Apollo Global Management Investor Day Presentation Deck
Definitions
For future periods presented in this presentation, which are pro-forma for the merger with Athene and assume the establishment of asset management, retirement services and principal investing as the combined company's reportable
business segments, Fee Related Earnings, Spread Related Earnings, Principal Investing Income, Distributable Earnings and Pre-tax Distributable Earnings have the meanings set forth below:
"Fee Related Earnings", or "FRE", is derived from segment reported results and refers to a component of DE that is used as a supplemental performance measure to assess the performance of the asset management segment. FRE is the sum of (i)
management fees, (ii) advisory and transaction fees, (iii) performance fees related to business development companies, Redding Ridge Holdings, and MidCap and (iv) other income, net, less (x) salary, bonus and benefits, excluding equity-based
compensation (y) other associated operating expenses and (z) non-controlling interests in the management companies of certain funds the Company manages.
"Spread Related Earnings", or "SRE" is derived from segment reported results and refers to a component of DE that is used as a supplemental performance measure to assess the performance of the Retirement Services segment excluding certain
market volatility and expenses related to integration, restructuring, equity-based compensation, and other expenses. For the Retirement Services segment, SRE equals the sum of (i) the net investment income earned on Athene's net invested assets and
(ii) management fees earned on the ADIP share of ACRA assets, less (x) cost of funds, including cost of crediting and other liability costs, (y) operating expenses excluding equity-based compensation and (z) financing costs including interest expense and
preferred dividends paid to Athene Preferred Stockholders.
"Principal Investing Income", or "PII" is derived from segment reported results and refers to a component of DE that is used as a supplemental performance measure to assess the performance of the Principal Investing segment. For the Principal
Investing segment, PII is the sum of (i) realized performance fees, excluding realizations received in the form of shares, (ii) realized investment income, net which includes dividends from our permanent capital vehicles, net of amounts to be distributed to
certain employees as part of a dividend compensation program, less (x) compensation expense, excluding expense related to equity-based compensation, (y) realized profit sharing expense, and (z) certain corporate non-compensation expenses and
financing costs including preferred dividends, if any, paid to the Apollo Preferred Stockholders.
"Pre-tax Distributable Earnings", or "Pre-tax DE", is the key performance measure used by management in evaluating the performance of the asset management, retirement services and principal investing segments. Management uses Pre-tax DE to
make key operating decisions such as the following:
Decisions related to the allocation of resources such as staffing decisions including hiring and locations for deployment of the new hires;
Decisions related to capital deployment such as providing capital to facilitate growth for the business and/or to facilitate expansion into new businesses;
Decisions related to expenses, such as determining annual discretionary bonuses and equity-based compensation awards to its employees. With respect to compensation, management seeks to align the interests of certain professionals
and selected other individuals with those of the investors in the funds and those of Apollo's stockholders by providing such individuals a profit sharing interest in the performance fees earned in relation to the funds. To achieve that
objective, a certain amount of compensation is based on Apollo's performance and growth for the year; and
Decisions related to the amount of earnings available for dividends to Class A Common Stockholders and holders of RSUS that participate in dividends.
Pre-tax DE is the sum of (i) Fee Related Earnings, (ii) Spread Related Earnings, and (iii) Principal Investing Income. Pre-tax DE excludes the effects of the consolidation of any of the related funds and SPACS, Taxes and Related Payables, transaction-related
charges and any acquisitions. Transaction-related charges includes equity-based compensation charges, the amortization of intangible assets, contingent consideration, and certain other charges associated with acquisitions, and restructuring charges. In
addition, Pre-tax DE excludes non-cash revenue and expense related to equity awards granted by unconsolidated related parties to employees of the Company, compensation and administrative related expense reimbursements, as well as the assets,
liabilities and operating results of the funds and VIEs that are included in the consolidated financial statements.
"Distributable Earnings" or "DE" represents Pre-tax DE less estimated income taxes. Income taxes on FRE and PIl represents the total current corporate, local, and non-U.S. taxes as well as the current payable under Apollo's tax receivable agreement.
Income taxes on FRE and PII excludes the impacts of deferred taxes and the remeasurement of the tax receivable agreement, which arise from changes in estimated future tax rates. Certain assumptions and methodologies that impact the implied FRE
and PII income tax provision are similar to those used under U.S. GAAP. Specifically, certain deductions considered in the income tax provision under U.S. GAAP relating to transaction related charges and equity-based compensation are taken into
account for the implied tax provision. Income Taxes on SRE represent the total current and deferred tax expense or benefit on income before taxes adjusted to eliminate the impact of the tax expense or benefit associated with the non-operating
adjustments. Management believes the methodologies used to compute income taxes on FRE, PII, SRE are meaningful to each segment and increases comparability of income taxes between periods.
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