UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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![](https://files.docoh.com/PRE 14A/0001060349-18-000006/thegabellitriangle.jpg)
GAMCO INVESTORS, INC.
One Corporate Center
Rye, New York 10580
________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on May 3, 20178, 2018
________________
We cordially invite you to attend the Annual Meeting of Shareholders of GAMCO Investors, Inc. at the Belle HavenIndian Harbor Yacht Club, 100 Harbor Drive,710 Steamboat Road, Greenwich, CT 06830, on Wednesday,Tuesday, May 3, 2017,8, 2018, at 9:00 a.m. local time. At the meeting, we will ask shareholders:
1. | to elect seven directors to our Board of Directors to serve until the 20182019 Annual Meeting of Shareholders or until their respective successors have been duly elected and qualified; |
2. | to ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017;2018; |
3. | to approve the potential issuance of more than 1.0% of the Company’s issued and outstanding common stock to a related party of the Company; and |
4. | to approve an amendment to the Company’s 2002 Stock Award and Incentive Plan to increase the number of shares of Class A Common Stock authorized and reserved for issuance thereunder by 2,000,000 shares; |
5. | to vote, on an advisory basis, on the Company’s named executive officer compensation; |
6. | to approve, on an advisory basis, the frequency of the vote on named executive officer compensation; |
7. | to vote, on an advisory basis, on whether our Board of Directors should consider the conversion and reclassification of our shares of Class B Common Stock into Class A Common Stock at a ratio in the range between 1.15 to 1.25 shares of Class A Common Stock for each share of Class B Common Stock; and |
8. | to vote on any other business that properly comes before the meeting. |
At the meeting, we will also review our 20162017 financial results and outlook for the future and will answer your questions.
Shareholders of record at the close of business on March 24, 201723, 2018 are entitled to vote at the meeting or any adjournments or postponements thereof. Please read the attached proxy statement carefully and vote your shares promptly whether or not you are able to attend the meeting.
We encourage all shareholders to attend the meeting.
By Order of the Board of Directors
KEVIN HANDWERKER
Secretary
April 10, 2017
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on May 3, 2017.8, 2018.
This Notice, the Proxy Statement, and the 20162017 Annual Report of Shareholders on Form 10-K are available free of charge on the following website: http://www.gabelli.com/Template/corporate/index.cfm.
TABLE OF CONTENTS
PROPOSAL 1 ELECTION OF DIRECTORS | | 3 5 |
PROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS | | 5 8 |
PROPOSAL 3 APPROVAL OF POTENTIAL ISSUANCE | | 6
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PROPOSAL 4 APPROVAL OF AN AMENDMENT TO THE COMPANY'S 2002 STOCK AWARD AND INCENTIVE PLAN
| | 7
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PROPOSAL 5 ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION | | 10 |
PROPOSAL 6 ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION | | 10 |
PROPOSAL 7 ADVISORY VOTE ON BOARD CONSIDERATION OF RECLASSIFICATION OF CLASS B STOCK
| | 11 9 |
CORPORATE GOVERNANCE | | 13 10 |
INFORMATION REGARDING NAMED EXECUTIVE OFFICERS | | 19 16 |
COMPENSATION OF EXECUTIVE OFFICERS | | 20 17 |
Compensation Discussion and Analysis | | 20 17 |
REPORT OF THE COMPENSATION COMMITTEE | | 22 20 |
Summary Compensation Table for 2016 2017 | | 23 21 |
CEO PAY RATIO | 30 |
CERTAIN OWNERSHIP OF OUR STOCK | | 32 31 |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | | 33 32 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | | 33 32 |
REPORT OF THE AUDIT COMMITTEE | | 40 |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | 40 |
SHAREHOLDER PROPOSALS FOR THE 20182019 ANNUAL MEETING | | 41 |
OTHER MATTERS | | 41 |
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GAMCO INVESTORS, INC.
One Corporate Center
Rye, New York 10580
________________
PROXY STATEMENT
________________
ANNUAL MEETING OF SHAREHOLDERS
________________
May 3, 20178, 2018
________________
INTRODUCTION; PROXY VOTING INFORMATION
Unless we have indicated otherwise, or the context otherwise requires, references in this proxy statement to “GAMCO Investors, Inc.,” “GAMCO,” “the Company,” “GBL,” “we,” “us” and “our” or similar terms are to GAMCO Investors, Inc., a Delaware corporation, its predecessors and its subsidiaries.
We are sending you this proxy statement and the accompanying proxy card in connection with the solicitation of proxies by the Board of Directors of GAMCO (the “Board”) for use at our 20172018 Annual Meeting of Shareholders (the “2017“2018 Annual Meeting”) to be held at the Belle HavenIndian Harbor Yacht Club, 100 Harbor Drive,710 Steamboat Road, Greenwich, CT 06830, on Wednesday,Tuesday, May 3, 2017,8, 2018, at 9:00 a.m., local time, and at any adjournments or postponements thereof. The purpose of the 20172018 Annual Meeting is to (i) elect seven directors to the Board to serve until the 20182019 Annual Meeting of Shareholders (the “2018“2019 Annual Meeting”) or until their respective successors have been duly elected and qualified, (ii) ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2017,2018, (iii) approve the potential issuance of more than 1.0% of the Company’s issued and outstanding common stock to a related party of the Company (the “Potential Issuance”), (iv) approve an amendment to the Company’s 2002 Stock Award and Incentive Plan to increase the number of shares of Class A Common Stock authorized and reserved for issuance thereunder by 2,000,000 shares, (v) hold an advisory vote on the Company’s named executive officer compensation (the “NEO Compensation Proposal”), (vi) approve, on an advisory basis, the frequency of the vote on named executive officer compensation (the “Frequency Proposal”), (vii) vote on an advisory basis, on whether the Board should consider the conversion and reclassification of our shares of Class B Common Stock into Class A Common Stock at a ratio in the range between 1.15 to 1.25 shares of Class A Common Stock for each share of Class B Common Stock (the “Reclassification Proposal”), and (viii)(iv) act upon any other matters properly brought to the 20172018 Annual Meeting. We are sending you this proxy statement, the proxy card, and our annual report on Form 10-K containing our financial statements and other financial information for the year ended December 31, 20162017 (the “2016“2017 Annual Report”) on or about April 10, 2017.___, 2018. The 20162017 Annual Report, however, is not part of the proxy solicitation materials.
Shareholders of record at the close of business on March 24, 2017,23, 2018, the record date for the 20172018 Annual Meeting, are entitled to notice of and to vote at the 20172018 Annual Meeting. On this record date, we had outstanding 10,251,1829,858,599 shares of Class A common stock, par value $.001 per share (“Class A Stock”), and 19,092,20119,024,404 shares of Class B common stock, par value $.001 per share (“Class B Stock”).
The presence, in person or by proxy, of a majority of the aggregate voting power of the shares of Class A Stock and Class B Stock outstanding on March 24, 201723, 2018 shall constitute a quorum for the transaction of business at the 20172018 Annual Meeting. The Class A Stock and Class B Stock vote together as a single class on all matters. Each share of Class A Stock is entitled to one vote per share, and each share of Class B Stock is entitled to ten votes per share. Directors who receive a plurality of the votes cast at the 20172018 Annual Meeting by the holders of Class A Stock and Class B Stock outstanding on March 24, 2017,23, 2018, voting together as a single class, will be elected to serve until the 20182019 Annual Meeting or until their successors are duly elected and qualified. Any other matters will be determined by a majority of the votes cast at the 20172018 Annual Meeting.
Under the New York Stock Exchange (“NYSE”) rules, the proposal to approve the appointment of independent auditors is considered a ‘‘discretionary’’ item. This means that brokerage firms may vote in their discretion on this matter on behalf of clients who have not furnished voting instructions at least 10 days before the date of the meeting. In contrast, the election of directors and the votesvote to approve the Potential Issuance an amendment to the Company’s 2002 Stock Award and Incentive Plan, the NEO Compensation Proposal, the Frequency Proposal and the Reclassification Proposal are “non-discretionary” items. This means brokerage firms that have not received voting instructions from their clients on these proposals may not vote on them. These so-called “broker non-votes” will be included in the calculation of the number of votes considered to be present at the meeting for purposes of determining a quorum, but will not be considered in determining the number of votes necessary for approval. Accordingly, broker non-votes will have no effect on the outcome of the vote for the election of directors or the votesvote to approve the Potential Issuance, an amendment to the Company’s 2002 Stock Award and Incentive Plan, the NEO Compensation Proposal, the Frequency Proposal or the Reclassification Proposal.Issuance. Abstentions will be included in the calculation of the number of votes considered to be present at the meeting for purposes of determining a quorum, but will not be considered in determining the number of votes necessary for approval and therefore will have no effect on the outcome of the vote for the election of directors. Abstentions will have the same effect as a vote against the ratification of our independent registered public accounting firm and the Potential Issuance, an amendment to the Company’s 2002 Stock Award and Incentive Plan, the NEO Compensation Proposal, the Frequency Proposal and the Reclassification Proposal.Issuance.
We will pay for the costs of soliciting proxies and preparing the 20172018 Annual Meeting materials. We ask securities brokers, custodians, nominees and fiduciaries to forward meeting materials to our beneficial shareholders as of the record date and we will reimburse them for the reasonable out-of-pocket expenses they incur. Our directors, officers and staff members may solicit proxies personally or by telephone, facsimile, e-mail or other means but will not receive additional compensation for doing so.
If you are the beneficial owner, but not the record holder, of shares of our Class A Stock, your broker, custodian or other nominee may only deliver one copy of this proxy statement and our 20162017 Annual Report to multiple shareholders who share an address unless we have received contrary instructions from one or more of the shareholders. We will deliver promptly, upon written or oral request, a separate copy of this proxy statement and our 20162017 Annual Report to a shareholder at a shared address to which a single copy of the documents was delivered. A shareholder who wishes to receive a separate copy of this proxy statement and 20162017 Annual Report, now or in the future, or who wishes to receive directions to the 20172018 Annual Meeting, should submit this request by writing to our Secretary at GAMCO Investors, Inc., One Corporate Center, Rye, NY 10580-1422 or by calling our Secretary at (914) 921-3700. Beneficial owners sharing an address who are receiving multiple copies of proxy materials and annual reports and who wish to receive a single copy of such materials in the future will need to contact their broker, custodian or other nominee to request that only a single copy of each document be mailed to all shareholders at the shared address in the future.
All shareholders and properly appointed proxy holders may attend the 20172018 Annual Meeting. Shareholders who plan to attend must present valid photo identification. If you hold your shares in a brokerage account, please also bring proof of your share ownership, such as a broker’s statement showing that you owned shares of the Company on the record date for the 20172018 Annual Meeting or a legal proxy from your broker or nominee. A legal proxy is required if you hold your shares in a brokerage account and you plan to vote in person at the 20172018 Annual Meeting. Shareholders of record will be verified against an official list available at the 20172018 Annual Meeting. The Company reserves the right to deny admittance to anyone who cannot adequately show proof of share ownership as of the record date for the 20172018 Annual Meeting.
The Board has selected each of Kevin Handwerker, Kieran Caterina and Diane M. LaPointe to act as proxies. When you sign and return your proxy card, you appoint each of Messrs. Handwerker and Caterina and Ms. LaPointe as your representatives at the 20172018 Annual Meeting. Unless otherwise indicated on the proxy, all properly executed proxies received in time to be tabulated for the 20172018 Annual Meeting will be voted “FOR”“FOR” the election of the nominees named below, “FOR”“FOR” the ratification of the appointment of the Company’s independent registered public accounting firm, “FOR”“FOR” the vote to approve the Potential Issuance, “FOR” the vote to approve an amendment to the Company’s 2002 Stock Award and Incentive Plan, “FOR” the advisory vote on the named executive officer compensation, FOR “THREE YEARS” on the Frequency Proposal, “ABSTAIN” with respect to the Reclassification Proposal and as the proxyholders may determine in their discretion with regard to any other matter properly brought before the meeting. You may revoke your proxy at any time before the 20172018 Annual Meeting by delivering a letter of revocation to our Secretary at GAMCO Investors, Inc., One Corporate Center, Rye, NY 10580-1422, by properly submitting another proxy bearing a later date or by voting in person at the 20172018 Annual Meeting. The last proxy you properly submit is the one that will be counted.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on May 8, 2018.
AVAILABILITY OF ANNUAL REPORT AND PROXY MATERIALS ON THE INTERNETThis Notice, the Proxy Statement, and the 2017 Annual Report of Shareholders on Form 10-K are available free of charge on the following website: http://www.gabelli.com/Template/corporate/index.cfm.
GAMCO makes available free of charge through its website, at www.gabelli.com,, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and certain other filings as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (“SEC”). Copies of certain of these documents may also be accessed electronically by means of the SEC’s home page at www.sec.gov.www.sec.gov. GAMCO also makes available on its website at http://www.gabelli.com/corporate/corp_gov.html the charters for the Audit Committee, Compensation Committee, Governance Committee and Nominating Committee, as well as its Code of Business Conduct, Code of Conduct for Chief Executive and Senior Financial Officers, Corporate Governance Guidelines and its By-laws. Print copies of these documents are available upon written request to our Secretary at GAMCO Investors, Inc., One Corporate Center, Rye, New York 10580-1422.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company’s Amended and Restated Bylaws provide that the Board shall consist of not less than three nor more than twelve directors, the exact number thereof to be fixed from time to time by the Board pursuant to a resolution adopted by a majority of the members then in office. As a result of the appointment by theThe Board of Leslie B. Daniels on November 4, 2016, the Board was increased to seven members.is currently fixed at seven. Currently serving as directors are Mario J. Gabelli, Edwin L. Artzt, Raymond C. Avansino, Jr., Leslie B. Daniels, Eugene R. McGrath, Robert S. Prather, Jr. and Elisa M. Wilson.
Our Nominating Committee recommended, and the Board approved, seven nominees for election as directors of the Company to serve until the 20182019 Annual Meeting or until their successors are duly elected and qualified. The nominees are as follows (ages are as of March 31, 2017)2018):
Name | Age
| Age | | Position |
| | | | |
Mario J. Gabelli | 74 | 75 | | Chairman, Chief Executive Officer, Chief Investment Officer – Value Portfolios |
Edwin L. Artzt | 85 | 86 | | Director |
Raymond C. Avansino, Jr. | 73 | 74 | | Director |
Leslie B. Daniels | 69 | 70 | | Director |
Eugene R. McGrath | 75 | 76 | | Director |
Robert S. Prather, Jr. | 72 | 73 | | Director |
Elisa M. Wilson | 44 | 45 | | Director |
All of the nominees are currently directors. Directors who receive a plurality of the votes cast at the 20172018 Annual Meeting shall be elected. Each of the nominees has consented to being named in the proxy statement and to serve if elected.
All properly executed proxies received in time to be tabulated for the 20172018 Annual Meeting will be voted “FOR” the election of the nominees named above, unless otherwise indicated on the proxy. If any nominee becomes unable or unwilling to serve between now and the 20172018 Annual Meeting, your proxies may be voted FOR the election of a replacement designated by the Board.
The following are brief biographical sketches of the seven nominees, including their principal occupations at present and for the past five years, as of March 31, 2017.2018. Unless otherwise noted, the nominated directors have been officers of the organizations named below or of affiliated organizations as their principal occupations for more than five years.
The Board believes that each of the below persons possesses the necessary attributes, skills, qualifications and experience that are appropriate for them to serve as directors of the Company. Our directors have held senior positions as leaders of various entities, demonstrating their ability to perform at the highest levels. The expertise and experience of our directors enable them to provide broad knowledge and sound judgment concerning the issues facing the Company.
The Board has proposed all of the following nominees:
Mario J. Gabelli has served as Chairman, Chief Executive Officer, Chief Investment Officer — Value Portfolios and a director of the Company since November 1976. In connection with those responsibilities, he serves as director or trustee of registered investment companies managed by the Company and its affiliates (“Gabelli Funds”). Mr. Gabelli also serves as the Chief Executive Officer and Chief Investment Officer of the Value Team of GAMCO Asset Management Inc., the Company’s wholly-owned subsidiary. Mr. Gabelli has served as Executive Chairman of Associated Capital Group, Inc. (“Associated Capital” or “AC”) since May 2015 and previously served as the Chief Executive Officer of Associated Capital from May 2015 until November 2016. Associated Capital is a public company containing the alternative investment management business, institutional research services business and certain cash and other assets that were spun-off from GAMCO in November 2015. Mr. Gabelli served as portfolio manager for Teton Advisors, Inc. (“Teton”) from 1998 to February 2017. Since March 1, 2017, GAMCO serves as a subadvisor to Teton, and Mr. Gabelli serves as portfolio manager under that subadvisory agreement. Teton is an asset management company which was spun-off from the Company in March 2009. Mr. Gabelli has served as Chairman of LICT Corporation (“LICT”), a public company engaged in broadband transport and other communications services, from 2004 to the present and has been the Chief Executive Officer of LICT since December 2010. He has also served as a director of CIBL, Inc., a holding company with operations in telecommunications that was spun off from LICT in 2007, from 2007 to the present, and as the Chairman of Morgan Group Holding Co., a public holding company, from 2001 to the present. Mr. Gabelli was the Chief Executive Officer of Morgan Group Holding Co. from 2001 to November 2012. He has served as a director of ICTC Group, Inc., a rural telephone company serving southeastern North Dakota from July 2013 to the present. In addition, Mr. Gabelli is the Chief Executive Officer, a director and the controlling shareholder of GGCP, Inc. (“GGCP”), a private company which owns a majority of our Class B Stock through an intermediate subsidiary, GGCP Holdings, LLC (“Holdings”), and the ChairmanPresident of MJG Associates, Inc. (“MJG Associates”), which acts as an investment manager of various investment funds and other accounts. Mr. Gabelli serves as Overseer of the Columbia University Graduate School of Business and as a Trustee of Boston College and Trustee of Roger Williams University. He also serves as Director of The Winston Churchill Foundation, The E. L. Wiegand Foundation, The American-Italian Cancer Foundation and The Foundation for Italian Art & Culture. He is also Chairman of the Gabelli Foundation, Inc., a Nevada private charitable trust. Mr. Gabelli also previously servedserves as Co-PresidentPresident of Field Point Park Association, Inc.
The Board believes that Mr. Gabelli’s qualifications to serve on the Board include his thirty-nineforty years of experience with the Company; his control of the Company through his ownership as the majority shareholder; his position as the senior executive officer of the Company and his direct responsibility for serving as the Chief Investment Officer of the Value Portfolios accounting for approximately 83%82% of the Company’s assets under management as of December 31, 2016.2017.
Edwin L. Artzt has been a director of the Company since May 2004. Mr. Artzt previously served as a senior advisor to GGCP from September 2003 to December 2008 and was a senior advisor to Kohlberg, Kravis, Roberts & Co., a private equity firm, from April 2001 to April 2008. Mr. Artzt held various senior executive management positions during his 42 year career (from 1953 to 1995) at The Procter & Gamble Company, a global manufacturer of consumer products, and served as its Chairman of the Board and Chief Executive Officer from 1990 until 1995. He also served as the senior director of Barilla S.p.A. Italy from 1995 until 1998. Mr. Artzt was a director of American Express from 1991 to 2002, Delta Airlines from 1990 to 2002 and GTE from 1992 to 2002.
The Board believes that Mr. Artzt’s qualifications to serve on the Board include his former position as a Chairman and Chief Executive Officer of The Procter & Gamble Company and his position as a director or an adviser to other public and private companies.
Raymond C. Avansino, Jr., has been a director since January 2008. Mr. Avansino has been the Chairman of the Board and Chief Executive Officer of The E. L. Wiegand Foundation of Reno, Nevada, a Nevada private charitable trust, since 1982. Mr. Avansino is the Chairman and President of Miami Oil Producers, Inc., a private corporation with investments in oil and gas properties, real properties and securities. He served as President and Chief Operating Officer of Hilton Hotels Corporation from 1993 to 1996 and was a member of the Nevada Gaming Commission from 1981 to 1984. Mr. Avansino currently serves as a member of the Nevada State Athletic Commission. Mr. Avansino was also a director of the Company from 2000 to 2006.
The Board believes that Mr. Avansino’s qualifications to serve on the Board include his former position as the President and Chief Operating Officer of Hilton Hotels Corporation, his current position as the Chairman and Chief Executive Officer of a private charitable trust and his background as a lawyer with an advanced tax degree.
Leslie B. Daniels has been a director since November 2016 and currently serves on the board of CSAT Solutions and Moeller Aerospace. Mr. Daniels was a former Chairman and is currently a Member of Florida’s State Board of Administration, Investment Advisory Council (IAC) as well as Commissioner of the Health Care District of Palm Beach County. Mr. Daniels was a founding partner of CAI Managers & Co., L.P. a private equity firm located in New York City from 1989 to 2014. He was previously President of Burdge, Daniels & Co., Inc., a company engaged as a principal in venture capital and buyout investments, as well as the trading of private placement securities. Prior to forming Burdge, Daniels & Co., Inc., Mr. Daniels was a Senior Vice President of Blyth, Eastman, Dillon & Co., having responsibility for the corporate fixed income sales and trading departments. Mr. Daniels is also a former Director of AeroSat Corporation, Aster-Cephac SA, Bioanalytical Systems, Inc., Douglas Machine & Tool Co., Inc., IVAX Corporation, MIM Corporation, MIST Inc., Mylan Laboratories Inc., NBS Technologies Inc. and Safeguard Health Enterprises Inc. Mr. Daniels also served as Chairman of TurboCombustor Technology Inc. and Zenith Laboratories, Inc.
The Board believes that Mr. Daniels’ qualifications to serve on the Board include his former positions as the founding partner of CAI Managers & Co., L.P. and as President of Burdge, Daniels & Co., Inc. and his current positions as a Member of Florida’s State Board of Administration Investment Advisory Council (IAC) as well as Commissioner of the Health Care District of Palm Beach County and his background as a director to other public and private companies.
Eugene R. McGrath has been a director of the Company since January 2007. Mr. McGrath previously served as Chairman, President and Chief Executive Officer of Consolidated Edison, Inc. (“Con Ed”), a public utility company, from October 1997 until September 2005 and as Chairman until February 2006. He served as Chairman and Chief Executive Officer of Con Ed’s subsidiary, Consolidated Edison Company of New York, Inc., from September 1990 until February 2006. Mr. McGrath has beenwas a director of Sensus sincefrom 2010 was a directorto 2017, of Con Ed from 1989 to 2014, a director of AEGIS Insurance Services from 2003 to October 2016, and a director of Schering-Plough from 2000 to 2009.
The Board believes that Mr. McGrath’s qualifications to serve on the Board include his former position as the Chairman, President and Chief Executive Officer of Con Ed and his position as a director of other public companies.
Robert S. Prather, Jr., has been a director of the Company since May 2004 and serves as the Board’s lead independent director. Mr. Prather has been the President and Chief Executive Officer of Heartland Media LLC, a private owner of television stations and media properties, since September 2013. He was the President and Chief Operating Officer of Gray Television, Inc., a television broadcast company, from September 2002 until June 2013. Mr. Prather was an Executive Vice President of Gray Television, Inc. from 1996 until September 2002. He was also a director of Gray Television, Inc. Mr. Prather is Chairman of the Board at Southern Community Newspapers, Inc., a publishing and communication company, since December 2005. He served as Chief Executive Officer and director of Bull Run Corporation, a sports and affinity marketing and management company, from 1992 until its merger into Triple Crown Media, Inc. in December 2005. Since 2009, he has served as a director of a firm formerly known as Gaylord Entertainment Company, originally a hospitality and entertainment company which converted into a real estate investment trust under the name Ryman Hospitality Properties, Inc. in October 2012. Mr. Prather has also served as a director of Diebold, Incorporated (“Diebold”) since 2013.
The Board believes that Mr. Prather’s qualifications to serve on the Board include his position as President and Chief Executive Officer of Heartland Media LLC and his position as a director of other public and private companies.
Elisa M. Wilson has been a director of the Company since February 2009. Ms. Wilson is President and a trustee of the Gabelli Foundation, Inc., a Nevada private charitable trust. In addition, she is a shareholder of GGCP. Ms. Wilson also serves as a director of the Metro NY Chapter of the American Red Cross and the Breast Cancer Alliance.Alliance and is a member of the Board of Regents at Boston College. She earned a B.A. from Boston College and an M.A., Ed.M. from Columbia University. Ms. Wilson has been a professional staff member of GAMCO since 1999 but has been on an unpaid leave for several years. Ms. Wilson is the daughter of Mario J. Gabelli.
The Board believes that Ms. Wilson’s qualifications to serve on the Board include her position and experience as the President and trustee of the Gabelli Foundation, Inc. and her previous positions and experience with the Company.
Recommendation
The Board recommends that shareholders vote “FOR” all of the nominees to our Board.
Vote Required
Nominees who receive a plurality of the votes cast will be elected to serve as directors of the Company until the 20182019 Annual Meeting or until their successors are duly elected and qualified. “Withhold” votes and broker non-votes, if any, will have no effect on the outcome of this proposal.
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
We are asking our shareholders to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accountants. In accordance with our governance documents, the Board believes that such submission is consistent with best practices in corporate governance and is an opportunity for shareholders to provide direct feedback to the Board on an important issue of corporate governance. In the event that the shareholders do not approve the selection of Deloitte & Touche LLP, the Audit Committee will reconsider the selection of Deloitte & Touche LLP. Ultimately, however, the Audit Committee retains full discretion and will make all determinations with respect to the appointment of the independent auditors, whether or not the Company’s shareholders ratify the appointment.
For additional information regarding the selection of Deloitte & Touche LLP as the Company’s independent registered public accountants, please see “Independent Registered Public Accounting Firm” appearing elsewhere in this proxy statement.
Recommendation
The Board recommends that shareholders vote “FOR” ratification of Deloitte & Touche LLP as the Company’s independent registered public accountants for the year ended December 31, 2017.2018.
Vote Required
Approval of Proposal 2 requires the affirmative vote of a majority of the votes cast on the proposal. Shareholders who return a signed proxy card but do not indicate how they wish to vote on Proposal 2 will be deemed to have voted FOR Proposal 2. Broker non-votes, if any, will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against Proposal 2.
PROPOSAL 3
APPROVAL OF POTENTIAL ISSUANCE
Background and Overview
On December 23, 2016,September 30, 2017, the Company entered into a restricted stock unit agreement (the “2017“Fourth Quarter 2017 RSU Agreement”) with Mario J. Gabelli, the Company’s Chief Executive Officer, pursuant to which the Company determined that any Variable Compensation (as defined below) earned by Mr. Gabelli during the period JanuaryOctober 1, 2017 through June 30,December 31, 2017, be awarded in the form of restricted stock units (“RSUs”) under the Company’s 2002 Stock Award and Incentive Plan, as amended (the “Plan”), subject to certain exceptions as further described therein and herein. As defined under the Plan, a “restricted stock unit” award is an award of the right to receive cash or shares of Class A Stock. As a result of the award, Mr. Gabelli will not be paid any cash compensation for the period JanuaryOctober 1, 2017 through June 30,December 31, 2017 that he would otherwise be entitled to receive under his amended employment agreement approved by shareholders on May 5, 2015 (the “Amended Employment Agreement”), and consistent with Mr. Gabelli’s agreement since 1977.
Pursuant to the terms of the Amended Employment Agreement and the practice in place since the Company’s founding in 1977, Mr. Gabelli is entitled to variable compensation consisting of: (i) a percentage of the revenues or net operating contributions related to or generated by Mr. Gabelli’s business activities for the Company or its subsidiaries involving managing or overseeing the management of investment companies, attracting mutual fund accounts, attracting or managing separate accounts or otherwise generating revenues, which percentage rates have been and generally will be the same as those received by other professionals in the Company or the affected subsidiaries performing similar services, and (ii) currently 10% of the Company’s aggregate annual pre-tax profits as computed for financial reporting purposes in accordance with generally accepted accounting principles before consideration of the fee (the “Management Fee”) (collectively, the “Variable Compensation”).
Under the Fourth Quarter 2017 RSU Agreement, the number of RSUs granted will bewas calculated by dividing (x) the Variable Compensation earned for the period JanuaryOctober 1, 2017 through June 30,December 31, 2017, except that the portion of the RSU expense which is derived from the Management Fee for the period JanuaryOctober 1, 2017 through June 30,December 31, 2017 willwas not be considered in calculating the Management Fee in any period of time during the vesting period of the RSUs, by (y) the volume-weighted average price (as defined in the 2017 RSU Agreement) per share of the Class A Stock for the period JanuaryOctober 1, 2017 through June 30,December 31, 2017. At the conclusion of the earnings period on December 31, 2017. and under this calculation, there were 530,662 RSUs granted under the Fourth Quarter 2017 RSU Agreement.
Subject to certain exceptions set forth in the Fourth Quarter 2017 RSU Agreement, the RSUs will vest in full on JulyApril 1, 2018 (the2019 (the “Vesting Date”), provided that Mr. Gabelli remains employed by the Company on such date. On the Vesting Date, the Company intends to make a cash payment to Mr. Gabelli equal to (i) the lesser of (x) the value (as defined in the Fourth Quarter 2017 RSU Agreement) per share of the Company’s Class A stock as of the Vesting Date, or if applicable, as of such earlier date upon which the restrictions otherwise lapse, orand (y) the volume-weighted average price per share of the Company’s Class A stock for the period JanuaryOctober 1, 2017 through June 30,December 31, 2017, as calculated in accordance with the preceding paragraph, multiplied by (ii) the number of RSUs with respect to which the restrictions have lapsed. However, notwithstanding this current intention, the Company reserves the right in its discretion to issue to Mr. Gabelli a number of shares of Class A Stock equal to the number of RSUs in lieu of such cash payment.
The terms of the Fourth Quarter 2017 RSU Agreement are only briefly summarized above. For further information, please refer to the description contained in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 29, 2016,October 5, 2017, and the text of the 2017 RSU Agreement filed as Exhibit 99.1 to such report. The discussion herein is qualified in its entirety by reference to the filed RSU Agreement.
Why the Company Needs Shareholder Approval
The Company is seeking shareholder approval for the potential issuance of shares of Class A Stock to Mr. Gabelli pursuant to the 2017 RSU Agreement in order to comply with NYSE Rule 312.03(b).
Under NYSE Rule 312.03(b), an issuer is required to obtain shareholder approval prior to the issuance of common stock, or of securities convertible into or exercisable for common stock, to a director, officer or substantial security holder of the company (a “Related Party”) if the number of shares of common stock to be issued, or if the number of shares of common stock into which the securities may be convertible or exercisable, exceeds either 1% of the number of shares of common stock or 1% of the voting power outstanding before the issuance. Mr. Gabelli is a Related Party.
It is the current intention of the Company to make a cash payment to Mr. Gabelli in settlement of the RSUs granted under the Fourth Quarter 2017 RSU Agreement. However, if the Company elects to settle Mr. Gabelli’s award in shares of Class A Stock, the exact number ofMr. Gabelli will receive 530,662 shares of the Company’s Class A Stock if any, to be issued to Mr. Gabelli on the Vesting Date, cannot be determined at this time, as it will depend onconstituting approximately 0.3% of the numberCompany’s outstanding voting power and approximately 5.4% of RSUs granted based on the Variable Compensation earned for the period January 1, 2017 through June 30, 2017. While the number of shares to be issued to Mr. Gabelli is uncertain,currently outstanding Class A Stock.
Therefore the Company believes any such potential issuance will exceed the threshold set forth under NYSE Rule 312.03(b). Accordingly, the Company is seeking shareholder approval in the event the potential issuance exceeds 1% of the number of shares of Class A Stock or 1% of the voting power outstanding before the issuance.
Recommendation
The Board recommends that shareholders vote “FOR” the potential issuance of shares of Class A Stock to Mr. Gabelli pursuant to the 2017 RSU Agreement in order to comply with NYSE Rule 312.03(b).
Vote Required
Approval of this proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Annual Meeting on this proposal. Shareholders who return a signed proxy card but do not indicate how they wish to vote on Proposal 3 will be deemed to have voted FOR the proposal. Broker non-votes will have no effect on the outcome of the vote. Abstentions will have the same effect as a vote against this proposal. Mr. Gabelli, who controls approximately 96% of the combined voting power of the Company, intends to vote “FOR” this proposal.
PROPOSAL 4
APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2002 STOCK AWARD AND INCENTIVE PLAN
Overview
The Board has adopted and is seeking shareholder approval of an amendment to the Company’s 2002 Stock Award and Incentive Plan, as amended to date (the “Plan”), to increase the number of shares of Class A Stock that are available to be issued under the Plan by 2,000,000 shares, from 4,000,000 shares to 6,000,000 shares (subject to adjustment for stock splits, stock dividends and similar events).
As of March 1, 2017, awards covering 1,632,775 shares of Class A Stock had been awarded under the Plan (net of forfeitures), leaving 2,367,225 shares available for future awards. However, on December 21, 2015, the Company entered into a restricted stock unit agreement with Mr. Mario J. Gabelli, the Company’s Chief Executive Officer, pursuant to which the Company determined to award Mr. Gabelli’s Variable Compensation generated in fiscal 2016 in the form of RSUs under the Plan (the “2016 RSU Agreement”). Under the 2016 RSU Agreement, the number of RSUs granted was calculated by dividing the Variable Compensation generated in fiscal year 2016 by the volume-weighted average price (as defined in the 2016 RSU Agreement) per share of the Class A Stock for fiscal 2016. If such RSUs are settled in shares of Class A Stock, Mr. Gabelli will receive 2,314,695 shares of Class A Stock under the Plan and accordingly, such shares have been reserved for issuance under the Plan. Subject to certain exceptions set forth in the 2016 RSU Agreement, the RSUs will vest in full on January 1, 2020, provided that Mr. Gabelli remains employed by the Company on such date. On January 1, 2020, the Company intends to make a cash payment to Mr. Gabelli in settlement of the RSUs granted under the 2016 RSU Agreement equal to (i) the lesser of (x) the value (as defined in the 2016 RSU Agreement) per share of the Company’s Class A stock as of such date, or if applicable, as of such earlier date upon which the restrictions otherwise lapse, or (y) the volume-weighted average price per share of the Company’s Class A stock for fiscal year 2016, as calculated in accordance with the above description, multiplied by (ii) the number of RSUs with respect to which the restrictions have lapsed. However, notwithstanding this current intention, the Company reserves the right in its discretion to issue to Mr. Gabelli a number of shares of Class A Stock equal to the number of RSUs in lieu of such cash payment.
In addition, as further discussed in Proposal 3, on December 23, 2016, the Company entered into the 2017 RSU Agreement with Mr. Mario J. Gabelli, pursuant to which the Company determined to award Mr. Gabelli’s Variable Compensation earned for the period January 1, 2017 through June 30, 2017 in the form of RSUs under the Plan, subject to certain exceptions. Under the 2017 RSU Agreement, the number of RSUs granted will be calculated by dividing (x) the Variable Compensation earned for the period January 1, 2017 through June 30, 2017, except that the portion of the RSU expense which is derived from the Management Fee for the period January 1, 2017 through June 30, 2017 will not be considered in calculating the Management Fee in any period of time during the vesting period of the RSUs, by (y) the volume-weighted average price (as defined in the 2017 RSU Agreement) per share of the Class A Stock for the period January 1, 2017 through June 30, 2017. Subject to certain exceptions set forth in the 2017 RSU Agreement, the RSUs will vest in full on July 1, 2018, the Vesting Date, provided that Mr. Gabelli remains employed by the Company on such date. On the Vesting Date, the Company intends to make a cash payment to Mr. Gabelli in settlement of the RSUs granted under the 2017 RSU Agreement equal to (i) the lesser of (x) the value (as defined in the 2017 RSU Agreement) per share of the Company’s Class A stock as of the Vesting Date, or if applicable, as of such earlier date upon which the restrictions otherwise lapse, or (y) the volume-weighted average price per share of the Company’s Class A stock for the period January 1, 2017 through June 30, 2017, as calculated in accordance with the above description, multiplied by (ii) the number of RSUs with respect to which the restrictions have lapsed. However, notwithstanding this current intention, the Company reserves the right in its discretion to issue to Mr. Gabelli a number of shares of Class A Stock equal to the number of RSUs in lieu of such cash payment.
In order to ensure an adequate reserve of shares available to settle Mr. Gabelli’s award in shares of Class A Stock under the 2016 RSU Agreement and 2017 RSU Agreement and for future grants to other key employees and directors of the Company, from time to time, the Company is seeking to increase the number of shares reserved for issuance under the Plan by 2,000,000. If the number of RSUs granted to Mr. Gabelli under the 2017 RSU Agreement, when calculated, exceeds the number of available shares under the Plan, the Company will seek shareholder approval for another amendment to the Plan. If the Company settles Mr. Gabelli’s award in cash, any shares previously reserved for issuance under the 2016 RSU Agreement or 2017 RSU Agreement will become available for future grants at the discretion of the Compensation Committee of the Board.
The Plan was originally approved by shareholders on May 21, 2002, and subsequently amended by the Board and approved by shareholders on November 20, 2013 and May 3, 2016. The Plan provides equity-based compensation through the grant of stock options, stock appreciation rights, stock awards, performance shares and stock units. The Board believes that an adequate reserve of shares available for issuance under the Plan is necessary to enable the Company to attract, motivate, and retain key employees and Directors and to provide an additional incentive for such individuals through stock ownership and other rights that promote and recognize the financial success and growth of the Company.
As of March 1, 2017, there were 10,251,182 shares of our Class A Stock outstanding. The increase of 2,000,000 shares of Class A Stock available for grant under the Plan will result in additional potential dilution of our outstanding stock. Based solely on the closing price of our Class A Stock on March 1, 2017 of $30.25 per share, the aggregate market value of the additional 2,000,000 shares of Class A Stock to be reserved for issuance under the Plan would be $60,500,000 and would represent approximately 16.32% of the number of shares of Class A Stock outstanding after this issuance of the additional 2,000,000 shares of Class A stock.
Other than the proposed amendment to the Plan to increase the number of shares of Class A Stock that the Company may issue under the Plan, there are no other changes to the Plan. The full text of the amendment to the Plan is attached hereto as Exhibit A. The following discussion is qualified in its entirety by reference to the amendment attached hereto as Exhibit A, the original text of the Plan filed as Exhibit A to the Company’s Proxy Statement on Schedule 14A, dated April 30, 2002, the First Amendment to the Plan included as Annex D to the Company’s Proxy Statement on Schedule 14A, dated October 29, 2013, and the Second Amendment to the Plan included as Exhibit A to the Company’s Proxy Statement on Schedule 14A, dated April 21, 2016.
The Company may register the 2,000,000 share increase on a Registration Statement on Form S-8 under the Securities Act of 1933, as amended, after receiving shareholder approval.
Plan Benefits
The following table sets forth the stock options and stock awards outstanding under the Plan as of March 1, 2017, to each of the Company’s named executive officers, the Company’s executive officers as a group, the Company’s non-executive directors as a group, and all employees of the Company, including all current officers who are not executive officers, as a group:
Name | Number of Shares Underlying Restricted Stock Awards | Number of Shares Underlying Stock Options |
Mario J. Gabelli Chairman, Chief Executive Officer and Chief Investment Officer – Value Portfolios | -0- | 1 | -0- |
Douglas R. Jamieson President and Chief Operating Officer of GAMCO Asset Management Inc. and Former President and Chief Operating Officer of the Company | 6,200 | | -0- |
Kevin Handwerker | 1,000 | | -0- |
Executive Vice President, General Counsel and Secretary | | | |
Kieran Caterina Senior Vice President and Co-Chief Accounting Officer | 5,500 | | -0- |
Diane M. LaPointe Senior Vice President and Co-Chief Accounting Officer | 5,000 | | -0- |
Agnes Mullady Senior Vice President of the Company and President and Chief Operating Officer of the Fund Division | 16,300 | | -0- |
Bruce Alpert | 2,800 | | -0- |
Senior Vice President | | | |
Henry Van der Eb | 700 | | -0- |
Senior Vice President | | | |
Total for all current executive officers (including the named executive officers identified above) | 37,500 | | -0- |
Non-executive director group | -0- | | -0- |
All employees, including all current officers who are not executive officers, as a group | 421,940 | | -0- |
Equity Compensation Plan Information
For information regarding outstanding options and shares reserved for future issuance under all of our equity compensation plans as of December 31, 2016, see the table included in our 2016 Annual Report under “Part II, Item 5: Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.”
Recommendation
The Board recommends that shareholders vote “FOR” the approval of the amendment to the Plan.
1 Excludes 2,314,695 shares of Class A Stock that have been reserved for issuance in the event the Company determines to settle the RSUs granted under the 2016 RSU Agreement to Mr. Gabelli in shares of Class A Stock, notwithstanding the Company’s current intention to make a cash payment to Mr. Gabelli in settlement of such RSUs.
Vote Required
Approval of this proposal requires the affirmative vote of the holders of at least a majority of the votes cast at the Annual Meeting on this proposal. Shareholders who return a signed proxy card but do not indicate how they wish to vote on this proposal will be deemed to have voted FOR Proposal 4. Broker non-votes will have no effect on the outcome of the vote. Abstentions will have the same effect as a vote against Proposal 4. Mr. Gabelli, who controls approximately 96% of the combined voting power of the Company, intends to vote “FOR” this proposal.
PROPOSAL 5
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
Section 14A of the Securities Exchange Act of 1934, as amended, (the "Exchange Act") requires that we provide our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the compensation of our named executive officer for the fiscal year 2016 as disclosed in this Proxy Statement in accordance with the compensation disclosure rules of the SEC under Section 14A of the Exchange Act. At the 2011 annual meeting of shareholders, our shareholders approved holding this advisory vote every three years. Our shareholders are also being asked to vote on the frequency of this advisory vote on executive compensation at this Annual Meeting (see Proposal 6).
The Company's goal for its executive compensation program is to attract, motivate and retain talented persons. The Company seeks to accomplish this goal in a way that rewards performance and is aligned with its shareholders' long-term interests. The Company believes that its executive compensation program satisfies this goal and is strongly aligned with the long-term interests of its shareholders. Accordingly, the Company is asking shareholders to approve the following advisory resolution:
“RESOLVED, that the compensation of the Company's named executive officers as disclosed pursuant to SEC compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the narrative disclosures that accompany the compensation tables), is hereby approved.”
As an advisory vote, this proposal is not binding upon the Company. However, the Compensation Committee, which is responsible for designing and administering the Company's executive compensation program, values the opinion expressed by shareholders on this proposal and will consider the outcome of the vote when making future compensation decisions for the named executive officers.
Recommendation
The Board recommends that shareholders vote “FOR” the advisory resolution approving the compensation of the Company's named executive officers.
Vote Required
Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. Shareholders who return a signed proxy card but do not indicate how they wish to vote on this proposal will be deemed to have voted FOR Proposal 5. Broker non-votes will have no effect on the outcome of the vote. Abstentions will have the same effect as a vote against this proposal.
PROPOSAL 6
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
Shareholders have an opportunity to advise the Board of Directors as to whether the Company should conduct an advisory vote with respect to its named executive officer compensation at every annual meeting, at every second annual meeting or every third annual meeting of shareholders. At the 2011 annual meeting of shareholders, our shareholders approved holding this advisory vote every three years. We are required to provide shareholders, at least once every six years, the opportunity to indicate how frequently shareholders would prefer future advisory votes on our named executive officer compensation. Accordingly, shareholders may vote at this Annual Meeting on the following non-binding resolution relating to the frequency with which the Company should conduct an advisory vote on the named executive officer compensation as described in the “Compensation Discussion and Analysis” section of the Proxy Statement. Shareholders may vote every one, two or three years, or abstain from voting on this proposal.
“RESOLVED, that the option of every 1 year, every 2 years, or every 3 years that receives the greatest number of votes cast for this resolution by the holders of our common stock entitled to vote at the meeting will be determined to be the recommended frequency for which we should hold a shareholder advisory vote to approve the compensation paid to our named executive officers as disclosed pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, the compensation tables, the narrative discussion and any related material disclosed in this proxy statement.”
The advisory vote is non-binding, but the Board of Directors and the Compensation Committee will take into account the outcome of the vote when making future decisions about how often the Company conducts an advisory shareholder vote on its named executive officer compensation.
The Board of Directors recommends that shareholders vote for the option of “THREE YEARS” as the frequency with which shareholders are provided an advisory vote on the compensation of its named executive officers included in the Company’s proxy statement.
Approval of this proposal requires the affirmative vote of a majority of the votes cast on the proposal. Shareholders who return a signed proxy card but do not indicate how they wish to vote on this proposal will be deemed to have voted FOR Proposal 6. Broker non-votes will have no effect on the outcome of the vote. Abstentions will have the same effect as a vote against this proposal.
PROPOSAL 7
ADVISORY VOTE ON BOARD CONSIDERATION OF RECLASSIFICATION OF CLASS B STOCK
General
As the Board requested in 2011, 2012, 2013, 2014 and 2016, holders of our Class A Stock are again asked to vote on whether the Board should consider the conversion and reclassification of all of our shares of Class B Stock into shares of Class A Stock at a ratio in the range between 1.15 to 1.25 shares of Class A Stock for each share of Class B Stock. Our Board, however, has not determined whether to proceed with the conversion and reclassification of our Class B Stock or, if so, what an appropriate exchange ratio would be. As a matter of good corporate governance, the Board recommends that each shareholder vote on this proposal and strongly encourages each shareholder to do so, in order to provide further and updated shareholder guidance to the Board in this matter. The Board will carefully consider the vote on the Reclassification Proposal and recommends that all Class A shareholders vote thereon, although the Board makes no recommendation on how shareholders should vote. The Board will also consider other factors relating to the possible conversion and reclassification of our Class B Stock. If our Board does determine that it would be in the best interests of all shareholders to convert and reclassify all of our shares of Class B Stock into shares of Class A Stock, we will present a binding proposal to amend our Amended and Restated Certificate of Incorporation for a vote of the shareholders at our next annual meeting of shareholders.
Background
In February 1999, we sold 6 million shares of Class A Stock at $17.50 per share in our initial public offering (unadjusted for the 2009 spin-off of Teton or for the 2015 spin-off of Associated Capital). At that time, GGCP and its subsidiaries owned all 24 million shares of our Class B Stock. The holders of Class A Stock were and are entitled to one vote per share while the holders of Class B Stock were and are entitled to ten votes per share. As of March 1, 2017, Mr. Gabelli, GGCP, and Gabelli & Company Investment Advisers, Inc. (“GCIA”), a subsidiary of Associated Capital Group, Inc. that is controlled by GGCP, collectively owned 79% of our common stock outstanding on a combined basis, representing 96% of the total voting power on a combined basis. If the Class B Stock had been converted into Class A Stock on March 1, 2017, using a conversion ratio of 1.15 and a conversion ratio of 1.25 shares of Class A Stock for Class B Stock, then the former Class B shareholders (with GGCP, GCIA, and Mr. Gabelli owning 99% of the Class B Stock) would collectively own 68% and 70%, respectively, of the Company’s outstanding stock and voting power.
The Company is again considering eliminating its dual class structure in which our Class A Stock has one vote per share and our Class B Stock has ten votes per share. One way of eliminating the dual class structure would be to convert and reclassify all outstanding shares of Class B Stock into shares of Class A Stock. Except for the advisory proposals previously voted on by the shareholders as described below, the Board has not considered any procedures for eliminating the Company’s dual class structure.
Purpose and Results of Vote
The Reclassification Proposal seeks to determine whether our holders of Class A Stock want the Board to consider converting and reclassifying all outstanding shares of Class B Stock into shares of Class A Stock at a ratio in the range between 1.15 to 1.25 shares of Class A Stock for each share of Class B Stock. The hypothetical conversion ratio range does not represent the Board’s view as to a fair or appropriate conversion ratio if the shares of Class B Stock were to be converted into shares of Class A Stock. The hypothetical conversion ratio range, however, does reflect the Board’s belief that the holders of the Class B Stock will not agree to convert their shares and give up their enhanced voting power unless this ratio is greater than one share of Class A Stock for each share of Class B Stock.
Before expending resources to obtain a “fairness opinion” from an independent party and evaluate various options for eliminating the dual class structure, the Board believes that it is appropriate to solicit the views of the holders of our Class A Stock. If the proposal is approved, the Board will consider whether the conversion ratio in the range between 1.15 to 1.25 is fair and may seek to retain an independent party to render a “fairness opinion.”
Even if the Reclassification Proposal is approved, there can be no assurance that the shares of Class B Stock will be converted into shares of Class A Stock at a ratio in the range between 1.15 to 1.25 or at any other ratio. If the Reclassification Proposal is approved, the Board will evaluate the proposal and, if after such evaluation the Board concludes that we should convert all of the shares of Class B Stock into shares of Class A Stock at a particular ratio, the Board will present the proposal and ratio for shareholder approval in our proxy statement for the 2018 Annual Meeting.
In light of the current stock ownership, even if all of our shares of Class B Stock were converted into shares of Class A Stock, Mario J. Gabelli and GGCP would continue to own a majority of our shares of common stock outstanding and a majority of the total voting power.
At a special meeting of our shareholders held on November 30, 2007, the shareholders of the Class A Stock approved a proposal by 97.7% of the votes cast that our Board of Directors should consider the conversion and reclassification on the Company’s Class B Stock to Class A Stock at a ratio of 1.15 shares of Class A Stock for each share of Class B Stock. In 2008, our Board, after preliminary discussions with representatives of the Board of GGCP, elected to defer its decision on converting and reclassifying all of the Class B Stock into shares of the Class A Stock. Subsequently, at the annual meeting of shareholders held on May 6, 2011, the Class A shareholders approved an advisory proposal on whether the Board should consider the reclassification of its stock, at a ratio of 1.10 to 1.20 shares of Class A Stock for Class B Stock, by 86% of the votes cast. However, the total votes cast on the advisory Reclassification Proposal in 2011 constituted well under a majority (36.3%) of the Class A Stock then outstanding. At the annual meeting of shareholders held on May 1, 2012, the Class A shareholders approved an advisory proposal on whether the Board should consider the reclassification of its stock, at a ratio of 1.15 to 1.25 shares of Class A Stock for Class B Stock, by 85% of the votes cast. However, as in 2011, the total votes cast on the advisory Reclassification Proposal in 2012 were well under a majority (39%) of the Class A Stock then outstanding. At the annual meeting of shareholders held on May 7, 2013, the Class A shareholders approved an advisory proposal on whether the Board should consider the reclassification of its stock, at a ratio of 1.15 to 1.25 shares of Class A Stock for Class B Stock, by 81% of the votes cast. However, as in 2011 and 2012, the total votes cast on the advisory Reclassification Proposal in 2013 were again less than a majority (41%) of the Class A Stock then outstanding. At the annual meeting of shareholders held on May 6, 2014, the Class A shareholders approved an advisory proposal on whether the Board should consider the reclassification of its stock, at a ratio of 1.15 to 1.25 shares of Class A Stock for Class B Stock, by 85% of the votes cast. The total votes cast on the advisory Reclassification Proposal in 2014 was 71% of the Class A Stock then outstanding. At the annual meeting of shareholders held on May 3, 2016, the Class A shareholders approved an advisory proposal on whether the Board should consider the reclassification of its stock, at a ratio of 1.15 to 1.25 shares of Class A Stock for Class B Stock, by 75% of the votes cast. The total votes cast on the advisory Reclassification Proposal in 2016 was 81% of the Class A Stock then outstanding. The Board has continued to consider the reclassification of its stock but has determined that it would be appropriate and helpful to the Board to ask, encourage and recommend that the Class A shareholders vote on the reclassification of its stock at the 2017 Annual Meeting.
Recommendation
The Board urges Class A shareholders to vote on this proposal, although the Board does not make any recommendation on how shareholders should vote with respect to this proposal.
Vote Required
Approval of Proposal 7 requires the affirmative vote of a majority of the votes cast by Class A shareholders. Shareholders who return a signed proxy card but do not indicate how they wish to vote on Proposal 7 will be deemed to have abstained on Proposal 7. Broker non-votes, if any, will have no effect on the outcome of this proposal. Abstentions will have the same effect as a vote against Proposal 7.
CORPORATE GOVERNANCE
GAMCO continually strives to maintain the highest standards of ethical conduct: reporting results with accuracy and transparency and maintaining full compliance with the laws, rules and regulations that govern the Company’s businesses. The Company is active in ensuring that its governance practices continue to serve the interests of its shareholders and remain at the leading edge of best practices.
Determination of Director Independence
The Board has established guidelines which it uses in determining director independence and that are based on the director independence standards of the New York Stock Exchange. A copy of these guidelines can be found as Exhibit B. These guidelines are also attached to the Board’s Corporate Governance Guidelines, which are available at the following website: http://www.gabelli.com/corporate/corp_gov.html. A copy of these guidelines may also be obtained upon request from our Secretary.
In making its determination of independence with respect to Mr. Prather, the Board considered that the investment advisory subsidiaries of the Company collectively own on behalf of their investment advisory clients as of March 1, 20172018 approximately 2.76%2.78% of the Company’s Class A Stock and 1.19%0.92% of the Common Stock of Gray Television, Inc. (“Gray”). This ownership represents approximately 1.98%1.75% of the total voting power of Gray. Mr. Prather served as President and Chief Operating Officer and a director of Gray until June of 2013. Furthermore, an investment advisory affiliate of the Company nominated Mr. Prather as a director of Gaylord Entertainment Company (“Gaylord”) in 2009, and Mr. Prather was elected as a director of Gaylord on May 7, 2009. Gaylord subsequently converted into a real estate investment trust named Ryman Hospitality Properties, Inc. (“Ryman”) in October 2012, and Mr. Prather remains on Ryman’s board of directors. The Company collectively owns on behalf of their investment advisory clients approximately 10.95%9.45% of Ryman’s Common Stock representing approximately 10.95%9.45% of the total voting power of Ryman as of March 1, 2017.2018. In addition, an investment advisory affiliate of the Company nominated Mr. Prather as a director of Diebold in 2013, and Mr. Prather was elected as a director of Diebold on April 25, 2013. The Company collectively owns on behalf of their investment advisory clients approximately 7.72%7.17% of Diebold’s Common Stock representing approximately 7.72%7.17% of the total voting power of Diebold as of March 1, 2017.2018. From time to time, investment advisory affiliates of the Company have nominated and may continue to nominate Mr. Prather to the Boards of public companies.
The Company’s affiliates may also nominate other directors to the Boards of companies that are beneficially owned on behalf of its clients. The Board further considered the difficulty the Company would encounter in attempting to unilaterally affect the management of Gray, Ryman or Diebold through the use of its voting power.
In making its determination of independence with respect to Mr. Avansino, the Board considered that he has a daughter who works for the Company in a non-executive role, as described under “Certain Relationships and Related Transactions”. In addition, the Board considered that he is the Chairman and the President of Miami Oil Producers, Inc. (“Miami Oil”), the landlord of a lease that was entered into in 1999 with the Company for office space in Nevada. The Company paid $38,880, $39,495, $39,984 and $39,984$40,788 in rent to Miami Oil in 2014, 2015, 2016 and 2016,2017, respectively. Mr. Avansino is not a shareholder of Miami Oil.
With respect to these relationships, the Board considered Messrs. Avansino’s and Prather’s lack of economic dependence on the Company and other personal attributes that need to be possessed by independent-minded directors. Based on the guidelines attached as Exhibit A hereto and the foregoing considerations, the Board concluded that the following directors were independent and determined that none of them had a material relationship with us which would impair his ability to act as an independent director: Messrs. Artzt, Avansino, Daniels, McGrath and Prather.
The table below sets forth certain information regarding the nominees to the Board and Committees on which they serve.
Name | Audit Committee | Governance Committee | | Nominating Committee |
Mario J. Gabelli | | | | X |
Edwin L. Artzt | X | | | |
Raymond C. Avansino, Jr. | X | X (Chair) | X | |
Leslie B. Daniels | X | | | |
Eugene R. McGrath | X | X | | |
Robert S. Prather, Jr. | X (Chair) | | X (Chair) | |
Elisa M. Wilson | | | | X (Chair) |
The Board’s Role in the Oversight of Risk
The Board’s oversight of risk is administered directly through the Board, as a whole, or through its Committees. Various reports and presentations regarding risk management are presented to the Board including the procedures that the Company has adopted to identify and manage risk. Each of the Board’s Committees addresses risks that fall within the Committee’s area of responsibility. For example, the Audit Committee is responsible for “overseeing the quality and objectivity of GAMCO’s financial statements and the independent audit thereof.” The Audit Committee reserves time at each of its quarterly meetings to meet with the Company’s independent registered public accounting firm outside of the presence of the Company’s management. The Director of Internal Audit also is significantly involved in risk management evaluation and designs the Company’s internal audit programs to take account of risk evaluation and work in conjunction with the Co-Chief Accounting Officers. The Director of Internal Audit reports directly to the Company’s Audit Committee.
Relationship of Compensation and Risk
The Compensation Committee of the Board works with the Chief Executive Officer in reviewing the significant elements of the Company’s compensation policies and programs for all staff. They evaluate the intended behaviors each program is designed to incentivize to ensure that such policies and programs are appropriate for the Company.
The Board and Committees
During 2016,2017, there were four meetings of the Board. Our Board has an Audit Committee, a Compensation Committee, a Governance Committee and a Nominating Committee. We are deemed to be a “controlled company” as defined by the corporate governance standards of the New York Stock Exchange by virtue of the fact that GGCP holds more than 50% of the voting power of the Company. As a result, we are exempt from the corporate governance standards of the New York Stock Exchange requiring that a majority of the Board be independent and that all members of the Governance, Nominating and Compensation Committees be independent. While the Company is a controlled Company, the Board nevertheless is comprised of a majority of independent directors.
The Board believes that the most effective leadership structure is for the Company’s Chief Executive Officer to serve as Chairman given that Mr. Mario Gabelli is the controlling shareholder of the Company. By having Mr. Gabelli serve as the Chief Executive Officer and as Chairman, the Board believes that it enables Mr. Gabelli to ensure that the Board’s agenda responds to strategic challenges, that the Board is presented with information required for it to fulfill its responsibilities, and that Board meetings are as productive and effective as possible.
Our non-management directors meet, without any management directors or employees present, immediately after our regular quarterly Board meetings. At least once each year, our independent directors meet in a separate executive session. Mr. Prather serves as lead independent director and chairs the meetings of our non-management and independent directors.
The Audit Committee regularly meets with our independent registered public accounting firm to ensure that satisfactory accounting procedures are being followed and that internal accounting controls are adequate, reviews fees charged by the independent registered public accounting firm and selects our independent registered public accounting firm. Messrs. Artzt, Avansino, Daniels, McGrath and Prather, each of whom is an independent director as defined by the corporate governance standards of the New York Stock Exchange and the Company’s guidelines as set forth in Exhibit B, are members of the Audit Committee. The Board has determined that Mr. Prather meets the standards of an “audit committee financial expert,” as defined by the applicable securities regulations. The Audit Committee met five times during 2016.2017. A copy of the Audit Committee’s charter is posted on our website at http://www.gabelli.com/corporate/corp_gov.html. A shareholder may also obtain a copy of the charter upon written request from our Secretary delivered to our principal executive offices.
The Compensation Committee reviews the amounts paid to the Chief Executive Officer for compliance with the terms of his employment agreement and generally reviews benefits and compensation for the other executive officers. It also administers our Stock Award and Incentive Plan. Messrs. Avansino and Prather, each of whom is an independent director, are the members of the Compensation Committee. The Compensation Committee does not have a formal policy regarding delegation of its authority. The Compensation Committee met fourfive times during 2016.2017. A copy of the Compensation Committee’s charter is posted on our website at http://www.gabelli.com/corporate/corp_gov.html. A shareholder may also obtain a copy of the charter upon written request from our Secretary delivered to our principal executive offices.
The Governance Committee advises the Board on governance policies and procedures. Messrs. Avansino and McGrath, each of whom is an independent director, are the members of the Governance Committee. The Governance Committee held three meetings during 2016.2017. A copy of the Governance Committee’s charter is posted on our website at http://www.gabelli.com/corporate/corp_gov.html. A shareholder may also obtain a copy of the charter upon written request from our Secretary delivered to our principal executive offices.
The Nominating Committee advises the Board on the selection and nomination of individuals to serve as directors of GAMCO. Nominations for director, including nominations for director submitted to the committee by shareholders, are evaluated according to our needs and the nominee’s knowledge, experience and background. Mario Gabelli and Elisa Wilson are the members of the Nominating Committee. Neither Mr. Gabelli nor Ms. Wilson is an independent director as defined by the corporate governance standards of the Company. The Nominating Committee did not meet in 2016.met once during 2017. A copy of the Nominating Committee’s charter is posted on our website at http://www.gabelli.com/corporate/corp_gov.html. A shareholder may also obtain a copy of the charter upon written request from our Secretary delivered to our principal executive offices. The Nominating Committee has adopted the following policy regarding diversity: When identifying nominees as directors, the Committee will have a bias to have diverse representation of candidates who serve or have served as chief executive officers or presidents of public or private corporations or entities that are either for-profit or not-for-profit. In accordance with its charter, the Nominating Committee will review the suitability for continued service as a director of each Board member when his or her term expires and when he or she has a change in status, including but not limited to an employment change, and recommend whether or not the director should be re-nominated. The Nominating Committee will review annually with the Board the composition of the Board as a whole and recommend, if necessary, measures to be taken.
Consideration of Director Candidates Recommended by Shareholders
Except as set forth in the Company’s Amended and Restated By-Laws, the Nominating Committee does not have a formal policy regarding the recommendation of director candidates by shareholders. The Board believes it is appropriate not to have such a policy because GGCP holds the majority of the voting power. Nevertheless, the Nominating Committee will consider appropriate candidates recommended by shareholders. Under the process described below, a shareholder wishing to submit such a recommendation should send a letter to our Secretary at One Corporate Center, Rye, NY 10580. The mailing envelope must contain a clear notation that the enclosed letter is a “Director Nominee Recommendation.” The letter must identify the author as a shareholder and provide a brief summary of the candidate’s qualifications and otherwise comply with the requirements of our Amended and Restated By-Laws. At a minimum, candidates recommended for election to the Board must meet the independence standards of the New York Stock Exchange as well as any criteria used by the Nominating Committee. The Nominating Committee will consider and evaluate candidates recommended by shareholders in the same manner as it considers candidates from other sources. Acceptance of a recommendation does not imply that the committee will ultimately nominate the recommended candidate.
Process for the Consideration of Director Candidates Nominated by Shareholders and of Business Proposed by Shareholders
GAMCO’s Amended and Restated By-Laws set forth the processes and advance notice procedures that shareholders of GAMCO must follow, and specifies additional information that shareholders of GAMCO must provide, when proposing director nominations at any annual or special meeting of GAMCO’s shareholders or other business to be considered at an annual meeting of shareholders. Generally, the By-Laws provide that advance notice of shareholder nominations or proposals of business be provided to GAMCO not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary date of the preceding annual meeting of shareholders. For the 20182019 Annual Meeting, such notice of nomination or other business must be received at GAMCO’s principal executive offices between January 3, 20188, 2019 and February 2, 2018.
Article III, Paragraph 6 of GAMCO’s Amended and Restated By-Laws sets out the procedures a shareholder must follow in order to nominate a candidate for Board membership. For these requirements, please refer to the Amended and Restated By-Laws as of November 20, 2013, filed with the Securities and Exchange Commission on November 22, 2013, as Exhibit 3.2 to a Current Report on Form 8-K. The Amended and Restated By-Laws are also available in the “Investor Relations” section of the Company’s website.
Director Attendance
During 2016,2017, all of the directors attended at least 75% of the meetings of the Board and the Board committees of which he or she was a member. Mr. Daniels was not a memberAll of the Board until his election in November 2016. Mr. Mario Gabelli, Mr. Avansino, and Mr. Pratherdirectors attended our 20162017 annual meeting of shareholders. We do not have a policy regarding directors’ attendance at our annual meetings.
COMPENSATION OF DIRECTORS
Neither Mr. Mario Gabelli nor Mr. Marc Gabelli receiveddid not receive compensation for serving as a director of the Company during 2016. Effective at the 2016 annual meeting of shareholders, Mr. Marc Gabelli no longer served as a director of the Company.2017. Effective July 1, 2010, all non-executive directors other than Mr. Gabelli receive annual cash retainers and meeting fees as follows:
Board Member | | $ | 60,000 | |
Audit Committee Chairman | | $ | 20,000 | |
Compensation Committee Chairman | | $ | 12,000 | |
Governance Committee Chairman | | $ | 12,000 | |
Attendance per Board Meeting | | $ | 10,000 | |
Attendance per Audit Committee Meeting | | $ | 4,000 | |
Attendance per Compensation and Governance Committees Meeting | | $ | 3,000 | |
DIRECTOR COMPENSATION TABLE FOR 20162017
The following table sets forth fees, awards, and other compensation paid to or earned by our non-executive directors in 2016.2017.
Director Compensation Table for 2016.2017. The following table sets forth fees, awards, and other compensation paid to or earned by our non-executive directors in 2016.2017.
Name | Fees Earned or Paid in Cash ($) | Restricted Stock Awards ($) (a) (b) | Option Awards ($) (c) | All Other Compensation ($) | | Fees Earned or Paid in Cash ($) | Restricted Stock Awards ($) (a) (b) | Option Awards ($) | All Other Compensation ($) | |
Edwin L. Artzt | 116,000 | -0- | 116,000 | 116,000 | -0- | 116,000 |
Raymond C. Avansino, Jr. | 150,000 | -0- | 150,000 | 149,000 | -0- | 149,000 |
Leslie B. Daniels | 19,457 | -0- | 19,457 | 108,000 | -0- | 108,000 |
Marc Gabelli (c)(d) | -0- | -0- | 324,205 | |
Eugene McGrath | 129,000 | -0- | 129,000 | |
Eugene McGrath. | | 122,000 | -0- | 122,000 |
Robert S. Prather, Jr. | 164,000 | -0- | 164,000 | 163,000 | -0- | 163,000 |
Elisa M. Wilson (d) | 100,000 | -0- | 100,000 | |
Elisa M. Wilson (c) | | 100,000 | -0- | 100,000 |
(a) | There were no GAMCO restricted stock awards granted or outstanding to any non-executive directorsdirector during 2016. However, at the time of the spin-off, existing GAMCO equity awards were supplemented by the awarding of Associated Capital equity awards. Specifically, outstanding RSAs relating to GAMCO remain unchanged, with each RSA holder also receiving an equal number of RSAs relating to Associated Capital. The terms of the new Associated Capital RSAs are the same as the terms of the pre-spin-off GAMCO RSAs. The purpose of the issuance was to ensure that any employee who had GAMCO RSAs was granted an equal number of AC RSAs so that the total value of the RSAs post-spin-off was equivalent to the total value pre-spin-off. Therefore, on November 30, 2015, pursuant to the spin-off of Associated Capital from GAMCO, Mr. Marc Gabelli, along with certain of the Company’s named executive officers and other teammates, received restricted shares of Associated Capital’s Class A common stock as a result of his ownership of GAMCO unvested restricted stock awards. Mr. Marc Gabelli did not stand for re-election upon the expiration of his term on May 3, 2016. Therefore there were no restricted stock awards outstanding to any current director on December 31, 2016.2017. |
(b) | There were no GAMCO option awards granted or outstanding to any directors at December 31, 2016.non-executive director during 2017. |
(c) | Effective at the 2016 annual meeting of shareholders, Mr. Marc Gabelli no longer served as a director of the Company. Mr. Marc Gabelli was employed by Associated Capital during 2016. He earned an amount of $324,205 for services rendered to GAMCO pursuant to the transition services agreement between GAMCO and Associated Capital, which is shown in the above table as “All Other Compensation”. Mr. Marc Gabelli’s all other compensation earned in 2016 consisted of an allocation of $200,000 of the incentive-based management fee (10% of GAMCO pre-tax profits) by Mr. Mario Gabelli as described in the “Variable Compensation” section of the Compensation and Discussion Analysis and in footnote (c) to the Summary Compensation Table for 2016 and $124,205 for acting as portfolio manager of a Gabelli Fund. Mr. Marc Gabelli also earned $827,751 in compensation directly from Associated Capital, which is excluded from the above table, for his role as an officer and employee in that company. |
(d) | We lease an approximately 60,000 square foot building located at 401 Theodore Fremd Avenue, Rye, New York as our headquarters (the “Building”) from M4E, LLC, (“M4E”), an entity that is owned by family members of Mr. Gabelli, including Mr. Marc Gabelli and Ms. Wilson. As membersa member of M4E, Mr. Marc Gabelli and Ms. Wilson each areis entitled to receive theirher pro-rata share of payments received by M4E under the lease. See “Certain Relationships and Related Transactions” on page 3332 of this proxy statement for further details. |
Communications with the Board
Our Board has established a process for shareholders and other interested parties to send communications to the Board. Shareholders or other interested parties who wish to communicate with the Board, the non-management or independent directors, or a particular director may send a letter to our Secretary at GAMCO Investors, Inc., One Corporate Center, Rye, NY 10580-1422. The mailing envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board or just certain specified individual directors. The Secretary will make copies of all such letters and circulate them to the appropriate director or directors.
Code of Business Conduct
We have adopted a Code of Business Conduct (the “Code of Conduct”) that applies to all of our officers, directors and staff members with additional requirements for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Conduct is posted on our website at http://www.gabelli.com/corporate/corp_gov.html. Any shareholder may also obtain a copy of the Code of Conduct upon written request to our Secretary at our principal executive offices. Shareholders may address a written request for a printed copy of the Code of Conduct to our Secretary at GAMCO Investors, Inc., One Corporate Center, Rye, New York 10580-1422. We intend to satisfy the disclosure requirement regarding any amendment to, or a waiver of, a provision of the Code of Conduct by posting such information on our website.
Transactions with Related Persons
Our Board has adopted written procedures governing the review, approval or ratification of any transactions with related persons required to be reported in this proxy statement. The procedures require that all related party transactions, other than certain pre-approved categories of transactions, be reviewed and approved by our Governance Committee or the Board. Under the procedures, directors may not participate in any discussion or approval by the Board of related party transactions in which they or a member of their immediate family is a related person, except that they shall provide information to the Board concerning the transaction. Only transactions that are found to be in the best interests of the Company will be approved.
Currently, we have a number of policies and procedures addressing conflicts of interest. Our Code of Conduct addresses the responsibilities of our officers, directors and staff to disclose conflicts of interest to our Legal/Compliance Department, which determines whether the matter constitutes a related party transaction that should be reviewed by our Governance Committee or Board. Generally, matters involving employer-employee relationships including compensation and benefits, ongoing arrangements that existed prior to our initial public offering and financial service relationships including investments in our funds are not presented for review, approval or ratification by our Governance Committee or Board.
Furthermore, our Amended and Restated Certificate of Incorporation provides that no contract, agreement, arrangement or transaction, or any amendment, modification or termination thereof, or any waiver of any right thereunder, (each, a “Transaction”) between GAMCO and:
(i) | Mario J. Gabelli, any member of his immediate family who is at the time an officer or director of GAMCO and any entity in which one or more of the foregoing beneficially own a controlling interest of the outstanding voting securities or comparable interests (each, a “Gabelli”), |
(ii) | any customer or supplier, |
(iii) | any entity in which a director of GAMCO has a financial interest (a “Related Entity”), or |
(iv) | one or more of the directors or officers of GAMCO or any Related Entity; |
will be voidable solely because any of the persons or entities listed in (i) through (iv) above are parties thereto, if the standard specified below is satisfied.
Further, no Transaction will be voidable solely because any such directors or officers are present at or participate in the meeting of the Board or committee thereof that authorizes the Transaction or because their votes are counted for such purpose, if the standard specified below is satisfied. That standard will be satisfied, and such Gabelli, the Related Entity, and the directors and officers of GAMCO or the Related Entity (as applicable) will be deemed to have acted reasonably and in good faith (to the extent such standard is applicable to such person’s conduct) and fully to have satisfied any duties of loyalty and fiduciary duties they may have to GAMCO and its shareholders with respect to such Transaction, if any of the following four requirements are met:
| (i) | the material facts as to the relationship or interest and as to the Transaction are disclosed or known to the Board or the committee thereof that authorizes the Transaction, and the Board or such committee in good faith approves the Transaction by the affirmative vote of a majority of the disinterested directors on the Board or such committee, even if the disinterested directors are less than a quorum; |
(ii) | the material facts as to the relationship or interest and as to the Transaction are disclosed or known to the holders of Voting Stock entitled to vote thereon, and the Transaction is specifically approved by vote of the holders of a majority of the voting power of the then outstanding Voting Stock not owned by such Gabelli or such Related Entity, voting together as a single class; |
(iii) | the Transaction is effected pursuant to guidelines that are in good faith approved by a majority of the disinterested directors on the Board or the applicable committee thereof or by vote of the holders of a majority of the then outstanding voting Stock not owned by such Gabelli or such Related Entity, voting together as a single class; or |
(iv) | the Transaction is fair to GAMCO as of the time it is approved by the Board, a committee thereof or the shareholders of GAMCO. |
Our Amended and Restated Certificate of Incorporation also provides that any such Transaction authorized, approved, or effected, and each of such guidelines so authorized or approved, as described in (i), (ii) or (iii) above, will be deemed to be entirely fair to GAMCO and its shareholders, except that, if such authorization or approval is not obtained, or such Transaction is not so effected, no presumption will arise that such Transaction or guideline is not fair to GAMCO and its shareholders. In addition, our Amended and Restated Certificate of Incorporation provides that a Gabelli will not be liable to GAMCO or its shareholders for breach of any fiduciary duty that a Gabelli may have as a director of GAMCO by reason of the fact that a Gabelli takes any action in connection with any transaction between such Gabelli and GAMCO. For purposes of these provisions, interests in an entity that are not equity or ownership interests or that constitute less than 10% of the equity or ownership interests of such entity will not be considered to confer a financial interest on any person who beneficially owns such interests.
A description of certain related party transactions appears under the heading “Certain Relationships and Related Transactions” on pages 3332 to 39 of this proxy statement.
Compensation Committee Interlocks and Insider Participation
Our Compensation Committee consists of Messrs. Avansino and Prather. Neither of these individuals has ever been an officer or employee of the Company. During 2016,2017, none of our executive officers served on the board of directors or compensation committee of any entity that employed any member of our Compensation Committee or served on the compensation committee of any entity that employed any member of our Board.
INFORMATION REGARDING NAMED EXECUTIVE OFFICERS
As of March 31, 2017,2018, the named executive officers of the Company are as follows (ages are as of March 31, 2017)2018):
Name | | Age | | Position |
Mario J. Gabelli | | 74 | 75 | Chairman, Chief Executive Officer and Chief Investment Officer – Value Portfolios |
Douglas R. Jamieson | | 62 | 63 | President and Chief Operating Officer of GAMCO Asset Management Inc., a wholly-owned subsidiary of the Company, and Former President and Chief Operating Officer of the Company |
Kevin Handwerker Kieran Caterina Diane M. LaPointe Agnes Mullady | | 61 44 60 43
59 58
| | Executive Vice President, General Counsel and Secretary Senior Vice President and Co-Chief Accounting Officer Senior Vice President and Co-Chief Accounting Officer Senior Vice President of the Company and President and Chief Operating Officer of the Fund Division |
Bruce N. Alpert | | 65 | 66 | Senior Vice President |
Henry G. Van der Eb | | 71 | 72 | Senior Vice President |
Biographical information for Mr. Gabelli appears above under “Election of Directors – The Nominees”. Brief biographical sketches of the other executive officers listed above are set forth below.
Douglas R. Jamieson served as President and Chief Operating Officer of the Company from August 2004 to November 2016. He has served as President and Chief Executive Officer of Associated Capital Group, Inc. since November 2016. He served as Executive Vice President and Chief Operating Officer of GAMCO Asset Management Inc. from 1986 to 2004 and has served as President and Chief Operating Officer of GAMCO Asset Management Inc. since 2004 and as a director of GAMCO Asset Management Inc. from 1991 to the present. Mr. Jamieson also serves as President and a director of Gabelli & Company Investment Advisers, Inc. (“GCIA”) (f/k/a Gabelli Securities, Inc.) (a wholly-owned subsidiary of Associated Capital) and GAMCO Asset Management (UK) Ltd. (a wholly-owned subsidiary of the Company). Mr. Jamieson served on the Board of Teton from 2005 through 2010. Mr. Jamieson also serves as a director of several Investment Partnerships that are managed by GCIA. Mr. Jamieson was a securities analyst with Gabelli & Company, Inc. (now known as G.research, LLC)G. research, LLC, the broker-dealer subsidiary of Associated Capital, from 1981 to 1986. He was a director of GGCP from December 2005 through December 2009, and served as an advisor to the GGCP board through 2010.
Kevin Handwerker has served as Executive Vice President, General Counsel and Secretary of the Company since November 2013. Mr. Handwerker has also served as Executive Vice President, General Counsel and Secretary of Associated Capital since December 2015. Mr. Handwerker was Managing Director at Neuberger Berman LLC from 2000 through October 2013. Previously, Mr. Handwerker held senior positions in National Financial Partners Corp. and J.P. Morgan Investment Management Inc. He began his law career at Shearman & Sterling LLP, representing financial institutions and other entities in public and private financings, mergers and acquisitions and merchant banking transactions. Mr. Handwerker received his J.D. from Fordham University School of Law after earning his B.S. in Accounting, summa cum laude, from the State University of New York at Albany.
Kieran Caterina has served as Co-Principal Financial Officer of the Company since July 2015, as Co-Chief Accounting Officer of the Company since 2012, and as Senior Vice President of the Company since 2011. Mr. Caterina earlier served as Vice President and Co-Principal Accounting Officer of the Company from 2008 to 2012, as Vice President and Acting Co-Chief Financial Officer from 2007 to 2008 and as Controller from 2002 to 2008. Mr. Caterina joined GAMCO in March 1998 as a staff accountant. He received his M.S. in Accounting from Binghamton University after earning his B.S. in Accounting from the State University of New York at Oswego.
Diane M. LaPointe has served as Co-Principal Financial Officer of the Company since July 2015, as Co-Chief Accounting Officer of the Company since 2012, and as Senior Vice President of the Company since 2011. She has also served as the Financial and Operations Principal of G.distributors, LLC, the Company’s broker-dealer subsidiary, since 2011. Ms. LaPointe also serves as a member of the President’s Council at Wesleyan University. Ms. LaPointe earlier served as Vice President and Co-Principal Accounting Officer of the Company from 2008 to 2012 and as Acting Co-Chief Financial Officer of the Company from 2007 to 2008. From 2004 until early 2016, she also served as Vice President and Controller of GCIA (f/k/a Gabelli Securities, Inc.)(a(a former subsidiary of the Company which became a subsidiary of Associated Capital in November 2015) and its broker-dealer subsidiary, G.research, LLC. Prior to joining the Company in June 2004, Ms. LaPointe was the Chief Financial Officer and Treasurer of Security Capital Corporation and had previously held several senior financial positions at Ultramar PLC, including Director of Worldwide Financial Reporting and Director of Corporate Finance. She began her career at KPMG. She received her M.B.A. from New York University’s Stern School of Business after earning her B.A. from Wesleyan University. Ms. LaPointe is a Certified Public Accountant.
Agnes Mullady has served as a Senior Vice President of the Company since 2008. She has also served as Executive Vice President of Associated Capital Group, Inc. since November 2016, as the President and Chief Operating Officer of the Fund Division of Gabelli Funds, LLC since 2010, as a Vice President of Gabelli Funds, LLC since 2006, and since 2011, as Chief Executive Officer of G.distributors, LLC, the Company’s broker-dealer subsidiary. Ms. Mullady also serves as an officer of all of the Gabelli/GAMCOGAMCO/Teton Funds. Ms. Mullady served as the President of the Closed-End Fund Division of Gabelli Funds, LLC from 2007 through 2010. In addition, she oversees the financial reporting of the affiliated open and closed-end funds for the Company. Prior to joining the Company in December 2005, Ms. Mullady was a Senior Vice President at U.S. Trust Company and Treasurer and Chief Financial Officer of the Excelsior Funds from 2004 through 2005.
Bruce N. Alpert has served as Senior Vice President of the Company since May 2008. Mr. Alpert served as Vice President and Chief Operating Officer of Gabelli Funds, LLC or its predecessor from 1988 to 1999, and became Executive Vice President and Chief Operating Officer of Gabelli Funds, LLC in 1999. Since 1989, Mr. Alpert has been a Vice President of G.research, LLC, a subsidiary of Associated Capital Group, Inc. Mr. Alpert is an officer of certain of the Gabelli/GAMCO Funds. Mr. Alpert also served as a director of Teton Advisors, Inc. from 1998 through May 2012, and was its President from 1998 through 2008 and Chairman from 2008 through 2010. He served as Chief Compliance Officer of the Gabelli/GAMCO Funds from 2012 through 2014 and Gabelli Funds, LLC from 2012 through March 2015. From 1986 until June 1988, he worked at the InterCapital Division of Dean Witter as Vice President and Treasurer of the mutual funds sponsored by Dean Witter. From 1983 through 1986, he worked at Smith Barney Harris Upham & Co. (“Smith Barney”) as Vice President in the Financial Services Division and as Vice President and Treasurer of the mutual funds sponsored by Smith Barney. Prior to Smith Barney, Mr. Alpert was an Audit Manager and Specialist at Price Waterhouse in the Investment Company Industry Services Group, where he was employed from 1975 through 1983. Mr. Alpert is a Certified Public Accountant.
Henry G. Van der Eb has served as Senior Vice President of the Company since August 2004 and is a senior advisor to management in all aspects of our business. He has served as a Senior Vice President with Gabelli Funds, LLC and GAMCO Asset Management Inc. since October 1999, when he joined the Company after managing his privately held investment advisory firm (Mathers and Company, Inc.), which was acquired by the Company in October 1999. Mr. Van der Eb is a portfolio manager for the Company and is a Chartered Financial Analyst.
COMPENSATION OF EXECUTIVE OFFICERS
COMPENSATION DISCUSSION AND ANALYSIS
The investment management and securities industries are highly competitive, and experienced professionals have significant career mobility. We believe that the ability to attract, retain and provide appropriate incentives for the highest quality professional personnel is important for maintaining our competitive position in the investment management and securities industries, as well as for providing for the long-term success of GAMCO.
Most of GAMCO’s compensation expense is incentive-based variable compensation that will increase or decrease based on the revenues from our assets under management. Since 1977, we have generally paid out up to 40% of the revenues or net operating contribution to the marketing staff and portfolio managers who introduce, service or generate our separate account and mutual fund business, with payments involving the separate accounts being typically based on revenues, and payments involving the mutual funds being typically based on net operating contribution. We believe that the variable compensation formulas in place for our marketing staff and portfolio managers provide significant incentives for the growth of our business and a cushion during periods of market decline.
Our administrative, operations, legal and finance personnel generally receive the majority of their compensation in the form of base salaries and annual bonuses. We believe that GAMCO must pay competitive levels of cash compensation. We also believe that appropriate equity incentive programs may motivate and retain our professional personnel but that these programs must always be consistent with shareholder interests.
The Compensation Committee and the Board have continued to consider the results of the shareholders’ non-binding vote in 2011 on our “say-on-pay” proposal. A substantial majority (over 99%) of the shares voted on our “say-on-pay” proposal approved the Company's executive compensation as described in our Compensation Discussion and Analysis and the accompanying tabular disclosures in the 2011 proxy statement. Because a majority of votes cast at the 2011 annual meeting of shareholders were in favor of having a “say-on-pay” vote every three years, the Board has adopted a triennial frequency policy. Therefore a “say-on-pay” vote was again held at the 2014 Annual Meeting of Shareholders. Once again a substantial majority (over 99%) of the shares voted on our “say-on-pay” proposal approved the Company's executive compensation as described in our Compensation Discussion and Analysis and the accompanying tabular disclosures in the 2014 proxy statement. A “say-on-pay” vote was again held at the 2017 Annual Meeting of Shareholders. Once again a substantial majority (over 99%) of the shares voted on our “say-on-pay” proposal approved the Company's executive compensation as described in our Compensation Discussion and Analysis and the accompanying tabular disclosures in the 2017 proxy statement. As a result of this favorable vote, it was determined that no changes were necessary to our executive compensation program’s design and administration. The Board believes that this continues to be the case.
Compensation of the Named Executive Officers
The compensation for our named executives (other than for Mr. Mario Gabelli, whose compensation is described separately below under the section entitled “Chief Executive Officer Compensation”) is composed of base salary, annual bonus compensation, equity compensation, incentive-based variable compensation and employee benefits. As used herein, the term “named executives” means all persons listed in the Summary Compensation Table set forth below.
Mr. Gabelli recommends to the Compensation Committee the amounts of the base salaries for our named executives, other than himself, which amounts are subject to the Committee’s review and approval, and are not at the discretion of the named executives. Mr. Gabelli received no base salary in 2016.2017.
Mr. Gabelli recommends to the Compensation Committee the amounts of the annual bonuses for our named executives, other than himself, which amounts are subject to the Committee’s review and approval. The factors considered by Mr. Gabelli in making annual bonus recommendations are typically subjective, such as perceptions of the named executives’ experience, performance and responsibilities. His recommendations may be but are not specifically tied to the performance of client assets, objectives set for each executive, the firm as a whole or the market value of our stock.
A portion of the annual bonuses for our named executives may be deferred for approximately 15 to 18 months. The terms of the deferrals are recommended by Mr. Gabelli to the Compensation Committee, which terms are subject to the Committee’s review and approval, and are not at the discretion of the named executives. The deferrals typically earn a return equal to the greater of the return on our U.S. Treasury money market fund or the return of one of our investment partnerships after payment of the management fee but before payment of any incentive fee. In order to receive the deferred bonus payment, the named executive must be employed by the Company at the time of payment. There were no deferrals in 2016.2017.
Our executive compensation program may also include stock option or restricted stock awards (sometimes referred to hereinafter as “RSAs”), which are intended to provide additional incentives to increase shareholder value as well as retain qualified individuals. Mr. Gabelli makes recommendations to the Compensation Committee for the grant of stock awards to corporate team members. Individual stock option award levels in past years and individual restricted stock award levels in 2016 and in past years were based upon a subjective evaluation of each named executive’s overall past and expected future contribution. No formula was used to determine the timing or amount of option awards and RSAs for any individual.
To the extent that they have the proper regulatory registrations, all of our staff, including the named executives, are eligible to receive incentive-based variable compensation for attracting or providing client service to separate accounts, shareholders of the Gabelli/GAMCO Funds or investors in our other products. Mr. Jamieson, who provides client service to a significant number of separate accounts, received the majority of his total 20162017 compensation from variable compensation payments, as described below in note (d) to the Summary Compensation Table.
In the course of fulfilling Mr. Gabelli’s duties, the Company at times brings on certain individuals to aid him. When this occurs, the Company offsets those costs by a reduction in compensation payable to Mr. Gabelli. Refer to the notes to the Summary Compensation Table for 20162017 on pagepages 2321 to 22 for further details.
Chief Executive Officer Compensation
Mr. Gabelli received no base salary, no bonus, no stock options and no restricted stock awards in 2016,2017, as has been the case for each year since our initial public offering in 1999. All of the compensation earned by Mr. Gabelli in 20162017 was incentive-based variable compensation that was calculated in accordance with Mr. Gabelli’s Amended Employment Agreement, which revised his 1999 employment agreement as described under the heading “Employment Agreements” below. Mr. Gabelli was, however, not paid any cash compensation during 2016.2016 or during the first half or fourth quarter of 2017.
Furthermore, as disclosed in a press release issued by the Company on February 23, 2018, Mr. Gabelli has elected to waive all of his compensation that he would otherwise have been entitled to receive under his employment agreement for the period March 1, 2018 to December 31, 2018.
As further described in Proposal 4the Company’s 2017 proxy statement, on pages 7 to 10, on December 21, 2015, the Company entered into a restricted stock unit agreement with Mr. Mario J. Gabelli, the Company’s Chief Executive Officer, pursuant to which the Company determined to award Mr. Gabelli’s Variable Compensation generated in fiscal 2016 in the form of RSUs under the Plan (the “2016 RSU Agreement”). Under the 2016 RSU Agreement, the number of RSUs granted was calculated by dividing the Variable Compensation generated in fiscal 2016 by the volume-weighted average price (as defined in the 2016 RSU Agreement) per share of the Class A Stock for fiscal 2016. If such RSUs are settled in shares of Class A Stock, Mr. Gabelli will receive 2,314,695 shares of Class A Stock under the Plan and accordingly, such shares have been reserved for issuance under the Plan. Subject to certain exceptions set forth in the 2016 RSU Agreement, the RSUs will vest in full on January 1, 2020, provided that Mr. Gabelli remains employed by the Company on such date. On January 1, 2020, the Company intends to make a cash payment to Mr. Gabelli in settlement of the RSUs granted under the 2016 RSU Agreement equal to (i) the lesser of (x) the value (as defined in the 2016 RSU Agreement) per share of the Company’s Class A stock as of such date, or if applicable, as of such earlier date upon which the restrictions otherwise lapse, or (y) the volume-weighted average price per share of the Company’s Class A stock for fiscal 2016, as calculated in accordance with the above description,agreement, multiplied by (ii) the number of RSUs with respect to which the restrictions have lapsed. However, notwithstanding this current intention, the Company reserves the right in its discretion to issue to Mr. Gabelli a number of shares of Class A Stock equal to the number of RSUs in lieu of such cash payment.
As also described in Proposal 3,the Company’s 2017 proxy statement, the Company entered into a second restricted stock unit agreement with Mr. Gabelli, pursuant to which any Variable Compensation earned by him during the period January 1, 2017 tothrough June 30, 2017, be awarded in the form of RSU’s under the Plan (“the First Half 2017 RSU Agreement”). Under the First Half 2017 RSU Agreement, the number of RSUs granted was calculated by dividing the Variable Compensation generated in the period January 1, 2017 through June 30, 2017 by the volume-weighted average price (as defined in the First Half 2017 RSU Agreement) per share of the Class A Stock for the period January 1, 2017 through June 30, 2017. If such RSUs are settled in shares of Class A Stock, Mr. Gabelli will receive 1,244,018shares of Class A Stock under the Plan and accordingly, such shares have been reserved for issuance under the Plan. Subject to certain exceptions set forth in the First Half 2017 RSU Agreement, the RSUs will vest in full on July 1, 2018, provided that Mr. Gabelli remains employed by the Company on such date. On July 1, 2018, the Company intends to make a cash payment to Mr. Gabelli in settlement of the RSUs granted under the First Half 2017 RSU Agreement equal to (i) the lesser of (x) the value (as defined in the First Half 2017 RSU Agreement) per share of the Company’s Class A stock as of such date, or if applicable, as of such earlier date upon which the restrictions otherwise lapse, or (y) the volume-weighted average price per share of the Company’s Class A stock for the period January 1, 2017 through June 30, 2017, as calculated in accordance with the agreement, multiplied by (ii) the number of RSUs with respect to which the restrictions have lapsed. However, notwithstanding this current intention, the Company reserves the right in its discretion to issue to Mr. Gabelli a number of shares of Class A Stock equal to the number of RSUs in lieu of such cash payment.
As described in Proposal 3, on September 30, 2017, the Company entered into a third restricted stock unit agreement with Mr. Gabelli, pursuant to which any Variable Compensation earned by him during the period October 1, 2017 through December 31, 2017, be awarded in the form of RSU’s under the Plan, subject to certain exceptions. If such RSUs are settled in shares of Class A Stock, Mr. Gabelli will receive 530,662shares of Class A Stock under the Plan. If Proposal 3 is approved by shareholders at the Annual Meeting, such shares will be reserved for issuance under the Plan. Subject to certain exceptions set forth in the Fourth Quarter 2017 RSU Agreement, the RSUs will vest in full on April 1, 2019, provided that Mr. Gabelli remains employed by the Company on such date. On April 1, 2019, the Company intends to make a cash payment to Mr. Gabelli equal to (i) the lesser of (x) the value (as defined in the Fourth Quarter 2017 RSU Agreement) per share of the Company’s Class A stock as of such date, or if applicable, as of such earlier date upon which the restrictions otherwise lapse, and (y) the volume-weighted average price per share of the Company’s Class A stock for the period October 1, 2017 through December 31, 2017, as calculated in accordance with the agreement, multiplied by (ii) the number of RSUs with respect to which the restrictions have lapsed. However, notwithstanding this current intention, the Company reserves the right in its discretion to issue to Mr. Gabelli a number of shares of Class A Stock equal to the number of RSUs in lieu of such cash payment.
Compensation Consultants
The Company has not retained compensation consultants to assist in determining or recommending the amount or form of executive and director compensation during its last fiscal year.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee reviewed and discussed with management the Compensation Discussion and Analysis appearing above. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this proxy statement, which section is also incorporated by reference in GAMCO’s Annual Report on Form 10-K.
COMPENSATION COMMITTEE
Robert S. Prather, Jr. (Chairman)
Raymond C. Avansino, Jr.
SUMMARY COMPENSATION TABLE FOR 20162017
The following table sets forth the cash and non-cash compensation for the fiscal years ended 2017, 2016 2015 and 2014,2015, respectively, paid to or earned by (i) our principal executive officer, (ii) our principal financial officers, and (iii) the other most highly compensated executive officers of the Company who were serving as of the end of the 20162017 fiscal year. As used herein, the term “named executives” means all persons listed in the Summary Compensation Table for 20162017 (the “Summary Compensation Table”).
| | | | | | | | | | | Change in | | | | | | | | | | | | | | | Change in | | | | |
| | | | | | | | | | | Pension Value | | | | | | | | | | | | | | | Pension Value | | | |
| | | | | | | | | | | and | | | | | | | | | | | | | | | and | | | | |
| | | | | | | | | Stock | | Nonqualified | | | | | | | | | | | | | Stock | | Nonqualified | | | | |
| | | | | Base | | | | Awards | | Deferred | | All Other | | | | | | | Base | | | | Awards | Deferred | | All Other | | |
| | | | | Salary | | Bonus | | ($) | | Compensation | | Compensation | | Total | | | | | Salary | | Bonus | | ($) | | Compensation | Compensation | Total |
Name and Principal Position | Name and Principal Position | | Year | | ($) | | ($) | | (k) | | Earnings ($) | | ($) | | ($) | Name and Principal Position | Year | | ($) | | ($) | | (k) | | Earnings ($) | | ($) | | ($) |
Mario J. Gabelli………………………… | Mario J. Gabelli………………………… | | 2016 | | -0- (a) | | -0- (b) | | -0- | | -0- | | 75,965,266 (c) | | 75,965,266 | Mario J. Gabelli………………………… | 2017 | | -0- (a) | | -0- (b) | | -0- | | -0- | | 69,414,472 (c) | 69,414,472 |
| Chairman of the Board, | | 2015 | | -0- (a) | | -0- (b) | | -0- | | -0- | | 75,018,176 (c) | | 75,018,176 | Chairman of the Board, | | 2016 | | -0- (a) | | -0- (b) | | -0- | | -0- | | 75,965,266 (c) | 75,965,266 |
| Chief Executive Officer | | 2014 | | -0- (a) | | -0- (b) | | -0- | | -0- | | 88,518,411 (c) | | 88,518,411 | Chief Executive Officer | | 2015 | | -0- (a) | | -0- (b) | | -0- | | -0- | | 75,018,176 (c) | 75,018,176 |
| and Chief Investment | | | | | | | | | | | | | | | and Chief Investment | | | | | | | | | | | | | | |
| Officer - Value Portfolios | | | | | | | | | | | | | | | Officer - Value Portfolios | | | | | | | | | | | | | | |
* As described in the Compensation Discussion and Analysis herein.