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Proxy Statement Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrantý
Filed by a Party other than the Registranto
Check the appropriate box:o
Cowen Group, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
August 3, 2011April 30, 2014
Dear Fellow Stockholder:
You are cordially invited to attend the 20112014 Annual Meeting of Stockholders of Cowen Group, Inc. to be held on August 31, 2011,June 3, 2014, at 10:00 a.m., Eastern Daylight Time, at 599 Lexington Avenue, 20th Floor, New York, New York 10022. The information regarding matters to be voted upon at the Annual Meeting is set out in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.
It is important that your shares be represented at the Annual Meeting, regardless of the number of shares you hold or whether you plan to attend the meeting in person. I urge you to read the accompanying proxy statement and vote your shares as soon as possible. The proxy card contains instructions on how to cast your vote.
Sincerely,
Peter A. Cohen
Chairman and Chief Executive Officer
Notice of 20112014 Annual Meeting of Stockholders
Date: | ||
Time: | 10:00 a.m., Eastern Daylight Time | |
Place: | 599 Lexington Avenue, New York, NY 10022 |
Purpose:
Record Date: | ||
Inspection of List of Stockholders of Record: | A list of the stockholders of record as of |
| | | |
|---|---|---|
| By Order of the Board of Directors | ||
 | ||
| Owen S. Littman Secretary |
August 3, 2011April 30, 2014
Important Notice Regarding the Availability of Proxy Materials for the 20112014 Annual Meeting of Stockholders to Be Held on August 31, 2011.June 3, 2014. The Proxy Statement and Annual Report to security holders are also available atwww.cowen.com/annualreports.html
Whether or not you plan to attend the meeting, please submit your proxy card or voting instructions promptly so that we can be assured of having a quorum present at the meeting and so that your shares may be voted in accordance with your wishes. Most stockholders have a choice of voting over the Internet, by telephone or by using a traditional proxy card. Please refer to the attached proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.
Proxy Statement
Table of Contents (to be updated)
| | Page | ||
|---|---|---|---|
Questions and Answers About the Annual Meeting and Voting | 1 | ||
Item 1. Election of Directors | |||
Information Regarding the Board of Directors and Corporate Governance | |||
Corporate Governance Guidelines | |||
Director Independence | 9 | ||
Board Leadership Structure | 9 | ||
The Board's Role in Risk Oversight | 10 | ||
Board Meetings and Attendance | 10 | ||
Director Attendance at Annual Meeting of Stockholders | 10 | ||
Committees of the Board | 10 | ||
Executive and Director Compensation Processes | 12 | ||
Director Nomination Process | 13 | ||
Procedures for Nominating Director Candidates | 14 | ||
Procedures for Contacting the Board of Directors | 14 | ||
Code of Business Conduct and Ethics | 14 | ||
Director Compensation | |||
Executive Officers of the Company | |||
Executive Compensation— | 17 | ||
Compensation Committee Report | |||
Summary Compensation Table | |||
| |||
Option Exercises and Stock Vested | 33 | ||
Outstanding Equity Awards at | |||
Pension Benefits | |||
Potential Payments Upon Termination or Change-In-Control | |||
Security Ownership | |||
Beneficial Ownership of Directors, Nominees and Executive Officers | |||
Beneficial Owners of More than Five Percent of Our Class A common stock | |||
Section 16(a) Beneficial Ownership Reporting Compliance | |||
Certain Relationships and Related Transactions | |||
Compensation Committee Interlocks and Insider Participation | |||
Transactions with Related Persons | |||
Review and Approval of Transactions with Related Persons | |||
Audit Committee Report and Payment of Fees to our Independent Registered Public Accounting Firm | |||
Audit Committee Report | |||
Independent Registered Public Accounting Firm Fees and Other Matters | |||
Auditor Services Pre-Approval Policy | |||
Item 2. Ratification of Selection of Independent Registered Public Accounting Firm | |||
Item 3. Advisory Vote on Executive Compensation | |||
| |||
| |||
Stockholder Proposals for the | |||
Annual Report to Stockholders and Form 10-K | |||
Householding | |||
Other Matters | |||
PROXY STATEMENT20112014 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 31, 2011JUNE 3, 2014
The Board of Directors of Cowen Group, Inc., Cowen Group or the Company, is soliciting proxies for use at the annual meeting of stockholders to be held on August 31, 2011June 3, 2014 at 599 Lexington Avenue, 20th Floor, New York, New York, and at any adjournment or postponement of the meeting. This proxy statement and the enclosed proxy card are first being mailed or given to stockholders on or about August 4, 2011.May 9, 2014.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What is the purpose of the meeting?
At our annual meeting, stockholders will act upon the matters outlined in the Notice of Annual Meeting of Stockholders. These include the election of directors, the ratification of the selection of our independent registered public accounting firm for 2011, an advisory vote to approve the compensation of our named executive officers2014 and an advisory vote on the frequency of advisory votes to approve the compensation of our named executive officers. Also, management will report on matters of current interest to our stockholders and respond to questions from our stockholders.
Who is entitled to vote at the meeting?
The Board has set July 25, 2011April 17, 2014 as the record date for the annual meeting. If you were a stockholder of record at the close of business on July 25, 2011,April 17, 2014, you are entitled to vote at the meeting. As of the record date, 116,248,689115,383,545 shares of Class A common stock, representing all of our voting stock, were issued and outstanding and, therefore, eligible to vote at the meeting.
What are my voting rights?
Holders of our Class A common stock are entitled to one vote per share. There are currently no shares of our non-voting Class B common stock outstanding. Therefore, a total of 116,248,689115,383,545 votes are entitled to be cast at the meeting. There is no cumulative voting.
How many shares must be present to hold the meeting?
In accordance with our bylaws, shares equal to a majority of our capital stock issued and outstanding and entitled to vote as of the record date must be present at the annual meeting in order to hold the meeting and conduct business. This is called a quorum. Shares are counted as present at the meeting if:
What is a proxy?
ItA proxy is your designation of another person to vote stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. When you designate a proxy, you also may direct the proxy how to vote your shares. We refer to this as your "proxy vote." Two of our officers, Peter A. Cohen, our Chairman and Chief Executive Officer, and Owen S. Littman, our General Counsel and Secretary, have been designated as proxies for our 20112014 annual meeting of stockholders.
What is a proxy statement?
ItA proxy statement is a document that we are required to give you, in accordance with regulations promulgated by the Securities and Exchange Commission, or the SEC, when we ask you to designate proxies to vote your shares of Cowen Group, Inc. Class A common stock at a meeting of our stockholders. The proxy statement includes information regarding the matters to be acted upon at the meeting and certain other information required by regulations promulgated by the SEC and rules of the NasdaqNASDAQ Stock Market.
What is the difference between a stockholder of record and a "street name" holder?
If your shares are registered directly in your name, you are considered the stockholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank, trust or other nominee,custodian, then the broker, bank, trust or other nomineecustodian is considered to be the stockholder of record with respect to those shares, while you are considered to be the beneficial owner of those shares. In the latter case, your shares are said to be held in "street name." Street name holders generally cannot vote their shares directly and must instead instruct the broker, bank, trust or other nomineecustodian how to vote their shares using the method described below under "How do I submit my proxy?"
How do I submit my proxy?
If you are a stockholder of record or if you hold restricted stock, you can submit a proxy to be voted at the meeting in any of the following ways:
If you hold your shares in street name, you can vote your shares in the manner prescribed by your broker, bank, trust company or other nominee.custodian. Your broker, bank, trust company or other nomineecustodian has enclosed or otherwise provided a voting instruction card for you to use in directing the broker, bank, trust company or other nomineecustodian how to vote your shares.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set of proxy materials or multiple control numbers for use in submitting your proxy, it means that you hold shares registered in more than one account. To ensure that all of your shares are voted, sign and return each proxy card or voting instruction card you receive or, if you submit your proxy by Internet or telephone, vote once for each card or control number you receive
Can I vote my shares in person at the meeting?
If you are a stockholder of record, you may vote your shares in person at the meeting by completing a ballot at the meeting. Even if you currently plan to attend the meeting, we recommend that you also submit your proxy as described above so your vote will be counted if you later decide not to attend the meeting. If you submit your vote by proxy and later decide to vote in person at the annual meeting, the vote you submit at the meeting will override your proxy vote.
If you are a street name holder, you may vote your shares in person at the meeting only if you obtain and bring to the meeting a signed letter or other form of proxy from your broker, bank, trust or other nomineecustodian giving you the right to vote the shares at the meeting.
How does the Board recommend that I vote?
The Board of Directors recommends a vote:
What if I do not specify how I want my shares voted?
If you are a stockholder of record or a holder of restricted stock and you submit a signed proxy card or submit your proxy by Internet or telephone but do not specify how you want to vote your shares on a particular manner, we will vote your shares:
Your vote is important. We urge you to vote, or to instruct your broker, bank, trust or other nomineecustodian how to vote, on all matters before the annual meeting. If you are a street name holder and fail to instruct the stockholder of record how you want to vote your shares on a particular matter, those shares are considered to be "uninstructed." New York Stock Exchange rules determine the circumstances under which member brokers of the New York Stock Exchange may exercise discretion to vote "uninstructed" shares held by them on behalf of their clients who are street name holders. These rules generally permit member brokers to exercise voting discretion with respect to uninstructed shares only on certain routine matters, including the ratification of the selection of a company's independent registered public accounting firm, however, recent changes in regulation were made to take away the ability of your bank, broker or other record holder to vote your uninstructed shares in the election of directors on a discretionary basis. The rules donot permit member brokers to exercise voting discretion with respect to the election of directors the advisory vote to approve the compensation of our named executive officers or the advisory vote on the frequency of future advisory votes to approve the compensation of our named executive officers. Therefore, member brokers may not vote uninstructed shares on the election of directors the advisory vote to approve the compensation of our named executive officers or the advisory vote on the frequency of future advisory votes to approve the compensation of our named executive officers. An uninstructed share that is not voted by a broker, bank or other nomineecustodian is sometimes referred to as a "broker non-vote." A broker non-vote will not have any effect on the approval or rejection of the proposal. For more information regarding the effect of broker non-votes on the outcome of the vote, see below under "How are votes counted?"
Can I change or revoke my vote after submitting my proxy?
Yes. If you are a record holder or a holder of restricted stock, you may revoke your proxy and change your vote at any time before your proxy is voted at the annual meeting, in any of the following ways:
If you are a street name holder, please refer to the voting instructions provided to you by your broker, bank, trust company or other nominee.custodian.
What vote is required to approve each item of business included in the notice of meeting?
| Proposal 1: Election of Directors | The eight nominees for director will be elected by an affirmative vote of a majority of the votes cast by holders of our Class A common stock present in person or by proxy and entitled to vote on the proposal at the Annual Meeting. | ||
Proposal 2: Ratification of the Selection of Our Independent Public Accountant | To be approved by our stockholders, this proposal requires the affirmative vote of a majority of the votes cast by holders of our Class A common stock present in person or by proxy and entitled to vote on the proposal at the Annual Meeting. | ||
Proposal 3: Advisory Vote on Executive Compensation | If the advisory vote on the compensation of our named executive officers included in this proxy statement receives more votes "for" than "against," then it will be deemed to be approved. | ||
The advisory votesvote on the compensation of our named executive officers andis not binding on the frequencyCompany, the Board, or the Compensation Committee, but we intend to consider the results of future advisory votes onthe vote when establishing the compensation of our named executive officers are not binding on the Company or the Board, but we will consider the stockholders' advisory input on these matters when establishing compensation of our executive officers in future years and recommending the frequency of future advisory votes on executive compensation.years.
How are votes counted?
You may either vote "FOR" or "WITHHOLD" authority to vote for each director nominee. You may vote "FOR," "AGAINST" or "ABSTAIN" on the ratification of the selection of PricewaterhouseCoopers LLP as our independent auditor for the year ending December 31, 20112014 and
the advisory vote on the compensation of our named executive officers. You may vote "ONE YEAR," "TWO YEARS," "THREE YEARS" or "ABSTAIN" on the advisory vote on the frequency of advisory votes to approve the compensation of our named executive officers. If you properly submit your proxy but withhold authority to vote for one or more director nominees or abstain from voting on the other proposals, your shares will be counted for purposes of determining both (i) the presence or absence of a quorum for the transaction of business and (ii) the total number of shares present in person or by proxy at the Annual Meeting with respect to a proposal, and, therefore, will have the effect of votes against the proposal. If you do not submit your proxy or voting instructions and also do not vote by ballot at the annual meeting, your shares will not be counted as present at the meeting for the purpose of determining either (i) the presence or absence of a quorum for the transaction of business and (ii) the total number of shares present in person or by proxy at the Annual Meeting with respect to a proposal unless you hold your shares in street name and the broker, bank, trust or other nomineecustodian has discretion to vote your shares and does so. For the avoidance of doubt, broker non-votes will be counted for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting but will have no effect on the outcome of the vote for any proposal. For more information regarding discretionary voting, see the information above under "What if I do not specify how I want my shares voted?"
What constitutes a quorum for the meeting?
Under Delaware law and the Company's by-laws, the presence of a quorum is required to transact business at the Annual Meeting. A quorum is defined as any number of stockholders, together holding at least a majority of the capital stock of the Company issued and outstanding and entitled to vote, who shall be present in person or represented by proxy at the Annual Meeting.
Will my vote be kept confidential?
Yes. We have procedures to ensure that, regardless of whether you vote by Internet, telephone, mail or in person:
How can I attend the meeting?
All of our stockholders are invited to attend the annual meeting. You may be asked to present valid photo identification, such as a driver's license or passport, before being admitted to the meeting. If you hold your shares in street name, you also may be asked to present proof of ownership to be admitted to the meeting. A brokerage statement or letter from your broker, bank, trust or other nomineecustodian proving ownership of the shares on July 25, 2011,April 17, 2014, the record date, are examples of proof of ownership.
To help us plan for the meeting, please let us know whether you expect to attend, by responding affirmatively when prompted during Internet or telephone voting or by marking the attendance box on the proxy card.
Who pays for the cost of proxy preparation and solicitation?
Cowen Group, Inc. pays for the cost of proxy preparation and solicitation, including the reasonable charges and expenses of brokerage firms,brokers, banks, trusts or other nomineescustodians for forwarding proxy materials to street name holders. We are soliciting proxies primarily by mail. In addition, our directors, officers and regular employees may solicit proxies by telephone or facsimile or personally. Our directors, officers and regular employees will receive no additional compensation for their services other than their regular compensation.
The number of directors currently serving on our Board of Directors is eight. On June 28, 2011, Cowen Group, Inc. (the "Company") announced that it had completed the transactions (the "Transactions") contemplated by the Agreement and Plan of Merger (the "Merger Agreement"), dated as of February 16, 2011, by and among the Company, Louisiana Merger Sub, Inc. ("Merger Sub"), a subsidiary of the Company, and LaBranche & Co Inc. ("LaBranche"). In connection therewith,Peter A. Cohen, Katherine Elizabeth Dietze, and George M.L LaBranche, IV, former directors of LaBranche, were appointed to our Board of Directors upon the completion of the Transactions. Except for the initial appointment of directors in connection with the Transactions, the members of our Board of Directors are elected to serve a one-year term.
Peter A. Cohen, Steven Kotler, Jerome S. Markowitz, Jack H. Nusbaum, John E. Toffolon, Jr.Jeffrey M. Solomon, Thomas W. Strauss and Joseph R. Wright have been nominated for re-election to the Board to serve until our 20122015 annual meeting of shareholders or until their successors are elected and qualified. Our Board, upon the recommendation of our Nominating and Corporate Governance Committee, is nominating Katherine Elizabeth Dietze and George M.L. LaBranche for election as a director by stockholders at our Annual Meeting for the first time. Each of the nominees has agreed to serve as a director if elected. If, for any reason, any nominee becomes unable to serve before the annual meeting occurs, the persons named as proxies may vote your shares for a substitute nominee selected by our Board of Directors.
If all director nominees are elected at our Annual Meeting, the Board will consist of eight directors.
The Board of Directors recommends a vote FOR the election of the director nominees. Proxies will be voted FOR the election of the nominees unless otherwise specified.
Each nominee to our Board of Directors brings unique capabilities to the Board. The Board believes that the nominees as a group have the experience and skills in areas such as business management, strategic development, corporate governance, leadership development, asset management, investment banking, finance and risk management and other relevant experience required to build a Board that is effective and responsive to the needs of the Company. In addition, the Board believes that each of our directors possesses sound judgment, integrity, high standards of ethics and a commitment to representing the long-term interests of our shareholders.
Set forth below is biographical information for each of the nominees for election as director and for the directors who will not stand for reelection. All ages are as of July 25, 2011.April 17, 2014.
Peter A. Cohen. Age 64.67. Mr. Cohen serves as Chairman of the Company's Board of Directors and Chief Executive Officer of Cowen Group and serves as a member of the ExecutiveManagement and Operating Committees of Cowen Group since November 2009. Mr. Cohen is a founding principal of RCGthe entity that owned the Ramius business prior to the combination of Ramius and Cowen Holdings, LLC,Inc., or RCG.Cowen Holdings, in November 2009. From November 1992 to May 1994, Mr. Cohen was Vice Chairman and a director of Republic New York Corporation, as well as a member of its executive management committee.Executive Management Committee. Mr. Cohen was also Chairman of Republic's subsidiary, Republic New York Securities Corporation. Mr. Cohen was Chairman of the Board and Chief Executive Officer of Shearson Lehman Brothers from 1983 to 1990. Over his career, Mr. Cohen has served on a number of corporate, industry and philanthropic boards, including the New York Stock Exchange, The Federal Reserve International Capital Markets Advisory Committee, The Depository Trust Company, The American Express Company, Olivetti SpA, Telecom Italia SpA, Kroll, Inc. and L-3 Communications. He is presently a Trustee of Mount Sinai Medical Center, Vice Chairman of the Board of Directors of Scientific Games Corporation, a member of the Board of Directors of Chart Acquisition Corp. and a Directordirector of Safe Auto Insurance. Mr. Cohen provides the Board with extensive experience as a senior leader of large and diverse financial institutions, and, as Chief Executive Officer, he will be able to provide in-depth knowledge of the Company's business and affairs, management's
perspective on those matters and an avenue of communication between the Board and senior management.
Katherine Elizabeth Dietze. Age 54.56. Ms. Dietze was appointed to our Board in June 2011 upon the completion of the Transactions.Cowen Group's acquisition of LaBranche & Co., Inc., or LaBranche. Ms. Dietze was a member of LaBranche's boardBoard of directorsDirectors since January 2007. Ms. Dietze spent over 20 years in the financial services industry prior to her retirement in 2005. From 2003 to 2005, Ms. Dietze was Global Chief Operating Officer for the Investment Banking Division of Credit Suisse First Boston. From 1996 to 2003, she was a Managing Director in Credit Suisse First Boston's Telecommunications Group. Prior to that, Ms. Dietze was a Managing Director and Co-Head of the Telecommunications Group in Salomon Brothers Inc's Investment Banking Division. Ms. Dietze began her career at Merrill Lynch Money Markets after which she moved to Salomon Brothers Inc to work on money market products and later became a member of the Investment Banking Division. Ms. Dietze is a director, a member of the boardAudit Committee and Chair of directors and chairs the compensation committeeFinance Committee of Matthews International Corporation (MATW), a designer, manufacturer and marketer of memorialization products and brand solutions. Ms. Dietze is also a member of the boardBoard of trusteesTrustees of Liberty Property Trust (LPT), a self-administered and self-managed Maryland real estate investment trust, which provides leasing, property management, development, acquisition, and other tenant-related services for a portfolio of industrial & office properties. At LPT, she serves on the Audit and Governance Committees. Ms. Dietze holds a B.A. from Brown University and an M.B.A. from Columbia Graduate School of Business. Ms. Dietze provides the Board with extensive experience in Investment Banking management and corporate governance expertise as a public company director.
Steven Kotler. Age 64.67. Mr. Kotler was elected to our Board on June 7, 2010. Mr. Kotler currently serves as Vice Chairman of the private equity firm Gilbert Global Equity Partners, which he
joined in 2000. Prior to joining Gilbert Global, Mr. Kotler, for 25 years, was with the investment banking firm of Schroder & Co. and its predecessor firm, Wertheim & Co., where he served in various executive capacities including President & Chief Executive Officer, and Group Managing Director and Global Head of Investment and Merchant Banking. Mr. Kotler is a Directordirector of CPM Holdings, an international agricultural process equipment company; Co-Chairman of Birch Grove Capital, an asset management firm; and a Capital Partner of The Archstone Partnerships; and, Vice Chairman of Stone Tower Capital.Partnerships. Mr. Kotler is a member of the Council on Foreign Relations; and, from 1999-2002, was Council President of The Woodrow Wilson International Center for Scholars. Mr. Kotler has previously served as a Governor of the American Stock Exchange, The New York City Partnership and Chamber of Commerce's Infrastructure and Housing Task Force, The Board of Trustees of Columbia Preparatory School; and, the Board of Overseers of the California Institute of the Arts. Mr. Kotler also previously served as a Directordirector of Cowen Holdings from September 2006 until June 2007. Mr. Kotler provides the Board with extensive experience in leading an international financial institution and expertise in private equity.
George M.L. LaBranche, IV. Age 55. Mr. LaBranche was appointed to our Board in June 2011 upon the completion of the Transactions. Mr. LaBranche is a Senior Managing Director of Cowen Group, Inc. Mr. LaBranche became CEO and Chairman of LaBranche & Co Inc. in 1999 after its public offering and served in that capacity until the company's acquisition by Cowen Group Inc. in June 2011. Mr. LaBranche joined LaBranche & Co. in 1977. He became a member of the company's Executive Committee in 1990 and became Managing Partner in 1996 and oversaw the company during a period of rapid growth. Mr. LaBranche served as a Director of Lava Trading from 2000 until its acquisition by Citigroup in 2004. Mr. LaBranche served as a Director of the Securities Industry Automation Corporation (SIAC) from 2001-2006. He was a Board member of the Securities Industry Association (SIA) from 2005-2007. He is currently a Board member of The New York Foundling. Mr. LaBranche provides the Board with extensive broker-dealer management expertise.
Jerome S. Markowitz. Age 71.74. Mr. Markowitz is our Lead Independent Director and has served as a member of our Board since November 2009. Mr. Markowitz was a Senior Partner at Conifer Securities LLC, a boutique servicing the operational needs of investment managers, from 2006 through May 2011. From 1998 to 2006,
Mr. Markowitz was actively involved in managing a private investment portfolio. Prior to 1998, Mr. Markowitz was Managing Director and a member of the executive committee at Montgomery Securities and was responsible for starting their private client, high yield, equity derivatives and prime brokerage divisions. Prior to joining Montgomery, Mr. Markowitz was a Managing Director of L.F. Rothschild's Institutional Equity Department. Mr. Markowitz is a director and serves on the investment committee of Market Axess Inc., and also formerly served on the advisory board of Thomas Weisel Partners Group, Inc. Mr. Markowitz provides the Board with extensive experience in asset management and investment banking, as well as experience as a public company director.
Jack H. Nusbaum. Age 71.73. Mr. Nusbaum has served as a member of our Board since November 2009. Mr. Nusbaum is a Senior Partner of the New York law firm of Willkie Farr & Gallagher LLP. Mr. Nusbaum served as the firm's Chairman from 1987 through 2009 and has been a partner in that firm for more than thirtyforty years. Willkie Farr & Gallagher LLP is outside counsel to Cowen Group. Mr. Nusbaum is also a director of W. R. Berkley Corporation. Mr. Nusbaum provides the Board with experience as senior management of an international law firm and provides extensive legal and corporate governance expertise.
John E. Toffolon, Jr.Jeffrey M. Solomon. Age 60. Mr. Toffolon has served as a member of our Board since November 2009. Mr. Toffolon served as non-Executive Chairman48. Jeffrey Solomon is Chief Executive Officer of Cowen Holdings, Inc., orand Company, a Cowen Holdings, from July 2008 through the closing of the business combinationGroup company, and was appointed a director of Cowen Holdings and RamiusGroup in November 2009.December 2011. Mr. Toffolon previously served as Cowen Holding's Lead Independent Director from June 2007 until his appointment as Chairman, and has been a member of Cowen Holding's Board of Directors and has served as the Chairman of Cowen Holding's Audit Committee since September 2006. Since May 2009, Mr. Toffolon has servedSolomon serves as a member of the BoardManagement and Operating Committees of DirectorsCowen Group. Mr. Solomon is responsible for overseeing all of Cowen and Company's businesses, including Investment Banking, Capital Markets, Sales & Trading and Research. Previously, Mr. Solomon served as Cowen Group's Chief Operating Officer and Head of Investment Banking at Cowen and Company. Mr. Solomon joined Ramius, Cowen Group's investment management division, when it was founded in 1994 and was responsible for the Chairmandevelopment, management and oversight of a number of the Audit Committeeinvestment strategies employed by Ramius. From 1991 to 1994, Mr. Solomon was at Republic New York Securities Corporation, the brokerage affiliate of Republic National Bank, now part of the HSBC Group, where he was the firm's Chief Administrative Officer. Prior to Republic, Mr. Solomon was in the Mergers and Acquisitions Group at Shearson Lehman Brothers. Currently, Mr. Solomon is a member of the Compensation Committee as well as Nominating Committeeon Capital Markets Regulation and a co-chair of Westwaythe Equity Capital Formation Task Force formed in June 2013. He is also on the Board of Directors of NuGo Nutrition, the manufacturer of NuGo Nutrition Bars. Mr. Solomon graduated from the University of Pennsylvania in 1988 with a B.A. in Economics. Mr. Solomon provides the board with institutional knowledge of all aspects of the Company's businesses.
Thomas W. Strauss. Age 71. Mr. Strauss is Vice Chairman of Cowen Group, Inc., and is the Chairman of Ramius LLC. Mr. Strauss was appointed a leading global providerdirector of bulk liquid storage services. Previously,Cowen Group in December 2011. Mr. Toffolon, in his capacityStrauss previously served as Chief Executive Officer and President of Ramius Alternative Investments since February 8, 2010 and serves as a partnermember of The Shermen Group,the Management and Operating Committees of Cowen Group. Mr. Strauss previously served as the Chief FinancialExecutive Officer and President of Ramius Alternative Solutions. Mr. Strauss is a founding principal of Ramius. From 1963 to 1991, Mr. Strauss was with Salomon Brothers Inc. where he was admitted as a General Partner in 1972 and was appointed to the Executive Committee in 1981. In 1986, he became President of Salomon Brothers and a Vice Chairman and member of the Board of Directors of Shermen WSC Acquisition Corp. since August 2006 untilSalomon Inc., the business combination with Westwayholding company of Salomon Brothers and Phibro Energy, Inc. In 1993, Mr. Strauss became Co-Chairman of Granite Capital International Group. Mr. Strauss is a former member of the Board of Governors of the American Stock Exchange, the Chicago Mercantile Exchange, the Public Securities Association, the Securities Industry Association, the Federal Reserve International Capital Markets Advisory Committee and the U.S. Japan Business-Council. He is a past President of the Association of Primary Dealers in May 2009. From 2001 to 2003,U.S. Government Securities. Mr. Toffolon served as an advisor toStrauss currently serves on the ChairmanBoard of Trustees of the U.S.-Japan Foundation and Chief Executive Officer of Royster-Clark, Inc., a privately-held chemicals distribution company. From 1992 to 2000, Mr. Toffolon served in various capacities, including Executive Managing Director, Chief Financial Officer and Chief Administrative Officer for Nomura Holding America, Inc. and Nomura Securities International, Inc. Mr. Toffolon also served asis a member of the BoardsBoard of DirectorsTrustees and Executive Committee of Mount Sinai Medical Center and Mount Sinai-NYU Health System. Mr. Strauss provides the Board with extensive experience in both Nomura companies. From 1979 to 1990, Mr. Toffolon worked at The First Boston Corporation as a Managing Director in various capacities, including Chief Financial Officerinvestment banking and served on the Management and Capital Commitment Committees. Mr. Toffolon has significant public company experience as well as expertise in risk management and finance. The Board also determined that Mr. Toffolon is an Audit Committee financial expert under the applicable rules of the SEC.asset management.
Joseph R. Wright. Age 72.75. Mr. Wright has served as a member of our Board since November 2009. Mr. Wright is Chairman and Chief Executive Officer of Chart Acquisition Corp. and serves as a senior advisor to Chart Capital Partners and the Comvest Group, is Chairman of the Investment Committee of the ClearSky Fund of NextEra and is Executive Chairman of the Board of MTN Satellite Communications. Prior to this, Mr. Wright was senior advisor of Providence Equity, LLC, The Chart Group L.P and The ComVest Group. From January 1, 2009 through December 31, 2009 Mr. Wright served as Chief Executive OfficerCEO of Scientific Games Corporation, a supplier of technology-based products, systems and services to gaming markets worldwide. From July 2006 through April 2008, he served as Chairman of Intelsat, Ltd., the world's largest provider of satellite services, and as Chief Executive OfficerCEO of PanAmSat Corporation from August 2001 until it was combined with Intelsat in July 2006. Mr. Wright wasand Chairman of GRC International, Inc. from 1996International—all who provided communication and other services to March 2000governments around the world. He was also Co-chairman of Baker & Taylor Holdings and was Executive Vice President and EVP/Vice Chairman of W.R.W. R. Grace & Co. from 1989 to 1994.Company. Mr. Wright was a member of President Reagan's Cabinet, was Director and Deputy Director of the White House Office of Management and Budget from 1982 to 1989 and was Deputy Secretary of the Department of Commerce from 1981 to 1982. He received the Distinguished Citizens Award from President Reagan in 1988. Mr. Wright currently is chairman of Seamobile/MTN and a director of Federal Signal Corporation and Education
Management Corporation. Mr. Wright provides the Board with significant senior management expertise as well as experience as a director of a public company. He also provides the Board with significant experience in public affairs.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our Board of Directors believes that good corporate governance is important to ensure that Cowen Group, Inc. is managed for the long-term benefit of its stockholders. This section describes key corporate governance guidelines and practices that our Board has adopted. Complete copies of our Corporate Governance Guidelines, the charters of our Audit, Compensation, Nominating and Corporate Governance Committees and our Code of Ethics and Business Conduct are available on the investor relations section of our website, www.cowen.com. Alternatively, you can request a copy of these documents by writing to Cowen Group, Inc., Attn: Corporate Secretary, 599 Lexington Avenue, New York, NY, 10022.
Corporate Governance Guidelines
Our Board has adopted corporate governance guidelines to assist in the exercise of its duties and responsibilities and to serve the best interests of the Company and our stockholders. These guidelines, which provide a framework for the conduct of the Board's business, provide that:
Under applicable NasdaqNASDAQ Stock Market rules, a director will only qualify as an "independent director" if, in the opinion of our Board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Our Board has determined that none of Ms. Dietze, nor Messrs. Kotler, Markowitz, Nusbaum Toffolon or Wright currently has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is an "independent director" as defined under Rule 4200(a)(15) of the NasdaqNASDAQ Stock Market, Inc. Marketplace Rules.
Messrs. Cohen, Solomon and LaBrancheStrauss cannot be considered independent directors under NasdaqNASDAQ Stock Market rules because Mr. Cohen is employed as our Chief Executive Officer, and Mr. LaBrancheSolomon is employed as a Senior Managing DirectorChief Executive Officer of the Company.Cowen and Company, LLC, our broker-dealer subsidiary and Mr. Strauss is employed as our Vice Chairman and Chairman of Ramius LLC, our investment management subsidiary. Therefore, the Board of Directors has determined that sixfive of our eight director nominees are independent.
Mr. Cohen serves in the combined roles of chairman and chief executive officer. We believe that Mr. Cohen's combined service as chairman and chief executive officer provides the Company with (i) a
unified strategic and operating focus, (ii) the benefit of clarity in the management structure of the organization, and (iii) consistency of communications to shareholders, customers, regulators and other constituencies. This structure also best assures that the leader of the organization is closely connected with both the Company's senior level managers and the Board and is therefore better able to appreciate and balance the perspectives of both groups. To establish a liaison between the non-management directors and the Chairman and CEO and thus facilitate effective communication between them, as well as to facilitate the deliberations of the non-management directors in executive session, the Board also appoints a lead director who is independent. This position is currently held by Mr. Markowitz.
The Company has adopted an anti-hedging policy that prohibits the "short sale" of Company securities. The policy prohibits employees from trading in options, warrants, puts and calls or similar instruments on Company securities.
Director Stock Ownership Guidelines
The Company adopted stock ownership guidelines in 2013 that require directors to hold Company stock or restricted stock units that have a value equal to at least three times the amount of annual fees paid to non-employee directors within the later of the adoption of the policy or five years of being appointed to the Board.
The Board's Role in Risk Oversight
It is management's responsibility to manage risk and bring to the Board of Directors' attention the most material risks to the Company. The Board of Directors has oversight responsibility of the processes established to report and monitor systems for material risks applicable to the Company and reviews the Company's enterprise risk management. Our Board's oversight of our risk management processes is effected primarily through our Audit Committee. Our Audit Committee periodically meets with senior executives responsible for risk oversight to review and discuss the material risks facing the Company, including operational, market, credit, liquidity, legal and regulatory risks, and to assess whether management has reasonable controls in place to address these risks. The Audit Committee is also responsible for ensuring that management has established processes and an enterprise risk management framework and governance structures designed to identify, bring to the Board's and/or the Audit Committee's attention, and appropriately manage, monitor, control and report exposures to the major risks affecting Cowen Group. In addition to the Audit Committee, the Compensation Committee separately reviews and discusses with management whether our compensation arrangements are consistent with effective controls and sound risk management. The Board evaluates the Company's risk profile on a quarterly basis.
Our Board met teneight times from January 1, 20102013 through December 31, 2010.2013. Each director attended at least 75% of the aggregate number of Board meetings and the number of meetings held by all committees on which he or she then served.
Director Attendance at Annual Meeting of Stockholders
Our Corporate Governance Guidelines provide that directors are invited and encouraged to attend the annual meeting of stockholders. Seven directorsMessrs. Cohen, Markowitz, Solomon, Strauss and Wright attended the 20102013 Annual Meeting of Stockholders.
Our Board has established three standing committees—Audit, Compensation, and Nominating and Corporate Governance—each of which operates under a charter that has been approved by our Board. Current copies of each committee's charter are posted on the investor relations section of our website, www.cowen.com. Alternatively, you can request a copy of these documents by writing to Cowen Group, Inc., Attn: Corporate Secretary, 599 Lexington Avenue, New York, NY, 10022.
Audit Committee
The Audit Committee's responsibilities include:
The current members of our Audit Committee are Mr. Toffolon,Ms. Dietze (Chairperson), Ms. Dietze,Mr. Kotler and Mr. Wright. At year-end 2010, our Audit Committee was comprised of Messrs. Toffolon (Chairperson), Kotler and Wright. Our Board of Directors has determined that Mr. ToffolonWright is an "audit committee financial expert" as defined by applicable SEC rules. Our Audit Committee met ninefive times from January 1, 20102013 through December 31, 2010.2013.
Compensation Committee
The Compensation Committee's responsibilities include:
The processes and procedures followed by our Compensation Committee in considering and determining executive and director compensation are described below under the heading "Director Compensation" on page 15 and in the Compensation Discussion and Analysis section beginning on page 17.
The current members of our Compensation Committee are Messrs. Markowitz (Chairperson), Kotler and Toffolon. At year-end 2010, our Compensation Committee was comprised of Messrs. Markowitz (Chairperson) and Toffolon.Wright.
Our Compensation Committee met seventhree times from January 1, 20102013 through December 31, 2010 and acted by unanimous written consent twice.2013.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee's responsibilities include:
The processes and procedures followed by the Nominating and Corporate Governance Committee in identifying and evaluating director candidates are described below under the heading "Director Nomination Process" on page 13 of this proxy statement.
The current members of our Nominating and Corporate Governance Committee are Messrs. NusbaumMr. Kotler (Chairperson) and Kotler.Ms. Dietze. Our Nominating and Corporate Governance Committee met two times from January 1, 20102013 through December 31, 2010.2013.
Our Board has determined that all of the members of the Board's Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent as defined under the rules of the NasdaqNASDAQ Stock Market, and the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, or the Exchange Act, as applicable.
Executive and Director Compensation Processes
For a discussion of our process relating to executive officer compensation, please see "Compensation Discussion and Analysis" included elsewhere in this proxy statement.
The CompensationNominating and Corporate Governance Committee is responsible for periodically reviewing the level and form of compensation of our non-employee directors, including how such compensation compares to director compensation of companies of comparable size, industry and complexity, and for making recommendations to the Board with respect to such compensation. For a description of the annual compensation paid to each non-employee director, please see "Compensation Program for Non-Employee Directors" below.
The Board has delegated to a New Hire Retention Award Committee limited authority to grant equity awards under our existing equity compensation plans. Mr. Cohen is the sole member of the New Hire Retention Award Committee. The New Hire Retention Award Committee may only grant equity awards in connection with the hiring of new employees, the retention of existing employees and in connection with significant promotions. The New Hire Retention Award Committee may not grant or modify awards to named executive officers or certain other senior employees. Subject to aggregate and individual share limitations established by the Board, the New Hire Retention Award Committee has the authority to determine the recipient of the award as well as the type and amount of the award.
The process to be followed by our Nominating and Corporate Governance Committee to identify and evaluate Directordirector candidates includes requests to Board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the Committee and the Board.
In considering whether to recommend any particular candidate for inclusion in the Board's slate of recommended Directordirector nominees, our Nominating and Corporate Governance Committee will apply the criteria set forth in the Committee's charter and in our Corporate Governance Guidelines. These criteria include the candidate's experience, skills, expertise, diversity, integrity, character, business judgment, time availability, dedication, age, conflicts of interest, reputation for honesty and ethical conduct, material relationships with the Company and independence from management and the Company. The Committee will not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. Our Board believes that the backgrounds and qualifications of its Directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow it to fulfill its responsibilities. Our Corporate Governance Guidelines require that if there is a significant change in a Director's primary job responsibilities, that director must notify the Board of Directors and the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may recommend to the Board that the director tender his or her resignation. In addition, our Corporate Governance Guidelines require that any Directordirector attaining the age of 75 must annually tender his or her proposed retirement from the Board, and the Nominating and Corporate Governance Committee shall recommend to the Board whether it should accept such proposed retirement or request that the director continue to serve on the Board. The Nominating and Corporate Governance Committee recommended that Mr. Wright continue to serve on the Board following his reaching the age of 75. The Board approved this recommendation.
Stockholders may recommend individuals to our Nominating and Corporate Governance Committee for consideration as potential director candidates by submitting to the Nominating and Corporate Governance Committee the proposed director's name, age, business address, principal occupation and principal qualifications. The stockholder making the recommendation must include a statement as to the amount of shares beneficially owned by the stockholder and a statement as to whether the proposed director has consented to serve as a director if elected. Stockholders should send all notices to the Nominating and Corporate Governance Committee, c/o Corporate Secretary, Cowen Group, Inc., 599 Lexington Avenue, New York, NY, 10022. Stockholders may make recommendations at any time, but recommendations for consideration as nominees at the next annual meeting of stockholders must be received not less than 120 days before the first anniversary of the date that the proxy statement was first mailed to stockholders in connection with the previous year's annual meeting. Assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating and Corporate Governance Committee will evaluate stockholder-recommended candidates by following the same process, and applying the same criteria, as it follows for candidates submitted by others. If the Board determines to nominate a stockholder-recommended candidate and recommends his or her election, then his or her name will be included in the Company's proxy card for the next annual meeting.
Stockholders also have the right under our bylaws to directly nominate director candidates, without any action or recommendation on the part of the Nominating and Corporate Governance Committee or the Board, by following the procedures set forth under "Procedures for Nominating Director Candidates."
At the Annual Meeting, stockholders will be asked to consider the re-election of Messrs. Cohen, Kotler, Markowitz, Toffolon and Wright and to elect Ms. Dietze and Mr. LaBranche to the Board for
the first time. Ms. Dietze and Mr. LaBranche were each appointed to our Board following the closing of the Transactions.
Procedures for Nominating Director Candidates
Stockholders may directly nominate a person for election to our Board by complying with the procedures set forth in Article III, Section 3 of our bylaws, and with the rules and regulations of the SEC. Under our bylaws, only persons nominated in accordance with the procedures set forth in the bylaws will be eligible to serve as directors. In order to nominate a candidate for service as a director, you must be a stockholder at the time you give the Board notice of your nomination, and you must be entitled to vote for the election of directors at the meeting at which your nominee will be considered. In accordance with our bylaws, director nominations generally must be made pursuant to notice to our Corporate Secretary delivered to or mailed and received at our principal executive offices at 599 Lexington Avenue, New York, NY, 10022, not later than the 90th day, nor earlier than the 120th day, prior to the first anniversary of the prior year's annual meeting of stockholders. However, since the date of this year's annual meeting of stockholders is more than 30 days from the anniversary of last year's annual meeting of stockholders, the deadline for receipt of notice of director nominations from a stockholder pursuant to our bylaws is August 13, 2011. Your notice must set forth (i) the name, age, business address and residence address of the nominee, (ii) the principal occupation or employment of the nominee, (iii) the class or series and number of shares of capital stock of Cowen Group, Inc. owned beneficially or of record by the nominee, and (iv) all other information relating to the nominee that is required to be disclosed in solicitations of proxies for the election of directors in an election contest, or is otherwise required, in each case pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.
Procedures for Contacting the Board of Directors
Our Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. The Chairman of the Board of Directors, with the assistance of our General Counsel, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he considers appropriate.
Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the General Counsel considers to be important for the directors to know. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we receive repetitive or duplicative communications.
Stockholders who wish to send communications on any topic to our Board should address such communications to Board of Directors, c/o Corporate Secretary, Cowen Group, Inc., 599 Lexington Avenue, New York, NY, 10022.
Code of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the code on our website, www.cowen.com. In addition, we intend to post on our website all disclosures that are required by law or NasdaqNASDAQ Stock Market listing standards concerning any amendments to, or waivers from, any provision of the code. You may also request a copy of the code by writing to Cowen Group, Inc., Attn: Corporate Secretary, 599 Lexington Avenue, New York, NY 10022.
The following table sets forth compensation information for our non-employee directors for the year ended December 31, 2010.2013.
Director | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Katherine Elizabeth Dietze | 75,000 | 75,001 | 150,001 | |||||||
Steven Kotler | 77,500 | 77,501 | 155,001 | |||||||
Jerome S. Markowitz(2) | — | 155,001 | 155,001 | |||||||
Jack H. Nusbaum(2) | — | 150,001 | 150,001 | |||||||
John E. Toffolon, Jr.(3) | 80,000 | 80,002 | 160,002 | |||||||
Joseph R. Wright(2) | — | 150,001 | 150,001 | |||||||
Director | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Steven Kotler(2) | 16,625 | 16,625 | ||||||||
Jerome S. Markowitz | 105,005 | 105,005 | ||||||||
Jack H. Nusbaum | 105,005 | 105,005 | ||||||||
John E. Toffolon, Jr. | 55,000 | 55,002 | 110,002 | |||||||
Joseph R. Wright | 100,005 | 100,005 | ||||||||
Narrative Disclosure Relating to Director Compensation Table
In 2010,2013, each of our Directors received annual compensation of $100,000.$150,000. The Chairman of each of the Compensation Committee and the Nominating and Corporate Governance Committee received additional compensation of $5,000 per annum and the Chairman of the Audit Committee received additional compensation of $10,000 per annum. For 2010,2013, a minimum of 50% of director's compensation was payable, atpaid in the Director's election, 50% in cash and 50% inform of restricted stock units or 100%("RSUs"). In addition, each director was entitled to elect to receive any amount in restricted stock units.excess of 50% of 2013 compensation in the form of RSUs. The restricted stock unitsRSUs were valued using the volume-weighted average price for the quarter ended March 31, 2013. RSUs are vested and not subject to forfeiture; however, except in the event of death, the underlying shares of Cowen Group, Inc. Class A common stock will not be delivered to the holder for at least one year from the date of grant. These equity awards are intended to further align the interests of our Directors with those of our stockholders. Mr. Kotler, who was appointed to our Board of Directors in 2010, received cash compensation for six months in 2010. Directors who also are employed as executive officers of the Company receive no additional Director compensation. In 2014, the Board approved additional compensation of $50,000 for our Lead Director and increased the compensation of our Audit Committee Chair by $15,000 to $25,000 per annum for the 2014 calendar year.
In 2013, the Company adopted stock ownership guidelines that require each non-employee director to hold Company stock or RSUs that have a value equal to at least three times the amount of annual fees they receive (excluding committee chair fees) within the later of the adoption of the policy or five years of being appointed to the Board.
EXECUTIVE OFFICERS OF THE COMPANY
Biographies of the current executive officers of the Company are set forth below, excluding Mr.Messrs. Cohen's, biography,Solomon's and Strauss' biographies, which are included under "Directors of the Company" above. Each executive officer serves at the discretion of the Board of Directors. Each executive officer was appointed in November 2009 with the exception of Mr. Littman, who was appointed an executive officer on March 2, 2011.
Morgan B. Stark.John Holmes. Age 72.50. Mr. StarkHolmes serves as the ChairmanChief Administrative Officer of Ramius Alternative Investments and Head of Macro Trading Strategy since February 8, 2010Cowen Group and serves as a member of the Operating Committee of Cowen Group. Mr. Stark previously served as Chief Executive Officer and President of Ramius LLC. Mr. Stark is a founding principal of RCG. From 1979 to 1988, Mr. Stark held senior management positions at Chemical Bank and in 1989 he became President and CEO of Chemical Securities, Inc., a Section 20 securities subsidiary. From 1993 to 1995, Mr. Stark was a portfolio manager and Managing Director with Granite Capital International Group. Mr. Stark is a former
Chairman and member of the United States Treasury Borrowing Advisory Committee of the Bond Market Association. He currently serves as a member of the Investors Advisory Committee on Financial Markets for the Federal Reserve Bank of New York. He previously served as President, Vice President and member of the Board of Directors of the Dealer Bank Association. Mr. Stark's philanthropic activities include his positions as a member of the Board of Directors of the Founders Affiliate (Northeast) of the American Heart Association, member of the Investment Committee of the American Heart Association, member of the Board of Directors and Vice President of the Perlman Music Program and Chairman of the Endowment Committee of the Perlman Music Program.
Thomas W. Strauss. Age 69. Mr. Strauss has served as Chief Executive Officer and President of Ramius Alternative Investments since February 8, 2010 and serves as a member of the ExecutiveManagement and Operating Committees of Cowen Group. Mr. Strauss previously servedHolmes was appointed an executive officer of the Company in May 2013. Previously, Mr. Holmes was the Head of Technology and Operations at Cowen Group following the merger between Cowen and Company and Ramius. Mr. Holmes joined Ramius in June 2006 as Chief Executive OfficerGlobal Head of Operations. Prior to joining Ramius, Mr. Holmes was Global Head of the Equity Product Team at Bank of America Securities. Mr. Holmes has also held senior operations management positions at Deutsche Bank, Credit Lyonnais and President of Ramius Alternative Solutions.Kidder Peabody. His experience includes treasury, foreign exchange, equity, fixed income & derivative operations. Mr. StraussHolmes is a founding principal of RCG. From 1963 to 1991, Mr. Strauss was with Salomon Brothers Inc. where he was admittedNASD licensed as a General Partner in 1972 and was appointed to the Executive Committee in 1981. In 1986, he became President of Salomon BrothersSecurities Representative, General Securities Principal and a Vice Chairman and member of the Board of Directors of Salomon Inc., the holding company of Salomon Brothers and Phibro Energy, Inc. In 1993, Mr. Strauss became Co-Chairman of Granite Capital International Group. Mr. Strauss is a former member of the Board of Governors of the American Stock Exchange, the Chicago Mercantile Exchange, the Public Securities Association, the Securities Industry Association, the Federal Reserve International Capital Markets Advisory Committee and the U.S. Japan Business-Council. He is a past President of the Association of Primary Dealers in U.S. Government Securities. Mr. Strauss currently serves on the Board of Trustees of the U.S.-Japan Foundation and is a member of the Board of Trustees and Executive Committee of Mount Sinai Medical Center and Mount Sinai-NYU Health System.
Jeffrey M. Solomon. Age 45. Mr. Solomon serves as Chief Operating Officer, Head of Investment Banking and serves as a member of the Executive and Operating Committees of Cowen Group. Mr. Solomon is a founding principal of RCG. From 1991 to 1994, Mr. Solomon was at Republic New York Securities Corporation, the brokerage affiliate of Republic National Bank (now part of the HSBC Group), where he served as Chief Administrative Officer, Head of Corporate Development and Strategic Planning. Prior to joining Republic, Mr. Solomon was in the Mergers and Acquisitions Group at Shearson Lehman Brothers. Currently, Mr. Solomon serves on the Boards of Directors of HaleFinancial & Hearty Soups, NuGo Nutrition and Tollgrade Communications, Inc. Mr. Solomon also serves on the Technical Advisory Group of the Committee on Capital Markets Regulation.Operations Principal.
Stephen A. Lasota. Age 48.51. Mr. Lasota serves as Chief Financial Officer of Cowen Group and serves as a member of the Management and Operating CommitteeCommittees of Cowen Group. Mr. Lasota was appointed Chief Financial Officer in November 2009. Prior to the consummation of the business combination of Cowen GroupHoldings and Ramius in November 2009, Mr. Lasota was the Chief Financial Officer of Ramius LLC and a Managing Director of the Company. Mr. Lasota began working at RCGRamius in November 2004 as the Director of Tax and was appointed Chief Financial Officer in May 2007. Prior to joining RCG,Ramius, Mr. Lasota was a Senior Manager at PricewaterhouseCoopers LLP. Mr. Lasota has been working in the accounting industry for over twenty years and is a Certified Public Accountant.
Owen S. Littman. Age 38.41. Mr. Littman serves as General Counsel and Secretary of Cowen Group and serves as a member of the Management and Operating CommitteeCommittees of Cowen Group. Mr. Littman was appointed General Counsel and Secretary in July 2010. Following the consummation of the business combination of Cowen GroupHoldings and Ramius in November 2009, Mr. Littman was appointed Deputy General Counsel, Assistant Secretary and Managing Director of Cowen Group and General Counsel and Secretary of Ramius LLC. Mr. Littman began working at RCGRamius in October 2005 as its senior transactional attorney and was appointed General Counsel in February 2009. Prior to joining RCG,Ramius, Mr. Littman was an associate in the Business and Finance Department of Morgan, Lewis & Bockius LLP.
Michael Singer. Age 48. Mr. Singer is the Chief Executive Officer and President of Ramius, a position he has held since joining the Company in December 2012 and serves as a member of the Management and Operating Committees of Cowen Group. Mr. Singer was appointed an executive officer of the Company in May 2013. Prior to joining Ramius, Michael Singer most recently served as Head of Alternative Investments at Third Avenue Management. Before that, Mr. Singer was Co-President of Ivy Asset Management, a Fund of Hedge Funds business with over $14 billion in assets. At Ivy, Mr. Singer established the firm's strategic plan and ran the day to day activities. Mr. Singer began his career at Weiss, Peck & Greer where he spent nine years and served as Senior Managing Director and Executive Committee Member overseeing day to day operations, new product development, client relationship management, hedge fund sales and risk functions.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Our "named executive officers" for 20102013 consist of the following individuals:
2013 marked our first profitable year since the Cowen/Ramius business combination in 2009. We realized improved operating leverage throughout the year as we reported new quarterly revenue highs. Cowen and Company solidified its position as a leader in equity underwritings and middle market debt financing in our core sectors. Ramius successfully grew net assets under management by $1.4 billion in 2013. The following improvements in operating performance during 2013 (which are presented on an Economic Income basis) were considered important factors by the Compensation Committee when evaluating executive compensation, particularly the compensation paid to Mr. Cohen, the Chief OperatingExecutive Officer of Cowen Group and HeadJeffrey Solomon, the Chief Executive Officer of Investment Banking;Cowen and Company:
Refer to the Company's Segment Reporting Note it its financial statements included in its Form 10-K for 2013, as filed with the SEC, for reconciliations of the non-GAAP financial measures above to their most directly comparable GAAP measures.
Key Features of Our Executive Compensation Program
| What We Do | What We Don't Do | |
|---|---|---|
• We pay for performance • We consider peer groups in establishing compensation • Meaningful annual equity awards granted in lieu of—not in addition to—annual cash incentives • We have implemented stock ownership guidelines for our directors. • We have double-trigger equity vesting in the event of a change-in-control • We require our named executive officers to comply with reasonable restrictive covenants • We seek to maintain a conservative compensation risk profile • The Compensation Committee retains an independent compensation consultant • We have an anti-hedging policy, and during 2013, all named executive officers were in compliance with this policy | • We do not pay dividend equivalents on unvested restricted stock units • We do not pay tax gross-ups on our limited perquisites • We do not provide "single-trigger" equity vesting in the event of a change-in-control • We do not provide golden parachute excise tax gross-ups • We do not provide guaranteed base salary increases, and we did not increase the base salaries of our named executive officers in 2013 |
Compensation Philosophy and Objectives
Our compensation program,programs, including compensation of our named executive officers, isare designed to achieve three objectives:
received long-term incentive award for 2010, received an awardgrants in the form of 217,391 restricted stock unitsRSUs in March 2011, as recommended by the Compensation Committee. Pursuant to a deferred equity grid approved by the Compensation Committee, the percentage of total compensation paid in deferred equity increases as total compensation increases.2013 The Compensation Committee believes that the payment of a significant portion of an employee's compensation in the form of equity and deferred equitycash properly aligns the employee's interests with those of the Company's stockholders and effectively mitigates any risks associated with the Company's compensation practices.
In addition to the objectives noted above, we seek to achieve an appropriate ratio of compensation and benefits expense to revenue on a Company-wide basis, based on the ongoing mix of revenue between broker dealer products, investment management products and revenue generated on our invested capital. We believe that we can lower the ratio without affecting our other objectives as we grow our assets under management and we experience a more robust investment banking environment.
In addition to the objectives noted above, we seek to achieve an appropriate ratio of compensation and benefits expense to revenue on a Company-wide basis, based on the ongoing mix of revenue between broker dealer products, investment management products and revenue generated on our invested capital. We believe that we can lower the ratio without affecting our other objectives as we grow our assets under management and we experience a more robust investment banking environment.
Our goal of lowering our compensation to revenue ratio is always balanced with our stated objectives. Specifically, with respect to our recruitment and retention objective, our Compensation Committee has determined that the success of our business is based largely on the quality of our employees, and as such we must continually monitor the market for their services and seek to offer competitive compensation, because we believe it is in our stockholders' best interest to attempt to minimize employee turnover as a result of paying below market compensation. As a result, we will continue to review our compensation to revenue ratio on a quarterly basis, and there can be no assurance that we will be able to achieve our target levels under difficult market conditions.
Employee compensation and benefits as a percentage of total revenues was 68% in 2010 (excluding legacy deferred compensation expenses), and while high given the Company's revenues, the Compensation Committee deemed it acceptable in light of the Company's particularized circumstances during the continuing integration of Ramius and Cowen.
Setting Compensation
The Compensation Committee is responsible for approving the compensation paid to our named executive officers as well as certain other highly compensated employees. In making compensation determinations, the Compensation Committee reviews information presented to them by the Company's management, compensation peer group information external compensation surveys for both investment banking and alternative asset management firms and the recommendations of a compensation consultant engaged by the Committee. The Compensation Committee also reviews our compensation to revenue ratio on a quarterly basis and may adjust the targeted compensation to revenue ratio in order to maintain the Company's compensation philosophy of aligning the interests of our executive officers and our stockholders.
Involvement of Executive Officers
Our Chief Executive Officer, in consultation with our Chief Operating Officer, our Chief Financial Officer, our General Counsel, our Chief Administrative Officer and employees in our Human Resources department, assists the Compensation Committee with its work.in making compensation determinations. These individuals assistprepare information that is provided to, and reviewed by, the Compensation Committee by presenting informationand the Chief Executive Officer makes recommendations to the Compensation Committee and making recommendations for the Compensation Committee's review andtheir consideration. Such information and recommendations include, among other things, the compensation that should be received by the named executive officers (other than himself) and certain other highly compensated employees; performance evaluations by the Chief Executive Officer; financial information regarding the Company that should be reviewed in connection with compensation decisions; the firms to be included in a compensation peer group; and the evaluation and compensation process to be followed by the Compensation Committee. Our Chief Executive Officer is often invited to participate in Compensation Committee meetings; however, he recuses himself from all discussions regarding his own compensation.
Compensation Consultant
In 2010,December 2012, the Compensation Committee engaged PricewaterhouseCoopers LLP, or PwC,exercised its sole authority pursuant to its charter to directly engage Pay Governance LLC to provide advice as a compensation consultant to provide peer group analyses, competitive assessments and advice. At the request of the Compensation Committee, PwC assisted in the preparation of and reviewed certain Compensation Committee presentation materials (including the peer group data described below)
during 2010 and advised the Compensation Committee as to the competitiveness of the base salary and bonus recommendations presented by our Chief Executive Officer, and the competitiveness of the ultimate compensation levels approvedconsultant. Pay Governance LLC was retained by the Compensation Committee for each executive officer and certain other highly compensated employees.
PwC's fees related to providingprovide advice, to the Compensation Committee during 2010 were approximately $25,000. Management reports on the scope of services and related fees to the Committee annually, but the decision to hire PwC for these services is made by management and/or the Audit Committee.
The characteristics of PwC's relationship with the Compensation Committee also comprise the following:
The Compensation Committee has assessed the independence of Pay Governance LLC pursuant to SEC and NASDAQ rules and concluded that no conflict of interest exists that would prevent Pay Governance LLC from independently representing the Compensation Committee. The Compensation
Committee reviewed and was satisfied with Pay Governance LLC's policies and procedures to prevent or mitigate conflicts of interest and that there was no business or personal relationships between members of the Compensation Committee and the individuals at Pay Governance LLC supporting the Compensation Committee.
Compensation Peer Group
In making compensation decisions for 2010,2013, our Compensation Committee reviewed two sets of peer group data. One set of data included a compensation peer group of firms identified byinformation for similarly titled individuals at comparable companies gathered from public filings made in 2013 related to 2012 annual compensation. In instances where an employee has responsibilities for both the broker-dealer and the alternative asset management with which we compete for executive talent.businesses, both broker-dealers and alternative asset management companies were utilized. For 2010,2013, our compensation peer group consisted of Greenhill & Co., Inc., Jefferies Group, Inc., Lazard LLC, Gleacher and Company, JMP Securities, Keefe Bruyette & Woods, Inc., Knight Capital Group, Piper Jaffray & Co., Stifel Financial, The Blackstone Group, Fortress Investment Group GLG PartnersLLC and Och-Ziff.Och-Ziff Capital Management together with PwC,LLC. The Compensation Committee identified these firms because they were either similar in size or engaged in similar businesses. Management gathered and provided information to the Compensation Committee relating to the compensation of the executive officers of these peer firms, including annual base salary, annual cash bonus, equity awards and all other compensation. The Compensation Committee believes that information regarding pay practices at comparable companies is useful in two respects. First, as discussed above, we recognize that our pay practices must be competitive in our marketplace. By understanding the compensation practices and levels of the Company's peer group, we enhance our ability to attract and retain highly skilled and motivated executives, which is fundamental to the Company's success. Second, this data is one of the many factors the Compensation Committee considers in assessing the reasonableness of compensation. Accordingly, the Compensation Committee reviewed trends among these peer firms and considered this data when determining named executive officers' 20102013 annual bonuses to ensureand other compensation, but did not utilize the peer firm compensation as a benchmark for determining executive compensation.
Advisory Vote on Executive Compensation
The Compensation Committee believes that our executive compensation levels were competitive relativeprograms are effective in driving our pay-for-performance philosophy. As part of our corporate governance system, we evaluate our programs in light of market conditions, stockholder views, and governance considerations, and make changes as appropriate for our business. At our 2011 annual meeting, we held our first non-binding shareholder advisory vote on the compensation of our named executive officers. We had extremely strong support from our stockholders, with over 95% of the votes cast in favor of the compensation of our named executive officers. The Board of Directors reviewed this favorable outcome and believed it conveyed our stockholders' support of the Compensation Committee's decisions and the existing executive compensation programs. The Compensation Committee made no material changes to our executive compensation program or to the compensation paid byof our peer group.
The other set of peer group data consisted of external market surveys provided by MGMC, Inc. and McLagen, compensation advisory firms. MGMC primarily addresses broker-dealer activities and McLagen primarily addresses alternative asset management activities. These market surveys allowed the Compensation Committee to benchmark each executive officer's total compensation against that of certain boutique investment banks and global investment banks. For 2010, the boutique investment banks included the following firms: CIBC, Evercore, FBR Capital Markets, Gleacher, Greenhill, Jefferies Group, Inc., JMP Securities, Leerink Swann, Keefe Bruyette & Woods, Inc., Piper Jaffray & Co., RBC, Thomas Weisel Partners Group, LLC and Wells Fargo. The global investment banks included the following firms: Bank of America, Barclays Capital, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS. The McLagen Asset Management Firm survey included 111 asset management firms as well as data from 39 asset management firms with assets under management between $1.5 billion and $100 billion. We use these external market surveys because we compete with companies of various sizes fornamed executive officers as a result of the advisory vote. At our 2011 annual meeting, our shareholders recommended that we hold non-binding shareholder advisory votes on executive compensation once every three years. Thereafter, our Board of Directors reviewed these results and determined that our shareholders should vote on a say-on-pay proposal every three years. Accordingly, a say-on-pay proposal is included in this proxy statement as one of the matters for stockholder approval at our 2014 annual meeting.
other senior employees. Each executive officer's total compensation for 2010, the performance of his respective business unit and his compensation recommendation by management to the Compensation Committee for 2010, were compared to: (i) the 2009 average, 25th, 50th and 75th percentile of total compensation of a similarly positioned executive officer at a boutique investment bank; and (ii) the 2009 average, 25th, 50th and 75th percentile of total compensation of an officer with similar functions (but not necessarily the same title) at a global investment bank or asset management firm. The Compensation Committee reviews such composite market data to determine the market median compensation paid to similarly situated executives. Market data are some of the many factors considered by the Compensation Committee when setting compensation, and the amount paid to each executive officer may be more or less than the composite market median based on the roles and responsibilities of the executive officer, experience level and other factors.
Compensation Program and Payments
Our 2013 executive compensation consistsconsisted of base salary, certain limited perquisites and benefits, an annual bonus paid in the form of cash and deferred cash and equity awards and, for certain limited perquisites and benefits.of our named executive officers, annual incentive awards in the form of long-term equity incentive compensation. In addition, certain ofpursuant to their employment agreements, our named executive officers are eligible to receive certain payments upon a termination or change in control. Certain of our named executive officers also received equity awards in the form of restricted stock units in 2013 pursuant to their employment agreements.
Base Salary
The purpose of base salary is to provide a set amount of cash compensation for each executive officer that is not variable in nature and is generally competitive with market practices. We seek to limit the base salaries of our named executive officers such that a significant amount of their total compensation is contingent upon the performance of the Company and the named executive officer during the fiscal year. This was consistent with standard practice within the securities and asset management industries and we believe this allowed us to reward performance.
In 2013, Mr. Cohen received a base salary of $950,000, Mr. Lasota received a base salary of $450,000, Mr. Holmes received a base salary of $450,000, Mr. Littman received a base salary of $450,000 and Mr. Solomon received a base salary of $950,000. The base salarysalaries for each named executive officer in fiscal year 2010, other thanMessrs. Cohen, Holmes, Lasota, Littman and Solomon for 2013 were unchanged from 2012.
Perquisites
Historically, Ramius provided certain perquisites, including reimbursement of group term life and long-term disability insurance and tax and financial planning expenses, and the Company continues to provide these perquisites to certain members of senior management, including Messrs. Cohen and Solomon. In addition, Mr. Lasota, whose base salaryCohen is $300,000 per year, is set out in his respective employment agreementprovided with a car and is described below. For 2011,driver for business use. Mr. Cohen reimburses the Compensation Committee determined to increase Mr. Cohen's salary from $500,000 to $950,000, Mr. Lasota's salary from $300,000 to $400,000, Mr. Solomon's salary from $400,000 to $600,000Company for personal use of the car and Mr. Strauss's salary from $450,000 to $600,000.driver.
Annual Bonus and Other Incentive Compensation
TheA significant portion of total compensation our named executive officers are eligible to receive is in the form of a discretionary annual bonus. This is consistent with our view that a significant portion of compensation paid is to be based on the performance of the Company and of each executive officer. The annual bonus is paid partially in cash and partially in deferred equity in accordance with a distribution grid established bycash and equity. The deferred components of the Compensation Committee. Our senior management developed, and the Compensation Committee approved, an equity distribution grid that set forth the percentage of total compensation an employee would receive in the form of equity awards,annual bonus are paid in lieu of, not in addition to, a cash payment. The equity component of the annual bonus ispayment and are subject to service-based vesting schedulesconditions, as discussed below.in more detail in the section below titled "2013 Annual Bonus Compensation and Annual Incentive Awards." The equity distribution grid proposed by management for 2010 was discussed and ultimately approved byCompensation Committee believes that the Compensation Committee. For fiscal 2010, the equity distribution grid was set such that any employee, regardlesspractice of title, earning total compensation in excesspaying a portion of $225,000 would, with rare exception, receive a percentage of his or her compensation over $225,000each named executive officer's annual bonus in the form of an equity award. According to the equity distribution grid approved by the Compensation Committee, the percentage of totaldeferred awards is consistent with compensation that must be paid in equity increases as total compensation increases. For example, according to the fiscal 2010 deferred equity grid, an employee earning in excess of $250,000 in total compensation would receivepractices at least 2.0% of his or her total compensation in the form of an equity award, while an employee earning $1 million or more in total compensation would receive at least 30.5% of his or her total compensation in the form of an equity award. The
Compensation Committee evaluates the deferred compensation formula every year and makes necessary changes both to remain competitive with ourout peer companies and is useful tool to continue aligning the long-term interests of our named executive officers' with the interests of our stockholders. The Compensation Committee believes that paying a meaningful portion
During the first quarter of each such named executive officer's compensation in the form of deferred equity properly aligns management's long-term interests with the interests of our stockholders.
Equity awards relating to fiscal 2010 bonuses were approved in 2010 in the form of restricted stock units vesting as follows: 25% on September 1, 2011, 25% on June 1, 2012, 25% on June 1, 2013, and 25% on June 1, 2014. Management recommended, and the Compensation Committee approved, this vesting schedule,set the Company's achievement of positive economic income during the 2013 calendar year as the performance criteria for purposes of Section 162(m) for each of our named executive officers. As discussed above, 2013 marked our first profitable year since the Cowen/Ramius business combination in part,2009, and accordingly, the Compensation Committee determined that it was appropriate to allow employees the opportunity to sell some portionpay bonuses in respect of the equity award into cash during 2011 in order to satisfy potential cash needs.
2013. At meetings held on December 8, 2010January 15, 2014 and January 21, 2011,February 27, 2014, the Compensation Committee considered and discussed management's compensation recommendations for our named executive officers and certain other highly compensated employees and the Compensation Committee approved management's recommendations. All performance-based cash bonuses were paid and restricted stock units were awardedIn determining the annual bonus compensation payable to each of our named executive officers relatingfor 2013, the Compensation Committee
reviewed and considered the financial performance of the Company as a whole and each individual business unit compared to fiscal 20102012; each named executive officer's contributions to the Company's growth initiatives in February 2011,2013; historical compensation information for each named executive officer; the Company's desire to retain and incentivize its named executive officers; the recommendations of the Chief Executive Officer regarding total compensation of our named executive officers, which the Compensation Committee discussed with the exceptionChief Executive Officer; the financial performance of the Company during 2013 compared to comparable public companies and other companies in the securities industry; a review of public filings regarding total compensation paid by certain peer investment banks and alternative asset management companies; and base salary, cash bonus, equity awards and all other compensation paid by the compensation peer group. The Compensation Committee approved annual bonuses for each of our executive officers after review and consideration of these factors, as well as the following individual performance factors.
Determination of Executive Officer Compensation for 2013
The following factors influenced the annual bonus determinations for each named executive officer for 2013:
After determining the aggregate cash values of annual bonuses payable to each of our named executive officers in respect of fiscal 2013, the Compensation Committee then determined the percentage of the annual bonus compensation that each of our named executive officers would receive
in the form of deferred awards. Our Chief Executive Officer developed a proposal for the allocation of each named executive officer's annual bonus compensation among the cash, deferred cash and equity components and presented this proposal to 25% on June 1, 2012, 25% on June 1, 2013the Compensation Committee, which it discussed and 50% on June 1, 2014.ultimately approved. The percentages of the annual bonuses delivered in the form of deferred cash and in the form of RSUs for Messrs. Cohen, Lasota, Holmes, Littman and Solomon are set out below under "Fiscal-Year Compensation." The cash bonus payments made to Messrs. Lasota, Holmes and Littman are inclusive of the guaranteed annual cash bonus payments they are entitled to receive pursuant to their employment agreements, as discussed in more detail in the section below titled "Narrative Disclosure Relating to Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Agreements." To eliminate the impact that a significant price change in the market value of our Class A common stock may have on the number of restricted stock unitsRSUs that are intended to be delivered to an employee, the Compensation Committee approved valuing the restricted stock unitsRSUs using the volume-weighted average price for a five tradingthe thirty business day period ending onended January 28, 2011,27, 2014, which equaled $4.60$3.96 per share. All restricted cash and RSUs relating to fiscal 2013 annual bonuses were awarded to our named executive officers in February 2014.
PerquisitesLong-Term Incentive Awards
PriorIn 2013, in addition to receiving awards of RSUs relating to fiscal 2012 annual bonuses, each of Messrs. Holmes, Lasota, Littman and Solomon received awards of RSUs under the terms of their employment agreements. In addition, in March 2013, Messrs. Holmes, Lasota and Littman received incentive awards of 100,000 stock appreciation rights, or SARs. The Compensation Committee approved these retention grants in order to enable these individuals to benefit from future appreciation of the Company's stock price. The incentive awards were intended to reflect the importance of each recipient's contributions to the Transactions, Ramius provided certain perquisites, including reimbursementCompany, and to serve as a tool to achieve an internally-balanced level of group term lifecompensation and equity ownership among our executive officers. The incentive grants are subject to service-based vesting conditions, as discussed in more detail below in the "Grant of Plan-Based Awards" and "Outstanding Equity Awards at 2013 Fiscal Year End" tables. The Compensation Committee believes that the vesting schedules applicable to the incentive grants provide an appropriate retention mechanism and properly align management's long-term disability insurance and tax and financial planning expenses, andinterests with the Company continues to provide these perquisites to certain membersinterests of senior management, including Messrs. Cohen, Stark, Solomon and Strauss. In addition, Mr. Cohen and Mr. Strauss are provided with a car and driver for business use. Messrs. Cohen and Strauss reimburse the Company for personal use of the car and driver.our stockholders.
Fiscal-Year Compensation
No portion of the bonuses awarded in restricted stock unitscash or RSUs to our named executive officers for their fiscal 20102013 performance is included in the Summary Compensation Table because the equity awards were made in 2011.2014. The table below sets forth the total compensation awarded to the named executive officers for their fiscal 20102013 performance. These amounts for 2013 include base salary information, and the grant date fair market value of the entire amount of the equity awards granted to the named executive officerofficers in February 2011, as well as grants made2014 and the value of the deferred cash awards granted to Messrs. Cohen and Lasotathe named executive officers in March 2011.February 2014. We believe this information is helpful to understanding how our compensation program rewarded our executive officers for their performance, during fiscal 2010, and it reflects the way in which our
which our Compensation Committee views aggregate compensation for our named executive officers on a fiscal-year basis.
Name | Year | Base Salary ($) | Cash Bonus ($) | Deferred Cash Award ($)(1) | Restricted Stock Units (2) ($) | SARs Awards ($) | Other Compensation(3) ($) | Total Compensation ($) | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter A. Cohen(4) | 2013 | 950,000 | 1,250,000 | — | 1,945,457 | — | 155,525 | 4,300,982 | ||||||||||||||
| (39.1% | (60.9% of | |||||||||||||||||||||
| of annual | annual bonus) | |||||||||||||||||||||
| bonus) | (454,546 shares) | |||||||||||||||||||||
| 2012 | 950,000 | 1,000,000 | — | 1,111,112 | — | 121,009 | 3,182,121 | |||||||||||||||
Stephen A. Lasota(5) | 2013 | 450,000 | 450,000 | 330,000 | 237,780 | — | 7,500 | 1,475,280 | ||||||||||||||
| (44.2% | (32.4% | (23.4% of | ||||||||||||||||||||
| of annual | of annual | annual bonus | ||||||||||||||||||||
| bonus) | bonus) | (55,556 shares) | ||||||||||||||||||||
| 2012 | 450,000 | 450,000 | 100,000 | 239,465 | 81,000 | 7,500 | 1,327,965 | |||||||||||||||
John Holmes(5) | 2013 | 450,000 | 450,000 | 330,000 | 237,780 | — | 7,500 | 1,475,280 | ||||||||||||||
| (44.2% | (32.4% | (23.4% of | ||||||||||||||||||||
| of annual | of annual | annual bonus | ||||||||||||||||||||
| bonus) | bonus) | (55,556 shares) | ||||||||||||||||||||
Owen S. Littman(5) | 2013 | 450,000 | 450,000 | 330,000 | 237,780 | 7,500 | 1,475,280 | |||||||||||||||
| (44.2% | (32.4% | (23.4% of | ||||||||||||||||||||
| of annual | of annual | annual bonus | ||||||||||||||||||||
| bonus) | bonus) | (55,556 shares) | ||||||||||||||||||||
| 2012 | 450,000 | 450,000 | 100,000 | 239,465 | 81,000 | 7,500 | 1,327,965 | |||||||||||||||
Jeffrey M. Solomon(6) | 2013 | 950,000 | 500,000 | 683,333 | 1,477,105 | — | 56,300 | 3,666,738 | ||||||||||||||
| (18.8% | (25.7% | (55.5% of | ||||||||||||||||||||
| of annual | of annual | annual bonus) | ||||||||||||||||||||
| bonus | bonus | (345,118 shares) | ||||||||||||||||||||
| 2012 | 866,667 | 500,000 | — | 1,037,678 | — | 54,928 | 2,459,272 | |||||||||||||||
Name | Base Salary ($) | Cash Bonus ($) | Restricted Stock Units ($) | Other Compensation(1) ($) | Total Compensation ($) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter A. Cohen | 500,000 | 0 | 863,042 | (2) | 137,608 | 1,500,650 | |||||||||
| (217,391 shares | ) | ||||||||||||||
Stephen A. Lasota | 300,000 | 389,000 | 407,157 | 7,350 | 1,103,507 | ||||||||||
| (97,229 shares | )(3) | ||||||||||||||
David M. Malcolm | 457,000 | 608,000 | 0 | 18,927 | 1,083,927 | ||||||||||
Jeffrey M. Solomon | 400,000 | 295,000 | 473,165 | 50,866 | 1,219,031 | ||||||||||
| (109,783 shares | ) | ||||||||||||||
Morgan B. Stark | 500,000 | 133,000 | 110,095 | 77,757 | 820,852 | ||||||||||
| (25,544 shares | ) | ||||||||||||||
Thomas W. Strauss | 450,000 | 233,000 | 250,639 | 77,177 | 1,010,816 | ||||||||||
| (58,153 shares | ) | ||||||||||||||
DeterminationAnnual Bonuses for 2010
When determining55,556 RSUs, which represents 23.4% of the amountaggregate value of his annual bonus to be paidcompensation for fiscal 2010, the Compensation Committee reviewed and considered the following information:
on May 15, 2015, 30% on May 15, 2016, 30% on May 15, 2017 and 30% on May 15, 2018. The amounts shown do not reflect the awards of 150,000 RSUs that were made to Messrs. Lasota, Holmes and Littman in August 2013 under the terms of their employment agreements.
The following factors influenced the compensation for each named executive officer for 2010:
Employment Agreements—Post-Employment and growth of the Company's investment banking and capital markets businesses. Through his leadership, the Company achieved increased market share in China and expanded its investment banking product offerings and reduced non-compensation expenses in 2010.
Based on this information, the Committee evaluated the performance of the chief executive officer and determined his annual performance-based compensation, assessed relative levels of responsibility and contribution during the year for each of the other named executive officers and approved 2010 performance-based compensation.
Employment Agreements
Each of our named executive officers is party to an employment agreement with the exception ofCompany. Mr. Lasota,Cohen entered into anhis employment agreement with the Company on June 3, 2009 in connection with the Transactions.business combination of Cowen Holdings and Ramius LLC (the "Transactions"), Mr. Solomon entered into a new employment agreement with the Company (which replaced his prior agreement) in May 2012, and Messrs. Holmes, Lasota and Littman entered into their employment agreements with the Company in August 2012. The Compensation Committee views the employment agreements as an important tool in achieving our compensation objective of recruiting and retaining talented employees and a strong management team. The equity grants contemplated by the employment agreements were intended to align our executive's interests with the interests of our stockholders. The guaranteed minimum bonuses for Messrs. Holmes, Lasota and Littman were intended to provide them with what was viewed as an appropriate level of cash compensation on an annual basis. Mr. Cohen's employment agreement was negotiated prior to the Transactions and the formation of the Compensation Committee and was ratified by our Board of Directors at a meeting held on November 5, 2009, while the 2012 employment agreements were approved by the Compensation Committee. In approving the 2012 employment agreements, the Compensation Committee recognized that Messrs. Holmes, Lasota, Littman and Solomon are key members of the Company's senior management team and determined that it was necessary to enter into the agreements in order to retain them and to better align their compensation with industry practices. The agreements provide for base salary, annual bonus opportunities, and other benefits, contain customary restrictive covenants, and provide for benefits upon certain qualifying terminations of employment. The severance and change in control arrangements provided by these employment agreements were offered to the executive officers in contemplation of the Transactions in order to induce the named executive officers to accept or continue employment with the Company following the completion of the Transactions. Additionally, the severance and change in control arrangements are intended to retain our named executive officers and to provide consideration for certain restrictive covenants that apply following a termination of employment. TheseAs discussed in more detail in the section below titled "Narrative Disclosure to Summary Compensation Table and Grant of Plan-Based Awards Table—Employment Agreements," the 2012 employment agreements also require us to make certain grants of RSUs to Messrs. Solomon, Holmes, Lasota and Littman, the first of which were negotiated prior tomade in 2012. The Compensation Committee views the Transactions and the formationequity grant component of the Compensation Committee and were ratified by2012 employment agreements as being consistent with our Boardobjective of Directors at a meeting held on November 5, 2009.aligning our named executive officers' interests with our stockholders' interests. For more information, please see the section below titled "Narrative Disclosure to Summary Compensation Table and Grant of Plan-Based Awards Table—Employment Arrangements."
Mr. Malcolm's Resignation Agreement
Relationship of Compensation Policies and Practices to Risk Management
On December 15, 2010, Mr. Malcolm resigned fromThe Board has discussed whether our compensation policies are reasonably likely to have a material adverse effect on our results. The Board noted that, consistent with our performance-based model, many of our employees receive a significant portion of their compensation through discretionary compensation tied to their individual or business unit performance, or a combination thereof. The Board noted that a lower portion of the Company's revenues are derived from proprietary trading businesses and that a significant portion of many employees' compensation is provided in the form of deferred compensation that vests over time, which has the effect of tying the individual employee's
long-term financial interest to the firm's overall success. The Board believes that this helps mitigate the risks inherent in our business.
The Board noted that our risk management team continuously monitors our various business groups, the level of Directorsrisk they are taking and Executive Management Committeethe efficacy of potential risk mitigation strategies. Senior management also monitors risk and Operating Committeethe Board is provided with data relating to risk at each of its regularly scheduled meetings. The Chief Risk Officer meets regularly with the Board to present his views and notifiedto respond to questions. For these reasons, the Board believes that our overall compensation policies and practices are not likely to have a material adverse effect on us.
In order to strengthen the alignment between stockholders and employees, the Company maintains an anti-hedging policy that prohibits the "short sale" of Company securities. The policy prohibits employees from trading in options, warrants, puts and calls or similar instruments on Company securities. We allow directors and executive officers to hold up to 50% of their Company stock in a margin account. During 2013, all named executive officers were in compliance with this policy.
Tax and Accounting Impact and Policy
The financial and income tax consequences to the Company of his intentindividual executive compensation elements are important considerations for the Compensation Committee when analyzing the overall design and mix of compensation. The Compensation Committee seeks to retire from his full-time dutiesbalance an effective compensation package for the executive officers with the Company effective February 1, 2011. In accordance with the termsan appropriate impact on reported earnings and other financial measures.
The rules of his employment agreement, which provided that he would be employed by the Company as a senior advisor beginning on the date of his retirement and for three years thereafter, on December 15, 2010, the Company entered into a letter agreement with Mr. Malcolm establishing the terms and conditions of his senior advisor engagement. For more information, please see the section below titled "Narrative Disclosure to Summary Compensation Table and Grant of Plan-Based Awards Table—Employment Arrangements."
Tax Deductibility under Section 162(m) of the Internal Revenue Code
The Internal Revenue Service, pursuant to Section 162(m) places a $1 million limit on the amount of the Internal Revenue Code of 1986, as amended, generally disallows a tax deductioncompensation we can deduct in any one year for compensation in excess of $1.0 million paid to our Chief Executive Officer and to certain otherour three most highly-compensated executive officers whoseemployed at the end of the year (other than our Chief Financial Officer). However, the $1 million deduction limit generally does not apply to compensation that is requiredperformance-based and provided under a shareholder-approved plan. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Compensation Committee also considers other factors in making its decisions and retains the flexibility to be reportedgrant awards that are not deductible for tax purposes. From time to time, in order to ensure competitive levels of compensation for our stockholders pursuant tosenior executives, the Exchange Act by reasonCompensation Committee approves compensation, including base salary and benefits that is not deductible under Section 162(m). Loss of being among our four most highly paid executive officers.the federal income tax deduction does not result in a current federal income tax liability, however, because we have substantial federal income tax net operating loss carryforwards. Our 2010 Equity and Incentive Plan is designed to qualify certain compensation that may be awarded under our annual incentive program as "performance based" to ensure that the tax deduction is available to the Company.Company for amounts payable under the plan.
The Compensation and Benefits Committee has reviewed and discussed the Compensation Discussion and Analysis with management and has recommended to the Board of Directors the inclusion of the Compensation Discussion and Analysis in this proxy statement.
Compensation and Benefits Committee of the Board of Directors of Cowen Group, Inc.
Jerome S. Markowitz,Chairperson.John E. Toffolon, Jr.Steven Kotler
Joseph R. Wright
The following table sets forth compensation information for our named executive officers for services performed for the Company and its subsidiaries during 2010.2013.
Name & Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Change in Pension Value | All Other Compensation | Total ($) | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter A. Cohen | 2013 | 950,000 | 1,250,000 | 1,111,112 | — | 9,017 | 155,525 | (4) | 3,475,654 | ||||||||||||||||
Chairman, Chief Executive and President | 2012 | 950,000 | 1,000,000 | — | — | 18,873 | 121,009 | 2,089,882 | |||||||||||||||||
| 2011 | 950,000 | — | 863,042 | — | 22,466 | 146,638 | 1,982,146 | ||||||||||||||||||
Stephen A. Lasota | 2013 | 450,000 | 450,000 | 779,465 | 81,000 | 2,440 | 42,068 | (5) | 1,804,973 | ||||||||||||||||
Chief Financial Officer | 2012 | 450,000 | 450,000 | 418,157 | — | 2,553 | 21,962 | 1,342,672 | |||||||||||||||||
| 2011 | 400,000 | 350,000 | 407,157 | — | 3,039 | 7,350 | 1,167,546 | ||||||||||||||||||
John Holmes(6) | 2013 | 450,000 | 450,000 | 779,465 | 81,000 | 2,710 | 42,068 | (5) | 1,805,243 | ||||||||||||||||
Chief Administrative Officer | |||||||||||||||||||||||||
Owen S. Littman | 2013 | 450,000 | 450,000 | 779,465 | 81,000 | 1,588 | 42,068 | (5) | 1,804,121 | ||||||||||||||||
General Counsel and Secretary | 2012 | 450,000 | 450,000 | 418,157 | — | 1,662 | 21,962 | 1,341,781 | |||||||||||||||||
| 2011 | 400,000 | 350,000 | 407,157 | — | 1,978 | 7,350 | 1,166,485 | ||||||||||||||||||
Jeffrey M. Solomon | 2013 | 950,000 | 500,000 | 1,800,178 | — | 7,426 | 56,300 | (7) | 3,313,904 | ||||||||||||||||
Chief Executive Officer of | 2012 | 866,667 | 500,000 | 801,084 | — | 7,771 | 76,140 | 2,251,662 | |||||||||||||||||
Cowen and Company | 2011 | 750,000 | — | 473,165 | — | 9,251 | 52,360 | 1,284,776 | |||||||||||||||||
Name & Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Change in Pension Value | Other Compensation | Total ($) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter A. Cohen | 2010 | 500,000 | — | 297,747 | 23,345 | 137,608 | (3) | 958,700 | |||||||||||||||
Chairman, Chief Executive Officer and President | 2009 | 83,333 | 60,242 | 3,089,324 | 22,303 | 22,262 | 3,277,464 | ||||||||||||||||
Stephen A. Lasota | 2010 | 300,000 | 389,000 | 258,525 | 3,158 | 7,350 | (4) | 958,033 | |||||||||||||||
Chief Financial Officer | 2009 | 50,000 | 365,000 | 250,485 | 3,018 | — | 668,503 | ||||||||||||||||
David M. Malcolm | 2010 | 457,000 | 608,000 | 129,771 | — | 18,927 | (5) | 1,213,698 | |||||||||||||||
Former Chief Executive Officer and President Cowen and Company, LLC | 2009 | 75,000 | 351,923 | 2,108,474 | — | 1,500,000 | 4,035,397 | ||||||||||||||||
Jeffrey M. Solomon | 2010 | 400,000 | 295,000 | 208,265 | 9,613 | 50,866 | (6) | 963,744 | |||||||||||||||
Chief Operating Officer and Head of Investment Banking | |||||||||||||||||||||||
Morgan B. Stark | 2010 | 500,000 | 133,000 | 254,754 | 26,240 | 77,757 | (7) | 991,751 | |||||||||||||||
Chairman of Ramius Alternative Investments | 2009 | 83,333 | 59,299 | 3,089,324 | 26,240 | 9,613 | 3,267,809 | ||||||||||||||||
Thomas W. Strauss | 2010 | 450,000 | 233,000 | 177,928 | 26,091 | 77,177 | (8) | 964,196 | |||||||||||||||
Chief Executive Officer and President of Ramius Alternative Investments | 2009 | 75,000 | 146,970 | 1,920,389 | 27,927 | 21,765 | 2,192,051 | ||||||||||||||||
2010 Grants of Plan-Based Awards
The following table provides information regarding grants of plan-based awards made to the named executive officers during fiscal year 2010.
| | Grant Date | Corporate Action Date | All Other Stock Awards: Number of Shares of Stock or Units (#)(1) | Grant Date Fair Value of Stock and Option Awards ($)(2) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter A. Cohen | 6/7/2010 | 2/10/2010 | 60,889 | 297,747 | |||||||||
Stephen A. Lasota | 6/7/2010 | 2/10/2010 | 52,868 | 258,525 | |||||||||
David M. Malcolm | 6/7/2010 | 2/10/2010 | 26,538 | 129,771 | |||||||||
Jeffrey M. Solomon | 6/7/2010 | 2/10/2010 | 42,590 | 208,265 | |||||||||
Morgan B. Stark | 6/7/2010 | 2/10/2010 | 52,097 | 254,754 | |||||||||
Thomas W. Strauss | 6/7/2010 | 2/10/2010 | 36,386 | 177,928 | |||||||||
2013 Grants of Plan-Based Awards
The following table provides information regarding grants of plan-based awards made to the named executive officers during fiscal year 2013.
| | Grant Date | Corporate Action Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards ($)(6) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter A. Cohen | 3/15/2013 | 2/21/2013 | 383,142 | (1) | — | — | 1,111,112 | ||||||||||||
Stephen A. Lasota | 3/1/2013 | 2/21/2013 | 95,786 | (2) | — | — | 239,465 | ||||||||||||
| 3/15/2013 | 2/21/2013 | — | 100,000 | (3) | 2.90 | 81,000 | |||||||||||||
| 8/7/2013 | 8/1/2012 | 150,000 | (4) | — | — | 540,000 | |||||||||||||
John Holmes | 3/1/2013 | 2/21/2013 | 95,786 | (2) | — | — | 239,465 | ||||||||||||
| 3/15/2013 | 2/21/2013 | — | 100,000 | (3) | 2.90 | 81,000 | |||||||||||||
| 8/7/2013 | 8/1/2012 | 150,000 | (4) | — | — | 540,000 | |||||||||||||
Owen S. Littman | 3/1/2013 | 2/21/2013 | 95,786 | (2) | — | — | 239,465 | ||||||||||||
| 3/15/2013 | 2/21/2013 | — | 100,000 | (3) | 2.90 | 81,000 | |||||||||||||
| 8/7/2013 | 8/1/2012 | 150,000 | (4) | — | — | 540,000 | |||||||||||||
Jeffrey M. Solomon | 3/1/2013 | 2/21/2013 | 415,061 | (2) | — | — | 1,037,678 | ||||||||||||
| 6/3/2013 | 5/31/2012 | 250,000 | (5) | — | — | 762,500 | |||||||||||||
Narrative Disclosure Relating to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment ArrangementsAgreements
Employment Agreements with Peter A. Cohen, Jeffrey M. Solomon, Morgan B. Stark and Thomas W. Strauss. The Company is party to an employment agreementsagreement with Messrs.Mr. Cohen, Solomon, Stark, and Strauss, which became effective on November 2, 2009, uponan employment agreement with Mr. Solomon, dated as of May 31, 2012, and employment agreements with Messrs. Holmes, Lasota and Littman, dated as of August 2, 2012. The employment agreements provide for the closingfollowing material terms:
Equity Benefits) "Equity Benefits"). In addition, if Mr. Stark undergoes an involuntary termination, he will be entitled to an additional cash payment equal to $1.5 million. In the event that theMr. Cohen's employment of any of these executives is terminated due to his death or disability, he or his estate will be entitled to the accrued obligations and the Equity Benefits. The employment agreement with Mr. Cohen does not contain any provisions that provide for payments to be made upon a change in control.
Mr. Solomon's death or disability (as such terms are defined in the agreement), Mr. Solomon will, subject to his execution of a general release in our favor, be entitled to the following: (i) any unpaid annual bonus with respect to the previous completed fiscal year, (ii) a prorated annual bonus for the fiscal year of termination, calculated based on the average bonus paid for the two years immediately preceding the year of termination and the timing of such termination, (iii) in the case of a termination by us without cause or by Mr. Solomon for good reason only, a lump sum cash payment in an amount equal to two and one-half times the sum of his base salary and the average annual bonus paid for the two years immediately preceding his termination, provided that the payment under clause (iii) will not be less than $3,250,000 and not more than $5,000,000, (iv) immediate vesting of all equity awards and unvested deferred compensation, (v) a cash payment equal to 24 months' COBRA premiums, and (vi) in the event that such termination occurs prior to the grant of the Equity Award, the grant of the Equity Award or its cash equivalent, which will be fully vested on the date of grant. In the event that Mr. Solomon breaches the restrictive covenants described below following a termination of his employment, he will be required to repay any payments or benefits received in connection with such termination.
Employment Arrangements with David M. Malcolm. During 2010, the Company was party to an employment agreement with Mr. Malcolm, which became effective on November 2, 2009, upon the closing of the Transactions. The agreement provided that, upon an involuntary termination (as described above with respect to the agreements for Messrs. Cohen, Stark, and Strauss), Mr. Malcolm would be entitled to the following, subject to his signing and not revoking a separation and release agreement: (i) accrued obligations, (ii) the Equity Benefits, (iii) a cash payment equal to the sum of $2.25 million, his prior year's base salary and the cash portion of his prior year's bonus, and (iv) vesting of his interest in Cowen Healthcare Royalty Partners. The agreement also provided that in the event that Mr. Malcolm was terminated due to his death or disability, he or his estate would be entitled to the accrued obligations and the Equity Benefits, as well the vesting of his interest in Cowen Healthcare Royalty Partners. Upon a change in control of the Company, Mr. Malcolm would be entitled to accelerated vesting of the shares of restricted stock that were granted to him pursuant to his employment agreement. Additionally, all outstanding equity awards would vest in accordance with the applicable grant agreement upon a change in control of the Company.
On December 15, 2010, in connection with Mr. Malcolm's resignation from the Board of Directors, the Company entered into a letter agreement (the "Letter Agreement") with Mr. Malcolm, which supersedes any and all of Mr. Malcolm's prior employment agreements and letters relating to Mr. Malcolm's employment. Pursuant to the Letter Agreement, Mr. Malcolm agreed to retire from his full time duties with the Company effective February 1, 2011 (the "Effective Date"), at which time, and continuing for sixty (60) months from such date (the "Term"), the Company shall employ Mr. Malcolm as a Senior Advisor. Pursuant to the Letter Agreement, Mr. Malcolm was entitled to a bonus for calendar year 2010 equal to $608,000, as well as a base salary of $650,000 per annum, commencing from the Effective Date until the second anniversary of the Effective Date, and $400,000 per annum, commencing from the second anniversary of the Effective Date until the fifth anniversary of the Effective Date, and continued eligibility to participate in the Company's medical plans during the Term. The Letter Agreement also includes customary restrictions on the disclosure of confidential information, non-solicitation (which survives for two years following the end of the Term), and non-competition (which survives for one year following the end of the Term).
Senior Advisor Agreement with Mr. Stark. In addition to the above, the employment agreements with Mr. Stark provides that upon his retirement on or after December 31, 2010, he will be employed by the Company as a senior advisor beginning on the date of his retirement and for three years thereafter, which employment will be governed by a senior advisor agreement. These agreements provide for an annual base salary of $750,000, Company-provided health and medical benefits Mr. Stark, his spouse, and his dependents during the three-year term (to the extent permitted by the terms of the applicable plans), and continued vesting of equity awards. In addition, the agreement provide that if the Company undergoes a change in control during the term of his employment as a senior advisor, he will be entitled to a lump sum cash payment equal to the unpaid balance of his base salary for the remainder of the three-year term. This agreement also subjects Mr. Stark to non-solicitation obligations during the term of his employment and for two years thereafter, and non-competition obligations during the term of his employment and for one year thereafter.
RAPP Program. Pursuant to the terms of his employment agreement, Mr. Strauss is eligible to participate in the employee profit participation plan of Ramius Alternative Solutions, LLC, a subsidiary of Ramius, known as the RAPP Program, which is offered to certain key employees. The RAPP Program provides for the granting of equity interests in related entities with initial grant values based on a certain percentage of profits of Ramius Alternative Solutions LLC. One half of the amount granted represents equity units in one of the consolidated fund-of-funds products managed by Ramius Alternative Solutions LLC chosen by senior management. The other half of the amount granted represent equity units of the Company. No amounts were earned by Mr. Strauss under the RAPP Program in respect of 2010 performance.
2010 Equity and Incentive Plan
Effective as of June 7, 2010, the Company adopted the 2010 Equity and Incentive Plan (the "2010 Plan").
The 2010 Plan initially reserved 7,500,000 shares of Class A common stock for delivery to participants and their beneficiaries under the 2010 Plan, subject to adjustment in the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off, or other similar change in capitalization or event. Additionally, commencing on January 1, 2011 and on the first day of each fiscal year of the Company thereafter during the term of the 2010 Plan, additional shares of common stock representing seven and one-half percent (7.5%) of our shares of common stock outstanding on such date, less shares then available for issuance under the 2010 Plan, will automatically become available for grant or settlement of awards. Shares delivered under the 2010 Plan may be either treasury shares or newly issued shares. For purposes of determining the remaining ordinary shares available for grant under the 2010 Plan, if any shares subject to an award are forfeited, cancelled, exchanged, or surrendered, or if an award terminates or expires without a distribution of shares, those shares will again be available for issuance under the 2010 Plan. However, shares of stock that are exchanged by a grantee or withheld by us as full or partial payment in connection with any award under the 2010 Plan, as well as any shares of stock exchanged by a grantee or withheld by us to satisfy the tax withholding obligations related to any award under the 2010 Plan, will not be available for subsequent awards under the 2010 Plan.
The 2010 Plan provides that generally, unless otherwise determined by the Compensation Committee or as set forth in an award or employment agreement, in the event of a change in control (as defined in the 2010 Plan), all outstanding awards shall become fully vested and exercisable and all restrictions, forfeiture conditions or deferral periods on any outstanding awards shall immediately lapse, and payment under any awards shall become due.
Outstanding Equity Awards at 20102013 Fiscal Year End
The following table contains certain information regarding equity awards held by the named executive officers as of December 31, 2010.2013.
| | Option Awards | Stock Awards | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares that have Not Vested (#) | Market Value of Shares that have Not Vested ($)(1) | |||||||||||||
Peter A. Cohen | |||||||||||||||||||
2010 Award(2) | — | — | — | — | 54,350 | 212,509 | |||||||||||||
2012 Award(3) | — | — | — | — | 383,142 | 1,498,085 | |||||||||||||
Stephen A. Lasota | |||||||||||||||||||
2010 Award(2) | — | — | — | — | 15,558 | 60,832 | |||||||||||||
2010 Incentive Award(4) | — | — | — | — | 17,500 | 68,425 | |||||||||||||
2011 Award(5) | — | — | — | — | 31,484 | 123,102 | |||||||||||||
2011 Incentive Award(6) | — | — | — | — | 45,000 | 175,950 | |||||||||||||
2012 Award(7) | — | — | — | — | 95,786 | 374,523 | |||||||||||||
Employment Agreement Award(8) | — | — | — | — | 100,000 | 391,000 | |||||||||||||
2012 SAR Award (10) | 0 | 100,000 | $ | 2.90 | 3/15/2018 | — | — | ||||||||||||
John Holmes | |||||||||||||||||||
2010 Award(2) | — | — | — | — | 12,500 | 48,875 | |||||||||||||
2010 Incentive Award(4) | — | — | — | — | 17,500 | 68,425 | |||||||||||||
2011 Award(5) | — | — | — | — | 31,484 | 123,102 | |||||||||||||
2011 Incentive Award(6) | — | — | — | — | 45,000 | 175,950 | |||||||||||||
2012 Award(7) | — | — | — | — | 95,786 | 374,523 | |||||||||||||
Employment Agreement Award(8) | — | — | — | — | 100,000 | 391,000 | |||||||||||||
2012 SAR Award (10) | 0 | 100,000 | $ | 2.90 | 3/15/2018 | — | — | ||||||||||||
Owen S. Littman | |||||||||||||||||||
2010 Award(2) | — | — | — | — | 15,558 | 60,832 | |||||||||||||
2010 Incentive Award(4) | — | — | — | — | 17,500 | 68,425 | |||||||||||||
2011 Award(5) | — | — | — | — | 31,484 | 123,102 | |||||||||||||
2011 Incentive Award(6) | — | — | — | — | 45,000 | 175,950 | |||||||||||||
2012 Award(7) | — | — | — | — | 95,786 | 374,523 | |||||||||||||
Employment Agreement Award(8) | — | — | — | — | 100,000 | 391,000 | |||||||||||||
2012 SAR Award (10) | 0 | 100,000 | $ | 2.90 | 3/15/2018 | — | — | ||||||||||||
Jeffrey M. Solomon | |||||||||||||||||||
2010 Award(2) | — | — | — | — | 27,448 | 107,322 | |||||||||||||
2011 Award (5) | — | — | — | — | 46,176 | 180,548 | |||||||||||||
2012 Award(7) | — | — | — | — | 415,071 | 1,622,928 | |||||||||||||
Employment Agreement Award(9) | — | — | — | — | 250,000 | 977,500 | |||||||||||||
| | Option Awards | Stock Awards | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares that have Not Vested (#) | Market Value of Shares that have Not Vested ($)(1) | ||||||||||||
Peter A. Cohen | |||||||||||||||||
Transaction Award(2) | — | — | — | 425,392 | 1,995,088 | ||||||||||||
2009 Award(3) | 45,668 | 214,183 | |||||||||||||||
Stephen A. Lasota | |||||||||||||||||
Transaction Award(2) | — | — | — | 34,491 | 161,763 | ||||||||||||
2009 Award(3) | 32,931 | 154,446 | |||||||||||||||
2009 Retention Award(4) | 8,961 | 42,027 | |||||||||||||||
David M. Malcolm | |||||||||||||||||
Transaction Award(2) | 288,832 | 1,354,622 | |||||||||||||||
2006 Option Award(5) | 103,390 | 16.00 | 7/12/2013 | — | — | ||||||||||||
2006 Initial Award(6) | 51,147 | 239,879 | |||||||||||||||
2007 Award(7) | 11,663 | 54,699 | |||||||||||||||
2008 Award(8) | 34,884 | 163,606 | |||||||||||||||
2009 Award(3) | 19,905 | 93,354 | |||||||||||||||
Jeffrey M. Solomon | |||||||||||||||||
Transaction Award(2) | 218,444 | 1,024,502 | |||||||||||||||
2009 Award(3) | 31,943 | 149,813 | |||||||||||||||
Morgan B. Stark | |||||||||||||||||
Transaction Award(2) | 425,392 | 1,995,088 | |||||||||||||||
2009 Award(3) | 39,074 | 183,257 | |||||||||||||||
Thomas W. Strauss | |||||||||||||||||
Transaction Award(2) | 264,432 | 1,240,186 | |||||||||||||||
2009 Award(3) | 27,291 | 127,995 | |||||||||||||||
Option Exercises and Stock Vested
The following table sets forth certain information concerning stock vested during the year ended December 31, 2010.2013. No stock options were exercised by any of the named executive officers in 2010.2013.
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting ($)(1) | |||||
|---|---|---|---|---|---|---|---|
Peter A. Cohen | 69,572 | 210,714 | |||||
Stephen A. Lasota | 109,247 | 357,490 | |||||
John Holmes | 103,334 | 340,019 | |||||
Owen S. Littman | 108,743 | 356,074 | |||||
Jeffrey M. Solomon | 39,765 | 119,892 | |||||
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting | |||||
|---|---|---|---|---|---|---|---|
Peter A. Cohen | 15,221 | $ | 61,219 | (1) | |||
Stephen A. Lasota | 10,976 | $ | 44,145 | (1) | |||
David M. Malcolm | 59,437 | $ | 273,314 | (2) | |||
Jeffrey M. Solomon | 10,647 | $ | 42,822 | (1) | |||
Morgan B. Stark | 13,023 | $ | 52,378 | (1) | |||
Thomas W. Strauss | 9,095 | $ | 36,580 | (1) | |||
The following table sets forth information relating to the accumulated pension benefits for Messrs. Cohen, Lasota, Solomon, Stark,Holmes, Littman and StraussSolomon in the Ramius LLC Cash Balance Plan as of
December 31, 2010. Mr. Stark elected to receive the entire amount of his accumulated pension benefits in 2009 when he reached the age of 70.2013.
Name | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | Plan Name | Number of Years of Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter A. Cohen | Ramius LLC Cash Balance Plan | 5 | $ | 580,504 | — | Ramius LLC Cash Balance Plan | 8 | — | 630,859 | |||||||||||||||
Stephen A. Lasota | Ramius LLC Cash Balance Plan | 5 | $ | 78,539 | Ramius LLC Cash Balance Plan | 8 | 86,572 | — | ||||||||||||||||
John Holmes | Ramius LLC Cash Balance Plan | 7 | 96,276 | — | ||||||||||||||||||||
Owen S. Littman | Ramius LLC Cash Balance Plan | 7 | 56,345 | — | ||||||||||||||||||||
Jeffrey M. Solomon | Ramius LLC Cash Balance Plan | 5 | $ | 239,032 | Ramius LLC Cash Balance Plan | 8 | 263,479 | — | ||||||||||||||||
Morgan B. Stark | Ramius LLC Cash Balance Plan | 5 | $ | 0 | — | |||||||||||||||||||
Thomas W. Strauss | Ramius LLC Cash Balance Plan | 5 | $ | 648,799 | — | |||||||||||||||||||
Ramius maintains the Ramius LLC Cash Balance Plan, pursuant to which, prior to the Transactions, employees of Ramius contributed cash to fund the plan and participants received an annual contribution credit (based on age and "tier" of participation). Participants also receive an annual interest credit (based on 30-Year Treasury Bills) on the balances in their respective accounts. Participants were able to elect payments in the form of a lump sum distribution or among several annuity options. All participants were 100% vested in their account balances at all times. Each participant in the plan is entitled to receive his accumulated benefits upon any separation from service or upon reaching the age of 70.65. The Trustees of the Cash Balance Plan decided to temporarily suspend plan contributions effective from and after January 1, 2009.
For information on the valuation method and material assumptions applied in quantifying the present value of the current accrued benefit, refer to the Company's Defined Benefit Plans Note in its financial statements included in its Form 10-K for 2010,2013, as filed with the SEC.
Potential Payments Upon Termination or Change in Control
Pursuant to the employment agreements with our named executive officers, upon certain terminations of employment or a change in control of the Company, our named executive officers are entitled to certain payments of compensation and benefits as described above under "Narrative Disclosure to Summary Compensation Table and Grant of Plan-Based Awards Table—Employment Arrangements." The table below reflects the amount of compensation and benefits that would have been payable to each named executive officer in the event that the named executive officer had experienced the following events as of December 31, 2010:2013: (i) a termination for cause or resignation, or voluntary termination, (ii) involuntary termination, (iii) an involuntary termination that occurs in
connection with a change in control, (iv) termination by reason of an executive's death, or (v) termination by reason of an executive's disability.
| | | Triggering Events | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Type of Payment | Voluntary Termination ($) | Involuntary Termination ($) | Involuntary Termination in connection with a Change in Control ($) | Death ($) | Disability ($) | ||||||||||||
Peter A. Cohen | Cash Severance | 0 | 2,900,000 | (1) | 0 | 0 | 0 | |||||||||||
| Equity Acceleration(2) | 0 | 1,710,594 | 1,710,594 | 1,710,594 | 1,710,594 | |||||||||||||
| Total | 0 | 4,610,594 | 1,710,594 | 1,710,594 | 1,710,594 | |||||||||||||
Stephen A. Lasota | Cash Severance | 0 | 2,858,952 | (3) | 3,858,952 | (4) | 1,358,952 | (3) | 1,358,952 | (3) | ||||||||
| Equity Acceleration(2) | 0 | 1,294,832 | 1,294,832 | 1,294,832 | 1,294,832 | |||||||||||||
| Total | 0 | 4,153,784 | 5,153,784 | 2,653,784 | 2,653,784 | |||||||||||||
John Holmes | Cash Severance | 0 | 2,853,049 | (3) | 3,853,049 | (4) | 1,353,049 | (3) | 1,353,049 | (3) | ||||||||
| Equity Acceleration(2) | 0 | 1,282,876 | 1,282,876 | 1,282,876 | 1,282,876 | |||||||||||||
| Total | 0 | 4,135,925 | 5,135,925 | 2,635,925 | 2,635,925 | |||||||||||||
Owen S. Littman | Cash Severance | 0 | 2,858,952 | (3) | 3,858,952 | (4) | 1,358,952 | (3) | 1,358,952 | (3) | ||||||||
| Equity Acceleration(2) | 0 | 1,294,832 | 1,294,832 | 1,294,832 | 1,294,832 | |||||||||||||
| Total | 0 | 4,153,784 | 5,153,784 | 2,653,784 | 2,653,784 | |||||||||||||
Jeffrey M. Solomon | Cash Severance | 0 | 4,926,272 | (5) | 123,750 | (6) | 1,928,355 | (5) | 1,928,355 | (5) | ||||||||
| Equity Acceleration(2) | 0 | 2,888,297 | 2,888,297 | 2,888,297 | 2,888,297 | |||||||||||||
| Total | 0 | 7,814,569 | 3,012,047 | 4,816,652 | 4,816,652 | |||||||||||||
TableCohen pursuant to the terms of Contents
included in the table below because his employment agreement, which terminated on December 15, 2010, was not in effect as of December 31, 2010.
| | | Triggering Events | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Type of Payment | Voluntary Termination ($) | Involuntary Termination ($) | Change in Control ($) | Death ($) | Disability ($) | ||||||||||||
Peter A. Cohen | Cash Severance | 0 | 1,338,272 | 0 | 0 | 0 | ||||||||||||
| Equity Acceleration(1) | 0 | 2,209,271 | 0 | 2,209,271 | 2,209,271 | |||||||||||||
| Total | 0 | 3,547,543 | 0 | 2,505,314 | 2,505,314 | |||||||||||||
Stephen A. Lasota | Cash Severance | 0 | 0 | 0 | 0 | 0 | ||||||||||||
| Equity Acceleration | 0 | 358,236 | 0 | 358,236 | 358,236 | |||||||||||||
| Total | 0 | 358,236 | 0 | 358,236 | 358,236 | |||||||||||||
Jeffrey M. Solomon | Cash Severance | 0 | 1,325,060 | 0 | 0 | 0 | ||||||||||||
| Equity Acceleration | 0 | 1,174,315 | 0 | 1,174,315 | 1,174,315 | |||||||||||||
| Total | 0 | 2,499,375 | 0 | 2,474,671 | 2,474,671 | |||||||||||||
Morgan B. Stark | Cash Severance | 0 | 1,323,800 | 0 | 0 | 0 | ||||||||||||
| Equity Acceleration | 0 | 2,178,346 | 0 | 2,178,346 | 2,178,346 | |||||||||||||
| Total | 0 | 3,502,146 | 0 | 3,502,146 | 3,502,146 | |||||||||||||
Thomas W. Strauss | Cash Severance | 0 | 1,265,988 | 0 | 0 | 0 | ||||||||||||
| Equity Acceleration | 0 | 1,368,181 | 0 | 1,368,181 | 1,368,181 | |||||||||||||
| Total | 0 | 2,634,169 | 0 | 2,634,169 | 2,634,169 | |||||||||||||
executive would have been entitled to a cash payment equal to the sum of the amounts described under clauses (i), (iii), (iv) and (v) above.
Beneficial Ownership of Directors, Nominees and Executive Officers
The following table shows how many shares of our Class A common stock were beneficially owned as of July 25, 2011,April 17, 2014, by each of our directors and named executive officers and by all of our directors and named executive officers as a group. Unless otherwise noted, the stockholders listed in the table have sole voting and investment power with respect to the shares owned by them.
| | Amount and Nature of Beneficial Ownership | Percent of Class | |||||
|---|---|---|---|---|---|---|---|
Executive Officers and Directors: | |||||||
Peter A. Cohen | 3,039,220 | 2.6 | % | ||||
Katherine Elizabeth Dietze | 48,030 | (1) | * | ||||
Steven Kotler | 10,000 | (2) | * | ||||
Jerome S. Markowitz | 306,180 | (3) | * | ||||
Jack H. Nusbaum | 141,568 | (4) | * | ||||
Joseph R. Wright | 103,217 | (5) | * | ||||
Jeffrey M. Solomon | 712,408 | * | |||||
Thomas W. Strauss | 2,998,832 | 2.6 | % | ||||
John Holmes | 197,540 | * | |||||
Stephen A. Lasota | 221,156 | * | |||||
Owen S. Littman | 224,180 | * | |||||
All directors and named executive officers as a group (11 persons) | 8,002,331 | 6.9 | % | ||||
| | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||
|---|---|---|---|---|---|---|---|---|
Executive Officers and Directors: | ||||||||
Peter A. Cohen(1)(2) | 32,631,515 | 28.07 | % | |||||
Katherine Elizabeth Dietze | 48,030 | * | ||||||
Stephen Kotler | 10,000 | * | ||||||
Gerorge M.L. LaBranche, IV(3) | 2,995,091 | 2.58 | % | |||||
Jerome S. Markowitz(4) | 150,177 | * | ||||||
Jack H. Nusbaum | 48,818 | * | ||||||
John E. Toffolon, Jr.(5) | 50,000 | * | ||||||
Joseph R. Wright | 67,922 | * | ||||||
Jeffrey M. Solomon(1)(6) | 32,626,941 | 28.07 | % | |||||
Morgan B. Stark(1)(7) | 32,629,317 | 28.07 | % | |||||
Thomas W. Strauss(1)(8) | 32,625,389 | 28.07 | % | |||||
Stephen A. Lasota(9) | 40,377 | * | ||||||
All directors and named executive officers as a group (12 persons) | 36,041,930 | 31.00 | % | |||||
Beneficial Owners of More than Five Percent of Our Class A common stock
Based on filings made under Section 13(d) and Section 13(g) of the Securities Exchange Act of 1934, as of July 25, 2011,April 17, 2014, the persons known by us to be beneficial owners of more than 5% of our Class A common stock were as follows:
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||
|---|---|---|---|---|---|---|---|
Ariel Investments, LLC(1) | 8,831,685 | 7.65 | % | ||||
BlackRock, Inc.(2) | 6,461,225 | 5.60 | % | ||||
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||
|---|---|---|---|---|---|---|---|
RCG Holdings LLC(1) | 32,616,294 | 28.06% | |||||
UniCredit S.p.A.(2) | 11,232,567 | 9.66% | |||||
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers, directors and persons holding 10% or more of our Class A common stock to file initial reports of ownership of our securities and reports of changes in ownership of our securities with the SEC. Based on a review of copies of such reports provided to us and on written representations from our executive officers and directors, we believe that all Section 16(a) filing and disclosure requirements applicable to our executive officers and directors for 20102013 have been satisfied.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is comprised entirely of non-employee directors, none of whom has ever been an officer or employee of the Company and none of whom had any related person transaction involving the Company. None of our executive officers (1) served as a member of the board of directors or compensation committee of any other entity that had one or more of its executive officers serving as a member of our Compensation Committee or (2) served as a member of the compensation committee of any other entity that had one or more of its executive officers serving as a member of our Board during 2010.2013.
Transactions within which Related Persons have a Material Interest
Related Transactions Involving Our Executive Officers
Side-by-Side Investments
To the extent permissible by applicable law, our principalsexecutive officers, directors and certain eligible employees, as well as such individuals' immediate family members and other investors they refer to us, have historically been permitted to invest their own capital either directly in, or in side-by-side investments or managed accounts with, our alternative investment management funds.funds and certain
proprietary investment vehicles established by our broker-dealer segment. Side-by-side investments are investments in assets substantially similar to the investments of the applicable fund.fund and the managed accounts are accounts that invest in the asset classes covered by our alternative investment business. Direct investment in managed accounts or side-by-side investments with, our funds by such individuals are generally made on the same terms and conditions as the investments made by other third party investors in the funds, except that such investments are subject to discounted management and performance fees. Certain Company employees who are eligible to make such investments will be permitted to invest their own capital either directly in, or in side-by-side investments with, our funds on the same terms currently available to our employees.
Employment Arrangements
Andrew Cohen, the son of Peter A. Cohen, is a Managing Director of Ramius, and earned approximately $1,000,000$756,274 in 2010.2013. Kyle Solomon, the brother of Jeffrey M. Solomon, is a Managing Director of Cowen and Company and earned approximately $550,633 in 2013.
Services Agreement with RCG
The Company and RCG are parties to a services agreement, under which the Company provides certain services (including accounting services, distribution of annual statements to members of RCG, maintenance and storage of RCG books and records, and coordination services relating to the sale and distribution of restricted shares of our Class A common stock held by RCG), to RCG for a total annual cost to RCG not to exceed $12,000, for a term not to exceed four years from the closing of the Transactions and terminable upon the mutual agreement of both parties.
Review and Approval of Transactions with Related Persons
To minimize actual and perceived conflicts of interests, our board of directors has adopted a written policy governing transactions in which the Company is a participant, the aggregate amount involved is reasonably expected to exceed $120,000, and any of the following persons has or may have a direct or indirect material interest in the transaction: (a) our executive officers, directors (including nominees) and certain other highly compensated employees, (b) stockholders who own more than 5% of our common stock, and (c) any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law or person (other than a tenant or employee) sharing the same household of any person described in (a) or (b) above. These transactions will be considered "related person transactions."
Unless exempted from such policy as described below, the policy requires that related person transactions must be reported to our General Counsel or Chief Compliance Officer who will then submit the related person transaction for review by our Audit Committee. The Audit Committee will review all relevant information available to it and will approve or ratify only those related person transactions that it determines are not inconsistent with the best interests of the Company. If our General Counsel or Chief Compliance Officer determines that advance approval of a related person transaction is not practicable under the circumstances, the Audit Committee will review, and, in its discretion, may ratify the related person transaction at its next meeting, or at the next meeting following the date that the related person transaction comes to the attention of our General Counsel Deputy General Counsel or Chief Compliance Officer. However, the General Counsel or Chief Compliance Officer may present a related person transaction that arises between Audit Committee meetings to the Chair of the Audit Committee, who will review and may approve the related person transaction, subject to the Audit Committee's ratification at its next meeting.
It is anticipated that any related person transaction previously approved by the Audit Committee or otherwise already existing that is ongoing will be reviewed annually by the Audit Committee to ensure that such transaction has been conducted in accordance with the previous approval granted by the Audit Committee, if any, and that all required disclosures regarding the related person transaction are made.
In addition to the transactions that are excluded by the instructions to the SEC's related person transaction disclosure rule, the board anticipates it will determine that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of the policy:
than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, (c) the amount involved in the transaction equals less than the greater of $200,000 or 5% of the annual gross revenues of the company receiving payment under the transaction;
The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the Compensation Committee in the manner specified in its charter.
AUDIT COMMITTEE REPORT AND PAYMENT OF FEES TO OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The primary function of our Audit Committee is oversight of our financial reporting process, publicly filed financial reports, internal accounting and financial and operational controls, and the independent audit of the consolidated financial statements. The consolidated financial statements of Cowen Group, Inc. for the year ended December 31, 2010,2013, were audited by PricewaterhouseCoopers LLP, independent registered public accounting firm for the Company.
As part of its activities, the Committee has:
Management is responsible for the Company's system of internal controls and the financial reporting process. PricewaterhouseCoopers LLP is responsible for performing an independent audit of the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board and issuing a report thereon. Our Committee's responsibility is to monitor and oversee these processes.
Based on the foregoing review and discussions and a review of the report of PricewaterhouseCoopers LLP with respect to the consolidated financial statements, we have recommended to the Board of Directors of Cowen Group, Inc. the inclusion of the audited consolidated financial statements in Cowen Group Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010,2013, for filing with the SEC.
Audit Committee of the Board of Directors of Cowen Group, Inc.John E. Toffolon, Jr.,
Katherine Elizabeth Dietze,Chairperson
Steven Kotler
Joseph R. Wright
Independent Registered Public Accounting Firm Fees and Other Matters
The following table presents the aggregate fees billed for services rendered by PricewaterhouseCoopers LLP, our independent registered public accounting firm, for the fiscal years ended December 31, 20102013 and December 31, 2009.2012.
| | 2013 | 2012 | |||||
|---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 4,316,305 | $ | 4,775,682 | |||
Audit-Related Fees(2) | 116,520 | 132,537 | |||||
Tax Fees(3) | 316,000 | 513,765 | |||||
| | | | | | | | |
Total | $ | 4,748,825 | $ | 5,421,984 | |||
| | | | | | | | |
| | | | | | | | |
| | 2010 | 2009 | |||||||
|---|---|---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 4,174,911 | $ | 2,319,408 | |||||
Audit-Related Fees(2) | 496,545 | — | |||||||
Tax Fees(3) | 567,820 | — | |||||||
All Other Fees(4) | — | 702,000 | |||||||
Total | $ | 5,239,276 | $ | 3,021,408 | |||||
Auditor Services Pre-Approval Policy
The Audit Committee has adopted an Audit Committee Policy Regarding Outside Auditor Services which includes a pre-approval policy that applies to services performed for the Company by our independent registered public accounting firm. In accordance with this policy, we may not engage our independent registered public accounting firm to render any audit or non-audit service unless the service was approved in advance by the Audit Committee or the engagement is entered into pursuant to the pre-approval policies and procedures described below. However, no pre-approval is required with respect to services (other than audit, review or attest services) if (i) the aggregate amount of all such services is no more than 5% of the total amount paid by us to the independent registered public accounting firm during the fiscal year in which the services are provided, (ii) such services were not recognized at the time of engagement to be non-audit services and (iii) such services are promptly brought to the attention of the Audit Committee and approved by either the Audit Committee or the Chairperson of the Audit Committee prior to completion of the audit. During the 2013 fiscal 2009,year, no fees were approved by the Audit Committee pursuant to this exemption.
The pre-approval policy delegates to the Chairperson of the Audit Committee the authority to pre-approve any audit or non-audit services, provided that any approval by the Chairperson is reported to the Audit Committee at the Audit Committee's next regularly scheduled meeting. The Audit Committee may also pre-approve services that are expected to be provided to the Company by the
independent registered public accounting firm during the next 12 months and at each regularly scheduled meeting of the Audit Committee, management or the independent registered public accounting firm must report to the Audit Committee each service actually provided to the Company pursuant to the pre-approval.
Our Audit Committee has determined that the provision of the non-audit services described in the table above was compatible with maintaining the independence of our independent registered public
accounting firm. The Audit Committee reviews each non-audit service to be provided and assesses the impact of the service on the registered public accounting firm's independence.
ITEM 2—RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of our Board of Directors has selected PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for the year ending December 31, 2011.2014. While it is not required to do so, our Board of Directors is submitting the selection of PricewaterhouseCoopers LLP for ratification in order to ascertain the views of our stockholders with respect to the choice of audit firm. If the selection is not ratified, the Audit Committee will reconsider its selection. Representatives of PricewaterhouseCoopers LLP are expected to be present at the annual meeting, will be available to answer stockholder questions and will have the opportunity to make a statement if they desire to do so. PricewaterhouseCoopers LLP served as our independent registered public accounting firm for the year ended December 31, 2010.2013.
The Board of Directors recommends that you vote FOR ratification of the selection of PricewaterhouseCoopers LLP as the independent registered public accounting firm of Cowen Group, Inc. and our subsidiaries for the year ending December 31, 2011.2014. The affirmative vote of the holders of a majority of our outstanding shares of Class A common stock voting on the proposal is required to ratify this selection. Proxies will be voted FOR ratification of this selection unless otherwise specified.
ITEM 3—ADVISORY VOTE ON EXECUTIVE COMPENSATION
UnderSection 14A of the rules promulgated by the SEC, the Company is required toExchange Act requires that we provide itsour stockholders with the opportunity to castvote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers at least once every three years. At the 2011 annual meeting, our stockholders followed the Board of Director's recommendation to hold an advisory vote on executive compensation once every three years. Our last vote was held in 2011. Accordingly, the Company is seeking your vote to approve, on an advisory (non-binding) basis, the compensation program for the Company's named executive officers. This proposal is frequently referred to as a "say-on-pay" vote. The Company is presenting the following proposal, which gives stockholders of the Company the opportunity to cast an advisory vote with respect to the compensation program for our named executive officers as disclosed in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described herein. Accordingly,in this proxy statement. Please note that your vote is advisory and therefore will not be binding on the Board of Directors, the Compensation Committee or the Company. However, we askintend to take the voting results into consideration when making future decisions regarding executive compensation.
As discussed in the Company's "Compensation Discussion and Analysis," we seek to closely align the interests of executive officers with those of the Company's stockholders. In addition, a substantial portion of the total compensation for each named executive officer is delivered on a pay-for-performance basis and is determined in light of general economic and specific company, industry and competitive conditions. As such, we believe our compensation program provides the right balance of competitive pay and meaningful incentives to align our executives' interests with the interests of our stockholders and enable us to retain talented executives to support our business objectives. Therefore, the Board of Directors unanimously supports the Company's executive compensation program and recommends that stockholders vote on an advisory basis, onin favor of the following resolution.resolution:
RESOLVED,"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed in the Company's proxy statement for the 2014 Annual Meeting of Stockholders pursuant to Item 402the compensation disclosure rules of Regulation S-K,the Securities and Exchange Commission, including the "CompensationCompensation Discussion and Analysis," compensation the Summary Compensation Table and the other related tables and narrative discussion and any related material contained in this Proxy Statement,disclosure, is hereby APPROVED.
Our stockholders are urged to read the "Compensation Discussion and Analysis" section of this Proxy Statement which discusses our compensation practices and methodologies.
Because this vote is only advisory in nature, it will not be binding on the Company. Our Board will consider the results of this stockholder vote in determining future compensation programs for our named executive officers. However, these programs may not change even if stockholders vote against this proposal.
The Board unanimously recommends that you vote "FOR" advisory approval of the resolution set forth above.
Unless you specify otherwise, the Board intends the accompanying Proxy to be voted for this item."
ITEM 4—ADVISORY VOTE ON THE FREQUENCY OF ADVISORY VOTES TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
Under The Board unanimously recommends a vote "FOR" the rules promulgated by the SEC, we are required to holdapproval, on an advisory stockholder vote to determine the frequency(non-binding) basis, of the advisory stockholder vote on the compensation of the Company's named executive officers, such as Item 3 of this proxy statement, for future annual stockholder meetings (or special stockholder meetings) for which the Company must include executive compensation information in the proxy statement for that meeting at least once every six years. By voting on this proposal, stockholders may indicate whether they would prefer an advisory vote on the compensation program forpaid to our named executive officers, once every one, two or three years, or they may abstain from voting.
After careful consideration ofas disclosed in this Proposal, our Board of Directors has determined that an advisory vote on executive compensation that occurs every three years is currently the most appropriate alternative for the Company so that stockholders may express their views on the Company's executive compensation program. Therefore, our Board recommends that you vote to recommend that future advisory votes regarding the compensation program for our named executive officers be held every three years. The proxy card provides stockholders with four choices (every one, two or three years, or abstain).
This vote will not be binding on us and is only advisory in nature, and our Board may decide that it is in the best interests of our stockholders and the Company to hold future advisory votes on our compensation programs less frequently than the option recommended. However, our Board will carefully consider the results from our stockholder vote regarding the frequency of advisory votes with respect to the compensation program for our named executive officers in determining whether future votes will be held annually, biennially or triennially.
The Board unanimously recommends that you vote for the frequency of "THREE YEARS" with respect to the frequency of holding future advisory votes regarding the compensation of our named executive officers.
Unless you specify otherwise, the Board intends the accompanying Proxy to be voted for the frequency of "THREE YEARS" for this item.statement.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table summarizes, as of December 31, 2010,2013, the number of shares of our common stock to be issued upon exercise of outstanding options granted under our 2010, 2007 and 2006 Equity and Incentive Plans, the weighted-average exercise price of such options, and the number of shares remaining available for future issuance under the plans for all awards as of December 31, 2010.2013.
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under the Equity Compensation Plans (Excluding Shares in First Column) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 300,006 | $ | 7.19 | 654,852 | ||||||
Equity compensation plans not approved by security holders | None | N/A | None | |||||||
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under the Equity Compensation Plans (Excluding Shares in First Column) | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders | 893,432 | $ | 13.04 | 5,492,383(1 | ) | |||||
Equity compensation plans not approved by security holders | None | N/A | None | |||||||
Equity and Incentive Plan.December 31, 2013. In addition to the 893,432300,006 shares to be issued upon the exercise of outstanding options to purchase our common stock, 5,788,02113,551,544 shares of restricted stock, common stock and restricted stock unitsRSUs were issued under the plans and were outstanding as of December 31, 2010.2013. All of the 5,492,383654,852 shares available for future issuance under the plan as of December 31, 2010,2013, may be granted in the form of restricted stock, restricted stock units,RSUs, options or another equity-based award authorized under the plan.plans. On January 1, 2014, 8.626 million were added to the shares available under the 2010 Equity and Incentive Plan to bring the total equal to 7.5% of the Company's outstanding shares of stock. As of July 25, 2011,April 17, 2014, we had 708,9841,549,037 shares remaining under the equity plans, which exclude shares reserved for issuance based on certain performance criteria in existing agreements.
STOCKHOLDER PROPOSALS FOR THE 20122015 ANNUAL MEETING
In order for a stockholder proposal, including a director nomination, to be considered for inclusion in our proxy statement for the 20122015 annual meeting of stockholders, the written proposal must be received at our principal executive offices on or before DecemberJanuary 2, 2011.2015. However, in the event that the next annual meeting of stockholders is called for a date that is not within 30 days before or after the first anniversary of the date of this year's annual meeting, the proposal must be received no later than a reasonable time before the Company begins to print and mail its proxy materials.
The proposal should be addressed to Cowen Group, Inc., Attention: Corporate Secretary, 599 Lexington Avenue, New York, New York, 10022. The proposal must comply with SEC regulations regarding the inclusion of stockholder proposals in company-sponsored proxy materials.
In accordance with our bylaws, a stockholder who wishes to present a proposal for consideration at the 20122015 annual meeting must deliver a notice of the matter the stockholder wishes to present to our principal executive offices in New York, New York, at the address identified in the preceding paragraph, not less than 90 nor more than 120 days prior to the first anniversary of the date of this year's annual meeting. Accordingly, any notice given by or on behalf of a stockholder pursuant to these provisions of our bylaws (and not pursuant to Rule 14a-8 of the SEC) must be received no earlier than MayFebruary 3, 2012,2015, and no later than June 2, 2012.March 5, 2015. However, in the event that the next annual meeting of stockholders is called for a date that is not within 30 days before or after the first anniversary of the date of this year's annual meeting, the notice must be received no later than the close of business on the tenth day following the day on which notice of the 20122014 annual meeting was mailed or public disclosure of the date of the 20122014 annual meeting was made, whichever occurs first. The notice should include (i) a brief description of the business desired to be brought before the 20112014 annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of the stockholder, (iii) the class or series and number of shares of capital stock of the Company beneficially owned or owned of record by the stockholder, (iv) a description of all arrangements or understandings between the stockholder and any other person or persons (including their names) in connection with the proposal and any material interest of the stockholder in such business and (v) a representation that the stockholder intends to appear in person or by proxy at the 20122015 annual meeting to bring such business before the meeting.
ANNUAL REPORT TO STOCKHOLDERS AND FORM 10-K
Our 20102013 Annual Report to Stockholders, including financial statements for the year ended December 31, 2010,2013, accompanies this proxy statement.Stockholders may obtain an additional copy of our Annual Report and/or a copy of our Form 10-K filed with the SEC for the year ended December 31, 2010,2013, without charge by viewing these documents on our Web sitewebsite at www.cowen.com or by writing to Cowen Group, Inc., Attention: Investor Relations, 599 Lexington Avenue, New York, New York, 10022.
The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement or annual report, as applicable, addressed to those stockholders. This process, which is commonly referred to as "householding," potentially providesaims to provide extra convenience for stockholders and cost savings for companies. Currently, only brokers household our proxy materials and annual reports, delivering a single proxy statement and annual report to multiple stockholders sharing an address, unless contrary instructions have been received from the affected stockholders.
If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or annual report, or if you are receiving multiple copies of either document and wish to receive only one, please contact your broker. Any householded stockholder may request a copy of the proxy statement and/or annual report by contacting us in writing or by telephone at Cowen Group, Inc., Attention: Investor Relations,General Counsel, 599 Lexington Avenue, New York, New York, 10022, (646) 562-1983. We will deliver promptly(212) 201-4841. Promptly upon written or oral request, we will deliver a separate copy of our annual report and/or proxy statement to a stockholder at a shared address to which a single copy of either document was delivered.
We do not know of any other matters that may be presented for consideration at the annual meeting. If any other business does properly come before the meeting, the persons named as proxies on the enclosed proxy card will vote as they deem in the best interests of Cowen Group, Inc.
| Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. X |
| . Notice of Annual Meeting of Stockholders Proxy Solicited by Board of Directors for Annual Meeting — |
