UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
þ☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 20172021
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: 001-35826
Artisan Partners Asset Management Inc.
(Exact name of registrant as specified in its charter)
Delaware45-0969585
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
875 E. Wisconsin Avenue, Suite 800
Milwaukee, WI
53202
(Address of principal executive offices)(Zip Code)


(414) 390-6100
(Registrant’s telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:
Class A Common Stock, $0.01 par valueAPAMThe New York Stock Exchange
(Title of each class)(Trading Symbol) (Name of each exchange on which registered)


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 þ No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes o No þ
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 þ 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 þ No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company)
Smaller reporting company o☐
Emerging growth company o☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☑
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o ☐ No þ
The aggregate market value of common equity held by non-affiliates of the registrant at June 30, 2017,2021, which was the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $1,513,831,509$3.3 billion based on the closing price of $30.70$50.82 for one share of Class A common stock, as reported on the New York Stock Exchange on that date. For purposes of this calculation only, it is assumed that the affiliates of the registrant include only directors and executive officers of the registrant.

The number of outstanding shares of the registrant’s Class A common stock, par value $0.01 per share, Class B common stock, par value $0.01 per share, and Class C common stock, par value $0.01 per share, as of February 16, 201818, 2022 were 51,888,532, 11,922,19266,515,087, 3,206,580 and 13,184,527,9,128,617, respectively.

DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the registrant’s definitive proxy statement for its annual meeting of stockholders, to be filed with the Securities and Exchange Commission within 120 days after December 31, 2021, are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS

Table of Contents
TABLE OF CONTENTS
Page
PART IPage
PART I
Item 1.
1
Item 1A.
1314
Item 1B.
3128
Item 2.
3128
Item 3.
3129
Item 4.
3129
30
PART II
Item 5.
3231
Item 6.
3432
Item 7.
3733
Item 7A.
6158
Item 8.
6360
Item 9.
95
Item 9A.
95
Item 9B.
95
Item 9C.
95
PART III
PART III
Item 10.
96
Item 11.
10096
Item 12.
11396
Item 13.
11697
Item 14.
12297
PART IV
Item 15.
12398
Item 16.
124100
125101
Except where the context requires otherwise, in this report:
•“Artisan Funds” refers to each series of Artisan Partners Funds, Inc., a family ofan open-ended management investment company, registered with the Securities and Exchange Commission registered mutual funds.Commission.
•“Artisan Global Funds” refers to each sub-fund of Artisan Partners Global Funds PLC, a familyplc, an open-ended investment company registered with the Central Bank of Ireland-domiciled funds organizedIreland pursuant to the European Union’s Undertaking for Collective Investment in Transferable Securities (“UCITS”).UCITS Directive.

•“Artisan Private Funds” refers to private investment funds sponsored by Artisan.
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•“client”Client” and “clients” refer to investors who access our investment management services by investing in funds, including Artisan Funds, Artisan Global Funds, Artisan Private Funds, or Artisan sponsored private funds,other pooled investment vehicles (including collective investment trusts) for which we serve as investment adviser, or by engaging us to manage a separate account in one or more of our investment strategies (such accounts include collective investment trusts and other pooled investment vehicles for which we are investment adviser, each of which we manage on a separate account basis).strategies.
•“Company”, “Artisan”, “we”, “us” or “our” refer to Artisan Partners Asset Management Inc. (“APAM”) and unless the context otherwise requires, its direct and indirect subsidiaries, including Artisan Partners Holdings LP (“Artisan Partners Holdings” or “Holdings”), and, for periods prior to our IPO, “Artisan,” the “company,” “we,” “us” and “our” refer to Artisan Partners Holdings and, unless the context otherwise requires, its direct and indirect subsidiaries. On March 12, 2013, APAM closed its IPO and related IPO Reorganization. Prior to that date, APAM was a subsidiary of Artisan Partners Holdings. The IPO Reorganization and IPO are described in the notes to our consolidated financial statements included in Part II of this Form 10-K.
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•“IPO” means the initial public offering of 12,712,279 shares of Class A common stock of Artisan Partners Asset Management Inc. completed on March 12, 2013.
•“IPO Reorganization” means the series of transactions Artisan Partners Asset Management Inc. and Artisan Partners Holdings completed on March 12, 2013, immediately prior to the IPO, in order to reorganize their capital structures in preparation for the IPO.
•“20152020 Follow-On Offering” means the registered offering of 3,831,5501,802,326 shares of Class A common stock of Artisan Partners Asset Management Inc. completed on February 24, 2020.
•“2021 Follow-On Offering” means the registered offering of 963,614 shares of Class A common stock of Artisan Partners Asset Management Inc. completed on March 9, 2015.
“2017 Follow-On Offering” means the registered offering of 5,626,517 shares of Class A common stock of Artisan Partners Asset Management Inc. completed on February 28, 2017.1, 2021.
Forward-Looking Statements
This report contains, and from time to time our management may make, forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements regarding future events and our future performance, as well as management’s current expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue”, the negative of these terms and other comparable terminology. Forward-looking statements are only predictions based on current expectations and projections about future events. Forward-looking statements are subject to a number of risks and uncertainties, and there are important factors that could cause actual results, level of activity, performance, actions or achievements to differ materially from the results, level of activity, performance, actions or achievements expressed or implied by the forward-looking statements. These factors include: the loss of key investment professionals or senior management, adverse market or economic conditions, poor performance of our investment strategies, change in the legislative and regulatory environment in which we operate, operational or technical errors or other damage to our reputation, the long-term impact of the COVID-19 pandemic and other factors disclosed in the Company’s filings with the Securities and Exchange Commission, including those factors listed under the caption entitled “Risk Factors” in Item 1A of this Form 10-K.10-K, as may be amended from time to time. We undertake no obligation to publicly update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this report, except as required by law.
Forward-looking statements include, but are not limited to, statements about:
•our anticipated future results of operations;
•our potential operating performance and efficiency; including our ability to operate under different and unique circumstances;
•our expectations with respect to the performance of our investment strategies;
•our expectations with respect to future levels of assets under management, including the capacity of our strategies and client cash inflows and outflows;
•our expectations with respect to industry trends and how those trends may impact our business;
•our financing plans, cash needs and liquidity position;
•our intention to pay dividends and our expectations about the amount of those dividends;
•our expected levels of compensation of our employees, including equityequity- and cash-based long-term incentive compensation;
•our expectations with respect to future expenses and the level of future expenses;
•our expected tax rate, and our expectations with respect to deferred tax assets; and
•our estimates of future amounts payable pursuant to our tax receivable agreements.



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Performance and Assets Under Management Information Used in this Report
We manage investments primarily through pooled investment funds and separate accounts. We serve as investment adviser to Artisan Funds, and as investment manager of Artisan Global Funds and Artisan Private Funds. We refer to funds and other accounts that are managed by us with a broadly common investment objective and substantially in accordance with a single model account as being part of the same investment “strategy”.
We measure investment performance based upon the results both of our individual funds and of our “composites”, which represent the aggregate performance of all discretionary client accounts, including funds,pooled investment vehicles, invested in the same strategy, except those accounts with respect to which we believe client-imposed investment restrictions (such as socially-based restrictions) may have a material impact on portfolio construction and those accounts managed in a currency other than U.S. dollars (thedollars. The results of these excluded accounts, which represented approximately 10% of our assets under management at December 31, 2021, are maintained in separate composites the results of which are not presented in this report).report.
The performance of accounts with investment restrictions differs from the performance of accounts included in our principal composite for the applicable strategy because one or more securities may be omitted from the portfolio in order to comply with client restrictions and the weightings in the portfolio of other securities are correspondingly altered. The performance of non-U.S. dollar accounts differs from the performance of the principal composite for the applicable strategy because of the fluctuations in currency exchange rates between the currencies in which portfolio securities are traded and the currency in which the account is managed or U.S. dollars, respectively. Our assets under management in accounts with investment restrictions and non-U.S. dollar accounts represented approximately 2% and 10%8%, respectively, of our assets under management as of December 31, 2017.2021. Results for any investment strategy described herein, and for different investment vehicles within a strategy, are affected by numerous factors, including: different material market or economic conditions; different investment management fee rates, brokerage commissions and other expenses; and the reinvestment of dividends or other earnings.
The returns for any strategy may be positive or negative, and past performance does not guarantee future results. In this report, we refer to the date on which we began tracking the performance of an investment strategy as that strategy’sthe “inception date”.
In this report,Unless otherwise noted, we present the average annual returns of our composites on a “gross” basis, which represent average annual returns before payment of fees payable to us by any portfolio in the composite and are net of commissions and transaction costs. We also present the average annual returns of certain market indices or “benchmarks” for the comparable period. The indices are unmanaged and have differing volatility, credit and other characteristics. You should not assume that there is any material overlap between the securities included in the portfolios of our investment strategies during these periods and those that comprise any MSCI, Russell, S&P or ICE BofAMLof the strategy’s comparator index referred to in this report. At times, this can causecauses material differences in relative performance. It is not possible to invest directly in any of the indices. The returns of these indices, as presented in this report, have not been reduced by fees and expenses associated with investing in securities, but do include the reinvestment of dividends.
In these materials, we present Value Added, which is the difference, in basis points, between an Artisan strategy’s average annual return and the return of its respective benchmark. The benchmark used for purposes of presenting a strategy’s performance and calculating Value Added is generally the market index most commonly used by our clients to compare the performance of the relevant strategy or, if none, the market index used by management to evaluate the performance of the strategy. Prior to the June 2021 quarter, the Credit Opportunities strategy, which is benchmark agnostic, used the ICE BofA U.S. High Yield Master II Total Return Index for this purpose. Since that time, the Credit Opportunities strategy has used the ICE BofA US Dollar LIBOR 3-month Constant Maturity Index for this purpose, which is the market index used by Company’s management to evaluate the performance of the strategy. Composites / Indexes used for the Value Added calculations described are: Non-U.S. Growth Strategy / International Value Strategy-MSCI EAFE Index; Global Discovery / Global Equity Strategy / Global Opportunities Strategy / Global Value Strategy-MSCI ACWI Index; Non-U.S. Small-Mid Growth Strategy-MSCI ACWI ex-USA Small Mid Index; U.S. Mid-Cap Growth Strategy-Russell Midcap Growth® Index; U.S. Mid-Cap Value Strategy-Russell Midcap Value® Index; U.S. Small-Cap Growth Strategy-Russell 2000 Growth® Index; Value Equity Strategy-Russell 1000 Value® Index; Developing World Strategy / Sustainable Emerging Markets Strategy-MSCI Emerging Markets Index; High Income Strategy-ICE BofA U.S. High Yield Master II Total Return Index; Credit Opportunities Strategy-ICE BofA US Dollar LIBOR 3-month Constant Maturity Index; Antero Peak Strategy / Antero Peak Hedge Strategy / Select Equity Strategy-S&P 500® Index; Artisan International Small Cap Value-MSCI All Country World Ex USA Small Cap Index.
The MSCI EAFE Index, the MSCI EAFE Small CapGrowth Index, the MSCI EAFE Value Index, the MSCI ACWI Index, the MSCI ACWI ex-USA Index, the MSCI ACWI ex-USA SMID Index, the MSCI ACWI ex-USA Small Cap and the MSCI Emerging Markets Index are trademarks of MSCI Inc. MSCI Inc. is the owner of all copyrights relating to these indices and is the source of the performance statistics of these indices that are referred to in this report. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This document is not approved or produced by MSCI.

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The Russell 2000®2000® Index, the Russell 2000®2000® Value Index, the Russell Midcap®Midcap® Index, the Russell Midcap®Midcap® Value Index, the Russell 1000®1000® Index, the Russell 1000®1000® Value Index, the Russell Midcap®Midcap® Growth Index, the Russell 1000®1000® Growth Index and the Russell 2000®2000® Growth Index are trademarks of Russell Investment Group. Russell Investment Group is the source and owner of the Russell Index data contained or reflected in this report and all trademarks and copyrights related thereto.
The S&P 500 Index is a product of S&P Dow Jones Indices LLC (S&P DJI) and/or its affiliates and has been licensed for use. Copyright© 2017Copyright© 2022 S&P Dow Jones Indices LLC, a division of S&P Global, Inc. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. S&P®&P® is a registered trademark of S&P Global and Dow Jones®Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). None of S&P DJI, Dow Jones, their affiliates or third party licensors makes any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and none shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
SourceThe ICE BofA U.S. High Yield Master II Total Return Index is owned by ICE Data Indices, LLC, used with permission. ICE Data Indices, LLC permits use of the ICE BofAMLBofA indices and related data on an "as is" basis, makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the ICE BofAMLBofA indices or any data included in, related to, or derived therefrom, assumes no liability in connection with the use of the foregoing, and does not sponsor, endorse, or recommend Artisan Partners or any of its products or services.

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In this report, we present ratings from Morningstar, Inc., or Morningstar, ratings for the series of Artisan Funds. The Morningstar RatingTMRatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. The ratings which form the basis for the information reflected in this report, and the fund categories in which they are rated, relating to each Fund's Investor Share Class are: Artisan Developing World Fund—Diversified Emerging Markets; Artisan Focus Fund—Large Growth; Artisan Global Discovery—World Large Stock Growth; Artisan Global Equity Fund—World Large Stock Growth; Artisan Global Opportunities Fund—World Large Stock Growth; Artisan Global Value Fund—World Large Stock Value; Artisan High Income Fund—High Yield Bond; Artisan International Fund—Foreign Large Growth; Artisan International Small-Mid Fund—Foreign Small/Mid Growth; Artisan International Value Fund—Foreign Large Blend; Artisan Mid Cap Fund—Mid-Cap Growth; Artisan Mid Cap Value Fund—Mid-Cap Value; Artisan Small Cap Fund—Small Growth; Artisan Sustainable Emerging Markets Fund—Diversified Emerging Markets; and Artisan Value Fund—Large Value. Morningstar ratings are initially given on a fund's three year track record and change monthly.
Throughout this report, we present historical information about our assets under management, including information about changes in our assets under management due to gross client cash inflows and outflows, market appreciation and depreciationflows, investment returns and transfers between investment vehicles (e.g., Artisan Fundspooled investment vehicles and separate accounts). Gross clientClient cash inflows and outflowsflows represent client fundings, terminations and client initiated contributions and withdrawals (which could be in cash or in securities). Market appreciation (depreciation), but generally exclude Artisan Funds’ income and capital gain distributions that are not reinvested by fund shareholders. Investment returns and other represents realized gains and losses, the change in unrealized gains and losses, net income and certain miscellaneous items, immaterial in the aggregate, which may include payment of Artisan’s management fees or payment of custody expenses to the extent a client causes these fees to be paid from the account we manage. The effect of translating into U.S. dollars the value of portfolio securities denominated in currencies other than the U.S. dollar is included in market appreciation (depreciation).Weinvestment returns and other. We also present information about our average assets under management for certain periods.
We use our information management systems to track our assets under management, the components of market appreciation and depreciation,investment returns, and client inflows and outflows,cash flows, and we believe the information set forth in this report regarding our assets under management, market appreciation and depreciation,investment returns, and client inflows and outflowscash flows is accurate in all material respects. We also present information regarding the amount of our assets under management and client inflows and outflowscash flows sourced through particular investment vehicles and distribution channels. The allocation of assets under management and client cash flows sourced through particular distribution channels involves estimates because precise information on the sourcing of assets invested in Artisan Funds or Artisan Global Funds through intermediaries is not available on a complete or timely basis and involves the exercise of judgment because the same assets, in some cases, might fairly be said to have been sourced from more than one distribution channel. We have presented the information on our assets under management and client inflows and outflowscash flows sourced by distribution channel in the way in which we prepare and use that information
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in the management of our business. Data onNon-financial data, including information about our investment performance, client cash flows, and assets under management sourced by distribution channel and client inflows and outflows are not subject to our internal controls over financial reporting.
None of the information in this report constitutes either an offer or a solicitation to buy or sell any fund securities, nor is any such information a recommendation for any fund security or investment service.

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PART I
Item 1. Business
Overview
Founded in 1994, Artisan is an investment management firm focused on providing high valued added, active investment strategies in growing asset classes to sophisticated clients globally. Our autonomous investment teams manage a broad range of U.S., non-U.S. and global investment strategies that are diversified by asset class, market cap and investment style.around the world.
Since our founding, we have maintained a business model that is designed to maximize our ability to produce attractive investment results for our clients, and we believe this model has contributed to our success in doing so. We focus on attracting, retaining and developing talented investment professionals by creating an environment in which each investment team is provided ample resources and support, transparent and direct financial incentives, and a high degree of investment autonomy.autonomy, and a long-term time horizon. Each of our investment teams is led by one or more experienced portfolio managers and applies its own unique investment philosophy and process. We believe this autonomous investment team structure promotes independent analysis and accountability among our investment professionals, which we believe promotes superior investment results.
The following table sets forth our revenues and our ending and average assets under management for the periods noted:
  For the Years Ended December 31,
 2017 2016 2015
 (in millions)
Total revenues$796
 $721
 $806
Ending assets under management$115,494
 $96,845
 $99,848
Average assets under management$108,754
 $96,281
 $106,484
Additional information regarding our revenues and our assets under management during the past three years is contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7, as well as our consolidated financial statements, which are included in Item 8 of this Form 10-K.
Each of our investment teams manages one or more investment strategies, each of which is designed to have a clearly articulated, consistent and replicable investment process that is well-understood by clients and managed to achieve long-term performance. Over our firm’s history, we have created new investment strategies that can use a broad array of securities, instruments and techniques (which we call degrees of freedom) to differentiate returns and manage risk. During 2017, we continued to expand our degrees of freedom with the launch of the Global Discovery and Thematic strategies, as well as privately offered strategies managed by our Credit team and Thematic team.
We launch a new strategy only when we believe it has the potential to achieve superior investment performance in an area that we believe will have sustained client demand at attractive fee rates over the long term. We strive to maintain the integrity of the investment process followed in each of our strategies by rigorous adherence to the investment parameters we have communicated to our clients. We also carefully monitor our investment capacity in each investment strategy. We believe that management of our investment capacity protects our ability to manage assets successfully,deliver strong investment returns, which protects the interests of our clients and, in the long term, protects our ability to retain client assets and maintain our profit margins. In order to better achieve our long-term goals, we are willing to close a strategy to new investors or otherwise take action to slow or restrict its growth, even though our short-term results may be impacted.
In addition to our investment teams, we have a management team with a fiduciary mindset that is focused on thoughtfully growing the business over the long term while preserving a consistent environment for our business objectives of achieving profitable growth, expanding ourtalented investment capabilities, diversifying the source of our assets under management, delivering superior client service, developing our investment teams into investment franchises with multiple decision-makersprofessionals and investment strategies, andassociates. We believe that maintaining the firm’s fiduciary mindsettalent-driven business model and investment-focused culture of compliance. Ouris critical to generating sustainable, long-term outcomes for clients, which in turn is critical to generating sustainable long-term outcomes for shareholders. To that end, our management team supports our investment management capabilitiesfocuses on managing the alignment of, and manages a centralized infrastructure, which allows ourresources for, the firm’s investment professionals, managing our operational infrastructure to focus primarily on makingprovide a distraction-free investment decisionsenvironment, adhering to our transparent and generating returns for our clients.predictable financial model, and promoting the sustainability of the firm.
We offer our investment management capabilities primarily to institutions and through intermediaries that operate with institutional-like decision-making processes and have longer-term investment horizons, by means of separate accounts and pooled vehicles. We access traditional institutional clients primarily through relationships with investment consultants. We access other institutional-like investors primarily through consultants, alliances with major defined contribution/401(k) platforms and relationships with financial advisors and broker-dealers.
We derive essentially all of our revenues from investment management fees, which primarily are based on a specified percentage of clients’ average assets under management. A small but growing percentage of our clients pay us performance fees or incentive allocations, in which a portion of the fee or allocation is based on the performance of clients’ accounts relative to a benchmark. These investment advisory fees are determined by the investment advisory and sub-advisory agreements thatbetween us and our clients. Investment advisory and sub-advisory agreements between us and our separate account clients are generally terminable by our separate account clients upon short notice or no notice.

Investment Teams
We offer clients a broad range of actively managed investment strategies diversified by asset class, market cap region and investment style. Each strategy is managed by one of the investment teams described below.
The following table below sets forth the total assets under management and certain performance information for each of our investment teams and strategies as of December 31, 2017, the inception date for each investment composite, the value-added by each publicly offered strategy since inception date, and, as applicable, the Overall Morningstar RatingTM for the share class2021.
1
Table of the respective seriesContents
Investment Team and StrategyAUM as of December 31, 2021Composite Inception Date
Value-Added Since Inception Date (1) as of December 31, 2021
Fund Rating(2) as of December 31, 2021
 (in millions)
Growth Team  
Global Opportunities27,578February 1, 2007625«««««
Global Discovery2,371September 1, 20171,080«««««
U.S. Mid-Cap Growth16,919April 1, 1997586«««««
U.S. Small-Cap Growth5,566April 1, 1995351««««
Global Equity Team    
Global Equity2,837April 1, 2010397«««
Non-U.S. Growth20,507January 1, 1996504««
Non-U.S. Small-Mid Growth9,417January 1, 20191,062«««
China Post-Venture237April 1, 2021539Not Applicable
U.S. Value Team   
Value Equity4,054July 1, 2005124«««
U.S. Mid-Cap Value3,999April 1, 1999270««
International Value Team
International Value31,792July 1, 2002551««««
International Small Cap Value24October 1, 2020944Not Applicable
Global Value Team  
Global Value26,324July 1, 2007257««««
Select Equity420March 1, 2020-1019Not yet rated
 
Sustainable Emerging Markets Team  
Sustainable Emerging Markets1,173July 1, 2006106«««
 
Credit Team
High Income8,018April 1, 2014257«««««
Credit Opportunities120July 1, 20171,299Not Applicable
Floating Rate (3)
19January 1, 2022—Not yet rated
Developing World Team
Developing World8,102July 1, 20151,105«««««
Antero Peak Group
Antero Peak4,028May 1, 2017996«««
Antero Peak Hedge1,249November 1, 2017214Not Applicable
Total AUM as of December 31, 2021174,754  
(1) Value-added is the amount, in basis points, by which the average annual gross composite return of each of our strategies has outperformed or underperformed its respective benchmark. See “Performance and Assets Under Management Information Used in this Report” for information regarding the benchmarks used. Value-added for periods less than one year is not annualized. The High Income strategy holds loans and other security types that are not included in its benchmark, which, at times, causes material differences in relative performance. The Credit Opportunities strategy is benchmark agnostic and has been compared to the 3-month LIBOR for reference purposes only. The Antero Peak and Antero Peak Hedge strategies' investments in initial public offerings (IPOs) made a material contribution to performance. IPO investments may contribute significantly to a small portfolio’s return, an effect that will generally decrease as assets grow. IPO investments may be unavailable in the future.
(2) The Overall Morningstar RatingTM applicable to the Artisan Fund managed to each investment strategy is derived from a weighted average of the performance figures associated with its three-year, five-year, and ten-year (if applicable) Morningstar Ratings metrics.
(3) The Floating Rate strategy composite performance began on January 1, 2022. As a result, there is not a performance track record as of December 31, 2021.
2
Table of Artisan Funds with the earliest inception date. Performance information for Artisan sponsored privately offered strategies has been intentionally omitted.

Contents
Investment Team and StrategyAUM as of December 31, 2017 Composite Inception Date
Value-Added Since Inception Date (1) as of December 31, 2017
Fund Rating(2) as of December 31, 2017
 (in millions)    
Growth Team     
Global Opportunities15,469 February 1, 2007579«««««
Global Discovery16 September 1, 2017(178)Not yet rated
U.S. Mid-Cap Growth12,798 April 1, 1997453«««
U.S. Small-Cap Growth2,345 April 1, 199599«««
      
Global Equity Team(3)
     
Global Equity1,439 April 1, 2010406«««
Non-U.S. Growth27,101 January 1, 1996542««
Non-U.S. Small-Cap Growth695 January 1, 2002302««
      
U.S. Value Team     
Value Equity2,269 July 1, 2005(5)«««
U.S. Mid-Cap Value6,496 April 1, 1999388«««
      
Global Value Team     
Global Value19,930 July 1, 2007482««««
Non-U.S. Value21,757 July 1, 2002628«««««
      
Emerging Markets Team     
Emerging Markets282 July 1, 200654«««
      
Credit Team     
High Income2,517 April 1, 2014296«««««
Privately offered strategy37 July 1, 2017Not disclosedNot applicable
      
Developing World Team     
Developing World2,253 July 1, 2015353Not yet rated
      
Thematic Team     
Thematic32 May 1, 20171,612Not yet rated
Privately offered strategy58 November 1, 2017Not disclosedNot applicable
      
Total AUM as of December 31, 2017115,494    
(1) Value-added since inception date is the amount in basis points by which the average annual gross composite return of each of our strategies has outperformed or underperformed the broad-based market index most commonly used by our clients to compare the performance of the relevant strategy since its inception date. Value-added for periods less than one year are not annualized. The broad-based market indices used to compute the value added since inception date for each of our strategies are as follows: Non-U.S. Growth Strategy / Non-U.S. Value Strategy-MSCI EAFE Index; Global Equity Strategy / Global Opportunities Strategy / Global Value Strategy / Global Discovery Strategy-MSCI ACWI Index; Non-U.S. Small-Cap Growth Strategy-MSCI EAFE Small Cap Index; U.S. Mid-Cap Growth Strategy / U.S. Mid-Cap Value Strategy-Russell Midcap® Index; U.S. Small-Cap Growth Strategy-Russell 2000® Index; Value Equity Strategy-Russell 1000® Index; Developing World Strategy / Emerging Markets Strategy-MSCI Emerging Markets Index; High Income Strategy-ICE BofAML US High Yield Master II Total Return Index; Thematic Strategy-S&P® 500 Index. Unlike the ICE BofAML US High Yield Master II Total Return Index, the Artisan High Income strategy may hold loans and other security types. At times, this causes material differences in relative performance.
(2) The Overall Morningstar RatingTM for a fund is derived from a weighted average of the performance figures associated with its three-year, five-year, and ten-year (if applicable) Morningstar Ratings metrics. The ratings which form the basis for the information reflected in this report, and the fund categories in which they are rated, relating to each Fund’s Investor Share Class are: Artisan Emerging Markets Fund—Diversified Emerging Markets; Artisan Global Equity Fund—World Stock; Artisan Global Opportunities Fund—World Stock; Artisan Global Value
Fund—World Stock; Artisan High Income Fund—High Yield Bond; Artisan International Fund—Foreign Large Blend; Artisan International Small Cap Fund—Foreign Small/Mid Growth; Artisan International Value Fund—Foreign Large Blend; Artisan Mid Cap Fund—Mid-Cap Growth; Artisan Mid Cap Value Fund—Mid-Cap Value; Artisan Small Cap Fund—Small Growth; Artisan Value Fund—Large Value. Morningstar ratings are initially given on a fund’s three year track record and change monthly.
(3) On January 20, 2017, we ceased managing assets in the Global Small-Cap Growth Strategy.




Growth Team
Our Growth team, which was formed in 1997 and is based in Milwaukee, Wisconsin, manages four investment strategies: Global Opportunities, Global Discovery, U.S. Mid-Cap Growth and U.S. Small-Cap Growth. James D. Hamel, Matthew H. Kamm, Craigh A. Cepukenas, and Jason L. White and Jay C. Warner are the portfolio co-managersmanagers of all four strategies. Mr. Hamel is the lead portfolio manager of the Global Opportunities strategy; Mr. White is the lead portfolio manager of the Global Discovery strategy; Mr. Kamm is the lead portfolio manager of the U.S. Mid-Cap Growth strategy; and Mr. Cepukenas is the lead portfolio manager of the U.S. Small-Cap Growth strategy. The U.S. Mid-Cap Growth and U.S. Small-Cap Growth strategies are currently closed to most new investors and client relationships. The Global Opportunities strategy is open across pooled vehicles, but closed to most new separate account clients.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
Global Opportunities (February 1, 2007)     
Average Annual Gross Returns15.17 %30.66 %22.22 %18.32 %13.27 %
MSCI ACWI® Index
18.54 %20.36 %14.39 %11.84 %7.02 %
Global Discovery (September 1, 2017)
Average Annual Gross Returns14.01 %34.48 %— %— %23.86 %
MSCI ACWI® Index
18.54 %20.36 %— %— %13.06 %
U.S. Mid-Cap Growth (April 1, 1997)     
Average Annual Gross Returns11.68 %35.59 %24.22 %18.62 %16.58 %
Russell Midcap® Index
22.58 %23.26 %15.09 %14.89 %11.13 %
Russell Midcap® Growth Index
12.73 %27.43 %19.82 %16.61 %10.72 %
 
U.S. Small-Cap Growth (April 1, 1995)     
Average Annual Gross Returns(7.77)%28.69 %23.16 %18.21 %12.18 %
Russell 2000® Index
14.82 %20.00 %12.01 %13.22 %9.83 %
Russell 2000® Growth Index
2.83 %21.14 %14.52 %14.12 %8.67 %
The Growth team’s investment process focuses on two distinct elements - security selection and capital allocation. The team identifies companies that have franchise characteristics (e.g. low cost production capability, possession of a proprietary asset, dominant market share or a defensible brand name), are benefiting from an accelerating profit cycle and are trading at a discount to the team’s estimate of private market value. The team looks for companies that are well positioned for long-term growth, which is driven by demand for their products and services at an early enough stage in their profit cycle to benefit from the increased cash flows produced by the emerging profit cycle.
Based on the investment team’s fundamental analysis of a company’s profit cycle, the investment team divides each portfolio into three parts. GardenSM investments generally are small positions in the early part of their profit cycle that may warrant a larger allocation once their profit cycle accelerates. CropSM investments are positions that are being increased to or maintained at a full weight because they are moving through the strongest part of their profit cycle. HarvestSM investments are positions that are being reduced as they near the investment team’s estimate of full valuation or their profit cycle begins to decelerate. The team overlays its investment process with broad knowledge of the global economy in order to position it to find growth wherever it occurs.
 As of December 31, 2017
Investment Strategy (Inception Date)1 Year 3 Years 5 Years 10 Years Inception
Global Opportunities (February 1, 2007)         
Average Annual Gross Returns32.73% 15.18% 14.87% 10.46% 11.00%
MSCI ACWI® Index
23.97% 9.29% 10.79% 4.65% 5.21%
          
Global Discovery (September 1, 2017)         
Average Annual Gross Returns—
 —
 —
 —
 5.99%
MSCI ACWI® Index
—
 —
 —
 —
 7.77%
          
U.S. Mid-Cap Growth (April 1, 1997)         
Average Annual Gross Returns21.96% 8.14% 13.46% 9.95% 15.06%
Russell Midcap® Index
18.52% 9.57% 14.95% 9.10% 10.54%
Russell® Midcap Growth Index
25.27% 10.29% 15.30% 9.09% 9.28%
          
U.S. Small-Cap Growth (April 1, 1995)         
Average Annual Gross Returns28.38% 11.71% 15.15% 10.30% 10.56%
Russell 2000® Index
14.65% 9.95% 14.11% 8.70% 9.56%
Russell 2000® Growth Index
22.17% 10.27% 15.20% 9.18% 7.98%

Global Equity Team
Our Global Equity team was formed in 1996 and is primarily based in San Francisco and New York. The Global Equity team currently manages threefour investment strategies: Global Equity, Non-U.S. Growth, Non-U.S. Small-Mid Growth and Non-U.S. Small-Cap Growth. China Post-Venture.
Mark L. Yockey is the founder of our Global Equity team and has beenserves as portfolio manager of each of the team’s strategies since their inception.Global Equity and Non-U.S. Growth strategies. Charles-Henri Hamker and Andrew J. Euretig are also portfolio managers of the Global Equity strategy and associate portfolio managers of the Non-U.S. Growth strategy andstrategy. Rezo Kanovich serves as the sole portfolio co-managers (with Mr. Yockey)manager of the Global EquityNon-U.S. Small-Mid Growth strategy. Mr. Hamker alsoTiffany Hsiao serves as portfolio co-managermanager and Yuanyuan Ji serves as associate portfolio manager of the Non-U.S. Small-Cap Growth strategy with Mr. Yockey. The Non-U.S. Growth and Non-U.S. Small-Cap Growth strategiesChina Post-Venture strategy.
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Table of Contents
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
Global Equity (April 1, 2010)     
Average Annual Gross Returns6.56 %22.55 %19.20 %15.89 %14.07 %
MSCI ACWI® Index
18.54 %20.36 %14.39 %11.84 %10.10 %
Non-U.S. Growth (January 1, 1996)     
Average Annual Gross Returns10.07 %16.03 %13.31 %10.37 %10.29 %
MSCI EAFE® Index
11.26 %13.53 %9.54 %8.02 %5.25 %
Non-U.S. Small-Mid Growth (January 1, 2019)
Average Annual Gross Returns5.17 %25.33 %— %— %25.33 %
MSCI All Country World Index Ex USA Small Mid Cap (Net)10.16 %14.71 %— %— %14.71 %
China Post-Venture (April 1, 2021) 1
Average Annual Gross Returns— %— %— %— %(9.06)%
MSCI China SMID Cap Index— %— %— %— %(14.45)%
1 Periods less than one year are currently closed to most new investors and client relationships. On January 20, 2017, the Global Equity team ceased managing assets in a fourth strategy, the Artisan Global Small-Cap Growth strategy.not annualized.

The Global Equity team employs a fundamental stock selection process focused on identifying companies within its preferred themes with sustainable growth characteristics at valuations that do not fully reflect their long-term potential. The team identifies long-term secular growth trends with the objective of investing in companies that have meaningful exposure to those trends. The team focuses on companies that are industry leaders with attractive growth and valuation characteristics that will be long-term beneficiaries of those trends.
The team applies a fundamental approach to identifying long-term, sustainable growth characteristics of potential investments. It seeks high-quality companies that typically have a sustainable competitive advantage, a superior business model and a high-quality management team. The team uses multiple valuation metrics to establish a target price range and assesses the relationship between its estimate of a company’s sustainable growth prospects and the company’s current valuation.
 As of December 31, 2017
Investment Strategy (Inception Date)            1 Year 3 Years 5 Years 10 Years Inception
Global Equity (April 1, 2010)         
Average Annual Gross Returns33.31% 10.66% 13.20% —
 13.14%
MSCI ACWI® Index
23.97% 9.29% 10.79% —
 9.08%
          
Non-U.S. Growth (January 1, 1996)         
Average Annual Gross Returns32.55% 5.48% 8.57% 3.87% 10.54%
MSCI EAFE® Index
25.03% 7.79% 7.89% 1.94% 5.12%
      
Non-U.S. Small-Cap Growth (January 1, 2002)         
Average Annual Gross Returns35.54% 10.39% 9.67% 5.51% 13.87%
MSCI EAFE® Small Cap Index
33.01% 14.19% 12.85% 5.77% 10.86%


U.S. Value Team
Our U.S. Value team, which was formed in 1997 and is based in Atlanta and Chicago, manages two investment strategies: Value Equity and U.S. Mid-Cap Value. James C. Kieffer, Thomas A. Reynolds, and Daniel L. Kane, and Craig Inman are the portfolio co-managersmanagers for both strategies. George O. Sertl, Jr., previously a portfolio co-managerDuring the first quarter of 2022, the team’s two strategies, stepped down from portfolio management in October 2017 and provided notice of his intent to retire. On May 23, 2016, the U.S. Value team ceasedwill begin managing assets in a third strategy, the Value Income strategy. James C. Kieffer, who relinquished portfolio management responsibilities of the Value Equity and U.S. Mid-Cap Value strategies effective February 1, 2021, remains a managing director of Artisan U.S. Small-Cap Value strategy.
ThePartners and a member of the U.S. Value team seeks to invest in companies that the team believes are undervalued, are in solid financial condition and have attractive business economics. The team believes companies with these characteristics are less likely to experience eroding values over the long term compared to companies without such characteristics.team.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
Value Equity (July 1, 2005)     
Average Annual Gross Returns24.43 %21.90 %12.83 %12.88 %9.67 %
Russell 1000® Index
26.45 %26.18 %18.41 %16.53 %11.07 %
Russell 1000® Value Index
25.16 %17.62 %11.16 %12.96 %8.43 %
U.S. Mid-Cap Value (April 1, 1999)     
Average Annual Gross Returns27.76 %19.43 %11.12 %11.78 %12.98 %
Russell Midcap® Index
22.58 %23.26 %15.09 %14.89 %10.43 %
Russell Midcap® Value Index
28.34 %19.60 %11.21 %13.43 %10.28 %
The team values a business using what it believes are reasonable expectations for the long-term earnings power and capitalization rates of that business. This results in a range of values for the company that the team believes would be reasonable. The team prefers companies with an acceptable level of debt and positive cash flow, and favors cash-producing businesses that it believes are capable of earning acceptable returns on capital over the company’s business cycle.

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Table of Contents
 As of December 31, 2017
Investment Strategy (Inception Date)1 Year 3 Years 5 Years 10 Years Inception
Value Equity (July 1, 2005)         
Average Annual Gross Returns16.99% 11.78% 13.41% 8.44% 9.00%
Russell 1000® Index
21.69% 11.22% 15.70% 8.59% 9.05%
Russell® 1000 Value Index
13.66% 8.64% 14.03% 7.10% 7.77%
          
U.S. Mid-Cap Value (April 1, 1999) 
  
  
  
  
Average Annual Gross Returns13.69% 8.70% 12.64% 10.17% 13.51%
Russell Midcap® Index
18.52% 9.57% 14.95% 9.10% 9.63%
Russell® Midcap Value Index
13.34% 8.99% 14.67% 9.09% 10.20%

GlobalInternational Value Team
Our GlobalInternational Value team, was formed in 2002 andled by N. David Samra, is based in San Francisco and Chicago. The team manages two investment strategies: GlobalInternational Value and Non-U.S.International Small Cap Value. N. David Samra and Daniel J. O’Keefe are the portfolio co-managers of both strategies. Mr. Samra is theserves as lead portfolio manager of the Non-U.S.International Value strategy and managing director of the International Small Cap Value strategy. Ian P. McGonigle and Joseph Vari serve as co-portfolio managers of the International Value strategy. Beini Zhou and Anand Vasagiri serve as co-portfolio managers of the International Small Cap Value strategy.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
International Value (July 1, 2002)     
Average Annual Gross Returns18.10 %17.64 %11.73 %11.79 %12.10 %
MSCI EAFE® Index
11.26 %13.53 %9.54 %8.02 %6.59 %
International Small Cap Value (October 1, 2020)
Average Annual Gross Returns20.65 %— %— %— %40.85 %
MSCI All Country World Index Ex USA Small Cap (Net)12.93 %— %— %— %31.41 %

Global Value Team
Our Global Value team, led by Daniel J. O’Keefe, is primarily based in Chicago. Mr. O’Keefe is theserves as lead portfolio manager and Michael J. McKinnon serves as portfolio manager of the team’s Global Value strategy. The Non-U.S. Value strategy is closed to most new investors and client relationships. The Global Value strategy is open to new relationships through pooled investment vehicles, but generally closed to most new separate account relationships.Select Equity strategies.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
Global Value (July 1, 2007)     
Average Annual Gross Returns16.94 %16.46 %11.40 %12.37 %9.17 %
MSCI ACWI® Index
18.54 %20.36 %14.39 %11.84 %6.60 %
Select Equity (March 1, 2020)
Average Annual Gross Returns16.87 %— %— %— %21.61 %
S&P 500 Index28.71 %— %— %— %31.80 %
The Global Value team employs a fundamental investment process to construct portfolios of companies that the team believes are high quality, undervalued companies with strong balance sheets and shareholder-oriented management teams. The team seeks to invest in companies at a significant discount to its estimate of each company’s intrinsic value. The team also looks for companies with histories of generating strong free cash flow, improving returns on capital and strong competitive positions in their industries. The team believes that investing in companies with strong balance sheets helps to reduce the potential for capital risk and provides company management the ability to build value when attractive opportunities are available. The team’s research process also attempts to identify management teams with a history of building value for shareholders.
 As of December 31, 2017
Investment Strategy (Inception Date)1 Year 3 Years 5 Years 10 Years Inception
Global Value (July 1, 2007)         
Average Annual Gross Returns23.47% 10.49% 13.88% 10.45% 9.40%
MSCI ACWI® Index
23.97% 9.29% 10.79% 4.65% 4.58%
          
Non-U.S. Value (July 1, 2002)         
Average Annual Gross Returns25.34% 9.84% 12.14% 9.04% 13.03%
MSCI EAFE® Index
25.03% 7.79% 7.89% 1.94% 6.74%

Sustainable Emerging Markets Team
Our Sustainable Emerging Markets team, which was formed in 2006 and is based in New York, manages a single investment strategy. Maria Negrete-Gruson is the portfolio manager for the Sustainable Emerging Markets strategy.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
Sustainable Emerging Markets (July 1, 2006)     
Average Annual Gross Returns(0.27)%14.40 %12.64 %7.72 %6.78 %
MSCI Emerging Markets Index(2.54)%10.93 %9.87 %5.48 %5.72 %
The Emerging Markets team seeks to invest in emerging market companies that it believes are uniquely positioned to benefit from the growth potential in emerging markets and possess a sustainable global competitive advantage. The team believes that over the long-term a stock’s price is directly related to the company’s ability to deliver sustainable earnings, which the team determines based upon financial and strategic analyses. The team also believes that a disciplined risk framework allows greater focus on fundamental stock selection. The team incorporates its assessment

5
Table of company-specific and macroeconomic risks into its valuation analysis to develop a risk adjusted target price. The risk-rating assessment includes a review of country-appropriate macroeconomic risk factors to which a company is exposed. Finally, the team believes that investment opportunities develop when businesses with sustainable earnings are undervalued relative to peers and historical industry, country and regional valuations. The team values a business and develops a price target for a company based on its assessment of the business’s sustainable earnings and risk analysis.
 As of December 31, 2017
Investment Strategy (Inception Date)1 Year 3 Years 5 Years 10 Years Inception
Emerging Markets (July 1, 2006)         
Average Annual Gross Returns41.19% 13.72% 6.83% 2.28% 6.89%
MSCI Emerging Markets IndexSM
37.28% 9.09% 4.35% 1.68% 6.35%
Contents
Credit Team
Our Credit team, which was formed in 2014 and is currently based in Mission Woods, Kansas,Denver, manages twothree investment strategies: High Income, Credit Opportunities and a privately offered credit long-short strategy.Floating Rate. Bryan L. Krug is theserves as portfolio manager for both strategies. The following description applies toof the High Income strategy. Information for the privately offered strategy has been intentionally omitted.
Theand Credit team seeks to invest in issuers with high quality business models that have compelling risk-adjusted return characteristics. The Credit team’s research process has four primary pillars: business quality; financial strengthOpportunities strategies. Mr. Krug serves as lead portfolio manager and flexibility; downside analysis; and value identification.

To understand an issuer’s business model resiliency, the team analyzes the general healthSeth B. Yeager serves as portfolio manager of the industry in which an issuer operates, the issuer’s competitive position, the dynamicsFloating Rate strategy.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
High Income (April 1, 2014)     
Average Annual Gross Returns7.16 %11.03 %8.35 %— %7.93 %
ICE BofA U.S. High Yield Master II Total Return Index5.36 %8.56 %6.09 %— %5.36 %
Credit Opportunities (July 1, 2017)
Average Annual Gross Returns18.44 %18.84 %— %— %14.44 %
ICE BofA U.S. High Yield Master II Total Return Index0.17 %1.28 %— %— %1.45 %
Floating Rate (January 1, 2022) 1
Average Annual Gross Returns— %— %— %— %— %
Credit Suisse Leveraged Loan Total Return Index— %— %— %— %— %
1 The Floating Rate strategy composite performance began on January 1, 2022. As a result, there is not a performance track record as of industry participants, and the decision-making history of the issuer’s management. The team believes that analyzing the history and trend of free cash flow generation is critical to understanding an issuer’s financial health. The team also considers an issuer’s capital structure, refinancing options, financial covenants, amortization schedules and overall financial transparency. The team seeks to manage the risk of loss on an investment with what it believes to be conservative financial projections that account for industry position, competitive dynamics and positioning within the capital structure. To determine the value of an investment opportunity the team uses multiple metrics. The team looks for credit improvement potential, relative value within an issuer’s capital structure, catalysts for business improvement and potential value stemming from market or industry dislocations.December 31, 2021.
 As of December 31, 2017
Investment Strategy (Inception Date)1 Year 3 Years 5 Years 10 Years Inception
High Income (April 1, 2014)         
Average Annual Gross Returns9.90% 9.07% — — 7.90%
ICE BofA Merrill Lynch U.S. High Yield Master II Total Return Index (Net)7.48% 6.38% — — 4.94%

Developing World Team
Our Developing World team, which was formed in 2015 and is based in San Francisco, manages a singleone investment strategy. Lewis S. Kaufman is the portfolio manager for the Developing World strategy.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
Developing World (July 1, 2015)     
Average Annual Gross Returns(8.71)%33.88 %22.94 %— %17.16 %
MSCI Emerging Markets Index(2.54)%10.93 %9.87 %— %6.11 %
The Developing World team employs a fundamental investment process to construct a diversified portfolio of securities that offers exposure to developing world economies. In pursuit of this goal, the team generally invests substantially in companies domiciled in or economically tied to countries the team considers to have characteristics typical of the developing world. The team generally seeks to emphasize business value compounders, which it defines as financially sound, free cash flow generative companies with sound business models that are exposed to the growth potential of the developing world. The team may seek to mitigate currency volatility by emphasizing investments in countries and currencies that are less dependent on foreign capital. The Developing World team believes a portfolio of companies with these characteristics will be well positioned to deliver attractive risk-adjusted returns over the long term.

 As of December 31, 2017
Investment Strategy (Inception Date)1 Year 3 Years 5 Years 10 Years Inception
Developing World (July 1, 2015)         
Average Annual Gross Returns36.87% — — — 13.24%
MSCI Emerging Markets Index37.28% — — — 9.71%
Antero Peak Group
Thematic Team
Our Thematic team, whichAntero Peak Group was formed in 2016 and is based in Denver and New York,York. The Antero Peak Group manages two investment strategies: ThematicAntero Peak and a privately offered long-short strategy.Antero Peak Hedge. Chris Smith is the portfolio manager for both strategies.
 As of December 31, 2021
Investment Strategy (Composite Inception Date)1 Year3 Years5 Years10 YearsInception
Antero Peak (May 1, 2017)     
Average Annual Gross Returns25.17 %29.95 %— %— %28.08 %
S&P 500 Index28.71 %26.04 %— %— %18.12 %
Antero Peak Hedge (November 1, 2017)
Average Annual Gross Returns19.56 %21.97 %— %— %20.18 %
S&P 500 Index28.71 %26.04 %— %— %18.04 %

Emerging Markets Debt Team

The following description appliesEmerging Markets Debt team was formed in 2021 and is based in Boston. We are working with the team to develop active, differentiated strategies with broad exposure to the Thematic strategy. Information foremerging markets debt asset class and expect the privately offered strategy has been intentionally omitted.team’s first strategies will launch during the first half of 2022.
The team’s investment approach is based on thematic idea generation, a systematic framework for analyzing companies and proactive risk management. Utilizing this approach, the team seeks to construct a focused portfolio designed to maximize alpha while limiting downside risk over the long term. The team believes the combination
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Table of a top-down thematic framework and bottom-up analysis will position a portfolio to deliver attractive risk-adjusted returns over the long term.
Contents
As of December 31, 2017
Investment Strategy (Inception Date)1 Year3 Years5 Years10 YearsInception
Thematic (May 1, 2017)
Average Annual Gross Returns————29.81%
S&P 500 Index————13.70%


Distribution, Investment Products and Client Relationships
The goal of our marketing, distribution and client service efforts is to establishgrow and maintain a client base that is diversified by investment strategy, investment vehicle (for example, across mutual funds and separate accounts),client type, distribution channel (for example, institutional, intermediary and retail) and geographic region. We focus our distribution and marketing efforts on sophisticated investors and asset allocators, including institutions and on intermediaries that operate with institutional-like, centralized decision-making processes and longer-term investment horizons. We have designed our distribution strategies and structured our distribution teams to use knowledgeable, seasoned marketing and client service professionals in a way intended to limit the time our investment professionals are required to spend inon marketing and client service activities. We believe that minimizing other demands allows our portfolio managers and other investment professionals to focus their energies and attention on the investment decision-making process, which we believe enhances the opportunity to achieve superior investment returns. Our distribution efforts are centrally managed by our Head of Global Distribution, who oversees and coordinates the efforts of our marketing and client service professionals.
We continue to expand our distribution efforts into non-U.S. markets, with our primary non-U.S. efforts focused currently on the United Kingdom, other European countries, Australia, Canada and certain Asian countries where we believe there is growing demand for global and non-U.S. investment strategies. In our non-U.S. distribution efforts, we use regional specialists who draw on the knowledge and expertise of our strategy-focused professionals. As of December 31, 2017, 20% of our total assets under management were sourced from clients located outside the United States.
Institutional Channel
Our institutional distribution channel includes institutional clients, such as U.S.-registered mutual funds, non-U.S. funds and collective investment trusts we sub-advise; state and local governments; employee benefit plans including Taft-Hartley plans; foundations; and endowments. Our institutional distribution channel also includes assets under management sourced from defined contribution/401(k)contribution plans. We offer our investment products to institutional clients directly and by marketing our services to the investment consultants and advisors that advise them. As of December 31, 2017,2021, approximately 45%36% of our assets under management were attributed to clients represented by investment consultants.
As of December 31, 2017, 66%2021, 64% of our assets under management were sourced through our institutional channel.
Intermediary Channel
We maintain relationships with a number of major brokerage firms and larger private banks and trust companies at which the process for identifying which funds to offer has been centralized to a relatively limited number of key decision-makers that exhibit institutionalinstitutional-like decision-making behavior. We also maintain relationships with a number of financial advisory firms and broker-dealer advisors that offer our investment products to their clients. These advisors range from relatively small firms to large organizations.
As of December 31, 2017,2021, approximately 30%32% of our assets under management were sourced through our intermediary channel.
Retail Channel
We primarily access retail investors indirectly through mutual fund supermarkets through which investors have the ability to purchase and redeem fund shares. InvestorsU.S. investors can also invest directly in the series of Artisan Funds. Our subsidiary, Artisan Partners Distributors LLC, a registered broker-dealer, distributes shares of Artisan Funds. Publicity and ratings and rankings from Morningstar, Lipper and others are important inessential to building the Artisan Partners brand, which is important infor attracting retail investors. As a result, we publicize the ratings and rankings received by the series of Artisan Funds and work to ensure that potential retail investors have appropriate information to evaluate a potential investment in Artisan Funds. We do not generally use direct marketing campaigns as we believe that their cost outweighs their potential benefits.
As of December 31, 2017,2021, approximately 4% of our assets under management were sourced from investors we categorize as retail investors.
Access Through a Range of Investment Vehicles
Our clients access our investment strategies through a range of investment vehicles, including separate accounts and mutual funds.pooled vehicles. As of December 31, 2017, approximately 50% of our assets under management were in separate accounts, and2021, Artisan Funds and Artisan Global Funds accounted for approximately 50%48% of our total assets under management.management, and approximately 52% of our assets under management were managed in separate accounts and other pooled vehicles.
Separate Accounts and Other
We manage traditional separate account assetsaccounts within most of our investment strategies. As of December 31, 2017,2021, we managed 215235 traditional separate accounts spanning 141138 client relationships and our largest separate account relationship represented approximately 9%8% of our assets under management. OurThese separate account clients include both institutional and intermediary channel relationships.relationships, such as pension and profit sharing plans, corporations, trusts, endowments, foundations, charitable organizations, high net worth individuals, governmental entities, insurance companies, commingled investment vehicles, investment advisers and other financial institutions, trustees of collective investment trusts and investment companies and similar pooled investment vehicles. We generally require a minimum relationship of $20 million to $100 million, depending on the strategy, to manage a separate account. We also offer access to a number of our strategies through Artisan-branded collective investment trusts and through funds (both public and private) that we sub-advise. The fees we charge ouron separate accounts vary by client, investment strategy and the size of the account. Fees are accrued monthly, but generally are paid quarterly in arrears.


We offer two
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A number of our investment strategies are accessible to certain types of employee benefit plans through Artisan-branded collective investment trusts, or CITs. We act as investment adviser to the CITs and earn a management fee for providing this service. As of December 31, 2021, Artisan-branded collective investment trusts represented approximately 5% of our own privatelyassets under management.
Certain of our investment strategies are primarily offered funds. through Artisan-sponsored unregistered pooled investment vehicles, referred to as Artisan Private Funds. For serving as investment adviser to Artisan Private Funds, we earn a management fee and, for certain funds, are entitled to receive either an allocation of profits or a performance-based fee. As of December 31, 2021, Artisan Private Funds comprised approximately 1% of our assets under management.
In our reporting materials, unless otherwise stated, our separate account“separate accounts and other” AUM includes assets we manage in traditional separate accounts, Artisan-branded collective investment trusts and Artisan Private Funds, as well as assets under advisement related to clients for whom we manage in Artisan-branded collectiveprovide investment trusts, in funds (both public and private) that we sub-advise, and in our own privately offered funds.models but do not have discretionary investment authority.
Artisan Funds and Artisan Global Funds
U.S. investors that do not meet our minimum account size for a separate account, or who otherwise prefer to invest through a mutual fund, can invest in our strategies through Artisan Funds. We serve as the investment adviser to each series of Artisan Funds, SEC-registered mutual funds that offer no-load, no 12b-1 share classes designed to meet the needs of a range of investors. Each series of Artisan Funds corresponds to an investment strategy we offer to clients. In contrast to some mutual funds, investors in Artisan Funds pay no 12b-1 fees, which are fees charged to investors in addition to management fees to pay for marketing, advertising and distribution services associated with the mutual funds. Rebates and expenses for marketing, advertising and distribution services related to Artisan Funds, including distribution payments to broker-dealers and other intermediaries with respect to the Investor and Advisor Shares, are paid out of the investment management fees we earn. The Institutional Shares do not include any payments to intermediaries. We earn investment management fees, which are based on the average daily net assets of each Artisan Fund and are paid monthly, for serving as investment adviser to these funds. As of December 31, 2021, Artisan Funds represented approximately 45% of our assets under management.
We also serve as investment manager of Artisan Global Funds, a family of Ireland-based UCITS funds. Artisan Global Funds which began operations in 2011, provides non-U.S. investors with access to a number of our investment strategies. Expenses for marketing, advertising and distribution services related to Artisan Global Funds, including payments to broker-dealers and other intermediaries, are paid out of thestrategies in a pooled vehicle structure. We earn investment management fees, we earn, which are based on the average daily net assets of each sub-fund and are generally paid monthly.monthly, for serving as investment adviser to these funds. As of December 31, 2021, Artisan Global Funds represented approximately 3% of our assets under management.
Regulatory Environment and Compliance
Our business is subject to extensive regulation in the United States at the federal level and, to a lesser extent, the state level, as well as by self-regulatory organizations and regulators located outside the United States. Under these laws and regulations, agencies that regulate investment advisers, investment funds and other related entities have broad administrative powers, including the power to limit, restrict or prohibit an investment adviserthe regulated entity from carrying on itsconducting business in the event that it fails to comply with such laws and regulations. PossibleBreaches of these laws and regulations could also result in regulatory enforcement, civil liability, criminal liability and/or the imposition of other sanctions, that may be imposed includeincluding monetary damages, fines, censures, the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, and the revocation of investment adviser and other registrations, censures and fines. Aregistrations. In addition, a regulatory proceeding, regardless of whether it results in a sanction, can require substantial expenditures and can have an adverse effect on our reputation or business.
SECThe domestic, international and extra-territorial laws and regulations that apply to our business relate to a broad range of subjects, including securities, compliance, corporate governance, financial reporting and disclosure, tax, privacy and data protection, information security, anti-bribery and anti-corruption, anti-money laundering and anti-terrorist financing. These laws and regulations are complex and continue to change and evolve over time. As a result, there is a level of uncertainty associated with the regulatory environments in which we operate. Accordingly, the discussion below is general in nature, does not purport to be complete and is current only as of the date of this report.
U.S. Regulation
As a publicly traded company, we are subject to U.S. federal securities laws, state securities and corporate laws, and the rules and regulations of U.S. regulatory and self-regulatory organizations. In particular, we are subject to the Securities Act of 1933, the Securities Exchange Act of 1934, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”), the Sarbanes-Oxley Act of 2002 and, because we are listed on the New York Stock Exchange, the NYSE listed company rules.
Artisan Partners Limited Partnership and Artisan Partners UK LLP are registered with the SEC as investment advisers under the Investment Advisers Act of 1940, or Advisers Act, and Artisan Funds and several of the investment companies we sub-advise are registered under the Investment Company Act of 1940, or 1940 Act. The Advisers Act and the 1940 Act, together with other applicable securities laws and the SEC’s regulations and interpretations thereunder, impose substantive and material restrictions and requirements on the operations of investment advisers and mutual funds. The Securities Act and the Exchange Act, along with the regulations and interpretations thereunder, impose additional restrictions and requirements on mutual funds. The SEC is authorized to institute proceedings and impose sanctions for violations, of those Acts, ranging from fines and censures to, in the case of investment advisers, the termination of an adviser’s registration.
As an investment adviser, we have a fiduciary duty to our clients. The SEC has interpreted that duty to impose standards, requirements and limitations on, among other things: trading for proprietary, personal and client accounts; allocations
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Table of investment opportunities among clients; use of soft dollars; execution of transactions; and recommendations to clients. We manage accounts for our clients on a discretionary basis, with authority to buy and sell securities for each portfolio, select broker-dealers to execute trades and negotiate brokerage commission rates. In connection with certain of these transactions, we receive soft dollar credits from broker-dealers that have the effect of reducing certain of our expenses.Contents
All of our soft dollar arrangements are intended to be within the safe harbor provided by Section 28(e) of the Exchange Act. If our ability to use soft dollars were reduced or eliminated as a result of the implementation of statutory amendments or new regulations including regulations imposed by non-U.S. regulators, our operating expenses would increase. As a registered adviser, we are subject to many additional requirements that cover, among other things, disclosure of information about our business to clients; maintenance of written policies and procedures; maintenance of extensive books and records; restrictions on the types of fees we may charge; custody of client assets; client privacy; advertising; and solicitation of clients. The SEC has authority to inspect any investment adviser and typically inspects a registered adviser periodically to determine whether the adviser is conducting its activities (i) in accordance with applicable laws, (ii) in a manner that is consistent with disclosures made to clients and (iii) with adequate controls, systems and procedures to ensure compliance.

For the year ended December 31, 2017, 62% of our revenues were derived from our advisory services to investment companies registered under the 1940 Act, including 59% from our advisory services to Artisan Funds. The 1940 Act imposes significant requirements and limitations on a registered fund, including with respect to its capital structure, investments and transactions. While we exercise broad discretion over the day-to-day management of the business and affairs of Artisan Funds and the investment portfolios of Artisan Funds and the funds we sub-advise, our own operations are subject to oversight and management by each fund’s board of directors. Under the 1940 Act, a majority of the directors must not be “interested persons” (sometimes referred to as the “independent director” requirement). The responsibilities of each fund’s board include, among other things, approving our investment management agreement with the fund; approving other service providers; determining the method of valuing assets; and monitoring transactions involving affiliates.
Our investment management agreements with these funds may be terminated by the funds on not more than 60 days’ notice, and are subject to annual renewal by each fund’s board after the initial term of one to two years. The 1940 Act also imposes on the investment adviser to a mutual fund a fiduciary duty with respect to the receipt of the adviser’s investment management fees. That fiduciary duty may be enforced by the SEC, by administrative action or by litigation by investors in the fund pursuant to a private right of action.
As required by the Advisers Act, our investment management agreements may not be assigned without client consent. Under the 1940 Act, investment management agreements with registered funds (such as the mutual funds we manage) terminate automatically upon assignment. The term “assignment” is broadly defined and includes direct assignments as well as assignments that may be deemed to occur upon the transfer, directly or indirectly, of a controlling interest in us.
Artisan Partners Distributors LLC, our SEC-registered limited purpose broker-dealer subsidiary, is subject to the Securities Exchange Act of 1934, the SEC’s rules promulgated thereunder and the rules and regulations of the Financial Industry Regulatory Authority, which generally relate to sales practices, registration of personnel, compliance and supervision, and compensation and disclosure. FINRA has the authority to conduct periodic examinations of member broker-dealers, and may initiate administrative proceedings. Artisan Partners Distributors LLC is also subject to the SEC’s Uniform Net Capital Rule and the National Securities Clearing Corporation’s excess net capital requirement, which require that at least a minimum part of a registered broker-dealer’s assets be kept in relatively liquid form.
ERISA-Related Regulation
Artisan Partners Limited Partnership is a fiduciary under ERISAthe Employee Retirement Income Security Act of 1974, as amended, with respect to assets that we manage for benefit plan clients subject to ERISA. ERISA regulations promulgated thereunder and applicable provisions of the Internal Revenue Code impose certainimposes duties on persons who are ERISA fiduciaries, under ERISA, prohibitand prohibits certain transactions involvingbetween related parties to a retirement plan. The U.S. Department of Labor administers ERISA and regulates plan clientsfiduciaries, including investment advisers who service retirement plan clients.
Artisan Partners Limited Partnership is registered with the Commodity Futures Trading Commission (CFTC) as a commodity pool operator, and provide monetary penalties for violationsexpects to become a member of the National Futures Association (NFA), with respect to its management of the Artisan Emerging Markets Debt Opportunities Fund and Artisan Global Unconstrained Fund, each of which we expect to launch in the first half of 2022. The CFTC and NFA each administer a comparable regulatory system covering futures, swaps and other derivative instruments. As the commodity pool operator of these prohibitions.Funds, Artisan Partners expects to claim relief under the Commodity Exchange Act from certain reporting and recordkeeping requirements.
The legislative and regulatory environment in the U.S. is subject to continual change. Political and electoral changes and developments have in the past introduced, and may in the future introduce, additional uncertainty. New legal or regulatory requirements often add further complexity to our business and operations, and addressing such new requirements may require substantial expenditures of time and capital. Certain regulatory reforms in the U.S. that have, or may in the future, impact our business include the following items:
•The SEC has recently proposed and/or adopted several new rules impacting registered investment advisers (e.g. private fund advisor rules, cybersecurity risk management rules, beneficial ownership rules, T+1 settlement cycle, amendments to Form PF and amended advertising rule) and registered investment companies (e.g. new or amended rules on mutual fund use of derivatives, liquidity risk management, reporting modernization, valuation). In addition, the SEC’s current regulatory agenda indicates that the SEC will be proposing a number of rules impacting public companies (e.g. new disclosure requirements on topics such as climate change, human capital management, cybersecurity risk governance, and pay versus performance). These rules impact us and the mutual funds we manage to varying degrees.
•In recent years there has been an increased focus on the protection of customer privacy and data, and the need to secure sensitive information. We are subject to the California Consumer Privacy Act, which took effect in January 2020, and provides for enhanced consumer protections for California residents. Since then, several additional states have proposed and/or adopted data privacy laws with which we may be required to comply.
Non-U.S. Regulation
In addition to the extensive regulation we are subject to in the United States, onea number of our subsidiaries and certain of our non-U.S. operations are subject to regulation in non-U.S. jurisdictions. Some laws in non-U.S. jurisdictions are also extra-territorial and may apply to our business.
Artisan Partners UK LLP is authorized and regulated by the U.K. Financial Conduct Authority, which is responsible for the conduct of business and supervision of financial firms in the United Kingdom. The FCA imposes a comprehensive system of regulation that is primarily principles-based (compared to the primarily rules-based U.S. regulatory system).
Artisan Partners Europe is authorized and regulated by the Central Bank of Ireland, imposes requirements on UCITS fundswhich regulates our Irish business activities. Artisan Partners Europe has a branch office in Sweden, which is also regulated by the Central Bank of Ireland and is further subject to the regulation by it, including of the Swedish financial supervisory authority.
Artisan Global Funds, as doa family of Ireland-domiciled UCITS funds, are regulated by the regulators in certain other markets in which sharesCentral Bank of Ireland. Artisan Global Funds are offeredregistered for sale in many countries around the world, both in the EU and with which we are required to comply. Webeyond, and thus are also subject to regulation internationallythe laws of, and supervision by, the governmental authorities of those countries.
Artisan Partners Hong Kong Limited, our Hong Kong subsidiary, is licensed and regulated by the Hong Kong Securities and Futures Commission (the “SFC”). Artisan Partners Hong Kong Limited and its employees conducting regulated activities under the Securities and Futures Ordinance are subject to the rules, codes and guidelines issued by the SFC from time to time.
Artisan Partners Australia Pty Ltd has historically operated in Australia on the basis of a “sufficient equivalence relief” exemption from local licensing with the Australian Securities and Investments Commission, where we operate pursuantCommission. This relief is expiring for foreign financial service providers like us and, as a result, Artisan Partners Australia Pty Ltd or one of its affiliates may need to ordersapply for and obtain a securities license or a new exemption by April 1, 2023.
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Certain Artisan Private Funds are regulated as mutual funds under the Mutual Funds Law (as amended) of the Cayman Islands, and by various Canadian regulatory authorities in the Canadian provinces where we operate pursuantCayman Islands Monetary Authority has supervisory and enforcement powers to exemptions from registration. ensure the funds’ compliance with the Mutual Funds Law.
Our business is also subject to the rules and regulations of the countries in which we marketconduct distribution or investment management activities. We have relationships with clients located outside of the United States, which relationships may be subject to laws and regulations of the jurisdictions in which the client is domiciled. In addition, 45% of our fundsassets under management were invested in securities denominated in currencies other than the U.S. dollar as of December 31, 2021. Our investments in these non-U.S. securities may subject us to certain laws and regulations of the jurisdictions in which the issuer resides or servicesis traded. We may also be subject to U.S. laws and conductregulations with respect to our distribution or investment management activities in non-U.S. markets, including the countriesin jurisdictions that may be considered higher risk.
Further expansion of our business into new international jurisdictions and regulatory reforms in jurisdictions in which we currently operate or invest, further complicate our compliance efforts. Addressing these legal and regulatory matters may require substantial time and expense. Certain non-U.S. regulatory reforms or guidance regarding such regulations that have, or may in the future, impact our business include the following items:
•In October 2020, the Central Bank of Ireland issued further guidance regarding the fund company management effectiveness framework (“CP86”). As a result of the guidance, fund management companies, including Artisan Global Funds, were required to assess their operational resources and governance arrangements and increase their level of resources to meet the new minimum requirements. During 2021, Artisan Global Funds retained a third-party management company to meet the requirements of CP86 in Ireland.
•The EU’s Markets in Financial Instruments Directive II regulates the use of soft dollars to pay for research and other soft dollar services. MiFID II’s soft dollar rules do not directly apply to our business because we currently conduct our investment strategies make investments. management activities in the United States. However, in response to MiFID II and the industry-wide changes prompted by it, we have experienced requests from clients to bear research expenses that are currently paid for using soft dollars. In response to such requests or as a result of changes in our operations, we may eventually bear a significant portion or all of the costs of research that are currently paid for using soft dollars, which would increase our operating expenses materially.
We may become subject to additional regulatory demands in the future to the extent we expand our business in existing and new jurisdictions. See “Risk Factors—Risks Related to our Industry—We are subject to extensive, regulation”complex and sometimes overlapping rules, regulations and legal interpretations.” and “Risk Factors—Risks Related to our Industry—The regulatory environment in which we operate is subject to continual change, and regulatory developments designed to increase oversight may adversely affect our business.”
Competition
The investment management industry is highly competitive. In order to be successful and grow our business, we must be able to compete effectively for assets under management. Historically, we have competedWe compete to attract assets to our managementclients and investors principally on the basis of:
•the performance of our investment strategies;strategies
•the continuity of our investment professionals;and distribution professionals
•the quality of the service we provide to our clients;clients
•the range of investment strategies and vehicles we offer
•our brand recognition and reputation within the institutional investing community.community

•the fees we charge for the investment management services we provide
Our ability to continue to compete effectively will also depend upon our ability to retain our current investment professionals and employees and to attract highly qualified new investment professionals and employees. We compete in all aspects of our business with a large number of investment management firms, commercial banks, broker-dealers, insurance companies and other financial institutions. For additional information concerning the competitive risks that we face, see “Risks Factors—Risks Related to Our Industry—The investment management industry is intensely competitive.”

Human Capital Resources
Operations, SystemsSince Artisan Partners was founded in 1994, we have recognized that our success as an investment management firm is predicated on having talented associates throughout the organization in every role, at every level. We understand that attracting, developing and Technology
With respectretaining talented professionals is an essential component of our business strategy. As a result, we are committed to providing an environment that is attractive to our equity strategies, we perform most middle-current and back-office functions internally, generally using third-party softwareprospective associates and technology for functions such as trade confirmation, trade settlement, custodian reconciliations, corporate action processing, performance calculation and client reporting, customized as necessarythat allows our talented associates to support our investment processes and operations. With respect to our fixed income strategies, we outsource mostbe successful throughout the course of the middle- and back-office functions to service providers that we supervise. Artisan Funds and Artisan Global Funds outsource the functions of custodian, transfer agent and portfolio accounting agent to third parties. We have back-up and disaster recovery systems in place.
Employeestheir careers.
As of December 31, 2017,2021, we employed approximately 400 full-time and part-time employees. None498 associates. Approximately 30% of our employeesassociates work within our investment teams, 17% within our distribution teams and 53% within our business management and operations teams. Approximately 94% of our associates operate from our U.S. offices and 6% operate from our offices outside of the U.S. As of December 31, 2021, 40% of our U.S. associates were female and 20% of our U.S. associates self-identified as ethnically diverse.

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We commit significant energy to the recruitment of our associates as they are critical to ensuring the long-term success of our firm. We strive to recruit and hire outstanding associates who thrive in broad roles and want the freedom to grow their talents and careers. We are also committed to seeking professionals from different backgrounds, experiences and locations to foster creative thinking and differentiated perspectives that remain a pillar of the firm’s culture. We have built relationships with a variety of recruitment partners and community organizations to broaden our candidate pools and increase our access to diverse talent.
We actively support associate development, both formally and informally, and encourage advancement from within the firm. Our tuition reimbursement program is subjectavailable to collective bargaining agreements.associates who are pursuing applicable undergraduate and graduate degrees or certifications or licenses relevant to the business. Our diversity and inclusion committee champions our diversity and inclusion initiatives by bringing together a group of individuals with broad representation across the firm, as well as diverse social, regional and cultural identities. We consideralso actively support a number of associate-led groups including the Pride Alliance, Multicultural Exchange, diffAbilities and the Women’s Networking Initiative. These groups create supportive and collaborative networks, encourage engagement and a sense of belonging, and enhance professional and personal growth. Our support of these and other associate-led programs are part of our relationshipongoing commitment to providing an environment that allows our talented associates to thrive.
We believe in order to attract and retain talent, it is critical that we continue to foster an engaging environment and provide attractive compensation and benefits programs. We regularly review compensation paid to associates to ensure it is competitive and fair for the role, experience, location and individual contribution. We provide equity or equity-linked incentives to all of our associates in order to align their economic interests with those of our employeesclients and stockholders. We encourage our associates to be goodsave for retirement. In the U.S., we match 100% of associate 401(k) contributions dollar for dollar (fully vested), up to the IRS limit. We also maintain competitive retirement programs or benefits for all non-U.S. associates. In addition, we offer a comprehensive benefits program that is available to all associates regardless of title, role, or responsibility.
Sustainability
Artisan Partners' purpose is to generate and have not experienced interruptionscompound wealth over the long-term for our clients. The wealth we generate improves retirement outcomes, pays for education, funds charitable purposes and in general improves people's lives. We are proud of operations dueour track record for the people we serve and are dedicated to labor disagreements.continuing to improve it.
To achieve our purpose, we must continue to thoughtfully grow our business over the long term while preserving a consistent environment in which our talented investment professionals and associates can thrive. Maintaining our talent-driven business model and investment-focused culture is critical to providing a stable environment for our associates, generating sustainable, long-term investment outcomes for clients, and creating long-term successful financial outcomes for shareholders.
To us, sustainability means the following:
•Long-term relationships with the right clients, on the right terms and with the right time horizons. We foster client relationships by prioritizing investment returns. Prioritizing clients’ investment returns may, at times, require us to limit client cash flows and overall assets managed in a strategy—a practice we refer to as capacity management.
•A deliberate process to bring on new investment talent, launch new strategies and build sustainable franchises. We are patient in developing our talent, teams and strategies. We are comfortable with evolving—and sometimes even disrupting—our firm to increase the probability of long-term successful investment outcomes through market cycles.
•Compelling work in a tailored environment, with long-term opportunities for associates across our firm. Our culture promotes associates’ success—ideally over their entire careers—with economic alignment in the form of variable compensation and long-duration incentive awards.
•Growing our business value while maintaining financial discipline and continuing to generate and distribute significant cash to our shareholders. By taking care of our people and fulfilling our fiduciary duty to our clients we create a waterfall effect that generates sustainable financial outcomes for our shareholders over the long term.
Our Structure and Reorganization
Holding Company Structure
We are a holding company and our assets principally consist of our ownership of partnership units of Artisan Partners Holdings, deferred tax assets and cash. As the sole general partner of Artisan Partners Holdings, we operate and control all of its business and affairs, subject to certain voting rights of its limited partners. We conduct all of our business activities through operating subsidiaries of Artisan Partners Holdings. Net profits and net losses are allocated based on the ownership of partnership units of Artisan Partners Holdings. As of December 31, 2017,2021, we owned approximately 67%84% of Artisan Partners Holdings, and the other 33%16% was owned by the limited partners of Artisan Partners Holdings.

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IPO Reorganization
In March 2013, we completed our IPO. In connection with the IPO, we and Artisan Partners Holdings completed a series of reorganization transactions, which we refer to as the IPO Reorganization, in order to reorganize our capital structures in preparation for the IPO. The IPO Reorganization was designed to create a capital structure that preserves our ability to conduct our business through Artisan Partners Holdings, while permitting us to raise additional capital and provide access to liquidity through a public company. Multiple classes of securities at the public company level were necessary to achieve those objectives and maintain a corporate governance structure consistent with that of Artisan Partners Holdings prior to the IPO Reorganization. The IPO Reorganization included, among other changes, the following:
•Our appointment as the sole general partner of Artisan Partners Holdings.
•The modification of our capital structure into three classes of common stock and a series of convertible preferred stock. We issued shares of our Class B common stock and Class C common stock and convertible preferred stock to pre-IPO partners of Artisan Partners Holdings. Each share of Class B common stock corresponds to a Class B common unit of Artisan Partners Holdings. Each share of Class C common stock corresponds to either a Class A, Class D or Class E common unit of Artisan Partners Holdings. Subject to certain restrictions, each common unit of Artisan Partners Holdings (together with the corresponding share of Class B or Class C common stock) is exchangeable for a share of our Class A common stock.
•A corporation (“H&F Corp”) merged with and into Artisan Partners Asset Management, which we refer to in this document as the H&F Corp Merger. As consideration forIn connection with the merger, the shareholder of H&F Corp received shares of our convertible preferred stock contingent value rights, or CVRs, issued by Artisan Partners Asset Management and the right to receive an amount of cash. In November 2013, the CVRs issued by Artisan Partners Asset Management were terminated with no amounts paid or payable thereunder.certain other considerations. In June 2014, the shareholder of H&F Corp converted all of its then-remaining shares of convertible preferred stock into shares of Class A common stock and sold those shares. We no longer have any outstanding shares of convertible preferred stock, and Artisan Partners Holdings no longer has any outstanding preferred units.
•The voting and certain other rights of each class of limited partnership units of Artisan Partners Holdings were modified. In addition, Artisan Partners Holdings separately issued CVRs to the holders of the preferred units. In November 2013, the CVRs issued by Artisan Partners Holdings were terminated with no amounts paid or payable thereunder.
•We entered into two tax receivable agreements (“TRAs”), one with a private equity fund (the “Pre-H&F Corp Merger Shareholder”) and the other with each limited partner of Artisan Partners Holdings. Pursuant to the first TRA, APAM will paypays to the assignees of the Pre-H&F Corp Merger Shareholder a portion of certain tax benefits APAM realizes as a result of the H&F Corp Merger. Pursuant to the second TRA, APAM will paypays to current or former limited partners of Artisan Partners Holdings (or their assignees) a portion of certain tax benefits APAM realizes as a result of the purchase or exchange of their limited partnership units of Artisan Partners Holdings.



The diagram below depicts our organizational structure as of February 9, 2018:December 31, 2021:

apam-20211231_g1.jpg

(1)Our employees to whom we have granted equity have entered into a stockholders agreement with respect to all shares of our common stock they have acquired from us and any shares they may acquire from us in the future, pursuant to which they granted an irrevocable voting proxy to a stockholders committee currently consisting of Eric R. Colson (Chairman and Chief(Chief Executive Officer), Charles J. Daley, Jr. (Chief Financial Officer) and Gregory K. Ramirez (Executive Vice President). The stockholders committee, by vote of a majority of its members, will determine the vote of all of the shares subject to the stockholders agreement. In addition to owning all of the shares of our Class B common stock, our employee-partners, together with our other employees, owned unvested restricted shares of our Class A common stock representing approximately 8% of our outstanding Class A common stock as of February 9, 2018.December 31, 2021.
(2)Each class of common units generally entitles its holders to the same economic and voting rights in Artisan Partners Holdings as each other class of common units, except that the Class E common units have no voting rights except as required by law.

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Table of Contents
Available Information
Our principal executive offices are located at 875 E. Wisconsin Avenue, Suite 800, Milwaukee, Wisconsin 53202. Our telephone number at this address is (414) 390-6100 and our website address is www.artisanpartners.com. We make available free of charge through our website all of the materials we file with or furnish withto the SEC as soon as reasonably practicable after we electronically file such material with, or furnish such materials withit to, the SEC. Information contained on our website is not part of, nor is it incorporated by reference into, this Form 10-K. The company was incorporated in Wisconsin on March 21, 2011 and converted to a Delaware corporation on October 29, 2012.
The public may read and copy any

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Table of the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxies and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.Contents


Item 1A. Risk Factors
An investment in our Class A common stock involves substantial risks and uncertainties. You should carefully consider each of the risks below, together with all of the other information contained in this document, before deciding to invest in shares of our Class A common stock. If any of the following risks develops into an actual event, our business, financial condition or results of operations could be negatively affected, the market price of your shares could decline and you could lose all or part of your investment.
Risks Related to our Business
The loss of key investment professionals or senior members of our seniordistribution and management teamteams could have a material adverse effect on our business. In addition, a substantial portion of our total assets under management is in six of our strategies, several of which are closed to most new investors and client relationships.
We depend on the skills and expertise of our portfolio managers and other investment professionals and ourOur success depends on our ability to retain the key members ofportfolio managers who manage our investment teams, who possess substantial experience in investingstrategies and have been primarily responsible for the historically strong investment performance we have achieved. Mark L. Yockey is the sole portfolio manager for our largest strategy, the Non-U.S. Growth strategy, which represented $27.1 billion, or 23%, of our assets under management as of December 31, 2017. Charles-Henri Hamker and Andrew J. Euretig are associate portfolio managers of the Non-U.S. Growth strategy. Our Non-U.S. Value strategy, which represented $21.8 billion, or 19%, of our assets under management as of December 31, 2017, is managed by co-managers N. David Samra (lead manager) and Daniel J. O’Keefe. Mr. O’Keefe (lead manager) and Mr. Samra also co-manage our Global Value strategy, which represented $19.9 billion, or 17%, of our assets under management as of December 31, 2017. James D. Hamel, Matthew A. Kamm, Craigh A. Cepukenas and Jason White are portfolio co-managers of our U.S. Mid-Cap Growth (of which Mr. Kamm is lead manager) and Global Opportunities (of which Mr. Hamel is lead manager) strategies, which represented $12.8 billion, or 11%, and $15.5 billion, or 13%, respectively, of our assets under management as of December 31, 2017. The U.S. Mid-Cap Value strategy, of which James C. Kieffer, Thomas A. Reynolds, and Daniel L. Kane are co-managers, represented $6.5 billion, or 6%, of our assets under management as of December 31, 2017.
Because of the long tenure and stability of our portfolio managers, our clients generally attribute the investment performance we have achieved to these individuals. The departure of a portfolio manager, even for strategies with multiple portfolio managers, could cause clients to withdraw funds from the strategy which would reduce our assets under management, investment managementadvisory fees and our net income, and these reductions could be material if our assets under management in that strategy and the related revenues were material. The departure of a portfolio manager could also could cause consultants and intermediaries to stop recommending a strategy, and clients to refrain from allocating additional funds to a strategy or delay such additional funds until a sufficient new track record has been established.
WeIn addition to our key investment professionals, we also depend on the contributions of our senior management team led by Eric R. Colson and Jason A. Gottlieb, and our senior marketing and client service personnel who have direct contact with our institutional clients, and consultants, intermediaries and other key individuals within each of our distribution channels.
The loss of any of these key professionals could limit our ability to successfully execute our business strategy and may prevent us from sustaining the historically strong investment performance we have achieved or adversely affect our ability to retain existing and attract new client assets and related revenues.
Any of our investment or managementkey professionals may resign at any time, join our competitors or form a competing company. Although many of our portfolio managers and each of our named executive officers are subject to post-employment non-compete obligations, these non-competition provisions may not be enforceable or may not be enforceable to their full extent. In addition, we may agree to waive non-competition provisions or other restrictive covenants applicable to former investment or managementkey professionals in light of the circumstances surrounding their relationship with us. We do not carry “key man” insurance that would provide us with proceeds in the event of the death or disability of any of the key members of our investment or management teams.
Competition for qualified investment, management and marketing and client service professionals is intense and we may fail to successfully attract and retain qualified personnel in the future. Our ability to attract and retain these personnel will depend heavily on the amount and structure of compensation and opportunities for equity ownership we offer. Any cost-reduction initiative or adjustments or reductions to compensation or changes to our equity ownership culture could negatively impact our ability to retain key personnel. As the amount of pre-IPO equity held by our key personnel decreases, our ability to retain these employees may be negatively impacted. professionals.
Changes to our management structure, corporate culture and corporate governance arrangements could also negatively impact our ability to retain key personnel.

If we are unable to maintain or evolve our investment environment or compensation structures in a way that attracts, develops and retains talentedcould cause instability within our investment professionals, there could be a negative impact toteams and/or have an adverse effect on the performance of our investment strategies, our financial results and our ability to grow. In addition, our efforts to maintain and evolve our investment environment and compensation structures could themselves cause instability within our existing investment teams and/or negatively impact our financial results and ability to grow.
Attracting, developing and retaining talented investment professionals is an essential component of our business strategy. To do so, it is critical that we continue to foster an environment and provide compensation that is attractive for our existing investment professionals and for prospective investment professionals. If we are unsuccessful in maintaining such an environment (for instance, because of changes in management structure, corporate culture, corporate governance arrangements, or applicable laws and regulations) or compensation levels or structures for any reason, our existing investment professionals may leave our firm or fail to produce their best work on a consistent, long-term basis and/or we may be unsuccessful in attracting talented new investment professionals, any of which could negatively impact the performance of our investment strategies, our financial results and our ability to grow.
Over our firm’s history we have sought to successfully design and implement compensation structures that align our investment professionals’ economic interests with those of our clients, investors partners, and shareholders.stockholders. We believe our historical structures have been important to our long-term growth and that objective, predictable, and transparent structures work best to incentivize investment professionals to perform over the long-term.
With respect to cash compensation,asset-based revenues, we use a single revenue share arrangement across all of our investment teams. Under the revenue share, each team shares a bonus pool consisting of 25% of the asset-based revenues earned by the strategies managed by the respective team. The revenue share directly links the majority of the investment teams’ cash compensation to long-term growth in revenues, which, over the long-term, we believe is primarily linked to investment performance. The asset-based revenue share is objective, predictable, transparent, and the same for all teams.
In addition, each team is generally entitled to a share of performance-based revenues earned by the strategies managed by the team. In the future, we expect that performance fees will represent a higher proportion of our total revenues, as some of our new products will use performance fees, while only a few of our separate accounts use performance fees today. We expect to design and implement new or modified compensation arrangements with respect to performance fee revenues. We do not expect that these new or modified compensation arrangements will have a significant impact on any of our existing arrangements, including the revenue share described above. However, the design and implementation of these new arrangements could cause instability within our existing investment teams and/or impact our ability to attract and retain new investment talent. These arrangements could also negatively impact the amount of profits that we recognize with respect to performance fee revenues, as compared to the asset-based revenues we earn today.
Over our firm’s history we have used a variety of equity incentives to align the long-term interests of our investment professionals and other senior personnel with the interests of our clients, investors, partners and shareholders. Untilstockholders. Prior to our IPO in 2013, firm equity awards were in the formconsisted of partnership profits interests, which entitled recipients to a percentage of future profits and future appreciation in the value of the firm.interests. Award recipients had the right to cash out their profits interests only after the end of their careers, and 50% of the awards were subject to forfeiture if the recipient left Artisan without proper notice or was terminated. Prior to the IPO Reorganization, the profits interests were converted into partnership units and, as part of the IPO Reorganization, the 50% forfeiture feature was eliminated and employee-partners were given the right to liquidate a portion of their partnership units during each year that they remained employed withby Artisan. At the time of
Since our IPO, the partnership units held by employee-partners represented 53% of the ownership interests inequity we’ve awarded to our firm. At the time of this report, the partnership units held by employee-partners represented approximately 16% of the ownership interests in our firm.
After our IPO, our equity incentives have been in the forminvestment professionals has consisted of APAM restricted stockshare-based awards. Initially, 100%In general, equity awarded to our investment professionals consists of thea mix of standard restricted stock awards were Standard Restricted Shares vestingshares which vest pro rata over five years from the date of grant.  grant, and career or franchise shares that generally only vest on, or 18 months after, a qualified retirement. Franchise shares are further subject to the Franchise Protection Clause, which applies to current or former portfolio managers and founding investment team members, and may reduce the number of shares ultimately vesting to the extent that cumulative net client cash outflows from the award recipient’s investment team during roughly a 3-year measurement period beginning on the date of the recipient’s retirement notice exceeds a set threshold.
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In 2014,2021 we made our first award of franchise capital awards to investment professionals. We designed franchise capital awards as we continuedan added feature to evolve our equity incentives, we introduced Career Shares, whichlong-term incentive award program to enhance the alignment between our investment professionals and clients, and to provide investment professionals with greater control over their long-term economic outcome. Franchise capital awards are restricted stockcash awards that in general, remainare subject to the same long-term vesting and forfeiture untilprovisions as the recipient’s qualifying retirement from Artisan.  In general, since 2014, excluding sign-onrestricted share-based awards described above. Prior to vesting, though, the franchise capital awards will generally be invested in one or walk away awards, approximately 50%more of the awards we have made to our senior employees have been Career Shares, and the other 50% Standard Restricted Shares. Unlike our pre-IPO profits interests, the APAM restricted stock awards are “full value” awards (as opposed to “option-style” awards) and the Standard Restricted Shares provide recipients with liquidity prior to the end of their careers. The percentage ownership in our firm representedinvestment strategies managed by the newly granted restricted stock each year is less than the percentage ownership represented by the partnership units that employee-partners may exchange and sell each year. Therefore, the amount of our firm owned by employees, including our portfolio managers, is expected to continue to decline.award recipient’s investment team.
As we have since our founding, we continue to assess the effectiveness of our compensation arrangements and equity structures in aligning the long-term interests of our investment professionals with those of our clients, investors partners, and shareholdersstockholders and whether different, types of, or modified, awards or structures would enhance incentives for long-term growth and succession planning. The design and implementation of new or modified compensation arrangements and equity structures is complicated.  We will only pursue changes that we believe will improve the alignment between our most important investment talent and our clients, investors, partners, and shareholders. 

Nevertheless, theThe implementation of new or modified compensation arrangements or equity structuresprograms could cause instability within our existing investment teams and/or impact our ability to attract and retain new investment talent. As with our historical and current compensation arrangements and equity compensation programs, any futurenew arrangements or modified equity structurestructures could materially impact our financial performance and financial results (or expectations about our future financial performance and financial results), reduce the amount of cash available for dividends and distributions to our stockholders and partners, or result in dilution to other shareholders.  stockholders.
If ourPoor investment strategies perform poorly, clientsperformance could withdraw their funds and we could sufferlead to a decline in ourloss of assets under management and/or become subject to litigation, which wouldcould reduce our earnings.revenues and negatively impact our financial condition.
The performance of our investment strategies is critical in retaining existing client assets as well asand in attracting new client assets. If our investment strategies perform poorly for any reason, our earnings could decline because:
Our existing clientsPoor performance may withdraw funds from our investment strategies or terminate their relationships with us.
Third-partycause financial intermediaries, advisors orand consultants mayto remove our investment products from recommended lists due to poor performance or for other reasons, whichand may lead our existing clients to withdraw funds from our investment strategies or reduce asset inflows from these third parties or their clients.
Theresult in lower Morningstar and Lipper ratings and rankingsrankings. Our existing clients may decide to withdraw funds from, or refrain from allocating additional funds to, our investment strategies or to end their relationships with us entirely. In addition, our ability to attract new client assets could also be adversely affected. A decrease in the value of mutual fundsour assets under management as a result of poor performance would have an adverse impact on our revenues, as nearly all of the investment management fees we manage may decline, which mayearn are based on a specified percentage of clients' average assets under management. Poor performance would also adversely affect the abilityportion of those fundsour revenues attributed to attract new or retain existing assets.performance-based fees.
Our investment strategies can perform poorly for a number of reasons, including general market conditions; investor sentiment about market and economic conditions; investment styles and philosophies; investment decisions; the performance of the companies in which our investment strategies invest and the currencies in which those investmentinvestments are made; the liquidity of securities or instruments in which our investment strategies invest; and our inability to identify sufficient appropriate investment opportunities for existing and new client assets on a timely basis. In addition, while we seek to deliver long-term value to our clients, volatility may lead to under-performanceunder performance in the near term, which could adversely affect our results of operations.
In contrast, when our strategies experience strong results relative to the market, clients’ allocations to our strategies typically increase relative to their other investments and we sometimes experience withdrawals as our clients rebalance their investments to fit their asset allocation preferences despite our strong results.
While clients do not have legal recourse against us solely on the basis of poor investment results, if our investment strategies perform poorly, we are more likely to become subject to litigation brought by dissatisfied clients. In addition, to the extent clients are successful in claiming that their losses resulted from fraud, negligence, willful misconduct, breach of contract or other similar misconduct, these clients may have remedies against us, the mutual funds and other funds we advise and/or our investment professionals under various U.S. and non-U.S. laws.
The historical returns of our existing investment strategies may not be indicative of their future results or of the investment strategies we may develop in the future.
The historical returns of our strategies and the ratings and rankings we or the mutual funds that we advise have received in the past may not be indicative of the future results of these strategies or of any other strategies that we may develop in the future. The investment performance we achieve for our clients varies over time and the variance can be wide. The ratings and rankings we or the mutual funds we advise have received are typically revised monthly. Our strategies’ returns have benefited during some periods from investment opportunities and positive economic and market conditions. In other periods, general economic and market conditions have negatively affected investment opportunities and our strategies’ returns. These negative conditions may occur again, and in the future we may not be able to identify and invest in profitable investment opportunities within our current or future strategies.
Difficult market conditions can adversely affect our business in many ways, including by reducing the value of our assets under management and causing clients to withdraw funds, each of which could materially reduce our revenues and adversely affectimpact our financial condition.
Difficult market conditions may cause investors in the mutual funds we advise to redeem their investments in those funds which they can do at any time and without prior notice. Our separate accounts clients may also reduce the aggregate amount of assets under management with us with minimal or no notice for any reason, including due to declining financial market conditions. In addition, the prices of the securities held in the portfolios we manage may decline for any number of reasons beyond our control, including, among others, a declining market, general economic downturn, political uncertainty, natural disasters, acts of terrorism, or other unpredictable events such as a global pandemic.
In connection with the severe market dislocations of 2008 and 2009, for example, the value of our assets under management declined substantially due primarily to the sizable decline in stock prices worldwide. In the period from June 30, 2008 through March 31, 2009, our assets under management decreased by approximately 43%, primarily as a result of general market conditions. More recently, during the first quarter of 2020, AUM levels fell from $125.4 billion on February 19, 2020 to $95.2 billion on March 31, 2020, as a result of sharp global equity market declines related to the COVID-19 pandemic.
The fees we earn under our investment management agreements are typically based on the market value of our assets under management, and to a much lesser extent based directly on investment performance. Investors in the mutual funds we advise can redeem their investments in those funds at any time without prior notice and our clients may reduce the aggregate amount of assets under management with us with minimal or no notice for any reason, including financialIf difficult market conditions, and the absolute or relative investment performance we achieve for our clients. In addition, the prices of the securities held in the portfolios we manage may decline duehowever caused, lead to any number of factors beyond our control, including, among others, a declining market, general economic downturn, political uncertainty or acts of terrorism. In connection with the severe market dislocations of 2008 and 2009, for example, the value of our assets under management declined substantially due primarily to the sizeable decline in stock prices worldwide. In the period from June 30, 2008 through March 31, 2009, our assets under management decreased by approximately 43%, primarily as a result of general market conditions.

The growth of our assets under management since 2009 benefited from the prolonged bull market in equity securities around the world. That prolonged bull market may increase the likelihood of a severe or prolonged downturn in world-wide equity prices which would directly reduce the value of our assets under management and could also accelerate client redemptions or withdrawals. If any of these factors cause a decline in our assets under management, it would result in lowerour investment management fees.advisory fees will decline as well. If our revenues decline without a commensurate reduction in our expenses, our net income will be reduced.
The significant growth we have experienced over the past decade has been and may continue to be difficult to sustain.
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Our assets under management increased from $55.5 billion as
Table of December 31, 2007 to $115.5 billion as of December 31, 2017. The absolute measure of our assets under management represents a significant rate of growth that has been and may continue to be difficult to sustain. For instance, between June 30, 2014, and December 31, 2016, our assets under management declined from $112.0 billion to $96.8 billion. The continued long-term growth of our business will depend on, among other things, retaining key investment professionals, attracting and recruiting new investment professionals, maintaining existing investment strategies and selectively developing new, value-added investment strategies. Our business growth will also depend on our success in achieving superior investment performance from our investment strategies, as well as our ability to maintain and extend our distribution capabilities, to deal with changing market conditions, to maintain adequate financial and business controls and to comply with new legal and regulatory requirements arising in response to both the increased sophistication of the investment management industry and the significant market and economic events of the last decade. We may not be able to manage our growing business effectively or be able to sustain the level of long-term growth we have achieved historically.Contents
Our efforts to establish and develop new teams and strategies may face challenges or ultimately be unsuccessful, which would likely negativelycould impact our results of operations, and could negatively impact our reputation and culture.
We seek to addrecruit new investment teams that invest in a way that is consistent with our philosophy of offeringmanage high value-added investment strategies and would allow us to grow strategically. We also look to offerdevelop new, differentiated strategies managed by our existing teams. We expect the costs associated with establishing a new team and/or strategy to initially to exceed the revenues generated, which will likely negatively impact our results of operations. New strategies, whether managed by a new team or by an existing team may invest in instruments (such as certain types of derivatives)make investments or present operational, (including legal, and regulatory)regulatory, or distribution-related issues and risks with which we have little or no experience.not yet encountered. Our lack of experience could strain our resources and increase the likelihood of an error or failure. The establishment of new teams and/or strategies (in particular, alternative investment teams or strategies) may also cause us to depart from our traditional compensation and economic model, which could reduce our profitability and harm our firm’s culture.
In addition, the historicalHistorical returns of our existing investment strategies maywill not be indicative of the investment performance of any new strategy and new strategies may have higher performance expectations that are more difficult to meet. Poor performance of any new strategy could negatively impact our reputation and the reputation of our other investment strategies.
We generally support the development of new strategies by making one or more seed investments using capital that would otherwise be available for our general corporate purposes. Making such seed investments exposes us to capital losses.
Failure to properly address conflicts of interest could harm our reputation or cause clients to withdraw funds, each of which could adversely affect our business and results of operations.
The SEC and other regulators have increased their scrutiny ofcontinued to focus on potential conflicts of interest and weour fiduciary duties as an adviser. We have implemented procedures and controls that we believe are reasonably designed to address these issues. However, appropriately dealing with conflicts of interest is complex and if we fail, or appear to fail, to deal appropriately with conflicts of interest, we could face reputational damage, litigation or regulatory proceedings or penalties, any of which may adversely affect our results of operations.
In addition, asAs we expand the scope of our business and our client base, we must continue to monitor and address any conflicts between the interests of our stockholders and those of our clients. Our clients may withdraw funds if they perceive conflicts of interest between the investment decisions we make for strategies in which they have invested and our obligations to our stockholders. For example, we may limit the growth of assets in or close strategies or otherwise take action to slow the flow of assets when we believe it is in the best interest of our clients even though our aggregate assets under management and investment managementadvisory fees may be negatively impacted in the short term. Similarly, we may establish new investment teams or strategies or expand operations into other geographic areas or jurisdictions if we believe such actions are in the best interest of our clients, even though our profitability may be adversely affected in the short term. Although we believe such actions enable us to retain client assets and maintain our profitability, which benefits both our clients and stockholders, if clients perceive a change in our investment or operations decisions in favor of a strategy to maximize short term results, they may withdraw funds, which could adversely affectreduce our investment management fees.

revenue and impact our financial condition.
Several of our investment strategies invest principally in the securities of non-U.S. companies, which involve foreign currency exchange, tax, political, social and economic uncertainties and risks.
As of December 31, 2017,2021, approximately 54%51% of our assets under management were invested in strategies that primarily invest in securities of non-U.S. companies. In addition, someSome of our other strategies also invest on a more limited basis in securities of non-U.S. companies. Approximately 47%45% of our assets under management were invested in securities denominated in currencies other than the U.S. dollar. Fluctuations in foreign currency exchange rates could negatively affect the returns of our clients who are invested in these strategies. In addition, an increase in the value of the U.S. dollar relative to non-U.S. currencies is likely to result in a decrease in the U.S. dollar value of our assets under management, which, in turn, would likely result in lower revenue and profits. See “Qualitative and Quantitative Disclosures Regarding Market Risk-Exchange Rate Risk” in Item 7A of this report for more information about exchange rate risk.
Investments in non-U.S. issuers may also be affected by tax positions taken in countries or regions in which we are invested as well as political, social and economic uncertainty. Declining tax revenues may cause governments to assert their ability to tax the local gains and/or income of foreign investors, (including our clients), which could adversely affect clients’ interests in investing outside their home markets. Many financial markets are not as developed, or as efficient, as the U.S. financial markets and, as a result, those markets may have limited liquidity and higher price volatility, and may lack established regulations.
Liquidity may also be adversely affected by political or economic events, government policies, and social or civil unrest within a particular country, and ourcountry. Our ability to dispose of an investment may also be adversely affected if we increase the size of our investmentsholdings in smaller non-U.S. issuers. Non-U.S. legal and regulatory environments, including financial accounting standards and practices, may also be different, and there may be less publicly available information about such companies. These risks could adversely affect the performance of our strategies that are invested in securities of non-U.S. issuers and may be particularly acute in the emerging or less developed markets in which we invest. In addition to our existing Sustainable Emerging Markets and Developing World strategies, a numberwe expect to launch three new emerging markets debt strategies in 2022. And several of our other investment strategies are permitted to invest, and do invest, in emerging or less developed markets.markets to a more limited extent.

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We may not be able to maintain our current fee rates as a result of poor investment performance, competitive pressures, as a result of changes in our business mix or for other reasons, which could have a material adverse effect on our profit margins and results of operations.
We may not be able to maintain our current fee rates for any number of reasons, including as a result of poor investment performance, competitive pressures, changes in global markets and asset classes, or as a result of changes in our business mix. Although our investment management fees vary by client and investment strategy, we historically have been successful in maintaining an attractive overall rate of fee and profit margin due to the strength of our investment performance and our focus on high value-added investment strategies. In recent years, however, there has been a general trend toward lower fees in the investment management industry as a result of competition and regulatory and legal pressures. Some of our investment strategies that tend to invest in larger-capitalization companies and were designed to have larger capacity have lower fee schedules. In order to maintain our fee structure in a competitive environment, we must retain the ability to decline additional assets to manage from potential clients who demand lower fees even though our revenues may be adversely affected in the short term. In addition, we must be able to continue to provide clients with investment returns and service that our clients believe justify our fees.
If our investment strategies perform poorly, weWe may be forced to lower our fees in order to retain current, and attract additional, assets to manage. We may not succeed in providing the investment returns and service that will allow us to maintain our current fee rates. We may also make fee concessions in order to attract early investors in a new strategy or increase marketing momentum in a strategy. Downward pressure on fees may also result from the growth and evolution of the universe of potential investments in a market or asset class. Changes in how clients choose to access asset management services may also exert downward pressure on fees. Some investment consultants, for example, have implemented programs in which the consultant provides a range of services, including selection, in a fiduciary capacity, of asset managers to serve as sub-adviser at lower fee rates than the manager’s otherwise applicable rates, with the expectation of a larger amount of assets under management through that consultant. The expansion of those and similar programs could, over time, make it more difficult for us to maintain our fee rates. Over time, a larger part of our assets under management could be invested in our larger capacity, lower fee strategies, which could adversely affect our profitability. In addition, plan sponsors of 401(k) and other defined contribution assets that we manage may choose to invest plan assets in vehicles with lower cost structures than mutual funds (such as a collective investment trust, if one is available)trust) or may choose to access our services through a separate account. We provide a lesser array offewer services to collective investment trusts and separate accounts than we provide to Artisan Funds and we receive fees at lower rates.
The investment management agreements pursuant to which we advise mutual funds are terminable on short notice and, after an initial term, are subject to an annual process of review and renewal by the funds’ boards. As part of that annual review process, the fund board considers, among other things, the level of compensation that the fund has been paying us for our services. That process may result in the renegotiation of our fee structure or an increase in the cost of ourthe performance of our obligations. Any fee reductions on existing or future new business could have an adverse effect on our profit margins and results of operations.

We derive substantially all of our revenues from contracts and relationships that may be terminated upon short or no notice.
We derive substantially all of our revenues from investment advisory and sub-advisory agreements, all of which are terminable by clients upon short notice or no notice. Our investment management agreements with mutual funds, as required by law, are generally terminable by the funds’ boards or a vote of a majority of the funds’ outstanding voting securities on not more than 60 days’ written notice. After an initial term, each fund’s investment management agreement must be approved and renewed annually by that fund’s board, including by its independent members. In addition, all of our separate account clientsaccounts and some of the mutual funds that we sub-advise have the ability to re-allocate all or any portion of the assets that we manage away from us at any time with little or no notice. These investment management agreements and client relationships may be terminated or not renewed for any number of reasons. The decrease in revenues that could result from the termination of a material client relationship or groupthe re-allocation of client relationshipsassets away from us could have a material adverse effect on our business.
Investors in many of the pooled vehicles that we advise can redeem their investments in those funds at any time without prior notice or with fairly limited notice, which would reduce our assets under management and could adversely affect our earnings.
Investors in the mutual funds, UCITS funds, and some other pooled investment vehicles that we advise or sub-advise may redeem their investments in those funds at any time without prior notice and investorsnotice. Investors in certain other types of pooledpool vehicles we advise or sub-advise may typically redeem their investments onwith fairly limited or no prior notice, thereby reducing our assets under management.notice. These investors may redeem for any number of reasons, including general financial market conditions, the absolute or relative investment performance we have achieved, or their own financial condition and requirements. In a declining stock market, the pace of redemptions could accelerate. Poor investment performance relative to other funds tends to result in decreased purchasesThese redemptions would reduce our assets under management and increased redemptions of fund shares. For the year ended December 31, 2017, we generated approximately 80% of our revenues from advising mutual funds and other pooled vehicles (including Artisan Funds, Artisan Global Funds, and other entities for which we are adviser or sub-adviser), and the redemption of investments in those funds would adversely affect our revenues and could have a material adverse effect on our earnings.revenues.
We depend on third parties to market our investment strategies.
Our ability to attract additional assets to manage is highly dependent on our access to third-party intermediaries. We gain access to investors in Artisan Funds primarily through consultants, 401(k) platforms, mutual fund platforms, broker-dealers and financial advisors through which shares of the funds are sold. We have relationships with some third-party intermediaries through which we access clients in multiple distribution channels. Our two largest intermediary relationships across multiple distribution channels represented approximately 9% and 8%7% of our total assets under management as of December 31, 2017.  2021.

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We compensate most of the intermediaries through which we gain access to investors in Artisan Funds by paying fees, most of which are a percentage of assets invested in Artisan Funds through that intermediary and with respect to which that intermediary provides shareholder and administrative services. The allocation of such fees between us and Artisan Funds is determined by the board of Artisan Funds,Funds’ board, based on information and a recommendation from us, with the goal of allocating to us, at a minimum, all costs attributable to marketing and distribution of shares of Artisan Funds.
In the future, our expenses in connection with those intermediary relationships could increase if the portion of those fees determined to be in connection with marketing and distribution, or otherwise allocated to us or payable by us, increased.
Industry pressure to increase transparency and reduce or eliminate inducements for distribution has impacted intermediaries’ business models and the manner in which they charge fees. If intermediaries continue to see reduced revenue from funds, we may see additional requests from intermediaries for alternative forms of compensation. To date, requests for such alternative forms of compensation have not had a material impact on us, but they could over time. Clients of these intermediaries may not continue to be accessible to us on terms we consider commercially reasonable, or at all. The absence of such access could have a material adverse effect on our results of operations.
We access institutional clients primarily through consultants. Ourconsultants upon whose referrals our institutional business is highly dependent upon referrals from consultants. Many of thesedependent. These consultants review and evaluate our products and our firm from time to time. As of December 31, 2017,2021, the investment consultant advising the largest portion of our assets under management represented approximately 9%5% of our total assets under management. Poor reviews or evaluations of eitherus or a particular strategy or us as an investment management firm may result in client withdrawals or may impair our ability to attract new assets through these intermediaries.consultants.
Substantially allThe majority of our existing assets under management are managed in primarily long-only, equity investment strategies, which exposes us to greater risk than certain of our competitors who may manage significant amounts of assets in non-long only or non-equitymore diverse strategies.
Fifteen18 of our 1721 existing investment strategies invest primarily in publicly-traded equity securities. Our Credit team, which primarily invests in fixed income securities, manages the High Income, strategyCredit Opportunities and a privately offered strategy.Floating Rate strategies. Together, these strategies accounted for only $2.6$8.2 billion of our $115.5$174.8 billion in total assets under management as of December 31, 2017.2021. Under market conditions in which there is a general decline in the value of equity securities, the assets under management in each of our 1518 equity strategies is likely to decline. The amount of assets that we manage in strategies that can take short positions in equity securities, which could offset some of the poor performance of our long-only equity strategies under such market conditions, accounted for less than $1.0$1.3 billion of our total assets under management as of December 31, 2017.2021. Even if our investment performance remains strong during such market conditions relative to other long-only, equity strategies, investors may choose to withdraw assets from our management or allocate a larger portion of their assets to non-long-only or non-equity strategies. In addition, the prices of equity securities may fluctuate more widely than the prices of other types of securities, making the level of our assets under management and related revenues more volatile.


Our failure to comply with clients’ investment guidelines set by our clients, including the boards of funds, and limitations imposed by applicable law,legal limitations could result in damage awards against us and a loss of our assets under management, either of which could adversely affect our results of operations or financial condition.
When clients retain us to manage assets on their behalf, they generally specify certain guidelines regarding investment allocation and strategyguidelines that we are required to follow in managing their portfolios. The boardsIn addition, some of funds we manage generally establish similar guidelines regardingour clients are subject to laws that impose restrictions and limitations on the investment of assets in those funds. In general, over the long-term, we have experienced an increase in client-imposed guidelines. We are also required to investtheir assets. For example, U.S. mutual funds’fund assets that we manage must be invested in accordance with limitations under the 1940 Act and applicable provisions of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. Other clients, such as plans subject to the Employee Retirement Income Security Act of 1974, as amended, or ERISA, or non-U.S. clients, require us to invest their assets in accordance with applicable law.amended. Our failure to comply with any of these guidelines and other limitations could result in losses to clients or fund investors in a fund which, depending on the circumstances, could result in our obligation to reimburse clients or fund investors for such losses. If we believed that the circumstances did not justify a reimbursement, or clients and investors believed the reimbursement we offered was insufficient, they could seek to recover damages from us or could withdraw assets from our management or terminate their investment management agreement with us. Any of these events could harm our reputation and adversely affect our business.

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Operational risks may disrupt our business, result in losses, damage our reputation or limit our growth.
We are heavily dependent on the capacity and reliability of the communications and information and technology systems supporting our operations, whether developed, owned and operated by us or by third parties. We also rely on manual workflows and a variety of manual user controls. As our clients, physical locations and investment teams and strategies increase in number and grow in complexity, and as our employees become increasingly mobile, developing and maintaining the systems supporting our operations becomes increasingly challenging. Any changes, upgrades or expansions to our systems to support increased volumes or complexity of transactions or to otherwise support growth of the business may require significant expenditures and may increase the probability that we will experience operational errors. Operational risks such as trading or other operational errors or interruption or failure of our financial, accounting, trading, compliance and other data processing systems, whether caused by human error, fire, other natural disaster or pandemic, power or telecommunications failure, cyber-attack, ransomware or viruses, natural disaster, fire, act of terrorism or war, public health crisis or otherwise, could result in a disruption of our business, liability to clients, regulatory intervention or reputational damage, and thus materially adversely affect our business. Although we have back-up systems and a business continuity plan in place, these arrangements may not be adequate in the event of a significant interruption or failure of the systems or operations that are critical to our business. The potential for some types of operational risks, including for example, trading errors, may be increasedincrease in periods of increased volatility, which can magnify the cost of an error. Although we have not suffered material operational errors, including material trading errors, in the past, we may experience such errors in the future, the losses related to which we would absorb. Insurance and other safeguards might not be available or might only partially reimburse us for our losses.
Although we have back-up systems in place, our back-up procedures and capabilities in the event of a failure or interruption may not be adequate, and the fact that we operate our business out of multiple physical locations may make such failures and interruptions difficult to address on a timely and adequate basis. As our client base, number and complexity of investment strategies, client relationships and/or physical locations increase, and as our employees become increasingly mobile, developing and maintaining our operational systems and infrastructure may become increasingly challenging.
Any changes, upgrades or expansions to our operations and/or technology or implementation of new technology systems to replace manual workflows or to accommodate increased volumes or complexity of transactions or otherwise may require significant expenditures and may increase the probability that we will experience operational errors or suffer system degradations and failures. If we are unsuccessful in executing upgrades, expansions or implementations, we may instead have to hire additional employees, which could increase operational risk due to human error.
We depend substantially on our Milwaukee, Wisconsin offices, where a majority of our employees, administration and technology resources are located, for the continued operation of our business. Any significant disruption to those offices could have a material adverse effect on us. We also dependrely on a number of key vendors for trading, middle- and back-office functions, various fund administration, accounting, custody and transfer agent roles and other operational needs. These key vendors may themselves rely on third party service providers to support their own operations. The failure of any key vendor, or of any service provider to a key vendor, to fulfill its obligations, for any reason, could cause operational issues that could lead to legal liability, regulatory issues, reputational harm and financial losses.
Any significant limitation, failure or security breach of the information security infrastructure, software applications, or other systems that are critical to our operations could disrupt our business, damage our reputation, and result in financial losses for us and/or our clients.
Our operational systems and networks are subject to evolving cybersecurityregulatory penalties or other technological risks, which could result in the disclosure of confidential client information, loss of our proprietary information, business interruptions, damage to our reputation, additional costs to us, regulatory penalties and other adverse impacts.us.
We are heavily reliant upon internal and third party technology systems, networks and networksapplications to view, process, transmit and store information, including sensitive client and proprietary information, and to conduct many of our business activities and transactions with our clients, vendors/service providers (collectively, “vendors”)vendors and other third parties. In addition, in recent years we have increased our use of and reliance on mobile and cloud technologies, including the complete migration of our information technology infrastructure to Amazon Web Service. Maintaining the integrity of these systems, networks and networkstechnologies is critical to the success of our business operations. We take measures to protect our proprietary information and our clients’ information pursuant to our internal policies and data protection regulations to which we’re subject. We rely on our (and our vendors’) information and cybersecurity infrastructure, policies, procedures and capabilities to protect thosethese systems, networks and applications and the data that reside on or are transmitted through them. We maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity, including misappropriation of assets, fraudulent financial reporting, and unauthorized access to sensitive or confidential data is either prevented or detected in a timely manner.

We also strive to understand the protective measures of our vendors and ensure that we have complementary user controls in place to mitigate risk. To date, we have not experienced any known material breaches of or interference with our systems, and networks; however,networks or applications or of those of our vendors. However, we routinely encounter and address such threats. Our experiences with and preparation for cybersecurity and other technology threats have included phishing scams, introductions of malware, attempts at electronic break-ins, ransomware and unauthorized payment requests. Any such breaches or interference that may occur in the future could have a material adverse impact on our business, financial condition or results of operations.
We are subject to international, federal and state regulations, and in some cases contractual obligations, that require us to establish and maintain policies and procedures designed to protect sensitive client, employee, contractor and vendor information. The increasing reliance on technology systems and networks and the occurrence and potential adverse impact of attacks on such systems and networks, both generally and in the financial services industry in particular, have enhanced government and regulatory scrutiny of the measures taken by companies to protect against cybersecurity threats. As these threats, and government and regulatory oversight of associated risks, continue to evolve, we may be required to expend additional resources to enhance or expand upon the security measures we currently maintain.
Despite the measures we have taken and may in the future take to address and mitigate cybersecurity and other technology risks, we cannot guarantee that our systems, networks and networksapplications, and those of third parties on whom we rely, will not be subject to disruptions, system failures or outages, unauthorized access, ransomware, breaches or other interference. In particular, althoughFor example, in connection with the information released in December 2021 regarding the Log4j vulnerability, we take precautionspromptly assessed and updated our affected systems and contacted key vendors and service providers. We put in place additional protections to password protectward off threats related to the vulnerability and, encryptas of the date of this filing, are not aware of any significant impact to us. We remain, however, reliant upon the information provided to us by our mobile electronic devices, if such devices are stolen or misplaced,key vendors and service providers regarding any potential indirect impact by virtue of the services they may become vulnerable to hacking or other unauthorized use, creating a possibleprovide.
Cybersecurity and information security risk. Any such eventevents may result in operational disruptions as well as unauthorized access to or the disclosure, corruption or loss of our proprietary information or our clients’ or employees’ information, which in turn may result in legal claims, regulatory scrutiny and liability, reputational damage, the incurrence of costs to eliminate or mitigate further exposure, or the loss of clients or other damage to our business. In addition, the trend toward broad consumer and generalany required public notification of such incidents could exacerbate the harm to our business, financial condition or results of operations. Even if we successfully protect our technology infrastructure and the confidentiality of sensitive data, we may incur significant expensesexpense in connection with our responsesresponse to any such attacks and the adoption and maintenance of additional appropriate security measures. Although we maintain insurance to mitigate the expense associated with a potential incident, the damage or claims arising from an incident may not be covered or may exceed the amount of any insurance available. We cannot be certain that future advances in criminal capabilities, the discovery of new vulnerabilities attempts to exploit vulnerabilities in our or our vendors’ systems, data thefts, physical system or network break-ins or inappropriate access, or other developments will not compromise or breach the technology or other security measures protecting the networks, systems and systemsapplications we use.

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Our newest investment strategies and strategies we may establish in the future present certain investment, operational, distribution and other risks that are different in kind and/or degree from those presented by our earlier investment strategies and we have less experiencedealing with those risks.
In order to establishrisks could place additional demands on our first fixed income strategy, the High Income strategy which was launched in 2014, we developed, and contracted with third parties for, theexisting operational infrastructure and systems necessaryemployees.
Our newest investment strategies have the ability to operate a fixed income strategy, including infrastructure and systems for trading and valuing fixed income securities and other credit instruments. Prior to the launch of the strategy, we had not operated a fixed income strategy. During 2017, we established our second fixed income strategy, a privately offered strategy. The fixed income strategies primarily invest in securities and instruments (such as high yield corporate bonds, secured and unsecured loans, revolving credit facilities and loan participations) and certain derivative securities (such as credit default swaps and futures) with which we previously had no or limited operational experience. The below-investment-grade instruments in which the strategies invest and the debtors to which the strategies are exposedmake investments that present different risks and/or degrees of risk (including liquidity and legal risks) than our other strategies, which invest primarily in publicly-tradedpublicly traded equity securities. In particular, the instruments in which theFor example, several of our newest strategies invest in securities that are not publicly traded. We may be less liquid than higher-rated bondsprohibited from selling these investments for a period of time and are not as liquid as most of the publicly-traded equitygenerally will be unable to sell these securities in which our other strategies primarily invest. This potential lack of liquidity may make itpublicly unless their sale is registered under applicable securities law or unless an exemption from such registration is available. Illiquid securities are more difficult for Artisan High Income Fund to accurately value these securities for purposesand dispose of determining the fund’s net asset value per sharewhen desired and, under certain circumstances, may make it more difficult for the fund to manage investors’ redemption requests. In order to identify, monitorOur newer strategies, and mitigate our exposure to these new or increased risks,strategies we have implemented or modified a number of policies, procedures and systems and hired new individuals with relevant experience. However, neither the measures we have taken, nor the Credit team’s investment decision-making and execution, can eliminate the risks associated with investingmay offer in the instruments described above. Any real or perceived problems with respect to our fixed income strategies (or any of our individual strategies) could negatively impact our reputation and business more generally.
During 2017 we established two strategies generally offered through private funds. Prior to the launch of those strategies, external investors had not investedfuture, may also invest in our strategies through private funds. Offering private funds presents new and different operational, regulatory and distribution-related risks. Establishing our private funds required that we engage new service providers for purposes of administration, operation and advice, with whom we had not previously had a relationship or with whom we only had a limited scope relationship, and build out new operational infrastructure and systems to support new processes, reporting and controls. Our private funds may invest incertain instruments (such as derivative securities) and engage in activities (such as shorting and the use of leverage) the complexity of which may place additional demands on our existing operational infrastructure and our existing employees, and increase the risk of operational errors. Any such errors could damage our reputation or result in regulatory scrutiny or legal liability. And any real or perceived problems could cause a disproportionate negative impact on our business and reputation.
Several of our newest investment strategies are primarily offered through private funds, which present operational, regulatory and distribution-related risks that are different than those associated with the mutual funds and traditional separate accounts through which we offer our earlier investment strategies. In the future, we expect to offer new investment strategies through closed-end funds with a commitment-based structure. Closed-end funds present different types of operational, regulatory and distribution-related risks with which we previously hadhave little to no or limited operational experience. These instruments and activities present different types and higher degreesThe complexity of investment risk than our other investment strategies. In addition, our lack of experience with these instruments and activitiesvehicles could strain our resources and increase the likelihood of an error.

real or perceived problems, which could damage our reputation or result in regulatory scrutiny or legal liability.
Offering private funds also poses risks associated with side by side management and the potential for real or perceived conflicts of interest, which, if not managed correctly, could cause reputational damage, litigationharm, regulatory scrutiny or regulatory proceedings or penalties. Welitigation. Although we have created or modified a number ofestablished policies and procedures brought in expertise from third party advisers, and implemented training programs in order to identify and mitigate exposure to these new risks. However,manage potential conflicts of interest, we are unable to completely eliminate the risks associated with offering private funds. Newthese risks.
Our newer investment strategies and investment vehicles, and those that we launchestablish in the future, will likely present newmay have more limited capacity than our earlier large capacity investment strategies. Despite the limited capacity, these newer strategies with broader degrees of freedom may require increased access to specialized technology, market data with advanced data analytic capabilities, and differentoperational resources, including bespoke operational solutions and third-party service providers. Requests for resources that are disproportionate to the size of the investment regulatory, operational, distributionteam may put pressure on our resource allocation model and cause friction and instability among the teams. Friction among investment teams may also occur if these newer strategies with broader degrees of freedom take action or make investments that ultimately impact the ability of our other risks than those presented byinvestment teams to invest in a manner consistent with their philosophy and process. Friction and distraction within our investment teams may cause our existing strategies. Any realinvestment professionals to leave our firm or perceived problems with futurefail to produce their best work on a consistent, long-term basis and/or we may be unsuccessful in attracting talented new investment professionals, any of which could negatively impact the performance of our investment strategies, or vehicles could cause a disproportionate negative impact on our businessfinancial results and reputation.our ability to grow.
Employee misconduct, or perceived misconduct, could expose us to significant legal liability and/or reputational harm.
We are vulnerable to reputational harm because we operate in an industry in which integrity and the confidence of our clients are of critical importance. Our employees, or third parties with whom we are affiliated, could engage in misconduct, (such as fraud or unauthorized trading), or perceived misconduct, that adversely affects our business. For example, if an employee were to engage in illegal or suspicious activities, we could be subject to regulatory sanctions and suffer serious harm to our reputation (as a consequence of the negative perception resulting from such activities), financial position, client relationships and ability to attract new clients. Our business often requires that we deal with confidential information. If our employees were to improperly use or disclose this information, even if inadvertently we could suffer serious harm to our reputation, financial position and current and future business relationships. It is not always possible to deter employee misconduct and the precautions we take to detectprevent and preventdetect this activity may not always be effective. Misconduct or perceived misconduct by our employees, or even unsubstantiated allegations of such conduct, could resultcause serious damage to our reputation, resulting in significant legal liability and/orthe loss of clients and an adverse effect on our reputationrevenues. Employee misconduct could also subject us to regulatory scrutiny and our business.legal liability.
If our techniques for managing risk are ineffective, we may be exposed to material unanticipated losses.
In order to manage the significant risks inherent in our business, we must maintain effective policies, procedures and systems that enable us to identify, monitor and mitigate our exposure to operational, legal and reputational risks. Our risk management methods may prove to be ineffective due to their design or implementation, or as a result of thea lack of adequate, accurate or timely information or otherwise. If our risk management efforts are ineffective, we could suffer losses that could have a material adverse effect on our operating results or financial condition or operating results.condition. Additionally, we could be subject to litigation, particularly from our clients or investors, and sanctions or fines from regulators.
Our techniques for managing operational, legal and reputational risks in client portfoliosWe may, not fully mitigate the risk exposure in all economic or market environments, includingfrom time to time, strategically manage our exposure to market, interest or exchange rate risks that we might fail to identifyon our own behalf or anticipate. Becauseon behalf of our clients. However, because our clients invest in our investment strategies in order to gain exposure to the portfolio securities of the respective strategies, we have not adopted corporate-level risk management policies to manage market, interest rate, or exchange rate risks that would affect the value of our overall assets under management.

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Our indebtedness may expose us to material risks.
In August 2012, we entered into a $100 million five-year revolving credit agreement and issued $200 million in unsecured notes consisting of $60 million Series A notes maturing in 2017, $50 million Series B notes maturing in 2019, and $90 million Series C notes maturing in 2022. In August 2017, we issued $60 million of Series D notes maturing in 2025, and used the proceeds to repay the $60 million Series A notes that matured on August 16, 2017. We also amended and extended the $100 million five-year revolving credit facility for an additional five-year period. As of December 31, 2017, no amounts were outstanding on the revolving credit facility. Nevertheless, we continue to have substantial indebtedness outstanding in the amount of $200 million in unsecured notes, which exposes us to risks associated with the use of leverage. In addition, we maintain a $100 million revolving credit agreement, though no amounts are outstanding as of the date of this filing. Our substantial indebtedness may make it more difficult for us to withstand or respond to adverse or changing business, regulatory and economic conditions or to take advantage of new business opportunities or make necessary capital expenditures. In addition, our notes and revolving credit agreement contain financial and operating covenants that may limit our ability to conduct our business. To the extent we service our debt from our cash flow, such cash will not be available for our operations or other purposes. Because our debt service obligations are fixed, the portion of our cash flow used to service those obligations could bebecome substantial if our revenues have declined,decline significantly, whether because of market declines or for other reasons. The Series B,
Our Series C, Series D and Series DE notes bear interest at a rate equal to 5.32%5.82%, 5.82%4.29%, and 4.29%4.53% per annum, respectively,respectively. On December 7, 2021, Artisan Partners Holdings entered into a Note Purchase Agreement to issue $90 million of Series F senior notes in a private placement transaction on August 16, 2022, subject to the satisfaction of certain customary closing conditions. All of the proceeds from the issuance of the Series F senior notes will be used to repay the Series C senior notes, which mature on August 16, 2022. The Series F senior notes will bear interest at a rate of 3.10% and will mature on August 16, 2032. The interest rate on each rateof the notes is subject to a 100 basis point increase in the event Artisan Partners Holdings receives a below-investment grade rating. Each series requires a balloon payment at maturity. Any substantial decrease in net operating cash flows or any substantial increase in expenses could make it difficult for us to meet our debt service requirements or force us to modify our operations. Our ability to repay the principal amount of our notes or any outstanding loans under our revolving credit agreement, to refinance our debt or to obtain additional financing through debt or the sale of additional equity securities will depend on our performance, as well as financial, business and other general economic factors affecting the credit and equity markets generally or our business in particular, many of which are beyond our control. Any such alternatives may not be available to us on satisfactory terms or at all.

Our note purchase agreements and revolving credit agreement contain, and our future indebtedness may contain, various covenants that may limit our business activities.
Our note purchase agreements and revolving credit agreement contain financial and operating covenants that limit our business activities, including restrictions on our ability to incur additional indebtedness and pay dividends to our stockholders. For example, the agreements include financial covenants requiring Artisan Partners Holdings not to exceed specified ratios of indebtedness to consolidated earnings before interest, taxes, depreciation and amortization (as defined in the agreements), or EBITDA, and interest expense to consolidated EBITDA. The agreements also restrict Artisan Partners Holdings from making distributions to its partners (including us), other than tax distributions or distributions to fund our ordinary expenses, if a default (as defined in the respective agreements) has occurred and is continuing or would result from such a distribution. In addition, if Artisan’sour average assets under management for a fiscal quarter isfalls below $45 billion, Holdings iswill generally be required to offer to pre-pay the unsecured notes. The failureFailure to comply with any of these restrictions could result in an event of default, giving our lenders the ability to accelerate repayment of our obligations. As of December 31, 2017,2021, we believe we are in compliance with all of the covenants and other requirements set forth in the agreements.
We provide a range of services to Artisan Funds, Artisan Global Funds, Artisan sponsored private fundsPrivate Funds and sub-advised funds which may expose us to liability.
We provide a broad range of administrative services to Artisan Funds, including providing personnel to Artisan Funds to serve as a directordirectors and as officers of Artisan Funds and to serve on the valuation and liquidity committee of Artisan Funds, the preparationFunds. We prepare or supervision ofsupervise the preparation of Artisan Funds’ regulatory filings maintenance of board calendars and preparation or supervision of the preparation of board meeting materials, management offinancial statements, and manage compliance and regulatory matters, provision ofmatters. We provide shareholder services, and communications, accounting services including the supervision of the activities of Artisan Funds’ accounting services provider in the calculation of the funds’ net asset values, supervision of the preparation of Artisan Funds’ financial statements and coordination of the audits of those financial statements, tax services including calculation of dividend and distribution amountsamounts. We also coordinate the audits of financial statements and supervision ofsupervise tax return preparation, and supervision of the work of Artisan Funds’ other service providers.preparation. Although less extensive than the range of services we provide to Artisan Funds, we also provide a range of similar services, in addition to investment management services to Artisan Global Funds and Artisan sponsored private funds, including personnel to serve as directors.
Private Funds. In addition, we from time to time we provide information to theother funds for which we act as sub-adviseradvise (or to a person oran entity providing administrative services to such a fund) which ismay be used by those funds in their efforts to comply with various regulatory requirements. If
The services we provide to Artisan Funds, Artisan Global Funds, Artisan Private Funds, and other funds we advise may expose us to liability. For example, if we make a mistake in the provision of thosesuch services, Artisan Funds, Artisan Global Funds, Artisan sponsored private funds, or the sub-adviseda fund could incur costs for which we might be liable. In addition, ifIf it were determined that Artisan Funds, Artisan Global Funds, Artisan sponsored private funds, or a sub-advised fund failed to comply with applicable regulatory requirements as a result of our action or our employees’ failure to act, by our employees, we could be responsible for losses suffered or penalties imposed. In addition, we could have penalties imposed on us, be required to pay fines or be subject to private litigation, any of which could decrease our future income or negatively affect our current business or our future growth prospects.
The expansion of our business inside and outside of the United States raises tax and regulatory risks, may adversely affect our profit margins and places additional demands on our resources and employees.
We have expanded and continue to expand our distribution efforts into non-U.S. markets, including the United Kingdom, other European countries, Canada, Australia and certain Asian countries, among others. We organized and serve as investment managermarkets. The number of Artisan Global Funds, a family of Ireland-based UCITS funds, that began operations during the first quarter of 2011. Our client relationships outside the United States haveU.S. has grown from 32 as of December 31, 2012 to 128226 as of December 31, 2017. Clients outside2021. Costs related to our distribution efforts in non-U.S. markets have often been more expensive than comparable costs in the United StatesU.S. Our non-U.S. clients may be adversely affected by political, socialaccustomed to certain practices that differ from and economic uncertainty in their respective home countries and regions, which could result in a decreasemay conflict with practices that are customary in the net client cash flows that come fromU.S. such clients. These clients also may be less accepting of the U.S. practice of paymentas, for certain research products and services through soft dollars or such practices may not be permissible in some jurisdictions. The Markets in Financial Instruments Directive II (“MiFID II”), effective on January 3, 2018, regulatesexample, the use of soft dollars to pay for research products and services. Such conflicting practices add complexity and risk to our non-U.S. client relationships.

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While a majority of our operations take place in the U.S., we do maintain offices in a number of other soft dollar services. MiFID II’s soft dollar rulescountries including the U.K., Ireland, Singapore, Australia and Hong Kong. Operating our business in non-U.S. markets is generally more expensive than in the U.S. Among other expenses, the effective tax rates applicable to our income allocated to some non-U.S. markets may be higher than the effective rates applicable to our income allocated to the U.S. To the extent that our revenues do not directly applyincrease to the same degree our expenses increase in connection with our continuing expansion outside the U.S., our profitability could be adversely affected. Expanding our business becauseinto new markets may also place significant demands on our existing operational infrastructure and on our existing employees.
Regulators in non-U.S. jurisdictions in which we currently conductoperate could change their laws or regulations, or change the way they interpret existing laws and regulations, in a manner that might restrict or otherwise impede our investment management activitiesability to operate in their respective markets. Any such changes could increase the costs we incur in a specific jurisdiction without any corresponding increase in revenues and income from operating in the United States. However,jurisdiction. For example, in response to MiFID IIBrexit, we established an Irish subsidiary regulated by the Central Bank of Ireland to carry out distribution efforts in the EU. Brexit added complexity to our global operations, imposed additional risks and the industry-wide changes it may prompt orresulted in additional legal and compliance costs, without an increase in revenues to offset those costs. Despite those increased costs, we do not currently expect Brexit to have a change inmaterial impact on our operations, we may eventually bear a significant portion or all of the costs of research that are currently paid for using soft dollars, which would increase our operating expenses.business.
Our expansion outside of the United States has required and will continue to require us to incur a number of up-front expenses, including those associated with obtaining and maintaining regulatory approvals and office space, as well as additional ongoing expenses, including those associated with leases, the employment of additional support staff and regulatory compliance. Our U.S.-based employees routinely travel inside and outside the United StatesU.S. as a part of our investment research process, or to market our services and may spend extended periods of time in one or more non-U.S. jurisdictions.to supervise and manage our business. Their activities outsidein the United Statesjurisdictions they travel to on our behalf may raise both tax and regulatory issues. If and to the extent we are incorrect in our analysis of the applicability or impact of state or non-U.S. taxtaxes or regulatory requirements, we could incur costs, penalties or be the subject of an enforcement or other action. Operating our business
Changes in non-U.S. markets is generally more expensive than in the United States. Among other expenses, the effective tax rates applicablelaws or exposure to our income allocated to some non-U.S. markets, which we are likely to earn through an entity

that will pay corporate incomeadditional tax may be higher than the effective rates applicable to our income allocated to the United States, even though the effective tax rates are lower in many non-U.S. markets, because our U.S. operations are conducted through partnerships. In addition, costs related to our distribution and marketing efforts in non-U.S. markets generally have been more expensive than comparable costs in the United States. To the extent that our revenues do not increase to the same degree our expenses increase in connection with our continuing expansion outside the United States, our profitability could be adversely affected. Expanding our business into non-U.S. markets may also place significant demands on our existing infrastructure and employees.
The U.K.’s exit from the European Union could affect our future operations in the U.K. and in the other countries of the European Union. Although the negotiations between the U.K. and the European Union regarding the U.K.’s exit have begun, it is still unclear what terms will ultimately be agreed to for the long term and for any transition period. The effects of Brexit will depend on the outcome of the exit negotiations. Brexit may add complexity to our global operations and impose additional risks. Moreover, it could lead to regulatory changes and uncertainty and result in additional legal and compliance costs.
Failure to maintain effective internal control over financial reportingliabilities could have a material adverse effectimpact on our businessfinancial condition, results of operations and stock price.liquidity.
AsWe are subject to income taxes, as well as non-income based taxes, in both the U.S. and various foreign jurisdictions at the federal, state and local levels of government. We cannot predict future changes in the tax laws, regulations, administrative guidance or judicial decisions to which we are subject or that could apply to our business. Any such changes could have a public company,material impact on our tax liability, materially impact our effective tax rate, result in additional tax reporting obligations, or result in increased costs associated with our tax compliance efforts.
From time to time, we are subject to a variety of reporting requirements underincome and non-income based tax audits in the Sarbanes-Oxley Act of 2002. Sarbanes-Oxley requires, among other things, thatjurisdictions in which we maintain effective internal control over financial reporting. In accordance with Section 404 of Sarbanes-Oxley, our management is required to conduct an annual assessment of the effectivenessoperate. The calculation of our internal control over financial reporting and include a report on these internal controlstax liabilities involves dealing with uncertainties in the annual reports we file with the SEC on Form 10-K. If we are not able to continue to comply with the requirementsapplication of Section 404complex tax rules and regulations in a capable manner,number of jurisdictions. From time to time, tax authorities have disagreed with certain positions we have taken which has resulted in additional taxes and, in certain cases interest payments. In the future, such instances may result in additional taxes, interest, fines and penalties becoming due. We evaluate whether to record tax liabilities for possible tax audit issues based on our estimate of whether, and the extent to which, additional income taxes will be subject to adverse regulatory consequencesdue. We adjust these liabilities in light of changing facts and there could be a negative reaction in the financial marketscircumstances as well as consult with our outside tax advisors. However, due to the complexity of some of these uncertainties, the ultimate resolution may result in a loss of investor confidence in us and the reliability ofpayment that is materially different from our financial statements. This could have a material adverse effect on us.estimates.
A change of control could result in termination of our investment advisory agreements with SEC-registered mutual funds and could trigger consent requirements in our other investment advisory agreements.
Under the U.S. Investment Company Act of 1940, as amended, or the 1940 Act, each of the investment advisory agreements between SEC-registered mutual funds and our subsidiary, Artisan Partners Limited Partnership, will terminate automatically in the event of its assignment, as defined in the 1940 Act.
assignment. Upon the occurrence of such an assignment, our subsidiary could continue to act as adviser to any such fund only if that fund’s board and shareholders approved a new investment advisory agreement, except in the case of certain of the funds that we sub-advise for which only board approval would be necessary. In addition, as required by the U.S. Investment Advisers Act of 1940, as amended, or the Advisers Act, each of the investment advisory agreements for the separate accounts we manage provides that it may not be assigned, as defined in the Advisers Act, without the consent of the client. An assignment occurs under the 1940 Act and the Advisers Act if, among other things, Artisan Partners Limited Partnership undergoes a change of control as recognized under the 1940 Act and the Advisers Act. If such an assignment were to occur, we cannot be certain that we willwould be able to obtain the necessary approvals from the boards and shareholders of the mutual funds we advise or the necessary consents from our separate account clients.
The continued COVID-19 outbreak and spread, and the reaction thereto, has negatively affected the global economy and has disrupted our normal business operations.
Since the first quarter of 2020, the COVID-19 pandemic, together with resulting voluntary and government-imposed actions, has disrupted the global economy and caused significant market fluctuations. Market fluctuations, for any reason, may cause clients to choose to redeem their investments in our strategies (upon short or no notice), as well as increase the likelihood and consequences of trading, valuation, or other operational errors.
The COVID-19 pandemic has also impacted the manner in which we operate as the majority of our associates now maintain a hybrid schedule. In addition, as of the date of this filing, the amount of business travel remains below pre-pandemic levels. We believe we continue to operate well under these changing circumstances. We are benefiting from the flexible and highly mobile operating environment we have built over 25 years. However, we do not know what, if any, longer-term impact the current operating environment will have on our business and results.
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The COVID-19 pandemic may create risks to us in the future that cannot be foreseen and the adverse effects of such risks may be significant and long-term. As the COVID-19 pandemic continues to evolve, it is not possible to predict the full extent to which the pandemic will adversely impact our business, which will depend on numerous developing factors that remain uncertain and subject to change. The impacts and risks described herein relating to COVID-19 augment the discussion of overlapping risks in our other risk factors, which may be heightened by the COVID-19 pandemic.
Risks Related to our Industry
We are subject to extensive, regulation.complex and sometimes overlapping laws, rules and regulations.
The industry in which we operate is subject to extensive and frequently changing regulation. Political and electoral changes and developments have in the past introduced, and may in the future introduce, additional uncertainty. We are subject to extensive regulation in the United States, primarily at the federal level, including regulation by the SEC, under the 1940 Act and the Advisers Act, by the U.S. Department of Labor, under ERISA, and by the Financial Industry Regulatory Authority, Inc. The U.S. mutual funds we manage are registered with and regulated by the SEC as investment companies under the 1940 Act. We are also subject to regulation in the United Kingdom by the Financial Conduct Authority. The U.K. Financial Conduct Authority imposes a comprehensive system of regulation that is primarily principles-based (compared to the primarily rules-based U.S. regulatory system). The Advisers Act imposes numerous obligations on investment advisers including record keeping, advertising and operating requirements, disclosure obligations and prohibitions on fraudulent activities. The 1940 Act imposes similar obligations, as well as additional detailed operational requirements, on registered investment companies, which must be adhered to by their investment advisers. We have also expanded and continue to expand our distribution effort into non-U.S. markets, including the United Kingdom, other European countries, Canada, Australia and certain Asian countries, among others. The Central Bank of Ireland imposes requirements on UCITS funds subject to regulation by it, as do the regulators in certain other markets in which shares of Artisan Global Funds are offered for sale, and with which we are required to comply with respect to Artisan Global Funds. Certain Artisan sponsored private funds are regulated as mutual funds under the Mutual Funds Law (as amended) of the Cayman Islands, and the Cayman Islands Monetary Authority has supervisory and enforcement powers to ensure the funds’ compliance with the Mutual Funds Law. In the future, we may further expand our business outside of the United States in such a way or to such an extent that we may be required to register with additional foreign regulatory agencies or otherwise comply with additional non-U.S. laws and regulations that do not currently apply to us and with respect to which we do not have compliance experience. Our lack of experience in complying with any such non-U.S. laws and regulations may increase our risk of becoming party to litigation and subject to regulatory actions.

Accordingly, we face the risk of significant intervention by regulatory authorities, including extended investigation and surveillance activity, adoption of costly or restrictive new regulations and judicial or administrative proceedings that may result in substantial penalties. Among other things, we could be fined or be prohibited from engaging in some of our business activities. The requirements imposed by our regulators are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal with us, and are not designed to protect our stockholders. Consequently, these regulations often serve to limit our activities, including through net capital, customer protection and market conduct requirements. See “Regulatory Environment and Compliance”.
In addition to the extensive regulation to which we are subject in the United States, the United Kingdom and Ireland, we are also subject to regulation by the Australian Securities and Investments Commission, where we operate pursuant to an order of exemption, and by Canadian regulatory authorities in the Canadian provinces where we operate pursuant to exemptions from registration.Commodity Futures Trading Commission. Our business is also subject to the ruleslaws and regulations of the various countries in which we conduct distribution or investment management activities. FailureFor a more extensive discussion of certain laws and regulations to complywhich we’re subject, see “Item 1—Business—Regulatory Environment and Compliance” in Part I of this report.
As a result of the extensive and complex regulatory environment in which we operate, we face risk of regulatory actions and litigation, which could consume substantial expenditures of time and capital. Our regulatory and compliance obligations impose significant operational and cost burdens on us and cover a broad range of topics including, investment advisory matters, securities and other financial instruments, financial reporting and other disclosure matters, accounting, tax, data protection, and privacy. As our business expands into new geographic regions and introduces new investment products with expanded degrees of freedom, the regulatory requirements to which we’re subject will increase in number. While we have focused significant attention and resources on the development and maintenance of compliance policies, procedures and practices, any inadvertent non-compliance with applicable laws, andrules or regulations, either in the foreign countries where we invest and/U.S. or where our clients or prospective clients resideabroad, could result in various legal proceedings, including civil litigation and regulatory investigations and enforcement actions that could result in fines, suspensions of personnelindividual employees, or other sanctions. See “Regulatory Environmentlimitations on particular business activities, any of which could have an adverse impact on our reputation and Compliance”.business.
The regulatory environment in which we operate is subject to continual change, and regulatory developments may adversely affect our business.
We operate in a legislative and regulatory environment that is subject to continual change, the nature of which we cannot predict. We may be adversely affected as a result of new or revised legislation or regulations imposed by the SEC, other U.S. or non-U.S. governmental regulatory authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations, as well as by courts. It is impossible to determine the extent of the impact of any new U.S. or non-U.S. laws, regulations or initiatives that may be proposed, or whether any of thesuch proposals will become law. Compliance with any new laws or regulations, or changes in the interpretation or enforcement of existing laws or regulations, could be more difficult and expensive and affect the manner in which we conduct business.
The requirements imposed by our regulators (including both U.S. and non-U.S. regulators) are designed to ensure the integrity of the financial markets and to protect customers and other third parties who deal Non-compliance with us, and are not designed to protect our stockholders. Consequently, these regulations often serve to limit our activities and/or increase our costs, including through customer protection and market conduct requirements. Newapplicable new laws, rules or regulations could result in litigation, governmental investigations and enforcement actions that could result in fines, penalties, suspensions of individual employees, or changes in the enforcementlimitations on particular business activities, any of existing laws or regulations, applicable to us and our clients may adversely affect our business. Our ability to function in this environment will dependwhich could have an adverse impact on our ability to constantly monitorreputation and promptly react to legislative and regulatory changes. There have been a number of highly publicized regulatory inquiries that have focused on the investment management industry. These inquiries already have resulted in increased scrutiny of the industry and new rules and regulations for mutual funds and investment managers. This regulatory scrutiny may limit our ability to engage in certain activities that might be beneficial to our stockholders. See “Regulatory Environment and Compliance”.business.
The investment management industry is intensely competitive.
TheCompetition within the investment management industry is intensely competitive, with competition based on a variety of factors, including investment performance, investment management fee rates, continuity of investment professionals and client relationships, the quality of services provided to clients,client service, corporate positioning and business reputation, continuity of sellingdistribution arrangements with intermediaries and differentiated products.product mix and offerings. A number of factors, including the following, serve to increase our competitive risks:
•Unlike some of our competitors, we do not currently engage in impact investing, offer passive investment strategies or “solutions” products like target-date funds.
•A number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do.
•Potential competitors have a relatively low cost of entering the investment management industry.
•Some investors may prefer to invest with an investment manager that is not publicly traded based on the perception that a publicly-traded asset manager may focus on the manager’s own growth to the detriment of investment performance for clients.performance.
•Other industry participants may seek to recruit our investment professionals.
•Many competitors charge lower fees for their investment management services than we do.

For example, the trend in favor of low-fee passive products such as index and certain exchange-traded funds will favorfavors those of our competitors who provide passive investment strategies. In recent years, across the investment management industry, passive products have experienced inflows and traditional actively managed products have experienced outflows, in each case, in the aggregate. That trend has presented, and likely will continue to present, a headwind to our business. Separately, intermediaries through which we distribute our mutual funds may also sell their own proprietary funds and investment products, which could limit the distribution of our investment strategies. If we are unable to compete effectively, our earnings would be reduced and our business could be materially adversely affected.


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The investment management industry faces substantial litigation risks which could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us.
We depend to a large extent on our network of relationships and on our reputation in order to attract and retain client assets. If a client is not satisfied with our services, its dissatisfaction may be more damaging to our business than client dissatisfaction would be to other types of businesses. We make investment decisions on behalf of our clients that could result in substantial losses to them. If our clients suffer significant losses, or are otherwise dissatisfied with our services, we could be subject to the risk of legal liabilitiesliability or actions alleging negligent misconduct,negligence, breach of fiduciary duty, breach of contract, unjust enrichment and/or fraud. These risks are often difficult to assess or quantify and their existence and magnitude often remain unknown for substantial periods of time, even after an action has been commenced.
We may incur significant legal expenses in defending against litigation whether or not we engaged in conduct as a result of which we might be subject to legal liability. Substantial legal liability or significant regulatory action against us could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us.
Risks Related to Our Structure
Control by our stockholders committee of approximately 23%12% of the combined voting power of our capital stock and the rights of holders of limited partnership units of Artisan Partners Holdings may give rise to conflicts of interest.
At the timeAs of this filing,February 18, 2022, our employees to whom we have granted equity (including our employee-partners) held approximately 23%12% of the combined voting power of our capital stock andstock. These employees have entered into a stockholders agreement pursuant to which they granted an irrevocable voting proxy with respect to all shares of our common stock they have acquired from us and any shares they may acquire from us in the future to a stockholders committee. Any additional shares of our common stock that we issue to our employee-partners or other employees including shares of common stock issued under our Omnibus Incentive Compensation Plan, will be subject to the stockholders agreement so long as the agreement has not been terminated. Shares held by an employee cease to be subject to the stockholders agreement upon termination of employment.
The stockholders committee currently consists of Eric R. Colson (Chairman and Chief(Chief Executive Officer), Charles J. Daley, Jr. (Chief Financial Officer) and Gregory K. Ramirez (Executive Vice President). All shares subject to the stockholders agreement are voted in accordance with the majority decision of those three members. The stockholders committee’s control of approximately 23%12% of the combined voting power gives the committee considerablea meaningful influence in determining the outcome of any shareholderstockholder vote, including the election of directors and the approval of certain transactions.
Our employee-partners (through their ownershipThe consent of Class B common units), AIC (through its ownership of Class D common units) and the holders of our Class A common units, have the right, each voting as a single and separate class, is required for Holdings to approve or disapproveengage in certain transactions and matters, including material corporate transactions, such asincluding a merger, consolidation, dissolution or sale of greater than 25% of the fair market value of Artisan Partners Holdings’ assets. These voting and class approval rights may enable our employee-partners, AIC or the holders of Class A common units to prevent the consummation of transactions that may be in the best interests of the holders of our Class A common stock.
In addition, because the majority of our pre-IPO owners (including certain members of our board of directors) hold all or a portion of their ownership interests in our business through Artisan Partners Holdings, rather than through Artisan Partners Asset Management, these pre-IPO owners may have conflicting interests with holders of our Class A common stock. For example, our pre-IPO owners may have different tax positions from us which could influence their decisions regarding whether and when we should dispose of assets, whether and when we should incur new or refinance existing indebtedness, especially in light of the existence of the tax receivable agreements, and whether and when Artisan Partners Asset Management should terminate the tax receivable agreements and accelerate its obligations thereunder. In addition, the structuring of future transactions may take into consideration these pre-IPO owners’ tax or other considerations even where no similar benefit would accrue to us.
Our ability to pay regular dividends to our stockholders is subject to the discretion of our board of directors and may be limited by our structure and applicable provisions of Delaware law.
We intend to pay dividends to holders of our Class A common stock as described in “Dividend Policy”. Our board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. In addition, as a holding company, we are dependent upon the ability of our subsidiaries to generate earnings and cash flows and distribute them to us so that we may pay dividends to our stockholders. We expect to cause Artisan Partners Holdings, which is a Delaware limited partnership, to make distributions to its partners, including us, in an amount sufficient for us to pay dividends. However, its ability to make such distributions will be subject to its and its subsidiaries’ operating results, cash requirements and financial condition, the applicable provisions of Delaware law, that may limit the amount of funds available for distribution to its partners, its compliance with covenants and financial ratios related to existing or future indebtedness, including under our notes and our revolving credit agreement, its other agreements with third parties, as well as its obligation to make tax distributions under its partnership agreement (which distributions would reduce the cash available for distributions by Artisan Partners Holdings to us).

In addition, each of the companies in our corporate chain must manage its assets, liabilities and working capital in order to meet all of its cash obligations, including the payment of dividends or distributions. As a consequenceresult of these various limitations and restrictions, we may not be able to make,pay, or may have to reduce, or eliminate, the payment of dividends on our Class A common stock. Any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our Class A common stock.

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Our ability to pay taxes and expenses, including payments under the tax receivable agreements (“TRAs”), may be limited by our holding company structure.
As a holding company, our assets principally consist of our ownership of partnership units of Artisan Partners Holdings, deferred tax assets and cash and we have no independent means of generating revenue. Artisan Partners Holdings is a partnership for U.S. federal income tax purposes and, as such, is not subject to U.S. federal income tax. Instead, Artisan Partners Holdings’ taxable income is allocated to holders of its partnership units, including us. Accordingly, we incur income taxes on our proportionate share of Artisan Partners Holdings’ taxable income and also may incur expenses related to our operations. Under the terms of its amended and restated limited partnership agreement, Artisan Partners Holdings is obligated to make tax distributions to holders of its partnership units, including us. In addition to tax expenses, we are also required to make payments under the tax receivable agreements,TRAs, which will be significant, and we incur other expenses related to the tax receivable agreementsTRAs and our operations. We intend to fund the payment of amounts due under the TRAs out of the reduced tax payments that APAM realizes in respect of the tax attributes to which the TRAs relate. We also intend to cause Artisan Partners Holdings to make distributions in an amount sufficient to allow us to pay our taxes and pay any additional operating expenses. However, its ability to make such distributions will be subject to various limitations and restrictions as set forth in the preceding risk factor. If, as a consequence of these various limitations and restrictions, we do not have sufficient funds to pay tax or other liabilities or to fund our operations, we may have to borrow funds and thus our liquidity and financial condition could be materially adversely affected. To the extent that we are unable to make payments when due under the tax receivable agreementsTRAs for any reason, such payments will be deferred and will accrue interest at a rate equal to one-year LIBOR plus 300 basis points until paid. We expect to amend the TRA agreements to replace LIBOR with an alternative reference rate in advance of the anticipated discontinuation of the LIBOR benchmark.
We will be required to pay the tax receivable agreementTRA beneficiaries for certain tax benefits we claim, and we expect that the payments we will be required to make will be substantial.
We are party to two tax receivable agreements.TRAs. The first tax receivable agreementTRA generally provides for the payment by APAM to the assignees of the Pre-H&F Corp Merger Shareholder of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) the tax attributes of the preferred units APAM acquired in the merger of a wholly-owned subsidiary of the Pre-H&F Corp Merger Shareholder into APAM in March 2013 (ii) net operating losses available as a result of the merger, and (iii)(ii) tax benefits related to imputed interest.
The second tax receivable agreementTRA generally provides for the payment by APAM to current or former limited partners of Artisan Partners Holdings or their assignees of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) certain tax attributes of their partnership units sold to us or exchanged (for shares of Class A common stock, convertible preferred stock or other consideration) and that are created as a result of such sales or exchanges and payments under the TRAs and (ii) tax benefits related to imputed interest.
The payment obligation under the tax receivable agreementsTRAs is an obligation of APAM, not Artisan Partners Holdings, and we expect that the payments we will be required to make under the tax receivable agreementsTRAs will be substantial. Assuming no material changes in the relevant tax law and that APAM earns sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreements,TRAs, we expect that the reduction in tax payments for us associated with (i) the merger described above; (ii) the purchase or exchange of partnership units from March 2013 through December 31, 2017;2021; and (iii) projected future purchases or exchanges of partnership units would aggregate to approximately $728$658 million over generally a minimum of 15 years, assuming the future purchases or exchanges described in clause (iii) occurred at a price of $39.50$47.64 per share of our Class A common stock, the closing price of our Class A common stock on December 29, 2017.31, 2021. Under such scenario we would be required to pay the other parties to the tax receivable agreementsTRAs 85% of such amount, or approximately $655$594 million, over generally a minimum of 15 years. The actual amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and tax receivable agreementTRA payments by us will be calculated using the market value of our Class A common stock at the time of purchase or exchange and the prevailing tax rates applicable to us over the life of the tax receivable agreementsTRAs and will be dependent on us generating sufficient future taxable income to realize the benefit. As of December 31, 2017,2021, we recorded a $385.4$425.4 million liability, representing amounts payable under the tax receivable agreementsTRAs equal to 85% of the tax benefit we expected to realize from the H&F Corp merger described above, our purchase of partnership units from limited partners of Holdings and the exchange of partnership units from March 2013 through December 31, 2017,2021, assuming no material changes in the related tax law and that APAM earns sufficient taxable income to realize all tax benefits subject to the tax receivable agreements. TRAs.
The liability will increase upon future purchases or exchanges of limited partnership units with the increase representing amounts payable under the tax receivable agreementsTRAs equal to 85% of the estimated future tax benefits, if any, resulting from such purchases or exchanges. Payments under the tax receivable agreementsTRAs are not conditioned on the counterparties’ continued ownership of us.

The actual increase in tax basis, as well as the amount and timing of any payments under these agreements, will vary depending upon a number of factors, including the timing of sales or exchanges by the holders of limited partnership units, the price of the Class A common stock at the time of such sales or exchanges, whether such sales or exchanges are taxable, the amount and timing of the taxable income APAM generates in the future and the tax rate then applicable and the portion of APAM’s payments under the tax receivable agreementsTRAs constituting imputed interest or depreciable basis or amortizable basis. Payments under the tax receivable agreementsTRAs are expected to give rise to certain additional tax benefits attributable to either further increases in basis or in the form of deductions for imputed interest, depending on the tax receivable agreementTRA and the circumstances. Any such benefits are covered by the tax receivable agreementsTRAs and will increase the amounts due thereunder. In addition, the tax receivable agreementsTRAs provide for interest, at a rate equal to one-year LIBOR plus 100 basis points, accrued from the due date (without extensions) of the corresponding APAM tax return to the actual payment date, provided that the actual payment date is on or before the payment due date, as specified in the tax receivable agreements. TRAs.
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In addition, to the extent that we are unable to make payments when due under the tax receivable agreementsTRAs for any reason, such payments will be deferred and will accrue interest at a rate equal to one-year LIBOR plus 300 basis points until paid.
Payments under the tax receivable agreementsTRAs will be based on the tax reporting positions that we determine. Although we are not aware of any issue that would cause the IRS or other taxing authority to challenge a tax basis increase or other tax attributes subject to the tax receivable agreements,TRAs, we will not be reimbursed for any payments previously made under the tax receivable agreementsTRAs if such basis increases or other benefits are subsequently disallowed (however, any such additional payments may be netted against future payments (if any) that are made under the tax receivable agreements)TRAs). As a result, in certain circumstances, payments could be made under the tax receivable agreementsTRAs in excess of the benefits that we actually realize in respect of the attributes to which the tax receivable agreementsTRAs relate.
In certain cases, payments under the tax receivable agreementsTRAs may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the tax receivable agreements.TRAs.
The tax receivable agreementsTRAs provide that (i) upon certain mergers, asset sales, other forms of business combinations or other changes of control, (ii) in the event that we materially breach any of our material obligations under the agreements, whether as a result of failure to make any payment within six months of when due (provided we have sufficient funds to make such payment), failure to honor any other material obligation required thereunder or by operation of law as a result of the rejection of the agreements in a bankruptcy or otherwise, or (iii) if, at any time, we elect an early termination of the agreements, our (or our successor’s) obligations under the agreements (with respect to all units, whether or not units have been exchanged or acquired before or after such transaction) would be based on certain assumptions. In the case of a material breach or if we elect early termination, those assumptions include that we would have sufficient taxable income to fully utilize the deductions arising from the increased tax deductions and tax basis and other benefits related to entering into the tax receivable agreements.TRAs. In the case of a change of control, the assumptions include that in each taxable year ending on or after the closing date of the change of control, our taxable income (prior to the application of the tax deductions and tax basis and other benefits related to entering into the tax receivable agreements)TRAs) will equal the greater of (i) the actual taxable income (prior to the application of the tax deductions and tax basis and other benefits related to entering into the tax receivable agreements)TRAs) for the taxable year and (ii) the highest taxable income (calculated without taking into account extraordinary items of income or deduction and prior to the application of the tax deductions and tax basis and other benefits related to entering into the tax receivable agreements)TRAs) in any of the four fiscal quarters ended prior to the closing date of the change of control, annualized and increased by 10% for each taxable year beginning with the second taxable year following the closing date of the change of control. In the event we elect to terminate the agreements early or we materially breach a material obligation, our obligations under the agreements will accelerate. As a result, (i) we could be required to make payments under the tax receivable agreementsTRAs that are greater than or less than the specified percentage of the actual benefits we realize in respect of the tax attributes subject to the agreements and (ii) if we materially breach a material obligation under the agreements or if we elect to terminate the agreements early, we would be required to make an immediate payment equal to the present value of the anticipated future tax benefits, which payment may be made significantly in advance of the actual realization of such future benefits. In these situations, our obligations under the tax receivable agreementsTRAs could have a substantial negative impact on our liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that we will be able to finance our obligations under the tax receivable agreements.TRAs. If we were to elect to terminate the tax receivable agreementsTRAs associated with (i) the merger described above; (ii) the purchase or exchange of partnership units from March 2013 through December 31, 2017;2021; and (iii) projected future purchases or exchanges of partnership units, as of December 31, 2017,2021, based on an assumed discount rate equal to one-year LIBOR plus 100 basis points and a price of $47.64 per share of our Class A common stock (the closing price of our Class A common stock on December 31, 2021), we estimate that we would be required to pay approximately $523$536 million in the aggregate under the tax receivable agreements.

TRAs.
If we were deemed an investment company under the 1940 Act as a result of our ownership of Artisan Partners Holdings, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and, absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company”, as such term is defined in either of those sections of the 1940 Act.
As theits sole general partner, of Artisan Partners Holdings, we control and operate Artisan Partners Holdings. On that basis, we believe that our interest in Artisan Partners Holdings is not an “investment security” as that term is used in the 1940 Act. However, if we were to cease participation in the management of Artisan Partners Holdings, our interest in Artisan Partners Holdings could be deemed an “investment security” for purposes of the 1940 Act..
We and Artisan Partners Holdings intend to continue to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

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Risks Related to Our Class A Common Stock
The marketEquity markets and the price and trading volume of our Class A common stock mayhave been, and will continue to be, volatile, which could result in rapid and substantial losses for our stockholders.
The market price of our Class A common stock may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume of our Class A common stock may fluctuate and cause significant price variations to occur. If the market price of our Class A common stock declines significantly, investors may be unable to sell shares of Class A common stock at or above their purchase price, if at all. The market price of our Class A common stock may fluctuate or decline significantly in the future.
Some of the factors that could negatively affect the price of our Class A common stock, or result in fluctuations in the price or trading volume of our Class A common stock, include:

Departures of our portfolio managers or members of our management team or additions or departures of other key personnel.
Actual or anticipated poor performance in one or more of the investment strategies we offer.
Variations in our quarterly operating results.
Litigation and governmental investigations.
Adverse market reaction to any plans we may announce, indebtedness we may incur or securities we may issue in the future.
Failure to meet analysts’ earnings or other expectations.
Publication of research reports about us or the investment management industry.
Actions by stockholders.
Changes in market valuations of similar companies.
Changes or proposed changes in laws or regulations, or differing interpretations thereof, affecting our business, or enforcement of these laws and regulations, or announcements relating to these matters.
Adverse publicity about the investment management industry generally, or particular scandals, specifically.
The relatively low trading volume and public float of our Class A common stock.
Sales of a large number of shares of our Class A common stock or the perception that such sales could occur.
General market and economic conditions.
Future sales of our Class A common stock in the public market could lower our stock price, and any future grant or sale of equity or convertible securities may dilute existing stockholders’ ownership in us.
The market price of our Class A common stock could decline as a result of future sales of a large number of shares of our Class A common stock, or the perception that such sales could occur.
These sales, or the possibility that thesesuch sales may occur, also may make it more difficult for us to raise additional capital by selling equity securities in the future, at a time and price that we deem appropriate.
We are party to a resale and registration rights agreement pursuant to which the shares of our Class A common stock issued upon exchange of limited partnership units are eligible for resale. Such shares of Class A common stock may be transferred only in accordance with the terms and conditions of the resale and registration rights agreement. The commonagreement, which our Board may waive or modify at any time. Common units of Artisan Partners Holdings discussed below are exchangeable for shares of our Class A common stock on a one-for-one basis.

There is no limit on the number of shares of our Class A common stock that our Class A limited partners or AIC are permitted to sell. As of December 31, 2017,2021, our Class A limited partners owned approximately 7.74.5 million Class A common units and AIC owned approximately 3.5 million Class D common units.
For an employee-partner,Historically, under the resale and registration rights agreement our employee-partners were generally permitted to sell in each one-year period, the first of which began in the first quarter of 2014, the partner is generally permitted to sell up to (i) a number of vested shares of our Class A common stock representing 15% of the aggregate number of Class B common units and shares of Class A common stock received upon exchange of commonsuch units, (in each case, whether vested or unvested) he or she held as of the first day of that period or, (ii) if greater, vested shares of our Class A common stock having a market value as of the time of sale of $250,000, as well as, in either case, the number of shares such holder could have sold in any previousprior period or periods but did not sell(the “original liquidity rule”). Pursuant to a waiver granted by the Board in such period or periods. In February 2018, certain portfolio managers and our Board approved the sale of additional shares by certain employee-partners. Those employee-partners mayChief Executive Officer became eligible to sell 20% of the aggregate number oftheir Class B common units and shares of Class A common stock received upon exchange of commonsuch units in 2018, and we expect to permit them to sell the same amount in each of 2018, 2019, 2020, 2021 and 2022. In January 2022, the following four years, subject to maintainingBoard approved a minimum dollar amountrevised liquidity schedule for all other employee-partners such that in each of firm equity.2022, 2023 and 2024, each of these employee-partners can sell the greater of (i) the number of shares they could have sold under the original liquidity rule and (ii) a number of shares of Class A common stock representing one-third of the aggregate number of their restricted Class B common units and shares of Class A common stock received upon exchange of such units, plus any shares of Class A common stock that could have been sold in prior periods. As of December 31, 2017,2021, our employee-partners owned 11.93.2 million Class B common units.units and 396,801 Class A common shares received upon an exchange of Class B common units that occurred in December 2021. Approximately 3.72.4 million of those units and shares are eligible for exchange and sale in the first quarter of 2018. An additional 1.82022. In addition, 1.2 million Class E common units are eligible for exchange and sale by retiredformer employee-partners in the first quarter of 2018. We may waive or modify these restrictions.
In addition, we have filed a registration statement registering 15,000,000 shares2022. As of our Class A common stock for issuance pursuant to our 2013 Omnibus Incentive Compensation Plan and 2013 Non-Employee Director Plan. Including the February 2018 grant, we have awarded 7,589,157 restricted stock units or restricted shares of Class A common stock to our employees and employees of our subsidiaries. 4,811,816 of these awards vest pro rata over the five years from the date of issuance and may be sold upon vesting. 2,777,341 of these awards are career shares or restricted stockthis filing, we expect approximately 97 thousand units which generally will only vest upon the grantee’s qualifying retirement. We may increase the number of shares registered for this purpose from time to time. Once these shares have been issued and have vested, they will be able to be sold in the public market.exchanged on February 24, 2022.
We may also purchase limited partnerships units of Holdings at any time and may issue and sell additional shares of our Class A common stock to fund such purchases. We cannot predict the size of future issuances of our Class A common stock or the effect, if any, that such future issuances and sales of shares of our Class A common stock may have on the market price of our Class A common stock. Sales or distributions of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may cause the market price of our Class A common stock to decline.
Anti-takeover provisionsIn addition, we have filed a registration statement registering 15,000,000 shares of our Class A common stock for issuance pursuant to our 2013 Omnibus Incentive Compensation Plan and 2013 Non-Employee Director Plan. Pursuant to these plans, we have granted 11,348,630 restricted share-based awards consisting of a mix of restricted stock units, performance share units and restricted shares of Class A common stock. We may increase the number of shares registered for this purpose from time to time. Once shares issued pursuant to these plans have vested, they will be able to be sold in the public market.
Provisions in our restated certificate of incorporationorganizational documents, equity award agreements and amended and restated bylaws and in the Delaware General Corporation Lawlaw could discourage a change of control that our stockholders may favor, which could negatively affect the market price of our Class A common stock.
Provisions in our restated certificate of incorporation, amended and restated bylaws and in the Delaware General Corporation Law, oras well as the DGCL,terms of our equity awards, may make it more difficult and expensive for a third party to acquire control of us even if a change of control would be beneficial to the interests of our stockholders. Those provisions include:

•The right of the variouscertain classes of our capital stock to vote, as separate classes, on certain amendments to our restated certificate of incorporation and certain fundamental transactions.
•The ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares, which could be used to thwart a takeover attempt.stock.
•Advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitationmeeting.
27
•A limitation that, generally, stockholder action may only be taken at an annual or special meeting or by unanimous written consent.
•A requirement that a special meeting of stockholders may be called only by our board of directors, the Chair of the board or our Chairman andthe Chief Executive Officer, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors.Officer.
•The ability of our board of directors to adopt, amend and repeal our amended and restated bylaws by majority vote, while such action by stockholders would require a super majority vote,vote.
•Except with respect to awards held by our named executive officers which makes it more difficultare double trigger, single trigger vesting upon a change in control for stockholdersunvested employee equity awards, including unvested equity awards held by investment team members. Prior to February 2019, our awards generally included double trigger vesting upon a change certain provisions described above.in control.
The market price of our Class A common stock could be adversely affected to the extent that the provisions of our restated certificate of incorporation and amended and restated bylawsabove factors discourage or delay potential takeover attempts that our stockholders may favor.

Our restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusivecontains a forum for certain types of actions and proceedings that may be initiated by our stockholders,selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our restated certificate of incorporation provides that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought oncertain types of actions and proceedings that may be initiated by our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our restated certificate of incorporation or our amended and restated bylaws or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein and the claim not being one which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or for which the Court of Chancery does not have subject matter jurisdiction.stockholders. Any person purchasing or otherwise acquiring any interest in any shares of our capital stock shall be deemed to have notice of and to have consented to this provision of our restated certificate of incorporation. This choice of forum provision may limit our stockholders’ ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents.such parties. Alternatively, if a court were to find this provision of our restated certificate of incorporationthe forum selection clause inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
Our indemnification obligations may pose substantial risks to our financial condition.
Pursuant to our restated certificate of incorporation, we will indemnify our directors and officers to the fullest extent permitted by Delaware law against all liability and expense incurred by them in their capacities as directors or officers of us. We alsous, and we are obligated to pay their expenses in connection with the defense of claims. Our bylaws provide for similar indemnification of, and advancement of expenses to, our directors, officers, employees and agents and members of our stockholders committee. We have also entered into indemnification agreements with each of our directors and executive officers and each member of our stockholders committee, pursuant to which we will indemnify them to the fullest extent permitted by Delaware law in connection with their service in such capacities. Artisan Partners Holdings will also indemnify and advance expenses to AIC as its(its former general partner, thepartner), former members of its pre-IPO Advisory Committee, theadvisory committee, members of our stockholders committee, our directors and officers, and its officers and employees against any liability and expenses incurred by them and arising as a result of the capacities in which they serve or served Artisan Partners Holdings.
We have obtained liability insurance insuring our directors, officers and members of our stockholders committee against liability for acts or omissions in their capacities as directors, officers or committee memberssuch, subject to certain exclusions. These indemnification obligations may pose substantial risks to our financial condition, asif we mayare not be able to maintain our insurance or, even if we are able to maintain our insurance, claims in excess of our insurance coverage could be material. In addition, these indemnification obligations and other provisions of our restated certificate of incorporation and the amended and restated partnership agreement of Artisan Partners Holdings, may have the effect of reducing the likelihood of derivative litigation against indemnified persons, and may discourage or deter stockholders or management from bringing a lawsuit against such persons, even though such an action, if successful, might otherwise have benefited us and our stockholders.
Our restated certificate of incorporation provides that certain of our investors do not have an obligation to offer us business opportunities.
Our restated certificate of incorporation provides that, to the fullest extent permitted by applicable law, certain of our investors and their respective affiliates (including affiliates who serve on our board of directors) have no obligation to offer us an opportunity to participate in the business opportunities presented to them, even if the opportunity is one that we might reasonably have pursued (and thereforepursued. Therefore, they may be free to compete with us in the same business or a similar business).business. Furthermore, we renounce and waive and agree not to assert any claim for breach of any fiduciary or other duty relating to any such opportunity against those investors and their affiliates by reason of any such activities unless, in the case of any person who is our director or officer, such opportunity is expressly offered to such director or officerperson in writing solely in his or her capacity as an officer or director of us. This may create actual and potential conflicts of interest between us and certain of our investors and their affiliates (including certain of our directors).

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business or our industry, our stock price and trading volume could decline.
The trading market for our Class A common stock depends in part on the research and reports that securities or industry analysts publish about us or our business, or about the investment management industry generally. If one or more of the analysts who cover us downgrades our stock or publishes unfavorable research about our business or about the investment management industry, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price and trading volume to decline.

Item 1B. Unresolved Staff Comments
None

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Item 2. Properties
We operatelease all of our business from officesoffice space, including our largest office in Milwaukee, Wisconsin; San Francisco, California; Atlanta, Georgia; New York, New York; Wilmington, Delaware; Mission Woods, Kansas; Chicago, Illinois; Sydney; London; Singapore and Toronto. MostWisconsin, where a majority of our business operations are based in Milwaukee. Our Chief Executive Officer and Chief Financial Officer, along with other employees are based in San Francisco.based. We lease office space in each location and believe our existing and contracted-for facilities are adequate to meet our requirements.
Item 3. Legal Proceedings
In the normal course of business, we may be subject to various legal and administrative proceedings. Currently, there are no legal or administrative proceedings that management believes may have a material adverse effect on our consolidated financial position, cash flows or results of operations.
Item 4. Mine Safety Disclosures
Not applicable

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Information about our Executive Officers
Information regarding our executive officers is as follows:
Eric R. Colson, age 52, has been chief executive officer and a director of Artisan Partners Asset Management since March 2011. Mr. Colson also served as the president of Artisan Partners Asset Management from March 2011 to January 2021 and as chairman of the Company’s board of directors from August 2015 to August 2021. Mr. Colson has served as the chief executive officer of Artisan Partners since January 2010. Prior to January 2010, Mr. Colson served as chief operating officer of investment operations from March 2007 through January 2010. Mr. Colson has been a managing director of Artisan Partners since he joined the firm in January 2005.

Charles J. Daley, Jr., age 59, has been executive vice president, chief financial officer and treasurer of Artisan Partners Asset Management since March 2011. He has served as the chief financial officer of Artisan Partners since August 2010 and has been a managing director since July 2010 when he joined the firm.

Jason A. Gottlieb, age 52, has been president of Artisan Partners Asset Management since January 2021. From February 2017 to January 2021, he served as executive vice president of Artisan Partners Asset Management. Mr. Gottlieb joined Artisan Partners in October 2016 as a managing director and the chief operating officer of investments.

Sarah A. Johnson, age 50, has been executive vice president, chief legal officer and secretary of Artisan Partners Asset Management and general counsel of Artisan Partners since October 2013. From April 2013 to October 2013 she served as assistant secretary of Artisan Partners Asset Management. Ms. Johnson was named a managing director of Artisan Partners in March 2010.

Christopher J. Krein, age 50, has been executive vice president of Artisan Partners Asset Management and Artisan Partners' head of Global Distribution since January 2020. Prior to becoming head of Global Distribution, Mr. Krein was responsible for institutional marketing and client service for the Artisan Developing World team. Mr. Krein has been a managing director of Artisan Partners since he joined the firm in September 2015.

Eileen L. Kwei, age 43, has been executive vice president of Artisan Partners Asset Management and Artisan Partners’ chief administrative officer since January 2021. From February 2018 to January 2021, Ms. Kwei was responsible for institutional marketing and client service for the Artisan Credit team. Prior to February 2018, Ms. Kwei was a relationship manager for the Artisan Global Equity team. Ms. Kwei joined Artisan Partners in June 2013 and has been a managing director of Artisan Partners since 2018.

Gregory K. Ramirez, age 51, was appointed executive vice president of Artisan Partners Asset Management in February 2016. From October 2013 to February 2016, he served as senior vice president and from April 2013 to October 2013 as assistant treasurer. Mr. Ramirez is currently head of securities and trade operations and vehicle administration for Artisan Partners and serves as chair of the Artisan Risk and Integrity Committee. Mr. Ramirez was named a managing director of Artisan Partners in April 2003.
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PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Shares of our Class A common stock have been listed and traded on the NYSE under the symbol “APAM” since March 7, 2013. The following table sets forth, for the periods indicated, the high and low intra-day sale prices in dollars on the NYSE forAs of February 18, 2022, there were approximately 126 stockholders of record of our Class A common stock, and the dividends per share25 stockholders of record of our Class AB common stock, we declared during the periods indicated.
  High Low 
Dividends
 Declared
For the quarter ended March 31, 2016 $35.54
 $23.65
 $1.00
For the quarter ended June 30, 2016 $35.00
 $26.14
 $0.60
For the quarter ended September 30, 2016 $29.45
 $25.41
 $0.60
For the quarter ended December 31, 2016 $32.20
 $24.48
 $0.60
For the quarter ended March 31, 2017 $30.85
 $26.30
 $0.96
For the quarter ended June 30, 2017 $31.55
 $26.70
 $0.60
For the quarter ended September 30, 2017 $33.85
 $29.00
 $0.60
For the quarter ended December 31, 2017 $40.65
 $32.45
 $0.60
and 27 stockholders of record of our Class C common stock. These figures do not reflect beneficial ownership or shares held in nominee name, nor do they include holders of any restricted stock units or performance share units. There is no trading market for shares of our Class B common stock or Class C common stock.
On December 29, 2017, the last reported sale price for our Class A common stock on the NYSE was $39.50 per share. As of February 16, 2018, there were approximately 116 stockholders of record of our Class A common stock, 37 stockholders of record of our Class B common stock, and 33 stockholders of record of our Class C common stock. These figures do not reflect the beneficial ownership or shares held in nominee name, nor do they include holders of any restricted stock units.
Performance Graph
The following graph compares the year-end cumulative total stockholder return on our Class A common stock fromduring the date the shares began trading on the NYSE on March 7, 2013 tofive-year period ended December 31, 2017,2021, with the year-end cumulative total return of the S&P 500® and the Dow Jones U.S. Asset Managers Index. The graph assumes the investment of $100 in our common stock and in the market indices on March 7, 2013 and the reinvestment of all dividends.
 3/7/201312/31/201312/31/201412/31/201512/31/201612/31/2017
Artisan Partners Asset Management, Inc.$100.00$188.06$141.46$108.85$99.63$144.54
S&P 500 Index$100.00$121.75$138.42$140.33$157.11$191.42
Dow Jones U.S. Asset Managers Index$100.00$124.20$133.86$117.85$127.98$162.43

apam-20211231_g2.jpg
 For the Years Ended December 31,
20172018201920202021
Artisan Partners Asset Management Inc.$145.07 $89.76 $149.48 $255.55 $262.45 
S&P 500 Index$121.83 $116.49 $153.17 $181.35 $233.41 
Dow Jones U.S. Asset Managers Index$129.66 $97.18 $123.15 $141.80 $199.40 
The information containedabove table is provided pursuant to SEC regulations and the outcomes are impacted significantly by beginning- and end-point stock price, as well as the price at which dividends are reinvested. A stockholder who invested in APAM at its IPO on March 7, 2013, at the performance graph and table shall not be deemedIPO price of $30 per share would have experienced an 11% annual total return as of December 31, 2021 if all dividends were retained, compared to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, except to the extent that the company specifically incorporates the information by reference into a document filed under the Securities Act or the Exchange Act.15% annual total return if all dividends were reinvested.
Dividend Policy
During the first quarter of 2018,2022, our board of directors declared a variable quarterly dividend of $0.60$1.03 per share with respect to the fourth quarter of Class A common stock2021 and a special annual dividend of $0.79$0.72 per share. The variable quarterly dividend of $1.03 per share represents approximately 80% of the cash generated in the fourth quarter of 2021. Subject to boardBoard approval each quarter, we currently expect to pay a quarterly dividend during 2018.of approximately 80% of the cash the Company generates each quarter. We expect quarterly cash generation to approximate adjusted net income plus long-term incentive compensation award expense, less cash reserved for future franchise capital awards (which we expect will approximate 4% of investment management revenues each quarter), with additional adjustments made for certain other sources and uses of cash, including capital expenditures. After the end of the year, our boardBoard will consider paying a special dividend that will take into consideration our annual adjusted earnings, business conditions andafter determining the amount of cash we want to retain at that time.needed for general corporate purposes and investments in growth and strategic initiatives. Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy or at all. We expect that management and our board will consider changes to our dividend policy, including consideration
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We intend to fund dividends from our portion of distributions made by Artisan Partners Holdings from its available cash generated from operations. The holders of our Class B common stock and Class C common stock are not entitled to any cash dividends in their capacity as stockholders but, in their capacity as holders of limited partnership units of Artisan Partners Holdings, they generally participate on a pro rata basis in distributions by Artisan Partners Holdings.

The declaration and payment of all future dividends, if any, will be at the sole discretion of our board of directors. In determining the amount of any future dividends, our board of directors will take into account: (i) our financial results, (ii) our available cash, as well as anticipated cash requirements (including debt servicing)servicing, seed capital for new investment strategies and vehicles, and cash required to support growth and strategic initiatives), (iii) our capital requirements and the capital requirements of our subsidiaries (including Artisan Partners Holdings), (iv) contractual, legal, tax and regulatory restrictions on, and implications of, the payment of dividends by us to our stockholders or by our subsidiaries (including Artisan Partners Holdings) to us, including the obligation of Artisan Partners Holdings to make tax distributions to the holders of partnership units (including us), (v) general economic and business conditions and (vi) any other factors that our board of directors may deem relevant.
As a holding company, our assets principally consist of our ownership of partnership units of Artisan Partners Holdings, deferred tax assets and cash. Accordingly, we depend on distributions from Artisan Partners Holdings to fund any dividends we may pay. We intend to cause Artisan Partners Holdings to distribute cash to its partners, including us, in an amount sufficient to cover dividends, if any, declared by us. If we do cause Artisan Partners Holdings to make such distributions, holders of Artisan Partners Holdings limited partnership units will be entitled to receive equivalent distributions on a pro rata basis.
Our dividend policy has certain risks and limitations, particularly with respect to liquidity. Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy, or at all, if, among other things, Artisan Partners Holdings is unable to make distributions to us as a result of its operating results, cash requirements and financial condition, the applicable laws of the State of Delaware (which may limit the amount of funds available for distribution), its compliance with covenants and financial ratios related to indebtedness (including the notes and the revolving credit agreement) and its other agreements with third parties. Our note purchase and revolving credit agreements contain covenants limiting Artisan Partners Holdings’ ability to make distributions if a default has occurred and is continuing or would result from such a distribution. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”.
Under the Delaware General Corporation Law, we may only pay dividends from legally available surplus or, if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Surplus is defined as the excess of the fair value of our total assets over the sum of the fair value of our total liabilities plus the par value of our outstanding capital stock. Capital stock is defined as the aggregate of the par value of all issued capital stock. To the extent we do not have sufficient cash to pay dividends, we may decide not to pay dividends.

Artisan Partners Holdings’ Distributions
Artisan Partners Holdings has made the following distributions to holders of its partnership units, including APAM, during the periods indicated:
 For the Years Ended December 31,
 20172016
 (in millions)
For the quarter ended March 31$38.2
$41.7
For the quarter ended June 30$100.1
$93.9
For the quarter ended September 30$77.2
$72.5
For the quarter ending December 31$97.4
$86.3
Unregistered Sales of Equity Securities
As described in Note 8, “Stockholders’ Equity”, to the Consolidated Financial Statements included in Item 8 of this report, upon termination of employment with Artisan, an employee-partner’s Class B common units are exchanged for Class E common units and the corresponding shares of Class B common stock are canceled. APAM issues the former employee-partner a number of shares of Class C common stock equal to the former employee-partner’s number of Class E common units. Class E common units are exchangeable for Class A common stock subject to the same restrictions and limitations on exchange applicable to the other common units of Holdings. There were no such issuances during the three months ended December 31, 2017.2021.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth the total shares of our Class A common stock authorized and issued (or to be issued) under our equity compensation plans as of December 31, 2017:
 As of December 31, 2017
  
Issued (or to be issued) upon settlement of restricted stock units(1)
 Number of Securities remaining available for future issuance under equity compensation plans Equity Type
2013 Omnibus Incentive Compensation Plan 6,001,282 7,998,718 
Restricted Share Awards
Restricted Stock Units
2013 Non-Employee Director Plan 120,942 879,058 Restricted Stock Units
(1) Excludes securities forfeited by grantees and available for future issuance.
These plans were approved by our sole stockholder prior to our IPO in March 2013. For restricted stock units issued to employees, the shares of Class A common stock underlying the restricted stock units will generally be issued and delivered promptly following the vesting of the awards. For restricted stock units issued to non-employee directors, the shares of Class A common stock underlying the restricted stock units will generally be issued and delivered on or promptly following the termination of the non-employee director’s service on the Board.

Item 6. Selected Financial Data
The following tables set forth selected historical consolidated financial data of Artisan Partners Asset Management as of the dates and for the periods indicated. The selected consolidated statements of operations data for the years ended December 31, 2017, 2016 and 2015 and the selected consolidated statements of financial condition data as of December 31, 2017 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this document. The selected consolidated statements of operations data for the years ended December 31, 2014 and 2013 and the consolidated statement of financial condition as of December 31, 2015, 2014 and 2013 have been derived from consolidated financial statements not included elsewhere in this document.
The Company adopted revised consolidation accounting guidance (ASU 2015-02) as of January 1, 2016. Upon adoption, Artisan Partners Launch Equity LP (“Launch Equity”), a private investment partnership liquidated in 2014, was deconsolidated and all periods presented in the audited consolidated financial statements were restated to reflect the deconsolidation. Launch Equity was previously accounted for as a consolidated variable interest entity until its operations were dissolved in 2014. For consistency, the selected consolidated statements of operations data for the year ended December 31, 2013 and the consolidated statement of financial condition as of December 31, 2014 and 2013 were restated to reflect the deconsolidation to be presented on the same basis as the annual financial statements.

You should read the following selected historical consolidated financial data together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and Notes.[Reserved]
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  For the Years Ended December 31,
 2017 2016 2015 2014 2013
 (in millions, except per-share data)
Statements of Operations Data:         
Revenues         
Management fees 
  
  
  
  
Mutual funds$502.6
 $470.6
 $543.3
 $575.4
 $464.3
Separate accounts292.7
 249.2
 260.4
 252.3
 219.0
Performance fees0.3
 1.1
 1.8
 1.0
 2.5
Total revenues$795.6
 $720.9
 $805.5
 $828.7
 $685.8
Operating Expenses         
Salaries, incentive compensation and benefits390.2
 355.8
 372.2
 350.3
 309.2
Pre-offering related compensation-share-based awards12.7
 28.1
 42.1
 64.7
 404.2
Pre-offering related compensation-other—
 —
 —
 —
 143.0
Total compensation and benefits402.9
 383.9
 414.3
 415.0
 856.4
Distribution, servicing and marketing29.6
 32.5
 43.6
 49.1
 38.4
Occupancy14.5
 13.1
 12.5
 11.3
 10.5
Communication and technology34.1
 32.2
 25.5
 21.0
 14.4
General and administrative28.1
 25.0
 27.2
 25.4
 27.3
Total operating expenses509.2
 486.7
 523.1
 521.8
 947.0
Operating income (loss)286.4
 234.2
 282.4
 306.9
 (261.2)
Non-operating income (loss)         
Interest expense(11.4) (11.7) (11.7) (11.6) (11.9)
Net gain on the valuation of contingent value rights—
 —
 —
 —
 49.6
Net investment income (loss) and other1.1
 1.3
 0.4
 0.4
 5.1
Net investment gain (loss) of consolidated investment products4.2
 —
 —
 —
 —
Net gain (loss) on the tax receivable agreements290.9

0.7
 (12.2) (4.2) —
Total non-operating income (loss)284.8
 (9.7) (23.5) (15.4) 42.8
Income (loss) before income taxes571.2
 224.5
 258.9
 291.5
 (218.4)
Provision for income taxes420.5
 51.5
 46.8
 48.8
 26.4
Net income (loss) before noncontrolling interests150.7
 173.0
 212.1
 242.7
 (244.8)
Less: Net income (loss) attributable to noncontrolling interests-Artisan Partners Holdings LP99.0
 100.0
 130.3
 173.1
 (269.6)
Less: Net income attributable to noncontrolling interests - consolidated investment products2.1
 —
 —
 —
 —
Net income attributable to Artisan Partners Asset Management Inc.$49.6
 $73.0

$81.8
 $69.6
 $24.8
          
Earnings (loss) per basic and diluted common share$0.75
 $1.57
 $1.86
 $(0.37) $(2.04)
Weighted average basic and diluted common shares outstanding44.6
 38.1
 35.4
 27.5
 13.8
Dividends declared per Class A common share$2.76
 $2.80
 $3.35
 $3.83
 $0.86

 As of December 31,
2017 2016 2015 2014 2013
Statement of Financial Condition Data:  (in millions)
Cash and cash equivalents$137.3
 $156.8
 $166.2
 $182.3
 $211.8
Total assets837.2
 936.2
 946.5
 849.5
 491.5
Borrowings(1)
200.0
 200.0
 200.0
 200.0
 200.0
Total liabilities666.5
 818.5
 829.9
 742.0
 409.6
Redeemable noncontrolling interests62.6
 —
 —
 —
 —
Total equity$108.1
 $117.7
 $116.6
 $107.5
 $81.9
(1) In August 2012, we issued $200 million in unsecured notes and entered into a $100 million five-year revolving credit agreement. In August 2017, we issued $60 million in unsecured notes and used the proceeds to repay $60 million of the 2012 unsecured notes that matured in August 2017. On the same date, we amended and extended the $100 million revolving credit facility for an additional five-year period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”.
The following table sets forth certain of our selected operating data as of the dates and for the periods indicated:
 As of and for the Years Ended December 31,
 2017
2016 2015 2014 2013
Selected Unaudited Operating Data: (in millions)
Assets under management(1)
$115,494
 $96,845
 $99,848
 $107,915
 $105,477
Net client cash flows(2)
(5,408) (4,824) (5,848) 788
 7,178
Market appreciation (depreciation)(3)
$24,057
 $1,821
 $(2,219) $1,650
 $23,965
(1) Reflects the dollar value of assets we managed for our clients in our investment strategies as of the last day of the period.
(2) Reflects the dollar value of assets our clients placed with us for management, and withdrew from our management, during the period, excluding appreciation (depreciation) due to market performance and fluctuations in exchange rates.
(3) Represents the appreciation (depreciation) of the value of our assets under management during the period due to market performance and fluctuations in exchange rates, as well as income, such as dividends, earned on assets under management.
The following table shows net income, operating income, operating margin and the corresponding adjusted measures for Artisan Partners Asset Management for the periods indicated.
 For the Years Ended December 31,
 2017
2016 2015 2014 2013
 (dollars in millions)
Net income attributable to Artisan Partners Asset Management Inc. (GAAP)$49.6
 $73.0
 $81.8
 $69.6
 $24.8
Adjusted net income (Non-GAAP)$182.1
 $158.7
 $197.3
 $228.9
 $180.3
Operating income (loss) (GAAP)$286.4
 $234.2
 $282.4
 $306.9
 $(261.2)
Adjusted operating income (Non-GAAP)$299.1
 $262.3
 $324.5
 $371.7
 $288.9
Operating margin (GAAP)36.0% 32.5% 35.1% 37.0% (38.1)%
Adjusted operating margin (Non-GAAP)37.6% 36.4% 40.3% 44.9% 42.1 %
For a further discussion of our adjusted non-GAAP measures and a reconciliation from GAAP financial measures to non-GAAP measures, including adjusted net income per adjusted share and adjusted EBITDA, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Supplemental Non-GAAP Financial Information”.

Item 7. Management’s Discussion and Analysis of Financial Condition andResults of Operations
The following discussion and analysis of the results of operations and financial condition of the Company should be read in conjunction with the “Forward-Looking Statements” disclosure preceding Part I and the “Risk Factors” set forth in Item 1A of Part I of this Annual Report on Form 10‑K, each of which describe our risks, uncertainties and other important factors in more detail.
Overview and Recent Highlights
We are an investment management firm focused on providing high-value added, active investment strategies in growing asset classes to sophisticated clients globally.around the world. As of December 31, 2017,2021, our eightnine autonomous investment teams managed a total of 1721 investment strategies across multiple asset classes and investment styles. OverWe expect our firm’s history, we have createdtenth autonomous investment team to launch its first strategies during the first half of 2022.
We focus on attracting, retaining and developing talented investment professionals and creating an environment in which each investment team is provided ample resources and support, transparent and direct financial incentives, a high degree of investment autonomy, and a long-term time horizon. We create new investment strategies that canwhen we identify opportunities to add value for clients, oftentimes through the use of a broad array of securities, instruments, and techniques (which we call degrees of freedom) to differentiate returns and manage risk. During 2017, we launched the Thematic and Global Discovery strategies and two privately offered strategies managed by our Credit team and Thematic team, each of which provides our investment talent with significant degrees of freedom with which to add value and manage risk.
We focus our distribution efforts on sophisticated investors and asset allocators, including institutions and intermediaries that operate with institutional-like decision-making processes. We offer our investment strategies to clients and investors through multiple investment vehicles, including separate accounts and different types of pooled vehicles. As of December 31, 2017,2021, approximately 80% and 20%77% of our assets under management were managed for clients and investors domiciled in and outside of the U.S., respectively. Over the last five years we have grown and 23% of our assets under management fromwere managed for clients and investors domiciled outside of the U.S. from $7.9 billion as of December 31, 2012, to $22.7 billion as of December 31, 2017.
As a high-value added investment manager we expect that long-term investment performance will be the primary driver of our long-term business and financial results. If we maintain and evolve existing investment strategies and launch new investment strategies that meet the needs of and generate attractive outcomes for sophisticated asset allocators, we are confidentbelieve that we will continue to generate strong business and financial results.
Over shorter time periods, changes in our business and financial results are largely driven by market conditions and fluctuations in our assets under management that may not necessarily be the result of our long-term investment performance or the long-term demand for our strategies. For this reason, we expect that our business and financial results will be lumpy over time. During the year ended December 31, 2017, our assets under management increased to $115.5 billion, an increase of $18.6 billion, or 19.3%, compared to $96.8 billion at December 31, 2016, as a result of $24.1 billion in market appreciation, partially offset by $5.4 billion of net client cash outflows. Average assets under management for the year ended December 31, 2017 was $108.8 billion, an increase of 13.0% from the average of $96.3 billion for the year ended December 31, 2016.
We strive to maintain a financial model that is transparent and predictable. WeCurrently, we derive essentiallynearly all of our revenues from investment management fees, nearly allmost of which are based on a specified percentage of clients’ average assets under management. A majority of our expenses, including most of our compensation expense, vary directly with changes in our revenues.
We invest thoughtfully to support our investment teams and future growth, while also paying out to shareholdersstockholders and partners a majority of the cash that we generate from operations through dividends and distributions. RevenuesWe expect to continue to invest in the growth of the business, with a focus on adding new investment capabilities and more degrees of freedom in areas where both opportunity and client demand exist, and in which we can differentiate our active management and add value for clients.
Business highlights for 2021 included:
•Michael Cirami, Michael O'Brien and Sarah Orvin joined Artisan in September 2021 to build the firm's newest autonomous investment franchise. The new team will develop active, differentiated strategies with broad exposure to the emerging markets debt asset class. We expect to launch three emerging market debt strategies in 2022.
•On March 1, 2021, we launched the Artisan China Post-Venture Strategy, which is our first strategy with a dedicated private investing component.
•On December 1, 2021, we launched the Artisan Floating Rate strategy, managed by the Credit team.
Financial highlights for 2021 included:
•During the year ended December 31, 2021, our assets under management increased to $174.8 billion, an increase of $17.0 billion, or 11%, compared to $157.8 billion at December 31, 2020, as a result of $17.6 billion of market appreciation and $1.7 billion of net client cash inflows, partially offset by $2.3 billion of Artisan Funds’ distributions that were $796not reinvested by fund shareholders.
•Average assets under management for the year ended December 31, 2021 was $171.8 billion, an increase of 37.5% from the average of $124.9 billion for the year ended December 31, 2020.
•We earned $1.23 billion in revenue for the year ended December 31, 2021, a 36% increase from revenues of $900 million for the year ended December 31, 2017, a 10% increase from revenues of $721 million in the prior year.2020.
•Our GAAP operating margin was 36.0% for the year ended December 31, 2017,44.0% in 2021, compared to 32.5% for the year ended December 31, 2016.39.8% in 2020. Adjusted operating margin was 37.6% for the year ended December 31, 2017,44.1% in 2021, compared to 36.4% for the year ended December 31, 2016.39.8% in 2020.
The Tax Cuts•We generated $5.10 of earnings per basic share, $5.09 of earnings per diluted share and Jobs Act (“Tax Reform”) was enacted in December 2017. Based on available information, the Company recorded a non-cash charge in the December quarter of 2017 of $62 million for the re-measurement of deferred tax assets, net of related adjustments to the amounts payable under the tax receivable agreements. Adjusted net income excludes the impact of the non-cash net charge. As a result of the reduced corporate tax rate under Tax Reform, the Company estimates its GAAP effective tax rate will be in the range of 14% to 17% and its adjusted effective tax rate will be 23.5% in 2018. Based on our current estimates, we anticipate the corporate tax rate reduction will result in an additional $0.55$5.03 of adjusted net income per adjusted share in 2018.EPS.
Business highlights for 2017 included:
Our assets under management as of December 31, 2017 were $115.5 billion, our highest year-end assets under management.
Our investment teams continued to generate strong absolute and relative investment returns for clients and investors. Of our 13 strategies launched prior to 2017, ten have outperformed their broad-based benchmarks since inception, with average annual out-performance ranging from 1.61% to 5.23% points, after fees.
We furthered the franchise development, in terms of leadership, resources, economic alignment, and culture, of our eight investment teams.
During the year, we launched four new investment strategies, the most strategies we have established in a single year.
We refinanced $60 million of senior notes and extended our $100 million revolving credit facility through August 2022.
•We declared and distributed dividends of $2.76$4.23 per share of Class A common stock during 2017,2021.
•We declared, effective February 1, 2022, a quarterly dividend of $1.03 per share of Class A common stock with respect to the December 2021 quarter and have declareda special annual dividend of $0.72 per share, for a total of $3.19$4.70 of dividends per share with respect to 2017.2021.
33
COVID-19 Pandemic
As noted in “Risk Factors—Risks Related to our Business”, the COVID-19 pandemic continues to impact the manner in which we operate, as the majority of our associates now maintain a hybrid schedule and, as of the date of this filing, the amount of business travel remains below pre-pandemic levels. We successfully completedbelieve we continue to operate well under these changing circumstances. We are benefiting from the flexible and highly mobile operating environment we have built over 25 years. However, we do not know what, if any, longer-term impact the current operating environment will have on our February 2017 follow-on offeringbusiness and results. Given the continued uncertainty surrounding the COVID-19 pandemic, it is difficult to predict whether further changes to associates' work arrangements will be needed and how long the reduced business travel will last. We expect most operating costs to return to pre-COVID-19 levels when associates return to the office and resume business travel.
The COVID-19 pandemic, together with resulting voluntary and government-imposed actions, has disrupted the global economy and caused significant market fluctuations. Ongoing global health concerns and uncertainty regarding the impact of COVID-19, could lead to further market volatility. Market fluctuations, for any reason, may cause clients to choose to redeem their investments from our investment strategies, which would ultimately impact our AUM, revenues and income.
As the COVID-19 pandemic continues to evolve, it is not possible to predict the full extent to which the pandemic may adversely impact our capital structure.
business, financial results and operations. These impacts, the onset of which may be delayed, will continue to depend on numerous developing factors that remain uncertain and subject to change.

Organizational Structure
Organizational Structure
Our operations are conducted through Artisan Partners Holdings (“Holdings”) and its subsidiaries. On March 12, 2013, Artisan Partners Asset Management Inc. (“APAM”) and Artisan Partners Holdings LP completed a series of transactions (the “IPO Reorganization”) to reorganize their capital structures in connection with the initial public offering (“IPO”) of APAM’s Class A common stock. The IPO Reorganization and IPO were completed on March 12, 2013. The IPO Reorganization was designed to create a capital structure that preserves our ability to conduct our business through Holdings, while permitting us to raise additional capital and provide access to liquidity through a public company.
Our employees and other limitedLimited partners of Holdings, some of whom are employees, held approximately 33%16% of the equity interests in Holdings as of December 31, 2017.2021. As a result, our post-IPO results reflect that significant noncontrolling interest.
We operate our business in a single segment.
20172021 Follow-On Offering and Holdings Unit Exchanges
On February 28, 2017, APAM completed an offering of 5,626,517March 1, 2021, the Company sold 963,614 shares of Class A common stock in an underwritten offering and utilized all of the proceeds to purchase an aggregate of 5,626,517963,614 common units from certain limited partners of Holdings. In connection with the offering, APAM received 5,626,517963,614 GP units of Holdings.
During the year ended December 31, 2017,2021, certain limited partners of Holdings exchanged 1,472,1972,142,292 common units (along with a corresponding number of shares of Class B or Class C common stock of APAM)APAM, as applicable) for 1,472,1972,142,292 shares of Class A common stock. In connection with the exchanges, APAM received 1,472,1972,142,292 GP units of Holdings.
APAM’s equity ownership interest in Holdings increased from 57%80% at December 31, 20162020 to 67%84% at December 31, 2017,2021, as a result of these transactions and other equity transactions during the period.
Tax Impact
34
In connection with the IPO, APAM entered into two tax receivable agreements (“TRAs”). The first TRA generally provides for the payment by APAM to a private equity fund (the “Pre-H&F Corp Merger Shareholder”) of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) the tax attributes of the preferred units APAM acquired in the merger of a wholly-owned subsidiary of the Pre-H&F Corp Merger Shareholder into APAM in March 2013, (ii) net operating losses available as a result of the merger and (iii) tax benefits related to imputed interest.
The second TRA generally provides for the payment by APAM to current or former limited partners of Holdings of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) certain tax attributes of their partnership units sold to us or exchanged (for shares of Class A common stock, convertible preferred stock or other consideration) and that are created as a result of such sales or exchanges and payments under the TRAs and (ii) tax benefits related to imputed interest. Under both agreements, APAM generally will retain the benefit of the remaining 15% of the applicable tax savings.

Tax Cuts and Jobs Act
As a result of the Tax Cuts and Jobs Act, deferred tax assets were re-measured in the December quarter of 2017 to reflect the reduced U.S. federal corporate tax rate. The lower tax rate reduced deferred tax assets by $352 million with a corresponding increase to the provision for income taxes. The reduction in deferred tax assets reduced the amounts payable under the tax receivable agreements by $290 million. The net impact of Tax Reform in the December quarter of 2017 was a $62 million reduction in net income.



The change in the Company’s deferred tax assets related to the tax rate change and the other tax benefits described above and the change in corresponding amounts payable under the TRAs for the year ended December 31, 2017 is summarized as follows:
 Deferred Tax Asset - Amortizable Basis Amounts Payable Under Tax Receivable Agreements
 (in millions)
December 31, 2016$653.9
 $586.2
2017 Follow-On Offering and Exchanges141.6
 120.3
Amortization(42.9) —
Payments under TRA—
 (30.2)
Tax Reform - change in federal corporate tax rate(341.7) (290.4)
Change in estimate(0.2) (0.5)
December 31, 2017$410.7
 $385.4
Financial Overview
Economic Environment
Global equity and debt market conditions can materially affect our financial performance. During the year ended December 31, 2017, market appreciation increased our assets under management by 24.8%. The following table presents the total returns of relevant market indices:
indices for the years ended December 31, 2021, 2020 and 2019:
 For the Years Ended December 31,
202120202019
S&P 500 total returns28.7 %18.4 %31.5 %
MSCI All Country World total returns18.5 %16.3 %26.6 %
MSCI EAFE total returns11.3 %7.8 %22.0 %
Russell Midcap® total returns22.6 %17.1 %30.5 %
MSCI Emerging Markets Index(2.5)%18.3 %18.4 %
ICE BofA U.S. High Yield Master II Total Return Index5.4 %6.2 %14.4 %
 For the Years Ended December 31,
 2017 2016 2015
S&P 500 total returns21.8% 12.0% 1.4 %
MSCI All Country World total returns24.0% 7.9% (2.4)%
MSCI EAFE total returns25.0% 1.0% (0.8)%
Russell Midcap®  total returns
18.5% 13.8% (2.4)%
MSCI Emerging Markets Index37.3% 11.2% (14.9)%
ICE BofA Merrill Lynch U.S. High Yield Master II Total Return Index7.5% 17.5% (4.6)%

Key Performance Indicators
When we review our business and financial performance we consider, among other things, the following:
 For the Years Ended December 31,
202120202019
(unaudited; dollars in millions)
Assets under management at period end$174,754 $157,776 $121,016 
Average assets under management(1)
$171,767 $124,901 $111,023 
Net client cash flows(2)
$1,678 $7,154 $(2,658)
Total revenues$1,227 $900 $799 
Weighted average fee(3)
70.7 bps70.9 bps71.6 bps
Operating margin44.0 %39.8 %35.5 %
Adjusted operating margin (4)
44.1 %39.8 %35.5 %
(1) We compute average assets under management by averaging day-end assets under management for the applicable period.
(2) Net client cash flows excludes Artisan Funds’ income and capital gain distributions that were not reinvested by fund shareholders.
(3) We compute our weighted average management fee by dividing annualized investment management fees (which excludes performance fees) by average assets under management for the applicable period.
(4) Adjusted measures are non-GAAP measures and are explained and reconciled to the comparable GAAP measures in “Supplemental Non-GAAP Financial Information” below.
 For the Years Ended December 31,
 2017 2016 2015
 (dollars in millions)
Assets under management at period end$115,494
 $96,845
 $99,848
Average assets under management(1)
$108,754
 $96,281
 $106,484
Net client cash flows$(5,408) $(4,824) $(5,848)
Total revenues$796
 $721
 $806
Weighted average fee(2)
73.1 bps
 74.8 bps
 75.6 bps
Operating Margin36.0% 32.5% 35.1%
Adjusted operating margin(3)
37.6% 36.4% 40.3%
(1) We compute average assets under management by averaging day-end assets under management for the applicable period.
(2) We compute our weighted average fee by dividing annualized investment management fees by average assets under management for the applicable period.
(3) Adjusted measures are non-GAAP measures and are explained and reconciled to the comparable GAAP measures in “-Supplemental Non-GAAP Financial Information” below.

The period-over-period changes in these metrics are discussed below. The decrease in the weighted average fee rate is primarily a result of the shift in the mix of our assets under management between our investment strategies and vehicles, primarily the increase in the proportion of total assets managed in separate accounts.
ManagementInvestment advisory fees and assets under management within our consolidated investment products are excluded from the weighted average fee calculations and from total revenues, since any such revenues are eliminated upon consolidation. Assets under management within our privately offered strategiesArtisan Private Funds are included in the reported firm-wide,firmwide, separate account,accounts and other, and institutional assets under management figures reported below.
Assets Under Management and Investment Performance
Changes to our operating results from one period to another are primarily caused by changes in the amount of our assets under management. Changes in the relative composition of our assets under management among our investment strategies and vehicles and the effective fee rates on our products also impact our operating results.
The amount and composition of our assets under management are, and will continue to be, influenced by a variety of factors including, among others:
•investment performance, including fluctuations in both the financial markets and foreign currency exchange rates and the quality of our investment decisions;
•flows of client assets into and out of our various strategies and investment vehicles;
•our decision to close strategies or limit the growth of assets in a strategy or a vehicle when we believe it is in the best interest of our clients; as well as our decision to re-open strategies, in part or entirely;
•our ability to attract and retain qualified investment, management, and marketing and client service professionals;
•industry trends towards products, strategies, vehicles or strategiesservices that we do not offer;
•competitive conditions in the investment management and broader financial services sectors; and
•investor sentiment and confidence.
35
The table below sets forth changes in our total assets under management:
 For the Years Ended December 31,
202120202019
(unaudited; dollars in millions)
Beginning assets under management$157,776 $121,016 $96,224 
Gross client cash inflows33,725 36,338 17,594 
Gross client cash outflows(32,047)(29,184)(20,252)
Net client cash flows1,678 7,154 (2,658)
Artisan Funds’ distributions not reinvested(1)
(2,295)(690)(630)
Investment returns and other(2)
17,595 30,296 28,080 
Ending assets under management$174,754 $157,776 $121,016 
Average assets under management$171,767 $124,901 $111,023 
(1) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
(2) Includes the impact of translating the value of assets under management denominated in non-USD currencies into U.S. dollars. The impact was immaterial for the periods presented.
  For the Years Ended December 31,
 2017 2016 2015
 (in millions)
Beginning assets under management$96,845
 $99,848
 $107,915
Gross client cash inflows16,380
 18,489
 18,577
Gross client cash outflows(21,788) (23,313) (24,425)
Net client cash flows(5,408) (4,824) (5,848)
Market appreciation (depreciation) (1)
24,057
 1,821
 (2,219)
Ending assets under management$115,494
 $96,845
 $99,848
Average assets under management$108,754
 $96,281
 $106,484
(1) Includes the impact of translating the value of assets under management denominated in non-USD currencies into US dollars. The impact was immaterial for the periods presented.
NetDuring 2021 our AUM increased by $17.0 billion due to $17.6 billion of investment returns and $1.7 billion of net client cash flows forinflows, partially offset by $2.3 billion of Artisan Funds’ distributions that were not reinvested by fund shareholders. For the years ended December 31, 2017, 2016 and 2015 includedyear, 13 of our 21 investment strategies had net inflows totaling $10.4 billion, which were offset by $8.7 billion of net outflows from the remaining strategies.
Over the long-term, we expect to generate the majority of approximately $510 million, $294 million, and $616 million, respectively, from Artisan Funds annual income and capital gains distributions, net of reinvestments.
Across the firm, we experienced total net outflows of $5.4 billion during the year ended December 31, 2017. Our Non-U.S. Growth, Mid-Cap Growth, and Mid-Cap Value strategies experienced net outflows of $3.4 billion, $2.9 billion, and $1.0 billion, respectively. We expect these strategies will continue to experience net outflows. During the year ended December 31, 2017, our Global Opportunities, Developing World, and High Income strategies experienced net inflows of $1.4 billion, $0.8 billion, and $0.5 billion, respectively. We expect all three strategies to continue to experience net inflows.AUM growth through investment returns, which has been our historical experience.
We monitor the availability of attractive investment opportunities relative to the amount of assets we manage in each of our investment strategies.strategies and the velocity at which the strategies are experiencing inflows. When appropriate, we will close a strategy to new investors or otherwise take action to slow or restrict its growth, even though our aggregate assets under management may be negatively impacted in the short term. We may also re-open a strategy, widely or selectively, to fill available capacity or manage the diversification of our client base in that strategy. We believe that management of our investment capacity protects our ability to manage assets successfully, which protects the interests of our clients and, in the long term, protects our ability to retain client assets and maintain our profit margins.

As of the date of this filing, our Non-U.S. Growth, Non-U.S. Small-Cap Growth, Non-U.S.the Artisan High Income Fund, Artisan International Value U.S. Mid-Cap GrowthFund and U.S. Small-Cap Growth strategiesArtisan International Small-Mid Fund are closed to most new investors and client relationships. Our Global Value and Global Opportunitiestheir respective strategies are open across pooled vehicles, but closedhave limited availability to most new separate account clients. We may selectively accept additional separate account clients in those strategies, butclient relationships. In addition, we are actively managing asset flows into those strategiesthe capacity of our U.S. Small-Cap Growth strategy with a bias towards assets from pooled vehicles.respect to new client relationships.
When we close or otherwise restrict the growth of a strategy, we typically continue to allow additional investments in the strategy by existing clients and certain related entities. We may also permit new investments by other eligible investors atin our discretion. As a result, during a given period we may have net client cash inflows in a closed strategy. However, when a strategy is closed or its growth is restricted we expect there to be periods of net client cash outflows.
The unaudited table belowon the following page sets forth the total assets under management for our investment teams and strategies as of December 31, 2017, the inception date for each investment composite, and the average annual total returns for each composite (gross of fees) and its respective broad-based benchmark (and style benchmark, if applicable) over a multi-horizon time period as of December 31, 2017.2021. Returns for periods less than one year are not annualized. Performance information for Artisan sponsored privately offered strategies has been intentionally omitted.
We measure investment performance based upon the results of our “composites”, which represent the aggregate performance of all discretionary client accounts, including mutual funds, invested in the same strategy except those accounts with respect to which we believe client-imposed investment restrictions may have a material impact on portfolio construction and those accounts managed in a currency other than U.S. dollars. The results of these excluded accounts, which represented approximately 12% of our assets under management at December 31, 2017, are maintained in separate composites the results of which are not included below.



36
Inception Strategy AUM Average Annual Total Returns (Gross) 
Average Annual Value-Added(1) Since Inception (bps)
Composite InceptionStrategy AUMAverage Annual Total Returns (Gross)
Average Annual Value-Added(1) Since Inception (bps)
Investment Team and StrategyDate  (in $MM) 1 YR3 YR5 YR10 YRInception Investment Team and StrategyDate
 (in $MM) (2)
1 YR3 YR5 YR10 YRInception
Growth Team    Growth Team
Global Opportunities Strategy2/1/2007 $15,469
 32.73%15.18%14.87%10.46%11.00% 579Global Opportunities Strategy2/1/2007$27,578 15.17%30.66%22.22%18.32%13.27%625
MSCI All Country World Index   23.97%9.29%10.79%4.65%5.21% MSCI All Country World Index18.54%20.36%14.39%11.84%7.02%
Global Discovery9/1/2017 16
 N/A5.99% (178)
Global Discovery StrategyGlobal Discovery Strategy9/1/20172,371 14.01%34.48%---23.86%1,080
MSCI All Country World Index   N/AN/A7.77% MSCI All Country World Index18.54%20.36%---13.06%
U.S. Mid-Cap Growth Strategy4/1/1997 12,798
 21.96%8.14%13.46%9.95%15.06% 453U.S. Mid-Cap Growth Strategy4/1/199716,919 11.68%35.59%24.22%18.62%16.58%586
Russell® Midcap Index
   18.52%9.57%14.95%9.10%10.54% 
Russell® Midcap Index
22.58%23.26%15.09%14.89%11.13%
Russell® Midcap Growth Index
   25.27%10.29%15.30%9.09%9.28% 
Russell® Midcap Growth Index
12.73%27.43%19.82%16.61%10.72%
U.S. Small-Cap Growth Strategy4/1/1995 2,345
 28.38%11.71%15.15%10.30%10.56% 99U.S. Small-Cap Growth Strategy4/1/19955,566 (7.77)%28.69%23.16%18.21%12.18%351
Russell® 2000 Index
   14.65%9.95%14.11%8.70%9.56% 
Russell® 2000 Index
14.82%20.00%12.01%13.22%9.83%
Russell® 2000 Growth Index
   22.17%10.27%15.20%9.18%7.98% 
Russell® 2000 Growth Index
2.83%21.14%14.52%14.12%8.67%
   
Global Equity Team   Global Equity Team
Global Equity Strategy4/1/2010 1,439
 33.31%10.66%13.20%N/A13.14% 406Global Equity Strategy4/1/20102,837 6.56%22.55%19.20%15.89%14.07%397
MSCI All Country World Index   23.97%9.29%10.79%N/A9.08% MSCI All Country World Index18.54%20.36%14.39%11.84%10.10%
Non-U.S. Growth Strategy1/1/1996 27,101
 32.55%5.48%8.57%3.87%10.54% 542Non-U.S. Growth Strategy1/1/199620,507 10.07%16.03%13.31%10.37%10.29%504
MSCI EAFE Index   25.03%7.79%7.89%1.94%5.12% MSCI EAFE Index11.26%13.53%9.54%8.02%5.25%
Non-U.S. Small-Cap Growth Strategy1/1/2002 695
 35.54%10.39%9.67%5.51%13.87% 302
MSCI EAFE Small Cap Index   33.01%14.19%12.85%5.77%10.86% 
   
Non-U.S. Small-Mid Growth StrategyNon-U.S. Small-Mid Growth Strategy1/1/20199,417 5.17%25.33---25.33%1,062
MSCI ACWI ex US SMID IndexMSCI ACWI ex US SMID Index10.16%14.71---14.71%
China Post-Venture StrategyChina Post-Venture Strategy4/1/2021237 ---(9.06)%539
MSCI China SMID Cap IndexMSCI China SMID Cap Index---(14.45)%
U.S. Value Team   U.S. Value Team
Value Equity Strategy7/1/2005 2,269
 16.99%11.78%13.41%8.44%9.00% (5)Value Equity Strategy7/1/20054,054 24.43%21.90%12.83%12.88%9.67%124
Russell® 1000 Index   21.69%11.22%15.70%8.59%9.05% Russell® 1000 Index26.45%26.18%18.41%16.53%11.07%
Russell® 1000 Value Index   13.66%8.64%14.03%7.10%7.77% Russell® 1000 Value Index25.16%17.62%11.16%12.96%8.43%
U.S. Mid-Cap Value Strategy4/1/1999 6,496
 13.69%8.70%12.64%10.17%13.51% 388U.S. Mid-Cap Value Strategy4/1/19993,999 27.76%19.43%11.12%11.78%12.98%270
Russell® Midcap Index   18.52%9.57%14.95%9.10%9.63% Russell® Midcap Index22.58%23.26%15.09%14.89%10.43%
Russell® Midcap Value Index   13.34%8.99%14.67%9.09%10.20% Russell® Midcap Value Index28.34%19.60%11.21%13.43%10.28%
   
International Value TeamInternational Value Team
International Value StrategyInternational Value Strategy7/1/200231,792 18.10%17.64%11.73%11.79%12.10%551
MSCI EAFE IndexMSCI EAFE Index11.26%13.53%9.54%8.02%6.59%
International Small Cap Value StrategyInternational Small Cap Value Strategy10/1/202024 20.65%---40.85%944
MSCI All Country World Index Ex USA Small Cap (Net)MSCI All Country World Index Ex USA Small Cap (Net)12.93%---31.41%
Global Value Team   Global Value Team
Global Value Strategy7/1/2007 19,930
 23.47%10.49%13.88%10.45%9.40% 482Global Value Strategy7/1/200726,324 16.94%16.46%11.40%12.37%9.17%257
MSCI All Country World Index   23.97%9.29%10.79%4.65%4.58% MSCI All Country World Index18.54%20.36%14.39%11.84%6.60%
Non-U.S. Value Strategy7/1/2002 21,757
 25.34%9.84%12.14%9.04%13.03% 628
MSCI EAFE Index   25.03%7.79%7.89%1.94%6.74% 
   
Emerging Markets Team   
Emerging Markets Strategy7/1/2006 282
 41.19%13.72%6.83%2.28%6.89% 54
Select Equity StrategySelect Equity Strategy3/1/2020420 16.87%---21.61%(1,019)
S&P 500 Market Index (Total Return)S&P 500 Market Index (Total Return)28.71%---31.80%
Sustainable Emerging Markets TeamSustainable Emerging Markets Team
Sustainable Emerging Markets StrategySustainable Emerging Markets Strategy7/1/20061,173 (0.27)%14.40%12.64%7.72%6.78%106
MSCI Emerging Markets Index   37.28%9.09%4.35%1.68%6.35% MSCI Emerging Markets Index(2.54)%10.93%9.87%5.48%5.72%
    
Credit Team   Credit Team
High Income Strategy(2)
4/1/2014 2,517
 9.90%9.07%N/A7.90% 296
ICE BofAML US High Yield Master II Total Return Index   7.48%6.38%N/A4.94% 
   
High Income StrategyHigh Income Strategy4/1/20148,018 7.16%11.03%8.35%---7.93%257
ICE BofA U.S. High Yield Master II Total Return IndexICE BofA U.S. High Yield Master II Total Return Index5.36%8.56%6.09%---5.36%
Credit Opportunities StrategyCredit Opportunities Strategy7/1/2017120 18.44%18.84%---14.44%1,299
ICE BofA U.S. Dollar LIBOR 3-month Constant Maturity IndexICE BofA U.S. Dollar LIBOR 3-month Constant Maturity Index0.17%1.28%---1.45%
Floating Rate Strategy (3)
Floating Rate Strategy (3)
1/1/202219 ---—
Credit Suisse Leveraged Loan Total Return IndexCredit Suisse Leveraged Loan Total Return Index---
Developing World Team   Developing World Team
Developing World Strategy7/1/2015 2,253
 36.87%N/A13.24% 353Developing World Strategy7/1/20158,102 (8.71)%33.88%22.94%---17.16%1,105
MSCI Emerging Markets Index   37.28%N/A9.71% MSCI Emerging Markets Index(2.54)%10.93%9.87%---6.11%
   
Thematic Team   
Thematic Strategy5/1/2017 32
 N/AN/A29.81% 1,612
S&P 500 Index   N/A13.7%  
   
Privately Offered Strategies(3)
 95
 
   
Total Assets Under Management $115,494
 �� 
(1) Value-added is the amount in basis points by which the average annual gross composite return of each of our strategies has outperformed the broad-based market index most commonly used by our clients to compare the performance of the relevant strategy. Value-added for periods less than one year is not annualized.
(2) The Artisan High Income strategy may hold loans and other security types, including securities with lower credit ratings, that may not be included in the ICE BofA Merrill Lynch High Yield Master II Index. At times, this causes material differences in relative performance.
(3) Total Assets Under Management includes $37 million and $58 million of assets managed in privately offered strategies managed by the Credit Team and the Thematic Team, respectively. Performance information for these strategies has been intentionally omitted.

37
Antero Peak Group
Antero Peak Strategy5/1/20174,028 25.17%29.95%------28.08%996
S&P 500 Index28.71%26.04%------18.12%
Antero Peak Hedge Strategy11/1/20171,249 19.56%21.97%------20.18%214
S&P 500 Index28.71%26.04%------18.04%
Total Assets Under Management$174,754 
(1) Value-added is the amount, in basis points, by which the average annual gross composite return of each of our strategies has outperformed or underperformed its respective benchmark. See “Performance and Assets Under Management Information Used in this Report” for additional information regarding the benchmarks used. Value-added for periods less than one year is not annualized. The High Income strategy holds loans and other security types that are not included in its benchmark, which, at times, causes material differences in relative performance. The Credit Opportunities strategy is benchmark agnostic and has been compared to the 3-month LIBOR for reference purposes only. The Antero Peak and Antero Peak Hedge strategies' investments in initial public offerings (IPOs) made a material contribution to performance. IPO investments may contribute significantly to a small portfolio’s return, an effect that will generally decrease as assets grow. IPO investments may be unavailable in the future.
(2) AUM for certain strategies include the following amounts for which Artisan Partners provides investment models to managed account sponsors (reported on a one-month lag): Artisan Sustainable Emerging Markets $98 million.
(3) The Floating Rate strategy composite performance began on January 1, 2022. As a result, there is not a performance track record as of December 31, 2021.


38
The tables below set forth changes in our assets under management by investment team:
By Investment Team
Year EndedGrowthGlobal EquityU.S. ValueInternational ValueGlobal ValueSustainable Emerging MarketsCreditDeveloping WorldAntero Peak GroupTotal
December 31, 2021(unaudited; in millions)
Beginning assets under management$52,685 $32,056 $7,149 $24,123 $22,417 $679 $6,338 $8,853 $3,476 $157,776 
Gross client cash inflows7,418 4,384 407 8,121 4,723 499 3,158 3,499 1,516 33,725 
Gross client cash outflows(12,528)(5,313)(1,189)(4,057)(3,809)(54)(1,582)(3,035)(480)(32,047)
Net client cash flows(5,110)(929)(782)4,064 914 445 1,576 464 1,036 1,678 
Artisan Funds’ distributions not reinvested (1)
(302)(545)(47)(701)(46)— (217)(286)(151)(2,295)
Investment returns and other (2)
5,161 2,416 1,733 4,330 3,459 49 460 (929)916 17,595 
Ending assets under management$52,434 $32,998 $8,053 $31,816 $26,744 $1,173 $8,157 $8,102 $5,277 $174,754 
Average assets under management$53,375 $33,679 $7,835 $28,998 $25,463 $924 $7,576 $9,541 $4,376 $171,767 
December 31, 2020
Beginning assets under management$34,793 $27,860 $7,402 $22,000 $19,707 $234 $3,850 $3,374 $1,796 $121,016 
Gross client cash inflows9,532 6,479 786 6,165 4,681 349 3,438 3,527 1,381 36,338 
Gross client cash outflows(8,616)(5,885)(1,687)(6,101)(3,535)(25)(1,415)(1,487)(433)(29,184)
Net client cash flows916 594 (901)64 1,146 324 2,023 2,040 948 7,154 
Artisan Funds’ distributions not reinvested (1)
(222)(115)(12)(46)— — (130)(142)(23)(690)
Investment returns and other (2)
17,198 3,717 660 2,105 1,564 121 595 3,581 755 30,296 
Ending assets under management$52,685 $32,056 $7,149 $24,123 $22,417 $679 $6,338 $8,853 $3,476 $157,776 
Average assets under management$40,806 $26,991 $6,266 $20,045 $17,780 $476 $4,493 $5,465 $2,579 124,901 
December 31, 2019
Beginning assets under management$26,251 $22,967 $6,577 $17,681 $17,113 $179 $2,860 $1,993 $603 $96,224 
Gross client cash inflows4,207 3,557 644 3,607 1,412 29 1,791 1,305 1,042 17,594 
Gross client cash outflows(5,251)(5,214)(1,435)(3,474)(2,806)(14)(1,138)(780)(140)(20,252)
Net client cash flows(1,044)(1,657)(791)133 (1,394)15 653 525 902 (2,658)
Artisan Funds’ distributions not reinvested (1)
(134)(133)(33)(199)(8)— (112)— (11)(630)
Investment returns and other (2)
9,720 6,683 1,649 4,385 3,996 40 449 856 302 28,080 
Ending assets under management$34,793 $27,860 $7,402 $22,000 $19,707 $234 $3,850 $3,374 $1,796 $121,016 
Average assets under management$31,861 $25,744 $7,113 $20,072 $18,559 $203 $3,586 $2,634 $1,251 111,023 
(1) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
(2) Includes the impact of translating the value of assets under management denominated in non-USD currencies into U.S. dollars. The impact was immaterial for the periods presented.
39
  By Investment Team
Year EndedGrowthGlobal EquityU.S. ValueGlobal ValueEmerging MarketsCreditDeveloping WorldThematicTotal
December 31, 2017 (in millions)
Beginning assets under management$25,714
$25,510
$8,588
$33,940
$228
$1,878
$987
$—
$96,845
Gross client cash inflows4,399
2,942
1,592
5,099
14
1,168
1,080
86
16,380
Gross client cash outflows(6,153)(6,818)(2,517)(5,321)(53)(672)(253)(1)(21,788)
Net client cash flows(1,754)(3,876)(925)(222)(39)496
827
85
(5,408)
Market appreciation (depreciation)6,668
7,601
1,102
7,969
93
180
439
5
24,057
Net transfers(1)
—
—
—
—
—
—
—
—
—
Ending assets under management$30,628
$29,235
$8,765
$41,687
$282
$2,554
$2,253
$90
$115,494
Average assets under management(2)
$29,366
$28,060
$8,719
$38,383
$280
$2,294
$1,632
$28
$108,754
December 31, 2016         
Beginning assets under management$24,929
$32,434
$10,369
$30,182
$571
$989
$374
$—
$99,848
Gross client cash inflows5,803
3,897
1,650
5,383
10
1,094
652
—
18,489
Gross client cash outflows(5,353)(7,885)(5,264)(3,878)(401)(424)(108)—
(23,313)
Net client cash flows450
(3,988)(3,614)1,505
(391)670
544
—
(4,824)
Market appreciation (depreciation)335
(2,936)1,833
2,253
48
219
69
—
1,821
Net transfers(1)
—
—
—
—
—
—
—
—
—
Ending assets under management$25,714
$25,510
$8,588
$33,940
$228
$1,878
$987
$—
96,845
Average assets under management$24,535
$29,216
$8,733
$31,282
$293
$1,527
$694
$—
96,281
December 31, 2015         
Beginning assets under management$24,499
$31,452
$18,112
$32,481
$806
$565
$—
$—
$107,915
Gross client cash inflows4,809
7,697
2,117
2,760
42
764
388
—
18,577
Gross client cash outflows(5,294)(5,630)(8,574)(4,379)(205)(335)(8)—
(24,425)
Net client cash flows(485)2,067
(6,457)(1,619)(163)429
380
—
(5,848)
Market appreciation (depreciation)915
(1,085)(1,286)(680)(72)(5)(6)—
(2,219)
Net transfers(1)
—
—
—
—
—
—
—
—
—
Ending assets under management$24,929
$32,434
$10,369
$30,182
$571
$989
$374
$—
$99,848
Average assets under management(3)
$25,204
$33,262
$14,511
$32,015
$641
$775
$153
$—
106,484
(1)Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy or investment vehicle into another strategy or vehicle.
(2)For the Thematic team, average assets under management is for the period between April 24, 2017, when the Thematic strategy began investment operations, and December 31, 2017.
(3)For the Developing World team, average assets under management is for the period between June 29, 2015, when the team’s investment strategy began operations, and December 31, 2015.

The goal of our marketing, distribution and client services efforts is to establish and maintain a client base that is diversified by investment strategy, investment vehicleclient type and distribution channel. As distribution channels have evolved to have more institutional-like decision making processes and longer-term investment horizons, we have expanded our distribution efforts into those areas. The table below sets forth our assets under management by distribution channel:
 As of December 31, 2017 As of December 31, 2016 As of December 31, 2015
 $ in millions % of total $ in millions % of total $ in millions % of total
  
Institutional$76,176
 66.0% $64,113
 66.2% $64,352
 64.5%
Intermediary34,172
 29.6% 27,925
 28.8% 30,161
 30.2%
Retail5,146
 4.4% 4,807
 5.0% 5,335
 5.3%
Ending Assets Under Management(1)
$115,494
 100.0% $96,845
 100.0% $99,848
 100.0%
(1) The allocation of assets under management by distribution channel involves the use of estimates and the exercise of judgment.
As of December 31, 2021As of December 31, 2020As of December 31, 2019
$ in millions% of total$ in millions% of total$ in millions% of total
(unaudited)(unaudited)(unaudited)
Institutional$111,705 63.9 %$102,189 64.8 %$80,274 66.3 %
Intermediary55,198 31.6 %48,657 30.8 %35,574 29.4 %
Retail7,851 4.5 %6,930 4.4 %5,168 4.3 %
Ending Assets Under Management(1)
$174,754 100.0 %$157,776 100.0 %$121,016 100.0 %
(1) The allocation of assets under management by distribution channel involves the use of estimates and the exercise of judgment.
Our institutional channel includes assets under management sourced from defined contribution plan clients, which makesmade up approximately 14%12% of our total assets under management as of December 31, 2017.2021.


40
The following tables set forth the changes in our assets under management for Artisan Funds, Artisan Global Funds and separate accounts:by vehicle type:
Year EndedArtisan Funds & Artisan Global Funds
Separate Accounts and Other(1)
Total
December 31, 2021(unaudited; in millions)
Beginning assets under management$74,746 $83,030 $157,776 
Gross client cash inflows23,957 9,768 33,725 
Gross client cash outflows(18,628)(13,419)(32,047)
Net client cash flows5,329 (3,651)1,678 
Artisan Funds’ distributions not reinvested(2)
(2,295)— (2,295)
Investment returns and other(3)
6,984 10,611 17,595 
Net transfers(4)
(401)401 — 
Ending assets under management$84,363 $90,391 $174,754 
Average assets under management$83,533 $88,234 $171,767 
December 31, 2020
Beginning assets under management$57,288 $63,728 $121,016 
Gross client cash inflows22,510 13,828 36,338 
Gross client cash outflows(18,110)(11,074)(29,184)
Net client cash flows4,400 2,754 7,154 
Artisan Funds’ distributions not reinvested(2)
(690)— (690)
Investment returns and other(3)
14,259 16,037 30,296 
Net transfers(4)
(511)511 — 
Ending assets under management$74,746 $83,030 $157,776 
Average assets under management$58,629 $66,272 $124,901 
December 31, 2019
Beginning assets under management$46,654 $49,570 $96,224 
Gross client cash inflows12,545 5,049 17,594 
Gross client cash outflows(13,911)(6,341)(20,252)
Net client cash flows(1,366)(1,292)(2,658)
Artisan Funds’ distributions not reinvested(2)
(630)— (630)
Investment returns and other(3)
13,003 15,077 28,080 
Net transfers(4)
(373)373 — 
Ending assets under management$57,288 $63,728 $121,016 
Average assets under management$52,974 $58,049 111,023 
(1) Separate accounts and other consists of AUM we manage in or through vehicles other than Artisan Funds or Artisan Global Funds. This AUM includes assets we manage in traditional separate accounts, as well as assets we manage in Artisan-branded collective investment trusts and in Artisan Private Funds. As of December 31, 2021, AUM for certain strategies include the following amounts for which Artisan Partners provides investment models to managed account sponsors (reported on a one-month lag): Artisan Sustainable Emerging Markets $98 million.
(2) Artisan Funds’ distributions not reinvested represents the amount of income and capital gain distributions that were not reinvested in the Artisan Funds.
(3) Includes the impact of translating the value of assets under management denominated in non-USD currencies into U.S. dollars. The impact was immaterial for the periods presented.
(4) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy, investment vehicle or account and into another strategy, vehicle or account.

41
Year EndedArtisan Funds & Artisan Global Funds 
Separate Accounts(2)
 Total
December 31, 2017(in millions)
Beginning assets under management$49,367
 $47,478
 $96,845
Gross client cash inflows12,448
 3,932
 16,380
Gross client cash outflows(15,584) (6,204) (21,788)
Net client cash flows(3,136) (2,272) (5,408)
Market appreciation (depreciation)11,674
 12,383
 24,057
Net transfers(1)
(556) 556
 —
Ending assets under management$57,349
 $58,145
 $115,494
Average assets under management$54,552
 $54,225
 $108,754
December 31, 2016     
Beginning assets under management$53,526
 $46,322
 $99,848
Gross client cash inflows13,101
 5,388
 18,489
Gross client cash outflows(17,715) (5,598) (23,313)
Net client cash flows(4,614) (210) (4,824)
Market appreciation (depreciation)604
 1,217
 1,821
Net transfers(1)
(149) 149
 —
Ending assets under management$49,367
 $47,478
 $96,845
Average assets under management$50,908
 $45,373
 $96,281
December 31, 2015     
Beginning assets under management$60,257
 $47,658
 $107,915
Gross client cash inflows13,942
 4,635
 18,577
Gross client cash outflows(18,864) (5,561) (24,425)
Net client cash flows(4,922) (926) (5,848)
Market appreciation (depreciation)(1,494) (725) (2,219)
Net transfers(1)
(315) 315
 —
Ending assets under management$53,526
 $46,322
 $99,848
Average assets under management$58,671
 $47,813
 106,484
(1)Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy, investment vehicle, or account and into another strategy, vehicle, or account.
(2)Separate account AUM consists of the assets we manage in or through vehicles other than Artisan Funds or Artisan Global Funds. Separate account AUM includes assets we manage in traditional separate accounts, as well as assets we manage in Artisan-branded collective investment trusts, in funds (both public and private) that we sub-advise, and in our own privately offered funds.
Artisan Funds and Artisan Global Funds
As of December 31, 2017,2021, Artisan Funds comprised $53.7$78.0 billion, or 47%45%, of our assets under management. For the year ended December 31, 2017,2021, fees from Artisan Funds represented $472.5$712.9 million, or 59%58%, of our revenues. Our contractual tiered fee rates for the series of Artisan Funds range from 0.625%0.60% to 1.25%1.05% of fund assets, depending on the investment strategy, the amount invested and other factors.
As of December 31, 2017,2021, Artisan Global Funds comprised $3.6$6.4 billion, or 3%, of our assets under management. In UCITS funds, it is permissible and in some circumstances customary for a portionFor the year ended December 31, 2021, fees from Artisan Global Funds represented $48.5 million, or 4%, of the management fee to be rebated to investors with accounts of a certain type or asset size to encourage investment at an early stage or for other reasons or for a portion of the management fee to be paid to intermediaries for distribution services. We have entered into such rebate and distribution arrangements, and will continue to do so, in circumstances we consider appropriate.our revenues. Our contractual fee rates for Artisan Global Funds range from 0.75% to 1.75%1.85% of assets under management. For the year ended December 31, 2017, fees from Artisan Global Funds represented $30.1 million, or 4%, of our revenues.

The weighted average management fee rate of fee paid by our Artisan Funds and Artisan Global Funds clients in the aggregate was 0.921%0.912%, 0.924%0.916%, and 0.926%0.915%, for the years ended December 31, 2017, 20162021, 2020 and 2015,2019, respectively.
Separate Accounts and Other
“Separate accounts comprised $58.1 billion, or 50%,and other”—which consists of our assets under management as of December 31, 2017. For the year ended December 31, 2017, fees from separate accounts represented $293.0 million, or 37%, of our revenues. Separate account assets under management consist of the assets we manage in or through vehicles other than Artisan Funds or Artisan Global Funds, including assets we manage in traditional separate accounts, Artisan-branded collective investment trusts and Artisan Private Funds, as well as assets under advisement related to clients for whom we manage in Artisan-branded collectiveprovide investment trusts, in funds (both publicmodels but do not have discretionary investment authority—comprised $90.4 billion, or 52%, of our assets under management as of December 31, 2021. For the year ended December 31, 2021, fees from separate accounts and private) that we sub-advise, and inother represented $465.8 million, or 38%, of our own privately offered funds.revenues.
For traditional separate account clients, we generally impose standard fee schedules that vary by investment strategy and, through the application of standard breakpoints, reflect the size of the account and client relationship, with tiered rates ofrelationship. The weighted average management fee currently ranging from 0.40% of assets under management to 1.05% of assets under management.rate paid by our traditional separate account clients was 0.484%, 0.498%, and 0.512% for the years ended December 31, 2021, 2020 and 2019, respectively. There are a number of exceptions to our standard fee schedules, including exceptions based on the nature of our relationship with the client and the value of the assets under our management in that relationship. In general, our effective rate of fee for a particular client relationship declines as the assets we manage for that client increase, which we believe is typical for the asset management industry.
A number of our investment strategies are accessible to certain types of employee benefit plans through Artisan-branded collective investment trusts. We act as investment adviser to the collective investment trusts and earn a management fee for providing this service. The weighted average management fee rate of fee paid by our separate accountArtisan-branded collective investment trust clients in the aggregate was 0.540%0.729%, 0.550%0.735%, and 0.547%0.739% for the years ended December 31, 2017, 20162021, 2020 and 2015,2019, respectively.
Artisan serves as the investment manager and acts as the general partner for certain Artisan Private Funds. Under the terms of these agreements, Artisan earns a management fee, and for certain funds is entitled to receive either an allocation of profits or a performance-based fee. The weighted average management fee rate paid by our Artisan Private Funds clients was 0.786%, 0.800%, and 0.706% for the years ended December 31, 2021, 2020 and 2019, respectively.
The weighted average management fee rate, which excludes performance fees, paid by our separate accounts and other clients in the aggregate was 0.513%, 0.526% and 0.534% for the years ended December 31, 2021, 2020 and 2019, respectively. Because, as is typical in the asset management industry, our rates of fee decline as the assets under our management in a relationship increase, and because of differences in our fees by investment strategy, a change in the composition of our assets under management, in particular a shift to strategies, clients or relationships with lower effective rates of fees, could have a material impact on our overall weighted average rate of fee. See “—Qualitative and Quantitative Disclosures Regarding Market Risk—Market Risk” for a sensitivity analysis that demonstrates the impact that certain changes in the composition of our assets under management could have on our revenues.
Investment Advisory Revenues
Essentially all of our revenues consist of investment management fees earned from managing clients’ assets. Our investment advisory fees, which are comprised of management fees and performance fees, fluctuate based on a number of factors, including the total value of our assets under management, the composition of assets under management among investment vehicles and our investment strategies, changes in the investment management fee rates on our products, the extent to which we enter into fee arrangements that differ from our standard fee schedules, which can be affected by custom and the competitive landscape in the relevant market, and, for the accounts on which we earn performance-basedperformance fees, the investment performance of those accounts relative to their designated benchmarks.accounts.
The different fee structures associated with Artisan Funds, Artisan Global Funds and separate accounts and other pooled vehicles, and the different fee schedules applicable to each of our investment strategies, make the composition of our assets under management an important determinant of the investment management fees we earn. Historically, we have received higher effective rates of investment management fees from Artisan Funds and Artisan Global Funds than from ourtraditional separate accounts, reflecting, among other things, the different and broader array of services we provide to Artisan Funds and Artisan Global Funds. Investment management fees for non-U.S. funds may also be higher because they include fees to offset higher distribution costs. Our investment management fees also differ by investment strategy, with higher-capacity strategies having lower standard fee schedulesrates than strategies with more limited capacity.
A small number
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Certain separate account clients pay us fees according tobased on the performance of their accounts relative to certain agreed-upon benchmarks, which typically results in a lower base fee, but allows us to earn higher fees if the performance we achieve for that client is superior to the performance of an agreed-upon benchmark. We may also receive performance fees or incentive allocations from Artisan sponsored privately offered funds also pay performance-basedPrivate Funds. Approximately 3% of our $174.8 billion of assets under management as of December 31, 2021 have performance fee billing arrangements. Performance fees of $13.3 million, $14.7 million, and $4.6 million were recognized in the form of incentive allocations. years ended December 31, 2021, 2020 and 2019, respectively.
The following table sets forth revenues we earned by vehicle type for the years ended December 31, 2021, 2020 and 2019:
 For the Years Ended December 31,
202120202019
Revenues(in millions)
Management fees
Artisan Funds & Artisan Global Funds$761.4 $537.2 $484.9 
Separate accounts and other452.5 347.7 309.5 
Performance fees13.3 14.7 4.6 
Total revenues$1,227.2 $899.6 $799.0 
Average assets under management for period$171,767 $124,901 $111,023 
Management fees, performance fees and performance-based feesincentive allocations earned from consolidated investment products are eliminated from revenue upon consolidation.
The following table sets forth revenues we earned under our investment management agreements with Artisan Funds and Artisan Global Funds and on the separate accounts that we managed as well as average assets under management for For each of the years ended December 31, 2017, 20162021, 2020 and 2015:
 For the Years Ended December 31,
 2017 2016 2015
 (in millions)
Revenues     
     Management fees     
          Artisan Funds & Artisan Global Funds$502.6
 $470.6
 $543.3
          Separate accounts292.7
 249.2
 260.4
     Performance fees0.3
 1.1
 1.8
Total revenues$795.6
 $720.9
 $805.5
Average assets under management for period$108,754
 $96,281
 $106,484

For the years ended December 31, 2017, 2016 and 2015,2019, approximately 85%, 89% and 90%, respectively,83% of our investment managementadvisory fees were earned from clients located in the United States.
Operating Expenses
Our operating expenses consist primarily of compensation and benefits, distribution, servicing and marketing, occupancy, communication and technology, and general and administrative.
Our expenses may fluctuate due to a number of factors, including the following:
•variations in the level of total compensation expense due to, among other things, incentive compensation, equity awards, changes in our employee count (including the addition of new investment teams) and product mix and competitive factors; and
•expenses, such as distribution fees, rent, professional service fees, technology and data-related costs, incurred, as necessary, to operate and grow our business.
A significant portion of our operating expenses are variable and fluctuate in direct relation to our assets under management and revenues. Even if we experience declining revenues, we expect to continue to make the expenditures necessary for us to manage and grow our business. As a result, our profits may decline.
Compensation and Benefits
Compensation and benefits includes (i) salaries, incentive compensation and benefits costs and (ii) long term incentive compensation expense related to post-IPO equity and cash awards granted to employees and (iii) pre-offering related compensation, which consists of amortization expense on unvested Class B awards.employees.
Incentive compensation is one of the most significant parts of the total compensation of our senior employees. The aggregate amount of cash incentive compensation paid to members of our investment teams and senior members of our marketing and client service teams is based in large part on formulas that are tied directly to revenues. For each of our investment teams, incentive compensation generally represents 25% of the asset-based management fees and a share of performance-based fees generated by assets under management in the team’s strategy or strategies. Incentive compensation paid to other employees is discretionary and subjectively determined based on individual performance and our overall results during the applicable year.
Certain compensation and benefits expenses are seasonal,generally higher in the beginning of the year, such as employer funded retirement and health care contributions and payroll taxes. HistoricallyWe expect these costs have addedto add approximately $3$5 million to our costsexpenses in the first quarter of each calendar year.2022, compared to the fourth quarter of 2021. Given our priorities in 2022, we expect to increase headcount over the next year across investment, distribution & marketing, and back office. We expect the fixed component of our compensation and benefits expenses will increase by approximately $15 million related to increased headcount and overall rising wage costs.
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We grant equity awards to our employees pursuant to the Artisan Partners Asset Management Inc. 2013 Omnibus Incentive Compensation Plan. The equity awards consist of standard restricted awards that generally vest on a pro rata basis over 5 years and career awards that vest when both of the following conditions are met (1) pro-rata annual time vesting over 5 years and (2) qualifying retirement (as defined in the award agreements).
Compensation expense related Investment team members generally receive franchise awards rather than career awards. Franchise awards are identical to career awards, except with respect to the equityFranchise Protection Clause, which applies to current or future portfolio managers and founding investment team members. The Franchise Protection Clause provides that the total number of franchise awards is recognized basedultimately vesting will be reduced to the extent that cumulative net client cash outflows from the award recipient’s investment team during roughly a 3-year measurement period beginning on the date of the recipient’s retirement notice exceeds a set threshold. In 2020, we began issuing performance share units to certain executive officers of the Company. The number of performance share units that will vest is dependent upon the Company’s adjusted operating margin and total stockholder return compared to its peer group over a three year measurement period.
The estimated grant date fair value for only thoseof equity awards that vest,is recognized as compensation expense on a straight-line basis over the requisite service period of the award. The initial requisite service period is generally three years for performance share units and five years for all other awards that have been granted to date. Compensation expense for performance share units is only recognized if it is probable that the performance conditions will be achieved. For all awards, if a service or performance condition is not achieved, the corresponding awards are forfeited and any previously recognized compensation expense is reversed. We grant long-term incentive cash awards, referred to as franchise capital awards, to certain investment team members in lieu of certain additional equity awards. The franchise capital awards are subject to the same long-term vesting and forfeiture provisions as the equity awards. Prior to vesting, franchise capital awards are generally allocated to one or more of Artisan’s investment strategies. The underlying investment holdings and franchise capital award liability are marked to market value each quarter. The change in value of the award liability is included in compensation expense. The change in value of the underlying investment holdings is included in non-operating income/(expense).
OurWe expect to reserve approximately 4% of our management fee revenues each quarter for future franchise capital awards, which we expect to make after the conclusion of each year. Over the long-term, we believe the economic impact of the reduced cash available for dividends will be offset by a corresponding reduction in dilution, as we expect to grant fewer restricted share-based awards as a result of the franchise capital awards.
On January 25, 2022, the Company's board of directors approved thea grant of 1,268,500 restricted share-basedlong-term incentive awards with a grant date fair value of $86.8 million consisting of $38.2 million of equity awards and $48.6 million of franchise capital cash awards to certain of our employees during 2017 and 1,518,970 restricted share-based awards in February 2018.pursuant to the Company’s 2013 Omnibus Incentive Compensation Plan. The grants consisted of both standard restricted awards and career awards, as described above.
Total compensation expense, whichgrant will be recognized on a straight-line basis over the requisite service period, is expected to be approximately $35.9 million and approximately $59.8 million, for the 2017 and February 2018 awards, respectively. Our first annual post-IPO equity grant, which was made in July 2013, will become fully vested in August 2018. Including the February 2018 grant, we expect the expense related to post-IPO equity compensation to be approximately $14 million, $15 million, $13 million, and $11 million in theeffective March June, September, and December quarters of 2018, respectively.1, 2022.
Since the IPO and including the February 2018 grant in the first quarter of 2022, our board of directors has approved the grant of 7,589,15711,348,630 restricted share-based awards. TheTotal unrecognized non-cash compensation expense for these awards asis $119.9 million. As of December 31, 2017 was $157the date of this filing, unvested equity awards are comprised of the following number of shares by vesting condition:
Service OnlyService & Performance ConditionsService & Market ConditionsTotal
Standard Pro Rata Time Vesting2,138,947 58,581 58,581 2,256,109 
Qualified Retirement2,789,391 1,278,351 57,002 4,124,744 
Total Unvested4,928,338 1,336,932 115,583 6,380,853 
Including the long-term incentive award approved in the first quarter of 2022, total unrecognized long-term incentive compensation expense is $199.5 million. We expect long-term incentive compensation expense to be approximately $14 million per quarter in 2022, excluding the impact of investment returns on the franchise capital awards’ underlying investments.
We expect to continue to make equity grantslong-term incentive awards each year, though the form and structure of equitythe awards may change as we seek to maximize alignment between our employees and our clients, investors partners, and shareholders.stockholders. The actual size of the expense over time will depend primarily on the number of awards granted and our stock price at the time theequity grants are made. The amount of equity grantedlong-term incentive awards will vary from year to year and will be influenced by our results and other factors. From time to time, we may also make individual equity grants to people we hire.


A significant portion
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As part of the IPO Reorganization, Class B grant agreements were amended, which eliminated the cash redemption feature and resulted in equity award accounting since such modification. Compensation expense for these awards following the IPO Reorganization represents the amortization of the fair value of unvested awards on the date of the IPO Reorganization over the remaining vesting period. All Class B awards were fully vested and expensed as of July 1, 2017.
Distribution, Servicing and Marketing
Distribution, servicing and marketing expenses primarily represent payments we make to broker-dealers, financial advisors, defined contribution plan providers, mutual fund supermarkets and other intermediaries for selling, servicing and administering accounts invested in shares of Artisan Funds. Artisan Funds authorizes intermediaries to accept purchase, exchange and redemption orders for shares of Artisan Funds on behalf of Artisan Funds. Many intermediaries charge a fee for those services. Artisan Funds pays a portion of suchsome of those fees, which areportion is intended to compensate the intermediary for its provision of services of the type that would be provided by Artisan Funds’ transfer agent or other service providers if the shares were registered directly on the books of Artisan Funds’ transfer agent. Like the investment management fees we earn as adviser to Artisan Funds, distribution, servicing and marketing fees typically vary with the value of the assets invested in shares of Artisan Funds. The allocation of such fees between us and Artisan Funds is determined by the board of Artisan Funds, based on information and a recommendation from us, with the goal of allocating to us, at a minimum, all costs attributable to the marketing and distribution of shares of Artisan Funds. A significant portion of Artisan Funds’ shares are held by investors through intermediaries to which we pay distribution, servicing and marketing expenses.
Total distribution, servicing and marketing fees will increase ifas we increase our assets under management sourced through intermediaries that charge these fees or similar fees. The amount we pay to intermediaries for distribution and administrative services varies by share class. IfAs assets transferhave transferred from the Investor share class to the Advisor or theand Institutional share classes, the amount we have paid for distribution, servicing and marketing has decreased. Consistent with the experience of feesother investment managers, as the foregoing expenses have decreased, we pay will decrease. In contrast to some mutual funds, investors in Artisan Funds pay no 12b-1 fees, which are fees charged to investors to payhave seen increased requests from intermediaries for marketing, advertising and distribution services.alternative forms of compensation. To date, such alternative forms of compensation have not been material, but they could be over time.
Occupancy
Occupancy expenses include operating leases for facilities, furniture and office equipment, miscellaneous facility related costs and depreciation expense associated with furniture purchases and leasehold improvements.
We expect three of our investment teams2022 occupancy expenses to relocate to new office space during 2018, which will increase occupancy expense by approximately $2$5 million per year. Additionally, we currently estimate that these relocations will result in approximately $4to $7 million of one-time expenses in 2018.compared to 2021.
Communication and technology
Communication and technology expenses include information and print subscriptions, telephone costs, information systems consulting fees, equipment and software maintenance expenses, operating leases for information technology equipment and depreciation and amortization expenses associated with computer hardware and software. Information and print subscriptions represent the costs we pay to obtain investment research and other data we need to operate our business, and suchbusiness. A portion of these expenses generally increase or decrease in relative proportion to the number of our employees and the overall size and scale of our business operations. We expect to continue our measured investments in technology to support our investment teams, distribution efforts, and scalable operations. We expect 2022 communication and technology expenses to increase by approximately $5 million to $7 million compared to 2021.
On behalf of our mutual fund and separate account clients, we make decisions to buy and sell securities for each portfolio, select broker-dealers to execute trades and negotiate brokerage commission rates. In connection with these transactions, we may receive research products and services from broker-dealers in exchange for the business we conduct with such firms. Some of those research products and services could be acquired for cash and our receipt of those products and services through the use of client commissions, or soft dollars, reduces cash expenses we would otherwise incur. Our operating expenses will increaseIn response to the extent thatMarkets in Financial Instruments Directive II and industry changes prompted by it, we decidehave experienced requests from clients to bear research expenses that are currently paid for using soft dollars. In response to such requests or as a result of changes in our operations, we may eventually bear a significant portion or all of the costs of research directly, rather than relying on the use of soft dollars. We believe that all research products and services we acquire throughare currently paid for using soft dollars, are within the safe harbor provided by Section 28(e) of the Exchange Act.
In addition towhich would increase our other communication and technologyoperating expenses we expect to incur approximately $4 million of additional costs in 2018 relating to risk management, regulatory initiatives, and a new client reporting system.


materially.
General and Administrative
General and administrative expenses include professional fees, travel and entertainment, certain state and local taxes, directors’ and officers’ liability insurance, director fees, and other miscellaneous expenses we incur in operating our business. Travel expenses decreased significantly in 2020 and remained lower than historical levels in 2021 due to the COVID-19 pandemic. We expect most operating costs, including travel expense, to return to or exceed pre-COVID-19 levels when employees return to the office and resume business travel.
Non-Operating Income (Loss)(Expense)
Interest Expense
Interest expense primarily relates to the interest we pay on our debt. In August 2012, we issued $200 million in fixed interest rate senior unsecured notes and entered into a $100 millionfive-year revolving credit agreement. The proceeds were used to repay the entire outstanding principal of an existing term loan. In August 2017, we issued $60 million of Series D notes and used the proceeds to repay the $60 million Series A senior notes that matured on August 16, 2017. We also amended and extended the $100 million revolving credit facility for an additional five-year period. The revolving credit facility has been undrawn since our March 2013 IPO. For a description of the terms of the notes and our revolving credit facility,debt, see “—Liquidity and Capital Resources”. Interest expense also includes interest on TRA payments, which is incurred between the due date (without extension) for our federal income tax return and the date on which we make TRA payments.

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Net Investment Gain (Loss) of Consolidated Investment Products
Net investment gain (loss) of consolidated investment products represents the realized and unrealized investment gains (losses) related to investment products that are included in our consolidated financial statements because Artisan holds a controlling financial interest in the respective investment entities. Significant portions of net investment gain (loss) of consolidated investment products are offset by noncontrolling interests in our Consolidated Statements of Operations.
Net Investment Income and Other
Net investment income includes realized and other items included in total non-operating income (loss) relateunrealized investment gains (losses) related to nonconsolidated investment products, income earned on excess cash balances, and dividends earned on available-for-sale securities, and gains or losses we recognize upon the sale of available-for-salenonconsolidated equity securities.
Net Gain (Loss) on the Tax Receivable Agreements
Non-operating income (loss)(expense) also includes gains or losses related to the changes in our estimate of the payment obligation under the tax receivable agreements,TRAs, including the impact of Tax Reform.tax rate changes. The effect of changes in our estimate of amounts payable under the tax receivable agreements,TRAs, including the effect of changes in enacted tax rates and in applicable tax laws, is included in net income.
Net Income (Loss) Attributable to Noncontrolling Interests
Net Income (Loss) Attributable to Noncontrolling Interests-HoldingsInterests - Holdings
Net income (loss) attributable to noncontrolling interests-Holdingsinterests - Holdings represents the portion of earnings or loss attributable to the ownership interestinterests in Artisan Partners Holdings held by the limited partners of Artisan Partners Holdings.
Net Income (Loss) Attributable to Noncontrolling Interests - Consolidated Investment Products
Net income (loss) attributable to noncontrolling interests - consolidated investment products represents the portion of earnings or loss attributable to third-party investors’ ownership interestinterests in consolidated investment products.
Provision for Income Taxes
The provision for income taxes primarily represents APAM’s U.S. federal, state and local income taxes on its allocable portion of Holdings’ income, as well as foreign income taxes payable by Holdings’ subsidiaries. Our effective income tax rate is dependent on many factors, including a rate benefit attributable to the fact that a portion of Holdings’ taxable earnings are not subject to corporate level taxes. Thus, income before income taxes includes amounts that are attributable to noncontrolling interests and not taxable to APAM and its subsidiaries, which reduces the effective tax rate. ThisThe effective tax rate is also lower than the statutory rate due to dividends paid on unvested share-based awards. These favorable impact isimpacts are partially offset by the impact of certain permanent items, including pre-IPO share-basedcertain executive compensation expenses, that are not deductible for tax purposes. These factors are expected to continue to impact the effective tax rate for future years, although pre-IPO share based compensation awards became fully vested on July 1, 2017 and therefore the related impact to the effective tax rate will no longer exist after July 1, 2017.
In addition, asAs APAM’s equity ownership in Holdings increases, the effective tax rate will likewise increase as more income will be subject to corporate-level taxes.
Beginning in 2016, the effective tax rate is also affected by the discrete tax impact
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As discussed above, the change in enacted U.S. federal corporate tax rates as a result of Tax Reform resulted in a discrete income tax expense, which significantly increased our effective tax rate for the year ended December 31, 2017.

Results of Operations
Year Ended December 31, 2017,2021, Compared to Year Ended December 31, 2016
 For the Years Ended December 31, Period-to-Period
 2017 2016 $ %
Statements of operations data:(in millions, except share and per-share data)
Revenues$795.6
 $720.9
 $74.7
 10 %
Operating Expenses       
Total compensation and benefits402.9
 383.9
 19.0
 5 %
Other operating expenses106.3
 102.8
 3.5
 3 %
Total operating expenses509.2
 486.7
 22.5
 5 %
Total operating income286.4
 234.2
 52.2
 22 %
Non-operating income (loss)       
Interest expense(11.4) (11.7) 0.3
 3 %
Other non-operating income (loss)296.2
 2.0
 294.2
 14,710 %
Total non-operating income (loss)284.8
 (9.7) 294.5
 3,036 %
Income before income taxes571.2
 224.5
 346.7
 154 %
Provision for income taxes420.5
 51.5
 369.0
 717 %
Net income before noncontrolling interests150.7
 173.0
 (22.3) (13)%
Less: Noncontrolling interests - Artisan Partners Holdings99.0
 100.0
 (1.0) (1)%
Less: Noncontrolling interests - consolidated investment products2.1
 —
 2.1
 100 %
Net income attributable to Artisan Partners Asset Management Inc.$49.6
 $73.0
 $(23.4) (32)%
Per Share Data       
Basic and diluted earnings per share$0.75
 $1.57
    
Basic and diluted weighted average number of common shares outstanding44,647,318
 38,137,810
    
2020
For the Years Ended December 31,Period-to-Period
20212020$%
Statements of operations data:(in millions, except share and per-share data)
Revenues$1,227.2 $899.6 $327.6 36 %
Operating Expenses
Total compensation and benefits563.0 435.8 127.2 29 %
Other operating expenses123.7 105.5 18.2 17 %
Total operating expenses686.7 541.3 145.4 27 %
Total operating income540.5 358.3 182.2 51 %
Non-operating income (expense)
Interest expense(10.8)(10.8)— — %
Other non-operating income21.9 21.8 0.1 — %
Total non-operating income (expense)11.1 11.0 0.1 1 %
Income before income taxes551.6 369.3 182.3 49 %
Provision for income taxes107.1 60.8 46.3 76 %
Net income before noncontrolling interests444.5 308.5 136.0 44 %
Less: Noncontrolling interests - Artisan Partners Holdings96.9 81.1 15.8 19 %
Less: Noncontrolling interests - consolidated investment products11.1 14.8 (3.7)(25)%
Net income attributable to Artisan Partners Asset Management Inc.$336.5 $212.6 $123.9 58 %
Share Data
Basic earnings per share$5.10 $3.40 
Diluted earnings per share$5.09 $3.40 
Basic weighted average number of common shares outstanding59,866,790 55,633,529 
Diluted weighted average number of common shares outstanding59,881,039 55,637,922 
Revenues
The increase in revenues of $74.7$327.6 million, or 10%36%, for the year ended December 31, 2017,2021, compared to the year ended December 31, 2016,2020, was driven primarily by a $12.5$46.9 billion, or 13%38%, increase in our average assets under management, partially offset by a decline$1.4 million decrease in the weighted average investment management fee.performance fee revenue. The weighted average investment management fee, of 73.1which excludes performance fees, was 70.7 basis points for the year ended December 31, 2017 decreased from 74.82021, compared to 70.9 basis points for the year ended December 31, 2016 primarily due to2020. The weighted average investment management fee remained relatively flat as a decrease in separate account fee rates resulting from tiered fee structures and client mix was mostly offset by the favorable rate impact of an increase in the proportion of our total assets managed inthrough Artisan Funds and Artisan Global Funds, which accrue management fees at a higher rate than separate accounts.
The following table sets forth the investment advisory fees and weighted average management fee and composition of revenue and assets under managementearned by investment vehicle:vehicle. The weighted average management fee for Artisan Funds and Artisan Global Funds reflects the additional services we provide to these pooled vehicles.
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Separate Accounts Artisan Funds and Artisan Global Funds
Separate Accounts and Other (2)
Artisan Funds and Artisan Global Funds
For the Years Ended December 31,2017 2016 2017 2016 For the Years Ended December 31,2021202020212020
(dollars in millions)(dollars in millions)
Investment management fees$293.0
 $250.3
 $502.6
 $470.6
Weighted average fee54.0 basis points
 55.0 basis points
 92.1 basis points
 92.4 basis points
Investment advisory feesInvestment advisory fees$465.8 $362.4 $761.4 $537.2 
Weighted average management fee(1)
Weighted average management fee(1)
51.3 bps52.6 bps91.2 bps91.6 bps
Percentage of ending AUM50% 49% 50% 51%Percentage of ending AUM52 %53 %48 %47 %
(1) We compute our weighted average management fee by dividing annualized management fees (which excludes performance fees) by average assets under management for the applicable period.
(1) We compute our weighted average management fee by dividing annualized management fees (which excludes performance fees) by average assets under management for the applicable period.
(2) Separate accounts and other consists of assets we manage in or through vehicles other than Artisan Funds or Artisan Global Funds, including assets we manage in traditional separate accounts, Artisan-branded collective investment trusts and Artisan Private Funds, as well as assets under advisement related to clients for whom we provide investment models but do not have discretionary investment authority.
(2) Separate accounts and other consists of assets we manage in or through vehicles other than Artisan Funds or Artisan Global Funds, including assets we manage in traditional separate accounts, Artisan-branded collective investment trusts and Artisan Private Funds, as well as assets under advisement related to clients for whom we provide investment models but do not have discretionary investment authority.
Operating Expenses
The increase in total operating expenses of $22.5$145.4 million, or 5%27%, for the year ended December 31, 2017,2021, compared to the year ended December 31, 2016,2020, was primarily a result of higher incentive compensation and third-party distribution expense duerelated to increased revenues, additional post-IPO equity grants,increases in compensation and an increasebenefits as a result of increased headcount, higher long-term incentive compensation costs as a result of the grant in the numberJanuary 2021, and higher technology and professional fee expense as a result of employees, including costs incurred related to our eighth investment team founded in the fourth quarter of 2016. These increases were partially offset by decreases in third-party intermediary and pre-offering related equity compensation expenses.firm initiatives.
Compensation and Benefits
  For the Years Ended December 31, Period-to-Period
 2017 2016 $ %
 (in millions)  
Salaries, incentive compensation and benefits (1)
$341.1
 $312.6
 $28.5
 9 %
Restricted share-based award compensation expense49.1
 43.2
 5.9
 14 %
Total salaries, incentive compensation and benefits390.2
 355.8
 34.4
 10 %
Pre-offering related compensation - share-based awards12.7
 28.1
 (15.4) (55)%
Total compensation and benefits$402.9
 $383.9
 $19.0
 5 %
(1) Excluding restricted share-based award compensation expense
       
 For the Years Ended December 31,Period-to-Period
20212020$%
(in millions)
Salaries, incentive compensation and benefits (1)
$516.9 $399.3 $117.6 29 %
Long-term incentive compensation awards46.1 36.5 9.6 26 %
Total compensation and benefits$563.0 $435.8 $127.2 29 %
(1) Excluding long-term incentive compensation awards
The increase in salaries, incentive compensation and benefits was driven primarily by a $21.5$96.0 million increase in incentive compensation paid to our investment and marketing professionals as a result of the increase in revenue. The remaining increase is primarily due to costs associated withrevenue, and higher salary and benefits expenses on an increase in theincreased number of employees, including employees on our eighth investment team.employees.
Restricted share-basedLong-term incentive compensation award compensation expense increased $5.9 million primarily as a result of our January 2017 grant of 1,267,250 restricted stock awards and 1,250 restricted stock units of Class A common stock to certain of our employees.

Pre-offering related compensation expense, which consists of the amortization expense on pre-offering Class B awards, decreased $15.4$9.6 million, as the remaining awards granted during 2020 and 2021 had a higher value than the awards that became fully vested during 2017. Asin 2020 and 2021. During the first quarter of July 1, 2017, all Class B2021, the Company’s board of directors approved a grant of $79.4 million of long-term incentive awards were fully vested.consisting of $44.4 million of restricted share-based awards and $35.0 million of long-term cash awards, which we refer to as franchise capital awards.
Total salaries, incentive compensation and benefits was 49%46% and 48% of our revenues for the years ended December 31, 20172021 and 2016.2020, respectively.
Other operating expenses
Other operating expenses increased $3.5$18.2 million for the year ended December 31, 2017,2021, compared to the year ended December 31, 2016,2020, primarily due to a $3.1$7.4 million increase in general and administrative expenses, and a $1.9 millionthird-party distribution expense related to an increase in communicationAUM subject to those fees, and higher technology and professional fee expense as a result of increased information subscriptions and market data costs.firm initiatives.
The increases were partially offset by a $2.9 million decrease in distribution, servicing and marketing expenses as a result
48
Non-Operating Income (Loss)(Expense)
Non-operating income (expense) consisted of the following:
 For the Years Ended December 31,Period-to-Period
20212020$%
(in millions)
Interest expense$(10.8)$(10.8)$— — %
Net investment gain (loss) of consolidated investment products19.7 26.2 (6.5)(25)%
Other investment gain (loss)1.8 0.3 1.5 500 %
Net gain (loss) on the tax receivable agreements0.4 (4.7)5.1 (109)%
Total non-operating income (expense)$11.1 $11.0 $0.1 1 %
Non-operating income (loss)(expense) for the year ended December 31, 20172021 includes $290.9a $0.4 million of incomegain relating to changesa change in the estimate of the payment obligation under the tax receivable agreements, including changes relating to Tax Reform, compared to $0.7a $4.7 million of incomeloss for the year ended December 31, 2016.2020. The effect of changes in that estimate after the date of an exchange or sale is included in net income.
Non-operating The change in estimate in 2020 was due to the remeasurement of deferred tax assets relating to an increase in estimated state income (loss) for the year ended December 31, 2017 also includes $4.2 million of income related to investments gains of consolidated investment products.tax rates.
Provision for Income Taxes
APAM’s effective income tax rate for the years ended December 31, 20172021 and 20162020 was 73.6%19.4% and 22.9%16.5%, respectively. The increase in effective tax rate increase was primarily due to Tax Reforman increase in APAM’s ownership in Holdings as the tax rate used to measure ourwell as a remeasurement of deferred tax assets decreasedin 2020, resulting from 37.0%an increase in estimated state income tax rates in 2020. An increase in Artisan's state deferred income tax rates results in an increase to 23.5%, which resulted in a reduction to our deferred tax assets of $352 million with a corresponding increasedecrease to the provision for income taxes for the year ended December 31, 2017. The increase in APAM’s equity ownership in Holdings also increasedtaxes.
Several factors contribute to the effective income tax rate. Forrate, including a rate benefit attributable to the year ended December 31, 2017,fact that approximately 38%19% and 24% of Holdings’ full year projected taxable earnings were not subject to corporate-level taxes compared to approximately 47% for the yearyears ended December 31, 2016.


2021 and 2020, respectively. Thus, income before income taxes includes amounts that are attributable to noncontrolling interests and not taxable to APAM and its subsidiaries, which reduces the effective tax rate. As APAM’s equity ownership in Holdings increases, the effective tax rate will likewise increase as more income will be subject to corporate-level taxes. The effective tax rate was favorably impacted in both periods due to tax deductible dividends paid on unvested restricted share-based awards and favorable tax deductions related to the vesting of restricted share-based awards.
Earnings Per Share
Weighted average basic and diluted shares of Class A common stock outstanding were higher for the year ended December 31, 2017,2021, compared to the year ended December 31, 2016,2020, as a result of stock offerings, unit exchanges, and equity award grants. See Note 12, “Earnings Per Share” in the Notes to the Consolidated Financial Statements in Item 8 of this report for further discussion of earnings per share.
49
Year Ended December 31, 20162020 Compared to the Year Ended December 31, 2015
2019
 For the Years Ended December 31,For the Period-to-Period
20202019$%
Statements of operations data:(in millions, except share and per-share data)
Revenues$899.6 $799.0 $100.6 13 %
Operating Expenses
Total compensation and benefits435.8 400.5 35.3 9 %
Other operating expenses105.5 115.0 (9.5)(8)%
Total operating expenses541.3 515.5 25.8 5 %
Total operating income358.3 283.5 74.8 26 %
Non-operating income (expense)
Interest expense(10.8)(11.1)0.3 3 %
Other non-operating income21.8 (3.1)24.9 803 %
Total non-operating income (expense)11.0 (14.2)25.2 177 %
Income before income taxes369.3 269.3 100.0 37 %
Provision for income taxes60.8 27.8 33.0 119 %
Net income before noncontrolling interests308.5 241.5 67.0 28 %
Less: Noncontrolling interests - Artisan Partners Holdings81.1 80.1 1.0 1 %
Less: Noncontrolling interests - consolidated investment products14.8 4.9 9.9 202 %
Net income attributable to Artisan Partners Asset Management Inc.$212.6 $156.5 $56.1 36 %
Share Data
Basic earnings per share$3.40 $2.65 
Diluted earnings per share$3.40 $2.65 
Basic weighted average number of common shares outstanding55,633,529 51,127,929 
Diluted weighted average number of common shares outstanding55,637,922 51,127,929 
 For the Years Ended December 31, For the Period-to-Period
 2016 2015 $ %
Statements of operations data:(in millions, except share and per-share data)
Revenues$720.9
 $805.5
 $(84.6) (11)%
Operating Expenses       
Total compensation and benefits383.9
 414.3
 (30.4) (7)%
Other operating expenses102.8
 108.8
 (6.0) (6)%
Total operating expenses486.7
 523.1
 (36.4) (7)%
Total operating income234.2
 282.4
 (48.2) (17)%
Non-operating income (loss)       
Interest expense(11.7) (11.7) —
 — %
Other non-operating income (loss)2.0
 (11.8) 13.8
 117 %
Total non-operating income (loss)(9.7) (23.5) 13.8
 59 %
Income before income taxes224.5
 258.9
 (34.4) (13)%
Provision for income taxes51.5
 46.8
 4.7
 10 %
Net income before noncontrolling interests173.0
 212.1
 (39.1) (18)%
Less: Noncontrolling interests - Artisan Partners Holdings100.0
 130.3
 (30.3) (23)%
Net income attributable to Artisan Partners Asset Management Inc.$73.0
 $81.8
 $(8.8) (11)%
Per Share Data       
Basic and diluted earnings per share$1.57
 $1.86
    
Basic and diluted weighted average number of common shares outstanding38,137,810
 35,448,550
    
Revenues
The decrease in revenuesA detailed discussion of $84.6 million, or 11%,the year-over-year results for the year ended December 31, 2016,2020 compared to the year ended December 31, 2015, was driven primarily by a $10.2 billion or, 10% decrease2019 can be found in “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our average assets under management, and a decrease in our weighted average investment management fee from 75.6 basis pointsAnnual Report on Form 10-K for the fiscal year ended December 31, 2015 to 74.8 basis points for2020, filed with the year ended December 31, 2016. The decrease in the weighted average fee rate is primarily the resultSEC on February 23, 2021.

50
The following table sets forth the weighted average fee and composition of revenue and assets under management by investment vehicle:
 Separate Accounts Artisan Funds and Artisan Global Funds
 For the Years Ended December 31,2016 2015 2016 2015
 (dollars in millions)
Investment management fees$250.3
 $262.2
 $470.6
 $543.3
Weighted average fee55.0 basis points
 54.7 basis points
 92.4 basis points
 92.6 basis points
Percentage of ending AUM49% 46% 51% 54%

Operating Expenses
The decrease in total operating expenses of $36.4 million, or 7%, for the year ended December 31, 2016, compared to the year ended December 31, 2015, was primarily a result of lower incentive compensation and third-party distribution expenses in 2016, which fluctuate with revenue, and a decrease in pre-offering related equity compensation expense. We incurred approximately $3.5 million of operating expenses in 2016 related to the establishment of the Thematic team and the addition of a Chief Operating Officer of Investments.
Compensation and Benefits
  For the Years Ended December 31, Period-to-Period
 2016 2015 $ %
 (in millions)  
Salaries, incentive compensation and benefits (1)
$312.6
 $335.7
 $(23.1) (7)%
Restricted share-based award compensation expense43.2
 36.5
 6.7
 18 %
Total salaries, incentive compensation and benefits355.8
 372.2
 (16.4) (4)%
Pre-offering related compensation - share-based awards28.1
 42.1
 (14.0) (33)%
Total compensation and benefits$383.9
 $414.3
 $(30.4) (7)%
(1) Excluding restricted share-based award compensation expense
       
The decrease in salaries, incentive compensation and benefits was driven primarily by a $23.9 million decrease in incentive compensation paid to our investment and marketing professionals as a result of lower investment management fee revenue and $6.0 million of start-up costs related to the Developing World team incurred in 2015. The decreases were partially offset by increased costs related to an increase in the number of employees, including those on the Thematic team and the addition of a Chief Operating Officer of Investments, as described above.
The $6.7 million increase in restricted share-based compensation expense resulted primarily from grants of awards in 2016 and 2015.
Pre-offering related compensation expense, which consists of the amortization expense on pre-offering Class B awards decreased $14.0 million, as certain awards became fully vested during 2016 and 2015.
Total salaries, incentive compensation and benefits was 49% and 46% of our revenues for the years ended December 31, 2016 and 2015, respectively.
Other operating expenses
Other operating expenses decreased $6.0 million for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due to a $10.7 million reduction in distribution expenses. Distribution expenses decreased as a result of a decrease in our assets under management sourced from third-party intermediaries and the launch of the Advisor Share class for certain series of Artisan Funds. The amount we and Artisan Funds pay to intermediaries for distribution and administrative services with respect to Advisor Shares is less than the amount paid with respect to Investor Shares. The transfer of assets from Investor Shares to Advisor Shares reduced our intermediary fees by approximately $2.9 million for the year ended December 31, 2016, as compared to the year ended December 31, 2015.
Other operating expenses includes a $6.7 million increase in communication and technology expenses as a result of an increase in information subscriptions and consulting expense related to firm initiatives.
Non-Operating Income (Loss)
Non-operating income (loss) for the year ended December 31, 2016 includes $0.7 million of income resulting from changes in the estimate of the payment obligation under the tax receivable agreements, compared to $12.2 million of expense for the year ended December 31, 2015. The effect of changes in that estimate after the date of an exchange or sale is included in net income. Similarly, the effect on the estimate of changes in enacted tax rates and in applicable tax laws are included in net income.
Provision for Income Taxes
APAM’s effective income tax rate for the years ended December 31, 2016 and 2015 was 22.9% and 18.1%, respectively. The rate increase was partially due to an increase in APAM’s equity ownership in Holdings. For the year ended December 31, 2016, approximately 47% of Holdings’ earnings were not subject to corporate-level taxes compared to approximately 50% for the year ended December 31, 2015. The rate increase was also due to the fact that the tax provision for the year ended December 31, 2015 included a discrete tax benefit of $8.3 million related to changes in estimates associated with our deferred tax assets.


Earnings Per Share
Weighted average basic and diluted shares of Class A common stock outstanding were higher for the year ended December 31, 2016, as a result of unit exchanges, and equity award grants. See Note 12, “Earnings Per Share” in the Notes to the Consolidated Financial Statements in Item 8 of this report for further discussion of earnings per share.
Supplemental Non-GAAP Financial Information
Our management uses non-GAAP measures (referred to as “adjusted” measures) of net income and operating income to evaluate the profitability and efficiency of the underlying operations of our business and as a factor when considering net income available for distributions and dividends. These adjusted measures remove the impact of (1) pre-offering related compensation, (2) net gain (loss) on the tax receivable agreements (if any), (2) compensation expense related to market valuation changes in compensation plans, (3) net investment gain (loss) of consolidated investment products, and (4) the adjustment toremeasurement of deferred taxes as a result of Tax Reform.taxes. These adjustments also remove the non-operational complexities of our structure by adding back non-controllingnoncontrolling interests and assuming all income of Artisan Partners Holdings is allocated to APAM. Management believes these non-GAAP measures provide more meaningful information to analyze our profitability and efficiency between periods and over time. We have included these non-GAAP measures to provide investors with the same financial metrics used by management to manage the company.Company.
Non-GAAP measures should be considered in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Our non-GAAP measures may differ from similar measures used by other companies, even if similar terms are used to identify such measures. Our non-GAAP measures are as follows:
•Adjusted net income represents net income excluding the impact of (1) pre-offering related compensation, (2) net gain (loss) on the tax receivable agreements (if any), (2) compensation expense related to market valuation changes in compensation plans, (3) net investment gain (loss) of consolidated investment products, and (4) the adjustment toremeasurement of deferred taxes as a result of Tax Reform.taxes. Adjusted net income also reflects income taxes assuming the vesting of all unvested Class A share-based awards and as if all outstanding limited partnership units of Artisan Partners Holdings had been exchanged for Class A common stock of APAM on a one-for-one basis. Assuming full vesting and exchange, all income of Artisan Partners Holdings is treated as if it were allocated to APAM, and the adjusted provision for income taxes represents an estimate of income tax expense at an effective rate reflecting assumedAPAM's current federal, state, and local income taxes.statutory tax rates. The estimated adjusted effective tax rate was 37.0%24.7%, 24.7% and 24.1% for the periods presented. We estimate our adjusted effective tax rate will be 23.5% in 2018 as a result of Tax Reform.years ended December 31, 2021, 2020, and 2019, respectively.
•Adjusted net income per adjusted share is calculated by dividing adjusted net income by adjusted shares. The number of adjusted shares is derived by assuming the vesting of all unvested Class A share-based awards and the exchange of all outstanding limited partnership units of Artisan Partners Holdings for Class A common stock of APAM on a one-for-one basis.
•Adjusted operating income represents the operating income of the consolidated company excluding pre-offeringcompensation expense related compensation.to market valuation changes in compensation plans.
•Adjusted operating margin is calculated by dividing adjusted operating income by total revenues.
•Adjusted EBITDA represents adjusted net income before interest expense, income taxes, depreciation and amortization expense.
Pre-offering related compensation includes the amortization of unvested Class B common units of Artisan Partners Holdings that were granted before and were unvested at our IPO, which closed on March 12, 2013. As of July 1, 2017, all Class B common units of Artisan Partners Holdings were fully vested and expensed.
Net gain (loss) on the tax receivable agreements represents the income (expense) associated with the change in estimate of amounts payable under the tax receivable agreements entered into in connection with APAM’s initial public offering and related reorganization.
Compensation expense related to market valuation changes in compensation plans represents the expense (income) associated with the change in the long term incentive award liability resulting from investment returns of the underlying investment products. Because the compensation expense impact of the investment market exposure is economically hedged, management believes it is useful to reflect the expected net income offset in the calculation of adjusted operating income, adjusted net income, and adjusted EBITDA. The related investment gain (loss) on the underlying investments is included in the adjustment for net investment gain (loss) of investment products.
Net investment gain (loss) of consolidated investment products represents the investmentnon-operating income (loss)(expense) related to the Company’s investments, in both consolidated investment products that are included inand nonconsolidated investment products, including investments held to economically hedge compensation plans. Excluding these non-operating market gains or losses on investments provides greater transparency to evaluate the Company’s consolidated financial statements because Artisan holds a controlling financial interest in the respective investment entities. The investment income (loss), including the Company’s proportionate share, is removed from the adjusted measures to provide greater transparencyprofitability and efficiency of the underlying operations of the business.
The adjustment to deferred taxes as a result
51

The following table sets forth, for the periods indicated, a reconciliation from GAAP financial measures to non-GAAP measures:
 For the Years Ended December 31,
202120202019
(unaudited; in millions, except per share data)
Reconciliation of non-GAAP financial measures:
Net income attributable to Artisan Partners Asset Management Inc. (GAAP)$336.5 $212.6 $156.5 
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings96.9 81.1 80.1 
Add back: Provision for income taxes107.1 60.8 27.8 
Add back: Compensation expense related to market valuation changes in compensation plans0.3 — — 
Add back: Net (gain) loss on the tax receivable agreements(0.4)4.7 19.6 
Add back: Net investment (gain) loss of investment products attributable to APAM(9.3)(10.3)(9.9)
Less: Adjusted provision for income taxes131.2 86.2 66.1 
Adjusted net income (Non-GAAP)$399.9 $262.7 $208.0 
Average shares outstanding
Class A common shares59.9 55.6 51.1 
Assumed vesting or exchange of:
Unvested Class A restricted share-based awards5.4 5.4 5.1 
Artisan Partners Holdings units outstanding (noncontrolling interests)14.2 17.9 21.8 
Adjusted shares79.5 78.9 78.0 
Basic earnings per share (GAAP)$5.10 $3.40 $2.65 
Diluted earnings per share (GAAP)$5.09 $3.40 $2.65 
Adjusted net income per adjusted share (Non-GAAP)$5.03 $3.33 $2.67 
Operating income (GAAP)$540.5 $358.3 $283.5 
Add back: Compensation expense related to market valuation changes in compensation plans0.3 — — 
Adjusted operating income (Non-GAAP)$540.8 $358.3 $283.5 
Operating margin (GAAP)44.0 %39.8 %35.5 %
Adjusted operating margin (Non-GAAP)44.1 %39.8 %35.5 %
Net income attributable to Artisan Partners Asset Management Inc. (GAAP)$336.5 $212.6 $156.5 
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings96.9 81.1 80.1 
Add back: Net (gain) loss on the tax receivable agreements(0.4)4.7 19.6 
Add back: Net investment (gain) loss of investment products attributable to APAM(9.3)(10.3)(9.9)
Add back: Compensation expense related to market valuation changes in compensation plans0.3 — — 
Add back: Interest expense10.8 10.8 11.1 
Add back: Provision for income taxes107.1 60.8 27.8 
Add back: Depreciation and amortization7.0 6.6 6.8 
Adjusted EBITDA (Non-GAAP)$548.9 $366.3 $292.0 

52
  For the Years Ended December 31,
 2017 2016 2015
 (in millions, except per share data)
Reconciliation of non-GAAP financial measures:     
Net income attributable to Artisan Partners Asset Management Inc. (GAAP)$49.6
 $73.0
 $81.8
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings99.0
 100.0
 130.3
Add back: Provision for income taxes420.5
 51.5
 46.8
Add back: Pre-offering related compensation - share-based awards12.7
 28.1
 42.1
Add back: Net (gain) loss on the tax receivable agreements(290.9) (0.7) 12.2
Add back: Net investment (gain) loss of consolidated investment products attributable to APAM(1.9) —
 —
Less: Adjusted provision for income taxes106.9
 93.2
 115.9
Adjusted net income (Non-GAAP)$182.1
 $158.7
 $197.3
      
Average shares outstanding     
Class A common shares44.6
 38.1
 35.4
Assumed vesting or exchange of:     
Unvested Class A restricted share-based awards4.2
 3.6
 3.1
Artisan Partners Holdings units outstanding (noncontrolling interest)26.8
 32.8
 35.0
Adjusted shares75.6
 74.5
 73.5
      
Basic and diluted earnings per share (GAAP)$0.75

$1.57
 $1.86
Adjusted net income per adjusted share (Non-GAAP)$2.41
 $2.13
 $2.69
      
Operating income (GAAP)$286.4
 $234.2
 $282.4
Add back: Pre-offering related compensation - share-based awards12.7
 28.1
 42.1
Adjusted operating income (Non-GAAP)$299.1
 $262.3
 $324.5
      
Operating margin (GAAP)36.0%
32.5%
35.1%
Adjusted operating margin (Non-GAAP)37.6% 36.4% 40.3%
      
Net income attributable to Artisan Partners Asset Management Inc. (GAAP)$49.6
 $73.0
 $81.8
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings99.0
 100.0
 130.3
Add back: Pre-offering related compensation - share-based awards12.7
 28.1
 42.1
Add back: Net (gain) loss on the tax receivable agreements(290.9) (0.7) 12.2
Add back: Net investment (gain) loss of consolidated investment products attributable to APAM(1.9) —
 —
Add back: Interest expense11.4
 11.7
 11.7
Add back: Provision for income taxes420.5
 51.5
 46.8
Add back: Depreciation and amortization5.3
 5.2
 4.5
Adjusted EBITDA (Non-GAAP)$305.7
 $268.8
 $329.4

Liquidity and Capital Resources
Our working capital needs, including accrued incentive compensation payments, have been and are expected to be met primarily through cash generated by our operations. The assets and liabilities of consolidated investment products attributable to third-party investors do not impact our liquidity and capital resources. We have no right to the benefits from, nor do we bear the risks associated with, the assets and liabilities of consolidated investment products, beyond our direct equity investment and any investment managementadvisory fees and incentive allocations earned. Accordingly, assets and liabilities of consolidated investment products attributable to third-party investors are excluded from the amounts and discussions below. The following table shows our liquidity position as of December 31, 20172021 and December 31, 2016.
 December 31, 2017 December 31, 2016
 (in millions)
Cash and cash equivalents$137.3
 $156.8
Accounts receivable$76.7
 $59.7
Seed investments(1)
$40.3
 $6.3
Undrawn commitment on revolving credit facility$100.0
 $100.0
(1) Seed investments includes available-for-sale investments in unconsolidated sponsored investment entities, as well as Artisan’s direct equity investments in consolidated investment products.
2020:
December 31, 2021December 31, 2020
(in millions)
Cash and cash equivalents$189.2 $155.0 
Accounts receivable$115.9 $99.9 
Seed investments(1)
$71.9 $62.6 
Undrawn commitment on revolving credit facility$100.0 $100.0 
(1) Seed investments include Artisan's direct equity investments in consolidated and nonconsolidated Artisan-sponsored investment products. The balance excludes $37.9 million of investments made related to funded long-term incentive compensation plans.
We manage our cash balances in order to fund our day-to-day operations. Accounts receivable primarily represent investment managementadvisory fees that have been earned, but not yet received from our clients. We perform a review of our receivables on a monthly basis to assess collectability. As of December 31, 2017,2021, none of our receivables were considered uncollectable. We also maintain a $100 million revolving credit facility, which was unused as of and for the year ended December 31, 2017.uncollectible.
We utilize capitalcash to make seed investments in Artisan-sponsored fundsinvestment products to support the development of new strategies.investment strategies and vehicles. As of December 31, 2017,2021, the balance of all seed investments, including investments in consolidated investment products, was $40.3$71.9 million. The seed investments are generally redeemable at our discretion.
During the year ended December 31, 2021, we also made investments of $35.0 million related to funded long-term incentive compensation plans. As of December 31, 2021, the value of investments held related to funded long-term incentive compensation plans was $37.9 million. In August 2012,the first quarter of 2022, we issuedintend to invest an additional $48.6 million in funded long-term incentive compensation plans related to the grant that was approved by our Board on January 25, 2022.
We expect our investment portfolio to continue to grow as we grant additional annual franchise capital awards and make seed investments in new investment strategies and vehicles.
We have $200 million in unsecured notes outstanding and entered into a $100 million five-year revolving credit facility.facility with a five-year term ending August 2022. The notes wereare comprised of three series, Series A,C, Series B,D, and Series C,E, each with a balloon payment at maturity.
In August 2017, we issued $60 million of Series D notes and used the proceeds to repay the $60 million Series A senior notes that matured on August 16, 2017. We also amended and extended the $100 million revolving credit facility for an additional five-year period. The $100 million revolving credit facility was unused as of and for the year ended December 31, 2017.2021.
In September 2017, we amended the 2012On December 7, 2021, Holdings entered into a Note Purchase Agreement with respectto issue $90 million of Series F senior notes in a private placement transaction on August 16, 2022, subject to the satisfaction of certain customary closing conditions. The Company will use the proceeds from the Series B andF senior notes to repay the $90 million of Series C senior notes that remain outstanding. Among other things, the amendment conformed certain termsmature on August 16, 2022. The Series F senior notes will bear interest at a rate of 3.10% and conditions applicable to the Series B and Series C notes to those applicable to the Series D notes. will mature on August 16, 2032.
The fixed interest rate on each series of unsecured notes is subject to a 100 basis point increase in the event Holdings receives a below-investment grade rating and any such increase will continue to apply until an investment grade rating is received. Holdings maintained an investment grade rating for the year ended December 31, 2017.2021.
These borrowings contain certain customary covenants including limitations on Artisan Partners Holdings’ ability to: (i) incur additional indebtedness or liens, (ii) engage in mergers or other fundamental changes, (iii) sell or otherwise dispose of assets including equity interests, and (iv) make dividend payments or other distributions to Artisan Partners Holdings’ partners (other than, among others, tax distributions paid to partners for the purpose of funding tax liabilities attributable to their interests) when a default occurred and is continuing or would result from such a distribution. In addition, in the event of a Change of Control (as defined in the Note Purchase Agreement) or if Artisan’s average assets under management for a fiscal quarter is below $45 billion, Holdings is generally required to offer to pre-pay the notes. Artisan Partners Limited Partnership, a wholly-owned subsidiary of Holdings, has guaranteed Holdings’ obligations under the terms of the Note Purchase Agreement.
In addition, covenants in the note purchase and revolving credit agreements require Artisan Partners Holdings to maintain the following financial ratios:
•leverage ratio (calculated as the ratio of consolidated total indebtedness on any date to consolidated EBITDA for the period of four consecutive fiscal quarters ended on or prior to such date) cannot exceed 3.00 to 1.00 (Artisan Partners Holdings’ leverage ratio for the year ended December 31, 20172021 was 0.60.3 to 1.00); and
53
•interest coverage ratio (calculated as the ratio of consolidated EBITDA for any period of four consecutive fiscal quarters to consolidated interest expense for such period) cannot be less than 4.00 to 1.00 for such period (Artisan Partners Holdings’ interest coverage ratio for the year ended December 31, 20172021 was 32.957.9 to 1.00).
Our failure to comply with any of the covenants or restrictions described above could result in an event of default under the agreements, giving our lenders the ability to accelerate repayment of our obligations. We were in compliance with all debt covenants as of December 31, 2017.

2021.
Distributions and Dividends
Artisan Partners Holdings’ distributions, including distributions to APAM, for the years ended December 31, 20172021 and 20162020 were as follows:
 For the Years Ended December 31,
20212020
(in millions)
Holdings Partnership Distributions to Limited Partners$93.2 $85.8 
Holdings Partnership Distributions to APAM400.2 270.0 
Total Holdings Partnership Distributions$493.4 $355.8 
  For the Years Ended December 31,
 2017 2016
 (in millions)
Holdings Partnership Distributions to Limited Partners$115.8 $133.9
Holdings Partnership Distributions to APAM$197.1 $160.5
Total Holdings Partnership Distributions$312.9 $294.4
On February 1, 2018, we,APAM, acting as the general partner of Artisan Partners Holdings, declared, effective February 1, 2022, a distribution of $68.3$71.6 million payable by Artisan Partners Holdings on February 21, 201823, 2022 to holders of its partnership units, including APAM, of record on February 14, 2018.APAM.
APAM declared and paid the following dividends per share during the years ended December 31, 20172021 and 2016:
2020:
 For the Years Ended December 31,
Type of DividendClass of Stock20212020
QuarterlyCommon Class A$3.92 $2.79 
Special AnnualCommon Class A$0.31 $0.60 
Type of Dividend Class of Stock  For the Years Ended December 31,
    2017 2016
Quarterly Common Class A $2.40 $2.40
Special Annual Common Class A $0.36 $0.40
On Our board of directors declared, effective February 1, 2018, our board declared2022, a variable quarterly dividend of $0.60$1.03 per share of Class A common stock with respect to the December quarter of 2021 and a special annual dividend of $0.79$0.72. The combined amount, $1.75 per share of Class A common stock, both payablewill be paid on February 28, 20182022 to shareholdersstockholders of record as of the close of business on February 14, 2018. We have historically distributed the majority2022. The variable quarterly dividend of $1.03 per share represents approximately 80% of the cash we generategenerated (as described below) in the formDecember quarter of regular2021 and special annual dividends. The $3.19a pro-rata portion of quarterly and special annual dividends declared with respect to 2017, represents the adjusted earnings per share of $2.41, adding back non-cash expenses and deferred taxes, plus approximately $0.25 of cash retained from prior year earnings and2021 tax savings realized in 2017 after payments underrelated to our tax receivable agreements. The special dividend represents the remainder of undistributed cash generated during the year ended December 31, 2021, less cash reserved for seed investments in new investment strategies and vehicles and for other purposes.
Subject to boardBoard approval each quarter, we currently expect to pay a quarterly dividend of $0.60 per shareapproximately 80% of Class A common stock.the cash the Company generates each quarter. We expect our quarterly cash generation to approximate adjusted net income plus long-term incentive compensation award expense, less cash reserved for future franchise capital awards (which we expect will approximate 4% of investment management revenues each quarter) with additional adjustments made for certain other sources and uses of cash, including capital expenditures. After the end of the year, our boardBoard will consider paying a special dividend that will take into consideration our annual adjusted earnings, business conditions andafter determining the amount of cash we want to retain at that time.needed for general corporate purposes and investments in growth and strategic initiatives. Although we expect to pay dividends according to our dividend policy, we may not pay dividends according to our policy or at all. We expect that our management and board will consider changes to our dividend policy during the course of 2018, including consideration of a variable quarterly dividend.
Tax Receivable Agreements (“TRAs”)
In addition to funding our normal operations, we will be required to fund amounts payable under the TRAs that we entered into in connection with the IPO, which resulted in the recognition of a $385.4$425.4 million liability as of December 31, 2017.2021. The liability generally represents 85% of the tax benefits APAM expects to realize as a result of the merger of an entity into APAM as part of the IPO Reorganization, our purchase of partnership units from limited partners of Holdings and the exchange of partnership units (for shares of Class A common stock or other consideration). The estimated liability assumes no material changes in the relevant tax law and that APAM earns sufficient taxable income to realize all tax benefits subject to the TRAs. As previously discussed, the TRA liability was reduced as a result of Tax Reform enactedAn increase or decrease in December 2017. Future increases or decreases infuture tax rates will increase or decrease, respectively, the expected tax benefits APAM would realize and the amounts payable under the TRAs. Changes in the estimate of expected tax benefits APAM would realize and the amounts payable under the TRAs as a result of change in tax rates have been and will be recorded in net income.
The liability will increase upon future purchases or exchanges of limited partnership units with the increase representing amounts payable under the TRAs equal to 85% of the estimated future tax benefits, if any, resulting from such purchases or exchanges.
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We intend to fund the payment of amounts due under the TRAs out of the reduced tax payments that APAM realizes in respect of the tax attributes to which the TRAs relate.

The actual increase in tax basis, as well as the amount and timing of any payments under these agreements, will vary depending upon a number of factors, including the timing of sales or exchanges by the holders of limited partnership units, the price of the Class A common stock at the time of such sales or exchanges, whether such sales or exchanges are taxable, the amount and timing of the taxable income APAM generates in the future and the tax rate then applicable and the portion of APAM’s payments under the TRAs constituting imputed interest or depreciable basis or amortizable basis.
In certain cases, payments under the TRAs may be accelerated and/or significantly exceed the actual benefits we realize in respect of the tax attributes subject to the TRAs. In such cases, we intend to fund those payments with cash on hand, although we may have to borrow funds depending on the amount and timing of the payments. During the year ended December 31, 2017,2021, we made payments of $30.3$31.3 million, related to the TRAs, including interest, were made in accordance with the TRA agreements. Weinterest. In 2022, we expect to make payments of approximately $36$33 million in 2018 related to the TRAs.

Cash Flows
 For the Years Ended December 31,
202120202019
(in millions)
Cash, cash equivalents and restricted cash as of January 1,$199.5 $144.3 $175.5 
Net cash provided by operating activities398.5 318.7 292.9 
Net cash provided by (used in) investing activities(27.0)18.7 (17.5)
Net cash used in financing activities(335.4)(282.2)(306.6)
Net impact of deconsolidation of consolidated investment products(34.8)— — 
Cash, cash equivalents and restricted cash as of December 31,$200.8 $199.5 $144.3 

 For the Years Ended December 31,
 2017 2016 2015
 (in millions)
Cash as of January 1$156.8
 $166.2
 $182.3
Net cash provided by operating activities204.1
 270.4
 321.2
Net cash used in investing activities(4.7) (2.1) (11.3)
Net cash used in financing activities(218.9) (277.7) (326.0)
Cash as of December 31,$137.3
 $156.8
 $166.2
Year Ended December 31, 20172021 Compared to Year Ended December 31, 20162020
Net cash provided by operating activities decreased $66.3increased $79.8 million duringfor the year ended December 31, 2017 primarily due to $92.5 million of net operating cash used by consolidated investment products, partially offset by increased revenues and operating income resulting from an increase in average assets under management. For the year ended December 31, 20172021, compared to the year ended December 31, 2016,2020, primarily due to an increase in operating income resulting from higher average AUM and revenues, partially offset by decreases in operating cash flows from consolidated investment products and an increase in income tax payments. For the year ended December 31, 2021 compared to the year ended December 31, 2020, our operating income, excluding noncash share-based and pre-offering related compensation expenses,expense, increased $42.8$184.9 million. Timing differences in working capital accounts reduced operatingOperating cash flows were negatively impacted by $14.5a $69.5 million reduction in 2017, compared to 2016.cash provided by consolidated investment products and a $34.9 million increase in cash paid for income taxes.
Investing activities consist primarily of acquiring and selling property and equipment, leasehold improvements and the purchase and sale of available-for-saleinvestment securities. Net cash used inby investing activities increased $2.6$45.7 million during the year ended December 31, 20172021, primarily due to a $3.8$42.8 million decreaseincrease in net proceeds from the salepurchases of investment securities, partially offset bywhich includes $34.1 million of investment securities related to funded long-term incentive compensation plans, and a $1.4$2.9 million decreaseincrease in acquisitionacquisitions of property and equipment and leasehold improvements.
Financing activities consist primarily of partnership distributions to non-controlling interests, dividend payments to holders of our Class A common stock, proceeds from the issuance of Class A common stock in follow-on offerings, payments to purchase Holdings partnership units, and payments of amounts owed under the tax receivable agreements. Net cash used byin financing activities decreased $58.8increased $53.2 million during the year ended December 31, 20172021, primarily due to $60.5a $71.7 million increase in dividends paid, a $7.4 million increase in distributions paid to limited partners, a $4.7 million increase in taxes paid related to employee net share settlement, and a $4.3 million increase in payments of net subscriptionsamounts owed under the TRAs. These higher cash uses were partially offset by a $35.0 million increase in contributions from noncontrolling interests in our consolidated investment products. Distributions to limited partners decreased $18.1 million and dividends paid increased $15.6 million due to the increase in APAM’s equity ownership interest in Holdings during
During the year ended December 31, 2017 compared to2021, the year ended December 31, 2016.
Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Net cash provided by operating activities decreased $50.8 million forCompany determined that it no longer had a controlling financial interest in an investment product that was previously consolidated. The deconsolidation of the year ended December 31, 2016 primarily due to decreased revenues and operating income resulting from the decreaseinvestment product resulted in average assets under management. For the year ended December 31, 2016, compared to the year ended December 31, 2015, our operating income, excluding share-based and pre-offering related compensation expenses, decreased $55.5 million.
Net cash used in investing activities decreased $9.2 million for the year ended December 31, 2016 primarily due to a $9.0$34.8 million decrease in net purchasescash, cash equivalents and restricted cash.

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Net cash used by financing activities decreased $48.3 million for the year ended December 31, 2016 due to a $48.3 million decrease in distributions to limited partners and an $8.6 million decrease in dividends paid, partially offset by a $7.6 million increase in payments under the tax receivable agreements.

Certain Contractual Obligations
The following table sets forth our contractual obligations under certain contracts as of December 31, 2017.
 Payments Due by Period
 Total Less than
1 year		 1-3 Years 3-5 Years More than 5
Years
 (in millions)
Principal payments on borrowings$200.0
 $—
 $50.0
 $90.0
 $60.0
TRAs (1) 
385.4
 —
 —
 —
 —
Interest payable52.9
 10.7
 18.6
 15.9
 7.7
Lease obligations77.0
 11.4
 20.3
 18.6
 26.7
Total Contractual Obligations$715.3
 $22.1
 $88.9
 $124.5
 $94.4
(1) The estimated payments under the TRAs as of December 31, 2017 are described above under “Liquidity and Capital Resources”. However, amounts payable under the TRAs will increase upon exchanges of Holdings units for our Class A common stock or sales of Holdings units to us, with the increase representing 85% of the estimated future tax benefits, if any, resulting from the exchanges or sales. The actual amount and timing of payments associated with our existing payable under our tax receivable agreements or future exchanges or sales, and associated tax benefits, will vary depending upon a number of factors as described under “-Liquidity and Capital Resources.” As a result, the timing of payments by period is currently unknown. We expect to pay approximately $36 million in 2018 related to the TRAs.
Off-Balance Sheet Arrangements
As of December 31, 2017, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity or capital resources.
Critical Accounting Policies and Estimates
The accompanying consolidated financial statements were prepared in accordance with GAAP, and related rules and regulations of the SEC. The preparation of financial statements in conformity with GAAP requires management to make estimates or assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates or assumptions and may have a material effect on the consolidated financial statements.
Accounting policies are an integral part of our financial statements. A thorough understanding of these accounting policies is essential when reviewing our reported results of operations and our financial condition. Management believes that the critical accounting policies and estimates discussed below involve additional management judgment due to the sensitivity of the methods and assumptions used.
Consolidation
We consolidate all subsidiaries or other entities in which we have a controlling financial interest. We assess each legal entity in which we hold a variable interest on a quarterly basis to determine whether consolidation is appropriate. We determine whether we have a controlling financial interest in the entity by evaluating whether the entity is a voting interest entity (“VOE”) or a variable interest entity (“VIE”) under GAAP. Assessing whether an entity is a VIE or VOE and if it requires consolidation involves judgment and analysis. Factors considered in this assessment include the legal organization of the entity, our equity ownership and contractual involvement with the entity and any related party or de facto agent implications of our involvement with the entity.
Voting Interest Entities-A- A VOE is an entity in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders at risk have the obligation to absorb losses, the right to receive residual returns and the right to direct the activities of the entity that most significantly impact the entity’s economic performance, whereby the equity investment has all the characteristics of a controlling financial interest. As a result, voting rights are a key driver of determining which party, if any, should consolidate the entity. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests.
Variable Interest Entities-A- A VIE is an entity that lacks one or more of the characteristics of a VOE. In accordance with GAAP, an enterprise must consolidate all VIEs of which it is the primary beneficiary. We determine if a legal entity meets the definition of a VIE by considering whether the fund’s equity investment at risk is sufficient to finance its activities without additional subordinated financial support and whether the fund’s at-risk equity holders absorb any losses, have the right to receive residual returns and have the right to direct the activities of the entity most responsible for the entity’s economic performance.

Under the VIE model, controlling financial interest is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. We will generally consolidate VIEs in which we meet the power criteria and hold an equity ownership interest of greater than 10%.
We serve as the investment adviser for Artisan Funds, a family of mutual funds registered with the SEC under the Investment Company Act of 1940, and investment manager of Artisan Global Funds, a family of Ireland-based UCITS.UCITS funds. Artisan Funds and Artisan Global Funds are corporate entities the business and affairs of which are managed by their respective boards of directors. The shareholders of the funds retain voting rights, including the right to elect and reelect members of their respective boards of directors. Each series of Artisan Funds is a VOE and is separately evaluated for consolidation under the VOE model. The shareholders of Artisan Global Funds lack simple majority liquidation rights, and as a result, Artisan Global Funds is evaluated for consolidation under the VIE model. Artisan sponsored privately offered fundsPrivate Funds are also evaluated for consolidation under the VIE model because third-party equity holders of the funds lack the ability to remove Artisan as the general partner, or otherwise divest Artisan of its control of the funds.
Seed Investments - We generally make seed investments in sponsored investment portfolios at the portfolio’s formation. If the seed investment results in a controlling financial interest, we will consolidate the investment, and the underlying individual securities will be accounted for as trading securities.based on their classification at the underlying fund. If the seed investment results in significant influence, but not control, the investment will be accounted for as an equity method investment. Significant influence is generally considered to exist with equity ownership levels between 20% and 50%, although other factors are considered. Seed investments in which we do not have a controlling financial interest or significant influence are classifiedaccounted for as available-for-sale investments.investment securities. These investments are measured at fair value in the Consolidated StatementStatements of Financial Condition. Unrealized gainsRealized and losses for available-for-sale securities are excluded from earnings and reported in other comprehensive income until realized. Realized gains are recognized in non-operating income (loss). As of December 31, 2017, all of our unconsolidated seed investments were accounted for as available-for-sale securities. Effective January 1, 2018, unrealized gains (losses) on allinvestment securities are recorded in net investment income in the Consolidated Statements of our seedOperations. Dividend income from these investments will beis recognized throughwhen earned and is included in net income.investment income in the Consolidated Statements of Operations.

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Revenue Recognition
Investment management fees are generally computed as a percentage of assets under management and are recognized as services are rendered.revenue at the end of each distinct service period. Fees for providing investment management services are computed and billed in accordance with the provisions of the applicableunderlying investment management agreements, which is generally on a monthly or quarterly basis. Investment management fees are presented net of cash rebates to certain Artisan Global Fund investors and fees waivedexpense reimbursements pursuant to contractual expense limitations of the funds or voluntary waivers.pooled investment vehicles.
TheA number of investment management agreements for a small number of accounts provide for performance-based fees or incentive allocations. Performance-basedallocations, collectively “performance fees”. Performance fees, and incentive allocations, if earned, are recognized upon completion of the contractually determined measurement period, which is generally quarterly or annually. Performance fees and incentive allocations generally are not subject to clawbackclaw back as a result of performance declines subsequent to the most recent measurement date.
Artisan accounts for asset management services as a single performance obligation that is satisfied over time, using a time-based measure of progress to recognize revenue. Customer consideration is variable due to the uncertainty of the value of assets under management during each distinct service period. At the end of each quarter, Artisan records revenue for the actual amount of investment management fees for that quarter because the uncertainty has been resolved.
Performance fees are subject to the uncertainty of market volatility, and as a result, the entire amount of the variable consideration related to performance fees is constrained until the end of each measurement period. At the end of the quarterly or annual measurement period, revenue is recorded for the actual amount of performance fees earned during that period because the uncertainty has been resolved.
The portfolios of Artisan Funds and Artisan Global Funds, as well as the portfolios we manage for our other clients, are invested principally in securities for which market values are readily available, with a portion of each portfolio held in cash or cash-like instruments. With the exception of the assets managed by our Credit team (which represented approximately 4.7% of our assets under management at December 31, 2021), the portfolios are invested principally in publicly-traded equity securities.
The investment management fees that we receive are calculated based on the values of the securities held in the accounts that we manage for our clients. For our U.S.-registered mutual fund clients and UCITS funds clients, including Artisan Funds and Artisan Global Funds, and for our own sponsored private funds,Artisan Private Funds, our fees are based on the values of the funds’ assets as determined for purposes of calculating their net asset values.
Securities held by U.S.-registered mutual funds, including Artisan Funds, Artisan Global Funds, and Artisan Private Funds are generally valued at closing market prices, or if closing market prices are not readily available or are not considered reliable, at a fair value determined under procedures established by the fund’s board (fair value pricing). A U.S.-registered mutual fund typically considers a closing market price not to be readily available, and therefore uses fair value pricing, if, among other things, the value of the security might have been materially affected by events occurring after the close of the market in which the security was principally traded but before the time for determination of the fund’s net asset value. A subsequent event might be a company-specific development, a development affecting an entire market or region, or a development that might be expected to have global implications. A significant change in securities prices in U.S. markets may be deemed to be such a subsequent event with respect to non-U.S. securities.
Values of securities determined using fair value pricing are likely to be different than they would be if only closing market prices were used. As a result, over short periods of time, the revenues we generate from U.S.-registered mutual funds, including Artisan Funds, may be different than they would be if only closing prices were used in valuing portfolio securities. Over longer time periods, the differences in our fees resulting from fair value pricing are not material.
For our separate account clients, other than U.S.-registered mutual funds, our fees may be based, at the client’s option, on the values of the securities in the portfolios we manage as determined by the client (or its custodian or other service provider) or by us in accordance with valuation procedures we have adopted. The valuation procedures we have adopted generally use closing market prices in the markets in which the securities trade, without adjustment for subsequent events except in unusual circumstances. We believe that our fees based on valuations determined under our procedures are not materially different from the fees we receive that are based on valuations determined by clients, their custodians or other service providers.

With the exception of the assets managed by our Credit team (which represented approximately 2.2% of our assets under management at December 31, 2017), the portfolios of Artisan Funds and Artisan Global Funds, as well as the portfolios we manage for our separate account clients, are invested principally in publicly-traded equity securities for which public market values are readily available, with a portion of each portfolio held in cash or cash-like instruments.
Income Taxes
We operate in numerous states and countries and must allocate our income, expenses, and earnings under the various laws and regulations of each of these taxing jurisdictions. Accordingly, our provision for income taxes represents our total estimate of the liability for income taxes that we have incurred in doing business each year in all of our locations. Annually, we file tax returns that represent our filing positions with each jurisdiction and settle our tax return liabilities. Each jurisdiction has the right to audit those tax returns and may take different positions with respect to income and expense allocations and taxable earnings determinations. Because the determination of our annual income tax provision is subject to judgments and estimates, actual results may vary from those recorded in our financial statements. We recognize additions to and reductions in income tax expense during a reporting period that pertains to prior period provisions as our estimated liabilities are revised and our actual tax returns and tax audits are completed.
Our management is required to exercise judgment in developing our provision for income taxes, including the determination of deferred tax assets and liabilities and any valuation allowance that might be required against deferred tax assets. As of December 31, 2017,2021, we have not recorded a valuation allowance on any deferred tax assets. In the event that sufficient taxable income of the same character does not result in future years, among other things, a valuation allowance for certain of our deferred tax assets may be required.

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Payments pursuant to the Tax Receivable Agreements (“TRAs”)
We have recorded a liability of $385.4$425.4 million as of December 31, 2017,2021, representing 85% of the estimated future tax benefits subject to the TRAs. The actual amount and timing of any payments under these agreements will vary depending upon a number of factors, including the timing of sales or exchanges by the holders of limited partnership units, the price of the Class A common stock at the time of such sales or exchanges, whether such sales or exchanges are taxable, the amount and timing of the taxable income APAM generates in the future and the tax rate then applicable and the portion of APAM’s payments under the TRAs constituting imputed interest or depreciable basis or amortizable basis. The expected payment obligation assumes no additional uncertain tax positions that would impact the TRAs.
New or Revised Accounting Standards
See Note 2, “Summary of Significant Accounting Policies — Recent accounting pronouncements” to the Consolidated Financial Statements included in Item 8 of Part II of this Form 10-K.
Item 7A. Qualitative and Quantitative Disclosures Regarding Market Risk
Market Risk
Our exposure to market risk is directly related to the role of our operating company as an investment adviser for the pooled vehicles and separate accounts it manages. Essentially all of our revenues are derived from investment management agreements with these vehicles and accounts. Under these agreements, the investment managementadvisory fees we receive are generally based on the value of our assets under management, and our fee rates.rates and, for the accounts on which we earn performance based fees, the investment performance of those accounts. Accordingly, if our assets under management decline as a result of market depreciation, our revenues and net income will also decline. In addition, such a decline could cause our clients to withdraw their funds in favor of investments believed to offer higher returns or lower risk, which would cause our revenues to decline further.
The value of our assets under management was $115.5$174.8 billion as of December 31, 2017.2021. A 10% increase or decrease in the value of our assets under management, if proportionately distributed over all our investment strategies, products and client relationships, would cause an annualized increase or decrease in our revenues of approximately $84.4$123.6 million at our current weighted average fee rate of 7371 basis points. Because of our declining rates of fee for larger relationships and differences in our rates of fee across investment strategies, a change in the composition of our assets under management, in particular an increase in the proportion of our total assets under management attributable to strategies, clients or relationships with lower effective rates of fees, could have a material negative impact on our overall weighted average rate of fee. The same 10% increase or decrease in the value of our total assets under management, if attributed entirely to a proportionate increase or decrease in the assets of each of the Artisan Funds and Artisan Global Funds, to which we provide a range of services in addition to those provided to separate accounts and therefore charge a higher rate of fee, would cause an annualized increase or decrease in our revenues of approximately $106.4$159.4 million at the Artisan Funds and Artisan Global Funds aggregate weighted average fee of 9291 basis points. If the same 10% increase or decrease in the value of our total assets under management was attributable entirely to a proportionate increase or decrease in the assets of each separate account we manage, it would cause an annualized increase or decrease in our revenues of approximately $62.4$89.6 million at the current weighted average fee rate across all of our separate accounts of 5451 basis points.

As is customary in the asset management industry, clients invest in particular strategies to gain exposure to certain asset classes, which exposes their investment to the benefits and risks of those asset classes. Because we believe that our clients invest in each of our strategies in order to gain exposure to the portfolio securities of the respective strategies and may implement their own risk management program or procedures, we have not adopted a corporate-level risk management policy regarding client assets, nor have we attempted to hedge at the corporate level or within individual strategies the market risks that would affect the value of our overall assets under management and related revenues. Some of these risks (e.g., sector risks and currency risks) are inherent in certain strategies, and clients may invest in particular strategies to gain exposure to particular risks. While negative returns in our investment strategies and net client cash outflows do not directly reduce the assets on our balance sheet (because the assets we manage are owned by our clients, not us), any reduction in the value of our assets under management would result in a reduction in our revenues.
We also are subject to market risk from a decline in the prices of marketable securities that we own. The total value of marketable securities we owned, including our direct equity investments in consolidated investment products, was $40.3$109.8 million as of December 31, 2017.2021. We invested in certain of Artisan sponsored private funds,Private Funds, Artisan Funds and Artisan Global Funds in amounts sufficient to cover certain organizational expenses and to ensure that the funds had sufficient assets at the commencement of their operations to build a viable investment portfolio. Assuming a 10% increase or decrease in the values of our total marketable securities, the fair value would increase or decrease by $4.0$11.0 million at December 31, 2017.2021. Management regularly monitors the value of these investments; however, given their nature and relative size, we have not adopted a specific risk management policy to manage the associated market risk. Due to the nature

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Exchange Rate Risk
A substantial portion of the accounts that we advise, or sub-advise, hold investments that are denominated in currencies other than the U.S. dollar. Movements in the rate of exchange between the U.S. dollar and the underlying foreign currency affect the values of assets held in accounts we manage, thereby affecting the amount of revenues we earn. The value of the assets we manage was $115.5$174.8 billion as of December 31, 2017. 2021. As of December 31, 2017,2021, approximately 54%51% of our assets under management across our investment strategies were invested in strategies that primarily invest in securities of non-U.S. companies and approximately 47%45% of our assets under management were invested in securities denominated in currencies other than the U.S. dollar. To the extent our assets under management are denominated in currencies other than the U.S. dollar, the value of those assets under management will decrease with an increase in the value of the U.S. dollar, or increase with a decrease in the value of the U.S. dollar. Each investment team monitors its own exposure to exchange rate risk and makes decisions on how to manage that risk in the portfolios managed by that team.
We have not adopted a corporate-level risk management policy to manage this exchange rate risk.risk in the assets we manage. Assuming that 47%45% of our assets under management is invested in securities denominated in currencies other than the U.S. dollar and excluding the impact of any hedging arrangements, a 10% increase or decrease in the value of the U.S. dollar would decrease or increase the fair value of our assets under management by $5.4$7.9 billion,, which would cause an annualized increase or decrease in revenues of approximately $39.5$55.6 million at our current weighted average fee rate of 7371 basis points.
We operate in several foreign countries of which the United Kingdom is the most prominent. We incur operating expenses and have foreign currency-denominated assets and liabilities associated with these operations, although our revenuesoperations. In addition, we have revenue arrangements that are predominately realizeddenominated in USD.non-U.S. currencies. We do not believe that foreign currency fluctuations materially affect our results of operations.
Interest Rate Risk
At certain times, weWe generally invest our available cash balances in money market mutual funds that invest primarily in U.S. Treasury or agency-backed money market instruments. These funds attempt to maintain a stable net asset value but interest rate changes or other market risks may affect the fair value of those funds’ investments and, if significant, could result in a loss of investment principal. Interest rate changes affect the income we earn from our excess cash balances. As of December 31, 2017, we invested $26.72021, $37.9 million of our available cash was invested in money market funds that invested solely in U.S. Treasuries. Given the current low yield on these funds, interest rate changes would not have a material impact on the income we earn from these investments. The remaining portion of our cash was held in demand deposit accounts.
Interest rate changes may affect the amount of our interest payments in connection with our revolving credit agreement, and thereby affect future earnings and cash flows. As of December 31, 2017,2021, there were no borrowings outstanding under the revolving credit agreement.
The strategies managed by our Credit Team, which had $2.6$8.2 billion of assets under management as of December 31, 2017,2021, invest in fixed income securities. The values of debt instruments held by the strategy may fall in response to increases in interest rates, which would reduce our revenues. We have considered the potential impact of a 100 basis point movement in market interest rates on the portfolios of the strategies managed by our Credit Team. Based on our analysis, we do not expect that such a change would have a material impact on our revenues or results of operations in the next twelve months.

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Item 8. Financial Information and Supplementary Data



Index to Financial Statements:Page
6461
6663
     Consolidated Statements of Operations for the years ended December 31, 2017, 20162021, 2020 and 20152019
6764
6865
6966
     Consolidated Statements of Cash Flows for the years ended December 31, 2017, 20162021, 2020 and 20152019
7168
7370


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Report of Independent Registered Public Accounting Firm




To the Board of Directors and
Stockholders of Artisan Partners Asset Management Inc.:


Opinions on the Financial Statements and Internal Control over Financial Reporting


We have audited the accompanying consolidated statements of financial condition of Artisan Partners Asset Management Inc.and its subsidiaries (the “Company”) as of December 31, 20172021 and 2016,2020, and the related consolidated statements of operations, of comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2017,2021, including the related notes (collectively referred to as the “consolidated financial statements”).We also have audited the Company's internal control over financial reporting as of December 31, 2017,2021, based on criteria established in Internal Control - Integrated Framework(2013)issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).


In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172021 and 2016,2020, and the results oftheir its operations andtheir its cash flows for each of the three years in the period ended December 31, 20172021 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, 2017,2021, based on criteria established in Internal Control - Integrated Framework(2013)issued by the COSO.


Basis for Opinions


The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the Report of Management on Internal Control over Financial Reporting appearing under Item 9A “Controls and Procedures”. 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.


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.


61
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Critical Audit Matters

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

Income Taxes – Deferred Tax Assets and Amounts Payable Under Tax Receivable Agreements

As described in Notes 2 and 11 to the consolidated financial statements, the Company has recorded a deferred tax assets (“DTA”) balance of $497.9 million at December 31, 2021 while the amount payable under the tax receivable agreements (“TRA”) was $425.4 million. DTAs are determined by management based upon the future tax consequences attributable to temporary differences between the financial statement carrying amounts and tax bases of assets. The TRAs generally provide for payment of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that the Company actually realizes (or is deemed to realize in certain circumstances) as a result of certain tax attributes or benefits. The cash savings are calculated by comparing the Company’s actual income tax liability to the amount it would have been required to pay had it not been able to utilize any of the tax benefits subject to the TRAs. The increase in tax basis, which results in a DTA, as well as the amount and timing of any payments under these agreements, will vary depending on a number of factors, which include the timing of sales or exchanges by the holders of limited partnership units, the price of the Class A common stock at the time of such sales or exchanges, whether such sales or exchanges are taxable, the amount and timing of the taxable income the Company generates in the future and the tax rate then applicable, and the portion of the Company’s payments under the TRAs constituting imputed interest or depreciable basis or amortizable basis.

The principal considerations for our determination that performing procedures relating to deferred tax assets and amounts payable under tax receivable agreements is a critical audit matter are (1) the significant audit effort necessary in performing procedures related to the aforementioned factors utilized in the estimate and the assessment of the application of the tax laws, and (2) the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to income taxes, including controls over the deferred tax assets and tax receivable agreements. These procedures also included, among others, testing management’s process for estimating the deferred tax assets and amounts payable under tax receivable agreements, including (1) testing the factors to the Company’s estimates, related to the timing of sales or exchanges by the holders of limited partnership units and the price of the Class A common stock at the time of such sales or exchanges, (2) assessing the reasonableness of the factors used in the Company’s estimates, related to the likelihood of the Company having sufficient future taxable income to utilize the deferred tax asset as well as the portion of the Company’s payments under the TRA constituting depreciable basis or amortizable basis, and (3) testing the impact of sales or exchanges of limited partnership units on the deferred tax asset and amounts payable under tax receivable agreements. Professionals with specialized skill and knowledge were used to assist in testing the estimates and assessing the appropriateness of the application of the tax laws related to evaluating whether the sales or exchanges of partnership units are taxable.

/s/ PricewaterhouseCoopers LLP

Milwaukee, WIChicago, Illinois
February 21, 201822, 2022




We have served as the Company’s auditor since 1995.





62
ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Financial Condition
(U.S. dollars in thousands, except per share amounts)
 At December 31,
 2017 2016
ASSETS
Cash and cash equivalents$137,286
 $156,777
Accounts receivable76,693
 59,739
Investment securities4,978
 6,297
Prepaid expenses8,969
 8,654
Property and equipment, net21,025
 20,018
Restricted cash629
 629
Deferred tax assets429,212
 678,518
Other4,395
 5,534
Assets of consolidated investment products   
Cash and cash equivalents21,881
 —
Accounts receivable and other16,768
 —
Investment assets, at fair value115,319
 —
Total assets$837,155
 $936,166
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY
Accounts payable, accrued expenses, and other$16,656
 $15,609
Accrued incentive compensation2,911
 12,642
Deferred lease obligations6,363
 3,972
Borrowings199,129
 199,477
Class B redemptions payable—
 506
Amounts payable under tax receivable agreements385,413
 586,246
Liabilities of consolidated investment products   
Accounts payable, accrued expenses, and other8,180
 —
Investment liabilities, at fair value47,857
 —
Total liabilities$666,509
 $818,452
Commitments and contingencies

 

Redeemable noncontrolling interests62,581
 —
Common stock   
Class A common stock ($0.01 par value per share, 500,000,000 shares authorized, 50,463,126 and 42,149,436 shares outstanding at December 31, 2017 and December 31, 2016, respectively)505
 421
Class B common stock ($0.01 par value per share, 200,000,000 shares authorized, 11,922,192 and 15,142,049 shares outstanding at December 31, 2017 and December 31, 2016, respectively)119
 151
Class C common stock ($0.01 par value per share, 400,000,000 shares authorized, 13,184,527 and 17,063,384 shares outstanding at December 31, 2017 and December 31, 2016, respectively)132
 171
Additional paid-in capital147,910
 119,221
Retained earnings (deficit)(37,870) 13,395
Accumulated other comprehensive income (loss)(873) (1,648)
Total Artisan Partners Asset Management Inc. stockholders’ equity109,923
 131,711
Noncontrolling interest - Artisan Partners Holdings(1,858) (13,997)
Total stockholders’ equity$108,065
 $117,714
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity$837,155
 $936,166

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Financial Condition
(U.S. dollars in thousands, except per share amounts)
At December 31,
20212020
ASSETS
Cash and cash equivalents$189,226 $154,987 
Accounts receivable115,850 99,888 
Investment securities47,878 3,656 
Prepaid expenses12,543 10,820 
Property and equipment, net35,313 35,874 
Operating lease assets88,642 79,304 
Restricted cash629 629 
Deferred tax assets497,902 482,061 
Other7,739 6,942 
Assets of consolidated investment products
Cash and cash equivalents10,916 43,834 
Accounts receivable and other6,408 3,587 
Investment assets, at fair value195,001 230,380 
Total assets$1,208,047 $1,151,962 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY
Accounts payable, accrued expenses, and other$28,992 $24,727 
Accrued incentive compensation7,521 12,924 
Operating lease liabilities100,303 92,671 
Borrowings199,444 199,284 
Amounts payable under tax receivable agreements425,427 412,468 
Liabilities of consolidated investment products
Accounts payable, accrued expenses, and other20,185 109,362 
Investment liabilities, at fair value19,179 15,731 
Total liabilities$801,051 $867,167 
Commitments and contingencies00
Redeemable noncontrolling interests111,035 93,753 
Common stock
Class A common stock ($0.01 par value per share, 500,000,000 shares authorized, 66,699,872 and 63,131,007 shares outstanding at December 31, 2021 and December 31, 2020, respectively)667 631 
Class B common stock ($0.01 par value per share, 200,000,000 shares authorized, 3,206,580 and 4,457,958 shares outstanding at December 31, 2021 and December 31, 2020, respectively)32 45 
Class C common stock ($0.01 par value per share, 400,000,000 shares authorized, 9,128,617 and 10,983,145 shares outstanding at December 31, 2021 and December 31, 2020, respectively)91 110 
Additional paid-in capital141,835 107,738 
Retained earnings134,889 72,944 
Accumulated other comprehensive income (loss)(1,310)(991)
Total Artisan Partners Asset Management Inc. stockholders’ equity276,204 180,477 
Noncontrolling interests - Artisan Partners Holdings19,757 10,565 
Total stockholders’ equity$295,961 $191,042 
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity$1,208,047 $1,151,962 

The accompanying notes are an integral part of the consolidated financial statements.



63

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Operations
(U.S. dollars in thousands, except per share amounts)
 For the Years Ended December 31,
Revenues202120202019
Management fees$1,213,924 $884,902 $794,338 
Performance fees13,312 14,665 4,614 
Total revenues$1,227,236 $899,567 $798,952 
Operating Expenses
Compensation and benefits563,054 435,818 400,456 
Distribution, servicing and marketing31,719 24,312 23,170 
Occupancy21,942 21,922 23,319 
Communication and technology42,861 38,138 39,499 
General and administrative27,169 21,053 29,053 
Total operating expenses686,745 541,243 515,497 
Total operating income540,491 358,324 283,455 
Non-operating income (expense)
Interest expense(10,803)(10,804)(11,054)
Net gain (loss) on the tax receivable agreements358 (4,674)(19,557)
Net investment gain (loss) of consolidated investment products19,748 26,147 10,084 
Other net investment gain (loss)1,756 305 6,338 
Total non-operating income (expense)11,059 10,974 (14,189)
Income before income taxes551,550 369,298 269,266 
Provision for income taxes107,026 60,795 27,809 
Net income before noncontrolling interests444,524 308,503 241,457 
Less: Net income attributable to noncontrolling interests - Artisan Partners Holdings96,879 81,079 80,055 
Less: Net income (loss) attributable to noncontrolling interests - consolidated investment products11,129 14,807 4,866 
Net income attributable to Artisan Partners Asset Management Inc.$336,516 $212,617 $156,536 
Basic earnings per share$5.10 $3.40 $2.65 
Diluted earnings per share$5.09 $3.40 $2.65 
Basic weighted average number of common shares outstanding59,866,790 55,633,529 51,127,929 
Diluted weighted average number of common shares outstanding59,881,039 55,637,922 51,127,929 
Dividends declared per Class A common share$4.23 $3.39 $3.39 

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Operations
(U.S. dollars in thousands, except per share amounts)
  For the Years Ended December 31,
 2017 2016 2015
Revenues     
Management fees$795,276
 $719,778
 $803,701
Performance fees348
 1,081
 1,768
Total revenues$795,624
 $720,859
 $805,469
Operating Expenses     
Compensation and benefits     
Salaries, incentive compensation and benefits390,202
 355,835
 372,167
Pre-offering related compensation - share-based awards12,678
 28,080
 42,071
Total compensation and benefits402,880
 383,915
 414,238
Distribution, servicing and marketing29,620
 32,516
 43,626
Occupancy14,490
 13,076
 12,504
Communication and technology34,073
 32,125
 25,487
General and administrative28,150
 24,993
 27,229
Total operating expenses509,213
 486,625
 523,084
Total operating income286,411
 234,234
 282,385
Non-operating income (loss)     
Interest expense(11,449) (11,653) (11,706)
Net investment gain (loss) of consolidated investment products4,241
 —
 —
Net investment income and other1,123
 1,253
 445
Net gain (loss) on the tax receivable agreements290,919
 650
 (12,247)
Total non-operating income (loss)284,834
 (9,750) (23,508)
Income before income taxes571,245
 224,484
 258,877
Provision for income taxes420,508
 51,483
 46,771
Net income before noncontrolling interests150,737
 173,001
 212,106
Less: Net income attributable to noncontrolling interests - Artisan Partners Holdings99,038
 99,971
 130,305
Less: Net income attributable to noncontrolling interests - consolidated investment products2,100
 —
 —
Net income attributable to Artisan Partners Asset Management Inc.$49,599
 $73,030
 $81,801
      
Basic and diluted earnings per share$0.75
 $1.57
 $1.86
Basic and diluted weighted average number of common shares outstanding44,647,318
 38,137,810
 35,448,550
Dividends declared per Class A common share$2.76
 $2.80
 $3.35

The accompanying notes are an integral part of the consolidated financial statements.



64

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Comprehensive Income
(U.S. dollars in thousands)
 For the Years Ended December 31,
202120202019
Net income before noncontrolling interests$444,524 $308,503 $241,457 
Other comprehensive income (loss)
Foreign currency translation gain (loss)(319)732 732 
Total other comprehensive income (loss)(319)732 732 
Comprehensive income444,205 309,235 242,189 
Comprehensive income attributable to noncontrolling interests - Artisan Partners Holdings96,879 81,376 80,317 
Comprehensive (loss) income attributable to noncontrolling interests - consolidated investment products11,129 14,807 4,866 
Comprehensive income attributable to Artisan Partners Asset Management Inc.$336,197 $213,052 $157,006 

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Comprehensive Income
(U.S. dollars in thousands)
  For the Years Ended December 31,
 2017 2016 2015
Net income before noncontrolling interests$150,737
 $173,001
 $212,106
Other comprehensive income (loss), net of tax     
Unrealized gain (loss) on investment securities:     
Unrealized gain (loss) on investment securities, net of tax of $131, ($20) and ($146), respectively542
 974
 (301)
Less: reclassification adjustment for net gains included in net income159
 1,073
 424
Net unrealized gain (loss) on investment securities383
 (99) (725)
Foreign currency translation gain (loss)1,277
 (2,130) (586)
Total other comprehensive income (loss)1,660
 (2,229) (1,311)
Comprehensive income152,397
 170,772
 210,795
Comprehensive income attributable to noncontrolling interests - Artisan Partners Holdings99,922
 99,015
 129,574
Comprehensive income attributable to noncontrolling interests - consolidated investment products2,100
 —
 —
Comprehensive income attributable to Artisan Partners Asset Management Inc.$50,375
 $71,757
 $81,221

The accompanying notes are an integral part of the consolidated financial statements.



65

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Changes in Stockholders’ Equity
(U.S. dollars in thousands)
Class A Common StockClass B Common StockClass C Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling interests - Artisan Partners HoldingsTotal stockholders’ equityRedeemable non-controlling interests
Balance at January 1, 2019$541 $86 $142 $97,553 $38,617 $(1,895)$5,443 $140,487 $34,349 
Net income— — — — 156,536 — 80,055 236,591 4,866 
Other comprehensive income - foreign currency translation— — — — — 521 211 732 — 
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax— — — (3,533)— (51)3,584 — — 
Amortization of equity-based compensation— — — 31,268 — — 11,827 43,095 — 
Deferred tax assets, net of amounts payable under tax receivable agreements— — — 2,716 — — — 2,716 — 
Issuance of Class A common stock, net of issuance costs— — — (22)— — — (22)— 
Forfeitures and employee/partner terminations— — — — — — — — — 
Issuance of restricted stock awards10 — — (10)— — — — — 
Employee net share settlement(1)— — (1,470)— — (607)(2,078)— 
Exchange of subsidiary equity14 (8)(6)— — — — — — 
Capital contributions, net— — — — — — — — 3,895 
Distributions— — — — — — (94,842)(94,842)— 
Dividends— — — (37,353)(150,698)— (127)(188,178)— 
Balance at December 31, 2019$564 $78 $136 $89,149 $44,455 $(1,425)$5,544 $138,501 $43,110 
Net income— — — — 212,617 — 81,079 293,696 14,807 
Other comprehensive income - foreign currency translation— — — — — 623 109 732 — 
Cumulative impact of changes in ownership of Artisan Partners Holdings LP— — — (2,544)— (189)2,733 — — 
Amortization of equity-based compensation— — — 28,801 — — 8,226 37,027 — 
Deferred tax assets, net of amounts payable under tax receivable agreements— — — 14,740 — — — 14,740 — 
Issuance of Class A common stock, net of issuance costs18 — — 62,696 — — — 62,714 — 
Forfeitures and employee/partner terminations— — — — — — — — — 
Issuance of restricted stock awards9 — — (9)— — — — — 
Employee net share settlement(1)— — (3,314)— — (1,215)(4,530)— 
Exchange of subsidiary equity41 (15)(26)— — — — — — 
Purchase of equity and subsidiary equity— (18)— (63,009)— — — (63,027)— 
Capital contributions, net— — — — — — — — 38,277 
Impact of deconsolidation of consolidated investment products— — — — — — — — (2,441)
Distributions— — — — — — (85,805)(85,805)— 
Dividends— — — (18,772)(184,128)— (106)(203,006)— 
Balance at December 31, 2020$631 $45 $110 $107,738 $72,944 $(991)$10,565 $191,042 $93,753 






ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Changes in Stockholders’ Equity
(U.S. dollars in thousands)
 Class A Common StockClass B Common StockClass C Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling interest - Artisan Partners HoldingsTotal stockholders’ equity
Balance at January 1, 2015$342
$215
$172
$93,524
$16,417
$206
$(3,377)$107,499
Net income—
—
—
—
81,801
—
130,305
212,106
Other comprehensive income - foreign currency translation—
—
—
—
—
(303)(283)(586)
Other comprehensive income - available for sale investments, net of tax—
—
—
—
—
(307)(383)(690)
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax—
—
—
(5,463)—
29
5,399
(35)
Amortization of equity-based compensation—
—
—
42,144
—
—
37,376
79,520
Deferred tax assets, net of amounts payable under tax receivable agreements—
—
—
26,075
—
—
—
26,075
Issuance of Class A common stock, net of issuance costs38
—
—
175,974
—
—
—
176,012
Forfeitures—
(4)3
1
—
—
—
—
Issuance of restricted stock awards6
—
—
(6)—
—
—
—
Employee net share settlement—
—
—
(358)—
—
(311)(669)
Exchange of subsidiary equity8
(4)(4)—
—
—
—
—
Purchase of equity and subsidiary equity—
(24)(14)(176,520)—
—
—
(176,558)
Distributions—
—
—
—
—
—
(182,175)(182,175)
Dividends—
—
—
(38,923)(84,980)—
(45)(123,948)
Balance at December 31, 2015$394
$183
$157
$116,448
$13,238
$(375)$(13,494)$116,551
Net income—
—
—
—
73,030
—
99,971
173,001
Other comprehensive income - foreign currency translation—
—
—
—
—
(1,192)(938)(2,130)
Other comprehensive income - available for sale investments, net of tax—
—
—
—
—
(30)(64)(94)
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax—
—
—
(3,332)—
(51)3,378
(5)
Amortization of equity-based compensation—
—
—
40,923
(408)—
31,481
71,996
Deferred tax assets, net of amounts payable under tax receivable agreements—
—
—
8,439
—
—
—
8,439
Issuance of Class A common stock, net of issuance costs—
—
—
(22)—
—
—
(22)
Forfeitures—
(17)15
2
—
—
—
—
Issuance of restricted stock awards11
—
—
(11)—
—
—
—
Employee net share settlement—
—
—
(422)—
—
(340)(762)
Exchange of subsidiary equity16
(15)(1)—
—
—
—
—
Distributions—
—
—
—
—
—
(133,876)(133,876)
Dividends—
—
—
(42,804)(72,465)—
(115)(115,384)
Balance at December 31, 2016$421
$151
$171
$119,221
$13,395
$(1,648)$(13,997)$117,714
         
The accompanying notes are an integral part of the consolidated financial statements.



ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Changes in Stockholders’ Equity, continued
(U.S. dollars in thousands)
 Class A Common StockClass B Common StockClass C Common StockAdditional Paid-in CapitalRetained Earnings (Deficit)Accumulated Other Comprehensive Income (Loss)Noncontrolling interest - Artisan Partners HoldingsTotal stockholders’ equityRedeemable non-controlling interest
Balance at January 1, 2017$421
$151
$171
$119,221
$13,395
$(1,648)$(13,997)$117,714
$—
Net income (loss)—
—
—
—
49,599
—
99,038
148,637
2,100
Other comprehensive income - foreign currency translation—
—
—
—
—
830
447
1,277
—
Other comprehensive income - available for sale investments, net of tax—
—
—
—
—
215
173
388
—
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax—
—
—
(5,994)—
(270)6,259
(5)—
Amortization of equity-based compensation—
—
—
40,177
—
—
22,715
62,892
—
Deferred tax assets, net of amounts payable under tax receivable agreements—
—
—
25,922
—
—
—
25,922
—
Issuance of Class A common stock, net of issuance costs56
—
—
161,980
—
—
—
162,036
—
Forfeitures—
(1)1
—
—
—
—
—
—
Issuance of restricted stock awards13
—
—
(13)—
—
—
—
—
Employee net share settlement—
—
—
(891)—
—
(586)(1,477)—
Exchange of subsidiary equity15
(10)(5)—
—
—
—
—
—
Purchase of equity and subsidiary equity—
(21)(35)(162,438)—
—
—
(162,494)—
Net contributions (redemptions) attributable to redeemable noncontrolling interest—
—
—
—
—
—
—
—
60,481
Distributions—
—
—
—
—
—
(115,804)(115,804)—
Dividends—
—
—
(30,054)(100,864)—
(103)(131,021)—
Balance at December 31, 2017$505
$119
$132
$147,910
$(37,870)$(873)$(1,858)$108,065
$62,581

The accompanying notes are an integral part of the consolidated financial statements.



66
Table of Contents
ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Changes in Stockholders’ Equity, continued
(U.S. dollars in thousands)
Class A Common StockClass B Common StockClass C Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling interests - Artisan Partners HoldingsTotal stockholders’ equityRedeemable non-controlling interests
Balance at January 1, 2021$631 $45 $110 $107,738 $72,944 $(991)$10,565 $191,042 $93,753 
Net income— — — — 336,516 — 96,879 433,395 11,129 
Other comprehensive income - foreign currency translation— — — — — (271)(48)(319)— 
Cumulative impact of changes in ownership of Artisan Partners Holdings LP— — — (563)— (48)611 — — 
Amortization of equity-based compensation— — — 32,750 — — 6,899 39,649 — 
Deferred tax assets, net of amounts payable under tax receivable agreements— — — 9,656 — — — 9,656 — 
Issuance of Class A common stock, net of issuance costs10 — — 46,630 — — — 46,640 — 
Forfeitures and employee/partner terminations(1)— — 1 — — — — — 
Issuance of restricted stock awards7 — — (7)— — — — — 
Employee net share settlement(2)— — (7,452)— — (1,791)(9,245)— 
Exchange of subsidiary equity22 (6)(16)— — — — — — 
Purchase of equity and subsidiary equity— (7)(3)(46,918)— — — (46,928)— 
Capital contributions, net— — — — — — — — 73,236 
Impact of deconsolidation of consolidated investment products— — — — — — — — (67,083)
Distributions— — — — — — (93,189)(93,189)— 
Dividends— — — — (274,571)— (169)(274,740)— 
Balance at December 31, 2021$667 $32 $91 $141,835 $134,889 $(1,310)$19,757 $295,961 $111,035 

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Cash Flows
(U.S. dollars in thousands)
  For the Years Ended December 31,
 2017 2016 2015
Cash flows from operating activities     
Net income before noncontrolling interests$150,737
 $173,001
 $212,106
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization5,297
 5,272
 4,519
Deferred income taxes395,416
 33,960
 16,521
Net (gain) loss on investment securities(519) (1,073) (424)
Net (gain) loss on the tax receivable agreements(290,919) (650) 12,247
Loss on disposal of property and equipment69
 108
 40
Amortization of debt issuance costs452
 448
 448
Share-based compensation62,892
 71,996
 79,520
Excess tax benefit on share-based awards—
 —
 (1,300)
Net investment (gain) loss of consolidated investment products(4,241) —
 —
Purchase of investments by consolidated investment products(252,047) —
 —
Proceeds from sale of investments by consolidated investment products190,353
 —
 —
Change in assets and liabilities resulting in an increase (decrease) in cash:     
Accounts receivable(16,955) 318
 9,303
Prepaid expenses and other assets1,629
 (4,898) (2,614)
Accounts payable and accrued expenses(9,202) (3,520) (316)
Class B liability awards(506) (5,096) (8,682)
Deferred lease obligations2,391
 494
 (129)
Net change in operating assets and liabilities of consolidated investment products(30,774) —
 —
Net cash provided by operating activities204,073
 270,360
 321,239
Cash flows from investing activities     
Acquisition of property and equipment(1,578) (2,933) (3,794)
Leasehold improvements(4,257) (4,343) (3,541)
Proceeds from sale of investment securities6,382
 8,961
 2,724
Purchase of investment securities(5,250) (4,014) (6,750)
Change in restricted cash—
 260
 36
Net cash used in investing activities(4,703) (2,069) (11,325)
      
The accompanying notes are an integral part of the consolidated financial statements.
 

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Cash Flows, continued
(U.S. dollars in thousands)
  For the Years Ended December 31,
 2017 2016 2015
Cash flows from financing activities     
Partnership distributions(115,804) (133,876) (182,175)
Dividends paid(131,021) (115,384) (123,948)
Payment of debt issuance costs(512) —
 —
Proceeds from issuance of notes payable60,000
 —
 —
Principal payments on notes payable(60,000) —
 —
Change in other liabilities—
 —
 (46)
Payment under the tax receivable agreements(30,234) (27,685) (20,040)
Net proceeds from issuance of common stock162,494
 —
 176,558
Payment of costs directly associated with the issuance of Class A common stock(294) —
 (427)
Purchase of equity and subsidiary equity(162,494) —
 (176,558)
Taxes paid related to employee net share settlement(1,477) (762) (669)
Net contributions (redemptions) attributable to redeemable noncontrolling interest60,481
 —
 —
Excess tax benefit on share-based awards—
 —
 1,300
Net cash used in financing activities(218,861) (277,707) (326,005)
Net increase (decrease) in cash and cash equivalents(19,491) (9,416) (16,091)
Cash and cash equivalents     
Beginning of period156,777
 166,193
 182,284
End of period$137,286
 $156,777
 $166,193
Supplementary information     
Noncash activity:     
Establishment of deferred tax assets$146,241
 $33,941
 $132,516
Establishment of amounts payable under tax receivable agreements120,320
 25,480
 107,740
Cash paid for:     
Interest on borrowings$11,019
 $11,108
 $11,019
Income tax25,296
 18,621
 29,316

The accompanying notes are an integral part of the consolidated financial statements.



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ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Cash Flows
(U.S. dollars in thousands)
 For the Years Ended December 31,
Cash flows from operating activities202120202019
Net income before noncontrolling interests$444,524 $308,503 $241,457 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization6,933 6,625 6,233 
Deferred income taxes38,382 27,990 7,356 
Asset impairment— 871 2,107 
Noncash lease expense(1,931)(1,499)1,533 
Net investment (gain) loss on nonconsolidated investment securities(2,315)(160)(5,101)
Net (gain) loss on the tax receivable agreements(358)4,674 19,557 
(Gain) loss on disposal of property and equipment4 5 275 
Amortization of debt issuance costs421 422 463 
Share-based compensation39,649 37,027 43,095 
Net investment (gain) loss of consolidated investment products(19,748)(26,147)(10,084)
Purchase of investments by consolidated investment products(252,399)(191,274)(123,366)
Proceeds from sale of investments by consolidated investment products196,620 137,561 75,468 
Change in assets and liabilities resulting in an increase (decrease) in cash:
Accounts receivable(15,962)(18,020)(14,178)
Prepaid expenses and other assets(3,164)(6,110)1,031 
Accounts payable and accrued expenses(1,301)1,622 6,881 
Net change in operating assets and liabilities of consolidated investment products(30,804)36,587 40,066 
Net cash provided by operating activities398,551 318,677 292,793 
Cash flows from investing activities
Acquisition of property and equipment(2,435)(2,049)(3,498)
Leasehold improvements(3,532)(1,050)(14,286)
Proceeds from sale of investment securities12,813 24,001 288 
Purchase of investment securities(33,820)(2,150)(10)
Net cash provided by (used in) investing activities(26,974)18,752 (17,506)
The accompanying notes are an integral part of the consolidated financial statements.


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ARTISAN PARTNERS ASSET MANAGEMENT INC.
Consolidated Statements of Cash Flows (continued)
(U.S. dollars in thousands)
 For the Years Ended December 31,
Cash flows from financing activities202120202019
Partnership distributions(93,189)(85,805)(94,842)
Dividends paid(274,740)(203,006)(188,178)
Payment of debt issuance costs— — (366)
Proceeds from issuance of notes payable— — 50,000 
Principal payments on notes payable— — (50,000)
Payment under the tax receivable agreements(31,250)(26,943)(24,998)
Net proceeds from issuance of common stock46,928 63,027 — 
Payment of costs directly associated with the issuance of Class A common stock(244)(227)— 
Purchase of equity and subsidiary equity(46,928)(63,027)— 
Taxes paid related to employee net share settlement(9,246)(4,530)(2,078)
Capital contributions to consolidated investment products, net73,236 38,277 3,895 
Net cash used in financing activities(335,433)(282,234)(306,567)
Net increase (decrease) in cash, cash equivalents and restricted cash36,144 55,195 (31,280)
Net cash impact of deconsolidation of consolidated investment products(34,823)— — 
Cash, cash equivalents and restricted cash
Beginning of period199,450 144,255 175,535 
End of period$200,771 $199,450 $144,255 
Cash, cash equivalents and restricted cash as of the end of the period
Cash and cash equivalents$189,226 $154,987 $134,621 
Restricted cash629 629 629 
Cash and cash equivalents of consolidated investment products10,916 43,834 9,005 
Cash, cash equivalents and restricted cash$200,771 $199,450 $144,255 
Supplementary information
Noncash activity:
Establishment of deferred tax assets$54,214 $77,756 $35,999 
Establishment of amounts payable under tax receivable agreements44,209 64,087 30,967 
Increase in investment securities due to deconsolidation of consolidated investment products20,900 1,469 946 
Operating lease assets obtained in exchange for operating leases20,830 3,425 4,162 
Cash paid for:
Interest on borrowings$10,210 $10,255 $10,649 
Income tax70,337 35,484 18,593 

The accompanying notes are an integral part of the consolidated financial statements.


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ARTISAN PARTNERS ASSET MANAGEMENT INC.
Notes to Consolidated Financial Statements
(U.S. currencies in thousands, except share and per share or per unit amounts and as otherwise indicated)
Note 1. Nature of Business and Organization
Nature of Business
Artisan Partners Asset Management Inc. (“APAM”), through its subsidiaries, is an investment management firm focused on providing high-value added, active investment strategies to sophisticated clients globally. APAM and its subsidiaries are hereafter referred to collectively as “Artisan” or the “Company”.
Artisan’s autonomous investment teams manage a broad range of U.S., non-U.S. and global investment strategies that are diversified by asset class, market cap and investment style. Strategies are offered through multiple investment vehicles to accommodate a broad range of client mandates. Artisan offers its investment management services primarily to institutions and through intermediaries that operate with institutional-like decision-making processes and have long-term investment horizons.
Organization
On March 12, 2013, APAM completed its initial public offering (the “IPO”). APAM was formed for the purpose of becoming the general partner of Artisan Partners Holdings LP (“Artisan Partners Holdings” or “Holdings”) in connection with the IPO. Holdings is a holding company for the investment management business conducted under the name “Artisan Partners”. The reorganization (“IPO Reorganization”) established the necessary corporate structure to complete the IPO while at the same time preserving the ability of the firm to conduct operations through Holdings and its subsidiaries.
As theits sole general partner, APAM controls the business and affairs of Holdings. As a result, APAM consolidates Holdings’ financial statements and records a noncontrolling interest for the equity interests in Holdings held by the limited partners of Holdings. At December 31, 2017,2021, APAM held approximately 67%84% of the equity ownership interest in Holdings.
Holdings, together with its wholly owned subsidiary, Artisan Investments GP LLC, (“AIGP”), controls a 100% interest in Artisan Partners Limited Partnership (“APLP”), a multi-product investment management firm that is the principal operating subsidiary of Artisan Partners Holdings. APLP is registered as an investment adviser with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. APLP provides investment advisory services to traditional separate accounts and pooled investment vehicles, including Artisan Partners Funds, Inc. (“Artisan Funds” or the “Funds”) and, Artisan Partners Global Funds plc (“Artisan Global Funds”), and Artisan sponsored private funds (“Artisan Private Funds”). Artisan Funds are a series of open-end, diversified mutual funds registered under the Investment Company Act of 1940, as amended. Artisan Global Funds is a family of Ireland-domiciled UCITS.
2017 Follow-On Offering
On February 28, 2017, APAM completedUCITS funds. Artisan Private Funds consist of a registered offering of 5,626,517 shares of Class A common stock (the “2017 Follow-On Offering”) and utilized all of the proceeds to purchase an aggregate of 5,626,517 common units of Artisan Partners Holdings at a price per unit of $28.88. The offering and subsequent purchase of units had the following impact on the consolidated financial statements:
APAM received 5,626,517 GP units of Holdings, which increased APAM’s ownership interest in Holdings. See Note 7, “Noncontrolling Interest - Holdings” for the financial statement impact of changes in ownership.
APAM’s purchase of common units of Holdings with the proceeds resulted in an increase to deferred tax assets and amounts payable under the tax receivable agreements. See Note 10, “Income Taxes and Related Payments”.

Holdings Unit Exchanges
Limited partners of Artisan Partners Holdings are entitled to exchange partnership units (along with a corresponding number of shares of Class B or C common stock of APAM) for shares of Class A common stock each quarter (the “Holdings Common Unit Exchanges”). The following partnership units were exchanged for APAM Class A common stock during the year ended December 31, 2017:Artisan-sponsored unregistered pooled investment vehicles.
 Total Common Units ExchangedClass A Common UnitsClass B Common UnitsClass E Common Units
Common units exchanged on March 6, 2017206,770
—
206,770
—
Common units exchanged on May 5, 2017474,127
50,000
404,127
20,000
Common units exchanged on August 8, 2017317,281
133,073
45,238
138,970
Common units exchanged on November 8, 2017293,049
—
211,812
81,237
Common units exchanged on December 29, 2017180,970
—
180,970
—
Total Units Exchanged1,472,197
183,073
1,048,917
240,207
The corresponding shares of APAM Class B and Class C common stock were immediately canceled upon exchange. The Holdings Common Unit Exchanges increased APAM’s equity ownership interest in Holdings, and resulted in an increase to deferred tax assets and amounts payable under the tax receivable agreements. See Note 10, “Income Taxes and Related Payments”.
Note 2. Summary of Significant Accounting Policies
Basis of presentation
The accompanying consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and related rules and regulations of the SEC. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates or assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates or assumptions.
Principles of consolidation
Artisan’s policy is to consolidate all subsidiaries or other entities in which it has a controlling financial interest. The consolidation guidance requires an analysis to determine if an entity should be evaluated for consolidation using the voting interest entity (“VOE”) model or the variable interest entity (“VIE”) model. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests. Under the VIE model, controlling financial interest is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. Artisan generally consolidates VIEs in which it meets the power criteria and holds an equity ownership interest of greater than 10%. The consolidated financial statements include the accounts of APAM and all subsidiaries or other entities in which APAM has a direct or indirect controlling financial interest. All material intercompany balances have been eliminated in consolidation.
Artisan serves as the investment adviser to Artisan Funds, Artisan Global Funds and other investment products, including Artisan sponsored private funds.Private Funds. Artisan Funds and Artisan Global Funds are corporate entities the business and affairs of which are managed by their respective boards of directors. The shareholders of the funds retain voting rights, including rights to elect and reelect members of their respective boards of directors. Each series of Artisan Funds is a VOE and is separately evaluated for consolidation under the VOE model. The shareholders of Artisan Global Funds lack simple majority liquidation rights, and as a result, each sub-fund of Artisan Global Funds is evaluated for consolidation under the VIE model. Artisan sponsored privately offered fundsPrivate Funds are also evaluated for consolidation under the VIE model because third-party equity holders of the funds generally lack the ability to remove Artisan as the general partner, or otherwise divest Artisan of its control of the funds.
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From time to time, the Company makes investments in Artisan Funds, Artisan Global Funds and privately offered investment strategies, which are made on the same terms as are available to other investors.Artisan Private Funds. If the investment results in a controlling financial interest, APAM consolidates the fund, and the underlying individual securities are accounted for as trading securities. Investmentsactivity of the entire fund is included in which the Company does not have a controlling financial interest are classified as available-for-sale investments, as described below under “-Investment Securities”.Artisan’s Consolidated Financial Statements. As of December 31, 2017,2021, Artisan hashad a controlling financial interest in two1 series of Artisan Funds, 3 sub-funds of Artisan Global Funds and two privately offered investment funds2 Artisan Private Funds and, as a result, these funds are included in Artisan’s Consolidated Financial Statements. Because thethese consolidated investment products meet the definition of investment companies under U.S. GAAP, Artisan has retained the specialized industry accounting principles for investment companies in its Consolidated Financial Statements.the consolidated financial statements. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details.

Operating segments
Artisan operates in one segment, the investment management industry. Artisan provides investment management services to separate accounts mutual funds and other pooled investment vehicles. Management assesses the financial performance of these vehicles on a combined basis.
Cash and cash equivalents
Artisan defines cash and cash equivalents as money market funds and other highly liquid investments with original maturities of 90 days or less. Cash and cash equivalents are stated at cost, which approximates fair value due to the short-term nature and liquidity of these financial instruments. For disclosure purposes, cash equivalents are categorized as Level 1 in the fair value hierarchy. Cash and cash equivalents are subject to credit risk and were primarily maintained in demand deposit accounts with financial institutions or treasury money market funds. Interest and dividends related to cash and cash equivalents is recorded in other investment gain (loss) in the Consolidated Statements of Operations.
Foreign currency translation
Assets and liabilities of foreign operations whose functional currency is not the U.S. dollar are translated at prevailing year-end exchange rates. Revenue and expenses of such foreign operations are translated at average exchange rates during the year. The net effect of the translation adjustment for foreign operations is included in other comprehensive income (loss) in the Consolidated Statements of Comprehensive Income (Loss).Income. The cumulative effect of translation adjustments is included in accumulated other comprehensive income (loss) and noncontrolling interestinterests - Artisan Partners Holdings in the Consolidated Statements of Financial Condition, based on period-end ownership levels.
Accounts receivable
Accounts receivable are carried at invoiced amounts and consist primarily of investment managementadvisory fees that have been earned, but not yet received from clients. Due to the short-term nature of the receivables, the carrying values of these assets approximate fair value. The accounts receivable balance does not include any allowance for doubtful accounts as Artisan believes all accounts receivable balances are fully collectible. There has not been any bad debt expense recorded for the years ended December 31, 2017, 20162021, 2020 and 2015.2019.
Investment securities
Investment securities consist of nonconsolidated investments in unconsolidated sponsored investment entitiesshares of Artisan Funds, Artisan Global Funds, and are classified as available-for-sale.Artisan Private Funds. Investments provide exposure to various risks, including price risk (the risk of a potential future decline in value of the investment) and foreign currency risk. Investments in registered mutual funds are carried at fair value at their respectivebased on net asset values as of the valuation date.
UnrealizedRealized and unrealized gains (losses) on available-for-salenonconsolidated investment securities are recorded as a componentin other net investment gain (loss) in the Consolidated Statements of other comprehensive income (loss).Operations. Dividend income from these investments is recognized when earned and is also included in netother investment income in the Consolidated Statements of Operations. Realized gains (losses) are computed on a specific identification basis and are recorded in net investment income in the Consolidated Statements of Operations.
Investment securities are evaluated for other-than-temporary impairment on a quarterly basis when the cost of an investment exceeds its fair value.gain (loss).
Property and equipment
Property and equipment are carried at cost, less accumulated depreciation. Depreciation is generally recognized on a straight-line basis over the estimated useful lives of the respective assets which range from threeor the remaining lease term, whichever is shorter. The estimated useful lives of property and equipment as of December 31, 2021 are as follows:
Property and Equipment TypeUseful Life
Computers and equipment
Three to Five years
Computer software
Three to Five years
Furniture and fixturesSeven years
Leasehold improvements
Two to 14 years
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Implementation costs incurred to seven years. Depreciation for leasehold improvements is recognizeddevelop or obtain internal-use software, including hosting arrangements, are capitalized and expensed on a straight-line basis over either the applicable life of the asset class, typically the lesser of the economicestimated useful life of the improvementrespective software or the remaining term of the lease. hosting arrangement.
Property and equipment is tested for impairment when there is an indication that the carrying amount of an asset may not be recoverable. When an asset is determined to not be recoverable, the impairment loss is measured based on the excess, if any, of the carrying value of the asset over its fair value.
Leases
Artisan has lease commitments for office space, parking structures, and equipment, which are all accounted for as operating leases. Artisan records expense for operating leases on a straight-line basis over the lease term. Any lease incentives received by Artisan are also amortized on a straight-line basis over the lease term.
Artisan assesses its contractual arrangements for the existence of a lease at inception. Operating leases with an initial term greater than 12 months are recorded as operating lease assets and operating lease liabilities in the Consolidated Statements of Financial Condition. Lease components (e.g. fixed rental payments) and non-lease components (e.g. fixed common-area maintenance costs) are generally accounted for as a single component.
Operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Operating lease assets are recognized at the lease commencement date based on the present value of lease payments over the lease term, adjusted for prepaid rent and the remaining balance of lease incentives received. Artisan's lease agreements generally do not provide an implicit interest rate, and therefore the present value calculation uses Artisan's estimated incremental borrowing rate. A market-based approach is used to estimate the incremental borrowing rate for each individual lease using observable market interest rates and Artisan specific inputs. The lease terms include periods covered by options to extend or exclude periods covered by options to terminate the lease when it is reasonably certain that Artisan will exercise that option.
Restricted cash
Restricted cash represents cash that is restricted as collateral on a standby letter of credit related to a lease obligation.
Cash and cash equivalents of consolidated investment products
Cash and cash equivalents of consolidated investment products consist of highly liquid investments, including money market funds. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details.

Investment assets and liabilities of consolidated investment products
Investment assets and liabilities of consolidated investment products primarily consist of equity andsecurities, fixed income securities.securities and options. The carrying value of the investment assets and liabilities is also their fair value. Changes in the fair value of the investments are recognized as gains and losses in earnings. Equity securities are generally valued based upon closing market prices of the security on the principal exchange on which the security is traded. Fixed income securities include corporate bonds, convertible bonds and bank loans. Fixed income securities are generally valued based on the judgment of pricing vendors. Derivative assets and liabilities are generally comprised of put and call options on securities or indices. Put and call options are valued at the mid price (average of the bid price and ask price) as provided by the pricing vendor at the close of trading on the contract’s principal exchange. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details.
Redeemable noncontrolling interests
Redeemable noncontrolling interests represent third-party investors’ ownership interest in consolidated investment products. Third-party investors in consolidated investment products generally have the right to withdraw their capital, subject to certain conditions. Noncontrolling interests of consolidated investment products that are currently redeemable or convertible for cash or other assets at the option of the holder are classified as temporary equity.
Revenue recognition
Artisan’s investment advisory revenue is derived from contracts with customers in the form of investment management fees and performance fees.
Investment Management Fees
Investment management fees are generally computed as a percentage of assets under management and are recognized as services are rendered. Feesrevenue at the end of each distinct service period. Management fees for providing investment advisory services are computed and billed in accordance with the provisions of the applicableunderlying investment management agreements, which is generally on a monthly or quarterly basis. Investment management fees are presented net of cash rebates and fees waivedexpense reimbursements pursuant to contractual expense limitations of the funds or voluntary waivers.certain funds.
The
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Performance Fees
A number of investment management agreements for a small number of accounts provide for performance-based fees or incentive allocations. Performance-basedallocations, collectively “performance fees”. Performance fees, and incentive allocations, if earned, are recognized upon completion of the contractually determined measurement period, which is generally quarterly or annually.
Performance-based Performance fees and incentive allocations generally are not subject to claw back as a result of performance declines subsequent to the most recent measurement date.
Pre-offering related compensation - share-based awardsRevenue Recognition
PriorArtisan accounts for asset management services as a single performance obligation that is satisfied over time, using a time-based measure of progress to recognize revenue. Customer consideration is variable due to the IPO Reorganization, Class B limited partnership interests were granted to certain employees. The Class B limited partnership interests provided both an interest in future profitsuncertainty of Holdings as well as an interest in the overall value of Holdings. Class B limited partnership interests generally vested ratably overassets under management during each distinct service period. At the end of each period, Artisan records revenue for the actual amount of investment management fees earned for that period because the uncertainty has been resolved.
Performance fees are subject to the uncertainty of market volatility, and as a five-yearresult, the entire amount of the variable consideration related to performance fees is constrained until the end of each measurement period. At the end of the measurement period, from the date of grant. Holders of Class B limited partnership interests were entitled to fully participate in profits from and after the date of grant. During 2013, the Class B awards were modified, which eliminated the cash redemption feature and resulted in equity classification since such modification. Compensation expenserevenue is recorded for unvested Class B awards onthe actual amount of performance fees earned during that period because the uncertainty has been resolved. For performance fees with annual measurement periods, revenue recognized in the current period could relate to performance obligations that were partially satisfied in prior periods.
Customer Rebates and Expense Reimbursements
Artisan has contractually agreed to reimburse for expenses incurred to the extent necessary to limit annualized ordinary operating expenses incurred by certain funds to not more than a straight-line basis overfixed percentage of the remaining vesting period. Asfunds’ average daily net assets. Artisan may also contractually agree to pay fee rebates to certain investors in Artisan Global Funds. Artisan accounts for all reimbursements and rebates as a reduction of July 1, 2017, all Class B awards were fully vested.the transaction price (and, hence, of revenue) because the billing adjustments and payments represent consideration payable to customers and Artisan does not receive any distinct goods or services from the customers in exchange.
Share-based compensation
Share-based compensation expense is recognized based on grant-datethe estimated grant date fair value on a straight-line basis over the requisite service period of the award. The initial requisite service period is generally five years for restricted share-based awards. The Company’s accounting policy is to record the impact of forfeitures when they occur. The awards generally vest ratably over a five-year period from the date of grant. Certain awards vest upon the satisfaction of both (1) pro-rata annual time vesting over five years and (2) qualifying retirement (as defined in the award agreements).
Distribution, feesservicing and marketing
Artisan Funds has authorized certain financial services companies, broker-dealers, banks or other intermediaries, and in some cases other organizations designated by an authorized intermediary, to accept purchase, exchange, and redemption orders for shares of Artisan Funds on the funds’ behalf. Many intermediaries charge a fee for accounting and shareholder services provided to fund shareholders on the funds’ behalf. Those services typically include recordkeeping, transaction processing for shareholders’ accounts, and other services.
The fee isFees are either based on the number of accounts to which the intermediary provides such services or a percentage of the average daily value of fund shares held in such accounts. The funds pay a portion of such fees directly to the intermediaries, which are intended to compensate the intermediary for its provision of services of the type that would be provided by the funds’ transfer agent or other service providers if the shares were registered directly on the books of the funds’ transfer agent. Artisan pays the balance of those fees which includes compensation to the intermediary for its distribution, servicing and marketing of Artisan Funds shares.
Artisan Global Funds also have distribution arrangements pursuant to which Artisan is required to pay a portion of its investment management fee for distribution, servicing and marketing of Artisan Global Funds shares.

Distribution, servicing and marketing fees paid by Artisan are presented as an operating expense asbecause Artisan is the principal in its role as the primary obligor related to distribution and marketingthese services. Distribution fees paid to intermediariesExpenses incurred were as follows:
  For the Years Ended December 31,
 2017 2016 2015
Total intermediary fees incurred related to Artisan Funds$78,398
 $88,942
 $120,402
Less: fees incurred by Artisan Funds52,701
 59,654
 80,390
Fees incurred by Artisan25,697
 29,288
 40,012
Global Funds distribution and other marketing expenses3,923
 3,228
 3,614
Total distribution, servicing and marketing$29,620
 $32,516
 $43,626
 For the Years Ended December 31,
202120202019
Expenses incurred with respect to Artisan Funds$28,640 $21,320 $20,096 
Expenses incurred with respect to Global Funds899 595 424 
Other marketing expenses2,180 2,397 2,650 
Total distribution, servicing and marketing$31,719 $24,312 $23,170 
Accrued fees to intermediaries were $3.6$5.3 million and $4.2 million as of December 31, 20172021 and 2016,2020, respectively, and are included in accounts payable, accrued expenses and other liabilities in the Consolidated Statements of Financial Condition.
Leases
Rent under non-cancelable operating leases with scheduled rent increases or decreases is accounted for on a straight-line basis over the lease term, beginning on the date
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Table of initial possession or the effective date of the lease agreement. Allowances and other lease incentives provided by Artisan’s landlords are amortized on a straight-line basis as a reduction of rent expense. The difference between straight-line rent expense and rent paid and the unamortized deferred lease costs and build-out allowances are recorded as deferred lease obligations in the Consolidated Statements of Financial Condition.Contents
Loss contingencies
Artisan considers the assessment of loss contingencies as a significant accounting policy because of the significant uncertainty relating to the outcome of any potential legal actions and other claims and the difficulty of predicting the likelihood and range of the potential liability involved, coupled with the material impact on Artisan’s results of operations that could result from legal actions or other claims and assessments. Artisan recognizes estimated costs to defend as incurred. Potential loss contingencies are reviewed at least quarterly and are adjusted to reflect the impact and status of settlements, rulings, advice of counsel and other information pertinent to a particular matter. Significant differences could exist between the actual cost required to investigate, litigate and/or settle a claim or the ultimate outcome of a suit and management’s estimate. These differences could have a material impact on Artisan’s results of operations, financial position, or cash flows. Recoveries of losses are recognized in the Consolidated Statements of Operations when receipt is deemed probable. No loss contingencies were recorded at December 31, 2017, 2016,2021, 2020 and 2015.2019. Currently, there are no legal or administrative proceedings that management believes may have a material effect on Artisan’s consolidated financial position, cash flows or results of operations.
Income taxes
Artisan accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the future tax consequences attributable to temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be realized or settled. Artisan recognizes a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Artisan accounts for uncertain income tax positions by recognizing the impact of a tax position in its consolidated financial statements when Artisan believes it is more likely than not that the tax position would not be sustained upon examination by the appropriate tax authorities based on the technical merits of the position.
Comprehensive income (loss)
Total comprehensive income (loss) includes net income and other comprehensive income. Other comprehensive income (loss) consists of the change in unrealized gains (losses) on available-for-sale investments and foreign currency translation, net of related tax effects. The tax effects of components of other comprehensive income (loss) is calculated on the portion of comprehensive income (loss) attributable to APAM.translation.
Partnership distributions
Artisan makes distributions to its partners for purposes of paying income taxes as required under the terms of Artisan Partners Holdings’ partnership agreement. Tax distributions are calculated utilizing the highest combined individual federal, state and local income tax rate among the various locations in which the partners, as a result of owning their interests in the partnership, are subject to tax, assuming maximum applicability of the phase-out of itemized deductions contained in the Internal Revenue Code.Code that apply to any specific tax year. Artisan also makes additional distributions under the terms of the partnership agreement. Distributions are recorded in the financial statements on the declaration date.


Earnings per Shareshare
Basic earnings per share is computed under the two-class method by dividing income available to Class A common stockholders by the weighted average number of Class A common shares outstanding during the period. Unvested restricted share-based awards are excluded from the number of Class A common shares outstanding for the basic earnings per share calculation because the shares have not yet been earned by employees. Income available to Class A common stockholders is computed by reducing net income attributable to APAM by earnings (both distributed and undistributed) allocated to participating securities, according to their respective rights to participate in those earnings. UnvestedExcept for certain performance share units, unvested share-based awards are participating securities because the awards include non-forfeitable dividend rights during the vesting period. Class B and Class C common shares do not share in profits of APAM and therefore are not reflected in the calculations.
Diluted earnings per share is computed by increasingunder the denominator bymore dilutive of the amounttreasury stock method or the two-class method. The weighted average number of additional Class A common shares that would have been outstanding if all potential Class A common shares had been issued. The numeratorduring the period is also increased forby the net income allocated to the potential Class A common shares. Potential dilutive Class A common shares consistassumed conversion of (1) the Class A common shares issuable upon exchange of Holdings limited partnership units for APAMnonparticipating unvested share-based awards into Class A common stock and (2) unvested restricted share-based awards.using the treasury stock method.
Recent accounting pronouncements
Accounting standards not yet adoptedNone.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes existing accounting standards for revenue recognition and creates a single framework. The guidance also changes the accounting for certain costs to obtain or fulfill a contract. The new guidance was effective on January 1, 2018 and allows for either a full retrospective or modified retrospective transition method. The Company will apply the modified retrospective transition method and the adoption will not have a material impact on the consolidated financial statements. The adoption will result in additional disclosures, including the disaggregation

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Table of revenue and information about performance obligations.Contents
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires all equity investments to be measured at fair value with changes in the fair value recognized through net income. ASU 2016-01 was effective on January 1, 2018 and results in a cumulative-effect adjustment to the Company’s Consolidated Statements of Financial Condition upon adoption. Upon adoption, the Company’s unrealized gains (losses) on available-for-sale investment securities will be recognized through net income, which will be a change from the current treatment of recognition in other comprehensive income (loss).
In February 2016, the FASB issued ASU 2016-02, Leases, which introduces a lessee model that brings most leases on the balance sheet. The new guidance will be effective on January 1, 2019, and will require a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. The standard is expected to result in a significant increase in total assets and total liabilities, but will not have a significant impact on the consolidated statement of operations.
Note 3. Investment Securities
The disclosures below include details of Artisan’s investments, excluding money market funds and consolidated investment products. Investments held by consolidated investment products are described in Note 6, “Variable Interest Entities and Consolidated Investment Products”.
 Cost Unrealized
Gains		 Unrealized
Losses		 Fair Value
December 31, 2017       
Mutual funds$4,361
 $617
 $—
 $4,978
December 31, 2016       
Mutual funds$6,194
 $103
 $—
 $6,297
As of December 31, 2021As of December 31, 2020
Investments in equity securities$37,179 $2,807 
Investments in equity securities accounted for under the equity method10,699 849 
Total investment securities$47,878 $3,656 
Artisan’s investments in mutual fundsequity securities consist of investments in shares of Artisan Funds, and Artisan Global Funds and are considered to be available-for-sale securities. As a result, unrealized gains (losses) are recorded to other comprehensive income (loss).
During the years ended December 31, 2017, 2016 and 2015, Artisan redeemed seed investments for proceeds of $6.4 million, $9.0 million and $2.7 million, respectively, resulting in realized gains of $0.1 million, $1.1 million and $0.4 million, respectively.
Private Funds. As of December 31, 2017 and 2016, none2021, $36.5 million of the Company’sArtisan’s investment securities were in an unrealized loss position. No impairment lossesrelated to funded long-term incentive compensation plans. Unrealized gains (losses) related to investment securities held at the end of the periods indicated below were recorded on these available-for-sale securities.as follows:

As of December 31, 2021As of December 31, 2020As of December 31, 2019
Unrealized gain (loss) on investment securities held at the end of the period$1,602 $716 $5,050 
Other net investment gain (loss) is presented within the non-operating income (expense) section of the Consolidated Statements of Operations. The components of other net investment gain (loss) are as follows:
 For the Years Ended December 31,
202120202019
Net investment gain (loss) on seed investments$(401)$160 $5,087 
Net investment gain (loss) on franchise capital investments$2,716 $— $— 
Other$(559)$145 $1,251 
Other net investment gain (loss)$1,756 $305 $6,338 
Note 4. Fair Value Measurements
The table below presents information about Artisan’s assets and liabilities that are measured at fair value and the valuation techniques Artisan utilized to determine such fair value. The financial instruments held by consolidated investment products are excluded from the table below and are presented in Note 6, “Variable Interest Entities and Consolidated Investment Products”.
In accordance with ASC 820, fair value is defined as the price that Artisan would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. The following three-tier fair value hierarchy prioritizes the inputs used in measuring fair value:
•Level 1 – Observable inputs such as quoted (unadjusted) market prices in active markets for identical securities.
•Level 2 – Other significant observable inputs (including but not limited to quoted prices for similar instruments, interest rates, prepayment speeds, credit risk, etc.).
•Level 3—3 – Significant unobservable inputs (including Artisan’s own assumptions in determining fair value).
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The following provides the hierarchy of inputs used to derive fair value of Artisan’s assets and liabilities that are financial instruments as of December 31, 20172021 and 2016:
 Assets and Liabilities at Fair Value
 Total Level 1 Level 2 Level 3
December 31, 2017       
Assets       
Cash equivalents$26,727
 $26,727
 $—
 $—
Mutual funds4,978
 4,978
 —
 —
        
December 31, 2016       
Assets       
Cash equivalents$64,170
 $64,170
 $—
 $—
Mutual funds6,297
 6,297
 —
 —
2020:
Assets and Liabilities at Fair Value
TotalNAV Practical Expedient (No Fair Value Level)Level 1Level 2Level 3
December 31, 2021
Assets
Money market funds$37,861 $— $37,861 $— $— 
Equity securities47,878 9,975 37,903 — — 
December 31, 2020
Assets
Money market funds$25,855 $— $25,855 $— $— 
Equity securities3,656 57 3,599 — — 
Fair values determined based on Level 1 inputs utilize quoted market prices for identical assets. Level 1 assets generally consist of money market funds, open-end mutual funds and UCITS funds. Equity securities without a fair value level consist of the Company’s investments in Artisan Private Funds, which are measured at the underlying fund’s net asset value (“NAV”), using the ASC 820 practical expedient. The NAV is provided by the fund and is derived from the fair values of the underlying investments as of the reporting date. Cash maintained in demand deposit accounts is excluded from the table above.
Artisan’s policy is to recognize transfers in and transfers out of the valuation levels as of the beginning of the reporting period. There were no transfers between Level 1, Level 2 or Level 3 securities during the years ended December 31, 2017and 2016.
Note 5. Borrowings
Artisan’s borrowings consist of the following as of December 31, 20172021 and 2016:
 Maturity Outstanding Balance as of 12/31/2017 Outstanding Balance as of 12/31/2016 Interest Rate Per Annum
Revolving credit agreementAugust 2022 —
 —
 NA
Senior notes       
Series AAugust 2017 —
 60,000
 4.98%
Series BAugust 2019 50,000
 50,000
 5.32%
Series CAugust 2022 90,000
 90,000
 5.82%
Series DAugust 2025 60,000
 —
 4.29%
Total borrowings  $200,000
 $200,000
  
2020:
MaturityOutstanding BalanceInterest Rate Per Annum
Revolving credit agreementAugust 2022— NA
Senior notes
Series CAugust 202290,000 5.82 %
Series DAugust 202560,000 4.29 %
Series EAugust 202750,000 4.53 %
Total borrowings$200,000 
The fair value of borrowings was approximately $209.3$203.2 million as of December 31, 2017.2021. Fair value was determined based on future cash flows, discounted to present value using current market interest rates. The inputs are categorized as Level 2 in the fair value hierarchy, as defined in Note 4, “Fair Value Measurements”.

Senior notes - On August 16, 2012,December 7, 2021, Holdings issued $200 million in senior unsecured notes and entered into a $100Note Purchase Agreement to issue $90.0 millionfive-year revolving credit agreement. of Series F senior notes in a private placement transaction on August 16, 2022, subject to the satisfaction of certain customary closing conditions. The Company will use the proceeds were usedfrom the Series F senior notes to repay the entire outstanding principal of an existing term loan.
On August 16, 2017, Artisan Partners Holdings issued $60$90.0 million of 4.29% Series D senior notes and used the proceeds to repay the $60 million of 4.98% Series AC senior notes that maturedmature on August 16, 2017. In addition, Holdings amended2022. The Series F senior notes will bear interest at a rate of 3.10% and extended its $100 million revolving credit facility for an additional five-year period. The Company incurred debt issuance costs related to the notes and revolving credit facility of $0.5 million and $1.2 million respectively, which are amortized as interest expense over the life of the instruments.will mature on August 16, 2032.
The fixed interest rate on each series of unsecured notes is subject to a one percentage point increase in the event Holdings receives a below-investment grade rating and any such increase will continue to apply until an investment grade rating is received.
Revolving credit agreement - Any loans outstanding under the revolving credit agreement bear interest at a rate per annum equal to, at the Company’s election, (i) LIBOR adjusted by a statutory reserve percentage plus an applicable margin ranging from 1.50% to 2.50%, depending on Holdings’ leverage ratio (as defined in the revolving credit agreement) or (ii) an alternate base rate equal to the highest of (a) Citibank, N.A.’s prime rate, (b) the federal funds effective rate plus 0.50%, and (c) the daily one-monthone-month LIBOR adjusted by a statutory reserve percentage plus 1.00%, plus, in each case, an applicable margin ranging from 0.50% to 1.50%, depending on Holdings’ leverage ratio. Unused commitments will bear interest at a rate that ranges from 0.175% to 0.500%, depending on Holdings’ leverage ratio.
As of and for the year-ended December 31, 2017,2021, there were no borrowings outstanding under the revolving credit agreement and the interest rate on the unused commitment was 0.175%.
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The unsecured notes and the revolving credit agreement contain certain restrictive financial covenants including a limitation on the leverage ratio of Holdings and a minimum interest coverage ratio. The Company was in compliance with all debt covenants as of December 31, 2021.
Interest expense incurred on the unsecured notes and revolving credit agreement was $10.9$10.3 million, for the year ended December 31, 2017,$10.3 million, and $11.1$10.5 million for the years ended December 31, 20162021, 2020 and 2015.2019, respectively.
As of December 31, 2017,2021, the aggregate maturities of debt obligations, based on their contractual terms, are as follows:
2022$90,000 
2023— 
2024— 
202560,000 
2026— 
Thereafter50,000 
Total$200,000 

2018$—
201950,000
2020—
2021—
202290,000
Thereafter60,000
Total$200,000
Note 6. Variable Interest Entities and Consolidated Investment Products
Artisan serves as the investment adviser for various types of investment products, consisting of both VIEs and VOEs. Artisan consolidates an investment product if it has a controlling financial interest in the entity. See Note 2, “Summary of Significant Accounting Policies”. Any such entities are collectively referred to herein as consolidated investment products or CIPs.
As of December 31, 2017,2021, Artisan is considered to be the primary beneficiaryhave a controlling financial interest in 1 series of two seriesArtisan Funds, 3 sub-funds of Artisan Global Funds and 2 Artisan Private Funds, with an aggregate direct equity investment in the funds related to two privately offeredconsolidated investment strategies for which it serves as investment manager. Artisan made aggregate seed investmentsproducts of $33.3 million in these CIPs during the year ended December 31, 2017.$61.9 million.
Artisan’s maximum exposure to loss in connection with the assets and liabilities of CIPs is limited to its direct equity investment, while the potential benefit is limited to the management fee and incentive allocationperformance fees received and the return on its equity investment. With the exception of Artisan’s direct equity investment, the assets of CIPs are not available to Artisan’s creditors, nor are they available to Artisan for general corporate purposes. In addition, third-party investors in the CIPs have no recourse to the general credit of the Company. As of December 31, 2017, Artisan’s aggregate direct equity investment in consolidated investment products was $35.4 million.
ArtisanManagement and performance fees earned management fees of $78 thousand and incentive allocation revenue of $50 thousand from CIPs during the year ended December 31, 2017, which are eliminated from revenue upon consolidation.

See Note 17, “Related Party Transactions” for additional information on management and performance fees earned from CIPs.
Third-party investors’ ownership interest in CIPs is presented as redeemable noncontrolling interestinterests in the Consolidated Statements of Financial Condition as third-party investors have the right to withdraw their capital, subject to certain conditions. Net income attributable to third-party investors is reported as net income attributable to noncontrolling interests - consolidated investment products in the Consolidated Statements of Operations.

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During the year ended December 31, 2021, the Company determined that it no longer had a controlling financial interest in one Artisan Private Fund upon the redemption of the Company's seed investment. Upon loss of control, the VIE was deconsolidated and the following assets, liabilities, and equity of the fund were derecognized from the Company’s Consolidated Statements of Financial Condition:
As of January 1, 2021
Assets of consolidated investment products
Cash and cash equivalents$34,823 
Accounts receivable and other1,769 
Investment assets, at fair value72,868 
Less: Amounts reclassified to investment securities(11,200)
Total assets$98,260
Liabilities of consolidated investment products
Accounts payable, accrued expenses and other$76,960 
Investment liabilities, at fair value566 
Total liabilities77,526
Redeemable noncontrolling interests20,734 
Total liabilities and equity$98,260
There was no net impact to the Consolidated Statements of Operations for the year ended December 31, 2021. Artisan generally does not recognize a gain or loss upon deconsolidation of investment products because the assets and liabilities of CIPs are carried at fair value.
As of December 31, 2021, Artisan held direct equity investments of $10.7 million in VIEs for which the Company does not hold a controlling financial interest. These direct equity investments consisted of seed investments in sub-funds of Artisan Global Funds and Artisan Private Funds, both of which are accounted for under the equity method of accounting because Artisan has significant influence over the funds.
Fair Value Measurements - Consolidated Investment Products
The carrying value of CIPs’ investments is also theirInvestments held by CIPs are reflected at fair value. Short and long positions on equity securities are valued based upon closing prices of the security on the exchange or market designated by the accounting agent or pricing vendor as the principal exchange. The closing price may represent last sale price, official closing price, a closing auction or other information depending on market convention. Short and long positions on fixed income instruments are valued at market value. Market values are generally evaluations based on the judgment of pricing vendors, which may consider, among other factors, the prices at which securities actually trade, broker-dealer quotations, pricing formulas, estimates of market values obtained from yield data relating to investments or securities with similar characteristics and/or discounted cash flow models that might be applicable. Derivative assets and liabilities are generally comprised of put and call options on securities and indices. Put and call options are valued at the mid price (average of bid price and ask price) as provided by the pricing vendor at the close of trading on the contract’s principal exchange.
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The following tables present the fair value hierarchy levels of assets and liabilities held by CIPs measured at fair value as of December 31, 2017. There2021 and 2020:
Assets and Liabilities at Fair Value
TotalLevel 1Level 2Level 3
December 31, 2021
Assets
Money market funds$7,908 $7,908 $— $— 
Equity securities - long position33,583 31,838 1,745 — 
Fixed income instruments - long position161,177 — 156,240 4,937 
Derivative assets241 — 241 — 
Liabilities
Equity securities - short position$3,427 $3,427 $— $— 
Fixed income instruments - short position15,570 — 15,570 — 
Derivative liabilities182 4 178 — 
December 31, 2020
Assets
Money market funds$7,822 $7,822 $— $— 
Equity securities - long position83,960 83,027 933 — 
Fixed income instruments - long position133,518 — 133,518 — 
Derivative assets12,902 12,902 — — 
Liabilities
Fixed income instruments - short position$14,978 $— $14,978 $— 
Derivative liabilities753 566 187 — 

CIP balances included in the Company's consolidated statements of financial condition were no CIP assets or liabilities as of December 31, 2016.follows:
As of December 31,
2021		As of December 31,
2020
Net CIP assets included in the table above$183,730 $222,471 
Net CIP assets not included in the table above(10,769)(69,763)
Total Net CIP assets172,961 152,708 
Less: redeemable noncontrolling interests111,035 93,753 
Artisan’s direct equity investment in CIPs$61,926 $58,955 

 Assets and Liabilities at Fair Value
 TotalLevel 1Level 2Level 3
December 31, 2017    
Assets    
Cash equivalents$21,881
$21,881
$—
$—
Equity securities - long position69,044
69,044
—
—
Fixed income instruments - long position45,758
—
45,758
—
Derivative assets343
303
40
—
     
Liabilities    
Equity securities - short position$29,199
$29,199
$—
$—
Fixed income instruments - short position18,513
—
18,513
—
Derivative liabilities145
45
100
—
     
     
CIP balances included in the Company’s consolidated statements of financial condition were as follows:2017   
Net CIP assets included in the table above$89,169
   
Net CIP assets not included in the table above8,762
   
Net CIP assets97,931
   
Less: redeemable noncontrolling interest62,581
   
Artisan’s direct equity investment in CIPs$35,350
   
Cash equivalents consisted of money market funds. Artisan’s policy is to recognize transfers in and transfers out of the valuation levels as of the beginning of the reporting period. There were no transfers between Level 1, Level 2 or Level 3 securities during the year ended December 31, 2017.

Note 7. Noncontrolling InterestInterests - Holdings
Net income attributable to noncontrolling interests - Artisan Partners Holdings in the Consolidated Statements of Operations represents the portion of earnings or loss attributable to the equity ownership interests in Holdings held by the limited partners of Holdings. As of December 31, 2017,2021, APAM held approximately 67%84% of the equity ownership interests in Holdings.
Limited partners of Artisan Partners Holdings are entitled to exchange partnership units (along with a corresponding number of shares of Class B or C common stock of APAM) for shares of Class A common stock from time to time (the "Holdings Common Unit Exchanges"). The Holdings Common Unit Exchanges increase APAM's equity ownership interest in Holdings and result in an increase to deferred tax assets and amounts payable under the tax receivable agreements. See Note 11, “Income Taxes and Related Payments”.
In order to maintain the one-to-one correspondence of the number of Holdings partnership units and APAM common shares, Holdings will issue one general partner (“GP”) unit to APAM for each share of Class A common stock issued by APAM.

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For the years ended December 31, 2017, 20162021, 2020 and 2015,2019, APAM’s equity ownership interest in Holdings has increased as a result of the following transactions:
Holdings GP UnitsLimited Partnership UnitsTotalAPAM Ownership %
Balance at January 1, 201954,071,188 22,871,684 76,942,872 70 %
Issuance of APAM Restricted Shares, Net (1)
876,271 — 876,271 — %
Holdings Common Unit Exchanges1,499,655 (1,499,655)— 3 %
Forfeitures from Employee Terminations (1)
(17,289)— (17,289)— %
Balance at December 31, 201956,429,825 21,372,029 77,801,854 73 %
Issuance of APAM Restricted Shares, Net (1)
789,114 — 789,114 — %
Delivery of Shares Underlying RSUs(1)
24,233 — 24,233 — %
2020 Follow-On Offering1,802,326 (1,802,326)— 2 %
Holdings Common Unit Exchanges4,128,600 (4,128,600)— 5 %
Forfeitures from Employee Terminations (1)
(43,091)— (43,091)— %
Balance at December 31, 202063,131,007 15,441,103 78,572,110 80 %
Issuance of APAM Restricted Shares, Net562,289 — 562,289 1 %
Delivery of Shares Underlying RSUs(1)
1,074 — 1,074 — %
2021 Follow-On Offering963,614 (963,614)— 1 %
Holdings Common Unit Exchanges2,142,292 (2,142,292)— 2 %
Forfeitures from Employee Terminations (1)
(100,404)— (100,404)— %
Balance at December 31, 202166,699,872 12,335,197 79,035,069 84 %
(1) The impact of the transaction on APAM’s ownership percentage was less than 1%.
 Holdings GP UnitsLimited Partnership UnitsTotalAPAM Ownership %
Balance at January 1, 201534,238,131
38,689,412
72,927,543
47 %
Issuance of APAM Restricted Shares, Net548,674
—
548,674
1 %
2015 Follow-On Offering3,831,550
(3,831,550)—
5 %
Holdings Common Unit Exchanges826,809
(826,809)—
1 %
Forfeitures from Employee Terminations (1)
(12,559)(54,730)(67,289)— %
Balance at December 31, 201539,432,605
33,976,323
73,408,928
54 %
Issuance of APAM Restricted Shares, Net (1)
1,090,042
—
1,090,042
— %
Holdings Common Unit Exchanges1,679,507
(1,679,507)—
3 %
Forfeitures from Employee Terminations (1)
(52,718)(91,383)(144,101)— %
Balance at December 31, 201642,149,436
32,205,433
74,354,869
57 %
Issuance of APAM Restricted Shares, Net1,218,604
—
1,218,604
1 %
2017 Follow-On Offering5,626,517
(5,626,517)—
7 %
Holdings Common Unit Exchanges1,472,197
(1,472,197)—
2 %
Forfeitures from Employee Terminations (1)
(3,628)—
(3,628)— %
Balance at December 31, 201750,463,126
25,106,719
75,569,845
67 %
(1) The impact of the transaction on APAM’s ownership percentage was less than 1%.
Since APAM continues to have a controlling interest in Holdings, changesChanges in ownership of Holdings are accounted for as equity transactions.transactions because APAM continues to have a controlling interest in Holdings. Additional paid-in capital and noncontrolling interestinterests - Artisan Partners Holdings in the Consolidated Statements of Financial Condition are adjusted to reallocate Holdings’ historical equity to reflect the change in APAM’s ownership of Holdings.
The reallocation of equity had the following impact on the Consolidated Statements of Financial Condition:
Statement of Financial Condition For the Years Ended December 31,
2017 2016
Additional paid-in capital$(5,994) $(3,332)
Noncontrolling interest - Artisan Partners Holdings6,259
 3,378
Accumulated other comprehensive income (loss)(265) (46)
Net impact to financial condition—
 —
Statements of Financial Condition For the Years Ended December 31,
20212020
Additional paid-in capital$(563)$(2,544)
Noncontrolling interests - Artisan Partners Holdings611 2,733 
Accumulated other comprehensive income (loss)(48)(189)
Net impact to financial condition$— $— 
In addition to the reallocation of historical equity, the change in ownership resulted in an increase to deferred tax assets and additional paid inpaid-in capital of $4.7$1.8 million and $4.3 million for the yearyears ended December 31, 20172021 and $3.9 million for the year ended December 31, 2016.2020, respectively.


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Note 8. Stockholders’ Equity
APAM - Stockholders’ Equity
As of December 31, 2017 and 2016, APAM had the following authorized and outstanding equity:equity as of December 31, 2021 and 2020, respectively:
Outstanding
Common sharesAuthorizedDecember 31, 2021December 31, 2020
Voting Rights (1)
Economic Rights
Class A, par value $0.01 per share500,000,000 66,699,872 63,131,007 1 vote per shareProportionate
Class B, par value $0.01 per share200,000,000 3,206,580 4,457,958 1 vote per shareNone
Class C, par value $0.01 per share400,000,000 9,128,617 10,983,145 1 vote per shareNone
(1) The Company’s employees to whom Artisan has granted equity have entered into a stockholders agreement with respect to all shares of APAM common stock they have acquired from the Company and any shares they may acquire from the Company in the future, pursuant to which they granted an irrevocable voting proxy to a Stockholders Committee. As of December 31, 2021, Artisan’s employees held 5,135,864 restricted shares of Class A common stock and all 3,206,580 outstanding shares of Class B common stock, all of which were subject to the agreement.
   Outstanding    
 Authorized December 31, 2017 December 31, 2016 
Voting Rights (1)
 Economic Rights
Common shares         
Class A, par value $0.01 per share500,000,000
 50,463,126
 42,149,436
 1 vote per share Proportionate
Class B, par value $0.01 per share200,000,000
 11,922,192
 15,142,049
 5 votes per share None
Class C, par value $0.01 per share400,000,000
 13,184,527
 17,063,384
 1 vote per share None
(1) The Company’s employees to whom Artisan has granted equity have entered into a stockholders agreement with respect to all shares of APAM common stock they have acquired from the Company and any shares they may acquire from the Company in the future, pursuant to which they granted an irrevocable voting proxy to a Stockholders Committee. As of December 31, 2017, Artisan’s employees held 3,912,111 restricted shares of Class A common stock subject to the agreement and all 11,922,192 outstanding shares of Class B common stock.
APAM is dependent on cash generated by Holdings to fund any dividends. Generally, Holdings will make distributions to all of its partners, including APAM, based on the proportionate share of ownership each holdshas in Holdings. APAM will fund dividends to its stockholders from its proportionate share of those distributions after provision for its taxes and other obligations. APAM declared and paid the following dividends per share during the years ended December 31, 2017, 20162021, 2020 and 2015.2019:
 For the Years Ended December 31,
Type of DividendClass of Stock202120202019
QuarterlyCommon Class A$3.92 $2.79 $2.36 
Special AnnualCommon Class A$0.31 $0.60 $1.03 


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Type of Dividend Class of Stock  For the Years Ended December 31,
    2017 2016 2015
Quarterly Common Class A $2.40
 $2.40
 $2.40
Special Annual Common Class A $0.36
 $0.40
 $0.95

The following table summarizes APAM’s stock transactions for the years ended December 31, 2017, 20162021, 2020 and 2015:
 Total Stock Outstanding
Class A Common Stock(1)
Class B Common StockClass C Common Stock
Balance at January 1, 201572,927,543
34,238,131
21,463,033
17,226,379
2015 Follow-On Offering—
3,831,550
(2,415,253)(1,416,297)
Holdings Common Unit Exchanges—
826,809
(355,305)(471,504)
Restricted Share Award Grants562,950
562,950
—
—
Restricted Share Award Net Share Settlement(14,276)(14,276)—
—
Employee/Partner Terminations(67,289)(12,559)(365,253)310,523
Balance at December 31, 201573,408,928
39,432,605
18,327,222
15,649,101
Holdings Common Unit Exchanges—
1,679,507
(1,549,070)(130,437)
Restricted Share Award Grants1,118,267
1,118,267
—
—
Restricted Share Award Net Share Settlement(28,225)(28,225)—
—
Employee/Partner Terminations(144,101)(52,718)(1,636,103)1,544,720
Balance at December 31, 201674,354,869
42,149,436
15,142,049
17,063,384
2017 Follow-On Offering—
5,626,517
(2,104,517)(3,522,000)
Holdings Common Unit Exchanges—
1,472,197
(1,048,917)(423,280)
Restricted Share Award Grants1,267,250
1,267,250
—
—
Restricted Share Award Net Share Settlement(48,646)(48,646)—
—
Employee/Partner Terminations(3,628)(3,628)(66,423)66,423
Balance at December 31, 201775,569,845
50,463,126
11,922,192
13,184,527
(1) There were 218,089, 178,401, and 122,990 restricted stock units outstanding at December 31, 2017, 2016, and 2015, respectively. Restricted stock units are not reflected in the table because they are not considered outstanding or issued stock.
2019:
Total Stock Outstanding
Class A Common Stock(1)
Class B Common StockClass C Common Stock
Balance at January 1, 201976,942,872 54,071,188 8,645,249 14,226,435 
Holdings Common Unit Exchanges— 1,499,655 (841,885)(657,770)
Restricted Share Award Grants959,000 959,000 — — 
Restricted Share Award Net Share Settlement(82,729)(82,729)— — 
Employee/Partner Terminations(17,289)(17,289)— — 
Balance at December 31, 201977,801,854 56,429,825 7,803,364 13,568,665 
2020 Follow-On Offering— 1,802,326 (1,777,326)(25,000)
Holdings Common Unit Exchanges— 4,128,600 (1,535,275)(2,593,325)
Delivery of Shares Underlying RSUs24,233 24,233 — — 
Restricted Share Award Grants916,085 916,085 — — 
Restricted Share Award Net Share Settlement(126,971)(126,971)— — 
Employee/Partner Terminations(43,091)(43,091)(32,805)32,805 
Balance at December 31, 202078,572,110 63,131,007 4,457,958 10,983,145 
2021 Follow-On Offering— 963,614 (638,614)(325,000)
Holdings Common Unit Exchanges— 2,142,292 (612,764)(1,529,528)
Delivery of Shares Underlying RSUs1,074 1,074 — — 
Restricted Share Award Grants740,249 740,249 — — 
Restricted Share Award Net Share Settlement(177,960)(177,960)— — 
Employee/Partner Terminations(100,404)(100,404)— — 
Balance at December 31, 202179,035,069 66,699,872 3,206,580 9,128,617 
(1) There were 327,713, 304,570, and 297,891 restricted stock units outstanding at December 31, 2021, 2020, and 2019, respectively. In addition, there were 135,230 and 60,000 performance share units outstanding at December 31, 2021 and 2020, respectively. Based on the current status of the market and performance conditions, the 135,230 unvested performance share units would ultimately result in the issuance of 135,233 shares of Class A common stock if all other vesting conditions were met. Restricted stock units and performance share units are not reflected in the table because they are not considered outstanding or issued stock.
Each Class A, Class B, Class D and Class E common unit of Holdings (together with the corresponding share of Class B or Class C common stock) is exchangeable for one share of Class A common stock. The corresponding shares of Class B and Class C common stock are immediately canceled upon any such exchange.
Upon termination of employment with Artisan, an employee-partner’s Class B common units are exchanged for Class E common units and the corresponding shares of Class B common stock are canceled. APAM issues the former employee-partner a number of shares of Class C common stock equal to the former employee-partner’s number of Class E common units. Class E common units are exchangeable for Class A common stock subject to the same restrictions and limitations on exchange applicable to the other common units of Holdings.
Artisan Partners Holdings - Partners’ Equity
Holdings makes distributions of its net income to the holders of its partnership units for income taxes as required under the terms of the partnership agreement and also makes additional distributions under the terms of the partnership agreement. The distributions are recorded in the financial statements on the declaration date, or on the payment date in lieu of a declaration date. Holdings’ partnership distributions for the years ended December 31, 2017, 20162021, 2020 and 20152019 were as follows:
  For the Years Ended December 31,
 2017 2016 2015
Holdings Partnership Distributions to Limited Partners$115,804 $133,876 $182,175
Holdings Partnership Distributions to APAM$197,070 $160,532 $186,711
Total Holdings Partnership Distributions$312,874 $294,408 $368,886
 For the Years Ended December 31,
202120202019
Holdings Partnership Distributions to Limited Partners$93,189 $85,805 $94,842 
Holdings Partnership Distributions to APAM400,191 270,044 226,245 
Total Holdings Partnership Distributions$493,380 $355,849 $321,087 
The distributions are recorded as a reduction to consolidated stockholders’ equity, with the exception of distributions made to APAM, which are eliminated upon consolidation.

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Note 9. Revenue From Contracts with Customers
The following table presents a disaggregation of investment advisory revenue by type and vehicle for the years ended December 31, 2021, 2020 and 2019:
 For the Years Ended December 31,
202120202019
Management fees
Artisan Funds$712,952 $503,642 $452,504 
Artisan Global Funds48,498 33,531 32,332 
Separate accounts and other(1)
452,474 347,729 309,502 
Performance fees
Separate accounts and other(1)
13,312 14,650 4,614 
Artisan Global Funds— 15 — 
Total revenues(2)
$1,227,236 $899,567 $798,952 
(1) Separate accounts and other revenue consists of management fees and performance fees earned from vehicles other than Artisan Funds or Artisan Global Funds, and therefore includes revenue earned from traditional separate accounts, Artisan-branded collective investment trusts and Artisan Private Funds.
(2) All management fees and performance fees from consolidated investment products were eliminated upon consolidation and therefore are omitted from this table. See Note 17, “Related Party Transactions”.
The following table presents the balances of receivables related to contracts with customers:
CustomerDecember 31,
2021		December 31,
2020
Artisan Funds$5,874 $5,227 
Artisan Global Funds5,433 4,473 
Separate accounts and other98,568 87,971 
Total receivables from contracts with customers$109,875 $97,671 
Non-customer receivables5,975 2,217 
Accounts receivable$115,850 $99,888 
Artisan Funds and Artisan Global Funds are billed on the last day of each month. Artisan Funds and Artisan Global Funds make payments on the same day the invoice is received for the majority of the invoiced amount. The remainder of the invoice is generally paid in the month following receipt of the invoice. Separate accounts and other clients are generally billed on a monthly or quarterly basis, with payments due within 30 days of billing.
Artisan had no other contract assets or liabilities from contracts with customers as of December 31, 2021 and 2020.
Note 9.10. Compensation and Benefits

Total compensation and benefits consists of the following:
 For the Years Ended December 31,
202120202019
Salaries, incentive compensation and benefits (1)
$516,931 $399,325 $358,339 
Long-term cash incentive compensation expense6,887 — — 
Restricted share-based award compensation expense39,236 36,493 42,117 
Long-term incentive compensation expense46,123 36,493 42,117 
Total compensation and benefits$563,054 $435,818 $400,456 
(1) Excluding long-term incentive compensation expense.

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  For the Years Ended December 31,
 2017 2016 2015
Salaries, incentive compensation and benefits (1)
$341,060
 $312,676
 $335,700
Restricted share-based award compensation expense49,142
 43,159
 36,467
Total salaries, incentive compensation and benefits390,202
 355,835
 372,167
Pre-offering related compensation - share-based awards12,678
 28,080
 42,071
Total compensation and benefits$402,880
 $383,915
 $414,238
(1) Excluding restricted share-based award compensation expense
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Incentive compensation
Cash incentive compensation paid to members of Artisan’s investment teams and members of its distribution teams is generally based on formulas that are tied directly to revenues. These payments are madeThe majority of this incentive compensation is earned on a quarterly basis and paid in the quarter following the quarter in which the incentive was earned with the exception of fourth quarter payments which are paid in the fourth quarter of the year. Cash incentive compensation paid to most other employees is discretionary and subjectively determined based on individual performance and Artisan’s overall results during the applicable year and has historically beenis generally paid in the fourth quarter of the year. The cashon an annual basis.
Long-term incentive compensation earned by executive officers for the years ended December 31, 2017awards consist of both APAM restricted share-based awards and 2016 were paid during 2017.long-term cash awards, which are referred to as franchise capital awards. These awards are described in more detail below.
Restricted share-based awards
Artisan has registered 14,000,000 shares of Class A common stock for issuance under the 2013 Omnibus Incentive Compensation Plan (the “Plan”). Pursuant to the Plan, APAM has granted a combination of restricted stock awards, and restricted stock units, and performance share units (collectively referred to as “restricted share-based awards” or "awards") of Class A common stock to employees. The
Standard Restricted Shares. Standard restricted share-based awardsshares are generally vest onsubject to a pro rata basis over five years. Certain share-based awards will vest uponfive-year service vesting condition.
Career Shares. Career shares are generally subject to both (i) a combination of both (1) pro-rata annual timepro rata five-year service vesting condition and (2)(ii) a qualifying retirement (as defined in the award agreements)agreement) condition.
Franchise Shares. Unvested awardsLike career shares, franchise shares are generally subject to both (i) a pro rata five-year service vesting condition and (ii) a qualifying retirement condition. In addition, franchise shares, which are only granted to investment team members, are subject to forfeiture upon terminationa Franchise Protection Clause, which provides that the number of employment. Grantees receivingshares that ultimately vest depends on whether certain conditions relating to client cash flows are met. If such conditions are not met, compensation cost will be reversed for any shares that do not vest.
Performance Share Units (PSUs). PSUs are generally subject to (i) a three-year service vesting condition, (ii) certain performance conditions related to the awards are entitledCompany's adjusted operating margin and total shareholder return compared to dividends on unvesteda peer group during a three-year performance period, and vested shares and units. 7,998,718(iii) for one-half of the PSUs eligible to vest at the end of the performance period, a qualifying retirement condition. The number of shares of Class A common stock were reservedthat are ultimately issued in connection with each PSU award will depend upon the outcome of the performance, market and available for issuancequalified retirement conditions. For the portion of a PSU award with a "performance condition" under ASC 718, expense is recognized over the Plan as of December 31, 2017service period if it is probable that the performance condition will be achieved.
Compensation expense related to the restricted share-based awards is recognized based on the estimated grant date fair value on a straight-line basis over the requisite service period of the award. The initial requisite service period is generally five years for restricted stock awards and restricted stock units, and three years for performance share units. The fair value of each award is equal to the market price of the Company's common stock on the grant date, except for performance share units with a "market condition" performance metric under ASC 718, which have a grant-date fair value based on a Monte Carlo valuation model.
Unvested restricted share-based awards are subject to forfeiture. Grantees are generally entitled to dividends or dividend equivalents on unvested and vested awards. 3,881,524 shares of Class A common stock were reserved and available for issuance under the Plan as of December 31, 2021. During the year ended December 31, 2021, Artisan granted 740,249 restricted stock awards, 1,306 restricted stock units, and 75,230 performance share units of Class A common stock to employees of the Company. Total compensation expense associated with the 2021 grant is expected to be approximately $44.1 million.
The Company’s accounting policy is to record the impact
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The following table summarizestables summarize the restricted share-based award activity for the years ended December 31, 2017, 20162021, 2020 and 2015:
2019:
Weighted-Average Grant Date Fair ValueRestricted Stock Awards and Restricted Stock Units
Unvested at January 1, 2019$38.04 4,678,457 
Granted22.92 963,000 
Forfeited34.61 (17,289)
Vested39.21 (618,746)
Unvested at January 1, 2020$35.00 5,005,422 
Granted33.80 919,455 
Forfeited30.92 (43,091)
Vested32.59 (588,144)
Unvested at January 1, 2021$35.09 5,293,642 
Granted52.93 741,555 
Forfeited29.99 (101,001)
Vested31.51 (688,802)
Unvested at December 31, 2021$38.18 5,245,394 
Weighted-Average Grant Date Fair ValuePerformance Share Units
Weighted-Average Grant Date Fair Value Number of Awards
Unvested at January 1, 2015$52.59
 2,700,634
Unvested at January 1, 2020Unvested at January 1, 2020$— — 
Granted48.17
 642,950
Granted52.45 60,000 
Forfeited52.71
 (12,559)Forfeited— — 
Vested52.69
 (469,041)Vested— — 
Unvested at January 1, 2016$51.58
 2,861,984
Unvested at January 1, 2021Unvested at January 1, 2021$52.45 60,000 
Granted30.42
 1,138,892
Granted68.58 75,230 
Forfeited50.44
 (52,718)Forfeited— — 
Vested51.76
 (553,248)Vested— — 
Unvested at January 1, 2017$44.47
 3,394,910
Granted28.30
 1,268,500
Forfeited39.56
 (3,628)
Vested48.06
 (645,796)
Unvested at December 31, 2017$38.79
 4,013,986
Unvested at December 31, 2021Unvested at December 31, 2021$61.42 135,230 
Compensation expense recognized related toBased on the restricted share-based awards was $49.1 million, $43.2 millioncurrent status of the market and $36.5 million forperformance conditions, the years ended December 31, 2017, 2016, and 2015, respectively. 135,230 unvested performance share units would ultimately result in the issuance of 135,233 shares of Class A common stock if all other vesting conditions were met.
The aggregate vesting date fair value of awards that vested during the years ended December 31, 2017, 20162021, 2020 and 20152019 was approximately $19.8$35.8 million, $15.321.0 million, and $22.0$15.9 million, respectively. The unrecognized compensation expense for the unvested restricted share-basedstock awards and restricted stock units as of December 31, 20172021 was $97.7$76.5 million with a weighted average recognition period of 2.93.3 years remaining. The unrecognized compensation expense for the unvested performance share units as of December 31, 2021 was $5.2 million with a weighted average recognition period of 2.8 years remaining.
During the years ended December 31, 20172021 and 2016,2020, the Company withheld a total of 48,646177,960 and 28,225126,971 restricted shares, respectively, and paid $9.2 million and $4.5 million, respectively, as a result of net share settlements to satisfy employee tax withholding obligations. The Company paid $1.5 million and $0.8 million in employee tax withholding obligations related to these settlements during the years ended December 31, 2017 and 2016, respectively. These net share settlements had the effect of shares repurchased and retired by the Company, as they reduced the number of shares outstanding.


Pre-offering related compensation - share-based
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Long-term cash awards (franchise capital awards)
Holdings historically granted Class B share-based awards to certain employees. These awards vested over a period of five years. Prior to the IPO, all vested Class B awards were subject to mandatory redemption on termination of employment for any reason and were reflected as liabilities measured at fair value; unvested Class B awards were forfeited on termination of employment.
The vested Class B liability awards of a terminated employee were historically redeemed in cash in annual installments, generally over the five years following termination of employment. The remaining $0.5 million of redemption payments for Class B awards of partners whose services to Holdings terminated prior to the IPO was paid duringDuring the year ended December 31, 2017.
As a part2021, Artisan granted $35.0 million of franchise capital awards to investment team members in lieu of certain additional restricted share-based awards. The franchise capital awards are subject to the same long-term vesting and forfeiture provisions as restricted share-based awards. Prior to vesting, franchise capital awards are generally allocated to one or more of the IPO Reorganization,investment strategies managed by the Class B grant agreements were amended to eliminateaward recipient's investment team. During the cash redemption feature. The amendment was considered a modification under ASC 718 andvesting period, the Class Bvalue of the awards have been classified as equitywill increase or decrease based on the investment returns of the strategies in which the awards since such modification.are invested. Compensation expense, was recorded for unvested Class B awardsincluding the appreciation or depreciation related to investment returns, is recognized on a straight-line basis over the remainingrequired service period, which is generally five years. Because the awards will be paid out in cash upon vesting, the fair value of unvested awards is recorded as a liability based on the percentage of the service requirement that has been completed.
The company hedges its economic exposure to the change in value of these awards due to market movements by investing the cash reserved for the awards in the underlying investments. The franchise capital award liability and the underlying investment holdings are marked to market each quarter. The change in value of the award liability is recognized as a compensation expense on a straight-line basis over the required service period. The change in value of the underlying investment holdings is recognized in non-operating income (expense) in the period of change. While there is a timing difference between the recognition of the compensation expense and the offsetting investment gain or loss, the compensation expense and investment income will net to zero at the end of the multi-year vesting period untilfor all awards that ultimately vest. The change in value of the awards became fully vestedinvestments had the following impact on July 1, 2017.the Consolidated Statements of Operations:

 For the Years Ended December 31,
Statement of Operations SectionStatement of Operations Line Item202120202019
Operating expensesCompensation and benefits$520 $— $— 
Non-operating income (expense)Other net investment gain (loss)2,717 — — 
The following table summarizes the activity related to unvested Class B awards for the years ended December 31, 2017, 2016 and 2015:
 Weighted-Average Grant Date Fair Value Number of Class B Awards
Unvested Class B awards at January 1, 2015$30.00
 4,045,016
Granted—
 —
Forfeited30.00
 (54,730)
Vested30.00
 (1,641,952)
Unvested Class B awards at January 1, 2016$30.00
 2,348,334
Granted—
 —
Forfeited30.00
 (91,383)
Vested30.00
 (1,411,731)
Unvested Class B awards at January 1, 2017$30.00
 845,220
Granted—
 —
Forfeited—
 —
Vested30.00
 (845,220)
Unvested Class B awards at December 31, 2017$—
 —
Compensation expense recognized related to the unvested Class B awardsfranchise capital award liability was $12.7$6.9 million $28.1 million and $42.1 million for the years ended December 31, 2017, 2016, and 2015, respectively. There is no remaining unrecognized compensation expense for the Class B awards as of December 31, 2017, as2021 and is included in accrued incentive compensation in the Class B awards became fully vested on July 1, 2017.Consolidated Statements of Financial Condition.

Note 10.11. Income Taxes and Related Payments
APAM is subject to U.S. federal, state and local income taxation on APAM’s allocable portion of Holdings’ income, as well as foreign income taxes payable by Holdings’ subsidiaries. Components of the provision for income taxes consist of the following:
 For the Years Ended December 31,
Current:202120202019
Federal$53,131 $24,116 $13,609 
State and local14,990 8,174 6,315 
Foreign523 515 529 
Total68,644 32,805 20,453 
Deferred:
Federal32,655 27,110 22,310 
State and local5,727 880 (14,954)
Total38,382 27,990 7,356 
Income tax expense$107,026 $60,795 $27,809 
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  For the Years Ended December 31,
 2017 2016 2015
Current:     
Federal$21,960
 $14,704
 $26,090
State and local2,663
 2,180
 3,560
Foreign469
 639
 600
Total25,092
 17,523
 30,250
Deferred:     
Federal396,502
 32,124
 22,916
State and local(1,086) 1,836
 (6,395)
Total395,416
 33,960
 16,521
Income tax expense$420,508
 $51,483
 $46,771

The provision for income taxes differs from the amount of income tax computed by applying the applicable U.S. statutory federal income tax rate to income before provision for income taxes as follows:
 For the Years Ended December 31,
202120202019
U.S. federal statutory rate21.0 %21.0 %21.0 %
State and local taxes, net of federal tax effect3.5 3.1 2.8 
Excess tax benefits on share-based compensation(1.4)(1.1)(0.7)
Rate benefit from the flow through entity(4.1)(5.5)(6.7)
Change in state tax rate— (1.1)(6.8)
Unrecognized tax benefits— 0.2 0.6 
Other0.4 (0.1)0.1 
Effective tax rate19.4 %16.5 %10.3 %
 Years Ended December 31,
 2017 2016 2015
U.S. federal statutory rate35.0 % 35.0 % 35.0 %
Non-deductible share-based compensation0.5
 2.4
 2.9
Rate benefit from the flow through entity(6.2) (15.7) (17.7)
Tax Reform - change in federal corporate tax rate43.9
 —
 —
Change in deferred state tax rate—
 —
 (3.0)
Other0.4
 1.2
 0.9
Effective tax rate73.6 % 22.9 % 18.1 %
The effective tax rate includes a rate benefit attributable to the fact that, for the years ended December 31, 20172021, 20162020 and 2015,2019, approximately 38%19%, 47%24% and 50%31%, respectively, of Artisan Partners Holdings’ taxable earnings were attributable to other partners and not subject to corporate-level taxes. The Tax Cutseffective tax rate was also lower than the statutory rate due to tax deductible dividends paid on unvested restricted share-based awards and Jobs Act (“Tax Reform”)favorable tax deductions related to the vesting of restricted share-based awards. The effective tax rate was enactedalso reduced in the years ended December 2017. As a result31, 2020, and 2019 due to the remeasurement of Tax Reform, existing deferred tax assets were remeasured to reflect the reductionresulting from an increase in the enacted U.S. federal corporateArtisan's state deferred income tax rate. The tax rate used to measure deferred tax assets changed from 37.0% to 23.5%, which resulted in a reduction to our deferred tax assets of $352 million with a corresponding increase to the provision for income taxes for the year ended December 31, 2017. The actual impact of Tax Reform on effective tax rates and deferred tax assets may differ from these estimates due to changes in interpretations and assumptions made in determining these estimates, future guidance issued by the IRS, and the completion of the Company’s U.S. tax return.rates.
In connection with the IPO, APAM entered into two tax receivable agreements (“TRAs”). The first TRA, generally provides for the payment by APAM to a private equity fund (the “Pre-H&F Corp Merger Shareholder”) or its assignees of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) the tax attributes of the preferred units APAM acquired in the merger of a wholly-owned subsidiary of the Pre-H&F Corp Merger Shareholder into APAM in March 2013 (ii) net operating losses available as a result of the merger and (iii)(ii) tax benefits related to imputed interest.
The second TRA generally provides for the payment by APAM to current or former limited partners of Holdings or their assignees of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) certain tax attributes of their partnership units sold to APAM or exchanged (for shares of Class A common stock, convertible preferred stock or other consideration) and that are created as a result of such sales or exchanges and payments under the TRAs and (ii) tax benefits related to imputed interest. Under both agreements, APAM generally will retain the benefit of the remaining 15% of the applicable tax savings.
For purposes of the TRAs, cash savings of income taxes are calculated by comparing APAM’s actual income tax liability to the amount it would have been required to pay had it not been able to utilize any of the tax benefits subject to the TRAs, unless certain assumptions apply. The TRAs will continue in effect until all such tax benefits have been utilized or expired, unless APAM exercises its right to terminate the agreements or payments under the agreements are accelerated in the event that APAM materially breaches any of its material obligations under the agreements.
The actual increase in tax basis, as well as the amount and timing of any payments under these agreements, will vary depending upon a number of factors, including the timing of sales or exchanges by the holders of limited partnership units, the price of the Class A common stock at the time of such sales or exchanges, whether such sales or exchanges are taxable, the amount and timing of the taxable income APAM generates in the future and the tax rate then applicable and the portion of APAM’s payments under the TRAs constituting imputed interest or depreciable basis or amortizable basis.
Payments under the TRAs, if any, will be made pro rata among all TRA counterparties entitled to payments on an annual basis to the extent APAM has sufficient taxable income to utilize the increased depreciation and amortization charges and imputed interest deductions. Artisan expects to make one or more payments under the TRAs, to the extent they are required, prior to or within 125 days after APAM’s U.S. federal income tax return is filed for each fiscal year. Interest on the TRA payments will accrue at a rate equal to one-year LIBOR plus 100 basis points from the due date (without extension) of such tax return until such payments are made.

The reduction in deferred tax assets described above (including the results of Tax Reform) resulted in a decrease in the amountsAmounts payable under the TRAs reflecting the reduced estimate of APAM’s tax savings that will be paid to the TRA counterparties. Amounts payable under tax receivable agreements are estimates which may be impacted by factors, including but not limited to, expected tax rates, projected taxable income, and projected ownership levels and are subject to change. Changes in the estimates of amounts payable under tax receivable agreements are recorded as non-operating income (loss) in the Consolidated Statements of Operations.
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The change in the Company’s deferred tax assets related to the tax benefits described above and the change in corresponding amounts payable under the TRAs for the years ended December 31, 20172021 and 20162020 is summarized as follows:
Deferred Tax Asset - Amortizable BasisAmounts Payable Under Tax Receivable Agreements
December 31, 2019$408,140 $375,324 
2020 Follow-On Offering21,424 18,211 
2020 Holdings Common Unit Exchanges48,474 41,203 
Amortization(34,686)— 
Payments under TRAs (1)
— (26,943)
Change in estimate (2)
3,602 4,673 
December 31, 2020$446,954 $412,468 
2021 Follow-On Offering16,362 13,908 
2021 Holdings Common Unit Exchanges36,069 30,659 
Amortization(39,483)— 
Payments under TRAs (1)
— (31,250)
Change in estimate(9)(358)
December 31, 2021$459,893 $425,427 
(1) Interest payments of $42 thousand and $60 thousand were paid in addition to these TRA payments for the years ended December 31, 2021 and 2020, respectively.
(2) Included in these totals are adjustments to the deferred tax assets for changes in the state deferred enacted tax rates of $3.7 million for the year ended December 31, 2020.

 Deferred Tax Asset - Amortizable Basis Amounts Payable Under Tax Receivable Agreements
December 31, 2015$660,254
 $589,101
2016 Holdings Common Unit Exchanges29,977
 25,480
Amortization(35,953) —
Payments under TRAs(1)
—
 (27,685)
Change in estimate(336) (650)
December 31, 2016$653,942
 $586,246
2017 Follow-On Offering113,419
 96,406
2017 Holdings Common Unit Exchanges28,134
 23,914
Amortization(42,891) —
Payments under TRAs(1)
—
 (30,234)
Tax Reform - change in federal corporate tax rate(341,669) (290,418)
Change in estimate(245) (501)
December 31, 2017$410,690
 $385,413
(1) Interest payments of $85 thousand and $127 thousand were paid in addition to these TRA payments for the years ended December 31, 2017 and 2016, respectively.
Net deferred tax assets comprise the following:
Deferred tax assets:As of December 31, 2021As of December 31, 2020
Amortizable basis (1)
$459,893 $446,954 
Other (2)
38,009 35,107 
Total deferred tax assets497,902 482,061 
Less: valuation allowance (3)
— — 
Net deferred tax assets$497,902 $482,061 
(1) Represents the unamortized step-up of tax basis and other tax attributes from the merger and partnership unit sales and exchanges described above. These future tax benefits are subject to the TRA agreements.
(2) Represents the net deferred tax assets associated with the merger described above and other miscellaneous deferred tax assets. These future tax benefits are not subject to the TRA agreements.
(3) Artisan assessed whether the deferred tax assets would be realizable and determined based on its history of taxable income that the benefits would more likely than not be realized. Accordingly, no valuation allowance is required.

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 As of December 31, 2017 As of December 31, 2016
Deferred tax assets:   
Amortizable basis (1)
$410,690
 $653,942
Other (2)
18,522
 24,576
Total deferred tax assets429,212
 678,518
Less: valuation allowance (3)
—
 —
Net deferred tax assets$429,212
 $678,518
(1) Represents the unamortized step-up of tax basis and other tax attributes from the merger and partnership unit sales and exchanges described above. These future tax benefits are subject to the TRA agreements.
(2) Represents the net deferred tax assets associated with the merger described above and other miscellaneous deferred tax assets.
(3) Artisan assessed whether the deferred tax assets would be realizable and determined based on its history of taxable income that the benefits would more likely than not be realized. Accordingly, no valuation allowance is required.
Accounting standards establish a minimum threshold for recognizing, and a systemprocess for measuring, the benefits of income tax return positions in financial statements. There were no uncertainThe change in the Company’s gross unrecognized tax positionsbenefits for the years ended December 31, 2021, 2020 and 2019 is summarized as follows:
 For the Years Ended December 31,
202120202019
Balance at beginning of year$1,085 $1,667 $— 
Additions for tax positions of prior years— 1,187 1,667 
Reductions for tax positions of prior years— (613)— 
Tax positions related to the current year— 216 — 
Settlements with taxing authorities— (1,372)— 
Expirations of statute of limitations— — — 
Balance at end of year$1,085 $1,085 $1,667 
If recognized, $1.0 million and $0.7 million of the benefits recorded as of December 31, 20172021 and 2020, respectively, would favorably impact the effective tax rate in future periods. The total amount of unrecognized tax benefits is currently not expected to significantly increase or decrease within the next twelve months.
The Company recognizes interest and penalties related to unrecognized tax benefits as a component of the income tax provision. Accrued interest on uncertain tax positions was $0.2 million as of December 31, 2016.2021 and 2020, and is excluded from the unrecognized tax benefits total above. The gross unrecognized tax benefit is recorded within accounts payable, accrued expenses, and other in the Company's Consolidated Statements of Financial Condition.
In the normal course of business, Artisan is subject to examination by federal and certain state, local and foreign tax regulators. As of December 31, 2017,2021, U.S. federal income tax returns filed for the years 20142018 through 20162020 are open and therefore subject to examination. State, local and localforeign income tax returns filed are generally subject to examination from 20132017 to 2016. Foreign tax returns are generally subject to examination from 2013 to 2016.2020.

Note 11. Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss), net of tax, in the accompanying Consolidated Statements of Financial Condition represents the portion of accumulated other comprehensive income attributable to APAM, and consists of the following:
 As of December 31, 2017 As of December 31, 2016
Unrealized gain on investments, net of tax$259
 $37
Foreign currency translation gain (loss)(1,132) (1,685)
Accumulated Other Comprehensive Income (Loss)$(873) $(1,648)
Comprehensive income (loss) attributable to noncontrolling interests - Artisan Partners Holdings in the Consolidated Statements of Comprehensive Income (Loss) represents the portion of comprehensive income (loss) attributable to the equity ownership interests in Holdings held by the limited partners of Holdings.
Note 12. Earnings Per Share
The computation of basic and diluted earnings per share under the two-class method for the years ended December 31, 2017, 20162021, 2020 and 20152019 were as follows:
Basic and Diluted Earnings Per ShareFor the Years Ended December 31,
 2017 2016 2015
Numerator:     
Net income attributable to APAM$49,599
 $73,030
 $81,801
Less: Allocation to participating securities16,026
 13,059
 16,033
Net income available to common stockholders$33,573
 $59,971
 $65,768
Denominator:     
Weighted average shares outstanding44,647,318
 38,137,810
 35,448,550
Earnings per share$0.75

$1.57
 $1.86

 For the Years Ended December 31,
Basic and Diluted Earnings Per Share202120202019
Numerator:
Net income attributable to APAM$336,516 $212,617 $156,536 
Less: Allocation to participating securities31,430 23,268 21,154 
Net income available to common stockholders$305,086 $189,349 $135,382 
Denominator:
Basic weighted average shares outstanding59,866,790 55,633,529 51,127,929 
Dilutive effect of nonparticipating equity awards14,249 4,393 — 
Diluted weighted average shares outstanding59,881,039 55,637,922 51,127,929 
Earnings per share - Basic$5.10 $3.40 $2.65 
Earnings per share - Diluted$5.09 $3.40 $2.65 
Allocation to participating securities in the table above primarily represents dividends paid to holders of unvested restricted share-based awards, which reduces net income available to common stockholders.

There were no dilutive securities outstanding during the years ended December 31, 2017, 2016 and 2015. The Holdings limited partnership units are anti-dilutive primarily due to the impact of public company expenses and unrecognized share-based compensation expense.expenses. Unvested restricted share-based awards with non-forfeitable dividend rights during the vesting period are considered participating securities and are therefore anti-dilutive.
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The following table summarizes the weighted-average shares outstanding that are excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive:
 For the Years Ended December 31,
Anti-Dilutive Weighted Average Shares Outstanding202120202019
Holdings limited partnership units14,167,538 17,885,335 21,827,809 
Unvested restricted share-based awards5,410,221 5,313,466 5,026,357 
Total19,577,759 23,198,801 26,854,166 
Anti-Dilutive Weighted Average Shares OutstandingFor the Years Ended December 31,
 2017 2016 2015
Holdings limited partnership units26,837,118
 32,784,750
 34,960,945
Unvested restricted share-based awards4,153,260
 3,566,784
 3,052,630
Total30,990,378
 36,351,534
 38,013,575
Note 13. Benefit Plans
Artisan has a 401(k) plan and similar foreign arrangements for its non-U.S. employees, under which it provides a matching contribution on employees’ pre-tax contributions. Expenses related to Artisan’s benefits plans for the years ended December 31, 2017, 2016,2021, 2020 and 20152019 were $6.4$8.4 million,, $6.0 $7.8 million and $5.5$7.2 million,, respectively, and are included in compensation and benefits in the Consolidated Statements of Operations.

Artisan provides an opportunity for eligible employees to participate in Artisan’s financial growth and success through equity linked incentive awards. Prior to 2015, designated employees received an annual award of units pursuant to the Equity Incentive Plan which vested on the third anniversary of the award date. The appreciation of the units, if any, was based upon a stated formula and paid in cash to participants after vesting. In 2015, Artisan began granting employees phantom equity awards, pursuant to the Artisan Partners Holdings LP Phantom Equity Plan. The phantom equity awards provide participants the right to receive cash payments upon vesting based on the trading price of APAM’s Class A common stock. Awards made under the Phantom Equity Plan are liability awards and are subject to vesting on a pro ratapro-rata basis over five years. Under both plans, awardAward recipients must be employed by Artisan on the vesting date in order to receive payment.
ExpensesExpense related to these plansthe Phantom Equity Plan for the years ended December 31, 2017, 2016,2021, 2020 and 2015 were $0.62019 was $1.6 million,, $0.1 $1.6 million and $0.2$0.9 million,, respectively, and areis included in compensation and benefits in the Consolidated Statements of Operations. The liability at December 31, 20172021 and 20162020 for these plansthe plan was $0.6 million and $0.3 million, respectively.$1.5 million.
Note 14. Indemnifications
In the normal course of business, APAM enters into agreements that include indemnities in favor of third parties. Holdings has also agreed to indemnify APAM as its general partner, Artisan Investment Corporation (“AIC”) as its former general partner, the directors and officers of APAM, the directors and officers of AIC as its former general partner, the members of its former Advisory Committee, and its partners, directors, officers, employees and agents. Holdings’ subsidiaries may also have similar agreements to indemnify their respective general partner(s), directors, officers, directors and officers of their general partner(s), partners, members, employees, and agents. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against usthe Company that have not yet occurred. APAM maintains insurance policies that may provide coverage against certain claims under these indemnities.

Note 15. Property and Equipment
The composition of property and equipment at December 31, 20172021 and 20162020 are as follows:
As of December 31,
20212020
Computers and equipment$7,210 $6,768 
Computer software6,643 5,377 
Furniture and fixtures12,689 12,267 
Leasehold improvements52,623 49,038 
Total Cost$79,165 $73,450 
Less: Accumulated depreciation(43,852)(37,576)
Property and equipment, net of accumulated depreciation$35,313 $35,874 
 As of December 31,
 2017 2016
Computers and equipment$7,770
 $8,197
Computer software4,372
 5,366
Furniture and fixtures8,658
 7,920
Leasehold improvements27,357
 23,207
Total Cost48,157
 44,690
Less: Accumulated depreciation(27,132) (24,672)
Property and equipment, net of accumulated depreciation$21,025
 $20,018
Depreciation expense totaled $5.3$6.8 million, $5.26.5 million and $4.5$6.8 million for the years ended December 31, 2017, 2016,2021, 2020 and 2015,2019, respectively.

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Note 16. Lease CommitmentsLeases
Artisan hasOperating lease commitments for office space, furniture, and equipment, which are accounted forexpense was as follows:
 For the Years Ended December 31,
Lease TypeClassification202120202019
Parking leasesCompensation and benefits$518 $520 $519 
Office leases (1)
Occupancy14,463 14,991 15,931 
Variable lease cost (2)
Occupancy110 135 118 
Short-term lease cost (2)
Occupancy455 343 369 
Sublease incomeOccupancy(267)(429)(286)
Office equipment leasesCommunication and technology247 281 305 
Total operating lease expense$15,526 $15,841 $16,956 
(1) Office lease expense includes impairment charges of $0.9 million and $1.5 million for the years ended December 31, 2020 and 2019, respectfully, related to the abandonment of a leased office space.
(2) Variable and short-term lease costs are excluded from the measurement of operating lease liabilities.
The table below presents the maturity of operating leases. Certain lease agreements provide for scheduled rent increases over the lease term. Artisan records rent expense for operating leases with scheduled rent increases on a straight-line basis over the termliabilities:
As of December 31, 2021
2022$16,310 
202316,028 
202415,114 
202514,994 
202614,260 
Thereafter43,091 
Total undiscounted lease payments (1)
119,797 
Adjustment to discount to present value(19,494)
Operating lease liabilities$100,303 
(1) Total undiscounted lease payments excludes $19.1 million of operating lease payments associated with leases that have been signed but have not yet commenced as of December 31, 2021. Leases that have been signed but have not yet commenced are also excluded from operating lease assets and operating lease liabilities within the Consolidated Statements of Financial Condition.
As of December 31, 2021, none of the respective agreement. In addition, Artisan has receivedoptions to extend lease terms were reasonably certain lease incentives, which are amortized on a straight-line basis over the term of the lease agreement. Rental expense for the years ended December 31, 2017, 2016 and 2015being exercised. Other information related to leases was $10.5 million, $9.8 million and $9.7 million, respectively.

At December 31, 2017, the aggregate future minimum payments for leases for each of the following five years and thereafter are as follows:
 For the Years Ended December 31,
202120202019
Weighted average discount rate4.4 %4.6 %4.7 %
Weighted average remaining lease term8.3 years7.4 years8.1 years
Operating cash flows for operating leases16,821 16,546 14,183 

2018$11,420
201910,411
20209,875
20219,738
20228,840
Thereafter26,762
Total$77,046
Note 17. Related Party Transactions
Several of the current named executive officers and directors of APAM, and certain members of APAM’s board (or their affiliates)or entities associated with those individuals, are limited partners of Holdings. As a result, certain transactions (such as TRA payments) between Artisan and the limited partners of Holdings are considered to be related party transactions with respect to these persons.
Holdings also makes estimated state tax payments on behalf of certain limited partners, including related parties. These payments are then netted from subsequent distributions to the limited partners. At December 31, 20172021 and 2016,2020, accounts receivables included $2.3$1.5 million and $0.9$2.0 million, respectively, of partnership tax reimbursements due from Holdings’ limited partners, including related parties.

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Affiliate transactions—Artisan Funds
Artisan has an agreement to serve as the investment adviser to Artisan Funds, with which certain Artisan employees are affiliated. Under the terms of the agreement, which generally is reviewed and continued by the board of directors of Artisan Funds annually, a fee is paid to Artisan based on an annual percentage of the average daily net assets of each Artisan Fund ranging from 0.625%0.60% to 1.25%1.05%. Artisan generally collects revenues related to these services on the last business day of each month and records them in management fees in the Consolidated Statement of Operations. Artisan has contractually agreed to waive its management fees or reimburse for expenses incurred to the extent necessary to limit annualized ordinary operating expenses incurred by certain of the Artisan Funds to not more than a fixed percentage (ranging from 0.88% to 1.50%) of a Fund’sfund’s average daily net assets. In addition, Artisan may voluntarily waive fees or reimburse any of the Artisan Funds for other expenses. The officers and a directordirectors of Artisan Funds who are affiliated with Artisan receive no compensation from the funds.
FeesInvestment advisory fees for managing theArtisan Funds and amounts waived or reimbursed by Artisan for fees and expenses (including management fees) are as follows:
  For the Years Ended December 31,
 2017 2016 2015
Investment management fees:     
Artisan Funds$472,501
 $453,579
 $528,098
Fee waiver / expense reimbursement:     
Artisan Funds$504
 $719
 $444
 For the Years Ended December 31,
Artisan Funds202120202019
Investment advisory fees (Gross of expense reimbursements)$713,595 $504,204 $452,895 
Elimination of fees from consolidated investment products (1)
$(8)$— $— 
Consolidated investment advisory fees (Gross of expense reimbursements)$713,587 $504,204 $452,895 
Expense reimbursements$676 $562 $391 
Elimination of expense reimbursements from consolidated investment products (1)
$(41)$— $— 
Consolidated expense reimbursements$635 $562 $391 
(1) Investment advisory fees and expense reimbursements related to consolidated investment products are eliminated from revenue upon consolidation.
Affiliate transactions—Artisan Global Funds
Artisan has an agreement to serve as the investment manager to Artisan Global Funds, with which certain Artisan employees are affiliated. Under the terms of these agreements, a fee is paid based on an annual percentage of the average daily net assets of each fund ranging from 0.75% to 1.75%1.85%. Artisan reimburses each sub-fund of Artisan Global Funds to the extent that sub-fund’s annual expenses, not including Artisan’s fee, exceed certain levels, which range from 0.10% to 0.20%. In addition, Artisan may voluntarily waive fees or reimburse any of the Artisan Global Funds for other expenses. The directors of Artisan Global Funds who are affiliated withalso employees of Artisan receive no compensation from the funds. Accounts receivable included $5.1 million and $1.8 million due from Artisan Global Funds as of December 31, 2017 and 2016, respectively.

FeesInvestment advisory fees for managing Artisan Global Funds and amounts reimbursed to Artisan Global Funds by Artisan are as follows:
 For the Years Ended December 31,
Artisan Global Funds202120202019
Investment advisory fees (Gross of expense reimbursements)$48,622 $33,786 $32,577 
Elimination of fees from consolidated investment products (1)
(75)(58)(67)
Consolidated investment advisory fees (Gross of expense reimbursements)$48,547 $33,728 $32,510 
Expense reimbursements$489 $515 $514 
Elimination of expense reimbursements from consolidated investment products (1)
(440)(333)(336)
Consolidated expense reimbursements$49 $182 $178 
(1) Investment advisory fees and expense reimbursements related to consolidated investment products are eliminated from revenue upon consolidation.


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  For the Years Ended December 31,
 2017 2016 2015
Investment management fees:     
Artisan Global Funds$30,107
 $16,981
 $15,218
Fee waiver / expense reimbursement:     
Artisan Global Funds$218
 $381
 $441
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Affiliate transactions - Artisan Sponsored Private Funds
Pursuant to written agreements, Artisan serves as the investment manager ofand acts as the general partner for certain privately offered investment funds constituting the firm’s privately offered strategies.Artisan Private Funds. Under the terms of these agreements, Artisan earns a management fee and for certain funds is entitled to receive either an allocation of profits. Artisan made aggregate seed investments of $32.3 million in the privately offered investment funds during the year ended December 31, 2017. Certain related parties, including employees, officers and members of the Company’s board invested an additional $34.6 million in the funds. These related party investors currently do not payprofits or a management fee or incentive allocation.performance-based fee. In addition, for a period of time following the formation of the privately offered funds,each private fund, Artisan has agreed to reimburse the fundsfund to the extent that expenses, excluding Artisan’s management fee, performance fee and transaction related costs, exceed certain levels, which range from 0.10% to 1.00% per annum of the net assets of the funds.fund. Artisan may also voluntarily waive fees or reimburse the funds for other expenses. FeesThe directors of Artisan Private Funds and the officers of the general partners of the Artisan Private Funds who are affiliated with Artisan receive no compensation from the funds.
Artisan and certain related parties, including employees, officers and members of the Company’s Board have invested in one or more of the Artisan Private Funds and currently do not pay a management fee, performance fee or incentive allocationsallocation.
Investment advisory fees for managing the privately offered funds were $39 thousandArtisan Private Funds and $50 thousand, respectively, for the year ended December 31, 2017. All management fees and incentive allocations from the privately offered strategies were eliminated from revenue upon consolidation. Expense reimbursements totaled $290 thousand for the year ended December 31, 2017.amounts reimbursed to Artisan Private Funds by Artisan are as follows:
 For the Years Ended December 31,
Artisan Private Funds202120202019
Investment advisory fees (Gross of expense reimbursements)$14,519 $7,570 $3,253 
Elimination of fees from consolidated investment products (1)
(1,246)(1,084)(369)
Consolidated investment advisory fees (Gross of expense reimbursements)$13,273 $6,486 $2,884 
Expense reimbursements$281 $405 $219 
Elimination of expense reimbursements from consolidated investment products (1)
(154)(258)(114)
Consolidated expense reimbursements$127 $147 $105 
(1) Investment advisory fees and expense reimbursements related to consolidated investment products are eliminated from revenue upon consolidation.

Note 18. Concentration of Credit Risk and Significant RelationshipsGeographic Information
Artisan generates a portion of its revenues from clients domiciled in various countries outside the United States. ForRevenues by geographic location based on client domicile for the years ended December 31, 2017, 20162021, 2020 and 2015, approximately 15%, 11%2019 were as follows:
 For the Years Ended December 31,
202120202019
U.S.$1,021,595 $748,327 $666,650 
Non-U.S.205,641 151,240 132,302 
Total revenues$1,227,236 $899,567 $798,952 

The following table sets forth Artisan’s long-lived assets by geographic area, which consist of net property and 10%equipment and operating lease assets:
As of December 31,
20212020
U.S.$118,558 $111,171 
Non-U.S.5,397 4,007 
Total long-lived assets$123,955 $115,178 


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Table of Artisan’s investment management fees, respectively, were earned from clients located outside of the United States.Contents
Note 19. Litigation Matters
In the normal course of business, Artisan may be subject to various legal and administrative proceedings. Currently, there are no legal or administrative proceedings that management believes may have a material effect on Artisan’s consolidated financial position, cash flows or results of operations.
Note 20. Selected Quarterly Financial Data (Unaudited)
The following table presents unaudited quarterly results of operations for 2017 and 2016. These quarterly results reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair statement of the results. Revenues and net income can vary significantly from quarter to quarter due to the nature of Artisan’s business activities.
 For the Quarters Ended
 March 31, 2017June 30, 2017Sept. 30, 2017Dec. 31, 2017
Total revenues$184,074
$196,273
$204,556
$210,721
Operating income$58,032
$66,503
$80,630
$81,246
Net income attributable to noncontrolling interests-Artisan Partners Holdings$22,760
$22,197
$27,234
$26,847
Net income attributable to noncontrolling interests- consolidated investment products$—
$4
$610
$1,486
Net income attributable to Artisan Partners Asset Management Inc.$19,795
$26,632
$30,665
$(27,493)
Earnings (loss) per basic and diluted share:$0.37
$0.45
$0.61
$(0.67)

 For the Quarters Ended
 March 31, 2016June 30, 2016Sept. 30, 2016Dec. 31, 2016
Total revenues$174,529
$180,768
$184,081
$181,481
Operating income$54,725
$59,013
$61,909
$58,587
Net income attributable to noncontrolling interests-Artisan Partners Holdings$24,057
$25,092
$26,301
$24,521
Net income attributable to Artisan Partners Asset Management Inc.$16,261
$18,384
$19,086
$19,299
Earnings per basic and diluted share:$0.35
$0.38
$0.41
$0.42
The summation of quarterly earnings per share does not equal annual earnings per share because the calculations are performed independently.
Note 21.20. Subsequent Events
Restricted share-basedLong-term incentive awards
On February 1, 2018,During the first quarter of 2022, the board of directors of APAM approved the grant of 1,518,970long-term incentive awards with a grant date fair value of $86.8 million consisting of $38.2 million of restricted share-based awards and $48.6 million of long-term cash awards, to certain employees pursuant to the Company’s 2013 Omnibus Incentive Compensation Plan. Approximately half of these awardsThe grant will vest pro rata in the first fiscal quarter of each of the next five years. The remaining awards will generally vest upon the satisfaction of both (1) pro-rata annual time vesting and (2) qualifying retirement (as defined in the award agreements).be effective March 1, 2022. Compensation expense associated with these awards is expected to be approximately $59.8 million, which will be recognized on a straight-line basis over the requisite service period.period, which is generally three or five years. Expense for the cash awards will be variable based on the investment returns of the investment strategy to which the awards are allocated.
Distributions and dividends
On February 1, 2018, APAM, acting as the general partner of Artisan Partners Holdings, declared, effective February 1, 2022, a distribution by Artisan Partners Holdings of $68.3$71.6 million to holders of Artisan Partners Holdings partnership units, including APAM. On the same date, theThe board of directors of APAM declared, effective February 1, 2022, a quarterly dividend of $0.60$1.03 per share of Class A common stock and a special annual dividend of $0.79$0.72 per share of Class A common stock. Both APAM common stock dividends, a total of $1.39$1.75 per share, are payable on February 28, 20182022 to shareholdersstockholders of record as of February 14, 2018.2022.

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Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate, to allow for timely decisions regarding required disclosure.


Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) at December 31, 2017.2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective.
Report of Management on Internal Control over Financial Reporting
Company management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our 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.


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.


Company management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2017,2021, based on the 2013 version of the Internal Control - Integrated Framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework. Based on that assessment, Company management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2017.2021.


The effectiveness of the Company’s internal control over financial reporting as of December 31, 2017,2021, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing in Item 8, which expresses an unqualified opinion on the effectiveness of internal control over financial reporting as of December 31, 2017.2021.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2017,2021, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
Item 9B. Other Information
None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The following table setsinformation required by this Item 10 (other than the information set forth below) will be set forth in our proxy statement for our 2022 Annual Meeting of Stockholders to be filed with the name, ageSEC within 120 days after December 31, 2021 (the “Proxy Statement”), under the sections titled “Proposal No. 1: Election of Directors – Director Nominees,” “Board Composition and positions of each of our directors and executives officers at February 16, 2018:
NameAgePosition
Matthew R. Barger60Independent Director
Seth W. Brennan47Independent Director
Tench Coxe60Independent Director
Stephanie G. DiMarco60Independent Director
Jeffrey A. Joerres58Independent Director
Andrew A. Ziegler60Lead Independent Director
Eric R. Colson48President, Chief Executive Officer and Chairman of the Board
Charles J. Daley, Jr.55Executive Vice President, Chief Financial Officer and Treasurer
Sarah A. Johnson46Executive Vice President, Chief Legal Officer and Secretary
Jason A. Gottlieb48Executive Vice President
James S. Hamman, Jr.48Executive Vice President
Gregory K. Ramirez47Executive Vice President

Mr. Barger has served on our Board since February of 2013. Mr. Barger is the chairmanStructure – Committees of the Board’s Nominating and Corporate Governance Committee and also serves on the Board’s Audit Committee. He is currently the managing member of MRB Capital, LLC, and he has been a senior advisor at Hellman & Friedman LLC (“H&F”) since 2007. Prior to 2007, he served in a number of roles at H&F, including managing general partner and chairman of the investment committee. Mr. Barger was a member of the advisory committee of Artisan Partners Holdings from January 1995 to the completion of our initial public offering in March 2013. Prior to joining H&F, Mr. Barger was an associate in the corporate finance department of Lehman Brothers Kuhn Loeb. Mr. Barger graduated from Yale University in 1979 and received an MBA from the Stanford Graduate School of Business in 1983. He has been a director of Hall Capital Partners LLC since August 2007. Mr. Barger’s expertise in the investment management industry and his broad experience in public and private directorships, finance, corporate strategy and business development provide valuable insight to our Board.

Mr. Brennan joined our Board in October of 2014 and currently serves on the Compensation Committee and Nominating and Corporate Governance Committee. Mr. Brennan is currently managing partner and co-founder of Lincoln Peak Capital. Prior to founding Lincoln Peak Capital in 2008, Mr. Brennan was an executive vice president and founding management team member of Affiliated Managers Group, Inc. Before joining Affiliated Managers Group, Mr. Brennan worked in the global insurance investment banking group at Morgan Stanley & Co. and in the financial institutions group at Wasserstein, Perella & Co. Mr. Brennan received a BA from Hamilton College. Mr. Brennan’s operating and leadership experience in the investment management industry qualifies him to serve on our Board. He brings to the Board extensive experience in finance and business development.

Mr. Coxe has served on our Board since February of 2013 and currently serves on the Compensation Committee and Nominating and Corporate Governance Committee. He has been a managing director of Sutter Hill Ventures since 1989 and joined that firm in 1987 following his tenure with Digital Communications Associates in Atlanta. Prior to that, Mr. Coxe worked with Lehman Brothers in New York City, where he was a corporate finance analyst specializing in mergers and acquisitions as well as debt and equity financing. Mr. Coxe was a member of Artisan Partners Holdings’ advisory committee from January 1995 to the completion of our initial public offering in March 2013. Mr. Coxe holds a BA in Economics from Dartmouth College and an MBA from Harvard Business School. He currently serves on the boards of directors of Mattersight Corporation and Nvidia Corporation. Mr. Coxe’s wide-ranging leadership experience and his experiences with both public and private directorships enable him to provide additional insight to our Board and its committees.


Ms. DiMarco has served on our Board since February 2013 and currently chairs the Audit Committee. Ms. DiMarco founded Advent Software, Inc. in June 1983 and served Advent in various capacities over time, including chair of its board of directors (September 2013 to July 2015), chief executive officer (May 2003 to June 2012) and chief financial officer (July 2008 to September 2009). She currently serves on the advisory board of the College of Engineering at the University of California Berkeley and the board of directors of Summer Search, a non-profit organization. She is a former member of the board of trustees of the University of California Berkeley Foundation, a former advisory board member of the Haas School of Business at the University of California Berkeley and a former trustee of the San Francisco Foundation where she chaired the investment committee. Ms. DiMarco holds a BS in Business Administration from the University of California at Berkeley. Ms. DiMarco’s extensive experience in technological developments for the asset management industry and her management experience as a founder, officer and director of Advent provide perspective on the management and operations of a public company. In addition, her extensive financial and accounting experience strengthens our Board through her understanding of accounting principles, financial reporting rules and regulations, and internal controls.

Mr. Joerres has served on our Board since February of 2013. He currently chairs the Compensation Committee and serves as a member of the Audit Committee. Mr. Joerres was executive chairman and chairman of the board of directors of ManpowerGroup until his retirement in December 2015. From April 1999 until May 2014, he served as chief executive officer of ManpowerGroup. Prior to becoming chief executive officer, he served as vice president of marketing, senior vice president of European operations and senior vice president of global account management. Prior to joining ManpowerGroup, Mr. Joerres held the position of vice president of sales and marketing for ARI Network Services. Mr. Joerres currently serves on the board of directors of Western UnionBoard” and is a member of the Committee for Economic Development. He is also past chairman and director of the Federal Reserve Bank of Chicago, a former director of Johnson Controls International plc, and a former trustee of the U.S. Council for International Business. Mr. Joerres served on the board of Artisan Partners Funds, Inc. from 2001 to 2011. Mr. Joerres holds a bachelor’s degree from Marquette University’s College of Business Administration. Mr. Joerres’s operating and leadership experience as an officer and director of ManpowerGroup and his innovative approach to optimizing human capital provide the Board with insight into the management and operations of a public company.incorporated herein by reference.

Executive Officers
Mr. Ziegler has served on our Board since March 2011 and is currently its Lead Independent Director. Mr. Ziegler served as Chairman of the Board from March 2011 to August 2015 and was our Executive Chairman from March 2011 to March 2014. Mr. Ziegler also served on the board of directors of Artisan Partners Funds, Inc. from January 1995 to November 2013. Mr. Ziegler was a managing director and the chief executive officer of Artisan Partners Holdings from its founding in 1994 through January 2010. Immediately prior to founding Artisan Partners, Mr. Ziegler was president and chief operating officer of Strong Capital Management, Inc. and president of the Strong Capital Management, Inc. group of mutual funds. Mr. Ziegler holds a BS from the University of Wisconsin-Madison and a JD from the University of Wisconsin Law School. Mr. Ziegler’s operating and leadership experience as our past executive chairman and his extensive knowledge of our business and the investment management industry provide the Board with insight into the company and valuable continuity of leadership.

Mr. Colson has been President, Chief Executive Officer and a director of Artisan Partners Asset Management since March 2011 and has served as Chairman of the Board since August 1, 2015. He has also been a director of Artisan Partners Funds, Inc. since November 2013. Mr. Colson has served as chief executive officer of Artisan Partners since January 2010. Before serving as Artisan Partners’ chief executive officer, Mr. Colson served as chief operating officer for investment operations from March 2007 through January 2010. Mr. Colson has been a managing director of Artisan Partners since he joined the Company in January 2005. Before joining Artisan Partners, Mr. Colson was an executive vice president of Callan Associates, Inc. Mr. Colson holds a BA in Economics from the University of California-Irvine.

Mr. Daley has been Executive Vice President, Chief Financial Officer and Treasurer of Artisan Partners Asset Management since March 2011. He has served as chief financial officer of Artisan Partners since August 2010 and has been a managing director since July 2010. Prior to that, Mr. Daley was chief financial officer, executive vice president and treasurer of Legg Mason, Inc. Mr. Daley holds a BS in Accounting from the University of Maryland, is an inactive certified public accountant, and holds a Series 27 license.

Ms. Johnson has been Executive Vice President, Chief Legal Officer and Secretary of Artisan Partners Asset Management and General Counsel of Artisan Partners since October 2013. From April 2013 to October 2013 she served as Assistant Secretary of Artisan Partners Asset Management. She has been general counsel of Artisan Partners Funds, Inc. since February 2011. She has also served as a director of certain private funds sponsoredThe information required by Artisan Partners since 2017. Ms. Johnson was named a managing director of Artisan Partners in March 2010. Prior to joining the Company in July 2002, Ms. Johnson practiced law with the law firm of Bell, Boyd & Lloyd LLC, Chicago, Illinois. Ms. Johnson holds a BA from Northwestern University and a JD from Northwestern University School of Law.


Mr. Gottlieb was appointed Executive Vice President of Artisan Partners Asset Management in February 2017. Mr. Gottlieb joined Artisan Partners in October 2016 as a managing director and Chief Operating Officer of Investments. Prior to joining the firm in October 2016, Mr. Gottlieb was a partner and managing director at Goldman Sachs where, since 2005, he was a leader in Goldman Sachs’ Alternative Investment & Manager Selection Group. He also served as a portfolio manager on the Goldman Sachs Multi-Manager Alternatives Fund from the fund’s inception in April 2013 until he left the firm in August 2016. Mr. Gottlieb holds a bachelor’s degree in Finance from Siena College and an MBA from Fordham University.

Mr. Hamman was appointed Executive Vice President of Artisan Partners Asset Management in February 2016. He has been a managing director of Artisan Partners since April 2014 and currently has responsibility for overseeing global distribution. Prior to his current role, Mr. Hamman was responsible for overseeing human capital and corporate development and for providing legal advicethis Item 10 with respect to various aspectsour executive officers is included at the end of Artisan’s advisory business. He also served as a director of Artisan Partners Global Funds from June 2010 to January 2018. Mr. Hamman joined Artisan Partners in March 2010. He holds a bachelor’s degree in Business Administration from the University of Notre Dame and a JD from Northwestern University School of Law.

Mr. Ramirez was appointed Executive Vice President of Artisan Partners Asset Management in February 2016. From October 2013 to February 2016 he served as Senior Vice President and from April 2013 to October 2013 as Assistant Treasurer. He has been a managing director of Artisan Partners since April 2003. Mr. Ramirez currently has responsibility for overseeing vehicle administration and facilities and serves as chair of the Artisan Risk and Integrity Committee. He has served as chief financial officer, vice president and treasurer of Artisan Partners Funds, Inc. since February 2011 and a director of Artisan Partners Global Funds since June 2010 and as a director of certain private funds sponsored by Artisan Partners since 2017. His prior roles with Artisan Partners include controller, chief accounting officer and director of client accounting and administration. Mr. Ramirez holds a BBA in Accounting from the University of Iowa and an MBA from Marquette University. He is a Certified Public Accountant and holds a Series 27 license.

Under the terms of our Stockholders Agreement, our Stockholders Committee, which has the authority to vote approximately 23% of the combined voting power of our capital stock, is required to vote the shares subject to the agreement for the election of each of Mr. Barger and Mr. Colson. Under the agreement, Artisan is required to use its best efforts to elect Mr. Barger and Mr. Colson, which efforts must include soliciting proxies for, and recommending that the Company’s stockholders vote in favor of, the election of each. For more information on the Stockholders Agreement and Stockholders Committee see Item 13Part I of this report. There are no family relationships among any ofForm 10-K under the heading “Information about our directors or executive officers.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act and regulations of the SEC require our directors, executive officers and, with certain exceptions, persons who own more than 10% of a registered class of our equity securities, as well as certain affiliates of such persons, to file with the SEC reports of ownership of, and transactions in, our equity securities. These reporting persons are further required to provide us with copies of these reports.

Based solely on our review of such reports and written representations by the reporting persons, we believe that during the fiscal year ended December 31, 2017, our directors, officers and owners of more than 10% of a registered class of our equity securities complied with all applicable filing requirements, except for one missed Form 4 for Mr. Ramirez relating to an exchange of APH partnership units for shares of the Company’s Class A common stock. No sales took place in connection with the exchange.

Executive Officers.”
Code of Ethics

Our Boardboard of directors has adopted a Code of Business Conduct applicable to all directors, officers and employees of the Company to provide a framework for the highest standards of professional conduct and foster a culture of honesty and accountability. The Code of Business Conduct satisfies applicable SEC requirements and NYSE listing standards. The Code of Business Conduct is available under the Corporate Governance link on our website at www.apam.com. We will provide a printed copy of the Code of Business Conduct to stockholders upon request.

We intend to post on our website at www.apam.com, all disclosures that are required by law or NYSE listing standards concerning any amendments to, or waivers from, any provision of our Code of Business Conduct.



The Board and its Committees

The Board conducts its business through meetings of the Board and through meetings of its committees. The Board has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The current members and chairpersons of the committees are:
Director*Audit CommitteeCompensation CommitteeNominating and Corporate Governance Committee
Matthew R. BargerXChair
Seth W. BrennanXX
Tench CoxeXX
Stephanie G. DiMarcoChair
Jeffrey A. JoerresXChair
Andrew A. Ziegler
*Our Board has determined that each of Matthew R. Barger, Seth W. Brennan, Tench Coxe, Stephanie G. DiMarco, Jeffrey A. Joerres and Andrew A. Ziegler is independent.

The Audit Committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is comprised solely of directors who meet the independence requirements under NYSE listing standards and the Securities Exchange Act, and who are “financially literate” under NYSE rules. The Board has determined that each member of the Audit Committee has “accounting or related financial management expertise” and qualifies as an “audit committee financial expert”.

Item 11. Executive Compensation

CompensationThe information required by this Item 11 will be set forth in the Proxy Statement, under the sections titled “Compensation Discussion and Analysis,

Summary

The core elements of our named executive officers’ compensation are base salary, a performance based discretionary cash bonus,” “Board Composition and equity awards. A significant percentage of our named executive officers’ compensation is variable and linked to his or her individual performance and the performance of the Company.
The following table shows the elements of compensation paid to our Chief Executive Officer (CEO), Chief Financial Officer (CFO) and the three other most highly compensated officers (collectively, the named executive officers) with respect to 2017, 2016 and 2015. The amounts in this table vary from the data and reporting conventions required by SEC rules in the Summary Compensation Table below.
Name & Principal Position Year Salary Cash Bonus Restricted Share Grant Total Direct Compensation Incentive Pay as a % of Total Direct Compensation
Eric R. Colson 2017 $250,000
 $5,000,000
 $1,042,775
 $6,292,775
 96%
Chief Executive Officer 2016 250,000
 4,800,000
 283,000
 5,333,000
 95%
  2015 250,000
 5,500,000
 915,300
 6,665,300
 96%
Charles J. Daley, Jr. 2017 250,000
 1,950,000
 259,710
 2,459,710
 90%
Chief Financial Officer 2016 250,000
 1,750,000
 141,500
 2,141,500
 88%
  2015 250,000
 2,000,000
 305,100
 2,555,100
 90%
Sarah A. Johnson 2017 250,000
 1,150,000
 177,075
 1,577,075
 84%
Chief Legal Officer 2016 250,000
 1,050,000
 141,500
 1,441,500
 83%
  2015 250,000
 1,200,000
 305,100
 1,755,100
 86%
James S. Hamman, Jr. 2017 250,000
 1,100,000
 177,075
 1,527,075
 84%
Executive Vice President 2016 250,000
 1,000,000
 283,000
 1,533,000
 84%
Jason A. Gottlieb, Executive Vice President 2017 250,000
 2,500,000
 521,388
 3,271,388
 92%
Total compensation paid to Mr. Colson, Mr. Daley, Ms. Johnson, and Mr. Hamman with respect to 2017 was higher than total compensation paid to them with respect to 2016. The year-over-year increase reflects the fact that, in 2017, our financial performance improved compared to 2016. Our average assets under management increased by 13% and revenues increased by 10%. Adjusted net income increased by 15%, and our adjusted operating margin increased from 36.4% to 37.6%. In addition to the improvement in our financial performance, there were a number of business and financial accomplishments in 2017, including:
Our assets under management as of December 31, 2017 were $115.5 billion, our highest year-end assets under management.
Our investment teams continued to generate strong absolute and relative investment returns for clients and investors. Of our 13 strategies launched prior to 2017, ten have outperformed their broad-based benchmarks since inception, with average annual out-performance ranging from 1.61% to 5.23% points, after fees.
We furthered the franchise development, in terms of leadership, resources, economic alignment, and culture, of our eight investment teams.
During the year, we launched four new investment strategies, the most strategies we have established in a single year.
We continued to increase the geographic diversification of our business. At year-end, $22.7 billion, or 20%, of our total assets under management were from clients domiciled outside the U.S.
We refinanced $60 million of senior notes and extended our $100 million revolving credit facility through August 2022.
We declared and distributed dividends of $2.76 per share of Class A common stock during 2017, and have declared a total of $3.19 of dividends with respect to 2017.
We successfully completed our February 2017 follow-on offering and continued to evolve our capital structure.


Our executive compensation program includes the following features that we believe reflect sound corporate pay governance:

We do not have employment or other agreements that provide termination benefits outside the context of a change in control.

Generally one-half of the restricted shares awarded to our executive officers in connection with the prior year’s performance are Career Shares that, with certain exceptions, will only vest if and when the recipient retires from the Company in accordance with qualifying retirement conditions.
All of our outstanding unvested equity awards to executive officers include double-trigger change in control provisions.
We maintain equity ownership guidelines, pursuant to which executive officers are required to hold Company equity equal in value to eight times base salary for the Chief Executive Officer and three times base salary for all other executive officers.
Our executive officers are subject to a clawback policy that permits the Board to recover incentive compensation from an executive officer if his or her fraud or willful misconduct led to a material restatement of financial results.
We do not provide “golden parachute” tax gross ups.
None of our named executive officers have bonus guarantees.
We do not offer retirement income or pension plans other than the same 401(k) plan that is available to all employees.
We do not maintain any benefit plans or perquisites that cover only one or more of our named executive officers.
Our insider trading policy prohibits hedging or pledging of Company stock by our employees.
Our Compensation Committee receives input from an independent compensation consultant.

In February 2018, the Compensation Committee recommended and the Board approved equity ownership guidelines and a clawback policy for executive officers.

Pursuant to the equity ownership guidelines, executive officers are expected to own shares of the Company’s common stock (including standard restricted shares and career shares) or Class B common units of Artisan Partners Holdings equal in value to eight times base salary for the Chief Executive Officer and three times base salary for all other executive officers. Current executive officers have a period of five years from the time the guidelines were adopted in February 2018 to comply with the ownership requirements. In addition, in the future, any individual becoming an executive officer will have a period of five years from the time of his or her designation as an executive officer to comply with the guidelines.

The clawback policy provides that in the event of a material restatement of the Company’s financial results within three years of the original reporting, the Board will review the facts and circumstances that led to the restatement and, if the Board determines that an executive officer engaged in fraud or willful misconduct leading to material noncompliance with any financial reporting requirements and the restatement, the Board may choose to recover incentive compensation paid to an executive officer in an amount that the Board determines is the difference between the amount of incentive compensation paid or granted to the executive officer and the amount of incentive compensation that would have been paid or granted to the executive officer based upon the restated financial results. Incentive compensation subject to this policy includes both cash bonuses and equity awards.
Objectives of the Compensation Program

We believe that to create long-term value for our stockholders our management team needs to focus on the following business objectives:

Achieving profitable and sustainable financial results.
Delivering superior investment performance and client service.
Attracting and retaining top investment talent whose interests are aligned with our clients and stockholders.
Expanding our investment capabilities through thoughtful growth.
Continuing to diversify our sources of assets.

Our executive compensation program is designed to:

Support our business strategy.
Attract, motivate and retain highly talented, results-oriented individuals.
Reward the achievement of superior and sustained long-term performance.
Be flexible and responsive to evolving market conditions.
Align the interests of our named executive officers with our stockholders.
Provide competitive pay opportunities.

Determination of Compensation

Role of Compensation Committee, Board and Chief Executive Officer. Our Compensation Committee, which is comprised solely of directors who qualify as independent under applicable SEC and NYSE rules, has ultimate responsibility for all compensation decisions relating to our named executive officers. Other members of the Board regularly attend and participate in meetings of the Compensation Committee, and the members of the Compensation Committee and Board regularly meet in executive session without management present. The decisions of the Compensation Committee are reported to the entire Board.


Our Chief Executive Officer evaluates the performance of, and makes recommendations to our Compensation Committee regarding compensation matters involving, the other named executive officers. The Compensation Committee retains the ultimate authority to approve, reject or modify those recommendations. The Compensation Committee independently evaluates our Chief Executive Officer’s performance and determines our Chief Executive Officer’s compensation.

Use of Compensation Consultant. Our Compensation Committee has retained the services of McLagan, a compensation consultant, to provide advice regarding our named executive officer compensation program and compensation trends in the asset management industry. McLagan must receive pre-approval from the chairperson of our Compensation Committee prior to accepting any non-survey-related work from management. Other than compensation surveys and multi-client studies where McLagan provided information, but not advice, McLagan did not provide any services to management in 2017. Our Compensation Committee has assessed the independence of McLagan pursuant to SEC rules and concluded that no conflict of interest exists that prevents McLagan from independently advising the Compensation Committee.

Peer Group Compensation Review. Our Compensation Committee considers the individual and aggregate pay levels and financial performance of other asset management companies in connection with its compensation decision-making process. We do not seek to benchmark our executive compensation to that of our peers. Instead, the Compensation Committee reviews the information to stay informed of competitive pay levels and compensation trends in the asset management industry.

Tax and Accounting Considerations. When it reviews compensation matters, our Compensation Committee considers the anticipated tax and accounting treatment of various payments and benefits to the Company and, when relevant, to its named executive officers, although these considerations are not dispositive.

Results of Advisory Votes on Compensation. The Compensation Committee considers the results of the Company’s advisory votes on compensation when determining the amount and type of compensation paid to the named executive officers and the structure of the executive compensation program generally. The Company’s first advisory votes on executive compensation and frequency of advisory votes on executive compensation took place in connection with the Company’s 2016 annual meeting of stockholders. The advisory votes resulted in the approval of the Company’s 2015 executive compensation and a frequency of executive compensation advisory votes of every three years. The next advisory vote on executive compensation will occur in connection with the Company’s 2019 annual meeting of stockholders, at which the stockholders will vote on the Company’s 2018 executive compensation.

Elements of our Named Executive Officers’ Compensation and Benefits

The elements of our named executive officer compensation program include:

Base salary.
Annual performance based discretionary cash bonus.
Equity compensation.
Retirement benefits.
Other benefits.

Base Salary

Base salaries are intended to provide our named executive officers with a degree of financial certainty and stability that does not depend on performance and that does not differentiate among the responsibilities, contributions or performance of our named executive officers. Instead, we consider it a baseline compensation level that delivers some current cash income to our named executive officers. As is typical in the asset management industry, our named executive officers’ base salaries represent a relatively small portion of their overall total direct compensation. We believe that the majority of their pay should be in the form of variable compensation tied to performance. Further, we believe in a model of managed fixed costs and the potential for substantial upside to productive employees and view this compensation structure as promoting our business objectives. Each of our named executive officers received an annual base salary of $250,000 in 2017. The $250,000 annual base salary for named executive officers has remained unchanged over the last decade.

Annual Performance Based Discretionary Cash Bonus

Cash incentive compensation is the most significant part of our named executive officers’ total direct compensation. Annual cash incentive compensation is determined at or after the end of each year and is based on the Compensation Committee’s assessment of individual and company-wide performance measured over long-term periods. We do not use predetermined incentive formulas to evaluate performance or determine pay. The Compensation Committee considers the execution of certain key strategic priorities, as well as business and financial metrics.


At its January 2017 meeting, our Compensation Committee discussed target bonus amounts for each named executive officer and a set of key strategic priorities and business and financial metrics against which to evaluate performance and determine bonuses for 2017. At each subsequent meeting, the Compensation Committee reviewed the status of the strategic priorities and assessed the business and financial metrics.

In December 2017 the Compensation Committee determined annual cash bonuses for the 2017 named executive officers based on its assessment of the named executive officers’ execution of strategic priorities and our 2017 business and financial results. In shaping its decisions with respect to all of the named executive officers, the Compensation Committee considered the following:

Our assets under management as of December 31, 2017 were $115.5 billion, our highest year-end assets under management.
Our investment teams continued to generate strong absolute and relative investment returns for clients and investors. Of our 13 strategies launched prior to 2017, ten have outperformed their broad-based benchmarks since inception, with average annual out-performance ranging from 1.61% to 5.23% points, after fees.
We furthered the franchise development, in terms of leadership, resources, economic alignment, and culture, of our eight investment teams.
During the year, we launched four new investment strategies, the most strategies we have established in a single year.
We continued to increase the geographic diversification of our business. At year-end, $22.7 billion, or 20%, of our total assets under management were from clients domiciled outside the U.S.
We refinanced $60 million of senior notes and extended our $100 million revolving credit facility through August 2022.
We declared and distributed dividends of $2.76 per share of Class A common stock during 2017, and have declared a total of $3.19 of dividends with respect to 2017.
We successfully completed our February 2017 follow-on offering and continued to evolve our capital structure.
Maintaining and enhancing relationships and communication with clients, investors, employees, and potential new investment talent.

Based on these achievements and our financial and business performance, the Compensation Committee determined to pay 2017 cash incentive awards as follows: $5,000,000 for Mr. Colson; $1,950,000 for Mr. Daley; $1,150,000 for Ms. Johnson; $1,100,000 for Mr. Hamman; and $2,500,000 for Mr. Gottlieb.

Equity Compensation

We strongly believe that equity participation causes employees to think and act like owners. Each of our named executive officers has significant holdings in the Company’s equity, through a mix of standard restricted shares, career shares and, for those executive officers who are employee-partners, Class B common units of Artisan Partners Holdings. We place significant restrictions on the number of Class B common units that our named executive officers may sell in any given year. These restrictions, together with an annual award of career shares that generally do not vest until a qualified retirement, result in our named executive officers maintaining a significant level of equity ownership. To further ensure that a significant amount of equity is held by our named executive officers, in February 2018 our Board adopted a set of equity ownership guidelines, pursuant to which our executive officers are required to hold Company equity equal in value to eight times base salary for the Chief Executive Officer and three times base salary for all other executive officers.

We grant equity to our named executive officers in the form of standard restricted shares and career shares. Our standard restricted shares vest pro-rata over the five years following the date of grant, subject to continued employment. For career shares to vest, both of the following conditions must be met:

Pro rata time-vesting, under which 20% of the shares satisfy this condition in each of the five years following the year of grant.
Qualifying retirement, which generally requires that the recipient (i) has been employed by us for at least 10 years at retirement; (ii) had provided, in the case of named executive officers and portfolio managers, three years’ prior written notice of retirement (which can be reduced at our discretion); and (iii) remains at the Company through the retirement notice period.

Career shares and standard restricted shares will also vest upon a termination of employment due to death or disability. In addition, after the fifth anniversary of the grant date, if the Company terminates a recipient without cause (as defined in the award agreement), career shares will fully vest. And after a change of control, if the Company terminates a recipient without cause or he or she resigns for good reason, in either case, within two years of the change in control, the shares will fully vest.

We believe that career shares further align the interests of our named executive officers, portfolio managers, and other senior employees with our stockholders and clients and will incentivize recipients to remain at our firm until they are ready to leave in a thoughtful and structured way. Both standard restricted shares and career shares are awarded pursuant to the Artisan Partners Asset Management Inc. 2013 Omnibus Incentive Compensation Plan.


In February 2018, our Compensation Committee recommended, and our Board subsequently approved, equity grants in respect of 2017 performance to certain of our employees, including to our named executive officers. The aggregate award constituted a total of approximately 1.5 million shares, of which a total of 55,350 shares (or 4% of the total grant) were awarded to our named executive officers as follows: 13,250 standard restricted shares and 13,250 career shares for Mr. Colson; 3,300 standard restricted shares and 3,300 career shares for Mr. Daley; 2,250 standard restricted shares and 2,250 career shares for Ms. Johnson; 2,250 standard restricted shares and 2,250 career shares for Mr. Hamman and 6,625 standard restricted shares and 6,625 career shares for Mr. Gottlieb. The size of the award to each named executive officer was determined by the Compensation Committee in consultation with our Chief Executive Officer. By accepting the awards, each of our named executive officers agreed to certain restrictive covenants, including agreements not to compete with Artisan or solicit Artisan clients and employees, for one year after he or she ceases to be employed by Artisan.

We intend to continue to grant annual equity-based awards to our named executive officers under the Omnibus Plan, which provides for a wide variety of equity awards. The size and structure of the equity awards granted with respect to 2017 may not be indicative of future awards. Future equity awards may be granted in a mix of restricted shares (both standard and career) and options and subject to both time- and performance-based vesting. We generally intend to continue to grant our named executive officers a 50-50 ratio of career shares and standard restricted shares.

Retirement Benefits

We believe that providing a cost-effective retirement benefit for the Company’s employees is an important recruitment and retention tool. Accordingly, the Company maintains, and each of the named executive officers participates in, a contributory defined contribution retirement plan for all U.S.-based employees, and matches 100% of each employee’s contributions (other than catch-up contributions by employees age 50 and older) up to the 2017 limit of $18,000. We also maintain retirement plans or make retirement plan contributions (or equivalent cash payments) for our employees based outside the U.S. The opportunity to participate in a retiree health plan, at the sole expense of the retiree, is available to employee-partners and career share recipients who have at least 10 years of service with us at the time of retirement.

Other Benefits

Our named executive officers participate in the employee health and welfare benefit programs we maintain, including medical, group life and long-term disability insurance, and health care savings accounts, on the same basis as all U.S. employees, subject to satisfying any eligibility requirements and applicable law. We also generally provide employer-paid parking or transit assistance and, for our benefit and convenience, on-site food and beverages; our named executive officers enjoy those benefits on the same terms as all of our employees.

Risk Management and Named Executive Officer Compensation

We have identified two primary risks relating to compensation: the risk that compensation will not be sufficient in amount or appropriately structured to attract and to retain talent, and the risk that compensation may provide unintended incentives. To combat the risk that our compensation might not be sufficient or be inappropriately structured, we strive to use a compensation structure, and set compensation levels, for all employees in a way that we believe promotes retention. We make equity awards subject to multi-year vesting schedules to provide a long-term component to our compensation program, and in 2014 we introduced career shares to our equity compensation program. We believe that both the structure and levels of compensation have aided us in attracting and retaining key personnel. To address the risk that our compensation programs might provide unintended incentives, we have deliberately kept our compensation programs simple and without formulaic incentives. We have not seen any employee behaviors motivated by our compensation policies and practices that create increased risks for our stockholders.

Based on the foregoing, we do not believe that our compensation policies and practices motivate imprudent risk taking. Consequently, we are satisfied that any potential risks arising from our employee compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. Our Compensation Committee will continue to monitor the effects of its compensation decisions to determine whether risks are being appropriately managed.

Structure – Compensation Committee Interlocks and Insider ParticipationParticipation” and “Director Compensation,” and is incorporated herein by reference.
The Compensation Committee consists of Seth W. Brennan, Tench Coxe and Jeffrey A. Joerres, each of whom is an independent director under the rules of the NYSE and our Governance Guidelines. None of the members of the Compensation Committee has been an officer or employee of the Company. None of our named executive officers serves on the board of directors or compensation committee of a company that has an executive officer that serves on our Board.
In connection with our initial public offering, we entered into agreements with all limited partners of Artisan Partners Holdings, including with entities associated with Tench Coxe. Information about the agreements, and transactions thereunder, are more fully discussed in Item 13 of this report.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the above Compensation Discussion and Analysis with management, and based upon such review and discussion, has recommended to the Board that the Compensation Discussion and Analysis be included in Artisan Partners Asset Management’s annual report on Form 10-K and proxy statement.
Compensation Committee:

Jeffrey A. Joerres, Chairperson
Seth W. Brennan
Tench Coxe

The information contained in this report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in future filings with the SEC, or subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically requests that the information be treated as soliciting materials or incorporates it by reference into a document filed under the Securities Act of 1933, as amended, or the Exchange Act.

Summary Compensation Table (1)
The following table provides information regarding the compensation earned during the years ended December 31, 2015, 2016 and 2017 by each of our named executive officers. Columns for “Option Awards”, “Non-Equity Incentive Plan Compensation” and “Change in Pension Value and Nonqualified Deferred Compensation Earnings” do not appear in the following table as they do not pertain to the Company.
The applicable SEC rules require that the value of an equity award be attributed to the year in which the award was made (not the year with respect to which the award was made) for purposes of the Summary Compensation Table below. Accordingly, the stock awards reported for 2015 are $0 (because we did not make any awards in 2015) and the stock awards reported for 2016 and 2017 reflect the awards made in January 2016 and January 2017, respectively. Because we believe the value of the equity awards we make in January of each year should be considered a part of each named executive officer’s compensation for the prior year, we have included those values in the table at the beginning of this Item 11, as well as in the first footnote below.
Name & Principal Position Year Salary 
Bonus (2)
 
Stock Awards(3)
 
All Other Compensation(4)
 Total
Eric R. Colson 2017 $250,000
 $5,000,000
 283,000
 $216,778
 $5,749,778
Chief Executive Officer 2016 250,000 4,800,000
 915,300
 147,884
 6,113,184
  2015 250,000 5,500,000
 —
 168,041
 5,918,041
Charles J. Daley, Jr. 2017 250,000 1,950,000
 141,500
 119,171
 2,460,671
Chief Financial Officer 2016 250,000 1,750,000
 305,100
 89,991
 2,395,091
  2015 250,000 2,000,000
 —
 106,383
 2,356,383
Sarah A. Johnson 2017 250,000 1,150,000
 141,500
 100,036
 1,641,536
Chief Legal Officer 2016 250,000 1,050,000
 305,100
 81,956
 1,687,056
  2015 250,000 1,200,000
 —
 79,152
 1,529,152
James S. Hamman, Jr., (5)
 2017 250,000 1,100,000
 283,000
 46,110
 1,679,110
Executive Vice President 2016 250,000 1,000,000
 305,100
 56,532
 1,611,632
Jason A. Gottlieb, (6)
Executive Vice President
 2017 250,000 2,500,000
 990,500
 43,403
 3,783,903
(1) The summary compensation table above includes the value of restricted shares that were granted to each named executive officer in each year presented, as required by SEC disclosure rules. The supplemental table below includes the value of the restricted shares that we granted to each named executive officer in 2016, 2017 and 2018 with respect to 2015, 2016 and 2017 performance, respectively.
Name Year Salary Bonus Stock Awards All Other Compensation Total
Eric R. Colson 2017 $250,000
 $5,000,000
 $1,042,775
 $216,778
 $6,509,553
  2016 250,000 4,800,000
 283,000
 147,884
 5,480,884
  2015 250,000 5,500,000
 915,300
 168,041
 6,833,341
Charles J. Daley, Jr. 2017 250,000 1,950,000
 259,710
 119,171
 2,578,881
  2016 250,000 1,750,000
 141,500
 89,991
 2,231,491
  2015 250,000 2,000,000
 305,100
 106,383
 2,661,483
Sarah A. Johnson 2017 250,000 1,150,000
 177,075
 100,036
 1,677,111
  2016 250,000 1,050,000
 141,500
 81,956
 1,523,456
  2015 250,000 1,200,000
 305,100
 79,152
 1,834,252
James S. Hamman, Jr. 2017 250,000 1,100,000
 177,075
 46,110
 1,573,185
  2016 250,000 1,000,000
 283,000
 56,532
 1,589,532
Jason A. Gottlieb 2017 250,000 2,500,000
 521,388
 43,403
 3,314,791
(2) Amounts in this column represent the annual discretionary cash bonus compensation earned by our named executive officers in 2017, 2016 and 2015, as applicable. The amounts for 2017 were paid in December 2017. The amounts for 2016 and 2015 were paid in February following each year presented.
(3) As discussed above, we believe the value of the equity awards we made in 2016, 2017 and 2018 should be considered a part of each named executive officer’s compensation for 2015, 2016 and 2017, respectively. Accordingly, the grant date fair value of those awards is reflected in the “Stock Awards” and “Total” columns in the supplemental table in footnote 1. The values reported represent the grant date fair value as computed in accordance with FASB ASC Topic 718 based upon the price of our common stock at the grant date.
(4) Amounts in this column represent the aggregate dollar amount of all other compensation received by our named executive officers. All other compensation includes, but is not limited to (a) company matching contributions to our named executive officers’ contributory defined contribution plan accounts equal to 100% of their pre-tax contributions (excluding catch-up contributions for named executive officers age 50 and older), up to the limitations imposed under applicable tax rules, which contributions totaled $18,000 for each named executive officer in 2017; (b) reimbursement for 2017 self-employment payroll tax expense as follows: $171,492 for Mr. Colson; $73,620 for Mr. Daley; and $52,919 for Ms. Johnson.
(5) Because Mr. Hamman first became an executive officer in 2016, no disclosure is included for 2015.
(6) Because Mr. Gottlieb first became an executive officer in 2017, no disclosure is included for 2016 or 2015.

Grants of Plan-Based Awards During 2017

The following table provides information regarding plan-based awards granted to each of our named executive officers in the year ended December 31, 2017.
Name Grant Date 
All Other Stock Awards: Number of Shares of Stock or Units (#)(1)
 
Grant Date Fair Value of Stock Awards ($)(2)
Eric R. Colson 1/27/2017 10,000
 $283,000
Charles J. Daley, Jr. 1/27/2017 5,000
 141,500
Sarah A. Johnson 1/27/2017 5,000
 141,500
James S. Hamman, Jr. 1/27/2017 10,000
 283,000
Jason A. Gottlieb 1/27/2017 35,000
 990,500
(1) Represents the number of restricted shares of our Class A common stock granted in January 2017, which were awarded as follows:
Name Standard Restricted Shares Career Shares
Eric R. Colson 5,000
 5,000
Charles J. Daley, Jr. 2,500
 2,500
Sarah A. Johnson 2,500
 2,500
James S. Hamman, Jr. 3,928
 6,072
Jason A. Gottlieb 35,000
 —
(2) Represents the grant date fair value as computed in accordance with FASB ASC Topic 718 based upon the price of our common stock at the grant date.


Outstanding Equity Awards at December 31, 2017

The following table provides information about the outstanding unvested equity-based awards held by each of our named executive officers as of December 31, 2017.
Name 
Number of Shares and Units of Stock That Have Not Vested(#)(1)
 
Market Value of Shares and Units of Stock That Have Not Vested($)(2)
Eric R. Colson 53,050
 $2,095,475
Charles J. Daley, Jr. 21,700
 857,150
Sarah A. Johnson 20,600
 813,700
James S. Hamman, Jr. 25,546
 1,009,067
Jason A. Gottlieb 67,609
 2,670,556
(1) Represents the number of unvested restricted shares (both career shares and standard restricted shares) of Class A common stock as of December 31, 2017:
Name 
Standard Restricted Shares (A)
 
Career Shares (B)
Eric R. Colson 24,800
 28,250
Charles J. Daley, Jr. 10,200
 11,500
Sarah A. Johnson 9,100
 11,500
James S. Hamman, Jr. 6,565
 18,981
Jason A. Gottlieb 67,609
 —
(A) Standard restricted shares vest in five equal installments over the five years following the date of grant, provided that the holder remains employed through the vesting dates. Standard restricted shares will also vest upon a termination of employment on account of the holder’s death or disability or upon a qualifying termination of employment in connection with a change in control.
(B) Career shares vest as described above in “-Compensation Discussion and Analysis - Equity-Based Compensation.”
(2) Restricted shares of Class A common stock were valued based on the closing price of our Class A common stock on the NYSE on December 31, 2017, which was $39.50.


Equity Awards Vested During the Year Ended December 31, 2017

The following table provides information about the value realized by each of our named executive officers during the year ended December 31, 2017, upon the vesting of equity awards.
Name 
Number of Shares or Units Acquired Upon Vesting(#)(1)
 
Value Realized on Vesting($)(2)
Eric R. Colson 20,121
 $620,286
Charles J. Daley, Jr. 18,047
 558,217
Sarah A. Johnson 5,022
 154,552
James S. Hamman, Jr. 1,818
 56,176
Jason A. Gottlieb 3,623
 108,871
(1) Represents the number of standard restricted shares of Class A common stock and Class B common units that vested during the year ended December 31, 2017:
Name Vested Shares of Class A Common Stock Vested Class B Common Units
Eric R. Colson 9,150
 10,971
Charles J. Daley, Jr. 3,900
 14,147
Sarah A. Johnson 2,800
 2,222
James S. Hamman, Jr. 1,818
 —
Jason A. Gottlieb 3,623
 —
Class B common units are exchangeable for shares of our Class A common stock on a one-for-one basis. However, the Class A common stock received upon exchange is generally subject to restrictions on the amount that may be sold in any one year period.
(2) The value of the restricted shares of Class A common stock and Class B common units that vested during 2017 is based on the stock price of our Class A common stock on each respective vesting date.

CEO Pay Ratio - 29:1

The Compensation Committee reviewed a comparison of our CEO’s annual total compensation in 2017 to that of the median of the annual total compensation of all other Company employees (the “Median Employee”) for the same period. The calculation of annual total compensation of all employees was determined in the same manner as the “Total Compensation” shown for our CEO in the Summary Compensation Table above. Pay elements that were included in 2017 annual total compensation for each employee included, as applicable, the following items:

•Salary
•Annual discretionary cash bonus earned
•Grant date fair value of restricted stock awards granted in 2017
•Grant date fair value of phantom equity awards granted in 2017
•Company matching contributions to our 401(k) Plan
•Health and vision insurance premiums paid by the Company
•Health savings account contributions made by the Company
•Life insurance premiums paid by the Company
•Reimbursement for employee-partners’ self-employment payroll tax expense
•Allowances for housing, parking and commuting costs
•Employee tuition paid by the Company

Our calculation includes all employees as of December 31, 2017. Compensation of our median employee was determined by calculating the annual total compensation described above for each of our employees. The annual total compensation for 2017 for our CEO was $5,749,778 and for the Median Employee was $197,932. The resulting ratio of our CEO’s pay to the pay of our Median Employee for 2017 is 29 to 1.


Pension Benefits

We do not sponsor or maintain any defined benefit pension or retirement benefits for the benefit of our employees.

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

We do not sponsor or maintain any nonqualified defined contribution or other nonqualified deferred compensation plans for the benefit of our employees.

Employment Agreements

We do not have employment agreements with any of our named executive officers. Upon commencement of employment, each named executive officer received an offer letter outlining the initial terms of employment, including base salary and cash incentive compensation. None of these terms affected compensation paid to our named executive officers in 2017, except with respect to certain payments made and equity awards granted to Mr. Gottlieb prior to becoming an executive officer of the Company. The terms of our named executive officers’ offer letters will not affect compensation paid in future years.

Each of the named executive officers has agreed, pursuant to his or her Class A restricted stock award agreements, to certain restrictive covenants, including agreements not to compete with Artisan, or solicit Artisan clients and employees, for one year after he or she ceases to be employed by Artisan. The enforceability of the restrictive covenants may be limited depending on the particular facts and circumstances.


Potential Payments Upon Termination or Change in Control

Our named executive officers are all employed on an “at will” basis, which enables us to terminate their employment at any time. Our named executive officers do not have agreements that provide severance benefits. We do not offer or have in place any formal retirement, severance or similar compensation programs providing for additional benefits or payments in connection with a termination of employment, change in job responsibility or change in control (other than our contributory defined contribution plan). Under certain circumstances, a named executive officer may be offered severance benefits to be negotiated at the time of termination.

Equity awards granted to our named executive officers are evidenced by an award agreement that sets forth the terms and conditions of the award and the effect of any termination event or a change in control on unvested awards. The effect of a termination event or change in control on outstanding equity awards varies by the type of award. The following table provides the value of equity acceleration that would have been realized for each of the named executive officers if he or she had been terminated on December 31, 2017 under the circumstances indicated (including following a change in control).

As discussed above, each of our named executive officers has been granted career shares that are designed to vest upon a qualifying retirement. A qualifying retirement requires 10 years of service with the Company as of the date of retirement and three years’ advance notice of retirement, which we may waive to no less than one year. Career shares also include a pro rata time-vesting requirement, under which 20% of the shares become eligible for qualifying retirement vesting in each of the five years following the year of grant. While none of our named executive officers has provided us with notice of intent to retire, the amounts shown in the “Retirement” column reflect the value of career shares that have satisfied the time-vesting and 10 years of service requirements as of December 31, 2017, had the named executive officer satisfied the advance notice requirement as of that date. In addition, the amount of shares received upon exchange of Class B common units that may be sold in any one-year period may also increase upon a named executive officer’s retirement, so long as the officer provided us with sufficient notice of retirement and has at least 10 years of service at retirement.

  Death or Disability Qualifying Termination in Connection with Change in Control Retirement
Eric R. Colson      
Standard Restricted Shares (1)
 $979,600
 $979,600
 $—
Career Shares(2)
 1,115,875
 1,115,875
 314,025
Charles J. Daley, Jr.      
Standard Restricted Shares (1)
 402,900
 402,900
 —
Career Shares(2)
 454,250
 454,250
 —
Sarah A. Johnson      
Standard Restricted Shares (1)
 359,450
 359,450
 —
Career Shares(2)
 454,250
 454,250
 134,300
James S. Hamman, Jr.      
Standard Restricted Shares (1)
 259,318
 259,318
 —
Career Shares(2)
 749,750
 749,750
 —
Jason A. Gottlieb      
Standard Restricted Shares (1)
 2,670,556
 2,670,556
 —
Career Shares(2)
 —
 —
 —
(1) Represents the value of the accelerated vesting of restricted shares of Class A common stock based on the closing price of our Class A common stock on the NYSE on December 31, 2017, which was $39.50 per share. Any standard restricted shares will become fully vested upon the holder’s death or disability or upon a qualifying termination of employment in connection with a change in control (subject to continued employment through such occurrence).
(2) Represents the value of the accelerated vesting and retirement vesting of career shares based on the closing price of our Class A common stock on the NYSE as of December 31, 2017, which was $39.50 per share. Any career shares will become fully vested upon the holder’s death or disability or upon a qualifying termination of employment in connection with a change in control (subject to continued employment through such occurrence). Career shares also vest upon qualifying retirement, as discussed above.

DIRECTOR COMPENSATION

The Company’s director compensation program is designed to attract and retain highly qualified non-employee directors. For fiscal year 2017, the director compensation program entitled non-employee directors to a cash component, designed to compensate directors for their service on the Board, and an equity component, designed to align the interests of the directors with those of the Company’s stockholders.

For 2017, the standard equity component of the Company’s director compensation program consisted of $100,000 of restricted stock units for each of the non-employee directors awarded under the Artisan Partners Asset Management Inc. 2013 Non-Employee Director Compensation Plan. The shares of Class A common stock underlying the restricted stock units will be delivered on the earlier to occur of (i) a change in control of APAM and (ii) the termination of the director’s service as a director.

During 2017, each non-employee director was entitled to receive cash payments of $50,000, paid in four quarterly installments. The lead director and chairperson of our Audit Committee were entitled to receive an additional cash retainer of $50,000, and the chairpersons of each of the Compensation Committee and Nominating and Corporate Governance Committee were entitled to receive an additional cash retainer of $40,000. Each of our non-employee directors elected to receive the value of this cash compensation in the form of additional restricted stock units.

As a result, an additional number of restricted stock units were granted to each non-employee director in January of 2017, the value of which equaled the amount of cash compensation to which each director was entitled. One-quarter of the units awarded in lieu of cash compensation vested in each quarter of 2017.

In addition, all directors are reimbursed for reasonable out-of-pocket expenses incurred by them in connection with attending Board, committee and stockholder meetings, including those for travel, meals and lodging. These reimbursements are not reflected in the table below.

Mr. Colson does not receive any additional compensation for serving on the Board.

The following table provides information concerning the 2017 compensation of each non-employee director who served in fiscal year 2017.
Name Stock Awards
Matthew R. Barger(1)
 $190,000
Seth W. Brennan(2)
 150,000
Tench Coxe(3)
 150,000
Stephanie G. DiMarco(4)
 200,000
Jeffrey A. Joerres(5)
 190,000
Andrew A. Ziegler(6)
 200,000
(1) On December 31, 2017, Mr. Barger had 21,547 restricted stock units outstanding.
(2) On December 31, 2017, Mr. Brennan had 13,278 restricted stock units outstanding.
(3) On December 31, 2017, Mr. Coxe had 18,006 restricted stock units outstanding.
(4) On December 31, 2017, Ms. DiMarco had 22,432 restricted stock units outstanding.
(5) On December 31, 2017, Mr. Joerres had 21,547 restricted stock units outstanding.
(6) On December 31, 2017, Mr. Ziegler had 19,404 restricted stock units outstanding.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this Item 12 (other than the information set forth below) will be set forth in the Proxy Statement, under the section titled “Security Ownership of Certain Beneficial Owners and Management,” and is incorporated herein by reference.
Securities Authorized for Issuance Under Equity Compensation Plans
All of our equity compensation plans were approved by our sole stockholder prior to our IPO in March 2013. The following table sets forth information regarding the beneficial ownership of our common stock as of February 16, 2018, for:
each person known by us to beneficially own more than 5% of any class of our outstanding shares, as of February 16, 2018;
each of our named executive officers;
each of our directors; and
all of our named executive officers and directors as a group.

Because we have disclosed the ownership oftotal shares of our Class BA common stock authorized and Class C common stock (which correspondissued (or to partnership units that are exchangeable for Class A common stock), thebe issued) under our equity compensation plans as of December 31, 2021.
As of December 31, 2021
Issued (or to be issued upon settlement of RSUs or PSUs)(1)
Number of Securities remaining available for future issuance under equity compensation plansType of Equity Outstanding
2013 Omnibus Incentive Compensation Plan10,416,0173,881,524Restricted Stock Awards
Restricted Stock Units Performance Share Units
2013 Non-Employee Director Plan246,544753,456Restricted Stock Units
(1) Excludes shares forfeited by grantees and available for future issuance.
The shares of Class A common stock underlying partnershiprestricted stock units are not separately reflectedand performance share units awarded to employees under the 2013 Omnibus Incentive Compensation Plan will generally be issued and delivered promptly following the vesting of the awards.
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Table of Contents
As of December 31, 2021, there were 109,530 restricted stock units and 135,230 performance share units outstanding under the 2013 Omnibus Incentive Compensation Plan. The 135,230 performance share units would result in the table below.
Applicable percentage ownership is based on 52,135,113issuance of 202,846 shares of Class A common stock (including 246,581 restricted stock units thatif all vesting conditions are currently outstanding), 11,922,192 shares of Class B common stock and 13,184,527 shares of Class C common stock outstanding at February 16, 2018. The aggregate percentage of combined voting power represents voting power with respect to all shares of our common stock voting together as a single class and is based on 76,995,251 total votes attributed to 76,995,251 total shares of outstanding common stock, as each share of our common stock entitles its holder to one vote per share.
Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws.
Information about securities authorized for issuance under equity compensation plans is included in Item 5 of this report.


Except as otherwise indicated, the address for each stockholder listed below is c/o Artisan Partners Asset Management Inc., 875 E. Wisconsin Avenue, Suite 800, Milwaukee, Wisconsin 53202.
 
Class A(1)
Class BClass C
Aggregate
% of
Combined
Voting
Power
 
No. of
Shares
% of
Class
No. of
Shares
% of
Class
No. of
Shares
% of
Class
        
Directors and Named Executive Officers:       
Stockholders Committee(2) 
5,925,294
11.4%
11,922,192
100%
—
—
23.0%
Eric R. Colson(3)
105,500
*
482,463
4.0%
—
—
—
Charles J. Daley, Jr.(3)(4)
35,500
*
97,779
*
—
—
*
Jason A. Gottlieb(3)
79,488
*
—
—
—
—
—
James S. Hamman, Jr.(3)
34,514
*
—
—
—
—
—
Sarah A. Johnson(3)
36,500
*
94,464
*
—
—
*
Gregory K. Ramirez(3)
35,400
*
77,364
*
—
—
*
Matthew R. Barger(5)
26,339
*
—
—
1,242,002
9.4%
1.6%
Seth W. Brennan(5)(6)
29,562
*
—
—
—
—
*
Tench Coxe(5)(7)
44,201
*
—
—
—
—
*
Stephanie G. DiMarco(5)(8)
98,555
*
—
—
—
—
*
Jeffrey A. Joerres(5)
29,839
*
—
—
—
—
*
Andrew A. Ziegler(5)(9)
24,449
*
—
—
3,455,973
26.2%
4.5%
Directors and executive officers as a group (11 persons)6,184,039
11.9%
11,922,192
100%
4,697,975
35.6%
29.3%
        
5+% Stockholders:       
Artisan Investment Corporation(9)
—
—
—
—
3,455,973
26.2%
4.5%
MLY Holdings Corp.(3)(10)
—
—
2,735,536
22.9%
—
—
—
LaunchEquity Acquisition Partners, LLC (3)(11)
—
—
1,271,196
10.7%
—
—
—
N. David Samra(3)
1,128,407
2.2%
983,218
8.2%
—
—
—
Daniel J. O’Keefe(3)
1,051,911
2.0%
960,676
8.1%
—
—
*
James C. Kieffer (3)
—
—
1,067,575
9.0%
—
—
—
George Sertl(3)
—
—
1,065,008
8.9%
—
—
—
    James D. Hamel(3)
296,758
*
816,066
6.8%
—
—
—
Scott C. Satterwhite—
—
—
—
1,383,768
10.5%
1.8%
Patricia Christina Hellman Survivor’s Trust—
—
—
—
1,197,665
9.1%
1.6%
Arthur Rock 2000 Trust—
—
—
—
1,153,280
8.7%
1.5%
Thomas F. Steyer 2017 GRAT I—
—
—
—
1,082,314
8.2%
1.4%
Big Fish Partners LLC—
—
—
—
807,305
6.1%
1.0%
Kayne Anderson Rudnick Investment Management LLC(12)

4,712,355
9.0%
—
—
—
—
6.1%
The Vanguard Group(13)
4,092,479
7.8%
—
—
—
—
*
Blackrock Inc.(14)
2,942,573
5.6%
—
—
—
—
3.7%
*Less than 1%.
(1)Subject to certain exceptions, the persons who hold shares of our Class B common stock and Class C common stock (which correspond to partnership units that generally are exchangeable for Class A common stock) are currently deemed to have beneficial ownership over a number of shares of our Class A common stock equal to the number of shares of our Class B common stock and Class C common stock reflected in the table above, respectively. Because we have disclosed the ownership of shares of our Class B common stock and Class C common stock, the shares of Class A common stock underlying partnership units are not separately reflected in the table above.
(2)Each of our employees to whom we have granted equity has entered into a stockholders agreement pursuant to which they granted an irrevocable voting proxy with respect to all of the shares of our common stock they have acquired from us and any shares they may acquire from us in the future to a stockholders committee currently consisting of Mr. Colson, Mr. Daley and Mr. Ramirez. All shares subject to the stockholders agreement are voted in accordance with the majority decision of those three members. Shares originally subject to the agreement cease to be subject to it when sold by the employee or upon the termination of the employee’s employment with us.

met.
The number of shares of Class A and Class B common stock in this row includes all shares of Class A common stock underlying the restricted stock units awarded to our non-employee directors under the 2013 Non-Employee Director Plan will be issued and Class B common stock that we have granteddelivered upon the earlier to current employeesoccur of (i) a change in control and that have not yet been sold by those employees. As members(ii) the termination of the stockholders committee, Mr. Colson, Mr. Daley and Mr. Ramirez share voting power over all of these shares. Other than as shown indirector’s service on the row applicable to each of them individually, none of Mr. Colson, Mr. Daley or Mr. Ramirez has investment power with respect to any of the shares subject to the stockholders agreement, and each disclaims beneficial ownership of such shares.
(3)Pursuant to the stockholders agreement, Mr. Colson, Mr. Daley, Mr. Gottlieb, Mr. Hamman, Ms. Johnson, Mr. Ramirez, MLY Holdings Corp., LaunchEquity Acquisition Partners, LLC, Mr. Samra, Mr. O’Keefe, Mr. Kieffer, Mr. Sertl and Mr. Hamel each granted an irrevocable voting proxy with respect to all of the shares of our common stock he or she has acquired from us and any shares he or she may acquire from us in the future to the stockholders committee as described in footnote 2 above. Each retains investment power with respect to the shares of our common stock he or she holds, which are the shares reflected in the row applicable to each person. 400 of Mr. Daley’s shares, 1,400 of Mr. Ramirez’s shares, 4,000 of Ms. Johnson’s shares, and 18,555 of Mr. O’Keefe’s shares are not subject to the stockholders agreement.
(4)Includes 200 shares of Class A common stock held by Mr. Daley’s daughter.
(5)Includes the shares of Class A common stock underlying restricted stock units granted to our non-employee directors. The underlying shares will be delivered on the earlier to occur of (i) a change in control of Artisan and (ii) assuming the restricted stock units have vested, the termination of such person’s service as a director. Mr. Coxe holds restricted stock units awarded to him for the benefit of the managing directors of the general partner of Sutter Hill Ventures.
(6)Includes 6,250 shares of Class A common stock held by a trust for the benefit of Mr. Brennan’s children.
(7)Includes 22,411 shares of Class A common stock held by a trust of which Mr. Coxe is a co-trustee and beneficiary. Mr. Coxe shares voting and investment power over all of such shares of Class A common stock.
(8)Includes 20,308 shares of Class A common stock held by a charitable trust of which Ms. DiMarco is a trustee.
(9)The Class C shares reflected in the row applicable to Mr. Ziegler individually are owned by Artisan Investment Corporation. Mr. Ziegler and Carlene M. Ziegler, who are married to each other, control Artisan Investment Corporation.
(10)MLY Holdings Corp. is a Delaware corporation through which Mark L. Yockey holds his shares of Class B common stock. Mr. Yockey is the sole director of MLY Holdings Corp.
(11)LaunchEquity Acquisition Partners, LLC, is a manager-managed designated series limited liability company organized under the laws of the State of Delaware. Andrew C. Stephens is the sole manager of the designated series of LaunchEquity Acquisition Partners through which Mr. Stephens holds his shares of Class B common stock.
(12) This information has been derived from the Schedule 13G filed with the SEC on February 13, 2018 by Kayne Anderson Rudnick Investment Management LLC which states that Kayne Anderson Rudnick Investment Management had voting and dispositive power over 4,712,355 shares of Class A common stock as of December 31, 2017. The address of Kayne Anderson Rudnick Investment Management is 1800 Avenue of the Stars, Los Angeles, California, 90067.Board.
(13) This information has been derived from the Schedule 13G filed with the SEC on February 12, 2018 by The Vanguard Group, Inc. which states that Vanguard Group had voting power over 93,549 shares and dispositive power over 4,092,479 shares of Class A common stock as of December 31, 2017. The address of the Vanguard Group is 100 Vanguard Blvd, Malvern, Pennsylvania, 19355.
(14) This information has been derived from the Schedule 13G filed with the SEC on February 1, 2018 by Blackrock Inc. which states that Blackrock had voting power over 2,845,855 shares and dispositive power over 2,942,573 shares of Class A common stock as of December 31, 2017. The address of Blackrock Inc. is 55 East 52nd Street, New York, NY 10055.


Item 13. Certain Relationships and Related Transactions, and Director Independence
Transactions in Connection with our IPO
In March 2013, in connection with the initial public offering (“IPO”) of Artisan Partners Asset Management, we entered into the agreements described below with the limited partners of Artisan Partners Holdings, including the following persons and entities:
Those of our currently-serving named executive officers who own Class B common units of Artisan Partners Holdings.
Artisan Investment Corporation (“AIC”), an entity controlledThe information required by Andrew A. Ziegler, our Lead Director, and Carlene M. Ziegler. AIC owns all of the Class D common units of Artisan Partners Holdings.
Private equity funds (the “H&F holders”) controlled by Hellman & Friedman LLC (“H&F”). Mr. Barger, one of our directors, is a senior advisor of H&F. The H&F holders no longer own any units of Artisan Partners Holdings or, to our knowledge, any shares of our common stock.
Mr. Barger, who owns Class A common units of Artisan Partners Holdings.
Sutter Hill Ventures, of which one of our directors, Mr. Coxe, is a managing director of the general partner, and two trusts of which Mr. Coxe is a co-trustee.
Several other persons or entities who own Class A common units of Artisan Partners Holdings and greater than 5% of our outstanding Class C common stock.
Several of our employees, or entities controlled by an employee, who own (or owned) Class B common units of Artisan Partners Holdings and greater than 5% of our outstanding Class B common stock.

The rights of each of the persons and entities listed above under the agreements discussed below are, in general, the same as the rights of each other holder of the same class of partnership units. So, for instance, the rights of our currently-serving named executive officers that are holders of Class B common units, under the exchange, registration rights, partnership and tax receivable agreements described below are, in general, the same as the rights of each other holder of Class B common units. The descriptions of the transactions and agreements below, including the rights and ownership interests of the persons and entities listed above, are as of January 31, 2018, unless otherwise indicated.
Exchange Agreement
Under the exchange agreement, subject to certain restrictions (including those intended to ensure that Artisan Partners Holdings is not treated as a “publicly traded partnership” for U.S. federal income tax purposes), holders of partnership units have the right to exchange common units (together with an equal number of shares of our Class B common stock or Class C common stock, as applicable) for shares of our Class A common stock on a one-for-one basis. A partnership unit cannot be exchanged for a share of our Class A common stock without a share of our Class B common stock or Class C common stock, as applicable, being delivered together at the time of exchange for cancellation.
Holders of partnership units have the right to exchange units in a number of circumstances that are generally based on, but in several respects are not identical to, the “safe harbors” contained in the U.S. Treasury Regulations dealing with publicly traded partnerships. In accordance with the terms of the exchange agreement, partnership units are exchangeable: (i) in connection with the first underwritten offering in any calendar year pursuant to the resale and registration rights agreement; (ii) on a specified date each fiscal quarter; (iii) in connection with the holder’s death, disability or mental incompetence; (iv) as part of one or more exchanges by the holder and any related persons during any 30-calendar day period representing in the aggregate more than 2% of all outstanding partnership units (generally disregarding interests held by us); (v) if the exchange is of all of the partnership units held by AIC in a single transaction; (vi) in connection with a tender offer, share exchange offer, issuer bid, take-over bid, recapitalization or similar transaction with respect to our Class A common stock that is effected with the consent of our Board or in connection with certain mergers, consolidations or other business combinations; or (vii) if we permit the exchanges after determining that Artisan Partners Holdings would not be treated as a “publicly traded partnership” under Section 7704 of the Internal Revenue Code as a result. In general, we may provide for exchanges in addition to the exchanges that holders of partnership units are entitled to.
As the holders of limited partnership units exchange their units for Class A common stock, we receive a number of general partnership units, or GP units, of Artisan Partners Holdings equal to the number of shares of our Class A common stock that they receive, and an equal number of limited partnership units are canceled.
During the fiscal year ended December 31, 2017, holders of Class A, Class B and Class E common units exchanged an aggregate of 1,472,197 units for Class A common stock, and an equal number of shares of our Class B or Class C common stock, as applicable, were canceled. We expect that approximately 900,000 common unitsthis Item 13 will be exchanged for Class A common stock on March 1, 2018.

Resale and Registration Rights Agreement
Under the resale and registration rights agreement, we have provided the holders of partnership units with certain registration rights. We have also established certain restrictions on the timing and manner of resales of Class A common stock received upon exchange of partnership units. In general, our Board may waive or modify the restrictions on resale described below.
We were required to file, and use our reasonable best efforts to cause the SEC to declare effective, two registration statements: (i) an exchange shelf registration statement registering all shares of our Class A common stock and convertible preferred stock to be issued upon exchange of partnership units, and (ii) a shelf registration statement registering secondary sales of Class A common stock issuable upon exchange of units or conversion of convertible preferred stock by AIC and the H&F holders, as applicable.
As of December 31, 2017, AIC owned 3,455,973 Class D common units exchangeable for an equal number of shares of our Class A common stock. There is no limit on the number of shares of our Class A common stock AIC may sell. AIC has the right to use the resale shelf registration statement to sell shares of Class A common stock, including the right to an unrestricted number of brokered transactions and, subject to certain limitations and qualifications, marketed and unmarketed underwritten shelf takedowns.
As of December 31, 2017, our employee-partners owned an aggregate of 11,922,192 Class B common units. In general, in each 12-month period, the first of which began in the first quarter of 2014, each employee-partner is permitted to sell up to (i) a number of vested shares of our Class A common stock representing 15% of the aggregate number of common units and shares of Class A common stock received upon exchange of common units (in each case, whether vested or unvested) he or she held as of the first day of that period or, (ii) if greater, vested shares of our Class A common stock having a market value as of the time of sale of $250,000, as well as, in either case, the number of shares such holder could have sold in any previous period or periods but did not sell in such period or periods. Units sold by employee-partners in connection with underwritten offerings or otherwise redeemed by us are included when calculating the maximum number of shares each employee-partner is permitted to sell in any one-year period. Our Board may waive or modify the resale limitations described in this paragraph.
In February 2018, our Board approved the sale of additional Class B common units by certain employee-partners, including Mr. Colson and certain senior portfolio managers that own Class B common units of Artisan Partners Holdings and greater than 5% of our outstanding Class B common stock. That group may sell 20% of the aggregate number of common units and shares of Class A common stock received upon exchange of common units in 2018, and we expect to permit them to sell the same amount in each of the following four years, subject to maintaining a minimum dollar amount of firm equity. In total, together with shares eligible for sale from retiring employee-partners, approximately 3.1 million shares will become eligible for sale in the first quarter of 2018. Combined with shares that previously became eligible but have not been sold, approximately 3.7 million Class B common units are eligible for exchange and sale in the first quarter of 2018. Because employee-partners and other employees are eligible to sell amounts of vested shares as described in this 10-K, employees’ equity ownership, in the aggregate, could significantly decline over the next five years.
Upon termination of employment with Artisan, an employee-partner’s Class B common units are exchanged for Class E common units; the employee-partner’s shares of Class B common stock are canceled; and we issue the former employee-partner a number of shares of Class C common stock equal to the former employee-partner’s number of Class E common units. Class E common units are exchangeable for Class A common stock subject to the same restrictions and limitations on exchange applicable to the other common units of Holdings.
If the employee-partner’s employment was terminated as a result of retirement, death or disability, the employee-partner or his or her estate may (i) as of and after the time of termination of employment, sell (A) a number of shares of our Class A common stock up to one-half of the employee-partner’s aggregate number of vested common units and shares of Class A common stock received upon exchange of common units held as of the date of termination of employment or, (B) if greater, vested shares of our Class A common stock having a market value as of the time of sale of up to $250,000, and (ii) as of and after the first anniversary of the termination, the person’s remaining shares of our Class A common stock received upon exchange of common units. Retirement, for these purposes, generally requires that the employee-partner have provided ten years of service or more at the date of retirement and offered one year’s written notice (or three years’ written notice in the case of employee-partners who are lead portfolio managers or executive officers) of the intention to retire, subject to our right to accept a shorter period of notice.
If an employee-partner resigns or is terminated involuntarily, the employee-partner may in each 12-month period following the third, fourth, fifth and sixth anniversary of the termination, sell a number of shares of our Class A common stock up to one-fourth of the employee-partner’s aggregate number of vested common units and shares of Class A common stock received upon exchange of common units held as of the date of termination of his or her employment (as well as the number of shares such employee-partner could have sold in any previous period or periods but did not sell in such period or periods).

As of December 31, 2017, former employee-partners owned an aggregate of 2,041,200 Class E common units, 1,778,894 of which may currently be sold.
As of December 31, 2017, our initial outside investors who are holders of Class A common units owned an aggregate of 7,687,354 Class A common units exchangeable for an equal number of shares of our Class A common stock. There is no limit on the number of shares of our Class A common stock the holders of Class A common units may sell.
We have paid and will continue to pay all expenses incident to our performance of any registration or marketing of securities pursuant to the resale and registration rights agreement, including reasonable fees and out-of-pocket costs and expenses of selling stockholders. We have also agreed to indemnify any selling stockholder, solely in their capacity as selling stockholders, against any losses or damages resulting from any untrue statement, or omission of material fact in any registration statement, prospectus or free writing prospectus pursuant to which they may sell shares of our Class A common stock, except to the extent the liability arose from their misstatement or omission of a material fact, in which case they have similarly agreed to indemnify us.
Amended and Restated Limited Partnership Agreement of Artisan Partners Holdings
As a holding company, we conduct all of our business activities through our direct subsidiary, Artisan Partners Holdings, an intermediate holding company, which wholly owns Artisan Partners Limited Partnership, our principal operating subsidiary. The rights and obligations of Artisan Partners Holdings’ partners are set forth in its amendedthe Proxy Statement, under the sections titled “Board Composition and restated limited partnership agreement.
We are the general partner of Artisan Partners HoldingsStructure – Director Independence” and control its business“Relationships and affairs and are responsible for the management of its business, subject to the voting rights of the limited partners as described below. No limited partners of Artisan Partners Holdings, in their capacity as such, have any authority or right to control the management of Artisan Partners Holdings or to bind it in connection with any matter.
Artisan Partners Holdings has outstanding GP units and common units. Net profits and net losses and distributions of profits of Artisan Partners Holdings are allocated and made to partners pro rata in accordance with the number of partnership units they hold. Artisan Partners Holdings is obligated to distribute to us and its other partners cash payments for the purposes of funding tax obligations of ours and theirs as partners of Artisan Partners Holdings. In order to make a share of our Class A common stock represent the same percentage economic interest, disregarding corporate-level taxes and payments with respect to the tax receivable agreements, in Artisan Partners Holdings as a common unit of Artisan Partners Holdings, we always hold a number of GP units equal to the number of shares of Class A common stock issued and outstanding.
As the general partner of Artisan Partners Holdings, we hold all GP units and control the business of Artisan Partners Holdings. Our approval, acting in our capacity as the general partner, along with the approval of holders of a majority of each class of limited partnership units (except the Class E common units), voting as a separate class, will be required to engage in a material corporate transaction; with certain exceptions, redeem or reclassify partnership units or interests in any subsidiary, issue additional partnership units or interests in any subsidiary, or create additional classes of partnership units or interests in any subsidiary; or make any in-kind distributions. If any of the foregoing affects only certain classes of partnership units, only the approval of us and the affected classes would be required. The approval rights of each class of partnership units will terminate when the holders of the respective class of units directly or indirectly cease to own units constituting at least 5% of the outstanding units of Artisan Partners Holdings.
The amended and restated limited partnership agreement may be amended with the consent of the general partner and the holders of a majority of the Class A common units, Class B common units and Class D common units, each voting as a separate class, provided that the general partner may, without the consent of any limited partner, make amendments that do not materially and adversely affect any limited partners. To the extent any amendment materially and adversely affects only certain classes of limited partners, only the holders of a majority of the units of the affected classes have the right to approve such amendment.
Artisan Partners Holdings will indemnify AIC, as its former general partner, us, as its current general partner, the former members of its pre-IPO Advisory Committee, the members of our Stockholders Committee and our directors and officers against any losses, damages, costs or expenses (including reasonable attorney’s fees, judgments, fines and amounts paid in settlement) actually incurred in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal or administrative (including any action by or on behalf of Artisan Partners Holdings) arising as a result of the capacities in which they serve or served Artisan Partners Holdings to the maximum extent that any of them could be indemnified if Artisan Partners Holdings were a Delaware corporation and they were directors of such corporation. In addition, Artisan Partners Holdings will pay the costs or expenses (including reasonable attorneys’ fees) incurred by the indemnified parties in advance of a final disposition of such matters so long as the indemnified party undertakes to repay the expenses if the party is adjudicated not to be entitled to indemnification.

Artisan Partners Holdings will also indemnify its officers and employees and officers and employees of its subsidiaries against any losses, damages, costs or expenses (including reasonable attorney’s fees, judgments, fines and amounts paid in settlement) actually incurred in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal or administrative arising as a result of their being an employee of Artisan Partners Holdings (or their serving as an officer or fiduciary of any of Artisan Partners Holdings’ subsidiaries or benefit plans or any entity of which Artisan is sponsor or adviser), provided that no employee will be indemnified or reimbursed for any claim, obligation or liability adjudicated to have arisen out of or been based upon such employee’s intentional misconduct, gross negligence, fraud or knowing violation of law.
Stockholders Agreement
Our employees (including all of our employee-partners) to whom we have granted equity have entered into a stockholders agreement pursuant to which they granted an irrevocable voting proxy with respect to all shares of our common stock they have acquired from us (which shares represent approximately 23% of the combined voting power of our capital stock at the time of this filing) and any shares they may acquire from us in the future to a stockholders committee currently consisting of Eric R. Colson (Chairman and Chief Executive Officer), Charles J. Daley, Jr. (Chief Financial Officer) and Gregory K. Ramirez (Executive Vice President). Any shares of our common stock that we issue to our employees in the future will be subject to the stockholders agreement so long as the agreement has not been terminated. Shares subject to the stockholders agreement will be voted in accordance with the majority decision of the three members of the stockholders committee.
The members of the stockholders committee must be Artisan employees and holders of shares subject to the agreement. If a member of the stockholders committee ceases to act as a member of the committee, our Chief Executive Officer (if he or she is a holder of shares subject to the stockholders agreementRelated Party Transactions,” and is not already a member of the committee) will become a member of the committee. Otherwise, the two remaining members of the stockholders committee will jointly select a third member of the committee. Each member of the stockholders committee is entitled to indemnification from Artisan in his or her capacity as a member of the committee.incorporated herein by reference.
The stockholders agreement provides that members of the stockholders committee will vote the shares subject to the agreement in support of the following:
Matthew R. Barger, or, unless Mr. Barger is removed from the Board for cause, a successor selected by Mr. Barger who holds Class A common units, so long as the holders of the Class A common units beneficially own at least 5% of our outstanding capital stock. As of December 31, 2017, the holders of the Class A common units beneficially owned approximately 10% of our outstanding capital stock.
A director nominee, initially Mr. Colson, designated by the stockholders committee who is an employee-partner.

Under the terms of the stockholders agreement, we are required to use our best efforts to elect the nominees described above, which efforts must include soliciting proxies for, and recommending that our stockholders vote in favor of, the election of each. Other than as provided above, under the terms of the stockholders agreement, the stockholders committee may in its discretion vote, or abstain from voting, all or any of the shares subject to the agreement on any matter on which holders of shares of our common stock are entitled to vote. The committee is specifically authorized to vote for its members as directors under the terms of the stockholders agreement.
At any time after the earlier of (i) the elimination of the Class B common stock’s supervoting rights and (ii) March 12, 2018, parties to the stockholders agreement holding at least two-thirds of the shares subject to the agreement may terminate it provided that the stockholders committee is no longer obligated to vote in favor of a director nominee who is a Class A common unit holder. The elimination of the Class B common stock’s supervoting rights occurred on February 9, 2018.
Tax Receivable Agreements
We are party to two tax receivable agreements. The first tax receivable agreement is between APAM and the Pre-H&F Corp Merger Shareholder that was the sole shareholder of our convertible preferred stock. As part of our IPO reorganization, a corporation (“H&F Corp”) controlled by Hellman & Friedman LLC merged with and into us pursuant to an Agreement and Plan of Merger. As consideration for the merger, the shareholder of H&F Corp received shares of our convertible preferred stock (all of which were converted to shares of Class A common stock in June 2014), contingent value rights (which were subsequently terminated in November 2013), and the right to receive an amount of cash. The tax receivable agreement between APAM and the Pre-H&F Merger Shareholder generally provides for the payment by APAM of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) the tax attributes of the preferred units APAM acquired in the merger, (ii) net operating losses available as a result of the merger, and (iii) tax benefits related to imputed interest.

The second tax receivable agreement, with each holder of limited partnership units, generally provides for the payment by APAM to each of them of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) certain tax attributes of their partnership units sold to us or exchanged (for shares of Class A common stock, convertible preferred stock or other consideration) and that are created as a result of such sales or exchanges and payments under the TRAs, and (ii) tax benefits related to imputed interest.
For purposes of these tax receivable agreements, cash savings in tax are calculated by comparing our actual income tax liability to the amount we would have been required to pay had we not been able to utilize any of the tax benefits subject to the tax receivable agreements, unless certain assumptions apply. The tax receivable agreements will continue until all tax benefits have been utilized or expired, unless we exercise our right to terminate the agreements or we materially breach any of our material obligations under the agreements, in which cases our obligations under the agreements will accelerate. The actual increase in tax basis, as well as the amount and timing of any payments under these agreements, will vary depending upon a number of factors, including the timing of purchases or exchanges of partnership units, the price of our Class A common stock at the time of such purchases or exchanges, the extent to which such transactions are taxable, the amount and timing of the taxable income we generate in the future and the tax rate then applicable and the portion of our payments under the tax receivable agreements constituting imputed interest or depreciable or amortizable basis. In addition, in the case of a change of control, our obligations will be based on different assumptions that may affect the amount of the payments required under the agreements.
As of December 31, 2017, we recorded a $385.4 million liability, representing amounts payable under the tax receivable agreements equal to 85% of the tax benefit we expect to realize from the merger described above and our purchase of Class A common units in connection with the IPO; our purchase of common and preferred units since the IPO; and the quarterly exchanges made by certain limited partners pursuant to the exchange agreement.
The amount assumes no material changes in the related tax law and that APAM earns sufficient taxable income to realize all tax benefits subject to the tax receivable agreements. Additional purchases or exchanges of units of Artisan Partners Holdings will cause the liability to increase.
During 2017, we made payments under the tax receivable agreements totaling approximately $30 million in the aggregate. Of that amount, $17.2 million was paid to certain of our directors or entities affiliated with certain directors and $7.7 million was paid to our employee-partners, including to certain of our currently-serving named executive officers and several employee-partners, or entities controlled by employee-partners, who own greater than 5% of our outstanding Class B common stock.
Assuming no material changes in the relevant tax law and that APAM earns sufficient taxable income to realize all tax benefits that are subject to the tax receivable agreements, we expect that the reduction in tax payments for us associated with (i) the H&F Corp merger described above; (ii) the purchase or exchange of partnership units from March 2013 through December 31, 2017; and (iii) projected future purchases or exchanges of partnership units would aggregate to approximately $728 million over generally a minimum of 15 years, assuming the future purchases or exchanges described in clause (iii) occurred at a price of $39.50 per share of our Class A common stock, the closing price of our Class A common stock on December 29, 2017.
Under such scenario we would be required to pay the other parties to the tax receivable agreements 85% of such amount, or approximately $655 million, over generally a minimum of 15 years. The actual amounts may materially differ from these hypothetical amounts, as potential future reductions in tax payments for us and tax receivable agreement payments by us will be calculated using the market value of our Class A common stock at the time of purchase or exchange and the prevailing tax rates applicable to us over the life of the tax receivable agreements and will be dependent on us generating sufficient future taxable income to realize the benefit.
Transactions in Connection with the 2017 Follow-On Offering
In February 2017, we entered into partnership unit purchase agreements with limited partners who elected to sell common units of Holdings to us. Pursuant to those agreements, we used the net proceeds of the issuance of 5,626,517 shares of our Class A common stock in February 2017 to purchase 5,626,517 common units from certain limited partners of Holdings, including AIC; Mr. Colson and Mr. Daley; and many of our employee-partners, including several employee-partners, or entities controlled by employee-partners, who own greater than 5% of our outstanding Class B common stock. We purchased the units at a price equal to $28.88 per unit.
Indemnification Agreements
We have entered into an indemnification agreement with each of our executive officers, directors and the members of our Stockholders Committee that provides, in general, that we will indemnify them to the fullest extent permitted by Delaware law in connection with their service in such capacities. Due to the nature of the indemnification agreements, they are not the type of agreements that are typically entered into with or available to unaffiliated third parties.

Corporate Hospitality Tent
We licensed a corporate hospitality tent from the United States Golf Association in connection with the 2017 U.S. Open Championship at Erin Hills Golf Course. Pursuant to the license agreement, the Company paid the USGA a rental and admission fee. Erin Hills, which is owned by Mr. Ziegler, was contractually entitled to a percentage of the total revenue generated by the event, including the fees paid by the Company in connection with its tent. Although the amount was immaterial to Mr. Ziegler, he waived the revenue that Erin Hills otherwise would have been entitled to in connection with the Company’s tent.

Investments in Certain Artisan-Sponsored Private Funds
Several of our directors, executive officers and employees, including employees who own greater than 5% of our outstanding Class B common stock, or entities they own or control, have made seed investments in certain Artisan-sponsored private funds. These investments provide the initial seed capital needed to support the launch of new investment strategies and products. Management and incentive fees are generally waived with respect to these investments. In the aggregate, $69,649 of management fees and $96,127 of incentive fees were waived during 2017 with respect to seed capital investments made by related-party investors.

Review, Approval or Ratification of Transactions with Related Persons
We have adopted a written policy regarding the approval, with certain exceptions, of any transaction or series of transactions in which we or any of our subsidiaries is a participant, the amount involved exceeds $120,000, and a “related party” (a director, director nominee, executive officer, or a person known to us to be the beneficial owner of more than 5% of our voting securities, or any immediate family member of any of the foregoing) has a direct or indirect material interest (a “related-party transaction”). Under the policy, a related party must promptly disclose to our Chief Legal Officer any potential related-party transaction and all material facts about the transaction. The Chief Legal Officer will then assess whether the transaction constitutes a related-party transaction. If the Chief Legal Officer determines a transaction qualifies as such, he or she will communicate that information to the Audit Committee, to the Chair of the Audit Committee, if the Chief Legal Officer determines it is impracticable or undesirable to wait until the next committee meeting, or to the entire Board. Based on its consideration of all of the relevant facts and circumstances, the Audit Committee, the Chair of the Audit Committee or the Board, as applicable, will decide whether to approve such transaction and will generally approve only those transactions that are not inconsistent with our best interests. If we become aware of a related-party transaction that was not approved under this policy before it was entered into, the transaction will be referred to the Audit Committee or the entire Board, which will evaluate all options available, including ratification, amendment or termination of such transaction. Under the policy, any director who has an interest in a related-party transaction will recuse himself or herself from any formal action with respect to the transaction as deemed appropriate by the Audit Committee or Board.
Director Independence

The Board is composed of a majority of directors who satisfy the criteria for independence under the NYSE listing standards and do not have any material relationship with the Company. Our Board has determined that each of Matthew R. Barger, Seth W. Brennan, Tench Coxe, Stephanie G. DiMarco, Jeffrey A. Joerres and Andrew A. Ziegler is independent in accordance with NYSE listing standards and our Governance Guidelines, and does not have any relationship that would interfere with exercising independent judgment in carrying out his or her responsibilities as a director.


Item 14. Principal Accountant Fees and Services
Audit and Non-Audit Fees
Aggregate fees for professional services rendered for usThe information required by this Item 14 will be set forth in the Proxy Statement, under the section titled “Proposal 2: Ratification of the Appointment of PricewaterhouseCoopers LLP as of and for the fiscal years endedFiscal Year Ending December 31, 20172021,” and 2016 are set forth below. The aggregate fees included in the “Audit Fees” category are fees billed for the fiscal year for the auditsis incorporated herein by reference.
97
Table of our annual financial statements, audits of statutory and regulatory filings, and quarterly reviews. The aggregate fees included in the Audit-Related, Tax and Other Fees categories are fees for services performed in the fiscal years.Contents
 Fiscal Year 2017 Fiscal Year 2016
Audit Fees$929,400
 $880,400
Audit‑Related Fees380,200
 57,000
Tax Fees984,300
 438,500
All Other Fees3,600
 3,600
Total$2,297,500
 $1,379,500

Audit Fees for the fiscal years ended December 31, 2017 and 2016 were for professional services rendered for the audits of our annual financial statements, reviews of quarterly financial statements and services that are customarily provided in connection with statutory or regulatory filings.

Audit-Related Fees for the fiscal years ended December 31, 2017 and 2016 were for reviews of registration statements filed with the SEC, consultations related to the accounting or disclosure treatment of transactions and attest services related to our compliance with the Global Investment Performance Standards (GIPS). For the year ended December 31, 2017, audit-related fees also includes $173,000 for audit services of consolidated investment products.

Tax Fees for the fiscal years ended December 31, 2017 and 2016 were for domestic and foreign tax return compliance, including review of partner capital accounts, and consultations related to technical interpretations, applicable laws and regulations and tax accounting. During 2017, $131,700 of the tax fees related to tax return compliance and preparation.

Other Fees for the fiscal years ended December 31, 2017 and 2016 were license fees for professional publications.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee is required to pre-approve, or adopt appropriate procedures to pre-approve, all audit and non-audit services to be provided by the independent auditors. The Committee will typically pre-approve specific types of audit, audit-related and tax services on an annual basis. The Committee pre-approves all other services on an individual basis throughout the year as the need arises. The Committee has delegated to its chairperson the authority to pre-approve independent auditor engagements between meetings of the Committee. Any such pre-approvals will be reported to and ratified by the entire Committee at its next regular meeting.
All audit, audit-related and tax services in fiscal 2017 were pre-approved by the Audit Committee. In all cases, the Audit Committee concluded that the provision of such services by PricewaterhouseCoopers LLP was compatible with the maintenance of PricewaterhouseCoopers LLP’s independence.

PART IV
Item 15. Exhibits and Financial Statement Schedules
(1) Financial Statements: The information required by this Item is contained in Item 8 of Part II of this report.
(2) Financial Statement Schedules: None
(3) Exhibits:
Exhibit No.DescriptionFormFile No.ExhibitFiling DateFiled or Furnished Herewith
2.110-K001-358262.1February 25, 2016
3.110-K001-358263.1February 25, 2016
3.210-K001-358263.2February 25, 2016
4.110-K001-358264.1February 18, 2020
10.110-K001-3582610.1February 25, 2016
10.210-K001-3582610.2February 25, 2016
10.310-K001-3582610.3February 25, 2016
10.410-K001-3582610.4February 25, 2016
10.510-K001-3582610.5February 25, 2016
10.610-K001-3582610.6February 25, 2016
10.710-K001-3582610.9February 25, 2016
10.810-K001-3582610.10February 25, 2016
10.910-K001-3582610.12February 25, 2016
10.1010-K001-3582610.14February 25, 2016
10.1110-K001-3582610.15February 25, 2016
10.1210-K001-3582610.18February 25, 2016
10.1310-K001-3582610.13February 20, 2019
10.1410-K001-3582610.14February 20, 2019
10.1510-K001-3582610.15February 20, 2019
10.1610-K001-3582610.16February 20, 2019
10.1710-K001-3582610.17February 20, 2019
10.1810-K001-3582610.18February 18, 2020
98
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Exhibit No.DescriptionFormFile No.ExhibitFiling DateFiled or Furnished Herewith
10.1910-K001-3582610.19February 23, 2021
10.20X
10.2110-K001-3582610.20February 23, 2021
10.22X
10.23X
10.2410-K001-3582610.22February 25, 2016
10.25X
10.268-K001-3582610.1August 18, 2017
10.278-K001-3582610.2August 18, 2017
10.2810-Q001-3582610.3November 1, 2017
10.298-K001-3582610.1June 6, 2019
10.308-K001-3582610.1December 7, 2021
21.1X
23.1X
31.1X
31.2X
32.1X
32.2X
99
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Exhibit No.DescriptionFormFile No.ExhibitFiling DateFiled or Furnished Herewith
2.1101
Agreement and Plan of Merger between Artisan Partners Asset Management Inc. and H&F Brewer Blocker Corp. (1)
3.1
Restated Certificate of Incorporation of Artisan Partners Asset Management Inc. (1)
3.2
Amended and Restated Bylaws of Artisan Partners Asset Management Inc. (1)
10.1
Fifth Amended and Restated Limited Partnership Agreement of Artisan Partners Holdings LP (1)
10.2
Amended and Restated Resale and Registration Rights Agreement (1)
10.3
Exchange Agreement (1)
10.4
Tax Receivable Agreement (Merger) (1)
10.5
Tax Receivable Agreement (Exchanges) (1)
10.6
Stockholders Agreement (1)
10.7
Artisan Partners Asset Management Inc. 2013 Omnibus Incentive Compensation Plan (1)
10.8
Artisan Partners Asset Management Inc. 2013 Non-Employee Director Plan (1)
10.9
Artisan Partners Asset Management Inc. Bonus Plan (1)
10.10
Amended and Restated Artisan Partners Asset Management Inc. Bonus Plan (2)
10.11
Form of Artisan Partners Holdings LP Restated Class B Common Units Grant Agreement (1)
10.12
Form of Indemnification Agreement (1)
10.13
Form of Indemnification Priority Agreement (1)
10.14
Form of Artisan Partners Asset Management Inc. 2013 Non-Employee Director Plan - Restricted Share Unit Award Agreement (1)
10.15
Form of Artisan Partners Asset Management Inc. 2013 Omnibus Incentive Compensation Plan - Restricted Stock Award Agreement (1)
10.16
Form of Artisan Partners Asset Management Inc. 2013 Omnibus Incentive Compensation Plan - Restricted Share Award Agreement
10.17
Form of Artisan Partners Asset Management Inc. 2013 Omnibus Incentive Compensation Plan - Career Restricted Share Award Agreement
10.18
Form of Unit Purchase Agreement (1)
10.19
Second Amended and Restated Investment Advisory Agreement between Artisan Partners Limited Partnership and Artisan Partners Funds, Inc.
10.20
Note Purchase Agreement, dated as of August 16, 2017, among Artisan Partners Holdings LP and the purchasers listed therein (3)
10.21
Amended and Restated Five-Year Revolving Credit Agreement, dated as of August 16, 2017, among Artisan Partners Holdings LP, the lenders named therein, and Citibank, N.A., as Administrative Agent (3)
10.22
Note Purchase Agreement, dated August 16, 2012, as amended September 15, 2017, among Artisan Partners Holdings LP and the purchasers listed therein (4)
21.1
Subsidiaries of the Registrant
23.1
Consent of Independent Registered Public Accounting Firm
31.1
Certification of the Company’s Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
Certification of the Company’s Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1
Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2
Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101The following Extensible Business Reporting Language (XBRL) documents are collectively included herewith as Exhibit 101: (i) the Consolidated Statements of Financial Condition as of December 31, 20172021 and 2016;2020; (ii) the Consolidated Statements of Operations for the years ended December 31, 2017, 20162021, 2020 and 2015;2019; (iii) the Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 20162021, 2020 and 2015;2019; (iv) the Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2017, 20162021, 2020 and 2015;2019; (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2017, 20162021, 2020 and 20152019 and (vi) the Notes to Consolidated Financial Statements as of and for the years ended December 31, 2017, 20162021, 2020 and 20152019X
104Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101)X
(1)
incorporated by reference to Form 10-K filed by Artisan Partners Asset Management Inc. on February 25, 2016 Indicates a management contract or compensatory plan or arrangement.
(2)
incorporated by reference These certifications are deemed to Form 10-Kbe furnished and not filed by Artisan Partners Asset Management Inc. on February 21, 2017
(3)incorporated by reference tofor purposes of Sections 11 and 12 of the Company’s Current Report on Form 8-K, filed withSecurities Act of 1933 and Section 18 of the SEC on August 18, 2017
(4)incorporated by reference to Form 10-Q, filed with the SEC on November 1, 2017Securities Exchange Act of 1934.

Item 16. Form 10-K Summary
None.

100
Table of Contents
SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




Artisan Partners Asset Management Inc.


Dated: February 21, 2018
By:
22, 2022
By:/s/ Eric R. Colson
Eric R. Colson
President,
Chief Executive Officer and Chairman of the Board

(principal executive officer)
/s/ Charles J. Daley Jr.
Charles J. Daley, Jr.
Executive Vice President, Chief Financial Officer and Treasurer
(principal financial and accounting officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 21st22nd day of February, 2018.
2022.
SignatureTitle
/s/ Jennifer BarbettaDirector
Jennifer A. Barbetta
/s/ Matthew R. BargerDirector
Matthew R. Barger
/s/ Seth W. BrennanDirector
Seth W. Brennan
/s/ Tench CoxeDirector
Tench Coxe
/s/ Stephanie G. DiMarcoDirectorChair of the Board
Stephanie G. DiMarco
/s/ Jeffrey A. JoerresDirector
Jeffrey A. Joerres
/s/ Saloni S. MultaniDirector
Saloni S. Multani
/s/ Andrew A. ZieglerDirector
Andrew A. Ziegler

125101