Annual Report of Employee Stock Plans (11-k) (2024)

Notes to Financial Statements

December31, 2017 and 2016

The following description of The Prudential Employee SavingsPlan (the “Plan” or “PESP”) provides only general information. Participants should refer to the Plan documents for a more complete description of the Plan’s provisions.

General

The Plan is adefined contribution plan generally covering all United States employees and statutory agents of The Prudential Insurance Company of America (the “Company”) and its participating affiliates. The Plan is subject to the provisions of theEmployee Retirement Income Security Act of 1974, as amended (“ERISA”).

Participation

Each eligible employee may enroll in PESP at any time, starting on their first day of employment with the Company and its participatingaffiliates.

Employees who do not affirmatively elect either to participate or to decline participation in PESP within 30 days of hire, areenrolled automatically in PESP until they affirmatively elect otherwise.

Contributions

Employee Contributions.Participants can contribute from 1% to 50% of eligible earnings as defined in the Plan, in any combination ofbefore-tax,Roth 401(k)(after-tax),and/or traditionalafter-taxcontributions. Participants who are enrolled automatically willcontribute 4% of eligible earnings on abefore-taxbasis if hired before January1, 2017, and on a Roth 401(k) basis if hired on or after January1, 2017. Rollover contributions are allowed.

Participants may elect to increase, decrease or stop their contributions at any time, subject to the Company’s Personal Securities TradingPolicy and Internal Revenue Service (“IRS”) rules.

RothIn-PlanRollovers.Participants may elect to rollover all or a portion of their vested Plan account that is then available for distribution orin-servicewithdrawal into Roth(after-tax)funds. Participants are required to pay income taxes on the amount rolled over and, assuming the applicable holding period and distribution requirements are satisfied, the RothIn-PlanRollover held in the Plan together with subsequent investment earnings will not be subject to Federal income taxes at the time of distribution. Participants are permitted to make up to four (4)separateRothIn-PlanRollovers in a single plan year.

RothIn-PlanRollovers, totaling $1,344,167 in 2017, are included in “Rollovers” and “Benefits paid to participants” in the Statement of Changes in Net Assets Available for Benefits.

Company Matching Contributions.The Company matches 100% ofbefore-taxand Roth 401(k)contributions up to a maximum of 4% of eligible earnings. Home Office employees are eligible for Company matching contributions beginning with their first contribution to the Plan. Prudential Advisors Financial Professionals and FinancialProfessional Associates are required to complete one year of service with the Company prior to becoming eligible for Company matching contributions.

Catch-UpContributions.Participants age 50 or older who will reach the 401(k) limit forcontributions for the year or certain of the Plan’s other limits for contributions, may be eligible to makebefore-taxand Roth 401(k)catch-upcontributions to thePlan during the plan year from eligible earnings.Catch-upcontributions are not eligible for Company matching contributions. For 2017,catch-upcontributions werelimited to $6,000 per participant.

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Notes to Financial Statements

December 31, 2017 and2016

PESP Company MatchTrue-Up.EffectiveJanuary1, 2017, the PESP Company MatchTrue-UpFeature was introduced. The first PESP Company MatchTrue-Upwas processed and added to participant accounts in thefirst quarter of 2017, based on 2016 contributions and earnings. The PESP Company MatchTrue-UpFeature was introduced to ensure that participants receive the maximum company matching contributions for whichthey are eligible, subject to applicable legal and Plan requirements. Going forward, the PESP Company MatchTrue-Upcontribution will be processed during the first quarter of each year, based on prior yearcontributions and earnings.

Contributions are subject to certain limitations imposed by applicable provisions of the Plan and the InternalRevenue Code of 1986, as amended (“IRC”), including compliance with applicable statutory limits andnon-discriminationrules.

Participant Account

Eachparticipant’s account is credited with the participant’s contributions and allocations of (a)the Company’s matching contributions, and (b)the Plan’s net earnings. Allocations are made pursuant to the terms of the Planbased on the participant’s eligible earnings and account balances. A participant is entitled to the benefit that can be provided from the participant’s vested account.

Vesting

Participants areimmediately vested in theirbefore-tax,Roth 401(k),after-tax,and rollover contributions plus earnings thereon. Generally, participants become 100% vested in Companymatching contributions upon the completion of three years of vesting service.

Vesting will be accelerated and participants will be 100%vested in the Company’s matching contribution and earnings thereon upon reaching age 65, or as a result of death, or becoming totally disabled while an employee. A participant will be considered totally disabled for purposes of the Plan if heor she is eligible to receive long-term disability benefits under The Prudential Welfare Benefits Plan.

Forfeitures

If a participant terminates employment with the Company prior to full vesting, thenon-vestedportionof his or her account attributable to the Company matching contributions and earnings thereon is forfeited. If the participant is reemployed within five years from the date of termination, the forfeited amount may be reinstated, subject to certainPlan provisions. During the five-year period, as stated above, the pending forfeiture amounts will continue to be invested in accordance with the participant’s investment directions or the Plan’s default investment provisions, asapplicable. Any amounts not reinstated to a participant, after the five-year period, are considered forfeitures that the Plan permits to be used to reduce future Company matching contributions or to pay administrative expenses.

As of December31, 2017 and 2016, forfeiture amounts invested in the PESP Fixed Rate Fund amounted to $1,247,781 and $1,461,941,respectively. Forfeitures of $1,407,520 were used to reduce the Company’s matching contributions in 2017.

Investment Options

Employee Contributions.Participants may direct their current account balance and future contributions in 1% increments in anyof the Plan’s investment options.

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Participants who are automatically enrolled and do not direct investment of their accountswill be invested by default into theage-appropriateconservative portfolio mix available under GoalMaker^®, a computer asset allocation programavailable to participants as described below.

Generally, there are no restrictions on the participant’s investment directions;however, participants are subject to the provisions of the PESP Market Timing Policy. Participant investment direction in regard to the Prudential Financial, Inc. Common Stock Fund is subject to the provisions of the Company’s PersonalSecurities Trading Policy. In addition, participants employed with affiliated service providers may be restricted as to investment directions in connection with certain funds and/or services being provided.

Company Matching Contributions.Starting with the first payroll deduction in 2017, 50% of an eligible employee’s company matchingcontributions were no longer automatically invested in the Prudential Financial, Inc. Common Stock Fund. Instead, 100% of company matching contributions are invested according to an employee’s investment allocation selection or, if there is noinvestment allocation on file, to the Plan’s qualified default investment alternative, GoalMaker, Conservative Portfolios.

Generally,there are no restrictions on transferring Company matching contributions from the Prudential Financial, Inc. Common Stock Fund to any of the other investment options under the Plan, except for certain limitations including, but not limited to, theprovisions of the Company’s Personal Securities Trading Policy.

The following investment options were available for the 2017 planyear:

PESP Fixed Rate Fund- The goal of the PESP Fixed Rate Fund is to provide preservation of principal and stable competitiveinterest rates based on current market conditions. The fund credits interest on an annual effective rate basis. The interest crediting rate is reset periodically (currently on a quarterly basis) and is announced in advance. The PESP Fixed Rate Fundis offered under a group annuity contract issued by the Company. It is subject to the credit risk of the Company.

Custom Plan Investments

Alliance Bernstein Core Opportunities Fund -This separate account seeks to generate capital appreciation through superior stockselection which is a process rooted in research insight and portfolio manager skill. The portfolio is constructed of approximately sixty investments where the portfolio manager believes there is a significant discount between a company’s stockprice and intrinsic economic value. The focus is on highly profitable businesses with strong fundamental prospects and above average capital flexibility. The separate account is offered by the Company and is advised by Alliance Bernstein L.P.

Delaware Small Cap Core Equity Fund -This separate account seeks long-term capital appreciation. The strategy invests in stocks ofsmall companies believed to have a combination of attractive valuations, growth prospects, and strong cash flows. The separate account is offered by the Company and is advised by Delaware Investment Advisers.

Insurance Company Separate Accounts

Core Bond Enhanced Index/PGIM Fund -This separate account seeks to achieve performance results similar to the Barclays Capital U.S.Aggregate Bond Index. This fund invests primarily in corporate and government bonds. The separate account is offered under a group annuity contract issued by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, andis advised by PGIM, Inc., also an affiliate of the Company.

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Prudential Retirement Real Estate Fund -This separate account seeks to meet or exceeda customized real estate and real estate securities benchmark return after fees and expenses. This fund of funds invests primarily in existing private real estate funds, publicly traded real estate securities, including Real Estate Investment Trustsecurities, and other real estate related investments. The manager seeks to provide maximum exposure to private real estate funds, while seeking to maintain liquidity for the purpose of meeting withdrawal requests through a combination of cash andcash equivalents, as well as investments in marketable real estate securities. The fund may, to the extent available in the market on reasonable terms, obtain a line of credit. The separate account is offered under a group annuity contract issued bythe Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, and is advised by PGIM, Inc., also an affiliate of the Company.

QMA International Developed Markets Index Fund- This separate account seeks to provide investment results that track the Morgan StanleyCapital International Europe, Australasia, and Far East Index. The fund will not hold actively managed stock positions as it does not attempt to outperform the market. The separate account is offered under a group annuity contract issued by theCompany and is advised by Quantitative Management Associates, LLC, an affiliate of the Company.

QMA U.S. Broad Market Index Fund -This separate account seeks to provide long-term growth of capital and investment results that approximate the performance of the Standard& Poor’s Composite 1500 Index. The separate account is offered under a group annuity contractissued by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, and is advised by Quantitative Management Associates, LLC, also an affiliate of the Company.

Wells Capital International Bond Fund- This separate account seeks to provide total return, consisting of a high level of currentincome and capital appreciation by investing principally in investment-grade securities of government, agency or corporate issuers worldwide, denominated in various currencies. The separate account is offered under a group annuity contract issued bythe Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, and is advised by Wells Capital Management.

Common/Collective Trusts

Jennison Opportunistic Equity Fund CIT -This collective trust seeks long-term growth of capital. It is amulti-capcatalyst driven based investment style utilizing a fundamentalbottom-upapproach. It focuses on finding companies that are either undergoing a positive changein fundamentals or delivering good forward growth characteristics for which expectations are not fully reflected or appreciated by the market. The collective trust is offered by the Prudential Trust Company, an affiliate of the Company.

Prudential High Yield Collective Investment Trust -This collective trust seeks to outperform the Barclays U.S. High-Yield Ba/B 1%Issuer Capped Bond Index by 150 basis points over a full market cycle. This fund uses a highly diversified, research-driven strategy targeting an excess return over the Bond Index. The strategy emphasizes the higher quality segment of the high yieldmarket (BB andB-ratedcorporate bonds) with heavy emphasis on default avoidance. The collective trust is offered by the Prudential Trust Company, an affiliate of the Company.

Wellington Trust Co. Diversified Inflation Hedges Fund- Effective as of June21, 2017. This collective trust seeks to providestrong relative performance versus broad equity and fixed income markets for investors during periods of rising inflation. The fund is designed to provide diversified exposure to a traditional equity and fixed income portfolio, that is, a typicalportfolio comprised of assets that are not highly inflation-sensitive. The fund seeks to accomplish its objective by providing exposure to assets that have a high sensitivity to inflation, including inflation-sensitive stocks, commodities and bonds.The collective trust is offered by the Wellington Trust Company, NA Multiple Collective Investment Funds Trust II. Account balances remaining in the eliminated investment option Prudential Jennison Natural Resources Fund, ClassQ weretransferred to this fund.

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Wellington Trust Co. International Opportunities Fund- This collective trust seeks toprovide long-term total return in excess of the Morgan Stanley Capital International All Country World IndexEx-US.This fund invests in international large tomid-capcompanies, with returns on capital underestimated by the market either on a value or a growth basis, with a split between 45% to 55% at any time. A cash position up to 10% may also be held. The collective trust is offered by the Wellington TrustCompany, NA Multiple Collective Investment Funds Trust II.

Registered Investment Companies

Prudential Jennison Natural Resources Fund, ClassQ -This mutual fund seeks long-term growth of capital. This fundgenerally invests at least 80% of assets in equity securities of natural resource companies and in asset-based securities, the values of which are related to natural resources. Natural resource companies are U.S. and foreign companies that own,explore, mine, process or otherwise develop, or provide goods and services with respect to natural resources. The principal type of equity and equity-related security in which the fund invests is common stock. The fund isnon-diversified.The mutual fund is advised by PGIM, Inc., and Jennison Associates, LLC serves as asub-advisor;both are affiliates of the Company. The ticker symbol for thisfund is PJNQX. This investment option was eliminated effective as of June20, 2017. Account balances remaining in this fund were transferred to the investment option Wellington Trust Co. Diversified Inflation Hedges Fund.

Vanguard Emerging Markets Stock Index Fund -This mutual fund seeks to track the performance of a benchmark index that measures theinvestment return of stocks issued by companies located in emerging market countries. The fund employs an indexing investment approach designed to track the performance of the Financial Times Stock Exchange Emerging Markets All Cap China ATransition Index, an interim index that will gradually increase exposure to small-capitalization stocks and ChinaA-shareswhile proportionately reducing exposure to other stocks based on their weightings inthe index. The index is a market-capitalization-weighted index. The mutual fund is advised by Vanguard Group Inc. The ticker symbol for this fund is VEMIX.

Vanguard Intermediate-Term Government Bond Index Fund -This mutual fund seeks to track the performance of a market-weighted governmentbond index with an intermediate-term dollar-weighted average maturity. The index includes fixed income securities issued by the U.S. Treasury and U.S. government agencies and instrumentalities, as well as corporate or dollar-denominated foreign debtguaranteed by the U.S. government, with maturities between three and ten years. The mutual fund is advised by Vanguard Group Inc. The ticker symbol for this fund is VIIGX.

Vanguard Short-Term Investment-Grade Fund -This mutual fund seeks to provide current income while maintaining limited price volatility.The fund invests in a variety of high-quality and, to a lesser extent, medium-quality, fixed income securities, at least 80% of which will be short-term and intermediate-term investment-grade securities. The mutual fund is advised by Vanguard GroupInc. The ticker symbol for this fund is VFSUX.

VanguardSmall-CapIndex Fund -This mutualfund seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund employs an indexing investment approach designed to track the performance of the Center for Research in SecurityPrices U.S. Small Cap

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Index, a broadly diversified index of stocks of small U.S. companies. The advisor attempts toreplicate the target index by investing all of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index. The mutual fund is advised by Vanguard Group Inc. The tickersymbol for this fund is VSCPX.

Master Trust

Prudential Financial, Inc. Common Stock Fund -This master trust invests in Prudential Financial, Inc. (“PFI”) common stockwith a small portion invested in money market shares or other investments expected to be liquid. This fund’s goal is to approximate the returns of a direct investment in shares of PFI common stock in a fund that also seeks to provide modestliquidity. Values for fund units are not identical to the current values of shares of PFI common stock. This fund has an ESOP andnon-ESOPportion (see Note 9).

Prudential IncomeFlex Select

Prudential IncomeFlex Select provides a guaranteed income for life without requiring an irrevocable election to receive PESP benefit paymentsas an annuity. Prudential IncomeFlex Select is designed to help invest the participant’s PESP accounts to provide future retirement income that is guaranteed for their lifetime. This investment option is only available to participants age 50 orolder. Participants could choose to invest their money in one or more of the three Prudential IncomeFlex Select separate accounts (Aggressive Growth, Conservative Growth, and Moderate Growth), which are described in more detail below. EffectiveDecember31, 2013, Prudential IncomeFlex Select was closed to new participants and to new contributions, loan repayments and transfers. The three Prudential IncomeFlex Select separate accounts (Aggressive Growth, Conservative Growth, andModerate Growth) are offered by the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company, which also serves as the manager of these three separate accounts.

Aggressive Growth Fund- The Prudential IncomeFlex Select Aggressive Growth Fund invests in a fixed asset allocation of underlying fundsthat are separate accounts available under group variable annuity contracts issued by the Company and the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company. The asset class mix for this fund is 70% stock (56% U.S.stocks and 14% international stocks) and 30% bonds. Each portfolio is rebalanced daily.

Conservative Growth Fund- The PrudentialIncomeFlex Select Conservative Growth Fund invests in a fixed asset allocation of underlying funds that are separate accounts available under group variable annuity contracts issued by the Company and the Prudential Retirement Insurance and AnnuityCompany, an affiliate of the Company. The asset class mix for this fund is 35% stock (28% U.S. stocks and 7% international stocks) and 65% bonds. Each portfolio is rebalanced daily.

Moderate Growth Fund- The Prudential IncomeFlex Select Moderate Growth Fund invests in a fixed asset allocation of underlying fundsthat are separate accounts available under group variable annuity contracts issued by the Company and the Prudential Retirement Insurance and Annuity Company, an affiliate of the Company. The asset class mix for this fund is 55% stock (44% U.S.stocks and 11% international stocks) and 45% bonds. Each portfolio is rebalanced daily.

Prudential IncomeFlex Target Balanced Fund

Prudential IncomeFlex Target is a product that provides certain guarantees on retirement income. The investment option underPrudential IncomeFlex Target is the Prudential IncomeFlex Target Balanced Fund, which invests in a mix of the index funds currently offered in PESP. The index funds invest in bonds (40%),

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Notes to Financial Statements

December 31, 2017 and2016

U.S. stocks (45%), and international stocks (15%) and are rebalanced daily. Unlike a targetdate fund, the Prudential IncomeFlex Target does not reduce exposure to the stock market as participants get older. In exchange for a guarantee fee of 0.95%, Prudential IncomeFlex Target provides guaranteed lifetime income, potential for income andasset growth, downside market protection for retirement income, and flexible access to market value. The guaranteed fee is applied only to those dollars invested in Prudential IncomeFlex Target. Prudential IncomeFlex Target does not guarantee marketvalue, which will fluctuate with market volatility. The underlying index funds are separate accounts available under group variable annuity contracts issued by the Company and by Prudential Retirement Insurance and Annuity Company, an affiliate ofthe Company.

As of December31, 2017, the asset allocation by the Plan’s investment options under the Prudential IncomeFlexSelect and Prudential IncomeFlex Target are shown in the following chart:

GoalMaker^®

GoalMaker^®is a computer asset allocation program available to participants. Itestablishes 12 portfolios, each invested in a different asset allocation mix. Participants select a portfolio based on their completion of an investment risk profile and estimated time to retirement; defaulting participants are assigned to theconservative portfolio applicable to their current age, assuming retirement at age 65. GoalMaker^®provides automatic rebalancing of investments once per quarter.

Payment of Benefits

Whenemployment with the Company and its affiliates ends, if the value of a vested participant’s account is in excess of $5,000, the participant may elect to (a)receive a lump sum distribution equal to the value of the participant’svested interest in his or her account, (b)receive an annuity from the Company in the amount that can be purchased with the vested value in his or her account, (c)receive a combination of a single payment for less than the total vestedvalue of his or her account plus an annuity, (d)receive partial distributions (no more than five withdrawals per Plan year, and the amount of any such withdrawal must equal at least $300), or (e)delay taking a distribution of the vestedvalue of his or her account until it is required by law. If the value of a terminated vested participant’s account is $5,000 or less, the participant may not defer distribution of his or her account.

Actively employed participants can makein-servicewithdrawals from PESP. The amount available forin-servicewithdrawals includes amounts credited to a participant’sAfter-TaxContributions Account, Rollover Contributions Account, andpre-2001Company Matching Contributions Account. Participants who have attained age 59¹⁄₂can also withdraw amountsfrom theirBefore-TaxContributions Account, Roth 401(k) Contributions Account and RothIn-PlanRollover Contributions Account. Participants can make up to fivewithdrawals each calendar year, and the withdrawals are subject to a 10% Federal early distribution tax for participants less than 59¹⁄₂years of age, inaddition to the regular income tax that applies, except forAfter-TaxContribution amounts. Other penalties may apply to Roth 401(k) and RothIn-PlanRollover amounts ifthe withdrawals are not qualified distributions.

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

When funds are not available from anin-servicewithdrawal or when a loan will create a hardship, participants may apply for a hardship withdrawal without first taking a loan. To qualify for a hardship withdrawal under the Plan, participants must demonstrate that they need the money to meet animmediate and heavy financial need for which they have no other resources available to them.

Participant Loans

Participants may take loans from theirBefore-TaxContributions Account and/or Rollover ContributionsAccount.

Loans may range from a minimum of $500 up to a maximum equal to the lesser of:

The $50,000 maximum takes into account all loans to the participant from any Plan maintained by the Company or an affiliate of the Company.

Only one loan is permitted to be outstanding at any time. The loan repayment period may range from one to five years. Currently, theinterest rate applicable to the loan is the prime rate as of the fifteenth business day of March, June, September or December and is effective for loans initiated during the following quarter.

Basis of Accounting

The financial statements of the Plan are prepared on a modified cash basis of accounting, which is a comprehensive basis of accounting otherthan generally accepted accounting principles in the United States of America (“U.S. GAAP”). The modified cash basis of accounting is a cash receipt and disbursement method of accounting unlike U.S. GAAP where information is reported on anaccrual basis. However, under the modified basis of accounting investments are stated at fair value, which is consistent with U.S. GAAP.

Use of Estimates

Thepreparation of financial statements in conformity with a modified cash basis of accounting requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure ofcontingent assets and liabilities at the date of the financial statements and the reported amounts of additions and deductions during the reporting period. Actual results could differ from those estimates.

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

Investment Valuation

The Plan’s investments are stated at fair value (see Note 5 for more information on fair value measurements), except for its investmentcontract (the “PESP Fixed Rate Fund”), which is valued at contract value (see Note 3).

The fair value of the following is basedon quoted redemption values:

- Participation units owned by the Plan in custom plan investments

- Participation units owned by the Plan in insurance company separate accounts

- Participation units owned by the Plan in common/collective trusts

- Shares owned by the Plan in registered investment companies

- Participation units owned by the Plan in the master trust

Purchases

Purchases ofthe following are recorded on a trade-date basis:

- Units of participation in custom plan investments

- Units of participation in insurance company separate accounts

- Units of participation in common/collective trusts

- Shares in registered investment companies

- Units of participation in the master trust

Income Recognition

ThePlan presents in the Statement of Changes in Net Assets Available for Benefits the net appreciation/ (depreciation) in the fair value of its investments, which consists of the realized gains or losses and unrealized appreciation/(depreciation) onthose investments.

Interest, dividend and other income is recorded when received.

Sales of the following are recorded on a trade-date basis:

- Units of participation in custom plan investments

- Units of participation in insurance company separate accounts

- Units of participation in common/collective trusts

- Shares in registered investment companies

- Units of participation in the master trust

Payment of Benefits

Benefits are recorded when paid.

Participant Loans

Participant loans are funded directly from the participant’s account balance. Repayments of principal and interest related to the loan arecredited to the participant’s account on apro-ratabasis based on their selected investment options. The carrying value is cost, which approximates fair value.

Recently Issued Accounting Pronouncements - Not Yet Adopted

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Update(“ASU”) to the FASB Accounting Standards Codification (“ASC”).

The Plan considers the applicability and impact of allASU. ASU listed below include those that have been issued but not yet adopted as of the date of this filing. ASU not listed below were assessed and determined to be either not applicable or not material.

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In February 2017, the FASB issued ASUNo.2017-06,Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965), Employee Benefit Plan Master TrustReporting. ASUNo.2017-06clarifies the presentation requirements for a Plan’s interest in a master trust and requires more detailed disclosures of the Plan’s interest in the master trust.ASUNo.2017-06also eliminates redundant investment disclosures relating to 401(h) account assets. ASUNo.2017-06is effective for fiscal years beginningafter December15, 2018. Early adoption is permitted. ASUNo.2017-06should be applied retrospectively to each period for which financial statements are presented.

In January 2016, the FASB issued ASUNo.2016-01,Financial Instruments-Overall (Subtopic825-10):Recognition and Measurement of Financial Assets and Financial Liabilities.ASUNo.2016-01requires equity investments (except those accounted for under theequity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. ASUNo.2016-01also requires publicbusiness entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes. ASUNo.2016-01is effective for employee benefit plans for fiscal yearsbeginning after December15, 2018.

Management is currently evaluating the implications of ASUNo.2017-06and ASUNo.2016-01and does not expect the implementation to have a material effect on the Plan’s financial statements.

The financial statement presentation anddisclosure of the PESP Fixed Rate Fund (the “Fund”) complies with the FASB ASC 946Financial Services - Investment Companieson the fair value reporting of fully benefit-responsive investment contracts as of December31, 2017and 2016.

The Fund is a fully benefit-responsive investment contract and is valued at contract value. Accordingly, the contract meets allof the following criteria:

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The Fund represents the fixed dollar account under an unallocated group annuity contract.Contract value is based upon contributions made under the contract, plus interest credited, and less participant withdrawals. There are no reserves against contract value for credit risk of the contract issuer or otherwise.

The Fund credits interest on an annual effective rate basis. The interest crediting rate is reset periodically; currently, the reset occursonce each calendar quarter. The annual effective interest crediting rate for 2017 was 3.50%. The minimum crediting rate is 3.50%. Effective July1, 2016, the crediting rate is based on a contract formula utilizing a number of factors. One ofthose factors includes a reference to the performance of a hypothetical investment portfolio consisting of public debt, private placement debt, and mortgage loans, net of a notional expense ratio of 0.23%. The resulting interest crediting rate issubject to the current contractual minimum crediting rate of 3.50%. Key factors that could influence future interest crediting rates are changes in interest rates, and default or credit failures of the reference portfolio.

There is no event that limits the ability of the Plan to transact at contract value with the issuer. There are also no events and circumstancesthat would allow the issuer to terminate the fully benefit-responsive investment contract with the Plan and settle at an amount different from contract value.

The information regarding the Plan’s investments included in thePlan’s financial statements and schedules was prepared based on the information furnished to the Plan Administrator by the Company and Prudential Trust Company (the “Trustee”). The Plan Administrator has obtained certifications fromthe Company and the Trustee that such furnished information is complete and accurate in accordance with 29 CFR2520.103-5of the Department of Labor’s Rules and Regulations for Reporting and Disclosureunder ERISA.

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December 31, 2017 and2016

During 2017, the Plan’s investments (including gains and losses on investments purchasedand sold, as well as held during the year) appreciated in value by $722,888,955 as follows:

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The investment options bear expenses related to investment management and other fees. Theabove appreciation on investments reflects these expenses. The annual gross expense ratio as a percentage of net assets attributable to each investment option as of December31, 2017 was as follows:

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Fair value represents the price that would be received to sellan asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

FASB ASC 820,Fair Value Measurements and Disclosures, establishes a framework for measuring fair value. This framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives thehighest priority to unadjusted quoted prices in active markets for identical assets or liabilities (“Level1” measurements), the next priority to quoted values based on observable inputs (“Level2” measurements), andthe lowest priority to unobservable inputs (“Level3” measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based onthe lowest level of any input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in themethodologies used at December31, 2017 and 2016.

Custom Plan Investments- Plan assets are represented by a “unit ofaccount” and a per unit value whose value is the result of the accumulated values of underlying investments.

Equity securities(stock): Valued at the closing price reported on the active market on which individual securities are traded.

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Insurance Company Separate Accounts- Plan assets are represented by a “unit ofaccount” and a per unit value whose value is the result of the accumulated values of underlying investments. The underlying investments are valued in the following ways:

Equity securities (stock): Valued at the closing price reported on the active market on which individual securities are traded.

Bonds: Securities are priced by industry standard vendors, such as Interactive Data Corporation, using inputs such as benchmark yields,reported trades, broker/dealer quotes, and issuer spreads. The pricing vendor also monitors market indices and industry and economic events, including credit rating agency actions. Prices are reviewed to ensure comfort and can be challenged with thevendor and/or overridden if the advisor believes that a different price would be more reflective of fair value.

Real estate: Values aredetermined through an independent appraisal process. The estimate of fair value is based on three approaches: (1)current cost of reproducing the property less deterioration and functional/ economic obsolescence; (2)discounting a seriesof income streams and reversion at a specific yield or by directly capitalizing an income estimate by an appropriate factor; and (3)value indicated by recent sales of comparable properties in the market. Each approach requires the exercise ofsubjective judgment.

Significant increases/(decreases) in any unobservable inputs used in the fair value measurement of real estate wouldresult in a significantly different fair value measurement. Generally, a change in the assumption used for reproducing the property, income streams, or the value of recent sales of comparable properties is accompanied by a directionally similarchange in fair value, while changes in the discounting assumption are accompanied by a directionally opposite change in fair value.

Common/Collective Trusts- Plan assets are represented by a “unit of account” and a per unit value whose value is the resultof the accumulated values of underlying investments. As the sponsor of the trusts, the Trustee specifies to the fund accountants the source(s) to use for underlying investment asset prices. The fund accountant values the fund using the protocol theTrustee has issued. The underlying investments are valued as follows:

Equity securities (stock): Securities are priced at the closingprice reported on the active market on which individual securities are traded.

Bonds: Securities are priced by industry standard vendors,such as Interactive Data Corporation, using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The pricing vendor also monitors market indices and industry and economic events, including credit rating agencyactions. Prices are reviewed to ensure comfort and can be challenged with the vendor and/or overridden if the advisor believes that a different price would be more reflective of fair value.

Registered Investment Companies -Valued at the net asset value (“NAV”) of shares held at year end.

Master Trust- Valued at the closing price reported on the active market on which individual securities are traded.

Prudential IncomeFlex Select and Prudential IncomeFlex Target- Plan assets are represented by a “unit of account” and a perunit value whose value is the result of the accumulated values of underlying investments. The underlying investments are valued in the following ways:

Equity securities (stock): Valued at the closing price reported on the active market on which individual securities are traded.

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

Bonds: Securities are priced by industry standard vendors, such as Interactive DataCorporation, using inputs such as benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The pricing vendor also monitors market indices and industry and economic events, including credit rating agency actions. Prices arereviewed to ensure comfort and can be challenged with the vendor and/or overridden if the advisor believes that a different price would be more reflective of fair value.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of futurefair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instrumentscould result in a different fair value measurement at the reporting date.

Plan investments may be redeemed by the participant or by thePlan. Participants redeem investments when they elect to receive a withdrawal, make a transfer to another investment, or take a loan. The Plan redeems investments when the fiduciaries determine that an investment will no longer be offered as a Planinvestment. The following is a high-level summary of the terms and conditions related to the redemption of Plan investments as of a certain date. For more recent and detailed information on the terms and conditions under which participants mayredeem investments, please see the relevant Plan and investment documentation (e.g., prospectus) for each investment.

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The following tables set forth by level, within the fair value hierarchy, the Plan’sinvestments carried at fair value as of December31, 2017 and 2016:

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The following table sets forth a summary of changes in the fair value of the Plan’sLevel3 investments for the year ended December31, 2017:

During the year ended December31, 2017, there were no transfers between levels.

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The Company (or an affiliate of the Company) acts as theinvestment manager for each of the investment options currently offered by the Plan, except for:

Prior to 2017, on a quarterly basis, certain revenue sharing payments (e.g.,12b-1fees, etc.) received by an affiliate of the Company from certain of the Plan’s investment options were deposited into a dedicated account in the Plan, known as the “ERISA Budget Account”.Revenue sharing payments were reported as “Other income” in the Statement of Changes in Net Assets Available for Benefits. Amounts deposited in the ERISA Budget Account were used to pay ongoing administrative expenses of the Plan inaccordance with ERISA and guidance issued by the U.S. Department of Labor (“DOL Guidance”). The funding of this account ceased in 2016.

The administrative expenses shown in the Statement of Changes in Net Assets Available for Benefits were direct expenses (as defined in the DOLGuidance) paid by the Plan. Most of these expenses were paid to the Company’s affiliate for recordkeeping services.

The Company alsopaid certain expenses of the Plan. Some of these expenses were paid to the Company (or an affiliate of the Company). Such expenses are not reflected in the Plan’s financial statements.

The Company paid administrative fees for trustee services in the amount of $5,000 for the year ended December31, 2017, which are notreflected in the Plan’s financial statements.

The following is a reconciliationof net assets per the financial statements to Form 5500 at December31, 2017:

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The following is a reconciliation of participant loans and benefit payments per the financialstatements to Form 5500:

The following is a reconciliation of assets of the Custom Plan Investments per the Statements of Net AssetsAvailable for Benefits to Form 5500 at December31, 2017:

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The following is a reconciliation of a component of the Statements of Net Assets Availablefor Benefits per the financial statements to Form 5500 at December31, 2017 due to the Prudential IncomeFlex investment options:

The following is a reconciliation of interest and dividend income per the Statement of Changes in Net AssetsAvailable for Benefits to Form 5500 for the year ended December31, 2017:

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The following is a reconciliation of net appreciation/(depreciation) of the Custom PlanInvestments included in the Statement of Changes in Net Assets Available for Benefits to Form 5500 for the year ended December31, 2017:

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The following is a reconciliation of a component of net appreciation/(depreciation) in fairvalue of investments included in the Statement of Changes in Net Assets Available for Benefits to Form 5500 for the year ended December31, 2017 due to the Prudential IncomeFlex investment options:

The following is a reconciliation of net appreciation of the Master Trust included in the Statement of Changesin Net Assets Available for Benefits to Form 5500 for the year ended December31, 2017:

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

The following is a reconciliation of net assets available for benefits per the financialstatements to the Form 5500 Supplemental Information, Schedule I - Schedule of Assets Held for Investment Purposes as of December31, 2017:

Although it has not expressed any intent to do so, the Company has theright under the Plan to discontinue its contributions at any time and amend or terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their Company matching contributionsaccount.

The ESOP portion of the Plan wasestablished in accordance with sections 401(a), 4975(e)(7) of the IRC and section 407(d)(6) of ERISA. The ESOP invests primarily in qualifying employer securities in accordance with IRC section 4975(e)(8). An ESOP account is established for eachparticipant in the Plan, and is invested in the PFI Common Stock Fund. To fund the ESOP, the recordkeeper, annually, transfers (“sweeps”) to the ESOP portion all of the participant’s fully vested amounts in thenon-ESOPportion of the PFI Common Stock Fund. Participants may redirect the amounts credited to the ESOP account into any other investment option subject to certain limitations including, but not limited to, theprovisions of the Company’s personal securities trading policy. Funds that are swept into the ESOP portion are treated the same as funds in thenon-ESOPportion for purposes of distributions,reallocations, and transfers. Cash dividends are paid to the ESOP, and thereafter, either distributed to participants or reinvested into participants’ ESOP accounts. All participants have a choice of either reinvesting the cash dividends intothe ESOP account or receiving cash on a yearly basis. Participants cannot contribute directly to the ESOP.

The trustee of the Planpurchases shares of PFI common stock on behalf of the PFI Common Stock Fund at fair value or by private purchase (including from an affiliate). Voting rights in shares of PFI common stock held by the Plan shall be exercised by the trustee in atimely manner and by the direction of the participants. Dividends and other income credited to the PFI Common Stock Fund are allocated to all participants with units in the PFI Common Stock Fund when such amounts are received by the Plan.

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The Prudential Employee Savings Plan

Notes to Financial Statements

December 31, 2017 and2016

In response to the Company’s application dated January29, 2016,the IRS issued a favorable determination letter dated April20, 2017, confirming that the Plan, as amended and restated effective January1, 2016, continues to satisfy the requirements fortax-qualifiedstatus under Section401(a) of the IRC. The Plan had been amended and restated effective as of January1, 2016, to incorporate previously adopted amendments, reflect plan design changesand comply with applicable law. The favorable determination letter also covers the most recent amendment to the Plan which was adopted on December15, 2016. The Plan Administrator and the Company’s tax counsel believe that the Plan isdesigned and is currently being operated in compliance with the applicable requirements of the IRC, and no provision for income tax is necessary.

U.S. GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the organization has taken anuncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The PlanAdministrator believes it is no longer subject to income tax examinations for years prior to 2015.

The Plan invests in various investment securities. Investmentsecurities are exposed to various risks such as interest rate, market and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securitieswill occur in the near term, and that such changes could materially affect participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.

A portion of the Plan’s investments are in the MasterTrust which was established for the investment of assets of the Plan and other defined contribution plans sponsored by affiliated companies. The assets of the Master Trust are held by the “Trustee”. As of December31, 2017 and 2016,the Plan’s interest in the net assets of the Master Trust was 100%.

The Plan Administrator has evaluated events subsequent toDecember31, 2017, and through June12, 2018, the date the financial statements were available to be issued, and determined there have not been any events that occurred that require adjustments to these financial statements and there wereno events or transactions that required disclosure other than the one listed below.

In 2018, the Plan was amended to provide forDiscretionary Company Contributions to be made from time to time in a given Plan year to eligible participants. Pursuant to the amendment, in June 2018, each eligible Company employee, generally in administrative, business support and entry levelprofessional roles, will receive aone-timeDiscretionary Company Contribution of $2,500 credited to the employee’s PESP account to supplement their retirement savings. The aggregate dollar amount of thiscontribution is approximately $9million.

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