ALLIANCEBERNSTEIN HOLDING L.P. 10-K

ab-20221231 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 , 2022 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 ☒ If securities are registered pursuant to Section 12 (b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b ). ☐ 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, 2022 was approximately $ 3.8 billion. The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of December 31, 2022 was 113,801,097 . (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 33 Market Environment 34 AB Holding 35 AB 37 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 127 Item 9A. Controls and Procedures 127 Item 9B. Other Information 128 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 128 Part III Item 10. Directors, Executive Officers and Corporate Governance 129 Item 11. Executive Compensation 145 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 175 Item 13. Certain Relationships and Related Transactions, and Director Independence 179 Item 14. Principal Accounting Fees and Services 180 Part IV Item 15. Exhibits, Financial Statement Schedules 181 Item 16. Form 10-K Summary 183 Signatures 184 2022 Annual Report i Table of Contents Glossary of Certain Defined Terms AB AllianceBernstein L.P. (Delaware limited partnership formerly known as Alliance Capital Management L.P., “ Alliance Capital ”), the operating partnership, and its subsidiaries and, where appropriate, its predecessors, AB Holding and ACMC, Inc. and their respective subsidiaries. AB Holding AllianceBernstein Holding L.P. (Delaware limited partnership). AB Holding Partnership Agreement the Amended and Restated Agreement of Limited Partnership of AB Holding, dated as of October 29, 1999 and as amended February 24, 2006. AB Holding Units units representing assignments of beneficial ownership of limited partnership 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. 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 include, as of December 31, 2022: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, 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. S ee “Distribution Channels” in this Item 1 for additional information. As of December 31, 2022, 2021 and 2020, our AUM were approximately $646 billion, $779 billion and $686 billion, respectively, and our net revenues were approximately $4.1 billion, $4.4 billion and $3.7 billion, respectively. EQH (our parent company) and its subsidiaries, whose AUM consist primarily of fixed income investments, is our largest client. Our EQH affiliates represented approximately 16%, 17% and 19% of our AUM as of December 31, 2022, 2021 and 2020, and we earned approximately 4% of our net revenues from services we provided to them in each of those years. Assets Under Management (AUM) ($ 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 . Research Our high-quality, in-depth research is the foundation of our asset management and private wealth management businesses. 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. 2022 Annual Report 1 Table of Contents Part I Purpose, Values and 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 that 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. We are committed to being a responsible firm and striving to model the behavior that we expect from the companies in which we invest. 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, equity and inclusion, we are afforded different perspectives and ways of thinking, which can lead to better outcomes for our clients ( See Diversity, Equity 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 the AB Responsibility Report, which can be found under “Responsibility - Overview” on www.alliancebernstein.com. And, we have described our firm's governance structure, including our Board and its committees, in Item 10 of this Form 10-K. 2 AllianceBernstein Table of Contents Part I Investment Philosophy We believe that by using differentiated research insights and a disciplined process to build high-active-share portfolios, we can achieve strong investment results for our clients over time. Key to this philosophy is developing and integrating ESG and climate research, as well as our approach to engagement. Our global research network, intellectual curiosity and collaborative culture allow us to advance clients' investment objectives, whether our clients are seeking responsibility generated idiosyncratic alpha, total return, downside mitigation, or sustainability and impact-focused outcomes. Our investment services include expertise in: • Actively managed equity strategies across global and regional universes, as well as 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; • Actively managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity); • Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address our clients' evolving need to invest their capital with purpose while pursuing strong investment returns; • Multi-asset services and solutions, including dynamic asset allocation, customized target-date funds and target-risk funds; and • Some passive management, including index, ESG index and enhanced index strategies. Our AUM by client domicile and investment service as of December 31, 2022, 2021 and 2020 are as follows: AUM by Client Domicile ($ in billions) AUM by Investment Service ($ in billions) 2022 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 24%, 25% and 29% of our institutional AUM as of December 31, 2022, 2021 and 2020, respectively, and approximately 19%, 18% and 18% of our institutional revenues for 2022, 2021 and 2020, 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, 2022. As of December 31, 2022, EQH and its subsidiaries combined AUM accounted for: Approximately 24% of our institutional AUM. Approximately 19% 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, 2022, 2021 and 2020, Institutional Services represented approximately 46%, 43% and 46%, respectively, of our AUM, and the fees we earned from providing these services represented approximately 16%, 13% 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 2022 2021 2020 2022-21 2021-20 (in millions) Equity: Equity Actively Managed $ 55,731 $ 73,726 $ 60,067 (24.4) % 22.7 % Equity Passively Managed (1) 21,062 28,995 27,873 (27.4) 4.0 Total Equity 76,793 102,721 87,940 (25.2) 16.8 U.S. 35,428 47,409 41,241 (25.3) 15.0 Global & Non-US 41,365 55,312 46,699 (25.2) 18.4 Total Equity 76,793 102,721 87,940 (25.2) 16.8 Fixed Income: Fixed Income Taxable 121,871 155,940 164,048 (21.8) (4.9) Fixed Income Tax-Exempt 849 1,108 1,271 (23.4) (12.8) Fixed Income Passively Managed (1) 192 224 84 (14.3) 166.7 Total Fixed Income 122,912 157,272 165,403 (21.8) (4.9) U.S. 88,800 110,312 116,833 (19.5) (5.6) Global & Non-US 34,112 46,960 48,570 (27.4) 26.1 Total Fixed Income 122,912 157,272 165,403 (21.8) (4.9) Alternatives/Multi-Asset Solutions (2) : U.S. 12,873 7,697 6,104 67.2 26.1 Global & Non-US 84,703 69,390 56,151 22.1 23.6 Total Alternatives/Multi-Asset Solutions 97,576 77,087 62,255 26.6 23.8 Total: U.S. 137,101 165,418 164,178 (17.1) 0.8 Global & Non-US 160,180 171,662 151,420 (6.7) 13.4 Total $ 297,281 $ 337,080 $ 315,598 (11.8) 6.8 Affiliated - EQH 70,924 84,096 91,396 (15.7) (8.0) Non-affiliated 226,357 252,984 224,202 (10.5) 12.8 Total $ 297,281 $ 337,080 $ 315,598 (11.8) 6.8 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. 2022 Annual Report 5 Table of Contents Part I Revenues from Institutional Services (by Investment Service) Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in thousands) Equity: Equity Actively Managed $ 220,917 $ 240,049 $ 170,802 (8.0) % 40.5 % Equity Passively Managed (1) 4,910 6,119 5,851 (19.8) 4.6 Total Equity 225,827 246,168 176,653 (8.3) 39.4 U.S. 80,908 97,522 69,795 (17.0) 39.7 Global & Non-US 144,919 148,646 106,858 (2.5) 39.1 Total Equity 225,827 246,168 176,653 (8.3) 39.4 Fixed Income: Fixed Income Taxable 189,679 199,866 194,026 (5.1) 3.0 Fixed Income Tax-Exempt 1,182 1,356 1,355 (12.8) 0.1 Fixed Income Passively Managed (1) 425 105 82 n/m 28.0 Fixed Income Servicing (2) 15,991 14,738 14,108 8.5 4.5 Total Fixed Income 207,277 216,065 209,571 (4.1) 3.1 U.S. 128,392 124,004 118,924 3.5 4.3 Global & Non-US 78,885 92,061 90,647 (14.3) 1.6 Total Fixed Income 207,277 216,065 209,571 (4.1) 3.1 Alternatives/Multi-Asset Solutions (3) : U.S. 114,982 64,646 52,222 77.9 23.8 Global & Non-US 111,202 59,179 73,354 87.9 (19.3) Total Alternatives/Multi-Asset Solutions 226,184 123,825 125,576 82.7 (1.4) Total Investment Advisory and Services Fees: U.S. 324,282 286,172 240,941 13.3 18.8 Global & Non-US 335,004 299,886 270,859 11.7 10.7 Total 659,286 586,058 511,800 12.5 14.5 Distribution Revenues 268 474 588 (43.5) (19.4) Shareholder Servicing Fees 429 485 526 (11.5) (7.8) Total $ 659,983 $ 587,017 $ 512,914 12.4 14.4 Affiliated - EQH 125,229 105,415 90,101 18.8 17.0 Non-affiliated 534,754 481,602 422,813 11.0 13.9 Total $ 659,983 $ 587,017 $ 512,914 12.4 14.4 (1) Includes index and enhanced index services. (2) Fixed Income Servicing includes advisory-related services fees that are not based on AUM, including derivative transaction fees, capital purchase program-related advisory services and other fixed income advisory services. (3) Includes certain multi-asset solutions and services not included in equity or fixed income services. 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, 2022, 2021 and 2020 and approximately 1% of our retail net revenues for the years ended December 31, 2022, 2021 and 2020. 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, 2022, retail U.S. Fund AUM were approximately $54 billion, or 22% of retail AUM, as compared to $73 billion, or 23%, as of December 31, 2021, and $62 billion, or 23%, as of December 31, 2020. Non-U.S. Fund AUM, as of December 31, 2022, totaled $96 billion, or 39% of retail AUM, as compared to $130 billion, or 41%, as of December 31, 2021, and $110 billion, or 41%, as of December 31, 2020. 2022 Annual Report 7 Table of Contents Part I Our Retail Services represented approximately 38%, 41% and 39% of our AUM as of December 31, 2022, 2021 and 2020, respectively, and the fees we earned from providing these services represented approximately 49%, 50% and 49% of our net revenues for the years ended December 31, 2022, 2021 and 2020, respectively. Our AUM and revenues are as follows: Retail Services Assets Under Management (by Investment Service) Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in millions) Equity: Equity Actively Managed $ 116,235 $ 154,200 $ 106,866 (24.6) % 44.3 % Equity Passively Managed (1) 30,445 40,821 35,995 (25.4) 13.4 Total Equity 146,680 195,021 142,861 (24.8) 36.5 U.S. 118,547 152,106 108,506 (22.1) 40.2 Global & Non-US 28,133 42,915 34,355 (34.4) 24.9 Total Equity 146,680 195,021 142,861 (24.8) 36.5 Fixed Income: Fixed Income Taxable 53,995 75,813 84,654 (28.8) (10.4) Fixed Income Tax-Exempt 26,714 29,009 23,202 (7.9) 25.0 Fixed Income Passively Managed (1) 9,206 12,762 8,231 (27.9) 55.0 Total Fixed Income 89,915 117,584 116,087 (23.5) 1.3 U.S. 41,151 46,361 36,137 (11.2) 28.3 Global & Non-US 48,764 71,223 79,950 (31.5) (10.9) Total Fixed Income 89,915 117,584 116,087 (23.5) 1.3 Alternatives/Multi-Asset Solutions (2) : U.S. 2,697 3,595 3,071 (25.0) 17.1 Global & Non-US 3,594 3,718 3,321 (3.3) 12.0 Total Alternatives/Multi-Asset Solutions 6,291 7,313 6,392 (14.0) 14.4 Total: U.S. 162,395 202,062 147,714 (19.6) 36.8 Global & Non-US 80,491 117,856 117,626 (31.7) 0.2 Total $ 242,886 $ 319,918 $ 265,340 (24.1) 20.6 Affiliated - EQH 34,110 44,417 36,765 (23.2) 20.8 Non-affiliated 208,776 275,501 228,575 (24.2) 20.5 Total $ 242,886 $ 319,918 $ 265,340 (24.1) 20.6 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services 8 AllianceBernstein Table of Contents Part I Revenues from Retail Services (by Investment Service) Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in thousands) Equity: Equity Actively Managed $ 746,889 $ 766,578 $ 508,973 (2.6) % 50.6 % Equity Passively Managed (1) 12,870 14,773 14,347 (12.9) 3.0 Total Equity 759,759 781,351 523,320 (2.8) 49.3 U.S. 558,319 556,398 355,542 0.3 56.5 Global & Non-US 201,440 224,953 167,778 (10.5) 34.1 Total Equity 759,759 781,351 523,320 (2.8) 49.3 Fixed Income: Fixed Income Taxable 390,708 517,327 534,164 (24.5) (3.2) Fixed Income Tax-Exempt 89,450 84,945 70,734 5.3 20.1 Fixed Income Passively Managed (1) 13,682 12,994 12,229 5.3 6.3 Total Fixed Income 493,840 615,266 617,127 (19.7) (0.3) U.S. 119,053 115,248 101,825 3.3 13.2 Global & Non-US 374,787 500,018 515,302 (25.0) (3.0) Total Fixed Income 493,840 615,266 617,127 (19.7) (0.3) Alternatives/Multi-Asset Solutions (2) : U.S. 55,356 81,872 57,069 (32.4) 43.5 Global & Non-US 13,484 13,117 12,723 2.8 3.1 Total Alternatives/Multi-Asset Solutions 68,840 94,989 69,792 (27.5) 36.1 Total Investment Advisory and Services Fees: U.S. 732,728 753,518 514,436 (2.8) 46.5 Global & Non-US 589,711 738,086 695,803 (20.1) 6.1 Consolidated company-sponsored investment funds 770 1,243 733 (38.1) 69.6 Total 1,323,209 1,492,847 1,210,972 (11.4) 23.3 Distribution Revenues 594,431 644,125 522,056 (7.7) 23.4 Shareholder Servicing Fees 83,268 86,857 78,920 (4.1) 10.1 Total $ 2,000,908 $ 2,223,829 $ 1,811,948 (10.0) 22.7 Affiliated - EQH 23,836 28,334 27,130 (15.9) 4.4 Non-affiliated 1,977,072 2,195,495 1,784,818 (9.9) 23.0 Total $ 2,000,908 $ 2,223,829 $ 1,811,948 (10.0) 22.7 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. 2022 Annual Report 9 Table of Contents Part I Private Wealth Management We partner with our clients, embracing innovation and 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%, 16% and 15% of our AUM as of December 31, 2022, 2021 and 2020, respectively. The fees we earned from providing these services represented approximately 25%, 25% and 24% of our net revenues for 2022, 2021 and 2020, respectively. Our AUM and revenues are as follows: Private Wealth Services Assets Under Management (by Investment Service) Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in millions) Equity: Equity Actively Managed $ 45,977 $ 59,709 $ 50,854 (23.0) % 17.4 % Equity Passively Managed (1) 2,304 1,764 666 30.6 % 164.9 % Total Equity 48,281 61,473 51,520 (21.5) 19.3 U.S. 28,014 35,014 28,776 (20.0) 21.7 Global & Non-US 20,267 26,459 22,744 (23.4) 16.3 Total Equity 48,281 61,473 51,520 (21.5) 19.3 Fixed Income: Fixed Income Taxable 14,391 14,567 14,515 (1.2) 0.4 Fixed Income Tax-Exempt 24,953 26,929 25,764 (7.3) 4.5 Fixed Income Passively Managed (1) 2 230 195 (99.1) 17.9 Total Fixed Income 39,346 41,726 40,474 (5.7) 3.1 U.S. 34,764 36,166 35,042 (3.9) 3.2 Global & Non-US 4,582 5,561 5,432 (17.6) 2.4 Total Fixed Income 39,346 41,727 40,474 (5.7) 3.1 Alternatives/Multi-Asset Solutions (2) : U.S. 6,607 6,926 5,927 (4.6) 16.9 Global & Non-US 12,021 11,446 7,064 5.0 62.0 Total Alternatives/Multi-Asset Solutions 18,628 18,372 12,991 1.4 41.4 Total: U.S. 69,385 78,106 69,745 (11.2) 12.0 Global & Non-US 36,870 43,466 35,240 (15.2) 23.3 Total $ 106,255 $ 121,572 $ 104,985 (12.6) 15.8 (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 2022 2021 2020 2022-21 2021-20 (in thousands) Equity: Equity Actively Managed $ 521,155 $ 584,455 $ 487,899 (10.8) % 19.8 % Equity Passively Managed (1) 8,700 4,780 1,113 82.0 % n/m Total Equity 529,855 589,235 489,012 (10.1) 20.5 U.S. 295,235 325,154 263,938 (9.2) 23.2 Global & Non-US 234,620 264,081 225,074 (11.2) 17.3 Total Equity 529,855 589,235 489,012 (10.1) 20.5 Fixed Income: Fixed Income Taxable 66,851 72,404 71,575 (7.7) 1.2 Fixed Income Tax-Exempt 125,123 130,391 123,952 (4.0) 5.2 Fixed Income Passively Managed (1) 1,804 2,634 2,891 (31.5) (8.9) Total Fixed Income 193,778 205,429 198,418 (5.7) 3.5 U.S. 159,411 167,402 160,666 (4.8) 4.2 Global & Non-US 34,367 38,027 37,752 (9.6) 0.7 Total Fixed Income 193,778 205,429 198,418 (5.7) 3.5 Alternatives/Multi-Asset Solutions (2) : U.S. 195,666 249,432 109,169 (21.6) 128.5 Global & Non-US 69,245 71,524 76,065 (3.2) (6.0) Total Alternatives/Multi-Asset Solutions 264,911 320,956 185,234 (17.5) 73.3 Total Investment Advisory and Services Fees: U.S. 650,311 741,987 533,773 (12.4) 39.0 Global & Non-US 338,232 373,632 338,891 (9.5) 10.3 Total 988,543 1,115,619 872,664 (11.4) 27.8 Distribution Revenues 12,496 7,641 7,137 63.5 7.1 Shareholder Servicing Fees 2,964 2,882 2,871 2.8 0.4 Total $ 1,004,003 $ 1,126,142 $ 882,672 (10.8) 27.6 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. 2022 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" or " BRS " ) . We serve our clients, which are based in 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 occasionally provide equity capital markets services to issuers of publicly traded securities, such as 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%, 10% and 12% of our net revenues for the years ended December 31, 2022, 2021 and 2020, respectively. For information regarding trends in fee rates charged for brokerage transactions, see “Risk Factors” in Item 1A . In the fourth quarter of 2022, AB and Société Générale (EURONEXT: SCGLY, “ SocGen ”) , a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As a result, the BRS business has been classified as held for sale. For further discussion, s ee Note 24 Acquisitions and Divestitures to AB's consolidated financial statements in Item 8. Our Bernstein Research Services revenues are as follows: Revenues from Bernstein Research Services Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in thousands) Bernstein Research Services $ 416,273 $ 452,017 $ 459,744 (7.9) % (1.7) % 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. People 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 and distinctive knowledge of our employees are collectively the most important assets of our firm, so the long-term sustainability and success of our firm is heavily dependent on our people. In 2022, our human capital and administrative services teams became our "People" team, a key acknowledgement of the central role they play in supporting our employees and advancing their work experience. We are keenly focused on: • fostering an inclusive culture by incorporating diversity, equity 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 matters affecting our people, including emerging people 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 talent acquisition associates focused on recruiting, and we have implemented various people-related 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 emerging talent and post-graduate 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, Equity and Inclusion Our continued commitment to Diversity, Equity & Inclusion (" DEI ") across all facets of our firm aligns with broader industry recognition of the workplace as both a working and learning community. We believe that our company plays a critical role in empowering our people though purpose and fostering an inclusive, collaborative environment and equitable culture that allows for connectivity, belonging and success at every level. A key element of our ongoing journey has been to adapt as appropriate to evolving DEI industry trends. In 2022, we formally incorporated the concept of "equity" into our strategy and team name in an effort to more accurately reflect our current and anticipated approach. Our firm's community engagement efforts have been further integrated under the DEI umbrella. To support our grantee and community partners, bolster our commitment to our non-profit clients, and add value for our current and future employees, our approach leverages four programs under the "AB Gives Back" brand: philanthropy, volunteering, board participation and gift matching. Some highlights include improved student attendance and financial literacy in inner city neighborhoods and over 3,000 employee volunteer hours completed in 2022. We have enhanced our talent attraction and retention approach to position ourselves as an employer of choice and increase investment in our people. We have developed a diverse talent strategy with a goal of gaining 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 providing opportunities to build relationships across the firm at all levels. Finally, our people remain our top priority. 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. 2022 Annual Report 13 Table of Contents Part I Compensation and Benefits We consistently invest 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, 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, performance, 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 industry peers; this process also includes engagement of outside counsel to conduct privileged pay equity reviews to ensure ongoing compliance with applicable laws and regulations. • We provide merit-based and cost of living annual salary increases, as well as incentive compensation, which are communicated to employees at year-end and documented through our annual review procedures, upon internal transfer and/or promotion; and • The firm makes benefits available to all eligible employees, including a flexible in-office work schedule that permits working remotely two days weekly, health and prescription 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, paid parental leave, adoption and surrogacy assistance, tuition reimbursement, and a health and financial wellness program. Health, Safety and Flexibility for our Workforce During 2020, at the onset of COVID, we mobilized to ensure the health and safety of our employees globally. 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. Then, while continuing to closely monitor COVID-related conditions globally, we developed return-to-office programs tailored locally, so that employees could feel safe knowing that their health, and the health of their families, were a priority. This meant a staggered return to the office so that we could monitor data while complying with local ordinances. Beginning in July 2021, in the U.S. we returned to the office three days a week, alternating weeks through the end of 2021. In early 2022, while most of our employees returned to the office full-time, we offered employees the ability to work remotely up to two days per week given the ability and diligence our employees demonstrated while working remotely. By the end of 2022, all employees had returned to the office utilizing a hybrid work schedule, including the flexibility to work remotely up to two days per week. We believe this approach allows our employees to maintain the important benefits of in-person collaboration while providing greater work-life balance. Employees As of December 31, 2022, our firm had 4,436 full-time employees, including 203 AB CarVal employees, compared to 4,118 full-time employees as of December 31, 2021, representing a 7.7% increase (a 2.8% increase excluding AB CarVal). 14 AllianceBernstein Table of Contents Part I As of December 31, 2022, our employees reflected the following characteristics and locations: Region: Female % Female Male % Male Grand Total % of Total Americas 1,164 26 % 2,099 47 % 3,263 74 % Asia ex Japan 234 5 % 227 5 % 461 10 % EMEA 221 5 % 377 9 % 598 14 % Japan 56 2 % 43 1 % 99 2 % Grand Total (1) (2) 1,675 38 % 2,746 62 % 4,421 100 % (1) The table above only reflects employees who have self-reported as male or female and as such does not reconcile to our total of 4,436 full-time employees. (2) The methodology utilized to populate the table above changed from the prior year. Specifically, while in 2021 we presented the total percentage of female and male full-time employees by region who self-reported, in the above table we present the total percentage of female and male full-time employees by region, as a percentage of total global full-time employees, who self-reported. 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.” 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. 2022 Annual Report 15 Table of Contents Part I AB, AB Holding, the General Partner and six 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, AB CarVal Investors 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 (the “ 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, 2022, 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 61.3% economic interest in AB as of December 31, 2022. 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 . 2022 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 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 recovered to new highs in 2021 following unprecedented, coordinated monetary and fiscal policy support and the approval of vaccines to help remedy the global pandemic. However, significant supply chain challenges, energy shortages and labor shortages, brought about by COVID-19 and significantly exacerbated by the conflict in Ukraine, contributed to heightened global inflationary pressures, which resulted in sizable interest rate increases and associated market volatility in 2022. 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. 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 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 (such as the ongoing conflict in Ukraine) 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. Also, 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 were relatively stable in 2022 despite market volatility, 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. • Interest Rate Changes . Investor interest in and the valuation of our fixed income and multi-asset investment portfolios can be adversely affected by changes in interest rates, particularly if interest rates increase substantially and quickly. 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, 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-2022 deteriorated from prior-year levels, with 40% of active managers outperforming their passive benchmarks for the 12 months ended June 30, 2022 (latest data available), compared to 47% for the prior 12-month period. U.S. stock active funds fared better than non-U.S. with 45% of U.S. active stock funds outperforming benchmarks, as compared with 23% for non-U.S. stock funds. Performance of actively managed bond funds decreased sharply in 2022, with just 29% outperforming benchmarks, representing a 44% decline compared to the prior-year period. Flows into actively managed funds deteriorated industry-wide in 2022, with U.S. industry-wide active mutual fund outflows of $974 billion in 2022, contrasted with inflows of $148 billion in 2021. Active fixed income U.S. mutual funds experienced outflows of $482 billion in 2022, compared to inflows of $368 billion in 2021. Furthermore, active equity U.S. mutual fund outflows accelerated to $432 billion in 2022, compared to outflows of $191 billion in 2021. By contrast, demand for passive strategies in the U.S. continued to grow, though at a reduced rate from the prior year, as industry-wide total passive mutual fund net inflows of $518 billion in 2022 compared to $928 billion in 2021. Organic growth through net inflows continues to be 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 16% of our AUM as of December 31, 2022, and we earned approximately 4% of our net revenues from services we provided to them. 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. 2022 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 10.6%, 9.2% and 0.5% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 6.6% 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 $145.2 million, $245.1 million and $132.6 million in 2022, 2021 and 2020, 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 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 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. Lastly, extensive changes proposed by the SEC to the equity market structure, including Regulation Best Execution, the proposed Order Competition Rule and proposed changes to Regulation NMA establishing, among other things, minimum pricing increments and required disclosures by larger broker-dealers and specified trading platforms, if adopted as proposed, could substantially increase the cost of conducting our buy-side and broker-dealer operations and, possibly, adversely impact trade execution quality. We discuss the risks associated with Brexit below in "Legal and Regulatory-related Risks" in this Item 1A. 20 AllianceBernstein Table of Contents Part I We may be unable to develop new products and services, and the development of new products and services may expose us to reputational harm, additional costs or operational risk. Our financial performance depends, in part, on our ability to react nimbly to changes in the asset management industry, respond to evolving client needs, and develop, market and manage new investment products and services. Conversely, the development and introduction of new products and services, including the creation of products with concentrations in industries or sectors specific to individual client criteria, or with a focus on ESG, requires continuous innovative effort on our part and may require significant time and resources as well as ongoing support and investment. Substantial risk and uncertainties are associated with the introduction of new products and services, including the implementation of new and appropriate operational controls and procedures, shifting client and market preferences, the introduction of competing products or services, and compliance with regulatory and disclosure requirements. We can make no assurance that we will be able to develop new products and services that successfully address the needs of clients within needed timeframes. Any failure to successfully develop new products and services, or effectively manage associated operational risks, could harm our reputation and expose us to additional costs, which could adversely affect our AUM, revenues and operating income. 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, swaps 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 (such as our purchase of CarVal Investors in 2022), dispositions, mergers, consolidations, joint venture partnerships (such as our planned joint venture partnership with SocGen) 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. 2022 Annual Report 21 Table of Contents Part I 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. 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 . People-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 continue 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. 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 have envisioned. We have established our corporate headquarters in and have relocated 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 adversely affect AB’s ability to motivate and retain current employees. Further, significant managerial and operational challenges could arise 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 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. Employee misconduct, which can be difficult to detect and deter, could harm us by impairing our ability to attract and retain clients and subjecting us to significant regulatory scrutiny, legal liability and reputational harm. There have been several highly publicized cases involving fraud or other misconduct by employees in the financial services industry generally, and we are not immune. Misconduct by employees could involve the improper use or disclosure of confidential information, which could result in legal action, regulatory sanctions, and reputational or financial harm. Further, 22 AllianceBernstein Table of Contents Part I fraud, payment or solicitation of bribes and other deceptive practices or other misconduct by our employees could similarly subject us to regulatory scrutiny, legal liability and reputational damage. 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 frequently, 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. 2022 Annual Report 23 Table of Contents Part I Climate change and other unpredictable events, including 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. Furthermore, climate change may increase the severity and frequency of catastrophes, or adversely affect our investment portfolio or investor sentiment. Climate change may also increase the frequency and severity of weather-related disasters and pandemics. And, climate change regulation may affect the prospects of companies and other entities whose securities in which we invest, or our willingness to continue to invest in such securities. 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 Nashville, Tennessee, New York City, London, England, and Hong Kong, 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 and third-party vendors 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. 24 AllianceBernstein Table of Contents Part I We may not always successfully manage actual and potential conflicts of interest that arise in our business. Increasingly, we must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived to conflict, with the interests of another client. Failure to adequately address potential conflicts of interest could adversely affect our reputation, results of operations and business prospects. We have procedures and controls that are designed to identify and mitigate conflicts of interest, including those designed to prevent the improper sharing of information. However, appropriately managing conflicts of interest is complex. Our reputation could be damaged and the willingness of clients to enter into transactions in which such a conflict might arise may be affected if we fail, or appear to fail, to deal appropriately with actual or perceived conflicts of interest. In addition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions. Maintaining adequate liquidity for our general business needs depends on certain factors, including operating cash flows and our access to credit on reasonable terms. Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain and grow AUM and other factors beyond our control. Our ability to issue public or private debt on reasonable terms may be limited by adverse market conditions, our profitability, our creditworthiness as perceived by lenders and changes in government regulations, including tax rates and interest rates. Furthermore, our access to credit on reasonable terms is partially dependent on our firm’s credit ratings. Both Moody’s Investors Service, Inc. and Standard & Poor's Rating Service affirmed AB’s long-term and short-term credit ratings and indicated a stable outlook in 2022. 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 purchase may not fully cover all potential exposures. We maintain professional liability, errors & omissions, 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. 2022 Annual Report 25 Table of Contents Part I 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, there has been increasing regulatory focus on ESG-related practices by investment managers. The SEC is poised in 2023 to issue a rule enhancing and standardizing climate disclosures by U.S. public companies, including investment managers. The SEC also has focused on the labeling by investment funds of their activities or investments as "sustainable" and has examined the methodology used by funds for determining ESG investments, with a keen focus on whether such labeling may be misleading. Outside the U.S., the European Commission has adopted an action plan on financing sustainable growth, as well as initiatives at the European Union (the " EU ") level, such as the EU Sustainable Finance Disclosure Regulation (the " SFDR "). Compliance with the SFDR and other ESG-related regulations may subject us to increased restrictions, disclosure obligations, and compliance and other associated costs, as well as potential reputational harm. Also, 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. 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 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 26 AllianceBernstein Table of Contents Part I 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. Changes in the treatment of AB Holding and AB as partnerships for tax purposes would have significant tax ramifications. 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, AB Holding is a PTP that is taxable as a partnership for federal income tax purposes. To preserve AB Holding's status as a PTP that is taxed as a partnership for federal income tax purposes, AB Holding must 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% (by value) of its total assets in, the new line of business. To preserve AB’s status as a private partnership for federal income tax purposes, AB Units must not be considered publicly traded. If either or both AB Holding and AB were taxable as a corporation, the return on investment to Unitholders generally would be reduced because distributions to Unitholders generally would be subject to two layers of taxation: first, amounts available for distribution would be subject to federal (and applicable state and local) taxes at the corporate entity level; and second, Unitholders generally would be subject to federal (and applicable state and local) taxes upon receipt of dividends. AB Holding and AB are subject to the 4.0% New York City unincorporated business tax (“UBT”). AB Holding may net credits for UBT paid by AB. Changes in tax law governing us or an increase in business activities outside the U.S. could have a material impact on us. 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. 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., or if there are changes in tax law or rates of taxation in foreign jurisdictions where our corporate subsidiaries operate, AB's effective tax rate could increase. If 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. 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, IRS audits and related proceedings (and any similar state or local audits and proceedings). Any actions taken by us or by the Partnership Representative on our behalf in connection with such audits or proceedings will be binding on us and our Unitholders. For an audit of a partnership's taxable years beginning after December 31, 2017, the IRS, absent an election by the partnership to the contrary ( see discussion below ), generally determines adjustments at the partnership level in the year in which the audit is resolved. Generally, we will have the ability to collect any resulting tax liability (and any related interest and penalties) 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, with respect to AB Holding, our Partnership Representative may, in certain instances, request that any “imputed under-payment” 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. 2022 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. This may also require Unitholders to provide certain information to us (possibly including information about the beneficial owners of our Unitholders). Also, a partnership that is a partner of another partnership (such as AB Holding with respect to AB) 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). There are several 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 withholding tax on the sale of their AB Units or AB Holding Units, as well as on distributions, and we may be liable for any under-withholding. Gain or loss from the sale or exchange of a partnership unit by a non-U.S. unitholder is treated as effectively connected with a U.S. trade or business and is subject to U.S. federal income tax 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. In furtherance of the foregoing, a transferee of a partnership unit is required to withhold a tax equal to 10% of the amount realized on any transfer of such a partnership unit unless an exception applies. Distributions by a PTP to a non-U.S. unitholder also are subject to U.S. withholding tax if the PTP has effectively connected gross income, gain or loss. A transferee is not required to withhold tax if it relies on a certification issued by the transferor or the underlying partnership establishing that an exception to withholding applies. If a transferee of AB Units is required to withhold and failed to properly do so, AB would be required to withhold on distributions to the transferee to satisfy that liability. A broker is not required to withhold on the transfer of an interest in a PTP or on a distribution by a PTP if the PTP certifies that the "10% exception" applies. This exception applies if, either (1) the PTP was not engaged in a U.S. trade or business during a specified time period, or (2) upon a hypothetical sale of the PTP'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 U.S. would be less than 10% of the total net gain, or (ii) no gain would have been effectively connected with the conduct of a trade or business in the U.S. To make this certification, the PTP must issue a "qualified notice" indicating that it qualifies for this exception, which we have done and intend to continue to do. The qualified notice must state the amount of a distribution that is attributable to each type of income group specified in the Treasury Regulations. The PTP must post each qualified notice on its primary public website (and keep it accessible for 10 years) and deliver it to any registered holder that is a nominee. A broker may not rely on such a certification if it has actual knowledge that the certification is incorrect or unreliable. As a PTP, beginning on January 1, 2023, AB Holding may be liable for any under-withholding by a broker that relies on a qualified notice for which we failed to make a reasonable estimate of the amounts required for determining the applicability of the 10% exception. 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 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 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 is a lease in London, England, expiring in 2031, and in Hong Kong, China, under a lease expiring in 2024. In London we currently lease 60,732 square feet of space. In Hong Kong, we currently lease and occupy 35,878 square feet of space. Item 3. Legal Proceedings With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome is probable and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of a negative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, if any, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate a possible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages. Such is also the case when the litigation is in its early stages or when the litigation is highly complex or broad in scope. In these cases, we disclose that we are unable to predict the outcome or estimate a possible loss or range of loss. On December 14, 2022, four individual participants in the Profit Sharing Plan for Employees of AB (the " AB Profit Sharing Plan" ) filed a class action complaint (the " Complaint ") in the U.S. District Court for the Southern District of New York against AB, current and former members of the Compensation and Workplace Practices Committee of the Board of Directors, and the Investment and Administrative Committees under the AB Profit Sharing Plan. Plaintiffs, who seek to represent a class of all participants in the AB Profit Sharing Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under ERISA by including proprietary collective investment trusts as investment options offered in the AB Profit Sharing Plan. The Complaint seeks unspecified damages, disgorgement and other equitable relief. AB is prepared to defend itself vigorously against these claims. While the outcome of this matter currently is not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity. AB may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that 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. 2022 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 30, 2022 (the last trading day of the year), the closing price of an AB Holding Unit on the NYSE was $34.37 per Unit. On December 31, 2022, there were (i) 893 AB Holding Unitholders of record for approximately 116,000 beneficial owners, and (ii) 368 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, 2022, 2021 and 2020, except as previously disclosed in a Current Report on Form 8-K dated July 1, 2022. 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 2022. 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 2022 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 10/1/22-10/31/22 — $ — — — 11/1/22-11/30/22 — — — — 12/1/22-12/31/22 (1) 2,558,363 40.70 — — Total 2,558,363 $ 40.70 — — (1) During the fourth quarter of 2022, we purchased 2,558,363 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. Neither we nor our affiliates bought any AB Units during the fourth quarter of 2022. 2022 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 AB continues to actively monitor COVID-19 developments and their impact on our employees, business and operations. The aggregate extent to which COVID-19, including its impact on the global economy, affects AB’s business, liquidity, results of operations and financial condition, will depend on future COVID-19 developments that are highly uncertain, including the scope and duration of COVID-19 and any recovery period, the emergence, spread and seriousness of COVID-19 variants, the continuing prevalence of severe, unconstrained and/or escalating rates of infection and hospitalization in various countries and regions, the availability, adoption and efficacy of treatments and vaccines, and future actions taken by governmental authorities, central banks and other parties in response to COVID-19. Further, we have benefited from certain of our adjusted operating expenses declining significantly due to COVID-19, generally owing to depressed levels of travel and entertainment and in-person client meetings, during both 2020 and 2021. While these costs started to return in 2022, results in 2022 did not reach historical levels; the prior-year savings are not indicative of our future performance. Additionally, as most of our workforce continues working in a hybrid model, which includes the option of two remote days each week, we are mindful of increased risk related to cybersecurity, which could significantly disrupt our business functions. Executive Overview (1) Our total assets under management (" AUM ") as of December 31, 2022 were $646.4 billion, down $132.2 billion, or 17.0%, during 2022. The decrease was driven primarily by market depreciation of $140.4 billion and net outflows of $3.6 billion (reflecting Retail net outflows of $11.6 billion, offset by Institutional net inflows of $6.3 billion and Private Wealth Management net inflows of $1.7 billion), offset by the addition of $12.2 billion due to the acquisition of CarVal Investors L.P. (" CarVal ") in the third quarter. AXA S.A.(" AXA ") redeemed approximately $4.5 billion of low-fee fixed income and equity mandates in 2022. Going forward, any AXA-related redemptions or new sales (reflecting, for example, recent commitments by AXA to certain of our private alternative strategies) will be considered as part of our normal course of business. Institutional AUM decreased $39.8 billion, or 11.8%, to $297.3 billion during 2022, primarily due to market depreciation of $57.8 billion, partially offset by the addition of $12.2 billion due to the acquisition of CarVal and net inflows of $6.3 billion. Gross sales increased $0.5 billion, from $31.7 billion in 2021 to $32.2 billion in 2022. Redemptions and terminations decreased $10.1 billion, from $23.4 billion in 2021 to $13.3 billion in 2022. Institutional net inflows included $2.3 billion of AXA redemptions. Retail AUM decreased $77.0 billion, or 24.1%, to $242.9 billion during 2022, primarily due to market depreciation of $65.5 billion and net outflows of $11.6 billion. Net outflows included $2.2 billion of AXA redemptions. Gross sales decreased $34.1 billion, from $100.0 billion in 2021 to $65.9 billion in 2022. Redemptions and terminations increased $1.2 billion, from $65.1 billion in 2021 to $66.3 billion in 2022. Private Wealth Management AUM decreased $15.4 billion, or 12.6%, to $106.2 billion during 2022, due to market depreciation of $17.1 billion, offset by net inflows of $1.7 billion. Gross sales decreased $0.8 billion, from $18.3 billion in 2021 to $17.5 billion in 2022. Redemptions and terminations increased $0.5 billion, from $15.3 billion in 2021 to $15.8 billion in 2022. Bernstein Research Services (" BRS ") revenue decreased $35.7 million, or 7.9%, in 2022. The decrease was driven by significantly lower customer trading activity in Europe and Asia due to local market conditions. In the fourth quarter of 2022, AB and Société Générale (EURONEXT: SCGLY, “ SocGen ”), a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As a result, the BRS business has been classified as held for sale. For further discussion, see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 . Our 2022 net revenues of $4.1 billion decreased $387.3 million, or 8.7%, compared to net revenues of $4.4 billion in the prior year. The decrease was primarily driven by lower base advisory fees of $123.6 million, higher investment losses of $101.8 million, lower performance-based fees of $99.9 million, lower distribution revenues of $45.0 million, lower Bernstein Research Services revenue of $35.7 million and lower shareholder servicing fees of $3.6 million, partially offset by higher net dividend and interest income of $21.6 million. Our operating expenses of $3.2 billion increased $14.1 million, or 0.4%, compared to the prior year. The increase was primarily due to higher general and administrative expenses of $86.0 million, higher amortization of intangible assets of $20.9 million, higher interest on borrowings of $12.8 million and higher contingent payment arrangements of $3.9 million, offset by lower promotion and servicing expenses of $60.1 million and lower employee compensation and benefits expenses of $49.4 million. Our operating income decreased $401.4 million, or 33.0%, to $0.8 billion from $1.2 billion in 2021 and our operating margin decreased to 21.5% in 2022 from 27.3% in 2021. 1 Percentage change figures are calculated using assets under management rounded to the nearest million, while financial statement amounts are rounded to the nearest hundred thousand. 2022 Annual Report 33 Table of Contents Part II Market Environment While equity markets were positive in the fourth quarter of 2022, with the S&P 500 Index (" S&P ") and Dow Jones Industrial Average both registering gains, both indexes declined for the full year ended December 31, 2022. The S&P declined 18.1% for the full year, while the Nasdaq declined by 33.1% and was down 8.7% in December. Inflation remains the dominant issue for U.S. markets, fueling consumer concerns of a potential recession. While the U.S. consumer has been largely resilient so far, higher interest rates have weighed on home building, trade and business investments. Despite signs that the labor market and inflation are easing, the Federal Reserve has maintained its aggressive stance on monetary policy. At its December meeting, the Federal Reserve increased interest rates and indicated that, while future rate increases are likely to be less severe, they continue to be needed. In the U.K., the new prime minister reversed the tax cuts introduced by his predecessor and added some tax increases. These actions calmed the market and reduced the pressure on mortgage rates. However, monetary tightening, steep energy prices and supply-side constraints from Brexit create a challenging outlook for consumers. In China, key watch-points include the property market and overall growth in the economy. The Chinese government has announced new support measures, but it is unclear whether these measures will be sufficient to re-create historical growth patterns. 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 Life Insurance Company, a subsidiary of EQH (" Equitable Financial "), has agreed to provide $10 billion in permanent capital 2 to build out AB's private illiquid offerings, including private alternatives and private placements. Deployment of this capital commitment is more than 50% completed and is expected to continue over approximately the next two years. We expect this anticipated capital from Equitable Financial will continue to 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. For example, included in this $10 billion commitment by EQH is $750 million in capital to be deployed through AB CarVal. 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 2022 we had 1,079 employees in Nashville. We expect to reach a total of 1,250 employees in Nashville by the end of 2024. 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 2022, we incurred $120 million of cumulative transition costs compared to $132 million of cumulative savings. In addition, we incurred $24 million of transition costs for the twelve months ended December 31, 2022, compared to $43 million of expense savings, resulting in an overall net savings of $19 million for the period. In 2022, our net income per unit (" EPU ") increased $0.07 as a result of our relocation strategy, which compares to the $0.06 EPU increase that occurred in 2021. We also expect to achieve EPU accretion in each future year. 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. 34 AllianceBernstein 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. 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 2022 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 2022 2021 2020 2022-21 2021-20 (in thousands, except per unit amounts) Net income attributable to AB Unitholders $ 831,813 $ 1,148,623 $ 865,952 (27.6) % 32.6 % Weighted average equity ownership interest 36.7 % 36.2 % 35.6 % Equity in net income attributable to AB Unitholders $ 305,504 $ 416,326 $ 308,404 (26.6) 35.0 Income taxes 31,339 30,483 29,024 2.8 5.0 Net income of AB Holding $ 274,165 $ 385,843 $ 279,380 (28.9) 38.1 Diluted net income per AB Holding Unit $ 2.69 $ 3.88 $ 2.88 (30.7) 34.7 Distributions per AB Holding Unit (1) $ 2.95 $ 3.90 $ 2.91 (24.4) 34.0 (1) Distributions reflect the impact of AB’s non-GAAP adjustments. AB Holding had net income of $274.2 million in 2022 compared to $385.8 million in 2021, reflecting lower net income attributable to AB Unitholders, partially offset by higher weighted average equity ownership interest. 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'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 10.3% in 2022, 7.3% in 2021 and 9.4% in 2020. 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 . 2022 Annual Report 35 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 2022 2021 2020 (in thousands, except per unit amounts) AB non-GAAP adjustments, before taxes $ 75,745 $ 2,959 $ 6,393 AB Income tax (expense) benefit on non-GAAP adjustments (6,395) 71 (523) AB non-GAAP adjustments, after taxes 69,350 3,030 5,870 AB Holding’s weighted average equity ownership interest in AB 36.7 % 36.2 % 35.6 % Impact on AB Holding’s net income of AB non-GAAP adjustments $ 25,468 $ 1,098 $ 2,090 Net income - diluted, GAAP basis $ 274,167 $ 385,873 $ 279,436 Impact on AB Holding’s net income of AB non-GAAP adjustments 25,468 1,098 2,090 Adjusted net income - diluted $ 299,635 $ 386,971 $ 281,526 Diluted net income per AB Holding Unit, GAAP basis $ 2.69 $ 3.88 $ 2.88 Impact of AB non-GAAP adjustments 0.25 0.01 0.03 Adjusted diluted net income per AB Holding Unit $ 2.94 $ 3.89 $ 2.91 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, 2022, net cash provided by operating activities was $362.6 million, compared to $355.1 million during the corresponding 2021 period. The increase primarily resulted from higher cash distributions received from AB of $9.3 million. 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 years ended December 31, 2022, 2021 and 2020, net cash used in investing activities was $1.8 million, $3.4 million and $0.1 million, respectively, reflecting investments in AB with proceeds from exercises of compensatory options to buy AB Holding Units and capital contributions to AB. During the year ended December 31, 2022, net cash used in financing activities was $360.8 million, compared to $351.7 million during the corresponding 2021 period. The increase was due to cash distributions to Unitholders of $3.5 million and proceeds from exercise of compensatory options to buy AB Holding Units of $3.2 million, offset by lower capital contributions from AB of $2.3 million. 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. 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. 36 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 2022 2021 2020 2022-21 2021-20 (in billions) Institutions $ 297.3 $ 337.1 $ 315.6 (11.8 %) 6.8 % Retail 242.9 319.9 265.3 (24.1) 20.6 Private Wealth Management 106.2 121.6 105.0 (12.6) 15.8 Total $ 646.4 $ 778.6 $ 685.9 (17.0) 13.5 Assets under management by investment service are as follows: As of December 31 % Change 2022 2021 2020 2022-21 2021-20 (in billions) Equity Actively Managed $ 217.9 $ 287.6 $ 217.8 (24.2 %) 32.1 % Passively Managed (1) 53.8 71.6 64.5 (24.8) 10.9 Total Equity 271.7 359.2 282.3 (24.3) 27.2 Fixed Income Actively Managed Taxable 190.3 246.3 263.2 (22.8) (6.4) Tax–exempt 52.5 57.1 50.3 (7.9) 13.6 Total 242.8 303.4 313.5 (20.0) (3.2) Passively Managed (1) 9.4 13.2 8.5 (28.9) 55.3 Total Fixed Income 252.2 316.6 322.0 (20.3) (1.7) Alternatives/Multi-Asset Solutions (2) Actively Managed 115.8 97.3 79.1 19.1 23.0 Passively Managed (1) 6.7 5.5 2.5 21.5 116.6 Total Alternatives/Multi-Asset Solutions 122.5 102.8 81.6 19.2 25.9 Total $ 646.4 $ 778.6 $ 685.9 (17.0 %) 13.5 % (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. 2022 Annual Report 37 Table of Contents Part II Changes in assets under management during 2022 and 2021 are as follows: Distribution Channel Institutions Retail Private Wealth Management Total (in billions) Balance as of December 31, 2021 $ 337.1 $ 319.9 $ 121.6 $ 778.6 Long-term flows: Sales/new accounts 32.2 65.9 17.5 115.6 Redemptions/terminations (13.3) (66.3) (15.8) (95.4) Cash flow/unreinvested dividends (12.6) (11.2) — (23.8) Net long-term inflows (outflows) (1) 6.3 (11.6) 1.7 (3.6) Adjustments (2) (0.4) — — (0.4) Acquisition (3) 12.2 — — 12.2 Transfers (0.1) 0.1 — — Market depreciation (57.8) (65.5) (17.1) (140.4) Net change (39.8) (77.0) (15.4) (132.2) Balance as of December 31, 2022 $ 297.3 $ 242.9 $ 106.2 $ 646.4 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 (1) Net flows include $4.5 billion and $1.3 billion of AXA redemptions for 2022 and 2021, respectively. (2) Approximately $0.4 billion of Institutional AUM was removed from our total assets under management during the second quarter of 2022 due to a change in the fee structure. (3) The CarVal acquisition added approximately $12.2 billion of Institutional AUM in the third quarter of 2022. 38 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, 2021 $ 287.6 $ 71.6 $ 246.3 $ 57.1 $ 13.2 $ 102.8 $ 778.6 Long-term flows: Sales/new accounts 46.0 1.8 25.5 16.0 (0.1) 26.4 115.6 Redemptions/terminations (39.0) (3.1) (32.6) (15.0) (1.5) (4.2) (95.4) Cash flow/unreinvested dividends (9.7) (4.0) (10.8) (0.4) 0.3 0.8 (23.8) Net long-term (outflows) inflows (3) (2.7) (5.3) (17.9) 0.6 (1.3) 23.0 (3.6) Adjustments (4) — — — — — (0.4) (0.4) Acquisition (5) — — — — — 12.2 12.2 Market (depreciation) (67.0) (12.5) (38.1) (5.2) (2.5) (15.1) (140.4) Net change (69.7) (17.8) (56.0) (4.6) (3.8) 19.7 (132.2) Balance as of December 31, 2022 $ 217.9 $ 53.8 $ 190.3 $ 52.5 $ 9.4 $ 122.5 $ 646.4 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 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. (3) Net flows include $4.5 billion and $1.3 billion of AXA redemptions for 2022 and 2021, respectively. (4) Approximately $0.4 billion of Institutional AUM was removed from our total assets under management during the second quarter of 2022 due to a change in the fee structure. (5) The CarVal acquisition added approximately $12.2 billion of Institutional AUM in the third quarter of 2022. 2022 Annual Report 39 Table of Contents Part II Net long-term (outflows) inflows for actively managed investment services as compared to passively managed investment services during 2022 and 2021 are as follows: Years Ended December 31 2022 2021 (in billions) Actively Managed Equity $ (2.7) $ 21.9 Fixed Income (17.3) (3.9) Alternatives/Multi- Asset Solutions 20.9 8.3 Total 0.9 26.3 Passively Managed Equity (5.3) (7.5) Fixed Income (1.3) 5.0 Alternatives/Multi- Asset Solutions 2.1 2.3 Total (4.5) (0.2) Total net long-term (outflows) inflows $ (3.6) $ 26.1 Average assets under management by distribution channel and investment service are as follows: Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in billions) Distribution Channel: Institutions $ 308.4 $ 325.7 $ 285.9 (5.3 %) 13.9 % Retail 267.8 291.0 236.5 (8.0) 23.0 Private Wealth Management 110.3 114.1 97.1 (3.3) 17.5 Total $ 686.5 $ 730.8 $ 619.5 (6.1) 18.0 Investment Service: Equity Actively Managed $ 239.7 $ 252.2 $ 179.8 (4.9) 40.2 Equity Passively Managed (1) 60.4 68.7 57.1 (12.1) 20.5 Fixed Income Actively Managed – Taxable 210.0 253.1 254.4 (17.1) (0.5) Fixed Income Actively Managed – Tax-exempt 54.1 53.8 47.9 0.6 12.3 Fixed Income Passively Managed (1) 11.5 9.6 9.4 20.2 1.4 Alternatives/Multi-Asset Solutions (2) 110.8 93.4 70.9 18.6 31.7 Total $ 686.5 $ 730.8 $ 619.5 (6.1) 18.0 (1) Includes index and enhanced index services. (2) Includes certain multi-asset solutions and services not included in equity or fixed income services. 40 AllianceBernstein Table of Contents Part II During 2022, our Institutional channel average AUM of $308.4 billion decreased $17.3 billion, or 5.3%, compared to 2021, primarily due to this AUM decreasing $39.8 billion, or 11.8%, to $297.3 billion from December 31, 2021. The $39.8 billion decrease in AUM resulted primarily from market depreciation of $57.8 billion, partially offset by an addition of $12.2 billion due to the acquisition of CarVal and net inflows of $6.3 billion. 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 during 2021. The $21.5 billion increase in AUM resulted primarily from market appreciation of $19.4 billion and net inflows of $2.3 billion. During 2022, our Retail channel average AUM of $267.8 billion decreased $23.2 billion, or 8.0%, compared to 2021, primarily due to this AUM decreasing $77.0 billion, or 24.1%, to $242.9 billion from December 31, 2021. The $77.0 billion decrease in AUM resulted primarily from market depreciation of $65.5 billion and net outflows of $11.6 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 during 2021. The $54.6 billion increase in AUM resulted primarily from market appreciation of $33.6 billion and net inflows of $20.8 billion. During 2022, our Private Wealth Management channel average AUM of $110.3 billion decreased $3.8 billion, or 3.3%, compared to 2021, primarily due to this AUM decreasing $15.4 billion, or 12.6%, to $106.2 billion from December 31, 2021. The $15.4 billion decrease in AUM resulted from market depreciation of $17.1 billion, offset by net inflows of $1.7 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 during 2021. The $16.6 billion increase in AUM resulted primarily from market appreciation of $13.6 billion and net inflows of $3.0 billion. Absolute investment composite returns, gross of fees, and relative performance as of December 31, 2022 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 (11.1%) (1.2%) 1.3% Relative return (vs. Bloomberg Barclays Global High Yield Index - Hedged) (0.1) — 0.1 Global Plus - Hedged (fixed income) Absolute return (11.6) (2.3) 0.5 Relative return (vs. Bloomberg Barclays Global Aggregate Index - Hedged) (0.4) 0.3 0.2 Intermediate Municipal Bonds (fixed income) Absolute return (5.2) 0.2 1.6 Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg) 0.2 0.7 0.7 U.S. Strategic Core Plus (fixed income) Absolute return (13.3) (2.3) 0.4 Relative return (vs. Bloomberg Barclays U.S. Aggregate Index) (0.3) 0.4 0.4 Emerging Market Debt (fixed income) Absolute return (18.4) (4.7) (1.4) Relative return (vs. JPM EMBI Global/JPM EMBI) (1.9) (0.2) (0.4) Sustainable Global Thematic Absolute return (26.5) 8.6 8.9 Relative return (vs. MSCI ACWI Index) (8.1) 4.6 3.7 2022 Annual Report 41 Table of Contents Part II 1-Year 3-Year (1) 5-Year (1) International Strategic Core Equity Absolute return (13.9) 0.7 2.3 Relative return (vs. MSCI EAFE Index) 0.6 (0.2) 0.8 U.S. Small & Mid Cap Value Absolute return (15.2) 6.7 4.8 Relative return (vs. Russell 2500 Value Index) (2.1) 1.5 — U.S. Strategic Value Absolute return (6.1) 7.0 5.0 Relative return (vs. Russell 1000 Value Index) 1.4 1.0 (1.6) U.S. Small Cap Growth Absolute return (38.4) 2.0 7.8 Relative return (vs. Russell 2000 Growth Index) (12.0) 1.3 4.3 U.S. Large Cap Growth Absolute return (28.3) 7.9 11.8 Relative return (vs. Russell 1000 Growth Index) 0.8 0.1 0.8 U.S. Small & Mid Cap Growth Absolute return (35.5) 3.6 7.1 Relative return (vs. Russell 2500 Growth Index) (9.3) 0.7 1.2 Concentrated U.S. Growth Absolute return (23.3) 7.3 12.2 Relative return (vs. S&P 500 Index) (5.2) (0.3) 2.8 Select U.S. Equity Absolute return (13.0) 10.0 10.7 Relative return (vs. S&P 500 Index) 5.1 2.3 1.3 Strategic Equities Absolute return (19.8) 5.9 7.5 Relative return (vs. Russell 3000 Index) (0.6) (1.2) (1.2) Global Core Equity Absolute return (19.5) 2.2 5.6 Relative return (vs. MSCI ACWI Index) (1.2) (1.8) 0.4 U.S. Strategic Core Equity Absolute return (9.4) 7.1 9.8 Relative return (vs. S&P 500 Index) 8.7 (0.6) 0.4 Select U.S. Equity Long/Short Absolute return (8.6) 6.8 7.6 Relative return (vs. S&P 500 Index) 9.5 (0.9) (1.8) Global Strategic Core Equity Absolute return (10.7) 5.0 7.3 Relative return (vs. S&P 500 Index) 7.5 — 1.2 (1) Reflects annualized returns. 42 AllianceBernstein Table of Contents Part II Consolidated Results of Operations Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in thousands, except per unit amounts) Net revenues $ 4,054,290 $ 4,441,602 $ 3,708,536 (8.7) % 19.8 % Expenses 3,239,194 3,225,140 2,801,100 0.4 15.1 Operating income 815,096 1,216,462 907,436 (33.0) 34.1 Income taxes 39,639 62,728 45,653 (36.8) 37.4 Net income 775,457 1,153,734 861,783 (32.8) 33.9 Net (loss) income of consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169) n/m n/m Net income attributable to AB Unitholders $ 831,813 $ 1,148,623 $ 865,952 (27.6) 32.6 Diluted net income per AB Unit $ 3.01 $ 4.18 $ 3.19 (28.0) 31.0 Distributions per AB Unit $ 3.26 $ 4.19 $ 3.20 (22.2) 30.9 Operating margin (1) 21.5 % 27.3 % 24.6 % (1) Operating income excluding net (loss) income attributable to non-controlling interests as a percentage of net revenues. Net income attributable to AB Unitholders for the year ended December 31, 2022 decreased $316.8 million from the year ended December 31, 2021. The decrease primarily is due to (in millions): Lower base advisory fees $ (123.6) Higher investment losses (101.8) Lower performance-based fees (99.9) Higher general and administrative expenses (86.0) Lower distribution revenues (45.0) Lower Bernstein Research Services revenue (35.7) Lower promotion and servicing expenses 60.1 Higher net loss of consolidated entities attributable to non-controlling interest 61.5 Lower employee compensation and benefits 49.4 Other 4.2 $ (316.8) 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 was 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 2022 Annual Report 43 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 2022. 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. 44 AllianceBernstein Table of Contents Part II Years Ended December 31 2022 2021 2020 (in thousands) Net revenues, US GAAP basis $ 4,054,290 $ 4,441,602 $ 3,708,536 Adjustments: Distribution-related adjustments: Distribution revenues (607,195) (652,240) (529,781) Investment advisory services fees (57,139) (90,242) (66,858) Pass-through adjustments: Investment advisory services fees (65,116) (40,628) (18,279) Other revenues (38,959) (37,209) (39,333) Impact of consolidated company-sponsored funds 57,436 (6,933) 954 Incentive compensation-related items (7,083) (6,694) (6,772) Write-down of investment — 1,880 859 Adjusted net revenues $ 3,336,234 $ 3,609,536 $ 3,049,326 Operating income, US GAAP basis $ 815,096 $ 1,216,462 $ 907,436 Adjustments: Real estate (825) (3,162) 2,880 Incentive compensation-related items 3,461 687 (83) EQH award compensation 606 940 802 Write-down of investment — 1,880 859 Acquisition-related expenses 72,503 2,614 1,935 Sub-total of non-GAAP adjustments 75,745 2,959 6,393 Less: Net (loss) income of consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169) Adjusted operating income 947,197 1,214,310 917,998 Adjusted income taxes 46,034 62,658 46,176 Adjusted net income $ 901,163 $ 1,151,652 $ 871,822 Diluted net income per AB Unit, GAAP basis $ 3.01 $ 4.18 $ 3.19 Impact of non-GAAP adjustments 0.25 0.02 0.02 Adjusted diluted net income per AB Unit $ 3.26 $ 4.20 $ 3.21 Operating margin, GAAP basis 21.5% 27.3% 24.6% Impact of non-GAAP adjustments 6.9 6.3 5.5 Adjusted operating margin 28.4% 33.6% 30.1% Adjusted operating income for the year ended December 31, 2022 decreased $267.1 million, or 22.0%, from the year ended December 31, 2021, primarily due to lower performance-based fees of $130.9 million, lower investment advisory base fees of $99.1 million, lower Bernstein Research Services revenue of $35.7 million and higher general and administrative expenses of $32.3 million, partially offset by lower employee compensation and benefits expense of $58.4 million. 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. 2022 Annual Report 45 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. Also, we adjust for certain performance-based fees passed through to our investment advisors. These fees do not affect operating income, as such, we exclude these fees from adjusted net revenues. We adjust for the revenue impact of consolidating company-sponsored investment funds by eliminating the consolidated company-sponsored investment funds' revenues and including AB's fees from such consolidated company-sponsored investment funds and AB's investment gains and losses on its investments in such consolidated company-sponsored investment funds that were eliminated in consolidation. Adjusted net revenues exclude investment gains and losses and dividends and interest on employee long-term incentive compensation-related investments. Also, we adjust for certain acquisition-related pass-through performance-based fees and performance related compensation. 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) the equity compensation paid by EQH to certain AB executives, as discussed below , (4) the write-down of investments ( discussed immediately above ), (5) acquisition-related expenses and (6) 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 Bernstein, our CEO, equity awards in connection with EQH's IPO. Additionally, equity awards were granted to Mr. Bernstein and other AB executives 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. 46 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. Acquisition-related expenses include professional fees and the recording of changes in estimates to contingent payment arrangements associated with our acquisitions. Beginning in the first quarter of 2022, acquisition-related expenses also include certain compensation-related expenses, amortization of intangible assets for contracts acquired and accretion expense with respect to contingent payment arrangements. During 2022 and 2021, these expenses included an intangible asset impairment charge of $5.6 million and $1.0 million, respectively, related to various historical acquisitions. 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. 2022 Annual Report 47 Table of Contents Part II Net Revenues The components of net revenues are as follows: Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in thousands) Investment advisory and services fees: Institutions: Base fees $ 581,987 $ 540,478 $ 458,449 7.7 % 17.9 % Performance-based fees 77,299 45,580 53,351 69.6 (14.6) 659,286 586,058 511,800 12.5 14.5 Retail: Base fees 1,321,645 1,442,178 1,186,560 (8.4) 21.5 Performance-based fees 1,564 50,669 24,412 (96.9) 107.6 1,323,209 1,492,847 1,210,972 (11.4) 23.3 Private Wealth Management: Base fees 922,159 966,749 817,801 (4.6) 18.2 Performance-based fees 66,384 148,870 54,863 (55.4) 171.3 988,543 1,115,619 872,664 (11.4) 27.8 Total: Base fees 2,825,791 2,949,405 2,462,810 (4.2) 19.8 Performance-based fees 145,247 245,119 132,626 (40.7) 84.8 2,971,038 3,194,524 2,595,436 (7.0) 23.1 Bernstein Research Services 416,273 452,017 459,744 (7.9) (1.7) Distribution revenues 607,195 652,240 529,781 (6.9) 23.1 Dividend and interest income 123,091 38,734 50,923 n/m (23.9) Investment (losses) gains (102,413) (636) (16,401) n/m (96.1) Other revenues 105,544 108,409 104,703 (2.6) 3.5 Total revenues 4,120,728 4,445,288 3,724,186 (7.3) 19.4 Less: Interest expense 66,438 3,686 15,650 n/m (76.4) Net revenues $ 4,054,290 $ 4,441,602 $ 3,708,536 (8.7) 19.8 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 50 basis points for passively managed services. Average basis points realized for other services could range from 3 basis points for certain Institutional third party managed services to over 150 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 48 AllianceBernstein Table of Contents Part II 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 is overseen by the Valuation Committee and is responsible for managing 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 10.6%, 9.2% and 0.5% of the assets we manage for institutional clients, private wealth clients and retail clients, respectively (in total, 6.6% of our AUM). Our investment advisory and services fees decreased by $223.5 million, or 7.0%, in 2022, due to a $123.6 million, or 4.2%, decrease in base fees and a $99.9 million decrease in performance-based fees. The decrease in base fees is primarily due to a 6.1% decrease in average AUM, partially offset by a slight increase in our portfolio fee rate. 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 was primarily due to a 18.0% increase in average AUM, as well as a slight increase in our portfolio fee rate. Performance-based fees decreased $99.9 million, or 40.7%, in 2022, primarily due to lower performance-based fees earned on Financial Services Opportunities fund, U.S. Select Equity fund, Arya Partners fund and Private Credit Services fund, partially offset by higher U.S. Real Estate Funds fees. Performance-based fees increased $112.5 million, or 84.8%, in 2021, primarily due to higher performance-based 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. Institutional investment advisory and services fees increased $73.2 million, or 12.5%, in 2022, due to an increase in base fees of $41.5 million, or 7.7%, and an increase in performance-based fees of $31.7 million. The increase in base fees is primarily due to a higher portfolio fee rate, partially offset by a 5.3% decrease in average AUM. 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 in performance-based fees of $7.8 million. The increase in base fees was primarily due to a 13.9% increase in average AUM, an increase in portfolio fee rate and a shift in product mix from fixed income to active equities and alternatives, which generally earn higher fees. Retail investment advisory and services fees decreased $169.6 million, or 11.4%, in 2022, due to a decrease in base fees of $120.5 million, or 8.4%, and a $49.1 million decrease in performance-based fees. The decrease in base fees is primarily due to a 8.0% decrease in average AUM. 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. Private Wealth Management investment advisory and services fees decreased by $127.1 million, or 11.4%, in 2022, due to a decrease in base fees of $44.6 million, or 4.6%, and an $82.5 million decrease in performance-based fees. The decrease in base fees is primarily due to a 3.3% decrease in average AUM. Private Wealth Management investment advisory and services fees increased $243.0 million, or 27.8%, in 2021, due to an 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. 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. In the fourth quarter of 2022, AB and SocGen, a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As a result, the BRS business has been classified as held for sale. For further discussion, see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 . 2022 Annual Report 49 Table of Contents Part II Revenues from Bernstein Research Services decreased $35.7 million, or 7.9%, in 2022. The decrease was driven by significantly lower customer trading activity in Europe and Asia due to local market conditions. 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 Research products. 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 decreased $45.0 million, or 6.9%, in 2022, primarily due to the corresponding average AUM of these mutual funds decreasing 12.4%, partially offset by a shift in product mix from mutual funds with lower distribution rates to mutual funds with higher distribution rates. 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%. 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 increased $84.4 million in 2022, primarily due to higher interest earned on customer margin balances, higher interest earned on U.S. Treasury Bills as well as higher dividend and interest income in our consolidated company-sponsored investment funds. Interest expense increased $62.8 million in 2022, due to higher interest paid 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. 50 AllianceBernstein 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 2022 2021 2020 (in thousands) Long-term incentive compensation-related investments: Realized gains $ 1,345 $ 2,213 $ 2,655 Unrealized (losses) gains (10,626) 2,446 2,914 Investments held by consolidated company-sponsored investment funds: Realized (losses) gains (46,293) (2,341) 3,357 Unrealized (losses) (73,194) (1,882) (854) Seed capital investments: Realized gains (losses) Seed capital and other 17,272 20,263 25,002 Derivatives 41,236 (22,313) (30,343) Unrealized (losses) gains Seed capital and other (31,261) (6,907) (12,387) Derivatives (177) 8,992 (5,220) Brokerage-related investments: Realized (losses) (1,384) (829) (1,188) Unrealized gains (losses) 669 (278) (337) $ (102,413) $ (636) $ (16,401) 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 decreased $2.9 million, or 2.6%, in 2022, primarily due to lower shareholder servicing fees. Other revenues increased $3.7 million, or 3.5%, in 2021, primarily due to higher shareholder servicing fees, partially offset by lower brokerage income. 2022 Annual Report 51 Table of Contents Part II Expenses The components of expenses are as follows: Years Ended December 31 % Change 2022 2021 2020 2022-21 2021-20 (in thousands) Employee compensation and benefits 1,666,636 $ 1,716,013 $ 1,494,198 (2.9) % 14.8 % Promotion and servicing: Distribution-related payments 629,572 708,117 569,283 (11.1) 24.4 Amortization of deferred sales commissions 34,762 34,364 27,355 1.2 25.6 Trade execution, marketing, T&E and other 215,556 197,486 189,787 9.2 4.1 879,890 939,967 786,425 (6.4) 19.5 General and administrative 641,635 555,608 491,070 15.5 13.1 Contingent payment arrangements 6,563 2,710 1,855 142.2 46.1 Interest on borrowings 17,906 5,145 6,180 n/a (16.7) Amortization of intangible assets 26,564 5,697 21,372 n/a (73.3) Total $ 3,239,194 $ 3,225,140 $ 2,801,100 0.4 15.1 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 41.1%, 38.6% and 40.3% for the years ended December 31, 2022, 2021 and 2020, 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, together with the Compensation and Workplace Practices Committee of the Board of Directors of AllianceBernstein Corporation (“ Compensation Committee ”), continue to believe that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation and benefits expense to adjusted net revenues. Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented as a non-GAAP measure ( discussed earlier in this Item 7 ). Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such as recruitment, training, temporary help and meals (which were 1.1%, 0.9% and 0.9% of adjusted net revenues for 2022, 2021 and 2020, 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 executives 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, excluding the impact of performance-based fees, generally should not exceed 50% of our adjusted net revenues in any year, except in unexpected or unusual circumstances. Our ratios of adjusted compensation expense as a percentage of adjusted net revenues were 48.4%, 46.5% and 47.9%, respectively, for the years ended December 31, 2022, 2021 and 2020. In 2022, employee compensation and benefits expense decreased $49.4 million, or 2.9%, primarily due to lower incentive compensation of $107.7 million, partially offset by higher base compensation of $39.8 million, higher commissions of $12.7 million and higher other employment costs of $5.3 million. 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, higher commissions of $25.0 million, higher fringes of $20.1 million and higher other employment costs of $3.3 million. 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. 52 AllianceBernstein Table of Contents Part II Promotion and servicing expenses decreased $60.1 million, or 6.4%, in 2022. The decrease was primarily due to lower distribution-related payments of $78.5 million, lower transfer fees of $4.9 million and lower trade execution and clearance expenses of $3.1 million, partially offset by higher travel and entertainment expenses of $15.4 million and higher firm meeting expenses of $8.8 million. Promotion and servicing expenses increased $153.5 million, or 19.5%, in 2021. The increase primarily was 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. 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 15.8%, 12.5% and 13.2% for the years ended December 31, 2022, 2021 and 2020, respectively. General and administrative expenses increased $86.0 million, or 15.5%, in 2022. The increase was primarily due to higher professional fees of $27.3 million, higher portfolio services fees of $21.3 million, higher technology fees of $19.1 million, a valuation adjustment of $7.4 million associated with the classification of BRS as held for sale, higher office-related expenses of $6.9 million and a $5.6 million impairment of certain acquisition related intangible assets. General and administrative expenses increased $64.5 million, or 13.1%, in 2021. The increase was primarily due to higher portfolio services 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. Contingent Payment Arrangements Contingent payment arrangements reflect changes in estimates of contingent payment liabilities associated with acquisitions in current and previous periods, as well as accretion expense of these liabilities. In 2022, we recognized $6.6 million in accretion expense related to our contingent considerations payable. 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. Interest on Borrowings Interest expense increased $12.8 million in 2022, reflecting higher interest rates on borrowings and higher weighted average borrowings. Average daily borrowings for the EQH facilities and commercial paper were $845.5 million at a weighted average interest rate of 1.7% during 2022 compared to $561.6 million and 0.2% during 2021. 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. 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. On July 1, 2022, AB acquired CarVal, which resulted in recording of $303.0 million of finite-lived intangible assets primarily relating to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years ( see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 ). Amortization of intangible assets increased $20.9 million in 2022. The increase was primarily due to the acquired intangible assets associated with the CarVal acquisition. Amortization of intangible assets decreased $15.7 million, or 73.3%, in 2021. The decrease in the prior year was primarily due to the full amortization of intangible assets related to the Bernstein acquisition. 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 decreased $23.1 million, or 36.8%, in 2022 compared to 2021. This decrease is due to lower pre-tax book income and one-time discrete items which resulted in a lower effective tax rate in 2022 of 4.9% compared to 5.2% in 2021. Income tax expense decreased $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. 2022 Annual Report 53 Table of Contents Part II Net (Loss) Income of Consolidated Entities Attributable to Non-Controlling Interests Net (loss) income 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 2022, we had $56.4 million of net loss of consolidated entities attributable to non-controlling interests, primarily due to losses on investments held by 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. 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 to support 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 2022, net cash provided by operating activities was $1.1 billion, compared to $1.3 billion during 2021. The change primarily was due to lower earnings of $265.1 million (after non-cash reconciling items), a decrease in accrued compensation of $200.8 million and a decrease in broker-dealer related payables (net of receivable and segregated U.S. Treasury Bills activity) of $169.2 million, partially offset by net activity of our consolidated company-sponsored investment funds of $252.0 million and an increase in fees receivable of $193.3 million. 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 2022, net cash used in investing activities was $22.0 million, compared to $65.7 million during 2021. The change is primarily due the acquisition of CarVal, net cash acquired of $40.3 million in 2022. 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 2022, net cash used in financing activities was $1.1 billion, compared to $0.9 billion during 2021. The change reflects lower net purchases of non-controlling interests of consolidated company-sponsored investment funds in 2022 of $309.9 million, repayment of CarVal debt subsequent to acquisition of $42.7 million and an decrease in overdrafts payable of $41.6 million, partially offset by higher net borrowings of debt of $155.0 million and a decrease in the net purchases of AB Holding Units to fund long-term incentive compensation plans of $51.3 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. As of December 31, 2022, AB had $1.1 billion of cash and cash equivalents (excluding cash and cash equivalents of consolidated company-sponsored investment funds and cash held for sale), 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 $497.0 million. 54 AllianceBernstein Table of Contents Part II 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. SCB LLC currently has five uncommitted lines of credit with five financial institutions. Four of these lines of credit permit us to borrow up to an aggregate of approximately $315.0 million, with AB named as an additional borrower, while the other line has no stated limit. 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 $263.4 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 $1.9 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, 2022, 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, 2022, we had funded $21.6 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 as of December 31, 2022 totaled $399.3 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 $49.2 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 $17.5 million in each of the next four years. We do not currently anticipate that we will contribute to the Retirement Plan during 2023. 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 as of December 31, 2022 totaled $11.7 million and is recorded to income tax payable on our consolidated statement of financial condition. See Note 21 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. 2022 Annual Report 55 Table of Contents Part II 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 Our acquisitions are accounted for under the acquisition method of accounting, where the cost of the acquisition is 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, results in the recognition of goodwill. On July 1, 2022, AB Holding acquired a 100% ownership interest in CarVal Investors L.P. (“ CarVal ”). Immediately following its acquisition of CarVal (the " CarVal acquisition "), AB Holding contributed 100% of its equity interests in CarVal to AB in exchange for AB Units (s ee Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8) . On November 22, 2022, AB and SocGen, a leading Eu ropean bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As such, the BRS business has been classified as held for sale and $159.8 million of goodwill recorded on the consolidated statement of financial condition has been allocated to the held for sale disposal group. As AB is a single reporting unit, we have allocated goodwill to the disposal group based on the relative fair values of (1) the disposal group and (2) the portion of the reporting unit that will be retained. For further discussion, see Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 . As of December 31, 2022, we had goodwill of $3.6 billion on the consolidated statement of financial condition, which included $666.1 million as a result of the CarVal acquisition in the third quarter of 2022, $2.8 billion as a result of the Sanford C. Bernstein Inc. (“ Bernstein ”) acquisition in 2000 and $291.9 million in regard to various smaller acquisitions. Approximately $159.8 million of goodwill has been classified as assets held for sale 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 or if certain events or changes in circumstances occur and trigger an interim impairment test. The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as, but not limited to significant transactions including acquisitions or divestitures and significant declines in AUM, revenues, earnings or the price of an AB Holding 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. For our annual impairment test, we utilize 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). The announcement of the joint venture between AB and SocGen and classification of the BRS business as held for sale during the fourth quarter of 2022 was a triggering event requiring an interim impairment test; as such, we tested our goodwill as of December 31, 2022. The impairment test indicated that goodwill was not 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. 56 AllianceBernstein Table of Contents Part II Business Combinations We account for business combinations using the acquisition method of accounting whereby the identifiable assets and liabilities of the acquired business, as well as any noncontrolling interest in the acquired business, are recorded at their estimated fair values as of the date that we obtain control of the acquired business. Any purchase consideration in excess of the estimated fair values of the net assets acquired is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Often, as part of the business combination, intangible assets are recorded based on their estimated fair value at the time of acquisition and primarily relate to acquired investment management contracts. 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. 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 a discounted basis on our consolidated statement 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. Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets and contingent liabilities, we typically use a method that is a form of the income approach, whereby a forecast of future cash flows attributable to the asset are discounted to present value using a risk-adjusted discount rate. Similarly for contingent liabilities, we develop a forecast of future cash flows attributable to the performance objectives that are then discounted to present value using a risk-adjusted discount rate. Some of the more significant estimates and assumptions inherent in the income approach include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows. See Note 24 Acquisitions and Divestitures to our consolidated financial statements in Item 8 . Assets and Liabilities Held for Sale The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment of held for sale at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary. Assets and liabilities held for sale are presented separately within the consolidated statements of financial condition with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale. For each reporting period the disposal group remains classified as held for sale, the carrying value of the disposal group is adjusted for subsequent changes in fair value less costs to sell. A loss is recognized for any subsequent decrease in fair value less costs to sell, while a gain is recognized in any subsequent period for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. If, in any period, the carrying value of the disposal group exceeds the estimated fair value less costs to sell, a loss is recognized on sale rather than an impairment loss. 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 . 2022 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, excluding the impact of performance-based fees, generally should not exceed 50% of our adjusted net revenues on an annual basis: 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. • The adverse impact of COVID-19: The aggregate extent to which COVID-19, including its impact on the global economy, affects AB’s business, liquidity, results of operations and financial condition, will depend on future COVID-19 developments that are highly uncertain, including the scope and duration of the disease and any recovery period, the emergence, spread and seriousness of COVID-19 variants, the continuing prevalence of severe, unconstrained and/or escalating rates of infection and hospitalization in various countries and regions, the availability, adoption and efficacy of treatments and vaccines, and future actions taken by governmental authorities, central banks and other parties in response to COVID-19. • The impact of our acquisition of CarVal: The impact of our acquisition of CarVal: These statements concern expected growth, client and stockholder benefits, key assumptions, revenue realization, financial benefits or returns, accretion and integration costs. Actual results may differ materially from future results expressed or implied by our forward-looking statements as a result of similar risks to those that impact our other similar business lines, as well as the risk that we are not able to realize the anticipated benefits of the transaction, including the realization of revenue, accretion, and financial benefits or returns, in full or that we may take longer to realize benefits than expected, due, among other reasons, to the 58 AllianceBernstein Table of Contents Part II challenges of integrating a new business and personnel. The anticipated benefits may also be adversely impacted by the risk that AB Holding units to be issued after the closing are issued at a price below anticipated levels. We caution readers to carefully consider such factors. • 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. 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, 2022, 2021 and 2020. 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. 2022 Annual Report 59 Table of Contents Part II 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, 2022 and 2021. 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 2022 2021 Fair Value Effect of +100 Basis Point Change Fair Value Effect of +100 Basis Point Change (in thousands) Fixed Income Investments: Trading $ 93,221 $ (5,789) $100,661 $ (6,976) 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, 2022 and 2021. 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 2022 2021 Fair Value Effect of -10% Equity Price Change Fair Value Effect of -10% Equity Price Change (in thousands) Equity Investments: Trading $ 65,846 $ (6,585) $ 85,704 $ (8,570) Other investments $ 58,451 $ (5,845) $ 87,053 $ (8,705) 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, 2022 and 2021, 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, 2022, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 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, 2022, 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. 2022 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. Acquisition of CarVal Investors L.P. - Fair Value of Finite-Lived Intangible Assets and Contingent Consideration Payable As described in Note 8 to the financial statements, on July 1, 2022, the Company acquired a 100% ownership interest in CarVal Investors L.P. (CarVal) for total purchase consideration of $818.1 million, which resulted in management recording $303.0 million of finite-lived intangible assets primarily related to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years and $228.9 million of contingent consideration payable. Immediately following the acquisition of CarVal by the Company, the Company contributed 100% of its equity interests in CarVal to AllianceBernstein L.P. (AB) in exchange for AB units. Fair value of the acquired finite-lived intangible assets was based on a forecast of future cash flows attributable to the assets that are discounted to present value using a risk-adjusted discount rate. Fair value of the contingent consideration payable was based on a forecast of future cash flows attributable to the performance objectives that are discounted to present value using a risk-adjusted discount rate. The principal considerations for our determination that performing procedures relating to the fair value of the finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal is a critical audit matter are the significant judgment by management in developing the estimated fair value of the finite-lived intangible assets and the contingent consideration payable. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows. In addition, the audit effort involved the use of professionals with specialized skill and knowledge. 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 the determination of the fair value of finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal, including controls over the development of the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows. These procedures also included, among others, reading the purchase agreement and testing management’s process for estimating the fair value of the acquired finite-lived intangible assets and contingent consideration payable. Testing management’s process included (i) evaluating the appropriateness of the method used to discount future cash flows to present value, (ii) testing the completeness and accuracy of underlying data used in the method used to discount future cash flows to present value, and (iii) evaluating management’s significant assumptions related to the future cash flows and risk-adjusted discount rate. Evaluating the reasonableness of the assumption related to the future cash flows involved considering the historical performance of Carval, the consistency with external market and industry data, and the consistency with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the method used to discount future cash flows to present value and the reasonableness of the risk-adjusted discount rate assumption. /s/ PricewaterhouseCoopers LLP Nashville, Tennessee February 10, 2023 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 2022 2021 (in thousands, except unit amounts) ASSETS Investment in AB $ 2,074,626 $ 1,623,764 Total assets $ 2,074,626 $ 1,623,764 LIABILITIES AND PARTNERS’ CAPITAL Liabilities: Other liabilities $ 1,623 $ 2,140 Total liabilities 1,623 2,140 Commitments and contingencies ( See Note 7 ) Partners’ capital: General Partner: 100,000 general partnership units issued and outstanding 1,355 1,439 Limited partners: 113,701,097 and 99,171,727 limited partnership units issued and outstanding 2,160,207 1,696,199 AB Holding Units held by AB to fund long-term incentive compensation plans ( 37,551 ) ( 43,309 ) Accumulated other comprehensive loss ( 51,008 ) ( 32,705 ) Total partners’ capital 2,073,003 1,621,624 Total liabilities and partners’ capital $ 2,074,626 $ 1,623,764 See Accompanying Notes to Financial Statements. 2022 Annual Report 63 Table of Contents Part II AllianceBernstein Holding L.P. Statements of Income Years Ended December 31 2022 2021 2020 (in thousands, except per unit amounts) Equity in net income attributable to AB Unitholders $ 305,504 $ 416,326 $ 308,404 Income taxes 31,339 30,483 29,024 Net income $ 274,165 $ 385,843 $ 279,380 Net income per unit: Basic $ 2.69 $ 3.88 $ 2.88 Diluted $ 2.69 $ 3.88 $ 2.88 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 2022 2021 2020 (in thousands) Net income $ 274,165 $ 385,843 $ 279,380 Other comprehensive (loss) income: Foreign currency translation adjustments, before reclassification and tax ( 19,805 ) ( 2,894 ) 8,579 Less: reclassification adjustment for gains (losses) included in net income upon liquidation — 1,613 ( 77 ) Foreign currency translation adjustments, before tax ( 19,805 ) ( 4,507 ) 8,656 Income tax benefit (expense) 249 147 ( 310 ) Foreign currency translation adjustments, net of tax ( 19,556 ) ( 4,360 ) 8,346 Changes in employee benefit related items: Amortization of prior service cost ( 12 ) 7 8 Recognized actuarial gain (loss) 1,293 5,566 ( 1,557 ) Changes in employee benefit related items 1,281 5,573 ( 1,549 ) Income tax (expense) ( 28 ) ( 20 ) ( 67 ) Employee benefit related items, net of tax 1,253 5,553 ( 1,616 ) Other comprehensive (loss) income ( 18,303 ) 1,193 6,730 Comprehensive income $ 255,862 $ 387,036 $ 286,110 See Accompanying Notes to Financial Statements. 2022 Annual Report 65 Table of Contents Part II AllianceBernstein Holding L.P. Statements of Changes in Partners’ Capital Years Ended December 31 2022 2021 2020 (in thousands) General Partner’s Capital Balance, beginning of year $ 1,439 $ 1,410 $ 1,402 Net income 270 387 288 Cash distributions to Unitholders ( 354 ) ( 358 ) ( 280 ) Balance, end of year 1,355 1,439 1,410 Limited Partners’ Capital Balance, beginning of year 1,696,199 1,656,816 1,619,200 Net income 273,895 385,456 279,092 Cash distributions to Unitholders ( 360,670 ) ( 357,097 ) ( 270,601 ) Retirement of AB Holding Units ( 114,794 ) ( 143,460 ) ( 78,388 ) Issuance of AB Holding Units to fund long-term incentive compensation plan awards 76,230 151,082 107,366 Issuance of AB Holding Units to fund CarVal acquisition 589,169 — — Exercise of compensatory options to buy AB Holding Units 178 3,402 147 Balance, end of year 2,160,207 1,696,199 1,656,816 AB Holding Units held by AB to fund long-term incentive compensation plans Balance, beginning of year ( 43,309 ) ( 20,171 ) ( 27,436 ) Change in AB Holding Units held by AB to fund long-term incentive compensation plans 5,758 ( 23,138 ) 7,265 Balance, end of year ( 37,551 ) ( 43,309 ) ( 20,171 ) Accumulated Other Comprehensive (Loss) Balance, beginning of year ( 32,705 ) ( 33,898 ) ( 40,628 ) Foreign currency translation adjustment, net of tax ( 19,556 ) ( 4,360 ) 8,346 Changes in employee benefit related items, net of tax 1,253 5,553 ( 1,616 ) Balance, end of year ( 51,008 ) ( 32,705 ) ( 33,898 ) Total Partners’ Capital $ 2,073,003 $ 1,621,624 $ 1,604,157 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 2022 2021 2020 (in thousands) Cash flows from operating activities: Net income $ 274,165 $ 385,843 $ 279,380 Adjustments to reconcile net income to net cash provided by operating activities: Equity in net income attributable to AB Unitholders ( 305,504 ) ( 416,326 ) ( 308,404 ) Cash distributions received from AB 394,470 385,236 298,919 Changes in assets and liabilities: Decrease (increase) in other assets — 92 ( 31 ) (Decrease) increase in other liabilities ( 517 ) 264 150 Net cash provided by operating activities 362,614 355,109 270,014 Cash flows from investing activities: Acquisition of business, net cash acquired 40,777 — — Contribution of CarVal to AB ( 40,777 ) — — Capital contribution to AB ( 1,590 ) — — Investments in AB with proceeds from exercise of compensatory options to buy AB Holding Units ( 178 ) ( 3,402 ) ( 147 ) Net cash used in investing activities ( 1,768 ) ( 3,402 ) ( 147 ) Cash flows from financing activities: Cash distributions to Unitholders ( 361,024 ) ( 357,455 ) ( 270,881 ) Capital contributions from AB — 2,346 867 Proceeds from exercise of compensatory options to buy AB Holding Units 178 3,402 147 Net cash used in financing activities ( 360,846 ) ( 351,707 ) ( 269,867 ) 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 31,862 30,127 28,906 Non-cash investing activities: Fair value of assets acquired (less cash acquired of $ 40.8 million) $ 1,087,218 $ — $ — Fair value of liabilities assumed 296,750 — — Fair value of non-redeemable non-controlling interest assumed 13,191 — — Fair value of assets contributed to AB (less cash acquired of $ 40.8 million) ( 1,087,218 ) — — Fair value of liabilities contributed to AB ( 296,750 ) — — Fair value of non-redeemable non-controlling interest contributed to AB ( 13,191 ) — — Issuance of AB Holding Units to fund long-term incentive compensation plan awards 76,230 151,082 107,366 Retirement of AB Holding Units ( 114,794 ) ( 143,460 ) ( 78,388 ) 2022 Annual Report 67 Table of Contents Part II Years Ended December 31 2022 2021 2020 (in thousands) Non-cash financing activities: Payables recorded under contingent payment arrangements 228,885 — — Equity consideration issued in connection with acquisition 589,169 — — Payables contributed to and assumed by AB under contingent payment arrangements ( 228,885 ) — — Equity consideration received from AB in connection with acquisition ( 589,169 ) — — See Accompanying Notes to Financial Statements. 68 AllianceBernstein 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 asset management and private wealth management businesses. 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 across global and regional universes, as well as 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; • Actively managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity); • Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address our clients evolving need to invest their capital with purpose while pursuing strong investment returns; • Multi-asset services and solutions, including dynamic asset allocation, customized target-date funds and target-risk funds; and • Some passive management, including index, ESG index and enhanced index strategies. 2022 Annual Report 69 Table of Contents Part II Organization As of December 31, 2022, EQH owns approximately 3.5 % 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. As of December 31, 2022, the ownership structure of AB, expressed as a percentage of general and limited partnership interests, was as follows: EQH and its subsidiaries 59.9 % AB Holding 39.4 Unaffiliated holders 0.7 100.0 % Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 61.3 % economic interest in AB as of December 31, 2022. 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 8, 2023, the General Partner declared a distribution of $ 0.70 per unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2022. 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 16, 2023 to holders of record at the close of business on February 21, 2023. Total cash distributions per Unit paid to Unitholders during 2022, 2021 and 2020 were $ 3.54 , $ 3.58 and $ 2.79 , 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 ”). 70 AllianceBernstein Table of Contents Part II 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. Repurchases of AB Holding Units for the years ended December 31, 2022 and 2021 consisted of the following: Years Ended December 31 2022 2021 (in millions) Total amount of AB Holding Units Purchased (1) 5.2 5.6 Total Cash Paid for AB Holding Units Purchased (1) $ 211.8 $ 262.3 Open Market Purchases of AB Holding Units Purchased (1) 2.3 2.6 Total Cash Paid for Open Market Purchases of AB Holding Units (1) $ 92.7 $ 117.9 (1) Purchased on a trade-date basis. The difference between open-market purchases and units retained reflects the retention 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 2022. 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 2022, AB granted to employees and Eligible Directors 4.7 million restricted AB Holding Units (including 3.8 million granted in December for 2022 year-end awards). 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). AB used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards. During 2022 and 2021, AB Holding issued 5,774 and 0.1 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $ 0.2 million and $ 3.4 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 SEC and did not identify any subsequent events that would have required disclosure in these financial statements. 2022 Annual Report 71 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 2022 2021 2020 (in thousands, except per unit amounts) Net income - basic $ 274,165 $ 385,843 $ 279,380 Additional allocation of equity in net income attributable to AB resulting from assumed dilutive effect of compensatory options 2 30 56 Net income - diluted $ 274,167 $ 385,873 $ 279,436 Weighted average units outstanding - basic 101,763 99,545 96,870 Dilutive effect of compensatory options 1 11 27 Weighted average units outstanding - diluted 101,764 99,556 96,897 Basic net income per unit $ 2.69 $ 3.88 $ 2.88 Diluted net income per unit $ 2.69 $ 3.88 $ 2.88 Years Ended December 31 2022 2021 2020 Anti-dilutive options excluded from diluted net income — — 29,056 4. Investment in AB Changes in AB Holding’s investment in AB for the years ended December 31, 2022 and 2021 are as follows: 2022 2021 (in thousands) Investment in AB as of January 1, $ 1,623,764 $ 1,605,941 Equity in net income attributable to AB Unitholders 305,504 416,326 Changes in accumulated other comprehensive income ( 18,303 ) 1,193 Cash distributions received from AB ( 394,470 ) ( 385,236 ) Additional investments with proceeds from exercises of compensatory options to buy AB Holding Units 178 3,402 Capital contributions to AB 1,590 — Capital contributions from AB — ( 2,346 ) AB Holding Units retired ( 114,794 ) ( 143,460 ) AB Holding Units issued to fund long-term incentive compensation plans 76,230 151,082 AB Holding Units issued to fund CarVal acquisition 589,169 — Change in AB Holding Units held by AB for long-term incentive compensation plans 5,758 ( 23,138 ) Investment in AB as of December 31, $ 2,074,626 $ 1,623,764 72 AllianceBernstein Table of Contents Part II 5. Units Outstanding Changes in AB Holding Units outstanding for the years ended December 31, 2022 and 2021 are as follows: 2022 2021 Outstanding as of January 1, 99,271,727 98,322,942 Options exercised 5,774 143,211 Units issued (1) 17,326,222 3,917,437 Units retired ( 2,802,626 ) ( 3,111,863 ) Outstanding as of December 31, 113,801,097 99,271,727 (1) Includes 15,321,535 Units issued as a result of the CarVal acquisition. 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 2022 2021 2020 (in thousands) UBT statutory rate $ 12,220 4.0 % $ 16,653 4.0 % $ 12,336 4.0 % Federal tax on partnership gross business income 30,676 10.0 29,643 7.1 28,522 9.2 State income taxes 663 0.2 840 0.2 502 0.2 Credit for UBT paid by AB ( 12,220 ) ( 4.0 ) ( 16,653 ) ( 4.0 ) ( 12,336 ) ( 4.0 ) Income tax expense and effective tax rate $ 31,339 10.3 % $ 30,483 7.3 % $ 29,024 9.4 % 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 2022 2021 2020 2022-21 2021-20 (in thousands) Net income attributable to AB Unitholders $ 831,813 $ 1,148,623 $ 865,952 ( 27.6 ) % 32.6 % Multiplied by: weighted average equity ownership interest 36.7 % 36.2 % 35.6 % Equity in net income attributable to AB Unitholders $ 305,504 $ 416,326 $ 308,404 ( 26.6 ) 35.0 AB qualifying revenues $ 2,775,693 $ 2,779,281 $ 2,740,137 ( 0.1 ) 1.4 Multiplied by: weighted average equity ownership interest for calculating tax 31.6 % 30.5 % 30.1 % Multiplied by: federal tax 3.5 % 3.5 % 3.5 % Federal income taxes 30,676 29,643 28,522 State income taxes 663 840 502 Total income taxes $ 31,339 $ 30,483 $ 29,024 2.8 5.0 2022 Annual Report 73 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, 2022 and 2021. 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, 2022, AB Holding is no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2018. 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. On December 14th, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the "Plan" ) filed a class action complaint (the “Complaint” ) in the U.S. District Court for the Southern District of New York against AB, current and former members of the Compensation Committee of the Board of Directors, and the Investment and Administrative Committees under the Plan. Plaintiffs, who seek to represent a class of all participants in the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended (" ERISA ") by including proprietary collective investment trusts as investment options offered under the Plan. The Complaint seeks unspecified damages, disgorgement and other equitable relief. AB is prepared to defend itself vigorously against these claims. While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity. AB may be involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some of which may allege significant damages. It is reasonably possible that AB could incur 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. 8. Acquisition On July 1, 2022, AB Holding acquired a 100 % ownership interest in CarVal Investors L.P. (“ CarVa l”), a global private alternatives investment manager primarily focused on opportunistic and distressed credit, renewable energy, infrastructure, specialty finance and transportation investments that, as of the acquisition date, constituted approximately $ 12.2 billion in AUM. Also on July 1, immediately following the acquisition of CarVal, AB Holding contributed 100 % of its equity interests in CarVal to AB in exchange for AB Units. Post-acquisition, CarVal was rebranded AB CarVal Investors (“ AB CarVal ”). On the acquisition date, AB Holding issued approximately 3.2 million AB Holding Units (with a fair value of $ 132.8 million), with the remaining 12.1 million Units (with a fair value of $ 456.4 million) issued on November 1, 2022. The fair value of the units issued on November 1, 2022 reflects final adjustments to the estimated unit issuance recorded as of acquisition close on July 1, 2022 and as disclosed in the third quarter 2022 Form 10-Q. 74 AllianceBernstein Table of Contents Part II AB received 100 % equity interest in CarVal from AB Holding and issued approximately 15.3 million AB Units (with a fair value of $ 589.2 million). AB also recorded a contingent consideration payable of $ 228.9 million (to be paid predominantly in AB Units) based on CarVal achieving certain performance objectives over a six-year period ending December 31, 2027. The AB Units, as discussed above , were issued to AB Holding; AB Holding then issued the equal amount of AB Holding Units to CarVal. The excess of the purchase price over the current fair value of identifiable net liabilities acquired of $ 156.1 million (net of cash acquired of $ 40.8 million), resulted in the recognition of $ 671.2 million of goodwill and the recording of $ 303.0 million of finite-lived intangible assets primarily relating to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years. As a result of the transfer of equity to AB, AB recorded a net deferred tax asset of $ 5.1 million, resulting in the recognition of $ 666.1 million of goodwill. The goodwill recorded is not deductible for tax purposes as the CarVal acquisition was an investment in a partnership. The following table summarizes the amounts of identified assets acquired and liabilities assumed at the acquisition date (reflecting acquisition adjustments recorded in the fourth quarter of 2022), as well as the consideration transferred to acquire CarVal (in thousands): Summary of purchase consideration: Fair value of AB Holding units issued $ 589,169 Fair value of contingent consideration 228,885 Total purchase consideration 818,054 Purchase price allocation: Assets acquired: Cash and cash equivalents $ 40,777 Receivables, net 82,523 Investments - other 947 Furniture, equipment, and leasehold improvements, net 2,464 Right-of-use assets 16,482 Other assets 10,600 Intangible assets 303,000 Goodwill 671,203 Total assets acquired 1,127,996 Liabilities assumed: Accounts payable and accrued expenses ( 17,793 ) Accrued compensation and benefits ( 219,726 ) Debt ( 42,661 ) Lease liabilities ( 16,571 ) Non-redeemable non-controlling interests in consolidated entities ( 13,191 ) Total liabilities assumed ( 309,942 ) Net assets acquired $ 818,054 The CarVal acquisition did not have a significant impact on our 2022 revenues and earnings. As a result, we have not provided supplemental pro forma financial information. 2022 Annual Report 75 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, 2022 and 2021, 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, 2022, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 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, 2022, 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. As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded CarVal Investors L.P. (CarVal) from its assessment of internal control over financial reporting as of December 31, 2022 because it was acquired by the Company in a purchase business combination during 2022. We have also excluded CarVal from our audit of internal control over financial reporting. CarVal is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting each approximate 2% of the related consolidated financial statement amounts as of and for the year ended December 31, 2022. 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. 76 AllianceBernstein Table of Contents Part II Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Acquisition of CarVal Investors L.P. - Fair Value of Finite-Lived Intangible Assets and Contingent Consideration Payable As described in Notes 2, 9 and 24 to the consolidated financial statements, on July 1, 2022, AllianceBernstein Holding L.P. (AB Holding) acquired a 100% ownership interest in CarVal for total purchase consideration of $818.1 million, which resulted in management recording $303.0 million of finite-lived intangible assets primarily related to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years and $228.9 million of contingent consideration payable. Immediately following the acquisition of CarVal by AB Holding, AB Holding contributed 100% of its equity interests in CarVal to AllianceBernstein L.P. (AB) in exchange for AB units. Fair value of the acquired finite-lived intangible assets was based on a forecast of future cash flows attributable to the assets that are discounted to present value using a risk-adjusted discount rate. Fair value of the contingent consideration payable was based on a forecast of future cash flows attributable to the performance objectives that are discounted to present value using a risk-adjusted discount rate. The principal considerations for our determination that performing procedures relating to the fair value of the finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal is a critical audit matter are the significant judgment by management in developing the estimated fair value of the finite-lived intangible assets and the contingent consideration payable. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows. In addition, the audit effort involved the use of professionals with specialized skill and knowledge. 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 determination of the fair value of finite-lived intangible assets and contingent consideration payable recognized in the acquisition of CarVal, including controls over the development of the future cash flows and risk-adjusted discount rate assumptions utilized within the calculation of the present value of future cash flows. These procedures also included, among others, reading the purchase agreement and testing management’s process for estimating the fair value of the acquired finite-lived intangible assets and contingent consideration payable. Testing management’s process included (i) evaluating the appropriateness of the method used to discount future cash flows to present value, (ii) testing the completeness and accuracy of underlying data used in the method used to discount future cash flows to present value, and (iii) evaluating management’s significant assumptions related to the future cash flows and risk-adjusted discount rate. Evaluating the reasonableness of the assumption related to the future cash flows involved considering the historical performance of Carval, the consistency with external market and industry data, and the consistency with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the method used to discount future cash flows to present value and the reasonableness of the risk-adjusted discount rate assumption. /s/PricewaterhouseCoopers LLP Nashville, Tennessee February 10, 2023 We have served as the Company’s auditor since 2006. 2022 Annual Report 77 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Financial Condition Years Ended December 31 2022 2021 (in thousands, except unit amounts) ASSETS Cash and cash equivalents $ 1,130,143 $ 1,285,700 Cash and securities segregated, at fair value (cost $1,511,916 and $1,503,554) 1,522,431 1,503,957 Receivables, net: Brokers and dealers 112,226 65,897 Brokerage clients 1,881,496 2,059,842 AB funds fees 314,247 340,158 Other fees 127,040 185,653 Investments: Long-term incentive compensation-related 47,870 63,839 Other 169,648 209,579 Assets of consolidated company-sponsored investment funds: Cash and cash equivalents 19,751 90,326 Investments 516,536 613,025 Other assets 44,424 30,461 Furniture, equipment and leasehold improvements, net 189,258 169,175 Goodwill 3,598,591 3,091,763 Intangible assets, net 310,203 41,531 Deferred sales commissions, net 52,250 74,899 Right-of-use assets 371,898 421,980 Assets held for sale 551,351 — Other assets 179,568 262,303 Total assets $ 11,138,931 $ 10,510,088 78 AllianceBernstein Table of Contents Part II Years Ended December 31 2022 2021 (in thousands, except unit amounts) LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND CAPITAL Liabilities: Payables: Brokers and dealers $ 389,828 $ 265,957 Securities sold not yet purchased — 3,828 Brokerage clients 3,322,903 3,603,558 AB mutual funds 162,291 94,962 Contingent consideration liability 247,309 38,260 Accounts payable and accrued expenses 173,466 219,047 Lease liabilities 427,479 490,735 Liabilities of consolidated company-sponsored investment funds 55,529 87,000 Accrued compensation and benefits 415,878 369,649 Debt 990,000 755,000 Liabilities held for sale 107,952 — Total liabilities 6,292,635 5,927,996 Commitments and contingencies (See Note 14) Redeemable non-controlling interest of consolidated entities 368,656 421,169 Capital: General Partner 45,985 42,850 Limited partners: 285,979,913 and 271,453,043 units issued and outstanding 4,648,113 4,336,211 Receivables from affiliates (4,270) (8,333) AB Holding Units held for long-term incentive compensation plans (95,318) (119,470) Accumulated other comprehensive loss (129,477) (90,335) Partners’ capital attributable to AB Unitholders 4,465,033 4,160,923 Non-redeemable non-controlling interests in consolidated entities 12,607 — Total capital 4,477,640 4,160,923 Total liabilities, non-controlling interest and capital $ 11,138,931 $ 10,510,088 See Accompanying Notes to Consolidated Financial Statements. 2022 Annual Report 79 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Income Years Ended December 31 2022 2021 2020 (in thousands, except per unit amounts) Revenues: Investment advisory and services fees $ 2,971,038 $ 3,194,524 $ 2,595,436 Bernstein research services 416,273 452,017 459,744 Distribution revenues 607,195 652,240 529,781 Dividend and interest income 123,091 38,734 50,923 Investment (losses) (102,413) (636) (16,401) Other revenues 105,544 108,409 104,703 Total revenues 4,120,728 4,445,288 3,724,186 Less: Interest expense 66,438 3,686 15,650 Net revenues 4,054,290 4,441,602 3,708,536 Expenses: Employee compensation and benefits 1,666,636 1,716,013 1,494,198 Promotion and servicing: Distribution-related payments 629,572 708,117 569,283 Amortization of deferred sales commissions 34,762 34,364 27,355 Trade execution, marketing, T&E and other 215,556 197,486 189,787 General and administrative 641,635 555,608 491,070 Contingent payment arrangements 6,563 2,710 1,855 Interest on borrowings 17,906 5,145 6,180 Amortization of intangible assets 26,564 5,697 21,372 Total expenses 3,239,194 3,225,140 2,801,100 Operating income 815,096 1,216,462 907,436 Income tax 39,639 62,728 45,653 Net income 775,457 1,153,734 861,783 Net (loss) income of consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169) Net income attributable to AB Unitholders $ 831,813 $ 1,148,623 $ 865,952 Net income per AB Unit: Basic $ 3.01 $ 4.18 $ 3.19 Diluted $ 3.01 $ 4.18 $ 3.19 See Accompanying Notes to Consolidated Financial Statements. 80 AllianceBernstein Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Comprehensive Income Years Ended December 31 2022 2021 2020 (in thousands) Net income $ 775,457 $ 1,153,734 $ 861,783 Other comprehensive income: Foreign currency translation adjustments, before reclassification and tax: (47,208) (7,839) 23,882 Less: reclassification adjustment for gains (losses) included in net income upon liquidation — 4,458 (216) Foreign currency translation adjustments, before tax (47,208) (12,297) 24,098 Income tax benefit (expense) 1,215 457 (854) Foreign currency translation adjustments, net of tax (45,993) (11,840) 23,244 Changes in employee benefit related items: Amortization of prior service cost 24 24 24 Recognized actuarial gain (loss) 6,922 15,743 (4,280) Changes in employee benefit related items 6,946 15,767 (4,256) Income tax (expense) (95) (59) (187) Employee benefit related items, net of tax 6,851 15,708 (4,443) Other comprehensive (loss) gain (39,142) 3,868 18,801 Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests (56,356) 5,111 (4,169) Comprehensive income attributable to AB Unitholders $ 792,671 $ 1,152,491 $ 884,753 See Accompanying Notes to Consolidated Financial Statements. 2022 Annual Report 81 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Changes in Partners’ Capital Years Ended December 31 2022 2021 2020 (in thousands) General Partner’s Capital Balance, beginning of year $ 42,850 $ 41,776 $ 41,225 Net income 8,318 11,486 8,660 Cash distributions to General Partner (10,715) (10,605) (8,376) Long-term incentive compensation plans activity 25 117 (23) (Retirement) issuance of AB Units, net (385) 76 290 Issuance of AB Units for CarVal acquisition 5,892 — — Balance, end of year 45,985 42,850 41,776 Limited Partners' Capital Balance, beginning of year 4,336,211 4,229,485 4,174,201 Net income 823,495 1,137,137 857,292 Cash distributions to Unitholders (1,059,105) (1,049,287) (828,503) Long-term incentive compensation plans activity 2,521 11,586 (2,147) (Retirement) issuance of AB Units, net (38,286) 7,290 28,642 Issuance of AB Units for CarVal acquisition 583,277 — — Balance, end of year 4,648,113 4,336,211 4,229,485 Receivables from Affiliates Balance, beginning of year (8,333) (8,316) (9,011) Long-term incentive compensation awards expense 607 941 802 Capital contributions from (to) AB Holding 3,456 (958) (107) Balance, end of year (4,270) (8,333) (8,316) AB Holding Units held for Long-term Incentive Compensation Plans Balance, beginning of year (119,470) (57,219) (76,310) Purchases of AB Holding Units to fund long-term compensation plans, net (210,568) (261,825) (148,624) Retirement (issuance) of AB Units, net 40,346 (7,348) (28,696) Long-term incentive compensation awards expense 198,783 215,484 194,840 Re-valuation of AB Holding Units held in rabbi trust (4,240) (9,690) 1,556 Other (169) 1,128 15 Balance, end of year (95,318) (119,470) (57,219) Accumulated Other Comprehensive (Loss) Balance, beginning of year (90,335) (94,203) (113,004) Foreign currency translation adjustment, net of tax (45,993) (11,840) 23,244 Changes in employee benefit related items, net of tax 6,851 15,708 (4,443) Balance, end of year (129,477) (90,335) (94,203) Total Partners' Capital attributable to AB Unitholders 4,465,033 4,160,923 4,111,523 Non-redeemable Non-controlling Interests in Consolidated Entities Balance, beginning of year — — — CarVal acquisition 12,607 — — Balance, end of year 12,607 — — Total Capital $ 4,477,640 $ 4,160,923 $ 4,111,523 See Accompanying Notes to Consolidated Financial Statements. 2022 Annual Report 82 Table of Contents Part II AllianceBernstein L.P. and Subsidiaries Consolidated Statements of Cash Flows Years Ended December 31 2022 2021 2020 (in thousands) Cash flows from operating activities: Net income $ 775,457 $ 1,153,734 $ 861,783 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred sales commissions 34,762 34,364 27,355 Non-cash long-term incentive compensation expense 199,390 216,425 195,642 Depreciation and other amortization 66,617 44,985 61,028 Unrealized losses on investments 40,857 4,454 10,405 Unrealized losses (gains) on investments of consolidated company-sponsored investment funds 73,194 1,882 (854) Non-cash lease expense 99,861 98,773 98,798 Loss on assets held for sale 7,400 — — Other, net 14,604 22,580 (2,914) Changes in assets and liabilities: (Increase) decrease in securities, segregated (18,474) 249,521 (658,612) Decrease (increase) in receivables 35,410 (360,789) (182,684) (Increase) decrease in investments (10,331) (27,000) 7,597 Decrease (increase) in investments of consolidated company-sponsored investment funds 23,295 (312,325) 279,276 (Increase) in deferred sales commissions (12,113) (45,197) (55,125) (Increase) decrease in other assets (5,487) (6,578) 69,160 (Increase) decrease in other assets and liabilities of consolidated company-sponsored investment funds, net (45,432) 38,161 7,169 Increase in payables 110,112 214,139 861,502 (Decrease) increase in accounts payable and accrued expenses (8,424) 35,877 10,666 (Decrease) increase in accrued compensation and benefits (150,285) 50,545 46,885 Cash payments to relieve operating lease liabilities (109,182) (114,769) (115,656) Net cash provided by operating activities 1,121,231 1,298,782 1,521,421 Cash flows from investing activities: Purchases of equity method investments — — (4,079) Purchases of furniture, equipment and leasehold improvements (62,308) (61,931) (41,504) Acquisition of businesses, net of cash acquired 40,282 (3,793) (13,552) Net cash used in investing activities (22,026) (65,724) (59,135) Cash flows from financing activities: Proceeds from debt, net 235,000 80,000 115,000 (Decrease) increase in overdrafts payable (25,411) 16,192 (12,633) Distributions to General Partner and Unitholders (1,069,820) (1,059,892) (836,879) Subscriptions (redemptions) of non-controlling interests of consolidated company-sponsored investment funds, net 3,843 313,699 (219,033) Capital contributions from (to) affiliates 1,590 (2,346) (867) Additional investments by AB Holding with proceeds from exercise of compensatory options to buy AB Holding Units 178 3,402 147 Purchases of AB Holding Units to fund long-term incentive compensation plan awards, net (210,568) (261,825) (148,624) Payment of acquisition-related debt obligation (42,661) — — Other, net (2,131) (2,186) 306 Net cash used in financing activities (1,109,980) (912,956) (1,102,583) Effect of exchange rate changes on cash and cash equivalents (56,234) (17,982) 23,032 Net (decrease) increase in cash and cash equivalents (67,009) 302,120 382,735 Cash and cash equivalents as of beginning of the period 1,376,026 1,073,906 691,171 Cash and cash equivalents as of end of the period $ 1,309,017 $ 1,376,026 $ 1,073,906 Cash paid: Interest paid $ 78,434 $ 5,263 $ 18,858 Income taxes paid 55,473 55,656 59,791 Non-cash investing activities: Fair value of assets acquired (excluding cash acquired of $40.8 million, $2.8 million and $0.6 million, for 2022, 2021 and 2020, respectively) 1,085,141 13,235 18,389 Fair value of deferred tax asset recorded 5,072 — — Fair value of liabilities assumed 296,750 1,642 437 Fair value of non-redeemable non-controlling interest recorded 13,191 — — Non-cash financing activities: Payables recorded under contingent payment arrangements 231,385 7,800 4,400 Equity consideration issued in connection with acquisition 589,169 — — See Accompanying Notes to Consolidated Financial Statements. 2022 Annual Report 83 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 asset management and private wealth management businesses. 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 across global and regional universes, as well as 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; • Actively managed alternative investments, including hedge funds, fund of funds and direct assets (e.g., direct lending, real estate and private equity); • Portfolios with Purpose, including actively managed, impact-focused and Responsible+ (climate-conscious, ESG leaders, change catalysts) equity, fixed income and multi-asset strategies that address our clients evolving need to invest their capital with purpose while pursuing strong investment returns; • Multi-asset services and solutions, including dynamic asset allocation, customized target-date funds and target-risk funds; and • Some passive management, including index, ESG index and enhanced index strategies. 84 AllianceBernstein Table of Contents Part II Organization As of December 31, 2022, EQH owned approximately 3.5% 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. As of December 31, 2022, 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 59.9 % AB Holding 39.4 Unaffiliated holders 0.7 100.0 % Including both the general partnership and limited partnership interests in AB Holding and AB, EQH and its subsidiaries had an approximate 61.3% economic interest in AB as of December 31, 2022. 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 or Accounting Pronouncements Not Yet Adopted During 2022, there have been no recently adopted accounting pronouncements or pronouncements not yet adopted that have or are expected to have a material impact on our consolidated results of operations. Revenue Recognition Investment Advisory and Services Fees AB provides asset management services by managing customer assets and seeking to deliver investment returns to investors. Each investment management contract between AB and a customer creates a distinct, separately identifiable performance obligation for each day the customer’s assets are managed as the customer can benefit from each day of service. In accordance with ASC 606, a series of distinct goods and services that are substantially the same and have the same pattern of transfer to the customer are treated as a single performance obligation. Accordingly, we have determined that our investment and advisory services are performed over time and entitle us to variable consideration earned based on the value of the investors’ assets under management (“ AUM ”). We calculate AUM using established market-based valuation methods and fair valuation (non-observable market) methods. Market-based valuation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognized pricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps; and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include: discounted cash flow models or any other 2022 Annual Report 85 Table of Contents Part II 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. In the fourth quarter of 2022, AB and Société Générale (EURONEXT: SCGLY, “ SocGen ”), a leading European bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As a result, the Bernstein Research Services (" BRS ") business has been classified as held for sale. For further discussion, see Note 24 Acquisitions and Divestitures. 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. 86 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, 2022, 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 2022 Annual Report 87 Table of Contents Part II arrangements for similar services negotiated at arm’s length. The primary beneficiary evaluation generally is performed qualitatively based on all facts and circumstances, as well as quantitatively, as appropriate. If we have a variable interest in an entity that is determined not to be a VIE, the entity is then evaluated for consolidation under the VOE model. For limited partnerships and similar entities, we are deemed to have a controlling financial interest in a VOE, and would be required to consolidate the entity, if we own a majority of the entity’s kick-out rights through voting limited partnership interests and limited partners do not hold substantive participating rights (or other rights that would indicate that we do not control the entity). For entities other than limited partnerships, we are deemed to have a controlling financial interest in a VOE if we own a majority voting interest in the entity. The analysis performed regarding the determination of variable interests held, whether entities are VIEs or VOEs, and whether we have a controlling financial interest in such entities, requires the exercise of judgment. The analysis is updated continuously as circumstances change or new entities are formed. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value (and considered Level 1 securities in the fair value hierarchy). Fees Receivable, Net Fees receivable are shown net of allowances. An allowance for doubtful accounts related to investment advisory and services fees is determined through an analysis of the aging of receivables, assessments of collectability based on historical trends and other qualitative and quantitative factors, including our relationship with the client, the financial health (or ability to pay) of the client, current economic conditions and whether the account is active or closed. The allowance for doubtful accounts is not material to fees receivable. 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, 2022 and 2021, we had $267.1 million and $23.4 million 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, 2022 and 2021. 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, 2022 and 2021, there is no allowance provision required for the collateral advanced. Income or expense is recognized over the life of the transaction. Cash on deposit with clearing organizations for trade facilitation purposes is reported in assets held for sale as of December 31, 2022 and other assets as of December 31, 2021, in our consolidated statements of financial condition. As of December 31, 2021, we had $114.9 million of cash on deposit with clearing organizations. As of December 31, 2022 and 2021, 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, 2022 and 2021. We consider these financing receivables to be of good credit quality because 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 88 AllianceBernstein Table of Contents Part II 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. 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 Our acquisitions are accounted for under the acquisition method of accounting, where the cost of the acquisition is 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, results in the recognition of goodwill. On July 1, 2022, AB Holding acquired a 100% ownership interest in CarVal Investors L.P. (“ CarVal ”). Immediately following its acquisition of CarVal (the " CarVal acquisition "), AB Holding contributed 100% of its equity interests in CarVal to AB in exchange for AB Units (see Note 24 Acquisitions and Divestitures ). On November 22, 2022, AB and SocGen, a leading Eu ropean bank, announced plans to form a joint venture combining their respective cash equities and research businesses. As a result, the BRS business has been classified as held for sale and $159.8 million of goodwill recorded on the consolidated statement of financial condition has been allocated to the held for sale disposal group. As AB is a single reporting unit, we have allocated goodwill to the disposal group based on the relative fair values of (1) the disposal group and (2) the portion of the reporting unit that will be retained. For further discussion, see Note 24 Acquisitions and Divestitures . As of December 31, 2022, we had goodwill of $3.6 billion on the consolidated statement of financial condition which included $666.1 million as a result of the CarVal acquisition in the third quarter of 2022, $2.8 billion as a result of the Sanford C. Bernstein Inc. (“ Bernstein ”) acquisition in 2000 and $291.9 million in regard to various smaller acquisitions. Approximately, $159.8 million of goodwill has been classified as assets held for sale on the consolidated statement of financial condition. 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, significant transactions including acquisitions or divestitures; 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 2022 Annual Report 89 Table of Contents Part II of September 30, 2022, the impairment test indicated that goodwill was not impaired. The announcement of the planned joint venture between AB and SocGen and classification of the BRS business as held for sale on the consolidated statement of financial condition during the fourth quarter of 2022 was a triggering event requiring an interim impairment test; as such, we tested our goodwill as of December 31, 2022. The impairment test indicated that goodwill was not 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. Business Combinations We account for business combinations using the acquisition method of accounting whereby the identifiable assets and liabilities of the acquired business, as well as any noncontrolling interest in the acquired business, are recorded at their estimated fair values as of the date that we obtain control of the acquired business. Any purchase consideration in excess of the estimated fair values of the net assets acquired is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Often, as part of the business combination, intangible assets are recorded based on their estimated fair value at the time of acquisition and primarily relate to acquired investment management contracts. 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 2022 and 2021, these expenses included an intangible asset impairment charge of $5.6 million and $1.0 million, respectively, related to various historical acquisitions. 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 a discounted basis on our consolidated statement 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. The CarVal acquisition resulted in the recording of a contingent consideration payable of $228.9 million if certain performance targets are achieved over a six-year period (see Note 9 Fair Value and Note 24 Acquisitions and Divestitures ). During 2022, there were no impairments of contingent consideration payable recorded in the 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. These impairments were related to our 2016 acquisition of Ramius Alternative Solutions LLC. Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets, we typically use a method that is a form of the income approach, whereby a forecast of future cash flows attributable to the asset are discounted to present value using a risk-adjusted discount rate. Similarly for contingent liabilities, we develop a forecast of future cash flows attributable to the performance objectives that are then discounted to present value using a risk-adjusted discount rate. Some of the more significant estimates and assumptions inherent in the income approach include the amount and timing of projected future cash flows and the discount rate selected to measure the risks inherent in the future cash flows. See Note 24 Acquisitions and Divestitures . 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 5 to 20 years. The CarVal acquisition resulted in recording of $303.0 million of finite-lived intangible assets primarily relating to investment management contracts and investor relationships with useful lives ranging from 5 to 10 years (see Note 24 Acquisitions and Divestitures ). As of December 31, 2022, intangible assets, net of accumulated amortization, of $310.2 million on the consolidated statement of financial condition consists of $295.0 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, 2021, intangible assets, net of accumulated amortization, of $41.5 million on the consolidated statement of financial condition consisted 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 in regard to other acquisitions. 90 AllianceBernstein Table of Contents Part II The gross carrying amount of finite-lived intangible assets totaled $327.9 million as of December 31, 2022 and $53.8 million as of December 31, 2021, and accumulated amortization was $32.9 million as of December 31, 2022 and $27.5 million as of December 31, 2021. Amortization expense was $26.6 million for 2022, $5.7 million for 2021 and $21.4 million for 2020. Estimated annual amortization expense is approximately $47 million annually in years one through three, $46 million in year four and approximately $25 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 2022 we performed an impairment assessment and recorded an impairment of $5.6 million related to our 2014 acquisition of CPH Capital. During the fourth quarters of 2021 and 2020, we recorded impairments of $1.0 million and $1.5 million, respectively, related to our 2016 acquisition of Ramius Alternative Solutions LLC. Due to the loss of acquired investment management contracts during each respective year, 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 2022 or 2021. 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 . 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 2022 Annual Report 91 Table of Contents Part II 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. Assets and Liabilities Held for Sale The Company classifies assets and liabilities to be sold (disposal group) as held for sale in the period when all of the applicable criteria are met, including: (i) management commits to a plan to sell, (ii) the disposal group is available to sell in its present condition, (iii) there is an active program to locate a buyer, (iv) the disposal group is being actively marketed at a reasonable price in relation to its fair value, (v) significant changes to the plan to sell are unlikely, and (vi) the sale of the disposal group is generally probable of being completed within one year. Management performs an assessment of held for sale at least quarterly or when events or changes in business circumstances indicate that a change in classification may be necessary. Assets and liabilities held for sale are presented separately within the consolidated statements of financial condition with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell. Depreciation of property, plant and equipment and amortization of intangible and right-of-use assets are not recorded while these assets are classified as held for sale. For each reporting period the disposal group remains classified as held for sale, the carrying value of the disposal group is adjusted for subsequent changes in fair value less costs to sell. A loss is recognized for any subsequent decrease in fair value less costs to sell, while a gain is recognized in any subsequent period for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. If, in any period, the carrying value of the disposal group exceeds the estimated fair value less costs to sell, a loss is recognized on sale rather than an impairment loss. Assets and liabilities classified as held for sale on the consolidated statement of financial condition as of December 31, 2022 were $551.4 million and $108.0 million, respectively. The 2021 consolidated statement of financial condition was not recast for assets and liabilities classified as held for sale in 2022. 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 2022, 2021 and 2020 allowed employees 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 their award to deferred cash. For these awards, the number of AB Holding Units awarded was based on the closing price of an AB Holding Unit on the date as of which the awards were approved by the Compensation and Workplace Practices Committee (the " Compensation Committe e") of the Board of Directors (the " Board "). For awards granted in 2022, 2021 and 2020: • 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 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. 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 covenants set forth in the applicable award agreement, including the imposition of forfeiture as a result of post-employment competition, prohibitions on employee and client solicitation, and a potential 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 the award 92 AllianceBernstein Table of Contents Part II 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 three 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 ”), 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, 2022 and 2021 consisted of the following: Years Ended December 31 2022 2021 (in millions) Total amount of AB Holding Units Purchased (1) 5.2 5.6 Total Cash Paid for AB Holding Units Purchased (1) $ 211.8 $ 262.3 Open Market Purchases of AB Holding Units Purchased (1) 2.3 2.6 Total Cash Paid for Open Market Purchases of AB Holding Units (1) $ 92.7 $ 117.9 (1) Purchased on a trade date basis. The difference between open-market purchases and units retained reflects the retention 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 2022. 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 2022, we granted to employees and Eligible Directors 4.7 million restricted AB Holding Units (including 3.8 million granted in December for 2022 year-end awards to employees). 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). We used AB Holding Units repurchased during the periods and newly-issued AB Holding Units to fund these awards. During 2022 and 2021, AB Holding issued 5,774 and 0.1 million AB Holding Units, respectively, upon exercise of options to buy AB Holding Units. AB Holding used the proceeds of $0.2 million and $3.4 million, respectively, received from award recipients as payment in cash for the exercise price to purchase the equivalent number of newly issued AB Units. Foreign Currency Translation and Transactions Assets and liabilities of foreign subsidiaries are translated from functional currencies into United States dollars (“ US$ ”) at exchange rates in effect at the balance sheet dates, and related revenues and expenses are translated into US$ at average exchange rates in effect during each period. Net foreign currency gains and losses resulting from the translation of assets and liabilities of foreign operations into US$ are reported as a separate component of other comprehensive income in the consolidated statements of comprehensive income. Net foreign currency transaction losses were $10.2 million, $8.5 million and $3.3 million for 2022, 2021 and 2020, respectively, and are reported in general and administrative expenses on the consolidated statements of income. 2022 Annual Report 93 Table of Contents Part II 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 8, 2023, the General Partner declared a distribution of $0.77 per AB Unit, representing a distribution of Available Cash Flow for the three months ended December 31, 2022. 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 16, 2023 to holders of record on February 21, 2023. Total cash distributions per Unit paid to the General Partner and Unitholders during 2022, 2021 and 2020 were $3.87, $3.86 and $3.08, 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 SEC and did not identify any subsequent events that would have required disclosure in these financial statements. 94 AllianceBernstein Table of Contents Part II 3. Revenue Recognition Revenues for the years ended December 31, 2022, 2021 and 2020 consisted of the following: Years Ended December 31 2022 2021 2020 (in thousands) Subject to contracts with customers: Investment advisory and services fees Base fees $ 2,825,791 $ 2,949,405 $ 2,462,810 Performance-based fees 145,247 245,119 132,626 Bernstein research services 416,273 452,017 459,744 Distribution revenues All-in-management fees 290,740 350,674 331,268 12b-1 fees 69,041 83,920 75,973 Other distribution fees 247,414 217,646 122,540 Other revenues Shareholder servicing fees 86,661 90,225 82,317 Other 18,120 16,034 21,240 4,099,287 4,405,040 3,688,518 Not subject to contracts with customers: Dividend and interest income, net of interest expense 56,653 35,048 35,273 Investment (losses) (102,413) (636) (16,401) Other revenues 763 2,150 1,146 (44,997) 36,562 20,018 Total net revenues $ 4,054,290 $ 4,441,602 $ 3,708,536 2022 Annual Report 95 Table of Contents Part II 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 2022 2021 2020 (in thousands, except per unit amounts) Net income attributable to AB Unitholders $ 831,813 $ 1,148,623 $ 865,952 Weighted average units outstanding—basic 273,943 271,729 269,058 Dilutive effect of compensatory options to buy AB Holding Units 1 11 27 Weighted average units outstanding—diluted 273,944 271,740 269,085 Basic net income per AB Unit $ 3.01 $ 4.18 $ 3.19 Diluted net income per AB Unit $ 3.01 $ 4.18 $ 3.19 Years Ended December 31 2022 2021 2020 (in thousands) Anti-dilutive options excluded from diluted net income — — 29,056 5. Cash and Securities Segregated Under Federal Regulations and Other Requirements As of both December 31, 2022 and 2021, $1.5 billion 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 2022 2021 (in thousands) Equity securities: Long-term incentive compensation-related $ 21,055 $ 32,237 Seed capital 138,012 133,992 Other (1) — 18,243 Exchange-traded options (1) — 1,893 Investments in limited partnership hedge funds: Long-term incentive compensation-related 26,815 31,602 Seed capital 15,711 19,318 Time deposits 7,750 21,024 Other 8,175 15,109 Total investments $ 217,518 $ 273,418 (1) Amounts have been classified as held for sale on the consolidated statement of financial position as of December 31, 2022. For further discussion, s ee Note 24 Acquisitions and Divestitures. 96 AllianceBernstein Table of Contents Part II Total investments related to long-term incentive compensation obligations of $47.9 million and $63.8 million as of December 31, 2022 and 2021, 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. Regarding 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, 2022 and 2021, our total seed capital investments were $309.6 million and $379.0 million, respectively. Seed capital investments in unconsolidated company-sponsored investment funds are valued using published net asset values or non-published net asset values if they are not listed on an active exchange but have net asset values that are comparable to funds with published net asset values and have no redemption restrictions. In addition, we also have long positions in corporate equities and long exchange-traded options traded through our options desk. The portion of unrealized gains (losses) related to equity securities, as defined by ASC 321-10, held as of December 31, 2022 and 2021 were as follows: Years Ended December 31 2022 2021 (in thousands) Net (losses) gains recognized during the period $ (23,855) $ 19,240 Less: net gains recognized during the period on equity securities sold during the period 17,960 23,697 Unrealized losses recognized during the period on equity securities held $ (41,815) $ (4,457) 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 . 2022 Annual Report 97 Table of Contents Part II The notional value, fair value and gains and losses recognized in investment gains (losses) as of December 31, 2022 and 2021 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, 2022 Exchange-traded futures $ 154,687 $ 1,768 $ 162 $ 19,994 Currency forwards 34,597 4,446 5,047 1,965 Interest rate swaps 16,847 386 262 70 Credit default swaps 225,671 17,507 7,302 (1,000) Total return swaps 28,742 605 933 14,828 Option swaps 50,000 — 6 5,211 Total derivatives $ 510,544 $ 24,712 $ 13,712 $ 41,068 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) As of December 31, 2022 and 2021, 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, 2022 and 2021, we held $8.4 million and $2.9 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers and dealers in our consolidated statements of financial condition. Although notional amount is the typical 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, 2022 and 2021, we delivered $4.2 million and $5.6 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, 2022 long and short exchange-traded equity options were classified as held for sale on our consolidated statement of financial position. For further discussion, see Note 24 Acquisitions and Divestitures. As of December 31, 2021, we held $1.9 million, respectively, of long exchange-traded equity options, which are included in other investments on our consolidated statements of financial condition. In addition, as of December 31, 2021, we held $2.8 million, respectively, of 98 AllianceBernstein Table of Contents Part II 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, 2022 and 2021, we recognized $22.1 million of losses and zero gains or losses on equity options activity, respectively. 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, 2022 and 2021 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, 2022 Securities borrowed (1) $ 62,063 $ — $ 62,063 $ (62,058) $ — $ 5 Derivatives 24,712 — 24,712 — (8,361) 16,351 Long exchange-traded options (1) — — — — — — 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 2022 Annual Report 99 Table of Contents Part II Offsetting of liabilities as of December 31, 2022 and 2021 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, 2022 Securities loaned (1) $ 272,580 $ — $ 272,580 $ (267,053) $ 5,527 Derivatives 13,712 — 13,712 — (4,158) 9,554 Short exchange-traded options (1) — — — — — — 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 (1) Certain amounts have been classified as held for sale on the consolidated statement of financial position as of December 31, 2022. For further discussion, s ee Note 24 Acquisitions and Divestitures . 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. 100 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, 2022 and 2021 was as follows (in thousands): Level 1 Level 2 Level 3 NAV Expedient (2) Other Total December 31, 2022 (1) : Money markets $ 95,521 $ — $ — $ — $ — $ 95,521 Securities segregated (U.S. Treasury Bills) — 1,521,705 — — — 1,521,705 Derivatives 1,768 22,944 — — — 24,712 Investments: Equity securities 129,655 27,799 129 1,484 — 159,067 Limited partnership hedge funds (3) — — — — 42,526 42,526 Time deposits (4) — — — — 7,750 7,750 Other investments 6,689 — — — 1,486 8,175 Total investments 136,344 27,799 129 1,484 51,762 217,518 Total assets measured at fair value $ 233,633 $ 1,572,448 $ 129 $ 1,484 $ 51,762 $ 1,859,456 Derivatives 162 13,550 — — — 13,712 Contingent payment arrangements — — 247,309 — — 247,309 Total liabilities measured at fair value $ 162 $ 13,550 $ 247,309 $ — $ — $ 261,021 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 (3) — — — — 50,920 50,920 Time deposits (4) — — — — 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 (1) Certain amounts have been classified as held for sale on the consolidated statement of financial position as of December 31, 2022. For further discussion, s ee Note 24 Acquisitions and Divestitures . (2) Investments measured at fair value using NAV (or its equivalent) as a practical expedient. (3) Investments in equity method investees that are not measured at fair value in accordance with GAAP. (4) Investments carried at amortized cost that are not measured at fair value in accordance with GAAP. 2022 Annual Report 101 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 ($6.7 million and $9.1 million as of December 31, 2022 and 2021, respectively). Other investments not measured at fair value include (i) investments in start-up companies that do not have a readily available fair value (these investments were $0.3 million as of December 31, 2022 and 2021), (ii) investments in equity method investees that are not measured at fair value in accordance with GAAP (during the third quarter of 2022, we sold this investment and the balance was reduced to zero, as compared to $2.9 million as of December 31, 2021), and (iii) broker-dealer exchange memberships that are not measured at fair value in accordance with GAAP ($1.2 million and $2.8 million as of December 31, 2022 and 2021, 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. As of December 31, 2022 these securities have been classified as held for sale on the consolidated statement of financial position. • 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, 2022 and 2021, 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 2022 2021 (in thousands) Balance as of beginning of period $ 126 $ 125 Purchases — — Sales — — Realized gains (losses), net — — Unrealized gains (losses), net 3 1 Balance as of end of period $ 129 $ 126 Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the consolidated statements of income. 102 AllianceBernstein Table of Contents Part II Our acquisitions may include 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 2022 2021 (in thousands) Balance as of beginning of period $ 38,260 $ 27,750 Addition 231,385 7,800 Accretion 6,563 3,310 Changes in estimates — (600) Held for sale reclassification (28,899) — Balance as of end of period $ 247,309 $ 38,260 In the third quarter of 2022, we acquired CarVal and recorded a contingent consideration liability of $228.9 million (see Note 24 Acquisitions and Divestitures ). The liability, ranging from zero to $650.0 million, is based on CarVal achieving certain performance objectives over a six-year period ending December 31, 2027. The liability was valued using a forecast of future cash flows attributable to the performance objectives that are discounted to present value using a risk-adjusted discount rate. The expected revenue growth rates range from 3.9% to 31.5%, with a weighted average of 14.1%, calculated using cumulative revenues and range of revenue growth rates. The discount rates range from 4.1% to 4.6%, with a weighted average of 4.2%, calculated using total contingent liabilities and range of discount rates. As of December 31, 2022, including the CarVal acquisition, the expected revenue growth rates range from 2.0% to 83.9%, with a weighted average of 11.5%, 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 4.5%, calculated using total contingent liabilities and range of 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. 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, 2022 or 2021. 10. Furniture, Equipment and Leasehold Improvements, Net Furniture, equipment and leasehold improvements, net consist of: Years Ended December 31 2022 2021 (in thousands) Furniture and equipment $ 605,567 $ 584,161 Leasehold improvements 323,982 301,036 Total 929,549 885,197 Less: Accumulated depreciation and amortization (740,291) (716,022) Furniture, equipment and leasehold improvements, net $ 189,258 $ 169,175 Depreciation and amortization expense on furniture, equipment and leasehold improvements were $39.7 million, $38.8 million and $39.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. 2022 Annual Report 103 Table of Contents Part II 11. Deferred Sales Commissions, Net The components of deferred sales commissions, net for the years ended December 31, 2022 and 2021 were as follows (excluding amounts related to fully amortized deferred sales commissions): Years Ended December 31 2022 2021 (in thousands) Carrying amount of deferred sales commissions $ 172,181 $ 177,233 Less: Accumulated amortization (66,184) (53,976) Cumulative CDSC received (53,747) (48,358) Deferred sales commissions, net $ 52,250 $ 74,899 Amortization expense was $34.8 million, $34.4 million and $27.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. Estimated future amortization expense related to the December 31, 2022 net asset balance, assuming no additional CDSC is received in future periods, is as follows (in thousands): 2023 $ 28,683 2024 17,848 2025 5,309 2026 410 Total $ 52,250 12. Debt Credit Facility 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 matures on October 13, 2026. 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, 2022, 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, 2022 and 2021, we had no amounts outstanding under the Credit Facility. During 2022 and 2021, we did not draw upon the Credit Facility. EQH 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. 104 AllianceBernstein Table of Contents Part II The EQH Facility contains affirmative, negative and financial covenants which are substantially similar to those in AB’s committed bank facilities. The EQH Facility also includes customary events of default substantially similar to those in AB’s committed bank facilities, including provisions under which, upon the occurrence of an event of default, all outstanding loans may be accelerated and/or the lender’s commitment may be terminated. Amounts under the EQH Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. AB or EQH may reduce or terminate the commitment at any time without penalty upon proper notice. EQH also may terminate the facility immediately upon a change of control of our general partner. As of December 31, 2022 and 2021, AB had $900.0 million and $755.0 million outstanding under the EQH Facility with interest rates of approximately 4.3% and 0.2%, respectively. Average daily borrowings on the EQH Facility during 2022 and 2021 were $655.2 million and $404.6 million, respectively, with weighted average interest rates of approximately 1.7% and 0.2%, respectively. EQH Uncommitted Facility In addition to the EQH Facility, AB has 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 December 31, 2022, we had $90.0 million outstanding under the EQH Uncommitted Facility with an interest rate of approximately 4.3%. Average daily borrowings on the EQH Facility during 2022 were $0.7 million with a weighted average interest rate of approximately 4.3%. During 2021, we did not draw on the facility. Commercial Paper As of both December 31, 2022 and 2021, 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 during 2022 and 2021 were $189.9 million and $157.0 million, respectively, with weighted average interest rates of approximately 1.5% and 0.2%, respectively. Revolving Credit Facility 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. Average daily borrowings under the Revolver for 2021 were $13.3 million with a weighted average interest rate of approximately 1.1%. SCB Lines of Credit SCB LLC currently has five uncommitted lines of credit with five financial institutions. Four of these lines of credit permit us to borrow up to an aggregate of approximately $315.0 million, with AB named as an additional borrower, while the other line has no stated limit. AB has agreed to guarantee the obligations on SCB LLC under these lines of credit. As of December 31, 2022 and 2021, SCB LLC had no outstanding balance on these lines of credit. Average daily borrowings on the lines of credit during 2022 and 2021 were $1.4 million and $47 thousand, respectively, with weighted average interest rates of approximately 3.7% and 0.9%, respectively. 13. Leases We lease office space, office equipment and technology under various operating and financing leases. Our current leases have remaining lease terms of one year to 15 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Since 2010, we have sub-leased over one million square feet of office space. 2022 Annual Report 105 Table of Contents Part II Leases included in the consolidated statements of financial condition as of December 31, 2022 and 2021 were as follows: Classification December 31, 2022 December 31, 2021 (in thousands) Operating Leases Operating lease right-of-use assets Right-of-use assets $ 360,092 $ 414,105 Operating lease liabilities Lease liabilities 415,539 482,781 Finance Leases Property and equipment, gross Right-of-use assets 18,116 10,947 Amortization of right-of-use assets Right-of-use assets (6,310) (3,072) Property and equipment, net 11,806 7,875 Finance lease liabilities Lease liabilities 11,940 7,954 The components of lease expense included in the consolidated statements of income for the years ended December 31, 2022 and 2021 were as follows: Years Ended December 31 Classification 2022 2021 (in thousands) Operating lease cost General and administrative $ 97,198 $ 97,466 Financing lease cost: Amortization of right-of-use assets General and administrative 3,860 2,355 Interest on lease liabilities Interest expense 200 107 Total finance lease cost 4,060 2,462 Variable lease cost (1) General and administrative 40,552 39,827 Sublease income General and administrative (34,420) (37,317) Net lease cost $ 107,390 $ 102,438 (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) 2023 $ 97,489 $ 4,169 $ 101,658 2024 104,596 3,258 107,854 2025 37,319 2,828 40,147 2026 35,808 1,810 37,618 2027 32,821 324 33,145 Thereafter 146,319 — 146,319 Total lease payments 454,352 12,389 $ 466,741 Less interest (38,813) (449) Present value of lease liabilities $ 415,539 $ 11,940 106 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 7.35 Finance leases 3.47 Weighted average discount rate: Operating leases 2.69 % Finance leases 2.10 % Supplemental non-cash activity related to leases are as follows: Years Ended December 31 2022 2021 (in thousands) Right-of-use assets obtained in exchange for lease obligations (1) : Operating leases $ 38,875 $ 82,379 Finance leases 7,791 7,782 (1) Represents non-cash activity and, accordingly, is not reflected in the consolidated statements of cash flows. 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, 2022, are as follows: Payments Sublease Receipts Net Payments (in millions) 2023 $ 107.6 $ (31.9) $ 75.7 2024 108.9 (30.9) 78.0 2025 58.3 — 58.3 2026 55.7 — 55.7 2027 51.3 — 51.3 2028 and thereafter 487.7 — 487.7 Total future minimum payments $ 869.5 $ (62.8) $ 806.7 See Note 13 for material lease commitments. Legal Proceedings On December 14, 2022, four individual participants in the Profit Sharing Plan for Employees of AllianceBernstein L.P., (the " Plan ") filed a class action complaint (the “ Complaint ”) in the U.S. District Court for the Southern District of New York against AB, current and former members of the Compensation Committee, and the Investment and Administrative Committees under the Plan. Plaintiffs, who seek to represent a class of all participants in the Plan from December 14, 2016 to the present, allege that defendants violated their fiduciary duties and engaged in prohibited transactions under the Employee Retirement Income Security Act of 1974, as amended (" ERISA "), by including proprietary collective investment trusts as investment options offered under the Plan. The Complaint seeks unspecified damages, disgorgement and other equitable relief. AB is prepared to defend itself vigorously against these claims. While the ultimate outcome of this matter is currently not determinable given the matter remains in its early stages, we do not believe this litigation will have a material adverse effect on our results of operations, financial condition or liquidity. 2022 Annual Report 107 Table of Contents Part II AB may be involved in various other 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 other matters, but we cannot currently estimate any such losses. Management, after consultation with legal counsel, currently believes that the outcome of any other 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 other 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, 2022, 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, 2022, we had funded $21.6 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. 108 AllianceBernstein Table of Contents Part II 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 regarding 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 included in our consolidated statements of financial condition were as follows: December 31, 2022 December 31, 2021 (in thousands) Cash and cash equivalents $ 19,751 $ 90,326 Investments 516,536 613,025 Other assets 44,424 30,461 Total assets $ 580,711 $ 733,812 Liabilities $ 55,529 $ 87,000 Redeemable non-controlling interest 368,656 421,169 Partners' capital attributable to AB Unitholders 156,526 225,643 Total liabilities, redeemable non-controlling interest and partners' capital $ 580,711 $ 733,812 During 2022, we deconsolidated five funds in which we had seed investments totaling approx