UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to§240.14a-12 |
WisdomTree Investments, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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WisdomTree Investments, Inc.
245 Park Avenue, 35th Floor
New York, New York 10167
April 30, 20182021
Dear Stockholder:
We are pleased to invite you to the WisdomTree Investments, Inc. (“WisdomTree” or the “Company”) 2018 Annual Meeting2021 annual meeting of Stockholdersstockholders to be held on June 19, 201817, 2021 at 11:00 a.m. Eastern Time. This year’s Annual MeetingAs we have done for the past 7 years, the annual meeting will be a completely virtual meeting of stockholders heldconducted virtually over the Internet. You will be able to attend the Annual Meeting,annual meeting, vote your shares electronically and submit your questions during the live webcast of the meeting by visitingwww.virtualshareholdermeeting.com/wisdomtree18wisdomtree21 and entering your16-digit control number.
Similar to last year, mostMost of our stockholders will not receive paper copies of our proxy materials and will instead receive a Notice of Internet Availability of Proxy Materials with instructions on how to access our proxy materials and how to vote online or by telephone. Such Noticenotice also will also provide information on how to obtain paper copies of our proxy materials if a stockholder so requests. This method expedites the receipt of your proxy materials, lowers the costs of our Annual Meetingannual meeting and helps to conserve our natural resources. For additional information about how we are caring for our environment and continuously striving to improve corporate governance, please read our Corporate Social Responsibility Report, which is available on our investor relations website at http://ir.wisdomtree.com by following the link for “Corporate Social Responsibility” under the heading “Corporate Governance.”
Every stockholder’sYour vote is important, so whether or not you are planning to attend the meeting, we encourage you to vote your shares by voting (i) over the Internet, (ii) by telephone or (iii) by requesting a paper copy of the proxy materials, including a proxy card, and returning an executed proxy card.
We hope that you will join us at the Annual Meetingannual meeting live webcast on June 19, 2018.17, 2021. I thank you for your commitment to WisdomTree and urge you to vote your shares.
Sincerely,
Jonathan Steinberg
Chief Executive Officer
WISDOMTREE INVESTMENTS, INC.
NOTICE OF 20182021 ANNUAL MEETING OF STOCKHOLDERS
Date: Tuesday,Thursday, June 19, 201817, 2021
Time: 11:00 a.m., Eastern Time
Place: Live Webcast atwww.virtualshareholdermeeting.com/wisdomtree18wisdomtree21
At the meeting, stockholders will be asked to:
1. | elect three Class I members of |
2. | ratify the appointment of Ernst & Young LLP as |
3. |
vote on an advisory resolution to approve the compensation of |
transact any other business that may properly come before the meeting or any postponements or adjournments thereof. |
The close of business on April 26, 201823, 2021 is the record date for determining stockholders entitled to vote at the Annual Meeting.annual meeting. A list of these stockholders will be available at WisdomTree’sour headquarters, 245 Park Avenue, 35th Floor, New York, New York, for at least 10 days before the Annual Meetingannual meeting or any adjournment or postponement thereof.
In accordance with the rules of the Securities and Exchange Commission, we also have also sent a Notice of Internet Availability of Proxy Materials and provided access to our proxy materials over the Internet, beginning on April 30, 2018,2021, to the holders of record and beneficial owners of our capital stock as of the close of business on the record date.
Distribution to stockholders of this proxy statement and a proxy card is scheduled to begin on or about April 30, 2018.2021.
By order of the Board of Directors,
Gregory Barton,Marci Frankenthaler, Secretary
New York, New York
April 30, 2018
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders
To Be Held on June 19, 2018.17, 2021.
The proxy statement and our Annual Report on Form10-K for the fiscal year ended December 31, 20172020 are available at:http://ir.wisdomtree.com by following the link for “Financial Information.”
Proxy Statement
This proxy statement contains information about the 2018 Annual Meeting2021 annual meeting of Stockholdersstockholders of WisdomTree Investments, Inc. Proxy materials or a Notice of Internet Availability of Proxy Materials will be first sent to stockholders on or about April 30, 2018.2021.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROXY MATERIALS | 1 | |||
PROPOSAL 1: ELECTION OF DIRECTORS | 7 | |||
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | ||||
Unless otherwise indicated, references to “the Company,” “we,” “us,” “our” and “WisdomTree” mean WisdomTree Investments, Inc. and its subsidiaries.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROXY MATERIALS
Who is soliciting my vote?
The Board of Directors of WisdomTree Investments, Inc. (“WisdomTree” or the “Company”) is soliciting your vote for the 2018 Annual Meeting2021 annual meeting of Stockholders.stockholders.
Who pays for the cost of soliciting proxies?
WisdomTree will pay the cost for the solicitation of proxies by the Board of Directors. Proxies may be solicited personally, by telephone fax or email by our employees of WisdomTree without any remuneration to such individuals other than their regular compensation. WisdomTree also will reimburse brokers, banks, custodians, other nominees and fiduciaries for forwarding these materials to their principals to obtain the authorization for the execution of proxies.
Why did I receive aone-page notice in the mail regarding the internet availability of proxy materials instead of a full set of proxy materials?
Pursuant to rules adopted by the Securities and Exchange Commission, (“SEC”), the Company hasor SEC, we have elected to provide access to itsour proxy materials via the Internet. Accordingly, the Company iswe are sending a Notice of Internet Availability of Proxy Materials, (“Notice”)or Notice, to itsour stockholders. All stockholders will be able to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis. The Company encouragesWe encourage stockholders to take advantage of the availability of the proxy materials on the Internet to help reduce the environmental impact of itsour annual meetings.
How can I obtain electronic access to the proxy materials?
The Notice will provide you with instructions regardingon how to:
View the Company’sour proxy materials for the Annual Meetingannual meeting on the Internet; and
Instruct the CompanyWisdomTree to send future proxy materials to you by email.
The Company’sOur proxy materials are also are available on itsour investor relations website athttp://ir.wisdomtree.com by following the link for “Financial Information.”
Choosing to receive future proxy materials by email will save the Companyus the cost of printing and mailing documents to you and will reduce the impact of the Company’sour annual meetings on the environment. If you choose to receive future proxy materials by email, you will receive an email message next year with instructions containing a link to those materials and a link to the proxy voting website. Your election to receive proxy materials by email will remain in effect until you terminate it.
How do I attend the Annual Meetingannual meeting, and may I ask questions?
The Annual Meetingannual meeting will be a completely virtual meeting of stockholders heldconducted virtually over the Internet. Please go towww.virtualshareholdermeeting.com/wisdomtree18wisdomtree21 for instructions on how to attend and participate in the Annual Meeting.participate. Any stockholder may attend and listen live to the webcast of the Annual Meetingannual meeting over the Internet at such site. Stockholders as of the record date of the Annual Meetingannual meeting may submit questions while attending the Annual Meetingannual meeting over the Internet by using the16-digit control number included in the Notice, proxy card or the voting instructions that accompanied these proxy materials.
What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
Stockholder of record. If your shares are registered directly in your name with the Company’sour transfer agent, (ContinentalContinental Stock Transfer & Trust Company),Company, you are considered a “stockholder of record” (orrecord,” or record holder)holder, with respect to those shares, and we sent the Notice was sent directly to you by the Company.you.
Beneficial owner of shares held in street name. If your shares are held in an account at a brokerage firm, bank, broker-dealer or other similar organization, then you are the “beneficial owner” of shares held in “street name,” and a Notice was forwarded to you by that organization. As a beneficial owner, you have the right to instruct your broker, bank, trustee or nominee how to vote your shares.
How do I vote my shares?
Whether you are a “stockholder of record” or hold your shares in “street name,” you may vote by proxy prior to the polls closing without participating in the online Annual Meeting.annual meeting. To vote by proxy, stockholders have a choice of voting over the Internet, by telephone or by mail using a traditional proxy card. Your shares will be voted in accordance with your instructions. If you plan to attend and participate in the online Annual Meeting, the Companyannual meeting, we still encouragesencourage you to vote prior to the Annual Meeting by Internet, by telephone, or by mail by returning a proxy card following your request of printed materials.annual meeting. This will ensure that your vote will be counted if you are unable to, or later decide not to, participate in the online Annual Meeting.annual meeting. You also may vote online at the Annual Meetingannual meeting prior to the polls closing. You will need to enterclosing by entering your16-digit control number (includedincluded in your Notice, your proxy card or the voting instructions that accompanied your proxy materials) to vote your shares at the Annual Meeting.materials.
Vote by Internet Go towww.proxyvote.com. You will need your16-digit control number included in your proxy card, voter instruction form or Notice. | Vote by Mobile Phone If you have your proxy card, you can directly scan the QR code on theproxy card with your mobile phone or, if you have the16-digit control number included in your proxy card, voter instruction form or Notice, you can scan the above QR code. | Vote by Phone Call 1-800-690-6903 toll-free from the U.S., U.S. territories and Canada or the number on your voter instruction form. You will need the16-digit control number included in your proxy card, voter instruction form or Notice. | Vote by Mail Send the | Vote at the Meeting You can vote by attending the online |
What are the Board’s recommendations on how to vote my shares?
The Board of Directors recommends a vote:
Proposal 1 | FOR the election of the three Class I directors set forth in this proxy statement (page | |
Proposal 2 | FOR the ratification of the appointment of Ernst & Young LLP as | |
Proposal 3 | ||
FOR the vote on the advisory resolution to approve the compensation of | ||
Can I change my vote?
You may revoke your proxy at any time before it is voted by notifying theour Secretary of WisdomTree in writing, by returning a signed proxy card with a later date, by transmitting a subsequent vote over the Internet or by telephone prior to the close of the Internet voting facility or the telephone voting facility, or by attending the online meeting, entering your16-digit control number and voting again electronically at the Annual Meeting.annual meeting.
How many votes can be cast by all stockholders?
153,104,136149,591,742 shares of the Company’sour common stock were outstanding and entitled to be voted on April 26, 2018 (the23, 2021, the record date for determining stockholders eligible to vote) and entitled to be voted at the meeting.vote. Each share of common stock is entitled to one vote on each matter. However, pursuant
How many votes are required to Nasdaq Listing Rule 5635approve each proposal?
Proposal 1 – Election of Directors. Under our by-laws, directors must be elected by the affirmative vote of a majority of votes cast in uncontested elections, such as the election of directors at the annual meeting. This means that the number of votes cast “for” a director nominee must exceed the number of votes cast “against” that nominee. Abstentions and broker IM-5635-2non-votes “Interpretative Material Regardingare not counted as votes “for” or “against” a director nominee. Any nominee who does not receive a majority of votes cast “for” his or her election would be required to tender his or her resignation promptly following the Use of Share Capsfailure to Comply with Rule 5635,”receive the sharesrequired vote. Within 90 days of the Company’s common stock issued to ETF Securities Limited in the ETFS Acquisition will not be entitled to vote to approve Proposal 3.
What percentagecertification of the stockholder vote, isthe Nominating and Governance Committee would then be required forto make a proposalrecommendation to the Board as to whether the Board should accept the resignation, and the Board would be approved?
Proposal 1: The three nominees forrequired to decide whether to accept the resignation and disclose its decision-making process. In a contested election, as Class I directors who receivethe required vote would be a plurality of the votes cast for electioncast.
Proposal 2 – Ratification of directors shall be elected directors.
Proposal 2: AErnst & Young. The affirmative vote of a majority of votes cast is necessary for the ratification of the appointment of Ernst & Young LLP as the Company’sour independent registered public accounting firm for the fiscal year ending December 31, 2018.2021.
Proposal 3:3 – Advisory Approval of Executive Compensation. The affirmative vote of a majority of the shares of common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon is required for the approval of the proposal to approve the issuance of shares of common stock upon conversion of the Company’s Series ANon-Voting Convertible Preferred Stock issued in connection with the ETFS Acquisition representing more than 19.99% of the outstanding common stock or voting power of the Company for purposes of complying with Nasdaq Listing Rule 5635.
Proposal 4: A majority of votes cast is necessary for the approval of the advisory resolution to approve the compensation of the Company’sour named executive officers.
Proposal 5: The vote on the advisory resolution on the frequency of future advisory resolutions to approve the compensation of the Company’s named executive officers will be determined based on a plurality of the votes cast. This means that the option that receives the most votes (every one year, every two years or every three years) will be the option deemed recommended by the stockholders to the Board of Directors.
If there are insufficient votes to approve ProposalsProposal 2, or 3, your proxy may be voted by the persons named in the proxy to adjourn the Annual Meetingannual meeting to solicit additional proxies in favor of the approval of such proposals.proposal. If the Annual Meetingannual meeting is adjourned or postponed for any purpose, at any subsequent reconvening of the meeting, your proxy will be voted in the same manner as it would have been voted at the original convening of the Annual Meetingannual meeting unless you withdraw or revoke your proxy. Your proxy may be voted in this manner even though it may have been voted on the same or any other matter at a previous session of the Annual Meeting.annual meeting.
How is a quorum reached?
The presence, in person or by proxy, of holders of at least a majority of the total number of outstanding shares entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting.annual meeting. Shares held of record by stockholders or brokers, bankers or other nominees who do not return a signed and dated proxy or attend the online Annual Meetingannual meeting in person will not be considered present or represented at the Annual Meetingannual meeting and will not be counted in determining the presence of a quorum. Abstentions and “brokernon-votes” (i.e., shares represented at the meeting held by brokers, bankers or other nominees as to which instructions have not been received from the beneficial owners or persons entitled to vote such shares and, with respect to one or more but not all issues, such brokers or nominees do not have discretionary voting power to vote such shares), if any, will be counted for purposes of determining whether a quorum is present for the transaction of business at the meeting.
How is the vote counted?
Votes cast by proxy or in person at the Annual Meetingannual meeting will be counted by the person(s) appointed by the Companywe appoint to act as inspector(s) of election for the meeting. The inspector(s) of election will count all votes “for,” “against,” “withhold”“against” and abstentions and brokernon-votes, as applicable, for each matter to be voted on at the Annual Meeting. Shares represented by proxies that withhold authority to vote for a nominee for election as a director will not be counted as votes “for” a director.annual meeting. Shares properly voted to “abstain” on a particular matter and brokernon-votes are treated as having not voted on the particular matter and will therefore not affect the outcome of Proposals 1, 2, 4 and 5. With respect to Proposal 3, abstentions will haveany of the effect of a voteagainst the proposal, and brokernon-votes will have no effect.proposals. Due to theirits advisory nature, the results of the vote on Proposals 4 and 5Proposal 3 are not binding on the Board of Directors or the Compensation Committee.
What does it mean if I receive more than one proxy card or voting instruction form?
It means that you have multiple accounts at the transfer agent or with brokers. Please complete and return all proxy cards or voting instruction forms to ensure that all your shares are voted.
Could other matters be decided at the Annual Meeting?annual meeting?
WisdomTree doesWe do not know of any other matters that may be presented for action at the Annual Meeting.annual meeting. Should any other business come before the meeting, the persons named on the enclosed proxyproxies will have discretionary authority to vote the shares represented by such proxies in their best judgment. If you hold shares through a broker, bank or other nominee as described above, they will not be able to vote your shares on any other business that comes before the Annual Meetingannual meeting unless they receive instructions from you with respect to such matters.
What happens if the Annual Meetingannual meeting is postponed?
Your proxy may be voted at the postponed or adjourned meeting. You will be able to change your proxy until it is voted.
Will the Annual Meetingannual meeting be webcast?
Yes. The Annual Meetingannual meeting will be a completely virtual meeting and will be webcast live atwww.virtualshareholdermeeting.com/wisdomtree18wisdomtree21.
What is the deadline to propose actions for consideration or to nominate individuals to serve as directors at the 2019 Annual Meeting?2022 annual meeting?
Requirements for stockholder proposals to be considered for inclusion in our proxy materials
Stockholders who wish to present proposals for inclusion in our proxy materials for our 2019 Annual Meeting of Stockholders2022 annual meeting may do so by following the procedures prescribed in Rule14a-8 under the Securities Exchange Act of 1934, (“or Exchange Act”)Act, and in ourby-laws. Our Secretary must receive stockholder proposals intended to be included in our proxy statement and form of proxy relating to our 2019 Annual Meeting of Stockholders2022 annual meeting made under Rule14a-8 by December 31, 2018. 30, 2021.
Requirements for stockholder proposals to be brought before an annual meeting
It is the policy of our Nominating and Governance Committee to consider nominations for candidates to our Board of Directors that are properly submitted by our stockholders in accordance with ourby-laws. Under our currentby-laws, proposals of business and nominations for directors other than those to be included in our proxy materials following the procedures described in Rule14a-8 may be made by any stockholder who was a stockholder of record at the time of the giving of notice provided for in ourby-laws, who is entitled to vote at the meeting, who is present (inin person or by proxy)proxy at the meeting and who complies with the notice procedures set forth in ourby-laws (i.e., notice must be timely given and contain the information required by theby-laws). To be timely, a notice with respect to the 2019 Annual Meeting of Stockholders2022 annual meeting must be delivered to our Secretary no earlier than Tuesday,Thursday, February 19, 201917, 2022 and no later than Thursday,Saturday, March 21, 2019,19, 2022, unless the date of the 2019 Annual Meeting2022 annual
meeting is advanced by more than thirty (30)30 days or delayed by more than sixty (60)60 days from the anniversary date of the 2018 Annual Meeting,2021 annual meeting, in which event theby-laws provide different notice requirements. Any proposal of business or nomination should be mailed to: Gregory Barton,to Marci Frankenthaler, Secretary, WisdomTree Investments, Inc., 245 Park Avenue, 35th Floor, New York, New York 10167. The Nominating and Governance Committee will evaluate candidates for the position of director recommended by stockholders in the same manner as candidates from other sources and will determine whether to interview any candidates or seek any additional information.
Who should I call if I have any additional questions?
If you hold your shares directly, please call Gregory Bartonemail our Secretary, Marci Frankenthaler, at(212) 801-2080.mfrankenthaler@wisdomtree.com. If your shares are held in street name, please call the telephone number provided on your voting instruction form or contact your broker or nominee holder directly.
Policies on Reporting of Concerns RegardingAbout Accounting and Other Matters and on Communicating withNon-ManagementNon-Employee Directors
TheOur Board of Directors and the Audit Committee have adopted policies on reporting concerns regarding accounting and other matters and on communicating with thenon-managementnon-employee directors. Any person, including any employee, who has a concern about the conduct of WisdomTree or any of its people, including with respect to accounting, internal accounting controls or auditing matters, may, in a confidential or anonymous manner, communicate that concern to Mr. Frank Salerno, the chairperson ofAnthony Bossone, the Audit Committee chair, who is the designated contact for these purposes. Contact may be made by writing to him care of the Audit Committee at the Company’sour offices at 245 Park Avenue, 35th Floor, New York, New York 10167, or by email atauditcommittee@wisdomtree.com. Any interested party, including any employee, who wishes to communicate directly with the presiding director of the executive sessions of ournon-managementnon-employee directors, or with ournon-managementnon-employee directors as a group, also may contact Mr.Frank Salerno, using oneChairman of the Board of Directors, by writing to him care of the Chairman of the Board at our offices using the above methods.address, or by email at WTIchairman@wisdomtree.com.
Where You Can Find More Information
WisdomTree filesWe file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any reports, statements, or other information that WisdomTree files atSEC, which are available on the SEC’s public reference roomwebsite at the following location: 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at1-800-732-0330 for further information regarding the operation of the public reference room. The Company’s SEC filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC athttp://www.sec.gov. You may also read and copy any document WisdomTree fileswe file with the SEC on the Company’sour investor relations website athttp://ir.wisdomtree.com by following the link for “Financial Information.”
You should rely on the information contained in this document to vote your shares at the Annual Meeting. WisdomTree hasannual meeting. We have not authorized anyone to provide you with information that is different from what is contained in this document. This document is dated April 30, 2018.2021. You should not assume that the information contained in this document is accurate as of any date other than that date, and the mailing of this document to stockholders at any time after that date does not create an implication to the contrary. This proxy statement does not constitute a solicitation of a proxy in any jurisdiction where, or to or from any person to whom, it is unlawful to make such proxy solicitations in such jurisdiction.
Incorporation by Reference
To the extent that this proxy statement has been or will be specifically incorporated by reference into any other filing of WisdomTreeours under the Securities Act of 1933, (“or Securities Act”)Act, or the Exchange Act, the sections of this proxy statement entitled “Audit Committee Report” (toReport,” to the extent permitted by the rules of the SEC)SEC, and “Compensation Committee Report” shallwill not be deemed to be so incorporated, unless specifically provided otherwise in such filing.
Important Notice Regarding Delivery of Stockholder Documents
In accordance with a notice sent to certain stockholders of WisdomTree common stockour stockholders who share a single address, only one copy of this proxy statement and our Annual Report on Form10-K for the fiscal year ended December 31, 20172020 is being sent to that address unless WisdomTree haswe have received contrary instructions from any stockholder at that address. This practice, known as “householding,” is designed to reduce the Company’sour printing and postage costs and help to conserve our natural resources. However, if any stockholder residing at such an address who wishes to receive a separate copy of this proxy statement or our Annual Report on Form10-K for the fiscal year ended December 31, 2017, he or she may contactsend a request in writing to WisdomTree Investments, Inc., 245 Park Avenue, 35th Floor, New York, New York 10167, Attention: Investor Relations, Tel:(212) 801-2080,Marci Frankenthaler, Secretary, or by email to mfrankenthaler@wisdomtree.com, and WisdomTreewe will deliver those documents to such stockholder promptly upon receiving the request. Any such stockholder also may also contact Investor Relations using the above contact information if he or she would likeour Secretary to receive separate proxy statements, annual reports or Notices of Internet Availability of Proxy Materials, as applicable, in the future. If you are receiving multiple copies of our annual reports and proxy statements, you may request householding in the future by contacting Investor Relations.our Secretary.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEPROPOSAL 1
Board CompositionELECTION OF DIRECTORS
Our Board of Directors currently consists of eight members. Our certificate of incorporation andby-laws provide that the number of our directors shall be fixed from time to time by a resolution of a majority of our Board of Directors. Pursuant to ourby-laws, the Board of Directors has fixed the number of directors at eightseven as of the date of this year’s Annual Meetingannual meeting of Stockholders.stockholders. In accordance with Delaware law and the Company’sour certificate of incorporation andby-laws, theour Board of Directors is divided into three staggered classes of directors of the same or nearly the same number. At each annual meeting
The Nominating and Governance Committee recommended, and the Board of the stockholders, a class ofDirectors nominated, three directors, will be electedAnthony Bossone, Smita Conjeevaram and Bruce Lavine, to stand for election as Class I directors for a three-year term until the 2024 annual meeting and until his or her successor is duly elected and qualified.
Unless otherwise instructed, the persons appointed in the accompanying form of proxy will vote the proxies received by them for these nominees. WisdomTree has no reason to succeed the directors of the same class whose terms are then expiring. The terms of the directorsbelieve that any nominee will expire upon thebe unavailable for election and qualification of successor directors at the annual meeting of stockholdersmeeting. If one, two or all nominees are unexpectedly not available to serve, proxies may be held in 2018voted for Class I directors, 2019 for Class II directors and 2020 for Class III directors. The following directors serve in Class I, II and III:
Any directorships resulting from an increase in the number of directors will be distributed among the three classes so that,another person nominated as nearly as possible, each class shall consist of one third of the Board of Directors. The division of our Board of Directors into three classes with staggered three-year terms may delay or prevent stockholder efforts to effect a change of our management or a change in control.
Pursuant to the corporate governance guidelines adoptedsubstitute by the Board of Directors, described below under “Corporate Governance Guidelines,”or the Company seeks directors who have high personal and professional integrity, judgment and ability. Our Nominating Committee is responsible for recommending criteria and qualifications for Board membership, identifying and evaluating potential director candidates and recommending to the Board those candidates to be nominated for election to, or fill vacancies on, the Board. The Nominating Committee will seek to identify, and the Board will select, director candidates who satisfy the criteria set forth in the director candidate guidelines included in the Nominating Committee’s charter. Candidates are selected for, among other things, their knowledge, skills, abilities, independence, character, diversity, demonstrated leadership and experience useful to the oversight of our business in the context of the needs of the Board. Our Nominating Committee’s and Board of Directors’ priority in selecting Board members is identification of persons who will further the interests of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among Board members, and professional and personal experiences and expertise relevant to our growth strategy.
Our Board of Directors is divided into three staggered classesmay reduce the number of directors of the same or nearly the same number. At the Annual Meeting, three individuals willto be elected to serve as Class I Directors until their term expires in 2021, and until their successors are elected and qualified. During 2017, each ofat the nominees to the Board served as a Director.
Class I Director Nominees whose terms, if elected, will expire in 2021:
Anthony Bossone Age: Director January 2009 Independent Audit Committee Chair Compensation and Nominating and Governance Committee Member | Anthony Bossone has been the Chief Financial Officer of Atlantic-Pacific Capital, Inc., a broker-dealer and global placement agent dedicated to raising capital for alternative investment funds, since 2003. From 2001 to 2003, Mr. Bossone was the Assistant Controller at SAC Capital Advisors, LLC, a hedge fund advisory firm, and from 1999 until 2001, Mr. Bossone served as an equity trader at Schonfeld Securities, LLC, a securities trading firm. Mr. Bossone began his career at PricewaterhouseCoopers LLP in 1993 where he was an audit manager until 1999. Mr. Bossone received his B.S. in Business and Economics with highest honors from Lehigh University and is a Certified Public Accountant. We believe Mr. Bossone’s qualifications to serve on the Board of Directors include his financial and accounting expertise. The Board also benefits from his experience as an equity trader. |
Smita Conjeevaram Age: 60 Director since January 2021 Independent | Smita Conjeevaram retired in 2013 after a 19-year career in the global investment and hedge fund industry. Her most recent position was as the Chief Financial Officer – Credit Hedge Funds and Deputy Chief Financial Officer – Credit Funds for Fortress Investment Group LLC, a global investment firm, where she served from 2010 to 2013. Prior to that, Ms. Conjeevaram served as the Chief Financial Officer of Everquest Financial LLC, a specialty finance company, from 2006 to 2009, and Strategic Value Partners LLC, a leading global investment firm, from 2004 to 2005. Ms. Conjeevaram began her career as a tax specialist at two Big-4 public accounting firms and is a Certified Public Accountant. In January 2021, Ms. Conjeevaram joined the Board of Directors of McGrath RentCorp (NASDAQ: MGRC), a diversified business-to-business rental company, and SkyWest, Inc. (NASDAQ: SKYW), an aircraft leasing company. She also has served as a director of SS&C Technologies Holdings, Inc. (NASDAQ: SSNC), an investment and financial management software and service provider for the global financial services industry, since November 2015, and is a member of the audit committee. Ms. Conjeevaram received her B.S. in Accounting and Business Administration from Butler University and a B.A. in Economics from Ethiraj College, Madras, India. We believe Ms. Conjeevaram’s qualifications to serve on the Board of Directors include her financial, accounting and compliance expertise, global experience and track record of success in guiding companies through significant growth. The Board also benefits from her experience serving on three other public company boards, including a fintech company, which the Board believes will translate into valuable governance and oversight of our digital assets initiatives. |
Bruce Lavine Age: Director January 2007 Independent Nominating and Governance Committee Member |
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE ABOVE MENTIONED NOMINEES
Class II Directors whose terms expire in 2022
Age: Director
Independent Audit and Nominating and Governance Committee Member |
Class II Directors whose terms expire in 2019:
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Win Neuger Age: Director July 2013 Independent Audit and Compensation Committee Member Nominating and Governance Committee Chair |
Class III Directors whose terms expire in 2020:2023
Frank Salerno Age: Director July 2005
Compensation Committee Chair Audit Member |
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Jonathan Steinberg Age: Director October 1988 |
David AbnerMarci Frankenthaler has served as our Head of WisdomTree Europe since August 2016 and became an Executive Vice President in January 2018. He joined the Company in April 2008 as Director of Institutional Sales and Trading. In January 2012, he was appointed Head of Capital Markets, a position he held until relocating to London in August 2016 to lead our European efforts. From February 2006 to March 2008, Mr. Abner was Head of ETF Trading Americas at BNP Paribas. Prior to that, he spent 14 years at Bear Stearns where he was Head of ETF Trading within the Equity Derivatives group. A renowned ETF expert, Mr. Abner has authored two books on the subject,The ETF Handbook (Wiley, 2010, 2016) andThe Visual Guide to ETFs(Bloomberg, 2013). He is also the creator of the ETF Implied Liquidity function, one of the most widely-used metrics for determining the potential investable liquidity of an ETF. Mr. Abner received his M.S. in Management and a B.A. in Economics from the State University of New York at Stony Brook. Mr. Abner is 48 years old.
Gregory Barton has served as our Executive Vice President and Chief Legal Officer and Secretary since January 2018. From October 2012 to December 2017, heApril 2019. She served as our Executive Vice PresidentDeputy General Counsel from January 2018 to March 2019, and Chief Operating Officer. Before joining the Company, Mr. Barton served as Executive Vice President,Director of Business and Legal Affairs, Associate General Counsel and Secretary of TheStreet, Inc., a financial media company, from July 2014 to December 2017. From June 20092008 to July 2012, following his service as General Counsel and Secretary of Martha Stewart Living Omnimedia, Inc., a media and merchandising company, from October 2007 to August 2008. From October 2004 to October 2007, Mr. Barton served as Executive Vice President, Licensing and Legal Affairs, General Counsel and Secretary, and from November 2002 to October 2004, as Executive Vice President, General Counsel and Secretary, of Ziff Davis Media Inc., a technology media company. Preceding Ziff Davis, Mr. Barton served in a variety of positions at WisdomTree (then known as Individual Investor Group, Inc.) from August 1998 to November 2002, including President, Chief Financial Officer and General Counsel; and prior to that served from September 1996 to August 1998 as Vice President, Corporate and Legal Affairs, and General Counsel, and from May 1995 to September 1996 asJune 2014, Ms. Frankenthaler was General Counsel of Alliance Semiconductor Corporation, an integrated circuit company. Mr. Barton was previously an attorney at the law firmFrederick’s of Gibson, Dunn & Crutcher LLP. From June 2006 through October 2012, Mr. Barton served as an Independent Trustee and Chairman of the Audit Committee for the WisdomTree Trust. Since June 2017, Mr. Barton has served as a director of ThesysHollywood Group Inc., a financial technology companyspecialty retailer that she helped to take public and then private. Prior to that, Ms. Frankenthaler was a partner in which the Company has an investment,Corporate and since January 2014 has served as ChairSecurities department of the Finance Committee of the Hoff-Barthelson Music School. Mr. Barton received a B.A. degree, summa cum laude, from Claremont McKenna College and a J.D. degree, magna cum laude, from Harvard Law School. Mr. Barton is 56 years old.
Stuart Bell hasGraubard Miller, which served as our Executive Vice Presidentprimary corporate counsel, from 1991 to 2007, and Chief Operating Officer since January 2018. From October 2016 until December 2017, hewas employed at that firm beginning in 1994. Ms. Frankenthaler received her B.A., with honors, in Psychology with a concentration in Human Resources from Binghamton University and her J.D. from Benjamin N. Cardozo School of Law, where she served as our DirectorExecutive Editor of International Business; in this capacity, he worked across all facets of our businesses in Europe, Japan and Canada where he helped drive operational alignment and execution of our strategic growth objectives. Mr. Bell joined the Company in September 2007 as Manager of Public Relations, adding to his responsibilities in January 2009 as Manager of Corporate Communications and Investor Relations, and thereafter from January 2012 to October 2016 as Director of Corporate Communications and Investor Relations. Before joining the Company, Mr. Bell worked at Sloane & Company, a strategic communications and investor relations firm. He received his B.A. in History, with departmental honors and honors in general scholarship, from Trinity College where he was Phi Beta Kappa and named the President’s Fellow in History. Mr. BellCardozo Law Review. Ms. Frankenthaler is 3452 years old.
R. Jarrett Lilien has served as ourPresident and Chief Operating Officer since September 2019. From November 2017 to September 2019, he served as Executive Vice President and Head of Emerging Technologies since November 2017.Technologies. From November 2008 to December 2017, Mr. Lilien was a member of ourthe Board of Directors and served on the Audit, Compensation and Nominating committees.and Governance Committees. Until November 2017, Mr. Lilien was the Managing Partner of Bendigo Partners, LLC, a financial services focused venture capital investing and advisory services firm he founded in 2008. From September 2012 to July 2014, Mr. Lilien served as the Chief Executive Officer of Kapitall Inc., an online investing platform. From 2003 to 2008, he served as President and Chief Operating Officer of E*TRADE Financial Corporation. In this role, he was responsible for the tactical execution
of all of E*TRADE’s global business strategies. Previously, he served as the President and Chief Brokerage Officer at E*TRADE Securities. In this capacity, Mr. Lilien reorganized the business, adding new product lines and providing innovative brokerage capabilities to its retail, institutional and corporate clients around the world. With experience in more than 40 global markets, he was instrumental in developing a flexible infrastructure for E*TRADE’s brokerage units designed to provide retail and institutional clients with seamless execution, clearing and settlement. Prior to joining E*TRADE, Mr. Lilien spent 10 years as Chief Executive Officer at TIR (Holdings) Limited, a global institutional broker, which E*TRADE acquired in 1999. Mr. Lilien currently serves as President of the Jazz Foundation of America and is on the Board of Directors of Barton Mines Corporation, Voyager Digital Ltd. and the Baryshnikov Arts Center, and is on the Advisory BoardCenter. He served as a member of WFUV FM Radio. In April 2015, he joined the Board of Directors of ITGInvestment Technology Group, Inc. (NYSE: ITG), an independent execution broker and research provider, from
April 2015 until its acquisition by Virtu Financial, Inc. in March 2019, and served as interim CEOChief Executive Officer from August 2015 until January 2016. Since November 2017, Mr. Lilien also has served on the Board of Directors of AdvisorEngine Inc., a customizedend-to-end platform for financial advisors in which the Company originally invested in November 2016. Mr. Lilien received his B.A. in Economics from the University of Vermont. Mr. Lilien is 5659 years old.
Kurt MacAlpineAlexis Marinof has served as our Executive Vice President and Global Head of WisdomTree Europe since August 2019. He joined WisdomTree Europe in July 2017 as Head of European Distribution, since July 2015.a position he held until April 2018 when he was appointed Chief Operating Officer to oversee the integration of ETF Securities and build out WisdomTree’s multi-product European exchange traded product, or ETP, business. Prior to joining the Company, Mr. MacAlpine was employedthat, he held various positions at McKinsey & Company between May 2006State Street Global Advisors, including as EMEA Head of SPDR ETFs (April 2013 – November 2016), EMEA Distribution Chief Operating Officer (October 2013 – September 2015), Head of Middle East and June 2015 in a variety of consulting roles. He was elected a Partner of McKinsey & Company inAfrica (February 2008 – April 20132013) and was the LeaderHead of the North American AssetNordic Region (January 2006 – January 2008). Mr. Marinof received a five-year degree in Finance and Business Management Practice. While at McKinsey & Company,“Ingénieur Commercial et de Gestion” from the Université Catholique de Louvain-La-Neuve IAG Louvain School of Management in Belgium. Mr. MacAlpine managed global consulting teams in the asset management and wealth management industries on topics related to distribution, marketing, product development, international expansion, strategy and M&A. Since November 2016, Mr. MacAlpine also has served on the Board of Directors of AdvisorEngine. He has extensive experience working with domestic and foreign firms in North America, Asia and Europe. Mr. MacAlpine received his M.B.A. from Queen’s University in Kingston, Ontario and his Bachelor of Commerce from Saint Mary’s University in Halifax, Nova Scotia. Mr. MacAlpineMarinof is 3646 years old.
Amit Muni has served as our Executive Vice President and Chief Financial Officer since March 2008. On April 8, 2021, Mr. Muni notified us of his intent to resign from his position as Chief Financial Officer to accept alternative employment, effective by May 31, 2021. Prior to joining the Company,WisdomTree, Mr. Muni served as Controller and Chief Accounting Officer of International Securities Exchange Holdings, Inc., an electronic options exchange, from 2003 until March 2008. Mr. Muni was Vice President, Finance, of Instinet Group Incorporated, an electronic agency broker-dealer, from 2000 to 2003. From 1996 until 2000, Mr. Muni was employed as a Manager of the Financial Services Industry Practice of PricewaterhouseCoopers LLP, an accounting firm. From 1991 until 1996, Mr. Muni was an accountant and a senior auditor for National Securities Clearing Corporation, a firm that provides centralized clearing, information and settlement services to the financial industry. Mr. Muni received a B.B.A. in Accounting from Pace University and is a Certified Public Accountant. Mr. Muni is 4952 years old.
Luciano Siracusano IIIWilliam Peck has served as Head of Strategy and Emerging Technologies since February 2020. In this role, he oversees our Executive Vice Presidentcorporate development and Chiefother strategic initiatives, including investments in emerging technologies such as digital assets. From September 2014 to January 2020, he held various positions on our Strategy team, including Senior Analyst, Senior Associate and Director. From July 2012 to July 2014, Mr. Peck worked as an Investment Strategist since March 2011. From October 2008 to May 2015, while serving asBanking Analyst for Bank of America Merrill Lynch covering a range of financial services companies. In connection with our strategic investment in December 2019 in Securrency, Inc., a technology company focused on blockchain-based financial services infrastructure, Mr. Peck joined Securrency’s Board of Directors. He received an A.B. in Government, cum laude, from Harvard University. Mr. Peck is 31 years old.
Jonathan Steinberg, our Chief Investment Strategist, Mr. SiracusanoExecutive Officer and a member of the Board of Directors, is also led our sales team as Directoran executive officer. His biographical information is set forth above in the description of Sales and Head of Sales. Prior to serving in those positions, Mr. Siracusano served as our Director of Research from 2001 until October 2008, and as a research analyst and editorthe members of our various media publications from 1999 until 2001. Mr. Siracusano, together with Mr. Steinberg, was responsible for the creation and developmentBoard of our fundamentally weighted index methodology. Prior to joining the Company in 1999, Mr. Siracusano was an Equity Analyst at Value Line, Inc., an investment research firm, from 1998 to 1999. Preceding his career in finance, Mr. Siracusano served as Special Assistant to HUD Secretary Henry Cisneros and as a Special Assistant to New York Governor Mario Cuomo. Mr. Siracusano received his B.A. in Political Science from Columbia University. Mr. Siracusano is 52 years old.Directors.
Peter M. Ziemba has served as our Executive Vice President – Senior Advisor to the CEO and Chief Administrative Officer since January 2018. He served as our Executive Vice President – Business and Legal Affairs from January 2008 to December 2017 and our Chief Legal Officer from March 2011 to December 2017. From April 2007 to March 2011, Mr. Ziemba served as our General Counsel. Prior to joining the Company,WisdomTree, Mr. Ziemba was a partner in the Corporate and Securities department of Graubard Miller, which served as our
primary corporate counsel, from 1991 to 2007, and was employed at that firm beginning in 1982. Mr. Ziemba is a member of the Advisory Board of WFUV FM Radio. Mr. Ziemba received his B.A. in History with university honors from Binghamton University and his J.D., cum laude, from Benjamin N. Cardozo School of Law. Mr. Ziemba served as a director of the CompanyWisdomTree from 1996 to 2003. Mr. Ziemba is 6063 years old.
Our Board of Directors currently consists of seven members. In accordance with Delaware law and our certificate of incorporation and by-laws, our Board of Directors is divided into three staggered classes of the same or nearly the same number. At each annual meeting of the stockholders, a class of directors is elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the directors will expire upon the election and qualification of successor directors at this year’s annual meeting of stockholders for Class I directors, in 2022 for Class II directors and in 2023 for Class III directors.
The following directors currently serve in Classes I, II and III:
Class I: Anthony Bossone, Smita Conjeevaram and Bruce Lavine
Class II: Susan Cosgrove and Win Neuger
Class III: Frank Salerno and Jonathan Steinberg
Our certificate of incorporation and by-laws provide that the number of our President and Chief Executive Officer anddirectors shall be fixed from time to time by a resolution of a majority of our Board of Directors. Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class shall consist of one third of the Board of Directors. The division of our Board of Directors into three classes with staggered three-year terms may delay or prevent stockholder efforts to effect a change of our management or a change in control.
In a private placement of our common stock in October 2009, we entered into a Securities Purchase Agreement that provided, among other things, that as long as Michael Steinhardt beneficially owns at least 10,000,000 shares of our common stock, he will have the right to require us to either (i) appoint a designee, reasonably acceptable to our Board of Directors, as a member of our Board of Directors, is also an executive officer of the Company. His biographical information is set forth above in the description of the member ofor (ii) provide a designee, reasonably acceptable to our Board of Directors.Directors, with notice of all Board meetings and copies of all materials delivered to Board members and permit such designee to attend and observe each Board meeting. Mr. Steinhardt retired as our non-executive Chairman of the Board in October 2019 after more than 14 years of service. While Mr. Steinhardt continues to beneficially own at least 10,000,000 shares of our common stock and therefore continues to be contractually entitled to designate a director or an observer to the Board, he has not designated a director or observer following his retirement.
Director Criteria, Qualifications and Experience
We are committed to diversified Board membership and seek directors who have high personal and professional integrity, judgment and ability. Our Nominating and Governance Committee is responsible for recommending criteria and qualifications for Board membership, identifying and evaluating potential director candidates and recommending to the Board those candidates to be nominated for election to, or fill vacancies on, the Board. The Nominating and Governance Committee seeks to identify director candidates who satisfy the criteria set forth in the director candidate guidelines included in the Nominating and Governance Committee’s charter. Candidates are selected for, among other things, their knowledge, skills, abilities, independence, character, diversity (inclusive of gender, race, ethnicity, age, gender identity, gender expression and sexual orientation), demonstrated leadership and experience useful to the oversight of our business in the context of the needs of the Board. Our Nominating and Governance Committee’s priority is to identify candidates who will further the interests of our stockholders through his or her established record of professional accomplishments, the ability to contribute positively to the collaborative culture among Board members, and professional and personal experiences and expertise relevant to our business strategy. To reflect its commitment to diversified Board membership, our corporate governance guidelines provide that when considering director candidates, the Nominating and Governance Committee should actively seek out highly qualified women and people of color for consideration as nominees to the Board as part of its regular process.
Director Highlights (excluding our CEO)
During 2017,2020, the Board of Directors held 11nine meetings and did not take any actionacted by unanimous written consent.consent on one occasion. Each director attended at least 75% of all Board meetings and meetings of the Board committees on which they serve, except for Mr. Steinhardt.he or she serves. Our policy is for all our directors to attend our annual meeting of stockholders. All our directors except Mr. Steinhardt attended our 2017 Annual Meeting2020 annual meeting of Stockholders.stockholders.
Nasdaq rules require listed companies to have a board of directors with at least a majority of independent directors. Our Board of Directors has determined that six ofall our eight directors are independent under the listing standards of the Nasdaq Stock Market. The members determined to be independent are Messrs. Begleiter, Bossone, Neuger, Salerno, Shea and Steinhardt.Market other than Mr. Steinberg, our Chief Executive Officer. Under our corporate governance guidelines, directors are required to promptly inform the Lead Independent Directorchair of the Nominating and Governance Committee if the director becomes aware of any change in circumstances that may result in such director no longer being considered independent under the Nasdaq rules.
Our Board of Directors believes that it is good corporate practice to designate one of our independent directors as Lead Independent Director. Mr. Salerno has held this designation since the position was established in 2008. The duties of our Lead Independent Director are as follows:
The Board of Directors has chosen to separate the roles of chairman of the Board of Directors and chief executive officer. Jonathan Steinberg is our President and Chief Executive Officer and Michael SteinhardtFrank Salerno is ournon-executive, independent Chairman of the Board of Directors.Board. We believe that separating these positions is optimal for WisdomTree because it allows Mr. Steinberg to focus on ourday-to-day business, while allowing Mr. SteinhardtSalerno to focus on leadership of the Board of Directorsleadership in its fundamental role of providing advice to and independent oversight of management. Our Board of Directors recognizes the time, effort and energy that the chief executive officer is required to devote to his position, in the current business environment, as well as the commitment required to serve as our chairman, particularly as the Board of Directors’ oversight responsibilities continue to
grow.chairman. While ourby-laws and corporate governance guidelines do not require that our chairman and chief executive officer positions be separate, our Board of Directors believes that having separate positions is the appropriate leadership structure for us and demonstrates our commitment to good corporate governance. Our corporate governance guidelines provide that if the offices of the Chairmanchairman of the Board and Chief Executive Officerchief executive officer are combined, the Board will appoint either anon-executive chairman or a Lead Independent Director.lead independent director.
Role of the Board in Risk Oversight
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our operations, strategic direction and intellectual property as more fully discussed under “Risk Factors” in our Annual Report on Form10-K for the fiscal year ended December 31, 2017,2020, as updated from time to time. Management is responsible for theday-to-day management of the risks we face, while our Board of Directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our Board of Directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The Board of Directors’ role in overseeing the management of our risks is conducted primarily through Board committees, of the Board of Directors, as discloseddescribed in the descriptions of each of the committees below and in the charters of each of the committees.their respective charters. The full Board of Directors (or the appropriate boardBoard committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on the Company and the steps we take to manage them. When a boardBoard committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairman of the relevant committee reports on the discussion to the full Board of Directors during the committee reports portion of the next boardBoard meeting. This enables our Board of Directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Committees of Our Board of DirectorsCommittees
Our Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee, each of which operates pursuant to a written charter adopted by our Board of Directors. As provided in its respective charters, each committee reviews its charter at least annually and recommends charter changes to the Board as appropriate. In June 2017,Charters for each of the Audit Committee, the Compensation Committee and Nominating and Governance Committee reviewed its charter and determined that no amendments were required. Membershipare available on each committeeour investor relations website at http://ir.wisdomtree.com by following the link for “Corporate Governance,” under the heading “Committee Charters.”
Committee membership is limited to independent directors as defined under the listing standards of the Nasdaq Stock Market. In addition, members of the Audit Committee members also must meet the independence standards for Audit Committee members adopted by the SEC. Our Board of Directors may from time to time establish other committees. Charters for each of the Audit Committee, Compensation Committee and Nominating Committee are available on our investor relations website athttp://ir.wisdomtree.com by following the link for “Corporate Governance,” under the heading “Committee Charters.” Our corporate governance guidelines provide that each independent director is expected, but not required, to serve on at least one committee. A director also may serve on more than one committee.
Audit Committee
Messrs. Bossone, Neuger and Salerno and Ms. Cosgrove currently serve on the Audit Committee, which is chaired by Mr. Salerno. Mr. Lilien served on the Audit Committee until November 2017, when he became an executive officer of the Company and was replaced by Mr. Neuger.Bossone. During 2017,2020, the Audit Committee held nine meetings and did not take any action by unanimous written consent. During 2020, the Audit Committee reviewed its charter and determined that no amendments were required. Our Board of Directors has determined that each member of the Audit Committee is an “audit committee financial expert,” as defined under the applicable rules of the SEC. The Audit Committee’s responsibilities include:
overseeing theour accounting and financial reporting processes of the Company and the audits of the Company’sour financial statements;
establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;
monitoring, reporting to and reviewing with the Board of Directors regarding the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;
reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and
taking, or recommending that the Board of Directors take, appropriate action to oversee the qualifications, independence and performance of the Company’sour independent auditor.
Compensation Committee
Messrs. Bossone, Neuger and Salerno currently serve on the Compensation Committee, which is chaired by Mr. Salerno. Mr. Lilien served on the Compensation Committee until November 2017, when he became an executive officer of the Company and was replaced by Mr. Bossone. During 2017,2020, the Compensation Committee held nineeight meetings and acted by unanimous consent on two occasions.
one occasion. During 2020, the Compensation Committee reviewed its charter and determined that no amendments were required. The Compensation Committee’s responsibilities include:
overseeing the administration of the Company’sour compensation programs;
reviewing and discussing with the Board corporate succession plans for the CEO and our other key officers of the Company;officers;
determining and approving the compensation of the Company’sour CEO;
approving the compensation of thenon-CEO executive officers and certain other senior employees;
reviewing and making recommendations to the Board with respect to directors’ compensation;
exercising sole authority to retain, terminate and approve the compensation of any compensation consultants or other compensation advisers and determining the nature and scope of their assignments; and
approving all discretionary bonuses for the Company’sour employees, advisers and consultants.
Nominating and Governance Committee
Messrs. Begleiter,Bossone, Lavine and Neuger and SteinhardtMs. Cosgrove currently serve on the Nominating and Governance Committee, which is chaired by Mr. Steinhardt. Mr. Lilien served onNeuger. During 2020, the Nominating Committee until November 2017, when he became an executive officer of the Company. During 2017, the Nominatingand Governance Committee held threefour meetings and did not take any action by unanimous written consent. The Nominating and Governance Committee’s responsibilities include:
recommending criteria and qualifications for Board membership;membership, which includes considering diversity of background and experience, inclusive of gender, race, ethnicity, age, gender identity, gender expression and sexual orientation;
identifying and evaluating candidates for nomination for election to the Board of Directors or to fill vacancies on the Board of Directors;vacancies;
recommending that the Board of Directors select the director nominees for election at each annual meeting of stockholders;
establishing a policy regarding the consideration of director candidates recommended by stockholders; and
reviewing all stockholder nominations submitted to the Company.us.
Compensation Committee Interlocks and Insider Participation
Messrs. Bossone, Lilien, Neuger and Salerno served as members of the Compensation Committee during 2017. Mr. Lilien resigned from the Compensation Committee in November 2017 when he became an executive officer of the Company and was replaced by Mr. Bossone.2020. None of the members of the Compensation Committee has beenwas an officer or employee of the Company and none were employeesours during 2020 or has ever served as one of the Company during 2017our officers and none had any relationship with the Companyus or any of itsour subsidiaries during 20172020 that would be required to be disclosed as a transaction with a related person.
None of theour executive officers of the Company has served on the board of directors or compensation committee of another company (or other board committee performing equivalent functions) at any time during which an executive officer of such other company served on the Company’sour Board of Directors or the Compensation Committee.
Corporate Governance Guidelines
TheOur Board of Directors has adopted corporate governance guidelines to promote the effective functioning of the Board of Directors and its committees, and the continued implementation of good corporate governance practices. The corporate governance guidelines address matters including the role and structure of the Board, of Directors, the selection,
qualifications and continuing education of Board members, of the Board of Directors, board meetings,non-employee director executive sessions, director service on other boards, boardBoard committees, management review and succession planning,non-employee director compensation and boardBoard and committee evaluations.
To reflect its commitment to diversified Board membership, the corporate governance guidelines provide that when considering director candidates, the Nominating and Governance Committee should actively seek out highly qualified women and people of color for consideration as nominees to the Board as part of the Nominating and Governance Committee’s regular process.
The corporate governance guidelines are available on our investor relations website athttp://ir.wisdomtree.com by following the link for “Corporate Governance,” under the heading “Corporate Governance Guidelines.”
Board and Committee Self-Evaluations
The Board conducts an annual self-evaluation to determine whether it and its committees are functioning effectively. The Board receives comments from all directors and executive officers and reports annually with an assessment of the Board’s performance. The assessment focuses on the Board’s contribution to the CompanyWisdomTree and specifically focuses on areas in which the Board or management believes that the Board could improve.
We have adopted a code of conduct that applies to all our employees, officers and directors, including those officers responsible for financial reporting. Our code of conduct is available on our investor relations website athttp://ir.wisdomtree.com by following the link for “Corporate Governance,” under the heading “Code of Conduct.” We intend to disclose any amendments to this code, or any waivers of its requirements, on our website.
Corporate Social Responsibility
At WisdomTree, sustainability and responsibility are embedded throughout our business, which we believe benefits our investors, employees and stockholders. Our Corporate Social Responsibility Report, or CSR Report, highlights some of the areas where we are investing to improve the Environmental, Social and Governance, or ESG, positioning of our firm as a whole. Generally, as the CSR Report describes, we are engaging in responsible investing, focused on diversity, equity and inclusion, working to enhance our employee experience through training and the provision of employee benefits, investing in our community through firmwide service projects, caring for our environment and continuously striving to improve corporate governance. Our CSR Report is available on our investor relations website at http://ir.wisdomtree.com by following the link for “Corporate Social Responsibility,” under the heading “Corporate Governance.”
Our Board of Directors has adopted stock ownership guidelines, which require executive officers andnon-employee directors to maintain an ongoing ownership position in our common stock while providing them with flexibility in personal financial planning.
On aneach annual measurement date which(determined by the Board has determined to be November 30th of each year (“Annual Measurement Date”), the dollar value of the base amountamounts set forth below is converted into the number of shares required to be held to meet the guidelines until the next Annual Measurement Date.November 30th.
Position | Base Amount | |
6X Base Salary | ||
All other | 3X Base Salary | |
5X Base Retainer |
Shares of common stock owned by the executive officer ornon-employee director directly, jointly or indirectly by a trust, partnership, limited liability company or other entity for the benefit of the executive officer ornon-employee director, count toward satisfaction of the guidelines, as well as 50% of unvested restricted stock awards issued under the Company’sour equity incentive plans. Stock options (both vested and unvested) do not count toward satisfaction of the guidelines.
If an executive officer ornon-employee director does not meet the guidelines on the Annual Measurement Date,November 30th, he or she will not be permitted to sell or otherwise dispose of the Company’sour common stock (except for (i) 50% of restricted stock awards as they vest to cover taxes and (ii) up to 50% of the shares of common stock issuable upon the exercise of stock options to cover the exercise price and taxes) until the next Annual Measurement Date,November 30th, and then only to the extent that his or her remaining holdings do not fall below the applicable requirement. The Compensation Committee has the authority to grant waivers on acase-by-case basis.
As of the last Annual Measurement Date in 2017,November 30, 2020, all our executive officers andnon-employee directors met the guidelines other than Kurt MacAlpineMarci Frankenthaler, Alexis Marinof, William Peck, Susan Cosgrove and Win Neuger. Messrs. MacAlpineMarinof and Neuger both joined WisdomTreePeck and Ms. Frankenthaler became executive officers within the last five years.two years, and Ms. Cosgrove joined the Board in April 2019. Additional detail regarding ownership of our common stock by our executive officers andnon-employee directors is included in this proxy statement under the heading “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Stock Ownership Table.”
Policy Regarding Short Sales, Derivatives, Hedging and Pledging
Our insider trading policy applies to all our employees, officers and directors, including our named executive officers. The policy prohibits these individuals from effecting “short sales” of our common stock. These individuals also may not trade in derivatives in our securities (such as put and call options) or engage in any other hedging transaction relating to our securities without prior Audit Committee approval. These individuals are also prohibited from holding shares of our common stock in margin accounts or pledging shares of our common stock as collateral for a loan without prior Audit Committee approval.
Compensation of Non-Employee Directors
Set forth below are the compensation terms for the non-employee members of the Board of Directors in effect in 2020 as approved by the Board of Directors:
Board Service | ||||
Annual Cash Retainer(1) | $ | 100,000 | ||
Annual Restricted Stock Award(2) | $ | 100,000 | ||
Chairman of the Board Cash Retainer(3) | $ | 110,000 |
Committee Service(1) | Chair | Member | ||||||
Audit | $ | 25,000 | $ | 12,500 | ||||
Compensation | $ | 40,000 | $ | 15,000 | ||||
Nominating and Governance | $ | — | $ | 7,500 |
(1) | The annual cash retainer is paid quarterly based on service during the prior quarter. |
(2) | Annual restricted stock award under our 2016 Equity Plan granted at the Board of Directors meeting immediately following the annual meeting of stockholders each year to all non-employee directors serving on that date that vests one year from the grant date, subject to certain exceptions. The award is valued at $100,000 on the grant date based on the closing price of our common stock on the grant date. A director who is appointed to the Board outside of the annual meeting of stockholders will receive a prorated amount of the annual award. |
(3) | Effective June 18, 2020, the Chairman of the Board’s cash retainer increased from $80,000 to $110,000. |
The following table sets forth compensation paid to our non-employee directors in 2020. All of our directors are reimbursed for out-of-pocket expenses for attending meetings. Directors who are also employees of WisdomTree are not entitled to any compensation for their services as a director.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Total ($) | |||||||||
Anthony Bossone | 147,500 | 99,996 | 247,496 | |||||||||
Susan Cosgrove | 120,000 | 99,996 | 219,996 | |||||||||
Bruce Lavine | 107,500 | 99,996 | 207,496 | |||||||||
Win Neuger | 135,000 | 99,996 | 234,996 | |||||||||
Frank Salerno | 241,071 | 99,996 | 341,067 |
(1) | As of December 31, 2020, each of our non-employee directors other than Ms. Conjeevaram, who joined the Board of Directors on January 25, 2021, held 27,247 shares of unvested restricted stock. |
(2) | Represents the grant date fair value of 27,247 shares of restricted stock awarded on June 18, 2020, computed in accordance with Financial Accounting Standards Board, or FASB, Accounting Standard Codification, or ASC, Topic 718 excluding estimated forfeitures. |
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. Ernst & Young LLP acted as our independent registered public accounting firm for the year ended December 31, 2020. A representative of Ernst & Young LLP is expected to be present at the annual meeting with the opportunity to make a statement if he or she desires and to respond to appropriate questions.
Our organizational documents do not require that the stockholders ratify the selection of Ernst & Young LLP as our independent registered public accounting firm. We request such ratification as a matter of good corporate practice. A majority of the votes properly cast is required for the approval of the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm, and brokers, bankers and other nominees have discretionary voting power on this routine matter. Accordingly, abstentions will have no effect on the ratification and we do not expect there to be any broker non-votes. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain Ernst & Young LLP, but still may retain them. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of our Company and our stockholders.
Principal Accounting Fees and Services
The following table sets forth the fees paid or accrued by us for the audit and other services provided by Ernst & Young LLP during the years ended December 31, 2020 and 2019 (in thousands):
2020 | 2019 | |||||||
Audit Fees(1) | $ | 1,392 | $ | 1,278 | ||||
Audit Related Fees(2) | 42 | 42 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
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Total Fees | $ | 1,434 | $ | 1,320 | ||||
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(1) | Audit fees relate to professional services rendered in connection with the audit of our annual financial statements, quarterly review of financial statements included in our statutory and regulatory filings, audit of our internal control over financial reporting, audits of the financial statements of certain consolidated subsidiaries and issuances of comfort letters. |
(2) | Fees related to the audits of our employee benefit plan during the years ended December 31, 2020 and 2019. |
Audit Committee Pre-Approval Policies and Procedures
The Audit Committee pre-approves each audit and non-audit service rendered by Ernst & Young LLP to us, including the fees and terms thereof. The Audit Committee may form and delegate authority to subcommittees of the Audit Committee consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting pursuant to the Audit Committee Charter. In accordance with this policy, the Audit Committee pre-approved all fees described above before services were rendered.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2020 and has discussed these statements with management and Ernst & Young LLP, the Company’s independent registered public accounting firm. The Company’s management is responsible for the preparation of the Company’s financial statements and for maintaining an adequate system of disclosure controls and procedures and internal control over financial reporting for that purpose. Ernst & Young LLP is responsible for expressing an opinion on the conformity of the audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. The Audit Committee is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls.
The Audit Committee also received from, and discussed with, Ernst & Young LLP the written disclosures and other communications required under Public Company Accounting Oversight Board, or PCAOB, Auditing Standard 1301, Communications with Audit Committees, including among other things, the following:
methods to account for significant unusual transactions;
the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus;
the process used by management in formulating particularly sensitive accounting estimates and the basis for the independent registered public accounting firm’s conclusions regarding the reasonableness of those estimates; and
disagreements with management regarding financial accounting and reporting matters and audit procedures.
Ernst & Young LLP also provided the Audit Committee with the written disclosures and the letter required by Rule 3526 of the PCAOB. PCAOB Rule 3526 requires independent registered public accounting firms annually to disclose in writing all relationships that in their professional opinion may reasonably be thought to bear on independence, to confirm their perceived independence and engage in a discussion of independence. The Audit Committee has reviewed this disclosure and has discussed with Ernst & Young LLP their independence from the Company.
Based on its discussions with management and our independent registered public accounting firm, and its review of the representations and information provided by management and our independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the Securities and Exchange Commission.
No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Act, or the Securities Exchange Act of 1934, as amended, or the Exchange Act, through any general statement incorporating by reference in its entirety the proxy statement in which this Report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be “soliciting material” or to be “filed” under either the Securities Act or the Exchange Act.
Members of the Audit Committee
Anthony Bossone (Chair) | Susan Cosgrove | Win Neuger | Frank Salerno |
VOTE ON AN ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF
OUR NAMED EXECUTIVE OFFICERS
The Board of Directors is committed to excellence in governance. As part of that commitment, and as required by Section 14A(a)(1) of the Exchange Act, the Board of Directors is providing our stockholders with an opportunity to vote on an advisory resolution to approve the compensation of our named executive officers.
As described below under “Executive Compensation – Compensation Discussion and Analysis,” we have developed a compensation policy that is designed to attract and retain key executives responsible for our success and motivate management to enhance long-term stockholder value. We believe our compensation policy strikes an appropriate balance between the implementation of responsible, measured compensation practices and the effective provision of incentives for our named executive officers to exert their best efforts for our success.
For the reasons discussed above, the Board of Directors unanimously recommends that stockholders vote “FOR” the following resolution:
“RESOLVED, that the Company’s stockholders hereby approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2021 annual meeting of stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other compensation related tables and disclosure.”
As this vote is advisory, it will not be binding upon the Board of Directors or the Compensation Committee and neither the Board of Directors nor the Compensation Committee will be required to take any action as a result of the outcome of this vote. However, the Board and the Compensation Committee value the opinions of our stockholders and will carefully consider the outcome of this vote when considering future executive compensation policies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
The following report of the Compensation Committee shall not be deemed to be “soliciting material” or to otherwise be considered “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act except to the extent that the Company specifically incorporates it by reference into such filing.
The Compensation Committee of the Board of Directors of WisdomTree has reviewed and discussed with management the information contained in the “Compensation Discussion and Analysis” section of this proxy statement for the fiscal year ended December 31, 2017.2020. Based upon that review and discussion, the Compensation Committee has recommended to the Board of Directors that the information set forth below under the heading “Compensation Discussion and Analysis” be included in this proxy statement.
Compensation Committee
Frank Salerno | Anthony Bossone | Win Neuger |
Compensation Discussion and Analysis
Overview
This Compensation Discussion and Analysis provides comprehensive information regarding our compensation programs and policies for our CEO, CFO and the next three highest compensated named executive officers (collectively, the “NEOs”) for the year ended December 31, 2017.2020. We collectively refer to these executive officers as the NEOs. They are:
our Chief Executive Officer (“CEO”)(CEO), Jonathan Steinberg;
our President and Chief Operating Officer (COO), R. Jarrett Lilien;
our Head of Europe (HoE), Alexis Marinof;
our Chief Financial Officer (“CFO”)(CFO), Amit Muni; and
We believe we provide a competitive total compensation opportunity for our executive management team through a combination of base salary, cash incentive bonuses, equity compensation and broad-based benefits programs. This Compensation Discussion and Analysis explains the following:
our compensation philosophy and objectives;
our compensation process, including the roles our Compensation Committee, management and compensation consultant serve in the process;
our policies and practices with respect to each compensation element; and
2020 compensation results.
Executive Summary
WhileWe began 2020 with momentum in our two largest ETFs continued to be outbusiness. Our U.S. listed products had generated six months of favor withpositive net inflows since September 2019 and our European listed platform was generating strong flows into our energy and commodity related products. However, the market,COVID-19 pandemic and resulting decline in equity markets in March 2020 stunted this momentum. A major portion of our executiveassets under management, team executed on strategic initiatives to diversifyor AUM, was in areas where the industry experienced significant outflows and stabilize our asset base by fostering deeper relationships through technology-driven solutions, increasing penetration within existing distribution channels and expanding into newwe did not have products in sectors that were
distribution channels, continuingattracting considerable industry inflows. In addition, the market declines had a particularly negative effect on the performance of our value-oriented ETPs. For our European listed products, the pandemic caused unprecedented volatility in oil prices and as the leader in oil ETPs, our products were significantly negatively impacted.
Our management team was early in identifying the risk the pandemic could cause on our employees and operations. We began managing the Company in a remote environment to growtest the resiliency of our international businessoperations. When government imposed lockdowns began in the U.S. and offering innovativeEurope, we were ready and have experienced no disruptions to our operations, client service or engagement with our employees.
During the year, we eliminated a potential risk caused by the significant decline in our AUM by refinancing our debt through a high premium convertible note. The terms were more favorable than other refinancing options and include no financial covenants, contrary to our former credit facility.
As the markets stabilized, our AUM grew 6%, reflecting the benefits of our acquisition of ETFS Capital Limited in 2018 with its leadership in commodities, which helped dampen the decline in AUM in our equity focused products. These initiatives included:
While from an inflow perspective, we faced challenges,during 2020, we believe our executive management team remainedNEOs and all our employees performed admirably, advancing our long-term strategic objectives, remaining focused on what we could control and ensuring WisdomTree is best positioned to take advantage of the growth ahead for the ETF industry. Our
compensation program appropriately balances rewarding our employees for both short-term and long-term performance. The Compensation Committee approved a total incentive compensation pool that was 93% of the targeted amountbusiness continued operating effectively in this unprecedented environment. In accordance with our performance-based incentive plan, which is discussed in further below.detail below, the Compensation Committee approved a total incentive compensation pool for our executive officers that was 74% of the targeted amount for 2020.
Our Compensation Philosophy and Objectives
Our compensation philosophy and objectives are primarily shaped by strategies targeted to achieve our long-term goals within the business environment in which we operate. We operate in a highly competitive and challenging business environment and we expect competition to continue and intensify. We directly compete with numerous other ETFETP sponsors and indirectly compete with other larger and multi-national traditional asset management companies. We compete on a number of factors, including the breadth and depth of our product offerings as well as the investment performance and fees of our ETFs.ETPs. We believe our long-term success depends on our ability to continue to:
innovate and introduce new ETFsproducts and services for financial advisors to diversify and expand our product offerings;
demonstrate organic growth and increase our market share of industry inflows to become one of the top five ETF sponsors in the world;inflows;
employ the industry’s most talented, professional and dedicated people at all levels within the Company.levels.
The primary objectives of our compensation programprograms are as follows:
attract, retain, and motivate our professional, dedicated and expert employees in the highly competitive asset management industry;
reward and retain employees whose knowledge, skills and performance are critical to our continued success;
align the interest of all our employees with those of our stockholders by motivating them to increase stockholder value; and
motivate our executives to manage our business to meet short-term and long-term objectives and reward them appropriately for meeting or exceeding them.
The following principles guide our compensation programs:
Pay-for-performance. Our compensation programs are designed to reward our employees for their individual performance as well as the Company’s performance. If an employee is atop-tier performer, he or she should receive higher rewards. Likewise, where individual performance falls short of expectations and/or the Company’sour financial performance declines, the programs should deliver lower levels of compensation. In addition, the objectives ofpay-for-performance and retention must be balanced. Even in periods of temporary downturns in the Company’sour performance, our programs should continue to ensure that our successful, high-achieving employees will remain motivated and committed to us.
Every employee should be a stakeholder aligned with our stockholders. We believe a key factor in our success has been and continues to be fostering an entrepreneurial culture where our employees act and think like our owners. As such, our compensation programs encourage stock ownership throughout our organization to align our employees’ interests with our stockholders. Accordingly, our stock awards are long-term in nature.
Higher levels of responsibility are reflected in compensation. Compensation is based on each employee’s level of job responsibility. As employees progress to higher levels in our organization, an increasing proportion of their pay is tied to our long-term performance because they are more able to impact our results.
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Competitive compensation levels. Our compensation programs reflect the value of the position in the marketplace. To attract and retain a highly skilled work force, we must remain competitive with the pay of other premier employers who compete with us for talent.
Team approach. We believe our success has been based on the coordinated efforts of all our employees working towards our common goals, not on the efforts of any one individual. As such, our compensation programs should be applied across the organization, taking into account differences in job responsibilities and marketplace considerations. Perquisites are rare and limited to those that are important to our employees’ ability to safely and effectively carry out their responsibilities.responsibilities safely and effectively.
Align with long-term success. We believe our compensation programs closely link incentive rewards to our long-term strategic priorities and successes and not to short-term excessive risk taking.
We believe we have designed our competitive compensation packages to incorporate the above principles and ensure that our executive compensation is aligned with corporate strategies and business objectives.
Components of Compensation
We have established the following components of compensation to satisfy our compensation objectives:
base salary;
annual incentive compensation;
long-term equity compensation;
benefit programs;
severance benefits; and
change in control benefits.
We believe these components provide competitive compensation packages recognizing and rewarding individual contributions; ensure that executive compensation is aligned with corporate strategies and business objectives; and promote the achievement of key strategic and operating performance measures.
Base Salary – We use base salary as a means of providing steady pay or a fixed source of compensation for our executive officers, allowing them a degree of certainty to attract and retain them. However, our
Compensation Committee believes the majority of our executives’ compensation should be earned through incentive compensation. The base salaries of our executive officers have been at a fixed level over the last several years. In January 2018, the Compensation Committee increased the base salaries for our executive officers to align with median industry pay levels.
Annual Incentive Compensation – IncentiveAnnual incentive compensation is awarded in cash and is used to motivate and reward our employees for achieving certain short-term operating, financial and other business goals as well as individual performance.
Long-Term Equity Compensation – Because short-term performance does not by itself accurately reflect our overall performance or the return realized by our stockholders, we grant equity awards to our employees as a long-term incentive. We believe that providing equity ownership:
serves to align the interests of our employees with our stockholders by creating an ownership culture and a direct link between compensation and stockholder return;
creates a significant, long-term interest for our employees to contribute to our success;
allows employees to participate in our longer-term success through potential stock price appreciation.
In determining the appropriate mix of short-term and long-term incentive compensation to our executives, and all of our employees, our Compensation Committee and management believe that employees with higher authority, responsibility and ability to significantly influence our growth and profitability should receive their incentive compensation more weighted towards long-term equity to further align their interest with our long-term success. As a result, incentive compensation paid to our CEO is moremost heavily weighted totoward long-term equity incentives, followed by our COO, and then our other executive officers. While these principles guide our incentive compensation programs, other factors in any particular year may shift the overall mix of cash and equity.
Benefits and Perquisites – As stated in our compensation philosophy, our executive officers and Compensation Committee agree that perquisites should be rare and limited to those that are important to our employees’ ability to safely and effectively carry out their responsibilities.responsibilities safely and effectively. Our executive officers are entitled to participate in directors’ and officers’ liability insurance, as well as the various benefits made available to our other employees on the same terms as other employees, such as our group health plans, paid vacation and sick leave, basic life insurance, short- and long-term disability benefits and 401(k) plan with a Company matching contribution of up to 50% of eligible employee contributions.
Severance Benefits – Our NEOs and certain otherCertain of our executive officers, including our NEOs, are entitled to specified benefits in the event of termination of their employment under certain conditions, including partial acceleration of unvested equity awards and specified severance payments and benefits.
Change in Control Benefits – Our NEOsCertain of our executive officers, including our CEO, COO, CFO and certain other executive officersCAO, are entitled to specified benefits in the event of involuntary termination of their employment without cause or voluntary termination for good reason within 18 months after a change of control, including partial acceleration of unvested equity awards and cash severance payments and benefits. In addition, if a change of control occurs within 12 months following the executive officer’s involuntary termination without cause or voluntary termination for good reason, all unvested equity awards will vest on the effective date of the change of control. We have provided more detailed information about these benefits, along with estimates of value under various circumstances, in the table below under “Potential Payments Upon Termination or Change in Control.”
Our goal in providing severance and change in control benefits is to offer sufficient certainty in compensation such that our executive officers will focus their full time and attention on the requirements of the business rather than the potential implications for their respective positions. We believe these benefits assist in maintaining a competitive position in terms of attracting and retaining key executives, which is in the best interests of our stockholders.
Role of the Compensation Committee, Performance Evaluations and Management
The Compensation Committee, which is comprised entirely of independent directors, is responsible for the general oversight of our compensation policies and practices. The Compensation Committee also reviews the overall compensation structure and evaluates the overall performance of our executive officers in order to determine that compensation is fair, reasonable, competitive and consistent with our compensation philosophies and objectives based on their collective experiences and business judgment. The Compensation Committee engages an independent compensation consultant to provide advice with respect to executive compensation.
The Compensation Committee specifically evaluates the performance of our CEO and, with input from our CEO, the overall performance of our other executive officers. The Compensation Committee also discusses the overall performance and compensation of our executives with members of our Board of Directors and presents them with information regarding compensation matters throughout the year as needed.
The Compensation Committee oversees the development, implementation and administration of our compensation programs, including all compensation plans adopted by the Board under which equity grants are
made, determines and approves performance measures and goals and objectives relevant to the compensation program. In addition, the Compensation Committee evaluates the performance of the CEO in light of those goals and objectives, determines and approves the CEO’s compensation based on this evaluation, reviews and approves the compensation of thenon-CEO executive officers, reviews and approves all discretionary bonuses to our employees, and reviews and approves employment, severance, and change in control agreements as well as any other supplemental benefits provided to our executive officers and other senior employees under the Compensation Committee’s purview. The Compensation Committee also reviews and makes recommendations to our Board of Directors with respect to directors’ compensation. The Compensation Committee also works with our CLOmanagement to annually review and reassess the adequacy of its charter, proposing changes as necessary to our Board of Directors for approval.
Our management and executive officers play a critical and important role in setting or recommending compensation levels throughout our organization. Our CEO makes incentive compensation recommendations to the Compensation Committee for the executive officers other than the CEO. In considering the CEO’s recommendations, the Compensation Committee evaluates results measured by the performance measures, goals and objectives of our compensation programs as well as qualitative factors to ensure that compensation is fair, reasonable, competitive and consistent with our compensation philosophies and objectives.
Management worksOur NEOs work with the Compensation Committee to design and develop compensation programs applicable to all our employees, including recommending changes to existing compensation programs and operational performance targets, preparing analyses of Company financial or operational data or other Compensation Committee briefing materials, analyzing industry data, and, ultimately, implementing the decisions of the Compensation Committee.
Use of Compensation Consultant
The Compensation Committee has retained Frederic W. Cook & Co., a compensation consultant, to provide objective advice on the pay practices, compensation plan design and the competitive landscape for compensation. The compensation consultant also reviews and makes recommendations for the selection process and pay information used for market compensation benchmarking discussed below. WisdomTree pays the cost for Frederic W. Cook & Co.’s services. However, the Compensation Committee retains the sole authority to direct, terminate or continue Frederic W. Cook & Co.’s services. The compensation consultant also reviews and makes recommendations for the selection process and pay information used for market compensation benchmarking discussed below. The Compensation Committee has confirmed the independence of Frederic W. Cook & Co. in accordance with SEC and Nasdaq rules and has determined that their work has not raised any conflicts of interest.
Market Compensation Benchmarking
The Compensation Committee monitors relevant market and industry statistics on executive compensation as one of several factors it considers in determining compensation of our executive officers. In making compensation decisions, the Compensation Committee reviews:
Industry surveys – McLagan Partners, Inc., a compensation consulting firm for the financial services industry, prepares annual comprehensive compensation surveys for the asset management industry. These surveys consist of consolidated compensation information of publicly traded and private asset management firms.
Industry peers – Publicly disclosed pay information for certain publicly traded asset management firms that are generally similar in size, market capitalization, product offering or financial metrics as WisdomTree.
The Compensation Committee uses this information forto inform compensation decisions and to understand evolving pay trends at asset managers; however, the Compensation Committee recognizes that there are inherent limitations on the comparability and usefulness of the market data, including time lags, differences in scope of responsibilities, geographic differences and other factors. While the Compensation Committee believes such comparative
information is useful, such data is intended solely to serve as a reference point to assist the Compensation Committee in its discussions and deliberations.
The Compensation Committee, working with its compensation consultant, reviews the appropriateness of the companies included in the industry peer group twice a year – first, at the beginning of the year, when determining the target pool, and second, at the end of the year, when determining year end compensation. The Compensation Committee will adjust the peer group based on metric changes of the peer group average relative to WisdomTree. Relevant metrics considered by the Compensation Committee include AUM, financial metrics, number of employees and market capitalization. The 20172020 peer group is set forth below. There were no changes from the 2016 peer group; however, Calamos Asset Management and CIFC Corp. were removed from the endGAMCO Investors, Inc., which had historically been part of the year analysis due to being acquired.peer group, was removed for 2020 because its pay structure is not comparable with our pay structure:
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• | • Pzena Investment Management, Inc.(1) | |
• BrightSphere Investments Group Inc.(1) | • Virtus Investment Partners, Inc. | |
• | • Waddell & Reed Financial, Inc. | |
• Diamond Hill Investment Group, Inc. | • Westwood Holdings Group, Inc. |
(1) | Represents new companies added to the peer group for 2020. |
Consideration of Results ofSay-on-Pay Vote
Beginning with our 2012 Annual Meeting of Stockholders, and once every three years thereafter,Each year, we provide our stockholders with the opportunity to cast an advisory vote on compensation paid to our NEOs, orsay-on-pay. At the 2015 Annual Meeting2020 annual meeting of Stockholders,stockholders, oursay-on-pay proposal received strong support from stockholders, with 97% of our stockholdersthe shares voting onsay-on-pay casting a vote in favor of the proposal. Although the results of thesay-on-pay vote are advisory and not binding on theour Company, the Board of Directors or the Compensation Committee, the Board and the Compensation Committee value the opinions of our stockholders and the Compensation Committee reviews the outcome of our stockholders’ advisorysay-on-pay proposal in its evaluation and determination of executive compensation. The Compensation Committee considered the results of the stockholders’ advisory vote at our 2015 Annual Meeting,2020 annual meeting, and, in light of the strong support for our compensation programs evidenced by oursay-on-pay results, decided to maintain our general approach to executive compensation and made no significant changes to our executive compensation program. At this Annual Meeting, we are providing our stockholders with the opportunity to cast an advisory vote on our fiscal year 2017 compensation paid to our NEOs.compensation. The Compensation Committee intends to review the outcome of thissay-on-pay proposal in its evaluation and determination of executive compensation for fiscal year 2018.2021.
20172020 Incentive Compensation Program and Results
The Compensation Committee, together with its independent compensation consultant and management, createdCompany maintains a formal performance-based incentive compensation program for 2017. Thisour executive officers. The program wasis designed to determine the proper level of funding for WisdomTree’sthe total incentive compensation pool for the executive team relative to achieving certain quantitative metrics and qualitative results that incentivize growth. The achievement of quantitative metrics determines 50% of the Company’s total incentive compensation pool with the remaining 50% determined at the discretion and judgment ofby the Compensation Committee based on qualitative results. This split reflects the Compensation Committee’s desire for a more formulaic bonus plan while recognizing the need to apply some level of judgment in setting appropriate compensation levels to reflect the accomplishment of strategic objectives and individual performance.
The quantitative metrics chosen are important operational and financial measurements that our Board of Directors and investors use to measure the health of our business and relative success. Net inflows predominantly measure our ability to increase our AUM through our distribution, marketing, research and product development efforts. Market share of industry flows reflects the relative success of our net inflows as compared to our
• | Operational metrics – which we believe measure our executive management team’s ability to generate organic growth and increase revenues: net inflows into our U.S. listed and European listed UCITS products; AUM market share of our U.S. listed products; market share of annualized revenues generated by inflows into our U.S. listed products; and AUM market share of our gold, commodity and leveraged/inverse products; |
competitors. Our adjusted pretax margin measures our NEOs’ ability to manage the Company’s financial health and generate earnings for our stockholders. Total shareholder return measures how the Company’s stock performed as compared to other publicly traded asset managers.
• | Financial metric – which we believe measures our executive management team’s ability to manage our financial health and generate earnings for our stockholders: our adjusted operating margin; and |
• | Relative total shareholder return – which we believe measures how our stock performed as compared to other publicly traded asset managers and generated value for our stockholders. |
The median metricsperformance levels are formulaic and derived using broad industry data for the asset management industry and ETFETP industry. As a result, the metricsgoals may increase or decrease year over year.year consistent with market trends. Achieving median metricsperformance generates median compensation; therefore, ourin order to earn above median compensation, plan is designed to reward management for achieving the metrics at a higher rate thanmust outperform the industry average.
Funding for the quantitative performance portion of the pool is between 0% and 200%250% of the median payout. The Compensation Committee can fund between 0%80% and 200% of the discretionarymedian payout for the qualitative portion of the pool but intends in most years to target between 50% and 150% of median.
pool. The payouts and actual results for 20172020 are as follows:
% of Total Bonus Pool | Performance | Bonus Payout | 2017 Actual | Performance | Bonus Payout ($ in millions) | 2020 Actual | ||||||||||||||||||
(Threshold) 0% | (Median) 100% | (Max) 200% | (Min) 0% | (Median) 100% | (Max) 250% | |||||||||||||||||||
Net inflows | Metric | $0 | $5.3 billion | td0.6 billion | $0.2 billion | |||||||||||||||||||
Payout | $0 | $4.3 million | $8.6 million | $0.2 million | Operational metrics | Payout | $0.0 | $2.0 | $5.0 | $1.0 | ||||||||||||||
Market share | Metric | 0% | 1.6% | 3.2% | 0.1% | Financial metric | Payout | $0.0 | $2.0 | $5.0 | $0.0 | |||||||||||||
of net inflows | Payout | $0 | $4.3 million | $8.6 million | $0.3 million | |||||||||||||||||||
Total shareholder return | Payout | $0.0 | $1.4 | $3.4 | $0.7 | |||||||||||||||||||
Adjustedpre-tax margin | Metric | — | 35.2% | — | 33.9% |
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50% | Total quantitative performance | $0.0 | $5.4 | $13.4 | $1.7 | |||||||||||||||||||
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(Min) 80% | (Median) 100% | (Max) 200% | 2020 Actual | |||||||||||||||||||||
50% | Qualitative factors | $4.3 | $5.4 | $10.7 | $6.3 | |||||||||||||||||||
Payout | $0 | $4.3 million | $8.6 million | $4.2 million |
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Total shareholder return | Metric | 0 percentile | 50th percentile | 100th percentile | <50th percentile | (Min) | (Median) | (Max) | 2020 Actual | |||||||||||||||
Payout | $0 | $4.3 million | $8.6 million | $1.3 million | Total pool | $4.3 | $10.7 | $24.2 | $8.0 | |||||||||||||||
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50% | Total performance | $0 | $17.4 million | $34.7 million | $6.0 million | |||||||||||||||||||
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50% | Discretionary | $0 to $34.7 million | $26.3 million | |||||||||||||||||||||
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Total Pool | $32.3 million |
Actual quantitative performance was significantly less than median.median due to the considerable decline in our AUM and outflows we experienced in our U.S. listed products due to the market declines resulting from the pandemic. The discretionaryqualitative amount was determined by the Compensation Committee using its business judgment, in consultation with its compensation consultant. The Compensation Committee did not allow temporary macro-driven sentimentshort-term performance associated with the pandemic to alter the Company’s long-term vision and instead focused on significant strategic accomplishments during 20172020, including:
continuing to manage the ETFS Acquisition andbusiness without any disruption in operations during the acquisition of a suite of eight Canadian listed ETFs from Questrade;pandemic;
refinancing our debt;
expense management; and
maintaining product innovation and the use of technology; and
long term vision.
These initiatives are described above in more detail in the Executive Summary above.Summary.
In recommending and determining the amount of incentive compensation and total compensation for our NEOs, our CEO and Compensation Committee primarily used their business judgment and considered:
individual performance;
the contribution of our NEOs in achieving the strategic initiatives described above;
retention;
tenure at the firm;
historical compensation;
compensation survey data from McLagan and our publicly-traded asset manager peer group; and
guidance from the Compensation Committee’s compensation consultant.
Total Compensation
The table below reflects the total compensation granted in 2017actual bonuses paid to our NEOs are set forth in a manner that the Compensation Committee used to evaluate total compensation. This table supplements“Bonus” column of the “2017 Summary Compensation Table” presented below, which is in a different format as required by the SEC:Table below.
Long-Term Equity Awards
NEO | Base | + | Incentive Compensation | = | Total Compensation | Sign-On Bonus | ||||||||||||||||||||||||||
Short-Term (Cash) | Long-Term (Stock) | Total | ||||||||||||||||||||||||||||||
Chief Executive Officer | $ | 450,000 | $ | 2,600,000 | $ | 1,400,000 | $ | 4,000,000 | $ | 4,450,000 | ||||||||||||||||||||||
Chief Financial Officer | $ | 300,000 | $ | 1,345,000 | $ | 455,000 | $ | 1,800,000 | $ | 2,100,000 | ||||||||||||||||||||||
Chief Legal Officer | $ | 300,000 | $ | 1,280,000 | $ | 420,000 | $ | 1,700,000 | $ | 2,000,000 | ||||||||||||||||||||||
Global Head of Distribution | $ | 300,000 | $ | 975,000 | $ | 525,000 | $ | 1,500,000 | $ | 1,800,000 | ||||||||||||||||||||||
Head of Emerging Technologies | $ | 300,000 | $ | 65,000 | $ | 35,000 | $ | 100,000 | $ | 400,000 | $ | 3,470,000 |
Long-term equity awards were granted to our NEOs for 2019 performance in January 20182020 and for 2020 performance in January 2021. For the 2020 performance year, 50% to 80% of the long-term equity awards granted were in the form of restricted stock awards that will vest in equal annual installments over three years commencing on the first anniversary of the grant date. The values forremaining portion was granted in the long-term equity awards represent the approximate accounting grant date fair values determined in accordance with U.S. generally accepted accounting principles.
R. Jarrett Lilien, our Headform of Emerging Technologies, received aone-timesign-on bonus upon joining our Company as an executive officer. The award was comprised of $550,000 in cash and $2,920,000 inperformance based restricted stock units, or PRSUs, which vests equally overcliff vest at the end of three years if certain pre-determined levels of relative total shareholder return, or TSR, are achieved. The number of restricted stock awards and PRSUs granted to our NEOs was determined by dividing the dollar value of such awards by the closing price of our common stock on the grant date. While a target number of PRSUs were initially granted, the number of PRSUs that will ultimately be earned and vest is tied to how our TSR compares to a peer group of other publicly traded asset managers over the three-year period and could range from 0% to 200% of the datetarget number of grant.PRSUs granted. With respect to the PRSUs granted for 2019 performance in January 2020, the number of PRSUs that will ultimately be earned and vest is determined as follows:
• | If the relative TSR is below the 25th percentile, then 0% of the target number of PRSUs granted will vest; |
• | If the relative TSR is at the 25th percentile, then 50% of the target number of PRSUs granted will vest; and |
• | If the relative TSR is above the 25th percentile, then linear scaling is applied such that the percent of the target number of PRSUs vesting is 100% at the 50th percentile; and capped at 200% of the target number of PRSUs granted for performance at the 100th percentile. |
With respect to the PRSUs granted for 2020 performance in January 2021, the method for determining the number of PRSUs that will ultimately be earned and vest was amended to provide that if the relative TSR is above the 50th percentile, then further linear scaling, but at a steeper rate, is applied such that the percent of the target number of PRSUs vesting is capped at 200% at the 85th percentile instead of at the 100th percentile.
As stated above in the section entitled “Our Compensation Philosophy and Objectives,” those individuals with greater levels of authority and responsibility havereceive a higher amount of their incentive compensation in the form of equity. Accordingly, we granted a greater proportion of incentive compensation in equity to our NEOs as equity. compared to our other employees. The long-term equity awards granted to our NEOs in 2020 are set forth in the Grants of Plan-Based Awards table below.
2020 Total Compensation
The table below reflects the total compensation awarded for 2020 performance to our NEOs who were serving in their respective positions as of December 31, 2020 in a manner that the Compensation Committee used to evaluate total compensation. This table supplements the Summary Compensation Table below, which is in a different format as required by the SEC:
NEO | Base Salary | + | Incentive Compensation | = | Total Compensation | |||||||||||||||||||||||
(amounts in thousands) | Short-Term (Cash) | Long-Term (Stock) | Total | |||||||||||||||||||||||||
Jonathan Steinberg – CEO | $ | 550 | $ | 1,325 | $ | 1,325 | $ | 2,650 | $ | 3,200 | ||||||||||||||||||
R. Jarrett Lilien – COO | $ | 425 | $ | 891 | $ | 729 | $ | 1,620 | $ | 2,045 | ||||||||||||||||||
Alexis Marinof – HoE | $ | 372 | $ | 538 | $ | 316 | $ | 854 | $ | 1,226 | ||||||||||||||||||
Amit Muni – CFO | $ | 375 | $ | 614 | $ | 361 | $ | 975 | $ | 1,350 | ||||||||||||||||||
Peter M. Ziemba – CAO | $ | 375 | $ | 551 | $ | 324 | $ | 875 | $ | 1,250 |
The following pie charts reflect the elements of total compensation for our NEOs who were serving in their respective positions as of December 31, 2020 as a percentage of their total compensation based on the chart above:
Risk Analysis of Compensation Policies and Programs
The Compensation Committee has reviewed our overall compensation policies and believes that these policies do not encourage excessive and unnecessary risk-taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company. The design of the compensation policies and programs encourages employees to remain focused on both our short- and long-term goals. For example, while the cash bonus plan measures performance on an annual basis, a portion of the equity awards typically vest in equal installments over a number of years which weand a portion typically cliff vest after three years in an amount derived from our TSR in relation to a peer group. We believe this encourages employees to focus on sustained stock price appreciation, thus limiting the potential for excessive risk-taking. In addition, we maintain stock ownership guidelines for executive officers and directors as described in this proxy statement under the heading “Stock Ownership Guidelines,” and prohibit hedging, pledging and similar transactions in our common stock by our employees, officers and directors as described in this proxy statement under the heading “Policy Regarding Short Sales, Derivatives, Hedging and Pledging.”
Tax and Accounting Considerations
We evaluate the effect of accounting and tax treatment of particular forms of compensation on an ongoing basis and make appropriate modifications to compensation policies in response where appropriate. In 2014, our Board of Directors and stockholders approved the 2014 Annual Incentive Compensation Plan (“2014 Plan”), which was intended to meet the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (“Code”). Prior to the Tax Cuts and Jobs Act (“Tax Act”), which became effective on January 1, 2018, Section 162(m) of the Code generally disallowed aUnder current U.S. tax deduction to a publicly-traded company for certain compensation in excess of $1,000,000 paid in any taxable year to the chief executive officer and the three other most highly compensated executive officers (other than the chief financial officer). In addition, qualifying performance-based compensation was not subject to the deduction limitation if specified requirements were met. We believe that certain awards made under the 2014 Plan were structured to comply with exemptions in Section 162(m) in place prior to the Tax Act so that certain compensation payable in 2017 under the 2014 Plan istax-deductible to us. Effective for taxable years beginning after December 31, 2017, the Tax Act (1) expands the scope of Section 162(m) such that all NEOs are “covered employees” and anyone who was a NEO in any year after 2016 will remain a covered employee for as long as he or she (or his or her beneficiaries) receives compensation from the Company and (2) eliminates the exception to the deduction limit for performance-based compensation. Accordingly,rules, compensation paid to our NEOs in excess of $1,000,000 willis generally not be deductible unless it qualifies forby us. Despite that, the transition relief applicable to certain arrangements in place as of November 2, 2017, as described above.
The Compensation Committee believes that stockholder interests are best served if the Compensation Committee retains maximum flexibility to design executive compensation programs that meet stated business objectives. For these reasons, the Compensation Committee,Accordingly, while considering tax deductibility as a factor in determining executive compensation, the Compensation Committee may not limit such compensation to those levels that will be deductible, particularly in light of the expansion of the covered employee group and the elimination of the exception for performance-based compensation.
Due to the passage of the Tax Act, the Compensation Committee approved the acceleration of vesting of certain restricted stock awards held by our NEOs. These awards, which were scheduled to vest in January 2018, were accelerated to December 2017 in order for the Company to benefit from a higher tax deduction for these awards in 2017.deductible.
Employment Agreements
The compensation paid to our NEOs is governed by employment agreements, which are described in this proxy statement under the heading “Employment Agreements.”
Conclusion
After careful review and analysis, we believe that each element of compensation and the total compensation provided to our executive officers is reasonable and appropriate. The Compensation Committee believes that our compensation program gives our executives appropriate incentive to contribute to our long-term performance and believes that our compensation structure and practices encourage management to work as a team in an entrepreneurial culture for outstanding stockholder returns, without taking unnecessary or excessive risks. We believe the total compensation opportunities of our compensation packages will allow us to attract and retain talented executives who have helped and who will continue to help us grow as we look to the years ahead.
2017 Summary Compensation Table
The following table sets forth certain information with respect to compensation earned during the years indicated below by each NEO.
Summary Compensation Table
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||||||||||||||||||
Jonathan Steinberg | 2017 | 450,000 | 2,600,000 | — | 12,000 | 3,062,000 | 2020 | 550,000 | 1,325,000 | 993,637 | 13,000 | 2,881,637 | ||||||||||||||||||||||||||||||||||||
Chief Executive Officer | 2016 | 450,000 | — | 5,001,991 | 12,000 | 5,463,991 | 2019 | 550,000 | 1,918,000 | 3,579,809 | 12,500 | 6,060,309 | ||||||||||||||||||||||||||||||||||||
and President | 2015 | 450,000 | 4,093,000 | 1,979,983 | 12,000 | 6,534,983 | ||||||||||||||||||||||||||||||||||||||||||
2018 | 550,000 | — | 1,399,999 | 12,250 | 1,962,249 | |||||||||||||||||||||||||||||||||||||||||||
Amit Muni | 2017 | 300,000 | 1,345,000 | 125,000 | 9,000 | 1,779,000 | 2020 | 375,000 | 614,000 | 163,679 | 12,500 | 1,165,179 | ||||||||||||||||||||||||||||||||||||
Chief Financial Officer | 2016 | 300,000 | 375,000 | 1,082,000 | 9,000 | 1,766,000 | 2019 | 375,000 | 680,000 | 701,046 | 12,500 | 1,768,546 | ||||||||||||||||||||||||||||||||||||
2015 | 300,000 | 1,323,000 | 741,999 | 9,000 | 2,373,999 | 2018 | 375,000 | 235,000 | 454,993 | 9,250 | 1,074,243 | |||||||||||||||||||||||||||||||||||||
R. Jarrett Lilien | 2017 | 29,615 | (4) | 615,000 | 2,920,000 | (5) | — | 3,564,615 | 2020 | 425,000 | 891,000 | 240,707 | 13,000 | 1,569,707 | ||||||||||||||||||||||||||||||||||
Head of Emerging Technologies | ||||||||||||||||||||||||||||||||||||||||||||||||
President and Chief Operating | 2019 | 375,000 | 1,000,000 | 715,959 | 12,500 | 2,103,459 | ||||||||||||||||||||||||||||||||||||||||||
Officer | 2018 | 375,000 | 240,000 | 34,994 | 9,000 | 658,994 | ||||||||||||||||||||||||||||||||||||||||||
Kurt MacAlpine | 2017 | 300,000 | 975,000 | 539,995 | 9,000 | 1,823,995 | ||||||||||||||||||||||||||||||||||||||||||
Global Head of Distribution | 2016 | 300,000 | 360,000 | 699,995 | 9,000 | 1,368,995 | ||||||||||||||||||||||||||||||||||||||||||
2015 | 150,000 | (6) | 350,000 | 999,984 | (7) | — | 1,499,984 | |||||||||||||||||||||||||||||||||||||||||
Alexis Marinof(4) | 2020 | 372,273 | 537,870 | 200,209 | 48,396 | 1,158,748 | ||||||||||||||||||||||||||||||||||||||||||
Head of Europe | 2019 | 250,137 | 376,804 | 92,397 | 32,518 | 751,856 | ||||||||||||||||||||||||||||||||||||||||||
Peter M. Ziemba | 2017 | 300,000 | 1,280,000 | 125,000 | 12,000 | 1,717,000 | 2020 | 375,000 | 551,000 | 182,936 | 13,000 | 1,121,936 | ||||||||||||||||||||||||||||||||||||
Senior Advisor to the CEO and | 2016 | 300,000 | 375,000 | 1,017,996 | 12,000 | 1,704,996 | 2019 | 375,000 | 760,000 | 775,624 | 12,500 | 1,923,124 | ||||||||||||||||||||||||||||||||||||
Chief Administrative Officer (formerly Chief Legal Officer) | 2015 | 300,000 | 1,244,000 | 741,999 | 12,000 | 2,297,999 | ||||||||||||||||||||||||||||||||||||||||||
Chief Administrative Officer | 2018 | 375,000 | 259,950 | 420,000 | 12,250 | 1,067,200 |
(1) | Amounts reported for |
(2) | Amounts reported include the aggregate accounting grant date fair value of awards made to our NEOs in the respective calendar year for services performed in the prior year and are computed in accordance with |
(3) | Represents employer contributions to the |
(4) | Mr. Marinof became our Head of |
our success. We strive to ensure that the pay of our employees reflects the level of their job impact and responsibilities and is competitive within our peer group. Compensation rates are benchmarked and are generally set to be market-competitive in the country in which the jobs are performed. Our ongoing commitment to pay equity is critical to our success in supporting a diverse workforce with opportunities for all employees to grow, develop and contribute.
As required by the SEC, we are providing disclosure about the relationship of the annual total compensation of our median employee to the annual total compensation of our CEO. The SEC rules for identifying the median employee and calculating the pay ratio allow companies to apply various methodologies and assumptions. Therefore, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies. For 2017,2020, the annual total compensation of our median employee, determined in accordance with the amounts presented in the “Total” column of the “2017 Summary Compensation Table,” was $189,392.$206,750. Our CEO’s annual total compensation, as reported in the Total column of the 2017 Summary Compensation Table, was $3,062,000.$2,881,637. Based on this information, the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee is approximately 1614 to 1. Our pay ratio estimate has been calculated in a manner consistent with SEC rules using the data and assumptions summarized below.
To identify our median employee, we first determined our employee population as of December 31, 2017,2020, which represented 203216 global full-time and part-time employees, excluding our CEO. We then measured the employee population’s total compensation as viewed by our Compensation Committee, which is comprised of base salary, cash incentive compensation and long-term incentive compensation granted for the 20172020 performance year. We annualized compensation for any employees who were employed for less than the full year and compensation paid in foreign currencies was converted to U.S. dollars based on a weightedan average exchange rate for the relevant period.full year.
The following table sets forth certain information with respect to stock awards granted to our NEOs during the year ended December 31, 2017.
Grants of Plan-Based Awards Table for the 2017 Fiscal Year2020.
Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of | Grant Date Fair Value of Stock and Option | ||||||||||||||||||||||||||||||||||
Name | Grant Date | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(1) | Grant Date | Threshold (#) | Target (#) | Maximum (#) | Stock or Units (#) | Awards ($)(1) | |||||||||||||||||||||||||||
Jonathan Steinberg | — | — | — | 1/25/2020 | 27,016 | 54,031 | 108,062 | — | 168,036 | |||||||||||||||||||||||||||
1/25/2020 | — | — | — | 216,126 | 825,601 | |||||||||||||||||||||||||||||||
Amit Muni | 1/25/2017 | 11,542 | 125,000 | 1/25/2020 | 4,450 | 8,900 | 17,800 | — | 27,679 | |||||||||||||||||||||||||||
1/25/2020 | — | — | — | 35,602 | 136,000 | |||||||||||||||||||||||||||||||
R. Jarrett Lilien | 12/11/2017 | 250,000 | (2) | 2,920,000 | 1/25/2020 | 6,545 | 13,089 | 26,178 | — | 40,707 | ||||||||||||||||||||||||||
Kurt MacAlpine | 1/25/2017 | 49,861 | 539,995 | |||||||||||||||||||||||||||||||||
1/25/2020 | — | — | — | 52,356 | 200,000 | |||||||||||||||||||||||||||||||
Alexis Marinof | 1/25/2020 | 5,444 | 10,887 | 21,774 | — | 33,859 | ||||||||||||||||||||||||||||||
1/25/2020 | — | — | — | 43,547 | 166,350 | |||||||||||||||||||||||||||||||
Peter M. Ziemba | 1/25/2017 | 11,542 | 125,000 | 1/25/2020 | 4,974 | 9,948 | 19,896 | — | 30,938 | |||||||||||||||||||||||||||
1/25/2020 | — | — | — | 39,790 | 151,998 |
(1) | Amounts |
Outstanding Equity Awards at FiscalYear-End
The following table sets forth certain information with respect to outstanding options and stock awards held by our NEOs at December 31, 2017:
Outstanding Equity Awards at FiscalYear-End 2017 Table2020:
Name | Grant Date | Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options Exercisable (#)(1) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Jonathan Steinberg | 1/25/18 | — | — | — | 38,220 | 204,477 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/25/19 | — | — | — | 299,066 | 1,600,003 | 56,075 | 300,001 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Grant Date | Option Awards | Stock Awards | 1/25/20 | — | — | — | 216,126 | 1,156,274 | 27,016 | 144,536 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options | Option Exercise Price ($) | Option Expiration Date(1) | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1/27/11 | 75,000 | 5.05 | 1/26/21 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Grant Date | Exercisable (#) | Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date(1) | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | 1/25/18 | — | — | — | 12,422 | 66,458 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
— | — | — | — | 147,290 | 1,848,490 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amit Muni | 1/27/11 | 75,000 | — | 5.05 | 1/26/21 | (4) | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/27/16 | — | — | — | — | 31,861 | 399,856 | 1/25/19 | — | — | — | 58,567 | 313,333 | 10,982 | 58,754 | ||||||||||||||||||||||||||||||||||||||||||||||
1/25/17 | — | — | — | — | 7,695 | 96,572 | 1/25/20 | — | — | — | 35,602 | 190,471 | 4,450 | 23,808 | ||||||||||||||||||||||||||||||||||||||||||||||
R. Jarrett Lilien | 6/20/17 | — | — | — | — | 10,214 | 128,186 | 1/25/18 | — | — | — | 956 | 5,115 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
12/11/17 | — | — | — | — | 250,000 | 3,137,500 | 1/25/19 | — | — | — | 59,813 | 320,000 | 11,215 | 60,000 | ||||||||||||||||||||||||||||||||||||||||||||||
1/25/20 | — | — | — | 52,356 | 280,105 | 6,545 | 35,016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Kurt MacAlpine | 7/1/15 | — | — | — | — | 14,913 | 187,158 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Alexis Marinof | 1/25/18 | — | — | — | 926 | 4,954 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/27/16 | — | — | — | — | 20,613 | 258,693 | 1/25/19 | — | — | — | 9,594 | 51,328 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
1/25/17 | — | — | — | — | 33,241 | 417,175 | 1/25/20 | — | — | — | 43,547 | 232,976 | 5,444 | 29,125 | ||||||||||||||||||||||||||||||||||||||||||||||
Peter M. Ziemba | 1/27/16 | — | — | — | — | 29,977 | 376,211 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Peter M. Ziemba(6) | 1/25/18 | — | — | — | 11,466 | 61,343 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
1/25/17 | — | — | — | — | 7,695 | 96,572 | 1/25/19 | — | — | — | 64,798 | 346,669 | 12,150 | 65,003 | ||||||||||||||||||||||||||||||||||||||||||||||
1/25/20 | — | — | — | 39,790 | 212,877 | 4,974 | 26,611 |
(1) | There are no unexercisable options |
(2) | These unvested shares of restricted stock vest at a rate of 33 1/3% each year starting one year from the date of grant, subject to continued |
(3) | The market value of such holdings is based on the closing price of |
(4) | These unvested PRSUs cliff vest three years from grant date. The number of |
(5) | The amounts reported are based on achieving threshold performance as our 2019 and 2020 relative TSR performance did not exceed the threshold level. |
(6) | All of Mr. Ziemba’s unvested shares of restricted stock and PRSUs will remain outstanding and continue to vest upon his Normal Retirement (as defined in the agreements representing such awards). |
Option Exercises and Stock Vested
The following table sets forth, for each NEO, all share-based incentive plan awards that vested during the year ended December 31, 2017.2020. Our NEOs did not exercise any option awards in 2017.
Option Exercises and Stock Vested Table for the 2017 Fiscal Year2020.
Option Awards | Stock Awards | Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(1)(2) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||||||||||||||
Jonathan Steinberg | — | — | 421,443 | 4,801,579 | — | — | 187,752 | 717,213 | ||||||||||||||||||||||||
Amit Muni | — | — | 110,047 | 1,258,218 | — | — | 45,552 | 174,009 | ||||||||||||||||||||||||
R. Jarrett Lilien | — | — | 9,487 | (3) | 92,878 | — | — | 114,195 | 528,726 | |||||||||||||||||||||||
Kurt MacAlpine | — | — | 72,757 | 829,994 | ||||||||||||||||||||||||||||
Alexis Marinof | — | — | 6,771 | 25,457 | ||||||||||||||||||||||||||||
Peter M. Ziemba | — | — | 101,996 | 1,166,541 | — | — | 47,712 | 182,260 |
(1) |
Amounts in this column were calculated by multiplying the number of shares |
CEO, COO, CFO and CAO
We have entered into employment agreements with each of the NEOsJonathan Steinberg, R. Jarrett Lilien, Amit Muni and certain other executive officersPeter M. Ziemba to serve for an indefinite term, and on an “at will” basis. The terms of the employment agreements for each of these executive officers are substantially identical except that for 2017, the annual base salary payable to each executive officer other thanof them. Mr. Steinberg was $300,000, with Mr. Steinberg receivingreceives an annual base salary of $450,000. Beginning in 2018, the$550,000. Mr. Lilien receives an annual base salary forof $425,000. Messrs. Muni and Ziemba each of these executive officers other than Mr. Steinberg was increased to $375,000, and Mr. Steinberg’sreceive an annual base salary was increased to $550,000.of $375,000. Each of these executive officers is eligible to receive such incentive compensation as may be determined by the Company’s Board of Directors or Compensation Committee and to participate in our standard Company benefit plans. The employment agreements contain employee confidentiality, assignment of inventions andnon-solicitation of employees provisions, as well asnon-competition provisions which are applicable as described below. Each of these executive officers also is entitled to the following benefits in the event of the termination of his employment:
Termination by the Company Without Cause or by the Executive OfficerResignation for Good Reason. The employment agreements provide that if we terminate the executive officer is terminated by the Company other thanofficer’s employment for “cause” or if the executive officer resigns for “good reason” (each as defined in the employment agreements), the Companyany reason, we will pay the executive officer his base salary through the termination date and the earned but unpaid cash portion of his prior year incentive compensation. In addition, if (i) we terminate the executive officer is terminated by the Companyofficer’s employment other than due to his death or disability,“disability,” or for “cause” (each as defined in the employment agreements) or (ii) the executive officer resigns for “good reason” (each(as defined in the employment agreements and, either of (i) or (ii), an “Involuntary Termination”) and he (A) enters into and does not revoke a release agreement with the Company and (B) complies with a three-month restrictive covenant from the date of termination, the Companywe will pay the executive officer:
one year’s base salary, (“which we refer to as Annual Base Salary”);Salary;
a pro rata portion of an amount equal to 50% of the incentive compensation that the executive officer would have received in the year of termination based upon the Company’sour performance, (“which we refer to as Termination Year Cash Incentive Compensation”);Compensation; and
The Termination Year Cash Incentive Compensation will be paid when the Company payswe pay incentive compensation for the termination year tonon-terminated senior executives. The Annual Base Salary and Average Cash Incentive Compensation will be paid in substantially equal installments over a12-month period. The executive officer also may elect to have the Companyus pay for COBRA insurance coverage for aone-year period following the date of termination.
The employment agreements also provide that any equity award that would have vested in the12-month period that immediately follows the date of termination will vest immediately upon termination, and unvested awards will remain outstanding for 12 months following the date of termination. In addition, if a “change of control” (as defined in the employment agreements) occurs within 12 months after the date of Involuntary Termination, all equity awards will vest on the effective date of the change of control.
Involuntary Termination Within 18 Months After a Change of Control. In the event of an executive officer’s Involuntary Termination within 18 months after a change of control of theour Company, and the executive officer’s (i) entry into andnon-revocation of a release agreement with the Company and (ii) compliance with a12-month restrictive covenant from the date of termination, the Companywe will pay the executive officer his salary through the termination date and the earned but unpaid cash portion of his prior year incentive compensation plus:
an amount equal to 1.75 times the Annual Base Salary;
a pro rata portion of the Average Cash Incentive Compensation based on the number of days the executive officer was employed during the year of termination; and
an amount equal to 1.75 times the Average Cash Incentive Compensation.
Such amounts will be paid in one lump sum. The executive officer also may elect to have the Companyus pay for COBRA insurance coverage for a21-month period following the date of termination. In addition, any equity award that would have vested in the21-month period that immediately follows the date of termination will vest immediately.
Termination by the Company for Cause or Voluntary Resignation by the Executive Officer Without Good Reason. If we terminate the executive officer is terminated by the Companyofficer’s employment for cause or he voluntarily resigns without good reason, the Companywe may elect to enforce a three-month restrictive covenant in consideration for which the Companywe will pay the Executive Officer:executive officer: (i) 25% of the Annual Base Salary; (ii) an amount equal to 12.5% of the average incentive compensation paid to the Executive Officer in the preceding three years;Average Cash Incentive Compensation; and (iii) an amount equal to 25% of the value of any equity awards that would have vested in theone-year period following the date of termination if no termination had occurred. Such amounts will be paid in substantially equal installments over a three-month period. The executive officer also may elect to have the Companyus pay for COBRA insurance coverage for a three-month period following the date of termination. On April 8, 2021, Mr. Muni notified us of his intent to resign from his position as Chief Financial Officer to accept alternative employment, effective by May 31, 2021. Because we have determined not to elect to enforce this three-month restrictive covenant, he is not entitled to any such payments upon termination of his employment.
Head of Europe
We have entered into an employment agreement with Alexis Marinof for an indefinite term. His current base salary is £290,000 ($372,273 using the average exchange rate of $1.2837 for 2020) and he is eligible to participate in any annual incentive plan established by our Board of Directors or Compensation Committee and to participate in our standard benefit plans. He also is subject to requirements relating to employee confidentiality, assignment of inventions and non-solicitation of employees. Either we or Mr. Marinof may terminate the employment agreement without cause upon not less than three months’ prior written notice, in which case we may choose to pay his base salary in lieu of notice and impose a period of garden leave for the length of the notice period. In addition, we may terminate Mr. Marinof’s employment immediately in certain circumstances described in his employment agreement, in which case Mr. Marinof would not be entitled to any payments or benefits.
Potential Payments upon Termination or Change in Control
As described above under “Employment Agreements,”
all of our NEOs and certain other executive officersexcept Alexis Marinof are entitled to payments and benefits in the event of: (i) an Involuntary Termination; (ii) a termination of employment by the Company for cause or voluntary
resignation by the NEO without good reason if we elect to enforce a three-month restrictive covenant; and (iii) an Involuntary Termination within 18 months after a change of control; and |
Alexis Marinof is entitled to payments and benefits in the executive officer without good reason; and (iii) an Involuntary Termination within 18 months afterevent of a change of control. termination for any reason other than his death or disability or for cause.
This section is intended to discuss these post-employment payments to our NEOs, assuming the termination from employment occurred on December 31, 2017.2020. Due to the number of factors that affect the nature and amount of any benefits provided
upon the occurrence of the events discussed in this section, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event and our stock price.
The terms of the PRSUs awarded to our NEOs provide for accelerated vesting of all or a portion of the PRSUs upon an Involuntary Termination. Also, if a change of control occurs during the 12-month period following an Involuntary Termination, all or a portion of the PRSUs will vest on the effective date of a change of control. Pursuant to the payout calculation set forth in the PRSU agreements, the dollar value of PRSUs that would have vested upon an Involuntary Termination or a change of control on December 31, 2020 was zero and is therefore not reflected in the table below.
Involuntary Termination Without Cause or for Good Reason ($) | Termination for Cause or Voluntary Resignation Without Good Reason ($) | Involuntary Termination Within 18 Months After a Change of Control ($) | ||||||||||
Jonathan Steinberg | ||||||||||||
Severance Arrangements | 5,928,737 | (1) | 823,036 | (2) | 8,593,753 | (3) | ||||||
Acceleration of Restricted Stock | — | (4) | — | 1,848,490 | (5) | |||||||
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Total | 5,928,737 | 823,036 | 10,442,243 | |||||||||
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Amit Muni | ||||||||||||
Severance Arrangements | 1,698,357 | (1) | 259,560 | (2) | 2,526,085 | (3) | ||||||
Acceleration of Restricted Stock | — | (4) | — | 448,135 | (5) | |||||||
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Total | 1,698,357 | 259,560 | 2,974,220 | |||||||||
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R. Jarrett Lilien | ||||||||||||
Severance Arrangements | 483,081 | (1) | 379,368 | (2) | 852,760 | (3) | ||||||
Acceleration of Restricted Stock | 1,174,015 | (4) | — | 3,265,686 | (5) | |||||||
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Total | 1,657,096 | 379,368 | 4,118,446 | (6) | ||||||||
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Kurt MacAlpine | ||||||||||||
Severance Arrangements | 1,757,770 | (1) | 311,700 | (2) | 2,604,375 | (3) | ||||||
Acceleration of Restricted Stock | 187,158 | (4) | — | 654,432 | (5) | |||||||
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Total | 1,944,928 | 311,700 | 3,258,807 | (6) | ||||||||
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Peter M. Ziemba | ||||||||||||
Severance Arrangements | 1,652,339 | (1) | 253,601 | (2) | 2,460,544 | (3) | ||||||
Acceleration of Restricted Stock | — | (4) | — | 424,491 | (5) | |||||||
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Total | 1,652,339 | 253,601 | 2,885,035 | |||||||||
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Involuntary Termination Without Cause or for Good Reason ($) | Termination for Cause or Voluntary Resignation Without Good Reason ($) | Involuntary Termination Within 18 Months After a Change of Control ($) | ||||||||||
Jonathan Steinberg | ||||||||||||
Severance Arrangements | 3,777,854 | (1) | 579,609 | (2) | 5,815,599 | (3) | ||||||
Acceleration of Unvested Equity Awards | 1,389,903 | (4) | 347,476 | (5) | 2,575,330 | (6) | ||||||
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Total | 5,167,757 | 927,085 | 8,390,929 | |||||||||
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Amit Muni(7) | ||||||||||||
Severance Arrangements | 1,500,415 | (1) | 250,951 | (2) | 2,354,984 | (3) | ||||||
Acceleration of Unvested Equity Awards | 286,610 | (4) | 71,653 | (5) | 506,768 | (6) | ||||||
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Total | 1,787,025 | 322,604 | 2,861,752 | |||||||||
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R. Jarrett Lilien | ||||||||||||
Severance Arrangements | 1,397,601 | (1) | 236,906 | (2) | 2,200,483 | (3) | ||||||
Acceleration of Unvested Equity Awards | 511,851 | (4) | 127,962 | (5) | 511,851 | (6) | ||||||
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Total | 1,909,452 | 364,868 | 2,712,334 | |||||||||
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Alexis Marinof | ||||||||||||
Severance Arrangements | 98,448 | (8) | — | 98,448 | (8) | |||||||
Acceleration of Unvested Equity Awards | — | — | — | |||||||||
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Total | 98,448 | — | 98,448 | |||||||||
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Peter M. Ziemba | ||||||||||||
Severance Arrangements | 1,521,471 | (1) | 252,757 | (2) | 2,384,290 | (3) | ||||||
Acceleration of Unvested Equity Awards(9) | 305,635 | (4) | 76,409 | (5) | 549,927 | (6) | ||||||
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Total | 1,827,106 | 329,166 | 2,934,217 | |||||||||
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(1) | Represents an amount equal to the sum of: (i) Annual Base Salary; (ii) Termination Year Cash Incentive Compensation; (iii) Average Cash Incentive Compensation; and (iv) the value of COBRA benefits for 12 months. |
(2) | Represents an amount equal to the sum of: (i) 25% of the Annual Base Salary; (ii) 12.5% of the |
(3) | Represents an amount equal to the sum of: (i) 1.75 times the Annual Base Salary; (ii) the Average Cash Incentive Compensation; (iii) 1.75 times the Average Cash Incentive Compensation; and (iv) the value of COBRA benefits for 21 months. |
(4) | Represents the dollar value of restricted stock that would have vested in the12-month period following the date of termination based on the closing price of our common stock of |
(5) | Represents 25% of the dollar value of restricted stock that would have vested in the |
Represents the dollar value of restricted stock that would have vested in the21-month period |
On April 8, 2021, Mr. Muni notified us of his intent to |
Compensation ofNon-Employee Directorshis employment.
The Compensation terms for thenon-employee members of the Board of Directors are as set forth in the following table:
Board Annual Cash Retainer(1) | $ | 80,000 | ||
Annual Restricted Stock Awards(2) | $ | 100,000 | ||
Independent Lead Director Cash Retainer | $ | 60,000 |
Committee Service(1) | Chair | Member | ||||||
Audit | $ | 22,500 | $ | 12,500 | ||||
Compensation | $ | 35,000 | $ | 15,000 | ||||
Nominating | $ | — | $ | 5,000 |
Represents an amount equal to three months’ base salary, pursuant to the terms of Mr. Marinof’s employment agreement. The amount reflected herein is reported in U.S. dollars using the exchange rate of $1.3579 at |
2017 Director Compensation Table
The following table describes compensation paid to ournon-employee directors in 2017. All of our directors are reimbursed forout-of-pocket expenses for attending meetings. Directors who are also employees of WisdomTree are not entitled to any compensation for their services as a director.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Total ($) | |||||||||
Steven Begleiter | 85,000 | 99,995 | 184,995 | |||||||||
Anthony Bossone | 95,313 | 99,995 | 195,308 | |||||||||
Bruce Lavine | 80,000 | 99,995 | 179,995 | |||||||||
R. Jarrett Lilien(1) | 102,058 | 99,995 | 202,053 | |||||||||
Win Neuger | 102,344 | 99,995 | 202,339 | |||||||||
Frank Salerno | 197,500 | 99,995 | 297,495 | |||||||||
Brian T. Shea(2) | — | — | — | |||||||||
Michael Steinhardt | 85,000 | 99,995 | 184,995 |
All of Mr. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding the beneficial ownership of shares of our common stock as of the record date (except as otherwise indicated in the footnotes) by (i) each person (including any “group” of persons as that term is used inSection 13d-3 of the Exchange Act) we know to be the beneficial owner of more than 5% of the outstanding shares of our common stock; (ii) each of our executive officers; (iii) each of our directors and director-nominees; and (iv) all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with Rule13d-3 under the Exchange Act. Except as otherwise indicated in the footnotes to the following table, we believe, based on the information provided to us, that the persons named in the following table have sole vesting and investment power with respect to the shares they beneficially own, subject to applicable community property laws. Unless otherwise noted, the business address of each of the persons and entities that beneficially own 5% or more of the outstanding shares of common stock is c/o WisdomTree Investments, Inc., 245 Park Avenue, 35th Floor, New York, NYNew York 10167. We have based our calculation of the percentage of beneficial ownership on 153,104,136149,591,742 shares of our common stock outstanding as of the record date, including shares of restricted stock issued to our employees but not yet vested.
In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included the shares the person has the right to acquire within 60 days of the record date, above, including through the exercise of any option, warrant or other right or conversion of any security. The shares that a stockholder has the right to acquire within 60 days, however, are not included in the computation of the percentage ownership of any other stockholder.
Beneficial Holder | Number | Percentage | ||||||
Executive Officers | ||||||||
David Abner(1) | 317,680 | 0.2 | ||||||
Gregory Barton(2) | 239,960 | 0.2 | ||||||
Stuart Bell(3) | 128,449 | 0.1 | ||||||
R. Jarrett Lilien(4) | 434,860 | 0.3 | ||||||
Kurt MacAlpine(5) | 184,056 | 0.1 | ||||||
Amit Muni(6) | 669,815 | 0.4 | ||||||
Luciano Siracusano III(7) | 497,041 | 0.4 | ||||||
Jonathan Steinberg(8) | 7,393,485 | 4.8 | ||||||
Peter M. Ziemba(9) | 860,244 | 0.6 | ||||||
Directors | ||||||||
Steven Begleiter(10) | 140,671 | 0.1 | ||||||
Anthony Bossone(11) | 173,186 | 0.1 | ||||||
Bruce Lavine(12) | 152,268 | 0.1 | ||||||
Win Neuger(13) | 36,002 | * | ||||||
Frank Salerno(14) | 218,736 | 0.1 | ||||||
Brian T. Shea(15) | 1,600 | * | ||||||
Michael Steinhardt(16) | 10,845,915 | 7.1 | ||||||
All directors and executive officers as a group (16 persons)(17) | 22,293,968 | 14.5 | ||||||
Other 5% or Greater Stockholders | ||||||||
ETF Securities Limited(18) | 15,250,000 | 9.9 | ||||||
BlackRock, Inc.(19) | 13,467,924 | 8.8 | ||||||
The Vanguard Group, Inc.(20) | 11,230,175 | 7.3 | ||||||
ArrowMark Colorado Holdings LLC(21) | 8,535,744 | 5.6 | ||||||
TimesSquare Capital Management, LLC(22) | 8,403,900 | 5.5 |
Beneficial Holder | Number | Percentage | ||||||
Executive Officers | ||||||||
Marci Frankenthaler(1) | 80,191 | 0.1 | ||||||
R. Jarrett Lilien(2) | 535,848 | 0.4 | ||||||
Alexis Marinof(3) | 99,626 | 0.1 | ||||||
Amit Muni(4) | 700,250 | 0.5 | ||||||
William Peck(5) | 55,684 | * | ||||||
Jonathan Steinberg(6) | 8,337,241 | 5.6 | ||||||
Peter M. Ziemba(7) | 1,010,714 | 0.7 | ||||||
Directors | ||||||||
Anthony Bossone(8) | 575,317 | 0.4 | ||||||
Smita Conjeevaram(9) | 7,296 | * | ||||||
Susan Cosgrove(10) | 45,156 | * | ||||||
Bruce Lavine(11) | 204,399 | 0.1 | ||||||
Win Neuger(12) | 88,133 | 0.1 | ||||||
Frank Salerno(13) | 258,627 | 0.2 | ||||||
All directors and executive officers as a group (13 persons) | 11,998,482 | 8.0 | ||||||
Other 5% or Greater Stockholders | ||||||||
ArrowMark Colorado Holdings LLC(14) | 20,401,615 | 13.6 | ||||||
BlackRock, Inc.(15) | 18,835,941 | 12.6 | ||||||
ETFS Capital Limited(16) | 15,250,000 | 10.2 | ||||||
The Vanguard Group, Inc.(17) | 13,160,179 | 8.8 | ||||||
Michael Steinhardt(18) | 10,854,851 | 7.3 |
* | Less than 0.1%. |
(1) | Includes |
(2) | Includes |
Includes |
Includes (i) |
Includes |
Includes (i) 798 shares of common stock owned by Mr. Steinberg’s spouse with whom he may be deemed to share voting and dispositive power; (ii) 16,889 shares of common stock held in a joint account with Mr. Steinberg’s spouse with whom he shares voting and dispositive power; and (iii) |
Includes (i) |
Includes |
Represents shares of restricted stock that do not vest within 60 days of the record date and are not transferable by Ms. Conjeevaram until they vest, but over which she exercises voting power. |
(10) | Includes |
(11) | Includes 27,247 shares of restricted stock that vest within 60 days of the record date and are not transferable by Mr. Lavine until they vest, but over which he exercises voting power. Excludes 15,000 shares of common stock held by the 2012 Bruce Lavine Irrevocable Trust for which Mr. Lavine does not possess any voting or dispositive power. |
Includes |
Represents (i) |
(14) | Information reported pursuant to a Schedule 13G/A filed with the SEC on February 16, 2021. The business address of ArrowMark Colorado Holdings LLC is 100 Fillmore Street, Suite 325, Denver, Colorado 80206. |
(15) | Information reported pursuant to a Schedule 13G/A filed with the SEC on January 27, 2021. Blackrock, Inc. has filed as a parent holding company or control person on behalf of |
Information reported pursuant to a Schedule 13G filed with the SEC on April 19, 2018. The shares indicated in the table are directly owned by |
common stock directly owned by |
Designations for the Series A Non-Voting Convertible Preferred Stock restricts |
Information reported pursuant to a Schedule 13G/A filed with the SEC on February |
Information reported pursuant to a Schedule |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers, directors and ten percent stockholders to file reports of ownership and changes in ownership with the SEC. The same persons are required to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of such forms furnished to us during the most recent fiscal year, we believe that all of our executive officers, directors and ten percent stockholders complied with the applicable filing requirements except for (i) Kurt MacAlpine, who filed one Form 4 late to report the surrender of 5,514 shares of common stock upon vesting of restricted stock to cover withholding taxes and (ii) Peter M. Ziemba, who filed one Form 4 late to report a bona fide gift of 5,600 shares of common stock.
The following graph presents total stockholder returns on an initial investment of $100 in our common stock on December 31, 2012,2015, compared to an equal investment in the Russell 2000 Index and the SNL U.S. Asset Manager Index. The SNL U.S. Asset Manager Index is a composite of 3540 publicly traded asset management companies prepared by S&P Global Market Intelligence (a company formed following the merger of SNL Financial and S&P Capital IQ).companies. The stock price performance on the graph is not necessarily indicative of future price performance.
Source: S&P Global Market Intelligence
Period Ending | Period Ending | |||||||||||||||||||||||||||||||||||||||||||||||
Index | 12/31/12 | 12/31/13 | 12/31/14 | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | ||||||||||||||||||||||||||||||||||||
WisdomTree Investments, Inc. | 100.00 | 289.38 | 257.44 | 264.60 | 194.15 | 226.06 | 100.00 | 73.42 | 85.51 | 45.91 | 34.09 | 38.91 | ||||||||||||||||||||||||||||||||||||
Russell 2000 Index | 100.00 | 138.82 | 145.62 | 139.19 | 168.85 | 193.58 | 100.00 | 121.31 | 139.08 | 123.76 | 155.35 | 186.36 | ||||||||||||||||||||||||||||||||||||
SNL Asset Manager Index | 100.00 | 153.67 | 162.12 | 138.26 | 146.27 | 194.23 | 100.00 | 105.79 | 140.48 | 105.98 | 147.70 | 189.47 |
Equity Compensation Plan Information
The table below sets forth information with respect to shares of common stock that may be issued under the Company’sour equity compensation plans as of December 31, 2017.2020. Information is included for equity compensation plans approved by our stockholders and equity compensation plans not approved by our stockholders.
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3) (c) | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(2) (c) | ||||||||||||||||||
Equity compensation plans approved by security holders | 1,058,828 | (1) | $ | 2.80 | 9,311,894 | 646,312 | (1) | $ | 5.68 | 4,972,197 | ||||||||||||||
Equity compensation plans not approved by security holders | 100,000 | (2) | $ | 2.26 | — | |||||||||||||||||||
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Total | 1,158,828 | $ | 2.75 | 9,311,894 |
(1) | Represents (i) 305,000 shares issuable upon exercise of outstanding options that were issued pursuant to |
(2) |
Represents shares available for issuance under |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since January 1, 2015,2019, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or are to be a party in which the amount involved exceeded or will exceed $120,000 and in which any of our directors or executive officers or holders of more than 5% or more of any class of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or material interest other than the transactions described below.
We are a party to an Amended and Restated Stockholder’s Agreement, dated December 21, 2006, between Michael Steinhardt, our former Chairman of the Board, and Jonathan Steinberg.Steinberg, our Chief Executive Officer. Under this agreement, Mr. Steinberg agreed to give Mr. Steinhardt aright-of-first refusal to purchase any shares he intends to sell if he were to sell any of his shares in a private transaction.
Related Person Transactions Policy and Procedures
In accordance with its written charter, our Audit Committee conducts an appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis, and the approval of our Audit Committee is required for all related party transactions. The term “related person transaction” refers to any transaction required to be disclosed by us pursuant to Item 404 of RegulationS-K (or any successor provision) promulgated by the SEC, except that “related party transactions” do not include compensation or employment arrangements that we disclose in our proxy statement (or, if the related person is an executive officer, that we would disclose if such person waswere a named executive officer).
The Audit Committee of the Board of Directors has reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2017 and has discussed these statements with management and Ernst & Young LLP, the Company’s independent registered public accounting firm. The Company’s management is responsible for the preparation of the Company’s financial statements and for maintaining an adequate system of disclosure controls and procedures and internal control over financial reporting for that purpose. Ernst & Young LLP is responsible for expressing an opinion on the conformity of the audited financial statements with generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. The Audit Committee is responsible for providing independent, objective oversight of the Company’s accounting functions and internal controls.
The Audit Committee also received from, and discussed with, Ernst & Young LLP the written disclosures and other communications required under Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard 1301,Communications with Audit Committees, including among other things, the following:
WISDOMTREE INVESTMENTS, INC. ATTN: MARCI FRANKENTHALER - CHIEF LEGAL OFFICER 245 PARK AVENUE 35TH FLOOR NEW YORK, NY 10167 |
Ernst & Young LLP also provided the Audit Committee with the written disclosures and the letter required by Rule 3526 of the PCAOB. PCAOB Rule 3526 requires independent registered public accounting firms annually to disclose in writing all relationships that in their professional opinion may reasonably be thought to bear on independence, to confirm their perceived independence and engage in a discussion of independence. The Audit Committee has reviewed this disclosure and has discussed with Ernst & Young LLP their independence from the Company.
Based on its discussions with management and our independent registered public accounting firm, and its review of the representations and information provided by management and our independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 2017 for filing with the Securities and Exchange Commission.
No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), through any general statement incorporating by reference in its entirety the proxy statement in which this Report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be “soliciting material” or to be “filed” under either the Securities Act or the Exchange Act.
Members of the Audit Committee
This proxy statement contains five proposals requiring stockholder action. Proposal 1 requests the election of three directors to the Board. Proposal 2 requests the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. Proposal 3 requests approval of the issuance of shares of common stock upon conversion of the Company’s Series ANon-Voting Convertible Preferred Stock issued in connection with the ETFS Acquisition representing more than 19.99% of the outstanding common stock or voting power of the Company for purposes of complying with Nasdaq Listing Rule 5635. Proposal 4 requests a vote on an advisory resolution to approve the compensation of the Company’s named executive officers. Proposal 5 requests a vote on an advisory resolution on the frequency of future advisory votes to approve the compensation of the Company’s named executive officers. Each proposal is discussed in more detail below.
ELECTION OF DIRECTORS
The Nominating Committee recommended, and the Board of Directors nominated
as nominees to stand forre-election as Class I directors for a three-year term until the 2021 Annual Meeting and until his successor is duly elected and qualified.
Unless otherwise instructed, the persons appointed in the accompanying form of proxy will vote the proxies received by them for these nominees, who are all presently directors of WisdomTree. WisdomTree has no reason to believe that any nominee will be unavailable for election at the Annual Meeting. If either of the nominees is unexpectedly not available to serve, proxies may be voted for another person nominated as a substitute by the Board of Directors. The term of office of each person elected as a director will continue until the 2021 annual meeting or until a successor has been elected and qualified, or until the director’s earlier death, resignation or removal.
The section titled “Directors, Executive Officers and Corporate Governance – Directors” commencing on page 7 of this proxy statement contains information about the nominees’ leadership skills and other experiences that caused the Nominating Committee and the Board of Directors to determine that these nominees should serve as directors of WisdomTree.
The affirmative vote of a plurality of the votes cast at the meeting will be required for the election of the Class I director nominees. Brokernon-votes and votes withheld will not be treated as votes cast for this purpose and, therefore, will not affect the outcome of the election.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION TO THE BOARD OF DIRECTORS OF EACH OF THE ABOVEMENTIONED NOMINEES
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. Ernst & Young LLP acted as the Company’s independent registered public accounting firm for the Company for the year ended December 31, 2017. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting with the opportunity to make a statement if he or she desires and to respond to appropriate questions.
The Company’s organizational documents do not require that the stockholders ratify the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm. The Company requests such ratification as a matter of good corporate practice. A majority of the votes properly cast is required for the approval of the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm, and brokers, bankers and other nominees have discretionary voting power on this routine matter. Accordingly, abstentions and brokernon-votes will have no effect on the ratification. If the stockholders do not ratify the selection, the Audit Committee will reconsider whether to retain Ernst & Young LLP, but still may retain them. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders.
Principal Accounting Fees and Services
The following table sets forth the fees paid or accrued by us for the audit and other services provided by Ernst & Young LLP during the years ended December 31, 2017 and 2016 (in thousands):
2017 | 2016 | |||||||
Audit Fees(1) | $ | 742 | $ | 760 | ||||
Audit Related Fees(2) | 571 | 40 | ||||||
Tax Fees | — | — | ||||||
All Other Fees | — | — | ||||||
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Total Fees | $ | 1,313 | $ | 800 | ||||
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Audit CommitteePre-Approval Policies and Procedures
The Audit Committeepre-approves each audit andnon-audit service rendered by Ernst & Young LLP to the Company, including the fees and terms thereof. The Committee may form and delegate authority to subcommittees of the Committee consisting of one or more members when appropriate, including the authority to grantpre-approvals of audit and permittednon-audit services, provided that decisions of such subcommittee to grantpre-approvals shall be presented to the full Committee at its next scheduled meeting pursuant to the Audit Committee Charter. In accordance with this policy, the Audit Committeepre-approved all fees described above before services were rendered.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK UPON CONVERSION OF THE COMPANY’S SERIES ANON-VOTING CONVERTIBLE PREFERRED STOCK ISSUED IN CONNECTION WITH THE ETFS ACQUISITION REPRESENTING MORE THAN 19.99% OF THE OUTSTANDING COMMON STOCK OR VOTING POWER OF THE COMPANY FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635
On November 13, 2017, we and WisdomTree International Holdings Ltd (“WisdomTree International”), one of our indirect wholly owned subsidiaries, entered into a Share Sale Agreement with ETF Securities Limited (“ETF Securities”), as amended by the Waiver and Variation Agreement, dated April 11, 2018 (collectively referred to as the “Share Sale Agreement”), pursuant to which we agreed to acquire ETF Securities’ European exchange-traded commodity, currency andshort-and-leveraged business (“ETFS”). On April 11, 2018, we completed the acquisition of ETFS, which we refer to in this proxy statement as the “ETFS Acquisition,” by purchasing the entire issued share capital of a subsidiary of ETF Securities into which ETF Securities transferred ETFS prior to completion of the ETFS Acquisition. ETFS had $17.6 billion of AUM as of April 10, 2018. With the addition of ETFS, our AUM increased to approximately $63.4 billion globally as of April 10, 2018. The ETFS Acquisition elevated WisdomTree to the ninth largest ETP sponsor globally and the largest global independent ETP provider based on AUM, with significant scale and presence in the U.S. and Europe, the two largest ETP markets.
Pursuant to the Share Sale Agreement, we acquired ETFS for a purchase price consisting of (a) $253.0 million in cash, subject to customary adjustments for working capital, and (b) a fixed number of shares of our capital stock, consisting of (i) 15,250,000 shares of common stock (the “Common Shares”) and (ii) 14,750 shares of Series ANon-Voting Convertible Preferred Stock (the “Preferred Shares”), which are convertible into an aggregate of 14,750,000 shares of common stock, subject to certain restrictions as described below.
On April 11, 2018, we also entered into an Investor Rights Agreement with ETF Securities, pursuant to which, among other things, ETF Securities is subject tolock-up, standstill and voting restrictions, and received certain registration rights, each as described below.
The information set forth in this Proposal 3 is qualified in its entirety by reference to the actual terms of the Share Sale Agreement, Certificate of Designations, Investor Rights Agreement and other agreements entered into in connection with the ETFS Acquisition, which are described in, or included as exhibits to, the following reports: (i) our Current Report on Form8-K, filed with the SEC on November 17, 2018, (ii) our Annual Report on Form10-K for the year ended December 31, 2017, filed with the SEC on March 1, 2018 and (iii) our Current Report on Form8-K, filed with the SEC on April 13, 2018.
On April 11, 2018 and in connection with the ETFS Acquisition, we, WisdomTree International and certain of our subsidiaries party thereto as guarantors entered into a credit agreement (the “Credit Agreement”) with the lenders party thereto and Credit Suisse AG, Cayman Islands Branch, as administrative agent, collateral agent, L/C Issuer and lender. Under the Credit Agreement, the lenders have extended a $200.0 million term loan (the “Term Loan”) to WisdomTree International, the net cash proceeds of which were used by WisdomTree International, together with other cash on hand, to complete the ETFS Acquisition and pay certain related fees, costs and expenses, and made a $50.0 million revolving credit facility (the “Revolver” and, together with the Term Loan, the “Credit Facility”) available to us and WisdomTree International for revolving borrowings from time to time for working capital, capital expenditures and general corporate purposes. Interest on the Term Loan accrues at a rate per annum equal to LIBOR, plus up to 2.00% (commencing at LIBOR, plus 1.75%), and interest on the Revolver accrues at a rate per annum equal to LIBOR, plus up to 1.50% (commencing at LIBOR, plus
1.25%), in each case, with the exact interest rate margin determined based on the Total Leverage Ratio (as defined below). The Revolver is also subject to a facility fee equal to a rate per annum of up to 0.50% of the actual daily amount the aggregate commitments (whether used or unused) under the Revolver, with the exact facility fee rate determined based on the Total Leverage Ratio. The Credit Facility matures on April 11, 2021 (the “Maturity Date”). The Term Loan does not amortize and the entire principal balance is due in a single payment on the Maturity Date.
The Credit Agreement includes a financial covenant that requires that we maintain a Total Leverage Ratio, calculated as of the last day of each fiscal quarter commencing with the fiscal quarter ending September 30, 2018, equal to or less than the ratio set forth opposite such fiscal quarter:
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“Total Leverage Ratio” means, as of the last day of any fiscal quarter, the ratio of our and our restricted subsidiaries’ Consolidated Total Debt (as defined in the Credit Agreement) as of such date to our and our restricted subsidiaries’ Consolidated EBITDA (as defined in the Credit Agreement) for the four consecutive fiscal quarters ended on such date.
WisdomTree International’s obligations under the Term Loan and the Revolver are unconditionally guaranteed by us and certain of our subsidiaries and secured by a lien on substantially all of our, WisdomTree International’s and such subsidiaries’ present and future property and assets, in each case, subject to customary exceptions and exclusions. Our obligations under the Revolver are unconditionally guaranteed by certain of our wholly-owned domestic subsidiaries and secured by substantially all of our and such subsidiaries’ present and future property and assets, in each case, subject to customary exceptions and exclusions.
The Credit Agreement contains customary affirmative covenants for transactions of this type and other affirmative covenants agreed to by the parties, including, among others, the provision of annual and quarterly financial statements and compliance certificates, maintenance of property, insurance, compliance with laws and environmental matters. The Credit Agreement contains customary negative covenants, including, among others, restrictions on the incurrence of indebtedness, granting of liens, making investments and acquisitions, paying dividends, repurchasing our equity interests, entering into affiliate transactions and asset sales. The Credit Agreement also provides for a number of customary events of default, including, among others, payment, bankruptcy, covenant, representation and warranty, change of control and judgment defaults.
Series ANon-Voting Convertible Preferred Stock
General
On April 10, 2018, we filed a Certificate of Designations of Series ANon-Voting Convertible Preferred Stock with the Secretary of State of the State of Delaware establishing the rights, preferences, privileges, qualifications, restrictions, and limitations relating to the Preferred Shares. The Preferred Shares are intended to provide ETF Securities with economic rights equivalent to our common stock on an as-converted basis. The Preferred Shares have no voting rights, are not transferrable and have the same priority with regard to dividends, distributions and payments as our common stock.
Restrictions on Conversion of Preferred Shares
The Preferred Shares are convertible into 14,750,000 shares of our common stock, subject to the following restrictions:
Redemption Rights
ETF Securities has the right to redeem the Preferred Shares under the following circumstances. However, we will not be obligated to make any such redemption payments to the extent such payments would be a breach of any covenant or obligation we owe to any of our secured creditors or is otherwise prohibited by applicable law.
On April 11, 2018 and in connection with the ETFS Acquisition, we entered into an Investor Rights Agreement with ETF Securities, pursuant to which, among other things:
Reasons for Requesting Stockholder Approval
Our common stock is listed on the Nasdaq Global Select Market, and we are subject to the Nasdaq listing standards set forth in its Listing Rules. Although we are not required under Delaware law to obtain stockholder approval in connection with the ETFS Acquisition, we are required under Listing Rule 5635(a)(1) to obtain stockholder approval to remove the Exchange Cap. This Proposal 3 is not seeking stockholder approval to complete the ETFS Acquisition or to issue the Common Shares or the Preferred Shares to ETF Securities since the ETFS Acquisition has been completed.
Listing Rule 5635(a)(1)
Listing Rule 5635(a)(1) requires stockholder approval prior to the issuance of securities in connection with the acquisition of the stock or assets of another company, where the common stock to be issued (a) has or will have upon issuance voting power of 20% or more of the outstanding voting power prior to the issuance or (b) is or will represent 20% or more of the outstanding common stock prior to the issuance.
Removal of Exchange Cap
Without the Exchange Cap, the maximum number of shares of our common stock issued in connection with the ETFS Acquisition and the number of shares of our common stock issuable upon conversion of the Preferred Shares is 30,000,000, or approximately 21.9% of ourpre-issuance shares, based on 136,901,984 shares of our common stock outstanding as of November 13, 2017, the date of the Share Sale Agreement. Excluding the Additional Shares, the maximum number of shares of our common stock issued in connection with the ETFS
Acquisition and issuable upon conversion of the Preferred Shares without exceeding the Exchange Cap under Listing Rule 5635(a)(1) is 23,366,707 shares. Accordingly, 6,633,293 shares represent the maximum number of shares of common stock issuable upon conversion of the 6,633 Preferred Shares subject to the Exchange Cap under Listing Rule 5635(a)(1). We therefore seek stockholder approval of this Proposal 3 to satisfy the requirements of Listing Rule 5635(a)(1) and the terms of the Certificate of Designations to permit the issuance of 6,633,293 shares of common stock upon the conversion of the 6,633 Preferred Shares subject to the Exchange Cap.
Effects if Proposal 3 is Approved
Upon approval of this Proposal 3, the Preferred Shares will become convertible in an amount in excess of the Exchange Cap and will no longer be subject to the redemption provisions related to stockholder approval described above. However, under the Certificate of Designations, ETF Securities will remain subject to the additional restriction that, after giving effect to any conversion of Preferred Shares, ETF Securities (together with certain attribution parties) may not beneficially own in excess of 9.99% of the shares of our common stock outstanding. Thelock-up and other restrictions applicable to ETF Securities under the Investor Rights Agreement also will remain in place.
Effects if Proposal 3 is Not Approved
If we do not receive approval of this Proposal 3, the Preferred Shares will remain subject to the Exchange Cap and the redemption provisions related to stockholder approval described above unless stockholder approval to remove the Exchange Cap can be obtained at a future special meeting of our stockholders. The efforts to hold one or more special meetings would be costly and time-consuming, and would also divert management’s time and attention away from managing the business.
If our stockholders do not approve this Proposal 3 by December 31, 2018, ETF Securities may require us to redeem the 6,633 Preferred Shares subject to the Exchange Cap at a per share redemption price equal to the dollar volume-weighted average price for a share of common stock for the30-trading day period ending on December 31, 2018 multiplied by 1,000. Based on the closing price of a share of our common stock as of April 11, 2018, such redemption amount would equal approximately $59.7 million in the aggregate.
Accordingly, the Board believes approval of Proposal 3 will allow us to meet our obligations under the Certificate of Designations and Nasdaq Listing Rule 5635.
A quorum being present, under Nasdaq Listing Rule 5635, the affirmative vote of a majority of the shares of our common stock present in person or by proxy at the Annual Meeting and entitled to vote thereon is required for stockholder approval of the proposal to approve, for purposes of complying with Nasdaq Listing Rule 5635, the issuance of shares of common stock upon conversion of the Preferred Shares issued in connection with the ETFS Acquisition representing more than 19.99% of our outstanding common stock or voting power, without the need for any limitation or cap on issuances. Abstentions will have the effect of a vote AGAINST the proposal. Brokernon-votes will have no effect on the proposal.
We hereby notify our stockholders that, pursuant to Nasdaq Listing Rule 5635 andIM-5635-2 “Interpretative Material Regarding the Use of Share Caps to Comply with Rule 5635,” the shares of our common stock issued to ETF Securities in the ETFS Acquisition will not be entitled to vote to approve Proposal 3.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK UPON CONVERSION OF THE COMPANY’S SERIES ANON-VOTING CONVERTIBLE PREFERRED STOCK ISSUED IN CONNECTION WITH THE ETFS ACQUISITION REPRESENTING MORE THAN 19.99% OF THE OUTSTANDING COMMON STOCK OR VOTING POWER OF THE COMPANY FOR PURPOSES OF COMPLYING WITH NASDAQ LISTING RULE 5635
VOTE ON AN ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
The Board of Directors is committed to excellence in governance. As part of that commitment, and as required by Section 14A(a)(1) of the Exchange Act, the Board of Directors is providing the Company’s stockholders with an opportunity to vote on an advisory resolution related to the compensation of the Company’s named executive officers.
As described above under “Executive Compensation – Compensation Discussion and Analysis,” we have developed a compensation policy that is designed to attract and retain key executives responsible for our success and motivate management to enhance long-term stockholder value. We believe our compensation policy strikes an appropriate balance between the implementation of responsible, measured compensation practices and the effective provision of incentives for our named executive officers to exert their best efforts for our success.
For the reasons discussed above, the Board of Directors unanimously recommends that stockholders vote “FOR” the following resolution:
“RESOLVED, that the Company’s stockholders hereby approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2018 annual meeting of stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other compensation related tables and disclosure.”
As this vote is advisory, it will not be binding upon the Board of Directors or the Compensation Committee and neither the Board of Directors nor the Compensation Committee will be required to take any action as a result of the outcome of this vote. However, the Compensation Committee will carefully consider the outcome of this vote when considering future executive compensation policies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED
EXECUTIVE OFFICERS
VOTE ON AN ADVISORY RESOLUTION ON THE FREQUENCY OF
FUTURE ADVISORY VOTES TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE
OFFICERS
As part of the Board’s commitment to excellence in corporate governance, and as required by the Section 14A(a)(2) of the Exchange Act, the Board of Directors is providing the Company’s stockholders with an opportunity to provide an advisory vote to recommend whether the vote on the advisory resolution on the compensation of the Company’s named executive officers should occur every one, two or three years.
The Board of Directors is not making a recommendation on this matter. Stockholders are not voting to approve or disapprove of this particular recommendation. Instead, the Notice of Internet Availability or proxy card provides for four choices and stockholders are entitled to vote on whether the advisory vote on executive compensation should be held every one, two, or three years, or to abstain from voting.
As this vote is advisory, the results will not be binding upon the Board of Directors and the Board of Directors may decide that it is in the best interest of our stockholders to hold an advisory vote on executive compensation more or less frequently than the frequency receiving the most votes cast by our stockholders. However, the Board of Directors will carefully consider the outcome of this vote when considering the frequency of future advisory votes on executive compensation.
WISDOMTREE INVESTMENTS, INC.
ATTN: GREGORY BARTON - CHIEF LEGAL OFFICER
245 PARK AVENUE
35THFLOOR
NEW YORK, NY 10167
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D52460-P54283 KEEP THIS PORTION FOR YOUR RECORDS |
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
WISDOMTREE INVESTMENTS, INC.
The Board of Directors recommends you vote FOR the following: | ||||||||||
1. | Election of Directors | |||||||||
Nominees: | For | Against | Abstain | |||||||
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1b. Smita Conjeevaram | ☐ | ☐ | ☐ | |||||||
1c. Bruce Lavine | ☐ | ☐ | ☐ |
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For | Against | Abstain | ||||||||||||||||||||||||
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2. | Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, | ☐ | ☐ | ☐ |
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3. | ☐ | ☐ | ☐ | |||||||||||||||||||||||
NOTE:Such other business as may properly come before the meeting or any adjournment thereof. |
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Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
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D52461-P54283
WISDOMTREE INVESTMENTS, INC. Annual Meeting of Stockholders June
This proxy is solicited by the Board of Directors
The stockholder(s) hereby appoint(s)
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.
Continued and to be signed on reverse side
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