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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §240.14a-12

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No fee required

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Fee paid previously with preliminary materials

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Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

1.

To elect eight directors of the Company to serve until the 2023 Annual Meeting of Stockholders and until their respective successors are duly elected and qualified.

2.

To approve, by a non‑binding advisory vote, the compensation of the Company’s named executive officers.

3.

To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the current fiscal year.

4.

To consider and act upon any other matters that may properly be brought before the Annual Meeting and at any adjournments or postponements thereof.

By Order of the Board of Directors.

David M. Billings

General Counsel and Secretary

West Palm Beach, Florida

April 15, 2022

2022 Annual Meeting of Stockholders

Meeting Information

Agenda Items

Recommendation

Additional Detail  

May 27, 2022
2:00 p.m. British Summer Time

(9:00 a.m. Eastern Daylight Time)

Affiliated Managers Group Ltd.

35 Park Lane, London W1K 1RB

United Kingdom

Proposal 1—Election of Directors

FOR each Nominee

 Page 12

Proposal 2—Advisory Vote to Approve Executive Compensation (Say-on-Pay)

FOR

 Page 55

Proposal 3—Ratification of Selection of Independent Registered Public Accounting Firm

FOR

 Page 56

Company Overview

AMG is a leading partner to independent active investment management firms globally. Our strategy is to generate long-term value by investing in a diverse array of high-quality independent partner-owned firms, referred to as “Affiliates,” through a proven partnership approach, and allocating resources across our unique opportunity set to the areas of highest growth and return. AMG’s innovative partnership approach enables each Affiliate’s management team to own significant equity in their firm while maintaining operational and investment autonomy. In addition, AMG offers its Affiliates growth capital, global distribution, and other strategic value-added capabilities, which enhance the long-term growth of these independent businesses and enable them to align equity incentives across generations of principals to build enduring franchises.

Governance Highlights

Highly Independent and Diverse Board

•   All Board committees are composed entirely of independent directors

•   The CEO is the only non-independent director

•   Directors bring a wide array of qualifications, skills, and attributes to AMG’s Board; see Director Experience and Skills Overview on page 14

•   43% of independent directors are women, with three women serving on the Board, and two of three Board committees are chaired by women

•   29% of independent directors are ethnic minorities

Independent Board Chair

•   Transitioned to an independent Board Chair in 2020; structure provides effective checks and balances to ensure the exercise of independent judgment by the Board

•   Current Board Chair is an independent director serving on all Board committees; position has specified duties

Significant Board Refreshment

•   Four of the seven independent directors are new since 2020

•   New Chairs of all three Board committees, and new members placed on each committee, since 2020

•   Fully reconstituted Compensation Committee in 2020

•   Half of new directors are women or ethnically diverse

•   Average director age of 58; average tenure of 4 years

•   Long-tenured independent directors in leadership roles

Director Accountability, Development, and Engagement

•   100% director attendance rate at all Board and committee meetings in 2021

•   Comprehensive orientation for new directors; ongoing development programs, with additional training for directors in new leadership roles

•   Annual Board and committee self-evaluations and individual director assessments

•   Annual election of directors at majority vote standard (no staggered board)

No Overboarding

•   Nominating and Governance Committee assesses director time commitments in reviewing nominee candidates

•   Only two directors serve on additional public company boards (none serves on more than two other boards)

Active Shareholder Engagement

•   Active engagement, with regular shareholder outreach

•   Strong track record of integration of shareholder feedback into corporate governance practices and compensation program design over many years

•   In 2021 and 2022YTD, AMG held approximately 140 meetings with stockholders representing approximately 70% of our voting shares, on topics including corporate strategy, ESG, and executive compensation

Shareholder Alignment Policies and Initiatives

•   Equity Ownership Guidelines require 10x annual base salary for CEO (7x for other NEOs) and 5x annual base fees for independent directors; CEO and other NEOs are subject to an additional Equity Holding Policy described on page 31

•   Our directors and executives have collectively purchased over 100,000 shares in the open market since 2019, totaling over $10 million notional value at time of purchase

•   A majority of our current independent directors, including our Board Chair, have purchased shares in the open market; independent directors collectively purchased over 50,000 shares since 2019

•   CEO holds shares of AMG stock that significantly exceed the required level, having purchased 52,000 shares in the open market since appointment as CEO, across seven distinct purchases, totaling $4.2 million notional value at time of purchase

•   Over the past two years, other named executive officers have purchased over 7,000 shares, with an aggregate notional value of more than $1 million at the time of purchase

Demonstrated Success in Implementing Succession Plan across Management and Board

•   Nominating and Governance Committee has primary responsibility for executive succession planning

•   Demonstrated success of the Board’s long-term succession planning; full execution of transition to the next-generation leadership team under President & CEO Jay C. Horgen, appointed in 2019

Prioritization of ESG Factors

•   Board has oversight responsibility for corporate ESG practices (see ESG Highlights, pages 23-25) and principal responsibility for enterprise risk management, an area where AMG enhanced resources since 2020; a majority of directors have risk management experience

•   A cross‑functional Sustainability Committee is responsible for policies, controls, and practices around environmental, health and safety, and social risks and initiatives; reports to the Board at least annually and includes members of AMG’s senior management team

2021 Performance Summary

Strong financial performance and business momentum reflect excellent performance by key Affiliates, and the positive impact of strategic investments and actions taken to position the business for growth

•  Strong stock performance since appointment of Jay C. Horgen as CEO in May 2019—an increase of approximately +90% from the 2019 appointment through year‑end 2021 and +62% in 2021

•  GAAP net income of $565.7 million for the year—an increase of +180% relative to the prior year, and a compound annual growth rate of +32% over the 3-year period

•  GAAP earnings per share (diluted) of $13.05 for the year—an increase of +201% relative to the prior year, and a compound annual growth rate of +42% over the 3-year period

•  Adjusted EBITDA of $1,058.6 million for the year—an increase of +33% relative to the prior year

•  Economic net income of $779.8 million for the year—an increase of +25% relative to the prior year

•  Record Economic earnings per share of $18.28 for the year—an increase of +37% relative to the prior year, to the highest level in AMG’s history

•  Outstanding results across all financial performance metrics—2021 results reflected increases across all key financial metrics

AMG achieved outstanding results in 2021 and created significant shareholder value through strong execution of its growth strategy, excellent Affiliate investment performance, and increasing momentum across the business. The impact of growth investments in new and existing Affiliates, and the active re-shaping of the Company’s strategic exposures in favor of growth areas, have together considerably increased the earnings power of AMG’s business. AMG’s 2021 results, set forth in the tables below, reflected these factors, which have created significant business performance and new investment tailwinds that we believe will further contribute to AMG’s earnings growth over the long term

Additional information on non-GAAP financial performance measures, including reconciliations to the most directly comparable GAAP measure, can be found in AMG’s Annual Report on Form 10-K under “Supplemental Financial Performance Measures.” AMG stock prices shown in the table above reflect the closing price reported on the NYSE on the referenced date.

2021 Performance Summary (cont.)

Having renewed the organization’s focus on AMG’s foundational values of entrepreneurial spirit, ownership mindset, and disciplined execution, AMG’s executive team continued to advance the Company’s strategy and re-shape the business in favor of fast-growing areas in 2021, amid ongoing complexity in the operating environment

Growth Investments: New Affiliates

AMG was one of the most active investors in independent asset managers over the past 24 months, including significant new Affiliate investments in 2021 in areas of secular growth and client demand

•   Completed partnerships with four new Affiliates in 2021, enhancing AMG’s exposure in growth areas including ESG investing, private markets, and Asia; completed an additional investment in an existing Affiliate in January 2022

•   Elevated volume of new Affiliate investment activity continued through the COVID-19 pandemic, in a competitive environment, benefiting from the strength of AMG’s existing long-term proprietary relationships and three-decade track record of successful partnerships

•   Excellent return on growth investments over a 3-year period, with yield on investments and return on capital more than double AMG’s pre-set targets

Growth Investments: AMG Centralized Capabilities

Realigned AMG’s institutional and retail distribution platforms, and broadened our partnership solution offerings

•   Continued to reorganize and further align global distribution platforms and activities more directly with Affiliates; ongoing realignment of AMG’s global sales professionals to focus on asset owners with the greatest growth opportunities for Affiliates

•   Completed strategic evolution of U.S. wealth platform to fully align AMG’s resources with Affiliate growth and exclusively offer strategies managed by Affiliates; clients benefited from a streamlined platform wholly focused on AMG Affiliates’ high-conviction investment offerings, including fee reductions across all the strategies involved in the transition. Affiliate strategies that were previously unavailable to the U.S. wealth market were newly offered, as well as additional differentiated investment solutions. Over $4 billion in assets was converted to Affiliate strategies

•   AMG-led distribution generated net client cash flows in excess of pre-set target for 2021

•   Active engagement with numerous Affiliates on succession planning and long-term business strategy

•   Actively collaborating with Affiliates on product development, including invested seed and acceleration capital to support new products in areas of increasing client demand

Stockholder Return

Excellent absolute and relative annual stock performance

•   Stockholder return of +62% in 2021 reflected excellent growth of +37% in Economic earnings per share, strong investment performance, the positive impact of strategic repositioning and effective capital management, and ongoing business momentum, more than double the pre-set target over 1- and 3- year composite period

•   Significantly outperformed the Peer Group median stockholder return of +37% in 2021, exceeding the pre-set relative target over 1- and 3- year composite period

•   AMG’s stock price increased approximately +90% from May 2019 through year-end 2021, following the announcement of the appointment of new CEO Jay C. Horgen and transition to the new executive management team

2021 Performance Summary (cont.)

Capital Management

Enhanced AMG’s capital position, while deploying over $1 billion across both growth investments and the return of significant excess capital to stockholders

•   Invested in four new Affiliates in 2021 and in growth initiatives across a number of existing Affiliates

•   Enhanced balance sheet by issuing $200 million in 40-year maturity bonds and amending the Company’s credit facility with a rate reduction

•   Approximately 8% of shares outstanding were repurchased during 2021 and over 20% of shares outstanding were repurchased during the last three years

•   Share repurchase authorization was expanded in 2021, demonstrating our ongoing commitment to returning capital to stockholders

Human Capital Management and ESG Initiatives

Advancement across a broad scope of human capital management and ESG initiatives

•   All employees were granted AMG stock in 2021, further affirming AMG’s core value of ownership mindset, and aligning 100% of AMG’s human capital base with shareholder value creation through stock ownership

•   Strong employee satisfaction (approximately 90%) measured through AMG’s annual formal engagement survey, despite working remotely for a substantial majority of the year

•   Focused on AMG’s position as a corporate citizen; corporate philanthropy initiatives included contributions to a variety of non-profit organizations, directly and through employee gift-matching; a majority of employees, and 100% of Directors and Executive Committee members, participated in corporate philanthropy initiatives in 2021

•   Completed fourth annual inventory and secured third-party attestation of AMG’s GhG emissions; achieved medium-term emissions reduction targets established in 2018

•   Efforts recognized in strong scores with multiple ESG ratings providers

AMG’s focus on sustainability extends to our capital allocation strategy, and was reflected in our 2021 Affiliate investments and our ongoing support of Affiliate ESG initiatives

•   $90+ billion in AUM in dedicated ESG strategies

•   23 Affiliates are UN PRI signatories

•   Recent new investments include Parnassus Investments, a pioneer in socially responsible investing for more than 35 years and the largest independent ESG-dedicated fund manager in the U.S.; Boston Common Asset Management, a women-owned and -led leader in sustainable and impact investing for more than 30 years; and Inclusive Capital Partners, a highly engaged impact investor focused on responsible capitalism

•   Supported existing Affiliates in developing, sourcing, and launching additional ESG strategies

Recent Corporate Governance Enhancements & ESG Initiatives

AMG maintains an active engagement with our stockholders throughout the year, and has a demonstrated history of integrating shareholder feedback into our corporate governance practices. This investor outreach continued in 2021 and into 2022, including engagement prior to and following the 2021 Annual Meeting on a range of topics, including Board refreshment and independence, and our ESG initiatives; the collective feedback reflected the recent enhancements made to AMG’s corporate governance practices.

Stockholder Comments

AMG Response

Further increase focus on Board refreshment and expanding the diversity of skills and experience to enhance oversight of capital allocation decision-making and strategic execution

Our Board has evolved along with AMG, as we have refined and executed our strategy against the backdrop of organizational change

•   New Independent Directors: Four new independent directors have been appointed since 2020, with complementary skillsets and perspective across industries and disciplines, which have enhanced the Board’s strategic dialogue with management; half of these new directors are either women or ethnically diverse

•   Rotating Board Roles:

oNew independent Board Chair in 2020

oNew Chairs of all committees (each individual had not chaired a committee) since 2020

oNew members placed on each committee, including a fully reconstituted Compensation Committee

•   Shortened Average Board Tenure: Given the significant refreshment of 2020 and 2021, average tenure of AMG directors is now 4 years

Prioritize diversity when evaluating the composition of the Board and AMG’s employee base

We believe that diversity is essential to our success, and that philosophy is reflected in our governance practices

•   Gender and Ethnic Diversity on the Board:

oWomen represent 43% of our independent directors, with three women serving on the Board

o29% of our independent directors are ethnic minorities

oTwo female directors, including one ethnic minority, chairing committees

•   Expanding Employee Diversity: Achieved gender diversity of approximately 40% across management positions, and overall over 50% of our employees are women (in each case, excluding our U.S. wealth subsidiary)

The Board Chair should be a non-executive

Today, our leadership structure reflects best practices in corporate governance, with a non-executive, independent Board Chair, which provides for effective checks and balances to ensure the exercise of independent judgment by the Board

•   Transitioned to an Independent Board Chair in 2020: Provides leadership to the Board and to the independent directors, including in executive sessions, and serves as a key source of communication between the independent directors and the CEO. Current Board Chair, Dwight D. Churchill’s, extensive knowledge, and participation in the development, of AMG’s corporate strategy, as well as his extensive executive management experience outside of AMG, make him an effective Board Chair

Enhance AMG’s corporate ESG initiatives

We continue to focus on ESG initiatives, and believe that sound corporate citizenship and attention to governance and environmental principles are essential to AMG’s success

•   Achieved strong rankings by ESG rating providers

•   ESG factors added to compensation determination process, with specific disclosed targets

•   Completed fourth annual inventory and secured third-party attestation of AMG’s GhG emissions

•   Participation in CDP’s Climate Change Disclosure program for five years

•   Company-wide giving campaigns support charities in local communities, and are often enhanced by matching gifts incremental to individual limits from the employee gift-matching program

•   2021 annual employee engagement survey reported an employee satisfaction rating of approximately 90%, which we attribute to our focus and commitment to our employees

2021 Compensation Program Enhancements and Program Overview

AMG meets with our stockholders extensively throughout the year as part of our investor outreach, and we have a demonstrated history of integrating shareholder feedback into our executive compensation program design. In 2021, 83% of stockholders voted in favor of our Say-on-Pay proposal, expressing strong support for our executive compensation program design and its demonstrated linkage of pay-for-performance, as well as the significant integration of shareholder feedback.

Following significant refreshment of the Board, our Compensation Committee was entirely reconstituted during the second half of 2020, with a new Chair and all new members. During the fourth quarter of 2020, the reconstituted Committee selected Semler Brossy Consulting Group, a national compensation consulting firm, as its new independent executive compensation consulting firm, following a formal search process. Given the reconstitution of the Compensation Committee and the transition to a new CEO, the new Committee undertook a comprehensive review of AMG’s incentive compensation determination program to be implemented for performance year 2021. As in previous years, shareholder feedback gathered throughout the year was carefully considered, along with input from our new compensation consultant, as well as commentary from proxy advisory firms. Following this review, the Committee determined to implement a number of significant enhancements to AMG’s compensation program, which were reflected in the Performance Assessment and the Committee’s final compensation determinations for the 2021 performance year.

Stockholder Comments

AMG Response

Simplify the compensation determination process

•   Streamlined into a single quantitative assessment scorecard, with scoring applied to pre-set target incentive amounts, and the payout allocated between cash bonus and equity awards using a pre-established tiered formula

Disclose compensation targets, in addition to maximum payout caps

•   New target payout amounts set annually based on peer benchmarking, where available, and reflecting input from our independent compensation consultant; ongoing use of caps on NEO incentive compensation

Performance Assessment should be more formulaic, with an emphasis on objective performance measures

Disclose additional objective targets used in the determination of incentive awards

•   Scorecard assessment is now weighted over 90% to pre-determined, objective metrics set in the first half of each year and aligned with AMG management’s ability to create shareholder value across capital allocation decision-making; overall, 13 distinct quantitative targets

•   Cap of 200% achievement set on each individual metric. Metrics have relatively uniform weightings, minimizing distortion in score result

•   Significantly Broadened Array of Financial Performance Targets:

-    Use of pre-set earnings targets has been expanded to include both annual targets as well as a 3-year relative earnings target measured against peers on a percentile-ranked basis, to focus management on generating long-term shareholder value

-    Added new capital deployment targets, measuring average yield and EBITDA acquired from new Affiliate investments, and weighted returns on share repurchases and new Affiliate investments – in each case over a 3-year period

•   New TSR Targets: Added pre-set Total Stockholder Return targets, based on 1- and 3-year returns on both an absolute and a relative basis, to further align the interests of management with those of our stockholders

•   New Performance Categories and Targets: Added pre-set targets for operational and organizational performance goals, enhancing the formulaic nature of the assessment and expanding the scope into additional areas, including ESG:

-    AMG Distribution Effectiveness – measuring results relative to gross sales targets relating to our AMG-led distribution business

-    Strategic and Organizational Initiatives – measuring organizational diversity, AMG’s participation in responsible investment, and employee engagement

Factor ESG-related activities into incentive determination in a more granular fashion

•   Introduced a new category of pre-set ESG-related targets that factor directly into the more formulaic and transparent process for compensation determination, measuring organizational diversity, participation in responsible investment, and employee engagement

Revise AMG’s Peer Group to better reflect AMG’s business model and the evolving industry

•   Expanded and evolved Peer Group, to include peers with market capitalizations and business scope (including alternative-focused investment firms) aligned with the ongoing evolution of AMG’s business, and to replace peers impacted by industry consolidation

ROE performance hurdle for performance RSUs is an appropriate metric, but targets should increase as the business grows

•   Overall, stockholders expressed support for our use of Return on Equity, which aligns management incentives with the strategic goals of growing earnings and the effective stewardship of shareholder capital, and incorporates the effect of share repurchases, new investments, cost containment, and reinvestment in the business

•   For the 2021 Long-Term Achievement Awards, the Committee raised the ROE target levels by over 10% compared to the 2020 awards, and widened the achievement level ranges

2021 Annual Incentive Compensation Determination Process

Overview of Enhanced Performance Assessment Process

•   Below is a summary of the Compensation Committee’s new Performance Assessment process, simplified to five steps, to establish the Annual Incentive Compensation for our CEO and other NEOs

•   Three of these five steps are formulaic; the Compensation Committee sets the Peer Group and target metrics and caps:

(i) For 2021, our Peer Group was updated and broadened to include peers with market capitalizations and business scope (including alternative-focused investment firms) aligned with the ongoing evolution of AMG’s business, and to replace peers impacted by industry consolidation

(ii) The Target Payout was set at $9.6 million for our CEO in 2021, based on the median of Peer Group compensation

2021 Annual Incentive Compensation Determination Results

2021 Performance Assessment Scorecard Results

•    With the Company’s excellent 2021 results, particularly in its new Affiliate investment strategy as well as strong shareholder return, achievement levels were strong relative to pre-set targets, generating a strong Overall Performance Assessment Score

Please refer to page 29 of the “Compensation Discussion and Analysis” section of this Proxy Statement for additional information.

2021 Annual Incentive Compensation Determination Results (cont.)

Formulaic Derivation of Incentive Compensation and Mix of Incentive Awards

•  The Overall Performance Assessment Score of 147% was applied to the Target Payout, producing Total Formulaic Incentive Compensation of $13.4 million for the CEO, which was reduced by $1.7 million to $11.7 million, reflecting the Committee’s third and final year of impact related to the one-time 2019 Long-Term Equity Alignment Award, as part of its commitment to stockholders in 2019

•  Annual Incentive Compensation was then allocated between cash bonus and long-term equity awards using a pre-established tiered formula which caps cash awards at 45% of Annual Incentive Compensation, and in which the proportion of equity awards increases as Annual Incentive Compensation increases. The allocation resulted in a formulaic cash bonus of $4.8 million (41%) and a formulaic equity incentive award amount of $6.9 million (59%)

•  The formulaic equity incentive award amount was granted 40% in the form of Long-Term Deferred Equity Awards and 60% in the form of Long-Term Performance Achievement Awards, consistent with the Committee’s targeted allocations

(1)Cash determined via a tiered formula: First $5 million in incentive compensation is split 45% cash and 55% equity; next $5 million is split 40% cash and 60% equity; any incentive compensation thereafter is split 30% cash and 70% equity.

Director Nominee Information: Committee Memberships

Name

Age

Compensation

Committee

Nominating and

Governance

Committee

Audit

Committee

Independence

Tenure (Years)

Other

Public Company Boards

Karen L. Alvingham

59

✓

4

—

Tracy A. Atkinson

57

✓ (Chair)

✓

1

2

Dwight D. Churchill

  Board Chair

68

✓

✓

✓

✓

12

—

Jay C. Horgen

  President and

  Chief Executive Officer

51

3

—

Reuben Jeffery III

68

✓ (Chair)

✓

✓

2

—

Félix V. Matos Rodríguez

60

✓

✓

1

—

Tracy P. Palandjian

51

✓

✓ (Chair)

✓

10

—

David C. Ryan

52

✓

—

1

Average

Age of 58

100% Independent;

All New Members and

New Chair since 2020

100% Independent;

2 New Members and New Chair since 2020

100% Independent;

100% Financial Experts;

2 New Members and New Chair since 2020

7 of 8

Nominees are Independent

4 New Members since 2020

No Overboarding

Director Experience and Skills Overview

Leadership

 Directors who have held significant leadership positions provide a practical understanding of organizations, processes, strategy, risk management, and other factors that promote growth

All
Directors

Capital allocation

Our continued success depends in large part on a disciplined approach to capital allocation, as we seek to deploy resources in the areas of highest growth and return in our business to capitalize on growth opportunities, before efficiently returning excess capital to our stockholders; directors with experience managing capital contribute to the advancement of this strategy to enhance long-term value creation 

6 of 8
Directors

Corporate governance

We place a high standard on strong corporate governance, and adopt best practices through the active monitoring of evolving trends and developments, and through routine Board self-assessments and enhancements to our governance policies, committee charters, and board practices, as well as through active shareholder engagement and ongoing board refreshment, and we seek directors with demonstrated knowledge and practical experience in corporate governance, fiduciary roles, and stakeholder engagement

All
Directors

Risk management and compliance

 Risk management is critical to the stability, security, and success of our business, and we seek directors with regulatory and compliance expertise, as well as experience managing and overseeing risk in public and private companies and in other contexts

All
Directors

Investment management

 Directors with investment management experience provide the Board with an enhanced understanding and assessment of our business strategy and bring valuable perspective on topics that are uniquely relevant to our industry

7 of 8
Directors

Financial, accounting, or financial reporting

 We use a broad set of financial metrics to measure our operating and strategic performance, and we seek directors with an understanding of finance and financial reporting processes

7 of 8

Directors

Operational, including human capital management

 Directors with experience in operations are able to assess and advise management on the formulation and execution of our business strategy, including the efficient allocation and utilization of our and our Affiliates’ human capital and other operating resources, and the re-allocation of those resources over time through all stages of market cycles

All
Directors

ESG

 Directors who have experience in managing environmental, social, and governance issues are able to assist the Board in overseeing and advising management to ensure that strategic business imperatives and long-term value creation for stockholders are achieved within a responsible, sustainable business plan

5 of 8
Directors

Public policy, regulatory, and government affairs

Directors with experience in governmental, regulatory, and related organizations provide valuable insight into governmental actions and socioeconomic trends, as well as the highly regulated industry in which we and our Affiliates operate

4 of 8
Directors

Other public board experience

 Directors with experience serving on other public company and publicly traded fund boards provide valuable operations and management perspectives, including insights on governance trends and practices and other issues affecting public companies generally

5 of 8
Directors

Global experience

Directors with global business experience, including managing and growing organizations worldwide, and investing and operating experience in international and emerging markets, provide valuable insights on growth trends in these markets

7 of 8
Directors

Director Biographical Information

Karen L. Alvingham

Karen L. Alvingham has been a director of the Company since January 2018. She served until June 2017 as Managing Partner of Genesis Investment Management, LLP, a boutique investment management firm. Genesis is one of the leading emerging markets equities specialists in the world, and has been an AMG Affiliate since 2004. Lady Alvingham joined the firm in 1990 and was appointed Managing Partner in 2003. Prior to joining Genesis, she was a senior investment manager at Touche Remnant Investment Management Ltd and Lloyds Investment Management Ltd. She began her career at Grieveson Grant & Co. She currently serves on the board of directors of International Market Management Ltd. We believe Lady Alvingham’s qualifications to serve on our Board of Directors include her substantial experience in the investment management industry, including as a senior executive in a leading boutique investment management firm.

Tracy A. Atkinson

Audit Committee (Chair)

Tracy A. Atkinson has been a director of the Company since August 2020. Prior to her retirement in March 2020, Ms. Atkinson served as an executive vice president of State Street Corporation with a number of senior finance and risk management roles including Chief Administrative Officer, Chief Compliance Officer, and Treasurer. Prior to joining State Street Corporation, she held leadership positions at MFS Investment Management and was a Partner at PricewaterhouseCoopers. She currently serves on the boards of directors of the United States Steel Corporation and Raytheon Technologies. We believe Ms. Atkinson’s qualifications to serve on our Board of Directors include her significant leadership experience from her career in the accounting and asset management industries, as well as a track record of service on public company boards.

Dwight D. Churchill

Board Chair

Compensation Committee, Nominating and Governance Committee, & Audit Committee

Dwight D. Churchill has been a director of the Company since February 2010, and has served as independent Board Chair since August 2020. Mr. Churchill held a number of senior positions at Fidelity Investments before retiring from the firm in 2009. Having joined Fidelity in 1993, he served as the head of the Fixed Income Division, head of Equity Portfolio Management and President of Investment Services. While at Fidelity, Mr. Churchill also served as the elected chair of the Board of Governors for the CFA Institute, a 178,000-member association, and from June 2014 to January 2015, he served as interim President and Chief Executive Officer at the CFA Institute. Prior to joining Fidelity, Mr. Churchill served as a Managing Director of Prudential Financial, Inc., as President and Chief Executive Officer of CSI Asset Management, Inc., a subsidiary of Prudential Financial, Inc., and held senior roles at Loomis, Sayles & Company and the Ohio Public Employees Retirement System. Mr. Churchill currently serves on the Board of Trustees and as Chair of the Audit Committee of State Street Global Advisors SPDR ETF Mutual Funds and as a staff consultant at The Public Employees Retirement System of Idaho. We believe that Mr. Churchill’s qualifications to serve on our Board of Directors include his extensive experience in the investment management industry, including his oversight of internal controls, financial reporting, and accounting procedures.

Jay C. Horgen

President and Chief

Executive Officer

Jay C. Horgen is the President and Chief Executive Officer of the Company and joined the Board of Directors in May 2019. Mr. Horgen was appointed President and CEO in 2019, having previously served as Chief Financial Officer from 2011 to 2019. Previously, Mr. Horgen served as Executive Vice President of the Company in New Investments. Prior to joining AMG in 2007, Mr. Horgen was a founder and Managing Director of Eastside Partners, a private equity firm. Prior to that, Mr. Horgen served as a Managing Director in the Financial Institutions Group at Merrill Lynch, Pierce, Fenner & Smith Incorporated. From 1993 to 2000, he worked as an investment banker in the Financial Institutions Group at Goldman, Sachs & Co. Mr. Horgen received a B.A. from Yale University. We believe that Mr. Horgen’s qualifications to serve on our Board of Directors include his direct knowledge of the Company’s strategy and operations through his service as Chief Executive Officer and in other leadership positions at the Company, including President and Chief Financial Officer, and his extensive experience in the financial services, private equity, and investment management industries.

Reuben Jeffery III

Audit Committee &

Compensation Committee (Chair)

Reuben Jeffery III has been a director of the Company since April 2020. Mr. Jeffery served as President and Chief Executive Officer and member of the board of Rockefeller & Co. and Rockefeller Financial Services, Inc. from 2010 to 2018. He previously served seven years in the U.S. government in a variety of positions, including as Under Secretary of State for Economic, Energy and Agricultural Affairs; Chairman of the U.S. Commodity Futures Trading Commission; and as Special Assistant to the President on the staff of the National Security Council (2002-2009). At Goldman, Sachs & Co., Mr. Jeffery was Managing Partner of the firm’s Paris office and of its European Financial Institutions Group in London. He began his career as a corporate attorney with Davis Polk & Wardwell LLP. Currently, Mr. Jeffery serves as an independent director and chairman of the board of SMBC Americas Holdings, Inc. Mr. Jeffery is also chairman of the board of Riverstone Credit Opportunities Income Plc (RCOI) and a board member of CSE Insurance Group, an indirect wholly-owned subsidiary of Covéa, a global insurer headquartered in France. He is also a board member of the Financial Services Volunteer Corps (FSVC), a not-for-profit that supports economic development by strengthening financial sectors in developing countries. Mr. Jeffery served as a non-executive director at Barclays Plc from 2010 to 2019. He received a B.A. in Political Science from Yale University and an M.B.A. and J.D. from Stanford University. We believe that Mr. Jeffery’s qualifications to serve on our Board of Directors include his extensive financial services experience, particularly within investment banking and wealth management, and his knowledge and experience with the U.S. and global political and regulatory environments.

Félix V. Matos Rodríguez

Nominating and Governance

Committee

Félix V. Matos Rodríguez has been a director of the Company since January 2021. Dr. Matos Rodríguez is the Chancellor of the City University of New York (CUNY). Prior to his appointment as Chancellor in May 2019, Dr. Matos Rodríguez was president of CUNY’s Queens College and of CUNY’s Eugenio María de Hostos Community College in the Bronx. Dr. Matos Rodríguez has served as a teacher, administrator, and former Cabinet secretary for the Commonwealth of Puerto Rico. He currently serves as board and executive committee chair of Research Foundation CUNY, and as co-chair of New York City Regional Economic Development Council. Additionally, he serves on the boards of Phipps Houses, the United Way of New York City, the American Council on Education, the Association for a Better New York (ABNY), and the Research Alliance for New York City Schools. Dr. Matos Rodríguez holds a B.A. from Yale University and received a doctorate in history from Columbia University. We believe that Dr. Matos Rodríguez’s qualifications to serve on our Board of Directors include his long track record as an innovator in both academia and the public sector and his leadership in a large, decentralized human-capital-based organization operating through a network of distinct institutions.

Tracy P. Palandjian

Compensation Committee &

Nominating and Governance Committee (Chair)

Tracy P. Palandjian has been a director of the Company since March 2012. Ms. Palandjian is the Chief Executive Officer, co-founder and a member of the Board of Directors of Social Finance, Inc., a nonprofit organization focused on developing and managing investments that generate social impact and financial return. Prior to establishing Social Finance, Ms. Palandjian served as a Managing Director at The Parthenon Group, a global strategy consulting firm. At Parthenon, she established and led the Nonprofit Practice and consulted to foundations and nonprofit organizations on strategy development, mission definition, corporate social responsibility, and knowledge and innovation in the U.S. and globally. Prior to Parthenon, Ms. Palandjian worked at McKinsey & Company and at Wellington Management Company, LLP. Ms. Palandjian is currently Vice-Chair of the United States Impact Investing Alliance and the Global Social Impact Investment Steering Group (successor to the G8 Social Impact Investment Taskforce). She serves on the Boards of Pershing Square Holdings, Ltd., The Boston Foundation, the Surdna Foundation (and chairs its Investment Committee) and Mass General Brigham. Ms. Palandjian is also a member of the Leadership Council of Facing History and Ourselves and the External Advisory Board of the McCance Center for Brain Health at Massachusetts General Hospital. We believe that Ms. Palandjian’s qualifications to serve on our Board of Directors include her extensive global financial management, consulting, and advisory experience.

David C. Ryan

David C. Ryan has been a director of the Company since July 2021. Mr. Ryan is a corporate advisor to Singapore-based Temasek Holdings, and serves on the boards of Mapletree Investments Pte Ltd., a Singapore-based real estate development, investment, capital and property management company, and Tiga Acquisition Corp., a Singapore-based special purpose acquisition company, and previously served on the board of ADT Inc. Mr. Ryan’s 22-year career at Goldman Sachs & Co., where he was a partner, spanned a variety of roles in Asia and the United States. From 2011 to 2013, he served as President of Goldman Sachs Asia (chairing its management committee) and was a member of the Management Committee of Goldman Sachs & Co. We believe that Mr. Ryan’s qualifications to serve on our Board of Directors include his substantial global financial services experience, particularly his extensive knowledge of the Asian region.

Board Refreshment Since 2020

Governance Highlights

►

Highly independent, diverse Board; world-class, experienced directors with a range of skills and backgrounds

►

Independent Board Chair

►

Women in Leadership Roles on the Board

►

No Overboarding

►

Policies to Promote Long-Term Director and Executive Equity Ownership

►

100% Director Attendance at Board and Committee Meetings in 2021

►

Significant Board Refreshment since 2020

►

Publicly-Disclosed Corporate Governance Guidelines

►

Majority Vote Standard in Uncontested Director Elections

►

No Staggered Board

►

No “Poison Pill”

►

“Double-Trigger” Equity Award Vesting Upon Change in Control

►

Annual Say-on-Pay Vote

►

Active Engagement with Shareholders

2021 Director Engagement

Board Meetings

Committee Meetings

9

Board Meetings

17

Committee Meetings

100%

Attendance rate at meetings of the full Board of Directors

100%

Attendance rate at Board committee meetings

Shareholder Engagement (2021-2022YTD)

Shareholder Outreach

Responsiveness

•   Proactive outreach to stockholders representing approximately 90% of voting shares

•   Held approximately 140 meetings with over 70 current and prospective stockholders, including three-fifths of our top 30 largest holders, representing approximately 70% of voting shares

•   Demonstrated integration of shareholder feedback into corporate governance practices and compensation program design over multiple years

•   Expanded shareholder engagement in recent years on topics including corporate strategy, ESG, and executive compensation; feedback reflected in our compensation program enhancements applied to performance year 2021 compensation

2021 Compensation Committee Actions in Response to Shareholder Feedback

•   Adopted an enhanced, more formulaic five-step Performance Assessment process for determining executive incentive compensation; three of the five steps are entirely formulaic

•   Disclosed performance targets used in the new five-step Performance Assessment process, which include a broadened array of pre-set financial targets, and new pre-set targets, along with achievement caps for each metric, for operational and organizational performance goals

•   Factored four ESG-related activities into the formulaic process, with pre-set performance targets and achievement caps across a range of ESG initiatives

•   Revised Peer Group to better reflect AMG’s business model and to address industry consolidation

•   Increased the ROE performance hurdle used for performance RSUs, vs. the prior year, to reflect growth in the business

Director Candidate Qualifications and Attributes

•   Business and leadership experience, including experience managing and growing organizations worldwide

•   Knowledge of the financial services industry and, in particular, the asset management industry

•   Demonstrated experience with prudent and strategic capital allocation, as we seek to deploy resources to the areas of highest growth and return in our business

•   Understanding of organizations, processes, strategy, risk management, and other factors that promote growth, including experience in managing ESG issues

•   Understanding of finance and financial reporting processes

•   Diversity, including ethnic, gender, geographic, and experiential diversity

Board of Directors Composition

•  Women represent 43% of independent directors, with three women serving on the Board

•  29% of independent directors are ethnic minorities

•  Four new independent directors since 2020; half of these are women or ethnically diverse

•  Transitioned to an independent Board Chair in 2020

•  New Chairs of all Board committees since 2020; two of three committees chaired by women, including one ethnic minority

•  New members on all Committees since 2020, including a fully reconstituted Compensation Committee

•  Long-tenured independent directors in leadership roles

•  Average director nominee age of 58

Board and Committee Self-Assessments and Individual Director Assessments

Questionnaire

•  Evaluation questionnaire solicits director feedback on a variety of procedural and substantive topics

Executive Session

•  Executive session discussion of Board and committee self-assessments led by the Chair of the Nominating and Governance Committee

Individual Director Assessments

 •  Individual director assessments support an annual evaluation of the Board’s composition to ensure that our Board as a whole continues to reflect the appropriate mix of skills and experience

Board Summary

  •  Summary of Board and committee self-assessments results presented by the Chair of the Nominating and Governance Committee, followed by a discussion of the full Board

Feedback Incorporated

 •  Policies and practices updated as appropriate, as a result of director feedback

Responsibilities of the Independent Board Chair

 •  Board leadership: Provides leadership to the Board and to the independent directors, including in executive sessions

•  Board discussion items: Coordinates the agenda for and chairs Board meetings; works with the CEO and the committee Chairs to propose major discussion items for the Board’s approval

 •  Liaison between CEO and independent directors: Regularly meets with the CEO and serves as liaison between the CEO and the independent directors

•  Board governance processes: In coordination with the Nominating and Governance Committee, guides the Board’s governance processes, including identifying and resolving any potential conflicts of interest

 •  Executive sessions: Leads quarterly executive sessions of the Board

•  CEO evaluation: Leads the annual performance evaluation of the CEO

 •  Additional executive sessions: May call additional meetings of the independent directors as needed

•  Stockholder communications: Participates in direct communications with AMG’s stockholders

Environmental, Social, and Governance (ESG) Highlights

Environmental, Social, and Governance (ESG) Highlights (continued)

Responsible Investing

Employee Engagement

►  More than $90 billion in AUM in dedicated ESG strategies at year-end 2021, an increase of approximately 250% relative to 2020 due to strong execution of AMG’s strategy to partner with new Affiliates in secular growth areas, including ESG investment, and collaborating with existing Affiliates to enhance their participation in sustainable investment

►  Sustainability factors and participation in responsible investing are incorporated into AMG's assessment process for prospective new Affiliates; recent new Affiliates include Parnassus Investments, the largest ESG-dedicated fund manager in the U.S.; Inclusive Capital Partners, AMG's first Affiliate entirely focused on responsible capitalism; and Boston Common Asset Management, a women-owned leader in sustainable and impact investing

►  All employees were granted AMG stock in 2021, further affirming the Company’s core value of ownership mindset

►  AMG prioritizes employee engagement through a range of cross-functional, multi-level communication media, including small working group lunches, company-wide town halls, management offsites, and volunteer activities; 2021 employee engagement score of approximately 90%

►  Company-supported time off and flexible work arrangements for professional development

►  Charitable giving and volunteer opportunities offered to AMG employees throughout the year

►  Leadership training and sponsored skills and career development programs, anchored on a comprehensive company-wide 360-degree performance review process

Work Environment

Diversity & Inclusion

►  Equal employment opportunity hiring practices, policies, and management of AMG employees

►  Anti-harassment policy applicable to AMG employees prohibits hostility or aversion towards individuals in protected categories, and prohibits sexual harassment in any form; the policy details how to report and respond to harassment issues and strictly prohibits retaliation

►  AMG supports the health and wellness of employees, with on-site fitness facilities in multiple principal offices

►  Committed to fostering and promoting an inclusive and globally diverse work environment; AMG partners with a variety of recruitment partners and community organizations to identify excellent diverse talent, and in 2021 launched a summer internship program for outstanding diverse students

►  Formal policies that forbid discrimination based on protected classifications; annual diversity and bias training required for all employees

►  Gender diversity of approximately 40% across management positions, and overall, over 50% of AMG's employees are women (in each case, excluding our U.S. wealth subsidiary); in 2021, approximately 45% of new hires were people of color, and more than 50% were women

►  Three, or 43%, of AMG's independent directors are women, and two, or 29%, of AMG’s independent directors are ethnic minorities; in each case, above the S&P 500 average. Two women, including one ethnic minority, chair Board committees

►  AMG partners with organizations that support and advance diverse candidates for Company roles, and makes meaningful donations to organizations promoting social equity in the broader community

Privacy and Data Security

►  AMG maintains privacy policies, management oversight, accountability structures, and technology design processes to protect privacy and personal data, as well as an incident response plan for use in the event of a data breach

►  All employees participate in annual cybersecurity training

►  AMG's data security program is governed by a senior management committee that meets regularly and reports to the Board quarterly

Business Conduct and Ethics Codes

Business Continuity

►  Strong corporate culture that promotes the highest standards of ethics and compliance for AMG's business

►  AMG's Code of Business Conduct and Ethics applies to all AMG employees and directors and sets forth principles to guide employee and director conduct

Anti-Bribery and Corruption Policies

►  Policies on political contributions and other restricted payments require AMG's full compliance     with all applicable political contribution and anti-corruption laws

►  Whistleblower hotline for confidential reporting of any suspected violations

Governance

►  Formal weighting of ESG factors included in AMG's compensation determination process, with more granular ESG-related metrics (across both participation in responsible investment as well as corporate measures related to diversity and employee satisfaction) incorporated for performance year 2021

►  Strong focus on corporate governance since AMG's inception, with best practices in corporate governance (see Governance Highlights on page 18)

Climate Change and Environmental Sustainability

►  AMG has participated in CDP's Climate Change Disclosure program for five years

►  Completed annual inventory and secured third-party attestation of AMG's GhG emissions each year since 2018

►  Achieved medium-term emissions reduction target of 5% in Scope 1 and 2 emissions

►  Utilizing 100% renewable energy sources at multiple AMG office locations

►  Programs to promote the procurement of products and materials that have high concentrations of recycled materials, and evaluation of vendor sustainability practices

►  Business continuity policies are designed to ensure the safety of AMG's personnel, facilities, and critical business functions in case of natural disasters or other crises creating business disruption

Community Investment and Engagement

►  AMG and The AMG Charitable Foundation donate to a variety of non-profit organizations and community programs globally, including more than $1 million to COVID-19 relief efforts around the world in 2020 and 2021; substantial contributions to social equity organizations, including the Equal Justice Initiative, NAACP Legal Defense and Education Fund, Sponsors for Educational Opportunity, Bottom Line, and others over the years; and ongoing support of the Sean M. Healey and AMG Center for ALS at Mass General Hospital, to which AMG was a cornerstone donor in 2018

In early 2022, AMG led its first-ever giving campaign encompassing both the AMG organization and AMG’s entire Affiliate group; ultimately, more than $1.7 million was raised in support of charitable organizations providing humanitarian aid in Ukraine or to Ukrainian refugees, across individual giving by AMG and Affiliate employees as well as gift-matching by The AMG Charitable Foundation and AMG

►  Company-wide giving campaigns support many charities in local communities, and AMG encourages employees to volunteer for and serve on boards of non-profit organizations. AMG supports numerous organizations in which employees are meaningfully involved, through grants from The AMG Charitable Foundation

►  Annual "AMG Day of Service," with employee participation across our offices globally in hands-on service projects benefiting non-profit organizations and individuals in the communities surrounding our principal offices; in 2021, we launched the inaugural “AMG Week of Service.” Virtual and in-person volunteering opportunities are offered to AMG employees and employees of Affiliates throughout the year

►  Formal AMG employee gift-matching program; AMG and The AMG Charitable Foundation have donated to over 400 organizations worldwide. In 2021, AMG supported the launch of gift-matching programs at multiple Affiliate firms and extended its gift-matching program to Directors; for 2022, AMG has more than doubled the employee gift-matching maximum

►  Approximately $2 million was disbursed or committed by The AMG Charitable Foundation in 2021

Stockholder Communications

Board of Directors

Any communications to the full Board of Directors

may be directed to Mr. Billings, General Counsel

and Secretary of the Company, who would discuss

as appropriate with the Board of Directors

David M. Billings

Affiliated Managers Group, Inc.

777 South Flagler Drive

West Palm Beach, Florida 33401-6152

Board Chair

A stockholder or other interested party may

communicate directly with Mr. Churchill, the Board Chair, by sending a confidential letter addressed to his attention

Dwight D. Churchill, Board Chair

c/o Affiliated Managers Group, Inc.

777 South Flagler Drive

West Palm Beach, Florida 33401-6152

Current Executive Officer Information

Name

Age

Position

Biographical Information

Jay C. Horgen

51

President and

Chief Executive Officer

For the biographical information of Mr. Horgen, see “Information Regarding the Nominees” above.

Rizwan M. Jamal

47

Head of Affiliate Investments

Mr. Jamal is Head of Affiliate Investments, responsible for overseeing the Company’s investments in new Affiliates, including the identification of prospective Affiliates worldwide and the structuring and execution of the Company’s investments in its partner firms. Prior to joining AMG in 2004, Mr. Jamal worked in the investment banking groups of Goldman Sachs & Co. and Salomon Smith Barney. Mr. Jamal received a B.S. from Boston College and a J.D. from Harvard Law School.

Thomas M. Wojcik

41

Chief Financial Officer

Mr. Wojcik is the Chief Financial Officer of the Company, responsible for AMG’s finance, accounting, investor relations, and capital management functions. He joined AMG in 2019 from BlackRock, Inc., where he most recently served as Chief Financial Officer for Europe, Middle East, and Africa (EMEA), Head of EMEA Strategy, and Global Head of Investor Relations, subsequent to his role as Global Head of Corporate Development and Head of Americas Strategy. Previously, Mr. Wojcik worked as an investor at Hunter Global Investors, Durham Asset Management, and Nautic Partners, and as an investment banker in the Financial Institutions Group at Merrill Lynch & Co. He earned a B.A. in Economics magna cum laude from Duke University, and an M.B.A. from The Wharton School at the University of Pennsylvania, where he was a Palmer Scholar.

John R. Erickson

51

Head of Affiliate Engagement

Mr. Erickson is Head of Affiliate Engagement, working with Affiliates on strategic matters. Prior to joining the Company in 2014, Mr. Erickson worked as an investment banker at Merrill Lynch for 15 years, most recently serving as a managing director in the Financial Institutions Group where he advised asset management clients on M&A and capital raising. Mr. Erickson received a B.A. in Economics cum laude from Middlebury College and an M.B.A. from Northwestern University’s Kellogg School of Management.

David M. Billings

59

General Counsel

and Secretary

Mr. Billings has served as General Counsel and Secretary of the Company since June 2014. Prior to joining AMG, Mr. Billings was a partner at Akin Gump Strauss Hauer & Feld LLP, where he led the firm’s investment funds practice in London. Mr. Billings received a J.D. from Harvard Law School and a B.A. with high honors from the University of Virginia.

•

Attracting, retaining, and motivating key members of senior management

•

Closely aligning executive compensation with performance and accomplishments for the year and over the long term

•

Focusing executives on long‑term performance with equity incentive awards, with a majority of these awards subject to rigorous pre‑established performance targets measured over forward multi‑year periods

•

Compensating executives based on a combination of Company performance—on both a relative and absolute basis—and individual roles

•

Avoiding incentives that might encourage excessive risk‑taking

•

Routinely reviewing and evolving our compensation program to incorporate feedback from stockholders and best practices into our executive compensation program design

•

Awarding fixed and variable Annual Incentive Compensation in an appropriate mix to align management incentives with shareholder value creation

•

Performing market comparisons to ensure that our compensation is in line with that of our Peer Group

•

Implementing strong compensation governance practices within a robust corporate governance framework

Recent Changes to Executive Compensation Program

Stockholder Comments

AMG Response

Simplify the compensation determination process

•   Streamlined into a single quantitative assessment scorecard, with scoring applied to pre-set target incentive amounts, and the payout allocated between cash bonus and equity awards using a pre-established tiered formula

Disclose compensation targets, in addition to maximum payout caps

•   New target payout amounts set annually based on peer benchmarking, where available, and reflecting input from our independent compensation consultant; ongoing use of caps on NEO incentive compensation

Performance Assessment should be more formulaic, with an emphasis on objective performance measures

Disclose additional objective targets used in the determination of incentive awards

•   Scorecard assessment is now weighted over 90% to pre-determined, objective metrics set in the first half of each year and aligned with AMG management’s ability to create shareholder value across capital allocation decision-making; overall, 13 distinct quantitative targets

•   Cap of 200% achievement set on each individual metric. Metrics have relatively uniform weightings, minimizing distortion in score result

•   Significantly Broadened Array of Financial Performance Targets:

-    Use of pre-set earnings targets has been expanded to include both annual targets as well as a 3-year relative earnings target measured against peers on a percentile-ranked basis, to focus management on generating long-term shareholder value

-    Added new capital deployment targets, measuring average yield and EBITDA acquired from new Affiliate investments, and weighted returns on share repurchases and new Affiliate investments – in each case over a 3-year period

•   New TSR Targets: Added pre-set Total Stockholder Return targets, based on 1- and 3-year returns on both an absolute and a relative basis, to further align the interests of management with those of our stockholders

•   New Performance Categories and Targets: Added pre-set targets for operational and organizational performance goals, enhancing the formulaic nature of the assessment and expanding the scope into additional areas, including ESG:

-    AMG Distribution Effectiveness – measuring results relative to gross sales targets relating to our AMG-led distribution business

-    Strategic and Organizational Initiatives – measuring organizational diversity, AMG’s participation in responsible investment, and employee engagement

Factor ESG-related activities into incentive determination in a more granular fashion

•   Introduced a new category of pre-set ESG-related targets that factor directly into the more formulaic and transparent process for compensation determination, measuring organizational diversity, participation in responsible investment, and employee engagement

Revise AMG’s Peer Group to better reflect AMG’s business model and the evolving industry

•   Expanded and evolved Peer Group, to include peers with market capitalizations and business scope (including alternative-focused investment firms) aligned with the ongoing evolution of AMG’s business, and to replace peers impacted by industry consolidation

ROE performance hurdle for performance RSUs is an appropriate metric, but targets should increase as the business grows

•   Overall, stockholders expressed support for our use of Return on Equity, which aligns management incentives with the strategic goals of growing earnings and the effective stewardship of shareholder capital, and incorporates the effect of share repurchases, new investments, cost containment, and reinvestment in the business

•   For the 2021 Long-Term Achievement Awards, the Committee raised the ROE target levels by over 10% compared to the 2020 awards, and widened the achievement level ranges

Equity Ownership Guidelines

•      Implemented in 2011, our Equity Ownership Guidelines provide that an executive officer or director should own equity in the amount of:

-    10x annual base salary in the case of our President and Chief Executive Officer

-    7x times annual base salary in the case of the other named executive officers

-    5x times base annual fees for service in the case of our independent directors

•      Shares underlying outstanding stock options and unearned performance awards are not counted for purposes of meeting these guidelines

•      Executives and directors are strongly encouraged to meet these ownership guidelines within five years of becoming an executive officer, or three years of becoming a director

•      Revised in 2020 to add a new restriction on selling shares of AMG stock while the equity ownership of the director or executive does not exceed the required level through the accumulation period

•      All named executive officers and directors currently satisfy these Equity Ownership Guidelines

Equity Holding Policy

•      New Equity Holding Policy implemented in 2019 and applicable to all recipients of the Long-Term Equity Alignment Award

•      Imposes additional restrictions on sales of AMG stock, for the duration of their AMG service

-     No sales permitted by CEO unless vested, unrestricted shares held exceeds 2x Total Annual Compensation

-     No sales permitted by non-CEO NEOs unless vested, unrestricted shares held exceeds 1x Total Annual Compensation

-     Alignment RSUs must be held for at least 6 years after grant (through 2025), and Alignment Option Shares must be held for 7 years after grant (through 2026)

•      Total Annual Compensation comprises the total amount of the executive officer’s cash compensation (including cash bonus) and equity compensation (based on the grant date fair value) received for performance in the year prior to measurement

•      Equity eligible for determining compliance includes unrestricted shares of AMG stock, whether acquired through award vesting, option exercises, open market purchases, or otherwise, and excludes unvested awards, undelivered performance awards, and unexercised options

2021 Incentive Compensation Determination Process: CEO Outcome

The Compensation Committee regularly reviews our Peer Group in order to ensure its ongoing relevance. In determining the Company’s Peer Group on an annual basis, the Compensation Committee considers both industry and company specific dynamics to identify the peers with which we compete for client assets, stockholders, and talent. The Committee evaluates the Peer Group to ensure that it reflects the Company’s growth, overall changes in the asset management industry, and the business models, size, and scope of our competitors.  

Our Peer Group was revised in 2021 to:

–    Increase the size of the Peer Group, to replace peers impacted by industry consolidation and maintain a peer group with a larger data set for comparability

–    Add peers with business scope in line with AMG’s, including alternative-focused asset management business, given the ongoing evolution of our business

–    Evolve the Peer Group, reducing the median market capitalization across the Peer Group by approximately 40%

–    CEO Target Payout was set at the median of the revised Peer Group, of $9.6 million

(1)

Cash determined via a tiered formula: First $5 million in incentive compensation is split 45% cash and 55% equity; next $5 million is split 40% cash and 60% equity; any incentive compensation thereafter is split 30% cash and 70% equity.

Total

Final

Formulaic Incentive Awards

Formulaic

Impact Due to

Incentive

Equity Awards

Incentive

2019 Alignment

Compensation

Perf-based

Time-Based

Compensation

Award

Payout

Cash

(LTPAA)

(LTDEA)

Jay C. Horgen

President and Chief Executive Officer

$13.4

($1.7)

$11.7

$4.8

$4.2

$2.8

Rizwan M. Jamal

Head of Affiliate Investments

$7.0

($0.7)

$6.4

$2.1

$2.6

$1.7

Thomas M. Wojcik

Chief Financial Officer

$5.9

($0.5)

$5.4

$2.4

$1.8

$1.2

John R. Erickson

Head of Affiliate Engagement

$4.2

($0.7)

$3.5

$1.3

$1.4

$0.9

David M. Billings

General Counsel and Secretary

$2.5

NA

$2.5

$1.1

$0.8

$0.6

The following is a summary of the metrics utilized in the new Performance Assessment scorecard, including the rationale for including each metric and the methodology used in setting the individual metric targets. In setting the targets for the revised quantitative scorecard, the Compensation Committee employed a disciplined methodology, relying on informed views of performance expectations applied to a framework in order to pre-set targets during the first half of the year, to appropriately incentivize executives.

Incentive Compensation Performance Assessment: Metric Descriptions / Rationale and Target-Setting Methodology

Metric

Description / Rationale                                              

Target-Setting Methodology

Financial Metrics                       

Annual Management Fee EBITDA

-   Key top-line growth metric at AMG tied to the long-term value creation of the business, measuring AMG profit net of performance fees, interest expense, taxes, and non-cash depreciation amortization – indicates the condition of AMG’s Affiliate base on an ownership-weighted basis, the efficacy of capital reinvested for growth, and management of corporate expenses

-   Performance fee earnings removed, to dampen volatility year-over-year

-   Annual growth in Management Fee EBITDA is influenced by the following primary factors:

1.   Change in market asset levels for the year (time weighted), estimated based on publicly available market composite data (“Beta”);

2.   Relative investment performance by AMG’s Affiliates;

3.   Asset-based fee rates;

4.   Annual expenses incurred by AMG and certain of our Affiliates;

5.   AMG’s ownership levels across our Affiliate group; and

6.   Management Fee EBITDA contributed by new Affiliate investments

-   Neither AMG’s management team nor our Affiliates can control market beta; therefore, for the purpose of setting the annual target for Management Fee EBITDA, we apply a framework that establishes an annual growth target based on a sliding scale of Beta (calculated by AMG as a market composite blend based on composites and weightings published by the Company quarterly, as a convention to approximate the impact of market changes on AMG’s assets under management) throughout the year

-   Framework for Setting Management Fee EBITDA Target:

o    If Beta has declined by more than (5)%, then the target Management Fee EBITDA will be 100% of prior-year Management Fee EBITDA

o    If Beta has increased by more than 5%, then the target Management Fee EBITDA will be 110% of prior-year Management Fee EBITDA

o    If Beta is between (5)% and 5%, the target Management Fee EBITDA will be calculated linearly between 100% and 110%

-       We believe that the resulting target is a rigorous metric given that the year-over-year change in Management Fee EBITDA is reflective of management’s execution against its strategy (described above) and beyond the impact of Beta on AMG’s business across a range of reasonable market outcome scenarios

Annual Economic Earnings Per Share

-   Most comprehensive measure of overall earnings contribution on a per-unit basis; please refer to AMG’s most recent Form 10-K for a full definition

-   Incorporates aggregate condition of Affiliates, corporate expenses, capital structure, tax exposure, and the full weight of capital allocation decisions (deployment of capital into new Affiliate investments and share repurchases)

-   Economic Earnings Per Share (EEPS) is a key non-GAAP performance metric

-   Annual growth in EEPS is influenced by similar principal factors that affect Management Fee EBITDA (1-6 above) and also includes the impact of performance fees and share repurchases

-   As discussed, neither AMG’s management team nor our Affiliates can control market beta; therefore, for the purpose of setting the annual target for EEPS, we apply a framework that establishes an annual growth target based on a sliding scale of Beta throughout the year. The framework for setting the EEPS target is aligned with that described for Management Fee EBITDA above

-   We believe that the resulting EEPS target is a rigorous metric given that the year-over-year change in EEPS is reflective of management’s execution against its strategy above and beyond the impact of Beta on AMG’s business across a range of reasonable market outcome scenarios

Metric

-   Description and Rationale                                              

Target-Setting Methodology

Relative Earnings Growth -
Percentile Rank

-   Relative growth ranking vs. Peer Group across GAAP Earnings Per Share and Economic Earnings Per Share (equally-weighted); relative metric reduces impact of macro factors

-   EEPS is one of AMG’s key performance metrics, but must be calculated for certain peers that do not disclose a comparable metric. Given that all public companies must report under GAAP, diluted GAAP EPS is included in the composite metric, enhancing conformity across the Peer Group. Idiosyncratic issues across each metric are offset by equally weighting EEPS vs. GAAP EPS; short-term anomalies are offset by comparing across a 3-year period

-   Target for AMG’s relative growth ranking vs. Peer Group across GAAP Earnings Per Share and Economic Earnings Per Share (equally-weighted) is the peer median (50^th percentile)

Shareholder Value Creation Metrics: Total Stockholder Return, Annualized (1- and 3-Year Composites)

Absolute TSR

-   TSR metrics directly link Performance Assessment with shareholder investment experience

-   Absolute metric accounts for AMG’s unique exposures that are not captured in the Peer Group

-   1- / 3-year composites recognize annual performance and align performance with longer-term stockholder return

-   Target for the Absolute TSR, Annualized, metric (1- and 3-Year Composite) was set at 10%, given cost of capital estimated utilizing the Capital Asset Pricing Model (CAPM), including assumptions for the risk-free rate, equity risk premium, and long-term beta

Relative TSR

-   TSR metrics directly link Performance Assessment with shareholder investment experience

-   Relative metric provides comparability with Peer Group and mitigates macro impact(s) on individual stocks’ return

-   1- / 3-year composites recognize annual performance and align performance with longer-term stockholder return

-   Target for the Relative TSR, Annualized, metric (1- and 3-Year Composite) was set at the peer median (50^th percentile)

AMG Distribution Business Metric

Total AMG-Related Gross Sales: 3-Year

-   Measures success of AMG’s efforts to support Affiliate growth (AMG distribution personnel marketing to institutional and wealth clients on behalf of Affiliates), on a 3-year basis; metric is Annual Gross Sales generated by AMG distribution efforts, in aggregate, over the 3-year period

-   Target is based on 3-year gross sales generated by AMG distribution personnel on behalf of Affiliates, which represented approximately 10% of AMG’s annual total gross sales

Capital Deployment and Return on Capital Metrics                       

EBITDA from New Investments: 3-Year

-   Measures Total Adjusted EBITDA recognized through execution of new Affiliate investment strategy, on a 3-year basis to offset short-term anomalies, indicating productivity of the new investment effort over such 3-year period

-   Incents ongoing investment in growth and diversification and evolution of AMG’s product offering and asset exposure over time

-   Target is based on the 10-year historical average of total EBITDA acquired through execution of new investments strategy over rolling 3-year periods

Average Annualized New Investments Yield: 3-Year

-   Measures average pre-tax cash returns on new investments on a 3-year basis, therefore indicating efficacy of new investment effort over the period; 3-year period offsets short-term anomalies

-   Incents a focus on pricing, structure, and long-term growth potential

-   Target pre-tax cost of equity of 12% is estimated utilizing the Capital Asset Pricing Model (CAPM), including assumptions for the risk-free rate, equity risk premium, and long-term beta

Average Annualized Adjusted Return on Capital: 3-Year

-   Average annual after-tax return on investment from capital deployed over 3-year period across the combination of new investments and share repurchases (together accounting for the significant majority of AMG’s discretionary capital decisions)

-   Incents a disciplined approach to capital allocation across growth investments and share repurchases as management creates shareholder value over time; 3-year period offsets short-term anomalies

-   Target after-tax cost of capital of 10% is estimated utilizing the Capital Asset Pricing Model (CAPM), including assumptions for the risk-free rate, equity risk premium, and long-term beta

Strategic and Organizational Initiatives

ESG-Dedicated AUM

-   Measures the notional level of ESG-dedicated AUM as AMG increasingly participates in this secular growth area via investments in new Affiliates or collaborating with existing Affiliates in product development or enhancing capabilities; targets are reconsidered annually to ensure appropriate progress is incented over time

-   Target set relative to the prior-year level of AMG notional AUM in these strategies

Organizational Diversity and Leadership

-   Percentage of women at AMG in management positions (excluding our U.S. wealth subsidiary), reflecting importance of diverse management and leadership perspectives; targets are re-considered annually to ensure appropriate progress is incented over time

-   Target set relative to the prior-year AMG level, and over time may include goals and objectives and incorporate other forms of diversity

Employee Engagement Survey Score

-   Percentage of AMG employees indicating overall job satisfaction in formal annual employee engagement survey, relative to industry benchmark satisfaction rate

-   Target set relative to an industry benchmark satisfaction rate

Other Strategic Initiatives

-   Board of Directors’ assessment of management performance in strategic execution not directly captured in other metrics

-   Target set at 4 on a scale of 1 to 5 as the Board intends for the management team to execute across all strategic initiatives, including those not captured by other metrics in the Performance Assessment, in excellent fashion

•

Caps on total Annual Incentive Compensation: The Compensation Committee applied a cap on Annual Incentive Compensation for our President and Chief Executive Officer (“CEO Annual Incentive Compensation”) of $17.5 million, which has been consistent since 2017. The Committee also applied annual caps on the Annual Incentive Compensation for each of our Head of Affiliate Investments, our Chief Financial Officer, and our Head of Affiliate Engagement of $10.0 million, and applied a cap on the Annual Incentive Compensation for our General Counsel of $5.0 million.

•

Use of a Target Payout as the basis for determining variable Annual Incentive Compensation award amounts: The Compensation Committee set a target payout level (the “Target Payout”) for the performance year, based on peer benchmarking and reflecting input from our independent Compensation Consultant. The Committee uses the Target Payout as the basis for determining Annual Incentive Compensation, including cash bonuses and all equity awards. For 2021, the Target Payout of $9.6 million for our President and Chief Executive Officer was based on the median of Peer Group compensation.

•

Determine Annual Incentive Compensation using a single Performance Assessment: The Compensation Committee determined all incentive compensation, including cash bonus and equity incentive awards, using a single process. The separate Short-Term and Long-Term Scorecards used in prior years have now been streamlined into a single quantitatively-based Performance Assessment scorecard to simplify the compensation determination process and enhance its formulaic nature, in alignment with shareholder feedback. Pre-determined, objective metrics now account for more than 90% of the score weighting, and a number of new metric targets have been disclosed:

–

Significantly Broadened Array of Financial Performance Targets

o

Use of pre-set earnings targets has been expanded to include both annual targets as well as a 3-year relative earnings target measured against peers on a percentile-ranked basis, to focus management on generating long-term shareholder value

o

Added new capital deployment targets, measuring average yield and EBITDA acquired from new Affiliate investments, and weighted returns on share repurchases and new Affiliate investments – in each case over a 3-year period

–

New TSR Targets

o

Added pre-set Total Stockholder Return targets, based on 1- and 3-year returns on both an absolute and a relative basis, to further align the interests of management with those of our stockholders

–

New Performance Categories and Targets

o

Added pre-set targets for operational and organizational performance goals, enhancing the formulaic nature of the assessment and expand the scope into additional areas, including ESG:

▪

AMG Distribution Effectiveness – measuring results relative to gross sales targets relating to our AMG-led distribution business

▪

Strategic and Organizational Initiatives – measuring organizational diversity, AMG’s participation in responsible investment, and employee engagement

•

Total Formulaic Incentive Compensation calculated by applying Performance Assessment score to Target Payout: The weighted score of the Committee’s Performance Assessment of 147%, determined based on the quantitative scorecard assessment, was applied to the Target Payout amount of $9.6 million, to produce a Total Formulaic Incentive Compensation amount of $13.4 million for our President and Chief Executive Officer.

•

Application of a reduction of formulaic incentive amounts, consistent with 2019 commitment to stockholders: In the third and final year of impact related to the one-time, long-duration, 100% performance-based 2019 Long-Term Equity Alignment Award granted to our President and Chief Executive Officer and other executive officers, Total Formulaic Incentive Compensation was reduced by $1.7 million to $11.7 million for our President and Chief Executive Officer, reflecting the Committee’s commitment made to stockholders in connection with that one-time award. Over the three-year period, the formulaic compensation for the President and Chief Executive Officer was reduced by approximately

$7.8 million in aggregate, specifically related to the one-time award. The Committee also reduced incentive compensation awarded to other recipients of the one-time 2019 award, over the three-year period, including in 2021.

–

The Long-Term Equity Alignment Award was granted in 2019 to accomplish specific alignment goals during a period of unique transition from the founding generation to the next generation of management. The award was designed to further align our Chief Executive Officer and the new leadership team with stockholders over the long term, galvanize the team around the goal of long-term shareholder value creation, retain the team through the management transition, and lengthen the duration of their equity incentives. In keeping with AMG’s pay-for-performance philosophy, the award will expire with little or no value if the management team does not achieve results in the form of both a higher stock price and strong Average Return on Equity results

•

Allocations of Annual Incentive Compensation reflect a significant proportion of performance‑based equity awards: The final Annual Incentive Compensation is allocated between cash bonus and long-term equity awards using a pre-established tiered formula, which caps cash awards at 45% of Annual Incentive Compensation, wherein the first $5 million in incentive compensation is split as 45% cash and 55% equity, the next $5 million in incentive compensation is split as 40% cash and 60% equity, and any incentive compensation thereafter is split as 30% cash and 70% equity, resulting in a formulaic cash bonus of $4.8 million and a formulaic equity incentive award amount of $6.9 million for our President and Chief Executive Officer:

–

A majority of Annual Incentive Compensation is in the form of equity incentive awards: The majority of CEO Annual Incentive Compensation was in the form of equity incentive awards – in 2021, approximately 60%

–

A substantial majority of the equity incentive awards have rigorous, transparent, pre-established performance hurdles governing delivery of the award: Of the equity incentive awards, 60% were targeted to be performance awards, granted in the form of Long‑Term Performance Achievement Awards, with three‑year cliff vesting and delivery further subject to rigorous and transparent pre-established performance targets

•

Long‑Term Performance Achievement Awards use an Average Return on Equity target, measured over a single three‑year performance period; target achievement levels were raised by over 10% in 2021:

–

Long‑Term Performance Achievement Awards are only deliverable if we meet minimum Return on Equity levels:

o

Return on Equity targets align management incentives with the strategic goals of not only growing earnings, but also effective stewardship of shareholder capital; the three‑year measurement period takes into account retained earnings from previous years and indicates the effectiveness of stockholder capital reinvestment

o

Return on Equity target range for the 2021 Long Term Performance Achievement Awards (achievement levels at which 100% of the shares would be delivered) was raised to 18 - 20% (from 16 - 18% for the 2020 performance year awards)

o

Return on Equity incorporates the effect of dividends, share repurchases, new investments, cost containment, and reinvestment in the business

–

Use of a single forward‑looking performance period:

o

Use of a single forward three‑year measurement period, with cliff vesting three years from issuance; any portion of the award that will not be delivered following the performance period will be forfeited

AMG Guiding Principles for Peer Selection 

Consider Industry

Identify companies with a similar business model/philosophy

•    Begin with direct ‘pure-play’ peers within the mono-line asset management industry; once mono-line asset manager peers are identified, select those that are most comparable

•    Extend search beyond mono-line asset managers to identify peers with operationally similar business models (i.e., financial services companies with a significant asset management component to their business)

•    Identify peers within the asset management industry managing assets in similar strategies and for similar client types

Consider Size and Scope

Select companies similar in strategic complexity, geographic focus, and financial scale

•    Evaluate peers for comparability, primarily considering assets under management and fee revenue as the most relevant metrics

•    Select asset managers with global scale and international operations 

Peer Group: 12 Peers

AllianceBernstein

Franklin Resources

Ameriprise Financial

Invesco

Ares Management

Janus Henderson Group

Artisan Partners

Lazard

Carlyle Group

Victory Capital Management

Federated Hermes

Virtus Investment Partners

Compensation Governance Practices

Our Board of Directors is committed to maintaining responsible compensation practices, and believes that rewards for our senior leaders should be commensurate with the results they achieve for our stockholders. Our strong governance procedures and practices with respect to employment and compensation include the following:

What we do

What we don’t do

•      Annual Say-on-Pay Vote

•      Caps on Annual Incentive Compensation for each NEO, including the CEO

•      Annual cap on independent director equity awards

•      Equity ownership guidelines for NEOs and directors, as well as an equity holding policy for NEOs

•      One-year minimum vesting on equity awards

•      Double-trigger vesting upon change in control

•      Clawback policy

•      Mitigation of dilutive impact of equity awards through share repurchases

•      Formulaic performance assessment scorecard; pre-set objective quantitative metrics drive over 90% of the assessment score, with achievement caps on each individual metric

•      Significant portion of variable compensation is performance-based equity awards tied to key business metrics

•      Majority of equity awards are performance-based, with delivery tied to the achievement of pre-established performance targets

•      A thorough risk assessment process, as described under “Risk Considerations in our Compensation Program” below

•      No employment agreements with any NEOs, including the CEO

•      No golden parachute change in control agreements with executives

•      No tax reimbursements or gross-ups for perquisites

•      No hedging or pledging of AMG securities by directors or officers

•      No option re-pricing or buy-outs of underwater stock options

•      No option grants with exercise price below grant date stock price

•      No payment of dividends on equity awards prior to vesting

•      No liberal share counting or recycling of shares tendered or surrendered to pay the exercise cost or tax obligation of grants

•      No “evergreen” equity plan feature

•      No excessive perquisites

Name and Principal Position

Year

Salary

($)

Non-Equity

Incentive Plan

Compensation

($)(1)

Stock

Awards

($)

Stock

Option

Awards($)

All Other

Compensation

($)(2)

Total

($)

Jay C. Horgen

2021

750,000

4,755,000

3,500,000

(3)

—

58,156

9,063,156

President and Chief Executive Officer

2020

750,000

2,550,000

4,275,000

(4)

—

57,026

7,632,026

2019

648,718

(5)

2,000,000

14,224,000

(6)

7,276,000

(7)

48,910

24,197,628

Thomas M. Wojcik(8)

2021

500,000

2,400,000

2,075,000

(3)

—

21,240

4,996,240

Chief Financial Officer

2020

500,000

1,175,000

1,950,000

(4)

—

20,940

3,645,940

2019

346,795

800,000

4,470,680

(6)

4,525,000

(7)

24,404

10,166,879

Rizwan M. Jamal(9)

2021

500,000

2,100,000

2,050,000

(3)

—

27,270

4,677,270

Head of Affiliate Investments

John R. Erickson(9)

2021

500,000

1,250,000

1,350,000

(3)

—

21,894

3,121,894

Head of Affiliate Engagement

David M. Billings

2021

500,000

1,125,000

1,400,000

(3)

—

23,454

3,048,454

General Counsel and Secretary

2020

400,000

1,100,000

450,000

(4)

—

23,154

1,973,154

2019

400,000

1,100,000

600,000

(6)

—

28,454

2,128,454

(1)

For 2021, amounts represent performance-based cash bonuses awarded in recognition of performance in 2021, determined using the Performance Assessment scorecard and framework, applying a formulaic score to target payout levels set based on peer benchmarking, and allocating between cash bonus and long-term equity awards using a pre-established tiered formula, as more fully described in the Compensation Discussion and Analysis section of this Proxy Statement.

(2)

For 2021, all other compensation consisted of (i) contributions to a 401(k) profit-sharing or similar pension plan in the amount of $17,400 on behalf of each named executive officer, (ii) medical benefits and life and long-term disability insurance premiums with respect to each named executive officer, and (iii) tax preparation services with respect to Mr. Horgen. The Company does not provide tax reimbursements for any perquisite.

(3)

Represents the aggregate grant date fair value (computed in accordance with FASB ASC Topic 718) of the following equity incentive awards consisting of restricted stock units granted under the 2020 Equity Incentive Plan (the “2020 Stock Plan”) in March 2021 in recognition of performance in 2020: (i) 2020 Long-Term Deferred Equity Awards granted to Mr. Horgen, Mr. Wojcik, Mr. Jamal, Mr. Erickson, and Mr. Billings with grant date values of $1,400,000, $830,000, $820,000, $540,000, and $560,000, respectively, and (ii) 2020 Long-Term Performance Achievement Awards granted to Mr. Horgen, Mr. Wojcik, Mr. Jamal, Mr. Erickson, and Mr. Billings with grant date values of $2,100,000, $1,245,000, $1,230,000, $810,000, and $840,000, respectively. The portions of the 2020 Long-Term Performance Achievement Awards that will be eligible to vest will be determined based on the Company’s level of achievement measured against pre-established performance targets measuring the Company’s Average Return on Equity, defined as the annual average of the Company’s Economic net income (calculated on a pre-compensation basis) over a three-year measurement period ending on December 31, 2023, divided by the quarterly average of the Company’s stockholder’s equity, controlling interest over such period (excluding accumulated other comprehensive income, impairments recorded subsequent to the grant date, and other transactions and investments

included in GAAP Net income but that do not impact Economic net income), reflected as a percentage. If Average Return on Equity is below 10% for the measurement period, no shares underlying the initial award will be issued and distributed. If Average Return on Equity is between 10% and 23% for the measurement period, a ratable portion between 50% and up to a maximum of 150% of the shares underlying the award will be issued and distributed, with 100% of the shares underlying the initial award issued and distributed if an Average Return on Equity of between 16% and 18% is achieved. The grant date fair value of the 2020 Long-Term Performance Achievement Awards assumes that the midpoint level of Average Return on Equity will be achieved. For details on the assumptions made in the valuation of these and the other awards described herein, see the Company’s 2021 Annual Report on Form 10-K, under “Critical Accounting Estimates and Judgments—Share-Based Compensation and Affiliate Equity” and the “Share-Based Compensation” note to the Consolidated Financial Statements included therein.

(4)

Represents the aggregate grant date fair value (computed in accordance with FASB ASC Topic 718) of the following equity incentive awards consisting of restricted stock units granted under the 2013 Stock Incentive Award Plan (as amended, the “2013 Stock Plan”) in March 2020 in recognition of performance in 2019: (i) 2019 Long-Term Deferred Equity Awards granted to Mr. Horgen, Mr. Wojcik, and Mr. Billings with grant date fair values of $1,710,000, $780,000, and $180,000, respectively, and (ii) 2019 Long-Term Performance Achievement Awards granted to Mr. Horgen, Mr. Wojcik, and Mr. Billings with grant date fair values of $2,565,000, $1,170,000, and $270,000, respectively. The portions of the 2019 Long-Term Performance Achievement Awards that will be eligible to vest will be determined based on the Company’s level of achievement measured against pre-established performance targets measuring the Company’s Average Return on Equity, defined as the annual average of the Company’s Economic net income (calculated on a pre-compensation basis) over a three-year measurement period ending on December 31, 2022, divided by the quarterly average of the Company’s Total stockholder’s equity, controlling interest (excluding accumulated other comprehensive income and impairments recorded subsequent to the grant date) over such period, reflected as a percentage. If Average Return on Equity is below 12% for the measurement period, no shares underlying the award will be issued and distributed. If Average Return on Equity is between 12% and 22% for the measurement period, a ratable portion between 50% and up to a maximum of 175% of the shares underlying the award issued will be issued and distributed, with 100% of the shares underlying the award issued and distributed if a midpoint of 16% Average Return on Equity is achieved. The grant date fair value of the 2019 Long-Term Performance Achievement Awards assumes that the midpoint level of Average Return on Equity will be achieved.

(5)

Mr. Horgen became the Chief Executive Officer of the Company in May 2019, and his salary was increased to $750,000. Mr. Horgen previously served as the Company’s President and Chief Financial Officer.

(6)

Represents the aggregate grant date fair value (computed in accordance with FASB ASC Topic 718) of the following equity incentive awards consisting of restricted stock units granted under the 2013 Stock Plan: (i) 2018 Long-Term Deferred Equity Awards granted in February 2019 in recognition of performance in 2018 to Mr. Horgen and Mr. Billings with grant date fair values of $1,400,000 and $240,000, respectively, (ii) 2018 Long-Term Performance Achievement Awards granted in February 2019 in recognition of performance in 2018 to Mr. Horgen and Mr. Billings with grant date fair values of $2,100,000 and $360,000, respectively, (iii) Alignment RSUs granted in August 2019 to Mr. Horgen and Mr. Wojcik with grant date fair values of $10,724,000 and $1,100,000, respectively, and (iv) for Mr. Wojcik, a one-time make-whole award of restricted stock units granted in May 2019 in connection with the commencement of his employment, with a grant date fair value of $3,370,680. The portions of the 2018 Long-Term Performance Achievement Awards that will be eligible to vest will be determined based on the Company’s level of achievement measured against pre-established performance targets measuring the Company’s Average Return on Equity, defined as the annual average of the Company’s Economic net income (calculated on a pre-compensation basis) over a three-year measurement period ending on December 31, 2021, divided by the quarterly average of the Company’s Total stockholder’s equity, controlling interest (excluding accumulated other comprehensive income) over such period, reflected as a percentage. If Average Return on Equity is below 12% for the measurement period, no shares underlying the award will be issued and distributed. If Average Return on Equity is between 12% and 22% for the measurement period, a ratable portion between 25% and up to a maximum of 175% of the shares underlying the award issued will be issued and distributed, with 100% of the shares underlying the award issued and distributed if a midpoint of 17% Average Return on Equity is achieved. The Alignment RSUs are divided into three equal tranches, and the number of shares of common stock of the Company underlying each tranche that may be issued and distributed for each restricted stock unit will be determined based on the Company’s level of achievement measured against pre-established performance targets measuring Average Return on Equity, defined as the annual average of the Company’s Economic net income (calculated on a pre-compensation basis) over the applicable three-, four- or five-year measurement period ending on December 31, 2020, 2021, or 2022, respectively, divided by the quarterly average of the Company’s Total stockholder’s equity, controlling interest (excluding accumulated other comprehensive income and impairments recorded subsequent to the grant date) over the applicable measurement period, reflected as a percentage. For each tranche, if Average Return on Equity is below 12% for the applicable measurement period, no shares underlying such tranche will be issued and distributed, and if Average Return on Equity is 12% or above for the applicable measurement period, 100% of the shares underlying the tranche will be issued

and distributed. The grant date fair value of the Alignment RSUs assumes that the target-level Average Return on Equity, the midpoint of 17%, will be achieved.

(7)

Represents the aggregate grant date fair value (computed in accordance with FASB ASC Topic 718 and assuming the midpoint level of performance will be achieved) of the Alignment Options (together with the Alignment RSUs, the “Alignment Awards”) consisting of stock options granted under the 2011 Stock Option and Incentive Plan (as amended, the “2011 Option Plan”) in August 2019. The number of shares of common stock of the Company underlying each stock option award that may become exercisable following vesting will be determined based on the Company’s level of achievement measured against pre-established performance targets measuring Average Return on Equity (calculated on the same basis as the Alignment RSUs) over a five-year performance period ending on December 31, 2023. If Average Return on Equity is between 12% and 20% or above for the measurement period, a ratable portion between 50% and up to a maximum of 150% of the shares underlying the award will be eligible for exercise, with 100% of the shares underlying the award becoming eligible for exercise if a midpoint of 16% Average Return on Equity is achieved for the measurement period. If Average Return on Equity is equal to or less than 12% for the measurement period, 50% of the shares underlying the award will be eligible for exercise. Any portion of the award that will not be delivered following the five-year performance period will be forfeited. The grant date fair value of the Alignment Options was determined using the Black-Scholes option pricing model, and assumes that the midpoint level of Average Return on Equity will be achieved.

(8)

Mr. Wojcik joined the company in April 2019 and, therefore, amounts in the table for 2019 represent Mr. Wojcik’s compensation for the period since he joined the Company.

(9)

Each of Mr. Jamal and Mr. Erickson were first determined to be named executive officers for fiscal year 2021 and, therefore, in accordance with SEC rules, their compensation is not included in the table for years prior to 2021.

Estimated Future

Payouts

Under Non-Equity

Incentive Plan

Awards(1)

Estimated Future Payouts

Under Equity

Incentive Plan Awards

Grant

Date

Fair Value

Name

Grant

Date

Threshold

($)

Target

($)

Maximum

($)

Threshold

(#)

Target

(#)

Maximum

(#)

of Stock

Awards ($)

Jay C. Horgen

1/27/2022

—

4,755,000

—

—

—

—

—

3/5/2021

(2)

—

—

—

—

10,050

—

1,400,000

3/5/2021

(3)

—

—

—

—

15,074

22,611

2,100,000

Thomas M. Wojcik

1/27/2022

—

2,400,000

—

—

—

—

—

3/5/2021

(2)

—

—

—

—

5,958

—

830,000

3/5/2021

(3)

—

—

—

—

8,937

13,406

1,245,000

Rizwan M. Jamal

1/27/2022

—

2,100,000

—

—

—

—

—

3/5/2021

(2)

—

—

—

—

5,886

—

820,000

3/5/2021

(3)

—

—

—

—

8,829

13,244

1,230,000

John R. Erickson

1/27/2022

—

1,250,000

—

—

—

—

—

3/5/2021

(2)

—

—

—

—

3,876

—

540,000

3/5/2021

(3)

—

—

—

—

5,814

8,721

810,000

David M. Billings

1/27/2022

—

1,125,000

—

—

—

—

—

3/5/2021

(2)

—

—

—

—

4,020

—

560,000

3/5/2021

(3)

—

—

—

—

6,030

9,045

840,000

(1)

Represents performance-based cash bonuses awarded in recognition of performance in 2021, determined using the Performance Assessment scorecard and framework, applying a formulaic score to target payout levels set based on peer benchmarking, and allocating between cash bonus and long-term equity awards using a pre-established tiered formula, as more fully described in the Compensation Discussion and Analysis section of this Proxy Statement.

(2)

Represents 2020 Long-Term Deferred Equity Awards granted in March 2021 under the 2020 Stock Plan in recognition of performance in 2020, vesting in four equal installments on March 5, 2022, 2023, 2024, and 2025, subject to continued employment through each vesting date (with certain limited exceptions in the case of death, disability, Retirement, or certain terminations of employment in connection with a change in control. To be eligible for Retirement, the named executive officer must (a) have completed at least 120 months (10 years) of service and (b) have a number of completed months of service plus age in months that, when summed, equals at least 780 months (65 years). Upon Retirement, qualifying awards continue to vest post-termination in accordance with the original schedule, subject to any applicable performance conditions). The grant date fair value has been computed in accordance with FASB ASC Topic 718.

(3)

Represents 2020 Long-Term Performance Achievement Awards granted in March 2021 under the 2020 Stock Plan in recognition of performance in 2020, vesting in full on March 5, 2024, subject to continued employment through the vesting date (with certain limited exceptions in the case of death, disability, Retirement, certain terminations of employment in connection with a change in control, or terminations of employment other than for cause or by the employee for good reason). The number of shares of common stock of the Company underlying each award that may be issued and distributed for each restricted stock unit is based on the Company’s level of achievement measured against pre-established performance targets measuring the Company’s Average Return on Equity over a three-year measurement period ending on December 31, 2023. The grant date fair value has been computed in accordance with FASB ASC Topic 718, and assumes that the midpoint level of Average Return on Equity will be achieved.

Option Awards

Stock Awards

Name

Number of

Securities

Underlying

Unexercised

Options

Exercisable

(#)(1)

Number of

Securities

Underlying

Unexercised

Unearned

Options

(#)(2)

Option

Exercise

Price ($)

Option

Expiration

Date

Number of

Shares of

Stock That

Have Not

Vested

(#)(3)

Market or

Payout

Value of

Shares of

Stock That

Have Not

Vested ($)

Equity

Incentive

Plan Awards:

Number of

Unearned

Shares of

Stock That

Have Not

Vested

(#)(4)

Equity

Incentive

Plan Awards:

Market

Value of

Unearned

Shares

of Stock That

Have Not

Vested ($)

Jay C. Horgen

—

400,000

74.49

8/15/2026

35,573

5,852,114

164,890

27,126,054

Thomas M. Wojcik

—

248,763

74.49

8/15/2026

24,999

4,112,585

34,634

5,697,639

Rizwan M. Jamal

—

285,871

74.49

8/15/2026

18,174

2,989,805

53,867

8,861,660

John R. Erickson

—

250,137

74.49

8/15/2026

14,149

2,327,652

44,711

7,355,407

David M. Billings

8,098

—