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      2017 Annual Report

      The 2017 Annual Report reviews the ideas and events that shaped our business in 2017 and that are likely to impact it in the years to come. With the perspectives of a broad cross-section of Neuberger Berman professionals, we hope to convey a thorough understanding of our firm, our people, our culture and, most important, our commitment to clients.

      A Message from Our CEO

      George H. Walker
      Chairman and Chief Executive Officer

      2017 was an extraordinary year in the financial markets. Equities were notably robust; for example, the S&P 500 delivered a positive return in each month of the year—the first time it has ever done so—and closed at a record high 62 times. Dollar-based returns of non-U.S. developed and emerging markets stock indexes were even stronger. With global central banks remaining broadly accommodative, investors took their cues throughout 2017 from meaningful data like synchronized global economic growth and improving corporate earnings rather than being distracted by the noise of discordant headlines. Nothing gold can stay, however; though we entered 2018 with the expectation that global GDP and corporate earnings growth would continue, financial conditions are likely to grow increasingly normal—i.e., more volatile—as global central banks raise benchmark lending rates and trim asset purchases. A new regime is near on the horizon.

      2017 also was an extraordinary year for Neuberger Berman. While the firm delivered compelling results by virtually any metric, most significant was the continued strength of our long-term investment performance across asset classes and geographies, against both benchmarks and our peers. Robust investment results fueled record client retention rates, driving a 16% increase in the implied average holding period of client accounts. Such results also attracted $13 billion of net client inflows, helping propel the firm to a record-high $295 billion in assets under management as of year-end. The firm’s revenue and earnings, consequently, exceeded all prior periods.

      We used the tailwind of a strong 2017 as an opportunity to prepare for the more volatile conditions that lie ahead. On the risk front, we continued to move the firm to a more conservative capital structure, reducing our debt outstanding to $600 million with notes that mature in 2027 and 2045, fully redeeming those that had been scheduled to mature in the next five years. Debt reduction and continued earnings growth has resulted in improvements to our interest coverage and debt to Adjusted EBITDA ratios, yielding us another round of upgrades to our investment grade ratings from both Standard & Poor’s and Moody’s. We also invested heavily in our capabilities during the year, adding talent and making major commitments across products, geographies and technologies.

      In our most recent equity offering we added 68 new employee owners, which brought the number of current employee owners to 503. Combined with deferred cash compensation directly linked to client returns, Neuberger Berman employees and their families have approximately $3 billion invested alongside our clients, epitomizing our commitment to alignment.1 The alignment of interests—not only between our employees and our clients, but also between the firm and our employees—is fundamental to our success as a private, independent, employee-owned investment manager. It also serves as a self-selection mechanism through which we attract those individuals who share our passion for delivering compelling long-term investment results on behalf of our clients; testament to this is a 96% annualized retention rate among senior investment professionals since we became an independent company in 2009.

      Retention is vital in our industry. Investment management is a team sport; for clients, there’s confidence in knowing that the players in the lineup today are the same ones that have been knocking the ball out of the park all season long, and that these players are more likely to be wearing the same jerseys in the years to come than is the case at most firms. I’m proud of the team we have assembled, and I’m not alone; we have been cited as a top-ranked firm (among those with 1,000 or more employees) in the Pension & Investments “Best Places to Work in Money Management” survey annually since 2013, ranking second in 2017.

      Explore Our Investment Capabilities

      We offer clients investment solutions across asset classes, styles, capitalizations and geographies in both public and private markets, as well as multi-asset class solutions that bring them all together.

      1Employee assets include current and former employees and their family members.

      This material is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. Neuberger Berman products and services may not be available in all jurisdictions or to all client types. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results.

      All information is as of December 31, 2017, unless otherwise indicated and is subject to change without notice. Firm data, including employee and assets under management figures, reflect collective data for the various affiliated investment advisers that are subsidiaries of Neuberger Berman Group LLC (the “firm”). Investment professionals referenced include portfolio managers, research analysts/associates, traders, and product specialists and team dedicated economists/strategists.

      This material is being issued on a limited basis through various global subsidiaries and affiliates of Neuberger Berman Group LLC. Please visit www.nb.com/disclosure-global-communications for the specific entities and jurisdictional limitations and restrictions.

      The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC.

      © 2018 Neuberger Berman BD LLC. All rights reserved.