AllianceBernstein
Annual Report 2012

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2012 OR ooTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-09818ALLIANCEBERNSTEIN HOLDING L.P.(Exact name of registrant as specified in its charter) Delaware 13-3434400(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 1345 Avenue of the Americas, New York, N.Y. 10105(Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (212) 969-1000 Securities registered pursuant to Section 12(b) of the Act: Title of Class Name of each exchange on which registeredunits representing assignments of beneficial ownership of limited partnershipinterests New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. Seedefinitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer xAccelerated filer oNon-accelerated filer oSmaller reporting company o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x The aggregate market value of the units representing assignments of beneficial ownership of limited partnership interests held by non-affiliatescomputed by reference to the price at which such units were last sold on the New York Stock Exchange as of June 30, 2012 was approximately $1.24 billion. The number of units representing assignments of beneficial ownership of limited partnership interests outstanding as of December 31, 2012 was105,173,342. (This figure includes 100,000 units of general partnership interest having economic interests equivalent to the economic interests of the unitsrepresenting assignments of beneficial ownership of limited partnership interests.) DOCUMENTS INCORPORATED BY REFERENCE This Form 10-K does not incorporate any document by reference.  Table of Contents Glossary of Certain Defined Termsii Part I Item 1.Business1 General1 Institutional Services4 Retail Services4 Private Client Services5 Bernstein Research Services5 Assets Under Management, Revenues and Fees6 Custody and Brokerage14 Service Marks14 Regulation15 Iran Threat Reduction and Syria Human Rights Act15 Taxes 15 History and Structure16 Competition17 Other Information18Item 1A.Risk Factors19Item 1B.Unresolved Staff Comments27Item 2.Properties28Item 3.Legal Proceedings29Item 4.Mine Safety Disclosures30 Part II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities31Item 6.Selected Financial Data33 Holding33 AllianceBernstein34Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations35 Executive Overview35 Holding36 AllianceBernstein38Item 7A. Quantitative and Qualitative Disclosures About Market Risk60 Holding60 AllianceBernstein60Item 8.Financial Statements and Supplementary Data62 Holding63 AllianceBernstein76Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure116Item 9A. Controls and Procedures117Item 9B.Other Information118 Part III Item 10.Directors, Executive Officers and Corporate Governance119Item 11.Executive Compensation127Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters145Item 13.Certain Relationships and Related Transactions, and Director Independence149Item 14.Principal Accounting Fees and Services151 Part IV Item 15.Exhibits, Financial Statement Schedules152Signatures154 Table of Contents Glossary of Certain Defined Terms “AllianceBernstein” – AllianceBernstein L.P. (Delaware limited partnership formerly known as Alliance Capital Management L.P., “Alliance Capital”),the operating partnership, and its subsidiaries and, where appropriate, its predecessors, Holding and ACMC, Inc. and their respective subsidiaries. “AllianceBernstein Investments” – AllianceBernstein Investments, Inc. (Delaware corporation), an indirect wholly-owned subsidiary of AllianceBernsteinthat services retail clients and distributes company-sponsored mutual funds. “AllianceBernstein Partnership Agreement” – the Amended and Restated Agreement of Limited Partnership of AllianceBernstein, dated as of October 29,1999 and as amended February 24, 2006. “AllianceBernstein Units” – units of limited partnership interest in AllianceBernstein. “AUM” – assets under management for clients. “AXA” – AXA (société anonyme organized under the laws of France), the holding company for an international group of insurance and related financialservices companies engaged in the financial protection and wealth management businesses. “AXA Equitable” – AXA Equitable Life Insurance Company (New York stock life insurance company), an indirect wholly-owned subsidiary of AXAFinancial, and its subsidiaries other than AllianceBernstein and its subsidiaries. “AXA Financial” – AXA Financial, Inc. (Delaware corporation), an indirect wholly-owned subsidiary of AXA. “Bernstein GWM” – Bernstein Global Wealth Management, a unit of AllianceBernstein that services private clients. “Bernstein Transaction” – on October 2, 2000, AllianceBernstein’s acquisition of the business and assets of SCB Inc., formerly known as Sanford C.Bernstein Inc., and assumption of the liabilities of that business. “Exchange Act” – the Securities Exchange Act of 1934, as amended. “ERISA” – the Employee Retirement Income Security Act of 1974, as amended. “General Partner” – AllianceBernstein Corporation (Delaware corporation), the general partner of AllianceBernstein and Holding and an indirect wholly-owned subsidiary of AXA Equitable, and, where appropriate, ACMC, LLC, its predecessor. “Holding” – AllianceBernstein Holding L.P. (Delaware limited partnership). “Holding Partnership Agreement” – the Amended and Restated Agreement of Limited Partnership of Holding, dated as of October 29, 1999 and asamended February 24, 2006. “Holding Units” – units representing assignments of beneficial ownership of limited partnership interests in Holding. “Investment Advisers Act” – the Investment Advisers Act of 1940, as amended. “Investment Company Act” – the Investment Company Act of 1940, as amended. “NYSE” – the New York Stock Exchange, Inc. “Partnerships” – AllianceBernstein and Holding together. “SCB” – SCB LLC, SCBL and Sanford C. Bernstein (Hong Kong) Limited, together. “SCB LLC” – Sanford C. Bernstein & Co., LLC (Delaware limited liability company), an indirect wholly-owned subsidiary of AllianceBernstein thatprovides Bernstein Research Services in the United States. “SCBL” – Sanford C. Bernstein Limited (U.K. company), an indirect wholly-owned subsidiary of AllianceBernstein that provides Bernstein ResearchServices primarily in Europe. “SEC” – the United States Securities and Exchange Commission. “Securities Act” – the Securities Act of 1933, as amended. iiTable of Contents PART I Item 1.Business The words “we” and “our” in this Form 10-K refer collectively to Holding and AllianceBernstein and its subsidiaries, or to their officers and employees.Similarly, the words “company” and “firm” refer to both Holding and AllianceBernstein. Where the context requires distinguishing between Holding andAllianceBernstein, we identify which company is being discussed. Cross-references are in italics. We use “global” in this Form 10-K to refer to all nations, including the United States; we use “international” or “non-U.S.” to refer to nations other thanthe United States. We use “emerging markets” in this Form 10-K to refer to countries included in the Morgan Stanley Capital International (“MSCI”) emerging marketsindex, which are, as of December 31, 2012, Brazil, Chile, China, Columbia, Czech Republic, Egypt, Hungary, India, Indonesia, Malaysia, Mexico,Morocco, Peru, the Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand and Turkey. We use the term “hedge funds” in this Form 10-K to refer to private investment funds we sponsor that utilize various alternative strategies such as leverage,short selling of securities, and the use of forward contracts, currency options and other derivatives. General Mission Our firm’s mission is to be the most trusted investment firm in the world by placing our clients’ interests first and foremost, utilizing our research capabilitiesto have more knowledge than any other investment firm, and using and sharing knowledge better than our competitors to help our clients achieve financialpeace of mind and investment success. Clients AllianceBernstein provides research, diversified investment management and related services globally to a broad range of clients, including: •institutional clients, including unaffiliated corporate and public employee pension funds, endowment funds, domestic and foreign institutions andgovernments, and various affiliates; •retail clients, including U.S. and offshore mutual funds, variable annuities, insurance products and sub-advisory relationships; •private clients, including high-net-worth individuals, trusts and estates, charitable foundations, partnerships, private and family corporations, andother entities; and •institutional investors seeking high-quality research, portfolio strategy advice and brokerage-related services. We also provide distribution, shareholder servicing and administrative services to our sponsored mutual funds. Research Our high-quality, in-depth research is the foundation of our business. We believe that our global team of research professionals gives us a competitiveadvantage in achieving investment success for our clients. Our research disciplines include fundamental, quantitative and economic research and currency forecasting. In addition, we have several specialized researchinitiatives, including research examining global strategic developments that can affect multiple industries and geographies. Products and Services We offer a broad range of investment products and services to our clients: •To our institutional clients, we offer separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts,mutual funds, hedge funds and other investment vehicles (“Institutional Services”); •To our retail clients, we offer retail mutual funds sponsored by AllianceBernstein and our subsidiaries, sub-advisory services to mutual fundssponsored by third parties, separately-managed account programs sponsored by financial intermediaries worldwide (“Separately-ManagedAccount Programs”) and other investment vehicles (collectively, “Retail Services”); •To our private clients, we offer diversified investment management services through separately-managed accounts, hedge funds, mutual funds andother investment vehicles (“Private Client Services”); and •To institutional investors, we offer research, portfolio strategy advice and brokerage-related services (“Bernstein Research Services”). 1Table of Contents These services are provided by teams of investment professionals with significant expertise in their respective disciplines (see “Employees” in this Item 1).Our buy-side research analysts support our portfolio managers and, together, they oversee a number of different types of investment services within variousvehicles (discussed above) and strategies (discussed below). Our sell-side research analysts provide the foundation for our Bernstein Research Services. Our services include: •Value equities, generally targeting stocks that are out of favor and considered undervalued; •Growth equities, generally targeting stocks with under-appreciated growth potential; •Fixed income securities, including taxable and tax-exempt securities; •Blend strategies, combining style-pure investment components with systematic rebalancing; •Passive management, including index and enhanced index strategies; •Alternative investments, including hedge funds, fund of funds, currency management strategies and private equity (e.g., direct real estateinvesting); and •Asset allocation services, including dynamic asset allocation, customized target date funds, target risk funds and other strategies tailored to helpclients meet their investment goals. Sub-advisory client mandates span our investment strategies, including value, growth, fixed income and blend. We serve as sub-adviser for retail mutualfunds, insurance products, retirement platforms and institutional investment products. We provide our services using various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-,intermediate- and short-duration debt securities), and geographic location (e.g., U.S., international, global and emerging markets), as well as local and regionaldisciplines in major markets around the world. We market and distribute alternative investment products globally to high-net-worth clients and institutional investors. Alternative product AUM totaled $11.6billion as of December 31, 2012, $9.7 billion of which was institutional AUM, $1.5 billion of which was private client AUM and $0.4 billion of which wasretail AUM. In 2008, we created a unit called AllianceBernstein Defined Contribution Investments (“ABDC”) focused on expanding our firm’s capabilities in the definedcontribution (“DC”) market. ABDC seeks to provide the most effective DC investment solutions in the industry, as measured by product features, reliability,cost and flexibility, to meet specialized client needs by integrating research and investment design, product strategy, strategic partnerships (e.g., record-keeperpartnerships and operations collaboration), and client implementation and service. In November 2010, we introduced Lifetime Income Strategies (formerlyknown as Secure Retirement Strategies, “LIS”), a multi-manager target-date solution. LIS provides guaranteed lifetime retirement income backed by multipleinsurers to participants of large DC plans. We had our first LIS client funding during the second quarter of 2012 and are in discussions with additional plansponsors to introduce LIS in their plans in 2013. As of December 31, 2012, our DC assets under management, which are distributed in all three of our buy-side distribution channels, totaled approximately$26.0 billion. 2Table of Contents Global Reach We serve clients in major global markets through operations in 44 cities in 22 countries. Our client base includes investors throughout the Americas, Europe,Asia, Africa and Australia. We utilize an integrated global investment platform that provides our clients with access to local (country-specific), international,and global research and investment strategies. Assets under management by client domicile and investment service as of December 31, 2012, 2011 and 2010 were as follows: By Client Domicile ($ in billions): By Investment Service ($ in billions): Revenues We earn revenues primarily by charging fees for managing the investment assets of, and providing research to, our clients. We generally calculate investment advisory fees as a percentage of the value of AUM at a specific date or as a percentage of the value of average AUM for theapplicable billing period, with these percentages varying by type of investment service, size of account and total amount of assets we manage for a particularclient. Accordingly, fee income generally increases or decreases as AUM increase or decrease. Increases in AUM generally result from market appreciation,positive investment performance for clients, net asset inflows from new and existing clients, or acquisitions. Similarly, decreases in AUM generally resultfrom market depreciation, negative investment performance for clients, or net asset outflows due to client redemptions, account terminations or assetwithdrawals. We are eligible to earn performance-based fees on some alternative investment services, including hedge fund services, as well as some long-only servicesprovided to our institutional clients. For these services, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentiveallocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a stated benchmark over aspecified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client account underperformsrelative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before we can collect futureperformance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-based fee for that periodand, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. If the percentage of our AUM subject toperformance-based fees grows, seasonality and volatility of revenue and earnings are likely to become more significant. Our performance-based fees in 2012,2011 and 2010 were $66.6 million (including $39.6 million pertaining to winding up the Public-Private Investment Program (“PPIP”) fund, see“Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7), $16.5 million and $20.5 million, respectively.For additional information about performance-based fees, see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” in Item 7. We sometimes experience periods when the number of new accounts or the amount of AUM increases or decreases significantly. These changes result fromwide-ranging factors, including conditions of financial markets, our investment performance for clients, the experience of the portfolio manager (both with ourfirm and in the industry generally), the client’s overall relationship with us, consultant recommendations, and changes in our clients’ investment preferences,risk tolerances and liquidity needs. Our Bernstein Research Services generate revenues from clients to whom we provide research, portfolio strategy advice and brokerage-related services,primarily in the form of transaction fees calculated as either “cents per share” (generally in the U.S. market) or a percentage of the value of the securities traded(generally outside of the U.S.) for these clients. 3Table of Contents Our revenues may fluctuate for a number of reasons; see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of Financial Conditionand Results of Operations” in Item 7. Employees Our firm’s 3,318 full-time employees, who are located in 22 countries, include 261 research analysts, 136 portfolio managers, 34 traders and 14professionals with other investment-related responsibilities. We have employed these professionals for an average period of approximately nine years, and theiraverage investment experience is approximately 18 years. We consider our employee relations to be good. Institutional Services We serve our institutional clients primarily through AllianceBernstein Institutional Investments (“Institutional Investments”), a unit of AllianceBernstein,and through other units in our international subsidiaries (institutional relationships of less than $25 million are generally serviced by Bernstein GWM, ourPrivate Client channel, discussed below). Institutional Services include actively managed equity accounts (including growth, value and blend accounts), fixedincome accounts and balanced accounts (which combine equity and fixed income), as well as passive management of index and enhanced index accounts.These services are provided through separately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutualfunds, hedge funds and other investment vehicles. As of December 31, 2012, institutional AUM were $220 billion, or 51% of our company-wide AUM, ascompared to $224 billion, or 55%, as of December 31, 2011 and $273 billion, or 57%, as of December 31, 2010. For more information concerninginstitutional AUM, revenues and fees, see “Assets Under Management, Revenues and Fees” in this Item 1. Our institutional client base includes unaffiliated corporate and public employee pension funds, endowment funds, domestic and foreign institutions andgovernments, and certain of our affiliates (AXA and its subsidiaries), as well as certain sub-advisory relationships with unaffiliated sponsors of various otherinvestment products. We manage approximately 802 mandates for these clients, which are located in 37 countries. Retail Services We provide investment management and related services to a wide variety of individual retail investors, both in the U.S. and internationally, through retailmutual funds sponsored by our company and our subsidiaries; mutual fund sub-advisory relationships; Separately-Managed Account Programs; and otherinvestment vehicles (“Retail Products and Services”). As of December 31, 2012, retail AUM were $144 billion, or 34% of our company-wide AUM, ascompared to $113 billion, or 28%, as of December 31, 2011 and $127 billion, or 27%, as of December 31, 2010. For more information concerning retailAUM, revenues and fees, see “Assets Under Management, Revenues and Fees” in this Item 1. Our Retail Products and Services are designed to provide disciplined, research-based investments that contribute to a well-diversified investment portfolio. Wedistribute these products and services through financial intermediaries, including broker-dealers, insurance sales representatives, banks, registered investmentadvisers and financial planners. These products and services include open-end and closed-end funds that are either (i) registered as investment companiesunder the Investment Company Act (“U.S. Funds”), or (ii) not registered under the Investment Company Act and generally not offered to United Statespersons (“Non-U.S. Funds” and, collectively with the U.S. Funds, “AllianceBernstein Funds”). They provide a broad range of investment options,including local and global value equities, growth equities, blend strategies, fixed income securities and alternative investment products. They also includeSeparately-Managed Account Programs, which are sponsored by financial intermediaries and generally charge an all-inclusive fee covering investmentmanagement, trade execution, asset allocation, and custodial and administrative services. We also provide distribution, shareholder servicing, andadministrative services for our Retail Products and Services. Our U.S. Funds, which include retail funds, our variable products series fund (a component of an insurance product) and the retail share classes of theSanford C. Bernstein Funds (principally Private Client Services products), currently offer 120 different portfolios to U.S. investors. As of December 31,2012, retail U.S. Funds AUM were approximately $45 billion, or 31% of total retail AUM, as compared to $41 billion, or 36%, as of December 31, 2011 and$46 billion, or 36%, as of December 31, 2010. Because of the way they are marketed and serviced, we report substantially all of the AUM in the Sanford C.Bernstein Funds (“SCB Funds”), which totaled $28 billion as of December 31, 2012, as private client AUM. 4Table of Contents Our Non-U.S. Funds are distributed internationally by local financial intermediaries to non-U.S. investors in most major international markets by means ofdistribution agreements. As of December 31, 2012, these funds consisted of 92 different portfolios and AUM in these funds were $60 billion, $6 billion ofwhich was invested in local-market funds that we distribute in Japan through financial intermediaries. AllianceBernstein Investments serves as the principal underwriter and distributor of the U.S. Funds. AllianceBernstein Investments employs 118 salesrepresentatives who devote their time to promoting the sale of U.S. Funds and certain other Retail Products and Services offered by financial intermediaries. AllianceBernstein (Luxembourg) S.A. (“AllianceBernstein Luxembourg”), a Luxembourg management company and one of our wholly-ownedsubsidiaries, generally serves as the distributor for the Non-U.S. Funds. We have an international sales force of 69 sales representatives who devote some or all of their time to promoting the sale of Non-U.S. Funds and other RetailProducts and Services offered by financial intermediaries. Our Retail Products and Services include open-end mutual funds designed to fund benefits under variable annuity contracts and variable life insurancepolicies offered by unaffiliated life insurance companies (“Sub-Advised Variable Products”), and we sub-advise variable product mutual funds sponsoredby affiliates. As of December 31, 2012, we managed or sub-advised approximately $33 billion of Sub-Advised Variable Product AUM. Private Client Services Through Bernstein GWM, we provide Private Client Services to high-net-worth individuals, trusts and estates, charitable foundations, partnerships, privateand family corporations, and other entities by means of separately-managed accounts, hedge funds, mutual funds and other investment vehicles. As ofDecember 31, 2012, private client AUM were $66 billion, or 15% of our company-wide AUM, as compared to $69 billion, or 17%, as of December 31,2011 and $78 billion, or 16%, as of December 31, 2010. For more information concerning private client AUM, revenues and fees, see “Assets UnderManagement, Revenues and Fees” in this Item 1. Our Private Client Services are built on a sales effort that involves approximately 253 financial advisors based in 18 cities in the U.S. These advisors do notmanage money, but work with private clients and their tax, legal and other advisors to assist them in determining a suitable mix of U.S. and non-U.S. equitysecurities and fixed income investments. The diversified portfolio created for each client is intended to maximize after-tax investment returns, in light of theclient’s individual investment goals, income requirements, risk tolerance, tax situation and other relevant factors. In creating these portfolios, we utilize ourresearch reports, investment planning services, the dynamic asset allocation service and Bernstein GWM, which has in-depth knowledge of trust, estate andtax planning strategies. Bernstein Research Services Bernstein Research Services consist of fundamental research, quantitative services and brokerage-related services in equities and listed options provided toinstitutional investors such as pension fund, hedge fund and mutual fund managers, and other institutional investors. Brokerage-related services are providedby SCB LLC in the United States and SCBL primarily in Europe, with research services also provided by Sanford C. Bernstein (Hong Kong) Limited (anindirect wholly-owned subsidiary of AllianceBernstein, “SCB Hong Kong”), in Asia. For more information concerning the revenues we derive from BernsteinResearch Services, see “Assets Under Management, Revenues and Fees” in this Item 1. We provide fundamental company and industry research along with disciplined research into securities valuation and factors affecting stock-price movements.Our analysts are consistently among the highest ranked research analysts in industry surveys conducted by third-party organizations. 5Table of Contents Assets Under Management, Revenues and Fees The following tables summarize our AUM and revenues by distribution channel: End of Period Assets Under Management December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions) Institutions $219,819 $223,874 $272,928 (1.8)% (18.0)%Retail 144,392 112,605 127,045 28.2 (11.4)Private Client 65,806 69,418 78,046 (5.2) (11.1)Total $430,017 $405,897 $478,019 5.9 (15.1) Average Assets Under Management Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions) Institutions $218,923 $252,597 $277,109 (13.3)% (8.8)%Retail 128,216 124,012 122,756 3.4 1.0 Private Client 68,839 75,323 74,686 (8.6) 0.9 Total $415,978 $451,932 $474,551 (8.0) (4.8) Revenues Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in thousands) Institutional Services $485,651 $616,787 $764,847 (21.3)% (19.4)%Retail Services 1,192,895 1,092,561 1,068,869 9.2 2.2 Private Client Services 585,791 652,097 651,218 (10.2) 0.1 Bernstein Research Services 413,707 437,414 430,521 (5.4) 1.6 Other(1) 61,915 (46,418) 36,650 n/m n/m Total Revenues 2,739,959 2,752,441 2,952,105 (0.5) (6.8)Less: Interest Expense 3,222 2,550 3,548 26.4 (28.1)Net Revenues $2,736,737 $2,749,891 $2,948,557 (0.5) (6.7) (1)Other revenues primarily consist of investment gains (losses) and dividend and interest income. For additional information, see “Management’sDiscussion and Analysis of Financial Condition and Results of Operations” in Item 7. AXA and its subsidiaries, whose AUM consist primarily of fixed income investments, together constitute our largest client. Our affiliates representedapproximately 25%, 23% and 22% of our company-wide AUM as of December 31, 2012, 2011 and 2010, respectively. We earned approximately 4%, 4% and5% of our company-wide net revenues from our affiliates in 2012, 2011 and 2010, respectively. Affiliated AUM is included in our Institutions and Retail buy-side distribution channels. 6Table of Contents Institutional Services The following tables summarize our Institutional Services AUM and revenues: Institutional Services Assets Under Management(by Investment Service) December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions) Value Equity: U.S. $2,476 $7,469 $13,955 (66.8)% (46.5)%Global and International 22,642 37,316 74,668 (39.3) (50.0) 25,118 44,785 88,623 (43.9) (49.5) Growth Equity: U.S. 3,479 5,541 10,921 (37.2) (49.3)Global and International 3,426 7,417 22,507 (53.8) (67.0) 6,905 12,958 33,428 (46.7) (61.2) Fixed Income: U.S. 92,112 86,329 78,101 6.7 10.5 Global and International 54,015 44,983 44,766 20.1 0.5 146,127 131,312 122,867 11.3 6.9 Other(1): U.S. 11,820 11,278 9,980 4.8 13.0 Global and International 29,849 23,541 18,030 26.8 30.6 41,669 34,819 28,010 19.7 24.3 Total: U.S. 109,887 110,617 112,957 (0.7) (2.1)Global and International 109,932 113,257 159,971 (2.9) (29.2)Total $219,819 $223,874 $272,928 (1.8) (18.0) Affiliated $77,569 $69,071 $74,672 12.3 (7.5)Non-affiliated 142,250 154,803 198,256 (8.1) (21.9)Total $219,819 $223,874 $272,928 (1.8) (18.0) (1)Includes index, structured, asset allocation services and certain other alternative investments. 7Table of Contents Revenues from Institutional Services(by Investment Service) Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in thousands) Investment Advisory and Services Fees: Value Equity: U.S. $17,433 $33,615 $47,126 (48.1)% (28.7)%Global and International 125,641 246,919 336,600 (49.1) (26.6) 143,074 280,534 383,726 (49.0) (26.9) Growth Equity: U.S. 27,119 38,807 46,510 (30.1) (16.6)Global and International 19,856 62,023 119,300 (68.0) (48.0) 46,975 100,830 165,810 (53.4) (39.2) Fixed Income: U.S. 145,216 115,051 103,855 26.2 10.8 Global and International 108,778 96,988 94,434 12.2 2.7 253,994 212,039 198,289 19.8 6.9 Other(1): U.S. 8,091 6,555 3,436 23.4 90.8 Global and International 33,155 16,233 12,866 104.2 26.2 41,246 22,788 16,302 81.0 39.8 Total Investment Advisory and Services Fees: U.S. 197,859 194,028 200,927 2.0 (3.4)Global and International 287,430 422,163 563,200 (31.9) (25.0) 485,289 616,191 764,127 (21.2) (19.4)Shareholder Servicing Fees(2) 362 596 720 (39.3) (17.2)Total $485,651 $616,787 $764,847 (21.3) (19.4)Affiliated $82,930 $82,965 $88,248 - (6.0)Non-affiliated 402,721 533,822 676,599 (24.6) (21.1)Total $485,651 $616,787 $764,847 (21.3) (19.4) (1)Includes index, structured, asset allocation services and certain other alternative investments.(2)For a description of shareholder servicing fees, see “Retail Services” below. As of December 31, 2012, 2011 and 2010, Institutional Services represented approximately 51%, 55% and 57%, respectively, of our company-wide AUM.The fees we earned from these services represented approximately 18%, 22% and 26% of our company-wide net revenues for 2012, 2011 and 2010,respectively. AXA and its subsidiaries together constitute our largest institutional client. Their AUM accounted for approximately 35%, 31% and 27% of our totalinstitutional AUM as of December 31, 2012, 2011 and 2010, respectively, and approximately 17%, 13% and 12% of our total institutional revenues for 2012,2011 and 2010, respectively. The institutional AUM we manage for our affiliates, along with our nine other largest institutional accounts, accounted for approximately 53% of our totalinstitutional AUM as of December 31, 2012 and approximately 30% of our total institutional revenues for the year ended December 31, 2012. No singleinstitutional client other than AXA and its subsidiaries accounted for more than approximately 1% of our company-wide net revenues for the year endedDecember 31, 2012. We manage the assets of our institutional clients through written investment management agreements or other arrangements, all of which are generallyterminable at any time or upon relatively short notice by either party. In general, our written investment management agreements may not be assigned withoutclient consent. We are compensated principally on the basis of investment advisory fees calculated as a percentage of AUM. The percentage we charge varies with the type ofinvestment service, the size of the account and the total amount of assets we manage for a particular client. We are eligible to earn performance-based fees on approximately 8% of institutional AUM, which are primarily invested in long-only equity and fixed incomeservices. Performance-based fees provide for a base advisory fee plus an additional fee based on investment performance. For additional information aboutperformance-based fees, see “General—Revenues” in this Item 1 and “Risk Factors” in Item 1A.  8Table of Contents Retail Services The following tables summarize our Retail Services AUM and revenues: Retail Services Assets Under Management(by Investment Service) December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions) Value Equity: U.S. $7,659 $7,769 $10,772 (1.4)% (27.9)%Global and International 7,979 10,351 20,107 (22.9) (48.5) 15,638 18,120 30,879 (13.7) (41.3) Growth Equity: U.S. 10,319 8,568 9,789 20.4 (12.5)Global and International 8,468 9,110 14,002 (7.0) (34.9) 18,787 17,678 23,791 6.3 (25.7) Fixed Income: U.S. 11,598 8,895 8,442 30.4 5.4 Global and International 66,009 42,843 40,754 54.1 5.1 77,607 51,738 49,196 50.0 5.2 Other(1): U.S. 20,514 18,013 18,466 13.9 (2.5)Global and International 11,846 7,056 4,713 67.9 49.7 32,360 25,069 23,179 29.1 8.2 Total: U.S. 50,090 43,245 47,469 15.8 (8.9)Global and International 94,302 69,360 79,576 36.0 (12.8)Total $144,392 $112,605 $127,045 28.2 (11.4) Affiliated $28,535 $22,561 $29,841 26.5 (24.4)Non-affiliated 115,857 90,044 97,204 28.7 (7.4)Total $144,392 $112,605 $127,045 28.2 (11.4) (1)Includes index, structured, asset allocation services and certain other alternative investments. 9Table of Contents Revenues from Retail Services(by Investment Service) Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in thousands) Investment Advisory and Services Fees: Value Equity: U.S. $40,595 $43,148 $45,862 (5.9)% (5.9)%Global and International 53,213 82,868 112,252 (35.8) (26.2) 93,808 126,016 158,114 (25.6) (20.3) Growth Equity: U.S. 52,242 50,572 45,752 3.3 10.5 Global and International 62,624 83,884 97,973 (25.3) (14.4) 114,866 134,456 143,725 (14.6) (6.4) Fixed Income: U.S. 46,821 34,143 31,723 37.1 7.6 Global and International 409,115 332,791 282,845 22.9 17.7 455,936 366,934 314,568 24.3 16.6 Other(1): U.S. 21,470 15,447 11,672 39.0 32.3 Global and International 19,181 9,646 11,798 98.8 (18.2) 40,651 25,093 23,470 62.0 6.9 Total Investment Advisory and Services Fees: U.S. 161,128 143,310 135,009 12.4 6.1 Global and International 544,133 509,189 504,868 6.9 0.9 705,261 652,499 639,877 8.1 2.0 Distribution Revenues(2) 399,259 348,456 336,204 14.6 3.6 Shareholder Servicing Fees(2) 88,375 91,606 92,788 (3.5) (1.3)Total $1,192,895 $1,092,561 $1,068,869 9.2 2.2 Affiliated $31,089 $31,301 $46,756 (0.7) (33.1)Non-affiliated 1,161,806 1,061,260 1,022,113 9.5 3.8 Total $1,192,895 $1,092,561 $1,068,869 9.2 2.2 (1)Includes index, structured, asset allocation services and certain other alternative investments.(2)For a description of distribution revenues and shareholder servicing fees, see below. Investment advisory fees and distribution fees for our Retail Products and Services are generally charged as a percentage of average daily AUM. In the past, ascertain of the U.S. Funds grew, we revised our fee schedules to provide lower incremental fees above certain asset levels. Fees paid by the U.S. Funds, EQAdvisors Trust (“EQAT”) and AXA Premier VIP Trust are reflected in the applicable investment management agreement, which generally must be approvedannually by the boards of directors or trustees of those funds, including by a majority of the independent directors or trustees. Increases in these fees must beapproved by fund shareholders; decreases need not be, including any decreases implemented by a fund’s directors or trustees. In general, each investmentmanagement agreement with the U.S. Funds, EQAT and AXA Premier VIP Trust provides for termination by either party at any time upon 60 days’ notice. Fees paid by Non-U.S. Funds are reflected in investment management agreements that continue until they are terminated. Increases in these fees generally mustbe approved by the relevant regulatory authority, depending on the domicile and structure of the fund, and Non-U.S. Fund shareholders must be givenadvance notice of any fee increases. Revenues from Retail Services represented approximately 44%, 40% and 36% of our company-wide net revenues for the years ended December 31, 2012, 2011and 2010, respectively. The mutual funds we sub-advise for AXA and its subsidiaries together constitute our largest retail client. They accounted for approximately 20%, 20% and23% of our total retail AUM as of December 31, 2012, 2011 and 2010, respectively, and approximately 3%, 3% and 4% of our total retail revenues for 2012,2011 and 2010, respectively. Our mutual fund distribution system (the “System”) includes a multi-class share structure that permits open-end AllianceBernstein Funds to offer investorsvarious options for the purchase of mutual fund shares, including both front-end load shares and back-end load shares. For front-end load shares,AllianceBernstein Investments generally pays sales commissions to financial intermediaries distributing the funds from the front-end sales charge it receivesfrom investors at the time of the sale. For back-end load shares, AllianceBernstein Investments pays sales commissions to financial intermediaries at the timeof sale and also receives higher ongoing distribution services fees from the mutual funds. In addition, investors who redeem back-end load shares before theexpiration of the minimum holding period (which ranges from one year to four years) pay a contingent deferred sales charge (“CDSC”) to AllianceBernsteinInvestments. We expect to recover sales commissions for back-end load shares over periods not exceeding five and one-half years through receipt of a CDSCand/or the higher ongoing distribution services fees we receive from holders of back-end load shares. Payments of sales commissions made to financialintermediaries in connection with the sale of back-end load shares under the System, net of CDSC received of $21.7 million, $14.2 million and $20.0million, totaled approximately $75.7 million, $21.5 million and $33.4 million during 2012, 2011 and 2010, respectively. We have not offered back-end loadshares to new investors in U.S. Funds since January 31, 2009. However, our Non-U.S. Funds continue to offer back-end load shares. 10Table of Contents The rules of the Financial Industry Regulatory Authority, Inc. (“FINRA”) effectively cap the aggregate sales charges that may be received from each open-endU.S. Fund by AllianceBernstein Investments at 6.25% of cumulative gross sales (plus interest at the prime rate plus 1% per annum). Most open-end U.S. Funds have adopted a plan under Rule 12b-1 of the Investment Company Act that allows the fund to pay, out of assets of the fund,distribution and service fees for the distribution and sale of its shares (“Rule 12b-1 Fees”). The open-end AllianceBernstein Funds have entered intoagreements with AllianceBernstein Investments under which they pay a distribution services fee to AllianceBernstein Investments. AllianceBernsteinInvestments has entered into selling and distribution agreements pursuant to which it pays sales commissions to the financial intermediaries that distribute ouropen-end U.S. Funds. These agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell anyspecific amount of fund shares. In addition to Rule 12b-1 Fees, AllianceBernstein Investments, at its own expense, currently provides additional payments under distribution services andeducational support agreements to financial intermediaries that sell shares of our funds, a practice sometimes referred to as “revenue sharing”. Although theamount of payments made in any given year may vary, the total amount paid to a financial intermediary in connection with the sale of shares of U.S. Fundsgenerally will not exceed the sum of (i) 0.25% of the current year’s fund sales by that firm, and (ii) 0.10% of average daily net assets attributable to that firmover the course of the year. Financial intermediaries that provide accounting or record-keeping services with respect to their customers’ investments in AllianceBernstein Funds mayreceive specified payments from these funds or from affiliates of AllianceBernstein, including AllianceBernstein Investor Services, Inc. (one of our wholly-owned subsidiaries, “AllianceBernstein Investor Services”) and AllianceBernstein Investments. During 2012, the 10 financial intermediaries responsible for the largest volume of sales of open-end AllianceBernstein Funds were responsible for 54% of suchsales. Certain subsidiaries of AXA, including AXA Advisors, LLC (“AXA Advisors”), a wholly-owned subsidiary of AXA Financial that utilizes membersof AXA Equitable’s insurance sales force as its registered representatives, were responsible for approximately 4%, 1% and 2% of total sales of shares of open-end AllianceBernstein Funds in 2012, 2011 and 2010, respectively. None of these entities are under any obligation to sell a specific amount ofAllianceBernstein Fund shares and each also sells shares of mutual funds sponsored by other affiliates and unaffiliated organizations. During 2012, Hong Kong and Shanghai Banking Corporation, UBS AG and Citigroup (or their respective subsidiaries) were responsible for approximately13%, 10% and 6%, respectively, of our open-end AllianceBernstein Fund sales. None of these companies are under any obligation to sell a specific amount ofAllianceBernstein Fund shares and each also sells shares of mutual funds that it sponsors and that are sponsored by unaffiliated organizations. Based on industry sales data reported by the Investment Company Institute, our market share in the U.S. mutual fund industry was approximately 1% oftotal industry assets in the U.S. during 2012. The investment performance of the U.S. Funds is an important factor in the sale of their shares, but there arealso other factors, including the level and quality of our shareholder services (see below) and the amounts and types of distribution assistance andadministrative services payments we make to financial intermediaries, which we believe are competitive with others in the industry. AllianceBernstein Investor Services, which operates in San Antonio, Texas, provides transfer agency and related services for each open-end U.S. Fund (exceptthe SCB Funds) and provides shareholder servicing for each open-end U.S. Fund’s shareholder accounts (approximately 2.7 million accounts in total), forwhich it receives a monthly fee under servicing agreements with each open-end U.S. Fund based on the number and type of shareholder accounts serviced.Each servicing agreement must be approved annually by the relevant open-end U.S. Fund’s board of directors or trustees, including a majority of theindependent directors or trustees, and may be terminated by either party without penalty upon 60 days’ notice. AllianceBernstein Funds utilize our personnel to perform most legal, clerical and accounting services. Payments to us by the U.S. Funds and certain Non-U.S. Funds for these services, which payments were approximately $5 million in 2012, $6 million in 2011 and $6 million in 2010, must be specificallyapproved in advance by each fund’s board of directors or trustees. A unit of AllianceBernstein Luxembourg (“ABIS Lux”) is the transfer agent for substantially all of the Non-U.S. Funds. ABIS Lux, based in Luxembourgand supported by operations in Singapore, Hong Kong and the United States, receives a monthly asset-based fee for its transfer agency services and atransaction-based fee under various services agreements with the Non-U.S. Funds. Each agreement may be terminated by either party upon 60 days’ notice. 11Table of Contents Private Client Services The following tables summarize Private Client Services AUM and revenues: Private Client Services Assets Under Management(by Investment Service) December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions) Value Equity: U.S. $8,839 $9,912 $13,082 (10.8)% (24.2)%Global and International 7,487 7,971 11,714 (6.1) (32.0) 16,326 17,883 24,796 (8.7) (27.9) Growth Equity: U.S. 7,751 7,735 9,626 0.2 (19.6)Global and International 5,967 5,859 7,492 1.8 (21.8) 13,718 13,594 17,118 0.9 (20.6) Fixed Income: U.S. 29,797 32,147 32,485 (7.3) (1.0)Global and International 2,055 2,360 1,658 (12.9) 42.3 31,852 34,507 34,143 (7.7) 1.1 Other(1): U.S. 818 319 236 156.4 35.2 Global and International 3,092 3,115 1,753 (0.7) 77.7 3,910 3,434 1,989 13.9 72.6 Total: U.S. 47,205 50,113 55,429 (5.8) (9.6)Global and International 18,601 19,305 22,617 (3.6) (14.6)Total $65,806 $69,418 $78,046 (5.2) (11.1) (1)Includes index, structured, asset allocation services and certain other alternative investments. 12Table of Contents Revenues From Private Client Services(by Investment Service) Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in thousands) Investment Advisory and Services Fees: Value Equity: U.S. $112,695 $134,149 $143,591 (16.0)% (6.6)%Global and International 83,671 104,260 116,254 (19.7) (10.3) 196,366 238,409 259,845 (17.6) (8.2) Growth Equity: U.S. 97,981 108,269 114,081 (9.5) (5.1)Global and International 68,826 78,927 79,651 (12.8) (0.9) 166,807 187,196 193,732 (10.9) (3.4) Fixed Income: U.S. 168,966 182,928 177,310 (7.6) 3.2 Global and International 14,193 12,166 7,141 16.7 70.4 183,159 195,094 184,451 (6.1) 5.8 Other(1): U.S. 5,246 2,160 292 142.9 639.7 Global and International 30,129 24,870 9,368 21.1 165.5 35,375 27,030 9,660 30.9 179.8 Total Investment Advisory and Services Fees: U.S. 384,888 427,506 435,274 (10.0) (1.8)Global and International 196,819 220,223 212,414 (10.6) 3.7 581,707 647,729 647,688 (10.2) — Distribution Revenues(2) 2,447 3,165 2,393 (22.7) 32.3 Shareholder Servicing Fees(2) 1,637 1,203 1,137 36.1 5.8 Total $585,791 $652,097 $651,218 (10.2) 0.1 (1)Includes index, structured, asset allocation services and certain other alternative investments.(2)For a description of distribution revenues and shareholder servicing fees, see “Retail Services” above. Private client accounts generally are managed pursuant to a written investment advisory agreement among the client, AllianceBernstein and SCB LLC, whichusually is terminable at any time or upon relatively short notice by any party. In general, these contracts may not be assigned without the consent of the client.We are compensated under these contracts by fees calculated as a percentage of AUM at a specific date or as a percentage of the value of average AUM for theapplicable billing period, with these fees varying based on the types of investment services and the size of the account. The aggregate fees we charge formanaging hedge funds may be higher than the fees we charge for managing other assets in private client accounts because hedge fund fees includeperformance-based fees, incentive allocations or carried interests in addition to base advisory fees. We are eligible to earn performance-based fees onapproximately 3% of private client AUM, substantially all of which is held in hedge funds. Revenues from Private Client Services represented approximately 21%, 24% and 22% of our company-wide net revenues for the years ended December 31,2012, 2011 and 2010, respectively. 13Table of Contents Bernstein Research Services The following table summarizes Bernstein Research Services revenues: Revenues From Bernstein Research Services Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in thousands) Bernstein Research Services $413,707 $437,414 $430,521 (5.4)% 1.6% We earn revenues for providing investment research to, and executing brokerage transactions for, institutional clients. These clients compensate us principallyby directing SCB to execute brokerage transactions on their behalf, for which we earn commissions. These services accounted for approximately 15%, 16%and 15% of our company-wide net revenues for the years ended December 31, 2012, 2011 and 2010, respectively. Fee rates charged for brokerage transactions have declined significantly in recent years, but increases in transaction volume in both the U.S. and Europe haveoften offset these decreases. For additional information, see “Risk Factors” in Item 1A and “Management’s Discussion and Analysis of FinancialCondition and Results of Operations” in Item 7. Custody and Brokerage Custody SCB LLC acts as custodian for the majority of AllianceBernstein’s private client AUM and some of AllianceBernstein’s institutional AUM. Other custodialarrangements are maintained by client-designated banks, trust companies, brokerage firms or custodians. Brokerage AllianceBernstein generally has the discretion to select the broker-dealers that execute securities transactions for client accounts. When selecting brokers, we arerequired to obtain “best execution”. Although there is no single statutory definition, SEC releases and other legal guidelines make clear that the duty to obtainbest execution requires us to seek “the most advantageous terms reasonably available under the circumstances for a customer’s account”. The lowest possiblecommission, while very important, is not the only consideration. Generally, to achieve best execution, we consider factors such as order size and marketdepth, availability of competing markets and liquidity, trading characteristics of the security, financial responsibility of the broker-dealer, the broker’s abilityto address current market conditions, and the ability and willingness of the broker to commit capital by taking positions in order to execute transactions. While we select brokers primarily on the basis of their execution capabilities, we may also take into consideration the quality and amount of research servicesa broker provides to us for the benefit of our clients. These research services, which are paid for with client commissions and which we purchase to augmentour own research capabilities, are governed by Section 28(e) of the Exchange Act. We use broker-dealers that provide these services in consideration forcommissions paid for the execution of client trades, subject at all times to our duty to seek best execution, and with respect to which we reasonably conclude,in good faith, that the value of the execution and other services we receive from the broker-dealer is reasonable in relation to the amount of commissions paid.The commissions charged by these full-service brokers are generally higher than those charged by electronic trading networks and other “low-touch” tradingvenues. We regularly execute transactions for our private clients through SCB, our affiliated broker-dealers, because these clients have generally subscribed to an all-inclusive package of services that includes brokerage, custody and investment advice. We sometimes execute institutional client transactions through SCBLLC or SCBL. We do so only when our clients have consented to our use of affiliated broker-dealers or we are otherwise permitted to do so, and only when wecan execute these transactions in accordance with applicable law (i.e., our obligation to obtain “best execution”). We may use third-party broker-dealers to execute client transactions that also sell shares of AllianceBernstein Funds or third party funds we sub-advise;however, we prohibit our investment professionals who place trades from considering these other relationships or the sale of fund shares as a factor whenselecting broker-dealers. Our Brokerage Allocation Committee has principal oversight responsibility for evaluating equity-related brokerage matters, including how to use researchservices we receive in a manner that is in the best interests of our clients and consistent with current regulatory requirements. Service Marks We have registered a number of service marks with the U.S. Patent and Trademark Office and various foreign trademark offices, including the combinationof an “AB” design logo with the mark “AllianceBernstein”. 14Table of Contents In connection with the Bernstein Transaction, we acquired all of the rights and title in, and to, the Bernstein service marks, including the mark “Bernstein”.Regulation Virtually all aspects of our business are subject to various federal and state laws and regulations, rules of various securities regulators and exchanges, andlaws in the foreign countries in which our subsidiaries conduct business. These laws and regulations are primarily intended to protect clients and fundshareholders and generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the carrying on of business forfailure to comply with such laws and regulations. Possible sanctions that may be imposed include the suspension of individual employees, limitations onengaging in business for specific periods, the revocation of the registration as an investment adviser or broker-dealer, censures and fines. AllianceBernstein, Holding, the General Partner, SCB LLC, AllianceBernstein Global Derivatives Corporation (an indirect wholly-owned subsidiary ofAllianceBernstein, “Global Derivatives”) and Alliance Corporate Finance Group Incorporated (an indirect wholly-owned subsidiary of AllianceBernstein)are registered with the SEC as investment advisers under the Investment Advisers Act. SCB LLC and Global Derivatives are also registered with theCommodity Futures Trading Commission (“CFTC”) as commodity pool operators and commodity trading advisers. As of January 1, 2013,AllianceBernstein was also registered with the CFTC as a commodity pool operator and commodity trading adviser. Each U.S. Fund is registered with the SEC under the Investment Company Act and the shares of most U.S. Funds are qualified for sale in all states in theUnited States and the District of Columbia, except for U.S. Funds offered only to residents of a particular state. AllianceBernstein Investor Services isregistered with the SEC as a transfer and servicing agent. SCB LLC and AllianceBernstein Investments are registered with the SEC as broker-dealers, and both are members of FINRA. SCB LLC is also a member ofthe NYSE and other principal U.S. exchanges. SCBL is a broker regulated by the Financial Services Authority of the United Kingdom (“FSA”) and is amember of the London Stock Exchange. SCB Hong Kong is regulated by the Hong Kong Securities and Futures Commission (“SFC”) and is an exchangeparticipant of The Stock Exchange of Hong Kong Limited. AllianceBernstein Trust Company, LLC (“ABTC”), a wholly-owned subsidiary of AllianceBernstein, is a non-depository trust company chartered underNew Hampshire law as a limited liability company. ABTC is authorized to act as trustee, executor, transfer agent, assignee, receiver, custodian, investmentadviser and in any other capacity authorized for a trust company under New Hampshire law. As a state-chartered trust company exercising fiduciary powers,ABTC must comply with New Hampshire laws applicable to trust company operations (such as New Hampshire Revised Statutes Annotated), certain federallaws (such as ERISA and sections of the Bank Secrecy Act), and New Hampshire banking laws. The primary fiduciary activities of ABTC consist ofserving as trustee to a series of collective investment funds, the investors of which currently are defined benefit and defined contribution retirement plans. Holding Units are listed on the NYSE and trade publicly under the ticker symbol “AB”. As an NYSE-listed company, Holding is subject to applicableregulations promulgated by the NYSE. Our relationships with AXA and its subsidiaries are subject to applicable provisions of the insurance laws and regulations of New York and other states.Under such laws and regulations, the terms of certain investment advisory and other agreements we enter into with AXA or its subsidiaries are required to befair and equitable, charges or fees for services performed must be reasonable, and, in some cases, are subject to regulatory approval. Some of our subsidiaries are subject to the oversight of regulatory authorities in Europe, including the FSA in the U.K., in Asia, including the FinancialServices Agency in Japan, the SFC in Hong Kong and the Monetary Authority of Singapore, and in Canada, including the Ontario Securities Commissionand other Canadian provincial regulators. While the requirements of these foreign regulators are often comparable to the requirements of the SEC and otherU.S. regulators, they are sometimes more restrictive and may cause us to incur substantial expenditures of time and money in our efforts to comply. As ofDecember 31, 2012, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement. Iran Threat Reduction and Syria Human Rights Act AllianceBernstein, Holding and their global subsidiaries had no transactions or activities requiring disclosure under the Iran Threat Reduction and SyriaHuman Rights Act (“Iran Act”), nor were they involved in the AXA Group insurance policies described immediately below. The non-U.S. based subsidiaries of AXA, our parent company, operate in compliance with applicable laws and regulations of the various jurisdictions wherethey operate, including applicable international (United Nations and European Union) laws and regulations. While AXA Group companies based andoperating outside the United States generally are not subject to U.S. law, as an international group, AXA has in place policies and standards (including theAXA Group International Sanctions Policy) that apply to all AXA Group companies worldwide and often impose requirements that go well beyond local law.For additional information regarding AXA, see “History and Structure” in this Item 1. AXA has reported to us that 16 insurance policies underwritten by two of AXA’s European insurance subsidiaries, AXA France IARD and AXA Winterthur,that were in-force during 2012 potentially come within the scope of the disclosure requirements of the Iran Act. Of these insurance policies, 15 policies werewritten by AXA France IARD and relate to property and casualty insurance (homeowners, auto, accident, liability and/or fraud policies) covering propertylocated in France where the insured is a company or other entity that may have, direct or indirect, ties to the Government of Iran (the “French Policies”),including Iranian entities designated under Executive Orders 13224 and 13382. AXA France IARD is a French company, based in Paris, which is licensed tooperate in France. The other policy, described below, was written by AXA Winterthur and provides global coverage to a Swiss-based non-governmentalorganization based in Geneva that was initially established by the United Nations to facilitate international transport (the “Swiss Policy”). AXA Winterthur isa Swiss company, based in Winterthur, Switzerland, which is licensed to operate in Switzerland. With respect to these policies, as of the date of this report: (1) AXA France IARD has taken actions necessary to terminate coverage under all 15 of the FrenchPolicies; and (2) AXA Winterthur has restructured coverage under the Swiss Policy to specifically exclude Iran. The aggregate premium for these 16 policieswas less than $1 million (approximately $105,000 for the 15 French Policies and approximately $884,000 for the relevant premium amount under the SwissPolicy), representing less than 0.001% of AXA’s consolidated revenues, which are in excess of $100 billion. The net profit attributable to these 16 insurancepolicies is difficult to calculate with precision, but AXA estimates its net profit attributable to all 16 of these policies, in the aggregate, was less than $300,000,representing less than 0.006% of AXA’s aggregate net profit. The Swiss Policy relates to insurance provided to the International Road Transport Union (“IRU”), a nongovernmental organization based in Geneva which,among other things, acts as the implementing partner of the Transports Internationaux Routiers Customs Transit System (“TIR System”) under mandate ofthe United Nations. The TIR System is an international harmonized system of customs control that facilitates trade and transport by TIR Carnets, which arecustoms transit documents used to prove the existence of the international guarantee for duties and taxes for the goods transported under the TIR System, withthe IRU guaranteeing payment to the contracting countries. The TIR Convention includes more than 70 contracting countries, including the United States, eachmember of the European Union and many other countries, including Iran. During 2012, AXA Winterthur provided global cover to the IRU insuring it against financial losses that the IRU may incur if a carrier fails to pay the dutycharges under the terms of a TIR Carnet. Under this policy, AXA Winterthur guaranteed duty payments on behalf of the IRU to the TIR national transportassociations in each of the more than 70 participating countries, which includes Iran’s TIR System national transport association (the Iran Chamber ofCommerce Industry Mines and Agriculture). As noted above, AXA Winterthur has restructured coverage under the Swiss Policy to specifically exclude Iran and notified the IRU accordingly. Taxes Holding, having elected under Section 7704(g) of the Internal Revenue Code of 1986, as amended (“Code”), to be subject to a 3.5% federal tax on partnershipgross income from the active conduct of a trade or business, is a “grandfathered” publicly-traded partnership for federal income tax purposes. Holding is alsosubject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AllianceBernstein. In order to preserve Holding’sstatus as a “grandfathered” publicly-traded partnership for federal income tax purposes, management ensures that Holding does not directly or indirectly(through AllianceBernstein) enter into a substantial new line of business. A “new line of business” includes any business that is not closely related toAllianceBernstein’s historical business of providing research and diversified investment management and related services to its clients. A new line of businessis “substantial” when a partnership derives more than 15% of its gross income from, or uses more than 15% of its total assets to support, the new line ofbusiness. 15Table of Contents AllianceBernstein is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes.However, AllianceBernstein is subject to the 4.0% UBT. Domestic corporate subsidiaries of AllianceBernstein, which are subject to federal, state and localincome taxes, generally are included in the filing of a consolidated federal income tax return with separate state and local income tax returns also being filed.Foreign corporate subsidiaries generally are subject to taxes at higher rates in the foreign jurisdictions where they are located so, as our business increasinglyoperates in countries other than the United States, our effective tax rate is expected to increase over time. For additional information, see “Risk Factors” in Item 1A. History and Structure We have been in the investment research and management business for more than 40 years. Alliance Capital was founded in 1971 when the investmentmanagement department of Donaldson, Lufkin & Jenrette, Inc. (since November 2000, a part of Credit Suisse Group) merged with the investment advisorybusiness of Moody’s Investor Services, Inc. Bernstein was founded in 1967. In April 1988, Holding “went public” as a master limited partnership. Holding Units, which trade under the ticker symbol “AB”, have been listed on theNYSE since that time. In October 1999, Holding reorganized by transferring its business and assets to AllianceBernstein, a newly-formed operating partnership, in exchange for allof the AllianceBernstein Units (“Reorganization”). Since the date of the Reorganization, AllianceBernstein has conducted the business formerly conducted byHolding and Holding’s activities have consisted of owning AllianceBernstein Units and engaging in related activities. As stated above, Holding Units tradepublicly; AllianceBernstein Units do not trade publicly and are subject to significant restrictions on transfer. The General Partner is the general partner of bothAllianceBernstein and Holding. In October 2000, our two legacy firms, Alliance Capital and Bernstein, combined, bringing together Alliance Capital’s expertise in growth equity and corporatefixed income investing, and its family of retail mutual funds, with Bernstein’s expertise in value equity and tax-exempt fixed income management, and itsprivate client and Bernstein Research Services businesses. For additional details about this business combination, see Note 2 to AllianceBernstein’sconsolidated financial statements in Item 8. As of December 31, 2012, the condensed ownership structure of AllianceBernstein was as follows (for a more complete description of our ownership structure,see “Principal Security Holders” in Item 12): (1)Direct and indirect ownership including unallocated Holding Units held in a consolidated rabbi trust primarily used to fund our long-term incentivecompensation plans and for other corporate purposes. The ownership of Holding by AllianceBernstein directors, officers and employees increased to 42.2% as of December 31, 2012 from 35.1% as of December31, 2011, with a corresponding decrease in public ownership. This shift reflects our purchase of approximately 12.3 million Holding Units on the openmarket during 2012, helping to fund anticipated obligations under our incentive compensation award program and for other corporate purposes. Any futurerestricted Holding Unit issuances as long-term incentive compensation will further increase employee ownership and decrease public ownership. The General Partner, an indirect wholly-owned subsidiary of AXA, owns 100,000 general partnership units in Holding and a 1% general partnership interestin AllianceBernstein. Including these general partnership interests, AXA, through certain of its subsidiaries (see “Principal Security Holders” in Item 12),had an approximate 65.5% economic interest in AllianceBernstein as of December 31, 2012. 16Table of Contents AXA and its subsidiaries own all of the issued and outstanding shares of the common stock of AXA Financial. AXA Financial indirectly owns all of theissued and outstanding shares of AXA Equitable. See “Principal Security Holders” in Item 12. AXA, a société anonyme organized under the laws of France, is the holding company for an international group of insurance and related financial servicescompanies engaged in the financial protection and wealth management businesses. AXA’s operations are diverse geographically, with major operations inWestern Europe, North America and the Asia/Pacific regions and, to a lesser extent, in other regions including the Middle East and Africa. AXA has fiveoperating business segments: life and savings, property and casualty, international insurance, asset management and other financial services. Competition The financial services industry is intensely competitive and new entrants are continually attracted to it. No single or small group of competitors is dominant inthe industry. We compete in all aspects of our business with numerous investment management firms, mutual fund sponsors, brokerage and investment banking firms,insurance companies, banks, savings and loan associations, and other financial institutions that often provide investment products that have similar featuresand objectives as those we offer. Our competitors offer a wide range of financial services to the same customers that we seek to serve. Some of our competitorsare larger, have a broader range of product choices and investment capabilities, conduct business in more markets, and have substantially greater resourcesthan we do. These factors may place us at a competitive disadvantage, and we can give no assurance that our strategies and efforts to maintain and enhanceour current client relationships, and create new ones, will be successful. AXA and its subsidiaries provide financial services, some of which compete with those we offer. The AllianceBernstein Partnership Agreement specificallyallows AXA Financial and its subsidiaries (other than the General Partner) to compete with AllianceBernstein and to exploit opportunities that may be availableto us. AXA, AXA Financial, AXA Equitable and certain of their respective subsidiaries have substantially greater financial resources than we do and are notobligated to provide resources to us. To grow our business, we must be able to compete effectively for AUM. Key competitive factors include: •our investment performance for clients; •our commitment to place the interests of our clients first; •the quality of our research; •our ability to attract, motivate and retain highly skilled, and often highly specialized, personnel; •the array of investment products we offer; •the fees we charge; •Morningstar/Lipper rankings for the AllianceBernstein Funds; •our operational effectiveness; •our ability to further develop and market our brand; and •our global presence. Increased competition could reduce the demand for our products and services, which could have a material adverse effect on our financial condition, results ofoperations and business prospects. Competition is an important risk that our business faces and should be considered along with the other risk factors we discuss in Item 1A below. 17Table of Contents Other Information AllianceBernstein and Holding file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other reportsrequired to comply with federal securities laws. The public may read and copy any materials filed with the SEC in the SEC’s conventional reading rooms,which are located within the SEC’s Headquarters Office at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation ofthese rooms by calling the SEC at (202) 942-8088. The SEC also maintains an Internet site (http://www.sec.gov) that contains reports, proxy and informationstatements, and other information regarding issuers that file electronically with the SEC. AllianceBernstein and Holding maintain an Internet site (http://www.alliancebernstein.com). The portion of the site at “Investor & Media Relations” and“Reports & SEC Filings” contains links to both companies’ annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K,Section 16 beneficial ownership reports on Forms 3, 4 and 5, registration statements on Form S-8, proxy statements and amendments to such filings. Thesereports are available through the site free of charge as soon as reasonably practicable after such material is filed with, or furnished to, the SEC. 18Table of Contents Item 1A.Risk FactorsPlease read this section along with the description of our business in Item 1, the competition section just above and AllianceBernstein’s financial informationcontained in Items 6, 7 and 8. The majority of the risk factors discussed below directly affect AllianceBernstein. These risk factors also affect Holdingbecause Holding’s principal source of income and cash flow is attributable to its investment in AllianceBernstein. See also “Cautions Regarding Forward-Looking Statements” in Item 7.Business-related Risks Our ability to retain clients and increase our AUM depends, in part, on our absolute and relative investment performance. Some of our coreequity services continued to underperform during 2012. Poor investment performance may lead to an additional loss of clients and a decline inAUM and revenues, and could lead to further downgrades in our credit ratings and a reduced ability to access credit on reasonable terms. Our ability to achieve investment returns for clients that meet or exceed investment returns for comparable asset classes and competing investment services is akey consideration when clients decide to keep their assets with us or invest additional assets, and when a prospective client is deciding whether to invest withus. Poor investment performance in some of our services, both in absolute terms and/or relative to peers and stated benchmarks, has resulted, and maycontinue to result, in clients withdrawing assets and in prospective clients choosing to invest with competitors. The resulting lower AUM levels have led, andmay continue to lead, to lower investment management fees, including minimal or no performance-based fees; lower investment management fees haveresulted, and may continue to result, in revenue declines. Since the financial crisis of 2008, we have underperformed benchmarks in many of our services, particularly some of our core equities services. Throughout2012, and particularly during the second quarter, numerous sources of uncertainty negatively affected the global economy, which hindered investor confidenceand hampered the ability of most asset managers, including our firm, to produce returns that met client expectations. Our underperformance in certain of ourcore equities services during 2012 may place continued pressure on our flows during 2013 in our Institutions and Private Client channels. In addition, our continued underperformance in certain of our core equities services may affect our credit ratings. Our access to credit on reasonable terms ispartially dependent on our firm’s credit ratings. Moody’s Investors Service, Inc. (“Moody’s”) affirmed AllianceBernstein’s long-term senior debt rating during2012 while Standard & Poor’s Ratings Service (“S&P”) downgraded the company’s long-term rating from AA- to A+ in June 2012. Each rating agencymaintains a “negative” outlook primarily due to concerns over continued outflows and weak investment performance in large cap equities. S&P, in its June2012 press release, cited factors that could result in a future downgrade of our firm’s long-term rating, including continued net outflows as a result of lagginginvestment performance in equities, particularly if the outflows lead to a less favorable asset mix and a deterioration of the firm’s AUM and profitability.Moody’s, in its latest ratings analysis, also cited factors that could result in a downgrade to our firm’s long-term rating, including material net outflows forseveral quarters, a decline in average AUM to below $375 billion and a leverage ratio (debt/EBITDA) greater than 1.5. A downgrade to our credit ratings islikely to increase our borrowing costs and limit our access to the capital markets. Volatility in and disruption of the global capital and credit markets and adverse changes in the global economy are likely to significantly affectour AUM; any significant reduction in our AUM can have a material adverse effect on our results of operations and business prospects. The mix, market value and level of our AUM are affected by the performance of financial markets (both domestic and international), global economicconditions, industry trends, interest rates, inflation rates, tax regulation changes and other factors that are difficult to predict. Investment advisory andservices fees, the largest component of our revenues, are generally calculated as a percentage of the value of AUM and vary with the type of account managed.Accordingly, fee income generally increases or decreases as AUM increase or decrease and is affected by market appreciation or depreciation, inflow of newclient assets (including purchases of mutual fund shares) and outflow of client assets (including redemption of mutual fund shares). In addition, changingmarket conditions and investment trends, particularly with respect to retirement savings, may reduce interest in certain of our investment products and mayresult in a reduction in AUM. Throughout 2012, and particularly during the second quarter, the capital and credit markets continued to experience volatility and disruption worldwide asconcerns over European sovereign debt and the effect of the U.S. fiscal cliff (which, during the first quarter of 2013, has shifted to concerns regarding the debtceiling debate), and signs of slowing growth in emerging markets, particularly China, created market volatility that negatively affected investmentperformance. These conditions, combined with net outflows in our Institutions and Private Client channels, resulted in significant decreases in our investmentadvisory and services fees. Future disruption of the capital and credit markets could result in further net outflows, which could severely impact our results ofoperations and financial condition. If we are unable to obtain funds and/or financing, we may be forced to incur unanticipated costs or revise our strategicplans, which could have a material adverse effect on our financial condition, results of operations and business prospects. 19Table of Contents The amount and mix of our AUM are subject to significant fluctuations, which may adversely affect our fee levels and results of operations; ourfee levels also could be negatively affected by regulatory initiatives, court decisions and competitive considerations, which may adversely affectour results of operations. Fluctuations in the amount and mix of our AUM may be attributable in part to conditions outside of our control that have had, and in the future may have, anegative effect on our revenues and income. We derive substantially all of our revenues and income from providing investment research and management andrelated services, so a decrease in the level of our AUM, whether resulting from poor investment performance, client outflows or other factors, adversely affectsour revenues and income. During the past several years, there has been a shift from active equity services towards fixed income services and passive services, which has resulted, andmay continue to result, in a corresponding decline in our revenues and income because we generally earn higher fees from assets invested in our active equityservices than in our fixed income services or passive services. A shift from global and international services to U.S. services is likely to have a similar effect.For example, the global economic turmoil experienced during the second quarter of 2012 caused some investors to further shift their investment preferencesfrom active equities to fixed income, passive and money market products (some of which we do not offer). This trend may continue or accelerate in the future. Conversely, increases in interest rates, particularly if rapid, or high interest rates, as well as uncertainty pertaining to the future direction of interest rates,would be likely to decrease the total return of many bond investments due to lower market valuations of existing bonds. These factors, combined with apotential shift in investor sentiment away from fixed income investments, could have a significant adverse effect on our revenues and results of operationsbecause, in recent years, our AUM in fixed income investments have become a larger component of our overall AUM. In addition, we may be required to reduce our fee levels, restructure the fees we charge or adjust the services we offer to our clients because of, among otherthings, regulatory initiatives (whether industry-wide or specifically targeted), court decisions and competitive considerations. A reduction in fees would reduceour revenues. A reduction in revenues, without a commensurate reduction in expenses, will adversely affect our results of operations. Our results of operations and reputation could continue to suffer if we are unable to deliver consistent, competitive investment performance. Our business is based on the trust and confidence of our clients, and we are dedicated to earning and maintaining this trust and confidence. Damage to ourreputation can substantially reduce our AUM and impair our ability to maintain or grow our business. Our continued underperformance over the last few years in certain of our core equities services damaged our reputation among many clients, prospects andconsultants. We are focused on delivering consistent, competitive investment performance in 2013 and, in so doing, continuing to rebuild our reputation.Failure in this endeavor, however, could have a material adverse effect on our reputation, results of operations and business prospects. Maintaining adequate liquidity for our general business needs depends on certain factors, including operating cash flows and our access to crediton reasonable terms. Our financial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability to maintain andgrow AUM and other factors beyond our control. Our ability to issue public or private debt on reasonable terms may be limited by adverse market conditions,our profitability, our creditworthiness as perceived by lenders and changes in government regulations, including tax rates and interest rates. Furthermore, ouraccess to credit on reasonable terms is partially dependent on our firm’s credit ratings. A downgrade to our credit ratings is likely to increase our borrowingcosts and limit our access to the capital markets. If we are unable to obtain funds and/or financing, we may be forced to incur unanticipated costs or revise ourstrategic plans, which could have a material adverse effect on our financial condition, results of operations and business prospects. An impairment of goodwill may occur. As a result of increased economic uncertainty and current market dynamics, determining whether an impairment of the goodwill asset exists requiresmanagement to exercise significant judgment. In addition, to the extent that securities valuations are depressed for prolonged periods of time and marketconditions worsen, or if we experience significant net redemptions, our AUM, revenues, profitability and unit price may be adversely affected. Although theprice of a Holding Unit is just one factor in the calculation of fair value, if current Holding Unit price levels decline significantly, reaching the conclusion thatfair value exceeds carrying value will, over time, become more difficult. In addition, control premiums, industry earnings multiples and discount rates areimpacted by economic conditions. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and futurecash flow projections, and may result in an impairment of goodwill. An impairment may result in a material charge to our earnings. For additional informationabout our impairment testing, see Item 7. Our business is dependent on investment advisory, selling and distribution agreements that are subject to termination or non-renewal on shortnotice. We derive most of our revenues pursuant to written investment management agreements (or other arrangements) with institutional investors, mutual funds andprivate clients, and selling and distribution agreements between AllianceBernstein Investments and financial intermediaries that distribute AllianceBernsteinFunds. Generally, the investment management agreements (and other arrangements) are terminable at any time or upon relatively short notice by either party.The selling and distribution agreements are terminable by either party upon notice (generally 30 days) and do not obligate the financial intermediary to sell anyspecific amount of fund shares. In addition, investors in AllianceBernstein Funds can redeem their investments without notice. Any termination of, or failureto renew, a significant number of these agreements, or a significant increase in redemption rates, could have a material adverse effect on our results ofoperations and business prospects. 20Table of Contents Furthermore, the investment management agreements pursuant to which we manage the U.S. Funds must be renewed and approved by the Funds’ boards ofdirectors annually. A significant majority of the directors are independent. Consequently, there can be no assurance that the board of directors of each fund willapprove the fund’s investment management agreement each year, or will not condition its approval on revised terms that may be adverse to us. Our ability to establish new client relationships and maintain existing ones is partly dependent on our relationships with various financialintermediaries and consultants that are not obligated to continue to work with us. Our ability to market our Retail Products and Services, sub-advisory services and certain other investment services is partly dependent on our access tosecurities firms, brokers, banks and other intermediaries. These intermediaries generally offer their clients investment products that compete with ourproducts. In addition, certain institutional investors rely on consultants to advise them on choosing an investment adviser, and currently, some of our coreequities services are not considered among the best choices by consultants. For example, in previous years a number of investment consultants advised theirclients to move their assets invested with us to other investment advisers, which contributed to significant net outflows. This trend may continue. Also, ourPrivate Client Services group relies on referrals from financial planners, registered investment advisers and other professionals. We cannot be certain that wewill continue to have access to, or receive referrals from, these third parties. Loss of such access or referrals could have a material adverse effect on our resultsof operations and business prospects. We may be unable to continue to attract, motivate and retain key personnel, and the cost to retain key personnel could put pressure on ouroperating margin. Our business depends on our ability to attract, motivate and retain highly skilled, and often highly specialized, technical, managerial and executive personnel;there is no assurance that we will be able to do so. The market for qualified research analysts, portfolio managers, financial advisors, traders and other professionals is extremely competitive and ischaracterized by frequent movement of these investment professionals among different firms. In 2012, some of our senior professionals left the firm;additional departures may occur. Portfolio managers and financial advisors often maintain strong, personal relationships with their clients so their departurehas caused, and may continue to cause, us to lose client accounts, which could have a material adverse effect on our results of operations and businessprospects. If our revenues continue to decline during 2013, it will place significant added pressure on our ability to pay our employees at competitive levels. As a result,we will continue to be vigilant about scaling our cost structure (including headcount) to our revenue base. For additional information regarding ourcompensation practices, see "Compensation Discussion and Analysis" in Item 11. Our operating margin may decline if we increase compensation to retain key personnel without a commensurate increase in revenues. Performance-based fee arrangements with our clients cause greater fluctuations in our revenues. We sometimes charge our clients performance-based fees for certain services. For these services, we charge a base advisory fee and are eligible to earn anadditional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investmentresults in excess of a stated benchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generallyprovides that if a client account underperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain backsuch underperformance before we can collect future performance-based fees. Therefore, if we fail to achieve the performance target for a particular period, wewill not earn a performance-based fee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees willbe impaired. We are eligible to earn performance-based fees on approximately 8% of the assets we manage for institutional clients and approximately 3% of the assets wemanage for private clients (in total, approximately 4% of our company-wide AUM). If the percentage of our AUM subject to performance-based fees grows,seasonality and volatility of revenue and earnings are likely to become more significant. Our performance-based fees in 2012, 2011 and 2010 were $66.6million (including $39.6 million pertaining to winding up the PPIP fund, see “Management’s Discussion and Analysis of Financial Condition and Resultsof Operations” in Item 7), $16.5 million and $20.5 million, respectively. We may engage in strategic transactions that could pose risks. As part of our business strategy, we consider potential strategic transactions, including acquisitions, dispositions, consolidations, joint ventures and similartransactions, some of which may be material. These transactions, if undertaken, may involve a number of risks and present financial, managerial andoperational challenges, including: •adverse effects on our earnings if acquired intangible assets or goodwill become impaired; •existence of unknown liabilities or contingencies that arise after closing; and •potential disputes with counterparties. Acquisitions also pose the risk that any business we acquire may lose customers or employees or could underperform relative to expectations. Additionally, theacquisition of investment personnel poses the risk that we may lose the AUM we expected to manage, which could adversely affect our results of operations.Furthermore, strategic transactions may require us to increase our leverage or, if we issue AllianceBernstein Units or Holding Units to fund an acquisition,would dilute the holdings of our existing Unitholders.  21Table of Contents Because many of our subsidiary operations are located outside of the United States and have functional currencies other than the U.S. dollar,changes in exchange rates to the U.S. dollar affect our reported financial results from one period to the next. Although significant portions of our net revenues and expenses, as well as our AUM, are presently derived from the United States, we have subsidiariesoutside of the United States with functional currencies other than the U.S. dollar. As a result, fluctuations in exchange rates to the U.S. dollar affect ourreported financial results from one period to the next. We may not be successful in our efforts to hedge our exposure to such fluctuations, which could have anegative effect on our reported financial results. Despite our efforts to manage exposures from principal positions taken by our sell-side business, these positions are subject to market risk. Bernstein Research Services may use the firm’s capital to facilitate customer transactions, primarily relating to trading activities in listed options. Theresulting principal positions are exposed to market risk. We seek to manage this risk both by engaging in transactions designed to hedge the market risk andby maintaining a risk platform that includes the measurement and monitoring of financial exposures and operational processes. Our ability to manage thisrisk may be limited, however, by adverse changes in the liquidity of the security or the hedging instrument and in the correlation of price movements betweenthe security and the hedging instrument. Similarly, the risk monitoring and risk mitigation techniques we employ and the related judgments we make cannotanticipate every possible economic and financial circumstance and outcome. Consequently, we may incur losses, which would require us to increase ourregulatory capital and could adversely affect our results of operations. Our seed capital investments are subject to market risk. While we enter into various futures, forward and swap contracts to economically hedgecertain of these investments, we also may be exposed to market risk and credit-related losses in the event of non-performance by counterpartiesto these derivative instruments. We have a seed investment program for the purpose of sponsoring new products. As our new product launches have increased in recent years, so too has ouruse of seed capital for investment purposes. These seed capital investments are subject to market risk. Our risk management team oversees a seed hedgingprogram that attempts to minimize this risk, subject to practical and cost considerations. Also, not all seed investments are deemed appropriate to hedge, andin those cases we are exposed to market risk. As a result, volatility in the capital markets may cause significant changes in our period-to-period financial andoperating results. We use various derivative instruments, including futures, forward and swap contracts, in conjunction with our seed hedging program. While in most casesbroad market risks are hedged, our hedges are imperfect and some market risk remains. In addition, our use of derivatives results in counterparty risk (i.e.,the risk that we may be exposed to credit-related losses in the event of non-performance by counterparties to these derivative instruments), regulatory risk (e.g.,short selling restrictions) and cash/synthetic basis risk (i.e., the risk that the underlying positions do not move identically to the related derivativeinstruments). The individuals, counterparties or issuers on which we rely in the course of performing services for us or our clients may be unable or unwilling tohonor their contractual obligations to us. We rely on various third party counterparties and other vendors to fulfill their obligations to us, whether specified by contract, course of dealing or otherwise.Default rates, downgrades and disputes with counterparties as to the valuation of collateral increase significantly in times of market stress. Furthermore,disruptions in the financial markets and other economic challenges, like those presented by the global financial turmoil during the second quarter of 2012,may cause our counterparties and other vendors to experience significant cash flow problems or even render them insolvent, which may expose us tosignificant costs. We may not accurately value the securities we hold on behalf of our clients or our company investments. In accordance with applicable regulatory requirements, contractual obligations or client direction, we employ procedures for the pricing and valuation ofsecurities and other positions held in client accounts or for company investments. We have established a Valuation Committee, composed of senior officersand employees, which oversees pricing controls and valuation processes. If market quotations for a security are not readily available, the Valuation Committeedetermines a fair value for the security. Extraordinary volatility in financial markets, significant liquidity constraints or our failure to adequately consider one or more factors when fair valuing asecurity based on information with limited market observability could result in our failing to properly value securities we hold for our clients or investmentsaccounted for on our balance sheet. Improper valuation would likely result in our basing fee calculations on inaccurate AUM figures, our striking incorrect netasset values for company-sponsored mutual funds or hedge funds or, in the case of company investments, our inaccurately calculating and reporting ourfinancial condition and operating results. Although the overall percentage of our AUM that we fair value based on information with limited marketobservability is not significant, inaccurate fair value determinations can harm our clients, create regulatory issues and damage our reputation. We may not have sufficient information to confirm or review the accuracy of valuations provided to us by underlying external managers for thefunds in which certain of our alternative investment products invest. Certain of our alternative investment services invest in funds managed by external managers (“External Managers”) rather than investing directly insecurities and other instruments. As a result, our abilities will be limited with regard to (i) monitoring such investments, (ii) regularly obtaining complete,accurate and current information with respect to such investments and (iii) exercising control over such investments. Accordingly, we may not have sufficientinformation to confirm or review the accuracy of valuations provided to us by External Managers. In addition, we will be required to rely on ExternalManagers’ compliance with any applicable investment guidelines and restrictions. Any failure of an External Manager to operate within such guidelines or toprovide accurate information with respect to the investment could subject our alternative investment products to losses and cause damage to our reputation.  22Table of Contents The quantitative models we use in certain of our investment services may contain errors, resulting in imprecise risk assessments and unintendedoutput. We use quantitative models in a variety of our investment services, generally in combination with fundamental research. Our quantitative models are validatedby senior quantitative professionals. In 2010, we formed our Model Risk Working Group, the purpose of which is to formalize and oversee a quantitativemodel governance framework, including minimum validation standards. However, due to the complexity of such models, it is possible that errors in themodels could exist and our controls could fail to detect such errors. Failure to detect errors could result in client losses and damage to our reputation. Unpredictable events, including natural disaster, dangerous weather conditions, technology failure, terrorist attack and political unrest, mayadversely affect our ability to conduct business. War, terrorist attack, political unrest in the Middle East, the Pacific Rim and elsewhere, power failure, climate change, natural disaster and rapid spread ofinfectious diseases could interrupt our operations by: •causing disruptions in global economic conditions, thereby decreasing investor confidence and making investment products generally lessattractive; •inflicting loss of life; •triggering massive technology failures or delays; and •requiring substantial capital expenditures and operating expenses to remediate damage and restore operations. Despite the contingency plans and facilities we have in place, including system security measures, information back-up and disaster recovery processes, ourability to conduct business may be adversely affected by a disruption in the infrastructure that supports our operations and the communities in which they arelocated. This may include a disruption involving electrical, communications, transportation or other services we may use or third parties with which weconduct business. If a disruption occurs in one location and our employees in that location are unable to occupy our offices or communicate with or travel toother locations, our ability to conduct business with and on behalf of our clients may suffer, and we may not be able to successfully implement contingencyplans that depend on communication or travel. Furthermore, unauthorized access to our systems as a result of a security breach, the failure of our systems, orthe loss of data could give rise to legal proceedings or regulatory penalties under laws protecting the privacy of personal information, disrupt operations, anddamage our reputation. Our operations require experienced, professional staff. Loss of a substantial number of such persons or an inability to provide properly equipped places forthem to work may, by disrupting our operations, adversely affect our financial condition, results of operations and business prospects. In addition, ourproperty and business interruption insurance may not be adequate to compensate us for all losses, failures, or breaches that may occur. We are highly dependent on various software applications, technologies and other systems for our business to function properly and to safeguardconfidential information; any significant limitation, failure or security breach of these systems could constrain our operations. We utilize software and related technologies throughout our business, including both proprietary systems and those provided by outside vendors. We use ourtechnology to, among other things, obtain securities pricing information, process client transactions, and provide reports and other customer services to theclients of the funds we manage. Although we take protective measures, including measures to effectively secure information through system securitytechnology and established and tested business continuity plans, we may experience system delays and interruptions as a result of natural disasters, powerfailures, acts of war and third-party failures. We cannot predict with certainty all of the adverse effects that could result from our failure, or the failure of athird party, to efficiently address and resolve these delays and interruptions. These adverse effects could include the inability to perform critical businessfunctions or failure to comply with financial reporting and other regulatory requirements, which could lead to loss of client confidence, harm to our reputation,exposure to disciplinary action and liability to our clients. Accordingly, potential system failures and the cost necessary to correct those failures could have amaterial adverse effect on our results of operations and business prospects. In addition, we could be subject to losses if we fail to properly safeguard sensitive and confidential information. As part of our normal operations, we maintainand transmit confidential information about our clients as well as proprietary information relating to our business operations. Although we take protectivemeasures, our systems still could be vulnerable to unauthorized access, computer viruses or other events that have a security impact, such as an authorizedemployee or vendor inadvertently or intentionally causing us to release confidential or proprietary information. Such disclosure could, among other things,allow competitors access to our proprietary business information and require significant time and expense to investigate and remediate the breach. Moreover,loss of confidential client information could harm our reputation and subject us to liability under laws that protect confidential personal data, resulting inincreased costs or loss of revenues. Also, although we take precautions to password protect and encrypt our laptops and other mobile electronic hardware, if such hardware is stolen, misplacedor left unattended, it may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly actions.Most of the software applications that we use in our business are licensed from, and supported, upgraded and maintained by, third-party vendors. Asuspension or termination of certain of these licenses or the related support, upgrades and maintenance could cause temporary system delays or interruption. Inaddition, technology rapidly evolves and we cannot guarantee that our competitors may not implement more advanced technology platforms for their productsand services, which may place us at a competitive disadvantage and adversely affect our results of operations and business prospects. 23Table of Contents Our own operational failures or those of third parties we rely on, including failures arising out of human error, could disrupt our business,damage our reputation and reduce our revenues. Weaknesses or failures in our internal processes or systems could lead to disruption of our operations, liability to clients, exposure to disciplinary action orharm to our reputation. Our business is highly dependent on our ability to process, on a daily basis, large numbers of transactions, many of which are highlycomplex, across numerous and diverse markets. These transactions generally must comply with investment guidelines, as well as stringent legal andregulatory standards. Our obligations to clients require us to exercise skill, care and prudence in performing our services. Despite our employees being highly trained and skilled, thelarge number of transactions we process makes it highly likely that errors will occasionally occur. Should we make a mistake in performing our services thatcauses financial harm to a client, we have a duty to act promptly to put the client in the position the client would have been in had we not made the error. Theoccurrence of mistakes, particularly significant ones, can have a material adverse effect on our reputation, results of operations and business prospects. We may not always successfully manage actual and potential conflicts of interest that arise in our business. We increasingly must manage actual and potential conflicts of interest, including situations where our services to a particular client conflict, or are perceived toconflict, with the interests of another client, as well as situations where certain of our employees have access to material non-public information that may notbe shared with all employees of our firm. Failure to adequately address potential conflicts of interest could adversely affect our reputation, results of operationsand business prospects. We have procedures and controls that are designed to identify and mitigate conflicts of interest, including those designed to prevent the improper sharing ofinformation. However, appropriately managing conflicts of interest is complex and difficult. Our reputation could be damaged and the willingness of clients toenter into transactions in which such a conflict might arise may be affected if we fail, or appear to fail, to deal appropriately with conflicts of interest. Inaddition, potential or perceived conflicts could give rise to litigation or regulatory enforcement actions. Rates we charge for brokerage transactions have declined significantly over the last several years, and declines may continue. In addition, turmoilin global capital markets and economies may reduce market volumes. Combined, these two factors may adversely affect Bernstein ResearchServices revenue. Electronic, or “low-touch”, trading approaches represent a significant percentage of buy-side trading activity and produce transaction fees for execution-onlyservices that are a small fraction of traditional full service fee rates. As a result, blended pricing for the industry and SCB has declined over the last severalyears. In addition, fee rates charged by SCB and other brokers for traditional brokerage services have also historically experienced price pressure, and weexpect these trends to continue. While increases in transaction volume and market share have in the past often offset decreases in rates, this may not continue.Recent economic and market turmoil has severely impacted much of SCB’s client base, which in the near-term may adversely affect transaction volumegenerally. Our insurance policies may be insufficient to protect us against large losses. We can make no assurance that a claim or claims will be covered by our insurance policies or, if covered, will not exceed the limits of available insurancecoverage, or that our insurers will remain solvent and meet their obligations. Our business is subject to pervasive, complex and frequently evolving global regulation, the compliance with which could involve substantialexpenditures of time and money, and the violation of which may result in material adverse consequences. Virtually all aspects of our business are subject to federal and state laws and regulations, rules of securities regulators and exchanges, and laws andregulations in the foreign jurisdictions in which our subsidiaries conduct business. If we violate these laws or regulations, we could be subject to civil liability,criminal liability or sanction, including revocation of our and our subsidiaries’ professional licenses or registrations, revocation of the licenses of ouremployees, censures, fines, or temporary suspension or permanent bar from conducting business. Any such liability or sanction could have a materialadverse effect on our financial condition, results of operations, and business prospects. A regulatory proceeding, even if it does not result in a finding ofwrongdoing or sanction, could require substantial expenditures of time and money. These laws and regulations generally grant supervisory agencies and bodies broad administrative powers, including, in some cases, the power to limit orrestrict doing business for failure to comply with such laws and regulations. Moreover, regulators in non-U.S. jurisdictions could change their policies or lawsin a manner that might restrict or otherwise impede our ability to market, distribute, or register investment products in their respective markets. These localrequirements could increase the expenses we incur in a specific jurisdiction without any corresponding increase in revenues from operating in the jurisdiction. In addition, there is uncertainty associated with the regulatory environments in which we operate, including uncertainty created by the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”). The Dodd-Frank Act fundamentally changed the U.S. financialregulatory landscape and may impose additional restrictions and limitations on our business as the various rules and regulations required for implementationcontinue to be adopted. Changes to the rules governing Rule 12b-1 Fees may affect the revenues we derive from our Retail Services. In July 2010, the SEC proposed a new rule and rule amendments that would alter Rule 12b-1 Fees. The new rule and amendments would continue to allowfunds to bear promotional costs within certain limits and would also preserve the ability of funds to provide investors with alternatives for paying salescharges (e.g., at the time of purchase, at the time of redemption or through a continuing fee charged to fund assets). Unlike the current Rule 12b-1 framework,however, the proposed rules would limit the cumulative sales charges each investor pays, regardless of how they are imposed. 24Table of Contents If rules are adopted as proposed, changes in Rule 12b-1 Fees for a number of share classes offered by company-sponsored mutual funds would be required,which would reduce the net fund distribution revenues we receive from company-sponsored mutual funds. The impact of this rule change is dependent uponthe final rules adopted by the SEC, any phase-in or grandfathering period, and any other changes made with respect to share class distribution arrangements. The financial services industry is intensely competitive. We compete on the basis of a number of factors, including our array of investment services, our investment performance for our clients, innovation,reputation and price. By having a global presence, we may face competitors with more experience and more established relationships with clients, regulatorsand industry participants in the relevant market, which could adversely affect our ability to expand. Furthermore, our underperformance in certain of our coreequities services during 2012 may place continued pressure on our flows during 2013, which may make it more difficult for us to compete effectively. Foradditional information regarding competitive factors, see “Competition” in Item 1. We are involved in various legal proceedings and regulatory matters and may be involved in such proceedings in the future, any one orcombination of which could have a material adverse effect on our financial condition, results of operations and business prospects. We are involved in various matters, including regulatory inquiries, administrative proceedings and litigation, some of which allege significant damages, andwe may be involved in additional matters in the future. Litigation is subject to significant uncertainties, particularly when plaintiffs allege substantial orindeterminate damages, the litigation is in its early stages, or when the litigation is highly complex or broad in scope. Structure-related Risks The partnership structure of Holding and AllianceBernstein limits Unitholders’ abilities to influence the management and operation ofAllianceBernstein’s business and is highly likely to prevent a change in control of Holding and AllianceBernstein. The General Partner, as general partner of both Holding and AllianceBernstein, generally has the exclusive right and full authority and responsibility tomanage, conduct, control and operate their respective businesses, except as otherwise expressly stated in their respective Amended and Restated Agreements ofLimited Partnership. Holding and AllianceBernstein Unitholders have more limited voting rights on matters affecting AllianceBernstein than do holders ofcommon stock in a corporation. Both Amended and Restated Agreements of Limited Partnership provide that Unitholders do not have any right to vote fordirectors of the General Partner and that Unitholders can only vote on certain extraordinary matters (including removal of the General Partner under certainextraordinary circumstances). Additionally, the AllianceBernstein Partnership Agreement includes significant restrictions on transfers of AllianceBernsteinUnits and provisions that have the practical effect of preventing the removal of the General Partner, which are highly likely to prevent a change in control ofAllianceBernstein’s management. AllianceBernstein Units are illiquid. There is no public trading market for AllianceBernstein Units and AllianceBernstein does not anticipate that a public trading market will ever develop. TheAllianceBernstein Partnership Agreement restricts our ability to participate in a public trading market or anything substantially equivalent to one by providingthat any transfer which may cause AllianceBernstein to be classified as a “publicly traded partnership” as defined in Section 7704 of the Code shall be deemedvoid and shall not be recognized by AllianceBernstein. In addition, AllianceBernstein Units are subject to significant restrictions on transfer; all transfers ofAllianceBernstein Units are subject to the written consent of AXA Equitable and the General Partner pursuant to the AllianceBernstein Partnership Agreement.Generally, neither AXA Equitable nor the General Partner will permit any transfer that it believes would create a risk that AllianceBernstein would be treated asa corporation for tax purposes. AXA Equitable and the General Partner have implemented a transfer program that requires a seller to locate a purchaser, andimposes annual volume restrictions on transfers. You may request a copy of the transfer program from our Corporate Secretary(corporate_secretary@alliancebernstein.com). Also, we have filed the transfer program as Exhibit 10.07 to this Form 10-K. Changes in the partnership structure of Holding and AllianceBernstein and/or changes in the tax law governing partnerships would havesignificant tax ramifications. Holding, having elected under Section 7704(g) of the Code to be subject to a 3.5% federal tax on partnership gross income from the active conduct of a trade orbusiness, is a “grandfathered” publicly-traded partnership (“PTP”) for federal income tax purposes. Holding is also subject to the 4.0% UBT, net of creditsfor UBT paid by AllianceBernstein. In order to preserve Holding’s status as a “grandfathered” PTP for federal income tax purposes, management ensures thatHolding does not directly or indirectly (through AllianceBernstein) enter into a substantial new line of business. A “new line of business” includes anybusiness that is not closely related to AllianceBernstein’s historical business of providing research and diversified investment management and related servicesto its clients. A new line of business is “substantial” when a partnership derives more than 15% of its gross income from, or uses more than 15% of its totalassets in, the new line of business. 25Table of Contents AllianceBernstein is a private partnership for federal income tax purposes and, accordingly, is not subject to federal and state corporate income taxes.However, AllianceBernstein is subject to the 4.0% UBT. Domestic corporate subsidiaries of AllianceBernstein, which are subject to federal, state and localincome taxes, are generally included in the filing of a consolidated federal income tax return with separate state and local income tax returns being filed. Foreigncorporate subsidiaries are generally subject to taxes in the foreign jurisdiction where they are located. As our business increasingly operates in countries otherthan the U.S., AllianceBernstein’s effective tax rate is expected to increase over time because our international subsidiaries are subject to corporate level taxes inthe jurisdictions where they are located. In order to preserve AllianceBernstein’s status as a private partnership for federal income tax purposes, AllianceBernstein Units must not be consideredpublicly traded. The AllianceBernstein Partnership Agreement provides that all transfers of AllianceBernstein Units must be approved by AXA Equitable andthe General Partner; AXA Equitable and the General Partner approve only those transfers permitted pursuant to one or more of the safe harbors contained inrelevant treasury regulations. If such units were considered readily tradable, AllianceBernstein would be subject to federal and state corporate income tax on itsnet income. Furthermore, as noted above, should AllianceBernstein enter into a substantial new line of business, Holding, by virtue of its ownership ofAllianceBernstein, would lose its status as a grandfathered PTP and would become subject to corporate income tax as set forth above. In years prior to 2010, Congress proposed tax legislation that would cause certain PTPs to be taxed as corporations, thus subjecting their income to a higherlevel of income tax. Holding is a PTP that derives its income from investment management services through its ownership interest in AllianceBernstein. Thelegislation, in the form proposed, would not have affected Holding’s tax status. Also, this proposed legislation would not have affected AllianceBernsteinbecause it is a private partnership. In addition, recent decisions by members of Congress and their staffs regarding the need for fundamental tax reform and possible tax law changes to raiseadditional revenue have included suggestions that all large partnerships (which would include both AllianceBernstein and Holding) be taxed ascorporations. However, we cannot predict whether, or in what form, tax legislation will be proposed in the future, and are unable to determine what effect anynew legislation might have on us. If Holding and AllianceBernstein were to lose their federal tax status as partnerships, they would be subject to corporateincome tax, which would reduce materially their net income and quarterly distributions to unitholders. 26Table of Contents Item 1B.Unresolved Staff Comments Neither AllianceBernstein nor Holding has unresolved comments from the staff of the SEC to report. 27Table of Contents Item 2.Properties Our principal executive offices at 1345 Avenue of the Americas, New York, New York are occupied pursuant to a lease expiring in 2019 with options to extendto 2029 (for more information regarding this lease, see Exhibit 10.10 to this Form 10-K). At this location, we currently lease 1,033,984 square feet of space,within which we currently occupy approximately 629,472 square feet of space and have sub-let (or are seeking to sub-let) approximately 404,512 square feetof space. We also lease approximately 312,301 square feet of space at 135 West 50th Street, New York, New York under a lease expiring in 2019 with optionsto extend to 2029. Within our leased space at 135 West 50th Street, we currently occupy approximately 4,132 square feet of space and have sub-let (or areseeking to sub-let) approximately 308,169 square feet of space. In addition, we lease approximately 263,083 square feet of space at One North Lexington, White Plains, New York under a lease expiring in 2021 with optionsto extend to 2031. At this location, we currently occupy approximately 136,687 square feet of space and have sub-let (or are seeking to sub-let) approximately126,396 square feet of space. AllianceBernstein Investments and AllianceBernstein Investor Services lease 92,067 square feet of space in San Antonio, Texas under a lease expiring in 2019with options to extend to 2029. At this location, these subsidiaries currently occupy approximately 59,004 square feet of space and have sub-let (or areseeking to sub-let) approximately 33,063 square feet of space. We also lease space in 19 other cities in the United States. Our subsidiaries lease space in 25 cities outside the United States, the most significant of which are in London, England under leases expiring between 2013and 2022, and in Tokyo, Japan under a lease expiring in 2018. In London, we currently lease 110,865 square feet of space, within which we currentlyoccupy approximately 57,567 square feet of space and have sub-let (or are seeking to sub-let) approximately 53,298 square feet of space. In Tokyo, wecurrently lease and occupy approximately 34,615 square feet of space. 28Table of Contents Item 3.Legal Proceedings With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome isprobable, and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of anegative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, ifany, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate apossible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, thelitigation is in its early stages, or when the litigation is highly complex or broad in scope. In such cases, we disclose that we are unable to predict the outcomeor estimate a possible loss or range of loss.During the first quarter of 2012, we received a legal letter of claim (the “Letter of Claim”) sent on behalf of a former European pension fund client, allegingthat AllianceBernstein Limited (a wholly-owned subsidiary of AllianceBernstein organized in the U.K.) was negligent and failed to meet certain applicablestandards of care with respect to the initial investment in and management of a £500 million portfolio of U.S. mortgage-backed securities. The alleged damagesrange between $177 million and $234 million, plus compound interest on an alleged $125 million of realized losses in the portfolio. We believe that any lossesto this client resulted from adverse developments in the U.S. housing and mortgage market that precipitated the financial crisis in 2008 and not any negligenceor failure on our part. We believe that we have strong defenses to these claims, which are set forth in our October 12, 2012 response to the Letter of Claim, andwill defend this matter vigorously. Currently, we are unable to estimate a reasonably possible range of loss because the matter remains in its early stages. In addition to the Letter of Claim discussed immediately above, we are involved in various other matters, including regulatory inquiries, administrativeproceedings and litigation, some of which allege significant damages.In management’s opinion, an adequate accrual has been made as of December 31, 2012 to provide for any probable losses regarding any litigation matters forwhich we can reasonably estimate an amount of loss. It is reasonably possible that we could incur additional losses pertaining to these matters, but currentlywe cannot estimate any such additional losses.Management, after consultation with legal counsel, currently believes that the outcome of any matter that is pending or threatened, or all of them combined,will not have a material adverse effect on our results of operations, financial condition or liquidity. However, as any inquiry, proceeding or litigation has theelement of uncertainty, management cannot determine whether further developments relating to any matter that is pending or threatened, or all of themcombined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period. 29Table of Contents Item 4.Mine Safety Disclosures Not applicable. 30Table of Contents PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Holding Units and AllianceBernstein Units; Cash Distributions Holding Units are listed on the NYSE and trade publicly under the ticker symbol “AB”. There is no established public trading market for AllianceBernstein Units, which are subject to significant restrictions on transfer. In general, transfers ofAllianceBernstein Units will be allowed only with the written consent of both AXA Equitable and the General Partner. Generally, neither AXA Equitable nor theGeneral Partner will permit any transfer that it believes would create a risk that AllianceBernstein would be treated as a corporation for tax purposes. AXAEquitable and the General Partner have implemented a transfer program, a copy of which you may request from our Corporate Secretary(corporate_secretary@alliancebernstein.com). Also, we have filed the transfer program as Exhibit 10.07 to this Form 10-K. Each of Holding and AllianceBernstein distributes on a quarterly basis all of its Available Cash Flow, as defined in the Holding Partnership Agreement and theAllianceBernstein Partnership Agreement, to its unitholders and the General Partner. For additional information concerning distribution of Available Cash Flowby Holding, see Note 2 to Holding’s financial statements in Item 8. For additional information concerning distribution of Available Cash Flow byAllianceBernstein, see Note 2 to AllianceBernstein’s consolidated financial statements in Item 8. Holding’s principal source of income and cash flow is attributable to its limited partnership interests in AllianceBernstein. The tables set forth below provide the distributions of Available Cash Flow made by AllianceBernstein and Holding during 2012 and 2011 and the high andlow sale prices of Holding Units reflected on the NYSE composite transaction tape during 2012 and 2011: Quarters Ended 2012 December 31 September 30 June 30 March 31 Total Cash distributions per AllianceBernstein Unit(1) $0.38 $0.41 $0.26 $0.31 $1.36 Cash distributions per Holding Unit(1) $0.40 $0.36 $0.21 $0.26 $1.23 Holding Unit prices: High $18.29 $15.99 $15.84 $16.75 Low $15.11 $11.44 $11.55 $13.01 Quarters Ended 2011 December 31 September 30 June 30 March 31 Total Cash distributions per AllianceBernstein Unit(1) $0.17 $0.32 $0.41 $0.48 $1.38 Cash distributions per Holding Unit(1) $0.12 $0.26 $0.34 $0.42 $1.14 Holding Unit prices: High $15.05 $20.38 $22.75 $24.20 Low $12.40 $13.25 $18.43 $20.48 (1)Declared and paid during the following quarter. On December 31, 2012, the closing price of a Holding Unit on the NYSE was $17.43 per Unit and there were 1,093 Holding Unitholders of record forapproximately 70,000 beneficial owners. On December 31, 2012, there were 456 AllianceBernstein Unitholders of record, and we do not believe there aresubstantial additional beneficial owners. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities We did not engage in any unregistered sales of our securities during the last three years. Purchases of Equity Securities by the Issuer and Affiliated Purchasers During each of the third and fourth quarters of 2012, we implemented a plan to repurchase Holding Units pursuant to Rule 10b5-1 under the Exchange Act. ARule 10b5-1 plan allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed tradingblackout periods and because it possesses material non-public information. Each broker we selected has the authority under the terms and limitations specifiedin the plan to repurchase Holding Units on AllianceBernstein’s behalf in accordance with the terms of each plan. Repurchases are subject to SEC regulationsas well as certain price, market volume and timing constraints specified in each plan. 31Table of Contents The following table provides information relating to any Holding Units bought by us or one of our affiliates in the fourth quarter of the fiscal year covered bythis report: Issuer Purchases of Equity Securities (a)Total Numberof Holding UnitsPurchased (b)Average PricePaidPer HoldingUnit, net ofCommissions (c)Total Number ofHolding UnitsPurchased asPart of PubliclyAnnounced Plansor Programs (d)MaximumNumber(or ApproximateDollar Value) ofHolding Units thatMay Yet BePurchased Underthe Plans orPrograms(1) Period 10/1/12-10/31/12(1)(2)(3) 733,568 $16.03 729,109 — 11/1/12-11/30/12(1)(3) 1,136,277 16.93 1,136,165 — 12/1/12-12/31/12(1)(3) 4,269,426 17.36 1,290,011 — Total 6,139,271 $17.12 3,155,285 — (1)During the fourth quarter of 2012, we purchased from employees 2,983,986 Holding Units to allow them to fulfill statutory withholding taxrequirements at the time of distribution of long-term incentive compensation awards.(2)Between October 1, 2012 and October 24, 2012 (inclusive), we purchased 608,203 Holding Units on the open market pursuant to a Rule 10b5-1 plan,which plan was adopted on August 3, 2012 and expired on October 24, 2012, to help fund anticipated obligations under our incentive compensationaward program and for other corporate purposes.(3)Between October 26, 2012 and December 31, 2012 (inclusive), we purchased 2,547,082 Holding Units on the open market pursuant to a Rule 10b5-1plan, which plan was adopted on October 26, 2012 and expired on February 11, 2013, to help fund anticipated obligations under our incentivecompensation award program and for other corporate purposes. The following table provides information relating to any AllianceBernstein Units bought by us or one of our affiliates in the fourth quarter of the fiscal yearcovered by this report: Issuer Purchases of Equity Securities (a)Total Number ofAllianceBernsteinUnits Purchased (b)Average PricePaid PerAllianceBernsteinUnit, net ofCommissions (c)Total Number ofAllianceBernsteinUnits Purchased asPart of PubliclyAnnounced Plansor Programs (d)Maximum Number(or ApproximateDollar Value) ofAllianceBernsteinUnits that May YetBe PurchasedUnder the Plans orPrograms Period 10/1/12-10/31/12 — $— — — 11/1/12-11/30/12 — — — — 12/1/12-12/31/12(1) 8,200 17.79 — — Total 8,200 $17.79 — — (1)On December 10, 2012, we purchased 8,200 AllianceBernstein Units in private transactions. 32Table of Contents Item 6.Selected Financial DataAllianceBernstein Holding L.P.Selected Financial Data Years Ended December 31, 2012 2011 2010 2009 2008 (in thousands, except per unit amounts) INCOME STATEMENT DATA: Equity in net income (loss) attributable to AllianceBernsteinUnitholders $70,807 $(65,581) $162,217 $192,513 $278,636 Income taxes 19,722 27,687 28,059 25,324 33,910 Net income (loss) $51,085 $(93,268) $134,158 $167,189 $244,726 Basic net income (loss) per unit $0.51 $(0.90) $1.33 $1.80 $2.79 Diluted net income (loss) per unit $0.51 $(0.90) $1.32 $1.80 $2.79 CASH DISTRIBUTIONS PER UNIT(1)(2)(3) $1.23 $1.14 $1.31 $1.77 $2.68 BALANCE SHEET DATA AT PERIOD END: Total assets $1,566,493 $1,628,984 $1,788,496 $1,800,075 $1,566,810 Partners’ capital $1,560,082 $1,626,173 $1,787,110 $1,797,892 $1,561,523 (1)Holding is required to distribute all of its Available Cash Flow, as defined in the Holding Partnership Agreement, to its unitholders.(2)The 2012 distribution excludes the impact of AllianceBernstein’s $207.0 million non-cash real estate charges recorded in the third and fourth quarters of2012. See Note 3 to AllianceBernstein’s consolidated financial statements in Item 8 for a discussion of these charges.(3)The 2011 distribution excludes the impact of AllianceBernstein’s $587.1 million one-time, non-cash long-term incentive compensation charge. See Note 2to Holding’s financial statements in Item 8 for a discussion of this charge. 33Table of Contents AllianceBernstein L.P.Selected Consolidated Financial Data Years Ended December 31, 2012 2011(1) 2010(1) 2009(1) 2008(1) (in thousands, except per unit amounts and unless otherwise indicated) INCOME STATEMENT DATA: Revenues: Investment advisory and services fees $1,772,257 $1,916,419 $2,051,692 $1,920,332 $2,839,526 Bernstein research services 413,707 437,414 430,521 434,605 471,716 Distribution revenues 401,706 351,621 338,597 277,328 378,425 Dividend and interest income 21,286 21,499 22,902 26,730 91,752 Investment gains (losses) 29,202 (82,081) (1,410) 144,447 (349,172)Other revenues 101,801 107,569 109,803 107,848 118,436 Total revenues 2,739,959 2,752,441 2,952,105 2,911,290 3,550,683 Less: interest expense 3,222 2,550 3,548 4,411 36,524 Net revenues 2,736,737 2,749,891 2,948,557 2,906,879 3,514,159 Expenses: Employee compensation and benefits: Employee compensation and benefits 1,168,645 1,246,898 1,320,495 1,296,386 1,452,017 Long-term incentive compensation charge — 587,131 — — — Promotion and servicing: Distribution-related payments 367,090 302,684 286,676 234,203 307,890 Amortization of deferred sales commissions 40,262 37,675 47,397 54,922 79,111 Other 202,191 219,197 193,822 178,070 202,749 General and administrative: General and administrative 508,364 533,578 516,185 520,372 513,098 Real estate charges 223,038 7,235 101,698 8,276 — Interest on borrowings 3,429 2,545 2,078 2,696 13,077 Amortization of intangible assets 21,353 21,417 21,344 21,126 20,716 Total expenses 2,534,372 2,958,360 2,489,695 2,316,051 2,588,658 Operating income (loss) 202,365 (208,469) 458,862 590,828 925,501 Non-operating income — — 6,760 33,657 18,728 Income (loss) before income taxes 202,365 (208,469) 465,622 624,485 944,229 Income taxes 13,764 3,098 38,523 45,977 95,803 Net income (loss) 188,601 (211,567) 427,099 578,508 848,426 Net income (loss) of consolidated entities attributable to non-controlling interests (315) (36,799) (15,320) 22,381 9,186 Net income (loss) attributable to AllianceBernsteinUnitholders $188,916 $(174,768) $442,419 $556,127 $839,240 Basic net income (loss) per AllianceBernstein Unit $0.67 $(0.62) $1.59 $2.07 $3.18 Diluted net income (loss) per AllianceBernstein Unit $0.67 $(0.62) $1.58 $2.07 $3.18 Operating margin(2) 7.4% n/m 16.1% 19.6% 26.1%CASH DISTRIBUTIONS PER ALLIANCEBERNSTEINUNIT(3)(4)(5) $1.36 $1.38 $1.58 $2.06 $3.07 BALANCE SHEET DATA AT PERIOD END: Total assets $8,115,050 $7,708,389 $7,580,315 $7,214,940 $8,503,459 Debt $323,163 $444,903 $224,991 $248,987 $284,779 Total Capital $3,803,268 $4,029,487 $4,495,356 $4,701,955 $4,486,826 ASSETS UNDER MANAGEMENT AT PERIOD END(in millions) $430,017 $405,897 $478,019 $486,683 $448,808 (1)Certain prior-year amounts have been reclassified to conform to our 2012 presentation. See Note 2 to AllianceBernstein’s consolidated financialstatements in Item 8 for a discussion of reclassifications.(2)Operating income excluding net income (loss) attributable to non-controlling interests as a percentage of net revenues.(3)AllianceBernstein is required to distribute all of its Available Cash Flow, as defined in the AllianceBernstein Partnership Agreement, to its unitholders andthe General Partner.(4)The 2012 distribution excludes a total of $207.0 million of non-cash real estate charges recorded in the third and fourth quarters of 2012. See Note 3 toAllianceBernstein’s consolidated financial statements in Item 8 for a discussion of these charges.(5)The 2011 distribution excludes the $587.1 million one-time, non-cash long-term incentive compensation charge. See Note 2 to AllianceBernstein’sconsolidated financial statements in Item 8 for a discussion of this charge. 34Table of Contents Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsPercentage change figures are calculated using assets under management rounded to the nearest million and financial statement amounts rounded tothe nearest thousand.Executive OverviewWe made significant progress in stabilizing our business in 2012, and demonstrated improvement in a number of areas of our business. In the fourth quarter,our total net flows turned positive for the first time since before the financial crisis, due to a second consecutive $5 billion-plus net inflow quarter in Retail andour first net flow positive quarter in Institutions since the first quarter of 2008. Our Fixed Income services continued to outperform their benchmarks duringthe fourth quarter, as did many of our core Growth and Value Equity services.These results conclude a year during which we were successful in executing our long-term strategy to improve our investment performance, diversify ourbusiness, innovate for clients with our offerings and strengthen our financial condition. In Fixed Income, we finished 2012 with approximately 89% of ourassets in strategies that outperformed their benchmarks for the three-year period. In Equities, our Global, International, Emerging Markets and U.S. StrategicValue strategies significantly outperformed their benchmarks in the fourth quarter of 2012, while Growth strategies such as U.S. Thematic, and U.S. Largeand Small Cap Growth outperformed their benchmarks for the full year, and stability services such as Select U.S. Equity and Global Market Neutral beatbenchmarks across multiple time periods.Our total AUM as of December 31, 2012 were $430.0 billion, up $24.1 billion, or 5.9%, during 2012. The increase in AUM was driven by marketappreciation of $38.5 billion and $16.2 billion of net inflows in the Retail channel, partially offset by net outflows of $21.6 billion and $9.0 billion in theInstitutions and Private Client channels, respectively.Institutional AUM decreased $4.1 billion, or 1.8%, to $219.8 billion during 2012. The decrease in AUM resulted from net outflows of $21.6 billion,partially offset by market appreciation of $17.6 billion. Gross sales increased $4.0 billion, or 23.2%, from $17.3 billion in 2011 to $21.3 billion in 2012. Inaddition, redemptions and terminations decreased $14.0 billion, or 26.4%, from $52.8 billion in 2011 to $38.8 billion in 2012. The pipeline of awarded butunfunded Institutional mandates was $8.0 billion as of year-end 2012, compared with $4.3 billion as of year-end 2011. We completed nearly 400 requests forproposals during 2012 across diverse fixed income and equity services – an 18% annual increase. Fixed Income is driving our improvement in this importantbusiness, but clients increasingly ask us about our equity, alternatives and multi-asset strategies.Retail AUM increased $31.8 billion, or 28.2%, to $144.4 billion during 2012, resulting from net inflows of $16.2 billion and market appreciation of $15.5billion. Gross sales increased $25.3 billion, or 81.7%, from $31.0 billion in 2011 to record annual gross sales of $56.3 billion in 2012 as a result of strongsales in Fixed Income products and significant sales increases from all geographic regions. Our strength was particularly pronounced in Asia Ex-Japan, wherewe won 23 awards for both performance and innovation in 2012, and where we command leading local market shares by AUM in Taiwan and Hong Kong.Private Client AUM decreased $3.6 billion, or 5.2%, to $65.8 billion during 2012. The decrease in AUM was driven by net outflows of $9.0 billion, offsetby market appreciation of $5.4 billion. Gross sales decreased $3.0 billion, or 41.5%, from $7.3 billion in 2011 to $4.3 billion in 2012. During 2012, weenhanced our fully diversified investment offering to better meet client needs by introducing Strategic Equities, a new multi-style, all-cap approach to equityinvestment that captures our highest conviction ideas, and providing broader client access to alternatives through a fund-of-hedge-funds registered investmentcompany.Bernstein Research Services revenue decreased $23.7 million, or 5.4% to $413.7 million in 2012, as a result of a significant decline in market tradingvolumes, partially offset by market share gains.Our full year 2012 revenues decreased $13.2 million, or 0.5%, to $2,736.7 million in 2012. The decrease was driven by lower investment advisory base feesof $194.3 million and lower Bernstein Research Services revenue of $23.7 million, offset by investments gains in 2012 compared to losses in 2011 resultingin a positive net impact of $111.3 million, higher performance-based fees of $50.1 million and higher distribution revenues of $50.1 million. Full year 2012operating expenses decreased $424.0 million, or 14.3% to $2,534.4 million in 2012, due to the one-time long-term incentive compensation charge of $587.1million recorded in 2011, lower employee compensation and benefits expense of $78.3 million (excluding the compensation charge) and lower office and relatedexpenses of $32.8 million (excluding the real estate charges), offset by higher real estate charges of $215.8 million (discussed below in this Item 7) and higherpromotion and servicing expenses of $50.0 million.Finally, we improved our firm’s operating leverage, finishing the year on schedule in executing our global real estate consolidation plan and anticipated relatedcost savings. With this and other firm-wide rationalization efforts, we increased our adjusted operating margin by 1.8 percentage points in 2012, to 18.8%,and achieved a second-half margin of 20.4%. 35Table of Contents HoldingHolding’s principal source of income and cash flow is attributable to its investment in AllianceBernstein Units. The Holding financial statements and notesand management’s discussion and analysis of financial condition and results of operations (“MD&A”) should be read in conjunction with those ofAllianceBernstein.Results of Operations Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in thousands,except per unit amounts) Net income (loss) attributable to AllianceBernsteinUnitholders $188,916 $(174,768) $442,419 n/m n/m Weighted average equity ownership interest 37.5% 37.5% 36.7% Equity in net income (loss) attributable to AllianceBernsteinUnitholders $70,807 $(65,581) $162,217 n/m n/m Net income (loss) of Holding $51,085 $(93,268) $134,158 n/m n/m Diluted net income (loss) per Holding Unit $0.51 $(0.90) $1.32 n/m n/m Distribution per Holding Unit (1)(2) $1.23 $1.14 $1.31 7.9% (13.0)% (1)The 2012 distribution excludes the impact of AllianceBernstein’s $207.0 million non-cash real estate charges recorded in the third and fourth quartersof 2012. See the AllianceBernstein section of this Item 7 for a discussion of these charges. (2)The 2011 distribution excludes the impact of AllianceBernstein’s $587.1 million one-time, non-cash long-term incentive compensation charge. Seethe AllianceBernstein section of this Item 7 for a discussion of this charge.Holding had net income of $51.1 million in 2012 as compared to a net loss of $93.3 million in 2011. The change reflects higher net income attributable toAllianceBernstein Unitholders. Holding had a net loss of $93.3 million in 2011 as compared to net income of $134.2 million in 2010. The net loss in 2011reflects the impact of AllianceBernstein’s $587.1 million one-time, non-cash long-term incentive compensation charge.Holding’s income taxes represent a 3.5% federal tax on its partnership gross income from the active conduct of a trade or business. Holding’s partnership grossincome is derived from its interest in AllianceBernstein. Holding’s income tax is computed by multiplying certain AllianceBernstein qualifying revenues(primarily U.S. investment advisory fees and SCB LLC commissions) by Holding’s ownership interest in AllianceBernstein (adjusted for Holding Unitsowned by AllianceBernstein’s consolidated rabbi trust), multiplied by the 3.5% tax rate. Holding’s effective tax rate was 27.9% in 2012 compared to (42.2)%in 2011 and 17.3% in 2010. See Note 6 to Holding’s financial statements in Item 8 for a further description. 36Table of Contents As supplemental information, AllianceBernstein provides the performance measures “adjusted net revenue”, “adjusted operating income” and “adjustedoperating margin”, which are the principal metrics management uses in evaluating and comparing the period-to-period operating performance ofAllianceBernstein. Such measures are not based on generally accepted accounting principles (“non-GAAP measures”). The impact of these non-GAAPmeasures on Holding’s net income and diluted net income per Holding Unit are as follows: Years Ended December 31, 2012 2011 2010 (in thousands,except per unit amounts) AllianceBernstein non-GAAP adjustments, before taxes $221,530 $585,242 $79,463 Income tax effect on non-GAAP adjustments (11,573) (23,234) (2,066)AllianceBernstein non-GAAP adjustments, after taxes 209,957 562,008 77,397 Holding’s weighted average equity ownership interest in AllianceBernstein 37.5% 37.5% 36.7%Impact on Holding’s net income of AllianceBernstein non-GAAP adjustments $78,693 $210,891 $28,378 Net income (loss) - diluted, GAAP basis $51,085 $(93,268) $135,798 Impact on Holding’s net income of AllianceBernstein non-GAAP adjustments 78,693 210,891 28,378 Adjusted net income - diluted $129,778 $117,623 $164,176 Diluted net income (loss) per Holding Unit, GAAP basis $0.51 $(0.90) $1.32 Impact of AllianceBernstein non-GAAP adjustments 0.77 2.04 0.28 Adjusted diluted net income per Holding Unit $1.28 $1.14 $1.60 The impact on Holding’s net income (loss) of AllianceBernstein’s non-GAAP adjustments reflects Holding’s share (based on its ownership percentage ofAllianceBernstein over the applicable period) of AllianceBernstein’s non-GAAP adjustments to its net income (see Management Operating Metrics in thisItem 7). These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and theymay not be comparable to non-GAAP measures presented by other companies. Management uses both the GAAP and non-GAAP measures in evaluating ourfinancial performance. The non-GAAP measures alone may pose limitations because they do not include all of AllianceBernstein’s revenues and expenses.Proposed Tax LegislationSee “Risk Factors” in Item 1A.Capital Resources and LiquidityDuring the year ended December 31, 2012, net cash provided by operating activities was $99.9 million, compared to $151.4 million during thecorresponding 2011 period. The decrease was primarily due to lower cash distributions received from AllianceBernstein of $57.8 million. During the yearended December 31, 2011, net cash provided by operating activities was $151.4 million, compared to $153.6 million during the corresponding 2010 period.The decrease was primarily due to lower cash distributions received from AllianceBernstein of $3.7 million.During the years ended December 31, 2012, 2011 and 2010, net cash used in investing activities was $11.6 million, $7.2 million and $10.5 million,respectively, reflecting investments in AllianceBernstein from cash distributions paid to the AllianceBernstein consolidated rabbi trust and with proceeds fromexercises of compensatory options to buy Holding Units.During the year ended December 31, 2012, net cash used in financing activities was $88.3 million, compared to $144.2 million during the corresponding2011 period. The decrease was primarily due to lower cash distributions paid to unitholders of $57.3 million. During the year ended December 31, 2011, netcash used in financing activities was $144.2 million, compared to $143.1 million during the corresponding 2010 period. The increase was due to lowerproceeds from the exercise of compensatory options to buy Holding Units of $6.8 million, offset by lower cash distributions paid to unitholders of $5.7million.Management believes that the cash flow realized from its investment in AllianceBernstein will provide Holding with the resources to meet its financialobligations. 37Table of Contents Cash DistributionsHolding is required to distribute all of its Available Cash Flow, as defined in the Holding Partnership Agreement, to its unitholders (including the GeneralPartner). Typically in the past, Available Cash Flow has been the diluted earnings per unit for the quarter multiplied by the number of units outstanding at theend of the quarter, except when, as was the case with the compensation-related charge in the fourth quarter of 2011 and the real estate charge in the thirdquarter of 2012, the effects of these non-cash charges were eliminated. Starting in the third quarter of 2012, Available Cash Flow is the adjusted diluted netincome per unit for the quarter multiplied by the number of units outstanding at the end of the quarter. In future periods, management anticipates that AvailableCash Flow typically will be based on adjusted diluted net income per unit, unless management determines that one or more non-GAAP adjustments should notbe made with respect to the Available Cash Flow calculation. See Note 2 to Holding’s financial statements in Item 8 for a description of Available Cash Flow.Commitments and ContingenciesSee Note 7 to Holding’s financial statements in Item 8.AllianceBernsteinAssets Under ManagementAssets under management by distribution channel were as follows: As of December 31, % Change 2012 2011 2010 2012-11 2011-10 (in billions) Institutions $219.8 $223.9 $272.9 (1.8)% (18.0)%Retail 144.4 112.6 127.0 28.2 (11.4)Private Client 65.8 69.4 78.1 (5.2) (11.1)Total $430.0 $405.9 $478.0 5.9 (15.1)Assets under management by investment service were as follows: As of December 31, % Change 2012 2011 2010 2012-11 2011-10 (in billions) Equity Value: U.S. $19.0 $25.2 $37.8 (24.6)% (33.5)%Global and International 38.1 55.6 106.5 (31.5) (47.8) 57.1 80.8 144.3 (29.3) (44.0)Growth: U.S. 21.6 21.8 30.3 (1.4) (28.0)Global and International 17.8 22.4 44.0 (20.2) (49.1) 39.4 44.2 74.3 (10.9) (40.5)Total Equity 96.5 125.0 218.6 (22.8) (42.8)Fixed Income: U.S. 133.5 127.4 119.0 4.8 7.0 Global and International 122.1 90.2 87.2 35.3 3.5 255.6 217.6 206.2 17.5 5.5 Other(1): U.S. 33.1 29.6 28.7 11.7 3.2 Global and International 44.8 33.7 24.5 33.2 37.6 77.9 63.3 53.2 23.1 19.1 Total: U.S. 207.2 204.0 215.8 1.5 (5.5)Global and International 222.8 201.9 262.2 10.4 (23.0)Total $430.0 $405.9 $478.0 5.9 (15.1) (1)Includes index, structured, asset allocation services and certain other alternative investments. 38Table of Contents Changes in assets under management during 2012 and 2011 were as follows: Distribution Channel Investment Service Institutions Retail PrivateClient Total ValueEquity GrowthEquity FixedIncome Other (1) Total (in billions) Balance as of December 31,2011 $223.9 $112.6 $69.4 $405.9 $80.8 $44.2 $217.6 $63.3 $405.9 Long-term flows: Sales/new accounts 21.3 56.3 4.3 81.9 5.2 5.0 62.4 9.3 81.9 Redemptions/terminations (38.8) (33.0) (10.9) (82.7) (32.0) (14.3) (33.8) (2.6) (82.7)Cash flow/unreinvesteddividends (4.1) (7.1) (2.4) (13.6) (5.7) (1.6) (6.0) (0.3) (13.6)Net long-term (outflows)inflows (21.6) 16.2 (9.0) (14.4) (32.5) (10.9) 22.6 6.4 (14.4)Transfers (0.1) 0.1 — — — — — — — Market appreciation 17.6 15.5 5.4 38.5 8.8 6.1 15.4 8.2 38.5 Net change (4.1) 31.8 (3.6) 24.1 (23.7) (4.8) 38.0 14.6 24.1 Balance as of December31, 2012 $219.8 $144.4 $65.8 $430.0 $57.1 $39.4 $255.6 $77.9 $430.0 Distribution Channel Investment Service Institutions Retail PrivateClient Total ValueEquity GrowthEquity FixedIncome Other (1) Total (in billions) Balance as of December 31,2010 $272.9 $127.0 $78.1 $478.0 $144.3 $74.3 $206.2 $53.2 $478.0 Long-term flows: Sales/new accounts 17.3 31.0 7.3 55.6 6.5 5.2 31.4 12.5 55.6 Redemptions/terminations (52.8) (34.8) (9.5) (97.1) (43.3) (24.7) (27.8) (1.3) (97.1)Cash flow/unreinvesteddividends (9.3) (7.1) (4.6) (21.0) (13.1) (6.3) (0.4) (1.2) (21.0)Net long-term (outflows)inflows (44.8) (10.9) (6.8) (62.5) (49.9) (25.8) 3.2 10.0 (62.5)Transfers 0.1 — (0.1) — — — — — — Acquisitions 1.1 0.2 0.1 1.4 — 1.2 0.2 — 1.4 Market (depreciation)appreciation (5.4) (3.7) (1.9) (11.0) (13.6) (5.5) 8.0 0.1 (11.0)Net change (49.0) (14.4) (8.7) (72.1) (63.5) (30.1) 11.4 10.1 (72.1)Balance as of December31, 2011 $223.9 $112.6 $69.4 $405.9 $80.8 $44.2 $217.6 $63.3 $405.9 (1) Includes index, structured, asset allocation services and certain other alternative investments. 39Table of Contents Average assets under management by distribution channel and investment service were as follows: Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in billions) Distribution Channel: Institutions $218.9 $252.6 $277.1 (13.3)% (8.8)%Retail 128.2 124.0 122.8 3.4 1.0 Private Client 68.9 75.3 74.7 (8.6) 0.9 Total $416.0 $451.9 $474.6 (8.0) (4.8) Investment Service: Value Equity $69.5 $117.2 $153.5 (40.7)% (23.6)%Growth Equity 41.1 61.0 81.3 (32.6) (25.0)Fixed Income 235.2 214.0 198.9 9.9 7.6 Other(1) 70.2 59.7 40.9 17.7 46.0 Total $416.0 $451.9 $474.6 (8.0) (4.8) (1)Includes index, structured, asset allocation services and certain other alternative investments.Our Institutions AUM decreased $4.1 billion to $219.8 billion, resulting in average AUM of $218.9 billion for 2012. The $4.1 billion decline in AUMduring 2012 was primarily due to $21.6 billion of net outflows (consisting of net outflows of $31.8 billion in Value and Growth Equity services, offset by netinflows of $8.2 billion and $2.0 billion in Fixed Income services and Other services, respectively), offset by market appreciation of $17.6 billion. During2011, Institutional AUM decreased $49.0 billion to $223.9 billion, resulting in average AUM of $252.6 billion for 2011. The $49.0 billion decrease in AUMduring 2011 was primarily due to $44.8 billion of net outflows (consisting of net outflows of $54.5 billion in Value and Growth Equity services, partly offsetby net inflows of $9.7 billion in Fixed Income services and Other services) and market depreciation of $5.4 billion.Our Retail AUM increased $31.8 billion to $144.4 billion, resulting in average AUM of $128.2 billion for 2012. The $31.8 billion increase in AUM during2012 was primarily due to $16.2 billion of net inflows (consisting of net inflows of $18.5 billion and $4.2 billion in Fixed Income services and Otherservices, respectively, offset by outflows of $6.5 billion in Value and Growth Equity services) and market appreciation of $15.5 billion. During 2011, RetailAUM decreased $14.4 billion to $112.6 billion, resulting in average AUM of $124.0 billion for 2011. The $14.4 billion decrease in AUM during 2011 wasprimarily due to $10.9 billion of net outflows (consisting of net outflows of $14.2 billion in Value and Growth Equity services, offset by net inflows of $3.3billion in Fixed Income services and Other services) and market depreciation of $3.7 billion.Our Private Client AUM decreased $3.6 billion to $65.8 billion, resulting in average AUM of $68.9 billion for 2012. The $3.6 billion decrease in AUMduring 2012 was due to $9.0 billion of net outflows (consisting of net outflows of $5.2 billion in Value and Growth Equity services and $4.0 billion in FixedIncome services, offset by inflows of $0.2 billion in Other services), offset by market appreciation of $5.4 billion. During 2011, Private Client AUMdecreased $8.7 billion to $69.4 billion, resulting in average AUM of $75.3 billion. The $8.7 billion decrease in AUM during 2011 was due to $6.8 billion ofnet outflows (consisting of net outflows within all services, except Other services) and market depreciation of $1.9 billion. 40Table of Contents Absolute investment composite returns, net of fees, and relative performance compared to benchmarks for certain representative Institutional (except asotherwise indicated) Value, Growth, Blend and Fixed Income services were as follows for the years ended December 31: 2012 2011 2010 Global High Income (fixed income) Absolute return 18.4% 2.0% 17.7%Relative return (vs. 33% Barclays High Yield, 33% JPM EMBI Global and 33% JPM GBI-EM) 0.2 (0.3) 4.2 Global Fixed Income (fixed income) Absolute return 3.9 12.1 6.8 Relative return (vs. CITI WLD GV BD-USD/JPM GLBL BD ) 2.2 5.7 1.6 Intermediate Municipal Bonds (fixed income) (Private Client composite) Absolute return 3.4 7.2 2.9 Relative return (vs. Lipper Short/Int. Blended Muni Fund Avg) (0.3) 0.8 0.9 U.S. Strategic Core Plus (fixed income) Absolute return 5.9 7.1 9.5 Relative return (vs. Barclays U.S. Aggregate) 1.7 (0.7) 2.9 Emerging Market Debt (fixed income) Absolute return 20.5 6.0 14.7 Relative return (vs. JPM EMBI Global/JPM EMBI) 2.0 (2.5) 2.7 Global Plus (fixed income) Absolute return 5.2 6.2 8.3 Relative return (vs. Barclays Global Aggregate) 0.9 0.6 2.8 Emerging Markets Value Absolute return 14.7 (23.3) 15.2 Relative return (vs. MSCI EM Index) (3.5) (4.9) (3.7)Global Value Absolute return 13.9 (15.8) 6.5 Relative return (vs. MSCI World Index) (1.9) (10.3) (5.3)International Value Absolute return 12.9 (18.6) 3.4 Relative return (vs. MSCI EAFE Index) (4.4) (6.5) (4.4)U.S. Small & Mid Cap Value Absolute return 18.6 (8.1) 26.1 Relative return (vs. Russell 2500 Value Index) (0.6) (4.8) 1.3 U.S. Strategic Value Absolute return 13.3 (7.6) 11.3 Relative return (vs. Russell 1000 Value Index) (4.2) (8.0) (4.2)U.S. Small Cap Growth Absolute return 14.9 4.4 37.1 Relative return (vs. Russell 2000 Growth Index) 0.3 7.3 8.0 U.S. Large Cap Growth Absolute return 15.9 (2.3) 9.8 Relative return (vs. Russell 1000 Growth Index) 0.6 (4.9) (6.9)U.S. Strategic Growth (Private Client composite) Absolute return 15.2 (4.3) 7.4 Relative return (vs. S&P 500 Index) (0.8) (6.4) (7.7)Select U.S. Equity Absolute return 16.2 3.8 19.8 Relative return (vs. S&P 500 Index) 0.2 1.7 4.7 International Style Blend – Developed Absolute return 15.6 (17.7) 3.1 Relative return (vs. MSCI EAFE Index) (1.7) (5.6) (4.7) Our Fixed Income services generally outperformed their benchmarks in 2012. Numerous sources of uncertainty adversely affected the global economythroughout the year, but risk aversion eased in the second half of the year, due to monetary-policy actions and improving perceptions regarding sovereign-debtcrises in Europe, fiscal policies in the U.S. and growth in China. Sector and security selection were generally the biggest drivers of our outperformance. Non-government bond exposures, particularly corporate bonds, contributed to positive returns in our U.S. taxable and global multi-sector portfolios. Our U.S. and Global value services outperformed their benchmarks for the three-month period ending December 31, 2012, but mostly lagged for the full year.In contrast, our U.S. large and small cap growth services lagged somewhat in the fourth quarter, but finished ahead of their benchmarks for the full year. Weattribute this performance pattern to our services’ adherence to their core investment disciplines. Long-term value characteristics, such as inexpensive cashflows, came back into favor late in 2012 after a long period in which more short-term oriented equity markets had not rewarded these characteristics. Long-term growth characteristics, such as underappreciated growth potential, underperformed in the fourth quarter. Our core research approach has not wavered; webelieve that staying true to our investment disciplines is in our clients’ best interests over the long term. 41Table of Contents Consolidated Results of Operations Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions, except per unit amounts) Net revenues $2,736.7 $2,749.9 $2,948.6 (0.5)% (6.7)%Expenses 2,534.4 2,958.4 2,489.7 (14.3) 18.8 Operating income (loss) 202.3 (208.5) 458.9 n/m n/m Non-operating income — — 6.7 — (100.0)Income (loss) before income taxes 202.3 (208.5) 465.6 n/m n/m Income taxes 13.7 3.1 38.5 344.3 (92.0)Net income (loss) 188.6 (211.6) 427.1 n/m n/m Net income (loss) of consolidated entities attributable to non-controlling interests (0.3) (36.8) (15.3) (99.1) 140.2 Net income (loss) attributable to AllianceBernsteinUnitholders $188.9 $(174.8) $442.4 n/m n/m Diluted net income (loss) per AllianceBernstein Unit $0.67 $(0.62) $1.58 n/m n/m Distributions per AllianceBernstein Unit(1)(2) $1.36 $1.38 $1.58 (1.4) (12.7)Operating margin(3) 7.4 % n/m 16.1% (1)The 2012 distribution excludes the impact of $207.0 million of non-cash real estate charges recorded in the third and fourth quarters of 2012. (2)The 2011 distribution excludes the impact of the $587.1 million one-time, non-cash long-term incentive compensation charge. (3)Operating income excluding net (loss) income attributable to non-controlling interests as a percentage of net revenues.Net income attributable to AllianceBernstein unitholders for the year ended December 31, 2012 was $188.9 million, as compared to net loss attributable toAllianceBernstein unitholders of $174.8 million for the year ended December 31, 2011. The change was primarily due to (in millions): Higher real estate charges $(215.8) Lower base advisory fees (194.3) Lower Bernstein Research Services revenues (23.7) 2011 long-term incentive compensation charge 587.1 Lower employee compensation and benefits (excluding $587.1 million compensation charge) 78.3 Higher performance-based fees 50.1 Higher long-term incentive compensation investment gains 37.0 Seed capital investment gains compared to 2011 losses 28.2 Lower other promotion and servicing expenses 17.0 Other ( 0.2) $363.7 42Table of Contents Net loss attributable to AllianceBernstein unitholders for the year ended December 31, 2011 was $174.8 million, as compared to net income attributable toAllianceBernstein unitholders of $442.4 million for the year ended December 31, 2010. The change was primarily due to (in millions):2011 long-term incentive compensation charge $(587.1)Lower investment advisory base fees (131.3)Long-term incentive compensation investment losses compared to 2010 gains (47.4)Higher other promotion and servicing expenses (25.5)Seed money investment losses compared to 2010 gains (12.4)Higher portfolio services (9.8)Lower real estate charges 94.5 Lower employee compensation and benefits (excluding $587.1 million compensation charge) 73.6 Lower income tax expense 35.4 2011 insurance proceeds 10.7 Other (17.9) $(617.2) Real Estate ChargesSince the fourth quarter of 2008, we consistently have taken steps to reduce our cost structure, including headcount reductions, and the consolidation of officelocations, in response to declines in our AUM and fee revenues.During 2010, we performed a comprehensive review of our real estate requirements in New York in connection with our workforce reductions commencing in2008. As a result, during 2010 we decided to sub-lease over 380,000 square feet in New York (approximately 80% of this space has been sublet) and largelyconsolidate our New York-based employees into two office locations from three. We recorded pre-tax real estate charges of $101.7 million in 2010 that reflectedthe net present value of the difference between the amount of our ongoing contractual operating lease obligations for this space and our estimate of currentmarket rental rates ($76.2 million), as well as the write-off of leasehold improvements, furniture and equipment related to this space ($25.5 million). Weperiodically review the assumptions and estimates we used in recording these charges.During 2011, we recorded pre-tax real estate charges totaling $7.2 million for our office space in London, England, New York and other U.S. locations. TheLondon charge was $8.8 million, consisting of a $5.8 million payment to the party to which the lease was assigned, as well as the write-off of $3.0 million ofleasehold improvements, furniture and equipment related to the space. We also wrote off an additional $1.5 million of leasehold improvements, furniture andequipment related to the New York space and had miscellaneous charges of $0.4 million. These charges were offset by a $3.5 million credit we recorded in2011 due to changes in estimates of our 2010 charge.During the first six months of 2012, we recorded pre-tax real estate charges totaling $16.1 million, reflecting $8.8 million resulting from the abandonment ofour leased New York City Data Center office space and $7.3 million resulting from a change in estimates relating to previously recorded real estate charges.The New York City Data Center charge consisted of the net present value of the difference between the amount of ongoing contractual operating leaseobligations for this space and our estimate of current market rental rates ($7.1 million) and the write-off of leasehold improvements, furniture and equipmentrelated to this space ($1.7 million).During the third quarter of 2012, in an effort to further reduce our global real estate footprint, we completed a comprehensive review of our worldwide officelocations and began implementing a global space consolidation plan. As a result, our intention is to sub-lease approximately 510,000 square feet of officespace, over 70% of which is New York office space (in addition to the 380,000 square feet written-off in 2010), with the remainder comprised of office space inLondon, England, Melbourne, Australia and various U.S. locations. We expect that the actions we are taking to vacate and market space for sublease willresult over time in projected non-cash real estate charges of $225 million to $250 million, with the bulk of the charges having occurred in the third and fourthquarters of 2012. These charges are in addition to the earlier non-cash real estate charges for New York City office space we recorded, and they will not affectour future quarterly distributions. We ultimately expect to realize reduced annual operating expenses of $38 million to $43 million once we have successfullysubleased the vacated space. These projections are based on current market conditions and could change over time as conditions evolve. We believeimplementing our global space consolidation plan will meaningfully improve our cost structure and will play an important part in positioning our firm for astronger future.During the third quarter of 2012, we recorded pre-tax real estate charges of $168.1 million, reflecting the net present value of the difference between the amountof our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($131.8 million), as well as the write-off ofleasehold improvements, furniture and equipment related to this space ($31.3 million), and changes in estimates relating to previously recorded real estatecharges ($5.0 million). 43Table of Contents During the fourth quarter of 2012, we recorded pre-tax real estate charges of $38.9 million, reflecting the net present value of the difference between the amountof our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($32.0 million), as well as the write-off ofleasehold improvements, furniture and equipment related to this space ($8.4 million), offset by changes in estimates relating to previously recorded real estatecharges of ($1.5 million).Long-term Incentive Compensation ChargeDuring the fourth quarter of 2011, we implemented changes to our employee long-term incentive compensation award program to ensure that our compensationpractices are competitive, and to better align the costs of employee compensation and benefits with the company’s current year financial performance andprovide employees with a higher degree of certainty that they will receive the incentive compensation they are awarded. We amended all outstanding year-endlong-term incentive compensation awards of active employees (i.e., those employees who we employed as of December 31, 2011), so that employees whoterminate their employment or are terminated without cause may retain their awards, subject to compliance with certain agreements and restrictive covenants setforth in the applicable award agreement, including restrictions on competition and employee and client solicitation, and a claw-back for failing to followexisting risk management policies. Most equity replacement, sign-on or similar long-term incentive compensation awards included in separate employmentagreements or arrangements were not amended in 2011 to reflect these changes.We recognize compensation expense related to equity compensation grants in the financial statements using the fair value method. Fair value of restrictedHolding Unit awards is the closing price of a Holding Unit on the grant date; fair value of options is determined using the Black-Scholes option valuationmodel. Under the fair value method, compensatory expense is measured at the grant date based on the estimated fair value of the award and is recognized overthe required service period. Prior to the changes made to the employee long-term incentive compensation award program in the fourth quarter of 2011, anemployee’s service requirement was typically the same as the delivery dates. These changes eliminated employee service requirements but did not modifydelivery dates contained in the original award agreements.As a result of these changes, we recorded a one-time, non-cash charge of $587.1 million in the fourth quarter of 2011 for all unrecognized long-term incentivecompensation on the amended outstanding awards from prior years. In addition, we recorded 100% of the expense associated with our 2011 long-term incentivecompensation awards of $159.9 million in the fourth quarter of 2011.Awards granted in 2011 contained the provisions described above, as did awards granted in 2012, and we expect to include these provisions in long-termincentive compensation awards in future years. Accordingly, our annual incentive compensation expense will reflect 100% of the expense associated with thelong-term incentive compensation awarded in each year. This approach to expense recognition will more closely match the economic cost of awarding long-termincentive compensation to the period in which the related service is performed. Units OutstandingWe engage in open-market purchases of Holding Units to help fund anticipated obligations under our incentive compensation award program and for othercorporate purposes, and purchase Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution oflong-term incentive compensation awards. During 2012 and 2011, AllianceBernstein purchased 15.7 million and 13.5 million Holding Units for $238.0million and $220.8 million, respectively. These amounts reflect open-market purchases of 12.3 million and 11.1 million Holding Units for $182.3 millionand $192.1 million, respectively, with the remainder relating to purchases of Holding Units from employees to allow them to fulfill statutory tax withholdingrequirements at the time of distribution of long-term incentive compensation awards, offset by Holding Units purchased by employees as part of a distributionreinvestment election. 44Table of Contents Since the third quarter of 2011, we have implemented plans each quarter to repurchase Holding Units pursuant to Rule 10b5-1 under the Exchange Act. ARule 10b5-1 plan allows a company to repurchase its shares at times when it otherwise might be prevented from doing so because of self-imposed tradingblackout periods and because it possesses material non-public information. Each broker we have selected has the authority under the terms and limitationsspecified in the plan to repurchase Holding Units on our behalf in accordance with the terms of the plan. Repurchases are subject to SEC regulations as well ascertain price, market volume and timing constraints specified in the plan. The plan adopted during the fourth quarter of 2012 did not specify an aggregatelimitation and expired at the close of business on February 11, 2013. We intend to adopt additional Rule 10b5-1 plans so that we can continue to engage inopen-market purchases of Holding Units to help fund anticipated obligations under our incentive compensation award programs and for other corporatepurposes.We granted to employees and Eligible Directors 12.1 million restricted Holding Unit awards (including 2.7 million granted in June 2012 to Peter Kraus, ourChief Executive Officer (see “Employee Compensation and Benefits” in this Item 7) and 8.7 million granted in January 2012 for 2011 year-end awards)and 1.7 million restricted Holding Unit awards during 2012 and 2011, respectively. To fund these awards, we allocated previously repurchased HoldingUnits that had been held in the consolidated rabbi trust. The 2012 and 2011 long-term incentive compensation awards allowed most employees to allocate theiraward between restricted Holding Units and deferred cash. As a result, 6.5 million restricted Holding Unit awards for the December 2012 awards and 8.7million restricted Holding Unit awards for the December 2011 awards were awarded and allocated as such within the consolidated rabbi trust in January 2013and 2012, respectively. There were approximately 17.9 million and 12.0 million unallocated Holding Units remaining in the consolidated rabbi trust as ofDecember 31, 2012 and January 31, 2013, respectively. The balance as of January 31, 2013 also reflects repurchases and other activity during January 2013. Cash DistributionsAllianceBernstein is required to distribute all of its Available Cash Flow, as defined in the AllianceBernstein Partnership Agreement, to its unitholders(including the General Partner). Typically in the past, Available Cash Flow has been the diluted earnings per unit for the quarter multiplied by the number ofgeneral and limited partnership interests at the end of the quarter, except when, as was the case with the compensation-related charge in the fourth quarter of2011 and the real estate charge in the third quarter of 2012, the effects of the non-cash charges were eliminated. Starting in the third quarter of 2012, AvailableCash Flow is the adjusted diluted net income per unit for the quarter multiplied by the number of general and limited partnership interests at the end of thequarter. In future periods, management anticipates that Available Cash Flow typically will be based on adjusted diluted net income per unit, unlessmanagement determines that one or more non-GAAP adjustments should not be made with respect to the Available Cash Flow calculation. See Note 2 toAllianceBernstein’s consolidated financial statements contained in Item 8 for a description of Available Cash Flow. 45Table of Contents Management Operating MetricsWe are providing the non-GAAP measures “adjusted net revenues”, “adjusted operating income” and “adjusted operating margin” because they are theprincipal operating metrics management uses in evaluating and comparing period-to-period operating performance and we believe they are useful to investors.Management principally uses these metrics in evaluating performance because they present a clearer picture of our operating performance, and allowmanagement to see long-term trends without the distortion primarily caused by long-term incentive compensation-related mark-to-market adjustments, realestate consolidation charges and other adjustment items. Similarly, these management operating metrics help investors better understand the underlying trendsin our results and, accordingly, we believe they provide a valuable perspective for investors.These non-GAAP measures are provided in addition to, and not as substitutes for, net revenues, operating income and operating margin, and they may not becomparable to non-GAAP measures presented by other companies. Management uses both the GAAP and non-GAAP measures in evaluating our financialperformance. The non-GAAP measures alone may pose limitations because they do not include all of our revenues and expenses. Years Ended December 31, 2012 2011 2010 (in thousands) Net revenues, GAAP basis $2,736,737 $2,749,891 $2,948,557 Exclude: Long-term incentive compensation-related investment (gains) losses (16,711) 20,302 (27,053)Long-term incentive compensation-related dividends and interest (2,245) (4,364) (6,513)90% of consolidated venture capital fund investment (gains) losses (1,118) 35,778 16,527 Distribution-related payments (367,090) (302,684) (286,676)Amortization of deferred sales commissions (40,262) (37,675) (47,397)Pass-through fees and expenses (49,010) (35,103) (32,684)Adjusted net revenues $2,260,301 $2,426,145 $2,564,761 Operating income (loss), GAAP basis $202,365 $(208,469) $458,862 Exclude: Long-term incentive compensation-related investment (gains) losses (16,711) 20,302 (27,053)Long-term incentive compensation-related dividends and interest (2,245) (4,364) (6,513)Long-term incentive compensation-related mark-to-market vesting expense (credit) 14,858 (19,425) 2,791 Long-term incentive compensation-related dividends and interest expense 2,590 5,054 8,540 2011 long-term incentive compensation charge — 587,131 — Net impact of long-term incentive compensation-related items (1,508) 588,698 (22,235)Insurance proceeds — (10,691) — Real estate charges 223,038 7,235 101,698 Sub-total of non-GAAP adjustments 221,530 585,242 79,463 Less: Net (loss) income of consolidated entities attributable to non-controlling interests (315) (36,799) (15,320)Adjusted operating income $424,210 $413,572 $553,645 Adjusted operating margin 18.8% 17.0% 21.6%Adjusted operating income for the year ended December 31, 2012 increased $10.6 million, or 2.6%, from the year ended December 31, 2011, primarily as aresult of lower employee compensation expense (excluding the impact of long-term incentive compensation-related items) of $110.1 million, lower general andadministrative expenses (excluding real estate charges) of $52.0 million, higher investment gains of $37.4 million and higher performance-based fees of $32.1million, offset by lower base advisory fees of $192.4 million and lower Bernstein Research Services revenues of $23.7 million. Adjusted operating income forthe year ended December 31, 2011 decreased $140.1 million, or 25.3%, from the year ended December 31, 2010, primarily as a result of lower investmentadvisory fees of $136.2 million, higher seed money losses of $12.4 million, higher general and administrative expenses (excluding real estate charges) of$27.1 million and higher other promotion and servicing expenses of $23.9 million, partially offset by higher Bernstein Research Services revenues of $6.9million and lower employee compensation expense (excluding the impact of long-term incentive compensation-related items) of $48.0 million. 46Table of Contents Adjusted Net RevenuesAdjusted net revenues exclude investment gains and losses and dividends and interest on long-term incentive compensation-related investments, and 90% ofthe investment gains and losses of our consolidated venture capital fund attributable to non-controlling interests. In addition, adjusted net revenues offsetdistribution-related payments to third parties as well as amortization of deferred sales commissions against distribution revenues. We believe the offset ofdistribution-related payments from net revenues is useful for our investors and other users of our financial statements because such presentation appropriatelyreflects the nature of these costs as pass-through payments to third parties who perform functions on behalf of our sponsored mutual funds and/orshareholders of these funds. Amortization of deferred sales commissions is offset against net revenues because such costs, over time, essentially offsetdistribution revenues earned by the company. We also exclude additional pass-through expenses we incur (primarily through our transfer agency) that arereimbursed and recorded as fees in revenues. During 2012, we offset sub-advisory payments to third parties against performance-based fees earned on thePublic-Private Investment Program (“PPIP”) fund we managed. These fees have no impact on operating income, but they do have an impact on our operatingmargin. As such, we exclude these fees from adjusted net revenues.Adjusted Operating IncomeAdjusted operating income represents operating income on a GAAP basis excluding (1) the impact on net revenues and compensation expense of the mark-to-market gains and losses (as well as the dividends and interest) associated with employee long-term incentive compensation-related investments, (2) the 2011compensation charge, (3) real estate charges, (4) insurance proceeds, and (5) the net loss or income of consolidated entities attributable to non-controllinginterests.Prior to 2009, a large proportion of employee compensation was in the form of long-term incentive compensation awards that were notionally invested inAllianceBernstein investment services and generally vested over a period of four years. AllianceBernstein has economically hedged the exposure to marketmovements by purchasing and holding these investments on its balance sheet. The full value of the investments’ appreciation (depreciation) is recorded withininvestment gains and losses on the income statement in the current period. U.S. GAAP requires the appreciation (depreciation) in the compensation liability tobe expensed over the award vesting period in proportion to the vested amount of the award as part of compensation expense. This creates a timing differencebetween the recognition of the compensation expense and the investment gain or loss impacting operating income, which will fluctuate over the life of the awardand net to zero at the end of the multi-year vesting period. Although during periods of high market volatility these timing differences have an impact onoperating income and operating margin, over the life of the award any impact is ultimately offset. Because these plans are economically hedged, managementbelieves it is useful to reflect the offset ultimately achieved from hedging the investments’ market exposure in the calculation of adjusted operating income,adjusted operating margin and adjusted diluted net income per Holding Unit, which will produce core operating results from period to period. The non-GAAPmeasures exclude gains and losses and dividends and interest on long-term incentive compensation-related investments included in revenues and compensationexpense, thus eliminating the timing differences created by different treatment under U.S. GAAP of the market movement on the expense and the investments.In the fourth quarter of 2011, we implemented changes to our employee long-term incentive compensation award program. As a result, mark-to-marketinvestment gains or losses recognized in compensation expense will closely approximate mark-to-market investment gains and losses recognized in revenues.Real estate charges have been excluded because they are not considered part of our core operating results when comparing financial results from period to periodand to industry peers.In the third quarter of 2011, we received significant insurance proceeds from the settlement of a claim that are not considered part of our core operating results.Most of the net income or loss of consolidated entities attributable to non-controlling interests relates to the 90% limited partner interests held by third parties inour consolidated venture capital fund. We own a 10% limited partner interest in the fund. Because we are the general partner of the venture capital fund and aredeemed to have a controlling interest, U.S. GAAP requires us to consolidate the financial results of the fund. However, recognizing 100% of the gains or lossesin operating income while only retaining 10% is not reflective of our underlying financial results at the operating income level. As a result, we are excluding the90% limited partner interests we do not own from our adjusted operating income. Similarly, net income of joint ventures attributable to non-controllinginterests, although not significant, is excluded because it does not reflect the economic interest attributable to AllianceBernstein.Adjusted Operating MarginAdjusted operating margin allows us to monitor our financial performance and efficiency from period to period and to compare our performance to industrypeers without the volatility noted above in our discussion of adjusted operating income. Adjusted operating margin is derived by dividing adjusted operatingincome by adjusted net revenues. 47Table of Contents Net RevenuesThe following table summarizes the components of net revenues: Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions) Investment advisory and services fees: Institutions: Base fees $426.0 $600.2 $745.5 (29.0)% (19.5)%Performance-based fees 59.3 16.0 18.7 271.1 (14.4) 485.3 616.2 764.2 (21.2) (19.4)Retail: Base fees 702.3 652.5 639.8 7.6 2.0 Performance-based fees 2.9 — 0.1 n/m (100.0) 705.2 652.5 639.9 8.1 2.0 Private Client: Base fees 577.3 647.2 645.9 (10.8) 0.2 Performance-based fees 4.4 0.5 1.7 658.6 (66.8) 581.7 647.7 647.6 (10.2) — Total: Base fees 1,705.6 1,899.9 2,031.2 (10.2) (6.5)Performance-based fees 66.6 16.5 20.5 302.6 (19.4) 1,772.2 1,916.4 2,051.7 (7.5) (6.6)Bernstein research services 413.7 437.4 430.5 (5.4) 1.6 Distribution revenues 401.7 351.6 338.6 14.2 3.8 Dividend and interest income 21.3 21.5 22.9 (1.0) (6.1)Investment gains (losses) 29.2 (82.1) (1.4) n/m n/m Other revenues 101.8 107.6 109.8 (5.4) (2.0)Total revenues 2,739.9 2,752.4 2,952.1 (0.5) (6.8)Less: Interest expense 3.2 2.5 3.5 26.4 (28.1)Net revenues $2,736.7 $2,749.9 $2,948.6 (0.5) (6.7)Investment Advisory and Services FeesInvestment advisory and services fees are the largest component of our revenues. These fees are generally calculated as a percentage of the value of AUM as ofa specified date, or as a percentage of the value of average AUM for the applicable billing period, and vary with the type of investment service, the size ofaccount and the total amount of assets we manage for a particular client. Accordingly, fee income generally increases or decreases as AUM increase or decreaseand is therefore affected by market appreciation or depreciation, the addition of new client accounts or client contributions of additional assets to existingaccounts, withdrawals of assets from and termination of client accounts, purchases and redemptions of mutual fund shares, shifts of assets between accountsor products with different fee structures, and acquisitions. Our average basis points realized (investment advisory fees divided by average AUM) generallyapproximate 50 to 70 basis points for equity services, 25 to 45 basis points for fixed income services and 5 to 15 basis points for other services. As such, ashift of client assets from active equity services toward fixed income services and/or other services results in a decline in revenues just as a shift of assetstoward active equity services would increase revenues.We calculate AUM using established fair valuation methodologies, including market-based valuation methods and fair valuation methods. Market-basedvaluation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognizedpricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps;and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include discounted cash flow models,evaluation of assets versus liabilities or any other methodology that is validated and approved by our Valuation Committee. Fair valuation methods are usedonly where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. Investments utilizing fairvalue methods typically make up an insignificant amount of our total AUM. Market volatility has not had a significant effect on our ability to acquire marketdata and, accordingly, our ability to use market-based valuation methods.The Valuation Committee, which is composed of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments heldin client and AllianceBernstein portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply topricing and valuing investments held in these portfolios. We have also established a Pricing Group, which reports to the Valuation Committee. The ValuationCommittee has delegated to the Pricing Group responsibility for overseeing the pricing process for all investments. 48Table of Contents We sometimes charge our clients performance-based fees. In these situations, we charge a base advisory fee and are eligible to earn an additional performance-based fee or incentive allocation that is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a statedbenchmark over a specified period of time. Some performance-based fees include a high-watermark provision, which generally provides that if a client accountunderperforms relative to its performance target (whether absolute or relative to a specified benchmark), it must gain back such underperformance before wecan collect future performance-based fees. Therefore, if we fail to achieve our performance target for a particular period, we will not earn a performance-basedfee for that period and, for accounts with a high-watermark provision, our ability to earn future performance-based fees will be impaired. We are eligible toearn performance-based fees on approximately 8% of the assets we manage for institutional clients and approximately 3% of the assets we manage for privateclients (in total, approximately 4% of our company-wide AUM). A majority of our hedge fund AUM is subject to high-watermarks and a significant majorityof this AUM is below the high-watermarks. Accordingly, it is very unlikely we will earn performance-based fees on these hedge funds in 2013 on the AUMbelow high-watermarks. If the percentage of our AUM subject to performance-based fees grows, seasonality and volatility of revenue and earnings are likely tobecome more significant.Our investment advisory and services fees decreased $144.2 million, or 7.5%, in 2012, primarily due to a decrease in base fees of $194.3 million, or 10.2%,which primarily resulted from an 8.0% decrease in average AUM and a continued shift in product mix from Equities to Fixed Income and Other in ourInstitutional AUM, offset by a $50.1 million increase in performance-base fees. During 2012, we recorded a $39.6 million performance fee from PPIP ($18.0million of which is payable to third party sub-advisors). Our investment advisory and services fees decreased $135.3 million, or 6.6%, in 2011, primarilydue to a decrease of 4.8% in average AUM.Institutional investment advisory and services fees decreased $130.9 million, or 21.2%, in 2012, due to a $174.2 million, or 29.0%, decrease in base fees,partly offset by a $43.3 million increase in performance-based fees (as a result of PPIP). The decrease in base fees was primarily due to a decrease in averageAUM of 13.3% as well as a continued shift in product mix from Equities to Fixed Income. Average AUM for Equity services decreased 52.6% while averageAUM for Fixed Income and Other products increased 7.6% and 16.6%, respectively. Institutional investment advisory and services fees decreased $148.0million, or 19.4%, in 2011, primarily due to a decrease in average AUM of 8.8% as well as a shift in product mix from Equities to Fixed Income products.Average AUM for Equity services decreased 32.9% while average AUM for Fixed Income and Other services increased 7.1% and 63.2%, respectively.Retail investment advisory and services fees increased $52.7 million, or 8.1%, in 2012, due to a 3.4% increase in average AUM. The increase in fees ascompared to an increase in average AUM is primarily due to a shift in product mix towards long-term non-U.S. global fixed income mutual funds from long-term U.S. mutual funds and other Retail products and services, which generally have higher fees as compared to long-term U.S. mutual funds and other Retailproducts and services. Retail investment advisory and services fees increased $12.6 million, or 2.0%, in 2011, primarily due to a 1.0% increase in averageAUM and the impact of significant net sales of long-term non-U.S. global fixed income mutual funds, which generally have higher fees as compared to long-term U.S. mutual funds.Private Client investment advisory and services fees decreased $66.0 million, or 10.2%, in 2012, primarily as a result of a decline in base fees of $69.9million, or 10.8%, reflecting a decrease in average billable AUM of 8.5% and the impact of a shift in product mix from Equities to Other products. PrivateClient investment advisory and services fees increased by $0.1 million in 2011, primarily as a result of higher base fees of $1.3 million, reflecting an increasein average billable AUM of 1.4%, offset by $1.2 million in lower performance-based fees.Bernstein Research ServicesBernstein Research Services revenue consists principally of equity commissions received for providing equity research and brokerage-related services toinstitutional investors.Revenues from Bernstein Research Services decreased $23.7 million, or 5.4%, in 2012. The decrease in 2012 was the result of a significant decline in markettrading volumes, partially offset by market share gains. Revenues from Bernstein Research Services increased $6.9 million, or 1.6%, in 2011. The increasein 2011 was the result of higher trading commissions in Europe and Asia, partially offset by lower trading commissions in the U.S. During the fourth quarterof 2011, however, trading activity declined sharply, which adversely affected our sell-side revenues.Distribution RevenuesAllianceBernstein Investments and AllianceBernstein (Luxembourg) act as distributor and/or placing agent of company-sponsored mutual funds and receivedistribution services fees from certain of those funds as partial reimbursement of the distribution expenses they incur. Period-over-period fluctuations ofdistribution revenues are typically in-line with fluctuations of the corresponding average AUM of these mutual funds. 49Table of Contents Distribution revenues increased $50.1 million, or 14.2%, and $13.0 million, or 3.8%, in 2012 and 2011, respectively, while the corresponding average AUMof these mutual funds grew 14.6% and 8.1%, respectively. Average AUM of non B-share and non C-share mutual funds (which have lower distribution feerates than B-share and C-share mutual funds) increased 18.3% and 12.0%, respectively, while average AUM of B-share and C-share mutual funds increasedby 0.6% in 2012 and decreased by 5.9% in 2011.During 2010, the SEC proposed a rule amendment that would significantly change and restrict the ability of U.S. mutual funds to pay distribution andservicing fees (“12b-1 fees”) to financial services firms for distributing their shares. If rules are adopted as proposed, changes in existing 12b-1 feearrangements for a number of share classes offered by company-sponsored mutual funds would be required, which would reduce the net fund distributionrevenues we receive from company-sponsored mutual funds. The impact of this rule change, which we do not anticipate being material, is dependent upon thefinal rules adopted by the SEC, any phase-in or grandfathering period, and any other changes made with respect to share class distribution arrangements. Foradditional information, see “Risk Factors” in Item 1A and “Cautions Regarding Forward-Looking Statements" in this Item 7.Dividend and Interest Income and Interest ExpenseDividend and interest income consists primarily of investment income and interest earned on customer margin balances and U.S. Treasury Bills. Interestexpense principally reflects interest accrued on cash balances in customers’ brokerage accounts. Dividend and interest income, net of interest expense,decreased $0.9 million and $0.4 million, in 2012 and 2011, respectively.Investment Gains (Losses)Investment gains (losses) consist of realized and unrealized investment gains or losses on: (i) employee long-term incentive compensation-related investments,(ii) investments owned by our consolidated venture capital fund, (iii) U.S. Treasury Bills, (iv) market-making in cash equities and exchange-traded optionsand equities, (v) seed capital investments and (vi) derivatives. Investment gains (losses) also include realized gains or losses on the sale of seed capitalinvestments classified as available-for-sale securities and equity in earnings of proprietary investments in limited partnership hedge funds that we sponsor andmanage.Investment gains (losses) are as follows: Years Ended December 31, 2012 2011 2010 (in millions) Long-term incentive compensation-related investments Realized gains (losses) $1.3 $(8.3) $(12.0)Unrealized gains (losses) 15.4 (12.0) 39.1 Consolidated private equity fund investments Realized gains (losses) (17.0) (0.8) 21.2 Unrealized gains (losses) 18.2 (39.0) (39.6)Seed capital investments Realized gains (losses) (21.1) 15.8 (6.5)Unrealized gains (losses) 39.2 (25.8) 8.9 Brokerage-related investments Realized gains (losses) (4.8) (12.4) (13.4)Unrealized gains (losses) (2.0) 0.4 0.9 $29.2 $(82.1) $(1.4)Realized gains or losses on long-term incentive compensation-related investments typically occur in December of each year, as well as during the first quarter,as award tranches vest and related investments are sold to provide cash for payments to employees. The unrealized gains during 2012 and 2010 reflect thefavorable financial markets during those periods, while unrealized losses on employee long-term incentive compensation-related investments during 2011reflect unfavorable financial markets.During 2012, the publicly-traded securities held by our consolidated private equity fund incurred realized losses compared to realized gains during 2011,while the non-public investments incurred realized losses during both periods. The fund incurred unrealized mark-to-market gains relating to both its publicly-traded and non-public investments during 2012 compared to unrealized mark-to-market losses during 2011. Our consolidated private equity fund during2011 incurred slightly higher mark-to-market losses relating to privately-held securities held by the fund, offset by slightly lower mark-to-market lossesrelating to publicly-traded securities. Also, 2010 reflects gains on the sale of securities.Our seed capital investments had unrealized gains in 2012 and 2010 as compared to unrealized losses in 2011. Offsetting these gains and losses were realizedlosses in 2012 and 2010 as compared to realized gains in 2011, on our derivatives we use to hedge our seed capital investments. 50Table of Contents Other RevenuesOther revenues consist of fees earned for transfer agency services provided to company-sponsored mutual funds, fees earned for administration andrecordkeeping services provided to company-sponsored mutual funds and the general accounts of AXA and its subsidiaries, and other miscellaneousrevenues. Other revenues decreased 5.4% and 2.0% in 2012 and 2011, respectively, primarily due to lower shareholder servicing fees.ExpensesThe following table summarizes the components of expenses: Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in millions) Employee compensation and benefits: Employee compensation and benefits $1,168.6 $1,246.9 $1,320.5 (6.3)% (5.6)%Long-term incentive compensation charge — 587.1 — n/m n/m 1,168.6 1,834.0 1,320.5 (36.3) 38.9 Promotion and servicing: Distribution-related payments 367.1 302.7 286.7 21.3 5.6 Amortization of deferred sales commissions 40.3 37.7 47.4 6.9 (20.5)Other 202.2 219.2 193.8 (7.8) 13.1 609.6 559.6 527.9 8.9 6.0 General and administrative: General and administrative 508.4 533.6 516.2 (4.7) 3.4 Real estate charges 223.0 7.2 101.7 n/m (92.9) 731.4 540.8 617.9 35.2 (12.5)Interest 3.4 2.6 2.1 34.7 22.5 Amortization of intangible assets 21.4 21.4 21.3 — 0.3 Total $2,534.4 $2,958.4 $2,489.7 (14.3) 18.8 Employee Compensation and BenefitsWe had 3,318 full-time employees as of December 31, 2012 compared to 3,764 as of year-end 2011 and 4,256 as of year-end 2010. Employee compensationand benefits consist of salaries (including severance), annual short-term incentive compensation awards (cash bonuses), annual long-term incentivecompensation awards, commissions, fringe benefits and other employment costs (including recruitment, training, temporary help and meals).As a result of the changes made to our long-term incentive compensation program in 2011 (discussed earlier in this Item 7), we recorded a one-time, non-cashcharge of $587.1 million in the fourth quarter of 2011 for all unrecognized long-term incentive compensation on outstanding awards from prior years. Inaddition, we recorded 100% of the expense associated with our 2011 long-term incentive compensation awards of $159.9 million in the fourth quarter of 2011.Compensation expense as a percentage of net revenues was 42.7%, 45.3% (excluding the one-time, non-cash charge) and 44.8% for the years ended December31, 2012, 2011 and 2010, respectively. Compensation expense generally is determined on a discretionary basis and is primarily a function of our firm’sfinancial performance. Amounts are awarded to help us achieve our key compensation goals of attracting, motivating and retaining top talent, by providingawards for the past year’s performance and providing incentives for future performance, while also helping ensure that our firm’s unitholders receive anappropriate return on their investment. Senior management, with the approval of the Compensation Committee of the Board (“Compensation Committee”),confirmed that the appropriate metric to consider in determining the amount of incentive compensation is the ratio of adjusted employee compensation andbenefits expense to adjusted net revenues. Adjusted net revenues used in the adjusted compensation ratio are the same as the adjusted net revenues presented asa non-GAAP measure (discussed earlier in this Item 7), less revenues associated with acquisitions in 2010 and 2011 to implement strategic productinitiatives (applicable to 2011 adjusted compensation ratio only). Adjusted employee compensation and benefits expense is total employee compensation andbenefits expense minus other employment costs such as recruitment, training, temporary help and meals, and excludes the impact of mark-to-market vestingexpense, as well as dividends and interest expenses, associated with employee long-term incentive compensation-related investments and total compensationand certain amortization of equity-based awards of personnel related to acquisitions in 2010 and 2011 to implement strategic product initiatives (applicable to2011 adjusted compensation ratio only). Senior management, with the approval of the Compensation Committee, also established as an objective that adjustedemployee compensation and benefits expense generally should not exceed 50% of our adjusted net revenues except in unexpected or unusual circumstances. Ourratios of adjusted compensation expense as a percentage of adjusted net revenues were 49.8%, 50.3% and 49.7%, respectively, for the years ended December31, 2012, 2011 and 2010. 51Table of Contents During June 2012, Peter S. Kraus, the General Partner, AllianceBernstein and Holding entered into an agreement (the “Extended Employment Agreement”)pursuant to which Mr. Kraus will continue to serve as Chairman of the Board of the General Partner and Chief Executive Officer of the General Partner,AllianceBernstein and Holding from January 3, 2014, the date following the end of the term of his existing employment agreement, until January 2, 2019 (the“Extended Employment Term”), unless the Extended Employment Agreement is terminated in accordance with its terms. In connection with the signing ofthe Extended Employment Agreement, Mr. Kraus was granted 2,722,052 restricted Holding Units, vesting ratably over the Extended Employment Term.Under U.S. GAAP, the compensation expense for the Holding Unit award under the Extended Employment Agreement of $33.1 million (based on the $12.17grant date Holding Unit price) must be amortized on a straight-line basis over 6.5 years, beginning on the grant date. As a result, even though Mr. Kraus willnot receive any incremental cash compensation or cash distributions related to the restricted Holding Unit award pursuant to the Extended EmploymentAgreement prior to its commencement date on January 3, 2014, we incurred $2.5 million incremental compensation expense resulting from such amortizationduring the second half of 2012 and will incur $5.1 million of such expense for the full year 2013.In 2012, employee compensation and benefits expense decreased $665.4 million, or 36.3%, primarily due to the one-time compensation charge ($587.1million) in 2011, the net impact of lower adjusted net revenues and a lower adjusted compensation ratio ($87.7 million) and compensation during 2011 ofpersonnel related to acquisitions ($14.8 million), partially offset by higher long-term incentive compensation mark-to-market expense ($34.3 million). In 2011,employee compensation and benefit expense increased $513.5 million, or 38.9%, primarily due to the 2011 one-time compensation charge ($587.1 million)and compensation during 2011 of personnel related to acquisitions ($14.8 million), partially offset by the net impact of lower adjusted net revenues and ahigher adjusted compensation ratio ($60.3 million) and lower long-term incentive compensation mark-to-market expense ($22.2 million).Since 2009, all long-term incentive compensation awards to eligible employees, which typically vest ratably over four years, have been made in the form ofrestricted Holding Units or deferred cash (in 2010, deferred cash was an option available only to certain non-U.S. employees; this option was expanded tomost employees in 2011 and 2012). Prior to 2009, employees receiving long-term incentive compensation awards allocated a portion of their awards to notionalinvestments in company-sponsored investment products (primarily mutual funds). Increases in the value of the notional investments in company-sponsoredinvestment products increase the company’s compensation liability to employees, while decreases in the value of the investments decrease the company’sliability. The company generally purchased an amount of these investments equivalent to the notional investments and held them in a consolidated rabbi trustto economically hedge its exposure to valuation changes on its future obligations. Mark-to-market gains or losses on these investments are recognized ininvestment gains and losses as they occur. However, prior to the changes made to the long-term incentive compensation program in 2011, the impact ofcumulative mark-to-market gains or losses was recognized as increases or decreases in compensation expense ratably over the remaining vesting period. As aresult, there was not a direct correlation between current period long-term incentive compensation-related investment gains or losses recognized in revenues andthe amortization of cumulative mark-to-market investment gains or losses recognized in compensation expense. Although there can be significant volatilityfrom period to period as the value of these investments change, if a participant remained employed by the company over the entire vesting period of the award,mark-to-market investment gains or losses recognized in revenues would, over that vesting period, equal mark-to-market investment gains or losses recognizedin compensation expense. As a result of the 2011 changes, mark-to-market investment gains or losses recognized in compensation expense will closelyapproximate mark-to-market investment gains and losses recognized in net revenues.The investment gains and losses on long-term incentive compensation-related investments recognized in net revenues as compared to the amortization of long-term incentive compensation awards notionally invested in company-sponsored investment products are as follows: Years Ended December 31, 2012 2011 2010 (in millions) Investment gains (losses) $16.7 $(20.3) $27.1 Amortization of awards notionally invested in company-sponsored investments products: Original award — 105.0 119.7 Prior periods’ mark-to-market — 18.0 (12.0)Current period mark-to-market 14.9 (19.4) 14.8 Total 14.9 103.6 122.5 Net operating income impact $1.8 $(123.9) $(95.4) 52Table of Contents Promotion and ServicingPromotion and servicing expenses include distribution-related payments to financial intermediaries for distribution of AllianceBernstein mutual funds andamortization of deferred sales commissions paid to financial intermediaries for the sale of back-end load shares of AllianceBernstein mutual funds. Alsoincluded in this expense category are costs related to travel and entertainment, advertising and promotional materials.Promotion and servicing expenses increased $50.0 million, or 8.9%, in 2012. The increase reflects higher distribution-related payments of $64.4 million, or21.3%, higher amortization of deferred sales commissions of $2.6 million and higher marketing and advertising costs of $2.7 million, partially offset bylower travel and entertainment of $11.4 million, lower trade execution of $5.0 million and lower transfer fees of $4.5 million all due to the prior year’sincreased business activity and new product launches. Promotion and servicing expenses increased $31.7 million, or 6.0%, in 2011. The increase reflectshigher distribution-related payments of $16.0 million, or 5.6%, higher travel and entertainment of $8.1 million, higher trade and execution and clearing costsof $8.1 million and higher transfer fees of $6.3 million, all attributable to increased business activity and new product launches. These increases werepartially offset by a decrease in amortization of deferred sales commissions of $9.7 million. The increases in distribution-related payments in both 2012 and2011 were generally in line with the 14.2% and 3.8% increases in distribution revenues, respectively, as well as higher broker-related distribution costs eachyear as compared to prior year costs.General and AdministrativeGeneral and administrative expenses include technology, professional fees, occupancy, communications and similar expenses. General and administrativeexpenses as a percentage of net revenues were 26.7% (18.6% excluding real estate charges), 19.7% (19.4% excluding real estate charges) and 21.0% (17.5%excluding real estate charges) for the years ended December 31, 2012, 2011 and 2010, respectively. General and administrative expenses increased $190.6million, or 35.2%, in 2012, primarily due to higher real estate charges of $215.8 million, higher portfolio services expenses of $18.6 million (primarily due toPPIP sub-advisor payments) and higher legal expenses of $15.6 million (primarily due to our receipt of insurance proceeds of $10.7 million in 2011),partially offset by lower office and related expenses of $32.8 million (excluding real estate charges), lower technology expenses of $13.7 million and a cashreceipt of $6.5 million in 2012 relating to the finalization of a claims processing contingency originally recorded in 2006. General and administrative expensesdecreased $77.1 million, or 12.5%, in 2011, primarily due to lower real estate charges of $94.5 million, partially offset by higher portfolio services expensesof $9.8 million (including market data services and sub-advisory fees).Income TaxesAllianceBernstein, a private limited partnership, is not subject to federal or state corporate income taxes, but we are subject to the New York Cityunincorporated business tax (“UBT”). Our domestic corporate subsidiaries are subject to federal, state and local income taxes, and are generally included inthe filing of a consolidated federal income tax return. Separate state and local income tax returns are also filed. Foreign corporate subsidiaries are generallysubject to taxes in the jurisdictions where they are located.Income tax expense increased $10.6 million, or 344.3%, in 2012 compared to 2011. The increase was primarily due to higher operating income in 2012 (inlarge part due to the 2011 compensation charge offset by the 2012 real estate charges), partially offset by the UBT tax benefit recorded in the third quarter of2012 ($5.7 million). In the third quarter of 2012, application of the New York City tax law that sources various types of receipts from services performed byregistered brokers and dealers of securities and commodities for purposes of apportioning income resulted in a reduction of our rate of tax for 2012 and to therate of tax that we expect to pay in the future. As a result, we recognized a $5.7 million tax benefit in the third quarter of 2012 relating to our full year 2011 andnine months 2012 UBT.Income tax expense decreased $35.4 million, or 92.0%, in 2011 compared to 2010. Prior to the fourth quarter 2011 compensation charge of $587.1 million,our estimate of our full-year 2011 effective tax rate was 7.1%. As a result of the compensation charge, as well as the immediate recognition of the 2011 long-term incentive compensation awards, we had a fourth quarter 2011 effective tax rate of 3.8% (pre-tax loss of $540.2 million and income tax benefit of $20.3million, that resulted in a full-year 2011 pre-tax loss of $208.5 million and income tax expense of $3.1 million). The compensation charge resulted in a one-time change to the historical mix of business between AllianceBernstein, which incurs a 4.0% UBT, and its corporate subsidiaries that incur corporate levelincome taxes. In addition, the recorded tax benefit associated with the future deliveries of vested Holding Units was based on the current market value in mostjurisdictions, which was lower than the grant price of the awards included in the compensation charge. Both contributed to us incurring tax expense of $3.1million rather than a benefit at the full-year estimated effective tax rate of 7.1%.Net Income (Loss) in Consolidated Entities Attributable to Non-Controlling InterestsNet income (loss) of consolidated entities attributable to non-controlling interests consists of limited partner interests owned by other investors representing90% of the total limited partner interests in our consolidated venture capital fund. It also included the 50% interest owned by AXA and its subsidiaries in ourconsolidated joint venture in Australia through March 31, 2011, when we purchased the remaining 50% interest in the Australian joint venture for $21.4million. In 2012, we had a $0.3 million net loss of consolidated entities attributable to non-controlling interests, due primarily to a $1.2 million net investmentgain attributable to our consolidated venture capital fund (of which 90% belongs to non-controlling interests) and management fees of $1.5 million. In 2011,we had a $36.8 million net loss of consolidated entities attributable to non-controlling interests, due primarily to a $39.8 million net investment lossattributable to our consolidated venture capital fund. 53Table of Contents Capital Resources and LiquidityDuring 2012, net cash provided by operating activities was $684.0 million, compared to $578.2 million during 2011. The change was primarily due to lowernet purchases of investments of $247.5 million, primarily related to broker-dealer investments and seed capital investments, and lower broker-dealer relatednet receivables and segregated U.S. Treasury Bills of $80.4 million, partially offset by lower cash provided by net income of $103.6 million and increases infees receivable and deferred sales commissions. During 2011, net cash provided by operating activities was $578.2 million, compared with $830.1 millionduring 2010. The change was primarily due to an increase in seed investments and a decrease in accounts payable and accrued expenses.During 2012, net cash used in investing activities was $18.3 million, compared to $76.7 million during 2011. The change was primarily due to the threeacquisitions we made during 2011. In addition, our net additions to furniture, equipment and leasehold improvements decreased $19.3 million in 2012 ascompared to 2011. During 2011, net cash used in investing activities was $76.7 million, compared to $33.5 million during 2010. During 2011, we madethree acquisitions for $41.8 million compared to our 2010 acquisition for $14.3 million. In addition, our net additions to furniture, equipment and leaseholdimprovement also increased $14.8 million in 2011 as compared to 2010.During 2012, net cash used in financing activities was $682.2 million, compared to $512.2 million during 2011. The increase reflects commercial paper netpayments of $123.3 million in 2012 compared to $219.4 million of net issuances during 2011, offset by lower distributions to the General Partner andunitholders of $155.0 million as a result of lower earnings (distributions on earnings are paid one quarter in arrears) and changes in overdrafts payable of$38.4 million. During 2011, net cash used in financing activities was $512.2 million, compared to $760.6 million during 2010. The decrease reflects netissuance of commercial paper of $219.4 million in 2011 compared to net repayment of commercial paper of $24.2 million in 2010 and lower distributions tothe General Partner and unitholders of $18.6 million as a result of lower earnings (distributions on earnings are paid one quarter in arrears), offset by changesin overdrafts payable of $53.9 million.As of December 31, 2012, AllianceBernstein had $627.2 million of cash and cash equivalents, all of which is available for liquidity, but is comprisedprimarily of cash on deposit for our broker-dealers to comply with various customer clearing activities and cash held by foreign entities for which a permanentinvestment assertion for U.S. tax purposes is taken. If the cash held at our foreign subsidiaries of $305.4 million, which includes cash on deposit for ourforeign broker-dealers, was to be repatriated to the U.S., we would be required to accrue and pay U.S. income taxes on these funds, based on the unremittedamount. Our intent is to permanently reinvest these earnings outside the U.S. We currently do not anticipate a liquidity need requiring a repatriation of thesefunds to the U.S.Debt and Credit FacilitiesAs of December 31, 2012 and 2011, AllianceBernstein had $323.2 million and $444.9 million, respectively, in commercial paper outstanding with weightedaverage interest rates of approximately 0.5% and 0.2%, respectively. The commercial paper is short term in nature, and as such, recorded value is estimated toapproximate fair value. Average daily borrowings of commercial paper during 2012 and 2011 were $404.9 million and $273.6 million, respectively, withweighted average interest rates of approximately 0.4% and 0.2%, respectively.AllianceBernstein has a $1.0 billon committed, unsecured senior revolving credit facility (the “Credit Facility”) with a group of commercial banks and otherlenders, which matures on January 17, 2017. The Credit Facility provides for possible increases in the principal amount by up to an aggregate incrementalamount of $250 million, any such increase being subject to the consent of the affected lenders. The Credit Facility is available for AllianceBernstein’s andSCB LLC’s business purposes, including the support of AllianceBernstein’s $1.0 billion commercial paper program. Both AllianceBernstein and SCB LLCcan draw directly under the Credit Facility and management expects to draw on the Credit Facility from time to time. AllianceBernstein has agreed to guaranteethe obligations of SCB LLC under the Credit Facility.The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including, among other things,restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. We are in compliance with thesecovenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which,upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under suchprovisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under the Credit Facility wouldautomatically become immediately due and payable, and the lender’s commitments would automatically terminate. Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepaymentsand commitment reductions requested by us are permitted at any time without fee (other than customary breakage costs relating to the prepayment of anydrawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, whichwill be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AllianceBernstein, plus one of thefollowing indexes: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate. 54Table of ContentsAs of December 31, 2012 and 2011, we had no amounts outstanding under the Credit Facility. During 2012, we did not draw upon the Credit Facility. During2011, $40.0 million was outstanding for one day in February (with an interest rate of 1.3%) resulting in average daily borrowings of $0.1 million under theCredit Facility.In addition, SCB LLC has five uncommitted lines of credit with four financial institutions. Two of these lines of credit permit us to borrow up to an aggregateof approximately $200.0 million while three lines have no stated limit.As of December 31, 2012 and 2011, we had no uncommitted bank loans outstanding. Average daily borrowings of uncommitted bank loans during 2012 and2011 were $18.1 million and $6.4 million, respectively, with weighted average interest rates of approximately 1.3% for both years. In May 2012,AllianceBernstein was named an additional borrower under a $100.0 million SCB uncommitted line of credit. As of December 31, 2012, AllianceBernsteinhad no loans outstanding. During 2012, $5.0 million was outstanding for one day with an interest rate of 1.4%. In January 2013, AllianceBernstein wasnamed an additional borrower on a second $100.0 million SCB uncommitted line of credit.Our financial condition and access to public and private debt markets should provide adequate liquidity for our general business needs. Management believesthat cash flow from operations and the issuance of debt and AllianceBernstein Units or Holding Units will provide us with the resources necessary to meet ourfinancial obligations. See “Risk Factors” in Item 1A and “Cautions Regarding Forward-Looking Statements” in this Item 7 for a discussion of creditmarkets and our ability to renew our credit facilities at expiration. Off-Balance Sheet Arrangements and Aggregate Contractual ObligationsWe have no off-balance sheet arrangements other than the guarantees and contractual obligations that are discussed below.GuaranteesUnder various circumstances, AllianceBernstein guarantees the obligations of its consolidated subsidiaries.AllianceBernstein maintains a guarantee in connection with the $1.0 billion Credit Facility. If SCB LLC is unable to meet its obligations, AllianceBernsteinwill pay the obligations when due or on demand. In addition, AllianceBernstein maintains guarantees totaling $400 million for three of SCB LLC’suncommitted lines of credit.AllianceBernstein maintains a guarantee with a commercial bank, under which we guarantee the obligations in the ordinary course of business of SCBL. Wealso maintain three additional guarantees with other commercial banks, under which we guarantee approximately $430 million of obligations for SCBL. In theevent SCBL is unable to meet its obligations, AllianceBernstein will pay the obligations when due or on demand.We also have three smaller guarantees with a commercial bank totaling approximately $3 million, under which we guarantee certain obligations in the ordinarycourse of business of two foreign subsidiaries.We have not been required to perform under any of the above agreements and currently have no liability in connection with these agreements.Aggregate Contractual ObligationsThe following table summarizes our contractual obligations as of December 31, 2012: Payments Due by Period Total Less than1 Year 1-3 Years 3-5 Years More than5 Years (in millions) Commercial paper $323.2 $323.2 $— $— $— Operating leases, net of sublease commitments 1,511.1 117.1 223.4 223.3 947.3 Funding commitments 28.7 5.4 23.3 — — Accrued compensation and benefits 449.0 207.4 181.5 31.2 28.9 Unrecognized tax benefits 3.7 0.8 1.9 1.0 — Total $2,315.7 $653.9 $430.1 $255.5 $976.2 55Table of Contents During 2009, we entered into a subscription agreement under which we committed to invest up to $35 million, as amended in 2011, in a venture capital fundover a six-year period. As of December 31, 2012, we have funded $22.8 million of this commitment.During 2010, as general partner of the AllianceBernstein U.S. Real Estate L.P. Fund, we committed to invest $25 million in the Real Estate Fund. As ofDecember 31, 2012, we had funded $8.7 million of this commitment.During 2012, we entered into an investment agreement under which we committed to invest up to $8 million in an oil and gas fund over a three-year period. Asof December 31, 2012, we had funded $7.8 million of this commitment.Accrued compensation and benefits amounts in the table above exclude our accrued pension obligation. Offsetting our accrued compensation obligations arelong-term incentive compensation-related investments and money market investments we funded totaling $132.9 million, which are included in ourconsolidated statement of financial condition. Any amounts reflected on the consolidated statement of financial condition as payables (to broker-dealers,brokerage clients and company-sponsored mutual funds) and accounts payable and accrued expenses are excluded from the table above.We expect to make contributions to our qualified profit sharing plan of approximately $14 million in each of the next four years. We currently estimate that wewill contribute $4.0 million to the Retirement Plan during 2013.ContingenciesSee Note 13 to AllianceBernstein's consolidated financial statements in Item 8 for a discussion of our commitments and contingencies.Critical Accounting EstimatesThe preparation of the consolidated financial statements and notes to consolidated financial statements requires management to make estimates and judgmentsthat affect the reported amounts of assets, liabilities, revenues and expenses.Management believes that the critical accounting policies and estimates discussed below involve significant management judgment due to the sensitivity of themethods and assumptions used.Variable Interest EntitiesIn accordance with ASU 2009-17, Consolidations (Topic 810) – Improvements to Financial Reporting by Enterprises Involved with Variable InterestEntities, the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design, acompany’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance, and whether a company is obligated toabsorb losses or receive benefits that could potentially be significant to the entity. The standard also requires ongoing assessments of whether a company is theprimary beneficiary of a variable interest entity (“VIE”).Significant judgment is required in the determination of whether we are the primary beneficiary of a VIE. If we, together with our related party relationships,are determined to be the primary beneficiary of a VIE, the entity will be consolidated within our consolidated financial statements. In order to determine whetherwe are the primary beneficiary of a VIE, management must make significant estimates and assumptions of probable future cash flows and assignprobabilities to different cash flow scenarios. Assumptions made in such analyses include, but are not limited to, market prices of securities, market interestrates, potential credit defaults on individual securities or default rates on a portfolio of securities, gain realization, liquidity or marketability of certainsecurities, discount rates and the probability of certain other outcomes.GoodwillAs of December 31, 2012, goodwill of $3.0 billion on the consolidated statement of financial condition included $2.8 billion as a result of the BernsteinTransaction and $154 million in regard to various smaller acquisitions. We have determined that AllianceBernstein has only one reporting segment andreporting unit.We test our goodwill annually, as of September 30, for impairment. As of September 30, 2012, the impairment test indicated that goodwill was not impaired.The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as significant declines in AUM,revenues, earnings or the price of a Holding Unit.The impairment test is a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value ofAllianceBernstein, the reporting unit, with its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill isconsidered not impaired and the second step of the impairment test is not performed. However, if the carrying value of the reporting unit exceeds its fair value,the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step compares the implied fairvalue of the reporting unit to the aggregated fair values of its individual assets and liabilities to determine the amount of impairment, if any. 56Table of Contents As of September 30, 2012, AllianceBernstein estimated its fair value under both the market approach and income approach. The types of assumptions andmethodologies used under both approaches were consistent with those used in impairment tests performed in prior periods. Under the market approach, thefair value of the reporting unit was based on its unadjusted market valuation (AllianceBernstein Units outstanding multiplied by the price of a Holding Unit)and adjusted market valuations assuming a control premium and earnings multiples. The price of a publicly-traded AllianceBernstein Holding Unit serves asa reasonable starting point for valuing an AllianceBernstein Unit because each represents the same fractional interest in our underlying business. On anunadjusted basis, AllianceBernstein’s fair value per unit as of September 30, 2012 was $15.41 (the price of a Holding Unit as of that date) as compared to itscarrying value, or book value, of $14.09 per unit. Also under the market approach, we typically assume a control premium of 10% - 20% for the reportingunit, which was determined based on an analysis of control premiums for relevant recent acquisitions, as well as comparable industry earnings multiplesapplied to our current earnings forecast. A control premium was not needed in the analysis for fair value to exceed carrying value. Under the income approach,the fair value of the reporting unit was based on the present value of estimated future cash flows. Determining estimated fair value using a discounted cashflow valuation technique consists of applying business growth rate assumptions over the estimated life of the goodwill asset and then discounting the resultingexpected cash flows using an estimated weighted average cost of capital of market participants to arrive at a present value amount that approximates fair value.In our tests, our discounted expected cash flow model uses management’s current five-year business plan, which factored in current market conditions and allmaterial events that had impacted, or that we believed at the time could potentially impact, future expected cash flows and a declining annual growth ratethereafter for three years before using a terminal value growth rate. We ran multiple discounted cash flow analyses under several scenarios. We used a weightedaverage cost of equity ranging from 7% to 10% as the discount rate. We used a cost of equity rate, as opposed to a cost of capital, due to using net income inour expected cash flow model (as a result of generally distributing 100% of our earnings). The cost of debt is already factored into the net income projections.We used terminal value growth rates ranging from 2% to 4% and we used our business plan growth rates as a base case and at stressed levels approximately50% lower, as a result of current economic uncertainty and market dynamics.Management considered the results of the market approach and income approach analysis performed along with a number of other factors (including currentmarket conditions) and has determined that AllianceBernstein’s fair value exceeded its carrying value as of September 30, 2012 by approximately 9% usingthe market approach (excluding any control premium), and by more than 50% using the income approach (using the most stressed scenarios). As such, nogoodwill impairment existed and the second step of the goodwill impairment test was not required.As a result of increased economic uncertainty and current market dynamics, determining whether an impairment of the goodwill asset exists requiresmanagement to exercise significant judgment. In addition, to the extent that securities valuations are depressed for prolonged periods of time and marketconditions worsen, or if we experience significant net redemptions, our AUM, revenues, profitability and unit price may be adversely affected. Although theprice of a Holding Unit is just one factor in the calculation of fair value, if current Holding Unit price levels decline significantly, reaching the conclusion thatfair value exceeds carrying value will, over time, become more difficult. In addition, control premiums, industry earnings multiples and discount rates areimpacted by economic conditions. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and futurecash flow projections, and may result in an impairment of goodwill. Any impairment could reduce materially the recorded amount of this asset, with acorresponding charge to our earnings.Real Estate ChargesDuring 2010 and 2012, we performed comprehensive reviews of our office real estate requirements and determined to consolidate office space and sub-lease theexcess office space. As a result, we recorded real estate charges that reflect the net present value of the difference between the amount of our on-going contractuallease obligations for the vacated floors and our estimate of current market rental rates for such floors. The charges we recorded were based on currentassumptions at the time of the charges regarding sublease marketing periods, costs to prepare the properties to market, market rental rates, brokercommissions and subtenant allowances/incentives, all of which are factors largely beyond our control. If our assumptions prove to be incorrect, we may needto record additional charges or reduce previously recorded charges.Retirement PlanWe maintain a qualified, noncontributory, defined benefit retirement plan covering current and former employees who were employed by the company in theUnited States prior to October 2, 2000. Service and compensation after December 31, 2008 are not taken into account in determining participants’ retirementbenefits. The amounts recognized in the consolidated financial statements related to the retirement plan are determined from actuarial valuations. Inherent inthese valuations are assumptions, including expected return on plan assets, discount rates at which liabilities could be settled, rates of annual salary increasesand mortality rates. The assumptions are reviewed annually and may be updated to reflect the current environment. Key assumptions are described in Note16 to AllianceBernstein’s consolidated financial statements in Item 8. In accordance with U.S. generally accepted accounting principles, actual results thatdiffer from those assumed are accumulated and amortized over future periods and, therefore, affect expense recognized and liabilities recorded in futureperiods. 57Table of Contents In developing the expected long-term rate of return on plan assets of 8.0%, we considered the historical returns and future expectations for returns for each assetcategory, as well as the target asset allocation of the portfolio. The expected long-term rate of return on assets is based on weighted average expected returns foreach asset class. We assumed a target allocation weighting of 50% to 70% for equity securities, 20% to 40% for debt securities, and 0% to 10% for real estateinvestment trusts. Exposure of the total portfolio to cash equivalents on average should not exceed 5% of the portfolio’s value on a market value basis. Theplan seeks to provide a rate of return that exceeds applicable benchmarks over rolling five-year periods. The benchmark for the plan’s large cap domesticequity investment strategy is the S&P 500 Index; the small cap domestic equity investment strategy is measured against the Russell 2000 Index; theinternational equity investment strategy is measured against the MSCI EAFE Index; and the fixed income investment strategy is measured against the BarclaysAggregate Bond Index. The actual rates of return on plan assets were 12.5%, (9.3)% and 9.8% in 2012, 2011 and 2010, respectively. A 25 basis pointadjustment, up or down, in the expected long-term rate of return on plan assets would have decreased or increased the 2012 net pension expense of $0.4 millionby approximately $0.2 million.The objective of our discount rate assumption was to reflect the rate at which our pension obligations could be effectively settled. In making this determination,we considered the timing and amount of benefits that would be payable under the plan’s lump sum option. Our methodology for selecting the discount rate asof December 31, 2012 and 2011 was to construct a hypothetical bond portfolio whose cash flow from coupons and maturities match the year-by-year,projected benefit cash flow from the plan. The selection of the 4.4% and 5.1% discount rate as of December 31, 2012 and 2011, respectively, represents theMercer Human Resources (“Mercer”) Bond Model (to the nearest five basis points). The discount rate as of December 31, 2011 was used in developing the2012 net pension charge. A lower discount rate increases pension expense and the present value of benefit obligations. A 25 basis point adjustment, up ordown, in the discount rate (along with a corresponding adjustment in the assumed lump sum interest rate) would have decreased or increased the 2012 netpension expense of $0.4 million by approximately $0.1 million.Loss ContingenciesManagement continuously reviews with legal counsel the status of regulatory matters and pending or threatened litigation. We evaluate the likelihood that a losscontingency exists and record a loss contingency if it is probable and reasonably estimable as of the date of the financial statements. See Note 13 toAllianceBernstein’s consolidated financial statements in Item 8.Accounting PronouncementsSee Note 24 to AllianceBernstein’s consolidated financial statements in Item 8.Cautions Regarding Forward-Looking StatementsCertain statements provided by management in this report are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Actof 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from futureresults expressed or implied by such forward-looking statements. The most significant of these factors include, but are not limited to, the following: theperformance of financial markets, the investment performance of sponsored investment products and separately-managed accounts, general economicconditions, industry trends, future acquisitions, competitive conditions and government regulations, including changes in tax regulations and rates and themanner in which the earnings of publicly-traded partnerships are taxed. We caution readers to carefully consider such factors. Further, such forward-lookingstatements speak only as of the date on which such statements are made; we undertake no obligation to update any forward-looking statements to reflect eventsor circumstances after the date of such statements. For further information regarding these forward-looking statements and the factors that could cause actualresults to differ, see “Risk Factors” in Item 1A. Any or all of the forward-looking statements that we make in this Form 10-K, other documents we file withor furnish to the SEC, and any other public statements we issue, may turn out to be wrong. It is important to remember that other factors besides those listedin “Risk Factors” and those listed below could also adversely affect our revenues, financial condition, results of operations and business prospects.The forward-looking statements referred to in the preceding paragraph include statements regarding: •Our belief that the cash flow Holding realizes from its investment in AllianceBernstein will provide Holding with the resourcesnecessary to meet its financial obligations: Holding’s cash flow is dependent on the quarterly cash distributions it receives fromAllianceBernstein. Accordingly, Holding’s ability to meet its financial obligations is dependent on AllianceBernstein’s cash flow from itsoperations, which is subject to the performance of the capital markets and other factors beyond our control. •Our financial condition and ability to issue public and private debt providing adequate liquidity for our general business needs: Ourfinancial condition is dependent on our cash flow from operations, which is subject to the performance of the capital markets, our ability tomaintain and grow client assets under management and other factors beyond our control. Our ability to issue public and private debt on reasonableterms, as well as the market for such debt or equity, may be limited by adverse market conditions, our firm’s long-term credit ratings, ourprofitability and changes in government regulations, including tax rates and interest rates. 58Table of Contents •The possible impairment of goodwill in the future: As a result of increased economic uncertainty and current market dynamics, determiningwhether an impairment of the goodwill asset exists requires management to exercise significant judgment. In addition, to the extent that securitiesvaluations are depressed for prolonged periods of time and market conditions worsen, or if we experience significant net redemptions, our AUM,revenues, profitability and unit price may be adversely affected. Although the price of a Holding Unit is just one factor in the calculation of fairvalue, if current Holding Unit price levels decline significantly, reaching the conclusion that fair value exceeds carrying value will, over time,become more difficult. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and futurecash flow projections, and may result in an impairment of goodwill. Any impairment could reduce materially the recorded amount of this asset,with a corresponding charge to our earnings. •The outcome of litigation: Litigation is inherently unpredictable, and excessive damage awards do occur. Though we have stated that we do notexpect certain legal proceedings to have a material adverse effect on our results of operations or financial condition, any settlement or judgment withrespect to a legal proceeding could be significant, and could have such an effect. •Our anticipation that the proposed 12b-1 fee-related rule changes will not have a material effect on us: We cannot predict the impact ofthis rule change, which is dependent upon the final rules adopted by the SEC, any phase-in or grandfathering period, and any other changes madewith respect to share class distribution arrangements. •Our intention to continue to engage in open market purchases of Holding Units to help fund anticipated obligations under ourincentive compensation award program: The number of Holding Units needed in future periods to make incentive compensation awards isdependent upon various factors, some of which are beyond our control, including the fluctuation in the price of a Holding Unit (NYSE: AB). •Our determination that adjusted employee compensation expense should not exceed 50% of our adjusted net revenues: Aggregateemployee compensation reflects employee performance and competitive compensation levels. Fluctuations in our revenues and/or changes incompetitive compensation levels could result in adjusted employee compensation expense being higher than 50% of our adjusted net revenues. •The pipeline of new institutional mandates not yet funded: Before they are funded, institutional mandates do not represent legally bindingcommitments to fund and, accordingly, the possibility exists that not all mandates will be funded in the amounts and at the times currentlyanticipated, or that mandates ultimately will not be funded. •Our belief that our global space consolidation plan will be effective in meaningfully improving our cost structure and helping positionour firm for a stronger future: Any charges we record and our estimates of reduced occupancy expenses in future years are based on our currentassumptions regarding sublease marketing periods, costs to prepare the properties to market, market rental rates, broker commissions andsubtenant allowances/incentives, all of which are factors largely beyond our control. If our assumptions prove to be incorrect, we may be forced torecord an additional charge and/or our estimated occupancy cost reduction may be less than we currently project. 59Table of Contents Item 7A.Quantitative and Qualitative Disclosures about Market RiskHoldingMarket Risk, Risk Management and Derivative Financial InstrumentsHolding’s sole investment is AllianceBernstein Units. Holding did not own, nor was it a party to, any derivative financial instruments during the years endedDecember 31, 2012, 2011 and 2010.AllianceBernsteinMarket Risk, Risk Management and Derivative Financial InstrumentsAllianceBernstein’s investments consist of trading and available-for-sale investments, and other investments. Trading and available-for-sale investmentsinclude United States Treasury Bills, mutual funds, exchange-traded options and various separately-managed portfolios consisting of equity and fixed incomesecurities. Trading investments are purchased for short-term investment, principally to fund liabilities related to long-term incentive compensation plans and toseed new investment services. Although available-for-sale investments are purchased for long-term investment, the portfolio strategy considers them available-for-sale from time to time due to changes in market interest rates, equity prices and other relevant factors. Other investments include investments in hedgefunds sponsored by AllianceBernstein, our consolidated venture capital fund and other private equity investment vehicles.We enter into various futures, forwards and swaps to economically hedge our seed capital investments. In addition, we have currency forwards thateconomically hedge certain cash accounts. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives andHedging. See Note 8 to AllianceBernstein's consolidated financial statements in Item 8.Trading and Non-Trading Market Risk Sensitive InstrumentsInvestments with Interest Rate Risk—Fair ValueThe table below provides our potential exposure with respect to our fixed income investments, measured in terms of fair value, to an immediate 100 basis pointincrease in interest rates at all maturities from the levels prevailing as of December 31, 2012 and 2011. Such a fluctuation in interest rates is a hypothetical ratescenario used to calibrate potential risk and does not represent our view of future market changes. While these fair value measurements provide arepresentation of interest rate sensitivity of our investments in fixed income mutual funds and fixed income hedge funds, they are based on our exposures at aparticular point in time and may not be representative of future market results. These exposures will change as a result of ongoing changes in investments inresponse to our assessment of changing market conditions and available investment opportunities: As of December 31, 2012 2011 Fair Value Effect of +100Basis PointChange Fair Value Effect of +100Basis PointChange (in thousands) Fixed Income Investments: Trading $206,998 $(10,412) $171,691 $(8,464)Available-for-sale and other investments 6,296 (317) 6,983 (344) 60Table of Contents Investments with Equity Price Risk—Fair ValueOur investments also include investments in equity securities, mutual funds and hedge funds. The following table provides our potential exposure with respectto our equity investments, measured in terms of fair value, to an immediate 10% drop in equity prices from those prevailing as of December 31, 2012 and2011. A 10% decrease in equity prices is a hypothetical scenario used to calibrate potential risk and does not represent our view of future market changes.While these fair value measurements provide a representation of equity price sensitivity of our investments in equity securities, mutual funds and hedgefunds, they are based on our exposures at a particular point in time and may not be representative of future market results. These exposures will change as aresult of ongoing portfolio activities in response to our assessment of changing market conditions and available investment opportunities: As of December 31, 2012 2011 Fair Value Effect of -10%Equity PriceChange Fair Value Effect of -10%Equity PriceChange (in thousands) Equity Investments: Trading $268,541 $(26,854) $339,308 $(33,931)Available-for-sale and other investments 250,666 (25,067) 277,312 (27,731) 61Table of Contents Item 8.Financial Statements and Supplementary DataReport of Independent Registered Public Accounting FirmTo the General Partner and Unitholders ofAllianceBernstein Holding L.P.:In our opinion, the accompanying statements of financial condition and the related statements of income, comprehensive income, changes in partners’ capitaland cash flows present fairly, in all material respects, the financial position of AllianceBernstein Holding L.P. (“AllianceBernstein Holding”) at December 31,2012 and 2011, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2012 in conformity withaccounting principles generally accepted in the United States of America. Also in our opinion, AllianceBernstein Holding maintained, in all material respects,effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issuedby the Committee of Sponsoring Organizations of the Treadway Commission (COSO). AllianceBernstein Holding’s management is responsible for thesefinancial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control overfinancial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is toexpress opinions on these financial statements and on AllianceBernstein Holding’s internal control over financial reporting based on our integrated audits. Weconducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that weplan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effectiveinternal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made bymanagement, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining anunderstanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design andoperating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessaryin the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflectthe transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 2013 62Table of Contents AllianceBernstein Holding L.P.Statements of Financial Condition December 31, 2012 2011 (in thousands,except unit amounts) ASSETS Investment in AllianceBernstein $1,560,536 $1,627,912 Other assets 5,957 1,072 Total assets $1,566,493 $1,628,984 LIABILITIES AND PARTNERS’ CAPITAL Liabilities: Due to AllianceBernstein $6,053 $2,453 Other liabilities 358 358 Total liabilities 6,411 2,811 Commitments and contingencies (See Note 7) Partners’ capital: General Partner: 100,000 general partnership units issued and outstanding 1,369 1,416 Limited partners: 105,073,342 limited partnership units issued and outstanding 1,723,172 1,760,388 Holding Units held by AllianceBernstein to fund long-term incentive compensation plans (146,258) (121,186)Accumulated other comprehensive income (loss) (18,201) (14,445)Total partners’ capital 1,560,082 1,626,173 Total liabilities and partners’ capital $1,566,493 $1,628,984 See Accompanying Notes to Financial Statements. 63Table of Contents AllianceBernstein Holding L.P.Statements of Income Years Ended December 31, 2012 2011 2010 (in thousands,except per unit amounts) Equity in net income (loss) attributable to AllianceBernstein Unitholders $70,807 $(65,581) $162,217 Income taxes 19,722 27,687 28,059 Net income (loss) $51,085 $(93,268) $134,158 Net income (loss) per unit: Basic $0.51 $(0.90) $1.33 Diluted $0.51 $(0.90) $1.32 See Accompanying Notes to Financial Statements. 64Table of Contents AllianceBernstein Holding L.P.Statements of Comprehensive Income Years Ended December 31, 2012 2011 2010 (in thousands) Net income (loss) $51,085 $(93,268) $134,158 Other comprehensive income (loss): Foreign currency translation adjustments (453) 3,510 96 Income tax benefit (expense) 296 (531) (243)Foreign currency translation adjustments, net of tax (157) 2,979 (147)Unrealized gains on investments: Unrealized gains arising during period 516 73 257 Less: reclassification adjustments for gains (losses) included in net income 17 (13) 19 Changes in unrealized gains on investments 499 86 238 Income tax (expense) benefit (242) 62 (99)Unrealized gains on investments, net of tax 257 148 139 Changes in employee benefit related items: Amortization of transition asset (54) (53) (49)Amortization of prior service cost 40 40 (316)Recognized actuarial loss (gain) (3,792) (5,791) (3,585)Changes in employee benefit related items (3,806) (5,804) (3,950)Income tax (expense) benefit (50) 128 46 Employee benefit related items, net of tax (3,856) (5,676) (3,904)Other comprehensive income (loss) (3,756) (2,549) (3,912)Comprehensive income (loss) $47,329 $(95,817) $130,246 See Accompanying Notes to Financial Statements. 65Table of Contents AllianceBernstein Holding L.P.Statements of Changes in Partners’ Capital Years Ended December 31, 2012 2011 2010 (in thousands) General Partner’s Capital Balance, beginning of year $1,416 $1,648 $1,668 Net income (loss) 49 (88) 131 Cash distributions to unitholders (96) (144) (151)Balance, end of year 1,369 1,416 1,648 Limited Partners’ Capital Balance, beginning of year 1,760,388 1,997,642 1,927,991 Net income (loss) 51,036 (93,180) 134,027 Cash distributions to unitholders (88,252) (145,552) (151,208)Issuance of Holding Units to fund long-term incentive compensation plan awards — — 78,545 Proceeds from exercise of compensatory options to buy Holding Units — 1,478 8,287 Balance, end of year 1,723,172 1,760,388 1,997,642 Holding Units held by AllianceBernstein to fund long-term incentive compensation plans Balance, beginning of year (121,186) (200,284) (123,783)Holding Units held by AllianceBernstein to fund long-term incentive compensation plans (25,072) 79,098 (76,501)Balance, end of year (146,258) (121,186) (200,284)Accumulated Other Comprehensive Income (Loss) Balance, beginning of year (14,445) (11,896) (7,984)Unrealized gain (loss) on investments, net of tax 256 149 139 Foreign currency translation adjustment, net of tax (157) 2,979 (147)Changes in employee benefit related items, net of tax (3,855) (5,677) (3,904)Balance, end of year (18,201) (14,445) (11,896)Total Partners’ Capital $1,560,082 $1,626,173 $1,787,110 See Accompanying Notes to Financial Statements. 66Table of Contents AllianceBernstein Holding L.P.Statements of Cash Flows Years Ended December 31, 2012 2011 2010 (in thousands) Cash flows from operating activities: Net income (loss) $51,085 $(93,268) $134,158 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Equity in net (income) loss attributable to AllianceBernstein Unitholders (70,807) 65,581 (162,217)Cash distributions received from AllianceBernstein 120,950 178,757 182,410 Changes in assets and liabilities: (Increase) decrease in other assets (4,885) (1,072) 10 Increase (decrease) in due to AllianceBernstein 3,600 1,525 (556)(Decrease) in other liabilities — (100) (241)Net cash provided by operating activities 99,943 151,423 153,564 Cash flows from investing activities: Investments in AllianceBernstein from cash distributions paid to AllianceBernstein consolidatedrabbi trust (11,595) (5,727) (2,205)Investments in AllianceBernstein with proceeds from exercises of compensatory options to buyHolding Units — (1,478) (8,287)Net cash used in investing activities (11,595) (7,205) (10,492) Cash flows from financing activities: Cash distributions to unitholders (88,348) (145,696) (151,359)Proceeds from exercise of compensatory options to buy Holding Units — 1,478 8,287 Net cash used in financing activities (88,348) (144,218) (143,072) Change in cash and cash equivalents — — — Cash and cash equivalents as of beginning of the year — — — Cash and cash equivalents as of end of the year $— $— $— Cash paid: Income taxes $24,606 $28,854 $28,305 Non-cash investing activities: Issuance of Holding Units to fund long-term incentive compensation plan awards — — 78,545 See Accompanying Notes to Financial Statements. 67Table of Contents AllianceBernstein Holding L.P.Notes to Financial StatementsThe words “we” and “our” refer collectively to AllianceBernstein Holding L.P. (“Holding”) and AllianceBernstein L.P. and its subsidiaries(“AllianceBernstein”), or to their officers and employees. Similarly, the word “company” refers to both Holding and AllianceBernstein. Where thecontext requires distinguishing between Holding and AllianceBernstein, we identify which company is being discussed. Cross-references are in italics.1. Business Description and OrganizationHolding’s principal source of income and cash flow is attributable to its investment in AllianceBernstein limited partnership interests.AllianceBernstein provides research, diversified investment management and related services globally to a broad range of clients. Its principal services include: •Institutional Services—servicing its institutional clients, including unaffiliated corporate and public employee pension funds, endowment funds,domestic and foreign institutions and governments, and affiliates such as AXA and certain of its insurance company subsidiaries, by means ofseparately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and otherinvestment vehicles. •Retail Services—servicing its retail clients, primarily by means of retail mutual funds sponsored by AllianceBernstein or an affiliated company,sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financialintermediaries worldwide and other investment vehicles. •Private Client Services—servicing its private clients, including high-net-worth individuals, trusts and estates, charitable foundations,partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and otherinvestment vehicles. •Bernstein Research Services—servicing institutional investors seeking high-quality research, portfolio strategy advice and brokerage-relatedservices.AllianceBernstein also provides distribution, shareholder servicing and administrative services to the mutual funds it sponsors.AllianceBernstein’s high-quality, in-depth research is the foundation of its business. AllianceBernstein’s research disciplines include fundamental,quantitative and economic research and currency forecasting. In addition, AllianceBernstein has created several specialized research initiatives, includingresearch examining global strategic developments that can affect multiple industries and geographies.AllianceBernstein provides a broad range of investment services with expertise in: •Value equities, generally targeting stocks that are out of favor and considered undervalued; •Growth equities, generally targeting stocks with under-appreciated growth potential; •Fixed income securities, including taxable and tax-exempt securities; •Blend strategies, combining style-pure investment components with systematic rebalancing; •Passive management, including index and enhanced index strategies; •Alternative investments, including hedge funds, fund of funds, currency management strategies and private equity (e.g., direct real estateinvesting); and •Asset allocation services, including dynamic asset allocation, customized target date funds, target risk funds and other strategies tailored to helpclients meet their investment goals.AllianceBernstein provides these services using various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities),term (e.g., long-, intermediate- and short-duration debt securities), and geography (e.g., U.S., international, global and emerging markets), as well as localand regional disciplines in major markets around the world. 68Table of Contents As of December 31, 2012, AXA, société anonyme organized under the laws of France and the holding company for an international group of insurance andrelated financial services companies, through certain of its subsidiaries (“AXA and its subsidiaries”) owned approximately 1.4% of the issued andoutstanding units representing assignments of beneficial ownership of limited partnership interests in Holding (“Holding Units”).As of December 31, 2012, the ownership structure of AllianceBernstein, expressed as a percentage of general and limited partnership interests, was as follows:AXA and its subsidiaries 61.0%Holding 37.5 Unaffiliated holders 1.5 100.0%AllianceBernstein Corporation (an indirect wholly-owned subsidiary of AXA, “General Partner”) is the general partner of both Holding andAllianceBernstein. AllianceBernstein Corporation owns 100,000 general partnership units in Holding and a 1% general partnership interest inAllianceBernstein. Including both the general partnership and limited partnership interests in Holding and AllianceBernstein, AXA and its subsidiaries had anapproximate 65.5% economic interest in AllianceBernstein as of December 31, 2012.2. Summary of Significant Accounting PoliciesBasis of PresentationThe financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation ofthe financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reportingperiods. Actual results could differ from those estimates.Holding’s financial statements and notes should be read in conjunction with the consolidated financial statements and notes of AllianceBernstein.AllianceBernstein’s consolidated financial statements and notes are included in Holding’s Form 10-K.Investment in AllianceBernsteinHolding records its investment in AllianceBernstein using the equity method of accounting. Holding’s investment is increased to reflect its proportionate shareof income of AllianceBernstein and decreased to reflect its proportionate share of losses of AllianceBernstein and cash distributions made by AllianceBernsteinto its unitholders. In addition, its investment is adjusted to reflect its proportionate share of certain capital transactions of AllianceBernstein.RevisionDuring 2012, we identified an error in the classification of our cash distributions to AllianceBernstein on unallocated Holding Units held in its consolidatedrabbi trust. As such, we revised the classification of prior period amounts recorded for our cash distributions to AllianceBernstein on unallocated HoldingUnits held in its consolidated rabbi trust from due from AllianceBernstein to investments in AllianceBernstein in the statements of financial condition. Inaddition, changes in due from AllianceBernstein included in cash flows from operating activities in prior periods are now presented as additional investmentsin AllianceBernstein included in cash flows from investing activities. As of December 31, 2011, the cumulative impact of the revision on the investments inAllianceBernstein in the statement of financial condition was $7.9 million. The impact of the revision for 2011 and 2010 in the statements of cash flows was$5.7 million and $2.2 million, respectively. Management concluded that the error did not, individually or in the aggregate, result in a material misstatement ofHolding’s financial statements for any prior period.Cash DistributionsHolding is required to distribute all of its Available Cash Flow, as defined in the Amended and Restated Agreement of Limited Partnership of Holding(“Holding Partnership Agreement”), to its unitholders pro rata in accordance with their percentage interests in Holding. Available Cash Flow is defined asthe cash distributions Holding receives from AllianceBernstein minus such amounts as the General Partner determines, in its sole discretion, should beretained by Holding for use in its business or plus such amounts as the General Partner determines, in its sole discretion, should be released from previouslyretained cash flow.On February 12, 2013, the General Partner declared a distribution of $42.1 million, or $0.40 per unit, representing Available Cash Flow for the three monthsended December 31, 2012. Each general partnership unit in Holding is entitled to receive distributions equal to those received by each Holding Unit. Thedistribution is payable on March 14, 2013 to holders of record at the close of business on February 22, 2013. This distribution excludes the impact ofAllianceBernstein’s non-cash real estate charge of $38.9 million recorded in the fourth quarter of 2012. 69Table of Contents Total cash distributions per Unit paid to unitholders during 2012, 2011 and 2010 were $0.95, $1.44 and $1.51, respectively.Long-term Incentive Compensation PlansAllianceBernstein maintains several unfunded, non-qualified long-term incentive compensation plans under which awards of restricted Holding Units andoptions to buy Holding Units are granted to employees of AllianceBernstein and eligible members of the Board of Directors (“Eligible Directors”).During the fourth quarter of 2011, AllianceBernstein implemented changes to its employee long-term incentive compensation award program to ensure that itscompensation practices are competitive, and to better align the costs of employee compensation and benefits with the company’s current year financialperformance and provide employees with a higher degree of certainty that they will receive the incentive compensation they are awarded. Specifically,AllianceBernstein amended all outstanding year-end long-term incentive compensation awards of active employees, so that employees who terminate theiremployment or are terminated without cause may retain their award, subject to compliance with certain agreements and restrictive covenants set forth in theapplicable award agreement, including restrictions on competition and employee and client solicitation, and a claw-back for failing to follow existing riskmanagement policies. Most equity replacement, sign-on or similar deferred compensation awards included in separate employment agreements or arrangementswere not amended in 2011 to reflect these changes.AllianceBernstein recognizes compensation expense related to equity compensation grants in the financial statements using the fair value method. Fair value ofrestricted Holding Unit awards is the closing price of a Holding Unit on the grant date; fair value of options is determined using the Black-Scholes optionvaluation model. Under the fair value method, compensatory expense is measured at the grant date based on the estimated fair value of the award and isrecognized over the required service period. Prior to the changes made to the employee long-term incentive compensation award program in the fourth quarter of2011, an employee’s service requirement was typically the same as the delivery dates. These changes eliminated employee service requirements, but did notmodify delivery dates contained in the original award agreements.As a result of these changes, AllianceBernstein recorded a one-time, non-cash charge of $587.1 million in the fourth quarter of 2011 for all unrecognized long-term incentive compensation on the amended outstanding awards from prior years. In addition, upon approval and communication of the dollar value of the2011 awards in December 2011, AllianceBernstein recorded 100% of the expense associated with its 2011 long-term incentive compensation awards of $159.9million. In January 2012, 8.7 million restricted Holding Units held in the consolidated rabbi trust were awarded for the 2011 awards and AllianceBernsteinreclassified $130.3 million of the liability to partners’ capital as equity-based awards.Awards granted in 2012 and 2011 contained the provisions described above and we expect to include these provisions in long-term incentive compensationawards in future years. Accordingly, AllianceBernstein’s annual incentive compensation expense will reflect 100% of the expense associated with the long-termincentive compensation awarded in each year. This approach to expense recognition will more closely match the economic cost of awarding long-term incentivecompensation to the period in which the related service is performed.Grants of restricted Holding Units and options to buy Holding Units are typically awarded to Eligible Directors during the second quarter. Restricted HoldingUnits vest on the third anniversary of the grant date and the options become exercisable ratably over three years. These restricted Holding Units and optionsare not forfeitable (except if the Eligible Director is terminated for “Cause”, as that term is defined in the applicable award agreement). Due to there being noservice requirement, AllianceBernstein fully expenses these awards on each grant date.AllianceBernstein funds its restricted Holding Unit awards either by purchasing Holding Units on the open market or purchasing newly-issued Holding Unitsfrom Holding, all of which are held in a consolidated rabbi trust until they are distributed to employees upon vesting. In accordance with the AllianceBernsteinPartnership Agreement, when AllianceBernstein purchases newly-issued Holding Units from Holding, Holding is required to use the proceeds it receives fromAllianceBernstein to purchase the equivalent number of newly-issued AllianceBernstein Units, thus increasing its percentage ownership interest inAllianceBernstein. Holding Units held in the consolidated rabbi trust are corporate assets in the name of the trust and are available to the general creditors ofAllianceBernstein.During 2012 and 2011, AllianceBernstein purchased 15.7 million and 13.5 million Holding Units for $238.0 million and $220.8 million, respectively. Theseamounts reflect open-market purchases of 12.3 million and 11.1 million Holding Units for $182.3 million and $192.1 million, respectively, with theremainder relating to purchases of Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution oflong-term incentive compensation awards, offset by Holding Units purchased by employees as part of a distribution reinvestment election. 70Table of Contents Since the third quarter of 2011, AllianceBernstein has implemented plans each quarter to repurchase Holding Units pursuant to Rule 10b5-1 under theSecurities Exchange Act of 1934, as amended (“Exchange Act”). A Rule 10b5-1 plan allows a company to repurchase its shares at times when it otherwisemight be prevented from doing so because of self-imposed trading blackout periods and because it possesses material non-public information. Each brokerselected by AllianceBernstein has the authority under the terms and limitations specified in the plan to repurchase Holding Units on AllianceBernstein’s behalfin accordance with the terms of the plan. Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specifiedin the plan. The plan adopted during the fourth quarter of 2012 does not specify an aggregate limitation and expires at the close of business on February 11,2013. AllianceBernstein intends to adopt additional Rule 10b5-1 plans so that the firm can continue to engage in open-market purchases of Holding Units tohelp fund anticipated obligations under its incentive compensation award program and for other corporate purposes.AllianceBernstein granted to employees and Eligible Directors 12.1 million restricted Holding Unit awards (including 2.7 million granted in June 2012 to PeterKraus, our Chief Executive Officer, in connection with his extended employment agreement and 8.7 million granted in January 2012 for 2011 year-endawards) and 1.7 million restricted Holding Unit awards during 2012 and 2011, respectively. To fund these awards, AllianceBernstein allocated previouslyrepurchased Holding Units that had been held in AllianceBernstein’s consolidated rabbi trust. The 2012 and 2011 long-term incentive compensation awardsallowed most employees to allocate their awards between restricted Holding Units and deferred cash. As a result, 6.5 million restricted Holding Unit awardsfor the December 2012 awards and 8.7 million restricted Holding Unit awards for the December 2011 awards were awarded and allocated as such within theconsolidated rabbi trust in January 2013 and 2012, respectively. There were approximately 17.9 million and 12.0 million unallocated Holding Unitsremaining in AllianceBernstein’s consolidated rabbi trust as of December 31, 2012 and January 31, 2013, respectively. The balance as of January 31, 2013also reflects repurchases and other activity during January 2013.New Holding Units also may be issued upon exercise of options. Proceeds received by Holding upon exercise of options are used to acquire newly-issuedAllianceBernstein Units, increasing Holding’s percentage ownership interest in AllianceBernstein. As of December 31, 2012, there were 8,553,345 options tobuy Holding Units outstanding, of which 4,237,915 were exercisable.3. Net Income (Loss) Per UnitBasic net income (loss) per unit is derived by dividing net income (loss) by the basic weighted average number of units outstanding for each year. Diluted netincome (loss) per unit is derived by adjusting net income (loss) for the assumed dilutive effect of compensatory options (“Net income (loss) - diluted”) anddividing by the diluted weighted average number of units outstanding for each year. Years Ended December 31, 2012 2011 2010 (in thousands,except per unit amounts) Net income (loss) - basic $51,085 $(93,268) $134,158 Additional allocation of equity in net income (loss) attributable to AllianceBernstein resulting fromassumed dilutive effect of compensatory options — — 1,640 Net income (loss) - diluted $51,085 $(93,268) $135,798 Weighted average units outstanding - basic 101,067 103,288 101,162 Dilutive effect of compensatory options 1 — 1,639 Weighted average units outstanding - diluted 101,068 103,288 102,801 Basic net income (loss) per unit $0.51 $(0.90) $1.33 Diluted net income (loss) per unit $0.51 $(0.90) $1.32 As of December 31, 2012, 2011 and 2010, we excluded 8,438,902, 3,813,567 and 4,783,472 options, respectively, from the diluted net income (loss) perunit computation due to their anti-dilutive effect. Weighted average units outstanding do not include Holding’s proportional shares (37.5% in 2012, 37.5% in2011 and 36.7% in 2010) of the Holding Units held by AllianceBernstein in its consolidated rabbi trust.The 2012 net income per unit includes the impact of AllianceBernstein’s $223.0 million non-cash real estate charges recorded in 2012 in regard to its globalspace consolidation plan.The 2011 net loss per unit includes the impact of AllianceBernstein’s one-time, non-cash long-term incentive compensation charge of $587.1 million recordedin the fourth quarter of 2011. See further discussion above in Note 2, Long-term Incentive Compensation Plans. 71Table of Contents 4. Investment in AllianceBernsteinChanges in Holding’s investment in AllianceBernstein for the years ended December 31, 2012 and 2011 were as follows: 2012 2011 (in thousands) Investment in AllianceBernstein as of January 1, $1,627,912 $1,788,496 Equity in net income (loss) attributable to AllianceBernstein Unitholders 70,807 (65,581)Changes in accumulated other comprehensive income (loss) (3,756) (2,549)Cash distributions received from AllianceBernstein (120,950) (178,757)Additional investments in AllianceBernstein from cash distributions paid to AllianceBernstein consolidated rabbitrust 11,595 5,727 Additional investments with proceeds from exercises of compensatory options to buy Holding Units, net — 1,478 Change in Holding Units held by AllianceBernstein for long-term incentive compensation plans (25,072) 79,098 Investment in AllianceBernstein as of December 31, $1,560,536 $1,627,912 5. Units OutstandingChanges in Holding Units outstanding for the years ended December 31, 2012 and 2011 were as follows: 2012 2011 Outstanding as of January 1, 105,173,342 105,086,799 Options exercised — 86,543 Units issued — — Units forfeited — — Outstanding as of December 31, 105,173,342 105,173,342 6. Income TaxesHolding is a “grandfathered” publicly-traded partnership for federal tax purposes and, accordingly, is not subject to federal or state corporate income taxes.However, Holding is subject to the 4.0% New York City unincorporated business tax (“UBT”), net of credits for UBT paid by AllianceBernstein, and to a3.5% federal tax on partnership gross income from the active conduct of a trade or business. Holding’s partnership gross income is derived from its interest inAllianceBernstein.The principal reasons for the difference between Holding’s effective tax rates and the UBT statutory tax rate of 4.0% are as follows: Years Ended December 31, 2012 2011 2010 (in thousands) UBT statutory rate $2,832 4.0% $(2,623) 4.0% $6,489 4.0%Federal tax on partnership gross businessincome 19,722 27.9 27,687 (42.2) 28,059 17.3 Credit for UBT paid by AllianceBernstein (2,832) (4.0) 2,623 (4.0) (6,489) (4.0) Income tax expense and effective taxrate $19,722 27.9 $27,687 (42.2) $28,059 17.3 72Table of Contents Years Ended December 31, % Change 2012 2011 2010 2012-11 2011-10 (in thousands) Net income (loss) attributable to AllianceBernsteinUnitholders $188,916 $(174,768) $442,419 n/m n/m Multiplied by: weighted average equity ownership interest 37.5% 37.5% 36.7% Equity in net income (loss) attributable to AllianceBernsteinUnitholders $70,807 $(65,581) $162,217 n/m n/m AllianceBernstein qualifying revenues $1,930,154 $2,082,133 $2,173,712 (7.3)% (4.2)%Multiplied by: weighted average equity ownership interest forcalculating tax 28.7% 37.5% 36.7% Multiplied by: federal tax 3.5% 3.5% 3.5% Income taxes $19,722 $27,687 $28,059 (28.8) (1.3)Holding’s income tax is computed by multiplying certain AllianceBernstein qualifying revenues (primarily U.S. investment advisory fees and SCB LLCcommissions) by Holding’s ownership interest in AllianceBernstein, multiplied by the 3.5% tax rate. For computing the federal tax liability paid by Holdingfor 2011 and prior, Holding Units held by AllianceBernstein in its consolidated rabbi trust were treated as outstanding for purposes of calculating Holding’sownership interest in AllianceBernstein. Effective with the 2012 tax year, Holding Units in AllianceBernstein’s consolidated rabbi trust will not be treated asoutstanding for purposes of calculating Holding’s ownership interest in AllianceBernstein. This change resulted in a 28.7% weighted average ownershipinterest in 2012, as compared to a 37.5% interest in 2011. This reduction in the ownership percentage reduced Holding’s income tax expense by $6.0 millionin 2012. Although Holding incurred an equity loss on its equity method holding in AllianceBernstein during 2011, Holding had income tax expense as a resultof the income tax computation being based on certain AllianceBernstein revenues.In order to preserve Holding’s status as a “grandfathered” publicly-traded partnership for federal income tax purposes, management ensures that Holding doesnot directly or indirectly (through AllianceBernstein) enter into a substantial new line of business. If Holding were to lose its status as a “grandfathered”publicly-traded partnership, it would be subject to corporate income tax, which would reduce materially Holding’s net income and its quarterly distributions toHolding unitholders.The effect of a tax position is recognized in the financial statements only if, as of the reporting date, it is “more likely than not” to be sustained based solely onits technical merits. In making this assessment, a company must assume that the taxing authority will examine the tax position and have full knowledge of allrelevant information. Accordingly, we have no liability for unrecognized tax benefits as of December 31, 2012 and 2011. A liability for unrecognized taxbenefits, if required, would be recorded in income tax expense and affect the company’s effective tax rate.We are no longer subject to federal, state and local income tax examinations by tax authorities for all years prior to 2009. Currently, there are no examinationsin progress and to date we have not been notified of any future examinations by applicable taxing authorities.7. Commitments and ContingenciesLegal and regulatory matters described below pertain to AllianceBernstein and are included here due to their potential significance to Holding’s investment inAllianceBernstein.With respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome isprobable, and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of anegative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, ifany, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate apossible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, thelitigation is in its early stages, or when the litigation is highly complex or broad in scope. In such cases, we disclose that we are unable to predict the outcomeor estimate a possible loss or range of loss.During the first quarter of 2012, AllianceBernstein received a legal letter of claim (the “Letter of Claim”) sent on behalf of a former European pension fundclient, alleging that AllianceBernstein Limited (a wholly-owned subsidiary of AllianceBernstein organized in the U.K.) was negligent and failed to meet certainapplicable standards of care with respect to the initial investment in and management of a £500 million portfolio of U.S. mortgage-backed securities. Thealleged damages range between $177 million and $234 million, plus compound interest on an alleged $125 million of realized losses in the portfolio.AllianceBernstein believes that any losses to this client resulted from adverse developments in the U.S. housing and mortgage market that precipitated thefinancial crisis in 2008 and not any negligence or failure on its part. AllianceBernstein believes that it has strong defenses to these claims, which are set forthin AllianceBernstein’s October 12, 2012 response to the Letter of Claim, and will defend this matter vigorously. Currently, AllianceBernstein is unable toestimate a reasonably possible range of loss because the matter remains in its early stages. 73Table of Contents In addition to the Letter of Claim, AllianceBernstein is involved in various other matters, including regulatory inquiries, administrative proceedings andlitigation, some of which allege significant damages.In the opinion of AllianceBernstein’s management, an adequate accrual has been made as of December 31, 2012 to provide for any probable losses regardingany litigation matters for which it can reasonably estimate an amount of loss. It is reasonably possible that AllianceBernstein could incur additional lossespertaining to these matters, but currently it cannot estimate any such additional losses.Management, after consultation with legal counsel, currently believes that the outcome of any matter that is pending or threatened, or all of them combined,will not have a material adverse effect on our results of operations, financial condition or liquidity. However, as any inquiry, proceeding or litigation has anelement of uncertainty, management cannot determine whether further developments relating to any matter that is pending or threatened, or all of themcombined, will have a material adverse effect on our results of operations, financial condition or liquidity in any future reporting period.8. Quarterly Financial Data (Unaudited) Quarters Ended December 31 September 30 June 30 March 31 (in thousands, except per unit amounts) 2012: Equity in net income (loss) attributable to AllianceBernstein Unitholders $26,892 $(16,595) $27,803 $32,707 Net income (loss) $26,189 $(23,142) $21,339 $26,699 Basic net income (loss) per unit(1) $0.26 $(0.23) $0.21 $0.26 Diluted net income (loss) per unit(1) $0.26 $(0.23) $0.21 $0.26 Cash distributions per unit(2)(3) $0.40 $0.36 $0.21 $0.26 2011: Equity in net (loss) income attributable to AllianceBernstein Unitholders $(193,458) $34,074 $42,745 $51,058 Net income $(199,463) $27,003 $35,512 $43,680 Basic net (loss) income per unit(1) $(1.97) $0.26 $0.34 $0.42 Diluted net (loss) income per unit(1) $(1.97) $0.26 $0.34 $0.42 Cash distributions per unit(2)(4) $0.12 $0.26 $0.34 $0.42 (1)Basic and diluted net income (loss) per unit are computed independently for each of the periods presented. Accordingly, the sum of the quarterly netincome (loss) per unit amounts may not agree to the total for the year.(2)Declared and paid during the following quarter.(3)The third and fourth quarter 2012 distributions exclude the impact of AllianceBernstein’s non-cash real estate charges of $168.1 million and $38.9million, respectively.(4)The fourth quarter 2011 distribution excludes the impact of AllianceBernstein’s $587.1 million one-time, non-cash long-term incentive compensationcharge. 74Table of Contents Report of Independent Registered Public Accounting FirmTo the General Partner and Unitholders ofAllianceBernstein L.P.:In our opinion, the accompanying consolidated statements of financial condition and the related consolidated statements of income, comprehensive income,changes in partners’ capital and cash flows present fairly, in all material respects, the financial position of AllianceBernstein L.P. and its subsidiaries(“AllianceBernstein”) at December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period endedDecember 31, 2012 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, AllianceBernsteinmaintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in InternalControl-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). AllianceBernstein’smanagement is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing underItem 9A. Our responsibility is to express opinions on these financial statements and on AllianceBernstein’s internal control over financial reporting based onour integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatementand whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements includedexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used andsignificant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reportingincluded obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as weconsidered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control overfinancial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflectthe transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 2013 75Table of Contents AllianceBernstein L.P. and SubsidiariesConsolidated Statements of Financial Condition December 31, 2012 2011 (in thousands,except unit amounts) ASSETS Cash and cash equivalents $627,182 $638,681 Cash and securities segregated, at fair value (cost $1,551,177 and $1,279,779) 1,551,326 1,279,855 Receivables, net: Brokers and dealers 408,037 291,276 Brokerage clients 942,034 782,697 Fees 265,685 265,248 Investments: Long-term incentive compensation-related 122,977 176,370 Other 609,357 618,924 Furniture, equipment and leasehold improvements, net 196,125 273,104 Goodwill 2,954,327 2,954,327 Intangible assets, net 169,208 190,000 Deferred sales commissions, net 95,430 59,999 Other assets 173,362 177,908 Total assets $8,115,050 $7,708,389 LIABILITIES AND CAPITAL Liabilities: Payables: Brokers and dealers $220,736 $279,655 Securities sold not yet purchased 63,838 39,307 Brokerage clients 2,563,061 1,895,972 AllianceBernstein mutual funds 156,679 122,151 Accounts payable and accrued expenses 499,076 362,570 Accrued compensation and benefits 485,229 534,344 Debt 323,163 444,903 Total liabilities 4,311,782 3,678,902 Commitments and contingencies (See Note 13) Capital: General Partner 41,213 42,632 Limited partners: 277,600,901 and 277,847,588 units issued and outstanding 4,165,461 4,306,760 Capital contributions receivable from General Partner (8,441) (12,135)Holding Units held for long-term incentive compensation plans (389,941) (323,382)Accumulated other comprehensive income (loss) (48,526) (38,413)Partners’ capital attributable to AllianceBernstein Unitholders 3,759,766 3,975,462 Non-controlling interests in consolidated entities 43,502 54,025 Total capital 3,803,268 4,029,487 Total liabilities and capital $8,115,050 $7,708,389 See Accompanying Notes to Consolidated Financial Statements. 76Table of Contents AllianceBernstein L.P. and SubsidiariesConsolidated Statements of Income Years Ended December 31, 2012 2011 2010 (in thousands,except per unit amounts) Revenues: Investment advisory and services fees $1,772,257 $1,916,419 $2,051,692 Bernstein research services 413,707 437,414 430,521 Distribution revenues 401,706 351,621 338,597 Dividend and interest income 21,286 21,499 22,902 Investment gains (losses) 29,202 (82,081) (1,410)Other revenues 101,801 107,569 109,803 Total revenues 2,739,959 2,752,441 2,952,105 Less: Interest expense 3,222 2,550 3,548 Net revenues 2,736,737 2,749,891 2,948,557 Expenses: Employee compensation and benefits: Employee compensation and benefits 1,168,645 1,246,898 1,320,495 Long-term incentive compensation charge — 587,131 — Promotion and servicing: Distribution-related payments 367,090 302,684 286,676 Amortization of deferred sales commissions 40,262 37,675 47,397 Other 202,191 219,197 193,822 General and administrative: General and administrative 508,364 533,578 516,185 Real estate charges 223,038 7,235 101,698 Interest on borrowings 3,429 2,545 2,078 Amortization of intangible assets 21,353 21,417 21,344 Total expenses 2,534,372 2,958,360 2,489,695 Operating income (loss) 202,365 (208,469) 458,862 Non-operating income — — 6,760 Income (loss) before income taxes 202,365 (208,469) 465,622 Income tax expense 13,764 3,098 38,523 Net income (loss) 188,601 (211,567) 427,099 Net (loss) income of consolidated entities attributable to non-controlling interests (315) (36,799) (15,320) Net income (loss) attributable to AllianceBernstein Unitholders $188,916 $(174,768) $442,419 Net income (loss) per AllianceBernstein Unit: Basic $0.67 $(0.62) $1.59 Diluted $0.67 $(0.62) $1.58 See Accompanying Notes to Consolidated Financial Statements. 77Table of Contents AllianceBernstein L.P. and SubsidiariesConsolidated Statements of Comprehensive Income Years Ended December 31, 2012 2011 2010 (in thousands) Net income (loss) $188,601 $(211,567) $427,099 Other comprehensive income (loss): Foreign currency translation adjustments (1,253) 1,802 3,470 Income tax benefit (expense) 796 (1,405) (510)Foreign currency translation adjustments, net of tax (457) 397 2,960 Unrealized gains on investments: Unrealized gains arising during period 1,375 225 751 Less: reclassification adjustment for gains (losses) included in net income 47 (34) 47 Changes in unrealized gains on investments 1,328 259 704 Income tax (expense) benefit (780) 302 (247)Unrealized gains on investments, net of tax 548 561 457 Changes in employee benefit related items: Amortization of transition asset (143) (143) (143)Amortization of prior service cost 107 107 (845)Recognized actuarial loss (gain) (10,074) (15,408) (9,213)Changes in employee benefit related items (10,110) (15,444) (10,201)Income tax (expense) benefit (134) 340 112 Employee benefit related items, net of tax (10,244) (15,104) (10,089)Other comprehensive income (loss) (10,153) (14,146) (6,672)Less: Comprehensive (loss) income in consolidated entities attributable to non-controlling interests (354) (37,316) (12,053)Comprehensive income (loss) attributable to AllianceBernstein Unitholders $178,802 $(188,397) $432,480 See Accompanying Notes to Consolidated Financial Statements. 78Table of Contents AllianceBernstein L.P. and SubsidiariesConsolidated Statements of Changes in Partners’ Capital Years Ended December 31, 2012 2011 2010 (in thousands) General Partner’s Capital Balance, beginning of year $42,632 $48,986 $48,671 Net income (loss) 1,889 (1,748) 4,424 Cash distributions to General Partner (3,226) (4,775) (4,978)Long-term incentive compensation plans activity (82) 132 954 Retirement of AllianceBernstein Units — — (85)Purchase of Australian joint venture non-controlled interest — 37 — Balance, end of year 41,213 42,632 48,986 Limited Partners' Capital Balance, beginning of year 4,306,760 4,905,037 4,862,158 Net income (loss) 187,027 (173,020) 437,995 Cash distributions to unitholders (318,208) (471,691) (490,118)Long-term incentive compensation plans activity (6,923) 49,290 103,438 Retirement of AllianceBernstein Units (3,195) (6,522) (8,436)Purchase of Australian joint venture non-controlled interest — 3,666 — Balance, end of year 4,165,461 4,306,760 4,905,037 Capital Contributions Receivable Balance, beginning of year (12,135) (15,973) (19,664)Capital contributions from General Partner 4,440 4,793 4,879 Compensation plan accrual (746) (955) (1,188)Balance, end of year (8,441) (12,135) (15,973)Holding Units held for Long-term Incentive Compensation Plans Balance, beginning of year (323,382) (535,410) (338,941)Purchases of Holding Units to fund long-term compensation plans, net (238,015) (220,813) (226,370)Reclassification from liability-based awards 130,281 — — Issuance of Holding Units to fund long-term incentive compensation plan awards, net of forfeitures — — (78,506)Amortization of long-term incentive compensation awards 20,661 437,743 113,548 Re-valuation of Holding Units held in rabbi trust 20,514 (4,902) (5,141)Balance, end of year (389,941) (323,382) (535,410)Accumulated Other Comprehensive Income (Loss) Balance, beginning of year (38,413) (31,801) (21,862)Unrealized gain (loss) on investments, net of tax 548 528 348 Foreign currency translation adjustment, net of tax (418) 7,964 (199)Changes in employee benefit related items, net of tax (10,243) (15,104) (10,088)Balance, end of year (48,526) (38,413) (31,801)Total Partners' Capital attributable to AllianceBernstein Unitholders 3,759,766 3,975,462 4,370,839 Non-controlling Interests in Consolidated Entities Balance, beginning of year 54,025 124,517 171,593 Net (loss) income (315) (36,799) (15,320)Unrealized gain (loss) on investments — 33 108 Foreign currency translation adjustment (39) (550) 3,159 Acquisitions (1) (32,103) — Distributions to non-controlling interests of our consolidated venture capital fund activities (10,168) (1,073) (35,023)Balance, end of year 43,502 54,025 124,517 Total Capital $3,803,268 $4,029,487 $4,495,356 See Accompanying Notes to Consolidated Financial Statements. 79Table of Contents AllianceBernstein L.P. and SubsidiariesConsolidated Statements of Cash Flows Years Ended December 31, 2012 2011 2010 (in thousands) Cash flows from operating activities: Net income (loss) $188,601 $(211,567) $427,099 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Amortization of deferred sales commissions 40,262 37,675 47,397 Amortization of non-cash long-term incentive compensation 21,830 474,103 122,612 Depreciation and other amortization 76,257 83,489 81,697 Unrealized (gains) losses on long-term incentive compensation-related investments (15,395) 12,037 (39,094)Unrealized (gains) losses on consolidated venture capital fund (18,233) 38,974 39,534 Unrealized (gains) losses on other investments (40,541) 23,535 (10,414)Real estate asset write-off charges 41,450 4,639 25,521 Other, net 1,552 5,069 3,722 Changes in assets and liabilities: (Increase) in segregated cash and securities (271,471) (169,964) (124,560)(Increase) decrease in receivables (226,553) 1,164 (399,549)Decrease (increase) in investments 136,901 (110,600) 24,062 (Increase) in deferred sales commissions (75,693) (21,518) (33,366)Decrease (increase) in other assets 4,363 (26,048) 26,223 Increase in payables 613,345 284,680 543,638 Increase (decrease) in accounts payable and accrued expenses 137,898 (26,343) 86,567 Increase in accrued compensation and benefits 69,406 178,870 9,045 Net cash provided by operating activities 683,979 578,195 830,134 Cash flows from investing activities: Purchases of investments (108) (56) (73)Proceeds from sales of investments 780 3,507 4,349 Purchases of furniture, equipment and leasehold improvements (21,650) (39,590) (25,302)Proceeds from sales of furniture, equipment and leasehold improvements 2,636 1,251 1,801 Purchase of businesses, net of cash acquired — (41,835) (14,298)Net cash used in investing activities (18,342) (76,723) (33,523) Cash flows from financing activities: (Repayment) issuance of commercial paper, net (123,250) 219,363 (24,247)(Decrease) increase in overdrafts payable (244) (38,640) 15,278 Distributions to General Partner and unitholders (321,434) (476,466) (495,096)Distributions to non-controlling interests in consolidated entities (10,168) (1,073) (35,023)Capital contributions from General Partner 4,440 4,793 4,879 Additional investments by Holding with proceeds from exercise of compensatory options to buyHolding Units — 1,478 8,287 Additional investments by Holding from distributions paid to AllianceBernstein consolidated rabbitrust 11,595 5,727 2,205 Purchases of Holding Units to fund long-term incentive compensation plan awards, net (238,015) (220,813) (226,370)Purchases of AllianceBernstein Units (3,195) (6,522) (8,521)Debt issuance costs (1,933) (69) (1,932)Other (31) (26) (51)Net cash used in financing activities (682,235) (512,248) (760,591)Effect of exchange rate changes on cash and cash equivalents 5,099 (734) (45)Net (decrease) increase in cash and cash equivalents (11,499) (11,510) 35,975 Cash and cash equivalents as of beginning of the period 638,681 650,191 614,216 Cash and cash equivalents as of end of the period $627,182 $638,681 $650,191 Cash paid: Interest paid $4,809 $3,001 $3,721 Income taxes paid 10,063 29,477 43,072 Non-cash investing activities: Fair value of assets acquired — 30,368 49,041 Fair value of liabilities assumed — (4,999) (34,743) See Accompanying Notes to Consolidated Financial Statements. 80Table of Contents AllianceBernstein L.P. and SubsidiariesNotes to Consolidated Financial StatementsThe words “we” and “our” refer collectively to AllianceBernstein L.P. and its subsidiaries (“AllianceBernstein”), or to their officers and employees.Similarly, the word “company” refers to AllianceBernstein. Cross-references are in italics.1. Business Description and OrganizationWe provide research, diversified investment management and related services globally to a broad range of clients. Our principal services include: •Institutional Services—servicing our institutional clients, including unaffiliated corporate and public employee pension funds, endowment funds,domestic and foreign institutions and governments, and affiliates such as AXA and certain of its insurance company subsidiaries, by means ofseparately-managed accounts, sub-advisory relationships, structured products, collective investment trusts, mutual funds, hedge funds and otherinvestment vehicles. •Retail Services—servicing our retail clients, primarily by means of retail mutual funds sponsored by AllianceBernstein or an affiliated company,sub-advisory relationships with mutual funds sponsored by third parties, separately-managed account programs sponsored by financialintermediaries worldwide and other investment vehicles. •Private Client Services—servicing our private clients, including high-net-worth individuals, trusts and estates, charitable foundations,partnerships, private and family corporations, and other entities, by means of separately-managed accounts, hedge funds, mutual funds and otherinvestment vehicles. •Bernstein Research Services—servicing institutional investors seeking high-quality research, portfolio strategy advice and brokerage-relatedservices.We also provide distribution, shareholder servicing and administrative services to the mutual funds we sponsor.Our high-quality, in-depth research is the foundation of our business. Our research disciplines include fundamental, quantitative and economic research andcurrency forecasting. In addition, we have created several specialized research initiatives, including research examining global strategic developments that canaffect multiple industries and geographies.We provide a broad range of investment services with expertise in: •Value equities, generally targeting stocks that are out of favor and considered undervalued; •Growth equities, generally targeting stocks with under-appreciated growth potential; •Fixed income securities, including taxable and tax-exempt securities; •Blend strategies, combining style-pure investment components with systematic rebalancing; •Passive management, including index and enhanced index strategies; •Alternative investments, including hedge funds, fund of funds, currency management strategies and private equity (e.g., direct real estateinvesting); and •Asset allocation services, including dynamic asset allocation, customized target date funds, target risk funds and other strategies tailored to helpclients meet their investment goals.We provide these services using various investment disciplines, including market capitalization (e.g., large-, mid- and small-cap equities), term (e.g., long-,intermediate- and short-duration debt securities), and geography (e.g., U.S., international, global and emerging markets), as well as local and regionaldisciplines in major markets around the world.As of December 31, 2012, AXA, société anonyme organized under the laws of France and the holding company for an international group of insurance andrelated financial services companies, through certain of its subsidiaries (“AXA and its subsidiaries”) owned approximately 1.4% of the issued andoutstanding units representing assignments of beneficial ownership of limited partnership interests in AllianceBernstein Holding L.P. (“Holding Units”). 81Table of Contents As of December 31, 2012, the ownership structure of AllianceBernstein, expressed as a percentage of general and limited partnership interests, was as follows:AXA and its subsidiaries 61.0%Holding 37.5 Unaffiliated holders 1.5 100.0%AllianceBernstein Corporation (an indirect wholly-owned subsidiary of AXA, “General Partner”) is the general partner of both AllianceBernstein HoldingL.P. (“Holding”) and AllianceBernstein. AllianceBernstein Corporation owns 100,000 general partnership units in Holding and a 1% general partnershipinterest in AllianceBernstein. Including both the general partnership and limited partnership interests in Holding and AllianceBernstein, AXA and itssubsidiaries had an approximate 65.5% economic interest in AllianceBernstein as of December 31, 2012.2. Summary of Significant Accounting PoliciesBasis of PresentationThe consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. Thepreparation of the consolidated financial statements requires management to make certain estimates and assumptions that affect the reported amounts of assetsand liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues andexpenses during the reporting periods. Actual results could differ from those estimates.Principles of ConsolidationThe consolidated financial statements include AllianceBernstein and its majority-owned and/or controlled subsidiaries. All significant inter-companytransactions and balances among the consolidated entities have been eliminated.Recently Adopted Accounting PronouncementsIn May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement.The changes to the existing guidance included how and when the valuation premise of highest and best use applies, the application of premiums anddiscounts, as well as new required disclosures (included in Note 9). We adopted this standard on January 1, 2012 and there was no material impact on ourconsolidated financial statements.In June 2011, the FASB issued ASU No. 2011-05, Presentation of Comprehensive Income. This standard eliminated the option to report othercomprehensive income and its components in the statement of changes in equity. An entity can elect to present items of net income and other comprehensiveincome in one continuous statement or in two separate, but consecutive statements. This standard did not change the items that constitute net income and othercomprehensive income, when an item of other comprehensive income must be reclassified to net income or the earnings per unit computation (which willcontinue to be based on net income). We adopted this standard on January 1, 2012 utilizing the two statement approach and there was no material impact onour consolidated financial statements.In September 2011, the FASB issued ASU No. 2011-08, Testing Goodwill for Impairment. The revised standard was intended to reduce the cost andcomplexity of the annual goodwill impairment test by providing entities an option to perform a “qualitative” assessment to determine whether furtherimpairment testing is necessary. We adopted this standard on January 1, 2012 and there was no material impact on our consolidated financial statements.Reclassifications and RevisionWe reclassified prior period Private Client commissions representing payments to third parties, from employee compensation and benefits expense in theconsolidated statements of income to other promotion and servicing expense to conform to the current year’s presentation. In addition, unrealized gains (losses)on other investments, previously included in other adjustments to reconcile net income to net cash provided by operating activities in the consolidatedstatements of cash flows, is currently shown separately.During 2012, we identified an error in the classification of Holding’s cash distributions to us on unallocated Holding Units held in our consolidated rabbitrust. As such, we revised the classification of prior period amounts recorded for Holding’s cash distributions to us on unallocated Holding Units held in ourconsolidated rabbi trust from due to Holding to additional investments by Holding in AllianceBernstein in partners’ capital in the consolidated statements offinancial condition. In addition, changes in due to Holding included in cash flows from operating activities in prior periods are now presented as additionalinvestments by Holding in AllianceBernstein included in cash flows from financing activities. As of December 31, 2012, the cumulative impact of the revisionon partners’ capital in the consolidated statement of financial condition was $7.9 million. The impact of the revision for 2011 and 2010 in the consolidatedstatements of cash flows was $5.7 million and $2.2 million, respectively. Management concluded that the error did not, individually or in the aggregate, resultin a material misstatement of AllianceBernstein’s consolidated financial statements for any prior period. 82Table of Contents Variable Interest EntitiesIn accordance with ASU 2009-17, Consolidation (Topic 810) – Improvements to Financial Reporting by Enterprises Involved with Variable InterestEntities, the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design, acompany’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance, and whether a company is obligated toabsorb losses or receive benefits that could potentially be significant to the entity. The standard also requires ongoing assessments of whether a company is theprimary beneficiary of a variable interest entity (“VIE”). The provisions of this standard became effective January 1, 2010. In January 2010, the FASBdeferred portions of ASU 2009-17 that relate to asset managers. We determined that all entities for which we are a sponsor and/or investment manager, otherthan collateralized debt obligations and collateralized loan obligations (collectively “CDOs”), qualify for the scope deferral and will continue to be assessed forconsolidation under prior accounting guidance for consolidation of variable interest entities.As of December 31, 2012, we were the investment manager for five CDOs that meet the definition of a VIE due primarily to the lack of unilateral decision-making authority of the equity holders. The CDOs are alternative investment vehicles created for the sole purpose of issuing collateralized debt instrumentsthat offer investors the opportunity for returns that vary with the risk level of their investment. Our management fee structure for these CDOs will typicallyinclude a senior management fee, and may also include subordinated and incentive management fees. We hold no equity interest in any of these CDOs. Foreach of the CDOs, we evaluated the management fee structure, the current and expected economic performance of the entities and other provisions included inthe governing documents of the CDOs that might restrict or guarantee an expected loss or residual return. In accordance with ASC 810, Consolidation, weconcluded that our investment management contract does not represent a variable interest in four of the five CDOs. As such, we are not required to consolidatethese entities.For the remaining CDO, we concluded our collateral management agreement represented a variable interest primarily due to the level of subordinated fees. Weevaluated whether we possessed both of the following characteristics of a controlling financial interest: (1) the power to direct the activities of the VIE that mostsignificantly impact the entity’s economic performance, and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity thatcould potentially be significant to the VIE. We determined that we possessed the decision-making power noted in criteria (1).In evaluating criteria (2), we considered all facts regarding the design, terms and characteristics of the CDO and concluded that we do not meet the criteria. Ourconclusion was based on the following quantitative and qualitative factors: (a) we have no involvement with the CDO beyond providing investmentmanagement services, (b) we hold no equity or debt interests in the CDO, (c) we are not a transferor of any of the assets of the CDO, (d) our expected aggregatefees in future periods are insignificant relative to the expected cash flows of the CDO, (e) the variability of our expected fees in relation to the expected cashflows of the CDO is insignificant, (f) our maximum exposure to loss for the CDO is our investment management fee, which is based upon the fair value of theCDO’s assets, (g) the CDO has no recourse against us for any losses sustained in the CDO structure, (h) we have not provided, nor do we expect to provide,any financial or other support to the CDO, and (i) there are no liquidity arrangements, guarantees and/or other commitments by third parties that wouldimpact our variable interest in the CDO. As such, we do not have a controlling financial interest in the CDO and we should not consolidate the CDO into ourconsolidated financial statements. The cash, collateral investments (at fair value) and notes payable (at amortized cost) as of December 31, 2012 of this CDOwere $21.4 million, $313.8 million and $317.1 million, respectively.For the entities that meet the scope deferral, management reviews its agreements quarterly and its investments in, and other financial arrangements with, certainentities that hold client assets under management (“AUM”) to determine the variable interest entities that the company is required to consolidate. These entitiesinclude certain mutual fund products, hedge funds, structured products, group trusts, collective investment trusts and limited partnerships. We earninvestment management fees on AUM of these entities, but we derive no other benefit from the AUM and cannot use them in our operations.As of December 31, 2012, we have significant variable interests in certain structured products and hedge funds with approximately $21.9 million in AUM.However, these VIEs do not require consolidation because management has determined that we are not the primary beneficiary of the expected losses or expectedresidual returns of these entities. Our maximum exposure to loss is limited to our investment of $0.1 million in these entities.Cash and Cash EquivalentsCash and cash equivalents include cash on hand, demand deposits, money market accounts, overnight commercial paper and highly liquid investments withoriginal maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value. 83Table of Contents Fees Receivable, NetFees receivable are shown net of allowances. An allowance for doubtful accounts related to investment advisory and services fees is determined through ananalysis of the aging of receivables, assessments of collectibility based on historical trends and other qualitative and quantitative factors, including thefollowing: our relationship with the client, the financial health (or ability to pay) of the client, current economic conditions and whether the account is closed oractive. The allowance for doubtful accounts is not material to fees receivable.Collateralized Securities TransactionsCustomers’ securities transactions are recorded on a settlement date basis, with related commission income and expenses reported on a trade date basis.Receivables from and payables to clients include amounts due on cash and margin transactions. Securities owned by customers are held as collateral forreceivables; such collateral is not reflected in the consolidated financial statements. We have the ability by contract or custom to sell or re-pledge this collateral,and have done so at various times. As of December 31, 2012, the fair value of these securities re-pledged was $2.7 million. Principal securities transactionsand related expenses are recorded on a trade date basis.Securities borrowed and securities loaned by Sanford C. Bernstein & Co., LLC (“SCB LLC”) and Sanford C. Bernstein Limited (“SCBL”), each of whichis our indirect wholly-owned subsidiary, are recorded at the amount of cash collateral advanced or received in connection with the transaction and are includedin receivables from and payables to brokers and dealers in the consolidated statements of financial condition. Securities borrowed transactions require SCBLLC and SCBL to deposit cash collateral with the lender. As of December 31, 2012 and 2011, cash collateral on deposit with lenders was $106.3 million and$34.9 million, respectively. With respect to securities loaned, SCB LLC and SCBL receive cash collateral from the borrower. As of December 31, 2012 and2011, cash collateral received from borrowers was $12.5 million and $151.6 million, respectively. The initial collateral advanced or received approximates oris greater than the fair value of securities borrowed or loaned. SCB LLC and SCBL monitor the fair value of the securities borrowed and loaned on a dailybasis and request additional collateral or return excess collateral, as appropriate. As of December 31, 2012 and 2011, there is no allowance provision requiredfor the collateral advanced. Income or expense is recognized over the life of the transactions.As of December 31, 2012 and 2011, we had $25.8 million and $16.8 million, respectively, of cash on deposit with clearing organizations for tradefacilitation purposes. In addition, as of December 31, 2012 and 2011, SCB LLC held U.S. Treasury Bills with values totaling $28.0 million and $38.0million, respectively, in its investment account which are pledged as collateral with clearing organizations. These clearing organizations have the ability bycontract or custom to sell or re-pledge this collateral.InvestmentsInvestments include United States Treasury Bills, unconsolidated mutual funds and limited partnership hedge funds we sponsor and manage, variousseparately-managed portfolios comprised of equity and fixed income securities, exchange-traded options and investments owned by a consolidated venturecapital fund in which we own a controlling interest as the general partner and a 10% limited partnership interest.Investments in United States Treasury Bills, mutual funds, and equity and fixed income securities are classified as either trading or available-for-salesecurities. Trading investments are stated at fair value with unrealized gains and losses reported in investment gains and losses on the consolidated statementsof income. Available-for-sale investments are stated at fair value with unrealized gains and losses reported as a separate component of accumulated othercomprehensive income in partners’ capital. Realized gains and losses on the sale of investments are reported in investment gains and losses on the consolidatedstatements of income. Average cost is used to determine realized gain or loss on investments sold.We use the equity method of accounting for investments in limited partnership hedge funds. The equity in earnings of our limited partnership hedge fundinvestments is reported in investment gains and losses on the consolidated statements of income.The investments owned by our consolidated venture capital fund are generally illiquid and are initially valued at cost. These investments are adjusted to fairvalue to reflect the occurrence of “significant developments” (i.e., capital transactions or business, economic or market events). Adjustments to fair value arereported in investment gains and losses on the consolidated statements of income. There are three private equity investments that we own directly outside of ourconsolidated venture capital fund. One of the investments is accounted for using the cost method; the other two are accounted for at fair value.See Note 9 for a description of how we measure the fair value of our investments.Furniture, Equipment and Leasehold Improvements, NetFurniture, equipment and leasehold improvements are stated at cost, less accumulated depreciation and amortization. Depreciation is recognized on a straight-line basis over the estimated useful lives of eight years for furniture and three to six years for equipment and software. Leasehold improvements are amortizedon a straight-line basis over the lesser of their estimated useful lives or the terms of the related leases. 84Table of Contents GoodwillIn 2000, AllianceBernstein acquired the business and assets of SCB Inc., an investment research and management company formerly known as Sanford C.Bernstein Inc. (“Bernstein”), and assumed the liabilities of Bernstein (“Bernstein Transaction”). The purchase price consisted of a cash payment ofapproximately $1.5 billion and 40.8 million newly-issued AllianceBernstein Units. The Bernstein Transaction was accounted for under the purchase methodand the cost of the acquisition was allocated on the basis of the estimated fair value of the assets acquired and the liabilities assumed. The excess of thepurchase price over the fair value of identifiable assets acquired, net of liabilities assumed, resulted in the recognition of goodwill of approximately $3.0billion.As of December 31, 2012, goodwill of $3.0 billion on the consolidated statement of financial condition included $2.8 billion as a result of the BernsteinTransaction and $154 million in regard to various smaller acquisitions. We have determined that AllianceBernstein has only one reporting segment andreporting unit.We test our goodwill annually, as of September 30, for impairment. As of September 30, 2012, the impairment test indicated that goodwill was not impaired.The carrying value of goodwill is also reviewed if facts and circumstances occur that suggest possible impairment, such as significant declines in AUM,revenues, earnings or the price of a Holding Unit.The impairment test is a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value ofAllianceBernstein, the reporting unit, with its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying value, goodwill isconsidered not impaired and the second step of the impairment test is not performed. However, if the carrying value of the reporting unit exceeds its fair value,the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step compares the implied fairvalue of the reporting unit to the aggregated fair values of its individual assets and liabilities to determine the amount of impairment, if any.As of September 30, 2012, AllianceBernstein estimated its fair value under both the market approach and income approach. The types of assumptions andmethodologies used under both approaches were consistent with those used in impairment tests performed in prior periods. Under the market approach, thefair value of the reporting unit was based on its unadjusted market valuation (AllianceBernstein Units outstanding multiplied by the price of a Holding Unit)and adjusted market valuations assuming a control premium and earnings multiples. The price of a publicly-traded AllianceBernstein Holding Unit serves asa reasonable starting point for valuing an AllianceBernstein Unit because each represents the same fractional interest in our underlying business. On anunadjusted basis, AllianceBernstein’s fair value per unit as of September 30, 2012 was $15.41 (the price of a Holding Unit as of that date) as compared to itscarrying value, or book value, of $14.09 per unit. Also under the market approach, we typically assume a control premium of 10% - 20% for the reportingunit, which was determined based on an analysis of control premiums for relevant recent acquisitions, as well as comparable industry earnings multiplesapplied to our current earnings forecast. A control premium was not needed in this analysis for fair value to exceed carrying value. Under the incomeapproach, the fair value of the reporting unit was based on the present value of estimated future cash flows. Determining estimated fair value using adiscounted cash flow valuation technique consists of applying business growth rate assumptions over the estimated life of the goodwill asset and thendiscounting the resulting expected cash flows using an estimated weighted average cost of capital of market participants to arrive at a present value amount thatapproximates fair value. In our tests, our discounted expected cash flow model used management’s current five-year business plan, which factored in currentmarket conditions and all material events that had impacted, or that we believed at the time could potentially impact, future expected cash flows and adeclining annual growth rate thereafter for three years before using a terminal value growth rate. We ran multiple discounted cash flow analyses under severalscenarios. We used a weighted average cost of equity ranging from 7% to 10% as the discount rate. We used a cost of equity rate, as opposed to a cost ofcapital, due to using net income in our expected cash flow model (as a result of generally distributing 100% of our earnings). The cost of debt is alreadyfactored into the net income projections. We used terminal value growth rates ranging from 2% to 4%, and we used our business plan growth rates as a basecase and at stressed levels approximately 50% lower, as a result of current economic uncertainty and market dynamics.Management considered the results of the market approach and income approach analysis performed along with a number of other factors (including currentmarket conditions) and determined that AllianceBernstein’s fair value exceeded its carrying value as of September 30, 2012 by approximately 9% using themarket approach (excluding any control premium), and by more than 50% using the income approach (using the most stressed scenarios). As such, nogoodwill impairment existed and the second step of the goodwill impairment test was not required.As a result of increased economic uncertainty and current market dynamics, determining whether an impairment of the goodwill asset exists requiresmanagement to exercise significant judgment. In addition, to the extent that securities valuations are depressed for prolonged periods of time and marketconditions worsen, or if we experience significant net redemptions, our AUM, revenues, profitability and unit price may be adversely affected. Although theprice of a Holding Unit is just one factor in the calculation of fair value, if current Holding Unit price levels decline significantly, reaching the conclusion thatfair value exceeds carrying value will, over time, become more difficult. In addition, control premiums, industry earnings multiples and discount rates areimpacted by economic conditions. As a result, subsequent impairment tests may occur more frequently and be based on more negative assumptions and futurecash flow projections, and may result in an impairment of goodwill. Any impairment could reduce materially the recorded amount of this asset, with acorresponding charge to our earnings. 85Table of Contents Intangible Assets, NetIntangible assets consist primarily of costs assigned to acquired investment management contracts of SCB Inc. based on their estimated fair value at the timeof acquisition, less accumulated amortization. As of December 31, 2012, intangible assets, net of accumulated amortization, of $169.2 million on theconsolidated statement of financial condition was composed of $166.7 million of definite-lived intangible assets subject to amortization, of which $160.4million relates to the Bernstein Transaction, and $2.5 million of indefinite-lived intangible assets not subject to amortization in regard to a smaller acquisition.Intangible assets are recognized at fair value and are generally amortized on a straight-line basis over their estimated useful life of approximately 20 years. Thegross carrying amount of intangible assets totaled $425.3 million as of December 31, 2012 and $424.7 million as of December 31, 2011, and accumulatedamortization was $256.1 million as of December 31, 2012 and $234.7 million as of December 31, 2011, resulting in the net carrying amount of intangibleassets subject to amortization of $169.2 million as of December 31, 2012 and $190.0 million as of December 31, 2011. Amortization expense was $21.4million for 2012, $21.4 million for 2011 and $21.3 million for 2010. Estimated annual amortization expense for each of the next five years is approximately$22 million.We periodically review intangible assets for impairment as events or changes in circumstances indicate that the carrying value may not be recoverable. If thecarrying value exceeds fair value, additional impairment tests are performed to measure the amount of the impairment loss, if any.Deferred Sales Commissions, NetWe pay commissions to financial intermediaries in connection with the sale of shares of open-end company-sponsored mutual funds sold without a front-endsales charge (“back-end load shares”). These commissions are capitalized as deferred sales commissions and amortized over periods not exceeding five andone-half years for U.S. fund shares and four years for non-U.S. fund shares, the periods of time during which deferred sales commissions are generallyrecovered. We recover these commissions from distribution services fees received from those funds and from contingent deferred sales commissions (“CDSC”) received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions of unamortized deferredsales commissions when received. Since January 31, 2009, our U.S. mutual funds have not offered back-end load shares to new investors. However, our non-U.S. funds continue to offer back-end load shares.We periodically review the deferred sales commission asset for impairment as events or changes in circumstances indicate that the carrying value may not berecoverable. If the carrying value exceeds fair value, additional impairment tests are performed to measure the amount of the impairment loss, if any.Loss ContingenciesWith respect to all significant litigation matters, we consider the likelihood of a negative outcome. If we determine the likelihood of a negative outcome isprobable, and the amount of the loss can be reasonably estimated, we record an estimated loss for the expected outcome of the litigation. If the likelihood of anegative outcome is reasonably possible and we are able to determine an estimate of the possible loss or range of loss in excess of amounts already accrued, ifany, we disclose that fact together with the estimate of the possible loss or range of loss. However, it is often difficult to predict the outcome or estimate apossible loss or range of loss because litigation is subject to inherent uncertainties, particularly when plaintiffs allege substantial or indeterminate damages, thelitigation is in its early stages, or when the litigation is highly complex or broad in scope. In such cases, we disclose that we are unable to predict the outcomeor estimate a possible loss or range of loss.Revenue RecognitionInvestment advisory and services fees, generally calculated as a percentage of AUM, are recorded as revenue as the related services are performed. Certaininvestment advisory contracts, including those associated with hedge funds or other alternative investments, provide for a performance-based fee, in additionto a base advisory fee, which is calculated as either a percentage of absolute investment results or a percentage of investment results in excess of a statedbenchmark over a specified period of time. Performance-based fees are recorded as a component of revenue at the end of each contract’s measurement period.We calculate AUM using established fair valuation methodologies, including market-based valuation methods and fair valuation methods. Market-basedvaluation methods include: last sale/settle prices from an exchange for actively-traded listed equities, options and futures; evaluated bid prices from recognizedpricing vendors for fixed income, asset-backed or mortgage-backed issues; mid prices from recognized pricing vendors and brokers for credit default swaps;and quoted bids or spreads from pricing vendors and brokers for other derivative products. Fair valuation methods include discounted cash flow models,evaluation of assets versus liabilities or any other methodology that is validated and approved by our Valuation Committee. Fair valuation methods are usedonly where AUM cannot be valued using market-based valuation methods, such as in the case of private equity or illiquid securities. Investments utilizing fairvaluation methods typically make up an insignificant amount of our total AUM. Recent market volatility has not had a significant effect on our ability toacquire market data and, accordingly, our ability to use market-based valuation methods. 86Table of Contents The Valuation Committee, which is composed of senior officers and employees, is responsible for overseeing the pricing and valuation of all investments heldin client and AllianceBernstein portfolios. The Valuation Committee has adopted a Statement of Pricing Policies describing principles and policies that apply topricing and valuing investments held in these portfolios. We have also established a Pricing Group, which reports to the Valuation Committee. The ValuationCommittee has delegated to the Pricing Group responsibility for overseeing the pricing process for all investments.Bernstein Research Services revenue consists primarily of brokerage commissions received by SCB LLC and SCBL for research and brokerage-relatedservices provided to institutional investors. Brokerage commissions earned and related expenses are recorded on a trade-date basis.Distribution revenues, shareholder servicing fees (included in other revenues), and dividend and interest income are accrued as earned.Mutual Fund Underwriting ActivitiesPurchases and sales of shares of company-sponsored mutual funds in connection with the underwriting activities of our subsidiaries, including relatedcommission income, are recorded on trade date. Receivables from brokers and dealers for sale of shares of company-sponsored mutual funds are generallyrealized within three business days from trade date, in conjunction with the settlement of the related payables to company-sponsored mutual funds for sharepurchases. Distribution plan and other promotion and servicing payments are recognized as expense when incurred.Long-term Incentive Compensation PlansWe maintain several unfunded, non-qualified long-term incentive compensation plans under which annual awards to employees are made generally in thefourth quarter.For awards made before 2009, participants were permitted to allocate their awards: (i) among notional investments in Holding Units, certain of the investmentservices we provided to our clients and a money market fund or (ii) under limited circumstances, in options to buy Holding Units. •We made investments in our services that were notionally elected by participants and maintained them in a consolidated rabbi trust or separatecustodial account. •Awards generally vested over four years but could vest more quickly depending on the terms of the individual award, the age of the participant, orthe terms of the participant’s employment, separation or retirement agreement. Upon vesting, an award is distributed to the participant unless theparticipant has made a voluntary long-term election to defer receipt. •Quarterly cash distributions on unvested Holding Units for which a long-term deferral election has not been made are paid currently to participants.Quarterly cash distributions on notional investments in Holding Units and income credited on notional investments in our investment services or themoney market fund for which a long-term deferral election has been made are reinvested and distributed as elected by participants. •Prior to a fourth quarter 2011 amendment made to all outstanding long-term incentive compensation awards of active employees (discussed below),compensation expense for awards under the plans, including changes in participant account balances resulting from gains and losses on relatedinvestments (other than in Holding Units and options to buy Holding Units), was recognized on a straight-line basis over the applicable vestingperiods. Mark-to-market gains or losses on investments made to fund long-term incentive compensation obligations (other than in Holding Units andoptions to buy Holding Units) were, and continue to be, recognized as investment gains (losses) in the consolidated statements of income. In addition,our equity in the earnings of investments in limited partnership hedge funds made to fund long-term incentive compensation obligations was, andcontinues to be, recognized as investment gains (losses) in the consolidated statements of income.Awards in 2010 and 2009 consisted solely of restricted Holding Units and deferred cash. (In 2010, deferred cash was an option available only to certain non-U.S. employees.) •We engaged in open-market purchases of Holding Units, or purchased newly-issued Holding Units from Holding, that were awarded to participantsand held in a consolidated rabbi trust. •Upon vesting, awards are distributed to the participant unless the participant has made a voluntary long-term election to defer receipt. 87Table of Contents •Quarterly cash distributions on vested and unvested Holding Units are paid currently to participants, regardless of whether or not a long-termdeferral election has been made. •Prior to a fourth quarter 2011 amendment made to all outstanding long-term incentive compensation awards of active employees (discussed below),compensation expense for awards under the plans was recognized on a straight-line basis over the applicable vesting periods.Awards in December 2012 and 2011 allowed participants to allocate their awards between restricted Holding Units and deferred cash. Participants (exceptcertain members of senior management) generally could allocate up to 50% of their awards to deferred cash, not to exceed a total of $250,000 per award, andhad until mid-January 2013 and 2012, respectively, to make their elections. The number of restricted Holding Units issued equaled the remaining dollar valueof the award divided by the average of the closing prices of a Holding Unit for a five business day period in January after participants made their electionseach year. •We engaged in open-market purchases of Holding Units, or purchased newly-issued Holding Units from Holding, that were awarded to participantsand held them in a consolidated rabbi trust. •Quarterly distributions on vested and unvested Holding Units are paid currently to participants, regardless of whether or not a long-term deferralelection has been made. •Interest on deferred cash is accrued monthly based on our monthly weighted average cost of funds.During the fourth quarter of 2011, we implemented changes to our employee long-term incentive compensation award program to ensure that our compensationpractices are competitive, and to better align the costs of employee compensation and benefits with our current year financial performance and provideemployees with a higher degree of certainty that they will receive the incentive compensation they are awarded. Specifically, we amended all outstanding year-end long-term incentive compensation awards of active employees, so that employees who terminate their employment or are terminated without cause mayretain their award, subject to compliance with certain agreements and restrictive covenants set forth in the applicable award agreement, including restrictionson competition and employee and client solicitation, and a claw-back for failing to follow existing risk management policies. Most equity replacement, sign-onor similar deferred compensation awards included in separate employment agreements or arrangements were not amended in 2011 to reflect these changes.We recognize compensation expense related to equity compensation grants in the financial statements using the fair value method. Fair value of restrictedHolding Unit awards is the closing price of a Holding Unit on the grant date; fair value of options is determined using the Black-Scholes option valuationmodel. Under the fair value method, compensatory expense is measured at the grant date based on the estimated fair value of the award and is recognized overthe required service period. Prior to the changes made to the employee long-term incentive compensation award program in the fourth quarter of 2011, anemployee’s service requirement was typically the same as the delivery dates. These changes eliminated employee service requirements, but did not modifydelivery dates contained in the original award agreements.As a result of these changes, we recorded a one-time, non-cash charge of $587.1 million in the fourth quarter of 2011 for all unrecognized long-term incentivecompensation on the amended outstanding awards from prior years. In addition, upon approval and communication of the dollar value of the 2011 awards inDecember 2011, we recorded 100% of the expense associated with our 2011 long-term incentive compensation awards of $159.9 million. In January 2012, 8.7million restricted Holding Units held in the consolidated rabbi trust were awarded for the 2011 awards and we reclassified $130.3 million of the liability topartners’ capital as equity-based awards.During 2012, we recorded $150.1 million of expense associated with our 2012 long-term incentive compensation awards. In January 2013, 6.5 millionrestricted Holding Units held in the consolidated rabbi trust were awarded for the 2012 awards and we reclassified $129.2 million of the liability to partners’capital as equity-based awards.Awards granted in 2012 and 2011 contained the provisions described above and we expect to include these provisions in long-term incentive compensationawards in future years. Accordingly, our annual incentive compensation expense will reflect 100% of the expense associated with the long-term incentivecompensation awarded in each year. This approach to expense recognition will more closely match the economic cost of awarding long-term incentivecompensation to the period in which the related service is performed.Grants of restricted Holding Units and options to buy Holding Units are typically awarded to eligible members of the Board of Directors (“Eligible Directors”) of the General Partner during the second quarter. Restricted Holding Units vest on the third anniversary of the grant date and the options become exercisableratably over three years. These restricted Holding Units and options are not forfeitable (except if the Eligible Director is terminated for “Cause”, as that term isdefined in the applicable award agreement). Due to there being no service requirement, we fully expense these awards on each grant date. 88Table of Contents We fund our restricted Holding Unit awards either by purchasing Holding Units on the open market or purchasing newly-issued Holding Units from Holding,all of which are then held in a consolidated rabbi trust until they are distributed to employees upon vesting. In accordance with the Amended and RestatedAgreement of Limited Partnership of AllianceBernstein (“AllianceBernstein Partnership Agreement”), when AllianceBernstein purchases newly-issuedHolding Units from Holding, Holding is required to use the proceeds it receives from AllianceBernstein to purchase the equivalent number of newly-issuedAllianceBernstein Units, thus increasing its percentage ownership interest in AllianceBernstein. Holding Units held in the consolidated rabbi trust arecorporate assets in the name of the trust and are available to the general creditors of AllianceBernstein.During 2012 and 2011, we purchased 15.7 million and 13.5 million Holding Units for $238.0 million and $220.8 million, respectively. These amountsreflect open-market purchases of 12.3 million and 11.1 million Holding Units for $182.3 million and $192.1 million, respectively, with the remainderrelating to purchases of Holding Units from employees to allow them to fulfill statutory tax withholding requirements at the time of distribution of long-termincentive compensation awards, offset by Holding Units purchased by employees as part of a distribution reinvestment election.Since the third quarter of 2011, we have implemented plans each quarter to repurchase Holding Units pursuant to Rule 10b5-1 under the Securities ExchangeAct of 1934, as amended (“Exchange Act”). A Rule 10b5-1 plan allows a company to repurchase its shares at times when it otherwise might be preventedfrom doing so because of self-imposed trading blackout periods and because it possesses material non-public information. Each broker we select has theauthority under the terms and limitations specified in the plan to repurchase Holding Units on our behalf in accordance with the terms of the plan.Repurchases are subject to SEC regulations as well as certain price, market volume and timing constraints specified in the plan. The plan adopted during thefourth quarter of 2012 does not specify an aggregate limitation and expires at the close of business on February 11, 2013. We intend to adopt additional Rule10b5-1 plans so that we can continue to engage in open-market purchases of Holding Units to help fund anticipated obligations under our incentivecompensation award program and for other corporate purposes.We granted to employees and Eligible Directors 12.1 million restricted Holding Unit awards (including 2.7 million granted in June 2012 to Peter Kraus, ourChief Executive Officer, in connection with his extended employment agreement and 8.7 million granted in January 2012 for 2011 year-end awards) and 1.7million restricted Holding Unit awards during 2012 and 2011, respectively. To fund these awards, we allocated previously repurchased Holding Units thathad been held in the consolidated rabbi trust. The 2012 and 2011 long-term incentive compensation awards allowed most employees to allocate their awardsbetween restricted Holding Units and deferred cash. As a result, 6.5 million restricted Holding Unit awards for the December 2012 awards and 8.7 millionrestricted Holding Unit awards for the December 2011 awards were awarded and allocated as such within the consolidated rabbi trust in January 2013 and2012, respectively. There were approximately 17.9 million and 12.0 million unallocated Holding Units remaining in the consolidated rabbi trust as ofDecember 31, 2012 and January 31, 2013, respectively. The balance as of January 31, 2013 also reflects repurchases and other activity during January 2013.Foreign Currency TranslationAssets and liabilities of foreign subsidiaries are translated into United States dollars (“US$”) at exchange rates in effect at the balance sheet dates, and relatedrevenues and expenses are translated into US$ at average exchange rates in effect during each period. Net foreign currency gains and losses resulting from thetranslation of assets and liabilities of foreign operations into US$ are reported as a separate component of other comprehensive income in the consolidatedstatements of comprehensive income. Net foreign currency transaction gains (losses) were $(1.1) million, $(2.4) million and $1.3 million for 2012, 2011 and2010, respectively.Cash DistributionsAllianceBernstein is required to distribute all of its Available Cash Flow, as defined in the AllianceBernstein Partnership Agreement, to its unitholders and tothe General Partner. Available Cash Flow can be summarized as the cash flow received by AllianceBernstein from operations minus such amounts as theGeneral Partner determines, in its sole discretion, should be retained by AllianceBernstein for use in its business, or plus such amounts as the General Partnerdetermines, in its sole discretion, should be released from previously retained cash flow.The General Partner computes cash flow received from operations by determining the sum of: •net cash provided by operating activities of AllianceBernstein, •proceeds from borrowings and from sales or other dispositions of assets in the ordinary course of business, and •income from investments in marketable securities, liquid investments and other financial instruments that are acquired for investment purposesand that have a value that may be readily established,and then subtracting from this amount the sum of: •payments in respect of the principal of borrowings, and •amounts expended for the purchase of assets in the ordinary course of business. 89Table of Contents On February 12, 2013, the General Partner declared a distribution of $106.6 million, or $0.38 per AllianceBernstein Unit, representing a distribution ofAvailable Cash Flow for the three months ended December 31, 2012. The General Partner, as a result of its 1% general partnership interest, is entitled toreceive 1% of each distribution. The distribution is payable on March 14, 2013 to holders of record on February 22, 2013. This distribution excludes $38.9million of non-cash real estate charges recorded in the fourth quarter of 2012.Total cash distributions per Unit paid to the General Partner and unitholders during 2012, 2011 and 2010 were $1.15, $1.70 and $1.79, respectively.Comprehensive IncomeWe report all changes in comprehensive income in the consolidated statements of comprehensive income. Comprehensive income includes net income, as wellas unrealized gains and losses on investments classified as available-for-sale, foreign currency translation adjustments, and unrecognized actuarial net lossesand transition assets. Deferred taxes are not recognized on foreign currency translation adjustments for foreign subsidiaries whose earnings are consideredpermanently invested outside the United States.3. Real Estate ChargesSince the fourth quarter of 2008, we consistently have taken steps to reduce our cost structure, including headcount reductions, and the consolidation of officelocations, in response to declines in our AUM and fee revenues.During 2010, we performed a comprehensive review of our real estate requirements in New York in connection with our workforce reductions commencing in2008. As a result, during 2010 we decided to sub-lease over 380,000 square feet in New York (approximately 80% of this space has been sublet) and largelyconsolidate our New York-based employees into two office locations from three. We recorded pre-tax real estate charges of $101.7 million in 2010 that reflectedthe net present value of the difference between the amount of our ongoing contractual operating lease obligations for this space and our estimate of currentmarket rental rates ($76.2 million), as well as the write-off of leasehold improvements, furniture and equipment related to this space ($25.5 million). Weperiodically review the assumptions and estimates we used in recording these charges.During 2011, we recorded pre-tax real estate charges totaling $7.2 million for our office space in London, England, New York and other U.S. locations. TheLondon charge was $8.8 million, consisting of a $5.8 million payment to the party to which the lease was assigned, as well as the write-off of $3.0 million ofleasehold improvements, furniture and equipment related to the space. We also wrote off an additional $1.5 million of leasehold improvements, furniture andequipment related to the New York space and had miscellaneous charges of $0.4 million. These charges were offset by a $3.5 million credit we recorded in2011 due to changes in estimates of our 2010 charge.During the first six months of 2012, we recorded pre-tax real estate charges totaling $16.1 million, reflecting $8.8 million resulting from the abandonment ofour leased New York City Data Center office space and $7.3 million resulting from a change in estimates relating to previously recorded real estate charges.The New York City Data Center charge consisted of the net present value of the difference between the amount of ongoing contractual operating leaseobligations for this space and our estimate of current market rental rates ($7.1 million) and the write-off of leasehold improvements, furniture and equipmentrelated to this space ($1.7 million).During the third quarter of 2012, in an effort to further reduce our global real estate footprint, we completed a comprehensive review of our worldwide officelocations and began implementing a global space consolidation plan. As a result, our intention is to sub-lease approximately 510,000 square feet of officespace, over 70% of which is New York office space (in addition to the 380,000 square feet written-off in 2010), with the remainder comprised of office space inLondon, England, Melbourne, Australia and various U.S. locations. We expect that the actions we are taking to vacate and market space for sublease willresult over time in projected non-cash real estate charges of $225 million to $250 million, with the bulk of the charges having occurred in the third and fourthquarters of 2012. These charges are in addition to the earlier non-cash real estate charges for New York City office space we recorded, and they did not affectour third and fourth quarter 2012 distributions.During the third quarter of 2012, we recorded pre-tax real estate charges of $168.1 million, reflecting the net present value of the difference between the amountof our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($131.8 million), as well as the write-off ofleasehold improvements, furniture and equipment related to this space ($31.3 million), and changes in estimates relating to previously recorded real estatecharges ($5.0 million).During the fourth quarter of 2012, we recorded pre-tax real estate charges of $38.9 million, reflecting the net present value of the difference between the amountof our ongoing contractual operating lease obligations for this space and our estimate of current market rental rates ($32.0 million), as well as the write-off ofleasehold improvements, furniture and equipment related to this space ($8.4 million), offset by changes in estimates relating to previously recorded real estatecharges of ($1.5 million). 90Table of Contents The following table summarizes the activity in the liability account relating to our 2010 and 2012 office space consolidation initiatives for the followingperiods: Years Ended December 31, 2012 2011 (in thousands) Balance as of January 1, $71,164 $89,793 Expense (credit) incurred 181,589 (3,506)Deferred rent 27,000 2,288 Payments made (42,833) (18,696)Interest accretion 1,864 1,285 Balance as of end of period $238,784 $71,164 4. Net Income (Loss) Per UnitBasic net income (loss) per unit is derived by reducing net income (loss) for the 1% general partnership interest and dividing the remaining 99% by the basicweighted average number of units outstanding for each year. Diluted net (loss) income per unit is derived by reducing net income (loss) for the 1% generalpartnership interest and dividing the remaining 99% by the total of the basic weighted average number of units outstanding and the dilutive unit equivalentsresulting from outstanding compensatory options to buy Holding Units as follows: Years Ended December 31, 2012 2011 2010 (in thousands, except per unit amounts) Net income (loss) attributable to AllianceBernstein Unitholders $188,916 $(174,768) $442,419 Weighted average units outstanding—basic 277,721 278,018 275,415 Dilutive effect of compensatory options to buy Holding Units 1 — 1,639 Weighted average units outstanding—diluted 277,722 278,018 277,054 Basic net income (loss) per AllianceBernstein Unit $0.67 $(0.62) $1.59 Diluted net income (loss) per AllianceBernstein Unit $0.67 $(0.62) $1.58 For the years ended December 31, 2012, 2011 and 2010, we excluded 8,438,902, 3,813,567 and 4,783,472 options, respectively, from the diluted net income(loss) per unit computation due to their anti-dilutive effect.The 2012 net income per unit includes $223.0 million of non-cash real estate charges recorded in 2012. See further discussion above in Note 3, Real EstateCharges.The 2011 net (loss) per unit includes the one-time, non-cash compensation charge of $587.1 million recorded in the fourth quarter of 2011. See furtherdiscussion above in Note 2, Long-term Incentive Compensation Plans.5. Cash and Securities Segregated Under Federal Regulations and Other RequirementsAs of December 31, 2012 and 2011, $1.5 billion and $1.2 billion, respectively, of United States Treasury Bills were segregated in a special reserve bankcustody account for the exclusive benefit of brokerage customers of SCB LLC under Rule 15c3-3 of the Exchange Act.AllianceBernstein Investments, Inc. (“AllianceBernstein Investments”), an indirect wholly-owned subsidiary of AllianceBernstein and the distributor ofcompany-sponsored mutual funds, maintains several special bank accounts for the exclusive benefit of customers. As of December 31, 2012 and 2011, $42.2million and $39.9 million, respectively, of cash were segregated in these bank accounts. 91Table of Contents 6. Fees Receivables, NetFees receivable, net consists of: December 31, 2012 2011 (in thousands) AllianceBernstein mutual funds $154,415 $120,828 Unaffiliated clients (net of allowance of $844 in 2012 and $752 in 2011) 103,392 135,416 Affiliated clients 7,878 9,004 Total fees receivables, net $265,685 $265,248 7. InvestmentsInvestments consist of: December 31, 2012 2011 (in thousands) Available-for-sale (primarily seed capital) $13,361 $13,883 Trading: Long-term incentive compensation-related 90,825 135,832 United States Treasury Bills 27,982 37,998 Seed capital 307,795 278,932 Equities and exchange-traded options 48,937 58,237 Investments in limited partnership hedge funds: Long-term incentive compensation-related 32,152 40,538 Seed capital 109,328 123,920 Consolidated private equity fund (10% seed capital) 47,045 58,749 Private equity (seed capital) 47,853 35,726 Other 7,056 11,479 Total investments $732,334 $795,294 Total investments related to long-term incentive compensation obligations of $123.0 million and $176.4 million as of December 31, 2012 and 2011,respectively, consist of company-sponsored mutual funds and hedge funds. We typically made investments in our services that were notionally elected bylong-term incentive compensation plan participants and maintained them in a consolidated rabbi trust or separate custodial account. The rabbi trust andcustodial account enable us to hold such investments separate from our other assets for the purpose of settling our obligations to participants. The investmentsheld in the rabbi trust and custodial account remain available to the general creditors of AllianceBernstein.The underlying investments of hedge funds in which we invest include long and short positions in equity securities, fixed income securities (including variousagency and non-agency asset-based securities), currencies, commodities and derivatives (including various swaps and forward contracts). These investmentsare valued at quoted market prices or, where quoted market prices are not available, are fair valued based on the pricing policies and procedures of theunderlying funds.United States Treasury Bills are held by SCB LLC in its investment account, the majority of which are pledged as collateral with clearing organizations.These clearing organizations have the ability by contract or custom to sell or re-pledge this collateral.We provide seed capital to our investment teams to develop new products and services for our clients.Trading securities also include long positions in corporate equities and long exchange-traded options traded through our options desk. 92Table of Contents The following is a summary of the cost and fair value of available-for-sale and trading investments held as of December 31, 2012 and 2011: AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses FairValue (in thousands) December 31, 2012: Available-for-sale: Equity investments $5,769 $1,445 $(149) $7,065 Fixed income investments 6,265 33 (2) 6,296 $12,034 $1,478 $(151) $13,361 Trading: Equity investments $239,368 $32,003 $(2,830) $268,541 Fixed income investments 199,191 12,098 (4,291) 206,998 $438,559 $44,101 $(7,121) $475,539 December 31, 2011: Available-for-sale: Equity investments $6,753 $489 $(342) $6,900 Fixed income investments 6,857 133 (7) 6,983 $13,610 $622 $(349) $13,883 Trading: Equity investments $375,287 $5,959 $(41,938) $339,308 Fixed income investments 172,142 3,475 (3,926) 171,691 $547,429 $9,434 $(45,864) $510,999 Proceeds from sales of available-for-sale investments were approximately $0.8 million, $3.5 million and $4.3 million in 2012, 2011 and 2010, respectively.Realized gains from our sales of available-for-sale investments were $0.1 million in 2012, $0.1 million in 2011 and $0.5 million in 2010. Realized losses fromour sales of available-for-sale investments were $0.1 million in 2012, $0.1 million in 2011 and $0.4 million in 2010. We assess valuation declines to determinethe extent to which such declines are fundamental to the underlying investment or attributable to temporary market-related factors. Based on our assessment,we do not believe the declines are other than temporary as of December 31, 2012.8. Derivative InstrumentsWe enter into various futures, forwards and swaps to economically hedge certain of our seed money investments. In addition, we have currency forwards thateconomically hedge certain cash accounts. We do not hold any derivatives designated in a formal hedge relationship under ASC 815-10, Derivatives andHedging.The following table presents the notional value, fair value and gains and losses recognized in investment gains (losses) in the consolidated statements ofincome as of December 31, 2012 and 2011 for derivative instruments not designated as hedging instruments: NotionalValue DerivativeAssets DerivativeLiabilities Gains(Losses) (in thousands) December 31, 2012: Exchange-traded futures $89,901 $64 $1,598 $(18,291)Currency forwards 80,445 473 429 (503)Interest rate swaps 55,435 73 888 (1,358)Credit default swaps 53,775 457 272 (8,598)Option swaps 103 83 92 (424)Total return swaps 90,673 1,475 3,791 (6,470)Total derivatives $370,332 $2,625 $7,070 $(35,644) 93Table of Contents NotionalValue DerivativeAssets DerivativeLiabilities Gains(Losses) (in thousands) December 31, 2011: Exchange-traded futures $111,447 $127 $2,054 $8,979 Currency forwards 38,330 358 227 453 Interest rate swaps 47,640 136 3,301 (5,585)Credit default swaps 84,215 2,962 639 676 Total return swaps 38,148 38 1,038 (184)Total derivatives $319,780 $3,621 $7,259 $4,339 As of December 31, 2012 and 2011, the derivative assets and liabilities are included in both receivables and payables to brokers and dealers on ourconsolidated statements of financial condition. Gains and losses on derivative instruments are reported in investments gains and losses on the consolidatedstatements of income.We may be exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments. We take steps to minimize ourcounterparty exposure through a credit review and approval process. In addition, we executed various collateral arrangements with counterparties to the over-the-counter derivative transactions that require both pledging and accepting collateral in the form of cash. As of December 31, 2012 and 2011, we held $1.5million and $4.4 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in payables to brokers anddealers in our consolidated statements of financial condition.Although notional amount is the most commonly used measure of volume in the derivative market, it is not used as a measure of credit risk. Generally, thecurrent credit exposure of our derivative contracts is limited to the net positive estimated fair value of derivative contracts at the reporting date after taking intoconsideration the existence of netting agreements and any collateral received. A derivative with positive value (a derivative asset) indicates existence of creditrisk because the counterparty would owe us if the contract were closed. Alternatively, a derivative contract with negative value (a derivative liability) indicateswe would owe money to the counterparty if the contract were closed. Generally, if there is more than one derivative transaction with a single counterparty, amaster netting arrangement exists with respect to derivative transactions with that counterparty to provide for aggregate net settlement.Certain of our standardized contracts for over-the-counter derivative transactions (“ISDA Master Agreements”) contain credit risk related contingentprovisions related to each counterparty's credit rating. In some ISDA Master Agreements, if the counterparty’s credit rating (or in some agreements, our AUM)falls below a specified threshold, either a default or a termination event permitting the counterparty to terminate the ISDA Master Agreement would be triggered.In all agreements that provide for collateralization, various levels of collateralization of net liability positions are applicable, depending on the credit rating ofthe counterparty. As of December 31, 2012 and 2011, we delivered $8.4 million and $14.7 million, respectively, of cash collateral into brokerage accounts,which is reported in cash and cash equivalents in our consolidated statements of financial condition.9. Fair ValueFair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction betweenmarket participants at the measurement date. The three broad levels of fair value hierarchy are as follows: •Level 1—Quoted prices in active markets are available for identical assets or liabilities as of the reported date. •Level 2—Quoted prices in markets that are not active or other pricing inputs that are either directly or indirectly observable as of the reported date. •Level 3—Prices or valuation techniques that are both significant to the fair value measurement and unobservable as of the reported date. Thesefinancial instruments do not have two-way markets and are measured using management’s best estimate of fair value, where the inputs into thedetermination of fair value require significant management judgment or estimation. 94Table of Contents Assets Measured at Fair Value on a Recurring BasisThe following table summarizes the valuation of our financial instruments by pricing observability levels as of December 31, 2012 and 2011: December 31, 2012 Level 1 Level 2 Level 3 Total (in thousands) Money markets $170,120 $— $— $170,120 U.S. Treasury bills — 1,537,150 — 1,537,150 U.K. Treasury bills — 125 — 125 Equity securities Growth 125,242 — — 125,242 Value 36,126 — — 36,126 Multi-asset and asset allocation 59,449 — — 59,449 Other(1) 39,702 — — 39,702 Fixed Income securities Taxable(2) 177,635 1,219 — 178,854 Tax-exempt(3) 5,661 797 — 6,458 Derivatives 64 2,561 — 2,625 Long exchange-traded options 15,087 — — 15,087 Private equity 7,695 — 76,953 84,648 Total assets measured at fair value $636,781 $1,541,852 $76,953 $2,255,586 Securities sold not yet purchased Short equities-corporate $54,370 $— $— $54,370 Short exchange-traded options 9,197 — — 9,197 Other 271 — — 271 Derivatives 1,598 5,472 — 7,070 Total liabilities measured at fair value $65,436 $5,472 $— $70,908 December 31, 2011 Level 1 Level 2 Level 3 Total (in thousands) Money markets $340,548 $— $— $340,548 U.S. Treasury bills — 1,277,944 — 1,277,944 U.K. Treasury bills — 119 — 119 Equity securities Growth 107,802 189 — 107,991 Value 60,096 9 — 60,105 Blend 118,208 — — 118,208 Other(1) 45,583 — — 45,583 Fixed Income securities Taxable(2) 110,062 14,488 — 124,550 Tax-exempt(3) 15,366 743 — 16,109 Other 17 — — 17 Derivatives 127 3,494 — 3,621 Long exchange-traded options 14,322 — — 14,322 Private equity 11,592 — 64,466 76,058 Total assets measured at fair value $823,723 $1,296,986 $64,466 $2,185,175 Securities sold not yet purchased Short equities-corporate $34,469 $— $— $34,469 Short exchange-traded options 3,567 — — 3,567 Other 1,271 — — 1,271 Derivatives 2,054 5,205 — 7,259 Total liabilities measured at fair value $41,361 $5,205 $— $46,566 (1)Primarily long positions in corporate equities traded through our options desk.(2)Primarily corporate and government securities.(3)Primarily municipal bonds. 95Table of Contents Following is a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instrumentspursuant to the valuation hierarchy: •Money markets: We invest excess cash in various money market funds that are valued based on quoted prices in active markets; these are includedin Level 1 of the valuation hierarchy. •Treasury bills: We hold United States Treasury Bills, which are primarily segregated in a special reserve bank custody account as required by Rule15c3-3 of the Exchange Act. We also hold United Kingdom Treasury Bills. These securities are valued based on quoted yields in secondary marketsand are included in Level 2 of the valuation hierarchy. •Equity and fixed income securities: Our equity and fixed income securities consist principally of company-sponsored mutual funds with net assetvalues and various separately-managed portfolios consisting primarily of equity and fixed income securities with quoted prices in active markets,which are included in Level 1 of the valuation hierarchy. In addition, some securities are valued based on observable inputs from recognized pricingvendors, which are included in Level 2 of the valuation hierarchy. •Derivatives: We hold exchange-traded futures with counterparties that are included in Level 1 of the valuation hierarchy. In addition, we holdcurrency forward contracts, interest rate swaps, credit default swaps, option swaps and total return swaps with counterparties that are included inLevel 2 of the valuation hierarchy. •Options: We hold long exchange-traded options that are included in Level 1 of the valuation hierarchy. •Private equity: Generally, the valuation of private equity investments owned by our consolidated venture capital fund requires significantmanagement judgment due to the absence of quoted market prices, inherent lack of liquidity and the long-term nature of such investments. Privateequity investments are valued initially at cost. The carrying values of private equity investments are adjusted either up or down from cost to reflectexpected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmedthrough ongoing review in accordance with our valuation policies and procedures. A variety of factors are reviewed and monitored to assess positiveand negative changes in valuation including, but not limited to, current operating performance and future expectations of investee companies,industry valuations of comparable public companies, changes in market outlooks and the third party financing environment over time. Indetermining valuation adjustments resulting from the investment review process, particular emphasis is placed on current company performance andmarket conditions. For these reasons, which make the fair value of private equity investments unobservable, equity investments are included inLevel 3 of the valuation hierarchy. However, if private equity investments owned by our consolidated venture capital fund become publicly-traded,they are included in Level 1 of the valuation hierarchy. Also, if they contain trading restrictions, publicly-traded equity investments are included inLevel 2 of the valuation hierarchy. One of our private securities went public in the first quarter of 2011 and, due to a trading restriction period, $3.6million was transferred from a Level 3 classification to a Level 2 classification. During the second quarter of 2011, the trading restriction period forone of our public securities lapsed, and, as a result, $20.6 million was transferred from a Level 2 classification to a Level 1 classification. Duringthe third quarter of 2011, the trading restriction period for one of our public securities lapsed, and, as a result, $3.7 million was transferred from aLevel 2 classification to a Level 1 classification. During the first quarter of 2012, one of our private securities went public and, due to a tradingrestriction period, $13.5 million was transferred from a Level 3 classification to a Level 2 classification. During the third quarter of 2012, the tradingrestriction period for one of our public securities lapsed and, as a result, $6.0 million was transferred from a Level 2 classification to a Level 1classification. •Securities sold not yet purchased: Securities sold not yet purchased, primarily reflecting short positions in equities and exchange-traded options,are included in Level 1 of the valuation hierarchy. 96Table of Contents The following table summarizes the change in carrying value associated with Level 3 financial instruments carried at fair value: December 31,2012 December 31,2011 (in thousands) Balance as of beginning of period $64,466 $59,414 Transfers (out) in, net (13,548) (3,588)Purchases 19,660 10,002 Sales (1,823) (214)Realized gains (losses), net (7,524) (3,106)Unrealized gains (losses), net 15,722 1,958 Balance as of end of period $76,953 $64,466 Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3financial instruments are recorded in investment gains and losses in the consolidated statements of income. A majority of the Level 3 investments are privateequity investments owned by our consolidated venture capital fund, of which we own 10% and non-controlling interests own 90%.The following table provides quantitative information about Level 3 fair value measurements: Fair Valueas ofDecember31, 2012 Valuation Technique UnobservableInput Range (in thousands) Private Equity: Technology, Media andTelecommunications $23,256 Market comparable companies Revenue multiple 2.5 – 6 Discount rate 18% Discount years 1 – 2 Healthcare and Cleantech $14,871 Market comparable companies Revenue multiple(1) 0.6 – 62.5 R&D multiple(1) 1.0 – 30.6 Discount for lack ofmarketability and risk factors 40-60% (1)The median for the Healthcare and Cleantech revenue multiple is 10.1; the majority of the R&D multiples fall between 4.0 and 11.4.The significant unobservable inputs used in the fair value measurement of the reporting entities’ venture capital securities in the technology, media andtelecommunications areas are enterprise value to revenue multiples and a discount rate to account for the time until the securities are likely monetized andvarious risk factors. Significant increases (decreases) in the enterprise value to revenue multiple inputs in isolation would result in a significantly higher(lower) fair value measurement. Significant increases (decreases) in the discount rate would result in a significantly lower (higher) fair value measurement.The significant unobservable inputs used in the fair value measurement of the reporting entities’ venture capital securities in the healthcare and cleantech areasare enterprise value to revenue multiples, enterprise value to R&D investment multiples, and a discount for lack of marketability and various risk factors.Significant increases (decreases) in the enterprise value to revenue multiple and enterprise value to R&D investment multiple inputs in isolation would result ina significantly higher (lower) fair value measurement. Significant increases (decreases) in the discount for lack of marketability and various risk factors inisolation would result in a significantly lower (higher) fair value measurement. Generally, a change in the assumption used for the level of enterprise value torevenue multiple is accompanied by a directionally similar change in the assumption used for the enterprise value to R&D multiple. In addition, a change inthe assumption used for the discount for lack of marketability and various risk factors is not correlated to changes in the assumptions used for the enterprisevalue to revenue multiple or the enterprise value to R&D investment multiple.We have one private equity investment, which is a venture capital fund (fair value of $29.9 million and unfunded commitment of $12.2 million as ofDecember 31, 2012) investing in communications, consumer, digital media, healthcare and information technology markets. We also have a second privateequity investment which is an investment in a private equity fund focused exclusively on the energy sector (fair value of $7.7 million and unfundedcommitment of $0.2 million as of December 31, 2012). In addition, one of the investments included in our consolidated private equity fund (fair value of $1.2million and unfunded commitment of $0.2 million as of December 31, 2012) is a venture capital fund investing in clean energy, resource and energyefficiency and other sustainable industries. The fair value of each of these investments has been estimated using the capital account balances provided by thepartnerships. The interests in these partnerships cannot be redeemed. Assets Measured at Fair Value on a Nonrecurring Basis There were no impairments recognized for goodwill, intangible assets or other long-lived assets as of December 31, 2012. 97Table of Contents 10. Furniture, Equipment and Leasehold Improvements, NetFurniture, equipment and leasehold improvements, net consist of: December 31, 2012 2011 (in thousands) Furniture and equipment $525,292 $564,958 Leasehold improvements 273,433 348,987 798,725 913,945 Less: Accumulated depreciation and amortization (602,600) (640,841)Furniture, equipment and leasehold improvements, net $196,125 $273,104 Depreciation and amortization expense on furniture, equipment and leasehold improvements were $52.8 million, $60.9 million and $59.6 million for theyears ended December 31, 2012, 2011 and 2010, respectively.During 2012, 2011 and 2010, we recorded $223.0 million, $7.2 million and $101.7 million, respectively, in pre-tax real estate charges. Included in thesecharges were $41.4 million, $4.6 million and $25.5 million, respectively, worth of leasehold improvements, furniture and equipment we wrote off related tothe respective spaces. See Note 3 for further discussion of the real estate charges.11. Deferred Sales Commissions, NetThe components of deferred sales commissions, net for the years ended December 31, 2012 and 2011 were as follows (excluding amounts related to fullyamortized deferred sales commissions): December 31, 2012 2011 (in thousands) Carrying amount of deferred sales commissions $758,127 $660,735 Less: Accumulated amortization (475,032) (434,770)Cumulative CDSC received (187,665) (165,966)Deferred sales commissions, net $95,430 $59,999 98Table of Contents Amortization expense was $40.3 million, $37.7 million and $47.4 million for the years ended December 31, 2012, 2011 and 2010, respectively. Estimatedfuture amortization expense related to the December 31, 2012 net asset balance, assuming no additional CDSC is received in future periods, is as follows (inthousands):2013 $39,560 2014 25,760 2015 20,179 2016 9,312 2017 541 2018 78 $95,430 12. DebtAs of December 31, 2012 and 2011, AllianceBernstein had $323.2 million and $444.9 million, respectively, in commercial paper outstanding with weightedaverage interest rates of approximately 0.5% and 0.2%, respectively. The commercial paper is short term in nature, and as such, recorded value is estimated toapproximate fair value. Average daily borrowings of commercial paper during 2012 and 2011 were $404.9 million and $273.6 million, respectively, withweighted average interest rates of approximately 0.4% and 0.2%, respectively.AllianceBernstein has a $1.0 billion committed, unsecured senior revolving credit facility (the “Credit Facility”) with a group of commercial banks andother lenders which matures on January 17, 2017. The Credit Facility provides for possible increases in the principal amount by up to an aggregateincremental amount of $250 million, any such increase being subject to the consent of the affected lenders. The Credit Facility is available forAllianceBernstein’s and SCB LLC’s business purposes, including the support of AllianceBernstein’s $1.0 billion commercial paper program. BothAllianceBernstein and SCB LLC can draw directly under the Credit Facility and management expects to draw on the Credit Facility from time to time.AllianceBernstein has agreed to guarantee the obligations of SCB LLC under the Credit Facility.The Credit Facility contains affirmative, negative and financial covenants, which are customary for facilities of this type, including, among other things,restrictions on dispositions of assets, restrictions on liens, a minimum interest coverage ratio and a maximum leverage ratio. We are in compliance with thesecovenants. The Credit Facility also includes customary events of default (with customary grace periods, as applicable), including provisions under which,upon the occurrence of an event of default, all outstanding loans may be accelerated and/or lender’s commitments may be terminated. Also, under suchprovisions, upon the occurrence of certain insolvency- or bankruptcy-related events of default, all amounts payable under the Credit Facility wouldautomatically become immediately due and payable, and the lender’s commitments would automatically terminate.Amounts under the Credit Facility may be borrowed, repaid and re-borrowed by us from time to time until the maturity of the facility. Voluntary prepaymentsand commitment reductions requested by us are permitted at any time without fee (other than customary breakage costs relating to the prepayment of anydrawn loans) upon proper notice and subject to a minimum dollar requirement. Borrowings under the Credit Facility bear interest at a rate per annum, whichwill be, at our option, a rate equal to an applicable margin, which is subject to adjustment based on the credit ratings of AllianceBernstein, plus one of thefollowing indexes: London Interbank Offered Rate; a floating base rate; or the Federal Funds rate.As of December 31, 2012 and 2011, we had no amounts outstanding under the Credit Facility. During 2012, we did not draw upon the Credit Facility. During2011, $40.0 million was outstanding for one day in February (with an interest rate of 1.3%) resulting in average daily borrowings of $0.1 million under theCredit Facility.In addition, SCB LLC has five uncommitted lines of credit with four financial institutions. Two of these lines of credit permit us to borrow up to an aggregateof approximately $200.0 million while three lines have no stated limit.As of December 31, 2012 and 2011, we had no uncommitted bank loans outstanding. Average daily borrowings of uncommitted bank loans during 2012 and2011 were $18.1 million and $6.4 million, respectively, with weighted average interest rates of approximately 1.3% for both years. In May 2012,AllianceBernstein was named an additional borrower under a $100.0 million SCB uncommitted line of credit. As of December 31, 2012, AllianceBernsteinhad no loans outstanding. During 2012, $5.0 million was outstanding for one day with an interest rate of 1.4%. In January 2013, AllianceBernstein wasnamed an additional borrower on a second $100.0 million SCB uncommitted line of credit. 99Table of Contents 13. Commitments and ContingenciesOperating LeasesWe lease office space, furniture and office equipment under various operating leases. The future minimum payments under non-cancelable leases, subleasecommitments and related payments we are obligated to make, net of sublease commitments of third party lessees to make payments to us, as of December 31,2012 are as follows: Payments SubleaseReceipts NetPayments (in millions) 2013 $139.4 $22.3 $117.1 2014 136.0 24.4 111.6 2015 136.2 24.4 111.8 2016 135.6 24.4 111.2 2017 136.9 24.8 112.1 2018 and thereafter 1,084.4 137.1 947.3 Total future minimum payments $1,768.5 $257.4 $1,511.1 Office leases contain escalation clauses that provide for the pass through of increases in operating expenses and real estate taxes. Rent expense, which isamortized on a straight-line basis over the life of the lease, was $100.4 million, $121.2 million and $121.5 million, respectively, for the years ended December31, 2012, 2011 and 2010, net of sublease income of $3.2 million for each of the years ended December 31, 2012, 2011 and 2010. In addition, we acceleratedrent of $181.6 million, $2.6 million and $76.2 million in 2012, 2011 and 2010, respectively. See Note 3 for further discussion of the real estate charges.Legal ProceedingsDuring the first quarter of 2012, we received a legal letter of claim (the “Letter of Claim”) sent on behalf of a former European pension fund client, allegingthat AllianceBernstein Limited (a wholly-owned subsidiary of ours organized in the U.K.) was negligent and failed to meet certain applicable standards of carewith respect to the initial investment in and management of a £500 million portfolio of U.S. mortgage-backed securities. The alleged damages range between$177 million and $234 million, plus compound interest on an alleged $125 million of realized losses in the portfolio. We believe that any losses to this clientresulted from adverse developments in the U.S. housing and mortgage market that precipitated the financial crisis in 2008 and not any negligence or failure onour part. We believe that we have strong defenses to these claims, which are set forth in our October 12, 2012 response to the Letter of Claim, and will defendthis matter vigorously. Currently, we are unable to estimate a reasonably possible range of loss because the matter remains in its early stages.In addition to the Letter of Claim, we are involved in various other matters, including regulatory inquiries, administrative proceedings and litigation, some ofwhich allege significant damages.In management’s opinion, an adequate accrual has been made as of December 31, 2012 to provide for any probable losses regarding any litigation matters forwhich we can reasonably estimate an amount of loss. It is reasonably possible that we could incur additional losses pertaining to these matters, but currentlywe cannot estimate any such additional losses.Management, after consultation with legal counsel, currently believes that the outcome of any matter that is pending or threatened, or all of them combined,will not have a material adverse effect on our results of operations, financial condition or liquidity. However, as any inquiry, proceeding or litigation has anelement of uncertainty, management cannot determine whether further developments relating to any matter that is pending or threatened, or all of themcombined, will have a material adverse effect on our results of operation, financial condition or liquidity in any future reporting period.OtherDuring 2009, we entered into a subscription agreement under which we committed to invest up to $35 million, as amended in 2011, in a venture capital fundover a six-year period. As of December 31, 2012, we had funded $22.8 million of this commitment.During 2010, as general partner of the AllianceBernstein U.S. Real Estate L.P. (the “Real Estate Fund”), we committed to invest $25 million in the RealEstate Fund. As of December 31, 2012, we had funded $8.7 million of this commitment.During 2012, we entered into an investment agreement under which we committed to invest up to $8 million in an oil and gas fund over a three-year period. Asof December 31, 2012, we had funded $7.8 million of this commitment. 100Table of Contents 14. Net CapitalSCB LLC, a broker-dealer and a member organization of the New York Stock Exchange (“NYSE”), is subject to the Uniform Net Capital Rule 15c3-1 of theExchange Act. SCB LLC computes its net capital under the alternative method permitted by the rule, which requires that minimum net capital, as defined,equal the greater of $1 million, or two percent of aggregate debit items arising from customer transactions, as defined. As of December 31, 2012, SCB LLChad net capital of $144.4 million, which was $125.9 million in excess of the minimum net capital requirement of $18.5 million. Advances, dividendpayments and other equity withdrawals by SCB LLC are restricted by the regulations of the U.S. Securities and Exchange Commission (“SEC”), theFinancial Industry Regulatory Authority, Inc., and other securities agencies.SCBL is a member of the London Stock Exchange. As of December 31, 2012, SCBL was subject to financial resources requirements of $21.6 millionimposed by the Financial Services Authority of the United Kingdom and had aggregate regulatory financial resources of $39.0 million, an excess of $17.4million.AllianceBernstein Investments serves as distributor and/or underwriter for certain company-sponsored mutual funds. AllianceBernstein Investments isregistered as a broker-dealer under the Exchange Act and is subject to the minimum net capital requirements imposed by the SEC. AllianceBernsteinInvestments’ net capital as of December 31, 2012 was $31.0 million, which was $30.9 million in excess of its required net capital of $0.1 million.Many of our subsidiaries around the world are subject to minimum net capital requirements by the local laws and regulations to which they are subject. As ofDecember 31, 2012, each of our subsidiaries subject to a minimum net capital requirement satisfied the applicable requirement.15. Counterparty RiskCustomer ActivitiesIn the normal course of business, brokerage activities involve the execution, settlement and financing of various customer securities trades, which may exposeSCB LLC and SCBL to off-balance sheet risk by requiring SCB LLC and SCBL to purchase or sell securities at prevailing market prices in the event thecustomer is unable to fulfill its contractual obligations.SCB LLC’s customer securities activities are transacted on either a cash or margin basis. In margin transactions, SCB LLC extends credit to the customer,subject to various regulatory and internal margin requirements. These transactions are collateralized by cash or securities in the customer’s account. Inconnection with these activities, SCB LLC may execute and clear customer transactions involving the sale of securities not yet purchased. SCB LLC seeks tocontrol the risks associated with margin transactions by requiring customers to maintain collateral in compliance with the aforementioned regulatory andinternal guidelines. SCB LLC monitors required margin levels daily and, pursuant to such guidelines, requires customers to deposit additional collateral, orreduce positions, when necessary. A majority of SCB LLC’s customer margin accounts are managed on a discretionary basis whereby AllianceBernsteinmaintains control over the investment activity in the accounts. For these discretionary accounts, SCB LLC’s margin deficiency exposure is minimized throughmaintaining a diversified portfolio of securities in the accounts and by virtue of AllianceBernstein’s discretionary authority and SCB LLC’s role as custodian.SCB LLC may enter into forward foreign currency contracts on behalf of accounts for which SCB LLC acts as custodian. SCB LLC minimizes credit riskassociated with these contracts by monitoring these positions on a daily basis, as well as by virtue of AllianceBernstein’s discretionary authority and SCBLLC’s role as custodian.In accordance with industry practice, SCB LLC and SCBL record customer transactions on a settlement date basis, which is generally three business daysafter trade date. SCB LLC and SCBL are exposed to risk of loss on these transactions in the event of the customer’s or broker’s inability to meet the terms oftheir contracts, in which case SCB LLC and SCBL may have to purchase or sell financial instruments at prevailing market prices. The risks assumed bySCB LLC and SCBL in connection with these transactions are not expected to have a material adverse effect on AllianceBernstein’s, SCB LLC’s, or SCBL’sfinancial condition or results of operations.Other CounterpartiesSCB LLC and SCBL are engaged in various brokerage activities on behalf of clients, including Sanford C. Bernstein (Hong Kong) Limited (an indirectwholly-owned subsidiary of AllianceBernstein), in which counterparties primarily include broker-dealers, banks and other financial institutions. In the eventcounterparties do not fulfill their obligations, SCB LLC and SCBL may be exposed to risk. The risk of default depends on the creditworthiness of thecounterparty or issuer of the instrument. It is SCB LLC’s and SCBL’s policy to review, as necessary, each counterparty’s creditworthiness. 101Table of Contents In connection with security borrowing and lending arrangements, SCB LLC and SCBL enter into collateralized agreements, which may result in creditexposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Security borrowing arrangements require SCB LLC andSCBL to deposit cash collateral with the lender. With respect to security lending arrangements, SCB LLC (SCBL does not participate in security lendingarrangements) receives collateral in the form of cash in amounts generally in excess of the market value of the securities loaned. SCB LLC minimizes creditrisk associated with these activities by establishing credit limits for each broker and monitoring these limits on a daily basis. Additionally, security borrowingand lending collateral is marked to market on a daily basis, and additional collateral is deposited by or returned to SCB LLC and SCBL as necessary.AllianceBernstein enters into various futures, forwards and swaps to economically hedge certain of its seed money investments, as well as currency forwardsto hedge certain cash accounts. AllianceBernstein is exposed to credit losses in the event of nonperformance by counterparties to these derivative financialinstruments. See Note 8 for further discussion.16. Qualified Employee Benefit PlansWe maintain a qualified profit sharing plan covering U.S. employees and certain foreign employees. Employer contributions are discretionary and generallylimited to the maximum amount deductible for federal income tax purposes. Aggregate contributions for 2012, 2011 and 2010 were $13.0 million, $13.7million and $14.6 million, respectively.We maintain several defined contribution plans for foreign employees working for our subsidiaries in the United Kingdom, Australia, Japan and other foreignlocations outside the United States. Employer contributions are generally consistent with regulatory requirements and tax limits. Defined contribution expensefor foreign entities was $6.7 million, $7.7 million and $7.1 million in 2012, 2011 and 2010, respectively.We maintain a qualified, noncontributory, defined benefit retirement plan (“Retirement Plan”) covering current and former employees who were employed byAllianceBernstein in the United States prior to October 2, 2000. Benefits are based on years of credited service, average final base salary (as defined in theRetirement Plan), and primary Social Security benefits. Service and compensation after December 31, 2008 are not taken into account in determiningparticipants’ retirement benefits.Our policy is to satisfy our funding obligation for each year in an amount not less than the minimum required by the Employee Retirement Income SecurityAct of 1974, as amended, and not greater than the maximum amount we can deduct for federal income tax purposes. We contributed $4.9 million to theRetirement Plan during 2012. We currently estimate that we will contribute $4.0 million to the Retirement Plan during 2013. Contribution estimates, which aresubject to change, are based on regulatory requirements, future market conditions and assumptions used for actuarial computations of the Retirement Plan’sobligations and assets. Management, at the present time, has not determined the amount, if any, of additional future contributions that may be required.The Retirement Plan’s projected benefit obligation, fair value of plan assets, and funded status (amounts recognized in the consolidated statements of financialcondition) were as follows: Years Ended December 31, 2012 2011 (in thousands) Change in projected benefit obligation: Projected benefit obligation at beginning of year $94,655 $87,733 Interest cost 4,633 4,627 Actuarial loss 13,481 4,585 Benefits paid (4,963) (2,290)Projected benefit obligation at end of year 107,806 94,655 Change in plan assets: Plan assets at fair value at beginning of year 63,325 64,627 Actual return on plan assets 8,408 (5,912)Employer contribution 4,850 6,900 Benefits paid (4,963) (2,290)Plan assets at fair value at end of year 71,620 63,325 Funded status $(36,186) $(31,330) 102Table of Contents The amounts recognized in other comprehensive income (loss) for 2012 and 2011 were as follows: 2012 2011 (in thousands) Unrecognized net loss from experience different from that assumed and effects of changes and assumptions $(9,194) $(15,231)Unrecognized net plan assets as of January 1, 1987 being recognized over 26.3 years (143) (143) (9,337) (15,374)Income tax (expense) benefit (126) 332 Other comprehensive loss $(9,463) $(15,042)The amounts included in accumulated other comprehensive income (loss) as of December 31, 2012 and 2011 were as follows: 2012 2011 (in thousands) Unrecognized net loss from experience different from that assumed and effects of changes and assumptions $(48,264) $(39,070)Unrecognized net plan assets as of January 1, 1987 being recognized over 26.3 years 47 190 (48,217) (38,880)Income tax benefit 723 849 Accumulated other comprehensive loss $(47,494) $(38,031)The estimated initial plan assets and amortization of loss for the Retirement Plan that will be amortized from accumulated other comprehensive income over thenext year is $47,129 and $1,105,698, respectively. The accumulated benefit obligation for the plan was $107.8 million and $94.7 million, respectively, asof December 31, 2012 and 2011.The discount rates used to determine benefit obligations as of December 31, 2012 and 2011 (measurement dates) were 4.4% and 5.1%, respectively.The following benefit payments are expected to be paid as follows (in thousands):2013 $3,331 2014 3,019 2015 4,822 2016 5,763 2017 4,889 2018-2022 30,153 Net expense under the Retirement Plan consisted of: Years Ended December 31, 2012 2011 2010 (in thousands) Interest cost on projected benefit obligations $4,633 $4,627 $4,600 Expected return on plan assets (4,969) (5,133) (4,453)Amortization of transition asset (143) (143) (143)Recognized actuarial loss 848 399 262 Net pension expense (benefit) $369 $(250) $266 Actuarial computations used to determine net periodic costs were made utilizing the following weighted-average assumptions: Years Ended December 31, 2012 2011 2010 Discount rate on benefit obligations 5.10% 5.50% 6.05%Expected long-term rate of return on plan assets 8.00 8.00 8.00 103Table of Contents The Retirement Plan’s asset allocation percentages consisted of: December 31, 2012 2011 Equity securities 67% 62%Debt securities 28 28 Real estate 2 10 Cash 3 — 100% 100%In developing the expected long-term rate of return on plan assets of 8.0%, management considered the historical returns and future expectations for returns foreach asset category, as well as the target asset allocation of the portfolio. The expected long-term rate of return on assets is based on weighted average expectedreturns for each asset class. The guidelines regarding allocation of assets formalized in the Investment Policy Statement were adopted by the Investment Committee for the Retirement Planto reflect the Plan’s liquidity requirements, funded status, growth expectations and risk tolerance. The guidelines specify an allocation weighting of 50% to70% for global equity securities (target of 60%), 20% to 40% for fixed income securities (target of 30%) and 0% to 10% for real estate investment trusts (target of10%). Alternative investments are permitted under the guidelines, with such investments to be allocated to one or more of the above security classes and subjectto the indicated tactical ranges.Exposure of the total portfolio to cash equivalents on average should not exceed 5% of the portfolio’s value on a market value basis. The plan seeks to providea rate of return that exceeds applicable benchmarks over rolling five-year periods. The benchmark for the plan’s large cap domestic equity investment strategyis the S&P 500 Index; the small cap domestic equity investment strategy is measured against the Russell 2000 Index; the international equity investmentstrategy is measured against the MSCI EAFE Index; and the fixed income investment strategy is measured against the Barclays Aggregate Bond Index.See Note 9 for a description of how we measure the fair value of our plan assets. The following table summarizes the valuation of our Retirement Plan assetsby pricing observability levels as of December 31, 2012: Level 1 Level 2 Level 3 Total (in thousands) Cash $2,197 $— $— $2,197 Fixed income mutual funds 22,135 — — 22,135 Equity mutual fund 12,356 — — 12,356 Equity securities 23,933 — — 23,933 Equity private investment trusts — 10,999 — 10,999 Total assets measured at fair value $60,621 $10,999 $— $71,620 During 2012, the Retirement Plan invested in two fixed income mutual funds. Both funds seek to generate income consistent with preservation of capital. Onemutual fund invests in a portfolio of fixed income securities of U.S. and non-U.S. companies and U.S. and non-U.S. government securities andsupranational entities, including lower-rated securities. The second fund invests in a broad range of fixed income securities in both developed and emergingmarkets with a range of maturities from short- to long-duration.The Retirement Plan also invested in separate equity and fixed income mutual funds which seek to moderate the volatility of equity and fixed income orientedasset allocation over the long term, as part of an investor’s overall asset allocation managed by AllianceBernstein.The Retirement Plan invested in a multi-style, multi-cap integrated portfolio adding incremental U.S. equity diversification to its value and growth equityselections, designed to deliver a long-term premium to the S&P 500 with greater consistency across a range of market environments.Finally, the Retirement Plan invested in two equity private investment trusts. One trust invests primarily in equity securities of non-U.S. companies located inemerging market countries, while the other trust invests in equity securities of established non-U.S. companies located in the countries comprising the MSCIEAFE Index, plus Canada. 104Table of Contents The following table summarizes the valuation of our Retirement Plan assets by pricing observability levels as of December 31, 2011: Level 1 Level 2 Level 3 Total (in thousands) Cash $9 $— $— $9 Government securities U.S. Treasury bills — 662 — 662 Agency Discount notes — 208 — 208 Real estate mutual fund 6,358 — — 6,358 Fixed income mutual funds 16,591 — — 16,591 Equity mutual funds 10,938 — — 10,938 Equity private investment trusts — 28,559 — 28,559 Total assets measured at fair value $33,896 $29,429 $— $63,325 During 2011, the Retirement Plan invested in a real estate mutual fund which is an open-end fund that seeks total return from long-term growth of capital andincome. Typically the mutual fund invests at least 80% of its net assets in real estate investment trusts and other real estate industry companies. The mutualfund is subject to certain risks associated with the direct ownership of real estate and with the real estate industry in general. To the extent that assetsunderlying the mutual fund’s investments are concentrated geographically, by property type or in certain other respects, the mutual fund may be subject toadditional risks.The Retirement Plan also invested in two fixed income mutual funds. One of the mutual funds seeks to provide safety of principal and a moderate rate ofincome that is subject to taxes. Typically the mutual funds invest at least 80% of their net assets in securities rated A or better by national rating agencies. Theother fixed income mutual fund seeks to generate current income consistent with preservation of capital. The mutual fund invests in debt securities with arange of maturities from short- to long-duration in both developed and emerging markets.The Retirement Plan invested in two equity mutual funds. One equity mutual fund seeks long-term growth of capital through the pursuit of opportunisticgrowth by investing in a global universe of companies in multiple industries that may benefit from innovation. The second mutual fund’s objective is tomaximize real return, which equals total return less the estimated effect of inflation. The mutual fund invests principally in instruments that are affecteddirectly or indirectly by the level and change in rate of inflation.Finally the Retirement Plan invested in two equity private investment trusts. One of these trusts invests primarily in equity securities of companies locatedaround the world, while the other invests primarily in equity securities of non-U.S. companies located in emerging market countries.The government securities held by the Retirement Plan consist of United States Treasury Bills and Agency Discount notes.We provide postretirement medical benefits which allow retirees between the ages of 55 and 65 meeting certain service requirements, at their election, tocontinue to participate in our group medical program by paying 100% of the applicable group premium. Retirees older than 65 may also continue to participatein our group medical program, but are required to pay the full expected cost of benefits. To the extent that retirees’ medical costs exceed premiums paid, weincur the cost of providing a post-retirement medical benefit. During 2012, our net periodic benefit cost was $0.8 million, and our aggregate benefit obligationas of December 31, 2012 was $7.5 million.17. Long-term Incentive Compensation PlansWe maintain an unfunded, non-qualified incentive compensation program known as the AllianceBernstein 2012 Incentive Compensation Award Program (the“Incentive Compensation Program”), under which annual awards may be granted to eligible employees. See Note 2. Summary of Significant AccountingPolicies – Long-term Incentive Compensation Plans’ for a discussion of the award provisions.Under the Incentive Compensation Program, we made awards in 2012, 2011 and 2010 aggregating $150.1 million, $159.9 million and $275.6 million,respectively. The amounts charged to employee compensation and benefits for the years ended December 31, 2012, 2011 and 2010 were $151.4 million,$654.3 million (which includes $509.1 million of the one-time, non-cash compensation charge) and $207.9 million, respectively. 105Table of Contents During 2005, we established the AllianceBernstein Financial Advisor Wealth Accumulation Plan (“Wealth Accumulation Plan”), a voluntary unfunded,non-qualified incentive plan. The Wealth Accumulation Plan was established to attract, motivate and retain eligible employees expected to make significantcontributions to the future growth and success of Bernstein Global Wealth Management, the unit of AllianceBernstein that services private clients. Participantsdesignate the percentage of their awards to be notionally invested in Holding Units or certain of our investment services. No more than 50% of the award maybe notionally invested in Holding Units. Prior to the changes made to incentive compensation awards in the fourth quarter of 2011 (see Note 2, “Summary ofSignificant Accounting Policies – Long-term Incentive Compensation Plans”), all awards vested annually on a pro rata basis over the term of the award.There have been no awards granted under this plan since 2009. The amounts charged to employee compensation and benefits expense for the years endedDecember 31, 2012, 2011 and 2010 were $(0.5) million, $25.5 million (which includes $24.8 million of the one-time, non-cash compensation charge) and$8.5 million, respectively.18. Compensatory Unit Awards and Option PlansEffective as of July 1, 2010, we established the AllianceBernstein 2010 Long Term Incentive Plan, as amended (“2010 Plan”), which was adopted by HoldingUnitholders at a special meeting of Holding Unitholders held on June 30, 2010. Since the 2010 Plan was adopted, the following forms of awards have beenavailable for grant to employees and Eligible Directors: (i) restricted Holding Units or phantom restricted Holding Units (a “phantom” award is a contractualright to receive Holding Units at a later date or upon a specified event); (ii) options to buy Holding Units; and (iii) other Holding Unit-based awards(including, without limitation, Holding Unit appreciation rights and performance awards). The purpose of the 2010 Plan is to promote the interest ofAllianceBernstein by: (i) attracting and retaining talented officers, employees and directors, (ii) motivating such officers, employees and directors by means ofperformance-related incentives to achieve longer-range business and operational goals, (iii) enabling such officers, employees and directors to participate in thelong-term growth and financial success of AllianceBernstein, and (iv) aligning the interests of such officers, employees and directors with those of HoldingUnitholders. The 2010 Plan will expire on June 30, 2020, and no awards under the 2010 Plan will be made after that date. Under the 2010 Plan, the aggregatenumber of Holding Units with respect to which awards may be granted is 60.0 million, including no more than 30.0 million newly-issued Holding Units.The 2010 Plan was amended by the Board in May 2011, expanding the universe of persons eligible to receive awards under the 2010 Plan to include anymember of the Board who is a former executive or former employee of an affiliate of Holding. For purposes of this amendment, “affiliate” includes anycompany or other entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with,AllianceBernstein.The 2010 Plan was further amended by the Compensation Committee of the Board (“Compensation Committee”) in December 2011, clarifying that, whereduly authorized by the Compensation Committee or the Board, continued vesting of Awards after a Termination (as those terms are defined in the 2010 Plan orthe applicable award agreement) in circumstances where such continued vesting is conditioned on compliance with (A) one or more restrictive covenants,and/or (B) a standard of conduct regarding appropriate consideration of risk set forth in the applicable award agreement, shall count towards satisfying theminimum vesting requirement set forth in Section 6(b)(i) of the 2010 Plan.The 2010 Plan was further amended by the Board in May 2012, when the Board authorized management to reacquire on the open market or otherwise all 60.0million Holding Units available for awards under the 2010 Plan (less one Holding Unit for every newly-issued Holding Unit already awarded under the 2010Plan), while maintaining the 30.0 million Holding Unit limitation on newly-issued Holding Units available for awards under the 2010 Plan.As of December 31, 2012, 210,591 options to buy Holding Units had been granted and 24,563,327 Holding Units, net of forfeitures, were subject to otherHolding Unit awards made under the 2010 Plan. Holding Unit-based awards (including options) in respect of 35,226,082 Holding Units were available forgrant as of December 31, 2012.In 1997, we established the 1997 Long Term Incentive Plan (“1997 Plan”), under which options to buy Holding Units, restricted Holding Units andphantom restricted Holding Units, performance awards, and other Holding Unit-based awards were available for grant to key employees and Eligible Directorsof the General Partner for terms established at the time of grant (generally 10 years). Options granted to employees are generally exercisable at a rate of 20% ofthe Holding Units subject to such options on each of the first five anniversary dates of the date of grant; options granted to Eligible Directors are generallyexercisable at a rate of 33.3% of the Holding Units subject to such options on each of the first three anniversary dates of the date of grant. Restricted HoldingUnits awarded to Eligible Directors vest on the third anniversary of the grant date or immediately upon a director’s resignation. Restricted Holding Unitsawarded to our CEO (as described below under “Restricted Holding Unit Awards”) vest 20% on each of the first five anniversary dates of the grant date.Restricted Holding Units awarded under the Incentive Compensation Program vest 25% on December 1st of the subsequent four years. The 1997 Plan expiredon July 26, 2010. 106Table of Contents Option AwardsOptions to buy Holding Units (including grants to Eligible Directors) were granted as follows: 114,443 options were granted during 2012, 70,238 options weregranted during 2011 and 387,661 options were granted during 2010. The weighted average fair value of options to buy Holding Units granted during 2012,2011 and 2010 was $3.67, $5.98 and $6.18, respectively, on the date of grant, determined using the Black-Scholes option valuation model with thefollowing assumptions: 2012 2011 2010 Risk-free interest rate 0.7% 1.9% 2.2 – 2.3%Expected cash distribution yield 6.2% 5.4% 7.2 – 8.2%Historical volatility factor 49.2% 47.3% 46.2 – 46.6%Expected term 6.0 years 6.0 years 6.0 years Due to a lack of sufficient historical data, we have chosen to use the simplified method to calculate the expected term of options.The following table summarizes the activity in our option plan during 2012: Options toBuyHoldingUnits WeightedAverageExercise PricePer Option WeightedAverageRemainingContractualTerm (Years) AggregateIntrinsic Value Outstanding as of December 31, 2011 8,994,229 $39.63 6.4 Granted 114,443 14.58 Exercised — — Forfeited (11,500) 33.18 Expired (543,827) 32.34 Outstanding as of December 31, 2012 8,553,345 39.77 5.8 $— Exercisable as of December 31, 2012 4,237,915 33.85 5.7 — Vested or expected to vest as of December 31, 2012 8,553,345 39.77 5.8 — The aggregate intrinsic value as of December 31, 2012 on options outstanding, exercisable and expected to vest is negative, and is therefore presented as zero inthe table above. The total intrinsic value of options exercised during 2012, 2011 and 2010 was zero, $0.4 million and $5.6 million, respectively.Under the fair value method, compensation expense is measured at the grant date based on the estimated fair value of the options awarded (determined usingthe Black-Scholes option valuation model) and is recognized over the required service period. We recorded compensation expense relating to option grants of$1.2 million, $36.4 million (which includes $35.2 million of the one-time, non-cash compensation charge) and $9.1 million, respectively, for the years endedDecember 31, 2012, 2011 and 2010. As of December 31, 2012, there was $0.2 million of compensation cost related to unvested option grants not yetrecognized in the consolidated statement of income. The remaining cost is expected to be recognized during the first half of 2013.Restricted Holding Unit AwardsIn 2012, 2011 and 2010, restricted Holding Units were awarded to Eligible Directors. These Holding Units give the Eligible Directors, in most instances, allthe rights of other Holding Unitholders subject to such restrictions on transfer as the Board may impose. We awarded 28,812, 19,313 and 5,275 restrictedHolding Units, respectively, in 2012, 2011 and 2010 with grant date fair values of $14.58, $21.75 and $28.46, respectively, per restricted Holding Unit. Allof the restricted Holding Units vest on the third anniversary of grant date or immediately upon a director’s resignation. We fully expensed these awards on eachgrant date. We recorded compensation expense relating to these awards of $0.4 million, $0.4 million and $0.2 million, respectively, for the years endedDecember 31, 2012, 2011 and 2010.In connection with the commencement of Mr. Kraus’s employment as our CEO on December 19, 2008, he was granted 2,722,052 restricted Holding Unitswith a grant date fair value of $19.20. Subject to accelerated vesting provisions in Mr. Kraus’s employment agreement, his restricted Holding Units vestratably on each of the first five anniversaries of December 19, 2008, commencing December 19, 2009, provided, with respect to each installment, Mr. Krauscontinues to be employed by AllianceBernstein on the vesting date. Mr. Kraus’s service requirement was not impacted by the changes to the employee long-termincentive compensation award program in the fourth quarter of 2011. During June 2012, Mr. Kraus entered into an agreement (the “Extended EmploymentAgreement”) pursuant to which Mr. Kraus will continue to serve as our CEO from January 3, 2014, the day following the end of the term of his initialemployment agreement, until January 2, 2019 (the “Extended Employment Term”), unless the Extended Employment Agreement is terminated inaccordance with its terms. In connection with the signing of the Extended Employment Agreement, Mr. Kraus was granted 2,722,052 restricted HoldingUnits, vesting ratably over the Extended Employment Term. Under U.S. GAAP, the compensation expense for the Holding Unit award under the ExtendedEmployment Agreement of $33.1 million (based on the $12.17 grant date Holding Unit price) must be amortized on a straight-line basis over 6.5 years,beginning on the grant date. As a result, even though Mr. Kraus will not receive any incremental cash compensation or cash distributions related to therestricted Holding Unit award pursuant to the Extended Employment Agreement prior to its commencement on January 3, 2014, we incurred $2.5 million ofincremental compensation expense during the second half of 2012 and will incur $5.1 million of such expense for the full year 2013. We recordedcompensation expense relating to the CEO restricted Holding Unit grants of $13.0 million, $10.5 million and $10.5 million, respectively, for each of the yearsended December 31, 2012, 2011 and 2010.ended December 31, 2012, 2011 and 2010. 107Table of Contents In 1993, we established the Century Club Plan, under which employees of AllianceBernstein whose primary responsibilities are to assist in the distribution ofcompany-sponsored mutual funds and who meet certain sales targets, are eligible to receive an award of restricted Holding Units. Awards granted prior toDecember 2010 vested ratably over three years and subsequent awards vest ratably over four years. The service requirement for Century Club participantswas impacted by the amendment to the employee long-term incentive compensation award program in the fourth quarter of 2011. We awarded 47,450, 57,828and 95,531 restricted Holding Units in 2012, 2011 and 2010, respectively. The grant date fair values of these awards were $17.91 in 2012, $13.38 in 2011and $27.45 and $23.72 in 2010 per Holding Unit. We recorded compensation expense relating to the Century Club Plan grants of $0.7 million, $3.0 million(which includes $2.2 million of the one-time, non-cash compensation charge) and $1.2 million, respectively, for the years ended December 31, 2012, 2011and 2010.Beginning in 2009, we awarded restricted Holding Units under the Incentive Compensation Program (see Note 17). We awarded 8,671,253 (all of which weregranted in January 2012 for 2011 year-end awards) in 2012 and 11,594,207 restricted Holding Units in 2010 with grant date fair values of $14.90 in 2012and ranging between $23.72 and $32.06 in 2010 per restricted Holding Unit.We also award restricted Holding Units in connection with certain employment and separation agreements with vesting schedules ranging between two to fiveyears. The fair value of the restricted Holding Units is amortized over the required service period as employee compensation expense. We awarded 630,630,1,649,973 and 1,369,751 Holding Units in 2012, 2011 and 2010, respectively, with grant date fair values ranging between $12.13 and $17.58 in 2012,$16.29 and $22.71 in 2011 and $23.72 and $28.37 in 2010 per restricted Holding Unit. We recorded compensation expense relating to restricted HoldingUnit grants in connection with certain employment and separation agreements of $20.1 million, $32.9 million (which includes $15.8 million of the one-time,non-cash compensation charge) and $23.2 million, respectively, for the years ended December 31, 2012, 2011 and 2010.The following table summarizes the activity of unvested restricted Holding Units during 2012: HoldingUnits WeightedAverageGrant DateFairValue perHoldingUnit Unvested as of December 31, 2011 15,574,191 $23.88 Granted 12,099,291 14.48 Vested (8,507,437) 21.65 Forfeited (728,556) 20.67 Unvested as of December 31, 2012 18,437,489 18.79 The total grant date fair value of restricted Holding Units that vested during 2012, 2011 and 2010 was $184.2 million, $140.2 million and $73.4 million,respectively. As of December 31, 2012, there was $59.3 million of compensation cost related to unvested restricted Holding Unit awards granted and not yetrecognized in the consolidated statement of income. The cost is expected to be recognized over a weighted average period of 4.0 years. 108Table of Contents 19. Units OutstandingChanges in units outstanding for the years ended December 31, 2012 and 2011 were as follows: 2012 2011 Outstanding as of January 1, 277,847,588 278,115,232 Options exercised — 86,543 Units issued — — Units retired (246,687) (354,187)Units forfeited — — Outstanding as of December 31, 277,600,901 277,847,588 During 2012 and 2011, we purchased 246,687 and 354,187 AllianceBernstein Units, respectively, in private transactions and retired them.20. Income TaxesAllianceBernstein is a private partnership for federal income tax purposes and, accordingly, is not subject to federal or state corporate income taxes. However,AllianceBernstein is subject to a 4.0% New York City unincorporated business tax (“UBT”). Domestic corporate subsidiaries of AllianceBernstein, which aresubject to federal, state and local income taxes, are generally included in the filing of a consolidated federal income tax return with separate state and localincome tax returns being filed. Foreign corporate subsidiaries are generally subject to taxes in the foreign jurisdictions where they are located.In order to preserve AllianceBernstein’s status as a private partnership for federal income tax purposes, AllianceBernstein Units must not be consideredpublicly traded. The AllianceBernstein Partnership Agreement provides that all transfers of AllianceBernstein Units must be approved by AXA Equitable LifeInsurance Company (a wholly-owned subsidiary of AXA, “AXA Equitable”) and the General Partner; AXA Equitable and the General Partner approve onlythose transfers permitted pursuant to one or more of the safe harbors contained in relevant treasury regulations. If AllianceBernstein Units were consideredreadily tradable, AllianceBernstein’s net income would be subject to federal and state corporate income tax, reducing its quarterly distribution to Holding.Furthermore, should AllianceBernstein enter into a substantial new line of business, Holding, by virtue of its ownership of AllianceBernstein, would lose itsstatus as a “grandfathered” publicly-traded partnership and would become subject to corporate income tax, which would reduce materially Holding’s netincome and its quarterly distributions to Holding unitholders.Earnings (loss) before income taxes and income tax expense consist of: Years Ended December 31, 2012 2011 2010 (in thousands) Earnings (loss) before income taxes: United States $177,347 $(120,159) $382,463 Foreign 25,018 (88,310) 83,159 Total $202,365 $(208,469) $465,622 Income tax expense: Partnership UBT $2,626 $8,737 $10,363 Corporate subsidiaries: Federal 2,367 10,600 2,570 State and local 541 1,772 1,401 Foreign 8,852 11,411 25,144 Current tax expense 14,386 32,520 39,478 Deferred tax (benefit) (622) (29,422) (955)Income tax expense $13,764 $3,098 $38,523 109Table of Contents The principal reasons for the difference between the effective tax rates and the UBT statutory tax rate of 4.0% are as follows: Years Ended December 31, 2012 2011 2010 (in thousands) UBT statutory rate $8,095 4.0% $(8,339) 4.0% $18,625 4.0%Corporate subsidiaries’ federal, state, localand foreign income taxes 12,548 6.2 2,998 (1.4) 25,544 5.5 Effect of ASC 740 adjustments,miscellaneous taxes, and other (9,665) (4.8) 2,560 (1.3) 1,445 0.3 Income not taxable resulting from use ofUBT business apportionment factors andeffect of compensation charge 2,786 1.4 5,879 (2.8) (7,091) (1.5)Income tax expense and effective taxrate $13,764 6.8 $3,098 (1.5) $38,523 8.3 Income tax expenses increased $10.7 million, or 344.3%, in 2012 compared to 2011. The increase was primarily due to higher operating income in 2012 (inlarge part due to the 2011 compensation charge offset by the 2012 real estate charges), partially offset by the UBT tax benefit recorded in the third quarter of2012 ($5.7 million). In the third quarter of 2012, application of the New York City tax law that sources various types of receipts from services performed byregistered brokers and dealers of securities and commodities for purposes of apportioning income resulted in a reduction of our rate of tax for the current yearand to the rate of tax that we expect to pay in the future. As a result, we recognized a $5.7 million tax benefit in the third quarter of 2012 relating to our fullyear 2011 and nine months 2012 UBT.Income tax expenses decreased $35.4 million, or 92.0%, in 2011 compared to 2010. Prior to the fourth quarter 2011 compensation charge of $587.1 million,our estimate of our full year 2011 effective tax rate was 7.1%. As a result of the compensation charge, as well as the immediate recognition of the 2011 long-term incentive compensation awards, we had a fourth quarter 2011 effective tax rate of 3.8% (pre-tax loss of $540.2 million and income tax benefit of $20.3million that resulted in a full-year 2011 pre-tax loss of $208.5 million and income tax expense of $3.1 million). The compensation charge resulted in a one-timechange to the historical mix of business between AllianceBernstein, which incurs a 4.0% UBT, and its corporate subsidiaries that incur corporate level incometaxes. In addition, the recorded tax benefit associated with the future deliveries of vested Holding Units was based on the current market value in mostjurisdictions, which was lower than the grant price of the awards included in the compensation charge. Both contributed to us incurring tax expense of $3.1million rather than a benefit at the full year estimated effective tax rate of 7.1%.We recognize the effects of a tax position in the financial statements only if, as of the reporting date, it is “more likely than not” to be sustained based solely onits technical merits. In making this assessment, we assume that the taxing authority will examine the tax position and have full knowledge of all relevantinformation.A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Years Ended December 31, 2012 2011 2010 (in thousands) Balance as of beginning of period $4,028 $5,326 $7,365 Additions for prior year tax positions 158 190 - Reductions for prior year tax positions - - - Additions for current year tax positions 918 761 823 Reductions for current year tax positions - - - Reductions related to closed years/settlements with tax authorities (1,432) (2,249) (2,862)Balance as of end of period $3,672 $4,028 $5,326 The amount of unrecognized tax benefits as of December 31, 2012, 2011 and 2010 when recognized, is recorded as a reduction to income tax expense andreduces the company’s effective tax rate.Interest and penalties, if any, relating to tax positions are recorded in income tax expense on the consolidated statements of income. The total amount of interestexpense (credit) recorded in income tax expense during 2012, 2011 and 2010 was $(0.3) million, $(0.2) million and $(0.1) million, respectively. The totalamount of accrued interest recorded on the consolidated statements of financial condition as of December 31, 2012, 2011 and 2010 are $0.2 million, $0.5million and $0.7 million, respectively. There were no accrued penalties as of December 31, 2012, 2011 or 2010. 110Table of Contents The company is generally no longer subject to U.S. federal, or state and local income tax examinations by tax authorities for any year prior to 2009, except asset forth below.The Internal Revenue Service (“IRS”) initiated an examination of our domestic corporate subsidiaries’ federal tax returns for the years 2008 through 2010 inthe fourth quarter of 2011. This examination was completed in 2012 and we have received notification that the IRS has accepted our tax returns as filed.In addition, examinations of five of AllianceBernstein’s domestic corporate subsidiaries were initiated in 2010 and 2011 by state and local taxing authorities.Two of these examinations were closed in 2012 with no change to our tax filings and one of these audits was settled for $0.2 million and the remaining reserveswere released. An assessment has been received for the fourth audit for years 2007 through 2010. This matter remains in the appeal stage and we do not believean increase in the existing reserve is necessary. The fifth audit remains in progress and we do not believe an increase in the reserve is necessary.The Canadian Revenue Agency continues their examination of AllianceBernstein’s Canadian subsidiary tax returns for the years 2005 through 2007. We havebeen advised verbally that there will be no change to the tax filing for the year 2005. An initial assessment has been made by the Canadian Revenue Agencywith respect to years 2006 and 2007. The assessment is being challenged and remains in the appeal stage. We do not believe an increase to the reserve isnecessary. Currently, there are no other income tax examinations at our significant non-U.S. subsidiaries except as noted above. Years that remain open andmay be subject to examination vary under local law, and range from one to seven years.During the third quarter of 2011, the City of New York notified us of an examination of AllianceBernstein’s UBT returns for the years 2007 and 2008. Theexamination was started in the fourth quarter of 2012 and remains in progress. We do not believe an increase in the reserve is necessary.Since there are no significant examinations for the years 2009 and forward it is our opinion that there will not be any recognition of unrecognized tax benefits.However, adjustment to the reserve could occur in light of changing facts and circumstances with respect to any future examinations.Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposesand the amounts used for income tax purposes. The tax effect of significant items comprising the net deferred tax asset (liability) is as follows: December 31, 2012 2011 (in thousands) Deferred tax asset: Differences between book and tax basis: Benefits from net operating loss carryforwards $15,352 $5,138 Long-term incentive compensation plans 28,340 35,716 Other, primarily accrued expenses deductible when paid 12,825 14,398 56,517 55,252 Less: valuation allowance (12,789) (5,138)Deferred tax asset 43,728 50,114 Deferred tax liability: Differences between book and tax basis: Intangible assets 6,971 14,325 Translation adjustment 8,655 9,413 Other, primarily undistributed earnings of certain foreign subsidiaries — 330 Deferred tax liability 15,626 24,068 Net deferred tax asset $28,102 $26,046 Valuation allowances of $12.8 million and $5.1 million were established during 2012 and 2011, respectively, due to the uncertainty of realizing certain netoperating loss (“NOL”) carryforwards given the future losses expected to be incurred by the applicable subsidiaries. We had NOL carryforwards at December31, 2012 of approximately $73.7 million in certain foreign locations with an indefinite expiration period.The deferred tax asset is included in other assets. Management has determined that realization of the deferred tax asset is more likely than not based onanticipated future taxable income.The company provides income taxes on the undistributed earnings of non-U.S. corporate subsidiaries except to the extent that such earnings are permanentlyinvested outside the United States. As of December 31, 2012, $619.9 million of accumulated undistributed earnings of non-U.S. corporate subsidiaries werepermanently invested. At existing applicable income tax rates, additional taxes of approximately $24.1 million, net of foreign tax credits, would need to beprovided if such earnings were remitted. 111Table of Contents 21. Business Segment InformationManagement has assessed the requirements of ASC 280, Segment Reporting, and determined that, because we utilize a consolidated approach to assessperformance and allocate resources, we have only one operating segment. Enterprise-wide disclosures as of and for the years ended December 31, 2012, 2011and 2010, were as follows:ServicesNet revenues derived from our investment management, research and related services were as follows: Years Ended December 31, 2012 2011 2010 (in millions) Institutions $485 $617 $765 Retail 1,193 1,093 1,069 Private client 586 652 651 Bernstein research services 414 437 431 Other 62 (47) 37 Total revenues 2,740 2,752 2,953 Less: Interest expense 3 2 4 Net revenues $2,737 $2,750 $2,949 Our AllianceBernstein Global High Yield Portfolio, an open-end fund incorporated in Luxembourg (ACATEUH: LX), generated approximately 12%, 10% and7% of our investment advisory and service fees and 13%, 11% and 8% of our net revenues during 2012, 2011 and 2010, respectively.Geographic InformationNet revenues and long-lived assets, related to our U.S. and international operations, as of and for the years ended December 31, were: 2012 2011 2010 (in millions) Net revenues: United States $1,700 $1,725 $1,933 International 1,037 1,025 1,016 Total $2,737 $2,750 $2,949 Long-lived assets: United States $3,363 $3,403 $3,448 International 52 74 74 Total $3,415 $3,477 $3,522 Major CustomersCompany-sponsored mutual funds are distributed to individual investors through broker-dealers, insurance sales representatives, banks, registeredinvestment advisers, financial planners and other financial intermediaries. Certain subsidiaries of AXA, including AXA Advisors, LLC, have entered intoselected dealer agreements with AllianceBernstein Investments and have been responsible for 4%, 1% and 2% of our open-end mutual fund sales in 2012, 2011and 2010, respectively. During 2012, Hong Kong and Shanghai Banking Corporation (HSBC), UBS AG and Citigroup (or their respective subsidiaries) wereresponsible for approximately 13%, 10% and 6%, respectively, of our open-end mutual fund sales. Neither AXA nor these unaffiliated companies are underany obligation to sell a specific amount of AllianceBernstein Fund shares and each also sells shares of mutual funds that it sponsors and that are sponsoredby unaffiliated organizations.AXA and the general and separate accounts of AXA Equitable (including investments by the separate accounts of AXA Equitable in the funding vehicle EQAdvisors Trust) accounted for approximately 4%, 4% and 5% of total revenues for the years ended December 31, 2012, 2011 and 2010, respectively. Nosingle institutional client other than AXA and its subsidiaries accounted for more than 1% of total revenues for the years ended December 31, 2012, 2011 and2010. 112Table of Contents 22. Related Party TransactionsMutual FundsInvestment management, distribution, shareholder and administrative, and brokerage services are provided to individual investors by means of retail mutualfunds sponsored by our company, our subsidiaries and our affiliated joint venture companies. Substantially all of these services are provided under contractsthat set forth the services to be provided and the fees to be charged. The contracts are subject to annual review and approval by each of the mutual funds’boards of directors or trustees and, in certain circumstances, by the mutual funds’ shareholders. Revenues for services provided or related to the mutual fundsare as follows: Years Ended December 31, 2012 2011 2010 (in thousands) Investment advisory and services fees $885,669 $840,165 $778,284 Distribution revenues 400,763 351,621 338,597 Shareholder servicing fees 89,117 91,931 93,148 Other revenues 5,127 5,643 5,726 Bernstein research services 133 66 121 AXA and its SubsidiariesWe provide investment management and certain administration services to AXA and its subsidiaries. In addition, AXA and its subsidiaries distributecompany-sponsored mutual funds, for which they receive commissions and distribution payments. Sales of company-sponsored mutual funds through AXAand its subsidiaries, excluding cash management products, aggregated approximately $1.7 billion, $0.4 billion and $0.5 billion for the years ended December31, 2012, 2011 and 2010, respectively. Also, we are covered by various insurance policies maintained by AXA subsidiaries and we pay fees for technologyand other services provided by AXA and its subsidiaries. Aggregate amounts included in the consolidated financial statements for transactions with AXA andits subsidiaries are as follows: Years Ended December 31, 2012 2011 2010 (in thousands) Revenues: Investment advisory and services fees $113,076 $114,266 $135,004 Bernstein research services 982 802 492 Distribution revenues 943 — — Other revenues 599 599 583 $115,600 $115,667 $136,079 Expenses: Commissions and distribution payments to financial intermediaries $7,924 $7,411 $8,896 General and administrative 19,779 22,191 21,256 Other 1,550 1,467 264 $29,253 $31,069 $30,416 Balance Sheet: Institutional investment advisory and services fees receivable $7,878 $9,004 $18,654 Prepaid insurance 1,342 1,411 1,199 Other due (to) from AXA and its subsidiaries (3,732) (4,319) (4,732) $5,488 $6,096 $15,121 During the first quarter of 2011, AXA sold its 50% interest in our consolidated Australian joint venture to an unaffiliated third party as part of a largertransaction. On March 31, 2011, we purchased that 50% interest from the unaffiliated third party making our Australian entity an indirect wholly-ownedsubsidiary. Investment advisory and services fees earned by this company were approximately $8.5 million for the first three months of 2011 and $37.1million for the year ended December 31, 2010, of which approximately $3.0 million and $12.8 million, respectively, were from AXA affiliates and areincluded in the table above. Minority interest recorded for this company was $0.4 million for the first three months of 2011 and $3.6 million for the yearended December 31, 2010.AllianceBernstein Venture Fund I, L.P. was launched during 2006. It seeks to achieve its investment objective, which is long-term capital appreciation throughequity and equity-related investments, by acquiring early-stage growth companies in private transactions. One of our subsidiaries is the general partner of thefund and, as a result, the fund is included in our consolidated financial statements, with approximately $47 million, $59 million and $101 million ofinvestments on the consolidated statements of financial condition as of December 31, 2012, 2011 and 2010, respectively. AXA Equitable holds a 10% limitedpartnership interest in this fund. 113Table of Contents We maintain an unfunded, non-qualified long-term incentive compensation plan known as the Capital Accumulation Plan and also have assumed obligationsunder contractual unfunded long-term incentive compensation arrangements covering certain executives (“Contractual Arrangements”). The CapitalAccumulation Plan was frozen on December 31, 1987 and no additional awards have been made. The Board may terminate the Capital Accumulation Plan atany time without cause, in which case our liability would be limited to benefits that have vested. Payment of vested benefits under both the CapitalAccumulation Plan and the Contractual Arrangements will generally be made over a ten-year period commencing at retirement age. The General Partner isobligated to make capital contributions to AllianceBernstein in amounts equal to benefits paid under the Capital Accumulation Plan and the ContractualArrangements. Amounts paid by the General Partner to AllianceBernstein for the Capital Accumulation Plan and the Contractual Arrangements for the yearsended December 31, 2012, 2011 and 2010 was $4.4 million, $4.8 million and $4.9 million, respectively.Other Related PartiesThe consolidated statements of financial condition include a net receivable from Holding as a result of cash transactions for fees and expense reimbursements.The net receivable balance included in the consolidated statements of financial condition as of December 31, 2012, 2011 and 2010 was $6.1 million, $2.5million and $0.9 million, respectively. 23. AcquisitionsOn October 1, 2010, we acquired SunAmerica’s alternative investment group, an experienced team that manages a portfolio of hedge fund and private equityfund investments. The purchase price of this acquisition, accounted for under ASC 805, Business Combinations, was $49.0 million, consisting of $14.3million of cash payments, $2.5 million of assumed deferred compensation liabilities and $32.2 million of net contingent consideration payable. The netcontingent consideration payable consists of the net present value of three annual payments of $1.5 million to SunAmerica based on its assets undermanagement transferred to us in the acquisition and the net present value of projected revenue sharing payments of $35.5 million based on projected newly-raised assets under management by the acquired group. This contingent consideration payable was offset by $4.1 million of performance-based fees earned in2010 determined to be pre-acquisition consideration. The excess of the purchase price over the fair value of identifiable assets acquired resulted in therecognition of $46.1 million of goodwill. During 2012 and 2011, no adjustments were made to the contingent consideration payable.During the first quarter of 2011, AXA sold its 50% interest in our consolidated Australian joint venture to an unaffiliated third party as part of a largertransaction. On March 31, 2011, we purchased that 50% interest from the unaffiliated third party for $21.4 million, making our Australian entity an indirectwholly-owned subsidiary. As a result, we eliminated $32.1 million of non-controlling interests in consolidated entities and increased partner’s capitalattributable to AllianceBernstein unitholders by $10.7 million.On May 31, 2011, we acquired Pyrander Capital Management, LLC, an investment management company jointly owned by Caxton Associates L.P.(“Caxton”) and Kurt Feuerman, a Caxton portfolio manager. We hired Mr. Feuerman and members of his team from Caxton, and acquired investmentmanagement contracts of the investment vehicles the team managed. The purchase price of this acquisition, accounted for under ASC 805, BusinessCombinations, was $10.2 million, consisting of $5.5 million of cash payments, $4.4 million payable in 2012 and 2013 (if Mr. Feuerman remains with thecompany) and a miscellaneous liability of $0.3 million. The excess of the purchase price over the fair value of identifiable assets acquired resulted in therecognition of $5.7 million of goodwill. We also recorded $2.5 million of indefinite-lived intangible assets relating to the acquired fund’s investmentmanagement contracts and $2.0 million of definite-lived intangible assets relating to separately managed account relationships. Mr. Feuerman also received tworestricted Holding Unit awards; one with a three-year service condition (the award was amended in December 2011 to eliminate the service condition) and onewith a five-year service condition (with three specific service dates) and performance conditions (with three specific assets under management targets, lateramended to two). As a result of the service conditions at the time of the acquisition, for accounting purposes these awards are considered compensationexpense, not part of the purchase price. Also, we were contingently liable to pay Caxton up to an additional $4.4 million if Mr. Feuerman meets all of hisservice conditions and performance targets. As of December 31, 2012, we accrued $1.5 million of this liability to Caxton due to an amendment to theacquisition agreement eliminating the first of Mr. Feuerman’s three performance targets.On November 30, 2011, we acquired Taiwan International Investment Management Co. (“TIIM”) to expand our business in the Taiwanese market. Thepurchase price of this acquisition, accounted for under ASC 805, Business Combinations, was a cash payment of $15.0 million, net of cash acquired. Thevaluation of the fair value of assets and liabilities acquired had been determined provisionally as of December 31, 2011. The excess of the purchase price overthe current fair value of identifiable net assets acquired resulted in the recognition of $9.8 million of goodwill as of December 31, 2011. The valuation wascompleted in the first quarter of 2012. As a result, intangible assets relating to customer relationships of $0.3 million were recognized retrospectively as ofDecember 31, 2011 with a corresponding reduction in goodwill. 114Table of Contents The 2010 and 2011 acquisitions have not had a significant impact on 2012, 2011 or 2010 revenues and earnings. As a result, we have not providedsupplemental pro forma information.24. Accounting PronouncementsIn December 2011, the FASB issued ASU 2011-11, Disclosures about Offsetting Assets and Liabilities. The amended standard requires an entity todisclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on itsfinancial position. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periodswithin those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented.This amendment is not expected to have a material impact on our consolidated financial statements.25. Quarterly Financial Data (Unaudited) Quarters Ended 2012 December 31 September 30 June 30 March 31 (in thousands, except per unit amounts) Net revenues $704,607 $708,158 $642,163 $681,809 Net income (loss) attributable to AllianceBernstein Unitholders $71,699 $(44,246) $74,185 $87,278 Basic net income (loss) per AllianceBernstein Unit(1) $0.26 $(0.16) $0.26 $0.31 Diluted net income (loss) per AllianceBernstein Unit(1) $0.26 $(0.16) $0.26 $0.31 Cash distributions per AllianceBernstein Unit(2)(3) $0.38 $0.41 $0.26 $0.31 Quarters Ended 2011 December 31 September 30 June 30 March 31 (in thousands, except per unit amounts) Net revenues $624,978 $641,529 $727,994 $755,390 Net (loss) income attributable to AllianceBernstein Unitholders $(516,360) $90,981 $114,139 $136,472 Basic net (loss) income per AllianceBernstein Unit(1) $(1.84) $0.32 $0.41 $0.49 Diluted net (loss) income per AllianceBernstein Unit(1) $(1.84) $0.32 $0.41 $0.48 Cash distributions per AllianceBernstein Unit(2)(4) $0.17 $0.32 $0.41 $0.48 (1)Basic and diluted net income (loss) per unit are computed independently for each of the periods presented. Accordingly, the sum of the quarterly netincome (loss) per unit amounts may not agree to the total for the year.(2)Declared and paid during the following quarter.(3)The third and fourth quarter 2012 distributions exclude the impact of non-cash real estate charges of $168.1 million and $38.9 million, respectively.(4)The fourth quarter 2011 distribution excludes the impact of the $587.1 million one-time, non-cash long-term incentive compensation charge. 115Table of Contents Item 9.Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNeither AllianceBernstein nor Holding had any changes in or disagreements with accountants in respect of accounting or financial disclosure. 116Table of Contents Item 9A.Controls and ProceduresDisclosure Controls and ProceduresEach of Holding and AllianceBernstein maintains a system of disclosure controls and procedures that is designed to ensure that information required to bedisclosed in our reports under the Exchange Act is (i) recorded, processed, summarized and reported in a timely manner, and (ii) accumulated andcommunicated to management, including the Chief Executive Officer and the Chief Financial Officer, to permit timely decisions regarding our disclosure.As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the ChiefExecutive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of disclosure controls and procedures. Based on thisevaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures are effective.Management’s Report on Internal Control Over Financial ReportingManagement acknowledges its responsibility for establishing and maintaining adequate internal control over financial reporting for each of Holding andAllianceBernstein.Internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive officer and principal financialofficer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with U.S. generally accepted accounting principles (“GAAP”) and includes those policies and procedures that: •Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of thecompany; •Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAPand receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;and •Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets thatcould have a material effect on the financial statements.All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those internal control systems determined to be effectivecan provide only reasonable assurance with respect to the reliability of financial statement preparation and presentation. Because of these inherent limitations,internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness of internal control to futureperiods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate.Management assessed the effectiveness of Holding’s and AllianceBernstein’s internal control over financial reporting as of December 31, 2012. In making itsassessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (“COSO criteria”).Based on its assessment, management concluded that, as of December 31, 2012, each of Holding and AllianceBernstein maintained effective internal controlover financial reporting based on the COSO criteria.PricewaterhouseCoopers LLP, the independent registered public accounting firm that audited the 2012 financial statements included in this Form 10-K, hasissued an attestation report on the effectiveness of each of Holding’s and AllianceBernstein’s internal control over financial reporting as of December 31, 2012.These reports can be found in Item 8.Changes in Internal Control Over Financial ReportingDuring the fourth quarter of 2011, we entered into a strategic outsourcing agreement with State Street Corporation (“State Street”), a provider of financialservices to institutional investors, pursuant to which State Street is performing certain of our investment operations and control activities, including tradesettlement, portfolio administration and reconciliations, derivative operations, client reporting, and performance measurement, for many of our client accounts.Since we entered into this agreement, State Street has continued to perform certain control activities utilizing our systems and approximately 100 of our formeremployees are now employed by State Street to provide global servicing support for our institutional client accounts. Over an approximate two-year period,certain AllianceBernstein technology platforms are being converted to similar platforms maintained by State Street so as to leverage their scale and marketexpertise. During the fourth quarter of 2012, we converted our automated reconciliation system to State Street’s equivalent system and we implementedadditional oversight controls to reflect our transition to State Street’s infrastructure. We determined that there were no other changes in our internal control over financial reporting during the quarter ended December 31, 2012 that have materiallyaffected, or are reasonably likely to materially affect, our internal control over financial reporting. 117Table of Contents Item 9B.Other InformationBoth AllianceBernstein and Holding reported all information required to be disclosed on Form 8-K during the fourth quarter of 2012. 118Table of Contents PART III Item 10.Directors, Executive Officers and Corporate Governance We use “Internet Site” in this Item 10 to refer to our company’s internet site, www.alliancebernstein.com. To contact our company’s Corporate Secretary, you may send an email to corporate_secretary@alliancebernstein.com or write to Corporate Secretary,AllianceBernstein L.P., 1345 Avenue of the Americas, New York, New York 10105.General Partner The Partnerships’ activities are managed and controlled by the General Partner. The Board of the General Partner (“Board”) acts as the Board of each of thePartnerships. The General Partner has agreed that it will conduct no active business other than managing the Partnerships, although it may make certaininvestments for its own account. Neither AllianceBernstein Unitholders nor Holding Unitholders have any rights to manage or control the Partnerships or toelect directors of the General Partner. The General Partner is an indirect, wholly-owned subsidiary of AXA. The General Partner does not receive any compensation from the Partnerships for services rendered to them as their general partner. The General Partner holds a1% general partnership interest in AllianceBernstein and 100,000 units of general partnership interest in Holding. Each general partnership unit in Holding isentitled to receive distributions equal to those received by each Holding Unit. The General Partner is entitled to reimbursement by AllianceBernstein for any expenses it incurs in carrying out its activities as general partner of thePartnerships, including compensation paid by the General Partner to its directors and officers (to the extent such persons are not compensated directly byAllianceBernstein). Board of Directors Our Board currently consists of 13 members, including our Chief Executive Officer, five senior executives of AXA and certain of its other subsidiaries, oneformer senior executive of AXA Financial, and six independent members. While we do not have a formal, written diversity policy in place, we believe that aneffective board consists of a diverse group of individuals who collectively possess a variety of complementary skills and perspectives and who will worktogether to provide a board with the needed leadership and experience to successfully guide our company. As set forth in its charter, the Corporate GovernanceCommittee of the Board (“Governance Committee”) assists the Board in identifying and evaluating such candidates, determining Board composition,developing and monitoring a process to assess Board effectiveness, developing and implementing corporate governance guidelines, and reviewing programsrelating to matters of corporate responsibility. As we indicate below, our directors have a combined wealth of leadership experience derived from extensive service leading large, complex organizations in theirroles as either senior executives or board members and in government and academia. Each has the integrity, business judgment, collegiality and commitmentthat are among the essential characteristics for a member of our Board. Collectively, they have substantive knowledge and skills applicable to our business,including expertise in regulatory; public accounting and financial reporting; finance; risk management; business development; operations; strategic planning;management development, succession planning and compensation; corporate governance; investor relations; public policy; international matters; and financialservices areas. As of February 12, 2013, the members of the Board were as follows: Peter S. KrausMr. Kraus, age 60, was elected Chairman of the Board of the General Partner and Chief Executive Officer of the General Partner, AllianceBernstein andHolding in December 2008. Mr. Kraus has in-depth experience in financial services, including investment banking, asset management and private wealthmanagement. He served as an executive vice president, the head of global strategy and a member of the Management Committee of Merrill Lynch & CompanyInc. (“Merrill Lynch”) from September 2008 through December 2008. Mr. Kraus spent 22 years with Goldman Sachs Group Inc. (“Goldman”), where hemost recently served as co-head of the Investment Management Division and a member of the Management Committee, as well as head of firm-wide strategyand chairman of the Strategy Committee. Mr. Kraus also served as co-head of the Financial Institutions Group. He was named a partner at Goldman in 1994and managing director in 1996. In April 2010, Mr. Kraus was appointed a member of the Management Committee of AXA, which was formed by Mr. deCastries in April 2010 to assist him with the operational management of AXA. He was named a Director of AXA Financial, AXA Equitable, MONY LifeInsurance Company (a wholly-owned subsidiary of AXA Financial, “MONY”) and MONY Life Insurance Company of America (a wholly-owned subsidiaryof MONY, “MLOA”) in February 2009. He is not compensated for serving in these roles for AXA and its subsidiaries. Mr. Kraus is also Chairman of theInvestment Committee of Trinity College, Chair of the Board of Overseers of CalArts, Co-Chair of the Friends of Carnegie International, a member of theboard of directors of Lincoln Center for the Performing Arts and the chairman of Lincoln Center’s Art Committee, a member of the board of KeewaydinFoundation, and a member of the National Board of Young Audiences, Inc., a non-profit organization that works with educational systems, the artscommunity and private and public sectors to provide arts education to children. 119Table of Contents Mr. Kraus brings to the Board extensive knowledge of our industry and in-depth experience in financial services, including experience as co-head of theInvestment Management Division and head of firm-wide strategy at Goldman. Christopher M. CondronMr. Condron, age 65, was elected a Director of the General Partner in May 2001. Formerly Director, President and Chief Executive Officer of AXA Financialsince May 2001, he retired from his AXA positions effective January 1, 2011. Prior to retiring, he was also Chairman of the Board, Chief Executive Officerand President of AXA Equitable and a member of the Management Committee of AXA. In addition, Mr. Condron was Chairman of the Board, President andChief Executive Officer of MONY and MLOA, which AXA Financial acquired in July 2004. During 2010, he assumed the additional responsibility ofoverseeing AXA’s Global Life & Savings and Health businesses. Prior to joining AXA Financial, Mr. Condron served as both President and Chief OperatingOfficer of Mellon Financial Corporation (“Mellon”), from 1999, and as Chairman and Chief Executive Officer of The Dreyfus Corporation, a subsidiary ofMellon, from 1995. Mr. Condron has been a member of the Board of Directors of Keefe Bruyette & Woods, Inc. (NYSE: KBW), a full-service investmentbank and broker-dealer, since January 2007. He also serves as Chairman of Keefe Bruyette & Woods’s compensation committee and as a member of its auditcommittee and its corporate governance and nominating committee. Mr. Condron brings to the Board extensive financial services, insurance, sales and sell-side experience obtained from his service to AXA and Mellon, as wellas his directorship at Keefe Bruyette & Woods. Henri de CastriesMr. de Castries, age 58, was elected a Director of the General Partner in October 1993. In April 2010, in connection with a change in AXA’s governancestructure from dual boards (the Supervisory Board and the Management Board) to a single Board of Directors, Mr. de Castries was appointed Chairman andChief Executive Officer of AXA. From May 2000 through the change in AXA’s governance, Mr. de Castries was Chairman of the AXA Management Board.Prior thereto, he served AXA in various capacities, including Vice Chairman of the AXA Management Board; Senior Executive Vice President-FinancialServices and Life Insurance Activities in the United States, Germany, the United Kingdom and Benelux from 1996 to 2000; Senior Executive Vice President-Financial Services and Life Insurance Activities from 1993 to 1996; Corporate Secretary from 1991 to 1993; and Central Director of Finances from 1989to 1991. Before joining AXA, Mr. de Castries was part of the French Finance Ministry Inspection Office. He is a director or officer of AXA Financial, AXAEquitable and various other privately-held subsidiaries and affiliates of the AXA Group. Mr. de Castries was elected Vice Chairman of AXA Financial inFebruary 1996 and was elected Chairman of AXA Financial in April 1998. In addition, Mr. de Castries joined the board of directors and audit committee ofNestle, Inc. (VTX: NESN) in April 2012. Mr. de Castries brings to the Board his extensive experience as an AXA executive and, prior thereto, his financial and public sector experience gained fromworking in French government. The Board also benefits from his invaluable perspective as the Chairman and Chief Executive Officer of AXA. Denis DuverneMr. Duverne, age 59, was elected a Director of the General Partner in February 1996. In April 2010, he was appointed the Deputy Chief Executive Officer ofAXA and a member of the Board of Directors of AXA. In January 2010, he was selected to oversee AXA Group strategy, finance and operations with AXA’sChief Operating Officer, Chief Financial Officer and Chief Risk Officer reporting to him. Mr. Duverne was a member of the AXA Management Board fromFebruary 2003 through the change in AXA’s governance in April 2010. He was Chief Financial Officer of AXA from May 2003 through December 2009. FromJanuary 2000 to May 2003, Mr. Duverne served as Group Executive Vice President-Finance, Control and Strategy. Mr. Duverne joined AXA as Senior VicePresident in 1995. He is a Director of AXA Financial, AXA Equitable and various other privately-held subsidiaries and affiliates of the AXA Group. Mr. Duverne brings to the Board the highly diverse experience he has attained throughout the years from the many key roles he has served for AXA. Steven G. ElliottMr. Elliott, age 66, was elected a Director of the General Partner in January 2011. Until his retirement in December 2010, Mr. Elliott had served as Senior ViceChairman of The Bank of New York Mellon (“BNY Mellon”) since 1998. In this role, he helped oversee numerous company-wide growth initiatives and co-headed the integration of The Bank of New York and Mellon from 2007 to 2009. Mr. Elliott was Chief Financial Officer of Mellon from 1990 to 2002 andHead of Finance from 1987 to 1990, while also leading some of Mellon’s diverse lines of business, including asset servicing, securities lending, global cashmanagement and institutional banking. Before joining BNY Mellon, he held senior positions at First Commerce Corporation (1986-87), Crocker NationalBank (1984-86), Continental Illinois National Bank (1977-84) and United California Bank (1974-77). Since January 2011, he has been a member of theboards of directors of Huntington Bancshares Inc. (NASDAQ: HBAN) and PPL Corporation (NYSE: PPL). Since April 2011, he has served as Chairman ofHuntington Bancshares’s risk oversight committee and, since January 2012, he has served as Chairman of PPL Corporation’s audit committee. Mr. Elliottserved as a director of Mellon (NYSE: MEL) from 2001 to the July 2007 merger with The Bank of New York and then as a director of BNY Mellon (NYSE:BK) through July 2008. Mr. Elliott, an audit committee financial expert, brings to the Board the four decades of auditing and banking expertise he has gained in the financial servicesindustry. 120Table of Contents Deborah S. HechingerMs. Hechinger, age 62, was elected a Director of the General Partner in May 2007. Currently an independent consultant on non-profit governance, she wasPresident and Chief Executive Officer of BoardSource, a leading governance resource for non-profit organizations, from 2003 to 2007. From 2004 to 2007, Ms.Hechinger also served as co-convener of the Governance and Fiduciary Responsibilities work group, one of the five groups established by the Panel on theNonprofit Sector to make recommendations to Congress on ways to improve the governance and accountability of non-profit organizations. She also served onthe Advisory Board for the Center for Effective Philanthropy and was a Member of the Ethics and Accountability Committee at Independent Sector. Prior tojoining BoardSource, Ms. Hechinger was the Executive Vice President of the World Wildlife Fund, a large, global conservation organization, where sheoversaw all fundraising, communication and operations activities. She has also served as a Deputy Comptroller and as Director of the Securities andCorporate Practices Division at the Office of the Comptroller of the Currency and has held senior executive positions in the Division of Enforcement at theSEC. A graduate of Georgetown Law School, Ms. Hechinger has been a member in good standing of the District of Columbia Bar Association since 1975. Ms. Hechinger brings to the Board the significant knowledge of corporate governance matters and public policy she has gained through her extensive experiencein both the private and public sectors. Weston M. HicksMr. Hicks, age 56, was elected a Director of the General Partner in July 2005. He has been a Director and the President and chief executive officer of AlleghanyCorporation (NYSE: Y, “Alleghany”), an insurance and diversified financial services holding company, since December 2004 and was Executive VicePresident of Alleghany from October 2002 until December 2004. From March 2001 through October 2002, Mr. Hicks was Executive Vice President and ChiefFinancial Officer of The Chubb Corporation. Mr. Hicks brings to the Board extensive financial expertise, including his unique perspective as the chief executive officer of an unaffiliated publicly-tradedcompany, his background as a professional investor and CFA charter holder, and his ten years of experience as an equity research analyst. Andrew J. McMahonMr. McMahon, age 45, was elected a Director of the General Partner in April 2012. Mr. McMahon is President of AXA Equitable and a member of thecompany's Executive Committee and Board of Directors. In this role, he has responsibility for the company's Financial Protection & Wealth Managementbusiness, including life insurance manufacturing, marketing, distribution and in-force management. He joined AXA Equitable in March 2005 as Senior VicePresident to launch the company's Strategic Initiatives Group. Later that year, Mr. McMahon was promoted to Executive Vice President and was named ChiefOperating Officer of AXA Advisors, the company’s broker-dealer and retail distribution channel comprised of approximately 6,000 career contracted financialprofessionals. He served as Chairman of AXA Advisors from July 2007 to May 2012. Before joining AXA Equitable, Mr. McMahon was a principal atMcKinsey & Co. (“McKinsey”) and served as a life insurance practice leader in North America. Prior to McKinsey, he spent several years in managementpositions with various business divisions of General Electric (“GE”). Mr. McMahon has been a Director of AXA Financial, AXA Equitable, MONY andMLOA since May 2011. He is also a member of the Board of Directors of the American Council of Life Insurers. Mr. McMahon brings to the Board the in-depth knowledge of finance, retail distribution and insurance he has developed through key roles he has served forAXA, McKinsey and GE. Kevin MolloyMr. Molloy, age 42, was elected a Director of the General Partner in January 2011. He has been the Business Support and Development representative for AXAEquitable, AXA Investment Managers S.A. (a wholly-owned subsidiary of AXA), AXA Japan and AllianceBernstein since January 2011. From April 2010 toDecember 2010, Mr. Molloy was the Chief Financial Officer of AXA Global Life, a company formed by AXA to accelerate global synergies throughout its Life& Savings business. Prior to serving in this role, he was Senior Vice President of Distribution & Service Finance at AXA Equitable. From November 2003 toApril 2007, Mr. Molloy served as Vice President and Head of AXA’s North American Investor Relations office. Mr. Molloy joined AXA Equitable in 1999 asDirector of Corporate Finance after beginning his career in 1993 as an economist and corporate profits analyst with The United States Department ofCommerce’s Bureau of Economic Analysis. Mr. Molloy brings to the Board the finance, capital markets and investor relations experience he has developed through the key roles he has served for AXAand the in-depth knowledge of global economies he gained while working for the U.S. government. Mark PearsonMr. Pearson, age 54, was elected a Director of the General Partner in February 2011. Also during February 2011, he succeeded Mr. Condron as Director,President and Chief Executive Officer of AXA Financial, and as Chairman and Chief Executive Officer of AXA Equitable. Having joined AXA in 1995 whenAXA acquired National Mutual Funds Management Limited (presently AXA Asia Pacific Holdings Limited), Mr. Pearson became a member of the ExecutiveCommittee of AXA in 2008 and the Management Committee of AXA in 2011. He was appointed Regional Chief Executive of AXA Asia Life in 2001 and, in2008, was named President and Chief Executive Officer of AXA Japan Holding Co., Ltd. and AXA Life Insurance Co., Ltd. Prior to joining AXA, Mr.Pearson spent approximately 20 years in the insurance sector, holding several senior management positions at National Mutual and Friends Provident. 121Table of Contents Mr. Pearson brings to the Board the in-depth knowledge of Asian markets and diverse experience he has developed through the key roles he has served forAXA. Lorie A. SlutskyMs. Slutsky, age 60, was elected a Director of the General Partner in July 2002. Since January 1990, she has been President and Chief Executive Officer ofThe New York Community Trust, a community foundation that manages a $2 billion endowment and annually grants more than $150 million to non-profitorganizations. Ms. Slutsky is Secretary and a board member of the Independent Sector and co-chaired its National Panel on the Non-Profit Sector, whichfocused on reducing abuse and improving governance practices at non-profit organizations. She served on the Board of Directors of BoardSource from 1999to 2008 and served as its Chair from 2005 to 2007. Ms. Slutsky also served as Trustee and Chair of the Budget Committee of Colgate University from 1989to 1997 and as a member of the Council on Foundations from 1989 to 1995, for which she also served as Chair from 1993 to 1995. She has been aDirector of AXA Financial, AXA Equitable, MONY and MLOA since September 2006. In addition, Ms. Slutsky was a member of AXA Financial’s AuditCommittee from 2006 through 2010. She has been a member of AXA Financial’s Organization and Compensation Committee since 2006 and was electedChair of the Organization and Compensation Committee in February 2012. Ms. Slutsky brings to the Board extensive corporate governance experience achieved through her executive and managerial roles at The New York CommunityTrust, BoardSource, Independent Sector and various other non-profit organizations. She also brings valuable insight gained from serving on boards andboard committees at certain of our parent companies. A.W. (Pete) Smith, Jr.Mr. Smith, age 69, was elected a Director of the General Partner in July 2005. The former CEO of Watson Wyatt Worldwide (now Towers Watson), he wasalso President of the Private Sector Council, a non-profit public service organization dedicated to improving the efficiency of the federal government, fromSeptember 2000 until May 2005. Mr. Smith has been President of Smith Compensation Consulting, a privately-held company specializing in executivecompensation consulting, since June 2005. Mr. Smith brings to the Board extensive financial services expertise, compensation expertise and leadership skills obtained through his wealth of experience asTowers Watson’s chief executive and the head of his own firm. Peter J. TobinMr. Tobin, age 68, was elected a Director of the General Partner in May 2000. From September 2003 to June 2005, he was Special Assistant to the President ofSt. John’s University. Prior thereto, Mr. Tobin served as Dean of the Tobin College of Business of St. John’s University from August 1998 to September2003. As Dean, Mr. Tobin was the chief executive and academic leader of the College of Business. Mr. Tobin was Chief Financial Officer at The ChaseManhattan Corporation from 1996 to 1997. Prior thereto, he was Chief Financial Officer of Chemical Bank (which merged with Chase in 1996) from 1991to 1996 and Chief Financial Officer of Manufacturers Hanover Trust (which merged with Chemical in 1991) from 1985 to 1991. Mr. Tobin has served onthe board of directors of CIT Group Inc. (NYSE: CIT) since 1985 (except for one year during which CIT Group was owned by Tyco). Until his retirement inFebruary 2012, he had been a Director of AXA Financial and AXA Equitable since March 1999 and also served on AXA Financial’s Audit Committee,Investment Committee, Investment and Finance Committee, Organization and Compensation Committee, and Executive Committee. Mr. Tobin brings to the Board invaluable expertise as an audit committee financial expert and key leadership and analytical skills from his positions inacademia. 122Table of Contents Executive Officers (other than Mr. Kraus) Laurence E. Cranch, General CounselMr. Cranch, age 66, has been our General Counsel since he joined our firm in 2004. Prior to joining AllianceBernstein, Mr. Cranch was a partner of CliffordChance, an international law firm. Mr. Cranch joined Clifford Chance in 2000 when Rogers & Wells, a New York law firm of which he was ManagingPartner, merged with Clifford Chance. James A. Gingrich, Chief Operating OfficerMr. Gingrich, age 54, joined our firm in 1999 as a senior research analyst with SCB LLC and has been our firm’s Chief Operating Officer since December2011. Prior to becoming COO, Mr. Gingrich held senior managerial positions with SCB LLC, including Chairman and Chief Executive Officer of SCB LLCfrom February 2007 to November 2011 and Global Director of Research from December 2002 to January 2007. Lori A. Massad, Head of Human Capital and Chief Talent OfficerMs. Massad, age 48, joined our firm in 2006 as Chief Talent Officer. In February 2009, her role was expanded to include oversight of Human Capital inaddition to Talent Development. Prior to joining our firm, Ms. Massad served as Chief Talent Officer and Chief Operating Officer at Marakon Associates, astrategy consulting firm from 2004 to 2006. Before joining Marakon, Ms. Massad was a founding member of two start-ups: Spencer Stuart Talent Network(in 2001) and EmployeeMatters, a human resources outsourcing firm (in 2000). Prior to helping found EmployeeMatters, she spent eight years at The BostonConsulting Group, where she became a senior manager on the consulting staff and leader of the firm’s recruiting, training and development programs. Whilewith The Boston Consulting Group, Ms. Massad was also an adjunct professor at New York University’s Leonard Stern School of Business. Robert P. van Brugge, Chairman and Chief Executive Officer of SCB LLCMr. van Brugge, age 44, has been Chairman of the Board and Chief Executive Officer of SCB LLC since December 2011. Prior to becoming Chairman andCEO, Mr. van Brugge served as Global Director of Research from January 2008 to December 2011. He joined our firm in 2002 as a senior research analystwith SCB LLC. John C. Weisenseel, Chief Financial OfficerMr. Weisenseel, age 53, joined our firm in May 2012 as Senior Vice President and Chief Financial Officer. From 2004 to April 2012, he worked at TheMcGraw Hill Companies (“McGraw Hill”), where he served initially as Senior Vice President and Corporate Treasurer and, since 2007, as Chief FinancialOfficer of the firm’s Standard & Poor’s subsidiary. Prior to joining McGraw Hill, Mr. Weisenseel was Vice President and Corporate Treasurer for Barnes &Noble, Inc. Before that, he spent ten years in various derivatives trading and financial positions at Citigroup. A Certified Public Accountant, Mr. Weisenseelalso worked at KPMG LLP. Board Meetings In 2012, the Board held regular meetings in February, April, May, August, September and November; the Board held one special meeting in July 2012. Generally, the Board holds six meetings annually: in February, April, May, July or August, September, and November. In addition, the Board holds specialmeetings or takes action by unanimous written consent as circumstances warrant. The Board has standing Executive, Audit, Corporate Governance,Compensation and Special Committees, each of which is described in further detail below. Each member of the Board attended 75% or more of the aggregateof all Board and committee meetings that he or she was entitled to attend in 2012, except Mr. de Castries. Committees of the Board In 2012, the Executive Committee of the Board (“Executive Committee”) was composed of Ms. Slutsky and Messrs. Condron, de Castries, Duverne,Kraus (Chair) and Tobin. The Executive Committee exercises all of the powers and authority of the Board (with limited exceptions) when the Board is not insession, or when it is impractical to assemble the full Board. The Executive Committee held four meetings in 2012. In 2012, the Governance Committee was composed of Mr. Condron, Mr. Duverne, Ms. Hechinger (Chair), Mr. Kraus and Ms. Slutsky. The GovernanceCommittee (i) assists the Board and the sole stockholder of the General Partner in (1) identifying and evaluating qualified individuals to become Boardmembers and (2) determining the composition of the Board and its committees, and (ii) assists the Board in (1) developing and monitoring a process to assessBoard effectiveness, (2) developing and implementing our corporate governance guidelines and (3) reviewing our policies and programs that relate to matters ofcorporate responsibility of the General Partner and the Partnerships. The Governance Committee held two meetings in 2012. In 2012, the Audit Committee of the Board (“Audit Committee”) was composed of Messrs. Elliott, Hicks, Smith and Tobin (Chair). The primary purposesof the Audit Committee are to: (i) assist the Board in its oversight of (1) the integrity of the financial statements of the Partnerships, (2) the Partnerships’ statusand system of compliance with legal and regulatory requirements and business conduct, (3) the independent registered public accounting firm’s qualificationand independence, and (4) the performance of the Partnerships’ internal audit function; and (ii) oversee the appointment, retention, compensation, evaluationand termination of the Partnerships’ independent registered public accounting firm. Consistent with this function, the Audit Committee encourages continuousimprovement of, and fosters adherence to, the Partnerships’ policies, procedures and practices at all levels. With respect to these matters, the Audit Committeeprovides an open avenue of communication among the independent registered public accounting firm, senior management, the Internal Audit Department andthe Board. The Audit Committee held eight meetings in 2012. 123Table of Contents In 2012, the Compensation Committee of the Board (“Compensation Committee”) was composed of Mr. Condron (Chair), Mr. Duverne, Mr. Elliott, Mr.Kraus, Ms. Slutsky and Mr. Smith. Mr. de Castries served as a member of the Compensation Committee during January 2012; he resigned as a member ofthe Compensation Committee in February 2012. The Compensation Committee held eight meetings in 2012. For additional information about theCompensation Committee, see “Compensation Discussion and Analysis—Compensation Committee” in Item 11. The functions of each of the committees discussed above are more fully described in each committee’s charter. The charters are available on our Internet Site. The Special Committee of the Board (“Special Committee”) is composed of all of the independent members of the Board and in 2012 included Mr. Elliott,Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin (Chair). The Special Committee has the authority to direct and oversee any mattersreferred to it by the Board and/or management including, but not limited to, matters relating to conflicts of interest and the relationship amongAllianceBernstein, Holding and AXA. The members of the Special Committee do not receive any additional compensation for their service on the SpecialCommittee, apart from the ordinary meeting fees described in “Director Compensation” in Item 11. The Special Committee did not meet in 2012. Audit Committee Financial Experts In January 2012 and 2013, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each ofSteven G. Elliott and Peter J. Tobin is an “audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K. The Board so determined atits regular meetings in February 2012 and 2013. The Board also determined at these meetings that each of Messrs. Elliott, Hicks, Smith and Tobin isfinancially literate and possesses accounting or related financial management expertise, as contemplated by Section 303A.07(a) of the NYSE Listed CompanyManual. Independence of Certain Directors In January 2012 and 2013, the Governance Committee, after reviewing materials prepared by management, recommended that the Board determine that each ofMr. Elliott, Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin is “independent” within the meaning of Section 303A.02 of the NYSE ListedCompany Manual. The Board considered immaterial the relationships of Mr. Elliott (relating to the fact that AllianceBernstein and its family of mutual fundsare clients of BNY Mellon and Mr. Elliott’s equity stake in BNY Mellon), Mr. Hicks (relating to the fact that Alleghany Corporation is a client of SCB LLCand Mr. Hicks was employed by Bernstein from 1991 to 1999), Ms. Slutsky (relating to contributions formerly made by AllianceBernstein to The NewYork Community Trust, of which she is President and Chief Executive Officer, and the fact that she is a member of the boards of directors of AXA Financialand AXA Equitable) and Mr. Tobin (relating to the fact that, until his retirement in February 2012, he was a member of the boards of directors of AXAFinancial and AXA Equitable) and then determined, at its February 2012 and 2013 regular meetings, that each of Mr. Elliott, Ms. Hechinger, Mr. Hicks, Ms.Slutsky, Mr. Smith and Mr. Tobin is independent within the meaning of the relevant rules. Board Leadership Structure and Role in Risk Oversight Leadership The Board, together with the Governance Committee, is responsible for reviewing the Board’s leadership structure. In determining the appropriate individual toserve as our Chairman and Chief Executive Officer, the Board and the Governance Committee consider, among other things, the composition of the Board, therole of the Board’s lead director (discussed more fully below), our company’s strong corporate governance practices, and the challenges and opportunitiesspecific to our company. We believe that there are significant benefits to having the positions of Chairman and Chief Executive Officer shared by one individual, but only if a companyhas sufficient counter-balancing governance in place. We see significant value in having the leader in the Board room also manage the affairs of our company,and we believe any potential doubts as to our Board’s objectivity in evaluating management are offset by the lead independent director we have in place and thefact that the affirmative consent of our largest Unitholder (AXA) is required in order for any action taken by the Executive Committee or the CompensationCommittee to be effective. 124Table of Contents Lead Independent Director Our lead independent director, Peter J. Tobin, was appointed unanimously by our Board in November 2005. He presides at all executive sessions of non-management and independent directors and makes himself available, if requested by Unitholders, for consultation and communication. Interested partieswishing to communicate directly with Mr. Tobin may send an e-mail, with “confidential” in the subject line, to our Corporate Secretary or address mail to Mr.Tobin in care of our Corporate Secretary. Our Corporate Secretary will promptly forward such e-mail or mail to Mr. Tobin. We have posted this information inthe “Management & Governance” section of our Internet Site. Risk Oversight The Board, together with the Audit Committee, has oversight for our company’s risk management framework, both investment risk and operational risk, andis responsible for helping to ensure that our company’s risks are managed in a sound manner. The Board has delegated to the Audit Committee, which iscomposed entirely of independent directors, the responsibility to consider our company’s policies and practices with respect to operational risk assessment andoperational risk management, including discussing with management the major financial risk exposures and the steps taken to monitor and control suchexposures. Members of the company’s Risk Management team responsible for identifying, managing and controlling the array of operational and investmentrisks inherent in our company’s business and operations, make quarterly reports to the Audit Committee, including an annual risk review which addressesoperational risk identification, assessment and monitoring. The Chief Risk Officer, whose expertise encompasses both quantitative research and associatedinvestment risks, makes periodic presentations to the Board and reports directly to our Chairman and Chief Executive Officer, and commencing in 2013, hasa reporting line to the Audit Committee. The Board has determined that its leadership and risk oversight are appropriate for our company. Mr. Kraus’s in-depth knowledge of financial services andextensive executive experience in the investment management industry make him uniquely suited to serve as our Chairman and Chief Executive Officer, whileMr. Tobin’s leadership and expertise have proven invaluable at enhancing the overall functioning of the Board. The Board believes that the combination of asingle Chairman and Chief Executive Officer, a lead independent director, the Audit Committee, a specialized risk management team, and significantinvolvement from our largest Unitholder (AXA) provide the appropriate leadership to help ensure effective risk oversight by the Board. Code of Ethics and Related Policies All of our directors, officers and employees are subject to our Code of Business Conduct and Ethics. The code is intended to comply with Section 303A.10 ofthe NYSE Listed Company Manual, Rule 204A-1 under the Investment Advisers Act and Rule 17j-1 under the Investment Company Act, as well as withrecommendations issued by the Investment Company Institute regarding, among other things, practices and standards with respect to securities transactions ofinvestment professionals. The Code of Business Conduct and Ethics establishes certain guiding principles for all of our employees, including sensitivity toour fiduciary obligations and ensuring that we meet those obligations. Our Code of Business Conduct and Ethics may be found in the “Management &Governance” section of our Internet Site. We have adopted a Code of Ethics for the Chief Executive Officer and Senior Financial Officers, which is intended to comply with Section 406 of theSarbanes-Oxley Act of 2002 (“Item 406 Code”). The Item 406 Code, which may be found in the “Management & Governance” section of our InternetSite, was adopted on October 28, 2004 by the Executive Committee. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regardingcertain amendments to, or waivers from, provisions of the Item 406 Code that apply to the Chief Executive Officer, Chief Financial Officer and Controller byposting such information on our Internet Site. To date, there have been no such amendments or waivers. NYSE Governance Matters Section 303A.00 of the NYSE Listed Company Manual exempts limited partnerships from compliance with the following sections of the Manual: Section303A.01 (board must have a majority of independent directors), 303A.04 (corporate governance committee must have only independent directors as itsmembers), and 303A.05 (compensation committee must have only independent directors as its members). Holding is a limited partnership (as isAllianceBernstein). In addition, because the General Partner is a wholly-owned subsidiary of AXA, and the General Partner controls Holding (andAllianceBernstein), we believe we would also qualify for the “controlled company” exemption. Notwithstanding the foregoing, the Board has adopted aCorporate Governance Committee Charter that complies with Section 303A.04 and a Compensation Committee Charter that complies with Section 303A.05.However, not all members of these committees are independent. 125Table of Contents Our Corporate Governance Guidelines (“Guidelines”) promote the effective functioning of the Board and its committees, promote the interests of thePartnerships’ respective Unitholders, with appropriate regard to the Board’s duties to the sole stockholder of the General Partner, and set forth a common set ofexpectations as to how the Board, its various committees, individual directors and management should perform their functions. The Guidelines may be foundin the “Management & Governance” section of our Internet Site. The Governance Committee is responsible for considering any request for a waiver under the Code of Business Conduct and Ethics, the Item 406 Code, theAXA Group Compliance and Ethics Guide, and the AXA Financial Policy Statement on Ethics from any director or executive officer of the General Partner.Any such waiver that has been granted would be set forth in the “Management & Governance” section of our Internet Site. Our Internet Site, under the heading “Meet our Directors”, provides an e-mail address for any interested party, including Unitholders, to communicate with theBoard of Directors. Our Corporate Secretary reviews e-mails sent to that address and has some discretion in determining how or whether to respond, and indetermining to whom such e-mails should be forwarded. In our experience, substantially all of the e-mails received are ordinary client requests foradministrative assistance that are best addressed by management or solicitations of various kinds. The 2012 Certification by our Chief Executive Officer under NYSE Listed Company Manual Section 303A.12(a) was submitted to the NYSE on February21, 2012. Certifications by our Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 have been furnished asexhibits to this Form 10-K. Holding Unitholders and AllianceBernstein Unitholders may request a copy of any committee charter, the Guidelines, the Code of Business Conduct andEthics, and the Item 406 Code by contacting our Corporate Secretary. The charters and memberships of the Executive, Audit, Governance and CompensationCommittees may be found in the “Management & Governance” section of our Internet Site. Fiduciary Culture We maintain a robust fiduciary culture and, as a fiduciary, we place the interests of our clients first and foremost. We are committed to the fair and equitabletreatment of all our clients, and to compliance with all applicable rules and regulations and internal policies to which our business is subject. We pursue thesegoals through education of our employees to promote awareness of our fiduciary obligations, incentives that align employees’ interests with those of our clients,and a range of measures, including active monitoring, to ensure regulatory compliance. Specific steps we have taken to help us achieve these goals include: •establishing two committees, the Code of Ethics Oversight Committee (“Ethics Committee”) and the Internal Compliance Controls Committee(“Compliance Committee”), composed of our executive officers and other senior executives to oversee and resolve code of ethics and compliance-related issues; •creating an ombudsman office, where employees and others can voice concerns on a confidential basis; •initiating firm-wide compliance and ethics training programs; and •appointing a Conflicts Officer and establishing a Conflicts Committee to identify and mitigate conflicts of interest. The Ethics Committee oversees all matters relating to issues arising under our Code of Business Conduct and Ethics. The Ethics Committee meets on aquarterly basis and at such other times as circumstances warrant. The Ethics Committee and its subcommittee, the Personal Trading Subcommittee, haveoversight of personal trading by our employees. The Compliance Committee reviews compliance issues throughout our Company, endeavors to develop solutions to those issues as they may arise from time totime, and oversees implementation of those solutions. The Compliance Committee meets on a quarterly basis and at such other times as circumstanceswarrant. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires directors of the General Partner and executive officers of the Partnerships, and persons who own more than 10% ofthe Holding Units or AllianceBernstein Units, to file with the SEC initial reports of ownership and reports of changes in ownership of Holding Units orAllianceBernstein Units. To the best of management’s knowledge, during 2012: (i) all Section 16(a) filing requirements relating to Holding were compliedwith, except one Form 4 for each of Edward J. Farrell, James A. Gingrich and Robert P. van Brugge was filed late (each Form 4 related solely to Holding Unitswithheld during January 2012 to fulfill statutory tax withholding requirements at the time of distribution of long-term incentive compensation awards to eachof these officers); and (ii) all Section 16(a) filing requirements relating to AllianceBernstein were complied with. Our Section 16 filings can be found under“Investor & Media Relations” / “Reports & SEC Filings” on our Internet Site. 126Table of Contents Item 11.Executive Compensation Compensation Discussion and Analysis (“CD&A”) Overview of Compensation Philosophy and Program The intellectual capital of our employees is collectively the most important asset of our firm. We invest in people—we hire qualified people, train them,encourage them to give their best thinking to the firm and our clients, and compensate them in a manner designed to motivate and retain them. As a result, thecosts of employee compensation and benefits are significant, comprising approximately 46.1% of our operating expenses and representing approximately42.7% of our revenues (49.8% of our adjusted net revenues, as defined below) for 2012. Although these percentages are not unusual for companies in thefinancial services industry, the magnitude of these costs requires that they be monitored by management, and overseen by the Board, with the particularattention of the Compensation Committee of the Board (“Compensation Committee”). We believe that the quality, skill and dedication of our executives are critical to enhancing the long-term value of our company. Our key compensation goals areto attract, motivate and retain highly-qualified executive talent, provide rewards for the past year’s performance and provide incentives for future performance,and align our executives’ long-term interests with those of our clients and Unitholders. We believe that success in achieving good results for the firm, and forour Unitholders, flows from achieving investment success for our clients. We are focused on ensuring that our compensation practices are competitive withindustry peers and provide sufficient potential for wealth creation for our executives and employees, which we believe will enable us to meet our compensationgoals. We utilize a variety of compensation elements to achieve the goals described above, including base salary, annual short-term incentive compensation awards(cash bonuses), a long-term incentive compensation award program and a defined contribution plan, all of which are discussed in detail below. In 2011, we implemented changes to our long-term incentive compensation award program to ensure that our compensation practices are competitive and tobetter align the costs of employee compensation and benefits with the firm’s current year financial performance and provide employees with a higher degree ofcertainty that they will receive the incentive compensation they are awarded. Most equity replacement, sign-on or similar long-term incentive compensationawards included in separate employment agreements or arrangements were not amended in 2011 to reflect these changes. The changes implemented in 2011, which have been incorporated into our 2012 long-term incentive compensation program, include the following: •We provide our employees, except certain members of senior management, with the opportunity to diversify their long-term incentive compensationawards by allocating up to 50% of their awards to cash, up to a maximum cash amount of $250,000 (“Deferred Cash”). The portion of an awardallocated to Deferred Cash is subject to the same multi-year vesting periods (generally, four years) as the portion of the award allocated to HoldingUnits; and •We permit all active employees (i.e., those employees who were employed by the company as of December 31, 2012) who terminate theiremployment or are terminated without cause, to continue to vest (as used in this Item 11, “vest” refers to the time at which the awards are no longersubject to forfeiture for breach of the restrictions or risk management policies discussed immediately below) in their long-term incentivecompensation awards if they comply with certain agreements and restrictive covenants set forth in the applicable award agreement. Theseagreements and covenants, which in 2011 were added to our long-term incentive compensation award programs for 2011 and prior years, includerestrictions on competition and employee and client solicitation, and a claw-back for failing to follow existing risk management policies. We expectto include these agreements and covenants in the award agreements relating to long-term incentive compensation awards in future years. For information about the accounting impact of the changes implemented in 2011, see Note 2 to AllianceBernstein’s consolidated financial statements inItem 8. Consideration of Risk Matters in Determining Compensation We have considered whether our compensation practices encourage unnecessary or excessive risk-taking and whether any risks arising from our compensationpractices are reasonably likely to have a material adverse effect on our company. For the reasons set forth below, we have determined that our currentcompensation practices do not incentivize, and actually discourage, our employees from engaging in unnecessary or excessively risky activities. Accordingly,we have concluded that our compensation practices do not create risks that are reasonably likely to have a material adverse effect on our company. In our effort to foster the spirit of partnership among our employees and better align their interests with those of Holding Unitholders and our clients, eligibleemployees receive at least half of their long-term incentive compensation awards in the form of restricted Holding Units, with multi-year vesting periods(generally, four years). Our Chairman and Chief Executive Officer firmly believes that compensating key employees with equity ownership fosters a truepartnership community, one that will help us grow and achieve our firm’s goals. We believe that as our employees become more focused on partnering witheach other to achieve our firm’s overall goals, they will serve as checks and balances on each other in assessing risk and performance. 127Table of Contents Our approach to long-term incentive compensation is designed to reflect the firm’s current year and long-term financial performance and the specificperformance of each individual employee. The initial amount of an employee’s award is based on the performance of the firm and the employee for the currentyear. But because a substantial portion of the award is denominated in Holding Units that are not distributed until subsequent years, the ultimate value that theemployee derives from the award depends on the long-term performance of the firm. Denominating a substantial portion of the award in Holding Units anddeferring their delivery also sensitizes employees to risk outcomes and discourages them from taking excessive risks that could lead to a decrease in the valueof the Holding Units. Furthermore, and as noted above, generally all outstanding long-term incentive compensation awards include a provision permitting usto “claw-back” the unvested portion of an employee’s long-term incentive compensation award (whether denominated in restricted Holding Units or DeferredCash) if the Compensation Committee determines that (i) the employee failed to follow existing risk management policies and (ii) as a result of the employee’sfailure, there has been or reasonably could be expected to be a material adverse impact on our firm or the employee’s business unit. We expect to include thisprovision in the award agreements relating to long-term incentive compensation awards in future years. Overview of 2012 Incentive Compensation Program Our 2012 incentive compensation, generally consisting of annual cash bonuses and long-term incentive compensation awards (restricted Holding Unit awardsand Deferred Cash awards to employees with 2012 total compensation in excess of $200,000), is intended to reward our executives and employees for theirperformance and encourage them to remain with the firm. Annual cash bonuses, which generally reflect individual performance and the firm’s current yearfinancial performance, provide a shorter-term incentive to remain through year end because such bonuses are typically paid during the last week of the year.Long-term incentive compensation awards (whether denominated in restricted Holding Units or Deferred Cash) provide future earnings potential. They aresubject to multi-year vesting periods (generally, four years) and are subject to forfeiture in the event an award recipient violates certain agreements andrestrictive covenants set forth in the applicable award agreement (see “Compensation Elements for Executive Officers—Long-term IncentiveCompensation” in this Item 11). Although estimates are developed for budgeting and strategic planning purposes, executive compensation is not correlatedwith meeting any specific targets (except that some of our salespeople have compensation incentives based on sales levels). The aggregate amount of incentive compensation (i.e., the amount available to pay annual cash bonuses and to grant long-term incentive compensation awardsto executives and other eligible employees) generally is determined on a discretionary basis and is primarily a function of our firm’s current year financialperformance. Amounts are awarded to help us achieve our goal of attracting, motivating and retaining top talent while also helping ensure that our Unitholdersreceive an appropriate return on their investment. Senior management, with the approval of the Compensation Committee, confirmed that the appropriatemetric to consider in determining the amount of incentive compensation for 2012 is the ratio of adjusted employee compensation and benefits expense toadjusted net revenues, both of which are described immediately below: •Adjusted net revenues (see our discussion of “Management Operating Metrics” in Item 7) exclude investment gains and losses and dividendsand interest on employee long-term incentive compensation-related investments and 90% of the investment gains and losses of our consolidatedventure capital fund attributable to non-controlling interests. In addition, adjusted net revenues offset distribution-related payments to third partiesas well as amortization of deferred sales commissions against distribution revenues. We also exclude from adjusted net revenues additional pass-through expenses we incur (primarily through our transfer agent) that are reimbursed and recorded as fees in revenues. •Adjusted employee compensation and benefits expense is total employee compensation and benefits expense minus other employment costs such asrecruitment, training, temporary help and meals, and excludes the impact of mark-to-market vesting expense, as well as dividends and interestexpense, associated with employee long-term incentive compensation-related investments. Senior management, with the approval of the Compensation Committee, also confirmed that the firm’s adjusted employee compensation and benefitsexpense should not exceed 50% of our adjusted net revenues, except in unexpected or unusual circumstances. As shown in the table below, in 2012, adjustedemployee compensation and benefits expense amounted to 49.8% of adjusted net revenues (in thousands): Net Revenues $2,736,737 Adjustments (see above) (476,436)Adjusted Net Revenues $2,260,301 Employee Compensation & Benefits Expense $1,168,645 Adjustments (see above) (42,724)Adjusted Employee Compensation & Benefits Expense $1,125,921 Adjusted Compensation Ratio 49.8% 128Table of Contents For the year ended December 31, 2012, the adjusted compensation ratio included incremental compensation expense recognized during the third and fourthquarters of 2012 attributable to the restricted Holding Unit award granted to our Chief Executive Officer pursuant to his extended employment agreement datedas of June 21, 2012 (discussed below in “Overview of our Chief Executive Officer’s Compensation – June 2012 Extended Employment Agreement” inthis Item 11, “Extended Employment Agreement”). Under U.S. GAAP, the compensation expense for the restricted Holding Unit award granted pursuantto the Extended Employment Agreement, which amounted to $33.1 million (based on the $12.17 grant date Holding Unit price), must be amortized on astraight-line basis over 6.5 years, beginning on June 21, 2012, the grant date. As a result, even though Mr. Kraus will not receive any incremental cashcompensation or cash distributions related to the restricted Holding Unit award pursuant to the Extended Employment Agreement prior to its commencementdate on January 3, 2014, we incurred $2.5 million of incremental compensation expense resulting from such amortization during the second half of 2012 andwill incur $5.1 million of such expense for the full year 2013. Our 2012 adjusted compensation ratio of approximately 50% reflects the need to keep compensation levels competitive with industry peers. In determining theappropriate level of compensation for the firm’s executives, senior management retained McLagan Partners (“McLagan”) to provide compensationbenchmarking data that included comparisons of estimated 2012 executive compensation to executive compensation in 2011. Employees with total compensation in excess of $200,000 received a portion of their 2012 incentive compensation in the form of a cash bonus and a portion inthe form of long-term incentive compensation (at least 50% of which must have been allocated to restricted Holding Units). The split between cash bonus andlong-term incentive compensation varied depending on the eligible employee’s total compensation, with lower-paid employees receiving a greater percentage oftheir incentive compensation as cash bonuses than more highly-paid employees. Quarterly cash distributions on vested and unvested restricted Holding Unitsare paid currently to award recipients. If Deferred Cash is elected, interest accrues monthly based on our monthly weighted average cost of funds and iscredited to the award recipient annually. Our cost of funds during 2012 was approximately 0.4%, representing a nominal return. Overview of our Chief Executive Officer’s Compensation Current Employment Agreement On December 19, 2008, Peter S. Kraus, the General Partner, AllianceBernstein and Holding entered into an agreement (“Kraus Employment Agreement”)pursuant to which Mr. Kraus serves as Chairman of the Board of Directors of the General Partner and Chief Executive Officer (“CEO”) of the GeneralPartner, AllianceBernstein and Holding until January 2, 2014 (“Employment Term”), unless the Kraus Employment Agreement is terminated in accordancewith its terms. The terms of the Kraus Employment Agreement were the result of arm’s-length negotiations between Mr. Kraus and a member of the Compensation Committee.The terms of the Kraus Employment Agreement (which are described in detail immediately below), including the compensation elements, were discussedand approved by the Compensation Committee and the full Board on December 19, 2008 and reflect their decision to structure the allocation of Mr. Kraus’scompensation more heavily toward a grant of restricted Holding Units. In connection with the commencement of Mr. Kraus’s employment, on December 19, 2008, he was granted 2,722,052 restricted Holding Units (“RestrictedHolding Unit Grant”). Subject to accelerated vesting clauses in the Kraus Employment Agreement, Mr. Kraus’s restricted Holding Units vest ratably on eachof the first five anniversaries of December 19, 2008, commencing December 19, 2009, provided, with respect to each installment, Mr. Kraus continues to beemployed by AllianceBernstein on the vesting date. In connection with the Extended Employment Agreement (which is described in detail below),AllianceBernstein amended the Kraus Employment Agreement permitting Mr. Kraus to defer until December 19, 2018 the delivery of the final vesting of the544,410 restricted Holding Units remaining under that agreement and to continue to receive distributions on those Holding Units until such delivery. The Kraus Employment Agreement provides for immediate vesting upon AXA ceasing to control the management of AllianceBernstein’s business or Holdingceasing to be publicly traded. The Kraus Employment Agreement also provides for the immediate vesting of the next two installments of restricted HoldingUnits or, if fewer remain as of the termination date, the balance of the installments that are unvested, upon certain qualifying terminations of employment,including termination of Mr. Kraus’s employment (i) by AllianceBernstein without cause (“cause” means, among other things, (1) the continued, willfulfailure by Mr. Kraus to perform substantially his duties with AllianceBernstein after a written demand for substantial performance is delivered to him by theBoard; (2) Mr. Kraus’s conviction of, or plea of guilty or nolo contendere to, a crime that constitutes a felony; (3) the willful engaging by Mr. Kraus inmisconduct that is materially and demonstrably injurious to AllianceBernstein or any of its affiliates; (4) the willful breach by Mr. Kraus of the covenant notto disclose any confidential information pertaining to AllianceBernstein or its affiliates or the covenant not to compete with AllianceBernstein or its affiliates;and (5) Mr. Kraus’s failure to comply with a material written company workplace policy applicable to him), and (ii) by Mr. Kraus for good reason (“goodreason” generally means actions taken by AllianceBernstein resulting in a material negative change in Mr. Kraus’s employment relationship, includingassignment to Mr. Kraus of duties materially inconsistent with his position, any material breach of the Kraus Employment Agreement by AllianceBernstein ora requirement by AllianceBernstein that Mr. Kraus be based at any office or location more than 25 miles commuting distance from company headquarters, ora requirement that Mr. Kraus report to an officer or employee of AllianceBernstein instead of reporting directly to the Board). In addition, upon death ordisability, Mr. Kraus immediately vests in a pro-rated portion of any restricted Holding Units otherwise due to vest on the next vesting date. During theEmployment Term, Mr. Kraus has been, and continues to be, paid the cash distributions payable with respect to his unvested restricted Holding Units and adollar amount equal to the cash distributions payable with respect to the number of any Holding Units that are withheld by AllianceBernstein to cover Mr.Kraus’s tax withholding obligations as the Holding Units vest. These cash distributions have been, and continue to be, paid at the time distributions are madeto Holding Unitholders generally, provided that no such payments to Mr. Kraus will be required with respect to any cash distribution with a record datefollowing the earlier of (i) the termination of Mr. Kraus’s employment for any reason, and (ii) December 19, 2018. 129Table of Contents The five-year vesting schedule provides Mr. Kraus with a strong incentive to remain with our firm for the full five-year term of the Kraus EmploymentAgreement and to cause our firm to have strong financial performance during each of those five years. The size of the Restricted Holding Unit Grant, whichhad a value of approximately $52 million based on the market price of a Holding Unit on December 19, 2008, reflected the determination by Mr. Kraus andthe Board that this was a reasonable and appropriate amount of long-term incentive compensation in view of Mr. Kraus’s expertise and experience, his pastcompensation, the compensation of his predecessor and the compensation of other chief executive officers of comparable asset management companies. Mr. Kraus, pursuant to the Kraus Employment Agreement, was paid a $6 million cash bonus in 2009, which represented the amount that Mr. Kraus and theBoard agreed represented a reasonable and appropriate short-term financial inducement for Mr. Kraus to join AllianceBernstein based on the same factors(listed immediately above) and reflected the significant uncertainty surrounding the level of 2009 quarterly cash distributions on Holding Units when he washired; it most directly reflects the company’s goal of attracting highly-qualified executive talent. Mr. Kraus is paid an annual base salary of $275,000, which has not been increased since he was hired. The $275,000 base salary is in line with our firm’spolicy generally to keep base salaries of executives and other highly-compensated employees low in relation to total compensation. During the Employment Term, AllianceBernstein has no commitment to pay additional cash bonuses to Mr. Kraus beyond the $6 million he was paid in2009 (with any additional bonuses being entirely in the discretion of the Compensation Committee) or to make any additional equity-based awards to him.Accordingly, for 2010 and subsequent years during the Employment Term, the totality of Mr. Kraus’s compensation (other than his salary and absent anyadditional awards the Compensation Committee may choose to grant) has been, and continues to be, dependent on the level of cash distributions on therestricted Holding Units granted to him and the evolution of the trading price of Holding Units, both of which are partially dependent on the financial andoperating results of our firm. Therefore, his long-term interests are directly aligned with the interests of our Unitholders and also indirectly aligned with theinterests of our clients, as strong performance for our clients generally contributes directly to increases in assets under management and thus improvedfinancial performance for the firm. Mr. Kraus received neither a cash bonus nor a long-term incentive compensation award for 2012, 2011 or 2010. Mr. Kraus is also entitled to receive perquisites and benefits, including full tax gross-ups by AllianceBernstein with respect to personal air travel on company-owned aircraft, personal use of a company car and driver, any continued medical coverage due to termination by death or disability, and any payments forCOBRA coverage due to termination of employment by AllianceBernstein without cause or by Mr. Kraus for good reason. These terms reflect the results of thearm’s-length negotiation process described immediately above.June 2012 Extended Employment Agreement On June 21, 2012, Mr. Kraus, the General Partner, AllianceBernstein and Holding entered into the Extended Employment Agreement, pursuant to which Mr.Kraus will continue to serve as Chairman of the Board of the General Partner and CEO of the General Partner, AllianceBernstein and Holding from January 3,2014, the day following the end of the Employment Term, until January 2, 2019 (the “Extended Employment Term”), unless the Extended EmploymentAgreement is terminated in accordance with its terms. Although the Extended Employment Term does not begin until January 3, 2014, certain provisions of theExtended Employment Agreement became effective on entry into the agreement, including those provisions summarized below relating to the grant ofadditional restricted Holding Units and termination of employment. The terms of the Extended Employment Agreement were the result of arm’s-length negotiations between Mr. Kraus, members of the Compensation Committee,who discussed this matter during four Special Meetings of the Compensation Committee, and other members of the Board. In addition, the CompensationCommittee considered comparative compensation benchmarking data from Johnson Associates, Inc. (“Johnson”), a compensation consultant engaged by theCompensation Committee, which data summarized CEO compensation levels for 2011 at selected asset management companies and banks comparable toours. This data provided ranges of compensation levels for CEOs at these companies, including salary, cash bonus, total cash compensation and totalcompensation. The terms of the Extended Employment Agreement (which are described in detail immediately below), including the compensation elements,were discussed and approved first by the Compensation Committee and then by the Executive Committee and reflect both Committees’ decision to structurethe allocation of Mr. Kraus’s compensation heavily toward an additional grant of restricted Holding Units. The Executive Committee exercises all of thepowers and authority of the full Board (with limited exceptions) when the Board is not in session or when it is impractical to assemble the full Board. Foradditional information regarding the Executive Committee, see “Committees of the Board” in Item 10 of this Form 10-K. 130Table of Contents In connection with the signing of the Extended Employment Agreement on June 21, 2012, Mr. Kraus was granted an additional 2,722,052 restricted HoldingUnits. Subject to accelerated vesting clauses in the Extended Employment Agreement (e.g., immediate vesting upon AXA ceasing to control the management ofAllianceBernstein’s business or Holding ceasing to be publicly traded), Mr. Kraus’s restricted Holding Units will vest ratably on each of the first fiveanniversaries of December 19, 2013, commencing December 19, 2014, provided, with respect to each installment, Mr. Kraus continues to be employed byAllianceBernstein on the vesting date. Pursuant to the Extended Employment Agreement, Mr. Kraus has elected to delay delivery of all of the restricted HoldingUnits until after the final vesting date on December 19, 2018, subject to acceleration upon a “change in control” of our firm (i.e., AXA, our parent company,ceasing to control the management of AllianceBernstein’s business or Holding ceasing to be publicly traded) and certain qualifying events of termination ofemployment. Beginning January 3, 2014, the commencement date of the Extended Employment Agreement, Mr. Kraus will be paid the cash distributionspayable with respect to his unvested and vested restricted Holding Units until they are delivered or forfeited. These cash distributions will be paid at the timedistributions are made to Holding Unitholders generally. The terms set forth in the Extended Employment Agreement regarding potential payments to Mr. Kraus upon a change in control of AllianceBernstein or atermination of employment are substantially the same as the comparable terms in the Kraus Employment Agreement (see “Overview of our Chief ExecutiveOfficer’s Compensation – Current Employment Agreement” above), except for the terms governing a termination of employment by AllianceBernsteinwithout “cause” or by Mr. Kraus for “good reason”. If the Extended Employment Agreement had been terminated for one of these reasons before December 19,2012, Mr. Kraus would have forfeited the entire restricted Holding Unit award granted under the Extended Employment Agreement. If the ExtendedEmployment Agreement is terminated for one of these reasons after December 19, 2012 but before December 19, 2013, Mr. Kraus immediately will vest in theinstallment of restricted Holding Units scheduled to vest on December 19, 2014. If the Extended Employment Agreement is terminated for one of these reasonsafter December 19, 2013, Mr. Kraus immediately will vest in the next two installments of restricted Holding Units or, if fewer remain as of the terminationdate, the balance of the installments that are unvested. Mr. Kraus will continue to be paid an annual base salary of $275,000, subject to increase by the Compensation Committee. During the Extended Employment Term, AllianceBernstein has no commitment to pay any cash bonuses to Mr. Kraus (with any bonuses being entirely in thediscretion of the Compensation Committee) or to make any additional equity-based awards to him. Accordingly, during the Extended Employment Term, thetotality of Mr. Kraus’s compensation (other than his salary) will continue to be primarily dependent on the level of cash distributions on the restricted HoldingUnits granted to him and the trading price of Holding Units, both of which are partially dependent on the financial and operating results of our firm.Therefore, his long-term interests continue to be directly aligned with the interests of our Unitholders and also indirectly aligned with the interests of ourclients, as strong performance for our clients generally contributes directly to increases in assets under management and thus improved financial performancefor the firm. The terms in the Extended Employment Agreement regarding perquisites and benefits are substantially the same as the comparable terms in the KrausEmployment Agreement (see “Overview of our Chief Executive Officer’s Compensation – Current Employment Agreement” above), except that, startingJanuary 3, 2014, Mr. Kraus will reimburse AllianceBernstein for any incremental cost to AllianceBernstein associated with his personal use of company-owned aircraft and will not be entitled to tax gross-ups by AllianceBernstein with respect to personal use of company-owned aircraft or personal use of acompany car and driver. These terms reflect the results of the arm’s length negotiation process described above. During the second quarter of 2012, Johnson provided us with comparative compensation benchmarking data, which summarized CEO compensation levelsfor 2011 at selected asset management companies and banks comparable to ours. As noted above, this data provided ranges of compensation levels for CEOsat these companies, including salary, cash bonus, total cash compensation and total compensation. The comparable companies, which were selected bymanagement with input from Johnson in order to provide appropriate comparisons for the size and business mix of AllianceBernstein, include AffiliatedManagers, Ameriprise Financial, Bank of New York Mellon, BlackRock Financial Management, Credit Suisse Asset Management, Eaton Vance, FederatedInvestors, Franklin Resources, Invesco Plc, Janus Capital Group, JPMorgan Asset Management, Lazard, Legg Mason, Morgan Stanley, Northern TrustCorp., State Street and T. Rowe Price Associates. Factors Considered when Determining Executive Compensation Decisions about executive compensation are based primarily on our assessment of each executive’s leadership, operational performance and potential toenhance investment returns and service for our clients, all of which contribute to long-term Unitholder value. We do not utilize quantitative formulas whendetermining the compensation of our CEO, our Chief Financial Officer (“CFO”), our Former Interim CFO and our other three most highly-compensatedexecutive officers (“named executive officers”), but rather rely on our judgment about each executive’s performance and whether each particular payment oraward provides an appropriate reward for the executive officer’s and the firm’s current year performance. We begin this process by determining the totalincentive compensation amounts available for a particular year (as more fully explained above in “Overview of 2012 Incentive Compensation Program”).We then consider a number of key factors for each of the named executive officers (other than Mr. Kraus, our CEO, whose compensation is described abovein “Overview of our Chief Executive Officer’s Compensation”). These factors include: total compensation paid to the named executive officer in theprevious year; the increase or decrease in the current year’s total incentive compensation amounts available; the named executive officer’s performancecompared to individual business and operational goals established at the beginning of the year (or, in the case of Mr. Weisenseel, our CFO, the business andoperational goals established when he joined us in May 2012); the nature, scope and level of responsibilities of the named executive officer; the contribution toour overall financial results; and the contribution of the executive’s business unit to our company’s fiduciary culture in which clients’ interests are paramount.In 2012, we also considered data provided by McLagan to benchmark the total compensation paid to each of our named executive officers. 131Table of Contents This process, which is conducted by the CEO working with other members of senior management, results in specific incentive compensationrecommendations to the Compensation Committee supported by the factors considered. The Compensation Committee then makes the final incentivecompensation decisions. The Compensation Committee does not analyze quantifiable goals relating to the firm’s business units in determining the cash bonusof each of the named executive officers. In addition to our CEO, our CFO and our other three most highly-compensated executive officers, for 2012, pursuant to applicable SEC rules and regulations,we also included our former Interim CFO, who returned to his duties as our firm’s Corporate Controller and Chief Accounting Officer after Mr. Weisenseeljoined our firm in May 2012, as a “named executive officer”. The priorities of our named executive officers (other than Mr. Kraus) generally include a robust set of factors relating to our firm’s financial performance, itsstrategic and operational considerations, the specific business or function headed by each named executive officer, and each named executive officer’smanagement effectiveness, talent development and adherence to our firm’s culture, including risk/control management and regulatory compliance. Becausespecific factors will vary among business units, among individuals and during different business cycles, we do not adopt any specific weighting or formulaunder which these metrics are applied. We have described below the business and operational goals established in 2012 for our named executive officers (other than Mr. Kraus) and the contributionto our company each made in achieving these goals: •For Mr. Gingrich, our company’s Chief Operating Officer, the main elements of his business and operational goals for 2012 included: increasingoperating efficiency; optimizing retail, institutional, and private client strategy and sales efforts; enhancing planning and organizational processes;optimizing revenue and profitability of Bernstein Research Services; fostering a culture of meritocracy, empowerment and accountability among ourbusiness leaders; and recruiting and retaining top talent. •Mr. Gingrich was successful in meeting these goals in 2012. Operating costs were reduced significantly compared to the previous year;important steps were taken to right-size our real estate footprint; operating margins were higher despite lower revenues; gross and net flowswere substantially improved; processes were implemented to better manage costs and headcount; new personnel were recruited to the firm,including our CFO; and Bernstein Research Services once again gained market share while improving margins. Mr. Gingrich’scompensation reflected Mr. Kraus’s and the Compensation Committee’s judgment in assessing the importance of these contributions to ourcompany. •For Mr. van Brugge, the Chairman and CEO of SCB LLC, the main elements of his business and operational goals for 2012 included: optimizingthe revenue and profit contribution of Bernstein Research Services; further enhancing this unit’s research capabilities, trading services and productarray; extending this unit’s geographic platform; and attracting, motivating and retaining top talent. •Mr. van Brugge was successful in meeting these goals in 2012. The most significant contributions made by Mr. van Brugge towardachieving these goals included leading Bernstein Research Services to: strong market share and increased profitability; excellent results inthird-party research surveys; and significant progress in growing its business in Asia. Mr. van Brugge’s compensation reflected Mr. Kraus’sand the Compensation Committee’s judgment in assessing the importance of these contributions to our company. •For Ms. Massad, our company’s Head of Human Capital and Chief Talent Officer, the main elements of her business and operational goals for2012 included: fostering a workplace that attracts, develops, engages and retains top talent; facilitating compensation planning of our company’sstrategic business units; establishing compensation principles and processes that support the company’s meritocracy-based culture; maintaining thecompany’s strong employee relations record; and refining the Human Capital business model to serve client needs while strengthening operatingleverage of the Human Capital department and the company generally. •Ms. Massad was successful in meeting these goals in 2012. The most significant contributions made by Ms. Massad toward achieving thesegoals included: supporting the successful restructuring and right-sizing of our company’s strategic business units; establishing an effectiverecruiting processes outsourcing (“RPO”) model, which improved our company’s ability to identify, access and attract top talent whilereducing recruiting costs; establishing new corporate competencies to strengthen overall employee performance; refining the company’sperformance management and compensation processes to strengthen the link between compensation and performance; evaluating thecompetitiveness of our global benefits programs and addressing these programs accordingly; and developing and facilitating managementforums that strengthened our culture and engagement of our people. Ms. Massad’s compensation reflected Mr. Kraus’s and theCompensation Committee’s judgment in assessing the importance of these contributions to our company. 132Table of Contents •For Mr. Weisenseel, our company’s CFO, the main elements of his business and operational goals for 2012 included: assuming his newresponsibilities as CFO in a seamless manner; focusing on improving the company’s adjusted operating margin with a particular emphasis onreducing the firm’s cost structure, including its global real estate footprint; enhancing both internal and external financial reporting to provide moreuseful information to the Board, management and our Unitholders (including an increased focus on management operating metrics); reviewing ourfirm’s global liquidity profile to identify any potential enhancements; realigning our firm’s Finance and Administrative functions, and hiring newsenior leaders in the Finance Department, to improve the level of client service provided to our company and its business leaders; and identifyingand developing our Finance Department’s next generation of leaders. •Mr. Weisenseel was successful in meeting these goals in 2012. The most significant contributions made by Mr. Weisenseel toward achievingthese goals included: improving our adjusted operating margin with a particular emphasis on reducing the firm’s cost structure pertaining tovarious promotion and servicing and general and administrative services expense items; executing the global space consolidation plan tofurther reduce the firm’s office footprint by approximately 500,000 square feet, which is expected to ultimately generate occupancy-relatedannual expense savings in the range of $38 to $43 million; identifying improvements to internal financial reporting to enhance transparencyand accountability of senior business leaders and re-emphasizing in external financial reporting the management operating metrics we useinternally to evaluate and compare period-to-period operating performance, including “adjusted net revenues”, “adjusted operating income”and “adjusted operating margin”; completing a review of our firm’s liquidity requirements, which resulted in the expansion of the firm’scredit facility by $100 million to match the potential size of its commercial paper program and securing additional liquidity lines of credit toassist in funding client redemptions; and adding senior leaders to the Finance team and reorganizing the Finance Department to provide betterclient service to our organization. Mr. Weisenseel’s compensation reflected Mr. Kraus’s and the Compensation Committee’s judgment inassessing the importance of these contributions to our company. •For Mr. Farrell, our Corporate Controller and former Interim CFO, the main elements of his business and operational goals for 2012 included:facilitating the transition of his responsibilities as Interim CFO to Mr. Weisenseel (in May 2012) in a seamless manner; ensuring the firm’s internalcontrol structure and financial reporting standards were adhered to; assisting in the integration and support of new business and services; reviewingthe firm’s global liquidity profile to ensure it supports current and future requirements; assisting in the review of the firm’s cost structure, includingreducing its global real estate footprint; organizing the firm’s Finance Department to leverage and improve the service levels to the firm and itsbusiness leaders; and continuing to identify and develop our Finance Department’s next generation of business leaders. •Mr. Farrell was successful in meeting these goals in 2012. The most significant contributions made by Mr. Farrell toward achieving thesegoals included: facilitating the transfer of CFO responsibilities to Mr. Weisenseel; providing technical support for business development-related initiatives; evaluating the firm’s global liquidity profile to ensure that the firm’s funding capabilities would not be compromised;assisting in the evaluation of the firm’s cost structure which, including the review of the firm’s occupancy requirements, resulted in theconsolidation of several office locations globally; and leveraging existing resources to provide the company and its business leaders with anefficient and effective financial support model. Mr. Farrell’s compensation reflected Mr. Kraus’s and the Compensation Committee’sjudgment in assessing the importance of these contributions to our company. Consistent with the management approach taken by AllianceBernstein for its executives generally, the 2012 goals of our named executive officers (other thanMr. Kraus, whose compensation is described above in “Overview of our Chief Executive Officer’s Compensation”) did not include specific revenue orprofit targets. By their nature, the business and operational goals for each of these other named executive officers are difficult to measure quantitatively andthus management uses discretion to determine whether those goals and objectives have been met. During the fourth quarter of 2012, McLagan provided us with comparative compensation benchmarking data, which summarized compensation levels for theprior year at selected asset management companies and banks comparable to ours. This data provides ranges of compensation levels for executive positions atthese companies similar to those held by our named executive officers, including salary, total cash compensation and total compensation. The comparablecompanies, which are selected by management with input from McLagan in order to provide appropriate comparisons for the size and business mix ofAllianceBernstein and the roles played by the named executive officers, include Bank of America Merrill Lynch, Barclays Capital Group, BlackRock, CreditSuisse, Deutsche Bank, Franklin Templeton, Goldman Sachs & Co., Goldman Sachs Asset Management, Invesco Plc, JPMorgan Asset Management,JPMorgan Chase, Morgan Stanley, Morgan Stanley Investment Management, Nomura Securities, PIMCO Advisors, T. Rowe Price Associates, UBS and TheVanguard Group. 133Table of Contents Our CEO, and the Compensation Committee, retain discretion as to how to utilize the McLagan benchmarking data. The data is not used in a formulaic ormechanical way to determine named executive officer compensation levels. Total compensation paid to our named executive officers in 2012 fell within orbelow the ranges of total compensation paid to executives in similar positions by the companies included in the McLagan data. The Compensation Committeeconsidered the McLagan data in concluding that the compensation levels paid in 2012 to our named executive officers were appropriate and reasonable. The Board, when it reviewed and approved the Kraus Employment Agreement in December 2008, also considered the McLagan data, which indicated that Mr.Kraus’s compensation arrangement was fully competitive, reasonable and appropriate given our size, scope and complexity, and Mr. Kraus’s experience,credentials and proven track record. Similarly, the Compensation Committee and the Executive Committee, in connection with the review and subsequentapproval of the Extended Employment Agreement in June 2012, considered the Johnson data, which indicated that the compensation terms for Mr. Kraus setforth in the agreement were fully competitive and consistent with industry standards given our size, scope and complexity, the importance of CEO continuity,Mr. Kraus’s experience and integral role in the ongoing execution of our firm’s long-term growth strategy, and the overwhelming equity focus of hiscompensation. Compensation Elements for Executive Officers Below we describe the major elements of our executive compensation. 1. Base Salary. Base salaries comprise a relatively small portion of our executives’ total compensation and are maintained at levels generally lower than thesalaries of executives at peer firms. Within the narrow range of base salaries paid to our executives, we consider individual experience, responsibilities andtenure with the firm. The salaries we paid during 2012 to our named executive officers are shown in column (c) of the Summary Compensation Table. 2. Short-term Incentive Compensation (Cash Bonus). In 2012, we paid annual cash bonuses in late December to reward individual performance for theyear. These bonuses are based on management’s evaluation (subject to the Compensation Committee’s review and approval) of each executive’s performanceduring the year, and the performance of the executive’s business unit or function, compared to business and operational goals established at the beginning ofthe year, and in the context of the firm’s current year financial performance. The cash bonuses we awarded in 2012 to our named executive officers are shownin column (d) of the Summary Compensation Table. 3. Long-term Incentive Compensation. In 2012, we granted annual long-term incentive compensation awards in December to supplement cash bonuses andto encourage retention of our executives. These awards are made under an unfunded, non-qualified incentive compensation plan under which awards may begranted to eligible employees. As discussed above in “Overview of 2012 Incentive Compensation Program”, long-term incentive compensation awards generally are denominated inrestricted Holding Units. We employ this structure to directly align our executives’ long-term interests with the interests of our Unitholders while also indirectlyaligning our executives’ long-term interests with the interests of our clients, as strong performance for our clients generally contributes directly to increases inassets under management and thus improved financial performance for the firm. The 2012 long-term incentive compensation awards granted to our namedexecutive officers are shown in column (e) of the Summary Compensation Table, column (i) of the Grants of Plan-based Awards Table and column (g) of theOutstanding Equity Awards at 2012 Fiscal Year End Table. Long-term incentive compensation was awarded in 2012 as part of total incentive compensation based on a customized set of goals for each executive. Therelative level of cash bonus compared to long-term incentive compensation is generally fixed using a sliding scale based on the total compensation level of theexecutive, with lower-paid executives receiving a greater percentage of their incentive compensation as cash bonuses than more highly-paid executives. In 2012, the number of restricted Holding Units comprising long-term incentive compensation awards was based on the average of the closing prices of aHolding Unit as reported for NYSE composite transactions for the five business day period that commenced on January 14, 2013 and concluded on January18, 2013 (this calculation resulted in an average price of $19.972); the Compensation Committee approved the awards on December 3, 2012. Long-term incentive compensation awards generally vest ratably over four years. However, award recipients who terminate their employment or are terminatedwithout cause continue to vest in their long-term incentive compensation awards if the award recipients comply with certain agreements and restrictivecovenants set forth in the applicable award agreement, including restrictions on competition, employee and client solicitation, and a claw-back for failing tofollow existing risk management policies. Withdrawals prior to vesting are not permitted. Upon vesting, awards are distributed to participants unless the award recipient has, in advance, voluntarilyelected to defer receipt to future periods. Quarterly cash distributions on vested and unvested restricted Holding Units are paid currently to award recipientsand are included in column (i) of the Summary Compensation Table. 4. Defined Contribution Plan. Employees of AllianceBernstein are eligible to participate in the Profit Sharing Plan for Employees of AllianceBernstein L.P.(as amended and restated as of January 1, 2010, “Profit Sharing Plan”), a tax-qualified retirement plan. The Compensation Committee determines theamount of company contributions (both the level of annual matching by the firm of an employee’s pre-tax salary deferral contributions and the annualcompany profit sharing contribution). For 2012, the Compensation Committee determined that employee deferral contributions would be matched on a one-to-one basis up to five percent of eligible compensation and there would be no profit sharing contribution. Company contributions to the Profit Sharing Plan onbehalf of the named executive officers are shown in column (i) of the Summary Compensation Table. 134Table of Contents 5. CEO Arrangements. See “Overview of our Chief Executive Officer’s Compensation” above. Compensation Committee In 2012, the Compensation Committee was composed of Mr. Condron (Chair), Mr. Duverne, Mr. Elliott, Mr. Kraus, Ms. Slutsky and Mr. Smith. Mr. deCastries resigned as a member of the Compensation Committee in February 2012. The Compensation Committee held eight meetings in 2012. As discussed above (see “Corporate Governance—NYSE Governance Matters” in Item 10), because Holding is a limited partnership, it is exempt fromNYSE rules that require public companies to have a compensation committee composed solely of independent directors. AXA owns, indirectly, anapproximate 65.5% economic interest in AllianceBernstein (as of December 31, 2012), and compensation expense is a significant component of our financialresults. For these reasons, Mr. Duverne, Deputy Chief Executive Officer of AXA, is a member of the Compensation Committee, and any action taken by theCompensation Committee requires the affirmative vote or consent of an executive officer of one or more of our parent companies. (Presently, Mr. Duverne is theonly member of the Compensation Committee who is also an executive officer of one or more of our parent companies.) The Compensation Committee has general oversight of compensation and compensation-related matters, including: (i) determining cash bonuses; (ii) determining contributions and awards under incentive plans or other compensation arrangements (whether qualified or non-qualified) for employeesof AllianceBernstein and its subsidiaries, and amending or terminating such plans or arrangements or any welfare benefit plan or arrangement ormaking recommendations to the Board with respect to adopting any new incentive compensation plan, including equity-based plans; (iii) reviewing and approving the compensation of our CEO, evaluating his performance, and determining and approving his compensation level basedon this evaluation, which in 2012 was done in connection with the process of negotiating and approving the Extended Employment Agreement (ourCEO recuses himself from voting on his own compensation and, accordingly, did not participate in the Compensation Committee’s or the ExecutiveCommittee’s discussions regarding the Extended Employment Agreement); and (iv) reviewing and discussing the CD&A, and recommending to the Board its inclusion in the Partnerships’ Forms 10-K and, when applicable, proxystatements. In 2007, the Compensation Committee delegated responsibility for managing AllianceBernstein’s non-qualified plans to the Omnibus Committee for Non-Qualified Plans (“Omnibus Committee”), consisting of six members who are senior officers of AllianceBernstein. The Omnibus Committee held fourmeetings in 2012. The Compensation Committee’s year-end process has generally focused on the cash bonuses and long-term incentive compensation awards granted to seniormanagement. Mr. Kraus plays an active role in the work of the Compensation Committee, but he does not participate in any committee discussions or votesregarding his own compensation. Mr. Kraus, working with other members of senior management, provides recommendations for individual employee awardsto the Compensation Committee for its consideration. As part of this process, management provides the committee with compensation benchmarking data fromcompensation consultants. For 2012, we paid $17,120 to McLagan for executive compensation benchmarking data and an additional $274,680 for surveyand consulting services relating to the amount and form of compensation paid to employees other than executives. The Compensation Committee held its regularly-scheduled meeting regarding year-end compensation on December 3, 2012, at which it discussed andapproved senior management’s compensation recommendations. The Compensation Committee retained Johnson when considering whether to approve theExtended Employment Agreement, but did not retain its own consultants for general employee compensation purposes. The Compensation Committee’s functions are more fully described in the committee’s charter, which is available online in the “Management & Governance”section of our Internet Site. Other Compensation-Related Matters AllianceBernstein and Holding are, respectively, private and public limited partnerships, and are subject to taxes other than federal and state corporate incometax (see “Business—Taxes” in Item 1 and “Structure-related Risks” in Item 1A). Accordingly, Section 162(m) of the Code, which limits tax deductionsrelating to executive compensation otherwise available to entities taxed as corporations, is not applicable to either AllianceBernstein or Holding. We have amended our qualified and non-qualified plans to the extent necessary to comply with applicable law. 135Table of Contents For long-term incentive compensation awards made during or before 2008, we typically purchased the investments that were notionally elected by planparticipants and held these investments in a consolidated rabbi trust. Effective January 1, 2009, investments we previously made in our investment servicesoffered to clients are held in a custodial account, while we continue to hold investments in Holding Units in the consolidated rabbi trust. These investments aresubject to the general creditors of AllianceBernstein. All compensation awards approved during 2012 that involve the issuance of Holding Units were made under the 2010 Plan. Compensation Committee Interlocks and Insider Participation Mr. de Castries, who was a member of the Compensation Committee from February 2011 through February 2012, is the Chief Executive Officer of AXA, theultimate parent of the General Partner. Mr. Duverne is the Deputy Chief Executive Officer of AXA. Mr. Condron served as the Chairman of the Board, President and Chief Executive Officer of AXA Equitable, the sole stockholder of the General Partner, untilhis retirement on January 1, 2011. As of December 31, 2012, AXA Equitable and its affiliates owned an aggregate 65.5% economic interest in AllianceBernstein. Mr. Kraus is Chairman of the Board and Chief Executive Officer of the General Partner and, accordingly, also serves in that capacity for AllianceBernsteinand Holding. Mr. Kraus is also a director of AXA Financial, AXA Equitable, MONY and MLOA. In addition, Mr. Kraus is a member of the ManagementBoard of AXA. Other than Mr. Kraus, no executive officer of AllianceBernstein served as (i) a member of a compensation committee or (ii) a director of anotherentity, an executive officer of which served as a member of AllianceBernstein’s Compensation Committee or Board. Compensation Committee Report The members of the Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis set forth above and,based on such review and discussion, recommended to the Board its inclusion in this Form 10-K. Christopher M. Condron (Chair) Denis DuverneSteven G. ElliottPeter S. KrausLorie A. SlutskyA.W. (Pete) Smith, Jr. 136Table of Contents Summary Compensation Table The following table summarizes the total compensation of our named executive officers for 2012, 2011 and 2010, as applicable (including Mr. Farrell, whoceased serving as our firm’s Interim CFO when Mr. Weisenseel joined our firm in May 2012 and, accordingly, is no longer an executive officer): Name andPrincipal Position Year Salary($) Bonus($) StockAwards(1)(2)($) OptionAwards($) Non-EquityIncentive PlanCompensation($) Change inPension ValueandNonqualifiedDeferredCompensationEarnings($) All OtherCompensation($) Total($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Peter S. Kraus(3) 2012 275,000 — 33,127,373 — — — 2,634,830 36,037,203 Chairman and Chief Executive Officer 2011 275,000 — — — — — 3,982,527 4,257,527 2010 275,000 — — — — — 4,328,020 4,603,020 James A. Gingrich 2012 400,000 2,485,000 3,114,993 — — — 304,781 6,304,774 Chief Operating Officer 2011 400,000 1,685,000 1,915,000 — — — 346,352 4,346,352 2010 400,000 1,311,092 2,638,921 — — — 155,586 4,505,599 Robert P. van Brugge(4)(6) 2012 389,808 1,490,778 1,609,224 — — — 86,237 3,576,047 Chairman and CEO of SCB LLC 2011 375,000 1,470,000 930,002 — — — 356,910 3,131,912 Lori A. Massad(5)Head of Human Capital and ChiefTalent Officer 2012 400,000 805,000 595,006 — — — 128,851 1,928,857 John C. Weisenseel(7)Chief Financial Officer 2012 229,327 755,050 1,244,969 — — — 40,207 2,269,553 Edward J. Farrell(4)(8) 2012 300,000 410,000 214,999 — — — 51,212 976,211 Former Interim Chief Financial Officer 2011 300,000 515,000 285,005 — — — 47,633 1,147,638 (1)The figures in column (e) of the above table provide the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718.For the assumptions made in determining these values, see Note 18 to AllianceBernstein’s consolidated financial statements in Item 8. (2)As discussed above in “Overview of 2012 Incentive Compensation Program” and “Compensation Elements for Executive Officers—Long-termIncentive Compensation” in this Item 11, long-term incentive compensation awards generally are denominated in restricted Holding Units. We employthis structure to directly align our executives’ long-term interests with the interests of our Unitholders while also indirectly aligning our executives’ long-term interests with the interests of our clients, as strong performance for our clients generally contributes directly to increases in assets under managementand thus improved financial performance for the firm. The 2012 long-term incentive compensation awards granted to our named executive officers areshown in column (e) of this table, column (i) of the Grant of Plan-Based Awards Table and column (g) of the Outstanding Equity Awards at 2012 FiscalYear-End Table. In 2012, the number of restricted Holding Units comprising long-term incentive compensation awards was based on the average of the closing prices of aHolding Unit as reported for NYSE composite transactions for the five business day period that commenced on January 14, 2013 and concluded onJanuary 18, 2013 (this calculation resulted in an average price of $19.972); the Compensation Committee approved the awards on December 3, 2012. (3)Mr. Kraus’s compensation structure is set forth in the Kraus Employment Agreement and the Extended Employment Agreement; the terms of each aredescribed above in “Compensation Discussion and Analysis—Overview of our Chief Executive Officer’s Compensation” and below in “PotentialPayments upon Termination or Change in Control”. (4)We have not provided 2010 compensation because neither Mr. van Brugge nor Mr. Farrell was a named executive officer in 2010. (5)We have not provided 2011 or 2010 compensation because Ms. Massad was not a named executive officer in those years. (6)The 2011 bonus disclosed in column (d) for Mr. van Brugge includes a $1,220,000 cash bonus paid to Mr. van Brugge in December 2011 and the$250,000 portion of Mr. van Brugge’s 2011 long-term incentive compensation award under the Incentive Compensation Program he elected to allocate toDeferred Cash. The Deferred Cash accrues interest monthly based on our monthly weighted average cost of funds (approximately 0.4% during 2012) andwill be credited to Mr. van Brugge annually until the cash is distributed to him in installments over the four-year vesting period. The interest on Mr. vanBrugge’s Deferred Cash is shown in column (d) of the Non-Qualified Deferred Compensation Table. (7)On May 14, 2012, Mr. Weisenseel joined our firm as Chief Financial Officer. We did not pay Mr. Weisenseel any compensation during 2011 or 2010. Mr. Weisenseel was granted, as of May 14, 2012 (his first date of employment, “JCW Hire Date”), in accordance with the terms and conditions of theIncentive Compensation Program, an award of restricted Holding Units initially valued at $1,000,000 in connection with his recruitment and asreplacement equity for awards he forfeited by leaving McGraw Hill. The number of restricted Holding Units (69,629) was determined by dividing$1,000,000 by the average closing price on the NYSE of a Holding Unit for the period covering the four trading days immediately preceding the JCW HireDate, the JCW Hire Date and the five trading days immediately following the JCW Hire Date (this calculation resulted in an average price of $14.362) androunded up to the nearest whole number (due to this rounding, the grant date fair value of the award reflected in column (e) is $1,000,012). This award isshown in column (e) of this table, column (i) of the Grant of Plan-Based Awards table and column (g) of the Outstanding Equity Awards at 2012 FiscalYear-End Table. The 2012 bonus disclosed in column (d) for Mr. Weisenseel includes a $655,000 cash bonus paid to Mr. Weisenseel in December 2012 and the$100,050 portion of Mr. Weisenseel’s 2012 long-term incentive compensation award under the Incentive Compensation Program he elected to allocate toDeferred Cash. The Deferred Cash accrues interest monthly based on our monthly weighted average cost of funds (approximately 0.4% during 2012) andwill be credited to Mr. Weisenseel annually until the cash is distributed to him in installments over the four-year vesting period. The interest on Mr.Weisenseel’s Deferred Cash will be shown in column (d) of the Non-Qualified Deferred Compensation Table. (8)Mr. Farrell continued as our firm’s Corporate Controller after Mr. Weisenseel joined our firm in May 2012. Column (i) includes the aggregate incremental cost to our company of certain other expenses and perquisites, including leased car and driver expenses,contributions to the Profit Sharing Plan, life insurance premiums, medical and dental coverage, financial planning, and tax services and tax gross-ups, asapplicable. In accordance with the Kraus Employment Agreement and the Restricted Holding Unit Grant, Mr. Kraus is paid the cash distributions payable with respect tohis unvested restricted Holding Units and a dollar amount equal to the cash distributions payable with respect to the number of any Holding Units that arewithheld by AllianceBernstein to cover Mr. Kraus’s tax withholding obligations as the Holding Units vest. 137Table of Contents For 2012, column (i) includes: for Mr. Kraus, $1,825,268 for quarterly distributions related to his Restricted Holding Unit Grant ($1,034,380 of which was paid on Holding Units Mr.Kraus owned and $790,888 of which was paid on Holding Units that had been withheld to cover taxes), $511,324 for personal use of aircraft,$172,598 for personal use of a car and driver (including lease costs ($15,586), driver compensation ($138,005) and other car-related costs ($19,007),such as parking, gas, tolls, and repairs and maintenance), $113,140 for gross-ups related to imputed income for personal use of aircraft and car, and a$12,500 contribution to the Profit Sharing Plan. for Mr. Gingrich, $291,315 for quarterly distributions on Holding Units awarded as long-term incentive compensation, a $12,500 contribution to theProfit Sharing Plan and $966 of life insurance premiums. for Mr. van Brugge, $129,240 for quarterly distributions on Holding Units awarded as long-term incentive compensation, a $12,500 contribution to theProfit Sharing Plan, $11,178 for financial planning services, $9,549 for gross-ups related to imputed income for tax payments made on his behalf,$3,520 for tax preparation services and $405 of life insurance premiums, minus $80,155 representing an adjustment of tax equalization relating to U.K.taxes paid on his behalf. for Ms. Massad, $87,094 for quarterly distributions on Holding Units awarded as long-term incentive compensation, $18,301 for financial planningservices, $10,326 for gross-ups related to imputed income for the financial planning services, a $12,500 contribution to the Profit Sharing Plan, and$630 of life insurance premiums. for Mr. Weisenseel, $39,689 for quarterly distributions on Holding Units awarded as long-term incentive compensation and $518 of life insurancepremiums. for Mr. Farrell, $38,022 for quarterly distributions on Holding Units awarded as long-term incentive compensation, a $12,500 contribution to the ProfitSharing Plan and $690 of life insurance premiums. For additional information regarding the compensation of our named executive officers, including their respective business and operational goals, see “FactorsConsidered when Determining Executive Compensation” and “Compensation Elements for Executive Officers” above. During 2012, we owned a fractional interest in an aircraft with an aggregate operating cost of $344,338 (including $86,119 in maintenance fees, $201,132 inusage fees and $57,087 of amortization expense). We sold this fractional interest during 2012. We also leased two aircraft during 2012 with an aggregateoperating cost of $7,224,347 (including $2,116,247 in leasing costs, $2,092,718 in maintenance fees and $3,015,382 in usage fees). Our interests in aircraft facilitate business travel of senior management. In 2012, we permitted our Chief Executive Officer to use the aircraft for personaltravel. His personal travel constituted approximately 17.6% of our actual use of the aircraft in 2012. Our methodology for determining the reported value of personal use of aircraft includes fees paid to the managers of the aircraft (fees take into account theaircraft type and weight, number of miles flown, flight time, number of passengers, and a variable fee), but excludes our fixed costs (amortization of originalcost less estimated residual value and monthly maintenance fees). We included such amounts in column (i). We use the Standard Industry Fare Level (“SIFL”) methodology to calculate the amount to include in the taxable income of executives for the personal use ofcompany-owned aircraft. Using the SIFL methodology, which was approved by our Compensation Committee, limits our ability to deduct the full cost ofpersonal use of company-owned aircraft by our executive officers. Taxable income for the 12 months ended October 31, 2012 for personal use imputed to Mr.Kraus is $84,897. 138Table of Contents Grants of Plan-based Awards in 2012 The following table describes each grant of an award made to a named executive officer during 2012 under the 2010 Plan, an equity compensation plan: Estimated Future Payouts UnderNon-Equity Incentive PlanAwards Estimated Future Payouts UnderEquity Incentive Plan Awards Name GrantDate Threshold($) Target($) Maximum($) Threshold(#) Target(#) Maximum(#) All OtherStockAwards:Number ofShares ofStock orUnits(#) All OtherOptionAwards:Number ofSecuritiesUnderlyingOptions(#) Exerciseor BasePrice ofOptionAwards($/Sh) GrantDate FairValue ofStock andOptionAwards($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) Peter S. Kraus(1) 6/21/2012 — — — — — — 2,722,052 — — 33,127,373 James A.Gingrich(2)(3) 12/3/2012 — — — — — — 155,968 — — 3,114,993 Robert P. vanBrugge(2)(3) 12/3/2012 — — — — — — 80,574 — — 1,609,224 Lori A.Massad(2)(3) 12/3/2012 — — — — — — 29,792 — — 595,006 John C.Weisenseel(2)(3)(4) 12/3/2012 — — — — — — 12,265 — — 244,957 5/14/2012 — — — — — — 69,629 — — 1,000,012 Edward J.Farrell(2)(3) 12/3/2012 — — — — — — 10,765 — — 214,999 (1)The amount shown in column (i) reflects the 2,722,052 Holding Units Mr. Kraus was granted pursuant to the Extended Employment Agreement, asdiscussed above in “Overview of our Chief Executive Officer’s Compensation” in this Item 11. (2)Amounts shown in column (i) reflect 2012 restricted Holding Unit awards granted under the Incentive Compensation Program and the 2010 Plan, anequity compensation plan, and can also be found in column (e) of the Summary Compensation Table. (3)As discussed above in “Overview of 2012 Incentive Compensation Program” and “Compensation Elements for Executive Officers—Long-termIncentive Compensation” in this Item 11, long-term incentive compensation awards generally are denominated in restricted Holding Units. We employthis structure to directly align our executives’ long-term interests with the interests of our Unitholders while also indirectly aligning our executives’ long-term interests with the interests of our clients, as strong performance for our clients generally contributes directly to increases in assets under managementand thus improved financial performance for the firm. The 2012 long-term incentive compensation awards granted to our named executive officers areshown in column (i) of this table, column (e) of the Summary Compensation Table and column (g) of the Outstanding Equity Awards at 2012 FiscalYear-End Table. In 2012, the number of restricted Holding Units comprising long-term incentive compensation awards was based on the average of the closing prices of aHolding Unit as reported for NYSE composite transactions for the five business day period that commenced on January 14, 2013 and concluded onJanuary 18, 2013 (this calculation resulted in an average price of $19.972); the Compensation Committee approved the awards on December 3, 2012. (4)Mr. Weisenseel was granted, as of the JCW Hire Date, in accordance with the terms and conditions of the Incentive Compensation Program, an award ofrestricted Holding Units initially valued at $1,000,000 in connection with his recruitment and as replacement equity for awards he forfeited by leavingMcGraw Hill. The number of restricted Holding Units (69,629) was determined by dividing $1,000,000 by the average closing price on the NYSE of aHolding Unit for the period covering the four trading days immediately preceding the JCW Hire Date, the JCW Hire Date and the five trading daysimmediately following the JCW Hire Date (this calculation resulted in an average price of $14.362) and rounded up to the nearest whole number (due tothis rounding, the grant date fair value of the award reflected in column (l) is $1,000,012). This award is shown in column (i) of this table, column (e)of the Summary Compensation Table and column (g) of the Outstanding Equity Awards at 2012 Fiscal Year-End Table. 139Table of Contents Outstanding Equity Awards at 2012 Fiscal Year-End The following table describes any outstanding equity awards held by our named executive officers as of December 31, 2012: Option Awards Holding Unit Awards Name Number ofSecuritiesUnderlyingUnexercisedOptionsExercisable(#) Number ofSecuritiesUnderlyingUnexercisedOptionsUnexercisable(#) EquityIncentivePlanAwards:Number ofSecuritiesUnderlyingUnexercisedUnearnedOptions(#) OptionExercisePrice($) OptionExpirationDate Number ofShares orUnits ofStock ThatHave NotVested(#) MarketValueofSharesorUnitsofStockThatHaveNotVested($) EquityIncentivePlanAwards:Number ofUnearnedShares,Units orOtherRightsThat HaveNotVested(#) EquityIncentive PlanAwards:Market orPayout Valueof UnearnedShares, Unitsor OtherRights ThatHave NotVested($) (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Peter S. Kraus(1)(2) — — — — — 3,266,462 56,934,433 — — James A. Gingrich(3)(4) 158,119 105,414 — 17.05 1/23/19 331,676 5,781,113 — — Robert P. vanBrugge(5) — — — — — 170,408 2,970,211 — — Lori A. Massad(6) — — — — — 90,410 1,575,846 — — John C. Weisenseel(7) — — — — — 64,486 1,123,991 — — Edward J. Farrell(8) — — — — — 34,579 602,712 — — (1)Mr. Kraus’s Restricted Holding Unit Grant vested in 20% increments on each of December 19, 2009, 2010, 2011 and 2012, and is scheduled to vest inan additional 20% increment on December 19, 2013. In connection with the Extended Employment Agreement, the Kraus Employment Agreement wasamended to permit Mr. Kraus to defer until December 19, 2018 delivery of the final vesting of 544,410 restricted Holding Units. (2)In connection with the signing of the Extended Employment Agreement on June 21, 2012, Mr. Kraus was granted an additional 2,722,052 restrictedHolding Units. Subject to the accelerated vesting clauses set forth in the Extended Employment Agreement (see “Overview of our Chief ExecutiveOfficer’s Compensation” in this Item 11), Mr. Kraus’s restricted Holding Units will vest in 20% increments on each of the first five anniversaries ofDecember 19, 2013, commencing December 19, 2014, provided, with respect to each installment, Mr. Kraus continues to be employed byAllianceBernstein on the vesting date. Delivery of all of the restricted Holding Units will be delayed until the final vesting date on December 19, 2018,subject to acceleration upon certain qualifying events of termination of employment. This award is shown in column (g) of this table, column (e) of theSummary Compensation Table and column (i) of the Grant of Plan-Based Awards Table. (3)Mr. Gingrich was awarded (i) 155,968 restricted Holding Units in December 2012 that vest in 25% increments on each of December 1, 2013, 2014,2015 and 2016, (ii) 128,558 restricted Holding Units in December 2011, 25% of which vested on December 1, 2012, and the remainder of which isscheduled to vest in additional 25% increments on each of December 1, 2013, 2014 and 2015, (iii) 111,253 restricted Holding Units in December 2010,25% of which vested on each of December 1, 2011 and 2012, and the remainder of which is scheduled to vest in additional 25% increments on each ofDecember 1, 2013 and 2014, and (iii) 94,650 restricted Holding Units in December 2009, 25% of which vested on each of December 1, 2010, 2011 and2012, and the remainder of which is scheduled to vest in an additional 25% increment on December 1, 2013. (4)Mr. Gingrich was granted 263,533 options to buy Holding Units in January 2009, 20% of which vested and became exercisable on each of January 23,2010, 2011 and 2012, and the remainder of which is scheduled to vest and become exercisable in additional 20% increments on each of January 23, 2013and 2014. (5)Mr. van Brugge was awarded (i) 80,574 restricted Holding Units in December 2012 that vest in 25% increments on each of December 1, 2013, 2014,2015 and 2016, and (ii) 62,433 restricted Holding Units in December 2011, 25% of which vested on December 1, 2012, and the remainder of which isscheduled to vest in additional 25% increments on each of December 1, 2013, 2014 and 2015. The totals in columns (g) and (h) include restrictedHolding Units granted to Mr. van Brugge before he became a named executive officer. (6)Ms. Massad was awarded 29,792 restricted Holding Units in December 2012 that vest in 25% increments on each of December 1, 2013, 2014, 2015and 2016. The totals in columns (g) and (h) include restricted Holding Units granted to Ms. Massad before she became a named executive officer. (7)Mr. Weisenseel was awarded 12,265 restricted Holding Units in December 2012 that vest in 25% increments on each of December 1, 2013, 2014, 2015and 2016. In addition, Mr. Weisenseel was granted, as of the JCW Hire Date, in accordance with the terms and conditions of the Incentive CompensationProgram, an award of restricted Holding Units initially valued at $1,000,000 in connection with his recruitment and as replacement equity for awards heforfeited by leaving McGraw Hill. The number of restricted Holding Units (69,629) was determined by dividing $1,000,000 by the average closingprice on the NYSE of a Holding Unit for the period covering the four trading days immediately preceding the JCW Hire Date, the JCW Hire Date and thefive trading days immediately following the JCW Hire Date (this calculation resulted in an average price of $14.362) and rounded up to the nearest wholenumber. 25% of this award vested on December 1, 2012 and the remainder of this award is scheduled to vest in additional 25% increments on each ofDecember 1, 2013, 2014 and 2015. This award is shown in column (g) of this table, column (e) of the Summary Compensation Table and column (i) ofthe Grant of Plan-Based Awards Table. (8)Mr. Farrell was awarded (i) 10,765 restricted Holding Units in December 2012 that vest in 25% increments on each of December 1, 2013, 2014, 2015and 2016, and (ii) 19,133 restricted Holding Units in December 2011, 25% of which vested on December 1, 2012, and the remainder of which isscheduled to vest in additional 25% increments on each of December 1, 2013, 2014 and 2015. The totals in columns (g) and (h) include restrictedHolding Units granted to Mr. Farrell before he became a named executive officer. 140Table of Contents Option Exercises and Holding Units Vested in 2012 The following table describes any Holding Units held by our named executive officers that vested during 2012: Option Awards Holding Unit Awards Name Number of UnitsAcquired on Exercise(#) Value Realizedon Exercise($) Number of HoldingUnits Acquired onVesting(#) Value Realizedon Vesting($) (a) (b) (c) (d) (e) Peter S. Kraus — — 544,410 9,178,753 James A. Gingrich — — 83,615 1,469,952 Robert P. van Brugge — — 46,209 812,354 Lori A. Massad — — 31,060 546,035 John C. Weisenseel — — 17,407 306,015 Edward J. Farrell — — 12,073 212,243 Pension Benefits for 2012 None of our named executive officers are entitled to benefits under the Amended and Restated Retirement Plan for Employees of AllianceBernstein L.P. (“Retirement Plan”), our company pension plan. For additional information regarding the Retirement Plan, including interest rates and actuarialassumptions, see Note 16 to AllianceBernstein’s consolidated financial statements in Item 8. Non-Qualified Deferred Compensation for 2012 The following table describes our named executive officers’ vested and unvested non-qualified deferred compensation contributions, earnings and distributionsduring 2012 and their non-qualified deferred compensation plan balances as of December 31, 2012: Name ExecutiveContributionsin Last FY($) RegistrantContributionsin Last FY($) AggregateEarningsin Last FY($) AggregateWithdrawals/Distributions($) AggregateBalance atLast FYE($) (a) (b) (c) (d) (e) (f) Peter S. Kraus — — — — — James A. Gingrich(1) — — 389,661 (460,482) 2,637,647 Robert P. van Brugge(1)(2)(3) — — 53,723 (705,685) 187,500 Lori A. Massad(1) — — 5,214 (41,933) — John C. Weisenseel(4) — 100,050 — — 100,050 Edward J. Farrell(1) — — 51,184 (322,322) 360,831 (1)For Ms. Massad and Messrs. Gingrich, van Brugge and Farrell, amounts shown reflect their respective interests from pre-2009 awards under theIncentive Compensation Program. For additional information about the Incentive Compensation Program, see Note 17 to AllianceBernstein’sconsolidated financial statements in Item 8. For individuals (including Ms. Massad and Messrs. Gingrich, van Brugge and Farrell) with notionalinvestments in Holding Units, amounts of quarterly distributions on such Holding Units are reflected as earnings in column (d) and, to the extentdistributed to the named executive officer, as distributions in column (e). Column (f) includes the value of all notional investments as of the close ofbusiness on December 31, 2012. As of that date, Messrs. Gingrich and Farrell notionally held 12,735 Holding Units and 6,347 Holding Units,respectively, and Ms. Massad and Mr. van Brugge did not hold any Holding Units, as a result of pre-2009 awards under the Incentive CompensationProgram. (2)The amount shown in column (d) for Mr. van Brugge reflects the interest payment to which he was entitled as a result of allocating a portion of his 2011long-term incentive compensation award to Deferred Cash. Interest accrues monthly based on our monthly weighted average cost of funds (approximately0.4% in December 2012) and will be credited to Mr. van Brugge annually until the cash is distributed to him in installments over the four-year vestingperiod. (3)The amount shown in column (e) for Mr. van Brugge includes his Deferred Cash distribution during 2012. (4)The amount shown in column (c) for Mr. Weisenseel reflects the portion of his 2012 long-term incentive compensation award that he elected to receive inDeferred Cash. This amount will accrue interest monthly based on our monthly weighed average cost of funds (approximately 0.4% during 2012) and willbe credited to Mr. Weisenseel annually until the cash is distributed to him in installments over the four-year vesting period. In future years, this interestwill be reflected in column (d) and these distributions will be reflected in column (e). Potential Payments upon Termination or Change in Control In connection with the commencement of Mr. Kraus’s employment, on December 19, 2008, he received the Restricted Holding Unit Grant. During Mr.Kraus’s Employment Term, AllianceBernstein has no commitment to pay any cash bonuses to Mr. Kraus beyond the $6 million in 2009 (with any additionalbonuses being entirely at the discretion of the Compensation Committee) or to make any additional equity-based awards to him. Consequently, for 2010 andsubsequent years during the Employment Term, the totality of Mr. Kraus’s compensation (other than his salary and absent any additional awards theCompensation Committee may choose to grant) has been, and continues to be, dependent on the level of cash distributions on the restricted Holding Unitsgranted to him and the evolution of the trading price of Holding Units, both of which are partially dependent on the financial and operating results of our firm.Therefore, his long-term interests are directly aligned with the interests of other holders of Holding Units and also indirectly aligned with the interests of ourclients as strong performance for our clients generally contributes to increases in assets under management and thus improved financial performance for thefirm. For additional information about Mr. Kraus’s compensation, see “Overview of our Chief Executive Officer’s Compensation” above. 141Table of Contents The Kraus Employment Agreement contains a number of accelerated vesting clauses, including immediate vesting upon a “change in control” of our firm (i.e.,AXA, our parent company, ceasing to control the management of AllianceBernstein’s business or Holding ceasing to be publicly traded); immediate vesting ofthe next two installments of restricted Holding Units (or, if only one installment remains as of the termination date, such installment) upon certain qualifyingevents of termination of employment, including termination of Mr. Kraus’s employment by AllianceBernstein “without cause” or by Mr. Kraus for “goodreason”; and immediate vesting of a pro-rata portion of any restricted Holding Units otherwise due to vest on the next vesting date upon Mr. Kraus’s death ordisability. The change-in-control provisions in the Kraus Employment Agreement were required by Mr. Kraus as part of his negotiation in order to assure him thatAllianceBernstein would continue to be operated as a separately-managed entity, and with a certain degree of independence, and that Holding would continue asa publicly-traded entity. Both AXA and Mr. Kraus believe that this arrangement adds significant value to AllianceBernstein. The Board understood that AXAhad no intention of changing this arrangement during the Employment Term and thus concluded that the change-in-control provisions were acceptable andnecessary in order to recruit Mr. Kraus. The provisions requiring accelerated vesting upon termination by AllianceBernstein without cause or by Mr. Kraus for good reason were required by Mr.Kraus in order to preserve the value of his long-term incentive compensation arrangement. The Board agreed to these provisions because they were typical ofexecutive compensation agreements for executives at Mr. Kraus’s level and because the Board concluded that they were necessary to recruit Mr. Kraus. The Board concluded that the change-in-control and termination provisions in the Kraus Employment Agreement fit into AllianceBernstein’s overallcompensation objectives because they permitted AllianceBernstein to attract and retain a highly-qualified chief executive officer, were consistent with AXA’sand the Board’s expectations with respect to the manner in which AllianceBernstein and Holding would be operated from 2009 to 2013, were consistent withthe Board’s expectations that Mr. Kraus would not be terminated without cause and that no steps would be taken that would provide him with the ability toterminate the agreement with good reason (and thus that there was no inconsistency between these provisions and AllianceBernstein’s goal of providing Mr.Kraus with effective incentives for future performance), and to align his long-term interests with those of AllianceBernstein’s Unitholders and clients. As discussed above in “Overview of our Chief Executive Officer’s Compensation”, on June 21, 2012, Mr. Kraus, the General Partner, AllianceBernsteinand Holding entered into the Extended Employment Agreement. The terms set forth in the Extended Employment Agreement regarding potential payments toMr. Kraus upon a change in control of AllianceBernstein or a qualifying event of termination of employment are substantially the same as the comparableterms in the Kraus Employment Agreement, except for the terms governing a termination of employment by AllianceBernstein without “cause” or by Mr.Kraus for “good reason”. If the Extended Employment Agreement had been terminated for either of these reasons before December 19, 2012, Mr. Kraus wouldhave forfeited the entire restricted Holding Unit award granted under the Extended Employment Agreement. If the Extended Employment Agreement isterminated for either of these reasons after December 19, 2012 but before December 19, 2013, Mr. Kraus will immediately vest in the installment of restrictedHolding Units scheduled to vest on December 19, 2014. If the Extended Employment Agreement is terminated for either of these reasons after December 19,2013, Mr. Kraus will immediately vest in the next two installments of restricted Holding Units or, if fewer remain as of the termination date, the balance of theinstallments that are unvested. In 2011, we amended all outstanding long-term incentive compensation awards (including option awards) of active employees (i.e., those employees who wereemployed by the company as of December 31, 2011) permitting those employees who terminate their employment or are terminated without cause to continue tovest in their long-term incentive compensation awards if they comply with certain agreements and restrictive covenants set forth in the applicable awardagreement. These agreements and covenants include restrictions on competition and employee and client solicitation, and a claw-back for failing to followexisting risk management policies. Our 2012 long-term incentive compensation awards incorporated these changes and we expect the changes to apply to long-term incentive compensation awards in future years as well. The amounts shown for the named executive officers (other than Mr. Kraus) for resignation ortermination by AllianceBernstein without cause in columns (b), (c) and (d) of the table below reflect the value of these changes to their outstanding awards,assuming such resignation or termination on December 31, 2012 and the executives’ continued compliance with these agreements and restrictive covenantsthrough the vesting dates of the awards. For additional information, see “Overview of Compensation Philosophy and Program” in this Item 11 and Note2 to AllianceBernstein’s consolidated financial statements in Item 8. In addition, there are amounts payable to the named executive officers upon death anddisability. 142Table of Contents The following table sets forth estimated payments and benefits to which our named executive officers would have been entitled upon a change in control ofAllianceBernstein or the qualifying events of termination of employment as of December 31, 2012: Name CashPayments(1)(2)($) Accelerationor Grant ofRestrictedHoldingUnitAwards(2)($) Accelerationof OptionAwards(2)($) OtherBenefits($) (a) (b) (c) (d) (e) Peter S. Kraus(3) Change in control - Kraus Employment Agreement — 9,489,066 — 16,460 Change in control - Extended Employment Agreement — 47,445,366 16,460 Termination by AllianceBernstein without cause - Kraus EmploymentAgreement — 9,489,066 — 16,460 Termination by AllianceBernstein without cause - Extended EmploymentAgreement — 9,489,066 16,460 Termination by Mr. Kraus for good reason - Kraus Employment Agreement — 9,489,066 — 16,460 Termination by Mr. Kraus for good reason - Extended Employment Agreement — 9,489,066 — 16,460 Death or disability(4)(5) - Kraus Employment Agreement — 9,489,066 — 16,460 Death or disability(4)(5) - Extended Employment Agreement — 9,489,066 16,460 James A. GingrichResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) — 5,781,113 40,057 — Death or disability(6) — 5,781,113 40,057 — Robert P. van BruggeResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) 187,500 2,970,211 — — Death or disability(6) 187,500 2,970,211 — — Lori A. MassadResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) — 1,575,846 — — Death or disability(6) — 1,575,846 — — John C. WeisenseelResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) 100,050 1,123,991 — — Death or disability(6) 100,050 1,123,991 — — Edward J. FarrellResignation or termination by AllianceBernstein without cause(complies with applicable agreements and restrictive covenants)(2) — 602,712 — — Death or disability(6) — 602,712 — — (1)For Messrs. van Brugge and Weisenseel, amounts shown represent the portions of their awards pursuant to the Incentive Compensation Program theyelected to allocate to Deferred Cash. Mr. van Brugge allocated a portion of his 2011 award to Deferred Cash and Mr. Weisenseel allocated a portion of his2012 award to Deferred Cash. In addition, it is possible that each named executive officer (other than Mr. Kraus) could receive a cash severance paymenton the termination of his or her employment. As the amounts of any such cash severance payments would be determined at the time of such termination,we are unable to estimate such amounts. (2)In 2011, we amended all outstanding long-term incentive compensation awards (including option awards) of active employees (i.e., those employees whowere employed by the company as of December 31, 2011) permitting those employees, who terminate their employment or are terminated without cause, tocontinue to vest in their long-term incentive compensation awards (including option awards) if they comply with certain agreements and restrictivecovenants set forth in the applicable award agreement. These agreements and covenants include restrictions on competition and employee and clientsolicitation, and a claw-back for failing to follow existing risk management policies. Our 2012 long-term incentive compensation awards incorporatedthese changes and we expect these changes also to apply to future long-term incentive compensation awards. If a named executive officer fails to comply with the applicable agreements and restrictive covenants set forth in his or her award agreements, the namedexecutive officer would not be entitled to continue to vest in his or her restricted Holding Unit or option awards. (3)If a change in control of AllianceBernstein or a qualifying event of termination of employment had occurred as of December 31, 2012, Mr. Kraus wouldhave been entitled to receive (i) accelerated vesting under each of the Kraus Employment Agreement and the Extended Employment Agreement of all or aportion of his restricted Holding Unit awards, as shown in column (c), and (ii) only one payment of $16,460 for continuing health and welfare benefitsunder “Other Benefits”, as shown in column (e). For additional information, please see “Overview of our Chief Executive Officer’s Compensation” inthis Item 11. (4)Each of the Kraus Employment Agreement and the Extended Employment Agreement defines “Disability” as a good faith determination byAllianceBernstein that Mr. Kraus is physically or mentally incapacitated and has been unable for a period of 120 days in the aggregate during any twelve-month period to perform substantially all of the duties for which he is responsible immediately before the commencement of the incapacity. (5)Under both the Kraus Employment Agreement and the Extended Employment Agreement, upon termination of Mr. Kraus’s employment due to death ordisability, AllianceBernstein will provide at its expense continued health and welfare benefits for Mr. Kraus, his spouse and his dependants through theend of the calendar year in which termination occurs. Thereafter, until the date Mr. Kraus (or, in the case of his spouse, his spouse) reaches age 65,AllianceBernstein will provide Mr. Kraus and his spouse with access to participation in AllianceBernstein’s medical plans at Mr. Kraus’s (or hisspouse’s) sole expense based on a reasonably determined fair market value premium rate. (6)“Disability” is defined in the Incentive Compensation Program award agreements of Mr. Gingrich, Mr. van Brugge, Ms. Massad, Mr. Weisenseel and Mr.Farrell, and in the Special Option Program award agreements of Mr. Gingrich, as the inability to engage in any substantial gainful activity by reason ofany medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12 months, as determinedby the carrier of the long-term disability insurance program maintained by AllianceBernstein or its affiliate that covers the executive officer. 143Table of Contents Director Compensation in 2012 The following table describes how we compensated our non-employee directors during 2012: Name FeesEarned orPaid inCash($) StockAwards(1)(3)($) OptionAwards(2)(3)($) Non-EquityIncentivePlanCompensation($) Change inPensionValue andNonqualifiedDeferredCompensationEarnings($) All OtherCompensation($) Total($) (a) (b) (c) (d) (e) (f) (g) (h) Christopher M.Condron 80,000 60,000 60,000 — — — 200,000 Steven G. Elliott 84,500 60,000 60,000 — — — 204,500 Deborah S. Hechinger 71,000 60,000 60,000 — — — 191,000 Weston M. Hicks 71,000 60,000 60,000 — — — 191,000 Lorie A. Slutsky 81,500 60,000 60,000 — — — 201,500 A.W. (Pete) Smith, Jr. 81,500 60,000 60,000 — — — 201,500 Peter J. Tobin 96,500 60,000 60,000 — — — 216,500 (1)As of December 31, 2012, these directors had outstanding restricted Holding Unit awards in the following amounts: Mr. Condron held 6,875 HoldingUnits, Mr. Elliott held 6,875 Holding Units, Ms. Hechinger held 10,380 Holding Units, Mr. Hicks held 10,842 Holding Units, Ms. Slutsky held11,503 Holding Units, Mr. Smith held 10,842 Holding Units and Mr. Tobin held 11,503 Holding Units. (2)As of December 31, 2012, these directors had outstanding option awards in the following amounts: Mr. Condron held options to buy 26,383 HoldingUnits, Mr. Elliott held options to buy 26,383 Holding Units, Ms. Hechinger held options to buy 42,510 Holding Units, Mr. Hicks held options to buy44,938 Holding Units, Ms. Slutsky held options to buy 69,339 Holding Units, Mr. Smith held options to buy 44,938 Holding Units and Mr. Tobinheld options to buy 69,339 Holding Units. (3)Reflects the aggregate grant date fair value of the awards calculated in accordance with FASB ASC Topic 718. For the assumptions made in determiningthese values, see Note 18 to AllianceBernstein’s consolidated financial statements in Item 8. The General Partner only pays fees, and makes equity-based awards, to directors who are not employed by our company or by any of our affiliates. ThroughDecember 31, 2012, these fees and awards consisted of: •an annual retainer of $50,000 (paid quarterly after any quarter during which a director serves on the Board); •a fee of $1,500 for participating in a meeting of the Board, or any duly constituted committee of the Board, whether in person or by telephone; •an annual retainer of $15,000 for acting as Chair of the Audit Committee; •an annual retainer of $7,500 for acting as Chair of the Governance Committee; and •an annual equity-based grant under an equity compensation plan consisting of: •restricted Holding Units having a value of $60,000 based on the closing price of a Holding Unit on the grant date as reported for NYSEcomposite transactions; and •options to buy Holding Units with a grant date value of $60,000 calculated using the Black-Scholes method. During 2012, at a regularly-scheduled meeting of the Board, 4,116 restricted Holding Units and options to buy 16,349 Holding Units at $14.58 per HoldingUnit were granted to each of Mr. Condron, Mr. Elliott, Ms. Hechinger, Mr. Hicks, Ms. Slutsky, Mr. Smith and Mr. Tobin. Such grants generally have beenmade at the May meeting of the Board. The date of the meeting was set at a Board meeting in 2011. The exercise price of the options was the closing price onthe NYSE on May 15, 2012, the date the Board approved the awards. For information about how the Black-Scholes value was calculated, see Note 18 toAllianceBernstein’s consolidated financial statements in Item 8. Options granted to these directors become exercisable ratably over three years. RestrictedHolding Units granted to these directors “cliff” vest after three years (i.e., 100% of the award is distributed on the third anniversary of the grant date). In orderto avoid any perception that our directors’ exercise of their fiduciary duties might be impaired, these options and restricted Holding Units are not forfeitable.Accordingly, vesting and exercisability of options continues following a director’s resignation from the Board. Restricted Holding Units vest and aredistributed as soon as administratively feasible following a director’s resignation from the Board. At a regular-scheduled meeting of the Board held on August 1, 2012, and effective with equity-based awards to be granted in May 2013, the Board adjustedthe equity-based awards it makes to directors who are not employed by our company or any of our affiliates by permitting each of these directors to elect toreceive his or her annual equity-based award in the form of (i) restricted Holding Units having a value of $120,000 based on the closing price of a HoldingUnit on the grant date as reported for NYSE composite transactions, (ii) options to buy Holding Units with a grant date value of $120,000 calculated using theBlack-Scholes method, or (iii) a combination consisting of restricted Holding Units having a value of $60,000 and options to buy Holding Units with a grantdate value of $60,000. The Board also determined that this election should be made in January of each year. The election form each director must complete isattached to this Form 10-K as Exhibit 10.05. The General Partner may reimburse any director for reasonable expenses incurred in participating in Board meetings. Holding and AllianceBernstein, in turn,reimburse the General Partner for expenses incurred by the General Partner on their behalf, including amounts in respect of directors’ fees and expenses. Thesereimbursements are subject to any relevant provisions of the Holding Partnership Agreement and the AllianceBernstein Partnership Agreement. 144Table of Contents Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance under Equity Compensation Plans The following table summarizes the Holding Units to be issued pursuant to our equity compensation plans as of December 31, 2012: Equity Compensation Plan Information Plan Category Number ofsecurities to beissued uponexercise ofoutstandingoptions, warrantsand rights Weighted averageexercise price ofoutstandingoptions, warrantsand rights Number ofsecuritiesremainingavailable for futureissuance(1) (a) (b) (c) Equity compensation plans approved by security holders 8,553,345 $39.77 35,226,082 Equity compensation plans not approved by security holders — — — Total 8,553,345 $39.77 35,226,082 (1)All Holding Units remaining available for future issuance will be issued pursuant to the 2010 Plan. There are no AllianceBernstein Units to be issued pursuant to an equity compensation plan. For information about our equity compensation plans (2010 Plan, 1997 Plan, 1993 Unit Option Plan, Century Club Plan), see Note 18 toAllianceBernstein’s consolidated financial statements in Item 8. Principal Security Holders As of December 31, 2012, we had no information that any person beneficially owned more than 5% of the outstanding Holding Units. As of December 31, 2012, we had no information that any person beneficially owned more than 5% of the outstanding AllianceBernstein Units except AXAand certain of its wholly-owned subsidiaries as reported on Schedules 13D/A and Forms 4 filed with the SEC on December 16, 2011 pursuant to theExchange Act. The table below and the notes following it have been prepared in reliance upon such filings for the nature of ownership and an explanation of overlappingownership. Name and Address of Beneficial Owner Amount and Nature of BeneficialOwnership Reported on Schedule Percent of Class AXA(1)(2)(3)(4)25 avenue Matignon 75008Paris, France 170,121,745(4)(5) 61.3%(4)(5) (1)Based on information provided by AXA Financial, on December 31, 2012, AXA and certain of its subsidiaries beneficially owned all of AXA Financial’soutstanding common stock. For insurance regulatory purposes, the shares of common stock of AXA Financial beneficially owned by AXA and itssubsidiaries have been deposited into a voting trust (“Voting Trust”), the term of which has been extended until April 29, 2021. The trustees of theVoting Trust (“Voting Trustees”) are Henri de Castries, Denis Duverne and Mark Pearson. Messrs. de Castries and Duverne serve on the Board ofDirectors of AXA, while Mr. Pearson serves on the Management Committee of AXA. The Voting Trustees have agreed to exercise their voting rights toprotect the legitimate economic interests of AXA, but with a view to ensuring that certain minority shareholders of AXA do not exercise control over AXAFinancial or certain of its insurance subsidiaries. (2)Based on information provided by AXA, as of December 31, 2012, 14.35% of the issued ordinary shares (representing 23.05% of the voting power) ofAXA were owned directly and indirectly by two French mutual insurance companies (AXA Assurances IARD Mutuelle and AXA Assurances VieMutuelle) engaged in the Property & Casualty insurance business and the Life & Savings insurance business in France (“Mutuelles AXA”). (3)The Voting Trustees and the Mutuelles AXA, as a group, may be deemed to be beneficial owners of all AllianceBernstein Units beneficially owned byAXA and its subsidiaries. By virtue of the provisions of the Voting Trust Agreement, AXA may be deemed to have shared voting power with respect to theAllianceBernstein Units. AXA and its subsidiaries have the power to dispose or direct the disposition of all shares of the capital stock of AXA Financialdeposited in the Voting Trust. The Mutuelles AXA, as a group, may be deemed to share the power to vote or to direct the vote and to dispose or to direct thedisposition of all the AllianceBernstein Units beneficially owned by AXA and its subsidiaries. The address of each of AXA and the Voting Trustees is 25avenue Matignon, 75008 Paris, France. The address of the Mutuelles AXA is 313 Terrasses de l’Arche, 92727 Nanterre Cedex, France. (4)By reason of their relationships, AXA, the Voting Trustees, the Mutuelles AXA, AXA America Holdings, Inc. (a wholly-owned subsidiary of AXA),AXA IM Rose Inc. (a 95.82%-owned subsidiary of AXA), AXA Financial, AXA Equitable, AXA Re Arizona Company (a wholly-owned subsidiary ofAXA Financial), Coliseum Reinsurance Company (a wholly-owned subsidiary of AXA Financial), ACMC, LLC (a wholly-owned subsidiary of AXAFinancial), MONY and MLOA may be deemed to share the power to vote or to direct the vote and to dispose or direct the disposition of all or a portion ofthe 170,121,745 issued and outstanding AllianceBernstein Units. (5)As indicated above in note 4, AXA owns approximately 95.82% of AXA IM Rose Inc., which means that approximately 4.18% of the AllianceBernsteinUnits beneficially owned by AXA IM Rose Inc. as of December 31, 2012 were not beneficially owned by AXA. As a result, as of December 31, 2012,AXA beneficially owned 168,368,879 AllianceBernstein Units, or 60.7% of the issued and outstanding AllianceBernstein Units. 145Table of Contents As of December 31, 2012, Holding was the record owner of 105,173,342, or 37.9%, of the issued and outstanding AllianceBernstein Units. Management The following table sets forth, as of December 31, 2012, the beneficial ownership of Holding Units by each director and named executive officer of the GeneralPartner and by all directors and executive officers as a group: Name of Beneficial Owner Number of HoldingUnits and Nature ofBeneficial Ownership Percent of Class Peter S. Kraus(1)(2) 4,337,643 4.1%Christopher M. Condron(3) 55,219 * Henri de Castries(1) 2,000 * Denis Duverne(1) 2,000 * Steven G. Elliott(4) 10,219 * Deborah S. Hechinger(5) 28,123 * Weston M. Hicks(6) 36,013 * Andrew J. McMahon(1) — * Kevin Molloy(1) 395 * Mark Pearson(1) — * Lorie A. Slutsky(1)(7) 56,863 * A.W. (Pete) Smith, Jr.(8) 32,532 * Peter J. Tobin(9) 56,075 * James A. Gingrich(1)(10) 719,493 * Lori A. Massad(1)(11) 131,231 * Robert P. van Brugge(1)(12) 200,419 * John C. Weisenseel(1)(13) 75,614 * Edward J. Farrell(1)(14) 62,901 * All directors and executive officers of the General Partner as a group (19 persons)(15)(16) 6,027,108 5.7% *Number of Holding Units listed represents less than 1% of the Units outstanding. (1)Excludes Holding Units beneficially owned by AXA and its subsidiaries. Ms. Slutsky and Messrs. Kraus, de Castries, Duverne, McMahon, Molloyand Pearson are directors and/or officers of AXA, AXA IM, AXA Financial, and/or AXA Equitable. Ms. Massad and Messrs. Kraus, Gingrich, vanBrugge, Weisenseel and Farrell are directors and/or officers of the General Partner. (2)In connection with the commencement of Mr. Kraus’s employment, on December 19, 2008, he was granted 2,722,052 restricted Holding Units. Subjectto accelerated vesting clauses in the Kraus Employment Agreement (e.g., immediate vesting upon AXA ceasing to control the management ofAllianceBernstein’s business or Holding ceasing to be publicly traded), Mr. Kraus’s restricted Holding Units vest ratably on each of the first fiveanniversaries of December 19, 2008, which commenced December 19, 2009, provided, with respect to each installment, Mr. Kraus continues to beemployed by AllianceBernstein on the vesting date. AllianceBernstein withheld 280,263 Holding Units, 277,487 Holding Units, 274,764 Holding Unitsand 273,947 Holding Units, respectively, from Mr. Kraus’s distributions when the 2009, 2010, 2011 and 2012 tranches of his Restricted Holding UnitGrant vested to cover withholding tax obligations. Mr. Kraus’s total reflected in the table includes 544,410 Holding Units awarded under the KrausEmployment Agreement and 2,722,052 Holding Units under the Extended Employment Agreement that have not yet vested or been distributed to him. (3)Includes 3,344 Holding Units Mr. Condron can acquire within 60 days under an AllianceBernstein option plan. (4)Includes 3,344 Holding Units Mr. Elliott can acquire within 60 days under an AllianceBernstein option plan. (5)Includes 17,743 Holding Units Ms. Hechinger can acquire within 60 days under an AllianceBernstein option plan. (6)Includes 20,171 Holding Units Mr. Hicks can acquire within 60 days under an AllianceBernstein option plan. (7)Includes 44,572 Holding Units Ms. Slutsky can acquire within 60 days under an AllianceBernstein option plan. (8)Includes 20,171 Holding Units Mr. Smith can acquire within 60 days under an AllianceBernstein option plan. (9)Includes 44,572 Holding Units Mr. Tobin can acquire within 60 days under an AllianceBernstein option plan. (10)Includes 210,826 Holding Units Mr. Gingrich can acquire within 60 days under an AllianceBernstein option plan and 331,676 restricted Holding Unitsawarded to Mr. Gingrich as long-term incentive compensation that have not yet vested or been distributed to him. These restricted Holding Units include155,968 restricted Holding Units granted to Mr. Gingrich as 2012 long-term incentive compensation. This award was approved by the CompensationCommittee at a meeting duly called and held on December 3, 2012, at which meeting the Compensation Committee determined that the number of HoldingUnits would be derived using the average of the closing prices ($19.972) of a Holding Unit as reported for NYSE composite transactions for the fivebusiness day period that commenced on January 14, 2013 and concluded on January 18, 2013. (11)Includes 90,410 restricted Holding Units awarded to Ms. Massad as long-term incentive compensation that have not yet vested or been distributed to her.These restricted Holding Units include 29,792 restricted Holding Units granted to Ms. Massad as 2012 long-term incentive compensation. This awardwas approved by the Compensation Committee at a meeting duly called and held on December 3, 2012, at which meeting the Compensation Committeedetermined that the number of Holding Units would be derived using the average of the closing prices ($19.972) of a Holding Unit as reported for NYSEcomposite transactions for the five business day period that commenced on January 14, 2013 and concluded on January 18, 2013. (12)Includes 170,408 restricted Holding Units awarded to Mr. van Brugge as long-term incentive compensation that have not yet vested or been distributed tohim. These restricted Holding Units include 80,574 restricted Holding Units granted to Mr. van Brugge as 2012 long-term incentive compensation. Thisaward was approved by the Compensation Committee at a meeting duly called and held on December 3, 2012, at which meeting the CompensationCommittee determined that the number of Holding Units would be derived using the average of the closing prices ($19.972) of a Holding Unit as reportedfor NYSE composite transactions for the five business day period that commenced on January 14, 2013 and concluded on January 18, 2013. (13)Includes 64,486 restricted Holding Units awarded to Mr. Weisenseel as long-term incentive compensation that have not vested or been distributed tohim. These restricted Holding Units include 12,265 restricted Holding Units granted to Mr. Weisenseel as 2012 long-term incentive compensation (“2012year-end award”) and 69,629 restricted Holding Units granted to him in connection with his recruitment and as replacement equity for awards heforfeited by leaving McGraw Hill .The 2012 year-end award was approved by the Compensation Committee at a meeting duly called and held onDecember 3, 2012, at which meeting the Compensation Committee determined that the number of Holding Units would be derived using the average of theclosing prices ($19.972) of a Holding Unit as reported for NYSE composite transactions for the five business day period that commenced on January14, 2013 and concluded on January 18, 2013. (14)Includes 34,579 restricted Holding Units awarded to Mr. Farrell as long-term incentive compensation that have not yet vested or been distributed to him.These restricted Holding Units include 10,765 restricted Holding Units granted to him as 2012 long-term incentive compensation. This award wasapproved by the Compensation Committee at a meeting duly called and held on December 3, 2012, at which meeting the Compensation Committeedetermined that the number of Holding Units would be derived using the average of the closing prices ($19.972) of a Holding Unit as reported for NYSEcomposite transactions for the five business day period that commenced on January 14, 2013 and concluded on January 18, 2013. (15)Includes 427,421 Holding Units the directors and executive officers as a group can acquire within 60 days under AllianceBernstein option plans. (16)Includes 4,048,079 restricted Holding Units awarded to the executive officers as a group as long-term incentive compensation that have not yet vested orbeen distributed to them. 146Table of Contents As of December 31, 2012, our directors and executive officers did not beneficially own any AllianceBernstein Units. The following table sets forth, as of December 31, 2012, the beneficial ownership of the common stock of AXA by each director and named executive officerof the General Partner and by all directors and executive officers as a group: AXA Common Stock(1) Name of Beneficial Owner Number of Sharesand Nature ofBeneficial Ownership Percent of Class Peter S. Kraus — * Christopher M. Condron(2) 3,407,930 * Henri de Castries(3) 4,458,696 * Denis Duverne(4) 2,565,402 * Steven G. Elliott — * Deborah S. Hechinger — * Weston M. Hicks — * Andrew J. McMahon(5) 239,105 * Kevin Molloy(6) 63,094 * Mark Pearson(7) 131,108 * Lorie A. Slutsky(8) 25,625 * A.W. (Pete) Smith, Jr. — * Peter J. Tobin(9) 37,548 * James A. Gingrich — * Lori A. Massad — * Robert P. van Brugge — * John C. Weisenseel — * Edward J. Farrell — * All directors and executive officers of the General Partner as a group (19 persons)(10) 10,928,508 * *Number of shares listed represents less than 1% of the outstanding AXA common stock. (1)Holdings of AXA American Depositary Shares (“ADS”) are expressed as their equivalent in AXA common stock. Each AXA ADS represents the right toreceive one AXA ordinary share. (2)Includes 2,396,076 shares Mr. Condron can acquire within 60 days under option plans and 434,140 AXA ADSs Mr. Condron can acquire within 60days under option plans. Also includes (i) 349,365 deferred restricted ADS units under AXA’s Variable Deferred Compensation Plan for Executives, and(ii) 43,120 earned and unpaid AXA performance units, which he can elect to receive in the form of ADSs or cash. (3)Includes 2,950,340 shares Mr. de Castries can acquire within 60 days under option plans. Also includes 231,000 unvested AXA performance shares,which are paid out when vested based on the price of AXA at that time and are subject to achievement of internal performance conditions. (4)Includes 1,889,169 shares Mr. Duverne can acquire within 60 days under option plans. (5)Includes 195,092 shares Mr. McMahon can acquire within 60 days under option plans. Also includes (i) 4,165 restricted AXA shares, representing the30% payout of AXA performance units awarded to Mr. McMahon in 2009 (restriction will lift on March 20, 2013), (ii) 15,883 restricted shares that willvest on May 20, 2015, and (iii) 11,375 earned and unpaid AXA performance units, which he can elect to receive in the form of ADSs or cash. (6)Includes 16,744 shares Mr. Molloy can acquire within 60 days under options plans and 7,036 ADSs Mr. Molloy can acquire within 60 days underoption plans. Also includes (i) 914 restricted AXA shares, representing the 30% payout of AXA performance units awarded to Mr. Molloy in 2009(restriction will lift on March 20, 2013), and (ii) 2,120 earned and unpaid AXA performance units, which he can elect to receive in the form of ADSs orcash. (7)Includes 84,399 shares Mr. Pearson can acquire within 60 days under options plans. Also includes (i) 4,719 restricted AXA shares, representing the 30%payout of AXA performance units awarded to Mr. Pearson in 2009, and (ii) 8,721 earned and unpaid AXA performance units, which he can elect toreceive in the form of ADSs or cash. (8)Includes 4,735 shares Ms. Slutsky can acquire within 60 days under option plans. (9)Includes 9,346 shares Mr. Tobin can acquire within 60 days under option plans. (10)Includes 7,545,901 shares the directors and executive officers as a group can acquire within 60 days under option plans and 441,176 ADSs thedirectors and executive officers as a group can acquire within 60 days under option plans. 147Table of Contents Partnership Matters The General Partner makes all decisions relating to the management of AllianceBernstein and Holding. The General Partner has agreed that it will conduct nobusiness other than managing AllianceBernstein and Holding, although it may make certain investments for its own account. Conflicts of interest, however,could arise between AllianceBernstein and Holding, the General Partner and the Unitholders of both Partnerships. Section 17-403(b) of the Delaware Revised Uniform Limited Partnership Act (“Delaware Act”) states in substance that, except as provided in the DelawareAct or the applicable partnership agreement, a general partner of a limited partnership has the liabilities of a general partner in a general partnership governedby the Delaware Uniform Partnership Law (as in effect on July 11, 1999) to the partnership and to the other partners. Accordingly, while under Delaware lawa general partner of a limited partnership is liable as a fiduciary to the other partners, those fiduciary obligations may be altered by the terms of the applicablepartnership agreement. The AllianceBernstein Partnership Agreement and Holding Partnership Agreement both set forth limitations on the duties and liabilitiesof the General Partner. Each partnership agreement provides that the General Partner is not liable for monetary damages for errors in judgment or for breach offiduciary duty (including breach of any duty of care or loyalty) unless it is established (the person asserting such liability having the burden of proof) that theGeneral Partner’s action or failure to act involved an act or omission undertaken with deliberate intent to cause injury, with reckless disregard for the bestinterests of the Partnerships or with actual bad faith on the part of the General Partner, or constituted actual fraud. Whenever the AllianceBernstein PartnershipAgreement and the Holding Partnership Agreement provide that the General Partner is permitted or required to make a decision (i) in its “discretion” or under agrant of similar authority or latitude, the General Partner is entitled to consider only such interests and factors as it desires and has no duty or obligation toconsider any interest of or other factors affecting the Partnerships or any Unitholder of AllianceBernstein or Holding or (ii) in its “good faith” or under anotherexpress standard, the General Partner will act under that express standard and will not be subject to any other or different standard imposed by theAllianceBernstein Partnership Agreement and the Holding Partnership Agreement or applicable law or in equity or otherwise. The partnership agreementsfurther provide that to the extent that, at law or in equity, the General Partner has duties (including fiduciary duties) and liabilities relating thereto to eitherPartnership or any partner, the General Partner acting under the AllianceBernstein Partnership Agreement or the Holding Partnership Agreement, as applicable,will not be liable to the Partnerships or any partner for its good faith reliance on the provisions of the partnership agreement. In addition, the AllianceBernstein Partnership Agreement and the Holding Partnership Agreement grant broad rights of indemnification to the General Partnerand its directors and affiliates and authorize AllianceBernstein and Holding to enter into indemnification agreements with the directors, officers, partners,employees and agents of AllianceBernstein and its affiliates and Holding and its affiliates. The Partnerships have granted broad rights of indemnification toofficers and employees of AllianceBernstein and Holding. The foregoing indemnification provisions are not exclusive, and the Partnerships are authorized toenter into additional indemnification arrangements. AllianceBernstein and Holding have obtained directors and officers/errors and omissions liabilityinsurance. The AllianceBernstein Partnership Agreement and the Holding Partnership Agreement also allow transactions between AllianceBernstein and Holding and theGeneral Partner or its affiliates if the transactions are on terms determined by the General Partner to be comparable to (or more favorable to AllianceBernstein orHolding than) those that would prevail with an unaffiliated party. The partnership agreements provide that those transactions are deemed to meet that standardif such transactions are approved by a majority of those directors of the General Partner who are not directors, officers or employees of any affiliate of theGeneral Partner (other than AllianceBernstein and its subsidiaries or Holding) or, if in the reasonable and good faith judgment of the General Partner, thetransactions are on terms substantially comparable to (or more favorable to AllianceBernstein or Holding than) those that would prevail in a transaction withan unaffiliated party. The Delaware courts have held that provisions in partnership or limited liability company agreements that permit affiliate transactionsso long as they are on an arms-length basis operate to establish a contractually-agreed-to fiduciary duty standard of entire fairness on the part of the generalpartner or manager in connection with the approval of affiliate transactions. The AllianceBernstein Partnership Agreement and the Holding Partnership Agreement expressly permit all affiliates of the General Partner (including AXAEquitable and its other subsidiaries) to compete, directly or indirectly, with AllianceBernstein and Holding, to engage in any business or other activity and toexploit any opportunity, including those that may be available to AllianceBernstein and Holding. AXA, AXA Financial, AXA Equitable and certain of theirsubsidiaries currently compete with AllianceBernstein. (See “Business—Competition” in Item 1.) The partnership agreements further provide that, except tothe extent that a decision or action by the General Partner is taken with the specific intent of providing an improper benefit to an affiliate of the General Partnerto the detriment of AllianceBernstein or Holding, there is no liability or obligation with respect to, and no challenge of, decisions or actions of the GeneralPartner that would otherwise be subject to claims or other challenges as improperly benefiting affiliates of the General Partner to the detriment of thePartnerships or otherwise involving any conflict of interest or breach of a duty of loyalty or similar fiduciary obligation. Section 17-1101(c) of the Delaware Act provides that it is the policy of the Delaware Act to give maximum effect to the principle of freedom of contract and tothe enforceability of partnership agreements. Further, Section 17-1101(d) of the Delaware Act provides in part that to the extent that, at law or in equity, apartner has duties (including fiduciary duties) to a limited partnership or to another partner, those duties may be expanded, restricted, or eliminated byprovisions in a partnership agreement (provided that a partnership agreement may not eliminate the implied contractual covenant of good faith and fairdealing). In addition, Section 17-1101(f) of the Delaware Act provides that a partnership agreement may limit or eliminate any or all liability of a partner to alimited partnership or another partner for breach of contract or breach of duties (including fiduciary duties); provided, however, that a partnership agreementmay not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fairdealing. Decisions of the Delaware courts have recognized the right of parties, under the above provisions of the Delaware Act, to alter by the terms of apartnership agreement otherwise applicable fiduciary duties and liability for breach of duties. However, the Delaware courts have required that a partnershipagreement make clear the intent of the parties to displace otherwise applicable fiduciary duties (the otherwise applicable fiduciary duties often being referred toas “default” fiduciary duties). Judicial inquiry into whether a partnership agreement is sufficiently clear to displace default fiduciary duties is necessarily factdriven and is made on a case by case basis. Accordingly, the effectiveness of displacing default fiduciary obligations and liabilities of general partnerscontinues to be a developing area of the law and it is not certain to what extent the foregoing provisions of the AllianceBernstein Partnership Agreement and theHolding Partnership Agreement are enforceable under Delaware law. 148Table of Contents Item 13.Certain Relationships and Related Transactions, and Director Independence Policies and Procedures Regarding Transactions with Related Persons Each of the Holding Partnership Agreement and the AllianceBernstein Partnership Agreement expressly permits AXA and its affiliates, which includes AXAEquitable and its affiliates (collectively, “AXA Affiliates”), to provide services to AllianceBernstein and Holding if the terms of the transaction are approvedby the General Partner in good faith as being comparable to (or more favorable to each such partnership than) those that would prevail in a transaction with anunaffiliated party. This requirement is conclusively presumed to be satisfied as to any transaction or arrangement that (i) in the reasonable and good faithjudgment of the General Partner, meets that unaffiliated party standard, or (ii) has been approved by a majority of those directors of the General Partner whoare not also directors, officers or employees of an affiliate of the General Partner. In practice, our management pricing committees review investment advisory agreements with AXA Affiliates, which is the manner in which the GeneralPartner reaches a judgment regarding the appropriateness of the fees. Other transactions with AXA Affiliates are submitted to the Audit Committee for theirreview and approval; in 2012, the unanimous consent of the Audit Committee constituted the consent of four of six independent directors on the Board. We arenot aware of any transaction during 2012 between our company and any related person with respect to which these procedures were not followed. We do not have written policies regarding the employment of immediate family members of any of our related persons. Compensation and benefits for all ofour employees is established in accordance with our employment and compensation practices applicable to employees with equivalent qualifications andresponsibilities who hold similar positions. Financial Arrangements with AXA Affiliates The General Partner has, in its reasonable and good faith judgment (based on its knowledge of, and inquiry with respect to, comparable arrangements with orbetween unaffiliated parties), approved the following arrangements with AXA Equitable and its affiliates as being comparable to, or more favorable toAllianceBernstein than, those that would prevail in a transaction with an unaffiliated party. The following tables summarize transactions between AllianceBernstein and related persons during 2012. The first table summarizes services we provide torelated persons and the second table summarizes services our related persons provide to us: Parties(1) General Description of Relationship(2) Amounts Receivedor Accrued for in 2012 AXA Equitable(3) We provide investment management services and ancillary accounting,valuation, reporting, treasury and other services to the general andseparate accounts of AXA Equitable and its insurance companysubsidiaries. $ 38,517,000 (of which $449,000 relates to the ancillary services) AXA Life Japan Limited(3) $24,037,000 EQAT, AXA Enterprise Trust and AXA Premier VIPTrust We serve as sub-adviser to these open-end mutual funds, each of whichis sponsored by a subsidiary of AXA Financial. $22,021,000 MONY Life Insurance Company and its subsidiaries(3)(4) We provide investment management services and ancillary accountingservices. $ 8,756,000 (of which $150,000 relates to the ancillary services) AXA Re Arizona Company(3) $7,248,000 AXA U.K. Group Pension Scheme $2,917,000 AXA Rosenberg Investment Management Asia Pacific(3) $2,701,000 AXA France(3) $2,234,000 AXA Germany(3) $1,706,000 AXA Corporate Solutions(3) $1,054,000 AXA Investment Managers Ltd. Paris(3) $944,000 AXA AB Funds $732,000 AXA China Region(3) $714,000 149Table of Contents Parties(1) General Description of Relationship(2) Amounts Receivedor Accrued for in 2012 AXA Belgium(3) $690,000 AXA Liability Managers (3) $348,000 AXA Mediterranean(3) $325,000 AXA (Canada)(3) $203,000 AXA Foundation, Inc., a subsidiary of AXA Financial(3) $136,000 AXA General Insurance Hong Kong Ltd.(3) $123,000 (1)AllianceBernstein or one of its subsidiaries is a party to each transaction. (2)We provide investment management services unless otherwise indicated. (3)This entity is a subsidiary of AXA. AXA is an indirect parent of AllianceBernstein. (4)Subsidiaries include MONY Life Insurance Company of America and U.S. Financial Life Insurance Company. Parties(1)(2) General Description of Relationship Amounts Paidor Accrued for in 2012 AXA Advisors AXA Advisors distributes certain of our Retail Products and providesPrivate Client referrals. $7,924,000 AXA Business Services Pvt. Ltd. AXA Business Services provides data processing services and supportfor certain investment operations functions. $7,623,000 AXA Equitable We are covered by various insurance policies maintained by AXAEquitable. $4,973,000 AXA Technology Services India Pvt. Ltd. AXA Technology Services India Pvt. Ltd. provides certain dataprocessing services and functions. $3,991,000 AXA Group Solutions Pvt. Ltd. AXA Group Solution Pvt. Ltd. provides maintenance and developmentsupport for applications. $2,287,000 AXA Advisors AXA Advisors sells shares of our mutual funds under DistributionServices and Educational Support agreements. $1,430,000 GIE Informatique AXA (“GIE”) GIE provides cooperative technology development and procurementservices to us and to various other subsidiaries of AXA. $905,000 AXA Equitable AXA Equitable allows us use of their healthcare facility. $120,000 (1)AllianceBernstein is a party to each transaction. (2)Each entity is a subsidiary of AXA. AXA is an indirect parent of AllianceBernstein. Additional Transactions with Related Persons Certain subsidiaries of AXA, including AXA Advisors, have entered into selected dealer agreements with AllianceBernstein Investments, for which we paidthese subsidiaries of AXA sales concessions on sales of approximately $1.7 billion. Various subsidiaries of AXA distribute certain of our Non-U.S. Funds,for which such entities received aggregate distribution payments of approximately $36,000 in 2012. AXA Equitable and its affiliates are not obligated to provide funds to us, except for ACMC, LLC’s and the General Partner’s obligation to fund certain of ourincentive compensation and employee benefit plan obligations. ACMC, LLC and the General Partner are obligated, subject to certain limitations, to makecapital contributions to AllianceBernstein in an amount equal to the payments AllianceBernstein is required to make as incentive compensation under theemployment agreements entered into in connection with AXA Equitable’s 1985 acquisition of Donaldson, Lufkin and Jenrette Securities Corporation (sinceNovember 2000, a part of Credit Suisse Group) as well as obligations of AllianceBernstein to various employees and their beneficiaries underAllianceBernstein’s Capital Accumulation Plan. In 2012, ACMC, LLC made capital contributions to AllianceBernstein in the amount of approximately $4.4million in respect of these obligations. ACMC, LLC’s obligations to make these contributions are guaranteed by Equitable Holdings, LLC (a wholly-ownedsubsidiary of AXA Equitable), subject to certain limitations. All tax deductions with respect to these obligations, to the extent funded by ACMC, LLC, theGeneral Partner or Equitable Holdings, LLC, will be allocated to ACMC, LLC or the General Partner. Arrangements with Immediate Family Members of Related Persons During 2012, we did not have arrangements with immediate family members of our directors and executive officers. Director Independence See “Corporate Governance—Independence of Certain Directors” in Item 10.  150Table of Contents Item 14.Principal Accounting Fees and Services The following table presents fees for professional audit services rendered by PricewaterhouseCoopers LLP (“PwC”) for the audit of AllianceBernstein’s andHolding’s annual financial statements for 2012 and 2011, respectively, and fees for other services rendered by PwC ($ in thousands): 2012 2011 Audit fees(1) $5,102 $4,869 Audit related fees(2) 3,330 2,825 Tax fees(3) 1,806 2,494 All other fees(4) 6 5 Total $10,244 $10,193 (1)Includes $64,914 paid for audit services to Holding in each of 2012 and 2011. (2)Audit related fees consist principally of fees for audits of financial statements of certain employee benefit plans, internal control reviews and accountingconsultation. (3)Tax fees consist of fees for tax consultation and tax compliance services. (4)All other fees in 2012 and 2011 consisted of miscellaneous non-audit services. On November 9, 2005, the Audit Committee adopted a policy to pre-approve audit and non-audit service engagements with the independent registered publicaccounting firm. This policy was revised on August 3, 2006. The independent registered public accounting firm must provide annually a comprehensive anddetailed schedule of each proposed audit and non-audit service to be performed. The Audit Committee then affirmatively indicates its approval of the listedengagements. Engagements that are not listed, but that are of similar scope and size to those listed and approved, may be deemed to be approved, if the fee forsuch service is less than $100,000. In addition, the Audit Committee has delegated to its chairman the ability to approve any permissible non-audit engagementwhere the fees are expected to be less than $100,000. 151Table of ContentsPART IV Item 15.Exhibits, Financial Statement Schedules (a)There is no document filed as part of this Form 10-K. Financial Statement Schedule. Attached to this Form 10-K is a schedule describing Valuation and Qualifying Account-Allowance for Doubtful Accounts for the three years endedDecember 31, 2012, 2011 and 2010. PwC’s report regarding the schedule is also attached. (b)Exhibits. The following exhibits required to be filed by Item 601 of Regulation S-K are filed herewith or incorporated by reference herein, as indicated: Exhibit Description3.01 Amended and Restated Certificate of Limited Partnership dated February 24, 2006 of Holding (incorporated by reference to Exhibit 99.06 to Form8-K, as filed February 24, 2006).3.02 Amendment No. 1 dated February 24, 2006 to Amended and Restated Agreement of Limited Partnership of Holding (incorporated by reference toExhibit 3.1 to Form 10-Q for the quarterly period ended September 30, 2006, as filed November 8, 2006).3.03 Amended and Restated Agreement of Limited Partnership dated October 29, 1999 of Alliance Capital Management Holding L.P. (incorporated byreference to Exhibit 3.2 to Form 10-K for the fiscal year ended December 31, 2003, as filed March 10, 2004).3.04 Amended and Restated Certificate of Limited Partnership dated February 24, 2006 of AllianceBernstein (incorporated by reference to Exhibit99.07 to Form 8-K, as filed February 24, 2006).3.05 Amendment No. 1 dated February 24, 2006 to Amended and Restated Agreement of Limited Partnership of AllianceBernstein (incorporated byreference to Exhibit 3.2 to Form 10-Q for the quarterly period ended September 30, 2006, as filed November 8, 2006).3.06 Amended and Restated Agreement of Limited Partnership dated October 29, 1999 of Alliance Capital Management L.P. (incorporated by referenceto Exhibit 3.3 to Form 10-K for the fiscal year ended December 31, 2003, as filed March 10, 2004).3.07 Certificate of Amendment to the Certificate of Incorporation of AllianceBernstein Corporation (incorporated by reference to Exhibit 99.08 to Form8-K, as filed February 24, 2006).3.08 AllianceBernstein Corporation By-Laws with amendments through February 24, 2006 (incorporated by reference to Exhibit 99.09 to Form 8-K,as filed February 24, 2006).10.01 AllianceBernstein 2012 Incentive Compensation Award Program.*10.02 AllianceBernstein 2012 Deferred Cash Compensation Program.*10.03 Form of 2012 Award Agreement under Incentive Compensation Award Program, Deferred Cash Compensation Program and 2010 Long TermIncentive Plan.*10.04 Form of 2012 Award Agreement under 2010 Long Term Incentive Plan (relates to May 2012 equity compensation awards to Eligible Directors).*10.05 Election Form relating to May 2013 equity compensation awards to Eligible Directors.*10.06 Amendment No. 3 to the AllianceBernstein L.P. 2012 Long Term Incentive Plan.*10.07 Guidelines for Transfer of AllianceBernstein L.P. Units.10.08 Employment Agreement among Peter S. Kraus, AllianceBernstein Corporation, AllianceBernstein Holding L.P. and AllianceBernstein L.P., datedas of June 21, 2012 (incorporated by reference to Exhibit 99.01 to Form 8-K/A, as filed June 26, 2012).*10.09 Amendment No. 1 to Employment Agreement dated as of December 19, 2008 among Peter S. Kraus, AllianceBernstein Corporation,AllianceBernstein Holding L.P. and AllianceBernstein L.P., dated as of June 21, 2012 (incorporated by reference to Exhibit 99.02 to Form 8-K,as filed June 21, 2012).*10.10 Summary of AllianceBernstein’s Lease at 1345 Avenue of the Americas, New York, New York 10105 (incorporated by reference to Exhibit 10.07to Form 10-K for the fiscal year ended December 31, 2011, as filed February 10, 2012).10.11 Revolving Credit Agreement, dated as of December 9, 2010 and Amended and Restated as of January 17, 2012, among AllianceBernstein L.P.and Sanford C. Bernstein & Co., LLC, as Borrowers; Bank of America, N.A., as Administrative Agent; Merrill Lynch, Pierce, Fenner & SmithIncorporated, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, as Joint Lead Arrangers and Joint Book Managers, and the otherlenders party thereto (incorporated by reference to Exhibit 10.01 to Form 8-K , as filed January 20, 2012).10.12 AllianceBernstein L.P. 2010 Long Term Incentive Plan, as amended (incorporated by reference to Exhibit 10.01 to Form 10-K for the fiscal yearended December 31, 2010, as filed February 10, 2011).*10.13 Form of Award Agreement under the Special Option Program (incorporated by reference to Exhibit 10.05 to Form 10-K for the fiscal year endedDecember 31, 2008, as filed February 23, 2009).* 152Table of Contents Exhibit Description 10.14 Amended and Restated Commercial Paper Dealer Agreement, dated as of February 10, 2009, among Banc of America Securities LLC, MerrillLynch Money Markets Inc., Deutsche Bank Securities Inc. and AllianceBernstein L.P. (incorporated by reference to Exhibit 10.11 to Form 10-Kfor the fiscal year ended December 31, 2008, as filed February 23, 2009).10.15 Employment Agreement among Peter S. Kraus, AllianceBernstein Corporation, AllianceBernstein Holding L.P. and AllianceBernstein L.P., datedas of December 19, 2008 (incorporated by reference to Exhibit 99.02 to Form 8-K, as filed December 24, 2008).*10.16 Amended and Restated 1997 Long Term Incentive Plan, as amended through November 28, 2007 (incorporated by reference to Exhibit 10.02 toForm 10-K for the fiscal year ended December 31, 2007, as filed February 25, 2008).*10.17 Amended and Restated Issuing and Paying Agency Agreement, dated as of May 3, 2006 (incorporated by reference to Exhibit 10.2 to Form 10-Qfor the quarterly period ended March 31, 2006, as filed May 8, 2006).10.18 Investment Advisory and Management Agreement for MONY Life Insurance Company (incorporated by reference to Exhibit 10.4 to Form 10-Kfor the fiscal year ended December 31, 2004, as filed March 15, 2005).10.19 Investment Advisory and Management Agreement for the General Account of AXA Equitable Life Insurance Company (incorporated by referenceto Exhibit 10.5 to Form 10-K for the fiscal year ended December 31, 2004, as filed March 15, 2005).10.20 Alliance Capital Management L.P. Partners Plan of Repurchase adopted as of February 20, 2003 (incorporated by reference to Exhibit 10.2 toForm 10-K for the fiscal year ended December 31, 2002, as filed March 27, 2003).10.21 Services Agreement dated as of April 22, 2001 between Alliance Capital Management L.P. and AXA Equitable Life Insurance Company(incorporated by reference to Exhibit 10.19 to Form 10-K for the fiscal year ended December 31, 2001, as filed March 28, 2002).10.22 Extendible Commercial Notes Dealer Agreement, dated as of December 14, 1999 (incorporated by reference to Exhibit 10.10 to the Form 10-Kfor the fiscal year ended December 31, 1999, as filed March 28, 2000).10.23 Amended and Restated Investment Advisory and Management Agreement dated January 1, 1999 among Alliance Capital Management HoldingL.P., Alliance Corporate Finance Group Incorporated, and AXA Equitable Life Insurance Company (incorporated by reference to Exhibit (a)(6)to Form 10-Q/A for the quarterly period ended September 30, 1999, as filed on September 28, 2000).10.24 Amended and Restated Accounting, Valuation, Reporting and Treasury Services Agreement dated January 1, 1999 between Alliance CapitalManagement Holding L.P., Alliance Corporate Finance Group Incorporated, and AXA Equitable Life Insurance Company (incorporated byreference to Exhibit (a)(7) to the Form 10-Q/A for the quarterly period ended September 30, 1999, as filed September 28, 2000).10.25 Alliance Capital Accumulation Plan (incorporated by reference to Exhibit 10.11 to Form 10-K for the fiscal year ended December 31, 1988, asfiled March 31, 1989).*12.01 AllianceBernstein Consolidated Ratio of Earnings to Fixed Charges in respect of the years ended December 31, 2012, 2011 and 2010.21.01 Subsidiaries of AllianceBernstein.23.01 Consents of PricewaterhouseCoopers LLP.31.01 Certification of Mr. Kraus furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.02 Certification of Mr. Weisenseel furnished pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.01 Certification of Mr. Kraus furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.02 Certification of Mr. Weisenseel furnished for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of1934 and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101.INS XBRL Instance Document.101.SCH XBRL Taxonomy Extension Schema.101.CAL XBRL Taxonomy Extension Calculation Linkbase.101.LAB XBRL Taxonomy Extension Label Linkbase.101.PRE XBRL Taxonomy Extension Presentation Linkbase.101.DEF XBRL Taxonomy Extension Definition Linkbase.* Denotes a compensatory plan or arrangement 153Table of Contents Signatures Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this report to be signed on its behalf by theundersigned, thereunto duly authorized. AllianceBernstein Holding L.P. Date: February 12, 2013By:/s/ Peter S. Kraus Peter S. Kraus Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Exchange Act, this report has been signed by the following persons on behalf of the Registrant and in the capacities and onthe dates indicated. Date: February 12, 2013 /s/ John C. Weisenseel John C. Weisenseel Chief Financial Officer 154Table of Contents Directors /s/ Peter S. Kraus /s/ Andrew J. McMahonPeter S. Kraus Andrew J. McMahonChairman of the Board Director /s/ Christopher M. Condron /s/ Kevin MolloyChristopher M. Condron Kevin MolloyDirector Director /s/ Henri de Castries /s/ Mark PearsonHenri de Castries Mark PearsonDirector Director /s/ Denis Duverne /s/ Lorie A. SlutskyDenis Duverne Lorie A. SlutskyDirector Director /s/ Steven G. Elliott /s/ A.W. (Pete) Smith, Jr.Steven G. Elliott A.W. (Pete) Smith, Jr.Director Director /s/ Deborah S. Hechinger /s/ Peter J. TobinDeborah S. Hechinger Peter J. TobinDirector Director /s/ Weston M. Hicks Weston M. Hicks Director 155Table of Contents SCHEDULE I IAllianceBernstein L.P.Valuation and Qualifying Account - Allowance for Doubtful AccountsFor the Three Years Ending December 31, 2012, 2011 and 2010Description Balance atBeginning ofPeriod Credited toCosts andExpenses Deductions Balance atEnd of Period (in thousands) For the year ended December 31, 2010 $1,393 $(504) $13(a) $876 For the year ended December 31, 2011 $876 $- $124(b) $752 For the year ended December 31, 2012 $752 $100 $8(c) $844 (a)Includes accounts written-off as uncollectible of $48 and a net addition to the allowance balance of $35.(b)Includes accounts written-off as uncollectible of $123 and a net reduction to the allowance balance of $1.(c)Includes accounts written-off as uncollectible of $15 and a net addition to the allowance balance of $7. 156 Report of Independent Registered Public Accounting Firm on Financial Statement Schedule To the General Partner and Unitholders ofAllianceBernstein L.P.:Our audits of the consolidated financial statements and of the effectiveness of internal control over financial reporting referred to in our report dated February12, 2013, appearing in Item 8, also included an audit of the financial statement schedule listed in Item 15(a) of this Form 10-K. In our opinion, this financialstatement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financialstatements./s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 2013 157Exhibit 10.01 ALLIANCEBERNSTEIN 2012 INCENTIVE COMPENSATION AWARD PROGRAM This AllianceBernstein 2012 Incentive Compensation Award Program (the “Program”) under the AllianceBernstein L.P. 2010 Long Term IncentivePlan, as amended (the “2010 Plan”) has been adopted by the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) ofAllianceBernstein Corporation, the general partner of AllianceBernstein L.P. (“AllianceBernstein”) and AllianceBernstein Holding L.P. (“Holding”). Anyincentive compensation awards granted under the 2010 Plan shall be governed solely by the 2010 Plan document, this Program and the terms of any relatedaward agreement. The right to defer Awards hereunder shall be considered a separate plan within the Program. Such separate plan shall be referred to as the “APCPDeferral Plan.” The APCP Deferral Plan is maintained primarily for the purpose of providing deferred compensation to a select group of management orhighly compensated employees (a “Top Hat Employee”). No one who is not a Top Hat Employee may defer compensation under the APCP Deferral Plan. Any deferral or payment hereunder is subject to the terms of the Program and compliance with Section 409A of the Internal Revenue Code (the“Code”) and the guidance issued thereunder (“Section 409A”), as interpreted by the Committee in its sole discretion. Although none of the Company, theCommittee, their affiliates, and their agents make any guarantee with respect to the treatment of payments under the Program and shall not be responsible inany event with regard to the Program’s compliance with Section 409A, the payments contained herein are intended to be exempt from Section 409A orotherwise comply with the requirements of Section 409A, and the Program shall be limited, construed and interpreted in accordance with the foregoing. Noneof the Company, the Committee, any of their affiliates, and any of their agents shall have any liability to any Participant or Beneficiary as a result of any tax,interest, penalty or other payment required to be paid or due pursuant to, or because of a violation of, Section 409A. ARTICLE 1Definitions Section 1.01 Definitions. Whenever used in the Program, each of the following terms shall have the meaning for that term set forth below: (a) “Account”: a separate bookkeeping account established for each Participant for each Award, with such Award, as described in Article 2,credited to the Account maintained for such Award. (b) “Award”: any award granted subject to the Program. (c) “Award Agreement”: an agreement between a Participant and a Company setting forth the terms of an Award. (d) “Beneficiary”: one or more Persons, trusts, estates or other entities, designated in accordance with Section 6.04(a), that are entitled toreceive, in the event of a Participant’s death, any amount or property to which the Participant would otherwise have been entitled under the Program.  (e) “Beneficiary Designation Form”: the form established from time to time by the Committee that a Participant completes, signs and returnsto the Committee to designate one or more Beneficiaries. (f) “Board”: the Board of Directors of the general partner of Holding and AllianceBernstein. (g) “Cause”: shall have the meaning assigned to it in the Award Agreement. To the extent that the term “Cause” is not defined in the AwardAgreement, all references to the term “Cause” herein shall be inapplicable. (h) “Code”: the Internal Revenue Code of 1986, as amended from time to time. (i) “Committee”: the Board or one or more committees of the Board designated by the Board to administer the Program. (j) “Company”: Holding, AllianceBernstein and any corporation or other entity of which Holding or AllianceBernstein (i) has sufficientvoting power (not depending on the happening of a contingency) to elect at least a majority of its board of directors or other governing body, as the case may be,or (ii) otherwise has the power to direct or cause the direction of its management and policies. (k) “Deferral Election Form”: the form(s) established from time to time by the Committee that a Participant completes, signs and returns tothe Committee to elect to defer the distribution of an Award pursuant to Article 5. (l) “Disability”: shall have the meaning assigned to it in the Award Agreement. To the extent that the term “Disability” is not defined in theAward Agreement, all references to the term “Disability” herein shall be inapplicable. (m) “Effective Date”: the date Awards are approved by the Committee. (n) “Eligible Employee”: an active employee of a Company whom the Committee determines to be eligible for an Award. If the Committeedetermines that Awards made for the subsequent calendar year shall be eligible for deferral, the Committee or its designee shall specify in writing prior to suchcalendar year those Eligible Employees, or the methodology used to determine those Eligible Employees, who shall be eligible to participate in the APCPDeferral Plan for that calendar year and so notify those Eligible Employees prior to the end of the then calendar year or such later date permitted by Section409A. Any advance deferral election made by such Eligible Employee is made on the condition that such Eligible Employee satisfies the conditionsestablished by the Committee and, if not, such deferral election shall be null and void ab initio. 2 (o) “ERISA”: the Employee Retirement Income Security Act of 1974, as amended. (p) “Fair Market Value”: with respect to a Holding Unit as of any given date and except as otherwise expressly provided by the Board or theCommittee, the closing price of a Holding Unit on such date as published in the Wall Street Journal or, if no sale of Holding Units occurs on the New YorkStock Exchange on such date, the closing price of a Holding Unit on such exchange on the last preceding day on which such sale occurred as published in theWall Street Journal. (q) “Holding Units”: units representing assignments of beneficial ownership of limited partnership interests in Holding. (r) “Participant”: any Eligible Employee of any Company who has been designated by the Committee to receive an Award for any calendaryear and who thereafter remains employed by a Company. (s) “Person”: any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government orpolitical subdivision thereof or other entity. (t) “Program”: the AllianceBernstein 2012 Incentive Compensation Award Program, as amended. (u) “Restricted Unit”: a right to receive a Holding Unit in the future, as accounted for in an Account, subject to vesting and any other termsand conditions established hereunder or by the Committee. (v) “Termination of Employment”: the Participant is no longer performing services as an employee of any Company, other than pursuant toa severance or special termination arrangement, and has had a “separation from service” within the meaning of Section 409A. (w) “Unforeseeable Emergency”: a severe financial hardship to a Participant or former Participant within the meaning of Section 409Aresulting from (i) an illness or accident of the Participant or former Participant, the spouse of the Participant or former Participant, or a dependent (as definedin Code Section 152, without regard to Code Sections 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant or former Participant, (ii) loss of property of theParticipant or former Participant due to casualty or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond thecontrol of the Participant or former Participant, all as determined in the sole discretion of the Committee. 3 ARTICLE 2Participation Section 2.01 Eligibility. The Committee, in its sole discretion, will designate those Eligible Employees employed by a Company who willreceive Awards with respect to a calendar year. In making such designation, the Committee may consider any criteria that it deems relevant, which mayinclude an Eligible Employee’s position with a Company and the manner in which the Eligible Employee is expected to contribute to the future growth andsuccess of the Company. The Committee may vary the amount of Awards to a particular Participant from year to year and may determine that a Participantwho received an Award for a particular year is not eligible to receive any Award with respect to any subsequent year. An Eligible Employee who is a member ofthe Committee during a particular year shall be eligible to receive an Award for that year only if the Award is approved by the majority of the other members ofthe Committee. Section 2.02 Grant of Awards. The number of Restricted Units constituting an Award will be determined by the Committee in its sole andabsolute discretion and, in the event the Committee elects to designate Awards by dollar amount, such amount will be converted into a number of RestrictedUnits as of the Effective Date for such Award based on the Fair Market Value of a Holding Unit on such Effective Date and will be credited to the Participant’sAccount as of such Effective Date. From and after such Effective Date, the Award shall be treated for all purposes as a grant of that number of RestrictedUnits determined pursuant to the preceding sentence. Awards vest in accordance with the terms set forth in the Award Agreement, and any such vested Awardwill be subject to the rules on distributions and deferral elections set forth below in Articles 4 and 5, respectively. As soon as reasonably practicable after theend of each calendar year, a statement shall be provided to each such Participant indicating the current balance in each Account maintained for the Participantas of the end of the calendar year. Section 2.03 Distributions on Holding Units. (a) When a regular cash distribution is made with respect to Holding Units, within 70 days thereafter, a distribution will be made to eachParticipant in an amount (the “Equivalent Distribution Amount”) equal to the number of such Restricted Units (whether vested or unvested) credited to theParticipant’s Account as of the record date for such cash distribution times the value of the regular cash distribution per Holding Unit. (b) If an Award is designated by dollar amount, fractional unit amounts remaining after conversion under Section 2.02 may be used for anypurposes for the benefit of the Participant as determined by the Committee in its sole discretion, including but not limited to the payment of taxes with respectto an Award or, if the Committee so elects, such fractional unit amounts may be cancelled. (c) Holding Units shall be subject to adjustment in accordance with Section 4(c) of the 2010 Plan (or such applicable successor provision). 4 ARTICLE 3Vesting and Forfeitures Section 3.01 Vesting. Terms related to vesting of Awards are set forth in the Award Agreement. Section 3.02 Forfeitures. Terms related to forfeiture of Awards are set forth in the Award Agreement. ARTICLE 4Distributions Section 4.01 General. No Award will be distributed unless such distribution is permitted under this Article 4. The distribution of the vestedportion of an Award shall be made in Holding Units. Any portion of an Award that is not vested will not be distributed hereunder. Section 4.02 Distributions If Deferral Election Is Not In Effect. (a) Unless a Participant elects otherwise on a Deferral Election Form under Sections 5.01 or 5.02 (if such election is permitted by theCommittee), or unless otherwise provided in the Award Agreement, a Participant who has not incurred a Disability or a Termination of Employment will havethe vested portion of his or her Award distributed to him or her within 70 days after such portion vests under the applicable vesting provisions set forth in theAward Agreement. (b) Unless a Participant elects otherwise on a Deferral Election Form under Sections 5.01 or 5.02 (if such election is permitted by theCommittee), or unless otherwise provided in the Award Agreement, a Participant who has had a Disability or a Termination of Employment will have thebalance of any vested Award not distributed under Section 4.02(a) distributed to him or her as follows: (i) In the event of a Participant’s Disability, a distribution will be made to the Participant within 70 days following the Participant’sDisability. (ii) In the event of a Participant’s Termination of Employment due to the Participant’s death, a distribution will be made to theParticipant’s Beneficiary within 70 days following the 180th day anniversary of the death. (iii) In the event of a Participant’s Termination of Employment for any reason other than Disability or death, distributions due withrespect to the Award, if any, shall be made in the same manner as prescribed in Section 4.02(a) above. 5 Section 4.03 Distributions If Deferral Election Is In Effect. (a) Subject to Section 4.03(b), in the event that a deferral election is in effect with respect to a Participant pursuant to Sections 5.01 or 5.02 andthe Participant has not incurred a Disability but has a Termination of Employment for any reason other than death, the vested portion of such Participant’sAward will be distributed to him within 70 days following the benefit commencement date specified on such Deferral Election Form. (b) In the event that a Deferral Election Form is in effect with respect to a Participant pursuant to Sections 5.01 or 5.02 and such Participantsubsequently incurs a Termination of Employment due to death, the elections made by such Participant in his or her Deferral Election Form shall bedisregarded, and the Participant’s Award will be distributed to his or her Beneficiary within 70 days following the 180th day anniversary of the death. (c) In the event that a Deferral Election is in effect with respect to a Participant pursuant to Section 5.01 or 5.02 and such Participant incurs asubsequent Disability, distribution will be made in accordance with such Participant’s election in his or her Deferral Election Form. Section 4.04 Unforeseeable Emergency. Notwithstanding the foregoing to the contrary, if a Participant or former Participant experiences anUnforeseeable Emergency, such individual may petition the Committee to (i) suspend any deferrals under a Deferral Election Form submitted by suchindividual and/or (ii) receive a partial or full distribution of a vested Award deferred by such individual. The Committee shall determine, in its sole discretion,whether to accept or deny such petition, and the amount to be distributed, if any, with respect to such Unforeseeable Emergency; provided, however, thatsuch amount may not exceed the amount necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as aresult of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation byinsurance or otherwise, by liquidation of the individual’s assets (to the extent the liquidation of such assets would not itself cause severe financial hardship),and by suspension of the individual’s deferral(s) under the Program. Section 4.05 Documentation. Each Participant and Beneficiary shall provide the Committee with any documentation required by theCommittee for purposes of administering the Program. 6 ARTICLE 5Deferrals of Compensation Section 5.01 Initial Deferral Election. (a) The Committee may permit deferral elections of Awards in its sole and absolute discretion in accordance with procedures established by theCommittee for this purpose from time to time. If so permitted, a Participant may elect in writing on a Deferral Election Form to have the portion of the Awardwhich vests distributed as of a permitted distribution commencement date elected by the Participant that occurs following the date that such Award becomes oris scheduled to become 100% vested under the applicable vesting period set forth in the Award Agreement and specifying among the forms of distributionalternatives permitted by the Committee and specified on the Deferral Election Form. In addition, if permitted by the Committee and specified on the DeferralElection Form, a Participant who elects a distribution commencement date may also elect that if a Termination of Employment occurs prior to suchdistribution commencement date, the distribution commencement date shall be six months after the Termination of Employment. A Participant may make thedeferral election with respect to all or a portion of an Award as permitted by the Committee. Any such distribution shall be made in such form(s) as permittedby the Committee at the time of deferral (including, if permitted by the Committee, a single distribution or distribution of a substantially equal number ofHolding Units over a period of up to ten years) as elected by the Participant. If the Participant fails to properly fully complete and file with the Committee (orits designee) the Deferral Election Form on a timely basis, the Deferral Election Form and the deferral election shall be null and void. If deferrals are permittedby the Committee and the Participant is eligible to make a deferral election, such Deferral Election Form must be submitted to the Committee (or its delegate) nolater than the last day of the calendar year prior to the Effective Date of an Award, except that a Deferral Election Form may also be submitted to the Committee(or its delegate) in accordance with the provisions set forth in Section 5.01(b) and (c). (b) In the case of the first year in which a Participant becomes eligible to participate in the Program and with respect to services to be performedsubsequent to such deferral election, a Deferral Election Form may be submitted within 30 days after the date the Participant becomes eligible to participate inthe Program. (c) A Deferral Election Form may be submitted at such other time or times as permitted by the Committee in accordance with Section 409A ofthe Code. Section 5.02 Changes in Time and Form of Distribution. The elections set forth in a Participant’s Deferral Election Form governing thepayment of the vested portion of an Award pursuant to Section 5.01 shall be irrevocable as to the Award covered by such election; provided, however, ifpermitted by the Committee, a Participant shall be permitted to change the time and form of distribution of such Award by making a subsequent election on aDeferral Election Form supplied by the Committee for this purpose in accordance with procedures established by the Committee from time to time, providedthat any such subsequent election does not take effect for at least 12 months, is made at least 12 months prior to the scheduled distribution commencementdate for such Award and the subsequent election defers commencement of the distribution for at least five years from the date such payment otherwise wouldhave been made. With regard to any installment payments, each installment thereof shall be deemed a separate payment for purposes of Section 409A,provided, however, the Committee may limit the ability to treat the deferral as a separate installment for purposes of changing the time and form ofpayment. Whenever a payment under the Program specifies a payment period with reference to a number of days, the actual date of payment within thespecified period shall be within the sole discretion of the Committee. 7 ARTICLE 6Administration; Miscellaneous Section 6.01 Administration. The Program is intended to constitute an unfunded, non-qualified incentive plan within the meaning of ERISAand shall be administered by the Committee as such. The APCP Deferral Plan is intended to be an unfunded, non-qualified deferred compensation planwithin the meaning of ERISA and shall be administered by the Committee as such. The right of any Participant or Beneficiary to receive distributions underthe Program shall be as an unsecured claim against the general assets of AllianceBernstein. Notwithstanding the foregoing, AllianceBernstein, in its solediscretion, may establish a “rabbi trust” or separate custodial account to pay benefits hereunder. The Committee shall have the full power and authority toadminister and interpret the Program and to take any and all actions in connection with the Program, including, but not limited to, the power and authority toprescribe all applicable procedures, forms and agreements. The Committee’s interpretation and construction of the Program shall be conclusive and bindingon all Persons. Section 6.02 Authority to Vary Terms of Awards. The Committee shall have the authority to grant Awards other than as described herein,subject to such terms and conditions as the Committee shall determine in its discretion. Section 6.03 Amendment, Suspension and Termination of the Program. The Committee reserves the right at any time, without the consent ofany Participant or Beneficiary and for any reason, to amend, suspend or terminate the Program in whole or in part in any manner; provided that no suchamendment, suspension or termination shall reduce the balance in any Account prior to such amendment, suspension or termination or impose additionalconditions on the right to receive such balance, except as required by law. Section 6.04 General Provisions. (a) To the extent provided by the Committee, each Participant may file with the Committee a written designation of one or more Persons,including a trust or the Participant’s estate, as the Beneficiary entitled to receive, in the event of the Participant’s death, any amount or property to which theParticipant would otherwise have been entitled under the Program. A Participant may, from time to time, revoke or change his or her Beneficiary designationby filing a new designation with the Committee. If (i) no such Beneficiary designation is in effect at the time of a Participant’s death, (ii) no designatedBeneficiary survives the Participant, or (iii) a designation on file is not legally effective for any reason, then the Participant’s estate shall be the Participant’sBeneficiary. 8 (b) Neither the establishment of the Program nor the grant of any Award or any action of any Company, the Board, or the Committee pursuantto the Program, shall be held or construed to confer upon any Participant any legal right to be continued in the employ of any Company. Each Companyexpressly reserves the right to discharge any Participant without liability to the Participant or any Beneficiary, except as to any rights which may expressly beconferred upon the Participant under the Program. (c) An Award hereunder shall not be treated as compensation, whether upon such Award’s grant, vesting, payment or otherwise, for purposesof calculating or accruing a benefit under any other employee benefit plan except as specifically provided by such other employee benefit plan. (d) Nothing contained in the Program, and no action taken pursuant to the Program, shall create or be construed to create a fiduciaryrelationship between any Company and any other person. (e) Neither the establishment of the Program nor the granting of an Award hereunder shall be held or construed to create any rights to anycompensation, including salary, bonus or commissions, nor the right to any other Award or the levels thereof under the Program. (f) No Award or right to receive any payment may be transferred or assigned, pledged or otherwise encumbered by any Participant orBeneficiary other than by will, by the applicable laws of descent and distribution or by a court of competent jurisdiction. Any other attempted assignment oralienation of any payment hereunder shall be void and of no force or effect. (g) If any provision of the Program shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of theProgram, and the Program shall be construed and enforced as if the illegal or invalid provision had not been included in the Program. (h) Any notice to be given by the Committee under the Program to any party shall be in writing addressed to such party at the last addressshown for the recipient on the records of any Company or subsequently provided in writing to the Committee. Any notice to be given by a party to theCommittee under the Program shall be in writing addressed to the Committee at the address of AllianceBernstein. (i) Section headings herein are for convenience of reference only and shall not affect the meaning of any provision of the Program. (j) The Program shall be governed and construed in accordance with the laws of the State of New York. 9 (k) There shall be withheld from each payment made pursuant to the Program any tax or other charge required to be withheld therefrompursuant to any federal, state or local law. A Company by whom a Participant is employed shall also be entitled to withhold from any compensation payableto a Participant any tax imposed by Section 3101 of the Code, or any successor provision, on any amount credited to the Participant; provided, however, thatif for any reason the Company does not so withhold the entire amount of such tax on a timely basis, the Participant shall be required to reimburseAllianceBernstein for the amount of the tax not withheld promptly upon AllianceBernstein’s request therefore. With respect to Restricted Units: (i) in the eventthat the Committee determines that any federal, state or local tax or any other charge is required by law to be withheld with respect to the Restricted Units or thevesting of Restricted Units (a “Withholding Amount”) then, in the discretion of the Committee, either (X) prior to or contemporaneously with the delivery ofHolding Units to the recipient, the recipient shall pay the Withholding Amount to AllianceBernstein in cash or in vested Holding Units already owned by therecipient (which are not subject to a pledge or other security interest), or a combination of cash and such Holding Units, having a total fair market value, asdetermined by the Committee, equal to the Withholding Amount; (Y) AllianceBernstein shall retain from any vested Holding Units to be delivered to therecipient that number of Holding Units having a fair market value, as determined by the Committee, equal to the Withholding Amount (or such portion of theWithholding Amount that is not satisfied under clause (X) as payment of the Withholding Amount; or (Z) if Holding Units are delivered without the paymentof the Withholding Amount pursuant to either clause (X) or (Y), the recipient shall promptly pay the Withholding Amount to AllianceBernstein on at leastseven business days notice from the Committee either in cash or in vested Holding Units owned by the recipient (which are not subject to a pledge or othersecurity interest), or a combination of cash and such Holding Units, having a total fair market value, as determined by the Committee, equal to theWithholding Amount, and (ii) in the event that the recipient does not pay the Withholding Amount to AllianceBernstein as required pursuant to clause (i) ormake arrangements satisfactory to AllianceBernstein regarding payment thereof, AllianceBernstein may withhold any unpaid portion thereof from any amountotherwise due the recipient from AllianceBernstein. 10Exhibit 10.02 ALLIANCEBERNSTEIN 2012 DEFERRED CASH COMPENSATION PROGRAM This AllianceBernstein 2012 Deferred Cash Compensation Program (the “Program”), under the AllianceBernstein 2012 Incentive CompensationAward Program (the “ICAP”), has been adopted by the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) ofAllianceBernstein Corporation, the general partner of AllianceBernstein L.P. (“AllianceBernstein”) and AllianceBernstein Holding L.P. (“Holding”). Anycash awards granted under this Program shall be governed solely by this Program document, the ICAP and the terms of any related award agreement. ARTICLE 1Definitions Section 1.01 Definitions. Whenever used in the Program, each of the following terms shall have the meaning for that term set forth below: (a) “Account”: a separate bookkeeping account established for each Participant for each Award, with such Award, as described in Article 2,credited to the Account maintained for such Award. (b) “Award”: any award granted subject to the Program. (c) “Award Agreement”: an agreement between a Participant and a Company setting forth the terms of an Award. (d) “Beneficiary”: one or more Persons, trusts, estates or other entities, designated in accordance with Section 5.04(a), that are entitled toreceive, in the event of a Participant’s death, any amount or property to which the Participant would otherwise have been entitled under the Program. (e) “Beneficiary Designation Form”: the form established from time to time by the Committee that a Participant completes, signs and returnsto the Company to designate one or more Beneficiaries. (f) “Board”: the Board of Directors of the general partner of Holding and AllianceBernstein. (g) “Cause”: shall have the meaning assigned to it in the Award Agreement. To the extent that the term “Cause” is not defined in the AwardAgreement, all references to the term “Cause” herein shall be inapplicable. (h) “Code”: the Internal Revenue Code of 1986, as amended from time to time. (i) “Committee”: the Compensation Committee of the Board or one or more other committees of the Board designated by the Board toadminister the Program; or if no such committee exists or is designated, the Board.  (j) “Company”: Holding, AllianceBernstein and any corporation or other entity of which Holding or AllianceBernstein currently hassufficient voting power to elect at least a majority of its board of directors or other governing body, as the case may be, or (ii) otherwise has the power to director cause the direction of its management and policies. (k) “Disability”: shall have the meaning assigned to it in the Award Agreement. To the extent that the term “Disability” is not defined in theAward Agreement, all references to the term “Disability” herein shall be inapplicable. (l) “Effective Date”: the date Awards are approved by the Committee. (m) “Eligible Employee”: an active employee of a Company who the Committee determines to be eligible for an Award. (n) “ERISA”: the Employee Retirement Income Security Act of 1974, as amended. (o) “Participant”: any Eligible Employee of any Company who has been designated by the Committee to receive an Award for any calendaryear and who thereafter remains employed by a Company. (p) “Person”: any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government orpolitical subdivision thereof or other entity. (q) “Program”: the AllianceBernstein 2012 Deferred Cash Compensation Program, as amended. (r) “Termination of Employment”: the Participant is no longer performing services as an employee of any Company, other than pursuant toa severance or special termination arrangement, and has had a “separation from service” within the meaning of Section 409A of the Code. ARTICLE 2Participation Section 2.01 Eligibility. The Committee, in its sole discretion, will designate those Eligible Employees who will receive Awards with respect to acalendar year. In making such designation, the Committee may consider any criteria that it deems relevant, which may include an Eligible Employee’sposition with a Company and the manner in which the Eligible Employee is expected to contribute to the future growth and success of the Company. TheCommittee may vary the amount of Awards to a particular Participant from year to year and may determine that a Participant who received an Award for aparticular year is not eligible to receive any Award with respect to any subsequent year. An Eligible Employee who is a member of the Committee during aparticular year shall be eligible to receive an Award for that year only if the Award is approved by the majority of the other members of the Committee. 2 Section 2.02 Grant of Awards. The amount of cash constituting an Award will be determined by the Committee in its sole and absolutediscretion in U.S. dollars and will be credited to the Participant’s Account as of such Effective Date. If the Participant is based outside the United States, suchamount will be converted into the local currency of the Participant as of the Effective Date for such Award based on the exchange rates on such Effective Date;from and after such Effective Date, the Award shall be treated for all purposes as a grant in that currency. Awards vest in accordance with the terms set forthin the Award Agreement, and any such vested Award will be subject to the rules on distributions set forth below in Articles 4 and 5, respectively. As soon asreasonably practicable after the end of each calendar year, a statement shall be provided to each such Participant indicating the current balance in each Accountmaintained for the Participant as of the end of the calendar year. Section 2.03 Interest.Interest on Awards will be accrued monthly based on AllianceBernstein’s monthly weighted average cost of funds. Thereturn will be nominal. The interest earned will be credited to the Participant’s Account balance annually. ARTICLE 3Vesting and Forfeitures Section 3.01 Vesting. Terms related to vesting of Awards are set forth in the Award Agreement. Section 3.02 Forfeitures. Terms related to forfeiture of Awards are set forth in the Award Agreement. ARTICLE 4Distributions Section 4.01 General. No Award will be distributed unless such distribution is permitted under this Article 4. The distribution of the vestedportion of an Award shall be made in cash in the local currency of the Participant. Any portion of an Award that is not vested will not be distributed hereunder. Section 4.02 Distributions. (a) Unless otherwise provided in the Award Agreement, a Participant who has not incurred a Disability or a Termination of Employment willhave the vested portion of his or her Award distributed to him or her within 70 days after such portion vests under the applicable vesting provisions set forthin the Award Agreement. (b) Unless otherwise provided in the Award Agreement, a Participant who has had a Disability or a Termination of Employment will have thebalance of any vested Award not distributed under Section 4.02(a) distributed to him or her as follows: 3 (i) In the event of a Participant’s Disability, a distribution will be made to the Participant within 70 days following the Participant’sDisability. (ii) In the event of a Participant’s Termination of Employment due to the Participant’s death, a distribution will be made to theParticipant’s Beneficiary within 70 days following the 180th day anniversary of the death. (iii) In the event of a Participant’s Termination of Employment for any reason other than Disability or death, distributions due withrespect to the Award, if any, shall be made in the same manner as prescribed in Section 4.02(a) above. Section 4.03 Documentation. Each Participant and Beneficiary shall provide the Committee with any documentation required by the Committeefor purposes of administering the Program. ARTICLE 5Administration; Miscellaneous Section 5.01 Administration. To the extent a Participant is a U.S. taxpayer or receives U.S. source income, the Program is intended to constitutean unfunded, non-qualified incentive plan within the meaning of ERISA and shall be administered by the Committee as such. The right of any Participant orBeneficiary to receive distributions under the Program shall be as an unsecured claim against the general assets of AllianceBernstein. Notwithstanding theforegoing, AllianceBernstein, in its sole discretion, may establish a “rabbi trust” or separate custodial account to pay benefits hereunder. The Committee shallhave the full power and authority to administer and interpret the Program and to take any and all actions in connection with the Program, including, but notlimited to, the power and authority to prescribe all applicable procedures, forms and agreements. The Committee’s interpretation and construction of theProgram shall be conclusive and binding on all Persons. Section 5.02 Authority to Vary Terms of Awards. The Committee shall have the authority to grant Awards other than as described herein,subject to such terms and conditions as the Committee shall determine in its discretion. Section 5.03 Amendment, Suspension and Termination of the Program. The Committee reserves the right at any time, without the consent ofany Participant or Beneficiary and for any reason, to amend, suspend or terminate the Program in whole or in part in any manner; provided that no suchamendment, suspension or termination shall reduce the balance in any Account prior to such amendment, suspension or termination or impose additionalconditions on the right to receive such balance, except as required by law. 4 Section 5.04 General Provisions. (a) To the extent provided by the Committee, each Participant may file with the Committee a written designation of one or more Persons,including a trust or the Participant’s estate, as the Beneficiary entitled to receive, in the event of the Participant’s death, any amount or property to which theParticipant would otherwise have been entitled under the Program. A Participant may, from time to time, revoke or change his or her Beneficiary designationby filing a new designation with the Committee. If (i) no such Beneficiary designation is in effect at the time of a Participant’s death, (ii) no designatedBeneficiary survives the Participant, or (iii) a designation on file is not legally effective for any reason, then the Participant’s estate shall be the Participant’sBeneficiary. (b) Neither the establishment of the Program nor the grant of any Award or any action of any Company, the Board or the Committee pursuantto the Program, shall be held or construed to confer upon any Participant any legal right to be continued in the employ of any Company. Each Companyexpressly reserves the right to discharge any Participant without liability to the Participant or any Beneficiary, except as to any rights which may expressly beconferred upon the Participant under the Program. (c) An Award hereunder shall not be treated as compensation, whether upon such Award’s grant, vesting, payment or otherwise, for purposesof calculating or accruing a benefit under any other employee benefit plan except as specifically provided by such other employee benefit plan. (d) Nothing contained in the Program, and no action taken pursuant to the Program, shall create or be construed to create a fiduciaryrelationship between any Company and any other Person. (e) Neither the establishment of the Program nor the granting of an Award hereunder shall be held or construed to create any rights to anycompensation, including salary, bonus or commissions, nor the right to any other Award or the levels thereof under the Program. (f) No Award or right to receive any payment may be transferred or assigned, pledged or otherwise encumbered by any Participant orBeneficiary other than by will, by the applicable laws of descent and distribution or by a court of competent jurisdiction. Any other attempted assignment oralienation of any payment hereunder shall be void and of no force or effect. (g) If any provision of the Program shall be held illegal or invalid, the illegality or invalidity shall not affect the remaining provisions of theProgram, and the Program shall be construed and enforced as if the illegal or invalid provision had not been included in the Program. (h) Any notice to be given by the Committee under the Program to any party shall be in writing addressed to such party at the last addressshown for the recipient on the records of any Company or subsequently provided in writing to the Committee. Any notice to be given by a party to theCommittee under the Program shall be in writing addressed to the Committee at the address of AllianceBernstein. 5 (i) Section headings herein are for convenience of reference only and shall not affect the meaning of any provision of the Program. (j) To the extent not preempted by ERISA, the Program shall be governed and construed in accordance with the laws of the State of New York. (k) There shall be withheld from each payment made pursuant to the Program any tax or other charge required to be withheld therefrompursuant to any federal, state or local law. A Company by whom a Participant is employed shall also be entitled to withhold from any compensation payableto a Participant any tax imposed by Section 3101 of the Code, or any successor provision, on any amount credited to the Participant; provided, however, thatif for any reason the Company does not so withhold the entire amount of such tax on a timely basis, the Participant shall be required to reimburseAllianceBernstein for the amount of the tax not withheld promptly upon AllianceBernstein’s request therefore. 6Exhibit 10.03 AllianceBernsteinIncentive Compensation Award Program,Deferred Cash Compensation Program and2010 Long Term Incentive PlanAward Agreement for 2012 Awards Award Agreement, dated as of December 31, 2012, among AllianceBernstein L.P. (together with its subsidiaries, “AllianceBernstein”),AllianceBernstein Holding L.P. (“Holding”) and (“Participant”), an employee of AllianceBernstein.Whereas, the Compensation Committee (“Committee” or “Administrator”) of the Board of Directors (“Board”) of AllianceBernstein Corporation (“Corporation”), pursuant to the AllianceBernstein 2012 Incentive Compensation Award Program (“Incentive Compensation Program”) and theAllianceBernstein 2010 Long Term Incentive Plan, as amended (“2010 Plan” and, together with the Incentive Compensation Program, the “Plans”), copies ofwhich have been delivered electronically to the Participant, has granted to the Participant an award (“Award”) consisting of units representing assignments ofthe beneficial ownership of limited partnership interests in Holding (“Holding Units”) subject to certain restrictions described herein (“Restricted Units”), andauthorized the execution and delivery of this Award Agreement; andWhereas, the Committee has granted to the Participant the right to receive a portion of the Award in cash instead of Restricted Units, as contemplatedin the AllianceBernstein 2012 Deferred Cash Compensation Program (“Deferred Cash Program”);Now, Therefore, in accordance with the grant of the Award, and as a condition thereto, AllianceBernstein, Holding and the Participant agree asfollows:1. Grant. Subject to and under the terms and conditions set forth in this Award Agreement and the Plans, the Committee hereby awards tothe Participant the amount of deferred cash (“Deferred Cash”) elected by the Participant and as set forth in Section 2 of Schedule A and the number ofRestricted Units set forth in Section 3 of Schedule A, together with the right to receive interest on Deferred Cash, if elected, as specified in Section 2 below andregular cash distributions with regard to the underlying Holding Units pursuant to Section 2.03(a) of the Incentive Compensation Program. The aggregatedollar amount of the Award (including Deferred Cash and Restricted Units) was determined by the Committee on December 3, 2012, with the number ofRestricted Units being based on the average of the closing prices of a Holding Unit on January 14, 15, 16, 17 and 18, 2013.  2. Earnings on Deferred Cash. Interest on Deferred Cash, if elected, will be accrued monthly based on AllianceBernstein’s monthly weightedaverage cost of funds. The return will be nominal. The interest earned will be credited to the Participant’s Deferred Cash balance annually. 3. Vesting and Distribution. The Deferred Cash and Restricted Units shall vest in accordance with Section 5 of Schedule A. Once theDeferred Cash, if elected, has vested, cash shall be distributed to the Participant as specified in Article 4 of the Deferred Cash Program. Once Restricted Unitshave vested, Holding Units shall be distributed to the Participant as specified in Article 4 of the Incentive Compensation Program.4. Notice of Resignation. As a condition of receiving the Award, the Participant agrees that in the event of the Participant’s resignation, theParticipant shall provide AllianceBernstein with prior written notice of the Participant’s intent to terminate employment with AllianceBernstein based on theschedule set forth below. Notwithstanding the terms of any other agreement between the Participant and AllianceBernstein (or its subsidiaries), including, butnot limited to, any employment agreement, which agreement shall be deemed amended by this Award Agreement, the Participant will continue to be eligible forbase salary or draw, as well as available health and welfare benefits, so long as the Participant’s employment with AllianceBernstein continues during thenotice period; provided that AllianceBernstein may, in its sole discretion, require the Participant to discontinue regular duties, including prohibiting theParticipant from further entry to any of AllianceBernstein’s premises. The notice period shall be as follows:Senior Vice President or above:90 daysVice President:60 daysAssistant Vice President or below:30 days5. Covenants. As an additional condition of receiving the Award, the Participant agrees to the following covenants and remedies for failure to comply:(a) Competition. At no time while employed by AllianceBernstein (including any applicable notice period) shall theParticipant provide Competing Services, in any capacity, whether as an employee, consultant, independent contractor, owner, partner,shareholder, director or otherwise, to any Direct Competitor; provided, however, that nothing herein shall prevent the Participant from beinga passive owner of not more than 5% of the outstanding equity of any class of securities of an entity that is publicly traded and that ownsor may acquire any corporation or business that competes with AllianceBernstein. “Competing Services” means services provided to aDirect Competitor that involve (i) the direct or indirect solicitation (including through financial intermediaries or consultants) of actual orprospective clients of AllianceBernstein with respect to investment management or research products or services; (ii) the creation,management or maintenance (or providing material support for, or managing or supervising, the creation, management or maintenance) ofan investment management or research product or service that competes directly with a significant investment management or researchproduct or service then offered or provided by AllianceBernstein or that AllianceBernstein intends to offer or provide as part of a PlannedBusiness; or (iii) the Participant functioning in a senior executive, operational, administrative, financial, advisory or consulting role, whichis the same as or substantially similar to the Participant’s role with AllianceBernstein. “Direct Competitor” means a business that offersor provides products or services that compete directly with products or services offered or provided by AllianceBernstein or thatAllianceBernstein intends to offer or provide as part of a Planned Business, where the business activities of the Direct Competitor eitherconstitute or can reasonably be expected to constitute meaningful competition for AllianceBernstein. “Planned Business” means abusiness: (i) that the Participant is aware that AllianceBernstein plans to enter within six months after the Participant’s last date ofemployment, (ii) that is material to the AllianceBernstein entity or business unit that plans to enter such business, and (iii) in which suchAllianceBernstein entity or business unit has invested material resources (including time of senior management) in preparation for launch. - 2 - (b) Employee Solicitation. At no time while employed by AllianceBernstein (including any applicable notice period) shallthe Participant (whether directly or indirectly through instruction to any other person or entity) recruit, solicit or hire any employee ofAllianceBernstein to work for the Participant or any other person or entity.(c) Confidentiality. From the date hereof and continuing after the Participant’s last date of employment, and except asotherwise required by law, the Participant shall not disclose or make accessible to any business, person or entity, or make use of (other thanin the course of the business of AllianceBernstein) any trade secrets, proprietary knowledge or confidential information that the Participantshall have obtained during his or her employment by AllianceBernstein and that shall not be generally known to or recognized by thegeneral public. All information regarding or relating to any aspect of the business of AllianceBernstein, including but not limited to thatrelating to existing or contemplated business plans, activities or procedures, current or prospective clients, current or prospective contractsor other business arrangements, current or prospective products, facilities and methods, manuals, intellectual property, price lists,financial information (including the revenues, costs, or profits associated with any of the products or services of AllianceBernstein), or anyother information acquired because of the Participant’s employment by AllianceBernstein, shall be conclusively presumed to beconfidential; provided, however, that confidential information shall not include any information known generally to the public (other thanas a result of unauthorized disclosure by the Participant). The Participant’s obligations under this Section 5(c) shall be in addition to anyother confidentiality or nondisclosure obligations the Participant has to AllianceBernstein at law or under any other of AllianceBernstein’spolicies or agreements. - 3 - (d) Non-disparagement. The Participant shall not make intentionally disparaging remarks about AllianceBernstein, or issueany communication, written or otherwise, that reflects adversely on or encourages any adverse action against AllianceBernstein, except iftestifying truthfully under oath pursuant to any subpoena, order, directive, request or other legal process, or as may be otherwise requiredby law.(e) Remedies. If the Participant fails to comply with the agreements and covenants set forth in Section 4 or this Section 5,AllianceBernstein shall have the following remedies:(i) The Participant agrees that in the event of a breach of any of the agreements or covenants contained in Section 4 or thisSection 5, any Deferred Cash or Restricted Units that have not vested or have vested but have not been delivered (other than as a result of avoluntary long-term deferral election) shall be forfeited. (ii) Without intending to limit the remedies available to AllianceBernstein, the Participant acknowledges that a breach of anyof the agreements or covenants contained in Section 4 or this Section 5 shall result in material irreparable injury to AllianceBernstein forwhich the forfeiture remedy described in Section (i) above may not be adequate and that, in the event of such a breach or threat thereof,AllianceBernstein shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining theParticipant from engaging in activities prohibited by this Award Agreement or such other relief as may be required to specifically enforceany of the agreements or covenants in Section 4 or this Section 5. The Participant acknowledges that the above restrictions are part of aprogram of AllianceBernstein covering employees in many jurisdictions and that it is necessary to maintain consistency of administrationand interpretation with respect to such program, and accordingly, the Participant consents to the applicability of New York law andjurisdiction in accordance with Section 14 hereof. In the event that any court or tribunal of competent jurisdiction shall determine thisSection 5 to be unenforceable or invalid for any reason, the Participant agrees that this Section 5 shall be interpreted to extend only over themaximum period of time for which it may be enforceable, and/or over the maximum geographical area as to which it may be enforceable,and/or to the maximum extent in any and all respects as to which it may be enforceable, all as determined by such court or tribunal. - 4 - (iii) In addition to the remedies set forth in clauses (i) and (ii) above, AllianceBernstein retains the right to seek damages and otherrelief for any breach by the Participant of any agreement or covenant contained in this Award Agreement. 6. Forfeiture for Failure to Consider Certain Risks. If the Committee determines that, during the calendar year in which the Award wasgranted, (a) the Participant participated in the structuring or marketing of any investment management or research product or service, or participated on behalfof AllianceBernstein or any of its clients in the purchase or sale of any security or other property as part of providing investment management services orotherwise, and (b) (i) the Participant failed to follow or violated any written AllianceBernstein policy guideline or process designed in whole or in part tomanage or mitigate risk; (ii) as a result, appropriate consideration was not given to the risk to AllianceBernstein or the Participant’s business unit (for example,where the Participant has improperly analyzed such risk or where the Participant failed sufficiently to raise concerns about such risk); and (iii) there hasbeen, or reasonably could be expected to be, a material adverse impact on AllianceBernstein or the Participant’s business unit, the Participant shall forfeit allunvested Deferred Cash, if elected, and all unvested Restricted Units granted pursuant to such Award.7. Termination of Employment. The Deferred Cash and Restricted Units shall vest in accordance with Section 5 of Schedule A only while theParticipant is employed by AllianceBernstein, except as follows:(a) Disability. Any unvested Deferred Cash and Restricted Units shall fully vest immediately upon a Participant’sDisability and shall be distributed to the Participant as specified in Article 4 of each of the Deferred Cash Program and the IncentiveCompensation Program. The Participant shall be deemed to have incurred a “Disability” if the Participant is unable to engage in anysubstantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to last for acontinuous period of not less than 12 months, as determined by the carrier of the long-term disability insurance program maintained byAllianceBernstein or its affiliate that covers the Participant, or such other person or entity designated by the Administrator in its solediscretion. In order to assist in the process described in this Section 7(a), the Participant shall, as reasonably requested by theAdministrator, (i) be available for medical examinations by one or more physicians chosen by the long-term disability insurance provideror the Administrator and approved by the Participant, whose approval shall not be unreasonably withheld, and (ii) grant the long-termdisability insurance provider, the Administrator and any such physicians access to all relevant medical information concerning theParticipant, arrange to furnish copies of medical records to them, and use best efforts to cause the Participant’s own physicians to beavailable to discuss the Participant’s health with them. - 5 - (b) Death. If the Participant dies (i) while in the employ of AllianceBernstein, or (ii) while the Participant otherwise holdsoutstanding unvested Deferred Cash or Restricted Units, any unvested Deferred Cash and all unvested Restricted Units held by theParticipant (and not previously forfeited or cancelled) shall vest immediately and be distributed in accordance with Article 4 of each of theDeferred Cash Program and the Incentive Compensation Program.(c) Resignation. If the Participant resigns or otherwise voluntarily terminates his or her employment with AllianceBernstein(other than due to the Participant’s Disability), any unvested Deferred Cash and all unvested Restricted Units held by the Participant (andnot previously forfeited or cancelled) on the date of resignation shall continue to vest as specified in Section 5 of Schedule A and bedistributed as specified in Article 4 of each of the Deferred Cash Program and the Incentive Compensation Program. The provisions in thisSection 7(c) are conditioned upon the Participant’s continued compliance with the agreements and covenants set forth in Sections 4 and 5 ofthis Award Agreement from the date of resignation until the Deferred Cash and Restricted Units have fully vested and been delivered (orwould have been delivered but for a voluntary long-term deferral election), the Participant providing to AllianceBernstein in writing (in aform to be provided by AllianceBernstein, a “Resignation Questionnaire”) no later than the Participant’s last date of employmentinformation relating to the Participant’s new employment opportunity, if any, the Participant confirming continued compliance with theagreements and covenants set forth in Sections 4 and 5 of this Award Agreement in writing (in a form to be provided by AllianceBernstein,a “Confirmation Certificate”) in connection with each vesting date, and the Participant executing and complying with a standard releasein favor of AllianceBernstein (in a form to be provided by AllianceBernstein, a “Release”); provided, however, that the only remedyavailable to AllianceBernstein for any breach by the Participant of the agreements and covenants set forth in Sections 4, 5(a) and 5(b) ofthis Award Agreement that occurs after the Participant’s last date of employment (including any applicable notice period), or for theParticipant failing to provide to AllianceBernstein the Resignation Questionnaire, the Release or each annual Confirmation Certificate, shallbe the forfeiture remedy described in Section 5(e)(i). In addition, the terms of this Section 7(c) are also conditioned on the Participant notreceiving replacement equity from a new employer for the unvested Deferred Cash and Restricted Units as to which continued vesting is toapply and the Participant confirming such fact in the Resignation Questionnaire and each Confirmation Certificate. - 6 - (d) Termination Without Cause. If AllianceBernstein terminates the Participant’s employment without Cause (other than dueto the Participant’s Disability or death), any unvested Deferred Cash and all unvested Restricted Units held by the Participant (and notpreviously forfeited or cancelled) on the date of such termination shall continue to vest as specified in Section 5 of Schedule A and bedistributed as specified in Article 4 of each of the Deferred Cash Program and the Incentive Compensation Program. The provisions in thisSection 7(d) are conditioned upon the Participant’s continued compliance with the covenants set forth in Section 5 of this Award Agreement(except Section 5(a), with respect to which the Participant need not comply after the Participant’s termination date) until the Deferred Cashand Restricted Units have fully vested and been delivered (or would have been delivered but for a voluntary long-term deferral election),signing and returning a Confirmation Certificate to AllianceBernstein in connection with each vesting date, and executing and complyingwith a standard release in favor of AllianceBernstein (in a form to be provided by AllianceBernstein); provided, however, that the onlyremedy available to AllianceBernstein for any breach by the Participant of the covenant set forth in Section 5(b) of this Award Agreementthat occurs after the Participant’s last date of employment (including any applicable notice period) shall be the forfeiture remedy describedin Section 5(e)(i).(e) Termination For Cause. If AllianceBernstein terminates the Participant’s employment for Cause (or, if after terminationof the Participant’s employment other than for “Cause”, as that term is defined in the 2010 Plan, AllianceBernstein determines than anevent occurred during the Participant’s employment that would have entitled AllianceBernstein to terminate the Participant’s employment forCause), the Participant shall forfeit all unvested Deferred Cash and Restricted Units. 8. No Right to Continued Employment. Neither the Award nor any term of this Award Agreement shall confer upon the Participant anyright to continue in the employ of AllianceBernstein and shall not interfere in any way with the right of AllianceBernstein to terminate the service of theParticipant at any time for any reason.9. Non-Transferability. The Participant may not sell, assign, transfer, pledge or otherwise dispose of or encumber any of the Deferred Cashor Restricted Units, or any interest therein, until the Participant’s rights in such Deferred Cash or Restricted Units vest in accordance with this AwardAgreement. Any purported sale, assignment, transfer, pledge or other disposition or encumbrance in violation of this Award Agreement will be void and of noeffect.10. Payment of Withholding Tax. The provisions set forth in Section 5.04(k) of the Deferred Cash Program and Section 6.04(k) of theIncentive Compensation Program shall apply in the event that AllianceBernstein determines that any federal, state or local tax or any other charge is required bylaw to be withheld with respect to a vesting or distribution of Deferred Cash or Restricted Units. - 7 - 11. Dilution and Other Adjustments. The existence of the Award shall not impair the right of AllianceBernstein, Holding or their respectivepartners to, among other things, conduct, make or effect any change in AllianceBernstein’s or Holding’s business, any distribution (whether in the form ofcash, limited partnership interests, other securities or other property), recapitalization (including, without limitation, any subdivision or combination oflimited partnership interests), reorganization, consolidation, combination, repurchase or exchange of limited partnership interests or other securities ofAllianceBernstein or Holding, issuance of warrants or other rights to purchase limited partnership interests or other securities of AllianceBernstein or Holding,or any incorporation (or other change in form) of AllianceBernstein or Holding. Holding Units shall be subject to adjustment in accordance with Section 4(c) ofthe 2010 Plan (or such applicable successor provision).12. Electronic Delivery. The Plans contemplate that each award shall be evidenced by an Award Agreement which shall be delivered to theParticipant. It is hereby understood that electronic delivery of this Award Agreement constitutes delivery under the Plans. 13. Administrator. If at any time there shall be no Committee, the Board shall be the Administrator.14. Governing Law. This Award Agreement shall be governed by and construed in accordance with the internal laws of the State of NewYork. The Participant hereby consents to the exclusive jurisdiction of any state or federal court located within the State of New York, County of New York,with respect to any legal action, dispute or otherwise, arising out of, related to, or in connection with this Award Agreement. The Participant hereby waivesany objection in any such action or proceeding based on forum non-conveniens, and any objection to venue with respect to any such legal action, which maybe instituted in any of the aforementioned courts.15. Sections and Headings. All section references in this Award Agreement are to sections hereof for convenience of reference only and are not to affectthe meaning of any provision of this Award Agreement.16. Interpretation. The Participant accepts the Award subject to all the terms and provisions of the Plans and this Award Agreement. In theevent of any conflict between any clause of the Plans and this Award Agreement, this Award Agreement shall control. The Participant accepts as binding,conclusive and final all decisions or interpretations of the Administrator or Board upon any questions arising under the Plans and/or this Award Agreement.17. Notices. Any notice under this Award Agreement shall be in writing and shall be deemed to have been duly given when deliveredpersonally (whether by hand or by facsimile) or when deposited in the United States mail, registered, postage prepaid, and addressed, in the case ofAllianceBernstein and Holding, to the Corporate Secretary at 1345 Avenue of the Americas, New York, New York 10105, or if AllianceBernstein should moveits principal office, to such principal office, and, in the case of the Participant, to his or her last permanent address as shown on AllianceBernstein's records,subject to the right of either party to designate some other address at any time hereafter in a notice satisfying the requirements of this Section 17. - 8 - 18. Entire Agreement; Amendment. This Award Agreement supersedes any and all existing agreements between the Participant, AllianceBernstein andHolding relating to the Award. It may not be amended except by a written agreement signed by both parties. AllianceBernstein l.p. AllianceBernstein Holding l.p. By:/s/ James A. Gingrich James A. Gingrich Chief Operating OfficerThe Participant hereby acknowledges and accepts the terms and conditions set forth in this Award Agreement, including AllianceBernstein’s remedies if theParticipant fails to comply with the agreements and covenants set forth in Sections 4 and 5 of this Award Agreement, and the forfeiture of unvested DeferredCash and Restricted Units for failure to consider certain risks as described in Section 6 of this Award Agreement. To accept the terms of this AwardAgreement, please click the “Accept” button below:ACCEPTDECLINE - 9 - Schedule AtoAward Agreement 1.$___________ 2012 Award2.$___________2012 Deferred Cash Award (may not exceed the lesser of $250,000 and 50% of the Award; provided, however, if the Participant isbased outside of the United States, is treated as a local hire rather than as an expatriate and received an Award of $100,000 or less, the Deferred CashAward may be up to 100% of the Award)3.____________ Restricted Units have been awarded pursuant to this Award Agreement. 4.The per Holding Unit price used to determine the number of Restricted Units awarded hereunder is $19.972 per Holding Unit, which is the averageof the closing prices of a Holding Unit as published for composite transactions on the New York Stock Exchange on January 14, 15, 16, 17 and18, 2013. 5.Restrictions lapse with respect to the Holding Units in accordance with the following schedule: Percentage of Awarded Holding UnitsDateVested and Delivered1 on the Date Indicated December 1, 201325.0%December 1, 201450.0%December 1, 201575.0%December 1, 2016100.0%1 Assuming the Participant has not elected to voluntarily defer receipt of Holding Units. - 10 - Schedule AtoAward Agreementfor AllianceBernstein Sales Professionals 1.$___________ 2012 Award*2..$___________2012 Deferred Cash Award (may not exceed the lesser of $250,000 and 50% of the Award; provided, however, if the Participant isbased outside of the United States, is treated as a local hire rather than as an expatriate and received an Award of $100,000 or less, the Deferred CashAward may be up to 100% of the Award)*3.____________ Restricted Units have been awarded pursuant to this Award Agreement.* 4.The per Holding Unit price used to determine the number of Restricted Units awarded hereunder is $19.972 per Holding Unit, which is the averageof the closing prices of a Holding Unit as published for composite transactions on the New York Stock Exchange on January 14, 15, 16, 17 and18, 2013. 5.Restrictions lapse with respect to the Holding Units in accordance with the following schedule: Percentage of Awarded Holding UnitsDateVested and Delivered2 on the Date Indicated December 1, 201325.0%December 1, 201450.0%December 1, 201575.0%December 1, 2016100.0%* The amount of the 2012 Award, 2012 Deferred Cash Award and the number of Restricted Units awarded pursuant to this Award Agreement are based on anestimate of Total Variable Compensation (“TVC”). The final amounts will be calculated once TVC is finalized in early 2013 and, if the final amounts differfrom the estimates stated above, the 2012 Award amount, the amount of the Deferred Cash Award and the number of Restricted Units awarded pursuant tothis Agreement will be adjusted accordingly. 2 Assuming the Participant has not elected to voluntarily defer receipt of Holding Units. - 11 -Exhibit 10.04 2010 Long Term Incentive Plan, as AmendedAward AgreementAward Agreement, dated as of May 15, 2012, among AllianceBernstein L.P. (“Partnership”), AllianceBernstein Holding L.P. (“Holding”) and<> (“Participant”), a member of the Board of Directors of AllianceBernstein Corporation (“Board”), the general partner of thePartnership and Holding.Whereas, the Board, pursuant to the Partnership’s 2010 Long Term Incentive Plan, as amended (“Plan”), a copy of which has been delivered to theParticipant, has granted to the Participant an award (“Award”) consisting of (i) an option (“Option”) to purchase units representing assignments of thebeneficial ownership of limited partnership interests in Holding (“Units”), and (ii) Units subject to certain restrictions described herein (“Restricted Units”),and authorized the execution and delivery of this Award Agreement.Now, Therefore, in accordance with the grant of the Award, and as a condition thereto, the Partnership, Holding and the Participant agree as follows:1. Grant. Subject to and under the terms and conditions set forth in this Award Agreement and the Plan, the Board hereby awards theParticipant: (a) an Option to purchase from the Partnership the number of Units set forth in Section 1 of Schedule A, at the per Unit price set forth in Section 2of Schedule A, subject to the vesting schedule set forth in Section 3 of Schedule A; and(b) the number of Restricted Units set forth in Section 4 of Schedule A, subject to the vesting schedule set forth in Section 5 of Schedule A.2. Term and Vesting Schedule. (a) Subject to Section 4(a) below, the Option shall not be exercisable to any extent prior to May 15, 2013 orafter May 15, 2022 (“Expiration Date”). Subject to the terms and conditions of this Award Agreement and the Plan, the Participant shall be entitled toexercise the Option prior to the Expiration Date and to purchase Units pursuant to the Option in accordance with the schedule set forth in Section 3 of ScheduleA.The right to exercise the Option shall be cumulative so that to the extent the Option is not exercised when it becomes initially exercisable with respect toany Units, it shall be exercisable with respect to such Units at any time thereafter until the Expiration Date. Any Units subject to the Option that have not beenpurchased on or before the Expiration Date may not, thereafter, be purchased hereunder. A Unit shall be considered to have been purchased on or before theExpiration Date if the Partnership has been given notice of the purchase and the Partnership has actually received payment therefor pursuant to Sections 3(a)and 14, on or before the Expiration Date. 1 (b) The Restricted Units shall vest in accordance with the schedule set forth in Section 5 of Schedule A and shall be distributed to the Participantpromptly after vesting.3. Notice of Exercise, Payment, Certificate and Account. (a) Exercise of the Option, in whole or in part, shall be by delivery of a written notice to thePartnership and Holding pursuant to Section 14, which specifies the number of Units being purchased and is accompanied by payment therefor in cash. TheParticipant may pay the Partnership as many as three business days subsequent to the exercise date through a financial intermediary designated by theBoard. Promptly after receipt of such notice and purchase price, the Partnership shall cause the Partnership’s transfer agent (“Transfer Agent”), currentlyComputershare Shareowner Services LLC, to deliver the number of Units purchased. Units to be issued upon the exercise of the Option may be authorizedand unissued Units or Units that have been reacquired by the Partnership, a subsidiary of the Partnership, Holding or a subsidiary of Holding.(b) The Partnership shall establish an uncertificated account (“Account”) with the Transfer Agent representing the Restricted Units within a reasonable timeafter the Participant’s execution and delivery of this Award Agreement. The Partnership shall deliver to the Participant a certificate representing Units that havevested pursuant to this Award Agreement within a reasonable time after such Units vest. The Transfer Agent will adjust the Account to reflect the number ofUnits covered by each such certificate and will reduce the Account to the extent that any unvested Restricted Units are forfeited pursuant to the terms of thisAward Agreement.4. Termination. (a) The Option may be exercised by the Participant and the Restricted Units may be distributed to the Participant only while theParticipant serves on the Board; provided, however, that upon termination of the Participant's service by reason of the Participant's voluntary mid-termresignation, declining to stand for re-election (whether as a result of the general partner’s mandatory retirement program or otherwise), becoming an employee ofthe Partnership or a subsidiary thereof, or because the Participant incurs a Disability, the outstanding portion of the Option held by the Participant on the dateof such termination shall continue to become exercisable as specified in Section 3 of Schedule A and shall expire on the earlier of the Expiration Date and thedate that is five years from the date of such termination, and the outstanding Restricted Units held by the Participant on the date of such termination shall bedistributed to the Participant promptly after the date of such termination. In the event of the death of the Participant (whether before or after termination ofservice), the outstanding portion of the Option held by the Participant (and not previously canceled or expired) on the date of death shall be fully exercisable bythe Participant's legal representative within one year of the date of death (without regard to Section 3 of Schedule A, but not later than the Expiration Date), andthe outstanding Restricted Units held by the Participant on the date of death shall be distributed to the Participant’s beneficiary (or the Participant’s estate, ifthe Participant has not designated a beneficiary) promptly after such date. “Disability” means the Participant’s inability to engage in any substantial gainfulactivity by reason of any medically determinable physical or mental impairment that can be expected to last for a continuous period of not less than 12months, as determined by the carrier of the long-term disability insurance program maintained by the Partnership or its affiliate that covers the Participant, ifany, or such other person or entity designated by the Partnership in its sole discretion. In order to assist in the process described in this paragraph, theParticipant shall, as reasonably requested by the Partnership or its designee, (i) be available for medical examinations by one or more physicians chosen by thelong-term disability insurance provider or the Partnership and approved by the Participant, whose approval shall not unreasonably be withheld, and (ii) grantthe long-term disability insurance provider, the Partnership and any such physicians access to all relevant medical information concerning the Participant,arrange to furnish copies of medical records to them, and use best efforts to cause the Participant’s own physicians to be available to discuss the Participant’shealth with them. 2 (b) The Participant shall immediately forfeit the vested and unvested portions of both the Option and the Restricted Units awarded underthis Award Agreement if the Participant’s service as a Director is terminated for Cause. “Cause” shall mean the Participant’s (1) continuing willful failure toperform his duties as a Director (other than as a result of his total or partial incapacity due to physical or mental illness), (2) gross negligence or malfeasancein the performance of his or her duties, (3) a finding by a court or other governmental body with proper jurisdiction that an act or acts by the Participantconstitutes (A) a felony under the laws of the United States or any state thereof, or (B) a violation of federal or state securities law, by reason of which findingthe Board determines in good faith that the continued service of the Participant would be seriously detrimental to the Partnership and its business, (4) in theabsence of such a finding by a court or other governmental body with proper jurisdiction, such a determination in good faith by the Board by reason of suchact or acts constituting such a felony, serious crime or violation, or (5) any breach by the Participant of any obligation of confidentiality, non-competition, ornon-solicitation to the Partnership.5. No Right to Continued Directorship. The granting of the Award shall not confer upon the Participant any right to continue to be retainedas a Director, and shall not interfere in any way with the right of the Partnership to terminate the service of the Participant at any time for any reason.6. Non-Transferability. (a) The Option is not transferable other than by will or the laws of descent and distribution and, except as otherwiseprovided in Section 4, during the lifetime of the Participant this Option is exercisable only by the Participant; except that a Participant may transfer thisOption, without consideration, subject to such rules as the Board may adopt to preserve the purposes of the Plan (including limiting such transfers to transfersby Participants who are Director Participants or senior executives), to a trust solely for the benefit of the Participant and the Participant's spouse, children orgrandchildren (including adopted and stepchildren and grandchildren). 3 (b) Except as otherwise provided in this Award Agreement, the Participant may not sell, assign, transfer, pledge or otherwise dispose of or encumber any of theUnits subject to the Option or any of the Restricted Units, or any interest therein, until the Participant’s rights in such Units vest in accordance with thisAward Agreement. Any purported sale, assignment, transfer, pledge or other disposition or encumbrance in violation of this Award Agreement will be void andof no effect.7. Payment of Withholding Tax. (a) In the event that the Partnership or Holding determines that any federal, state or local tax or any othercharge is required by law to be withheld with respect to the exercise of the Option or the grant of the Restricted Units, the Participant shall, either directly orthrough a financial intermediary, promptly pay to the Partnership, a subsidiary specified by the Partnership, Holding or a subsidiary specified by Holding,on four business days’ notice, an amount equal to such withholding tax or charge, or (b) if the Participant does not promptly so pay the entire amount of suchwithholding tax or charge in accordance with such notice, or make arrangements satisfactory to the Partnership and Holding regarding payment thereof, thePartnership, any subsidiary of the Partnership, Holding or any subsidiary of Holding may withhold the remaining amount thereof from any amount due theParticipant from the Partnership, its subsidiary, Holding or its subsidiary.8. Dilution and Other Adjustments. The existence of the Award shall not impair the right of the Partnership, Holding or their respectivepartners to, among other things, conduct, make or effect any change in the Partnership’s or Holding’s business, any distribution (whether in the form of cash,limited partnership interests, other securities, or other property), recapitalization (including, without limitation, any subdivision or combination of limitedpartnership interests), reorganization, consolidation, combination, repurchase or exchange of limited partnership interests or other securities of the Partnershipor Holding, issuance of warrants or other rights to purchase limited partnership interests or other securities of the Partnership or Holding, or any incorporationof the Partnership or Holding. In the event of such a change in the partnership interests of the Partnership or Holding, the Board shall make such adjustmentsto the Award, including the purchase price of the Option specified in Section 2 of Schedule A, as it deems appropriate and equitable. In the event ofincorporation of the Partnership or Holding, the Board shall make such arrangements as it deems appropriate and equitable with respect to the Award for theParticipant to purchase stock in the resulting corporation in place of the Units subject to the Option and the Restricted Units. Any such adjustment orarrangement may provide for the elimination of any fractional Unit or shares of stock that might otherwise become subject to this Option. Any decision by theBoard under this Section shall be final and binding upon the Participant. 4 9. Rights as an Owner of a Unit. (a) The Participant (or a transferee of the Option pursuant to Sections 4 and 6 hereof) shall have no rightsas an owner of a Unit with respect to any Unit covered by the Option until he or she becomes the holder of record of such Unit, which shall be deemed tooccur at the time that notice of purchase is given and payment in full is received by the Partnership and Holding under Sections 3(a) and 14 of this AwardAgreement. By such actions, the Participant (or such transferee) shall be deemed to have consented to, and agreed to be bound by, all other terms, conditions,rights and obligations set forth in the then current Amended and Restated Agreement of Limited Partnership of Holding and the then current Amended andRestated Agreement of Limited Partnership of the Partnership (“Partnership Agreement”). Except as provided in Section 8 hereof, no adjustment shall bemade with respect to any Unit for any distribution for which the record date is prior to the date on which the Participant becomes the holder of record of theUnit, regardless of whether the distribution is ordinary or extraordinary, in cash, securities or other property, or of any other rights.(b) Except as provided in the Partnership Agreement, as of the date of this Award Agreement, the Participant shall have all of the rightsunder the Partnership Agreement that a Unitholder would have with respect to the Restricted Units awarded to the Participant hereunder (including, withoutlimitation, the right to receive quarterly distributions payable with respect to such Units on or after that date).10. Administrator. The Board shall be the Administrator.11. Governing Law. This Award Agreement shall be governed by and construed in accordance with the internal laws of the State of New York.12. Entire Agreement; Amendment. This Award Agreement supersedes any and all existing agreements between the Participant, the Partnership andHolding relating to the Option and Restricted Unit awards. It may not be amended except by a written agreement signed by both parties.13. Interpretation. The Participant accepts this Award subject to all the terms and provisions of the Plan, which shall control in the event ofany conflict between any provision of the Plan and this Award Agreement, and accepts as binding, conclusive and final all decisions or interpretations of theBoard upon any questions arising under the Plan and/or this Award Agreement.14. Notices. Any notice under this Award Agreement shall be in writing and shall be deemed to have been duly given when delivered personallyor when deposited in the United States mail, registered, postage prepaid, and addressed, in the case of the Partnership and Holding, to the Corporate Secretaryor an Assistant Secretary at 1345 Avenue of the Americas, New York, New York 10105, or if the Partnership should move its principal office, to suchprincipal office, and, in the case of the Participant, to his last permanent address as shown on the Partnership's records, subject to the right of either party todesignate some other address at any time hereafter in a notice satisfying the requirements of this Section. 5 15. Sections and Headings. All section references in this Award Agreement are to sections hereof for convenience of reference only and are not to affectthe meaning of any provision of this Award Agreement. AllianceBernstein l.p. By:/s/ James A. Gingrich James A. Gingrich Chief Operating Officer AllianceBernstein Holding l.p. By:/s/ James A. Gingrich James A. Gingrich Chief Operating Officer <> 6 Schedule A 1.The number of Units that the Participant is entitled to purchase pursuant to the Option granted under this Award Agreement is 16,349. 2.The per Unit price to purchase Units pursuant to the Option granted under this Award Agreement is $14.58 per Unit. 3.Percentage of Units With Respect toWhich the Option First BecomesExercisable on the Date Indicated 1. May 15, 2013 33.3%2. May 15, 2014 66.6%3. May 15, 2015 100.0% * * *4.4,116 Restricted Units have been awarded pursuant to this Award Agreement.5.Restrictions lapse with respect to the Units in accordance with the following schedule: Percentage of Units Vested on theDateDate Indicated May 15, 2015 100.0% 7Exhibit 10.05 AllianceBernstein 2010 Long Term Incentive Plan, As Amended2013 Equity Compensation Election Form Election Form, dated as of January 31, 2013, among AllianceBernstein L.P. (“Partnership”), AllianceBernstein Holding L.P. (“AllianceBernsteinHolding”) and the undersigned (“Participant”), a member of the Board of Directors of AllianceBernstein Corporation (“Board”), the general partner of thePartnership and Holding.Whereas, the Board determined at its meeting held on August 1, 2012 that the equity grant to each Non-Management Director (consisting of optionsand/or AllianceBernstein Holding units) shall be based on the election by each such Director, in January of each year, to receive, pursuant to theAllianceBernstein 2010 Long Term Incentive Plan, as amended, or any successor equity compensation plan, an award consisting of (1) an option to purchasethe number of AllianceBernstein Holding units where the option has a value of $120,000 calculated in accordance with Black-Scholes methodology, (2) thenumber of AllianceBernstein Holding units having a value of $120,000 based on the closing price of AllianceBernstein Holding units on the date of grant asreported for New York Stock Exchange composite transactions, or (3) an equity grant consisting of (a) an option to purchase a number of AllianceBernsteinHolding units where the option has a value of $60,000 calculated in accordance with Black-Scholes methodology and (b) the number of AllianceBernsteinHolding units having a value of $60,000 based on the closing price of AllianceBernstein Holding units on the date of grant as reported for New York StockExchange composite transactions;Now, Therefore, I hereby elect to receive my 2013 equity compensation award, pursuant to the AllianceBernstein 2010 Long Term Incentive Plan, asamended, in the following form:o an option to purchase the number of AllianceBernstein Holding units where the option has a value of $120,000 calculated in accordance withBlack-Scholes methodology; o the number of AllianceBernstein Holding units having a value of $120,000 based on the closing price of AllianceBernstein Holding units on thedate of grant as reported for New York Stock Exchange composite transactions; or o an equity award consisting of (a) an option to purchase the number of AllianceBernstein Holding units where the option has a value of $60,000calculated in accordance with Black-Scholes methodology, and (b) the number of AllianceBernstein Holding units having a value of $60,000 basedon the closing price of AllianceBernstein Holding units on the date of grant as reported for New York Stock Exchange composite transactions. By: Name: Date: Exhibit 10.06 Amendment No. 3 to theAllianceBernstein L.P. 2010 Long Term Incentive Plan Amendment Number Three (the “Amendment”) to the AllianceBernstein L.P. 2010 Long Term Incentive Plan (the “Plan”). Whereas, the Board of Directors (the “Board”) of AllianceBernstein Corporation, the general partner of AllianceBernstein L.P. (the “Company”),desires to amend the Plan as provided herein; and Whereas, pursuant to Section 8(a) of the Plan, the Board and the Compensation Committee of the Board have the authority to, among other things,amend the Plan in accordance with its terms; andWhereas, Section 4 of the Plan currently permits management to award (i) up to 30 million newly-issued units representing assignments of beneficialownership of limited partnership interests in AllianceBernstein Holding L.P. (the “Units”), and (ii) up to an additional 30 million Units to the extent that suchUnits are reacquired by the Company on the open market or otherwise; andWhereas, the Board desires to authorize management to reacquire on the open market or otherwise all 60 million Units available for awards under thePlan (less one Unit for every newly-issued Unit already awarded under the Plan), while maintaining the 30 million Unit limitation on newly issued Unitsavailable for awards under the Plan; andWhereas, the Plan amendment contemplated herein does not constitute a “material revision” to the Plan, as contemplated in Section 303A.08 of theNew York Stock Exchange Listed Company Manual, and, accordingly, does not require the approval of the AllianceBernstein Holding L.P. Unitholders.Now, Therefore, Be it: Resolved, that the Plan is hereby amended, effective May 15, 2012, by adding the following language to Section 4(b)(ii):“; and provided further that the Partnership may use up to 30 million additional such reacquired Units to make Awardsunder the Plan if and to the extent that Units with respect to which Awards may be granted under Section 4(a)(i) abovehave not been granted.” Exhibit 10.07 Guidelines for Transfer of AllianceBernstein L.P. Units No transfer of ownership of the units of AllianceBernstein L.P. (the private partnership) is permitted without prior approval ofAllianceBernstein and AXA Equitable Life Insurance Company (“AXA Equitable”). Under the terms of the Transfer Program, transfers of ownership will be considered once every calendar quarter. To sell your Units to a third party:rYou must first identify the buyer for your Units. AllianceBernstein can not maintain a list of prospective buyers.rThe unitholder and the prospective buyer must submit a request for transfer of ownership of the Units and obtain approval of AllianceBernstein andAXA Equitable for the transaction.rDocumentation required for consideration of approval includes: -Unit Certificate(s) -Executed “Stock” Power Form, with guaranteed signature -Letter from Seller -Letter from PurchaserTo donate the Units:rThe donor must obtain approval of AllianceBernstein and AXA Equitable for the transfer of units.rDocumentation required for consideration of approval includes: -Unit Certificate(s) -Executed “Stock” Power Form, with guaranteed signature -Letter from TransfereerAdditional required documentation should be verified with AllianceBernstein’s transfer agent, BNY Mellon Shareowner Services, at 866-737-9896.To have private Units re-registered to your name if they have been left to you by a deceased party:rThe beneficiary must obtain approval of AllianceBernstein and AXA Equitable for the transfer of units.rDocumentation required for consideration of approval includes: -Unit Certificate(s) -Executed “Stock” Power Form, with guaranteed signature -Copy of death certificate -Required Inheritance Tax Waiver for applicable statesrAdditional required documentation (which varies by state) should be verified with AllianceBernstein’s transfer agent, BNY Mellon Shareowner Services,at 866-737-9896 To re-register your certificate to reflect a legal change of name or change in custodian:rThe unitholder must obtain approval of AllianceBernstein and AXA Equitable for the change of name/registration on the unit certificate.rDocumentation required for consideration of approval includes: -Unit Certificate(s) -Executed “Stock” Power Form, with guaranteed signature -Specific instruction letter indicating the manner in which the new unit certificate should be registeredrAdditional required documentation should be verified with AllianceBernstein’s transfer agent, BNY Mellon Shareowner Services, at 866-737-9896.Once AllianceBernstein and AXA Equitable approve the transfer request, AllianceBernstein will inform you of the approval and begin processing the transfer. You should not begin to prepare necessary documentation until you have contacted: David Lesser Legal and Compliance Department – Transfer Program AllianceBernstein L.P. 1345 Avenue of the Americas New York, NY 10105 Phone: (212) 969-1429 Exhibit 12.01 AllianceBernstein L.P.Consolidated Ratio Of Earnings To Fixed Charges Years Ended December 31, 2012 2011 2010 (in thousands) Fixed Charges: Interest Expense $3,429 $2,545 $2,078 Estimate of Interest Component In Rent Expense (1) - - - Total Fixed Charges $3,429 $2,545 $2,078 Earnings: Income (Loss) Before Income Taxes and Non-Controlling $200,046 $(208,469) $465,622 Interest in Earnings of Consolidated Entities Other 24,675 (6,029) 8,899 Fixed Charges 3,429 2,545 2,078 Total Earnings $228,150 $(211,953) $476,599 Consolidated Ratio Of Earnings To Fixed Charges 66.54 N/A(2) 229.35 (1)AllianceBernstein L.P. has not entered into financing leases during these periods.(2)The ratio of earnings to fixed charges was negative for the year ended December 31, 2011. Additional earnings of $214.5 million would be needed to havea one-to-one ratio of earnings to fixed charges. Exhibit 21.01 Subsidiaries ofAllianceBernstein l.p. Each of the entities listed below are wholly-owned subsidiaries of AllianceBernstein, unless a specific percentage ownership is indicated:AllianceBernstein International LLC(Delaware)AllianceBernstein Trust Company, LLC(New Hampshire)AllianceBernstein Corporation of Delaware(Delaware)AllianceBernstein Holdings (Cayman) Ltd.(Cayman Islands)Sanford C. Bernstein & Co., LLC(Delaware)AllianceBernstein Real Estate Investments LLC(Delaware)AllianceBernstein Investments, Inc.(Delaware)AllianceBernstein Investor Services, Inc.(Delaware)AllianceBernstein Global Derivatives Corporation(Delaware)AllianceBernstein Oceanic Corporation(Delaware)Alliance Corporate Finance Group Incorporated(Delaware)AllianceBernstein Japan Inc.(Delaware)Alliance Capital Management LLC(Delaware)  AllianceBernstein Canada, Inc.(Canada)AllianceBernstein (Mexico), S. de R.L. de C.V.(Mexico)AllianceBernstein Administradora de Carteiras (Brasil) Ltda.(Brazil)AllianceBernstein (Argentina) S.R.L.(Argentina)AllianceBernstein Holdings Limited(U.K.)AllianceBernstein Preferred Limited(U.K.)AllianceBernstein Limited(U.K.)AllianceBernstein Services Limited(U.K.)Sanford C. Bernstein Limited(U.K.)Sanford C. Bernstein (CREST Nominees) Limited(U.K.)Sanford C. Bernstein (Schweiz) GmbH(Switzerland)AllianceBernstein (Luxembourg) S.a.r.l(Luxembourg)AllianceBernstein (France) SAS(France)ACM Bernstein GmbH(Germany) AllianceBernstein Japan Ltd.(Japan)  AllianceBernstein Hong Kong Limited(Hong Kong)Sanford C. Bernstein (Hong Kong) Limited(Hong Kong)AllianceBernstein Taiwan Ltd.(Taiwan)AllianceBernstein Asset Management (Korea) Ltd.(Korea)AllianceBernstein Investment Research (Proprietary) Limited(South Africa; 80%-owned)AllianceBernstein Investment Management Australia Limited(Australia)AllianceBernstein Australia Limited(Australia)AllianceBernstein New Zealand Limited(New Zealand)AllianceBernstein (Singapore) Ltd.(Singapore)AllianceBernstein Investments Taiwan Limited(Taiwan)Alliance Capital (Mauritius) Private Limited(Mauritius)AllianceBernstein Investment Research and Management (India) Private Ltd.(India) Exhibit 23.01 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-170717, No. 333-160994, No. 333-153151, No. 333-142202, No. 333-142199, No. 333-127223, No. 333-51418, No. 333-49392, No. 333-47667, No. 333-47665, No. 333-47194, No. 033-65932, No. 033-65930, No. 033-52387 and No. 033-28534) of AllianceBernstein Holding L.P. of our report dated February 12, 2013 relating to the financial statements andthe effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 2013  CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-64886) and Form S-8 (No. 333-47192) ofAllianceBernstein L.P. of our report dated February 12, 2013 relating to the financial statements and the effectiveness of internal control over financialreporting, which appears in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated February 12, 2013 relatingto the financial statement schedule, which appears in this Form 10-K. /s/ PricewaterhouseCoopers LLPNew York, New YorkFebruary 12, 2013 Exhibit 31.01I, Peter S. Kraus, certify that:1. I have reviewed this annual report on Form 10-K of AllianceBernstein Holding L.P.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 12, 2013/s/ Peter S. Kraus Peter S. Kraus Chief Executive Officer AllianceBernstein Holding L.P. Exhibit 31.02I, John C. Weisenseel, certify that:1. I have reviewed this annual report on Form 10-K of AllianceBernstein Holding L.P.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant’s internal control over financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 12, 2013/s/ John C. Weisenseel John C. Weisenseel Chief Financial Officer AllianceBernstein Holding L.P. Exhibit 32.01CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of AllianceBernstein Holding L.P. (the “Company”) on Form 10-K for the period ending December 31, 2012 to be filedwith the Securities and Exchange Commission on or about February 12, 2013 (the “Report”), I, Peter S. Kraus, Chief Executive Officer of the Company,certify, for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: February 12, 2013/s/ Peter S. Kraus Peter S. Kraus Chief Executive Officer AllianceBernstein Holding L.P.Exhibit 32.02CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of AllianceBernstein Holding L.P. (the “Company”) on Form 10-K for the period ending December 31, 2012 to be filedwith the Securities and Exchange Commission on or about February 12, 2013 (the “Report”), I, John C. Weisenseel, Chief Financial Officer of the Company,certify, for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Exchange Act; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.Date: February 12, 2013/s/ John C. Weisenseel John C. Weisenseel Chief Financial Officer AllianceBernstein Holding L.P.

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