AMG.NYSEAffiliated Managers Group, INC
DEF 14A: Affiliated Managers Group Announces 2024 Annual Meeting and Executive Compensation Details
Sentiment:
Definitive Proxy Statement
Affiliated Managers Group (AMG) will hold its 2024 Annual Meeting on May 22, 2024, to elect directors, approve executive compensation, and ratify the selection of its independent auditor.
Worse than expectedEconomic earnings per share (EEPS) of $19.48 declined (3%) relative to the prior year primarily due to lower performance fee earnings per share.Adjusted EBITDA of $935.7 million declined (11%) relative to prior year primarily due to lower performance fee earnings.While stockholder return underperformed the Peer Group in 2023, AMG continued to outperform the Peer Group over the prior 3-year period.The Overall Performance Assessment Score decreased from 128% to 106% as compared to 2022.
Summary
- Affiliated Managers Group (AMG) has announced its 2024 Annual Meeting of Stockholders to be held on May 22, 2024.
- Stockholders will vote on the election of nine directors, an advisory vote on executive compensation, and the ratification of PricewaterhouseCoopers LLP (PwC) as the independent registered public accounting firm.
- The record date for determining stockholders eligible to vote is April 1, 2024.
- As of the record date, there were 32,456,451 shares of common stock outstanding and entitled to vote.
- The Board of Directors recommends voting FOR all director nominees, the advisory vote on executive compensation, and the ratification of PwC.
- In 2023, AMG's Economic earnings per share (EEPS) of $19.48 declined (3%) relative to the prior year primarily due to lower performance fee earnings per share, with a CAGR of +14% over the 3-year period.
- Adjusted EBITDA of $935.7 million declined (11%) relative to prior year primarily due to lower performance fee earnings, and a CAGR of +6% over the 3-year period.
- GAAP Earnings per share (diluted) , excluding the impact from gains from Affiliate sales, grew +7% to $14.52 in 2023, with a CAGR of +50% over the 3-year period.
- The CEO Target Total Payout was set at $11.1 million for our CEO in 2023, based on the median of Peer Group compensation.
- The Overall Performance Assessment Score decreased from 128% to 106% as compared to 2022.
- The formulaic equity incentive award amount was granted 40% in the form of Long-Term Deferred Equity Awards and 60% in the form of LongTerm Performance Achievement Awards.
Sentiment
Score: 6
Explanation: The document presents a mixed sentiment. While it highlights solid results and strategic initiatives, it also acknowledges declines in key financial metrics and underperformance relative to peers in certain areas. The company's focus on long-term growth and shareholder value creation provides a somewhat positive outlook.
Positives
- AMG achieved solid results in 2023, reflecting the positive impact of our strategy and our capital allocation discipline across both growth investments and share repurchases.
- The company has a strong employee satisfaction of 90% measured through AMG's annual formal engagement survey.
- The company has industry-leading organizational diversity; women and ethnic minorities each represent 40% of AMG's current executive officers.
- The company has a highly Independent and Diverse Board.
- The company has a Non-Executive, Independent Board Chair.
- The company has a Significant Board Refreshment.
- The company has Director Accountability, Development, and Engagement.
- The company has Strong Shareholder Alignment: Policies and Initiatives.
- The company has Prioritization of Sustainability Factors.
Negatives
- Economic earnings per share (EEPS) of $19.48 declined (3%) relative to the prior year primarily due to lower performance fee earnings per share.
- Adjusted EBITDA of $935.7 million declined (11%) relative to prior year primarily due to lower performance fee earnings.
- While stockholder return underperformed the Peer Group in 2023, AMG continued to outperform the Peer Group over the prior 3-year period.
- The Overall Performance Assessment Score decreased from 128% to 106% as compared to 2022.
Risks
- The document mentions that actual results may be impacted by a number of external factors, including macroeconomic factors, market changes, and regulatory or political changes, as well as other factors such as share repurchases and investments in new and existing Affiliates, which may not be anticipated and could significantly impact AMGs business.
Future Outlook
The company continues to focus on evolving its business toward long-term secular growth areas and exercise ongoing discipline in allocating capital to generate long-term earnings growth and shareholder value creation.
Industry Context
AMG operates in the asset management industry, which is highly competitive and subject to various market and economic factors. The company's strategy of partnering with independent investment firms and focusing on secular growth areas is aimed at differentiating itself and achieving long-term success.
Comparison to Industry Standards
- The document compares AMG's performance to a peer group of asset management and financial services companies, including AllianceBernstein, Ares Management, Artisan Partners, Blue Owl Capital, The Carlyle Group, Federated Hermes, Franklin Resources, Invesco, Janus Henderson Group, Lazard, TPG Inc., Victory Capital Holdings, and Virtus Investment Partners.
- The CEO Target Total Payout was set at the median of the Peer Group ($11.1 million).
- The document notes that AMG's organizational diversity is above the S&P 500 average.
Management Changes
| Role | Previous Person | New Person | Effective Date | Reason |
|---|---|---|---|---|
| Chief Operating Officer | NA | Thomas M. Wojcik | April 1, 2024 | Appointment |
| Chief Financial Officer | Thomas M. Wojcik | Dava E. Ritchea | April 1, 2024 | Appointment |
| General Counsel and Corporate Secretary | NA | Kavita Padiyar | April 1, 2024 | Appointment |
Corporate Governance
| Change Type | Description | Effective Date | Impact Assessment |
|---|---|---|---|
| Board Chair Appointment | Reuben Jeffery III was appointed Board Chair in January 2024, succeeding Dwight D. Churchill. | January 2024 | Provides effective checks and balances to ensure the exercise of independent judgment by the Board. |
| Director Compensation Program Revision | Beginning in January 2024, the Compensation Committee revised the director compensation program to provide for vesting of director equity awards over a one-year period, consistent with industry practice. | January 2024 | Aligns director compensation with industry standards. |
Related Party Transactions
- Our executive officers and directors may invest from time to time in funds advised by our Affiliates, or receive other investment services provided by our Affiliates, in each case, on substantially the same terms as other investors.
- Further, certain of our employees invested in funds managed by certain of our Affiliates during the reporting period, through the assignment from the Compa ny to the applicable employee of a portion of the Companys unfunded required capital commitment obligation, following the approval of the Audit Committee of the Companys Board of Directors.
- The investments are on the same general terms available to senior fund professionals and are not subject to a management fee.
- The participating executive officers and aggregate amounts invested (including unfunded commitments) during the reporting period (which are inclusive of amounts for the reporting period previously reported in the 2023 Proxy Statement) are as follows: Mr. Horgen, $1,150,000; Mr. Jamal, $750,000; and Mr. Wojcik, $250,000.
Stakeholder Impact
- The document outlines potential impacts on shareholders through discussions of executive compensation, board composition, and corporate governance practices.
- Employees are impacted through discussions of human capital management, diversity initiatives, and employee engagement scores.
- Customers (clients of AMG and its affiliates) are indirectly impacted through discussions of investment performance and strategic initiatives aimed at enhancing client outcomes.
Key Dates
| Date | Description |
|---|---|
| 2018 | Achieved medium-term emissions reduction targets established in 2018 |
| 2019 | Equity Holding Policy first implemented in 2019 and applicable to all recipients of the Long-Term Equity Alignment Award as well as other members of senior management granted one-time long-term equity awards |
| 2019 | The Equity Holding Policy was first implemented in 2019 for recipients of the Long-Term Equity Alignment Award, and together with the Equity Ownership Guidelines, represent an industry-leading set of policies to further cultivate an ownership mindset among senior executives, with direct and substantial alignment with stockholders through ownership of vested, unrestricted shares of AMG stock. |
| 2019 | Since 2019, independent directors have collectively purchased more than 54,000 shares, with an aggregate notional value of more than $5.5 million at the time of purchase. |
| 2019 | Since his May 2019 appointment, Mr. Horgen has purchased 52,000 shares in the open market and owns 1% of AMGs outstanding common stock. |
| 2020 | Transitioned to a non-executive, independent Board Chair in 2020; structure provides effective checks and balances to ensure the exercise of independent judgment by the Board |
| 2020 | New Chairs of all three Board committees, and new members appointed to each committee, since 2020 |
| 2020 | Five of the eight independent director nominees are new since 2020, including a new independent director appointment in 2023, and a new independent director nomination in 2024; 40% of such new directors are women and/or ethnically diverse |
| 2020 | Strong refreshment practices on Committees; new members on all Committees since 2020 |
| 2020 | 2024 Board nominees include five new independent directors since 2020, including a new independent director appointment in 2023, and a new independent director nomination in 2024 |
| 2020 | Transitioned to a non-executive, independent Board Chair in 2020; Board Chair does not chair any committee |
| 2021 | Following the Compensation Committees re-design of AMGs incentive determination process for performance year 2021, and further modifications for performance year 2022, the new approach was widely well-received, with strong shareholder support for the simplified, transparent incentive determination process driven by pre-set, objective, rigorous metric targets; new compensation payout targets; and formulaic determination of compensation amounts and mix |
| 2022 | Named to Barrons 100 Most Sustainable U.S. Companies in each of 2022 (#79) and 2023 (#48) |
| 2023 | In 2023, 98% of the votes cast by stockholders supported our Say-on-Pay proposal, expressing strong support for our executive compensation program (following 97% stockholder support in 2022, indicating very strong ongoing support for the program, redesigned for performance year 2021). |
| 2023 | In 2023, we continued to progress on our strategic objectives of evolving our business towards secular growth areas and magnifying the growth of our Affiliate partners. |
| 2023 | In 2023, entered into new partnerships with Forbion, a private markets firm focused on investing in highquality life sciences companies, and Ara Partners, a private markets firm specializing in industrial decarbonization |
| 2023 | Executed on two new Affiliate investments and returned more than $575 million in capital to stockholders, while maintaining strong and flexible balance sheet |
| 2023 | Excess capital used to further reduce shares outstanding by approximately 10% in 2023 and approximately 28% since the end of 2019. |
| 2023 | Paid down $400 million of institutional debt and issued $450 million in 40-year retail bonds in Q1 2024, further strengthening our balance sheet and liquidity profile |
| 2023 | Completed annual inventory and secured third-party attestation of AMGs greenhouse gas emissions; achieved medium-term emissions reduction targets established in 2018 |
| 2023 | Third annual AMG Week of Service held in 2023, with employee participation in hands-on service projects benefiting non-profit organizations and individuals in the communities surrounding our offices globally; virtual and in-person volunteering opportunities are regularly offered to AMG employees and employees of Affiliates |
| 2023 | Approximately $2.2 million was disbursed by The AMG Charitable Foundation in 2023 |
| 2023 | In 2023, AMG established AMG Gives, a giving program to coordinate, facilitate, and encourage philanthropy by members of senior management, consistent with The AMG Charitable Foundations mission and areas of charitable focus. |
| 2023 | For 2023, recommendations by our named executive officers led to donations under this program to not-for-profit organizations in the following amounts: Mr. Horgen, $400,000; Mr. Wojcik, $200,000; and Mr. Erickson, $200,000. |
| 2023 | The NYSE Clawback Policy subjects any incentive-based compensation paid to an executive officer after October 2, 2023 to recoupment if and to the extent the same was paid on the basis of financial results in respect of any of the three most recently completed fiscal years, which results were later restated. |
| 2024 | Dava E. Ritchea joined AMG on April 1, 2024, and was appointed Chief Financial Officer; and Kavita Padiyar was appointed as General Counsel and Corporate Secretary; all appointments were effective as of April 1, 2024, as further described in the Companys Current Report on Form 8-K filed with the SEC on March 25, 2024. |
| April 1, 2024 | The Board of Directors fixed the close of business on April 1, 2024 as the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournments or postponements thereof. |
| April 12, 2024 | On or about April 12, 2024, we will mail to our stockholders a Notice of Internet Availability of Proxy Materials (the Notice) containing instructions on how to access the Proxy Statement and our 2023 Annual Report on Form 10-K online. |
| May 22, 2024 | The 2024 Annual Meeting of Stockholders (the Annual Meeting) of Affiliated Managers Group, Inc. (the Company) will be held on May 22, 2024, at 9:00 a.m. Eastern Daylight Time at the Companys office at 600 Hale Street, Prides Crossing, Massachusetts 01965 |
Keywords
Annual Meeting, Executive Compensation, Board of Directors, Affiliated Managers Group, AMG, Proxy Statement, Stockholders, Directors, PricewaterhouseCoopers, Audit Committee, Economic Earnings Per Share, Adjusted EBITDA, GAAP Earnings Per Share, Sustainability, Corporate Governance, Equity Ownership, Incentive Compensation
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