Company: MGRE
Filing Date: 2025-04-11
Form Type: DEF 14A
Source: 0001004434-25-000021
Chunk: 12

Company: AFFILIATED MANAGERS GROUP, INC.
Filing Date: 2025-04-11
Form: DEF 14A
Chunk 12
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: (i) growing Economic earnings and (ii)effective stewardship of shareholder capital, over a long-term period. The Average ROE ratio providesshareholders with objective insight into the efficiency with which AMG’s management team allocates capitaland uses stockholder equity to generate earnings, and should be measured against Cost of Equity•Average ROE incorporates multiple financial metrics. Average ROE is defined as the annual average of theCompany’s Economic net income (calculated on a pre-compensation basis) over a specified measurementperiod, divided by the quarterly average of the Company’s stockholder’s equity, controlling interest over suchperiod (excluding accumulated other comprehensive income, impairments recorded subsequent to the grantdate, and other transactions and investments included in GAAP Net income but that do not impact Economicnet income), reflected as a percentage•Return on Equity (ROE) is often used by other financial services companies as an objective measure ofmanagement’s effectiveness at using stockholder equity to generate earnings and to encourage responsiblelong-term planning                                                                                                                                                                                          |
| What was the rationalebehind the changes made toLong-Term PerformanceAchievement Awards,including the addition of asecond metric, increasingthe vesting duration, andincreasing the mix of theseawards as a percentage oftotal formulaic equityincentive awards? | •The Compensation Committee believes that equity incentive awards tied to rigorous, transparentperformance metrics better align realized executive compensation with business performance. Accordingly,the Compensation Committee decided to increase the proportion of Long-Term Performance AchievementAwards as a percentage of total formulaic equity incentive awards to 75%, from 60%•The increase in the vesting duration and performance measurement period of Long-Term PerformanceAchievement Awards to 4 years from 3 years is in line with the program’s focus on long-term returns andbusiness performance. The lengthened vesting duration and performance measurement period enhances theCompany’s ability to retain key executives and incent long-term performance•The implementation of a second metric further incents long-term performance achievement, providingexecutives with the opportunity to earn a higher maximum payout if long-term growth objectives are achieved•The second metric is 4-Year Cumulative Economic earnings per share (EEPS). We believe EEPS is the mostcomprehensive measure of overall earnings contribution on a per-unit basis, and incorporates the aggregatecondition of Affiliates, corporate expenses, capital structure, tax exposure, and the full weight of capitalallocation decisions (i.e., deployment of capital into growth investments and share repurchases) |

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