(1)Excludes AB Holding Units beneficially owned by AXAEQH and its subsidiaries. Ms. Fallon-WalshMatus and Messrs. Bernstein, de Oliveira, Duverne,Hurd, Kaye, MalmstromLane, Pearson and Pearson are directorsStonehill each is a director and/or officersofficer of AXA, AXAEQH, Equitable Holdings, AXA FinancialLife and/or AXA Equitable.Equitable America. Ms. Burke and Messrs. Bernstein, Zoellick, Gingrich, Cranch and Weisenseel are directorseach is a director and/or officersofficer of the General Partner.

(2)
Reflects 164,706Represents 453,704 restricted AB Holding Units awarded to Mr. Bernstein pursuant to the CEO Employment Agreement that have not yet vested. vested or with respect to which Mr. Bernstein has deferred delivery. See “Overview of Our President and CEO’s CompensationMr. Bernstein's Employment Agreement – Compensation Elements – Restricted AB Holding Units”Units,” “Grants of Plan-based Awards in 2019” and “Outstanding Equity Awards at 2019 Fiscal Year-End” in Item 11 for additional information regarding the CEO 2017 Award.information.
(3)
Includes 1,239,148698,629 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 “Long-Term Incentive Compensation Awards - Mr. Gingrich's Compensation,” “Grants of Plan-based Awards in 2017”2019” and “Outstanding Equity Awards at 20172019 Fiscal Year-End” in Item 11.
(4)
Includes 78,348211,940 restricted AB Holding Units Mr. Cranch can acquire within 60 days under an AB option planawarded 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 “Relocation-related Performance Awards,” “Grants of Plan-based Awards in 2019” and 115,465“Outstanding Equity Awards at 2019 Fiscal Year-End” in Item 11.
(5)
Includes 219,289 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 “Relocation-related Performance Awards,” “Grants of Plan-based Awards in 2017”2019” and “Outstanding Equity Awards at 20172019 Fiscal Year-End” in Item 11.
(5)(6)
Includes 92,106Represents 299,622 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 “Relocation-related Performance Awards,” “Grants of Plan-based Awards in 2017”2019” and “Outstanding Equity Awards at 20172019 Fiscal Year-End” in Item 11.
(6)
Includes 32,853 restricted AB Holding Units awarded to Ms. Burke as long-term incentive compensation that have not yet vested or with respect to which she has deferred delivery.  For information regarding Ms. Burke’s long-term incentive compensation awards, see “Grants of Plan-based Awards in 2017” and “Outstanding Equity Awards at 2017 Fiscal Year-End” in Item 11.
(7)Includes 78,348 AB Holding Units the directors and executive officers as a group can acquire within 60 days under AB option plans.
(8)Includes 1,644,2781,910,190 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.delivery (includes 14,643

AB Holding Units owned outright by William R. Siemers, our Chief Accounting Officer, and 27,006 restricted AB Holding Units that have not yet vested for Mr. Siemers).

As of December 31, 2017,2019, our directors and executive officers did not beneficially own any AB Units.


As of December 31, 2017,2019, the beneficial ownership of the common stock of AXAEQH by each director and named executive officer of the General Partner and by all directors and executive officers as a group is as follows:


AXAEQH Common Stock(1)


Name of Beneficial  Owner 
Number of Shares and
Nature of Beneficial
Ownership
 Percent of Class
Seth P. BernsteinRamon de Oliveira —21,243

 *
Robert B. Zoellick
Seth P. Bernstein(1)
 —32,936

 *
Paul L. Audet —

*
Nella L. Domenici—
 *
Ramon de OliveiraJeffrey J. Hurd(2)
 35,11793,209
*
Denis Duverne(3)
1,956,570
*
Barbara Fallon-Walsh(4)
26,181

 *
Daniel G. Kaye 9,06412,474
*
Shelley B. Leibowitz—

 *
Anders MalmstromNick Lane(5)(3)
 122,23060,383

*
Kristi A. Matus12,474
 *
Das Narayandas —2,000

 *
Mark Pearson(6)(4)
 993,205305,724

*
Charles G.T. Stonehill12,474
 *
James A. Gingrich —

*
Kate C. Burke—
 *
Laurence E. Cranch —

 *
John C. Weisenseel —
*
Kate C. Burke—

 *
All directors and executive officers as a group (15(16 persons)(7)(5)
 3,142,367552,917

 *

* Number of shares listed represents less than 1% of the outstanding AXAEQH common stock.
(1)
Holdings of AXA American Depositary Shares (“ADS”) are expressed as their equivalent in AXA common stock. Each AXA ADS representsIncludes (i) 21,816 options Mr. Bernstein has the right to receive one AXA ordinary share.
exercise within 60 days, and (ii) 4,566 restricted stock units that will vest within 60 days and settle in EQH shares.

(2)Includes 4,361 shares(i) 71,806 options Mr. de Oliveira can acquireHurd has the right to exercise within 60 days, under option plans.and (ii) 8,220 restricted stock units that will vest within 60 days and settle in EQH shares,
(3)Includes 409,480 shares(i) 41,449 options Mr. Duverne can acquireLane has the right to exercise within 60 days, under option plans. Also includes 82,603 AXA performance shares, which are paid out when vested based on the share price of AXA atand (ii) 18,934 restricted stock units that timewill vest within 60 days and are subject to achievement of internal performance conditions.settle in EQH shares.
(4)Includes 2,127 shares Ms. Fallon-Walsh can acquire(i) 189,579 options Mr. Pearson has the right to exercise within 60 days, under options plans.and (ii) 25,116 restricted stock units that will vest within 60 days and settle in EQH shares.
(5)Includes 23,851 shares Mr. Malmstrom can acquire324,650 options that may be exercised and 56,836 restricted stock units that will vest within 60 days under option plans. Also includes 97,297 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 529,707 shares Mr. Pearson can acquire within 60 days under options plans. Also includes 332,007 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 969,526 sharesfor the directors and executive officers as a group can acquire within 60 days under option plans.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 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.



Item 13.Certain Relationships and Related Transactions, and Director Independence


Policies and Procedures Regarding Transactions with Related Persons


Each Partnership Agreement expressly permits AXA and its affiliates, which includes AXA EquitableEQH and its 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. These principles also applied to transactions with AXA and its subsidiaries during 2019. AXA, which reduced its ownership of EQH to less than 10% as of December 31, 2019, previously was AB's ultimate parent company.


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 20172019 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 AXAEQH Affiliates


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.


See Note 12 to AB’s consolidated financial statements in Item 8 for disclosures related to our credit facility with EQH. Transactions between AB and related persons during 20172019 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 2019
   
Equitable LifeWe provide investment management services and ancillary accounting, valuation, reporting, treasury and other services to the general and separate accounts of Equitable Life and its insurance company subsidiaries.$78,984,000
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.$27,682,000
AXA Life Invest(3)
We provide investment management, distribution and shareholder servicing-related services.$16,404,000
AXA Life Japan Limited(3)
 $14,470,000
AXA France(3)
 $11,160,000
AXA Rosenberg Asia Pacific(3)
 $8,123,000
AXA Germany(3)
 $6,626,000
AXA Switzerland Life(3)
 $4,812,000

Parties(1)
General Description of Relationship(2)
Amounts Received
or Accrued for in 2017
   
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 and its insurance company subsidiaries.$62,453,000
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 Financial.$26,392,000
AXA AB FundsWe provide investment management, distribution and shareholder servicing-related services.$17,593,000
AXA Life Japan Limited(3)
 $14,124,000
AXA France(3)
 $12,300,000
AXA Switzerland Life(3)
 $10,426,000
AXA Re Arizona Company(3)
 $7,559,000
AXA U.K. Group Pension Scheme $6,999,000
AXA Rosenberg Asia Pacific(3)
 $5,748,000

AXA Germany(3)
 $4,985,000
AXA Belgium(3)
 $3,383,000
MONY Life Insurance Company of America(3)
 $1,789,000
AXA Hong Kong Life(3)
 $1,641,000
AXA Mediterranean(3)
 $1,438,000
AXA Switzerland Property and Casualty(3)
 $1,024,000
AIM Deutschland GmbH(3)
 $474,000
AXA Corporate Solutions(3)
 $432,000
AXA Investment Managers Ltd.(3)
 $403,000
U.S. Financial Life Insurance Company(3)
 $366,000
AXA Winterthur(3)
 $364,000
AXA MPS (3)
 $353,000
AXA General Insurance Hong Kong Ltd.(3)
 $304,000
AXA Insurance Company(3)
 $144,000
AXA Life Singapore (3)
 $141,000
   
Parties(1)(3)
General Description of RelationshipAmounts Paid
or Accrued for in 2017
AXA AdvisorsDistributes certain of our Retail Products and provides Private Wealth Management referrals.$19,202,000
AXA Business Services Pvt. Ltd.Provides data processing services and support for certain investment operations functions.$5,622,000
AXA EquitableWe are covered by various insurance policies maintained by AXA Equitable.$2,610,000
AXA AdvisorsSells shares of our mutual funds under Distribution Service and educational Support agreements.$1,696,000
AXA Technology Services India Pvt.Provides certain data processing services and functions.$1,661,000
AXA Group Solutions Pvt. Ltd.Provides maintenance and development support for applications.$920,000
GIE Informatique AXAProvides cooperative technology development and procurement services to us and to various other subsidiaries of AXA.$687,000
AXA WealthProvides portfolio-related services for assets we manage under the AXA Corporate Trustee Investment Plan.$474,000
AXA EquitableReflects cost sharing arrangement related to EQ/International Equity Index Portfolio.$275,000
AXA Assistance USA, Inc.Provides security and medical response solutions to business travelers and expatriates.$179,000
AXA Winterthur(3)
 $3,915,000
AXA Belgium(3)
 $2,579,000
AXA Insurance UK Non Direct Regulated(3)
 $1,852,000
Equitable America $1,822,000
AXA Hong Kong Life(3)
 $1,455,000
XL Group Investments Ltd(3)
 $1,157,000
Architas Multi-Manager UK(3)
 $1,064,000
AXA Mediterranean(3)
 $809,000
AXA Insurance Ltd(3)
 $756,000
AXA U.K. Group Pension Scheme(3)
 $740,000
Equitable Holdings $672,000
AXA Switzerland Property and Casualty(3)
 $560,000
AXA Corporate Solutions $496,000
AXA General Insurance Hong Kong Ltd(3)
 $487,000
U.S. Financial Life Insurance Company $354,000
AXA Spain Property and Casualty(3)
 $348,000
AXA General Insurance Hong Kong Ltd.(3)
 $301,000
AXA Insurance Company(3)
 $247,000
AXA Life Singapore (3)
 $151,000
   
Parties(1)
General Description of RelationshipAmounts Paid
or Accrued for in 2019
AXADistributes certain of our Retail Products and provides Private Wealth Management referrals.$16,693,000
Equitable AdvisorsDistributes certain of our Retail Products and provides Private Wealth Management referrals.$3,956,000
AXA Business Services Pvt. Ltd.(3)
Provides data processing services and support for certain investment operations functions.$6,610,000
AXA Technology Services India Pvt.(3)
Provides certain data processing services and functions.$3,093,000
Equitable AdvisorsSells shares of our mutual funds under Distribution Service and educational Support agreements.$2,759,000
Equitable HoldingsWe are covered by various insurance policies maintained by Equitable Holdings.$2,466,000
AXA XL Insurance(3)
We are covered by various E&O insurance policies maintained by AXA XL.$1,914,000
GIE Informatique AXA(3)
Provides cooperative technology development and procurement services to us and to various other subsidiaries of AXA.$113,000

(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.

Additional Transactions with Related Persons

Please refer to “Compensation for Mr. Kraus”in Item 11for a discussion of the Unit Purchase Agreement, under which AXA Equitable Holdings agreed to purchase from Mr. Kraus, and Mr. Kraus agreed to sell to AXA Equitable Holdings, all of Mr. Kraus’s AB Holding Units.


AXA Equitable and its affiliates are not obligated to provide funds to us, except for ACMC, LLC’s and the General Partner’s obligation to fund certain of our incentive compensation and employee benefit plan obligations. ACMC, LLC and the General Partner are obligated, subject to certain limitations, to make capital contributions to AB in an amount equal to the payments AB is required to make as incentive compensation under the employment agreements entered into in connection with AXA Equitable’s 1985 acquisition of Donaldson, Lufkin and Jenrette Securities Corporation (since November 2000, a part of Credit Suisse Group) as well as obligations of AB to various employees and their beneficiaries under AB’s Capital Accumulation Plan. In 2017, ACMC, LLC made capital contributions to AB in the amount of approximately $0.3 million in respect of these obligations. ACMC, LLC’s obligations to make these contributions are guaranteed byEquitable Holdings, LLC (a wholly-owned subsidiary of AXA Equitable), subject to certain limitations. All tax deductions with respect to these obligations, to the extent funded by ACMC, LLC, the General Partner or Equitable Holdings, LLC, will be allocated to ACMC, LLC or the General Partner.


Arrangements with Immediate Family Members of Related Persons


During 2017,2019, 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.

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 20172019 and 2016,2018, respectively, and fees for other services rendered by PwC are as follows:
2017 20162019 2018
(in thousands)(in thousands)
Audit fees(1)
$5,943
 $5,173
$6,263
 $6,244
Audit-related fees(2)
3,457
 3,391
3,130
 3,259
Tax fees(3)
2,112
 1,980
1,320
 2,001
All other fees(4)
189
 548
6
 6
Total$11,701
 $11,092
$10,719
 $11,510

(1)Includes $57,010$59,313 and $55,606$58,447 paid for audit services to AB Holding in 20172019 and 2016,2018, 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 20172019 and 20162018 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.

PART IV


Item 15.Exhibits, Financial Statement Schedules


(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, 2017, 20162019, 2018 and 2015.2017.


(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:
Exhibit Description
3.01

 
AllianceBernstein Corporation By-Laws with amendments through November 14, 2017.July 25, 2018 (incorporated by reference to Ex. 3.01 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).
3.02

 
Amended and Restated Certificate of Limited Partnership dated February 24, 2006 of AB Holding (incorporated by reference to ExhibitEx. 99.06 to Form 8-K, as filed February 24, 2006).
3.03

 
Amendment No. 1 dated February 24, 2006 to Amended and Restated Agreement of Limited Partnership of AB Holding (incorporated by reference to ExhibitEx. 3.1 to Form 10-Q for the quarterly periodfiscal quarter ended September 30, 2006, as filed November 8, 2006).
3.04

 
Amended and Restated Agreement of Limited Partnership dated October 29, 1999 of AB Holding (incorporated by reference to ExhibitEx. 3.2 to Form 10-K for the fiscal year ended December 31, 2003, as filed March 10, 2004).
3.05

 
Amended and Restated Certificate of Limited Partnership dated February 24, 2006 of AB (incorporated by reference to ExhibitEx. 99.07 to Form 8-K, as filed February 24, 2006).
3.06

 
Amendment No. 1 dated February 24, 2006 to Amended and Restated Agreement of Limited Partnership of AB (incorporated by reference to ExhibitEx. 3.2 to Form 10-Q for the quarterly periodfiscal quarter ended September 30, 2006, as filed November 8, 2006).
3.07

 
Amended and Restated Agreement of Limited Partnership dated October 29, 1999 of AB (incorporated by reference to ExhibitEx. 3.3 to Form 10-K for the fiscal year ended December 31, 2003, as filed March 10, 2004).
3.08

 
Certificate of Amendment to the Certificate of Incorporation of AllianceBernstein Corporation (incorporated by reference to ExhibitEx. 99.08 to Form 8-K, as filed February 24, 2006).
4.01
Description of AB Holding Units and AB Units.
10.01

 
AmendmentAllianceBernstein 2019 Incentive Compensation Award Program.*
10.02
AllianceBernstein 2019 Deferred Cash Compensation Program.*
10.03
Form of Award Agreement, dated as of February 6, 2018, between James A. Gingrich and AB to amend the Letter Agreement, dated as of February 13, 2017, between Mr. Gingrich and AB.*
10.02
AllianceBernstein 2017 Incentive Compensation Award Program.*

10.03
AllianceBernstein 2017 Deferred Cash Compensation Program.*
10.04
Form of Award AgreementDecember 31, 2019, under Incentive Compensation Award Program, Deferred Cash Compensation Program and AB 2017 Long Term Incentive Plan.*

10.0510.04

 
Form of Award Agreement dated as of November 14, 2017, under AB 2017 Long Term Incentive Plan relating to equity compensation awards to EligibleIndependent Directors.*
10.0610.05

 
AB 2017 Long Term Incentive Plan.*
10.07
Award Agreement, dated as of May 16, 2017, among Robert B. Zoellick, AB and AB Holding, under 2010 Long Term Incentive Plan.*
10.08
Award Agreement, dated as of May 16, 2017, among Seth P. Bernstein, AB and AB Holding, under 2010 Long Term Incentive Plan.*
10.09
Form of Award Agreement, dated as of May 16, 2017, under 2010 Long Term Incentive Plan relating to equity compensation awards to Eligible Directors.*
10.10
Amendment to the Retirement Plan for Employees of AllianceBernstein L.P., dated as of May 16, 2017 and effective as of January 1, 2008.*
10.11
Summary of AB's Lease at 1345 Avenue of the Americas, New York, NY 10105.New York.
10.1210.06

 
Summary of AB's Lease at 501 Commerce Street, Nashville, Tennessee.
10.07
Guidelines for Transfer of AB Units.
10.08
Amendment No.2 to Seth P. Bernstein's Employment Agreement (incorporated by reference to Ex. 10.1 to Form 8-K, as filed December 19, 2019).*
10.09
Credit Agreement dated as of November 4, 2019 between AllianceBernstein L.P., as borrower, and Equitable Holdings, Inc., as lender (incorporated by reference to Ex. 10.01 to Form 8-K, as filed November 4, 2019).
10.10
Letter Agreement dated as of May 31, 2019 among James A. Gingrich, AllianceBernstein L.P. and AllianceBernstein Corporation (incorporated by reference to Ex. 99.01 to Form 8-K, as filed June 5, 2019).*
10.11
Amendment to Seth P. Bernstein's Employment Agreement (incorporated by reference to Ex. 10.01 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).*

10.13Exhibit
Description
10.12
 
James A. Gingrich Award Letter dated as of April 24, 2018 (incorporated by reference to Ex. 10.07 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).*
10.13
Kate C. Burke Award Letter dated as of April 24, 2018 (incorporated by reference to Ex. 10.08 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).*
10.14
Laurence E. Cranch Award Letter dated as of April 24, 2018 (incorporated by reference to Ex. 10.09 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).*
10.15
John C. Weisenseel Award Letter dated as of April 24, 2018 (incorporated by reference to Ex. 10.10 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).*
10.16
Amendment No.to the Retirement Plan for Employees of AllianceBernstein L.P., dated as of April 1, 2018 (incorporated by reference to Ex. 10.11 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).*
10.17
Amendment to the Profit Sharing Plan for Employees of AllianceBernstein L.P., dated as of April 1, 2018 (incorporated by reference to Ex. 10.12 to Form 10-K for the fiscal year ended December 31, 2018, as filed February 13, 2019).*
10.18
Amended and Restated Revolving Credit Agreement, dated as of November 29, 2017, with AB and SCB LLC as Borrowers, the Industrial and Commercial Bank of China Limited, New York Branch, as Administrative Agent and the other lending institutions that may be party theretoSeptember 27, 2018 (incorporated by reference to Exhibit 10.02Ex. 10.01 to Form 8-K, as filed December 4, 2017)October 3, 2018).
10.1410.19

 
Letter Agreement between Robert B. Zoellick and AllianceBernstein Corporation relating to Mr. Zoellick's Service as Non-Executive Chairman of the BoardAB 2017 Long Term Incentive Plan (incorporated by reference to Exhibit 10.1Ex. 10.06 to Form 8-K,10-K for the fiscal year ended December 31, 2017, as filed May 1, 2017)February 13, 2018).*
10.1510.20

 
Letter Agreement among Peter S. Kraus, AB, AB Holding and AllianceBernstein Corporation relating to Cooperation by Mr. Kraus in Transition of his Duties (incorporated by reference to Exhibit 10.2 to Form 8-K, as filed May 1, 2017).*
10.16
Employment Agreement among Seth P. Bernstein, AB, AB Holding and AllianceBernstein Corporation (incorporated by reference to ExhibitEx. 10.3 to Form 10-K, as filed May 1, 2017).*
10.17
Agreement between Peter S. Kraus and AXA America Holdings, Inc. relating to Purchase and Sale of AB Holding Units (incorporated by reference to Exhibit 10.4 to Form 8-K, as filed May 1, 2017).*
10.1810.21

 
Award Letter among James A. Gingrich, AB and AB Holding (incorporated by reference to Exhibit 10.01 to Form 10-K for the fiscal year ended December 31, 2016, as filed February 14, 2017).*
10.19
Amendment to the Profit Sharing Plan for Employees of AllianceBernstein L.P., dated as of October 20, 2016 and effective as of January 1, 2017 (incorporated by reference to ExhibitEx. 10.06 to Form 10-K for the fiscal year ended December 31, 2016,2017, as filed February 14, 2017)13, 2018).*
10.2010.22

 
Revolving Credit Agreement, dated as of December 1, 2016, with AB and SCB LLC as Borrowers, the Industrial and Commercial Bank of China as Administrative Agent and the other lending institutions that may be party thereto (incorporated by reference to Exhibit 10.01 to Form 8-K, as filed December 5, 2016).
10.21
Profit Sharing Plan for Employees of AB, as amended and restated as of January 1, 2015 and as further amended as of January 1, 2017 (incorporated by reference to ExhibitEx. 10.05 to Form 10-K thefor the fiscal year ended December 31, 2015, as filed February 11, 2016).*
10.2210.23

 
Amendment and Restatement of the Retirement Plan for Employees of AB, as of January 1, 2015 (incorporated by reference to ExhibitEx. 10.06 to Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).*
10.2310.24

 
Commercial Paper Dealer Agreement 4(a)(2) Program, dated as of June 1, 2015, between AllianceBernstein L.P., as Issuer, and Citigroup Global Markets Inc., as Dealer (incorporated by reference to ExhibitEx. 10.08 to Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).
10.2410.25

 
Commercial Paper Dealer Agreement 4(a)(2) Program, dated as of June 1, 2015, between AllianceBernstein L.P., as Issuer, and Credit Suisse Securities (USA) LLC, as Dealer.(incorporatedDealer (incorporated by reference to ExhibitEx. 10.09 to Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).
10.2510.26

 
Commercial Paper Dealer Agreement 4(a)(2) Program, dated as of June 1, 2015, between AllianceBernstein L.P., as Issuer, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Dealer.(incorporatedDealer (incorporated by reference to ExhibitEx. 10.10 to Form 10-K for the fiscal year ended December 31, 2015, as filed February 11, 2016).
10.26
AllianceBernstein L.P. 2010 Long Term Incentive Plan, as amended (incorporated by reference to Exhibit 10.03 to Form 10-K for the fiscal year ended December 31, 2014, as filed February 12, 2015.)*
10.27

 
Revolving Credit Agreement, dated as of December 9, 2010, Amended and Restated as of January 17, 2012 and Further Amended and Restated as of October 22, 2014, among AB and SCB LLC, as Borrowers; Bank of America, N.A., as Administrative Agent; Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc., J.P. Morgan Securities LLC, The Bank of Tokyo-Mitsubishi UFJ, Ltd. and HSBC Securities (USA) Inc., as Joint Lead Arrangers and Joint Book Managers, and the other lenders party thereto (incorporated by reference to Exhibit 10.01 to Form 8-K, as filed October 24, 2014).
10.28
Employment Agreement among Peter S. Kraus, AllianceBernstein Corporation, AB Holding and AB, dated as of June 21, 2012 (incorporated by reference to Exhibit 99.01 to Form 8-K/A, as filed June 26, 2012).*
10.29
Amendment No. 1 to Employment Agreement dated as of December 19, 2008 among Peter S. Kraus, AllianceBernstein Corporation, AB Holding and AB, dated as of June 21, 2012 (incorporated by reference to Exhibit 99.02 to Form 8-K, as filed June 21, 2012).*
10.30
Form of Award Agreement under the Special Option Program (incorporated by reference to Exhibit 10.07 to Form 10-K for the fiscal year ended December 31, 2008, as filed February 23, 2009).*
10.31
Investment Advisory and Management Agreement for the General Account of AXA Equitable Life Insurance Company (incorporated by reference to ExhibitEx. 10.5 to Form 10-K for the fiscal year ended December 31, 2004, as filed March 15, 2005).
10.3210.28

 
Amended and Restated Investment Advisory and Management Agreement dated January 1, 1999 among AB Holding, Alliance Corporate Finance Group Incorporated, and AXA Equitable Life Insurance Company (incorporated by reference to ExhibitEx. (a)(6) to Form 10-Q/A for the quarterly periodfiscal quarter ended September 30, 1999, as filed on September 28, 2000).

12.01
AB Consolidated Ratio of Earnings to Fixed Charges in respect of the years ended December 31, 2017, 2016 and 2015.
21.01

 
Subsidiaries of AB.
23.01

 
Consents of PricewaterhouseCoopers LLP.
31.01

 
Certification of Mr. Bernstein furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02

 
Certification of Mr. Weisenseel furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01

 
Certification of Mr. Bernstein furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.02

 
Certification of Mr. Weisenseel furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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.

ExhibitDescription
101.SCH

 XBRL 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, 2019, formatted in Inline XBRL (included in Exhibit 101).
*

 Denotes a compensatory plan or arrangement




Item 16.Form 10-K Summary


None.

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 Holding L.P.
   
Date: February 13, 201812, 2020By:/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 13, 201812, 2020 /s/ John C. Weisenseel
  John C. Weisenseel
  Chief Financial Officer
 
Date: February 13, 201812, 2020 /s/ Edward J. FarrellWilliam R. Siemers
  Edward J. FarrellWilliam R. Siemers
  Controller and Chief Accounting Officer

Directors
 
/s/ Seth P. Bernstein /s/ Robert B. ZoellickRamon de Oliveira
Seth P. Bernstein Robert B. ZoellickRamon de Oliveira
President and Chief Executive Officer Chairman of the Board
   
/s/ Paul L. Audet /s/ Ramon de OliveiraNella L. Domenici
Paul L. Audet Ramon de OliveiraNella L. Domenici
Director Director
   
/s/ Denis DuverneJeffrey J. Hurd /s/ Barbara Fallon-WalshDaniel G. Kaye
Denis DuverneJeffrey J. Hurd Barbara Fallon-WalshDaniel G. Kaye
Director Director
   
/s/ Daniel G. KayeNick Lane /s/ Shelley B. LeibowitzKristi A. Matus
Daniel G. KayeNick Lane Shelley B. LeibowitzKristi A. Matus
Director Director
   
/s/ Anders MalmstromDas Narayandas /s/ Das NarayandasMark Pearson
Anders MalmstromDas Narayandas Das NarayandasMark Pearson
Director Director
   
/s/ Mark PearsonCharles G.T. Stonehill  
Mark PearsonCharles G. T. Stonehill  
Director  
   

SCHEDULE II


AllianceBernstein L.P.
Valuation and Qualifying Account - Allowance for Doubtful Accounts
For the Three Years Ending December 31, 2017, 20162019, 2018 and 20152017


Description 
Balance at Beginning
of Period
 
Credited to
Costs and
Expenses
 Deductions   
Balance at End
of Period
 
Balance at Beginning
of Period
 
Credited to
Costs and
Expenses
 Deductions   
Balance at End
of Period
 (in thousands) (in thousands)
For the year ended December 31, 2015 $725
 $100
 $273
 (a) $552
For the year ended December 31, 2017 $513
 $150
 $252
 (a) $411
                
For the year ended December 31, 2016 $552
 $—
 $39
 (b) $513
For the year ended December 31, 2018 $411
 $—
 $16
 (b) $395
                
For the year ended December 31, 2017 $513
 $150
 252
 (c) $411
For the year ended December 31, 2019 $395
 $132
 $218
 (c) $309


(a)Includes accounts written-off as uncollectible of $273.$252.
(b)
Includes accounts written-off as uncollectible of $39$16.
(c)Includes accounts written-off as uncollectible of $252.$218.




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