KKR Annual Report 2019 | Quarterlytics

Plain-text annual report

KKR & CO. INC. FORM 10-K (Annual Report) Filed 02/18/20 for the Period Ending 12/31/19 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 9 WEST 57TH STREET, SUITE 4200 NEW YORK, NY, 10019 212-750-8300 0001404912 KKR 6282 - Investment Advice Investment Management & Fund Operators Financials 12/31 http://www.edgar-online.com © Copyright 2020, EDGAR Online, a division of Donnelley Financial Solutions. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, a division of Donnelley Financial Solutions, Terms of Use. Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the fiscal year ended December 31, 2019 or☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the Transition period from to . Commission File Number 001-34820 KKR & CO. INC.(Exact name of Registrant as specified in its charter) Delaware 26-0426107(State or other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification Number)9 West 57th Street, Suite 4200New York, New York 10019Telephone: (212) 750-8300(Address, zip code, and telephone number, includingarea code, of registrant's principal executive office.)Securities registered pursuant to Section 12(b) of the Act:Title of each classTrading symbol(s)Name of each exchange on which registeredClass A Common StockKKRNew York Stock Exchange6.75% Series A Preferred StockKKR PR ANew York Stock Exchange6.50% Series B Preferred StockKKR PR BNew York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No oIndicate 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 ý Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days. Yes ý No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-Tduring the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growthcompany. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.Large accelerated filer☒ Accelerated filer ☐Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of Class A common stock of the registrant held by non-affiliates as of June 30, 2019, was approximately $13.1 billion. As of February 10, 2020,the registrant had 558,046,130 shares of Class A common stock, 1 share of Class B common stock and 290,381,345 shares of Class C common stock outstanding.DOCUMENTS INCORPORATED BY REFERENCENone Table of ContentsKKR & CO. INC. FORM 10-K For the Year Ended December 31, 2019 INDEX Page No. PART I Item 1.Business5 Item 1A.Risk Factors32 Item 1B.Unresolved Staff Comments88 Item 2.Properties88 Item 3.Legal Proceedings88 Item 4.Mine Safety Disclosures88 PART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities89 Item 6.Selected Financial Data92 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations94 Item 7A.Quantitative and Qualitative Disclosures About Market Risk138 Item 8.Financial Statements and Supplementary Data142 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure214 Item 9A.Controls and Procedures214 Item 9B.Other Information215 PART III Item 10.Directors, Executive Officers and Corporate Governance216 Item 11.Executive Compensation222 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters236 Item 13.Certain Relationships and Related Transactions, and Director Independence239 Item 14.Principal Accounting Fees and Services245 PART IV Item 15.Exhibits, Financial Statement Schedules246 Item 16.Form 10-K Summary253 SIGNATURES 2542Table of ContentsCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), andSection 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which reflect our current views with respect to, among other things, ouroperations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believe," "expect," "potential,""continue," "may," "should," "seek," "approximately," "predict," "intend," "will," "plan," "estimate," "anticipate," the negative version of these words, othercomparable words or other statements that do not relate strictly to historical or factual matters. Without limiting the foregoing, statements regarding the declarationand payment of dividends on common or preferred stock of KKR, the timing, manner and volume of repurchases of common stock pursuant to a repurchaseprogram, and the expected synergies and benefits from acquisitions, reorganizations or strategic partnerships, may constitute forward-looking statements. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results todiffer materially from those indicated in these statements or cause the anticipated benefits and synergies from transactions to not be realized. We believe thesefactors include those described under the section entitled "Risk Factors" in this report. These factors should be read in conjunction with the other cautionarystatements that are included in this report and in our other filings with the U.S. Securities and Exchange Commission (the "SEC"). We do not undertake anyobligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as requiredby law. In this report, references to "KKR," "we," "us" and "our" refer to (i) KKR & Co. Inc. and its subsidiaries following the conversion from a Delaware limitedpartnership named KKR & Co. L.P. into a Delaware corporation named KKR & Co. Inc. on July 1, 2018 (the "Conversion") and (ii) KKR & Co. L.P. and itssubsidiaries prior to the Conversion, in each case, except where the context requires otherwise. KKR & Co. L.P. became listed on the New York Stock Exchange("NYSE") on July 15, 2010 under the symbol "KKR." On January 1, 2020, KKR completed an internal reorganization (the "Reorganization"), which wasundertaken to, among other purposes, simplify KKR's internal structure following the Conversion. In the Reorganization, (i) KKR Management Holdings L.P. andKKR International Holdings L.P., which were former intermediate holdings companies for KKR's business, were combined with another intermediate holdingcompany, KKR Fund Holdings L.P., which changed its name to KKR Group Partnership L.P. ("KKR Group Partnership") and became the sole intermediateholding company for KKR's business, (ii) the issuers of each series of KKR’s outstanding senior notes were contributed to KKR Group Partnership and theguarantees by KKR International Holdings L.P. and KKR Management Holdings L.P. under the senior notes were automatically and unconditionally released anddischarged pursuant to the terms of the indentures governing such senior notes, with KKR Group Partnership remaining as a guarantor and (iii) the ownershipinterests of certain operating subsidiaries of KKR Group Partnership were reorganized. In connection with the 6.75% Series A Preferred Stock ("Series A PreferredStock") and 6.50% Series B Preferred Stock ("Series B Preferred Stock") of KKR & Co. Inc., KKR Group Partnership has series of preferred units issued andoutstanding with economic terms designed to mirror those of the Series A Preferred Stock and Series B Preferred Stock, respectively.References to our Class A common stock, Series A Preferred Stock or Series B Preferred Stock for periods prior to the Conversion mean the common units,Series A preferred units and Series B preferred units of KKR & Co. L.P., respectively. References to "KKR Group Partnerships" for periods prior to theReorganization mean KKR Fund Holdings L.P., KKR Management Holdings L.P. and KKR International Holdings L.P., collectively, and references to "KKRGroup Partnership" for periods following the Reorganization mean KKR Group Partnership L.P. References to a "KKR Group Partnership Unit" mean (i) one ClassA partner interest in each of KKR Fund Holdings L.P., KKR Management Holdings L.P. and KKR International Holdings L.P., collectively, for periods prior to theReorganization and (ii) one Class A partner interest in KKR Group Partnership for periods following the Reorganization. References to the "Class B Stockholder"are to KKR Management LLP, the holder of the sole share of our Class B common stock, which converted from a limited liability company named KKRManagement LLC to a limited liability partnership in the Reorganization.Contemporaneously with the Reorganization, KKR acquired KKR Capstone Americas LLC and its affiliates ("KKR Capstone") on January 1, 2020.References to "non-employee operating consultants" for periods prior to the acquisition include employees of KKR Capstone, who were not employees of KKRduring such periods. Prior to the acquisition, KKR Capstone was owned and controlled by its senior management and was not a subsidiary or affiliate of KKR.Unless otherwise indicated, references to equity interests in KKR's business, or to percentage interests in KKR's business, reflect the aggregate equity interestsin KKR Group Partnership and are net of amounts that have been allocated to our3Table of Contentsprincipals and other employees and non-employee operating consultants in respect of the carried interest from KKR's business as part of our "carry pool" andcertain minority interests. References to "principals" are to our senior employees who hold interests in KKR's business through KKR Holdings L.P. ("KKRHoldings") or another KKR entity, and references to our "senior principals" are to our senior employees who hold interests in the Class B Stockholder.In this report, the term "GAAP" refers to accounting principles generally accepted in the United States of America.We disclose certain financial measures in this report that are calculated and presented using methodologies other than in accordance with GAAP, includingafter-tax distributable earnings, fee related earnings ("FRE") and book value. We believe that providing these performance measures on a supplemental basis to ourGAAP results is helpful to stockholders in assessing the overall performance of KKR's businesses. These non-GAAP financial measures should not be consideredas a substitute for, or superior to, similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measuresmay differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investmentmanagers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance withGAAP, where applicable, are included under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Reconciliations to GAAPMeasures." This report also uses the terms assets under management ("AUM"), fee paying assets under management ("FPAUM"), capital invested and syndicatedcapital. You should note that our calculations of these and other operating metrics may differ from the calculations of other investment managers and, as a result,may not be comparable to similar metrics presented by other investment managers. These non-GAAP and operating metrics are defined in the section"Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Non-GAAP and Other Operating and Performance Measures."References to our "funds" or our "vehicles" refer to investment funds, vehicles and accounts advised, sponsored or managed by one or more subsidiaries ofKKR, including collateralized loan obligations ("CLOs") and commercial real estate mortgage-backed securities ("CMBS") vehicles, unless the context requiresotherwise. They do not include investment funds, vehicles or accounts of any hedge fund or other manager with which we have formed a strategic partnershipwhere we have acquired an ownership interest.Unless otherwise indicated, references in this report to our fully exchanged and diluted Class A common stock outstanding, or to our Class A common stockoutstanding on a fully exchanged and diluted basis, reflect (i) actual shares of Class A common stock outstanding, (ii) shares of Class A common stock into whichKKR Group Partnership Units held by KKR Holdings are exchangeable pursuant to the terms of the exchange agreement described in this report, (iii) shares ofClass A common stock issuable in respect of exchangeable equity securities issued in connection with the acquisition of Avoca Capital ("Avoca"), all of whichhave been exchanged as of December 31, 2018, and (iv) Class A common stock issuable pursuant to any equity awards actually granted from the Amended andRestated KKR & Co. Inc. 2010 Equity Incentive Plan (the "2010 Equity Incentive Plan") or the KKR & Co. Inc. 2019 Equity Incentive Plan (the "2019 EquityIncentive Plan" and, together with the 2010 Equity Incentive Plan, our "Equity Incentive Plans"). Our fully exchanged and diluted Class A common stockoutstanding does not include shares of Class A common stock available for issuance pursuant to the Equity Incentive Plans for which equity awards have not yetbeen granted. The use of any defined term in this report to mean more than one entities, persons, securities or other items collectively is solely for convenience of referenceand in no way implies that such entities, persons, securities or other items are one indistinguishable group. For example, notwithstanding the use of the definedterms "KKR," "we" and "our" in this report to refer to KKR & Co. Inc. and its subsidiaries, each subsidiary of KKR & Co. Inc. is a standalone legal entity that isseparate and distinct from KKR & Co. Inc. and any of its other subsidiaries.4Table of ContentsPART IITEM 1. BUSINESSOverview We are a leading global investment firm that manages multiple alternative asset classes including private equity, energy, infrastructure, real estate and credit,with strategic partners that manage hedge funds. We aim to generate attractive investment returns for our fund investors by following a patient and disciplinedinvestment approach, employing world-class people, and driving growth and value creation with our portfolio companies. We invest our own capital alongside thecapital we manage for fund investors and provide financing solutions and investment opportunities through our capital markets business.Our business offers a broad range of investment management services to our fund investors and provides capital markets services to our firm, our portfoliocompanies and third parties. Throughout our history, we have consistently been a leader in the private equity industry, having completed more than 360 privateequity investments in portfolio companies with a total transaction value in excess of $630 billion as of December 31, 2019. We have grown our firm by expandingour geographical presence and building businesses in areas such as leveraged credit, alternative credit, capital markets, infrastructure, energy, real estate, growthequity and core investments. Our balance sheet has provided a significant source of capital in the growth and expansion of our business, and has allowed us tofurther align our interests with those of our fund investors. Building on these efforts and leveraging our industry expertise and intellectual capital have allowed usto capitalize on a broader range of the opportunities we source. Additionally, we have increased our focus on meeting the needs of our existing fund investors andin developing relationships with new investors in our funds.We seek to work proactively and collaboratively as one-firm across business lines, departments, and geographies, as appropriate, to achieve what we believeare the best results for our funds and the firm. Through our offices around the world, we have a pre-eminent global integrated platform for sourcing transactions,raising capital and carrying out capital markets activities. Our growth has been driven by value that we have created through our operationally focused investmentapproach, the expansion of our existing businesses, our entry into new lines of business, innovation in the products that we offer investors in our funds, anincreased focus on providing tailored solutions to our clients and the integration of capital markets distribution activities.As a global investment firm, we earn management, monitoring, transaction and incentive fees and carried interest for providing investment management,monitoring and other services to our funds, vehicles, CLOs, managed accounts and portfolio companies, and we generate transaction-specific income from capitalmarkets transactions. We earn additional investment income by investing our own capital alongside that of our fund investors, from other assets on our balancesheet and from the carried interest we receive from our funds and certain of our other investment vehicles. A carried interest entitles the sponsor of a fund to aspecified percentage of investment gains that are generated on third-party capital that is invested.Our investment teams have deep industry knowledge and are supported by a substantial and diversified capital base; an integrated global investment platform;the expertise of operating professionals, senior advisors and other advisors; and a worldwide network of business relationships that provide a significant source ofinvestment opportunities, specialized knowledge during due diligence and substantial resources for creating and realizing value for stakeholders. These teamsinvest capital, a substantial portion of which is of a long duration and not subject to redemption. As of December 31, 2019, approximately 77% of our FPAUM arenot subject to redemption for at least 8 years from inception, providing us with significant flexibility to grow investments and select exit opportunities. We believethat these aspects of our business will help us continue to expand and grow our business and deliver strong investment performance in a variety of economic andfinancial conditions.Our FirmWith offices around the world, we have established ourselves as a leading global investment firm. We have multilingual and multicultural investment teamswith local market knowledge and significant business, investment and operational experience in the countries in which we invest. We believe that our globalcapabilities and "one-firm" philosophy have helped us to raise capital, capture a greater number of investment opportunities, and assist our portfolio companies intheir increasing reliance on global markets and sourcing, while enabling us to diversify our operations.Though our operations span multiple continents and asset classes, our investment professionals are supported by an integrated infrastructure and operate undera common set of principles and business practices that are monitored by a variety of committees. The firm operates with a single culture that rewards investmentdiscipline, creativity, determination and patience and emphasizes the sharing of information, resources, expertise and best practices across offices and asset classes.When5Table of Contentsappropriate, we staff transactions across multiple offices and businesses in order to take advantage of the industry-specific expertise of our investmentprofessionals, and we hold regular meetings in which investment professionals throughout our offices share their knowledge and experiences. We believe that theability to draw on the local cultural fluency of our investment professionals while maintaining a centralized and integrated global infrastructure distinguishes usfrom other investment firms and has been a substantial contributing factor to our ability to raise funds, invest internationally and expand our businesses.Since our inception, one of our fundamental philosophies has been to align the interests of the firm and our principals with the interests of our fund investors,portfolio companies and other stakeholders. We achieve this by putting our own capital behind our ideas. As of December 31, 2019, we and our employees andother personnel have approximately $18.6 billion invested in or committed to our own funds and portfolio companies, including $10.6 billion funded from ourbalance sheet, $5.2 billion of additional commitments from our balance sheet to investment funds, $2.0 billion funded from personal investments and $0.8 billionof additional commitments from personal investments.Our BusinessOur Business LinesWe operate our business in four business lines: (1) Private Markets, (2) Public Markets, (3) Capital Markets, and (4) Principal Activities. Information aboutour business lines below should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and ourconsolidated financial statements included elsewhere in this report.Private Markets Through our Private Markets business line, we manage and sponsor a group of private equity funds that invest capital for long-term appreciation, eitherthrough controlling ownership of a company or strategic minority positions. In addition to our traditional private equity funds, we sponsor investment funds thatinvest in growth equity and core investments. We also manage and sponsor investment funds that invest capital in real assets, such as infrastructure, energy and realestate. Our Private Markets business line includes separately managed accounts that invest in multiple strategies, which may include our credit strategies as well asour private equity and real assets strategies. These funds and accounts are managed by Kohlberg Kravis Roberts & Co. L.P., an SEC-registered investment adviser.As of December 31, 2019, our Private Markets business line had $119.3 billion of AUM, consisting of $78.9 billion in private equity (including growth equity andcore investments), $27.7 billion in real assets (including infrastructure, energy and real estate) and $12.7 billion in other related strategies.6Table of ContentsPrivate MarketsAssets Under Management (1) ($ in billions) (1)For the years 2006 through 2008, AUM are presented pro forma for the acquisition of the assets and liabilities of KKR & Co. (Guernsey) L.P. (formerly known as KKR PrivateEquity Investors, L.P.) ("KPE") on October 1, 2009 (the "KPE Transaction"), and therefore exclude the net asset value of KPE and its former commitments to our investment funds. In2015, our definition of AUM was amended to include capital commitments for which we are eligible to receive fees or carried interest upon deployment of capital and our pro rataportion of the AUM managed by strategic partners in which we hold an ownership interest. AUM for all prior periods have been adjusted to include such changes. 7Table of ContentsThe table below presents information as of December 31, 2019, relating to our current private equity, growth equity, core investment and real asset funds andother investment vehicles in our Private Markets business line for which we have the ability to earn carried interest. This data does not reflect acquisitions ordisposals of investments, changes in investment values, or distributions occurring after December 31, 2019. Investment Period (1)Amount ($ in millions) StartDateEndDateCommitment (2)UncalledCommitmentsPercentageCommittedby GeneralPartnerInvestedRealizedRemainingCost (3)RemainingFair ValueGrossAccruedCarriedInterestPrivate Equity and Growth Equity Funds Americas Fund XII1/20171/2023$13,500.0$7,061.95.8%$6,461.8$89.0$6,458.0$7,476.4$99.4North America Fund XI9/20121/20178,718.4573.12.9%9,579.610,334.25,632.89,782.4779.12006 Fund (4)9/20069/201217,642.2247.42.1%17,304.530,478.73,528.76,491.9583.0Millennium Fund (4)12/200212/20086,000.0—2.5%6,000.014,123.1—6.11.3European Fund V3/20197/20256,277.76,277.71.8%—————European Fund IV12/20143/20193,507.2239.95.7%3,372.91,968.62,522.54,175.9320.4European Fund III (4)3/20083/20145,507.1147.35.2%5,359.810,447.8419.5416.83.3European Fund II (4)11/200510/20085,750.8—2.1%5,750.88,507.4—34.3(0.2)Asian Fund III4/20174/20239,000.05,011.85.6%4,208.8486.44,166.35,677.7270.6Asian Fund II4/20134/20175,825.0342.91.3%6,495.23,907.44,413.16,499.1430.7Asian Fund (4)7/20074/20133,983.3—2.5%3,945.98,535.4173.552.6(22.4)China Growth Fund (4)11/201011/20161,010.0—1.0%1,010.0805.5524.7461.8(13.6)Next Generation Technology Growth Fund II12/201912/20252,033.32,033.37.4%—————Next Generation Technology Growth Fund3/201612/2019658.933.822.5%630.645.9613.51,060.146.4Health Care Strategic Growth Fund12/201612/20211,331.01,047.911.3%360.482.4289.3560.731.5Global Impact Fund2/20192/20251,129.31,129.38.9%—————Private Equity and Growth Equity Funds 91,874.224,146.3 70,480.389,811.828,741.942,695.82,529.5 Co-Investment Vehicles and OtherVariousVarious9,157.32,853.6Various6,556.84,802.54,434.86,062.0477.3 Total Private Equity and Growth EquityFunds 101,031.526,999.9 77,037.194,614.333,176.748,757.83,006.8 Core Investment VehiclesVariousVarious9,500.05,010.336.8%4,489.7—4,489.76,196.8101.0 Real Assets Energy Income and Growth Fund II6/20186/2021994.2581.420.1%416.33.4413.1427.7—Energy Income and Growth Fund9/20136/20181,974.259.312.9%1,963.4769.11,300.51,205.2—Natural Resources Fund (4)VariousVarious887.40.9Various886.5123.2194.295.3—Global Energy OpportunitiesVariousVarious914.1242.6Various501.1122.9343.2279.8—Global Infrastructure Investors III6/20186/20247,140.65,088.73.8%2,081.429.52,049.12,081.9—Global Infrastructure Investors II10/20146/20183,039.6177.24.1%3,093.7593.42,744.53,562.597.3Global Infrastructure Investors9/201110/20141,040.225.44.8%1,047.61,316.2377.9867.554.8Asia Pacific Infrastructure Investors(5)(6)1,439.61,439.613.9%—————Real Estate Partners Americas II5/201712/20201,921.2964.57.8%1,068.6181.3945.21,202.935.1Real Estate Partners Americas5/20135/20171,229.1148.216.3%1,010.71,268.6266.3249.017.3Real Estate Partners Europe9/201512/2019706.7274.69.3%504.0124.8431.7544.624.4Real Estate Credit Opportunity Partners2/20174/20191,130.0122.24.4%1,007.8136.81,007.81,050.410.7Co-Investment Vehicles and OtherVariousVarious5,023.83,209.6Various1,814.2801.31,810.52,088.34.0 Real Assets 27,440.712,334.2 15,395.35,470.511,884.013,655.1243.6 Other Unallocated Commitments (7) 2,333.92,333.9Various————— Private Markets Total $140,306.1$46,678.3 $96,922.1$100,084.8$49,550.4$68,609.7$3,351.4 (1)The start date represents the date on which the general partner of the applicable fund commenced investment of the fund's capital or the date of the first closing. The end date represents the earlier of (i) the date on which the general partner of the applicablefund was or will be required by the fund's governing agreement to cease making new investments on behalf of the fund, unless extended by a vote of the fund investors and (ii) the date on which the last new investment was made.(2)The commitment represents the aggregate capital commitments to the fund, including capital commitments by third-party fund investors and the general partner. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreignexchange rate at the date of purchase for each investment and (ii) the exchange rate that prevailed on December 31, 2019, in the case of uncalled commitments.(3)The remaining cost represents the initial investment of the general partner and limited partners, reduced for returns of capital, with the limited partners' investment further reduced for any return of capital and realized gains from which the general partner didnot receive a carried interest.(4)The "Invested" and "Realized" columns do not include the amounts of any realized investments that restored the unused capital commitments of the fund investors, if any.(5)Upon first investment of the fund.(6)Six years from first investment date.(7)"Unallocated Commitments" represent unallocated commitments from our strategic investor partnerships.8Table of ContentsPerformanceWe take a long-term approach to Private Markets investing and measure the success of our investments over a period of years rather than months. Given theduration of these investments, the firm focuses on realized multiples of invested capital and internal rates of return ("IRRs") when deploying capital in thesetransactions. We have nearly doubled the value of capital that we have invested in our Private Markets investment funds, turning $107.8 billion of capital into$213.8 billion of value from our inception in 1976 to December 31, 2019.Amount Invested and Total Value forPrivate Markets Investment FundsAs of December 31, 2019From our inception in 1976 through December 31, 2019, our investment funds with at least 24 months of investment activity generated a cumulative gross IRRof 25.6%, compared to the 11.8% and 9.1% gross IRR achieved by the S&P 500 Index and MSCI World Index, respectively, over the same period, despite thecyclical and sometimes challenging environments in which we have operated. The S&P 500 Index and MSCI World Index are unmanaged indices and such returnsassume reinvestment of distributions and do not reflect any fees or expenses. Our past performance, however, may not be representative of performance in anyperiod other than the period discussed above and is not a guarantee of future results. For example, as of March 31, 2009, the date of the lowest aggregate valuationof our private equity funds during the 2008 and 2009 market downturn, the investments in certain of our private equity funds at the time were marked down to 67%of original cost. For additional information regarding impact of market conditions on the value and performance of our investments, see "Risk Factors—RisksRelated to Our Business—Difficult market and economic conditions can adversely affect our business in many ways, including by reducing the value orperformance of the investments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our netincome and cash flow and adversely affect our financial prospects and condition" and "Risk Factors—Risks Related to the Assets We Manage—The historicalreturns attributable to our funds, including those presented in this report, should not be considered as indicative of the future results of our funds or our balancesheet investments, of our future results or the performance of our common stock."The tables below present information as of December 31, 2019, relating to the historical performance of certain of our Private Markets investment vehiclessince inception, which we believe illustrates the benefits of our investment approach. This data does not reflect additional capital raised since December 31, 2019,or acquisitions or disposals of investments, changes in investment values, or distributions occurring after that date. However, the information presented below isnot intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is noguarantee of future results.9Table of Contents Amount Fair Value of Investments Private Markets Investment Funds CommitmentInvested Realized (4)Unrealized Total Value GrossIRR (5)NetIRR (5) GrossMultiple ofInvestedCapital (5) ($ in millions) Total Investments Legacy Funds (1) 1976 Fund $31.4$31.4 $537.2$— $537.2 39.5 %35.5 % 17.11980 Fund 356.8356.8 1,827.8— 1,827.8 29.0 %25.8 % 5.11982 Fund 327.6327.6 1,290.7— 1,290.7 48.1 %39.2 % 3.91984 Fund 1,000.01,000.0 5,963.5— 5,963.5 34.5 %28.9 % 6.01986 Fund 671.8671.8 9,080.7— 9,080.7 34.4 %28.9 % 13.51987 Fund 6,129.66,129.6 14,949.2— 14,949.2 12.1 %8.9 % 2.41993 Fund 1,945.71,945.7 4,143.3— 4,143.3 23.6 %16.8 % 2.11996 Fund 6,011.66,011.6 12,476.9— 12,476.9 18.0 %13.3 % 2.1Subtotal - Legacy Funds 16,474.516,474.5 50,269.3— 50,269.3 26.1 %19.9 % 3.1Included Funds European Fund (1999) (2) 3,085.43,085.4 8,757.7— 8,757.7 26.9 %20.2 % 2.8Millennium Fund (2002) 6,000.06,000.0 14,123.16.1 14,129.2 22.0 %16.1 % 2.4European Fund II (2005) (2) 5,750.85,750.8 8,507.434.3 8,541.7 6.1 %4.5 % 1.52006 Fund (2006) 17,642.217,304.5 30,478.76,491.9 36,970.6 12.1 %9.5 % 2.1Asian Fund (2007) 3,983.33,945.9 8,535.452.6 8,588.0 18.8 %13.5 % 2.2European Fund III (2008) (2) 5,507.15,359.8 10,447.8416.8 10,864.6 16.7 %11.6 % 2.0E2 Investors (Annex Fund) (2009) (2) 195.8195.8 199.6— 199.6 0.6 %0.5 % 1.0China Growth Fund (2010) 1,010.01,010.0 805.5461.8 1,267.3 6.5 %2.2 % 1.3Natural Resources Fund (2010) 887.4886.5 123.295.3 218.5 (26.4)%(28.4)% 0.2Global Infrastructure Investors (2011) (2) 1,040.21,047.6 1,316.2867.5 2,183.7 17.8 %15.8 % 2.1North America Fund XI (2012) 8,718.49,579.6 10,334.29,782.4 20,116.6 23.9 %19.1 % 2.1Asian Fund II (2013) 5,825.06,495.2 3,907.46,499.1 10,406.5 16.9 %12.5 % 1.6Real Estate Partners Americas (2013) 1,229.11,010.7 1,268.6249.0 1,517.6 18.5 %13.6 % 1.5Energy Income and Growth Fund (2013) 1,974.21,963.4 769.11,205.2 1,974.3 0.2 %(2.4)% 1.0Global Infrastructure Investors II (2014) (2) 3,039.63,093.7 593.43,562.5 4,155.9 13.3 %11.0 % 1.3European Fund IV (2015) (2) 3,507.23,372.9 1,968.64,175.9 6,144.5 28.8 %22.4 % 1.8Real Estate Partners Europe (2015) (2) 706.7504.0 124.8544.6 669.4 17.5 %10.9 % 1.3Next Generation Technology Growth Fund (2016) 658.9630.6 45.91,060.1 1,106.0 37.0 %29.8 % 1.8Health Care Strategic Growth Fund (2016) 1,331.0360.4 82.4560.7 643.1 87.8 %48.0 % 1.8Americas Fund XII (2017) 13,500.06,461.8 89.07,476.4 7,565.4 14.0 %8.1 % 1.2Real Estate Credit Opportunity Partners (2017) 1,130.01,007.8 136.81,050.4 1,187.2 11.3 %9.0 % 1.2Core Investment Vehicles (2017) 9,500.04,489.7 —6,196.8 6,196.8 22.9 %21.4 % 1.4Asian Fund III (2017) 9,000.04,208.8 486.45,677.7 6,164.1 48.2 %34.1 % 1.5Real Estate Partners Americas II (2017) 1,921.21,068.6 181.31,202.9 1,384.2 34.9 %27.0 % 1.3Global Infrastructure Investors III (2018) (2) (3) 7,140.62,081.4 29.52,081.9 2,111.4 —— —European Fund V (2019) (2) (3) 6,277.7— —— — —— —Energy Income and Growth Fund II (2019) (3) 994.2416.3 3.4427.7 431.1 —— —Next Generation Technology Growth Fund II (2019) (3) 2,033.3— —— — —— —Global Impact Fund (2019) (3) 1,129.3— —— — —— —Asia Pacific Infrastructure Investors (2019) (3) 1,439.6— —— — —— —Subtotal - Included Funds 126,158.291,331.2 103,315.460,179.6 163,495.0 16.0 %12.0 % 1.8 All Funds $142,632.7$107,805.7 $153,584.7$60,179.6 $213,764.3 25.6 %18.8 % 2.0(1)These funds were not contributed to KKR as part of the KPE Transaction.(2)Commitment amounts have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate prevailing on December 31, 2019, in the case of unfundedcommitments. The following table presents information regarding investment funds with euro-denominated commitments.10Table of ContentsPrivate Markets Investment FundsCommitment (€ in millions) European Fund €196.5European Fund II €2,597.5European Fund III €2,882.8E2 Investors (Annex Fund) €55.5Global Infrastructure Investors €30.0Global Infrastructure Investors II €243.8European Fund IV €1,626.1Real Estate Partners Europe €276.6Global Infrastructure Investors III €987.0European Fund V €2,144.2(3)The gross IRR, net IRR and gross multiple of invested capital are calculated for our investment funds that made their first investment at least 24 months prior to December 31, 2019. None of the Global Infrastructure Investors III,European Fund V, Energy Income and Growth Fund II, Next Generation Technology Growth Fund II, Global Impact Fund or Asia Pacific Infrastructure Investors has invested for at least 24 months as of December 31, 2019. Wetherefore have not calculated gross IRRs, net IRRs and gross multiples of invested capital with respect to those funds.(4)An investment is considered realized when it has been disposed of or has otherwise generated disposition proceeds or current income that has been distributed by the relevant fund. In periods prior to the three months endedSeptember 30, 2015, realized proceeds excluded current income such as dividends and interest.(5)IRRs measure the aggregate annual compounded returns generated by a fund's investments over a holding period. Net IRRs are calculated after giving effect to the allocation of realized and unrealized carried interest and thepayment of any applicable management fees and organizational expenses. Gross IRRs are calculated before giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable managementfees and organizational expenses.The gross multiples of invested capital measure the aggregate value generated by a fund's investments in absolute terms. Each multiple of invested capital is calculated by adding together the total realized and unrealized values of afund's investments and dividing by the total amount of capital invested by the fund. Such amounts do not give effect to the allocation of realized and unrealized carried interest or the payment of any applicable management fees ororganizational expenses.KKR's Private Markets funds may utilize third-party financing facilities to provide liquidity to such funds. The above net and gross IRRs are calculated from the time capital contributions are due from fund investors to the timefund investors receive a related distribution from the fund, and the use of such financing facilities generally decreases the amount of time that would otherwise be used to calculate IRRs, which tends to increase IRRs when fairvalue grows over time and decrease IRRs when fair value decreases over time. KKR's Private Markets funds also generally provide in certain circumstances, which vary depending on the relevant fund documents, for a portion ofcapital returned to investors to be restored to unused commitments as recycled capital. For KKR's Private Markets funds that have a preferred return, we take into account recycled capital in the calculation of IRRs and multiples ofinvested capital because the calculation of the preferred return includes the effect of recycled capital. For KKR's Private Markets funds that do not have a preferred return, we do not take recycled capital into account in thecalculation of IRRs and multiples of invested capital. The inclusion of recycled capital generally causes invested and realized amounts to be higher and IRRs and multiples of invested capital to be lower than had recycled capitalnot been included. The inclusion of recycled capital would reduce the composite net IRR of all Included Funds by 0.1% and the composite net IRR of all Legacy Funds by 0.5% and would reduce the composite multiple of investedcapital of Included Funds by less than 0.2 and the composite multiple of invested capital of Legacy Funds by 0.4.For more information, see "Risk Factors—Risks Related to the Assets We Manage—The historical returns attributable to our funds, including those presentedin this report, should not be considered as indicative of the future results of our funds or our balance sheet investments, of our future results or the performance ofour common stock."Private EquityWe are a world leader in private equity, having raised 26 private equity funds (including growth equity), as indicated in the table above, with approximately$111.6 billion of capital commitments through December 31, 2019. We invest in industry-leading franchises and attract world-class management teams. Ourinvestment approach leverages our capital base, sourcing advantage, global network and industry knowledge. It also leverages a sizable team of operatingprofessionals, as well as senior advisors and other advisors, many of whom are former chief executive officers and leaders of the business community.Our traditional private equity investment strategy typically seeks to engage primarily in management buyouts, build-ups, or other investments with a view toacquire a controlling or significant influence. Building upon our four decades of private equity investing experience, we have sourced a number of smaller growthequity investment opportunities, and we expanded our business by launching dedicated growth equity funds in 2016 and 2019 that pursue growth equity investmentopportunities in the technology, media and telecommunications ("TMT") sector, primarily in the United States, Canada, Europe and Israel. In 2016, we launchedanother dedicated growth equity fund to pursue growth equity investment opportunities in the health care sector, primarily in the United States and Europe. As ofDecember 31, 2019, we have received $4.0 billion of capital commitments to our TMT and health care growth equity strategies.We further expanded on our private equity business by making our first core investment in 2017. Through our core investments strategy, we target investmentsthat have a longer holding period and a lower risk profile, which may not be suitable for our traditional private equity funds. See "—Core Investments Strategy."11Table of ContentsPortfolioThe following chart presents information concerning the remaining value of traditional private equity funds by geography through December 31, 2019. Webelieve that this data illustrates the benefits of our business approach and our ability to source and invest in deals in multiple geographies.As of December 31, 2019, our traditional private equity portfolio consisted of 106 companies with approximately $165 billion of annual revenues. Thesecompanies are headquartered in 19 countries and operate in 20 general industries, which take advantage of our broad and deep industry and operating expertise.Many of these companies are leading franchises with global operations, strong management teams and attractive growth prospects, which we believe will providebenefits through a broad range of business conditions.Investment ApproachOur approach to making private equity investments focuses on achieving multiples of invested capital and attractive risk-adjusted IRRs by selecting high-quality investments that may be made at attractive prices, applying rigorous standards of due diligence when making investment decisions, implementing strategicand operational changes that drive growth and value creation in acquired businesses, carefully monitoring investments, and making informed decisions whendeveloping investment exit strategies.We believe that we have achieved a leading position in the private equity industry by applying a disciplined investment approach and by building strongpartnerships with highly motivated management teams who put their own capital at risk. When making private equity investments, we seek out strong businessfranchises, attractive growth prospects, leading market positions and the ability to generate attractive returns. In our private equity funds, we do not effecttransactions that are "hostile," meaning a target company's board of directors makes an unfavorable recommendation with respect to the transaction or publiclyopposes the consummation of the transaction.Sourcing and Selecting InvestmentsWe have access to significant opportunities for making private equity investments as a result of our sizable capital base, global platform, and relationships withleading executives from major companies, commercial and investment banks, and other investment and advisory institutions. Members of our global networkcontact us with new investment opportunities, including a substantial number of exclusive investment opportunities and opportunities that are made available toonly a limited number of12Table of Contentsother firms. We also proactively pursue business development strategies that are designed to generate deals internally based on the depth of our industry knowledgeand our reputation as a leading financial sponsor.Due Diligence and the Investment DecisionWhen an investment team determines that an investment proposal is worth consideration, the proposal is formally presented to the applicable regionalinvestment committee and the due diligence process commences, if appropriate. The objective of the due diligence process is to identify attractive investmentopportunities based on the facts and circumstances surrounding an investment and to prepare a framework that may be used from the date of an acquisition to driveoperational improvement and value creation. When conducting due diligence, investment teams evaluate a number of important business, financial, tax,accounting, environmental, social, governance, legal and regulatory issues in order to determine whether an investment is suitable. While the due diligence processdiffers depending on the type of investment we make, generally, in connection with the private equity due diligence process, investment professionals spendsignificant amounts of time meeting with a company's management and operating personnel, visiting plants and facilities, and where appropriate, speaking withother stakeholders interested in and impacted by the investment in order to understand the opportunities and risks associated with the proposed investment. Ourinvestment professionals may also use the services of outside accountants, consultants, lawyers, investment banks and industry experts as appropriate to assist themin this process. Investment committees or portfolio managers, as applicable, monitor our due diligence practices and approve an investment before it is made.Building Successful and Competitive BusinessesPortfolio management committees are responsible for working with our investment professionals from the date on which a private equity investment is madeuntil the time it is exited in order to ensure that strategic and operational objectives are accomplished and that the performance of the investment is closelymonitored. When investing in a private equity portfolio company, we partner with management teams to execute on our investment thesis, and we rigorously trackperformance through regular monitoring of detailed operational and financial metrics as well as appropriate environmental, social and governance issues. We havedeveloped a global network of experienced managers and operating professionals who assist the private equity portfolio companies in making operationalimprovements and achieving growth. We augment these resources with operational guidance from operating professionals at KKR Capstone, senior advisors, otheradvisors and investment teams, and with "100-Day Plans" that focus the firm's efforts and drive our strategies. We seek to emphasize efficient capital management,top-line growth, R&D spending, geographical expansion, cost optimization and investment for the long-term.Realizing InvestmentsWe have developed substantial expertise for realizing private equity investments. From our inception through December 31, 2019, the firm has generatedapproximately $149.0 billion of cash proceeds from the sale of our private equity portfolio companies in initial public offerings and secondary offerings, dividends,and sales to strategic and financial buyers. When exiting private equity investments, our objective is to structure the exit in a manner that optimizes returns for fundinvestors and, in the case of publicly traded companies, minimizes the impact that the exit has on the trading price of the company's securities. We believe that ourability to successfully realize investments is attributable in part to the strength and discipline of our portfolio management committees and capital markets business,as well as the firm's longstanding relationships with corporate buyers and members of the investment banking and investing communities.Private Equity Fund StructuresThe private equity funds that we sponsor and manage have finite lives and investment periods. Each fund is organized as one or more partnerships, and eachpartnership is controlled by a general partner. Private equity fund investors are limited partners who agree to contribute a specified amount of capital to the fundfrom time to time for use in qualifying investments during the investment period, which generally lasts up to six years depending on how quickly capital isdeployed. The investment period for certain funds may be terminated upon supermajority vote (based on capital commitment) of the fund's limited partners or bythe fund's advisory committee. The term of our private equity funds generally last for 10 to 12 years and may last up to 15 years from the date of the fund's first orlast investment, subject to a limited number of extensions with the consent of the limited partners or the applicable advisory committee. Given the length of theinvestment periods and terms of our private equity funds and the limited conditions under which such periods can be terminated and commitments may bewithdrawn, the AUM of our private equity funds provide a long-term stable capital base.Each private equity fund's general partner is generally entitled to a carried interest that allocates to it 20% of the net profits realized by the limited partnersfrom the fund's investments. Our private equity funds since 2012 generally have a performance hurdle which requires that we return 7%, compounded annually, tolimited partners in the fund prior to receiving our 20% share of net profits realized by limited partners. Such performance hurdles are subject to a catch-upallocation to the general partner after the hurdle has been reached. Our earlier private equity funds do not include a performance hurdle. The timing of receipt of13Table of Contentscarried interest in respect of investments of our private equity funds is dictated by the terms of the partnership agreements that govern such funds, and is distributedto the general partner of a private equity fund only after all of the following are met: (i) a realization event has occurred (e.g. sale of a portfolio company, dividend,etc.); (ii) the vehicle has achieved positive overall investment returns since its inception, in excess of performance hurdles where applicable, and is accruing carriedinterest; and (iii) with respect to investments with a fair value below cost, cost has been returned to fund investors in an amount sufficient to reduce remaining costto the investments' fair value. For a fund that has a fair value above cost, overall, and is otherwise accruing carried interest, but has one or more investments wherefair value is below cost, the shortfall between cost and fair value for such investments is referred to as a "netting hole." See "Management's Discussion andAnalysis of Financial Condition and Results of Operations—Liquidity—Sources of Liquidity" for a discussion of netting holes. Net realized profit or loss is notnetted between or among funds. In addition, the agreements governing our private equity funds generally include a "clawback" provision that, if triggered, maygive rise to a contingent obligation that may require the general partner to return or contribute amounts to the fund for distribution to fund investors at the end ofthe life of the fund. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Recognition ofCarried Interest in the Statement of Operations" and "Risk Factors—The 'clawback' provision in our governing agreements may give rise to a contingent obligationthat may require us to return or contribute amounts to our funds and fund investors."We enter into management agreements with our private equity funds pursuant to which we receive management fees in exchange for providing the funds withmanagement and other services. Gross management fees for our private equity funds generally range from 1% to 2% of committed capital during the fund'sinvestment period and are generally 0.75% to 1.25% of invested capital after the expiration of the fund's investment period with subsequent reductions over time,which causes the fees to be reduced as investments are liquidated. In addition, in connection with the expiration of the investment period, a private equity fund mayestablish a reserve on its fund investors' capital commitments on which no fee is paid unless such capital is invested. These management fees are paid by privateequity fund investors, who generally contribute capital to the fund in order to allow the fund to pay the fees to us. Our private equity funds generally require thatmanagement fees be returned to fund investors before a carried interest may be paid.We also enter into monitoring agreements with our portfolio companies pursuant to which we receive periodic monitoring fees in exchange for providing themwith management, consulting and other services, and we typically receive transaction fees for providing portfolio companies with financial, advisory and otherservices in connection with specific transactions. Monitoring agreements may provide for a termination payment following an initial public offering or change ofcontrol, if certain criteria are satisfied. In some cases, we may be entitled to other fees that are paid by an investment target upon closing a transaction or when apotential investment is not consummated. Since 2014, our private equity fund agreements typically require us to share 100% of any monitoring, transaction andother fees that are allocable to a fund (after reduction for expenses incurred allocable to a fund from unconsummated transactions) with fund investors.In addition, the agreements governing our private equity funds enable investors in those funds to reduce their capital commitments available for furtherinvestments, on an investor-by-investor basis, in the event one or more "key persons" (for example, investment professionals who are named as "key executives"for certain geographically or product focused funds) cease to be actively involved in the management of the fund. While these provisions do not allow investors inour funds to withdraw capital that has been invested or cause a fund to terminate, the occurrence of a "key person" event could cause disruption in our business,reduce the amount of capital that we have available for future investments, and make it more challenging to raise additional capital in the future.Because private equity fund investors typically are unwilling to invest their capital in a fund unless the fund's manager also invests its own capital in the fund'sinvestments, our private equity fund documents generally require the general partners of the funds to make minimum capital commitments to the funds. Theamounts of these commitments, which are negotiated by fund investors, generally range from 2% to 8% of a fund's total capital commitments at final closing, butmay be greater for certain funds (i) where we are pursuing newer strategies, (ii) where third party investor demand is limited, and (iii) where a larger commitmentis consistent with the asset allocation strategy our balance sheet is pursuing. When investments are made, the general partner contributes capital to the fund basedon its fund commitment percentage and acquires a capital interest in the investment that is not subject to a carried interest or management fees.14Table of ContentsReal AssetsEnergyOur energy platform aims to deliver current returns to fund investors through distributions generated by producing and selling oil and natural gas reserves andcapital appreciation. The goal is to provide fund investors with exposure to commodity prices and optionality associated with future drilling and production. Ourenergy platform targets real asset investment opportunities across the upstream and midstream segments of the oil and gas industry. We have acquired and operatedoil and natural gas properties in mature basins located primarily in the United States. In acquiring these properties, which are typically considered to be non-core bytheir sellers, we seek to generate value through optimizing production, reducing operating costs, and optimizing commercial and marketing arrangements. Inaddition, we have completed investments in oil and gas drilling development transactions with operating companies and have also acquired mineral and royaltyinterests. We work closely with external teams of technical and operational experts to assist in the selection, evaluation and operation of investments. We invest inthese energy strategies primarily through KKR's energy funds. As of December 31, 2019, we have received $3.9 billion of capital commitments to our energy fundsand $1.0 billion of capital commitments to this strategy through separately managed accounts.InfrastructureOur infrastructure platform seeks to achieve returns including current income through the acquisition and operational improvement of assets important to thefunctioning of the economy. We believe that the global infrastructure market provides an opportunity for the firm's private investment, operational improvementcapabilities and stakeholder engagement. Through this platform we have made investments in power and utilities, midstream, alternative energy, transportation,asset leasing, water and wastewater, and telecommunications infrastructure. As of December 31, 2019, we had received $12.7 billion of capital commitments to ourinfrastructure funds, and $1.9 billion of capital commitments to this strategy through separately managed accounts and co-investment vehicles.Real EstateOur real estate equity platform targets real estate investment opportunities globally, across the United States, Western Europe and Asia-Pacific. Our equityinvestments include direct investments in real property, debt, special situations transactions and businesses with significant real estate holdings that can benefitfrom KKR's involvement and operational expertise. We seek to partner with real estate owners, lenders, operators, and developers to provide flexible capital torespond to transaction specific needs, including the outright purchase or financing of existing assets or companies and the funding of future development oracquisition opportunities. Through this strategy, we have made real estate equity investments in residential and commercial assets. We have also established aninvestment platform with a strategic partner to invest in commercial real estate in the United States. As of December 31, 2019, we have received $5.5 billion ofcapital commitments through our real estate equity investment funds.Our real estate credit platform provides capital solutions for real estate transactions with a focus on commercial mortgage-backed securities, whole loans andsubordinated debt. As of December 31, 2019, we managed approximately $3.3 billion of assets in our real estate credit strategy, which include KKR Real EstateFinance Trust Inc. ("KREF"), a NYSE-listed real estate investment trust ("REIT"), and $2.0 billion of capital commitments through our real estate credit fundsfocused on the risk retention tranches of CMBS transactions.Real Asset Investment ProcessOur energy, infrastructure and real estate funds have a similar investment process as that described under "—Private Equity." Investment teams for a particularreal asset strategy formally present potential investments to the applicable strategy oriented investment committee or the portfolio manager, as applicable, whichmonitors our due diligence practices and approves an investment before it is made. Most of our real asset strategies also have a portfolio management committeethat works with our investment professionals from the date on which an investment is made until the time it is exited in order to ensure that strategic andoperational objectives are accomplished and that the performance of the investment is closely monitored. In addition to leveraging the resources of the firm, ourenergy, infrastructure and real estate investment teams typically partner with technical experts and operators to manage our real asset investments.15Table of ContentsReal Asset Fund StructuresOur energy, infrastructure and real estate funds generally have investment periods of up to 6 years and generally have a fund term of up to 13 years.Management fees for such funds generally range from 0.75% to 1.5% on committed capital, invested capital or net asset value during the investment period and oninvested capital or net asset value for investments thereafter, subject to certain adjustments. These funds generally have performance hurdles of 8% to 10% subjectto a catch-up allocation to the general partner after the hurdle has been reached. Thereafter the general partners of such funds generally share in 10% to 20% of netprofits realized by limited partners.Core Investments StrategyOur core investments strategy targets investments with a longer holding period and a lower risk profile than our traditional private equity or, in certain cases,our real asset investments. The holding periods in core investments are generally longer than 15 years. In 2017, we established core investment vehicles with $6.0billion of capital commitments from fund investors and $3.5 billion of capital commitments from KKR's balance sheet, through which we aim to make coreinvestments in private equity and real asset opportunities globally.Public Markets Through our Public Markets business line, we operate our combined credit and hedge funds platforms. Our credit business invests capital in (i) leveragedcredit strategies, including leveraged loans, high-yield bonds, opportunistic credit and revolving credit strategies, and (ii) alternative credit strategies, includingspecial situations and private credit strategies such as direct lending and private opportunistic credit (or mezzanine) investment strategies. The funds, CLOs,separately managed accounts, investment companies registered under the Investment Company Act of 1940 (the "Investment Company Act"), including businessdevelopment companies ("BDCs"), and alternative investment funds ("AIFs") in our leveraged credit and alternative credit strategies are managed by KKR CreditAdvisors (US) LLC, which is an SEC-registered investment adviser, KKR Credit Advisors (Ireland) Unlimited Company, which is regulated by the Central Bankof Ireland ("CBI"), and FS/KKR Advisor, LLC ("FS/KKR Advisor"), which is a strategic BDC partnership with Franklin Square Holdings, L.P. ("FSInvestments"). Our Public Markets business line also includes our hedge funds platform, which consists of strategic partnerships with third-party hedge fundmanagers in which KKR owns a minority stake (which we refer to as "hedge fund partnerships"). Our hedge fund partnerships offer a variety of investmentstrategies, including hedge fund-of-funds, equity hedge funds and credit hedge funds.We intend to continue to grow the Public Markets business line by leveraging our global investment platform, experienced investment professionals and theability to adapt our investment strategies to different market conditions to capitalize on investment opportunities that may arise at various levels of the capitalstructure and across market cycles.On April 9, 2018, we completed the transaction (the "FS Investments Transaction") to form FS/KKR Advisor to provide investment advisory services to twoBDCs previously advised and sub-advised by KKR Credit Advisors (US) LLC, and four BDCs previously advised by FS Investments. We own a 50% interest inFS/KKR Advisor. In December 2018, one of the BDCs previously advised by KKR Credit Advisors (US) LLC and one of the BDCs previously advised by FSInvestments merged to create FS KKR Capital Corp., a BDC listed on the NYSE and advised by FS/KKR Advisor. In December 2019, the other four non-tradedBDCs were merged to create FS KKR Capital Corp. II, which is advised by FS/KKR Advisor. As of December 31, 2019, our BDC platform had approximately$16.5 billion in combined AUM. We report all of the AUM of the BDCs in our AUM. 16Table of ContentsThe following chart presents the growth in the AUM of our Public Markets business line from the commencement of its operations in August 2004 throughDecember 31, 2019.Public MarketsAssets Under Management (1) (2) ($ in billions)(1)For years 2006 through 2008, AUM are presented pro forma for the KPE Transaction and, therefore, exclude the net asset value of KPE and its former commitments to our investmentfunds. AUM of acquired businesses and pro rata AUM of hedge fund partnerships in which KKR has made an investment are included in the years on and after the completion of therespective acquisitions or transactions, as applicable.(2)In 2015 our definition of AUM was amended to include (i) KKR's pro rata portion of AUM managed by third-party hedge fund managers in which KKR holds a minority stake and(ii) capital commitments for which we are eligible to receive fees or carried interest upon deployment of capital. AUM for all prior periods has been adjusted to include such changes.17Table of ContentsCreditPerformanceWe generally review our performance in our credit business by investment strategy.Our leveraged credit strategies principally invest through separately managed accounts, BDCs, CLOs and investment funds. In certain cases, these strategieshave meaningful track records and may be compared to widely-known indices. The following table presents information regarding larger leveraged credit strategiesmanaged by KKR from inception to December 31, 2019. However, the information presented below is not intended to be representative of any past or futureperformance for any particular period other than the period presented below. Past performance is no guarantee of any future result.Leveraged Credit Strategies: Inception-to-Date Annualized Gross Performance vs. Benchmark by Strategy($ in millions) Inception Date GrossReturns NetReturns Benchmark (1) BenchmarkGrossReturnsBank Loans Plus High Yield Jul 2008 7.70% 7.09% 65% S&P/LSTA Loan Index, 35% BoAML HY Master II Index (2) 6.13%Opportunistic Credit (3) May 2008 11.85% 9.93% 50% S&P/LSTA Loan Index, 50% BoAML HY Master II Index (3) 6.42%Bank Loans Apr 2011 5.24% 4.64% S&P/LSTA Loan Index (4) 4.30%High-Yield Apr 2011 7.12% 6.54% BoAML HY Master II Index (5) 6.40%Bank Loans Conservative Apr 2011 4.66% 4.07% S&P/LSTA BB-B Loan Index (6) 4.34%European Leveraged Loans (7) Sep 2009 4.92% 4.40% CS Inst West European Leveraged Loan Index (8) 4.41%High-Yield Conservative Apr 2011 6.51% 5.94% BoAML HY BB-B Constrained (9) 6.42%European Credit Opportunities (7) Sept 2007 5.54% 4.60% S&P European Leveraged Loans (All Loans) (10) 4.23%Revolving Credit (11) May 2015 N/A N/A N/A N/A (1)The benchmarks referred to herein include the S&P/LSTA Leveraged Loan Index (the "S&P/LSTA Loan Index"), S&P/LSTA U.S. B/BB Ratings Loan Index (the "S&P/LSTA BB-B LoanIndex"), the Bank of America Merrill Lynch High Yield Master II Index (the "BoAML HY Master II Index"), the BofA Merrill Lynch BB-B US High Yield Index (the "BoAML HY BB-BConstrained"), the Credit Suisse Institutional Western European Leveraged Loan Index (the "CS Inst West European Leveraged Loan Index"), and S&P European Leveraged Loans (AllLoans). The S&P/LSTA Loan Index is a daily tradable index for the U.S. loan market that seeks to mirror the market-weighted performance of the largest institutional loans that meetcertain criteria. The S&P/ LSTA BB-B Loan Index is comprised of loans in the S&P/LSTA Loan Index, whose rating is BB+, BB, BB-, B+, B or B-. The BoAML HY Master II Index is anindex for high-yield corporate bonds. It is designed to measure the broad high-yield market, including lower-rated securities. The BoAML HY BB-B Constrained is a subset of the BoAMLHY Master II Index including all securities rated BB1 through B3, inclusive. The CS Inst West European Leveraged Loan Index contains only institutional loan facilities priced above 90,excluding TL and TLa facilities and loans rated CC, C or are in default. The S&P European Leveraged Loan Index reflects the market-weighted performance of institutional leveraged loanportfolios investing in European credits. While the returns of our leveraged credit strategies reflect the reinvestment of income and dividends, none of the indices presented in the chartabove reflect such reinvestment, which has the effect of increasing the reported relative performance of these strategies as compared to the indices. Furthermore, these indices are notsubject to management fees, incentive allocations, or expenses.(2)Performance is based on a blended composite of Bank Loans Plus High Yield strategy accounts. The benchmark used for purposes of comparison for the Bank Loans Plus High Yieldstrategy is based on 65% S&P/LSTA Loan Index and 35% BoAML HY Master II Index.(3)The Opportunistic Credit strategy invests in high-yield securities and corporate loans with no preset allocation. The benchmark used for purposes of comparison for the OpportunisticCredit strategy presented herein is based on 50% S&P/LSTA Loan Index and 50% BoAML HY Master II Index. Funds within this strategy may utilize third-party financing facilities toenhance investment returns. In cases where financing facilities are used, the amounts drawn on the facility are deducted from the assets of the fund in the calculation of net asset value,which tends to increase returns when net asset value grows over time and decrease returns when net asset value decreases over time.(4)Performance is based on a composite of portfolios that primarily invest in leveraged loans. The benchmark used for purposes of comparison for the Bank Loans strategy is based on theS&P/LSTA Loan Index.(5)Performance is based on a composite of portfolios that primarily invest in high-yield securities. The benchmark used for purposes of comparison for the High Yield strategy is based on theBoAML HY Master II Index.(6)Performance is based on a composite of portfolios that primarily invest in leveraged loans rated B-/Baa3 or higher. The benchmark used for purposes of comparison for the Bank LoansConservative strategy is based on the S&P/LSTA BB-B Loan Index.(7)The returns presented are calculated based on local currency.(8)Performance is based on a composite of portfolios that primarily invest in higher quality leveraged loans. The benchmark used for purposes of comparison for the European LeveragedLoans strategy is based on the CS Inst West European Leveraged Loan Index.(9)Performance is based on a composite of portfolios that primarily invest in high-yield securities rated B or higher. The benchmark used for purposes of comparison for the High-YieldConservative strategy is based on the BoAML HY BB-B Constrained Index.(10)Performance is based on a composite of portfolios that primarily invest in European institutional leveraged loans. The benchmark used for purposes of comparison for the European CreditOpportunities strategy is based on the S&P European Leveraged Loans (All Loans) Index.(11)This strategy has not called any capital as of December 31, 2019. As a result, the gross and net return performance measures are not meaningful and are not included above.18Table of ContentsOur alternative credit strategies primarily invest in more illiquid instruments through private investment funds, BDCs and separately managed accounts. Thefollowing table presents information regarding our Public Markets alternative credit commingled funds where investors are subject to capital commitments frominception to December 31, 2019. Some of these funds have been investing for less than 24 months, and thus their performance is less meaningful and not includedbelow. In addition, the information presented below is not intended to be representative of any past or future performance for any particular period other than theperiod presented below. Past performance is no guarantee of any future result.Alternative Credit Strategies: Fund Performance Amount Fair Value of Investments Public Markets Investment Funds InceptionDate Commitment Invested (1) Realized (1) Unrealized Total Value GrossIRR (2) NetIRR (2) Multiple ofInvestedCapital (3) GrossAccruedCarriedInterest($ in Millions) Special Situations Fund II Dec 2014 $3,524.7 $2,655.3 $497.8 $2,448.6 $2,946.4 4.5% 2.4% 1.1 $—Special Situations Fund Dec 2012 2,274.3 2,273.0 1,527.3 1,049.5 2,576.8 3.2% 1.2% 1.1 —Mezzanine Partners Mar 2010 1,022.8 920.1 1,070.9 305.8 1,376.7 12.6% 8.2% 1.5 57.6Private Credit OpportunitiesPartners II Dec 2015 2,245.1 1,419.3 76.6 1,532.9 1,609.5 10.9% 8.0% 1.1 19.5Lending Partners III Apr 2017 1,497.8 657.0 81.9 703.8 785.7 19.8% 16.2% 1.2 9.8Lending Partners II Jun 2014 1,335.9 1,179.1 1,090.1 435.7 1,525.8 10.3% 8.2% 1.3 43.1Lending Partners Dec 2011 460.2 405.3 445.7 46.2 491.9 5.6% 4.0% 1.2 —Lending Partners Europe Mar 2015 847.6 604.9 178.6 499.4 678.0 7.3% 4.3% 1.1 —Other Alternative Credit Vehicles Various 10,738.3 4,813.7 3,180.6 3,391.3 6,571.9 N/A N/A N/A 124.8Unallocated Commitments (4) Various 285.6 — — — — N/A N/A N/A —All Funds $24,232.3 $14,927.7 $8,149.5 $10,413.2 $18,562.7 $254.8(1) Recycled capital is excluded from the amounts invested and realized. (2) These credit funds utilize third-party financing facilities to provide liquidity to such funds, and in such event IRRs are calculated from the time capital contributions are due from fundinvestors to the time fund investors receive a related distribution from the fund. The use of such financing facilities generally decreases the amount of invested capital that would otherwisebe used to calculate IRRs, which tends to increase IRRs when fair value grows over time and decrease IRRs when fair value decreases over time. IRRs measure the aggregate annualcompounded returns generated by a fund's investments over a holding period and are calculated taking into account recycled capital. Net IRRs presented are calculated after giving effect tothe allocation of realized and unrealized carried interest and the payment of any applicable management fees. Gross IRRs are calculated before giving effect to the allocation of carriedinterest and the payment of any applicable management fees.(3) The multiples of invested capital measure the aggregate value generated by a fund's investments in absolute terms. Each multiple of invested capital is calculated by adding together thetotal realized and unrealized values of a fund's investments and dividing by the total amount of capital invested by the investors. The use of financing facilities generally decreases theamount of invested capital that would otherwise be used to calculate multiples of invested capital, which tends to increase multiples when fair value grows over time and decrease multipleswhen fair value decreases over time. Such amounts do not give effect to the allocation of any realized and unrealized returns on a fund's investments to the fund's general partner pursuantto a carried interest or the payment of any applicable management fees and are calculated without taking into account recycled capital.(4)"Unallocated Commitments" represent unallocated commitments from our strategic investor partnerships.For additional information regarding impact of market conditions on the value and performance of our investments, see "Risk Factors—Risks Related to OurBusiness—Difficult market and economic conditions can adversely affect our business in many ways, including by reducing the value or performance of theinvestments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flowand adversely affect our financial prospects and condition" and "Risk Factors—Risks Related to the Assets We Manage—The historical returns attributable to ourfunds, including those presented in this report, should not be considered as indicative of the future results of our funds or our balance sheet investments, of ourfuture results or the performance of our common stock."Investment ApproachOur approach to making investments focuses on creating investment portfolios that seek to generate attractive risk-adjusted returns by selecting investmentsthat may be made at attractive prices, subjecting investments to regular monitoring and oversight, and, for more liquid investments, making buy and sell decisionsbased on price targets and relative value parameters. The firm employs both "top-down" and "bottom-up" analyses when making investments. Our top-downanalysis involves, as appropriate, a macro analysis of relative asset valuations, long-term industry trends, business cycles, regulatory trends, interest rateexpectations, credit fundamentals and technical factors to target specific industry sectors and asset classes in which to invest. From a bottom-up perspective, ourinvestment decision is predicated on an investment thesis that is developed using our proprietary resources and knowledge and due diligence.19Table of ContentsSourcing and Selecting InvestmentsWe source investment opportunities through a variety of channels, including internal deal generation strategies and the firm's global network of contacts atmajor companies, corporate executives, commercial and investment banks, financial intermediaries, other private equity sponsors and other investment andadvisory institutions. We are also provided with opportunities to invest, in certain strategies where appropriate, in the securities of KKR's private equity portfoliocompanies, though there are limitations across the platform on the availability and maximum size of such KKR-affiliated investments.Due Diligence and the Investment DecisionOnce a potential investment has been identified, our investment professionals screen the opportunity and make a preliminary determination concerningwhether we should proceed with further diligence. When evaluating the suitability of an investment for our funds, we typically employ a relative value frameworkand subject the investment to due diligence. This review considers many factors including, as appropriate, expected returns, capital structure, credit ratings,historical and projected financial data, the issuer's competitive position, the quality and track record of the issuer's management team, margin stability, and industryand company trends. Investment professionals use the services of outside advisors and industry experts as appropriate to assist them in the due diligence processand, when relevant and permitted, leverage the knowledge and experience of our Private Markets investment professionals. Strategy-specific investmentcommittees monitor our due diligence practices.Monitoring InvestmentsWe monitor our portfolios of investments using, as applicable, daily, quarterly and annual analyses. Daily analyses include morning market meetings, industryand company pricing runs, industry and company reports and discussions with the firm's Private Markets investment professionals on an as-needed basis. Quarterlyanalyses include the preparation of quarterly operating results, reconciliations of actual results to projections and updates to financial models (baseline and stresscases). Annual analyses involve conducting internal audits, and testing compliance with monitoring and documentation requirements.Credit StrategiesOur credit business pursues investments in leveraged credit strategies, such as leveraged loans, high-yield bonds, opportunistic credit and revolving creditstrategies, and alternative credit strategies, such as special situations, direct lending and private opportunistic credit (or mezzanine) strategies. We pursue theseinvestments across a range of vehicles, including investment funds and separately managed accounts, for which we receive a fee and in certain cases an incentivefee or carried interest.We also manage structured credit vehicles in the form of CLOs that hold leveraged loans, high-yield bonds or a combination of both. CLOs are typicallystructured as special purpose investment vehicles that acquire, monitor and, to varying degrees, manage a pool of credit assets. CLOs generally serve as long-termfinancing for leveraged credit investments and as a way to reduce refinancing risk, reduce maturity risk and secure a fixed cost of funds over an underlying marketinterest rate. We typically receive a fee for managing CLOs.We also serve as the registered investment adviser or sub-adviser to registered investment companies. The management fees we are paid for managingregistered investment companies are generally subject to contractual rights that require their board of directors to provide prior notice in order to terminate ourinvestment management services. Following the FS Investments Transaction in April 2018, FS/KKR Advisor serves as the investment adviser to the BDCs in ourBDC platform. Leveraged Credit. Our leveraged credit strategies are principally directed at investing in leveraged loans, high-yield bonds or a combination of both. Ouropportunistic credit strategy seeks to deploy capital across investment themes that take advantage of credit market dislocations, spanning asset types andliquidity profiles. Our revolving credit strategy invests in senior secured revolving credit facilities.Alternative Credit. Our alternative credit strategies consist of special situations and private credit strategies.•Special Situations. We seek to make opportunistic investments largely in stressed or distressed companies through our special situations investmentstrategy. These investments include distressed investments (including post- restructuring equity), control-oriented opportunities, rescue financing (debtor equity investments made to address covenant, maturity or liquidity issues), debtor-in-possession or exit financing, and other event-driven investmentsin debt or equity.20Table of Contents•Private Credit. Our private credit strategies seek to leverage the knowledge and relationships developed in the leveraged credit business. Thesestrategies include direct lending and private opportunistic credit strategies. Through our direct lending strategy, we seek to make investments inproprietarily sourced primarily senior debt financings for middle-market companies. Through our private opportunistic credit strategy, we seek to makeinvestments in directly sourced third-party mezzanine and mezzanine-like transactions and also seek asset-based credit and structured creditopportunities across financial and hard assets. These investments often consist of mezzanine debt, which generates a current yield, coupled withmarginal equity exposure with additional upside potential.Hedge FundsOur hedge fund platform consists of strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake. This includes a 39.6%interest in Marshall Wace LLP (together with its affiliates, "Marshall Wace"), a global alternative investment manager specializing in long/short equity products,and a 24.9% interest in BlackGold Capital Management L.P. ("BlackGold"), a credit-oriented investment manager focused on energy and hard asset investments.We also own a 39.9% interest in, and are entitled to receive certain other payments from, PAAMCO Prisma Holdings, LLC ("PAAMCO Prisma"), an investmentmanager focused on liquid alternative investment solutions, including hedge fund-of-fund portfolios.Public Markets AUM and Vehicle StructuresAs of December 31, 2019, our Public Markets business line had $99.1 billion of AUM, comprised of $41.1 billion of assets managed in our leveraged creditstrategies (which include $4.7 billion of assets managed in our opportunistic credit strategy and $2.0 billion of assets managed in our revolving credit strategy),$6.6 billion of assets managed in our special situations strategy, $24.5 billion of assets managed in our private credit strategies, $26.1 billion of assets managedthrough our hedge fund platform, and $0.8 billion of assets managed in other strategies. Our private credit strategies include $17.9 billion of assets managed in ourdirect lending strategy and $6.6 billion of assets managed in our private opportunistic credit strategy. Our BDC platform has approximately $16.5 billion incombined assets under management, all of which are reflected in the AUM of our leveraged credit strategies and alternative credit strategies above. We report all ofthe assets under management of the BDCs in our BDC platform. We report only a pro rata portion of the AUM of our strategic partnerships with third-party hedgefund managers based on KKR's percentage ownership in them.21Table of ContentsThe table below presents information as of December 31, 2019, based on the investment funds, vehicles or accounts offered by our Public Markets businessline. Our funds, vehicles and accounts have been sorted based upon their primary investment strategies. However, the AUM and FPAUM presented for each line inthe table includes certain investments from non-primary investment strategies, which are permitted by their investment mandates, for purposes of presenting thefees and other terms for such funds, vehicles and accounts.($ in millions) AUM FPAUM Typical ManagementFee Rate Incentive Fee /CarriedInterest PreferredReturn Durationof CapitalLeveraged Credit: Leveraged Credit SMAs/Funds $22,802 $21,199 0.10%-1.10% Various (1) Various (1) Subject to redemptionsCLOs 15,311 15,311 0.40%-0.50% Various (1) Various (1) 10-14 Years (2)Total Leveraged Credit 38,113 36,510 Alternative Credit: (3) Special Situations 6,847 4,646 0.90%-1.75% (4) 10.00-20.00% 7.00-12.00% 8-15 Years (2)Private Credit 11,578 5,729 0.50%-1.50% 10.00-20.00% 5.00-8.00% 8-15 Years (2)Total Alternative Credit 18,425 10,375 Hedge Funds (5) 26,082 20,947 0.50%-2.00% Various (1) Various (1) Subject to redemptionsBDCs (6) 16,460 16,460 0.60% 8.00% 7.00% IndefiniteTotal $99,080 $84,292 (1)Certain funds and CLOs are subject to a performance fee in which the manager or general partner of the funds share up to 20% of the net profits earned by investors in excess ofperformance hurdles (generally tied to a benchmark or index) and subject to a provision requiring the funds and vehicles to regain prior losses before any performance fee is earned.(2)Duration of capital is measured from inception. Inception dates for CLOs were between 2013 and 2019 and for separately managed accounts and funds investing in alternative creditstrategies from 2009 through 2019.(3)Our alternative credit funds generally have investment periods of three to five years and our newer alternative credit funds generally earn fees on invested capital during the investmentperiod.(4)Lower fees on uninvested capital in certain vehicles.(5)Hedge Funds represent KKR's pro rata portion of AUM and FPAUM of our hedge fund partnerships.(6)Consists of our BDC platform advised by FS/KKR Advisor. We report all of the AUM of the BDCs in our AUM and FPAUM.22Table of ContentsFundraising and Composition of Fund InvestorsWe have a Client & Partner Group that is responsible for raising capital for us globally across all products, expanding our client relationships across assetclasses and across types of fund investors, developing products to meet our clients' needs, and servicing existing fund investors and products. We also providefundraising services to certain third-party fund managers in our hedge fund partnerships. As of December 31, 2019, we had over 90 executives and professionalsdedicated to our Client & Partner Group.As of December 31, 2019, we had approximately 1,040 investors in funds across all our strategies, which reflect the addition of 75 investors during the year.On average, a fund investor is invested in approximately two of our strategies as of December 31, 2019. The following charts detail our investor base by type andgeography as of December 31, 2019.Fund Investor Base by Type (1) Fund Investor Base by Geography (1) (1)Based on the AUM of our Private Markets investment funds, Private Markets co-investment vehicles, and Public Markets separately managed accounts and Public Marketsinvestment funds. These charts exclude general partner commitments, assets managed through CLOs, and assets managed by other asset managers with which KKR has formedstrategic partnerships where KKR does not hold more than a 50% ownership interest. Allocations are assigned to a type or geographic region according to subscriptions received froma limited partner.Capital Markets Our Capital Markets business line is comprised of our global capital markets business, which is integrated with KKR’s other business lines, and serves ourfirm, our portfolio companies and third-party clients by developing and implementing both traditional and non-traditional capital solutions for investments orcompanies seeking financing. These services include arranging debt and equity financing, placing and underwriting securities offerings, and providing other typesof capital markets services that may result in the firm receiving fees, including underwriting, placement, transaction and syndication fees, commissions,underwriting discounts, interest payments and other compensation, which may be payable in cash or securities, in respect of the activities described above.Our capital markets business underwrites credit facilities and arranges loan syndications and participations. When we are sole arrangers of a credit facility, wemay advance amounts to the borrower on behalf of other lenders, subject to repayment. When we underwrite an offering of securities on a firm commitment basis,we commit to buy and sell an issue of securities and generate revenue by purchasing the securities at a discount or for a fee. When we act in an agency capacity orbest efforts basis, we generate revenue for arranging financing or placing securities with capital markets investors. We may also provide issuers with capitalmarkets advice on security selection, access to markets, marketing considerations, securities pricing, and other aspects of capital markets transactions in exchangefor a fee. Our capital markets business also provides syndication services in23Table of Contentsrespect of co-investments in transactions participated in by KKR funds or third-party clients, which may entitle the firm to receive syndication fees, managementfees and/or a carried interest.The capital markets business has a global footprint, with local presence and licenses to carry out certain broker-dealer activities in various countries in NorthAmerica, Europe, Asia-Pacific and the Middle East. Our flagship capital markets subsidiary is KKR Capital Markets LLC, an SEC-registered broker-dealer and amember of the Financial Industry Regulation Authority ("FINRA").Principal Activities Through our Principal Activities business line, we manage the firm's own assets on our balance sheet and deploy capital to support and grow our businesslines. Typically, the funds in our Private Markets and Public Markets business lines contractually require us, as general partner of the funds, to make sizable capitalcommitments from time to time. We believe making general partner commitments assists us in raising new funds from limited partners by demonstrating ourconviction in a given fund's strategy. We also use our balance sheet to acquire investments in order to help establish a track record for fundraising purposes in newstrategies. We may also use our own capital to seed investments for new funds, to bridge capital selectively for our funds' investments or finance strategicacquisitions and partnerships, although the financial results of an acquired business or hedge fund partnership may be reported in our other business lines.Our Principal Activities business line also provides the required capital to fund the various commitments of our Capital Markets business line whenunderwriting or syndicating securities, or when providing term loan commitments for transactions involving our portfolio companies and for third parties. OurPrincipal Activities business line also holds assets that may be utilized to satisfy regulatory requirements for our Capital Markets business line and risk retentionrequirements for our CLOs.We also make opportunistic investments through our Principal Activities business line, which include co-investments alongside our Private Markets and PublicMarkets funds as well as Principal Activities investments that do not involve our Private Markets or Public Markets funds.We endeavor to use our balance sheet strategically and opportunistically to generate an attractive risk-adjusted return on equity in a manner that is consistentwith our fiduciary duties, in compliance with applicable laws, and consistent with our one-firm approach.24Table of ContentsThe chart below presents the holdings of our Principal Activities business line by asset class as of December 31, 2019.Holdings by Asset Class (1) (1)General partner commitments in our funds are included in the various asset classes shown above. Assets and revenues of other asset managers with which KKR has formed strategicpartnerships where KKR does not hold more than 50% ownership interest are not included in our Principal Activities business line but are reported in the financial results of our otherbusiness lines. Private Equity includes KKR private equity funds, co-investments alongside such KKR-sponsored private equity funds, certain core equity investments, and otheropportunistic investments. Equity investments in other asset classes, such as real estate, special situations and energy appear in these other asset classes. Other Credit consists of certainleveraged credit and specialty finance strategies.25Table of ContentsCompetitionWe compete with other investment managers for both fund investors and investment opportunities. The firm's competitors consist primarily of sponsors ofpublic and private investment funds, real estate development companies, BDCs, investment banks, commercial finance companies and operating companies actingas strategic buyers. We believe that competition for fund investors is based primarily on investment performance, investor liquidity and willingness to invest,investor perception of investment managers' drive, focus and alignment of interest, business reputation, duration of relationships, quality of services, pricing, fundterms including fees, and the relative attractiveness of the types of investments that have been or are to be made. We believe that competition for investmentopportunities is based primarily on the pricing, terms and structure of a proposed investment and certainty of execution. In addition to these traditional competitorswithin the global investment management industry, we also face competition from local and regional firms, financial institutions and sovereign wealth funds in thevarious countries in which we invest. In certain emerging markets, local firms may have more established relationships with the companies in which we areattempting to invest. These competitors often fall into one of the aforementioned categories but in some cases may represent new types of fund investors, includinghigh net worth individuals, family offices and state-sponsored entities.There are numerous funds focused on private equity, real assets, growth equity, credit and hedge fund strategies that compete for investor capital. Fundmanagers have also increasingly adopted investment strategies outside of their traditional focus. For example, funds focused on credit and equity strategies havebecome active in taking control positions in companies, while private equity funds have acquired minority equity or debt positions in publicly listed companies.This convergence could heighten competition for investments. Furthermore, as institutional fund investors increasingly consolidate their relationships for multipleinvestment products with a few investment firms, competition for capital from such institutional fund investors may become more acute. However, suchconsolidation may also lead institutional fund investors to prefer more established investment firms, which could help us compete against newer entrants orinvestment firms that are smaller in size or offer more limited types of investment strategies.Some of the entities that we compete with as an investment firm may have greater financial, technical, marketing and other resources and more personnel thanus and, in the case of some asset classes, longer operating histories, more established relationships or greater experience. Several of our competitors also haveraised, or may raise, significant amounts of capital and have investment objectives that are similar to the investment objectives of our funds, which may createadditional competition for investment opportunities. Some of these competitors may also have lower costs of capital and access to funding sources that are notavailable to us, which may create competitive advantages for them. In addition, some of these competitors may have higher risk tolerances, different riskassessments or lower return thresholds, which could allow them to consider a wider range of investments and to bid more aggressively than us for investments.Strategic buyers may also be able to achieve synergistic cost savings or revenue enhancements with respect to a targeted portfolio company, which may providethem with a competitive advantage in bidding for such investments.Our capital markets business competes primarily with investment banks and independent broker-dealers in North America, Europe, Asia-Pacific and theMiddle East. We principally focus our capital markets activities on the firm, our portfolio companies and fund investors, but we also seek to service other thirdparties. While we generally target customers with whom we have existing relationships, those customers may have similar relationships with the firm's competitors,many of whom will have access to competing securities transactions, greater financial, technical or marketing resources or more established reputations than us.Competition is also intense for the attraction and retention of qualified employees and consultants. Our ability to continue to compete effectively in ourbusinesses will depend upon our ability to attract new employees and consultants and retain and motivate our existing employees and consultants.Employees, Consultants and AdvisorsAs of December 31, 2019, we employed 1,384 people worldwide:Investment Professionals480Other Professionals624Support Staff280Total Employees(1)1,384 (1)Does not include 69 operating consultants of KKR Capstone and other consultants who provide services to us or our funds. KKR acquired KKR Capstone on January 1, 2020.See "—KKR Capstone" below.26Table of ContentsInvestment ProfessionalsOur 480 investment professionals come from diverse backgrounds in private equity, real assets, credit and other asset classes and include executives withoperations, strategic consulting, risk management, liability management and finance experience. As a group, these professionals provide us with a strong globalteam for identifying attractive investment opportunities, creating value and generating superior returns.Other ProfessionalsOur 624 other professionals come from diverse backgrounds in capital markets, economics, capital raising, client services, public affairs, finance, tax, legal,compliance, human resources, and information technology. As a group, these professionals provide us with a strong team for overseeing investments andperforming capital markets activities, servicing our existing fund investors and creating relationships with new fund investors globally. Additionally, a majority ofthese other professionals are responsible for supporting the global infrastructure of KKR.KKR CapstoneWe have developed an institutionalized process for creating value in investments. As part of our effort, we utilize a team of 69 operating professionals at KKRCapstone, who work exclusively with our investment professionals and portfolio company management teams or our designees. With professionals in NorthAmerica, Europe and the Asia-Pacific, KKR Capstone provides additional expertise for assessing investment opportunities and assisting managers of portfoliocompanies in defining strategic priorities and implementing operational changes. During the initial phases of an investment, KKR Capstone's work seeks toimplement our thesis for value creation. These operating professionals may assist portfolio companies in addressing top-line growth, cost optimization and efficientcapital allocation and in developing operating and financial metrics. Over time, this work shifts to identifying challenges and taking advantage of businessopportunities that arise during the life of an investment. On January 1, 2020, KKR acquired KKR Capstone.Senior Advisors and Other AdvisorsTo complement the expertise of our investment professionals, we have a team of senior advisors and other advisors. While not KKR employees, they provideus with additional operational and strategic insights. The responsibilities of senior advisors and other advisors include serving on the boards of our portfoliocompanies, helping us source and evaluate individual investment opportunities and assisting portfolio companies with operational matters. These individualsinclude current and former chief executive officers, chief financial officers and chairpersons of major corporations and others holding leading positions of publicagencies worldwide.27Table of ContentsOrganizational StructureThe following simplified diagram illustrates our organizational structure as of February 10, 2020, unless otherwise noted. Certain entities depicted below maybe held through intervening entities not shown in the diagram.(1)KKR Management LLP is the sole holder of Class B common stock of KKR & Co. Inc. KKR Management LLP is owned by senior KKR employees.(2)KKR Holdings is the holding vehicle through which certain of our current and former employees and other persons indirectly own their interest in KKR. KKR Group Partnership Units thatare held by KKR Holdings are exchangeable for shares of Class A common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stockdividends and reclassifications and compliance with applicable vesting and transfer restrictions. As limited partner interests, these KKR Group Partnership Units are non-voting and donot entitle KKR Holdings to participate in the management of our business and affairs. As of January 1, 2020, KKR Holdings had approximately a 34.2% interest in our businessindirectly through its limited partner interests in KKR Group Partnership. KKR Holdings also holds Class C common stock that entitles it to cast a number of votes equal to the numberof KKR Group Partnership Units that it holds, with respect to the limited matters upon which our Class A common stockholders are entitled to vote.(3)On January 1, 2020, KKR completed the Reorganization, in which KKR Management Holdings L.P. and KKR International Holdings L.P., which were formerly intermediate holdingcompanies for KKR's business, were combined with another intermediate holding company, KKR Fund Holdings L.P., which changed its name to KKR Group Partnership L.P. andbecame the sole intermediate holding company for KKR's business.(4)Includes Kohlberg Kravis Roberts & Co. L.P., the SEC-registered investment adviser, which in turn is the parent company of KKR's other management and capital markets subsidiaries,including KKR Credit Advisors (US) LLC, KKR Credit Advisors (Ireland) Unlimited Company, KKR Alternative Investment Management Unlimited Company and KKR CapitalMarkets Holdings L.P., the holding company for KKR Capital Markets LLC. Kohlberg Kravis Roberts & Co. L.P. is also the parent company of KKR Capstone Holdings LLC, theholding company for KKR Capstone entities.(5)40% of the carried interest earned from our investment funds, and, beginning with the quarter ended September 30, 2016, 40% of the management fees that would have been subject to amanagement fee refund for investment funds that have a preferred return, are allocated to a carry pool, from which carried interest is allocable to our current and former employees andother persons associated with KKR. Beginning with the quarter ended September 30, 2017, 43% of carried interest generated by certain then-current and future funds is allocated to thecarry pool instead of 40% of carried interest. For impacted funds, the incremental 3% replaces the amount of certain management fee refunds that would have been calculated for thosefunds as performance income compensation. No carried interest has been allocated with respect to co-investments acquired from KPE in the KPE Transaction. See "Management'sDiscussion and Analysis of Financial Condition and Results of Operations—Key Financial Measures Under GAAP—Expenses—Compensation and Benefits."(6)Includes KKR Financial Holdings LLC and KKR Group Finance Co. Holdings Limited, which in turn owns the issuers of KKR's outstanding senior notes.28Table of ContentsRegulationOur operations are subject to regulation and supervision in a number of jurisdictions. The level of regulation and supervision to which we are subject variesfrom jurisdiction to jurisdiction and is based on the type of business activity involved. We, in conjunction with our outside advisors and counsel, seek to manageour business and operations in compliance with such regulation and supervision. The regulatory and legal requirements that apply to our activities are subject tochange from time to time and may become more restrictive, which may make compliance with applicable requirements more difficult or expensive or otherwiserestrict our ability to conduct our business activities in the manner in which they are now conducted. Changes in applicable regulatory and legal requirements,including changes in their enforcement, could materially and adversely affect our business and our financial condition and results of operations. As a matter ofpublic policy, the regulatory bodies that regulate our business activities are generally responsible for safeguarding the integrity of the securities and financialmarkets and protecting fund investors who participate in those markets rather than protecting the interests of our stockholders.United StatesRegulation as an Investment AdviserWe conduct our advisory business through our investment adviser subsidiaries, including Kohlberg Kravis Roberts & Co. L.P. and its wholly-ownedsubsidiary KKR Credit Advisors (US) LLC, each of which is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940 (the"Investment Advisers Act"). The investment advisers are subject to the anti-fraud provisions of the Investment Advisers Act and to fiduciary duties derived fromthese provisions, which apply to our relationships with our advisory clients globally, including funds that we manage. These provisions and duties imposerestrictions and obligations on us with respect to our dealings with our fund investors and our investments, including for example restrictions on agency cross andprincipal transactions. Our registered investment advisers are subject to periodic SEC examinations and other requirements under the Investment Advisers Act andrelated regulations primarily intended to benefit advisory clients. These additional requirements relate, among other things, to maintaining an effective andcomprehensive compliance program, record-keeping and reporting requirements and disclosure requirements. The Investment Advisers Act generally grants theSEC broad administrative powers, including the power to limit or restrict an investment adviser from conducting advisory activities in the event it fails to complywith federal securities laws. Additional sanctions that may be imposed for failure to comply with applicable requirements include the prohibition of individualsfrom associating with an investment adviser, the revocation of registrations and other censures and fines.KKR Credit Advisors (US) LLC is also subject to regulation under the Investment Company Act as an investment adviser to a registered investment company.The KKR Income Opportunities Fund is a closed-end management investment company registered under the Investment Company Act. The closed-endmanagement investment company and KKR Credit Advisors (US) LLC are subject to the Investment Company Act and the rules thereunder, which among otherthings regulate the relationship between a registered investment company and its investment adviser and prohibit or restrict principal transactions and jointtransactions.Regulation as a Broker-DealerKKR Capital Markets LLC, one of our subsidiaries, is registered as a broker-dealer with the SEC under the Exchange Act and in all 50 U.S. States and U.S.territories, and is a member of the FINRA. As a registered broker-dealer, KKR Capital Markets LLC is subject to periodic SEC and FINRA examinations andreviews. A broker-dealer is subject to legal requirements covering all aspects of its securities business, including sales and trading practices, public and privatesecurities offerings, use and safekeeping of customers' funds and securities, capital structure, record-keeping and retention and the conduct and qualifications ofdirectors, officers, employees and other associated persons. These requirements include the SEC's "uniform net capital rule," which specifies the minimum level ofnet capital that a broker-dealer must maintain, requires a significant part of the broker-dealer's assets to be kept in relatively liquid form, imposes certainrequirements that may have the effect of prohibiting a broker-dealer from distributing or withdrawing its capital and subjects any distributions or withdrawals ofcapital by a broker-dealer to notice requirements. These and other requirements also include rules that limit a broker-dealer's ratio of subordinated debt to equity inits regulatory capital composition, constrain a broker-dealer's ability to expand its business under certain circumstances and impose additional requirements whenthe broker-dealer participates in securities offerings of affiliated entities. Violations of these requirements may result in censures, fines, the issuance of cease-and-desist orders, revocation of licenses or registrations, the suspension or expulsion from the securities industry of the broker-dealer or its officers or employees orother similar consequences by regulatory bodies.29Table of ContentsIrelandWe have a number of subsidiaries which are authorized and regulated by the Central Bank of Ireland, or CBI. The CBI is responsible for, among other things,regulating and supervising firms that provide financial services in Ireland, including broker-dealers and investment firms. The CBI also develops and maintainsregulatory policies for Ireland's financial services sector. The CBI has the authority to approve applications from financial services providers in Ireland, monitorcompliance with its standards, and take enforcement action for non-compliance. Violation of the CBI's requirements may result in administrative sanctions;investigations; refusal, revocation or cancellation of authorization or registrations; criminal prosecution; and/or reports to other agencies.KKR Alternative Investment Management Unlimited Company, KKR Credit Advisors (Ireland) Unlimited Company and KKR Capital Markets (Ireland)Limited Company are regulated by the CBI. KKR Alternative Investment Management Unlimited Company is an authorized EU alternative investment managerpermitted to conduct portfolio management, risk management and certain administrative activities. KKR Credit Advisors (Ireland) Unlimited Company isauthorized to carry out a number of regulated activities including receiving and transmitting orders, portfolio management and providing investment advice. KKRCapital Markets (Ireland) Limited Company is authorized to engage in a number of regulated activities regulated under Markets in Financial Instruments Directive,known as "MiFID," including dealing as principal or agent, making arrangements in relation to certain types of specified investments, and arranging thesafeguarding and administration of assets. KKR Capital Markets (Ireland) Limited also benefits from a passport under the single market directives to offer servicescross border into all countries in the European Economic Area.United KingdomWe have several subsidiaries which are authorized and regulated by the United Kingdom Financial Conduct Authority (the "FCA") under the FinancialServices and Markets Act 2000 ("FSMA"). FSMA and related rules govern most aspects of investment business, including investment management, sales, researchand trading practices, provision of investment advice, corporate finance, use and safekeeping of client funds and securities, regulatory capital, record-keeping,margin practices and procedures, approval standards for individuals, anti-money laundering, periodic reporting and settlement procedures. The FCA is responsiblefor administering these requirements and our compliance with the FSMA and related rules. Violations of these requirements may result in censures, fines,imposition of additional requirements, injunctions, restitution orders, revocation or modification of permissions or registrations, the suspension or expulsion fromcertain "controlled functions" within the financial services industry of officers or employees performing such functions or other similar consequences.KKR Capital Markets Limited has permission to engage in a number of regulated activities regulated under FSMA, including dealing as principal or agent andarranging deals in relation to certain types of specified investments and arranging the safeguarding and administration of assets. KKR Capital Markets Limited alsocurrently benefits from a passport under the single market directives to offer services cross border into all countries in the European Economic Area and Gibraltar.Although this benefit is expected to cease upon the scheduled expiration of the Brexit transitional period on December 31, 2020, KKR Capital Markets (Ireland)Limited will continue to benefit from passporting rights. Kohlberg Kravis Roberts & Co. Partners LLP has permission to engage in a number of regulated activitiesincluding advising on and arranging deals relating to corporate finance business in relation to certain types of specified investments. KKR Credit Advisors (EMEA)LLP has permission to engage in a number of regulated activities including managing, advising on and arranging deals in relation to certain types of specifiedinvestments.Other JurisdictionsCertain other subsidiaries or funds that we advise are registered with, have been licensed by or have obtained authorizations to operate in their respectivejurisdictions outside of the United States. These registrations, licenses or authorizations relate to providing investment advice, broker-dealer activities, marketing ofsecurities and other regulated activities. Failure to comply with the laws and regulations governing these subsidiaries and funds that have been registered, licensedor authorized could expose us to liability and/or damage our reputation.In Canada, KKR Capital Markets LLC is also registered as an international dealer under the Securities Act (Ontario). This registration permits us to trade innon-Canadian equity and debt securities with certain types of investors located in Ontario, Canada.In Japan, KKR Capital Markets Japan Ltd. is registered as a Type I and Type II Financial Instruments Business Operator (broker-dealer) under the FinancialInstruments and Exchange Act of Japan, and a money lender under the Money Lending Business Act of Japan.30Table of ContentsIn the United Arab Emirates, KKR MENA Limited, a Dubai International Financial Centre company, is licensed to arrange deals in investments, advise onfinancial products and arrange custody, and is regulated by the Dubai Financial Services Authority.In Saudi Arabia, KKR Saudi Limited is licensed by the Capital Market Authority of Saudi Arabia and is authorized for the activity of arranging in thesecurities business.In Australia, KKR Australia Pty Limited and KKR Australia Investment Management Pty Limited are Australian financial services licensed and are authorizedto provide advice on and deal in financial products for wholesale clients, and are regulated by the Australian Securities and Investments Commission.In Hong Kong, KKR Capital Markets Asia Limited is licensed by the Securities and Futures Commission in Hong Kong to carry on dealing in securities andadvising on securities regulated activities.In Singapore, KKR Singapore Pte. Ltd. holds a capital markets services license to conduct fund management for qualified investors only, and is regulated byMonetary Authority of Singapore.In Mauritius, KKR Holdings Mauritius, Ltd. and KKR Account Adviser (Mauritius), Ltd. are unrestricted investment advisers authorized to manage portfoliosof securities and give advice on securities transactions, and are regulated by the Financial Services Commission, Mauritius.In India, we have subsidiaries that are registered with the Securities Exchange Board of India ("SEBI") (i) as a foreign portfolio investor or a foreign venturecapital investor to make investments in Indian securities, (ii) as a merchant bank to execute capital market mandates, underwrite issues, offer investment advisoryand other consultancy services in connection with securities, and (iii) as an investment manager and sponsor of alternative investment funds. In addition, certainsubsidiaries are registered with the Reserve Bank of India as non-deposit taking non-banking financial companies and are authorized to undertake lending andfinancing activities.From time to time, one or more of our investment funds or their related investment vehicles may be regulated as a mutual fund by the Cayman IslandsMonetary Authority, regulated as an investment limited partnership by CBI, listed on the Irish Stock Exchange, notified with the Financial Services Agency ofJapan for sale pursuant to certain private placement exemptions and/or for investment pursuant to certain exemption, registered with the Financial SupervisoryService of the Republic of Korea, licensed by or granted in principal approval from SEBI, subject to the regulatory supervision of the Commission de Surveillancedu Secteur Financier of Luxembourg, notified with the Netherlands Authority for Financial Markets for sale pursuant to certain private placement exemptions, orregistered under the Investment Company Act.There are a number of legislative and regulatory initiatives in the United States and in Europe that could significantly affect our business. See "Risk Factors—Risks Related to Our Business—Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. Thepossibility of increased regulatory focus or legislative or regulatory changes could materially and adversely affect our business."31Table of ContentsWebsite and Availability of SEC FilingsOur website address is www.kkr.com. Information on our website is not incorporated by reference herein and is not a part of this report. We make availablefree of charge on our website or provide a link on our website to our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports onForm 8-K, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable afterthose reports are electronically filed with, or furnished to, the SEC. To access these filings, go to the "Stockholder (KKR & Co. Inc.)" section of our "InvestorCenter" page on our website, then click on "SEC Filings." In addition, these reports and the other documents we file with the SEC are available at a websitemaintained by the SEC at www.sec.gov.From time to time, we may use our website as a channel of distribution of material information. Financial and other material information regarding ourcompany is routinely posted on and accessible at www.kkr.com. In addition, you may automatically receive e-mail alerts and other information about our companyby enrolling your e-mail address by visiting the "Email Alerts" section under the "Stockholder (KKR & Co. Inc.)" section of the "Investor Center" page atwww.kkr.com.ITEM 1A. RISK FACTORS Investing in our securities involves risk. Persons investing in our securities should carefully consider the risks described below and the other informationcontained in this report and other filings that we make from time to time with the SEC, including our consolidated financial statements and accompanying notes.Any of the following risks could materially and adversely affect our business, financial condition or results of operations. Our business, financial condition orresults of operations could also be materially and adversely affected by additional factors that apply to all companies generally, as well as other risks that are notcurrently known to us or that we currently view to be immaterial. In any such case, the trading price of our securities could decline and you may lose all or part ofyour original investment. While we attempt to mitigate known risks to the extent we believe to be practicable and reasonable, we can provide no assurance, and wemake no representation, that our mitigation efforts will be successful.Risks Related to Our BusinessDifficult market and economic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investmentsthat we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow andadversely affect our financial prospects and condition.Our business and the businesses of the companies in which we invest are materially affected by financial markets and economic conditions or eventsthroughout the world, such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), tradebarriers, commodity prices, currency exchange rates and controls and national and international political circumstances (including wars, terrorist acts or securityoperations). For example, the turmoil in the global financial markets during 2008 and 2009 provoked significant volatility of securities prices, contraction in theavailability of credit and the failure of a number of companies, including leading financial institutions, and had a material adverse effect on our businesses and thebusinesses of the companies in which we invest. Similarly, the imposition of tariffs in 2019 have weighed on the global economy, and although an initial trade dealwas reached in January 2020 between the two countries, ongoing trade disputes could create uncertainty and volatility in the market that can adversely affect ourbusiness. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Business Environment" for a discussion of recentdevelopments in market and business conditions that may affect our business.Such financial markets and economic conditions are outside our control and may affect the level and volatility of securities prices and liquidity and as a result,the value of our investments and our financial results. In addition, we may not be able to or may choose not to manage our exposure to these conditions and/orevents. If not otherwise offset, declines in the equity, commodity and debt in the markets would likely cause us to write down our investments and the investmentsof our funds. For example, during the global financial crisis in 2008 and 2009, valuations of our private equity funds declined across all geographies, withinvestments in private equity funds marked down to as low as 67% of original cost and multiples of invested capital reaching as low as 0.5x, 0.6x, 0.7x and 0.8x forthe European Fund II, European Fund III, 2006 Fund and Asian Fund, respectively, as of March 31, 2009. Our profitability may also be materially and adverselyaffected by our fixed costs and the possibility that we would be unable to scale back other costs within a time frame sufficient to match any decreases in net incomerelating to a downturn in market and economic conditions.Unfavorable market and economic conditions may reduce opportunities for our funds to make, exit and realize value from their investments. Challengingmarket and economic conditions, including those caused by changes in tax laws and other regulatory restrictions, may make it difficult for us to find suitableinvestments for our funds or secure financing for32Table of Contentsinvestments on attractive terms. Such conditions may also result in reduced opportunities for our funds to exit and realize value from their existing investments andlower-than-expected returns on existing investments. Although the equity markets are not the only means by which we exit investments, in challenging equitymarkets, our funds may experience greater difficulty in realizing value from investments. In addition, when financing is not available or becomes too costly, it isdifficult for potential buyers to raise sufficient capital to purchase our funds' investments. Consequently, we may earn lower-than-expected returns on investments,which could cause us to realize diminished or no carried interest.We generally raise capital for a successor fund following the substantial and successful deployment of capital from the existing fund. In the event of poorperformance by existing funds, our ability to raise new funds is impaired. Our fundraising may also be negatively impacted by any change in or rebalancing of fundinvestors' asset allocation policies. During periods of unfavorable fundraising conditions, fund investors may negotiate for lower fees, different fee sharingarrangements for transaction or other fees, and other concessions. The outcome of such negotiations could result in our agreement to terms that are materially lessfavorable to us than for prior funds we have managed. Our current funds, including all our recent private equity funds, have performance hurdles, which require usto generate a specified return on investment prior to our right to receive carried interest. This requirement will likely be in all our future funds, and the hurdle ratecould increase for our future funds. In addition, successor funds raised by us when such unfavorable circumstances described above exist would also likely result insmaller funds than our comparable predecessor funds. Fund investors may also seek to redeploy capital away from certain of our credit or other non-private equityinvestment vehicles, which permit redemptions on relatively short notice, in order to meet liquidity needs or invest in other asset classes or with other managers.Any of these developments could materially and adversely affect our future revenues, net income, cash flow, financial condition or ability to retain our employees.See "—Our inability to raise additional or successor funds (or raise successor funds of a comparable size as our predecessor funds) could have a material adverseimpact on our business" and "—Our investors in future funds may negotiate to pay us lower management fees, reimburse us for fewer expenses or change theeconomic terms of our future funds, including with respect to transaction fees, management fees or monitoring fees, to be less favorable to us than those of ourexisting funds, which could materially and adversely affect our revenues or profitability."During periods of difficult market or economic conditions or slowdowns (which may occur across one or more industries, sectors or geographies), companiesor assets in which we have invested may experience decreased revenues, financial losses, credit rating downgrades, difficulty in obtaining access to financing andincreased funding costs. These companies may also have difficulty in expanding their businesses and operations or be unable to meet their debt service obligationsor pay other expenses as they become due, including amounts payable to us. Negative financial results in our funds' portfolio companies may result in lowerinvestment returns for our investment funds, which could materially and adversely affect our operating results and cash flow. To the extent the operatingperformance of such portfolio companies (as well as valuation multiples) deteriorate or do not improve, our funds may sell those assets at values that are less thanwe projected or even at a loss, thereby significantly affecting those funds' performance and consequently our operating results and cash flow and resulting in loweror no carried interest being paid to us. Adverse conditions may also increase the risk of default with respect to private equity, credit and other investments that wemanage or the abandonment or foreclosure of our real asset investments. Even if economic and market conditions do improve broadly, adverse conditions inparticular sectors may also cause our performance to suffer. Finally, low interest rates related to monetary stimulus, economic stagnation or deflation maynegatively impact expected returns on all types of investments as the demand for relatively higher return assets increases and the supply decreases. In addition, our capital markets business generates fees through a variety of activities in connection with the issuance and placement of equity and debtsecurities and credit facilities, with the size of fees generally correlated to overall transaction sizes. As a result, adverse conditions in financial markets as describedabove, as well as lower level of transaction activities involving our funds' investments, which can be unpredictable and outside our control, may negatively impactboth the frequency and size of fees generated by our capital markets business.Changes in the debt financing markets may negatively impact the ability of our investment funds, their portfolio companies and strategies pursued with ourbalance sheet assets to obtain attractive financing for their investments or to refinance existing debt and may increase the cost of such financing or refinancingif it is obtained, which could lead to lower-yielding investments and potentially decrease our net income.In the event that our funds are unable to obtain committed debt financing for potential acquisitions or can only obtain debt at an increased interest rate or onunfavorable terms, our funds may have difficulty completing otherwise profitable acquisitions or may generate profits that are lower than would otherwise be thecase, either of which could lead to a decrease in the investment income earned by us. Any failure by lenders to provide previously committed financing can alsoexpose us to potential claims by sellers of businesses that we may have contracted to purchase. Similarly, certain of the strategies pursued with our balance sheetassets rely on the use of leverage, including the issuance of CLOs, and other secured and unsecured borrowings. Our ability to generate returns on these assetswould be reduced to the extent that changes in market conditions,33Table of Contentsincluding an increase by the U.S. Federal Reserve of its benchmark interest rate, cause the cost of our financing to increase relative to the income that can bederived from the assets acquired and financed. Similarly, our portfolio companies regularly utilize the corporate debt markets in order to obtain financing for theiroperations. To the extent that credit markets render such financing difficult to obtain or more expensive, this may negatively impact the operating performance ofthose portfolio companies and, therefore, the investment returns on our funds. In addition, to the extent that conditions in the credit markets impair the ability of ourportfolio companies to refinance or extend maturities on their outstanding debt, either on favorable terms or at all, the operating performance of those portfoliocompanies may be negatively impacted, which could impair the value of our investment in those portfolio companies and lead to a decrease in the investmentincome earned by us. In some cases, the inability of our portfolio companies to refinance or extend maturities may result in the inability of those companies torepay debt at maturity or pay interests when due, and may cause the companies to sell assets, undergo a recapitalization or seek bankruptcy protection, any ofwhich would also likely impair the value of our investment and lead to a decrease in investment income earned by us.Transition away from LIBOR as a benchmark reference for interest rates may affect the cost of capital and may require amending or restructuring existingdebt instruments and related hedging arrangements for us, our investment funds and our portfolio companies, and may impact the value of floating ratesecurities based on LIBOR we or our investment funds hold or may hold in the future, which may result in additional costs or adversely affect our or ourfunds' liquidity, results of operations and financial condition.A substantial portion of the long-term indebtedness incurred by us, our investment funds and our portfolio companies bears interest at fluctuating interest rates,primarily based on the London interbank offered rate ("LIBOR"). In July 2017, the U.K. Financial Conduct Authority (the authority that regulates LIBOR)announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. Such announcement indicates that LIBOR in its currentform will likely cease to exist after 2021, and instead, a new method of calculating LIBOR or an alternative reference rate will be established. For example, theAlternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, identified the Secured Overnight Financing Rate("SOFR") as its recommended alternative reference rate, which measures the cost of borrowing cash overnight collateralized by U.S. Treasury securities. However,it is unknown whether SOFR or any other alternative reference rates will attain market acceptance as replacements for LIBOR, and various industry organizationsare still developing workable transition mechanisms. As such, it is not possible to predict all potential effects of these changes on U.S. and global credit markets.While agreements governing our corporate revolving credit facility and our capital markets revolving credit facilities either mature before the end of 2021 orcontain a "fallback" provision providing for alternative rate calculations in the event LIBOR is unavailable, we, our investment funds and our portfolio companieshave other LIBOR-based debt instruments and related hedging arrangements that are likely to require amending or restructuring, which may be difficult, costly andtime consuming. In addition, from time to time our funds invest in floating rate loans and investment securities whose interest rates are indexed to LIBOR.Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR, or any changes announced with respect to suchreforms, may result in a sudden or prolonged increase or decrease in the reported LIBOR rates and the value of LIBOR-based loans and securities, including thoseof other issuers we or our funds currently own or may in the future own, and may impact the availability and cost of hedging instruments and borrowings, includingpotentially, an increase to our and our funds' interest expense and cost of capital. Any increased costs or reduced profits as a result of the foregoing may adverselyaffect our liquidity, results of operations and financial condition.We have significant liquidity requirements, and adverse market and economic conditions may adversely affect our sources of liquidity, which could adverselyaffect our business operations in the future.We expect that our primary liquidity needs will consist of cash required to:•continue to grow our business lines, including seeding new strategies, funding our capital commitments made to existing and future funds, co-investmentsand any net capital requirements of our capital markets companies and otherwise supporting investment vehicles that we sponsor;•warehouse investments in portfolio companies or other investments for the benefit of one or more of our funds, accounts or CLOs pending thecontribution of committed capital by the investors in such vehicles, and advancing capital to them for operational or other needs;•service debt obligations including the payment of obligations at maturity, on interest payment dates or upon redemption, as well as any contingentliabilities that may give rise to future cash payments;•fund cash operating expenses and contingencies, including for litigation matters;34Table of Contents•payment of additional corporate income taxes following the Conversion;•pay amounts that may become due under our tax receivable agreement with KKR Holdings;•pay cash dividends in accordance with our dividend policy for our Class A common stock or the terms of our preferred stock;•underwrite commitments, advance loan proceeds and fund syndication commitments within our capital markets business;•acquire other assets for our Principal Activities business line, including our office space, other businesses, investments and assets, some of which may berequired to satisfy regulatory requirements for our capital markets business or risk retention requirements for CLOs (to the extent it continues to apply);and•repurchase our Class A common stock pursuant to the share repurchase program or other securities issued by us.These liquidity requirements are significant and, in some cases, involve capital that will remain invested for extended periods of time. As of December 31,2019, we have approximately $5.2 billion of remaining unfunded capital commitments to our investment funds. Our commitments to our funds will requiresignificant cash outlays over time, and there can be no assurance that we will be able to generate sufficient cash flows from realizations of investments to fundthem. We have also used our balance sheet to provide credit support to our general partner's obligations to our funds, to provide certain guarantees in commercialreal estate financing transactions and to support certain transactions by our funds. In addition, as of December 31, 2019, we had $27.0 billion of indebtedness outstanding under our credit facilities and debt securities on a GAAP basis and$4.0 billion of indebtedness outstanding under our credit facilities and debt securities on a non-GAAP basis, and $2.3 billion of cash and cash equivalents on aGAAP basis and $2.8 billion of cash and short-term investments on a non-GAAP basis. The non-GAAP based measures exclude the assets and liabilities of ourinvestment funds, CLOs and CMBS, and other consolidated entities that are not subsidiaries of KKR & Co. Inc., but include debt obligations of KKR FinancialHoldings LLC ("KFN"), which as of December 31, 2019, consisted of $948.5 million, which do not provide for recourse to KKR beyond the assets of KFN. Our$1.0 billion corporate revolving credit facility is scheduled to mature in 2023. Depending on market conditions, we may not be able to refinance or renew all or partof these senior notes or our corporate revolving credit facility, or find alternate sources of financing (including issuing equity), on commercially reasonable termsor at all. Furthermore, the incurrence of additional debt by us or our subsidiaries in the future could result in downgrades of our existing corporate credit ratings,which could limit the availability of future financing and increase our costs of borrowing.In addition, the underwriting commitments for our capital markets business may require significant cash obligations, and these commitments may also putpressure on our liquidity. The holding company for our capital markets business has entered into a credit agreement that provides for revolving borrowings of up to$500 million, which can only be used in connection with our capital markets business, including placing and underwriting securities offerings, and a 364-dayrevolving credit agreement that provides for revolving borrowings of up to $750 million, which can only be used to facilitate the settlement of debt transactionsyndicated by our capital markets business. To the extent we commit to buy and sell an issue of securities in firm commitment underwritings or otherwise, we maybe required to borrow under these revolving credit facilities to fund such obligations, which, depending on the size and timing of the obligations, may limit ourability to enter into other underwriting arrangements or similar activities, service existing debt obligations or otherwise grow our business. Further, these facilitiesare scheduled to mature in 2021 and 2020, respectively, and depending on the market conditions, we may not be able to refinance or renew them on commerciallyreasonable terms or at all. Regulatory net capital requirements may also limit the ability of our broker-dealer subsidiaries to participate in underwriting or othertransactions or to allocate our capital more efficiently across our businesses.In the event that our liquidity requirements were to exceed available liquid assets for the reasons specified above or for any other reasons, we could be forcedto sell assets or seek to raise debt or equity capital on unfavorable terms. For further discussion of our liquidity needs, see "Management's Discussion and Analysisof Financial Condition and Results of Operations—Liquidity."The "clawback" provisions in our governing agreements may give rise to a contingent obligation that may require us to return or contribute amounts to ourfunds and fund investors.The partnership documents governing our carry-paying funds, including funds relating to private equity, growth equity, infrastructure, energy, real estate,special situations, private credit opportunities, direct lending, revolving credit and core35Table of Contentsinvestments, generally include a "clawback" provision that, if triggered, may give rise to a contingent obligation requiring the general partner to return amounts tothe fund for distribution to the fund investors at the end of the life of the fund. Under a clawback obligation, upon the liquidation of a fund, the general partner isrequired to return, typically on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, theaggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimatelyentitled, including the effects of any performance thresholds. We would continue to be subject to the clawback obligation even if carry has been distributed tocurrent or former employees or other personnel through our carry pool, and we would be required to seek other sources of liquidity to fund such an obligation ifsuch carry is not returned to us by them. As of December 31, 2019, $36.9 million of carried interest was subject to this clawback obligation, assuming that allapplicable carry-paying funds were liquidated at their December 31, 2019 fair values. Had the investments in such carry-paying funds been liquidated at zero value,the clawback obligation would have been approximately $2.5 billion.Carry distributions may give rise to clawback obligations that may be allocated to us and our principals who participate in the carry pool. In addition,guarantees of or similar arrangements relating to clawback obligations in favor of third-party investors in an individual investment partnership by entities we ownmay limit distributions of carried interest more generally.Strategic investor partnerships have longer investment periods and invest in multiple strategies, which may increase the possibility of a "netting hole," whichwill result in less carried interest for us, as well as clawback liabilities.We have entered into strategic partnerships with certain investors, generally through separately managed accounts, which have longer investment periods,often of 20 years or more, and provide for investments across different investment strategies (which we refer to as "strategic investor partnerships"). Compared toour traditional private equity fund structure, these partnerships may offer reduced fees for fund investors and may require netting across various funds in whichthey invest. Generally, if a fund's investments have fair values above cost overall, but one or more of its investments has a fair value that is below cost, the shortfallbetween cost and fair value for such investment (which we refer to as a "netting hole") must be "filled" by returning invested capital to such fund's limited partnersin an amount equal to such shortfall before any realized gains on individual investments can be distributed to the general partner as carried interest. The longerinvestment period and cross-fund netting feature of the strategic investor partnerships increase the possibility of netting holes compared to our traditional privateequity fund structure, which, if present, will reduce the carried interest we otherwise would earn. Similarly, the longer duration of these partnerships can increasethe risk of clawback, because over a longer investment period, a period of reduced performance following periods of performance adequate to realize carriedinterest is more likely to occur. See "—The 'clawback' provisions in our governing agreements may give rise to a contingent obligation that may require us to returnor contribute amounts to our funds and fund investors."Our earnings and cash flow are highly variable due to the nature of our business and we do not intend to provide earnings guidance, each of which may causethe value of interests in our business to be volatile.Our earnings are highly variable from quarter to quarter due to the volatility of investment returns of most of our funds, other investment vehicles and ourbalance sheet assets and the transaction and other fees earned from our businesses. We recognize earnings on investments in our funds based on our allocable shareof realized and unrealized gains (or losses) reported by such funds and for certain of our recent funds, when a performance hurdle is achieved. During times ofmarket volatility the fair value of our funds and our balance sheet assets are more variable, and as publicly traded equity securities currently represent a significantproportion of the assets of many of our funds and balance sheet assets, volatility in the equity markets may have a significant impact on our reported results. See"Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Fair Value Measurements" for adiscussion of the impact of equity markets on the value of private equity investments. A decline in realized or unrealized gains, a failure to achieve a performancehurdle or an increase in realized or unrealized losses, would adversely affect our net income.Fee income, which we recognize when contractually earned, can vary due to fluctuations in AUM, the number of investment transactions made by our funds,the number of portfolio companies we manage, the fee provisions contained in our funds and other investment products and transactions by our capital marketsbusiness. In any particular quarter, fee income may vary significantly due to the variances in size and frequency of monitoring fees (including terminationpayments), transaction fees or fees received by our capital markets business. Our total management, monitoring and transaction fees (net of fee credits) for theyears ended December 31, 2019, 2018 and 2017 were $1,504.6 million, $1,569.1 million and $1,309.0 million, respectively, on a GAAP basis, and $1,861.5million, $1,853.9 million and $1,502.0 million, respectively, on a non-GAAP basis. We may create new funds or investment products or vary the terms of ourfunds or investment products (for example our funds now include performance hurdles), which may alter the composition or mix of our income from time to time.In particular, in our private equity and other funds raised since 2014, we credit all monitoring and transaction fees generated by the fund's investments against fundmanagement fees, which resulted in a decrease of our monitoring and transaction fee income.36Table of ContentsWe may also experience fluctuations in our results from quarter to quarter, including our revenue and net income, due to a number of other factors, includingchanges in the values of our funds' investments, changes in the amount of distributions or interest earned in respect of investments, changes in our operatingexpenses, the degree to which we encounter competition and general market and economic conditions. In addition, our earnings and cash flows are dependent inpart on the performance of KFN, a specialty finance company that we acquired in 2014, and are subject to the risks to KFN's businesses as described elsewhere inthe report. Although KFN is a subsidiary of KKR, KFN has its own indebtedness outstanding. The terms of its indebtedness impose limitations on KFN's currentand future operations and may restrict its ability to make distributions to KKR. For the years ended December 31, 2019, 2018 and 2017, our net income attributableto KKR & Co. Inc. Class A Common Stockholders was $1,971.7 million, $1,097.7 million and $984.9 million, respectively, and our after-tax distributable earningswas $1,405.3 million, $1,597.2 million and $1,355.6 million, respectively. Such fluctuations may lead to variability in the value of interests in our business andcause our results for a particular period not to be indicative of our performance in future periods. It may be difficult for us to achieve steady growth in net incomeand cash flow on a quarterly basis, which could in turn lead to large adverse movements in the value of interests in our business.The timing and receipt of carried interest from our investment funds are unpredictable and will contribute to the volatility of our cash flows. For example, withrespect to our private equity funds, carried interest is distributed to the general partner of a private equity fund with a clawback provision only after all of thefollowing are met: (i) a realization event has occurred (e.g., sale of a portfolio company, dividend, etc.); (ii) the fund has achieved positive overall investmentreturns since its inception, in excess of performance hurdles where applicable, and is accruing carried interest; and (iii) with respect to investments with a fair valuebelow cost (which we refer to as a netting hole), cost has been returned to fund investors in an amount sufficient to reduce remaining cost to the investments' fairvalue. Carried interest payments from investments depend on our funds' performance and opportunities for realizing gains, which may be limited. It takes asubstantial period of time to identify attractive investment opportunities, to raise all the funds needed to make an investment and then to realize the cash value (orother proceeds) of an investment through a sale, public offering or other exit. To the extent an investment is not profitable, no carried interest will be received fromour funds with respect to that investment and, to the extent such investment remains unprofitable, we will only be entitled to a management fee on that investment.Furthermore, certain vehicles and separately managed accounts may not provide for the payment of any carried interest at all. Even if an investment proves to beprofitable, it may be several years before any profits can be realized in cash. We cannot predict when, or if, any realization of investments will occur. In addition, iffinance providers, such as commercial and investment banks, make it difficult for potential purchasers to secure financing to purchase companies in our investmentfunds' portfolio, it may decrease potential realization events and the potential to earn carried interest. A downturn in the equity markets would also make it moredifficult to exit investments by selling equity securities. If we were to have a realization event in a particular quarter, the event may have a significant impact on ourcash flows during the quarter that may not be replicated in subsequent quarters. A decline in realized or unrealized gains, or an increase in realized or unrealizedlosses, would adversely affect our investment income, which could further increase the volatility of our quarterly results.The timing and receipt of carried interest also vary with the life cycle of certain of our funds. Our carry-paying funds that have completed their investmentperiods and are able to realize mature investments, sometimes referred to as being in a "harvesting period," are more likely to make larger distributions than ourcarry-paying funds that are in their fund raising or investment periods that precede the harvesting period. During times when a significant portion of our AUM isattributable to carry-paying funds that are not in their harvesting periods, we may receive substantially lower carried interest distributions.In addition, we have formed strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake (which we refer to as "hedgefund partnerships"). These third-party hedge fund managers offer a variety of investment strategies, including hedge fund-of-funds, equity hedge funds and credithedge funds. As a result, we are indirectly exposed to the volatility and fluctuations in financial results of these hedge fund managers. For example, certain fundsmanaged by the hedge fund managers have "high-water mark" provisions whereby if the funds have experienced losses in prior periods, the fund managers will notbe able to earn incentive fees with respect to a fund investor's account until the net asset value of the fund investor's account exceeds the highest period end valueon which incentive fees were previously paid. The incentive fees the hedge fund managers earn are therefore dependent on the net asset value of these funds, whichcould add to volatility in our quarterly results and cash flow.A decline in the pace or size of investment by our funds would result in our receiving less revenue from fees.The transaction and management or monitoring fees that we earn are driven in part by the pace at which our funds make investments and the size of thoseinvestments. Any decline in that pace or the size of investments would reduce our revenue from transaction and management or monitoring fees. Likewise, duringan attractive selling environment, our funds may capitalize on increased opportunities to exit investments. Any increase in the pace at which our funds exitinvestments, if not offset by new commitments and investments, would reduce future management fees. Additionally, in certain of our funds that37Table of Contentsderive management fees only on the basis of invested capital, the pace at which we make investments, the length of time we hold such investment and the timing ofdisposition will directly impact our revenues. Many factors could cause such a decline in the pace of investment or the transaction and management or monitoringfees we receive, including:•the inability of our investment professionals to identify attractive investment opportunities;•competition for such opportunities among other potential acquirers;•unfavorable market and economic conditions;•decreased availability of capital or financing on attractive terms;•our failure to consummate identified investment opportunities because of business, regulatory or legal complexities and adverse developments in the U.S.or global economy or financial markets;•terms we may agree with or provide to our fund investors or investors in separately managed accounts with respect to fees such as increasing thepercentage of transaction or other fees we may share with our fund investors; and•new regulations, guidance or other actions provided or taken by regulatory authorities.Our inability to raise additional or successor funds (or raise successor funds of a comparable size as our predecessor funds) could have a material adverseimpact on our business.Our current private equity funds and certain other funds and investment vehicles have a finite life and a finite amount of commitments from fund investors.Once a fund nears the end of its investment period, our success depends on our ability to raise additional or successor funds in order to keep making investmentsand, over the long term, earning management fees (although our funds and investment vehicles continue to earn management fees after the expiration of theirinvestment periods, they are generally at a reduced rate). Even if we are successful in raising successor funds, to the extent we are unable to raise successor fundsof a comparable size to our predecessor funds or the extent that we are delayed in raising such successor funds, our revenues may decrease as the investment periodof our predecessor funds expire and associated fees decrease. For example, European Fund IV was smaller than its predecessor fund and North America Fund XIwas smaller than its predecessor fund. The performance of our funds also impacts our ability to raise capital, and deterioration in the performance of our fundswould result in challenges to future fundraising. The evolving preferences of our fund investors may necessitate that alternatives to the traditional investment fundstructure, such as separately managed accounts, smaller funds and co-investment vehicles, become a larger part of our business going forward. This could increaseour cost of raising capital at the scale we have historically achieved. Furthermore, in order to raise capital for new strategies and products without drawing capitalaway from our existing products, we will need to seek new sources of capital such as individual investors.Our ability to raise new funds could also be hampered if the general appeal of private equity and alternative investments were to decline. An investment in alimited partner interest in a private equity fund is less liquid than an exchange traded instrument and the returns on such investment may be more volatile than aninvestment in securities for which there is a more active and transparent market. Private equity and alternative investments could fall into disfavor as a result ofconcerns about liquidity and short-term performance. Institutional investors in private equity funds that have suffered from decreasing returns, liquidity pressure,increased volatility or difficulty maintaining target asset allocations may materially decrease or temporarily suspend making new investments in private equityfunds. Such concerns could be exhibited, in particular, by public pension funds, which have historically been among the largest investors in alternative assets.Many public pension funds are significantly underfunded and their funding problems have been, and may in the future be, exacerbated by economic downturn.Concerns with liquidity could cause such public pension funds to reevaluate the appropriateness of alternative investments, and other institutional investors mayreduce their overall portfolio allocations to alternative investments. This could result in a smaller overall pool of available capital in our industry. There is noassurance that the amount of commitments investors are making to alternative investment funds will continue at recent levels or that our ability to raise capital frominvestors will not be hampered.In addition, the asset allocation rules or regulations or investment policies to which such third-party investors are subject could inhibit or restrict the ability ofthird-party investors to make investments in our investment funds. Coupled with a lack of distributions from their existing investment portfolios, many of theseinvestors may have been left with disproportionately outsized remaining commitments to, and invested capital in, a number of investment funds, which maysignificantly limit their ability to make new commitments to third-party managed investment funds such as those advised by us.38Table of ContentsFund investors may also seek to redeploy capital away from certain of our credit or other non-private equity investment vehicles, which permit redemptions onrelatively short notice in order to meet liquidity needs or invest in other asset classes. We believe that our ability to avoid excessive redemption levels primarilydepends on our funds' continued satisfactory performance, although redemptions may also be driven by other factors important to our fund investors, includingtheir need for liquidity and compliance with investment mandates, even if our performance is superior. Investors' liquidity needs tend to be more pronouncedduring periods of market volatility. Any such redemptions would decrease our AUM and revenues.In addition, the Dodd Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), under what has become known as the "Volcker Rule,"broadly prohibits depository institution holding companies (including foreign banks with U.S. branches, agencies or commercial lending companies and certaininsurance companies), insured depository institutions and their subsidiaries and controlled affiliates, or "banking entities," from investing in "covered funds,"including third-party private equity funds like ours. As a result, banking entities, subject to certain limited exemptions, had to conform their existing covered fundinvestments and relationships to the Volcker Rule, and are limited in their ability to undertake new contractual commitments to private equity funds like ours. Inaddition to federal law, changes in state and local law may limit investment activities of state pension plans and insurance companies.The number of funds raising capital varies from year to year, and in years where relatively few funds are raising capital, the growth of our AUM, FPAUM andassociated fees may be significantly lower. There is no assurance that fundraises for new strategies or successor funds will experience similar success as ourexisting or predecessor funds in the future.Our investors in future funds may negotiate to pay us lower management fees, reimburse us for fewer expenses or change the economic terms of our futurefunds, including with respect to transaction fees, management fees or monitoring fees, to be less favorable to us than those of our existing funds, which couldmaterially and adversely affect our revenues or profitability.In connection with raising new funds or securing additional investments in existing funds, we negotiate terms for such funds and investments with our fundlimited partners. The outcome of such negotiations could result in our agreement to terms that are materially less favorable to us than the terms of prior funds wehave advised or funds advised by our competitors. Such terms could restrict our ability to raise investment funds with investment objectives or strategies thatcompete with existing funds, reduce fee revenues we earn, reduce the percentage of profits on third-party capital in which we share, increase the performancehurdle required to be generated on investment prior to our right to receive carried interest, add expenses and obligations for us in managing the fund or increase ourpotential liabilities. Furthermore, as institutional investors increasingly consolidate their relationships with investment firms and competition becomes more acute,we may receive more requests to modify the terms in our new funds. Certain of our newer funds also include more favorable terms for fund investors that committo early closes for our funds. Additionally, in certain funds, we have agreed to charge management fees based on invested capital or net asset value as opposed tocharging management fees based on committed capital. In certain cases, we have provided "fee holidays" to certain investors during which we do not chargemanagement fees for a fixed period of time (such as the first six months). Agreement to terms that are materially less favorable to us could result in a materialdecrease in our profitability.Certain institutional investors have also publicly criticized certain fund fee and expense structures, including monitoring fees and transaction fees. We havereceived and expect to continue to receive requests from a variety of fund investors and groups representing such investors to decrease fees and to modify ourcarried interest and incentive fee structures, which could result in a reduction or delay in the timing of receipt of the fees and carried interest and incentive fees weearn. The SEC has focused on certain fund fees and expenses, including whether such fees and expenses were appropriately disclosed to fund limited partners, andsuch focus may lead to increased publicity that could cause fund investors to further resist our receipt of certain fees and expense reimbursements. In our flagshipprivate equity funds, we have increased the percentage of transaction and monitoring fees that are credited against fund management fees to 100% of the amount ofthe transaction and monitoring fees attributable to that fund.In addition, certain institutional investors, including sovereign wealth funds and public pension funds, have demonstrated an increased preference foralternatives to the traditional investment fund structure, such as separately managed accounts, specialized funds and co-investment vehicles. We also have enteredinto strategic investor partnerships with specific investors whereby we manage that investor's capital across a variety of our products on separately negotiatedterms. There can be no assurance that such alternatives will be as profitable to us as the traditional investment fund structure, and the impact such a trend couldhave on our results of operations, if widely implemented, is unclear. Moreover, certain institutional investors are demonstrating a preference to in-source their owninvestment professionals and to make direct investments in alternative assets without the assistance of investment advisers like us. Such institutional investors maybecome our competitors and could cease to be our clients.39Table of ContentsAny agreement to or changes in terms less favorable to us could materially and adversely affect our revenues and profitability.The investment management business is intensely competitive, which could have a material adverse impact on our business.We compete as an investment manager for both fund investors and investment opportunities. The investment management business is highly fragmented, withour competitors consisting primarily of sponsors of public and private investment funds, real estate development companies, BDCs, investment banks, commercialfinance companies and operating companies acting as strategic buyers of businesses. We believe that competition for fund investors is based primarily on:•investment performance;•investor liquidity and willingness to invest;•investor perception of investment managers' drive, focus and alignment of interest;•business reputation;•the duration of relationships with fund investors;•the quality of services provided to fund investors;•pricing;•fund terms (including fees);•the relative attractiveness of the types of investments that have been or will be made; and•consideration for environmental, social and governance issues.We believe that competition for investment opportunities is based primarily on the pricing, terms and structure of a proposed investment and certainty ofexecution.A number of factors serve to increase our competitive risks:•a number of our competitors in some of our businesses may have greater financial, technical, marketing and other resources and more personnel than wedo, and, in the case of some asset classes or geographic regions, longer operating histories, more established relationships, greater expertise or betterreputation;•fund investors may materially decrease their allocations in new funds due to their experiences following an economic downturn, the limited availability ofcapital, regulatory requirements or a desire to consolidate their relationships with investment firms;•some of our competitors may have agreed to terms on their investment funds or products that are more favorable to fund investors than our funds orproducts, such as lower management fees, greater fee sharing or higher performance hurdles for carried interest, and therefore we may be forced to matchor otherwise revise our terms to be less favorable to us than they have been in the past;•some of our funds may not perform as well as competitors' funds or other available investment products;•our competitors have raised or may raise significant amounts of capital, and many of them have similar investment objectives and strategies to our funds,which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternativeinvestment strategies seek to exploit;•some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create competitivedisadvantages for us with respect to investment opportunities;•some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider awider variety of investments and to bid more aggressively than us for investments;40Table of Contents•some of our competitors may be subject to less regulation or less regulatory scrutiny and accordingly may have more flexibility to undertake and executecertain businesses or investments than we do and/or bear less expense to comply with such regulations than we do;•there are relatively few barriers to entry impeding the formation of new funds, including a relatively low cost of entering these businesses, and thesuccessful efforts of new entrants into our various lines of business, including major commercial and investment banks and other financial institutions,have resulted in increased competition;•some fund investors may prefer to invest with an investment manager that is not publicly traded, is smaller or manages fewer investment products; and•other industry participants will from time to time seek to recruit our investment professionals and other employees away from us.We may lose investment opportunities in the future if we do not match investment prices, structures and terms offered by competitors. Our competitors that arecorporate buyers may be able to achieve synergistic cost savings in respect of an investment, which may provide them with a competitive advantage in bidding foran investment. Alternatively, we may experience decreased investment returns and increased risks of loss if we match investment prices, structures and termsoffered by competitors. Moreover, as a result, if we are forced to compete with other investment firms on the basis of price, we may not be able to maintain ourcurrent fund fee, carried interest or other terms. There is a risk that fees and carried interest in the alternative investment management industry will decline, withoutregard to the historical performance of a manager. Fee or carried interest income reductions on existing or future funds, without corresponding decreases in our coststructure, could materially and adversely affect our revenues and profitability.In addition, if interest rates were to rise or if market conditions for competing investment products become or are more favorable and such products begin tooffer rates of return superior to those achieved by our funds, the attractiveness of our funds relative to investments in other investment products could decrease.This competitive pressure could materially and adversely affect our ability to make successful investments and limit our ability to raise future funds, either ofwhich would adversely impact our business, results of operations and cash flow.We are subject to increasing focus by our fund investors, our stockholders and regulators on environmental, social and governance ("ESG") matters.Our fund investors, stockholders, regulators and other stakeholders are increasingly focused on ESG matters. Certain fund investors, including public pensionfunds, have considered our record of socially responsible investing and other ESG factors in determining whether to invest in our funds. Similarly, certain of ourstockholders, particularly institutional investors, use third-party benchmarks or scores to measure our ESG practices, and decide whether to invest in our commonstock or engage with us to require changes to our practices. If our ESG practices do not meet the standards set by these fund investors or stockholders, they maychoose not to invest in our funds or exclude our common stock from their investments, and we may face reputational challenges by other stakeholders. Theoccurrence of any of the foregoing could have a material adverse impact on new fundraises and negatively affect the price of our stock. In addition, there has alsobeen an increased regulatory focus on ESG-related practices by investment managers. The SEC has examined the methodology used by ESG funds for determiningsocially responsible investments and EU legislators are expected to adopt new rules to standardize the definition of environmentally sustainable investing. Ifregulators disagree with the procedures or standards we use for ESG investing, or new regulation or legislation, if adopted, requires a methodology of measuring ordisclosing ESG impact that is different from our current practice, our business and reputation could be adversely affected.Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely impact our effective tax rateand tax liability.Our effective tax rate and tax liability is based on the application of current income tax laws, regulations and treaties. These laws, regulations and treaties arecomplex, and the manner which they apply to us and our funds is sometimes open to interpretation. Significant management judgment is required in determiningour provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. Althoughmanagement believes its application of current laws, regulations and treaties to be correct and sustainable upon examination by the tax authorities, the taxauthorities could challenge our interpretation resulting in additional tax liability or adjustment to our income tax provision that could increase our effective tax rate.Regarding the impact of the Conversion on our income taxes, see Item 8. Financial Statements and Supplementary Data—Note 11 "Income Taxes."41Table of ContentsIn addition, tax laws, regulations or treaties newly enacted or enacted in the future may cause us to revalue our net deferred tax assets and have a materialchange to our effective tax rate and tax liabilities. For example, the Tax Cuts and Jobs Act, which was enacted in December 2017 and amended various aspects ofU.S. federal income tax legislation (the "2017 Tax Act"), has resulted in various changes to U.S. tax laws, including meaningful reduction to the U.S. federalcorporate income tax rate and a partial limitation on the deductibility of business interest expense, which could have a material effect on our business operationsand our funds' investment activities. These and other changes from the 2017 Tax Act, including the changes to the carryback and carryforward of net operatinglosses, U.S. taxation on earnings from international business operations and certain modifications to the Section 162(m) of the Code, could also have a significanteffect on the business of our portfolio companies. In December 2019, the Internal Revenue Service (the "IRS") released proposed regulations under Section162(m), which addressed changes made by the 2017 Tax Act and, among other things, extended the coverage of Section 162(m) to include compensation paid by apartnership for services performed for it by a covered employee of a corporation that is a partner in the partnership. The proposed regulations, if they becomeeffective in their current form, could meaningfully reduce the amount of tax deductions available to us. Additionally, foreign and state and local governments mayenact tax laws in response to the 2017 Tax Act that could result in further changes to foreign and state and local taxation and materially affect our financial positionand results of operations.The U.S. Congress, the Organization for Economic Co-operation and Development (the "OECD") and other government agencies in jurisdictions in which weand our affiliates invest or do business have maintained a focus on issues related to the taxation of multinational companies, such as KKR. The OECD, whichrepresents a coalition of member countries, is contemplating changes to numerous long-standing tax principles through its base erosion and profit shifting("BEPS") project, which is focused on a number of issues, including profit shifting among affiliated entities in different jurisdictions, interest deductibility andeligibility for the benefits of double tax treaties. Several of the proposed measures, including measures covering treaty abuse (including an anti-abuse "principalpurpose" test that would deny treaty benefits to the extent that obtaining such benefit was one of the principal purposes of any arrangement or transaction thatresulted directly or indirectly in such benefit), the deductibility of interest expense, local nexus requirements, transfer pricing and hybrid mismatch arrangementsare potentially relevant to some of our structures and could have an adverse tax impact on our funds, investors and/or our portfolio companies. Some membercountries have been moving forward on the BEPS agenda but, because timing of implementation and the specific measures adopted will vary among participatingstates, significant uncertainty remains regarding the impact of BEPS proposals. If implemented, these and other proposals could result in a loss of tax treatybenefits and increased taxes on income from our investments. In addition, the OECD is working on a "BEPS 2.0" initiative, which is aimed at (1) shifting taxingrights to the jurisdiction of the consumer and (2) ensuring all companies pay a global minimum tax. New rules could be recommended by the end of 2020 and ifimplemented could have a significant impact on KKR, its portfolio companies and its investment structures. The timing and scope of any provisions currently aresubject to significant uncertainty. We depend on our founders and other key personnel, the loss of whose services could have a material adverse effect on our business, results of operations andfinancial condition.We depend on the efforts, skills, reputations and business contacts of our employees, including our founders, Henry Kravis and George Roberts, and other keypersonnel, the information and deal flow they and others generate during the normal course of their activities and the synergies among the diverse fields ofexpertise and knowledge held by our professionals. Accordingly, our success depends on the continued service of these individuals, who are not obligated toremain employed with us. The loss of the services of any of them could have a material adverse effect on our revenues, net income and cash flows and could harmour ability to maintain or grow AUM in existing funds or raise additional funds in the future.Our employees and other key personnel possess substantial experience and expertise and have strong business relationships with investors in our funds andother members of the business community. As a result, the loss of these personnel could jeopardize our relationships with investors in our funds and members ofthe business community and result in the reduction of AUM or fewer investment opportunities. For example, if any of our key personnel were to join or form acompeting firm, our business, results of operations and financial condition could suffer.Furthermore, the agreements governing our committed capital funds generally provide that in the event certain "key persons" (for example, investmentprofessionals who are named as "key executives" for certain geographically or product focused funds) cease to actively manage a fund or be substantially involvedin KKR activities, investors in the fund will be entitled to reduce, in whole or in part, their capital commitments available for further investments on an investor-by-investor basis. In the case of certain of our fully paid-up funds, investors may be permitted to terminate their investment in the event a "key persons" provision istriggered, which could possibly lead to a liquidation of those funds. In addition, the occurrence of such a "key person" event could cause us to agree to lessfavorable ongoing terms with respect to the affected fund. Although we periodically engage in discussions with the limited partners of our funds regarding a waiverof such provisions with respect to executives involved in geographically or product focused funds whose departures have occurred or are anticipated, such42Table of Contentswaiver is not guaranteed, and our limited partners' refusal to provide a waiver may have a material adverse effect on our revenue, net income and cash flow.If we cannot retain and motivate our employees and other key personnel and recruit, retain and motivate new employees and other key personnel, our business,results of operations and financial condition could be materially and adversely affected.Our most important asset is our people, and our continued success is highly dependent upon the efforts of our employees and other key personnel, and to asubstantial degree on our ability to retain and motivate our employees and other key personnel and to strategically recruit, retain and motivate new talentedemployees, including qualified investment professionals. However, we may not be successful in these efforts as the market for talented and qualified candidates isextremely competitive. Our ability to recruit, retain and motivate our employees is dependent on our ability to offer highly attractive incentive opportunities. Underthe 2017 Tax Act, investments must be held for more than three years, rather than the prior requirement of more than one year, for carried interest to be treated forU.S. federal income tax purposes as capital gain. The longer holding period requirement may result in some of our carried interest being treated as ordinaryincome, which would materially increase the amount of taxes that our employees and other key personnel would be required to pay, thereby adversely affecting ourability to offer attractive incentive opportunities. In addition, following the 2017 Tax Act, the tax treatment of carried interest may continue to be an area of focusfor policymakers and government officials, which could result in a further regulatory action by federal or state governments. For example, certain states, includingNew York and California, have proposed legislation to levy additional state tax on carried interest, which may also negatively affect our ability to attract and retainemployees and key personnel. Similarly, changes in the United Kingdom with respect to the taxation of carried interest, including the treatment of certain carriedinterest returns as income, which became effective from April 6, 2016, may impact our ability to recruit, retain and motivate employees and key personnel in theUnited Kingdom. In addition, there have been proposed laws and regulations that sought to regulate the compensation of certain of our employees. See "—Extensive regulation of our business affects our activities and creates the potential for significant liabilities and penalties. The possibility of increased regulatoryfocus or legislative or regulatory changes could materially and adversely affect our business." The loss of even a small number of our investment professionalscould jeopardize the performance of our funds and other investment products, which would have a material adverse effect on our results of operations. Efforts toretain or attract employees, including our investment professionals, may result in significant additional expenses, which could materially and adversely affect ourprofitability.Many of our employees hold interests in our business through KKR Holdings. These individuals historically received financial benefits from our business inthe form of distributions and amounts funded by KKR Holdings and through their direct and indirect participation in the value of KKR Group Partnership Unitsheld by KKR Holdings. While all of our employees receive base salaries from us, annual cash bonuses for certain employees were historically borne by KKRHoldings from its cash reserves based upon distributions on a portion of KKR Group Partnership Units held by KKR Holdings. However, substantially all units inKKR Holdings have been allocated to certain employees, and upon their vesting, distributions on vested units would belong to such unitholders and not beavailable to fund annual cash bonuses. In addition, under its dividend policy, KKR intends to make equal quarterly dividends to holders of its Class A commonstock in a fixed amount per share per quarter. In 2019, no annual cash bonuses were borne by KKR Holdings. Although KKR Holdings may fund a portion of thecash bonus payments from its cash reserves, if any, in future periods, we likely will continue to utilize our own funds for most, if not all, of the cash bonuspayments. In that event, either our profit margins or our employee retention or both may be adversely impacted. There can be no assurance that the carry pool willhave sufficient cash available to continue to make such cash payments in the future and fluctuations from the distributions generated from the carry pool, if notoffset by funds from other sources, including other performance-based income, could render our compensation less attractive. In any of these circumstances, ahigher percentage of our revenue would be paid out in the form of cash compensation, which could have a material adverse impact on our profit margins. Currently40% or 43%, as applicable, of the carried interest earned from our investment funds is allocated to our carry pool. We are not permitted under our certificate ofincorporation to increase the percentage of carried interest allocable to the carry pool without the consent of a majority of our independent directors.We have granted equity awards from our Equity Incentive Plans and expect to grant equity awards from our 2019 Equity Incentive Plan, which has caused andwill cause dilution. If we increase the use of equity awards in the future, expense associated with equity-based compensation may increase materially. For example,in connection with compensation in 2019, we allocated equity awards relating to 4.7 million shares of Class A common stock under our Equity Incentive Plans, andno KKR Holdings units were granted. KKR Holdings awards granted, if any, come from outstanding but previously unallocated units of KKR Holdings, andconsequently these grants do not increase the number of KKR Holdings units outstanding or outstanding shares of KKR Class A common stock on a fully-dilutedbasis. The value of our Class A common stock may drop in value or be volatile, which may make our equity less attractive to our employees.In July 2015, the SEC proposed rules, as mandated by the Dodd-Frank Act, requiring companies to develop and enforce recovery policies that in the event ofan accounting restatement, "claw back" from current and former executive officers incentive-based compensation they would not have received based on therestatement. In April and May 2016, the SEC also43Table of Contentsissued for public comment revised proposed rules designed to prohibit certain incentive-based compensation arrangements deemed to encourage inappropriate risktaking by covered financial institutions by providing "excessive" compensation, fees or benefits or that could lead to material losses. Although the SEC has notadopted the proposed rules to date, the clawback proposal was included in the SEC's 2019 fall short-term rule making agenda. Depending on the outcome of therule making process, the application of these rules to us could require us to substantially revise our compensation strategy, increase our compensation and othercosts, and materially and adversely affect our ability to recruit and retain qualified employees. In addition, less carried interest from the carry pool may be allocatedto certain of our employees, which may result in less cash payments to such employees. To the extent our equity incentive or carry pool programs are not effective,we may be limited in our ability to attract, retain and motivate talented employees and other key personnel and we may need to increase the level of cashcompensation that we pay.In addition, there is no guarantee that the confidentiality and restrictive covenant agreements to which our employees and other key personnel are subject,together with our other arrangements with them, will prevent them from leaving us, joining our competitors or otherwise competing with us. Depending on whichentity is a party to these agreements and/or the laws applicable to them, we may not be able to, or may choose not to, enforce them or become subject to lawsuits orother claims, and certain of these agreements might be waived, modified or amended at any time without our consent. Even when enforceable, these agreementsexpire after a certain period of time, at which point each of our employees and other key personnel are free to compete against us and solicit our fund investors andemployees. See "Certain Relationships and Related Transactions, and Director Independence—Confidentiality and Restrictive Covenant Agreements."We strive to maintain a work environment that reinforces our culture of collaboration, motivation and alignment of interests with fund investors. If we do notcontinue to develop and implement the right processes and tools to manage our changing enterprise and maintain our culture, our ability to compete successfullyand achieve our business objectives could be impaired, which could materially and adversely affect our business, results of operations and financial condition.Operational risks and data security breaches may disrupt our businesses, result in losses or limit our growth.We rely heavily on our financial, accounting and other data processing systems and on the systems of third parties who provide services to us. If any of thesesystems do not operate properly or are disabled, we could suffer financial loss, a disruption of our businesses, liability to our funds, regulatory intervention orreputational damage. In addition, we operate in businesses that are highly dependent on information systems and technology. For example, we face operational riskfrom errors made in the execution, confirmation or settlement of transactions. We also face operational risk from transactions not being properly recorded,evaluated or accounted for in our funds. In particular, our Public Markets business line is highly dependent on our ability to process and evaluate, on a daily basis,transactions across markets and geographies in a time-sensitive, efficient and accurate manner. Our and our third-party service providers' information systems andtechnology may not continue to be able to accommodate our growth, may not be suitable for new products and strategies and may be subject to security risks, andthe cost of maintaining such systems and technology may increase from our current level. Such a failure to accommodate growth, or an increase in costs related tosuch information systems and technology, could have a material adverse effect on our business. We are also dependent on an increasingly concentrated group ofthird-party vendors that we do not control for hosting solutions and technologies. A disaster or a disruption in technology or infrastructure that supports ourbusinesses, including a disruption involving electronic communications or other services used by us, our vendors or third parties with whom we conduct business,or directly affecting our principal offices, could have a material adverse impact on our ability to continue to operate our business without interruption. Our businesscontinuation or disaster recovery programs may not be sufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance andother safeguards might only partially reimburse us for our losses, if at all. Furthermore, most of our administrative personnel and our information system andtechnology infrastructure are located in our New York City office. Any disruption in the operation of, or inability to access, our New York City office could have asignificant impact on our business, and such risk of disruption or inaccessibility could be heightened during our planned move of our New York City office in2020.Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. We facevarious security threats on a regular basis, including ongoing cyber-security threats to and attacks on our information technology infrastructure that are intended togain access to our proprietary information, destroy data or disable, degrade or sabotage our systems. Although we take protective measures and endeavor to modifythem as circumstances warrant, our computer systems, software and networks may be vulnerable to unauthorized access, theft, misuse, computer viruses or othermalicious code, and other events that could have a security impact. We may be exposed to a more significant risk if these acts are taken by state actors. We and ouremployees have been and expect to continue to be the target of fraudulent calls and emails, and the subject of impersonations and fraudulent requests for money,and other forms of activities. The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. In addition,cyber-security has become a top priority for regulators around the world. Many jurisdictions in which we operate have44Table of Contentslaws and regulations relating to data privacy, cyber-security and protection of personal information, including the General Data Protection Regulation in theEuropean Union that became effective in May 2018 and the California Consumer Privacy Act that became effective in January 2020. Some jurisdictions have alsoenacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data. Breaches in security could potentiallyjeopardize our, our employees' or our fund investors' or counterparties' confidential and other information processed and stored in, and transmitted through, ourcomputer systems and networks, or otherwise cause interruptions or malfunctions in our, our employees', our fund investors', our counterparties' or third parties'operations, which could result in significant losses, increased costs, disruption of our business, liability to our fund investors and other counterparties, regulatoryintervention or reputational damage. Furthermore, if we experience a cyber-security incident and fail to comply with the relevant laws and regulations, it couldresult in regulatory investigations and penalties, which could lead to negative publicity and may cause our fund investors and clients to lose confidence in theeffectiveness of our security measures. Finally, we rely on third-party service providers for certain aspects of our business, including for certain informationsystems, legal services, technology, administration, tax and compliance matters. These third-party service providers could also experience any of the above cyber-security threats, fraudulent activities or security breaches, and as a result, unauthorized individuals could improperly gain access to our confidential data. Anyinterruption or deterioration in the performance of these third parties or cyber-security incidents involving these third parties could impair the quality of our and ourfunds' operations and could impact our reputation and materially and adversely affect our businesses and limit our ability to grow.Our portfolio companies also rely on data processing systems and the secure processing, storage and transmission of information, including payment andhealth information. A disruption or compromise of these systems could have a material adverse effect on the value of these businesses. Our funds may invest instrategic assets having a national or regional profile or in infrastructure, the nature of which could expose them to a greater risk of being subject to a terrorist attackor security breach than other assets or businesses. Such an event may have material adverse consequences on our investment or assets of the same type or mayrequire portfolio companies to increase preventative security measures or expand insurance coverage.Our organizational documents do not limit our ability to enter into new lines of businesses, and we may expand into new investment strategies, geographicmarkets and businesses, each of which may result in additional risks and uncertainties in our businesses.We intend, to the extent that market conditions warrant, to seek to grow our businesses by increasing AUM in existing businesses, pursuing new investmentstrategies (including investment opportunities in new asset classes), developing new types of investment structures and products (such as separately managedaccounts and structured products), and expanding into new geographic markets and businesses. We have in the past opened offices in Asia and the Middle East,and also developed a capital markets business in the United States, Europe, the Middle East and Asia-Pacific, which we intend to grow and diversify. We have alsolaunched a number of new investment initiatives in areas such as real estate, energy, infrastructure, growth equity and core investments. Introducing new types ofinvestment structures and products could increase the complexities involved in managing such investments, including to ensure compliance with regulatoryrequirements and terms of the investment. See "—We may not be successful in executing upon or managing the complexities of new investment strategies, marketsand businesses, which could adversely affect our business, results of operations and financial condition."Our organic growth strategy focuses on providing resources to foster the development of new product offerings and business strategies by our investmentprofessionals and launching successor and related products, such that our new strategies achieve a level of scale and profitability. Given our diverse platform, theseinitiatives could create conflicts of interests with existing products, increase our costs and expose us to new market risks, and legal and regulatory requirements.The success of our organic growth strategy will also depend on, among other things, our ability to correctly identify and create products that appeal to the limitedpartners of our funds and vehicles. While we have made significant expenditures to develop these new strategies and products, there is no assurance that they willachieve a satisfactory level of scale and profitability. To raise new funds and pursue new strategies, we have and expect to continue to use our balance sheet towarehouse seed investments, which may decrease the liquidity available for other parts of our business. If a new strategy or fund does not develop as anticipatedand such investments are not ultimately transferred to a fund, we may be forced to realize losses on these retained investments.We have and may continue to pursue growth through acquisitions of other investment management companies, acquisitions of critical business partners,strategic partnerships or other strategic initiatives, which may include entering into new lines of business. In addition, we expect opportunities will arise to acquireother alternative or traditional investment managers. For example, we have expanded our European credit business with our acquisition of Avoca in 2014. We havealso made minority investments in hedge fund managers, and we have entered into joint ventures with third parties to participate in new real estate investmentstrategies. On April 2018, we completed our transaction to form FS/KKR Advisor, a strategic BDC partnership with FS Investments, to provide investmentadvisory services to BDCs previously advised by us and FS Investments. To the extent45Table of Contentswe make strategic investments or acquisitions, undertake other strategic initiatives or enter into a new line of business, we will face numerous risks anduncertainties, including risks associated with:•our ability to successfully negotiate and enter into beneficial arrangements with our counterparties;•the required investment of capital and other resources;•the incurrence of substantial transaction-related costs including non-recurring transaction-related costs;•delays or failure to complete an acquisition or other transaction in a timely manner or at all due to a failure to obtain shareholder or regulatory approvalsor satisfy any other closing conditions, which may subject us to damages or require us to pay significant costs;•lawsuits challenging an acquisition or unfavorable judgments in such lawsuits, which may prevent the closing of the transaction, cause delays, or requireus to incur substantial costs including in costs associated with the indemnification of directors;•the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk or liability orhave not appropriately planned for such activities;•the possibility of diversion of management's time and attention from our core business;•the possibility of disruption of our ongoing business;•the failure to realize the anticipated benefits from an acquired business or strategic partnership in a timely manner, if at all;•combining, integrating or developing operational and management systems and controls including an acquired business's internal controls and procedures;•integration of the businesses including the employees of an acquired business;•potential increase in concentration of the investors in our funds;•disagreements with joint venture partners or other stakeholders in our hedge fund partnerships and our strategic partnerships;•the additional business risks of the acquired business and the broadening of our geographic footprint, including the risks associated with conductingoperations in foreign jurisdictions such as taxation;•properly managing conflicts of interests;•our ability to obtain requisite regulatory approvals and licenses without undue cost or delay and without being required to comply with materialrestrictions or material conditions that would be detrimental to us or to the combined organization; and•regulatory scrutiny or litigation exposure due to the activities of the acquired business, hedge fund partners or joint venture partners.Entry into new strategies or certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we arecurrently exempt, and may lead to increased litigation and regulatory risk and costs. If a new business generates insufficient revenues or if we are unable toefficiently manage our expanded operations, our results of operations will be adversely affected. Our strategic initiatives include joint ventures or the acquisition ofminority interests in third parties, in which case we will be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability,losses or reputational damage relating to, systems, controls and personnel that are not under our control.We may not be successful in executing upon or managing the complexities of new investment strategies, markets and businesses, which could adversely affectour business, results of operations and financial condition.Our growth strategy is based, in part, on the expansion of our platform through selective investment in, and development or acquisition of, businesses,products and investment strategies complementary to our business. The expansion into new products and geographies has demanded greater management attentionand dedication of resources to manage the increasing complexity46Table of Contentsof operations and regulatory compliance. For example, we developed and completed several structured transactions in which KKR provides subordinated or equityfinancing and third party investors provide senior financing to an investment vehicle that invests in our funds. In addition to the increased operational complexityand cost that arise from the structure and bespoke terms of these transactions, because of the subordinated nature of KKR's interests, we are at risk of losing all ofour capital committed to these transactions ahead of any third party if the vehicle's investments do not perform as expected.This growth strategy involves a number of risks, including the risk that: the expected synergies from a newly developed product or strategic alliance will notbe realized; the expected results will not be achieved; new strategies are not appropriately planned for or integrated into the firm; the new strategies may conflict,detract from or compete against our existing businesses; the investment process, controls and procedures that we have developed around our existing platform willprove insufficient or inadequate; or our information systems and technology, including related security systems, may prove to be inadequate.We have also entered into strategic investor partnerships and established separately managed accounts, which lack the scale of our traditional funds and aremore costly to administer. The prevalence of these accounts may also present conflicts and introduce complexity in the deployment of capital. The offering ofinvestment products to retail investors, including any funds registered under the Investment Company Act, BDCs and KREF, may result in increased complianceand litigation costs. We may also incur significant charges in connection with such investments, which ultimately may result in significant losses and costs. Suchlosses could adversely impact our business, results of operations and financial condition, as well as harm our professional reputation.If we are unable to syndicate the securities or indebtedness or realize returns on investments financed with our balance sheet assets, our liquidity, business,results of operations and financial condition could be materially and adversely affected.Our balance sheet assets provide us with a significant source of capital to grow and expand our business, increase our participation in our transactions andunderwrite commitments in our capital markets business. We have used our balance sheet assets to underwrite loans, securities or other financial instruments,which we generally expect to syndicate to third parties. We also entered into an arrangement with a third party that reduces our risk associated with holding unsoldsecurities when underwriting certain debt transactions, which enables our capital markets business to underwrite a larger amount. To the extent that we are unableto syndicate our commitments to third parties or our risk reduction arrangement does not fully perform as anticipated, we may be required to sell such investmentsat a significant loss or hold them indefinitely. If we are required to retain investments on our balance sheet for an extended period of time, our results would bedirectly impacted by the performance of such investments and it would also impair our capital markets business' ability to complete additional transactions, eitherof which could materially and adversely affect our business, results of operations and financial condition.We generally have a larger balance sheet than many of our competitors, and consequently, the performance of these balance sheet assets has a greater impacton our results of operations. In particular, during a period when our balance sheet assets are concentrated in a limited number of investments, results from a smallnumber of investments can have a significant impact on our balance sheet performance. Our success in deploying our balance sheet assets and generating returns onthis capital will depend, among other things, on the availability of suitable opportunities after giving priority in investment opportunities to our advised investmentfunds, the level of competition from other companies that may have greater financial resources and our ability to value potential development or acquisitionopportunities accurately and negotiate acceptable terms for those opportunities. To the extent we are unsuccessful in deploying our balance sheet assets, ourbusiness and financial results may suffer. In addition, our balance sheet assets have been a significant source of capital for new strategies and products. To theextent that such strategies or products are not successful or our balance sheet assets cease to provide adequate liquidity, we would realize losses on our balancesheet investments or become limited in our ability to seed new businesses or support our existing business as effectively as contemplated. For example, wedeveloped and completed several structured transactions in which our balance sheet provides subordinated or equity financing and third party investors providesenior financing to an investment vehicle that invests in our funds. In addition to the increased operational complexity and cost that arise from the structure andbespoke terms of these transactions, because of the subordinated nature of KKR's interests, we are at risk of losing all of our interests in these transactions ahead ofany third party if the investments do not perform as expected. As of December 31, 2019, total balance sheet investments made by KKR in these structuredtransactions were approximately $620 million. See "—We may not be successful in executing upon or managing the complexities of new investment strategies,markets and businesses, which could adversely affect our business, results of operations and financial condition."Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. The possibility of increasedregulatory focus or legislative or regulatory changes could materially and adversely affect our business.Our business is subject to extensive regulation, including periodic examinations, inquiries and investigations by governmental and self-regulatoryorganizations in the jurisdictions in which we operate around the world. Many of these47Table of Contentsregulators, including U.S. federal and state and foreign government agencies and self-regulatory organizations, are empowered to impose fines, suspensions ofpersonnel or other sanctions, including censure, the issuance of cease-and-desist orders or the suspension or expulsion of applicable licenses and memberships. Anyof the foregoing may damage our relationships with existing fund investors, impair our ability to raise capital for successor funds, impair our ability to carry outcertain investment strategies, or contravene provisions concerning compliance with law in agreements to which we are a party. Even if a sanction is not imposed orthe sanction imposed against us or our personnel by a regulator were small in monetary amount, the adverse publicity relating to the regulatory activity orimposition of these sanctions could harm our reputation and cause us to lose existing fund investors or fail to gain new fund investors.In recent years, the private equity industry has come under increased regulatory and news media scrutiny with governmental officials and regulators, includingthe SEC, focusing on the private equity industry's fees, allocation of expenses to funds, valuation practices, allocation of fund investment opportunities, particularlyco-investment opportunities, and disclosures to fund investors. The SEC's recent focus areas included, among others, the acceleration of monitoring fees, theallocation of broken-deal expenses, the disclosure, use and compensation of operating partners or consultants, outside business activities of firm principals andemployees, group purchasing arrangements, disclosure of affiliated service providers, general conflicts of interest disclosures, electronic messaging, cyber-security,data privacy and protection, foreign bribery and corruption, and policies covering insider trading, business continuity and transition planning. The SEC iscontinuing its pursuit of these or other focus areas. The SEC's 2020 examination priorities specifically identified private fund managers as a priority and, inparticular, highlighted its focus on managers that have a greater impact on retail investors, controls with respect to the misuse of material non-public information,and conflicts of interest including missing or inadequate disclosure of fees and expenses and the use of affiliated service providers for clients. Any actions by theSEC or other regulators against us or other investment managers can cause changes in business practices that could materially and adversely affect our business,results of operations and financial condition.Any changes or potential changes in the regulatory framework applicable to our business, including the changes and potential changes described below, aswell as adverse news media attention, may: impose additional expenses or capital requirements on us; limit our fundraising for our investment products; result inlimitations in the manner in which our business is conducted; have an adverse impact upon our results of operations, financial condition, reputation or prospects;impair employee retention or recruitment; and require substantial attention by senior management. It is impossible to determine the extent of the impact of any newlaws, regulations, initiatives or regulatory guidance that may be proposed or may become law on our business or the markets in which we operate. If enacted, anynew law, regulation, initiatives or regulatory guidance could negatively impact our funds and us in a number of ways, including: increasing our costs and the costfor our funds of investing, borrowing, hedging or operating; increasing the funds' or our regulatory operating costs; imposing additional burdens on the funds' orour staff; and potentially requiring the disclosure of sensitive information. In addition, we may be materially and adversely affected by changes in the interpretationor enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. New laws, regulations, initiatives or regulatoryguidance could make compliance more difficult or more expensive, affect the manner in which we conduct business and divert significant management andoperational resources and attention from our business. Moreover, an increase in regulatory investigations and new or enhanced reporting requirements of thetrading and other investment activities of alternative investment management funds and firms, including our funds and us, is possible. Such investigations andreporting requirements could impose additional expenses on us, require the attention of senior management, increase the complexity of managing our business, orresult in fines or other sanctions if we or any of our funds are deemed to have violated any law or regulations.Recent and Potential Regulatory Changes in the United States. In recent years, there have been a number of changes in the regulatory framework applicableto our business, including those required under the Dodd-Frank Act. These changes have, among other things: increased regulatory scrutiny of our industry;increased our recordkeeping, reporting and disclosure requirements; and placed restrictions on the growth or type of activities certain financial institutions maypursue. In addition, under the prior administration, regulatory agencies proposed several regulations that, if adopted as proposed, may increase our compliancecosts and affect our profitability in various ways. Although the current administration is not presently pursuing all of these proposed regulatory actions, it or futureadministrations could redirect their attention to these or other areas at any time. We discuss below several recent or potential regulatory changes that may furtherimpact our business. Financial Stability Oversight Council (the "FSOC"). Established under the Dodd-Frank Act, the FSOC is an inter-agency body charged with, among otherthings, designating systemically important nonbank financial companies for heightened prudential supervision and making recommendations regarding theimposition of enhanced regulatory standards regarding capital, leverage, conflicts and other requirements for financial firms deemed to pose a systemic threat toU.S. financial stability. On December 4, 2019, the FSOC finalized interpretive guidance on non-bank financial company designations that prioritizes an "activities-based" approach to identify, assess, and address potential risks to U.S. financial stability and reserves entity-specific designations for instances when a potentialrisk cannot be adequately addressed through an activities-based48Table of Contentsapproach. Pursuant to guidance, which became effective on January 29, 2020, the FSOC applies a two-step activities-based approach to identify and address risksto financial stability from certain activities, products or practices. If the FSOC identifies a product, activity, or practice that could pose a risk to financial stability, itwill, during the first step, evaluate the extent to which certain characteristics could "amplify" risks to financial stability. These characteristics include assetvaluation risk or credit risk; leverage arising from debt, derivatives, off-balance sheet obligations, and other arrangements; liquidity risk or maturity mismatch;counterparty risk; transparency of financial markets; and operational risks. If the FSOC identifies a potential risk to financial stability, it will progress to step two,during which it would work with relevant financial regulators to seek the implementation of actions to address the identified potential risk and coordinate amongmember agencies to ensure the risk is addressed. There currently is little precedent or guidance specifically addressing the FSOC's approach or methodology toevaluating and identifying activities that could pose a risk to financial stability. It is possible that the FSOC could identify one or more of our product lines,activities, or practices as a potential risk to U.S. financial stability and, along with other regulators, could take the actions described above to address such risk,which may result in additional compliance costs. If the FSOC finds that the regulators' efforts have not adequately addressed the potential risk or if the potentialthreat arises "outside the jurisdiction or authority" of financial regulatory agencies and the potential risk could be addressed by an FSOC designation, the FSOCmay designate a nonbank financial company systemically important. If the FSOC were to designate us as a systemically important nonbank financial company, wewould become subject to supervision by the U.S. Federal Reserve and a heightened degree of regulation, including more stringent standards relating to capital,leverage, liquidity, risk management, resolution planning, credit exposure reporting and concentration limits, restrictions on acquisitions, and annual stress testingby the U.S. Federal Reserve. There can be no assurance that nonbank financial firms such as us will not become subject to the aforementioned restrictions or otherrequirements for financial firms deemed to be systemically important to the financial stability of the U.S. economy.On December 18, 2014, the FSOC issued a notice seeking public comment on potential systemic risks from asset management products and activities,focusing in particular on (1) liquidity and redemption risks, (2) use of leverage, (3) operational functions and (4) resolution-related issues. On November 16, 2016,the FSOC reiterated its focus on these risk areas, as well as securities lending, in a public statement on its review of asset management products and activities.According to the notice and statement, the FSOC has not made any final determination regarding the existence or nature of any potential risks to financial stabilityposed by the asset management industry.Regulation of Swaps. The Commodity Futures Trading Commission (the "CFTC") administers a comprehensive regulatory framework for swaps that waslargely adopted under Title VII of the Dodd-Frank Act. As a result:•Operating pooled funds that trade swaps, or providing investment advice to clients that trade swaps is a basis for registration with the CFTC, absent anapplicable exemption. Operating our funds in a manner consistent with one or more exemptions from registration with the CFTC may limit the activitiesof certain of our funds, and monitoring and analysis of these exemptions requires management and operational resources and attention. Registration withthe CFTC, if required, could impact our operations and add additional costs associated with ongoing compliance.•The CFTC's swap rules also impose regulatory requirements on the trading of swaps, including requirements that most swaps be executed on an exchangeor "swap execution facility" and cleared through a central clearing house. Although these requirements presently apply only to certain classes of interestrate swaps and credit default swaps, the CFTC may mandate central execution and clearing with respect to additional classes of swaps in the future.•CFTC regulations employ quantitative tests and thresholds to determine whether entities are "swap dealers" or "major swap participants" that mustregister in the appropriate category and comply with capital, margin, record keeping, reporting and business conduct rules. Our funds could becomesubject to the requirement to register as major swap participants due to changes to the funds' investment strategy or valuations, or revisions to thethresholds for registration.•The proposed CFTC rulemaking to expand position limits or apply aggregation rules to additional derivative instruments could also limit or restrict theability of our funds to use, trade or invest in futures and swaps and increase the cost of engaging in these transactions. The Dodd-Frank Act alsoauthorizes the SEC to establish position limits on security-based swaps, which rules could have a similar impact on our business.•The SEC, CFTC and banking regulators have adopted rules regarding margin and capital requirements for most uncleared or "over-the-counter" swaps.These rules generally require swap dealers and major swap participants to collect and post a minimum amount of margin when trading with other coveredentities and financial end-users. These requirements could increase the cost of trading in the derivative markets, which could in turn make it moreexpensive and difficult, and in certain cases impractical, for us or our funds to enter into swaps and other derivatives in the49Table of Contentsnormal course of our business and reduce the effectiveness of the funds' and our investment strategies. These rules could also adversely impact liquidity inderivatives markets, which could expose our funds and us to greater risks and reduce hedging opportunities in connection with their trading activities.•In September 2016, the U.S. Federal Reserve issued for public comment a proposed rule that, if adopted as proposed, would impose significant capital andother prudential requirements on the physical commodities activities of certain banking organizations. The implementation of these or other newregulations could increase the cost of trading in the commodities and derivative markets, which could in turn make it more expensive and difficult for usor our funds to enter into swaps and other derivatives in the normal course of our business. Moreover, these increased regulatory responsibilities andincreased costs could reduce trading levels in the commodities and derivative markets by a number of market participants, which could in turn adverselyimpact liquidity in the markets and expose our funds to greater risks in connection with their trading activities.Other Regulations under the Dodd-Frank Act. The Dodd-Frank Act amended the Exchange Act to compensate and protect whistleblowers who voluntarilyprovide original information to the SEC and establishes a fund to be used to pay whistleblowers who will be entitled to receive a payment equal to between 10%and 30% of certain monetary sanctions imposed in a successful government action resulting from the information provided by the whistleblower. The CFTC hasadopted a similar whistleblower program. In addition, in October 2011, the SEC adopted a rule requiring certain advisers to private funds to periodically filereports on Form PF, as required under the Dodd-Frank Act. Large private fund advisers including advisers with at least $1.5 billion in assets under managementattributable to hedge funds and advisers with at least $2 billion in assets under management attributable to private equity funds are subject to more detailed and incertain cases more frequent reporting requirements. The information is to be used by the FSOC in monitoring risks to the U.S. financial system. These regulationsincrease our compliance costs and could result in adverse regulatory actions against us.Although it is possible that Congress or the current administration could modify and relax regulatory requirements and restrictions that were adopted inresponse to the financial crisis, the timing and scope of such modifications remain uncertain and may not materialize.EU-Wide Regulations. The EU Alternative Investment Fund Managers Directive (the "AIFMD"), which became effective on July 22, 2013, established acomprehensive regulatory and supervisory framework for alternative investment fund managers ("AIFMs") managing or marketing alternative investment funds("AIFs") in the European Union. The AIFMD imposes various substantive regulatory requirements on AIFMs, which could have a material adverse effect on ourbusinesses by (i) imposing disclosure obligations and restrictions on distributions by EU portfolio companies, (ii) requiring changes to our compensation structuresfor key personnel, thereby potentially affecting our ability to recruit and retain these personnel, (iii) increasing the cost and complexity of raising capital for ourfunds, which may slow the pace of fundraising, and (iv) generally increasing our compliance costs. In addition, there are areas of the AIFMD that are subject tolegal uncertainty, including the scope of the legal structures qualifying as AIFs subject to AIFMD. Failure to comply with AIFMD, even in areas where there islegal uncertainty, can result in enforcement action, including, but not limited to, fines.Although a subsidiary of ours is registered as an AIFM with the Central Bank of Ireland, we may not be able to benefit from an "EU passport" under theAIFMD to market all of our funds to professional investors throughout the European Union, and the EU marketing passport may not apply to marketing toinvestors in the United Kingdom when its withdrawal from the European Union becomes effective. See "—Brexit" below.The Markets in Financial Instruments Directive ("MiFID II") and related regulation ("MiFIR"), which began applying to our European operations fromJanuary 2018, introduced a number of new requirements for providing investment services and trading financial instruments in regards to transaction reporting,transparency, market infrastructure, securities and derivatives trading, and conduct of business rules, including new harmonized rules for authorization of EUbranches of third-country firms seeking to provide certain investment services in the European Union. The application of MiFID II and MiFIR have increasedregulatory burdens on a number of our subsidiaries, which could result in increased costs, and any failure to comply with the requirements, even in areas wherethere is legal uncertainty, could result in enforcement action, including, but not limited to, fines.In July 2016, the Market Abuse Regulation ("MAR") became effective. Under MAR, certain of our European subsidiaries are required to, among other things,implement systems and controls regarding inside information, follow record keeping and other prescribed procedures for market soundings, and provide conflictsof interest and other relevant disclosure when providing investment recommendations. These requirements increased the regulatory and compliance burden for anumber of our European subsidiaries, which will result in increased costs, and any failure to comply with the requirements could result in enforcement action,including, but not limited to, fines. Any expansion in the scope of MAR, including to extend its applicability to certain foreign exchange contracts as proposed bythe European Securities and Markets Authority, likely will increase the regulatory burden on our European operations and increase costs to our business.50Table of ContentsIn the European Union, credit institutions and certain investment firms are subject to the provisions of the Capital Requirements Directive IV ("CRD IV") andthe Capital Requirements Regulation. These pieces of legislation implement the capital and liquidity standards promulgated by the Basel Committee on BankingSupervision (commonly referred to as "Basel III"), and impose various governance and remuneration obligations. CRD IV has enhanced our financial reportingobligations and subjected us to new reporting requirements, which increases costs and the risk of non-compliance. Compliance with Basel III may result insignificant costs to banking organizations, which, in turn, could result in higher borrowing costs for us and our portfolio companies, and may reduce access tocertain types of credit.Three of our subsidiaries (established in the UK and Ireland) are subject to the remuneration-related requirements of CRD IV, as well as similar requirementsunder the AIFMD. Additionally, the European Banking Authority has published final guidelines on sound remuneration policies under CRD IV which set out therequirements for remuneration policies, group application and proportionality, along with criteria for the allocation of remuneration as fixed and variable anddetails on the disclosures required under the Capital Requirements Regulation. These measures required changes in our compensation structures for key personnel,thereby potentially affecting these subsidiaries' ability to recruit and retain these personnel.Other EU bank regulatory initiatives that could result in higher borrowing costs for us and our portfolio companies or reduce access to certain types of creditinclude the European Banking Authority's guidelines on limits to exposures to shadow banking entities which carry out banking activities outside a regulatedframework under EU law (including funds employing leverage on a substantial basis, within the meaning of AIFMD and its implementing rules, and credit funds),which entered into force on January 1, 2017, and guidelines on leveraged lending, proposed in November 2016 and modeled on U.S. leveraged lending guidelines.The regulation on OTC Derivatives, Central Counterparties and Trade Repositories (also known as the European Market Infrastructure Regulation, or"EMIR") applies to derivatives transactions in which one of the parties is established in the European Union, and may in some circumstances apply to transactionsbetween two non-EU counterparties where these contracts have a direct, substantial and foreseeable effect within the European Union. Recent amendments toEMIR expanded the scope of the regulation to classify all AIFs, including UK, EU and non-EEA AIFs, managed by an AIFM as financial counterparties subject tothe regulation. EMIR requires reporting of derivative trades, central clearing of standardized over-the-counter derivative contracts, and monitoring and mitigatingof operational risks associated with derivative trades. Implementing EMIR increases the cost of trading in the commodities and derivative markets, which could inturn make it more expensive and difficult for us or our funds to enter into swaps and other derivatives in the normal course of our business. Moreover, theseincreased regulatory responsibilities and increased costs could reduce trading levels in the commodities and derivative markets by a number of market participants,which could in turn adversely impact liquidity in the markets and expose our funds to greater risks in connection with their trading activities.A number of other EU financial regulatory initiatives have the potential to materially and adversely affect our business. For example, the new SecuritisationRegulation that became effective in 2019 established requirements for, among other things, due diligence, risk retention and disclosure regarding certain of ourEuropean investments, subsidiaries and CLOs. Also, future acquisitions by KKR or our funds could lead to application of the European Union's FinancialConglomerates Directive, which establishes a prudential regime for financial conglomerates to address perceived risks associated with large cross-sectorbusinesses, and could increase the costs of investing in insurance companies, investment firms and banks located in the European Union. Other EU financialregulatory initiatives such as the Short Selling Regulation, which limits naked short selling of sovereign bonds and stocks, the Bank Recovery and ResolutionDirective, which established a recovery and resolution framework for EU credit institutions and investment firms, and a new regulation on reporting andtransparency of securities financing transactions, which requires all such transactions to be reported to trade repositories, places additional reporting requirementson investment managers and introduces prior risk disclosures and written consent before assets are rehypothecated, may all impact the complexity and cost ofconducting our business in the European Union. Finally, the European Union has adopted, and may in the future adopt, additional risk retention and due diligencerequirements in respect of various types of EU-regulated investors that, among other things, restrict investors from taking positions in securitization, increase thecapital costs of originator, sponsor or original lender of a securitization, and require retaining a larger net economic interest in the securitization, which mayadversely affect the profitability of us, our funds or our CLOs and the leveraged loan market generally. The implementation of these new requirements couldincrease our and our funds' or CLOs' costs and the complexity of managing our business and could result in fines if we or any of our funds or CLOs were deemedto have violated any of the new regulations.The General Data Protection Regulation, which became effective in May 2018, imposes stringent data protection requirements and provides for significantpenalties for noncompliance. Any inability, or perceived inability, to adequately address privacy and data protection concerns, or comply with applicable laws,regulations, policies, industry standards,51Table of Contentscontractual obligations, or other legal obligations, even if unfounded, could result in additional cost and liability and could damage our reputation and materiallyand adversely affect our business.Brexit. On January 31, 2020, the United Kingdom exited the European Union. The related withdrawal agreement ("EUWA") provides for the implementationof a transitional period through December 31, 2020. During the transition period, our subsidiaries located in the European Union and the United Kingdom will havelargely the same rights as they currently have, including in relation to the exercise of passporting rights. However, the EUWA does not detail the terms of the futurerelationship between the European Union and the United Kingdom following the cessation of the transitional period. The nature and extent of the futurerelationship is currently subject to negotiation and remain unclear. The United Kingdom may leave the European Union without any agreement as to the terms oftheir future relationship. The resulting legal and regulatory uncertainty in this regard may impact our business in a number of ways, not all of which are currentlyreadily apparent, with the materiality of any risks dependent in large part on actions to be taken by the United Kingdom and the European Union. This uncertaintymay adversely affect our ability to source investments and the value of our investments that are located in the United Kingdom, or those that conduct business in orderive revenues from, the United Kingdom. Following the cessation of the transitional period, our subsidiaries that are authorized and regulated by the FCA may nolonger be able to avail themselves of passporting rights to provide services in other EU Member States, while our CBI-authorized alternative investment fundmanager may no longer benefit from the EU marketing passport to market products to investors in the United Kingdom. While we have sought to take protectivemeasures to allow us to continue to conduct our business in both the United Kingdom and the European Union, Brexit may increase our cost of raising capital,underwriting and distributing securities and conducting business generally, including the cost of complying with two regimes, and interfere with our ability tomarket our products and provide our services. Changes in regulation may also impair our ability to recruit, retain and motivate new employees and retain keyemployees.Other Financial Markets Regulation. Certain requirements imposed by regulators, as well as certain legislation and proposed legislation, are designedprimarily to ensure the integrity of the financial markets or other objectives and are not designed to protect our stockholders. These laws and regulations often serveto limit our activities. In addition to many of the regulations and proposed regulations described above under "—Recent and Potential Regulatory Changes in theUnited States" and "—EU-Wide Regulations," U.S. federal bank regulatory agencies and the European Central Bank have issued leveraged lending guidancecovering transactions characterized by a degree of financial leverage, although in the United States, the status of this guidance is uncertain as the U.S. GovernmentAccountability Office determined, in October 2017, that the guidance is subject to review under the Congressional Review Act. If applied by the U.S. federal bankregulatory agencies in its current form, such guidance would limit the amount or availability of debt financing available to borrowers and may increase the cost offinancing we are able to obtain for our transactions and may cause the returns on our investments to suffer.In 2016, the SEC proposed a rule that would require registered investment advisers to adopt and implement written business continuity plans and transitionplans based upon the particular risks associated with the individual adviser's operations and address several specified factors. While it remains to be seen what thefinal rule, if adopted, will require, compliance with such a rule may impose additional costs on us.In June 2019, the SEC approved a rule that requires a broker-dealer, or a natural person who is an associated person of a broker-dealer, to act in the bestinterest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities, without placing the financialor other interest of the broker, dealer or natural person who is an associated person of a broker-dealer making the recommendation ahead of the interest of the retailcustomer ("Regulation Best Interest"). The term "retail customer" is defined as a natural person who uses such a recommendation primarily for personal, family orhousehold purposes, without reference to investor sophistication or net worth. The "best interest" standard would be satisfied through compliance with certaindisclosure, duty of care, conflict of interest mitigation and compliance obligations. As adopted and when fully in force, compliance with Regulation Best Interestwill impose additional costs to us, in particular with respect to our product offerings and investment platforms that include retail investors.In July 2019, a Senate bill titled Stop Wall Street Looting Act was introduced that aims to regulate certain business practices by private funds, which the billdefines as companies or partnerships relying on Section 3(c)(1) or 3(c)(7) of the Investment Company Act (except venture capital funds), that directly, or throughan affiliate, act as a "control person" by acquiring at least 20% of voting securities of a portfolio company. The bill, among others, requires such private funds to bejointly and severally liable for debt and other obligations of a portfolio company; prohibits portfolio companies from paying dividends within 24 months of theiracquisition by a private fund; imposes 100% tax on any monitoring fee or transaction fee paid by portfolio companies to a private fund; applies an ordinary incometax rate, instead of a capital gains tax rate, on carried interest; and requires an annual SEC disclosure of certain information about a private fund and its portfoliocompanies. If the bill became law, our business would be materially adversely impacted, and we would be required to change various operational and investmentpractices, which would be costly, time-consuming and disruptive.52Table of ContentsCertain of the funds we manage that engage in originating, lending and/or servicing loans, may consider investments that would subject us to state and federalregulation, borrower disclosure requirements, limits on fees and interest rates on some loans, state lender licensing requirements and other regulatory requirementsin the conduct of their business. If our funds make these investments, they may also be subject to consumer disclosures and substantive requirements on consumerloan terms and other federal regulatory requirements applicable to consumer lending that are administered by the Consumer Financial Protection Bureau. Thesestate and federal regulatory programs are designed to protect borrowers.State and federal regulators and other governmental entities have authority to bring administrative enforcement actions or litigation to enforce compliance withapplicable lending or consumer protection laws, with remedies that can include fines and monetary penalties, restitution of borrowers, injunctions to conform tolaw, or limitation or revocation of licenses and other remedies and penalties. In addition, lenders and servicers may be subject to litigation brought by or on behalfof borrowers for violations of laws or unfair or deceptive practices. If we enter into transactions that subject us to these risks, failure to conform to applicableregulatory and legal requirements could be costly and have a detrimental impact on certain of our funds and ultimately on us.Portfolio Company Legal and Regulatory Environment. We are subject to certain laws, such as certain environmental laws, takeover laws, anti-bribery, tradesanctions, trade control, anti-money laundering and anti-corruption laws, escheat or abandoned property laws, antitrust laws and data privacy and data protectionlaws that may impose requirements on us and our portfolio companies as an affiliated group. As a result, we could become jointly and severally liable for all or partof fines imposed on our portfolio companies or be fined directly for violations committed by portfolio companies, and such fines imposed directly on us could begreater than those imposed on the portfolio company. Moreover, portfolio companies may seek to hold us responsible if any fine imposed on them is increasedbecause of their membership in a larger group of affiliated companies. For example, on April 2, 2014, the European Commission announced that it had fined 11producers of underground and submarine high voltage power cables a total of 302 million euro for participation in a ten-year market and customer sharing cartel.Fines were also imposed on parent companies of the producers involved, including Goldman Sachs, the former parent company of one of the cartel members.Similarly, on February 16, 2018, the U.S. Department of Justice named a private equity sponsor as a co-defendant in a False Claims Act case against one of itsportfolio companies, alleging that the private equity sponsor had an active involvement in managing the company and in developing its strategy to use illegalkickback payments to increase reimbursements. In addition, compliance with certain laws or contracts could also require us to commit significant resources andcapital towards information gathering and monitoring thereby increasing our operating costs. For example, because we may indirectly hold voting securities inpublic utilities subject to regulation by the Federal Energy Regulatory Commission ("FERC"), including entities that may hold FERC authorization to chargemarket-based rates for sales of wholesale power and energy, we may be subject to certain FERC regulations, including regulations requiring us and our portfoliocompanies to collect, report and keep updated substantial information concerning our ownership of such voting interests and voting interests in other related energycompanies, corporate officers, and our direct and indirect investment in such utilities and related companies. Such rules may subject our portfolio companies and usto costly and burdensome data collection and reporting requirements.In the United States, certain statutes may subject us or our funds to the liabilities of our portfolio companies. The Comprehensive Environmental Response,Compensation and Liability Act ("CERCLA"), also referred to as the "Superfund," requires cleanup of sites from which there has been a release or threatenedrelease of hazardous substances, and authorizes the U.S. Environmental Protection Agency to take any necessary response action at Superfund sites, includingordering potentially responsible parties liable for the release to pay for such actions. Potentially responsible parties are broadly defined under CERCLA and couldinclude us.In addition, we or certain of our investment funds could potentially be held liable under U.S. Employee Retirement Income Security Act of 1974 ("ERISA")for the pension obligations of one or more of our portfolio companies if we or the investment fund were determined to be a "trade or business" under ERISA anddeemed part of the same "controlled group" as the portfolio company under such rules, and the pension obligations of any particular portfolio company could bematerial. On March 28, 2016, a Federal District Court judge in Massachusetts ruled that two private equity funds affiliated with Sun Capital were jointly andseverally responsible for unfunded pension liabilities of a Sun Capital portfolio company. While neither fund held more than an 80% ownership interest of theportfolio company, the percentage required under existing regulations to find liability, the court found the funds had formed a partnership-in-fact conducting a tradeor business and that as a result each fund was jointly and severally liable for the portfolio company's unfunded pension liabilities. While a federal appellate courtonly upheld certain aspects of the District Court holding, if the rationale of the District Court decision were to be applied by other courts, we or certain of ourinvestment funds could be held liable under ERISA for certain pension obligations of portfolio companies. In addition, if the rationale of this decision wereexpanded to apply also for U.S. federal income tax purposes, then53Table of Contentscertain of our investors could be subject to increased U.S. income tax liability or filing obligations in certain contexts. Similar laws that could be applied withsimilar results also exist outside of the United States.Similarly, our portfolio companies may be subject to contractual obligations which may impose obligations or restrictions on their affiliates. The interpretationof such contractual provisions will depend on local laws. Given that we do not control all of our portfolio companies and that our portfolio companies generallyoperate independently of each other, there is a risk that we could contravene one or more of such laws, regulations and contractual arrangements due to limitedaccess and opportunities to monitor compliance. In addition, compliance with these laws or contracts could require us to commit significant resources and capitaltowards information gathering and monitoring thereby increasing our operating costs.Because of our ownership interest in portfolio companies, attention on our portfolio companies can also result in attention on us. For example, heightenedgovernmental scrutiny of the healthcare and educational industries has resulted in requests by a Congressional committee and members of Congress for informationfrom us about our investments in portfolio companies that operate in these industries. Congressional scrutiny and other similar inquiries by governmental bodiesmay damage our reputation and may also result in potential legislation designed to further regulate portfolio companies or the industries in which they operate,which may materially and adversely affect our portfolio companies' businesses, which in turn could decrease the value of our investments.Complex regulations may limit our ability to raise capital, increase the costs of our capital raising activities and may subject us to penalties.We regularly rely on exemptions in the United States from various requirements of the Securities Act, the Exchange Act, the Investment Company Act, theCommodity Exchange Act and ERISA in conducting our investment management activities. These exemptions are sometimes highly complex and may in certaincircumstances depend on compliance by third parties whom we do not control. If for any reason these exemptions were to become unavailable to us, we couldbecome subject to additional restrictive and costly registration requirements, regulatory action or third-party claims and our business could be materially andadversely affected. For example, in raising new funds, we typically rely on private placement exemptions from registration under the Securities Act, including Rule506 of Regulation D. However, Rule 506 becomes unavailable to issuers (including our funds) if the issuer or any of its "covered persons" (certain officers anddirectors and also certain third parties including, among others, promoters, placement agents and beneficial owners of 20% of outstanding voting securities of theissuer) has been the subject of a "disqualifying event," which includes a variety of criminal, regulatory and civil matters (so-called "bad actor" disqualification). Ifour funds or any of the covered persons associated with our funds are subject to a disqualifying event, one or more of our funds could lose the ability to raisecapital in a Rule 506 private offering for a significant period of time, which could significantly impair our ability to raise new funds, and, therefore, couldmaterially and adversely affect our business, results of operations and financial condition. In addition, if certain of our employees or any potential significantinvestor has been the subject of a disqualifying event, we could be required to reassign or terminate such an employee or we could be required to refuse theinvestment of such an investor, which could impair our relationships with investors, harm our reputation or make it more difficult to raise new funds. See "—RisksRelated to Our Organizational Structure—If we were deemed to be an 'investment company' subject to regulation under the Investment Company Act, applicablerestrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business."We are and will become further subject to additional regulatory and compliance burdens as we expand our product offerings and investment platform toinclude retail investors. For example, funds in our Public Markets business line are registered under the Investment Company Act as investment companies. Thesefunds and KKR Credit Advisors (US) LLC, which currently serves as their investment adviser, are subject to the Investment Company Act and the rulesthereunder, which, among other things, regulate the relationship between a registered investment company and its investment adviser and prohibit or severelyrestrict principal transactions and joint transactions. In 2018, we completed our transaction to form FS/KKR Advisor, a strategic BDC partnership with FSInvestments, to provide investment advisory services to BDCs previously advised by us and FS Investments. BDCs are subject to certain restrictions andprohibitions under the Investment Company Act. If any of the BDCs advised by FS/KKR Advisor fails to meet the requirements for a BDC, it may be regulated asa closed-end investment company under the Investment Company Act and become subject to substantially more regulatory restrictions, which could limit itsoperating flexibility and in turn result in decreased profitability for FS/KKR Advisor. As our business expands we may be required to make additional registrationsunder the Investment Company Act or similar laws, including in jurisdictions outside the United States. As an example, in 2019, we raised an Australian listedinvestment trust, which is listed on the Australian Securities Exchange and subject to the regulation of the Australian Securities and Investments Commission.Compliance with these and other U.S. and non-U.S. rules will increase our compliance costs and create potential for additional liabilities and penalties, whichwould divert management's attention from our business and investments.54Table of ContentsRule 206(4)-5 under the Investment Advisers Act regulates "pay to play" practices by investment advisers involving campaign contributions and otherpayments to elected officials or candidates for political office who are able to exert influence on government clients. Among other restrictions, the rule prohibitsinvestment advisers from providing advisory services for compensation to a government client for two years, subject to very limited exceptions, after theinvestment adviser, its senior executives or its personnel involved in soliciting investments from government entities make contributions to certain candidates andofficials in position to influence the hiring of an investment adviser by such government client. Advisers are required to implement compliance policies designed,among other matters, to track contributions by certain of the adviser's employees and engagements of third parties that solicit government entities and to keepcertain records in order to enable the SEC to determine compliance with the rule. There has also been similar rule-making on a state-level regarding "pay to play"practices by investment advisers, including in California and New York. FINRA has released its own set of "pay to play" regulations that effectively prohibit thereceipt of compensation from state or local government agencies for solicitation and distribution activities within two years of a prohibited contribution by abroker-dealer or one of its covered associates. Any failure on our part to comply with these rules could cause us to lose compensation for our advisory services orexpose us to significant penalties and reputational damage.Federal, state and foreign anti-corruption and trade sanctions laws applicable to us and our portfolio companies create the potential for significant liabilitiesand penalties and reputational harm.We are subject to a number of laws and regulations governing payments and contributions to political persons or other third parties, including restrictionsimposed by the Foreign Corrupt Practices Act ("FCPA"), as well as trade sanctions and trade control laws administered by the Office of Foreign Assets Control("OFAC"), the U.S. Department of Commerce and the U.S. Department of State. The FCPA is intended to prohibit bribery of foreign governments and theirofficials and political parties, and requires public companies in the United States to keep books and records that accurately and fairly reflect those companies'transactions. OFAC, the U.S. Department of Commerce and the U.S. Department of State administer and enforce various trade control laws and regulations,including economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign states, organizations and individuals.These laws and regulations implicate a number of aspects of our business, including servicing existing fund investors, finding new fund investors, and sourcingnew investments, as well as activities by the portfolio companies in our investment portfolio or other controlled investments. Some of these regulations provide thatpenalties can be imposed on us for the conduct of a portfolio company, even if we have not ourselves violated any regulation.The Iran Threat Reduction and Syrian Human Rights Act of 2012 ("ITRA") expanded the scope of U.S. sanctions against Iran and requires public reportingcompanies to disclose in their annual or quarterly reports certain dealings or transactions the company or its affiliates "knowingly" engaged in during the previousreporting period involving Iran or other individuals and entities targeted by certain OFAC sanctions. In some cases, ITRA requires companies to disclose thesetypes of dealings or transactions even if they are permissible under U.S. law or are conducted outside of the United States by a foreign affiliate. If any suchactivities are disclosed in a periodic report, we are required to separately file, concurrently with such report, a notice of such disclosure. The SEC is required to postthis notice on its website and send the report to the U.S. President and certain U.S. Congressional committees. The U.S. President thereafter is required to initiatean investigation and, within 180 days of initiating such an investigation, to determine whether sanctions should be imposed. Disclosure of such activity, even ifsuch activity is not subject to sanctions under applicable law, and any sanctions actually imposed on us or our affiliates as a result of these activities, could harmour reputation and have a negative impact on our business.Similar laws in non-U.S. jurisdictions, such as EU sanctions or the U.K. Bribery Act, as well as other applicable anti-bribery, anti-corruption, anti-moneylaundering, or sanction or other export control laws in the United States and abroad, may also impose stricter or more onerous requirements than the FCPA, OFAC,the U.S. Department of Commerce and the U.S. Department of State, and implementing them may disrupt our business or cause us to incur significantly more coststo comply with those laws. Different laws may also contain conflicting provisions, making compliance with all laws more difficult. If we fail to comply with theselaws and regulations, we could be exposed to claims for damages, civil or criminal financial penalties, reputational harm, incarceration of our employees,restrictions on our operations and other liabilities, which could materially and adversely affect our business, results of operations and financial condition. Inaddition, we may be subject to successor liability for FCPA violations or other acts of bribery, or violations of applicable sanctions or other export control lawscommitted by companies in which we or our funds invest or which we or our funds acquire.We face significant liabilities and damage to our professional reputation as a result of litigation allegations and negative publicity.The activities of our businesses, including the investment decisions we make and the activities of our employees in connection with our portfolio companies,may subject us and them to the risk of litigation by third parties, including fund55Table of Contentsinvestors dissatisfied with the performance or management of our funds, holders of our or our portfolio companies' debt or equity, and a variety of other potentiallitigants. See Item 8. Financial Statements and Supplementary Data—Note 16 "Commitments and Contingencies—Litigation." For example, we, our funds andcertain of our employees are each exposed to the risks of litigation relating to investment activities of our funds and actions taken by the officers and directors(some of whom may be KKR employees) of portfolio companies, such as lawsuits by other shareholders of our public portfolio companies or holders of debtinstruments of companies in which our funds have significant investments. We are also exposed to risks of litigation, investigation or negative publicity in theevent of any transactions that are alleged not to have been properly considered and approved under applicable law.Although investors in our funds do not have legal remedies against us, the general partners of our funds, our funds, our employees or our affiliates solely basedon their dissatisfaction with the investment performance of those funds, such investor may have remedies against us, the general partners of our funds, our funds,our employees or our affiliates to the extent any losses result from fraud, negligence, willful misconduct or other similar misconduct. While the general partnersand investment advisers to our investment funds, including their directors, officers, employees and affiliates, are generally indemnified to the fullest extentpermitted by law with respect to their conduct in connection with the management of the business and affairs of our investment funds, such indemnity generallydoes not extend to actions determined to have involved fraud, gross negligence, willful misconduct or other similar misconduct. If any civil or criminal lawsuitswere brought against us and resulted in a finding of substantial legal liability or culpability, the lawsuit could materially and adversely affect our business, resultsof operations and financial condition or cause significant reputational harm to us, which could seriously impact our business.Furthermore, the current rise of populist political movements has generated and may continue to generate a growing negative public sentiment towardglobalization, free trade, capitalism and financial institutions, which could lead to heightened scrutiny and criticisms of our business and our investments. Inaddition, public discourse and Congressional inquiries in the 2020 U.S. presidential election have elevated the level of focus put on us, our industry and companiesin which our funds are invested. See "—Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties.The possibility of increased regulatory focus or legislative or regulatory changes could materially and adversely affect our business—Portfolio Company Legal andRegulatory Environment." The risk of reputational harm is elevated by the prevalence of Internet and social media usage and the increased public focus onbehaviors and externalities of business activities, including those affecting stakeholder interests and environmental, social and governance considerations. Wedepend to a large extent on our business relationships and our reputation for integrity and high-caliber professional services to attract and retain fund investors andqualified professionals and to pursue investment opportunities for our funds. As a result, allegations of improper conduct by private litigants or regulators, whetherthe ultimate outcome is favorable or unfavorable to us, as well as negative publicity and press speculation about us, our investment activities or the private equityindustry in general, whether or not valid, may harm our reputation, which may be more damaging to our business than to other types of businesses.With a workforce composed of many highly-paid professionals, we face the risk of litigation relating to claims for compensation or other damages, which may,individually or in the aggregate, be significant in amount. The cost of settling any such claims could negatively impact our business, results of operations andfinancial condition.Certain types of investment vehicles may subject us to additional risk of litigation and regulatory scrutiny.We have formed and may continue to form investment vehicles seeking investment from retail investors, which may subject us to additional risk of litigationand regulatory scrutiny. See "—Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. Thepossibility of increased regulatory focus or legislative or regulatory changes could materially and adversely affect our business." We have and expect to continue todistribute products through new channels, including through unaffiliated firms, and we may not be able to effectively monitor or control the manner of theirdistribution, which could result in litigation against us, including with respect to, among other things, claims that products distributed through such channels aredistributed to customers for whom they are unsuitable or distributed in any other inappropriate manner. The distribution of products through new channels whetherdirectly or through market intermediaries, including in the retail channel, could expose us to additional regulatory risk in the form of allegations of improperconduct and/or actions by state and federal regulators against us with respect to, among other things, product suitability, conflicts of interest and the adequacy ofdisclosure to customers to whom our products are distributed through those channels.In addition, investment adviser subsidiaries of KKR externally manage a number of publicly traded permanent capital vehicles, including KREF (a REIT listedon the NYSE), KKR Income Opportunities Fund (a closed-end management investment company) and KKR Credit Income Fund (an Australian listed investmenttrust). FS KKR Capital Corp. (a BDC listed on the NYSE) and FS KKR Capital Corp. II (a BDC) are advised by FS/KKR Advisor, in which we own a 50%interest.56Table of ContentsWe plan to enter into new investment management agreements with other publicly traded permanent capital vehicles in the future. Publicly traded permanentcapital vehicles allow us to invest in longer-term strategies and secure stable fee streams, while providing liquidity to such vehicle's equity investors. However,these vehicles are subject to the heightened regulatory requirements applicable to public companies, including compliance with the laws and regulations of theSEC, the Exchange Act, the Sarbanes-Oxley Act of 2002 and the national securities exchanges on which their securities are listed, among others. Theserequirements will place increased demands on senior employees, require administrative, operational and accounting resources, and incur significant expenses.Failure to comply with these requirements could result in a civil lawsuit, regulatory penalties, enforcement actions, or potentially lead to suspension of trading orde-listing from an exchange. Furthermore, if the shareholders of these vehicles were to be dissatisfied with the investment performance or disagree with investmentstrategies employed by us, they may seek to cause the board of directors of the relevant vehicle to terminate the investment management agreement with us orchange the terms of such agreement in a manner that is less favorable to us. As publicly traded entities, these permanent capital vehicles also face additionallitigation risk, including class actions and other shareholder lawsuits, which would distract senior employees, including investment professionals.Misconduct of our employees, consultants or sub-contractors or by our portfolio companies could harm us by impairing our ability to attract and retain clientsand subjecting us to significant legal liability and reputational harm.There is a risk that our employees, consultants or sub-contractors could engage in misconduct that adversely affects our business. We are subject to a numberof obligations and standards arising from our business and our authority over the assets we manage. The violation of these obligations and standards by any of ouremployees, consultants or sub-contractors would adversely affect our clients and us. We may also be adversely affected if there is misconduct by seniormanagement of portfolio companies in which we invest, even though we may be unable to control or mitigate such misconduct. Such misconduct may alsonegatively affect the valuation of the investments in such portfolio companies. Our current and former employees, consultants or sub-contractors and those of ourportfolio companies may also become subject to allegations of sexual harassment, racial and gender discrimination or other similar misconduct, which, regardlessof the ultimate outcome, may result in adverse publicity that could significantly harm our and such portfolio company's brand and reputation. Furthermore, ourbusiness often requires that we deal with confidential matters of great significance to companies in which we may invest. If our employees, consultants or sub-contractors were improperly to use or disclose confidential information, we could suffer serious harm to our reputation, financial position and current and futurebusiness relationships, as well as face potentially significant litigation or investigation. It is not always possible to detect or deter such misconduct, and theprecautions we take may not be effective in all cases. If any of our employees, consultants or sub-contractors or the employees of portfolio companies were toengage in misconduct or were to be accused of such misconduct, our business and our reputation could be materially and adversely affected.Underwriting, syndicating and securities placement activities expose us to risks.KKR Capital Markets LLC and our other broker-dealer subsidiaries may act as an underwriter, syndicator or placement agent in securities offerings and,through affiliated entities, loan syndications. We may incur losses and be subject to reputational harm to the extent that, for any reason, we are unable to sellsecurities or indebtedness we purchased or placed as an underwriter, syndicator or placement agent at the anticipated price levels or at all. As an underwriter,syndicator or placement agent, we also may be subject to potential liability for material misstatements or omissions in prospectuses and other offering documentsrelating to offerings our broker-dealer subsidiaries underwrite, syndicate or place. In certain situations, our broker-dealer subsidiaries may have liabilities arisingfrom transactions in which our investment fund may participate as a purchaser or a seller of securities, which could constitute a conflict of interest or subject us todamages or reputational harm. See "—Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties.The possibility of increased regulatory focus or legislative or regulatory changes could materially and adversely affect our business—Other Regulations of theFinancial Markets."We are subject to risks in using third-party service providers, including prime brokers, custodians, administrators and other agents.Certain of our investment funds, finance vehicles and our principal trading activities depend on the services of third-party service providers, including primebrokers, custodians, administrators and other agents, to carry out administrative or other services, including valuations, securities transactions, tax preparation andgovernment filings. We are subject to risks of errors and mistakes made by these third parties, which may be attributed to us and subject us or our fund investors toreputational damage, penalties or losses. We may be unsuccessful in seeking reimbursement or indemnification from these third-party service providers.57Table of ContentsFurthermore, in the event of the insolvency of a prime broker and/or custodian, our funds may not be able to recover equivalent assets in full as they will rankamong the prime broker's and custodian's unsecured creditors in relation to assets that the prime broker or custodian borrows, lends or otherwise uses. In addition,our and our funds' cash held with a prime broker or custodian may not be segregated from the prime broker's or custodian's own cash, and our funds therefore mayrank as unsecured creditors in relation to that cash. The inability to recover assets from the prime broker or custodian could have a material adverse impact on theperformance of our funds and our business, results of operations and financial condition. Counterparties have generally reacted to recent market volatility bytightening their underwriting standards and increasing their margin requirements for all categories of financing, which has the result of decreasing the overallamount of leverage available and increasing the costs of borrowing. Many of our funds have credit lines, and if a lender under one or more of these credit lineswere to become insolvent, we may have difficulty replacing the credit line and one or more of our funds may face liquidity problems.Default risk may arise from events or circumstances that are difficult to detect, foresee or evaluate. In addition, concerns about, or a default by, one largemarket participant could lead to significant liquidity problems for other market participants, which may in turn expose us to significant losses. We may notaccurately anticipate the impact of market stress or counterparty financial condition, and as a result, we may not have taken sufficient action to reduce these riskseffectively, which, if left unmitigated, could have a material adverse effect on our business, results of operations and financial condition.Risks Related to the Assets We ManageAs an investment manager, we sponsor and manage funds that make investments worldwide on behalf of third-party investors and, in connection with thoseactivities, are required to deploy our own capital in those investments. The investments of these funds are subject to many risks and uncertainties which, to theextent they are material, are discussed below. In addition, we have investments on our balance sheet, which we manage for our own behalf. These risks, as theyapply to our balance sheet investments, may have a greater impact on our results of operations and financial conditions as we directly bear the full risk of ourbalance sheet investments. As a result, the gains and losses on such assets are reflected in our net income and the risks set forth below relating to the assets that wemanage will directly affect our operating performance.The historical returns attributable to our funds, including those presented in this report, should not be considered as indicative of the future results of ourfunds or our balance sheet investments, of our future results or the performance of our common stock.We have presented in this report certain information relating to our investment returns, such as net and gross IRRs, multiples of invested capital and realizedand unrealized investment values for funds that we have sponsored and managed. The historical and potential future returns of the funds that we manage are notdirectly linked to returns on KKR Group Partnership Units.Moreover, historical returns of our funds may not be indicative of the future results that you should expect from our funds or our balance sheet investments. Inparticular, the future results may differ significantly from their historical results for the following reasons, among others:•the rates of returns of our funds reflect unrealized gains as of the applicable valuation date that may never be realized, which may adversely affect theultimate value realized from those funds' investments;•the historical returns that we present in this report derive largely from the performance of our earlier private equity funds, whereas future fund returns willdepend increasingly on the performance of our newer funds, which may have little or no investment track record, and in particular, you will not benefitfrom any value that was created in our funds prior to the KPE Transaction to the extent such value has been realized and we may be required to repayexcess amounts previously received in respect of carried interest in our funds if, upon liquidation of the fund, we have received carried interestdistributions in excess of the amount to which we were entitled;•the future performance of our funds will be affected by macroeconomic factors, including negative factors arising from disruptions in the global financialmarkets or tensions in global trade, which may not have been prevalent in the periods relevant to the historical return data included in this report;•in some historical periods, the rates of return of some of our funds have been positively influenced by a number of investments that experienced asubstantial decrease in the average holding period of such investments and rapid and substantial increases in value following the dates on which thoseinvestments were made; those trends and rates of return may not be repeated in the future as the actual or expected length of holding periods related toinvestments is likely longer than such historical periods;58Table of Contents•our newly established funds may generate lower returns during the period that they take to deploy their capital;•our funds' returns have benefited from investment opportunities and general market conditions in certain historical periods that may not repeat themselves,and there can be no assurance that our current or future funds will be able to avail themselves of comparable investment opportunities or marketconditions; and•we may create new funds and investment products in the future that reflect a different asset mix in terms of allocations among funds, investmentstrategies, geographic and industry exposure, vintage year and economic terms.In addition, our historical rates of return reflect our historical cost structure, which has varied and may vary further in the future. Certain of our newer funds,for example, have lower fee structures and also have performance hurdles. Future returns will also be affected by the risks described elsewhere in this report,including risks of the industry sectors and businesses in which a particular fund invests and changes in laws. See "—Risks Related to Our Business—Difficultmarket and economic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that wemanage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affectour financial prospects and condition."Valuation methodologies for certain assets in our funds and on our balance sheet can be subjective and the fair value of assets established pursuant to suchmethodologies may never be realized, which could result in significant losses for our funds and us.There are no readily ascertainable market prices for a substantial majority of illiquid investments of our investment funds, our finance vehicles or other assetson our balance sheet. When determining fair values of investments, we use the last reported market price as of the statement of financial condition date forinvestments that have readily observable market prices. When an investment does not have a readily available market price, the fair value of the investmentrepresents the value, as determined by us in good faith, at which the investment could be sold in an orderly disposition over a reasonable period of time betweenwilling parties other than in a forced or liquidation sale. There is no single standard for determining fair value in good faith and in many cases fair value is bestexpressed as a range of fair values from which a single estimate may be derived. When making fair value determinations for our private equity investments, wetypically use a market multiples approach that considers a specified financial measure (such as EBITDA) and/or a discounted cash flow analysis. Real assetinvestments in infrastructure, energy and real estate are valued using one or more of the discounted cash flow analysis, market comparables analysis and directincome capitalization, which in each case incorporates significant assumptions and judgments, and in certain cases, utilizes the services of independent valuationfirms. Credit investments are valued using values obtained from dealers or market makers, and where these values are not available, credit investments are valuedby us based on ranges of valuations determined by an independent valuation firm.Each of these methodologies requires estimates of key inputs and significant assumptions and judgments. We also consider a range of additional factors thatwe deem relevant, including the applicability of a control premium or illiquidity discount, the presence of significant unconsolidated assets and liabilities, anyfavorable or unfavorable tax attributes, the method of likely exit, financial projections, estimates of assumed growth rates, terminal values, discount rates includingrisk free rates, capital structure, risk premiums, commodity prices and other factors, and determining these factors may involve a significant degree of ourmanagement's judgment and the judgment of management of our portfolio companies.Because valuations, and in particular valuations of investments for which market quotations are not readily available, are inherently uncertain, may fluctuateover short periods of time and may be based on estimates, determinations of fair value may differ materially from the values that would have resulted if a readymarket had existed. Even if market quotations are available for our investments, such quotations may not reflect the value that we would actually be able to realizebecause of various factors, including possible illiquidity associated with a large ownership position, subsequent illiquidity in the market for a company's securities,future market price volatility or the potential for a future loss in market value based on poor industry conditions or the market's view of overall company andmanagement performance. Our stockholders' equity could be adversely affected if the values of investments that we record is materially higher than the values thatare ultimately realized upon the disposal of the investments and changes in values attributed to investments from quarter to quarter may result in volatility in ourAUM and such changes could materially affect the results of operations that we report from period to period. There can be no assurance that the investment valuesthat we record from time to time will ultimately be realized and that we will be able to realize the investment values that are presented in this report.Because there is significant uncertainty in the valuation of, or in the stability of the value of, illiquid investments, the fair values of investments reflected in aninvestment fund's or finance vehicle's net asset value ("NAV") do not necessarily reflect the prices that would actually be obtained by us on behalf of the fund orfinance vehicle when such investments are realized.59Table of ContentsFor example, there may be liabilities such as unknown or uncertain tax exposures with respect to investments, especially those outside the United States, whichmay not be fully reflected in valuations. Realizations at values significantly lower than the values at which investments have been reflected in prior fund NAVswould result in losses for the applicable fund and the loss of potential carried interest and other fees. Also, if realizations of our investments produce valuesmaterially different than the carrying values reflected in prior fund NAVs, fund investors may lose confidence in us, which could in turn result in difficulty inraising capital for future funds.In addition, because we value our entire portfolio only on a quarterly basis, subsequent events that may have a material impact on those valuations may not bereflected until the next quarterly valuation date.Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have asignificant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financialcondition.Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have asignificant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition. Forexample:•Global equity markets, which may be volatile, significantly impact the valuation of our portfolio companies and, therefore, the investment income that werecognize. For our investments that are publicly listed and thus have readily observable market prices, global equity markets have a direct impact onvaluation. For other investments, these markets have an indirect impact on valuation as we typically utilize market multiples (i.e. stock price ofcomparable companies divided by earnings or cash flow) as a critical input to ascertain fair value of our investments that do not have readily observablemarket prices. In addition, the valuation for any particular period may not be realized at the time of disposition. For example, because our private equityfunds often hold very large amounts of the securities of their portfolio companies, the disposition of these securities often takes place over a long period oftime, which can further expose us to volatility risk. In addition, the receptivity of equity markets to initial public offerings, as well as subsequentsecondary equity offerings by companies already public, impacts our ability to realize investment gains. Unfavorable market conditions, market volatilityand other factors may also adversely impact our strategic partnerships with third-party hedge fund managers by influencing the level or pace ofsubscriptions or redemptions from the funds managed by our partners.•Changes in credit markets can also impact valuations and may have offsetting results depending on the valuation methodology used. For example, wetypically use a discounted cash flow analysis as one of the methodologies to ascertain the fair value of our investments that do not have readily observablemarket prices. If applicable interest rates rise, then the assumed cost of capital for those portfolio companies would be expected to increase under thediscounted cash flow analysis, and this effect would negatively impact their valuations if not offset by other factors. Rising U.S. interest rates may alsonegatively impact certain foreign currencies that depend on foreign capital flows. Conversely, a fall in interest rates can positively impact valuations ofcertain portfolio companies if not offset by other factors. These impacts could be substantial depending upon the magnitude of the change in interest rates.In certain cases, the valuations obtained from the discounted cash flow analysis and the other primary methodology we use, the market multiplesapproach, may yield different and offsetting results. For example, the positive impact of falling interest rates on discounted cash flow valuations mayoffset the negative impact of the market multiples valuation approach and may result in less of a decline in value than for those investments that had areadily observable market price. Finally, low interest rates related to monetary stimulus and economic stagnation may also negatively impact expectedreturns on all investments, as the demand for relatively higher return assets increases and supply decreases.•Foreign exchange rates can materially impact the valuations of our investments that are denominated in currencies other than the U.S. dollar. For example,U.S. dollar appreciation relative to other currencies is likely to cause a decrease in the dollar value of non-U.S. investments to the extent unhedged.•Conditions in commodity markets impact the performance of our portfolio companies and other investments in a variety of ways, including through thedirect or indirect impact on the cost of the inputs used in their operations as well as the pricing and profitability of the products or services that they sell.The price of commodities has historically been subject to substantial volatility, which among other things, could be driven by economic, monetary,political or weather related factors. If our funds' operator or our portfolio companies are unable to raise prices to offset increases in the cost of rawmaterials or other inputs, or if consumers defer purchases of or seek substitutes for the products of our funds or such portfolio companies, our funds orsuch portfolio companies could experience lower operating income which may in turn reduce the valuation of such funds' investments or those portfoliocompanies. The value of energy investments60Table of Contentsgenerally increase or decrease with the increase or decrease, respectively, of energy commodity prices and in particular with long-term forecasts for suchenergy commodity prices. Given our investments in oil and gas companies and assets, the value of this portfolio and the investment income we realize issensitive to oil and gas prices. The volatility of commodity prices also makes it difficult to predict commodity price movements. Apart from our energyinvestments, a number of our other investments may be dependent to varying degrees on the energy sector through, for example, the provision ofequipment and services used in energy exploration and production. These companies may benefit from an increase or suffer from a decline in commodityprices.•Political developments, natural disasters, war or threat of war, terrorist attacks, public health crises and other events outside of our control can, andperiodically do, materially and adversely impact our portfolio companies and other investments around the world. Our investment strategies targetopportunities globally, across North America, Europe, Asia-Pacific and the Middle East. Political instability and extremism, civil unrest and anti-government protests in any region where we have material business operations or investments can, and periodically does, have an adverse impact on ourand our portfolio companies’ business results, reputation or license to operate. In addition, occurrence of war or hostilities involving a country in whichwe have investments or where our portfolio companies operate could adversely affect the operations and valuations of our portfolio companies andinvestments in such country. Natural disasters, such as extreme weather events, climate change, earthquakes, tsunamis or floods, can also have an adverseimpact on certain of our portfolio companies and investments, especially our real asset investments and portfolio companies that rely on physicalfactories, plants or stores located in the affected areas. As the effects of climate change increase, we expect the frequency and impact of weather andclimate related events and conditions to increase as well. For example, unseasonal or violent weather events can have a material impact to businesses orproperties that focus on tourism or recreational travel. Public health crises, pandemics and epidemics, such as those caused by new strains of viruses suchas H5N1 (avian flu), severe acute respiratory syndrome (SARS) and, most recently, the novel coronavirus (COVID-19), are also expected to increase asinternational travel continues to rise, and also directly and indirectly impact us and our portfolio companies in material respects by threatening our andtheir employees' well-being and morale, interrupting business activities, supply chains and transactional activities, disrupting travel, and negativelyimpacting the economies of the affected countries or regions.Changes in these factors can have a significant effect on the results of the valuation methodologies used to value our portfolio, and our reported fair values forthese assets could vary materially if these factors from prior quarters were to change significantly. See "Management's Discussion and Analysis of FinancialCondition and Results of Operations—Business Environment."Global and regional economic conditions have a substantial impact on the value of investments. See "—Risks Related to Our Business—Difficult market andeconomic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or byreducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financialprospects and condition."Dependence on significant leverage in investments by our funds and our balance sheet assets could adversely affect our ability to achieve attractive rates ofreturn on those investments.Because many of our funds' investments and our balance sheet investments often rely heavily on the use of leverage, our ability to achieve attractive rates ofreturn will depend on our continued ability to access sufficient sources of indebtedness at attractive rates. For example, our credit funds use varying degrees ofleverage when making investments. Similarly, in many private equity investments, indebtedness may constitute 70% or more of a portfolio company's total debtand equity capitalization, including debt that may be incurred in connection with the investment, and a portfolio company's indebtedness may also increase inrecapitalization transactions subsequent to the company's acquisition. The absence of available sources of sufficient debt financing for extended periods of timecould therefore materially and adversely affect our funds and our portfolio companies. U.S. federal bank regulatory agencies and the European Central Bank haveissued leveraged lending guidance covering transactions characterized by a degree of financial leverage. Such guidance may limit the amount or availability of debtfinancing and may increase the cost of financing we are able to obtain for our transactions and may cause the returns on our investments to suffer. See "—RisksRelated to Our Business—Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. Thepossibility of increased regulatory focus or legislative or regulatory changes could materially and adversely affect our business."An increase in either the general levels of interest rates or in the risk spread demanded by sources of indebtedness such as we experienced during the globalfinancial crisis in 2008 and 2009 would make it more expensive to finance those investments. In addition, increases in interest rates could decrease the value offixed-rate debt investments that our balance sheet assets,61Table of Contentsfinance vehicles or our funds make. Increases in interest rates could also make it more difficult to locate and consummate private equity and other investmentsbecause other potential buyers, including operating companies acting as strategic buyers, may be able to bid for an asset at a higher price due to a lower overall costof capital or their ability to benefit from a higher amount of cost savings following the acquisition of the asset. In addition, a portion of the indebtedness used tofinance private equity investments often includes high-yield debt securities issued in the capital markets. Capital markets are volatile, and there may be times whenwe might not be able to access those markets at attractive rates, or at all, when completing an investment.Investments in highly leveraged entities are also inherently more sensitive to declines in revenues, increases in expenses and interest rates and adverseeconomic, market and industry developments. The incurrence of a significant amount of indebtedness by an entity could, among other things:•subject the entity to a number of restrictive covenants, terms and conditions, any violation of which would be viewed by creditors as an event of defaultand could materially impact our ability to realize value from our investment;•allow even moderate reductions in operating cash flow to render it unable to service its indebtedness;•give rise to an obligation to make mandatory prepayments of debt using excess cash flow, which might limit the entity's ability to respond to changingindustry conditions to the extent additional cash is needed for the response, to make unplanned but necessary capital expenditures or to take advantage ofgrowth opportunities;•limit the entity's ability to adjust to changing market conditions, thereby placing it at a competitive disadvantage compared to its competitors who haverelatively less debt;•limit the entity's ability to engage in strategic acquisitions that might be necessary to generate attractive returns or further growth; and•limit the entity's ability to obtain additional financing or increase the cost of obtaining such financing, including for capital expenditures, working capitalor other general corporate purposes.A leveraged company's income and equity also tend to increase or decrease at a greater rate than would otherwise be the case if money had not been borrowed.As a result, the risk of loss associated with a leveraged company is generally greater than for comparable companies with comparatively less debt. For example,leveraged companies could default on their debt obligations due to a decrease in revenues and cash flow precipitated by an economic downturn or by poor relativeperformance at such a company. Similarly, the leveraged nature of some of our investments in real assets increases the risk that a decline in the fair value of theunderlying real asset will result in their abandonment or foreclosure. For example, if the property-level debt on a particular investment has reached its maturity andthe underlying asset value has declined below its debt-level, we may, in absence of cooperation by the lender in regards to a partial debt-write-off, be forced to putthe investment into liquidation. In addition, the 2017 Tax Act partially limits the tax deductibility of interest, which could have a material adverse effect on ourfunds' investment activities and on operations of a leveraged company.When our existing portfolio investments reach the point when debt incurred to finance those investments matures in significant amounts and must be eitherrepaid or refinanced, those investments may materially suffer if they have generated insufficient cash flow to repay maturing debt and there is insufficient capacityand availability in the financing markets to permit them to refinance maturing debt on satisfactory terms, or at all. If the financing for such purposes were to beunavailable or uneconomic when significant amounts of the debt incurred to finance our existing portfolio investments start to come due, these investments couldbe materially and adversely affected. In the event of default or potential default under applicable financing arrangements, one or more of our portfolio companiesmay go bankrupt, which could give rise to substantial investment losses, adverse claims or litigation against us or our employees and damage to our reputation.Among the sectors particularly challenged by downturns in the global credit markets (such as the global financial crisis in 2008 and 2009) are the CLO andleveraged finance markets. We have significant exposure to these markets through our CLO subsidiaries, which we principally acquired in the acquisitions of KFNand Avoca. As of December 31, 2019, we indirectly hold below investment grade corporate loans and securities with a $14.9 billion estimated fair market valuethrough our CLO subsidiaries. Each of these subsidiaries is a special purpose company that issued to us and other investors notes secured by a pool of collateralconsisting primarily of corporate leveraged loans. In most cases, our CLO holdings are deeply subordinated, representing the CLO subsidiary's substantial leverage,which increases both the opportunity for higher returns as well as the magnitude of losses when compared to holders or investors that rank more senior to us inright of payment. These loans and bonds also generally involve a higher degree of risk than investment grade rated debt, including the risks described in theparagraphs above. Our CLO subsidiaries have historically experienced an increase in downgrades, depreciations in market62Table of Contentsvalue and defaults in respect of leveraged loans in their collateral during downturns in credit markets. The CLOs' portfolio profile tests set limits on the amount ofdiscounted obligations a CLO can hold. During any time that a CLO issuer exceeds such a limit, the ability of the CLO's manager to sell assets and reinvestavailable principal proceeds into substitute assets is restricted. In such circumstances, CLOs may fail certain over-collateralization tests, which would causediversions of cash flows away from us as holders of the more junior CLO, which may impact our cash flows. The ability of the CLOs to make interest payments tothe holders of the senior notes of those structures is highly dependent upon the performance of the CLO collateral. If the collateral in those structures were toexperience a significant decrease in cash flow due to an increased default level, payment of all principal and interest outstanding may be accelerated as a result ofan event of default or by holders of the senior notes. There can be no assurance that market conditions giving rise to these types of consequences will not occur, re-occur, subsist or become more acute in the future. Because our CLO structures involve complex collateral and other arrangements, the documentation for suchstructures is complex, is subject to differing interpretations and involves legal risk. These CLOs have served as long-term, non-recourse financing for debtinvestments and as a way to reduce refinancing risk, reduce maturity risk and secure a fixed cost of funds over an underlying market interest rate. An inability tocontinue to utilize CLOs or other similar financing vehicles successfully could limit our ability to fund future investments, grow our business or fully execute ourbusiness strategy and our results of operations may be materially and adversely affected.Our CLO subsidiaries regularly use significant leverage to finance their assets. An inability of such subsidiaries to continue to raise or utilize leverage, torefinance or extend the maturities of their outstanding indebtedness or to maintain adequate levels of collateral under the terms of their CLOs could limit theirability to grow their business, reinvest principal cash, distribute cash to us or fully execute their business strategy, and our results of operations may be materiallyand adversely affected. If these subsidiaries are unable to maintain their operating results and access to capital resources, they could face substantial liquidityproblems and might be required to dispose of material assets or operations to meet debt service and other obligations. These CLO strategies and the value of theassets of such CLO subsidiaries are also sensitive to changes in interest rates because these strategies rely on borrowed money and because the value of theunderlying portfolio loans can fall when interest rates rise. If interest rates on CLO borrowings increase and the interest rates on the portfolio loans do not alsoincrease, the CLO strategy is unlikely to achieve its projected returns. Also, if interest rates increase in the future, our CLO portfolio will likely experience areduction in value because it would hold assets receiving below market rates of interest.Our credit-oriented funds and CLOs may choose to use leverage as part of their respective investment programs and regularly borrow a substantial amount oftheir capital. The use of leverage poses a significant degree of risk and enhances the possibility of a significant loss in the value of the investment portfolio. A fundmay borrow money from time to time to purchase or carry securities or debt obligations or may enter into derivative transactions (such as total return swaps) withcounterparties that have embedded leverage. The interest expense and other costs incurred in connection with such borrowing may not be recovered by appreciationin the securities or debt obligations purchased or carried and will be lost—and the timing and magnitude of such losses may be accelerated or exacerbated—in theevent of a decline in the market value of such securities or debt obligations. Gains realized with borrowed funds may cause the fund's NAV to increase at a fasterrate than would be the case without borrowings. However, if investment results fail to cover the cost of borrowings, the fund's NAV could also decrease faster thanif there had been no borrowings.Any of the foregoing circumstances could have a material adverse effect on our results of operations, financial condition and cash flow.The due diligence process that we undertake in connection with our investments may not reveal all facts that may be relevant in connection with an investment.Before making our investments, we conduct due diligence that we deem reasonable and appropriate based on the facts and circumstances applicable to eachinvestment. The objective of the due diligence process is to identify attractive investment opportunities based on the facts and circumstances surrounding aninvestment, to identify possible risks associated with that investment and, in the case of private equity investments, to prepare a framework that may be used fromthe date of an acquisition to drive operational achievement and value creation. When conducting due diligence, we typically evaluate a number of importantbusiness, financial, tax, accounting, environmental, technological, regulatory and legal issues in determining whether or not to proceed with an investment. Outsideconsultants, legal advisors, accountants and investment banks are involved in the due diligence process in varying degrees depending on the type of investment.Nevertheless, when conducting due diligence and making an assessment regarding an investment, we rely on resources available to us, including informationprovided by the target of the investment and, in some circumstances, third-party investigations. The due diligence process may at times be subjective with respectto newly organized companies or carve-out transactions for which only limited information is available.63Table of ContentsInstances of bribery, fraud, accounting irregularities and other improper, illegal or corrupt practices can be difficult to detect, and fraud and other deceptivepractices can be widespread in certain jurisdictions. Several of our funds invest in emerging market countries that may not have established laws and regulationsthat are as stringent as in more developed nations, or where existing laws and regulations may not be consistently enforced. For example, our funds investthroughout jurisdictions that have material perceptions of corruption according to international rating standards (such as Transparency International's CorruptionPerceptions Index) such as China, India, Indonesia, Latin America, the Middle East and Africa. Due diligence on investment opportunities in these jurisdictions isfrequently more complicated because consistent and uniform commercial practices in such locations may not have developed. Bribery, fraud, accountingirregularities and corrupt practices can be especially difficult to detect in such locations.The due diligence conducted for certain of our credit strategies, as well as certain private equity and real asset investments, is limited to publicly availableinformation. Accordingly, we cannot be certain that the due diligence investigation that we will carry out with respect to any investment opportunity will reveal orhighlight all relevant facts (including fraud, bribery and other illegal activities and contingent liabilities) that may be necessary or helpful in evaluating suchinvestment opportunity, including the existence of contingent liabilities. We also cannot be certain that our due diligence investigations will result in investmentsbeing successful or that the actual financial performance of an investment will not fall short of the financial projections we used when evaluating that investment.Our investment management activities involve investments in relatively high-risk, illiquid assets, and we may fail to realize any profits from these activities fora considerable period of time or lose some or all of the capital invested.Many of our funds and our balance sheet may hold investments in securities that are not publicly traded. In many cases, our funds or we may be prohibited bycontract or by applicable securities laws from selling such securities at many points in time. Our funds or we will generally not be able to sell these securitiespublicly unless their sale is registered under applicable securities laws, or unless an exemption from such registration is available, and then only at such times whenwe do not possess material nonpublic information. The ability of many of our funds or us to dispose of investments is heavily dependent on the capital markets andin particular the public equity markets. For example, the ability to realize any value from an investment may depend upon the ability to complete an initial publicoffering of the portfolio company in which such investment is made. Even if the securities are publicly traded, large holdings of securities can often be disposed ofonly over a substantial length of time, exposing our investment returns to risks of downward movement in market prices during the intended disposition period.Moreover, because the investment strategy of many of our funds, particularly our private equity funds, often entails having representation on our funds' publicportfolio company boards, our funds may be restricted in their ability to effect such sales during certain time periods. In addition, market conditions and regulatoryenvironment can also delay our funds' ability to exit and realize value from their investments. For example, rising interest rates and challenging credit markets maymake it difficult for potential buyers to raise sufficient capital to purchase our funds' investments. Government policies regarding certain regulations, such asantitrust law, or restrictions on foreign investment in certain of our funds' portfolio companies or assets can also limit our funds' exit opportunities. The recentlyenacted Foreign Investment Risk Review Modernization Act ("FIRRMA") and related regulations significantly expanded the types of transactions that are subjectto the jurisdiction of the Committee on Foreign Investment in the United States ("CFIUS"). Under FIRRMA, CFIUS has the authority to review and potentiallyblock or impose conditions on certain foreign investments in U.S. companies or real estate, which may reduce the number of potential buyers and limit the abilityof our funds to exit from certain investments. As many of our funds have a finite term, we could also be forced to dispose of investments sooner than otherwisedesirable. Accordingly, under certain conditions, our funds may be forced to either sell their investments at lower prices than they had expected to realize or defersales that they had planned to make, potentially for a considerable period of time. Moreover, we may determine that we may be required to sell our balance sheetassets alongside our funds' investments at such times. We have made and expect to continue to make significant capital investments in our current and future fundsand other strategies. Contributing capital to these funds is risky, and we may lose some or all of the principal amount of our investments.Our investments are subject to a number of inherent risks.Our results are highly dependent on our continued ability to generate attractive returns from our investments. Investments made by our private equity, credit orother investments involve a number of significant risks inherent to private equity, credit and other investing, including the following:•companies in which investments are made may have limited financial resources and may be unable to meet their obligations under their securities, whichmay be accompanied by a deterioration in the value of their equity securities or any collateral or guarantees provided with respect to their debt;64Table of Contents•companies in which investments are made are more likely to depend on the management talents and efforts of a small group of persons and, as a result,the death, disability, resignation or termination of one or more of those persons could have a material adverse impact on their business and prospects;•companies in which private equity investments are made may be businesses or divisions acquired from larger operating entities that may require arebuilding or replacement of financial reporting, information technology, operational and other functions;•companies in which investments are made may from time to time be parties to litigation, may be engaged in rapidly changing businesses with productssubject to a substantial risk of obsolescence and may require substantial additional capital to support their operations, finance expansion or maintain theircompetitive position;•instances of bribery, fraud and other deceptive practices committed by senior management of portfolio companies in which our funds or we invest mayundermine our due diligence efforts with respect to such companies, and if such bribery, fraud or other deceptive practices are discovered, negativelyaffect the valuation of a fund's investments as well as contribute to overall market volatility that can negatively impact a fund's or our investment program;•our funds may make investments that they do not advantageously dispose of prior to the date the applicable fund is dissolved, either by expiration of suchfund's term or otherwise, resulting in a lower than expected return on the investments and, potentially, on the fund itself;•our portfolio companies generally have capital structures established on the basis of financial projections based primarily on management's judgments andassumptions, and general economic conditions and other factors may cause actual performance to fall short of these financial projections, which couldcause a substantial decrease in the value of our equity holdings in the portfolio company and cause our funds' or our performance to fall short of ourexpectations;•executive officers, directors and employees of an equity sponsor may be named as defendants in litigation involving a company in which an investment ismade or is being made, and we or our funds may indemnify such executive officers, directors or employees for liability relating to such litigation;•we advise funds that invest in businesses that operate in a variety of industries that are subject to extensive domestic and foreign regulation (includingcompanies that supply services to governmental agencies), such as the telecommunications industry, the defense and government services industry, thehealthcare industry, oil and gas industry, the waste management industry and the food industry, which may involve greater risk due to rapidly changingmarket and governmental conditions in those sectors;•our transactions involve complex tax structuring that could be challenged or disregarded, which may result in losing treaty benefits or would otherwiseadversely impact our investments; and•significant failures of our portfolio companies to comply with laws and regulations applicable to them could affect the ability of our funds or us to investin other companies in certain industries in the future and could harm our reputation.For additional risks that rise from the types of investment vehicles used in an investment, see "—Risks Related to Our Business—Certain types of investmentvehicles may subject us to additional risk of litigation and regulatory scrutiny."Our investments in real assets such as real estate, infrastructure and energy may expose us to increased risks and liabilities and may expose our stockholders toadverse consequences.Investments in real assets, which may include real estate, infrastructure, oil and gas properties and other energy assets, may expose us to increased risks andliabilities that are inherent in the ownership of real assets. For example:•Ownership of real assets in our funds or vehicles may increase our risk of liability under environmental laws that impose, regardless of fault, joint andseveral liability for the cost of remediating contamination and compensation for damages. In addition, changes in environmental laws or regulations or theenvironmental condition of an investment may create liabilities that did not exist at the time of acquisition that would not have been foreseen. Even incases where we are indemnified by a seller with respect to an investment against liabilities arising out of violations of environmental laws and regulations,there can be no assurance as to the financial viability of the seller to satisfy such indemnities or our ability to achieve enforcement of such indemnities;65Table of Contents•Ownership of real assets may also present additional risk of liability for personal and property injury or impose significant operating challenges and costs,for example with respect to compliance with zoning, environmental or other applicable laws;•Real asset investments may face construction risks, including without limitation: (i) labor disputes, shortages of material and skilled labor, or workstoppages; (ii) slower than projected construction progress and the unavailability or late delivery of necessary equipment; (iii) less than optimalcoordination with public utilities in the relocation of their facilities; (iv) adverse weather conditions and unexpected construction conditions; (v) accidentsor the breakdown or failure of construction equipment or processes; (vi) catastrophic events such as explosions, fires and terrorist activities, and othersimilar events and (vii) risks associated with holding direct or indirect interests in undeveloped land or underdeveloped real property. These risks couldresult in substantial unanticipated delays or expenses (which may exceed expected or forecasted budgets) and, under certain circumstances, could preventcompletion of construction activities once undertaken. Certain real asset investments may remain in construction phases for a prolonged period and,accordingly, may not be cash generative for a prolonged period. Recourse against the contractor may be subject to liability caps or may be subject todefault or insolvency on the part of the contractor;•The operation of real assets is exposed to potential unplanned interruptions caused by significant catastrophic or force majeure events. These risks could,among other effects, adversely impact the cash flows available from investments in real assets, cause personal injury or loss of life, damage property, orinstigate disruptions of service. In addition, the cost of repairing or replacing damaged assets could be considerable. Repeated or prolonged serviceinterruptions may result in permanent loss of customers, litigation, or penalties for regulatory or contractual non-compliance. Force majeure events thatare incapable of, or too costly to, cure may also have a permanent adverse effect on an investment; and•The management of the business or operations of a real asset may be contracted to a third-party management company unaffiliated with us. Although itwould be possible to replace any such operator, the failure of such an operator to adequately perform its duties or to act in ways that are in the best interestof the investment, or the breach by an operator of applicable agreements or laws, rules and regulations, could have an adverse effect on the investment'sresults of operations and financial condition. Real asset investments may involve the subcontracting of design and construction activities in respect ofprojects, and as a result our investments are subject to the risk that contractual provisions passing liabilities to a subcontractor could be ineffective, thesubcontractor fails to perform services that it has agreed to provide and, in cases where a single subcontractor provides services to various investments,the subcontractor becomes insolvent.Without limiting the foregoing risks, we note that investments that we have made and will continue to make in the oil and gas industries may present specificenvironmental, safety and other inherent risks. Such investments are subject to stringent and complex foreign, federal, state and local laws, ordinances andregulations specific to oil and gas industries, including, for example, those governing transportation, exploration and production of oil and natural gas. There arealso various conservation laws and regulations applicable to oil and natural gas production and related operations, in addition to regulations governing occupationalhealth and safety, the discharge of materials into the environment and other practices relating to environmental protection. Failure to comply with applicable laws,ordinances and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations and the issuance oforders enjoining some or all of our operations in affected areas. These laws, ordinances and regulations may also restrict the rate of oil and natural gas productionbelow the rate that would otherwise be possible and increase the cost of production, thereby reducing profitability. Our oil and gas investments are subject to otherrisks, such as:•Volatility in the prices of oil and gas properties may make it difficult to ensure that our acquisition of interest in such properties is at appropriate prices;•Currently unforeseen environmental incidents may occur or past non-compliance with environmental laws or regulations may be discovered making itdifficult to predict the future costs or impact of compliance;•The oil and gas industries present inherent risk of personal and property injury, for which we may not be fully insured or indemnified;•There may be unforeseen or increased regulatory and environmental risks stemming from the use of new technologies, including hydraulic fracturing;66Table of Contents•Our estimated oil, natural gas, and natural gas liquids reserve quantities and future production rates are based on many assumptions that may prove to beinaccurate. Any material inaccuracies in these reserve estimates or the underlying assumptions will materially affect the quantities and value of ourreserves;•The performance of our energy investments depend on the skill, ability and decisions of third-party operators. The success of our investment will dependon their exploitation, development, construction and drilling activities and the timing and cost of drilling, completing and operating wells. Failure of suchoperators to comply with applicable laws, rules and regulations could result in liabilities to us, reduce the value of our interest in the oil and natural gasproperties, and materially and adversely affect our cash flows and results of operations; and•If commodity prices decline and remain depressed for a prolonged period, a significant portion of our development projects may become uneconomic andcause write-downs of the value of our oil and gas properties, which may reduce the value of our energy investments, have a negative impact on our abilityto use these investments as collateral or otherwise have a material adverse effect on our results of operations.Investments in real estate are subject to the risks inherent in the ownership and operation of real estate and real estate-related businesses and assets. These risksinclude those associated with the burdens of ownership of real property; general and local economic conditions; changes in supply of and demand for competingproperties in an area (as a result, for instance, of overbuilding); fluctuations in the average occupancy; the financial resources of tenants; changes in building,environmental and other laws; energy and supply shortages; various uninsured or uninsurable risks; natural disasters; changes in government regulations (such asrent control); changes in real property tax rates; changes in interest rates; the reduced availability of mortgage funds that may render the sale or refinancing ofproperties difficult or impracticable; negative developments in the economy that depress travel activity; environmental liabilities; contingent liabilities ondisposition of assets; and terrorist attacks, war and other factors that are beyond our control. Our real estate investments are also subject to additional risks,including but not limited to the following:•The success of certain investments will depend on the ability to restructure and effect improvements in the operations of the applicable properties, andthere is no assurance that we will be successful in identifying or implementing such restructuring programs and improvements.•If we acquire direct or indirect interests in undeveloped land or underdeveloped real property, which may often be non-income producing, they will besubject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoningand other regulatory or environmental approvals, the cost and timely completion of construction (including risks beyond the control of us or our fund,such as weather or labor conditions or material shortages) and the availability of both construction and permanent financing on favorable terms.•The strategy of our real estate funds may be based, in part, on the availability for purchase of assets at favorable prices followed by the continuation orimprovement of market conditions or on the availability of refinancing. No assurance can be given that the real estate businesses or assets can be acquiredor disposed of at favorable prices or that refinancing will be available.•Lenders in commercial real estate financing customarily will require a "bad boy" guarantee, which typically provides that the lender can recover lossesfrom the guarantors for certain bad acts, such as fraud or intentional misrepresentation, intentional waste, willful misconduct, criminal acts,misappropriation of funds, voluntary incurrence of prohibited debt and environmental losses sustained by lender. For our acquisitions, "bad boy"guarantees would generally be extended by our funds, our balance sheet or a combination of both depending on the ownership of the relevant asset. Inaddition, "bad boy" guarantees typically provide that the loan will be a full personal recourse obligation of the guarantor, for certain actions, such asprohibited transfers of the collateral or changes of control and voluntary bankruptcy of the borrower. It is expected that commercial real estate financingarrangements generally will require "bad boy" guarantees and in the event that such a guarantee is called, a fund's or our assets could be materially andadversely affected. Moreover, "bad boy" guarantees could apply to actions of the joint venture partners associated with the investments, and in certaincases the acts of such joint venture partner could result in liability to our funds or us under such guarantees.•The acquisition, ownership and disposition of real properties carry certain specific litigation risks. Litigation may be commenced with respect to aproperty acquired in relation to activities that took place prior to the acquisition of such property. In addition, at the time of disposition, other potentialbuyers may bring claims related to the asset or for due67Table of Contentsdiligence expenses or other damages. After the sale of a real estate asset, buyers may later sue our funds or us for losses associated with latent defects orother problems not uncovered in due diligence.•Our funds or we may be subject to certain risks associated with investments in particular assets. REITs may be affected by changes in the value of theirunderlying properties and by defaults by borrowers or tenants. REITs depend on their ability to generate cash flow to make distributions and may beimpacted by changes in tax laws or by a failure to qualify for tax-free pass through income. Investments in real estate debt investments may be unsecuredand subordinated to a substantial amount of indebtedness. Such debt investments may not be protected by financial covenants. Non-performing real estateloans may require a substantial amount of workout negotiations and/or restructuring, which may entail, among other things, a substantial reduction in theinterest rate and a substantial write-down of the principal of such loan. Investments in commercial mortgage loans are subject to risks of delinquency,foreclosure and loss of principal. In the event of any default under a mortgage loan held directly by our fund or us, our fund or we will bear a risk of lossof principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the loan. Investments in assets orbusinesses that are distressed may have little or no near-term cash flow and involve a high degree of risk. Such investments subject to bankruptcy orinsolvency could be subordinated or disallowed.Infrastructure investments often involve an ongoing commitment to a municipal, state, federal or foreign government or regulatory agencies. The nature ofthese obligations exposes the owners of infrastructure investments to a higher level of regulatory control than typically imposed on other businesses. They may alsorely on complex government licenses, concessions, leases or contracts, which may be difficult to obtain or maintain. Infrastructure investments may requireoperators to manage such investments, and such operators' failure to comply with laws, including prohibitions against bribing of government officials, maymaterially and adversely affect the value of such investments and cause us serious reputational and legal harm. Revenues for such investments may rely oncontractual agreements for the provision of services with a limited number of counterparties, and are consequently subject to heightened counterparty default risk.The operations and cash flow of infrastructure investments are also more sensitive to inflation and, in certain cases, commodity price risk. Furthermore, servicesprovided by infrastructure investments may be subject to rate regulations by government entities that determine or limit prices that may be charged. Similarly, usersof applicable services, or government entities in response to such users, may react negatively to any adjustments in rates, which may reduce the profitability of suchinfrastructure investments.Our growth equity strategy invests in emerging and less established companies that are heavily dependent on new technologies.Our growth equity funds may make investments in companies that are in a conceptual or early stage of development. These companies are often characterizedby short operating histories, new technologies and products, quickly evolving markets, management teams that may have limited experience working together andin many cases, negative cash flow, all of which enhance the difficulty of evaluating these investment opportunities and the ultimate success of such investments.Other substantial operational risks to which such companies are subject include: uncertain market acceptance of the company's products or services; a high degreeof regulatory risk for new or untried or untested business models, products and services; high levels of competition among similarly situated companies; newcompeting products and technology; lower barriers to entry and downward pricing pressure; lower capitalizations and fewer financial resources; the potential forrapid organizational or strategic change; and susceptibility to personal misconduct by or departure of key executives or founders. In addition, growth equitycompanies may be more susceptible to macroeconomic effects and industry downturns, and their valuations may be more volatile depending on the achievement ofmilestones, such as receiving a governmental license or approval. Growth equity companies also generally depend heavily on intellectual property rights, includingpatents, trademarks and proprietary products or processes. The ability to effectively enforce patent, trademark and other intellectual property laws in a cost-effective manner will affect the value of many of these companies. The presence of patents or other intellectual property rights belonging to other parties may leadto the termination of the research and development of a portfolio company's particular product. In addition, if a portfolio company infringes on third-party patentsor other intellectual property rights, it could be prevented from using certain third-party technologies or forced to acquire licenses in order to obtain access to suchtechnologies at a high cost.Certain of our funds and CLOs, and our firm through our balance sheet, hold high-yield, below investment grade or unrated debt, or securities of companiesthat are experiencing significant financial or business difficulties, which generally entail greater risk, and if those risks are realized, it could materially andadversely affect our results of operations, financial condition and cash flow.Certain of our funds and CLOs, and our firm through our balance sheet, invest in high-yield, below investment grade or unrated debt, including corporate loansand bonds, each of which generally involves a higher degree of risk than investment grade rated debt, and may be less liquid. Issuers of high yield, belowinvestment grade or unrated debt may be highly leveraged,68Table of Contentsand their relatively high debt-to-equity ratios create increased risks that their operations might not generate sufficient cash flow to service their debt obligations. Asa result, high yield, below investment grade or unrated debt is often less liquid than investment grade rated debt. Also, investments may be made in loans and otherforms of debt that are not marketable securities and therefore are not liquid. In the absence of appropriate hedging measures, changes in interest rates generally willalso cause the value of fixed rate debt investments to vary inversely to such changes. The obligor of a debt security or instrument may not be able or willing to payinterest or to repay principal when due in accordance with the terms of the associated agreement and collateral may not be available or sufficient to cover suchliabilities. Commercial bank lenders and other creditors may be able to contest payments to the holders of other debt obligations of the same obligor in the event ofdefault under their commercial bank loan agreements. Sub-participation interests in syndicated debt may be subject to certain additional risks as a result of havingno direct contractual relationship with underlying borrowers. Debt securities and instruments may be rated below investment grade by recognized rating agenciesor unrated and face ongoing uncertainties and exposure to adverse business, financial or economic conditions and the issuer's failure to make timely interest andprincipal payments.Certain of our investment funds, especially in our special situations strategy, and our firm through our balance sheet may hold interests in business enterprisesinvolved in work-outs, liquidations, reorganizations, bankruptcies and similar transactions and may purchase high-risk receivables. An investment in such businessenterprises entails the risk that the transaction in which such business enterprise is involved either will be unsuccessful, will take considerable time or will result ina distribution of cash or a new security the value of which will be less than the purchase price to the fund of the security or other financial instrument in respect ofwhich such distribution is received. In addition, if an anticipated transaction does not in fact occur, we or the fund may be required to sell the investment at a loss.Investments in troubled companies may also be adversely affected by U.S. federal and state and non-U.S. laws relating to, among other things, fraudulentconveyances, voidable preferences, lender liability and a bankruptcy court's discretionary power to disallow, subordinate or disenfranchise particular claims.Investments in securities and private claims of troubled companies made in connection with an attempt to influence a restructuring proposal or plan ofreorganization in a bankruptcy case may also involve substantial litigation, which has the potential to adversely impact us or unrelated funds or portfoliocompanies. Companies that were not in financial distress at the time we or our funds made investments may in the future require work-outs, liquidations,reorganizations, bankruptcies or similar transactions, and as a result, become subject to the same risks described above. Because there is substantial uncertaintyconcerning the outcome of transactions involving financially troubled companies, there is a potential risk of loss of the entire investment in such company. Suchinvestments involve a substantial degree of risk, and a decline in value of the assets would have a material adverse effect on our financial performance.We often pursue investment opportunities that involve business, regulatory, legal or other complexities.As an element of our investment style, we often pursue complex investment opportunities. This can often take the form of substantial business, regulatory orlegal complexity that would deter other investment managers. Our tolerance for complexity presents risks, as such transactions can be more difficult, expensive andtime consuming to finance and execute; it can be more difficult to manage or realize value from the assets acquired in such transactions; and such transactionssometimes entail a higher level of regulatory scrutiny, the application of complex tax laws or a greater risk of contingent liabilities. Our transactions involvecomplex tax structures that are costly to establish, monitor and maintain, and as we pursue a larger number of transactions across multiple assets classes and inmultiple jurisdictions, such costs will increase and the risk that a tax matter is overlooked or inadequately or inconsistently addressed will increase. Consequently,we may fail to achieve the desired tax benefit or otherwise decrease the returns of our investments or damage the reputation of our firm. Changes in law andregulation and in the enforcement of existing law and regulation, such as antitrust laws and tax laws, also add complexity and risk to our business. Further, we,directly or through our funds, may acquire an investment that is subject to contingent liabilities, which could be unknown to us at the time of acquisition or, if theyare known to us, we may not accurately assess or protect against the risks that they present. Acquired contingent liabilities could thus result in unforeseen losses forus or our funds. In addition, in connection with the disposition of an investment in a portfolio company, we or a fund may be required to make representationsabout the business and financial affairs of such portfolio company typical of those made in connection with the sale of a business. We or a fund may also berequired to indemnify the purchasers of such investment to the extent that any such representations are inaccurate. These arrangements may result in the incurrenceof contingent liabilities by us or a fund, even after the disposition of an investment. Any of these risks could harm the performance of us or our funds.Our private equity investments are typically among the largest in the industry, which involves certain complexities and risks that are not encountered in small-and medium-sized investments.Our private equity funds make investments in companies with relatively large capitalizations, which involves certain complexities and risks that are notencountered in small- and medium-sized investments. For example, larger transactions may be more difficult to finance and exiting larger deals may presentincremental challenges. In addition, larger transactions may pose greater challenges in implementing changes in the company's management, culture, finances oroperations, and may entail69Table of Contentsgreater scrutiny by regulators, interest groups and other third parties. These constituencies may be more active in opposing larger investments by certain privateequity firms.In some transactions, the amount of equity capital that is required to complete a large capitalization private equity transaction may be significant and arerequired to be structured as a consortium transaction. A consortium transaction involves an equity investment in which two or more private equity firms servetogether or collectively as equity sponsors. While we have sought to limit where possible the amount of consortium transactions in which we have been involved,we have participated in a significant number of those transactions. Consortium transactions generally entail a reduced level of control by our firm over theinvestment because governance rights must be shared with the other consortium investors. Accordingly, we may not be able to control decisions relating to aconsortium investment, including decisions relating to the management and operation of the company and the timing and nature of any exit, which could result inthe risks described in "—We and our funds have made investments in companies that we do not control, exposing us to the risk of decisions made by others withwhich we may not agree." Any of these factors could increase the risk that our larger investments could be less successful. The consequences to our investmentfunds of an unsuccessful larger investment could be more severe given the size of the investment. Moreover, we have significant capital of our own committed insuch large investments. For certain large private equity transactions, we may seek to syndicate a portion of our capital commitment to third parties; however, if weare unable to syndicate all or part of such commitment, we may be required to fund the remaining commitment amount from our balance sheet. If we are requiredto keep on our balance sheet a large portion of the capital commitment that could not be syndicated to third parties, poor performance of such large investment mayhave a material adverse impact on our financial results. See "—Risks Related to Our Business—If we are unable to syndicate the securities or indebtedness orrealize returns on investments financed with our balance sheet assets, our liquidity, business, results of operations and financial condition could be materially andadversely affected" and "—Our funds and our firm through our balance sheet may make a limited number of investments, or investments that are concentrated incertain issuers, geographic regions or asset types, which could negatively affect our performance or the performance of our funds to the extent those concentratedassets perform poorly."We and our funds have made investments in companies that we do not control, exposing us to the risk of decisions made by others with which we may notagree.We and our funds hold investments that include debt instruments and equity securities of companies that we do not control, and such investments maycomprise an increasing part of our business. Such instruments and securities may be acquired by our funds through trading activities or through purchases ofsecurities from the issuer or we may purchase such instruments and securities on a principal basis. In addition, our funds may acquire minority equity interests,particularly when making private equity investments in Asia, making growth equity investments or sponsoring investments as part of an investor consortium orthrough many of our credit funds. Our funds may also dispose of a portion of their majority equity investments in portfolio companies over time in a manner thatresults in the funds retaining a minority investment. We and our funds, including our newer private equity funds, have made certain minority investments inpublicly traded companies.We have also made minority investments in companies including hedge fund managers on our balance sheet. For example, we have investments in MarshallWace, BlackGold and PAAMCO Prisma. We also have investments in real estate managers like Drawbridge Realty.Transactions made by companies we do not control could be viewed as unwanted, damage our reputation, and consequently impair our ability to sourcetransactions in the future. Those investments will be subject to the risk that the company in which the investment is made may make business, financial ormanagement decisions with which we do not agree or that the majority stakeholders or the management of the company may take risks or otherwise act in a mannerthat does not serve our interests. These companies may be subject to complex regulatory requirements and instances of non-compliance by them may subject us toreputational harm or in certain cases, liability. We are also reliant on the systems and processes of these companies for, among other, financial information andvaluations of our investments in or with them, including hedge fund managers and their funds, but we do not control the decisions and judgments made during suchprocesses. Our investments in hedge fund managers may subject us to additional regulatory complexities or scrutiny if we are deemed to control the company forregulatory purposes, despite our minority interest. These asset managers may also be dependent on their founders and other key persons, and the loss of these keypersonnel could adversely impact our investment. If any of the foregoing were to occur, the value of the investments held by our funds or by us could decrease andour results of operations, financial condition and cash flow could be materially and adversely affected.70Table of ContentsWe make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investingin companies that are based in the United States.Many of our funds invest or have the flexibility to invest a significant portion of their assets in the equity, debt, loans or other securities of issuers that arebased outside of the United States. A substantial amount of these investments consist of private equity investments made by our private equity funds. For example,as of December 31, 2019, approximately 51% of the capital invested in those funds was attributable to non-U.S. investments. Investing in companies that are basedor have significant operations in countries outside of the United States and, in particular, in emerging markets such as China and India, Eastern Europe, South andSoutheast Asia, Latin America and Africa, involves risks and considerations that are not typically associated with investments in companies established in theUnited States. These risks may include the following:•the possibility of exchange control regulations;•restrictions on repatriation of profit on investments or of capital invested;•the imposition of non-U.S. taxes and changes in tax law;•differences in the legal and regulatory environment, such as the recognition of information barriers, or enhanced legal and regulatory compliance;•greater levels of corruption and potential exposure to the FCPA and other laws that prohibit improper payments or offers of payments to foreigngovernments, their officials and other third parties;•violations of trade sanctions or trade control regimes;•limitations on borrowings to be used to fund acquisitions or dividends;•limitations on permissible counterparties in our transactions or consolidation rules that effectively restrict the types of businesses in which we may invest;•political risks generally, including political and social instability, nationalization, expropriation of assets or political hostility to investments by foreign orprivate equity investors;•less liquid markets;•reliance on a more limited number of commodity inputs, service providers and/or distribution mechanisms;•adverse fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency into another;•higher rates of inflation;•less available current information about an issuer;•higher transaction costs;•less government supervision of exchanges, brokers and issuers;•less developed bankruptcy and other laws;•greater application of concepts like equitable subordination, which may, in bankruptcy or insolvency, result in the subordination of debt or other seniorinterests held by our investment funds, vehicles or accounts in companies in which our investment funds, vehicles or accounts also hold equity interests;•difficulty in enforcing contractual obligations;•lack of uniform accounting, auditing and financial reporting standards;•less stringent requirements relating to fiduciary duties;71Table of Contents•fewer investor protections; and•greater price volatility.As a result of the complexity of and lack of clear laws, precedent or authority with respect to the application of various income tax laws to our structures, theapplication of rules governing how transactions and structures should be reported is also subject to differing interpretations. In particular, certain jurisdictions haveeither proposed or adopted rules that seek to limit the amount of interest that may be deductible where the lender and the borrower are related parties (or wherethird-party borrowings have been guaranteed by a related party) and in some cases, without regard to whether the lender is a related party, or may seek to interpretexisting rules in a more restrictive manner. In addition, the tax authorities of certain countries have sought to disallow tax deductions for transaction and certainother costs at the portfolio company level either on the basis that the entity claiming the deduction does not benefit from the costs incurred or on other grounds.These measures will most likely adversely affect portfolio companies in those jurisdictions in which our investment funds have investments, and limit the benefitsof additional investments in those countries. Our business is also subject to the risk that similar measures might be introduced in other countries in which ourinvestment funds currently have investments or plan to invest in the future, or that other legislative or regulatory measures that negatively affect their respectiveportfolio investments might be promulgated in any of the countries in which they invest. See "—Our investments are impacted by various economic conditions andevents outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on theinvestment income we realize and our results of operations and financial condition."In addition, certain countries such as Australia, China, India, Japan, Brazil and South Korea, where we have made investments, have sought to tax investmentgains derived by nonresident investors, including private equity funds, from the disposition of the equity in companies operating in those countries. In some casesthis development is the result of new legislation or changes in the interpretation of existing legislation and local authority assertions that investors have a localtaxable presence or are holding companies for trading purposes rather than for capital purposes, or are not otherwise entitled to treaty benefits.Further, the tax authorities in certain countries, such as Australia, Belgium, China, India, Japan, Denmark, Germany and South Korea have sought to deny thebenefits of income tax treaties or EU Directives with respect to withholding taxes on interest and dividends and capital gains of nonresident entities. Benefits ofincome tax treaties or EU Directives could be denied under each country's general anti-avoidance rules or on the basis that the entity benefiting from such treaty orDirective is not the owner of the income, is a mere conduit inserted primarily to access treaty benefits or Directives, or otherwise lacks substance.These various proposals and initiatives could result in an increase in taxes paid by our funds and/or increased tax withholding with respect to our fundinvestors. See "—Risks Related to Our Business—Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authoritiescould adversely impact our effective tax rate and tax liability."As a result of the complexity of our structures, foreign jurisdictions may seek to tax an additional portion of the fee income associated with our managementadvisory activity. Foreign jurisdictions may assert that an additional amount of fee income is subject to local tax, potentially reducing our profits associated withsuch income, although this risk may be mitigated by the availability of foreign tax credits. We or our funds may also inadvertently establish a taxable presence in ajurisdiction because of activities conducted there. Compliance with tax laws and structures in these jurisdictions and the costs of adapting to changes in tax policiesrequire significant oversight and cost.Although we expect that much of the capital commitments of our funds will be denominated in U.S. dollars, our investments and capital commitments that aredenominated in a foreign currency, such as euro, will be subject to the risk that the value of a particular currency will change in relation to one or more othercurrencies. A depreciation of foreign currencies against the U.S. dollar, if not adequately hedged, would reduce the value of our investments in the relevant region,which could adversely impact our financial results. Factors that may affect currency values include trade balances, the ability of countries to pay their national debt,levels of short-term interest rates, differences in relative values of similar assets in different currencies, long-term opportunities for investment and capitalappreciation and political developments. We may employ hedging techniques to reduce these risks, but we can offer no assurance that such strategies will beeffective or even available at all. If we engage in hedging transactions, we may be exposed to additional risks associated with such transactions. See "—Riskmanagement activities may adversely affect the return on our investments." In addition, various countries and regulatory bodies may implement controls on foreignexchange and outbound remittances of currency, which could impact not only the timing and amount of capital contributions that are required to be made to ourfunds but also the value, in U.S. dollars, of our investments and investment proceeds. See "Risks Related to Our Business—Difficult market and economicconditions can72Table of Contentsadversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or by reducing the ability of ourfunds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financial prospects and condition"and "Risks Related to Our Business—Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties.The possibility of increased regulatory focus or legislative or regulatory changes could materially and adversely affect our business." See also "Management'sDiscussion and Analysis of Financial Condition and Results of Operations—Business Environment" for a discussion of recent developments in market andbusiness conditions that may affect our business.Third-party investors in our funds with commitment-based structures may not satisfy their contractual obligation to fund capital calls when requested by us,which could adversely affect a fund's operations and performance.Investors in certain of our funds make capital commitments to those funds that the funds are entitled to call from those investors at any time during prescribedperiods. We depend on fund investors fulfilling their commitments when we call capital from them in order for such funds to consummate investments andotherwise pay their obligations (for example, management fees) when due. Any fund investor that did not fund a capital call would generally be subject to severalpossible penalties, including having a significant amount of existing investment forfeited in that fund. However, the impact of the penalty is directly correlated tothe amount of capital previously invested by the investor in the fund and if an investor has invested little or no capital, for instance early in the life of the fund, thenthe forfeiture penalty may not be as meaningful. Investors may in the future also negotiate for lesser or reduced penalties at the outset of the fund, therebyinhibiting our ability to enforce the funding of a capital call. If our fund investors were to fail to satisfy a significant amount of capital calls for any particular fundor funds, the operation and performance of those funds could be materially and adversely affected.Our equity investments and many of our debt investments often rank junior to investments made by others, exposing us to greater risk of losing our investment.In many cases, the companies in which we or our funds invest have, or are permitted to have, outstanding indebtedness or equity securities that rank senior toour or our fund's investment. By their terms, such instruments may provide that their holders are entitled to receive payments of distributions, interest or principalon or before the dates on which payments are to be made in respect of our or our fund's investment. Also, in the event of insolvency, liquidation, dissolution,reorganization or bankruptcy of a company in which an investment is made, holders of securities ranking senior to our investment would typically be entitled toreceive payment in full before distributions could be made in respect of our investment. In addition, debt investments made by us or our funds in our portfoliocompanies may be equitably subordinated to the debt investments made by third parties in our portfolio companies. After repaying senior security holders, thecompany may not have any remaining assets to use for repaying amounts owed in respect of our investment. To the extent that any assets remain, holders of claimsthat rank equally with our investment would be entitled to share on an equal and ratable basis in distributions that are made out of those assets. Also, during periodsof financial distress or following insolvency, the ability of us or our funds to influence a company's affairs and to take actions to protect an investment may besubstantially less than that of the senior creditors.Risk management activities may adversely affect the return on our investments.When managing exposure to market risks, we employ hedging strategies or certain forms of derivative instruments to limit our exposure to changes in therelative values of investments that may result from market developments, including changes in prevailing interest rates, currency exchange rates and commodityprices. The scope of risk management activities undertaken by us is selective and varies based on the level and volatility of interest rates, prevailing foreigncurrency exchange rates, the types of investments that are made and other changing market conditions. We do not seek to hedge our exposure in all currencies or allinvestments, which means that our exposure to certain market risks are not limited. Where applicable, we use hedging transactions and other derivative instrumentsto reduce the effects of a decline in the value of a position, but they do not eliminate the possibility of fluctuations in the value of the position or prevent losses ifthe value of the position declines. However, such activities can establish other positions designed to gain from those same developments, thereby offsetting thedecline in the value of the position. Such transactions may also limit the opportunity for gain if the value of a position increases. Moreover, it may not be possibleto limit the exposure to a market development that is so generally anticipated that a hedging or other derivative transaction cannot be entered into at an acceptableprice.The success of any hedging or other derivative transactions that we enter into generally will depend on our ability to correctly predict market changes. As aresult, while we may enter into such transactions in order to reduce our exposure to market risks, unanticipated market changes may result in poorer overallinvestment performance than if the hedging or other derivative transaction had not been executed. In addition, the degree of correlation between price movementsof the instruments used in connection with hedging activities and price movements in a position being hedged may vary. Moreover, for a variety of reasons, wemay not seek or be successful in establishing a perfect correlation between the instruments used in hedging or other73Table of Contentsderivative transactions and the positions being hedged. An imperfect correlation could prevent us from achieving the intended result and could give rise to a loss. Inaddition, it may not be possible to fully or perfectly limit our exposure against all changes in the value of its investments, because the value of investments is likelyto fluctuate as a result of a number of factors, some of which will be beyond our control or ability to hedge.While hedging arrangements may reduce certain risks, such arrangements themselves may entail certain other risks. These arrangements may require theposting of cash collateral, including at a time when a fund has insufficient cash or illiquid assets such that the posting of the cash is either impossible or requires thesale of assets at prices that do not reflect their underlying value. Moreover, these hedging arrangements may generate significant transaction costs, includingpotential tax costs, that reduce the returns generated by a fund. The CFTC has proposed or adopted regulations governing swaps and security-based swaps, whichmay limit our trading activities and our ability to implement effective hedging strategies or increase the costs of compliance. See "Risks Related to Our Business—Extensive regulation of our businesses affects our activities and creates the potential for significant liabilities and penalties. The possibility of increased regulatoryfocus or legislative or regulatory changes could materially and adversely affect our business."Our funds and our firm through our balance sheet may make a limited number of investments, or investments that are concentrated in certain issuers,geographic regions or asset types, which could negatively affect our performance or the performance of our funds to the extent those concentrated assetsperform poorly.The governing agreements of our funds contain only limited investment restrictions and only limited requirements as to diversification of fund investments,either by geographic region or asset type. Our private equity funds generally permit up to 20% of the fund to be invested in a single company. We also advise fundsthat invest in a single industry such as growth equity, energy, infrastructure or real estate or funds that focus on particular geographic region. During periods ofdifficult market conditions or slowdowns in these sectors or geographic regions, decreased revenues, difficulty in obtaining access to financing and increasedfunding costs may be exacerbated by this concentration of investments, which would result in lower investment returns. Because a significant portion of a fund'scapital may be invested in a single investment or portfolio company, a loss with respect to such investment or portfolio company could have a material adverseimpact on such fund's capital. Accordingly, a lack of diversification on the part of a fund could materially and adversely affect a fund's performance and therefore,our results of operations and financial condition.Similarly, our balance sheet has significant exposures to certain issuers, industries or asset classes. Because we hold interests in some of our portfoliocompanies both through our balance sheet investments in our private equity funds and direct co-investments, fluctuation in the fair values of these portfoliocompanies may have a disproportionate impact on the investment income earned by us as compared to other portfolio companies. In these circumstances, as wasthe case with energy investments beginning in late 2014 through and into 2018, losses may have an even greater impact on our results of operations and financialcondition, as we would directly bear the full extent of such losses. Our balance sheet also has significant exposures to a small group of companies, with ourinvestment in Fiserv, Inc. (NASDAQ: FISV) representing approximately 14.1% and our top five investments representing approximately 30.5% of our balancesheet's total investments as of December 31, 2019. As a result, our investment income is subject to greater volatility depending on such companies' operatingresults and other idiosyncratic factors specific to such companies, and in the case of publicly traded companies, our operating results would be impacted byvolatility in the public markets generally and in the stock price of such companies. See "—Management's Discussion and Analysis of Financial Condition andResults of Operations—Analysis of Non-GAAP Operating Results—Non-GAAP Balance Sheet Measures" for information on significant investments held on ourbalance sheet.Our business activities may give rise to a conflict of interest with our funds.As we have expanded and as we continue to expand the number and scope of our businesses, we increasingly confront potential conflicts of interest relating toinvestment activities among our various funds and also our own account. For example:•In pursuing the interest of our fund investors, we may take actions that could reduce our AUM or our profits that we could otherwise realize in the shortterm;•We may be required to allocate investment opportunities among investment vehicles that may have overlapping investment objectives, including vehiclesthat may have different fee structures, and among KKR co-investment vehicles (including vehicles in which KKR employees may investment) and third-party co-investors;•We may, on behalf of our funds or KKR itself, buy, sell, hold or otherwise deal with securities or other investments that may be purchased, sold or held byour other funds or that are otherwise issued by a portfolio company in which our funds invest. Conflicts of interest may arise between a fund, on one hand,and KKR on the other or among our74Table of Contentsfunds including but not limited to those relating to the purchase or sale of investments, the structuring of, or exercise of rights with respect to investmenttransactions and the advice we provide to our funds. For example we may sell an investment at a different time or for different consideration than ourfunds;•We may invest on behalf of our fund or for our own account in a portfolio company of one fund that is a competitor, service provider, supplier, customer,or other counterparty with respect to a portfolio company of another fund;•We may structure an investment in a manner that may be attractive to fund investors or to KKR Holdings from a tax perspective even though KKR isrequired to pay corporate taxes;•A decision to acquire material non-public information about a company while pursuing an investment opportunity for a particular fund or our own accountmay result in our having to restrict the ability of other funds to take any action with regards to that company or its securities;•Our fiduciary obligations to our fund investors may preclude us from pursuing attractive proprietary investment opportunities, in particular as we enterinto strategic relationships with broad investment mandates similar to the investments we make with our balance sheet. Notwithstanding the foregoing, wealso allocate certain investments that we believe are not suitable for our funds to our balance sheet;•Conflicts may arise in allocating investments, time, services, expenses or resources among the investment activities of our funds, KKR, other KKR-affiliated entities and the employees of KKR;•Our principals have made personal investments in a variety of our investment funds, which may result in conflicts of interest among investors of our fundsor stockholders regarding investment decisions for these funds;•The general partner's entitlement to receive carried interest from many of our funds may create an incentive for that general partner to make riskier andmore speculative investments on behalf of a fund than would be the case in the absence of such an arrangement. In addition, for our funds that pay carriedinterest based on accrued rather than realized gains, the amount of carried interest to which the general partner is entitled and the timing of its receipt ofcarried interest will depend on the valuation by the general partner of the fund's investment;•Under the 2017 Tax Act, investments must be held for more than three years, rather than the prior requirement of more than one year, for carried interestto be treated for U.S. federal income tax purposes as capital gain, which may create a conflict of interest between the limited partner investors (whoseinvestments would receive such capital gain treatment after a holding period of only one year) and the general partner on the execution, closing or timingof sales of a fund's investments in connection with the receipt of carried interest;•From time to time, one of our funds or other investment vehicles (including CLOs) may seek to effect a purchase or sale of an investment with one ormore of our other funds or other investment vehicles in a so-called "cross transaction," or we as a principal may seek to effect a purchase or sale of ourinvestment with one or more of our funds or other investment vehicles in a so-called "principal transaction";•A dispute may arise between our portfolio companies, and if such dispute is not resolved amicably or results in litigation, it could cause significantreputational harm to us, and our fund investors may become dissatisfied with our handling of the dispute;•The investors in our investment vehicles are based in a wide variety of jurisdictions and take a wide variety of forms, and consequently have diverginginterests among themselves from a regulatory, tax or legal perspective or with respect to investment policies and target risk/return profiles; and•We or our affiliates, including our capital markets business, may receive fees or other compensation in connection with specific transactions or differentclients that may give rise to conflicts. The decision to take on an opportunity in one of our businesses may, as a practical matter, also limit the ability ofone or our other businesses to take advantage of other related opportunities.In addition, our funds also invest in a broad range of asset classes throughout the corporate capital structure. These investments include investments incorporate loans and debt securities, preferred equity securities and common equity securities. In certain cases, we may manage separate funds that invest indifferent parts of the same company's capital structure. For example, our credit funds may invest in different classes of the same company's debt and may makedebt investments in a company that is owned by one of our private equity funds. In those cases, the interests of our funds may not always be aligned,75Table of Contentswhich could create actual or potential conflicts of interest or the appearance of such conflicts. For example, one of our private equity funds could have an interest inpursuing an acquisition, divestiture or other transaction that, in its judgment, could enhance the value of the private equity investment, even though the proposedtransaction would subject one of our credit fund's debt investments to additional or increased risks. Finally, our ability to effectively implement a public securitiesstrategy may be limited to the extent that contractual obligations entered into in the ordinary course of our private equity business impose restrictions on ourengaging in transactions that we may be interested in otherwise pursuing.We may also cause different investment funds to invest in a single portfolio company, for example where the fund that made an initial investment no longerhas capital available to invest. Conflicts may also arise where we make balance sheet investments for our own account or permit employees to invest alongside ourinvestment vehicles or our balance sheet for their own account. In certain cases, we may require that a transaction or investment be approved by fund investors ortheir advisory committees, be approved by an independent valuation expert, be subject to a fairness opinion, be based on arm's-length pricing data or be calculatedin accordance with a formula provided for in a fund's governing documents prior to the completion of the relevant transaction or investment to address potentialconflicts of interest. Such instances include principal transactions where we or our affiliates warehouse an investment in a portfolio company for the benefit of oneor more of our funds pending the contribution of committed capital by the investors in such funds, follow-on investments by a fund other than a fund that made aninitial investment in a company, or transactions in which we arrange for one of our funds to buy a security from, or sell a security to, another one of our funds.Appropriately dealing with conflicts of interest is complex and difficult and we could suffer reputational damage or potential liability if we fail, or appear tofail, to deal appropriately with conflicts as they arise. Regulatory scrutiny of, or litigation in connection with, conflicts of interest could have a material adverseeffect on our reputation which could in turn materially and adversely affect our business in a number of ways, including as a result of an inability to raise additionalfunds and a reluctance of counterparties to do business with us.Investors in certain funds in our Public Markets business line may redeem their investments in these funds with minimal notice.Investors in our funds in certain of our leveraged credit investment vehicles may generally submit redemptions to redeem their investments on a quarterly ormonthly basis following the expiration of a specified period of time or in certain cases capital may be withdrawn earlier subject to a fee, in each case subject to theapplicable fund's specific redemption provisions. Factors that could result in investors leaving our funds include changes in interest rates that make otherinvestments more attractive, changes in or rebalancing due to investors' asset allocation policy, changes in investor perception regarding our focus or alignment ofinterest, unhappiness with a fund's performance or investment strategy, changes in our reputation, departures or changes in responsibilities of key investmentprofessionals, and performance and liquidity needs of fund investors. In a declining market or period of economic disruption or uncertainty, the pace ofredemptions and consequent reduction in our AUM could accelerate. The decrease in revenues that would result from significant redemptions from our funds orother similar investment vehicles could have a material adverse effect on our business, revenues, net income and cash flows.A portion of assets invested in our funds in the Public Markets business line are managed through separately managed accounts or entities structured forinvestment by one investor or related investors whereby we earn management and incentive fees, and we intend to continue to seek additional separately managedaccount or single entity mandates. The investment management agreements we enter into in connection with managing separately managed accounts or entities onbehalf of certain clients may be terminated by such clients on as little as 30 days' prior written notice, or less in certain prescribed circumstances. In addition, weprovide sub-advisory services to other investment advisors and managers. Such investment advisors and managers could terminate our sub-advisory agreements onas little as 30 days' prior written notice. In the case of any such terminations, the management and incentive fees we earn in connection with managing suchaccount or company would immediately cease, which could result in a material adverse impact on our revenues.In addition, certain funds in our Public Markets business line are registered under the Investment Company Act as management investment companies. Thesefunds and KKR Credit Advisors (US) LLC, which serves as their investment adviser, are subject to the Investment Company Act and the rules thereunder. One ofthese funds is a NYSE-listed closed-end fund. BDCs in our BDC platform are also registered under the Investment Company Act, including FS KKR CapitalCorp., a BDC listed on the NYSE. In addition, the management fees we and our strategic BDC partnership receive for managing registered investment companiesand BDCs will generally be subject to contractual rights the company's board of directors or the investment adviser has to terminate KKR's or our strategic BDCpartnership's management of an account on as short as 60 days' prior notice. Termination of these agreements would reduce the fees we earn from the relevantfunds, which could have a material adverse effect on our results of operations.76Table of ContentsOur stakes in our hedge fund partnerships subject us to numerous additional risks.Our stakes in our hedge fund partnerships subject us to numerous additional risks applicable to hedge funds and funds of funds, including the following:•Generally, there are few limitations on the execution of investment strategies of a hedge fund or fund of funds, which are subject to the sole discretion ofthe management company or the general partner of such funds;•A fund of funds is subject to risks related to the limited rights it has to withdraw, redeem, transfer or otherwise liquidate its investments from theunderlying hedge funds or other funds in which it invests. It may be impossible or costly for hedge funds or such other funds to liquidate positions rapidlyin order to meet margin calls, withdrawal requests, redemption requests or otherwise, particularly if there are other market participants seeking to disposeof similar assets at the same time or the relevant market is otherwise moving against a position or in the event of trading halts or daily price movementlimits on the market or otherwise. In addition, terms of the governing documents of the relevant portfolio funds may limit withdrawal, redemption,transfer or liquidation of investments, including restrictions on the redemption of capital for an initial period, restrictions on the amount of redemptionsand the frequency with which redemptions can be made and investment minimums that must be maintained. Portfolio funds also typically reserve the rightto reduce ("gate") or suspend redemptions, to set aside ("side pocket") capital that cannot be redeemed for so long as an event or circumstance has notoccurred or ceased to exist, respectively, and to satisfy redemptions by making distributions in-kind, under certain circumstances. Moreover, these risksmay be exacerbated for funds of funds. For example, if a fund of funds were to invest a significant portion of its assets in two or more hedge funds thateach had illiquid positions in the same issuer, the illiquidity risk for such fund of funds would be compounded.•Hedge funds may engage in short selling, which is subject to theoretically unlimited loss, in that the price of the underlying security could theoreticallyincrease without limit, thus increasing the cost of buying those securities to cover the short position. There can be no assurance that the security necessaryto cover a short position will be available for purchase. Purchasing securities to close out the short position can itself cause the prices of the securities torise further, thereby exacerbating the loss;•Hedge funds may enter into CDS as investments or hedges. CDS involve greater risks than investing in the reference obligation directly. In addition togeneral market risks, CDS are subject to risks related to changes in interest rates, credit spreads, credit quality and expected recovery rates of theunderlying credit instrument;•Hedge funds are exposed to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute overthe terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the fund to suffer a loss. Counterparty risk isaccentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the fund has concentrated its transactions witha single or small group of counterparties. Generally, hedge funds are not restricted from dealing with any particular counterparty or from concentratingany or all of their transactions with one counterparty. Moreover, the fund's internal consideration of the creditworthiness of their counterparties may proveinsufficient. The absence of a regulated market to facilitate settlement may increase the potential for losses;•The efficacy of investment and trading strategies depends largely on the ability to establish and maintain an overall market position in a combination offinancial instruments. A hedge fund's trading orders may not be executed in a timely and efficient manner due to various circumstances, including systemsfailures or human error. In such event, the funds might only be able to acquire some but not all of the components of the position, or if the overall positionwere to need adjustment, the funds might not be able to make such adjustment. As a result, the funds would not be able to achieve the market positionselected by the management company or general partner of such funds, and might incur a loss in liquidating their position;•Hedge funds may make investments that they do not advantageously dispose of prior to the date the applicable fund is dissolved, either by expiration ofsuch fund's term or otherwise. Although we generally expect that investments will be disposed of prior to dissolution or be suitable for in-kind distributionat dissolution, these funds may have to sell, distribute or otherwise dispose of investments at a disadvantageous time as a result of dissolution. This wouldresult in a lower than expected return on the investments and, perhaps, on the fund itself;•Hedge funds may rely on computer programs, internal infrastructure and services, quantitative models (both proprietary models and those supplied bythird parties) and information and data provided by third parties to trade, clear and settle securities and other transactions, among other activities, that arecritical to the oversight of certain77Table of Contentsfunds' activities. If any such models, information or data prove to be incorrect or incomplete, any decisions made in reliance thereon could expose thefunds to potential risks. Any hedging based on faulty models, information or data may prove to be unsuccessful and adversely impact a fund's profits; and•Hedge fund investments are also subject to risks relating to investments in commodities, futures, options and other derivatives, the prices of which arehighly volatile and may be subject to the theoretically unlimited risk of loss in certain circumstances, including if the fund writes a call option. Pricemovements of commodities, futures and options contracts and payments pursuant to swap agreements are influenced by, among other things, interestrates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programs and policies of governments and national andinternational political and economic events and policies. The value of futures, options and swap agreements also depends upon the price of thecommodities underlying them. In addition, hedge funds' assets are subject to the risk of the failure of any of the exchanges on which their positions tradeor of their clearinghouses or counterparties. Most U.S. commodities exchanges limit fluctuations in certain commodity interest prices during a single dayby imposing "daily price fluctuation limits" or "daily limits," the existence of which may reduce liquidity or effectively curtail trading in particularmarkets. Hedge funds and funds of these hedge funds may also be subject to extensive regulations, including those of CFTC.To the extent the financial condition of Marshall Wace, PAAMCO Prisma or other third-party hedge fund managers with which we have hedge fundpartnerships is adversely affected by these risks, our revenues, AUM and FPAUM may also decline.Risks Related to Our Common StockOur founders' significant voting power limits the ability of holders of our Class A common stock to influence our business.Holders of our Class A common stock are entitled to vote pursuant to Delaware law with respect to:•Any amendment of our certificate of incorporation to change the par value of our Class A common stock or the powers, preferences or special rights ofour Class A common stock in a way that would affect our Class A common stock adversely;•A conversion of the legal entity form of KKR & Co. Inc.; and•A transfer, domestication or continuance of KKR & Co. Inc. to a foreign jurisdiction.In addition, our certificate of incorporation provides voting rights to holders of our Class A common stock on the following additional matters:•A sale, exchange or disposition of all or substantially all of our assets;•A merger, consolidation or other business combination;•An increase in the number of authorized shares of Class B common stock; and•Certain amendments to our certificate of incorporation that would have a material adverse effect on our Class A common stock relative to the other classesof our stock.Furthermore, holders of our Class A common stock have the right to vote on the adoption of a new equity compensation plan any material amendment to anexisting equity compensation plan, and an issuance of common stock if, based on the number of shares or the voting power outstanding before such issuance, morethan 1% of our common stock is issued to our affiliates and other related parties or more than 20% of our common stock is issued in any transaction, subject tocertain limited exemptions. In January 2019, holders of our Class A common stock, together with the holders of our Class C common stock, voted on the adoptionof our 2019 Equity Incentive Plan.In general, any matters that are subject to a vote of the holders of our Class A common stock will require the approval of a majority in voting power of all ourClass A common stock and Class C common stock, voting together as a single class. As a result, KKR Holdings, the holder of our Class C common stock, will votetogether with the holders of our Class A common stock. As of February 10, 2020, there were 558,046,130 shares of Class A common stock and 290,381,345 sharesof Class C common stock issued and outstanding, giving holders of Class A common stock 65.8% and KKR Holdings 34.2% of the total combined voting poweron matters for which they are entitled to vote together as a single class. Because Messrs. Kravis and Roberts, when acting together, jointly control the vote of theshares of our Class C common stock held by KKR Holdings,78Table of ContentsMessrs. Kravis and Roberts are expected to be able to substantially influence the outcome of any matter submitted to a vote of the Class A common stock. Inaddition, Messrs. Kravis and Roberts, when acting together, jointly control the vote of the Class B common stock held by KKR Management LLP. The vote of theClass B common stock will determine the outcome of all matters that are not listed above as being subject to a vote by the Class A common stock.Our certificate of incorporation and bylaws contain additional provisions affecting the holders of our Class A common stock, including limitations on thecalling of meetings of the stockholders and procedures for submitting proposals for business to be considered at meetings of the stockholders. In addition, anyperson that beneficially acquires 20% or more of any class of stock then outstanding without the consent of our board of directors (other than KKR ManagementLLP or KKR Holdings L.P., which are jointly controlled by our founders) is unable to vote such stock on any matter submitted to such stockholders.For a more detailed description of our Class A common stock, Class B common stock and Class Common stock, see "Description of Securities RegisteredPursuant to Section 12 of the Securities Exchange Act of 1934," which is filed as an exhibit to this report.As a "controlled company," we qualify for some exemptions from the corporate governance and other requirements of the NYSE. We are a "controlled company" within the meaning of the corporate governance standards of the NYSE. As a "controlled company" we have elected not tocomply with certain corporate governance requirements of the NYSE, including the requirements: (i) that the listed company have a nominating and corporategovernance committee that is composed entirely of independent directors, (ii) that the listed company have a compensation committee that is composed entirely ofindependent directors and (iii) that the compensation committee be required to consider certain independence factors when engaging compensation consultants,legal counsel and other committee advisers. Accordingly, holders of our Class A common stock do not have the same protections afforded to stockholders ofcompanies that are subject to all of the corporate governance requirements of the NYSE.We are not required to comply with certain provisions of U.S. securities laws relating to proxy statements and other annual meeting materials. We are not required to file proxy statements or information statements under Section 14 of the Exchange Act, unless a vote of holders of our Class A commonstock is required. Accordingly, legal causes of action and remedies under Section 14 of the Exchange Act for inadequate or misleading information in proxystatements will not be generally available to holders of our Class A common stock. If we do not deliver any proxy statements, information statements, annualreports, and other information and reports to the Class B Stockholder, then we will similarly not provide any of this information to the holders of our Class Acommon stock. In addition, we will generally not be subject to the "say-on-pay" and "say-on-frequency" provisions of the Dodd-Frank Act. As a result, ourstockholders will not have an opportunity to provide a non-binding vote on the compensation of our named executive officers. Moreover, holders of our Class Acommon stock will be unable to bring matters before our annual meeting of stockholders or nominate directors at such meeting, nor can they generally submitstockholder proposals under Rule 14a-8 of the Exchange Act.Our certificate of incorporation states that the Class B Stockholder is under no obligation to consider the separate interests of the other stockholders andcontains provisions limiting the liability of the Class B Stockholder. Subject to applicable law, our certificate of incorporation contains provisions limiting the duties owed by the Class B Stockholder and contains provisionsallowing the Class B Stockholder to favor its own interests and the interests of its controlling persons over us and the holders of our Class A common stock. Ourcertificate of incorporation contains provisions stating that the Class B Stockholder is under no obligation to consider the separate interests of the otherstockholders (including the tax consequences to such stockholders) in deciding whether or not to authorize us to take (or decline to authorize us to take) any actionas well as provisions stating that the Class B Stockholder shall not be liable to the other stockholders for damages or equitable relief for any losses, liabilities orbenefits not derived by such stockholders in connection with such decisions. See "—Potential conflicts of interest may arise among the Class B Stockholder and theholders of our Class A common stock."The Class B Stockholder will not be liable to KKR or holders of our Class A common stock for any acts, or omissions unless there has been a final and non-appealable judgment determining that the Class B Stockholder acted in bad faith or engaged in fraud or willful misconduct and we have also agreed toindemnify the Class B Stockholder to a similar extent. Even if there is deemed to be a breach of the obligations set forth in our certificate of incorporation, our certificate of incorporation provides that the Class BStockholder will not be liable to us or the holders of our Class A common stock for any79Table of Contentsacts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that the Class B Stockholder or itsofficers and directors acted in bad faith or engaged in fraud or willful misconduct. These provisions are detrimental to the holders of our Class A common stockbecause they restrict the remedies available to stockholders for actions of the Class B Stockholder. In addition, we have agreed to indemnify the Class B Stockholder and its affiliates and any member, partner, Tax Matters Partner (as defined in U.S. InternalRevenue Code of 1986, as amended (the "Code"), as in effect prior to 2018), Partnership Representative (as defined in the Code), officer, director, employee agent,fiduciary or trustee of any of KKR or its subsidiaries, KKR Group Partnership, the Class B Stockholder or any of our or the Class B Stockholder’s affiliates andcertain other specified persons (collectively, "Indemnitees"), to the fullest extent permitted by law, against any and all losses, claims, damages, liabilities, joint orseveral, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts incurred by any Indemnitee. We haveagreed to provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that theIndemnitee acted in bad faith or engaged in fraud or willful misconduct. We have also agreed to provide this indemnification for criminal proceedings. The provision of our certificate of incorporation requiring exclusive venue in the Court of Chancery in the State of Delaware for certain types of lawsuits mayhave the effect of discouraging lawsuits against us and our directors, officers and stockholders. Our certificate of incorporation requires, to the fullest extent permitted by law, that any claims, suits, actions or proceedings arising out of or relating in anyway to our certificate of incorporation may only be brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matterjurisdiction thereof, any other court in the State of Delaware with subject matter jurisdiction. This provision may have the effect of discouraging lawsuits against usand our directors, officers and stockholders.The market price and trading volume of our Class A common stock may be volatile, which could result in rapid and substantial losses for our Class A commonstockholders.The market price of our Class A common stock may be highly volatile, could be subject to wide fluctuations and could decline significantly in the future. Inaddition, the trading volume in our Class A common stock may fluctuate and cause significant price variations to occur. If the market price of our Class A commonstock declines significantly, you may be unable to sell your shares at an attractive price, if at all. Some of the factors that could negatively affect the price of ourClass A common stock or result in fluctuations in the price or trading volume of our Class A common stock include:•variations in our quarterly operating results, including the accrual and payment of corporate taxes following the Conversion, which may be substantial;•changes in the amount of our dividends or our dividend policy;•taking a long-term perspective on making investment, operational and strategic decisions, which may result in significant and unpredictable variations inour quarterly returns;•failure to meet analysts' earnings estimates;•publication of research reports about us or the investment management industry or the failure of securities analysts to cover our Class A common stocksufficiently;•additions or departures of our key management and investment personnel;•adverse market reaction to any acquisitions, joint ventures, reorganizations and other transactions, including incurrence of debt or issuance of securities inthe future;•changes in market valuations of similar companies;•speculation in the press or investment community;•changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws andregulations, or announcements relating to these matters;80Table of Contents•a concentrated ownership of our Class A common stock or ownership by short-term investors;•a lack of liquidity in the trading of our Class A common stock;•adverse publicity about the investment management or private equity industry generally or individual scandals, specifically; and•general market and economic conditions.An investment in our Class A common stock is not an investment in any of our funds, and the assets and revenues of our funds are not directly available to us.Our Class A common stock is only securities of KKR & Co. Inc., the holding company of the KKR business. While our historical consolidated financialstatements include financial information, including assets and revenues, of certain funds on a consolidated basis, and our future financial statements will continueto consolidate certain of these funds, such assets and revenues are available to the fund and not to us except to a limited extent through management fees, carriedinterest or other incentive income, distributions and other proceeds arising from agreements with funds, as discussed in more detail in this report.Our Class A common stock price may decline due to the large number of shares eligible for future sale or for exchange, and issued or issuable pursuant to ourequity incentive plans or as consideration in acquisitions.The market price of our Class A common stock could decline as a result of sales of a large number of shares in the market or the perception that such salescould occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell shares of Class A common stock in the futureat a time and at a price that we deem appropriate. As of February 10, 2020, we have 558,046,130 shares of Class A common stock outstanding, which amountexcludes shares beneficially owned by KKR Holdings in the form of KKR Group Partnership Units discussed below and shares available for future issuance underour 2019 Equity Incentive Plan.As of February 10, 2020, KKR Holdings owns 290,381,345 KKR Group Partnership Units that may be exchanged, on a quarterly basis, for our shares of ClassA common stock on a one-for-one basis, subject to customary conversion rate adjustments for splits, unit distributions and reclassifications. The market price ofour Class A common stock could decline as a result of the exchange or the perception that an exchange may occur of a large number of KKR Group PartnershipUnits for shares of our Class A common stock. These exchanges, or the possibility that these exchanges may occur, also might make it more difficult for holders ofour Class A common stock to sell shares of our Class A common stock in the future at a time and at a price that they deem appropriate.In addition, we will continue to issue additional shares of Class A common stock pursuant to our 2019 Equity Incentive Plans, and such issuances mayincrease in the future as equity awards granted by KKR Holdings decrease. See "Risks Related to Our Business—If we cannot retain and motivate our employeesand other key personnel and recruit, retain and motivate new employees and other key personnel, our business, results of operations and financial condition couldbe materially and adversely affected." As of January 1, 2020, 123,295,864 shares of Class A common stock were available for issuance in respect of outstandingawards and the grant of future awards, representing 15% of the aggregate number of shares of Class A common stock and KKR Group Partnership Units(excluding KKR Group Partnership Units held by KKR & Co. Inc. or its wholly-owned subsidiaries) outstanding (together, "Diluted Class A Shares") at the closeof business on December 31, 2019, minus the number of shares underlying any outstanding equity awards granted under our 2019 Equity Incentive Plan that havenot yet been delivered upon vesting. Under the 2019 Equity Incentive Plan, on the first day of each fiscal year, the number of shares of Class A common stockavailable for issuance of future awards under our New Equity Incentive Plan will be adjusted upwards to 15% of the aggregate number of Diluted Class A Sharesoutstanding at the close of business on the last day of the immediately preceding fiscal year, minus the number of shares underlying any outstanding equity awardsgranted under our 2019 Equity Incentive Plan that have not yet been delivered upon vesting. In addition, previously issued awards that were canceled or arecanceled in the future, or in certain cases, withheld in respect of tax withholding obligations, are or will become available for further grant under the terms of our2019 Equity Incentive Plan. See "Executive Compensation—KKR & Co. Inc. Equity Incentive Plan." In the past, we have issued and sold KKR & Co. Inc. Class Acommon stock to generate cash proceeds to pay withholding taxes, social benefit payments or similar payments payable by us in respect of awards granted pursuantto our Equity Incentive Plans or the amount of cash delivered in respect of awards granted pursuant to our Equity Incentive Plans that are settled in cash instead ofClass A common stock. We may issue and sell shares of our Class A common stock in the future for similar purposes.81Table of ContentsWe have used and in the future may continue to use Class A common stock as consideration in acquisitions and strategic investments. For example, inconnection with KKR's acquisition of KFN, we issued the equivalent of approximately 104.3 million shares of our Class A common stock, in connection withKKR's acquisition of Avoca, we issued the equivalent of approximately 4.9 million shares of our Class A common stock and in connection with KKR's initialacquisition and subsequent increase in ownership of Marshall Wace, we issued the equivalent of approximately 23.0 million shares of our Class A common stock.In addition, in connection with other investments, we may make certain future contingent payments in the form of Class A common stock. If our valuations of thesetransactions are not accurate or if the value of these acquisitions and investments is not realized, the value of our Class A common stock as well as our dividend pershare of Class A common stock may decline.Our issuance of preferred stock may cause the price of our Class A common stock to decline, which may negatively impact our Class A common stockholders. Our board of directors is authorized to issue series of shares of preferred stock without any action on the part of our stockholders and, with respect to each suchseries, fix, without stockholder approval (except as may be required by our certificate of incorporation or any certificate of designation relating to any outstandingseries of preferred stock), the designation of such series, the powers (including voting powers), preferences and relative, participating, optional and other specialrights, and the qualifications, limitations or restrictions thereof, of such series of preferred stock and the number of shares of such series. Any series of preferredstock we may issue in the future will rank senior to all of our Class A common stock with respect to the payment of dividends or upon our liquidation, dissolution,or winding-up. If we issue cumulative preferred stock in the future that has preference over our Class A common stock with respect to the payment of dividends orupon our liquidation, dissolution, or winding up, or if we issue preferred stock with voting rights that dilute the voting power of our Class A common stockholdersin the limited instances in which they have the right to vote, the market price of our Class A common stock could decrease. Similarly, the limited partnershipagreement of the KKR Group Partnership authorize the general partner of the KKR Group Partnership to issue an unlimited number of additional securities of theKKR Group Partnership with such designations, preferences, rights, powers and duties that are different from, and may be senior to, those applicable to the KKRGroup Partnerships Units, and which may be exchangeable for KKR Group Partnership Units. For example, in March and June of 2016, KKR issued 13,800,000Series A preferred units (which have subsequently been converted to shares of Series A Preferred Stock) and 6,200,000 Series B preferred units (which havesubsequently been converted to shares of Series B Preferred Stock), respectively, and in connection with such issuances, the KKR Group Partnerships issuedpreferred units with economic terms designed to mirror KKR's respective preferred units.Our certificate of incorporation also provides us with a right to acquire all of the then outstanding shares of Class A common stock under specifiedcircumstances, which may adversely affect the price of our shares of Class A common stock and the ability of holders of shares of Class A common stock toparticipate in further growth in our stock price.Our certificate of incorporation provides that, if at any time, either (i) less than 10% of the total shares of any class our stock then outstanding (other than ClassB common stock, Class C common stock and preferred stock) is held by persons other than the Class B Stockholder and its affiliates or (ii) we are subjected toregistration under the provisions of the Investment Company Act, we may exercise our right to call and purchase all of the then outstanding shares of Class Acommon stock held by persons other than the Class B Stockholder or its affiliates or assign this right to the Class B Stockholder or any of its affiliates. As a result,a stockholder may have his or her shares of Class A common stock purchased from him or her at an undesirable time or price and in a manner which adverselyaffects the ability of a stockholder to participate in further growth in our stock price.Risks Related to Our Organizational StructurePotential conflicts of interest may arise among the Class B Stockholder and the holders of our Class A common stock. Our founders, who also serve as our Co-Chairmen and Co-Chief Executive Officers, jointly control the Class B Stockholder when acting together. As a result,conflicts of interest may arise among the Class B Stockholder and its controlling persons, on the one hand, and us and the holders of our Class A common stock, onthe other hand. The Class B Stockholder has the ability to generally control our business and affairs through its ownership of the sole share of Class B common stock, theClass B Stockholder's ability to appoint our board of directors, and provisions under our certificate of incorporation requiring Class B Stockholder approval forcertain corporate actions (in addition to approval by our board of directors). See "—Certain actions by our board of directors require the approval of the Class BStockholder, which is controlled by our senior employees." If the holders of our Class A common stock are dissatisfied with the performance of our board ofdirectors, they have no ability to remove any of our directors, with or without cause. 82Table of ContentsFurther, through its ability to elect our board of directors, the Class B Stockholder has the ability to indirectly influence the determination of the amount andtiming of the KKR Group Partnership’s investments and dispositions, cash expenditures, including those relating to compensation, indebtedness, issuances ofadditional partner interests, tax liabilities and amounts of reserves, each of which can affect the amount of cash that is available for distribution to holders of KKRGroup Partnership Units. In addition, conflicts may arise relating to the selection, structuring and disposition of investments and other transactions, declaring dividends and otherdistributions and other matters due to the fact that our senior principals indirectly hold KKR Group Partnership Units through KKR Holdings, which is a pass-through entity that is not subject to corporate income taxation. Certain actions by our board of directors require the approval of the Class B Stockholder, which is controlled by our senior employees. Although the affirmative vote of a majority of our directors is required for any action to be taken by our board of directors, certain specified actions will alsorequire the approval of the Class B Stockholder, which is controlled by our senior employees. These actions consist of the following: •the entry into a debt financing arrangement by us in an amount in excess of 10% of our then existing long-term indebtedness (other than the entry intocertain intercompany debt financing arrangements);•the issuance by us or our subsidiaries of any securities that would (i) represent, after such issuance, or upon conversion, exchange or exercise, as the casemay be, at least 5% on a fully diluted, as converted, exchanged or exercised basis, of any class of our or their equity securities or (ii) have designations,preferences, rights, priorities or powers that are more favorable than those of the Class A common stock;•the adoption by us of a shareholder rights plan;•the amendment of our certificate of incorporation, certain provisions of our bylaws relating to our board of directors and officers or the operatingagreement of the KKR Group Partnership;•the exchange or disposition of all or substantially all of our assets or the assets of the KKR Group Partnership;•the merger, sale or other combination of our company or the KKR Group Partnership with or into any other person;•the transfer, mortgage, pledge, hypothecation or grant of a security interest in all or substantially all of the assets of the KKR Group Partnership;•the appointment or removal of our Chief Executive Officer or a Co-Chief Executive Officer;•the termination of our employment of any of our officers or the officers of any of our subsidiaries or the termination of the association of a partner withany of our subsidiaries, in each case, without cause;•the liquidation or dissolution of us or the KKR Group Partnership; and•the withdrawal, removal or substitution of any person as the general partner of the KKR Group Partnership or the transfer of beneficial ownership of all orany part of a general partner interest in the KKR Group Partnership to any person other than a wholly-owned subsidiary.The Class B Stockholder may transfer its interest in the sole share of Class B Common Stock which could materially alter our operations.The Class B Stockholder may transfer the sole outstanding share of our Class B common stock held by it to a third party upon receipt of approval to do so byour board of directors and satisfaction of certain other requirements, and without the consent of the holders of our Class A common stock and Class C commonstock. Further, the partners of the Class B Stockholder may sell or transfer all or part of their partnership interests in the Class B Stockholder at any time withoutKKR's approval. A new holder of our Class B common stock or new controlling partners of the Class B Stockholder may appoint directors to our board of directorswho have a different philosophy and/or investment objectives from those of our current directors. A new holder of our Class B common stock, new controllingpartners of the Class B Stockholder and/or the directors they appoint to our board of directors could also have a different philosophy for the management of ourbusiness, including the hiring and compensation of our investment professionals. If any of the foregoing were to occur, we could experience difficulty in formingnew funds and other investment vehicles and in making new investments, and the value of our existing investments, our business, our results of operations and ourfinancial condition could materially suffer.83Table of ContentsWe intend to pay periodic dividends to the holders of our Class A common stock and preferred stock, but our ability to do so may be limited by our holdingcompany structure and contractual restrictions.We intend to pay cash dividends on a quarterly basis. We are a holding company and have no material assets other than the KKR Group Partnership Units thatwe hold through a wholly-owned subsidiary and have no independent means of generating income. Accordingly, we intend to cause the KKR Group Partnership tomake distributions on the KKR Group Partnership Units, including KKR Group Partnership Units that we directly or indirectly hold, in order to provide us withsufficient amounts to fund dividends we may declare. If the KKR Group Partnership makes such distributions, other holders of KKR Group Partnership Units,including KKR Holdings, will be entitled to receive equivalent distributions pro rata based on their KKR Group Partnership Units.The declaration and payment of dividends to our Class A common stockholders will be at the sole discretion of our board of directors, and our dividend policymay be changed at any time. The declaration and payment of dividends is subject to legal, contractual and regulatory restrictions on the payment of dividends by usor our subsidiaries, including restrictions contained in our debt agreements, the terms of our certificate of incorporation, and such other factors as the board ofdirectors considers relevant including, among others: our available cash and current and anticipated cash needs, including funding of investment commitments anddebt service and future debt repayment obligations; general economic and business conditions; our strategic plans and prospects; our results of operations andfinancial condition; and our capital requirements. Under Section 170 of the Delaware General Corporation Law ("DGCL"), our board of directors may only declareand pay dividends either out of our surplus (as defined in DGCL) or in case there is no such surplus, out of our net profits for the fiscal year in which the dividendis declared and/or the preceding fiscal year. However, dividends may not be declared out of net profits if our capital, computed in accordance with DGCL, shallhave been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capitalrepresented by the issued and outstanding stock of all classes having a preference upon the distribution of assets. Furthermore, by paying cash dividends rather thaninvesting that cash in our businesses, we risk slowing the pace of our growth, or not having a sufficient amount of cash to fund our operations, new investments orunanticipated capital expenditures, should the need arise.Our preferred stock ranks senior to our Class A common stock with respect to the payment of dividends. Unless dividends have been declared and paid ordeclared and set apart for payment on the preferred stock for a quarterly dividend period, during the remainder of that dividend period we may not declare or pay orset apart payment for dividends on any class of stock of KKR & Co. Inc. that are junior to the preferred stock, including our Class A common stock, and we maynot repurchase any such junior stock.Dividends on the preferred stock are discretionary and non-cumulative. Holders of preferred stock will only receive dividends on their shares of preferredstock when, as and if declared by our board of directors. If dividends on a series of the preferred stock have not been declared and paid for the equivalent of six ormore quarterly dividend periods, whether or not consecutive, holders of the preferred stock, together as a class with holders of any other series of parity stock withlike voting rights, will be entitled to vote for the election of two additional directors to our board of directors. When quarterly dividends have been declared andpaid on such series of the preferred stock for four consecutive quarters following such a nonpayment event, the right of the holders of the preferred stock and suchparity stock to elect these two additional directors will cease, the terms of office of these two directors will forthwith terminate and the number of directorsconstituting our board of directors will be reduced accordingly. Additional risks related to our Series A Preferred Stock and Series B Preferred Stock are containedin the prospectus supplement relating to the respective securities.We will be required to pay our principals for most of the benefits relating to our use of tax attributes we receive from prior and future exchanges of our Class Acommon stock for KKR Group Partnership Units and related transactions, and the timing and value of these tax attributes differ from those of our restrictedstock units.We are required to acquire KKR Group Partnership Units from time to time pursuant to our exchange agreement with KKR Holdings. Certain of theseexchanges are expected to result in an increase in our share of the tax basis of the tangible and intangible assets of the KKR Group Partnership, primarilyattributable to a portion of the goodwill inherent in our business that would not otherwise have been available. This increase in tax basis may increase (for taxpurposes) depreciation and amortization and therefore reduce the amount of income tax we would otherwise be required to pay in the future. This increase in taxbasis may also decrease gain (or increase loss) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.We have entered into a tax receivable agreement with KKR Holdings, which requires us to pay to KKR Holdings or to current and former principals who haveexchanged KKR Holdings units for shares of Class A common stock as transferees of KKR Group Partnership Units, 85% of the amount of cash tax savings, ifany, in U.S. federal, state and local income tax that we84Table of Contentsrealize as a result of this increase in tax basis, as well as 85% of the amount of any such savings we actually realize as a result of increases in tax basis that arisedue to future payments under the agreement. A termination of the agreement or a change of control could give rise to similar payments based on tax savings that wewould be deemed to realize in connection with such events. These payment obligations are obligations of KKR & Co. Inc. and certain of its intermediate holdingcompanies and not of the KKR Group Partnership. Our 2019 Equity Incentive Plan provides for the issuance of restricted holdings units that are not related to KKRHoldings. While the tax receivable agreement does not apply to restricted holdings units issued under our 2019 Equity Incentive Plan (and therefore we will receive100% of any tax benefits arising from the exchange of restricted holdings units for shares of Class A common stock), any tax benefits we realize from KKRHoldings units or restricted holdings units would be deferred until such units are exchanged for shares of our Class A common stock. The timing of the tax benefitis different with respect to our restricted stock units, where we realize any tax benefit at the time of vesting, which is generally earlier than the time of exchange ofKKR Holdings units or restricted holdings units. As a result, the actual increase in tax basis and the amount of tax savings in any given year will vary dependingupon a number of factors, including the timing of exchanges, the number of units exchanged, the price of our Class A common stock at the time of the exchange,the extent to which such exchanges are taxable and the amount and timing of our taxable income. We expect that, as a result of the size of the increases in the taxbasis of the tangible and intangible assets of the KKR Group Partnership, the payments that we may be required to make to KKR Holdings or transferees of itsKKR Group Partnership Units under the tax receivable agreement will be substantial.We recorded $131.3 million in our consolidated statements of financial condition as of December 31, 2019, representing the estimated aggregate futurepayment amount, on an undiscounted basis, under the tax receivable agreement as of such date for previously exchanged KKR Holdings units. See Item 7."Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity—Other Liquidity Needs—Contractual Obligations,Commitments and Contingencies." As of December 31, 2019, 290.4 million KKR Holdings units (the "Remaining KKR Holdings Units") remained available forexchange into shares of our Class A common stock. The present value of our aggregate cash tax savings is highly dependent on the assumed discount rate used forits calculation. Assuming (i) all of the Remaining KKR Holdings Units had been exchanged for shares of our Class A common stock on December 31, 2019, (ii) allsuch exchanges were taxable to the exchanging unitholders, (iii) the market value of our Class A common stock was $29.17 per share (which was the closing priceon December 31, 2019), and (iv) our effective tax rate, for federal, state and local income tax combined, was 23.25%, we estimate that the present value of ouraggregate cash tax savings over the next 15 years attributable to such hypothetical exchange of the Remaining KKR Holdings Units would have beenapproximately $825 million assuming a 7% per annum discount rate and approximately $559 million assuming a 15% per annum discount rate. Using theassumptions above, we estimate our payments under the tax receivable agreement to KKR Holdings and current and former principals attributable to suchhypothetical exchange of the Remaining KKR Holdings Units would be 85% of the foregoing amounts, or $701 million using a 7% discount rate and $475 millionusing a 15% discount rate. The estimates above also assume that we would have taxable income sufficient to fully utilize the deductions arising from the increasein tax basis and any interest imputed with respect to our payment obligations under the tax receivable agreement, and that there would be no future changes tofederal, state or local income tax rates. The assumptions and estimates described above are for illustrative purposes only. These estimates are not intended to be aprojection of any future financial results, and the actual increases in tax basis and any payments under the tax receivable agreement resulting from any exchangesof KKR Holdings units that occur in the future are expected to vary materially from these estimates. Moreover, the method for calculating the estimated aggregatefuture payment amount recorded in our financial statements differs in material respects from the assumptions used to calculate the present value of our aggregatecash tax savings over the next 15 years attributable to the hypothetical exchange of all Remaining KKR Holding Units. For example, no discount rate has beenapplied to the estimated aggregate future payment amount for previously exchanged KKR Holdings units.We may need to incur debt to finance payments under the tax receivable agreement to the extent our cash resources are insufficient to meet our obligationsunder the tax receivable agreement as a result of timing discrepancies or otherwise. In particular, our obligations under the tax receivable agreement would beeffectively accelerated in the event of an early termination of the tax receivable agreement by us or in the event of certain mergers, asset sales and other forms ofbusiness combinations or other changes of control. In these situations, we would be required to pay an early termination payment based upon the net present valueof all tax benefits that would be required to be paid by us to KKR Holdings and current and former principals who have exchanged KKR Holdings units. Themethod used to calculate the early termination payment is prescribed in the tax receivable agreement and the assumptions used for this purpose, including anapplicable discount rate, which currently is LIBOR (as defined) plus 1% (LIBOR plus 1% was 2.76250% as of December 31, 2019), differ in material respectsfrom the assumptions used to calculate the estimated present value of our aggregate cash tax savings for the hypothetical exchange of all Remaining KKR HoldingsUnits or the estimated payment amount for previously exchanged KKR Holdings units that is recorded in our financial statements. Accordingly, as of December31, 2019, the amount of early termination payment would have been significantly larger than the present value of the estimated payments under the tax receivable85Table of Contentsagreement described above. At the time of the filing of this Annual Report, we have no intention to exercise the early termination right.Payments under the tax receivable agreement will be based upon the tax reporting positions that we will determine. We are not aware of any issue that wouldcause the IRS to challenge a tax basis increase. However, neither KKR Holdings nor its transferees will reimburse us for any payments previously made under thetax receivable agreement if such tax basis increase, or the tax benefits we claim arising from such increase, is successfully challenged by the IRS. As a result, incertain circumstances, payments to KKR Holdings or its transferees under the tax receivable agreement could be in excess of our cash tax savings. Our ability toachieve benefits from any tax basis increase, and the payments to be made under the tax receivable agreement, will depend upon a number of factors, as discussedabove, including the timing and amount of our future income.If we were deemed to be an "investment company" subject to regulation under the Investment Company Act, applicable restrictions could make it impracticalfor us to continue our business as contemplated and could have a material adverse effect on our business.A person will generally be deemed to be an "investment company" for purposes of the Investment Company Act if:•it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or•absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets(exclusive of U.S. government securities and cash items) on an unconsolidated basis.We believe that we are engaged primarily in the business of providing investment management services and not in the business of investing, reinvesting ortrading in securities. We regard ourselves as an investment management firm and do not propose to engage primarily in the business of investing, reinvesting ortrading in securities. Accordingly, we do not believe that we are an "orthodox" investment company as defined in Section 3(a)(1)(A) of the Investment CompanyAct and described in the first bullet point above.With regard to the provision described in the second bullet point above, we have no material assets other than our equity interests in subsidiaries, which in turnhave no material assets other than equity interests, directly or indirectly, in the KKR Group Partnership. Through these interests, we indirectly are the sole generalpartner of the KKR Group Partnership and indirectly are vested with all management and control over the KKR Group Partnership. We do not believe our equityinterests in our subsidiaries are investment securities, and we believe that the capital interests of the general partners of our funds in their respective funds areneither securities nor investment securities. Accordingly, based on our determination, less than 40% of our total assets (exclusive of U.S. government securities andcash items) on an unconsolidated basis are comprised of assets that could be considered investment securities. However, our subsidiaries have a significant numberof investment securities, and we expect to make investments in other investment securities from time to time. We monitor these holdings regularly to confirm ourcontinued compliance with the 40% test described in the second bullet point above. The need to comply with this 40% test may cause us to restrict our business andsubsidiaries with respect to the assets in which we can invest and/or the types of securities we may issue, sell investment securities, including on unfavorable terms,acquire assets or businesses that could change the nature of our business or potentially take other actions that may be viewed as adverse by the holders of our ClassA common stock, in order to ensure conformity with exceptions provided by, and rules and regulations promulgated under, the Investment Company Act.The Investment Company Act and the rules and regulations thereunder contain detailed parameters for the organization and operation of investmentcompanies. Among other things, the Investment Company Act and the rules and regulations thereunder limit or prohibit transactions with affiliates, imposelimitations on the issuance of debt and equity securities, generally prohibit the issuance of options and impose certain governance requirements. We intend toconduct our operations so that we will not be deemed to be an investment company under the Investment Company Act. If anything were to happen which wouldcause us to be deemed to be an investment company under the Investment Company Act, requirements imposed by the Investment Company Act, includinglimitations on our capital structure, ability to transact business with affiliates and ability to compensate key employees, would make it impractical for us to continueour business as currently conducted, impair the agreements and arrangements between and among us, including the KKR Group Partnership, and KKR Holdings,and materially and adversely affect our business, results of operations and financial condition. In addition, we may be required to limit the amount of investmentsthat we make as a principal, potentially divest of our investments or otherwise conduct our business in a manner that does not subject us to the registration andother requirements of the Investment Company Act.86Table of ContentsWith respect to our subsidiary KFN, we believe it is not and does not propose to be primarily engaged in the business of investing, reinvesting or trading insecurities, and we do not believe that KFN has held itself out as such. KFN conducts its operations primarily through its majority-owned subsidiaries, each ofwhich is either outside of the definition of an investment company as defined in the Investment Company Act or excepted from such definition under theInvestment Company Act. KFN monitors its holdings regularly to confirm its continued compliance with the 40% test described in the second bullet point above,and restricts its subsidiaries with respect to the assets in which each of them can invest and/or the types of securities each of them may issue in order to ensureconformity with exceptions provided by, and rules and regulations promulgated under, the Investment Company Act. If the SEC were to disagree with KFN'streatment of one or more of its subsidiaries as being excepted from the Investment Company Act, with its determination that one or more of its other holdings arenot investment securities for purposes of the 40% test, or with its determinations as to the nature of its business or the manner in which it holds itself out, KFNand/or one or more of its subsidiaries could be required either (i) to change substantially the manner in which it conducts its operations to avoid being subject to theInvestment Company Act or (ii) to register as an investment company. Either of these would likely have a material adverse effect on KFN, its ability to service itsindebtedness and to make distributions on its shares, and on the market price of its securities, and could thereby materially and adversely affect our business, resultsof operations and financial condition.In 2011, the SEC published an advance notice of proposed rulemaking regarding Rule 3a-7 under the Investment Company Act and a concept release seekinginformation on Section 3(c)(5)(C) of the Investment Company Act, two provisions with which KKR's subsidiaries, including KFN, must comply under the 40%test described above. Among the issues for which the SEC has requested comment is whether Rule 3a-7 should be modified so that parent companies ofsubsidiaries that rely on Rule 3a-7 should treat their interests in such subsidiaries as investment securities for purposes of the 40% test. The SEC is also seekinginformation about the nature of entities that invest in mortgages and mortgage-related pools and how the SEC staff's interpretive positions in connection withSection 3(c)(5)(C) affect these entities. Although no further action has been taken by the SEC, any guidance or action from the SEC or its staff, including changesthat the SEC may ultimately propose and adopt to the way Rule 3a-7 applies to entities or new or modified interpretive positions related to Section 3(c)(5)(C),could further inhibit KKR's ability, or the ability of any of its subsidiaries, including KFN, to pursue its current or future operating strategies, which could have amaterial adverse effect on us.We may from time to time undertake internal reorganizations that may adversely impact our business and results of operations.On July 1, 2018, we converted from a Delaware limited partnership to a Delaware corporation, and on January 1, 2020, we completed an internalreorganization to, among other changes, combine KKR Management Holdings L.P. and KKR International Holdings L.P., which were former intermediateholdings companies for KKR's business, with another intermediate holding company, KKR Fund Holdings L.P., which changed its name to KKR GroupPartnership L.P. From time to time, we may undertake other internal reorganizations or make other changes in an effort to simplify our organizational structure,streamline our operations, increase our stockholder base or for other operational reasons. These reorganizations or changes could be disruptive to our business,result in significant expense, require regulatory approvals, and may not be successful in achieving its objectives or fail to result in the intended or expected benefits,any of which could adversely impact our business and results of operations.Other anti-takeover provisions in our charter documents could delay or prevent a change in control.In addition to the provisions described elsewhere relating to the Class B Stockholder's control, other provisions in our certificate of incorporation and bylawsmay discourage, delay or prevent a merger or acquisition that a stockholder may consider favorable by, for example:•permitting our board of directors to issue one or more series of preferred stock;•requiring advance notice for stockholder proposals and nominations if they are ever permitted by applicable law; and•placing limitations on convening stockholder meetings.These provisions may also discourage acquisition proposals or delay or prevent a change in control.87Table of ContentsITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESOur principal executive offices are located in leased office space at 9 West 57th Street, New York, New York. We also lease space for our other offices inNorth America, Europe, Asia and Australia. We consider these facilities to be suitable and adequate for the management and operations of our business.In May 2019, we took delivery of office space at 30 Hudson Yards in New York, New York to serve as our principal executive offices in late 2020.ITEM 3. LEGAL PROCEEDINGS.The section entitled "Litigation" appearing in Note 16 "Commitments and Contingencies" to our consolidated financial statements included elsewhere in thisreport is incorporated herein by reference.ITEM 4. MINE SAFETY DISCLOSURES.Not applicable.88Table of ContentsPART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIES.Shares of our Class A common stock are listed on the NYSE under the symbol "KKR."The number of holders of record of our Class A common stock as of February 10, 2020 was 24. This does not include the number of stockholders that holdshares in "street-name" through banks or broker-dealers.Dividend PolicyUnder our current dividend policy for Class A common stock, we expect to pay our Class A common stockholders an annualized dividend of $0.54 per shareof Class A common stock, equal to a quarterly dividend of $0.135 per share of Class A common stock, beginning with any dividend announced with respect to thefirst quarter of 2020. On January 31, 2020, we declared a regular dividend of $0.125 per share of Class A common stock under our prior dividend policy for thequarter ended December 31, 2019.Because we make our investment in our business through a holding company structure and the applicable holding companies do not own any material cash-generating assets other than their direct and indirect holdings in KKR Group Partnership Units, dividends are expected to be funded in the following manner:•First, the KKR Group Partnership will make distributions to holders of KKR Group Partnership Units, including the holding companies through which weinvest, in proportion to their percentage interests in the KKR Group Partnerships;•Second, the holding companies through which we invest will distribute to us the amount of any distributions that they receive from the KKR GroupPartnership, after deducting any applicable taxes; and•Third, we will distribute to holders of our Class A common stock, Series A Preferred Stock and Series B Preferred Stock the amount of dividends declaredby our board of directors from the distributions that we receive from our holding companies through which we invest.The limited partnership agreement of the KKR Group Partnership provides for cash distributions, which are referred to as "tax distributions," to the partners ofthe partnership if we determine that the taxable income of the partnership will give rise to taxable income for its partners, including indirectly KKR Holdings. TheKKR Group Partnership may make tax distributions in the future, from time to time, to provide distributions to pay for the U.S. or non-U.S. tax liabilities of thepartners of KKR Holdings.The declaration and payment of any dividends to holders of our Class A common stock, Series A Preferred Stock or Series B Preferred Stock are subject to thediscretion of our board of directors, which may change our dividend policy at any time or from time to time, and the terms of our certificate of incorporation. Therecan be no assurance that dividends will be made as intended or at all or that any particular dividend policy will be maintained. When KKR & Co. Inc. receivesdistributions from the KKR Group Partnership (the holding company of the KKR business), KKR Holdings receives its pro rata share of such distributions from theKKR Group Partnership. Furthermore, the declaration and payment of distributions and dividends is subject to legal, contractual and regulatory restrictions on thepayment of dividends and distributions by us or our subsidiaries, including restrictions contained in our debt agreements, the terms of our preferred stock, and suchother factors as the board of directors considers relevant including, among others: our available cash and current and anticipated cash needs, including funding ofinvestment commitments and debt service and future debt repayment obligations; general economic and business conditions; our strategic plans and prospects; ourresults of operations and financial condition; and our capital requirements. See "Management's Discussion and Analysis of Financial Condition and Results ofOperations—Liquidity—Sources of Cash." In addition, under Section 170 of the DGCL, our board of directors may only declare and pay dividends either out ofour surplus (as defined in DGCL) or in case there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the precedingfiscal year.89Table of ContentsClass A Common Stock Repurchases in the Fourth Quarter of 2019Under our current repurchase program, KKR is authorized to repurchase its Class A common stock from time to time in open market transactions, in privatelynegotiated transactions or otherwise. The timing, manner, price and amount of any Class A common stock repurchases will be determined by KKR in its discretionand will depend on a variety of factors, including legal requirements, price and economic and market conditions. KKR expects that the program, which has noexpiration date, will be in effect until the maximum approved dollar amount has been used. The program does not require KKR to repurchase any specific numberof shares of Class A common stock, and the program may be suspended, extended, modified or discontinued at any time.In addition to the repurchases of Class A common stock described above, subsequent to May 3, 2018, the repurchase program will be used for the retirement(by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards issued pursuant to our Equity Incentive Plans representing theright to receive shares of Class A common stock. From October 27, 2015 through December 31, 2019, KKR has paid approximately $327 million in cash to satisfytax withholding and cash settlement obligations in lieu of issuing shares of Class A common stock or its equivalent upon the vesting of equity awards representing16.3 million shares of Class A common stock. Of these amounts, equity awards representing 11.0 million shares of Class A common stock or its equivalent wereretired for $190 million prior to May 3, 2018 and did not count against the amounts remaining under the repurchase program. The table below sets forth the information with respect to repurchases made by or on behalf of KKR & Co. Inc. or any "affiliated purchaser" (as defined inRule 10b-18(a)(3) under the Exchange Act) of our Class A common stock during the fourth quarter of 2019. 1,489,163 shares of Class A common stock wererepurchased during the fourth quarter of 2019 and 1,396,907 equity awards were retired during the fourth quarter of 2019. From inception of the repurchaseprogram through December 31, 2019, we have repurchased or retired a total of approximately 47.4 million shares of Class A common stock under the program atan average price of approximately $17.73 per share.Issuer Purchases of Class A common stock(amounts in thousands, except share and per share amounts) Total Number ofShares Purchased Average Price PaidPer Share Cumulative Numberof Shares Purchasedas Part of PubliclyAnnounced Plans orPrograms Approximate DollarValue of Shares thatMay Yet Be PurchasedUnder the Plans orPrograms (1)Month #1(October 1, 2019 toOctober 31, 2019)— $— 40,585,002 $446,605Month #2(November 1, 2019 toNovember 30, 2019)— $— 40,585,002 $446,605Month #3(December 1, 2019 toDecember 31, 2019)1,489,163 $29.25 42,074,165 $365,540 1,489,163 (1) Amounts have been reduced by retirements of equity awards occurring after May 3, 2018.Unregistered Sale of Equity SecuritiesOn November 22, 2019, KKR acquired an additional 5.0% interest in Marshall Wace after the exercise of the final remaining options agreed to betweenMarshall Wace and KKR. As partial consideration, KKR issued 5,674,251 shares of Class A common stock to affiliates of Marshall Wace in a private transactionexempt from registration in reliance on Section 4(a)(2) of the Securities Act. For a further discussion of the transaction, see Item 8. Financial Statements andSupplementary Data—Note 4 "Investments—Equity Method."Other Equity SecuritiesDuring the fourth quarter of 2019, 5,364,802 KKR Group Partnership Units were exchanged by KKR Holdings for an equal number of shares of our Class Acommon stock. This resulted in an increase in our ownership of the KKR Group90Table of ContentsPartnerships and a corresponding decrease in the ownership of the KKR Group Partnerships by KKR Holdings. On February 12, 2020, approximately 3.9 millionKKR Group Partnership Units were exchanged by KKR Holdings into an equal number of shares of our Class A common stock.91Table of ContentsITEM 6. SELECTED FINANCIAL DATAThe following tables set forth our selected historical consolidated financial data as of and for the years ended December 31, 2019, 2018, 2017, 2016 and 2015.We derived the selected historical consolidated financial data as of December 31, 2019 and 2018 and for the years ending December 31, 2019, 2018 and 2017 fromthe audited consolidated financial statements included elsewhere in this report. We derived the selected historical consolidated financial data as of December 31,2017, 2016, and 2015 and for the years ended December 31, 2016 and 2015 from our audited consolidated financial statements, which are not included in thisreport. You should read the following data together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and ourconsolidated financial statements and related notes included elsewhere in this report.On January 1, 2016, KKR adopted ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis ("ASU 2015-02"), whichresulted in the de-consolidation of most of KKR's investment funds that had been consolidated prior to such date. Effective with the adoption of ASU 2015-02,assets, liabilities, and noncontrolling interests from our investment funds that had previously been consolidated are no longer included in the statement of financialcondition. Additionally, when an investment fund is consolidated, management fees, fee credits and carried interest earned from consolidated funds are eliminatedin consolidation and as such are not recorded in Fees and Other. The economic impact of these management fees, fee credits and carried interests that areeliminated is reflected as an adjustment to noncontrolling interests and has no impact to Net Income Attributable to KKR & Co. Inc. KKR adopted this guidanceusing the modified retrospective method. As a result, no retrospective adjustment is required and prior periods presented under GAAP have not been impacted.Prior to January 1, 2018, to the extent an investment fund was not consolidated, KKR accounted for carried interest within Revenues separately from itsgeneral partner capital interest, which was included within Investment Income (Loss) in the consolidated statements of operations. Effective January 1, 2018, thecarried interest component of the general partner interest and the capital interest KKR holds in its investment funds as the general partner are accounted for as asingle unit of account and reported within Revenues in the consolidated statements of operations. This change in accounting principle has been applied on a fullretrospective basis. See Item 8. Financial Statements and Supplementary Data—Note 2 "Summary of Significant Accounting Policies" to the consolidated financialstatements included elsewhere in this report.92Table of Contents For the Years Ended December 31, 2019 2018 2017 2016 2015 (all dollars are in thousands, except share and per share data)Statements of Operations Data: Total Revenues$4,220,900 $2,395,836 $3,557,280 $2,040,018 $1,043,768Total Expenses2,908,431 2,089,477 2,336,692 1,695,474 1,871,225Total Investment Income (Loss)3,855,821 1,950,489 1,563,780 630,681 6,169,125Income (Loss) Before Taxes5,168,290 2,256,848 2,784,368 975,225 5,341,668Income Tax Expense (Benefit)528,750 (194,098) 224,326 24,561 66,636Net Income (Loss)4,639,540 2,450,946 2,560,042 950,664 5,275,032Net Income (Loss) Attributable to RedeemableNoncontrolling Interests— (37,352) 73,972 (8,476) (4,512)Net Income (Loss) Attributable to NoncontrollingInterests2,634,491 1,357,235 1,467,765 649,833 4,791,062Net Income (Loss) Attributable to KKR & Co. Inc.2,005,049 1,131,063 1,018,305 309,307 488,482Series A Preferred Stock Dividends23,288 23,288 23,288 17,337 —Series B Preferred Stock Dividends10,076 10,076 10,076 4,898 —Net Income (Loss) Attributable toKKR & Co. Inc. Class A Common Stockholders$1,971,685 $1,097,699 $984,941 $287,072 $488,482 Net Income (Loss) Attributable toKKR & Co. Inc. Per Share of Class A Common Stock Basic$3.62 $2.14 $2.10 $0.64 $1.09Diluted$3.54 $2.06 $1.95 $0.59 $1.01Weighted Average Shares of Class A Common StockOutstanding Basic545,096,999 514,102,571 468,282,642 448,905,126 448,884,185Diluted557,687,512 533,707,039 506,288.971 483,431,048 482,699,194 As of December 31, 2019 2018 2017 2016 2015 (all dollars are in thousands)Statements of Financial Condition Data: Total Assets$60,899,319 $50,743,375 $45,834,719 $39,002,897 $71,042,339Total Liabilities$30,396,945 $25,360,766 $25,171,919 $21,884,814 $21,574,754Redeemable Noncontrolling Interests$— $1,122,641 $610,540 $632,348 $188,629Noncontrolling Interests$19,694,884 $15,610,358 $12,866,324 $10,545,902 $43,731,774Total KKR & Co. Inc. Stockholders' Equity (1)$10,807,490 $8,649,610 $7,185,936 $5,939,833 $5,547,182(1)Total KKR & Co. Inc. stockholders' equity (including Series A and B preferred stock) reflects only the portion of equity attributable to KKR & Co. Inc. (65.9% interest in the KKR GroupPartnerships as of December 31, 2019) and differs from book value reported on a non-GAAP basis primarily as a result of the exclusion of the allocations of equity to KKR Holdings. KKRHoldings' 34.1% interest in the KKR Group Partnerships as of December 31, 2019 is reflected as noncontrolling interests and is not included in total KKR & Co. Inc. stockholders' equity.For periods prior to December 31, 2018, equity attributable to KKR & Co. Inc. differs from book value reported on a non-GAAP basis primarily as a result of the exclusion of the equityimpact of KKR Management Holdings Corp. and allocations of equity to KKR Holdings.93Table of ContentsITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis should be read in conjunction with the consolidated financial statements of KKR & Co. Inc., together with itsconsolidated subsidiaries, and the related notes included elsewhere in this report. The historical consolidated financial data discussed below reflects the historicalresults and financial position of KKR and do not reflect the Reorganization or the acquisition of KKR Capstone on January 1, 2020. In addition, this discussionand analysis contains forward-looking statements and involves numerous risks and uncertainties, including those described under "Cautionary Note RegardingForward-looking Statements" and "Risk Factors." Actual results may differ materially from those contained in any forward-looking statements.Overview of Business For a discussion about our business lines and our firm, see Item 1. "Business."Business EnvironmentEconomic and Market ConditionsEconomic Conditions. As a global investment firm, we are affected by financial and economic conditions globally. Global and regional economic conditionshave substantial impact on our financial condition and results of operations, impacting the values of the investments we make, our ability to exit these investmentsprofitably, our ability to raise capital from investors, and our ability to make new investments. Financial and economic conditions in the United States, EuropeanUnion, Japan, China, and other major economies are significant contributors to the global economy.In 2019, the U.S. economy grew at a solid pace, although the growth rate slowed compared to 2018 amid the U.S.-China trade dispute and a deceleratingglobal economy. After cutting its benchmark interest rate three times in the second half of 2019, the U.S. Federal Reserve left the rate unchanged in December2019 and signaled that rates would remain on hold in 2020. In the United States, real GDP growth is 2.3% for the full year ended December 31, 2019, compared to2.9% in the prior year; the U.S. unemployment rate was 3.5% as of December 31, 2019, down from 3.9% as of December 31, 2018; U.S. core consumer price indexwas 2.3% on a year-over-year basis as of December 31, 2019, slightly up from 2.2% on a year-over-year basis as of December 31, 2018; and the effective federalfunds rate set by the U.S. Federal Reserve was 1.6% as of December 31, 2019, down from 2.4% as of December 31, 2019.In 2019, the European Union's economic growth slowed down, with fourth quarter growth stalling almost to zero, and the economies of France and Italycontracting in the quarter. In the Euro Area, real GDP growth is estimated to be 1.2% for the year ended December 31, 2019 down from 1.9% in the prior year; theEuro Area unemployment rate was 7.4% as of December 31, 2019, down from 7.8% as of December 31, 2018; Euro Area core inflation was 1.3% on a year-over-year basis as of December 31, 2019, up from 0.9% as of December 31, 2018; and the short-term benchmark interest rate set by the European Central Bank was0.0% as of December 31, 2019, unchanged from December 31, 2018.In 2019, Japanese economic growth slowed down in the second half of the year, with fourth quarter GDP expected to have contracted. China's economicgrowth in 2019 recorded one of the slowest rates of growth in recent years, although it was in line with the official target range provided by the Chinesegovernment earlier in the year. Both Japan and China suffered from the U.S.-China trade tensions and soft global demand. The recent outbreak of coronavirus(COVID-19) in the region has added pressure to the economic outlook for both countries. In Japan, the short-term benchmark interest rate set by the Bank of Japanwas -0.1% as of December 31, 2019, unchanged from December 31, 2018; and in China, reported real GDP is estimated to be 6.1% in the year ended December 31,2019, below the 6.7% reported for the year ended December 31, 2018.These and other key issues could have repercussions across regional and global financial markets, which could adversely affect the valuations of ourinvestments. Other key issues include (i) political uncertainty caused by, among other things, populist political parties, economic nationalist sentiments, anti-government protests and the 2020 U.S. Presidential election, (ii) regulatory changes regarding, for example, taxation, international trade, cross-border investments,immigration, and austerity programs, (iii) volatility or downturn in stock and credit markets, (iv) the potential impact and duration of the recent outbreak of thenovel coronavirus, (v) any unexpected shift in the U.S. Federal Reserve's monetary policies and its impact on the markets and (vi) technological advancements andinnovations that may disrupt marketplaces and businesses. For a further discussion of how market conditions may affect our businesses, see "Risk Factors—RisksRelated to Our Business—Difficult market and94Table of Contentseconomic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or byreducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financialcondition."Equity and Credit Markets. Global equity and credit markets have a substantial effect on our financial condition and results of operations. In general, aclimate of reasonable interest rates and high levels of liquidity in the debt and equity capital markets provide a positive environment for us to generate attractiveinvestment returns, which also impacts our ability to generate incentive fees and carried interest. Periods of volatility and dislocation in the capital markets presentsubstantial risks, but also can present us with opportunities to invest at reduced valuations that position us for future growth and investment returns. Low interestrates related to monetary stimulus and economic stagnation may negatively impact expected returns on all types of investments. Higher interest rates in conjunctionwith slower growth or weaker currencies in some emerging market economies have caused, and may further cause, the default risk of these countries to increase,and this could impact the operations or value of our investments that operate in these regions. Areas such as Japan, which have ongoing central bank quantitativeeasing campaigns and comparatively low interest rates relative to the United States, could potentially experience further currency volatility and weakness relativeto the U.S. dollar.Many of our investments are in equities, so a change in global equity prices or in market volatility directly impacts the value of our investments and ourprofitability as well as our ability to realize investment gains and the receptiveness of fund investors to our investment products. For the year ended December 31,2019, global equity markets were positive, with the S&P 500 Index up 31.5% and the MSCI World Index up 28.4% on a total return basis including dividends.Equity market volatility as evidenced by the Chicago Board Options Exchange Market Volatility Index (the "VIX"), a measure of volatility, ended at 13.8 as ofDecember 31, 2019, decreasing from 25.4 as of December 31, 2018. For a discussion of our valuation methods, see "Risk Factors—Risks Related to the Assets WeManage—Our investments are impacted by various economic conditions that are difficult to quantify or predict, which may have a significant impact on thevaluation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition" and "Management’sDiscussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Fair Value Measurements—Level III ValuationMethodologies."Many of our investments are also in non-investment grade credit instruments, and our funds and our portfolio companies also rely on credit financing and theability to refinance existing debt. Consequently, any decrease in the value of credit instruments that we have invested in or any increase in the cost of creditfinancing reduces our returns and decreases our net income. In particular due in part to holdings of credit instruments such as CLOs on our balance sheet, theperformance of the credit markets has had an amplified impact on our financial results, as we directly bear the full extent of losses from credit instruments on ourbalance sheet. Credit markets can also impact valuations because a discounted cash flow analysis is generally used as one of the methodologies to ascertain the fairvalue of our investments that do not have readily observable market prices. In addition, with respect to our credit instruments, tightening credit spreads aregenerally expected to lead to an increase, and widening credit spreads are generally expected to lead to a decrease, in the value of these credit investments, if notoffset by hedging or other factors. In addition, the significant widening of credit spreads is also typically expected to negatively impact equity markets, which inturn would negatively impact our portfolio and us as noted above.During the year ended December 31, 2019, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) contracted by 58 basispoints and U.S. high-yield corporate bond spreads (BofAML HY Master II Index) contracted by 173 basis points. The non-investment grade credit indices were upduring the year ended December 31, 2019, with the S&P/LSTA Leveraged Loan Index up 8.6% and the BofAML HY Master II Index up 14.4%. During the yearended December 31, 2019, 10-year government bond yields fell 77 basis points in the United States, fell 46 basis points in the United Kingdom, fell 43 basis pointsin Germany, fell 16 basis points in China, and fell 1 basis point in Japan. For a further discussion of how market conditions may affect our businesses, see "RiskFactors—Risks Related to Our Business—Difficult market and economic conditions can adversely affect our business in many ways, including by reducing thevalue or performance of the investments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impactour net income and cash flow and adversely affect our financial condition" and "Risk Factors—Risks Related to the Assets We Manage—Our investments areimpacted by various economic conditions that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and,therefore, on the investment income we realize and our results of operations and financial condition."For further discussion of the impact of global credit markets on our financial condition and results of operations, see "Risk Factors—Risks Related to theAssets We Manage—Changes in the debt financing markets may negatively impact the ability of our investment funds, their portfolio companies and strategiespursued with our balance sheet assets to obtain attractive financing for their investments or to refinance existing debt and may increase the cost of such financing orrefinancing if it is obtained, which could lead to lower-yielding investments and potentially decrease our net income," "Risk Factors—Risks95Table of ContentsRelated to the Assets We Manage—Our investments are impacted by various economic conditions that are difficult to quantify or predict, which may have asignificant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition"and "Risk Factors—Risks Related to the Assets We Manage—Our funds and our firm through our balance sheet may make a limited number of investments, orinvestments that are concentrated in certain issuers, geographic regions or asset types, which could negatively affect our performance or the performance of ourfunds to the extent those concentrated assets perform poorly." For a further discussion of our valuation methods, see "—Critical Accounting Policies—Fair ValueMeasurements—Level III Valuation Methodologies."Foreign Exchange Rates. Foreign exchange rates have a substantial impact on the valuations of our investments that are denominated in currencies other thanthe U.S. dollar. Currency volatility can also affect our businesses and investments that deal in cross-border trade. The appreciation or depreciation of the U.S. dollaris expected to contribute to a decrease or increase, respectively, in the U.S. dollar value of our non-U.S. investments to the extent unhedged. In addition, anappreciating U.S. dollar would be expected to make the exports of U.S. based companies less competitive, which may lead to a decline in their export revenues, ifany, while a depreciating U.S. dollar would be expected to have the opposite effect. Moreover, when selecting investments for our investment funds that aredenominated in U.S. dollars, an appreciating U.S. dollar may create opportunities to invest at more attractive U.S. dollar prices in certain countries outside of theUnited States, while a depreciating U.S. dollar would be expected to have the opposite effect. For our investments denominated in currencies other than the U.S.dollar, the depreciation in such currencies will generally contribute to the decrease in the valuation of such investments, to the extent unhedged, and adverselyaffect the U.S. dollar equivalent revenues of portfolio companies with substantial revenues denominated in such currencies, while the appreciation in suchcurrencies would be expected to have the opposite effect. For the year ended December 31, 2019, the euro fell 2.2%, the British pound strengthened 3.9%, theJapanese yen rose 1.0%, and the Chinese renminbi fell 1.2%, respectively, relative to the U.S. dollar. For additional information regarding our foreign exchangerate risk, see "—Quantitative and Qualitative Disclosure About Market Risk—Exchange Rate Risk."Commodity Markets. Our Private Markets portfolio contains energy real asset investments, and certain of our other Private Markets and Public Marketsstrategies and products, including private equity, direct lending, special situations and CLOs, also have meaningful investments in the energy sector. The value ofthese investments is heavily influenced by the price of natural gas and oil. During the year ended December 31, 2019, the long-term price of WTI crude oilincreased approximately 3%, and the long-term price of natural gas decreased approximately 7%. The long-term price of WTI crude oil increased fromapproximately $50 per barrel to $52 per barrel, and the long-term price of natural gas decreased from approximately $2.60 per mcf to $2.42 per mcf as ofDecember 31, 2018 and December 31, 2019, respectively. When commodity prices decline or if a decline is not offset by other factors, we would expect the valueof our energy real asset investments to be adversely impacted, to the extent unhedged. In addition, because we hold certain energy assets, which had a fair value of$0.7 billion as of December 31, 2019 on our balance sheet, these price movements would have an amplified impact on our financial results, to the extent unhedged,as we would directly bear the full extent of such gains or losses. For additional information regarding our energy real assets, see "—Critical Accounting Policies—Fair Value Measurements—Level III Valuation Methodologies—Real Asset Investments" and "Risk Factors—Risks Related to the Assets We Manage—Our fundsand our firm through our balance sheet may make a limited number of investments, or investments that are concentrated in certain issuers, geographic regions orasset types, which could negatively affect our performance or the performance of our funds to the extent those concentrated assets perform poorly."Spot prices for crude oil and natural gas have declined since December 31, 2019, while the impact to longer-term prices of crude oil and natural gas has beenless pronounced. We expect these price movements to have a negative impact on the fair value of our energy portfolio, all other things being equal, given thosecommodity prices are an input in our valuation models. However, we expect the impact of the decline will be mitigated by the existence of near-term commodityprice hedges, which make long-term oil and natural gas prices a more significant driver of fair value than spot prices. As of December 31, 2019, energy strategiesmake up approximately 1% of our assets under management and 5% of our balance sheet assets.Business ConditionsOur operating revenues consist of fees, performance income and investment income. Our ability to grow our revenues depends in part on our ability to attractnew capital and investors, our successful deployment of capital including from our balance sheet and our ability to realize investments at a profit.Our ability to attract new capital and investors. Our ability to attract new capital and investors in our funds is driven, in part, by the extent to which theycontinue to see the alternative asset management industry generally, and our investment products specifically, as an attractive vehicle for capital appreciation orincome. Since 2010, we have expanded into strategies such as energy, infrastructure, real estate, growth equity, core, credit and, through hedge fund partnerships,hedge funds. In96Table of Contentsseveral of these strategies, our first time funds have begun raising successor funds, and we expect the cost of raising such successor funds to be lower. We havealso reached out to new fund investors, including retail and high net worth investors. However, fundraising continues to be competitive. While our Americas FundXII, Asian Fund III, European Fund V, Real Estate Partners Americas II, Global Infrastructure Investors III and Next Generation Technology Growth Fund IIexceeded the size of their respective predecessor funds, there is no assurance that fundraises for our other flagship private equity funds or for our newer strategiesand their successor funds will experience similar success. If we are unable to successfully raise comparably sized or larger funds, our AUM, FPAUM, andassociated fees attributable to new capital raised in future periods may be lower than in prior years. See "Risk Factors—Risks Related to Our Business—Ourinability to raise additional or successor funds (or raise successor funds of a comparable size as our predecessor funds) could have a material adverse impact on ourbusiness."Our ability to successfully deploy capital. Our ability to maintain and grow our revenue base is dependent upon our ability to successfully deploy the capitalavailable to us and participate in capital markets transactions. Greater competition, high valuations, increased overall cost of credit and other general marketconditions may impact our ability to identify and execute attractive investments. Additionally, because we seek to make investments that have an ability to achieveour targeted returns while taking on a reasonable level of risk, we may experience periods of reduced investment activity. We have a long-term investment horizonand the capital deployed in any one quarter may vary significantly from the capital deployed in any other quarter or the quarterly average of capital deployed in anygiven year. Reduced levels of transaction activity also tends to result in reduced potential future investment gains, lower transaction fees and lower fees for ourCapital Markets business line, which may earn fees in the syndication of equity or debt.Our ability to realize investments. Challenging market and economic conditions may adversely affect our ability to exit and realize value from ourinvestments and result in lower-than-expected returns. Although the equity markets are not the only means by which we exit investments, the strength and liquidityof the U.S. and relevant global equity markets generally, and the initial public offering market specifically, affect the valuation of, and our ability to successfullyexit, our equity positions in our private equity portfolio companies in a timely manner. We may also realize investments through strategic sales. When financing isnot available or becomes too costly, it may be more difficult to find a buyer that can successfully raise sufficient capital to purchase our investments.Basis of Accounting We consolidate the financial results of the KKR Group Partnerships and their consolidated entities, which include the accounts of our investment managementand capital markets companies, the general partners of unconsolidated funds and vehicles, general partners of certain funds that are consolidated and theirrespective consolidated funds and certain other entities including certain CLOs and CMBS. We refer to CLOs and CMBS as collateralized financing entities("CFEs").When an entity is consolidated, we reflect the accounts of the consolidated entity, including its assets, liabilities, revenues, expenses, investment income, cashflows and other amounts, on a gross basis. While the consolidation of a consolidated fund or entity does not have an effect on the amounts of Net IncomeAttributable to KKR or KKR's stockholders' capital that KKR reports, the consolidation does significantly impact the financial statement presentation under GAAP.This is due to the fact that the accounts of the consolidated entities are reflected on a gross basis while the allocable share of those amounts that are attributable tothird parties are reflected as single line items. The single line items in which the accounts attributable to third parties are recorded are presented as noncontrollinginterests on the consolidated statements of financial condition and net income attributable to noncontrolling interests on the consolidated statements of operations. For a further discussion of our consolidation policies, see Item 8. Financial Statements and Supplementary Data—Note 2 "Summary of Significant AccountingPolicies." Key Financial Measures Under GAAP RevenuesFees and Other Fees and other consist primarily of (i) management and incentive fees from providing investment management services to unconsolidated funds, CLOs, othervehicles, and separately managed accounts; (ii) transaction fees earned in connection with successful investment transactions and from capital marketsactivities; (iii) monitoring fees from providing services to portfolio companies; (iv) expense reimbursements from certain investment funds and portfoliocompanies; (v) revenue earned by oil and gas entities that are consolidated; and (vi) consulting fees earned by consolidated entities that employ non-employeeoperating97Table of Contentsconsultants. These fees are based on the contractual terms of the governing agreements and are recognized when earned, which coincides with the period duringwhich the related services are performed and in the case of transaction fees, upon closing of the transaction. Monitoring fees may provide for a terminationpayment following an initial public offering or change of control. These termination payments are recognized in the period when the related transaction closes.Capital Allocation-Based IncomeCapital allocation-based income is earned from those arrangements whereby KKR serves as general partner and includes income from KKR's capital interestas well as "carried interest" which entitles KKR to a disproportionate allocation of investment income from investment funds' limited partners.For a further discussion of our revenue policies, see Item 8. Financial Statements and Supplementary Data—Note 2 "Summary of Significant AccountingPolicies."ExpensesCompensation and BenefitsCompensation and benefits expense includes cash compensation consisting of salaries, bonuses, and benefits, as well as equity-based compensation consistingof charges associated with the vesting of equity-based awards, carry pool allocations, and other performance-based income compensation. The amounts allocated tothe carry pool and other performance-based income compensation are accounted for as compensatory profit-sharing arrangements and recorded as compensationand benefits expenses.All employees and employees of certain consolidated entities receive a base salary that is paid by KKR or its consolidated entities, and is accounted for ascompensation and benefits expense. These employees are also eligible to receive discretionary cash bonuses based on performance, overall profitability, and othermatters. While cash bonuses paid to most employees are borne by KKR and certain consolidated entities and result in customary compensation and benefitsexpense, in the past cash bonuses that are paid to certain employees have been borne by KKR Holdings. These bonuses have historically been funded withdistributions that KKR Holdings receives on KKR Group Partnership Units held by KKR Holdings but are not then passed on to holders of unvested units of KKRHoldings. Because employees are not entitled to receive distributions on units that are unvested, any amounts allocated to employees in excess of an employee'svested equity interests are reflected as employee compensation and benefits expense. These compensation charges are currently recorded based on the amount ofcash expected to be paid by KKR Holdings. Because KKR makes only fixed quarterly dividends, the distributions made on KKR Group Partnership Unitsunderlying any unvested KKR Holdings units are generally insufficient to fund annual cash bonus compensation to the same extent as in periods prior to the fourthquarter of 2015. In addition, substantially all remaining units in KKR Holdings have been allocated and, while subject to a 5 year vesting period, will become fullyvested by 2021, thus decreasing the amount of distributions received by KKR Holdings that are available for annual cash bonus compensation. We, therefore,expect to pay all or substantially all of the cash bonus payments from KKR's cash from operations and the carry pool, although, from time to time, KKR Holdingsmay contribute to the cash bonus payments in the future. For the year ending December 31, 2019, no cash bonuses were contributed by KKR Holdings. See "RisksRelated to Our Business—If we cannot retain and motivate our principals and other key personnel and recruit, retain and motivate new principals and other keypersonnel, our business, results and financial condition could be adversely affected" in our Annual Report regarding the adequacy of such distributions to fundfuture discretionary cash bonuses.KKR uses several methods, which are designed to yield comparable results, to allocate carried interest and other performance income compensation. Withrespect to KKR's investment funds that provide for carried interest without a preferred return, KKR allocates 40% of the carried interest received from such fundsto its carry pool for employees and non-employee operating consultants. Beginning with the quarter ended September 30, 2016, for investment funds that providefor carried interest with a preferred return and have accrued carried interest as of June 30, 2016, KKR also includes 40% of the management fees that would havebeen subject to a management fee refund as performance income compensation. Because of the different ways management fees are refunded in preferred returnand non-preferred return funds that provide for carried interest, this calculation of 40% of the portion of the management fees subject to refund for funds that havea preferred return is designed to allocate to compensation an amount comparable to the amount that would have been allocated to the carry pool had the fund nothad a preferred return. Beginning with the quarter ended September 30, 2017, for certain then-current and future carry generating funds with a preferred return andno or minimal accrued carried interest as of June 30, 2017, KKR allocates 43% of the carried interest to the carry pool instead of 40% of carried interest. Forimpacted funds, the incremental 3% replaces the allocation of management fee refunds that would have been calculated for those funds and is designed, based on ahistorical financial analysis of certain investment funds, to allocate an amount for preferred return funds that is comparable to the98Table of Contentsmanagement fee refunds that would have been allocated as performance income compensation for those funds. The percentage of carried interest, management feerefunds, and incentive fees allocable to the carry pool or as performance income compensation is subject to change from time to time. For a discussion of howmanagement fees are refunded for preferred return funds and non-preferred funds see "—Fair Value Measurements—Recognition of Carried Interest in theStatement of Operations." General, Administrative and Other General, administrative and other expense consists primarily of professional fees paid to legal advisors, accountants, advisors and consultants, insurance costs,travel and related expenses, communications and information services, depreciation and amortization charges, expenses (including impairment charges) incurred byoil and gas entities that are consolidated, costs incurred in connection with pursuing potential investments that do not result in completed transactions ("broken-dealexpenses"), and other general operating expenses. A portion of these general administrative and other expenses, in particular broken-deal expenses, are borne byfund investors.Investment Income (Loss)Net Gains (Losses) from Investment ActivitiesNet gains (losses) from investment activities consist of realized and unrealized gains and losses arising from our investment activities as well as income earnedfrom certain equity method investments. Fluctuations in net gains (losses) from investment activities between reporting periods is driven primarily by changes inthe fair value of our investment portfolio as well as the realization of investments. The fair value of, as well as the ability to recognize gains from, our investmentsis significantly impacted by the global financial markets, which, in turn, affects the net gains (losses) from investment activities recognized in any given period.Upon the disposition of an investment, previously recognized unrealized gains and losses are reversed and an offsetting realized gain or loss is recognized in thecurrent period. Since our investments are carried at fair value, fluctuations between periods could be significant due to changes to the inputs to our valuationprocess over time. For a further discussion of our fair value measurements and fair value of investments, see "—Critical Accounting Policies—Fair ValueMeasurements."Dividend Income Dividend income consists primarily of distributions that we and our consolidated investment funds receive from portfolio companies in which they invest.Dividend income is recognized primarily in connection with (i) dispositions of operations by portfolio companies, (ii) distributions of cash generated fromoperations from portfolio investments, and (iii) other significant refinancings undertaken by portfolio investments.Interest Income Interest income consists primarily of interest that is received on our credit instruments in which we and our consolidated funds and other entities invest as wellas interest on our cash balances and other investments. Interest Expense Interest expense is incurred from debt issued by KKR, including debt issued by KFN, credit facilities entered into by KKR, debt securities issued byconsolidated CFEs, and financing arrangements at our consolidated funds entered into primarily with the objective of managing cash flow. KFN's debt obligationsare non-recourse to KKR beyond the assets of KFN. Debt securities issued by consolidated CFEs are supported solely by the investments held at the CFE and arenot collateralized by assets of any other KKR entity. Our obligations under financing arrangements at our consolidated funds are generally limited to our pro rataequity interest in such funds. However, in some circumstances, we may provide limited guarantees of the obligations of our general partners in an amount equal toits pro rata equity interest in such funds. Our management companies bear no obligations with respect to financing arrangements at our consolidated funds. We alsomay provide other kinds of guarantees. See "—Liquidity."99Table of ContentsIncome TaxesOn July 1, 2018, we converted from a Delaware limited partnership to a Delaware corporation (the "Conversion"). Prior to the Conversion, KKR’s investmentincome and carried interest generally were not subject to U.S. corporate income taxes. Subsequent to the Conversion, all income earned by KKR is subject to U.S.corporate income taxes, resulting in an overall higher income tax expense (or benefit) in periods subsequent to the Conversion.KKR & Co. Inc. is a corporation for U.S. federal income tax purposes and thus is subject to U.S. federal, state and local corporate income taxes at the entitylevel on KKR’s share of net taxable income. In addition, the KKR Group Partnerships and certain of their subsidiaries operate in the United States as partnershipsfor U.S. federal income tax purposes and as corporate entities in certain non-U.S. jurisdictions. These entities, in some cases, are subject to U.S. state or localincome taxes or non-U.S. income taxes. Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is requiredin determining tax expense and in evaluating tax positions including evaluating uncertainties. We review our tax positions quarterly and adjust our tax balances asnew information becomes available.For a further discussion of our income tax policies and further information about the impact of the Conversion, see Item 8. Financial Statements andSupplementary Data—Note 2 "Summary of Significant Accounting Policies" and Note 11 "Income Taxes."Net Income (Loss) Attributable to Noncontrolling InterestsNet income (loss) attributable to noncontrolling interests primarily represents the ownership interests that certain third parties hold in entities that areconsolidated in the financial statements as well as the ownership interests in our KKR Group Partnerships that are held by KKR Holdings. The allocable share ofincome and expense attributable to these interests is accounted for as net income (loss) attributable to noncontrolling interests. Given the consolidation of certain ofour investment funds and the significant ownership interests in our KKR Group Partnerships held by KKR Holdings, we expect a portion of net income (loss) willcontinue to be attributed to noncontrolling interests in our business.For a further discussion of our noncontrolling interests policies, see Item 8. Financial Statements and Supplementary Data—Note 2 "Summary of SignificantAccounting Policies."Key Non-GAAP and Other Operating and Performance MeasuresThe key non-GAAP and other operating and performance measures that follow are used by management in making operational and resource deploymentdecisions as well as assessing the overall performance of KKR's businesses. They include certain financial measures that are calculated and presented usingmethodologies other than in accordance with GAAP. These non-GAAP measures, including after-tax distributable earnings, book value, operating assets, operatingliabilities, operating revenues, operating expenses and distributable operating earnings, are presented prior to giving effect to the allocation of income (loss)between KKR & Co. Inc. and KKR Holdings L.P. and as such represent the business in total. In addition, these non-GAAP measures are presented without givingeffect to the consolidation of the investment funds and CFEs that KKR manages as well as other consolidated entities that are not subsidiaries of KKR & Co. Inc.We believe that providing these non-GAAP measures on a supplemental basis to our GAAP results is helpful to stockholders in assessing the overallperformance of KKR's businesses. These non-GAAP measures should not be considered as a substitute for, or superior to, financial measures calculated inaccordance with GAAP. We caution readers that these non-GAAP measures may differ from the calculations of other investment managers, and as a result, maynot be comparable to similar measures presented by other investment managers. These non-GAAP measures are presented in this report as KKR's operating results,which were previously referred to as KKR's segment results.Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, whereapplicable, are included under "—Reconciliations to GAAP Measures."Adjusted SharesAdjusted shares represents shares of Class A common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include shares issuable upon exchange ofall units of KKR Holdings L.P. and any other securities exchangeable into Class A common stock of KKR & Co. Inc. that are eligible to receive a dividend (whichexcludes equity awards issued under the Equity100Table of ContentsIncentive Plans). We believe providing adjusted shares is useful to stockholders as it provides insight into the calculation of amounts available for distribution asdividends on a per share basis. Weighted average adjusted shares is used in the calculation of after-tax distributable earnings per adjusted share and adjusted sharesis used in the calculation of book value per adjusted share. Adjusted shares was previously referred to as "adjusted shares eligible for distribution."After-tax Distributable EarningsAfter-tax distributable earnings is a non-GAAP measure of KKR’s earnings excluding mark-to-market gains (losses) after interest expense, preferreddividends, noncontrolling interests and income taxes paid. It is defined as the amount of net realized earnings of KKR for a given reporting period, after deductingequity-based compensation and the impact of non-recurring items. KKR believes that after-tax distributable earnings is useful to stockholders as it aligns KKR’snet realization performance with the manner in which KKR receives its revenues and determines the compensation of its employees. After-tax distributableearnings does not represent and is not used to calculate actual dividends under KKR’s dividend policy. Equity based compensation expense is included in after-taxdistributable earnings as a component of compensation expense in order to reflect the dilutive nature of these non-cash equity-based awards. Income taxes paidrepresents the implied amount of income taxes that would be paid assuming that all pre-tax distributable earnings were allocated to KKR & Co. Inc., which wouldoccur following an exchange of all KKR Holdings units for Class A common stock of KKR & Co. Inc. Income taxes paid also includes amounts paid pursuant tothe tax receivable agreement.Assets Under Management ("AUM")Assets under management represent the assets managed or advised by KKR from which KKR is entitled to receive fees or a carried interest (either currently orupon deployment of capital), general partner capital, and assets managed or advised by our strategic BDC partnership and the hedge fund and other managers inwhich KKR holds an ownership interest. We believe this measure is useful to stockholders as it provides additional insight into the capital raising activities of KKRand its hedge fund and other managers and the overall activity in their investment funds and other managed capital. KKR calculates the amount of AUM as of anydate as the sum of: (i) the fair value of the investments of KKR's investment funds; (ii) uncalled capital commitments from these funds, including uncalled capitalcommitments from which KKR is currently not earning management fees or carried interest; (iii) the fair value of investments in KKR's co-investment vehicles;(iv) the par value of outstanding CLOs (excluding CLOs wholly owned by KKR); (v) KKR's pro rata portion of the AUM of hedge fund and other managers inwhich KKR holds an ownership interest; (vi) all AUM of the strategic BDC partnership with FS Investments; and (vii) the fair value of other assets managed byKKR. The pro rata portion of the AUM of hedge fund and other managers is calculated based on KKR’s percentage ownership interest in such entities multipliedby such entity’s respective AUM. KKR's definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing theinvestment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.Book ValueBook value is a non-GAAP measure of the net assets of KKR and is used by management primarily in assessing the unrealized value of KKR’s operatingassets after deducting for operating liabilities, noncontrolling interests and preferred stock. We believe this measure is useful to stockholders as it providesadditional insight into the net assets of KKR excluding those net assets that are allocated to noncontrolling interest holders and to the holders of the Series A andSeries B Preferred Stock. Following the Conversion, KKR's book value includes the net impact of KKR's tax assets and liabilities as prepared under GAAP.Capital InvestedCapital invested is the aggregate amount of capital invested by (i) KKR’s investment funds, (ii) KKR's Principal Activities business line as a co-investment, ifany, alongside KKR’s investment funds, and (iii) KKR's Principal Activities business line in connection with a syndication transaction conducted by KKR's CapitalMarkets business line, if any. Capital invested is used as a measure of investment activity at KKR during a given period. We believe this measure is useful tostockholders as it provides a measure of capital deployment across KKR’s business lines. Capital invested includes investments made using investment financingarrangements like credit facilities, as applicable. Capital invested excludes (i) investments in certain leveraged credit strategies, (ii) capital invested by KKR’sPrincipal Activities business line that is not a co-investment alongside KKR’s investment funds, and (iii) capital invested by KKR’s Principal Activities businessline that is not invested in connection with a syndication transaction by KKR’s Capital Markets business line. Capital syndicated by KKR's Capital Marketsbusiness line to third parties other than KKR’s investment funds or Principal Activities business line is not included in capital invested. See also syndicated capital.101Table of ContentsDistributable Operating EarningsDistributable operating earnings is a non-GAAP measure that represents after-tax distributable earnings before interest expense, preferred dividends, income(loss) attributable to noncontrolling interests and income taxes paid. We believe distributable operating earnings is useful to stockholders as it provides asupplemental measure of our operating performance without taking into account items that we do not believe relate directly to KKR's operations.Fee Paying AUM ("FPAUM")Fee paying AUM represents only the AUM from which KKR is entitled to receive management fees. We believe this measure is useful to stockholders as itprovides additional insight into the capital base upon which KKR earns management fees. FPAUM is the sum of all of the individual fee bases that are used tocalculate KKR's and its hedge fund and BDC partnership management fees and differs from AUM in the following respects: (i) assets and commitments fromwhich KKR is not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which it is entitled to receive only carriedinterest or is otherwise not currently entitled to receive a management fee) and (ii) certain assets, primarily in its private equity funds, are reflected based on capitalcommitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.Fee Related Earnings ("FRE")Fee related earnings is a non-GAAP measure of earnings of KKR before performance income and investment income. KKR believes this measure may beuseful to stockholders as it may provide additional insight into the profitability of KKR’s fee generating management companies and capital markets businesses.Fee related earnings is calculated as KKR’s total Fees and Other, Net, multiplied by KKR’s distributable operating margin. For purposes of the fee related earningscalculation, distributable operating margin is calculated as distributable operating earnings, before equity-based compensation, divided by total operating revenues.Operating AssetsOperating assets is a non-GAAP measure that represents cash and short-term investments, investments, unrealized carried interest, tax assets, and other assetsof KKR presented on a basis that deconsolidates (i) KKR's investment funds and collateralized financing entities that KKR manages and (ii) other consolidatedentities that are not subsidiaries of KKR & Co. Inc. We believe this measure is useful to stockholders as it provides additional insight into the assets of KKR thatare used to operate its business lines. As used in this definition, cash and short-term investments represent cash and liquid short-term investments in high-grade,short-duration cash management strategies used by KKR to generate additional yield.Operating ExpensesOperating expenses is a non-GAAP measure that represents the expenses of KKR and is the sum of (i) compensation and benefits (excluding unrealizedperformance income compensation), (ii) occupancy and related charges and (iii) other operating expenses. KKR believes that operating expenses is useful tostockholders as it provides insight into the costs expended in connection with generating KKR's operating revenues.Operating LiabilitiesOperating liabilities is a non-GAAP measure that represents the debt obligations of KKR (including KFN), tax liabilities, and other liabilities of KKRpresented on a basis that deconsolidates (i) KKR's investment funds and collateralized financing entities that KKR manages and (ii) other consolidated entities thatare not subsidiaries of KKR & Co. Inc. We believe this measure is useful to stockholders as it provides additional insight into the liabilities of KKR excluding theliabilities that are allocated to noncontrolling interest holders and to the holders of the Series A and Series B Preferred Stock.Operating RevenuesOperating revenues is a non-GAAP measure that represents the realized revenues (which excludes unrealized carried interest and unrealized net gains (losses))generated by KKR and is the sum of (i) fees and other, net, (ii) realized performance income (loss) and (iii) realized investment income (loss). KKR believes thatoperating revenues is useful to stockholders as it provides insight into the realized revenue generated by KKR's business lines.102Table of ContentsSyndicated CapitalSyndicated capital is the aggregate amount of capital in transactions originated by KKR and its investment funds and carry-yielding co-investment vehicles,which has been distributed to third parties, generally in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment fundsand carry-yielding co-investment vehicles, which is instead reported in capital invested, (ii) debt capital that is arranged as part of the acquisition financing oftransactions originated by KKR investment funds, and (iii) debt capital that is either underwritten or arranged on a best efforts basis. Syndicated capital is used as ameasure of investment activity for KKR during a given period, and we believe that this measure is useful to stockholders as it provides additional insight into levelsof syndication activity in KKR's Capital Markets business line and across KKR's investment platform.Uncalled CommitmentsUncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles havereceived from partners to contribute capital to fund future investments. We believe this measure is useful to stockholders as it provides additional insight into theamount of capital that is available to KKR’s investment funds to make future investments. Uncalled commitments are not reduced for investments completed usingfund-level investment financing arrangements.103Table of ContentsConsolidated Results of Operations The following is a discussion of our consolidated results of operations for the years ended December 31, 2019 and 2018. You should read this discussion inconjunction with the financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected our non-GAAP operating results in these periods, see "—Analysis of Non-GAAP Operating Results." For a discussion comparing our consolidated results of operations forthe years ended December 31, 2018 and 2017, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" ofour Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 15, 2019.Year ended December 31, 2019 compared to year ended December 31, 2018 Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Revenues Fees and Other$1,790,475 $1,841,326 $(50,851)Capital Allocation-Based Income2,430,425 554,510 1,875,915Total Revenues4,220,900 2,395,836 1,825,064 Expenses Compensation and Benefits2,116,890 1,374,363 742,527Occupancy and Related Charges62,728 59,706 3,022General, Administrative and Other728,813 655,408 73,405Total Expenses2,908,431 2,089,477 818,954 Investment Income (Loss) Net Gains (Losses) from Investment Activities3,161,884 1,254,832 1,907,052Dividend Income318,972 175,154 143,818Interest Income1,418,516 1,396,532 21,984Interest Expense(1,043,551) (876,029) (167,522)Total Investment Income (Loss)3,855,821 1,950,489 1,905,332 Income (Loss) Before Taxes5,168,290 2,256,848 2,911,442 Income Tax Expense (Benefit)528,750 (194,098) 722,848 Net Income (Loss)4,639,540 2,450,946 2,188,594Net Income (Loss) Attributable to Redeemable Noncontrolling Interests— (37,352) 37,352Net Income (Loss) Attributable to Noncontrolling Interests2,634,491 1,357,235 1,277,256Net Income (Loss) Attributable to KKR & Co. Inc.2,005,049 1,131,063 873,986 Series A Preferred Stock Dividends23,288 23,288 —Series B Preferred Stock Dividends10,076 10,076 — Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders$1,971,685 $1,097,699 $873,986104Table of ContentsRevenuesFor the years ended December 31, 2019 and 2018, revenues consisted of the following: Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Management Fees $824,903 $724,558 $100,345Fee Credits (340,900) (231,943) (108,957)Transaction Fees 914,329 988,954 (74,625)Monitoring Fees 106,289 87,545 18,744Incentive Fees — 14,038 (14,038)Expense Reimbursements 169,415 146,989 22,426Oil and Gas Revenue 47,153 51,465 (4,312)Consulting Fees 69,286 59,720 9,566Total Fees and Other 1,790,475 1,841,326 (50,851) Carried Interest 2,041,847 441,529 1,600,318General Partner Capital Interest 388,578 112,981 275,597Total Capital Allocation-Based Income 2,430,425 554,510 1,875,915 Total Revenues $4,220,900 $2,395,836 $1,825,064Total Fees and Other for the year ended December 31, 2019 decreased compared to the year ended December 31, 2018 primarily as a result of an increase infee credits and a decrease in transaction fees and incentive fees. Partially offsetting these decreases was an increase in management fees.Transaction fees decreased overall primarily from a lower level of transaction fees earned in our Capital Markets business line. Partially offsetting thesedecreases was an increase in transaction fees earned in our Private Markets business line, and to a lesser extent, our Public Markets business line.The increase in fee credits was due primarily to the increase in transaction fees earned in our Private Markets business line, and to a lesser extent, our PublicMarkets business line.Fee credits owed to consolidated investment funds are eliminated upon consolidation under GAAP. Transaction fees earned from KKR portfolio companiesare not eliminated upon consolidation because those fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in ourCapital Markets business line are not shared with fund investors. Accordingly, certain transaction fees are reflected in revenues without a corresponding fee credit.For a more detailed discussion of the factors that affected our transaction and monitoring fees during the period, see "—Analysis of Non-GAAP OperatingResults—Operating Revenues."The increase in management fees during the year ended December 31, 2019 compared to the prior period was due primarily to management fees earned fromour European Fund V which entered its investment period in 2019 and Global Infrastructure Investors III Fund which entered its investment period during the thirdquarter of 2018. Partially offsetting this increase was a decrease in management fees and incentive fees related to our BDC platform as a result of the FSInvestments Transaction that closed in the second quarter of 2018. KKR reports its investment in FS/KKR Advisor using the equity method of accounting, and assuch, KKR reflects its allocation of the net income of this entity as investment income. Accordingly, the management fees and incentive fees of the BDCs that hadbeen reported in fees and other revenues prior to the closing of the FS Investments Transaction are now reflected on a net basis as part of our allocation of the netincome of this entity within investment income. This decreased our reported gross management fees and incentive fees when compared to the prior period.105Table of ContentsThe increase in carried interest and general partner capital interest during the year ended December 31, 2019 compared to the prior period was due primarily toa higher level of net appreciation in the value of our private equity investment portfolio as compared to the year ended December 31, 2018.Compensation and Benefits ExpensesThe increase in compensation and benefits expenses during the year ended December 31, 2019 compared to the prior period was primarily due to an increasein carried interest compensation resulting from a higher level of unrealized appreciation in the value of our private equity portfolio as compared to the prior period.This increase was partially offset by lower equity-based compensation charges resulting from a decrease in the weighted average number of unvested sharesoutstanding.General, Administrative and Other ExpensesThe increase in general, administrative and other expenses for the year ended December 31, 2019 compared to the year ended December 31, 2018 wasprimarily due to (i) a higher level of expenses that were credited to our investment funds, in particular a higher level of broken-deal expenses and (ii) a higher levelof expenses related to capital raising efforts, in particular approximately $20 million of issuance costs incurred in connection with the launch of a closed-end fundthat closed in the fourth quarter of 2019. These increases were partially offset by a lower level of financing costs incurred related to debt at consolidated CLOscompared to the prior period.Net Gains (Losses) from Investment ActivitiesThe following is a summary of net gains (losses) from investment activities: Year Ended December 31, 2019 December 31, 2018 ($ in thousands)Private Equity$3,110,951 $893,384Credit(242,995) (774,524)Investments of Consolidated CFEs213,038 (536,050)Real Assets(34,545) 160,884Equity Method - Other611,160 335,036Other Investments(186,860) (673,618)Debt Obligations and Other(435,071) 909,171Other Net Gains (Losses) from Investment Activities126,206 940,549Net Gains (Losses) from Investment Activities$3,161,884 $1,254,832Net Gains (Losses) from Investment Activities for the year ended December 31, 2019The net gains from investment activities for the year ended December 31, 2019 were comprised of net realized gains of $497.3 million and net unrealizedgains of $2,664.5 million.Investment gains and losses relating to investments in our unconsolidated funds are not reflected in our discussion and analysis of Net Gains (Losses) fromInvestment Activities. Our economics associated with these gains and losses are reflected in Capital Allocation-Based Income as described above. For a discussionand analysis of the primary investment gains or losses relating to individual investments in our unconsolidated funds, see "—Analysis of Non-GAAP OperatingResults—Operating Revenues."Realized Gains and Losses from Investment ActivitiesFor the year ended December 31, 2019, net realized gains related primarily to realized gains on (i) the sale of our investment in Trainline PLC (LSE: TRN),(ii) the sales of assets in our consolidated real estate funds, (iii) the sale of our investment in Sedgwick Claims Management Services, Inc. (financial servicessector) and (iv) the sales of assets in our consolidated special situations funds. Partially offsetting these realized gains were realized losses, the most significant ofwhich related to the sale of investments held by our consolidated CLOs and the sale of our investment in DoubleDutch, Inc. (technology sector).106Table of ContentsUnrealized Gains and Losses from Investment ActivitiesFor the year ended December 31, 2019, unrealized gains were driven primarily by (i) mark-to-market gains on the growth equity investments held by KKR andcertain consolidated entities, the most significant of which was BridgeBio Pharma, Inc. (NASDAQ: BBIO), (ii) mark-to-market gains in portfolio companies in ourcore investment strategy, the most significant of which were PetVet Care Centers, LLC (health care sector), Heartland Dental, LLC (health care sector), and USI,Inc. (financial services sector) and (iii) mark-to-market gains on our investment in Fiserv, Inc., which is held in our funds and as a balance sheet co-investment byKKR.Partially offsetting the unrealized gains above were unrealized losses relating to (i) mark-to-market losses in our energy investments held through certainconsolidated entities, (ii) mark-to-market losses on investments held at our consolidated special situations funds, (iii) mark-to-market losses on investments held atour India debt financing company and (iv) the reversal of previously recognized unrealized gains relating to the realization activity described above. For moredetails regarding investments held at our India debt financing company, see "—Analysis of Non-GAAP Operating Results—Non-GAAP Balance Sheet Measures."Net Gains (Losses) from Investment Activities for the year ended December 31, 2018The net gains from investment activities for the year ended December 31, 2018 were comprised of net realized gains of $534.7 million and net unrealizedgains of $720.2 million.Realized Gains and Losses from Investment ActivitiesFor the year ended December 31, 2018, realized gains related primarily to (i) the sale of assets in our consolidated special situations funds, (ii) the FSInvestments Transaction, (iii) the sale of our equity interest in Nephila Capital Ltd. ("Nephila"), (iv) the sale of real estate investments held through certainconsolidated entities, and (v) the partial sale of our investment in First Data Corporation (which was merged with Fiserv, Inc.) in the third quarter of 2018 whichwas held in part as a direct co-investment by KKR.Partially offsetting these realized gains were realized losses primarily relating (i) the write-off of Trinity Holdings LLC (energy sector) and certain CLOsduring the year ended December 31, 2018 and (ii) the partial write-off of our investment in Preferred Proppants, LLC (manufacturing sector) which is held directlyby KKR and in our consolidated special situations funds.Unrealized Gains and Losses from Investment ActivitiesFor the year ended December 31, 2018, unrealized gains were driven primarily by (i) mark-to-market gains in portfolio companies in our core investmentstrategy, the most significant of which were USI, Inc., PetVet Care Centers, LLC, and Heartland Dental LLC, (ii) mark-to-market gains in our growth equityinvestments held directly by KKR and certain consolidated entities, (iii) an increase in our allocation of the net income of our hedge fund partnerships and BDCplatform, (iv) the reversal of previously recognized unrealized losses related to the write-off of Trinity Holdings LLC and certain CLOs and the partial write-off ofPreferred Proppants, LLC as described above, and (v) mark-to-market gains on investments in our energy portfolio held through certain consolidated funds.Partially offsetting the unrealized gains above were unrealized losses relating to (i) the reversal of previously recognized unrealized gains relating to assetssold in our consolidated special situations funds, the partial sale of First Data Corporation in the third quarter of 2018 which was held as a direct co-investment byKKR and the sale of real estate investments held through certain consolidated entities and (ii) mark-to-market losses on certain investments held in ourconsolidated special situations funds and investments held at our India debt financing company.Dividend IncomeDuring the year ended December 31, 2019, the most significant dividends received included $195.3 million from our investment in Fiserv, Inc., part of whichis held as a balance sheet co-investment by KKR, $36.0 million from our consolidated real estate funds, $29.1 million from our consolidated special situationsfunds, $14.1 million from infrastructure investments held by KKR and $12.7 million from our consolidated energy funds. During the year ended December 31,2018, the most significant dividends received included $52.7 million from our consolidated energy funds, $34.7 million from our consolidated special situationsfunds, and $32.4 million from our consolidated real estate funds. Significant dividends from portfolio companies or consolidated funds are generally not recurringquarterly dividends, and while they may occur in the future, their107Table of Contentssize and frequency are variable. For a discussion of other factors that affected KKR's dividend income, see "—Analysis of Non-GAAP Operating Results—Operating Revenues—Principal Activities Revenues—Realized Investment Income."Interest Income The increase in interest income during the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily due to a higher levelof interest earned related to (i) the closing of five additional consolidated CLOs subsequent to December 31, 2018 and (ii) an increase in the amount of capitaldeployed in investments held by KKR Real Estate Finance Trust Inc. ("KREF"), a NYSE-listed real estate investment trust ("REIT"), which is consolidated, ascompared to the prior period. Partially offsetting this increase is a decrease in interest income related to (i) interest income from our consolidated special situationsfunds, primarily related to corporate restructurings in certain underlying investments that resulted in KKR receiving non-interest bearing securities for thoseinvestments subsequent to December 31, 2018 and (ii) investments held at our India debt finance company as a result of an increase in non-performing loans (see"—Analysis of Non-GAAP Operating Results—Non-GAAP Balance Sheet Measures"). For a discussion of other factors that affected KKR's interest income, see"—Analysis of Non-GAAP Operating Results—Operating Revenues—Principal Activities Revenues—Realized Investment Income."Interest Expense The increase in interest expense during the year ended December 31, 2019 compared to the year ended December 31, 2018 was primarily due to (i) the impactof the closing of five additional consolidated CLOs subsequent to December 31, 2018, (ii) the issuance of euro denominated senior notes in the second quarter of2019 and (iii) increased borrowings from consolidated asset backed financing vehicles managed by KKR. These increases were partially offset by a decrease ininterest expense associated with the redemption of our 6.375% Senior Notes due 2020 (the "2020 Senior Notes") during the year ended December 31, 2019. For adiscussion of other factors that affected KKR's interest expense, see "—Analysis of Non-GAAP Operating Results—Operating Expenses—Interest Expense." Income (Loss) Before Taxes The increase in income (loss) before taxes for the year ended December 31, 2019 compared to the year ended December 31, 2018 was due primarily to ahigher level of net gains from investment activities and capital allocation-based income, and to a lesser extent, increased dividend income, partially offset by ahigher level of compensation and benefits and interest expense.Income TaxesFor the year ended December 31, 2019, income tax expense was $528.8 million compared to a net income tax benefit of $194.1 million for the prior period.The income tax benefit in the prior period was primarily the result of tax benefits recorded on the date of Conversion. Prior to the Conversion, KKR & Co. L.P.'sinvestment income and carried interest generally were not subject to U.S. corporate income taxes. Subsequent to the Conversion, all income earned by KKR & Co.Inc. is subject to U.S. corporate income taxes, which has resulted in, and we believe will continue to result in, an overall higher income tax expense when comparedto periods prior to the Conversion. Our effective tax rate under GAAP for the year ended December 31, 2019 was 10.23%. For a discussion of factors that impactedKKR's tax provision, see Item 8. Financial Statements and Supplementary Data—Note 11 "Income Taxes."Net Income (Loss) Attributable to Noncontrolling Interests Net income (loss) attributable to noncontrolling interests for the year ended December 31, 2019 relates primarily to net income attributable to KKR Holdingsrepresenting its ownership interests in the KKR Group Partnerships as well as third-party limited partner interests in those investment funds that we consolidate.The increase from the prior period is due primarily to an increase in amounts attributable to KKR Holdings, and to a lesser extent, to an increase in incomerecorded by certain consolidated fund entities that is attributable to third party limited partners as a result of a higher level of income having been recognized forthe year ended December 31, 2019 compared to the prior period. Partially offsetting this increase is a decrease in the amount attributable to noncontrolling interestsas a result of the reduction in KKR Holdings' ownership percentage in the KKR Group Partnerships as compared to the prior period.108Table of ContentsNet Income (Loss) Attributable to KKR & Co. Inc.The increase in net income (loss) attributable to KKR & Co. Inc. for the year ended December 31, 2019 compared to the year ended December 31, 2018 wasprimarily due to an increase in net gains from investment activities and capital allocation-based income, and to a lesser extent, an increase in dividend income inthe current period as compared to the prior period. Partially offsetting this increase were decreases primarily related to an increase in income attributable tononcontrolling interests, and to a lesser extent, (i) increased compensation and benefits expenses, (ii) an income tax expense in the current period as compared to anoverall tax benefit in the prior period, and (iii) increased interest expense.Consolidated Statements of Financial ConditionThe following table provides the Consolidated Statements of Financial Condition on a GAAP basis as of December 31, 2019 and December 31, 2018.(Amounts in thousands, except per share amounts) As of As of December 31, 2019 December 31, 2018 Assets Cash and Cash Equivalents $2,346,713 $1,751,287Investments 54,936,268 44,907,982Other Assets 3,616,338 4,084,106Total Assets $60,899,319 $50,743,375 Liabilities and Equity Debt Obligations $27,013,284 $22,341,192Other Liabilities 3,383,661 3,019,574Total Liabilities 30,396,945 25,360,766 Redeemable Noncontrolling Interests — 1,122,641 Stockholders' Equity Preferred Stock 482,554 482,554KKR & Co. Inc. Stockholders' Equity - Common Stockholders 10,324,936 8,167,056Noncontrolling Interests 19,694,884 15,610,358Total Equity 30,502,374 24,259,968Total Liabilities and Equity $60,899,319 $50,743,375 KKR & Co. Inc. Stockholders' Equity Per Outstanding Share of Class A CommonStock $18.44 $15.27 KKR & Co. Inc. Stockholders’ Equity - Common Stockholders per Outstanding Share of Class A common stock was $18.44 as of December 31, 2019, upfrom $15.27 as of December 31, 2018. The increase was primarily attributable to net appreciation in the value of our investment portfolio that is attributable toKKR & Co. Inc. net of dividends to Class A common stockholders.109Table of ContentsConsolidated Statements of Cash Flows The accompanying consolidated statements of cash flows include the cash flows of our consolidated entities which include certain consolidated investmentfunds and CFEs notwithstanding the fact that we may hold only a minority economic interest in those funds and CFEs.The assets of our consolidated funds and CFEs, on a gross basis, can be substantially larger than the assets of our business and, accordingly, could have asubstantial effect on the cash flows reflected in our consolidated statements of cash flows. The primary cash flow activities of our consolidated funds and CFEsinvolve: (i) capital contributions from fund investors; (ii) using the capital of fund investors to make investments; (iii) financing certain investments withindebtedness; (iv) generating cash flows through the realization of investments; and (v) distributing cash flows from the realization of investments to fundinvestors. Because our consolidated funds and CFEs are treated as investment companies for accounting purposes, certain of these cash flow amounts are includedin our cash flows from operations.Net Cash Provided (Used) by Operating Activities Our net cash provided (used) by operating activities was $(5.7) billion and $(7.6) billion during the years ended December 31, 2019 and 2018, respectively.These amounts primarily included: (i) proceeds from investments net of investments purchased of $(6.0) billion and $(8.5) billion during the years endedDecember 31, 2019 and 2018, respectively; (ii) net realized gains (losses) on investments of $497.3 million and $534.7 million during the years endedDecember 31, 2019 and 2018, respectively; (iii) change in unrealized gains (losses) on investments of $2.7 billion and $0.7 billion during the years endedDecember 31, 2019 and 2018, respectively; and (iv) capital allocation-based income of $2.4 billion and $0.6 billion during the years ended December 31, 2019 and2018, respectively. Investment funds are, for GAAP purposes, investment companies and reflect their investments and other financial instruments at fair value. Net Cash Provided (Used) by Investing Activities Our net cash provided (used) by investing activities was $(207.4) million and $(78.6) million during the years ended December 31, 2019 and 2018,respectively. Our investing activities included: (i) the purchase of fixed assets of $(194.6) million and $(102.7) million during the years ended December 31, 2019and 2018, respectively; (ii) development of oil and natural gas properties of $(12.8) million and $(2.6) million for the years ended December 31, 2019 and 2018,respectively; and (iii) proceeds from sale of oil and natural gas properties of $26.6 million for the year ended December 31, 2018. Net Cash Provided (Used) by Financing Activities Our net cash provided (used) by financing activities was $6.5 billion and $6.6 billion during the years ended December 31, 2019 and 2018, respectively. Ourfinancing activities primarily included: (i) distributions to, net of contributions by, our noncontrolling and redeemable noncontrolling interests of $1.5 billion and$1.9 billion during the years ended December 31, 2019 and 2018, respectively; (ii) proceeds received net of repayment of debt obligations of $5.5 billion and $5.4billion during the years ended December 31, 2019 and 2018, respectively; (iii) common stock dividends of $(271.5) million and $(322.3) million during the yearsended December 31, 2019 and 2018, respectively; (iv) net delivery of Class A common stock of $(91.0) million and $(98.8) million for the years endedDecember 31, 2019 and 2018, respectively; (v) repurchases of Class A common stock of $(72.1) million and $(173.1) million during the years ended December 31,2019 and 2018, respectively; and (vi) preferred stock dividends of $(33.4) million during each of the years ended December 31, 2019 and 2018.110Table of ContentsAnalysis of Non-GAAP Operating Results The following is a discussion of the results of our business on a non-GAAP basis for the years ended December 31, 2019 and 2018. You should read thisdiscussion in conjunction with the information included under "—Basis of Accounting—Key Non-GAAP and Other Operating and Performance Measures" and thefinancial statements and related notes included elsewhere in this report. For a discussion comparing the results of our business on a non-GAAP basis for the yearsended December 31, 2018 and 2017, see "Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our AnnualReport on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 15, 2019. Certain non-GAAP measures that are presented in thisreport as KKR's operating results, such as operating assets, operating liabilities, operating revenues, operating expenses and distributable operating earnings, werepreviously referred to as segment results in our Annual Report on Form 10-K for the year ended December 31, 2018.The following tables set forth information regarding KKR's operating results and certain key operating metrics as of and for the years ended December 31,2019 and 2018.Year ended December 31, 2019 compared to year ended December 31, 2018OPERATING REVENUES Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Operating Revenues Fees and Other, Net Management Fees $1,227,236 $1,069,074 $158,162Transaction Fees 910,932 977,485 (66,553)Monitoring Fees 106,289 87,520 18,769Fee Credits (382,940) (280,136) (102,804)Total Fees and Other, Net 1,861,517 1,853,943 7,574 Realized Performance Income (Loss) Carried Interest 1,070,788 1,218,647 (147,859)Incentive Fees 65,256 138,330 (73,074)Total Realized Performance Income (Loss) 1,136,044 1,356,977 (220,933) Realized Investment Income (Loss) Net Realized Gains (Losses) (1) 189,858 365,324 (175,466)Interest Income and Dividends 495,915 286,468 209,447Total Realized Investment Income (Loss) 685,773 651,792 33,981 Total Operating Revenues $3,683,334 $3,862,712 $(179,378) OPERATING EXPENSES Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Operating Expenses Compensation and Benefits (2) $1,446,292 $1,533,431 $(87,139)Occupancy and Related Charges 58,888 57,022 1,866Other Operating Expenses (3) 343,418 293,621 49,797Total Operating Expenses $1,848,598 $1,884,074 $(35,476) AFTER-TAX DISTRIBUTABLE EARNINGS Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)After-tax Distributable Earnings (+) Total Operating Revenues $3,683,334 $3,862,712 $(179,378)(-) Total Operating Expenses 1,848,598 1,884,074 (35,476)(=) Total Distributable Operating Earnings 1,834,736 1,978,638 (143,902)(-) Interest Expense 183,682 187,379 (3,697)(-) Preferred Dividends 33,364 33,364 —(-) Income (Loss) Attributable to Noncontrolling Interests 4,907 8,807 (3,900)(-) Income Taxes Paid 207,479 151,848 55,631After-tax Distributable Earnings $1,405,304 $1,597,240 $(191,936)111Table of Contents(1)Excludes a non-recurring $22.8 million make-whole premium associated with KKR’s retirement of its 2020 Senior Notes during the year ended December 31, 2019. Given theextraordinary nature of the Conversion, the non-GAAP financial results for the year ended December 31, 2018 exclude approximately $729.4 million of losses on certain investmentswhich were realized in the second quarter of 2018 in advance of the Conversion.(2)Includes equity-based compensation of $207.8 million and $242.8 million for the years ended December 31, 2019 and December 31, 2018, respectively.(3)For the year ended December 31, 2019, other operating expenses include approximately $20 million of issuance costs incurred in connection with the launch of a closed-end fund thatclosed in the fourth quarter. For the year ended December 31, 2018, excludes approximately $11.5 million of non-recurring costs in connection with the Conversion.Operating RevenuesThe following sections discuss revenues for each of our business lines on a disaggregated basis for the years ended December 31, 2019 and 2018.Private Markets Operating RevenuesThe following table presents Fees and Other, Net and Realized Performance Income in the Private Markets business line for the years ended December 31,2019 and 2018: Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Fees and Other, Net Management Fees $780,254 $665,026 $115,228Transaction Fees 421,494 303,902 117,592Monitoring Fees 106,289 87,520 18,769Fee Credits (307,716) (239,441) (68,275)Total Fees and Other, Net 1,000,321 817,007 183,314 Realized Performance Income (Loss) Carried Interest 1,046,038 1,208,747 (162,709)Incentive Fees 2,316 1,041 1,275Total Realized Performance Income (Loss) $1,048,354 $1,209,788 $(161,434)Fees and Other, Net The increase for the year ended December 31, 2019 as compared to the year ended December 31, 2018 was primarily due to an increase in transaction fees,partially offset by a corresponding increase in fee credits, and an increase in management fees.The increase in transaction fees was primarily attributable to an increase in the number of transaction fee-generating investments. During the year endedDecember 31, 2019, there were 59 transaction fee-generating investments that paid an average fee of $7.1 million compared to 41 transaction fee-generatinginvestments that paid an average fee of $7.4 million during the year ended December 31, 2018. For the year ended December 31, 2019, approximately 36% of thesetransaction fees were paid by companies located in the Asia-Pacific region, 35% were paid from companies in Europe, and 29% were paid by companies located inNorth America. Transaction fees vary by investment based upon a number of factors, the most significant of which are transaction size, the particular agreementsas to the amount of the fees, the complexity of the transaction and KKR's role in the transaction. Additionally, transaction fees are generally not earned with respectto energy and real estate investments. The increase in fee credits is due primarily to a higher level of transaction fees which are shared with fund investors.The increase in management fees was primarily due to (i) management fees earned from our European Fund V which entered its investment period in 2019,(ii) a full year of management fees earned from our Global Infrastructure Investors III Fund in 2019 which entered its investment period subsequent to the secondquarter of 2018, (iii) management fees earned from our Global Impact Fund which entered its investment period during 2019, and (iv) increased capital invested inour core investment strategy, for which fees are earned on invested capital. This net increase was partially offset by decreases due to lower management feescalculated based on lower levels of invested capital as a result of realizations primarily in our North America Fund XI, 2006 Fund and European Fund IV.112Table of ContentsRealized Performance IncomeThe following table presents realized carried interest by investment vehicle for the year ended December 31, 2019 and 2018: Year Ended December 31, 2019 December 31, 2018 ($ in thousands)North America Fund XI$341,602 $471,291European Fund IV221,222 —2006 Fund143,692 297,173Asian Fund II126,039 92,011Co-Investment Vehicles and Other70,179 19,192European Fund III65,700 192,715Asian Fund III36,707 —Core Investment Vehicles14,449 —Asian Fund10,913 28,991Real Estate Partners Americas7,439 12,189European Fund II5,058 2,159China Growth Fund3,038 11,759Millennium Fund— 64,614Global Infrastructure Investors— 16,653Total Realized Carried Interest (1)$1,046,038 $1,208,747(1)The above table excludes any funds for which there was no realized carried interest during both of the periods presented. Realized carried interest for the year ended December 31, 2019 consisted primarily of realized gains from the sales of Sedgwick Claims Management Services,Inc. and Trainline PLC and dividends received from our investment in Fiserv, Inc.Realized carried interest for the year ended December 31, 2018 consisted primarily of realized gains from the partial sales of National Vision Holdings(NASDAQ: EYE), Inc., GoDaddy Inc. (NYSE: GDDY), and Gardner Denver Holdings, Inc. (NYSE: GDI).Public Markets Operating RevenuesThe following table presents Fees and Other, Net and Realized Performance Income in the Public Markets business line for the year ended December 31, 2019and 2018: Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Fees and Other, Net Management Fees $446,982 $404,048 $42,934Transaction Fees 79,383 42,531 36,852Fee Credits (75,224) (40,695) (34,529)Total Fees and Other, Net 451,141 405,884 45,257 Realized Performance Income (Loss) Carried Interest 24,750 9,900 14,850Incentive Fees 62,940 137,289 (74,349)Total Realized Performance Income (Loss) $87,690 $147,189 $(59,499)113Table of ContentsFees and Other, NetThe increase for the year ended December 31, 2019 was primarily due to an increase in management fees and transaction fees partially offset by an increase inassociated fee credits.The increase in management fees was primarily due to (i) increased fees from our CLOs and leveraged credit strategies as a result of greater overall FPAUMand (ii) an increase in fees earned from BDCs advised by FS/KKR Advisor due to a full year of fees from this strategic partnership in 2019. On a non-GAAP basis,KKR's pro rata income from our BDC platform, which is an equity method investment, is included in management fees and incentive fees. On a GAAP basis, suchamounts are included in net gains from investment activities.The increase in transaction fees was primarily attributable to an increase in both the average size and number of transaction fee-generating investments duringthe period. During the year ended December 31, 2019, there were 45 transaction fee-generating investments that paid an average fee of $1.8 million compared to 37transaction fee-generating investments that paid an average fee of $1.1 million during the year ended December 31, 2018.Realized Performance IncomeThe decrease for the year ended December 31, 2019 compared to the prior period was primarily attributable to a lower level of incentive fees earned in ourhedge fund partnerships as a result of less favorable performance as compared to prior year, partially offset by an increased level of realized carried interest earnedin three of our alternative credit strategy funds as compared to one fund during the year ended December 31, 2018.Capital Markets Operating RevenuesThe following table presents Transaction Fees in the Capital Markets business line for the year ended December 31, 2019 and 2018: Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Transaction Fees $410,055 $631,052 $(220,997)Transaction fees decreased due primarily to a decrease in the size of capital markets transactions and to a lesser extent the number of transactions for the yearended December 31, 2019, compared to the year ended December 31, 2018. Overall, we completed 192 capital markets transactions for the year endedDecember 31, 2019, of which 28 represented equity offerings and 164 represented debt offerings, as compared to 204 transactions for the year ended December 31,2018, of which 28 represented equity offerings and 176 represented debt offerings. Our capital markets fees are generated in connection with our Private Marketsand Public Markets business lines as well as from third-party companies. For the year ended December 31, 2019, approximately 23% of our transaction fees wereearned from unaffiliated third parties as compared to approximately 18% for the year ended December 31, 2018. Our transaction fees are comprised of fees earnedfrom North America, Europe and Asia-Pacific. For the year ended December 31, 2019, approximately 61% of our transaction fees were generated outside of NorthAmerica as compared to approximately 30% for the year ended December 31, 2018. Our Capital Markets business line is dependent on the overall capital marketsenvironment, which is influenced by equity prices, credit spreads and volatility. Our Capital Markets business line does not generate management or monitoringfees.Principal Activities Operating RevenuesThe following table presents Realized Investment Income in the Principal Activities business line for the year ended December 31, 2019 and 2018: Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Realized Investment Income (Loss) Net Realized Gains (Losses) (1) $189,858 $365,324 $(175,466)Interest Income and Dividends 495,915 286,468 209,447Total Realized Investment Income (Loss) $685,773 $651,792 $33,981114Table of Contents(1)Excludes a non-recurring $22.8 million make-whole premium associated with KKR’s retirement of its 2020 Senior Notes during the year ended December 31, 2019. Given theextraordinary nature of the Conversion, the non-GAAP financial results for the year ended December 31, 2018 exclude approximately $729.4 million of losses on certain investmentswhich were realized in the second quarter in advance of the Conversion.Realized Investment IncomeThe increase in net realized investment income for the year ended December 31, 2019 compared to the prior period is primarily due to an increase individends, partially offset by a decreased level of net realized gains for the year ended December 31, 2019, compared to the prior period. Dividend income washigher for the year ended December 31, 2019 compared to 2018 primarily due to dividends received in connection with our investment in Fiserv, Inc. The amountof realized investment income (loss) depends on the transaction activity of our funds and balance sheet, which can vary from period to period.For the year ended December 31, 2019, interest income and dividends were comprised of (i) $195.3 million of dividend income from our investment in Fiserv,Inc., (ii) $141.4 million of dividend income from distributions received primarily through our real assets investments, including our real estate investment in KREFand our energy investments, as well as certain of our credit and private equity investments, and (iii) $159.2 million of interest income which consists primarily ofinterest that is received from our Public Markets investments, including CLOs and other credit investments, our cash balances, and, to a lesser extent, our CapitalMarkets business.For the year ended December 31, 2018, interest income and dividends were comprised of (i) $174.4 million of interest income which consists primarily ofinterest that is received from our Public Markets investments, including CLOs and other credit investments and, to a lesser extent, our Capital Markets business andour cash balances and (ii) $112.1 million of dividend income from distributions received primarily through our real assets investments, including our real estateinvestment in KREF and our energy investments, as well as our credit and energy investments.For the year ended December 31, 2019, net realized gains were comprised primarily of gains from the sale of our investments in Trainline PLC, GEG GermanEstate Group AG (financial services sector), and Sedgwick Claims Management Services, Inc., and the sale of certain investments in our special situations funds.Partially offsetting these realized gains were realized losses, the most significant of which was a realized loss on the sale of our investment in DoubleDutch, Inc.For the year ended December 31, 2018, net realized gains were comprised primarily of gains from the sale of Private Markets investments including the salesor partial sales of our investments in First Data Corporation, Next Issue Media LLC (technology sector), and National Vision Holdings, Inc., as well as the sale ofour equity interest in Nephila and the sale of our alternative credit investment in Amedisys, Inc. (NASDAQ: AMED). Partially offsetting these realized gains wererealized losses, the most significant of which was a realized loss on Preferred Proppants, LLC. Given the extraordinary nature of the Conversion, the non-GAAPfinancial results for the year ended December 31, 2018 exclude approximately $729.4 million of realized losses on certain investments, primarily credit and energyinvestments, which were realized in the second quarter of 2018 in advance of the Conversion.Subsequent to December 31, 2019, we completed, or expect to complete sales, partial sales or secondary sales with respect to certain private equity portfoliocompanies and other investments as well as other realization activities such as the receipt of dividends and interest income across our broader portfolio. Theserealization activities, if and when completed, are expected to result in realized performance income and realized investment income of approximately $700 millionin the first half of 2020. Some of these transactions are not complete, and are subject to the satisfaction of closing conditions; there can be no assurance if or whenany of these transactions will be completed.Operating ExpensesCompensation and Benefits The decrease for the year ended December 31, 2019 compared to the prior period was due primarily to lower compensation recorded in connection with lowertotal operating revenues and lower equity-based compensation charges resulting from a decrease in the weighted average number of unvested shares outstanding.Occupancy and Other Operating ExpensesThe increase for the year ended December 31, 2019 compared to the prior period is primarily due to a higher level of expenses that are creditable to ourinvestment funds, in particular a higher level of broken-deal expenses, as well as a higher level of professional fees in connection with the growth of the firm. Thelevel of broken-deal expenses can vary significantly115Table of Contentsperiod to period based upon a number of factors, the most significant of which are the number of potential investments being pursued for our investment funds, thesize and complexity of investments being pursued and the number of investment funds currently in their investment period. Additionally, for the year endedDecember 31, 2019, other operating expenses include approximately $20 million of issuance costs incurred in connection with the launch of a closed-end fund thatclosed in the fourth quarter.Other Components of After-tax Distributable EarningsInterest ExpenseFor the year ended December 31, 2019 and 2018, interest expense relates primarily to the senior notes outstanding for KKR and KFN. The decrease in interestexpense for the year ended December 31, 2019 compared to the prior period is due primarily to (i) the redemption of our $500 million aggregate principal amountof the 2020 Senior Notes in the third quarter of 2019, (ii) the redemption of preferred shares at KFN in the first quarter of 2018, and (iii) a lower level ofborrowings in our Capital Markets business line. These decreases were partially offset by the issuance of $500 million aggregate principal amount of 3.750%Senior Notes due 2029, which bear interest at a lower rate than that of the 2020 Senior Notes, and the issuance of the €650 million aggregate principal amount of1.625% Senior Notes due 2029 in the second quarter of 2019.Income Taxes PaidThe increase in income taxes paid is primarily due to a higher level of income that is subject to corporate taxes following the Conversion. Prior to theConversion, KKR's investment income and carried interest generally were not subject to U.S. corporate income taxes. Subsequent to the Conversion, all incomeearned by KKR is subject to U.S. corporate income taxes which has resulted in, and we believe will continue to result in, an overall higher income taxes paid whencompared to periods prior to the Conversion. As a result of the Conversion, KKR recognized a partial step-up in the tax bases of certain assets that will berecovered as those assets are sold or the bases are amortized. This generally results in a lower level of taxable gains upon realization of carried interest andinvestment income for those assets that existed on the date of the Conversion. Over time as these assets with higher tax bases are realized, we expect that ourincome taxes paid and non-GAAP effective tax rate will increase. The pace of such increase is not currently known and is dependent on a variety of factorsincluding the pace at which the assets with higher tax bases are realized and the mix of all assets realized in any given period. Therefore, we cannot predict whatthe increase, if any, in income taxes paid will be quarter-over-quarter or year-over-year.After-tax Distributable Earnings The decrease in after-tax distributable earnings for the year ended December 31, 2019 compared to the prior period was due primarily to a lower level ofrealized performance income partially offset by an increase in management fees.Other Operating and Performance MeasuresThe following table presents certain key operating and performance metrics as of December 31, 2019 and December 31, 2018: As of December 31, 2019 December 31, 2018 Change ($ in thousands)Assets Under Management $218,355,100 $194,720,400 $23,634,700Fee Paying Assets Under Management $161,209,800 $141,007,700 $20,202,100Uncalled Commitments $56,920,600 $57,959,000 $(1,038,400)The following table presents one of our key performance metrics for the year ended December 31, 2019 and 2018: Year Ended December 31, 2019 December 31, 2018 Change ($ in thousands)Capital Invested and Syndicated Capital $28,055,900 $26,493,900 $1,562,000116Table of ContentsAssets Under ManagementPrivate MarketsThe following table reflects the changes in our Private Markets AUM from December 31, 2018 to December 31, 2019: ($ in thousands)December 31, 2018$103,396,500New Capital Raised12,097,800Distributions and Other(9,978,500)Change in Value13,758,900December 31, 2019$119,274,700AUM for the Private Markets business line was $119.3 billion at December 31, 2019, an increase of $15.9 billion, compared to $103.4 billion at December 31,2018.The increase was primarily attributable to (i) an increase in the value of our Private Markets portfolio and (ii) to a lesser extent new capital raised primarily inour Next Generation Technology Growth Fund II, Asia Pacific Infrastructure Investors, European Fund V, private equity separately managed accounts, Real EstateCredit Opportunity Partners II Fund, and Asia Real Estate Partners. These increases were partially offset by distributions to Private Markets fund investorsprimarily as a result of realizations, most notably in our North America Fund XI, European Fund IV, Asian Fund II, 2006 Fund, and European Fund III.The increase in the value of our Private Markets portfolio was driven primarily by net gains of $3.1 billion in our 2006 Fund, $1.9 billion in our NorthAmerica Fund XI, $1.6 billion in our Asian Fund III, $1.4 billion in our European Fund IV, $1.2 billion in our core investment vehicles, and $1.0 billion in AsianFund II.For the year ended December 31, 2019, the value of our private equity investment portfolio increased 27.0%. This was comprised of a 60.7% increase in shareprices of various publicly held or publicly indexed investments and a 16.7% increase in value of our privately held investments.The most significant increases in share prices of various publicly held or publicly indexed investments were increases in Fiserv, Inc., Gardner DenverHoldings, Inc., and BrightView Holdings Inc. (NYSE: BV). These increases were partially offset by decreases in share prices of various publicly held investments,the most significant of which were decreases in Coffee Day Resorts Private Limited (NSE: CCD), RigNet, Inc. (NASDAQ: RNET), and Tarena International, Inc.(NASDAQ: TEDU).The most significant increases in value of our privately held investments related to increases in KCF Technologies Co. Ltd. (industrial sector), KokusaiElectric Corporation (manufacturing sector), AppLovin Corporation (technology sector), and Internet Brands, Inc. (technology sector). These increases in value onour privately held investments were partially offset by decreases in value relating primarily to oil and gas assets held in our energy income and growth portfolio,Envision Healthcare Corporation (health care sector), and Academy Ltd. (retail sector). The increased valuations of individual companies in our privately heldinvestments, in the aggregate, generally related to (i) individual company performance, (ii) an increase in the value of market comparables, and (iii) with respect toKCF Technologies Co. Ltd. and Kokusai Electric Corporation, increases in valuation reflecting agreements to exit these investments. The decreased valuations ofindividual companies in our privately held investments, in the aggregate, generally related to individual company performance or, in certain cases, an unfavorablebusiness outlook.For the year ended December 31, 2018, the value of our private equity investment portfolio increased 5.1%. This was comprised of a 12.3% increase in thevalue of our privately held investments and a 7.9% decrease in the value of various publicly held or publicly indexed investments.The most significant increases in value of our privately held investments related to increases in Sedgwick Claims Management Services, Inc., Internet Brands,Inc., and Cognita Schools Ltd (education sector). These increases in value on our privately held investments were partially offset by decreases in value relatingprimarily to Arbor Pharmaceuticals, Inc. (health care sector), Resource Environmental Solutions, LLC (energy sector), and Mandala Energy Ltd. (energy sector).The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) in the case of Sedgwick ClaimsManagement Services, Inc. and Cognita Schools Ltd, a valuation that reflects an agreement to exit these investments, (ii) an increase in the value of marketcomparables, and (iii) individual company performance. The decreased valuations of individual companies in our privately held investments, in the aggregate,generally related to (i) individual117Table of Contentscompany performance or, in certain cases, an unfavorable business outlook or (ii) a decrease in the value of market comparables.The most significant decreases in share prices of various publicly held or publicly indexed investments were decreases in Gardner Denver Holdings, Inc.,BrightView Holdings, Inc., and National Vision Holdings, Inc. These decreases were partially offset by increases in share prices of various publicly heldinvestments, the most significant of which were gains in First Data Corporation, GoDaddy Inc., and PT Japfa Comfeed Indonesia Tbk. (IDX: JPFA).Public MarketsThe following table reflects the changes in our Public Markets AUM from December 31, 2018 to December 31, 2019: ($ in thousands)December 31, 2018$91,323,900New Capital Raised13,419,600Impact of Other Transactions2,172,900Distributions(1,951,300)Redemptions(7,657,300)Change in Value1,772,600December 31, 2019$99,080,400AUM in our Public Markets business line totaled $99.1 billion at December 31, 2019, an increase of $7.8 billion compared to AUM of $91.3 billion atDecember 31, 2018. The increases due to new capital raised were related to multiple strategies, most notably $3.5 billion in certain leveraged credit strategies, $2.9billion in our alternative credit strategies, $2.8 billion in our hedge fund partnerships, and $2.4 billion in CLOs. Partially offsetting these increases wereredemptions and distributions from certain investment vehicles across multiple strategies, primarily from our hedge fund partnerships, certain leveraged creditstrategies, and our alternative credit strategies. The increase in value was driven primarily by net increases in value of our hedge fund partnerships, certainleveraged credit strategies, partially offset by decreases at our BDCs. The "Impact of Other Transactions" represents a $2.2 billion increase in our pro rata portionof AUM managed by Marshall Wace in connection with the acquisition of an additional 5% interest in Marshall Wace.Fee Paying Assets Under Management Private MarketsThe following table reflects the changes in our Private Markets FPAUM from December 31, 2018 to December 31, 2019: ($ in thousands)December 31, 2018$66,830,000New Capital Raised14,076,800Distributions and Other(3,641,900)Net Changes in Fee Base of Certain Funds(561,300)Change in Value214,500December 31, 2019$76,918,100FPAUM in our Private Markets business line was $76.9 billion at December 31, 2019, an increase of $10.1 billion, compared to $66.8 billion at December 31,2018.The increase was primarily attributable to new capital raised of $5.7 billion in European Fund V, $2.1 billion in private equity separately managed accounts,$1.9 billion in Next Generation Technology Growth Fund II, and $1.1 billion of capital invested by our core investment vehicles. These increases were partiallyoffset by distributions primarily relating to realizations of $0.6 billion in each of North America Fund XI, European Fund IV, and Asian Fund II, and $0.4 billion inAsian Fund.118Table of ContentsPublic MarketsThe following table reflects the changes in our Public Markets FPAUM from December 31, 2018 to December 31, 2019: ($ in thousands)December 31, 2018$74,177,700New Capital Raised13,878,500Impact of Other Transactions2,172,900Distributions(2,089,100)Redemptions(5,159,100)Change in Value1,310,800December 31, 2019$84,291,700 FPAUM in our Public Markets business line was $84.3 billion at December 31, 2019, an increase of $10.1 billion compared to FPAUM of $74.2 billion atDecember 31, 2018. The increases due to new capital raised were related to multiple strategies, most notably $3.5 billion in both our alternative credit strategiesand certain leveraged credit strategies, $2.8 billion in our hedge fund partnerships, and $2.4 billion in CLOs. Partially offsetting these increases were redemptionsand distributions from certain investment vehicles across multiple strategies, primarily from our hedge fund partnerships, certain leveraged credit strategies, andour alternative credit strategies. The increase in value was related primarily to increases at our hedge fund partnerships and various leveraged credit strategies,partially offset by decreases at our BDCs. The "Impact of Other Transactions" represents a $2.2 billion increase in our pro rata portion of FPAUM managed byMarshall Wace in connection with the acquisition of an additional 5% interest in Marshall Wace.Uncalled CommitmentsPrivate MarketsAs of December 31, 2019, our Private Markets business line had $46.8 billion of remaining uncalled capital commitments that could be called for investmentsin new transactions as compared to $48.2 billion as of December 31, 2018. The net decrease is due primarily to capital called from fund investors to makeinvestments during the period, partially offset by new capital raised in various Private Markets investing strategies, and our private equity separately managedaccounts.Public MarketsAs of December 31, 2019, our Public Markets business line had $10.1 billion of remaining uncalled capital commitments that could be called for investmentsin new transactions as compared to $9.8 billion as of December 31, 2018. The net increase is due to new capital raised primarily in our alternative credit strategies,partially offset by capital called from fund investors to make investments during the period.Capital Invested and Syndicated CapitalPrivate Markets Capital InvestedFor the year ended December 31, 2019, Private Markets had $14.1 billion of capital invested as compared to $13.2 billion for the year ended December 31,2018. The increase was driven primarily by a $1.0 billion increase in capital invested in our private equity platform (including core investments and growth equity),partially offset by a $0.1 billion decrease in capital invested in our real assets platforms. Generally, the portfolio companies acquired through our private equityfunds have higher transaction values and result in higher capital invested relative to transactions in our real assets funds. The number of large private equityinvestments made in any quarterly or year-to-date period is volatile and, consequently, a significant amount of capital invested in one period or a few periods maynot be indicative of a similar level of capital deployment in future periods. During the year ended December 31, 2019, 43% of capital deployed in private equity,which includes core and growth equity investments, was in transactions in the Asia-Pacific region, 35% was in Europe and 22% was in North America.119Table of ContentsPublic Markets Capital InvestedFor the year ended December 31, 2019, Public Markets had $10.1 billion of capital invested as compared to $6.9 billion for the year ended December 31,2018. The increase was primarily due to a higher level of capital deployed in our direct lending and private opportunistic credit strategies, partially offset by alower level of capital deployed in our special situations strategy. During the year ended December 31, 2019, 67% of capital deployed was in transactions in NorthAmerica, 25% was in Europe, and 8% was in the Asia-Pacific region.Capital Markets Syndicated CapitalFor the year ended December 31, 2019, Capital Markets syndicated $3.9 billion of capital as compared to $6.3 billion for the year ended December 31, 2018.The decrease was primarily due to a decrease in the size of syndication transactions in the year ended December 31, 2019 as compared to the year endedDecember 31, 2018. Overall, we completed 21 syndication transactions for the year ended December 31, 2019 as compared to 16 syndications for the year endedDecember 31, 2018. The size and frequency of syndication transactions depend in large part on market conditions and other factors that are unpredictable andoutside our control, which may negatively impact the fees generated by our capital markets business from syndication transactions.120Table of ContentsNon-GAAP Balance Sheet MeasuresThe following tables present information with respect to our operating assets, operating liabilities, and book value as of December 31, 2019 and December 31,2018:OPERATING ASSETS As of December 31, 2019 December 31, 2018 ($ in thousands)Operating Assets Cash and Short-term Investments $2,783,905 $2,502,239Investments 13,026,387 9,847,464Net Unrealized Carried Interest (1) 1,982,251 1,223,084Tax Assets 111,719 561,114Other Assets (2) 3,716,189 3,453,735Total Operating Assets $21,620,451 $17,587,636 OPERATING LIABILITIES As of December 31, 2019 December 31, 2018 ($ in thousands)Operating Liabilities Debt Obligations - KKR (ex-KFN) $3,097,460 $2,367,801Debt Obligations - KFN 948,517 948,517Tax Liabilities 169,997 174,395Other Liabilities 514,236 590,981Total Operating Liabilities $4,730,210 $4,081,694 BOOK VALUE As of December 31, 2019 December 31, 2018 ($ in thousands)Book Value (+) Total Operating Assets $21,620,451 $17,587,636(-) Total Operating Liabilities 4,730,210 4,081,694(-) Noncontrolling Interests 26,291 25,382(-) Preferred Stock 500,000 500,000Book Value $16,363,950 $12,980,560 Book Value Per Adjusted Share $19.24 $15.57Adjusted Shares 850,388,924 833,938,476(1)The following table provides net unrealized carried interest by business line: As of December 31, 2019 December 31, 2018Private Markets Business Line $1,832,581 $1,083,163Public Markets Business Line 149,670 139,921Total $1,982,251 $1,223,084(2)Other Assets include KKR's ownership interest in FS/KKR Advisor, LLC and minority ownership interests in hedge fund partnerships.Book Value Per Adjusted ShareBook value per adjusted share increased 23.6% from December 31, 2018. This increase was due primarily to a broad-based increase in the value of KKR'sinvestment portfolio, including investments held by KKR as well as investments held through investment funds, such as KKR's private equity funds, where KKR isentitled to earn carried interest. For the year ended December 31, 2019, the value of KKR's balance sheet portfolio, on a non-GAAP basis, increased 25.2% andKKR's overall private equity portfolio increased 27.0%. The increase in KKR's balance sheet portfolio and net unrealized carried interest was primarily due tomark-to-market gains in our portfolio companies. For a further discussion, see "—Consolidated Results of121Table of ContentsOperations—Unrealized Gains and Losses from Investment Activities." For a discussion of the changes in KKR's private equity portfolio, see "—Analysis of Non-GAAP Operating Results—Other Operating and Performance Measures—AUM." The increase in book value per adjusted share was also due to approximately$1.4 billion of after-tax distributable earnings, partially offset by the payment of dividends during the year ended December 31, 2019. For a discussion of factorsthat impacted KKR's after-tax distributable earnings, see "—Analysis of Non-GAAP Operating Results."Investment in Marshall WaceOn November 22, 2019, KKR acquired an additional 5.0% interest in Marshall Wace after the exercise of an option agreed to between Marshall Wace andKKR, bringing KKR's total ownership of Marshall Wace to 39.6%, after giving effect to certain equity dilution. KKR's interest in Marshall Wace is accounted forusing the equity-method of accounting and is not carried at fair value. If KKR had paid the same price for the 34.6% of Marshall Wace acquired prior to November22, 2019 as we paid for the 5.0% acquired on November 22, 2019, the implied carrying value for KKR's 39.6% interest in Marshall Wace would have beenapproximately $460 million higher than its current carrying value.122Table of ContentsThe following table presents the holdings of our operating assets by asset class as of December 31, 2019. To the extent investments in our operating assets arerealized at values below their cost in future periods, after-tax distributable earnings would be adversely affected by the amount of such loss, if any, during theperiod in which the realization event occurs. For example, during 2019 we recognized net unrealized losses in our credit investment portfolio at our India debtfinance company. As of December 31, 2019, KKR’s 51% interest in our India debt finance company had a cost basis of approximately $198 million, comprised ofinvested capital of $100 million plus reinvested earnings. If the value of our 51% investment is ultimately realized at the current carrying value of $110 million,future realized investment losses of approximately $88 million would be recognized based on valuations as of December 31, 2019, which would reduce after-taxDistributable Earnings in future periods. As of December 31, 2019Investments (1) Cost Fair Value Fair Value as a PercentageofTotal Investments Private Equity Funds / SMAs $3,442,169 $4,914,559 37.7%Private Equity Co-Investments and Other Equity 2,176,113 3,641,702 28.0%Private Equity Total 5,618,282 8,556,261 65.7% Energy 778,898 714,635 5.5%Real Estate 979,818 1,076,838 8.3%Infrastructure 495,237 614,093 4.7%Real Assets Total 2,253,953 2,405,566 18.5% Special Situations 596,344 464,519 3.6%Direct Lending 176,378 179,028 1.4%Alternative Credit Total 772,722 643,547 4.9%CLOs 769,006 646,597 5.0%Other Credit 70,424 60,135 0.5%Credit Total 1,612,152 1,350,279 10.4% Other 1,094,349 714,281 5.4% Total Investments $10,578,736 $13,026,387 100.0% December 31, 2019Significant Investments: (2) Cost Fair Value Fair Value as a Percentageof Total InvestmentsFiserv, Inc. (NASDAQ: FISV) $794,978 $1,837,682 14.1%USI, Inc. 500,111 800,168 6.1%BridgeBio Pharma, Inc. (NASDAQ: BBIO) 75,835 513,989 3.9%Heartland Dental LLC 302,255 423,157 3.2%PetVet Care Centers, LLC 243,188 413,420 3.2%Total Significant Investments 1,916,367 3,988,416 30.5% Other Investments 8,662,369 9,037,971 69.5%Total Investments $10,578,736 $13,026,387 100.0% (1)Investments is a term used solely for purposes of financial presentation of a portion of KKR's balance sheet and includes majority ownership of subsidiaries that operate KKR's assetmanagement and other businesses, including the general partner interests of KKR's investment funds.(2)The significant investments include the top five investments (other than investments expected to be syndicated or transferred in connection with new fundraising) based on their fair valuesas of December 31, 2019. The fair value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable.123Table of ContentsReconciliations to GAAP MeasuresThe following tables reconcile the most directly comparable financial measures calculated and presented in according with GAAP to KKR's non-GAAPinformation for the year ended December 31, 2019 and 2018:Revenues Year Ended December 31, 2019 December 31, 2018 ($ in thousands)Total GAAP Revenues$4,220,900 $2,395,836(+) Management Fees - Consolidated Funds and Other464,190 457,314(-) Fee Credits - Consolidated Funds42,041 48,193(-) Capital Allocation-Based Income (GAAP)2,430,425 554,510(+) Realized Carried Interest1,070,788 1,218,647(+) Realized Investment Income (Loss)685,773 651,792(-) Revenue Earned by Other Consolidated Entities116,435 111,185(-) Expense Reimbursements169,416 146,989Total Operating Revenues$3,683,334 $3,862,712Expenses Year Ended December 31, 2019 December 31, 2018 ($ in thousands)Total GAAP Expenses$2,908,431 $2,089,477(-) Equity-based and Other Compensation - KKR Holdings L.P.91,921 100,182(-) Unrealized Performance Income Compensation520,033 (295,794)(-) Amortization of Intangibles1,674 7,700(-) Reimbursable Expenses196,694 176,126(-) Operating Expenses relating to Other Consolidated Entities187,056 179,818(-) Non-recurring Costs (1)— 11,501(+) Other(62,455) (25,870)Total Operating Expenses$1,848,598 $1,884,074(1)For the year ended December 30, 2018, represents non-recurring costs in connection with the Conversion.124Table of ContentsNet Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders Year Ended December 31, 2019 December 31, 2018 ($ in thousands)Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders$1,971,685 $1,097,699(+) Net Income (Loss) Attributable to Noncontrolling Interests held by KKR Holdings L.P.1,369,671 561,052(+) Equity-based and Other Compensation - KKR Holdings L.P.91,296 100,632(+) Amortization of Intangibles and Other, net226,422 26,116(+) Non-recurring Costs (1)22,839 11,501(+) Realized Losses on Certain Investments (2)— 729,425(-) Unrealized Carried Interest1,263,046 (756,467)(-) Net Unrealized Gains (Losses)1,854,867 1,043,912(+) Unrealized Performance Income Compensation520,033 (295,794)(+) Income Tax Expense (Benefit)528,750 (194,098)(-) Income Taxes Paid207,479 151,848After-tax Distributable Earnings$1,405,304 $1,597,240(1)For the year ended December 31, 2019, represents a non-recurring make-whole premium associated with KKR’s refinancing of its 2020 Senior Notes. For the year ended December 31,2018, represents non-recurring costs in connection with the Conversion.(2)Represents losses on certain investments which were realized in the second quarter in advance of the Conversion.The following tables provide reconciliations of certain of KKR's GAAP Consolidated Statements of Financial Condition measures to our non-GAAP BalanceSheet measures as of December 31, 2019 and December 31, 2018.Assets As of December 31, 2019 December 31, 2018Total GAAP Assets $60,899,319 $50,743,375(-) Impact of Consolidation of Funds and Other Entities 37,453,629 31,888,471(-) Carry Pool Reclassification 1,448,879 922,977(-) Other Reclassifications 376,360 344,291Total Operating Assets $21,620,451 $17,587,636Liabilities As of December 31, 2019 December 31, 2018Total GAAP Liabilities $30,396,945 $25,360,766(-) Impact of Consolidation of Funds and Other Entities 23,841,496 20,011,804(-) Carry Pool Reclassification 1,448,879 922,977(-) Other Reclassifications 376,360 344,291Total Operating Liabilities $4,730,210 $4,081,694125Table of ContentsKKR & Co. Inc. Stockholders' Equity - Common Stockholders As of December 31, 2019 December 31, 2018KKR & Co. Inc. Stockholders' Equity - Common Stockholders $10,324,936 $8,167,056(+) Impact of Consolidation of Funds and Other Entities 327,826 205,502(-) Other Reclassifications 17,446 17,446(+) Noncontrolling Interests Held by KKR Holdings L.P. 5,728,634 4,625,448Book Value $16,363,950 $12,980,560The following table provides reconciliations of KKR's GAAP Shares of Class A Common Stock Outstanding to Adjusted Shares: As of December 31, 2019 December 31, 2018GAAP Shares of Class A Common Stock Outstanding560,007,579(1) 534,857,237Adjustments: KKR Holdings Units (2)290,381,345 299,081,239Adjusted Shares (3)850,388,924 833,938,476 Unvested Shares of Class A Common Stock (4)22,712,604 33,408,491(1)Includes 5.7 million shares of Class A common stock issued to affiliates of Marshall Wace LLP as partial consideration for an additional 5% interest acquired by KKR on November 22,2019.(2)Class A common stock that may be issued by KKR & Co. Inc. upon exchange of units in KKR Holdings for Class A common stock.(3)Amounts exclude unvested equity awards granted under our Equity Incentive Plans.(4)Represents equity awards granted under our Equity Incentive Plans. The issuance of Class A common stock of KKR & Co. Inc. pursuant to awards under our Equity Incentive Plans dilutesKKR Class A common stockholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business. Excludes the award of 2,500,000 restrictedstock units granted to each of our Co-Presidents/Co-Chief Operating Officers during 2017 that have not met their market-price based vesting condition as of December 31, 2019 orDecember 31, 2018. See Item 8. Financial Statements and Supplementary Data—Note 12 "Equity Based Compensation."Liquidity We manage our liquidity and capital requirements by focusing on our cash flows before the consolidation of our funds and CFEs and the effect of changes inshort term assets and liabilities, which we anticipate will be settled for cash within one year. Our primary cash flow activities typically involve: (i) generating cashflow from operations; (ii) generating income from investment activities, by investing in investments that generate yield (namely interest and dividends), as well asthe sale of investments and other assets; (iii) funding capital commitments that we have made to, and advancing capital to, our funds and CLOs; (iv) developingand funding new investment strategies, investment products, and other growth initiatives, including acquisitions of other investments, assets, and businesses; (v)underwriting and funding commitments in our capital markets business; (vi) distributing cash flow to our stockholders and holders of our Series A and Series BPreferred Stock; and (vii) paying borrowings, interest payments, and repayments under credit agreements, our senior notes, and other borrowing arrangements. See"—Liquidity—Liquidity Needs—Dividends."Sources of Liquidity Our primary sources of liquidity consist of amounts received from: (i) our operating activities, including the fees earned from our funds, portfolio companies,and capital markets transactions; (ii) realizations on carried interest from our investment funds; (iii) interest and dividends from investments that generate yield,including our investments in CLOs; (iv) realizations on and sales of investments and other assets, including the transfers of investments for fund formations; and(v) borrowings under our credit facilities, debt offerings, and other borrowing arrangements. In addition, we may generate cash proceeds from sales of our equitysecurities. Many of our investment funds provide carried interest. With respect to our private equity funds, carried interest is distributed to the general partner of a privateequity fund with a clawback provision only after all of the following are met: (i) a realization event has occurred (e.g., sale of a portfolio company, dividend, etc.);(ii) the vehicle has achieved positive overall126Table of Contentsinvestment returns since its inception, in excess of performance hurdles where applicable, and is accruing carried interest; and (iii) with respect to investments witha fair value below cost, cost has been returned to fund investors in an amount sufficient to reduce remaining cost to the investments' fair value. As of December 31,2019, certain of our funds had met the first and second criteria, as described above, but did not meet the third criteria. In these cases, carried interest accrues on theconsolidated statement of operations, but will not be distributed in cash to us as the general partner of an investment fund upon a realization event. For a fund thathas a fair value above cost, overall, and is otherwise accruing carried interest, but has one or more investments where fair value is below cost, the shortfall betweencost and fair value for such investments is referred to as a "netting hole." When netting holes are present, realized gains on individual investments that wouldotherwise allow the general partner to receive carried interest distributions are instead used to return invested capital to our funds' limited partners in an amountequal to the netting hole. Once netting holes have been filled with either (a) return of capital equal to the netting hole for those investments where fair value isbelow cost or (b) increases in the fair value of those investments where fair value is below cost, then realized carried interest will be distributed to the generalpartner upon a realization event. A fund that is in a position to pay cash carry refers to a fund for which carried interest is expected to be paid to the general partnerupon the next material realization event, which includes funds with no netting holes as well as funds with a netting hole that is sufficiently small in size such thatthe next material realization event would be expected to result in the payment of carried interest. Strategic investor partnerships with fund investors may requirenetting across the various funds in which they invest, which may reduce the carried interest we otherwise would have earned if such fund investors were to haveinvested in our funds without the existence of the strategic investor partnership. See "Risk Factors—Risks Related to Our Business—Strategic investor partnershipshave longer investment periods and invest in multiple strategies, which may increase the possibility of a 'netting hole,' which will result in less carried interest forus, as well as clawback liabilities." As of December 31, 2019, netting holes in excess of $50 million existed at three of our private equity funds, which were Americas Fund XII, 2006 Fund, andAsian Fund, which had netting holes of approximately $272 million, $107 million, and $84 million, respectively. In accordance with the criteria set forth above,other funds currently have and may in the future develop netting holes, and netting holes for those and other funds may otherwise increase or decrease in the future.We have access to funding under various credit facilities, other borrowing arrangements and other sources of liquidity that we have entered into with majorfinancial institutions or which we receive from the capital markets. The following describes these sources of liquidity.Revolving Credit Agreements, Senior Notes, KFN Debt Obligation, KFN Securities and Real Estate FinancingFor a discussion of KKR's debt obligations, including our revolving credit agreements, senior notes, KFN debt obligations, KFN securities and corporate realestate financing, see Item 8. Financial Statements and Supplementary Data—Note 10 "Debt Obligations."Preferred StockFor a discussion of KKR's equity, including our preferred stock, see Item 8. Financial Statements and Supplementary Data—Note 15 "Equity."Liquidity Needs We expect that our primary liquidity needs will consist of cash required to:•continue to grow our business lines, including seeding new strategies, funding our capital commitments made to existing and future funds, co-investments and any net capital requirements of our capital markets companies, pay the costs related to fundraising and launching of new strategies,and otherwise supporting investment vehicles which we sponsor; •warehouse investments in portfolio companies or other investments for the benefit of one or more of our funds, vehicles, accounts or CLOs pendingthe contribution of committed capital by the investors in such vehicles, and advancing capital to them for operational or other needs;•service debt obligations including the payment of obligations upon maturity or redemption, as well as any contingent liabilities that may give rise tofuture cash payments;•fund cash operating expenses and contingencies, including litigation matters; 127Table of Contents•pay corporate income taxes and other taxes;•pay amounts that may become due under our tax receivable agreement with KKR Holdings; •pay cash dividends in accordance with our dividend policy for our Class A common stock or the terms of our preferred stock; •underwrite commitments, advance loan proceeds and fund syndication commitments within our capital markets business;•acquire other assets for our Principal Activities business line, including other businesses, investments and assets, some of which may be required tosatisfy regulatory requirements for our capital markets business or risk retention requirements for CLOs (to the extent it continues to apply); and•repurchase KKR's Class A common stock or retire equity awards pursuant to the share repurchase program or other securities issued by KKR.KKR & Co. Inc. Share Repurchase ProgramUnder the terms of our share repurchase program, KKR is authorized to repurchase its Class A common stock from time to time in open market transactions,in privately negotiated transactions or otherwise. The timing, manner, price and amount of any Class A common stock repurchases will be determined by KKR inits discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. In addition to the repurchases ofClass A common stock, the repurchase program will be used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement)of equity awards issued pursuant to our Equity Incentive Plans representing the right to receive Class A common stock. KKR expects that the program, which hasno expiration date, will be in effect until the maximum approved dollar amount has been used. The program does not require KKR to repurchase or retire anyspecific number of shares of Class A common stock or equity awards, respectively, and the program may be suspended, extended, modified or discontinued at anytime. As of December 31, 2019, $366 million was available under the repurchase program. See Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."128Table of ContentsCapital CommitmentsThe agreements governing our active investment funds generally require the general partners of the funds to make minimum capital commitments to suchfunds, which generally range from 2% to 8% of a fund's total capital commitments at final closing, but may be greater for certain funds (i) where we are pursuingnewer strategies, (ii) where third party investor demand is limited, and (iii) where a larger commitment is consistent with the asset allocation strategy our balancesheet is pursuing. The following table presents our uncalled commitments to our active investment funds as of December 31, 2019: UncalledCommitmentsPrivate Markets($ in thousands)Core Investment Vehicles$1,694,500Americas Fund XII412,500Asian Fund III358,600Asia Real Estate Partners250,000Global Infrastructure III237,400Asia Infrastructure200,000European Fund V164,300Real Estate Partners Europe II150,000Next Generation Technology Growth II150,000Health Care Strategic Growth118,100Energy Income and Growth II116,900Global Impact Fund100,000Real Estate Partners Americas II92,700Real Estate Credit Opportunity Partners II50,000Other Private Markets Vehicles456,500Total Private Markets Commitments4,551,500 Public Markets Special Situations Fund III400,000Special Situations Fund II77,900Lending Partners Europe II56,000Private Credit Opportunities Partners II17,600Lending Partners III14,500Lending Partners Europe11,300Other Public Markets Vehicles112,400Total Public Markets Commitments689,700 Total Uncalled Commitments$5,241,200Other CommitmentsIn addition to the uncalled commitments to our investment funds as shown above, KKR has entered into contractual commitments with respect to (i) thepurchase of investments and other assets primarily in our Principal Activities business line and (ii) underwriting transactions, debt financing, and syndications inour Capital Markets business line. As of December 31, 2019, these commitments amounted to $0.8 million and $1,089.4 million, respectively. Whether theseamounts are actually funded, in whole or in part, depends on the contractual terms of such commitments, including the satisfaction or waiver of any conditions toclosing or funding. The unfunded commitments shown for our Capital Markets business line are shown without reflecting arrangements that may reduce the actualamount of contractual commitments shown. Our capital markets business has an arrangement with a third party, which reduces our risk when underwriting certaindebt transactions, and thus our unfunded commitments as of December 31, 2019 are reduced to reflect the amount to be funded by such third party. In the case ofpurchases of investments or assets in our Principal Activities business line, the amount to be funded includes amounts that are intended to be syndicated to thirdparties, and the actual amounts to be funded may be less than shown.129Table of ContentsOn January 14, 2020, KKR committed to invest up to an additional $150 million in KKR India Financial Services to support KKR’s alternative credit businessin India.Tax Receivable AgreementWe may be required to acquire KKR Group Partnership Units from time to time pursuant to our exchange agreement with KKR Holdings, which may result inan increase in our tax basis of the assets of the KKR Group Partnerships at the time of an exchange of KKR Group Partnership Units. We have entered into a taxreceivable agreement with KKR Holdings, which requires us to pay to KKR Holdings, or to current and former principals who have exchanged KKR Holdingsunits for KKR Class A common stock as transferees of KKR Group Partnership Units, 85% of the amount of cash savings, if any, in U.S. federal, state and localincome tax that we realize as a result of the increase in tax basis described above, as well as 85% of the amount of any such savings we realize as a result ofincreases in tax basis that arise due to future payments under the agreement. As of December 31, 2019, an undiscounted payable of $131.3 million has beenrecorded in due to affiliates in the financial statements representing management's best estimate of the amounts currently expected to be owed under the taxreceivable agreement. As of December 31, 2019, approximately $35.8 million of cumulative cash payments have been made under the tax receivable agreement.Following the Conversion, we expect the amount of future payments under the tax receivable agreement to be materially higher than it would have been hadwe not converted to a corporation. In addition, our obligations under the tax receivable agreement would be effectively accelerated in the event of an earlytermination of the tax receivable agreement by us or in the event of certain mergers, asset sales and other forms of business combinations or other changes ofcontrol. See "Risk Factors—Risks Related to Our Organization—We will be required to pay our principals for most of the benefits relating to our use of taxattributes we receive from prior and future exchanges of our Class A common stock for KKR Group Partnership Units and related transactions, and the timing andvalue of these tax attributes differ from those of our restricted stock units."DividendsA dividend of $0.125 per share of Class A common stock has been declared for the quarter ended December 31, 2019, which will be paid on February 25,2020 to holders of record of Class A common stock as of the close of business on February 10, 2020.A dividend of $0.421875 per share of Series A Preferred Stock has been declared and set aside for payment on March 16, 2020 to holders of record of Series APreferred Stock as of the close of business on March 1, 2020. A dividend of $0.406250 per share of Series B Preferred Stock has been declared and set aside forpayment on March 16, 2020 to holders of record of Series B Preferred Stock as of the close of business on March 1, 2020.When KKR & Co. Inc. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its prorata share of such distributions from the KKR Group Partnerships.The declaration and payment of dividends to our Class A common stockholders will be at the sole discretion of our board of directors, and our dividendpolicy may be changed at any time. Our current dividend policy is to pay dividends to holders of our Class A common stock in an annual aggregate amount of$0.54 per share (or a quarterly dividend of $0.135 per share) beginning with any dividend to be announced with respect to the results for the first quarter of 2020,subject to the discretion of our board of directors based on a number of factors, including KKR’s future financial performance and other considerations that theboard deems relevant, and compliance with the terms of KKR & Co. Inc.'s certificate of incorporation and applicable law. For U.S. federal income tax purposes,any dividends we pay (including dividends on our preferred stock) generally will be treated as qualified dividend income for U.S. individual stockholders to theextent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. There can be no assurance that futuredividends will be made as intended or at all or that any particular dividend policy for our Class A common stock will be maintained. Furthermore, the declarationand payment of distributions by the KKR Group Partnerships and our other subsidiaries may also be subject to legal, contractual and regulatory restrictions,including restrictions contained in our debt agreements and the terms of the preferred stock of the KKR Group Partnerships.Other Liquidity NeedsWe may also be required to fund various underwriting, syndication and fronting commitments in our capital markets business in connection with theunderwriting of loans, securities or other financial instruments, which has increased in significance in recent periods and may continue to be significant in futureperiods. We generally expect that these commitments will be syndicated to third parties or otherwise fulfilled or terminated, although we may in some instanceselect to retain a portion of the commitments for our own investment.130Table of ContentsContractual Obligations, Commitments and Contingencies In the ordinary course of business, we and our consolidated funds and CFEs enter into contractual arrangements that may require future cash payments. Thefollowing table sets forth information relating to anticipated future cash payments as of December 31, 2019 excluding consolidated funds and CFEs with areconciliation of such amounts to the anticipated future cash payments of KKR including consolidated funds and CFEs. Payments due by PeriodTypes of Contractual Obligations <1 Year 1-3 Years 3-5 Years >5 Years Total ($ in millions)Uncalled commitments to investment funds (1) $5,241.2 $— $— $— $5,241.2Debt payment obligations (2) — — 229.3 3,816.7 4,046.0Interest obligations on debt payment obligations (3) 206.4 322.5 320.5 2,069.3 2,918.7Underwriting commitments (4) 796.4 — — — 796.4Lending commitments (5) 293.0 — — — 293.0Purchase commitments (6) 0.8 — — — 0.8Lease obligations 52.8 45.7 19.0 14.8 132.3Total Contractual Obligations of KKR 6,590.6 368.2 568.8 5,900.8 13,428.4(+) Uncalled commitments of consolidated funds (7) 11,412.1 — — — 11,412.1(+) Debt payment obligations of consolidated funds, CFEs and Other(8) 1,053.4 3,357.6 1,676.5 16,528.2 22,615.7(+) Corporate real estate borrowings (9) — 490.0 — — 490.0(+) Interest obligations of consolidated funds, CFEs and Other (10) 831.3 1,271.7 1,028.7 2,661.4 5,793.1(+) Purchase commitments of consolidated funds (11) 616.4 — — — 616.4Total Consolidated Contractual Obligations $20,503.8 $5,487.5 $3,274.0 $25,090.4 $54,355.7(1)These uncalled commitments represent amounts committed by us to fund a portion of the purchase price paid for each investment made by our investment funds which are activelyinvesting. Because capital contributions are due on demand, the above commitments have been presented as falling due within one year. However, given the size of such commitments andthe pace at which our investment funds make investments, we expect that the capital commitments presented above will be called over a period of several years. See "—Liquidity—Liquidity Needs."(2)Amounts include: (i) $727.9 million aggregate principal amount of 1.625% Senior Notes due 2029 issued by KKR Group Finance Co. V LLC (denominated in euro), $500 millionaggregate principal amount of 3.750% Senior Notes due 2029 issued by KKR Group Finance Co. VI LLC, $500 million aggregate principal amount of 5.500% Senior Notes due 2043issued by KKR Group Finance Co. II LLC and $1,000 million aggregate principal amount of 5.125% Senior Notes due 2044 issued by KKR Group Finance Co. III LLC, gross ofunamortized discount; (ii) $369.7 million aggregate principal amount of 0.509% Senior Notes due 2023, 0.764% Senior Notes due 2025 and 1.595% Senior Notes due 2038 issued by KKRGroup Finance Co. IV LLC (denominated in Japanese Yen); (iii) $500 million aggregate principal amount of 5.500% Senior Notes due 2032 issued by KFN, gross of unamortized discount;(iv) $120 million aggregate principal amount of 5.200% Senior Notes due 2033 issued by KFN; (v) $70.0 million aggregate principal amount of 5.400% Senior Notes due 2033 issued byKFN; and (vi) $258.5 million aggregate principal amount of junior subordinated notes issued by KFN, gross of unamortized discount. KFN's debt obligations are non-recourse to KKRbeyond the assets of KFN.(3)These interest obligations on debt represent estimated interest to be paid over the term of the related debt obligation, which has been calculated assuming the debt outstanding atDecember 31, 2019 is not repaid until its maturity. Future interest rates are assumed to be those in effect as of December 31, 2019, including both variable and fixed rates, as applicable,provided for by the relevant debt agreements. The amounts presented above include accrued interest on outstanding indebtedness.(4)Represents various commitments in our capital markets business in connection with the underwriting of loans, securities and other financial instruments. These commitments are shown netof amounts syndicated.(5)Represents obligations in our capital markets business to lend under various revolving credit facilities.(6)Represents commitments of KKR and KFN to fund the purchase of various investments.(7)Represents uncalled commitments of our consolidated funds excluding KKR's portion of uncalled commitments as the general partner of the respective funds. Because capital contributionsare due on demand, the above commitments have been presented as falling due within one year. However, given the size of such commitments and the pace at which our investment fundsmake investments, we expect that the capital commitments presented above will be called over a period of several years. See "—Liquidity—Liquidity Needs."(8)Amounts include (i) financing arrangements entered into by our consolidated funds with the objective of providing liquidity to the funds of $6.9 billion, (ii) debt securities issued by ourconsolidated CLOs of $14.7 billion and (iii) borrowings collateralized by specific investments and other assets held directly by majority-owned investment vehicles of $1.0 billion. Debtsecurities issued by consolidated CLO entities are supported solely by the investments held at the CLO vehicles and are not collateralized by assets of any other KKR entity. Obligationsunder financing arrangements entered into by our consolidated funds are generally limited to our pro rata equity interest in such funds. Our management companies bear no obligations torepay any financing arrangements at our consolidated funds.(9)Represents a debt obligation in connection with the ownership of KKR office space.131Table of Contents(10)The interest obligations on debt of our CFEs and other borrowings represent estimated interest to be paid over the term of the related debt obligation, which has been calculated assumingthe debt outstanding at December 31, 2019 is not repaid until its maturity. Future interest rates are assumed to be those in effect as of December 31, 2019, including both variable and fixedrates, as applicable, provided for by the relevant debt agreements. The amounts presented above include accrued interest on outstanding indebtedness.(11)Represents commitments of consolidated funds to fund the purchase of various investments. The commitment table above excludes contractual amounts owed under the tax receivable agreement because the ultimate amount and timing of the amountsdue are not presently known. See "—Liquidity Needs—Tax Receivable Agreement" in this report and "Risk Factors—We will be required to pay our principals formost of the benefits relating to our use of tax attributes we receive from prior and future exchanges of our Class A common stock for KKR Group Partnership Unitsand related transactions, and the timing and value of these tax attributes differ from those of our restricted stock units."The commitment table above excludes KKR's commitment to invest up to an additional $150 million in KKR India Financial Services to support KKR’salternative credit business in India. We may incur contingent liabilities for claims that may be made against us in the future. We enter into contracts that contain a variety of representations,warranties and covenants, including indemnifications. For example, certain of our investment funds and KFN have provided certain indemnities relating toenvironmental and other matters and have provided nonrecourse carve-out guarantees for fraud, willful misconduct and other customary wrongful acts, each inconnection with the financing of certain real estate investments that we have made. KKR has also provided certain guarantees for fraud, willful misconduct,bankruptcy and other customary wrongful acts in connection with the financing of KKR's corporate real estate and certain investment vehicles. KKR has also (i)provided credit support regarding repayment obligations to third-party lenders to certain of its employees, excluding its executive officers, in connection with theirpersonal investments in KKR investment funds and (ii) provided credit support to one of our hedge fund partnerships. We have also indemnified employees andnon-employees against potential liabilities, in connection with their service as described under "Item 13. Certain Relationships and Related Transactions, andDirector Independence-Indemnification of Directors, Officers and Others" in our Annual Report. In addition, we have also provided credit support to certain of oursubsidiaries' obligations in connection with certain investment vehicles or partnerships that we manage. For example, KKR has guaranteed the obligations of ageneral partner to post collateral on behalf of its investment vehicle in connection with such vehicle's derivative transactions, and we have also agreed to be liablefor certain investment losses and/or for providing liquidity in the events specified in the governing documents of certain investment vehicles. Our maximumexposure under these arrangements is currently unknown as our liabilities for these matters would require a claim to be made against us in the future. The partnership documents governing our carry-paying funds generally include a "clawback" provision that, if triggered, may give rise to a contingentobligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund. See Item 8. FinancialStatements and Supplementary Data—Note 16 "Commitments and Contingencies—Contingent Repayment Guarantees" for further information on KKR's potentialclawback obligations.Off Balance Sheet Arrangements Other than contractual commitments and other legal contingencies incurred in the normal course of our business, we do not have any off-balance sheetfinancings or liabilities.132Table of ContentsCritical Accounting PoliciesThe preparation of our financial statements in accordance with GAAP requires our management to make estimates and judgments that affect the reportedamounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of fees, expenses and investment income. Our managementbases these estimates and judgments on available information, historical experience and other assumptions that we believe are reasonable under the circumstances.However, these estimates, judgments and assumptions are often subjective and may be impacted negatively based on changing circumstances or changes in ouranalyses. If actual amounts are ultimately different from those estimated, judged or assumed, revisions are included in the financial statements in the period inwhich the actual amounts become known. We believe our critical accounting policies could potentially produce materially different results if we were to changeunderlying estimates, judgments or assumptions.The following discusses certain aspects of our critical accounting policies. For a full discussion of these and all critical accounting policies, see Item 8.Financial Statements and Supplementary Data—Note 2 "Summary of Significant Accounting Policies."Fair Value MeasurementsFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date under current market conditions. Except for certain of KKR's equity method investments and debt obligations, KKR's investments and otherfinancial instruments are recorded at fair value or at amounts whose carrying values approximate fair value.GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financialinstruments at fair value. Investments and financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputsused in the determination of fair values, as follows:Level IPricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. The types of financial instrumentsincluded in this category are publicly-listed equities and securities sold short.We classified 4.4% of total investments measured and reported at fair value as Level I at December 31, 2019.Level IIPricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value isdetermined through the use of models or other valuation methodologies. The types of financial instruments included in this category are credit investments,investments and debt obligations of consolidated CLO entities, convertible debt securities indexed to publicly-listed securities, less liquid and restricted equitysecurities and certain over-the-counter derivatives such as foreign currency option and forward contracts.We classified 38.9% of total investments measured and reported at fair value as Level II at December 31, 2019.Level IIIPricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. Theinputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments generally included in thiscategory are private portfolio companies, real assets investments, credit investments, equity method investments for which the fair value option was elected andinvestments and debt obligations of consolidated CMBS entities.We classified 56.7% of total investments measured and reported at fair value as Level III at December 31, 2019. The valuation of our Level III investments atDecember 31, 2019 represents management's best estimate of the amounts that we would anticipate realizing on the sale of these investments in an orderlytransaction at such date.In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair valuehierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair valuemeasurement in its entirety.133Table of Contents Level III Valuation MethodologiesWith respect to our private equity portfolio, which includes growth equity investments, we generally employ two valuation methodologies when determiningthe fair value of an investment. The first methodology is typically a market comparables analysis that considers key financial inputs and recent public and privatetransactions and other available measures. The second methodology utilized is typically a discounted cash flow analysis, which incorporates significantassumptions and judgments. Estimates of key inputs used in this methodology include the weighted average cost of capital for the investment and assumed inputsused to calculate terminal values, such as exit EBITDA multiples. In certain cases the results of the discounted cash flow approach can be significantly impacted bythese estimates. Other inputs are also used in both methodologies. Also, as discussed in greater detail under "—Business Environment" and "Risk Factors—RisksRelated to the Assets We Manage—Our investments are impacted by various economic conditions that are difficult to quantify or predict, but may have asignificant adverse impact on the value of our investments" in this report, a change in interest rates could have a significant impact on valuations. In addition, whena definitive agreement has been executed to sell an investment, KKR generally considers a significant determinant of fair value to be the consideration to bereceived by KKR pursuant to the executed definitive agreement.Upon completion of the valuations conducted using these methodologies, a weighting is ascribed to each method, and an illiquidity discount is typicallyapplied where appropriate. The ultimate fair value recorded for a particular investment will generally be within a range suggested by the two methodologies, exceptthat the value may be higher or lower than such range in the case of investments being sold pursuant to an executed definitive agreement.Across the total Level III private equity investment portfolio (including core investments), and including investments in both consolidated and unconsolidatedinvestment funds, approximately 58% of the fair value is derived from investments that are valued based exactly 50% on market comparables and 50% on adiscounted cash flow analysis. Less than 2% of the fair value of this Level III private equity investment portfolio is derived from investments that are valued eitherbased 100% on market comparables or 100% on a discounted cash flow analysis. As of December 31, 2019, the overall weights ascribed to the market comparablesmethodology, the discounted cash flow methodology, and a methodology based on pending sales for this portfolio of Level III private equity investments were39%, 46%, and 15%, respectively.In the case of growth equity investments, enterprise values may be determined using the market comparables analysis and discounted cash flow analysisdescribed above. A scenario analysis may also be conducted to subject the estimated enterprise values to a downside, base and upside case, which involvessignificant assumptions and judgments. A milestone analysis may also be conducted to assess the current level of progress towards value drivers that we havedetermined to be important, which involves significant assumptions and judgments. The enterprise value in each case may then be allocated across the investment'scapital structure to reflect the terms of the security and subjected to probability weightings. In certain cases, the values of growth equity investments may be basedon recent or expected financings.Real asset investments in infrastructure, energy and real estate are valued using one or more of the discounted cash flow analysis, market comparables analysisand direct income capitalization, which in each case incorporates significant assumptions and judgments. Infrastructure investments are generally valued using thediscounted cash flow analysis. Key inputs used in this methodology can include the weighted average cost of capital and assumed inputs used to calculate terminalvalues, such as exit EBITDA multiples. Energy investments are generally valued using a discounted cash flow analysis. Key inputs used in this methodology thatrequire estimates include the weighted average cost of capital. In addition, the valuations of energy investments generally incorporate both commodity prices asquoted on indices and long-term commodity price forecasts, which may be substantially different from, and are currently higher than, commodity prices on certainindices for equivalent future dates. Certain energy investments do not include an illiquidity discount. Long-term commodity price forecasts are utilized to capturethe value of the investments across a range of commodity prices within the energy investment portfolio associated with future development and to reflect a range ofprice expectations. Real estate investments are generally valued using a combination of direct income capitalization and discounted cash flow analysis. Key inputsused in such methodologies that require estimates include an unlevered discount rate and current capitalization rate, and certain real estate investments do notinclude a minimum illiquidity discount. The valuations of real assets investments also use other inputs.For GAAP purposes, where KKR holds energy investments consisting of working interests in oil and gas properties directly and not through an investmentfund, such working interests are consolidated based on the proportion of the working interests held by us. Accordingly, we reflect the assets, liabilities, revenues,expenses, investment income and cash flows of the consolidated working interests on a gross basis and changes in the value of these energy investments are notreflected as unrealized gains and losses in the consolidated statements of operations. Accordingly, a change in fair value for these investments does not result in adecrease in net gains (losses) from investment activities, but may result in an impairment134Table of Contentscharge reflected in general, administrative and other expenses. For non-GAAP purposes, these directly held working interests are treated as investments andchanges in value are reflected in our operating results as unrealized gains and losses.On a non-GAAP basis, our energy real asset investments in oil and gas properties as of December 31, 2019 had a fair value of approximately $715 million.Based on this fair value, we estimate that an immediate, hypothetical 10% decline in the fair value of these energy investments from one or more adversemovements to the investments' valuation inputs would result in a decline in book value of $71.5 million. As of December 31, 2019, if we were to value our energyinvestments using only the commodity prices as quoted on indices and did not use long-term commodity price forecasts, and also held all other inputs to theirvaluation constant, we estimate that book value would have been approximately $77 million lower.These hypothetical declines relate only to book value. There would be no current impact on KKR's unrealized carried interest since all of the investment fundswhich hold these types of energy investments have investment values that are either below their cost or not currently accruing carried interest. Additionally, therewould be no impact on fees since fees earned from investment funds which hold investments in oil and gas properties are based on either committed capital orcapital invested.Credit investments are valued using values obtained from dealers or market makers, and where these values are not available, credit investments are generallyvalued by us based on ranges of valuations determined by an independent valuation firm. Valuation models are based on discounted cash flow analyses, for whichthe key inputs are determined based on market comparables, which incorporate similar instruments from similar issuers.Key unobservable inputs that have a significant impact on our Level III investment valuations as described above are included in Item 8. Financial Statementsand Supplementary Data—Note 5 "Fair Value Measurements."Level III Valuation ProcessThe valuation process involved for Level III measurements is completed on a quarterly basis and is designed to subject the valuation of Level III investmentsto an appropriate level of consistency, oversight, and review.For Private Markets investments classified as Level III, investment professionals prepare preliminary valuations based on their evaluation of financial andoperating data, company specific developments, market valuations of comparable companies and other factors. KKR begins its procedures to determine the fairvalues of its Level III assets one month prior to the end of a reporting period, and KKR follows additional procedures to ensure that its determinations of fair valuefor its Level III assets are appropriate as of the relevant reporting date. These preliminary valuations are reviewed by an independent valuation firm engaged byKKR to perform certain procedures in order to assess the reasonableness of KKR's valuations annually for all Level III investments in Private Markets andquarterly for investments other than certain investments, which have values less than preset value thresholds and which in the aggregate comprise less than 1% ofthe total value of KKR's Level III Private Markets investments. The valuations of certain real asset investments are determined solely by an independent valuationfirm without the preparation of preliminary valuations by our investment professionals, and instead such independent valuation firm relies on valuation informationavailable to it as a broker or valuation firm. For credit investments and debt obligations of consolidated CMBS vehicles, an independent valuation firm is generallyengaged quarterly by KKR with respect to most investments classified as Level III. The valuation firm either provides a value or provides a valuation range fromwhich KKR's investment professionals select a point in the range to determine the preliminary valuation or performs certain procedures in order to assess thereasonableness and provide positive assurance of KKR's valuations. After reflecting any input from the independent valuation firm, the valuation proposals aresubmitted for review and approval by KKR's valuation committees. As of December 31, 2019, less than 5% of the total value of our Level III credit investmentswere not valued with the engagement of an independent valuation firm.KKR has a global valuation committee that is responsible for coordinating and implementing the firm's valuation process to ensure consistency in theapplication of valuation principles across portfolio investments and between periods. The global valuation committee is assisted by the asset class-specificvaluation committees that exist for private equity (including core investments), growth equity, real estate, energy and infrastructure and credit. The asset class-specific valuation committees are responsible for the review and approval of all preliminary Level III valuations in their respective asset classes on a quarterlybasis. The members of these valuation committees are comprised of investment professionals, including the heads of each respective strategy, and professionalsfrom business operations functions such as legal, compliance and finance, who are not primarily responsible for the management of the investments.All Level III valuations are also subject to approval by the global valuation committee, which is comprised of senior employees including investmentprofessionals and professionals from business operations functions, and includes one of KKR's135Table of ContentsCo-Presidents and Co-Chief Operating Officers and its Chief Financial Officer, General Counsel and Chief Compliance Officer. When valuations are approved bythe global valuation committee after reflecting any input from it, the valuations of Level III investments, as well as the valuations of Level I and Level IIinvestments, are presented to the audit committee of the board of directors of KKR & Co. Inc. and are then reported to the board of directors.As of December 31, 2019, upon completion by, where applicable, an independent valuation firm of certain limited procedures requested to be performed bythem on certain investments, the independent valuation firm concluded that the fair values, as determined by KKR, of those investments reviewed by them werereasonable. The limited procedures did not involve an audit, review, compilation or any other form of examination or attestation under generally accepted auditingstandards and were not conducted on all Level III investments. We are responsible for determining the fair value of investments in good faith, and the limitedprocedures performed by an independent valuation firm are supplementary to the inquiries and procedures that we are required to undertake to determine the fairvalue of the commensurate investments.As described above, Level II and Level III investments were valued using internal models with significant unobservable inputs and our determinations of thefair values of these investments may differ materially from the values that would have resulted if readily observable inputs had existed. Additional external factorsmay cause those values, and the values of investments for which readily observable inputs exist, to increase or decrease over time, which may create volatility inour earnings and the amounts of assets and stockholders' equity that we report from time to time.Changes in the fair value of investments impacts the amount of carried interest that is recognized as well as the amount of investment income that isrecognized for investments held directly and through our consolidated funds as described below. We estimate that an immediate 10% decrease in the fair value ofinvestments held directly and through consolidated investment funds generally would result in a commensurate change in the amount of net gains (losses) frominvestment activities for investments held directly and through investment funds and a more significant impact to the amount of carried interest recognized,regardless of whether the investment was valued using observable market prices or management estimates with significant unobservable pricing inputs. Withrespect to consolidated investment funds, the impact that the consequential decrease in investment income would have on net income attributable to KKR wouldgenerally be significantly less than the amount described above, given that a majority of the change in fair value of our consolidated funds would be attributable tononcontrolling interests and therefore we are only impacted to the extent of our carried interest and our balance sheet investments.As of December 31, 2019, there were no investments which represented greater than 5% of total investments on a GAAP basis. On a non-GAAP basis, as ofDecember 31, 2019, investments which represented greater than 5% of total non-GAAP investments consisted of Fiserv, Inc. and USI, Inc. valued at $1,837.7million and $800.2 million, respectively. Our investment income on a GAAP basis and our book value can be impacted by volatility in the public markets related toour holdings of publicly traded securities, including our sizable holdings of Fiserv, Inc. See "—Business Environment" for a discussion on the impact of globalequity markets on our financial condition and "—Non-GAAP Balance Sheet Measures" for additional information regarding our largest holdings on a non-GAAPbasis.Recognition of Investment IncomeInvestment income consists primarily of the net impact of: (i) realized and unrealized gains and losses on investments; (ii) dividends; (iii) interest income;(iv) interest expense and (v) foreign exchange gains and losses relating to mark-to-market activity on foreign exchange forward contracts, foreign currency options,foreign denominated debt and debt securities issued by consolidated CFEs.Certain of our investment funds are consolidated. When a fund is consolidated, the portion of our funds' investment income that is allocable to our carriedinterests and capital investments is not shown in the consolidated statements of operations. For funds that are consolidated, all investment income (loss), includingthe portion of a funds' investment income (loss) that is allocable to KKR's carried interest, is included in investment income (loss) on the consolidated statements ofoperations. The carried interest that KKR retains in net income (loss) attributable to KKR & Co. Inc. is reflected as an adjustment to net income (loss) attributableto noncontrolling interests. However, because certain of our funds remain consolidated and because we hold a minority economic interest in these funds'investments, our share of the investment income is less than the total amount of investment income presented in the consolidated statements of operations for theseconsolidated funds.Recognition of Carried Interest in the Statement of OperationsCarried interest entitles the general partner of a fund to a greater allocable share of the fund's earnings from investments relative to the capital contributed bythe general partner and correspondingly reduces noncontrolling interests' attributable share136Table of Contentsof those earnings. Carried interest is earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable,preferred return thresholds have been met. If these investment returns decrease or turn negative in subsequent periods, recognized carried interest will be reversedand reflected as losses in the statement of operations. For funds that are not consolidated, amounts earned pursuant to carried interest are included in capitalallocation-based income in the consolidated statements of operations. Amounts earned pursuant to carried interest at consolidated funds are eliminated from feesand other upon consolidation of the fund and are included as investment income (loss) in net gains (losses) from investment activities along with all of the otherinvestment gains and losses at the consolidated fund.Carried interest is recognized in the statement of operations based on the contractual conditions set forth in the agreements governing the fund as if the fundwere terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Due to the extended durations of ourprivate equity funds, we believe that this approach results in income recognition that best reflects our periodic performance in the management of those funds.Amounts earned pursuant to carried interest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and whereapplicable, preferred return thresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carriedinterest will be reversed and to the extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed theamount to which the general partner was ultimately entitled, a clawback obligation would be recorded. For funds that are not consolidated, this clawbackobligation, if any, is reflected as a reduction of our investment balance as this is where carried interest is initially recorded. For funds that are consolidated, thisclawback obligation, if any, is reflected as an increase in noncontrolling interests in the consolidated statements of financial condition.Prior to 2012, most of our historical private equity funds that provide for carried interest do not have a preferred return. For these funds, the managementcompany is required to refund up to 20% of any management fees earned from its limited partners in the event that the fund recognizes carried interest. At suchtime as the fund recognizes carried interest in an amount sufficient to cover 20% of the management fees earned or a portion thereof, a liability due to the fund'slimited partners is recorded and revenue is reduced for the amount of the carried interest recognized, not to exceed 20% of the management fees earned. Therefunds to the limited partners are paid, and liabilities relieved, at such time that the underlying investment is sold and the associated carried interest is realized. Inthe event that a fund's carried interest is not sufficient to cover all or a portion of the amount that represents 20% of the earned management fees, such managementfees would be retained and not returned to the funds' limited partners.Most of our investment funds that provide for carried interest and were launched after 2012, however, have a preferred return. In this case, the managementcompany does not refund the management fees earned from the limited partners of the fund as described above. Instead, the management fee is effectively returnedto the limited partners through a reduction of the realized gain on which carried interest is calculated. To calculate the carried interest, KKR calculates whether apreferred return has been achieved based on an amount that includes all of the management fees paid by the limited partners as well as the other capitalcontributions and expenses paid by them to date. To the extent the fund has exceeded the preferred return at the time of a realization event, and subject to any otherconditions for the payment of carried interest like netting holes, carried interest is distributed to the general partner. Until the preferred return is achieved, nocarried interest is recorded. Thereafter, the general partner is entitled to a catch up allocation such that the general partner's carried interest is paid in respect of allof the fund's net gains, including the net gains used to pay the preferred return, until the general partner has received the full percentage amount of carried interestthat the general partner is entitled to under the terms of the fund. In general, investment funds that entitle the management company to receive an incentive fee havea preferred return and are calculated on a similar basis that takes into account management fees paid.Recently Issued Accounting PronouncementsFor a full discussion of recently issued accounting pronouncements, see Item 8. Financial Statements and Supplementary Data—Note 2 "Summary ofSignificant Accounting Policies."137Table of ContentsITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our exposure to market risks primarily relates to movements in the fair value of investments, including the effect that those movements have on ourmanagement fees, carried interest, and net gains from investment activities. The fair value of investments may fluctuate in response to changes in the values ofinvestments, foreign currency exchange rates, and interest rates. Additionally, interest rate movements can adversely impact the amount of interest income wereceive on credit instruments bearing variable rates and could also impact the amount of interest that we pay on debt obligations bearing variable rates.The quantitative information provided in this section was prepared using estimates and assumptions that management believes are appropriate in order toprovide a reader with an indication of the directional impact that a hypothetical adverse movement in certain risks would have on net income attributable to KKR &Co. Inc. In all cases, these directional impacts are presented after deducting amounts that are attributable to noncontrolling interests held by KKR Holdings. As ofDecember 31, 2019, KKR & Co. Inc. and KKR Holdings held interests in our business of 65.9% and 34.1%, respectively. The actual impact of a hypotheticaladverse movement in these risks could be materially different from the amounts shown below.The firm uses various committees to help manage market risk and general business risks.Management of Market RiskWhen we commit capital of a certain amount from our balance sheet to investments or transactions, a balance sheet committee of senior employees, includingour two Co-Chief Executive Officers, a Co-President/Co-Chief Operating Officer, and the Chief Financial Officer, must approve the investment or transactionbefore it may be made. The committee may delegate authority to other employees subject to maximum commitment sizes or other limitations determined by thecommittee. In addition, this committee supervises activities governing KKR's capital structure, liquidity, and the composition of our balance sheet.Certain securities transactions by our capital markets business are subject to risk tolerance limits, regulatory capital requirements, and the review and approvalof one or more committees in compliance with rules applicable to broker-dealers pursuant to the Exchange Act. When our capital is committed to capital marketstransactions after diligence is conducted, such transactions are subject to the review and approval of a capital markets underwriting committee. These transactionsare also subject to risk tolerance limits. The risk tolerance limits establish the level of investment we may make in a single company or type of transaction, forexample, and are designed to avoid undue concentration and risk exposure. Regulatory capital requirements also place limits on the size of securities underwritingsthe capital markets business can conduct based on quantitative measure of assets, liabilities, and certain off-balance-sheet items. Aggregate balance sheet risk andcapital deployed for transactions are monitored on an ongoing basis by the balance sheet committee referenced above.With respect to the funds and other investment vehicles through which we make investments for our fund investors, KKR manages risk by subjectingtransactions to the review and approval of an applicable investment committee or portfolio manager; a portfolio management committee (or other designated senioremployees) then regularly monitors these investments. Before making an investment, investment professionals identify risks in due diligence, evaluating, amongother things, business, financial, legal and regulatory issues, financial data, and other information relevant to a particular investment. An investment team presentsthe investment and its identified risks to an investment committee or a portfolio manager, which must approve each investment before it may be made. If aninvestment is made, a portfolio management committee (or other designated senior employees) is responsible for working with our investment professionals tomonitor the investment on an ongoing basis.Management of General Business RiskKKR has an investment management and distribution committee comprised of senior employees across our business lines, and includes our Co-Presidents/Co-Chief Operating Officers and Chief Financial Officer. The investment management and distribution committee focuses on coordinating investment and distributionactivities across the firm. KKR has a risk and operations committee comprised of senior employees from across our business operations, and includes our Co-Presidents/Co-Chief Operating Officers, Chief Financial Officer, General Counsel, and Chief Compliance Officer. The risk and operations committee focuses onKKR's operations and enterprise risk management.KKR's global conflicts and compliance committee is responsible for analyzing and addressing new or potential conflicts of interest that may arise in KKR'sbusiness, including conflicts relating to specific transactions as well as potential conflicts involving the overall activities of KKR and its various businesses. Thiscommittee also reviews and monitors certain138Table of Contentscompliance matters. Our Chief Financial Officer, General Counsel, and Chief Compliance Officer are included as members of this committee.Changes in Fair ValueThe majority of our investments are reported at fair value. Net changes in the fair value of investments impact the net gains (losses) from investment activitiesin our consolidated statements of operations. Based on investments held as of December 31, 2019, we estimate that an immediate 10% decrease in the fair value ofinvestments generally would result in a commensurate change in the amount of net gains (losses) from investment activities (except that carried interest wouldlikely be more significantly impacted), regardless of whether the investment was valued using observable market prices or management estimates with significantunobservable pricing inputs. The impact that the consequential decrease in investment income would have on net income attributable to KKR & Co. Inc. wouldgenerally be significantly less than the amount described above, given that a significant portion of the change in fair value would be attributable to noncontrollinginterests and therefore we are only impacted to the extent of our carried interest and our balance sheet investments and to a lesser extent our management fees.Because of this, the quantitative information that follows represents the impact that a reduction to each of the income streams shown below would have on netincome attributable to KKR & Co. Inc. before income taxes. The actual impact to individual line items within the consolidated statements of operations woulddiffer from the amounts shown below as a result of (i) the inclusion of amounts attributable to KKR Holdings in individual line items within the consolidatedstatement of operations, (ii) the elimination of management fees and carried interest as a result of the consolidation of certain investment funds and CFEs, and (iii)the gross-up of net gains (losses) from investment activities, in each case as a result of the consolidation of certain investment funds and CFEs.Based on the fair value of investments as of December 31, 2019, we estimate that an immediate, hypothetical 10% decline in the fair value of investmentswould result in declines in net income attributable to KKR & Co. Inc. before income taxes in 2020 from reductions in the following items, if not offset by otherfactors: Management FeesCarried Interest, Net of CarryPool AllocationNet Gains/(Losses) FromInvestment Activities IncludingGeneral Partner CapitalInterest ($ in thousands)10% Decline in Fair Value of Investments (1)$20,399(2)$399,043(3)$858,439(3)(1)An immediate, hypothetical 10% decline in the fair value of investments would also impact our ability to earn incentive fees. Since the majority of our incentive fees are earned atDecember 31st or September 30th of each calendar year and are not subject to clawback, a 10% decline in fair value would generally result in the recognition of no incentive fees on aprospective basis and result in lower net income relative to prior years where such incentive fees may have been earned.(2)Represents an annualized reduction in management fees.(3)Decrease would impact our statement of operations in a single quarter. With respect to carried interest, for purposes of this analysis the impact of preferred returns are ignored.Management FeesOur management fees in our Private Markets business line are generally calculated based on the amount of capital committed or invested by a fund, asdescribed under "Business—Our Business Lines—Private Markets." Accordingly, movements in the fair value of investments do not significantly affect theamount of fees we may charge in Private Markets funds. Management fees in our infrastructure funds are calculated based on NAV of the fund and, in some cases,we additionally earn management fees on the fund's remaining commitment.In the case of our Public Markets business line, management fees are often calculated based on the average NAV of the fund for that particular period,although certain funds in our Public Markets business line have management fees based on the amount of capital invested. In the case of our CLO vehicles,management fees are calculated based on the collateral of the vehicle. The collateral is based on the par value of the investments and cash on hand.To the extent that management fees are calculated based on the NAV of the fund's investments, the amount of fees that we may charge will increase ordecrease in direct proportion to the effect of changes in the fair value of the fund's investments. The proportion of our management fees that are based on NAVdepends on the number and type of funds in existence. For the year ended December 31, 2019, the fund management fees that were recognized based on the NAVof the applicable funds was approximately 25%.139Table of ContentsPublicly Traded SecuritiesOur investment funds and KKR's balance sheet hold certain investments in portfolio companies whose securities are publicly traded. The market prices ofsecurities may be volatile and are likely to fluctuate due to a number of factors beyond our control. These factors include actual or anticipated fluctuations in thequarterly and annual results of such companies or of other companies in the industries in which they operate, market perceptions concerning the availability ofadditional securities for sale, general economic, social or political developments, industry conditions, changes in government regulation, shortfalls in operatingresults from levels forecasted by securities analysts, the general state of the securities markets and other material events, such as significant management changes,re-financings, acquisitions, and dispositions. In addition, although a substantial portion of our investments are comprised of investments in portfolio companieswhose securities are not publicly traded, the value of these privately held investments may also fluctuate as our Level III investments are valued in part using amarket comparables analysis. Consequently, due to similar factors beyond our control as described above for portfolio companies whose securities are publiclytraded, the value of these Level III investments may fluctuate with market prices. See "Management's Discussion and Analysis of Financial Condition and Resultsof Operations—Business Environment."Exchange Rate RiskOur investment funds, CLO vehicles, and KKR's balance sheet hold investments denominated in currencies other than the U.S. dollar. Those investmentsexpose us and our fund investors to the risk that the value of the investments will be affected by changes in exchange rates between the currency in which theinvestments are denominated and the currency in which the investments are made. Additionally, a portion of our management fees are denominated in non-U.S.dollar currencies. Our policy is to reduce these risks by employing hedging techniques, including using foreign currency options and foreign exchange forwardcontracts to reduce exposure to future changes in exchange rates when a meaningful amount of capital has been invested in currencies other than the currencies inwhich the investments are denominated.Our primary exposure to exchange rate risk relates to movements in the value of exchange rates between the U.S. dollar and other currencies in which ourinvestments are denominated (including euros, British pounds, Japanese yen, among others), net of the impact of foreign exchange hedging strategies. Thequantitative information that follows represents the impact that a reduction to each of the income streams shown below would have on net income attributable toKKR & Co. Inc. before income taxes. The actual impact to individual line items within the statements of operations would differ from the amounts shown below asa result of (i) the inclusion of amounts attributable to KKR Holdings in individual line items within the consolidated statement of operations, (ii) the elimination ofcarried interest as a result of the consolidation of certain investment funds, and (iii) the gross-up of net gains (losses) from investment activities, in each case as aresult of the consolidation of certain investment funds and CLO vehicles.We estimate that an immediate, hypothetical 10% decline in the exchange rates between the U.S. dollar and all of the major foreign currencies in which ourinvestments were denominated as of December 31, 2019 (i.e. an increase in the value of the U.S. dollar against these foreign currencies) would result in declines innet income attributable to KKR & Co. Inc. before income taxes in 2020 from reductions in the following items, net of the impact of foreign exchange hedgingstrategies, if not offset by other factors: Carried Interest, Net of CarryPool AllocationNet Gains/(Losses) FromInvestment Activities IncludingGeneral Partner Capital Interest ($ in thousands)10% Decline in Foreign Currencies Against the U.S. Dollar (1) $66,688(2)$102,098(2)(1)An immediate, hypothetical 10% decline in exchange rates between the U.S. dollar and all of the major foreign currencies in which our investments were denominated would onlymarginally impact our ability to earn incentive fees since the majority of our funds in which we are entitled to earn incentive fees are denominated in U.S. dollars. Additionally, the impacton our management fees that are denominated in non-U.S. dollar currencies considering the impact of foreign exchange hedging strategies employed would not be expected to be material.(2)Decrease would impact our statement of operations in a single quarter. With respect to carried interest, for purposes of this analysis the impact of preferred returns are ignored.140Table of ContentsInterest Rate RiskValuation of InvestmentsChanges in credit markets and in particular, interest rates, can impact investment valuations, particularly our Level III investments, and may have offsettingresults depending on the valuation methodology used. For example, we typically use a discounted cash flow analysis as one of the methodologies to ascertain thefair value of our investments that do not have readily observable market prices. If applicable interest rates rise, then the assumed cost of capital for those portfoliocompanies would be expected to increase under the discounted cash flow analysis, and this effect would negatively impact their valuations if not offset by otherfactors. Conversely, a fall in interest rates can positively impact valuations of certain portfolio companies if not offset by other factors. These impacts could besubstantial depending upon the magnitude of the change in interest rates. In certain cases, the valuations obtained from the discounted cash flow analysis and theother primary methodology we use, the market multiples approach, may yield different and offsetting results. For example, the positive impact of falling interestrates on discounted cash flow valuations may offset the negative impact of the market multiples valuation approach and may result in less of a decline in value thanfor those investments that had a readily observable market price. Finally, low interest rates related to monetary stimulus and economic stagnation may alsonegatively impact expected returns on all investments, as the demand for relatively higher return assets increases and supply decreases.Interest IncomeWe and certain consolidated funds, including CLOs, hold credit investments that generate interest income based on variable interest rates. We are exposed tointerest rate risk relating to investments that generate yield since a meaningful portion of credit investments held by us and our consolidated funds, including CLOs,earn income based on variable interest rates. However, the contractual interest rate structure for a large portion of our credit investments bearing variable rates have"floors," which establish a minimum rate of interest that will be earned. In the current low interest rate environment, a large portion of the credit investments heldby us and our consolidated funds, including CLOs, are earning interest marginally above the contractual floor and therefore, for these investments, a decrease invariable interest rates would not materially impact the amount of interest income earned. The impact on net income attributable to KKR & Co. Inc. resulting from adecrease of a hypothetical 100 basis points in variable interest rates used in the recognition of interest income would not be expected to be material since (i) manyvariable rate credit investments are subject to floors as described above and (ii) a substantial portion of this decrease would be attributable to noncontrollinginterests.Interest ExpenseWe and certain consolidated funds, including CLOs, have debt obligations that include revolving credit agreements, certain investment financing arrangementsand debt securities issued by CLO vehicles that accrue interest at variable rates. Changes in these rates would affect the amount of interest payments that ourconsolidated funds, including CLOs, would have to make. With respect to consolidated funds and CLOs, the impact on net income attributable to KKR & Co. Inc.resulting from an increase of a hypothetical 100 basis points in variable interest rates used in the recognition of interest expense would not be expected to bematerial since a substantial portion of this increase would be attributable to noncontrolling interests. With respect to debt obligations held by KKR and not in theconsolidated funds or CLOs, as of December 31, 2019, KKR had debt obligations outstanding with an aggregate principal amount of approximately $258.5 millionthat accrues interest at a variable rate. Our policy is to reduce these risks by employing hedging techniques, including using interest rate swaps. The impact on netincome attributable to KKR & Co. Inc. resulting from an increase of a hypothetical 100 basis points in variable interest rates used in the recognition of interestexpense, net of the impact of interest rate hedging strategies, would not be expected to be material.Credit RiskWe are party to agreements providing for various financial services and transactions that contain an element of risk in the event that the counterparties areunable to meet the terms of such agreements. In these agreements, we depend on these counterparties to make payment or otherwise perform. We generallyendeavor to reduce our risk of exposure by limiting the counterparties with which we enter into financial transactions to reputable financial institutions. In addition,availability of financing from financial institutions may be uncertain due to market events, and we may not be able to access these financing markets.141Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAINDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm143Consolidated Statements of Financial Condition as of December 31, 2019 and 2018145Consolidated Statements of Operations for the Years Ended December 31, 2019, 2018 and 2017147Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2019, 2018 and 2017148Consolidated Statements of Changes in Equity for the Years Ended December 31, 2019, 2018 and 2017149Consolidated Statements of Cash Flows for the Years Ended December 31, 2019, 2018 and 2017152Notes to Consolidated Financial Statements154142Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors of KKR & Co. Inc.:Opinions on the Financial Statements and Internal Control over Financial ReportingWe have audited the accompanying consolidated statement of financial condition of KKR & Co. Inc. and its subsidiaries (the “Company”) as of December 31,2019 and 2018, and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the three years inthe period ended December 31, 2019, and the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the“financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2019, based on criteria established inInternal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accountingprinciples generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control overfinancial reporting as of December 31, 2019, based on criteria established in Internal Control-Integrated Framework (2013) issued by COSO.Basis for OpinionsThe Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessmentof the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on ouraudits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to beindependent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control overfinancial reporting was maintained in all material respects.Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erroror fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuresin the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluatingthe overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal controlover financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal controlbased on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our auditsprovide a reasonable basis for our opinions.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financialreporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 compliance withthe policies or procedures may deteriorate.143Table of ContentsCritical Audit MatterThe critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to becommunicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especiallychallenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, takenas a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts ordisclosures to which it relates.Fair Value-Level III Investments-Refer to Notes 2, 4, and 5 to the financial statementsCritical Audit Matter DescriptionThe Company and the funds it sponsors and manages have investments reported at fair value. The fair values of certain investments are determined based onunobservable pricing inputs (“Level III Investments”). These investments have limited observable market activity and the inputs used in the determination of fairvalue require significant management judgment or estimation.In addition, the Company recognizes carried interest from investment funds based on cumulative fund performance to date. At the end of each reporting period, theCompany calculates the carried interest that would be due to the Company for each investment fund, pursuant to the fund agreements. Certain of the funds’investments contain unobservable inputs that are classified as Level III in the fair value hierarchy. The change in the fair value of the underlying Level IIIInvestments held by the funds is a significant input into the determination of carried interest for each reporting period. As the fair value of underlying investmentsvaries between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest. Accrued but unpaid carried interest as of the reportingdate is reflected in investments in the consolidated statements of financial condition.We identified the Level III Investments as a critical audit matter because of the unobservable pricing inputs management used to estimate fair value, and changes inthe fair value of these investments directly impacts the amount of unrealized carried interest the Company accrues for the period as well as unrealized investmentincome recorded during the period.Performing audit procedures to evaluate the appropriateness of these inputs required a high degree of auditor judgment and an increased extent of effort, includingthe need to involve our fair value specialists who possess significant investment valuation expertise.How the Critical Audit Matter Was Addressed in the AuditOur audit procedures related to the unobservable pricing inputs used by management to estimate the fair values of Level III Investments included the following,among others:•We involved more senior, more experienced audit team members to perform audit procedures.•We tested the design, implementation, and operating effectiveness of controls over the determination of the fair value of Level III Investments.•With the assistance of fair value specialists, we evaluated management’s process for Level III valuation, including their determination of the unobservablepricing inputs used to estimate fair value.•We assessed the consistency by which management applied its process.•We evaluated the Company’s historical ability to accurately estimate fair value of Level III Investments by comparing previous estimates of fair value tomarket transactions, subsequent to December 31, 2019, where appropriate./s/ Deloitte & Touche LLPNew York, New YorkFebruary 14, 2020We have served as the Company's auditor since 2006.144Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(Amounts in Thousands, Except Share and Per Share Data) December 31, 2019 December 31, 2018Assets Cash and Cash Equivalents$2,346,713 $1,751,287Cash and Cash Equivalents Held at Consolidated Entities816,441 693,860Restricted Cash and Cash Equivalents74,262 196,365Investments54,936,268 44,907,982Due from Affiliates717,399 657,189Other Assets2,008,236 2,536,692Total Assets$60,899,319 $50,743,375 Liabilities and Equity Debt Obligations$27,013,284 $22,341,192Due to Affiliates286,098 275,584Accounts Payable, Accrued Expenses and Other Liabilities3,097,563 2,743,990Total Liabilities30,396,945 25,360,766 Commitments and Contingencies Redeemable Noncontrolling Interests— 1,122,641 Stockholders' Equity Series A and B Preferred Stock, $0.01 par value. 13,800,000 and 6,200,000 shares, respectively, issued andoutstanding as of December 31, 2019 and 2018.482,554 482,554Class A Common Stock, $0.01 par value. 3,500,000,000 shares authorized, 560,007,579 and 534,857,237shares, issued and outstanding as of December 31, 2019 and 2018, respectively.5,600 5,349Class B Common Stock, $0.01 par value. 1 share authorized, 1 share issued and outstanding as ofDecember 31, 2019 and 2018.— —Class C Common Stock, $0.01 par value. 499,999,999 shares authorized, 290,381,345 and 299,081,239shares, issued and outstanding as of December 31, 2019 and 2018, respectively.2,904 2,991Additional Paid-In Capital8,565,919 8,106,408Retained Earnings1,792,152 91,953Accumulated Other Comprehensive Income (Loss)(41,639) (39,645)Total KKR & Co. Inc. Stockholders' Equity10,807,490 8,649,610Noncontrolling Interests19,694,884 15,610,358Total Equity30,502,374 24,259,968Total Liabilities and Equity$60,899,319 $50,743,375See notes to financial statements.145Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Continued)(Amounts in Thousands) The following presents the portion of the consolidated balances presented in the consolidated statements of financial condition attributable to consolidatedvariable interest entities ("VIEs"). KKR's consolidated VIEs consist primarily of (i) certain collateralized financing entities ("CFEs") holding collateralized loanobligations ("CLOs") and commercial real estate mortgage-backed securities ("CMBS") and (ii) certain investment funds. With respect to consolidated VIEs, thefollowing assets may only be used to settle obligations of these consolidated VIEs and the following liabilities are only the obligations of these consolidated VIEs.The noteholders, limited partners and other creditors of these VIEs have no recourse to KKR's general assets. Additionally, KKR has no right to the benefits from,nor does KKR bear the risks associated with, the assets held by these VIEs beyond KKR's beneficial interest therein and any income generated from the VIEs.There are neither explicit arrangements nor does KKR hold implicit variable interests that would require KKR to provide any material ongoing financial support tothe consolidated VIEs, beyond amounts previously committed, if any. December 31, 2019 Consolidated CFEs Consolidated KKRFunds and OtherEntities TotalAssets Cash and Cash Equivalents Held at Consolidated Entities$634,029 $112,122 $746,151Restricted Cash and Cash Equivalents— 34,849 34,849Investments14,948,237 20,851,587 35,799,824Due from Affiliates— 9,678 9,678Other Assets100,221 178,892 279,113Total Assets$15,682,487 $21,187,128 $36,869,615 Liabilities Debt Obligations$14,658,137 $2,481,937 $17,140,074Accounts Payable, Accrued Expenses and Other Liabilities513,057 109,575 622,632Total Liabilities$15,171,194 $2,591,512 $17,762,706 December 31, 2018 Consolidated CFEs Consolidated KKRFunds and OtherEntities TotalAssets Cash and Cash Equivalents Held at Consolidated Entities$428,850 $176,264 $605,114Restricted Cash and Cash Equivalents— 174,057 174,057Investments14,733,423 15,585,629 30,319,052Due from Affiliates— 11,832 11,832Other Assets148,221 223,054 371,275Total Assets$15,310,494 $16,170,836 $31,481,330 Liabilities Debt Obligations$13,958,554 $1,392,987 $15,351,541Accounts Payable, Accrued Expenses and Other Liabilities579,408 126,333 705,741Total Liabilities$14,537,962 $1,519,320 $16,057,282See notes to financial statements.146Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in Thousands, Except Share and Per Share Data) For the Years Ended December 31, 2019 2018 2017Revenues Fees and Other$1,790,475 $1,841,326 $1,541,604Capital Allocation-Based Income2,430,425 554,510 2,015,676Total Revenues4,220,900 2,395,836 3,557,280 Expenses Compensation and Benefits2,116,890 1,374,363 1,695,490Occupancy and Related Charges62,728 59,706 58,722General, Administrative and Other728,813 655,408 582,480Total Expenses2,908,431 2,089,477 2,336,692 Investment Income (Loss) Net Gains (Losses) from Investment Activities3,161,884 1,254,832 928,144Dividend Income318,972 175,154 202,115Interest Income1,418,516 1,396,532 1,242,419Interest Expense(1,043,551) (876,029) (808,898)Total Investment Income (Loss)3,855,821 1,950,489 1,563,780 Income (Loss) Before Taxes5,168,290 2,256,848 2,784,368 Income Tax Expense (Benefit)528,750 (194,098) 224,326 Net Income (Loss)4,639,540 2,450,946 2,560,042Net Income (Loss) Attributable to Redeemable Noncontrolling Interests— (37,352) 73,972Net Income (Loss) Attributable to Noncontrolling Interests2,634,491 1,357,235 1,467,765Net Income (Loss) Attributable to KKR & Co. Inc.2,005,049 1,131,063 1,018,305 Series A Preferred Stock Dividends23,288 23,288 23,288Series B Preferred Stock Dividends10,076 10,076 10,076 Net Income (Loss) Attributable to KKR & Co. Inc.Class A Common Stockholders$1,971,685 $1,097,699 $984,941 Net Income (Loss) Attributable to KKR & Co. Inc.Per Share of Class A Common Stock Basic$3.62 $2.14 $2.10Diluted$3.54 $2.06 $1.95Weighted Average Shares of Class A Common Stock Outstanding Basic545,096,999 514,102,571 468,282,642Diluted557,687,512 533,707,039 506,288,971See notes to financial statements.147Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(Amounts in Thousands) For the Years Ended December 31, 2019 2018 2017Net Income (Loss)$4,639,540 $2,450,946 $2,560,042 Other Comprehensive Income (Loss), Net of Tax: Foreign Currency Translation Adjustments(3,398) (48,764) 54,654 Comprehensive Income (Loss)4,636,142 2,402,182 2,614,696 Comprehensive Income (Loss)Attributable to Redeemable Noncontrolling Interests— (37,352) 73,972Comprehensive Income (Loss)Attributable to Noncontrolling Interests2,632,151 1,326,164 1,498,861 Comprehensive Income (Loss)Attributable to KKR & Co. Inc.$2,003,991 $1,113,370 $1,041,863 See notes to financial statements.148Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY(Amounts in Thousands, Except Share and Per Share Data)The statements below for the year ended December 31, 2017 and the six months ended June 30, 2018 represent KKR & Co. Inc. as a partnership prior to theConversion: KKR & Co. L.P. Common UnitsCapital - Common UnitholdersAccumulated Other Comprehensive Income (Loss)Total Capital - Common UnitsCapital - Series A Preferred UnitsCapital - Series B Preferred Units Noncontrolling Interests Total Equity Redeemable Noncontrolling InterestsBalance at January 1, 2017452,380,335$5,506,375$(49,096)$5,457,279$332,988$149,566 $10,545,902 $16,485,735 $632,348Net Income (Loss) 984,941 984,94123,28810,076 1,467,765 2,486,070 73,972Other Comprehensive Income (Loss)- ForeignCurrency Translation (Net of Tax) 23,55823,558 31,096 54,654 Changes in Consolidation — (1,682) (1,682) (315,057)Transfer of interest under common control andOther (see Note 15 "Equity") 16,1397,35923,498 (23,498) — Exchange of KKR Holdings L.P. Units and OtherSecurities to KKR & Co. L.P. Common Units20,086,963291,040(1,979)289,061 (289,061) — Tax Effects Resulting from Exchange of KKRHoldings L.P. Units and Other (3,469)677(2,792) (2,792) Net Delivery of Common Units - EquityIncentive Plans8,979,472(58,679) (58,679) (58,679) Equity-Based and Other Non-Cash Compensation 204,308 204,308 141,727 346,035 Common Units Issued in Connection with thePurchase of an Investment4,727,96694,181 94,181 94,181 Capital Contributions — 3,119,917 3,119,917 220,167Capital Distributions (1) (311,973) (311,973)(23,288)(10,076) (2,125,842) (2,471,179) (890)Balance at December 31, 2017486,174,736$6,722,863$(19,481)$6,703,382$332,988$149,566 $12,866,324 $20,052,260 $610,540Net Income (Loss) 850,483 850,48311,6445,038 1,294,467 2,161,632 7,658Other Comprehensive Income (Loss)- ForeignCurrency Translation (Net of Tax) (9,237)(9,237) (14,676) (23,913) Changes in Consolidation — 370,307 370,307 Exchange of KKR Holdings L.P. Units andOther Securities to KKR & Co. L.P. CommonUnits32,722,098507,470(1,998)505,472 (505,472) — Tax Effects Resulting from Exchange of KKRHoldings L.P. Units and Other 6,448176,465 6,465 Net Delivery of Common Units - EquityIncentive Plans7,652,340(53,439) (53,439) (53,439) Equity-Based and Other Non-CashCompensation 125,994 125,994 61,942 187,936 Unit Repurchases(2,207,300)(52,212) (52,212) (52,212) Capital Contributions — 2,410,722 2,410,722 349,451Capital Distributions (2) (167,078) (167,078)(11,644)(5,038) (1,550,955) (1,734,715) (5,502)Balance at June 30, 2018524,341,874$7,940,529$(30,699)$7,909,830$332,988$149,566 $14,932,659 $23,325,043 $962,147(1)$0.67 per common unit, $1.687500 per Series A preferred unit, and $1.625000 per Series B preferred unit.(2)$0.34 per common unit, $0.843750 per Series A preferred unit, and $0.812500 per Series B preferred unit.See notes to financial statements.149Table of ContentsKKR & CO. INC. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued) (Amounts in Thousands, Except Share and Per Share Data)The statement below represents KKR & Co. Inc. as a corporation subsequent to the Conversion for the six months ended December 31, 2018: Six Months Ended December 31, 2018 Amounts SharesKKR & Co. L.P. Partners' Capital - Common Unitholders Beginning of Period$7,940,529 524,341,874Reclassifications resulting from the Conversion(7,940,529) (524,341,874)End of Period— —Preferred Units Beginning of Period482,554 20,000,000Reclassifications resulting from the Conversion(482,554) (20,000,000)End of Period— —Preferred Stock Beginning of Period— —Reclassifications resulting from the Conversion482,554 20,000,000End of Period482,554 20,000,000Class A Common Stock Beginning of Period— —Reclassifications resulting from the Conversion5,243 524,341,874Exchange of KKR Holdings Units65 6,428,323Net Delivery of Class A Common Stock42 4,181,402Repurchases of Class A Common Stock(53) (5,333,251) Class A Common Stock Issued in Connection with the Purchase of an Investment52 5,238,889End of Period5,349 534,857,237Class B Common Stock Beginning of Period— —Issuance of Class B Common Stock resulting from the Conversion— 1End of Period— 1Class C Common Stock Beginning of Period— —Issuance of Class C Common Stock resulting from the Conversion3,041 304,107,762Cancellation of Class C Common Stock(50) (5,026,523)End of Period2,991 299,081,239Additional Paid-In Capital Beginning of Period— Reclassifications resulting from the Conversion7,932,245 Exchange of KKR Holdings Units114,958 Tax Effects Resulting from Exchange of KKR Holdings Units and Other(11,359) Net Delivery of Class A Common Stock(45,399) Repurchases of Class A Common Stock(120,877) Equity-Based Compensation116,817 Equity Issued in Connection with the Purchase of an Investment120,023 End of Period8,106,408 Retained Earnings Beginning of Period— Net Income (Loss) Attributable to KKR & Co. Inc.263,898 Series A Preferred Stock Dividends ($0.843750 per share)(11,644) Series B Preferred Stock Dividends ($0.812500 per share)(5,038) Common Stock Dividends ($0.295 per share)(155,263) End of Period91,953 Accumulated Other Comprehensive Income (Loss) (net of tax) Beginning of Period(30,699) Foreign Currency Translation(8,395) Exchange of KKR Holdings Units(551) End of Period(39,645) Total KKR & Co. Inc. Stockholders' Equity8,649,610 Noncontrolling Interests (See Note 15 "Equity")15,610,358 Total Equity$24,259,968 See notes to financial statements.150Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)(Amounts in Thousands, Except Share and Per Share Data)The statement below represents KKR & Co. Inc. for the year ended December 31, 2019: Year Ended December 31, 2019 Amounts SharesPreferred Stock Beginning of Period$482,554 20,000,000End of Period482,554 20,000,000Class A Common Stock Beginning of Period5,349 534,857,237Exchange of KKR Holdings Units87 8,699,894Net Delivery of Class A Common Stock101 10,135,649Repurchases of Class A Common Stock(29) (2,859,452)Class A Common Stock Issued in Connection with the Purchase of Investments92 9,174,251End of Period5,600 560,007,579Class B Common Stock Beginning of Period— 1End of Period— 1Class C Common Stock Beginning of Period2,991 299,081,239Cancellation of Class C Common Stock(87) (8,699,894)End of Period2,904 290,381,345Additional Paid-In Capital Beginning of Period8,106,408 Exchange of KKR Holdings Units162,761 Tax Effects Resulting from Exchange of KKR Holdings Units and Other4,190 Net Delivery of Class A Common Stock(91,067) Repurchases of Class A Common Stock(72,095) Equity-Based Compensation207,789 Class A Common Stock Issued in Connection with the Purchase of Investments247,933 End of Period8,565,919 Retained Earnings Beginning of Period91,953 Net Income (Loss) Attributable to KKR & Co. Inc.2,005,049 Series A Preferred Stock Dividends ($1.687500 per share)(23,288) Series B Preferred Stock Dividends ($1.625000 per share)(10,076) Common Stock Dividends ($0.50 per share)(271,486) End of Period1,792,152 Accumulated Other Comprehensive Income (Loss) (net of tax) Beginning of Period(39,645) Foreign Currency Translation(1,058) Exchange of KKR Holdings Units(936) End of Period(41,639) Total KKR & Co. Inc. Stockholders' Equity10,807,490 Noncontrolling Interests (See Note 15 "Equity")19,694,884 Total Equity$30,502,374 See notes to financial statements.151Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in Thousands) For the Years Ended December 31, 2019 2018 2017Operating Activities Net Income (Loss)$4,639,540 $2,450,946 $2,560,042Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by OperatingActivities: Equity-Based and Other Non-Cash Compensation297,708 331,708 334,820Net Realized (Gains) Losses on Investments(497,346) (534,652) (38,316)Change in Unrealized (Gains) Losses on Investments(2,664,538) (720,180) (889,828)Capital Allocation-Based Income(2,430,425) (554,510) (2,015,676)Other Non-Cash Amounts(45,250) (23,211) (51,129)Cash Flows Due to Changes in Operating Assets and Liabilities: Change in Consolidation and Other(137,498) 45,914 1,831Change in Due from / to Affiliates(82,508) (201,196) (285,562)Change in Other Assets954,554 24,226 86,545Change in Accounts Payable, Accrued Expenses and Other Liabilities327,431 93,536 1,581,967Investments Purchased(36,678,379) (35,663,033) (39,616,120)Proceeds from Investments30,634,556 27,143,977 34,799,260Net Cash Provided (Used) by Operating Activities(5,682,155) (7,606,475) (3,532,166) Investing Activities Purchases of Fixed Assets(194,569) (102,664) (97,070)Development of Oil and Natural Gas Properties(12,793) (2,563) (1,052)Proceeds from Sale of Oil and Natural Gas Properties— 26,630 —Net Cash Provided (Used) by Investing Activities(207,362) (78,597) (98,122) Financing Activities Preferred Stock Dividends(33,364) (33,364) (33,364)Common Stock Dividends(271,486) (322,341) (311,973)Distributions to Redeemable Noncontrolling Interests— (16,100) (890)Contributions from Redeemable Noncontrolling Interests— 565,553 220,167Distributions to Noncontrolling Interests(3,169,975) (3,015,655) (2,125,842)Contributions from Noncontrolling Interests4,669,756 4,359,615 3,116,722Net Delivery of Class A Common Stock (Equity Incentive Plans)(90,966) (98,796) (58,679)Repurchases of Class A Common Stock(72,124) (173,142) —Proceeds from Debt Obligations14,811,703 17,117,987 11,657,948Repayment of Debt Obligations(9,310,771) (11,712,014) (9,514,558)Financing Costs Paid(47,784) (55,812) (9,448)Net Cash Provided (Used) by Financing Activities6,484,989 6,615,931 2,940,083 Effect of exchange rate changes on cash, cash equivalents and restricted cash432 (24,708) 79,751 Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash595,904 (1,093,849) (610,454)Cash, Cash Equivalents and Restricted Cash, Beginning of Period2,641,512 3,735,361 4,345,815Cash, Cash Equivalents and Restricted Cash, End of Period$3,237,416 $2,641,512 $3,735,361 See notes to financial statements.152Table of ContentsKKR & CO. INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)(Amounts in Thousands) For the Years Ended December 31, 2019 2018 2017Supplemental Disclosures of Cash Flow Information Payments for Interest$1,032,818 $788,220 $773,882Payments for Income Taxes$129,929 $148,141 $55,216Payments for Operating Lease Liabilities$50,574 $— $— Supplemental Disclosures of Non-Cash Investing and Financing Activities Equity-Based and Other Non-Cash Contributions$299,087 $343,443 $346,035Class A Common Stock Issued in Connection with the Purchase of an Investment$248,025 $120,075 $94,181Non-Cash Distributions to Noncontrolling Interests$— $— $3,195Debt Obligations - Net Gains (Losses), Translation and Other$(262,512) $779,529 $(512,745)Tax Effects Resulting from Exchange of KKR Holdings L.P. Units and Other$4,190 $(4,833) $(2,792)Gain on Sale of Oil and Natural Gas Properties$— $15,224 $—Right-of-Use Assets obtained in Exchange for new Operating Lease Liabilities$10,669 $— $— Change in Consolidation and Other Investments$(2,038,205) $(2,251,865) $(75,827)Due From Affiliates$1,642 $— $15,379Other Assets$(19,703) $(94,853) $(298,097)Debt Obligations$(1,046,515) $(3,427,070) $46,809Due to Affiliates$— $8,857 $5,021Accounts Payable, Accrued Expenses and Other Liabilities$(47,731) $198,270 $(114,309)Noncontrolling Interests$23,123 $593,172 $(1,682)Redeemable Noncontrolling Interests$(1,122,641) $— $(315,057)Gain on Asset Contribution$— $312,644 $— December 31, 2019 December 31, 2018 December 31, 2017Reconciliation to the Consolidated Statements of Financial Condition Cash and Cash Equivalents$2,346,713 $1,751,287 $1,876,687Cash and Cash Equivalents Held at Consolidated Entities816,441 693,860 1,802,372Restricted Cash and Cash Equivalents74,262 196,365 56,302Cash, Cash Equivalents and Restricted Cash, End of Period$3,237,416 $2,641,512 $3,735,361 See notes to financial statements.153Table of ContentsKKR & CO. INC.NOTES TO FINANCIAL STATEMENTS(All Amounts in Thousands, Except Share and Per Share Data, and Except Where Noted)1. ORGANIZATION KKR & Co. Inc. (NYSE: KKR), together with its subsidiaries ("KKR"), is a leading global investment firm that manages multiple alternative asset classesincluding private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investmentreturns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation withKKR's portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investmentopportunities through its capital markets business.On July 1, 2018, KKR & Co. L.P. converted from a Delaware limited partnership to a Delaware corporation named KKR & Co. Inc. (the "Conversion").Because the Conversion became effective on July 1, 2018, the prior period amounts in the accompanying consolidated financial statements for the six monthsended June 30, 2018 and for the year ended December 31, 2017 reflect KKR as a limited partnership and not a corporation. In this report, references to KKR & Co.Inc. for periods prior to the Conversion mean KKR & Co. L.P., and references to KKR's Class A common stock, Series A Preferred Stock and Series B PreferredStock for periods prior to the Conversion mean common units, Series A preferred units and Series B preferred units of KKR & Co. L.P., respectively, in each case,except where the context requires otherwise. As a result of the Conversion, the financial impact to the consolidated financial statements contained herein consistedof (i) reclassifications from partnership equity accounts to equity accounts reflective of a corporation and (ii) a partial step-up in the tax basis of certain assetsresulting in the recognition of a net income tax benefit.KKR & Co. Inc. is the parent company of KKR Group Holdings Corp., which is (i) a general partner of KKR Fund Holdings L.P. ("Fund Holdings") and KKRInternational Holdings L.P. ("International Holdings") and (ii) the sole stockholder of KKR Management Holdings Corp. (the general partner of KKR ManagementHoldings L.P. ("Management Holdings")) and KKR Fund Holdings GP Limited (the other general partner of Fund Holdings and International Holdings). FundHoldings, Management Holdings and International Holdings are collectively referred to as the "KKR Group Partnerships." KKR & Co. Inc. both indirectly controls the KKR Group Partnerships and indirectly holds Class A partner units in each KKR Group Partnership (collectively,"KKR Group Partnership Units") representing economic interests in KKR's business. The remaining KKR Group Partnership Units are held by KKR Holdings L.P.("KKR Holdings"), which is not a subsidiary of KKR & Co. Inc. As of December 31, 2019, KKR & Co. Inc. held approximately 65.9% of the KKR GroupPartnership Units and KKR Holdings held approximately 34.1% of the KKR Group Partnership Units. The percentage ownership in the KKR Group Partnershipswill continue to change as KKR Holdings exchange units in the KKR Group Partnerships for shares of Class A common stock of KKR & Co. Inc. or when KKR &Co. Inc. otherwise issues or repurchases shares of Class A common stock of KKR & Co. Inc. The KKR Group Partnerships also have outstanding equity intereststhat provide for the carry pool and preferred units with economic terms that mirror the preferred stock issued by KKR & Co. Inc.The following table presents the effect of changes in the ownership interest in the KKR Group Partnerships on KKR: For the Years Ended December 31, 2019 2018 2017Net income (loss) attributable to KKR & Co. Inc.$2,005,049 $1,131,063 $1,018,305Transfers from noncontrolling interests: Exchange of KKR Group Partnership shares held by KKR Holdings L.P.(1)161,270 570,898 247,946Change from net income (loss) attributable to KKR & Co. Inc. and transfers from noncontrollinginterests held by KKR Holdings$2,166,319 $1,701,961 $1,266,251(1)Increase in KKR's stockholders' equity for exchange of 8,699,894, 36,890,095, and 17,786,064 KKR Group Partnerships units for the years ended December 31, 2019, 2018, and 2017,respectively, held by KKR Holdings L.P., inclusive of deferred taxes.Reorganization and Acquisition of KKR CapstoneOn January 1, 2020, KKR completed an internal reorganization (the "Reorganization"), in which (i) Management Holdings and International Holdings werecombined with Fund Holdings, which changed its name to KKR Group Partnership L.P. ("KKR Group Partnership") and became the sole intermediate holdingcompany for KKR's business, (ii) the issuers of each154Table of ContentsNotes to Financial Statements (Continued)series of KKR’s outstanding senior notes were contributed to KKR Group Partnership and the guarantees by International Holdings and Management Holdingsunder the senior notes were automatically and unconditionally released and discharged pursuant to the terms of the indentures governing such senior notes, withKKR Group Partnership remaining as a guarantor, and (iii) the ownership interests of certain operating subsidiaries of KKR Group Partnership were reorganized.References to "KKR Group Partnerships" for periods prior to the Reorganization mean Fund Holdings, Management Holdings and International Holdings,collectively, and references to "KKR Group Partnership" for periods following the Reorganization mean KKR Group Partnership L.P. References to a "KKRGroup Partnership Unit" mean (i) one Class A partner interest in each of Fund Holdings, Management Holdings and International Holdings, collectively, forperiods prior to the Reorganization and (ii) one Class A partner interest in KKR Group Partnership for periods following the Reorganization.Contemporaneously with the Reorganization, KKR acquired KKR Capstone Americas LLC and its affiliates ("KKR Capstone") on January 1, 2020. KKRCapstone was consolidated prior to January 1, 2020 and consequently, this transaction will be accounted for as an equity transaction in the first quarter of 2020.The consolidated financial statements and the accompanying notes do not reflect the Reorganization or the acquisition of KKR Capstone on January 1, 2020.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationThe accompanying consolidated financial statements (referred to hereafter as the "financial statements") have been prepared in accordance with accountingprinciples generally accepted in the United States of America ("GAAP").KKR consolidates the financial results of the KKR Group Partnerships and their consolidated entities, which include the accounts of KKR's investmentmanagement and capital markets companies, the general partners of certain unconsolidated investment funds, general partners of consolidated investment fundsand their respective consolidated investment funds and certain other entities including CFEs. References in the accompanying financial statements to "principals"are to KKR's senior employees and non-employee operating consultants who hold interests in KKR's business through KKR Holdings.All intercompany transactions and balances have been eliminated.Use of EstimatesThe preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues,expenses, and investment income (loss) during the reporting periods. Such estimates include but are not limited to (i) the determination of the income tax provisionand (ii) the valuation of investments and financial instruments. Actual results could differ from those estimates, and such differences could be material to thefinancial statements.Principles of ConsolidationThe types of entities KKR assesses for consolidation include (i) subsidiaries, including management companies, broker-dealers and general partners ofinvestment funds that KKR manages, (ii) entities that have all the attributes of an investment company, like investment funds, (iii) CFEs and (iv) other entities,including entities that employ non-employee operating consultants. Each of these entities is assessed for consolidation on a case by case basis depending on thespecific facts and circumstances surrounding that entity.Pursuant to its consolidation policy, KKR first considers whether an entity is considered a VIE and therefore whether to apply the consolidation guidanceunder the VIE model. Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities ("VOEs") under the voting interest model.KKR's funds are, for GAAP purposes, investment companies and therefore are not required to consolidate their investments in portfolio companies even ifmajority-owned and controlled. Rather, the consolidated funds and vehicles reflect their investments at fair value as described below in "Fair ValueMeasurements."155Table of ContentsNotes to Financial Statements (Continued)An entity in which KKR holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient topermit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of the equity investment at risk (as a group) lackeither the direct or indirect ability through voting rights or similar rights to make decisions about a legal entity's activities that have a significant effect on thesuccess of the legal entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some investorsare disproportionate to their obligation to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, orboth and substantially all of the legal entity's activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. Limitedpartnerships and other similar entities where unaffiliated limited partners have not been granted (i) substantive participatory rights or (ii) substantive rights to eitherdissolve the partnership or remove the general partner ("kick-out rights") are VIEs under condition (b) above. KKR's investment funds that are not CFEs (i) aregenerally limited partnerships, (ii) generally provide KKR with operational discretion and control, and (iii) generally have fund investors with no substantive rightsto impact ongoing governance and operating activities of the fund, including the ability to remove the general partner, and, as such, the limited partners do not holdkick-out rights. Accordingly, most of KKR's investment funds are categorized as VIEs.KKR consolidates all VIEs in which it is the primary beneficiary. A reporting entity is determined to be the primary beneficiary if it holds a controllingfinancial interest in a VIE. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the VIE'seconomic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from theVIE that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (i) whether an entity in which KKR holds avariable interest is a VIE and (ii) whether KKR's involvement, through holding interests directly or indirectly in the entity or contractually through other variableinterests (for example, management and performance related fees), would give it a controlling financial interest. Performance of that analysis requires the exerciseof judgment. Fees earned by KKR that are customary and commensurate with the level of effort required to provide those services, and where KKR does not holdother economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be consideredvariable interests. KKR factors in all economic interests including interests held through related parties, to determine if it holds a variable interest. KKR determineswhether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion when facts and circumstances change.For entities that are determined not to be VIEs, these entities are generally considered VOEs and are evaluated under the voting interest model. KKRconsolidates VOEs it controls through a majority voting interest or through other means.The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE depends on the facts and circumstancessurrounding each entity and therefore certain of KKR's investment funds may qualify as VIEs whereas others may qualify as VOEs.With respect to CLOs (which are generally VIEs), in its role as collateral manager, KKR generally has the power to direct the activities of the CLO that mostsignificantly impact the economic performance of the entity. In some, but not all cases, KKR, through its residual interest in the CLO may have variable intereststhat represent an obligation to absorb losses of, or a right to receive benefits from, the CLO that could potentially be significant to the CLO. In cases where KKRhas both the power to direct the activities of the CLO that most significantly impact the CLO's economic performance and the obligation to absorb losses of theCLO or the right to receive benefits from the CLO that could potentially be significant to the CLO, KKR is deemed to be the primary beneficiary and consolidatesthe CLO.With respect to CMBS vehicles (which are generally VIEs), KKR holds unrated and non-investment grade rated securities issued by the CMBS, which are themost subordinate tranche of the CMBS vehicle. The economic performance of the CMBS is most significantly impacted by the performance of the underlyingassets. Thus, the activities that most significantly impact the CMBS economic performance are the activities that most significantly impact the performance of theunderlying assets. The special servicer has the ability to manage the CMBS assets that are delinquent or in default to improve the economic performance of theCMBS. KKR generally has the right to unilaterally appoint and remove the special servicer for the CMBS and as such is considered the controlling class of theCMBS vehicle. These rights give KKR the ability to direct the activities that most significantly impact the economic performance of the CMBS. Additionally, asthe holder of the most subordinate tranche, KKR is in a first loss position and has the right to receive benefits, including the actual residual returns of the CMBS, ifany. In these cases, KKR is deemed to be the primary beneficiary and consolidates the CMBS vehicle.156Table of ContentsNotes to Financial Statements (Continued)InvestmentsInvestments consist primarily of private equity, credit, investments of consolidated CFEs, real assets, equity method and other investments. Investmentsdenominated in currencies other than the entity's functional currency are valued based on the spot rate of the respective currency at the end of the reporting periodwith changes related to exchange rate movements reflected in the consolidated statements of operations. Security and loan transactions are recorded on a trade datebasis. Further disclosure on investments is presented in Note 4 "Investments."The following describes the types of securities held within each investment class.Private Equity - Consists primarily of equity investments in operating businesses, including growth equity investments.Credit - Consists primarily of investments in below investment grade corporate debt securities (primarily high yield bonds and syndicated bank loans),originated, distressed and opportunistic credit, real estate mortgage loans, and interests in unconsolidated CLOs.Investments of Consolidated CFEs - Consists primarily of (i) investments in below investment grade corporate debt securities (primarily high yield bondsand syndicated bank loans) held directly by the consolidated CLOs and (ii) investments in originated, fixed-rate real estate mortgage loans held directly bythe consolidated CMBS vehicles.Real Assets - Consists primarily of investments in (i) energy related assets, principally oil and natural gas properties, (ii) infrastructure assets, and (iii) realestate, principally residential and commercial real estate assets and businesses.Equity Method - Other - Consists primarily of (i) certain direct interests in operating companies in which KKR is deemed to exert significant influenceunder GAAP and (ii) certain interests in partnerships and joint ventures that hold private equity and real assets investments.Equity Method - Capital Allocation-Based Income - Consists primarily of (i) the capital interest KKR holds as the general partner in certain investmentfunds, which are not consolidated and (ii) the carried interest component of the general partner interest, which are accounted for as a single unit ofaccount.Other - Consists primarily of investments in common stock, preferred stock, warrants and options of companies that are not private equity, real assets,credit or investments of consolidated CFEs.Investments held by Consolidated Investment FundsThe consolidated investment funds are, for GAAP purposes, investment companies and reflect their investments and other financial instruments, includingportfolio companies that are majority-owned and controlled by KKR's investment funds, at fair value. KKR has retained this specialized accounting for theconsolidated investment funds in consolidation. Accordingly, the unrealized gains and losses resulting from changes in fair value of the investments and otherfinancial instruments held by the consolidated investment funds are reflected as a component of Net Gains (Losses) from Investment Activities in the consolidatedstatements of operations.Certain energy investments are made through consolidated investment funds, including investments in working and royalty interests in oil and natural gasproperties as well as investments in operating companies that operate in the energy industry. Since these investments are held through consolidated investmentfunds, such investments are reflected at fair value as of the end of the reporting period. Investments in operating companies that are held through KKR's consolidated investment funds are generally classified within private equity investments andinvestments in working and royalty interests in oil and natural gas properties are generally classified as real asset investments.157Table of ContentsNotes to Financial Statements (Continued)Energy Investments held by KKRKKR directly holds certain working and royalty interests in oil and natural gas properties that are not held through investment funds. Oil and natural gasactivities are accounted for under the successful efforts method of accounting and such working interests are consolidated based on the proportion of the workinginterests held by KKR. Accordingly, KKR reflects its proportionate share of these interests on a gross basis and changes in the value of these interests are notreflected as unrealized gains and losses in the consolidated statements of operations. Under the successful efforts method, exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Costs that areassociated with the drilling of successful exploration wells are capitalized if proved reserves are found. Lease acquisition costs are capitalized when incurred. Costsassociated with the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs and costs of certain nonproducing leaseholdcosts are charged to expense as incurred.Expenditures for repairs and maintenance, including workovers, are charged to expense as incurred.The capitalized costs of producing oil and natural gas properties are depleted on a field-by-field basis using the units-of production method based on the ratioof current production to estimated total net proved oil, natural gas and natural gas liquid reserves. Proved developed reserves are used in computing depletion ratesfor drilling and development costs and total proved reserves are used for depletion rates of leasehold costs.Estimated dismantlement and abandonment costs for oil and natural gas properties, net of salvage value, are capitalized at their estimated net present value andamortized on a unit-of-production basis over the remaining life of the related proved developed reserves.Whenever events or changes in circumstances indicate that the carrying amounts of oil and natural gas properties may not be recoverable, KKR evaluates oiland natural gas properties and related equipment and facilities for impairment on a field-by-field basis. The determination of recoverability is made based uponestimated undiscounted future net cash flows. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discountedcash flow analysis, with the carrying value of the related asset. Any impairment in value is recognized when incurred and is recorded in General, Administrative,and Other expense in the consolidated statements of operations.Fair Value OptionFor certain investments and other financial instruments, KKR has elected the fair value option. Such election is irrevocable and is applied on a financialinstrument by financial instrument basis at initial recognition. KKR has elected the fair value option for certain private equity, real assets, credit, investments ofconsolidated CFEs, equity method - other and other financial instruments not held through a consolidated investment fund. Accounting for these investments at fairvalue is consistent with how KKR accounts for its investments held through consolidated investment funds. Changes in the fair value of such instruments arerecognized in Net Gains (Losses) from Investment Activities in the consolidated statements of operations. Interest income on interest bearing credit securities onwhich the fair value option has been elected is based on stated coupon rates adjusted for the accretion of purchase discounts and the amortization of purchasepremiums. This interest income is recorded within Interest Income in the consolidated statements of operations.Equity MethodFor certain investments in entities over which KKR exercises significant influence but which do not meet the requirements for consolidation and for whichKKR has not elected the fair value option, KKR uses the equity method of accounting. The carrying value of equity method investments, for which KKR has notelected the fair value option, is determined based on the amounts invested by KKR, adjusted for the equity in earnings or losses of the investee allocated based onKKR's respective ownership percentage, less distributions.For equity method investments for which KKR has not elected the fair value option, KKR records its proportionate share of the investee's earnings or lossesbased on the most recently available financial information of the investee, which in certain cases may lag the date of KKR's financial statements by no more thanthree calendar months. As of December 31, 2019, equity method investees for which KKR reports financial results on a lag include Marshall Wace LLP ("MarshallWace").KKR evaluates its equity method investments for which KKR has not elected the fair value option for impairment whenever events or changes incircumstances indicate that the carrying amounts of such investments may not be recoverable.158Table of ContentsNotes to Financial Statements (Continued)The carrying value of investments classified as Equity Method - Capital Allocation-Based Income approximates fair value, because the underlying investmentsof the unconsolidated investment funds are reported at fair value.Financial Instruments held by Consolidated CFEsKKR measures both the financial assets and financial liabilities of the consolidated CFEs in its financial statements using the more observable of the fair valueof the financial assets and the fair value of the financial liabilities which results in KKR's consolidated net income (loss) reflecting KKR's own economic interestsin the consolidated CFEs including (i) changes in the fair value of the beneficial interests retained by KKR and (ii) beneficial interests that represent compensationfor services rendered.For the consolidated CLOs, KKR has determined that the fair value of the financial assets of the consolidated CLOs is more observable than the fair value ofthe financial liabilities of the consolidated CLOs. As a result, the financial assets of the consolidated CLOs are being measured at fair value and the financialliabilities are being measured in consolidation as: (1) the sum of the fair value of the financial assets and the carrying value of any nonfinancial assets that areincidental to the operations of the CLOs less (2) the sum of the fair value of any beneficial interests retained by KKR (other than those that represent compensationfor services) and KKR's carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individualfinancial liabilities (other than the beneficial interests retained by KKR).For the consolidated CMBS vehicles, KKR has determined that the fair value of the financial liabilities of the consolidated CMBS vehicles is more observablethan the fair value of the financial assets of the consolidated CMBS vehicles. As a result, the financial liabilities of the consolidated CMBS vehicles are beingmeasured at fair value and the financial assets are being measured in consolidation as: (1) the sum of the fair value of the financial liabilities (other than thebeneficial interests retained by KKR), the fair value of the beneficial interests retained by KKR and the carrying value of any nonfinancial liabilities that areincidental to the operations of the CMBS vehicles less (2) the carrying value of any nonfinancial assets that are incidental to the operations of the CMBS vehicles.The resulting amount is allocated to the individual financial assets.Fair Value MeasurementsFair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date under current market conditions. Except for certain of KKR's equity method investments (see "Equity Method" above) and debt obligations (asdescribed in Note 10 "Debt Obligations"), KKR's investments and other financial instruments are recorded at fair value or at amounts whose carrying valuesapproximate fair value. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Whereobservable prices or inputs are not available, valuation techniques are applied. These valuation techniques involve varying levels of management estimation andjudgment, the degree of which is dependent on a variety of factors.GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financialinstruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to thefinancial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instrumentswith readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used inmeasuring fair value.Investments and financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in thedetermination of fair values, as follows:Level I - Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. The types of financialinstruments included in this category are publicly-listed equities and securities sold short.Level II - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fairvalue is determined through the use of models or other valuation methodologies. The types of financial instruments included in this category are creditinvestments, investments and debt obligations of consolidated CLO entities, convertible debt securities indexed to publicly-listed securities, less liquid andrestricted equity securities and certain over-the-counter derivatives such as foreign currency option and forward contracts.Level III - Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financialinstrument. The inputs into the determination of fair value require significant management159Table of ContentsNotes to Financial Statements (Continued)judgment or estimation. The types of financial instruments generally included in this category are private portfolio companies, real assets investments, creditinvestments, equity method investments for which the fair value option was elected and investments and debt obligations of consolidated CMBS entities.In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair valuehierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair valuemeasurement in its entirety. KKR's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment andconsideration of factors specific to the asset.A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representativeof fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis oftransactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value.The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example,the type of instrument, whether the instrument has recently been issued, whether the instrument is traded on an active exchange or in the secondary market, andcurrent market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fairvalue requires more judgment. Accordingly, the degree of judgment exercised by KKR in determining fair value is greatest for instruments categorized in Level III.The variability and availability of the observable inputs affected by the factors described above may cause transfers between Levels I, II, and III, which KKRrecognizes at the beginning of the reporting period. Investments and other financial instruments that have readily observable market prices (such as those traded on a securities exchange) are stated at the lastquoted sales price as of the reporting date. KKR does not adjust the quoted price for these investments, even in situations where KKR holds a large position and asale could reasonably affect the quoted price.Management's determination of fair value is based upon the methodologies and processes described below and may incorporate assumptions that aremanagement's best estimates after consideration of a variety of internal and external factors.Level II Valuation MethodologiesCredit Investments: These financial instruments generally have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest pricethat KKR and others are willing to pay for an instrument. Ask prices represent the lowest price that KKR and others are willing to accept for an instrument. Forfinancial instruments whose inputs are based on bid-ask prices obtained from third party pricing services, fair value may not always be a predetermined point in thebid-ask range. KKR's policy is generally to allow for mid-market pricing and adjusting to the point within the bid-ask range that meets KKR's best estimate of fairvalue.Investments and Debt Obligations of Consolidated CLO Vehicles: Investments of consolidated CLO vehicles are reported within Investments of ConsolidatedCFEs and are valued using the same valuation methodology as described above for credit investments. Under ASU 2014-13, KKR measures CLO debt obligationson the basis of the fair value of the financial assets of the CLO.Securities Indexed to Publicly-Listed Securities: These securities are typically valued using standard convertible security pricing models. The key inputs intothese models that require some amount of judgment are the credit spreads utilized and the volatility assumed. To the extent the company being valued has otheroutstanding debt securities that are publicly-traded, the implied credit spread on the company's other outstanding debt securities would be utilized in the valuation.To the extent the company being valued does not have other outstanding debt securities that are publicly-traded, the credit spread will be estimated based on theimplied credit spreads observed in comparable publicly-traded debt securities. In certain cases, an additional spread will be added to reflect an illiquidity discountdue to the fact that the security being valued is not publicly-traded. The volatility assumption is based upon the historically observed volatility of the underlyingequity security into which the convertible debt security is convertible and/or the volatility implied by the prices of options on the underlying equity security.Equity Securities: The valuation of certain equity securities is based on an observable price for an identical security adjusted for the effect of a restriction orleverage that collateralized the equity securities.160Table of ContentsNotes to Financial Statements (Continued)Derivatives: The valuation incorporates observable inputs comprising yield curves, foreign currency rates and credit spreads.Level III Valuation MethodologiesPrivate Equity Investments: KKR generally employs two valuation methodologies when determining the fair value of a private equity investment. The firstmethodology is typically a market comparables analysis that considers key financial inputs and recent public and private transactions and other available measures.The second methodology utilized is typically a discounted cash flow analysis, which incorporates significant assumptions and judgments. Estimates of key inputsused in this methodology include the weighted average cost of capital for the investment and assumed inputs used to calculate terminal values, such as exitEBITDA multiples. In certain cases the results of the discounted cash flow approach can be significantly impacted by these estimates. Other inputs are also used inboth methodologies. In addition, when a definitive agreement has been executed to sell an investment, KKR generally considers a significant determinant of fairvalue to be the consideration to be received by KKR pursuant to the executed definitive agreement.Upon completion of the valuations conducted using these methodologies, a weighting is ascribed to each method, and an illiquidity discount is typicallyapplied where appropriate. The ultimate fair value recorded for a particular investment will generally be within a range suggested by the two methodologies, exceptthat the value may be higher or lower than such range in the case of investments being sold pursuant to an executed definitive agreement.When determining the weighting ascribed to each valuation methodology, KKR considers, among other factors, the availability of direct market comparables,the applicability of a discounted cash flow analysis, the expected hold period and manner of realization for the investment, and in the case of investments beingsold pursuant to an executed definitive agreement, an estimated probability of such sale being completed. These factors can result in different weightings amonginvestments in the portfolio and in certain instances may result in up to a 100% weighting to a single methodology.When an illiquidity discount is to be applied, KKR seeks to take a uniform approach across its portfolio and generally applies a minimum 5% discount to allprivate equity investments. KKR then evaluates such private equity investments to determine if factors exist that could make it more challenging to monetize theinvestment and, therefore, justify applying a higher illiquidity discount. These factors generally include (i) whether KKR is unable to freely sell the portfoliocompany or conduct an initial public offering of the portfolio company due to the consent rights of a third party or similar factors, (ii) whether the portfoliocompany is undergoing significant restructuring activity or similar factors, and (iii) characteristics about the portfolio company regarding its size and/or whetherthe portfolio company is experiencing, or expected to experience, a significant decline in earnings. These factors generally make it less likely that a portfoliocompany would be sold or publicly offered in the near term at a price indicated by using just a market multiples and/or discounted cash flow analysis, and thesefactors tend to reduce the number of opportunities to sell an investment and/or increase the time horizon over which an investment may be monetized. Dependingon the applicability of these factors, KKR determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the timeKKR holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquiditydiscount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of eachindividual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher orlower than that estimated by KKR in its valuations.In the case of growth equity investments, enterprise values may be determined using the market comparables analysis and discounted cash flow analysisdescribed above. A scenario analysis may also be conducted to subject the estimated enterprise values to a downside, base and upside case, which involvessignificant assumptions and judgments. A milestone analysis may also be conducted to assess the current level of progress towards value drivers that we havedetermined to be important, which involves significant assumptions and judgments. The enterprise value in each case may then be allocated across the investment'scapital structure to reflect the terms of the security and subjected to probability weightings. In certain cases, the values of growth equity investments may be basedon recent or expected financings.Real Asset Investments: Real asset investments in infrastructure, energy and real estate are valued using one or a combination of the discounted cash flowanalysis, market comparables analysis and direct income capitalization, which in each case incorporates significant assumptions and judgments.Infrastructure investments are generally valued using the discounted cash flow analysis. Key inputs used in this methodology can include the weighted averagecost of capital and assumed inputs used to calculate terminal values, such as exit EBITDA multiples.161Table of ContentsNotes to Financial Statements (Continued)Energy investments are generally valued using a discounted cash flow approach, and where applicable, a market approach using comparable companies andtransactions. Key inputs used in our valuations include (i) the weighted average cost of capital, (ii) future commodity prices, as quoted on indices and long-termcommodity price forecasts, and (iii) the asset’s future operating performance.Real estate investments are generally valued using a combination of direct income capitalization and discounted cash flow analysis. Certain real estateinvestments are valued by KKR based on ranges of valuations determined by an independent valuation firm. Key inputs used in such methodologies that requireestimates include an unlevered discount rate and current capitalization rate. The valuations of real assets investments also use other inputs.Credit Investments: Credit investments are valued using values obtained from dealers or market makers, and where these values are not available, creditinvestments are generally valued by KKR based on ranges of valuations determined by an independent valuation firm. Valuation models are based on discountedcash flow analyses, for which the key inputs are determined based on market comparables, which incorporate similar instruments from similar issuers.Real Estate Mortgage Loans: Real estate mortgage loans are illiquid, structured investments that are specific to the property and its operating performance.KKR engages an independent valuation firm to estimate the fair value of each loan. KKR reviews the quarterly loan valuation estimates provided by theindependent valuation firm. These loans are generally valued using a discounted cash flow model using discount rates derived from observable market data appliedto the capital structure of the respective sponsor and estimated property value. In the event that KKR's estimate of fair value differs from the fair value estimateprovided by the independent valuation firm, KKR ultimately relies solely upon the valuation prepared by the investment personnel of KKR.Other Investments: With respect to other investments including equity method investments for which the fair value election has been made, KKR generallyemploys the same valuation methodologies as described above for private equity and real assets investments when valuing these other investments.Investments and Debt Obligations of Consolidated CMBS Vehicles: Under ASU 2014-13, KKR measures CMBS investments, which are reported withinInvestments of Consolidated CFEs on the basis of the fair value of the financial liabilities of the CMBS. Debt obligations of consolidated CMBS vehicles arevalued based on discounted cash flow analyses. The key input is the expected yield of each CMBS security using both observable and unobservable factors, whichmay include recently offered or completed trades and published yields of similar securities, security-specific characteristics (e.g. securities ratings issued bynationally recognized statistical rating organizations, credit support by other subordinate securities issued by the CMBS and coupon type) and other characteristics.Key unobservable inputs that have a significant impact on KKR's Level III investment valuations as described above are included in Note 5 "Fair ValueMeasurements." KKR utilizes several unobservable pricing inputs and assumptions in determining the fair value of its Level III investments. These unobservablepricing inputs and assumptions may differ by investment and in the application of KKR's valuation methodologies. KKR's reported fair value estimates could varymaterially if KKR had chosen to incorporate different unobservable pricing inputs and other assumptions or, for applicable investments, if KKR only used eitherthe discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies.162Table of ContentsNotes to Financial Statements (Continued)RevenuesFor the years ended December 31, 2019, 2018, and 2017 respectively, revenues consisted of the following: For the Years Ended December 31, 2019 2018 2017Management Fees$824,903 $724,558 $700,245Fee Credits(340,900) (231,943) (257,401)Transaction Fees914,329 988,954 783,952Monitoring Fees106,289 87,545 82,238Incentive Fees— 14,038 4,601Expense Reimbursements169,415 146,989 121,927Oil and Gas Revenue47,153 51,465 63,460Consulting Fees69,286 59,720 42,582Total Fees and Other1,790,4751,841,326 1,541,604 Carried Interest2,041,847 441,529 1,740,661General Partner Capital Interest388,578 112,981 275,015Total Capital Allocation-Based Income2,430,425554,510 2,015,676 Total Revenues$4,220,900$2,395,836 $3,557,280Fees and OtherFees and Other, as detailed above, are accounted for as contracts with customers. Under ASC 606, Revenue from Contracts with Customers ("ASC 606"),KKR is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price,(d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) KKR satisfies its performance obligation. Indetermining the transaction price, KKR has included variable consideration only to the extent that it is probable that a significant reversal in the amount ofcumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.163Table of ContentsNotes to Financial Statements (Continued)The following table summarizes KKR's revenues from contracts with customers:Revenue TypeCustomerPerformanceObligationPerformance ObligationSatisfied Over Time orPoint In Time (1)Variable orFixed ConsiderationPaymentTermsSubject toReturn OnceRecognizedClassification ofUncollectedAmounts (2)Management FeesInvestment funds,CLOs and othervehiclesInvestmentmanagement servicesOver time as services arerenderedVariable considerationsince varies based onfluctuations in the basis ofthe management fee overtimeTypicallyquarterly orannually inarrearsNoDue from AffiliatesTransaction FeesPortfoliocompanies andthird partycompaniesAdvisory services anddebt and equityarranging andunderwritingPoint in time when thetransaction (e.g. underwriting) iscompletedFixed considerationTypically paid onor shortly aftertransaction closesNoDue from Affiliates(portfolio companies)Other Assets (thirdparties)Monitoring Fees Recurring FeesPortfoliocompaniesMonitoring servicesOver time as services arerenderedVariable considerationsince varies based onfluctuations in the basis ofthe recurring feeTypicallyquarterly inarrearsNoDue from AffiliatesTermination FeesPortfoliocompaniesMonitoring servicesPoint in time when thetermination is completedFixed considerationTypically paid onor shortly afterterminationoccursNoDue from AffiliatesIncentive FeesInvestment fundsand other vehiclesInvestmentmanagement servicesthat result inachievement ofminimum investmentreturn levelsPoint in time at the end of theperformance measurement period(quarterly or annually) ifinvestment performance isachievedVariable considerationsince contingent upon theinvestment fund and othervehicles achieving morethan stipulated investmentreturn hurdlesTypically paidshortly after theend of theperformancemeasurementperiodNoDue from AffiliatesExpenseReimbursementsInvestment fundsand portfoliocompaniesInvestmentmanagement andmonitoring servicesPoint in time when the relatedexpense is incurredFixed considerationTypically shortlyafter expense isincurredNoDue from AffiliatesOil and GasRevenuesOil and gaswholesalersDelivery of oil liquidsand gasPoint in time when delivery hasoccurred and title has transferredFixed considerationTypically shortlyafter deliveryNoOther AssetsConsulting FeesPortfoliocompanies andother companiesConsulting and otherservicesOver time as services arerenderedFixed considerationTypicallyquarterly inarrearsNoDue from Affiliates(1)For performance obligations satisfied at a point in time, there were no significant judgments made in evaluating when a customer obtains control of the promised service.(2)For amounts classified in Other Assets, see Note 8 "Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities." For amounts classified in Due from Affiliates, see Note13 "Related Party Transactions."164Table of ContentsNotes to Financial Statements (Continued)Management FeesKKR provides investment management services to investment funds, CLOs, and other vehicles in exchange for a management fee. Management fees aredetermined quarterly based on an annual rate and are generally based upon a percentage of the capital committed or capital invested during the investment period.Thereafter, management fees are generally based on a percentage of remaining invested capital, net asset value, gross assets or as otherwise defined in therespective contractual agreements. Since some of the factors that cause the fees to fluctuate are outside of KKR's control, management fees are considered to beconstrained and are therefore not included in the transaction price. Additionally, after the contract is established there are no significant judgments made whendetermining the transaction price.Management fees earned from private equity funds generally range from 1.0% to 2.0% of committed capital during the fund's investment period and aregenerally 0.75% to 1.25% of invested capital after the expiration of the fund's investment period with subsequent reductions over time. Typically, an investmentperiod is defined as a period of up to six years. The actual length of the investment period is often shorter due to the earlier deployment of committed capital.Management fees earned from real asset funds generally range from 0.75% to 1.5% and are generally based on the investment fund's average net asset value,capital commitments, or invested capital.Management fees earned from alternative and liquid credit funds generally range from 0.10% to 1.75%. Such rates may be based on the investment fund'saverage net asset value, gross assets or invested capital.Management fees earned from CLOs include senior collateral management fees and subordinate collateral management fees. When combined, senior collateralmanagement fees and subordinate collateral management fees are determined based on an annual rate ranging from 0.40% to 0.50% of collateral. If amountsdistributable on any payment date are insufficient to pay the collateral management fees according to the priority of payments, any shortfall is deferred and payableon subsequent payment dates. For the purpose of calculating the collateral management fees, collateral, the payment dates, and the priority of payments are termsdefined in the management agreements.Management fees earned from KKR's consolidated investment funds, CLOs, and other vehicles are eliminated in consolidation. However, because theseamounts are funded by, and earned from, noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds, CLOs, andother vehicles is increased by the amount of fees that are eliminated. Accordingly, the elimination of these fees does not impact the net income (loss) attributable toKKR or KKR stockholders' equity.Fee CreditsUnder the terms of the management agreements with certain of its investment funds, KKR is required to share with such funds an agreed upon percentage ofcertain fees, including monitoring and transaction fees earned from portfolio companies ("Fee Credits"). Investment funds earn Fee Credits only with respect tomonitoring and transaction fees that are allocable to the fund's investment in the portfolio company and not, for example, any fees allocable to capital investedthrough co-investment vehicles. Fee Credits are calculated after deducting certain costs incurred in connection with pursuing potential investments that do notresult in completed transactions ("broken-deal expenses") and generally amount to 80% for older funds, or 100% for newer funds, of allocable monitoring andtransaction fees after broken-deal expenses are recovered, although the actual percentage may vary from fund to fund. Fee Credits are recognized and owed toinvestment funds concurrently with the recognition of monitoring fees, transaction fees and broken-deal expenses. Since Fee Credits are payable to investmentfunds, amounts owed are generally applied as a reduction of the management fee that is otherwise billed to the investment fund. Fee credits are recorded as areduction of revenues in the consolidated statement of operations. Fee Credits owed to investment funds are recorded in Due to Affiliates on the consolidatedstatements of financial condition. See Note 13 "Related Party Transactions."Transaction FeesKKR (i) arranges debt and equity financing, places and underwrites securities offerings, and provides other types of capital markets services for companiesseeking financing in its Capital Markets business line and (ii) provides advisory services in connection with successful Private Markets and Public Marketsbusiness line portfolio company investment transactions, in each case, in exchange for a transaction fee. Transaction fees are separately negotiated for eachtransaction and are generally based on (i) for Capital Markets business line transactions, a percentage of the overall transaction size and (ii) for Private Markets andPublic Markets business line transactions, a percentage of either total enterprise value of an investment or a165Table of ContentsNotes to Financial Statements (Continued)percentage of the aggregate price paid for an investment. After the contract is established, there are no significant judgments made when determining thetransaction price.Monitoring FeesKKR provides services in connection with monitoring portfolio companies in exchange for a fee. Recurring monitoring fees are separately negotiated for eachportfolio company. In addition, certain monitoring fee arrangements may provide for a termination payment following an initial public offering or change ofcontrol as defined in the contractual terms of the related agreement. These termination payments are recognized in the period when the related transaction closes.After the contract is established, there are no significant judgments made when determining the transaction price.Incentive FeesKKR provides investment management services to certain investment funds, CLOs and other vehicles in exchange for a management fee as discussed aboveand, in some cases an incentive fee when KKR is not entitled to a carried interest. Incentive fee rates generally range from 5% to 20% of investment gains.Incentive fees are considered a form of variable consideration as these fees are subject to reversal, and therefore the recognition of such fees is deferred until theend of each fund's measurement period when the performance-based incentive fees become fixed and determinable. Incentive fees are generally paid within 90days of the end of the investment vehicles' measurement period. After the contract is established, there are no significant judgments made when determining thetransaction price.Incentive fees earned from KKR's consolidated investment funds, CLOs, and other vehicles are eliminated in consolidation. However, because these amountsare funded by, and earned from, noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds, CLOs, and othervehicles is increased by the amount of fees that are eliminated. Accordingly, the elimination of these fees does not impact the net income (loss) attributable to KKRor KKR stockholders' equity.Expense ReimbursementsProviding investment management services to investment funds and monitoring KKR’s portfolio companies require KKR to arrange for services on behalf ofthem. In those situations where KKR is acting as an agent on behalf of its investment funds or portfolio companies, it presents the cost of services on a net basis asa reduction of Revenues. In all other situations, KKR is primarily responsible for fulfilling the services and is therefore acting as a principal for those arrangementsfor accounting purposes. As a result, the expense and related reimbursement associated with those services is presented on a gross basis. Costs incurred areclassified within Expenses and reimbursements of such costs are classified as Expense Reimbursements within Revenues on the consolidated statements ofoperations. After the contract is established, there are no significant judgments made when determining the transaction price.Oil and Gas RevenueKKR directly holds certain working and royalty interests in oil and natural gas properties that are not held through investment funds. Oil and gas revenue isrecognized when the performance obligation is satisfied, which occurs at the point in time when control of the product transfers to the customer. Performanceobligations are typically satisfied through the monthly delivery of production. Revenue is recognized based on KKR's proportionate share of production from non-operated properties as marketed by the operator. After the contract is established, there are no significant judgments made when determining the transaction price.Consulting FeesCertain consolidated entities that employ non-employee operating consultants provide consulting and other services to portfolio companies and othercompanies in exchange for a consulting fee. Consulting fees are separately negotiated with each portfolio company for which services are provided and are notshared with KKR. After the contract is established, there are no significant judgments made when determining the transaction price.166Table of ContentsNotes to Financial Statements (Continued)Capital Allocation-Based IncomeCapital allocation-based income is earned from those arrangements where KKR has a general partner capital interest and is entitled to a disproportionateallocation of investment income (referred to hereafter as "carried interest"). KKR accounts for its general partner interests in capital allocation-based arrangementsas financial instruments under ASC 323, Investments - Equity Method and Joint Ventures ("ASC 323") since the general partner has significant governance rightsin the investment funds in which it invests, which demonstrates significant influence. In accordance with ASC 323, KKR records equity method income based onthe proportionate share of the income of the investment fund, including carried interest, assuming the investment fund was liquidated as of each reporting datepursuant to each investment fund's governing agreements. Accordingly, these general partner interests are accounted for outside of the scope of ASC 606. Otherarrangements surrounding contractual incentive fees through an advisory contract are separate and distinct and accounted for in accordance with ASC 606. In theseincentive fee arrangements, accounted for in accordance with ASC 606, KKR’s economics in the entity do not involve an allocation of capital. See "Incentive Fees"above.Carried interest is allocated to the general partner based on cumulative fund performance to date, and where applicable, subject to a preferred return to thefunds' limited partners. At the end of each reporting period, KKR calculates the carried interest that would be due to KKR for each investment fund, pursuant to thefund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As thefair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest to reflect either(a) positive performance resulting in an increase in the carried interest allocated to the general partner or (b) negative performance that would cause the amount dueto KKR to be less than the amount previously recognized, resulting in a negative adjustment to carried interest allocated to the general partner. In each case, it isnecessary to calculate the carried interest on cumulative results compared to the carried interest recorded to date and to make the required positive or negativeadjustments. KKR ceases to record negative carried interest allocations once previously recognized carried interest allocations for an investment fund have beenfully reversed. KKR is not obligated to make payments for guaranteed returns or hurdles and, therefore, cannot have negative carried interest over the life of aninvestment fund. Accrued but unpaid carried interest as of the reporting date is reflected in Investments in the consolidated statements of financial condition.KKR earns management fees, incentive fees and capital allocation-based income from investment funds, CLOs, and other vehicles whose primary focus ismaking investments in specified geographical locations and earns transaction, monitoring, and consulting fees from portfolio companies located in varyinggeographies. For the years ended December 31, 2019, 2018, and 2017, over 10% of consolidated revenues were earned in the United States. For the year endedDecember 31, 2019, 55.8%, 21.5% and 22.7% of consolidated revenues were generated in the Americas, Europe/Middle East, and Asia, respectively. For the yearended December 31, 2018, 62.4%, 24.7% and 12.9% of consolidated revenues were generated in the Americas, Europe/Middle East, and Asia, respectively. For theyear ended December 31, 2017, 64.5%, 21.1% and 14.4% of consolidated revenues were generated in the Americas, Europe/Middle East, and Asia, respectively.The determination of the geographic region was based on the geographic focus of the associated investment vehicle or where the portfolio company isheadquartered. Oil and gas revenue is included within Americas since all KKR’s oil and natural gas properties are located in the United States.For the year ended December 31, 2019, revenues from two of KKR’s flagship funds represented approximately $1.1 billion of total consolidated revenues. Forthe year ended December 31, 2018, none of KKR's flagship funds contributed more than 10% of KKR's total consolidated revenues. For the year ended December31, 2017, revenues from one of KKR’s flagship funds represented approximately $0.9 billion of total consolidated revenues.Additionally, KKR’s fixed assets are predominantly located in the United States.Compensation and BenefitsCompensation and Benefits expense includes (i) cash compensation consisting of salaries, bonuses, and benefits, (ii) equity based compensation consisting ofcharges associated with the vesting of equity-based awards (see Note 12 "Equity Based Compensation") and (iii) carry pool allocations.All KKR employees and employees of certain consolidated entities receive a base salary that is paid by KKR or its consolidated entities, and is accounted foras Compensation and Benefits expense in the consolidated statements of operations. These employees are also eligible to receive discretionary cash bonuses basedon performance, overall profitability and other matters. While cash bonuses paid to most employees are borne by KKR and certain consolidated entities and resultin customary compensation and benefits expense, certain cash bonuses that are paid to certain of KKR's principals can be borne by KKR Holdings. These bonusesare funded with distributions that KKR Holdings receives on KKR Group Partnership Units held by KKR Holdings but are not then passed on to holders ofunvested units of KKR Holdings. Because KKR principals are167Table of ContentsNotes to Financial Statements (Continued)not entitled to receive distributions on units that are unvested, any amounts allocated to principals in excess of a principal's vested equity interests are reflected asemployee compensation and benefits expense. These compensation charges, if any, are currently recorded based on the amount of cash expected to be paid by KKRHoldings.Carry Pool AllocationWith respect to KKR's active and future funds and co-investment vehicles that provide for carried interest, KKR allocates to its employees and employees ofcertain consolidated entities a portion of the carried interest earned in relation to these funds as part of its carry pool. KKR currently allocates 40% or 43%, asapplicable, of the carry it earns from these funds and vehicles to its carry pool. These amounts are accounted for as compensatory profit‑sharing arrangements inAccounts Payable, Accrued Expenses and Other Liabilities within the accompanying consolidated statements of financial condition in conjunction with the relatedcarried interest income and recorded as compensation expense.Profit Sharing PlanKKR provides certain profit sharing programs for KKR employees and other eligible personnel. In particular, KKR provides a 401(k) plan for eligibleemployees in the United States. For certain professionals who are participants in the 401(k) plan, KKR may, in its discretion, contribute an amount after the end ofthe plan year. For the years ended December 31, 2019, 2018 and 2017, KKR incurred expenses of $10.2 million, $9.5 million and $8.2 million, respectively, inconnection with the 401(k) plan and other profit sharing programs.General, Administrative and OtherGeneral, administrative and other expense consists primarily of professional fees paid to legal advisors, accountants, advisors and consultants, insurance costs,travel and related expenses, communications and information services, depreciation and amortization charges, expenses (including impairment charges) incurred byoil and gas entities that are consolidated, broken-deal expenses, placement fees and other general operating expenses. A portion of these general administrative andother expenses, in particular broken-deal expenses, are borne by fund investors.Investment IncomeInvestment income consists primarily of the net impact of:(i)Realized and unrealized gains and losses on investments, securities sold short, derivatives and debt obligations of consolidated CFEs which are recordedin Net Gains (Losses) from Investment Activities. Upon disposition of an investment, previously recognized unrealized gains or losses are reversed and arealized gain or loss is recognized.(ii)Foreign exchange gains and losses relating to mark‑to‑market activity on foreign exchange forward contracts, foreign currency options and foreigndenominated debt which are recorded in Net Gains (Losses) from Investment Activities.(iii)Dividends, which are recognized on the ex‑dividend date, or, in the absence of a formal declaration of a record date, on the date it is received.(iv)Interest income, which is recognized as earned.(v)Interest expense, which is recognized as incurred.Income TaxesKKR & Co. Inc. is a corporation for U.S. federal income tax purposes and thus is subject to U.S. federal, state and local corporate income taxes at the entitylevel on KKR’s share of net taxable income. In addition, the KKR Group Partnerships and certain of their subsidiaries operate in the United States as partnershipsfor U.S. federal income tax purposes and as corporate entities in certain non-U.S. jurisdictions. These entities, in some cases, are subject to U.S. state or localincome taxes or non-U.S. income taxes.Prior to the Conversion, KKR & Co. L.P.’s investment income and carried interest generally were not subject to U.S. corporate income taxes. Subsequent tothe Conversion, all net income earned by KKR & Co. Inc. is subject to U.S. corporate income taxes.168Table of ContentsNotes to Financial Statements (Continued)Deferred Income TaxesIncome taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for theexpected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for theyear in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in the consolidatedstatements of operations in the period when the change is enacted.Deferred tax assets, which are recorded in Other Assets within the statement of financial condition, are reduced by a valuation allowance when, based on theweight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability ofthe deferred tax assets, all evidence, both positive and negative, is considered. Items considered when evaluating the need for a valuation allowance include theability to carry back losses, future reversals of existing temporary differences, tax planning strategies, and expectations of future earnings.For a particular tax‑paying component of an entity and within a particular tax jurisdiction, deferred tax assets and liabilities are offset and presented as a singleamount within Other Assets or Accounts Payable, Accrued and Other Liabilities, as applicable, in the accompanying statements of financial condition.Uncertain Tax PositionsKKR analyzes its tax filing positions in all of the U.S. federal, state and local tax jurisdictions and foreign tax jurisdictions where it is required to file incometax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, KKR determines that uncertainties in tax positions exist, a reserve isestablished. The reserve for uncertain tax positions is recorded in Accounts Payable, Accrued and Other Liabilities in the accompanying statements of financialcondition. KKR recognizes accrued interest and penalties related to uncertain tax positions within the provision for income taxes in the consolidated statements ofoperations.KKR records uncertain tax positions on the basis of a two‑step process: (a) determination is made whether it is more likely than not that the tax positions willbe sustained based on the technical merits of the position and (b) those tax positions that meet the more‑likely‑than‑not threshold are recognized as the largestamount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related tax authority.Cash and Cash EquivalentsKKR considers all highly liquid short‑term investments with original maturities of 90 days or less when purchased to be cash equivalents.Cash and Cash Equivalents Held at Consolidated EntitiesCash and cash equivalents held at consolidated entities represents cash that, although not legally restricted, is not available to fund general liquidity needs ofKKR as the use of such funds is generally limited to the investment activities of KKR's investment funds and CFEs.Restricted Cash and Cash EquivalentsRestricted cash and cash equivalents primarily represent amounts that are held by third parties under certain of KKR's financing and derivative transactions.The duration of this restricted cash generally matches the duration of the related financing or derivative transaction.Due from and Due to AffiliatesKKR considers its principals and their related entities, unconsolidated investment funds and the portfolio companies of its funds to be affiliates for accountingpurposes. Receivables from and payables to affiliates are recorded at their current settlement amount.169Table of ContentsNotes to Financial Statements (Continued)Fixed Assets, Depreciation and AmortizationFixed assets consist primarily of corporate real estate, leasehold improvements, furniture and computer hardware. Such amounts are recorded at cost lessaccumulated depreciation and amortization and are included in Other Assets within the accompanying consolidated statements of financial condition. Depreciationand amortization are calculated using the straight‑line method over the assets' estimated economic useful lives, which for leasehold improvements are the lesser ofthe lease terms or the life of the asset, and three to seven years for other fixed assets.Freestanding DerivativesFreestanding derivatives are instruments that KKR and certain of its consolidated funds have entered into as part of their overall risk management andinvestment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such contracts may include forward, swap andoption contracts related to foreign currencies and interest rates to manage foreign exchange risk and interest rate risk arising from certain assets and liabilities. Allderivatives are recognized in Other Assets or Accounts Payable, Accrued Expenses and Other Liabilities and are presented on a gross basis in the consolidatedstatements of financial condition and measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in theaccompanying consolidated statements of operations. KKR's derivative financial instruments contain credit risk to the extent that its counterparties may be unableto meet the terms of the agreements. KKR attempts to reduce this risk by limiting its counterparties to major financial institutions with strong credit ratings.Goodwill Goodwill represents the excess of acquisition cost over the fair value of net tangible and intangible assets acquired in connection with an acquisition. Goodwillis assessed for impairment annually in the third quarter of each fiscal year or more frequently if circumstances indicate impairment may have occurred. Goodwill isrecorded in Other Assets in the accompanying consolidated statements of financial condition.Securities Sold ShortWhether part of a hedging transaction or a transaction in its own right, securities sold short represent obligations of KKR to deliver the specified security at thecontracted price at a future point in time, and thereby create a liability to repurchase the security in the market at the prevailing prices. The liability for suchsecurities sold short, which is recorded in Accounts Payable, Accrued Expenses and Other Liabilities in the statement of financial condition, is marked to marketbased on the current fair value of the underlying security at the reporting date with changes in fair value recorded as unrealized gains or losses in Net Gains(Losses) from Investment Activities in the accompanying consolidated statements of operations. These transactions may involve market risk in excess of theamount currently reflected in the accompanying consolidated statements of financial condition.Comprehensive Income (Loss)Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances,excluding those resulting from contributions from and distributions to owners. In the accompanying consolidated financial statements, comprehensive income iscomprised of (i) Net Income (Loss), as presented in the consolidated statements of operations and (ii) net foreign currency translation.Foreign CurrencyConsolidated entities which have a functional currency that differs from KKR's reporting currency are primarily KKR's investment management and capitalmarkets companies located outside the United States and certain CFEs. Foreign currency denominated assets and liabilities are translated using the exchange ratesprevailing at the end of each reporting period. Results of foreign operations are translated at the weighted average exchange rate for each reporting period.Translation adjustments are included as a component of accumulated other comprehensive income (loss) until realized. Foreign currency income or expensesresulting from transactions outside of the functional currency of a consolidated entity are recorded as incurred in general, administrative and other expense in theconsolidated statements of operations.170Table of ContentsNotes to Financial Statements (Continued)LeasesAt contract inception, KKR determines if an arrangement contains a lease by evaluating whether (i) the identified asset has been deployed in the contractexplicitly or implicitly and (ii) KKR obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purposethe asset is used during the term of the contract. Additionally, at contract inception KKR will evaluate whether the lease is an operating or finance lease. Right-of-use (“ROU”) assets represent KKR’s right to use an underlying asset for the lease term and lease liabilities represent KKR’s obligation to make lease paymentsarising from the lease.ROU assets and the associated lease liabilities are recognized at the commencement date based on the present value of the future minimum lease paymentsover the lease term. The discount rate implicit in the lease is generally not readily determinable. Consequently, KKR uses its incremental borrowing rate based onthe information available including, but not limited to, collateral assumptions, the term of the lease, and the economic environment in which the lease isdenominated at the commencement date in determining the present value of the future lease payments. The ROU assets are recognized as the initial measurementof the lease liabilities plus any initial direct costs and any prepaid lease payments less lease incentives received, if any. The lease terms may include options toextend or terminate the lease which are accounted for when it is reasonably certain that KKR will exercise that option. Certain leases that include lease and non-lease components are accounted for as one single lease component. In addition to contractual rent payments, occupancy lease agreements generally includeadditional payments for certain costs incurred by the landlord, such as building expenses and utilities. To the extent these are fixed or determinable, they areincluded as part of the lease payments used to measure the Operating Lease Liability.Operating lease expense is recognized on a straight-line basis over the lease term and is recorded within Occupancy and Related Charges in the accompanyingconsolidated statements of operations. The ROU assets are included in Other Assets and the lease liabilities are included in Accounts Payable, Accrued Expensesand Other Liabilities in the accompanying consolidated statements of financial condition. See Note 8 "Other Assets and Accounts Payable, Accrued Expenses andOther Liabilities."Recently Issued Accounting PronouncementsAdopted in 2019LeasesIn February 2016, the FASB issued ASU No. 2016-02, Leases ("ASC 842") which has subsequently been amended. This guidance, among other items: (i)requires recognition of lease assets and lease liabilities for those leases classified as operating leases under previous GAAP, ASC 840; (ii) retains a distinctionbetween finance leases and operating leases; and (iii) includes the classification criteria for distinguishing between finance leases and operating leases that aresubstantially similar to the classification criteria for distinguishing between capital leases and operating leases under ASC 840.The only material lease activity KKR is engaged in is the leasing of office space where KKR is the lessee under the terms of lease agreements, which havebeen determined to be operating leases. For operating leases, a lessee is required to: (a) recognize a right-of-use asset and a lease liability, initially measured at thepresent value of the lease payments, in the consolidated statement of financial condition; (b) recognize a single lease cost, calculated so that the cost of the lease isallocated over the lease term, generally on a straight-line basis, and (c) classify all cash payments within operating activities in the consolidated statement of cashflows.KKR adopted this guidance on the effective date, January 1, 2019, using the modified retrospective approach and electing the "Comparatives Under ASC 840Approach." The Comparatives Under ASC 840 Approach allows an entity to elect not to recast its comparative periods in the period of adoption when transitioningto ASC 842. In doing so, KKR has provided the disclosures required by ASC 840 for the comparative periods. Additionally, KKR has elected the practicalexpedient package transition election for all leases. The practical expedient package under the new standard allows an entity not to have to reassess its priorconclusions about lease identification, lease classification and initial direct costs. KKR also has made the election under ASC 842 to account for lease and non-lease components as a single lease component.Upon adoption, KKR recorded ROU assets of $153.3 million and lease liabilities of $162.9 million, resulting in no cumulative-effect adjustment to retainedearnings as of January 1, 2019.171Table of ContentsNotes to Financial Statements (Continued)Premium Amortization on Purchased Callable Debt SecuritiesIn March 2017, the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization onPurchased Callable Debt Securities ("ASU 2017-08"). This guidance amends the amortization period for certain purchased callable debt securities held at apremium. The guidance requires the premium to be amortized to the earliest call date. The guidance does not require an accounting change for securities held at adiscount; the discount continues to be amortized to maturity. ASU 2017-08 is effective for fiscal years and interim periods beginning after December 15, 2018.This guidance has been adopted as of January 1, 2019 and did not have a material impact to KKR.Reclassification of Certain Tax Effects from Accumulated Other Comprehensive IncomeIn February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain TaxEffects from Accumulated Other Comprehensive Income ("ASU 2018-02"). Under ASC 740-10-45-15, the effects of changes in tax rates and laws on deferred taxbalances are recorded as a component of tax expense for the period in which the law was enacted, even if the assets and liabilities related to items of accumulatedother comprehensive income ("OCI"). ASU 2018-02 allows entities to elect to reclassify from accumulated OCI to retained earnings stranded tax effects that relateto the Tax Cuts and Jobs Act, which was enacted in December 2017 (the "2017 Tax Act") from the change in federal tax rate for all items accounted for in OCI.Entities can also elect to reclassify other stranded tax effects that relate to the 2017 Tax Act, but do not directly relate to the change in the federal tax rate. Taxeffects that are stranded in OCI for other reasons may not be reclassified. In the period of adoption, entities that elect to reclassify the income tax effects of the2017 Tax Act from accumulated OCI to retained earnings must disclose that they made such an election. Entities must also disclose a description of other incometax effects related to the 2017 Tax Act that are reclassified from accumulated OCI to retained earnings, if any. The guidance is effective for fiscal periodsbeginning after December 15, 2018, and interim periods within those fiscal years. This guidance has been adopted as of January 1, 2019 and did not have a materialimpact to KKR. KKR did not elect to reclassify stranded tax effects that relate to the 2017 Tax Act from accumulated OCI to retained earnings for all itemsaccounted for in OCI. KKR's policy for releasing income tax effects from accumulated OCI is when all related units of account are liquidated, sold or extinguished.Effective on January 1, 2020Measurement of Credit Losses on Financial InstrumentsIn June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments("ASU 2016-13"), which has subsequently been amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, and ASU No. 2019-11. The objective of theguidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entityto present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available for sale and held to maturitydebt securities are also required to be held net of an allowance for credit losses. The guidance is effective for fiscal periods beginning after December 15, 2019. Theguidance should be applied using a modified retrospective approach. KKR is currently evaluating the impact of this guidance on the financial statements.GoodwillIn January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. Thisguidance simplifies the accounting for goodwill impairments by eliminating the second step from the goodwill impairment test. The ASU requires goodwillimpairments to be measured on the basis of the fair value of a reporting unit relative to the reporting unit's carrying amount rather than on the basis of the impliedamount of goodwill relative to the goodwill balance of the reporting unit. The ASU also (i) clarifies the requirements for excluding and allocating foreign currencytranslation adjustments to reporting units related to an entity's testing of reporting units for goodwill impairment and (ii) clarifies that an entity should considerincome tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. Theguidance is effective for fiscal periods beginning after December 15, 2019. Early adoption is allowed for entities as of January 1, 2017, for annual and any interimimpairment tests occurring after January 1, 2017. KKR is currently evaluating the impact of this guidance on the financial statements.172Table of ContentsNotes to Financial Statements (Continued)Implementation Costs Incurred in a Cloud Computing ArrangementIn August 2018, the FASB issued ASU No. 2018-15, which addresses a customer’s accounting for implementation costs incurred in a cloud computingarrangement ("CCA") that is a service contract. The ASU aligns the accounting for costs incurred to implement a CCA that is a service arrangement with theguidance on capitalizing costs associated with developing or obtaining internal-use software. The guidance is effective for fiscal periods beginning after December15, 2019. Early adoption is permitted and this ASU can be applied on either a retrospective or prospective basis. KKR is currently evaluating the impact of thisguidance on the financial statements.Effective on January 1, 2021Simplifying the Accounting for Income TaxesOn December 18, 2019, the FASB issued ASU No. 2019-12, which modifies ASC 740 to simplify the accounting for income taxes. The ASU, among otherchanges, (i) provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and (ii)provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separatetransaction. The guidance is effective for fiscal periods beginning after December 15, 2020. KKR is currently evaluating the impact of this guidance on thefinancial statements.173Table of ContentsNotes to Financial Statements (Continued)3. NET GAINS (LOSSES) FROM INVESTMENT ACTIVITIESNet Gains (Losses) from Investment Activities in the consolidated statements of operations consist primarily of the realized and unrealized gains and losses oninvestments (including foreign exchange gains and losses attributable to foreign denominated investments and related activities) and other financial instruments,including those for which the fair value option has been elected. Unrealized gains or losses result from changes in the fair value of these investments and otherfinancial instruments during a period. Upon disposition of an investment or financial instrument, previously recognized unrealized gains or losses are reversed andan offsetting realized gain or loss is recognized in the current period.The following table summarizes total Net Gains (Losses) from Investment Activities for the years ended December 31, 2019, 2018 and 2017, respectively: For the Year Ended December 31, 2019 Net Realized Gains (Losses) Net Unrealized Gains (Losses) TotalPrivate Equity (1)$261,920 $2,849,031 $3,110,951Credit (1)(92,114) (150,881) (242,995)Investments of Consolidated CFEs (1)(57,230) 270,268 213,038Real Assets (1)93,848 (128,393) (34,545)Equity Method - Other (1)70,385 540,775 611,160Other Investments (1)53,688 (240,548) (186,860)Foreign Exchange Forward Contracts and Options (2)161,175 20,309 181,484Securities Sold Short (2)54,707 (53,483) 1,224Other Derivatives (2)(19,584) (36,918) (56,502)Debt Obligations and Other (3)(29,449) (405,622) (435,071)Net Gains (Losses) From Investment Activities$497,346 $2,664,538 $3,161,884 For the Year Ended December 31, 2018 Net Realized Gains (Losses) Net Unrealized Gains (Losses) TotalPrivate Equity (1)$184,784 $708,600 $893,384Credit (1)(354,090) (420,434) (774,524)Investments of Consolidated CFEs (1)(83,719) (452,331) (536,050)Real Assets (1)92,885 67,999 160,884Equity Method - Other (1)(3,991) 339,027 335,036Other Investments (1)(239,081) (434,537) (673,618)Foreign Exchange Forward Contracts and Options (2)(90,625) 266,938 176,313Securities Sold Short (2)750,007 26,465 776,472Other Derivatives (2)(13,273) 1,037 (12,236)Debt Obligations and Other (3)291,755 617,416 909,171Net Gains (Losses) From Investment Activities$534,652 $720,180 $1,254,832 For the Year Ended December 31, 2017 Net Realized Gains (Losses) Net Unrealized Gains (Losses) TotalPrivate Equity (1)$223,568 $338,720 $562,288Credit (1)(470,487) 423,603 (46,884)Investments of Consolidated CFEs (1)(97,129) 352 (96,777)Real Assets (1)(18,722) 218,728 200,006Equity Method - Other (1)34,190 95,968 130,158Other Investments (1)(796,348) 65,516 (730,832)Foreign Exchange Forward Contracts and Options (2)(31,772) (342,849) (374,621)Securities Sold Short (2)1,116,325 97,811 1,214,136Other Derivatives (2)(7,129) (23,687) (30,816)Debt Obligations and Other (3)85,820 15,666 101,486Net Gains (Losses) From Investment Activities$38,316 $889,828 $928,144(1)See Note 4 "Investments."(2)See Note 8 "Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities."(3)See Note 10 "Debt Obligations."174Table of ContentsNotes to Financial Statements (Continued)4. INVESTMENTSInvestments consist of the following: December 31, 2019 December 31, 2018Private Equity$12,923,600 $7,349,559Credit10,538,139 9,099,135Investments of Consolidated CFEs14,948,237 14,733,423Real Assets3,567,944 3,157,954Equity Method - Other4,846,949 4,212,874Equity Method - Capital Allocation-Based Income5,329,368 3,584,415Other Investments2,782,031 2,770,622Total Investments$54,936,268 $44,907,982 As of December 31, 2019 and December 31, 2018, there were no investments which represented greater than 5% of total investments. The majority of thesecurities underlying private equity investments represent equity securities.Equity Method Investment in Marshall WaceOn November 2, 2015, KKR entered into a long-term strategic relationship with Marshall Wace and acquired a 24.9% interest in Marshall Wace through acombination of cash and Class A common stock.Subject to the exercise of a put option by Marshall Wace or a call option by KKR, at subsequent closings to occur in the second, third, and fourth yearsfollowing the initial closing described above, and subject to satisfaction or waiver of certain closing conditions, including regulatory approvals, KKR may at eachsuch closing subscribe (or be required to subscribe) for an incremental 5% equity interest. The exercise of such options would require the use of cash and/or KKRClass A common stock.On each of November 30, 2017 and 2018 and November 22, 2019, KKR acquired an additional 5.0% interest in Marshall Wace after the exercise of theoptions agreed to between Marshall Wace and KKR, bringing KKR's total ownership of Marshall Wace to 39.6%, after giving effect to certain equity dilution.These acquisitions in 2017, 2018 and 2019 were funded through a combination of cash and 4,727,966, 5,238,889 and 5,674,251 shares of Class A common stock,respectively.KKR's investment in Marshall Wace is accounted for using the equity method of accounting.Summarized Financial InformationKKR evaluates each of its equity method investments to determine if any are significant as defined in the regulations promulgated by the U.S. Securities andExchange Commission (the "SEC"). As of and for the years ended December 31, 2019, 2018, and 2017, no individual equity method investment held by KKR metthe significance criteria. As such, KKR is not required to present separate financial statements for any of its equity method investments.The following table shows summarized financial information relating to the statements of financial condition for all of KKR's equity method investmentsassuming 100% ownership as of December, 31, 2019 and 2018: December 31, 2019 December 31, 2018Total Assets $112,688,482 $93,577,773Total Liabilities $22,622,609 $21,296,194Total Equity $90,065,873 $72,281,579175Table of ContentsNotes to Financial Statements (Continued)The following table shows summarized financial information relating to the statements of operations for all of KKR's equity method investments assuming100% ownership for the years ended December 31, 2019, 2018 and 2017: For the Years Ended December 31, 2019 2018 2017Investment Related Revenues $2,552,266 $1,679,950 $1,167,038Other Revenues 5,132,796 5,304,634 3,002,987Investment Related Expenses 1,385,870 1,258,782 482,336Other Expenses 4,066,713 3,602,612 2,392,965Net Realized and Unrealized Gain/(Loss) from Investments 10,532,988 1,818,861 9,217,912Net Income (Loss) $12,765,467 $3,942,051 $10,512,6365. FAIR VALUE MEASUREMENTSThe following tables summarize the valuation of assets and liabilities measured and reported at fair value by the fair value hierarchy. Investments classified asEquity Method - Other, for which the fair value option has not been elected, and Equity Method - Capital Allocation-Based Income have been excluded from thetables below.Assets, at fair value: December 31, 2019 Level I Level II Level III TotalPrivate Equity$1,393,654 $1,658,264 $9,871,682 $12,923,600Credit— 1,320,380 9,217,759 10,538,139Investments of Consolidated CFEs— 14,948,237 — 14,948,237Real Assets— — 3,567,944 3,567,944Equity Method - Other228,999 49,511 1,656,045 1,934,555Other Investments431,084 196,192 2,154,755 2,782,031Total Investments2,053,737 18,172,584 26,468,185 46,694,506 Foreign Exchange Contracts and Options— 188,572 — 188,572Other Derivatives— 1,333 21,806(1) 23,139Total Assets$2,053,737 $18,362,489 $26,489,991 $46,906,217 176Table of ContentsNotes to Financial Statements (Continued) December 31, 2018 Level I Level II Level III TotalPrivate Equity$1,156,977 $63,999 $6,128,583 $7,349,559Credit— 2,334,405 6,764,730 9,099,135Investments of Consolidated CFEs— 12,650,878 2,082,545 14,733,423Real Assets— — 3,157,954 3,157,954Equity Method - Other245,225 43,943 1,503,022 1,792,190Other Investments480,192 173,844 2,116,586 2,770,622Total Investments1,882,394 15,267,069 21,753,420 38,902,883 Foreign Exchange Contracts and Options— 177,264 — 177,264Other Derivatives— 3,879 37,116(1) 40,995Total Assets$1,882,394 $15,448,212 $21,790,536 $39,121,142(1)Includes derivative assets that were valued using a third-party valuation firm. The approach used to estimate the fair value of these derivative assets was generally the discounted cash flowmethod, which includes consideration of the current portfolio, projected portfolio construction, projected portfolio realizations, portfolio volatility (based on the volatility, correlation, andsize of each underlying asset class), and the discounting of future cash flows to the reporting date.Liabilities, at fair value: December 31, 2019 Level I Level II Level III TotalSecurities Sold Short$251,223 $— $— $251,223Foreign Exchange Contracts and Options— 39,364 — 39,364Unfunded Revolver Commitments— — 75,842(1) 75,842Other Derivatives— 34,174 — 34,174Debt Obligations of Consolidated CFEs— 14,658,137 — 14,658,137Total Liabilities$251,223 $14,731,675 $75,842 $15,058,740 December 31, 2018 Level I Level II Level III TotalSecurities Sold Short$344,124 $— $— $344,124Foreign Exchange Contracts and Options— 60,749 — 60,749Unfunded Revolver Commitments— — 52,066(1) 52,066Other Derivatives— 18,440 17,200(2) 35,640Debt Obligations of Consolidated CFEs— 12,081,771 1,876,783 13,958,554Total Liabilities$344,124 $12,160,960 $1,946,049 $14,451,133(1)These unfunded revolver commitments are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.(2)Includes options issued in connection with the acquisition of the equity interest in Marshall Wace and its affiliates in November 2015 to increase KKR's ownership interest in periodicincrements. The options are valued using a Monte-Carlo simulation valuation methodology. Key inputs used in this methodology that require estimates include Marshall Wace's dividendyield, assets under management volatility and equity volatility. See Note 4 "Investments."177Table of ContentsNotes to Financial Statements (Continued)The following tables summarize changes in investments and debt obligations measured and reported at fair value for which Level III inputs have been used todetermine fair value for the years ended December 31, 2019 and 2018, respectively: For the Year Ended December 31, 2019 Level III Investments Level III Debt Obligations Private Equity Credit Investments of Consolidated CFEs Real Assets EquityMethod -Other OtherInvestments Total Debt Obligations of Consolidated CFEsBalance, Beg. of Period$6,128,583 $6,764,730 $2,082,545 $3,157,954 $1,503,022 $2,116,586 $21,753,420 $1,876,783Transfers In / (Out) Due to Changes inConsolidation23,123 956,402 (2,015,130) — — (42,864) (1,078,469) (1,849,206)Transfers In26,045 149,804 — 18,429 26,520 — 220,798 —Transfers Out(491,723) (10,248) — — (143,620) (36,018) (681,609) —Asset Purchases / Debt Issuances3,179,376 4,600,626 — 927,477 414,393 829,992 9,951,864 —Sales / Paydowns(353,684) (3,032,887) (62,334) (501,371) (303,196) (516,346) (4,769,818) —Settlements— 39,424 — — — — 39,424 (26,770)Net Realized Gains (Losses)114,812 (55,948) (2,759) 93,848 17,496 52,757 220,206 —Net Unrealized Gains (Losses)1,245,150 (177,954) (2,322) (128,393) 141,430 (249,352) 828,559 (807)Change in Other ComprehensiveIncome— (16,190) — — — — (16,190) —Balance, End of Period$9,871,682 $9,217,759 $— $3,567,944 $1,656,045 $2,154,755 $26,468,185 $— Changes in Net Unrealized Gains(Losses) Included in Net Gains(Losses) from Investment Activitiesrelated to Level III Assets andLiabilities still held as of theReporting Date$1,316,857 $(208,744) $— $(90,583) $149,519 $(230,726) $936,323 $— For the Year Ended December 31, 2018 Level III Investments Level III Debt Obligations PrivateEquity Credit Investments ofConsolidatedCFEs Real Assets EquityMethod -Other OtherInvestments Total Debt Obligations ofConsolidatedCFEsBalance, Beg. of Period$2,172,290 $5,138,937 $5,353,090 $2,251,267 $1,076,709 $1,760,011 $17,752,304 $5,238,236Transfers In / (Out) Due to Changes inConsolidation928,217 770,677 (4,153,641) — — 1,065 (2,453,682) (4,045,957)Transfers In— 154,255 1,000,000 — — 38,782 1,193,037 —Transfers Out(52,568) (1,030,072) — — — — (1,082,640) —Asset Purchases / Debt Issuances2,383,277 4,265,569 — 1,309,390 657,332 814,407 9,429,975 800,350Sales / Paydowns(142,067) (1,932,299) (31,280) (545,686) (141,806) (350,484) (3,143,622) —Settlements— (1,350) — — — — (1,350) (20,722)Net Realized Gains (Losses)41,614 (236,595) 13,000 55,966 (149,825) 20,745 (255,095) —Net Unrealized Gains (Losses)797,820 (294,417) (98,624) 87,017 60,612 (167,940) 384,468 (95,124)Change in Other ComprehensiveIncome— (69,975) — — — — (69,975) —Balance, End of Period$6,128,583 $6,764,730 $2,082,545 $3,157,954 $1,503,022 $2,116,586 $21,753,420 $1,876,783 Changes in Net Unrealized Gains(Losses) Included in Net Gains(Losses) from Investment Activitiesrelated to Level III Assets andLiabilities still held as of theReporting Date$808,637 $(197,159) $(98,624) $68,215 $(86,009) $(120,413) $374,647 $(95,124)178Table of ContentsNotes to Financial Statements (Continued)Total realized and unrealized gains and losses recorded for Level III assets and liabilities are reported in Net Gains (Losses) from Investment Activities in theaccompanying consolidated statements of operations.The following table presents additional information about valuation methodologies and significant unobservable inputs used for investments that are measuredand reported at fair value and categorized within Level III as of December 31, 2019: Fair ValueDecember 31, 2019 ValuationMethodologies Unobservable Input(s) (1) WeightedAverage (2) Range Impact to Valuationfrom anIncrease inInput (3) Private Equity$9,871,682 Private Equity$7,608,566 Inputs to market comparables,discounted cash flow and transactionprice Illiquidity Discount 6.7% 5.0% - 15.0% Decrease Weight Ascribed to Market Comparables 25.2% 0.0% - 75.0% (4) Weight Ascribed to Discounted Cash Flow 60.0% 0.0% - 100.0% (5) Weight Ascribed to Transaction Price 14.8% 0.0% - 100.0% (6) Market comparables Enterprise Value/LTM EBITDA Multiple 14.7x 8.0x - 26.0x Increase Enterprise Value/Forward EBITDA Multiple 15.0x 8.7x - 23.9x Increase Discounted cash flow Weighted Average Cost of Capital 9.5% 6.7% - 15.4% Decrease Enterprise Value/LTM EBITDA Exit Multiple 12.7x 6.0x - 15.0x Increase Growth Equity$2,263,116 Inputs to market comparables,discounted cash flow and milestones Illiquidity Discount 11.7% 10.0% - 40.0% Decrease Weight Ascribed to Market Comparables 37.6% 0.0% - 100.0% (4) Weight Ascribed to Discounted Cash Flow 0.4% 0.0% - 37.5% (5) Weight Ascribed to Milestones 62.0% 0.0% - 100.0% (6) Scenario Weighting Base 60.8% 40.0% - 70.0% Increase Downside 14.0% 5.0% - 45.0% Decrease Upside 25.2% 5.0% - 45.0% Increase Credit$9,217,759 Yield Analysis Yield 6.3% 5.3% - 25.2% Decrease Net Leverage 5.5x 1.2x - 14.1x Decrease EBITDA Multiple 10.5x 0.2x - 27.4x Increase Real Assets$3,567,944(9) Energy$1,686,783 Discounted cash flow Weighted Average Cost of Capital 11.6% 8.5% - 17.6% Decrease Average Price Per BOE (8) $38.73 $35.21 - $40.70 Increase Real Estate$1,671,221 Inputs to direct income capitalization anddiscounted cash flow Weight Ascribed to Direct Income Capitalization 33.9% 0.0% - 100.0% (7) Weight Ascribed to Discounted Cash Flow 66.1% 0.0% - 100.0% (5) Direct income capitalization Current Capitalization Rate 5.9% 4.9% - 11.0% Decrease Discounted cash flow Unlevered Discount Rate 7.6% 4.9% - 18.0% Decrease Equity Method -Other$1,656,045 Inputs to market comparables,discounted cash flow and transactionprice Illiquidity Discount 8.2% 5.0% - 15.0% Decrease Weight Ascribed to Market Comparables 37.4% 0.0% - 100.0% (4) Weight Ascribed to Discounted Cash Flow 37.9% 0.0% - 100.0% (5) Weight Ascribed to Transaction Price 24.7% 0.0% - 100.0% (6) Market comparables Enterprise Value/LTM EBITDA Multiple 12.3x 8.0x - 17.0x Increase Enterprise Value/Forward EBITDA Multiple 11.3x 10.2x - 14.4x Increase Discounted cash flow Weighted Average Cost of Capital 8.8% 5.6% - 13.1% Decrease Enterprise Value/LTM EBITDA Exit Multiple 10.5x 6.0x - 12.5x Increase Other Investments$2,154,755(10)Inputs to market comparables,discounted cash flow and transactionprice Illiquidity Discount 9.5% 0.0% - 20.0% Decrease Weight Ascribed to Market Comparables 29.6% 0.0% - 100.0% (4) Weight Ascribed to Discounted Cash Flow 41.0% 0.0% - 100.0% (5) Weight Ascribed to Transaction Price 29.4% 0.0% - 100.0% (6) Market comparables Enterprise Value/LTM EBITDA Multiple 12.6x 1.8x - 27.4x Increase Enterprise Value/Forward EBITDA Multiple 11.3x 0.2x - 13.5x Increase Discounted cash flow Weighted Average Cost of Capital 14.9% 7.7% - 43.8% Decrease Enterprise Value/LTM EBITDA Exit Multiple 9.7x 3.7x - 12.7x Increase 179Table of ContentsNotes to Financial Statements (Continued)(1)In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparablecompanies and company specific developments including exit strategies and realization opportunities. Management has determined that market participants would take these inputs intoaccount when valuing the investments and debt obligations. LTM means last twelve months and EBITDA means earnings before interest, taxes, depreciation and amortization.(2)Inputs were weighted based on the fair value of the investments included in the range.(3)Unless otherwise noted, this column represents the directional change in the fair value of the Level III investments that would result from an increase to the corresponding unobservableinput. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fairvalue measurements.(4)The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparablesapproach results in a higher valuation than the discounted cash flow approach and transaction price. The opposite would be true if the market comparables approach results in a lowervaluation than the discounted cash flow approach and transaction price.(5)The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flowapproach results in a higher valuation than the market comparables approach, transaction price and direct income capitalization approach. The opposite would be true if the discounted cashflow approach results in a lower valuation than the market comparables approach, transaction price and direct income capitalization approach.(6)The directional change from an increase in the weight ascribed to the transaction price or milestones would increase the fair value of the Level III investments if the transaction price ormilestones results in a higher valuation than the market comparables and discounted cash flow approach. The opposite would be true if the transaction price or milestones results in a lowervaluation than the market comparables approach and discounted cash flow approach.(7)The directional change from an increase in the weight ascribed to the direct income capitalization approach would increase the fair value of the Level III investments if the direct incomecapitalization approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the direct income capitalization approach results in a lowervaluation than the discounted cash flow approach.(8)The total energy fair value amount includes multiple investments (in multiple locations throughout North America) that are held in multiple investment funds and produce varyingquantities of oil, condensate, natural gas liquids, and natural gas. Commodity price may be measured using a common volumetric equivalent where one barrel of oil equivalent ("BOE"), isdetermined using the ratio of six thousand cubic feet of natural gas to one barrel of oil, condensate or natural gas liquids. The price per BOE is provided to show the aggregate of all priceinputs for the various investments over a common volumetric equivalent although the valuations for specific investments may use price inputs specific to the asset for purposes of ourvaluations. The discounted cash flows include forecasted production of liquids (oil, condensate, and natural gas liquids) and natural gas with a forecasted revenue ratio of approximately89% liquids and 11% natural gas.(9)Includes one Infrastructure investment for $209.9 million that was valued using a market comparables and discounted cash flow analysis; weights ascribed were 25% and 75%,respectively. The significant inputs used in the market comparables approach included the Forward EBITDA multiple 11.7x. The significant inputs used in the discounted cash flowapproach included the weighted average cost of capital 7.0% and the enterprise value/LTM EBITDA exit multiple 10.0x.(10)Consists primarily of investments in common stock, preferred stock, warrants and options of companies that are not private equity, real assets, credit, equity method - other or investmentsof consolidated CFEs.In the table above, certain private equity investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value. Inaddition, certain valuations of private equity investments may be entirely or partially derived by reference to observable valuation measures for a pending orconsummated transaction.The various unobservable inputs used to determine the Level III valuations may have similar or diverging impacts on valuation. Significant increases anddecreases in these inputs in isolation and interrelationships between those inputs could result in significantly higher or lower fair value measurements as noted inthe table above.180Table of ContentsNotes to Financial Statements (Continued)6. FAIR VALUE OPTIONThe following table summarizes the financial instruments for which the fair value option has been elected: December 31, 2019 December 31, 2018Assets Private Equity$— $2,977Credit6,451,765 4,950,819Investments of Consolidated CFEs14,948,237 14,733,423Real Assets222,488 310,399Equity Method - Other1,934,555 1,792,190Other Investments395,637 235,012 Total$23,952,682 $22,024,820 Liabilities Debt Obligations of Consolidated CFEs$14,658,137 $13,958,554 Total$14,658,137 $13,958,554The following table presents the net realized and unrealized gains (losses) on financial instruments for which the fair value option was elected for the yearsended December 31, 2019, 2018 and 2017, respectively: For the Year Ended December 31, 2019 Net Realized Gains (Losses) Net Unrealized Gains (Losses) TotalAssets Private Equity$— $194 $194Credit(67,279) (203,666) (270,945)Investments of Consolidated CFEs(57,230) 270,268 213,038Real Assets737 (2,038) (1,301)Equity Method - Other17,373 157,291 174,664Other Investments2,652 (24,130) (21,478) Total$(103,747) $197,919 $94,172 Liabilities Debt Obligations of Consolidated CFEs$(2,368) $(362,783) $(365,151) Total$(2,368) $(362,783) $(365,151) For the Year Ended December 31, 2018 Net Realized Gains (Losses) Net UnrealizedGains (Losses) TotalAssets Private Equity$(4,907) $5,355 $448Credit(245,737) (148,150) (393,887)Investments of Consolidated CFEs(83,719) (452,331) (536,050)Real Assets11,184 (11,446) (262)Equity Method - Other(150,225) 16,916 (133,309)Other Investments(13,838) (19,468) (33,306) Total$(487,242) $(609,124) $(1,096,366) Liabilities Debt Obligations of Consolidated CFEs$4,371 $521,101 $525,472 Total$4,371 $521,101 $525,472181Table of ContentsNotes to Financial Statements (Continued) For the Year Ended December 31, 2017 Net Realized Gains (Losses) Net Unrealized Gains (Losses) TotalAssets Private Equity$(1,386) $38,791 $37,405Credit(464,512) 78,282 (386,230)Investments of Consolidated CFEs(97,129) 352 (96,777)Real Assets13,112 44,136 57,248Equity Method - Other18,883 (2,635) 16,248Other(32,217) 24,923 (7,294) Total$(563,249) $183,849 $(379,400) Liabilities Debt Obligations of Consolidated CFEs$83,146 $11,768 $94,914 Total$83,146 $11,768 $94,914182Table of ContentsNotes to Financial Statements (Continued)7. NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. INC. PER SHARE OF CLASS A COMMON STOCK For the years ended December 31, 2019, 2018, and 2017, basic and diluted Net Income (Loss) attributable to KKR & Co. Inc. per share of Class A commonstock were calculated as follows: For the Years Ended December 31, 2019 2018 2017Net Income (Loss) Attributable to KKR & Co. Inc.Class A Common Stockholders$1,971,685 $1,097,699 $984,941Excess of carrying value over consideration transferred on redemption of KFN 7.375% Series ALLC Preferred Shares— 3,102 —Net Income (Loss) Available to KKR & Co. Inc.Class A Common Stockholders$1,971,685 $1,100,801 $984,941Basic Net Income (Loss) Per Share of Class A Common Stock Weighted Average Shares of Class A Common Stock Outstanding - Basic545,096,999 514,102,571 468,282,642Net Income (Loss) Attributable to KKR & Co. Inc.Per Share of Class A Common Stock - Basic$3.62 $2.14 $2.10Diluted Net Income (Loss) Per Share of Class A Common Stock Weighted Average Shares of Class A Common Stock Outstanding - Basic545,096,999 514,102,571 468,282,642Weighted Average Unvested Shares of Class A Common Stock and Other ExchangeableSecurities12,590,513 19,604,468 38,006,329Weighted Average Shares of Class A Common Stock Outstanding - Diluted557,687,512 533,707,039 506,288,971Net Income (Loss) Attributable to KKR & Co. Inc.Per Share of Class A Common Stock - Diluted$3.54 $2.06 $1.95Weighted Average Shares of Class A Common Stock Outstanding - Diluted primarily includes unvested equity awards that have been granted under theAmended and Restated KKR & Co. Inc. 2010 Equity Incentive Plan (the "2010 Equity Incentive Plan") and the KKR & Co. Inc. 2019 Equity Incentive Plan (the"2019 Equity Incentive Plan" and, together with the 2010 Equity Incentive Plan, the "Equity Incentive Plans"), as well as exchangeable equity securities issued inconnection with the acquisition of Avoca. Vesting or exchanges of these equity interests dilute KKR & Co. Inc. and KKR Holdings pro rata in accordance withtheir respective ownership interests in the KKR Group Partnerships.For the years ended December 31, 2019, 2018, and 2017, KKR Holdings units have been excluded from the calculation of Net Income (Loss) Attributable toKKR & Co. Inc. Per Share of Class A Common Stock - Diluted since the exchange of these units would not dilute KKR's respective ownership interests in theKKR Group Partnerships. For the Years Ended December 31, 2019 2018 2017Weighted Average KKR Holdings Units296,445,196 314,458,757 344,422,095Additionally, for the years ended December 31, 2019, 2018 and 2017, 5.0 million shares of KKR Class A common stock subject to a market price-basedvesting condition were excluded from the calculation of Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock - Diluted sincethe vesting conditions have not been satisfied. See Note 12 "Equity Based Compensation."183Table of ContentsNotes to Financial Statements (Continued)8. OTHER ASSETS AND ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIESOther Assets consist of the following: December 31, 2019 December 31, 2018Unsettled Investment Sales (1)$86,033 $101,789Receivables26,893 27,258Due from Broker (2)65,154 396,512Oil & Gas Assets, net (3)215,243 225,256Deferred Tax Assets, net158,574 538,161Interest Receivable156,026 241,547Fixed Assets, net (4)633,025 451,206Foreign Exchange Contracts and Options (5)188,572 177,264Goodwill (6)83,500 83,500Derivative Assets23,139 40,995Prepaid Taxes84,462 69,165Prepaid Expenses14,596 23,551Operating Lease Right of Use Assets (7)121,101 —Deferred Financing Costs12,374 13,871Other139,544 146,617Total$2,008,236 $2,536,692(1)Represents amounts due from third parties for investments sold for which cash settlement has not occurred.(2)Represents amounts held at clearing brokers resulting from securities transactions.(3)Includes proved and unproved oil and natural gas properties under the successful efforts method of accounting, which is net of impairment write-downs, accumulated depreciation,depletion and amortization. Depreciation, depletion and amortization of $31.4 million, $22.3 million and $24.7 million for the years ended December 31, 2019, 2018, and 2017,respectively, are included in General, Administrative and Other in the accompanying consolidated statements of operations.(4)Net of accumulated depreciation and amortization of $132.7 million and $113.5 million as of December 31, 2019 and 2018, respectively. Depreciation and amortization expense of $17.7million, $15.0 million and $15.3 million for the years ended December 31, 2019, 2018, and 2017, respectively, are included in General, Administrative and Other in the accompanyingconsolidated statements of operations.(5)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fairvalue with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 3 "Net Gains (Losses)from Investment Activities" for the net changes in fair value associated with these instruments.(6)As of December 31, 2019, the carrying value of goodwill is recorded and assessed for impairment at the reporting unit.(7)KKR’s non-cancelable operating leases consist of leases for office space in North America, Europe, Asia and Australia. KKR is the lessee under the terms of the operating leases. For theyear ended December 31, 2019, the operating lease cost was $48.0 million.184Table of ContentsNotes to Financial Statements (Continued)Accounts Payable, Accrued Expenses and Other Liabilities consist of the following: December 31, 2019 December 31, 2018Amounts Payable to Carry Pool (1)$1,448,879 $922,977Unsettled Investment Purchases (2)481,337 541,165Securities Sold Short (3) 251,223 344,124Derivative Liabilities34,174 35,640Accrued Compensation and Benefits131,719 107,887Interest Payable234,165 212,969Foreign Exchange Contracts and Options (4)39,364 60,749Accounts Payable and Accrued Expenses118,454 130,554Taxes Payable32,682 24,453Uncertain Tax Positions65,716 66,775Unfunded Revolver Commitments75,842 52,066Operating Lease Liabilities (5)125,086 —Other Liabilities58,922 244,631Total$3,097,563 $2,743,990(1)Represents the amount of carried interest payable to principals, professionals and other individuals with respect to KKR's active funds and co-investment vehicles that provide for carriedinterest.(2)Represents amounts owed to third parties for investment purchases for which cash settlement has not occurred.(3)Represents the obligations of KKR to deliver a specified security at a future point in time. Such securities are measured at fair value with changes in fair value recorded in Net Gains(Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 3 "Net Gains (Losses) from Investment Activities" for the net changes in fairvalue associated with these instruments.(4)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fairvalue with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 3 "Net Gains (Losses)from Investment Activities" for the net changes in fair value associated with these instruments.(5)KKR’s operating leases have remaining lease terms that range from approximately one year to 14 years, some of which include options to extend the leases for up to three years. As ofDecember 31, 2019, the weighted average remaining lease term and weighted average discount rate were 4.46 years and 2.53%, respectively.185Table of ContentsNotes to Financial Statements (Continued)9. VARIABLE INTEREST ENTITIESConsolidated VIEsKKR consolidates certain VIEs in which it is determined that KKR is the primary beneficiary as described in Note 2 "Summary of Significant AccountingPolicies". The consolidated VIEs are predominately CFEs and certain investment funds sponsored by KKR.The primary purpose of these VIEs is to provide strategy specific investment opportunities to earn investment gains, current income or both in exchange formanagement and performance based fees or carried interest. KKR's investment strategies differ for these VIEs; however, the fundamental risks have similarcharacteristics, including loss of invested capital and loss of management and performance based fees or carried interest. KKR does not provide performanceguarantees and has no other financial obligation to provide funding to these consolidated VIEs, beyond amounts previously committed, if any.Unconsolidated VIEsKKR holds variable interests in certain VIEs which are not consolidated as it has been determined that KKR is not the primary beneficiary. VIEs that are notconsolidated predominantly include certain investment funds sponsored by KKR.KKR's investment strategies differ by investment fund; however, the fundamental risks have similar characteristics, including loss of invested capital and lossof management and performance based fees or carried interest. KKR's maximum exposure to loss as a result of its investments in the unconsolidated investmentfunds is the carrying value of such investments, including KKR's capital interest and any unrealized carried interest. Accordingly, disaggregation of KKR'sinvolvement by type of unconsolidated investment fund would not provide more useful information. For these unconsolidated investment funds in which KKR isthe sponsor, KKR may have an obligation as general partner to provide commitments to such investment funds. As of December 31, 2019, KKR's commitments tothese unconsolidated investment funds was $2.9 billion. KKR has not provided any financial support other than its obligated amount as of December 31, 2019.As of December 31, 2019 and 2018, the maximum exposure to loss, before allocations to the carry pool and noncontrolling interests, if any, for those VIEs inwhich KKR is determined not to be the primary beneficiary but in which it has a variable interest is as follows: December 31, 2019 December 31, 2018Investments$5,329,368 $3,610,502Due from (to) Affiliates, net439,374 410,489Maximum Exposure to Loss$5,768,742 $4,020,991186Table of ContentsNotes to Financial Statements (Continued)10. DEBT OBLIGATIONSKKR enters into credit agreements and issues debt for its general operating and investment purposes.KKR consolidates and reports debt obligations of KKR Financial Holdings LLC ("KFN"), which are non-recourse to KKR beyond the assets of KFN.Certain of KKR's consolidated investment funds borrow to meet financing needs of their operating and investing activities. Fund financing facilities have beenestablished for the benefit of certain investment funds. When an investment fund borrows from the facility in which it participates, the proceeds from theborrowings are limited for their intended use by the borrowing investment fund. KKR's obligations with respect to these financing arrangements are generallylimited to KKR's pro rata equity interest in such investment funds.In certain other cases, KKR has majority-owned consolidated investment vehicles that make investments and purchase other assets with borrowings that arecollateralized only by the investments and assets they own.In addition, consolidated CFE vehicles issue debt securities to third-party investors which are collateralized by assets held by the CFE vehicle. Debt securitiesissued by CFEs are supported solely by the assets held at the CFEs and are not collateralized by assets of any other KKR entity. CFEs also may have warehousefacilities with banks to provide liquidity to the CFE. The CFE's debt obligations are non-recourse to KKR beyond the assets of the CFE.KKR's borrowings consisted of the following: December 31, 2019 December 31, 2018 FinancingAvailable BorrowingOutstanding Fair Value FinancingAvailable BorrowingOutstanding Fair Value Revolving Credit Facilities: Corporate Credit Agreement$1,000,000 $— $— $1,000,000 $— $— KCM Credit Agreement444,904 — — 451,338 — — KCM Short-Term Credit Agreement750,000 — — 750,000 — — Notes Issued: KKR Issued 6.375% Notes Due 2020 (1)— — — — 498,975 523,500(13) KKR Issued 3.750% Notes Due 2029 (2)— 493,962 533,505(13) — — — KKR Issued 5.500% Notes Due 2043 (3)— 492,175 613,415(13) — 491,836 508,615(13) KKR Issued 5.125% Notes Due 2044 (4)— 991,106 1,186,670(13) — 990,740 974,320(13) KKR Issued 0.509% Notes Due 2023 (5)— 228,280 228,026(13) — 226,895 227,298(13) KKR Issued 0.764% Notes Due 2025 (6)— 45,255 45,856(13) — 44,923 45,161(13) KKR Issued 1.595% Notes Due 2038 (7)— 93,325 98,524(13) — 92,817 94,568(13) KKR Issued 1.625% Notes Due 2029 (8)— 718,478 758,903(14) — — — KFN Issued 5.500% Notes Due 2032 (9)— 494,054 504,807 — 493,568 496,359 KFN Issued 5.200% Notes Due 2033 (10)— 118,411 117,834 — 118,291 115,582 KFN Issued 5.400% Notes Due 2033 (11)— 68,774 70,059 — 68,683 68,780 KFN Issued Junior Subordinated Notes (12)— 233,473 185,485 — 232,142 203,135 2,194,9043,977,2934,343,0842,201,3383,258,8703,257,318 Other Debt Obligations3,865,49523,035,99123,035,9913,840,87719,082,32219,082,322 $6,060,399 $27,013,284 $27,379,075 $6,042,215 $22,341,192 $22,339,640 (1)$500 million aggregate principal amount of 6.375% senior notes of KKR due 2020. These senior notes were redeemed in full in July 2019. Borrowing outstanding is presented net of (i)unamortized note discount and (ii) unamortized debt issuance costs of $0.7 million as of December 31, 2018.(2)$500 million aggregate principal amount of 3.750% senior notes of KKR due 2029. Borrowing outstanding is presented net of (i) unamortized note discount and (ii) unamortized debtissuance costs of $4.7 million as of December 31, 2019.(3)$500 million aggregate principal amount of 5.500% senior notes of KKR due 2043. Borrowing outstanding is presented net of (i) unamortized note discount and (ii) unamortized debtissuance costs of $3.4 million and $3.6 million as of December 31, 2019 and 2018, respectively.(4)$1.0 billion aggregate principal amount of 5.125% senior notes of KKR due 2044. Borrowing outstanding is presented net of (i) unamortized note discount (net of premium) and (ii)unamortized debt issuance costs of $7.7 million and $8.0 million as of December 31, 2019 and 2018, respectively.187Table of ContentsNotes to Financial Statements (Continued)(5)¥25 billion (or $229.3 million) aggregate principal amount of 0.509% senior notes of KKR due 2023. Borrowing outstanding is presented net of unamortized debt issuance costs of $1.0million and $1.3 million as of December 31, 2019 and 2018, respectively. These senior notes are denominated in Japanese Yen ("JPY").(6)¥5.0 billion (or $45.9 million) aggregate principal amount of 0.764% senior notes of KKR due 2025. Borrowing outstanding is presented net of unamortized debt issuance costs of $0.6million and $0.7 million as of December 31, 2019 and 2018, respectively. These senior notes are denominated in JPY.(7)¥10.3 billion (or $94.5 million) aggregate principal amount of 1.595% senior notes of KKR due 2038. Borrowing outstanding is presented net of unamortized debt issuance costs of $1.1million and $1.2 million as of December 31, 2019 and 2018, respectively. These senior notes are denominated in JPY.(8)€650 million (or $727.9 million) aggregate principal amount of 1.625% senior notes of KKR due 2029. Borrowing outstanding is presented net of (i) unamortized note discount and (ii)unamortized debt issuance costs of $6.3 million as of December 31, 2019. These senior notes are denominated in euro.(9)KKR consolidates KFN and thus reports KFN's outstanding $500.0 million aggregate principal amount of 5.500% senior notes due 2032. Borrowing outstanding is presented net of (i)unamortized note discount and (ii) unamortized debt issuance costs of $4.0 million and $4.4 million as of December 31, 2019 and 2018, respectively. These debt obligations are classifiedas Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.(10)KKR consolidates KFN and thus reports KFN's outstanding $120.0 million aggregate principal amount of 5.200% senior notes due 2033. Borrowing outstanding is presented net ofunamortized debt issuance costs of $1.6 million and $1.7 million as of December 31, 2019 and 2018, respectively. These debt obligations are classified as Level III within the fair valuehierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.(11)KKR consolidates KFN and thus reports KFN's outstanding $70.0 million aggregate principal amount of 5.400% senior notes due 2033. Borrowing outstanding is presented net ofunamortized debt issuance costs of $1.2 million and $1.3 million as of December 31, 2019 and 2018, respectively. These debt obligations are classified as Level III within the fair valuehierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.(12)KKR consolidates KFN and thus reports KFN's outstanding $258.5 million aggregate principal amount of junior subordinated notes. The weighted average interest rate is 4.4% and 5.0%and the weighted average years to maturity is 16.8 years and 17.8 years as of December 31, 2019 and 2018, respectively. These debt obligations are classified as Level III within the fairvalue hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.(13)The notes are classified as Level II within the fair value hierarchy and fair value is determined by third party broker quotes.(14)The notes are classified as Level I within the fair value hierarchy and fair value is determined by quoted prices in active markets since the debt is publicly listed.Revolving Credit FacilitiesCorporate Credit AgreementOn December 7, 2018, Kohlberg Kravis Roberts & Co. L.P. and the KKR Group Partnerships, as borrowers, entered into and closed on an Amended andRestated Credit Agreement (the "Corporate Credit Agreement") by and among the borrowers, the other borrowers from time to time party thereto, the guarantorsfrom time to time party thereto, the lending institutions from time to time party thereto and HSBC Bank USA, National Association, as Administrative Agent,which amended and restated in its entirety the credit agreement dated as of October 22, 2014.The Corporate Credit Agreement provides the borrowers with a senior unsecured multicurrency revolving credit facility in an aggregate principal amount of$1.0 billion, as of the closing date, with the option to request an increase in the facility amount of up to an additional $500 million, for an aggregate principalamount of $1.5 billion, subject to certain conditions, including obtaining new or increased commitments from new or existing lenders. The credit facility is a five-year facility, scheduled to mature on December 7, 2023, with the borrowers’ option to extend the maturity date, subject to the consent of the applicable lenders, andthe borrowers may prepay, terminate or reduce the commitments under the credit facility at any time without penalty. Borrowings under the credit facility areavailable for general corporate purposes. Interest on borrowings under the credit facility will be based on either London Interbank Offered Rate (LIBOR) orAlternate Base Rate, with the applicable margin per annum based on a corporate ratings-based pricing grid ranging from 56.5 basis points to 110 basis points (forLIBOR borrowings). The borrowers have agreed to pay a facility fee on the total commitments (whether used or unused) at a rate per annum also based on acorporate ratings-based pricing grid ranging from 6 basis points to 15 basis points. Borrowings under the credit facility are guaranteed by (i) KKR & Co. Inc., (ii)any other entity (other than the borrowers) that guarantees the 2020 Senior Notes, the 2043 Senior Notes or the 2044 Senior Notes (each as defined below), and (iii)any other entity (other than the borrowers) that guarantees the JPY Notes (as defined below).188Table of ContentsNotes to Financial Statements (Continued)KCM Credit AgreementKKR Capital Markets maintains a revolving credit agreement with a major financial institution (the "KCM Credit Agreement") for use in KKR's capitalmarkets business, which provides for revolving borrowings of up to $500 million with a $500 million sublimit for letters of credit.On March 30, 2016, the KCM Credit Agreement was amended and restated to extend the maturity date from March 30, 2017 to March 30, 2021. If aborrowing is made on the KCM Credit Agreement, the interest rate will vary depending on the type of drawdown requested. If the loan is a Eurocurrency loan, itwill be based on LIBOR plus the applicable margin which ranges initially between 1.25% and 2.50%, depending on the amount and nature of the loan. If the loan isan ABR Loan, it will be based on the prime rate plus the applicable margin which ranges initially between 0.25% and 1.50% depending on the amount and natureof the loan. Borrowings under this facility may only be used for KKR's capital markets business, and its only obligors are entities involved in KKR's capitalmarkets business, and its liabilities are non-recourse to other parts of KKR's business. A facility fee ranging between 0.20% and 0.40% is also payable on the entirefacility amount.As of December 31, 2019 and 2018, no amounts were outstanding under the KCM Credit Agreement, however various letters of credit were outstanding in theamount of $55.1 million and $48.7 million, respectively, which reduce the overall borrowing capacity of the KCM Credit Agreement.KCM Short-Term Credit AgreementOn June 27, 2019, KKR Capital Markets Holdings L.P. and certain other capital market subsidiaries of KKR & Co. Inc. (collectively, the “KCM Borrowers”)entered into a 364-day revolving credit agreement (the “KCM Revolver Agreement”) with the same financial institution that provides the KCM Credit Agreement,as administrative agent. The KCM Revolver Agreement provides for revolving borrowings of up to $750 million, expires on June 26, 2020, and ranks pari passuwith the existing $500 million credit facility provided by them for KKR's capital markets business. The prior 364-day revolving credit agreement, dated as of June28, 2018, expired according to its terms on June 27, 2019. Borrowings under the KCM Revolver Agreement may only be used to facilitate the settlement of debttransactions syndicated by KKR’s capital markets business. Obligations under the KCM Revolver Agreement are limited to the KCM Borrowers, which are solelyentities involved in KKR’s capital markets business, and liabilities under the KCM Revolver Agreement are non-recourse to other parts of KKR.If a borrowing is made under the KCM Revolver Agreement, the interest rate will vary depending on the type of drawdown requested. If the borrowing is aEurocurrency loan, it will be based on a LIBOR rate plus an applicable margin ranging between 1.25% and 2.50%, depending on the duration of the loan. If theborrowing is an ABR loan, it will be based on a base rate plus an applicable margin ranging between 0.25% and 1.50%, depending on the duration of the loan. The KCM Revolver Agreement contains customary representations and warranties, events of default, and affirmative and negative covenants, including afinancial covenant providing for a maximum debt to equity ratio for the KCM Borrowers. The KCM Borrowers’ obligations under the KCM Revolver Agreementare secured by certain assets of the KCM Borrowers, including a pledge of equity interests of certain subsidiaries of the KCM Borrowers.Notes Issuances and RedemptionsKKR Redeemed 6.375% Senior Notes Due 2020On July 31, 2019, KKR Group Finance Co. LLC, an indirect subsidiary of KKR & Co. Inc., redeemed in full its $500 million aggregate principal amount of6.375% Senior Notes due 2020 (the “2020 Senior Notes”) in accordance with the optional redemption provisions set forth in the indenture governing the 2020Senior Notes. In connection with this redemption, KKR paid a make-whole premium of $22.8 million. This make-whole premium payment was recorded as arealized loss within Net Gains (Losses) from Investment Activities on the consolidated statements of operations.189Table of ContentsNotes to Financial Statements (Continued)KKR Issued 5.500% Notes Due 2043On February 1, 2013, KKR Group Finance Co. II LLC, an indirect subsidiary of KKR & Co. Inc., issued $500 million aggregate principal amount of 5.50%Senior Notes due 2043 (the "2043 Senior Notes"). The 2043 Senior Notes are unsecured and unsubordinated obligations of KKR Group Finance Co. II LLC andwill mature on February 1, 2043, unless earlier redeemed or repurchased. The 2043 Senior Notes are fully and unconditionally guaranteed, jointly and severally, byKKR & Co. Inc. and the KKR Group Partnerships. The guarantees are unsecured and unsubordinated obligations of the guarantors.The 2043 Senior Notes bear interest at a rate of 5.50% per annum, accruing from February 1, 2013. Interest is payable semi‑annually in arrears on February 1and August 1 of each year.The indenture, as supplemented by a first supplemental indenture, relating to the 2043 Senior Notes includes covenants, including limitations on the issuer'sand the guarantors' ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiariesor merge, consolidate or sell, transfer or lease assets. The indenture, as supplemented, also provides for events of default and further provides that the trustee or theholders of not less than 25% in aggregate principal amount of the outstanding 2043 Senior Notes may declare the 2043 Senior Notes immediately due and payableupon the occurrence and during the continuance of any event of default after expiration of any applicable grace period. In the case of specified events ofbankruptcy, insolvency, receivership or reorganization, the principal amount of the 2043 Senior Notes and any accrued and unpaid interest on the 2043 SeniorNotes automatically becomes due and payable. All or a portion of the 2043 Senior Notes may be redeemed at the issuer's option in whole or in part, at any time,and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the 2043 Senior Notes. If a change of control repurchase eventoccurs, the 2043 Senior Notes are subject to repurchase by the issuer at a repurchase price in cash equal to 101% of the aggregate principal amount of the 2043Senior Notes repurchased plus any accrued and unpaid interest on the 2043 Senior Notes repurchased to, but not including, the date of repurchase.KKR Issued 5.125% Notes Due 2044On May 29, 2014, KKR Group Finance Co. III LLC, an indirect subsidiary of KKR & Co. Inc., issued $500 million aggregate principal amount of 5.125%Senior Notes due 2044 (the "2044 Senior Notes"). The 2044 Senior Notes are unsecured and unsubordinated obligations of the issuer and will mature on June 1,2044, unless earlier redeemed or repurchased. The 2044 Senior Notes are fully and unconditionally guaranteed, jointly and severally, by KKR & Co. Inc. and theKKR Group Partnerships. The guarantees are unsecured and unsubordinated obligations of the guarantors.The 2044 Senior Notes bear interest at a rate of 5.125% per annum, accruing from May 29, 2014. Interest is payable semi‑annually in arrears on June 1 andDecember 1 of each year, commencing on December 1, 2014.On March 18, 2015, KKR Group Finance Co. III LLC issued an additional $500 million aggregate principal amount of its 2044 Senior Notes. The 2044 Notesissued in March 2015 form a single series with the 2044 Notes issued in May 2014, and the terms are identical to each other except for the issue date, issue price,the first payment date, June 1, 2015, and the date from which interest begins to accrue for the 2044 Notes issued in March 2015.The indenture, as supplemented by a first supplemental indenture, relating to the 2044 Senior Notes includes covenants, including limitations on the issuer'sand the guarantors' ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiariesor merge, consolidate or sell, transfer or lease assets. The indenture, as supplemented, also provides for events of default and further provides that the trustee or theholders of not less than 25% in aggregate principal amount of the outstanding 2044 Senior Notes may declare the 2044 Senior Notes immediately due and payableupon the occurrence and during the continuance of any event of default after expiration of any applicable grace period. In the case of specified events ofbankruptcy, insolvency, receivership or reorganization, the principal amount of the 2044 Senior Notes and any accrued and unpaid interest on the 2044 SeniorNotes automatically becomes due and payable. All or a portion of the 2044 Senior Notes may be redeemed at the issuer's option in whole or in part, at any time,and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the 2044 Senior Notes. If a change of control repurchase eventoccurs, the 2044 Senior Notes are subject to repurchase by the issuer at a repurchase price in cash equal to 101% of the aggregate principal amount of the 2044Senior Notes repurchased plus any accrued and unpaid interest on the 2044 Senior Notes repurchased to, but not including, the date of repurchase.190Table of ContentsNotes to Financial Statements (Continued)KKR Issued 0.509% Senior Notes Due 2023, 0.764% Senior Notes Due 2025, and 1.595% Senior Notes Due 2038On March 23, 2018, KKR Group Finance Co. IV LLC, an indirect subsidiary of KKR & Co. Inc., issued ¥40.3 billion aggregate principal amount of its (i)¥25.0 billion 0.509% Senior Notes due 2023 (the "2023 Notes"), (ii) ¥5.0 billion 0.764% Senior Notes due 2025 (the "2025 Notes") and (iii) ¥10.3 billion 1.595%Senior Notes due 2038 (the "2038 Notes" and, together with the 2023 Notes and the 2025 Notes, the "JPY Notes"). The JPY Notes are fully and unconditionallyguaranteed, jointly and severally, by KKR & Co. Inc. and the KKR Group Partnerships. The guarantees are unsecured and unsubordinated obligations of theGuarantors.The 2023 Notes bear interest at a rate of 0.509% per annum and will mature on March 23, 2023 unless earlier redeemed. The 2025 Notes bear interest at a rateof 0.764% per annum and will mature on March 21, 2025 unless earlier redeemed. The 2038 Notes bear interest at a rate of 1.595% per annum and will mature onMarch 23, 2038 unless earlier redeemed. Interest on the JPY Notes accrues from March 23, 2018 and is payable semiannually in arrears on March 23 andSeptember 23 of each year, commencing on September 23, 2018 and ending on the applicable maturity date. The JPY Notes are unsecured and unsubordinatedobligations of the issuer.The indenture, as supplemented by the first supplemental indenture, related to the JPY Notes includes covenants, including limitations on the issuer's and theguarantors' ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge,consolidate or sell, transfer or lease assets. The indenture, as supplemented, also provides for events of default and further provides that the trustee or the holders ofnot less than 25% in aggregate principal amount of the outstanding JPY Notes may declare the JPY Notes immediately due and payable upon the occurrence andduring the continuance of any event of default after expiration of any applicable grace period. In the case of specified events of bankruptcy, insolvency,receivership or reorganization, the principal amount of the JPY Notes and any accrued and unpaid interest on the JPY Notes automatically become due andpayable. The issuer may redeem the JPY Notes at its option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the JPY Notesto be redeemed, together with interest accrued and unpaid to, but excluding, the date fixed for redemption, at any time, in the event of certain changes affectingtaxation as provided in the JPY Indenture.KKR Issued 1.625% Senior Notes Due 2029On May 22, 2019, KKR Group Finance Co. V LLC, an indirect subsidiary of KKR & Co. Inc., issued €650 million aggregate principal amount of its 1.625%Senior Notes due 2029 (the "2029 Senior Notes"). The 2029 Senior Notes are guaranteed by KKR & Co. Inc. and the KKR Group Partnership.The 2029 Senior Notes bear interest at a rate of 1.625% per annum and will mature on May 22, 2029, unless earlier redeemed. Interest on the 2029 SeniorNotes accrues from May 22, 2019 and is payable annually in arrears on May 22 of each year, commencing on May 22, 2020 and ending on the applicable maturitydate. The 2029 Senior Notes are unsecured and unsubordinated obligations of the issuer. The 2029 Senior Notes are fully and unconditionally guaranteed, jointlyand severally, by each of the Guarantors. The guarantees are unsecured and unsubordinated obligations of the Guarantors.The indenture, as supplemented by the first supplemental indenture, related to the 2029 Senior Notes includes covenants, including limitations on the issuer'sand the Guarantors' ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiariesor merge, consolidate or sell, transfer or lease assets. The indenture, as supplemented, also provides for events of default and further provides that the trustee or theholders of not less than 25% in aggregate principal amount of the outstanding 2029 Senior Notes may declare the 2029 Senior Notes immediately due and payableupon the occurrence and during the continuance of any event of default after expiration of any applicable grace period. In the case of specified events ofbankruptcy, insolvency, receivership or reorganization, the principal amount of the 2029 Senior Notes and any accrued and unpaid interest on the 2029 SeniorNotes automatically become due and payable. Prior to February 22, 2029, the issuer may redeem the 2029 Senior Notes at its option, in whole or in part, at anytime and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the 2029 Senior Notes. On or after February 22, 2029, theissuer may redeem the 2029 Senior Notes at its option, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principalamount of the 2029 Senior Notes to be redeemed, together with interest accrued and unpaid to, but excluding, the date of redemption. If a change of controlrepurchase event occurs, the 2029 Senior Notes are subject to repurchase by the issuer at a repurchase price in cash equal to 101% of the aggregate principleamount of the 2029 Senior Notes repurchased plus any accrued and unpaid interest on the 2029 Senior Notes repurchased to, but not including, the date ofrepurchase. In the event of certain changes affecting taxation as provided in the 2029 Senior Notes, the issuer may redeem the 2029 Senior Notes in whole but notin part, at any time at 100% of their principal amount, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.191Table of ContentsNotes to Financial Statements (Continued)KKR Issued 3.750% Senior Notes Due 2029On July 1, 2019, KKR Group Finance Co. VI LLC, an indirect subsidiary of KKR & Co. Inc., issued $500 million aggregate principal amount of its 3.750%Senior Notes due 2029 (the "KKR 3.750% Senior Notes"). The KKR 3.750% Senior Notes are guaranteed by the Guarantors.The KKR 3.750% Senior Notes bear interest at a rate of 3.750% per annum and will mature on July 1, 2029, unless earlier redeemed. Interest on the KKR3.750% Senior Notes accrues from July 1, 2019 and is payable semi-annually in arrears on January 1 and July 1 of each year, commencing on January 1, 2020 andending on the maturity date. The KKR 3.750% Senior Notes are unsecured and unsubordinated obligations of the issuer. The KKR 3.750% Senior Notes are fullyand unconditionally guaranteed, jointly and severally, by each of the Guarantors. The guarantees are unsecured and unsubordinated obligations of the Guarantors.The Indenture includes covenants, including limitations on the issuer's and the Guarantors’ ability to, subject to exceptions, incur indebtedness secured by lienson voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or convey all or substantially all of their assets. TheIndenture also provides for events of default and further provides that the trustee or the holders of not less than 25% in aggregate principal amount of theoutstanding KKR 3.750% Senior Notes may declare the KKR 3.750% Senior Notes immediately due and payable upon the occurrence and during the continuanceof any event of default after expiration of any applicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, theprincipal amount of the KKR 3.750% Senior Notes and any accrued and unpaid interest on the KKR 3.750% Senior Notes automatically become due and payable.Prior to April 1, 2029, all or a portion of the KKR 3.750% Senior Notes may be redeemed at the issuer’s option in whole or in part, at any time and from time totime, prior to their stated maturity, at the make-whole redemption price set forth in the KKR 3.750% Senior Notes. On or after April 1, 2029, the issuer mayredeem the KKR 3.750% Senior Notes at its option, in whole or in part, at any time and from time to time, at a redemption price equal to 100% of the principalamount of the KKR 3.750% Senior Notes to be redeemed, together with interest accrued and unpaid to, but excluding, the date of redemption. If a change ofcontrol repurchase event occurs, the KKR 3.750% Senior Notes are subject to repurchase by the issuer at a repurchase price in cash equal to 101% of the aggregateprincipal amount of the KKR 3.750% Senior Notes repurchased plus any accrued and unpaid interest on the KKR 3.750% Senior Notes repurchased to, but notincluding, the date of repurchase.KFN Issued 5.500% Notes Due 2032On March 30, 2017, KFN issued $375.0 million aggregate principal amount of 5.500% Senior Notes due 2032 (the "KFN 2032 Senior Notes"), resulting in netproceeds to KFN of $368.6 million. The KFN 2032 Senior Notes are unsecured and unsubordinated obligations of KFN and will mature on March 30, 2032, unlessearlier redeemed or repurchased. The KFN 2032 Senior Notes bear interest at a rate of 5.500% per annum, accruing from March 30, 2017. Interest is payable semi-annually in arrears on March 30 and September 30 of each year.The indenture, as supplemented by a first supplemental indenture, relating to the KFN 2032 Senior Notes includes covenants, including (i) limitations onKFN's ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of certain of its subsidiaries ormerge, consolidate or sell, transfer or lease assets, (ii) requirements that KFN maintain a minimum Consolidated Net Worth (as defined in the indenture) and (iii)requirements that KFN maintain a minimum Cash and Liquid Investments (as defined in the indenture). The indenture, as supplemented, also provides for events ofdefault and further provides that the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding KFN 2032 Senior Notes maydeclare the KFN 2032 Senior Notes immediately due and payable upon the occurrence and during the continuance of any event of default after expiration of anyapplicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, the principal amount of the KFN 2032 SeniorNotes and any accrued and unpaid interest on the KFN 2032 Senior Notes automatically becomes due and payable.Beginning on March 30, 2022, KFN may redeem the KFN 2032 Senior Notes in whole, but not in part, at KFN's option, at a redemption price equal to 100%of the outstanding principal amount plus accrued and unpaid interest to, but excluding, the date of redemption. At any time prior to March 30, 2022, KFN mayredeem the KFN 2032 Senior Notes in whole, but not in part, at KFN's option at any time, at a "make-whole" redemption price set forth in the KFN 2032 SeniorNotes. If a change of control occurs, the KFN 2032 Senior Notes are subject to repurchase by the issuer at a repurchase price in cash equal to 101% of theaggregate principal amount of the KFN 2032 Senior Notes repurchased plus any accrued and unpaid interest on the KFN 2032 Senior Notes repurchased to, but notincluding, the date of repurchase.On November 17, 2017, KFN issued an additional $125.0 million aggregate principal amount of the KFN 2032 Senior Notes, resulting in the total outstandingaggregate principal amount of $500.0 million. The additional KFN 2032 Senior Notes,192Table of ContentsNotes to Financial Statements (Continued)which were issued under the indenture related to the existing KFN 2032 Senior Notes as supplemented by a second supplemental indenture, constitute a furtherissuance of and are part of the same series as the KFN 2032 Senior Notes first issued on March 30, 2017.KFN Issued 5.200% Notes Due 2033On February 12, 2018, KFN issued $120.0 million aggregate principal amount of 5.200% Senior Notes due 2033 (the "KFN 2033 Senior Notes"). The KFN2033 Senior Notes are unsecured and unsubordinated obligations of KFN, which do not provide for recourse to KKR beyond the assets of KFN. The KFN 2033Senior Notes are not guaranteed by KKR & Co. Inc. or the KKR Group Partnerships. The KFN 2033 Senior Notes will mature on February 12, 2033, unless earlierredeemed or repurchased. The KFN 2033 Senior Notes bear interest at a rate of 5.200% per annum, accruing from February 12, 2018. Interest is payable semi-annually in arrears on February 12 and August 12 of each year.The indenture, as supplemented by a first supplemental indenture, relating to the KFN 2033 Senior Notes includes covenants, including (i) limitations onKFN's ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of certain of its subsidiaries ormerge, consolidate or sell, transfer or lease assets, (ii) requirements that KFN maintain a minimum Consolidated Net Worth (as defined in the indenture) and (iii)requirements that KFN maintain a minimum Cash and Liquid Investments (as defined in the indenture). The indenture, as supplemented, also provides for events ofdefault and further provides that the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding KFN 2033 Senior Notes maydeclare the KFN 2033 Senior Notes immediately due and payable upon the occurrence and during the continuance of any event of default after expiration of anyapplicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, the principal amount of the KFN 2033 SeniorNotes and any accrued and unpaid interest on the KFN 2033 Senior Notes automatically becomes due and payable.Beginning on February 12, 2023, KFN may redeem the KFN 2033 Senior Notes in whole, but not in part, at KFN's option, at a redemption price equal to100% of the outstanding principal amount plus accrued and unpaid interest to, but excluding, the date of redemption. At any time prior to February 12, 2023, KFNmay redeem the KFN 2033 Senior Notes in whole, but not in part, at KFN's option at any time, at a "make-whole" redemption price set forth in the KFN 2033Senior Notes. If a change of control occurs, the KFN 2033 Senior Notes are subject to repurchase by the issuer at a repurchase price in cash equal to 101% of theaggregate principal amount of the KFN 2033 Senior Notes repurchased plus any accrued and unpaid interest on the KFN 2033 Senior Notes repurchased to, but notincluding, the date of repurchase.KFN Issued 5.400% Notes Due 2033On May 23, 2018, KFN issued $70.0 million aggregate principal amount of 5.400% Senior Notes due 2033 (the "KFN 5.400% Senior Notes"). The KFN5.400% Senior Notes are unsecured and unsubordinated obligations of KFN, which do not provide for recourse to KKR beyond the assets of KFN. The KFN5.400% Senior Notes are not guaranteed by KKR & Co. Inc. or the KKR Group Partnerships. The KFN 5.400% Senior Notes will mature on May 23, 2033, unlessearlier redeemed or repurchased. The KFN 5.400%Senior Notes bear interest at a rate of 5.400% per annum, accruing from May 23, 2018. Interest is payable semi-annually in arrears on May 23 and November 23 of each year.The indenture, as supplemented by a second supplemental indenture, relating to the KFN 5.400% Senior Notes includes covenants, including (i) limitations onKFN's ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of certain of its subsidiaries ormerge, consolidate or sell, transfer or lease assets, (ii) requirements that KFN maintain a minimum Consolidated Net Worth (as defined in the indenture) and (iii)requirements that KFN maintain minimum Cash and Liquid Investments (as defined in the indenture). The indenture, as supplemented, also provides for events ofdefault and further provides that the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding KFN 5.400% Senior Notes maydeclare the KFN 5.400% Senior Notes immediately due and payable upon the occurrence and during the continuance of any event of default after expiration of anyapplicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, the principal amount of the KFN 5.400% SeniorNotes and any accrued and unpaid interest on the KFN 5.400% Senior Notes automatically becomes due and payable.Beginning on May 23, 2023, KFN may redeem the KFN 5.400% Senior Notes in whole, but not in part, at KFN's option, at a redemption price equalto 100% of the outstanding principal amount plus accrued and unpaid interest to, but excluding, the date of redemption. At any time prior to May 23, 2023, KFNmay redeem the KFN 5.400% Senior Notes in whole, but not in part, at KFN's option at any time, at a "make-whole" redemption price set forth in the KFN 5.400%Senior Notes. If a change of control occurs, the KFN 5.400% Senior Notes are subject to repurchase by the issuer at a repurchase price in cash equal to 101% of theaggregate principal amount of the KFN 5.400% Senior Notes repurchased plus any accrued and unpaid interest on the KFN 5.400% Senior Notes repurchased to,but not including, the date of repurchase.193Table of ContentsNotes to Financial Statements (Continued)KFN Issued Junior Subordinated NotesKFN established six 30-year trusts between 2006 and 2007 for the sole purpose of issuing trust preferred securities. These trusts issued preferred securities tounaffiliated investors and common securities to KFN. The combined proceeds were invested by the trusts in junior subordinated notes issued by KFN. The juniorsubordinated notes are the sole assets of the trusts and mature between 2036 and 2037. Interest is payable on the junior subordinated notes quarterly and based onthe associated trust ranges from between LIBOR plus 2.25% and LIBOR plus 2.65%. KFN may redeem the junior subordinated notes, in whole or in part, at anytime, at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date.Other Debt ObligationsAs of December 31, 2019, other debt obligations consisted of the following: FinancingAvailable BorrowingOutstanding Fair Value WeightedAverageInterest Rate Weighted AverageRemainingMaturity in YearsFinancing Facilities of Consolidated Funds and Other$3,865,495 $8,377,854 $8,377,854 4.0% 4.4Debt Obligations of Consolidated CLOs— 14,658,137 14,658,137 (1) 11.0 $3,865,495 $23,035,991 $23,035,991 (1)The senior notes of the consolidated CLOs had a weighted average interest rate of 3.0%. The subordinated notes of the consolidated CLOs do not have contractual interest rates but insteadreceive a pro rata amount of the net distributions from the excess cash flows of the respective CLO vehicle. Accordingly, weighted average borrowing rates for the subordinated notes arebased on cash distributions during the period, if any.Financing Facilities of Consolidated Funds and OtherCertain of KKR's consolidated investment funds have entered into financing arrangements with financial institutions, generally to provide liquidity to suchinvestment funds. These financing arrangements are generally not direct obligations of the general partners of KKR's investment funds (beyond KKR's capitalinterest) or its management companies. Such borrowings have varying maturities and bear interest at floating rates. Borrowings are generally secured by theinvestment purchased with the proceeds of the borrowing and/or the uncalled capital commitment of each respective fund. When an investment vehicle borrows,the proceeds are available only for use by that investment vehicle and are not available for the benefit of other investment vehicles or KKR. Collateral within eachinvestment vehicle is also available only against borrowings by that investment vehicle and not against the borrowings of other investment vehicles or KKR.In certain other cases, investments and other assets held directly by majority-owned consolidated investment vehicles have been funded with borrowings thatare collateralized by the investments and assets they own. These borrowings are non-recourse to KKR beyond the investments and assets serving as collateral. Suchborrowings have varying maturities and generally bear interest at fixed rates.Debt Obligations of Consolidated CLOsDebt obligations of consolidated CLOs consist of debt securities to third-party investors issued by the consolidated CLOs. CLO debt obligations arecarried at fair value and are classified as Level II within the fair value hierarchy. See Note 5 "Fair Value Measurements." Debt Obligations of Consolidated CMBSDuring the year ended December 31, 2019, the controlling financial interest in a CMBS vehicle was sold by KKR resulting in the deconsolidation of thatCMBS vehicle. For the year ended December 31, 2018, CMBS debt obligations are carried at fair value and are classified as Level III within the fair valuehierarchy. See Note 5 "Fair Value Measurements." Debt obligations of consolidated CFEs are collateralized by assets held by each respective CFE vehicle and assets of one CFE vehicle may not be used tosatisfy the liabilities of another. As of December 31, 2019, the fair value of the consolidated CFE assets was $15.7 billion. This collateral consisted of Cash andCash Equivalents Held at Consolidated Entities, Investments, and Other Assets.194Table of ContentsNotes to Financial Statements (Continued)Debt CovenantsBorrowings of KKR contain various debt covenants. These covenants do not, in management's opinion, materially restrict KKR's operating business orinvestment strategies as of December 31, 2019. KKR is in compliance with its debt covenants in all material respects as of December 31, 2019.Scheduled principal payments for debt obligations at December 31, 2019 are as follows: Revolving CreditFacilities Notes Issued OtherDebt Obligations Total2020$— $— $1,053,418 $1,053,4182021— — 2,458,087 2,458,0872022— — 1,389,542 1,389,5422023— 229,250 1,408,859 1,638,1092024— — 267,616 267,616Thereafter— 3,816,727 16,528,211 20,344,938 $— $4,045,977 $23,105,733 $27,151,710195Table of ContentsNotes to Financial Statements (Continued)11. INCOME TAXESThe provision (benefit) for income taxes consists of the following: For the Years Ended December 31, 2019 2018 2017Current Federal Income Tax$56,046 $105,245 $(34,611)State and Local Income Tax10,925 16,997 5,229Foreign Income Tax (1)38,23841,716 79,371Subtotal105,209 163,958 49,989Deferred Federal Income Tax428,110 (300,536) 178,449State and Local Income Tax49,148 (52,240) (424)Foreign Income Tax (1)(53,717) (5,280) (3,688)Subtotal423,541 (358,056) 174,337Total Income Taxes$528,750 $(194,098) $224,326(1)The foreign income tax provision was calculated on $126.0 million, $141.0 million, and $171.6 million of pre-tax income generated in foreign jurisdictions in the years 2019, 2018, and2017, respectively.KKR & Co. Inc. is a corporation for U.S. federal income tax purposes and thus is subject to U.S. federal, state and local corporate income taxes at the entitylevel on KKR’s share of net taxable income. In addition, the KKR Group Partnerships and certain of their subsidiaries operate in the United States as partnershipsfor U.S. federal income tax purposes and as corporate entities in certain non-U.S. jurisdictions. These entities, in some cases, are subject to U.S. state or localincome taxes or non-U.S. income taxes.Prior to the Conversion on July 1, 2018, KKR & Co. L.P.’s investment income and carried interest generally were not subject to U.S. corporate income taxes.Subsequent to the Conversion, all income earned by KKR & Co. Inc. is subject to U.S. corporate income taxes, which we believe will result in an overall higherincome tax expense (or benefit) when compared to periods prior to the Conversion.The Conversion resulted in KKR obtaining a partial step-up in the tax basis of certain assets that will be recovered as those assets are sold or the basis isamortized. KKR's overall tax provision is based on, among other things, the amount of such partial step-up in tax basis that is derived from an analysis of the basisof its former unitholders in their ownership of KKR common units at June 30, 2018. On the date of the Conversion, based on the information available to KKR atthat time, KKR recorded an estimated net tax benefit and estimated net deferred tax asset of $257.1 million relating to this partial step-up in tax basis. Uponanalysis of the basis of KKR's former unitholders in their ownership of KKR common units at June 30, 2018, based on the additional information made available toKKR after December 31, 2018, the final determination of the amount of partial step-up in tax basis resulted in an additional tax benefit of approximately $45.0million during 2019.196Table of ContentsNotes to Financial Statements (Continued)The following table reconciles the U.S. Federal Statutory Tax Rate to the Effective Income Tax Rate: For the Years Ended December 31, 2019 2018 2017Statutory U.S. Federal Income Tax Rate21.00 % 21.00 % 35.00 %Income not attributable to KKR & Co. Inc. (1)(10.57)% (20.13)% (38.64)%Foreign Income Taxes(0.28)% 1.66 % 2.62 %State and Local Income Taxes0.85 % (0.16)% 0.05 %Compensation Charges Borne by KKR Holdings2.75 % 1.69 % 6.29 %Conversion Benefit(0.90)% (11.19)% — %Change in Valuation Allowance— % (0.53)% — %Impact of the 2017 Tax Act— % — % 3.52 %Other(2.62)% (0.94)% (0.78)%Effective Income Tax Rate10.23 % (8.60)% 8.06 %(1)Represents primarily income attributable to (i) redeemable noncontrolling interests for all periods and (ii) noncontrolling interests for all periods. This item also includes investment incomeof certain entities and net carried interest of certain general partners of KKR investment funds that were not subject to U.S. federal income taxes prior to the Conversion.Deferred income taxes reflect the net tax effects of temporary differences that may exist between the carrying amounts of assets and liabilities for financialreporting purposes and the amounts used for income tax purposes using enacted tax rates in effect for the year in which the differences are expected to reverse. Asummary of the tax effects of the temporary differences is as follows: December 31, 2019 December 31, 2018Deferred Tax Assets Fund Management Fee Credits & Refunds$65,168 $60,740Equity Based Compensation28,731 21,949KKR Holdings Unit Exchanges (1)152,759 127,275Depreciation and Amortization (2)300,851 293,481Operating Lease Deferred Liability19,152 —Investment Basis Differences / Net Unrealized Gains & Losses (2)— 16,613Net Operating Loss Carryforwards13,381 3,607Other11,732 14,496Total Deferred Tax Assets before Valuation Allowance591,774 538,161Valuation Allowance— —Total Deferred Tax Assets591,774 538,161Deferred Tax Liabilities Investment Basis Differences / Net Unrealized Gains & Losses (2)414,048 —Operating Lease Right-of-Use Asset19,152 —Total Deferred Tax Liabilities433,200 —Total Deferred Taxes, Net$158,574 $538,161(1)In connection with exchanges of KKR Holdings units into Class A common stock of KKR & Co. Inc., KKR records a deferred tax asset associated with an increase in KKR & Co. Inc.'sshare of the tax basis of the tangible and intangible assets of the KKR Group Partnerships. This amount is offset by an adjustment to record amounts due to KKR Holdings and principalsunder the tax receivable agreement, which is included within Due to Affiliates in the consolidated statements of financial condition. The net impact of these adjustments was recorded as anadjustment to equity at the time of the exchanges.(2)This deferred tax item includes a portion of the tax benefit KKR recognized as a result of the step-up in tax basis generated by the Conversion.Future realization of the above deferred tax assets is dependent on KKR generating sufficient taxable income within the period of time that the tax benefits areexpected to reverse. KKR considers projections of taxable income in evaluating its ability to utilize those deferred tax assets. In projecting its taxable income, KKRbegins with historical results and incorporates assumptions concerning the amount and timing of future pretax operating income. Those assumptions requiresignificant judgment and are consistent with the plans and estimates that KKR uses to manage its business. KKR has determined that it is197Table of ContentsNotes to Financial Statements (Continued)more likely than not that all deferred tax assets will be realized and that a valuation allowance is not needed as of December 31, 2019 and 2018.As of December 31, 2019, KKR has a cumulative state and local NOL carryforward of $162.2 million that will begin to expire in 2036. KKR has elected totreat taxes paid in foreign jurisdictions as a deduction in lieu of a Foreign Tax Credit (“FTC”), because of U.S. federal limitations on FTC utilization.Tax ContingenciesKKR files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, KKR is subject to examinationby U.S. federal and certain state, local and foreign tax regulators. As of December 31, 2019, tax returns of KKR and its predecessor entities for the years 2016through 2018 for U.S. federal purposes and 2011 through 2018 for state and local tax purposes are open under general statute of limitations provisions andtherefore subject to examination.At December 31, 2019, 2018 and 2017, KKR's unrecognized tax benefits relating to uncertain tax positions, excluding related interest and penalties, consistedof the following: For the Years Ended December 31, 2019 2018 2017Unrecognized Tax Benefits, beginning of period$53,598 $48,170 $43,996Gross increases in tax positions in prior periods— — —Gross decreases in tax positions in prior periods(2,443) — —Gross increases in tax positions in current period4,107 5,542 4,406Lapse of statute of limitations(1,890) (114) (232)Unrecognized Tax Benefits, end of period$53,372 $53,598 $48,170If the above tax benefits were recognized it would reduce the effective income tax rate. KKR believes that there will not be a significant increase or decrease tothe tax positions within 12 months of the reporting date.The unrecognized tax benefits are recorded in Accounts Payable, Accrued Expenses and Other Liabilities. KKR recognizes interest and penalties accruedrelated to unrecognized tax benefits as income tax expense. Related to the unrecognized tax benefits, KKR had a net reversal of accrued penalties of $(0.4) millionand interest of $(0.4) million during 2019 and in total, as of December 31, 2019, recognized a liability for penalties of $2.2 million and interest of $10.2 million.During 2018, penalties of $0.3 million and interest of $2.6 million were accrued and in total, as of December 31, 2018, recognized a liability for penalties of $2.6million and interest of $10.6 million.198Table of ContentsNotes to Financial Statements (Continued)12. EQUITY BASED COMPENSATIONThe following table summarizes the expense associated with equity-based compensation for the years ended December 31, 2019, 2018 and 2017, respectively. For the Years Ended December 31, 2019 2018 2017Equity Incentive Plans$207,789 $242,811 $204,308KKR Holdings Principal Awards91,123 104,625 143,204Total (1)$298,912 $347,436 $347,512(1)Includes $1.4 million, $11.7 million and $11.2 million of equity based compensation for the years ended December 31, 2019, 2018, and 2017 respectively, related to employees of equitymethod investees. Such amounts are included in Net Gains (Losses) from Investment Activities in the consolidated statements of operations.Equity Incentive PlansOn March 29, 2019, the 2019 Equity Incentive Plan became effective. Following the effectiveness of the 2019 Equity Incentive Plan, KKR will not make anyfurther grants under the 2010 Equity Incentive Plan, and the 2019 Equity Incentive Plan became KKR's only plan for providing new equity-based awards.Outstanding awards under the 2010 Equity Incentive Plan will remain outstanding, unchanged and subject to the terms of the 2010 Equity Incentive Plan and theirrespective equity award agreements, until the vesting, expiration or lapse of such awards in accordance with their terms. There are no significant differences in theexpense recognition between the 2010 Equity Incentive Plan and the 2019 Equity Incentive Plan. Under the 2019 Equity Incentive Plan, KKR is permitted to grant equity awards representing ownership interests in KKR & Co. Inc. Class A common stock.The total number of shares of Class A common stock that may be issued under the 2019 Equity Incentive Plan is equivalent to 15% of the aggregate number of theshares of Class A common stock and KKR Group Partnership Units (excluding KKR Group Partnership Units held by KKR & Co. Inc. or its wholly-ownedsubsidiaries), subject to annual adjustment. Vested awards under the Equity Incentive Plans dilute KKR & Co. Inc. common stockholders and KKR Holdings prorata in accordance with their respective percentage interests in the KKR Group Partnerships.Equity awards have been granted under the Equity Incentive Plans and are generally subject to service-based vesting, typically over a three to five year periodfrom the date of grant. In certain cases, these awards are subject to transfer restrictions and/or minimum retained ownership requirements. The transfer restrictionperiod, if applicable, lasts for (i) one year with respect to one-half of the interests vesting on any vesting date and (ii) two years with respect to the other one-half ofthe interests vesting on such vesting date. While providing services to KKR, if applicable, certain of these awards are also subject to minimum retained ownershiprules requiring the award recipient to continuously hold shares of Class A common stock equivalents equal to at least 15% of their cumulatively vested awards thathave the minimum retained ownership requirement.Expense associated with the vesting of these awards is based on the closing price of the KKR & Co. Inc. Class A common stock on the date of grant,discounted for the lack of participation rights in the expected dividends on unvested shares.The following table presents information regarding the discount for the lack of participation rights in the expected dividends by grant date:Date of Grant Discountper share (1)January 1, 2016 to December 31, 2016 $0.64January 1, 2017 to December 31, 2017 $0.68January 1, 2018 to June 30, 2018 $0.68July 1, 2018 to December 31, 2019 $0.50(1)Represents the annual discount for the lack of participation rights on expected dividends. The total discount on any given tranche of unvested shares is calculated as the discount per sharemultiplied by the number of years in the applicable vesting period.Expense is recognized on a straight line basis over the life of the award and assumes a forfeiture rate of up to 7% annually based upon expected turnover byclass of recipient.199Table of ContentsNotes to Financial Statements (Continued)Market Condition AwardsOn November 2, 2017, KKR's Co-Presidents and Co-Chief Operating Officers were each granted equity awards representing 2.5 million shares of KKR ClassA common stock subject to a market price-based vesting condition ("Market Condition Awards"). These awards were granted under the 2010 Equity IncentivePlan. All of such awards will vest upon the market price of KKR Class A common stock reaching and maintaining a closing market price of $40 per share for 10consecutive trading days on or prior to December 31, 2022, subject to the employee's continued service to the time of such vesting. If the $40 price target is notachieved by the close of business on December 31, 2022, the unvested Market Condition Awards will be automatically canceled and forfeited. These MarketCondition Awards are subject to additional transfer restrictions and minimum retained ownership requirements after vesting. Due to the existence of the marketcondition, the vesting period for the Market Condition Awards is not explicit, and as such, compensation expense will be recognized over the period derived fromthe valuation technique used to estimate the grant-date fair value of the award (the "Derived Vesting Period"). The fair value of the Market Condition Awards at thedate of grant was $4.02 per share based on a Monte-Carlo simulation valuation model due to the existence of the market condition described above.Below is a summary of the significant assumptions used to estimate the grant date fair value of the Market Condition Awards:Closing KKR share price as of valuation date $19.90Risk Free Rate 2.02%Volatility 25.00%Dividend Yield 3.42%Expected Cost of Equity 11.02%In addition, the grant date fair value assumes that holders of the Market Condition Awards will not participate in dividends until such awards have met theirvesting requirements. Compensation expense is recognized over the Derived Vesting Period, which was estimated to be 3 years from the date of grant, on astraight-line basis. As of December 31, 2019, there was approximately $5.6 million of estimated unrecognized compensation expense related to unvested MarketCondition Awards and such awards did not meet their market-price based vesting condition.As of December 31, 2019, there was approximately $295.9 million of total estimated unrecognized expense related to unvested awards, including MarketCondition Awards. That cost is expected to be recognized as follows:Year Unrecognized Expense (in millions)2020 $162.82021 86.42022 36.92023 7.82024 1.72025 0.3Total $295.9200Table of ContentsNotes to Financial Statements (Continued)A summary of the status of unvested awards granted under the Equity Incentive Plans, excluding Market Condition Awards as described above, fromJanuary 1, 2019 through December 31, 2019 is presented below: Shares WeightedAverage GrantDate Fair ValueBalance, January 1, 201933,400,183 $16.23Granted4,742,836 25.98Vested(13,816,158) 15.79Forfeitures(1,629,216) 17.23Balance, December 31, 201922,697,645 $18.46 The weighted average remaining vesting period over which unvested awards are expected to vest is 1.2 years.A summary of the remaining vesting tranches of awards granted under the Equity Incentive Plans is presented below:Vesting Date SharesApril 1, 2020 6,897,566October 1, 2020 4,161,077April 1, 2021 4,765,284October 1, 2021 2,611,618April 1, 2022 1,665,568October 1, 2022 1,309,649April 1, 2023 841,805October 1, 2023 130,649April 1, 2024 182,585October 1, 2024 5,133April 1, 2025 126,711 22,697,645KKR Holdings AwardsKKR Holdings units are exchangeable for KKR Group Partnership Units and allow for their exchange into Class A common stock of KKR & Co. Inc. on aone-for-one basis. As of December 31, 2019 and 2018, KKR Holdings owned approximately 34.1% or 290,381,345 units and 35.9% or 299,081,239 units,respectively, of outstanding KKR Group Partnership Units. Awards for KKR Holdings units that have been granted are generally subject to service based vesting,typically over a three to five year period from the date of grant. They are also generally subject to transfer restrictions which last for (i) one year with respect toone-half of the interests vesting on any vesting date and (ii) two years with respect to the other one-half of the interests vesting on such vesting date. Whileproviding services to KKR, the recipients are also subject to minimum retained ownership rules requiring them to continuously hold 25% of their vested interests.Upon separation from KKR, award recipients are subject to the terms of a confidentiality and restrictive covenants agreement that would require the forfeiture ofcertain vested and unvested units should the terms of the agreement be violated. Holders of KKR Holdings units are not entitled to participate in distributions madeon KKR Group Partnership Units underlying their KKR Holdings units until such units are vested. All of the KKR Holdings units (except for less than 1.0% of theoutstanding KKR Holdings units) have been granted as of December 31, 2019, and certain Holdings units remain subject to vesting.The fair value of awards granted out of KKR Holdings is generally based on the closing price of KKR & Co. Inc. Class A common stock on the date of grantdiscounted for the lack of participation rights in the expected distributions on unvested units. KKR determined this to be the best evidence of fair value as KKR &Co. Inc. Class A common stock is traded in an active market and has an observable market price. Additionally, a KKR Holdings unit is an instrument with termsand conditions similar to those of KKR & Co. Inc. Class A common stock. Specifically, units in KKR Holdings and shares of KKR & Co. Inc. represent ownershipinterests in KKR Group Partnership Units and, subject to any vesting, minimum retained ownership requirements and transfer restrictions, each KKR Holdings unitis exchangeable into a KKR Group Partnership Unit and then into a share of KKR & Co. Inc. Class A common stock on a one-for-one basis.201Table of ContentsNotes to Financial Statements (Continued)In February 2016, approximately 28.9 million KKR Holdings units were granted that were originally subject to market condition and service-based vestingthat were subsequently modified in November 2016 to eliminate the market condition vesting and instead require only service-based vesting in equal annualinstallments over a five year period. At the date of modification, total future compensation expense amounted to $320.9 million, net of estimated forfeitures, to berecognized over the remaining vesting period of the modified awards.The awards described above were granted from outstanding but previously unallocated units of KKR Holdings, and consequently these grants did not increasethe number of KKR Holdings units outstanding or outstanding KKR & Co. Inc. Class A common stock on a fully-diluted basis. If and when vested, these awardswill not dilute KKR's respective ownership interests in the KKR Group Partnerships.KKR Holdings awards give rise to equity-based compensation in the consolidated statements of operations based on the grant-date fair value of the awarddiscounted for the lack of participation rights in the expected distributions on unvested units. This discount is consistent with that noted above for shares issuedunder the Equity Incentive Plans.Expense is recognized on a straight line basis over the life of the award and assumes a forfeiture rate of up to 7% annually based on expected turnover by classof recipient.As of December 31, 2019, there was approximately $153.3 million of estimated unrecognized expense related to unvested KKR Holdings awards. That cost isexpected to be recognized as follows:Year Unrecognized Expense (in millions)2020 $82.02021 45.72022 25.6Total $153.3A summary of the status of unvested awards granted under the KKR Holdings Plan from January 1, 2019 through December 31, 2019 is presented below: Units WeightedAverage GrantDate Fair ValueBalance, January 1, 201924,123,993 $14.42Granted— —Vested(6,162,014) 14.86Forfeitures(1,392,500) 12.25Balance, December 31, 201916,569,479 $14.43The weighted average remaining vesting period over which unvested awards are expected to vest is 1.5 years.A summary of the remaining vesting tranches of awards granted under the KKR Holdings Plan is presented below:Vesting Date UnitsApril 1, 2020 124,479May 1, 2020 3,085,000October 1, 2020 2,940,000May 1, 2021 3,085,000October 1, 2021 3,425,000October 1, 2022 3,910,000 16,569,479202Table of ContentsNotes to Financial Statements (Continued)13. RELATED PARTY TRANSACTIONSDue from Affiliates consists of: December 31, 2019 December 31, 2018Amounts due from portfolio companies$120,391 $82,204Amounts due from unconsolidated investment funds594,184 568,211Amounts due from related entities2,824 6,774Due from Affiliates$717,399 $657,189Due to Affiliates consists of: December 31, 2019 December 31, 2018Amounts due to KKR Holdings in connection with the tax receivable agreement$131,288 $117,862Amounts due to unconsolidated investment funds154,810 157,722Due to Affiliates$286,098 $275,584Tax Receivable AgreementKKR is required to acquire KKR Group Partnership Units from time to time pursuant to the exchange agreement with KKR Holdings. The KKR GroupPartnerships have each made an election under Section 754 of the Internal Revenue Code of 1986, as amended, that will remain in effect for each taxable year inwhich an exchange of KKR Group Partnership Units for Class A common stock occurs, which may result in an increase in KKR's tax basis of the assets of theKKR Group Partnerships at the time of an exchange of KKR Group Partnership Units. Certain of these exchanges are expected to result in an increase in KKR'sshare of the tax basis of the tangible and intangible assets of the KKR Group Partnerships, primarily attributable to a portion of the goodwill inherent in KKR'sbusiness that would not otherwise have been available. This increase in tax basis may increase depreciation and amortization deductions for tax purposes andtherefore reduce the amount of income tax KKR otherwise would be required to pay in the future. This increase in tax basis may also decrease gain (or increaseloss) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.KKR has entered into a tax receivable agreement with KKR Holdings, which requires KKR to pay to KKR Holdings, or to current and former principals whohave exchanged KKR Holdings units for shares of Class A common stock (as transferees of KKR Group Partnership Units), 85% of the amount of cash savings, ifany, in U.S. federal, state and local income tax that KKR realizes as a result of the increase in tax basis described above, as well as 85% of the amount of any suchsavings KKR actually realizes as a result of increases in tax basis that arise due to future payments under the agreement. KKR expects to benefit from theremaining 15% of cash savings, if any, in income tax that it realizes. A termination of the agreement or a change of control could give rise to similar paymentsbased on tax savings that KKR would be deemed to realize in connection with such events.These payment obligations are obligations of KKR & Co. Inc. and certain of its intermediate holding companies and not of any KKR Group Partnership andare recorded within Due to Affiliates in the accompanying consolidated statements of financial condition. Payments made under the tax receivable agreement arerequired to be made within 90 days of the filing of KKR's tax returns, which may result in a timing difference between the tax savings received by KKR and thecash payments made to the exchanging holders of KKR Group Partnership Units.As a result of the 2017 Tax Act, which lowered the U.S. federal corporate tax rate from 35% to 21%, expected future cash savings generated as a result ofKKR Holdings exchanges are expected to decrease. Accordingly, KKR has decreased the liability associated with the tax receivable agreement to reflect lowerfuture payments to individuals who exchanged KKR Holdings units for shares of Class A common stock. The amount of this reduction was $67.2 million and isincluded in Net Gains (Losses) from Investment Activities in the consolidated statements of operations for the year ended December 31, 2017.Effective July 1, 2018, we amended the tax receivable agreement to reflect the Conversion. The amendment also provides that, in the event the maximum U.S.federal corporate income tax rate is increased to a rate higher than 21.0% within the five-year period following the Conversion, for exchanges pursuant to theexchange agreement that take place within that five-year period (other than exchanges following the death of an individual), payments of cash tax savings realizedas a result of such exchanges shall be calculated by applying a U.S. federal corporate income tax rate not to exceed 21.0%. The amendment also clarifies that thetax benefit payments with respect to exchanges completed at any time prior to the Conversion will be203Table of ContentsNotes to Financial Statements (Continued)calculated without taking into account the step-up in tax basis in our underlying assets that we generated in 2018 as a result of the Conversion.For the year ended December 31, 2019, cash payments that have been made under the tax receivable agreement were $11.8 million. For the years endedDecember 31, 2018 and 2017, no cash payments have been made under the tax receivable agreement. KKR expects its intermediate holding companies to benefitfrom the remaining 15% of cash savings, if any, in income tax that they realize. As of December 31, 2019, $6.3 million of cumulative income tax savings havebeen realized.Discretionary InvestmentsCertain of KKR's current and former employees and other qualifying personnel are permitted to invest, and have invested, their own capital in KKR's funds, inside-by-side investments with these funds and the firm, as well as in funds managed by its strategic manager partnerships. Side-by-side investments are made onthe same terms and conditions as those acquired by the applicable fund or the firm, except that the side-by-side investments do not subject the investor tomanagement fees or a carried interest. The cash contributed by these individuals aggregated $433.0 million, $415.0 million, and $505.1 million for the years endedDecember 31, 2019, 2018 and 2017, respectively.Aircraft and Other ServicesCertain of the senior employees own aircraft that KKR uses for business purposes in the ordinary course of its operations. These senior employees paid for thepurchase of these aircraft with personal funds and bear all operating, personnel and maintenance costs associated with their operation. The hourly rates that KKRpays for the use of these aircraft are based on current market rates for chartering private aircraft of the same type. KKR incurred $3.8 million, $3.6 million, and$3.9 million for the use of these aircraft for the years ended December 31, 2019, 2018 and 2017, respectively.FacilitiesCertain trusts, whose beneficiaries include children of Mr. Kravis and Mr. Roberts, and certain other senior employees who are not executive officers of KKR,are partners in a real-estate based partnership that maintains an ownership interest in KKR's Menlo Park location. Payments made to this partnership were $8.1million, $7.9 million, and $7.6 million for the years ended December 31, 2019, 2018 and 2017, respectively.14. SEGMENT REPORTINGKKR operates through one operating and reportable segment. This single reportable segment reflects how the chief operating decision makers allocateresources and assess performance under KKR's "one-firm approach," which includes operating collaboratively across business lines, with predominantly a singleexpense pool.15. EQUITYStockholders' EquityClass A, Class B and Class C Common StockClass A common stock is entitled to vote as provided by our certificate of incorporation, Delaware law and the rules of the NYSE. Class B common stock isentitled to vote on any other matter that is submitted to a vote of the stockholders. For matters on which our Class A common stock is entitled to vote, so long asthe ratio at which KKR Group Partnership Units are exchangeable for Class A common stock remains on a one-for-one basis, Class C common stock will votetogether with Class A common stock as a single class and on an equivalent basis unless required otherwise by Delaware law, except Class C common stock willvote separately as a class on any amendment to the certificate of incorporation that changes certain terms, rights or preferences of Class C common stock. The holder of Class B common stock and holders of Class C common stock do not have any economic rights to receive dividends or receive distributions uponthe dissolution, liquidation or winding up of KKR. Class A common stock, Class B common stock and Class C common stock are not entitled to preemptive rights,and, except in the case of impermissible transfers of the Class B common stock, which would result in KKR’s redemption of such Class B common stock, are notsubject to conversion, redemption or sinking fund provisions.204Table of ContentsNotes to Financial Statements (Continued)Series A and Series B Preferred StockThe board of directors is authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time totime the number of shares to be included in each series, and to fix the designation, powers (including voting powers), preferences and rights of the shares of eachseries and any of its qualifications, limitations or restrictions, in each case without further vote or action by the stockholders (except as may be required by theterms of any preferred stock then outstanding).KKR & Co. Inc. has outstanding 13,800,000 shares of Series A Preferred Stock and 6,200,000 shares of Series B Preferred Stock. Series A Preferred Stockand Series B Preferred Stock trade on the NYSE under the symbols "KKR PR A" and "KKR PR B", respectively, and were originally issued on March 17, 2016and June 20, 2016, respectively. The terms of the preferred stock are set forth in our certificate of incorporation.If declared, dividends on the Series A Preferred Stock and Series B Preferred Stock are payable quarterly on March 15, June 15, September 15 and December15 of each year, at a rate per annum equal to 6.75%, in the case of Series A Preferred Stock, and 6.50%, in the case of Series B Preferred Stock. Dividends on theSeries A Preferred Stock and Series B Preferred Stock are discretionary and non-cumulative. Holders of the Series A Preferred Stock and Series B Preferred Stockwill only receive dividends on such shares when, as and if declared by the board of directors. KKR has no obligation to declare or pay any dividends for anydividend period, whether or not dividends on any series of preferred stock are declared or paid for any other dividend period. Unless dividends have been declared and paid (or declared and set apart for payment) on Series A Preferred Stock and Series B Preferred Stock for a quarterlydistribution period, KKR & Co. Inc. may not declare or pay dividends on, or repurchase, any of its shares that are junior to Series A Preferred Stock and Series BPreferred Stock, including Class A common stock, during such dividend period. A dividend period begins on a dividend payment date and extends to, but excludes,the next dividend payment date.If KKR & Co. Inc. dissolves, then the holders of the Series A Preferred Stock and Series B Preferred Stock are entitled to receive payment of a $25.00liquidation preference per share, plus declared and unpaid dividends, if any, to the extent that KKR has sufficient gross income (excluding any gross incomeattributable to the sale or exchange of capital assets) such that holders of such preferred stock have capital account balances equal to such liquidation preference,plus declared and unpaid dividends, if any.The Series A Preferred Stock and Series B Preferred Stock do not have a maturity date. However, Series A Preferred Stock may be redeemed at KKR & Co.Inc.’s option, in whole or in part, at any time on or after June 15, 2021, at a price of $25.00 per share, plus declared and unpaid dividends, if any. Series B PreferredStock may be redeemed at KKR & Co. Inc.’s option, in whole or in part, at any time on or after September 15, 2021, at a price of $25.00 per share, plus declaredand unpaid dividends, if any. Holders of Series A Preferred Stock and Series B Preferred Stock have no right to require the redemption of such stock.If a certain change of control event with a ratings downgrade occurs prior to June 15, 2021, in the case of Series A Preferred Stock, and September 15, 2021, inthe case of Series B Preferred Stock, then Series A Preferred Stock or Series B Preferred Stock, as applicable, may be redeemed at KKR & Co. Inc.’s option, inwhole but not in part, upon at least 30 days' notice, within 60 days of the occurrence of such change of control event, at a price of $25.25 per share, plus declaredand unpaid dividends, if any. If such a change of control event occurs (whether before, on or after June 15, 2021, in the case of the Series A Preferred Stock, orSeptember 15, 2021, in the case of the Series B Preferred Stock) and we do not give such notice, the dividend rate per annum on the applicable series of preferredstock will increase by 5.00%, beginning on the 31st day following such change of control event.Series A Preferred Stock and Series B Preferred Stock are not convertible into common stock of KKR & Co. Inc. and have no voting rights, except that holdersof Series A Preferred Stock and Series B Preferred Stock have certain voting rights in limited circumstances relating to the election of directors following thefailure to declare and pay dividends, certain amendments to the terms of the preferred stock, and the creation of preferred stock that are senior to the Series APreferred Stock and Series B Preferred Stock.In connection with the issuance of the Series A Preferred Stock and Series B Preferred Stock, the KKR Group Partnerships issued for the benefit of KKR &Co. Inc. corresponding series of preferred units with economic terms that mirror those of the Series A Preferred Stock and Series B Preferred Stock, as applicable.205Table of ContentsNotes to Financial Statements (Continued)Share Repurchase ProgramIn the first quarter of 2019, KKR increased the available amount under its repurchase program to $500 million, which may be used for the repurchase of itsshares of Class A common stock of KKR & Co. Inc. and retirement of equity awards granted pursuant to the Equity Incentive Plans. Under this repurchaseprogram, shares of Class A common stock of KKR & Co. Inc. may be repurchased from time to time in open market transactions, in privately negotiatedtransactions or otherwise. The timing, manner, price and amount of any repurchases will be determined by KKR in its discretion and will depend on a variety offactors, including legal requirements, price and economic and market conditions. In addition to the repurchases of Class A common stock, the repurchase programwill be used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards granted pursuant to our EquityIncentive Plans representing the right to receive Class A common stock. KKR expects that the program, which has no expiration date, will be in effect until themaximum approved dollar amount has been used. The program does not require KKR to repurchase or retire any specific number of shares of Class A commonstock or equity awards, respectively, and the program may be suspended, extended, modified or discontinued at any time.The following table presents KKR & Co. Inc. Class A common stock that has been repurchased or equity awards retired under the repurchase program: For the Years Ended December 31, 2019 2018 2017Shares of Class A common stock repurchased2,859,452 7,540,551 —Equity Awards for Class A common stock retired (1)3,670,019 1,675,306 —(1)Amounts exclude retirements of equity awards prior to May 3, 2018, the date on which retirements of equity awards became included under the repurchase program.Noncontrolling InterestsNoncontrolling interests represent (i) noncontrolling interests in consolidated entities and (ii) noncontrolling interests held by KKR Holdings.Noncontrolling Interests in Consolidated EntitiesNoncontrolling interests in consolidated entities represent the non-redeemable ownership interests in KKR that are held primarily by:(i)third party fund investors in KKR's consolidated funds and certain other entities;(ii)third parties entitled to up to 1% of the carried interest received by certain general partners of KKR's funds that have made investments on or priorto December 31, 2015;(iii)certain former principals and their designees representing a portion of the carried interest received by the general partners of KKR's private equityfunds that was allocated to them with respect to private equity investments made during such former principals' tenure with KKR prior to October1, 2009;(iv)certain principals and former principals representing all of the capital invested by or on behalf of the general partners of KKR's private equity fundsprior to October 1, 2009 and any returns thereon; and(v)third parties in KKR's capital markets business line.206Table of ContentsNotes to Financial Statements (Continued)Noncontrolling Interests held by KKR HoldingsNoncontrolling interests held by KKR Holdings include economic interests held by principals indirectly in the KKR Group Partnership Units. Such principalsreceive financial benefits from KKR's business in the form of distributions received from KKR Holdings and through their direct and indirect participation in thevalue of KKR Group Partnership Units held by KKR Holdings. These financial benefits are not paid by KKR & Co. Inc. and are borne by KKR Holdings.The following tables present the calculation of total noncontrolling interests: For the Year Ended December 31, 2019 NoncontrollingInterests inConsolidated Entities Noncontrolling InterestsHeld by KKR Holdings Total NoncontrollingInterestsBalance at the beginning of the period$10,984,910 $4,625,448 $15,610,358Net income (loss) attributable to noncontrolling interests (1)1,264,820 1,369,671 2,634,491Other comprehensive income (loss), net of tax (2)(1,803) (537) (2,340)Exchange of KKR Holdings Units to Class A Common Stock (3) — (161,825) (161,825)Equity-based and other non-cash compensation— 91,297 91,297Capital contributions4,668,114 1,642 4,669,756Capital distributions(2,972,914) (197,062) (3,169,976)Changes in consolidation23,123 — 23,123Balance at the end of the period$13,966,250 $5,728,634 $19,694,884 For the Year Ended December 31, 2018 NoncontrollingInterests inConsolidated Entities Noncontrolling InterestsHeld by KKR Holdings Total NoncontrollingInterestsBalance at the beginning of the period$8,072,849 $4,793,475 $12,866,324Net income (loss) attributable to noncontrolling interests (1)796,183 561,052 1,357,235Other comprehensive income (loss), net of tax (2)(18,512) (12,559) (31,071)Exchange of KKR Holdings Units to Class A Common Stock and Other (3) (52,585) (567,309) (619,894)Equity-based and other non-cash compensation— 100,632 100,632Capital contributions4,357,219 2,396 4,359,615Capital distributions(2,763,416) (252,239) (3,015,655)Changes in consolidation593,172 — 593,172Balance at the end of the period$10,984,910 $4,625,448 $15,610,358 For the Year Ended December 31, 2017 NoncontrollingInterests inConsolidated Entities NoncontrollingInterests Held by KKRHoldings Total NoncontrollingInterestsBalance at the beginning of the period$6,252,565 $4,293,337 $10,545,902Net income (loss) attributable to noncontrolling interests (1)676,744 791,021 1,467,765Other comprehensive income (loss), net of tax (2)9,192 21,904 31,096Exchange of KKR Holdings Units to Class A Common Stock and Other (3) (50,120) (238,941) (289,061)Equity-based and other non-cash compensation— 141,727 141,727Capital contributions3,116,889 3,028 3,119,917Capital distributions(1,890,232) (235,610) (2,125,842)Changes in consolidation(1,682) — (1,682)Transfers of interests under common control and Other(40,507) 17,009 (23,498)Balance at the end of the period$8,072,849 $4,793,475 $12,866,324207Table of ContentsNotes to Financial Statements (Continued)(1)Refer to the table below for calculation of net income (loss) attributable to noncontrolling interests held by KKR Holdings.(2)With respect to noncontrolling interests held by KKR Holdings, calculated on a pro rata basis based on the weighted average KKR Group Partnership Units held by KKR Holdings duringthe reporting period. (3)For the year ended December 31, 2019, calculated based on the proportion of KKR Holdings units exchanged for KKR & Co. Inc. Class A common stock. For the years ended December31, 2018 and 2017, calculated based on the proportion of KKR Holdings units and other exchangeable securities exchanged for KKR & Co. Inc. Class A common stock. The exchangeagreement with KKR Holdings provides for the exchange of KKR Group Partnership Units held by KKR Holdings for KKR & Co. Inc. Class A common stock.Net income (loss) attributable to each of KKR & Co. Inc. Class A common stockholders and KKR Holdings, with the exception of certain tax assets andliabilities that are directly allocable to KKR & Co. Inc., is attributed based on the percentage of the weighted average KKR Group Partnership Units directly orindirectly held by KKR & Co. Inc. and KKR Holdings, each of which directly or indirectly holds equity of the KKR Group Partnerships. However, primarilybecause of the (i) contribution of certain expenses borne entirely by KKR Holdings, (ii) the periodic exchange of KKR Holdings units for KKR & Co. Inc. Class Acommon stock pursuant to the exchange agreement and (iii) the contribution of certain expenses borne entirely by KKR associated with the Equity Incentive Plans,equity allocations shown in the consolidated statement of changes in equity differ from their respective pro rata ownership interests in KKR's net assets.The following table presents net income (loss) attributable to noncontrolling interests held by KKR Holdings: For the Years Ended December 31, 2019 2018 2017Net income (loss)$4,639,540 $2,450,946 $2,560,042(-) Net income (loss) attributable to Redeemable Noncontrolling Interests— (37,352) 73,972(-) Net income (loss) attributable to Noncontrolling Interestsin consolidated entities1,264,820 796,183 676,744(-) Preferred Stock Dividends33,364 33,364 33,364(+) Income tax expense (benefit) attributable to KKR & Co. Inc.539,466 (229,232) 150,812(-) Gain from remeasurement of tax receivable agreement liability attributable to KKR & Co.Inc.(1) — — 67,221Net income (loss) attributable to KKR & Co. Inc.Class A Common Stockholders and KKR Holdings$3,880,822 $1,429,519 $1,859,553 Net income (loss) attributable to Noncontrolling Interestsheld by KKR Holdings$1,369,671 $561,052 $791,021(1)Represents the impacts of the remeasurement of the tax receivable agreement which arises from changes in the associated deferred tax balance, including the impacts related to the 2017Tax Act.Redeemable Noncontrolling InterestsRedeemable Noncontrolling Interests represent noncontrolling interests of certain investment funds and vehicles that are subject to periodic redemption byfund investors following the expiration of a specified period of time (typically one year), or may be withdrawn subject to a redemption fee during the period whencapital may not be otherwise withdrawn. Fund investors interests subject to redemption as described above are presented as Redeemable Noncontrolling Interests inthe accompanying consolidated statements of financial condition and presented as Net Income (Loss) Attributable to Redeemable Noncontrolling Interests in theaccompanying consolidated statements of operations.When redeemable amounts become legally payable to fund investors, they are classified as a liability and included in Accounts Payable, Accrued Expensesand Other Liabilities in the accompanying consolidated statements of financial condition. For all consolidated investment vehicles and funds in which redemptionrights have not been granted, noncontrolling interests are presented within Stockholders' Equity in the accompanying consolidated statements of financial conditionas noncontrolling interests.208Table of ContentsNotes to Financial Statements (Continued)The following table presents the rollforward of Redeemable Noncontrolling Interests: For the Years Ended December 31, 2019 2018 2017Balance at the beginning of the period$1,122,641 $610,540 $632,348Net income (loss) attributable to Redeemable Noncontrolling Interests— (37,352) 73,972Capital contributions— 565,553 220,167Capital distributions— (16,100) (890)Changes in consolidation(1,122,641) — (315,057)Balance at the end of the period$— $1,122,641 $610,54016. COMMITMENTS AND CONTINGENCIESFunding CommitmentsAs of December 31, 2019, KKR had unfunded commitments consisting of $5,241.2 million to its active investment vehicles. In addition to the uncalledcommitments to KKR's investment funds, KKR has entered into contractual commitments with respect to (i) the purchase of investments and other assets in itsPrincipal Activities business line and (ii) underwriting transactions, debt financing, and syndications in KKR's Capital Markets business line. As of December 31,2019, these commitments amounted to $0.8 million and $1,089.4 million, respectively. Whether these amounts are actually funded, in whole or in part, depends onthe contractual terms of such commitments, including the satisfaction or waiver of any conditions to closing or funding. The unfunded commitments shown forKKR's Capital Markets business line are shown without reflecting arrangements that may reduce the actual amount of contractual commitments shown. KKR'scapital markets business has an arrangement with a third party, which reduces its risk when underwriting certain debt transactions, and thus our unfundedcommitments as of December 31, 2019 are reduced to reflect the amount to be funded by such third party. In the case of purchases of investments or assets inKKR's Principal Activities business line, the amount to be funded includes amounts that are intended to be syndicated to third parties, and the actual amounts to befunded may be less than shown.Non-cancelable Operating LeasesKKR's non-cancelable operating leases consist of leases of office space around the world. There are no material rent holidays, contingent rent, rent concessionsor leasehold improvement incentives associated with any of these property leases. In addition to base rentals, certain lease agreements are subject to escalationprovisions and rent expense is recognized on a straight‑line basis over the term of the lease agreement.As of December 31, 2019, the approximate aggregate future lease payments required on the operating leases are as follows: 2020$52,811202124,954202220,720202314,57020244,491Thereafter14,762Total lease payments required132,308Less: Imputed Interest(7,222)Total operating lease liabilities$125,086As of December 31, 2019, KKR has an additional operating lease for office space that has not yet commenced with future lease payments of approximately£66.9 million (or $88.9 million) over a lease term of 15 years. This operating lease is denominated in Pound Sterling.209Table of ContentsNotes to Financial Statements (Continued)Contingent Repayment GuaranteesThe partnership documents governing KKR's carry-paying investment funds and vehicles generally include a "clawback" provision that, if triggered, may giverise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund.Under a clawback obligation, upon the liquidation of a fund, the general partner is required to return, typically on an after-tax basis, previously distributed carry tothe extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the termof the fund exceed the amount to which the general partner was ultimately entitled, including the effects of any performance thresholds. As of December 31, 2019,$36.9 million of carried interest was subject to this clawback obligation, assuming that all applicable carry-paying funds were liquidated at their December 31,2019 fair values. Had the investments in such funds been liquidated at zero value, the clawback obligation would have been approximately $2.5 billion. Carriedinterest is recognized in the consolidated statements of operations based on the contractual conditions set forth in the agreements governing the fund as if the fundwere terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Amounts earned pursuant to carriedinterest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred returnthresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and tothe extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the generalpartner was ultimately entitled, a clawback obligation would be recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as anincrease in noncontrolling interests in the consolidated statements of financial condition. For funds that are not consolidated, this clawback obligation, if any, isreflected as a reduction of KKR's investment balance as this is where carried interest is initially recorded.Indemnifications and Other GuaranteesKKR may incur contingent liabilities for claims that may be made against it in the future. KKR enters into contracts that contain a variety of representations,warranties and covenants, including indemnifications. For example, KKR, certain of KKR's investment funds and KFN have provided certain indemnities relatingto environmental and other matters and have provided non-recourse carve-out guarantees for fraud, willful misconduct and other customary wrongful acts, each inconnection with the financing of KKR's corporate real estate and certain real estate investments and for certain investment vehicles that KKR manages. In addition,KKR has also provided credit support to certain of its subsidiaries' obligations in connection with a limited number of investment vehicles that KKR manages. Forexample, KKR has guaranteed the obligations of a general partner to post collateral on behalf of its investment vehicle in connection with such vehicle's derivativetransactions, and KKR has also agreed to be liable for certain investment losses and/or for providing liquidity in the events specified in the governing documents ofother investment vehicles. However, KKR is not a guarantor for any borrowings, credit facilities or debt securities of its Indian debt financing company. KKR hasalso provided credit support regarding repayment obligations to third-party lenders to certain of its employees, excluding its executive officers, in connection withtheir personal investments in KKR investment funds and to a hedge fund partnership regarding the ownership of its business. KKR also may become liable forcertain fees payable to sellers of businesses or assets if a transaction does not close, subject to certain conditions, if any, specified in the acquisition agreements forsuch businesses or assets. KKR's maximum exposure under these arrangements is currently unknown and KKR's liabilities for these matters would require a claimto be made against KKR in the future.LitigationFrom time to time, KKR is involved in various legal proceedings, lawsuits and claims incidental to the conduct of KKR's business. KKR's business is alsosubject to extensive regulation, which may result in regulatory proceedings against it.In December 2017, KKR & Co. L.P. and its Co-Chief Executive Officers were named as defendants in a lawsuit pending in Kentucky state court alleging,among other things, the violation of fiduciary and other duties in connection with certain separately managed accounts that Prisma Capital Partners LP, a formersubsidiary of KKR, manages for the Kentucky Retirement Systems. Also named as defendants in the lawsuit are certain current and former trustees and officers ofthe Kentucky Retirement Systems, Prisma Capital Partners LP, and various other service providers to the Kentucky Retirement Systems and their related persons.KKR and other defendants’ motions to dismiss were denied by the trial court in November 2018, but in April 2019 the Kentucky Court of Appeals vacated the trialcourt's opinion and order denying the motions to dismiss the case for lack of standing. The decision of the Court of Appeals has been appealed by plaintiffs to theSupreme Court of Kentucky, whose decision is pending.KKR currently is and expects to continue to become, from time to time, subject to examinations, inquiries and investigations by various U.S. and non-U.S.governmental and regulatory agencies, including but not limited to the SEC,210Table of ContentsNotes to Financial Statements (Continued)Department of Justice, state attorney generals, Financial Industry Regulatory Authority, or FINRA, and the U.K. Financial Conduct Authority. Such examinations,inquiries and investigations may result in the commencement of civil, criminal or administrative proceedings or fines against KKR or its personnel.Moreover, in the ordinary course of business, KKR is and can be both the defendant and the plaintiff in numerous lawsuits with respect to acquisitions,bankruptcy, insolvency and other types of proceedings. Such lawsuits may involve claims that adversely affect the value of certain investments owned by KKR'sfunds. KKR establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable.In such cases, there may be an exposure to loss in excess of any amounts accrued. No loss contingency is recorded for matters where such losses are either notprobable or reasonably estimable (or both) at the time of determination. Such matters may be subject to many uncertainties, including among others: (i) theproceedings may be in early stages; (ii) damages sought may be unspecified, unsupportable, unexplained or uncertain; (iii) discovery may not have been started oris incomplete; (iv) there may be uncertainty as to the outcome of pending appeals or motions; (v) there may be significant factual issues to be resolved or (vi) theremay be novel legal issues or unsettled legal theories to be presented or a large number of parties. Consequently, management is unable to estimate a range ofpotential loss, if any, related to these matters. In addition, loss contingencies may be, in part or in whole, subject to insurance or other payments such ascontributions and/or indemnity, which may reduce any ultimate loss.It is not possible to predict the ultimate outcome of all pending legal proceedings, and some of the matters discussed above seek or may seek potentially largeand/or indeterminate amounts. As of such date, based on information known by management, management has not concluded that the final resolutions of thematters above will have a material effect upon the financial statements. However, given the potentially large and/or indeterminate amounts sought or may besought in certain of these matters and the inherent unpredictability of investigations and litigations, it is possible that an adverse outcome in certain matters could,from time to time, have a material effect on KKR's financial results in any particular period.211Table of ContentsNotes to Financial Statements (Continued)17. QUARTERLY FINANCIAL DATA (UNAUDITED) For the Three Months Ended, March 31, 2019 June 30, 2019 September 30, 2019 December 31, 2019Statement of Operations Data: Total Revenues$1,187,480 $1,179,864 $790,485 $1,063,071Total Expenses728,767 808,811 619,533 751,320Total Investment Income (Loss)1,335,926 1,156,076 218,792 1,145,027Income (Loss) Before Taxes1,794,639 1,527,129 389,744 1,456,778Income Tax Expense / (Benefit)167,593 165,399 53,132 142,626Net Income (Loss)1,627,046 1,361,730 336,612 1,314,152Net Income (Loss) Attributable to Redeemable NoncontrollingInterests— — — —Net Income (Loss) Attributable to Noncontrolling Interests917,727 838,996 87,058 790,710Net Income (Loss) Attributable to KKR & Co. Inc.709,319 522,734 249,554 523,442Series A Preferred Stock Dividends5,822 5,822 5,822 5,822Series B Preferred Stock Dividends2,519 2,519 2,519 2,519Net Income (Loss) Attributable to KKR & Co. Inc. Class A CommonStockholders$700,978 $514,393 $241,213 $515,101Net Income (Loss) Attributable to KKR & Co. Inc. Per Share ofClass A Common Stock Basic$1.31$0.94 $0.44 $0.93Diluted$1.27$0.93 $0.43 $0.91Weighted Average Shares of Class A Common Stock Outstanding Basic533,892,474 544,528,863 546,336,936 555,379,973Diluted550,046,440 554,643,810 559,532,065 566,277,984 For the Three Months Ended, March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018Statement of Operations Data: Total Revenues$472,606 $971,620 $1,129,666 $(178,056)Total Expenses436,601 675,050 740,090 237,736Total Investment Income (Loss)584,530 1,330,786 833,288 (798,115)Income (Loss) Before Taxes620,535 1,627,356 1,222,864 (1,213,907)Income Tax Expense / (Benefit)17,641 60,960 (129,405) (143,294)Net Income (Loss)602,894 1,566,396 1,352,269 (1,070,613)Net Income (Loss) Attributable to Redeemable NoncontrollingInterests25,674 (18,016) 12,236 (57,246)Net Income (Loss) Attributable to Noncontrolling Interests398,777 895,690 691,494 (628,726)Net Income (Loss) Attributable to KKR & Co. Inc.178,443 688,722 648,539 (384,641)Series A Preferred Stock Dividends5,822 5,822 5,822 5,822Series B Preferred Stock Dividends2,519 2,519 2,519 2,519Net Income (Loss) Attributable to KKR & Co. Inc. Class A CommonStockholders$170,102 $680,381 $640,198 $(392,982)Net Income (Loss) Attributable to KKR & Co. Inc. Per Share ofClass A Common Stock Basic$0.36 $1.33 $1.22 $(0.74)Diluted$0.32 $1.24 $1.17 $(0.74)Weighted Average Shares of Class A Common Stock Outstanding Basic487,704,838 510,586,631 525,240,214 532,266,521Diluted535,918,274 548,745,498 545,672,953 532,266,521212Table of ContentsNotes to Financial Statements (Continued)18. SUBSEQUENT EVENTSCommon Stock DividendA dividend of $0.125 per share of Class A common stock of KKR & Co. Inc. was announced on January 31, 2020, and will be paid on February 25, 2020 toClass A common stockholders of record as of the close of business on February 10, 2020. KKR Holdings will receive its pro rata share of the distribution from theKKR Group Partnership.Preferred Stock DividendA dividend of $0.421875 per share of Series A Preferred Stock has been declared as announced on January 31, 2020 and set aside for payment on March 16,2020 to holders of record of Series A Preferred Stock as of the close of business on March 1, 2020.A dividend of $0.406250 per share of Series B Preferred Stock has been declared as announced on January 31, 2020 and set aside for payment on March 16,2020 to holders of record of Series B Preferred Stock as of the close of business on March 1, 2020.213Table of ContentsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and ProceduresWe maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensurethat the information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in the SEC's rules and forms and such information is accumulated and communicated to management, including the Co-ChiefExecutive Officers and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matterhow well designed and operated, can provide only reasonable assurances of achieving the desired control objectives. We carried out an evaluation, under the supervision and with the participation of our management, including the Co-Chief Executive Officers and the ChiefFinancial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2019. Based upon that evaluation,our Co-Chief Executive Officers and Chief Financial Officer have concluded that, as of December 31, 2019, our disclosure controls and procedures were effectiveto accomplish their objectives at the reasonable assurance level.Management's Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting (asdefined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) is a process designed by, or under the supervision of, a company's principal executive andprincipal financial officers and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes thosepolicies 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 the company;•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of managementand directors of the company; and•Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that couldhave a material effect on the financial statements.Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, managementused the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework thatwas issued in 2013. Based on its assessment, our management has concluded that, as of December 31, 2019, our internal control over financial reporting iseffective.Changes in Internal Control Over Financial ReportingNo changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during the fourth quarterof 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.Attestation Report of the Independent Registered Public Accounting FirmDeloitte & Touche LLP, our independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report,has issued its attestation report on our internal control over financial reporting, which is included in Item 8. Financial Statements and Supplementary Data.214Table of ContentsITEM 9B. OTHER INFORMATIONRestricted Holdings UnitsOn February 13, 2020, we adopted a new form of equity award under the 2019 Equity Incentive Plan called restricted holdings units. Restricted holdings unitswill be granted under the 2019 Equity Incentive Plan, and the number of shares of Class A common stock in respect of such awards is subject to the overalllimitation on the number of shares of Class A common stock that may be awarded under the 2019 Equity Incentive Plan. The form of restricted holdings units wasapproved by a committee of independent directors of our Board of Directors. In general, restricted holdings units are subject to vesting conditions. Followingvesting, certain restricted holdings units may also be subject to additional restrictions, including transfer restrictions or minimum retained ownership requirements.Restricted holdings units provide the holder the ability, after vesting and the satisfaction of certain other conditions, to exchange them for KKR GroupPartnership Units and then for shares of Class A Common Stock on a one-for-one basis (or at the discretion of KKR, cash in an amount equal to the fair marketvalue of the shares of Class A common stock that would otherwise be deliverable in such exchange). There is no tax receivable agreement in place for suchexchange of restricted holdings units granted under the 2019 Equity Incentive Plan, and therefore KKR will receive 100% of any tax benefits arising from theexchange of restricted holdings units granted under that plan.Prior to vesting, restricted holdings units will not be entitled to any distributions. As of the date of this report, no restricted holdings units have been issued.Annual Meeting of StockholdersKKR will hold its 2020 annual meeting of stockholders (the "Annual Meeting") at 9:00 a.m., Eastern Time, on Wednesday, April 22, 2020, at the offices ofSimpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York 10017. The close of business on March 16, 2020 has been set as the record datefor the Annual Meeting (the "Record Date"). Stockholders as of the close of business on the Record Date may attend the Annual Meeting if they bring validgovernment-issued photo identification and proof of stock ownership.215Table of ContentsPART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive OfficersThe following table presents certain information concerning our board of directors and executive officers.NameAge Position(s)Henry R. Kravis76 Co-Chief Executive Officer, Co-Chairman and DirectorGeorge R. Roberts76 Co-Chief Executive Officer, Co-Chairman and DirectorJoseph Y. Bae48 Co-President, Co-Chief Operating Officer and DirectorScott C. Nuttall47 Co-President, Co-Chief Operating Officer and DirectorMary N. Dillon58 DirectorDavid C. Drummond56 DirectorJoseph A. Grundfest68 DirectorJohn B. Hess65 DirectorXavier B. Niel62 DirectorPatricia F. Russo67 DirectorThomas M. Schoewe67 DirectorRobert W. Scully70 DirectorRobert H. Lewin40 Chief Financial OfficerDavid J. Sorkin60 General Counsel and SecretaryHenry R. Kravis co-founded KKR in 1976 and is our Co-Chairman and Co-Chief Executive Officer. He is actively involved in managing the firm and serveson each of the regional Private Equity Investment Committees. Mr. Kravis serves as a director, chairman emeritus, or trustee of several cultural, professional, andeducational institutions, including The Business Council (former chairman), Claremont McKenna College, Columbia Business School (co-chairman), Mount SinaiHospital, the Partnership for New York City (former chairman), the Partnership Fund for New York City (founder), Rockefeller University (vice chairman),Sponsors for Educational Opportunity (chairman), ICONIQ Capital, LLC and the Tsinghua School of Economics and Management in China. He earned a B.A.from Claremont McKenna College in 1967 and an M.B.A. from Columbia Business School in 1969. Mr. Kravis has more than four decades of experiencefinancing, analyzing, and investing in public and private companies, as well as serving on the boards of a number of KKR portfolio companies. As our co-founderand Co-Chief Executive Officer, Mr. Kravis has an intimate knowledge of KKR's business, which allows him to provide insight into various aspects of ourbusiness and is of significant value to the board of directors. Mr. Kravis and Mr. Roberts are first cousins.George R. Roberts co-founded KKR in 1976 and is our Co-Chairman and Co-Chief Executive Officer. He is actively involved in managing the firm andserves on regional Private Equity Investment Committees. Mr. Roberts serves as a director or trustee of several cultural and educational institutions, includingClaremont McKenna College. He is also founder and chairman of the board of directors of REDF, a San Francisco nonprofit organization. He earned a B.A. fromClaremont McKenna College in 1966 and a J.D. from the University of California (Hastings) Law School in 1969. Mr. Roberts has more than four decades ofexperience financing, analyzing, and investing in public and private companies, as well as serving on the boards of a number of KKR portfolio companies. As ourco-founder and Co-Chief Executive Officer, Mr. Roberts has an intimate knowledge of KKR's business, which allows him to provide insight into various aspects ofour business and is of significant value to the board of directors. Mr. Roberts and Mr. Kravis are first cousins.Joseph Y. Bae joined KKR in 1996 and is our Co-President and Co-Chief Operating Officer. Mr. Bae has been a member of the board of directors since July16, 2017. Prior to July 2017, when he was promoted to his current position, he was the managing partner of KKR Asia and the global head of KKR's infrastructureand energy real asset businesses. He is the chairman of KKR's Asia and Americas Private Equity Investment Committees and serves on KKR's European PrivateEquity, Growth Equity, Energy, Infrastructure, Real Estate and Special Situations Investment Committees. He is also a member of KKR's Inclusion and DiversityCouncil. Prior to KKR, Mr. Bae worked for Goldman Sachs & Co. in its principal investment area, where he was involved in a broad range of merchant bankingtransactions. He has a B.A., magna cum laude, from Harvard College. Mr. Bae serves on the boards of a number of non-profit educational and cultural institutionsincluding, as a trustee for Phillips Andover Academy, the Global Advisory Council at Harvard University, a board member of the Lincoln Center and the216Table of ContentsAsia Society. Mr. Bae's intimate knowledge of KKR's business and operations and his experience in a variety of senior leadership roles within KKR providesignificant value to the board of directors.Scott C. Nuttall joined KKR in 1996 and is our Co-President and Co-Chief Operating Officer. Mr. Nuttall has been a member of the board of directors sinceJuly 16, 2017. Prior to July 2017, when he was promoted to his current position, he was the head of KKR's global capital and asset management group, where hewas responsible for overseeing KKR's Public Markets and distribution businesses, which include credit, capital markets, hedge funds and its Client and PartnerGroup. Mr. Nuttall also serves on KKR's balance sheet committee and the firm's Inclusion and Diversity Council. He is currently a member of the board ofdirectors of Fiserv, Inc. Prior to joining KKR, he was with the Blackstone Group where he was involved in numerous merchant banking and merger and acquisitiontransactions. He received a B.S., summa cum laude, from the University of Pennsylvania. He has served on the board of various non-profit institutions with aparticular focus on education, most recently as co-chairman of Teach for America - New York. Mr. Nuttall's intimate knowledge of KKR's business and operationsand his experience in a variety of senior leadership roles within KKR provide significant value to the board of directors.Mary N. Dillon has been a member of the board of directors since September 6, 2018. Ms. Dillon has served as Chief Executive Officer and a member of theboard of directors of Ulta Beauty, Inc., a beauty products retailer, since July 2013. Prior to joining Ulta Beauty, she served as President and Chief Executive Officerand member of the board of directors of United States Cellular Corporation, a provider of wireless telecommunication services, beginning in June 2010. Prior tojoining U.S. Cellular, Ms. Dillon served as Global Chief Marketing Officer and Executive Vice President of McDonald’s Corporation from 2005 to 2010, whereshe led its worldwide marketing efforts and global brand strategy. Prior to joining McDonald’s, Ms. Dillon held several positions of increasing responsibility atPepsiCo Corporation, including as President of the Quaker Foods division from 2004 to 2005 and as Vice President of Marketing for Gatorade and Quaker Foodsfrom 2002 to 2004. Ms. Dillon served as a director of Target Corporation from 2007 to 2013 and as a member of its compensation committee from 2009 to 2013.Ms. Dillon joined the board of directors of Starbucks in January 2016 and serves as chair of its compensation and management development committee, and as amember of the nominating and corporate governance committee. Ms. Dillon provides the board with valuable knowledge and insights she gained through hervarious senior management and leadership roles, including as the chief executive officer of a publicly traded company. In addition, with over 30 years ofexperience in consumer-driven businesses, Mr. Dillon brings to the Board her extensive operational and marketing expertise in the retail industry.David C. Drummond has been a member of the board of directors since March 14, 2014. Mr. Drummond has served as the senior vice president, corporatedevelopment of Alphabet Inc. (and its predecessor Google Inc.) since January 2006, as its chief legal officer since December 2006 and as its secretary since 2002,each until his retirement in January 2020. Previously, he served as Google Inc.'s vice president, corporate development and general counsel since February 2002 toDecember 2005. Prior to joining Google Inc., from July 1999 to February 2002, Mr. Drummond served as chief financial officer of SmartForce, an educationalsoftware applications company. Prior to that, Mr. Drummond was a partner at the law firm of Wilson Sonsini Goodrich & Rosati. Mr. Drummond holds a JurisDoctor degree from Stanford Law School and a Bachelor of Arts degree in history from Santa Clara University. Mr. Drummond provides significant value to theoversight and development of our business through his management and leadership roles at a publicly-traded global technology business and his insight into legaldevelopments affecting global enterprises.Joseph A. Grundfest has been a member of the board of directors since July 15, 2010. Mr. Grundfest has been a member of the faculty of Stanford LawSchool since 1990, where he is the William A. Franke Professor of Law and Business. He is also senior faculty of the Arthur and Toni Rembe Rock Center forCorporate Governance at Stanford University; co-director of Directors' College, a venue for the continuing professional education of directors of publicly tradedcorporations; and co-founder of Financial Engines, Inc., a provider of services and advice to participants in employer-sponsored retirement plans, where he hasserved as a director since its inception in 1996 until 2018. Prior to joining the Stanford Law School faculty, Mr. Grundfest was a Commissioner of the SEC from1985 to 1990. He holds a B.A. in Economics from Yale University and a J.D. from Stanford Law School. Mr. Grundfest's knowledge and expertise in capitalmarkets, corporate governance, and securities laws provides significant value to the oversight and development of our business.John B. Hess has been a member of the board of directors since July 28, 2011. Mr. Hess has been the chief executive officer of Hess Corporation since 1995and a director since 1978. He was also director of Dow Chemical Co. from 2006 to 2013. He serves as a member of the Business Council, the TrilateralCommission and the Council on Foreign Relations and on the executive committee of the American Petroleum Institute and previously served on the Secretary ofEnergy Advisory Board Quadrennial Review Task Force. Mr. Hess is a member of the board of trustees at the Center for Strategic and International Studies, MountSinai Hospital, the Lincoln Center for the Performing Arts and the Dean's Advisors at Harvard Business School, and chairs The Harvard Business SchoolCampaign. Mr. Hess earned a B.A. from Harvard College and an M.B.A. from Harvard Business School. Mr. Hess provides significant value to the oversight anddevelopment of our business through his217Table of Contentsmanagement and leadership roles at a global energy business, and his involvement with major businesses and public policy organizations also provides valuableperspectives for our business.Xavier B. Niel has been a member of the board of directors since March 1, 2018. Mr. Niel is the founder, deputy chairman of the board and chief strategyofficer of Iliad SA, a French telecommunications company that owns the internet provider Free and the low-cost mobile operator Free Mobile. Mr. Niel also ownsmajority stakes in telecom operators in various countries. He has been involved in the data communications, internet and telecommunications industry since the late1980s. In 2010, Mr. Niel founded Kima Ventures SAS, which is an active early-stage investor. In 2013, he created 42, a school that trains computer specialists inFrance and the United States, and in 2017, he opened Station-F, a startup campus located in Paris. Mr. Niel brings significant value to the board due to hisextensive experience as an entrepreneur who founded multiple companies, in addition to his leadership and technology experience.Patricia F. Russo has been a member of the board of directors since April 15, 2011. Ms. Russo served as chief executive officer of Alcatel-Lucent from 2006to 2008. Prior to the merger of Alcatel and Lucent in 2006, she served as chairman of Lucent Technologies, Inc. from 2003 to 2006, and as president and chiefexecutive officer from 2002 to 2006. Before rejoining Lucent in 2002, Ms. Russo was president and chief operating officer of Eastman Kodak Company fromMarch 2001 to December 2001. She has served as the chairman of Hewlett Packard Enterprise Company since 2015, and as a director of Merck & Co., Inc. since2009 and General Motors Company since 2009. Prior to its merger with Merck in 2009, Ms. Russo served as a director of Schering-Plough since 1995, and sheserved as a director of Hewlett Packard Company from 2011 to November 2015. From November 2016 to May 2018, Ms. Russo also served on the board ofArconic Inc., which separated from Alcoa Inc., where Ms. Russo served as a director from 2008 to November 2016. She graduated from Georgetown Universitywith a bachelor's degree in political science and history, and obtained an Advanced Management Degree from Harvard Business School's Advanced ManagementProgram. Ms. Russo's management and leadership experience as chief executive officer of complex global companies as well as her experience with corporatestrategy, mergers and acquisitions, and sales and marketing brings important expertise to the oversight and development of our business. Ms. Russo also bringsextensive experience in corporate governance as a member of boards and board committees of other public companies.Thomas M. Schoewe has been a member of the board of directors since March 14, 2011. Mr. Schoewe was executive vice president and chief financial officerfor Wal-Mart Stores, Inc., a position he held from 2000 to 2010, and was employed by Walmart in a transitional capacity to January 2011. Prior to his employmentat Walmart, Mr. Schoewe served as senior vice president and chief financial officer for Black and Decker Corp., a position he held from 1993 to 1999. Prior to that,he served for four years as Black and Decker's vice president of finance. He previously held the position of vice president of business planning and analysis. Hejoined Black and Decker in 1986 after serving at Chicago-based Beatrice Companies, where he was chief financial officer and controller of Beatrice ConsumerDurables, Inc. He has served on the board of directors of Northrop Grumman Corporation and General Motors Company since 2011. He also serves on the board ofthe LPGA. From 2001 to May 2012, he served on the board of directors of PulteGroup Inc., which merged with Centex Corporation in 2009 and previously servedon the Centex board. Mr. Schoewe graduated from Loyola University of Chicago with a bachelor's of business administration degree in finance. Mr. Schoewe'sexperience in financial reporting, accounting and controls, and business planning and analysis, together with his significant international experience as an executiveof large multinational companies, brings important expertise to the oversight and development of our business. Mr. Schoewe also has experience with large-scale,transformational information technology implementations at Wal-Mart and Black and Decker.Robert W. Scully has been a member of the board of directors since July 15, 2010. Mr. Scully was a member of the Office of the Chairman of MorganStanley from 2007 until his retirement in 2009, where he had previously been co-president, chairman of global capital markets and vice chairman of investmentbanking. Prior to joining Morgan Stanley in 1996, he served as a managing director at Lehman Brothers and at Salomon Brothers. Mr. Scully has served as adirector of Zoetis Inc. since June 2013, Chubb Limited since January 2016, and prior to its acquisition of Chubb Limited, a director of ACE Limited from May2014 to January 2016, and UBS Group AG since May 2016. Previously, he was a director of Bank of America Corporation from August 2009 to May 2013 and apublic governor of the Financial Industry Regulatory Authority, Inc. from October 2014 to May 2016. He has also served as a director of GMAC FinancialServices and MSCI Inc. He holds an A.B. from Princeton University and an M.B.A. from Harvard Business School. Mr. Scully previously served on the Board ofDean's Advisors of Harvard Business School. Mr. Scully's 35-year career in the financial services industry brings important expertise to the oversight of ourbusiness. In addition, his leadership experience with a global financial services company brings an industry perspective to our business development within andoutside the United States as well as issues such as talent development, senior client relationship management, strategic initiatives, risk management and audit andfinancial reporting.Robert H. Lewin joined KKR in 2004 and is our Chief Financial Officer. Since joining KKR, Mr. Lewin held a number of positions, including as an investorin private equity, co-leading the firm's credit and capital markets businesses, serving as Treasurer and Head of Corporate Development and most recently as Headof Human Capital & Strategic Talent. From 2006218Table of Contentsthrough 2010, Mr. Lewin resided in Hong Kong, helping to launch KKR's Asia business. Mr. Lewin has a Bachelor of Science from the University ofPennsylvania. He currently serves on the board of Answer the Call, a non-profit organization.David J. Sorkin joined KKR in 2007 and is our General Counsel and Secretary. Prior to joining KKR, Mr. Sorkin was a partner with Simpson Thacher &Bartlett LLP. Mr. Sorkin serves as President of the board of directors of New Alternatives for Children. He received a B.A., summa cum laude, from WilliamsCollege and a J.D., cum laude, from Harvard Law School.Independence and Composition of the Board of DirectorsOur board of directors consists of twelve directors, eight of whom, Messrs. Drummond, Grundfest, Hess, Niel, Schoewe and Scully and Mses. Dillon andRusso, are independent under NYSE rules relating to corporate governance matters and the independence standards described in our corporate governanceguidelines.Because the Class B Stockholder has more than 50% of the voting power for the election of our directors, we are a "controlled company" within the meaningof the corporate governance standards of the NYSE. Under these standards, a "controlled company" may elect not to comply with certain corporate governancestandards, including the requirements (1) that a majority of its board of directors consist of independent directors, (2) that its board of directors have acompensation committee that is comprised entirely of independent directors with a written charter addressing the committee's purpose and responsibilities and (3)that its board of directors have a nominating and corporate governance committee that is comprised entirely of independent directors with a written charteraddressing the committee's purpose and responsibilities. We currently utilize the second and third of these exemptions. See "Risk Factors—Risks Related to OurCommon Stock—As a 'controlled company,' we qualify for some exemptions from the corporate governance and other requirements of the NYSE." While we areexempt from NYSE rules relating to board independence, we intend to maintain a board of directors that consists of at least a majority of directors who areindependent under NYSE rules. In the event that we cease to be a "controlled company" and our shares of Class A common stock continue to be listed on theNYSE, we will be required to comply with these provisions within the applicable transition periods.In addition, the board has considered transactions and relationships between KKR and the companies and organizations on whose boards or other similargoverning bodies where our independent directors also serve or where our independent directors serve as executive officers, including investments made by suchcompanies in the portfolio companies in which KKR or its funds are invested, and certain personal investments made by our independent directors in companies inwhich certain of our executive officers have also invested. It was determined that none of these transactions or relationships adversely impacted the independenceof our independent directors.Board CommitteesOur board of directors has four standing committees: an audit committee, a conflicts committee, a nominating and corporate governance committee and anexecutive committee that operate pursuant to written charters as described below. Because we are a "controlled company," our board is not required by NYSE rulesto establish a compensation committee or a nominating and corporate governance committee or to meet certain other substantive NYSE corporate governancerequirements. While the board has established a nominating and governance committee, we rely on available exemptions concerning the committee's compositionand mandate.Audit CommitteeThe audit committee consists of Messrs. Grundfest (Chairman), Schoewe and Scully. The purpose of the audit committee is to provide assistance to the boardof directors in fulfilling its responsibility with respect to its oversight of: (i) the quality and integrity of our financial statements, including investment valuations;(ii) our compliance with legal and regulatory requirements; (iii) our independent registered public accounting firm's qualifications, independence and performance;and (iv) the performance of our internal audit function. The members of the audit committee meet the independence standards and financial literacy requirementsfor service on an audit committee of a board of directors pursuant to the Exchange Act and NYSE rules applicable to audit committees. Our board of directors hasdetermined that each of Messrs. Grundfest, Schoewe and Scully is an "audit committee financial expert" within the meaning of Item 407(d)(5) of Regulation S-K.The audit committee has a charter, which is available on our website at www.kkr.com under the "Investor Center" section. 219Table of ContentsConflicts CommitteeThe conflicts committee consists of Mses. Dillon and Russo and Messrs. Drummond, Schoewe and Scully (Chairman). The conflicts committee is responsiblefor reviewing specific matters that the board of directors believes may involve a conflict of interest and for enforcing our rights under any of the exchangeagreement, the tax receivable agreement, the limited partnership agreement of any KKR Group Partnership, our certificate of incorporation or our bylaws(collectively, the "covered agreements") against KKR Holdings and certain of its subsidiaries and designees, a general partner or limited partner of KKR Holdings,or a person who holds a partnership or equity interest in the foregoing entities. The conflicts committee is also authorized to take any action pursuant to anyauthority or rights granted to such committee under any covered agreement or with respect to any amendment, supplement, modification or waiver to any suchagreement that would purport to modify such authority or rights. In addition, the conflicts committee shall approve any amendment to any of the coveredagreements that in the reasonable judgment of our board of directors is or will result in a conflict of interest. The conflicts committee will determine if theresolution of any conflict of interest submitted to it is fair and reasonable to us. Any matters approved by the conflicts committee will be conclusively deemed to befair and reasonable to us and not a breach of any duties that may be owed to our stockholders. In addition, the conflicts committee may review and approve anyrelated person transactions, other than those that are approved pursuant to our related person policy, as described under "Certain Relationships and RelatedTransactions, and Director Independence—Statement of Policy Regarding Transactions with Related Persons," and may establish guidelines or rules to coverspecific categories of transactions. The members of the conflicts committee meet the independence standards under our corporate governance guidelines asrequired for service on the conflicts committee in accordance with its charter. Nominating and Corporate Governance CommitteeThe nominating and corporate governance committee consists of Messrs. Kravis, Roberts and Scully. The nominating and corporate governance committee isresponsible for identifying and recommending candidates for appointment to the board of directors and for assisting and advising the board of directors withrespect to matters relating to the general operation of the board and corporate governance matters. Mr. Scully meets the independence standards under the rules ofthe NYSE as required for service on the nominating and corporate governance committee in accordance with its charter.Executive CommitteeThe executive committee consists of Messrs. Kravis and Roberts. The purpose of the executive committee is to act, when necessary, in place of the full boardof directors during periods in which the board is not in session. The executive committee is authorized and empowered to act as if it were the full board of directorsin overseeing our business and affairs, except that it is not authorized or empowered to take actions that have been specifically delegated to other board committeesor to take actions with respect to: (i) the declaration of dividends on our Class A common stock; (ii) a merger or consolidation of us with or into another entity; (iii)a sale, lease or exchange of all or substantially all of our assets; (iv) a liquidation or dissolution of us; (v) any action that must be submitted to a vote of the Class BStockholder's members or our stockholders; or (vi) any action that may not be delegated to a board committee under our certificate of incorporation, our bylaws orthe DGCL.Code of Business Conduct and EthicsWe have a Code of Business Conduct and Ethics that applies to our principal executive officers, principal financial officer and principal accounting officer andis available on our website at www.kkr.com under the "Investor Center" section. In accordance with, and to the extent required by the rules and regulations of theSEC, we intend to disclose any amendment to or waiver of the Code of Business Conduct and Ethics on behalf of an executive officer or director either on ourwebsite or in a Current Report on Form 8-K filing.Corporate Governance GuidelinesOur board of directors has a governance policy, which addresses matters such as the board of directors' responsibilities and duties, the board of directors'composition and compensation and director independence. The governance guidelines are available on our website at www.kkr.com under the "Investor Center"section.220Table of ContentsCommunications to the Board of DirectorsThe non-management members of our board of directors meet regularly. At each meeting of the non-management members, the non- management directorschoose a director to lead the meeting. All interested parties, including any employee or stockholder, may send communications to the non-management members ofour board of directors by writing to: Investor Relations, KKR & Co. Inc., 9 West 57th Street, Suite 4200, New York, New York 10019. 221Table of ContentsITEM 11. EXECUTIVE COMPENSATIONCompensation Discussion and AnalysisCompensation PhilosophyOur compensation program has three primary objectives: (1) to attract, motivate and retain our employees, (2) to align their interests with those of ourstockholders and fund investors and (3) to reinforce our culture and values.Our employees. Our business is dependent on the services of our employees, including our named executive officers. Among other things, we depend on theirability, where applicable, to find, select and execute investments, manage and improve portfolio company operations, find and develop relationships with fundinvestors and other sources of capital, find, select and execute capital markets opportunities, and provide other services, and we cannot compete effectively withouttheir continued employment with us. Therefore, it is important that our key employees are compensated in a manner that motivates them to excel consistently andencourages them to remain with the firm.Alignment of interests. Management equity ownership in the businesses in which we invest has been a guiding principle throughout our firm's history, and weapply that principle to ourselves: every employee of the firm is expected to have an equity interest in KKR. This equity ownership serves to align the interests ofour employees with those of our stockholders. In addition, because we invest in and alongside our investment funds and have a carry pool from which we canallocate to our employees 40% or 43%, as applicable, of the carried interest that we generate through our business, we believe that our employees' interests are alsoaligned with those of our investors in the funds, vehicles and accounts that we manage, which in turn benefits our stockholders.Culture and values. One of our most important values is our "one-firm" approach with shared responsibility and success, and we also subscribe to a culture ofmeritocracy and fairness. Therefore, compensation is based on the performance of the firm as a whole as well as on an individual's contributions to the firm. Forexample, we do not compensate people based merely on an individual's accomplishments in relation to the profits and losses of his or her business unit. In addition,we conduct, at least annually, an evaluation process based on input from a wide range of persons regarding each employee's contribution to the firm, including hisor her commitment to the firm's culture and values. We believe that using this kind of an evaluation process also promotes a measure of objectivity as a balance to asingle manager's judgment.We refer to our two Co-Chief Executive Officers (Henry Kravis and George Roberts), our two Co-Presidents/Co-Chief Operating Officers (Joseph Bae andScott Nuttall), our former Chief Financial Officer (William Janetschek) and our General Counsel (David Sorkin) as our "named executive officers." Mr. Janetschekretired from his position as of December 31, 2019. We believe that the elements of compensation discussed below for our named executive officers serve theseprimary objectives. We are not required to conduct say-on-pay or say-on-frequency votes under the Dodd-Frank Act. However, we intend periodically to reviewthe elements of our compensation, and we may make changes to the compensation structure relating to one or more named executive officers based on the outcomeof such reviews from time to time.KKR HoldingsEach of our named executive officers holds interests in our business through KKR Holdings, which is the entity that indirectly owns all of the outstandingKKR Group Partnership Units that are not allocable to us.KKR Holdings units are, subject to certain restrictions, exchangeable for shares of our Class A common stock, on a one-for-one basis, and generally cannot besold to third parties for monetary value unless they are first exchanged for shares of our Class A common stock. Because KKR Holdings units are exchangeable forshares of our Class A common stock, we believe that our named executive officers' interests are aligned with those of our stockholders.KKR Holdings, from time to time, receives distributions that are made on KKR Group Partnership Units that are held by it. To the extent such distributions arereceived on KKR Group Partnership Units that underlie any KKR Holdings units that have satisfied their respective vesting requirements, if any, at the timedistributions are declared on the underlying KKR Group Partnership Units, such distributions will be allocated and further distributed to the named executiveofficers as and when received. To the extent that such distributions are made on KKR Group Partnership Units underlying any KKR Holdings units that have notsatisfied all vesting requirements at the time distributions are declared on the underlying KKR Group Partnership Units, such distributions may be allocated orotherwise applied in such amounts and in such manner as our Co-Chief Executive Officers, acting through the general partner of KKR Holdings, may determine.See "—Compensation Elements—Year-End222Table of ContentsBonus Compensation" for a description of these grants. As of February 10, 2020, approximately 3.2 million KKR Holdings units remain unallocated. In 2019, our named executive officers received distributions on KKR Holdings units, including distributions relating to tax liabilities, as well as dividends onshares of Class A common stock they own, and because these distributions and dividends are not considered to be compensation, they have not been reported in theSummary Compensation Table.Compensation ElementsBase SalaryFor 2019, each of our named executive officers was paid an annual salary of $300,000. We believe that the base salary of our named executive officers shouldtypically not be the most significant component of total compensation. Our Co-Chief Executive Officers determined that this amount was a sufficient minimumbase salary for our named executive officers and decided that it should be the same for all named executive officers. We are responsible for funding this basesalary.Year-End Bonus CompensationOur Co-Chief Executive Officers did not receive any year-end bonus compensation in 2019. They have decided at this time not to receive any bonus from usor from KKR Holdings in excess of distributions payable with respect to their KKR Holdings units. Instead, they have decided that year-end bonus payments for2019 should be made to our other employees in order to motivate and retain them for the benefit of the firm. See "—Other Compensation" below for certainincidental benefits provided by the firm.In 2019, our Co-Presidents/Co-Chief Operating Officers and General Counsel were awarded additional year-end cash compensation as bonus payments thatwere determined by our Co-Chief Executive Officers. Our Co-Chief Executive Officers made their subjective determinations by assessing our overall performanceand the contributions that our Co-Presidents/Co-Chief Operating Officers and General Counsel made to our development and success, as a firm, during the year.Certain factors that were considered when determining the size of their bonus payments include (i) their respective contributions and accomplishments in 2019 interms of driving commercial results for the firm, leading and managing people, and living the firm's values; (ii) their respective performance and contributionsrelative to other senior employees at the firm; (iii) their respective performance and contributions in 2019 as compared to the prior year; and (iv) the overallfinancial performance of the firm in 2019 as compared to the prior year based on certain financial measures considered by management, including but not limitedto after-tax distributable earnings. More specifically, in assessing Mr. Bae and Mr. Nuttall's contributions, our Co-Chief Executive Officers considered theirservices as Co-Presidents/Co-Chief Operating Officers and their day-to-day management of the firm's operations, as well as their joint leadership roles in executingand implementing KKR's strategy in its global private equity, real assets, credit, capital markets and capital raising businesses together with its corporatedevelopment and balance sheet initiatives. In assessing Mr. Sorkin's contributions, they considered his leadership and oversight of our global legal, compliance,enterprise risk and internal audit functions and his role with respect to the strategic initiatives undertaken by the firm. The size of the cash bonus payments to thenamed executive officers (other than Messrs. Kravis, Roberts and Janetschek who received none) were lower compared to the prior year, reflecting the firm'sfinancial performance in 2019, in particular with respect to a year-over-year decrease in operating revenues, and an increase in the number of employees comparedto 2018. No equity-based bonus compensation was granted to the named executive officers as part of their 2019 year-end bonus compensation, because it wasdecided that our senior principals would generally not receive any year-end equity-based bonus for 2019. In making these determinations, our Co-Chief ExecutiveOfficers consulted with certain of our senior employees and, with respect to the determinations for our General Counsel, considered the recommendations by ourCo-Presidents/Co-Chief Operating Officers. We believe that the discretion permitted to our Co-Chief Executive Officers permits them to award bonuscompensation in an amount they determine to be necessary to motivate and retain these named executive officers.The cash bonus amounts paid to our Co-Presidents/Co-Chief Operating Officers and our General Counsel for 2019 are reflected in the Bonus column of the2019 Summary Compensation Table below. Although no deferred equity bonus or additional equity compensation awards were made to our named executiveofficers in connection with 2019 year-end bonus compensation, these equity awards may become a component of our annual year-end bonus determination for ournamed executive officers in the future.223Table of ContentsCarried InterestWe allocate 40% or 43%, as applicable, of the carried interest that we earn to a carry pool, from which our employees and selected other individuals areeligible to receive a carried interest allocation. The percentage of carried interest allocable to the carry pool may be amended with the approval of a majority of ourindependent directors. Carry pool allocations for the named executive officers are made by first determining a total dollar value for the named executive officer'sinterest in the carry pool. Due to their unique status as co-founders of our firm, our Co-Chief Executive Officers determine their own allocation from the carrypool. To make this total dollar value determination for the other named executive officers, our Co-Chief Executive Officers take into consideration the executiveofficer's involvement with investments and impact on the portfolio, the size of the executive officer's bonus as well as the recommendations by our Co-Presidents/Co-Chief Operating Officers and other factors similar to those considered when determining the size of the bonus, as described under "—Year-EndBonus Compensation." However, the total dollar value available to be allocated to the named executive officers and other employees is limited by the total amountof investments made by our investment funds during the fiscal year, and executive officers and other employees may not be allocated any dollar value of carry inany given year. For our older funds, carry pool allocations were determined based on a percentage applied on an investment-by-investment basis. After a totaldollar value, if any, for each named executive officer is determined, such dollar value was then divided by the total allocable dollar value of investments made byour funds for the year, which yielded a certain percentage for the named executive officer. This percentage was then applied consistently to each investment madeduring the year. Because the size of each investment was different, the nominal amount of the carry pool allocation differed by investment, although the percentageapplied to each investment was consistent. For our more recent funds, carry pool allocations are determined based on a percentage applied on a fund-by-fund basis.The dollar value, if any, for each named executive officer is determined and then allocated to the applicable funds, and such dollar value is then divided by the totalallocable dollar value of investments made by that fund for the year to yield a percentage for that particular fund. If carry is paid prior to the end of a fund'sinvestment period, this percentage is applied at that time. At the end of the investment period, an adjustment would be made to account for any difference inpercentages applied at the times carry was paid during the investment period (taking vesting into account) and the percentage determined for a particular fundbased on the total dollar values allocated to the named executive officer for such fund divided by the total allocable dollars invested during the entire investmentperiod of such fund.The carried interest allocated to the carry pool is maintained and administered by KKR Associates Holdings L.P., which, similar to KKR Holdings, is not asubsidiary of ours. Allocations of carried interest, including any reserved carried interest, are determined by our Co-Chief Executive Officers acting through thegeneral partner of KKR Associates Holdings L.P.Carried interest, if any, from the carry pool in respect of any particular investment or fund is only paid in cash after all of the following are met: (i) arealization event has occurred (e.g., sale of a portfolio company, dividend, etc.); (ii) the vehicle has achieved positive overall investment returns since its inception,in excess of performance hurdles where applicable, and is accruing carried interest; and (iii) with respect to investments with a fair value below cost, cost has beenreturned to fund investors in an amount sufficient to reduce remaining cost to the investments' fair value. To the extent any "clawback" obligation is triggered,carried interest previously distributed by the fund would have to be returned to such fund, thereby reducing the named executive officer's overall compensation forany such year. A portion of certain carried interest payable is generally not distributed to the recipient and is instead held in escrow in the recipient's name in orderto enhance the recipient's ability to satisfy any future clawback obligation. Because the amount of carried interest payable is directly tied to the realizedperformance of the underlying investments, we believe this fosters a strong alignment of interests among the investors in those funds and the named executiveofficers, and thus benefits our stockholders. In addition, several of our competitors use participation in carried interest as an important incentive, and we believethat we must do the same in order to attract and retain the most qualified personnel.Participation in our carry pool for our employees, including our named executive officers, is subject only to service-based vesting with certain exceptions,including additional vesting upon death, disability or certain retirement events. In general, the vesting for carry pool allocations is annual over a four-year period(other than for our Co-Chief Executive Officers). Vesting serves as an employment retention mechanism and enhances the alignment of interests between aparticipant in our carry pool and the firm as well as the limited partners in our investment funds. Due to their status as co-founders of our firm, our Co-ChiefExecutive Officers are typically completely vested in their carry pool allocations upon grant.Carry pool allocations after December 31, 2018, whether or not vested, are subject to forfeiture if the recipient violates his or her confidentiality and restrictivecovenant agreement. See "—Narrative Disclosure to Summary Compensation Table and Grants of Plan‑Based Awards—Terms of Confidentiality and RestrictiveCovenant Agreements." 224Table of ContentsOther CompensationOur Co-Chief Executive Officers are reimbursed by us for the use of a car and driver, and we pay for the compensation of certain personnel who administerpersonal matters for them. We believe that these benefits are appropriate in light of the time that they spend on our business, the limited compensation paid by usfor their services and their unique status as co-founders of our firm. In addition, we also pay for certain tax preparation fees for our named executive officers and,starting in 2019, for financial planning services for certain of our named executive officers.Minimum Retained OwnershipWhile employed by us, unless waived in whole or in part, each of our named executive officers is required to hold at least 25% of the cumulative amount ofKKR Holdings units that have satisfied the vesting conditions during the duration of his employment with the firm. In addition, unless waived in whole or in part,each of our named executive officers may be required, on a grant by grant basis, to hold shares of Class A common stock equivalents of 15% of the cumulativerestricted stock units granted under our Equity Incentive Plans that have satisfied the applicable vesting condition during the duration of his employment with thefirm.Compensation and RiskOur compensation program includes elements that we believe discourage excessive risk-taking and align the compensation of our employees with the long-term performance of the firm. For example, other than certain equity that either immediately vested as part of the grants to all employees or our founders or thatwere made in exchange for the contribution of assets, in each case in connection with the consummation of the KPE Transaction in October 2009 or otherwise, asignificant majority of the equity awards granted to our employees are subject to a multi-year vesting conditions, one- and two-year post-vesting transfer restrictionperiods and/or a minimum retained ownership requirement. Because our equity awards have multi-year vesting provisions, the actual amount of compensationrealized by the recipient will be tied to the long- term performance of our Class A common stock. Pursuant to our internal policies, our employees are not permittedto buy or sell derivative securities, including for hedging purposes, or to engage in short-selling to hedge their economic risk of ownership. In addition, we onlymake cash payments of carried interest to our employees when profitable investments have been realized and after sufficient cash has been distributed to theinvestors in our funds. Moreover, the general partner of a fund is required to return carried interest distributions to the fund due to, for example, underperformanceby the relevant fund subsequent to the payment of such carried interest. Accordingly, the employees would be subject to a "clawback," i.e., be required to returncarried interest payments previously made, all of which further discourages excessive risk-taking by our personnel.225Table of ContentsSummary Compensation TableThe following table presents summary information concerning compensation that was paid for services rendered by our named executive officers during thefiscal years ended December 31, 2017, 2018 and 2019.In 2017, 2018 and 2019, our named executive officers received distributions based on their vested KKR Holdings units or dividends on shares of Class Acommon stock they hold. Because these distributions and dividends are not considered to be compensation, they are not reflected as compensation in the tablebelow. There are certain contractual arrangements we entered into with KKR Holdings at the time of the KPE Transaction in October 2009 and thereafter,including a tax receivable agreement, which relate to payments to our named executive officers that are not compensatory and are described in "CertainRelationships and Related Transactions, and Director Independence."Carried interest distributions to our named executive officers in respect of the carry pool for the years ended December 31, 2017, 2018 and 2019 are reflectedin the All Other Compensation column in the 2019 Summary Compensation Table below.2019 Summary Compensation TableName and Principal Position Year Salary($) Bonus($) Stock Awards ($) (2) All OtherCompensation ($)(3) Total($)Henry R. Kravis 2019 300,000 — — 39,822,617(4) 40,122,617Co-Chief Executive Officer 2018 300,000 — — 56,217,088 56,517,088 2017 300,000 — 44,650,000 68,484,271 113,434,271 George R. Roberts 2019 300,000 — — 39,865,377(5) 40,165,377Co-Chief Executive Officer 2018 300,000 — — 56,233,435 56,533,435 2017 300,000 — 44,650,000 68,761,704 113,711,704 Joseph Y. Bae 2019 300,000 8,300,000 — 26,372,589(6) 34,972,589Co-President and Co-ChiefOperating Officer 2018 300,000 9,000,000 5,872,442 21,168,222 36,340,664 2017 300,000 7,385,000 121,302,000 14,919,102 143,906,102 Scott C. Nuttall 2019 300,000 8,300,000 — 26,612,129(7) 35,212,129Co-President and Co-ChiefOperating Officer 2018 300,000 9,000,000 5,872,442 21,491,798 36,664,240 2017 300,000 7,385,000 121,302,000 15,364,186 144,351,186 William J. Janetschek 2019 300,000 —— 1,951,426(8) 2,251,426Former Chief Financial Officer 2018 300,000 2,950,000 1,257,647 9,378,133 13,885,780 2017 300,000 2,747,500(1) 967,419 6,655,362 10,670,281 David J. Sorkin 2019 300,000 2,800,000 — 3,361,433(9) 6,461,433General Counsel 2018 300,000 2,950,000 1,257,647 4,607,770 9,115,417 2017 300,000 2,747,500(1) 967,419 3,389,709 7,404,628 (1)Represents distributions received by KKR Holdings with respect to unvested KKR Holdings units that have been distributed to the named executive officer as bonus.The discretionary bonus payments in 2017 were made by KKR Holdings and accordingly were not economically borne by us. 226Table of Contents(2)Stock awards reflected in the table above for each year presented represent the value of the restricted stock units and KKR Holdings units granted in such reportingperiod. For the fiscal years ended December 31, 2017 and 2018, restricted stock units presented in such reporting periods relate to the equity portion of the prior year'syear-end bonus compensation and in each case reflect the grant date fair value of restricted stock units. For the fiscal year ended December 31, 2017, amounts relating toKKR Holdings units represent the original grant date fair value of KKR Holdings units. Fair value of the restricted stock units and KKR Holdings units granted to ournamed executive officers and the incremental fair value relating to the modification of the KKR Holdings units are calculated in accordance with Accounting StandardsCodification Topic 718, Compensation-Stock Compensation ("ASC Topic 718"). See Note 12 "Equity Based Compensation" to our consolidated financial statementsincluded elsewhere in this report for additional information about the valuation assumptions with respect to all grants reflected in this column. These amounts reflect theaggregate grant date fair values (or incremental fair values) calculated under ASC Topic 718, and may not correspond to the actual value that will be recognized by ournamed executive officers. (3)Carried interest is presented on the basis of cash received by our named executive officers in the respective fiscal year. We believe that presenting actual cash receivedby our named executive officers is a more representative disclosure of their compensation than presenting accrued carried interest, because carried interest is paid only ifand when there are profitable realization events relating to the underlying investments. Carried interest also includes amounts retained and allocated for distribution tothe respective named executive officer, but not yet distributed to the named executive officer, which could be used to fund potential future clawback obligations if anywere to arise. (4)Consists of $39,182,711 in cash payments of carried interest from the carry pool during 2019; $40,000 in fees for Mr. Kravis's service as a KKR-designated director onthe board of directors of First Data Corporation prior to its merger with Fiserv, Inc., a KKR portfolio company, during 2019; $150,195 related to Mr. Kravis's use of a carand driver during 2019; $399,711 related to certain personnel who administer personal matters for Mr. Kravis during 2019; $25,000 related to financial planning servicesfees; and $25,000 related to tax preparation fees. SEC rules require that transportation and personnel expenses not directly and integrally related to our business bedisclosed as compensation to Mr. Kravis. Because we do not separately track personnel expenses based on whether they are incurred for business or for personal reasons,100% of the preceding costs have been reported for Mr. Kravis. (5)Consists of $39,182,711 in cash payments of carried interest from the carry pool during 2019; $192,808 related to Mr. Roberts's use of a car and driver during 2019;$439,858 related to certain personnel who administer personal matters for Mr. Roberts during 2019; $25,000 related to financial planning services fees; and $25,000related to tax preparation fees. SEC rules require that transportation and personnel expenses not directly and integrally related to our business be disclosed ascompensation to Mr. Roberts. Because we do not separately track personnel expenses based on whether they are incurred for business or personal reasons, 100% of thepreceding costs have been reported for Mr. Roberts. (6)Consists of $26,322,589 in cash payments of carried interest from the carry pool during 2019; $25,000 related to financial planning services fees; and $25,000 related totax preparation fees. (7)Consists of $26,522,129 in cash payments of carried interest from the carry pool during 2019; $40,000 in fees for Mr. Nuttall's service as a KKR-designated director onthe board of directors of First Data Corporation prior to its merger with Fiserv, Inc., a KKR portfolio company, during 2019; $25,000 related to financial planningservices fees; and $25,000 related to tax preparation fees. (8)Consists of $1,926,426 in cash payments of carried interest from the carry pool during 2019 and $25,000 related to tax preparation fees. (9)Consists of $3,311,433 in cash payments of carried interest from the carry pool during 2019; $25,000 related to financial planning services fees; and $25,000 related totax preparation fees.Narrative Disclosure to Summary Compensation Table and Grants of Plan‑‑Based AwardsTerms of KKR Holdings UnitsIn general, KKR Holdings units vest over a three- to five-year period from their grant date, subject to continued service through each vesting date. Followingthis service-based vesting, certain KKR Holdings units may also be subject to transfer restrictions and/or minimum retained ownership requirements. UnvestedKKR Holdings units are not entitled to receive any distributions that are declared and received on the underlying KKR Group Partnership Units. As of February 10,2020, 270,941,316 outstanding KKR Holdings units have vested, constituting 93% of the KKR Holdings units outstanding. See "—KKR Holdings."KKR Holdings units that are subject to transfer restrictions, unless waived, may not be sold, exchanged or otherwise transferred for a specified period of timefollowing the initial vesting date and interests in such units will remain contingently vested during that time. The transfer restriction period typically lasts for(1) one year with respect to one-half of the units vesting on the vesting date and (2) two years with respect to the other one-half of the units vesting on such vestingdate. Transfer restricted units become fully vested and transferable and may be exchanged into shares of Class A common stock at the end of the transfer restrictionperiod if the holder is not terminated for cause and has complied with the terms of his or her confidentiality and restrictive covenant agreement during the transferrestrictions period. See "Terms of Confidentiality and Restrictive Covenant Agreements" below.Because KKR Holdings is a partnership, all of the 290,381,345 KKR Holdings units have been legally allocated, but the allocation of 2,870,550 of these unitshas not been communicated to each respective principal as of December 31, 2019. The units whose allocation has not been communicated are subject toperformance-based vesting conditions, which include: (i) whether the principal is in good standing and has adhered to our policies and rules; (ii) performance ofassigned tasks and duties in an effective, efficient and diligent manner; (iii) contribution and commitment to the growth, development and227Table of Contentsprofitability of KKR and our business; (iv) contribution and commitment to our management and general administration; (v) contribution and commitment to theculture, business principles, reputation and morale of KKR as a whole and the team or teams to which the principal has been assigned; and (vi) contribution andcommitment to our recruiting, business development, public image and marketing efforts and the professional development of our personnel. These criteria are notsufficiently specific to constitute performance conditions for accounting purposes, and the achievement, or lack thereof, will be determined based upon the exerciseof judgment by the general partner of KKR Holdings. Each principal will ultimately receive between zero and 100% of the units initially allocated. The allocationof these units has not yet been communicated to the award recipients as this was management's decision on how to best incentivize its principals. It is anticipatedthat additional service‑based vesting conditions will be imposed at the time the allocation is initially communicated to the respective principals. We applied theguidance of ASC Topic 718 and concluded that these KKR Holdings units do not yet meet the criteria for recognition of compensation cost because neither thegrant date nor the service inception date has occurred. In reaching a conclusion that the service inception date has not occurred, we considered (1) the fact that thevesting conditions are not sufficiently specific to constitute performance conditions for accounting purposes, (2) the significant judgment that can be exercised bythe general partner of KKR Holdings in determining whether the vesting conditions are ultimately achieved and (3) the absence of communication to the principalsof any information related to the number of units they were initially allocated. The allocation of these units will be communicated to the award recipients when theperformance‑based vesting conditions have been met, and currently there is no plan as to when the communication will occur. The determination as to whether theaward recipients have satisfied the performance‑based vesting conditions is made by the general partner of KKR Holdings, and is based on multiple factorsprimarily related to the award recipients' individual performance.While employed by our firm, our principals, including our named executive officers, are also subject to minimum retained ownership rules that require them tocontinuously hold at least 25% of their cumulatively vested KKR Holdings units, unless waived.The transfer and vesting restrictions and minimum retained ownership requirements applicable to KKR Holdings units may not be enforceable in all cases andcan be waived, modified or amended by KKR Holdings at any time without our consent.The terms of the KKR Holdings units described above are distinct from equity awards issuable under our Equity Incentive Plans, which are described below.Terms of Restricted Stock UnitsRestricted stock units are equity awards issuable under our 2019 Equity Incentive Plan, which after vesting, may be settled for shares of our Class A commonstock on a one-for-one basis (or an amount of cash equal to the fair market value of such shares).In general, restricted stock units are subject to a service-based vesting condition and vest in equal annual installments over a multi‑year period (generally threeto five years) from a specified date, subject to the recipient's continued employment with us. Following this service-based vesting, certain restricted stock unit grantagreements may also subject the shares of Class A common stock delivered upon settlement of such restricted stock units to transfer restrictions and/or minimumretained ownership requirements. Unvested restricted stock units granted under our Equity Incentive Plans are not entitled to receive dividends. Certain restrictedstock unit grant agreements may also contain additional vesting requirements.Shares of Class A common stock delivered upon settlement of restricted stock units that are subject to transfer restrictions, unless waived, may not be sold,exchanged or otherwise transferred for a specified period of time following the vesting date. The transfer restriction period typically lasts for (1) one year withrespect to one-half of the units vesting on such vesting date and (2) two years with respect to the other one-half of the units vesting on such vesting date. Transfer-restricted shares of Class A common stock become saleable at the end of the transfer restriction period if the holder has not been terminated for cause and has notbreached in any significant or intentional manner, as determined by the Administrator (as defined in "KKR & Co. Inc. Equity Incentive Plan—Administration"),the terms of his or her confidentiality and restrictive covenants contained in the grant agreement during the transfer restriction period. See "Terms ofConfidentiality and Restrictive Covenant Agreements" below.While employed by our firm, our employees, including our named executive officers, may also be subject to a minimum retained ownership requirement underthe restricted stock unit grant agreement, which would obligate them to continuously hold shares of Class A common stock equivalents of 15% of theircumulatively vested restricted stock units, unless waived. From time to time, the transfer restrictions and minimum retained ownership requirements applicable torestricted stock units of certain employees, including our named executive officers, may be transferred to such employees' KKR Holdings units, if any, so that thetotal units or shares of equity subject to transfer restrictions and minimum retained ownership requirements are expected to be the same, unless waived.228Table of ContentsFor additional information about equity awards granted under our Equity Incentive Plan, please also see "KKR & Co. Inc. Equity Incentive Plan" below.Terms of Restricted Holdings UnitsIn February 2020, KKR adopted restricted holdings units, a new form of equity award, under the 2019 Equity Incentive Plan. For a description of terms andconditions of the restricted holdings units, see "Part II. Item 9B. Other Information." Grants of restricted holdings units to KKR's named executive officers aresubject to further approval by KKR's board of directors. KKR's independent directors are ineligible to receive restricted holdings units. As of the date of this report,no restricted holdings units have been issued.Terms of Confidentiality and Restrictive Covenant AgreementsThe confidentiality and restrictive covenant agreements with each of our named executive officers include prohibitions on them competing with us orsoliciting our clients or employees while employed by us and during a restricted period following their departure from the firm. These agreements also requirepersonnel to protect and use the firm's confidential information only in accordance with confidentiality restrictions set forth in the agreement.The restricted periods for our Co‑Chief Executive Officers expire two years from termination for both the prohibitions on competition with us and theprohibitions on the solicitations of our clients and employees. In cases where the Co-Chief Executive Officer is terminated involuntarily and for reasons notconstituting cause, such periods are reduced to one year from termination. The restricted periods for our other named executive officers expire (1) in the case of theprohibitions on competition with us, 12 months from termination and (2) in the case of the prohibitions on the solicitation of our clients and employees, 15 monthsfrom termination. These agreements also require that we, and our named executive officers, provide advance notice prior to termination of employment.Our named executive officers other than our Co‑Chief Executive Officers have entered into these confidentiality and restrictive covenant agreements with usthrough their restricted stock unit grant agreements and separately also with KKR Holdings, which is entitled to waive, modify or amend them at any time withoutour consent. However, because our Co‑Chief Executive Officers have not received any restricted stock units, their confidentiality and restrictive covenantagreements are solely with KKR Holdings. Because KKR Holdings is the party to these agreements and not us, we may not be able to enforce them, and theseagreements might be waived, modified or amended at any time without our consent.229Table of ContentsOutstanding Equity Awards at 2019 Fiscal Year‑‑EndThe following table sets forth information concerning unvested restricted stock units and KKR Holdings units for each of the named executive officers as ofDecember 31, 2019. Stock AwardsName Number of Sharesor Units of Stockthat Have NotVested (#) Market Value of Sharesor Units of Stockthat Have NotVested ($) (1)Henry R. Kravis1,500,000 (2) $43,755,000George R. Roberts1,500,000 (2) $43,755,000Joseph Y. Bae8,040,228 (3) $234,533,451Scott C. Nuttall8,146,240 (4) $237,625,821William J. Janetschek283,328 (5) $8,264,678David J. Sorkin283,328 (6) $8,264,678(1)These amounts are based on the closing market price of our Class A common stock on the last trading day of the year ended December 31, 2019, of $29.17 pershare.(2)Includes 1,500,000 KKR Holdings units granted to each of Messrs. Kravis and Roberts on November 2, 2017, which will vest in three equal annual installments,beginning on October 1, 2020.(3)Includes (i) 67,033 KKR Holdings units granted on December 30, 2016, which will vest on April 1, 2020; (ii) 520,000 KKR Holdings units granted on February25, 2016, which will vest in equal installments on May 1, 2020 and May 1, 2021; (iii) 3,637,500 KKR Holdings units granted on November 2, 2017, which willvest on October 1 of each year as follows: 27% in 2020, 33% in 2021 and 40% in 2022; (iv) 3,625,000 restricted stock units granted on November 2, 2017, ofwhich (a) 1,125,000 units will vest on October 1 of each year as follows: 27% in 2020, 33% in 2021 and 40% in 2022 and (b) 2,500,000 units will vest upon themarket price of our Class A common stock reaching and maintaining a market price of $40.00 per share for a period of ten consecutive trading days on or prior toDecember 31, 2022; and (v) 190,695 restricted stock units granted on February 21, 2018, which will vest in equal installments on April 1, 2020 and April 1, 2021.(4)Includes (i) 53,045 KKR Holdings units granted on December 30, 2016, which will vest on April 1, 2020; (ii) 640,000 KKR Holdings units granted on February25, 2016, which will vest in equal installments on May 1, 2020 and May 1, 2021; (iii) 3,637,500 KKR Holdings units granted on November 2, 2017, which willvest on October 1 of each year as follows: 27% in 2020, 33% in 2021 and 40% in 2022; (iv) 3,625,000 restricted stock units granted on November 2, 2017, ofwhich (a) 1,125,000 units will vest on October 1 of each year as follows: 27% in 2020, 33% in 2021 and 40% in 2022 and (b) 2,500,000 units will vest upon themarket price of our Class A common stock reaching and maintaining a market price of $40.00 per share for a period of ten consecutive trading days on or prior toDecember 31, 2022; and (v) 190,695 restricted stock units granted on February 21, 2018, which will vest in equal installments on April 1, 2020 and April 1, 2021.(5)Includes (i) 220,000 KKR Holdings units granted on February 25, 2016, which will vest in equal installments on May 1, 2020 and May 1, 2021; (ii) 22,488restricted stock units granted on February 21, 2017, which will vest on April 1, 2020; and (iii) 40,840 restricted stock units granted on February 21, 2018, whichwill vest in equal installments on April 1, 2020 and April 1, 2021.(6)Includes (i) 220,000 KKR Holdings units granted on February 25, 2016, which will vest in equal installments on May 1, 2020 and May 1, 2021; (ii) 22,488restricted stock units granted on February 21, 2017, which will vest on April 1, 2020; and (iii) 40,840 restricted stock units granted on February 21, 2018, whichwill vest in equal installments on April 1, 2020 and April 1, 2021.230Table of ContentsOption Exercises and Stock Vested in 2019The following table sets forth information concerning the vesting of KKR Holdings units and restricted stock units held by each of our named executiveofficers during the year ended December 31, 2019. Stock AwardsName Number ofShares Acquired onVesting (#) (1)Value Realized onVesting ($) (2)Henry R. Kravis500,000$13,030,000George R. Roberts500,000$13,030,000Joseph Y. Bae1,427,476$36,415,921Scott C. Nuttall1,469,541$37,461,549William J. Janetschek172,150$4,210,080David J. Sorkin172,840$4,226,729(1)The amounts reflected in this column represent KKR Holdings units and shares of Class A common stock delivered upon vesting, a portion of which are subject toone‑ and two-year transfer restrictions upon vesting. See "—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Terms ofKKR Holdings Units" and "—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Terms of Restricted Stock Units" foradditional terms, including with respect to the transfer of certain restrictions from the restricted stock units to employees' KKR Holdings units.(2)These amounts are based on the closing market price of our Class A common stock on each respective vesting date.Pension Benefits for 2019We provided no pension benefits during the fiscal year ended December 31, 2019.Nonqualified Deferred Compensation for 2019We provided no defined contribution plan for the deferral of compensation on a basis that is not tax‑qualified during the fiscal year ended December 31, 2019.Potential Payments Upon Termination or Change in ControlUpon termination of employment, vesting generally ceases for KKR Holdings units and restricted stock units that have not vested. In addition, transfer-restricted vested KKR Holdings units and, if applicable, transfer-restricted restricted stock units (which term includes the transfer-restricted shares of Class Acommon stock that may be delivered upon settlement of such restricted stock units) remain subject to transfer restrictions for one- and two-year periods, except asdescribed below. See "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" for additional information regardingKKR Holdings units and transfer-restricted restricted stock units of our named executive officers.An employee who retires after the first date on which his or her age plus years of service to KKR equals 80 ("qualified retirement") will continue to vest in hisor her unvested KKR Holdings units and restricted stock units for an additional two years following retirement, subject to compliance, if applicable, with therequirement that the holder not violate the terms and conditions of his or her confidentiality and restrictive covenants during the period in which such KKRHoldings unit or restricted stock unit, if applicable, remains transfer restricted over one- and two-year periods.Upon death or permanent disability, a holder of KKR Holdings units or restricted stock units becomes immediately vested in all unvested KKR Holdings unitsand restricted stock units, respectively, which become permitted to be exchanged after the scheduled vesting dates or will be settled on the scheduled vesting dates,respectively. In addition, upon a change in control of KKR, a holder of KKR Holdings units and restricted stock units becomes immediately vested in all unvestedKKR Holdings units and restricted stock units, respectively, which become permitted to be exchanged after the scheduled vesting dates or will be settled on thescheduled vesting dates, respectively. The values of unvested KKR Holdings units and restricted stock units held by the named executive officers as ofDecember 31, 2019 are set forth above in "Outstanding Equity Awards at 2019 Fiscal Year-End."231Table of ContentsUpon termination of employment, vesting generally ceases for carried interest allocations. In addition, carried interest allocations become immediately vestedupon death or permanent disability.Pay Ratio DisclosureFor the fiscal year ended December 31, 2019:•the median of the annual total compensation of all employees of our company (other than Messrs. Kravis and Roberts, who are our Co-Chief ExecutiveOfficers) was $277,500;•the annual total compensation of Messrs. Kravis and Roberts were $40,122,617 and $40,165,377, respectively; and•the ratio of the annual total compensation of our Co-Chief Executive Officers to the median of the annual total compensation of all other employees was145 to 1.To identify the median employee for the purpose of providing the information above, we examined the compensation of all our employees (other than our Co-Chief Executive Officers) as of December 31, 2019 using, based on our payroll records, a consistently applied compensation measure consisting of suchemployees' annual salary, annual cash bonus, actual overtime, carried interest payouts and equity granted. Employees on unpaid leave of absence, employees whogave notice of departure and were not part of the regular year-end compensation process, and any employee who joined us in connection with an acquisitionconsummated during the year (there was none in 2019) were excluded from the calculation. Compensation of employees who were employed for less than the fullyear of 2019 were annualized, if they were part of the regular year-end compensation process. We reviewed all compensation in U.S. dollars, using the relevantexchange rate for any compensation paid in other currencies. After identifying the median employee, we calculated annual total compensation for such employeeusing the same methodology we use for our principal executive officers as set forth in "—Summary Compensation Table—2019 Summary Compensation Table."As noted in “—Compensation Elements—Year-end Bonus Compensation," Messrs. Kravis and Roberts did not receive any year-end bonus compensation in 2019,and the distributions and dividends payable with respect to their vested KKR Holdings units and shares of Class A common stock they hold are not consideredcompensation and accordingly are not included in the pay ratio calculation above.232Table of ContentsDirector CompensationWe limit compensation for service on our board of directors to the independent directors. Each independent director receives (1) an annual cash retainer of$90,000, (2) an additional annual cash retainer of $15,000 if such independent director is a member of the nominating and corporate governance committee, (3) anadditional annual cash retainer of $25,000 if such independent director is a member of the audit committee and an additional annual cash retainer of $25,000 (inaddition to the annual cash retainer as a member of the audit committee) if such independent director serves as the chairman of the audit committee, and (4) anadditional annual cash retainer of $10,000 if such independent director is a member of the conflicts committee and an additional annual cash retainer of $15,000 (inaddition to the annual cash retainer as a member of the conflicts committee) if such independent director serves as the chairman of the conflicts committee. Cashretainers are pro-rated if, during the fiscal year, a director joins or resigns from the board of directors, a director joins or resigns from a committee or the amount ofa retainer is increased or decreased. In addition, on October 30, 2019, 5,205 restricted stock units were granted to each independent director pursuant to our 2019Equity Incentive Plan.Name FeesEarned orPaid in Cash($)StockAwards($) (1)Total($)Mary N. Dillon92,833147,406240,239David C. Drummond92,833147,406240,239Joseph A. Grundfest140,000147,406287,406John B. Hess90,000147,406237,406Xavier B. Niel90,000147,406237,406Patricia F. Russo92,833147,406240,239Thomas M. Schoewe117,833147,406265,239Robert W. Scully137,083147,406284,489(1)Represents the aggregate grant date fair value of restricted stock units granted to each of the independent directors during the year ended December 31, 2019 ascalculated in accordance with ASC Topic 718. See Note 12 "Equity Based Compensation" to our consolidated financial statements included elsewhere in thisreport for additional information about the valuation assumptions with respect to all grants reflected in this column. These amounts reflect the aggregate grant datefair values calculated under ASC Topic 718 and may not correspond to the actual value that will be recognized by the independent directors.The following table details grants of restricted stock units to each independent director in the year ended December 31, 2019. The table includes the grant dateand grant date fair value of 2019 restricted stock units and the aggregate number of unvested restricted stock units as of December 31, 2019 owned by eachindependent director who served as a director during the year ended December 31, 2019:Name GrantDate (1)StockAwards(#)Grant DateFair Value($) (2)Total Number ofUnvested RestrictedEquity Awards onDecember 31, 2019(#)Mary N. Dillon10/30/20195,205147,4065,205David C. Drummond10/30/20195,205147,4065,205Joseph A. Grundfest10/30/20195,205147,4065,205John B. Hess10/30/20195,205147,4065,205Xavier B. Niel10/30/20195,205147,4065,205Patricia F. Russo10/30/20195,205147,4065,205Thomas M. Schoewe10/30/20195,205147,4065,205Robert W. Scully10/30/20195,205147,4065,205(1)The restricted stock units were granted on October 30, 2019 and will vest on October 1, 2020, subject to the grantee's continued service through the vesting date.(2)This column represents the grant date fair value of restricted stock units granted to each of the independent directors during the year ended December 31, 2019 ascalculated in accordance with ASC Topic 718. These amounts reflect the aggregate grant date fair values calculated under ASC Topic 718 and may not correspondto the actual value that will be recognized by the independent directors.233Table of ContentsKKR & Co. Inc. Equity Incentive PlanIn connection with the Conversion, we amended and restated the KKR & Co. L.P. 2010 Equity Incentive Plan by adopting the Amended and RestatedKKR & Co. Inc. 2010 Equity Incentive Plan, which we refer to as our 2010 Equity Incentive Plan. In addition, on March 29, 2019, the KKR & Co. Inc. 2019Equity Incentive Plan, which we refer to as our 2019 Equity Incentive Plan, became effective. Following the effectiveness of our 2019 Equity Incentive Plan, we donot make any further grants under our 2010 Equity Incentive Plan, and our 2019 Equity Incentive Plan became our only plan for providing new equity-basedawards. Our 2019 Equity Incentive Plan has a term of 10 years from the effective date. Outstanding awards under our 2010 Equity Incentive Plan remainoutstanding, unchanged and subject to the terms of our 2010 Equity Incentive Plan and their respective equity award agreements, until the vesting, expiration orlapse of such awards in accordance with their terms. AdministrationOur board of directors or a committee or subcommittee thereof administers or will administer, as applicable, our Equity Incentive Plans (the "Administrator").The Administrator has the authority to make all decisions, determinations and interpretations with respect to the administration of our Equity Incentive Plans,including determining who will receive awards thereunder, the number of shares of Class A common stock underlying the awards and the terms and conditions ofthe awards, and is permitted, subject to applicable law, to delegate all or any part of its responsibilities and powers to any employee or employees selected by it inaccordance with the terms of the plan. The board of directors authorized its executive committee (consisting of Messrs. Kravis and Roberts) to act as theAdministrator under each plan, provided that (i) the Executive Committee is not authorized to make grants with respect to the executive officers without approvalof the board of directors and (ii) the board of directors reserved the power and authority to act as the Administrator and to modify the power and authority of theExecutive Committee under each plan.Class A Common Stock Subject to the PlanAs of January 1, 2020, 123,295,864 shares of Class A common stock were available for issuance in respect of outstanding awards and the grant of futureawards, representing 15% of the aggregate number of aggregate number of the shares of Class A common stock and KKR Group Partnership Units (excludingKKR Group Partnership Units held by KKR & Co. Inc. or its wholly-owned subsidiaries) (which is referred to as "Diluted Class A Shares" in this report)outstanding at the close of business on December 31, 2019, minus the number of shares underlying any outstanding equity awards granted under our 2019 EquityIncentive Plan that have not yet been delivered upon vesting. Under the 2019 Equity Incentive Plan, the aggregate number of shares of Class A common stockavailable under the plan will be increased, on the first day of each fiscal year, by a number of shares of Class A common stock equal to the positive difference, ifany, between (x) 15% of the number of Diluted Class A Shares outstanding at the close of business on the last day of the immediately preceding fiscal year minus(y) the number of shares of Class A common stock available for issuance in respect of outstanding awards and the grant of future awards, in each case, under our2019 Equity Incentive Plan as of the last day of such year, unless the Administrator in its sole discretion should decide to increase the number of shares of Class Acommon stock available under the plan by a lesser amount on any such date. As a result, on the first day of each fiscal year, the number of shares of Class Acommon stock available for issuance of future awards under our 2019 Equity Incentive Plan will be adjusted upwards to 15% of the number of Diluted Class AShares outstanding at the close of business on the last day of the immediately preceding fiscal year, minus the number of shares underlying any outstanding equityawards granted under our 2019 Equity Incentive Plan that have not yet been delivered upon vesting. Therefore, we expect that the number of shares of Class Acommon stock available for issuance of future awards under our 2019 Equity Incentive Plan will increase at the beginning of each fiscal year compared to the endof the immediately preceding fiscal year if, during the immediately preceding year, there has been (i) any increase in the aggregate number of shares of Class Acommon stock and KKR Group Partnership Units outstanding or (ii) any delivery of underlying shares upon vesting of outstanding equity awards under our 2019Equity Incentive Plan.Restricted Stock Units and Other Equity-Based AwardsThe Administrator may grant or sell awards of restricted stock units, Class A common stock, restricted Class A common stock, deferred restricted Class Acommon stock, phantom restricted Class common stock, or any other awards that are valued in whole or in part by reference to, or are otherwise based on the fairmarket value of, the Class A common stock. Any of these or other equity-based awards may be in such form, and dependent on such conditions, as theAdministrator determines, including the right to receive, or vest with respect to, one or more shares of Class A common stock (or the equivalent cash value of suchshares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. The Administrator maydetermine whether any such equity-based awards will be payable in cash, shares of Class A common stock or other assets or a combination of cash, Class Acommon stock and other assets.234Table of ContentsOptions and Stock Appreciation RightsThe Administrator may award non-qualified stock options and stock appreciation rights. Options and stock appreciation rights granted under our EquityIncentive Plans will become vested and exercisable at such times and upon such terms and conditions as may be determined by the Administrator at the time ofgrant, but no option or stock appreciation right will be exercisable for a period of more than ten years after it is granted. The exercise price per share will bedetermined by the Administrator, provided that options and stock appreciation rights granted to participants who are U.S. taxpayers will not be granted with anexercise price less than 100% of the fair market value per share of the Class A common stock on the date of grant. To the extent permitted by the Administrator, theexercise price of an option may be paid in cash or its equivalent, in shares of Class A common stock having a fair market value equal to the aggregate exerciseprice and satisfying such other requirements as may be imposed by the Administrator, partly in cash and partly in shares of Class A common stock or net settlementin shares of Class A common stock. As determined by the Administrator, stock appreciation rights may be settled in shares of Class A common stock, cash or anycombination thereof.Compensation Committee Interlocks and Insider ParticipationBecause we are a "controlled company" within the meaning of the corporate governance standards of the NYSE, our board of directors is not required byNYSE rules to establish a compensation committee. Our founders, Messrs. Kravis and Roberts, serve as Co-Chairmen of the board of directors and participated indiscussions regarding executive compensation. For a description of certain transactions between us and our founders, see "Certain Relationships and RelatedTransactions, and Director Independence."Compensation Committee ReportOur board of directors does not have a compensation committee. The entire board of directors has reviewed and discussed with management the foregoingCompensation Discussion and Analysis and, based on such review and discussion, has determined that the Compensation Discussion and Analysis should beincluded in this Annual Report. Henry R. KravisGeorge R. RobertsJoseph Y. BaeScott C. NuttallMary N. DillonDavid C. DrummondJoseph A. GrundfestJohn B. HessXavier B. NielPatricia F. RussoThomas M. SchoeweRobert W. Scully235Table of ContentsITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSThe following table sets forth the beneficial ownership of our Class A common stock and KKR Group Partnership Units that are, together with shares of ourClass C common stock, exchangeable for shares of our Class A common stock by:•each person known to us to beneficially own more than 5% of any class of our outstanding voting securities based on our review of filings with theSEC;•each of our directors, persons chosen to become a director and named executive officers; and•our directors and named executive officers as a group.The numbers of shares of Class A common stock and KKR Group Partnership Units and shares of Class C common stock outstanding and the percentage ofbeneficial ownership are based on 558,046,130 shares of Class A common stock issued and outstanding and 290,381,345 KKR Group Partnership Units that,together with shares of our Class C common stock, are exchangeable for shares of our Class A common stock as of February 10, 2020. Beneficial ownership is ineach case determined in accordance with the rules of the SEC, and includes equity securities of which that person has the right to acquire beneficial ownershipwithin 60 days of February 10, 2020. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may bedeemed a beneficial owner of securities as to which he has no economic interest. Class A Common StockBeneficially Owned (1)KKR GroupPartnership Units andClass C Common StockBeneficially Owned (1)(2) Percentageof Combined Class Aand Class C BeneficialName (3) Number PercentNumber Percent Ownership (4)KKR Holdings (5)2,677 *290,381,345 100.0% 34.2%ValueAct Capital MFB Holdings, L.P. (6)48,100,000 8.6%— — 5.7The Vanguard Group Inc. (7)47,846,307 8.6— — 5.6Vulcan Value Partners, LLC (8)30,115,654 5.4— — 3.6Henry R. Kravis (5)(9)(10)14,965,126 2.7290,381,345 100.0 36.0George R. Roberts (5)(9)(10)12,858,598 2.3290,381,345 100.0 35.7Joseph Y. Bae (11)1,463,122 *8,839,897 3.0 1.2Scott C. Nuttall (11)1,641,410 *12,053,794 4.2 1.6Mary N. Dillon7,020 *— — *David C. Drummond38,878 *— — *Joseph A. Grundfest73,494 *— — *John B. Hess147,094 *— — *Xavier B. Niel9,908 *— — *Patricia F. Russo66,494 *— — *Thomas M. Schoewe74,094 *— — *Robert W. Scully128,494 *— — *William J. Janetschek (11)80,895 *3,130,000 1.1 *David J. Sorkin (11)42,908 *3,203,593 1.1 *Directors and executive officers as a group(14 persons)26,927,691 4.8%290,381,345 100.0% 37.4%*Less than 1.0%.(1)KKR Group Partnership Units held by KKR Holdings are exchangeable (together with the corresponding Class C common stock) for our Class A common stock on a one-for-one basis,subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications and in compliance with lock-up, vesting and transfer restrictions as describedunder "Certain Relationships and Related Transactions, and Director Independence—Exchange Agreement." Beneficial ownership of KKR Group Partnership Units and Class Ccommon stock reflected in this table has not also been reflected as beneficial ownership of our Class A common stock for which such KKR Group Partnership Units and Class Ccommon stock may be exchanged.(2)On any matters that may be submitted to a vote of the holders of Class A common stock, our Class C common stock provides its holders with a number of votes that is equal to theaggregate number of KKR Group Partnership Units that such holders hold and entitle such holders to participate in the vote on the same basis as the holders of Class A common stock.236Table of Contents(3)The address of each director and executive officer, except Mr. Roberts, is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, Suite 4200, New York, New York 10019. Theaddress of Mr. Roberts is c/o Kohlberg Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite 200, Menlo Park, California 94025.(4)This column assumes the exchange of KKR Group Partnership Units and Class C common stock into shares of Class A common stock and a number of outstanding shares of Class Acommon stock calculated in accordance with Rule 13d-3(d)(1) of the Exchange Act.(5)KKR Holdings owns, beneficially or of record, an aggregate of 2,677 shares of Class A common stock and 290,381,345 exchangeable KKR Group Partnership Units and shares ofClass C common stock. Our principals hold interests in KKR Holdings that will entitle them to participate in the value of the KKR Group Partnership Units held by KKR Holdings.KKR Holdings is a limited partnership that is controlled by KKR Holdings GP Limited, its sole general partner, which has investment control over all KKR Group Partnership Units,shares of Class C common stock and shares of Class A common stock held by KKR Holdings and voting control over all shares of Class A common stock and Class C common stockheld by KKR Holdings. Messrs. Kravis and Roberts, by virtue of their rights under the organizational documents of KKR Holdings GP Limited (the general partner of KKR Holdings),may be deemed to share dispositive and/or voting power with respect to the KKR Group Partnership Units, shares of Class A common stock and shares of Class C common stock heldby KKR Holdings. Each of Messrs. Kravis and Roberts disclaims beneficial ownership of the securities that may be deemed to be beneficially owned by him, except to the extent of hisown pecuniary interest therein. Mr. Kravis disclaims beneficial ownership of the securities that may be deemed to be beneficially owned by him, except with respect to 72,814,740KKR Group Partnership Units in which he and certain related entities he controls have a pecuniary interest. Mr. Roberts disclaims beneficial ownership of the securities that may bedeemed to be beneficially owned by him, except with respect to 80,277,805 KKR Group Partnership Units in which he and certain related entities he controls have a pecuniary interest.The address of KKR Holdings is 9 West 57th Street, Suite 4200, New York, New York 10019.(6)Based on a Schedule 13D/A filed with the SEC on September 17, 2019, shares of Class A common stock reported as beneficially owned by ValueAct Capital MFB Holdings, L.P. arealso reported as indirectly beneficially owned by (i) ValueAct Capital Master Fund, L.P. as sole limited partner of ValueAct Capital MFB Holdings, L.P., (ii) VA Partners I, LLC asgeneral partner of ValueAct Capital MFB Holdings, L.P. and ValueAct Capital Master Fund, L.P., (iii) ValueAct Capital Management, L.P. as the manager of ValueAct Capital MasterFund, L.P., (iv) ValueAct Capital Management, LLC as general partner of ValueAct Capital Management, L.P., (v) ValueAct Holdings, L.P. as the sole owner of the limitedpartnership interests of ValueAct Capital Management, L.P. and the membership interests of ValueAct Capital Management, LLC and as the majority owner of the membershipinterests of VA Partners I, LLC and (vi) ValueAct Holdings GP, LLC as general partner of ValueAct Holdings, L.P. ValueAct Capital MFB Holdings, L.P. is reported as having sharedpower to vote or to direct the vote, and shared power to dispose or direct the disposition of, such shares of Class A common stock, with VA Partners I, LLC, ValueAct Capital MasterFund, L.P., ValueAct Capital Management, L.P., ValueAct Capital Management, LLC, ValueAct Holdings, L.P. and ValueAct Holdings GP, LLC. The address of these beneficialowners is One Letterman Drive, Building D, Fourth Floor, San Francisco, California 94129.(7)Based on a Schedule 13G/A filed with the SEC on February 12, 2020, as of December 31, 2019, The Vanguard Group reports it is the beneficial owner of 47,846,307 shares of Class Acommon stock, with sole voting power over 284,349 shares of Class A common stock, sole dispositive power over 47,489,330 shares of Class A common stock, shared voting powerover 128,522 shares of Class A common stock and shared dispositive power over 356,977 shares of Class A common stock. The address of The Vanguard Group is 100 VanguardBlvd., Malvern, Pennsylvania 19355.(8)Based on a Schedule 13G filed with the SEC on February 14, 2020, as of December 31, 2019, Vulcan Value Partners, LLC and C.T. Fitzpatrick may be deemed to beneficially own andhave the sole voting power over 29,682,559 shares of Class A common stock and sole dispositive power over 30,115,654 shares of Class A common stock. The address of thesebeneficial owners is Three Protective Center, 2801 Highway 280 South, Suite 300, Birmingham, Alabama 35223. Mr. Fitzpatrick and/or members of his immediate family own397,347 shares of Class A common stock for his or their own accounts, in a managed account over which Vulcan Value Partners, LLC serves as the investment adviser. Vulcan ValuePartners, LLC exercises voting and dispositive power over such account.(9)KKR MIF Fund Holdings L.P. owns, beneficially or of record, an aggregate of 1,028,156 shares of Class A common stock. The sole general partner of KKR MIF Fund Holdings L.P. isKKR MIF Carry Holdings L.P. The sole general partner of KKR MIF Carry Holdings L.P. is KKR MIF Carry Limited. Each of KKR MIF Carry Holdings L.P. (as the sole generalpartner of KKR MIF Fund Holdings L.P.); KKR MIF Carry Limited (as the sole general partner of KKR MIF Carry Holdings L.P.); KKR Index Fund Investments L.P. (as the soleshareholder of KKR MIF Carry Limited); KKR IFI GP L.P. (as the sole general partner of KKR Index Fund Investments L.P.); KKR IFI Limited (as the sole general partner of KKRIFI GP L.P.); KKR Group Partnership L.P. (as the sole shareholder of KKR IFI Limited); KKR Group Holdings Corp. (as the general partner of KKR Group Partnership L.P.); KKR &Co. Inc. (as the sole shareholder of KKR Group Holdings Corp.); and KKR Management LLP (as the Class B common stockholder of KKR & Co. Inc.) may be deemed to be thebeneficial owner of the securities. Messrs. Kravis and Roberts are the founding partners of KKR Management LLP and may be deemed to share dispositive power with respect to theshares of Class A common stock held by KKR MIF Fund Holdings L.P. Each of Messrs. Kravis and Roberts disclaims beneficial ownership of the securities.(10)KKR Reference Fund Investments L.P. owns, beneficially or of record, an aggregate of 3,639,010 shares of Class A common stock. The sole general partner of KKR Reference FundInvestments L.P. is KKR IFI GP L.P. Each of KKR IFI GP L.P. (as the sole general partner of KKR Reference Fund Investments L.P.); KKR IFI Limited (as the sole general partner ofKKR IFI GP L.P.); KKR Group Partnership L.P. (as the sole shareholder of KKR IFI Limited); KKR Group Holdings Corp. (as the general partner of KKR Group Partnership L.P.);KKR & Co. Inc. (as the sole shareholder of KKR Group Holdings Corp.); and KKR Management LLP (as the Class B common stockholder of KKR & Co. Inc.) may be deemed to bethe beneficial owner of the securities. Messrs. Kravis and Roberts are the founding partners of KKR Management LLP and may be deemed to share dispositive power with respect tothe shares of Class A common stock held by KKR MIF Fund Holdings L.P. Each of Messrs. Kravis and Roberts disclaims beneficial ownership of the securities(11)The shares of Class A common stock above for Messrs. Bae, Nuttall, Janetschek and Sorkin include 95,348, 95,348, 42,908 and 42,908 restricted stock units, respectively, that will vestwithin 60 days of February 10, 2020.237Table of ContentsSecurities Authorized for Issuance under Equity Compensation PlansThe table set forth below provides information concerning the awards that may be issued under our Equity Incentive Plans as of December 31, 2019. Number ofSecurities to beIssued UponExercise ofOutstanding Options,Warrants and Rights (1)Weighted‑‑AverageExercise Priceof OutstandingOptions, Warrantsand RightsNumber ofSecurities RemainingAvailable for FutureIssuance Under EquityCompensation Plans(excluding securitiesreflected in the first column) (2)Equity Compensation Plans Approved by Security Holders4,262,474—120,508,317Equity Compensation Plans Not Approved by Security Holders———Total4,262,474—120,508,317(1)Reflects the aggregate number of restricted stock units granted under our Equity Incentive Plans and outstanding as of December 31, 2019.(2)The aggregate number of shares of Class A common stock available under our 2019 Equity Incentive Plan is increased, on the first day of each fiscal year, by a number of shares ofClass A common stock equal to the positive difference, if any, between (x) 15% of the number of Diluted Class A Shares outstanding at the close of business on the last day of theimmediately preceding fiscal year minus (y) the number of shares of Class A common stock available for issuance in respect of outstanding awards and the grant of future awards, ineach case, under our 2019 Equity Incentive Plan as of the last day of such year, unless the Administrator in its sole discretion should decide to increase the number of shares of ClassA common stock available under the plan by a lesser amount on any such date. We have filed registration statements on Form S-8 under the Securities Act to register shares of ClassA common stock covered by our Equity Incentive Plans. Accordingly, upon issuance pursuant to our Equity Incentive Plans, these shares of Class A common stock will be availablefor sale in the open market.238Table of ContentsITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEThe following description is a summary of the material terms of the agreements described below, and does not contain all of the information that you may finduseful. For additional information, you should read the copies of our exchange agreement, our registration rights agreement, our tax receivable agreement and thelimited partnership agreement of the KKR Group Partnership, all of which have been incorporated by reference as exhibits to this report.Exchange AgreementWe have entered into an exchange agreement with KKR Holdings, the entity through which certain of our employees, including Messrs. Kravis, Roberts, Bae,Nuttall, Lewin and Sorkin, hold their KKR Group Partnership Units. Pursuant to the exchange agreement, KKR Holdings or certain transferees of its KKR GroupPartnership Units may, on a quarterly basis (subject to the terms of the exchange agreement), exchange KKR Group Partnership Units held by them (together withcorresponding shares of Class C common stock) for shares of our Class A common stock on a one-for-one basis, subject to customary conversion rate adjustmentsfor splits, unit distributions and reclassifications. At the election of certain of our intermediate holding companies that are partners of the KKR Group Partnerships,the intermediate holding companies may settle exchanges of KKR Group Partnership Units with cash in an amount equal to the fair market value of the shares ofClass A common stock that would otherwise be deliverable in such exchanges. To the extent that KKR Group Partnership Units held by KKR Holdings or itstransferees are exchanged for shares of our Class A common stock, our interests in the KKR Group Partnerships will be correspondingly increased. Any shares ofClass A common stock received upon such exchange will be subject to any restrictions that were applicable to the exchanged KKR Group Partnership Units,including any applicable transfer restrictions. During the year ended December 31, 2019, 8,699,894 KKR Group Partnership Units were exchanged for shares ofour Class A common stock pursuant to this agreement.Certain interests in KKR Holdings that are held by our employees are subject to transfer restrictions and vesting requirements that, unless waived, modified oramended, limit the ability of our employees to cause KKR Group Partnership Units to be exchanged under the exchange agreement so long as applicable vestingand transfer restrictions apply. The general partner of KKR Holdings, which is controlled by our founders, will have sole authority for waiving any applicablevesting or transfer restrictions.As contemplated by the exchange agreement, a coordinated selling program has been established relating to sales of shares of Class A common stock receivedpursuant to the exchanges by certain holders of KKR Holdings units. Pursuant to the program, sales generally take place quarterly, and management is permitted toestablish an overall limit on such sales based upon the trading volume of our Class A common stock or any other factor that may be considered relevant.Registration Rights AgreementIn connection with our NYSE listing, we entered into a registration rights agreement with KKR Holdings pursuant to which we granted KKR Holdings, itsaffiliates and transferees of its KKR Group Partnership Units the right, under certain circumstances and subject to certain restrictions, to require us to register underthe Securities Act our Class A common stock (and other securities convertible into or exchangeable or exercisable for shares of our Class A common stock) held oracquired by them. Under the registration rights agreement, holders of registration rights will have the right to request us to register shares of our Class A commonstock received upon the exchange of their KKR Holdings units and the sale of such shares and also have the right to require us to make available shelf registrationstatements permitting sales of shares of Class A common stock into the market from time to time over an extended period. In addition, holders of registration rightswill have the ability to exercise certain piggyback registration rights in connection with registered offerings requested by other holders of registration rights orinitiated by us. On October 1, 2010, the registration statement we filed pursuant to this agreement was declared effective, and related post-effective amendmentswere declared effective on April 14, 2011, September 21, 2011 and July 10, 2018. As of December 31, 2019, 290,381,345 shares of Class A common stock remainunissued under that registration statement.Tax Receivable AgreementWe are required to acquire KKR Group Partnership Units from time to time pursuant to our exchange agreement with KKR Holdings. The KKR GroupPartnerships have each made an election under Section 754 of the Code that will remain in effect for each taxable year in which an exchange of KKR GroupPartnership Units for shares of Class A common stock occurs, which may result in an increase in our tax basis of the assets of the KKR Group Partnerships at thetime of an exchange of KKR Group Partnership Units. Certain of these exchanges are expected to result in an increase in our share of the tax basis of the tangibleand intangible assets of the KKR Group Partnership, primarily attributable to a portion of the goodwill inherent in our239Table of Contentsbusiness that would not otherwise have been available. This increase in tax basis may increase depreciation and amortization deductions for tax purposes andtherefore reduce the amount of income tax we otherwise would be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss)on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.We have entered into a tax receivable agreement with KKR Holdings, which requires us to pay to KKR Holdings, or to current and former principals who haveexchanged KKR Holdings units for shares of Class A common stock as transferees of KKR Group Partnership Units, 85% of the amount of cash savings, if any, inU.S. federal, state and local income tax that we realize as a result of the increase in tax basis described above, as well as 85% of the amount of any such savings weactually realize as a result of increases in tax basis that arise due to future payments under the agreement. We expect to benefit from the remaining 15% of cashsavings, if any, in income tax that we realize. A termination of the agreement or a change of control could give rise to similar payments based on tax savings thatwe would be deemed to realize in connection with such events.These payment obligations are obligations of KKR & Co. Inc. and certain of its intermediate holding companies and not of the KKR Group Partnership.Payments made under the tax receivable agreement are required to be made within 90 days of the filing of our tax returns, which may result in a timing differencebetween the tax savings received by KKR and the cash payments made to the exchanging holders of KKR Group Partnership Units. There is no tax receivableagreement in place for any exchange of KKR Group Partnership Units underlying restricted holdings units granted under the 2019 Equity Incentive Plan, andtherefore we will receive 100% of any tax benefits arising from such exchange.For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing our actual income tax liability to the amount of suchtaxes that we would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of the KKR Group Partnership as aresult of the exchanges of KKR Group Partnership Units and had we not entered into the tax receivable agreement. The term of the tax receivable agreementcontinues until all such tax benefits have been utilized or expired, unless we exercise our right to terminate the tax receivable agreement for an amount based on theagreed payments remaining to be made under the agreement.Effective July 1, 2018, we amended the tax receivable agreement to reflect the Conversion. The amendment also provides that, in the event the maximum U.S.federal corporate income tax rate is increased to a rate higher than 21.0% within the five-year period following the Conversion, for exchanges pursuant to theexchange agreement that take place within that five-year period (other than exchanges following the death of an individual), payments of cash tax savings realizedas a result of such exchanges shall be calculated by applying a U.S. federal corporate income tax rate not to exceed 21.0%. The amendment also clarifies that thetax benefit payments with respect to exchanges completed at any time prior to the Conversion will be calculated without taking into account the step-up in tax basisin our underlying assets that we generated in 2018 as a result of the Conversion.Estimating the amount of payments that may be made under the tax receivable agreement is by its nature imprecise, insofar as the calculation of amountspayable depends on a variety of factors. The actual increase in tax basis, as well as the amount and timing of any payments under the tax receivable agreement, willvary depending upon a number of factors, including:•the timing of exchanges—for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, ofthe KKR Group Partnership Units, which will depend on the fair market value of the depreciable or amortizable assets of the KKR Group Partnershipat the time of the transaction;•the price of our Class A common stock at the time of the exchange—the increase in any tax deductions, as well as the tax basis increase in other assets, ofthe KKR Group Partnership is directly proportional to the price of our Class A common stock at the time of the exchange; and•the amount of tax, if any, we are required to pay aside from any tax benefit from the exchanges, and the timing of any such payment—if we do not havetaxable income aside from any tax benefit from the exchanges, we will not be required to make payments under the tax receivable agreement for thattaxable year because no tax savings will have been actually realized. We expect that as a result of the amount of the increases in the tax basis of the tangible and intangible assets of the KKR Group Partnership, assuming nomaterial changes in the relevant tax law and that we earn sufficient taxable income to realize the full tax benefit of the increased amortization of our assets, futurepayments under the tax receivable agreement will be substantial. The payments under the tax receivable agreement are not conditioned upon our principals'continued ownership of us and are required to be made within 125 days of the filing of our tax returns. For the year ended December 31, 2019, no240Table of Contentspayments were made to our principals, including our executive officers, or KKR Holdings. The independent directors of our board of directors are not eligible toreceive payments under the tax receivable agreement.We may terminate the tax receivable agreement at any time by making an early termination payment to KKR Holdings or its transferees, based upon the netpresent value (based upon certain assumptions in the tax receivable agreement) of all tax benefits that would be required to be paid by us to KKR Holdings or itstransferees. In addition, the tax receivable agreement provides that upon certain mergers, asset sales, other forms of combination transactions or other changes ofcontrol, our or our successor's minimum obligations with respect to exchanged or acquired KKR Group Partnership Units (whether exchanged or acquired beforeor after such transaction) would be based on certain assumptions, including that we would have sufficient taxable income to fully utilize the increased taxdeductions and increased tax basis and other benefits related to entering into the tax receivable agreement. In these situations, our obligations under the taxreceivable agreement could have a substantial negative impact on our liquidity. Decisions made by our senior principals in the course of running our business, such as with respect to mergers, asset sales, other forms of businesscombinations or other changes of control, may influence the timing and amount of payments that are received by an exchanging or selling holder of partnerinterests in the KKR Group Partnership under the tax receivable agreement. For example, the earlier disposition of assets following an exchange or acquisitiontransaction will generally accelerate payments under the tax receivable agreement and increase the present value of such payments, and the disposition of assetsbefore an exchange or acquisition transaction will increase a principals' tax liability without giving rise to any rights of a principal to receive payments under thetax receivable agreement. Payments under the tax receivable agreement will be based upon the tax reporting positions that we will determine. We are not aware of any issue that wouldcause the IRS to challenge a tax basis increase. However, neither KKR Holdings nor its transferees will reimburse us for any payments previously made under thetax receivable agreement if such tax basis increase, or the tax benefits we claim arising from such increase, is successfully challenged by the IRS. As a result, incertain circumstances payments to KKR Holdings or its transferees under the tax receivable agreement could be in excess of our cash tax savings. Our ability toachieve benefits from any tax basis increase, and the payments to be made under this agreement, will depend upon a number of factors, as discussed above,including the timing and amount of our future income. See Item 1A. "Risk Factors—Risks Related to Our Organizational Structure—We will be required to payour principals for most of the benefits relating to our use of tax attributes we receive from prior and future exchanges of our Class A common stock for KKR GroupPartnership Units and related transactions, and the timing and value of these tax attributes differ from those of our restricted stock units."KKR Group Partnership AgreementWe indirectly control the general partner of the KKR Group Partnership and, through the KKR Group Partnership and its subsidiaries, the KKR business.Pursuant to the limited partnership agreement of the KKR Group Partnership, we, as the controlling general partner of the KKR Group Partnership, have theindirect right to determine when distributions will be made to the holders of KKR Group Partnership Units and the amount of any such distributions.On March 17, 2016, in connection with the issuance of the 6.75% Series A preferred units of KKR & Co. L.P. and on June 20, 2016, in connection with theissuance of the 6.50% Series B preferred units of KKR & Co. L.P., the limited partnership agreements of the KKR Group Partnerships were amended to provide forpreferred units with economic terms designed to mirror those of the Series A preferred units and Series B preferred units. Following the Conversion, the Series Apreferred units and Series B preferred units of KKR & Co. L.P. became Series A Preferred Stock and Series B Preferred Stock of KKR & Co. Inc., respectively.The limited partnership agreement of the KKR Group Partnership provides for tax distributions to the holders of KKR Group Partnership Units if the generalpartner of the KKR Group Partnership determine that distributions from the KKR Group Partnership would otherwise be insufficient to cover the tax liabilities of aholder of a KKR Group Partnership Unit. Generally, these tax distributions will be computed based on our estimate of the net taxable income of the relevantpartnership allocable to a holder of a KKR Group Partnership Unit multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal,state and local income tax rate prescribed for an individual or corporate resident in New York, New York (taking into account the nondeductibility of certainexpenses and the character of our income).The limited partnership agreement of the KKR Group Partnership authorizes the general partner of the KKR Group Partnership to issue an unlimited numberof additional securities of the KKR Group Partnership with such designations,241Table of Contentspreferences, rights, powers and duties that are different from, and may be senior to, those applicable to the KKR Group Partnerships Units, and which may beexchangeable for KKR Group Partnership Units.Firm Use of Private AircraftCertain of our senior employees, including Messrs. Kravis and Roberts, own aircraft that we use for business purposes in the ordinary course of our operations.These senior employees paid for the purchase of these aircraft with their personal funds and bear all operating, personnel and maintenance costs associated withtheir operation. The hourly rates that we pay for the use of these aircraft are based on current market rates for chartering private aircraft of the same type. Weincurred $3.8 million for the use of these aircraft during the year ended December 31, 2019, of which substantially all was paid to entities collectively controlled byMessrs. Kravis and Roberts.Side-By-Side and Other InvestmentsBecause fund investors typically are unwilling to invest their capital in a fund unless the fund's manager also invests its own capital in the fund's investments,our investment fund documents generally require the general partners of our investment funds to make minimum capital commitments to the funds. The amount ofthese commitments, which are negotiated by fund investors, generally range from 2% to 8% of a fund's total capital commitments at final closing, but may begreater for certain funds pursuing new strategies. When investments are made, the general partner contributes capital to the fund based on its fund commitmentpercentage and if applicable, acquires a capital interest in the investment that is not subject to a carried interest. Historically, these capital contributions have beenfunded with cash from operations that otherwise would be distributed to our employees. In connection with the KPE Transaction, we did not acquire capital interests in investments that were funded by our employees or others involved in ourbusiness prior to October 1, 2009. Rather, those capital interests were allocated to our employees or others involved in our business and are reflected in ourfinancial statements as noncontrolling interests in consolidated entities to the extent that we hold the general partner interest in the fund. Any capital contributionsthat our private equity fund general partners are required to make to a fund will be funded by us and we will be entitled to receive our allocable share of the returnsthereon.In addition, certain of our current and former employees and certain other qualifying personnel are permitted to invest, and have invested, their own capital inour funds, in side-by-side investments with our funds and the firm, as well as in funds managed by our hedge fund partnerships. Side-by-side investments areinvestments generally made on the same terms and conditions as those available to the applicable fund or the firm and, they, together with their investments in ourfunds or the funds managed by our hedge fund partnerships, are not generally subject to management fees or a carried interest. The cash invested by our current andformer employees and certain other qualifying personnel and their investment vehicles aggregated to $433 million for the year ended December 31, 2019, of which$46.6 million, $92.1 million, $22.7 million, $10.4 million, $4.0 million, $2.7 million and $1.3 million was invested by Messrs. Kravis, Roberts, Bae, Nuttall,Janetschek, Lewin and Sorkin and their investment vehicles, respectively. These investments are not included in the accompanying consolidated financialstatements. In addition, our funds invested $3.0 million in 2019 from the commitments of certain investment vehicles associated with Mr. Hess. Such investmentsassociated with Mr. Hess were made on the same terms and conditions as for other fund investors including management fees and/or a carried interest applicable tothe relevant fund. Indemnification of Directors, Officers and OthersUnder our certificate of incorporation, in most circumstances we will indemnify the following persons, to the fullest extent permitted by law, from and againstall losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or otheramounts: (a) the Class B Stockholder; (b) KKR Management LLC in its capacity as the former general partner of KKR & Co. L.P. (the "Former ManagingPartner"); (c) any person who is or was an affiliate of the Class B Stockholder or the Former Managing Partner; (d) any person who is or was a member, partner,Tax Matters Partner (as defined in the Code, as in effect prior to 2018), Partnership Representative (as defined in the Code), officer, director, employee, agent,fiduciary or trustee of us or our subsidiaries, the KKR Group Partnership, the Class B Stockholder or any Former Managing Partner or any affiliate of us or oursubsidiaries, the Class B Stockholder or the Former Managing Partner; (e) any person who is or was serving at our request or any Former Managing Partner or anyaffiliate of us or any Former Managing Partner as an officer, director, employee, member, partner, Tax Matters Partner, Partnership Representative, agent, fiduciaryor trustee of another person (provided that a person shall not be an indemnitee by reason of providing, on a fee-for-services basis or similar arms-lengthcompensatory basis, agency, advisory, consulting, trustee, fiduciary or custodial services); or (f) any person designated by us as an indemnitee as permitted byapplicable law.242Table of ContentsWe have agreed to provide this indemnification unless there has been a final and non-appealable judgment by a court of competent jurisdiction determiningthat these persons acted in bad faith or engaged in fraud or willful misconduct. We have also agreed to provide this indemnification for criminal proceedings. Anyindemnification under these provisions will only be out of our assets. Unless it otherwise agrees, the Class B Stockholder will not be liable for, or have anyobligation to contribute or loan any monies or property to us to enable us to effectuate, indemnification. The indemnification of the persons described above shallbe secondary to any indemnification such person is entitled from another person or the relevant KKR fund to the extent applicable. We may purchase insuranceagainst liabilities asserted against and expenses incurred by persons in connection with its activities, regardless of whether we would have the power to indemnifythe person against liabilities under our certificate of incorporation. We currently maintain liability insurance for our directors and officers. Such insurance would beavailable to our directors and officers in accordance with its terms.In addition, we have entered into indemnification agreements with KKR Management LLP, which formerly was KKR Management LLC, and each of ourdirectors. Each indemnification agreement provides that the indemnitee, subject to the limitations set forth in each indemnification agreement, will be indemnifiedand held harmless by us on an after-tax basis from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees andexpenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all threatened, pending or completed claims, demands, actions,suits or proceedings, whether civil, criminal, administrative or investigative, and whether formal or informal and including appeals, in which the indemnitee maybe involved, or is threatened to be involved, as a party or otherwise, by reason of its status as an indemnitee or by reason of any action alleged to have been taken oromitted in such capacity, whether arising from alleged acts or omissions to act occurring on, before or after the date of such indemnification agreement. Eachindemnification agreement provides that the indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment enteredby an arbitral tribunal or court of competent jurisdiction determining that, in respect of the matter for which the indemnitee is seeking indemnification pursuant tothe indemnification agreement, the indemnitee acted in bad faith or engaged in fraud or willful misconduct.Guarantee of Contingent Obligations to Fund Partners; IndemnificationThe partnership documents governing KKR's carry-paying investment funds and vehicles generally include a "clawback" provision that, if triggered, may giverise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund.Under a clawback obligation, upon the liquidation of a fund, the general partner is required to return, typically on an after-tax basis, previously distributed carry tothe extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the termof the fund exceed the amount to which the general partner was ultimately entitled, including the effects of any performance thresholds. As of December 31, 2019,$36.9 million of carried interest was subject to this clawback obligation, assuming that all applicable carry-paying funds were liquidated at their December 31,2019 fair values. Had the investments in such funds been liquidated at zero value, the clawback obligation would have been approximately $2.5 billion. Carriedinterest is recognized in the consolidated statements of operations based on the contractual conditions set forth in the agreements governing the fund as if the fundwere terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Amounts earned pursuant to carriedinterest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred returnthresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and tothe extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the generalpartner was ultimately entitled, a clawback obligation would be recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as anincrease in noncontrolling interests in the consolidated statements of financial condition. For funds that are not consolidated, this clawback obligation, if any, isreflected as a reduction of KKR's investment balance as this is where carried interest is initially recorded.FacilitiesCertain trusts, whose beneficiaries include children of Mr. Kravis and Mr. Roberts, and certain other senior employees who are not executive officers of theCompany, are partners in a real-estate based partnership that maintains an ownership interest in our Menlo Park location. Payments made from us to thispartnership aggregated $8.1 million for the year ended December 31, 2019.Confidentiality and Restrictive Covenant AgreementsOur employees have entered into confidentiality and restrictive covenant agreements that include prohibitions on our employees competing with us orsoliciting clients or employees of our firm during a restricted period following their departure from the firm. For further information on these agreements, see"Executive Compensation—Narrative Disclosure to Summary243Table of ContentsCompensation Table and Grants of Plan-Based Awards in 2019—Terms of Confidentiality and Restrictive Covenant Agreements."Other Transactions with Related PersonsWe have and may in the future continue to enter into ordinary course transactions with unaffiliated entities known to us to beneficially own more than 5% ofany class of our outstanding voting securities. These transactions may include investments by them in our funds generally on the same terms and conditions offeredto other unaffiliated fund investors and participation in our capital markets transactions, including underwritings and syndications, generally on the same terms andconditions offered to other unaffiliated capital markets participants. See "Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder Matters."Statement of Policy Regarding Transactions with Related PersonsOur board of directors adopted a written statement of policy for our partnership regarding transactions with related persons (our "related person policy"). Ourrelated person policy requires that a "related person" (as defined as in Item 404(a) of Regulation S-K) must promptly disclose to our General Counsel or otherdesignated person any "related person transaction" (defined as any transaction, arrangement or relationship, or series of similar transactions, arrangements orrelationships, including, without limitation, any loan, guarantee of indebtedness, transfer or lease of real estate, or use of company property that is reportable by usunder Item 404(a) of Regulation S-K in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had orwill have a direct or indirect material interest) and all material facts with respect thereto. Those individuals will then communicate that information to the board ofdirectors. No related person transaction will be consummated without the approval or ratification of a committee of the board consisting exclusively ofdisinterested directors; provided, however, the conflicts committee of our board of directors has pre-approved: certain ordinary course transactions with personsknown to us to beneficially own more than 5% of our outstanding Class A common stock on terms generally not less favorable as obtained from other third parties,including investments in our funds as limited partners and participation in capital markets transactions like underwritings and syndications; the renewal of pre-existing strategic relationships with an owner of more than 5% of our outstanding Class A common stock; the use of aircraft owned by our senior employees forbusiness purposes; certain investments by eligible employees in our funds, in side-by-side investments with our funds and the firm, as well as in funds managed byour hedge fund partnerships; and certain pro rata cash contributions to the KKR Group Partnerships for cash management purposes. It is our policy that directorsinterested in a related person transaction will recuse themselves from any vote on a related person transaction in which they have an interest.Director IndependenceSee Item 10. "Directors, Executive Officers and Corporate Governance—Independence and Composition of the Board of Directors" for information ondirector independence.244Table of ContentsITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESThe following table summarizes the aggregate fees for professional services provided by Deloitte & Touche LLP, the member firms of Deloitte ToucheTohmatsu Limited or their respective affiliates (collectively, the "Deloitte Entities") for the years ended December 31, 2019 and 2018. For the Year Ended December 31, 2019 KKR CompletedTransactions ($ in thousands) Audit Fees$27,849(1) $— Audit-Related Fees$10,746(2) $7,704(4) Tax Fees$42,807(3) $7,965(4) All Other Fees$79 $— For the Year Ended December 31, 2018 KKR CompletedTransactions ($ in thousands) Audit Fees$27,283(1) $— Audit-Related Fees$12,943(2) $22,774(4) Tax Fees$43,688(3) $9,401(4) All Other Fees$— $— (1)Audit Fees consisted of estimated fees for each audit year for (a) the audits of our consolidated financial statements in our Annual Report on Form 10-K and services related to, or requiredby, statute or regulation; (b) reviews of the interim condensed consolidated financial statements included in our quarterly reports on Form 10-Q; (c) comfort letters, consents and otherservices related to SEC and other regulatory filings; and (d) audit services provided to certain KKR funds which are not consolidated and other corporate entities.(2)Audit-Related Fees primarily included merger, acquisition, and investment due diligence services for strategic acquisitions or investments in target companies for in-process transactionsand transactions not completed.(3)Tax Fees consisted of fees for services rendered for tax compliance, planning and advisory services as well as tax fees for merger, acquisition, and investment structuring services forstrategic acquisitions or investments in target companies for in-process transactions and transactions not completed.(4)Audit-Related Fees and Tax Fees included merger, acquisition, and investment due diligence services for strategic acquisitions or investments in portfolio companies that have beencompleted. In addition, the Deloitte Entities provided audit, audit-related, tax and other services to the portfolio companies, which are approved directly by the portfolio company'smanagement and are not included in the amounts presented here.Our audit committee charter, which is available on our website at www.kkr.com under "Investor Center—KKR & Co. Inc.—Corporate Governance—AuditCommittee Charter", requires the audit committee to approve in advance all audit and non-audit related services to be provided by our independent registeredpublic accounting firm in accordance with the audit and non-audit related services pre-approval policy. All services reported in the Audit, Audit-Related, Tax, andAll Other categories above were approved by the audit committee.245Table of ContentsPART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a) The following documents are filed as part of this Annual Report.1. Financial StatementsSee Item 8 above.2. Financial Statement Schedules:See Schedule II - Valuation and Qualifying Accounts - Years Ended December 31, 2019, 2018 and 2017 of this Annual Report on Form 10-K. The otherschedules are omitted as they are not applicable or the amounts involved are not material.3. Exhibits:2.1 Plan of Conversion (incorporated by reference to Exhibit 2.1 of KKR & Co. Inc. Quarterly Report on Form 10-Q filed on May 8, 2018). 3.1 Certificate of Incorporation of KKR & Co. Inc. (incorporated herein by reference to Exhibit 3.2 KKR & Co. Inc. Quarterly Report on Form10-Q filed on May 8, 2018). 3.2 Bylaws of KKR & Co. Inc. (incorporated herein by reference to Exhibit 3.3 of KKR & Co. Inc. Quarterly Report on Form 10-Q filed on May8, 2018). 4.1 Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934. 4.2 Form of 6.75% Series A Preferred Stock Certificate (included in Exhibit 2.1 to the KKR & Co. Inc. Quarter Report on Form 10-Q filed onMay 8, 2018). 4.3 Form of 6.50% Series B Preferred Stock Certificate (included in Exhibit 2.1 to the KKR & Co. Inc. Quarter Report on Form 10-Q filed onMay 8, 2018).4.4 Indenture dated as of February 1, 2013 among KKR Group Finance Co. II LLC, KKR & Co. L.P., KKR Management Holdings L.P., KKRFund Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to theKKR & Co. Inc. Current Report on Form 8-K filed on February 1, 2013). 4.5 First Supplemental Indenture dated as of February 1, 2013 among KKR Group Finance Co. II LLC, KKR & Co. L.P., KKR ManagementHoldings L.P., KKR Fund Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference toExhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on February 1, 2013). 4.6 Second Supplemental Indenture dated as of August 5, 2014 among KKR Group Finance Co. II LLC, KKR & Co. L.P., KKR ManagementHoldings L.P., KKR Fund Holdings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., astrustee (incorporated by reference to Exhibit 4.2 to the KKR & Co. Inc. Quarterly Report on Form 10-Q filed on August 7, 2014). 4.7 Form of 5.500% Senior Note due 2043 (included in Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on February 1,2013). 4.8 Indenture dated as of May 29, 2014 among KKR Group Finance Co. III LLC, KKR & Co. L.P., KKR Management Holdings L.P., KKR FundHoldings L.P. and The Bank of New York Mellon Trust Company, N. A., as trustee (incorporated by reference to Exhibit 4.1 to theKKR & Co. Inc. Current Report on Form 8-K filed on May 29, 2014).246Table of Contents 4.9 First Supplemental Indenture dated as of May 29, 2014 among KKR Group Finance Co. III LLC, KKR & Co. L.P., KKR ManagementHoldings L.P., KKR Fund Holdings L.P. and The Bank of New York Mellon Trust Company, N. A., as trustee (incorporated by reference toExhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on May 29, 2014). 4.10 Second Supplemental Indenture dated as of August 5, 2014 among KKR Group Finance Co. III LLC, KKR & Co. L.P., KKR ManagementHoldings L.P., KKR Fund Holdings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., astrustee (incorporated by reference to Exhibit 4.3 to the KKR & Co. Inc. Quarterly Report on Form 10-Q filed on August 7, 2014). 4.11 Form of 5.125% Senior Note due 2044 (included in Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on May 29, 2014). 4.12 Indenture dated as of March 23, 2018 among KKR Group Finance Co. IV LLC, KKR & Co. L.P., KKR Management Holdings L.P., KKRFund Holdings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated byreference to Exhibit 4.1 to the KKR & Co. Inc. Current Report on Form 8-K filed on March 23, 2018). 4.13 First Supplemental Indenture dated as of March 23, 2018 among KKR Group Finance Co. IV LLC, KKR & Co. L.P., KKR ManagementHoldings L.P., KKR Fund Holdings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., astrustee (incorporated by reference to Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on March 23, 2018). 4.14 Form of 0.509% Senior Note due 2023 (included in Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on March 23, 2018). 4.15 Form of 0.764% Senior Note due 2025 (included in Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on March 23, 2018). 4.16 Form of 1.595% Senior Notes due 2038 (included in Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on March 23, 2018). 4.17 Indenture dated as of May 22, 2019 among KKR Group Finance Co. V LLC, KKR & Co. Inc., KKR Management Holdings L.P., KKR FundHoldings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated byreference to Exhibit 4.1 to the KKR & Co. Inc. Current Report on Form 8-K filed on May 22, 2019). 4.18 First Supplemental Indenture dated as of May 22, 2019 among KKR Group Finance Co. V LLC, KKR & Co. Inc., KKR ManagementHoldings L.P., KKR Fund Holdings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., astrustee (incorporated by reference to Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on May 22, 2019). 4.19 Form of 1.625% Senior Note due 2029 (included in Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on May 22, 2019). 4.20 Indenture dated as of July 1, 2019 among KKR Group Finance Co. VI LLC, KKR & Co. Inc., KKR Management Holdings L.P., KKR FundHoldings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated byreference to Exhibit 4.1 to the KKR & Co. Inc. Current Report on Form 8-K filed on July 1, 2019). 4.21 First Supplemental Indenture dated as of July 1, 2019 among KKR Group Finance Co. VI LLC, KKR & Co. Inc., KKR ManagementHoldings L.P., KKR Fund Holdings L.P., KKR International Holdings L.P. and The Bank of New York Mellon Trust Company, N.A., astrustee (incorporated by reference to Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on July 1, 2019). 247Table of Contents4.22 Form of 3.750% Senior Note due 2029 (included in Exhibit 4.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on July 1, 2019).4.23 Indenture, dated as of November 15, 2011, between the KKR Financial Holdings LLC and Wilmington Trust, National Association, as trustee(incorporated by reference to Exhibit 4.1 to the KKR Financial Holdings LLC Current Report on Form 8-K filed on November 15, 2011). 4.24 Indenture, dated as of March 30, 2017, between KKR Financial Holdings LLC and The Bank of New York Mellon Trust Company, N.A., astrustee (incorporated by reference to Exhibit 4.1 to the KKR Financial Holdings LLC Current Report on Form 8-K filed on March 30, 2017). 4.25 First Supplemental Indenture, dated as of March 30, 2017, between KKR Financial Holdings LLC and The Bank of New York Mellon TrustCompany, N.A., as trustee (incorporated by reference to Exhibit 4.2 to the KKR Financial Holdings LLC Current Report on Form 8-K filed onMarch 30, 2017). 4.26 Second Supplemental Indenture dated as of November 17, 2017 among KKR Financial Holdings LLC and The Bank of New York MellonTrust Company, N. A., as trustee (incorporated by reference to Exhibit 4.3 to the KKR Financial Holdings LLC Current Report on Form 8-Kfiled on November 11, 2017). 4.27 Form of 5.50% Senior Note due 2032 of KKR Financial Holdings LLC (included in Exhibit 4.2 to the KKR Financial Holdings LLC CurrentReport on Form 8-K filed on March 30, 2017). 10.1 Third Amended and Restated Limited Partnership Agreement of KKR Group Partnership L.P. dated January 1, 2020 (incorporated byreference to Exhibit 10.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on January 2, 2020). 10.2 Registration Rights Agreement dated July 14, 2010, by and among KKR & Co. L.P., KKR Holdings L.P. and the persons from time to timeparty thereto (incorporated by reference to Exhibit 10.2 to the KKR & Co. Inc. Current Report on Form 8-K filed on July 20, 2010). 10.3*Amended and Restated KKR & Co. Inc. 2010 Equity Incentive Plan (incorporated by reference to Exhibit 4.4 to the KKR & Co. Inc. Post-Effective Amendment No. 1 to Form S-8 filed on July 2, 2018). 10.4*KKR & Co. Inc. 2019 Equity Incentive Plan (incorporated herein by reference to Appendix A to the KKR & Co. Inc. definitive proxystatement filed on December 14, 2018). 10.5 Tax Receivable Agreement, dated as of July 14, 2010, among KKR Holdings L.P., KKR Management Holdings Corp., KKR & Co. L.P., KKRManagement Holdings, L.P., and other persons who executed a joinder thereto (incorporated by reference to Exhibit 10.3 to theKKR & Co. Inc. Current Report on Form 8-K filed on July 20, 2010). 10.6 Amendment to Tax Receivable Agreement, dated as of May 3, 2018, among KKR Holdings L.P., KKR Management Holdings Corp., KKR &Co. L.P., KKR Management Holdings L.P. and KKR Group Holdings Corp. (incorporated by reference to Exhibit 10.1 to the KKR & Co. Inc.Quarterly Report on Form 10-Q filed on May 8, 2018). 10.7 Third Amended and Restated Exchange Agreement, dated as of January 1, 2020, among KKR Group Partnership L.P., KKR Holdings L.P.KKR & Co. Inc. and KKR Group Holdings Corp. (incorporated by reference to Exhibit 10.3 to the KKR & Co. Inc. Current Report on Form 8-K filed on January 2, 2020).10.8 Amended and Restated Credit Agreement, dated as of December 7, 2018, among Kohlberg Kravis Roberts & Co. L.P., KKR Fund HoldingsL.P., KKR Management Holdings L.P. and KKR International Holdings L.P., the other borrowers from time to time party thereto, theguarantors from time to time party thereto, the lending institutions from time to time party thereto and HSBC Bank USA, NationalAssociation, as Administrative Agent (incorporated by reference to Exhibit 10.1 to the KKR & Co. Inc. Current Report on Form 8-K filed onDecember 7, 2018). 248Table of Contents10.9†364-Day Revolving Credit Agreement, dated as of June 27, 2019, among KKR Capital Markets Holdings L.P., certain subsidiaries of KKRCapital Markets Holdings L.P., each of the Lenders (as defined therein), and Mizuho Bank, Ltd., as administrative agent (incorporated byreference to Exhibit 10.1 to the KKR & Co. Inc. Quarterly Report on Form 10-Q filed on August 2, 2019). 10.10††First Amendment, dated as of June 29, 2017, to Second Amended and Restated 5-Year Revolving Credit Agreement, dated as of March 30,2016, among KKR Capital Markets Holdings L.P., certain subsidiaries of KKR Capital Markets Holdings L.P., the Majority Lenders (asdefined therein), and Mizuho Bank, Ltd., as administrative agent (incorporated by reference to Exhibit 10.2 to the KKR & Co. Inc. QuarterlyReport on Form 10-Q filed on August 4, 2017). 10.11 Second Amendment, dated as of November 14, 2018, to the Second Amended and Restated 5-Year Revolving Credit Agreement, dated as ofMarch 30, 2016, among KKR Capital Markets Holdings L.P., certain subsidiaries of KKR Capital Markets Holdings L.P., the MajorityLenders (as defined therein), and Mizuho Bank, Ltd., as administrative agent (incorporated by reference to Exhibit 10.14 to the KKR & Co.Inc. Annual Report on Form 10-K filed on February 15, 2019). 10.12*Form of Indemnification Agreement for Directors of KKR & Co. Inc. (incorporated by reference to Exhibit 10.7 to the KKR & Co. Inc.Quarterly Report on Form 10-Q filed on May 8, 2018). 10.13 Indemnification Agreement, dated as of May 3, 2018, between KKR & Co. L.P. and KKR Management LLP, formerly KKR ManagementLLC (incorporated by reference to Exhibit 10.6 to the KKR & Co. Inc. Quarterly Report on Form 10-Q filed on May 8, 2018). 10.14*Independent Director Compensation Program (incorporated by reference to Exhibit 10.1 to the KKR & Co. Inc. Quarterly Report on Form 10-Q filed on November 5, 2019). 10.15*Form of Public Company Holdings Unit Award Agreement of KKR & Co. L.P. (Executive Officers) (incorporated by reference to Exhibit10.17 of the KKR & Co. Inc. Annual Report on Form 10-K filed on February 27, 2015). 10.16*Form of Public Company Holdings Unit Award Agreement of KKR & Co. L.P. (Executive Officers) (incorporated by reference toExhibit 10.19 of the KKR & Co. Inc. Annual Report on Form 10-K filed on February 26, 2016). 10.17*Form of Public Company Holdings Unit Award Agreement of KKR & Co. L.P. (Executive Officers) (incorporated by reference to Exhibit10.18 of the KKR & Co. Inc. Annual Report on Form 10-K filed on February 24, 2017). 10.18*Form of Grant Certificate (Executive Officers) (incorporated by reference to Exhibit 10.19 of the KKR & Co. Inc. Annual Report on Form 10-K filed on February 24, 2017). 10.19*Form of Grant Certificate (Executive Officers) (incorporated by reference to Exhibit 10.23 of the KKR & Co. Inc. Annual Report on Form 10-K filed on February 23, 2018). 10.20*Form of Public Company Holdings Unit Award Agreement of KKR & Co. L.P. (Executive Officers) (Market Price Vesting) (incorporated byreference to Exhibit 10.24 of the KKR & Co. Inc. Annual Report on Form 10-K filed on February 23, 2018). 10.21*Form of Public Company Holdings Unit Award Agreement of KKR & Co. L.P. (Executive Officers) (Service Vesting) (incorporated byreference to Exhibit 10.25 of the KKR & Co. Inc. Annual Report on Form 10-K filed on February 23, 2018). 10.22*Form of Public Company Equity Unit Award Agreement of KKR & Co. Inc. (Directors) (incorporated by reference to Exhibit 10.3 to the KKR& Co. Inc. Quarterly Report on Form 10-Q filed on November 2, 2018). 249Table of Contents10.23*Form of Public Company Holdings Unit Award Agreement of KKR & Co. Inc. (Executive Officers) (incorporated by reference to Exhibit 10.4to the KKR & Co. Inc. Quarterly Report on Form 10-Q filed on November 2, 2018). 10.24*Form of Restricted Stock Unit Agreement of KKR & Co. Inc. (Directors) (incorporated by reference to Exhibit 10.2 to the KKR & Co. Inc.Quarterly Report on For m10-Q filed on May 3, 2019). 10.25*Form of Restricted Stock Unit Agreement of KKR & Co. Inc. (Executive Officers) (incorporated by reference to Exhibit 10.3 to the KKR &Co. Inc. Quarterly Report on For m10-Q filed on May 3, 2019). 10.26*Form of Restricted Stock Unit Agreement of KKR & Co. Inc. (Directors). 10.27*Form of Restricted Stock Unit Agreement of KKR & Co. Inc. (Executive Officers). 10.28*Form of Restricted Holdings Unit Agreement of KKR & Co. Inc. (Executive Officers). 10.29*Form of Compensation Agreement for 2019 (Executive Officers). 21.1 Subsidiaries of the Registrant. 23.1 Consent of Independent Registered Public Accounting Firm Relating to the Financial Statements of KKR & Co. Inc. 31.1 Certification of Co-Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, asamended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Co-Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, asamended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.3 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended, asadopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002. 32.2 Certification of Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Actof 2002. 32.3 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of2002. 101 Interactive data files pursuant to Rule 405 of Regulation S-T, formatted in Inline XBRL: (i) the Consolidated Statements of FinancialCondition as of December 31, 2019 and December 31, 2018, (ii) the Consolidated Statements of Operations for the years ended December 31,2019, 2018 and 2017, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2019, 2018 and2017, (iv) the Consolidated Statements of Changes in Equity for the years ended December 31, 2019, 2018 and 2017 (v) the ConsolidatedStatements of Cash Flows for the years ended December 31, 2019, 2018 and 2017, and (vi) the Notes to the Consolidated FinancialStatements. 104 Cover page interactive data file, formatted in Inline XBRL and contained in Exhibit 101.*Management contract or compensatory plan in which directors and/or executive officers are eligible to participate.†Certain information contained in this agreement has been omitted because it is not material and would likely cause competitive harm to the registrantif publicly disclosed.250Table of Contents††Certain information contained in this agreement has been omitted in accordance with a request for confidential treatment that the registrant hassubmitted to the SEC. Omitted information has been filed separately with the SEC.The registrant hereby agrees to furnish to the SEC at its request copies of long-term debt instruments defining the rights of holders of outstanding long-termdebt that are not required to be filed herewith.The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respectto the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warrantiesmade by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe theactual state of affairs as of the date they were made or at any other time.251Table of ContentsSCHEDULESCHEDULE II—VALUATION AND QUALIFYING ACCOUNTSValuation Allowance for Deferred Tax Assets (in thousands) Balance at Beginningof Period Tax ValuationAllowance Charged toIncome Tax Provision Tax ValuationAllowance Creditedto Income TaxProvision Balance at End ofPeriodYear Ended: December 31, 2017$9,768 $2,104 $— $11,872December 31, 2018$11,872 $— $11,872(1) $—December 31, 2019$— $— $— $— (1) The valuation allowance related to a deferred tax asset for foreign tax credit carryovers is no longer applicable because KKRelected to deduct its foreign tax credit carryovers in lieu of taking a tax credit.252Table of ContentsITEM 16. FORM 10-K SUMMARYNone.253Table of ContentsSIGNATURES Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized. Date:February 14, 2020 KKR & CO. INC. /s/ ROBERT H. LEWIN Name:Robert H. Lewin Title:Chief Financial OfficerPursuant to the requirements of the Exchange Act of 1934 this report has been signed below by the following persons on behalf of the registrant and in thecapacities indicated below on the dates indicated below.Signature Title Date /s/ HENRY R. KRAVIS Co-Chairman and Co-Chief Executive Officer February 14, 2020Henry R. Kravis (principal executive officer) /s/ GEORGE R. ROBERTS Co-Chairman and Co-Chief Executive Officer February 14, 2020George R. Roberts (principal executive officer) /s/ JOSEPH Y. BAE Director, Co-President and Co-Chief Operating February 14, 2020Joseph Y. Bae Officer /s/ SCOTT C. NUTTALL Director, Co-President and Co-Chief Operating February 14, 2020Scott C. Nuttall Officer /s/ MARY N. DILLON Director February 14, 2020Mary N. Dillon /s/ DAVID C. DRUMMOND Director February 14, 2020David C. Drummond /s/ JOSEPH A. GRUNDFEST Director February 14, 2020Joseph A. Grundfest /s/ JOHN. B. HESS Director February 14, 2020John. B. Hess /s/ XAVIER B. NIEL Director February 14, 2020Xavier B. Niel /s/ PATRICK F. RUSSO Director February 14, 2020Patricia F. Russo /s/ THOMAS M. SCHOEWE Director February 14, 2020Thomas M. Schoewe /s/ ROBERT W. SCULLY Director February 14, 2020Robert W. Scully /s/ ROBERT H. LEWIN Chief Financial Officer (principal financial and accountingofficer) February 14, 2020Robert H. Lewin 254EXHIBIT 4.1DESCRIPTION OF SECURITIES REGISTERED PURSUANT TOSECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDEDGeneralThe following description summarizes the most important terms of our securities registered pursuant to Section 12 of the Securities Exchange Act of1934, as amended. This summary does not purport to be complete and is qualified in its entirety by the provisions of our certificate of incorporation and bylaws,copies of which have been filed by us with the Securities and Exchange Commission. For a complete description of our these securities, you should refer to ourcertificate of incorporation, our bylaws and applicable provisions of Delaware law. As used in this section, “we,” “us” and “our” mean KKR & Co. Inc., aDelaware corporation, and its successors, but not any of its subsidiaries.Our authorized capital stock consists of 5,000,000,000 shares, all with a par value of $0.01 per share, of which:•3,500,000,000 are designated as Class A common stock;•1 is designated as Class B common stock;•499,999,999 are designated as Class C common stock; and•1,000,000,000 are designated as preferred stock, of which (x) 13,800,000 shares are designated as “6.75% Series A Preferred Stock” (“Series APreferred Stock”) and (y) 6,200,000 shares are designated as “6.50% Series B Preferred Stock” (“Series B Preferred Stock”).Common StockOur common stock consists of Class A common stock, Class B common stock and Class C common stock.Economic RightsDividends. Subject to preferences that apply to shares of Series A Preferred Stock and Series B Preferred Stock and any other shares of preferred stockoutstanding at the time, the holders of our Class A common stock are entitled to receive dividends out of funds legally available if our board of directors, in itsdiscretion, determines to issue dividends and then only at the times and in the amounts that our board of directors may determine. The holder of our Class Bcommon stock (the “Class B Stockholder”) and the holder of our Class C common stock do not have any rights to receive dividends.Liquidation. If we become subject to an event giving rise to our dissolution, liquidation or winding up, the assets legally available for distribution to ourstockholders would be distributable ratably among the holders of our Class A common stock and any participating preferred stock outstanding at that time rankingon a parity with our Class A common stock with respect to such distribution, subject to prior satisfaction of all outstanding debt and liabilities and the preferentialrights of and the payment of liquidation preferences, if any, on any outstanding shares of our Series A Preferred Stock, Series B Preferred Stock and any otheroutstanding shares of preferred stock. The Class B Stockholder and the holder of our Class C common stock do not have any rights to receive distributions uponour dissolution, liquidation or winding up.Voting RightsOur certificate of incorporation provides for holders of our Class A common stock and our Class C common stock, voting together as a single class, tohave the right to vote on the following matters:•any increase in the number of authorized shares of Class B common stock;1•a sale of all or substantially all of our and our subsidiaries’ assets, taken as a whole, in a single transaction or series of related transactions(except (i) for the sole purpose of changing our legal form into another limited liability entity and where the governing instruments of the newentity provide our stockholders with substantially the same rights and obligations and (ii) mortgages, pledges, hypothecations or grants of asecurity interest by the Class B Stockholder in all or substantially all of our assets (including for the benefit of affiliates of the Class BStockholder));•merger, consolidation or other business combination (except for the sole purpose of changing our legal form into another limited liability entityand where the governing instruments of the new entity provide our stockholders with substantially the same rights and obligations); and•any amendment to our certificate of incorporation that would have a material adverse effect on the rights or preferences of our Class A commonstock relative to the other classes of our stock.In addition, holders of our Class C common stock will be entitled to vote separately as a class on any amendment to our certificate of incorporation thatchanges certain terms of the Class C common stock or is inconsistent with such terms, changes the par value of the shares of Class C common stock or adverselyaffects the rights or preferences of the Class C common stock.In addition, Delaware law would permit holders of our Class A common stock to vote as a separate class on an amendment to our certificate ofincorporation that would:•change the par value of our Class A common stock; or•alter or change the powers, preferences, or special rights of the Class A common stock in a way that would adversely affect the holders of ourClass A common stock.The Class B common stock is entitled to vote on any matter that is submitted to a vote of our stockholders generally.Our certificate of incorporation provides that the number of authorized shares of any class of stock, including our Class A common stock, may beincreased or decreased (but not below the number of shares of such class then outstanding) solely with the approval of the Class B Stockholder and, in the case ofany increase in the number of authorized shares of our Class B common stock, the holders of a majority in voting power of the Class A common stock and Class Ccommon stock, voting together as a single class. As a result, the Class B Stockholder can approve an increase or decrease in the number of authorized shares ofClass A common stock and Class C common stock without a separate vote of the holders of the applicable class of common stock. This could allow us to increaseand issue additional shares of Class A common stock and/or Class C common stock beyond what is currently authorized in our certificate of incorporation withoutthe consent of the holders of the applicable class of common stock.Except as described below under “Anti-Takeover Provisions—Loss of voting rights,” each record holder of Class A common stock will be entitled to anumber of votes equal to the number of shares of Class A common stock held with respect to any matter on which the Class A common stock is entitled to vote. Inaddition, so long as the ratio at which KKR Group Partnership Units (as defined below) are exchangeable for our Class A common stock remains on a one-for-onebasis, holders of our Class C common stock shall vote together with holders of our Class A common stock as a single class and on an equivalent basis. If the ratioat which KKR Group Partnership Units are exchangeable for our Class A common stock changes from a one-for-one basis, the number of votes to which theholders of the Class C common stock are entitled will be adjusted accordingly. Additional classes of common stock having special voting rights could also beissued.No Preemptive or Similar RightsOur Class A common stock, Class B common stock and Class C common stock are not entitled to preemptive rights, and, except in the case ofimpermissible transfers of the Class B common stock, which would2result in our redemption of such Class B common stock, are not subject to conversion, redemption or sinking fund provisions.TransferabilityThe Class B Stockholder may transfer all or any part of the Class B common stock held by it with the written approval of our board of directors and amajority of the controlling interest of the Class B Stockholder without first obtaining approval of any other stockholder so long as the transferee assumes the rightsand duties of the Class B Stockholder under our certificate of incorporation, agrees to be bound by the provisions of our certificate of incorporation and furnishesan opinion of counsel regarding limited liability matters. The foregoing limitations do not preclude the members of the Class B Stockholder from selling ortransferring all or part of their limited liability company interests in the Class B Stockholder at any time.ExchangeUnits held by KKR Holdings L.P. (the “KKR Group Partnership Units”) in KKR Group Partnership L.P. (the “KKR Group Partnership”) areexchangeable for our Class A common stock on a one-for-one basis, subject to customary adjustments for splits, stock dividends and reclassifications andcompliance with applicable lock-up, vesting and transfer restrictions. When a KKR Group Partnership Unit is exchanged for a share of Class A common stock, thecorresponding share of Class C common stock shall automatically be cancelled and retired with no consideration being paid or issued with respect thereto.Limited Call RightIf at any time: (i)less than 10% of the then issued and outstanding shares of any class (other than Class B common stock, Class C common stock and preferred stock)are held by persons other than the Class B Stockholder and its affiliates; or(ii)we are subjected to registration under the provisions of the U.S. Investment Company Act of 1940, as amended,we will have the right, which we may assign in whole or in part to the Class B Stockholder or any of its affiliates, to acquire all, but not less than all, of theremaining shares of the class held by unaffiliated persons.As a result of our right to purchase outstanding shares of common stock, a stockholder may have their shares purchased at an undesirable time or price.Preferred StockOur board of directors is authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish fromtime to time the number of shares to be included in each series, and to fix the designation, powers (including voting powers), preferences and rights of the shares ofeach series and any of its qualifications, limitations or restrictions, in each case without further vote or action by our stockholders (except as may be required by theterms of any preferred stock then outstanding). Our board of directors can also increase or decrease the number of shares of any series of preferred stock (other thanthe Series A Preferred Stock and Series B Preferred Stock or, so long as any shares of Series A Preferred Stock or Series B Preferred Stock remain outstanding,increases in the authorized number of shares of Series A senior stock or Series B senior stock (as each is defined below), respectively), but not below the number ofshares of that series then outstanding, without any further vote or action by our stockholders. Our board of directors may authorize the issuance of preferred stockwith voting or conversion rights that could adversely affect the proportion of voting power held by, or other relative rights of, the holders of our Class A commonstock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things,have the effect of delaying, deferring or preventing a change in our control of our company and might adversely affect the market3price of the Class A common stock or the proportion of voting power held by, or other relative rights of, the holders of the Class A common stock.Series A Preferred StockIn March 2016, KKR & Co. L.P. issued 13,800,000 6.75% Series A Preferred Units (“Series A Preferred Units”). In connection with our conversion onJuly 1, 2018 from a Delaware limited partnership named KKR & Co. L.P. into a Delaware corporation named KKR & Co. Inc. (the “Conversion”), each Series APreferred Unit outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Series A PreferredStock.Economic rights. Dividends on the Series A Preferred Stock are payable when, as and if declared by our board of directors out of funds legally available,at a rate per annum equal to 6.75% of the $25.00 liquidation preference per share. Dividends on the Series A Preferred Stock are payable quarterly on March 15,June 15, September 15 and December 15 of each year, when, as and if declared our board of directors.Dividends on the Series A Preferred Stock are non-cumulative.Ranking. Shares of the Series A Preferred Stock rank senior to our common stock and equally with shares of our Series B Preferred Stock and any of ourother equity securities, including any other preferred stock, that we may issue in the future, whose terms provide that such securities will rank equally with theSeries A Preferred Stock respect to payment of dividends and distribution of our assets upon our liquidation, dissolution or winding up (“Series A parity stock”).Shares of the Series A Preferred Stock include the same provisions with respect to restrictions on declaration and payment of dividends as the Series B PreferredStock. Holders of the Series A Preferred Stock do not have preemptive or subscription rights.Shares of the Series A Preferred Stock rank junior to (i) all of our existing and future indebtedness and (ii) any of our equity securities, including preferredstock, that we may issue in the future, whose terms provide that such securities will rank senior to the Series A Preferred Stock with respect to payment ofdividends and distribution of our assets upon our liquidation, dissolution or winding up (such equity securities, “Series A senior stock”). We currently have noSeries A senior stock outstanding. While any shares of Series A Preferred Stock are outstanding, we may not authorize or create any class or series of Series Asenior stock without the approval of two-thirds of the votes entitled to be cast by the holders of outstanding Series A Preferred Stock and all other series of Series Avoting preferred stock (defined below), acting as a single class. See “—Voting rights” below for a discussion of the voting rights applicable if we seek to create anyclass or series of Series A senior stock.Maturity. The Series A Preferred Stock does not have a maturity date, and we are not required to redeem or repurchase the Series A Preferred Stock.Optional redemption. We may not redeem the Series A Preferred Stock prior to June 15, 2021 except as provided below under “—Change of controlredemption.” At any time or from time to time on or after June 15, 2021, we may, at our option, redeem the Series A Preferred Stock, in whole or in part, at a priceof $25.00 per share of Series A Preferred Stock plus declared and unpaid dividends, if any, to, but excluding, the redemption date, without payment of anyundeclared dividends.Holders of the Series A Preferred Stock will have no right to require the redemption of the Series A Preferred Stock.Change of control redemption. If a change of control event occurs prior to June 15, 2021, we may, at our option, redeem the Series A Preferred Stock, inwhole but not in part, at a price of $25.25 per share of Series A Preferred Stock, plus declared and unpaid dividends to, but excluding, the redemption date, withoutpayment of any undeclared dividends.If we do not give a redemption notice within the time periods specified in our certificate of incorporation following a change of control event (whetherbefore, on or after June 15, 2021), the dividend rate per annum on the Series A Preferred Stock will increase by 5.00%.4A change of control event would occur if a change of control is accompanied by the lowering of the rating on certain series of our senior notes that areguaranteed by us and the KKR Group Partnership (or, if no such series of our senior notes are outstanding, our long-term issuer rating) in respect of such change ofcontrol and any series of such senior notes or our long-term issuer rating, as applicable, is rated below investment grade.The change of control redemption feature of the Series A Preferred Stock may, in certain circumstances, make more difficult or discourage a sale ortakeover of us or the KKR Group Partnership and, thus, the removal of incumbent management. We have no present intention to engage in a transaction involvinga change of control, although it is possible that we could decide to do so in the future.Voting rights. Except as indicated below, the holders of the Series A Preferred Stock will have no voting rights.Whenever six quarterly dividends (whether or not consecutive) payable on the Series A Preferred Stock have not been declared and paid, the number ofdirectors on our board of directors will be increased by two and the holders of the Series A Preferred Stock, voting together as a single class with the holders of theSeries B Preferred Stock and any other series of Series A parity stock then outstanding upon which like voting rights have been conferred and are exercisable (anysuch other series, together with the Series B Preferred Stock, the “Series A voting preferred stock”), will have the right to elect these two additional directors at ameeting of the holders of the Series A Preferred Stock and such Series A voting preferred stock. These voting rights will continue until four consecutive quarterlydividends have been declared and paid on the Series A Preferred Stock.The approval of two-thirds of the votes entitled to be cast by the holders of outstanding Series A Preferred Stock and all series of Series A votingpreferred units, acting as a single class, either at a meeting of stockholders or by written consent, is required in order:(i)to amend, alter or repeal any provision of our certificate of incorporation relating to the Series A Preferred Stock or series of Series A votingpreferred stock so as to materially and adversely affect the voting powers, rights or preferences of the holders of the Series A Preferred Stock orseries of Series A voting preferred stock, or(ii)to authorize, create or increase the authorized amount of, any class or series of preferred stock having rights senior to the Series A Preferred Stockwith respect to the payment of distributions or amounts upon liquidation, dissolution or winding up,provided that in the case of clause (i) above, if such amendment materially and adversely affects the rights, preferences, privileges or voting powers of one or morebut not all of the classes or series of Series A voting preferred stock (including the Series A Preferred Stock for this purpose), only the consent of the holders of atleast two-thirds of the outstanding shares of the classes or series so affected, voting as a class, is required in lieu of (or, if such consent is required by law, inaddition to) the consent of the holders of two-thirds of the Series A voting preferred stock (including the Series A Preferred Stock for this purpose) as a class.However, we may create additional series or classes of Series A parity stock and any equity securities that rank junior to our Series A Preferred Stock andissue additional series of such stock without the consent of any holder of the Series A Preferred Stock.In addition, if at any time any person or group (other than the Class B Stockholder and its affiliates, or a direct or subsequently approved transferee of theClass B Stockholder or its affiliates) acquires, in the aggregate, beneficial ownership of 20% or more of the Series A Preferred Stock then outstanding, that personor group will lose voting rights on all of its stock and the stock may not be voted on any matter and will not be considered to be outstanding when calculatingrequired votes or for other similar purposes. See “Anti-Takeover Provisions—Loss of voting rights.”Amount payable in liquidation. Upon any voluntary or involuntary liquidation, dissolution or winding up of us, each holder of the Series A PreferredStock will be entitled to a payment equal to the sum of the $25.005liquidation preference per share of Series A Preferred Stock and declared and unpaid dividends, if any, to, but excluding the date of the liquidation, dissolution orwinding up. Such payment will be made out of our assets available for distribution (to the extent available) to the holders of the Series A Preferred Stock followingthe satisfaction of all claims ranking senior to the Series A Preferred Stock.No conversion rights. The shares of Series A Preferred Stock are not convertible into any class of common stock or any other class or series of our capitalstock or any other security.Series A GP Mirror Units. In connection with the Series A Preferred Stock, we hold a series of preferred units issued by the KKR Group Partnership (the“Series A GP Mirror Units”), with economic terms designed to mirror those of the Series A Preferred Stock. The terms of the Series A GP Mirror Units providethat unless distributions have been declared and paid or declared and set apart for payment on all Series A GP Mirror Units issued by the KKR Group Partnershipfor the then-current quarterly dividend period, then during such quarterly dividend period only, the KKR Group Partnership may not repurchase its common unitsor any junior units and may not declare or pay or set apart payment for distributions on its junior units, other than distributions paid in junior units or options,warrants or rights to subscribe for or purchase junior units. The terms of the Series A GP Mirror Units also provide that, in the event that the KKR GroupPartnership liquidates, dissolves or winds up, the KKR Group Partnership may not declare or pay or set apart payment on its common units or any other unitsranking junior to the Series A GP Mirror Units unless the outstanding liquidation preference on all outstanding Series A GP Mirror Units have been repaid viaredemption or otherwise. The foregoing is subject to certain exceptions, including, (i) in the case of a merger or consolidation of the KKR Group Partnerships in atransaction whereby the surviving person, if not the KKR Group Partnership immediately prior to such transaction, expressly assumes all of the obligations underthe Series A GP Mirror Units and satisfies certain other conditions, (ii) the KKR Group Partnership being sold or disposed of does not constitute a “significantsubsidiary” under Rule 1-02(w) of Regulation S-X promulgated by the Securities and Exchange Commission or (iii) the Series A Preferred Stock have been fullyredeemed. The Series B GP Mirror Units (as defined below) rank equally with the Series A GP Mirror Units.Series B Preferred StockIn June 2016, KKR & Co. L.P. issued 6,200,000 6.50% Series B Preferred Units (“Series B Preferred Units”). In connection with the Conversion, eachSeries B Preferred Unit outstanding immediately prior to the Conversion converted into one issued and outstanding, fully paid and nonassessable share of Series BPreferred Stock.Economic rights. Dividends on the Series B Preferred Stock are payable when, as and if declared by our board of directors out of funds legally available,at a rate per annum equal to 6.50% of the $25.00 liquidation preference per share. Dividends on the Series B Preferred Stock are payable quarterly on March 15,June 15, September 15 and December 15 of each year, when, as and if declared our board of directors.Dividends on the Series B Preferred Stock are non-cumulative.Ranking. Shares of the Series B Preferred Stock rank senior to our Class A common stock and equally with shares of our Series A Preferred Stock and anyof our other equity securities, including any other preferred stock, that we may issue in the future, whose terms provide that such securities will rank equally withthe Series B Preferred Stock respect to payment of dividends and distribution of our assets upon our liquidation, dissolution or winding up (“Series B paritystock”). Shares of the Series B Preferred Stock include the same provisions with respect to restrictions on declaration and payment of dividends as the Series APreferred Stock. Holders of the Series B Preferred Stock do not have preemptive or subscription rights.Shares of the Series B Preferred Stock rank junior to (i) all of our existing and future indebtedness and (ii) any of our equity securities, including preferredstock, that we may issue in the future, whose terms provide that such securities will rank senior to the Series B Preferred Stock with respect to payment ofdividends and distribution of our assets upon our liquidation, dissolution or winding up (such equity securities, “Series B senior stock”). We currently have noSeries B senior stock outstanding. While any shares of Series B Preferred Stock are outstanding, we may not authorize or create any class or series of Series Bsenior stock without the approval of two-thirds of the votes entitled to be cast by the holders of outstanding Series B Preferred Stock and all other series of Series Bvoting6preferred stock (defined below), acting as a single class. See “—Voting rights” below for a discussion of the voting rights applicable if we seek to create any classor series of Series B senior stock.Maturity. The Series B Preferred Stock does not have a maturity date, and we are not required to redeem or repurchase the Series B Preferred Stock.Optional redemption. We may not redeem the Series B Preferred Stock prior to September 15, 2021 except as provided below under “—Change of controlredemption.” At any time or from time to time on or after September 15, 2021, we may, at our option, redeem the Series B Preferred Stock, in whole or in part, at aprice of $25.00 per share of Series B Preferred Stock plus declared and unpaid dividends, if any, to, but excluding, the redemption date, without payment of anyundeclared dividends.Holders of the Series B Preferred Stock will have no right to require the redemption of the Series B Preferred Stock.Change of control redemption. If a change of control event occurs prior to September 15, 2021, we may, at our option, redeem the Series B PreferredStock, in whole but not in part, at a price of $25.25 per share of Series B Preferred Stock, plus declared and unpaid dividends to, but excluding, the redemptiondate, without payment of any undeclared dividends.If we do not give a redemption notice within the time periods specified in our certificate of incorporation following a change of control event (whetherbefore, on or after September 15, 2021), the dividend rate per annum on the Series B Preferred Stock will increase by 5.00%.A change of control event would occur if a change of control is accompanied by the lowering of the rating on certain series of our senior notes that areguaranteed by us and the KKR Group Partnership (or, if no such series of our senior notes are outstanding, our long-term issuer rating) in respect of such change ofcontrol and any series of such senior notes or our long-term issuer rating, as applicable, is rated below investment grade.The change of control redemption feature of the Series B Preferred Stock may, in certain circumstances, make more difficult or discourage a sale ortakeover of us or the KKR Group Partnership and, thus, the removal of incumbent management. We have no present intention to engage in a transaction involvinga change of control, although it is possible that we could decide to do so in the future.Voting rights. Except as indicated below, the holders of the Series B Preferred Stock will have no voting rights.Whenever six quarterly dividends (whether or not consecutive) payable on the Series B Preferred Stock have not been declared and paid, the number ofdirectors on our board of directors will be increased by two and the holders of the Series B Preferred Stock, voting together as a single class with the holders of theSeries A Preferred Stock and any other series of Series B parity stock then outstanding upon which like voting rights have been conferred and are exercisable (anysuch other series, together with the Series A Preferred Stock, the “Series B voting preferred stock”), will have the right to elect these two additional directors at ameeting of the holders of the Series B Preferred Stock and such Series B voting preferred stock. These voting rights will continue until four consecutive quarterlydividends have been declared and paid on the Series B Preferred Stock.The approval of two-thirds of the votes entitled to be cast by the holders of outstanding Series B Preferred Stock and all series of Series B voting preferredunits, acting as a single class, either at a meeting of stockholders or by written consent, is required in order:(i) to amend, alter or repeal any provision of our certificate of incorporation relating to the Series B Preferred Stock or series of Series B voting preferredstock so as to materially and adversely affect the voting powers, rights or preferences of the holders of the Series B Preferred Stock or series of Series B votingpreferred stock, or7(ii) to authorize, create or increase the authorized amount of, any class or series of preferred stock having rights senior to the Series B Preferred Stockwith respect to the payment of distributions or amounts upon liquidation, dissolution or winding up,provided that in the case of clause (i) above, if such amendment materially and adversely affects the rights, preferences, privileges or voting powers of one or morebut not all of the classes or series of Series B voting preferred stock (including the Series B Preferred Stock for this purpose), only the consent of the holders of atleast two-thirds of the outstanding shares of the classes or series so affected, voting as a class, is required in lieu of (or, if such consent is required by law, inaddition to) the consent of the holders of two-thirds of the Series B voting preferred stock (including the Series B Preferred Stock for this purpose) as a class.However, we may create additional series or classes of Series B parity stock and any equity securities that rank junior to our Series B Preferred Stock andissue additional series of such stock without the consent of any holder of the Series B Preferred StockIn addition, if at any time any person or group (other than the Class B Stockholder and its affiliates, or a direct or subsequently approved transferee of theClass B Stockholder or its affiliates) acquires, in the aggregate, beneficial ownership of 20% or more of the Series B Preferred Stock then outstanding, that personor group will lose voting rights on all of its stock and the stock may not be voted on any matter and will not be considered to be outstanding when calculatingrequired votes or for other similar purposes. See “Anti-Takeover Provisions—Loss of voting rights.”Amount payable in liquidation. Upon any voluntary or involuntary liquidation, dissolution or winding up of us, each holder of the Series B PreferredStock will be entitled to a payment equal to the sum of the $25.00 liquidation preference per share of Series B Preferred Stock and declared and unpaid dividends,if any, to, but excluding the date of the liquidation, dissolution or winding up. Such payment will be made out of our assets available for distribution (to the extentavailable) to the holders of the Series B Preferred Stock following the satisfaction of all claims ranking senior to the Series B Preferred Stock.No conversion rights. The shares of Series B Preferred Stock are not convertible into any class of common stock or any other class or series of our capitalstock or any other security.Series B GP Mirror Units. In connection with the Series B Preferred Stock, we hold a series of preferred units issued by the KKR Group Partnership (the“Series B GP Mirror Units”), with economic terms designed to mirror those of the Series B Preferred Stock. The terms of the Series B GP Mirror Units provide thatunless distributions have been declared and paid or declared and set apart for payment on all Series B GP Mirror Units issued by the KKR Group Partnership forthe then-current quarterly dividend period, then during such quarterly dividend period only, the KKR Group Partnership may not repurchase its common units orany junior units and may not declare or pay or set apart payment for distributions on its junior units, other than distributions paid in junior units or options, warrantsor rights to subscribe for or purchase junior units. The terms of the Series B GP Mirror Units also provide that, in the event that the KKR Group Partnershipliquidates, dissolves or winds up, KKR Group Partnership may not declare or pay or set apart payment on its common units or any other units ranking junior to theSeries B GP Mirror Units unless the outstanding liquidation preference on all outstanding Series B GP Mirror Units have been repaid via redemption or otherwise.The foregoing is subject to certain exceptions, including, (i) in the case of a merger or consolidation of the KKR Group Partnerships in a transaction whereby thesurviving person, if not the KKR Group Partnership immediately prior to such transaction, expressly assumes all of the obligations under the Series B GP MirrorUnits and satisfies certain other conditions, (ii) the KKR Group Partnership being sold or disposed of does not constitute a “significant subsidiary” under Rule 1-02(w) of Regulation S-X promulgated by the Securities and Exchange Commission or (iii) the Series B Preferred Stock have been fully redeemed. The Series A GPMirror Units rank equally with the Series B GP Mirror Units.Forum selection. The federal district courts of the United States of America are the exclusive forums for resolving any complaint brought by any holder ofSeries B Preferred Stock (including any holder of beneficial interests in shares of Series B Preferred Stock) asserting a cause of action arising under the UnitedStates federal securities laws.8Conflicts of InterestDelaware law permits corporations to adopt provisions renouncing any interest or expectancy in certain opportunities that are presented to the corporationor its officers, directors or stockholders. Our certificate of incorporation, to the maximum extent permitted from time to time by Delaware law, renounces anyinterest or expectancy that we have in any business ventures of the Class B Stockholder and its affiliates and any member, partner, Tax Matters Partner (as definedin U.S. Internal Revenue Code of 1986, as amended (the “Code”), in effect prior to 2018), Partnership Representative (as defined in the Code), officer, director,employee agent, fiduciary or trustee of any of KKR or its subsidiaries, the KKR Group Partnership, the Class B Stockholder or any of our or the Class BStockholder’s affiliates and certain other specified persons (collectively, the “Indemnitees”). Our certificate of incorporation provides that each Indemnitee has theright to engage in businesses of every type and description, including business interests and activities in direct competition with our business and activities. Ourcertificate of incorporation also waives and renounces any interest or expectancy that we may have in, or right to be offered an opportunity to participate in,business opportunities that are from time to time presented to the Indemnitees. Notwithstanding the foregoing, pursuant to our certificate of incorporation, the ClassB Stockholder has agreed that its sole business will be to act as the Class B Stockholder and as a general partner or managing member of any partnership or limitedliability company that we may hold an interest in and that it will not engage in any business or activity or incur any debts or liabilities except in connectiontherewith.Anti-Takeover ProvisionsOur certificate of incorporation and bylaws and Delaware General Corporation Law (the “DGCL”) contain provisions, which are summarized in thefollowing paragraphs, that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and to discourage certaintypes of transactions that may involve an actual or threatened acquisition of our company. These provisions are intended to avoid costly takeover battles, reduceour vulnerability to a hostile change in control or other unsolicited acquisition proposal, and enhance the ability of our board of directors to maximize stockholdervalue in connection with any unsolicited offer to acquire us. However, these provisions may have the effect of delaying, deterring or preventing a merger oracquisition of our company by means of a tender offer, a proxy contest or other takeover attempt that a stockholder might consider in its best interest, includingattempts that might result in a premium over the prevailing market price for the shares of Class A common stock held by stockholders.Class C common stock. Class A common stock is entitled to vote on matters provided by our certificate of incorporation and Delaware law. Our certificateof incorporation provides that generally, with respect to any matter on which the Class A common stock is entitled to vote, such vote shall require a majority ormore of all the outstanding Class A common stock and Class C common stock voting together as a single class. As a result, with respect to any matter as to whichClass A common stock may be entitled to vote, depending on the number of shares of outstanding shares of Class A common stock and Class C common stockactually voted, our senior employees have sufficient voting power to substantially influence matters subject to the vote.Election of directors. Subject to the rights granted to one or more series of preferred stock then outstanding, the Class B Stockholder has the sole authorityto elect directors.Removal of directors. Subject to the rights granted to one or more series of preferred stock then outstanding, the Class B Stockholder has the soleauthority to remove and replace any director, with or without cause, at any time.Vacancies. In addition, our bylaws also provide that, subject to the rights granted to one or more series of preferred stock then outstanding, any newlycreated directorship on the board of directors that results from an increase in the number of directors and any vacancies on our board of directors will be filled bythe Class B Stockholder.Loss of voting rights. If at any time any person or group (other than the Class B Stockholder and its affiliates, or a direct or subsequently approvedtransferee of the Class B Stockholder or its affiliates) acquires, in the aggregate, beneficial ownership of 20% or more of any class of our stock then outstanding,that person or group will lose voting rights on all of its shares of stock and such shares of stock may not be voted on any matter as to which9such shares may be entitled to vote and will not be considered to be outstanding when sending notices of a meeting of stockholders, calculating required votes,determining the presence of a quorum or for other similar purposes, in each case, as applicable and to the extent such shares of stock are entitled to any vote.Requirements for advance notification of stockholder proposals. Our bylaws establish advance notice procedures with respect to stockholder proposalsrelating to the limited matters on which our Class A common stock may be entitled to vote. Generally, to be timely, a stockholder’s notice must be received at ourprincipal executive offices not less than 90 days or more than 120 days prior to the first anniversary date of the immediately preceding annual meeting ofstockholders. Our bylaws also specify requirements as to the form and content of a stockholder’s notice. Our bylaws allow the chairman of the meeting at ameeting of the stockholders to adopt rules and regulations for the conduct of meetings, which may have the effect of precluding the conduct of certain business at ameeting if the rules and regulations are not followed. These provisions may deter, delay or discourage a potential acquirer from attempting to influence or obtaincontrol of our company.Special stockholder meetings. Our certificate of incorporation provides that special meetings of our stockholders may be called at any time only by or atthe direction of our board of directors, the Class B Stockholder or, if at any time any stockholders other than the Class B Stockholder are entitled under applicablelaw or our certificate of incorporation to vote on specific matters proposed to be brought before a special meeting, stockholders representing 50% or more of thevoting power of the outstanding stock of the class or classes of stock which are entitled to vote at such meeting. Class A common stock and Class C common stockare considered the same class of common stock for this purpose.Stockholder action by written consent. Pursuant to Section 228 of the DGCL, any action required to be taken at any annual or special meeting of thestockholders may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, is signedby the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting atwhich all shares of our stock entitled to vote thereon were present and voted, unless the certificate of incorporation provides otherwise or it conflicts with the rulesof the New York Stock Exchange. Our certificate of incorporation permits stockholder action by written consent by stockholders other than the Class BStockholder only if consented to by the board of directors in writing.Actions requiring Class B Stockholder approval. Certain actions require the prior approval of the Class B Stockholder, including, without limitation:•entry into a debt financing arrangement in an amount in excess of 10% of our then existing long-term indebtedness (other than with respect tointercompany debt financing arrangements);•issuances of securities that would (i) represent at least 5% of any class of equity securities or (ii) have designations, preferences, rights priorities or powersthat are more favorable than the Class A common stock;•adoption of a shareholder rights plan;•amendment of our certificate of incorporation, certain provisions of our bylaws relating our board of directors and officers and the operating agreementsof the KKR Group Partnership;•the appointment or removal of our Chief Executive Officer or a Co-Chief Executive Officer;•merger, sale or other dispositions of all or substantially all of the assets, taken as a whole, of us and our subsidiaries, and the liquidation or dissolution ofus or the KKR Group Partnership; and•the withdrawal, removal or substitution of any person as the general partner of the KKR Group Partnership or the transfer of beneficial ownership of all orany part of a general partner interest in the KKR Group Partnership to any person other than a wholly-owned subsidiary.10Amendments to our certificate of incorporation requiring Class B Stockholder approval. Except as otherwise expressly provided by applicable law, onlythe vote of the Class B Stockholder, together with the approval of our board of directors, shall be required in order to amend certain provisions of our certificate ofincorporation and none of our other stockholders shall have the right to vote with respect to any such amendments, which include, without limitation: (1)amendments to provisions relating to approvals of the transfer of the Class B units in the KKR Group Partnerships, Class B Stockholder approvalsfor certain actions and the appointment or removal of the Chief Executive Officer or Co-Chief Executive Officers;(2)a change in our name, our registered agent or our registered office;(3)an amendment that our board of directors determines to be necessary or appropriate to address certain changes in U.S. federal, state and localincome tax regulations, legislation or interpretation;(4)an amendment that is necessary, in the opinion of our counsel, to prevent us or our indemnitees from having a material risk of being in any mannersubjected to the provisions of the U.S. Investment Company Act of 1940, as amended, the U.S. Investment Advisers Act of 1940, as amended, or“plan asset” regulations adopted under the U.S. Employee Retirement Income Security Act of 1974, as amended, whether or not substantiallysimilar to plan asset regulations currently applied or proposed by the U.S. Department of Labor;(5)a change in our fiscal year or taxable year;(6)an amendment that our board of directors has determined to be necessary or appropriate for the creation, authorization or issuance of any class orseries of our capital stock or options, rights, warrants or appreciation rights relating to our capital stock;(7)any amendment expressly permitted in our certificate of incorporation to be made by the Class B Stockholder acting alone;(8)an amendment effected, necessitated or contemplated by an agreement of merger, consolidation or other business combination agreement that hasbeen approved under the terms of our certificate of incorporation;(9)an amendment effected, necessitated or contemplated by an amendment to the partnership agreement of the KKR Group Partnership that requiresunitholders of the KKR Group Partnership to provide a statement, certification or other proof of evidence regarding whether such unitholder issubject to U.S. federal income taxation on the income generated by the KKR Group Partnership;(10)any amendment that our board of directors has determined is necessary or appropriate to reflect and account for our formation of, or our investmentin, any corporation, partnership, joint venture, limited liability company or other entity, as otherwise permitted by our certificate of incorporation;(11)a merger into, or conveyance of all of our assets to, another limited liability entity that is newly formed and has no assets, liabilities or operations atthe time of the merger or conveyance other than those it receives by way of the merger or conveyance consummated solely to effect a mere changein our legal form, the governing instruments of which provide the stockholders with substantially the same rights and obligations as provided byour certificate of incorporation;(12)any amendment that our board of directors determines to be necessary or appropriate to cure any ambiguity, omission, mistake, defect orinconsistency; or(13)any other amendments substantially similar to any of the matters described in (1) through (12) above.11In addition, except as otherwise provided by applicable law, the Class B Stockholder, together with the approval of our board of directors, can amend ourcertificate of incorporation without the approval of any other stockholder to adopt any amendments that our board of directors has determined:(1)do not adversely affect the stockholders considered as a whole (or adversely affect any particular class or series of stock as compared to anotherclass or series) in any material respect;(2)are necessary or appropriate to satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation ofany federal, state, local or non-U.S. agency or judicial authority or contained in any federal, state, local or non-U.S. statute (including the DGCL);(3)are necessary or appropriate to facilitate the trading of our stock or to comply with any rule, regulation, guideline or requirement of any securitiesexchange on which our stock are or will be listed for trading;(4)are necessary or appropriate for any action taken by us relating to splits or combinations of shares of our capital stock under the provisions of ourcertificate of incorporation; or(5)are required to effect the intent of or are otherwise contemplated by our certificate of incorporation.Super-majority requirements for certain amendments to our certificate of incorporation. Except for amendments to our certificate of incorporation thatrequire the sole approval of the Class B Stockholder, any amendments to our certificate of incorporation require the vote or consent of stockholders holding at least90% in voting power of our Class A common stock and Class C common stock unless we obtain an opinion of counsel confirming that such amendment would notaffect the limited liability of such stockholder under the DGCL. Any amendment of this provision of our certificate of incorporation also requires the vote orconsent of stockholders holding at least 90% in voting power of our Class A common stock and Class C common stock.Merger, sale or other disposition of assets. Our certificate of incorporation provides that we may, with the approval of the Class B Stockholder and withthe approval of the holders of at least a majority in voting power of our Class A common stock and Class C common stock, sell, exchange or otherwise dispose ofall or substantially all of our assets in a single transaction or a series of related transactions, or consummate any merger, consolidation or other similar combination,or approve the sale, exchange or other disposition of all or substantially all of the assets of our subsidiaries, except that no approval of our Class A common stockand Class C common stock shall be required in the case of certain limited transactions involving our reorganization into another limited liability entity. See “—Common Stock—Voting Rights.” We may in our sole discretion mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets(including for the benefit of persons other than us or our subsidiaries) without the prior approval of the holders of our Class A common stock and Class C commonstock. We may also sell all or substantially all of our assets under any forced sale of any or all of our assets pursuant to the foreclosure or other realization uponthose encumbrances without the prior approval of the holders of our Class A common stock and Class C common stock.Preferred stock. The rights of holders of our Series A Preferred Stock and Series B Preferred Stock requiring us to redeem all or a portion of their series ofpreferred stock upon the occurrence of a change of control event could have the effect of discouraging third parties from pursuing certain transactions with us,which may otherwise be in the best interest of our stockholders. See “Preferred Stock” above.Choice of forum. The Court of Chancery of the State of Delaware (or, solely to the extent that the Court of Chancery lacks subject matter jurisdiction, anyother court in the State of Delaware with subject matter jurisdiction) is the exclusive forum for resolving any claims, suits, actions or proceedings arising out of orrelating in any way to our certificate of incorporation (including any claims, suits or actions to interpret, apply or enforce (i) the provisions of our certificate ofincorporation or our bylaws, (ii) our duties, obligations or liabilities to our stockholders, or of our stockholders to us, or among our stockholders, (iii) the rights orpowers of, or restrictions on, us or any of our stockholders, (iv) any provision of the DGCL or (v) any other instrument, document, agreement or certificatecontemplated by any provision of the DGCL relating to us (regardless of whether such claims, suits, actions or proceedings (x) sound in contract, tort, fraud orotherwise, (y) are based on common law, statutory, equitable, legal12or other grounds or (z) are derivative or direct claims)), except as otherwise provided in our certificate of incorporation for any series of our preferred stock.Business CombinationsWe have opted out of Section 203 of the DGCL, which provides that an “interested stockholder” (a person other than the corporation or any direct orindirect majority-owned subsidiary who, together with affiliates and associates, owns, or, if such person is an affiliate or associate of the corporation, within threeyears did own, 15% or more of the outstanding voting stock of a corporation) may not engage in “business combinations” (which is broadly defined to include anumber of transactions, such as mergers, consolidations, asset sales and other transactions in which an interested stockholder receives or could receive a financialbenefit on other than a pro rata basis with other stockholders) with the corporation for a period of three years after the date on which the person became aninterested stockholder without certain statutorily mandated approvals.Transfer Agent and RegistrarThe transfer agent and registrar for our Class A common stock, Class A Preferred Stock and Class B Preferred Stock is American Stock Transfer & TrustCompany, LLC. The transfer agent and registrar’s address is 6201 15th Avenue, Brooklyn, New York 11219, and its telephone number is (718) 921-8300.ListingOur Class A common, Class A Preferred Stock and Class B Preferred Stock are listed on the New York Stock Exchange under the ticker symbols “KKR”,“KKR PRA” and “KKR PRB,” respectively.13EXHIBIT 10.26RESTRICTED STOCK UNIT GRANT CERTIFICATEUNDER THE KKR & CO. INC. 2019 EQUITY INCENTIVE PLAN(DIRECTOR)KKR & Co. Inc. (the “Corporation”), pursuant to its KKR & Co. Inc. 2019 Equity Incentive Plan (the “Plan”), hereby grants to the Grantee set forth below,who is a member of the board of directors of the Corporation, the number of Restricted Stock Units (“RSUs”) set forth below. The RSUs are subject to all of theterms and conditions as set forth herein, in the Restricted Stock Unit Agreement (attached hereto), and in the Plan, all of which are incorporated herein in theirentirety. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan. Grantee:Participant Name Date of Grant:Grant Date Number of RSUs:Number of Awards Granted Vesting Schedule:The following sets forth each applicable Service Vesting Date upon which theRSUs granted hereunder shall become vested, subject to the Grantee’s continuedService through each such date and other terms and conditions contained in theattached Restricted Stock Unit Grant Agreement. Percentage of RSUs Vesting: Applicable Service Vesting Date: * * * THE UNDERSIGNED GRANTEE ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCK UNIT GRANT CERTIFICATE, THERESTRICTED STOCK UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCKUNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED STOCK UNIT GRANT CERTIFICATE, THERESTRICTED STOCK UNIT AGREEMENT AND THE PLAN.KKR & CO. INC. GRANTEE Electronic SignatureBy: Name: Participant NameTitle: Date: Grant DateRESTRICTED STOCK UNIT AGREEMENTUNDER THE KKR & CO. INC. 2019 EQUITY INCENTIVE PLAN(DIRECTOR)Pursuant to the Restricted Stock Unit Grant Certificate (the “RSU Grant Certificate”) delivered to the Grantee (as defined in the RSU Grant Certificate),and subject to the terms of this Restricted Stock Unit Agreement (this “Agreement”) and the KKR & Co. Inc. 2019 Equity Incentive Plan (the “Plan”), KKR &Co. Inc. (the “Corporation”) and the Grantee agree as follows. The RSU Grant Certificate is incorporated into and deemed a part of this Agreement. Capitalizedterms not otherwise defined herein or in Appendix A (attached hereto) shall have the meaning set forth in the Plan. RECITALS WHEREAS, the board of directors of the Corporation (the “Board”) has determined it is in the best interests of the Corporation to provide the Grantee with thisAgreement and the RSU Grant Certificate pursuant to and in accordance with the terms of the Plan. NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree tothe following: ARTICLE IGRANT OF RESTRICTED STOCK UNITS Section 1.1. Grant of Restricted Stock Units. Subject to the terms and conditions set forth herein and in the Plan, the Corporation hereby grants to the Granteethe number of Restricted Stock Units (“RSUs”) provided in the RSU Grant Certificate (with each RSU representing an unfunded, unsecured right to receive oneshare of Class A Common Stock upon vesting, subject to any adjustment pursuant to Section 9 of the Plan). ARTICLE IIVESTING AND SETTLEMENT OF RESTRICTED STOCK UNITSSection 2.1. Vesting of RSUs. (a)Subject to the terms and conditions contained herein and in the Plan, the RSUs shall vest as provided in the RSU Grant Certificate and thisSection 2.1. (i)Subject to the Grantee’s continued service as a director of the Corporation (“Service”) through the Service Vesting Date(s) as specifiedin the RSU Grant Certificate, the RSUs shall become vested on such date(s) as to the percentage(s) of RSUs set forth in the RSU GrantCertificate. (ii)If, prior to the date the RSUs are vested as provided in Section 2.1(a)(i) above or otherwise terminate pursuant to Section 2.1(b) below:(A) the Grantee dies or experiences a Disability or (B) there occurs a Change in Control, then all unvested RSUs shall be vested as aresult thereof. (iii)All RSUs that become vested under this Section 2.1(a) shall be Settled pursuant to Section 2.2 of this Agreement. (b)If the Grantee’s Service terminates for any reason other than due to the Grantee’s death or Disability, all then unvested RSUs shall immediatelyterminate and be forfeited without consideration, and no shares of Class A Common Stock shall be delivered hereunder. 1Section 2.2. Settlement of RSUs. (a)To the extent that an RSU becomes vested and the applicable Service Vesting Date has occurred, the applicable percentage of RSUs shall beSettled as soon as administratively practicable on or following the applicable Service Vesting Date. The Settlement of RSUs that become vestedupon a termination of Service due to Grantee’s death or Disability or due to a Change in Control, as applicable, shall not be accelerated such thatany such RSUs shall be Settled on the applicable Service Vesting Date as set forth on the RSU Grant Certificate that such RSUs would otherwisehave become vested. The date on which any RSU is to be Settled hereunder is referred to as a “Delivery Date.”(b)On any Delivery Date, each vested RSU being Settled shall be cancelled in exchange for the Corporation delivering to the Grantee the number ofshares of Class A Common Stock equal to the number of RSUs that are to be Settled on such Delivery Date pursuant to Section 2.2(a). Theforegoing deliveries shall in all instances be subject to Sections 4.4 and 4.6. (c)Subject to the provisions of this Article II relating to the number of RSUs that are to be Settled on any applicable Delivery Date and solely to theextent permitted under Section 409A, if applicable, the Corporation may impose such other conditions and procedures in relation to theSettlement of RSUs as it may reasonably determine. Section 2.3. No Dividend Payments. The RSUs granted to the Grantee hereunder do not include the right to receive any dividend payments. ARTICLE IIIRESTRICTIONS ON TRANSFERS Section 3.1. Transfer Restrictions on RSUs. (a)The Grantee may not Transfer all or any portion of the Grantee’s RSUs to any Person (including to any Permitted Transferee) without the priorwritten consent of the Administrator, which consent may be given or withheld, or made subject to such conditions (including the receipt of suchlegal or tax opinions and other documents that the Corporation may require) as determined by the Administrator. (b)Prior to a Transfer of any RSUs to any Person that the Administrator consents to, such Person must consent in writing to be bound by thisAgreement and deliver such consent to the Administrator. (c)Any purported Transfer of RSUs that is not in accordance with this Section 3.1 is null and void. ARTICLE IVMISCELLANEOUS Section 4.1. Governing Law. This Agreement and RSU Grant Certificate shall be governed by, and construed in accordance with, the laws of the State of NewYork, United States of America, without giving effect to any otherwise governing principles of conflicts of law that would apply the Laws of another jurisdiction. Section 4.2. Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms andprovisions of the Plan and the provisions of this Agreement, the Plan shall govern and control. Section 4.3. Arbitration. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE U.S. FEDERAL AND STATE COURTSLOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THEPROVISIONS OF THIS SECTION 4.3, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR2CONTEMPLATED ARBITRATION ARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Any controversy or claim arising out ofor relating to this Agreement (or the breach thereof) shall be settled by arbitration conducted by a single arbitrator in New York, New York in accordance with thethen-existing Rules of Arbitration of the International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within 30days of the receipt of the request for arbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shallconduct the proceedings in the English language. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. Thearbitrators shall have the authority to award any remedy or relief that a court of competent jurisdiction could order or grant, including, without limitation, theissuance of an injunction. However, either party may, without inconsistency with this arbitration provision, bring an action or special proceeding in any court ofcompetent jurisdiction for the purpose of compelling the other party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, orenforcing an arbitration award. The Grantee irrevocably appoints the Secretary or General Counsel of the Corporation as such Grantee’s agent for service ofprocess in connection with any such action or proceeding and agrees that service of process upon such agent, who shall promptly advise such Grantee of any suchservice of process, shall be deemed in every respect effective service of process upon the Grantee in any such action or proceeding. Except as necessary in courtproceedings to enforce this arbitration provision or an award rendered hereunder, to obtain interim relief or as otherwise required by law, neither a party nor anarbitrator may disclose the content or results of any arbitration hereunder without the prior written consent of the Corporation and the Grantee, other than generalstatements. Section 4.4. Remedies; Recoupment; Right to Set-Off. (a)The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude orwaive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law orunder the terms of any other applicable agreement.(b)To the extent required or advisable, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules promulgatedthereunder and any other similar Laws including, as applicable, but not limited to the European Directives 2011/61/EU, 2013/36/EU and2014/91/EU, the Administrator may specify in any other document or a policy to be incorporated into this Agreement by reference, that theGrantee’s rights, payments, and benefits with respect to RSUs awarded hereunder and/or Class A Common Stock delivered to the Grantee inrespect of RSUs awarded hereunder shall be subject to reduction, cancellation, forfeiture or recoupment. (c)The Grantee further acknowledges and agrees that KKR Group shall have the right to clawback, forfeit, cancel, recoup, reduce or set-off anydistribution or payment that is due or payable (or that the Administrator reasonably determines may become due or payable) to the Granteepursuant to any agreement with the KKR Group (including but not limited to partnership agreements of KKR Holdings L.P., KKR Holdings IIL.P. and KKR Associates Holdings L.P.) or otherwise for the purpose of fulfilling any present or future obligation or liability of whatever nature(whether matured or unmatured, absolute or contingent) that the Grantee has to make (or that the Administrator reasonably determines maybecome such an obligation or liability to make) any payment or contribution to the KKR Group, regardless of whether the payment orcontribution is currently due or payable, or may be due or payable in the future, whether in advance of or without adjudication (provided that theAdministrator must act in good faith when determining any contribution or payment that may become due or payable as a result of damage to theKKR Group arising from a breach by Grantee of any of Grantee’s agreements with the KKR Group or other wrongdoing), and notwithstandingany other agreements between the Grantee and the KKR Group entered into prior to the date hereof. Section 4.5. Amendments and Waivers. (a)This Agreement (including the RSU Grant Certificate and Appendices A and B attached hereto, as applicable) may be amended, supplemented,waived or modified only in accordance with Section 34(b) of the Plan or Section 13 of the Plan, as applicable, or as may be required for purposes of compliance or enforceability with applicable localLaw; provided, however, that the RSU Grant Certificate shall be deemed amended from time to time to reflect any adjustments provided forunder the Plan.(b)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of timespecified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof orthe exercise of any other right, power or privilege. Section 4.6. Withholding. The provisions of Section 4(d) of the Plan are incorporated herein by reference and made a part hereof. Regardless of any action theCorporation takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to theGrantee’s participation in the Plan and legally applicable to the Grantee (“Tax-Related Items”), the Grantee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and may exceed the amount, if any, actually withheld by the Corporation. The Grantee furtheracknowledges that the Corporation (1) makes no representations or undertakings regarding the treatment of any Tax-Related Items and (2) is under no obligation tostructure the terms of the RSUs to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Granteeis subject to tax in more than one jurisdiction, the Grantee acknowledges that the Corporation may be required to withhold or account for Tax-Related Items inmore than one jurisdiction. The Corporation may refuse to issue or deliver Class A Common Stock or the proceeds of the sale of Class A Common Stock, if theGrantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items as set forth in this Section 4.6. Section 4.7. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed tohave been duly given upon receipt) by delivery in person, by courier service, by fax or by registered or certified mail (postage prepaid, return receipt requested) tothe respective parties at the following addresses (or at such other address for a party as shall be specified): (a)If to the Corporation, to: KKR & Co. Inc.9 West 57th Street, Suite 4200New York, New York 10019U.S.A. Attention: General Counsel and Secretary (b)If to the Grantee, to the most recent address for the Grantee in the books and records of the Corporation. Section 4.8. Entire Agreement; Termination of Agreement; Survival. (a)This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prioragreements and understandings, whether oral or written, pertaining thereto. The Grantee acknowledges that the grant of RSUs provided for underthis Agreement is in full satisfaction of any and all grants of equity or equity-based awards that representatives of the Corporation or itsAffiliates, on or prior to the date hereof, may have informed the Grantee that such Grantee is entitled to receive. (b)This Agreement shall terminate when the Grantee and all Permitted Transferees cease to hold any of the RSUs that have been granted hereunder.Notwithstanding anything to the contrary herein, this Article IV shall survive any termination of this Agreement. Section 4.9. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, orpublic policy, all other conditions and provisions of this4Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions is not affected in any manner materiallyadverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate ingood faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that thetransactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. Section 4.10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement,their successors, executors, administrators, heirs, legal representatives and assigns. Section 4.11. Appendices. Appendices A and B constitute part of this Agreement. Section 4.12. Further Assurances. The Grantee shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate tocarry out the purposes and intent of this Agreement. Section 4.13. Section 409A; Service. (a)This Section 4.13(a) applies to Grantees who are U.S. tax residents (such as, a U.S. citizen, green card holder or a U.S. tax resident under thesubstantial presence test) to the extent applicable. All references to any “separation from service” or termination of Services to be provided bythe Grantee shall be deemed to refer to a “separation from service” within the meaning of Section 409A, if applicable. Notwithstanding anythingherein to the contrary, (i) if at the time of the Grantee’s termination of Service the Grantee is a “specified employee” as defined in Section 409Aof the Code and the deferral of the commencement of any payments or delivery of Class A Common Stock otherwise payable or providedhereunder as a result of such termination of Service is necessary in order to prevent any accelerated or additional tax under Section 409A, then,to the extent that Section 409A applies to the RSUs, the Corporation will defer the commencement of the payment of any such payments ordelivery hereunder (without any reduction in such payments or delivery of Class A Common Stock ultimately paid or provided to the Grantee)until the date that is six months following the Grantee’s termination of Service (or the earliest date as is permitted under Section 409A) and (ii) ifany other payments or other deliveries due to the Grantee hereunder could cause the application of an accelerated or additional tax under Section409A, such payments or other deliveries shall be deferred if deferral will make such payment or other delivery compliant under Section 409A, orotherwise such payment or other delivery shall be restructured, to the extent possible, in a manner, determined by the Administrator, that doesnot cause such an accelerated or additional tax. The Corporation shall use commercially reasonable efforts to implement the provisions of thisSection 4.13(a) in good faith; provided that none of the Corporation, the Administrator nor any of the Corporation’s or its affiliates’ employees,directors or representatives shall have any liability to the Grantee with respect to this Section 4.13(a). (b)Nothing in this Agreement shall be deemed to obligate the Corporation to employ the Grantee in any capacity whatsoever or to prohibit orrestrict the Corporation from terminating the Grantee’s Service at any time or for any reason whatsoever. Section 4.14. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by thedifferent parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shallconstitute one and the same agreement. Copies of executed counterparts transmitted by telecopy or other electronic transmission service shall be consideredoriginal executed counterparts for purposes of this Agreement. [Rest of page intentionally left blank] 5IN WITNESS WHEREOF, the Corporation has executed this Agreement as of the date specified under the signature of the Grantee. KKR & CO. INC. By: Name: Title: 6IN WITNESS WHEREOF, the undersigned Grantee has caused this counterpart signature page to this Agreement to be duly executed as of the date specifiedunder the signature of the Grantee. “GRANTEE” Electronic SignatureName: Participant NameDated: Grant Date 7APPENDIX A DEFINITIONS In addition to the defined terms set forth in the Plan, the following terms shall have the following meanings for purposes of the Agreement: “Disability” means, as to any Person, such Person’s inability to perform in all material respects such Person’s duties and responsibilities to Corporation by reasonof a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutive monthsor (ii) such shorter period as the Administrator may reasonably determine in its sole discretion. “Group Partnership” means KKR Group Partnership L.P., a Cayman Island exempted limited partnership, along with its successor and any other legal entitydesignated in the future as a “Group Partnership” by the Corporation. “KKR Group” means (i) the Corporation and KKR Management LLP (and its successors), (ii) any direct or indirect subsidiaries of the Corporation, including butnot limited to the Group Partnership and its direct and indirect subsidiaries (not including Portfolio Companies), (iii) KKR Holdings L.P. and KKR AssociatesHoldings L.P., their respective general partners, and the direct or indirect subsidiaries of KKR Holdings L.P. and KKR Associates Holdings L.P., respectively, and(iv) any investment fund, account or vehicle that is managed, advised or sponsored by any member of the KKR Group. “Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by anynational, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdictionover the Corporation or any Grantee, as the case may be. “Permitted Transferee” means (A) any person who is a “family member” of the Grantee, as such term is used in the instructions to Form S-8 under the SecuritiesAct of 1933, as amended, or any successor form of registration statement promulgated by the Securities and Exchange Commission (collectively, the “ImmediateFamily Members”); (B) a trust solely for the benefit of the Grantee and his or her Immediate Family Members; (C) a partnership or limited liability companywhose only partners or stockholders are the Grantee and his or her Immediate Family Members; (D) a beneficiary to whom donations are eligible to be treated as“charitable contributions” for federal income tax purposes; or (E) any other Person the Administrator consents to. “Person” means any individual, corporation, partnership, limited liability company, trust, joint stock company, business trust, unincorporated association, joint venture,governmental authority or other entity of any nature whatsoever. “Portfolio Company” means any portfolio companies, joint ventures or affiliated investments that are held as such by the KKR Group. “RSU Grant Certificate” means the RSU Grant Certificate delivered to the Grantee and attached to this Agreement, as the same may be modified pursuant toSection 4.5(a) of the Agreement. “Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as the same may be amended from time to time, and the applicable regulations,including temporary regulations, promulgated under such Section, as such regulations may be amended from time to time (including corresponding provisions ofsucceeding regulations). “Service Vesting Date” means, with respect to any RSU, the date set forth in the RSU Grant Certificate as the “Service Vesting Date.” “Settle”, “Settled” or “Settlement” means the discharge of the Corporation’s obligations in respect of an RSU through the delivery to the Grantee of Class ACommon Stock in accordance with Article II.A-1“Transfer” or “Transferred” means with respect to any RSU or Class A Common Stock, as applicable, any (i) sale, assignment, transfer or other dispositionthereof or any interests therein or rights attached thereto, whether voluntarily or by operation of Law, or (ii) creation or placement of any mortgage, claim, lien,encumbrance, conditional sales or other title retention agreement, right of first refusal, preemptive right, pledge, option, charge, security interest or other similarinterest, easement, judgment or imperfection of title of any nature whatsoever. A-2APPENDIX B ADDITIONAL TERMS AND CONDITIONSEXHIBIT 10.27RESTRICTED STOCK UNIT GRANT CERTIFICATEUNDER THE KKR & CO. INC. 2019 EQUITY INCENTIVE PLAN(EXECUTIVE)KKR & Co. Inc. (the “Corporation”), pursuant to its KKR & Co. Inc. 2019 Equity Incentive Plan (the “Plan”), hereby grants to the Grantee set forth belowthe number of Restricted Stock Units (“RSUs”) set forth below. The RSUs are subject to all of the terms and conditions as set forth herein, in the Restricted StockUnit Agreement (attached hereto), and in the Plan, all of which are incorporated herein in their entirety. Capitalized terms not otherwise defined herein shall havethe meaning set forth in the Plan. Grantee:Participant NameDate of Grant:Grant DateNumber of RSUs:Number of Awards GrantedVesting Schedule:The following sets forth each applicable Service Vesting Date upon which the RSUsgranted hereunder shall become vested, subject to the Grantee’s continued Employmentthrough each such date and other terms and conditions contained in the attachedRestricted Stock Unit Grant Agreement.Percentage of RSUs Vesting:Applicable Service Vesting Date:Post-Settlement Transfer Restrictions under Section 3.3 of theRestricted Stock Unit Agreement:☐ Applicable ☐ InapplicableMinimum Retained Ownership Percentage under Section 3.4 ofthe Restricted Stock Unit Agreement:☐ Applicable ☐ InapplicableMinimum Retained Ownership Percentage if applicable: 15%* * *THE UNDERSIGNED GRANTEE ACKNOWLEDGES RECEIPT OF THIS RESTRICTED STOCK UNIT GRANT CERTIFICATE, THERESTRICTED STOCK UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTED STOCKUNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED STOCK UNIT GRANT CERTIFICATE, THERESTRICTED STOCK UNIT AGREEMENT AND THE PLAN.KKR & CO. INC.GRANTEEElectronic SignatureBy:Name: Participant NameTitle:Date: Grant DateRESTRICTED STOCK UNIT AGREEMENTUNDER THE KKR & CO. INC. 2019 EQUITY INCENTIVE PLAN(EXECUTIVE)Pursuant to the Restricted Stock Unit Grant Certificate (the “RSU Grant Certificate”) delivered to the Grantee (as defined in the RSU Grant Certificate),and subject to the terms of this Restricted Stock Unit Agreement (this “Agreement”) and the KKR & Co. Inc. 2019 Equity Incentive Plan (the “Plan”), KKR &Co. Inc. (the “Corporation”) and the Grantee agree as follows. The RSU Grant Certificate is incorporated into and deemed a part of this Agreement. Capitalizedterms not otherwise defined herein or in Appendix A (attached hereto) shall have the meaning set forth in the Plan.RECITALSWHEREAS, the board of directors of the Corporation (the “Board”) has determined it is in the best interests of the Corporation to provide the Grantee with thisAgreement and the RSU Grant Certificate pursuant to and in accordance with the terms of the Plan.NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties hereto agree tothe following:ARTICLE IGRANT OF RESTRICTED STOCK UNITSSection 1.1. Grant of Restricted Stock Units. Subject to the terms and conditions set forth herein and in the Plan, the Corporation hereby grants to the Granteethe number of Restricted Stock Units (“RSUs”) provided in the RSU Grant Certificate (with each RSU representing an unfunded, unsecured right to receive oneshare of Class A Common Stock upon vesting, subject to any adjustment pursuant to Section 9 of the Plan). The grant of RSUs hereunder is conditioned upon theGrantee’s agreement to and compliance with the covenants and obligations contained in the confidentiality and restrictive covenant obligations, attached hereto asAppendix C (the “Confidentiality and Restrictive Covenant Agreement”) and incorporated herein by reference.ARTICLE IIVESTING AND SETTLEMENT OF RESTRICTED STOCK UNITSSection 2.1. Vesting of RSUs.(a)Subject to the terms and conditions contained herein and in the Plan, the RSUs shall vest as provided in the RSU Grant Certificate and thisSection 2.1. (i)Subject to the Grantee’s continued Employment through the Service Vesting Date(s) as specified in the RSU Grant Certificate, theRSUs shall become vested on such date(s) as to the percentage(s) of RSUs set forth in the RSU Grant Certificate. (ii)If, prior to the date the RSUs are vested or such RSUs otherwise terminate and are forfeited: (A) the Grantee's Employment terminatesdue to the Grantee's Retirement, then all Retirement RSUs shall be vested; (B) the Grantee dies or experiences a Disability, then allunvested RSUs shall be vested; and (C) a Change in Control occurs prior to any termination of the Grantee's Employment, then all orany portion of any unvested RSUs may be vested, subject, in each case of clause (A), (B) or (C), to the discretion of the Administrator. Notwithstanding the foregoing, if the Corporation receives an opinion of counsel that there has been a legal judgment or legaldevelopment in the Grantee’s jurisdiction that would likely result in the favorable treatment applicable to the Retirement RSUs pursuantto this Section 2.1(a)(ii) being deemed unlawful or discriminatory, then the Corporation will not apply the favorable treatment at thetime the Grantee’s Employment terminates due to the Grantee’s Retirement under clause (A)1above, and the RSUs will be treated as set forth in Section 2.1(a)(i), 2.1(b), 2.1(c) or the other provisions of this Section 2.1(a)(ii), asapplicable. (iii)All RSUs that become vested under this Section 2.1(a) shall be Settled pursuant to Section 2.2 of this Agreement. (b)If the Grantee’s Employment terminates for any reason other than due to the Grantee’s death, Disability or Retirement, all then unvested RSUs(including any RSUs that are not Retirement RSUs) shall immediately terminate and be forfeited without consideration, and no shares of Class ACommon Stock shall be delivered hereunder. (c)Unless otherwise agreed in writing between the Grantee and the Corporation or as otherwise determined by the Administrator at the time of grantor otherwise, the Grantee’s right to vest in the RSUs under the Plan, if any, will terminate effective as of the date that the Grantee is no longeractively providing services (even if still considered employed or engaged under local Law) and will not be extended by any notice periodmandated under local Law (e.g., active Employment would not include a period of “garden leave” or similar period pursuant to local Law or theterms of the Grantee’s Employment agreement or service contract, if any), and all unvested RSUs shall immediately be forfeited upon such date. Section 2.2. Settlement of RSUs.(a)To the extent that an RSU becomes vested and the applicable Service Vesting Date has occurred, the applicable percentage of RSUs shall beSettled as soon as administratively practicable on or following the applicable Service Vesting Date. The Settlement of RSUs that become vestedupon a termination of Employment due to Grantee’s Retirement, death or Disability or due to a Change in Control, as applicable, shall not beaccelerated such that any such RSUs shall be Settled on the applicable Service Vesting Date as set forth on the RSU Grant Certificate that suchRSUs would otherwise have become vested. The date on which any RSU is to be Settled hereunder is referred to as a “Delivery Date.”(b)On any Delivery Date, each vested RSU being Settled shall be cancelled in exchange for the Corporation delivering, or causing to be deliveredby the Designated Service Recipient, to the Grantee either (i) the number of shares of Class A Common Stock equal to the number of RSUs thatare to be Settled on such Delivery Date pursuant to Section 2.2(a) or (ii) an amount of cash, denominated in U.S. dollars, equal to the Fair MarketValue of the foregoing number of shares of Class A Common Stock (a “Cash Payment”). The Administrator may elect in its sole discretionwhether to Settle the RSUs in Class A Common Stock or by a Cash Payment. Any of the foregoing payments or deliveries shall in all instancesbe subject to Sections 4.4 and 4.6.(c)Subject to the provisions of this Article II relating to the number of RSUs that are to be Settled on any applicable Delivery Date and solely to theextent permitted under Section 409A, if applicable, the Corporation may impose such other conditions and procedures in relation to theSettlement of RSUs as it may reasonably determine.Section 2.3. No Dividend Payments. The RSUs granted to the Grantee hereunder do not include the right to receive any dividend payments.ARTICLE IIIRESTRICTIONS ON TRANSFERS AND OTHER LIMITATIONSSection 3.1. Transfer Restrictions on RSUs.(a)The Grantee may not Transfer all or any portion of the Grantee’s RSUs to any Person (including to any Permitted Transferee) without the priorwritten consent of the Administrator, which consent2may be given or withheld, or made subject to such conditions (including the receipt of such legal or tax opinions and other documents that theCorporation may require) as determined by the Administrator.(b)Prior to a Transfer of any RSUs to any Person that the Administrator consents to, such Person must consent in writing to be bound by thisAgreement and deliver such consent to the Administrator.(c)Any purported Transfer of RSUs that is not in accordance with this Section 3.1 is null and void.Section 3.2. Confidentiality and Restrictive Covenant Agreement. The Grantee acknowledges and agrees that the Grantee is bound by and will comply withthe Confidentiality and Restrictive Covenant Agreement contained in Appendix C and any other similar agreements that the Grantee has entered into with theDesignated Service Recipient, the Corporation, KKR Holdings L.P., KKR Holdings II, L.P., KKR Associates Holdings L.P., or any other member of the KKRGroup, as applicable, as such agreements may be amended from time to time. If the Grantee is a limited partner of KKR Holdings L.P., KKR Holdings II, L.P. orKKR Associates Holdings L.P., the Grantee further acknowledges and agrees that references to a Confidentiality and Restrictive Covenant Agreement in thelimited partnership agreements of KKR Holdings L.P., KKR Holdings II L.P. and KKR Associates Holdings L.P. shall be deemed to include the Confidentialityand Restrictive Covenant Agreement contained in Appendix C hereto.Section 3.3. Post-Settlement Transfer Restrictions on Class A Common Stock.The provisions of this Section 3.3 and any references to a Transfer Restricted Class A Common Stock shall not be applicable to the RSUs granted to the Granteehereunder if so indicated on the RSU Grant Certificate. (a)The Grantee may not Transfer all or any portion of the Grantee’s Transfer Restricted Class A Common Stock (as defined below) (including toany Permitted Transferee) without the prior written consent of the Administrator, which consent may be given or withheld, or made subject tosuch conditions (including the receipt of such legal or tax opinions and other documents that the Corporation may require) as determined by theAdministrator. Any permitted transfer pursuant to this Section 3.3(a) shall be made in accordance with Section 3.1.(b)A “Transfer Restricted Class A Common Stock” refers to all Class A Common Stock or Cash Payment delivered upon Settlement of a vestedRSU until (i) the first anniversary of the applicable Service Vesting Date, in the case of 50% of such Class A Common Stock or Cash Paymentand (ii) the second anniversary of such Service Vesting Date, in the case of the remaining 50% of such Class A Common Stock or CashPayment; provided that if the Grantee has given or been given notice of termination of Grantee’s Employment, then the Administrator, in its solediscretion, may direct that any Class A Common Stock or Cash Payment that is then Transfer Restricted Class A Common Stock shall continueto be Transfer Restricted Class A Common Stock until the expiration of the later to occur of the Non-Compete Period (as defined in Appendix C)or the Non-Solicit Period (as defined in Appendix C) applicable to the Grantee, unless an earlier date is selected by the Administrator, in its solediscretion.(c)If the Grantee breaches in any significant or intentional manner, as determined by the Administrator in its sole discretion, any of the Grantee’scovenants in Appendix C, the Administrator, in its sole discretion, may direct that the Grantee forfeit all or a portion of the Transfer RestrictedClass A Common Stock held by the Grantee. If the Grantee’s Employment is terminated for Cause, as determined by the Administrator in itssole discretion, all Transfer Restricted Class A Common Stock held by the Grantee shall automatically be forfeited, unless otherwise determinedby the Administrator, in its sole discretion. The Grantee hereby consents and agrees to immediately surrender and deliver such TransferRestricted Class A Common Stock to the Corporation, without the payment of any consideration, receipt of any further notice or fulfillment ofany other condition. Any forfeiture of Transfer Restricted Class A Common Stock pursuant to this Section 3.3(c) shall require no additionalprocedures on the part of the Corporation or its Affiliates.3(d)Any purported Transfer of Transfer Restricted Class A Common Stock that is not in accordance with this Section 3.3 is null and void. In theevent of a property settlement or separation agreement between the Grantee and his or her spouse, the Grantee agrees that he or she shall usereasonable efforts to retain all of his or her RSUs and Transfer Restricted Class A Common Stock and shall reimburse his or her spouse for anyinterest he or she may have under this Agreement out of funds, assets or proceeds separate and distinct from his or her interest under thisAgreement.Section 3.4. Minimum Retained Ownership Requirement.The provisions of this Section 3.4 shall not be applicable to the RSUs granted to the Grantee hereunder if so indicated on the RSU Grant Certificate.(a)For so long as the Grantee retains his or her Employment, the Grantee (collectively with all Permitted Transferees, if applicable) mustcontinuously hold an aggregate number of Class A Common Stock Equivalents (defined below) that is at least equal to the Minimum RetainedOwnership Percentage of the cumulative amount of (x) all RSUs granted to the Grantee under this Agreement and (y) all other RSUs subject to aminimum retained ownership requirement that have been or are hereafter granted to the Grantee under the Plan, in each case, that have becomevested pursuant to Section 2 (or similar provision in any other applicable grant agreement), prior to any net Settlement permitted by Section 4.6(or similar provision in any other applicable grant agreement).(b)“Class A Common Stock Equivalents” means any combination of: (i) RSUs that are or become vested pursuant to Section 2 of this Agreementand shares of Class A Common Stock delivered upon Settlement of any such RSUs (even if they are Transfer Restricted Class A CommonStock) and (ii) RSUs subject to a minimum retained ownership requirement granted to the Grantee under the Plan that are or become vestedpursuant to a provision similar to Section 2 of this Agreement and shares of Class A Common Stock delivered upon Settlement of any suchRSUs (even if a provision similar to the transfer restrictions on Transfer Restricted Class A Common Stock has not yet been satisfied).(c)Any purported Transfer of any Class A Common Stock that would result in a violation of this Section 3.4 is null and void. Notwithstandinganything to the contrary contained in this Agreement (including, without limitation, Section 4.8) this Section 3.4 shall survive any termination ofthis Agreement.Section 3.5. Waiver of Restrictions. The Administrator may, from time to time, waive the provisions of Section 3.3 or Section 3.4 of this Agreement, subject tothe imposition of any conditions or further requirements, as determined by the Administrator in its sole discretion. Without limiting the foregoing, to the extent theAdministrator waives the application of Section 3.3 or Section 3.4, (i) equivalent restrictions on the Grantee’s other equity, if any, held in KKR Holdings L.P.,KKR Holdings II L.P., the Corporation or any of their respective Affiliates (or any of their respective equity incentive plans) may be imposed and (ii) the Granteehereby consents in advance to the imposition of such equivalent restrictions for purposes of the governing documents of Grantee’s other equity, if any, held in KKRHoldings L.P., KKR Holdings II L.P., the Corporation or any of their respective Affiliates (or any of their respective equity incentive plans).ARTICLE IVMISCELLANEOUSSection 4.1. Governing Law. This Agreement and RSU Grant Certificate shall be governed by, and construed in accordance with, the laws of the State of NewYork, United States of America, without giving effect to any otherwise governing principles of conflicts of law that would apply the Laws of another jurisdiction.Section 4.2. Plan. The terms and provisions of the Plan are incorporated herein by reference. In the event of a conflict or inconsistency between the terms andprovisions of the Plan and the provisions of this Agreement, the Plan shall govern and control.4Section 4.3. Arbitration. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE U.S. FEDERAL AND STATE COURTSLOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THEPROVISIONS OF THIS SECTION 4.3, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATIONARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Any controversy or claim arising out of or relating to this Agreement (or thebreach thereof) shall be settled by arbitration conducted by a single arbitrator in New York, New York in accordance with the then-existing Rules of Arbitration ofthe International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within 30 days of the receipt of the request forarbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the Englishlanguage. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitrators shall have the authority toaward any remedy or relief that a court of competent jurisdiction could order or grant, including, without limitation, the issuance of an injunction. However, eitherparty may, without inconsistency with this arbitration provision, bring an action or special proceeding in any court of competent jurisdiction for the purpose ofcompelling the other party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, or enforcing an arbitration award. The Granteeirrevocably appoints the Secretary or General Counsel of the Corporation as such Grantee’s agent for service of process in connection with any such action orproceeding and agrees that service of process upon such agent, who shall promptly advise such Grantee of any such service of process, shall be deemed in everyrespect effective service of process upon the Grantee in any such action or proceeding. Except as necessary in court proceedings to enforce this arbitrationprovision or an award rendered hereunder, to obtain interim relief or as otherwise required by law, neither a party nor an arbitrator may disclose the content orresults of any arbitration hereunder without the prior written consent of the Corporation and the Grantee, other than general statements.Section 4.4. Remedies; Recoupment; Right to Set-Off.(a)The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude orwaive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law orunder the terms of any other applicable agreement.(b)To the extent required or advisable, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules promulgatedthereunder and any other similar Laws including, as applicable, but not limited to the European Directives 2011/61/EU, 2013/36/EU and2014/91/EU, the Administrator may specify in any other document or a policy to be incorporated into this Agreement by reference, that theGrantee’s rights, payments, and benefits with respect to RSUs awarded hereunder and/or Class A Common Stock delivered to the Grantee inrespect of RSUs awarded hereunder shall be subject to reduction, cancellation, forfeiture or recoupment.(c)The Grantee further acknowledges and agrees that KKR Group shall have the right to clawback, forfeit, cancel, recoup, reduce or set-off anydistribution or payment that is due or payable (or that the Administrator reasonably determines may become due or payable) to the Granteepursuant to any agreement with the KKR Group (including but not limited to partnership agreements of KKR Holdings L.P., KKR Holdings IIL.P. and KKR Associates Holdings L.P.) or otherwise for the purpose of fulfilling any present or future obligation or liability of whatever nature(whether matured or unmatured, absolute or contingent) that the Grantee has to make (or that the Administrator reasonably determines maybecome such an obligation or liability to make) any payment or contribution to the KKR Group, regardless of whether the payment orcontribution is currently due or payable, or may be due or payable in the future, whether in advance of or without adjudication (provided that theAdministrator must act in good faith when determining any contribution or payment that may become due or payable as a result of damage to theKKR Group arising from a breach by Grantee of any of Grantee’s agreements with the KKR Group or other wrongdoing), and notwithstandingany other agreements between the Grantee and the KKR Group entered into prior to the date hereof.Section 4.5. Amendments and Waivers.5(a)This Agreement (including the RSU Grant Certificate and Appendices A through D attached hereto, as applicable) may be amended,supplemented, waived or modified only in accordance with Section 4(b) of the Plan or Section 13 of the Plan, as applicable, or as may berequired for purposes of compliance or enforceability with applicable local Law; provided, however, that the RSU Grant Certificate shall bedeemed amended from time to time to reflect any adjustments provided for under the Plan.(b)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of timespecified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof orthe exercise of any other right, power or privilege.Section 4.6. Withholding.(a) The provisions of Section 4(d) of the Plan are incorporated herein by reference and made a part hereof. Regardless of any action the Corporationor the Designated Service Recipient takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee (“Tax-Related Items”), the Grantee acknowledges that theultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and may exceed the amount, if any, actually withheld by the Corporation orthe Designated Service Recipient. The Grantee further acknowledges that the Corporation and/or the Designated Service Recipient (1) make no representations orundertakings regarding the treatment of any Tax-Related Items and (2) are under no obligation to structure the terms of the RSUs to reduce or eliminate theGrantee’s liability for Tax-Related Items or achieve any particular tax result. Furthermore, if the Grantee is subject to tax in more than one jurisdiction, the Granteeacknowledges that the Corporation and the Designated Service Recipient (or former Designated Service Recipient) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. The Corporation may refuse to issue or deliver Class A Common Stock, the Cash Payment or the proceeds of the saleof Class A Common Stock, if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items as set forth in this Section 4.6.(b) Prior to any relevant taxable or tax withholding event, as applicable, the Grantee will pay or make adequate arrangements satisfactory to theCorporation and/or the Designated Service Recipient to satisfy all Tax-Related Items. In this regard, the Grantee authorizes the Corporation and/or the DesignatedService Recipient or their respective agents to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:(i)withholding from the Cash Payment, the Grantee’s wages or other cash compensation paid to the Grantee by the Corporation and/or theDesignated Service Recipient; or(ii)withholding from proceeds of the sale of Class A Common Stock delivered upon Settlement of the RSUs either through a voluntary saleor through a mandatory sale arranged by the Corporation (on the Grantee’s behalf pursuant to this authorization); or(iii)withholding in Class A Common Stock to be delivered upon Settlement of the RSUs.The Corporation may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicablewithholding rates, including maximum applicable rates in the Grantee’s jurisdiction(s), in which case the Grantee may receive a refund of any over-withheldamount in cash and will have no entitlement to the equivalent in Class A Common Stock. If the obligation for Tax-Related Items is satisfied by withholding inClass A Common Stock, the Grantee is deemed to have been issued the full number of shares of Class A Common Stock subject to the Settled Class A CommonStock, notwithstanding that a number of shares of Class A Common Stock are held back solely for the purpose of paying the Tax-Related Items. Finally, theGrantee shall pay to the Corporation or the Designated Service Recipient any amount of Tax-Related Items that the Corporation or the Designated ServiceRecipient may be required to withhold or account for as a result of the Grantee’s participation in the Plan that cannot be satisfied by the means previouslydescribed.6Section 4.7. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed tohave been duly given upon receipt) by delivery in person, by courier service, by fax or by registered or certified mail (postage prepaid, return receipt requested) tothe respective parties at the following addresses (or at such other address for a party as shall be specified):(a)If to the Corporation, to: KKR & Co. Inc.9 West 57th Street, Suite 4200New York, New York 10019U.S.A. Attention: General Counsel and Secretary(b)If to the Grantee, to the most recent address for the Grantee in the books and records of the Corporation or the Designated Service Recipient, asapplicable.Section 4.8. Entire Agreement; Termination of Agreement; Survival.(a)This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prioragreements and understandings, whether oral or written, pertaining thereto. The Grantee acknowledges that the grant of RSUs provided for underthis Agreement is in full satisfaction of any and all grants of equity or equity-based awards that representatives of the Corporation or itsAffiliates, on or prior to the date hereof, may have informed the Grantee that such Grantee is entitled to receive.(b)This Agreement shall terminate when the Grantee and all Permitted Transferees cease to hold any of the RSUs or Transfer Restricted Class ACommon Stock that have been granted or delivered, as applicable, hereunder. Notwithstanding anything to the contrary herein, this Article IVshall survive any termination of this Agreement.Section 4.9. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, orpublic policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance ofthe transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapableof being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in amutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.Section 4.10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement,their successors, executors, administrators, heirs, legal representatives and assigns.Section 4.11. Appendices. Appendices A, B, C and D constitute part of this Agreement. Notwithstanding the provisions of this Article IV, the provisions ofSections 10 through 19 (inclusive) of Appendix C shall govern solely with respect to, and shall be applicable only to the interpretation, administration andenforcement of the provisions of Appendix C, but not to any other provisions of this Agreement or any other Appendix.Section 4.12. Further Assurances. The Grantee shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate tocarry out the purposes and intent of this Agreement.Section 4.13. Section 409A; Employment with Designated Service Recipient.(a)This Section 4.13(a) applies to Grantees who are U.S. tax residents (such as, a U.S. citizen, green card holder or a U.S. tax resident under thesubstantial presence test) to the extent applicable. All7references to any “separation from service” or termination of the Employment of or the services to be provided by the Grantee, shall be deemedto refer to a “separation from service” within the meaning of Section 409A, if applicable. Notwithstanding anything herein to the contrary, (i) ifat the time of the Grantee’s termination of Employment the Grantee is a “specified employee” as defined in Section 409A of the Code and thedeferral of the commencement of any payments or delivery of Class A Common Stock otherwise payable or provided hereunder as a result ofsuch termination of employment is necessary in order to prevent any accelerated or additional tax under Section 409A, then, to the extent thatSection 409A applies to the RSUs, the Corporation will defer the commencement of the payment of any such payments or delivery hereunder(without any reduction in such payments or delivery of Class A Common Stock ultimately paid or provided to the Grantee) until the date that issix months following the Grantee’s termination of Employment (or the earliest date as is permitted under Section 409A) and (ii) if any otherpayments or other deliveries due to the Grantee hereunder could cause the application of an accelerated or additional tax under Section 409A,such payments or other deliveries shall be deferred if deferral will make such payment or other delivery compliant under Section 409A, orotherwise such payment or other delivery shall be restructured, to the extent possible, in a manner, determined by the Administrator, that doesnot cause such an accelerated or additional tax. The Corporation shall use commercially reasonable efforts to implement the provisions of thisSection 4.13(a) in good faith; provided that none of the Corporation, the Administrator nor any of the Corporation’s or KKR Group’s, asapplicable, employees, directors or representatives shall have any liability to the Grantee with respect to this Section 4.13(a).(b)Nothing in this Agreement shall be deemed to obligate the Corporation, Designated Service Recipient or any other member of the KKR Group,as applicable, to employ the Grantee in any capacity whatsoever or to prohibit or restrict the Corporation, Designated Service Recipient or anyother member of the KKR Group, as applicable, from terminating the Grantee’s Employment at any time or for any reason whatsoever, with orwithout Cause.Section 4.14. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by thedifferent parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shallconstitute one and the same agreement. Copies of executed counterparts transmitted by telecopy or other electronic transmission service shall be consideredoriginal executed counterparts for purposes of this Agreement.[Rest of page intentionally left blank]8IN WITNESS WHEREOF, the Corporation has executed this Agreement as of the date specified under the signature of the Grantee. KKR & CO. INC.By:Name:Title:9IN WITNESS WHEREOF, the undersigned Grantee has caused this counterpart signature page to this Agreement to be duly executed as of the date specifiedunder the signature of the Grantee. “GRANTEE”Electronic SignatureName: Participant NameDated: Grant Date10APPENDIX ADEFINITIONSIn addition to the defined terms set forth in the Plan, the following terms shall have the following meanings for purposes of the Agreement:“Cause” means, with respect to the Grantee, the occurrence or existence of any of the following as determined fairly on an informed basis and in good faith by theAdministrator: (i) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct by the Grantee against any member of the KKR Group(including the Corporation) or a Portfolio Company (as defined below), (ii) a Regulatory Violation that has a material adverse effect on (x) the business of anymember of the KKR Group or (y) the ability of the Grantee to function as an employee, associate or in any similar capacity (including consultant) with respect tothe KKR Group, taking into account the services required of the Grantee and the nature of the business of the KKR Group, or (iii) a material breach by the Granteeof a material provision of any Written Policies & Agreements or the deliberate failure by the Grantee to perform the Grantee’s duties to the KKR Group, providedthat in the case of this clause (iii), the Grantee has been given written notice of such breach or failure within 45 days of the KKR Group becoming aware of suchbreach or failure and, where such breach or failure is curable, the Grantee has failed to cure such breach or failure within (A) 15 days of receiving notice thereof or(B) such longer period of time, not to exceed 30 days, as may be reasonably necessary to cure such breach or failure provided that the Grantee is then workingdiligently to cure such breach or failure; and provided further, that if such breach or failure is not capable of being cured, the notice given to the Grantee maycontain a date of termination that is earlier than 15 days after the date of such notice.“Designated Service Recipient” means any member of the KKR Group that employs the Grantee or with which the Grantee is similarly associated.“Disability” means, as to any Person, such Person’s inability to perform in all material respects such Person’s duties and responsibilities to the KKR Group byreason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutivemonths or (ii) such shorter period as the Administrator may reasonably determine in its sole discretion.“Employment” means the Grantee’s employment (including any similar association determined by the Administrator to constitute employment for purposes of thisAgreement) with the Designated Service Recipient or any other member of the KKR Group.“Group Partnership” means KKR Group Partnership L.P., a Cayman Island exempted limited partnership, along with its successor and any other legal entitydesignated in the future as a “Group Partnership” by the Corporation. “KKR Group” means (i) the Corporation and KKR Management LLP (and its successors), (ii) any direct or indirect subsidiaries of the Corporation, including butnot limited to the Group Partnership and its direct and indirect subsidiaries (not including Portfolio Companies), (iii) KKR Holdings L.P. and KKR AssociatesHoldings L.P., their respective general partners, and the direct or indirect subsidiaries of KKR Holdings L.P. and KKR Associates Holdings L.P., respectively, and(iv) any investment fund, account or vehicle that is managed, advised or sponsored by any member of the KKR Group (the “Funds”).“Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by anynational, supranational, state, federal, provincial, local or municipal government or any administrative or regulatory body with authority therefrom with jurisdictionover the Corporation or any Grantee, as the case may be.“Minimum Retained Ownership Percentage” means the percentage set forth on the RSU Grant Certificate.“Permitted Transferee” means (A) any person who is a “family member” of the Grantee, as such term is used in the instructions to Form S-8 under the SecuritiesAct of 1933, as amended, or any successor form of registration statement promulgated by the Securities and Exchange Commission (collectively, the “ImmediateFamily Members”); (B) a trust solely for the benefit of the Grantee and his or her Immediate Family Members; (C) a partnership or limitedA-1liability company whose only partners or stockholders are the Grantee and his or her Immediate Family Members; (D) a beneficiary to whom donations areeligible to be treated as “charitable contributions” for federal income tax purposes; or (E) any other Person the Administrator consents to.“Person” means any individual, corporation, partnership, limited liability company, trust, joint stock company, business trust, unincorporated association, jointventure, governmental authority or other entity of any nature whatsoever.“Portfolio Company” means any portfolio companies, joint ventures or affiliated investments that are held as such by the KKR Group.“Regulatory Violation” means, with respect to the Grantee (i) a conviction of the Grantee based on a trial or by an accepted plea of guilt or nolo contendere of anyfelony or misdemeanor crime involving moral turpitude, false statements, misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery, (ii)a final determination by any court of competent jurisdiction or governmental regulatory body (or an admission by the Grantee in any settlement agreement) that theGrantee has violated any U.S. federal or state or comparable non-U.S. securities laws, rules or regulations or (iii) a final determination by self-regulatoryorganization having authority with respect to U.S. federal or state or comparable non-U.S. securities laws, rules or regulations (or an admission by the Grantee inany settlement agreement) that the Grantee has violated the written rules of such self-regulatory organization that are applicable to any member of the KKR Group.“Retirement” means the resignation by the Grantee of the Grantee’s Employment with the KKR Group (other than for Cause), on or after the date that theGrantee’s age, plus the Grantee’s years of Employment with the KKR Group equals at least 80.“Retirement RSUs” means, with respect to any Grantee whose Employment terminates due to Retirement, any RSUs with a Service Vesting Date that would, ifthe Grantee’s Employment were not so terminated, occur within two years after the date of such termination due to Retirement.“RSU Grant Certificate” means the RSU Grant Certificate delivered to the Grantee and attached to this Agreement, as the same may be modified pursuant toSection 4.5(a) of the Agreement.“Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as the same may be amended from time to time, and the applicable regulations,including temporary regulations, promulgated under such Section, as such regulations may be amended from time to time (including corresponding provisions ofsucceeding regulations).“Service Vesting Date” means, with respect to any RSU, the date set forth in the RSU Grant Certificate as the “Service Vesting Date.”“Settle”, “Settled” or “Settlement” means the discharge of the Corporation’s obligations in respect of an RSU through the delivery to the Grantee of (i) Class ACommon Stock or (ii) a Cash Payment, in each case in accordance with Article II. “Transfer” or “Transferred” means with respect to any RSU or Class A Common Stock, as applicable, any (i) sale, assignment, transfer or other dispositionthereof or any interests therein or rights attached thereto, whether voluntarily or by operation of Law, or (ii) creation or placement of any mortgage, claim, lien,encumbrance, conditional sales or other title retention agreement, right of first refusal, preemptive right, pledge, option, charge, security interest or other similarinterest, easement, judgment or imperfection of title of any nature whatsoever.“Written Policies & Agreements” means the written policies of the KKR Group included in its employee manual, code of ethics and confidential information andinformation barrier policies and procedures and other documents relating to the Grantee’s Employment with the KKR Group, as applicable, and any agreementsbetween the Grantee and a member of the KKR Group relating to the Grantee’s Employment with the KKR Group, including but not limited to an employmentagreement, if any, and the Confidentiality and Restrictive Covenant Agreement.A-2APPENDIX BADDITIONAL TERMS AND CONDITIONSAPPENDIX CCONFIDENTIALITY AND RESTRICTIVE COVENANT OBLIGATIONSAPPENDIX D GRANTEE CONSENT EXHIBIT 10.28RESTRICTED HOLDINGS UNIT GRANT CERTIFICATEUNDER THE KKR & CO. INC. 2019 EQUITY INCENTIVE PLAN(EXECUTIVE)Pursuant to this Restricted Holdings Unit Grant Certificate (this “Certificate”), the Restricted Holdings Unit Agreement (as attached hereto) (the“Restricted Holdings Unit Agreement”) and the KKR & Co. Inc. 2019 Equity Incentive Plan (as may be amended from time to time, the “Plan”): (i) KKR GroupPartnership L.P., a Cayman Islands exempted limited partnership (“KKR Group Partnership”), hereby issues the number of unvested profits interests in KKRGroup Partnership, in the form of KKR Group Partnership Class P units (“Class P Units”), set forth below to KKR Holdings II L.P., a Cayman Islands exemptedlimited partnership (“Holdings II”); (ii) Holdings II hereby issues an equal number of unvested profits interests in Holdings II, in the form of Holdings II Class Aunits (“Holdings II Units” and, together with the related Class P Units (or Class A Units upon automatic conversion, as applicable), “Restricted Units”), to theGrantee; and (iii) KKR & Co. Inc. (the “Corporation”) hereby grants an equal number of stock exchange rights (“SERs” and, together with the related RestrictedUnits, the “Restricted Holdings Units” or “RHUs”) to the Grantee. The RHUs are subject to all of the terms and conditions set forth herein, and in the LimitedPartnership Agreement of KKR Group Partnership, the Limited Partnership Agreement of Holdings II and the Restricted Holdings Unit Agreement, as applicable. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Restricted Holdings Unit Agreement (including Appendix A to the RestrictedHoldings Unit Agreement) and the Plan. Grantee:Participant Name Date of Grant:Grant Date Number of RHUs:Number of Units Granted Vesting Schedule:The following sets forth each applicable Service Vesting Date upon which the RestrictedUnits granted hereunder shall become vested, subject to the Grantee’s continuedEmployment through each such date and other terms and conditions contained in theattached Restricted Holdings Unit Agreement.Percentage of Vesting:Applicable Service Vesting Date: Post-Vesting Transfer Restrictions under Section 3.3 of theRestricted Holdings Unit Agreement:☐ Applicable ☐ Inapplicable Minimum Retained Ownership Percentage under Section 3.4 of theRestricted Holdings Unit Agreement: ☐ Applicable ☐ InapplicableMinimum Retained Ownership Percentage if applicable: %* * *THE UNDERSIGNED GRANTEE ACKNOWLEDGES RECEIPT OF THIS RESTRICTED HOLDINGS UNIT GRANT CERTIFICATE, THERESTRICTED HOLDINGS UNIT AGREEMENT AND THE PLAN, AND, AS AN EXPRESS CONDITION TO THE GRANT OF RESTRICTEDHOLDINGS UNITS HEREUNDER, AGREES TO BE BOUND BY THE TERMS OF THIS RESTRICTED HOLDINGS UNIT GRANT CERTIFICATE,THE RESTRICTED HOLDINGS UNIT AGREEMENT AND THE PLAN.KKR GROUP PARTNERSHIP L.P.,by KKR Group Holdings Corp, its general partner GRANTEE Electronic SignatureBy: Name: Participant NameTitle: Date: Grant Date KKR HOLDINGS II L.P.,by KKR Group Holdings Corp, its general partner By: Title: KKR & CO. INC. By:Title:RESTRICTED HOLDINGS UNIT AGREEMENTUNDER THE KKR & CO. INC. 2019 EQUITY INCENTIVE PLANPursuant to the Restricted Holdings Unit Grant Certificate (the “RHU Grant Certificate”) delivered to the Grantee (as defined in the RHU GrantCertificate), and subject to the terms of this Restricted Holdings Unit Agreement (this “Agreement”), the Limited Partnership Agreement of KKR GroupPartnership (as defined below), the Limited Partnership Agreement of Holdings II (as defined below) and the KKR & Co. Inc. 2019 Equity Incentive Plan (asamended from time to time, the “Plan”), KKR & Co. Inc. (the “Corporation”), KKR Holdings II L.P. (“Holdings II”), KKR Group Partnership L.P. (“KKRGroup Partnership”) and the Grantee agree as follows. The RHU Grant Certificate is incorporated into and deemed a part of this Agreement.This Agreement sets forth the terms and conditions of one or more tandem awards of (i) unvested profits interests in KKR Group Partnership, pursuant tothe Limited Partnership Agreement of KKR Group Partnership, in the form of KKR Group Partnership Class P units (“Class P Units”), (ii) unvested profitsinterests in Holdings II, pursuant to the Limited Partnership Agreement of Holdings II, in the form of Holdings II Class A units (“Holdings II Units” and, togetherwith the related Class P Units (or Class A Units upon automatic conversion, as applicable), “Restricted Units”) and (iii) stock exchange rights (“SERs”) issued bythe Corporation pursuant to the Plan . Each tandem award of Class P Units, Holdings II Units and SERs is herein referred to as a “Restricted Holdings Unit” oran “RHU.” The Limited Partnership Agreement of KKR Group Partnership and the Limited Partnership Agreement of Holdings II are herein referred to as the“Operating Agreements.” Capitalized terms not otherwise defined herein or in Appendix A (attached hereto) shall have the meaning set forth in the Plan. ARTICLE IGRANT OF RESTRICTED HOLDINGS UNITS Section 1.1. Grant of Restricted Holdings Units. Subject to the terms and conditions set forth herein and in the Operating Agreements and the Plan, (i) KKR Group Partnership hereby grants to HoldingsII the number of Class P Units set forth in the RHU Grant Certificate, (ii) Holdings II hereby grants to the Grantee the number of Holdings II Units set forth in theRHU Grant Certificate and (iii) the Corporation hereby grants to the Grantee the number of SERs set forth in the RHU Grant Certificate. The grant of RHUshereunder is conditioned upon the Grantee’s (a) agreement to and compliance with the covenants and obligations contained in the confidentiality and restrictivecovenant obligations, attached hereto as Appendix B (the “Confidentiality and Restrictive Covenant Agreement”) and incorporated herein by reference and (b)execution of a supplement to the Limited Partnership Agreement of Holdings II, attached hereto as Appendix C. ARTICLE IIVESTING AND EXCHANGE OF RESTRICTED HOLDINGS UNITS Section 2.1. Vesting of Restricted Units. (a)Subject to the terms and conditions contained herein and in the Operating Agreements, the Restricted Units shall vest as provided in the RHUGrant Certificate and this Section 2.1. (i)Subject to the Grantee’s continued Employment through the Service Vesting Date(s) as specified in the RHU Grant Certificate, theRestricted Units shall become vested on such date(s) as to the percentage(s) set forth in the RHU Grant Certificate. (ii)If, prior to the date the Restricted Units are vested or such Restricted Units otherwise terminate and are forfeited: (A) the Grantee’sEmployment terminates due to the Grantee’s Retirement, then all Retirement Restricted Units shall be vested; (B) the Grantee dies orexperiences a Disability, then all unvested Restricted Units shall be vested; and (C) a Change in Control occurs prior to any terminationof the Grantee’s Employment, then all or any portion of any unvested Restricted Units may be vested, subject, in each case of clause(A), (B) or (C), to the discretion of the Administrator. Notwithstanding the foregoing, if the Corporation receives an opinion of counselthat there has been a legal 1judgment or legal development in the Grantee’s jurisdiction that would likely result in the favorable treatment applicable to theRetirement Restricted Units pursuant to this Section 2.1(a)(ii) being deemed unlawful or discriminatory, then the Corporation will notapply the favorable treatment at the time the Grantee’s Employment terminates due to the Grantee’s Retirement under clause (A) above,and the Restricted Units will be treated as set forth in Section 2.1(a)(i), 2.1(b), 2.1(c) or the other provisions of this Section 2.1(a)(ii), asapplicable.(b)If the Grantee’s Employment terminates for any reason other than due to the Grantee’s death, Disability or Retirement, all then unvestedRestricted Units (including any Restricted Units that are not Retirement Restricted Units) and all corresponding SERs shall immediatelyterminate and be forfeited without consideration, and no exchange of such unvested Restricted Units for shares of Class A Common Stockpursuant to Section 2.2 shall occur. (c)Unless otherwise agreed in writing between the Grantee and the Corporation or as otherwise determined by the Administrator at the time of grantor otherwise, the right to vest in the Restricted Units, if any, will terminate effective as of the date that the Grantee is no longer activelyproviding services (even if still considered employed or engaged under local Law) and will not be extended by any notice period mandated underlocal Law (e.g., active Employment would not include a period of “garden leave” or similar period pursuant to local Law) (a “ServiceTermination”), and all unvested Restricted Units and corresponding SERs shall immediately be forfeited upon such date. (d)Once a Class P Unit is vested and becomes an Equitized Class P Series Unit (as defined in the Limited Partnership Agreement of KKR GroupPartnership), it shall be automatically converted into a Class A Unit pursuant to the terms of the Limited Partnership Agreement of KKR GroupPartnership. Section 2.2. Exercise of SERs and Exchange of Restricted Units. (a)To the extent that a Holdings II Unit becomes vested and the related Class P Unit has become a vested and Equitized Class P Unit (as defined inthe Limited Partnership Agreement of KKR Group Partnership) and automatically converted to a Class A Unit pursuant to the terms of theLimited Partnership Agreement of KKR Group Partnership, the Grantee may elect to exercise the corresponding SER to (i) receive fromHoldings II a Class A Unit underlying the Holdings II Unit in connection with the redemption thereof, and (ii) exchange such Class A Unit for ashare of Class A Common Stock, in each case, on a one-for-one basis, subject to customary conversion rate adjustments for splits, unitdistributions and reclassifications (the “Exchange”). Restricted Units may be exchanged on a quarterly basis, pursuant to the exchangeprocedures set forth in the Exchange Agreement, as such exchange procedures would apply to a “KKR Holdings Affiliated Person” (as definedtherein), which exchange procedures shall apply to the Exchanges contemplated in this Section 2.2 as if directly incorporated into thisAgreement. The Administrator shall have the sole discretion to impose policies and procedures for any Exchange and any sale of shares of ClassA Common Stock received by the Grantee in the Exchange. The date on which any Restricted Unit is to be Exchanged hereunder is referred toas an “Exchange Date.” (b)On any Exchange Date, each vested Holdings II Unit subject to the Exchange shall be cancelled and each related Class A Unit shall betransferred to the Corporation or its designated subsidiary in exchange for the Corporation delivering, or causing to be delivered by theDesignated Service Recipient, to the Grantee either (i) the number of shares of Class A Common Stock equal to the number of Restricted Unitsthat are subject to the Exchange on such Exchange Date pursuant to Section 2.2(a), subject to customary conversion rate adjustments for splits,unit distributions and reclassifications or (ii) an amount of cash, denominated in U.S. dollars, equal to the Fair Market Value of the foregoingnumber of shares of Class A Common Stock (a “Cash Payment”). The Administrator may elect in its sole discretion whether to Exchange theRestricted Units for shares 2of Class A Common Stock or for a Cash Payment. The delivery of shares of Class A Common Stock or Cash Payment to the Grantee shall bemade as soon as administratively practicable on or following the applicable Exchange Date (or next permissible trading window of Class ACommon Stock). Any of the foregoing payments or deliveries shall in all instances be subject to Sections 4.4 and 4.6.(c)Subject to the provisions of this Article II relating to the number of shares of Class A Common Stock that are to be delivered or Cash Paymentthat is to be paid on any applicable delivery date and solely to the extent permitted under Section 409A, if applicable, the Corporation mayimpose such other conditions and procedures in relation to such delivery or payment as it may reasonably determine. (d)To the extent (i) the Grantee’s Employment terminates or the Grantee undergoes a Service Termination, in either case, for any reason, and (ii)any Holdings II Unit becomes, or has become, vested and the related Class P Unit becomes, or has become, a vested and Equitized Class P SeriesUnit (as defined in the Limited Partnership Agreement of KKR Group Partnership) and automatically converted to a Class A Unit pursuant to theterms of the Limited Partnership Agreement of KKR Group Partnership, the Administrator may, in its sole discretion, elect to exercise thecorresponding SER and force an Exchange without any action on the part of the Grantee or the Grantee’s consent (a “Forced Exchange”). Inthe event of a Forced Exchange, each vested Holdings II Unit subject to the Exchange shall be cancelled and each related Class A Unit shall betransferred to the Corporation or its designated subsidiary in exchange for the Corporation delivering, or causing to be delivered by theDesignated Service Recipient, to the Grantee either (A) the number of shares of Class A Common Stock equal to the number of Restricted Unitsthat are subject to the Exchange on such Exchange Date pursuant to this Section 2.2(d), subject to customary conversion rate adjustments forsplits, unit distributions and reclassifications or (B) a Cash Payment, as determined by the Administrator, in its sole discretion. The delivery ofshares of Class A Common Stock or Cash Payment to the Grantee shall be made as soon as administratively practicable on or following theapplicable Exchange Date (or next permissible trading window of Class A Common Stock). Any of the foregoing payments or deliveries shall inall instances be subject to Sections 4.4 and 4.6. Section 2.3. Dividend and Distribution Payments. The RHUs granted to the Grantee hereunder do not include the right to receive any dividend payments withrespect to the Class A Common Stock. Any Distribution paid by KKR Group Partnership to Holdings II with respect to Class A Units held by Holdings II shall beallocated and payable by Holdings II to the Grantee of the Restricted Units corresponding to such Class A Units as provided in the Operating Agreements. ARTICLE IIIRESTRICTIONS ON TRANSFERS AND OTHER LIMITATIONS Section 3.1. Transfer Restrictions on Holdings II Units and Stock Exchange Rights. (a)The Grantee may not Transfer all or any portion of the Grantee’s Holdings II Units or SERs to any Person (including to any PermittedTransferee) without the prior written consent of the Administrator, which consent may be given or withheld, or made subject to such conditions(including the receipt of such legal or tax opinions and other documents that the Corporation may require) as determined by the Administrator. (b)Prior to a Transfer of any Holdings II Units or SERs to any Person that the Administrator consents to, such Person must consent in writing to bebound by this Agreement and deliver such consent to the Administrator. (c)Any purported Transfer of Holdings II Units or SERs that is not in accordance with this Section 3.1 or which would cause Holdings II or theKKR Group Partnership to be treated as a “publicly traded 3partnership”, as defined in Section 7704 of the U.S. Internal Revenue Code of 1986, as amended, is null and void.(d)Transfers of Holdings II Units shall be subject to further conditions and/or restrictions, if any, set forth in the Limited Partnership Agreement ofHoldings II. Section 3.2. Confidentiality and Restrictive Covenant Agreement. The Grantee acknowledges and agrees that the Grantee is bound by and will comply withthe Confidentiality and Restrictive Covenant Agreement contained in Appendix B and any other similar agreements that the Grantee has entered into with theDesignated Service Recipient, the Corporation, KKR Holdings L.P., KKR Associates Holdings L.P., or any other member of the KKR Group, as applicable, assuch agreements may be amended from time to time. If the Grantee is a limited partner of KKR Holdings L.P. or KKR Associates Holdings L.P., the Granteefurther acknowledges and agrees that references to a Confidentiality and Restrictive Covenant Agreement in the limited partnership agreements of KKR HoldingsL.P. and KKR Associates Holdings L.P. shall be deemed to include the Confidentiality and Restrictive Covenant Agreement contained in Appendix B hereto. Section 3.3. Post-Vesting Transfer Restrictions. The provisions of this Section 3.3 and any references to a Transfer-Restricted Unit shall not be applicable to the Holdings II Units or SERs granted to the Granteehereunder if so indicated on the RHU Grant Certificate. (a)The Grantee may not Transfer or Exchange all or any portion of the Grantee’s Transfer-Restricted Units (as defined below) (including to anyPermitted Transferee) without the prior written consent of the Administrator, which consent may be given or withheld, or made subject to suchconditions (including the receipt of such legal or tax opinions and other documents that the Corporation may require) as determined by theAdministrator. Any permitted transfer pursuant to this Section 3.3(a) shall be made in accordance with Section 3.1. No Class A Unit or Class PUnit corresponding to a Transfer-Restricted Unit may be exchanged for a share of Class A Common Stock pursuant to the Exchange. (b)A “Transfer-Restricted Unit” refers to all Holdings II Units and corresponding SERs held by the Grantee until [(i) the first anniversary of theapplicable Service Vesting Date, in the case of [ ]% of such Holdings II Units and corresponding SERs and (ii) the second anniversary ofsuch Service Vesting Date, in the case of the remaining [ ]% of such Holdings II Units and corresponding SERs]; provided that if theGrantee has given or been given notice of termination of Grantee’s Employment, then the Administrator, in its sole discretion, may direct thatany Holdings II Units and corresponding SERs that is then Transfer Restricted Units shall continue to be Transfer Restricted Units until theexpiration of the later to occur of the Non-Compete Period (as defined in Appendix B) or the Non-Solicit Period (as defined in Appendix B)applicable to the Grantee, unless an earlier date is selected by the Administrator, in its sole discretion. (c)If the Grantee breaches in any significant or intentional manner, as determined by the Administrator in its sole discretion, any of the Grantee’scovenants in Appendix B, the Administrator, in its sole discretion, may direct that the Grantee forfeit all or a portion of the Transfer-RestrictedUnits held by the Grantee, in which case all related Class P Units (or Class A Units upon automatic conversion) held by Holdings II shall also beforfeited. If the Grantee’s Employment is terminated for Cause, as determined by the Administrator in its sole discretion, all Transfer-RestrictedUnits held by the Grantee shall automatically be forfeited together with all related Class P Units (or Class A Units upon automatic conversion)held by Holdings II, unless otherwise determined by the Administrator, in its sole discretion. The Grantee hereby consents and agrees toimmediately surrender and deliver such Transfer-Restricted Units to the Corporation, or its designee, without the payment of any consideration,receipt of any further notice or fulfillment of any other condition. Any forfeiture of Transfer-Restricted Units pursuant to this Section 3.3(c)shall require no additional procedures on the part of the Corporation, Holdings II, KKR Group Partnership or any of their Affiliates.4(d)Any purported Transfer or Exchange of Transfer-Restricted Units that is not in accordance with this Section 3.3 is null and void. In the event ofa property settlement or separation agreement between the Grantee and his or her spouse, the Grantee agrees that he or she shall use reasonableefforts to retain all of his or her Holdings II Units and SERs and shall reimburse his or her spouse for any interest he or she may have under thisAgreement out of funds, assets or proceeds separate and distinct from his or her interest under this Agreement. Section 3.4. Minimum Retained Ownership Requirement. The provisions of this Section 3.4 shall not be applicable to the Holdings II Units or SERs granted to the Grantee hereunder if so indicated on the RHU GrantCertificate.(a)For so long as the Grantee retains his or her Employment, the Grantee (collectively with all Permitted Transferees, if applicable) mustcontinuously hold an aggregate number of Class A Common Stock Equivalents (defined below) that is at least equal to the Minimum RetainedOwnership Percentage of the cumulative amount of (x) all Holdings II Units granted to the Grantee under this Agreement and (y) all otherHoldings II Units subject to a minimum retained ownership requirement that have been or are hereafter granted to the Grantee under theOperating Agreements and the Plan, in each case, that have become vested pursuant to Section 2 (or similar provision in any other applicablegrant agreement), prior to any Exchange permitted by Section 2.2 (or similar provision in any other applicable grant agreement).(b)“Class A Common Stock Equivalents” means any combination of: (i) Holdings II Units that are or become vested pursuant to Section 2 of thisAgreement (even if they are Transfer-Restricted Units) but not exchanged and shares of Class A Common Stock delivered upon Exchange ofsuch Holdings II Units and not designated for sale and (ii) Holdings II Units subject to a minimum retained ownership requirement granted to theGrantee under the Operating Agreements and the Plan that are or become vested pursuant to a provision similar to Section 2 to this Agreement(even if a provision similar to the transfer restrictions on the Transfer-Restricted Units has not yet been satisfied) but not exchanged and shares ofClass A Common Stock delivered upon Exchange of such Holdings II Units and not designated for sale. (c)Any purported Transfer or Exchange of any Holdings II Units or Class A Common Stock that would result in a violation of this Section 3.4 isnull and void. Notwithstanding anything to the contrary contained in this Agreement (including, without limitation, Section 4.8) this Section 3.4shall survive any termination of this Agreement. Section 3.5. Waiver of Restrictions. The Administrator may, from time to time, waive the provisions of Section 3.3 or Section 3.4 of this Agreement, subject tothe imposition of any conditions or further requirements, as determined by the Administrator in its sole discretion. Without limiting the foregoing, to the extent theAdministrator waives the application of Section 3.3 or Section 3.4, (i) equivalent restrictions on the Grantee’s other equity, if any, held in KKR Holdings L.P., theCorporation or any of their respective Affiliates (or any of their respective equity incentive plans) may be imposed and (ii) the Grantee hereby consents in advanceto the imposition of such equivalent restrictions for purposes of the governing documents of Grantee’s other equity, if any, held in KKR Holdings L.P., theCorporation or any of their respective Affiliates (or any of their respective equity incentive plans).ARTICLE IVMISCELLANEOUS Section 4.1. Governing Law. This Agreement and RHU Grant Certificate shall be governed by, and construed in accordance with, the laws of the State of NewYork, United States of America, without giving effect to any otherwise governing principles of conflicts of law that would apply the Laws of another jurisdiction.5Section 4.2. Operating Agreements and Plan. In the event of a conflict or inconsistency between the terms and provisions of the Operating Agreements or thePlan and the provisions of this Agreement, the Operating Agreements or the Plan, as applicable, shall govern and control. Section 4.3. Arbitration. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE U.S. FEDERAL AND STATE COURTSLOCATED IN NEW YORK, NEW YORK FOR THE PURPOSE OF ANY JUDICIAL PROCEEDING BROUGHT IN ACCORDANCE WITH THEPROVISIONS OF THIS SECTION 4.3, OR ANY JUDICIAL PROCEEDING ANCILLARY TO AN ARBITRATION OR CONTEMPLATED ARBITRATIONARISING OUT OF OR RELATING TO OR CONCERNING THIS AGREEMENT. Any controversy or claim arising out of or relating to this Agreement (or thebreach thereof) shall be settled by arbitration conducted by a single arbitrator in New York, New York in accordance with the then-existing Rules of Arbitration ofthe International Chamber of Commerce. If the parties to the dispute fail to agree on the selection of an arbitrator within 30 days of the receipt of the request forarbitration, the International Chamber of Commerce shall make the appointment. The arbitrator shall be a lawyer and shall conduct the proceedings in the Englishlanguage. Judgment on the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The arbitrators shall have the authority toaward any remedy or relief that a court of competent jurisdiction could order or grant, including, without limitation, the issuance of an injunction. However, eitherparty may, without inconsistency with this arbitration provision, bring an action or special proceeding in any court of competent jurisdiction for the purpose ofcompelling the other party to arbitrate, seeking temporary or preliminary relief in aid of an arbitration hereunder, or enforcing an arbitration award. The Granteeirrevocably appoints the Secretary or General Counsel of the Corporation as such Grantee’s agent for service of process in connection with any such action orproceeding and agrees that service of process upon such agent, who shall promptly advise such Grantee of any such service of process, shall be deemed in everyrespect effective service of process upon the Grantee in any such action or proceeding. Except as necessary in court proceedings to enforce this arbitrationprovision or an award rendered hereunder, to obtain interim relief or as otherwise required by law, neither a party nor an arbitrator may disclose the content orresults of any arbitration hereunder without the prior written consent of the Corporation and the Grantee, other than general statements. Section 4.4. Remedies; Recoupment; Right to Set-Off. (a)The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude orwaive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law orunder the terms of any other applicable agreement.(b)To the extent required or advisable, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules promulgatedthereunder and any other similar Laws including, as applicable, but not limited to the European Directives 2011/61/EU, 2013/36/EU and2014/91/EU, the Administrator may specify in any other document or a policy to be incorporated into this Agreement by reference, that theGrantee’s rights, payments, and benefits with respect to RHUs awarded hereunder and/or Class A Common Stock delivered to the Grantee inrespect of RHUs awarded hereunder shall be subject to reduction, cancellation, forfeiture or recoupment. (c)The Grantee further acknowledges and agrees that KKR Group shall have the right to clawback, forfeit, cancel, recoup, reduce or set-off anydistribution or payment that is due or payable (or that the Administrator reasonably determines may become due or payable) to the Granteepursuant to any agreement with the KKR Group (including but not limited to partnership agreements of KKR Holdings L.P., KKR Holdings IIL.P. and KKR Associates Holdings L.P.) or otherwise for the purpose of fulfilling any present or future obligation or liability of whatever nature(whether matured or unmatured, absolute or contingent) that the Grantee has to make (or that the Administrator reasonably determines maybecome such an obligation or liability to make) any payment or contribution to the KKR Group, regardless of whether the payment orcontribution is currently due or payable, or may become due or payable in the future, whether in advance of or without adjudication (providedthat the Administrator must act in good faith when determining any contribution or payment that may become due or payable as a result ofdamage to the KKR Group arising from a breach by Grantee of any of Grantee’s written agreements with the KKR Group or 6other wrongdoing), and notwithstanding any other agreements between the Grantee and the KKR Group entered into prior to the date hereof.Section 4.5. Amendments and Waivers. (a)This Agreement (including the RHU Grant Certificate and Appendices A through D attached hereto, as applicable) may be amended,supplemented, waived or modified only in accordance with Section 4(b) of the Plan or Section 13 of the Plan, as applicable, or as may berequired for purposes of compliance or enforceability with applicable local Law; provided, however, that the RHU Grant Certificate shall bedeemed amended from time to time to reflect any adjustments provided for in the Operating Agreements or the Plan. (b)No failure or delay by any party in exercising any right, power or privilege hereunder (other than a failure or delay beyond a period of timespecified herein) shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof orthe exercise of any other right, power or privilege. Section 4.6. Withholding. (a) The provisions of Section 4(d) of the Plan are incorporated herein by reference and made a part hereof. Regardless of any action the Corporationor the Designated Service Recipient takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items relatedto the Grantee’s participation in the Plan and legally applicable to the Grantee (“Tax-Related Items”), the Grantee acknowledges that the ultimate liability for allTax-Related Items is and remains the Grantee’s responsibility and may exceed the amount, if any, actually withheld by the Corporation or the Designated ServiceRecipient. The Grantee further acknowledges that the Corporation and/or the Designated Service Recipient (1) make no representations or undertakings regardingthe treatment of any Tax-Related Items and (2) are under no obligation to structure the terms of the RHUs to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any particular tax result. The Corporation may refuse to issue or deliver Class A Common Stock, the Cash Payment or the proceeds of thesale of Class A Common Stock, if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items as set forth in this Section4.6. (b) Prior to any relevant taxable or tax withholding event, as applicable, the Grantee will pay or make adequate arrangements satisfactory to theCorporation and/or the Designated Service Recipient to satisfy all Tax-Related Items. In this regard, the Grantee authorizes the Corporation and/or the DesignatedService Recipient to satisfy the obligations with regard to all Tax-Related Items, if any, by one or a combination of the following: (i)withholding from the Cash Payment, the Grantee’s wages or other cash compensation paid to the Grantee by the Corporation and/or theDesignated Service Recipient; or (ii)withholding from proceeds of the sale of Class A Common Stock delivered upon the Exchange either through a voluntary sale orthrough a mandatory sale arranged by the Corporation (on the Grantee’s behalf pursuant to this authorization); or (iii)withholding in Class A Common Stock to be delivered upon the Exchange. The Corporation may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicablewithholding rates, including maximum applicable rates in the Grantee’s jurisdiction(s), in which case the Grantee may receive a refund of any over-withheldamount in cash and will have no entitlement to the equivalent in Class A Common Stock. If the obligation for Tax-Related Items is satisfied by withholding inClass A Common Stock, the Grantee is deemed to have been issued the full number of shares of Class A Common Stock subject to the Exchange, notwithstandingthat a number of shares of Class A Common Stock are held back solely for the purpose of paying the Tax-Related Items. Finally, the Grantee shall pay to theCorporation or the Designated Service Recipient any amount of Tax-Related Items that the Corporation or the Designated Service Recipient may be required towithhold or account for as a result of the Grantee’s participation in the Plan that cannot7be satisfied by the means previously described. The Grantee’s liability for Tax-Related items, if any, will survive the Grantee’s withdrawal from Holdings II orTransfer of any RHUs. Section 4.7. Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed tohave been duly given upon receipt) by delivery in person, by courier service, by fax or by registered or certified mail (postage prepaid, return receipt requested) tothe respective parties at the following addresses (or at such other address for a party as shall be specified): (a)If to the Corporation, to: KKR & Co. Inc.9 West 57th Street, Suite 4200New York, New York 10019U.S.A.Attention: General Counsel and Secretary (b)If to the KKR Group Partnership, to: KKR Group Partnership L.P.9 West 57th Street, Suite 4200New York, New York 10019U.S.A.Attention: General Counsel and Secretary (c)If to Holdings II, to: KKR Holdings II L.P.9 West 57th Street, Suite 4200New York, New York 10019U.S.A.Attention: General Counsel and Secretary (d)If to the Grantee, to the most recent address for the Grantee in the books and records of the Corporation or the Designated Service Recipient, asapplicable. Section 4.8. Entire Agreement; Termination of Agreement; Survival. (a)This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prioragreements and understandings, whether oral or written, pertaining thereto. The Grantee acknowledges that the grant of RHUs provided forunder this Agreement is in full satisfaction of any and all grants of equity or equity-based awards that representatives of the Corporation or itsAffiliates, on or prior to the date hereof, may have informed the Grantee that such Grantee is entitled to receive. (b)This Agreement shall terminate when the Grantee and all Permitted Transferees cease to hold any of the RHUs that have been granted hereunder.Notwithstanding anything to the contrary herein, this Article IV shall survive any termination of this Agreement. Section 4.9. Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law, orpublic policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance ofthe transactions is not affected in any manner materially adverse to any party. Upon a determination that any term or other provision is invalid, illegal or incapableof being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in amutually acceptable8manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible. Section 4.10. Binding Effect. This Agreement shall be binding upon and inure to the benefit of all of the parties and, to the extent permitted by this Agreement,their successors, executors, administrators, heirs, legal representatives and assigns. Section 4.11. Appendices. Appendices A, B, C and D constitute part of this Agreement. Notwithstanding the provisions of this Article IV, the provisions ofSections 10 through 19 (inclusive) of Appendix B shall govern solely with respect to, and shall be applicable only to the interpretation, administration andenforcement of the provisions of Appendix B, but not to any other provisions of this Agreement or any other Appendix. Section 4.12. Further Assurances. The Grantee shall perform all other acts and execute and deliver all other documents as may be necessary or appropriate tocarry out the purposes and intent of this Agreement. Section 4.13. Section 409A; Employment with Designated Service Recipient. (a)This Section 4.13(a) applies to Grantees who are U.S. tax residents (such as, a U.S. citizen, green card holder or a U.S. tax resident under thesubstantial presence test) to the extent applicable. All references to any “separation from service” or termination of the Employment of or theservices to be provided by the Grantee, shall be deemed to refer to a “separation from service” within the meaning of Section 409A, ifapplicable. Notwithstanding anything herein to the contrary, (i) if at the time of the Grantee’s termination of Employment the Grantee is a“specified employee” as defined in Section 409A of the Code and the deferral of the commencement of any payments or delivery of Class ACommon Stock otherwise payable or provided hereunder as a result of such termination of employment is necessary in order to prevent anyaccelerated or additional tax under Section 409A, then, to the extent that Section 409A applies to the RHUs, the Corporation will defer thecommencement of the payment of any such payments or delivery hereunder (without any reduction in such payments or delivery of Class ACommon Stock ultimately paid or provided to the Grantee) until the date that is six months following the Grantee’s termination of Employment(or the earliest date as is permitted under Section 409A) and (ii) if any other payments or other deliveries due to the Grantee hereunder couldcause the application of an accelerated or additional tax under Section 409A, such payments or other deliveries shall be deferred if deferral willmake such payment or other delivery compliant under Section 409A, or otherwise such payment or other delivery shall be restructured, to theextent possible, in a manner, determined by the Administrator, that does not cause such an accelerated or additional tax. The Corporation shalluse commercially reasonable efforts to implement the provisions of this Section 4.13(a) in good faith; provided that none of the Corporation, theAdministrator nor any of the Corporation’s or KKR Group’s, as applicable, employees, directors or representatives shall have any liability to theGrantee with respect to this Section 4.13(a). (b)Nothing in this Agreement shall be deemed to obligate the Corporation, Designated Service Recipient or any other member of the KKR Group,as applicable, to employ the Grantee in any capacity whatsoever or to prohibit or restrict the Corporation, Designated Service Recipient or anyother member of the KKR Group, as applicable, from terminating the Grantee’s Employment at any time or for any reason whatsoever, with orwithout Cause. Section 4.14. Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by thedifferent parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shallconstitute one and the same agreement. Copies of executed counterparts transmitted by telecopy or other electronic transmission service shall be consideredoriginal executed counterparts for purposes of this Agreement. [Rest of page intentionally left blank] 9IN WITNESS WHEREOF, the Corporation, KKR Group Partnership and Holdings II have executed this Agreement as of the date specified under the signatureof the Grantee.KKR & Co. Inc. By: Name: Title: KKR Group Partnership L.P. By: KKR Group Holdings Corp., its general partner By: Name: Title: KKR Holdings II L.P. By: KKR Group Holdings Corp., its general partner By: Name: Title: 10IN WITNESS WHEREOF, the undersigned Grantee has caused this counterpart signature page to this Agreement to be duly executed as of the date specifiedunder the signature of the Grantee. “GRANTEE” Electronic SignatureName: Participant Name Dated: Grant Date11APPENDIX A DEFINITIONS In addition to the defined terms set forth in the Plan, the following terms shall have the following meanings for purposes of the Agreement: “Cause” means, with respect to the Grantee, the occurrence or existence of any of the following as determined fairly on an informed basis and in good faith by theAdministrator: (i) any act of fraud, misappropriation, dishonesty, embezzlement or similar conduct by the Grantee against any member of the KKR Group(including the Corporation) or a Portfolio Company (as defined below), (ii) a Regulatory Violation that has a material adverse effect on (x) the business of anymember of the KKR Group or (y) the ability of the Grantee to function as an employee, associate or in any similar capacity (including consultant) with respect tothe KKR Group, taking into account the services required of the Grantee and the nature of the business of the KKR Group, or (iii) a material breach by the Granteeof a material provision of any Written Policies & Agreements or the deliberate failure by the Grantee to perform the Grantee’s duties to the KKR Group, providedthat in the case of this clause (iii), the Grantee has been given written notice of such breach or failure within 45 days of the KKR Group becoming aware of suchbreach or failure and, where such breach or failure is curable, the Grantee has failed to cure such breach or failure within (A) 15 days of receiving notice thereof or(B) such longer period of time, not to exceed 30 days, as may be reasonably necessary to cure such breach or failure provided that the Grantee is then workingdiligently to cure such breach or failure; and provided further, that if such breach or failure is not capable of being cured, the notice given to the Grantee maycontain a date of termination that is earlier than 15 days after the date of such notice. “Class A Units” means the Class A Units of KKR Group Partnership under the Limited Partnership Agreement of KKR Group Partnership. “Designated Service Recipient” means any member of the KKR Group that employs the Grantee or with which the Grantee is similarly associated. “Disability” means, as to any Person, such Person’s inability to perform in all material respects such Person’s duties and responsibilities to the KKR Group byreason of a physical or mental disability or infirmity which inability is reasonably expected to be permanent and has continued (i) for a period of six consecutivemonths or (ii) such shorter period as the Administrator may reasonably determine in its sole discretion. “Employment” means the Grantee’s employment (including any similar association determined by the Administrator to constitute employment for purposes of thisAgreement) with the Designated Service Recipient or any other member of the KKR Group. “Exchange Agreement” means the Third Amended and Restated Exchange Agreement, dated as of January 1, 2020, among KKR Group Partnership, KKRHoldings L.P., the Corporation, and KKR Group Holdings Corp., as amended from time to time, or such other exchange agreement entered into from time to timeby the Corporation, or any successor thereto, and KKR Group Partnership. “Group Partnership” means KKR Group Partnership, along with its successor and any other legal entity designated in the future as a “Group Partnership” by theCorporation. “KKR Group” means (i) the Corporation and KKR Management LLP (and its successors), (ii) any direct or indirect subsidiaries of the Corporation, including butnot limited to the Group Partnership and its direct and indirect subsidiaries (not including Portfolio Companies), (iii) KKR Holdings L.P. and KKR AssociatesHoldings L.P., their respective general partners, and the direct or indirect subsidiaries of KKR Holdings L.P. and KKR Associates Holdings L.P., respectively, and(iv) any investment fund, account or vehicle that is managed, advised or sponsored by any member of the KKR Group (the “Funds”). “Law” means any statute, law, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by anynational, supranational, state, federal, provincial, local or municipal governmentA-1or any administrative or regulatory body with authority therefrom with jurisdiction over the Corporation or any Grantee, as the case may be. “Limited Partnership Agreement of Holdings II” means the Limited Partnership Agreement of Holdings II, dated as of January 1, 2020, as amended from timeto time. “Limited Partnership Agreement of KKR Group Partnership” means the Third Amended and Restated Limited Partnership Agreement of KKR GroupPartnership, dated as of January 1, 2020, as amended. “Minimum Retained Ownership Percentage” means the percentage set forth on the RHU Grant Certificate. “Permitted Transferee” means (A) any person who is a “family member” of the Grantee, as such term is used in the instructions to Form S-8 under the SecuritiesAct of 1933, as amended, or any successor form of registration statement promulgated by the Securities and Exchange Commission (collectively, the “ImmediateFamily Members”); (B) a trust solely for the benefit of the Grantee and his or her Immediate Family Members; (C) a partnership or limited liability companywhose only partners or stockholders are the Grantee and his or her Immediate Family Members; (D) a beneficiary to whom donations are eligible to be treated as“charitable contributions” for federal income tax purposes; or (E) any other Person the Administrator consents to. “Person” means any individual, corporation, partnership, limited liability company, trust, joint stock company, business trust, unincorporated association, jointventure, governmental authority or other entity of any nature whatsoever. “Portfolio Company” means any portfolio companies, joint ventures or affiliated investments that are held as such by the KKR Group. “Regulatory Violation” means, with respect to the Grantee (i) a conviction of the Grantee based on a trial or by an accepted plea of guilt or nolo contendere of anyfelony or misdemeanor crime involving moral turpitude, false statements, misleading omissions, forgery, wrongful taking, embezzlement, extortion or bribery, (ii)a final determination by any court of competent jurisdiction or governmental regulatory body (or an admission by the Grantee in any settlement agreement) that theGrantee has violated any U.S. federal or state or comparable non-U.S. securities laws, rules or regulations or (iii) a final determination by self-regulatoryorganization having authority with respect to U.S. federal or state or comparable non-U.S. securities laws, rules or regulations (or an admission by the Grantee inany settlement agreement) that the Grantee has violated the written rules of such self-regulatory organization that are applicable to any member of the KKR Group. “Retirement” means the resignation by the Grantee of the Grantee’s Employment with the KKR Group (other than for Cause), on or after the date that theGrantee’s age, plus the Grantee’s years of Employment with the KKR Group, equals at least 80. “Retirement Restricted Units” means, with respect to any Grantee whose Employment terminates due to Retirement, any Class P Units and Holdings II Unitswith a Service Vesting Date that would, if the Grantee’s Employment were not so terminated, occur within two years after the date of such termination due toRetirement. “RHU Grant Certificate” means the RHU Grant Certificate delivered to the Grantee and attached to this Agreement, as the same may be modified pursuant toSection 4.5(a) of the Agreement. “Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986, as the same may be amended from time to time, and the applicable regulations,including temporary regulations, promulgated under such Section, as such regulations may be amended from time to time (including corresponding provisions ofsucceeding regulations). “Service Vesting Date” means, with respect to any Restricted Unit, the date set forth in the RHU Grant Certificate as the “Service Vesting Date.” “Transfer” or “Transferred” means with respect to any RHUs or Class A Common Stock, as applicable, any (i) sale, assignment, transfer or other dispositionthereof or any interests therein or rights attached thereto, whether voluntarilyA-2or by operation of Law, including but not limited to an Exchange, or (ii) creation or placement of any mortgage, claim, lien, encumbrance, conditional sales orother title retention agreement, right of first refusal, preemptive right, pledge, option, charge, security interest or other similar interest, easement, judgment orimperfection of title of any nature whatsoever. “Written Policies & Agreements” means the written policies of the KKR Group included in its employee manual, code of ethics and confidential information andinformation barrier policies and procedures and other documents relating to the Grantee’s Employment with the KKR Group, as applicable, and any agreementsbetween the Grantee and a member of the KKR Group relating to the Grantee’s Employment with the KKR Group, including but not limited to an employmentagreement, if any, and the Confidentiality and Restrictive Covenant Agreement. A-3APPENDIX B CONFIDENTIALITY AND RESTRICTIVE COVENANT OBLIGATIONS APPENDIX C SUPPLEMENT TO THE LIMITED PARTNERSHIP AGREEMENT OF HOLDINGS IIAPPENDIX D GRANTEE CONSENTExhibit 10.29December 19, 2019Kohlberg Kravis Roberts & Co. L.P. (“KKR”) is pleased to enter into this binding written agreement with you to pay, with respect to the year-ending December 31,2019 only, an amount of cash equal to “Total Cash Compensation” as stated in your “2019 Total Value Statement” prepared by KKR and delivered to you earlierthis month.Nothing herein is intended to be construed as an employment agreement, and your employment at KKR remains at-will, which means the Firm may remove you asexecutive officer of the Firm or terminate your employment (or both), at any time with or without cause.Please acknowledge your agreement with the foregoing, at which time this will become a binding agreement between you and KKR.KOHLBERG KRAVIS ROBERTS & CO. L.P.By: Exhibit 21.1The following is a list of the subsidiaries of KKR & Co. Inc. as of January 1, 2020.Subsidiaries of the RegistrantName Jurisdiction8 Sigma Capital Holdings Pte. Ltd. Singapore9W Halo Parent LLC DelawareAerosmith Holdings LLC DelawareAlamo GP LLC DelawareAllstar Co-Invest GP LLC DelawareASF Walter Co-Invest GP Limited Cayman IslandsAvoca Capital Jersey Unlimited JerseyAvoca Capital Property Unlimited Company IrelandAvoca Capital Unlimited Company IrelandAvoca Securities Investments Unlimited Company IrelandBrunswick Asset Holdings (Overseas) LLC DelawareBrunswick Asset Holdings LLC DelawareCapstone Europe Limited England & WalesCapstone Limited JerseyCapstone Purchasing LLC DelawareColt Admiral A Holding GP LLC DelawareColt Admiral A Holding L.P. DelawareColt Drilling Aggregator LLC DelawareColt Real Asset Holdings GP LLC DelawareColt Real Asset Holdings L.P. DelawareCPS (US) LLC DelawareCPS Associates (US) L.P. DelawareCPS Associates L.P. Cayman IslandsCPS GP Limited Cayman IslandsDorms Asia Real Estate (GP) Pte. Ltd. SingaporeDorms Asia Real Estate LP SingaporeDorms Pte. Ltd. SingaporeEcho Holdings GP Limited Cayman IslandsEIGF TE GP Newark Acquisition GP I LLC DelawareEIGF TE GP Newark Acquisition I L.P. DelawareEIGF TE GP Newark Investors L.P. DelawareEIGF TE GP Resource Holdings GP I LLC DelawareEIGF TE GP Resource Holdings I L.P. DelawareEIGF TE GP Resource Investors GP LLC DelawareEIGF TE GP Resource Investors L.P. DelawareElectron IM Pte. Ltd. SingaporeElectron Pte. Ltd. SingaporeEnergy Real Assets GP LLC DelawareEnergy Real Assets L.P. DelawareEsoteric I Pte. Ltd. SingaporeFan Co-Invest GP Limited Cayman IslandsFan Investors GP Limited Cayman IslandsName JurisdictionFan Investors L.P. Cayman IslandsFan Investors Limited Cayman IslandsFinanciere Victor I S.à r.l. LuxembourgFinanciere Victor III S.à r.l. LuxembourgFortune Creek Co-Invest GP Limited Cayman IslandsGDG Co-Invest GP LLC DelawareHelios Co-Invest GP Limited Cayman IslandsHoosier Asset Financing LLC DelawareHoosier Asset Holdings LLC DelawareKAM Advisors LLC DelawareKAM Credit Advisors LLC DelawareKAM Fund Advisors LLC DelawareKappa Holdings Ltd. Cayman IslandsKFH III Holdings Ltd. Cayman IslandsKFH Real Asset Holdings L.P. DelawareKFH Royalties GP LLC DelawareKFH Royalties II GP LLC DelawareKFH Royalties II LLC DelawareKFH Royalties L.P. DelawareKFH Royalties LLC DelawareKFN Bellemeade Feeder LLC DelawareKFN Birch 2 Feeder LLC DelawareKFN Broadway Feeder LLC DelawareKFN BTS Feeder LLC DelawareKFN Colonie Feeder LLC DelawareKFN HG Hotel Feeder LLC DelawareKFN HHV Feeder LLC DelawareKFN Midland Feeder LLC DelawareKFN Osprey Feeder LLC DelawareKFN Pelican 1 Feeder LLC DelawareKFN Rad Philly Feeder LLC DelawareKFN Sullivan Feeder LLC DelawareKFN WTC Oahu Feeder LLC DelawareKFN YTC Feeder LLC DelawareKKR & Co. GP LLC DelawareKKR & Co. L.L.C. DelawareKKR (Cayman) Limited Cayman IslandsKKR 2006 AIV GP LLC DelawareKKR 2006 AIV Limited Cayman IslandsKKR 2006 GP (Energy II) LLC DelawareKKR 2006 GP LLC DelawareKKR 2006 Limited Cayman IslandsKKR 8 NA Limited Cayman IslandsKKR Account Adviser (Mauritius), Ltd. MauritiusKKR AHI GP LLC DelawareName JurisdictionKKR AHI Investors L.P. DelawareKKR Alternative Assets L.P. DelawareKKR Alternative Assets Limited Cayman IslandsKKR Alternative Assets LLC DelawareKKR Alternative Investment Management Unlimited Company IrelandKKR Americas Fund XII (Enterprise) A GP LLC DelawareKKR Americas Fund XII (Enterprise) B GP LLC DelawareKKR Americas XII AIV GP LLC DelawareKKR Americas XII EEA Limited Cayman IslandsKKR Americas XII EEA LLC DelawareKKR Americas XII Limited Cayman IslandsKKR AMG Co-Invest GP LLC DelawareKKR AP Infrastructure Holdings Limited Cayman IslandsKKR AP Infrastructure S.à r.l. LuxembourgKKR Apollo Co-Invest GP Limited Cayman IslandsKKR ARC India Private Limited IndiaKKR Ark Holdings Pte. Ltd. SingaporeKKR Ascend Co-Invest GP Limited Cayman IslandsKKR Ascent Co-Invest GP LLC DelawareKKR ASF Walter PE Limited Cayman IslandsKKR Asia Credit Opportunities Holdings Limited Cayman IslandsKKR Asia Credit Opportunities S.à r.l. LuxembourgKKR Asia II Japan AIV Limited Cayman IslandsKKR Asia II Limited Cayman IslandsKKR Asia III Delaware AIV LLC DelawareKKR Asia III Holdings Limited Cayman IslandsKKR Asia III Japan AIV Limited Hong KongKKR Asia III S.à r.l. LuxembourgKKR Asia IV Holdings Limited Cayman IslandsKKR Asia IV S.à r.l. LuxembourgKKR Asia Limited Hong KongKKR Asia Limited Cayman IslandsKKR Asia LLC DelawareKKR Asian Fund (Ireland) GP Limited IrelandKKR Asset Management (International) Partners LLP DelawareKKR Asset Management Ltd England & WalesKKR Associates 2006 (Overseas) AIV L.P. Cayman IslandsKKR Associates 2006 (Overseas), Limited Partnership Cayman IslandsKKR Associates 2006 AIV L.P. DelawareKKR Associates 2006 L.P. DelawareKKR Associates 8 NA L.P. Cayman IslandsKKR Associates Americas XII AIV L.P. DelawareKKR Associates Americas XII L.P. Cayman IslandsKKR Associates AP Infrastructure SCSp LuxembourgKKR Associates ASF Walter PE L.P. Cayman IslandsName JurisdictionKKR Associates Asia Credit Opportunities SCSp LuxembourgKKR Associates Asia (Japan) L.P. Cayman IslandsKKR Associates Asia II Japan AIV L.P. Cayman IslandsKKR Associates Asia II L.P. Cayman IslandsKKR Associates Asia III Delaware AIV L.P. DelawareKKR Associates Asia III Japan AIV L.P. Cayman IslandsKKR Associates Asia III SCSp LuxembourgKKR Associates Asia L.P. Cayman IslandsKKR Associates Cardinal Credit Opportunities GP L.P. DelawareKKR Associates Cardinal Credit Opportunities LLC DelawareKKR Associates CDP PE L.P. Cayman IslandsKKR Associates China Growth L.P. Cayman IslandsKKR Associates CIP SCSp LuxembourgKKR Associates CIS Global L.P. Cayman IslandsKKR Associates Credit Select L.P. Cayman IslandsKKR Associates CS I L.P. Cayman IslandsKKR Associates CS II L.P. Cayman IslandsKKR Associates CS III L.P. Cayman IslandsKKR Associates CS IX L.P. Cayman IslandsKKR Associates CS V L.P. DelawareKKR Associates CS VIII L.P. Cayman IslandsKKR Associates CS X L.P. Cayman IslandsKKR Associates Custom Equity Opportunities (AIV) L.P. Cayman IslandsKKR Associates Custom Equity Opportunities L.P. Cayman IslandsKKR Associates E2 L.P. Cayman IslandsKKR Associates EIGF II LLC DelawareKKR Associates EIGF L.P. DelawareKKR Associates EIGF TE L.P. DelawareKKR Associates Europe II, Limited Partnership AlbertaKKR Associates Europe III, Limited Partnership Cayman IslandsKKR Associates Europe IV L.P. Cayman IslandsKKR Associates Europe V SCSp LuxembourgKKR Associates GCOF GP Ltd. Cayman IslandsKKR Associates GFIP L.P. Cayman IslandsKKR Associates Global Credit Opportunities GP L.P. Cayman IslandsKKR Associates Global Impact SCSp LuxembourgKKR Associates HCRI L.P. Cayman IslandsKKR Associates HCSG AIV L.P. DelawareKKR Associates HCSG L.P. DelawareKKR Associates Infrastructure (AIV) L.P. DelawareKKR Associates Infrastructure II AIV L.P. DelawareKKR Associates Infrastructure II L.P. Cayman IslandsKKR Associates Infrastructure III AIV SCSp LuxembourgKKR Associates Infrastructure III SCSp LuxembourgKKR Associates Infrastructure L.P. Cayman IslandsName JurisdictionKKR Associates IUH L.P. DelawareKKR Associates Lending Europe II SCSp LuxembourgKKR Associates Lending Europe L.P. Cayman IslandsKKR Associates Lending II L.P. DelawareKKR Associates Lending III L.P. DelawareKKR Associates Lending L.P. DelawareKKR Associates LR Energy L.P. Cayman IslandsKKR Associates Mezzanine I L.P. DelawareKKR Associates Millennium (Overseas), Limited Partnership AlbertaKKR Associates Millennium L.P. 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DelawareTEA GP Limited Cayman IslandsUno Co-Invest GP LLC DelawareVenado EF Holdings GP LLC DelawareExhibit 23.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in (i) Registration Statement No. 333-228333 on Form S-3ASR, (ii) Registration Statement No. 333-210061 on FormS-3ASR, as amended by Post-Effective Amendment No.1 on Form S-3 dated July 2, 2018, (iii) Registration Statement No. 333-223202 on Form S-8, as amendedby Post-Effective Amendment No. 1 on Form S-8 dated July 2, 2018, (iv) Registration Statement No. 333-194249 on Form S-3, as amended by Post-EffectiveAmendment No. 1 on Form S-3 dated July 2, 2018, and (v) Registration Statement No. 333-169433 on Form S-1, as amended by Post-Effective Amendment No. 3on Form S-3 dated July 2, 2018, and (vi) Registration Statement No. 333-230627 on Form S-8 dated March 29, 2019, relating to the consolidated financialstatements and financial statement schedule of KKR & Co. Inc. and it’s subsidiaries (the “Company”) and the effectiveness of the Company’s internal control overfinancial reporting, appearing in this Annual Report on Form 10-K of the Company for the year ended December 31, 2019. /s/ Deloitte & Touche LLPNew York, New YorkFebruary 14, 2020Exhibit 31.1 CO-CHIEF EXECUTIVE OFFICER CERTIFICATION I, Henry R. Kravis, certify that:1.I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2019 of KKR & Co. Inc.;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 the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct 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 theregistrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,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 our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance 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 the effectiveness ofthe 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 recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officers 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 reasonably likelyto 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 control overfinancial reporting. Date:February 14, 2020 /s/ Henry R. Kravis Henry R. Kravis Co-Chief Executive OfficerExhibit 31.2 CO-CHIEF EXECUTIVE OFFICER CERTIFICATION I, George R. Roberts, certify that: 1.I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2019 of KKR & Co. Inc.;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 the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct 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 theregistrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,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 our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance 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 the effectiveness ofthe 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 recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and 5.The registrant’s other certifying officers 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 reasonably likely toadversely 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 control overfinancial reporting. Date:February 14, 2020 /s/ George R. Roberts George R. Roberts Co-Chief Executive OfficerExhibit 31.3 CHIEF FINANCIAL OFFICER CERTIFICATION I, Robert H. Lewin, certify that: 1.I have reviewed this Annual Report on Form 10-K for the period ended December 31, 2019 of KKR & Co. Inc.;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 the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, 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 officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct 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 theregistrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,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 our supervision, toprovide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance 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 the effectiveness ofthe 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 recent fiscalquarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and5.The registrant’s other certifying officers 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 reasonably likely toadversely 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 control overfinancial reporting. Date:February 14, 2020 /s/ Robert H. Lewin Robert H. Lewin Chief Financial OfficerExhibit 32.1 CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER Pursuant to 18 U.S.C. §1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Annual Report of KKR & Co. Inc. (the "Corporation") on Form 10-K for the period ended December 31, 2019 as filed with theSecurities and Exchange Commission (the "Report"), I, Henry R. Kravis, Co-Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. §1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCorporation. Date:February 14, 2020 /s/ Henry R. Kravis Henry R. Kravis Co-Chief Executive Officer * The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separatedisclosure document.Exhibit 32.2 CERTIFICATION OF CO-CHIEF EXECUTIVE OFFICER Pursuant to 18 U.S.C. §1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Annual Report of KKR & Co. Inc. (the "Corporation") on Form 10-K for the period ended December 31, 2019 as filed with theSecurities and Exchange Commission (the "Report"), I, George R. Roberts, Co-Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. §1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCorporation. Date:February 14, 2020 /s/ George R. Roberts George R. Roberts Co-Chief Executive Officer * The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separatedisclosure document.Exhibit 32.3 CERTIFICATION OF CHIEF FINANCIAL OFFICER Pursuant to 18 U.S.C. §1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Annual Report of KKR & Co. Inc. (the "Corporation") on Form 10-K for the period ended December 31, 2019 as filed with theSecurities and Exchange Commission (the "Report"), I, Robert H. Lewin, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. §1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge: (1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCorporation. Date:February 14, 2020 /s/ Robert H. Lewin Robert H. Lewin Chief Financial Officer * The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separatedisclosure document.

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