What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-16 compared with 2023-02-15 · 159 added, 268 removed, 829 unchanged (34% of the section changed)

96 unchanged sentences

Other comprehensive income (loss) before income taxes 20.1 ( 52.5 ) ( 33.1 )

Net deferred tax benefits 5.0 3.4 ( 11.8 )

Net deferred tax benefits (income taxes) ( 1.9 ) 5.0 3.4

Total other comprehensive income (loss) 18.2 ( 47.5 ) ( 29.7 )

14 unchanged sentences

Stock-based compensation expense 265.6 285.4 274.6

Net gains recognized on other investments

210.6 ( 122.5 ) ( 189.6 )

Net (gains) losses recognized on other investments ( 460.8 ) 210.6 ( 122.5 )

Net investments in sponsored investment products used to economically hedge supplemental savings plan liability 56.1 ( 18.8 ) ( 85.7 )

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Balances at December 31, 2020 227,965 $ 45.6 $ 654.6 $ 7,029.8 $ ( 23.0 ) $ 7,707.0 $ — $ 7,707.0 $ 1,561.7

Net income — — — 2,372.7 — 2,372.7 — 2,372.7 150.6

Net income (loss) — — — 3,082.9 — 3,082.9 — 3,082.9 15.6

Other comprehensive income (loss), net of tax — — — — ( 3.5 ) ( 3.5 ) — ( 3.5 ) ( 26.2 )

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— — — ( 1,003.5 ) — ( 1,003.5 ) — ( 1,003.5 ) —

Special cash dividend declared ($ 3.00 per share)

— — — ( 699.5 ) — ( 699.5 ) — ( 699.5 ) —

Common stock-based compensation plans activity:

5 unchanged sentences

Common shares repurchased ( 5,941 ) ( 1.2 ) ( 809.4 ) ( 325.4 ) — ( 1,136.0 ) — ( 1,136.0 ) —

Net subscriptions into sponsored investment products — — — — — — — — 563.3

Common shares issued for acquisition 4,447 0.9 880.6 881.5 — 881.5 —

Non-controlling interests — — — — — — 248.7 248.7 —

Net redemptions from sponsored investment products — — — — — — — — ( 67.7 )

Net deconsolidations of sponsored investment products — — — — — — — — ( 501.1 )

Balances at December 31, 2021 229,175 45.8 919.8 8,083.6 ( 26.5 ) 9,022.7 248.7 9,271.4 982.3

Net income — — — 3,082.9 — 3,082.9 — 3,082.9 15.6

Net income (loss) — — — 1,557.9 — 1,557.9 ( 22.9 ) 1,535.0 ( 108.3 )

Other comprehensive income (loss), net of tax — — — — ( 26.5 ) ( 26.5 ) — ( 26.5 ) ( 21.0 )

1 unchanged sentence

— — — ( 1,108.7 ) — ( 1,108.7 ) — ( 1,108.7 ) —

Special cash dividend declared ($ 3.00 per share)

— — — ( 699.5 ) — ( 699.5 ) — ( 699.5 ) —

Common stock-based compensation plans activity:

5 unchanged sentences

Common shares repurchased ( 6,751 ) ( 1.3 ) ( 731.4 ) ( 122.6 ) — ( 855.3 ) — ( 855.3 ) —

Common shares issued for acquisition 4,447 .9 880.6 — — 881.5 — 881.5 —

Non-controlling interests — — — — — — 248.7 248.7

Net redemptions into sponsored investment products — — — — — — — — ( 67.7 )

Net distributions to non-controlling interests in consolidated entities — — — — — — ( 35.1 ) ( 35.1 )

Net redemptions from sponsored investment products — — — — — — — — ( 49.3 )

Net deconsolidations of sponsored investment products — — — — — — — — ( 147.0 )

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Net income (loss) — — — 1,788.7 — 1,788.7 44.6 1,833.3 47.0

Other comprehensive loss, net of tax — — — — ( 26.5 ) ( 26.5 ) — ( 26.5 ) ( 21.0 )

Other comprehensive income (loss), net of tax — — — — 5.5 5.5 — 5.5 12.7

Dividends declared ($ 4.88 per share)

8 unchanged sentences

Net distributions to non-controlling interests in consolidated entities — — — — — — ( 43.3 ) ( 43.3 ) —

Net redemptions from sponsored investment products — — — — — — — — ( 49.3 )

Net subscriptions into sponsored investment products — — — — — — — — 356.9

Net deconsolidations of sponsored investment products — — — — — — — — ( 479.2 )

Balances at December 31, 2023

223,938 $ 44.8 $ 431.7 $ 9,076.1 $ ( 47.5 ) $ 9,505.1 $ 192.0 $ 9,697.1 $ 594.1

(1) Accumulated other comprehensive income

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Rowe Price Group, Inc.

derives its consolidated revenues and net income primarily from investment advisory services that its subsidiaries provide to individual and institutional investors in the T.

derives its consolidated revenues and net income primarily from investment advisory services that its subsidiaries provide to individual and institutional investors that invest in a broad range of investment solutions across equity, fixed income, multi-asset, and alternative capabilities.

We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services;

participant recordkeeping and transfer agent services for defined contribution retirement plans;

trust services;

and non-discretionary advisory services through model delivery.

The investment solutions are provided in a number of vehicles including the T.

Rowe Price U.S.

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open-ended investment products offered to investors outside the U.S., products offered through variable annuity life insurance plans in the U.S., affiliated private investment funds and collateralized loan obligations.

We also provide certain investment advisory clients with related administrative services, including distribution, mutual fund transfer agent, accounting, and shareholder services;

participant recordkeeping and transfer agent services for defined contribution retirement plans;

trust services;

and non-discretionary advisory services through model delivery.

On December 29, 2021, we completed our acquisition of Oak Hill Advisors, L.P., a leading alternative credit manager, and other entities that have common ownership (collectively, "OHA").

We acquired 100 % of the equity interests of Oak Hill Advisors, L.P., 100 % of the equity interests in entities that make co-investments in certain affiliated private investment funds (the "co-investment entities") and a majority of the equity interests in entities that have interests in general partners of affiliated private investment funds and are entitled to a disproportionate allocation of income (the "carried interest entities").

The acquisition accelerated our expansion into alternatives investment markets and complemented our existing global platform and ongoing strategic initiatives in our core investments and distribution capabilities.

OHA and its advisory affiliates provide investment advisory, asset management and other advisory services primarily to affiliated private investment funds and private accounts investing in leveraged loans, high yield bonds, structured products, private lending, distressed securities and turnaround investments.

Investment advisory revenues depend largely on the total value and composition of assets under our management.

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Actual results may vary from our estimates.

We completed our acquisition of Oak Hill Advisors, L.P.

and other entities that have common ownership (collectively, "OHA") on December 29, 2021, therefore, our results of operations for 2021 does not include any financial results of OHA.

Additionally, certain prior period tax-related amounts were recast to conform to current year presentation.

INFLATION REDUCTION LEGISLATION.

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Among other things, the IRA created a 15% minimum tax on adjusted book income effective for taxable years beginning after December 31, 2022 as well as an excise tax of 1% on stock repurchases, net of stock issuances, for publicly traded companies effective for net stock repurchases made after December 31, 2022.

We do not believe the impact of the IRA’s provisions will be material to our financial position and results of operations.

The impact of the IRA’s provisions was not material to our financial position and results of operations.

NEWLY ISSUED BUT NOT YET ADOPTED ACCOUNTING GUIDANCE.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-07 - Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .

The amendment requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker by reportable segment and clarifies that single reportable segment entities are required to apply all existing segment disclosures in the guidance.

The amendment is effective for the firm on January 1, 2024 and is retrospectively applicable to all prior periods presented in its consolidated financial statements.

We are currently evaluating the impact of adopting this standard, however, we expect the standard to result in additional segment footnote disclosures.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09 - Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

This amendment is effective for the firm on January 1, 2025.

We are currently evaluating the impact of adopting this standard and have not yet determined our transition approach.

We have considered all other newly issued accounting guidance that is applicable to our operations and the preparation of our consolidated statements, including those we have not yet adopted.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

Business Combinations

We account for business combinations under the acquisition method of accounting, whereby we recognize assets acquired and liabilities assumed, including separately identified intangible assets, contingent liabilities, and non-controlling interests, based on the fair value estimates as of the date of the acquisition.

Any excess purchase consideration over the fair value of the identified net assets acquired is recognized as goodwill.

During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded in earnings.

Consolidation

Our consolidated financial statements include the accounts of all subsidiaries and sponsored investment products in which we have a controlling interest.

Our consolidated financial statements include the accounts of all wholly-owned subsidiaries, majority-owned entities that are entitled to a disproportionate allocation of income of affiliated private investment funds ("carried interest entities"), and sponsored investment products in which we have a controlling interest.

We are deemed to have a controlling interest when we own the majority of a voting interest entity ("VOE") or are deemed to be the primary beneficiary of a variable interest entity ("VIE").

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We consolidate a VIE when we are the primary beneficiary, which is the party that has both (i) the power to direct the activities of the VIE that most significantly impact its economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the VIE that could potentially be significant.

Our Luxembourg-based SICAV funds, and other sponsored investment products regulated outside the U.S., were determined to be VIEs.

In addition, as part of the OHA acquisition, we acquired a majority of the carried interest entities.

These carried interest entities are considered VIEs and T.

Rowe Price is determined to be the primary beneficiary.

Our Luxembourg-based SICAV funds, and other sponsored investment products regulated outside the U.S., that we provide seed capital were determined to be VIEs and are consolidated when we are the primary beneficiary.

We have determined that our carried interest entities are considered VIEs and T.

Rowe Price is determined to be the primary beneficiary of these entities.

Further, our carried interest entities hold general partner interests in affiliated private investment funds that are VIEs, though these carried interest entities were determined to not be the primary beneficiary.

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Those investments that we do not consolidate are carried at fair value using the quoted closing NAV per share of each fund as of the balance sheet date.

The underlying investments held by our consolidated sponsored investment products retain investment company specialized accounting in consolidation, are considered securities held in a trading account for cash flow reporting purposes, and are valued in accordance with the valuation and pricing policy used to value our assets under management which is further described in the Revenue Recognition policy below.

The underlying portfolio investments held by our consolidated sponsored investment products retain investment company specialized accounting in consolidation;

are considered securities held in a trading account for cash flow reporting purposes;

and are valued in accordance with the valuation and pricing policy used to value our assets under management which is further described in the Revenue Recognition policy below.

We elected to value our interest in investment partnerships, for which market prices or quotations are not readily available, at fair value using the NAV per share as a practical expedient.

1 unchanged sentence

Equity method investments

Equity method investments consist of investments in entities, including sponsored investment products, for which we have the ability to exercise significant influence over the operating and financial policies of the investee.

Equity method investments consist of investments in entities, including sponsored investment products and investments in affiliated private investments funds - seed/co-investment, for which we have the ability to exercise significant influence over the operating and financial policies of the investee.

The carrying values of these investments are adjusted to reflect our proportionate share of the investee's net income or loss, any unrealized gain or loss resulting from the translation of foreign-denominated financial statements into U.S.

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The basis difference between our carrying value and our proportionate share of UTI’s book value is primarily related to consideration paid in excess of the stepped-up basis of assets and liabilities on the date of purchase.

Investments in affiliated private investment funds

Investments in affiliated private investment funds - carried interest

The investments in affiliated private investment funds - carried interest represent interests in general partners of affiliated private investment funds that have arrangements that entitle them to a disproportionate allocation of income, which is also referred to as carried interest.

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Intangible assets

Intangible assets consist primarily of acquired investment advisory agreements and the OHA trade name.

The fair values of the acquired investment advisory agreements are based on the net present value of estimated future cash flows attributable to the agreements, which include significant assumptions related to revenue, discount rate, and effective tax rate.

Intangible assets consist primarily of acquired investment advisory agreements and trade name.

The fair values of the acquired investment advisory agreements were based on the net present value of estimated future cash flows attributable to the agreements, which included significant assumptions related to revenue, discount rate, and effective tax rate.

The investment advisory agreement intangible assets are amortized using the straight-line method over their estimated useful lives unless the asset is determined to have an indefinite life as there is no foreseeable limit on the contract period.

The weighted average remaining useful life of definite-lived intangibles assets is approximately 5.5 years.

The trade name fair value is determined using the relief from royalty method based on net present value of estimated cash flows, which include significant assumptions about royalty rate, revenue growth rate, discount rate and effective tax rate.

Additionally, we identified the trade name intangible asset as indefinite-lived as there is no foreseeable limit on the use of the OHA name.

The trade name fair value was determined using the relief from royalty method based on net present value of estimated cash flows, which include significant assumptions about royalty rate, revenue growth rate, discount rate and effective tax rate.

Additionally, we identified the trade name intangible asset as indefinite-lived as there is no foreseeable limit on use of the acquired name.

Indefinite-lived intangible assets are tested for impairment annually or more frequently when an event occurs or circumstances change that more likely than not reduce the fair value of the indefinite-lived intangible asset below its carrying value.The fair value for each asset is determined using a discounted cash flow analysis where estimated future cash flows were discounted to arrive at a single present value amount.

This approach includes inputs that require significant management judgment, the most relevant of which include revenue growth, discount rates, and effective tax rates.

Definite-lived intangible assets are tested when there is an indication of impairment.

Impairment is indicated when the carrying value of the asset is not recoverable and exceeds its fair value.

If indicators are present, we perform a

recoverability test by comparing the estimated undiscounted future cash flows attributable to the asset group in question to the asset group’s carrying amount.

If indicators are present, we perform a recoverability test by comparing the estimated undiscounted future cash flows attributable to the asset group in question to the asset group’s carrying amount.

If the undiscounted estimated future cash flows are less than the carrying amount of the asset, the asset’s cost is adjusted to fair value and an impairment loss is recognized.

value is determined using a discounted cash flow analysis where estimated future cash flows are discounted to arrive at a single present value amount.

This approach includes inputs that require significant management judgment, the most relevant of which included revenue growth, discount rates, and effective tax rates.

We internally conduct, manage, and report our operations as one investment advisory business.

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Stock-based compensation

We maintain three stockholder-approved employee long-term incentive plans (2020 Long-Term Incentive Plan, 2012 Long-Term Incentive Plan, and 2004 Stock Incentive Plan (collectively, the LTI Plans), and two stockholder-approved non-employee director plans (2017 Non-Employee Director Equity Plan and 2007 Non-Employee Director Equity Plan, collectively the Director Plans).

We maintain two stockholder-approved employee long-term incentive plans (2020 Long-Term Incentive Plan and 2012 Long-Term Incentive Plan (collectively, the LTI Plans), and two stockholder-approved non-employee director plans (2017 Non-Employee Director Equity Plan and 2007 Non-Employee Director Equity Plan, collectively the Director Plans).

We believe that our stock-based compensation programs align the interests of our employees and directors with those of our common stockholders.

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Vesting of these awards is based on the individual continuing to render service over an average 5.0 year graded schedule.

All restricted stock unit holders receive non-forfeitable cash dividends and cash dividend equivalents, respectively, on our dividend payable date.

All restricted stock unit holders receive non-forfeitable cash dividend equivalents on our dividend payable date.

We are also authorized to grant qualified incentive and nonqualified fixed stock options with a maximum term of 10 years.

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We have not granted options to non-employee directors since 2016.

Both time-based and performance-based restricted stock units are valued on the grant-date using the closing market price of our common stock.

We recognize the grant-date fair value of these awards as compensation expense ratably over the awards' requisite service period.

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We account for forfeitures as they occur.

Both time-based and performance-based restricted stock units are valued on the grant-date using the closing market price of our common stock.

Earnings per share

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dollars using year-end exchange rates, and revenues and expenses are translated using weighted-average exchange rates for the period.

The changes in accumulated balances of each component of other comprehensive income, the deferred tax impacts of each component, and information about significant items reclassified out of accumulated other comprehensive income are presented in the notes to the financial statements.

The notes also indicate the line item of our consolidated statements of income in which the significant reclassifications were recognized.

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The amount of the reclassification depends on the investment’s accounting treatment before and after the change in ownership percentage.

NOTE 2 - ACQUISITION .

As discussed in Note 1, on December 29, 2021, T.

Rowe Price Group, Inc.

and certain wholly-owned subsidiaries completed the acquisition of Oak Hill Advisors, L.P., a leading alternative credit manager, and other entities that have common ownership (collectively, "OHA").

The upfront purchase consideration transferred included cash consideration of $ 2,487.4 million, and 4.4 million shares of common stock valued at $ 881.5 million.

The upfront purchase consideration included the retirement of $ 217.1 million of OHA debt.

An additional $ 8.5 million of cash was paid to the sellers in June 2022 following the finalization of the purchase consideration.

The equity consideration transferred was restricted from sale for one year .

In addition, contingent consideration in the amount of up to $ 900.0 million in cash may be due as part of an earnout payment starting in 2025 and ending in 2027, upon satisfying or exceeding certain defined revenue targets.

These defined revenue targets are evaluated on a cumulative basis beginning at the end of 2024, with the ability to extend two additional years if the defined revenue targets are not achieved.

The earnout amount is subject to a proportional reduction if OHA's actual revenue at the end of the earnout period does not meet the defined revenue targets and could result in no earnout payout if OHA's actual revenue falls below 75 % of the defined revenue target.

About 22 % of the earnout is conditioned upon continued service with T.

Rowe Price and was excluded from the purchase consideration transferred as further discussed in Compensation Arrangements below.

The portion of the earnout which is not conditioned upon continued service with T.

Rowe Price had a fair value of $ 95.8 million and $ 306.3 million at December 31, 2022 and 2021, respectively, and is recorded as a contingent consideration liability in our consolidated balance sheets.

The following table sets forth the preliminary and revised fair values of the assets acquired and liabilities assumed in connection with the acquisition:

(in millions) Acquisition date fair value Adjustments Revised fair value

Cash and cash equivalents $ 22.1 $ — $ 22.1

Accounts receivable and accrued revenue 122.2 — 122.2

Investments 891.0 — 891.0

Property, equipment and software, net 22.4 — 22.4

Operating lease asset 101.5 — 101.5

Intangible assets 913.4 — 913.4

Goodwill 2,027.5 ( 50.4 ) 1,977.1

Other assets 27.2 — 27.2

Total assets 4,127.3 ( 50.4 ) 4,076.9

Accounts payable and accrued expenses $ 133.3 $ — $ 133.3

Operating lease liability 114.1 — 114.1

Deferred tax liabilities, included in other assets in the consolidated balance sheet 125.7 ( 9.6 ) 116.1

Contingent consideration liability 306.3 ( 49.3 ) 257.0

Total liabilities 679.4 ( 58.9 ) 620.5

Total identifiable net assets $ 3,447.9 $ 8.5 $ 3,456.4

The adjustments to the acquisition date fair values are a result of new information obtained about facts that existed as of the acquisition date.

As part of the acquisition, T.

Rowe Price Group, Inc.

incurred approximately $ 31.9 million of acquisition-related costs in 2021 that are included in general, administrative and other expenses in our 2021 consolidated statement of income.

We incurred additional $ .9 million of acquisition-related costs during 2022.

GOODWILL AND INTANGIBLE ASSETS

Goodwill is comprised of future benefits for T.

Rowe Price from the OHA acquisition, which do not qualify as separately recognized intangible assets.

Approximately $ 1.2 billion of the goodwill generated by the acquisition is deductible in future periods for U.S.

federal income tax purposes.

The remaining goodwill is not deductible for tax purposes.

The non-deductible goodwill is part of a tax basis difference associated with our investment in OHA, and, as permitted by accounting guidance, we have adopted an accounting policy to not record a related deferred tax liability.

The separately identified intangible assets at acquisition close included an indefinite-lived trade name of $ 134.7 million and both indefinite- and definite-lived investment advisory agreements totaling $ 778.7 million.

See Note 10 for more details on goodwill and the intangible assets.

As part of the OHA acquisition, investments in affiliated private investment funds were recorded at fair value of $ 761.1 million as of the acquisition date.

The difference of $ 375.0 million between the carrying value of these investments on OHA’s books and their fair value represented the basis difference, of which $ 306.5 million is being amortized on a straight-line basis over the funds’ estimated weighted average life of 5.9 years at acquisition.

Rowe Price acquired the majority, but not 100 % of the equity interest in these carried interest entities, non-controlling interests were recorded in permanent stockholders' equity at a fair value of $ 248.7 million as of the

acquisition date.

The fair value of these non-controlling interests included a basis difference of $ 154.3 million, of which $ 129.1 million is attributable to funds with a definite life and is being amortized on a straight-line basis over the funds’ estimated weighted average life of 5.9 years at acquisition.

The non-controlling interests are held by employees that participate in the management of the investments in affiliated private investment funds and therefore profit and loss allocations is reflected as compensation expense in the consolidated statements of income.

COMPENSATION ARRANGEMENTS

In connection with the OHA acquisition, a portion of the upfront purchase consideration and future payments to sellers or employees related to other compensation arrangements were conditioned upon continued service or a future performance period.

These arrangements are treated as post-combination compensation expense recognized over a period of three to five years , and had an aggregate fair value of $ 459.9 million as of the acquisition closing date.

These arrangements include an agreement among certain sellers whereby $ 283.2 million of their upfront purchase consideration would be forfeited and redistributed among the other sellers who are party to the agreement if employment with T.

Rowe Price or an affiliate was voluntarily terminated prior to the fifth anniversary of the acquisition date.

Additionally, these arrangements include about 22 % of the total earnout with a fair value of $ 88.2 million as of December 31, 2021, and $ 58.3 million in retention bonuses that will be paid to certain employees of OHA following the completion of a service period.

The aggregate fair value of $ 459.9 million also includes an agreement, referred to as the Value Creation Agreement, whereby certain employees of OHA will receive incentive payments in the aggregate equal to 10 % of the appreciated value of the OHA business, subject to an annualized preferred return to T.

Rowe Price, on the fifth anniversary of the acquisition date.

The fair value of the earnout and Value Creation Agreement will be remeasured each reporting period and recognized over the related service periods.

See Note 6 for more information on the Value Creation Agreement.

CASH FLOW INFORMATION

For the 2021 statement of cash flow, there were non-cash financing activities of $ 881.5 million for the issuance of T.

Rowe Price Group, Inc.

common stock as part of the purchase consideration and non-cash investing activities of $ 306.3 million related to the contingent consideration for the earnout.

PRO FORMA SUMMARY

The following unaudited pro forma summary presents combined results of operations of T.

Rowe Price Group, Inc.

as if the OHA acquisition had occurred on January 1, 2020.

The pro forma adjustments include acquisition-related costs and adjustments to intangible amortization expense.

These pro forma results are not indicative of results of operations that would have been achieved had the acquisition occurred on January 1, 2020, nor are they indicative of future results of operations of the combined entity.

Pro forma years ended (unaudited)

(in millions) 12/31/2021 12/31/2020

Revenue $ 8,162 $ 6,479

Net income $ 3,016 $ 2,241

NOTE 2 – CASH EQUIVALENTS.

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NOTE 3 – INFORMATION ABOUT RECEIVABLES, REVENUES, AND SERVICES.

Revenues earned during the years ended December 31, 2022, 2021 and 2020, under agreements with clients include:

Administrative, distribution, and servicing fees

(in millions) Investment advisory fees Administrative fees Distribution and servicing fees Capital allocation-based income Net revenues

mutual funds $ 3,486.2 $ 338.3 $ 92.2 $ — $ 3,916.7

Subadvised funds, separate accounts, collective investment trusts, and other investment products 2,482.9 16.1 — ( 54.3 ) 2,444.7

Other clients — 127.0 — — 127.0

$ 5,969.1 $ 481.4 $ 92.2 $ ( 54.3 ) $ 6,488.4

Administrative, distribution, and servicing fees

(in millions) Investment advisory fees Administrative fees Distribution and servicing fees Net revenues

mutual funds $ 4,388.9 $ 333.4 $ 120.3 $ 4,842.6

Subadvised funds, separate accounts, collective investment trusts, and other investment products 2,709.2 — — 2,709.2

Other clients — 120.1 — 120.1

$ 7,098.1 $ 453.5 $ 120.3 $ 7,671.9

Administrative, distribution, and servicing fees

(in millions) Investment Advisory Fees Administrative Fees Distribution and servicing fees Net Revenues

mutual funds $ 3,639.9 $ 291.3 $ 111.3 $ 4,042.5

Subadvised funds, separate accounts, collective investment trusts, and other investment products 2,053.2 — — 2,053.2

Other clients — 111.0 — 111.0

$ 5,693.1 $ 402.3 $ 111.3 $ 6,206.7

The following table details the investment advisory fees earned from clients by their underlying asset class.

Revenues earned during the years ended December 31, 2023, 2022 and 2021, are included in the table below along with details of investment advisory revenues earned from clients by their underlying asset class.

We have also included average assets under management by asset class, on which we earn the investment advisory revenues.

(in millions) 2023 2022 2021

Investment advisory fees

Equity $ 3,445.5 $ 3,759.7 $ 4,899.9

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Multi-asset 1,583.4 1,508.9 1,788.4

3,486.2 4,388.9 3,639.9

Subadvised funds, separate accounts, collective investment trusts, and other investment products

Equity and blended assets 1,344.4 1,781.4 1,326.3

Fixed income, including money market 166.0 164.6 149.3

Multi-asset 699.4 763.2 577.6

Alternatives 317.3 273.1 —

2,482.9 2,709.2 2,053.2

Total $ 5,969.1 $ 7,098.1 $ 5,693.1

The following table summarizes the investment portfolios and assets under management on which we earned investment advisory fees.

(in billions) Average during As of December 31,

2022 2021 2020 2022 2021

Equity $ 424.9 $ 540.4 $ 417.0 $ 369.8 $ 553.9

Fixed income, including money market 81.0 86.4 76.8 73.8 85.3

Multi-Asset 199.8 229.8 193.9 184.2 232.2

705.7 856.6 687.7 627.8 871.4

Subadvised funds, separate accounts, collective investment trusts, and other investment products

Total investment advisory fees $ 5,747.7 $ 5,969.1 $ 7,098.1

Capital allocation-based income 161.9 ( 54.3 ) —

Total administrative, distribution, and servicing fees 550.9 573.6 573.8

Net revenues $ 6,460.5 $ 6,488.4 $ 7,671.9

Average AUM (in billions) :

Equity $ 705.2 $ 763.6 $ 972.0

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Alternatives 45.5 42.7 —

692.7 742.7 560.2 646.9 816.4

Total $ 1,398.4 $ 1,599.3 $ 1,247.9 $ 1,274.7 $ 1,687.8

Investors that we serve are primarily domiciled in the U.S.;

investment advisory clients outside the U.S.

account for about 9.1 % and 9.9 % of our assets under management at December 31, 2022 and 2021, respectively.

Average AUM $ 1,362.3 $ 1,398.4 $ 1,599.3

Total net revenues earned from sponsored investment products totaled $ 5,327.9 million in 2023, $ 5,326.3 million in 2022, and $ 6,259.3 million in 2021.

Accounts receivable from these products aggregate to $ 533.9 million at December 31, 2023 and $ 492.4 million at December 31, 2022.

Investors that we serve are primarily domiciled in the U.S.;

investment advisory clients outside the U.S.

account for 8.6 % and 9.1 % of our assets under management at December 31, 2023 and 2022, respectively.

NOTE 4 – INVESTMENTS.

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Seed capital 91.1 125.7

Supplemental savings plan liability economic hedges 21.0 —

Investment in UTI Asset Management Company Limited (India) 164.5 158.8

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Total $ 2,554.7 $ 2,539.2

INVESTMENTS AT FAIR VALUE

The investment partnerships are carried at fair value using net asset value ("NAV") per share as a practical expedient.

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The investment strategies of these partnerships include growth equity, buyout, venture capital, and real estate.

During 2022, we recognized $ 240.5 million of net unrealized losses on investments held at fair value that were still held at December 31, 2022.

For 2021, we recognized $ 63.6 million of net unrealized gains on investments held at fair value that were still held at December 31, 2021.

During 2023, we recognized $ 86.7 million of net unrealized gains on investments held at fair value that were still held at December 31, 2023.

For 2022, we recognized $ 240.5 million of net unrealized losses on investments held at fair value that were still held at December 31, 2022.

For 2021, we recognized $ 63.6 million of net unrealized gains on investments held at fair value that were still held at December 31, 2021.

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Additionally, during 2023 and 2022, certain sponsored investment products that were being accounted for as either equity method or fair value investments were consolidated, as we regained a controlling interest.

The net impact of these changes on our consolidated balance sheets and statements of income as of the dates the portfolios were deconsolidated or reconsolidated is detailed below.

The net impact of these changes on our consolidated balance

sheets and statements of income as of the dates the portfolios were deconsolidated or reconsolidated is detailed below.

(in millions) 2023 2022 2021

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The gains recognized upon deconsolidation were the result of reclassifying currency translation adjustments accumulated on certain sponsored investment products with non-USD functional currencies from accumulated other comprehensive income to non-operating income.

In October 2020, UTI Asset Management Company Limited (India), one of our equity method investments, held an initial public offering in India.

As part of the offering, we sold a portion of our 26 % interest and recorded a net gain on the sale of approximately $ 2.8 million in the fourth quarter of 2020.

Subsequent to the sale, we have an ownership interest of 23 % in UTI Asset Management Company Limited (India).

INVESTMENTS IN AFFILIATED COLLATERALIZED LOAN OBLIGATIONS.

As part of the OHA acquisition, we acquired long-term investments in collateralized loan obligations ("CLOs") and assumed debt associated with these investments.

The European CLOs, which were valued at $ 116.0 million at December 31, 2022, invest in 5 % vertical strips in each class of rated notes and subordinated notes.

These investments represent European CLOs that invest in 5 % vertical strips in each class of rated notes and subordinated notes.

Certain investments in the debt tranches of the CLOs are measured at amortized cost as investments held to maturity and included in investments in our consolidated balance sheets.

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Certain of the investments in the debt tranches of the CLOs have been pledged as collateral against the repurchase agreements.

There is debt associated with our long-term investments in affiliated CLOs.

As of December 31, 2022 and 2021, the debt is carried at $ 103.0 million and $ 113.5 million, respectively, and is reported in accounts payable and accrued expenses in our consolidated balance sheets.

The debt includes outstanding repurchase agreements of € 66.7 million (equivalent to $ 71.3 million at December 31, 2022 and $ 75.9 million at December 31, 2021 at the respective EUR spot rates) and collateralized by our CLO investments.

Interest income on the underlying investments accrues quarterly and those amounts are retained by the counterparty.

Interest expense accrues quarterly, which is equal to the interest income retained by the counterparty, plus 0.5 % per annum on the notes of the underlying pledged investments.

We still hold the legal rights and obligations associated with the underlying assets and therefore continue to satisfy the United Kingdom risk retention requirements.

The debt also includes outstanding note facilities of € 35.6 million (equivalent to $ 31.7 million at December 31, 2022 and $ 36.9 million at December 31, 2021 at the respective EUR spot rates) and are collateralized by first priority security interests in the assets of the consolidated OHA entity that is party to the notes.

These notes bear interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 3.16 % to 3.41 % as of December 31, 2022.

The notes mature on various dates through 2032 or if the investment is paid back in full or cancelled, whichever is sooner.

Payments are required on the debt when payments are received on the investments.

Each deed contains covenants which, if not met, may cause the termination of the note facility and declare principal and interest immediately due and payable.

The consolidated entity that is the party to the notes was in compliance with all such covenants at December 31, 2022 and 2021.

There is debt associated with our long-term investments in affiliated collateralized loan obligations (“CLOs”).

This debt is carried at $ 89.4 million at December 31, 2023 and $ 103.0 million at December 31, 2022, and is reported in accounts payable and accrued expenses in our consolidated balance sheets.

The debt includes outstanding repurchase agreements of € 65.5 million (equivalent to $ 72.3 million at December 31, 2023 and $ 71.3 million at December 31, 2022 at the respective EUR spot rates) that are collateralized by the CLO investments.

The debt also includes outstanding note facilities of € 15.5 million (equivalent to $ 17.1 million at December 31, 2023 and $ 31.7 million at December 31, 2022 at the respective EUR spot rates) that are collateralized by first priority security interests in the assets of a consolidated subsidiary that is party to the notes.

These note facilities bear interest at rates based on EURIBOR plus the initial margin, which equals all-in rates ranging from 1.15 % to 12.87 % as of December 31, 2023.

The debt matures on various dates through 2035 or if the investments are paid back in full or cancelled, whichever is sooner.

VARIABLE INTEREST ENTITIES.

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In addition to such amounts, a percentage of prior distributions may be called under certain circumstances.

INVESTMENTS IN AFFILIATED FUNDS.

As part of the OHA acquisition in December 2021, we acquired a majority of the equity interests in entities that have interests in general partners of affiliated private investment funds and are entitled to a disproportionate allocation of income.

These entities are considered variable interest entities and are consolidated as T.

INVESTMENTS IN AFFILIATED FUNDS - CARRIED INTEREST.

Certain of the investments in affiliated funds represent the general partners interest in affiliated private investment funds and are entitled to a disproportionate allocation of income.

These general partner entities are considered variable interest entities and are consolidated as T.

Rowe Price is determined to be the primary beneficiary.

The total assets, liabilities and non-controlling interests of these consolidated variable interest entities as of December 31, 2022 and 2021 are as follows:

The total assets, liabilities and non-controlling interests of these consolidated variable interest entities as of December 31 are as follows:

(in millions) 2023 2022

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We determine the fair value of our cash equivalents and certain investments using the following broad levels of inputs as defined by related accounting standards:

Level 1 – quoted prices in active markets for identical securities.

Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar

securities, interest rates, prepayment speeds, and credit risk.

These inputs are based on market data

obtained from independent sources.

Level 1 – quoted prices in active markets for identical financial instruments accessible at the reporting date.

Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar financial instruments in active markets, quoted prices for identical or similar financial instruments in inactive markets, interest rates and yield curves, implied volatilities, and credit spreads.

These inputs are based on market data obtained from independent sources.

Level 3 – unobservable inputs reflecting our own assumptions based on the best information available.

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The fair value hierarchy level table above does not include the investment partnerships and other investments for which fair value is estimated using their NAV per share as a practical expedient.

The carrying value of these investments as disclosed in Note 5 were $ 86.4 million and $ 108.1 million at December 31, 2022 and 2021, respectively.

As part of the purchase consideration for our acquisition of OHA in December 2021, there was contingent consideration in the amount of up to $ 900.0 million as part of an earnout payment.

See Note 2 for more details on the earnout arrangement.

The carrying value of these investments as disclosed in Note 4 were $ 69.0 million at December 31, 2023 and $ 86.4 million at December 31, 2022.

As part of the purchase consideration for our acquisition of OHA in December 2021, there was contingent consideration in the amount of up to $ 900.0 million as part of an earnout cash payment that may be due starting in 2025 and ending in 2027, upon satisfying or exceeding certain defined revenue targets.

These defined revenue targets are evaluated on a cumulative basis beginning at the end of 2024, with the ability to extend two additional years if the defined revenue targets are not achieved.

About 22 % of the earnout is conditioned upon continued service with T.

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The fair value of the earnout deemed compensatory is remeasured each reporting period and recognized over the related service period.

For the year ended December 31, 2022, $ 13.5 million was recorded as part of compensation expense in our consolidated statements of income for the portion of the earnout deemed compensatory.

For the year ended December 31, 2023 and 2022, the amounts recognized as part of compensation expense in our consolidated statements of income were immaterial.

The change in the contingent consideration liability measured at fair value for which we used Level 3 inputs to determine fair value is as follows:

Contingent Consideration Liability

(in millions) Year ended 12/31/2022

Balance at beginning of period $ 306.3

(in millions) 12/31/2023

Balance at beginning of the year $ 95.8 $ 306.3

Measurement period adjustment — ( 49.3 )

Unrealized gains, included in earnings ( 82.4 ) ( 161.2 )

Balance, December 31, 2022

Balance at end of the year $ 13.4 $ 95.8

The fair value of the contingent consideration is measured using the Monte Carlo simulation methodology of valuation.

The most significant assumptions used relate to the discount rates and from changes pertaining to the achievement of the defined financial targets.

In addition, simultaneously with the OHA acquisition, a Value Creation Agreement was entered into whereby certain employees of OHA will receive incentive payments based on the appreciated value of the OHA business on the fifth anniversary of the acquisition date.

See Note 2 for more details on this arrangement.

In addition, simultaneously with the OHA acquisition, a Value Creation Agreement was entered into whereby certain employees of OHA will receive incentive payments equal to 10% of the appreciated value of the OHA business on the fifth anniversary of the acquisition date, subject to an annualized preferred return to T.

This arrangement is treated as a post-combination compensation expense.

This arrangement will be remeasured at fair value at each reporting date and recognized over the related service period.

For the year ended December 31, 2022, $ 8.9 million was recognized as part of compensation expense in our consolidated statements of income.

During 2022, we recognized impairment charges on certain of our identified intangible assets related to the OHA acquisition.

For the year ended December 31, 2023 and 2022, the amounts recognized as part of compensation expense in our consolidated statements of income were immaterial.

During 2023 and 2022, we recognized impairment charges on certain of our identified intangible assets related to the OHA acquisition.

As part of the impairment recognition, a fair value measurement was determined for these intangible assets.

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Since third-party investors in these investment products have no recourse to our credit, our overall risk related to the net assets of consolidated sponsored investment products is limited to valuation changes associated with our net interest.

We, however, are required to recognize the valuation changes associated with all underlying investments held by these products in our consolidated statements of income and disclose the portion attributable to third-party investors as net income attributable to redeemable non-controlling interests.

However, we are required to recognize the valuation changes associated with all underlying investments held by these products in our consolidated statements of income and disclose the portion attributable to third-party investors as net income attributable to redeemable non-controlling interests.

The operating results of the consolidated sponsored investment products, are reflected in our consolidated statements of income for the year ended December 31 as follows:

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We determine the fair value of investments held by consolidated sponsored investment products using the following broad levels of inputs as defined by related accounting standards:

Level 1 – quoted prices in active markets for identical securities.

Level 2 – observable inputs other than Level 1 quoted prices including, but not limited to, quoted prices for similar

securities, interest rates, prepayment speeds, and credit risk.

These inputs are based on market data

obtained from independent sources.

Level 1 – quoted prices in active markets for identical financial instruments accessible at the reporting date.

These inputs are based on market data obtained from independent sources.

Level 3 – unobservable inputs reflecting our own assumptions based on the best information available.

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These inputs are developed based on the company's own data, which is adjusted if information indicates that market participants would use different assumptions.

Changes in fair value Level 3 are solely attributable to the purchases of investments during 2022.

There were no transfers into or out of Level 3 of the fair value hierarchy for the year ended December 31, 2022.

Changes in fair value Level 3 are solely attributable to the deconsolidation of certain investments in 2023, and the purchase of investments in 2022.

The following table provides information about the significant Level 3 inputs:

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Other investments $ 71.8 Market Yield (Comparables) Yield 9.8 % - 12.4 %

There were no transfers into or out of Level 3 of the fair value hierarchy for the year ended December 31, 2023 or 2022.

NOTE 7 – LEASES.

All of our leases are operating leases and primarily consist of real estate leases for corporate offices, data centers, and other facilities.

In December 2020, we announced that we signed a letter of intent for a long-term lease for our global headquarters in a different downtown location in Baltimore, Maryland.

We plan to relocate our operations from our East Pratt Street offices in 2024.

As of December 31, 2022, the weighted-average remaining lease term on our leases is approximately 10.6 years and the weighted-average discount rate used to measure the lease liabilities is 3.3 %.

In December 2020, we announced that we signed a letter of intent for a long-term lease for our global headquarters in a different downtown location in Baltimore, Maryland and plan to relocate in late 2024.

At December 31, 2023, the weighted-average remaining lease term on our leases is approximately 10.3 years and the weighted-average discount rate used to measure the lease liabilities is 3.3 %.

Operating lease expense was $ 52.4 million in 2023, $ 50.0 million in 2022, and $ 32.5 million in 2021.

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We made lease payments of $ 42.4 million during 2023.

Our future undiscounted cash flows related to our operating leases, including operating leases associated with OHA, and the reconciliation to the operating lease liability as of December 31, 2022, are as follows:

Our future undiscounted cash flows related to our operating leases, and the reconciliation to the operating lease liability as of December 31, 2023, are as follows:

(in millions) 2023

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Balance, beginning of the year $ 2,642.8 $ 2,693.2

Acquisition of OHA — 2,027.5

Measurement period adjustments — ( 50.4 )

Balance, end of year $ 2,642.8 $ 2,693.2

Balance, end of the year $ 2,642.8 $ 2,642.8

We evaluate the carrying amount of goodwill in our consolidated balance sheets for possible impairment on an annual basis in the fourth quarter of each year using a fair value approach.

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INTANGIBLE ASSETS .

Our indefinite-lived intangible assets are tested for impairment annually, in the fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the intangible asset is impaired.

Based on a review of qualitative factors, primarily, the current market environment and future outlook, we determined that it was necessary to perform a quantitative impairment test.

The impairment test consists of a comparison of the fair value of an intangible asset with its carrying amount.

During 2022, we determined that the carrying amount of our indefinite-lived intangible assets exceeded their fair value.

Accordingly, we recognized an impairment loss equal to that excess in the amount of $ 99.2 million for the investment advisory agreements and $ 17.6 million for the trade name.

Fair value for each asset was determined using a discounted cash flow analysis where estimated future cash flows were discounted to arrive at a single present value amount.

This approach included inputs that required significant management judgment, the most relevant of which included revenue growth, discount rates, and effective tax rates.

Definite-lived intangible assets are reviewed for impairment whenever events or circumstances indicate that their carrying amount may not be recoverable (i.e., the carrying amount is less than the undiscounted estimated future cash flows).

Based on a review of factors significant to these assets, we determined that the carrying amount is not recoverable from certain of these intangible assets.

Accordingly, we then assessed whether the fair value was less than the asset's carrying amount.

During 2022, we determined that the carrying amount of certain intangible assets exceeded their fair value and recorded an impairment loss equal to that excess in the amount of $ 58.3 million.

Fair value was determined using a discounted cash flow analysis where estimated future cash flows were discounted to arrive at a single present value amount.

This approach included inputs that required significant management judgment, the most relevant of which included revenue growth, discount rates, and effective tax rates.

Should conditions that led us to recognize these impairment charges continue or deteriorate, additional impairments may be recognized in future periods.

As of December 31, 2022, the estimated weighted average remaining life for the definite-lived intangible assets is 6.5 years.

Amortization expense for the definite-lived investment advisory agreement intangible assets was $ 108.5 million for 2022.

Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for 2023 through 2027 is, $ 96.3 million for 2023, $ 93.9 million for 2024, $ 93.2 million for 2025, $ 75.9 million for 2026, and $ 51.6 million for 2027.

Intangible assets consisted of the following:

(in millions) Remaining weighted-average estimated useful life Gross carrying amount Accumulated amortization & impairments Net carrying amount

December 31, 2023

Definite-lived intangible assets - Investment advisory agreements 5.5 613.9 ( 289.3 ) 324.6

December 31, 2022

Definite-lived intangible assets - Investment advisory agreements 6.5 613.9 ( 166.8 ) 447.1

Amortization and Impairments.

We recognized no impairments of indefinite-lived intangibles in 2023 compared with $ 116.8 M in 2022.

Of the $ 116.8 M in impairments in 2022, $ 99.2 M was attributable to investment advisory agreements and $ 17.6 M for the trade name.The impairments in 2022 were the result of reduced growth expectations for both management and incentive fees and a higher discount rate.

We recognized insignificant impairments of definite-lived intangibles in 2023 compared with $ 58.3 M in 2022.

The impairments in 2022 were the result of reduced growth expectations for both management and incentive fees and a higher discount rate.

Amortization and impairment expense for the definite-lived investment advisory agreement intangible assets was $ 122.5 million for 2023.

Estimated amortization expense for the definite-lived investment advisory agreements intangible assets for the five succeeding years is a follows:

(in millions) 2023

NOTE 10 – INCOME TAXES.

INCOME TAX PROVISION.

The provision for income taxes consists of:

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Total $ 654.6 $ 498.6 $ 896.1

Deferred income taxes and benefits arise from temporary differences between taxable income for financial statement and income tax return purposes.

Deferred income taxes (benefits) arise from temporary differences between taxable income for financial statement and income tax return purposes.

The deferred income taxes (benefits) recognized as part of our provision for income taxes is related to:

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Unrealized holding gains recognized in non-operating income 43.8 ( 114.6 ) ( 26.1 )

Foreign net operating losses ( 31.5 ) ( 11.0 ) —

Change in valuation allowance 86.4 16.4 —

Other 3.1 3.6 ( 5.0 )

Total deferred income taxes (benefits) $ ( 207.0 ) $ ( 56.3 ) $ 13.7

Total net deferred income taxes (benefits) $ 8.6 $ ( 207.0 ) $ ( 56.3 )

The following table reconciles the statutory federal income tax rate to our effective income tax rate.

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Net excess tax benefits from stock-based compensation plans activity 0.1 ( 0.4 ) ( 2.1 )

Valuation allowance 3.4 — —

Other items — 0.3 ( 0.1 )

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(2) Net income attributable to redeemable non-controlling interests represents the portion of earnings held in the firm's consolidated investment products, which are not taxable to the firm despite being included in pre-tax income.

DEFERRED TAX ASSETS (LIABILITIES).

The net deferred tax assets recognized in our consolidated balance sheets in other assets as of December 31 relate to the following:

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Stock-based compensation $ 94.5 $ 96.4

Asset impairments — 5.4

Property and equipment 30.6 —

Operating lease liabilities 44.8 48.6

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Supplemental savings plan 195.3 168.9

Net operating loss carry-forwards 42.5 11.0

Net unrealized holding losses recognized in income — 10.6

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Other 9.4 17.3

Total deferred tax assets 477.7 391.7

Valuation allowance ( 102.8 ) ( 16.4 )

Total deferred tax assets, net of valuation allowance 374.9 375.3

Deferred tax liabilities

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Contingent consideration liability ( 47.8 ) ( 32.4 )

Acquired Investments — ( 59.2 )

Property and equipment — ( 12.6 )

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Other ( 17.8 ) ( 10.8 )

( 161.2 ) ( 350.0 )

Net deferred tax (liability) asset $ 216.1 $ ( 7.0 )

We consider the need for valuation allowances against our deferred tax assets to the extent that we are not able to generate sufficient taxable income.

During 2022, we recognized an immaterial amount of valuation allowances against our deferred tax assets.

Unless we are able to generate sufficient taxable income in future periods, we may need to record additional valuation allowances to further reduce our deferred tax assets.

Any additional amount of valuation allowances could materially increase our income tax expenses in future periods.

Total deferred tax liabilities ( 181.1 ) ( 159.2 )

Net deferred tax assets $ 193.8 $ 216.1

We had operating loss carryforwards before tax of $ 173.4 million and $ 61.7 million at December 31, 2023 and 2022, respectively.

Almost all of the operating loss carryforwards are attributable to the United Kingdom and do not expire.

However, the amount of annual profits that can be relieved by losses carried forward is limited to 50%, subject to an annual allowance of GBP 5 million per group.

The increase from 2022 is primarily related to operating losses generated by certain subsidiaries based outside the U.S.

We consider the need for valuation allowances against our deferred tax assets to the extent that we believe that these assets are more likely than not to be realized.

As of December 31, 2023 and 2022, the valuation allowances total $ 102.8 million and $ 16.4 million, respectively.

The increase of $ 86.4 million in the valuation allowances was due to the uncertainty of generating sufficient taxable income in future periods in certain foreign jurisdictions.

Any additional or reversal of valuation allowances in future periods will be dependent on the generation of sufficient taxable income.

The future change in the valuation allowance could materially increase or decrease our income tax expenses in future periods.

We intend to repatriate earnings of T.

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federal or foreign withholding taxes as the PTEP should not be taxed in these jurisdictions.

We did recognize a state deferred tax liability of $ 0.9 million for the intended repatriation as states have varying rules on taxation of these amounts.

OTHER DISCLOSURES.

Other assets include tax refund receivables of $ 81.0 million at December 31, 2023, and $ 71.2 million at December 31, 2022.

Cash outflows from operating activities include net income taxes paid of $ 632.0 million in 2023, $ 794.2 million in 2022, and $ 948.9 million in 2021.

Additional income tax benefit arising from stock-based compensation plans activity totaling $ 7.1 million in 2022, $ 82.7 million in 2021, and $ 61.9 million in 2020 reduced the amount of income taxes that would have otherwise been payable.

These income tax benefits were recognized in the income tax provision.

In 2023, stock-based compensation plans activity increased income tax expense by $ 3.4 million.

In 2022 and 2021, stock-based compensation plans activity decreased income tax expense by $ 7.1 million and $ 82.7 million, respectively.

These income tax impacts were recognized in the income tax provision.

UNRECOGNIZED TAX BENEFITS.

The following table summarizes the changes in our unrecognized tax benefits.

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Exercisable at December 31, 2023 1,476,104 $ 75.39 1.1

Compensation and related costs includes a charge for stock option-based compensation expense.

There was no stock option-based compensation expense in 2022 and 2021, but, in 2020, we recorded $ 2.0 million of stock option-based compensation expense.

There was no stock option-based compensation expense in 2023, 2022, or in 2021.

The total intrinsic value of options exercised was $ 30.6 million in 2023, $ 40.3 million in 2022, and $ 177.2 million in 2021.

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Fourth quarter 2024 50.3

Total 2023 228.5

2026 through 2029 88.5

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Currency translation adjustments $ ( 2.0 ) $ 4.2 $ 2.8

Reclassification adjustment recognized upon partial disposition of equity method investment — — ( 1.7 )

Reclassification adjustment recognized in the provision for income taxes upon deconsolidation of T.

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Other comprehensive income before reclassifications and income taxes ( 1.6 ) 9.0 7.4 7.4

Reclassification adjustments recognized in non-operating income — ( 3.0 ) ( 3.0 ) ( 3.0 )

( 14.6 ) ( 16.9 ) ( 31.5 ) ( 31.5 )

Net deferred tax benefits (income taxes) 0.2 ( 2.1 ) ( 1.9 ) ( 1.9 )

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Balances at December 31, 2023

$ ( 51.9 ) $ 4.4 $ ( 47.5 ) $ ( 47.5 )

The other comprehensive income (loss) in the table above excludes $ 12.7 million in 2023, $( 21.0 ) million in 2022, and $( 26.2 ) million in 2021 of other comprehensive income (loss) related to redeemable non-controlling interests held in our consolidated products.

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CONTINGENCIES.

On October 27, 2022, two individuals filed a class action lawsuit in the United States District Court for the Southern District of California against T.

Rowe Price Retirement Plan Services, Inc.

The complaint alleges that use of certain biometric voiceprints to validate the identity of callers as participants in retirement plans serviced by RPS violated the California Invasion of Privacy Act (“CIPA”) because RPS did not obtain their express written consent.

While we believe the claims are without merit and will vigorously defend the case, we cannot predict at this time the outcome of the litigation or estimate the possible loss or range of loss that may arise from the proceeding.

Various claims against us arise in the ordinary course of business, including employment-related claims.

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SUPPLEMENTAL SAVINGS PLAN.

Through the 2020 plan year, the Supplemental Savings Plan provides certain senior officers the opportunity to defer receipt of up to 100 % of their cash incentive compensation earned for a respective calendar year during which services are provided.

The Supplemental Savings Plan provides certain senior officers the opportunity to defer the lesser of 50 % of their annual cash incentive earned or $ 2 million.

The amounts deferred are adjusted in accordance with the hypothetical investments chosen by the officer from a list of mutual funds.

Beginning with the plan's 2021 year, the maximum that certain senior officers can defer is the lesser of 50 % of their annual cash incentive earned or $ 2 million.

Previous to the 2021 plan year, the officer could initially defer these amounts for a period of two to 15 years.

This was updated to five to 15 years beginning with the plan's 2021 year.

The officer can defer these amounts for a period of five to 15 years.

Certain senior officers elected to defer $ 51.7 million in 2023, $ 51.8 million in 2022, and $ 62.4 million in 2021.

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and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements 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 years in the three-year period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.-generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 16, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

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Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the 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 are a public accounting firm registered with the 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.

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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:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter 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.

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The following are the primary procedures we performed to address the critical audit matter.

We evaluated the design and tested the operational effectiveness of certain controls over the Company’s revenue processes, including manual controls over the completeness and accuracy of AUM data.

We evaluated the design and tested the operating effectiveness of certain controls over the Company’s revenue processes, including manual controls over the completeness and accuracy of AUM data.

We involved IT professionals with specialized skills and knowledge, who assisted in the testing of general IT controls and the interface of data between multiple IT systems used to maintain AUM data.

To assess the AUM data, we (1) compared AUM used in the calculation of a sample of investment advisory fees to the source IT systems, and (2) for a selection of Funds, compared AUM on select dates from the source IT system to the audited Fund financial statements.

/ s/ KPMG LLP

We have served as the Company’s auditor since 2001.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data