GLOBAL HEADQUARTERS OFFICES New York, New York Bogota, Colombia 800.223.6448 Boston, Massachusetts REGIONAL HEADQUARTERS Buenos Aires, Argentina Hong Kong, China Dubai, United Arab Emirates +852 3664 8800 Frankfurt, Germany London, United Kingdom Houston, Texas +44 20 3214 9000 Los Angeles, California Tokyo, Japan Melbourne, Australia +81 3 5218 1930 Milan, Italy Palm Beach, Florida ADDITIONAL PRIMARY PORTFOLIO MANAGEMENT CENTERS Paris, France Atlanta, Georgia Piscataway, New Jersey Chicago, Illinois San Francisco, California Dallas, Texas Seoul, South Korea The Hague, Netherlands Shanghai, China Singapore Taipei, Taiwan Tampa, Florida Toronto, Canada Totowa, New Jersey Wilmington, Delaware Zurich, Switzerland Neuberger Berman Group LLC 605 ird Avenue New York, NY 10158-3698 800.223.6448 L0317 04/15 ©2015 Neuberger Berman Group LLC. All rights reserved. www.nb.com NB002_2014_AR_Cover_QCR_Offset_042715_UG_R2.indd 1 5/3/15 8:21 AM Neuberger Berman is a private, independent, employee-owned investment firm, managing equity, fixed income, private equity and hedge fund portfolios for institutions, advisors and individuals. Our presence is worldwide, with offices in 18 countries and more than 2,000 professionals focused on serving global clients. Named by Pensions & Investments as a 2013 and 2014 Best Place to Work in Money Management, our firm is tenured, stable and long-term in focus. We foster an investment culture of fundamental research and independent thinking, in place since our founding in 1939. NB002_2014_AR_Cover_QCR_Offset_042715_UG_R1.indd 2 5/1/15 10:16 AM OUR MISSION IS TO PARTNER WITH OUR 1 CLIENTS TO ACHIEVE 1,649 79 % THEIR UNIQUE RESEARCH MEETINGS OF ALL WITH COMPANY INVESTMENT MANAGEMENT TEAMS NB PRIVATE OBJECTIVES. AT OUR OFFICES IN 2014 EQUITY FUNDS RAISED BETWEEN ’02 AND ’12 OUTPERFORMED THEIR RESPECTIVE % EQUITY AUM % FIXED INCOME AUM IRR BENCHMARKS 80 77 BASED ON OUTPERFORMED THEIR BENCHMARKS OUTPERFORMED THEIR BENCHMARKS INVESTED CAPITAL1 FOR THE MOST RECENT 10-YEAR PERIOD1 FOR THE MOST RECENT 10-YEAR PERIOD1 $251BN 32 18 505 2 ,113 ASSETS UNDER OFFICES COUNTRIES INVESTMENT PROFESSIONALS NUMBER OF EMPLOYEES MANAGEMENT2 WORLDWIDE 94% 28 YRS 97% $3.3 BN OF CLIENTS’ ASSETS PORTFOLIO MANAGERS’ ANNUALIZED RETENTION INVESTED BY NB MANAGED BY LEAD AVERAGE INDUSTRY RATE OF INVESTMENT EMPLOYEES AND THEIR PORTFOLIO MANAGERS EXPERIENCE PROFESSIONALS AT SVP & FAMILIES IN NB WHO HAVE 20+ YRS MD LEVELS SINCE 2009 STRATEGIES/ACCOUNTS INDUSTRY EXPERIENCE3 TABLE OF CONTENTS All information is as of March 31, 2015, except as otherwise noted. Firm data reflects the collective 2 A MESSAGE FROM OUR CEO data for the various subsidiaries of Neuberger Berman Group LLC. See Additional Disclosures at the end of this piece, which are an important part of this presentation, for the definition of “investment 10 GLOBAL PERSPECTIVES professionals" and certain exclusions. 16 EQUITY 1As of December 31, 2014. AUM outperformance data is asset-weighted and based on the gross of 26 FIXED INCOME fee performance of the firm’s traditional equity and fixed income strategies against their respective benchmarks and peer categories. Individual strategies may have experienced negative performance 34 ALTERNATIVE INVESTMENTS during certain periods of time. NB Private Equity fund outperformance data is net of fees and as of September 30, 2014. See disclosures at the end of this material for additional information regarding 44 PRIVATE CLIENT AUM outperformance (including 3- and 5-year statistics) and private equity outperformance statistics. 54 PROTECTING THE FRANCHISE Indexes are unmanaged and are not available for direct investment. Investing entails risks, including possible loss of principal. Past performance is no guarantee of future results. 63 FINANCIAL HIGHLIGHTS 2Includes $115.7 billion in Equity assets, $104.4 billion in Fixed Income assets and $31.1 billion in 64 BOARD OF DIRECTORS AND MANAGEMENT Alternatives assets under management. 3As of December 31, 2014 NB002_2014_AR_Text_Final_QCR_Offset_042715_UG_R1.indd 1 5/6/15 9:47 PM 2 A MESSAGE FROM OUR CEO George Walker 2014 WAS A LANDMARK YEAR CHAIRMAN AND CHIEF EXECUTIVE OFFICER FOR NEUBERGER BERMAN... ...as we advanced to 100% employee ownership,1 well ahead of schedule. Today the firm is owned by 465 current employees, including 84 who made their first equity purchase in Neuberger Berman this year. We are gratified by this outcome. Our core assets are our people, our culture, on a net basis over time. These bonds are 144A for 2009 2010 2011 2012 2013 2014 our experience and our ability to focus on a single life—private, just as we intend the firm will be private mission—helping clients achieve their unique in 2045. Market participants called this offering "a Managing Directors 97% 94% 99% 96% 98% 98% investment objectives over time. Employee ownership rare bird sighting" as few private companies are able impacts those assets fundamentally as it helps drive: to participate beyond 10 years. We are grateful for Senior Vice Presidents 95% 91% 95% 97% 97% 97% the support of the financial community—largely Alignment with client interests. competitors we admire deeply—who share our conviction in the outlook for Neuberger Berman as a Revenues are not shared with a corporate parent or stable, high quality organization in the decades ahead. public shareholders, rather amongst those who are tasked with delivering for clients. In a world with Employee engagement and retention. thousands of competitors and the ability to move funds with the click of a mouse, it is crystal clear to During 2014, virtually all of our senior investment each of us that the firm can only prosper if we execute professionals remained in place, as in the past. We on that mission. are proud of our 97% annualized retention rate since 2009. Keeping great investors over time enables us to Long-term focus. have a team where more than 94% of client assets are managed by lead portfolio managers with 20 or more When decisions are made to build capabilities, years of experience—materially above industry average. employee owners tend to approach them in the Neuberger Berman is known as a place where portfolio context of our work and our career horizon (and managers can focus on investing. Managers choose to beyond), not purely financially, and with less sensitivity bring their careers to Neuberger Berman, valuing the to quarterly financial results. For example, we have investment culture and climate, resources and spirit of invested materially in upgrading our technology intellectual independence that we provide. in both our Fixed Income and Equities platforms, investments which have long payback periods but Alignment, engagement and retention are critical which help us execute day-in and day-out. That time elements to driving long-term investment performance, horizon and focus on career accomplishment better and ownership is just one element that influences them. aligns us with our clients’ objectives. We recognize that alignment emerges from multiple The same long-term focus applies to our capital factors. Our employees invest alongside clients in funds, structure. In addition to adding 84 new equity separately managed accounts and partnership vehicles. owners, we fully redeemed the 2020 5.625% senior The firm pursues no proprietary investing activities. notes we issued two years ago and replaced them Our employees and their families have invested with 4.875% bonds due in 2045. As in the past, we approximately $3.3 billion in Neuberger Berman chose the most conservative path and longest tenor accounts, partnerships and strategies—the equivalent financing available, and we plan to further deleverage of many years of compensation. 1Employee ownership includes current and former employees, directors, consultants and their permitted transferees. NEUBERGER BERMAN ANNUAL REPORT 2014 NB002_2014_AR_Text_Final_QCR_Offset_042715_UG_R1.indd 2 5/6/15 9:47 PM 3 2014 WAS A LANDMARK YEAR FOR NEUBERGER BERMAN... ...as we advanced to 100% employee ownership,1 well ahead of schedule. Today the firm is owned by 465 current employees, including 84 who made their first equity purchase in Neuberger Berman this year. We are gratified by this outcome. RETENTION LEVELS OF INVESTMENT PROFESSIONALS 2009 2010 2011 2012 2013 2014 AUM BY ASSET CLASS AS OF 12/31/14 Managing Directors 97% 94% 99% 96% 98% 98% Senior Vice Presidents 95% 91% 95% 97% 97% 97% Alignment matters. The solutions are straight-forward but will require political will that appears lacking in the U.S., while We try hard to put ourselves on the same side of the thankfully other nations, e.g. Australia, Colombia and table as our clients. many northern European countries, will likely benefit in 47% EQUITY decades ahead from their prudence today.) 41% FIXED INCOME Anecdotally, alignment—and taking care of our 12% ALTERNATIVE INVESTMENTS employees—also explains why we increased our firm Our agenda on employee engagement (“Are you proud 401(k) payment in the United States to be 15% of to work at NB?”) and enablement (“Is NB getting your compensation, with a maximum annual contribution AUM BY CLIENT very best work or are there impediments/constraints?”) AS OF 12/31/14 of $35,000 for 2015, significantly above most peers is broad and deep. Most fundamentally, it involves and better aligned with leading non-U.S. programs. asking those questions regularly and differently of We want each of our employees to be presented with each of our employees and committing to continuous the same choices clients face—how to invest their improvement. We are also making new efforts to irreplaceable assets in challenging markets. We also want procuring quantitative and qualitative feedback on to make sure that, at all levels, if someone pursues a functions that are mission critical but don’t have the career at Neuberger Berman, they can be equipped to same performance metrics as our portfolio managers. take care of themselves and their families in retirement. In December, we were honored for the second 58% INSTITUTIONAL (As an aside, the outlook in the U.S.