Brookfield Asset Management Ltd.

1. ORGANIZATION

Brookfield Asset Management Ltd. (“BAM”), through its investment in Brookfield Asset Management ULC (“asset management business”, the “Asset Management Company” or the “Company”) is an alternative asset manager. BAM is listed on the New York and Toronto stock exchanges under the symbol BAM. BAM was incorporated on July 4, 2022 and its head office is located at Brookfield Place, 250 Vesey Street, 15 th Floor, New York, NY, 10281-0221 and its registered office is located at 1055 West Georgia Street, 1500 Royal Centre, P.O. Box 11117, Vancouver, British Columbia V6E 4N7.

On December 9, 2022, Brookfield Corporation (“BN”) completed the spin-off of 25% of its interest in Brookfield Asset Management ULC (the “2022 Arrangement”). BAM was incorporated for the purpose of holding a 25% interest in Brookfield Asset Management ULC and to facilitate the 2022 Arrangement. As part of the 2022 Arrangement, BN contributed certain indirect wholly-owned asset management subsidiaries to Brookfield Asset Management ULC. The contribution of these entities was considered a common control transaction and was measured at historical cost. Further, BN contributed a 25% interest of Brookfield Asset Management ULC to BAM, and in exchange, BAM issued securities of BAM to BN’s shareholders at that time on a pro-rata basis.

BAM entered into several agreements and arrangements resulting from the 2022 Arrangement, among which include:

•The Asset Management Services Agreement (the “AMSA”) under which BAM provides the services of its employees and its Chief Executive Officer to Brookfield Asset Management ULC which pays BAM for the services of these individuals on a cost recovery basis. Most of BAM's employees/executives spend their time discharging their duties as officers and employees of BAM and towards responsibilities related to Brookfield Asset Management ULC which include investment, corporate and other services. In addition, at the request of Brookfield Asset Management ULC, BAM may provide options and long term incentive awards to its employees, which will be reimbursed under this agreement. See discussion of the accounting for this agreement in the Operating Recoveries accounting policy in Note 2;

•The Transitional Services Agreement (the “TSA”) pursuant to which (i) Brookfield Asset Management ULC will provide BN and BAM, on a transitional basis, certain services to support day-to-day corporate activities (including services relating to finance, treasury, accounting, legal and regulatory, marketing, communications, human resources, internal audit, information technology), and (ii) BN will provide, on a transitional basis, certain services to Brookfield Asset Management ULC to facilitate the orderly transfer of the asset management business. See discussion of the accounting for this agreement in the Related Parties accounting policy in Note 2; and

•The Relationship Agreement under which certain employee share-based and performance-based compensation costs are recovered from BN. See discussion of the accounting for this agreement in the Operating Recoveries accounting policy in Note 2.

On May 2, 2024, Brookfield Wealth Solutions (“BWS”) completed the acquisition of the remaining outstanding common stock of American Equity Investment Life Holding Company (“AEL”) that it did not already own. In connection with the transaction, BAM issued approximately 28.8 million Class A limited voting shares totaling consideration of $1.1 billion to BN in exchange for 28.8 million common shares of the Asset Management Company (the “AEL Mandate”). The AEL Mandate was non-dilutive to BAM Ltd. shareholders and increased BAM's ownership in the Asset Management Company from approximately 25% to approximately 27%. This incremental ownership in the Asset Management Company was reflected in our earnings in the period.

The accompanying Consolidated Financial Statements of BAM have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. Dollars. The Consolidated Financial Statements have been prepared in accordance with the accounting policies set out below.

The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Management believes that estimates utilized in the preparation of the Consolidated Financial Statements are reasonable. Such estimates include those used in the valuation of investments and the accounting for share-based and performance-based compensation. Actual results may differ from those estimates and such differences may be material.

BAM consolidates all entities that it controls through a majority voting interest and all variable interest entities (“VIE”) for which it is the primary beneficiary. An enterprise is determined to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. BAM determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and upon events warranting reconsideration. In determining whether BAM is the primary beneficiary, the Company evaluates its control rights as well as economic interests in the entity held either directly or indirectly by the Company. Investments and redemptions (either by BAM, affiliates of the Company or third parties) and amendments to governing documents could affect an entity’s status as a VIE or the determination of the primary beneficiary, and management will re-evaluate its assessment as or when such events occur. As at December 31, 2024, BAM is not the primary beneficiary of any VIE.

In the normal course of business, BAM may enter into transactions not denominated in U.S. Dollars. Foreign exchange gains and losses arising on such transactions are recorded in Net Income. In addition, where BAM consolidates entities that have a non-U.S. Dollar functional currency those non-U.S. Dollar denominated assets and liabilities are translated to U.S. Dollars at the exchange rate prevailing at the reporting date and income, expenses, gains and losses are translated at the prevailing exchange rate on the dates that they were recorded. Cumulative translation adjustments arising from the translation of non-U.S. Dollar denominated operations are recorded in Other Comprehensive Income.

Cash and cash equivalents represent cash on hand and cash held in banks. Interest income from cash and cash equivalents is recorded in the Consolidated Statements of Comprehensive Income.

Equity Method Investments

Investments in which BAM is deemed to exert significant influence, but do not have a controlling financial interest, are accounted for using the equity method of accounting. BAM has significant influence over Brookfield Asset Management ULC and therefore accounts for its investment under the equity method.

The carrying value of equity method investments is determined based on amounts invested by the Company, adjusted for the share of earnings or losses of the investee allocated based on the relevant agreements, less distributions received. Under the equity method of accounting, BAM's share of earnings from equity investments is included in the share of income from equity method investments in the Consolidated Statements of Comprehensive Income. BAM evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

When BAM acquires an additional interest in an existing equity method investment, resulting in a step-up in basis, the difference between the purchase price and BAM's proportionate share of the book value of the investee’s net assets is identified and allocated to the fair value of the identifiable assets and liabilities of the investee at the acquisition date. The excess of the purchase price over the book value of the net assets acquired is allocated to intangible assets and goodwill. The basis difference is generally amortized over the remaining useful lives of the finite life intangible assets, while any amount allocated to indefinite life intangibles and goodwill is not amortized but is tested for impairment annually. The amortization of the basis difference affects BAM’s share of the investee’s net income or loss and is included in the “Share of income from Brookfield Asset Management ULC” line item in the Consolidated Statements of Comprehensive Income. The amortization periods for the intangible assets to which the basis difference is allocated are consistent with the estimated useful lives of those assets.

Refer to Note 3 for further details of BAM's equity method investments.

Accounts Payable and Accrued Liabilities

Accounts payable primarily consists of long-term compensation liabilities due to the employees of BAM.

Other Assets

Other assets include options to acquire shares of the Company. BAM has elected the measurement alternative for equity investments without readily determinable fair values to be measured at cost minus accumulated impairment, if any. The carrying amount of these investments as of December 31, 2024 was $75 million (2023 – $40 million). For the year ended December 31, 2024, there has beenno downward or upward adjustments made to the carrying amount of these investments due to impairment or observable price changes in orderly transactions for identical or similar investment of the same issuer.

Operating Recoveries

Operating Recoveries arise from the AMSA between BAM and Brookfield Asset Management ULC and the Relationship Agreement between BAM, Brookfield Asset Management ULC and BN.

Under the AMSA, recoveries are recognized on a cost recovery basis such that neither party receives financial gain nor suffers financial loss. Income generated under the AMSA relating to these services is recognized as Operating Recoveries in the Consolidated Statements of Comprehensive Income on a gross basis as and when the services are performed by BAM.

Under the Relationship Agreement, certain employee share-based and performance-based compensation costs are recovered from BN. Income generated under the Relationship Agreement relating to these awards is recognized as Operating Recoveries in the Consolidated Statements of Comprehensive Income on a gross basis.

Certain liabilities classified as share-based awards covered by the AMSA and the Relationship Agreement are required to be revalued at each balance sheet date. As a result, where the revaluation results in an increase in the share-based award liability, BN and Brookfield Asset Management ULC will reimburse BAM while conversely, where the revaluation results in a decrease in the share-based award liability, BAM will be responsible for refunding the difference to BN and Brookfield Asset Management ULC.

Under the TSA, BAM is responsible for the costs of transitional services provided by Brookfield Asset Management ULC and BN. Such costs are recognized as Operating Recoveries in the Consolidated Statements of Comprehensive Income when services are performed.

To the extent that Brookfield Asset Management ULC makes payments to BAM under the AMSA for share-based awards before they vest, such prepayments are recognized by BAM as deferred income included in Accounts payable and accrued liabilities on the Consolidated Balance Sheets.

Compensation consists of (a) salary and bonus, and benefits paid and payable to employees and (b) share-based compensation associated with the grants of share-based awards to employees of BAM. Compensation costs relating to the issuance of share-based awards to senior management and employees of BAM is accounted for in accordance with ASC 718, Compensation - Stock Compensation, which measures the equity-classified awards at fair value on the grant date and expenses the awards over the vesting period. Cash settled share-based awards and awards settled in a variable number of shares for a fixed monetary amount are classified as liabilities and are remeasured at the end of each reporting period, with forfeitures recognized as they occur.

In the normal course of business, BAM issues share-based compensation awards to employees of Brookfield Asset Management ULC. Such awards are accounted for as awards issued to employees of equity method investees under ASC 323 Investments – Equity Method and Joint Ventures. As the awards vest, BAM recognizes the entire cost of the awards as an expense included in share of income from equity method investments, as no proportionate funding by the other investors occurs and BAM does not receive any increase in its relative ownership percentage of Brookfield Asset Management ULC. However, the cost associated with BAM’s ownership interest is recognized when BAM recognizes its share of Brookfield Asset Management ULC’s earnings. Brookfield Asset Management ULC reimburses BAM for such awards, which BAM recognizes as income included in share of income from equity method investments in the same period as the associated cost of the awards. As such, this arrangement with Brookfield Asset Management ULC has no net impact on BAM’s Consolidated Statements of Comprehensive Income. To the extent that Brookfield Asset Management ULC reimburses BAM for such awards before they vest, BAM recognizes the reimbursement in additional paid-in capital.

Refer to Note 5 for further details of BAM's share-based compensation.

Carried Interest Compensation Expense

Carried interest is performance-based compensation associated with realized or unrealized carried interest earned on the performance of investments on a fund-by-fund basis. Employees of BAM earn carried interest compensation which is subject to both positive and negative adjustments and recoverable from Brookfield Asset Management ULC and BN under the terms of the ASMA and the Relationship Agreement.

Related Parties

In the normal course of operations, BAM enters into various transactions on market terms with related parties, including amounts in Due from/to affiliates. BAM and its subsidiaries may also transact with entities that share a common parent. Amounts owed to and by equity method investments are not eliminated on consolidation. See Note 7 for further detail.

Dividends

Dividends are reflected in the Consolidated Financial Statements when declared.

Earnings per Share

BAM uses the two class method to calculate basic and diluted net income per share. Earnings for each period are allocated to participating securities based on the contractual participation rights of the security to share in the current earnings as if all current period earnings had been distributed. Undistributed losses are not allocated to participating securities that do not have a contractual obligation to share in losses.

Diluted net income per share reflects the impact of dilutive instruments, which are generally determined using the treasury stock method. For potentially dilutive instruments that are also participating securities, the treasury stock method or the two-class method, whichever, produces the more diluted result, is used to determine diluted net income per share.

Segment Reporting

We operate asone reportable and operating segment with our primary activity being the management of our investment in the Asset Management Company. ASC 280, Segment Reporting, requires the use of the“management approach” to align segment reporting with our internal reporting, and our Chief Operating Decision Maker (“CODM”), BAM's Chief Executive Officer, manages operations on a consolidated basis and regularly reviews net income as the primary measure for assessing BAM's performance and allocating resources. Asset management decisions are made at the BAM level and deployment of capital decisions are made based on our single operating segment for which the key measure is U.S. GAAP net income and aligned with the Consolidated Statements of Comprehensive Income. Substantially all of BAM's revenues and assets are recognized and domiciled in North America. Significant segment expenses that are regularly provided to and reviewed by BAM's CODM would be consistent with the consolidated expenses as presented in the Consolidated Statements of Comprehensive Income. The measure of segment assets is reported in the Consolidated Balance Sheets, as BAM is managed on a consolidated basis.

Recent Accounting Pronouncements

BAM considers the applicability and impact of all Accounting Standard Updates (“ASUs”) issued by the Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company's Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07. ASU 2023-07 intends to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. BAM adopted this accounting standard effective for the year ended December 31, 2024 and its adoption did not have a material impact on BAM's Consolidated Financial Statements.

In November 2024, the FASB issued ASU 2024-03, which requires public business entities to disclose specific information about existing costs and expenses in the notes to its financial statements. This ASU is intended to provide users with useful information about expenses critical to understanding an entity's performance. This standard requires that a public business entity disclose key expenses including, but not limited to, employee compensation, depreciation and amortization, and associated qualitative disclosures about the nature of expenses. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027. BAM is currently assessing the impact of this update.

3. INVESTMENTS

BAM has a variable interest in the Company, an unconsolidated VIE. It has been determined that BAM is not the primary beneficiary mainly due to its lack of power to unilaterally make decisions about the activities that most significantly impact the VIE’s returns. BAM accounts for its interest in the Company using the equity method of accounting as it has significant influence from its approximate 27% (2023– 25%) equity interest and its ability to appointtwo of four directors on the VIE’s board.

During the year ended December 31, 2024, BAM issued 28,803,599 Class A limited voting shares with a fair value of $1.1 billion to BN in exchange for 28,803,599 shares of the Asset Management Company. This transaction increased BAM's ownership interest in the Company to approximately 27%. BAM accounted for the step-up in basis by allocating the excess of the purchase price over the proportionate share of the book value of the net assets acquired to the identifiable assets and liabilities of the Company.

Additionally, during the year ended December 31, 2024, BAM acquired redeemable preferred shares of a subsidiary of the asset management business valued at $47 million in exchange for common shares of the Asset Management Company which has been accounted for as a debt security held at amortized cost.

As at December 31, 2024, the carrying value of the equity method investment was equal to BAM’s interest in the Company’s underlying net assets.

The summarized financial information and results of BAM’s equity method investee, Brookfield Asset Management ULC, are outlined in the tables below:

For the year ended December 31, 2024, BAM’s share of net income from the Company was $570 million (2023 – $470 million; period from December 9, 2022 to December 31, 2022 – $21 million) and BAM received cash distributions from the Company of $653 million (2023 – $526 million; period from December 9, 2022 to December 31, 2022 – $nil).

The assets and liabilities recognized in BAM’s Consolidated Balance Sheets as of December 31, 2024 and 2023, related to its maximum exposure to the loss of the Company as an unconsolidated VIE, are as follows:

BAM has not provided financial or other support to the Company during the periods presented above.

4. INCOME TAXES

The income before provision of taxes consists of income earned in the jurisdictions in which we operate. BAM does not currently carry a provision for taxes as there is no tax obligation on current period net income. BAM's equity-accounted investment in the Company is expected to be realized through non-taxable dividends. Accordingly, no tax provision has been recorded.

BAM's effective income tax rate is different from BAM's statutory income tax rate due to the following differences set out below:

A summary of the tax effects of the temporary differences is as follows:

As at December 31, 2024, BAM did not have any material unrecognized tax benefits related to uncertain tax positions.

BAM files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, BAM is subject to examination by U.S and other local tax authorities. As at December 31, 2024, no tax returns were subject to examination.

5. SHARE-BASED COMPENSATION

BAM, the Asset Management Company, and BN have granted share-based compensation awards to certain employees and directors of BAM, under a number of compensation plans (the “Equity Plans”). The Equity Plans provide for the granting of share options, restricted shares, escrowed shares and deferred share and restricted share units which contain certain service or performance requirements of BAM or BN.

For the year ended December 31, 2024, BAM granted 6.1 million (2023 –7.9 million) stock options at a weighted average exercise price of $40.07 (2023 – $35.13). The compensation expense for the year ended December 31, 2024 was calculated using the Black-Scholes method of valuation, assuming an average 7.5 year term (2023 –7.5 year term),29.2% volatility (2023 –28.5%), a weighted average expected dividend yield of 4.8% annually (2023 –4.6%), a risk-free rate of 4.2% (2023 –3.9%) and a liquidity discount of 25% (2023 –25%), with a fair value of $6.12 per unit (2023 – $5.26). The total fair value of the options granted during the year ended December 31, 2024 was $37.5 million (2023 – $41.3 million).

For the year ended December 31, 2024, BAM didnot grant any escrowed shares. For the year ended December 31, 2023, BAM granted 4.8 million escrowed shares at a weighted average exercise price of $35.13. The compensation expense for the year ended December 31, 2024 and 2023 was calculated using the Black-Scholes method of valuation, assuming an average 7.5 year term,28.5% volatility, a weighted average expected dividend yield of 4.6% annually, a risk-free rate of 3.9% and a liquidity discount of 25%, with a fair value of $5.26 per unit. The total fair value of the escrowed shares granted during the year ended December 31, 2023 was $25.2 million.

The expenses of the share-based compensation are recognized on the financial statements of BAM and are summarized in the following table:

Management Share Option Plan

BAM recognizes any awards associated with the existing Equity Plans for its employees irrespective of whether the awards were granted by BN or BAM. Options issued under the Management Share Option Plan (“MSOP”) of both BN and BAM vest over a period of up tofive years, expireten years after the grant date and are settled through issuance of Class A shares of BN or BAM. The exercise price is equal to the market price at the grant date.

For the year ended December 31, 2024, the total expense incurred by BAM with respect to MSOP totaled $10 million (2023 – $10 million, for the period from July 4, 2022 to December 31, 2022 – $1 million).

The change in the number of options during the year ended December 31, 2024 was as follows:

The change in the number of options during the year ended December 31, 2023 was as follows:

The change in the number of options for the period from July 4, 2022 to December 31, 2022 was as follows:

The weighted-average grant date fair value of BAM MSOP granted for the year ended December 31, 2024, December 31, 2023 and the period from July 4, 2022 to December 31, 2022 were $6.12, $5.26, and $3.50 respectively, and was determined using the Black-Scholes valuation model, with inputs to the model as follows:

The weighted-average grant date fair value of BN MSOP granted for the period from July 4, 2022 to December 31, 2022 was $8.82, and was determined using the Black-Scholes valuation model, with inputs to the model as follows:

Escrowed Stock Plan

The Escrowed Stock (“ES”) shares generally vest over five years and must be held to the fifth anniversary of the grant date. At a date no more thanten years from the grant date, all outstanding ES shares will be exchanged for Class A shares issued by BN or BAM based on the market value of the respective Class A shares at the time of the exchange. The number of Class A shares issued on exchange will be less than the Class A shares purchased under the ES Plan resulting in a net reduction in the number of Class A shares issued by BAM.

For the year ended December 31, 2024, the total expense incurred with respect to the ES Plan totaled $44 million.

For the year ended December 31, 2023, the total expense incurred with respect to the ES Plan totaled $20 million.

For the period from July 4, 2022 to December 31, 2022, the total expense incurred with respect to the ES Plan totaled $3 million.

The weighted-average grant date fair value of BAM ULC escrowed shares granted for the year ended December 31, 2024 was $6.17 and the weighted-average grant date fair value of BAM escrowed shares granted for the year ended December 31, 2023 and the period ended December 31, 2022 were$5.26 and $3.83, respectively, and were determined using the Black-Scholes model of valuation with inputs to the model as follows:

The weighted-average grant date fair value of BN escrowed shares granted for the period from July 4, 2022 to December 31, 2022 was $7.50, and was determined using the Black-Scholes valuation model, with inputs to the model as follows:

Restricted Stock Plan

The Restricted Stock Plan awards executives with Class A shares of BN and BAM purchased on the open market (“Restricted Shares”). Under the Restricted Stock Plan, Restricted Shares awarded vest over a period of up tofive years, except for Restricted Shares awarded in lieu of a cash bonus, which may vest immediately. Vested and unvested Restricted Shares are subject to a hold period of up tofive years. Holders of Restricted Shares are entitled to vote Restricted Shares and to receive associated dividends. Employee compensation expense for the Restricted Stock Plan is charged against income over the vesting period.

Compensation expense recognized for the year ended December 31, 2024 was $7 million (2023 – $7 million; for the period ended December 31, 2022 – $1 million).

Deferred Share Unit Plan

The Deferred Share Unit (“DSU”) Plan provides for the issuance of DSUs. Under the plan, qualifying employees and directors receive varying percentages of their annual incentive bonus or directors’ fees in the form of DSUs. The DSUs vest over periods of up tofive years, and accumulate additional DSUs at the same rate as dividends on Class A shares of BN and BAM based on the market value of the Class A Shares at the time of the dividend. Participants may convert vested DSUs into cash upon retirement or cessation of employment.

The value of these DSUs, when converted to cash, will be equivalent to the market value of the Class A shares of BN and BAM at the time the conversion takes place. The fair value of the vested DSUs as at December 31, 2024 was $488 million (December 31, 2023 – $336 million).

Employee compensation expense is charged against income over the vesting period of the DSUs. As these awards are classified as liabilities, the amount payable in respect of vested DSUs changes as a result of dividends and share price movements. All of the amounts attributable to changes in the amounts payable by the Company are recorded as employee compensation expense in the period of the change. For awards issued as part of the 2022 Arrangement, the mark-to-market movement in the awards is recoverable from the Asset Management Company. For the year ended December 31, 2024, employee compensation expense totaled $162 million (2023 – $113 million; for the period ended 2022 – recovery of $45 million), due to a change in the underlying share price.

Restricted Share Unit Plan

The Restricted Share Unit (“RSU”) Plan provides for the issuance of RSUs. Under the plan, qualifying employees and directors receive varying percentages of their annual incentive bonus or directors’ fees in the form of RSUs. The RSUs vest over periods of up tofive years. Participants may convert vested RSUs into cash upon retirement or cessation of employment.

The value of the RSUs, when converted into cash, will be equivalent to the difference between the market price of equivalent number of Class A shares of BN or BAM at the time the conversion takes place and the market price on the date the RSUs are granted. Employee compensation expense is charged against income over the vesting period of the RSUs. As these awards are liability classified, the amount payable in respect of vested RSUs changes as a result of dividends and share price movements. All of the amounts attributable to changes in the amounts payable by the Company are recorded as employee compensation expense in the period of the change. For awards issued as part of the 2022 Arrangement, the mark-to-market movement in the awards is recoverable from the Asset Management Company.

During the year ended December 31, 2024, the RSU Plan was settled and all participating BAM employees and directors received a cash settlement equal to the liability at the date of settlement. As the RSU Plan was a plan of BN, all costs associated with settlement were reimbursed by BN. As the RSUs have been settled, the fair value is $nil as at December 31, 2024 (December 31, 2023 – $195 million).

For the year ended December 31, 2024, employee compensation expense totaled $5 million (2023 – $43 million), due to the change in the underlying share price.

The change in the number of BN DSUs and RSUs outstanding to employees of BAM for the year ended December 31, 2024 was as follows:

The change in the number of BN DSUs and RSUs outstanding to employees of BAM for the year ended December 31, 2023 was as follows:

The change in the number of BN DSUs and RSUs outstanding to employees of BAM for period from July 4, 2022 to December 31, 2022 was as follows:

6. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. BAM applies the two-class method in calculating earnings per share for each of its two classes of shares and participating securities, based on their pro-rata share of earnings. Class A shares held under the ES Plans in one or more private wholly-owned subsidiaries of BAM are classified as treasury shares and have been excluded from the calculation of earnings per share. BAM has certain dilutive securities relating to outstanding restricted stock and options held by employees and non-employees and have been reflected accordingly in diluted earnings per share figures. Basic and diluted net income per share of common stock for the year ended December 31, 2024, year ended December 31, 2023 and for the period from July 4, 2022 to December 31, 2022 was calculated as follows:

The following weighted average potentially dilutive securities were evaluated under the treasury stock method for potentially dilutive effects and have been excluded in the above computation of diluted net income per share attributable to common shareholders for the period presented due to their anti-dilutive effect:

7. RELATED PARTY TRANSACTIONS

In the normal course of business, BAM enters into transactions with related parties by recovering or bearing the cost of certain employee compensation with BN and Brookfield Asset Management ULC and by borrowing on its $500 million credit facility with Brookfield Asset Management ULC to fund short-term working capital requirements.

Under the AMSA, BAM provides the services of its employees and its Chief Executive Officer to Brookfield Asset Management ULC on a cost recovery basis. For the year ended December 31, 2024, under this arrangement BAM has recognized $181 million (2023 – $177 million; period ended December 31, 2022 – $nil) in Operating Recoveries. In addition, for the year ended December 31, 2024, BAM recovered $9 million (2023 – $4 million, period ended December 31, 2022 – $nil) in unrealized carried interest compensation expense from the asset management business.

As outlined in the Relationship Agreement, BN is responsible for the share-based awards issued by BN, some of which are subject to revaluation at each balance sheet date and will also bear the cost of the employee entitlement to carried interest on mature funds either directly or indirectly through reimbursement to the Company. For the year ended December 31, 2024, BAM has recognized Operating Recoveries of $234 million (2023 – $206 million; period ended December 31, 2022 – $35 million).

Under the TSA, Brookfield Asset Management ULC will provide BN and BAM certain services to support day-to-day corporate activities on a transitional basis. For services provided to BAM, costs are recorded on a gross basis in the Consolidated Statements of Comprehensive Income. For the year ended December 31, 2024, BAM has recognized less than $1 million (2023 – less than $1 million; period ended December 31, 2022 – less than $1 million), in the Consolidated Statements of Comprehensive Income under this arrangement.

For the year ended December 31, 2024, BAM received from Brookfield Asset Management ULC prepayments under the AMSA for share-based compensation of $15 million (2023 – $16 million, period ended December 31, 2022 – $nil), respectively, which represent deferred income and has been included in Accounts payable and accrued liabilities. For the year ended December 31, 2024, BAM received from Brookfield Asset Management ULC advanced reimbursements for BAM share-based awards issued to employees of Brookfield Asset Management ULC of $79 million (2023 – $88 million; period ended December 31, 2022 – $nil), respectively, which has been recorded in additional paid-in capital.

Due from affiliates and Due to affiliates consisted of the following:

In addition, BAM owns options to acquire Brookfield Asset Management ULC’s shares. These options track certain options issued under our Management Share Option Plan and are automatically exercised at the same time and the same exercise prices as the tracked BAM options. As of December 31, 2024, the carrying amount of these options is $75 million (2023 – $40 million) and is included in other assets on the Consolidated Balance Sheets.

8. COMMITMENTS AND CONTINGENCIES

Guarantees

BAM may from time to time enter into guarantees in respect of certain co-investments in which there is carried interest. The amount guaranteed is up to the carry amount paid to the general partners of the respective funds, net of taxes. In the event that the general partners default on their carry clawback obligations, BAM will make payments under the guarantees. As at December 31, 2024, BAM has not recognized any liabilities with respect to such guarantees as no carry has been paid in the relevant funds.

Litigation

BAM may from time to time be involved in litigation and claims incidental to the conduct of its business. BAM’s business is also subject to extensive regulation, which may result in regulatory proceedings against the Company. As of December 31, 2024, there is no outstanding litigation.

BAM accrues a 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. Although there can be no assurance of the outcome of such legal actions, based on information known by management, BAM does not have a potential liability related to any current legal proceeding or claim that would individually or in the aggregate materially affect its results of operations, financial position or cash flows.

9. SUBSEQUENT EVENTS

Quarterly Dividend

On February 11, 2025, the Board of BAM declared a quarterly dividend of $0.4375 per share, payable on March 31, 2025 to shareholders of record as at the close of business on February 28, 2025.

BAM Announces Completion of Enhanced Corporate Structure

On February 4, 2025, BAM completed a corporate restructuring with BN by way of a court-approved plan of arrangement (the “2025 Plan of Arrangement”), which was originally announced on October 31, 2024, whereby BN transferred its approximate 73% interest in the Asset Management Company to BAM in exchange for newly issued Class A Shares of BAM, on a one-for-one basis (the “2025 Arrangement”).

Upon completion of the 2025 Arrangement on February 4, 2025, BAM issued 1,194,021,145 Class A Shares to BN and certain of its subsidiaries in exchange for all of the common shares of the Asset Management Company currently owned by BN and its subsidiaries on a one-for-one basis.

The 2025 Arrangement will be accounted for as a reverse asset acquisition in which BAM ULC is considered the accounting acquirer and have issued shares to acquire the net assets of BAM. BAM will continue to be the SEC registrant and its Consolidated Financial Statements, including historical results, other than legal share capital, will be that of BAM ULC.