Welcome to the Franklin Resources Inc. 2026 Annual Meeting of Stockholders. It is my pleasure to introduce Mr. Greg Johnson, Executive Chairman and Chairman of the Board of Franklin Resources Inc. Mr. Johnson, we're ready to begin.
Well, thank you and welcome to the Franklin Resources 2026 Annual Meeting of Stockholders. In order to make sure we have a fair treatment for all stockholders, when asking a question or making a comment, it is important that you abide by the rules of conduct which are posted on the annual meeting website at www.virtualshareholdermeeting.com/ben2026. The agenda for this meeting is also posted on the website. Will the meeting please come to order? I'd like to welcome our current directors who, in addition to myself, are nominated for election at today's meeting: Mariann Byerwalter, Alex Friedman, Jennifer Johnson, our Chief Executive Officer; Rupert Johnson, our Vice Chairman, John Kim, Karen King, Anthony Noto; John Thiel, Seth Waugh, and Geoffrey Yang.
Also participating in this annual meeting today are Matthew Nicholls, our Co-President, Chief Financial Officer and Chief Operating Officer, Courtney Hoffman, our Secretary, and Beth McAuley O'Malley, our Inspector of Elections. In addition, I'd like to welcome the other executive officers and senior management of the company that are joining us today. And finally, we welcome Zahid Rahman and Mike Bowling from the company's independent registered public accounting firm, PricewaterhouseCoopers. The annual meeting of stockholders of Franklin Resources has been called by notice dated December 22nd, 2025, which was provided to all stockholders of record as of December 5th, 2025. An affidavit of distribution is available for inspection by any stockholder wishing to do so. If there is no objection, we will dispense with the reading of the meeting notice. The notice of meeting and the accompanying proxy statement will be entered in the minutes of the meeting.
The list of stockholders entitled to vote is available. Will the Secretary of the meeting advise whether a quorum is present?
Mr. Chairman, on the record date, there were 521,390,673 shares of capital stock of the company issued, outstanding, and entitled to vote at the meeting. A majority of these shares of capital stock is present in person or by proxy at the meeting. Therefore, a quorum necessary to transact business is present.
The Chair notes that a quorum is present.
This meeting has been called for the following purposes as stated in the notice of meeting and described in detail in the Proxy Statement: the election of directors, the ratification of the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for fiscal year ending September 30th, 2026, to approve the amendment and restatement of the company's 1998 Employee Stock Investment Plan, which includes increasing the number of shares of common stock par value of $0.10 per share of the company authorized for issuance under the USIP by an additional 5 million shares, to approve an amendment and restatement of the company's 2002 Universal Stock Incentive Plan, which includes increasing the number of shares of common stock par value of $0.10 per share of the company authorized for issuance under the ESIP by an additional 25 million shares, and to approve on an advisory basis the compensation of our named executive officers.
The first proposal calls for the election of directors. Each of the persons named in the Proxy Statement has been nominated by the Board of Directors for election as a director of the company to serve until the next annual meeting of stockholders or until his or her earlier death, resignation, retirement, disqualification, or removal. The second proposal calls for the ratification of the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for fiscal year ending September 30th, 2026. The third proposal calls for the approval of the amendment and restatement of the company's 1998 Employee Stock Investment Plan, which includes increasing the number of shares of common stock par value of $0.10 per share of the company authorized for issuance under the USIP by an additional 5 million shares.
The fourth proposal calls for the approval of the amendment and restatement of the company's 2002 Universal Stock Incentive Plan, which includes increasing the number of shares of common stock at par value of $0.10 per share of the company authorized for issuance under the ESIP by an additional 25 million shares. The fifth proposal calls for the approval, on an advisory basis, the compensation of our named executive officers. If there are any questions or comments on the proposals, please type your question or comment in the field noted on the annual meeting website. We will pause briefly to allow for submission of any questions or comments that meet the standards set forth in the rules of conduct for this meeting. We ask that you identify yourself as a stockholder or proxy holder and that you limit your questions or comments to matters relating to the proposals.
Mr. Chairman, no questions have been submitted.
Thank you, Ms. Hoffman. Those stockholders who wish to vote during the meeting online should do so at this time using the Vote Here button on the annual meeting website so that their votes can be collected and included in the final vote. If you've already voted online by telephone or by mailing a proxy, you do not need to vote now unless you wish to change your vote. We will now briefly pause to facilitate voting online, and then voting will be closed for the meeting. After the completion of the formal part of the meeting, we will report on the operations of the company. Voting for this meeting is now closed. Will the Secretary please announce the preliminary tabulation results of the vote?
Mr.
Chairman, the results of the vote are: 1) Each nominee has received the vote of a majority of the votes cast and has been elected to the Board of Directors. 2) The appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for fiscal year twenty twenty-six has been ratified by a majority vote. 3) The amendment and restatement of the company's 1998 Employee Stock Investment Plan, which includes increasing the number of shares of common stock par value of $0.10 per share of the company authorized for issuance under the USIP by an additional 5 million shares, has been approved. 4) The amendment and restatement of the company's 2002 Universal Stock Incentive Plan, which includes increasing the number of shares of common stock par value of $0.10 per share of the company authorized for issuance under the ESIP by an additional 25 million shares, has been approved. 5) The compensation of our named executive director officers has been approved on an advisory basis.
Since there is no further business, the annual meeting of stockholders is now adjourned. Next, Ms. Jenny Johnson, the company's Chief Executive Officer, and Mr. Matthew Nicholls, the company's Co-President, Chief Financial Officer, and Chief Operating Officer, will report on the company's recent operations. But first, Ms. Hoffman will provide an advisory statement about forward-looking information.
Statements made during this presentation regarding Franklin Resources Inc., which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of known and unknown risks, uncertainties, and other important factors that could cause actual results to differ materially from any future results expressed or implied by such forward-looking statements. These and other risks, uncertainties, and other important factors are described in more detail in Franklin's recent filings with the Securities and Exchange Commission, including the risk factors and MD&A sections of Franklin's most recent Forms 10-K and 10-Q filings.
Now I'll turn it over to Ms. Jenny Johnson.
Thank you, Greg, and I hope everybody attending the meeting today is doing well. First of all, I'd like to thank Greg and my fellow board members who continue to provide valuable direction and counsel. Over the course of our fiscal year 2025, we made progress in several areas, ensuring we continue to meet the evolving needs of our clients. The year delivered strong equity gains and broader market participation, creating an attractive environment for active management. Against this backdrop, ending assets under management were $1.66 trillion as of September 30th, 2025, and long-term flows increased 7.8% to $343.9 billion. Long-term net outflows were $97.4 billion compared to $32.6 billion in the prior year. Excluding Western Asset Management, which I will touch on later, we had $44.5 billion in long-term net inflows compared to $16 billion in the prior year, with eight consecutive quarters of positive net flows.
Alternative and multi-asset strategies experienced strong net inflows with a combined total of $25.7 billion. We saw record growth in retail, separately managed accounts, exchange-traded funds, and Canvas, our custom indexing platform, each delivering positive net flows with double-digit AUM growth rates. fiscal year 2025 presented significant challenges for Western Asset, and we remained committed to supporting them. Western's leading investment team continues its investment autonomy, and performance has rebounded strongly, with 92%, 98%, 88%, and 99% of Western's composite AUM outperforming the benchmark for the one, three, five, and ten-year periods as of September 30th, 2025. We integrated select corporate functions to drive efficiency and give access to broader resources. Western's client service team joined Franklin Templeton in order to better serve the needs of our clients, and these enhancements have been seamless. In fiscal year 2025, we made progress across a number of key focus areas.
We are ahead of our 5-year plan in alternatives fundraising, ETFs, and Canvas, and on track in other areas. Franklin Templeton is a leading manager of alternative assets with $270 billion in alternative AUM after closing the Apera Asset Management. We have a broad range of strategies, including alternative credit, secondary private equity, real estate, hedge funds, and venture capital. This year, we fundraised $22.9 billion in private markets and advanced our commitment to democratizing private assets by bringing institutional quality opportunities to a wider range of investors. Retail SMA AUM was $165 billion as of September 30th, 2025. Our SMA business has grown at a 21% compound annual rate since 2023, reflecting the growing demand for personalized investment solutions. Within the retail SMA segment, custom and direct indexing are the fastest growing areas.
We are seeing strong momentum in our Canvas platform, where our customized solution-related AUM has more than tripled since 2023, an 82% compound annual growth rate. Our ETF business is also scaling rapidly and ahead of plan, driven by strong global demand across fundamental active, systematic active, and thematic country strategies. Our ETF AUM has grown at a 74% compound annual rate since 2023, with 16 consecutive quarters of net inflows and 14 ETFs now exceeding $1 billion in AUM. In the first year of our five-year plan, with approximately $50 billion in ETF AUM, we are already halfway to achieving our overall goal, a clear sign of the strength, momentum, and scalability of our platform. In closing, in December, we were pleased to be recognized for the third year in a row as one of the best places to work in money management by Pensions and Investments.
I'd like to thank our dedicated employees around the world for their efforts to grow our business by always putting our clients first in a continually evolving industry. With that brief overview, I would now like to hand the meeting over to our Co-President, CFO/COO, Matthew Nicholls, who will touch on financial and operational highlights from our 2025 fiscal year.
Our fiscal 2025 represented another year of continued change in the investment management industry. Notwithstanding some notable challenges, we continue to make progress on our long-term strategic plan of diversifying our business across asset classes, vehicles, and geographies to align with our client needs on a global scale. Furthermore, we remain focused on the balance of expense discipline and the need to attract, retain, and develop the best talent while investing strategically across company operations, investment teams, and distribution. As Jenny mentioned, our total AUM was $1.66 trillion at September 30th, 2025, while average AUM increased 3% to $1.61 trillion. Fiscal year adjusted operating revenues of $6.7 billion increased by 2% from the prior year, primarily due to an additional quarter of Putnam, higher average assets under management, and elevated performance fees, partially offset by the impact of Western Asset outflows.
Adjusted performance fees of $365 million increased from $293 million in the prior year. Fiscal year adjusted operating income was $1.64 billion. Adjusted operating margin was 24.5% compared to 26.1% in the prior year, reflecting our ongoing support of Western Asset. In terms of capital management, we returned $930 million to shareholders through dividends and share repurchases. As always, we continue to prioritize our dividend, which has increased every year since 1981, and share repurchases to hedge our employee share grants. We also completed the majority of our remaining acquisition-related payments and repaid $400 million of senior notes due in March 2025. Our cash flow generation and strong balance sheet provide flexibility to invest in the business organically and inorganically.
We have co-investments in seed capital of $2.8 billion, an increase from $2.4 billion at the end of the prior year, that we use to develop and scale new investment strategies. At this time, I would like to turn the meeting back to Greg. Thank you.
Thank you, Matthew. That concludes today's event. Thank you for joining us.
This now concludes the meeting. Thank you for joining, and have a pleasant day.