ALLIANCEBERNSTEIN HOLDING L.P. 10-K

ab-20211231 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31 , 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-09818 ALLIANCEBERNSTEIN HOLDING L.P. (Exact name of registrant as specified in its charter) Delaware 13-3434400 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 501 Commerce Street , Nashville , TN 37203 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: ( 615 ) 622-0000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol Name of Each Exchange on Which Registered Units Rep. Assignments of Beneficial Ownership of LP Interests in AB Holding ("Units") AB New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ 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 ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ 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. ☐ 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. Yes ☒ No ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of the units representing assignments of beneficial ownership of limited partnership interests held by non-affiliates computed by reference to the price at which such units were last sold on the New York Stock Exchange as of June 30, 2021 was approximately $ 4.2 billion. The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of December 31, 2021 was 99,271,727 . (This figure includes 100,000 general partnership units having economic interests equivalent to the economic interests of the units representing assignments of beneficial ownership of limited partnership interests.) DOCUMENTS INCORPORATED BY REFERENCE This Form 10-K does not incorporate any document by reference. Table of Contents Table of Contents Glossary of Certain Defined Terms ii Part I Item 1. Business 1 Item 1A. Risk Factors 18 Item 1B. Unresolved Staff Comments 29 Item 2. Properties 29 Item 3. Legal Proceedings 29 Item 4. Mine Safety Disclosures 29 Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 30 Item 6. Reserved 32 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Impact of COVID-19 33 Executive Overview 34 Market Environment 34 AB Holding 37 AB 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59 AB Holding 59 AB 59 Item 8. Financial Statements and Supplementary Data 61 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 121 Item 9A. Controls and Procedures 121 Item 9B. Other Information 122 Part III Item 10. Directors, Executive Officers and Corporate Governance 123 Item 11. Executive Compensation 138 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 164 Item 13. Certain Relationships and Related Transactions, and Director Independence 168 Item 14. Principal Accounting Fees and Services 169 Part IV Item 15. Exhibits, Financial Statement Schedules 170 Item 16. Form 10-K Summary 172 Signatures 173 2021 Annual Report i Table of Conte nts Glossary of Certain Defined Terms AB AllianceBernstein L.P. (Delaware limited partnership formerly known as Alliance Capital Management L.P., “ Alliance Capital ”), the operating partnership, and its subsidiaries and, where appropriate, its predecessors, AB Holding and ACMC, Inc. and their respective subsidiaries. AB Holding AllianceBernstein Holding L.P. (Delaware limited partnership). AB Holding Partnership Agreement the Amended and Restated Agreement of Limited Partnership of AB Holding, dated as of October 29, 1999 and as amended February 24, 2006. AB Holding Units units representing assignments of beneficial ownership of limited partnership interest in AB Holding. AB Partnership Agreement the Amended and Restated Agreement of Limited Partnership of AB, dated as of October 29, 1999 and as amended February 24, 2006. AB Units units of limited partnership interest in AB. AUM AB's Assets Under Management. AXA AXA S.A. ( société anonyme organized under the laws of France) is the holding company for the AXA Group, a worldwide leader in financial protection. Bernstein Transaction AB's acquisition of the business and assets of SCB Inc., formerly known as Sanford C. Bernstein Inc., and the related assumption of the liabilities of that business, completed on October 2, 2000. Equitable America Equitable Financial Insurance Company of America (f/k/a MONY Life Insurance Company of America, an Arizona corporation), a subsidiary of Equitable Holdings. Equitable Financial Equitable Financial Life Insurance Company (New York stock life insurance company), a subsidiary of Equitable Holdings. Equitable Holdings or EQH Equitable Holdings, Inc. (Delaware corporation) and its subsidiaries other than AB and its subsidiaries. Exchange Act the Securities Exchange Act of 1934, as amended. ERISA the Employee Retirement Income Security Act of 1974, as amended. GAAP U.S. Generally Accepted Accounting Principles. General Partner AllianceBernstein Corporation (Delaware corporation), the general partner of AB and AB Holding and a subsidiary of Equitable Holdings, and, where appropriate, ACMC, LLC, its predecessor. Investment Advisers Act the Investment Advisers Act of 1940, as amended. Investment Company Act the Investment Company Act of 1940, as amended. NYSE the New York Stock Exchange, Inc. Partnerships AB and AB Holding together. SEC the United States Securities and Exchange Commission. Securities Act the Securities Act of 1933, as amended. ii AllianceBernstein Table of Contents Part I Item 1. Business The words “ we ” and “ our ” in this Form 10-K refer collectively to AB Holding and AB and its subsidiaries, or to their officers and employees. Similarly, the words “ company ” and “ firm ” refer to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which company is being discussed. Cross-references are in italics. We use “ global ” in this Form 10-K to refer to all nations, including the United States; we use “ international ” or “ non-U.S. ” to refer to nations other than the United States. We use “ emerging markets ” in this Form 10-K to refer to countries included in the Morgan Stanley Capital International (“ MSCI ”) emerging markets index, which are, as of December 31, 2021: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Russia, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates. Clients We provide diversified investment management, research and related services globally to a broad range of clients through our three buy-side distribution channels: Institutions, Retail and Private Wealth Management, and our sell-side business, Bernstein Research Services. See “Distribution Channels” in this Item 1 for additional information. As of December 31, 2021, 2020 and 2019, our AUM were approximately $779 billion, $686 billion and $623 billion, respectively, and our net revenues were approximately $4.4 billion, $3.7 billion and $3.5 billion, respectively. EQH (our parent company) and its subsidiaries, whose AUM consist primarily of fixed income investments, is our largest client. Our EQH affiliates represented approximately 17%, 19% and 18% of our AUM as of December 31, 2021, 2020 and 2019, and we earned approximately 3% of our net revenues from services we provided to them in each of those years. Assets Under Management (AUM) ($ billions) Net Revenues ($ billions) See “Distribution Channels” below and “Assets Under Management” and “Net Revenues” in Item 7 for additional information regarding our AUM and net revenues. Generally, we are compensated for our investment services on the basis of investment advisory and services fees calculated as a percentage of AUM. For additional information about our investment advisory and services fees, including performance-based fees, see “ Risk Factors ” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7 . 2021 Annual Report 1 Table of Contents Part I Research Our high-quality, in-depth research is the foundation of our business. We believe that our global team of research professionals, whose disciplines include economic, fundamental equity, fixed income and quantitative research, gives us a competitive advantage in achieving investment success for our clients. We also have experts focused on multi-asset strategies, wealth management, environmental, social and governance (“ ESG ”), and alternative investments. Corporate Responsibility At AB, we pursue insight that unlocks opportunity. This is our firm's purpose. Together with our firm's mission and values, which we have described below , our purpose forms the foundation of responsibility at AB. AB's mission is to help our clients define and achieve their investment goals, explicitly stating what we do each day to unlock opportunity for our clients. As an active manager, our differentiated insights drive our ability to deliver alpha and design innovative investment solutions. ESG and climate issues are key elements in forming insights and in presenting potential risks and opportunities that can impact the performance of the companies and issuers in which we invest and the portfolios we build. Our values provide a framework for the behaviors and actions that deliver on our purpose and mission. Values align our actions. Each value emerges from our firm's character, yet also is aspirational, and each value challenges us to become a better, more responsible version of AB: • We invest in each other, meaning that we have a strong organizational culture in which diversity is celebrated and mentorship is critical to our success. • We strive for distinctive insight, meaning that we collaboratively identify creative solutions to clients' economic, ESG and climate-related investment challenges through our expertise in a wide range of investment disciplines. • We speak with courage and conviction, which informs how we engage with our AB colleagues and issuers. • We act with integrity, which is the bedrock of our relationships and drives us to avoid activities that could create potential conflicts of interest or distract us from our singular focus to provide asset management and research to our clients. As noted above , we consistently challenge ourselves to become a better version of AB. This means, in part, giving back to the communities in which we work through our firm-wide philanthropic initiative, AB Gives Back, and reducing our environmental footprint by increasing our use of “green buildings,” such as our new corporate headquarters in Nashville, Tennessee. Additionally, by promoting diversity and inclusion, we are afforded different perspectives and ways of thinking, which can lead to better outcomes for our clients ( See Diversity and Inclusion below in this Item 1 ). Also, striving to be more responsible gives us a richer perspective for evaluating other companies. As longtime fundamental investors with a strong research heritage, we consider ESG factors in various processes. This helps us make fully informed risk/return assessments and draw insightful investment conclusions. Our investors — research analysts and portfolio managers — understand the companies and industries they cover in-depth. This positions them well to determine which ESG issues are material to particular companies, to determine the financial impact of an ESG issue and to incorporate that insight into their cash-flow, earnings and credit models. And, we continue to invest in technology and innovation to further enable our investment teams to formalize their ESG evaluations and share insights from our engagements with other companies. Additionally, AB has prioritized our employees' health and welfare throughout the COVID-19 pandemic while ensuring that our firm has continued to meet our fiduciary obligations and provide exceptional client service and thoughtful investment advice. Furthermore, COVID-19 is a prominent theme in engagement: it not only impacts business models but also highlights corporate ESG practices. We are advocating that issuers be responsible corporate citizens, and we are working to better understand opportunities and threats, including supply chain disruptions and inflationary pressures, fueled by the pandemic. We provide additional information in this regard in our corporate responsibility report, which is entitled "Advancing Responsible Investing" and can be found under “Responsibility - Overview” on www.alliancebernstein.com. 2 AllianceBernstein Table of Contents Part I Investment Services We provide a broad range of investment services with expertise in: • Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities; • Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies; • Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity; • Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and • Some passive management, including index and enhanced index strategies. Our AUM by client domicile and investment service as of December 31, 2021, 2020 and 2019 were as follows: AUM by Client Domicile ($ in billions) AUM by Investment Service ($ in billions) 2021 Annual Report 3 Table of Contents Part I Distribution Channels Institutions We offer to our institutional clients, which include private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and EQH and its subsidiaries, separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles (“ Institutional Services ”). We manage the assets of our institutional clients pursuant to written investment management agreements or other arrangements, which generally are terminable at any time or upon relatively short notice by either party. In general, our written investment management agreements may not be assigned without the client's consent. For information about our institutional investment advisory and services fees, including performance-based fees, see “ Risk Factors ” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7 . EQH and its subsidiaries constitute our largest institutional client. EQH and its subsidiaries combined AUM accounted for approximately 25%, 29% and 28% of our institutional AUM as of December 31, 2021, 2020 and 2019, respectively, and approximately 18%, 18% and 17% of our institutional revenues for 2021, 2020 and 2019, respectively. No single institutional client other than EQH and its respective subsidiaries accounted for more than approximately 2% of our net revenues for the year ended December 31, 2021. As of December 31, 2021, EQH and its subsidiaries combined AUM accounted for: Approximately 25% of our institutional AUM. Approximately 18% of our institutional revenues. EQH and Subsidiaries as a % of our Institutional AUM EQH and Subsidiaries as a % of our Institutional Revenues 4 AllianceBernstein Table of Contents Part I As of December 31, 2021, 2020 and 2019, Institutional Services represented approximately 43%, 46% and 45%, respectively, of our AUM, and the fees we earned from providing these services represented approximately 13%, 14% and 14%, respectively, of our net revenues for each of those years. Our AUM and revenues are as follows: Institutional Services Assets Under Management (by Investment Service) Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in millions) Equity: Equity Actively Managed $ 73,726 $ 60,067 $ 44,628 22.7 % 34.6 % Equity Passively Managed (1) 28,995 27,873 25,300 4.0 10.2 Total Equity 102,721 87,940 69,928 16.8 25.8 U.S. 47,409 41,241 35,210 15.0 17.1 Global & Non-US 55,312 46,699 34,718 18.4 34.5 Total Equity 102,721 87,940 69,928 16.8 25.8 Fixed Income: Fixed Income Taxable 155,940 164,048 157,717 (4.9) 4.0 Fixed Income Tax-Exempt 1,108 1,271 1,209 (12.8) 5.1 Fixed Income Passively Managed (1) 224 84 89 166.7 (5.6) Total Fixed Income 157,272 165,403 159,015 (4.9) 4.0 U.S. 110,312 116,833 108,714 (5.6) 7.5 Global & Non-US 46,960 48,570 50,301 26.1 9.6 Total Fixed Income 157,272 165,403 159,015 (4.9) 4.0 Alternatives/Multi-Asset Solutions (2) : U.S. 7,697 6,104 5,568 26.1 9.6 Global & Non-US 69,390 56,151 48,179 23.6 16.5 Total Alternatives/Multi-Asset Solutions 77,087 62,255 53,747 23.8 15.8 Total: U.S. 165,418 164,178 149,492 0.8 9.8 Global & Non-US 171,662 151,420 133,198 13.4 13.7 Total $ 337,080 $ 315,598 $ 282,690 6.8 11.6 Affiliated - EQH 84,096 91,396 78,506 (8.0) 16.4 Non-affiliated (3) 252,984 224,202 204,184 12.8 9.8 Total $ 337,080 $ 315,598 $ 282,690 6.8 11.6 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. (3) As of 12/31/2021, AXA is no longer considered an affiliated party, as such, AXA-related AUM has been reclassified to non-affiliated in 2020 and 2019. 2021 Annual Report 5 Table of Contents Part I Revenues from Institutional Services (by Investment Service) Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands) Equity: Equity Actively Managed $ 240,049 $ 170,802 $ 160,421 40.5 % 6.5 % Equity Passively Managed (1) 6,119 5,851 5,838 4.6 0.2 Total Equity 246,168 176,653 166,259 39.4 6.3 U.S. 97,522 69,795 66,098 39.7 5.6 Global & Non-US 148,646 106,858 100,161 39.1 6.7 Total Equity 246,168 176,653 166,259 39.4 6.3 Fixed Income: Fixed Income Taxable 199,866 194,026 204,087 3.0 (4.9) Fixed Income Tax-Exempt 1,356 1,355 1,309 0.1 3.5 Fixed Income Passively Managed (1) 105 82 107 28.0 (23.4) Fixed Income Servicing (2) 14,738 14,108 13,215 4.5 6.8 Total Fixed Income 216,065 209,571 218,718 3.1 (4.2) U.S. 124,004 118,924 118,345 4.3 0.5 Global & Non-US 92,061 90,647 100,373 1.6 (9.7) Total Fixed Income 216,065 209,571 218,718 3.1 (4.2) Alternatives/Multi-Asset Solutions (3) : U.S. 64,646 52,222 54,582 23.8 (4.3) Global & Non-US 59,179 73,354 39,405 (19.3) 86.2 Total Alternatives/Multi-Asset Solutions 123,825 125,576 93,987 (1.4) 33.6 Total Investment Advisory and Services Fees: U.S. 286,172 240,941 239,025 18.8 0.8 Global & Non-US 299,886 270,859 239,939 10.7 12.9 Total 586,058 511,800 478,964 14.5 6.9 Distribution Revenues 474 588 704 (19.4) (16.5) Shareholder Servicing Fees 485 526 476 (7.8) 10.5 Total $ 587,017 $ 512,914 $ 480,144 14.4 6.8 Affiliated - EQH 105,415 90,101 82,413 17.0 9.3 Non-affiliated (4) 481,602 422,813 397,731 13.9 6.3 Total $ 587,017 $ 512,914 $ 480,144 14.4 6.8 (1) Includes index and enhanced index services. (2) Fixed Income Servicing includes advisory-related services fees that are not based on AUM, including derivative transaction fees, capital purchase program-related advisory services and other fixed income advisory services. (3) Includes certain multi-asset solutions and services not included in equity or fixed income services. (4) As of 12/31/2021, AXA is no longer considered an affiliated party, as such, AXA-related AUM has been reclassified to non-affiliated in 2020 and 2019. 6 AllianceBernstein Table of Contents Part I Retail We provide investment management and related services to a wide variety of individual retail investors globally through retail mutual funds we sponsor, mutual fund sub-advisory relationships, separately-managed account programs ( see below ), and other investment vehicles (“ Retail Products and Services ”). We distribute our Retail Products and Services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investment advisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companies under the Investment Company Act (“ U.S. Funds ”), or (ii) not registered under the Investment Company Act and generally not offered to U.S. persons (“ Non-U.S. Funds ” and, collectively with the U.S. Funds, “ AB Funds ”). They also include separately-managed account programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investment management, trade execution, asset allocation, and custodial and administrative services. In addition, we provide distribution, shareholder servicing, transfer agency services and administrative services for our Retail Products and Services. See “Net Revenues – Investment Advisory and Services Fees” in Item 7 for information about our retail investment advisory and services fees. See Note 2 to AB’s consolidated financial statements in Item 8 for a discussion of the commissions we pay to financial intermediaries in connection with the sale of open-end AB Funds. Fees paid by the U.S. Funds are reflected in the applicable investment management agreement, which generally must be approved annually by the board of directors or trustees of those funds, by a majority vote of the independent directors or trustees. Increases in these fees must be approved by fund shareholders; decreases need not be, including any decreases implemented by a fund’s directors or trustees. In general, each investment management agreement with the U.S. Funds provides for termination by either party, at any time, upon 60 days’ notice. Fees paid by Non-U.S. Funds are reflected in management agreements that continue until they are terminated. Increases in these fees generally must be approved by the relevant regulatory authority, depending on the domicile and structure of the fund, and Non-U.S. Fund shareholders must be given advance notice of any fee increases. The mutual funds we sub-advise for EQH and its subsidiaries constitute our largest retail client. EQH and its subsidiaries accounted for approximately 14% of our retail AUM as of December 31, 2021, 2020 and 2019 and approximately 1%, 1% and 2% of our retail net revenues for the years ended December 31, 2021, 2020 and 2019, respectively. HSBC was responsible for approximately 4%, 6% and 14% of our open-end mutual fund sales in 2021, 2020 and 2019, respectively. HSBC is not under any obligation to sell a specific amount of AB Fund shares and is not our affiliate. Most open-end U.S. Funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and service fees for the distribution and sale of its shares. The open-end U.S. Funds have entered into such agreements with us, and we have entered into selling and distribution agreements pursuant to which we pay sales commissions to the financial intermediaries that distribute our open-end U.S. Funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. As of December 31, 2021, retail U.S. Fund AUM were approximately $73 billion, or 23% of retail AUM, as compared to $62 billion, or 23%, as of December 31, 2020, and $55 billion, or 23%, as of December 31, 2019. Non-U.S. Fund AUM, as of December 31, 2021, totaled $130 billion, or 41% of retail AUM, as compared to $110 billion, or 41%, as of December 31, 2020, and $103 billion, or 43%, as of December 31, 2019. 2021 Annual Report 7 Table of Contents Part I Our Retail Services represented approximately 41%, 39% and 39% of our AUM as of December 31, 2021, 2020 and 2019, respectively, and the fees we earned from providing these services represented approximately 50%, 49% and 46% of our net revenues for the years ended December 31, 2021, 2020 and 2019, respectively. Our AUM and revenues are as follows: Retail Services Assets Under Management (by Investment Service) Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in millions) Equity: Equity Actively Managed $ 154,200 $ 106,866 $ 81,622 44.3 % 30.9 % Equity Passively Managed (1) 40,821 35,995 34,683 13.4 3.8 Total Equity 195,021 142,861 116,305 36.5 22.8 U.S. 152,106 108,506 84,278 40.2 28.7 Global & Non-US 42,915 34,355 32,027 24.9 7.3 Total Equity 195,021 142,861 116,305 36.5 22.8 Fixed Income: Fixed Income Taxable 75,813 84,654 88,408 (10.4) (4.2) Fixed Income Tax-Exempt 29,009 23,202 20,750 25.0 11.8 Fixed Income Passively Managed (1) 12,762 8,231 8,825 55.0 (6.7) Total Fixed Income 117,584 116,087 117,983 1.3 (1.6) U.S. 46,361 36,137 34,830 28.3 3.8 Global & Non-US 71,223 79,950 83,153 (10.9) (3.9) Total Fixed Income 117,584 116,087 117,983 1.3 (1.6) Alternatives/Multi-Asset Solutions (2) : U.S. 3,595 3,071 2,470 17.1 24.3 Global & Non-US 3,718 3,321 2,408 12.0 37.9 Total Alternatives/Multi-Asset Solutions 7,313 6,392 4,878 14.4 31.0 Total: U.S. 202,062 147,714 121,578 36.8 21.5 Global & Non-US 117,856 117,626 117,588 0.2 — Total $ 319,918 $ 265,340 $ 239,166 20.6 10.9 Affiliated - EQH 44,417 36,765 34,448 20.8 6.7 Non-affiliated (3) 275,501 228,575 204,718 20.5 11.7 Total $ 319,918 $ 265,340 $ 239,166 20.6 10.9 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. (3) As of 12/31/2021, AXA is no longer considered an affiliated party, as such, AXA-related AUM has been reclassified to non-affiliated in 2020 and 2019. 8 AllianceBernstein Table of Contents Part I Revenues from Retail Services (by Investment Service) Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands) Equity: Equity Actively Managed $ 766,578 $ 508,973 $ 436,617 50.6 % 16.6 % Equity Passively Managed (1) 14,773 14,347 16,173 3.0 (11.3) Total Equity 781,351 523,320 452,790 49.3 15.6 U.S. 556,398 355,542 292,640 56.5 21.5 Global & Non-US 224,953 167,778 160,150 34.1 4.8 Total Equity 781,351 523,320 452,790 49.3 15.6 Fixed Income: Fixed Income Taxable 517,327 534,164 506,849 (3.2) 5.4 Fixed Income Tax-Exempt 84,945 70,734 65,474 20.1 8.0 Fixed Income Passively Managed (1) 12,994 12,229 12,105 6.3 1.0 Total Fixed Income 615,266 617,127 584,428 (0.3) 5.6 U.S. 115,248 101,825 98,310 13.2 3.6 Global & Non-US 500,018 515,302 486,118 (3.0) 6.0 Total Fixed Income 615,266 617,127 584,428 (0.3) 5.6 Alternatives/Multi-Asset Solutions (2) : U.S. 81,872 57,069 51,958 43.5 9.8 Global & Non-US 13,117 12,723 8,946 3.1 42.2 Total Alternatives/Multi-Asset Solutions 94,989 69,792 60,904 36.1 14.6 Total Investment Advisory and Services Fees: U.S. 753,518 514,436 442,908 46.5 16.1 Global & Non-US 738,086 695,803 655,214 6.1 6.2 Consolidated company-sponsored investment funds 1,243 733 883 69.6 (17.0) Total 1,492,847 1,210,972 1,099,005 23.3 10.2 Distribution Revenues 644,125 522,056 447,050 23.4 16.8 Shareholder Servicing Fees 86,857 78,920 73,777 10.1 7.0 Total $ 2,223,829 $ 1,811,948 $ 1,619,832 22.7 11.9 Affiliated - EQH 28,334 27,130 27,737 4.4 (2.2) Non-affiliated (3) 2,195,495 1,784,818 1,592,095 23.0 12.1 Total $ 2,223,829 $ 1,811,948 $ 1,619,832 22.7 11.9 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. (3) As of 12/31/2021, AXA is no longer considered an affiliated party, as such, AXA-related AUM has been reclassified to non-affiliated in 2020 and 2019. 2021 Annual Report 9 Table of Contents Part I Private Wealth Management We partner with our clients, embracing innovation and independent research to address increasingly complex challenges. Our clients include high-net-worth individuals and families who have created generational wealth as successful business owners, athletes, entertainers, corporate executives and private practice owners. We also provide investment and wealth advice to foundations and endowments, family offices and other entities. Our flexible and extensive investment platform offers a range of solutions, including separately-managed accounts, hedge funds, mutual funds and other investment vehicles, tailored to meet each distinct client's needs. Our investment platform is complimented with a wealth platform that includes complex tax and estate planning, pre-IPO and pre-transaction planning, multi-generational family engagement, and philanthropic advice in addition to tailored approaches to meeting the unique needs of emerging wealth and multi-cultural demographics (" Private Wealth Services "). We manage accounts pursuant to written investment advisory agreements, which generally are terminable at any time or upon relatively short notice by any authorized party, and may not be assigned without the client's consent. For information about our investment advisory and services fees, including performance-based fees, see “ Risk Factors ” in Item 1A and “Net Revenues – Investment Advisory and Services Fees” in Item 7 . Our Private Wealth Services represented approximately 16%, 15% and 16% of our AUM as of December 31, 2021, 2020 and 2019, respectively. The fees we earned from providing these services represented approximately 25%, 24% and 26% of our net revenues for 2021, 2020 and 2019, respectively. Our AUM and revenues are as follows: Private Wealth Services Assets Under Management (by Investment Service) Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in millions) Equity: Equity Actively Managed $ 59,709 $ 50,854 $ 50,934 17.4 % (0.2) % Equity Passively Managed (1) 1,764 666 174 164.9 % n/m Total Equity 61,473 51,520 51,108 19.3 0.8 U.S. 35,014 28,776 26,982 21.7 6.6 Global & Non-US 26,459 22,744 24,126 16.3 (5.7) Total Equity 61,473 51,520 51,108 19.3 0.8 Fixed Income: Fixed Income Taxable 14,567 14,515 12,170 0.4 19.3 Fixed Income Tax-Exempt 26,929 25,764 25,117 4.5 2.6 Fixed Income Passively Managed (1) 230 195 372 17.9 (47.6) Total Fixed Income 41,726 40,474 37,659 3.1 7.5 U.S. 36,166 35,042 32,685 3.2 7.2 Global & Non-US 5,561 5,432 4,974 2.4 9.2 Total Fixed Income 41,727 40,474 37,659 3.1 7.5 Alternatives/Multi-Asset Solutions (2) : U.S. 6,926 5,927 6,808 16.9 (12.9) Global & Non-US 11,446 7,064 5,484 62.0 28.8 Total Alternatives/Multi-Asset Solutions 18,372 12,991 12,292 41.4 5.7 Total: U.S. 78,106 69,745 66,475 12.0 4.9 Global & Non-US 43,466 35,240 34,584 23.3 1.9 Total $ 121,572 $ 104,985 $ 101,059 15.8 3.9 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. 10 AllianceBernstein Table of Contents Part I Revenues from Private Wealth Services (by Investment Service) Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands) Equity: Equity Actively Managed $ 584,455 $ 487,899 $ 510,911 19.8 % (4.5) % Equity Passively Managed (1) 4,780 1,113 334 n/m n/m Total Equity 589,235 489,012 511,245 20.5 (4.3) U.S. 325,154 263,938 267,815 23.2 (1.4) Global & Non-US 264,081 225,074 243,430 17.3 (7.5) Total Equity 589,235 489,012 511,245 20.5 (4.3) Fixed Income: Fixed Income Taxable 72,404 71,575 63,964 1.2 11.9 Fixed Income Tax-Exempt 130,391 123,952 122,447 5.2 1.2 Fixed Income Passively Managed (1) 2,634 2,891 4,475 (8.9) (35.4) Total Fixed Income 205,429 198,418 190,886 3.5 3.9 U.S. 167,402 160,666 156,909 4.2 2.4 Global & Non-US 38,027 37,752 33,977 0.7 11.1 Total Fixed Income 205,429 198,418 190,886 3.5 3.9 Alternatives/Multi-Asset Solutions (2) : U.S. 249,432 109,169 123,216 128.5 (11.4) Global & Non-US 71,524 76,065 68,728 (6.0) 10.7 Total Alternatives/Multi-Asset Solutions 320,956 185,234 191,944 73.3 (3.5) Total Investment Advisory and Services Fees: U.S. 741,987 533,773 547,940 39.0 (2.6) Global & Non-US 373,632 338,891 346,135 10.3 (2.1) Total 1,115,619 872,664 894,075 27.8 (2.4) Distribution Revenues 7,641 7,137 7,289 7.1 (2.1) Shareholder Servicing Fees 2,882 2,871 3,141 0.4 (8.6) Total $ 1,126,142 $ 882,672 $ 904,505 27.6 (2.4) (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. 2021 Annual Report 11 Table of Contents Part I Bernstein Research Services We offer high-quality fundamental and quantitative research and trade execution services in equities and listed options to institutional investors, such as mutual fund and hedge fund managers, pension funds and other institutional investors (" Bernstein Research Services") . We serve our clients, which are based in the United States and in other major markets around the world, through our trading professionals, who are primarily based in New York, London and Hong Kong, and our research analysts, who provide fundamental company and industry research along with quantitative research into securities valuation and factors affecting stock-price movements. Additionally, we provide equity capital markets services to issuers of publicly-traded securities, primarily in initial public offerings and follow-on offerings, generally acting as co-manager in such offerings. We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser but increasing extent, by paying us directly for research through commission sharing agreements or cash payments. Bernstein Research Services accounted for approximately 10%, 12% and 12% of our net revenues for the years ended December 31, 2021, 2020 and 2019, respectively. For information regarding trends in fee rates charged for brokerage transactions, see “Risk Factors” in Item 1A . Our Bernstein Research Services revenues are as follows: Revenues from Bernstein Research Services Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands) Bernstein Research Services $ 452,017 $ 459,744 $ 407,911 (1.7 %) 12.7 % Custody Our U.S. based broker-dealer subsidiary acts as custodian for the majority of our Private Wealth Management AUM and some of our Institutional AUM. Other custodian arrangements, directed by clients, include banks, trust companies, brokerage firms and other financial institutions. Human Capital Management As a leading global investment management and research firm, we bring together a wide range of insights, expertise and innovations to advance the interests of our clients around the world. The intellectual capital of our employees is collectively the most important asset of our firm, so the long-term sustainability of our firm is heavily dependent on our people. We are keenly focused on: • fostering an inclusive culture by incorporating diversity and inclusion in all levels of our business; • encouraging innovation; • developing, retaining and recruiting high quality talent; and • aligning employees’ incentives and risk taking with those of the firm. As a result, we have a strong firm culture that helps us maximize performance and drive excellence. Further, our firm’s role as a fiduciary is embedded in our culture. As a fiduciary, our firm’s primary objective is to act in our clients' best interests and help them reach their financial goals. Also, our Board of Directors (the " Board ") and committees of the Board, particularly our Compensation and Workplace Practices Committee, provide oversight into various human capital matters, including emerging human capital management risks and strategies to mitigate our exposure to those risks. Furthermore, our Board and Board committees evaluate the overall effectiveness of our social responsibility policies, goals and programs and recommend changes to management as necessary. These collaborative efforts contribute to the overall framework that guides how AB attracts, retains and develops a workforce that supports our values and strategic initiatives. 12 AllianceBernstein Table of Contents Part I Talent Acquisition AB seeks to achieve excellence in business and investment performance by recruiting and hiring a workforce with diversity of thought, backgrounds and experiences. We believe that diverse and inclusive teams generate better ideas and reach more balanced decisions. We seek to leverage the unique backgrounds of our employees to meet the needs of a broad range of clients and engage with the communities in which we operate. We engage several external organizations to assist in attracting and recruiting top talent at all levels, with a particular focus on attracting diverse talent. We have a sizable group of internal human capital associates focused on recruiting, and we have implemented various human capital initiatives to develop and provide for a balanced workforce. Additionally, we offer internship programs for students to work in positions across functional areas of the firm, and an important part of our college recruitment strategy is to convert a high percentage of our interns into full-time employees. Employee Engagement We believe a workforce is most productive, effective and highly engaged when they feel connected to our business and culture. We seek to provide diverse work experiences, professional development opportunities, competitive compensation and benefits, an inclusive and diverse culture and social engagement projects to keep our employees motivated, connected to our firm and engaged throughout their careers. We strive to create a culture of intellectual curiosity and collaboration, creating an environment where our employees can thrive and do their best work. We foster growth and advancement through different training avenues to develop skill sets, create opportunities for networking, both internally and externally, and we encourage internal mobility as a part of our employees' career trajectory. It is important that our employees are not only connected to our business but also to the communities in which we operate. As such, AB offers many opportunities for our employees to volunteer in the communities in which we serve, including our firm-wide philanthropic initiative, AB Gives Back. Other initiatives in support of these objectives include a five-year refresh award, whereby employees receive two additional weeks off for every five years of service. In addition, we utilize AB Voice, a periodic survey designed to measure employee satisfaction and engagement, allowing us to identify and address performance gaps. Diversity and Inclusion We continue to believe that diverse and inclusive teams generate better ideas and best serve the needs of our clients. The events of the last two years have provided an unforeseen yet unique opportunity to reflect, adapt and broaden our Diversity & Inclusion (“ D&I ”) strategy. D&I continues to be a key strategic priority for AB and our ongoing commitment to embed it across all facets of the firm has further reinforced our company values. It has also allowed for a more purposeful approach to engagement with our people, our clients and the communities in which we operate. Also, our firm's community engagement efforts have been further integrated under the D&I umbrella. Under the new structure, we are better able to streamline and formalize the process for assessing corporate partnerships and philanthropic giving through the lens of D&I, allowing for a more cohesive overall strategy. We have enhanced our talent attraction and retention approach to position ourselves as an employer of choice and invest in the development of our people. We have developed a diverse talent strategy with a goal of developing a deeper understanding of the needs of diverse talent and also equipping managers with the necessary tools to effectively manage an increasingly diverse workforce. The strategy includes incorporating the concept of inclusive leadership into the firm-wide leadership development curriculum and enhancing our exit interview process for diverse talent by conducting in-person interviews, which will better enable us to detect trends and mitigate attrition. Our people remain our top priority, especially during these times of uncertainty. Over the course of the last year, there has been a continued focus on education and deepening engagement across all pillars of our strategy to include Employee Resource Groups (" ERGs "), corporate partnerships, and the overall experience at AB. ERGs have been a major proponent of these efforts by cultivating spaces for courageous conversations, encouraging professional development and personal wellness, and raising awareness for various underrepresented communities. As we continue to seek opportunities to further our commitment to diversity, equity and inclusion, we are leveraging best practices from industry peers. Our D&I journey continues to evolve; addressing racial and gender equity, increasing access to diverse talent and monitoring client trends remain top priorities. 2021 Annual Report 13 Table of Contents Part I Compensation and Benefits We have demonstrated a history of investing in our workforce by offering competitive compensation. We utilize a variety of compensation elements, including base salaries, annual short-term compensation awards (i.e., cash bonuses) and, for those of our employees who earn more than $300,000 annually, a long-term compensation award program. Long-term incentive compensation awards generally are denominated in restricted AB Holding Units. We utilize this structure to foster a stronger sense of ownership and align the interests of our employees directly with the interests of our Unitholders and indirectly with the interests of our clients, as strong performance for our clients generally contributes directly to increases in AUM and improved financial performance for the firm. Furthermore, we offer to all eligible employees health and welfare, 401(k) profit-sharing and other benefits programs, including a flexible in-office work schedule that permits working remotely two days weekly. In the U.S. (and elsewhere, although benefits may differ by jurisdiction): • We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location; • We engage nationally recognized compensation and benefits consulting firms to independently evaluate the effectiveness of our executive compensation and benefit programs, as well as consulting services relating to the amount and form of compensation paid to employees other than executives, and to provide benchmarking against our peers; • We provide merit-based and performance-based annual increases and incentive compensation, which are communicated to employees at the time of hiring and documented through our talent management process as part of our annual review procedures and upon internal transfer and/or promotion; and • The firm makes benefits available to all eligible employees, including health insurance, paid and unpaid leaves, a retirement plan, and life and disability/accident coverage. We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs, including flexible time-off, telemedicine, paid parental leave, adoption assistance, prescription savings solutions, Veterans' Health Administration coverage in U.S. medical plans, a personalized wellness program and a financial wellness program. Health and Safety Our ongoing response to the COVID-19 global pandemic demonstrates how highly we value the health and safety of our employees. At the initial onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., EMEA (including the U.K., Luxembourg, France and other jurisdictions), Hong Kong, Shanghai, Singapore and Taiwan. We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which lasted through the second quarter of 2021. Since then, working in the office generally has been voluntary, with mandatory in-office participation occurring only at certain times when COVID-19 has ebbed significantly in the communities in which we operate. Throughout the pandemic, we have conscientiously ensured operating continuity for all critical functions. We also instituted a confidential notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and advised of key developments. Additionally, we continue to monitor communications from the World Health Organization and the U.S. Centers for Disease Control and Prevention, and in the third quarter of 2021 engaged an epidemiologist on a consulting basis, to ensure we have current and accurate information. We have also instituted various other protocols in response to the COVID-19 pandemic, such as increased cleaning protocols, masking requirements where permitted by local law and testing protocols for large gatherings. Employees As of December 31, 2021, our firm had 4,118 full-time employees, compared to 3,929 full-time employees as of December 31, 2020, representing a 4.8% increase. 14 AllianceBernstein Table of Contents Part I As of December 31, 2021, our employees reflected the following characteristics and locations: Region: Female % Female Male % Male Grand Total % of Total Americas 1,124 37 % 1,943 63 % 3,067 75 % Asia ex Japan 225 51 % 214 49 % 439 11 % EMEA 183 35 % 333 65 % 516 13 % Japan 46 55 % 38 45 % 84 2 % Grand Total (1) 1,578 38 % 2,528 62 % 4,106 100 % (1) The table above only reflects employees who have self-reported as male or female and as such may not reconcile to our total of 4,118 full-time employees. In connection with our establishing 1,250 roles in Nashville, Tennessee, we have relocated many of our employees from our New York City and White Plains, New York, locations. Employees whose roles are in-scope for the move, but who are not relocating, receive a separation package. We expect layoffs to continue on a rolling basis until all in-scope roles are filled in Nashville. Information about our Executive Officers Please refer to "Item 10. Directors, Executive Officers and Corporate Governance" below for information relating to our firm's executive officers. Service Marks We have registered a number of service marks with the U.S. Patent and Trademark Office and various foreign trademark offices, including the mark “AllianceBernstein.” The logo set forth below is a service mark of AB: In 2015, we established a new brand identity by prominently incorporating “AB” into our brand architecture, while maintaining the legal names of our corporate entities. With this and other related refinements, our company, and our Institutional and Retail businesses, are referred to as “AllianceBernstein (AB)” or simply “AB.” Private Wealth Management and Bernstein Research Services are referred to as “AB Bernstein.” Also, we adopted the logo service mark described above . In connection with the Bernstein Transaction, we acquired all of the rights in, and title to, the Bernstein service marks, including the mark “Bernstein.” In connection with an acquisition we completed in 2013, we acquired all of the rights in, and title to, the W.P. Stewart & Co. service marks, including the logo “WPSTEWART.” Service marks are generally valid and may be renewed indefinitely, as long as they are in use and/or their registrations are properly maintained. Regulation Virtually all aspects of our business are subject to various federal and state laws and regulations, rules of various securities regulators and exchanges, and laws in the foreign countries in which our subsidiaries conduct business. These laws and regulations primarily are intended to protect clients and fund shareholders and generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business for failure to comply with such laws and regulations. Possible sanctions that may be imposed on us include the suspension of individual employees, limitations on engaging in business for specific periods, the revocation of the registration as an investment adviser or broker-dealer, censures and fines. 2021 Annual Report 15 Table of Contents Part I AB, AB Holding, the General Partner and five of our subsidiaries (Sanford C. Bernstein & Co., LLC (“ SCB LLC ”), AB Broadly Syndicated Loan Manager LLC, AB Custom Alternative Solutions LLC, AB Private Credit Investors LLC and W.P. Stewart Asset Management Ltd.) are registered with the SEC as investment advisers under the Investment Advisers Act. Additionally, AB Holding is an NYSE-listed company and, accordingly, is subject to applicable regulations promulgated by the NYSE. Also, AB, SCB LLC and AB Custom Alternative Solutions LLC are registered with the Commodity Futures Trading Commission (“ CFTC ”) as commodity pool operators and commodity trading advisers; SCB LLC also is registered with the CFTC as a commodities introducing broker. Each U.S. Fund is registered with the SEC under the Investment Company Act and each Non-U.S. Fund is subject to the laws in the jurisdiction in which the fund is registered. For example, our platform of Luxembourg-based funds operates pursuant to Luxembourg laws and regulations, including Undertakings for the Collective Investment in Transferable Securities Directives, and is authorized and supervised by the Commission de Surveillance du Secteur Financier (“ CSSF ”), the primary regulator in Luxembourg. AllianceBernstein Investor Services, Inc., one of our subsidiaries, is registered with the SEC as a transfer and servicing agent. SCB LLC and another of our subsidiaries, AllianceBernstein Investments, Inc., are registered with the SEC as broker-dealers, and both are members of the Financial Industry Regulatory Authority. In addition, SCB LLC is a member of the NYSE and other principal U.S. exchanges. Many of our subsidiaries are subject to the oversight of regulatory authorities in the jurisdictions outside the United States in which they operate, including the Ontario Securities Commission, the Investment Industry Regulatory Organization of Canada, the European Securities and Markets Authority, the Financial Conduct Authority in the U.K., the CSSF in Luxembourg, the Financial Services Agency in Japan, the Securities & Futures Commission in Hong Kong, the Monetary Authority of Singapore, the Financial Services Commission in South Korea, the Financial Supervisory Commission in Taiwan and The Securities and Exchange Board of India. While these regulatory requirements often may be comparable to the requirements of the SEC and other U.S. regulators, they are sometimes more restrictive and may cause us to incur substantial expenditures of time and money related to our compliance efforts. For additional information relating to the regulations that impact our business, please refer to "Risk Factors" in Item 1A . History and Structure We have been in the investment research and management business for more than 50 years. Bernstein was founded in 1967. Alliance Capital was founded in 1971 when the investment management department of Donaldson, Lufkin & Jenrette, Inc. (since November 2000, a part of Credit Suisse Group) merged with the investment advisory business of Moody’s Investors Service, Inc. In April 1988, AB Holding “went public” as a master limited partnership. AB Holding Units, which trade under the ticker symbol “AB,” have been listed on the NYSE since that time. In October 1999, AB Holding reorganized by transferring its business and assets to AB, a newly-formed operating partnership, in exchange for all of the AB Units (“ Reorganization ”). Since the date of the Reorganization, AB has conducted the business formerly conducted by AB Holding and AB Holding’s activities have consisted of owning AB Units and engaging in related activities. Unlike AB Holding Units, AB Units do not trade publicly and are subject to significant restrictions on transfer. The General Partner is the general partner of both AB and AB Holding. In October 2000, our two legacy firms, Alliance Capital and Bernstein, combined, bringing together Alliance Capital’s expertise in growth equity and corporate fixed income investing and its family of retail mutual funds, with Bernstein’s expertise in value equity investing, tax-exempt fixed income management, and its Private Wealth Management and Bernstein Research Services businesses. 16 AllianceBernstein Table of Contents Part I As of December 31, 2021, the condensed ownership structure of AB is as follows (for a more complete description of our ownership structure, see “Principal Security Holders” in Item 12 ): The General Partner owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB. Including these general partnership interests, EQH, directly and through certain of its subsidiaries ( see “Principal Security Holders” in Item 12 ), had an approximate 64.5% economic interest in AB as of December 31, 2021. Competition We compete in all aspects of our business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms, insurance companies, banks, savings and loan associations, and other financial institutions that often provide investment products with similar features and objectives as those we offer. Our competitors offer a wide range of financial services to the same customers that we seek to serve. Some of our competitors are larger, have a broader range of product choices and investment capabilities, conduct business in more markets, and have substantially greater resources than we do. These factors may place us at a competitive disadvantage, and we can give no assurance that our strategies and efforts to maintain and enhance our current client relationships, and create new ones, will be successful. In addition, EQH and its subsidiaries provide financial services, some of which compete with those we offer. The AB Partnership Agreement specifically allows EQH and its subsidiaries (other than the General Partner) to compete with AB and to pursue opportunities that may be available to us. EQH and certain of its subsidiaries have substantially greater financial resources than we do and are not obligated to provide resources to us. To grow our business, we believe we must be able to compete effectively for AUM. Key competitive factors include: • our investment performance for clients; • our commitment to place the interests of our clients first; • the quality of our research; • our ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; • the array of investment products we offer; • the fees we charge; • Morningstar/Lipper rankings for the AB Funds; • our ability to sell our actively-managed investment services despite the fact that many investors favor passive services; • our operational effectiveness; • our ability to further develop and market our brand; and • our global presence. Competition is an important risk that our business faces and should be considered along with the other factors we discuss in “Risk Factors” in Item 1A . 2021 Annual Report 17 Table of Contents Part I Available Information AB and AB Holding file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, amendments to such reports, and other reports (and amendments thereto) required to comply with federal securities laws, including Section 16 beneficial ownership reports on Forms 3, 4 and 5, registration statements and proxy statements. We maintain an Internet site ( http://www.alliancebernstein.com ) where the public can view these reports, free of charge, as soon as reasonably practicable after each report is filed with, or furnished to, the SEC. In addition, the SEC maintains an Internet site ( http://www.sec.gov ) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Item 1A. Risk Factors Please consider this section along with the description of our business in Item 1 , the competition section immediately above and AB’s financial information contained in Items 7 and 8 . The majority of the risk factors discussed below directly affect AB. These risk factors also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB. See also “Cautions Regarding Forward-Looking Statements” in Item 7 . Business-related Risks, including risks relating to COVID-19 Our revenues and results of operations depend on the market value and composition of our AUM, which can fluctuate significantly based on various factors, including many factors outside of our control. We derive most of our revenues from investment advisory and services fees, which typically are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of the account and the total amount of assets we manage for a particular client. The value and composition of our AUM can be adversely affected by several factors, including: • Market Factors . Our AUM remain sensitive to the volatility associated with global financial market conditions. For example, the dramatic securities market declines experienced during March 2020, which resulted from the global effects of COVID-19, caused a significant reduction in our AUM. Markets and AUM levels have since recovered to new highs following unprecedented, coordinated monetary and fiscal policy support and the approval of vaccines to help remedy the global pandemic. However, we recognize that, due to continued uncertainty associated with these circumstances, markets may remain volatile and, accordingly, there remains risk of a significant reduction in our revenues and net income in future periods, particularly if the negative effects on the global economy from COVID accelerate. Global economies and financial markets are increasingly interconnected, which increases the probability that conditions in one country or region might adversely impact a different country or region. Conditions affecting the general economy, including political, social or economic instability at the local, regional or global level, such as the U.S. civil unrest centered around racial inequity experienced in 2020 or the riot experienced in Washington D.C. in January 2021 surrounding the transition to a new Presidential administration, may also affect the market value of our AUM. Health crises, such as the COVID-19 pandemic, as well as other incidents that interrupt the expected course of events, such as natural disasters, war or civil disturbance, acts of terrorism (whether foreign or domestic), power outages and other unforeseeable and external events, and the public response to or fear of such diseases or events, have had and may in the future have a significant adverse effect on financial markets and our AUM, revenues and net income. Furthermore, the preventative and protective health-related actions, such as business activity suspensions and population lock-downs, that governments have taken, and may continue to take, in response to COVID-19 have resulted, and may continue to result, in periods of business interruption, inability to obtain raw materials, supplies and component parts, and reduced or disrupted operations. These circumstances have caused, and may continue to cause, significant economic disruption and high levels of unemployment, as well as inflationary pressures, which could adversely affect the financial condition and results of operations of many of the companies in which we invest, and likely reduce the market value of their securities and thus our AUM and revenues. Furthermore, significant market volatility and uncertainty, and reductions in the availability of margin financing, can significantly limit the liquidity of certain asset backed and other securities, making it at times impossible to sell these securities at prices reflecting their true economic value. While liquidity conditions have improved considerably since the first quarter of 2020 following the stimulus programs announced by the U.S. Federal Reserve and U.S. Treasury, we recognize the possibility that conditions could deteriorate in the future. Lack of liquidity makes it more difficult for our funds to meet redemption requests. If liquidity were to worsen, this may have a significant adverse effect on our AUM, revenues and net income in the future. • Client Preferences . Generally, our clients may withdraw their assets at any time and on short notice. Also, changing market dynamics and investment trends, particularly with respect to sponsors of defined benefit plans choosing to invest in less risky investments and the ongoing shift to lower-fee passive services described below , may continue to reduce interest in some of the investment products we offer, and/or clients and prospects may continue to seek investment products that we may not currently offer. Loss of, or decreases in, AUM reduces our investment advisory and services fees and revenues. 18 AllianceBernstein Table of Contents Part I • Our Investment Performance . Our ability to achieve investment returns for clients that meet or exceed investment returns for comparable asset classes and competing investment services is a key consideration when clients decide to keep their assets with us or invest additional assets, and when a prospective client is deciding whether to invest with us. Poor investment performance, both in absolute terms and/or relative to peers and stated benchmarks, may result in clients withdrawing assets and prospective clients choosing to invest with competitors. • Investing Trends . Our fee rates can vary significantly among the various investment products and services we offer to our clients ( see “Net Revenues” in Item 7 for additional information regarding our fee rates); our fee realization rate fluctuates as clients shift assets between accounts or products with different fee structures. • Service Changes . We may be required to reduce our fee levels, restructure the fees we charge and/or adjust the services we offer to our clients because of, among other things, regulatory initiatives (whether industry-wide or specifically targeted), changing technology in the asset management business (including algorithmic strategies and emerging financial technology), court decisions and competitive considerations. A reduction in fee levels would reduce our revenues. A decrease in the value of our AUM, a decrease in the amount of AUM we manage, an adverse mix shift in our AUM and/or a reduction in the level of fees we charge would adversely affect our investment advisory fees and revenues. A reduction in revenues, without a commensurate reduction in expenses, adversely affects our results of operations. The industry-wide shift from actively-managed investment services to passive services has adversely affected our investment advisory and services fees, revenues and results of operations, and this trend may continue. Our competitive environment has become increasingly difficult over the past decade, as active managers, which invest based on individual security selection, have, on average, consistently underperformed passive services, which invest based on market indices. Active performance relative to benchmarks as of mid-2021 remained mixed, with 47% of active managers outperforming their passive benchmarks for the 12 months ended June 30, 2021 (latest data available). Non-U.S. stock active funds fared better with 59% outperforming benchmarks, while 40% of U.S. large-cap stock active funds outperformed. Actively-managed bond funds generally performed well in 2021, with intermediate core, corporate and high yield funds each generally outperforming benchmarks. Flows into actively-managed funds improved industry-wide in 2021, with U.S. industry-wide active mutual fund flows rebounding to inflows of $217 billion in 2021, contrasted with $196 billion of outflows in 2020. Active fixed income U.S. mutual fund inflows accelerated to $366 billion in 2021, compared to $246 billion in 2020. Furthermore, active equity U.S. mutual fund outflows decelerated to $198 billion in 2021, compared to outflows of $338 billion in 2020. However, the improvement in active fund flows was surpassed by increased demand for passive strategies in the U.S., as industry-wide total passive mutual net inflows increased to $918 billion in 2021 from $361 billion in 2020. In this environment, organic growth through net inflows is difficult to achieve for active managers, such as AB, and requires taking market share from other active managers. The significant shift from active services to passive services adversely affects Bernstein Research Services revenues as well. Institutional global market trading volumes continue to be pressured (notwithstanding the heightened market volatility and trading volume predominantly relating to COVID-19 in the first half of 2020) by persistent active equity outflows and passive equity inflows. As a result, portfolio turnover has declined and investors hold fewer shares that are actively traded by managers. Our reputation could suffer if we are unable to deliver consistent, competitive investment performance. Our business is based on the trust and confidence of our clients. Damage to our reputation, resulting from poor or inconsistent investment performance, among other factors, can reduce substantially our AUM and impair our ability to maintain or grow our business. EQH and its subsidiaries provide a significant amount of our AUM and fund a significant portion of our seed investments, and if our agreements with them terminate or they withdraw capital support it could have a material adverse effect on our business, results of operations and/or financial condition. EQH (our parent company) and its subsidiaries constitute our largest client. Our EQH affiliates represented approximately 17% of our AUM as of December 31, 2021, and we earned approximately 3% of our net revenues from services we provided to them in 2021. Our related investment management agreements are terminable at any time or on short notice by either party, and EQH is not under any obligation to maintain any level of AUM with us. A material adverse effect on our business, results of operations and/or financial condition could result if EQH were to terminate its investment management agreements with us. 2021 Annual Report 19 Table of Contents Part I Our business is dependent on investment advisory agreements with clients, and selling and distribution agreements with various financial intermediaries and consultants, which generally are subject to termination or non-renewal on short notice. We derive most of our revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds and private wealth clients, and selling and distribution agreements with financial intermediaries that distribute AB Funds. Generally, the investment management agreements (and other arrangements), including our agreements with EQH and its subsidiaries, are terminable at any time or upon relatively short notice by either party. The investment management agreements pursuant to which we manage the U.S. Funds must be renewed and approved by the Funds’ boards of directors annually. A significant majority of the directors are independent. Consequently, there can be no assurance that the board of directors of each fund will approve the fund’s investment management agreement each year, or will not condition its approval on revised terms that may be adverse to us. In addition, investors in AB Funds can redeem their investments without notice. Any termination of, or failure to renew, a significant number of these agreements, or a significant increase in redemption rates, could have a material adverse effect on our results of operations and business prospects. Similarly, the selling and distribution agreements with securities firms, brokers, banks and other financial intermediaries are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. These intermediaries generally offer their clients investment products that compete with our products. In addition, certain institutional investors rely on consultants to advise them about choosing an investment adviser and some of our services may not be considered among the best choices by these consultants. As a result, investment consultants may advise their clients to move their assets invested with us to other investment advisers, which could result in significant net outflows. Lastly, our Private Wealth Services rely on referrals from financial planners, registered investment advisers and other professionals. We cannot be certain that we will continue to have access to, or receive referrals from, these third parties. Loss of such access or referrals could have a material adverse effect on our results of operations and business prospects. Performance-based fee arrangements with our clients may cause greater fluctuations in our net revenues. We sometimes charge our clients performance-based fees, whereby we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account under-performs relative to its performance target (whether in absolute terms or relative to a specified benchmark), it must gain back such under-performance before we can collect future performance-based fees. Therefore, if we fail to achieve the performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible to earn performance-based fees on 6.7%, 8.7% and 0.6% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 4.5% of our AUM). If the percentage of our AUM subject to performance-based fees increases, seasonality and volatility of revenue and earnings are likely to become more significant. Our performance-based fees were $245.1 million, $132.6 million and $99.6 million in 2021, 2020 and 2019, respectively. The revenues generated by Bernstein Research Services may be adversely affected by circumstances beyond our control, including declines in brokerage transaction rates, declines in global market volumes, failure to settle our trades by significant counterparties and the effects of MiFID II and Brexit. Electronic, or “low-touch,” trading represents a significant percentage of buy-side trading activity and typically produces transaction fees that are significantly lower than the price of traditional full service fee rates. As a result, blended pricing throughout our industry is lower now than it was historically, and price declines may continue. In addition, fee rates we charge and charged by other brokers for brokerage services have historically experienced price pressure, and we expect these trends to continue. Also, while increases in transaction volume and market share often can offset decreases in rates, this may not continue. In addition, the failure or inability of any of our broker-dealer's significant counterparties to perform could expose us to substantial expenditures and adversely affect our revenues. For example, SCB LLC, as a member of clearing and settlement organizations, would be required to settle open trades of any non-performing counterparty. This exposes us to the mark-to-market adjustment on the trades between trade date and settlement date, which could be significant, especially during periods of severe market volatility. Also, our ability to access liquidity in such situations may be limited by what our funding relationships are able to offer us at such times. We discuss the risks associated with the second installment of the Markets in Financial Instruments Directive II (“ MiFID II ”) and Brexit below in "Legal and Regulatory-related Risks" in this Item 1A. 20 AllianceBernstein Table of Contents Part I Fluctuations in the exchange rates between the U.S. dollar and various other currencies can adversely affect our AUM, revenues and results of operations. Although significant portions of our net revenues and expenses, as well as our AUM, presently are denominated in U.S. dollars, we have subsidiaries and clients outside of the United States with functional currencies other than the U.S. dollar. Weakening of these currencies relative to the U.S. dollar adversely affects the value in U.S. dollar terms of our revenues and our AUM denominated in these other currencies. Accordingly, fluctuations in U.S. dollar exchange rates affect our AUM, revenues and reported financial results from one period to the next. We may not be successful in our efforts to hedge our exposure to such fluctuations, which could negatively impact our revenues and reported financial results. Our seed capital investments are subject to market risk. While we enter into various futures, forwards, swap and option contracts to economically hedge many of these investments, we also may be exposed to market risk and credit-related losses in the event of non-performance by counterparties to these derivative instruments. We have a seed investment program for the purpose of building track records and assisting with the marketing initiatives pertaining to our firm's new products. These seed capital investments are subject to market risk. Our risk management team oversees a seed hedging program that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, and in those cases we are exposed to market risk. In addition, we may be subject to basis risk in that we cannot always hedge with precision our market exposure and, as a result, we may be subject to relative spreads between market sectors. As a result, volatility in the capital markets may cause significant changes in our period-to-period financial and operating results. We use various derivative instruments, including futures, forwards, swap and option contracts, in conjunction with our seed hedging program. While in most cases broad market risks are hedged, our hedges are imperfect and some market risk remains. In addition, our use of derivatives results in counterparty risk ( i.e., the risk that we may be exposed to credit-related losses in the event of non-performance by counterparties to these derivative instruments), regulatory risk ( e.g. , short selling restrictions) and cash/synthetic basis risk ( i.e., the risk that the underlying positions do not move identically to the related derivative instruments). We may engage in strategic transactions that could pose risks. As part of our business strategy, we consider potential strategic transactions, including acquisitions, dispositions, mergers, consolidations, joint venture partnerships and similar transactions, some of which may be material. These transactions, if undertaken, may involve various risks and present financial, managerial and operational challenges, including:. • adverse effects on our earnings if acquired intangible assets or goodwill become impaired; • existence of unknown liabilities or contingencies that arise after closing; • potential disputes with counterparties; and • the possible need for us to increase our firm's leverage or, if we fund the purchase price of a transaction with AB Units or AB Holding Units, likely dilution to our existing unitholders. Acquisitions also pose the risk that any business we acquire may lose customers or employees or could under-perform relative to expectations. Additionally, the loss of investment personnel poses the risk that we may lose the AUM we expected to manage, which could adversely affect our results of operations. We may not accurately value the securities we hold on behalf of our clients or our company investments. In accordance with applicable regulatory requirements, contractual obligations or client direction, we employ procedures for the pricing and valuation of securities and other positions held in client accounts or for company investments. We have established a Valuation Committee, consisting of senior officers and employees, which oversees pricing controls and valuation processes. If market quotations for a security are not readily available, the Valuation Committee determines a fair value for the security. Extraordinary volatility in financial markets, significant liquidity constraints or our failure to adequately consider one or more factors when determining the fair value of a security based on information with limited market observability could result in our failing to properly value securities we hold for our clients or investments accounted for on our balance sheet. Improper valuation likely would result in our basing fee calculations on inaccurate AUM figures, our striking incorrect net asset values for company-sponsored mutual funds or hedge funds or, in the case of company investments, our inaccurately calculating and reporting our financial condition and operating results. Although the overall percentage of our AUM that we fair value based on information with limited market observability is not significant, inaccurate fair value determinations can harm our clients, create regulatory issues and damage our reputation. 2021 Annual Report 21 Table of Contents Part I We may not have sufficient information to confirm or review the accuracy of valuations provided to us by underlying external managers for the funds in which certain of our alternative investment products invest. Certain of our alternative investment services invest in funds managed by external managers (“ External Managers ”) rather than investing directly in securities and other instruments. As a result, our abilities will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete, accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, we may not have sufficient information to confirm or review the accuracy of valuations provided to us by External Managers. In addition, we will be required to rely on External Managers’ compliance with any applicable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or to provide accurate information with respect to the investment could subject our alternative investment products to losses and cause damage to our reputation. The quantitative and systematic models we use in certain of our investment services may contain errors, resulting in imprecise risk assessments and unintended output. We use quantitative and systematic models in a variety of our investment services, generally in combination with fundamental research. These models are developed by senior quantitative professionals and typically are implemented by IT professionals. Our Model Risk Oversight Committee oversees the model governance framework and associated model review activities, which are then executed by our Model Risk Team. However, due to the complexity and large data dependency of such models, it is possible that errors in the models could exist and our controls could fail to detect such errors. Failure to detect errors could result in client losses and reputational damage. The financial services industry is intensely competitive. We compete on the basis of a number of factors, including our investment performance for our clients, our array of investment services, innovation, reputation and price. By having a global presence, we often face competitors with more experience and more established relationships with clients, regulators and industry participants in the relevant market, which could adversely affect our ability to expand. Furthermore, if we are unable to maintain and/or continue to improve our investment performance, our client flows may be adversely affected, which may make it more difficult for us to compete effectively. Also, increased competition could reduce the demand for our products and services, which could have a material adverse effect on our financial condition, results of operations and business prospects. For additional information regarding competitive factors, see “Competition” in Item 1 . Human Capital-related Risks We may be unable to continue to attract, motivate and retain key personnel, and the cost to retain key personnel could put pressure on our adjusted operating margin. Our business depends on our ability to attract, motivate and retain highly skilled, and often highly specialized, technical, investment, managerial and executive personnel, and there is no assurance that we will be able to do so. The market for these professionals is extremely competitive. Certain of these professionals often maintain strong, personal relationships with investors in our products and other members of the business community so their departure may cause us to lose client accounts or result in fewer opportunities to win new business, either of which factors could have a material adverse effect on our results of operations and business prospects. Additionally, a decline in revenues may limit our ability to pay our employees at competitive levels, and maintaining (or increasing) compensation without a revenue increase, in order to retain key personnel, may adversely affect our operating margin. As a result, we remain vigilant about aligning our cost structure (including headcount) with our revenue base. For additional information regarding our compensation practices, see "Compensation Discussion and Analysis" in Item 11. Our process of relocating our headquarters may not be executed as we envision. We have established our corporate headquarters in and expect to relocate a total of approximately 1,250 jobs previously located in the New York metropolitan area to Nashville, Tennessee (for additional information, see “Relocation Strategy” in Item 7 ). Although the eventual impact on AB from this process is not yet known, the uncertainty created by these circumstances could have a significant adverse effect on AB’s ability to motivate and retain current employees. Further significant managerial and operational challenges could arise, such as ineffective transfer of institutional knowledge from current employees to newly-hired employees, if AB experiences significantly greater attrition among current employees than the firm anticipates in connection with the relocation and/or if the firm encounters more difficulty than expected in hiring qualified employees to help staff our Nashville headquarters. Additionally, our estimates for both the transition costs and the corresponding expense savings relating to our headquarters relocation, which we discuss in more detail in “Relocation Strategy” in Item 7 , are based on our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs. If our assumptions turn out to be inaccurate, our expenses and operating income could be adversely affected. 22 AllianceBernstein Table of Contents Part I Operational, Technology and Cyber-related Risks Technology failures and disruptions, including failures to properly safeguard confidential information, can significantly constrain our operations and result in significant time and expense to remediate, which could result in a material adverse effect on our results of operations and business prospects. We are highly dependent on software and related technologies throughout our business, including both proprietary systems and those provided by third-party vendors. We use our technology to, among other things, obtain securities pricing information, process client transactions, store and maintain data, and provide reports and other services to our clients. Despite our protective measures, including measures designed to effectively secure information through system security technology and established and tested business continuity plans, we may still experience system delays and interruptions as a result of natural disasters, hardware failures, software defects, power outages, acts of war and third-party failures. We cannot predict with certainty all of the adverse effects that could result from our failure, or the failure of a third party, to efficiently address and resolve these delays and interruptions. These adverse effects could include the inability to perform critical business functions or failure to comply with financial reporting and other regulatory requirements, which could lead to loss of client confidence, reputational damage, exposure to disciplinary action and liability to our clients. Many of the software applications that we use in our business are licensed from, and supported, upgraded and maintained by, third-party vendors. A suspension or termination of certain of these licenses or the related support, upgrades and maintenance could cause temporary system delays or interruption. Additionally, technology rapidly evolves and we cannot guarantee that our competitors may not implement more advanced technology platforms for their products and services, which may place us at a competitive disadvantage and adversely affect our results of operations and business prospects. Also, we could be subject to losses if we fail to properly safeguard sensitive and confidential information. As part of our normal operations, we maintain and transmit confidential information about our clients as well as proprietary information relating to our business operations. Although we take protective measures, our systems still could be vulnerable to cyber attack or other forms of unauthorized access (including computer viruses) that have a security impact, such as an authorized employee or vendor inadvertently or intentionally causing us to release confidential or proprietary information. Such disclosure could, among other things, allow competitors access to our proprietary business information and require significant time and expense to investigate and remediate the breach. Moreover, loss of confidential client information could harm our reputation and subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of revenues. Any significant security breach of our information and cyber security infrastructure, as well as our failure to properly escalate and respond to such an incident, may significantly harm our operations and reputation. It is critical that we ensure the continuity and effectiveness of our information and cyber security infrastructure, policies, procedures and capabilities to protect our computer and telecommunications systems and the data that reside on or are transmitted through them and contracted third-party systems. Although we take protective measures, including measures to effectively secure information through system security technology, our technology systems may still be vulnerable to unauthorized access, supply chain attacks, computer viruses or other events that have a security impact, such as an external attack by one or more cyber criminals (including phishing attacks attempting to obtain confidential information and ransomware attacks attempting to block access to a computer system until a sum of money is paid), which could materially harm our operations and reputation. Additionally, while we take precautions to password protect and encrypt our laptops and sensitive information on our other mobile electronic devices, if such devices are stolen, misplaced or left unattended, they may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly actions by us. Furthermore, although we maintain a robust cyber security infrastructure and incident preparedness strategy, which we test periodically, we may be unable to respond, both internally and externally, to a cyber incident in a sufficiently expeditious manner. Any such failure could cause significant harm to our reputation and result in litigation, regulatory scrutiny and/or significant remediation costs. Unpredictable events, including climate change, outbreak of infectious disease, natural disaster, dangerous weather conditions, technology failure, terrorist attack and political unrest, may adversely affect our ability to conduct business. War, terrorist attack, political unrest, power failure, climate change, natural disaster and rapid spread of infectious disease (such as the ongoing COVID-19 pandemic) could interrupt our operations by: • causing disruptions in global economic conditions, thereby decreasing investor confidence and making investment products generally less attractive; • inflicting loss of life; • triggering large-scale technology failures or delays; • breaching our information and cyber security infrastructure; and • requiring substantial capital expenditures and operating expenses to remediate damage and restore operations. 2021 Annual Report 23 Table of Contents Part I Despite the contingency plans and facilities we have in place, including system security measures, information back-up and disaster recovery processes, our ability to conduct business, including in key business centers where we have significant operations, such as New York City, London, England, and Nashville, Tennessee, may be adversely affected by a disruption in the infrastructure that supports our operations and the communities in which they are located. This may include a disruption involving electrical, communications, transportation or other services we may use or third parties with which we conduct business. If a disruption occurs in one location and our employees in that location are unable to occupy our offices or communicate with or travel to other locations, our ability to conduct business with and on behalf of our clients may suffer, and we may not be able to successfully implement contingency plans that depend on communication or travel. Furthermore, unauthorized access to our systems as a result of a security breach, the failure of our systems, or the loss of data could give rise to legal proceedings or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, and damage our reputation. Our operations require experienced, professional staff. Loss of a substantial number of such persons or an inability to provide properly equipped places for them to work may, by disrupting our operations, adversely affect our financial condition, results of operations and business prospects. In addition, our property and business interruption insurance may not be adequate to compensate us for all losses, failures or breaches that may occur. Our own operational failures or those of third parties on which we rely, including failures arising out of human error, could disrupt our business, damage our reputation and reduce our revenues. Weaknesses or failures in our internal processes or systems could lead to disruption of our operations, liability to clients, exposure to disciplinary action or harm to our reputation. Our business is highly dependent on our ability to process, on a daily basis, large numbers of transactions, many of which are highly complex, across numerous and diverse markets. These transactions generally must comply with client investment guidelines, as well as stringent legal and regulatory standards. Our obligations to clients require us to exercise skill, care and prudence in performing our services. Despite our employees being highly trained and skilled, the large number of transactions we process makes it highly likely that errors will occasionally occur. If we make a mistake in performing our services that causes financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. The occurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, results of operations and business prospects. The individuals, third-party vendors or issuers on whom we rely to perform services for us or our clients may be unable or unwilling to honor their contractual obligations to us. We rely on various counterparties and other third-party vendors to augment our existing investment, operational, financial and technological capabilities, but the use of a third-party vendor does not diminish AB's responsibility to ensure that client and regulatory obligations are met. Default rates, credit downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress. Disruptions in the financial markets and other economic challenges may cause our counterparties and other third-party vendors to experience significant cash flow problems or even render them insolvent, which may expose us to significant costs and impair our ability to conduct business. Weaknesses or failures within a third-party vendor's internal processes or systems, or inadequate business continuity plans, can materially disrupt our business operations. Also, third-party vendors may lack the necessary infrastructure or resources to effectively safeguard our confidential data. If we are unable to effectively manage the risks associated with such third-party relationships, we may suffer fines, disciplinary action and reputational damage. We may not always successfully manage actual and potential conflicts of interest that arise in our business. Increasingly, we must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect our reputation, results of operations and business prospects. We have procedures and controls that are designed to identify and mitigate conflicts of interest, including those designed to prevent the improper sharing of information. However, appropriately managing conflicts of interest is complex. Our reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail, or appear to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions. Maintaining adequate liquidity for our general business needs depends on certain factors, including operating cash flows and our access to credit on reasonable terms. Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow AUM and other factors beyond our control. Our ability to issue public or private debt on reasonable terms may be limited by adverse market conditions, our profitability, our creditworthiness as perceived by lenders and changes in government regulations, including tax rates and interest rates. Furthermore, our access to credit on reasonable terms is partially dependent on our firm’s credit ratings. 24 AllianceBernstein Table of Contents Part I Both Moody’s Investors Service, Inc. and Standard & Poor's Rating Service affirmed AB’s long-term and short-term credit ratings and indicated a stable outlook in 2021. Future changes in our credit ratings are possible and any downgrade to our ratings is likely to increase our borrowing costs and limit our access to the capital markets. If this occurs, we may be forced to incur unanticipated costs or revise our strategic plans, which could have a material adverse effect on our financial condition, results of operations and business prospects. An impairment of goodwill may occur. Determining whether an impairment of the goodwill asset exists requires management to exercise a substantial amount of judgment. In addition, to the extent that securities valuations are depressed for prolonged periods of time and/or market conditions deteriorate, or if we experience significant net redemptions, our AUM, revenues, profitability and unit price will be adversely affected. Although the price of an AB Holding Unit is just one factor in the calculation of fair value, if AB Holding Unit price levels decline significantly, reaching the conclusion that fair value exceeds carrying value will, over time, become more difficult. In addition, control premiums, industry earnings multiples and discount rates are impacted by economic conditions. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and future cash flow projections, and may result in an impairment of goodwill. An impairment may result in a material charge to our earnings. For additional information about our impairment testing, see Item 7 . The insurance that we maintain may not fully cover all potential exposures. We maintain professional liability, fidelity, cyber, property, casualty, business interruption and other types of insurance, but such insurance may not cover all risks associated with the operation of our business. Our coverage is subject to exclusions and limitations, including high self-insured retentions or deductibles and maximum limits and liabilities covered. In addition, from time to time, various types of insurance may not be available on commercially acceptable terms or, in some cases, at all. We can make no assurance that a claim or claims will be covered by our insurance policies or, if covered, will not exceed our available insurance coverage, or that our insurers will remain solvent and meet their obligations. In the future, we may not be able to obtain coverage at current levels, if at all, and our premiums may increase significantly on coverage that we maintain. Also, we currently are party to certain joint insurance arrangements with subsidiaries of EQH. If our affiliates choose not to include us as insured parties under any such policies, we may need to obtain stand-alone insurance coverage, which could have coverage terms that are less beneficial to us and/or cost more. Legal and Regulatory-related Risks Our business is subject to pervasive, complex and continuously evolving global regulation, compliance with which involves substantial expenditures of time and money, and violation of which may result in material adverse consequences. Virtually all aspects of our business are subject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws and regulations in the foreign jurisdictions in which our subsidiaries conduct business. If we violate these laws or regulations, we could be subject to civil liability, criminal liability or sanction, including restriction or revocation of our and our subsidiaries’ professional licenses or registrations, revocation of the licenses of our employees, censures, fines, or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a material adverse effect on our financial condition, results of operations and business prospects. A regulatory proceeding, even if it does not result in a finding of wrongdoing or sanction, could require substantial expenditures of time and money and could potentially damage our reputation. In recent years, global regulators have substantially increased their oversight of financial services. Some of the newly-adopted and proposed regulations are focused on investment management services. Others, while more broadly focused, nonetheless impact our business. Moreover, the adoption of new laws, regulations or standards and changes in the interpretation or enforcement of existing laws, regulations or standards have directly affected, and will continue to affect, our business, including making our efforts to comply more expensive and time-consuming. For example, in 2015 the Financial Supervisory Commission in Taiwan (the “ FSC ”) implemented new limits on the degree to which local investors can own an offshore investment product. While certain exemptions have been available to us, should we not continue to qualify, the FSC’s rules could force some of our local resident investors to redeem their investments in our funds sold in Taiwan (and/or prevent further sales of those funds in Taiwan), some of which funds have local ownership levels substantially above the FSC limits. This could lead to significant declines in our investment advisory and services fees and revenues earned from these funds. In Europe, MiFID II, which became effective in January 2018, makes significant modifications to the manner in which European broker-dealers can be compensated for research. These modifications have reduced, and are believed to have significantly reduced, the overall research spend by European buy-side firms, which has decreased the revenues we derive from our European clients. Our European clients may continue to reduce their research budgets, which could result in a significant decline in our sell-side revenues. 2021 Annual Report 25 Table of Contents Part I Also, while MiFID II is not applicable to firms operating outside of Europe, competitive and client pressures increasingly may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions. To the extent that occurs, we expect that research budgets from those clients will decrease further, which could result in an additional significant decline in our sell-side revenues. Additionally, these competitive and client pressures may result in our buy-side operation paying for research out of our own resources instead of through bundled trading commissions, which could increase our firm's expenses and decrease our operating income. Additionally, in July 2017 the Chief Executive of the U.K. Financial Conduct Authority (the “ FCA ”), which regulates the London Interbank Offered Rate, or “ LIBOR ,” as a “benchmark” or “reference rate” for various interest rate calculations, announced that the FCA will no longer persuade or compel banks to submit rates for the calculation of the LIBOR benchmark after 2021. In November 2020, the ICE Benchmark Administration Limited announced a plan to extend the date as of which most U.S. LIBOR values would cease being computed from December 31, 2021 to June 30, 2023. Although financial regulators and industry working groups have suggested alternative reference rates, global consensus on alternative rates is lacking and the process for amending existing contracts or instruments to transition away from LIBOR remains unclear. The elimination of LIBOR or changes to other reference rates or any other changes or reforms to the determination or supervision of reference rates may adversely affect the amount of interest payable or interest receivable on certain of our firm's portfolio investments. These changes may also impact the market liquidity and market value of these portfolio investments. We are finalizing our global assessment of exposure in relation to funds utilizing LIBOR based instruments and benchmarks. Further, we are prioritizing the mitigation of risks associated with the forecast changes to financial instruments and performance benchmarks referencing existing LIBOR rates, and concurrently any impact on AB portfolios and investment strategies. Lastly, it also is uncertain how regulatory trends will further evolve, both in the U.S. and abroad. For example, following the Brexit referendum in June 2016, the U.K.'s departure from the European Union (the " EU ") resulted in the U.K. leaving the EU Single Market on December 31, 2020. While the U.K. and the EU have agreed to a trade deal, which took effect on January 1, 2021, this deal does not include specific arrangements for financial services. Accordingly, since the start of 2021, our U.K.-based buy-side and sell-side subsidiaries have implemented alternative arrangements in EU jurisdictions (utilizing AB's EU-based subsidiaries) to ensure continued operations in the EU Single Market. These arrangements are subject to potential change due to ongoing negotiations between the U.K. and the EU on future regulatory cooperation, and it is difficult to ascertain how any such changes may impact the ability of our U.K.-based subsidiaries to provide services to EU-based clients in the future. We are involved in various legal proceedings and regulatory matters and may be involved in such proceedings in the future, any one or combination of which could have a material adverse effect on our reputation, financial condition, results of operations and business prospects. We may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which allege significant damages, and we may be involved in additional matters in the future. Litigation is subject to significant uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, the litigation is in its early stages, or when the litigation is highly complex or broad in scope. Structure-related Risks The partnership structure of AB Holding and AB limits Unitholders’ abilities to influence the management and operation of AB’s business and is highly likely to prevent a change in control of AB Holding and AB. The General Partner, as general partner of both AB Holding and AB, generally has the exclusive right and full authority and responsibility to manage, conduct, control and operate their respective businesses, except as otherwise expressly stated in their respective Amended and Restated Agreements of Limited Partnership. AB Holding and AB Unitholders have more limited voting rights on matters affecting AB than do holders of common stock in a corporation. Both Amended and Restated Agreements of Limited Partnership provide that Unitholders do not have any right to vote for directors of the General Partner and that Unitholders only can vote on certain extraordinary matters (including removal of the General Partner under certain extraordinary circumstances). Additionally, the AB Partnership Agreement includes significant restrictions on the transfer of AB Units and provisions that have the practical effect of preventing the removal of the General Partner, which provisions are highly likely to prevent a change in control of AB’s management. AB Units are illiquid and subject to significant transfer restrictions. There is no public trading market for AB Units and we do not anticipate that a public trading market will develop. The AB Partnership Agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providing that any transfer that may cause AB to be classified as a “publicly traded partnership” (“ PTP ”) as defined in Section 7704 of the Internal Revenue Code of 1986, as amended (the “ Code ”), shall be deemed void and shall not be recognized by AB. In addition, AB Units are subject to significant restrictions on transfer, such as obtaining the written consent of EQH and the General Partner pursuant to the AB Partnership Agreement. Generally, neither EQH nor the General Partner will permit any transfer that it believes would create a risk that AB would be treated as a corporation for tax purposes. EQH and the General Partner have implemented a transfer program that requires a seller to locate a purchaser and imposes annual volume restrictions on transfers. You may request a copy of the transfer program from our Corporate Secretary (corporate_secretary@alliancebernstein.com) . Also, we have filed the transfer program as Exhibit 10.07 to this Form 10-K. 26 AllianceBernstein Table of Contents Part I Changes in the partnership structure of AB Holding and AB and/or changes in the tax law governing partnerships would have significant tax ramifications. AB Holding, having elected under Section 7704(g) of the Code to be subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade or business, is a PTP for federal income tax purposes. AB Holding is also subject to the 4.0% New York City unincorporated business tax (“ UBT ”), net of credits for UBT paid by AB. In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management seeks to ensure that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. A “new line of business” includes any business that is not closely related to AB’s historical business of providing research and diversified investment management and related services to its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or uses more than 15% of its total assets in, the new line of business. AB is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes. However, AB is subject to the 4.0% UBT. Domestic corporate subsidiaries of AB, which are subject to federal, state and local income taxes, generally are included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Each of AB's non-U.S. corporate subsidiaries generally is subject to taxes in the foreign jurisdiction where it is located. If our business increasingly operates in countries other than the U.S., AB’s effective tax rate will increase as our international subsidiaries are subject to corporate taxes in the jurisdictions where they are located. In order to preserve AB’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. If such units were to be considered readily tradable, AB would be subject to federal and state corporate income tax on its net income. Furthermore, as noted above , should AB enter into a substantial new line of business, AB Holding, by virtue of its ownership of AB, would lose its status as a PTP and would become subject to corporate income tax as set forth above . If AB and AB Holding were to become subject to corporate income tax as set forth above , their net income and quarterly distributions to Unitholders would be materially reduced. For information about the significant restrictions on transfer of AB Units, see the risk factor immediately above . Additionally, past or future legislative proposals have been or may be introduced that, if enacted, could have a material adverse effect on us. We cannot predict the outcome of such legislative proposals. If, pursuant to the Bipartisan Budget Act of 2015 ("2015 Act"), any audit by the Internal Revenue Service ("IRS") of our income tax returns for any of our taxable years beginning after December 31, 2017 results in any adjustments, the IRS may collect any resulting taxes, including any applicable penalties and interest, directly from us, in which case our net income and the cash available for quarterly Unitholder distributions may be substantially reduced. Although the IRS, under current law, generally determines tax adjustments at the partnership level when it audits the income tax return of a partnership, the IRS, with respect to taxable years beginning on or before December 31, 2017, is required to collect any additional taxes, interest and penalties from the partnership's individual partners. The 2015 Act modifies this procedure for audits of a partnership’s taxable years beginning after December 31, 2017 and, if a partnership meets certain requirements and makes a proper election, for audits of a partnership’s taxable years beginning before January 1, 2018. We may choose to make such an election if we receive a written notice of selection for examination for an eligible taxable year or if we file, on or after January 1, 2018, an administrative adjustment request for an eligible taxable year and otherwise qualify to make such an election. Generally, we will have the ability to collect tax liability from our Unitholders in accordance with their percentage interests during the year under audit, but there can be no assurance that we will elect to do so or be able to do so under all circumstances. If we do not collect such tax liability from our Unitholders in accordance with their percentage interests in the tax year under audit, our net income and the available cash for quarterly distributions to current Unitholders may be substantially reduced. Accordingly, our current Unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such Unitholders did not own Units during the tax year under audit. In particular, as a publicly traded partnership, our Partnership Representative (as defined below) may, in certain instances, request that any “imputed underpayment” resulting from an audit be adjusted by amounts of certain of our passive losses. If we successfully make such a request, we would have to reduce suspended passive loss carryovers in a manner which is binding on the partners. For taxable years beginning after December 31, 2017, a "partnership representative" that we designate (a “ Partnership Representative ”) will have the sole authority to act on our behalf for purposes of, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS. If we do not make such a designation, the IRS can select any person as the Partnership Representative. Any actions taken by us or by the Partnership Representative on our behalf with respect to, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS, will be binding on us and our Unitholders. 2021 Annual Report 27 Table of Contents Part I In addition, for taxable years beginning after December 31, 2017, we may, but are not required to, make an election to require our Unitholders to take into account on their income tax returns an audit adjustment made to our income tax items, also known as a “push-out” election. Also, a partnership that is a partner of another partnership may elect to have its unitholders take an audit adjustment of the lower-tier partnership into account (i.e., the upper-tier partnership may push adjustments received from the lower-tier partnership through to the partners of the upper-tier partnership). The upper-tier partnership must timely complete the “push-out” of the adjustment in order for it to be effective. Such election must be made by the extended due date for the return for the adjustment year of the audited partnership, regardless of whether the audited partnership is required to file a return for the adjustment year or timely files a request for an extension for its return. There are a number of requirements to make a “push-out” election and we may be unable or unwilling to comply with such requirements. If we do not make a “push-out” election, we would be required to pay any tax resulting from the adjustments to our income tax items, and the cash available for distribution to unitholders would be substantially reduced. Non-U.S. unitholders may be subject to a 10% withholding tax on the sale of their AB Units or AB Holding Units, which could reduce the value of such Units. Gain or loss from the sale or exchange of partnership units after November 27, 2017 by a non-U.S. unitholder are treated as effectively connected with a U.S. trade or business to the extent that the non-U.S. unitholder would have had effectively connected gain or loss on a hypothetical sale by the partnership of all of its assets at fair market value as of the date of the sale or exchange of the partnership units. The Tax Cuts and Jobs Act also imposed certain withholding requirements for the sale of partnership units by a non-U.S. unitholder and authorized the IRS to issue regulations to carry out the withholding rules in the case of publicly traded partnerships. On November 30, 2020, the IRS published final regulations (the " 1446 Final Regulations ") that address withholding tax and information reporting with respect to interests in publicly traded partnerships engaged in a U.S. trade or business. The 1446 Final Regulations end the suspension of withholding on the sale, exchange or disposition of certain interests in a publicly traded partnership, effective January 1, 2022, but place the primary responsibility for such withholding obligations for transfers effected through brokers on the broker, and not the publicly traded partnership. However, the requirement to withhold on amounts realized in connection with the sale, exchange or disposition of certain interests in a publicly traded partnership (including by brokers) is suspended under Notice 2021-51 for transfers that occur before January 1, 2023, and no withholding will apply until that date. Under the 1446 Final Regulations, a publicly traded partnership may be liable for any under-withholding by a broker that relies on a qualified notice for which the publicly traded partnership failed to make a reasonable estimate of the amounts required for determining the applicability of the "ten percent exception." The "ten percent exception" applies if, either (1) the publicly traded partnership was not engaged in a U.S. trade or business during a specified period of time, or (2) upon a hypothetical sale of the publicly traded partnership's assets at fair market value, (i) the amount of net gain that would have been effectively connected with the conduct of a trade or business within the United States would be less than 10 percent of the total net gain, or (ii) no gain would have been effectively connected with the conduct of a trade or business in the United States. We may be liable for any under-withholding by nominees on our Unitholder distributions after January 1, 2023. Under the 1446 Final Regulations, for distributions made after January 1, 2022, a publicly traded partnership must post on its primary public website (and keep accessible for 10 years), and deliver to any registered holder that is a nominee, a qualified notice that states the amount of a distribution that is attributable to each type of income group specified in the 1446 Final Regulations. If the qualified notice is incorrect such that it causes a broker to under-withhold with respect to an amount in excess of cumulative net income, the publicly traded partnership is liable for any under-withholding on such amount. Notice 2021-51 suspends these requirements for distributions made before January 1, 2023. 28 AllianceBernstein Table of Contents Part I Item 1B. Unresolved Staff Comments Neither AB nor AB Holding has unresolved comments from the staff of the SEC to report. Item 2. Properties Our headquarters is located at 501 Commerce Street, Nashville, Tennessee. We occupy 218,976 square feet of space at this location under a 15-year lease agreement that commenced in the fourth quarter of 2020. We lease space at our other principal location, 1345 Avenue of the Americas, New York, New York. We occupy this space pursuant to a lease expiring in 2024. At this location, we currently lease 999,963 square feet of space, within which we currently occupy approximately 512,284 square feet of space and have sub-let (or are seeking to sub-let) approximately 487,679 square feet of space. Also, we entered into a 20-year lease agreement in New York, New York, at 66 Hudson Boulevard, for 165,608 square feet that is expected to commence in 2024. We also lease 50,792 square feet of space in San Antonio, Texas under a lease expiring in 2029. In addition, we lease more modest amounts of space in 23 other cities in the United States. Our subsidiaries lease space in 30 cities outside the United States, the most significant of which are two leases in London, England, one lease expiring in 2022 and a second lease expiring in 2031, and in Hong Kong, China, under a lease expiring in 2027. In London, we currently lease 65,488 square feet of space, within which we currently occupy approximately 54,746 square feet of space and have sub-let approximately 10,742 square feet of space, which will expire in 2022. In 2021, we signed a 10-year lease for 52,814 square feet for an additional London location that we expect to occupy by the fourth quarter of 2022. In Hong Kong, we currently lease and occupy 35,878 square feet of space. Item 3. Legal Proceedings With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss. AB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that we could incur losses pertaining to these matters, but we cannot currently estimate any such losses. Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period. Item 4. Mine Safety Disclosures Not applicable. 2021 Annual Report 29 Table of Contents Part II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for AB Holding Units and AB Units; Cash Distributions AB Holding Units are listed on the NYSE and trade publicly under the ticker symbol “AB". There is no established public trading market for AB Units, which are subject to significant restrictions on transfer. For information about these transfer restrictions, see “Structure-related Risks” in Item 1A . AB Holding’s principal source of income and cash flow is attributable to its limited partnership interests in AB. Each of AB Holding and AB distributes on a quarterly basis all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement and the AB Partnership Agreement, respectively, to its Unitholders and the General Partner. For additional information concerning distribution of Available Cash Flow by AB Holding, see Note 2 to AB Holding’s financial statements in Item 8 . For additional information concerning distribution of Available Cash Flow by AB, see Note 2 to AB’s consolidated financial statements in Item 8. On December 31, 2021, the closing price of an AB Holding Unit on the NYSE was $48.84 per Unit. On December 31, 2021, there were (i) 928 AB Holding Unitholders of record for approximately 82,000 beneficial owners, and (ii) 317 AB Unitholders of record (we do not believe there are substantial additional beneficial owners). Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities We did not engage in any unregistered sales of our securities during the years ended December 31, 2021, 2020 and 2019. Purchases of Equity Securities by the Issuer and Affiliated Purchasers Each quarter, AB considers whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Exchange Act. We did not, however, adopt a plan during the fourth quarter of 2021. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under the firm’s incentive compensation award program and for other corporate purposes. For additional information about Rule 10b5-1 plans, see “Units Outstanding” in Item 7 . 30 AllianceBernstein Table of Contents Part II AB Holding Units bought by us or one of our affiliates during the fourth quarter of 2021 are as follows: Issuer Purchases of Equity Securities Period Total Number of AB Holding Units Purchased Average Price Paid Per AB Holding Unit, net of Commissions Total Number of AB Holding Units Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of AB Holding Units that May Yet Be Purchased Under the Plans or Programs 10/1/21-10/31/21 (1)(2) 281,579 $ 50.46 — — 11/1/21-11/30/21 — — — — 12/1/21-12/31/21 (1) 2,449,657 49.95 — — Total 2,731,236 $ 50.00 — — (1) During the fourth quarter of 2021, we purchased 2,449,716 AB Holding Units from employees to allow them to fulfill statutory withholding tax requirements at the time of distribution of long-term incentive compensation awards. (2) During the fourth quarter of 2021, we purchased 281,520 AB Holding Units on the open market pursuant to a Rule 10b5-1 plan to help fund anticipated obligations under our incentive compensation award program. Neither we nor our affiliates bought any AB Units during the fourth quarter of 2021. 2021 Annual Report 31 Table of Contents Part II Item 6. [Reserved] 32 AllianceBernstein Table of Contents Part II Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Impact of COVID-19 General Economic Conditions COVID-19 has significantly impacted the global economy since the first quarter of 2020, and its impact may persist for months to come. While most businesses have re-opened, vaccinations are progressing in most portions of the world and leading economic indicators, other than heightened inflation, have improved significantly, the overall extent and duration of COVID-19's impact on businesses and economic activity generally remains unclear. Various countries around the world, and most areas in the U.S., have continued to experience surges in the rates of COVID-19 infections and hospitalizations, which have resulted from the emergence and spread of virus variants (particularly the "delta variant" during the second half of 2021 and the "omicron variant" more recently), greatly increased social interactions, including at colleges and universities and social venues, after re-opening of economies, and decreased usage of mitigation techniques, such as mask-wearing and social distancing, in combination with large portions of the population remaining unvaccinated. These ongoing circumstances surrounding the virus may adversely affect consumer sentiment and the durability of business re-openings, and they also may slow economic recovery and possibly cause market volatility and even a new downturn. AB Impact At the onset of COVID-19 during the first quarter of 2020, we quickly responded in the various jurisdictions where we operate, including the U.S., the U.K., Hong Kong, Shanghai, Singapore and Taiwan. We implemented business continuity measures, including travel restrictions and a work-from-home requirement for almost all personnel (other than a relatively small number of employees whose physical presence in our offices was considered critical), which generally remained in place throughout 2020 and 2021 to ensure operating continuity for all critical functions. We also instituted a notification process for any employee who tests positive for COVID-19 or has been exposed to someone else who has tested positive. As the COVID-19 crisis has continued to evolve since the lockdown in the first quarter of 2020, certain key functions of the business, such as Risk Management, Business Continuity, Finance and Human Capital, have maintained constant communication and monitored the evolution of the pandemic to keep our employees safe and advise of key developments. Additionally, we continue to monitor communications from the World Health Organization and the U.S. Centers for Disease Control and Prevention, and in the third quarter of 2021 engaged an epidemiologist on a consulting basis, to ensure we have current and accurate information. Furthermore, we have continued to enhance our virtual programs to support business functions, such as training on cybersecurity and enhancements to our existing technology platforms, which has increased the effectiveness of our remote work force. There has been a heightened focus on the emotional well-being of our employees, and we have provided regular touch points with employees through virtual town halls and management communications. Additionally, we have maintained regular communications and updates on the virus and the Company's response, which are posted on the Company's internal website, to ensure transparent communication with our employees. The economic impact of COVID-19 and any additional declines in the financial markets could have a significant adverse effect on our AUM and revenues, particularly if economic activity does not continue to recover and inflation continues unabated. Further, we have benefited from certain of our adjusted operating expenses declining significantly as a result of the COVID-19 pandemic, such as costs for travel and entertainment and client meetings, particularly during 2020. Although these costs increased in 2021, they have not yet returned to a normalized level. These cost savings have benefited our margins. If financial markets continue to normalize and economic activity increases, we do not anticipate continued cost savings related to COVID-19, and these savings are not indicative of our future performance. Although countries throughout the world continue to grapple with re-opening their economies, there is a significant risk that the opening process may be interrupted or reversed if infection and hospitalization rates increase. Also, any reluctance of consumers to resume spending could do long-term damage to the global economy, which would have an adverse effect on our business. Additionally, as most of our workforce continues working remotely, at least part of the time, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions. Ultimately, the return to normal business and economic activity will likely require the broad application of effective vaccines. The distribution of multiple safe, effective vaccines was initiated towards the end of the fourth quarter of 2020, and the distribution of such vaccines generally increased globally throughout 2021. However, the rate of new vaccinations in the U.S. plateaued, and in some areas began to decline, by the end of the second quarter of 2021, and the rate at which vaccination "boosters" have been administered has lagged. If global vaccination rates do not improve further, a significant risk will remain that COVID-19 and/or a variant thereof, could accelerate global health concerns and, in so doing, cause heightened market and economic turmoil in the future. 2021 Annual Report 33 Table of Contents Part II Executive Overview (1) Our total assets under management (" AUM ") as of December 31, 2021 were $778.6 billion, up $92.7 billion, or 13.5%, during 2021. The increase was driven primarily by market appreciation of $66.6 billion and net inflows of $26.1 billion (reflecting Retail net inflows of $20.8 billion, Private Wealth Management net inflows of $3.0 billion and Institutional net inflows of $2.3 billion). As previously disclosed, we expect additional redemptions by AXA of low-fee retail AUM in the first half of 2022 of approximately $5 billion. Institutional AUM increased $21.5 billion, or 6.8%, to $337.1 billion during 2021, primarily due to market appreciation of $19.4 billion and net inflows of $2.3 billion, primarily driven by growth in active equities. Gross sales increased $0.8 billion, from $30.9 billion in 2020 to $31.7 billion in 2021. Redemptions and terminations increased $0.1 billion, from $23.3 billion in 2020 to $23.4 billion in 2021. Institutional sales and redemptions in 2021 include $8.7 billion in sales and $10.0 billion in redemptions associated with the reinsurance agreement entered into by Equitable Financial Life Insurance Company (" Equitable Financial ") and a subsidiary of Venerable Holdings, Inc., pursuant to which Equitable Financial ceded to Venerable a portion of its legacy variable annuity business; AB remained the preferred investment manager for the General Account assets transferred Retail AUM increased $54.6 billion, or 20.6%, to $319.9 billion during 2021, primarily due to market appreciation of $33.6 billion and net inflows of $20.8 billion, primarily driven by growth in active equities. Gross sales increased $21.1 billion, from $78.9 billion in 2020 to $100.0 billion in 2021. Redemptions and terminations decreased $4.4 billion, from $69.5 billion in 2020 to $65.1 billion in 2021. Private Wealth Management AUM increased $16.6 billion, or 15.8%, to $121.6 billion during 2021, due to market appreciation of $13.6 billion and net inflows of $3.0 billion, primarily driven by growth in alternatives and multi-asset solutions. Gross sales increased $4.0 billion, from $14.3 billion in 2020 to $18.3 billion in 2021. Redemptions and terminations decreased $1.2 billion, from $16.5 billion in 2020 to $15.3 billion in 2021. Bernstein Research Services (" Bernstein ") revenue decreased $7.7 million, or 1.7%, in 2021. The decrease was due to lower trading activity driven by lower global market volatility as compared to the COVID-related volatility in 2020. This was partially offset by higher research payments across Bernstein and Autonomous Research (" Autonomous ") products. Our 2021 net revenues of $4.4 billion increased $733.1 million, or 19.8%, compared to net revenues of $3.7 billion in the prior year. The increase was primarily driven by higher base advisory fees of $486.6 million, higher distribution revenues of $122.5 million and higher performance-based fees of $112.5 million. Our operating expenses of $3.2 billion increased $424.0 million, or 15.1%, compared to operating expenses of $2.8 billion in the prior year. The increase was primarily due to higher employee compensation and benefits expenses of $221.8 million, higher promotion and servicing expenses of $153.5 million and higher general and administrative expenses of $64.5 million. Our operating income increased $309.0 million, or 34.1%, to $1.2 billion from $907.4 million in 2020 and our operating margin increased to 27.3% in 2021 from 24.6% in 2020. Market Environment Despite a selloff in November resulting from fears surrounding inflation and the rising cases of the omicron variant, U.S. equity markets finished higher in 2021. The S&P 500, Dow Jones Industrial Average and Nasdaq each rallied to finish the year with solid gains. With rising inflation remaining a key concern, the Federal Reserve signaled it would begin tapering its quantitative easing at a faster pace and will begin raising their target interest rate in the first half of 2022. Meanwhile, U.S. government negotiations surrounding the Build Back Better package and the Infrastructure and Investments Jobs Act continued, with concerns the fiscal stimulus could drive inflation even higher in 2022. In the U.K., equities lagged the global gains in 2021 but rose in fourth quarter. Brexit, however, has placed constraints on labor supply and, in turn, upward pressure on wages and inflation. In response, the Bank of England raised interest rates, despite the spread of the omicron variant. In China, equities significantly underperformed global equities. The People’s Bank of China reduced the reserve requirement ratio, releasing inexpensive funds for banks to lend, and announced that this cut is not the beginning of an easing cycle, but rather a regular monetary policy action. The risks in China, however, around the property market will likely remain a key watchpoint over the coming months. 1 Percentage change figures are calculated using assets under management rounded to the nearest million, while financial statement amounts are rounded to the nearest thousand. 34 AllianceBernstein Table of Contents Part II MiFID II In Europe, MiFID II, which became effective on January 3, 2018, has made significant modifications to the manner in which European broker-dealers can be compensated for research. These modifications are believed to have significantly reduced the overall research spend by European buy-side firms, which has decreased the revenues we derive from our European clients. Our European clients may continue to reduce their research budgets, which could result in a significant decline in our sell-side revenues. Also, while MiFID II is not applicable to firms operating outside of Europe, competitive and client pressures may force buy-side firms operating outside of Europe to pay for research from their own resources instead of through bundled trading commissions. If that occurs, we would expect that research budgets from those clients will decrease further, which could result in an additional significant decline in our sell-side revenues. Additionally, these competitive and client pressures may result in our buy-side operation paying for research out of our own resources instead of through bundled trading commissions, which could increase our firm's expenses and decrease our operating income. The ultimate impact of MiFID II on payments for research globally remains uncertain. Relationship with EQH and its Subsidiaries EQH (our parent company) and its subsidiaries are our largest client. EQH is collaborating with AB in order to improve the risk-adjusted yield for the General Accounts of EQH's insurance subsidiaries by investing additional assets at AB, including the utilization of AB's higher-fee, longer-duration alternative offerings. Equitable Financial has agreed to provide $10 billion in permanent capital 2 over the next three years to build out AB’s private illiquid offerings, including private alternatives and private placements. We expect this anticipated capital from Equitable Financial will accelerate both organic and inorganic growth in our private alternatives business, allowing us to continue to deliver for our clients, employees, unitholders and other stakeholders. Relocation Strategy As previously announced, we have established our corporate headquarters in Nashville, TN, at 501 Commerce Street. Our Nashville headquarters houses Finance, IT, Operations, Legal, Compliance, Internal Audit, Human Capital, and Sales and Marketing, and at year-end we had 974 employees in Nashville. We expect to reach a total of 1,250 employees in Nashville by the end of 2024. We have been actively relocating jobs and expect this transition to take several more years. We will continue to maintain a principal location in New York City, which houses our Portfolio Management, Sell-Side Research and Trading, and New York-based Private Wealth Management businesses. We believe relocating our corporate headquarters to Nashville affords us the opportunity to provide an improved quality of life alternative for our employees and enables us to attract and recruit new talented employees to a highly desirable location while improving the long-term cost structure of the firm. During the transition period, which began in 2018 and is expected to continue through 2024, we currently estimate that we will incur transition costs of between $145 million to $155 million. These costs include employee relocation, severance, recruitment, and overlapping compensation and occupancy costs. Over this same period, we expect to realize total expense savings of between $205 million to $215 million. However, we did incur some transition costs before we began to realize expense savings. For the period beginning in 2018 and ending in the fourth quarter of 2021, we incurred $97 million of cumulative transition costs compared to $89 million of cumulative savings. In addition, we incurred $27 million of transition costs for the twelve months ended December 31, 2021, compared to $43 million of expense savings, resulting in an overall net savings of $16 million for the period. In 2021, our net income per unit (" EPU ") increased $0.06 as a result of our relocation strategy, which compares to the $0.04 EPU increase that occurred in 2020. We also expect to achieve EPU accretion in each year thereafter. Beginning in 2025, once the transition period has been completed, we estimate ongoing annual expense savings of approximately $75 million to $80 million, which will result from a combination of occupancy and compensation-related savings. Our estimates for both the transition costs and the corresponding expense savings are based on our current assumptions of employee relocation costs, severance, and overlapping compensation and occupancy costs. In addition, our estimates for both the timing of when we incur transition costs and realize the related expense savings are based on our current relocation implementation plan and the timing for execution of each phase. The actual total charges we eventually record, the related expense savings we realize, and the timing of EPU impact may differ from our current estimates as we implement each phase of our headquarters relocation. 2 Permanent capital means investment capital of indefinite duration, which may be withdrawn under certain conditions. Although Equitable Financial has indicated its intention over time to provide this investment capital to AB, which is mutually beneficial to both firms, it has no binding commitment to do so. 2021 Annual Report 35 Table of Contents Part II During October 2018, we signed a lease, which commenced in the fourth quarter of 2020, relating to 218,976 square feet of space at our new Nashville headquarters. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 15-year initial lease term is $134 million. 36 AllianceBernstein Table of Contents Part II Although we have presented many of our transition costs and annual expense savings with numerical specificity, and we believe these targets to be reasonable as of the date of this report, the uncertainties surrounding the assumptions we discuss above create a significant risk that these targets may not be achieved. Accordingly, the expenses we actually incur and the savings we actually realize may differ from our targets, particularly if actual events adversely differ from one or more of our key assumptions. The transition costs and expense savings, together with their underlying assumptions, are Forward-Looking Statements and can be affected by any of the factors discussed in “Risk Factors” and “Cautions Regarding Forward-Looking Statements” in this 2021 10-K. We strongly caution investors not to place undue reliance on any of these assumptions or our cost and expense targets. Except as may be required by applicable securities laws, we are not under any obligation, and we expressly disclaim any obligation, to update or alter any assumptions, estimates, financial goals, targets, projections or other related statements that we may make. AB Holding AB Holding’s principal source of income and cash flow is attributable to its investment in AB Units. The AB Holding financial statements, notes to the financial statements and management’s discussion and analysis of financial condition and results of operations (“ MD&A ”) should be read in conjunction with those of AB. Results of Operations Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands, except per unit amounts) Net income attributable to AB Unitholders $ 1,148,623 $ 865,952 $ 752,042 32.6 % 15.1 % Weighted average equity ownership interest 36.2 % 35.6 % 35.4 % Equity in net income attributable to AB Unitholders $ 416,326 $ 308,404 $ 266,292 35.0 15.8 Income taxes 30,483 29,024 27,729 5.0 4.7 Net income of AB Holding $ 385,843 $ 279,380 $ 238,563 38.1 17.1 Diluted net income per AB Holding Unit $ 3.88 $ 2.88 $ 2.49 34.7 15.7 Distributions per AB Holding Unit (1) $ 3.90 $ 2.91 $ 2.53 34.0 15.0 (1) Distributions reflect the impact of AB’s non-GAAP adjustments. AB Holding had net income of $385.8 million in 2021 compared to $279.4 million in 2020, reflecting higher net income attributable to AB Unitholders and higher weighted average equity ownership interest. AB Holding had net income of $279.4 million in 2020 compared to $238.6 million in 2019, reflecting higher net income attributable to AB Unitholders. AB Holding's partnership gross income is derived from its interest in AB. AB Holding’s income taxes, which reflect a 3.5% federal tax on its partnership gross income from the active conduct of a trade or business, are computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, brokerage commissions and direct payments for research services) by AB Holding’s ownership interest in AB, multiplied by the 3.5% tax rate. AB Holding’s effective tax rate was 7.3% in 2021, 9.4% in 2020 and 10.4% in 2019. See Note 6 to AB Holding’s financial statements in Item 8 for a further description. As supplemental information, AB provides the performance measures “adjusted net revenues,” “adjusted operating income” and “adjusted operating margin,” which are the principal metrics management uses in evaluating and comparing the period-to-period operating performance of AB. Management principally uses these metrics in evaluating performance because they present a clearer picture of AB's operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, real estate charges ( discussed below in Adjusted Operating Income) and other adjustment items. Similarly, management believes that these management operating metrics help investors better understand the underlying trends in AB's results and, accordingly, provide a valuable perspective for investors. Such measures are not based on generally accepted accounting principles (“ non-GAAP measures ”). These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both GAAP and non-GAAP measures in evaluating the company’s financial performance. The non-GAAP measures alone may pose limitations because they do not include all of AB’s revenues and expenses. Further, adjusted diluted net income per AB Holding Unit is not a liquidity measure and should not be used in place of cash flow measures. See “Management Operating Metrics” in this Item 7 . 2021 Annual Report 37 Table of Contents Part II The impact of these adjustments on AB Holding’s net income and diluted net income per AB Holding Unit are as follows: Years Ended December 31 2021 2020 2019 (in thousands, except per unit amounts) AB non-GAAP adjustments, before taxes $ 2,959 $ 6,393 $ 8,648 AB Income tax benefit (expense) on non-GAAP adjustments 71 (523) 1,070 AB non-GAAP adjustments, after taxes 3,030 5,870 9,718 AB Holding’s weighted average equity ownership interest in AB 36.2 % 35.6 % 35.4 % Impact on AB Holding’s net income of AB non-GAAP adjustments $ 1,098 $ 2,090 $ 3,441 Net income - diluted, GAAP basis $ 385,873 $ 279,436 $ 238,642 Impact on AB Holding’s net income of AB non-GAAP adjustments 1,098 2,090 3,441 Adjusted net income - diluted $ 386,971 $ 281,526 $ 242,083 Diluted net income per AB Holding Unit, GAAP basis $ 3.88 $ 2.88 $ 2.49 Impact of AB non-GAAP adjustments 0.01 0.03 0.03 Adjusted diluted net income per AB Holding Unit $ 3.89 $ 2.91 $ 2.52 The degree to which AB’s non-GAAP adjustments impact AB Holding’s net income fluctuates based on AB Holding's ownership percentage in AB. Tax Legislation For a discussion of tax legislation, see “Risk Factors - Structure-related Risks” in Item 1A . Capital Resources and Liquidity During the year ended December 31, 2021, net cash provided by operating activities was $355.1 million, compared to $270.0 million during the corresponding 2020 period. The increase primarily resulted from higher cash distributions received from AB of $86.3 million. During the year ended December 31, 2020, net cash provided by operating activities was $270.0 million, compared to $222.8 million during the corresponding 2019 period. The increase primarily resulted from higher cash distributions received from AB of $49.5 million. During the years ended December 31, 2021, 2020 and 2019, net cash used in investing activities was $3.4 million, $0.1 million and $11.5 million, respectively, reflecting investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units. During the year ended December 31, 2021, net cash used in financing activities was $351.7 million, compared to $269.9 million during the corresponding 2020 period. The increase primarily was due to higher cash distributions to Unitholders of $86.6 million, offset by higher proceeds from exercise of compensatory options to buy AB Holding Units of $3.3 million. During the year ended December 31, 2020, net cash used in financing activities was $269.9 million, compared to $211.2 million during the corresponding 2019 period. The increase was primarily due to higher cash distributions to Unitholders of $48.4 million, partially offset by lower proceeds from exercise of compensatory options to buy AB Holding Units of $11.4 million. Management believes that AB Holding will have the resources it needs to meet its financial obligations as a result of the cash flow AB Holding realizes from its investment in AB. Cash Distributions AB Holding is required to distribute all of its Available Cash Flow, as defined in the AB Holding Partnership Agreement, to its Unitholders (including the General Partner). Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of units outstanding at the end of the quarter. Management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments made to adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to AB Holding’s financial statements in Item 8 for a description of Available Cash Flow. 38 AllianceBernstein Table of Contents Part II Commitments and Contingencies For a discussion of commitments and contingencies, see Note 7 to AB Holding’s financial statements in Item 8 . AB Assets Under Management Assets under management by distribution channel are as follows: As of December 31 % Change 2021 2020 2019 2021-20 2020-19 (in billions) Institutions $337.1 $315.6 $282.7 6.8 % 11.6 % Retail 319.9 265.3 239.2 20.6 10.9 Private Wealth Management 121.6 105.0 101.0 15.8 3.9 Total $778.6 $685.9 $622.9 13.5 10.1 Assets under management by investment service are as follows: As of December 31 % Change 2021 2020 2019 2021-20 2020-19 (in billions) Equity Actively Managed $287.6 $217.8 $177.2 32.1 % 22.9 % Passively Managed (1) 71.6 64.5 60.1 10.9 7.3 Total Equity 359.2 282.3 237.3 27.2 19.0 Fixed Income Actively Managed Taxable 246.3 263.2 258.3 (6.4) 1.9 Tax–exempt 57.1 50.3 47.1 13.6 6.7 Total 303.4 313.5 305.4 (3.2) 2.6 Passively Managed (1) 13.2 8.5 9.3 55.3 (8.4) Total Fixed Income 316.6 322.0 314.7 (1.7) 2.3 Alternatives/Multi-Asset Solutions (2) Actively Managed 97.3 79.1 69.3 23.0 14.2 Passively Managed (1) 5.5 2.5 1.6 116.6 54.1 Total Alternatives/Multi-Asset Solutions 102.8 81.6 70.9 25.9 15.1 Total $778.6 $685.9 $622.9 13.5 % 10.1 % (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions." 2021 Annual Report 39 Table of Contents Part II Changes in assets under management during 2021 and 2020 are as follows: Distribution Channel Institutions Retail Private Wealth Management Total (in billions) Balance as of December 31, 2020 $315.6 $265.3 $105.0 $685.9 Long-term flows: Sales/new accounts 31.7 100.0 18.3 150.0 Redemptions/terminations (23.4) (65.1) (15.3) (103.8) Cash flow/unreinvested dividends (6.0) (14.1) — (20.1) Net long-term inflows (1) 2.3 20.8 3.0 26.1 Transfers (0.2) 0.2 — — Market appreciation 19.4 33.6 13.6 66.6 Net change 21.5 54.6 16.6 92.7 Balance as of December 31, 2021 $337.1 $319.9 $121.6 $778.6 Balance as of December 31, 2019 $282.7 $239.2 $101.0 $622.9 Long-term flows: Sales/new accounts 30.9 78.9 14.3 124.1 Redemptions/terminations (23.3) (69.5) (16.5) (109.3) Cash flow/unreinvested dividends (6.6) (11.0) 0.2 (17.4) Net long-term inflows (outflows) (1) 1.0 (1.6) (2.0) (2.6) Acquisitions — 0.2 — 0.2 Transfers 1.4 (0.6) (0.8) — Market appreciation 30.5 28.1 6.8 65.4 Net change 32.9 26.1 4.0 63.0 Balance as of December 31, 2020 $315.6 $265.3 $105.0 $685.9 (1) Institutional net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively. 40 AllianceBernstein Table of Contents Part II Investment Service Equity Actively Managed Equity Passively Managed (1) Fixed Income Actively Managed- Taxable Fixed Income Actively Managed-Tax- Exempt Fixed Income Passively Managed (1) Alternatives/ Multi-Asset Solutions (2) Total (in billions) Balance as of December 31, 2020 $217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 Long-term flows: Sales/new accounts 72.9 1.4 44.9 13.5 4.6 12.7 150.0 Redemptions/terminations (39.6) (1.1) (52.6) (7.8) (0.4) (2.3) (103.8) Cash flow/unreinvested dividends (11.4) (7.8) (2.2) 0.3 0.8 0.2 (20.1) Net long-term inflows (outflows) (3) 21.9 (7.5) (9.9) 6.0 5.0 10.6 26.1 Market appreciation (depreciation) 47.9 14.6 (7.0) 0.8 (0.3) 10.6 66.6 Net change 69.8 7.1 (16.9) 6.8 4.7 21.2 92.7 Balance as of December 31, 2021 $287.6 $71.6 $246.3 $57.1 $13.2 $102.8 $778.6 Balance as of December 31, 2019 $177.2 $60.1 $258.3 $47.1 $9.3 $70.9 $622.9 Long-term flows: Sales/new accounts 51.4 1.7 54.3 10.3 — 6.4 124.1 Redemptions/terminations (36.7) (1.9) (58.3) (9.5) (0.3) (2.6) (109.3) Cash flow/unreinvested dividends (7.3) (4.4) (5.8) 0.2 (1.3) 1.2 (17.4) Net long-term inflows (outflows) (3) 7.4 (4.6) (9.8) 1.0 (1.6) 5.0 (2.6) Acquisitions — — — — — 0.2 0.2 Market appreciation 33.2 9.0 14.7 2.2 0.8 5.5 65.4 Net change 40.6 4.4 4.9 3.2 (0.8) 10.7 63.0 Balance as of December 31, 2020 $217.8 $64.5 $263.2 $50.3 $8.5 $81.6 $685.9 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions." (3) Fixed income - taxable investment service net flows include $1.3 billion and $11.8 billion of AXA redemptions of certain low-fee fixed income mandates for 2021 and 2020, respectively. 2021 Annual Report 41 Table of Contents Part II Net long-term inflows (outflows) for actively managed investment services as compared to passively managed investment services during 2021 and 2020 are as follows: Years Ended December 31 2021 2020 (in billions) Actively Managed Equity $ 21.9 $ 7.4 Fixed Income (3.9) (8.8) Alternatives/Multi- Asset Solutions 8.3 4.5 Total 26.3 3.1 Passively Managed Equity (7.5) (4.6) Fixed Income 5.0 (1.6) Alternatives/Multi- Asset Solutions 2.3 0.5 Total (0.2) (5.7) Total net long-term inflows (outflows) $ 26.1 $ (2.6) Average assets under management by distribution channel and investment service are as follows: Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in billions) Distribution Channel: Institutions $ 325.7 $ 285.9 $ 265.4 13.9 % 7.7 % Retail 291.0 236.5 212.3 23.0 11.4 Private Wealth Management 114.1 97.1 96.5 17.5 0.7 Total $ 730.8 $ 619.5 $ 574.2 18.0 7.9 Investment Service: Equity Actively Managed $ 252.2 $ 179.8 $ 158.4 40.2 13.5 Equity Passively Managed (1) 68.7 57.1 56.4 20.5 1.2 Fixed Income Actively Managed – Taxable 253.1 254.4 239.7 (0.5) 6.2 Fixed Income Actively Managed – Tax-exempt 53.8 47.9 44.6 12.3 7.5 Fixed Income Passively Managed (1) 9.6 9.4 9.4 1.4 0.2 Alternatives/Multi-Asset Solutions (2) 93.4 70.9 65.7 31.7 7.8 Total $ 730.8 $ 619.5 $ 574.2 18.0 7.9 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. Prior to December 31, 2020, this investment service line was disclosed as "Other." In order to reflect the increasing significance of our Alternatives and Multi-Asset Solutions services, we updated the investment service line to "Alternatives and Multi-Asset Solutions." 42 AllianceBernstein Table of Contents Part II During 2021, our Institutional channel average AUM of $325.7 billion increased $39.8 billion, or 13.9%, compared to 2020, primarily due to this AUM increasing $21.5 billion, or 6.8%, to $337.1 billion over the last twelve months. The $21.5 billion increase in AUM resulted primarily from market appreciation of $19.4 billion and net inflows of $2.3 billion. During 2020, our Institutional channel average AUM of $285.9 billion increased $20.5 billion, or 7.7%, compared to 2019, primarily due to this AUM increasing $32.9 billion, or 11.6%, to $315.6 billion during 2020. The $32.9 billion increase in AUM resulted primarily from market appreciation of $30.5 billion and net inflows of $1.0 billion. During 2021, our Retail channel average AUM of $291.0 billion increased $54.5 billion, or 23.0%, compared to 2020, primarily due to this AUM increasing $54.6 billion, or 20.6%, to $319.9 billion over the last twelve months. The $54.6 billion increase in AUM resulted primarily from market appreciation of $33.6 billion and net inflows of $20.8 billion. During 2020, our Retail channel average AUM of $236.5 billion increased $24.2 billion, or 11.4%, compared to 2019, primarily due to this AUM increasing $26.1 billion, or 10.9%, to $265.3 billion during 2020. The $26.1 billion increase in AUM resulted primarily from market appreciation of $28.1 billion, partially offset by net outflows of $1.6 billion. During 2021, our Private Wealth Management channel average AUM of $114.1 billion increased $17.0 billion, or 17.5%, compared to 2020, primarily due to this AUM increasing $16.6 billion, or 15.8%, to $121.6 billion over the last twelve months. The $16.6 billion increase in AUM resulted primarily from market appreciation of $13.6 billion and net inflows of $3.0 billion. During 2020, our Private Wealth Management channel average AUM of $97.1 billion increased $0.6 billion, or 0.7%, compared to 2019, primarily due to this AUM increasing $4.0 billion, or 3.9%, to $105.0 billion during 2020. The $4.0 billion increase in AUM resulted primarily from market appreciation of $6.8 billion, partially offset by net outflows of $2.0 billion. Absolute investment composite returns, gross of fees, and relative performance as of December 31, 2021 compared to benchmarks for certain representative Institutional equity and fixed income services are as follows: 1-Year 3-Year (1) 5-Year (1) Global High Income - Hedged (fixed income) Absolute return 4.8 % 7.8 % 5.6 % Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged) 2.3 0.7 0.3 Global Plus - Hedged (fixed income) Absolute return (0.5) 4.6 3.8 Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged) 0.9 0.6 0.4 Intermediate Municipal Bonds (fixed income) Absolute return 1.8 4.0 3.4 Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg) 0.9 1.0 0.8 U.S. Strategic Core Plus (fixed income) Absolute return (0.5) 5.5 4.2 Relative return (vs. Bloomberg Barclays U.S. Aggregate Index) 1.1 0.7 0.6 Emerging Market Debt (fixed income) Absolute return (2.1) 6.7 4.9 Relative return (vs. JPM EMBI Global/JPM EMBI) (0.6) 0.7 0.4 Sustainable Global Thematic Absolute return 23.7 31.7 23.5 Relative return (vs. MSCI ACWI Index) 5.2 11.3 9.1 2021 Annual Report 43 Table of Contents Part II 1-Year 3-Year (1) 5-Year (1) International Strategic Core Equity Absolute return 10.8 12.3 10.4 Relative return (vs. MSCI EAFE Index) (0.4) (1.3) 0.8 U.S. Small & Mid Cap Value Absolute return 37.0 20.2 11.1 Relative return (vs. Russell 2500 Value Index) 9.2 1.9 1.3 U.S. Strategic Value Absolute return 28.3 16.5 9.3 Relative return (vs. Russell 1000 Value Index) 3.1 (1.2) (1.8) U.S. Small Cap Growth Absolute return 10.5 33.1 26.3 Relative return (vs. Russell 2000 Growth Index) 7.7 12.0 11.8 U.S. Large Cap Growth Absolute return 29.3 33.2 26.4 Relative return (vs. Russell 1000 Growth Index) 1.7 (0.8) 1.1 U.S. Small & Mid Cap Growth Absolute return 11.9 31.5 23.9 Relative return (vs. Russell 2500 Growth Index) 6.9 6.4 6.3 Concentrated U.S. Growth Absolute return 32.4 31.3 23.6 Relative return (vs. S&P 500 Index) 3.7 5.3 5.1 Select U.S. Equity Absolute return 31.2 25.9 18.7 Relative return (vs. S&P 500 Index) 2.5 (0.2) 0.3 Strategic Equities Absolute return 26.9 23.7 16.3 Relative return (vs. Russell 3000 Index) 1.2 (2.0) (1.6) Global Core Equity Absolute return 19.4 19.6 15.6 Relative return (vs. MSCI ACWI Index) 0.8 (0.8) 1.2 U.S. Strategic Core Equity Absolute return 25.1 21.4 15.6 Relative return (vs. S&P 500 Index) (3.7) (4.7) (2.9) Select U.S. Equity Long/Short Absolute return 19.4 16.6 12.5 Relative return (vs. S&P 500 Index) (9.3) (9.5) (6.0) (1) Reflects annualized returns. 44 AllianceBernstein Table of Contents Part II Consolidated Results of Operations Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands, except per unit amounts) Net revenues $ 4,441,602 $ 3,708,536 $ 3,518,432 19.8 % 5.4 % Expenses 3,225,140 2,801,100 2,694,995 15.1 3.9 Operating income 1,216,462 907,436 823,437 34.1 10.2 Income taxes 62,728 45,653 41,754 37.4 9.3 Net income 1,153,734 861,783 781,683 33.9 10.2 Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641 n/m n/m Net income attributable to AB Unitholders $ 1,148,623 $ 865,952 $ 752,042 32.6 15.1 Diluted net income per AB Unit $ 4.18 $ 3.19 $ 2.78 31.0 14.7 Distributions per AB Unit $ 4.19 $ 3.20 $ 2.82 30.9 13.5 Operating margin (1) 27.3 % 24.6 % 22.6 % (1) Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues. Net income attributable to AB Unitholders for the year ended December 31, 2021 increased $282.7 million from the year ended December 31, 2020. The increase primarily is due to (in millions): Higher base advisory fees $ 486.6 Higher distribution revenues 122.5 Higher performance-based fees 112.5 Higher employee compensation and benefits (221.8) Higher promotion and servicing expenses (153.5) Higher general and administrative expenses (64.5) Other 0.9 $ 282.7 Net income attributable to AB Unitholders for the year ended December 31, 2020 increased $113.9 million from the year ended December 31, 2019. The increase primarily was due to (in millions): Higher base advisory fees $ 90.4 Higher distribution revenues 74.7 Higher Bernstein Research Services revenue 51.8 Higher net income of consolidated entities attributable to non-controlling interest 33.8 Lower performance-based fees 33.0 Higher promotion and servicing expenses (63.6) Higher investment losses (55.1) Higher employee compensation and benefits (51.4) Other 0.3 $ 113.9 2021 Annual Report 45 Table of Contents Part II Units Outstanding Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“ Exchange Act ”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority to repurchase AB Holding Units on our behalf in accordance with the terms and limitations specified in the plan. Repurchases are subject to regulations promulgated by the SEC, as well as certain price, market volume and timing constraints specified in the plan. There was no plan adopted during the fourth quarter of 2021. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes. Cash Distributions We are required to distribute all of our Available Cash Flow, as defined in the AB Partnership Agreement, to our Unitholders and the General Partner. Available Cash Flow typically is the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will continue to be based on adjusted diluted net income per unit, unless management determines, with concurrence of the Board of Directors, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation. See Note 2 to our consolidated financial statements contained in Item 8 for a description of Available Cash Flow. Management Operating Metrics We are providing the non-GAAP measures “adjusted net revenues,” “adjusted operating income” and “adjusted operating margin” because they are the principal operating metrics management uses in evaluating and comparing period-to-period operating performance. Management principally uses these metrics in evaluating performance because they present a clearer picture of our operating performance and allow management to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, real estate charges and other adjustment items. Similarly, we believe that these management operating metrics help investors better understand the underlying trends in our results and, accordingly, provide a valuable perspective for investors. These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not be comparable to non-GAAP measures presented by other companies. Management uses both accounting principles generally accepted in the United States of America (" US GAAP ") and non-GAAP measures in evaluating our financial performance. The non-GAAP measures alone may pose limitations because they do not include all of our revenues and expenses. 46 AllianceBernstein Table of Contents Part II Years Ended December 31 2021 2020 2019 (in thousands) Net revenues, US GAAP basis $ 4,441,602 $ 3,708,536 $ 3,518,432 Adjustments: Distribution-related adjustments: Distribution revenues (652,240) (529,781) (455,043) Investment advisory services fees (90,242) (66,858) (47,951) Pass through adjustments: Investment advisory services fees (40,628) (18,279) (20,914) Other revenues (37,209) (39,333) (35,926) Impact of consolidated company-sponsored funds (6,933) 954 (33,044) Long-term incentive compensation-related investment gains and dividend and interest (6,694) (6,772) (8,939) Write-down of investment 1,880 859 — Adjusted net revenues $ 3,609,536 $ 3,049,326 $ 2,916,615 Operating income, US GAAP basis $ 1,216,462 $ 907,436 $ 823,437 Adjustments: Real estate (3,162) 2,880 2,623 Long-term incentive compensation-related items 687 (83) 1,217 EQH award compensation 940 802 1,125 Write-down of investment 1,880 859 — Acquisition-related expenses 3,214 3,301 6,734 Contingent payment arrangements (600) (1,366) (3,051) Sub-total of non-GAAP adjustments 2,959 6,393 8,648 Less: Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641 Adjusted operating income 1,214,310 917,998 802,444 Adjusted income taxes 62,658 46,176 40,684 Adjusted net income $ 1,151,652 $ 871,822 $ 761,760 Diluted net income per AB Unit, GAAP basis $ 4.18 $ 3.19 $ 2.78 Impact of non-GAAP adjustments 0.02 0.02 0.03 Adjusted diluted net income per AB Unit $ 4.20 $ 3.21 $ 2.81 Operating margin, GAAP basis 27.3 % 24.6 % 22.6 % Impact of non-GAAP adjustments 6.3 5.5 4.9 Adjusted operating margin 33.6 % 30.1 % 27.5 % Adjusted operating income for the year ended December 31, 2021 increased $296.3 million, or 32.3%, from the year ended December 31, 2020, primarily due to higher investment advisory base fees of $460.9 million and higher performance-based fees of $91.7 million, partially offset by higher employee compensation and benefits expenses of $221.4 million and higher general and administrative expenses of $49.2 million. Adjusted operating income for the year ended December 31, 2020 increased $115.6 million, or 14.4%, from the year ended December 31, 2019, primarily due to higher investment advisory base fees of $74.1 million, higher Bernstein Research Services revenue of $51.8 million, lower promotion and servicing expenses of $33.4 million and higher performance-based fees of $33.2 million, partially offset by higher employee compensation expenses (excluding the impact of long-term incentive compensation-related items) of $56.1 million and higher net investment losses of $22.8 million. 2021 Annual Report 47 Table of Contents Part II Adjusted Net Revenues Net Revenue, as adjusted, is reduced to exclude all of the company's distribution revenues, which are recorded as a separate line item on the consolidated statement of income, as well as a portion of investment advisory services fees received that is used to pay distribution and servicing costs. For certain products, based on the distinct arrangements, certain distribution fees are collected by us and passed through to third-party client intermediaries, while for certain other products, we collect investment advisory services fees and a portion is passed through to third-party client intermediaries. In both arrangements, the third-party client intermediary owns the relationship with the client and is responsible for performing services and distributing the product to the client on our behalf. We believe offsetting distribution revenues and certain investment advisory services fees is useful for our investors and other users of our financial statements because such presentation appropriately reflects the nature of these costs as pass-through payments to third parties that perform functions on behalf of our sponsored mutual funds and/or shareholders of these funds. Distribution-related adjustments fluctuate each period based on the type of investment products sold, as well as the average AUM over the period. Also, we adjust distribution revenues for the amortization of deferred sales commissions as these costs, over time, will offset such revenues. We adjust investment advisory and services fees and other revenues for pass through costs, primarily related to our transfer agent and shareholder servicing fees. These fees do not affect operating income, but they do affect our operating margin. As such, we exclude these fees from adjusted net revenues. We adjust for the revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such consolidated company-sponsored investment funds and AB's investment gains and losses on its investments in such consolidated company-sponsored investment funds that were eliminated in consolidation. Also, adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments. During the fourth quarter of 2021, we wrote down an equity method investment; this write down brought the investment balance to zero. Additionally, during the first quarter of 2020, we wrote-down an investment that had been received in exchange for the sale of software technology; the write-down brought the investment balance to zero. Previously, we had been excluding the investment from adjusted net revenues. Adjusted Operating Income Adjusted operating income represents operating income on a US GAAP basis excluding (1) real estate charges (credits), (2) the impact on net revenues and compensation expense of the investment gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (3) our senior management's EQH award compensation, as discussed below , (4) the write-down of investments ( discussed immediately above ), (5) acquisition-related expenses, (6) adjustments to contingent payment arrangements, and (7) the impact of consolidated company-sponsored investment funds. Real estate charges (credits) incurred during the fourth quarter of 2019 through the fourth quarter of 2020, while excluded in the period in which the charges (credits) were recorded, are included ratably over the remaining applicable lease term. Prior to 2009, a significant portion of employee compensation was in the form of long-term incentive compensation awards that were notionally invested in AB investment services and generally vested over a period of four years. AB economically hedged the exposure to market movements by purchasing and holding these investments on its balance sheet. All such investments had vested as of year-end 2012 and the investments have been delivered to the participants, except for those investments with respect to which the participant elected a long-term deferral. Fluctuation in the value of these investments, which also impacts compensation expense, is recorded within investment gains and losses on the income statement. Management believes it is useful to reflect the offset achieved from economically hedging the market exposure of these investments in the calculation of adjusted operating income and adjusted operating margin. The non-GAAP measures exclude gains and losses and dividends and interest on employee long-term incentive compensation-related investments included in revenues and compensation expense. The board of directors of EQH granted to Seth P. Bernstein, our CEO, equity awards in connection with EQH's IPO. Additionally, equity awards were granted to Mr. Bernstein and other members of AB's senior management for their membership on the EQH Management Committee. These individuals may receive additional equity or cash compensation from EQH in the future related to their service on the Management Committee. Any awards granted to these individuals by EQH are recorded as compensation expense in AB’s consolidated statement of income. The compensation expense associated with these awards has been excluded from our non-GAAP measures because they are non-cash and are based upon EQH's, and not AB's, financial performance. The write-down of investments discussed above in Adjusted Net Revenues have been excluded due to their non-recurring nature and because they are not part of our core operating results. 48 AllianceBernstein Table of Contents Part II Acquisition-related expenses have been excluded because they are not considered part of our core operating results when comparing financial results from period to period and to industry peers. During 2021 and 2020, these expenses included an intangible asset impairment charge of $1.0 million and $1.5 million, respectively, relating to our 2016 acquisition. The recording of changes in estimates of contingent consideration payable with respect to contingent payment arrangements associated with our acquisitions are not considered part of our core operating results and, accordingly, have been excluded. We adjusted for the operating income impact of consolidating certain company-sponsored investment funds by eliminating the consolidated company-sponsored funds' revenues and expenses and including AB's revenues and expenses that were eliminated in consolidation. We also excluded the limited partner interests we do not own. Adjusted Net Income and Adjusted Diluted Net Income per AB Unit As previously discussed, our quarterly distribution is typically our adjusted diluted net income per unit (which is derived from adjusted net income) for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. Adjusted income taxes, used in calculating adjusted net income, are calculated using the GAAP effective tax rate adjusted for non-GAAP income tax adjustments. Adjusted Operating Margin Adjusted operating margin allows us to monitor our financial performance and efficiency from period to period without the volatility noted above in our discussion of adjusted operating income and to compare our performance to industry peers on a basis that better reflects our performance in our core business. Adjusted operating margin is derived by dividing adjusted operating income by adjusted net revenues. Net Revenues The components of net revenues are as follows: Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands) Investment advisory and services fees: Institutions: Base fees $ 540,478 $ 458,449 $ 451,125 17.9 % 1.6 % Performance-based fees 45,580 53,351 27,839 (14.6) 91.6 586,058 511,800 478,964 14.5 6.9 Retail: Base fees 1,442,178 1,186,560 1,076,495 21.5 10.2 Performance-based fees 50,669 24,412 22,510 107.6 8.4 1,492,847 1,210,972 1,099,005 23.3 10.2 Private Wealth Management: Base fees 966,749 817,801 844,809 18.2 (3.2) Performance-based fees 148,870 54,863 49,266 171.3 11.4 1,115,619 872,664 894,075 27.8 (2.4) Total: Base fees 2,949,405 2,462,810 2,372,429 19.8 3.8 Performance-based fees 245,119 132,626 99,615 84.8 33.1 3,194,524 2,595,436 2,472,044 23.1 5.0 Bernstein Research Services 452,017 459,744 407,911 (1.7) 12.7 Distribution revenues 652,240 529,781 455,043 23.1 16.4 Dividend and interest income 38,734 50,923 104,421 (23.9) (51.2) Investment (losses) gains (636) (16,401) 38,659 (96.1) n/m Other revenues 108,409 104,703 97,559 3.5 7.3 Total revenues 4,445,288 3,724,186 3,575,637 19.4 4.2 Less: Interest expense 3,686 15,650 57,205 (76.4) (72.6) Net revenues $ 4,441,602 $ 3,708,536 $ 3,518,432 19.8 5.4 2021 Annual Report 49 Table of Contents Part II Investment Advisory and Services Fees Investment advisory and services fees are the largest component of our revenues. These fees generally are calculated as a percentage of the value of AUM as of a specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size of account and the total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as AUM increase or decrease and is affected by market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existing accounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, shifts of assets between accounts or products with different fee structures, and acquisitions. Our average basis points realized (investment advisory and services fees divided by average AUM) generally approximate 30 to 105 basis points for actively-managed equity services, 10 to 70 basis points for actively-managed fixed income services and 2 to 40 basis points for passively-managed services. Average basis points realized for other services could range from 4 basis points for certain Institutional third party managed services to over 100 basis points for certain Retail and Private Wealth Management alternative services. These ranges include all-inclusive fee arrangements (covering investment management, trade execution and other services) for our Private Wealth Management clients. We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee ( see paragraph immediately below for more information regarding our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments. We sometimes charge our clients performance-based fees. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible to earn performance-based fees on 6.7%, 8.7% and 0.6% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 4.5% of our AUM). Our investment advisory and services fees increased by $599.1 million, or 23.1%, in 2021, due to a $486.6 million, or 19.8%, increase in base fees and a $112.5 million increase in performance-based fees. The increase in base fees is primarily due to an 18.0% increase in average AUM, as well as a slight increase in our portfolio fee rate. Our investment advisory and services fees increased by $123.4 million, or 5.0%, in 2020, due to a $90.4 million, or 3.8%, increase in base fees and a $33.0 million increase in performance-based fees. The increase in base fees is primarily due to a 7.9% increase in average AUM, partially offset by a lower portfolio fee rate. Performance-based fees increased $112.5 million, or 84.8%, in 2021, primarily due to higher performance fees earned on Private Credit Services, U.S. Real Estate Funds, Financial Services Opportunities and U.S. Select Equity, partially offset by lower Arya Partners fees. Performance-based fees increased $33.0 million, or 33.1%, in 2020, primarily due to higher performance-based fees earned on Arya Partners, partially offset by lower Private Credit Services fees. Institutional investment advisory and services fees increased $74.3 million, or 14.5%, in 2021, due to an increase in base fees of $82.0 million, or 17.9%, partially offset by a decrease in performance-based fees of $7.8 million. The increase in base fees is primarily due to a 13.9% increase in average AUM, an increase in the portfolio fee rate and a shift in product mix from fixed income to active equities and alternatives, which generally earn higher fees. Institutional investment advisory and services fees increased $32.8 million, or 6.9%, in 2020, due to an increase in in performance-based fees of $25.5 million and an increase in base fees of $7.3 million, or 1.6%. The increase in base fees was primarily due to a 7.7% increase in average AUM, partially offset by a lower portfolio fee rate. 50 AllianceBernstein Table of Contents Part II Retail investment advisory and services fees increased $281.9 million, or 23.3%, in 2021, due to an increase in base fees of $255.6 million, or 21.5%, and a $26.3 million increase in performance-based fees. The increase in base fees is primarily due to a 23.0% increase in average AUM. Retail investment advisory and services fees increased $112.0 million, or 10.2%, in 2020, due to an increase in base fees of $110.1 million, or 10.2%, and a $1.9 million increase in performance-based fees. The increase in performance-based fees was primarily due to a 11.4% increase in average AUM, partially offset by a lower portfolio fee rate. Private Wealth Management investment advisory and services fees increased by $243.0 million, or 27.8%, in 2021, due to a increase in base fees of $148.9 million, or 18.2%, and a $94.0 million increase in performance-based fees. The increase in base fees is primarily due to a 17.5% increase in average AUM. Private Wealth Management investment advisory and services fees decreased $21.4 million, or 2.4%, in 2020, due to an decrease in base fees of $27.0 million, or 3.2%, partially offset by a increase in performance-based fees of $5.6 million. The decrease in base fees was primarily due to the impact of a lower portfolio fee rate, as well as a product mix shift with high fee value equity strategies representing a lower percentage of our total AUM than in prior periods. Bernstein Research Services We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principally by directing us to execute brokerage transactions on their behalf, for which we earn commissions, and to a lesser extent, but increasingly, by paying us directly for research through commission sharing agreements or cash payments. Revenues from Bernstein Research Services decreased $7.7 million, or 1.7%, in 2021. The decrease was due to lower trading activity driven by lower global market volatility as compared to the COVID-related volatility in 2020. This was partially offset by higher research payments across Bernstein and Autonomous products. Revenues from Bernstein Research Services increased $51.8 million, or 12.7%, in 2020. The increase was due to higher market volatility in 2020, particularly between March and June 2020, primarily as a result of the COVID-19 pandemic, which led to higher customer activity and greater global trading volumes. Any decreases in customer activity and trading volumes will have a corresponding effect on Bernstein Research Services revenue. Furthermore, all of 2020 included revenues from our acquisition of Autonomous (which closed on April 1, 2019). Distribution Revenues Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as full or partial reimbursement of the distribution expenses they incur. Period-over-period fluctuations of distribution revenues typically are in line with fluctuations of the corresponding average AUM of these mutual funds. Distribution revenues increased $122.5 million, or 23.1%, in 2021, primarily due to the corresponding average AUM of these mutual funds increasing 17.2%. Distribution revenues increased $74.7 million, or 16.4%, in 2020, primarily due to the corresponding average AUM of these mutual funds increasing 13.2%. Dividend and Interest Income and Interest Expense Dividend and interest income consists primarily of investment income and interest earned on customer margin balances and U.S. Treasury Bills as well as dividend and interest income in our consolidated company-sponsored investment funds. Interest expense principally reflects interest accrued on cash balances in customers’ brokerage accounts. Dividend and interest income decreased $12.2 million, or 23.9%, in 2021, primarily due to lower interest earned on U.S. Treasury Bills as well as lower dividend and interest income in our consolidated company-sponsored investment funds. Interest expense decreased $12.0 million, or 76.4%, in 2021, due to lower interest paid on cash balances in customers' brokerage accounts. Dividend and interest income decreased $53.5 million, or 51.2%, in 2020, primarily due to lower interest earned on customer margin balances and U.S. Treasury Bills, as well as lower dividend and interest income in our consolidated company-sponsored investment funds. Interest expense decreased $41.6 million, or 72.6%, in 2020, due to lower interest paid on cash balances in customers' brokerage accounts. 2021 Annual Report 51 Table of Contents Part II Investment Gains (Losses) Investment gains (losses) consist primarily of realized and unrealized investment gains or losses on: (i) employee long-term incentive compensation-related investments, (ii) U.S. Treasury Bills, (iii) market-making in exchange-traded options and equities, (iv) seed capital investments, (v) derivatives and (vi) investments in our consolidated company-sponsored investment funds. Investment gains (losses) also include equity in earnings of proprietary investments in limited partnership hedge funds that we sponsor and manage. Investment gains (losses) are as follows: Years Ended December 31 2021 2020 2019 (in thousands) Long-term incentive compensation-related investments: Realized gains $ 2,213 $ 2,655 $ 1,672 Unrealized gains 2,446 2,914 5,859 Investments held by consolidated company-sponsored investment funds: Realized (losses) gains (2,341) 3,357 9,378 Unrealized (losses) gains (1,882) (854) 36,150 Seed capital investments: Realized gains (losses) Seed capital and other 20,263 25,002 17,301 Derivatives (22,313) (30,343) (30,320) Unrealized (losses) gains Seed capital and other (6,907) (12,387) 7,510 Derivatives 8,992 (5,220) (8,013) Brokerage-related investments: Realized (losses) (829) (1,188) (1,209) Unrealized (losses) gains (278) (337) 331 $ (636) $ (16,401) $ 38,659 Other Revenues Other revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration and recordkeeping services provided to company-sponsored mutual funds and the General Accounts of EQH and its subsidiaries, and other miscellaneous revenues. Other revenues increased $3.7 million, or 3.5%, in 2021, primarily due to higher shareholder servicing fees, partially offset by lower brokerage income. Other revenues increased $7.1 million, or 7.3%, in 2020, primarily due to higher shareholder servicing fees, higher brokerage income and higher mutual fund reimbursements, partially offset by lower investment income related to our consolidated company-sponsored investment funds. 52 AllianceBernstein Table of Contents Part II Expenses The components of expenses are as follows: Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands) Employee compensation and benefits $ 1,716,013 $ 1,494,198 $ 1,442,783 14.8 % 3.6 % Promotion and servicing: Distribution-related payments 708,117 569,283 487,965 24.4 16.7 Amortization of deferred sales commissions 34,364 27,355 15,029 25.6 82.0 Trade execution, marketing, T&E and other 197,486 189,787 219,860 4.1 (13.7) 939,967 786,425 722,854 19.5 8.8 General and administrative: General and administrative 555,608 485,544 484,750 14.4 0.2 Real estate charges — 5,526 3,324 (100.0) 66.2 555,608 491,070 488,074 13.1 0.6 Contingent payment arrangements 2,710 1,855 (510) 46.1 n/m Interest on borrowings 5,145 6,180 13,035 (16.7) (52.6) Amortization of intangible assets 5,697 21,372 28,759 (73.3) (25.7) Total $ 3,225,140 $ 2,801,100 $ 2,694,995 15.1 3.9 Employee Compensation and Benefits Employee compensation and benefits consist of base compensation (including salaries and severance), annual short-term incentive compensation awards (cash bonuses), annual long-term incentive compensation awards, commissions, fringe benefits and other employment costs (including recruitment, training, temporary help and meals). Compensation expense as a percentage of net revenues was 38.6%, 40.3% and 41.0% for the years ended December 31, 2021, 2020 and 2019, respectively. Compensation expense generally is determined on a discretionary basis and is primarily a function of our firm’s current-year financial performance. The amounts of incentive compensation we award are designed to motivate, reward and retain top talent while aligning our executives' interests with the interests of our Unitholders. Senior management, with the approval of the Compensation and Workplace Practices Committee of the Board of Directors of AllianceBernstein Corporation (“ Compensation Committee ”), periodically confirms that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues. Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented as a non-GAAP measure ( discussed earlier in this Item 7 ). Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were 0.9%, 0.9% and 1.2% of adjusted net revenues for 2021, 2020 and 2019, respectively), and excludes the impact of mark-to-market vesting expense, as well as dividends and interest expense, associated with employee long-term incentive compensation-related investments and the amortization expense associated with the awards issued by EQH to some of our firm's senior management relating to their roles as members of the EQH Management Committee. Senior management, with the approval of the Compensation Committee, has established as an objective that adjusted employee compensation and benefits expense generally should not exceed 50% of our adjusted net revenues, except in unexpected or unusual circumstances. Our ratios of adjusted compensation expense as a percentage of adjusted net revenues were 46.5%, 47.9% and 47.9%, respectively, for the years ended December 31, 2021, 2020 and 2019. In 2021, employee compensation and benefits expense increased $221.8 million, or 14.8%, primarily due to higher incentive compensation of $124.6 million, higher base compensation of $48.9 million (primarily higher base salaries), higher commissions of $25.0 million, higher fringes of $20.1 million and higher other employment costs of $3.3 million. In 2020, employee compensation and benefits expense increased $51.4 million, or 3.6%, primarily due to higher incentive compensation of $58.8 million and higher base compensation of $13.5 million (primarily higher base salaries), offset by lower fringes of $8.5 million, lower commissions of $6.2 million and lower other employment costs of $6.2 million. 2021 Annual Report 53 Table of Contents Part II Promotion and Servicing Promotion and servicing expenses include distribution-related payments to financial intermediaries for distribution of AB mutual funds and amortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load shares of AB mutual funds. Also included in this expense category are costs related to trade execution and clearance, travel and entertainment, advertising and promotional materials. Promotion and servicing expenses increased $153.5 million, or 19.5%, in 2021. The increase was primarily due to higher distribution-related payments of $138.8 million, higher transfer fees of $10.1 million, higher amortization of deferred sales commissions of $7.0 million and higher marketing expenses of $4.9 million, partially offset by lower trade execution and clearance expenses of $7.4 million. Promotion and servicing expenses increased $63.6 million, or 8.8%, in 2020. The increase primarily was due to higher distribution-related payments of $81.3 million, higher amortization of deferred sales commissions of $12.3 million, higher trade execution and clearance expenses of $7.9 million and higher transfer fees of $4.8 million, offset by lower travel and entertainment expenses of $34.3 million and lower marketing expense of $8.4 million. The decrease in travel and entertainment and marketing expense was primarily as a result of cost savings associated with the COVID-19 pandemic. General and Administrative General and administrative expenses include portfolio services fees, technology fees, professional fees and office-related expenses (occupancy, communications and similar expenses). General and administrative expenses as a percentage of net revenues were 12.5%, 13.2% and 13.9% for the years ended December 31, 2021, 2020 and 2019, respectively. General and administrative expenses increased $64.5 million, or 13.1%, in 2021. The increase was primarily due to higher portfolio services fees of $34.0 million, higher technology fees of $14.3 million, higher office-related expenses of $7.6 million, higher professional fees of $6.6 million and an unfavorable foreign exchange translation impact of $5.2 million, partially offset by lower charitable contributions of $4.9 million. General and administrative expenses increased $3.0 million, or 0.6%, during 2020, primarily due to higher technology fees of $4.7 million, higher charitable contributions of $3.9 million, higher portfolio service fees of $3.6 million, higher real estate charges of $2.2 million and higher other taxes of $1.6 million, partially offset by lower professional fees of $9.1 million and lower office-related expenses of $3.5 million. Contingent Payment Arrangements Contingent payment arrangements reflect changes in estimates of contingent payment liabilities associated with acquisitions in previous periods, as well as accretion expense of these liabilities. The expense of $2.7 million for 2021 reflects accretion expense of $3.3 million, offset by the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $0.6 million. The expense of $1.9 million for 2020 reflects accretion expense of $3.3 million, offset by the change in estimate of the contingent consideration payable relating to our 2016 acquisition of $1.4 million. Interest on Borrowings Interest expense decreased $1.0 million, or 16.7%, in 2021, reflecting lower interest rates partially offset by higher weighted average borrowings. Average daily borrowings for both the EQH facility and commercial paper were $561.6 million at a weighted average interest rate of 0.2% during 2021 compared to $554.0 million and 0.5% during 2020. Interest expense decreased 52.6% in 2020, reflecting lower interest rates partially offset by higher weighted average borrowings. Average daily borrowings for both the EQH facility and commercial paper were $554.0 million at a weighted average interest rate of 0.5% during 2020 compared to $436.9 million and 2.5% during 2019. Amortization of Intangible Assets Amortization of intangible assets reflects our amortization of costs assigned to acquired investment management contracts with a finite life. These assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life. Amortization of intangible assets decreased $15.7 million, or 73.3%, and $7.4 million, or 25.7%, in 2021 and 2020, respectively. The decrease in both periods was primarily due to the full amortization of intangible assets related to the Bernstein acquisition as of September 30, 2020. As a result, $5.2 million of quarterly amortization expense ceased after the third quarter of 2020. 54 AllianceBernstein Table of Contents Part II Income Taxes AB, a private limited partnership, is not subject to federal or state corporate income taxes. However, AB is subject to a 4.0% New York City unincorporated business tax ( “UBT” ). Our domestic corporate subsidiaries are subject to federal, state and local income taxes, and generally are included in the filing of a consolidated federal income tax return. Separate state and local income tax returns also are filed. Foreign corporate subsidiaries generally are subject to taxes in the jurisdictions where they are located. Income tax expense increased $17.1 million, or 37.4%, in 2021 compared to 2020. This increase is due to higher pre-tax book income which resulted in a higher effective tax rate in 2021 of 5.2% compared to 5.0% in 2020. Income tax expense increased $3.9 million, or 9.3%, in 2020 compared to 2019. This increase is due to higher pre-tax book income, offset by a slightly lower effective tax rate in 2020 of 5.0% compared to 5.1% in 2019. The decrease in our effective tax rate was driven by a reduction of one-time discrete items. Net Income (Loss) of Consolidated Entities Attributable to Non-Controlling Interests Net income (loss) of consolidated entities attributable to non-controlling interests primarily consists of limited partner interests owned by other investors in our consolidated company-sponsored investment funds. In 2021, we had $5.1 million of net income of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds. In 2020, we had $4.2 million of net losses of consolidated entities attributable to non-controlling interests, primarily due to losses on investments held by our consolidated company-sponsored investment funds. In 2019 we had $29.6 million of net gains of consolidated entities attributable to non-controlling interests, primarily due to gains on investments held by our consolidated company-sponsored investment funds. Capital Resources and Liquidity Cash flows from operating activities primarily include the receipt of investment advisory and services fees and other revenues offset by the payment of operating expenses incurred in the normal course of business. Our cash flows from operating activities have historically been positive and sufficient in supporting our operations. We do not anticipate this to change in the foreseeable future. Cash flows from investing activities generally consist of small capital expenditures and, when applicable, business acquisitions. Cash flows from financing activities primarily consist of issuance and repayment of debt and the repurchase of AB Holding units to fund our long-term deferred compensation plans. We are required to distribute all of our Available Cash Flow to our Unitholders and the General Partner. During 2021, net cash provided by operating activities was $1.3 billion, compared to $1.5 billion during 2020. The change primarily was due to net activity of our consolidated company-sponsored investment funds of $560.6 million, an increase in other assets of $75.7 million and higher net purchases of broker-dealer investments of $33.3 million, partially offset by higher earnings of $346.2 million, an increase in broker-dealer related payables (net of receivable and segregated U.S. Treasury Bills activity) of $72.9 million and an increase in accounts payable and accrued expenses of $25.2 million. During 2020, net cash provided by operating activities was $1.5 billion, compared to $827.5 million during 2019. The change primarily was due to net activity of our consolidated company-sponsored investment funds of $468.2 million, an increase in broker-dealer related payables (net of receivable and segregated U.S. Treasury Bills activity) of $368.0 million, a decrease in other assets of $92.3 million, an increase in accounts payable and accrued expenses of $67.2 million and an increase in accrued compensation of $54.4 million, partially offset by higher net purchases of broker-dealer investments of $454.1 million. During 2021, net cash used in investing activities was $65.7 million, compared to $59.1 million during 2020. The change is primarily due to higher purchases of furniture, equipment and leasehold improvements of $20.4 million, partially offset by lower cash paid for acquisitions, net of cash acquired, of $9.8 million and lower purchases of equity method investments of $4.1 million. During 2020, net cash used in investing activities was $59.1 million, compared to $23.0 million during 2019. The change is primarily due to $13.6 million paid for acquisitions, net of cash acquired, $4.1 million paid for equity method investments and higher purchases of furniture, equipment and leasehold improvements of $13.2 million. During 2021, net cash used in financing activities was $0.9 billion, compared to $1.1 billion during 2020. The change reflects the net purchases of non-controlling interests of consolidated company-sponsored investment funds in 2021 as compared to net redemptions in 2020 (impact of $532.7 million), partially offset by higher distributions to the General Partner and Unitholders of $223.0 million as a result of higher earnings (distributions on earnings are paid one quarter in arrears) and an increase in the net purchases of AB Holding Units to fund long-term incentive compensation plans of $113.2 million. During 2020, net cash used in financing activities was $1.1 billion, compared to $775.0 million during 2019. The change reflects higher redemptions of non-controlling interests of consolidated company-sponsored investment funds of $369.1 million and higher distributions to the General Partner and Unitholders of $133.4 million, partially offset by higher net proceeds of debt of $112.9 million and an increase in overdrafts payable of $47.3 million. 2021 Annual Report 55 Table of Contents Part II As of December 31, 2021, AB had $1.3 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds), all of which is available for liquidity but consist primarily of cash on deposit for our broker-dealers related to various customer clearing activities, and cash held by foreign subsidiaries of $675.3 million. Debt and Credit Facilities See Note 12 to our consolidated financial statements in Item 8 for disclosures relating to our debt and credit facilities. Our financial condition and access to public and private debt markets should provide adequate liquidity for our general business needs. Management believes that cash flow from operations and the issuance of debt and AB Units or AB Holding Units will provide us with the resources we need to meet our financial obligations. See “Risk Factors” in Item 1A and “Cautions Regarding Forward-Looking Statements” in this Item 7 for a discussion of credit markets and our ability to renew our credit facilities at expiration. Off-Balance Sheet Arrangements and Aggregate Contractual Obligations Guarantees Under various circumstances, AB guarantees the obligations of its consolidated subsidiaries. AB maintains a guarantee in connection with an $800 million committed, unsecured senior revolving credit facility (the " Credit Facility "). If SCB LLC is unable to meet its obligations, AB will pay the obligations when due or on demand. In addition, during 2021 AB established two additional uncommitted lines of credit for $100.0 million and $50.0 million, respectively, which are available for both AB's and SCB LLC's business. AB has guaranteed the obligations of SCB LLC under these lines of credit. AB maintains guarantees totaling $415.0 million for SCB LLC’s five uncommitted lines of credit. AB maintains a guarantee with a commercial bank, under which we guarantee the obligations in the ordinary course of business of each of SCB LLC, our U.K.-based broker-dealer and our Cayman subsidiary. We also maintain three additional guarantees with other commercial banks under which we guarantee approximately $277.4 million of obligations for our U.K.-based broker-dealer and $99.0 million of obligations for our India-based broker-dealer. In the event that any of these three entities is unable to meet its obligations, AB will pay the obligations when due or on demand. We also have two smaller guarantees with a commercial bank totaling approximately $2.0 million, under which we guarantee certain obligations in the ordinary course of business of one of our foreign subsidiaries. We have not been required to perform under any of the above agreements and currently have no liability in connection with these agreements. Aggregate Contractual Obligations During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (“ Real Estate Fund ”), we committed to invest $25.0 million in the Real Estate Fund. As of December 31, 2021, we had funded $22.4 million of this commitment. During 2014, as general partner of AllianceBernstein U.S. Real Estate II L.P. (“ Real Estate Fund II ”), we committed to invest $27.3 million, as amended in 2020, in the Real Estate Fund II. As of December 31, 2021, we had funded $21.1 million of this commitment. We have various compensation and benefit obligations, including accrued salaries and fringes, commissions, payroll taxes, incentive payments and deferred compensation arrangements. The majority of our compensation and benefits obligations are paid out in less than one year, while the deferred compensation obligations are payable over various periods, with the majority payable over periods of up to three years. Accrued compensation and benefits at December 31, 2021 totaled $353.6 million. This amount excludes our accrued pension obligation. Offsetting our accrued compensation obligations are long-term incentive compensation-related investments and money market investments we funded totaling $65.7 million, which are included in our consolidated statement of financial condition. Any amounts reflected on the consolidated statement of financial condition as payables (to broker-dealers, brokerage clients and company-sponsored mutual funds) and accounts payable and accrued expenses are excluded from the aforementioned accrued compensation and benefits obligation amount. We expect to make contributions to our qualified profit sharing plan of approximately $16.5 million in each of the next four years. We do not currently anticipate that we will contribute to the Retirement Plan during 2022. 56 AllianceBernstein Table of Contents Part II The 2017 Tax Act (enacted in the U.S. on December 22, 2017) imposed a federal transition tax on mandatory deemed repatriation of certain deferred foreign earnings. Management elected to pay the transition tax in installments over an eight-year period from 2018 to 2025. The federal transition tax obligation at December 31, 2021 totaled $13.3 million and is recorded to income tax payable on our consolidated statement of financial condition. See Note 20 to our consolidated financial statements in Item 8 for further discussion of our taxes. See Note 13 to our consolidated financial statements in Item 8 for discussion of our leases. See Note 12 to our consolidated financial statements in Item 8 for a discussion of our debt. Contingencies See Note 14 to our consolidated financial statements in Item 8 for a discussion of our commitments and contingencies. Critical Accounting Estimates The preparation of the consolidated financial statements and notes to consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management believes that the critical accounting policies and estimates discussed below involve significant management judgment due to the sensitivity of the methods and assumptions used. Goodwill As of December 31, 2021, we had goodwill of $3.1 billion on the consolidated statement of financial condition. We have determined that AB has only one reporting segment and reporting unit. We test our goodwill annually, as of September 30, for impairment. As of September 30, 2021, the impairment test indicated that goodwill was not impaired. The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as significant declines in AUM, revenues, earnings or the price of an AB Holding Unit. On an annual basis, or when circumstances warrant, goodwill is tested for impairment utilizing the market approach where the fair value of the reporting unit is based on its unadjusted market valuation (AB Units outstanding multiplied by AB Holding's Unit price) and earnings multiples. The price of a publicly-traded AB Holding Unit serves as a reasonable starting point for valuing an AB Unit because each represents the same fractional interest in our underlying business. Our market approach analysis also includes comparable industry earnings multiples applied to our earnings forecast and assumes a control premium (when applicable). Throughout the year, the carrying value of goodwill is also reviewed for impairment if certain events or changes in circumstances occur and trigger whether an interim impairment test may be required. Such changes in circumstances may include, but are not limited to, a sustained decrease in the price of an AB Holding Unit or declines in AB’s market capitalization that would suggest that the fair value of the reporting unit is less than the carrying amount; significant and unanticipated declines in AB’s assets under management or revenues; and/or lower than expected earnings per unit. Any of these changes in circumstances could suggest the possibility that goodwill is impaired, but none of these events or circumstances by itself would indicate that it is more likely than not that goodwill is impaired. Instead, they are merely recognized as triggering events for the consideration of impairment and must be viewed in combination with any mitigating or positive factors. A holistic evaluation of all events since the most recent quantitative impairment test must be done to determine whether it is more likely than not that the reporting unit is impaired. Under ASU 2017-04, Simplifying the Test for Goodwill Impairment, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Under this guidance, the goodwill impairment test no longer includes a determination by management of whether a decline in fair value is temporary; however, it is important that management's determination of fair value reflect the impact of changing market conditions, including the severity and anticipated duration of any such changes. Loss Contingencies Management continuously reviews with legal counsel the status of regulatory matters and pending or threatened litigation. We evaluate the likelihood that a loss contingency exists and record a loss contingency if it is both probable and reasonably estimable as of the date of the financial statements. See Note 14 to our consolidated financial statements in Item 8 . 2021 Annual Report 57 Table of Contents Part II Accounting Pronouncements See Note 2 to our consolidated financial statements in Item 8. Cautions Regarding Forward-Looking Statements Certain statements provided by management in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: the performance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economic conditions, industry trends, future acquisitions, integration of acquired companies, competitive conditions and government regulations, including changes in tax regulations and rates and the manner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, these forward-looking statements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actual results to differ, see “Risk Factors” in Item 1A . Any or all of the forward-looking statements that we make in this Form 10-K, other documents we file with or furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listed in “Risk Factors” and those listed below could also adversely impact our revenues, financial condition, results of operations and business prospects. The forward-looking statements referred to in the preceding paragraph, most of which directly affect AB but also affect AB Holding because AB Holding’s principal source of income and cash flow is attributable to its investment in AB, include statements regarding: • Our belief that the cash flow AB Holding realizes from its investment in AB will provide AB Holding with the resources it needs to meet its financial obligations: AB Holding’s cash flow is dependent on the quarterly cash distributions it receives from AB. Accordingly, AB Holding’s ability to meet its financial obligations is dependent on AB’s cash flow from its operations, which is subject to the performance of the capital markets and other factors beyond our control. • Our financial condition and ability to access the public and private capital markets providing adequate liquidity for our general business needs: Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow client assets under management and other factors beyond our control. Our ability to access public and private capital markets on reasonable terms may be limited by adverse market conditions, our firm’s credit ratings, our profitability and changes in government regulations, including tax rates and interest rates. • The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do not expect any pending legal proceedings to have a material adverse effect on our results of operations, financial condition or liquidity, any settlement or judgment with respect to a legal proceeding could be significant, and could have such an effect. • The possibility that we will engage in open market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program: The number of AB Holding Units AB may decide to buy in future periods, if any, to help fund incentive compensation awards depends on various factors, some of which are beyond our control, including the fluctuation in the price of an AB Holding Unit (NYSE: AB) and the availability of cash to make these purchases. • Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregate employee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes in competitive compensation levels could result in adjusted employee compensation expense exceeding 50% of our adjusted net revenues. • Our Relocation Strategy: While many of the expenses, expense savings and EPU impact we expect will result from our Relocation Strategy are presented with numerical specificity, and we believe these figures to be reasonable as of the date of this report, the uncertainties surrounding the assumptions on which our estimates are based create a significant risk that our current estimates may not be realized. These assumptions include: • the amount and timing of employee relocation costs, severance, and overlapping compensation and occupancy costs we experience; and • the timing for execution of each phase of our relocation implementation plan. • The Adverse Impact of COVID-19: The severity of the expected adverse impact on our AUM and revenues of the economic downturn caused by the COVID-19 pandemic will depend on the depth and length of the downturn and its impact on the companies in which we invest. Our conclusions about the possible continuing significant adverse impact on us is based on our assumptions that the recovery will be gradual and that there may be lasting unemployment and economic damage. We 58 AllianceBernstein Table of Contents Part II believe that these assumptions are reasonable, but they may not be correct and economic conditions likely will differ from our assumptions. Item 7A. Quantitative and Qualitative Disclosures about Market Risk AB Holding Market Risk, Risk Management and Derivative Financial Instruments AB Holding’s sole investment is AB Units. AB Holding did not own, nor was it a party to, any derivative financial instruments during the years ended December 31, 2021, 2020 and 2019. AB Market Risk, Risk Management and Derivative Financial Instruments Our investments consist of trading and other investments. Trading investments include U.S. Treasury Bills, mutual funds, exchange-traded options and various separately-managed portfolios consisting of equity securities. Trading investments are purchased for short-term investment, principally to fund liabilities related to long-term incentive compensation plans and to seed new investment services. Other investments include investments in hedge funds we sponsor and other investment vehicles. We enter into various futures, forwards, swaps and options primarily to economically hedge our seed capital investments. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging. See Note 7 to our consolidated financial statements in Item 8. Trading and Non-Trading Market Risk Sensitive Instruments Investments with Interest Rate Risk—Fair Value The table below provides our potential exposure with respect to our fixed income investments, measured in terms of fair value, to an immediate 100 basis point increase in interest rates at all maturities from the levels prevailing as of December 31, 2021 and 2020. Such a fluctuation in interest rates is a hypothetical rate scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of interest rate sensitivity of our investments in fixed income mutual funds and fixed income hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments in response to our assessment of changing market conditions and available investment opportunities: As of December 31 2021 2020 Fair Value Effect of +100 Basis Point Change Fair Value Effect of +100 Basis Point Change (in thousands) Fixed Income Investments: Trading $ 100,661 $ (6,976) $35,555 $ (2,457) 2021 Annual Report 59 Table of Contents Part II Investments with Equity Price Risk—Fair Value Our investments also include investments in equity securities, mutual funds and hedge funds. The following table provides our potential exposure with respect to our equity investments, measured in terms of fair value, to an immediate 10% decrease in equity prices from those prevailing as of December 31, 2021 and 2020. A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent our view of future market movements. While these fair value measurements provide a representation of equity price sensitivity of our investments in equity securities, mutual funds and hedge funds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as a result of ongoing portfolio activities in response to our assessment of changing market conditions and available investment opportunities: As of December 31 2021 2020 Fair Value Effect of -10% Equity Price Change Fair Value Effect of -10% Equity Price Change (in thousands) Equity Investments: Trading $ 85,704 $ (8,570) $ 137,529 $ (13,753) Other investments $ 87,053 $ (8,705) $ 80,291 $ (8,029) 60 AllianceBernstein Table of Contents Part II Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm To the General Partner and Unitholders of AllianceBernstein Holding L.P. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying statements of financial condition of AllianceBernstein Holding L.P. (the “Company”) as of December 31, 2021 and 2020, and the related statements of income, of comprehensive income, of changes in partners’ capital and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 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 financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 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, 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 financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 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. 2021 Annual Report 61 Table of Contents Part II Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Measurement of Equity in Net Income Attributable to AB Unitholders – Performance-Based Fees As described in Notes 1 and 2 to the financial statements, the Company’s principal source of income and cash flow is attributable to its investment in AllianceBernstein L.P. (AB) limited partnership interests. The equity in net income attributable to AB unitholders was $416.3 million for the year ended December 31, 2021. The Company records its investment in AB using the equity method of accounting. The Company’s investment is increased to reflect its proportionate share of income of AB, decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its unitholders and adjusted to reflect its proportionate share of certain capital transactions of AB. The Company’s proportionate share of income of AB includes performance-based fees recognized by AB. As disclosed by management, the transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee. With respect to the constraining factors related to the fund’s market value, management measures assets under management (AUM) using established market-based valuation methods and fair valuation (non-observable market) methods. Fair valuation methods, including discounted cash flow models and other methods, are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. The principal considerations for our determination that performing procedures relating to the measurement of equity in net income attributable to AB unitholders - performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management’s estimate of the funds’ market value where fair valuation methods are used. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included testing the effectiveness of controls relating to equity in net income attributable to AB Unitholders, including controls relating to AB’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM. These procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees. In evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges. Developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities. /s/ PricewaterhouseCoopers LLP Nashville, Tennessee February 11, 2022 We have served as the Company’s auditor since 2006. 62 AllianceBernstein Table of Contents Part II AllianceBernstein Holding L.P. Statements of Financial Condition Years Ended December 31 2021 2020 (in thousands, except unit amounts) ASSETS Investment in AB $ 1,623,764 $ 1,605,941 Other assets — 92 Total assets $ 1,623,764 $ 1,606,033 LIABILITIES AND PARTNERS’ CAPITAL Liabilities: Other liabilities $ 2,140 $ 1,876 Total liabilities 2,140 1,876 Commitments and contingencies ( See Note 7 ) Partners’ capital: General Partner: 100,000 general partnership units issued and outstanding 1,439 1,410 Limited partners: 99,171,727 and 98,222,942 limited partnership units issued and outstanding 1,696,199 1,656,816 AB Holding Units held by AB to fund long-term incentive compensation plans ( 43,309 ) ( 20,171 ) Accumulated other comprehensive loss ( 32,705 ) ( 33,898 ) Total partners’ capital 1,621,624 1,604,157 Total liabilities and partners’ capital $ 1,623,764 $ 1,606,033 See Accompanying Notes to Financial Statements. 2021 Annual Report 63 Table of Contents Part II AllianceBernstein Holding L.P. Statements of Income Years Ended December 31 2021 2020 2019 (in thousands, except per unit amounts) Equity in net income attributable to AB Unitholders $ 416,326 $ 308,404 $ 266,292 Income taxes 30,483 29,024 27,729 Net income $ 385,843 $ 279,380 $ 238,563 Net income per unit: Basic $ 3.88 $ 2.88 $ 2.49 Diluted $ 3.88 $ 2.88 $ 2.49 See Accompanying Notes to Financial Statements. 64 AllianceBernstein Table of Contents Part II AllianceBernstein Holding L.P. Statements of Comprehensive Income Years Ended December 31 2021 2020 2019 (in thousands) Net income $ 385,843 $ 279,380 $ 238,563 Other comprehensive (loss) income: Foreign currency translation adjustments, before reclassification and tax ( 2,894 ) 8,579 1,900 Less: reclassification adjustment for gains (losses) included in net income upon liquidation 1,613 ( 77 ) — Foreign currency translation adjustments, before tax ( 4,507 ) 8,656 1,900 Income tax benefit (expense) 147 ( 310 ) ( 161 ) Foreign currency translation adjustments, net of tax ( 4,360 ) 8,346 1,739 Changes in employee benefit related items: Amortization of prior service cost 7 8 6 Recognized actuarial gain (loss) 5,566 ( 1,557 ) ( 3,011 ) Changes in employee benefit related items 5,573 ( 1,549 ) ( 3,005 ) Income tax (expense) benefit ( 20 ) ( 67 ) 99 Employee benefit related items, net of tax 5,553 ( 1,616 ) ( 2,906 ) Other comprehensive income (loss) 1,193 6,730 ( 1,167 ) Comprehensive income $ 387,036 $ 286,110 $ 237,396 See Accompanying Notes to Financial Statements. 2021 Annual Report 65 Table of Contents Part II AllianceBernstein Holding L.P. Statements of Changes in Partners’ Capital Years Ended December 31 2021 2020 2019 (in thousands) General Partner’s Capital Balance, beginning of year $ 1,410 $ 1,402 $ 1,385 Net income 387 288 249 Cash distributions to Unitholders ( 358 ) ( 280 ) ( 232 ) Balance, end of year 1,439 1,410 1,402 Limited Partners’ Capital Balance, beginning of year 1,656,816 1,619,200 1,555,892 Net income 385,456 279,092 238,314 Cash distributions to Unitholders ( 357,097 ) ( 270,601 ) ( 222,253 ) Retirement of AB Holding Units ( 143,460 ) ( 78,388 ) ( 110,752 ) Issuance of AB Holding Units to fund long-term incentive compensation plan awards 151,082 107,366 146,488 Exercise of compensatory options to buy AB Holding Units 3,402 147 11,511 Balance, end of year 1,696,199 1,656,816 1,619,200 AB Holding Units held by AB to fund long-term incentive compensation plans Balance, beginning of year ( 20,171 ) ( 27,436 ) ( 27,759 ) Change in AB Holding Units held by AB to fund long-term incentive compensation plans ( 23,138 ) 7,265 323 Balance, end of year ( 43,309 ) ( 20,171 ) ( 27,436 ) Accumulated Other Comprehensive (Loss) Income Balance, beginning of year ( 33,898 ) ( 40,628 ) ( 39,461 ) Foreign currency translation adjustment, net of tax ( 4,360 ) 8,346 1,739 Changes in employee benefit related items, net of tax 5,553 ( 1,616 ) ( 2,906 ) Balance, end of year ( 32,705 ) ( 33,898 ) ( 40,628 ) Total Partners’ Capital $ 1,621,624 $ 1,604,157 $ 1,552,538 See Accompanying Notes to Financial Statements. 66 AllianceBernstein Table of Contents Part II AllianceBernstein Holding L.P. Statements of Cash Flows Years Ended December 31 2021 2020 2019 (in thousands) Cash flows from operating activities: Net income $ 385,843 $ 279,380 $ 238,563 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net income attributable to AB Unitholders ( 416,326 ) ( 308,404 ) ( 266,292 ) Cash distributions received from AB 385,236 298,919 249,463 Changes in assets and liabilities: Decrease (increase) in other assets 92 ( 31 ) ( 61 ) Increase in other liabilities 264 150 1,082 Net cash provided by operating activities 355,109 270,014 222,755 Cash flows from investing activities: Investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units ( 3,402 ) ( 147 ) ( 11,511 ) Net cash used in investing activities ( 3,402 ) ( 147 ) ( 11,511 ) Cash flows from financing activities: Cash distributions to Unitholders ( 357,455 ) ( 270,881 ) ( 222,485 ) Capital contributions from (to) AB 2,346 867 ( 270 ) Proceeds from exercise of compensatory options to buy AB Holding Units 3,402 147 11,511 Net cash used in financing activities ( 351,707 ) ( 269,867 ) ( 211,244 ) Change in cash and cash equivalents — — — Cash and cash equivalents as of beginning of the year — — — Cash and cash equivalents as of end of the year $ — $ — $ — Cash paid: Income taxes 30,127 28,906 26,650 Non-cash investing activities: Issuance of AB Holding Units to fund long-term incentive compensation plan awards 151,082 107,366 146,488 Retirement of AB Holding Units ( 143,460 ) ( 78,388 ) ( 110,752 ) See Accompanying Notes to Financial Statements. 2021 Annual Report 67 Table of Contents Part II AllianceBernstein Holding L.P. Notes to Financial Statements The words “ we ” and “ our ” refer collectively to AllianceBernstein Holding L.P. (“ AB Holding ”) and AllianceBernstein L.P. and its subsidiaries (“ AB ”), or to their officers and employees. Similarly, the word “ company ” refers to both AB Holding and AB. Where the context requires distinguishing between AB Holding and AB, we identify which of them is being discussed. Cross-references are in italics. 1. Business Description and Organization AB Holding’s principal source of income and cash flow is attributable to its investment in AB limited partnership interests. AB provides diversified investment management, research and related services globally to a broad range of clients. Its principal services include: • Institutional Services —servicing its institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as Equitable Holdings, Inc. (" EQH ") and its subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles. • Retail Services— servicing its retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles. • Private Wealth Management Services —servicing its private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles. • Bernstein Research Services —servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options. AB also provides distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds it sponsors. AB’s high-quality, in-depth research is the foundation of its business. AB’s research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, AB has expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ( "ESG" ), and alternative investments. AB provides a broad range of investment services with expertise in: • Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities; • Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies; • Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity; • Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and • Some passive management, including index and enhanced index strategies. Organization As of December 31, 2021, EQH owns approximately 4.0 % of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AB Holding (“ AB Holding Units ”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “ General Partner ”) is the general partner of both AB Holding and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1 % general partnership interest in AB. 68 AllianceBernstein Table of Contents Part II As of December 31, 2021, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows: EQH and its subsidiaries 63.0 % AB Holding 36.2 Unaffiliated holders 0.8 100.0 % Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 64.5 % economic interest in AB as of December 31, 2021. 2. Summary of Significant Accounting Policies Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. AB Holding’s financial statements and notes should be read in conjunction with the consolidated financial statements and notes of AB, which are included in this Form 10-K. Investment in AB AB Holding records its investment in AB using the equity method of accounting. AB Holding’s investment is increased to reflect its proportionate share of income of AB and decreased to reflect its proportionate share of losses of AB and cash distributions made by AB to its Unitholders. In addition, AB Holding's investment is adjusted to reflect its proportionate share of certain capital transactions of AB. Cash Distributions AB Holding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of AB Holding (“ AB Holding Partnership Agreement ”), to its Unitholders pro rata in accordance with their percentage interests in AB Holding. Available Cash Flow is defined as the cash distributions AB Holding receives from AB minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB Holding for use in its business (such as the payment of taxes) or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. On February 11, 2022, the General Partner declared a distribution of $ 1.29 per unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2021. Each general partnership unit in AB Holding is entitled to receive distributions equal to those received by each AB Holding Unit. The distribution is payable on March 17, 2022 to holders of record at the close of business on February 22, 2022. Total cash distributions per Unit paid to Unitholders during 2021, 2020 and 2019 were $ 3.58 , $ 2.79 and $ 2.32 , respectively. Long-term Incentive Compensation Plans AB maintains several unfunded, non-qualified long-term incentive compensation plans, under which the company grants awards of restricted AB Holding Units to its employees and members of the Board of Directors, who are not employed by AB or by any of AB’s affiliates (“ Eligible Directors ”). AB funds its restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the AB Holding Partnership Agreement, when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB. 2021 Annual Report 69 Table of Contents Part II Repurchases of AB Holding Units for the years ended December 31, 2021 and 2020 consisted of the following: Years Ended December 31 2021 2020 (in millions) Total amount of AB Holding Units Purchased (1) 5.6 5.4 Total Cash Paid for AB Holding Units Purchased (1) $ 262.3 $ 149.0 Open Market Purchases of AB Holding Units Purchased (2) 2.6 3.1 Total Cash Paid for Open Market Purchases of AB Holding Units (2) $ 117.9 $ 74.0 (1) Purchased on a trade date basis. (2) The remainder related to purchases of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards. Each quarter, AB considers whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“ Exchange Act ”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker selected by AB has the authority to repurchase AB Holding Units on AB’s behalf in accordance with the terms and limitations specified in the plan. Repurchases are subject to regulations promulgated by the U.S. Securities and Exchange Commission (“ SEC ”) as well as certain price, market volume and timing constraints specified in the plan. We did not adopt a plan during the fourth quarter of 2021. AB may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under its incentive compensation award program and for other corporate purposes. During 2021, AB granted to employees and Eligible Directors 7.0 million restricted AB Holding Units (including 3.4 million granted in December for 2021 year-end awards). During 2020, AB granted to employees and Eligible Directors 5.7 million restricted AB Holding Units (including 5.0 million granted in December for 2020 year-end awards). AB used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards. During 2021 and 2020, AB Holding issued 0.1 million and 5,182 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $ 3.4 million and $ 0.1 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units. Subsequent Events We have evaluated subsequent events through the date that these financial statements were filed with the Securities and Exchange Commission and did not identify any subsequent events that would have required disclosure in these financial statements. 70 AllianceBernstein Table of Contents Part II 3. Net Income Per Unit Basic net income per unit is derived by dividing net income by the basic weighted average number of units outstanding for each year. Diluted net income per unit is derived by adjusting net income for the assumed dilutive effect of compensatory options (“ Net income - diluted ”) and dividing by the diluted weighted average number of units outstanding for each year. Years Ended December 31 2021 2020 2019 (in thousands, except per unit amounts) Net income - basic $ 385,843 $ 279,380 $ 238,563 Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options 30 56 79 Net income - diluted $ 385,873 $ 279,436 $ 238,642 Weighted average units outstanding - basic 99,545 96,870 95,884 Dilutive effect of compensatory options 11 27 44 Weighted average units outstanding - diluted 99,556 96,897 95,928 Basic net income per unit $ 3.88 $ 2.88 $ 2.49 Diluted net income per unit $ 3.88 $ 2.88 $ 2.49 Years Ended December 31 2021 2020 2019 Anti-dilutive options excluded from diluted net income — 29,056 29,056 4. Investment in AB Changes in AB Holding’s investment in AB for the years ended December 31, 2021 and 2020 are as follows: 2021 2020 (in thousands) Investment in AB as of January 1, $ 1,605,941 $ 1,554,203 Equity in net income attributable to AB Unitholders 416,326 308,404 Changes in accumulated other comprehensive income 1,193 6,730 Cash distributions received from AB ( 385,236 ) ( 298,919 ) Additional investments with proceeds from exercises of compensatory options to buy AB Holding Units 3,402 147 Capital contributions (from) AB ( 2,346 ) ( 867 ) AB Holding Units retired ( 143,460 ) ( 78,388 ) AB Holding Units issued to fund long-term incentive compensation plans 151,082 107,366 Change in AB Holding Units held by AB for long-term incentive compensation plans ( 23,138 ) 7,265 Investment in AB as of December 31, $ 1,623,764 $ 1,605,941 2021 Annual Report 71 Table of Contents Part II 5. Units Outstanding Changes in AB Holding Units outstanding for the years ended December 31, 2021 and 2020 are as follows: 2021 2020 Outstanding as of January 1, 98,322,942 98,192,098 Options exercised 143,211 5,182 Units issued 3,917,437 3,363,132 Units retired ( 3,111,863 ) ( 3,237,470 ) Outstanding as of December 31, 99,271,727 98,322,942 6. Income Taxes AB Holding is a publicly-traded partnership (" PTP ") for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However, AB Holding is subject to the 4.0 % New York City unincorporated business tax (“ UBT ”), net of credits for UBT paid by AB, and to a 3.5 % federal tax on partnership gross income from the active conduct of a trade or business. AB Holding’s partnership gross income is derived from its interest in AB. The principal reasons for the difference between AB Holding’s effective tax rates and the UBT statutory tax rate of 4.0 % are as follows: Years Ended December 31 2021 2020 2019 (in thousands) UBT statutory rate $ 16,653 4.0 % $ 12,336 4.0 % $ 10,652 4.0 % Federal tax on partnership gross business income 29,643 7.1 28,522 9.2 27,197 10.2 State income taxes 840 0.2 502 0.2 532 0.2 Credit for UBT paid by AB ( 16,653 ) ( 4.0 ) ( 12,336 ) ( 4.0 ) ( 10,652 ) ( 4.0 ) Income tax expense and effective tax rate $ 30,483 7.3 $ 29,024 9.4 $ 27,729 10.4 AB Holding’s federal income tax is computed by multiplying certain AB qualifying revenues (primarily U.S. investment advisory fees, research payments and brokerage commissions) by AB Holding’s ownership interest in AB, multiplied by the 3.5 % tax rate. AB Holding Units in AB’s consolidated rabbi trust are not considered outstanding for purposes of calculating AB Holding’s ownership interest in AB. Years Ended December 31 % Change 2021 2020 2019 2021-20 2020-19 (in thousands) Net income attributable to AB Unitholders $ 1,148,623 $ 865,952 $ 752,042 32.6 % 15.1 % Multiplied by: weighted average equity ownership interest 36.2 % 35.6 % 35.4 % Equity in net income attributable to AB Unitholders $ 416,326 $ 308,404 $ 266,292 35.0 15.8 AB qualifying revenues $ 2,779,281 $ 2,740,137 $ 2,640,169 1.4 2.4 Multiplied by: weighted average equity ownership interest for calculating tax 30.5 % 30.1 % 29.4 % Multiplied by: federal tax 3.5 % 3.5 % 3.5 % Federal income taxes 29,643 28,522 27,197 State income taxes 840 502 532 Total income taxes $ 30,483 $ 29,024 $ 27,729 5.0 4.7 72 AllianceBernstein Table of Contents Part II In order to preserve AB Holding’s status as a PTP for federal income tax purposes, management ensures that AB Holding does not directly or indirectly (through AB) enter into a substantial new line of business. If AB Holding were to lose its status as a PTP, it would be subject to corporate income tax, which would reduce materially AB Holding’s net income and its quarterly distributions to AB Holding Unitholders. We recognize the effects of a tax position in the financial statements only if, as of the reporting date, it is “more likely than not” to be sustained based on its technical merits and their applicability to the facts and circumstances of the tax position. In making this assessment, we assume that the taxing authority will examine the tax position and have full knowledge of all relevant information. Accordingly, we have no liability for unrecognized tax benefits as of December 31, 2021 and 2020. A liability for unrecognized tax benefits, if required, would be recorded in income tax expense and affect the company’s effective tax rate. As of December 31, 2021, AB Holding is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2017. 7. Commitments and Contingencies Legal and regulatory matters described below pertain to AB and are included here due to their potential significance to AB Holding’s investment in AB. With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss. AB may be involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that AB could incur losses pertaining to these matters, but management cannot currently estimate any such losses. Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has the element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period. 2021 Annual Report 73 Table of Contents Part II Report of Independent Registered Public Accounting Firm To the General Partner and Unitholders of AllianceBernstein L.P. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated statements of financial condition of AllianceBernstein L.P. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of changes in partners’ capital and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes and financial statement schedule listed in the index appearing under Item 15(a) (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 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, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 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, 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 Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 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. 74 AllianceBernstein Table of Contents Part II Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Performance-Based Fees As described in Notes 2 and 3 to the consolidated financial statements, performance-based fees earned were $245.1 million for the year ended December 31, 2021. The transaction price for the asset management performance obligation for certain hedge fund and alternative investment advisory contracts, provide for a performance-based fee, in addition to the base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value and the level at which the fund’s value exceeds the contractual threshold required to earn such a fee. With respect to the constraining factors related to the fund’s market value, management measures assets under management (AUM) using established market-based valuation methods and fair valuation (non-observable market) methods. Fair valuation methods, including discounted cash flow models and other methods, are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. The principal considerations for our determination that performing procedures relating to performance-based fees is a critical audit matter are the significant audit effort in performing procedures and evaluating evidence related to these fees, including evaluating evidence related to the constraining factors impacting the amount of variable consideration, and the audit effort also included the involvement of professionals with specialized skill and knowledge to assist in evaluating management's estimate of the funds' market value where fair valuation methods are used. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company’s revenue recognition process for performance-based fees, including controls over the assessment of constraining factors and the valuation of AUM. These procedures also included, among others, testing management’s process for determining performance-based fees, including evaluating the appropriateness of the methods used, testing the contractual claw-back provisions to which the variable consideration is subject and, on a sample basis, evaluating the reasonableness of management’s assumptions related to the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts and the probability of significant fluctuations in the funds’ market value and, as applicable, the level at which a fund’s value exceeded the contractual threshold required to earn such fees. In evaluating management’s estimates of the funds’ market value, procedures included the involvement of professionals with specialized skill and knowledge to assist in developing an independent range of prices for a sample of securities used in determining the underlying funds’ market value where fair valuation methods are used, and comparison of management’s estimate of the securities’ fair value to the independently developed ranges. Developing the independent estimate of securities’ fair value involved testing the completeness and accuracy of data provided by management and independently developing the significant assumptions for the sampled securities. /s/PricewaterhouseCooper LLP Nashville, Tennessee February 11, 2022 We have served as the Company’s auditor since 2006. 2021 Annual Report 75 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Financial Condition Years Ended December 31 2021 2020 (in thousands, except unit amounts) ASSETS Cash and cash equivalents $ 1,285,700 $ 1,037,400 Cash and securities segregated, at fair value (cost $1,503,554 and $1,752,483) 1,503,957 1,753,478 Receivables, net: Brokers and dealers 65,897 92,638 Brokerage clients 2,059,842 1,713,377 AB funds fees 340,158 325,407 Other fees 185,653 148,746 Investments: Long-term incentive compensation-related 63,839 60,114 Other 209,579 193,261 Assets of consolidated company-sponsored investment funds: Cash and cash equivalents 90,326 36,506 Investments 613,025 302,582 Other assets 30,461 12,244 Furniture, equipment and leasehold improvements, net 169,175 147,874 Goodwill 3,091,763 3,082,778 Intangible assets, net 41,531 44,496 Deferred sales commissions, net 74,899 64,066 Right-of-use assets 421,980 418,455 Other assets 262,303 264,418 Total assets $ 10,510,088 $ 9,697,840 76 AllianceBernstein Table of Contents Part II Years Ended December 31 2021 2020 (in thousands, except unit amounts) LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL Liabilities: Payables: Brokers and dealers $ 265,957 $ 216,403 Securities sold not yet purchased 3,828 17,791 Brokerage clients 3,603,558 3,440,266 AB mutual funds 94,962 65,550 Accounts payable and accrued expenses 257,307 197,657 Lease liabilities 490,735 505,549 Liabilities of consolidated company-sponsored investment funds 87,000 30,620 Accrued compensation and benefits 369,649 335,122 Debt 755,000 675,000 Total liabilities 5,927,996 5,483,958 Commitments and contingencies (See Note 14) Redeemable non-controlling interest 421,169 102,359 Capital: General Partner 42,850 41,776 Limited partners: 271,453,043 and 270,509,658 units issued and outstanding 4,336,211 4,229,485 Receivables from affiliates (8,333) (8,316) AB Holding Units held for long-term incentive compensation plans (119,470) (57,219) Accumulated other comprehensive loss (90,335) (94,203) Partners’ capital attributable to AB Unitholders 4,160,923 4,111,523 Total liabilities, redeemable non-controlling interest and capital $ 10,510,088 $ 9,697,840 See Accompanying Notes to Consolidated Financial Statements. 2021 Annual Report 77 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Income Years Ended December 31 2021 2020 2019 (in thousands, except per unit amounts) Revenues: Investment advisory and services fees $ 3,194,524 $ 2,595,436 $ 2,472,044 Bernstein research services 452,017 459,744 407,911 Distribution revenues 652,240 529,781 455,043 Dividend and interest income 38,734 50,923 104,421 Investment (losses) gains (636) (16,401) 38,659 Other revenues 108,409 104,703 97,559 Total revenues 4,445,288 3,724,186 3,575,637 Less: Interest expense 3,686 15,650 57,205 Net revenues 4,441,602 3,708,536 3,518,432 Expenses: Employee compensation and benefits 1,716,013 1,494,198 1,442,783 Promotion and servicing: Distribution-related payments 708,117 569,283 487,965 Amortization of deferred sales commissions 34,364 27,355 15,029 Trade execution, marketing, T&E and other 197,486 189,787 219,860 General and administrative: General and administrative 555,608 485,544 484,750 Real estate charges — 5,526 3,324 Contingent payment arrangements 2,710 1,855 (510) Interest on borrowings 5,145 6,180 13,035 Amortization of intangible assets 5,697 21,372 28,759 Total expenses 3,225,140 2,801,100 2,694,995 Operating income 1,216,462 907,436 823,437 Income tax 62,728 45,653 41,754 Net income 1,153,734 861,783 781,683 Net income (loss) of consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,641 Net income attributable to AB Unitholders $ 1,148,623 $ 865,952 $ 752,042 Net income per AB Unit: Basic $ 4.18 $ 3.19 $ 2.78 Diluted $ 4.18 $ 3.19 $ 2.78 See Accompanying Notes to Consolidated Financial Statements. 78 AllianceBernstein Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Comprehensive Income Years Ended December 31 2021 2020 2019 (in thousands) Net income $ 1,153,734 $ 861,783 $ 781,683 Other comprehensive income: Foreign currency translation adjustments, before reclassification and tax: (7,839) 23,882 5,986 Less: reclassification adjustment for gains (losses) included in net income upon liquidation 4,458 (216) — Foreign currency translation adjustments, before tax (12,297) 24,098 5,986 Income tax benefit (expense) 457 (854) (383) Foreign currency translation adjustments, net of tax (11,840) 23,244 5,603 Changes in employee benefit related items: Amortization of prior service cost 24 24 24 Recognized actuarial gain (loss) 15,743 (4,280) (7,891) Changes in employee benefit related items 15,767 (4,256) (7,867) Income tax (expense) benefit (59) (187) 274 Employee benefit related items, net of tax 15,708 (4,443) (7,593) Other comprehensive gain (loss) 3,868 18,801 (1,990) Less: Comprehensive income (loss) in consolidated entities attributable to non-controlling interests 5,111 (4,169) 29,788 Comprehensive income attributable to AB Unitholders $ 1,152,491 $ 884,753 $ 749,905 See Accompanying Notes to Consolidated Financial Statements. 2021 Annual Report 79 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Changes in Partners’ Capital Years Ended December 31 2021 2020 2019 (in thousands) General Partner’s Capital Balance, beginning of year $ 41,776 $ 41,225 $ 40,240 Net income 11,486 8,660 7,521 Cash distributions to General Partner (10,605) (8,376) (7,042) Long-term incentive compensation plans activity 117 (23) 149 Issuance of AB Units, net 76 290 357 Balance, end of year 42,850 41,776 41,225 Limited Partners' Capital Balance, beginning of year 4,229,485 4,174,201 4,075,306 Net income 1,137,137 857,292 744,521 Cash distributions to Unitholders (1,049,287) (828,503) (696,470) Long-term incentive compensation plans activity 11,586 (2,147) 14,741 Issuance of AB Units, net 7,290 28,642 35,259 Other — — 844 Balance, end of year 4,336,211 4,229,485 4,174,201 Receivables from Affiliates Balance, beginning of year (8,316) (9,011) (11,430) Long-term incentive compensation awards expense 941 802 1,125 Capital contributions from AB Holding (958) (107) 1,294 Balance, end of year (8,333) (8,316) (9,011) AB Holding Units held for Long-term Incentive Compensation Plans Balance, beginning of year (57,219) (76,310) (77,990) Purchases of AB Holding Units to fund long-term compensation plans, net (261,825) (148,624) (171,930) (Issuance) of AB Units, net (7,348) (28,696) (35,736) Long-term incentive compensation awards expense 215,484 194,840 207,057 Re-valuation of AB Holding Units held in rabbi trust (9,690) 1,556 (4,403) Other 1,128 15 6,692 Balance, end of year (119,470) (57,219) (76,310) Accumulated Other Comprehensive Income (Loss) Balance, beginning of year (94,203) (113,004) (110,866) Foreign currency translation adjustment, net of tax (11,840) 23,244 5,455 Changes in employee benefit related items, net of tax 15,708 (4,443) (7,593) Balance, end of year (90,335) (94,203) (113,004) Total Partners' Capital attributable to AB Unitholders 4,160,923 4,111,523 4,017,101 Non-redeemable Non-controlling Interests in Consolidated Entities Balance, beginning of year — — 949 Net income — — 91 Foreign currency translation adjustment — — 147 Purchase of non-controlling interest — — (1,187) Balance, end of year — — — Total Capital $ 4,160,923 $ 4,111,523 $ 4,017,101 See Accompanying Notes to Consolidated Financial Statements. 2021 Annual Report 80 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31 2021 2020 2019 (in thousands) Cash flows from operating activities: Net income $ 1,153,734 $ 861,783 $ 781,683 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred sales commissions 34,364 27,355 15,029 Non-cash long-term incentive compensation expense 216,425 195,642 208,182 Depreciation and other amortization 44,985 61,028 77,021 Unrealized losses (gains) on investments 4,454 10,405 (13,431) Unrealized losses (gains) on investments of consolidated company-sponsored investment funds 1,882 (854) (36,150) Non-cash lease expense 98,773 98,798 103,773 Other, net 22,580 (2,914) 10,281 Changes in assets and liabilities: Decrease (increase) in securities, segregated 249,521 (658,612) 74,688 (Increase) decrease in receivables (360,789) (182,684) 223,137 (Increase) decrease in investments (27,000) 7,597 460,347 (Increase) decrease in investments of consolidated company-sponsored investment funds (312,325) 279,276 (193,158) (Increase) in deferred sales commissions (45,197) (55,125) (34,177) (Increase) decrease in other assets (6,578) 69,160 (23,140) Decrease in other assets and liabilities of consolidated company-sponsored investment funds, net 38,161 7,169 11,437 Increase (decrease) in payables 214,139 861,502 (641,369) Increase (decrease) in accounts payable and accrued expenses 35,877 10,666 (56,518) Increase (decrease) in accrued compensation and benefits 50,545 46,885 (7,486) Cash payments to relieve operating lease liabilities (114,769) (115,656) (132,669) Net cash provided by operating activities 1,298,782 1,521,421 827,480 Cash flows from investing activities: Purchases of equity method investments — (4,079) — Purchases of furniture, equipment and leasehold improvements (61,931) (41,504) (28,303) Acquisition of businesses, net of cash acquired (3,793) (13,552) 5,255 Net cash used in investing activities (65,724) (59,135) (23,048) Cash flows from financing activities: Proceeds from debt, net 80,000 115,000 2,105 Increase (decrease) in overdrafts payable 16,192 (12,633) (59,924) Distributions to General Partner and Unitholders (1,059,892) (836,879) (703,512) Subscriptions (redemptions) of non-controlling interests of consolidated company-sponsored investment funds, net 313,699 (219,033) 150,091 Capital contributions (to) from affiliates (2,346) (867) 269 Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units 3,402 147 11,511 Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net (261,825) (148,624) (171,930) Other, net (2,186) 306 (3,571) Net cash used in financing activities (912,956) (1,102,583) (774,961) Effect of exchange rate changes on cash and cash equivalents (17,982) 23,032 8,376 Net increase in cash and cash equivalents 302,120 382,735 37,847 Cash and cash equivalents as of beginning of the period 1,073,906 691,171 653,324 Cash and cash equivalents as of end of the period $ 1,376,026 $ 1,073,906 $ 691,171 Cash paid: Interest paid $ 5,263 $ 18,858 $ 66,002 Income taxes paid 55,656 59,791 52,444 Non-cash investing activities: Fair value of assets acquired (excluding cash acquired of $2.8 million, $0.6 million and $11.8 million, for 2021, 2020 and 2019, respectively) 13,235 18,389 28,966 Fair value of liabilities assumed 1,642 437 16,837 Non-cash financing activities: Payables recorded under contingent payment arrangements 7,800 4,400 17,384 See Accompanying Notes to Consolidated Financial Statements. 2021 Annual Report 81 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Notes to Consolidated Financial Statements The words “ we ” and “ our ” refer collectively to AllianceBernstein L.P. and its subsidiaries (“ AB ”), or to their officers and employees. Similarly, the word “ company ” refers to AB. Cross-references are in italics. 1. Business Description and Organization We provide diversified investment management, research and related services globally to a broad range of clients. Our principal services include: • Institutional Services —servicing our institutional clients, including private and public pension plans, foundations and endowments, insurance companies, central banks and governments worldwide, and affiliates such as Equitable Holdings, Inc. (" EQH ") and its subsidiaries, by means of separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and other investment vehicles. • Retail Services —servicing our retail clients, primarily by means of retail mutual funds sponsored by AB or an affiliated company, sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide and other investment vehicles. • Private Wealth Management Services —servicing our private clients, including high-net-worth individuals and families, trusts and estates, charitable foundations, partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles. • Bernstein Research Services —servicing institutional investors, such as pension fund, hedge fund and mutual fund managers, seeking high-quality fundamental research, quantitative services and brokerage-related services in equities and listed options. We also provide distribution, shareholder servicing, transfer agency services and administrative services to the mutual funds we sponsor. Our high-quality, in-depth research is the foundation of our business. Our research disciplines include economic, fundamental equity, fixed income and quantitative research. In addition, we have expertise in multi-asset strategies, wealth management, environmental, social and corporate governance ( "ESG" ), and alternative investments. We provide a broad range of investment services with expertise in: • Actively-managed equity strategies, with global and regional portfolios across capitalization ranges, concentration ranges and investment strategies, including value, growth and core equities; • Actively-managed traditional and unconstrained fixed income strategies, including taxable and tax-exempt strategies; • Alternative investments, including hedge funds, fund of funds, direct lending, real estate and private equity; • Multi-asset solutions and services, including dynamic asset allocation, customized target-date funds and target-risk funds; and • Some passive management, including index and enhanced index strategies. Organization As of December 31, 2021, EQH owned approximately 4.0% of the issued and outstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“ AB Holding Units ”). AllianceBernstein Corporation (an indirect wholly-owned subsidiary of EQH, “ General Partner ”) is the general partner of both AllianceBernstein Holding L.P. (“ AB Holding ”) and AB. AllianceBernstein Corporation owns 100,000 general partnership units in AB Holding and a 1% general partnership interest in AB. 82 AllianceBernstein Table of Contents Part II As of December 31, 2021, the ownership structure of AB, including limited partnership units outstanding as well as the general partner's 1% interest, was as follows: EQH and its subsidiaries 63.0 % AB Holding 36.2 Unaffiliated holders 0.8 100.0 % Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 64.5% economic interest in AB as of December 31, 2021. 2. Summary of Significant Accounting Policies Basis of Presentation The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ( "US GAAP" ). The preparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include AB and its majority-owned and/or controlled subsidiaries, and the consolidated entities that are considered to be variable interest entities ( "VIEs" ) and voting interest entities ( "VOEs" ) in which AB has a controlling financial interest. Non-controlling interests on the consolidated statements of financial condition include the portion of consolidated company-sponsored investment funds in which we do not have direct equity ownership. All significant inter-company transactions and balances among the consolidated entities have been eliminated. Recently Adopted Accounting Pronouncements In August 2018, the Financial Accounting Standards Board (the " FASB ") issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Topic 715-20) . The amendment modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify US GAAP for other areas of Topic 740 by clarifying and amending the existing guidance. We adopted this standard prospectively on January 1, 2021. The adoption of this standard did not have a material impact on our financial condition or results of operations. Accounting Pronouncements Not Yet Adopted in 2021 None. Revenue Recognition Investment advisory and services fees AB provides asset management services by managing customer assets and seeking to deliver investment returns to investors. Each investment management contract between AB and a customer creates a distinct, separately identifiable performance obligation for each day the customer’s assets are managed as the customer can benefit from each day of service. In accordance with ASC 606, a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer are treated as a single performance obligation. Accordingly, we have determined that our investment and advisory services are performed over time and entitle us to variable consideration earned based on the value of the investors’ assets under management (“ AUM ”). 2021 Annual Report 83 Table of Contents Part II We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models or any other methodology that is validated and approved by our Valuation Committee ( see paragraph immediately below for additional information about our Valuation Committee). Fair valuation methods are used only where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. The Valuation Committee, which consists of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments held in client and AB portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply to pricing and valuing investments held in these portfolios. We also have a Pricing Group, which reports to the Valuation Committee and is responsible for overseeing the pricing process for all investments. We record as revenue investment advisory and services base fees, which we generally calculate as a percentage of AUM. At month-end, all the components of the transaction price ( i.e., the base fee calculation) are no longer variable and the value of the consideration is determined. These fees are not subject to claw back and there is minimal probability that a significant reversal of the revenue recorded will occur. The transaction price for the asset management performance obligation for certain investment advisory contracts, including those associated with hedge funds or other alternative investments, provide for a performance-based fee (including carried interest), in addition to a base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over a specified period of time. The performance-based fees are forms of variable consideration and are therefore excluded from the transaction price until it becomes probable that there will not be significant reversal of the cumulative revenue recognized. At each reporting date, we evaluate the constraining factors, discussed below , surrounding the variable consideration to determine the extent to which, if any, revenues associated with the performance-based fee can be recognized. Constraining factors impacting the amount of variable consideration included in the transaction price include: the contractual claw-back provisions to which the variable consideration is subject, the length of time to which the uncertainty of the consideration is subject, the number and range of possible consideration amounts, the probability of significant fluctuations in the fund’s market value, the level at which the fund’s value exceeds the contractual threshold required to earn such a fee, and the materiality of the amount being evaluated. Bernstein Research Services Bernstein Research Services revenue consists principally of commissions received, and to a lesser but increasing extent, direct payments for trade execution services and equity research services provided to institutional clients. Brokerage commissions for trade execution services and related expenses are recorded on a trade-date basis when the performance obligations are satisfied. Generally, the transaction price is agreed upon at the time of each trade and is based upon the number of shares traded or the value of the consideration traded. Research revenues are recognized when the transaction price is quantified, collectability is assured and significant reversal of such revenue is not probable. Distribution Revenues Two of our subsidiaries act as distributors and/or placement agents of company-sponsored mutual funds and receive distribution services fees from certain of those funds as full or partial reimbursement of the distribution expenses they incur. The variable consideration can be determined in different ways, as discussed below , as we satisfy the performance obligation depending on the contractual arrangements with the customer and the specific product sold. Most open-end U.S. funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund, distribution and service fees for the distribution and sale of its shares (“ 12b-1 fees ”). The open-end U.S. funds have such agreements with us, and we have selling and distribution agreements pursuant to which we pay sales commissions to the financial intermediaries that distribute our open-end U.S. funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell any specific amount of fund shares. We record 12b-1 fees monthly based upon a percentage of the net asset value (“ NAV ”) of the funds. At month-end, the variable consideration of the transaction price is no longer constrained as the NAV can be calculated and the value of consideration is determined. These services are separate and distinct from other asset management services as the customer can benefit from these services independently of other services. We accrue the corresponding 12b-1 fees paid to sub-distributors monthly as the expenses are incurred. We are acting in a principal capacity in these transactions; as such, these revenues and expenses are recorded on a gross basis. 84 AllianceBernstein Table of Contents Part II We offer back-end load shares in limited instances and charge the investor a contingent deferred sales charge (“ CDSC ”) if the investment is redeemed within a certain period. The variable consideration for these contracts is contingent on the timing of the redemption by the investor and the value of the sale proceeds. Due to these constraining factors, we exclude the CDSC fee from the transaction price until the investor redeems the investment. Upon redemption, the cash consideration received for these contractual arrangements are recorded as reductions of unamortized deferred sales commissions. Our Luxembourg subsidiary, the management company for most of our non-U.S. funds, earns a management fee that is accrued daily and paid monthly, at an annual rate, based on the average daily net assets of the fund. With respect to certain share classes, the management fee may also contain a component that is paid to distributors and other financial intermediaries and service providers to cover shareholder servicing and other administrative expenses (also referred to as an All-in-Fee). As we have concluded that asset management is distinct from distribution, we allocate a portion of the investment and advisory fee to distribution revenues for the servicing component based on standalone selling prices. Other Revenues Revenues from contracts with customers include a portion of other revenues, which consists primarily of shareholder servicing fees, as well as mutual fund reimbursements and other brokerage income. We provide shareholder services, which include transfer agency, administrative and recordkeeping services provided to company-sponsored mutual funds. The consideration for these services is based on a percentage of the NAV of the fund or a fixed-fee based on the number of shareholder accounts being serviced. The revenues are recorded at month-end when the constraining factors involved with determining NAV or the number of shareholders’ accounts are resolved. Non-Contractual Revenues Dividend and interest income is accrued as earned. Investment gains and losses on the consolidated statements of income include unrealized gains and losses of trading and private equity investments stated at fair value, equity in earnings of our limited partnership hedge fund investments, and realized gains and losses on investments sold. Contract Assets and Liabilities We use the practical expedient for contracts that have an original duration of one year or less. Accordingly, we do not consider the time value of money and, instead, accrue the incremental costs of obtaining the contract when incurred. As of December 31, 2021, the balances of contract assets and contract liabilities are not considered material and, accordingly, no further disclosures are necessary. Consolidation of company-sponsored investment funds For legal entities (company-sponsored investment funds) evaluated for consolidation, we first determine whether the fees we receive and the interests we hold qualify as a variable interest in the entity, including an evaluation of fees paid to us as a decision maker or service provider to the entity being evaluated. Fees received by us are not variable interests if (i) the fees are compensation for services provided and are commensurate with the level of effort required to provide those services, (ii) the service arrangement includes only terms, conditions or amounts that are customarily present in arrangements for similar services negotiated at arm’s length, and (iii) our other economic interests in the entity held directly and indirectly through our related parties, as well as economic interests held by related parties under common control, would not absorb more than an insignificant amount of the entity’s losses or receive more than an insignificant amount of the entity’s benefits. For those entities in which we have a variable interest, we perform an analysis to determine whether the entity is a VIE by considering whether the entity’s equity investment at risk is insufficient, whether the investors lack decision making rights proportional to their ownership percentage of the entity, and whether the investors lack the obligation to absorb an entity’s expected losses or the right to receive an entity’s expected income. A VIE must be consolidated by its primary beneficiary, which generally is defined as the party that has a controlling financial interest in the VIE. We are deemed to have a controlling financial interest in a VIE if we have (i) the power to direct the activities of the VIE that most significantly affect the VIE's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive income from the VIE that could potentially be significant to the VIE. For purposes of evaluating (ii) above, fees paid to us as a decision maker or service provider are excluded if the amount of fees is commensurate with the level of effort required to be performed and the arrangement includes only customary terms, conditions or amounts present in arrangements for similar services negotiated at arm’s length. The primary beneficiary evaluation generally is performed qualitatively based on all facts and circumstances, as well as quantitatively, as appropriate. 2021 Annual Report 85 Table of Contents Part II If we have a variable interest in an entity that is determined not to be a VIE, the entity is then evaluated for consolidation under the VOE model. For limited partnerships and similar entities, we are deemed to have a controlling financial interest in a VOE, and would be required to consolidate the entity, if we own a majority of the entity’s kick-out rights through voting limited partnership interests and limited partners do not hold substantive participating rights (or other rights that would indicate that we do not control the entity). For entities other than limited partnerships, we are deemed to have a controlling financial interest in a VOE if we own a majority voting interest in the entity. The analysis performed regarding the determination of variable interests held, whether entities are VIEs or VOEs, and whether we have a controlling financial interest in such entities, requires the exercise of judgment. The analysis is updated continuously as circumstances change or new entities are formed. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value (and considered Level 1 securities in the fair value hierarchy). Fees Receivable, Net Fees receivable are shown net of allowances. An allowance for doubtful accounts related to investment advisory and services fees is determined through an analysis of the aging of receivables, assessments of collectability based on historical trends and other qualitative and quantitative factors, including our relationship with the client, the financial health (or ability to pay) of the client, current economic conditions and whether the account is active or closed. The allowance for doubtful accounts is not material to fees receivable. Brokerage Transactions Customers’ securities transactions are recorded on a settlement date basis, with related commission income and expenses reported on a trade date basis. Receivables from and payables to clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral for receivables; such collateral is not reflected in the consolidated financial statements. We have the ability by contract or custom to sell or re-pledge this collateral, and have done so at various times. As of December 31, 2021 and 2020, we had $23.4 million and zero of re-pledged securities, respectively. Principal securities transactions and related expenses are recorded on a trade date basis. Securities borrowed and securities loaned by our broker-dealer subsidiaries are recorded at the amount of cash collateral advanced or received in connection with the transaction and are included in receivables from and payables to brokers and dealers in the consolidated statements of financial condition. Securities borrowed transactions require us to deposit cash collateral with the lender. With respect to securities loaned, we receive cash collateral from the borrower. See Note 8 for securities borrowed and loaned amounts recorded in our consolidated statements of financial condition as of December 31, 2021 and 2020. The initial collateral advanced or received approximates or is greater than the fair value of securities borrowed or loaned. We monitor the fair value of the securities borrowed and loaned on a daily basis and request additional collateral or return excess collateral, as appropriate. As of December 31, 2021 and 2020, there is no allowance provision required for the collateral advanced. Income or expense is recognized over the life of the transaction. As of December 31, 2021 and 2020, we had $114.9 million and $130.0 million, respectively, of cash on deposit with clearing organizations for trade facilitation purposes, which are reported in other assets in our consolidated statements of financial condition. As of December 31, 2021 and 2020, we held no U.S. Treasury bills pledged as collateral. These clearing organizations have the ability by contract or custom to sell or re-pledge the collateral, if any. Current Expected Credit Losses- Receivables from Brokerage clients Receivables from clients primarily consists of margin loan balances. The value of the securities owned by clients and held as collateral for these receivables is not reflected in the consolidated financial statements and the collateral was not repledged or sold as of December 31, 2021 and 2020. We consider these financing receivables to be of good credit quality due to the fact that these receivables are primarily collateralized by the related client investments. To estimate expected credit losses on margin loans, we applied the collateral maintenance practical expedient by comparing the amortized cost basis of the margin loans with the fair value of the collateral at the reporting date. Margin loans are limited to a percentage of the total value of the securities held in the client's account against those loans. AB requires, in the event of a decline in the market value of the securities in a margin account, the client to deposit additional securities or cash so that, at all times, the value of the securities in the account, at a minimum, cover the loan to the client. As such, AB reasonably expects that the borrower will be able to continually replenish collateral securing the financial asset and does not expect the fair value of collateral to fall below the amortized cost basis of the margin loans and, as a result, we consider the credit risk associated with these receivables to be minimal. In circumstances when a loan becomes undercollateralized and the client fails to deposit additional securities or cash, AB reserves the right to liquidate the account. 86 AllianceBernstein Table of Contents Part II Current Expected Credit Losses - Receivables from Revenue Contracts with Customers The majority of our revenue receivables are from investment advisory and service fees, and distribution revenues, that are typically paid out of the client accounts or third-party products consisting of cash and securities. Due to the size of the fees in relation to the value of the cash and securities in account or funds, the account value always exceeds the amortized cost basis of the receivables, resulting in a remote risk of loss. These receivables have a short duration, generally due within 30-90 days and there is minimal historical evidence of non-payment or market declines that would cause the fair value of the underlying securities to decline below the amortized cost of the receivables. AB maintains an allowance for credit losses based upon an estimate of the amount of potential credit losses in existing accounts receivable, as determined from a review of aging schedules, past due balances, historical collection experience and other specific account data. Once determined uncollectible, aged balances are written off as credit loss expense. This determination is based on careful analysis of individual receivables and aging schedules, and generally occurs when the receivable becomes over 360 days past due. Our aged receivables and amounts written off related to credit losses in any year are not material. Furniture, Equipment and Leasehold Improvements, Net Furniture, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation is recognized on a straight-line basis over the estimated useful lives of eight years for furniture and three to six years for equipment and software. Leasehold improvements are amortized on a straight-line basis over the lesser of their estimated useful lives or the terms of the related leases. Goodwill In 2000, AB acquired SCB Inc., an investment research and management company formerly known as Sanford C. Bernstein Inc. (“ Bernstein ”). The Bernstein acquisition was accounted for under the purchase method, and the cost of the acquisition was allocated on the basis of the estimated fair value of the assets acquired and the liabilities assumed. The excess of the purchase price over the fair value of identifiable assets acquired, net of liabilities assumed, resulted in the recognition of goodwill of approximately $3.0 billion. As of December 31, 2021, goodwill of $3.1 billion on the consolidated statement of financial condition included $2.8 billion as a result of the Bernstein acquisition and $291 million in regard to various smaller acquisitions. We have determined that AB has only one reporting segment and reporting unit. Goodwill is tested annually, as of September 30, for impairment utilizing the market approach where the fair value of the reporting unit is based on its unadjusted market valuation (AB Units outstanding multiplied by AB Holding's Unit price) and adjusted market valuations assuming a control premium (when applicable). The price of a publicly-traded AB Holding Unit serves as a reasonable starting point for valuing an AB Unit because each represents the same fractional interest in our underlying business. Throughout the year, the carrying value of goodwill is also reviewed for impairment if certain events or changes in circumstances occur and trigger whether an interim impairment test may be required. Such changes in circumstances may include, but are not limited to, a sustained decrease in the price of an AB Holding Unit or declines in AB’s market capitalization that would suggest that the fair value of the reporting unit is less than the carrying amount; significant and unanticipated declines in AB’s assets under management or revenues; and/or lower than expected earnings per unit. Any of these changes in circumstances could suggest the possibility that goodwill is impaired, but none of these events or circumstances by itself would indicate that it is more likely than not that goodwill is impaired. Instead, they are merely recognized as triggering events for the consideration of impairment and must be viewed in combination with any mitigating or positive factors. A holistic evaluation of all events since the most recent quantitative impairment test must be done to determine whether it is more likely than not that the reporting unit is impaired. As of September 30, 2021, the impairment test indicated that goodwill was not impaired. There were no facts or circumstances occurring in the fourth quarter of 2021 suggesting possible impairment. Under ASU 2017-04, Simplifying the Test for Goodwill Impairment, a goodwill impairment will be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Under this guidance, the goodwill impairment test no longer includes a determination by management of whether a decline in fair value is temporary; however, it is important that management's determination of fair value reflect the impact of changing market conditions, including the severity and anticipated duration of any such changes. Intangible Assets, Net Intangible assets consist primarily of costs assigned to acquired investment management contracts based on their estimated fair value at the time of acquisition, less accumulated amortization. Intangible assets are recognized at fair value and generally are amortized on a straight-line basis over their estimated useful life ranging from seven to 20 years. 2021 Annual Report 87 Table of Contents Part II As of December 31, 2021, intangible assets, net of accumulated amortization, of $41.5 million on the consolidated statement of financial condition consists of $26.3 million of finite-lived intangible assets subject to amortization and $15.2 million of indefinite-lived intangible assets not subject to amortization. As of December 31, 2020, intangible assets, net of accumulated amortization, of $44.5 million on the consolidated statement of financial condition consisted of $29.2 million of finite-lived intangible assets subject to amortization and $15.3 million of indefinite-lived intangible assets not subject to amortization in regard to other acquisitions. The gross carrying amount of finite-lived intangible assets totaled $53.8 million as of December 31, 2021 and $65.1 million as of December 31, 2020, and accumulated amortization was $27.5 million as of December 31, 2021 and $35.9 million as of December 31, 2020. Amortization expense was $5.7 million for 2021, $21.4 million for 2020 and $28.8 million for 2019. Estimated annual amortization expense for 2022 is approximately $5 million, $5 million in years two and three, $4 million in year four and then approximately $2 million in year five. We periodically review indefinite-lived intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If the carrying value exceeds fair value, we perform additional impairment tests to measure the amount of the impairment loss, if any. During the fourth quarter of 2021 and 2020, we recorded an impairment of $1.0 million and $1.5 million, respectively, relating to our 2016 acquisition of Ramius Alternative Solutions LLC. Due to the loss of acquired investment management contracts during 2021, the carrying value of the finite-lived intangible assets exceeded the fair value of the contracts. We determined the fair value of the contracts using a discounted cash flow model. The impairment charge was recorded in general and administrative expenses in the consolidated statements of income. Deferred Sales Commissions, Net We pay commissions to financial intermediaries in connection with the sale of shares of open-end company-sponsored mutual funds sold without a front-end sales charge (“ back-end load shares ”). These commissions are capitalized as deferred sales commissions and amortized over periods not exceeding one year for U.S. fund shares and four years for Non-U.S. Fund shares, the periods of time during which deferred sales commissions generally are recovered. We recover these commissions from distribution services fees received from those funds and from CDSC received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions of unamortized deferred sales commissions when received. Since January 31, 2009, our U.S. mutual funds have not offered back-end load shares to new investors. We periodically review the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If these factors indicate impairment in value, we compare the carrying value to the undiscounted cash flows expected to be generated by the asset over its remaining life. If we determine the deferred sales commission asset is not fully recoverable, the asset will be deemed impaired and a loss will be recorded in the amount by which the recorded amount of the asset exceeds its estimated fair value. There were no impairment charges recorded during 2021 or 2020. Leases We determine if an arrangement is a lease at inception. Both operating and finance leases are included in the right-of-use ( “ROU” ) assets and lease liabilities in our consolidated statement of financial condition. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. We use our consolidated incremental borrowing rate based on the information available as of the lease commencement date in determining the present value of lease payments. Our lease terms may include options to extend or terminate the lease. These options to extend or terminate are assessed on a lease-by-lease basis, and the ROU assets and lease liabilities are adjusted when it is reasonably certain that an option will be exercised. When calculating the measurement of ROU assets and lease liabilities, we utilize the fixed payments associated with the lease and do not include other variable contractual obligations, such as operating expenses, real estate taxes, cleaning and utilities. These costs are accounted for as period costs and expensed as incurred. Additionally, we exclude any intangible assets such as software licensing agreements as stated in ASC 842-10-15-1. These arrangements will continue to follow the guidance of ASC 350, Intangibles - Goodwill and Other . 88 AllianceBernstein Table of Contents Part II Loss Contingencies With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss. Contingent Payment Arrangements We periodically enter into contingent payment arrangements in connection with our business combinations. In these arrangements, we agree to pay additional consideration to the sellers to the extent that certain performance targets are achieved. We estimate the fair value of these potential future obligations at the time a business combination is consummated and record a liability on our consolidated statements of financial condition. We then accrete the obligation to its expected payment amount over the measurement period. If our expected payment amount subsequently changes, the obligation is modified in the current period resulting in a gain or loss. Both gains and losses resulting from changes to expected payments and the accretion of these obligations to their expected payment amounts are reflected within contingent payment arrangements in our consolidated statements of income. During the fourth quarters of 2021 and 2020, we recorded an impairment of the contingent consideration payable of $0.6 million and $1.4 million, respectively. This impairment was related to our 2016 acquisition of Ramius Alternative Solutions LLC. Mutual Fund Underwriting Activities Purchases and sales of shares of company-sponsored mutual funds in connection with the underwriting activities of our subsidiaries, including related commission income, are recorded on the trade date. Receivables from brokers and dealers for sale of shares of company-sponsored mutual funds generally are realized within three business days from the trade date, in conjunction with the settlement of the related payables to company-sponsored mutual funds for share purchases. Distribution plan and other promotion and servicing payments are recognized as expense when incurred. Long-term Incentive Compensation Plans We maintain several unfunded, non-qualified long-term incentive compensation plans, under which we grant annual awards to employees, generally in the fourth quarter, and to members of the Board of Directors of the General Partner, who are not employed by our company or by any of our affiliates (" Eligible Directors "). Awards granted in December 2021, 2020 and 2019 allowed employee participants to allocate their awards between restricted AB Holding Units and deferred cash. Participants (except certain members of senior management) generally could allocate up to 50% of their awards to deferred cash, not to exceed a total of $250,000 per award. Each of our employees based outside of the United States (other than expatriates), who received an award of $100,000 or less, could have allocated 100% of his or her award to deferred cash. Participants allocated their awards prior to the date on which the Compensation and Workplace Practices Committee (the " Compensation Committee ") of the Board of Directors (the " Board ") approved awards in December 2021, 2020 and 2019. For these awards, the number of AB Holding Units awarded was based on the closing price of an AB Holding Unit on the grant date. For awards granted in 2021, 2020 and 2019: • We engaged in open-market purchases of AB Holding Units or purchase newly-issued AB Holding Units from AB Holding that are awarded to participants and keep them in a consolidated rabbi trust. • Quarterly distributions on vested and unvested AB Holding Units were paid currently to participants, regardless of whether or not a long-term deferral election has been made. • Interest on deferred cash was accrued monthly based on our monthly weighted average cost of funds. 2021 Annual Report 89 Table of Contents Part II We recognize compensation expense related to equity compensation grants in the financial statements using the fair value method. Fair value of restricted AB Holding Unit awards is the closing price of an AB Holding Unit on the grant date; fair value of options is determined using the Black-Scholes option valuation model. Under the fair value method, compensatory expense is measured at the grant date based on the estimated fair value of the award and is recognized over the required service period. For year-end long-term incentive compensation awards, employees who resign or are terminated without cause may retain their awards, subject to compliance with certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictions on competition and employee and client solicitation, and a claw-back for failing to follow existing risk management policies. Because there is no service requirement, we fully expense these awards on the grant date. Most equity replacement, sign-on or similar deferred compensation awards included in separate employment agreements or arrangements include a required service period. Regardless of whether or not the award agreement includes employee service requirements, AB Holding Units typically are delivered to employees ratably over three years to four years, unless the employee has made a long-term deferral election. Grants of restricted AB Holding Units can be awarded to Eligible Directors. Generally, these restricted AB Holding Units vest ratably over four years. These restricted AB Holding Units are not forfeitable (except if the Eligible Director is terminated for “Cause,” as that term is defined in the applicable award agreement). We fully expense these awards on grant date, as there is no service requirement. We fund our restricted AB Holding Unit awards either by purchasing AB Holding Units on the open market or purchasing newly-issued AB Holding Units from AB Holding, and then keeping these AB Holding Units in a consolidated rabbi trust until delivering them or retiring them. In accordance with the Amended and Restated Agreement of Limited Partnership of AB (“ AB Partnership Agreement ”), when AB purchases newly-issued AB Holding Units from AB Holding, AB Holding is required to use the proceeds it receives from AB to purchase the equivalent number of newly-issued AB Units, thus increasing its percentage ownership interest in AB. AB Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors of AB. Repurchases of AB Holding Units for the years ended December 31, 2021 and 2020 consisted of the following: Years Ended December 31 2021 2020 (in millions) Total amount of AB Holding Units Purchased (1) 5.6 5.4 Total Cash Paid for AB Holding Units Purchased (1) $ 262.3 $ 149.0 Open Market Purchases of AB Holding Units Purchased (2) 2.6 3.1 Total Cash Paid for Open Market Purchases of AB Holding Units (2) $ 117.9 $ 74.0 (1) Purchased on a trade date basis. (2) The remainder related to purchases of AB Holding Units from employees to fulfill statutory tax withholding requirements at the time of delivery of long-term incentive compensation awards. Each quarter, we consider whether to implement a plan to repurchase AB Holding Units pursuant to Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended (“ Exchange Act ”). A plan of this type allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed trading blackout periods or because it possesses material non-public information. Each broker we select has the authority to repurchase AB Holding Units on our behalf in accordance with the terms and limitations specified in the plan. Repurchases are subject to regulations promulgated by the SEC as well as certain price, market volume and timing constraints specified in the plan. There was no plan adopted during the fourth quarter of 2021. We may adopt additional plans in the future to engage in open-market purchases of AB Holding Units to help fund anticipated obligations under our incentive compensation award program and for other corporate purposes. During 2021, we granted to employees and Eligible Directors 7.0 million restricted AB Holding Units (including 3.4 million granted in December for 2021 year-end awards to employees). During 2020, we granted to employees and Eligible Directors 5.7 million restricted AB Holding Units (including 5.0 million granted in December for 2020 year-end awards to employees). We used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards. During 2021 and 2020, AB Holding issued 0.1 million and 5,182 AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $3.4 million and $0.1 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly-issued AB Units. 90 AllianceBernstein Table of Contents Part II Foreign Currency Translation and Transactions Assets and liabilities of foreign subsidiaries are translated from functional currencies into United States dollars (“ US$ ”) at exchange rates in effect at the balance sheet dates, and related revenues and expenses are translated into US$ at average exchange rates in effect during each period. Net foreign currency gains and losses resulting from the translation of assets and liabilities of foreign operations into US$ are reported as a separate component of other comprehensive income in the consolidated statements of comprehensive income. Net foreign currency transaction losses were $8.5 million, $3.3 million and $2.0 million for 2021, 2020 and 2019, respectively, and are reported in general and administrative expenses on the consolidated statements of income. Cash Distributions AB is required to distribute all of its Available Cash Flow, as defined in the AB Partnership Agreement, to its Unitholders and to the General Partner. Available Cash Flow can be summarized as the cash flow received by AB from operations minus such amounts as the General Partner determines, in its sole discretion, should be retained by AB for use in its business, or plus such amounts as the General Partner determines, in its sole discretion, should be released from previously retained cash flow. Typically, Available Cash Flow has been the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of the quarter. In future periods, management anticipates that Available Cash Flow will be based on adjusted diluted net income per unit, unless management determines, with the concurrence of the Board, that one or more adjustments that are made for adjusted net income should not be made with respect to the Available Cash Flow calculation. On February 11, 2022, the General Partner declared a distribution of $1.38 per AB Unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2021. The General Partner, as a result of its 1% general partnership interest, is entitled to receive 1% of each distribution. The distribution is payable on March 17, 2022 to holders of record on February 22, 2022. Total cash distributions per Unit paid to the General Partner and Unitholders during 2021, 2020 and 2019 were $3.86, $3.08 and $2.60, respectively. Comprehensive Income We report all changes in comprehensive income in the consolidated statements of comprehensive income. Comprehensive income includes net income, as well as foreign currency translation adjustments, actuarial gains (losses) and prior service cost. Deferred taxes were not recognized on foreign currency translation adjustments for foreign subsidiaries which had earnings that were considered permanently invested outside the United States. Subsequent Events We have evaluated subsequent events through the date that these financial statements were filed with the Securities and Exchange Commission and did not identify any subsequent events that would have required disclosure in these financial statements. Reclassifications During 2021, amounts previously presented on the Statement of Cash Flows as (increase) decrease in right-of-use assets and increase (decrease) in lease liabilities are now presented net as "Cash payments to relieve operating lease liabilities". Non-cash lease expense under adjustments to reconcile net income to net cash provided by operating activities formerly classified as "Depreciation and other amortization" are now classified separately on the Statement of Cash Flows as "Non-cash lease expense." Prior period amounts previously presented as such have been reclassified to conform to the current period's presentation. 2021 Annual Report 91 Table of Contents Part II 3. Revenue Recognition Revenues for the years ended December 31, 2021, 2020 and 2019 consisted of the following: Years Ended December 31 2021 2020 2019 (in thousands) Subject to contracts with customers: Investment advisory and services fees Base fees $ 2,949,405 $ 2,462,810 $ 2,372,429 Performance-based fees 245,119 132,626 99,615 Bernstein research services 452,017 459,744 407,911 Distribution revenues All-in-management fees 350,674 331,268 291,999 12b-1 fees 83,920 75,973 80,268 Other distribution fees 217,646 122,540 82,776 Other revenues Shareholder servicing fees 90,225 82,317 77,394 Other 16,034 21,240 17,924 4,405,040 3,688,518 3,430,316 Not subject to contracts with customers: Dividend and interest income, net of interest expense 35,048 35,273 47,216 Investment (losses) gains (636) (16,401) 38,659 Other revenues 2,150 1,146 2,241 36,562 20,018 88,116 Total net revenues $ 4,441,602 $ 3,708,536 $ 3,518,432 4. Net Income Per Unit Basic net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the basic weighted average number of limited partnership units outstanding for each year. Diluted net income per unit is derived by reducing net income for the 1% general partnership interest and dividing the remaining 99% by the total of the diluted weighted average number of limited partnership units outstanding for each year. Years Ended December 31 2021 2020 2019 (in thousands, except per unit amounts) Net income attributable to AB Unitholders $ 1,148,623 $ 865,952 $ 752,042 Weighted average units outstanding—basic 271,729 269,058 268,075 Dilutive effect of compensatory options to buy AB Holding Units 11 27 44 Weighted average units outstanding—diluted 271,740 269,085 268,119 Basic net income per AB Unit $ 4.18 $ 3.19 $ 2.78 Diluted net income per AB Unit $ 4.18 $ 3.19 $ 2.78 Years Ended December 31 2021 2020 2019 Anti-dilutive options excluded from diluted net income — 29,056 29,056 92 AllianceBernstein Table of Contents Part II 5. Cash and Securities Segregated Under Federal Regulations and Other Requirements As of December 31, 2021 and 2020, $1.5 billion and $1.8 billion, respectively, of U.S. Treasury Bills were segregated in a special reserve bank custody account for the exclusive benefit of our brokerage customers under Rule 15c3-3 of the Exchange Act. 6. Investments Investments consist of: Years Ended December 31 2021 2020 (in thousands) Equity securities: Long-term incentive compensation-related $ 32,237 $ 34,351 Seed capital 133,992 75,766 Other 18,243 55,439 Exchange-traded options 1,893 7,527 Investments in limited partnership hedge funds: Long-term incentive compensation-related 31,602 25,762 Seed capital 19,318 16,646 Time deposits 21,024 18,602 Other 15,109 19,282 Total investments $ 273,418 $ 253,375 Total investments related to long-term incentive compensation obligations of $63.8 million and $60.1 million as of December 31, 2021 and 2020, respectively, consist of company-sponsored mutual funds and hedge funds. For long-term incentive compensation awards granted before 2009, we typically made investments in company-sponsored mutual funds and hedge funds that were notionally elected by plan participants and maintained them (and continue to maintain them) in a consolidated rabbi trust or separate custodial account. The rabbi trust and custodial account enable us to hold such investments separate from our other assets for the purpose of settling our obligations to participants. The investments held in the rabbi trust and custodial account remain available to the general creditors of AB. The underlying investments of hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including various agency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). These investments are valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of the underlying funds. We allocate seed capital to our investment teams to help develop new products and services for our clients. A portion of our seed capital trading investments are equity and fixed income products, primarily in the form of separately-managed account portfolios, U.S. mutual funds, Luxembourg funds, Japanese investment trust management funds or Delaware business trusts. We also may allocate seed capital to investments in private equity funds. In regard to our seed capital investments, the amounts above reflect those funds in which we are not the primary beneficiary of a VIE or hold a controlling financial interest in a VOE. See Note 15, Consolidated Company-Sponsored Investment Funds , for a description of the seed capital investments that we consolidated. As of December 31, 2021 and 2020, our total seed capital investments were $379.0 million and $310.3 million, respectively. Seed capital investments in unconsolidated company-sponsored investment funds are valued using published net asset values or non-published net asset values if they are not listed on an active exchange but have net asset values that are comparable to funds with published net asset values and have no redemption restrictions. In addition, we also have long positions in corporate equities and long exchange-traded options traded through our options desk. 2021 Annual Report 93 Table of Contents Part II The portion of unrealized gains (losses) related to equity securities, as defined by ASC 321-10, held as of December 31, 2021 and 2020 were as follows: Years Ended December 31 2021 2020 (in thousands) Net gains recognized during the period $ 19,240 $ 17,927 Less: net gains recognized during the period on equity securities sold during the period 23,697 27,357 Unrealized losses recognized during the period on equity securities held $ (4,457) $ (9,430) 7. Derivative Instruments See Note 15, Consolidated Company-Sponsored Investment Funds , for disclosure of derivative instruments held by our consolidated company-sponsored investment funds. We enter into various futures, forwards, options and swaps to economically hedge certain seed capital investments. Also, we have currency forwards that help us to economically hedge certain balance sheet exposures. In addition, our options desk trades long and short exchange-traded equity options. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives and Hedging . The notional value, fair value and gains and losses recognized in investment gains (losses) as of December 31, 2021 and 2020 for derivative instruments (excluding derivative instruments relating to our options desk trading activities discussed below ) not designated as hedging instruments were as follows: Notional Value Derivative Assets Derivative Liabilities Gains (Losses) (in thousands) December 31, 2021 Exchange-traded futures $ 131,876 $ 392 $ 1,186 $ (5,072) Currency forwards 66,058 7,344 6,980 1,746 Interest rate swaps 13,483 497 833 (316) Credit default swaps 155,757 6,594 6,967 (2,914) Total return swaps 63,817 595 527 (6,433) Option swaps 50,000 — 430 (309) Total derivatives $ 480,991 $ 15,422 $ 16,923 $ (13,298) December 31, 2020 Exchange-traded futures $ 142,886 $ 118 $ 1,834 $ (15,743) Currency forwards 63,906 8,576 8,451 (1,779) Interest rate swaps 60,997 2,043 2,955 (347) Credit default swaps 167,649 10,910 13,304 (104) Total return swaps 52,061 94 1,847 (15,242) Option swaps 2,486 — 2,146 (2,374) Total derivatives $ 489,985 $ 21,741 $ 30,537 $ (35,589) As of December 31, 2021 and 2020, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on our consolidated statements of financial condition. Gains and losses on derivative instruments are reported in investment gains (losses) on the consolidated statements of income. We may be exposed to credit-related losses in the event of non-performance by counterparties to derivative financial instruments. We minimize our counterparty exposure through a credit review and approval process. In addition, we have executed various collateral arrangements with counterparties to the over-the-counter derivative transactions that require both pledging and accepting collateral in the form of cash. As of December 31, 2021 and 2020, we held $2.9 million and $0.4 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers and dealers in our consolidated statements of financial condition. 94 AllianceBernstein Table of Contents Part II Although notional amount is the most commonly used measure of volume in the derivatives market, it is not used as a measure of credit risk. Generally, the current credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking into consideration the existence of netting agreements and any collateral received. A derivative with positive value (a derivative asset) indicates existence of credit risk because the counterparty would owe us if the contract were closed. Alternatively, a derivative contract with negative value (a derivative liability) indicates we would owe money to the counterparty if the contract were closed. Generally, if there is more than one derivative transaction with a single counterparty, a master netting arrangement exists with respect to derivative transactions with that counterparty to provide for aggregate net settlement. Certain of our standardized contracts for over-the-counter derivative transactions (“ ISDA Master Agreements ”) contain credit risk related contingent provisions pertaining to each counterparty's credit rating. In some ISDA Master Agreements, if the counterparty’s credit rating, or in some agreements, our AUM, falls below a specified threshold, either a default or a termination event permitting the counterparty to terminate the ISDA Master Agreement would be triggered. In all agreements that provide for collateralization, various levels of collateralization of net liability positions are applicable, depending on the credit rating of the counterparty. As of December 31, 2021 and 2020, we delivered $5.6 million and $6.4 million, respectively, of cash collateral into brokerage accounts. We report this cash collateral in cash and cash equivalents in our consolidated statements of financial condition. As of December 31, 2021 and 2020, we held $1.9 million and $7.5 million, respectively, of long exchange-traded equity options, which are included in other investments on our consolidated statements of financial condition. In addition, as of December 31, 2021 and 2020, we held $2.8 million and $12.5 million, respectively, of short exchange-traded equity options, which are included in securities sold not yet purchased on our consolidated statements of financial condition. Our options desk provides our clients with equity derivative strategies and execution for exchange-traded options on single stocks, exchange-traded funds and indices. While predominately agency-based, the options desk may commit capital to facilitate a client's transaction. Our options desk hedges the risk associated with this activity by taking offsetting positions in equities. For the year ended December 31, 2021, we recognized zero gains or losses on equity options activity compared to $11.9 million of losses recognized on equity options activity for the year ended December 31, 2020. These losses are recognized in investment gains (losses) in the consolidated statements of income. 8. Offsetting Assets and Liabilities See Note 15, Consolidated Company-Sponsored Investment Funds , for disclosure of offsetting assets and liabilities of our consolidated company-sponsored investment funds. Offsetting of assets as of December 31, 2021 and 2020 was as follows: Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition Financial Instruments Collateral Cash Collateral Received Net Amount (in thousands) December 31, 2021 Securities borrowed $ 19,899 $ — $ 19,899 $ (18,327) $ — $ 1,572 Derivatives $ 15,422 $ — $ 15,422 $ — $ (2,872) $ 12,550 Long exchange-traded options $ 1,893 $ — $ 1,893 $ — $ — $ 1,893 December 31, 2020 Securities borrowed $ 7,808 $ — $ 7,808 $ (7,344) $ — $ 464 Derivatives $ 21,741 $ — $ 21,741 $ — $ (380) $ 21,361 Long exchange-traded options $ 7,527 $ — $ 7,527 $ — $ — $ 7,527 2021 Annual Report 95 Table of Contents Part II Offsetting of liabilities as of December 31, 2021 and 2020 was as follows: Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial Instruments Collateral Cash Collateral Pledged Net Amount (in thousands) December 31, 2021 Securities loaned $ 23,911 $ — $ 23,911 $ (23,373) $ — $ 538 Derivatives $ 16,923 $ — $ 16,923 $ — $ (5,572) $ 11,351 Short exchange-traded options $ 2,774 $ — $ 2,774 $ — $ — $ 2,774 December 31, 2020 Derivatives $ 30,537 $ — $ 30,537 $ — $ (6,374) $ 24,163 Short exchange-traded options $ 12,486 $ — $ 12,486 $ — $ — $ 12,486 Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty. 9. Fair Value See Note 15, Consolidated Company-Sponsored Investment Funds , for disclosure of fair value of our consolidated company-sponsored investment funds. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability ( i.e. , the “exit price” ) in an orderly transaction between market participants at the measurement date. The three broad levels of fair value hierarchy are as follows: • Level 1—Quoted prices in active markets are available for identical assets or liabilities as of the reported date. • Level 2—Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date. • Level 3—Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. These financial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into the determination of fair value require significant management judgment or estimation. 96 AllianceBernstein Table of Contents Part II Assets and Liabilities Measured at Fair Value on a Recurring Basis Valuation of our financial instruments by pricing observability levels as of December 31, 2021 and 2020 was as follows (in thousands): Level 1 Level 2 Level 3 NAV Expedient (1) Other Total December 31, 2021: Money markets $ 151,156 $ — $ — $ — $ — $ 151,156 Securities segregated (U.S. Treasury Bills) — 1,503,828 — — — 1,503,828 Derivatives 392 15,030 — — — 15,422 Investments: Equity securities 144,917 39,284 126 145 — 184,472 Long exchange-traded options 1,893 — — — — 1,893 Limited partnership hedge funds (2) — — — — 50,920 50,920 Time deposits (3) — — — — 21,024 21,024 Other investments 9,094 — — — 6,015 15,109 Total investments 155,904 39,284 126 145 77,959 273,418 Total assets measured at fair value $ 307,452 $ 1,558,142 $ 126 $ 145 $ 77,959 $ 1,943,824 Securities sold not yet purchased: Short equities – corporate $ 1,054 $ — $ — $ — $ — $ 1,054 Short exchange-traded options 2,774 — — — — 2,774 Derivatives 1,186 15,737 — — — 16,923 Contingent payment arrangements — — 38,260 — — 38,260 Total liabilities measured at fair value $ 5,014 $ 15,737 $ 38,260 $ — $ — $ 59,011 December 31, 2020: Money markets $ 130,675 $ — $ — $ — $ — $ 130,675 Securities segregated (U.S. Treasury Bills) — 1,752,906 — — — 1,752,906 Derivatives 118 21,623 — — — 21,741 Investments: Equity securities 147,705 17,565 125 161 — 165,556 Long exchange-traded options 7,527 — — — — 7,527 Limited partnership hedge funds (2) — — — — 42,408 42,408 Time deposits (3) — — — — 18,602 18,602 Other investments 7,011 — — — 12,271 19,282 Total investments 162,243 17,565 125 161 73,281 253,375 Total assets measured at fair value $ 293,036 $ 1,792,094 $ 125 $ 161 $ 73,281 $ 2,158,697 Securities sold not yet purchased: Short equities – corporate $ 5,305 $ — $ — $ — $ — $ 5,305 Short exchange-traded options 12,486 — — — — 12,486 Derivatives 1,834 28,703 — — — 30,537 Contingent payment arrangements — — 27,750 — — 27,750 Total liabilities measured at fair value $ 19,625 $ 28,703 $ 27,750 $ — $ — $ 76,078 (1) Investments measured at fair value using NAV (or its equivalent) as a practical expedient. (2) Investments in equity method investees that are not measured at fair value in accordance with GAAP. (3) Investments carried at amortized cost that are not measured at fair value in accordance with GAAP. 2021 Annual Report 97 Table of Contents Part II Other investments included in Level 1 of the fair value hierarchy include our investment in a mutual fund measured at fair value ($9.1 million and $7.0 million as of December 31, 2021 and 2020, respectively). Other investments not measured at fair value include (i) an investment in a software publishing company that does not have a readily available fair value (zero and $2.1 million as of December 31, 2021 and 2020, respectively), (ii) investments in start-up companies that do not have a readily available fair value (these investments were $0.3 million as of December 31, 2021 and 2020), (iii) investments in equity method investees that are not measured at fair value in accordance with GAAP ($2.9 million and $6.5 million as of December 31, 2021 and 2020, respectively), and (iv) broker dealer exchange memberships that are not measured at fair value in accordance with GAAP ($2.8 million and $3.3 million as of December 31, 2021 and 2020, respectively). We provide below a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy: • Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are included in Level 1 of the valuation hierarchy. • Treasury Bills: We hold U.S. Treasury Bills, which are primarily segregated in a special reserve bank custody account as required by Rule 15c3-3 of the Exchange Act. These securities are valued based on quoted yields in secondary markets and are included in Level 2 of the valuation hierarchy. • Equity securities: Our equity securities consist principally of company-sponsored mutual funds with NAVs and various separately-managed portfolios consisting primarily of equity and fixed income mutual funds with quoted prices in active markets, which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy. • Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy. In addition, we also hold currency forward contracts, interest rate swaps, credit default swaps, option swaps and total return swaps with counterparties that are valued based on observable inputs from recognized pricing vendors, which are included in Level 2 of the valuation hierarchy. • Options: We hold exchange-traded options that are included in Level 1 of the valuation hierarchy. • Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options, are included in Level 1 of the valuation hierarchy. • Contingent payment arrangements: Contingent payment arrangements relate to contingent payment liabilities associated with various acquisitions. At each reporting date, we estimate the fair values of the contingent consideration expected to be paid upon probability-weighted AUM and revenue projections, using unobservable market data inputs, which are included in Level 3 of the valuation hierarchy. During the years ended December 31, 2021 and 2020, there were no transfers between Level 2 and Level 3 securities. The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as equity securities, is as follows: December 31 2021 2020 (in thousands) Balance as of beginning of period $ 125 $ 119 Purchases — — Sales — — Realized gains (losses), net — — Unrealized gains (losses), net 1 6 Balance as of end of period $ 126 $ 125 Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the consolidated statements of income. 98 AllianceBernstein Table of Contents Part II As part of acquisitions made by the Company, we may enter into contingent consideration arrangements as part of the purchase price. The change in carrying value associated with Level 3 financial instruments carried at fair value, classified as contingent payment arrangements, is as follows: December 31 2021 2020 (in thousands) Balance as of beginning of period $ 27,750 $ 22,911 Addition 7,800 4,400 Accretion 3,310 3,105 Changes in estimates (600) (1,366) Payments — (1,300) Balance as of end of period $ 38,260 $ 27,750 The liabilities were valued using expected revenue growth rates and discount rates. As of December 31, 2021, the expected revenue growth rates range from 2.0% to 83.9%, with a weighted average of 11.9%, calculated using cumulative revenues and range of revenue growth rates (excluding revenue growth from additional AUM contributed in year of acquisition). The discount rates ranged from 1.9% to 10.4%, with a weighted average of 7.0%, calculated using total contingent liabilities and range of discount rates. As of December 31, 2020, the expected revenue growth rates range from 0.7% to 50.0%, with a weighted average of 4.9%, calculated using cumulative revenues and range of revenue growth rates (excluding revenue growth from additional AUM contributed in year of acquisition). The discount rates ranged from 1.9% to 10.4%, with a weighted average of 8.0%, calculated using total contingent liabilities and range of discount rates. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We did not have any material assets or liabilities that were measured at fair value for impairment on a nonrecurring basis during the years ended December 31, 2021 or 2020. 10. Furniture, Equipment and Leasehold Improvements, Net Furniture, equipment and leasehold improvements, net consist of: Years Ended December 31 2021 2020 (in thousands) Furniture and equipment $ 584,161 $ 556,966 Leasehold improvements 301,036 284,080 Total 885,197 841,046 Less: Accumulated depreciation and amortization (716,022) (693,172) Furniture, equipment and leasehold improvements, net $ 169,175 $ 147,874 Depreciation and amortization expense on furniture, equipment and leasehold improvements were $38.8 million, $39.2 million and $38.1 million for the years ended December 31, 2021, 2020 and 2019, respectively. 2021 Annual Report 99 Table of Contents Part II 11. Deferred Sales Commissions, Net The components of deferred sales commissions, net for the years ended December 31, 2021 and 2020 were as follows (excluding amounts related to fully amortized deferred sales commissions): Years Ended December 31 2021 2020 (in thousands) Carrying amount of deferred sales commissions $ 177,233 $ 116,484 Less: Accumulated amortization (53,976) (30,001) Cumulative CDSC received (48,358) (22,417) Deferred sales commissions, net $ 74,899 $ 64,066 Amortization expense was $34.4 million, $27.4 million and $15.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. Estimated future amortization expense related to the December 31, 2021 net asset balance, assuming no additional CDSC is received in future periods, is as follows (in thousands): 2022 $ 35,349 2023 26,176 2024 12,676 2025 698 Total $ 74,899 12. Debt AB has an $800.0 million committed, unsecured senior revolving credit facility (the " Credit Facility ") with a group of commercial banks and other lenders, which had an original maturity date of September 27, 2023. The Credit Facility was amended and restated as of October 13, 2021, extending the maturity date to October 13, 2026. There were no other significant changes included in the amendment. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incremental amount of $200.0 million; any such increase is subject to the consent of the affected lenders. The Credit Facility is available for AB and Sanford C. Bernstein & Co., LLC (" SCB LLC ") business purposes, including the support of AB’s commercial paper program. Both AB and SCB LLC can draw directly under the Credit Facility and management may draw on the Credit Facility from time to time. AB has agreed to guarantee the obligations of SCB LLC under the Credit Facility. The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. As of December 31, 2021, we were in compliance with these covenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under such provisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under the Credit Facility would automatically become immediately due and payable, and the lender’s commitments automatically would terminate. Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepayments and commitment reductions requested by us are permitted at any time without a fee (other than customary breakage costs relating to the prepayment of any drawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, which will be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate. As of December 31, 2021 and 2020, we had no amounts outstanding under the Credit Facility. During 2021 and 2020, we did not draw upon the Credit Facility. AB also has a $900.0 million committed, unsecured senior credit facility (“ EQH Facility ”) with EQH. The EQH Facility matures on November 4, 2024 and is available for AB's general business purposes. Borrowings under the EQH Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated. 100 AllianceBernstein Table of Contents Part II Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. AB or EQH may reduce or terminate the commitment at any time without penalty upon proper notice. EQH also may terminate the facility immediately upon a change of control of our general partner. As of December 31, 2021 and 2020, AB had $755.0 million and $675.0 million outstanding under the EQH Facility with interest rates of approximately 0.2%. Average daily borrowings on the EQH Facility during 2021 and 2020 were $404.6 million and $470.8 million, respectively, with weighted average interest rates of approximately 0.2% and 0.5%, respectively. In addition to the EQH Facility, on September 1, 2020, AB established a $300.0 million uncommitted, unsecured senior credit facility (“ EQH Uncommitted Facility ”) with EQH. The EQH Uncommitted Facility matures on September 1, 2024 and is available for AB's general business purposes. Borrowings under the EQH Unsecured Facility generally bear interest at a rate per annum based on prevailing overnight commercial paper rates. The EQH Uncommitted Facility contains affirmative, negative and financial covenants which are substantially similar to those in the EQH Facility. As of both December 31, 2021 and December 31, 2020, we had no amounts outstanding on the EQH Uncommitted Facility and have not drawn the facility since its inception. As of both December 31, 2021 and 2020, we had no commercial paper outstanding. The commercial paper is short term in nature, and as such, recorded value is estimated to approximate fair value (and considered a Level 2 security in the fair value hierarchy). Average daily borrowings of commercial paper for 2021 were $157.0 million with a weighted average interest rate of 0.2%. Average daily borrowings of commercial paper for 2020 were $83.2 million with a weighted average interest rate of approximately 0.4%. AB had a $200.0 million committed, unsecured senior revolving credit facility (the " Revolver ") with a leading international bank, which matured on November 16, 2021. The Revolver was available for AB's and SCB LLC's business purposes, including the provision of additional liquidity to meet funding requirements primarily related to SCB LLC's operations. Both AB and SCB LLC were able to draw directly under the Revolver and did so from time to time. AB agreed to guarantee the obligations of SCB LLC under the Revolver. The Revolver contained affirmative, negative and financial covenants that were identical to those of the Credit Facility. Borrowings under the Revolver bear interest at a rate per annum, which could be, at our option, a rate equal to an applicable margin, which was subject to adjustment based on the credit ratings of AB, plus one of the following indices: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate. As of both December 31, 2021 and 2020 we had no amounts outstanding under the Revolver. Average daily borrowings for 2021 and 2020 were $13.3 million and $16.5 million, respectively, with weighted average interest rates of 1.1% and 1.6%, respectively. On September 28, 2021, AB established a $100.0 million uncommitted line of credit with a financial institution. On October 11, 2021, AB established a $50.0 million uncommitted line of credit with a financial institution. Both uncommitted lines of credit are available for AB's and SCB LLC's business purposes. Both AB and SCB LLC can draw directly under these lines. AB has agreed to guarantee the obligations of SCB LLC under these lines of credit. As of December 31, 2021 we had no amounts outstanding under these lines of credit and have not drawn on them since their inception. In addition, SCB LLC currently has three uncommitted lines of credit with three financial institutions. Two of these lines of credit permit us to borrow up to an aggregate of approximately $165.0 million, with AB named as an additional borrower, while the other line has no stated limit. As of December 31, 2021 and 2020, SCB LLC had no outstanding balance on these lines of credit. Average daily borrowings on the lines of credit during 2021 and 2020 were $47 thousand and $0.9 million, respectively, with weighted average interest rates of approximately 0.9% and 1.6%, respectively. 13. Leases We lease office space, office equipment and technology under various operating and financing leases. Our current leases have remaining lease terms of one year to 15 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Since 2010, we have sub-leased over one million square feet of office space. 2021 Annual Report 101 Table of Contents Part II Leases included in the consolidated statements of financial condition as of December 31, 2021 and 2020 were as follows: Classification December 31, 2021 December 31, 2020 (in thousands) Operating Leases Operating lease right-of-use assets Right-of-use assets $ 414,105 $ 416,007 Operating lease liabilities Lease liabilities 482,781 503,174 Finance Leases Property and equipment, gross Right-of-use assets 10,947 5,167 Amortization of right-of-use assets Right-of-use assets (3,072) (2,719) Property and equipment, net 7,875 2,448 Finance lease liabilities Lease liabilities 7,954 2,375 The components of lease expense included in the consolidated statements of income for the years ended December 31, 2021 and 2020 were as follows: Years Ended December 31 Classification 2021 2020 (in thousands) Operating lease cost General and administrative $ 97,466 $ 90,212 Financing lease cost: Amortization of right-of-use assets General and administrative 2,355 1,755 Interest on lease liabilities Interest expense 107 86 Total finance lease cost 2,462 1,841 Variable lease cost (1) General and administrative 39,827 38,208 Sublease income General and administrative (37,317) (38,622) Net lease cost $ 102,438 $ 91,639 (1) Variable lease expense includes operating expenses, real estate taxes and employee parking. The sublease income represents all revenues received from sub-tenants. It is primarily fixed base rental payments combined with variable reimbursements such as operating expenses, real estate taxes and employee parking. The vast majority of sub-tenant income is derived from our New York metro sub-tenant agreements. Sub-tenant income related to base rent is recorded on a straight-line basis. Maturities of lease liabilities are as follows: Operating Leases Financing Leases Total Year ending December 31, (in thousands) 2022 $ 100,604 $ 2,616 $ 103,220 2023 97,049 2,354 99,403 2024 99,259 1,510 100,769 2025 33,060 1,214 34,274 2026 32,047 478 32,525 Thereafter 169,074 — 169,074 Total lease payments 531,093 8,172 $ 539,265 Less interest (48,312) (218) Present value of lease liabilities $ 482,781 $ 7,954 102 AllianceBernstein Table of Contents Part II We have signed a lease that commences in 2024, relating to approximately 166,000 square feet of space in New York City. Our estimated total base rent obligation (excluding taxes, operating expenses and utilities) over the 20-year lease term is approximately $393.0 million. Lease term and discount rate: Weighted average remaining lease term (years): Operating leases 7.57 Finance leases 3.62 Weighted average discount rate: Operating leases 2.77 % Finance leases 1.60 % Supplemental non-cash activity related to leases are as follows: Years Ended December 31 2021 2020 (in thousands) Right-of-use assets obtained in exchange for lease obligations (1) : Operating leases $ 82,379 $ 135,919 Finance leases 7,782 1,695 (1) Represents supplemental non-cash information on lease liabilities arising from obtaining right-of-use assets. 14. Commitments and Contingencies Leases As indicated in Note 13 , we lease office space, office equipment and technology under various leasing arrangements. The future minimum payments under non-cancelable leases, sublease commitments and related payments we are obligated to make, net of sublease commitments of third party lessees to make payments to us, as of December 31, 2021, are as follows: Payments Sublease Receipts Net Payments (in millions) 2022 $ 107.1 $ (31.2) $ 75.9 2023 99.4 (31.6) $ 67.8 2024 100.7 (30.7) $ 70.0 2025 51.6 — $ 51.6 2026 49.9 — $ 49.9 2027 and thereafter 528.3 — 528.3 Total future minimum payments $ 937.0 $ (93.5) $ 843.5 See Note 13 for material lease commitments. Legal Proceedings AB may be involved in various matters, including regulatory inquires, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that we could incur losses pertaining to these matters, but we cannot currently estimate any such losses. 2021 Annual Report 103 Table of Contents Part II Management, after consultation with legal counsel, currently believes that the outcome of any individual matter that is pending or threatened, or all of them combined, will not have a material adverse effect on our results of operations, financial condition or liquidity. However, any inquiry, proceeding or litigation has an element of uncertainty; management cannot determine whether further developments relating to any individual matter that is pending or threatened, or all of them combined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period. Other During 2010, as general partner of AllianceBernstein U.S. Real Estate L.P. (“ Real Estate Fund ”), we committed to invest $25.0 million in the Real Estate Fund. As of December 31, 2021, we had funded $22.4 million of this commitment. During 2014, as general partner of AllianceBernstein U.S. Real Estate II L.P. (“ Real Estate Fund II ”), we committed to invest $27.3 million, as amended in 2020, in the Real Estate Fund II. As of December 31, 2021, we had funded $21.1 million of this commitment. 15. Consolidated Company-Sponsored Investment Funds We regularly provide seed capital to new company-sponsored investment funds. As such, we may consolidate or de-consolidate a variety of company-sponsored investment funds each quarter. Due to the similarity of risks related to our involvement with each company-sponsored investment fund, disclosures required under the VIE model are aggregated, such as disclosures regarding the carrying amount and classification of assets. We are not required to provide financial support to company-sponsored investment funds and only the assets of such funds are available to settle each fund's own liabilities. Our exposure to loss in regard to consolidated company-sponsored investment funds is limited to our investment in, and our management fee earned from, such funds. Equity and debt holders of such funds have no recourse to AB’s assets or to the general credit of AB. The balances of consolidated VIEs and VOEs included in our consolidated statements of financial condition were as follows: December 31, 2021 December 31, 2020 (in thousands) VIEs VOEs Total VIEs VOEs Total Cash and cash equivalents $ 90,326 $ — $ 90,326 $ 36,370 $ 136 $ 36,506 Investments 613,025 — 613,025 242,541 60,041 302,582 Other assets 30,461 — 30,461 4,859 7,385 12,244 Total assets $ 733,812 $ — $ 733,812 $ 283,770 $ 67,562 $ 351,332 Liabilities $ 87,000 $ — $ 87,000 $ 7,741 $ 22,879 $ 30,620 Redeemable non-controlling interest 421,169 — 421,169 82,753 19,606 102,359 Partners' capital attributable to AB Unitholders 225,643 — 225,643 193,276 25,077 218,353 Total liabilities, redeemable non-controlling interest and partners' capital $ 733,812 $ — $ 733,812 $ 283,770 $ 67,562 $ 351,332 During 2021, we deconsolidated four funds in which we had seed investments totaling approximately $93.9 million as of December 31, 2020 due to no longer having a controlling financial interest. Fair Value Cash and cash equivalents include cash on hand, demand deposits, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value. 104 AllianceBernstein Table of Contents Part II Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of December 31, 2021 and 2020 was as follows (in thousands): Level 1 Level 2 Level 3 Total December 31, 2021: Investments - VIEs $ 165,415 $ 444,253 $ 3,357 $ 613,025 Investments - VOEs — — — — Derivatives - VIEs 622 5,265 — 5,887 Derivatives - VOEs — — — — Total assets measured at fair value $ 166,037 $ 449,518 $ 3,357 $ 618,912 Derivatives - VIEs $ 16,291 $ 2,051 $ — $ 18,342 Derivatives - VOEs — — — — Total liabilities measured at fair value $ 16,291 $ 2,051 $ — $ 18,342 December 31, 2020: Investments - VIEs $ 73,909 $ 168,114 $ 518 $ 242,541 Investments - VOEs — 59,940 101 60,041 Derivatives - VIEs 442 2,782 — 3,224 Derivatives - VOEs — 464 — 464 Total assets measured at fair value $ 74,351 $ 231,300 $ 619 $ 306,270 Derivatives - VIEs $ 1,649 $ 5,244 $ — $ 6,893 Derivatives - VOEs — 664 — 664 Total liabilities measured at fair value $ 1,649 $ 5,908 $ — $ 7,557 See Note 9 for a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy. The change in carrying value associated with Level 3 financial instruments carried at fair value within consolidated company-sponsored investment funds was as follows: December 31, 2021 2020 (in thousands) Balance as of beginning of period $ 619 $ 854 Deconsolidated funds (717) (135) Transfers (out) in (205) 552 Purchases 3,675 259 Sales (7) (571) Realized gains (losses), net 3 (99) Unrealized (losses), net (11) (242) Accrued discounts — 1 Balance as of end of period $ 3,357 $ 619 The Level 3 securities primarily consist of corporate bonds that are vendor priced with no ratings available, bank loans, non-agency collateralized mortgage obligations and asset-backed securities. Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the consolidated statements of income. 2021 Annual Report 105 Table of Contents Part II Derivative Instruments As of December 31, 2021 and 2020, the VIEs held $12.5 million and $3.7 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the years ended December 31, 2021 and 2020, we recognized $0.7 million and $0.6 million of losses, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the consolidated statements of income. As of December 31, 2021 and 2020, the VIEs held $0.9 million and $0.5 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our consolidated statements of financial condition. As of December 31, 2021 and 2020, the VIEs delivered $1.8 million and $4.2 million, respectively, of cash collateral into brokerage accounts. The VIEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our consolidated statements of financial condition. As of December 31, 2021 and 2020, the VOEs held zero and $0.2 million (net), respectively, of futures, forwards, options and swaps within their portfolios. For the years ended December 31, 2021 and 2020, we recognized zero and $0.2 million of gains, respectively, on these derivatives. These gains and losses are recognized in the investment gains (losses) in the consolidated statements of income. As of December 31, 2021 and 2020, the VOEs held no cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our consolidated statements of financial condition. As of December 31, 2021 and 2020, the VOEs delivered zero and $0.1 million, respectively, of cash collateral into brokerage accounts. The VOEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our consolidated statements of financial condition. Offsetting Assets and Liabilities Offsetting of derivative assets of consolidated company-sponsored investment funds as of December 31, 2021 and 2020 was as follows: Gross Amounts of Recognized Assets Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Assets Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Received Net Amount (in thousands) December 31, 2021: Derivatives - VIEs $ 5,887 $ — $ 5,887 $ — $ (904) $ 4,983 Derivatives - VOEs $ — $ — $ — $ — $ — $ — December 31, 2020: Derivatives - VIEs $ 3,224 $ — $ 3,224 $ — $ (513) $ 2,711 Derivatives - VOEs $ 464 $ — $ 464 $ — $ — $ 464 106 AllianceBernstein Table of Contents Part II Offsetting of derivative liabilities of consolidated company-sponsored investment funds as of December 31, 2021 and 2020 was as follows: Gross Amounts of Recognized Liabilities Gross Amounts Offset in the Statement of Financial Condition Net Amounts of Liabilities Presented in the Statement of Financial Condition Financial Instruments Cash Collateral Pledged Net Amount (in thousands) December 31, 2021: Derivatives - VIEs $ 18,342 $ — $ 18,342 $ — $ (1,824) $ 16,518 Derivatives - VOEs $ — $ — $ — $ — $ — $ — December 31, 2020: Derivatives - VIEs $ 6,893 $ — $ 6,893 $ — $ (4,201) $ 2,692 Derivatives - VOEs $ 664 $ — $ 664 $ — $ (138) $ 526 Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty. Non-Consolidated VIEs As of December 31, 2021, the net assets of company-sponsored investment products that are non-consolidated VIEs are approximately $68.9 billion; our maximum risk of loss is our investment of $8.8 million in these VIEs and our advisory fees receivable from these VIEs are $75.7 million. As of December 31, 2020, the net assets of company-sponsored investment products that were non-consolidated VIEs was approximately $73.4 billion; our maximum risk of loss was our investment of $7.1 million in these VIEs and our advisory fees receivable from these VIEs were $77.6 million. 16. Net Capital SCB LLC is registered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the U.S. Securities and Exchange Commission (" SEC "). SCB LLC computes its net capital under the alternative method permitted by the applicable rule, which requires that minimum net capital, as defined, equals the greater of $1 million or two percent of aggregate debit items arising from customer transactions, as defined. As of December 31, 2021, SCB LLC had net capital of $307.6 million, which was $267.5 million in excess of the minimum net capital requirement of $40.1 million. Advances, dividend payments and other equity withdrawals by SCB LLC are restricted by regulations imposed by the SEC, the Financial Industry Regulatory Authority, Inc., and other securities agencies. Our U.K.-based broker-dealer is a member of the London Stock Exchange. As of December 31, 2021, it was subject to financial resources requirements of $47.4 million imposed by the Financial Conduct Authority of the United Kingdom and had aggregate regulatory financial resources of $61.1 million, an excess of $13.7 million over the required level. AllianceBernstein Investments, Inc., another one of our subsidiaries and the distributor and/or underwriter for certain company-sponsored mutual funds, is registered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the SEC. As of December 31, 2021, it had net capital of $26.5 million, which was $26.2 million in excess of its required net capital of $0.3 million. Many of our subsidiaries around the world are subject to minimum net capital requirements by the local laws and regulations to which they are subject. As of December 31, 2021, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement. 17. Counterparty Risk Customer Activities In the normal course of business, brokerage activities involve the execution, settlement and financing of various customer securities trades, which may expose our broker-dealer operations to off-balance sheet risk by requiring us to purchase or sell securities at prevailing market prices in the event the customer is unable to fulfill its contractual obligations. 2021 Annual Report 107 Table of Contents Part II Our customer securities activities are transacted on either a cash or margin basis. In margin transactions, we extend credit to the customer, subject to various regulatory and internal margin requirements. These transactions are collateralized by cash or securities in the customer’s account. In connection with these activities, we may execute and clear customer transactions involving the sale of securities not yet purchased. We seek to control the risks associated with margin transactions by requiring customers to maintain collateral in compliance with the aforementioned regulatory and internal guidelines. We monitor required margin levels daily and, pursuant to such guidelines, require customers to deposit additional collateral, or reduce positions, when necessary. A majority of our customer margin accounts are managed on a discretionary basis whereby we maintain control over the investment activity in the accounts. For these discretionary accounts, our margin deficiency exposure is minimized by our maintaining a diversified portfolio of securities in the accounts, our discretionary authority and our U.S.-based broker-dealer's role as custodian. In accordance with industry practice, we record customer transactions on a settlement date basis, which generally is two business days after trade date for our U.K. and U.S. operations. We are exposed to risk of loss on these transactions in the event of the customer’s inability to meet the terms of their contracts, in which case we may have to purchase or sell financial instruments at prevailing market prices. The risks we assume in connection with these transactions are not expected to have a material adverse effect on our financial condition or results of operations. Other Counterparties We are engaged in various brokerage activities on behalf of clients, in which counterparties primarily include broker-dealers, banks and other financial institutions. In the event these counterparties do not fulfill their obligations, we may be exposed to loss. The risk of default depends on the creditworthiness of the counterparty or issuer of the instrument. It is our policy to review, as necessary, each counterparty’s creditworthiness. In connection with security borrowing and lending arrangements, we enter into collateralized agreements, which may result in potential loss in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Security borrowing arrangements require us to deposit cash collateral with the lender. With respect to security lending arrangements, we receive collateral in the form of cash in amounts generally in excess of the market value of the securities loaned. We attempt to mitigate credit risk associated with these activities by establishing credit limits for each broker and monitoring these limits on a daily basis. Additionally, security borrowing and lending collateral is marked to market on a daily basis, and additional collateral is deposited by or returned to us as necessary. We enter into various futures, forwards, options and swaps primarily to economically hedge certain of our seed money investments. We may be exposed to credit losses in the event of nonperformance by counterparties to these derivative financial instruments. See Note 7, Derivative Instruments for further discussion. 18. Qualified Employee Benefit Plans We maintain a qualified profit sharing plan covering U.S. employees and certain foreign employees. Employer contributions are discretionary and generally limited to the maximum amount deductible for federal income tax purposes. Aggregate contributions were $16.5 million, $15.6 million and $14.4 million for 2021, 2020 and 2019, respectively. We maintain several defined contribution plans for foreign employees working for our subsidiaries in the United Kingdom, Australia, Japan and other locations outside the United States. Employer contributions generally are consistent with regulatory requirements and tax limits. Defined contribution expense for foreign entities was $9.8 million, $8.4 million and $7.7 million in 2021, 2020 and 2019, respectively. We maintain a qualified, noncontributory, defined benefit retirement plan (“ Retirement Plan ”) covering current and former employees who were employed by AB in the United States prior to October 2, 2000. Benefits are based on years of credited service, average final base salary (as defined in the Retirement Plan) and primary Social Security benefits. Service and compensation after December 31, 2008 are not taken into account in determining participants’ retirement benefits. Our policy is to satisfy our funding obligation for each year in an amount not less than the minimum required by the Employee Retirement Income Security Act of 1974, as amended, and not greater than the maximum amount we can deduct for federal income tax purposes. We did not make a contribution to the Retirement Plan during 2021. We do not currently anticipate that we will contribute to the Retirement Plan during 2022. Contribution estimates, which are subject to change, are based on regulatory requirements, future market conditions and assumptions used for actuarial computations of the Retirement Plan’s obligations and assets. Management, at the present time, has not determined the amount, if any, of additional future contributions that may be required. 108 AllianceBernstein Table of Contents Part II The Retirement Plan’s projected benefit obligation, fair value of plan assets and funded status (amounts recognized in the consolidated statements of financial condition) were as follows: Years Ended December 31 2021 2020 (in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $ 151,124 $ 136,113 Interest cost 3,794 4,443 Plan settlements (5,803) — Actuarial (gain) loss (4,447) 16,131 Benefits paid (2,806) (5,563) Projected benefit obligation at end of year 141,862 151,124 Change in plan assets: Plan assets at fair value at beginning of year 125,022 114,080 Actual return on plan assets 14,526 16,505 Employer contribution — — Plan settlements (5,803) — Benefits paid (2,806) (5,563) Plan assets at fair value at end of year 130,939 125,022 Funded status $ (10,923) $ (26,102) Effective December 31, 2015, the Retirement Plan was amended to change the actuarial basis used for converting a life annuity benefit to optional forms of payment and converting benefits payable at age 65 to earlier commencement dates. This prior service cost will be amortized over future years. The amounts recognized in other comprehensive income (loss) for the Retirement Plan for 2021, 2020 and 2019 were as follows: 2021 2020 2019 (in thousands) Unrecognized net gain (loss) from experience different from that assumed and effects of changes and assumptions $ 15,858 $ (4,089) $ (7,934) Prior service cost 24 24 24 15,882 (4,065) (7,910) Income tax (expense) benefit (87) (216) 312 Other comprehensive income (loss) $ 15,795 $ (4,281) $ (7,598) The gain of $15.8 million recognized in 2021 was primarily due to actual earnings exceeding expected earnings on plan assets ($8.2 million), changes in the discount rate and lump sum interest rates of ($5.6 million), settlement loss recognized of ($2.0 million) and the recognized actuarial loss of ($1.5 million), offset by changes in the census data ($1.0 million) and changes in the mortality assumption ($0.2 million). The loss of $4.3 million recognized in 2020 was primarily due to changes in the discount rate and lump sum interest rates ($16.7 million), offset by actual earnings exceeding expected earnings on plan assets ($10.4 million), changes in the mortality assumption ($1.0 million), the recognized actuarial loss ($1.4 million) and changes in the census data ($0.4 million). The loss of $7.6 million recognized in 2019 was primarily was due to changes in the