(j) Mr. Van der Eb’s all other compensation for 20172019 and 2016 consists of $30,000, and $25,000, respectively, for allocation of fees received by Mr. Gabelli for creating and acting as portfolio manager of several open-end Gabelli Funds, as described in the “Variable Compensation” section of the Compensation and Discussion Analysis and in footnote (c) above and for 2018 2017, and 2016 also consists of Variable Compensation (as defined in note (d)) of $115,281 and $158,571, $161,726, and $155,382, respectively.
(k) | On December 29, 2017, the Company issued $11,673,571 million of promissory notes payable to certain executive officers and employees relating to compensation earned in 2017. $5,506,592 million of the notes were due on January 31, 2018 and $6,166,979 million were due on February 28, 2018, and all amounts were paid in full on those respective dates. These named executive officers were issued such promissory notes in the following amounts: $6,166,979 to Mr. Gabelli, $1,071,510 to Mr. Jamieson, $293,455 to Mr. Handwerker, $267,678 to Mr. Caterina, $252,120 to Ms. LaPointe, $602,547 to Ms. Mullady, and $94,545 to Mr. Alpert. |
Grants of Plan-Based Awards for 2018
The following table (the “Grants of Plan-Based Awards”) shows all plan-based awards granted to our named executives during the fiscal year ended December 31, 2018.2019.
| | | | |
| | All Other Stock Awards: | | | All Other Stock Awards: | |
| | Number of Shares of Stock Or Units | Grant Date Fair Value of Stock Awards ($) (a) | | Number of Shares of Stock Or Units | Grant Date Fair Value of Stock Awards ($) (a) |
Mario J. Gabelli (b) | -0- | -0- | -0- | -0- | -0- | -0- |
Douglas R. Jamieson | 4/4/2018 8/7/2018 | 5,000 15,000 | 123,850 377,400 | 6/30/2019 | 10,000 | 191,700 |
Kevin Handwerker | 4/4/2018 8/7/2018 | 2,500 5,500 | 61,925 138,380 | 6/30/2019 | 3,500 | 67,095 |
Kieran Caterina | 4/4/2018 8/7/2018 | 4,000 5,000 | 99,080 125,800 | 6/30/2019 | 5,000 | 95,850 |
Diane M. LaPointe | 4/4/2018 8/7/2018 | 4,000 5,000 | 99,080 125,800 | |
Agnes Mullady | 4/4/2018 8/7/2018 | 4,000 6,000 | 99,080 150,960 | 6/30/2019 | 6,000 | 115,020 |
Bruce Alpert | 4/4/2018 | 3,000 | 74,310 | |
Henry Van der Eb | 4/4/2018 | 1,000 | 24,770 | 6/30/2019 | 1,000 | 19,170 |
| | | | |
(a) | In accordance with the SEC’s disclosure rules, the amounts reported in this table reflect the fair value on the effective grant date of the stock awards, determined in accordance with FASB ASC Topic 718, granted to the named executive officersexecutives during 2018.2019. |
(b) | Mr. Gabelli has never received either stock options awards or restricted stock awardsRSAs from the Company. He recommends the grant of stock awards for corporate team membersteammates to the Compensation Committee, as described in the Compensation Discussion and Analysis above. He has received restricted stock unitsRSUs which are described in detail under Employment Agreements in the next section. |
(c) The 2018 amounts reported in the above table exclude Associated Capital phantom restricted stock awards granted in 2018 to Mr. Jamieson and Mr. Handwerker for services rendered to Associated Capital pursuant to the Transition Services Agreement in their roles as named executive officers of that company and also exclude Associated Capital phantom restricted stock awards granted in 2018 to Ms. Mullady for services rendered to Associated Capital pursuant to the Transition Services Agreement.
Employment Agreements.Mr. Gabelli is currently the only named executive who has an employment agreement with the Company.
Mario J. Gabelli.Gabelli On, on February 6, 2008, Mr. Gabelli entered into the Amended Employment Agreement with the Company, which was approved by the Company’s shareholders on November 30, 2007 and which limits his activities outside of the Company. The Amended Employment Agreement hashad a three-year initial term with an automatic extension for an additional year on each anniversary of its effective date unless either party gives written notice of termination at least 90 days in advance of the expiration date. The Amended Employment Agreement allows Mr. Gabelli to perform investment management services for former subsidiaries that are spun offspun-off to shareholders or otherwise cease to be subsidiaries in similar transactions and permits new investors in the outside accounts if all of the performance fees, less expenses, generated by assets attributable to such investors are paid to the Company. The Amended Employment Agreement was last submitted to, and re-approved by, the Company’s shareholders at the Annual Meeting of Shareholders held on May 5, 2015.2015 and pursuant to Proposal Number 4 the Amended Employment Agreement is being submitted to the Company’s shareholders for re-approval.
Mr. Gabelli (or, at his option, his designee) receives an incentive-based management fee in the amount of 10% of our aggregate annual pre-tax profits, if any, as computed for financial reporting purposes in accordance with U.S. generally accepted accounting principlesGAAP (before consideration of this fee) so long as he is an executive of the Company and devotes the substantial majority of his working time to our business. This incentive-based management fee is subject to the Compensation Committee’s review at least annually for compliance with the terms of the Amended Employment Agreement. The Amended Employment Agreement may not be amended without the approval of the Compensation Committee and Mr. Gabelli.
Mr. Gabelli was, however, not paid any cash compensation during 2016, duringreceived no base salary, no bonus, no stock option awards, and no RSAs in 2019, as has been the period January 1, 2017 to June 30, 2017, or during the period October 1, 2017 to December 31, 2017 due to the three restricted stock unit agreements that were entered into with respect to the compensationcase for those periods. Furthermore, as disclosedeach year since our IPO in a press release issued by the Company on February 23, 2018,1999. Mr. Gabelli elected to waive all of his compensation that he would otherwise have been entitled to receive under his employment agreementAmended Employment Agreement for the periodperiods March 1, 2018 to December 31, 2018.2018 (as disclosed in a press release issued by the Company on February 23, 2018), January 1, 2019 to March 31, 2019 (as disclosed in a press release issued by the Company on December 26, 2018), and September 1, 2019 to November 30, 2019 (as disclosed in a current report on Form 8-K filed with the SEC on August 29, 2019). All of the compensation earned and not waived by Mr. Gabelli in 2019 and 2018 was incentive-based variable compensation that was calculated in accordance with Mr. Gabelli’s Amended Employment Agreement, which revised his 1999 employment agreement.
On
Mr. Gabelli’s compensation for 2016 and 2017 was also calculated in accordance with his Amended Employment Agreement and was further subject to the terms of RSU agreements through which he deferred cash compensation during 2016, First Half 2017, or Fourth Quarter 2017. He was, therefore, not paid any cash compensation during 2016, First Half 2017, or Fourth Quarter 2017 and such deferred cash compensation, as adjusted, was paid in 2018, 2019, or 2020 as described below.
As described in the Company’s 2017 proxy statement, on December 21, 2015, the Company entered into a restricted stock unit agreementthe 2016 RSU Agreement with Mr. Gabelli, the Company’s Chief Executive Officer, pursuant to which the Company determined to award Mr. Gabelli’s Variable Compensation generatedany variable compensation earned by him in fiscal 2016 would be awarded in the form of RSUs under the Plan. Under the 2016 RSU Agreement, the number ofCompany issued 2,314,695 RSUs, granted was calculated by dividingbased upon 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 shareVWAP of the Company’s Class A stock asStock for 2016 of such date, or if applicable, as$32.8187, in satisfaction of such earlier date upon whichMr. Gabelli’s variable compensation of $76.0 million for 2016. These RSUs vested 100% on January 2, 2020, and a cash payment in the restrictions otherwise lapse, multipliedamount of $43.7 million was made to the CEO. This payment was reduced by (ii)$32.3 million resulting from the number of RSUs with respectbeing indexed to which the restrictions have lapsed, or (y) $75,965,266 which is the volume-weighted average price per share of the Company’s Class A stock forStock price and utilizing the lesser of the VWAP on the vesting date ($18.8812) versus the VWAP over 2016 fiscal year and is equivalent to Mr. Gabelli’s variable compensation for that period. 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.($32.8187).
OnAs also described in the Company’s 2017 proxy statement, on December 23, 2016, the Company entered into a second restricted stock unit agreementthe First Half 2017 RSU Agreement with Mr. Gabelli, pursuant to which any variable compensation earned by him during the Company determined to award Mr. Gabelli’s Variable Compensation generated in first half of fiscalFirst Half 2017 would be awarded in the form of RSUsRSU’s under the Plan. Under the First Half 2017 RSU Agreement, the number ofCompany issued 1,244,018 RSUs, granted was calculated by dividingbased upon the Variable Compensation generated in period from January 1, 2017 to 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 that six month period. That agreement capped the payment based on terms that stipulated that the amount due, if settled in cash, was equal to (i) the lesser of (x) the value (as defined in the First Half 2017 RSU Agreement) per shareVWAP of the Company’s Class A stock as ofStock for 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 First Half 2017 as calculatedof $29.6596, in accordance with the agreement, multiplied by (ii) the numbersatisfaction of Mr. Gabelli’s variable compensation of $36.9 million for that period. These RSUs with respect to which the restrictions have lapsed. On May 23, 2018, Mr. Gabelli waived his right to receive $6 million of the total that would otherwise have been payable to himvested 100% on the vesting date of these First Half 2017 RSUs. On July 2, 2018, the remaining obligation was marked to market in accordance with the prescribed settlement value under (i), vested in accordance with the agreement terms, and a cash payment in the amount of $28.3 million was made to the CEO. If such This payment was after a waiver of $6.0 million by the CEO and a reduction of $2.6 million resulting from the RSUs had been settled in shares ofbeing indexed to the Company’s Class A Stock Mr. Gabelli would have received 1,041,723 sharesprice and utilizing the lesser of Class A Stock under the Plan, and accordingly, such shares were previously reserved for issuance underVWAP on the Plan. These shares, together withvesting date ($27.1837) versus the 202,295 shares that he waived his right to receive, which aggregate to 1,244,018 sharesVWAP over the First Half 2017 ($29.6596).
As described in total, are now available for future Plan-based awards.
Onthe Company’s 2018 proxy statement, on September 30, 2017, the Company entered into a third restricted stock unit agreementthe Fourth Quarter 2017 RSU Agreement with Mr. Gabelli, pursuant to which any variable compensation earned by him during the Company determined to award Mr. Gabelli’s Variable Compensation generated in fourth quarter of fiscalFourth Quarter 2017 would be awarded in the form of RSUsRSU’s under the Plan. Under the Fourth Quarter 2017 RSU Agreement, the number ofCompany issued 530,662 RSUs, granted was calculated by dividingbased upon the Variable Compensation generated in period from October 1, 2017 to December 31, 2017 by the volume-weighted average price (as defined in the Fourth Quarter 2017 RSU Agreement) per share of the Class A Stock for that three month period. That agreement capped the payment based on terms that stipulated that the amount due, if settled in cash, was equal to (i) the lesser of (x) the value (as defined in the Fourth Quarter 2017 RSU Agreement) per shareVWAP of the Company’s Class A stock asStock for the Fourth Quarter 2017 of $29.1875, in satisfaction of Mr. Gabelli’s variable compensation of $15.5 million for that period. These RSUs vested 100% on April 1, 2019, and a cash payment in the vesting date, or if applicable, asamount of such earlier date upon which$11.0 million was made to the restrictions otherwise lapse, or (y)CEO. This payment was reduced by $4.5 million resulting from the volume-weighted average price per share ofRSUs being indexed to the Company’s Class A stock forStock price and utilizing the lesser of the VWAP on the vesting date ($20.7916) versus the VWAP over the Fourth Quarter 2017 as calculated in accordance with the agreement, multiplied by (ii) the number of RSUs with respect to which the restrictions have lapsed. ($29.1875).
25On April 1, 2019, the remaining obligation was marked to market in accordance with the prescribed settlement value under (i) and vested in accordance with the agreement terms.
In accordance with the Amended Employment Agreement, Mr. Gabelli chose to allocate $875,000, $1,394,000,$1,510,000 and $2,205,000$875,000 of his management fee to certain other professional staff members of the Companyteammates in 2019 and 2018, 2017 and 2016, respectively. He also elected to waive receipt of $194,744 of his management fee in 2016.
Furthermore, as disclosed in a press release issued by the Company on December 26, 2018, Mr. Gabelli has elected to waive all of his compensation that he would otherwise have been entitled to receive under his employment agreement for the period January 1, 2019 to March 31, 2019.
Mr. Gabelli earned (after allocations and waiver) the following incentive-based management fees during the past five years:
| | | | | | | |
Management Fee ($ in millions) | 14.4 | 12.8 | 16.5 | 13.3 | 1.8 | 5.4 | 1.8 |
* The management fee for 2018 is only for the period from January 1, 2018 to February 28, 2018 due to Mr. Gabelli’s decision to waive compensation for the period March 1, 2018 to December 31, 2018. The management fee for 2017 and 2016 excludes $0.7 and $1.1 million, respectively, earned from Associated Capital. In addition, the management fee for the First Half and Fourth Quarter of 2017 and for all of 2016 is subject to the RSU agreements described above. The management fee for 2015 excludes $0.2 million earned from Associated Capital in December 2015 (post-spin). | | | | | |
* The management fee for 2019 is only for the period April 1, 2019 to August 31, 2019 and the month of December 2019 due to Mr. Gabelli’s decision to waive compensation for the periods January 1, 2019 to March 31, 2019 and September 1, 2019 to November 30, 2019 and excludes $5.2 million earned from AC. The management fee for 2018 is only for the period January 1, 2018 to February 28, 2018 due to Mr. Gabelli’s decision to waive compensation for the period March 1, 2018 to December 31, 2018. | | |
Consistent with the Company’s practice since its inception in 1977, Mr. Gabelli will, in periods where he does not waive compensation, also continue receiving a percentage of revenues or net operating contribution, which are substantially derived from assets under management,AUM, as compensation relating to or generated by the following activities: (i) managing or overseeing the management of various investment companies and partnerships, (ii) attracting mutual fundFund shareholders, (iii) attracting and managing separate accounts and alternative funds, and (iv) otherwise generating revenues for the Company. Such payments are made in a manner and at rates as agreed to from time to time by GAMCO, which rates have been and generally will be the same as those received by other professionals at GAMCO performing similar services. With respect to our institutional and high net worth assetprivate wealth management and mutual fund advisory business, we pay out up to 40% of the revenues or net operating contribution to the portfolio managers and marketing staffteammates who introduce, service, or generate such business, with (i) payments involving the separate accounts being typically based on revenues and (ii) payments involving the mutual fundsFunds being typically based on net operating contribution.
In accordance with the terms of his Amended Employment Agreement, Mr. Gabelli has agreed that while he is employed by us he will not provide investment management services outside of GAMCO, except for certain permitted accounts or except for services to be performed for former subsidiaries that are spun offspun-off from the Company. During 2019 and 2018, Mr. Gabelli served as a portfolio manager for various privately offered funds.
Outstanding Equity Awards at December 31, 20182019
The following table summarizes the number of securities underlying outstanding equity awards for the named executives as of December 31, 2018.2019.
| Number of Securities Underlying Unexercised Options at | Option Exercise | Option Expiration | Number of Unvested Restricted Stock Awards and | Market Value of Unvested Restricted Stock Awards and Restricted Stock Units |
| | | | | | |
Mario J. Gabelli | -0- | -0- | N/A | N/A | 2,845,357 | (a) | 48,058,080 | (a) |
Douglas R. Jamieson | -0- | -0- | N/A | N/A | 20,000 | (c) | 337,800 | (b) |
Kevin Handwerker | -0- | -0- | N/A | N/A | 8,000 | (d) | 135,120 | (b) |
Kieran Caterina | -0- | -0- | N/A | N/A | 9,000 | (e) | 152,010 | (b) |
Diane M. LaPointe | -0- | -0- | N/A | N/A | 9,000 | (f) | 152,010 | (b) |
Agnes Mullady | -0- | -0- | N/A | N/A | 10,000 | (g) | 168,900 | (b) |
Bruce Alpert | -0- | -0- | N/A | N/A | 3,000 | (h) | 50,670 | (b) |
Henry Van der Eb | -0- | -0- | N/A | N/A | 1,000 | (i) | 16,890 | (b) |
| Number of Securities Underlying Unexercised Options at | Option Exercise | Option Expiration | Number of Unvested RSAs and | Market Value of Unvested RSAs and RSUs (GAMCO) |
| | | | | | |
Mario J. Gabelli | -0- | -0- | N/A | N/A | 2,314,695 | (a) | 45,113,406 | (a) |
Douglas R. Jamieson | -0- | -0- | N/A | N/A | 30,000 | (c) | 584,700 | (b) |
Kevin Handwerker | -0- | -0- | N/A | N/A | 11,500 | (d) | 224,135 | (b) |
Kieran Caterina | -0- | -0- | N/A | N/A | 14,000 | (e) | 272,860 | (b) |
Diane M. LaPointe | -0- | -0- | N/A | N/A | -0- | (f) | -0- | |
Agnes Mullady | -0- | -0- | N/A | N/A | 16,000 | (g) | 311,840 | (b) |
Bruce Alpert | -0- | -0- | N/A | N/A | 3,000 | (h) | 58,470 | (b) |
Henry Van der Eb | -0- | -0- | N/A | N/A | 2,000 | (i) | 38,980 | (b) |
(a) | As discussed under Employment Agreements on pages 2325 to 25,26, the Company entered into three restricted stock unitRSU agreements with Mr. Gabelli. Only twoone of these remainremained outstanding at December 31, 20182019, as one wastwo were settled in accordance with the terms of the agreementRSU agreements when it vested on July 2, 2018 and April 1, 2018. Although the Company intends to make a cash payment for these awards, and those cash payments can differ from the market value of the Class A Stock on the above table or the market value on the vesting dates due to the terms described on page 24, the2019. The above table reflects the market value of the outstanding unvested GAMCO restricted stock unitsRSUs for Mr. Gabelli determined with reference to the $16.89$19.49 per share closing price of GAMCO’s Class A Stock on December 31, 2018. The Company at its discretion can settle the awards, in whole or in part, in stock notwithstanding its current cash settlement intention. The first award of 2,314,695 units vests2019. Such remaining RSU agreement vested 100% on January 1,2, 2020, and if settleda cash payment in cash, will be atthe amount of $43.7 million was made to the CEO. This payment was reduced by $32.3 million resulting from the RSUs being indexed to the Company’s Class A Stock price and utilizing the lesser of $32.8187 per share or the VWAP price of GAMCO’s Class A stock on the vesting date. The other award of 530,662 units vested on April 1, 2019.date ($18.8812) versus the VWAP over 2016 ($32.8187). |
(b) | The market value of the outstanding unvested GAMCO restricted stock awardsRSAs on the above table is determined with reference to the $16.89$19.49 per share closing price of GAMCO’s Class A Stock on December 31, 2018.2019. |
(c) | Mr. Jamieson’s restricted stock awardsRSAs will vest on April 4, 2021 and 2023 as to 30% and 70%, respectively, of 5,000 shares,shares; on August 7, 2021 and 2023 as to 30% and 70%, respectively, of 15,000 shares,shares; and on April 4, 2023June 30, 2022 and 2025 as to 30% and 70%, respectively, of 5,000 shares, and on August 7, 2023 as to 70% of 15,00010,000 shares in accordance with the terms of his restricted stock awardRSA agreements. |
(d) | Mr. Handwerker’s restricted stock awardsRSAs will vest on April 4, 2021 and 2023 as to 30% and 70%, respectively, of 2,500 shares,shares; on August 7, 2021 and 2023 as to 30% and 70%, respectively, of 5,500 shares,shares; and on April 4, 2023June 30, 2022 and 2025 as to 30% and 70%, respectively, of 2,500 shares, and on August 7, 2023 as to 70% of 5,5003,500 shares in accordance with the terms of his restricted stock awardRSA agreements. |
(e) | Mr. Caterina’s restricted stock awardsRSAs will vest on April 4, 2021 and 2023 as to 30% and 70%, respectively, of 4,000 shares,shares; on August 7, 2021 and 2023 as to 30% and 70%, respectively, of 5,000 shares,shares; and on April 4, 2023June 30, 2022 and 2025 as to 70% of 4,000 shares,30% and on August 7, 2023 as to 70%, respectively, of 5,000 shares in accordance with the terms of his restricted stock awardRSA agreements. |
(f) | Ms. LaPointe’s restricted stock awards will vestRSAs granted on April 4, 2021 as to 30% of 4,000 shares, on2018 and August 7, 2021 as to 30% of 5,000 shares, on April 4, 2023 as to 70% of 4,000 shares, and on August 7, 2023 as to 70% of 5,000 shares,2018 were forfeited in accordance with the terms of her restricted stock award agreements.RSA agreements upon leaving GAMCO effective June 5, 2019. |
(g) | Ms. Mullady’s restricted stock awardsRSAs will vest on April 4, 2021 and 2023 as to 30% and 70%, respectively, of 4,000 shares,shares; on August 7, 2021 and 2023 as to 30% and 70%, respectively, of 6,000 shares,shares; and on April 4, 2023June 30, 2022 and 2025 as to 70% of 4,000 shares,30% and on August 7, 2023 as to 70%, respectively, of 6,000 shares in accordance with the terms of her restricted stock awardRSA agreements. |
(h) Mr. Alpert’s RSAs will vest on April 4, 2021 and 2023 as to 30% and 70%, respectively, of 3,000 shares in accordance with the terms of his RSA agreements.
(h)(i) | Mr. Alpert’s restricted stock awardsVan der Eb’s RSAs will vest on April 4, 2021 and 2023 as to 30% of 3,000 shares and on April 4, 2023 as to 70% of 3,000 shares, in accordance with the terms of his restricted stock award agreements. |
(i) | Mr. Van der Eb’s restricted stock awards will vest on April 4, 2021 as to 30%, respectively, of 1,000 shares and on April 4, 2023June 30, 2022 and 2025 as to 30% and 70%, respectively, of 1,000 shares in accordance with the terms of his restricted stock awardRSA agreements. |
Options Exercises, Restricted StockRSAs Vested, and Restricted Stock UnitsRSUs Vested for 20182019
The following table summarizes stock options exercised by and restricted stock awards and restricted stock unitsRSUs which vested for the named executives during 2018.2019. There were no stock options exercised by or RSAs which vested for the named executives during 2019.
| Option awards | Restricted stock awards | |
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($) | |
Mario J. Gabelli | -0- | -0- | -0- | -0- | |
Douglas R. Jamieson | -0- | -0- | 5,000 | 156,380 | (a) |
Kevin Handwerker | -0- | -0- | 700 | 21,491 | (a) |
Kieran Caterina | -0- | -0- | -0- | -0- | |
Diane M. LaPointe | -0- | -0- | -0- | -0- | |
Agnes Mullady | -0- | -0- | 13,700 | 426,510 | (a) |
Bruce Alpert | -0- | -0- | -0- | -0- | |
Henry Van der Eb | -0- | -0- | -0- | -0- | |
| | RSUs | | |
Name | | Number of shares acquired on vesting (#) | | | Value realized on vesting ($) | | |
Mario J. Gabelli | | | -0- | | | $ | 11,033,320 | | (a) |
| | | | | | | | | |
(a) | On January 5, 2018,As discussed under Employment Agreements on pages 25 to 26, the Compensation CommitteeCompany entered into the Fourth Quarter 2017 RSU Agreement with Mr. Gabelli in satisfaction of GAMCO’s BoardMr. Gabelli’s variable compensation of Directors approved$15.5 million for the accelerated vestingFourth Quarter 2017. These 530,662 RSUs vested 100% on January 12, 2018April 1, 2019, and a cash payment in the amount of $11.0 million was made to the CEO. This payment was reduced by $4.5 million resulting from the RSUs being indexed to the Company’s Class A Stock price and utilizing the lesser of the remaining total 19,400 outstanding GAMCO RSAs held on that date by Mr. Jamieson, Mr. Handwerker, and Ms. Mullady. The table amounts include $6,680, $532, and $16,332 paymentVWAP on the vesting date of accumulated cash dividends on these RSAs for Mr. Jamieson, Mr. Handwerker, and Ms. Mullady, respectively.($20.7916) versus the VWAP over the Fourth Quarter 2017 ($29.1875). |
Nonqualified Deferred Compensation Table for 20182019
There was no nonqualified deferred compensation payable to the named executives during 2018.2019.
Pension Benefits for 20182019
| There were no pension benefit plans for any of the named executives during 2018.2019. |
Potential Payments Upon Termination of Employment or Change-of-Control.
Upon a change-of-control of the Company, Mr. Gabelli’s deferred compensation in cash or RSUs, if any (none are currently outstanding), and all RSAs held by the other named executives (if still employed by the Company at such time) automatically vest, and the accumulated but unpaid dividends associated with the RSAs would become immediately payable. There arewere no accumulated dividends associated with the RSUs.
The following table sets forth information on the value of GAMCO RSUs and RSAs held on December 31, 20182019 and the accumulated but unpaid dividends on the RSAs through December 31, 2018,2019, which would have been payable had a change-of-control occurred on that date. The price per share assumed is $16.89,$19.49, which was the closing price of Class A Stock on December 31, 2018.2019.
| | | | | | | | | | |
| | | | | | | | | | |
| | Fair Value of Unvested GBL RSAs and RSUs at December 31, 2018 | | | Accumulated but Unpaid Dividends on These RSAs at December 31, 2018 | | | | | | Fair Value of Unvested GBL RSAs and RSUs at December 31, 2019 | | | Accumulated but Unpaid Dividends on these RSAs at December 31, 2019 | | | | |
Mario J. Gabelli | | $ | 48,058,080(a | ) | | $ | -0- | | | $ | 48,058,080(a | ) | | $ | 45,113,406(a | ) | | $ | -0- | | | $ | 45,113,406(a | ) |
Douglas R. Jamieson | | | 337,800 | | | | 900 | | | | 338,700 | | | 584,700 | | | 2,900 | | | 587,600 | |
Kevin Handwerker | | | 135,120 | | | | 370 | | | | 135,490 | | | 224,135 | | | 1,150 | | | 225,285 | |
Kieran Caterina | | | 152,010 | | | | 440 | | | | 152,450 | | | 272,860 | | | 1,360 | | | 274,220 | |
Diane M. LaPointe | | | 152,010 | | | | 440 | | | | 152,450 | | | -0- | | | -0- | | | -0- | |
Agnes Mullady | | | 168,900 | | | | 480 | | | | 169,380 | | | 311,840 | | | 1,520 | | | 313,360 | |
Bruce Alpert | | | 50,670 | | | | 180 | | | | 50,850 | | | 58,470 | | | 420 | | | 58,890 | |
Henry Van der Eb | | | 16,890 | | | | 60 | | | | 16,950 | | | | 38,980 | | | | 180 | | | | 39,160 | |
Total | | $ | 49,071,480 | | | $ | 2,870 | | | $ | 49,074,350 | | | $ | 46,604,391 | | | $ | 2,870 | | | $ | 46,611,921 | |
(a) | As discussed under Employment Agreements on pages 25 to 26, the Company entered into three RSU agreements with Mr. Gabelli was granted RSUsGabelli. Only one of these remained outstanding at December 31, 2019, as deferred compensation in lieu of cash compensation during both 2016 and 2017. All of the compensation earned by Mr. Gabelli in 2016 and 2017 was incentive-based variable compensation that was calculatedtwo were settled in accordance with Mr. Gabelli’s Amended Employment Agreement. Mr. Gabelli was, however, not paid any cash compensation during 2016 nor during the first half or fourth quarter of 2017. Although it is the Company’s intent to settle these awards and those cash payments can differ from the market valueterms of the Class A StockRSU agreements when vested on the vesting dates due to the terms described on page 24, theJuly 2, 2018 and April 1, 2019. The above table reflects the market value of the outstanding unvested GAMCO restricted stock unitsRSUs for Mr. Gabelli determined with reference to the $16.89$19.49 per share closing price of GAMCO’s Class A Stock on December 31, 2018. The Company at its discretion can settle2019. Such remaining RSU agreement vested 100% on January 2, 2020, and a cash payment in the awards, in whole or in part, in stock notwithstanding its current cash settlement intention. Also see note (a) regarding outstanding equity awardsamount of $43.7 million was made to the CEO. This payment was reduced by $32.3 million resulting from the RSUs being indexed to the Company’s Class A Stock price and utilizing the lesser of the VWAP on pages 25 to 26 for further discussion of Mr. Gabelli’s RSU awards.the vesting date ($18.8812) versus the VWAP over 2016 ($32.8187). |
CEO PAY RATIO
As a result of rules adopted underSmaller reporting companies are not required to provide the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted a rule requiring us to disclose ininformation required by this proxy statement the ratio of the annual total compensation of Mr. Gabelli, our Chairman and CEO, to the median of the annual total compensation of all of our employees (excluding Mr. Gabelli). We determined that Mr. Gabelli’s 2018 annual total compensation was $10,660,345 (as further described in the Summary Compensation Table set forth above), the median of the 2018 annual total compensation of all of our employees (excluding Mr. Gabelli) was $179,860, and the ratio of these amounts was 59 to 1.
To identify the “median employee” for purposes of this disclosure (i.e., the individual employee whose compensation was at the median level among our entire employee group), we used a determination date of December 31, 2018 and analyzed, for all of the individuals employed by us or any of our consolidated subsidiaries on that date, the compensation that we paid to each of those individuals for the 12-month period ending on that date. We considered each employee’s “compensation” to consist of the employee’s total gross earnings for the 12-month period ending December 31, 2018, including base salary, bonus, variable compensation, and the fair value of stock awards vested under the Plan. The compensation for employees, other than temporary employees, who were not employed by us for the entire 12-month period ending December 31, 2018 was annualized to reflect compensation for the entire 12-month period.
The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.item.
CERTAIN OWNERSHIP OF OUR STOCK
The following table sets forth, as of March 1, 2019,3, 2020, certain information with respect to all persons known to us who beneficially own more than 5% of the Class A Stock or Class B Stock. The table also sets forth information with respect to stock ownership of the directors, nominees, each of the executive officers named in the Summary Compensation Table, and all directors and executive officers as a group. The number of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which a person has the sole or shared voting or investment power and any shares which the person can acquire within 60 days (e.g., through the exercise of stock options). Except as otherwise indicated, the shareholders listed in the table have sole voting and investment power with respect to the shares set forth in the table.
Name of Beneficial Owner* | | | | Number of Shares Acquirable within 60 days | | | | | | Number of Shares Acquirable within 60 days | | |
5% or More Shareholders | | | | | | | | | | | | |
The Frederick J. Mancheski Revocable Trust Indenture, dated June 8, 1999, as amended | Class A | 1,136,704 | (1) | -0- | | 11.50 | |
The Vanguard Group
| | Class A | 517,089 | (1) | -0- | | 6.23 |
BlackRock, Inc.
| Class A | 598,177 | (2) | -0- | | 6.05 | Class A | 479,697 | (2) | -0- | | 5.78 |
| | | | | | | |
| | | | | | | | | | | | |
Directors and Executive Officers | | | | | | | | | | | | |
Mario J. Gabelli | Class A | 3,035,004 | (3) | -0- | | 30.7 | Class A | 2,965,049 | (3) | -0- | | 35.71 |
| Class B | 18,767,036 | (4) | -0- | | 98.65 | Class B | 18,767,036 | (4) | -0- | | 98.65 |
Douglas R. Jamieson | Class A | 32,539 | (5) | -0- | | ** | Class A | 39,259 | (5) | -0- | | ** |
| Class B | 29,471 | | -0- | | ** | Class B | 29,471 | | -0- | | ** |
Kevin Handwerker | Class A | 8,404 | | -0- | | ** | Class A | 11,904 | | -0- | | ** |
Kieran Caterina | Class A | 11,000 | | -0- | | ** | Class A | 16,000 | | -0- | | ** |
Diane M. LaPointe | Class A | 9,000 | | -0- | | ** | |
Agnes Mullady | Class A | 31,939 | | -0- | | ** | |
Bruce Alpert | Class A | 12,119 | | -0- | | ** | Class A | 12,119 | | -0- | | ** |
| Class B | 1,720 | | -0- | | ** | Class B | 1,720 | | -0- | | ** |
Henry Van der Eb | Class A | 1,000 | | -0- | | ** | Class A | 2,000 | | -0- | | ** |
| | | | | | | | | | | | |
Edwin L. Artzt | Class A | 3,000 | | -0- | | ** | Class A | 3,000 | | -0- | | ** |
Raymond C. Avansino, Jr. | Class A | 211,500 | (6) | -0- | | 2.14 | Class A | 141,500 | (6) | -0- | | 1.70 |
Leslie B. Daniels
| Class A | -0- | | -0- | | ** | Class A | 10,000 | | -0- | | ** |
Eugene R. McGrath | Class A | 12,455 | (7) | -0- | | ** | Class A | 12,455 | (7) | -0- | | ** |
Robert S. Prather, Jr. | Class A | 10,010 | | -0- | | ** | Class A | 10,010 | | -0- | | ** |
Elisa M. Wilson | Class A | 3,500 | | -0- | | ** | Class A | -0- | | -0- | | ** |
| Class B | 15,808 | | -0- | | ** | Class B | 23,808 | | -0- | | ** |
All Directors & Executive Officers as a Group (14 persons) | Class A | 3,381,470 | | -0- | | 34.20 | |
All Directors & Executive Officers as a Group (12 persons) | | Class A | 3,223,296 | | -0- | | 38.82 |
| Class B | 18,814,305 | | -0- | | 98.90 | Class B | 18,822,035 | | -0- | | 98.94 |
(*) | The address of each beneficial owner of more than 5% of the Class A Stock or Class B Stock is as follows: The Frederick J. Mancheski Revocable Trust Indenture, dated June 8, 1999 as amended, c/o Philip M. Halpern, Esq.Vanguard Group, 100 Vanguard Blvd., Collier, Halpern, One North Lexington Avenue, 15th Floor, White Plains, New York 10601;Malvern, PA 19355; BlackRock, Inc., 55 East 52nd Street, New York, NY 10055; and Mario J. Gabelli, GAMCO Investors, Inc., 140 Greenwich Avenue,191 Mason Street, Greenwich, CT 06830. |
(**) | Represents beneficial ownership of less than 1%.
Pursuant to a resolution approved by the Board, as of February 26, 2019,March 3, 2020, there are 599,943 shares of the Class B Stock that may be converted into Class A Stock. |
(1) | As reported in Initial Schedule 13G that was filed with the SEC by The Frederick J. Mancheski Revocable Trust Indenture, dated June 8, 1999, as amendedVanguard Group on January 22, 2019.February 11, 2020. |
(2) | As reported in Initial Schedule 13G that was filed with the SEC by BlackRock, Inc. on February 8, 2019.7, 2020. |
(3) | Of this amount, 2,0008,642 are owned directly by Mr. Gabelli, 16,50321,006 shares are held by GGCP, 816,501 shares are held by Gabelli & Company Investment Advisers, Inc.GCIA, and 2,200,0002,118,900 shares held by Associated Capital Group, Inc.AC. Mr. Gabelli has voting and dispositive control of these shares. |
(4) | Of this amount, 453,295 are owned directly by Mr. Gabelli and 18,313,741 of these shares are owned by Holdings via GGCP. Mr. Gabelli may be deemed to have beneficial ownership of the Class B Stock held by Holdings on the basis of (i) his position as the Chief Executive OfficerCEO of, a director of, and the controlling shareholder of GGCP which is the manager and the majority member of Holdings, and (ii) a certain profit interest in Holdings. Mr. Gabelli disclaims beneficial ownership of the shares owned by Holdings except to the extent of his pecuniary interest therein. |
(5) | Includes 820 shares for which Mr. Jamieson is the Uniform Gift to Minors Act Custodian for his minor child’s account and 3,280 shares held by four of his children who have reached the age of legal majority but who continue to reside in Mr. Jamieson’s household.account. Mr. Jamieson has voting and dispositive control of these shares. |
(6) | These shares are owned by three entities for which Mr. Avansino serves as a director, officer, or trustee. Mr. Avansino disclaims beneficial ownership of these shares. |
(7) | Includes 2,350 shares held by a trust for which Mr. McGrath is a trustee and has shared voting and dispositive power with respect to these shares with his spouse. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of filings made under Section 16(a) of the Securities Exchange Act of 1934, we believe that our directors and executive officers and our shareholders who own 10% or more of our Class A Stock or Class B Stock have complied with the requirements of Section 16(a) of the Securities Exchange Act of 1934 to report ownership, and transactions which change ownership, on time for 2018, except for two Form 4 filings reporting a single transaction occurring on March 5, 2018 by each of Raymond Avansino and Eugene R. McGrath which were not filed on a timely basis.
2019.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GGCP, through Holdings, owns a majority of our Class B Stock representing approximately 91%92% of the combined voting power and approximately 63%67% of the outstanding shares of our common stock atas of December 31, 2018.2019. Mr. Mario Gabelli serves as the Chief Executive Officer,CEO, a director, and is the controlling shareholder of GGCP. Various family members of Mr. Mario Gabelli are shareholders of GGCP, including Mr. Marc Gabelli and Ms. Wilson. Mr. Marc Gabelli serves as President and Managing Director of GGCP.
AC and its subsidiaries owned approximately 3.02.9 million shares of our Class A Stock, representing approximately 2%1% of the combined voting power and 10%11% of the outstanding shares of our Class A common stockStock at December 31, 2018. On March 5, 2018,2019. AC completed an exchange offer with respect to its Class A common stock. Tendering shareholders received 1.35 shares of GBL Class A common stock for each share of AC Class A common stock that they tendered, together with cash in lieu of any fractional share. There were approximately 490,000 shares of AC Class A common stock tendered and acceptedis majority-owned by AC. AC delivered approximately 660,000 shares of GBL Class A common stock that they held to the tendering shareholders. On October 29, 2018, AC completed an exchange offer with respect to its Class A common stock. Tendering shareholders received 1.9 shares of GBL Class A common stock for each share of AC Class A common stock that they tendered, together with cash in lieu of any fractional share. There were approximately 370,000 shares of AC Class A common stock tendered and accepted by AC. AC delivered approximately 710,000 shares of GBL Class A common stock that they held to the tendering shareholders.Holdings.
For 2018,2019, the Company incurred variable costs of $294,705$317,391 for actual usage (but not the fixed costs) relating to our use of aircraft in which GGCP owns the fractional interests.
Since 1997, we have leased an approximately 60,000 square foot building located at 401 Theodore Fremd Avenue,One Corporate Center, Rye, New York as one of our two headquarters (the “Building”) from M4E,M4E, an entity that is owned by family members of Mr. Mario Gabelli, including Ms. Wilson. Under the lease for the Building, which, on June 11, 2013, was extended to December 31, 2028 with no change to the base rental of $18 per square foot, we are responsible for all operating expenses, costs of electricity, and other utilities and taxes. For 2018,2019, the rent was $1,229,857,$1,253,331, or $20.50$20.89 per square foot. As a member of M4E,M4E, Ms. Wilson is entitled to receive her pro-rata share of payments received by M4EM4E under the lease.
As of April 1, 2016, we leaseWe sub-lease approximately 15,00013,800 square feet in the Building to AC. We entered intoAC pays rent at the initial lease on April 1, 2016 for a one year term and extended the lease for an additional one year term on April 1, 2017. We entered into a new lease in February 2018 for an additional one year term which began on April 1, 2018 at abase rate of $36.71 per square foot plus $3 per square foot for electricity, subject to adjustment for increases in taxes and other operating expenses. Effective April 1, 2019, the lease is extended on a month-to-month basis. The total amount paid in 2018 for rent and other expenses under these leases was $463,286.
We sublease approximately 3,300 square feet in the Building to LICT, a company for which Mr. Mario Gabelli serves as Chairman and CEO and is deemed to be the controlling shareholder. LICT pays rent to us at the rate of $28$22.32 per square foot plus $3 per square foot for electricity, subject to adjustment for increases in taxes and other operating expenses. The total amount paid to us in 20182019 for rent and other expenses under this leasethese leases was $118,957. This sublease expires on December 5, 2023.$485,333.
We also sublease approximately 1,600 square feet in the Building to Teton, a company for which, since March 1, 2017, GAMCO serves as a subadvisor, and Mr. Gabelli serves as portfolio manager under that subadvisory agreement. Mr. Gabelli previously served as portfolio manager for Teton from 1998 to February 2017. Teton is an asset management company which was spun-off from the Company in March 2009. Teton pays rent to us at the rate of $37.75 per square foot plus $3 per square foot for electricity, subject to adjustment for increases in taxes and other operating expenses. The total amounts paid in 2018 to us for rent and other expenses under this lease were $69,299.
We lease 1,599 square feet of office space in Reno, Nevada from Miami Oil Producers, Inc., for which Mr. Avansino serves as the Chairman and President. We pay a base rent of $3,358 per month plus the cost of parking and subject to adjustment annually for changes in the consumer price index. We entered into the current lease on January 1, 2011 with a 3 year term and thereafter subject to an option to extend the term for a year at a time. We extended the term by one year on January 1, 2015 with it remaining subject to an option to extend the term for one year at a time. We further extended the term by one year each on January 1, 2016, January 1, 2017, and January 1, 2018 with it remaining subject to an option to extend the term for one year at a time. We are currently in negotiations to extend the term for an additional one year through December 31, 2019. For the period January 1, 2018 through December 31, 2018, the rent was $41,736, or $26.10 per square foot. In 2009, GAMCO entered into a sublease of a portion of this office space in Reno, Nevada to CIBL, Inc. (“CIBL”). Mr. Mario Gabelli is a director of CIBL, and an affiliate of Mr. Gabelli is its largest shareholder. Under the terms of the Reno sublease, the Company granted CIBL the right to use such part of GAMCO’s Reno office as the Company and CIBL shall from time to time agree. The sublease granted CIBL the right to use space in the Reno office until July 31, 2009 with an automatic renewal for one additional calendar year which extended the sublease until July 31, 2010. Since August 1, 2010, the space has been subleased on a month-to-month basis. For 2018, the rent for the Reno sublease was $6,000.
In addition to the sublease of space in the Building, we entered into a number of agreements in connection with the Company’s distribution of the shares of Class A and B common stock in Teton in March 2009. These agreements are as follows: a Separation and Distribution Agreement, an Administrative and Management Services Agreement (“Administrative(the “Administrative Agreement”), and Service Mark and Name License Agreement (the “License Agreement”). Pursuant to the Administrative Agreement, we provide certain services to Teton, including senior executive functions, strategic planning, and general corporate management services; mutual fund administration services; treasury services, including insurance and risk management services and administration of benefits; operational and general administrative assistance, including office space, office equipment, administrative personnel, payroll, and procurement services, as needed; accounting and related financial services; legal, regulatory, and compliance advice, including the retention of a Chief Compliance Officer; and human resources functions, including sourcing of permanent and temporary employees, as needed, recordkeeping, performance reviews, and terminations. Effective January 1, 2011, Teton and GBL renegotiated the Administrative Agreement was amended to be basedterms of the sub-administration agreement from a flat 0.20% on a tiered formula as opposed to a fixed rate. Under the amended agreement,average net assets of the Company is compensatedmutual funds managed by Teton 20 basis points annuallyto 0.20% on the first $370 million ofin average net assets, under management (“AUM”) in the Teton funds, 12 basis points annually0.12% on the next $630 million ofin average AUM in the Teton funds,net assets, and 10 basis points annually of0.10% on average AUM in the Teton fundsnet assets in excess of $1 billion. The License Agreement providesbillion, as compensation for providing mutual fund administration services. Additionally, Teton and the funds that it manages the usepaid to GBL an administrative services fee of certain names and service marks. Effective April 1, 2014, the Administrative Agreement was further amended to increase the fixed monthly component of it from $15,000 per month to $25,000$4,167 per month. Pursuant to the Administrative Agreement and the License Agreement,For 2019, the Company was compensated by Teton in the amount of $25,000 per month from April 1, 2014 through September 30, 2016, $18,750 for October 1, 2016 through May 31, 2017, and $4,167 per month for June 1, 2017 through December 31, 2018. For the full year 2018, the Company was compensated by Teton $50,004$50,000 for the full year, plus an average of 13.213.9 basis points of the average AUM in the Teton funds (pursuant to the tiered formula) for providing mutual fund administration services to these funds, or $2,065,704$1,959,069 for 2018. We sublease space2019. Effective October 1, 2018, Teton and GBL entered into an additional agreement whereby GBL acts as the sub-administrator for the Keeley-Teton funds in exchange for a flat annual fee of $24,000 and a variable annual fee equal to 2.5 basis points of the Building toaverage AUM of the Keeley-Teton funds. During 2019, Teton as discussed above.paid GBL $208,849. G.distributors, LLC (“G.distributors”), an affiliated broker-dealer of the Company, served as distributor to the seven mutual9 open-end funds that are managed by Teton during 2018.2019. In 2018,2019, the funds managed by Teton paid G.distributors $3,345,560$2,519,103 in distribution fees, of which $3,042,212$2,267,617 was reallocated to other broker dealers by G.distributors. In addition, in 2018,2019, Keeley-Teton Advisors, Inc., a wholly-owned subsidiary of Teton, paid G.distributors $180,000 in distribution fees.
Effective January 1, 2014, GAMCO Asset and Gabelli Funds Advisor each entered into a research services agreement with G.research, LLC, a wholly-owned subsidiary of GCIA (which iswas a wholly-owned subsidiary of Associated CapitalAC subsequent to the spin-off), for G.research LLC to provide them with the same types of research services that it provides to its other clients. In 2018,2019, GAMCO and Gabelli Funds Advisoreach paid G.research LLC $1,000,000 and $1,030,000, respectively.$750,000. This agreement ended December 31, 2019.
In connection with the spin-off of Associated CapitalAC in November 2015, we entered into certain other agreements with Associated CapitalAC to define our ongoing relationship with Associated CapitalAC after the spin-off. These other agreements define responsibility for obligations arising before and after the distribution date, including certain transitional services and taxes, and are summarized below.
Separation and Distribution Agreement
On November 30, 2015, we entered into a Separation and Distribution Agreement with Associated CapitalAC (the “Separation Agreement”), which contains the key provisions relating to the separation of Associate Capital’sAC’s business from that of GAMCO and the distribution of the Associated CapitalAC common stock. The Separation Agreement identified the assets transferred, liabilities assumed, and contracts assigned to Associated CapitalAC by GAMCO and by Associated CapitalAC to GAMCO in the spin-off and describes when and how these transfers, assumptions, and assignments occurred. The Separation Agreement also includes procedures by which GAMCO and Associated CapitalAC became separate and independent companies. The Separation Agreement also provides that, as of November 30, 2015, each party released the other party and their respective affiliates and their directors, officers, employees, and agents from all claims, demands, and liabilities, in law and in equity, against such other party, which such releasing party has or may have had relating to events, circumstances, or actions taken by such other party prior to the distribution. This release does not apply to claims arising from the Separation Agreement.
Indemnification
GAMCO has agreed to indemnify Associated CapitalAC and its directors, officers, employees, agents, and affiliates (collectively, ‘‘Associated Capital indemnitees’’“AC Indemnitees”) against all losses, liabilities, and damages incurred or suffered by any of the Associated Capital indemniteesAC Indemnitees arising out of:
•GAMCO’s business;
•the failure or alleged failure of GAMCO or any of its subsidiaries to pay, perform, or otherwise discharge in due course any of GAMCO liabilities;
•a breach by GAMCO of any of its obligations under the Separation Agreement; and
•any untrue statement or alleged untrue statement of a material fact: (i) contained in any document filed with the SEC by GAMCO pursuant to any securities rule, regulation, or law, (ii) otherwise disclosed by GAMCO or its subsidiaries to investors or potential investors in GAMCO or its subsidiaries, or (iii) furnished to any Associated Capital indemniteeAC Indemnitee by GAMCO or any of its subsidiaries for inclusion in any public disclosures to be made by any Associated Capital indemnitee;AC Indemnitee; or any omission or alleged omission to state in any information described in clauses (i), (ii), or (iii) a material fact necessary to make the statements not misleading. The indemnity described in this paragraph is available only to the extent that Associated CapitalAC losses are caused by any such untrue statement or omission or alleged untrue statement or omission, and the information which is the subject of such untrue statement or omission or alleged untrue statement or omission was not supplied after the spin-off by Associated CapitalAC or its agents.
Similarly, Associated CapitalAC has agreed to indemnify GAMCO and its directors, officers, employees, agents, and affiliates (collectively, ‘‘GAMCO indemnitees’’“GAMCO Indemnitees”) against all losses, liabilities, and damages incurred or suffered by any of the GAMCO indemniteesIndemnitees arising out of:
•Associated Capital’s AC’s business;
•the failure or alleged failure of Associated CapitalAC or any of its subsidiaries to pay, perform, or otherwise discharge in due course any of Associated CapitalAC liabilities;
•a breach by Associated CapitalAC of any of its obligations under the Separation Agreement; and
•any untrue statement or alleged untrue statement of a material fact: (i) contained in any document filed with the SEC by Associated CapitalAC following the distribution pursuant to any securities rule, regulation, or law, (ii) otherwise disclosed following the distribution by Associated CapitalAC or its subsidiaries to investors or potential investors in Associated CapitalAC or its subsidiaries, or (iii) furnished to any GAMCO indemnitee by Associated CapitalAC or any of its subsidiaries for inclusion in any public disclosures to be made by any GAMCO indemnitee; or any omission or alleged omission to state in any information described in clauses (i), (ii), or (iii) a material fact necessary to make the statements not misleading. The indemnity described in this paragraph is available only to the extent that GAMCO losses are caused by any such untrue statement or omission or alleged untrue statement or omission, and the information which is the subject of such untrue statement or omission or alleged untrue statement or omission was not supplied by GAMCO or its agents.
Transitional Administrative and Management Services Agreement
On November 30, 2015, we entered into a Transitional Administrative and Management Services Agreement with Associated CapitalAC (the “Transition Services Agreement”) pursuant. The agreement calls for GAMCO to which GAMCO will provide Associated Capital with a variety of services and Associated Capital will provide payroll services to GAMCO following the spin-off. Among the principal services GAMCO will provide to Associated Capital are:
accounting, financial reporting and consolidationAC certain administrative services including the services of a financial and operations principal;
treasury services, including, without limitation, insurance and risk management services and administration of benefits;
•tax planning, tax return preparation, recordkeeping and reporting services;
•human resources, including but not limited to the sourcing of permanentto: human resources, compliance, legal, payroll, information technology, and temporary employees as needed, recordkeeping, performance reviews and terminations;
•legal and compliance advice, including the services of a Chief Compliance Officer;
•technical/technology consulting; and
•operations and general administrative assistance, including office space, office equipment and furniture, payroll, procurement, and administrative personnel.
In providing the services pursuant to this agreement, GAMCO may, subject to the prior written consent of Associated Capital, employ consultants and other advisers in addition to utilizing its own employees.operations. Services provided by GAMCO to Associated CapitalAC or by Associated CapitalAC to GAMCO under the Transition Services Agreement are charged at cost and for the fiscal year ended December 31, 2018,2019, we paid Associated CapitalAC approximately $9,532,893,$8,477,516, and Associated CapitalAC paid $4,355,160$1,899,158 to us.
The Transition Services Agreement had an initial term of twelve months but has continued in full force and has not been terminated to date. The Transition Services Agreement is terminable by either party on 30 days’ prior written notice to the other party.
Certain named executives of GAMCO earned an amount during 20182019 for services rendered to Associated CapitalAC pursuant to the Transition Services Agreement and/or, in some cases, an additional amount that was earned by them directly for incentive-based variable compensation from Associated Capital.AC.
| GAMCO Named Executives’ Compensation From Associated Capital During 2018 | GAMCO Named Executives’ Compensation From AC During 2019 |
| Earned for services rendered to Associated Capital pursuant to the Transition Services Agreement ($) | Earned directly as incentive-based variable compensation from Associated Capital ($) | Grant date fair value of phantom restricted stock awards granted by Associated Capital pursuant to the Transitions Services Agreement ($) | Earned for services rendered to AC pursuant to the Transition Services Agreement ($) | Earned directly as incentive-based variable compensation from AC ($) | |
Mario J. Gabelli | -0- | 405,776 | -0- | -0- | 5,817,436 | |
Douglas R. Jamieson | 950,000 | 186,230 | 494,200 | 951,694 | 311,030 | |
Kevin Handwerker | 352,250 | -0- | 105,900 | 377,632 | -0- | |
Kieran Caterina | -0- | -0- | -0- | |
Diane LaPointe | -0- | -0- | -0- | |
Agnes Mullady | 550,000 | -0- | 211,800 | 651,029 | -0- | |
Bruce Alpert | -0- | 1,887 | -0- | |
Henry Van der Eb | -0- | -0- | -0- | |
Tax Indemnity and Sharing Agreement
On November 30, 2015, we entered into a Tax Indemnity and Sharing Agreement with Associated CapitalAC that provides for certain agreements and covenants related to tax matters involving Associated CapitalAC and us. This agreement covers time periods before and after the distribution. Among the matters addressed in the agreement are filing of tax returns, retention and sharing of books and records, cooperation in tax matters, control of possible tax audits, and contests and tax indemnities. The agreement also provides for limitations on certain corporate transactions that could affect the qualification of the spin-off as tax free under the Internal Revenue Code.
Promissory Note
In connection with the spin-off of Associated Capital on November 30, 2015, the Company issued a promissory note (the “AC 4% PIK Note”) to AC in the original principal amount of $250 million used to partially capitalize AC. The AC 4% PIK Note bears interest at 4% per annum and has a maturity date of November 30, 2020 with respect to the original principal amount. Interest on the AC 4% PIK Note will accrue from the most recent date for which interest has been paid. Prior to November 30, 2019, at the election of the Company, payment of interest on the AC 4% PIK Note may, in lieu of being paid in cash, be paid, in whole or in part, in kind (a “PIK Amount”). The Company will repay all PIK Amounts added to the outstanding principal amount of the AC 4% PIK Note in cash on the fifth anniversary of the date on which each such PIK Amount was added to the outstanding principal amount of the AC 4% PIK Note. The Company may prepay the AC 4% PIK Note prior to maturity without penalty.
During 2018, the Company prepaid $50 million of principal of the AC 4% PIK Note, which paid the remaining principal amount outstanding. This final installment was due on November 30, 2020. During 2018, the Company paid interest expense of $847,123 for the AC 4% PIK Note.
AC 1.6% Note
On December 26, 2017, the Company issued a promissory note to AC for $15 million which bears interest at 1.6% per annum and is secured by a second lien on certain marketable securities held by the Company. The note matured and was repaid on February 28, 2018. During 2018, the Company paid interest expense of $40,000.
Promissory Notes Payable to Certain Executive Officers and Employees
On December 29, 2017, the Company issued $11,673,571 million of promissory notes payable to certain executive officers and employees relating to compensation earned in 2017. $5,506,592 million of the notes were due on January 31, 2018 and $6,166,979 million were due on February 28, 2018, and all amounts were paid in full on those respective dates. During 2018, GBL paid interest expense of $16,445.
Service Mark and Name License Agreement
On November 30, 2015, we entered into the Service Mark and Name License Agreement with Associated Capital AC pursuant to which Associated Capital AC has certain rights to use the ‘‘Gabelli’’“Gabelli” name and the ‘‘GAMCO’’“GAMCO” name.
Other Related Party Transactions
GAMCO Asset Management Inc. (“GAMCO Asset Management”), a wholly-owned subsidiary of the Company, has entered into an agreement to provide advisory and administrative services to MJG Associates, which has been wholly-owned by our Chairman and CEO, Mr. Mario Gabelli, since 1990, with respect to the private investment funds that it manages. Pursuant to this agreement, MJG Associates paid GAMCO Asset Management $10,000 (excluding reimbursement of expenses) for 2018.
GAMCO serves as the investment advisor for twenty-two24 open-end funds, sixteenFunds and 16 closed-end funds and four actively-managed, exchange-traded funds (collectively, the “Funds”)Funds and earns advisory fees based on predetermined percentages of the average net assets of the Funds. In addition, G.distributors, LLC, the broker dealer subsidiary of GAMCO, has entered into distribution agreements with each of the Funds. As principal distributor, G.distributors LLC incurs certain promotional and distribution costs related to the sale of Fund shares, for which it receives a distribution fee from the Funds or reimbursement from the investment advisor. For 2018,2019, G.distributors LLC received $35,268,228earned $29,405,087 in distributions fees. Advisory and distribution fees receivable from the Funds were $18,777,939$30,956,402 at December 31, 2018. 2019.
Pursuant to an agreement between GCIA and Gabelli Funds, Advisor,Gabelli Funds Advisor pays to GCIA 90% of the net revenues received by Gabelli Funds Advisor related to being the advisor to the SICAV. Net revenues are defined as gross advisory fees less expenses related to payouts and expenses of the SICAV paid by Funds Advisor.Gabelli Funds. The amount paid by Gabelli Funds Advisor to GCIA for 20182019 was $3,909,523.$7,625,284.
We incur expenses for certain professional and administrative services and purchase services from third party providers, such as payroll, transportation, insurance, and public relations services, on behalf of GGCP and MJG Associates. GGCP and MJG Associates reimburse us for these expenses. GGCP also incurs expenses for certain professional and administrative services on behalf of the Company, and we reimburse GGCP for these expenses. The net amount reimbursable from GGCP and MJG Associates to us for such expenses for 20182019 was $117,979$184,305 and $328,065,$329,171, respectively. At December 31, 2018, $25,6772019, $57,794 and $329,171 was owed to the Company by GGCP and $328,065 was owed to the Company by MJG Associates. The GGCP amount was paid in full to the Company on March 1, 2019, and the MJG Associates, amount was paid in full to the Company on February 27, 2019.respectively.
Certain directors and executive officers have immediate family members who are employed by us, our subsidiaries, and certain related entities. The base salaries and bonuses of each of these immediate family members are established in accordance with our compensation practices applicable generally to staff membersteammates with equivalent qualifications and responsibilities and holding similar positions. None of the directors or executive officers has a material interest in any of these employment relationships of their immediate family members, and all of the immediate family members of our directors mentioned below are financially independent adult children. None of the immediate family members mentioned below is anare executive officerofficers of GAMCO.
A daughter of Mr. Avansino, one of our directors, is employed by one of our subsidiaries in a sales and marketing role and earned from GAMCO in 2018 incentive-based variable compensation based on revenues generated by certain relationships (“2019 Variable Compensation”)Compensation of $247,749$216,311 plus usual and customary benefits. She also received 1,500 restricted stock awards500 RSAs on April 4, 2018June 30, 2019 with a grant date fair value of $24.77$19.17 per share. As with all Company restricted stock awards,RSAs, fair value equals the closing price of the Company’s Class A Stock on the day preceding the effective grant date. Compensation expense of $6,688$10,068 was recognized for all of her awardsRSAs for financial statement reporting purposes for the fiscal year ended December 31, 20182019 calculated in accordance with FASB guidance. The total compensation that she earned from GAMCO in 20182019 was $254,437.$226,379.
A son of our Chairman is employed by a subsidiary of Associated Capital,AC, but he also earned from GAMCO in 2018 $1,077,301 in2019 Variable Compensation of $1,581,001 plus usual and customary benefits.
A son of our Chairman is employed by a subsidiary of Associated Capital, but he also earned from GAMCO in 2018 $136,491 in Variable Compensation plus usual and customary benefits.
Our Chairman’s spouse, who has been employed by a subsidiary of the Company in a sales and marketing role since 1984, has been a director of that subsidiary since 1991, and has been his spouse since 2002, earned from GAMCO in 20182019 no base salary and $4,567,682$3,821,895 in Variable Compensation plus usual and customary benefits. She also received 3,800 restricted stock awards3,500 RSAs on April 4, 2018June 30, 2019 with a grant date fair value of $24.77 per share and 4,200 restricted stock awards on August 7, 2018 with a grant date fair value of $25.16$19.17 per share. As with all Company restricted stock awards,RSAs, fair value equals the closing price of the Company’s Class A Stock on the day preceding the effective grant date. Total compensation expense of $27,509$56,004 was recognized by the Company for all of her awardsRSAs for financial statement reporting purposes for the fiscal year ended December 31, 20182019 calculated in accordance with FASB guidance. The total compensation that she earned from GAMCO in 20182019 was $4,595,191.$3,877,899.
A brother of our Chairman earned $406,076from GAMCO in 2019 $274,261 in Variable Compensation from GAMCO in 2018 plus usual and customary benefits. He also received 1,000 restricted stock awards500 RSAs on April 4, 2018June 30, 2019 with a grant date fair value of $24.77$19.17 per share and 500 restricted stock awards on August 7, 2018 with a grant date fair value of $25.16.share. As with all Company restricted stock awards,RSAs, fair value equals the closing price of the Company’s Class A Stock on the day preceding the effective grant date. Compensation expense of $5,717$10,114 was recognized for all of his awardsRSAs for financial statement reporting purposes for the fiscal year ended December 31, 20182019 calculated in accordance with FASB guidance. The total compensation that he earned from GAMCO in 20182019 was $411,793.$284,375.
Ms. Wilson, a director and the daughter of our Chairman, is also a professional staff memberteammate of the Company. Ms. Wilson has been on extended unpaid leave from the Company since January 1, 2004 and, therefore, received no compensation during 20182019 other than compensation she received as a director disclosed in the Director Compensation Table for 20182019 and her previously-discussedpreviously discussed entitlement, as a member of M4E,M4E, to receive her pro-rata share of payments received by M4EM4E under the lease on the Building.
The spouse of Ms. LaPointe, our former Senior Vice President and Co-Chief Accounting Officer, iswas employed until July 1, 2019 as the Executive Vice President, and Chief Financial Officer and a Director of LICT, until February 3, 2020 as the Interim Chief Executive OfficerCEO and Chief Financial Officer of CIBL, and until November 1, 2019 as the Interim Chief Executive Officer,Acting CEO, Chief Financial Officer, and a Director of Morgan Group Holding, Inc. (“Morgan”)., and continues to serve as a Director of LICT. In addition to serving as the Chairman and Chief Executive OfficerCEO of LICT and as a Director and Executive Chairman of CIBL, our Chairman and CEO, Mr. Mario Gabelli, also servesserved as the Chairman of Morgan.Morgan until October 2019.
As required by our Code of Ethics, our staff membersteammates are required to maintain their brokerage accounts at G.research unless they receive permission to maintain an outside account. G.research offers all of these staff membersteammates the opportunity to engage in brokerage transactions at discounted rates. Accordingly, many of our staff members,teammates, including the executive officers or entities controlled by them, have brokerage accounts at G.research and have engaged in securities transactions through it at discounted rates. From time to time, we, through our subsidiaries, in the ordinary course of business have also provided brokerage or investment advisory services to our directors, the substantial shareholders listed in the table under “Certain Ownership of Our Stock”Stock,” or entities controlled by such persons for customary fees.
REPORT OF THE AUDIT COMMITTEE
Messrs. Avansino, McGrath, and Prather, each of whom is an independent director, are the members of the Audit Committee. In this report, the term “we” refers to the members of the Audit Committee.
The Board has adopted a written charter for the Audit Committee. A copy of that charter can be found on our website at http:https://www.gabelli.com/corporate/corp_gov.html.investor_relations. Our job is one of oversight as set forth in our charter. The Company’s management is responsible for preparing its financial statements and for maintaining internal controls. The independent registered public accounting firm is responsible for auditing the financial statements and expressing an opinion as to whether those audited financial statements fairly represent the financial position, results of operations, and cash flows of the Company in conformity with U.S. generally accepted accounting principles.GAAP.
We have reviewed and discussed the Company’s audited 20182019 financial statements with management and with Deloitte & Touche LLP (“D&T”),&T, the Company’s independent registered public accounting firm.
We have discussed with D&T the matters required to be discussed by Statement on Auditing Standard No. 1301, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board (the “PCAOB”).
We have received from D&T the written statements required by the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence and have discussed with the independent accountant the independent accountant’s independence.
Based on the review and discussions referred to above, we have recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20182019 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Robert S. Prather, Jr. (Chairman)
Raymond C. Avansino, Jr.
Eugene R. McGrath
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
SelectionAppointment of Deloitte & Touche LLP
Our Audit Committee approved the engagement of Deloitte & Touche LLP (“D&T”)&T as the Company’s independent registered public accounting firm for the year-ending December 31, 2018.2019. D&T has been the auditor of the Company since March 27, 2009. In deciding to engage D&T, the Audit Committee reviewed auditor independence and existing commercial relationships with D&T and concluded that D&T has no commercial relationship with the Company that would impair its independence. During the fiscal year ended December 31, 20182019 and in the subsequent interim period through March 31, 2019,2020, neither the Company nor anyone acting on its behalf has consulted with D&T on any of the matters or events set forth in Item 304(a)(2) of Regulation S−K.
A representative of D&T will be present at the 2019 Annual Meeting. The representative will have the opportunity to make a statement and respond to appropriate questions from shareholders.
Deloitte & Touche LLPD&T Fees For 2017for 2019 and 2018
Fees for professional services provided by our independent registered public accounting firm in 20172019 and 2018, in each of the following categories are:
| | 2017 | | | 2018 | | | 2019 | | | 2018 | |
Audit Fees | | $ | 1,060,000 | | | $ | 1,095,000 | | | $ | 1,125,000 | | | $ | 1,095,000 | |
Audit-Related Fees | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
Tax Fees | | $ | 0 | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
All Other Fees | | $ | 1,432 | | | $ | 1,447 | | | $ | 1,017 | | | $ | 1,447 | |
Audit fees include fees relating to the audit of our annual financial statements and review of financial statements included in our quarterly reports on Form 10-Q. Audit fees also include fees for services related to Section 404 of the Sarbanes-Oxley Act which consist of the review of documentation and testing of our procedures and controls. Audit fees for 2017 and 2018 also include a $5,000 in each yearfee for fees fora consent lettersletter provided in connection with the filing of a registration statement in each year on Form S-3. All other fees were for access to online technical research services.
SHAREHOLDER PROPOSALS FOR THE 20202021 ANNUAL MEETING
Qualified shareholders who want to have proposals included in our proxy statement in connection with our 20202021 Annual Meeting pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must deliver such proposals so that they are received at one of our two principal executive offices at 140 Greenwich Avenue,191 Mason Street, Greenwich, CT 06830 by December 20, 201930, 2020 in order to be considered for inclusion in next year’s proxy statement and proxy. For any shareholder proposal submitted outside Rule 14a-8 of the Exchange Act to be considered timely under our Amended and Restated Bylaws, the Company must receive notice of such proposal, or any nomination of a director by a shareholder, no earlier than January 8, 20205, 2021 and no later than February 7, 2020.4, 2021.
OTHER MATTERS
We know of no other matters to be presented at the 2019 Annual Meeting other than the election of directors, and the ratification of auditors, the vote to approve the reduction in authorized shares of Class B Stock, the vote to approve Mr. Gabelli’s Amended and Restated Employment Agreement, the advisory vote on named executive officer compensation, all as described above. If other matters are properly presented at the 2019 Annual Meeting, the proxies will vote on these matters in accordance with their judgment of the best interests of the Company.
We will provide a free copy of our Annual Report on Form 10-K for the year ended December 31, 2018.2019. Requests should be in writing and addressed to our Secretary at GAMCO Investors, Inc., 140 Greenwich Avenue,191 Mason Street, Greenwich, CT 06830.
EXHIBIT A
GUIDELINES FOR DIRECTOR INDEPENDENCE
For a director to be deemed “independent,” the Board shall affirmatively determine that the director has no material relationship with GAMCO Investors, Inc. (together with its consolidated subsidiaries, “GAMCO”) or its affiliates or any member of the senior management of GAMCO or his or her affiliates. This determination shall be disclosed in the proxy statement for each annual meeting of GAMCO’s shareholders. In making this determination, the Board shall apply the following standards:
· | A director who is an employee, or whose immediate family member is an executive officer, of GAMCO will not be deemed independent until three years after the end of such employment relationship. Employment as an interim Chairman or Chief Executive Officer will not disqualify a director from being considered independent following that employment. |
A director who is an employee, or whose immediate family member is an executive officer, of GAMCO will not be deemed independent until three years after the end of such employment relationship. Employment as an interim Chairman or CEO will not disqualify a director from being considered independent following that employment.
· | A director who received, or whose immediate family member received in any twelve month period over the last three years more than $120,000 in direct compensation from GAMCO will not be deemed independent. In calculating such compensation, the following will be excluded: |
A director who received, or whose immediate family member received in any twelve month period over the last three years more than $120,000 in direct compensation from GAMCO will not be deemed independent. In calculating such compensation, the following will be excluded:
o | director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); |
o | compensation received by a director for former service as an interim Chairman or Chief Executive Officer;CEO; and |
o | compensation received by an immediate family member for service as a non-executive officer employee of GAMCO. |
· | A director will not be considered independent if: |
A director will not be considered independent if:
o | the director is a current partner or employee of a firm that is GAMCO’s internal or external auditor; |
o | the director has an immediate family member who is a current partner of GAMCO’s internal or external auditor; |
o | the director has an immediate family member who is a current employee of GAMCO’s internal or external auditor and personally works on GAMCO’s audit; or |
o | the director or an immediate family member was within in the last three years a partner or employee of GAMCO’s internal or external auditor and personally worked on GAMCO’s audit within that time. |
· | A director who is, or whose immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of GAMCO’s current executive officers serve on that company’s compensation committee will not be deemed independent. |
A director who is, or whose immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of GAMCO’s current executive officers serve on that company’s compensation committee will not be deemed independent.
· | A director who is, a current employee, or whose immediate family member is an executive officer, of an entity that makes payments to, or receives payments from, GAMCO for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other entity’s consolidated gross revenues, will not be deemed independent. |
A director who is, a current employee, or whose immediate family member is an executive officer, of an entity that makes payments to, or receives payments from, GAMCO for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other entity’s consolidated gross revenues, will not be deemed independent.
· | A director who serves as an executive officer of a tax-exempt entity that receives significant contributions (i.e., more than 2% of the annual contributions received by the entity or more than $1 million in a single fiscal year, whichever amount is greater) from GAMCO, any of its affiliates, any executive officer or any affiliate of an executive officer within the preceding twelve-month period may not be deemed independent, unless the contribution was approved by the Board and disclosed in GAMCO’s proxy statement. |
A director who serves as an executive officer of a tax-exempt entity that receives significant contributions (i.e., more than 2% of the annual contributions received by the entity or more than $1 million in a single fiscal year, whichever amount is greater) from GAMCO, any of its affiliates, any executive officer or any affiliate of an executive officer within the preceding twelve-month period may not be deemed independent, unless the contribution was approved by the Board and disclosed in GAMCO’s proxy statement.
For purposes of these Guidelines, the terms:
· | “affiliate” means any consolidated subsidiary of GAMCO and any other company or entity that controls, is controlled by or is under common control with GAMCO, as evidenced by the power to elect a majority of the board of directors or comparable governing body of such entity; and |
“affiliate” means any consolidated subsidiary of GAMCO and any other company or entity that controls, is controlled by or is under common control with GAMCO, as evidenced by the power to elect a majority of the board of directors or comparable governing body of such entity; and
· | “immediate family” means spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law and anyone (other than domestic employees) sharing a person’s home, but excluding any person who is no longer an immediate family member as a result of legal separation or divorce, or death or incapacitation. |
“immediate family” means spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone (other than domestic employees) sharing a person’s home, but excluding any person who is no longer an immediate family member as a result of legal separation or divorce, death, or incapacitation.
The Board shall undertake an annual review of the independence of all non-employee directors. In advance of the meeting at which this review occurs, each non-employee director shall be asked to provide the Board with full information regarding the director’s business and other relationships with GAMCO and its affiliates and with senior management and their affiliates to enable the Board to evaluate the director’s independence.
Directors have an affirmative obligation to inform the Board of any material changes in their circumstances or relationships that may impact their designation by the Board as “independent.” This obligation includes all business relationships between, on the one hand, directors or members of their immediate family, and, on the other hand, GAMCO and its affiliates or members of senior management and their affiliates, whether or not such business relationships are subject to the approval requirements set forth by the Board.
EXHIBIT B
CERTIFICATE OF AMENDMENT
OF THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
GAMCO INVESTORS, INC.
GAMCO INVESTORS, INC., a corporation duly organized and existing under the General Corporation Law of the State Delaware (the “Corporation”), does hereby certify that:
1. The amendment to the Corporation’s Amended and Restated Certificate of Incorporation set forth below was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware and has been consented to by the stockholders of the Corporation at a meeting called in accordance with Section 222 of the General Corporation Law of the State of Delaware.
2.Subparagraph (a) of Article FOURTH, of the Corporation’s Amended and Restated Certificate of Incorporation is amended to read in its entirety as follows:
“(a) The total number of shares of all classes of stock which the Corporation shall be authorized to issue is 135,000,000 shares, consisting of: (i) 100,000,000 shares of Class A Common Stock, par value of $.001 per share (the “Class A Common Stock”), (ii) 25,000,000 shares of Class B Common Stock, par value of $.001 per share (the “Class B Common Stock”), and (iii) 10,000,000 shares of Preferred Stock, having a par value of $.001 per share (the “Preferred Stock”). The powers, preferences and rights, and the qualifications, limitations and restrictions of each class of stock of the Corporation are as follows:”
IN WITNESS WHEREOF, said Corporation has caused this Certificate of Amendment to be signed by its duly authorized officer on this ____ day of _____, 2020.
| GAMCO INVESTORS, INC. |
| |
| |
| By: | |
| | Name: | Mario J. Gabelli |
| | Title: | Chief Executive Officer |
EXHIBIT C
EMPLOYMENT AGREEMENT
AGREEMENT made this 6th day of February, 2008 (the “Effective Date”) by and between GAMCO Investors, Inc. (the “Company”), a New York corporation, and Mario J. Gabelli (the “Executive”).
WHEREAS, the Executive has served as an executive of the Company since the inception of the Company and its predecessors in 1976.
WHEREAS, the Executive’s skills, position, knowledge and expertise in the management of portfolios such as those managed by the Company are unique.
WHEREAS, the Company is dependent upon the efforts of the Executive, in the capacities described herein in which he serves, and as the primary portfolio manager for a significant majority of the Company’s assets under management.
WHEREAS, the loss of the Executive’s services would have a material adverse effect on the Company.
WHEREAS, since the inception of the Company and its predecessors in 1976, up until the Company’s initial public offering in February 1999 (“IPO”), the Executive received an incentive-based management fee of twenty percent (20%) of the pre-tax profits, if any, as computed for financial reporting purposes in accordance with generally accepted accounting principles as applied by the Company and its subsidiaries and consolidated affiliates for financial reporting purposes (together, “Subsidiaries”) from time to time, for each fiscal year of each of the operating divisions of the Company and each of its Subsidiaries before consideration of this fee, less applicable payroll and tax deductions, accrued monthly and payable at least annually.
WHEREAS, the Company and the Executive entered into an Employment Agreement dated February 9, 1999, in connection with the Company’s IPO, which Employment Agreement, among other things, reduced the Executive’s incentive-based management fee to ten percent (10%) of the Company’s pre-tax profits, if any, as computed for financial reporting purposes in accordance with generally accepted accounting principles as applied by the Company and its Subsidiaries from time to time, for each fiscal year of each of the operating divisions of the Company and its Subsidiaries before consideration of this fee, less applicable payroll and tax deductions, accrued monthly and payable at least annually.
WHEREAS, the Company and the Executive desire to amend and restate the Employment Agreement entered into in 1999 to eliminate outdated provisions, allow for services to be performed for former Subsidiaries that are spun off to shareholders or otherwise cease to be Subsidiaries in similar transactions, allow for the management fee to be paid to the Executive or an entity designated by him, and reflect the Company’s name change, among other things.
WHEREAS, the Compensation Committee of the Board of Directors of the Company has reviewed and approved this amended and restated Employment Agreement and believes it to be in the best interests of the Company.
WHEREAS, the Company desires that the Executive or his designee continue to receive a management fee to provide an incentive for the achievement of the Company’s performance goals and the enhancement of shareholder value.
NOW THEREFORE, in consideration of the foregoing and of the mutual promises hereinafter set forth, the parties hereto agree as follows:
1. Employment.
The Company hires and employs the Executive, and the Executive agrees to work for the Company, under the terms and conditions set forth herein.
2. Duties.
The Executive shall serve as Chairman of the Board, Chief Executive Officer and Chief Investment Officer of the Company, as an executive in various capacities for certain of the Company’s Subsidiaries as determined by the Executive, and as Portfolio Manager for certain investment companies and separate accounts managed by the Company and its Subsidiaries as determined by the Executive. The Executive or the Company may at any time limit or terminate the Executive’s service in one or more of the capacities referred to above.
3. Term.
The Term of this Agreement shall commence on the Effective Date and continue through the third anniversary of the Effective Date (the “Expiration Date”). On each anniversary of the Effective Date commencing on the first anniversary (each, an “Anniversary Date”), this Agreement shall automatically be renewed and the Term extended for an additional one (1) year period, unless such renewal is objected to by either the Company or by the Executive on written notice delivered to the other not less than ninety (90) days prior to an Anniversary Date. The last day of each such extension shall become the new Expiration Date.
4. Fees from Revenue Generating Activities (Revenue Fees).
For managing or overseeing the management of investment companies or partnerships, attracting mutual fund accounts or partnership investments, attracting or managing separate accounts, providing investment banking services or otherwise generating revenues for the Company or its Subsidiaries, the Executive will be paid a percentage of the revenues or net operating contribution related to or generated by such business activities, in a manner and at payment rates as agreed to from time to time by the Executive and the Company or the affected Subsidiaries, which 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. The Executive shall be entitled to receive such payments within seventy-five (75) days of the date the Company actually receives the funds related to the business activities from which the Executive will receive payment. Unless and until the Company receives such funds, the Executive shall not be entitled to receive payment.
5. Incentive-Based Management Fee (The Management Fee).
The Executive or an entity designated by him will be entitled to receive an incentive-based management fee in the amount of ten percent (10%) of the aggregate annual pre-tax profits, if any, as computed for financial reporting purposes in accordance with generally accepted accounting principles as applied by the Company and its Subsidiaries from time to time, of the Company and each of its Subsidiaries before consideration of this fee, less applicable payroll and tax deductions, accrued monthly and payable at least annually (the “Management Fee”) but in no event later than March 15 of the year following the year with respect to which the Management Fee is being paid. A committee or subcommittee (comprised solely of independent directors) of the Board of Directors of the Company will review at least annually all Management Fee payments for compliance with the terms hereof. In the event that the Executive is no longer an executive of the Company or is no longer devoting the substantial majority of his working time to the business of the Company and its Subsidiaries, the Executive’s right to accrue any additional Management Fee payments will terminate. The Management Fee is separate and distinct from the Executive’s revenue fees pursuant to Paragraph 4 above.
6. Extent of Service-Restrictive Covenant.
During the term of this Agreement, the Executive shall not provide investment management services for compensation other than in his capacity as an officer or employee of the Company or its Subsidiaries, except to (a) the funds in existence on February 10, 1999 (the “IPO Date”) (which serve no investors other than those in the funds as of the IPO Date, their successors, heirs, donees or immediate family, or new investors pursuant to the next sentence) and accounts managed by the Executive outside the Company under performance fee arrangements as of the IPO Date or pursuant to the next sentence, and (b) successor funds and accounts (“New Outside Accounts”) which funds serve no investors other than those in the funds referred to in clause (a) or their successors, heirs, donees or immediate family and which accounts are for no investors other than those having an interest in the accounts referred to in clause (a) or their successors, heirs, donees or immediate family, which funds and accounts operate according to an investment style similar to such other funds or accounts, which style was not used at the Company as of the IPO Date, and which are subject to performance fee arrangements (collectively, “Permissible Accounts”). The Permissible Accounts may include new investors if all of the performance fees, less expenses, earned on assets attributable to those investors are paid to the Company or its Subsidiaries. If any Subsidiaries of the Company are spun off from the Company or otherwise cease to be Subsidiaries in similar transactions, the Executive may continue providing investment management services for compensation to such entities. Prior to providing investment management services for compensation to any New Outside Accounts during the term hereof, the Executive agrees to have a committee or subcommittee (comprised solely of independent directors) of the Board of Directors of the Company review any proposed New Outside Accounts for compliance with the terms hereof and accept the determination of such committee or subcommittee as final. The Company understands that the Executive intends to serve as a director, Chief Executive Officer and Chief Investment Officer of GGCP, Inc. and its affiliates and be compensated for such service, and the Company agrees that such service and compensation is permissible under this Agreement.
7. Benefits.
The Executive shall be entitled to participate in all group health and insurance programs and all other fringe benefit or retirement plans which the Company may, in its sole and absolute discretion, elect to make available to its senior executives generally, provided that the Executive meets the qualifications therefor.
8. Reimbursement of Expenses.
The Company shall reimburse the Executive for all reasonable and legitimate business expenses incurred after the date of employment by the Executive while conducting business, provided that the Executive submits vouchers for such expenses in a manner and form prescribed from time to time by the Company, except that up to $50,000 per year of such expenses may be non-accountable.
9. Section 409A Compliance.
This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, so as to avoid the imposition of any tax pursuant to Section 409A, and, in the case of any ambiguity, shall be interpreted accordingly. In the event that the Company or the Executive subsequently determine that the provisions of this Agreement would subject the Executive to tax under Section 409A, Company and the Executive shall negotiate in good faith to revise the Agreement so as to prevent the imposition of such tax, if possible, while preserving the original intent of the Agreement.
10. Assignability Clause.
This Agreement is binding upon the Company, the Executive and their respective successors and assigns. The rights and obligations set forth under this Agreement may be assigned by the Company or by the Executive to a successor or to an assign, except the Executive acknowledges that the duties set forth in Paragraph 2 of this Agreement are personal to him.
11. Governing Law.
This Agreement shall be governed by the law of the State of New York, without giving effect to the principles of conflicts of laws thereof. The Executive and the Company agree that any claim arising hereunder shall be brought before the state or federal courts sitting in New York, New York, and the Executive and the Company each consent to jurisdiction and venue in New York, New York, as being proper and appropriate for the resolution of any such claim.
12. Entire Agreement; Modification.
This Agreement supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, written or oral, of the parties hereto, relating to the matters covered by this Agreement. This Agreement may not be modified or amended except by a further written instrument duly executed by the Executive and the Company with the approval of a committee or subcommittee (comprised solely of independent directors) of the Board of Directors of the Company.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first written above.
/s/ Mario J. Gabelli
Mario J. Gabelli
GAMCO INVESTORS, INC.
By: /s/ Douglas R. Jamieson
President and Chief Operating Officer