UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  x                            Filed by a Party other than the Registrant  ¨

Check the appropriate box:

Westwood Holdings Group, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

Dear Stockholder:

You are cordially invited to attend the 20122013 Annual Meeting of Stockholders of Westwood Holdings Group, Inc., which will be held on Thursday, April 19, 2012,18, 2013, at 10:00 a.m., Central time, at The Crescent Club, 200 Crescent Court, Suite 1700, Dallas, Texas 75201. The official Notice of Annual Meeting together with a proxy statement and proxy card are enclosed. Please give this information your careful attention.

Westwood invites all stockholders to attend the meeting in person. Whether or not you expect to attend the annual meeting, we urge you to complete, sign, date and promptly return the accompanying proxy card in the enclosed postage-paid envelope to assure your representation at the meeting. You can revoke your proxy at any time before it is voted by delivering written notice to Brian O. Casey at Westwood’s principal executive office, by signing and mailing to us a proxy card bearing a later date, or by attending the meeting and voting in person.

						Sincerely,
March 14, 20128, 2013
						Brian O. Casey
						Chief Executive Officer, President
				and Secretary

		WESTWOOD MANAGEMENT • WESTWOOD TRUST
		200 CRESCENT COURT, SUITE 1200 • DALLAS, TEXAS 75201 • T.214.756.6900 • F.214.756.6979 • www.westwoodgroup.com

TABLE OF CONTENTS

WESTWOOD HOLDINGS GROUP, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 19, 201218, 2013

To the Stockholders of Westwood Holdings Group, Inc.:

NOTICE IS HEREBY GIVEN that the annual meeting of the stockholders of Westwood Holdings Group, Inc. (“Westwood,” the “Company,” “we,” “us” or “our”) will be held at The Crescent Club at 200 Crescent Court, Suite 1700, Dallas, Texas 75201 on Thursday, April 19, 2012,18, 2013, at 10:00 a.m., Central time, to consider and vote on the following proposals:

In addition, we will consider the transaction of such other business as may properly come before the meeting or at any adjournments or postponements.

The foregoing items of business are more fully described in the attached proxy statement.

Only stockholders of record at the close of business on March 2, 20121, 2013 are entitled to notice of, and to vote at, the annual meeting and any adjournments or postponements thereof. A holder of shares of our common stock as of the record date is entitled to one vote in person or by proxy for each share of common stock owned by such holder on all matters properly brought before the annual meeting or at any adjournments or postponements.

All of our stockholders are invited to attend the annual meeting. Whether or not you expect to attend the annual meeting, we urge you to complete, sign, date and promptly return the accompanying proxy card in the enclosed postage-paid envelope to assure your representation at the meeting. You can revoke your proxy at any time before it is voted by delivering written notice to Brian O. Casey at our principal executive office, which is located at 200 Crescent Court, Suite 1200, Dallas, Texas 75201, by signing and mailing to us a proxy bearing a later date, or by attending the annual meeting and voting in person.

If you are the beneficial owner of shares of our common stock held in street name, you will receive voting instructions from your broker, bank or other nominee (who must be the stockholder of record). The voting instructions will provide details regarding how to vote these shares. Additionally, you may vote these shares in person at the annual meeting if you have requested and received a legal proxy from your broker, bank or other nominee giving you the right to vote the shares at the annual meeting, and you complete the legal proxy and present it to us at the annual meeting. Pursuant to the New York Stock Exchange rules, if you hold your shares in street name, nominees will not have discretion to vote these shares on the election of directors. Accordingly, if your shares are held in street name and you do not submit voting instructions to your broker, bank or other nominee, these shares will not be counted in determining the outcome on Proposal 1 set forth in this proxy statement at the annual meeting. We encourage you to provide voting instructions to your broker, bank or other nominee if you hold your shares in street name so that your voice is heard on these proposals.

This proxy statement and proxy card are being mailed to our stockholders on or about March 20, 2012.15, 2013.

i

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

Important Notice Regarding Internet Availability of Proxy Materials for the Stockholder Meeting to be Held on April 19, 201218, 2013

The proxy materials for the Company’s Annual Meeting of Stockholders, including the 20112012 Annual Report, the Proxy Statement and any other additional soliciting materials, are available over the Internet by accessing the Company’s website athttp://ir.westwoodgroup.com/annuals.cfm. Other information on the Company’s website does not constitute part of the Company’s proxy materials.

ii

WESTWOOD HOLDINGS GROUP, INC.

PROXY STATEMENT FOR

2012 ANNUAL MEETING2013 Annual Meeting OF STOCKHOLDERS

TO BE HELD ON APRIL 19, 201218, 2013

GENERAL QUESTIONS AND ANSWERS

The following questions and answers are intended to provide brief answers to frequently asked questions concerning the proposals described in this proxy statement and the proxy solicitation process. These questions and answers do not, and are not intended to, address all the questions that may be important to you. You should carefully read the remainder of this proxy statement. This proxy statement and the accompanying proxy card are being mailed to the stockholders of Westwood Holdings Group, Inc. (“Westwood,” the “Company,” “we,” “us” or “our”) on or about March 20, 2012.15, 2013.

The Annual Meeting

If you submit your properly executed proxy without voting instructions, your shares represented by that proxy will be voted as recommended by the Board of Directors.

common stock owned by such holder on all matters properly brought before the annual meeting or at any adjournments or postponements thereof. As of March 2, 2012,1, 2013, there were 8,023,7288,123,263 shares of common stock outstanding and entitled to vote on each of the proposals.

Q:	What is the difference between holding shares as a “stockholder of record” and as a “beneficial owner”?

Beneficial Owners: If your shares are held through a bank, broker or other nominee, you are the “beneficial owner” of shares held in “street name,” and these proxy materials are being forwarded to you by your bank, broker or other nominee, which is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee on how to vote by completing the instructions provided to you by your bank, broker or other nominee. However, since you are not a stockholder of record, you may not vote these shares in person at the annual meeting unless you obtain a valid proxy from your bank, broker or other nominee (who must be the stockholder of record) giving you the right to vote the shares.

Under applicable rules, ProposalProposals 1, is3 and 4 are considered a “non-routine” matter, onmatters, which banks, brokers and other nominees are not allowed to vote on unless they have received voting instructions from the beneficial owners of such shares. The proposal to ratify the appointment of Grant Thornton LLP as Westwood’s independent auditor for the year ending December 31, 20122013 (Proposal No. 2) is considered a routine matter on which banks, brokers and other nominees may vote in their discretion on behalf of beneficial owners who have not provided voting instructions. Your bank, broker or other nominee will send you instructions on how you can instruct them to vote on Proposal No. 2. If you do not provide voting instructions, your bank, broker or other nominee will have discretionary authority to vote your shares with respect to Proposal No. 2.

there may be broker non-votes on this proposal, only “FOR” votes will be counted in determining whether a plurality has been cast in favor of a director. Broker non-votes and “WITHHOLD” votes will not affect the outcome on the election of directors.

Proposal No. 2: The ratification of the appointment of Grant Thornton LLP as Westwood’s independent auditors for the year ending December 31, 20122013 requires the affirmative “FOR” vote of a majority of the votes cast at the annual meeting. Abstentions will have no effect on the outcome of this proposal.

Proposal No. 3: The approval of the Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries requires the affirmative “FOR” vote of a majority of the votes cast at the annual meeting (provided that the total votes cast upon this proposal represent over fifty percent (50%) of all shares entitled to vote on this proposal). As the approval of the Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries is a non-routine matter under applicable rules, your bank, broker or other nominee cannot vote without instructions from you. An abstention is a vote cast under current NYSE rules, and, as a result, abstentions will have the effect of a vote “AGAINST” this proposal. A broker non-vote, however, is not a vote cast under current New York Stock Exchange (“NYSE”) rules, and, as a result will have no effect on the outcome of this proposal.

Proposal No. 4: The approval of the Second Amendment to the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan requires the affirmative “FOR” vote of a majority of the votes cast at the annual meeting (provided that the total votes cast upon this proposal represent over fifty percent (50%) of all shares entitled to vote on this proposal). As the approval of the Second Amendment to the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan is a non-routine matter under applicable rules, your bank, broker or other nominee cannot vote without instructions from you. An abstention is a vote cast under current NYSE rules, and, as a result, abstentions will have the effect of a vote “AGAINST” this proposal. A broker non-vote, however, is not a vote cast under current NYSE rules, and, as a result will have no effect on the outcome of this proposal.

Procedures for Voting

Q:	How do I vote?

If your shares are held by your broker as your nominee (that is, in “street name”), you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker to vote your shares. If your shares are held in street name, your proxy card may contain instructions from your broker that allow you to vote your shares using the Internet or telephone. Please consult with your broker if you have any questions regarding the electronic voting of shares held in street name.

If you are not a stockholder of record, but instead hold your shares in “street name” through a bank, broker or other nominee, the above-described options for revoking your proxy do not apply. Instead, you will need to follow the instructions provided to you by your bank, broker or other nominee in order to revoke your proxy and submit new voting instructions.

Our Current Stock Ownership

We believe that our executive officers and directors intend to vote their shares of our common stock on each of the proposals presented in this proxy statement as recommended by the Board of Directors.

Susan M. Byrne, our Chairman, owned 8.2%6.4%, and Brian O. Casey, our President and Chief Executive Officer, owned 4.9%3.8% of our outstanding common stock as of March 2, 2012.1, 2013. Our employees and directors, including Ms. Byrne and Mr. Casey, collectively owned approximately 33.6%29.7% of our outstanding common stock as of March 2, 2012.1, 2013.

Other Information

Crescent Court, Suite 1200, Dallas, Texas 75201, Attn: Secretary, no later than November 20, 2012.In15, 2013.In addition, all proposals will need to comply with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “1934“Exchange Act”), which lists the requirements for the inclusion of shareholder proposals in company-sponsored proxy materials.

However, if we did not hold an annual meeting during the previous year, or if the date of the current year’s annual meeting has been changed by more than 30 days from the date of the previous year’s annual meeting, then the deadline is a reasonable time before we begin to print and mail our proxy materials. For the 20132014 annual meeting, the deadline is November 20, 2012.15, 2013. Director candidates recommended by stockholders are evaluated by the Governance/Nominating Committee based on the same criteria applied by the Governance/Nominating Committee to director candidates identified by that committee. To be valid, a stockholder’s notice to the Corporate Secretary must set forth certain information, as further described in “Corporate Governance Information—Director Nominees.”

William R. Hardcastle, Jr.,Mark A. Wallace, Chief Financial Officer

Westwood Holdings Group, Inc.

200 Crescent Court, Suite 1200

Dallas, Texas 75201

Telephone: (214) 756-6900

This question and answer section is qualified in its entirety by the more detailed information contained in this proxy statement.You are strongly urged to carefully read this proxy statement carefully in its entirety before you vote.

This proxy statement contains important information that should be read before you vote on the proposals herein. You are strongly urged to read this proxy statement, including Appendix A and Appendix B hereto, in its entirety. You are also strongly urged to read our Annual Report on Form 10-K for the period ended December 31, 2011,2012, which is being sent to you with this proxy statement.

PROPOSAL 1:

Election of Directors

Our bylaws provide that the Board of Directors of the Company (the “Board”) will consist of between three and eleven directors, as determined from time to time by resolution of the Board. The Board of Directors has previously set the number of directors at eight, all of whose terms expire asat the 2013 Annual Meeting. Director Tom C. Davis is not standing for re-election to the Board at the 2013 Annual Meeting. Accordingly, the Board of Directors has reduced the size of the 2012 Annual Meeting.Board and established the number of directors as seven. Each director elected at the 20122013 Annual Meeting will serve until the 20132014 Annual Meeting and thereafter until his or her successor has been elected and qualified or until the director’s earlier death, resignation or removal. The Board of Directors, upon the recommendation of the Governance/Nominating Committee, has nominated the nominees listed below. Each nominee has consented to being named in this proxy statement and to serve if elected.

We have no reason to believe that any of the nominees will not serve if elected, but if any of them should become unavailable to serve as a director, and if the Board of Directors designates a substitute nominee, the persons named in the accompanying proxy will vote for the substitute nominee designated by the Board of Directors, unless a contrary instruction is given in the proxy.

Each stockholder is entitled to cast one vote for each director nominee per share of common stock held by them at the close of business on March 2, 2012.1, 2013. A plurality of the shares represented in person or by proxy at the annual meeting and entitled to vote is required for the election of directors. This means that the eightseven director nominees whothat receive the most votes will be elected. Votes may be cast in favor of a director nominee or withheld. Stockholders may withhold authority to vote for any nominee by striking a line through the name of such nominee in the space provided for such purpose on the proxy card. Broker non-votes and votes that are withheld will be excluded entirely from the vote and will have no effect. Votes that are withheld for a particular nominee will be excluded from the vote for that nominee only.

Nominees

The persons nominated to be directors are listed below. The following information is submitted concerning the nominees for election as directors:

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE

FOR THE APPROVAL OF EACH OF THE DIRECTOR NOMINEES.

The biographical information for each director nominee is set forth below.

Brian O. Caseyhas served as Chief Executive Officer of Westwood since January 2006, as President, Secretary and director of Westwood since its inception in December 2001, and as Chief Operating Officer of Westwood from 2001 to 2005. Mr. Casey has served as Chief Executive Officer of Westwood Management Corp. (“Westwood Management”), our subsidiary that provides investment advisory services to a variety of clients, since January 2006, as Secretary since 2003, as President since 2002, and as a director since 2000. Mr. Casey served as Chief Operating Officer of Westwood Management from 2000 to 2005, as Executive Vice President from 2000 to 2002, and as Vice President from 1992 to 1996. Mr. Casey has served as President and director of Westwood Trust our subsidiary that provides trust and custodial services, since 1996. Since 2002, Mr. Casey has served on the Tartan Board of Directors, a group exclusively devoted to raising money for the Texas Scottish Rite Hospital for Children. Since 2006, he has been a member of the Governor’s Business Council for the State of Texas. He was appointed in 2008 to the board of the Baylor Health Care System Foundation, which helps raise money to support Baylor Health Care System’s mission of patient care, education, research and community service. In 2011, he was appointed to the Board of the Cooper Institute, an organization that is dedicated to scientific research in the field of preventative medicine and public health.

As the Chief Executive Officer of the Company and with over 1920 years in senior executive roles with the Company, Mr. Casey brings an extensive knowledge of and experience with the Company and its business as well as valuable leadership and management experience. Mr. Casey has deep knowledge of the Company’s operations, strategies and competitive environment as well as the asset management industry as a whole. As a board member of numerousseveral private organizations, Mr. Casey also brings valuable experience in governance matters.

Susan M. Byrne has served as Chairman of the Board of Directors and director of Westwood since its inception in December 2001. She previouslyMs. Byrne served as Westwood’s Co-Chief Investment Officer from January 2011 to February 2012, as its Chief Investment Officer of Westwood from January 2006 to January 2011, and as its Chief Executive Officer from December 2001 to December 2005. Ms. Byrne is the founder of Westwood Management, and has served as its Chairman of the Board since 1983, as its Co-Chief Investment Officer from January 2011 to February 2012, as its Chief Investment Officer from 1983 to January 2011,February 2012, and as its Chief Executive Officer from 1983 to 2005, and as its President from 1983 to 2002. She also served as a director of Westwood Trust from 1996 to 1999. Ms. Byrne servesShe has previously served as a member of the Board of Grace Presbyterian Ministries Foundation. She served asCommunities Service Foundation, a member of the Board of the University of Texas Investment Management Company, from 1996 to 2004 and as a member of the Board of Trustees for the City of Dallas Employees Retirement Fund from 1998 to 2003.Fund.

As the Founder and Chairman of the Board of the Company and as a result of her tenure with the Company and its subsidiaries for over 2830 years, Ms. Byrne brings an extensive knowledge of and experience with the Company and its business as well as valuable leadership and management experience. Ms. Byrne has deep knowledge of the Company’s operations, strategies and competitive environment as well as the asset management industry as a whole. With over 40 years of experience in the investment management business, Ms. Byrne is uniquely qualified to provide insight to the Board on the Company’s investment management strategies and operations. As a board member of numerousseveral private organizations, Ms. Byrne also brings valuable experience in governance matters.

Tom C. Davishas served as a director of Westwood since April 2004. He served as a director of Westwood Trust from March 2004 to December 2006. Since March 2001, he has served as Chief Executive Officer of The Concorde Group, a private investment firm. Mr. Davis serves on the Board of Directors of Dean Foods Company, an NYSE-listed dairy and branded foods business; Affirmative Insurance Holdings, Inc., a NASDAQ-listed integrated, non-standard auto insurance business; and Bluffview Advisors, LLC, an inactive registered broker-dealer headquartered in Dallas, Texas. He was the managing partner and head of banking and corporate finance for the Southwest division of Credit Suisse First Boston (formerly Donaldson, Lufkin & Jenrette) from March 1984 to February 2001.

Mr. Davis brings extensive financial, operational, regulatory, strategic and capital markets expertise to the Board, having led the investment banking and corporate finance group for the Southwest Division of Credit Suisse First Boston (formerly Donaldson, Lufkin & Jenrette) for 17 years. Mr. Davis also brings valuable experience in business, governance, compensation and financial matters through his current and prior service as a director for other public and private companies.

Richard M. Frankhas served as a director of Westwood and Westwood Trust since February 2006. Since December 2008, Mr. Frank has served as Executive Chairman of the Board of CEC Entertainment, Inc. (“CEC”), a Dallas-based NYSE-listed company that operates a chain of pizza and children’s entertainment restaurants. He has served as a directorDirector of CEC since June 1985. He served as Chairman of the Board and Chief Executive Officer of CEC from March 1986 to December 2008, and served as CEC’s President and Chief Operating Officer from June 1985 until October 1988.

Mr. Frank brings extensive knowledge with regard to executive and board level oversight of a public company through his significant experience as chief executive officer, chairman and director of CEC. Mr. Frank also has a deep understanding of business, governance, compensation and financial matters through his service with CEC.

Robert D. McTeerhas served as a director of Westwood and Westwood Trust since July 2007. Mr. McTeer has served as a Distinguished Fellow at the National Center for Policy Analysis (the “NCPA”)(NCPA) since January 2007. Prior to joining the NCPA, he was Chancellor of the Texas A&M University System from November 2004 through November 2006. Before that, he had a 36-year career with the Federal Reserve System, including approximatelyalmost 14 years as President of the Federal Reserve Bank of Dallas and as a member of the Federal Open Market Committee.Committee (FOMC). Mr. McTeer currently serves on the Board of Directors of Refocus Group, a privatenonpublic company, basedheadquartered in Dallas, engaged in research and development of surgical procedures for vision disorders. He also serves as a Director of Aquinas Companies, a private company based in Houston primarily engaged in construction, and as a Director of Beal Bank Plano(Plano) and Beal Bank Nevada, both private companies.USA (nonpublic). He is a former Director of Aquinas Companies (nonpublic), Guaranty Bank a public company,(public), the University of Georgia’s College of Business (nonprofit), and the National Council on Economic Education a non-profit entity.(nonprofit). He is a former Director and President of the Association of Private Enterprise Education a non-profit entity.(nonprofit).

Mr. McTeer brings extensive knowledge of capital markets and the global economy, having served with the Federal Reserve System for 36 years. Mr. McTeer also brings valuable experience in business, governance, compensation and financial matters through his current and prior service as a director for other public and private companies.

Geoffrey R. Normanhas served as a director of Westwood and Westwood Trust since April 2007. He has been an independent consultant to General Electric Company (“General Electric”) since 2004. He was employed by General Electric from 1968 to 2004, serving in various roles including Comptroller of GE Española, Chief Financial Officer of GE International Contractor Equipment, Vice President & Treasurer of GE Capital, and Executive Vice President of GE Asset Management from April 1988 to March 2004. He is currently a memberMr. Norman graduated from GE’s Financial Management Program and spent three years on GE’s Corporate Audit Staff, conducting numerous audits of GE businesses in the Board of Trustees of the Canadian General Electric Pension Trust. He alsoUnited States and internationally. Mr. Norman serves on an advisory boardsboard for QD Technology, a start-up software company; and buildOn, a not-for-profit entity that builds schools in underdeveloped countries and organizes after-school clubs in United StatesUS high schools. Mr. Norman also serves as a member of the Distribution Committee and as an advisor to 5AM Ventures, an early-stage venture capital biotech firm.firm based in Menlo Park, California.

Mr. Norman brings extensive financial, operational, regulatory and strategy expertise to the Board, having served in several finance and executive management roles over a 36-year career at General Electric. In addition, asAs a former executive with GE Asset Management, where he led the creation of GE’s external money management business and served on the Board of Trustees of GE Canada’s Pension Plan, and current member of the Board of Trustees of the Canadian General Electric Pension Trust, Mr. Norman brings extensive knowledge of the institutional investment management business from both the asset manager and plan sponsor perspective.

Martin J. Weilandhas served as a director of Westwood and Westwood Trust since December 2010. He retired as Chairman, President and Chief Executive Officer of Northern Trust Bank of Texas N.A. in May of 2009. Before his appointment to the CEO position in 1997 to CEO, Mr. Weiland served as Chief Fiduciary Officer of Northern Trust Bank of Texas N.A. He has more than 35 years of experience in the trust and investment management industry. Mr. Weiland began his career at Continental Illinois National Bank in 1973. He then moved to Texas to become Manager of Employee Benefits for Texas Commerce Bank. In 1987, he joined First Republic (Bank of America) to manage Corporate and Institutional Trust. He is a past Chairman of the Trust Financial Services

Division of the Texas Bankers Association and has served on various industry related committees including the American Bankers Association, as well as the Texas Bankers Association. He is currently on the boardBoard of The Dallas Opera, having served as President/Chairman on two separate occasions.

Mr. Weiland brings extensive knowledge of the trust and investment management industries to the Board, having served over 35 years with Northern Trust, First Republic Bank, Texas Commerce Bank and Continental Illinois Bank. Mr. Weiland brings a thorough understanding of competitive, regulatory, client service and strategic issues facing the Company.

Raymond E. Wooldridgehas served as a director of Westwood since its inceptionit became a public company in December 2001. He has served as a director of Westwood Trust since 2000. He is a director of CEC Entertainment, Inc., a Dallas-based NYSE-listed company that operates a chain of pizza and children’s entertainment restaurants. He is Chairman of the Board of Reeves Bancshares, Inc., a one-bank holding company whose principal subsidiary is Stockmans Bank, which serves southwestern Oklahoma. Mr. Wooldridge was a Director for Davidson Companies, Inc., a financial services holding company headquartered in Montana, from 1994 to 2009. He also served as a Director of Davidson Trust Company, a wealth management and trust firm, from 2001 to 2005. From 1986 to 1999, he was a director of SWS Group, Inc. (“SWS”); from 1996 to 1999, he served as the Vice Chairman and Chairman of the Executive Committee of SWS; from 1993 to 1996, he served as Chief Executive Officer of SWS; and from 1986 to 1993, he served as President and Chief Operating Officer of SWS. He is a past Chairman of the National Securities Clearing Corporation, a national clearing agency registered with the SEC, and past Vice Chairman of the Board of Governors of the National Association of Securities Dealers.

Mr. Wooldridge brings extensive financial, operational, regulatory and strategy expertise to the Board, having served in senior executive roles with SWS for over 13 years. In addition, as a former senior executive and director of SWS, our former parent company, Mr. Wooldridge developed intimate knowledge of the Company’s operations, firm history and competitive landscape. Mr. Wooldridge also brings valuable experience in business, governance, compensation and financial matters through his current and prior service as a director for other public and private companies.

Tom C. Davis, who served as a director of Westwood in 2012, will not be standing for re-election at the 2013 Annual Meeting.

Corporate Governance Information

The Board of Directors held five meetings during 2011.2012. All of the director nominees attended at least seventy-five percentall of the meetings held in 2011.2012. The standing committees of the Board of Directors currently consist of the Audit Committee, the Compensation Committee and the Governance/Nominating Committee. The membership and duties of these committees are described below.

Board Committees

Audit Committee. The Audit Committee operates pursuant to a charter approved by our Board of Directors, which the Audit Committee reviews periodically to determine if revisions are necessary or appropriate. A copy of the charter is posted on our website at www.westwoodgroup.com. In addition, a copy of the charter is available upon written request to our Corporate Secretary at our principal executive office (200 Crescent Court, Suite 1200, Dallas, Texas 75201). The Audit Committee monitors our independent auditors as well as the preparation of our financial statements. The Audit Committee considers and selects an independent accounting firm to conduct the annual audit, monitors the independence of our independent accountants and monitors our accounting and financial reporting processes and audits of our financial statements. The Audit Committee is responsible for reviewing reports from our management relating to our financial condition and other matters that may have a material impact on our financial statements and compliance policies. The Audit Committee is also responsible for inquiring of our management and independent auditors regarding the appropriateness of the accounting principles we follow, as well as reviewing changes in accounting principles and their impact on our financial statements in terms of scope of audits conducted or scheduled to be conducted. The Audit Committee is further responsible for preparing a report stating, among other things, whether our audited financial statements should be included in our Annual Report. The Audit Committee met five times during 2011.2012. All of the members of the Audit Committee attended at least seventy-five percentall of the meetings held in 2011.2012.

Compensation Committee. The Compensation Committee operates pursuant to a charter approved by our Board of Directors, a copy of which is posted on our website at www.westwoodgroup.com. In addition, a copy of the charter is available upon written request to our Corporate Secretary at our principal executive office. The Compensation Committee authorizes and determines all compensation for our executive officers, administers our incentive compensation plans in accordance with the powers and authority granted in such plans, determines any incentive awards to be made to our officers, administers all of our stock incentive plans and other equity ownership,

compensation, retirement and benefit plans, approves the performance-based compensation of individuals pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended (“Code Section 162(m)”), and administers other matters relating to compensation or benefits. The Compensation Committee met six times during 2011.2012. All of the members of the Compensation Committee attended at least seventy-five percentall of the meetings held in 2011.2012.

Governance/Nominating Committee. The Governance/Nominating Committee operates pursuant to a charter approved by our Board of Directors, a copy of which is posted on our website at www.westwoodgroup.com. In addition, a copy of the charter is available upon written request to our Corporate Secretary at our principal executive office. The primary function of the Governance/Nominating Committee is to develop and oversee the application of corporate governance principles to Westwood, to identify and evaluate qualified candidates for Board membership and recommend to the Board director nominees to be voted on at the annual meeting of stockholders, and communicate with members of the Board regarding Board and committee meeting format and procedures. The Governance/Nominating Committee met four times during 2011.2012. All of the members of the Governance/Nominating Committee attended at least seventy-five percentall of the meetings held in 2011.2012.

Director Independence

Our Board of Directors has adopted Corporate Governance Guidelines, which concern director independence, among other matters. The full text of our Corporate Governance Guidelines is available on our website at www.westwoodgroup.com. In addition, a copy of our Corporate Governance Guidelines is available upon written request to our Corporate Secretary at our principal executive office.

Pursuant to our Corporate Governance Guidelines, a majority of the members of our Board of Directors, as well as all members of each committee of the Board, must be non-management directors who meet the “independence” requirements of the NYSE Corporate Governance Listing Standards and other governing laws and regulations. In addition, all members of the Audit Committee must meet additional “independence” standards required under the 1934Exchange Act. Our Board of Directors annually reviews director independence. In the 20112012 review, the Board of Directors reviewed directors’ responses to a questionnaire asking about their relationships, and the relationships of their family members, with us, and other potential conflicts of interest. In connection with this review, our Board of Directors specifically considered that Mr. Wooldridge has a former relationship with SWS Group, Inc., the company from which we were spun-off in 2002. In addition, our Board of Directors was aware that certain of our directors and individuals or entities affiliated with such directors have asset management accounts that are held by one of our subsidiaries and managed by us. After noting such items, and based upon its review, the Board of Directors unanimously decided that none of these relationships constituted a material relationship with us that would affect the “independence” of any such director under the NYSE rules.

As a result, the Board affirmatively determined that Messrs. Davis, Frank, McTeer, Norman, Weiland and Wooldridge are all “independent” as defined under SEC and NYSE rules. Ms. Byrne and Mr. Casey (each of whom iswas an executive officer of the Company)Company during 2012) are not independent directors.

Board Leadership Structure

Our Board of Directors currently separates the roles of Chief Executive Officer and Chairman of the Board, however the Board does not have a policy in place that requires these two roles to remain separate. Brian O. Casey serves as our President, Chief Executive Officer and director, and Susan M. Byrne serves as our Chairman of the Board. As President and Chief Executive Officer, Mr. Casey has primary responsibility for the day-to-day operations of the Company and provides leadership on the Company’s key strategic objectives. As Chairman of the Board, Ms. Byrne provides leadership to the Board and chairs its meetings.

Pursuant to our Corporate Governance Guidelines, if the Chairman of the Board is an employee of the Company, the Board will designate a non-management director as “Lead Director.” Since Ms. Byrne, the Chairman of the Board, is an executive officeremployee of the Company, the Board has appointed Mr. Wooldridge to serve as Lead Director. As such, he (i) chairs executive sessions of the non-management directors, (ii) serves as the principal liaison between the Chairman of the Board and the independent directors, and (iii) advises the Chairman of the Board with respect to agenda items. In accordance with our Corporate Governance Guidelines, our non-management directors meet in executive session without the presence of management on a regular basis.

With a supermajority of independent directors, an Audit Committee, a Compensation Committee and a Governance/Nominating Committee each comprised entirely of independent directors, a Lead Director to chair all executive sessions of the non-management directors, and a Chairman of the Board with extensive experience as a leader in the asset management industry and intimate knowledge of the Company’s strategy and daily operations, the Board of Directors believes that its existing leadership structure provides an appropriate balance that best serves the Company and its stockholders.

Board’s Role in Risk Oversight

The Board’s role in the Company’s risk oversight process includes receiving regular reports from members of senior management on areas of material risk to the Company, including operational, financial, legal and regulatory, and strategic risks. The Audit Committee is responsible for oversight of risks relating to the Company’s accounting matters, financial reporting and legal and regulatory compliance. To satisfy these oversight responsibilities, the Audit Committee meets regularly with management, the Company’s internal auditor and Grant Thornton LLP, the Company’s independent auditor. The Compensation Committee is responsible for overseeing risks relating to employment policies and the Company’s compensation and benefits programs. To satisfy these oversight responsibilities, the Compensation Committee meets regularly with management to better understand the implications of compensation decisions, particularly the risks the

Company’s compensation policies pose to the Company’s financial condition, human resources and stockholders. The Governance/Nominating Committee is responsible for overseeing risks relating to overall corporate governance and Board succession planning. To satisfy these oversight responsibilities, the Governance/Nominating Committee annually reviews Board composition and Board and committee performance and periodically reports to the Board on corporate governance matters.

Additionally, the Board’s risk oversight function is supported by the directorships of Mr. Casey and Ms. Byrne, whose industry knowledge and experience provide the Board with a deep understanding of the risks that the Company faces. Accordingly, the Board of Directors believes that having Mr. Casey and Ms. Byrne both serve on the Board, together with a supermajority of independent directors, three independent Board committees and a Lead Director, provide the appropriate leadership structure to assist in effective risk oversight by the Board.

Risks Related to Compensation Policies and Practices

As part of its oversight of the Company’s executive and non-executive compensation programs, the Compensation Committee considers the impact of the Company’s compensation programs, and the incentives created by the compensation awards that it administers, on the Company’s risk profile. In addition, the Company reviews all of its compensation policies and procedures, including the incentives that they create and factors that may reduce the likelihood of excessive risk-taking, to determine whether they present a material risk to the Company. The Compensation Committee also considers the following risk mitigating factors:

Based on this review, the Company has concluded that its compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

Director Nominees

The Board of Directors has delegated to the Governance/Nominating Committee specified responsibilities relating to selection of directors to serve on the Board. The Governance/Nominating Committee of the Board has the responsibility for identifying potential candidates for Board membership and for making a recommendation to

the Board of a slate of director candidates to stand for election at the annual meeting of our stockholders. The Governance/Nominating Committee seeks to identify, and the Board selects, director candidates who (i) have significant business experience that is relevant and beneficial to the Board and Westwood, (ii) are willing and able to make a sufficient time commitment to the affairs of Westwood in order to effectively perform effectively the duties of a director, including regular attendance of Board meetings and committee meetings, (iii) are committed to the long-term growth and profitability of Westwood, (iv) are individuals of character and integrity, (v) are individuals with inquiring minds who are willing to speak their minds and challenge and stimulate management and (vi) represent the interests of Westwood as a whole and not just the interests of a particular stockholder or

group. The Governance/Nominating Committee does not have a specific policy considering diversity in identifying director candidates, but rather uses the criteria listed above. The Governance/Nominating Committee believes these criteria are the key factors in identifying qualified director candidates.

The Governance/Nominating Committee has a policy for considering new director candidates recommended by our stockholders if such recommendations are made in compliance with the following procedures. A stockholder wishing to recommend a candidate for inclusion as a director nominee in the proxy statement for our annual meeting must submit a written notice of the recommendation to our Corporate Secretary at our principal executive office. The submission must be received at our principal executive office not less than 120 calendar days before the one-year anniversary of the date that the proxy statement for the previous year’s annual meeting was released to stockholders. However, if we did not hold an annual meeting during the previous year, or if the date of the current year’s annual meeting has been changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before we begin to print and mail our proxy materials. For the 20132014 annual meeting, the deadline is November 20, 2012.15, 2013. Director candidates recommended by stockholders are evaluated by the Governance/Nominating Committee based on the same criteria applied by the Governance/Nominating Committee to director candidates identified by that committee, as described in the previous paragraph.

To be valid, a stockholder’s notice to the Corporate Secretary must set forth (i) the name and address of the stockholder recommending such candidate, as such information appears on our books (if the stockholder is a record holder), (ii) the class and number of shares of Westwood stock that are beneficially owned by the stockholder, (iii) the name, age, business address and residence address of each candidate proposed in the notice, (iv) each candidate’s biographical data and qualifications, (v) the class and number of shares of Westwood stock beneficially owned by the candidate, if any, (vi) a description of all arrangements or understandings between the stockholder (or between any person(s) at whose request the stockholder is making the recommendation) and each candidate and (vii) any other information required to be disclosed in solicitations of proxies for election of directors or otherwise required pursuant to Regulation 14A under the 1934Exchange Act. The foregoing information must be provided with respect to any person that the stockholder proposes to recommend for election or re-election as a director. The candidate’s signed written consent to being named in the proxy statement as a nominee and to serving as a director if elected must also be provided.

For the 20122013 Annual Meeting, our Governance/Nominating Committee has not received a candidate recommendation from any stockholder (or group of stockholders), including any stockholder (or group of stockholders) that beneficially owns more than five percent of our common stock.

Communications with the Board

Stockholders or other interested parties may communicate with the Board of Directors or particular Board members (including our Lead Director or non-management directors as a group) by mailing a written communication to our Corporate Compliance Officer at 200 Crescent Court, Suite 1200, Dallas, Texas 75201, by email to compliance@westwoodgroup.com or by telephone to 214-756-6900. All communications are received and processed by the Corporate Compliance Officer before being referred to the appropriate Board member(s). Complaints relating to our accounting, internal accounting controls or auditing matters, and concerns regarding questionable accounting or auditing matters, are referred to the Chairman of the Audit Committee. Other communications intended for the Board of Directors at large are referred to our Lead Director, while communications intended for specific Board members are referred to those Board members. Advertisements, solicitations for periodical or other subscriptions, and similar communications are not forwarded to Board members. In the event that a complaint or concern appears to involve the Corporate Compliance Officer, then the stockholder or other interested party is encouraged to contact directly the Chairman of the Audit Committee, Raymond E. Wooldridge, at rwooldridge@westwoodgroup.com.

Stockholders may also communicate directly with Board members at the annual meetings of stockholders, as it is our policy that Board members should attend such meetings and make themselves available to address any matters properly brought before the meetings. All of our Board members attended the 20112012 annual meeting of stockholders.

Code of Ethics

All of our employees, including our principal executive officer, principal financial officer and principal accounting officer, and all of our directors are required by our Code of Business Conduct and Ethics (the “Code of Ethics”) to conduct our business in the highest legal and ethical manner. The full text of the Code of Ethics is available on our website at www.westwoodgroup.com. In addition, a copy of the Code of Ethics is available upon written request to our Corporate Secretary at our principal executive office.office address. We intend to post amendments to or waivers from the Code of Ethics as required by applicable rules on our website.

Our employees are required to report any conduct that they believe could in any way be construed as a fraudulent or illegal act or otherwise in violation of the Code of Ethics. The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters and to allow for the confidential and anonymous submission by employees of related concerns.

Director Compensation

We pay each non-employee member of our Board of Directors a $20,000 annual retainer, $5,000 for each regularly scheduled quarterly meeting of the Board of Directors attended by the member and $5,000 per Board or committee meeting attended other than regularly scheduled quarterly meetings. The Chairman of the Audit CommitteeLead Director receives an additional $5,000 annual retainer. Additionally, upon election or re-election as a member of our Board of Directors, each non-employee director is awarded 1,500 restricted shares of our common stock, which generally vest 12 months from the date of grant. In 2011, the Board established a policy that directors should own a minimum of 3,000 shares of our common stock within three years of their election or the establishment of this policy. The Compensation Committee reviews our compensation arrangements for directors from time to time. Brian O. Casey, our President and Chief Executive Officer, and Susan M. Byrne, our Chairman of the Board, and a Co-Chief Investment Officer during 2011, are not included in this table as they are Company employees and receive no compensation for their service as directors. The Company’s executive officers do not make recommendations regarding the non-employee directors’ compensation.

20112012 Director Summary Compensation Table

Notes, by column letter:

financial statements, which are included in our 20112012 Form 10-K filed with the SEC on February 28, 2012.2013. All restricted stock grants were made under the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan and are subject to a one-year vesting period as described above.

Holdings Group, Inc. Stock Incentive Plan and are subject to a one-year vesting period as described above. Mr. Mosle did not receive a restricted stock award in 2011 as he did not stand for reelection at the 2011 Annual Meeting of Stockholders.

As of December 31, 2011,2012, our directors held the following unvested restricted stock and unexercised stock options:stock:

Notes, by column letter:

EXECUTIVE OFFICERS

Biographical information regarding Westwood’s current executive officers and other key employees is as follows:

Brian O. Casey.See biographical information under the caption Proposal 1 – Election of Directors.

Susan M. Byrne.See biographical information under the caption Proposal 1 – Election of Directors.

Mark Freeman, age 44,45, has served as Westwood’s Executive Vice President since January 2011 and its Chief Investment Officer since February 2012. He previouslyMr. Freeman served as Westwood’sExecutive Vice President and Co-Chief Investment Officer from January 2011 to February 2012,2012. He served as its Senior Vice President and Portfolio Manager for Westwood from July 2006 to December 2010,2010. He joined Westwood in 1999 as itsAssistant Vice President and served as Vice President and Portfolio Manager from July 2000 to July 2006 and as its Assistant Vice President from 1999 to 2000.2006. Mr. Freeman is a member of the American Economics Association, the National Association of Business Economics, the CFA Institute, and the CFA Society of Dallas/Fort Worth. Additionally, he is a member of the Board of Trustees of Millsaps College, and serves as a board member for the Wilson Fund.

William R. Hardcastle, Jr.Mark A. Wallace, age 44,55, has served as Vice President and Chief Financial Officer of Westwood since November 2012. Mr. Wallace has extensive experience in senior financial officer roles at NYSE listed corporations. His experience includes financial reporting for SEC registrants, capital markets, corporate governance, global tax and treasury matters, mergers and acquisitions, and technology solutions. Prior to joining the Company, Mr. Wallace served as Chief Financial Officer of HCP, Inc., an S&P 500 real estate investment trust, from March 2004 until March 2009. Following HCP, Mr. Wallace served as Chief Financial Officer of Westcore Properties, a privately held international real estate firm, from August 2010 until December 2010, as a financial consultant to Goodman Networks, Inc., a telecommunication services company, from May 2011 until August 2012, and as Chief Financial Officer of Leading Edge Aviation Services, Inc., a privately held aerospace services company, from September 2012 until November 2012. Mr. Wallace also served as Chief Financial Officer of Titanium Metals Corporation and Tremont Corporation, both NYSE listed companies, and as Assistant Controller of Valhi, Inc. His career includes 11 years with Arthur Andersen LLP. Mr. Wallace holds a Bachelor’s and Master’s degree in business administration, and is a certified public accountant.

William R. Hardcastle, Jr., age 45, served as Vice President and Chief Financial Officer of Westwood from July 2005.2005 until November 2012, when he resigned as Chief Financial Officer to focus his attention on business development and strategic initiatives at the Company. Mr. Hardcastle served as Treasurer of Westwood from July 2002 to July 2005 and as Assistant to the President of Westwood from December 2001 to July 2002. Mr. Hardcastle is a member of the CFA Institute.

There are no family relationships among the directors, executive officers and other key employees of Westwood.Westwood, except as described under “Certain Relationships and Related Party Transactions – Review and Approval of Related Party Transactions.”

SEC rules require that we discuss the compensation of all individuals that served as a named executive officer during the year. As a result, Ms. Byrne, who served as Co-Chief Investment Officer until February 2012, and Mr. Hardcastle, who served as Chief Financial Officer until November 2012, are discussed in those capacities.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This compensation discussion and analysis provides information regarding our executive compensation program in 20112012 for the following executive officers of the Company (collectively, the “named executive officers”):

During 2011, the Company2012, we had only fourfive executive officers, all of whom are set forth above.

Effective February 7, 2012, Mark R. Freeman was named our Chief Investment Officer. Prior to this appointment, Mr. Freeman and Susan Byrne, our Founder and Chairman of the Board, shared this role as Co-Chief Investment Officers.

While Ms. Byrne no longer serves as Co-Chief Investment Officer, she remains on our Board of Directors and serves as its Chairman. Ms. Byrne also continues to work with the Company on strategic global initiatives and offer her investment experience to the Company. Our Amended and Restated Bylaws were amended and restated effective April 19, 2012, to provide, among other things, that the Chairman of the Board will not, by virtue of that position alone, be deemed an officer of the Company.

Effective November 6, 2012, Mark A. Wallace was appointed our Chief Financial Officer, replacing William R. Hardcastle Jr., who resigned as our Chief Financial Officer effective November 6, 2012, in order to focus his attention on other business development and strategic initiatives at the Company.

Overview of our Executive Compensation Program

The intellectual capital of our employees is collectivelyone of the most important assetassets to our firm. As an asset manager, our financial results are primarily based upon the amount of assets we manage, which is dependent on our ability to generate competitive long-term investment performance, build strong relationships with clients, investment consulting firms and other financial intermediaries, provide attentive client service and develop new client relationships, all of which is directly dependent upondepends, in part, on the intellectual capital of our intellectual capital.employees, including the named executive officers.

Highlights of our 2012 performance included the following:

•

With the addition of three funds in late 2012, our Westwood FundsTM family of mutual funds now includes ten funds and ended the year with $1.6 billion in assets under management.

We believe that the quality, expertise and commitment of our named executive officers are critical to enhancing theachieving our short-term and long-term value of the Company.business objectives and strategies. To this end, a coreprincipal objective in designingof our executive compensation program is to deliver competitive total direct compensation (i.e. base salary, annual cash incentive award and annual equity incentive award) upon the achievement of financial and individual performance and contributions that will attract, motivate and retain executives critical to our long-term success. The compensation awarded to our named executive officers is substantially dependent on our financial performance, as well as individual performance and contributions, which drives the creation of sustainable long-term stockholder value.

In 2011, our named executive officers demonstrated their capacity to perform well in an ongoing climate of economic uncertainty. Key highlights of the Company’s 2011 performance include the following:

The Compensation Committee (the “Committee”) believes that our executive compensation program has played a significant role in our ability to drive strong financial results and the creation of stockholder value, which is demonstrated by the accomplishments of our named executive officers in 2011. The Committee took the following key actions with respect to the compensation of the named executive officers in 2011:

Significant Aspects of our 2012 Executive Compensation Program

Over the past four years, the named executive officers have not received significant perquisites.

The Committee annually reviews and approves our executive compensation strategy and principles to ascertain whether they are aligned with our business strategy and objectives, stockholder interests, desired behaviors, and corporate culture. The Committee aims to set our named executive officers’ total direct compensation at a level that is fair, reasonable and competitive.

2011 Stockholders Advisory Vote on Executive Compensation

We conducted our firstAs further discussed below, we did not conduct an advisory vote on executive compensation at last yearyear’s Annual Meeting of Stockholders.

To date, we have conducted one advisory vote on executive compensation, which occurred at our 2011 Annual Meeting of Stockholders. While this vote was not binding on the Committee, the Board of Directors or the Company, the Committee values the opinions of the Company’s stockholders on executive compensation matters. Based upon the Inspector of Election’s report, thethis advisory vote on executive compensation received the favorable support of 97.6% of the votes cast thereon.thereon, reflecting strong stockholder support for our 2010 executive compensation program. The Committee reviewed these finalevaluated the results of this advisory vote, resultstogether with the other factors and determined that, givendata discussed in this Compensation Discussion and Analysis, in determining our 2012 executive compensation program. In light of the significant levelstrong stockholder support of support, noour 2010 executive compensation program, the Committee did not make any changes to our 2012 executive compensation program were necessary atsolely as a result of this time based on the voting results.advisory vote.

Additionally, in response to theThe majority of the votes cast for an advisory vote on executive compensation every three years at our 2011 Annual Meeting of Stockholders we have determined thatwere in favor of conducting the advisory vote on executive compensation will be conductedonce every three years, untilyears. Partly in response to this stockholder support, we holdhave adopted a policy of conducting the advisory vote on executive compensation once every three years. We will revisit this policy following the next advisory vote on the frequency of advisory votes on executive compensation.compensation, and we may revise this policy in the interim as we deem appropriate.

The Committee nevertheless made the following changes in the first quarter of 2013 to our executive compensation program:

Compensation Philosophy and Objectives

As an asset management firm, oneOur 2012 executive compensation program and compensation decisions were grounded in the following principles:

As further discussed below, in 2012 the Committee reviewed and considered the market compensation data derived from the McLagan Survey and the Custom Peer Group to ensure, in its subjective judgment, that the named executive officers. Ourofficers’ total direct compensation (i.e., base salary, annual cash incentive award and long-term success depends onequity awards) was competitive in our abilitymarketplace for executive talent. Furthermore, a significant portion of Messrs. Casey’s, Freeman’s and Hardcastle’s and Ms. Byrne’s 2012 total direct compensation—approximately 64% to

provide superior investment returns 85%—was “at risk” compensation, delivered in the form of annual cash incentive awards and attentive service to our clients. To achieve these goals, it is critical that we are able to attract, retain and motivate talented professionals within all levels of our Company who are committed to our core values of integrity, honesty and excellence as well as to properly align their incentives with our stockholders and clients.long-term equity awards. The Committee believesdesigned the annual cash incentive awards and long-term equity awards with the intention that compensation paid tosuch awards would focus the named executive officers should:

The Committee evaluates both performance and compensation relative to other peer companies to ensure that we maintain our ability to attract and retain superior employees in key positions. Our compensation program seeks to compensate the named executive officers at a level competitive with similar firms in the asset management industry (without targeting or setting compensation at specific benchmark percentiles) and to align executives’ incentives with stockholders and clients. The compensation program is designed to reward individual and company-wide performance as well as recognize the executives’ contribution to serving our clients and creating value for our stockholders. Accordingly, the compensation program for the named executive officers generally consists of a combination of base salary, an annual cash incentive award, an annual equity incentive award, and employee and post-retirement benefits.

Role of Executive Officers in Compensation Decisions

The Committee receives a joint recommendation fromIn 2012, Mr. Casey worked closely with the Committee to formulate specific plan and Ms. Byrneaward designs necessary to align our executive compensation program with our business objectives and strategies.

Mr. Casey provided the Committee his recommendations on the level and form of the compensation of Messrs. Hardcastle’sWallace, Hardcastle and Freeman’s compensation. The recommendation ofFreeman. With respect to Messrs. Hardcastle and Freeman, Mr. Casey and Ms. Byrne isCasey’s recommendations were based upon theirhis annual review of Messrs. Hardcastle’sthese executive officer’s individual performance and Freeman’s performance.their applicable employment arrangements, if any. With respect to Mr. Wallace, Mr. Casey’s recommendations were based upon his review of the market compensation data derived from the McLagan Survey and the Custom Peer Group as further described below. The Committee has complete discretion to accept, reject, or modify this recommendation.Mr. Casey’s recommendations. In 2011,2012, the Committee accepted, without modification, Mr. Casey’s and Ms. Byrne’s joint recommendationrecommendations regarding Messrs. Hardcastle’s and Freeman’sthe base salary adjustment,adjustments, if any, annual cash incentive award and long-term equity incentive award.awards for Messrs. Wallace, Hardcastle and Freeman.

Mr. Casey and Ms. Byrne dodoes not make recommendations regarding their compensation to the Committee.Committee as to his own compensation or the compensation of Ms. Byrne.

Setting Executive Compensation

Based on the foregoing philosophy and objectives, the Committee has structured ouraims to structure the executive compensation program to motivate the named executive officers to achieve the business strategies and goals set by usthe Company and to reward the executives for achieving such results.strategies and goals. In establishing the total direct compensation (i.e., base salary, annual cash incentive award and annuallong-term equity incentive award) forawards) of each of the named executive officers, the Committee performsperformed one or more of the following reviews:

With respect to

In approving the (i) annual base salarysalaries of each of the named executive officersMessrs. Casey, Hardcastle, Freeman and Ms. Byrne and (ii) annual cash incentive awardawards and equity incentive awardawards of Messrs. Casey, Hardcastle and Freeman, the Committee did not assess the above performance measures based upon predetermined goals, formulas or weighted factors, butfactors; rather, the Committee considered all of these measures subjectively and collectively; provided thatcollectively. However, as we discuss below, the Committee did use our annual “adjusted pre-tax income” (as further discusseddefined below) as the starting point for determining (a) the Company cash bonus pool, in which Messrs.Mr. Hardcastle and FreemanMr. Wallace participated was based uponin 2012, and (b) the Company’s annual “adjusted pre-tax income.”

With respect toperformance formula for determining the size of the annual cash incentive awardawards of Messrs. Casey and equity incentive award of Mr. CaseyFreeman, and Ms. Byrne and the Committee established a formula based on the Company’s adjusted pre-tax income. The Committee retains discretion to reduce (but not increase) the formula amounts2012 tranche of the annual cash incentive award payable to Mr.Messrs. Casey and Ms. Byrne as further discussed below.Freeman’s performance-based restricted stock shares.

The Committee chose the above performance measures because it believes that such measures are meaningful indicators of the Company’sour profitability and performance and align executiveour executive’s compensation with the interests of the Company’s stockholders and clients.our stockholders. As further described below, Companyour performance was only one of manyseveral factors considered by the Committee in approving executive compensation.

In approving the compensation of the named executive officersMessrs. Casey, Hardcastle and Freeman and Ms. Byrne in 2011,2012, the Committee considered the following subjective individual accomplishments and contributions:

Brian O. Casey. In assessing Mr. Casey’s base salary and assessing whether the Committee should exercise any discretion to reduce Mr. Casey’s annual cash incentive award, the Committee considered Mr. Casey’s:

William R. Hardcastle, Jr. In assessing Mr. Hardcastle’s base salary, annual cash incentive award and equity incentive award, the Committee considered Mr. Hardcastle’s:

Mark R. Freeman. In assessing Mr. Freeman’s base salary, annual cash incentive award, mutual fund bonus award, and equity award, the Committee considered Mr. Freeman’s:

Susan M. Byrne. In assessing Ms. Byrne’s base salary and assessing whether the Committee should exercise any discretion to reduce Ms. Byrne’s annual cash incentive award, the Committee considered Ms. Byrne’s:

Mark R. Freeman. In assessing Mr. Freeman’s base salary, annual cash incentive award and equity incentive award, the Committee considered Mr. Freeman’s:

The Committee did not assign individual weights to any of the above considerations, but usedassessed them collectively to makein making its compensation determinations. As further described below, individual performance was only one of manyseveral factors considered by the Committee in approving executive compensation.

The McLagan Survey is a widely used and definitive source of market compensation data for a significant number of public and private investment management and advisory firms. It provides detailed analyses of compensation for a greater depth of investment management employees than is available forfrom our public peers and is specifically focused on the asset management industry. The McLagan Survey provides market compensation data for approximately 56158 public and private investment management firms. However, the compensation analysis for a particular officer position in the McLagan Survey does not provide the identities of the individual investment management and advisory firms. Instead, the market compensation data is presented in several different groupings, including, by the firms’ headquartersbut not limited to, headquarter location, range of assets under management and job function. Confidentiality obligations to McLagan Partners and to its survey participants prevent us from disclosing the firms included in the survey.

The Custom Peer Group, which is periodically reviewed and updated by the Committee, consists of companies against which the Committee believes the Company competes for executive talent.may compete with in one or more aspects of its business. For 2011,2012, the companies comprising the Custom Peer Group were:

Most of the companies that comprise the Custom Peer Group are much larger companies than the Company in terms of assets under management and revenues and have greater resources than the Company.revenues. The Committee realizes this size

disparity and takes it into account when looking at the market compensation data derived from the Custom Peer Group in the context of evaluating and approving compensation for the named executive officers. There were no changes in the composition of the Custom Peer Group from 20102011 to 2011.2012.

The Committee considers the market compensation data derived from the McLagan Survey and the Custom Peer Group equally relevant and important, with neither source of information being a determiningdeterminative factor in setting executive compensation levels. The Committee uses both sources of information as a “market check” to ensure, in its subjective judgment, that individual pay components remain competitive. The Committee does not target any individual pay component of the named executive officers to fall within a specific range or percentile of the market compensation data derived from the McLagan Survey or the Custom Peer Group.

There is no pre-established target for the allocation between (i) cash and equity-based compensation and (ii) short-term and long-term incentive compensation. Rather, the Committee considers, among other things, Company performance, individual performance, and the market compensation data derived from the McLagan Survey and Custom Peer Group, as well as its own subjective judgment to determine the appropriate level and mix of each component of the executive compensation program.

20112012 Executive Compensation Components

For 2011,2012, the principal components of compensation for the named executive officers were:

Base Salary

Base salary is the fixed component of the named executive officer’sofficers’ annual cash compensation. We provide the named executive officers with a base salary to compensate them for services rendered during the fiscal year and in recognition of their expertise, skills, knowledge and experience.

Salary levels are typically considered annually as part of our performance review process, as well as upon a promotion, change in job responsibilities, or in connection with the renegotiationnegotiation of an employment agreement.terms of employment.

In 2011, Mr. Casey and Ms. Byrne did not receive an increase in theirThe base salaries as a result of the Committee’s desire to place a greater emphasis on their cashnamed executive officers as of the beginning and equity incentive awards to further align their interests withend of the long-term interests of our stockholders and clients. Mr. Casey’s base salary is $500,000, which is2012 fiscal year, including any adjustments made during the minimum base salary stipulated in his employment agreement. Ms. Byrne’s base salary is $750,000, which is the minimum base salary stipulated in her employment agreement. Ms. Byrne has not had a base salary increase in approximately five years.year, were as follows:

In 2011,

Mr. Hardcastle received a 2.7% merit increase in his base salary in recognition of 6% from $175,000 to $185,000, primarily due to the fact that he had not received a base salary increase in approximately three years. In determining Mr. Hardcastle’s base salary increase, the Committee also subjectively considered the Companyhis individual performance factors discussed above,above.

Mr. Freeman received an 81.8% increase in his base salary in connection with his promotion as Chief Investment Officer effective February 7, 2012. The Committee determined that this increase was appropriate in recognition of (i) the significant additional responsibilities he assumed as our Chief Investment Officer and (ii) his individual performance factors discussed above, andas well as to increase the market compensation data derived from the McLagan Survey or the Custom Peer Group.competitiveness of his base salary.

In 2011, Mr. Freeman’sconnection with Ms. Byrne’s resignation as Co-Chief Investment Officer, her base salary was increased 38% from $200,000decreased 33.3%. The Committee determined this adjustment to $275,000, primarilybe appropriate in light of (i) her relinquishing her previous responsibilities as a result of his assumption of additional duties and responsibilities associated with his promotion to Co-Chief Investment Officer in January 2011. In determining Mr. Freeman’s base salary increase, the Committee also subjectively consideredand (ii) her still significant role at the Company performance factorsfocused on strategic global initiatives. Ms. Byrne continues her service to the Company as our non-executive Chairman of the Board and his individual performance factors discussed above,will continue to work with the Company on strategic global initiatives and offer her investment experience to the market compensation data derived from the McLagan Survey or the Custom Peer Group.Company.

While the Committee reviewed the market compensation data derived from the McLagan Survey and the Custom Peer Group when setting Messrs. Hardcastle’s and Freeman’sthe base salary in 2011,of Messrs. Wallace, Hardcastle and Freeman and Ms. Byrne, the Committee did not target their respective base salary to fall within a specific range or percentile of the market compensation data.

The material terms of the employment agreements of Mr. Casey and Ms. Byrne are summarized below.

Annual Cash Incentive Awards

TheIn general, the Committee believes thatawards annual cash incentive awards promote high performance and achievementto each of corporate strategy and objectives by ourthe named executive officers. These awards are intended to focus the named executive officers encourage growth of stockholder value,on achieving our short-term business objectives and strategies and allow our named executive officersthem to participate in our growth and profitability.

The Company maintains a Company bonus poolAnnual Cash Incentive Awards of Messrs. Casey and Freeman and Ms. Byrne

Under the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan (the “Stock Incentive Plan”), in which every employee of the Company is2012 Messrs. Casey and Freeman and Ms. Byrne were each eligible to participate, including Messrs. Hardcastle and Freeman, but excluding Mr. Casey and Ms. Byrne. In 2011, the total amount of the Company bonus pool was approximately $7,781,000, which was based onearn a guideline of

approximately 20% of the Company’s 2011 “adjusted pre-tax income” (as defined below). The Committee annually reviews the 20% guideline to ensure, in its subjective judgment, such threshold reflects industry standards, will adequately fund potential bonuses, and provide sufficient capacity to reward extraordinary performance, when and if earned. While the 20% guideline did not change from 2010 to 2011, the amount and calculation of the bonus pool are subject to change at any time at the discretion of the Committee.

In 2011, the Committee granted Mr. Hardcastle an annual cash incentive award of $150,000 from the Company bonus pool, the same amount as his 2010 award. In determining Mr. Hardcastle’s 2011 cash incentive award, the Committee subjectively considered the Company performance factors discussed above, his individual performance factors discussed above and the market compensation data compiled from the McLagan Survey and the Custom Peer Group.

In 2011, Mr. Freeman received an annual cash incentive award of $656,000 from the Company bonus pool, representing a 64% increase from his award in 2010. The Committee significantly increased Mr. Freeman’s award primarily to increase the competitiveness of his annual cash incentive award in light of his increased roles and responsibilities within the Company as Co-Chief Investment Officer. In determining Mr. Freeman’s 2011 cash incentive award, the Committee also subjectively considered the Company performance factors discussed above, his individual performance factors discussed above and the market compensation data compiled from the McLagan Survey and the Custom Peer Group.

The Committee determined that Messrs. Hardcastle’s and Freeman’s 2011 cash incentive award was reasonable based upon its subjective judgment after reviewing the market compensation data derived from the McLagan Survey and the Custom Peer Group. Notwithstanding the Committee’s review of the market compensation data, the Committee did not target their respective cash incentive award to fall within a specific range or percentile of the market compensation data. Messrs. Hardcastle’s and Freeman’s annual cash incentive awards earned in 2011 and paid in February 2012 and July 2011 are listed in column (d) in the “2011 Summary Compensation Table” below.

The maximum annual cash incentive award for Mr. Caseyequal to 3%, 1.5% and 8%, respectively, of the Company’s 2012 “adjusted pre-tax income.” Ms. Byrne is determinedByrne’s maximum annual cash incentive award was based on the formula described below, which isupon our adjusted pre-tax income through April 30, 2012 (the expiration date of her employment agreement).

Each of these 2012 cash incentive awards were subject to the Committee’s oversight, and reduction. On April 27, 2006,including the Company’s stockholders approved the formula for the annual cash incentive award that may be earned by Mr. Casey and Ms. Byrne. For Mr. Casey, the annual cash incentive award is a maximumCommittee’s oversight of 3% of our “adjusted pre-tax income.” For Ms. Byrne, the annual cash incentive award is a maximum of 8% of our “adjusted pre-tax income.”Company performance. The Committee hasalso retained discretion to reduce (but not to increase) the amount determined bypayable pursuant to each of these formulas for any year. Theawards. In 2012, the Committee did not exercise its discretion to reduce Mr. Casey’sthe annual cash incentive award of Messrs. Casey or Freeman or Ms. Byrne’s award for 2011.Byrne.

The Committee chose “adjusted pre-tax income” as the basis for the company bonus pool and the performance formula for Mr.Messrs. Casey and Freeman and Ms. Byrne because it believes that such performance measure is a meaningful indicator of our performance and profitability and also believes that structuring the annual cash incentive award in this way closely aligns the interests of these executives with our stockholders. The Committee chose the 3%, 1.5% and 8% levels based on its review of the market compensation data as well as its subjective judgment of the proper allocation of the annual cash incentive award to total direct compensation of these executives.

Our adjusted pre-tax income isfor 2012 was determined based on our audited financial statements and is equal to our income before income taxes (i) increased by the expenses incurred for the year (a) for (i) the annual cash incentive awards earned by Mr.Messrs. Casey and Freeman and Ms. Byrne (ii)and one other employee, (b) for incentive compensation for all other Company employees, and (iii)(c) for performance-based restricted stock awards to Mr.Messrs. Casey and Ms. Byrne.Freeman and one other employee and (ii) excluding revenues and expenses associated with Westwood

International Advisors Inc., as determined by the Committee. The Company’s adjusted pre-tax income through April 30, 2012 and for 2011the entire 2012 fiscal was $37,327,753. Mr.$13,378,936 and $42,523,347, respectively. Messrs. Casey’s and Freeman’s and Ms. Byrne’s annual cash incentive awards that were earned in 2011 and2012, but paid in February 20122013 are listed in column (f) in the “2011“2012 Summary Compensation Table” below.

The CommitteeMutual Fund Award of Mr. Freeman

Pursuant to his employment agreement, Mr. Freeman is eligible throughout the term of his employment agreement to receive “mutual fund share bonus awards” as may also grant discretionarybe granted from time to time by our Board or the Committee. These mutual fund share bonus awards are annual performance bonus awards the amounts and payment of stock,which are conditioned on one or more of our mutual funds achieving one or more performance goals established by the Committee. Mr. Freeman’s employment agreement provides that any mutual fund bonus award granted to him must be pursuant to an agreement similar to the 2012 MFSI Agreement (described below) and (i) provide a target bonus amount that is no less than the amount of his then-current base salary, and (ii) be subject to performance criteria tied to bonus award amounts that provide Mr. Freeman an equal or better opportunity for success than he has under the terms of 2012 MFSI Agreement.

For 2012, Mr. Freeman received a mutual fund bonus award, the terms of which are set forth in the Mutual Fund Share Incentive Agreement dated February 7, 2012 (as amended, “2012 MFSI Agreement”). The 2012 MFSI Agreement provided that Mr. Freeman would earn $500,000 (i.e., the target bonus amount) if the Westwood Income Opportunity Fund (the “fund”) received a 4-star overall rating from Morningstar for the fund performance period ended December 31, 2012 (the “performance period”) and $1 million (i.e., the maximum bonus amount) if the fund received a 5-star overall rating from Morningstar for the performance period. If the Committee determined that the fund received a 4—or 5-star overall rating from Morningstar, then the amount of $500,000 or $1 million, as applicable, would be notionally credited to a bookkeeping account (the “account”) maintained by the Company and converted, on a notional basis, to a number of fund shares equal to the amount divided by the net closing value of a fund share on the date the amount is credited to the account. The value of the account would be adjusted (up or down) to reflect changes in the net value of fund shares credited to the account. If and when distributions are paid by the fund with respect to its shares, the Company would credit the account with additional fund shares having a value equal to the amount of the distributions that would have been payable if the shares credited to the account were issued and outstanding. Mr. Freeman’s right to receive payment of the amount credited to this account will vest on the earliest of (i) December 31, 2013 provided Mr. Freeman remains continuously employed by the Company through that date, (ii) the date of his death or permanent and total disability, (iii) upon a change in control of the Company where the successor does not honor the terms of the 2012 MFSI Agreement, or (iv) upon Mr. Freeman’s involuntary termination without cause or voluntary termination for good reason following a change in control. Payment of the amount credited to this account may, in the Committee’s discretion, be in fund shares, cash or any combination of stock and cash to our officers and key employees in such amountsother property, and subject to such terms and conditions asany applicable tax withholding. Payment will be made within 30 days of the applicable date of vesting.

On February 7, 2013, the Committee may determine. certified that the fund received a 5-star overall rating from Morningstar. As a result, on January 14, 2013, $1 million was notionally credited to the account and converted to 79,491 fund shares.

The Committee currently intendsawarded Mr. Freeman the mutual fund bonus award in an effort to continueprovide a significant motivation for Mr. Freeman to utilizemaximize the performance of the fund, which the Committee expected to substantially benefit the Company by attracting investments into the fund.

Annual Cash Incentive Award of Mr. Hardcastle

We maintain a Company bonus pool in which nearly every U.S. employee of the Company is eligible to participate, including Messrs. Hardcastle and Wallace, but excluding Messrs. Casey, and Freeman and Ms. Byrne, in 2012. In 2012, the total amount of the Company bonus pool was approximately $7,251,000, which represented approximately 17% of the Company’s 2012 “adjusted pre-tax income” (as defined above). The

Committee annually reviews the level of the bonus pool to ensure, in its subjective judgment, such levels reflect industry practices, will adequately fund potential bonuses, and provide sufficient capacity to reward extraordinary performance, when and if earned. The amount and calculation of the bonus pool are subject to change at any time at the discretion of the Committee.

In 2012, the Committee granted Mr. Hardcastle an annual cash incentive awards similaraward of $165,000 from the Company bonus pool, a 10% increase from his 2011 award. In determining Mr. Hardcastle’s 2012 cash incentive award, the Committee subjectively considered the Company performance factors discussed above, his individual performance factors discussed above and the market compensation data compiled from the McLagan Survey and the Custom Peer Group.

Sign-On Performance Bonus of Mr. Wallace

Pursuant to the above asterms of Mr. Wallace’s Offer Letter, he is guaranteed a cash performance bonus of $50,000 for 2012, payable in February 2013 provided he is in good standing with the primary meansCompany at the time of grantingpayment.

In 2013, Mr. Wallace will participate in the Company bonus pool (as discussed above); provided that he is guaranteed a minimum annual cash incentive award of $100,000 (if he is in good standing with the Company at the time of payment) pursuant to the terms of his Offer Letter.

While the Committee reviewed the market compensation data derived from the McLagan Survey and the Custom Peer Group when approving Mr. Hardcastle’s 2012 cash incentive award and Mr. Wallace’s 2012 sign-on performance bonus, awards to our named executive officers. Thethe Committee did not grant any discretionary bonus awardstarget their respective cash award to fall within a specific range or percentile of the market compensation data. Messrs. Hardcastle’s and Wallace’s respective cash award that was earned in 2011.2012 and paid in February 2013 is listed in column (d) in the “2012 Summary Compensation Table” below.

Long-Term Equity Incentive Awards

Long-termFor 2012, the Committee granted the named executive officers long-term equity incentive awards are designedunder the Stock Incentive Plan. These equity awards were intended to alignattract, retain and motivate the interests of our named executive officers, as well as our other employees, with the interests of our clients and stockholders. Equity awards also encourage our named executive officers and other employees to focus them on our long-term performance.

While the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan (the “Stock Incentive Plan”) authorizes the grant of several types of long-term equity incentive awards, the Committee currently expects that itsthe named executive officers’ long-term equity awards will be limited to time-vestedtime-based restricted stock awards and performance-based restricted stock awards. Long-term equity incentive awards are a key component of our overall compensation program, which we believe has enabled us to attract, retain and motivate talented professionals. The Committee also believes that restricted stock is the most effective equity award to accomplish these objectives, as it best conveys the concept of ownership to grantees and, subject to Committee discretion, allows them to vote the shares and receive dividends on their unvested shares.

The vesting of restricted shares of our common stock may be conditioned upon the lapse of time and/or the satisfaction of performance and other conditions determined by the Committee. Unless the Committee determines otherwise, the recipient of restricted sharesstock awards will generally have the right to vote the underlying restricted shares. The Committee may also determine whether dividends will be payable with respect to restricted shares (at the same rate that is paid to all our stockholders generally) and, if so, may impose vesting and repayment conditions with respect to such dividends. Historically, we paid dividends on shares ofthe underlying restricted stockshares, as and when dividends were paid to our stockholders. Beginning with thein 2011, dividends on restricted stock grant, dividends on unvested restricted stockawards are accrued and payable to the recipient only when the underlying shares of restricted stockshares vest. None of the restricted shares may be sold, transferred, or pledged during the restricted period.

The Committee has utilizedbelieves that restricted stock awards as a meaningful componentalign the interests of total direct compensation paid to theour named executive officers with our stockholders, as well asthe value of the award is tied to other employees. These awards also allow all employees to participate in any growth in the Company’smarket value to which they contribute.of our common stock.

Time-VestedTime-Based Restricted Stock Awards

The Committee may grant time-vested restricted stock awards. Since 2006, Mr. Casey and Ms. Byrne have not received time-vested restricted stock awards, but instead have received performance-based restricted stock awards, as described below. For Messrs. Hardcastle and Freeman, as well as all other eligible employees, time-vested restricted stock awards are generally made annually.

In 2011,2012, Mr. Hardcastle received a time-vestedtime-based restricted stock award of 5,500 shares, which was 500 shares fewer thanthe same that he received in 20102011, and Mr. Freeman received a time-vestedtime-based restricted stock award of 9,5009,548 shares, which was 50048 shares more than he received in 2010. The Committee approved Messrs. Hardcastle’s and Freeman’s 2011 restricted stock award based upon their respective individual performance factors discussed above and the Company performance factors discussed above. The 2011 restricted stock award vests2011. These awards will vest as follows: 50% after two years, 75% after three years and 100% after four years, generally subject to the executive’s continuing employment through the applicable vesting date.

In approving Mr. Hardcastle’s time-based restricted stock award, the Committee considered the market compensation data derived from the McLagan Survey and the Custom Peer Group, his individual performance factors discussed above and the Company performance factors discussed above.

In approving Mr. Freeman’s time-based restricted stock award, the Committee considered the market compensation data derived from the McLagan Survey and the Custom Peer Group, his individual performance factors discussed above and the Company performance factors discussed above.

Pursuant to the terms of Mr. Wallace’s Offer Letter, he received a time-based restricted stock award of 5,000 shares which vests 50% on February 23, 2015, 75% on February 23, 2016, and 100% on February 23, 2017, generally subject to Mr. Wallace’s continuing employment through the applicable vesting date. Mr. Wallace’s Offer Letter provides that he is entitled to receive a time-based restricted stock award of 5,000 shares in most cases,February 2013 and a time-based restricted stock award of 5,000 shares in February 2014. These awards will vest as follows: 50% after two years, 75% after three years and 100% after four years, generally subject to Messrs. Hardcastle’sthe executive’s continuing employment through the applicable vesting date. In approving these awards the Committee considered, the market compensation data derived from the McLagan Survey and Freeman’s continuing employment.the Custom Peer Group.

Performance-Based Restricted Stock Awards

The Committee believes that granting performance-based restricted stock awards to Mr.Messrs. Casey and Ms. Byrne strongly alignsFreeman further strengthens the alignment of their interests with our stockholders and clients. These awards also allow them to participate in any growth in the Company’s value to which they contribute.

In 2010, the Committee granted a performance-based restricted stock award to Mr. Casey for 175,000 shares, of restricted common stock, which vests over a period of five years, 35,000 shares per year; provided that, with respect to each fiscal year the performance goal for such period has been met. For 2011,2012, the performance goal was “adjusted pre-tax income” (as defined below) of not less than $19,330,265$26,661,105 representing a five-year compound annual growth rate of 10%7% over 20062007 adjusted pre-tax income of $12,002,574.$19,008,999. In each subsequent vesting year, the performance goal for further vesting of the restricted stock will be determined by the Committee and established in writing no later than 90 days after the commencement of such fiscal year. If, in any year, the performance goal is not met, in any year, the

Committee may establish a goal for a subsequent year which, if achieved or exceeded, may result in full or partial vesting of the shares that did not otherwise become vested in a prior year. Performance goals will in all events be based upon criteria set forth in the Stock Incentive Plan.

In 2006,2012, the Committee granted a restricted stock award to Ms. ByrneMr. Freeman for 300,000100,000 shares, of restricted common stock, which vests over a period of sixfive years, 50,00020,000 shares per year; provided that with respect to each fiscal year the performance goal for such period has been met. For 2011,2012, the performance goal was “adjusted pre-tax income” (as defined below) of not less than $19,330,265$26,661,105 representing a five-year compound annual growth rate of 10%7% over 20062007 adjusted pre-tax income of $12,002,574.$19,008,999. In each subsequent vesting year, the performance goal for further vesting of the restricted stock will be determined by the Committee and established in writing no later than 90 days after the commencement of such fiscal year. If, in any year, the performance goal is not met, the Committee may establish a goal for a subsequent year that,which, if achieved or exceeded, may result in full or partial vesting of the shares that did not otherwise become vested in a prior year. Performance goals will in all events be based upon criteria set forth in the Company’s adjusted pre-tax income.Stock Incentive Plan.

Adjusted pre-tax income iswas determined based on our audited financial statements and isin 2012 was equal to our income before income taxes (i) increased by the expenses incurred for the year (a) for (i) the annual cash incentive awards earned by Mr.Messrs. Casey and Freeman and Ms. Byrne (ii)and one other employee, (b) for incentive compensation for all other Company employees, and (iii)(c) for performance-based restricted stock awards to Mr.Messrs. Casey and Ms. Byrne.Freeman and one other employee and (ii) excluding revenues and expenses associated with Westwood International Advisors Inc., as determined by the Committee. The Committee chose adjusted pre-tax income as

the basis for the performance-based vesting formula because it believes that such financial measure is a meaningful indicator of our performance and profitability and also believes that structuring the performance-based annual incentive awards in this way closely aligns the interests of these executives with our stockholders.

On February 23, 2012,22, 2013, the Committee certified that the performance goal for 20112012 was achieved and Mr. Casey vested in 35,000 shares and Ms. ByrneMr. Freeman vested in 50,00020,000 shares. As allowed under the Stock Incentive Plan and approved by the Committee, Mr. Casey surrendered 12,75713,072 and Ms. ByrneMr. Freeman surrendered 18,0006,625 of these shares in order to partially satisfy tax withholding requirements due to the vesting of these shares.

It is anticipated that performance-based restricted stock awards for Mr. Casey and Ms. Byrne will qualify for the performance-based compensation exemption from the deduction limitation provisions of 162(m) of the Internal Revenue Code (“Section 162(m)”). The specific performance goal for which Mr. Casey’s and Ms. Byrne’s performance-based restricted stock awards vest for the year is established within 90 days after the beginning of the vesting year, as required by Section 162(m).

The Company does not have a formal policy on timing equity compensation grants in connection with the release of material non-public information to affect the value of compensation. In the event that material non-public information becomes known to the Committee prior to granting equity awards, the Committee will take the existence of such information under advisement and make an assessment in its business judgment whether to delay the grant of the equity award in order to avoid any impropriety or any appearance of impropriety.

Employee and Post-Retirement Benefits

We offer employee and post-retirement benefits to all Company employees, including the named executive officers, in order to provide them with a reasonable level of financial support in the event of injury, illness, or disability and to help them accumulate retirement savings on a tax-favored basis. All Company employees are generally eligible to participate in all benefit programs including medical, dental and vision insurance coverage, disability insurance and life insurance. In addition, all employees are generally eligible to participate in the Westwood Holdings Group, Inc. Savings Plan (the “Savings Plan”).applicable savings plans. The cost of health insurance and the Savings Plansavings plans is partially borne by employees, including the named executive officers. We bear the cost of disability insurance and a set amount of term life insurance for all employees.

Savings Plan and Matching Contributions

Under the Company’s U. S. Savings Plan, all CompanyU.S. based employees are eligible to make so-called 401(k) contributions to their plan accounts subject to the annual IRS limits. We fully match employee contributions up to 6% of their eligible compensation (subject(again, subject to IRS limits). Employees are vested immediately in their 401(k) contributioncontributions as well as the Company match.

Profit Sharing Contributions

The Company’s U.S. Savings Plan also authorizes us to make discretionary annual contributions to employees’ Savings Plan accounts based on our profitability and performance. The profit sharing component of the Savings Plan is meant to be broad-based and all U. S. employees are eligible for discretionary profit sharing contributions. Profit sharing contributions are subject to a six-year graded vesting schedule based on an employee’s years of service. For 2011,2012, we made a discretionary contribution for all eligible employees equal to 5% of their eligible compensation.

For 2011,2012, the Company made 401(k) Company matching contributions and Company profit sharing contributions totaling $26,950$27,500 for each of our named executive officers.

Perquisites

We doIn 2012 we did not provide significant perquisites or personal benefits to the named executive officers.officers, other than relocation benefits in connection with Mr. Wallace’s Offer Letter. These relocation benefits consisted of reimbursement, up to $50,000, of moving and househunting expenses incurred by Mr. Wallace in connection with his move from Huntington Beach, California to Dallas, Texas. These amounts are subject to clawback if Mr. Wallace resigns or terminates employment with the Company on or before November 6, 2014, prorated on a monthly basis reduced by the months he is employed prior to such resignation or termination.

Tax and Accounting Implications

Compliance with Section 162(m) of the Internal Revenue Code

Section 162(m) disallows a federal income tax deduction to publicly-held companies for certainof the Internal Revenue Code limits the deductibility of nonperformance-based compensation paid to the chiefour Chief Executive Officer and any of our three other most highly compensated executive officer and certain other highly-compensated officers (other than our Chief Financial Officer), to the extent that compensation exceeds $1 million per executive officer covered by Section 162(m) in any fiscaltax year. However, performance-basedIn establishing the total direct compensation that meets certain requirements is excluded from this $1 million limitation.

In designing our compensation program,for such executives, the Compensation Committee considers the effect of Section 162(m) together.

Our objectives and strategies may not always be consistent with other factors relevantthe requirements of Section 162(m) for full deductibility of the compensation paid to our business needs. We have historically taken,executives. Accordingly, deductibility for purposes of Section 162(m) is just one consideration and intend to continue taking, appropriate actions, tonot the extent we believe desirable, to preserve the deductibility of executive compensation. The Committee considers it important to preserve the tax deductibility ofdeterminative factor in setting our executives’ compensation, for its named executive officers, consistent with achieving its goal of retaining its executive management team; however, the Committee has not adopted a policy that alland certain compensation paid mustby us in the future may not be tax-deductible and qualified underfully deductible for purposes of Section 162(m).

2012 Compensation Arrangements

Effective February 7, 2012, Mr. Freeman was named Chief Investment Officer of the Company. In connection with his promotion, Mr. Freeman entered into an employment agreement with the Company.

Under the terms of Mr. Freeman’s employment agreement, (i) his base salary was increased to $500,000, (ii) he is eligible to receive performance-based and discretionary bonuses under the Stock Incentive Plan, (iii) he is eligible to earn a mutual fund share bonus award pursuant to the terms of the Mutual Fund Share Incentive Agreement that he entered into in connection with his employment agreement, and (iv) he received a performance-based restricted stock award for 100,000 shares of restricted common stock that vests over five years, 20,000 shares per year; provided that the annual performance goal for such period is met.

Under the terms of the Stock Incentive Plan, Mr. Freeman will receive, at a minimum, annual performance-based and discretionary bonuses equal to at least 1.5% of the Company’s adjusted pre-tax income. For 2012, adjusted pre-tax income shall be determined based on the Company’s audited financial statements and shall be equal to income before income taxes increased by the expenses incurred for the year for (i) incentive compensation for all officers and employees and (ii) performance-based restricted stock awards. The calculation will exclude revenues and expenses associated with subsidiaries acquired or newly launched in 2012. Mr. Freeman must be employed by the Company to receive payment of this award.

Under the terms of the Mutual Fund Share Incentive Agreement, Mr. Freeman is eligible to receive mutual fund share bonus awards based on the performance of the Westwood Income Opportunity Fund during the 2012 calendar year. In general, mutual fund share bonus awards may be granted from time to time by the Board of Directors of the Company or the Compensation Committee of the Board of Directors and subject to meeting Company performance goals, as established by the Compensation Committee during the first quarter of each year, and in accordance with the terms of the Stock Incentive Plan. Each year, Mr. Freeman and the Company will enter into a mutual fund share incentive agreement that establishes (1) a target bonus amount that is no less than the amount of Mr. Freeman’s base salary and (2) “Morningstar Ratings” and “Applicable Percentages” that provide Mr. Freeman an equal or better opportunity to receive a performance bonus as under the previous year’s mutual fund share incentive agreement between Mr. Freeman and the Company.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussion,discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

20112012 Summary Compensation Table

The following table summarizes all compensation earned by our named executive officers in the years indicated.

Notes, by columncolumn/row letter:

For 2011, the amounts contained in column (e) reflect (1) for Mr. Casey, the grant date fair value of the tranche of his 2010 performance-based restricted stock award that was subject to vesting in 2011 (35,000 shares), (2) for Mr. Hardcastle, the grant date fair value of his time-vested restricted stock award granted in 2011 (5,500 shares), (3) for Mr. Freeman, the grant date fair value of his time-vested restricted stock award granted in 2011 (9,500 shares), and (4) for Ms. Byrne, the grant date fair value of the tranche of her 2006 performance-based restricted stock award that was subject to vesting in 2011 (50,000 shares).

For 2010, the amounts contained in column (e) reflect (1) for Mr. Casey, the grant date fair value of the tranche of his 2010 performance-based restricted stock award that was subject to vesting in 2010

(35,000 (35,000 shares), (2) for Mr. Hardcastle, the grant date fair value of his time-vested restricted stock award granted in 2010 (6,000 shares), and (3) for Ms. Byrne, the grant date fair value of the tranche of her 2006 performance-based restricted stock award that was subject to vesting in 2010 (50,000 shares), and (3) for Mr. Hardcastle, the grant date fair value of his time-vested restricted stock award granted in 2010 (6,000 shares).

For 2009, the amounts contained in column (e) reflect (1) for Mr. Casey, the grant date fair value of the tranche of his 2006 performance-based restricted stock award that was subject to vesting in 2009 (25,000 shares), (2) for Ms. Byrne, the grant date fair value of the tranche of her 2006 performance-based restricted stock award that was subject to vesting in 2009 (50,000 shares); and (3) for Mr. Hardcastle, the grant date fair value of his time-vested restricted stock award granted in 2009 (7,000 shares).

The above grant date fair values reported in column (e) were calculated in accordance with Accounting Standards Codification Topic 718 (“ASC 718”), “Stock Compensation,” except no assumptions for forfeitures were included. The assumptions used in the valuation of the performance-based and time-vested restricted stock awards are discussed in footnote “9.“10. Employee Benefits” of our audited financial statements, which are included in our 20112012 Form 10-K filed with the Securities and Exchange Commission on February 28, 2012.2013. See the “Compensation Discussion &and Analysis” section above for a further description of these restricted stock awards.

We currently have employment agreements with Mr. Casey and Ms. Byrne.Mr. Freeman. Under these agreements these officersofficers: receive a minimum base salary, are eligible to receive performance-based and discretionary bonuses, receive restricted shares (subject to performance conditions), could become fully vested in their unvested equity compensation (depending on the cause of termination of employment), and could receive salary and benefits for one year after the termination of their employment (depending on the cause of termination of employment). In accordance with the terms of his employment agreement, Mr. Casey iswas paid a minimuman annual salary of $500,000 in 2012 and may receive a maximum annual incentive award of 3% of our adjusted pre-tax income.income, as defined. In accordance with the terms of herhis employment agreement, Ms. ByrneMr. Freeman is paid a minimum annual salary of $750,000. Ms. Byrne$500,000. Mr. Freeman is currently eligible to receive a maximum annual incentive award of 1.5% of our adjusted pre-tax income, as defined. The agreements expire on April 30, 2015 for Mr. Casey and January 1, 2017 for Mr. Freeman. See the “Employment and Related Agreements” section set forth below for further discussion of these employment agreements.

Our employment agreement with Ms. Byrne expired on April 30, 2012. Prior to the expiration of this agreement, the agreement provided Ms. Byrne a minimum base salary, eligibility to receive performance-based and discretionary bonuses, restricted shares (subject to performance conditions), potential vesting in her unvested equity compensation (depending on the cause of termination of employment) and potential salary continuation payments and benefits for one year after the termination of her employment (depending on the cause of termination of employment). In accordance with the terms of the employment agreement, Ms. Byrne was paid a minimum annual salary of $750,000 and could receive a maximum annual incentive award of 8% of our adjusted pre-tax income. The agreements expire on April 30, 2015 for Mr. CaseyMs. Byrne remains subject to the non-solicitation and April 30, 2012 for Ms. Byrne. See the “Executive Employment Agreements” sectionnon-competition covenants set forth belowin her expired employment agreement for further discussiona period of theseone year following her termination of employment agreements.

We entered into an Offer Letter with Mr. Wallace in connection with his hire as our Chief Financial Officer. This Offer Letter provides Mr. Wallace an annual base salary of $200,000, an award of 5,000 shares of time-vested restricted stock in 2012, an award of 5,000 shares of time-vested restricted stock in February 2013, an award of at least 5,000 shares of time-vested restricted stock in February 2014, a 2012 annual cash performance bonus of at least $50,000 (payable in February 2013), and a 2013 annual cash performance bonus of at least $100,000 (payable in February 2014). We also offered to reimburse Mr. Wallace for up to $50,000 of moving and househunting expenses incurred in connection with his move from Huntington Beach, California to Dallas, Texas. These amounts are subject to clawback if Mr. Wallace resigns or terminates employment with the Company on or before November 6, 2014, prorated on a monthly basis reduced by the months he is employed prior to such resignation or termination.

Grants of Plan-Based Awards in 20112012

The following table summarizes all grants of plan-based awards made to our named executive officers in 2011.2012. The equity plan-based awards set forth in the following table consisted solely of restricted shares of our common stock that were granted under the Stock Incentive Plan.

Notes, by column letter:

our adjusted pre-tax income for the four months ended April 30, 2012 to Ms. Byrne. There were no threshold or maximum award levels (or equivalent items) for these annual cash incentive awards. The Company’s adjusted pre-tax income for 20112012 was $37,327,753. See the “Compensation Discussion & Analysis” section above for a further description of these cash incentive awards.$42,523,347.

On February 7, 2012, Mr. Freeman received a mutual fund share incentive award under which he was entitled to receive $500,000 if the Westwood Income Opportunity Fund received a 4-star overall rating from Morningstar and $1,000,000 if the fund received a 5-star overall rating from Morningstar for the performance period ending December 31, 2012. Mr. Freeman earned $1,000,000 as a result of Westwood Income Opportunity Fund receiving a 5-star overall rating from Morningstar. Pursuant to the terms of this award, the $1 million was notionally credited to an account maintained by the Company on January 14, 2013 and deemed invested in 79,491 shares of the Westwood Income Opportunity Fund. Mr. Freeman’s right to receive payment of the amount credited to this account will vest on the earliest of: (i) December 31, 2013, provided Mr. Freeman remains continuously employed by the Company through that date, (ii) the date of his death or permanent and total disability, (iii) upon a change in control of the Company where the successor does not honor the terms of the 2012 MFSI Agreement, or (iv) upon Mr. Freeman’s involuntary termination without cause or voluntary termination for good reason following a change in control. Payment of the amount credited to this account may, in the Committee’s discretion, be in fund shares, cash or other property, and subject to any applicable tax withholding. Payment will be made within 30 days of the applicable vesting date.

See the “Compensation Discussion and Analysis” section above for a further description of these cash incentive awards.

Stock Incentive Plan

All equity-based incentive awards are governed by the Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan (the “Stock Incentive Plan”), which currently permits the award of 3,398,100 shares of our common stock under the Stock Incentive Plan.stock.

In 2011,2012, equity awards under the Stock Incentive Plan consisted of our authorized restricted common stock. Awards under the Stock Incentive Plan may be made to employees, including officers and directors who may be employees, non-employee directors, and consultants. Any shares issued under the Stock Incentive Plan may consist of authorized but unissued shares or reacquired shares or a combination thereof.

The Stock Incentive Plan authorizes the grant of several types of equity-based awards, including incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), restricted stock, stock purchase rights and performance shares (in the form of deferred stock awards). The Stock Incentive Plan also authorizes cash awards in the form of annual incentive awards, performance-based awards, and discretionary bonus awards. The various types of awards authorized under the Stock Incentive Plan may be utilized in the future if determined to be appropriate by the Committee. To date the Committee has limited its equity-based awards under the Stock Incentive Plan to NSOs and restricted stock, and in the future the Committee currently expects that its future equity-based awards will likely be limited to restricted stock. The Committee believes that restricted stock is the most effective vehicle to align the interests of employees with stockholders and clients. Unless the Committee determines otherwise, the recipient of restricted shares will generally have the right to vote the restricted shares. The Committee may also determine whether dividends will be payable with respect to restricted shares (at the same rate that is paid to all our stockholders generally) and, if so, may impose vesting and repayment conditions with respect to such dividends. Historically, we paid dividends on shares of restricted stock as and when dividends were paid to our stockholders. Beginning with the 2011 restricted stock grant, dividends payable on unvested restricted stock are accrued, subject to forfeiture conditions and payable to the recipient only when the underlying shares of restricted stock vest. The Committee believes that the terms and conditions for restricted stock awards offer the best balance of providing value to the employee if we are successful as a company as well as providing a mechanism to retain key employees over the long-term as they build a meaningful portion of their wealth in the form of equity in us.

The Board or the Committee administers the Stock Incentive Plan with respect to all eligible individuals. Cash incentive awards earned in a given year are typically communicated to employees and paid in the first quarter of the following year to coincide with year-end performance reviews. In 2009, 2010 and 2011, a portion of certain employees’ cash incentive bonus was paid at mid-year to coincide with the personal tax liability resulting from restricted stock vesting. Prior to 2008, restricted stock grants were generally awarded annually by the Committee at its July meeting, which coincided with the timing of the first annual equity grants that were awarded shortly after our spin-off in July 2002. Since 2008, annual time-vested restricted stock awards have generally been awarded in the first quarter of the year in order to better synchronize the payment of cash incentive bonus awards with the withholding tax liability resulting from restricted stock vesting.

Time-vested restricted stock awards are subject to the following four-year vesting schedule: 50% after two years, 75% after three years and 100% after four years. The Committee believes that this long-term vesting schedule is effective in acting as a retention tool for Messrs. Hardcastle, Freeman and FreemanWallace and other non-executive employees. All employees are eligible to receive time-vested restricted stock awards.

The Committee makes all determinations involving awards that are exempt fromto “covered employees” with the deduction limitationsmeaning of Section 162(m). of the Code. Determinations of the Committee are final, conclusive, and binding upon all persons having an interest in the Stock Incentive Plan. However, any action or determination by the Committee specifically affecting or relating to an award to a non-employee director will be approved and ratified by the Board of Directors.

Executive Employment and Related Agreements

The Committee believes that the retention of our named executive officers and other key employees is critical to our opportunity for future success. In order to formalize a long-term commitment with thetwo of our top three executive officers, we executed employment agreements with our Chief Executive Officer, Brian O. Casey, in April 2010 our Co-Chief Investment Officer, Susan M. Byrne, in 2006 and our Co-ChiefChief Investment Officer, Mark Freeman, in February 2012. The agreements broadly address

the terms of their employment with the Company, including, among other things, duties, compensation and benefits, termination, and the effect of termination. In addition, the employment agreements include non-solicitation covenants and non-competition covenants that apply in specified circumstances for a period of one year following the date of termination.

The Committee determined that Mr. Casey is critical to our future success, due to his significant responsibilities and contributions to the ongoing day-to-day operation of the business, his involvement in marketing our products, his development and direction of strategic initiatives and corporate development, as well as his participation in the development of new products. As a result, the Committee determined that it was in our best interests to enter into an employment agreement with Mr. Casey that is effective through April 30, 2015.

The Committee determined that Ms. Byrne is critical to our future success, due to her significant responsibilities and contributions to the development and oversight of our investment strategy, her day-to-day operation and oversight of our investment function (including risk management), her integral importance to the ongoing success of our investment performance as well as her involvement in product development, strategic initiatives and marketing our products. As a result, the Committee determined that it was in our best interests to enter into an employment agreement with Ms. Byrne that is effective through April 30, 2012.

The Committee determined that Mr. Freeman is critical to our future success, due to his significant responsibilities and contributions to the development and oversight of our investment policy, the development of the Company’s macroeconomic and investment outlook, his day-to-day operation and oversight of our investment department, his monitoring of absolute risk and consistency of quality across all investment strategies, his integral importance to the ongoing success of our investment performance as well as his involvement in product development, strategic initiatives and marketing our products. As a result, the Committee determined that it was in our best interests to enter into an employment agreement with Mr. Freeman that is effective through January 1, 2017.

In November 2012, we entered into an Offer Letter with Mr. Wallace in connection with his hire as our Chief Financial Officer. This offer letter provides Mr. Wallace an annual base salary of $200,000, a sign-on equity award of 5,000 shares of time-vested restricted stock, an additional equity award of at least 5,000 shares of time-vested restricted stock in February 2013, an additional equity award of at least 5,000 shares of time-vested restricted stock in February 2014, and a 2012 annual cash performance bonus of at least $50,000 (payable in February 2013) and a 2013 annual cash performance bonus of at least $100,000 (payable in February 2014). The terms of the Offer Letter were conditioned on Mr. Wallace’s execution of our standard confidentiality agreement.

Outstanding Equity Awards at December 31, 20112012

The following table summarizes all outstanding equity awards held by our named executive officers as of December 31, 2011.2012.

Notes, by column letter:

Option Exercises and Stock Vested in 20112012

The following table summarizes all options exercised and shares vested by our named executive officers for the year ended December 31, 2011.2012.

Notes, by column letter:

Mr. Freeman that vested as of February 23, at a market value of $39.38 per share market values of $36.95 and $38.30, respectively; 7,250 and 2,12520,000 shares of time-vestedperformance-based restricted stock for Mr. Freeman that vested as of February 23December 31, 2012 at a market value of $40.90 per share; and July 1, 2011, respectively, at per share market values of $36.95 and $38.30, respectively; and 35,000 and 50,000 shares of performance-based restricted stock for Mr. Casey and Ms. Byrne, respectively, that vested as of December 31, 20112012 at a market value of $36.55$40.90 per share.

Potential Payments Upon Termination or Change in Control

Set forth below is a summary of the compensation and benefits payable to Mr. Casey, Ms. Byrne,Mr. Wallace, Mr. Freeman and Mr. Hardcastle and Mr. Freeman in the event their employment is terminated. For purposes of this disclosure, we have calculated benefits assuming a December 31, 20112012 termination date. As of December 31, 2011,2012, we had executive employment agreements with Mr. Casey and Ms. Byrne, and as of February 7, 2012, we had an employment agreement with Mr. Freeman. For further information on the employment agreements, see “Executive Employment“Employment Related Agreements” above.

Under the terms of our Stock Incentive Plan, in the event of their death or a “change in control” of the Company, Messrs. Wallace’s, Freeman’s and Hardcastle’s and Freeman’s unvested time-vested restricted stock awards would vest. These shares had a value of $598,506$204,500 for Mr. Hardcastle and $941,163Wallace, $1,065,363 for Mr. Freeman and $644,175 for Mr. Hardcastle as of December 31, 2011.2012. Other than the acceleration of Mr. Wallace and Mr. Hardcastle’s restricted stock awards upon his death or a “change in control,” Mr. Wallace and Mr. Hardcastle isare not contractually entitled to any other severance payments upon histheir termination or a “change in control” of the Company.

Under the employment agreementsagreement in place, the payments to Mr. Casey and Ms. Byrne could vary depending on the cause of termination and whether or not the Board of Directors elects to enforce a non-compete agreement. Under the employment agreement in place for Mr. Freeman, the payments to Mr. Freeman could vary depending upon the cause of termination and whether or not the Board of Directors elects to enforce a “Mandatory Inactivity Period.” For the purposes hereof, a “Mandatory Inactivity Period” shall mean the three-month period of time immediately following Mr. Freeman’s termination during which he may not (a) in any capacity provide investment advisory services or investment management services in competition with the Company or (b) establish, join, participate in,

acquire or maintain ownership in, or provide investment advisory services to, any U.S.-based entity that offers services and/or products that compete with the Company. Additionally, these agreements contain a “single trigger” change in control provision pursuant to which Mr. Casey Ms. Byrne and Mr. Freeman are entitled to certain payments and benefits in the event they voluntarily terminate their employment with the Company within the ninety-day period, or in the case of Mr. Freeman, the thirty-day period, immediately following the date that is three (3) months following change in control of the Company. The Committee believes that a “single trigger” change in control provision (1) provides a powerful retention device during change in control discussions, and (2) ensures Mr. Casey Ms. Byrne and Mr. Freeman are not deprived of the benefits that they earned or reasonably should expect to receive if there was no change in control. The various payment scenarios for Mr. Casey and Ms. Byrne are described immediately below, and the various payment scenarios for Mr. Freeman are described thereafter.

The various payment scenarios for Mr. Casey and Ms. Byrne are:

Payments upon termination without cause where the non-compete agreement is enforced

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination without cause where the non-compete agreement is not enforced

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination with cause or by the executive without good reason where the non-compete agreement is enforced

Amounts under this scenario include the following to the extent they have not been already paid:

All unvested stock options and all unvested restricted shares shall be forfeited under this scenario.

Payments upon termination with cause or by the executive without good reason where the non-compete agreement is not enforced

Amounts under this scenario include the following to the extent they have not been already paid:

All unvested stock options and all unvested restricted shares shall be forfeited under this scenario.

Payments upon termination by the executive with good reason (the non-compete agreement is automatically enforced)

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination due to a change in control (the non-compete agreement is automatically enforced)

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination due to death

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination due to disability

Amounts under this scenario include the following to the extent they have not been already paid:

The various payment scenarios for Mr. Freeman are:

Payments upon termination without cause or by the executive for good reason where the Mandatory Inactivity Period is enforced

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination without cause or by the executive for good reason where the Mandatory Inactivity Period is not enforced

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination with cause where the Mandatory Inactivity Period is enforced

Amounts under this scenario include the following to the extent they have not been already paid:

All unvested stock options, all unvested restricted shares, and all unvested mutual fund share bonus awards shall be forfeited under this scenario.

Payments upon termination with cause where the Mandatory Inactivity Period is not enforced

Amounts under this scenario include the following to the extent they have not been already paid:

All unvested stock options, all unvested restricted shares, and all unvested mutual fund share bonus awards shall be forfeited under this scenario.

Payments upon termination by the executive without good reason where the Mandatory Inactivity Period is enforced

Amounts under this scenario include the following to the extent they have not been already paid:

All unvested stock options and all unvested restricted shares shall be forfeited under this scenario. Additionally, all unvested mutual fund share bonus awards shall vest sixty (60) days after the first anniversary of the termination date unless a final determination is made in binding arbitration that the executive either directly or indirectly sold or provided products that are the same or similar to any product that the Company is providing as of, and about which the executive had confidential information during the year prior to, the termination date; provided, however, that if any such unvested equity or equity-based award is subject to performance-based vesting conditions that are intended to qualify for the performance-based compensation exemption under Section 162(m) of the Code, then such award will become vested only if, when and to the extent such award would have become vested in accordance with its terms if Mr. Freeman’s employment had continued; and provided further that, if such award is subject to periodic vesting based upon performance conditions established for each vesting period, then the annual performance conditions applicable to any such award following the termination of Mr. Freeman’s employment shall be the same as the last periodic performance goal established with respect to such award prior to the termination of Mr. Freeman’s employment or, if more favorable to Mr. Freeman, the periodic performance conditions established for performance-based vesting of equity or equity-based awards granted to other senior executives who are then still employed by the Company.

Payments upon termination by the executive without good reason where the Mandatory Inactivity Period is not enforced

Amounts under this scenario include the following to the extent they have not been already paid:

All unvested stock options and all unvested restricted shares shall be forfeited under this scenario. Additionally, all unvested mutual fund share bonus awards shall vest sixty (60) days after the first anniversary of the termination date unless a final determination is made in binding arbitration that the executive either directly or indirectly sold or provided products that are the same or similar to any product that the Company is providing as of, and about which the executive had confidential information during the year prior to, the termination date; provided, however, that if any such unvested equity or equity-based award is subject to performance-based vesting conditions that are intended to qualify for the performance-based compensation exemption under Section 162(m) of the Code, then such award will become vested only if, when and to the extent such award would have become vested in accordance with its terms if Mr. Freeman’s employment had continued; and provided further that, if such award is subject to periodic vesting based upon performance conditions established for each vesting period, then the annual performance conditions applicable to any such award following the termination of Mr. Freeman’s employment shall be the same as the last periodic performance goal established with respect to such award prior to the termination of Mr. Freeman’s employment or, if more favorable to Mr. Freeman, the periodic performance conditions established for performance-based vesting of equity or equity-based awards granted to other senior executives who are then still employed by the Company.

Payments upon termination due to a change in control (assuming that Mr. Freeman terminates his employment after the 90^th day, but before the 121^st day, immediately following a change in control)

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination due to death

Amounts under this scenario include the following to the extent they have not been already paid:

Payments upon termination due to disability

Amounts under this scenario include the following to the extent they have not been already paid:

The following tables show the amounts each officer would receive under different scenarios.

Severance and change in control arrangements for Mr. Casey:

Severance and change in control arrangements for Ms. Byrne: