DEF 14A
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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 Rule 14a-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)

Payment of Filing Fee (Check all boxes that apply)

 

No fee required.

 

Fee paid previously with preliminary materials.

 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 


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LOGO


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LOGO

WISDOMTREE INVESTMENTS, INC.  |  250 WEST 34th STREET, 3rd FLOOR  |  NEW YORK, NY 10119

June 10, 2022

DEAR STOCKHOLDER:

We are pleased to invite you to the WisdomTree Investments, Inc. 2022 annual meeting of stockholders to be held on July 15, 2022 at 10:00 a.m., Eastern Time. As we have done for the past 8 years, the annual meeting will be conducted virtually over the Internet. You will be able to attend the annual meeting, vote your shares electronically and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/WETF22 and entering your 16-digit control number. A list of stockholders entitled to vote at the meeting will be available during the meeting on such website to stockholders who properly join the meeting.

Your vote is important, so whether or not you are planning to attend the meeting, we encourage you to vote your shares (i) over the Internet, (ii) by telephone, or (iii) by returning an executed proxy card in the mail.

We hope that you will join us at the annual meeting live webcast on July 15, 2022. I thank you for your commitment to WisdomTree and urge you to vote your shares.

Sincerely,

 

LOGO   

LOGO

 

Jonathan Steinberg

Chief Executive Officer

 

WISDOMTREE INVESTMENTS, INC.  |  2022 PROXY STATEMENT


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LOGO

WISDOMTREE INVESTMENTS, INC.

Notice of 2022 Annual Meeting of Stockholders

We cordially invite you to attend the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) of WisdomTree Investments, Inc. (“WisdomTree”, the “Company”, “we” or “our”). Stockholders as of the record date for the Annual Meeting are entitled to vote on the items set forth below. Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on.

See the “General Information for Stockholders About the Annual Meeting” section of the proxy statement on page 10 for information about voting and virtually attending the Annual Meeting.

 

 

DATE AND TIME:

 

Friday, July 15, 2022 at 10:00 a.m., Eastern Time      

 

 

VIRTUAL MEETING SITE:

 

www.virtualshareholdermeeting.com/

WETF22    

 

 

RECORD DATE:

 

May 26, 2022

 

 

MAILING DATE:

 

On or about June 10, 2022

VOTING MATTERS AND BOARD RECOMMENDATIONS

At or before the Annual Meeting, we ask that you vote on the following items:

 

Proposal

   Board
Recommendation
  Page
  
Reference  

1

 

Elect three Class II members of our Board of Directors

   FOR   18

 

2

 

Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022

  

FOR

 

  32

 

 

3

 

Approve an amendment to Article IV of our Amended and Restated Certificate of Incorporation to increase our authorized common stock from 250,000,000 shares to 400,000,000 shares and the corresponding increase in the total number of authorized shares of capital stock the Company may issue from 252,000,000 shares to 402,000,000 shares

   FOR   35

 

4

 

Vote on an advisory resolution to approve the compensation of our named executive officers

  

FOR

 

  38

 

5

 

Approve our 2022 Equity Plan

   FOR   59

 

6

 

Approve an amendment to Article V of our Amended and Restated Certificate of Incorporation to declassify our Board of Directors

  

FOR

 

  69

 

In addition, stockholders are asked to transact any other business that may properly come before the meeting or any postponements or adjournments thereof.

 

WISDOMTREE INVESTMENTS, INC.  |  2022 PROXY STATEMENT


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HOW TO VOTE

You will need your 16-digit control number included in your proxy card or voter instruction form to vote in any of the following ways:

 

     

 

LOGO

        

VOTE BY INTERNET

www.proxyvote.com

 

LOGO

   

VOTE BY QR CODE

Scan the QR code on your computer or mobile phone, which will take you to www.proxyvote.com

 

LOGO

   

VOTE BY PHONE

Call 1-800-690-6903 toll-free from the U.S., U.S. territories and Canada

 

LOGO

   

VOTE BY MAIL

Complete, sign, date and return your proxy card in the envelope provided

 

LOGO

     

VOTE AT THE MEETING

Attend our virtual Annual Meeting and click on the “Cast Your Vote” link

A list of the stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose relevant to the Annual Meeting on a reasonably accessible electronic network for at least 10 days before the Annual Meeting or any adjournments or postponements thereof. Please e-mail Marci Frankenthaler, Secretary, at mfrankenthaler@wisdomtree.com if you wish to examine the stockholder list prior to the Annual Meeting. In addition, the list of stockholders will be available during the Annual Meeting on such website to stockholders who properly join the meeting.

By order of the Board of Directors,

 

 

LOGO

Marci Frankenthaler, Secretary

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders

To Be Held on July 15, 2022.

We have elected to utilize the “full set delivery” option and are delivering paper copies to all stockholders entitled thereto of all proxy materials, as well as providing access to those proxy materials on a publicly accessible website. The proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2021, as amended, are available at:

http://ir.wisdomtree.com by following the link for “Financial Information.”

 

WISDOMTREE INVESTMENTS, INC.  |  2022 PROXY STATEMENT


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PROXY SUMMARY      1  

About our Company

     1  

Corporate Performance Highlights

     1  

Mission, Vision, Values

     2  

Corporate Social Responsibility

     3  

Board of Directors Highlights

     5  

Board Diversity Matrix

     5  

Director Qualifications and Experience

     6  

Board Governance Overview

     6  

Executive Compensation

     7  
GENERAL INFORMATION FOR STOCKHOLDERS ABOUT THE ANNUAL MEETING      10  
PROPOSAL 1: ELECTION OF DIRECTORS      18  

Class II Director Nominees

     18  

Continuing Directors

     20  

Executive Officers

     23  
CORPORATE GOVERNANCE      25  

Board Composition

     25  

Director Criteria, Qualifications and Experience

     25  

Board Meetings

     26  

Board Independence

     26  

Board Leadership Structure

     26  

Role of the Board in Risk Oversight

     26  

Board Committees

     27  

Compensation Committee Interlocks and Insider Participation

     28  

Corporate Governance Guidelines

     29  

Board and Committee Self-Assessments

     29  

Code of Conduct

     29  

Stock Ownership Guidelines

     29  

Policy Prohibiting Short Sales, Derivatives Trading, Hedging and Pledging

     30  

Compensation of Non-Employee Directors

     30  
PROPOSAL 2: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      32  

Principal Accounting Fees and Services

     32  

Audit Committee Pre-Approval Policies and Procedures

     32  
AUDIT COMMITTEE REPORT      34  
PROPOSAL 3: APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK      35  

Overview of the Authorized Shares Amendment

     35  

Effectiveness of the Authorized Shares Amendment

     36  
PROPOSAL 4: VOTE ON AN ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS      38  
EXECUTIVE COMPENSATION      39  

Compensation Committee Report

     39  

Compensation Discussion and Analysis

     39  

Summary Compensation Table

     52  

CEO Pay Ratio

     53  

Grants of Plan-Based Awards

     53  

Outstanding Equity Awards at Fiscal Year-End

     54  

 

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Option Exercises and Stock Vested

     55  

Employment Agreements

     55  

Potential Payments upon Termination or Change in Control

     57  
PROPOSAL 5: APPROVAL OF 2022 EQUITY PLAN      59  

Overview

     59  

Determination of the Number of Shares Subject to the 2022 Plan

     60  

Shares Subject to the 2022 Plan

     61  

Summary of the 2022 Plan

     62  

New Plan Benefits

     65  

Federal Tax Consequences Under the 2022 Plan

     66  

Equity Compensation Plan Information

     68  
PROPOSAL 6: APPROVAL OF AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY OUR BOARD      69  
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS      71  

Stock Ownership Table

     71  
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS      74  

Stockholders Agreement

     74  

Contractual Gold Payments

     74  

Related Person Transactions Policy and Procedures

     74  
OTHER MATTERS      75  

Forward-Looking Statements

     75  

Websites

     75  
APPENDIX A: CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED CERTIFICATE OF INCORPORATION      A-1  
APPENDIX B: WISDOMTREE INVESTMENTS, INC. 2022 EQUITY PLAN      B-1  

Unless otherwise indicated, references to “the Company,” “we,” “us,” “our” and “WisdomTree” mean WisdomTree Investments, Inc. and its subsidiaries.

 

WISDOMTREE INVESTMENTS, INC.  |  2022 PROXY STATEMENT


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WISDOMTREE INVESTMENTS, INC.  |  250 WEST 34th STREET, 3rd FLOOR  |  NEW YORK, NY 10119

Proxy Statement for the 2022 Annual Meeting of Stockholders

TO BE HELD ON JULY 15, 2022

Proxy Summary

This summary does not contain all the information that you should consider before voting. Please read this entire proxy statement carefully. For more information about our 2021 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2021, as amended, a copy of which is available at http://ir.wisdomtree.com.

This proxy statement is dated June 10, 2022. This proxy statement and our annual report are first being mailed on or about June 10, 2022 to stockholders entitled to vote at the Annual Meeting.

ABOUT OUR COMPANY

WisdomTree Investments, Inc. is an asset management company in the business of offering transparent financial exposures to our clients and is a leading global exchange traded product (“ETP”) sponsor based on assets under management (“AUM”). More recently, we have been positioning ourselves to expand beyond our existing ETP business by leveraging blockchain technology, digital assets and principles of decentralized finance (“DeFi”) to deliver transparency, choice and inclusivity to customers and consumers around the world.

CORPORATE PERFORMANCE HIGHLIGHTS

Strong Financial Performance

 

 

WisdomTree had a highly successful year in 2021 driven by smart investments in growth, increased efficiency and disciplined profit and loss (“P&L”) management. Our AUM as of December 31, 2021 was $77.5 billion, an all-time high. The last quarter of 2021 marked the fifth consecutive quarter of organic growth.

 

 

Our U.S. products have generated positive net inflows for the last six consecutive quarters ended December 31, 2021. In Europe, our Undertakings for Collective Investment in Transferable Securities (“UCITS”) business has grown at an annualized organic growth rate of 105% in 2021, has generated positive net inflows for the last seven consecutive quarters and had AUM of $3.7 billion as of December 31, 2021.

 

 

The breadth and depth of our flows and products is increasing and we generated $4.7 billion of net inflows in 2021, representing an annualized organic growth rate of 7%, and more than $4.3 billion in 2022 net inflows to date, bringing our total AUM to approximately $79 billion, even in the face of a volatile market environment.

 

 

Revenues and operating income increased 22% and 62%, respectively, in 2021 as compared to 2020.

 

 

Our stock price increased by 45% in 2021, and has started 2022 outperforming our self-identified peer group.

 

WISDOMTREE INVESTMENTS, INC.  |  2022 PROXY STATEMENT    1


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Proxy Summary

 

 

 

Balance Sheet Management

 

 

Our balance sheet is strong, and we continue to return capital to our stockholders in the form of a quarterly cash dividend, which we have paid consecutively since 2014. Over the last two years, we have also repurchased 13.4 million shares of our common stock for an aggregate cost of $65.7 million.

 

 

In March 2022, our Board of Directors authorized the extension and increase of our stock repurchase program. Under the new authorization, we may purchase up to $100 million of shares of our common stock through April 27, 2025, including purchases to offset future equity grants made under our equity plans.

Environmental, Social and Governance (ESG) Leadership

 

 

Environmental, social and governance (“ESG”) investing is a significant part of our global approach and ties in with existing and planned corporate initiatives.

 

 

In the U.S., we offer three core integrated ESG exchange traded funds (“ETFs”) in addition to ESG-screened funds and model portfolios as well as a suite of ex-state owned funds, ranking us sixth in the U.S. by ESG AUM as of December 31, 2021.

Disciplined Risk Management

 

 

Our Board of Directors actively oversees the development of strategic objectives and receives updates on the implementation of strategic plans throughout the year at regularly scheduled Board meetings. The Board of Directors also reviews the risk assessment of the strategic plan.

 

 

In addition, we have established a Global Risk Committee, consisting of members of senior management, which oversees risks both inside and outside of the firm, including any heightened or changed risks as they relate to independent third-party service providers. The Global Risk Committee meets quarterly and reports to the Board of Directors at regularly scheduled Board meetings.

MISSION, VISION, VALUES

We strive to differentiate ourselves in the asset management industry through our sense of community and purpose integrated into our culture, where every employee has a voice. Guided by our mission, vision and values and a defined framework for growth, we believe we are well positioned for success.

Our mission is to deliver a better investment and financial experience through the quality of our products, solutions and engagement.

Our vision is to be the leader in the best structures and executions in financial services, including ETPs and digital assets and to be a profitable, growing and enduring financial services company.

Our values are grounded in

 

 

Excellence & Innovation – we relentlessly focus on improving our process, products and solutions to drive positive change in the business and continually advance our mission, and we “think big” and are not afraid to disrupt the status quo.

 

 

Transparency & Accountability – we learn from our mistakes and celebrate individual and group contributions to our achievements, and we always strive to do the right thing, without shortcuts or exceptions.

 

 

Fairness & Respect – we respect everyone’s personal sense of worth and value, and we strive to maintain a collaborative and empowering work environment.

 

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Proxy Summary

 

 

 

CORPORATE SOCIAL RESPONSIBILITY

Sustainability and responsibility are embedded throughout our business, which we believe benefits our investors, employees and stockholders. We have made a firm-wide commitment to incorporate social responsibility efforts through various initiatives, including becoming a signatory to the United Nations Principles for Responsible Investment and launching funds dedicated to ESG strategies. 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.

We have established a committee-based approach to driving ESG initiatives across our business with oversight from our Board of Directors, the Nominating and Governance Committee and our executive management team.

 

 

LOGO

 

WISDOMTREE INVESTMENTS, INC.  |  2022 PROXY STATEMENT    3


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Proxy Summary

 

 

 

Included below are highlights of our ESG programs and practices. Our Corporate Social Responsibility Report, or CSR Report, available on our investor relations website at http://ir.wisdomtree.com, provides additional details about these programs and policies and the ESG positioning of our firm as a whole.

 

   

Responsible Investing

 

  Our U.S. ESG offering includes our ex-state-owned methodology as well as three core equity strategies, offering exposure to U.S., international and emerging markets equities. As of December 31, 2021, we were ranked sixth in the U.S. by ESG AUM.

 

  In Europe, we offer a variety of products with ESG integration, including our Battery Solutions, European Union Bonds and EUR Aggregate Bond ESG Enhanced Yield UCITS products. We also apply ESG screens across all of our equity UCITS products.

 

  In 2021, we launched ESG model portfolios, our first models with explicit and specific ESG objectives, and in 2022, we integrated ESG metrics into our Fund Comparison online tool to help investors compare the ESG attributes of various WisdomTree and third-party funds.

 

  Starting in 2022, we are offering a Climate Impact and Investing Program in collaboration with Columbia University, a training and certification program built to equip both advisors and our employees with the education and tools needed to make sound decisions around climate, environmental risks and investing.

 

  As of March 31, 2022, we offered 22 ETPs in Europe that are categorized as Article 8 products under the EU Sustainable Finance Disclosures Regulation (“SFDR”). Article 8 products promote, among other characteristics, environmental or social characteristics or a combination of those characteristics, provided that the companies in which the investments are made follow good governance practices.

Diversity, Equity and Inclusion

 

  Our global DEI Council of senior leaders and employees represents our employee base and promotes a diverse and inclusive workplace culture.

 

  Our Women’s Initiative Network, or WIN, is an employee-led network designed to provide opportunities and support from all genders for women at WisdomTree, career development and professional training opportunities, and female empowerment and leadership within the organization.

Enhancing Our Employee Experience

 

  We offer our employees extensive health, wellness, career development and other benefits, including a monthly stipend to cover remote work-related business expenses, numerous wellness programs, an educational reimbursement program, and flexible paid time-off and sick leave policies.

 

  Our annual “Team Alpha” Awards recognize employees who led significant successes while exhibiting extraordinary teamwork and demonstrating strong character.

 

  In the U.S., we were named a 2021 Best Places to Work in Money Management by Pension & Investments for the second consecutive year and five years total, and were one of the top five firms within the category for managers with 100-499 employees. We were also named Best WorkPlace for medium-sized companies in the U.K. for a second consecutive year.

Investing in Our Community

 

  We encourage employees to be active members of the community and to give back through a variety of programs, including paid time off to volunteer at a charitable organization of their choice.

 

  We continue to support charitable causes through regular donations. During 2021, we also partnered with Good Today, a platform enabling our employees to allocate weekly WisdomTree-sponsored donations to organizations of their choice across a range of causes.

 

  In our London office, we support a program that matches our employees with local charities and social enterprises to provide business guidance and support to become more efficient, effective and sustainable organizations.

Caring for Our Environment

 

  Our entire global workforce has transitioned seamlessly to a “Remote First” policy where employees are encouraged to work from home on an ongoing basis. We believe that this reduction in our physical footprint will make us more efficient and sustainable over the long run.

 

  Through carbon-offsetting, our European operations have been certified carbon neutral since 2019. Partnering with Carbon Footprint, we successfully calculated and offset our carbon emissions in Europe. We are engaging with a third-party consultant to expand this initiative on a global level.

Corporate Governance

 

  As described under “Board Governance Overview” below, our Board of Directors is committed to strong and effective governance and oversight through a number of policies, practices and procedures.

 

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Proxy Summary

 

 

 

BOARD OF DIRECTORS HIGHLIGHTS

 

Name

  Age   Gender   Demographic
Background
  Independent   Director
Since
 

Other Public

Company Boards

 

Board Committees

  Audit   Compen-
sation
  Nominating &
Governance
 

Operations &

Strategy

Class II Nominees

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Lynn S. Blake

  57   Female   White     2022  

 

 

 

  M  

 

  M

Susan Cosgrove

  60   Female   White     2019  

 

  M*  

 

 

M

 

 

Win Neuger

  72   Male   White     2013  

 

 

 

  M   C  

 

                     

Continuing Directors

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

Anthony Bossone

  51   Male   White     2009  

 

 

C*

  M  

 

  M

Smita Conjeevaram

  61   Female   Asian     2021  

McGrath RentCorp;

SkyWest, Inc.;

SS&C Technologies
Holdings, Inc.

  M*  

 

  M   C

Deborah A. Fuhr

  63   Female   White     2022  

 

 

 

 

 

  M   M

Harold Singleton III

  60   Male   Black     2022  

 

  M*  

 

 

 

 

 

Frank Salerno

  62   Male   White     2005  

 

 

 

  C  

 

 

 

Jonathan Steinberg

  57   Male   White    

 

  1988    

 

   

 

   

 

   

 

   

 

*

Financial Expert         M = Member         C = Chair

 

Gender

 

 

Demographic

Background

 

 

Tenure

 

 

Independence

 

LOGO   LOGO   LOGO   LOGO

 

The following Board Diversity Matrix presents our Board of Directors’ diversity statistics in accordance with Nasdaq Rule 5606, as self-disclosed by our directors.

BOARD DIVERSITY MATRIX (As of May 27, 2022)

 

Total Number of Directors

   9         

 

        

 

      

 

 

Part I: Gender Identity

     Female          Male          Non-Binary        Decline to Disclose  

Number of Directors based on gender identity

     4          5                  
         

Part II: Demographic Background

    

 

 

 

 

 

      

 

 

 

 

 

      

 

 

 

 

 

    

 

 

 

 

 

African American or Black

              1                  

Alaskan Native or Native American

                               

Asian

     1                           

Hispanic or Latinx

                               

Native Hawaiian or Pacific Islander

                               

White

     3          4                  

Two or More Races or Ethnicities

                               

LGBTQ+

                               

Did Not Disclose Demographic Background

                               

 

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Proxy Summary

 

 

 

DIRECTOR QUALIFICATIONS AND EXPERIENCE

The following table provides an overview of our directors’ specific skills, experiences and areas of knowledge that allow the Board of Directors to effectively serve and represent the interests of our stockholders, customers and employees. In addition, directors gain substantial experience through serving on our Board of Directors, which involves significant exposure to the complex regulations and changing landscape of the financial services industry.

 

Skills and Experience   Blake   Bossone   Conjeevaram   Cosgrove   Fuhr   Neuger   Salerno   Singleton   Steinberg

Accounting/Financial Reporting

   

 

         

 

         

 

Corporate Governance

         

 

   

 

       

Global Business

   

 

             

 

   

Legal and Regulatory

   

 

           

 

   

 

   

 

   

 

Financial Services/Asset Management

                 

Executive Leadership

                 

Other Public Company Experience

   

 

   

 

     

 

     

 

     

 

   

 

Risk Management

       

 

     

 

   

 

   

 

   

 

   

 

ETF

       

 

   

 

         

BOARD GOVERNANCE OVERVIEW

Our Board of Directors is committed to strong and effective governance and oversight. Annually, the Board reviews and enhances, as necessary, its practices for Board independence, accountability and effectiveness. Below are some highlights of our Board governance program.

 

Board Independence

    

 

Separation of Roles

   The roles of Chair of the Board and Chief Executive Officer are completely separate.

Substantial Majority of Independent Directors

   All directors are considered independent under applicable standards except Jonathan Steinberg, our CEO.

Independent Director-Led Committees

   All Board committees are comprised entirely of independent directors.

Executive Sessions

   Independent directors regularly meet in executive session without management throughout the year.

Board Accountability

    

 

Attendance

   The Board and its committees had a 94% aggregate attendance rate in 2021.

Majority Voting Standards

   We utilize majority voting requirements for uncontested director elections.

Oversight of Strategy

   The Board oversees the development of strategic objectives and receives updates on the implementation of strategic plans throughout the year at regularly scheduled Board meetings. The Board also reviews the risk assessment of the strategic plan.

Oversight of ESG Matters

   The Nominating and Governance Committee reviews and provides oversight of our strategy, initiatives and policies concerning corporate social responsibility, including ESG matters, and makes recommendations to the Board regarding our ESG initiatives.

Stock Ownership Guidelines

   Our non-employee directors and executive officers are subject to stock ownership guidelines.

 

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Proxy Summary

 

 

 

Prohibition of Pledging, Hedging, Short Sales and Derivative Transactions

   Our Insider Trading Policy prohibits pledging, hedging, short sales and derivative transactions in our securities by directors, officers and employees.

Oversight of Executive Management Succession Planning

   The Board engages in annual executive management succession planning reviews, as well as regular succession planning discussions at the Compensation Committee level.

Board Effectiveness

    

 

Robust Self-Assessments

   The Board and each committee completes written self-assessments. Management implements action plans based on directors’ feedback and reports to the Board on the implementation of those plans to ensure continuous improvement.

Director Education Program

   To enhance directors’ knowledge on topics relevant to oversight of the Company, Board members participate in educational programs, including through a membership we procure for each director with the National Association of Corporate Directors.

Broad Director Onboarding Program

   Our comprehensive onboarding program seeks to quickly integrate new directors in our business and culture and features one-on-one sessions with senior executives and functional area representatives, and training on company policies and industry trends.

Board Succession Planning

   The Board, and its relevant committees, regularly discuss director succession planning, focusing on business needs, industry trends, diverse perspectives and stockholder expectations.

Over-boarding Restrictions

   To maintain Board effectiveness, ensure that directors have sufficient time to devote to their duties, and align with stockholder expectations, directors may serve on up to five total public company boards and directors who serve as our CEO or an executive officer may serve on a total of two public company boards.

Strong Corporate Governance Guidelines

   Our Corporate Governance Guidelines and Board Committee Charters are clear and robust, and are reviewed annually to maintain strong and sound governance practices.

EXECUTIVE COMPENSATION

2021 Highlights

In 2021, we made the following refinements to our executive compensation program:

 

 

significantly reduced the overall level of discretion exercised by the Compensation Committee in relation to the payout resulting from our executive incentive compensation program;

 

 

aligned our CEO’s incentive compensation with the overall funding level of the executive incentive compensation pool; and

 

 

provided additional transparency pertaining to:

 

   

incentive compensation targets for each named executive officer (“NEO”);

 

   

performance weightings for all quantitative metrics; and

 

   

long-term incentive mix for equity granted in 2022.

Impact of Total Shareholder Return on NEO Compensation

A significant portion of our executive compensation program is linked to shareholder return, as follows:

 

 

relative total shareholder return, or TSR, is a performance metric included in our performance-based incentive compensation program for our NEOs. As described in the Compensation Discussion and Analysis section of this proxy statement in the subsection titled “2021 Incentive Compensation Program and Results,” the 2021 funded payout percentage for this performance metric was 50% of target;

 

 

long-term incentive compensation is granted entirely in the form of equity, which value is explicitly linked to TSR, and is comprised of both restricted stock awards and relative TSR-based performance-based restricted stock units, or PRSUs;

 

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Proxy Summary

 

 

 

 

PRSUs granted for 2021 performance in January 2022 to our CEO and COO represent 50% of each of their respective long-term equity awards granted. PRSUs granted to our other NEOs represent 25% of each of their respective long-term equity awards granted; and

 

 

the payout on PRSUs granted in January 2019 and vesting in January 2022 was zero.

Changes to be effective in 2022

We made the following enhancements to our incentive compensation program that will take effect prospectively beginning in 2022:

 

 

greater weight has been ascribed to quantitative performance metrics such that the achievement of quantitative metrics will determine 75% of the executive incentive compensation pool and the remaining 25% will be determined by the Compensation Committee based on qualitative results, representing a shift from the prior 50%-50% quantitative-qualitative mix;

 

 

all NEOs will receive a greater percentage of incentive compensation in the form of equity, including an anticipated equity payout of 60% for our CEO compared to 52% in 2021, of which 50% will consist of PRSUs and 50% will consist of time-based restricted stock awards;

 

 

the Compensation Committee adopted a compensation clawback policy, pursuant to which we may recoup all or a portion of the value of any cash or equity incentive compensation provided to any current or former executive officer and certain other employees in the event that our financial statements are restated due to material noncompliance with any financial reporting requirement under the securities laws; and

 

 

our Board of Directors has adopted a new 2022 Equity Plan, which provides, among other things, that dividends on unvested time-based equity awards granted under the 2022 Equity Plan will not be paid when declared as is the case under the 2016 Equity Plan, but instead will accrue and not be paid unless and until the award vests. As a result, no dividends will be paid with respect to unvested awards under the 2022 Equity Plan. As described in Proposal 5 in this proxy statement, we are seeking stockholder approval of the 2022 Equity Plan at this Annual Meeting.

2021 Total Compensation Pay Mix

The following charts reflect the elements of 2021 total compensation for (i) our CEO and (ii) our other NEOs who were serving in their respective positions as of December 31, 2021 as a percentage of their total compensation. Incentive compensation paid to our CEO is most heavily weighted toward long-term equity incentives, followed by our COO, and then our other NEOs. Long-term equity awards consist of restricted stock awards and PRSUs. PRSUs granted to our CEO and COO represent 50% of the long-term equity awards granted. PRSUs granted to our other NEOs represent 25% of the long-term equity awards granted.

 

LOGO    LOGO

 

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Proxy Summary

 

 

 

Our compensation program incorporates best practices, including the following:

 

What We Do

  

 

 

What We Don’t Do

  Annual say-on-pay advisory vote

 

  Pay for performance compensation philosophy

 

  Robust stock ownership guidelines

 

  Clawback policy applicable to cash and equity incentive compensation

 

  Independent compensation consultant

 

  Entirely independent Compensation Committee

 

  Annual compensation risk assessment

 

    

×   Beginning with awards granted in 2022, no dividends will be paid with respect to unvested awards under the new 2022 Equity Plan

 

×   No pledging, hedging, short sales or derivative transactions

 

×   No excessive perks

 

×   No excessive risk taking

 

×   No excise tax gross-ups

 

 

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General Information for Stockholders About the Annual Meeting

WHO IS SOLICITING MY VOTE?

 

The Board of Directors of WisdomTree Investments, Inc. is soliciting your vote for the 2022 Annual Meeting of Stockholders (“Annual Meeting”).

HOW DO I ATTEND THE ANNUAL MEETING, AND MAY I ASK QUESTIONS?

 

The Annual Meeting will be conducted virtually over the Internet. Please go to www.virtualshareholdermeeting.com/WETF22 for instructions on how to attend and participate. Any stockholder may attend and listen live to the webcast of the Annual Meeting over the Internet at such site. Stockholders as of the record date of the Annual Meeting may submit questions while attending the Annual Meeting over the Internet by using the 16-digit control number included in the proxy card or voting instructions that accompanied these proxy materials, may vote their shares, and will have access to the list of stockholders entitled to vote at the meeting.

In order to encourage stockholder participation and transparency, subject to our rules of conduct and procedures, we will:

 

 

provide stockholders attending the Annual Meeting with the ability to submit appropriate questions relating to an agenda item on which stockholders are entitled to vote during the Annual Meeting through the Annual Meeting website when such item is being considered;

 

 

provide management with the ability to answer as many questions submitted during the Annual Meeting in accordance with the meeting rules of conduct as possible in the time allotted for the Annual Meeting without discrimination;

 

 

address technical and logistical issues related to accessing the virtual meeting platform;

 

 

provide procedures for accessing technical support to assist in the event of any difficulties accessing the Annual Meeting; and

 

 

to the extent time permits, management may conduct an informal online question and answer session.

HOW MANY VOTES CAN BE CAST BY ALL STOCKHOLDERS?

 

146,519,365 shares of our common stock were outstanding and entitled to be voted on May 26, 2022, the record date for determining stockholders eligible to vote. Each share of common stock is entitled to one vote on each matter.

WHAT AM I VOTING ON?

 

There are six matters scheduled for a vote:

 

 

Proposal 1: Election of three Class II members of our Board of Directors (the “Director Election Proposal”);

 

 

Proposal 2: Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022 (the “Auditor Ratification Proposal”);

 

 

Proposal 3: Approval of an amendment to Article IV of our Amended and Restated Certificate of Incorporation to increase our authorized common stock from 250,000,000 shares to 400,000,000 shares and the corresponding increase in the total number of authorized shares of capital stock the Company may issue from 252,000,000 to 402,000,000 (the “Authorized Shares Amendment Proposal”);

 

 

Proposal 4: Vote on an advisory resolution to approve the compensation of our named executive officers (the “Executive Compensation Proposal”);

 

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Proposal 5: Approval of our 2022 Equity Plan (the “Equity Plan Proposal”); and

 

 

Proposal 6: Approval of an amendment to Article V of our Amended and Restated Certificate of Incorporation to declassify our Board of Directors (the “Declassification Amendment Proposal”).

HOW MANY VOTES ARE REQUIRED TO APPROVE EACH PROPOSAL?

 

Director Election Proposal. Under our bylaws, 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 non-votes will have no effect on the election of the nominees. 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 failure to receive the required vote. Within 90 days of the certification of the stockholder vote, the Nominating and Governance Committee would then be required to make a recommendation to the Board of Directors as to whether the Board should accept the resignation, and the Board of Directors would be required to decide whether to accept the resignation and disclose its decision-making process. In a contested election, the required vote would be a plurality of votes cast.

Auditor Ratification Proposal. The affirmative vote of a majority of votes cast is necessary for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Abstentions and broker non-votes will have no effect on this proposal. However, we expect there will be no broker non-votes on this proposal since brokers have discretionary voting authority with respect to this proposal.

Authorized Shares Amendment Proposal. The affirmative vote of a majority of shares of common stock outstanding and entitled to vote is necessary for the approval of the Authorized Shares Amendment Proposal to increase our authorized common stock from 250,000,000 shares to 400,000,000 shares and the corresponding increase in the total number of authorized shares of capital stock the Company may issue from 252,000,000 shares to 402,000,000 shares. Abstentions and broker non-votes will have the effect of a vote “against” this proposal. However, we expect there will be no broker non-votes on this proposal since brokers have discretionary voting authority with respect to this proposal.

Executive Compensation Proposal. The affirmative vote of a majority of votes cast is necessary for the approval of the advisory resolution to approve the compensation of our named executive officers. Abstentions and broker non-votes will have no effect on this proposal.

Equity Plan Proposal. The affirmative vote of a majority of votes cast is necessary for the approval of the 2022 Equity Plan. Abstentions and broker non-votes will have no effect on this proposal.

Declassification Amendment Proposal. The affirmative vote of holders of at least 75% of shares of common stock outstanding and entitled to vote is necessary for the approval of the Declassification Amendment Proposal. Abstentions and broker non-votes will have the same effect as votes cast “against” this proposal.

WHAT AREBROKER NON-VOTES”?

 

If you are a beneficial owner whose shares of record are held by a bank, broker or other nominee (sometimes called “street name” or “nominee name”), you may instruct your bank, broker or other nominee how to vote your shares. If you do not give instructions to your bank, broker or other nominee, the bank, broker or other nominee will determine if it has the discretionary authority to vote on the particular matter. Under the rules of the New York Stock Exchange (“NYSE”), which are also applicable to Nasdaq-listed companies, banks, brokers or other nominees have the discretion to vote on routine matters, but do not have discretion to vote on non-routine matters.

Because several of the proposals being voted on at this Annual Meeting are non-routine, if you hold your shares in the name of your bank, broker or other nominee and you do not provide your bank, broker or other nominee with specific instructions regarding how to vote on a non-routine proposal to be voted on at the Annual Meeting, your bank, broker or other nominee will not be permitted to vote your shares on that proposal and your shares with respect to that proposal will be deemed a broker non-vote. Because brokers have discretionary authority on at least one proposal at the meeting, broker non-votes will be counted for purposes of calculating whether a quorum is present at the meeting.

 

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General Information for Stockholders About the 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 at the meeting is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Shares held of record by stockholders or brokers, bankers or other nominees who do not return a signed and dated proxy card or voting instruction form or attend the Annual Meeting will not be considered present or represented at the Annual Meeting and will not be counted in determining the presence of a quorum. Abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present for the transaction of business at the meeting.

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 our transfer agent, Continental Stock Transfer & Trust Company, you are considered a “stockholder of record,” or record holder, with respect to those shares, and we sent the proxy materials directly to 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 the proxy materials were forwarded to you by that organization. As a beneficial owner, you have the right to instruct your broker, bank, or nominee how to vote your shares.

HOW DO I VOTE?

 

For each proposal, you may either vote “For” or “Against” or abstain from voting.

The Board of Directors recommends that you vote:

 

 

“FOR” each of the director nominees to be elected to the Board named in the Director Election Proposal;

 

 

“FOR” the Auditor Ratification Proposal;

 

 

“FOR” the Authorized Shares Amendment Proposal;

 

 

“FOR” the Executive Compensation Proposal;

 

 

“FOR” the Equity Plan Proposal; and

 

 

“FOR” the Declassification Amendment Proposal.

Votes cast by proxy or during the Annual Meeting will be counted by the person(s) we appoint to act as inspector of election for the meeting. The inspector of election will count all votes “for” and “against,” as well as abstentions and broker non-votes, as applicable, for each matter to be voted on at the Annual Meeting.

The procedures for voting are as follows:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote by virtually attending the Annual Meeting, vote by proxy over the telephone, vote by proxy through the Internet or vote by proxy using the enclosed proxy card. Whether or not you plan to virtually attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still virtually attend the Annual Meeting and vote during the Annual Meeting even if you have already voted by proxy.

 

 

To vote using the enclosed proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you return your signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.

 

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General Information for Stockholders About the Annual Meeting

 

 

 

 

To vote over the telephone or the Internet, simply follow the instructions and use the control number on the enclosed proxy card. Your vote must be received by 11:59 p.m., Eastern Time on July 14, 2022 to be counted.

 

 

If you virtually attend the Annual Meeting, you can also vote during the Annual Meeting.

Beneficial Owner: Shares Registered in the Name of Broker or Other Nominee

If you are a beneficial owner of shares registered in the name of your broker, bank, or other nominee, these proxy materials along with a voting instruction form are being provided by that organization rather than the Company. Simply follow the instructions and mail the voting instruction form or vote by Internet or telephone to ensure that your vote is counted. To vote by virtually attending the Annual Meeting, you must obtain a valid legal proxy from your broker, bank or other nominee. Follow the instructions from your broker, bank or other nominee included with these proxy materials, or contact your broker, bank or other nominee to request a legal proxy. Because several of the proposals at the Annual Meeting are considered “non-routine,” your bank, broker or other nominee does not have the authority to vote on those proposals at the Annual Meeting if you do not provide voting instructions with respect to such proposals.

WHAT HAPPENS IF I DO NOT VOTE?

 

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record and do not vote by completing your proxy card, by telephone, through the Internet, or by virtually attending the Annual Meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of Broker or Other Nominee

If you are a beneficial owner and do not instruct your broker, bank, or other nominee how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the particular proposal is a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Because several of the proposals at the Annual Meeting are considered “non-routine,” your bank, broker or other nominee does not have the authority to vote on those proposals at the Annual Meeting if you do not provide voting instructions with respect to such proposals.

WHAT IF I RETURN A PROXY CARD OR OTHERWISE VOTE BUT DO NOT MAKE SPECIFIC CHOICES?

 

If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable:

 

 

“FOR” each of the director nominees to be elected to the Board named in the Director Election Proposal;

 

 

“FOR” the Auditor Ratification Proposal;

 

 

“FOR” the Authorized Shares Amendment Proposal;

 

 

“FOR” the Executive Compensation Proposal;

 

 

“FOR” the Equity Plan Proposal; and

 

 

“FOR” the Declassification Amendment Proposal.

WHO PAYS FOR THE COST OF SOLICITING PROXIES?

 

The entire cost of soliciting proxies on behalf of the Board, including the costs of preparing, assembling, printing and mailing this proxy statement, the proxy card and any additional soliciting materials furnished to stockholders by or on

 

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behalf of the Company, will be borne by the Company. Copies of solicitation material will be furnished to banks, brokerage houses, dealers, banks, voting trustees, their respective nominees and other agents holding shares in their names, which are beneficially owned by others, so that they may forward such solicitation material, together with our 2021 Annual Report, which includes our Form 10-K for the fiscal year ended December 31, 2021, to beneficial owners. In addition, we will reimburse these persons for their reasonable expenses in forwarding these materials to the beneficial owners.

We have engaged the proxy solicitation firm of Innisfree M&A Incorporated to solicit proxies from stockholders in connection with the Annual Meeting. We will pay Innisfree M&A Incorporated a fee not to exceed $25,000 plus costs and expenses. In addition, Innisfree M&A Incorporated and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement.

CAN I CHANGE MY VOTE OR REVOKE MY PROXY?

 

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

 

 

You may submit another properly completed proxy card with a later date.

 

 

You may grant a subsequent proxy by telephone or through the Internet.

 

 

You may send a timely written notice that you are revoking your proxy to our Secretary, Marci Frankenthaler, at WisdomTree Investments, Inc., 250 West 34th Street, 3rd Floor, New York, NY 10119.

 

 

You may virtually attend the Annual Meeting and vote. Virtual attendance at the Annual Meeting will not, by itself, revoke your proxy.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

COULD OTHER MATTERS BE DECIDED AT THE ANNUAL MEETING?

 

We do not know of any other matters that may be presented for action at the Annual Meeting. Should any other business come before the meeting, the persons named on the proxies will have discretionary authority to vote the shares represented by such proxies in their best judgment, subject to compliance with Rule 14a-4(c) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

WHAT HAPPENS IF THE ANNUAL MEETING IS POSTPONED OR ADJOURNED?

 

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 MEETING BE WEBCAST?

 

Yes. The Annual Meeting will be completely virtual and will be webcast live at www.virtualshareholdermeeting.com/WETF22.

 

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General Information for Stockholders About the Annual Meeting

 

 

 

WHAT IS THE DEADLINE TO PROPOSE ACTIONS FOR CONSIDERATION OR TO NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS AT THE 2023 ANNUAL MEETING OF STOCKHOLDERS?

 

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 2023 annual meeting of stockholders may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. Our Secretary must receive stockholder proposals intended to be included in our proxy statement and form of proxy relating to our 2023 annual meeting of stockholders made under Rule 14a-8 by February 10, 2023.

Requirements for stockholder proposals and director nominations 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 our by-laws. Under our current by-laws, proposals of business other than those to be included in our proxy materials following the procedures described in Rule 14a-8 and nominations for directors may be made by any stockholder who was a stockholder of record at the time of the giving of notice provided for in our by-laws, who is entitled to vote at the meeting, who is present in person or by proxy at the meeting and who complies with the notice procedures set forth in our by-laws (i.e., notice must be timely given and contain the information required by the by-laws). To be timely, a notice with respect to the 2023 annual meeting of stockholders must be delivered to our Secretary no earlier than March 17, 2023 and no later than April 16, 2023, unless the date of the 2023 annual meeting of stockholders is advanced by more than 30 days or delayed by more than 60 days from the anniversary date of the Annual Meeting, in which event the by-laws provide different notice requirements. Any proposal of business or nomination should be mailed to Marci Frankenthaler, Secretary, WisdomTree Investments, Inc., 250 West 34th Street, 3rd Floor, New York, NY 10119.

Recommendation of Director Candidates by Stockholders

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 have any questions or require any assistance with voting your shares, please contact our proxy solicitor, Innisfree M&A Incorporated, toll free at (877) 687-1865.

HOW CAN I OBTAIN ELECTRONIC ACCESS TO THE PROXY MATERIALS?

 

Our proxy materials are available on our investor relations website at http://ir.wisdomtree.com by following the link for “Financial Information.”

WHAT ARE THE TERMS OF THE COOPERATION AGREEMENT WITH THE INVESTOR GROUP?

 

On May 25, 2022, we entered into an agreement (the “Cooperation Agreement”) with ETFS Capital Limited and Graham Tuckwell (together with ETFS Capital Limited, “ETFS”), and Lion Point Capital, LP, Lion Point Capital Holdings GP, LLC

 

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and Didric Cederholm (together with Lion Point Capital, LP and Lion Point Capital Holdings GP, LLC, “Lion Point” and, together with ETFS, the “Investor Group”) in connection with the Investor Group’s notice of intention to nominate certain individuals for election as directors at the Annual Meeting. Pursuant to the Cooperation Agreement, we agreed to increase the size of the Board of Directors by two directors to a total of nine directors and appoint Lynn S. Blake and Deborah A. Fuhr (together, the “New Directors”) as independent members of the Board of Directors, effective on May 25, 2022. Ms. Blake serves as a Class II director with a term expiring at the Annual Meeting and Ms. Fuhr serves as a Class III director with a term expiring at the Company’s 2023 annual meeting of stockholders. We agreed to nominate Ms. Blake for election at the Annual Meeting.

We also agreed to propose an amendment to our Amended and Restated Certificate of Incorporation at the Annual Meeting to declassify the Board of Directors and provide for the annual election of directors starting at the Annual Meeting and to recommend that our stockholders vote in favor of the Declassification Amendment Proposal. If stockholder approval of the Declassification Amendment Proposal is obtained, the Board will begin the declassification process at the Annual Meeting and the Board will be declassified fully starting at the 2024 annual meeting of stockholders.

The Investor Group has agreed to certain customary standstill provisions and other covenants, including, among others, withdrawing their proposed director candidates for election at the Annual Meeting and to vote in favor of our proposed slate of directors at the Annual Meeting. The terms of the Cooperation Agreement are more fully described in our Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 26, 2022 and the Cooperation Agreement is filed as Exhibit 10.1 to such Form 8-K.

POLICIES ON REPORTING CONCERNS ABOUT ACCOUNTING AND OTHER MATTERS AND COMMUNICATING WITH NON-EMPLOYEE DIRECTORS

 

Our Board of Directors and Audit Committee have adopted policies on reporting concerns regarding accounting and other matters and on communicating with the non-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 Anthony 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 our offices at 250 West 34th Street, 3rd Floor, New York, NY 10119, or by email at auditcommittee@wisdomtree.com. Any interested party, including any employee, who wishes to communicate directly with the presiding director of the executive sessions of our non-employee directors, or with our non-employee directors as a group, may contact Frank Salerno, Chair of the Board of Directors, by writing to him, care of the Chair of the Board, at our offices using the above address, or by email at WTIchairman@wisdomtree.com.

WHERE YOU CAN FIND MORE INFORMATION

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC, which are available on the SEC’s website at http://www.sec.gov. You may also read and find a copy of any document we file with the SEC on our investor relations website at http://ir.wisdomtree.com by following the link for “Financial Information.”

INCORPORATION BY REFERENCE

 

To the extent that this proxy statement has been or will be specifically incorporated by reference into any other filing of ours under the Securities Act of 1933 (the “Securities Act”), or the Exchange Act, the sections of this proxy statement entitled “Audit Committee Report,” to the extent permitted by the rules of the SEC, and “Compensation Committee Report” will not be deemed to be so incorporated, unless specifically provided otherwise in such filing.

 

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General Information for Stockholders About the Annual Meeting

 

 

 

IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS

 

In accordance with a notice sent to certain of our stockholders who share a single address, only one copy of this proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2021 is being sent to that address unless we have received contrary instructions from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs and help conserve our natural resources. However, any stockholder residing at such an address who wishes to receive a separate copy of this proxy statement or our Annual Report may send a request in writing to WisdomTree Investments, Inc., 250 West 34th Street, 3rd Floor, New York, NY 10119, Attention: Marci Frankenthaler, Secretary, or by email to mfrankenthaler@wisdomtree.com, and we will deliver those documents promptly upon receiving the request. Any such stockholder also may contact our 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 our Secretary.

 

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Proposal 1

Election of Directors

Our certificate of incorporation and by-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 our by-laws, the Board of Directors has fixed the number of directors at nine. In accordance with Delaware law and our certificate of incorporation and by-laws, our Board of Directors is divided into three staggered classes, with the directors in one class being elected each year for a three-year term. The Class II directors are up for election at the Annual Meeting.

The Nominating and Governance Committee recommended, and the Board of Directors nominated, three directors, Lynn S. Blake, Susan Cosgrove and Win Neuger, to stand for election as Class II directors at the Annual Meeting. Each of these nominees will stand for a three-year term until the 2025 annual meeting of stockholders and until his or her successor is duly elected and qualified, unless the Declassification Amendment Proposal is approved, in which case, we will promptly file the certificate of amendment to our certificate of incorporation attached hereto as Appendix A during the Annual Meeting and they will stand for a one-year term until the 2023 annual meeting of stockholders.

The nominees recommended by the Board have consented to serving as nominees for election to the Board, to being named in this proxy statement and to serving as members of the Board if elected by our stockholders. As of the date of this proxy statement, we have no reason to believe that any nominee will be unable or unwilling to serve if elected as a director. However, if for any reason a nominee becomes unable to serve or for good cause will not serve if elected, the Board upon the recommendation of its Nominating and Governance Committee may designate substitute nominees, in which event the shares represented by proxies returned to us will be voted for such substitute nominees. If any substitute nominees are so designated, we will file an amended proxy statement that, as applicable, identifies the substitute nominees, discloses that such nominees have consented to being named in the amended proxy statement and to serve as directors if elected, and includes certain biographical and other information about such nominees required by the applicable rules promulgated by the SEC.

CLASS II DIRECTOR NOMINEES

 

 

 

LOGO

        

 

 

Lynn S. Blake

 

Lynn S. Blake has served as an independent consultant since October 2021. Previously, Ms. Blake served in various positions at State Street Global Advisors, Inc. (“SSGA”), the investment management division of State Street Corporation (NYSE: STT), a financial services company, including as Executive Vice President and Chief Investment Officer of Equity Indexing, Smart Beta and Environmental, Social, and Governance strategies, overseeing SSGA’s ESG data, research and asset stewardship activities, from January 2011 to September 2021, Head of Non-US Equity Indexing, from 1999 to 2010, and Senior Portfolio Manager, from 1990 to 1999. Ms. Blake served on the board of directors of SSGA Trust Company, the governing board for SSGA Institutional Products and SPDR SPY and DIA ETFs, from January 2018 to September 2021, and at times, served as a member of SSGA’s Global Fiduciary and Conduct Committee, Investment Committee, Executive Management Group, and the State Street Conduct Risk Committee. Additionally, Ms. Blake has served on the advisory boards of The Posse Foundation, a college access and youth leadership development program, since 2016 and the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia Law School, a premier research institution, from September 2020 to October 2021. Ms. Blake was also a member of the Investor Advisory Group of the Sustainability Accounting Standards Board, a nonprofit organization which connects businesses and investors on the financial impacts of sustainability, from 2016 to September 2021. She received a B.S. from Boston College and an M.B.A. in Finance from the D’Amore-McKim School of Business at Northeastern University. Ms. Blake is a Chartered Financial Analyst.

 

Qualifications

 

We believe that Ms. Blake’s qualifications to serve on the Board of Directors include her expertise in investment management, including her experience with ESG investment strategies, and her many years of experience in leadership positions in the asset management industry.

 

Age

57

 

 

Director since

May 2022

 

Committees

 

  Compensation

 

  Operations and Strategy

 

 

 

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LOGO

        

 

 

Susan Cosgrove

 

Susan Cosgrove is Managing Director and Chief Financial Officer of The Depository Trust & Clearing Corporation (“DTCC”), the premier post-trade market infrastructure for the global financial services industry. She was appointed Chief Financial Officer in August 2013 and is responsible for leading the firm’s global finance and treasury teams and overseeing the company’s financial processes and liquidity and capital position. From 2011 to 2013, she served as Managing Director and General Manager of Settlement and Asset Services of DTCC, overseeing all depository businesses, and from 1999 to 2011, was the General Manager for DTCC’s Equity and Fixed Income Clearing Services. Ms. Cosgrove is a member of DTCC’s Management Committee and Management Risk Committee, and she co-chairs the firm’s Investment and Operating Committee. She is also Chair of the Board of Directors of DerivSERV LLC, a subsidiary of DTCC. In February 2021, Ms. Cosgrove joined the Board of Directors of Ultimus Fund Solutions, an independent provider of full-service fund administration, accounting and investor solutions. Until January 2022, she served as Vice Chair of the Board of Pencil Inc., a not-for-profit organization leading collaboration between business and public education communities. Prior to joining DTCC in 1999, she was a Senior Vice President at Lehman Brothers in charge of Audit and Compliance for the company’s Americas division. Before Lehman, she worked at Maxcor Financial Group for 10 years as Chief Financial Officer and Head of Compliance. She began her career as a Senior Auditor for PricewaterhouseCoopers in their Financial Services Group. Ms. Cosgrove received her B.B.A. in Accounting from Baruch College.

 

Qualifications

 

We believe Ms. Cosgrove’s qualifications to serve on the Board of Directors include her financial, accounting and compliance expertise, and many years of experience in leadership positions in the financial services industry.

Age

60

 

 

Director since

April 2019

 

Committees

 

  Audit

 

  Nominating and Governance

 

 

 

 

 

LOGO

        

 

 

Win Neuger

 

Win Neuger is an independent investor and consultant. From July 2014 until June 2015, he served as Chairman of EcoAlpha Asset Management LLC, a private investment management company focused on investing in companies providing solutions to the global problems of burdened resources. From March 2012 until January 2013, he served as Vice Chairman of the Board of Directors of PineBridge Investments, an independent asset manager offering investment opportunities in emerging and developed markets, and from March 2010 to March 2012, he served as its Chief Executive Officer and Chair of the Executive Committee. From January 2009 to March 2010, Mr. Neuger served as Executive Vice President of American International Group (“AIG”), an international insurance organization serving commercial, institutional and individual customers, as well as Chairman and Chief Executive Officer of AIG Investments, AIG’s asset management company. Prior to January 2009, in addition to these positions, he also served as Chief Investment Officer of AIG. Prior to AIG, Mr. Neuger served as both Managing Director, Fixed Income and, subsequently, as Managing Director, Global Equities at Bankers Trust Company. Before Bankers Trust, he was Chief Investment Officer at Western Asset Management. He also served as Head of Fixed Income at Northwestern National Bank. Mr. Neuger previously served on our Board of Directors from January 2007 to December 2009. He currently serves as Chairman of the Board of Neuger Communications Group, a private strategic marketing communications and public relations firm. Mr. Neuger received his A.B. from Dartmouth College and an M.B.A. from the Amos Tuck Graduate School of Business.

 

Qualifications

 

We believe that Mr. Neuger’s qualifications to serve on the Board of Directors include his prior service on our Board and familiarity with our business model and his years of experience in senior management positions in the asset management industry.

 

Age

72

 

 

Director since

July 2013

 

Committees

 

  Compensation

 

  Nominating and Governance (Chair)

 

 

REQUIRED VOTE

The directors must be elected by the affirmative vote of a majority of votes cast. Abstentions and broker non-votes will have no effect on the election of the directors.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE ABOVE-MENTIONED NOMINEES

(PROPOSAL NO. 1 ON YOUR PROXY CARD)

 

 

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CONTINUING DIRECTORS

Class III Directors Whose Terms Expire in 2023

 

 

 

LOGO

        

 

 

Deborah A. Fuhr

 

Deborah A. Fuhr is the Managing Partner and Founder of ETFGI LLP, an independent research, event, and consultancy firm covering the global ETFs and ETPs industry, launched in London in 2012. Ms. Fuhr has also served as the Co-Founder, Editorial Director, Producer and Presenter at ETF TV since June 2019. In addition, Ms. Fuhr has served on the FTSE Russell Industry Classification Advisory Committee, an advisory committee to the FTSE Russell Governance Board, since 2011. She also served as the Co-Founder of ETFs Global Markets Roundtable from April 2017 to August 2019. From July 2017 to May 2019, Ms. Fuhr served as Vice-Chair of the Nasdaq Listing and Hearing Review Council, an independent advisory committee to the Nasdaq board of directors, and was a member of the Council from April 2014 to July 2017. Previously, Ms. Fuhr served as Global Head of ETF research and implementation strategy and as a Managing Director at BlackRock, Inc. (NYSE: BLK) from 2008 to 2011. Earlier in her career, Ms. Fuhr served as a Managing Director and Head of the Investment Strategy team at Morgan Stanley (NYSE: MS) in London, and as an Associate at Greenwich Associates LLC. Ms. Fuhr served as a director of LGBTQ Loyalty Holdings, Inc. (OTCMKTS: LFAP), the first LGBTQ Loyalty Preference Index ETF, from December 2021 to April 2022, and as an independent trustee of each of Renaissance Capital Greenwich Funds, an ETF series, since July 2021, and SYNTAX ETF TRUST, an ETF series, since March 2018. She also has served as a board member and Vice President for Women in ETFs, the first women’s group for the ETF industry, since she helped found the non-profit organization in 2014. She is a board member and Co-President for Women in ETFs EMEA. She has won numerous awards in the financial industry, including the ETF.com 2018 Lifetime Achievement Award, 100 Women in Finance’s 2017 European Industry Leadership Award, “100 Most Influential Women in Finance” by Financial News over several years, most recently in 2016, and the 2014 William F. Sharpe Lifetime Achievement Award for outstanding and lasting contributions to the field of index investing, among others. Ms. Fuhr received her B.S. from the University of Connecticut and an M.B.A. from the Kellogg School of Management at Northwestern University.

 

Qualifications

 

We believe Ms. Fuhr’s qualifications to serve on the Board of Directors include her global ETF, investment and fund management markets experience, and her experience consulting in the ETF sector.

Age

63

 

 

Director since

May 2022

 

Committees

 

  Nominating and Governance

 

  Operations and Strategy

 

 

 

 

 

LOGO

        

 

 

Frank Salerno

 

Frank Salerno has served as our non-executive Chair of the Board since October 2019 and served as our Lead Independent Director from July 2005 until October 2019. He was Managing Director and Chief Operating Officer of Merrill Lynch Investment Advisors – Americas Institutional Division, an investment advisory company, from July 1999 until his retirement in February 2004. Before joining Merrill Lynch, Mr. Salerno spent 18 years with Bankers Trust Company in various positions. In 1990, he assumed responsibility for Bankers Trust’s domestic index management business and in 1995 he became Chief Investment Officer for its Structured Investment Management Group. Mr. Salerno received a B.S. in Economics from Syracuse University and an M.B.A. in Finance from New York University. Mr. Salerno served as a director and member of the audit committee and conflicts committee of K-Sea Transportation Partners, L.P., formerly an NYSE-listed company, from 2004 until its acquisition in 2011.

 

Qualifications

 

We believe Mr. Salerno’s qualifications to serve on the Board of Directors include his extensive years in senior management positions at large asset management firms as well as his service on the board of directors of another public company. The Board also benefits from his strategic insights on the asset management industry.

Age

62

 

 

Director since

July 2005

 

Chair of the Board        

 

Committees

 

  Compensation (Chair)

 

 

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LOGO

        

 

 

Jonathan Steinberg

 

Jonathan Steinberg founded WisdomTree and has served as Chief Executive Officer since October 1988 and as President from August 2012 to September 2019. He has been a member of the Board of Directors since October 1988, serving as Chair of the Board of Directors from October 1988 to November 2004. He also served as Editor-in-Chief of Individual Investor and Ticker, two magazines formerly published by the Company. Mr. Steinberg is responsible for the creation and development of our proprietary index methodology. Prior to founding WisdomTree, Mr. Steinberg was employed as an analyst in the Mergers and Acquisitions Department of Bear, Stearns & Co. Inc., an investment banking firm, from 1986 to 1988. Mr. Steinberg is the author of Midas Investing, published by Times Books, a division of Random House, Inc., in 1996. In connection with our strategic investment in December 2019 in Securrency, Inc., a technology company focused on blockchain-based financial services infrastructure, Mr. Steinberg joined Securrency’s Board of Directors. He attended The Wharton School of Business at the University of Pennsylvania.

 

Qualifications

 

We believe Mr. Steinberg’s qualifications to serve on the Board of Directors include his extensive knowledge of our business, his experience in founding and developing our fundamentally weighted index methodology, as well as his corporate and strategic vision, which provide strategic guidance to the Board. As our Chief Executive Officer, Mr. Steinberg provides essential insight and guidance to the Board from a management perspective.

Age

57

 

 

Director since

October 1988

 

Committees

 

  None

 

 

Class I Directors Whose Terms Expire in 2024

 

 

 

LOGO

        

 

 

Anthony Bossone

 

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. In this role, Mr. Bossone directs and oversees all global financial and administrative functions of the broker-dealer, including financial accounting and reporting, regulatory compliance, planning and analysis, treasury, tax, legal, payroll, human resources, benefits, insurance and other corporate matters. 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. Mr. Bossone is also NACD (National Association of Corporate Directors) Directorship Certified.

 

Qualifications

 

We believe Mr. Bossone’s qualifications to serve on the Board of Directors include his global financial, accounting and compliance expertise. The Board also benefits from his experience as an equity trader.

Age

51

 

 

Director since

January 2009

 

Committees

 

  Audit (Chair)

 

  Compensation

 

  Operations and Strategy

 

 

 

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Smita Conjeevaram

 

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.

 

Qualifications

 

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.

 

Age

61

 

 

Director since

January 2021

 

Committees

 

  Audit

 

  Nominating and Governance

 

  Operations and Strategy (Chair)

 

 

 

 

 

LOGO

        

 

 

Harold Singleton III

 

Harold Singleton III, an executive with more than 30 years of experience in the investment management and financial services industry, was most recently Vice President, Managing Director/Head of Manager Selection and Portfolio Construction of Lincoln Financial Group (NYSE: LNC), which operates multiple insurance and retirement businesses, from March 2016 to December 2021, and previously Vice President/Head of Client Portfolio Management from July 2014 to March 2016. He served as an independent director and member of the Investment Committee of The Vantagepoint Funds from October 2013 to July 2014, and prior to that, he held multiple investment management roles at PineBridge Investments (formerly AIG Investments) from January 2007 to May 2012, most recently as Managing Director/Head of Asset Management Companies and Global Head of Retail and Intermediary Sales. Mr. Singleton also served as Chairman of PineBridge East Africa and PineBridge Taiwan. His investment management career also includes multiple equity portfolio management and analyst positions at well-known firms, including UBS Global Asset Management from June 2003 to December 2006, Metropolitan West Capital Management from September 2000 to June 2003, and Brinson Partners from December 1996 to September 2000, prior to its acquisition by UBS Global Asset Management. Mr. Singleton serves as Chair of the Investment Committee of the Executive Leadership Council, an organization dedicated to the development of global black leaders. He received his B.S. in Chemical Engineering from the Illinois Institute of Technology, where he is currently a member of the Executive Committee and chairs the Investment Committee of its Board of Trustees, an M.B.A. in Finance from the University of Chicago and a certificate from the University of Cambridge Judge Business School in Digital Disruption: Digital Transformation Strategies. Mr. Singleton is a Chartered Financial Analyst and is NACD (National Association of Corporate Directors) Directorship Certified.

 

Qualifications

 

We believe Mr. Singleton’s qualifications to serve on the Board of Directors include his expertise that spans global markets, ESG and diversity, equity and inclusion, and many years of experience in senior leadership positions in the investment management and financial services industry. The Board also benefits from his training in digital disruption and digital transformation, which the Board believes will translate into valuable governance and oversight of our digital assets initiatives.

Age

60

 

 

Director since

January 2022

 

Committees

 

  Audit

 

 

 

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EXECUTIVE OFFICERS

Bryan Edmiston, 46, has served as Chief Financial Officer since June 2021. Previously, he served as Chief Accounting Officer from April 2018 to May 2021 and as Director – Financial Reporting and Accounting Policy from September 2016 to May 2021. Prior to WisdomTree, Mr. Edmiston joined Gleacher & Company, Inc. as a Managing Director responsible for Accounting Policy and SEC Reporting in December 2009. From August 2011 to September 2016, he served as Controller and Principal Accounting Officer of Gleacher. Mr. Edmiston was also a Senior Manager within the Banking & Capital Markets Assurance Practice at PricewaterhouseCoopers LLP, having been employed there from September 1997 to December 2009 while servicing a number of clients in the financial services industry. He received a B.B.A. in Accounting from Pace University and is a Certified Public Accountant.

Marci Frankenthaler, 53, has served as Chief Legal Officer and Secretary since April 2019. She served as Deputy General Counsel from January 2018 to March 2019, and as Director of Business and Legal Affairs, Associate General Counsel from July 2014 to December 2017. From June 2008 to June 2014, Ms. Frankenthaler was General Counsel of Frederick’s of Hollywood Group Inc., a specialty retailer that she helped to take public and then private. Prior to that, Ms. Frankenthaler 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 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 Executive Editor of the Cardozo Law Review.

R. Jarrett Lilien, 60, has served as President and Chief Operating Officer since September 2019. From November 2017 to September 2019, he served as Executive Vice President and Head of Emerging Technologies. From November 2008 to December 2017, Mr. Lilien was a member of the Board of Directors and served on the Audit, Compensation and Nominating 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 and the Baryshnikov Arts Center. He served as a member of the Board of Directors of Investment 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 Chief Executive Officer from August 2015 until January 2016. Mr. Lilien received his B.A. in Economics from the University of Vermont.

Alexis Marinof, 47, has served as Head of WisdomTree Europe since August 2019. He joined WisdomTree Europe in July 2017 as Head of European Distribution, 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 ETP business. Prior to that, he held various positions at State 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 Africa (February 2008 – April 2013) and Head of the Nordic Region (January 2006 – January 2008). Mr. Marinof received a five-year degree in Finance and Business Management “Ingénieur Commercial et de Gestion” from the Université Catholique de Louvain-La-Neuve IAG Louvain School of Management in Belgium.

William Peck, 32, has served as Head of Digital Assets since October 2021. In this role, he oversees digital asset initiatives. From February 2020 to October 2021, he served as Head of Strategy and Emerging Technologies, where he was responsible for oversight of corporate development and other strategic initiatives, including investments in emerging technologies. From September 2014 to January 2020, he held various positions on our Strategy team, including Senior

 

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Analyst, Senior Associate and Director. From July 2012 to July 2014, Mr. Peck worked as an Investment Banking 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.

Jonathan Steinberg, our Chief Executive Officer and a member of the Board of Directors, is also an executive officer. His biographical information is set forth above in the description of the members of our Board of Directors.

David Yates, 42, has served as Chief Information Officer since April 2015. He is responsible for WisdomTree’s global technology infrastructure, cybersecurity, information management and software engineering. He previously worked at McKinsey & Company from October 2009 to March 2015, most recently as an Associate Principal, advising investment management and insurance clients on a range of strategic technology and operations issues. He pioneered McKinsey’s advanced analytics approach for the insurance industry, laying the foundation for new engagement models and product offerings. He also co-led McKinsey’s IT Sourcing Practice in the Americas, where he was responsible for sharing expertise with clients during sales and procurement situations, creating industry-shaping content on sourcing, and training expert practitioners within the firm. From March 2005 to July 2007, he worked at Accenture plc, where he led multinational technology delivery programs in the capital markets space, including the design and implementation of the London Stock Exchange’s equity trading platform. Prior to that, he held technology roles at the Bank of England. Mr. Yates received his B.S. in Mathematics and Economics with First Class Honours from the London School of Economics and Political Science, an M.S. in Computing Science with Distinction from Imperial College London and an M.B.A. from MIT Sloan School of Management.

Peter M. Ziemba, 64, has served as Senior Advisor to the CEO and Chief Administrative Officer since January 2018. He served as Executive Vice President – Business and Legal Affairs from January 2008 to December 2017 and Chief Legal Officer from March 2011 to December 2017. From April 2007 to March 2011, Mr. Ziemba served as General Counsel. Prior to joining 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 WisdomTree from 1996 to 2003.

 

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Corporate Governance

BOARD COMPOSITION

Our Board of Directors currently consists of nine members. In accordance with our certificate of incorporation and by-laws, our Board of Directors is currently divided into three staggered classes of the same or nearly the same number. Currently, 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 the Annual Meeting for Class II directors, in 2023 for Class III directors and in 2024 for Class I directors. However, if stockholder approval of the Declassification Amendment Proposal is obtained, the Board will begin the declassification process at the Annual Meeting and will be declassified fully starting at our 2024 annual meeting of stockholders.

The following directors currently serve in classes I, II and III:

 

 

Class I: Anthony Bossone, Smita Conjeevaram and Harold Singleton III

 

 

Class II: Lynn S. Blake, Susan Cosgrove and Win Neuger

 

 

Class III: Deborah A. Fuhr, Frank Salerno and Jonathan Steinberg

Our certificate of incorporation and by-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. 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.

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.

As provided in our corporate governance guidelines, the Nominating and Governance Committee actively seeks out highly qualified women and people of color for consideration as nominees to the Board as part of its regular process. In February 2022, the Board of Directors amended the corporate governance guidelines to direct the Nominating and Governance Committee to take reasonable steps to ensure the Board’s overall composition complies with applicable law regarding diversity matters, including with respect to the number of female directors and directors from unrepresented communities on the Board and to include qualified candidates having diversity inclusive of gender, race, ethnicity, age, gender identity, gender expression and sexual orientation, in the pool of candidates to be considered by the Nominating and Governance Committee for recommendation to 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.

 

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Corporate Governance

 

 

 

BOARD MEETINGS

During 2021, the Board of Directors held 12 meetings and acted by unanimous written consent on four occasions. Each director attended at least 75% of all Board meetings and meetings of the Board committees on which he or she serves. Our policy is for all our directors to attend our annual meeting of stockholders. All of our directors attended our 2021 annual meeting of stockholders.

BOARD INDEPENDENCE

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 all our directors are independent under the listing standards of the Nasdaq Stock Market other than Mr. Steinberg, our Chief Executive Officer. Under our corporate governance guidelines, directors are required to promptly inform the chair 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.

BOARD LEADERSHIP STRUCTURE

The Board of Directors has chosen to separate the roles of chair of the Board of Directors and chief executive officer. Jonathan Steinberg is our Chief Executive Officer and Frank Salerno is our non-executive, independent Chair of the Board. We believe that separating these positions is optimal because it allows Mr. Steinberg to focus on our day-to-day business, while allowing Mr. Salerno to focus on Board leadership 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, as well as the commitment required to serve as our chair of the Board. While our by-laws and corporate governance guidelines do not require that our chair of the Board 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 chair of the Board and chief executive officer are combined, the Board will appoint either a non-executive chair or a 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 Form 10-K for the year ended December 31, 2021, as amended, and as updated from time to time. Management is responsible for the day-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 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, as described in the descriptions of each of the committees below and in their respective charters. The full Board of Directors (or the appropriate Board 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 and the steps we take to manage them. When a Board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chair of the relevant committee reports on the discussion to the full Board during the committee reports portion of the next Board meeting. For example, the Nominating and Governance Committee is responsible for overseeing our strategy, initiatives and policies concerning corporate social responsibility, including ESG matters and risks, and the chair of the committee reports and makes recommendations to the full Board regarding our ESG initiatives. This enables our Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

 

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Corporate Governance

 

 

 

BOARD COMMITTEES

Our Board of Directors has an Audit Committee, Compensation Committee, and 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. During 2021, each of the Audit Committee, Compensation Committee and Nominating and Governance Committee reviewed its charter and adopted amendments that were clerical in nature to improve the clarity and consistency of the language in the charter. Further, in February 2022, the Board of Directors adopted additional amendments to the Nominating and Governance Committee charter to include within the committee’s responsibilities oversight of our ESG strategy, initiatives and policies. Charters for each of the Audit Committee, Compensation Committee and Nominating and Governance Committee are available on our investor relations website at http://ir.wisdomtree.com by following the link for “Corporate Governance,” under the heading “Committee Charters.”

Our Board of Directors also has an Operations and Strategy Committee, which was formed in May 2022. Mses. Blake, Conjeevaram and Fuhr and Mr. Bossone are members of the committee, and Ms. Conjeevaram serves as Chair.

Committee membership is limited to independent directors as defined under the listing standards of the Nasdaq Stock Market. Audit Committee members also must meet the independence standards adopted by the SEC. Our Board of Directors may from time to time establish other committees. 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

    

 

 

Committee Responsibilities:

 

  oversee our accounting and financial reporting processes and the audits of our financial statements;

 

  approve audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

 

  establish policies and procedures for the receipt and retention of accounting-related complaints and concerns;

 

  monitor, report to and review with the Board of Directors matters related to the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

 

  review all related person transactions for potential conflict of interest situations and approve such transactions; and

 

  take, or recommend that the Board of Directors take, appropriate action to oversee the qualifications, independence and performance of our independent auditor.

 

  

Members:

 

  Anthony Bossone, Chair*

 

  Smita Conjeevaram*

 

  Susan Cosgrove*

 

  Harold Singleton III*

 

Messrs. Neuger and Salerno served on the committee until June 17, 2021. Mr. Singleton joined the committee in May 2022.

 

* Designated as an “audit committee financial expert” as defined under the applicable rules of the SEC.

 

  

 

Number of Meetings in 2021: 9

 

Action by Unanimous Consent in 2021: 0

 

  
    

 

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Corporate Governance

 

 

 

Compensation Committee

    

 

 

Committee Responsibilities:

 

  oversee the administration of our compensation programs;

 

  review and discuss with the Board corporate succession plans for the CEO and our other key officers;

 

  determine and approve the compensation of our CEO;

 

  approve the compensation of the non-CEO executive officers and certain other senior employees;

 

  review and make recommendations to the Board with respect to directors’ compensation;

 

  exercise sole authority to retain, terminate and approve the compensation of any compensation consultants or other compensation advisers and determine the nature and scope of their assignments; and

 

  approve all discretionary bonuses for our employees, advisers and consultants.

  

Members:

 

  Frank Salerno, Chair

 

  Lynn S. Blake

 

  Anthony Bossone

 

  Win Neuger

 

Ms. Blake joined the committee in May 2022.

 

  

 

Number of Meetings in 2021: 10

 

Action by Unanimous Consent in 2021: 1

 

  
  
  
  
  

Nominating and Governance Committee

    

 

 

Committee Responsibilities:

 

  recommend criteria and qualifications for Board membership, which includes considering diversity of background and experience, inclusive of gender, race, ethnicity, age, gender identity, gender expression and sexual orientation;

 

  identify and evaluate candidates for nomination for election to the Board of Directors or to fill Board vacancies;

 

  recommend that the Board of Directors select the director nominees for election at each annual meeting of stockholders;

 

  review the policy regarding the consideration of director candidates recommended by stockholders;

 

  review all stockholder nominations submitted to us; and

 

  review and provide oversight and recommendations with respect to, our strategy, initiatives and policies concerning corporate social responsibility, including ESG matters.

  

Members:

 

  Win Neuger, Chair

 

  Smita Conjeevaram

 

  Susan Cosgrove

 

  Deborah A. Fuhr

 

Mr. Bossone served on the committee until June 17, 2021, Ms. Conjeevaram joined the committee in January 2022, and Ms. Fuhr joined the committee in May 2022.

 

  

 

Number of Meetings in 2021: 2

 

Action by Unanimous Consent in 2021: 0

  
    

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Messrs. Bossone, Neuger and Salerno served as members of the Compensation Committee during 2021. None of the members of the Compensation Committee was an officer or employee of ours during 2021 or has ever served as one of our officers and none had any relationship with us or any of our subsidiaries during 2021 that would be required to be disclosed as a transaction with a related person.

None of our executive officers 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 our Board of Directors or Compensation Committee.

 

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Corporate Governance

 

 

 

CORPORATE GOVERNANCE GUIDELINES

Our Board of Directors has adopted corporate governance guidelines to promote the effective functioning of the Board 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, the selection, qualifications and continuing education of Board members, Board meetings, non-employee director executive sessions, director service on other boards, Board committees, management review and succession planning, non-employee director compensation and Board 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 further direct the Nominating and Governance Committee to take reasonable steps to ensure the Board’s overall composition complies with applicable law regarding diversity matters, including with respect to the number of female directors and directors from unrepresented communities on the Board, and to include qualified candidates having diversity inclusive of gender, race, ethnicity, age, gender identity, gender expression and sexual orientation, in the pool of candidates to be considered by the Nominating and Governance Committee for recommendation to the Board.

The corporate governance guidelines are available on our investor relations website at http://ir.wisdomtree.com by following the link for “Corporate Governance,” under the heading “Corporate Governance Guidelines.”

BOARD AND COMMITTEE SELF-ASSESSMENTS

The Board conducts an annual self-assessment 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 WisdomTree and specifically focuses on areas in which the Board or management believes that the Board could improve. Management implements action plans based on directors’ feedback and reports to the Board on the implementation of those plans in order to ensure continuous improvement.

CODE OF CONDUCT

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 at http://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.

STOCK OWNERSHIP GUIDELINES

Our Board of Directors has adopted stock ownership guidelines, which require executive officers and non-employee directors to maintain an ongoing ownership position in our common stock while providing them with flexibility in personal financial planning.

On each annual measurement date (determined by the Board to be November 30th), the dollar value of the base amounts set forth below is converted into the number of shares required to be held to meet the guidelines until the next November 30th.

 

Position

   Base Amount

Chief Executive Officer

   6X Base Salary

All other executive officers

   3X Base Salary

Non-employee directors

   5X Base Retainer

 

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Shares of common stock owned by the executive officer or non-employee director directly, jointly or indirectly by a trust, partnership, limited liability company or other entity for the benefit of the executive officer or non-employee director, count toward satisfaction of the guidelines, as well as 50% of unvested restricted stock awards subject to time vesting issued under our equity incentive plans. Stock options (both vested and unvested) and unearned performance-based restricted stock unit awards do not count toward satisfaction of the guidelines.

If an executive officer or non-employee director does not meet the guidelines on November 30th, he or she will not be permitted to sell or otherwise dispose of our 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 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 a case-by-case basis.

As of November 30, 2021, all of our executive officers and non-employee directors serving in such role on such date met the guidelines other than Bryan Edmiston, Marci Frankenthaler, Alexis Marinof, William Peck, Smita Conjeevaram and Susan Cosgrove. Messrs. Edmiston, Marinof and Peck and Ms. Frankenthaler became executive officers within the last three years, and Mses. Conjeevaram and Cosgrove recently joined the Board. Additional detail regarding ownership of our common stock by our executive officers and non-employee directors as of the record date 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 PROHIBITING SHORT SALES, DERIVATIVES TRADING, HEDGING AND PLEDGING

Our insider trading policy applies to all of our employees, officers and directors, including our named executive officers. The policy strictly prohibits these individuals from:

 

 

effecting “short sales” of our common stock;

 

 

trading in derivatives in our securities (such as put and call options);

 

 

engaging in any other hedging transaction relating to our securities; and

 

 

pledging shares of our common stock as collateral for a loan.

These individuals are also prohibited from holding shares of our common stock in margin accounts 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 2021 as approved by the Board of Directors:

 

Board Service

 

Annual Cash Retainer(1)

   $ 100,000  

Annual Restricted Stock Award(2)

   $ 100,000  

Chair of the Board Cash Retainer

   $ 110,000  

 

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Corporate Governance

 

 

 

Committee Service(1)

   Chair      Member  

Audit

   $ 25,000      $ 12,500  

Compensation

   $ 40,000      $ 15,000  

Nominating and Governance

   $ —      $ 7,500  
(1)

Annual cash retainers for Board and committee service are 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.

The following table sets forth compensation paid to our non-employee directors in 2021. 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)     Total ($)  

Anthony Bossone

     145,337        100,000 (2)      245,337  

Smita Conjeevaram

     71,739        139,180 (3)      210,919  

Susan Cosgrove

     120,000        100,000 (2)      220,000  

Bruce Lavine(4)

     107,500        100,000 (4)      207,500  

Win Neuger

     131,394        100,000 (2)      231,394  

Frank Salerno

     258,894        100,000 (2)      358,894  
(1)

As of December 31, 2021, each of our non-employee directors held 15,625 shares of unvested restricted stock other than Ms. Conjeevaram, who held 22,921 shares of unvested restricted stock.

(2)

Represents the grant date fair value of 15,625 shares of restricted stock awarded on June 17, 2021, computed in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standard Codification, (“ASC”), Topic 718.

(3)

Represents the aggregate grant date fair value of 22,921 shares of restricted stock awarded to Ms. Conjeevaram, of which 7,296 shares with a grant date fair value of $39,180 were awarded upon her appointment as a non-employee director on January 25, 2021 and 15,625 shares with a grant date fair value of $100,000 were awarded on June 17, 2021.

(4)

Mr. Lavine resigned from our Board of Directors on January 12, 2022. Upon his resignation, the vesting of 8,990 shares of the 15,625 shares of restricted stock held by Mr. Lavine was accelerated, which shares were originally scheduled to vest on June 17, 2022.

 

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Proposal 2

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, 2022. Ernst & Young LLP acted as our independent registered public accounting firm for the year ended December 31, 2021. 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. 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, 2021 and 2020 (in thousands):

 

 

 

   2021      2020  

Audit Fees(1)

   $ 1,360      $ 1,392  

Audit-Related Fees(2)

     44        42  

Tax Fees

     —          —    

All Other Fees

     —          —    
          

Total Fees

   $ 1,404      $ 1,434  
(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 issuance of comfort letters.

(2)

Fees related to the audits of our employee benefit plan during the years ended December 31, 2021 and 2020.

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.

 

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Proposal 2

 

 

 

REQUIRED VOTE

The affirmative vote of a majority of votes cast is necessary for the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022. Abstentions and broker non-votes will have no effect on this proposal. However, we expect there will be no broker non-votes on this proposal since brokers have discretionary voting authority with respect to this proposal.

 

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

(PROPOSAL NO. 2 ON YOUR PROXY CARD)

 

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Audit Committee Report

The Audit Committee of the Board of Directors has reviewed the Company’s audited financial statements for the fiscal year ended December 31, 2021 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:

 

 

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, 2021 for filing with the U.S. 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*

 

Anthony Bossone (Chair)    Smita Conjeevaram    Susan Cosgrove
*

Mr. Singleton joined the Audit Committee in May 2022.

 

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Proposal 3

Approval of an Amendment to Our Amended and Restated Certificate of Incorporation to Increase Our Authorized Shares of Common Stock

The Board of Directors has approved an amendment to Article IV of our Amended and Restated Certificate of Incorporation (the “Charter”), to increase our authorized common stock from 250,000,000 shares to 400,000,000 shares and the corresponding increase in the total number of authorized shares of capital stock the Company may issue from 252,000,000 shares to 402,000,000 shares. We refer to this proposal as the “Authorized Shares Amendment.”

As of the record date, of the 250,000,000 shares of common stock that are currently authorized to be issued under the Charter, 146,519,365 shares are issued and outstanding, and 16,000,000 shares are reserved for issuance under our current 2016 Equity Plan and, subject to stockholder approval (as further described in Proposal 5 below), the proposed 2022 Equity Plan. Additionally, approximately 69,000,000 shares are reserved for issuance upon conversion of our outstanding convertible notes in the event of a “make-whole fundamental change” as defined under the indentures therefor, as more fully discussed in our Annual Report on Form 10-K for the year ended December 31, 2021, as amended. Thus, approximately 18,500,000 authorized shares of common stock are not reserved and currently remain available for issuance.

We are asking stockholders to approve the Authorized Shares Amendment to increase the number of total authorized shares of common stock and the corresponding increase in the total number of authorized shares of capital stock the Company is authorized to issue. Approval of the Authorized Shares Amendment would provide us with the flexibility to issue shares of common stock for general corporate purposes in furtherance of the Board’s objectives. If the Authorized Shares Amendment to increase the authorized shares is not approved by the stockholders, based on the number of shares of common stock currently authorized for issuance under the Charter, we do not have sufficient shares available to raise additional cash through the sale of our common stock or to issue our common stock to a third party that might be interested in making a strategic investment in our Company without stockholder approval, which may make it difficult to raise additional capital or engage in such a transaction in a timely manner.

OVERVIEW OF THE AUTHORIZED SHARES AMENDMENT

The additional common stock authorized under the Authorized Shares Amendment will have rights and privileges identical to our currently outstanding common stock. The number of authorized shares of our preferred stock will not be affected by the Authorized Shares Amendment and will be remain at 2,000,000 shares. Approval of the Authorized Shares Amendment requires the affirmative vote of holders of a majority of the shares of common stock outstanding as of the record date.

The increase in the number of authorized shares of common stock will provide us with the flexibility to issue shares of common stock for general corporate purposes, which could include financing transactions, such as public or private offerings of common stock or convertible securities, strategic investments, strategic partnership arrangements, restructuring or refinancing transactions, acquisitions, stock splits or stock dividends, and providing equity awards to employees, officers, directors and/or consultants to support execution of our business strategy. The availability of additional authorized shares of common stock would allow us to execute any of these transactions in the future without additional stockholder approval, except as may be required for particular transactions under our Charter, applicable law or rules of any stock exchange on which our securities may be listed, including the Nasdaq Global Select Market, thereby avoiding the potential expense or delay associated with obtaining stockholder approval. Such additional shares would be available for issuance from time to time as determined by the Board for any such proper corporate purpose.

 

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Proposal 3

 

 

 

If the Authorized Shares Amendment is approved and becomes effective, any future issuance of additional shares of authorized common stock, or securities convertible into common stock, may decrease the relative percentage of equity ownership of our existing stockholders, ultimately diluting voting power of existing stockholders and could cause prevailing market prices for our common stock to decline. Stockholders do not have preemptive rights with respect to our common stock. Therefore, if we issue additional shares of common stock, existing stockholders would not have any preferential rights to purchase such shares in order to maintain their ownership percentage.

As of the date of this proxy statement, we have no plans to engage in any merger or acquisition with other companies or entities. However, we consider and evaluate merger and acquisition opportunities in the normal operation of our business, and merger or acquisition opportunities may arise at any time.

SEC Release No. 34-15230 requires disclosure and discussion of the effects of any proposal that may be used as an anti-takeover device. Although not a factor in the decision by our Board to effect the increase of our authorized shares of common stock, one of the effects of having increased additional shares of our authorized common stock available for issuance may be to enable the Board to render more difficult or to discourage an attempt to obtain control of the Company by means of a merger, tender offer, proxy contest, or otherwise, and thereby protect the continuity of then present management. Unless prohibited by the regulations of applicable law or other agreements or restrictions, a sale of shares of common stock by us or other transactions in which the number of our outstanding shares of common stock would be increased could dilute the interest of a party attempting to obtain control of the Company. The increase in available authorized common stock may make it more difficult for, prevent or deter a third-party from acquiring control of the Company or changing our Board and management, as well as inhibit fluctuations in the market price of our shares that could result from actual or rumored takeover attempts. While it is possible that our management could use the increased shares of common stock authorized by the Authorized Shares Amendment to resist or frustrate a third-party transaction providing an above-market premium that is favored by a majority of stockholders, at this time we have no intent or plans to employ the Authorized Shares Amendment as an anti-takeover device, and as mentioned above, this was not a factor in the decision by our Board to effect the increase of our authorized shares of common stock.

EFFECTIVENESS OF THE AUTHORIZED SHARES AMENDMENT

If the Authorized Shares Amendment is approved by our stockholders, it will become effective upon the filing with the Secretary of State of Delaware of a certificate of amendment to our Charter which would have the effect of increasing the total number of authorized shares of all classes of stock we are authorized to issue from 252,000,000 shares to 402,000,000 shares and increasing the number of authorized shares of common stock from 250,000,000 shares to 400,000,000 shares. We will promptly file the certificate of amendment to our Charter attached hereto as Appendix A during the Annual Meeting.

If the Authorized Shares Amendment is approved, the current first paragraph of Article IV of our Charter will be replaced in its entirety as follows:

“The total number of shares of all classes of stock that the Corporation shall have authority to issue is four hundred two million (402,000,000) shares, of which four hundred million (400,000,000) shares will be a class designated as common stock, with a par value of one cent ($.01) per share (the “Common Stock”), and two million (2,000,000) shares shall be a class designated as undesignated shares of preferred stock, with a par value of one cent ($.01) per share (the “Undesignated Preferred Stock”).”

The amendment to our Charter to implement the Authorized Shares Amendment is set forth in the certificate of amendment to our Charter, which is attached as Appendix A to this proxy statement. If the Authorized Shares Amendment Proposal is approved by our stockholders, we will promptly file the certificate of amendment to our Charter attached hereto as Appendix A during the Annual Meeting. If the Authorized Shares Amendment Proposal is not approved by our stockholders, our number of authorized shares will remain the same. This description of the proposed amendment to Article IV of our Charter is only a summary and is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the proposed amendment set forth in the certificate of amendment to our Charter attached hereto as Appendix A.

 

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Proposal 3

 

 

 

REQUIRED VOTE

The affirmative vote of holders of a majority of the shares of common stock issued and outstanding as of the record date is required to approve the Authorized Shares Amendment. Abstentions and broker non-votes will have the effect of votes “against” the proposal. However, we expect there will be no broker non-votes on this proposal since brokers have discretionary voting authority with respect to this proposal.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE AUTHORIZED SHARES AMENDMENT TO INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK

(PROPOSAL NO. 3 ON YOUR PROXY CARD)

 

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Proposal 4

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 in the section titled “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 2022 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 has adopted a policy providing for an annual say-on-pay vote. Unless the Board of Directors modifies this policy, the next say-on-pay vote will be held at our next annual stockholders meeting in 2023.

REQUIRED VOTE

The affirmative vote of a majority of votes cast is necessary for the approval of the advisory resolution to approve the compensation of our named executive officers. Abstentions and broker non-votes will have no effect on this proposal.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ADVISORY RESOLUTION TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

(PROPOSAL NO. 4 ON YOUR PROXY CARD)

 

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COMPENSATION COMMITTEE REPORT

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, 2021. 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 (Chair)    Anthony Bossone    Win Neuger

 

*

Ms. Blake joined the Compensation Committee in May 2022.

COMPENSATION DISCUSSION AND ANALYSIS

 

 

TABLE OF CONTENTS   

 

 

 

INTRODUCTION      40  
CHANGES IN EXECUTIVE MANAGEMENT      40  
CONSIDERATION OF RESULTS OF SAY-ON-PAY VOTE      40  
EXECUTIVE SUMMARY      40  

Business Overview

     40  

Compensation Overview

     42  
OUR COMPENSATION PHILOSOPHY AND OBJECTIVES      43  
COMPONENTS OF COMPENSATION      44  
ROLE OF THE COMPENSATION COMMITTEE, PERFORMANCE EVALUATIONS AND MANAGEMENT      46  
USE OF COMPENSATION CONSULTANT      47  
MARKET COMPENSATION BENCHMARKING      47  
2021 INCENTIVE COMPENSATION PROGRAM AND RESULTS      48  
2021 TOTAL COMPENSATION      49  
RISK ANALYSIS OF COMPENSATION POLICIES AND PROGRAMS      50  
TAX AND ACCOUNTING CONSIDERATIONS      51  
EMPLOYMENT AGREEMENTS      51  
CONCLUSION      51  

 

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Introduction

This Compensation Discussion and Analysis describes the comprehensive information regarding our compensation programs and policies for our CEO, each person who served as our CFO and the next three highest compensated named executive officers for the year ended December 31, 2021. We collectively refer to these executive officers as the NEOs.

 

Name

   Title

Jonathan Steinberg

   Chief Executive Officer (CEO)

Bryan Edmiston

   Chief Financial Officer (CFO)

R. Jarrett Lilien

   President and Chief Operating Officer (COO)

Alexis Marinof

   Head of Europe (HoE)

Peter M. Ziemba

   Senior Advisor to the CEO and Chief Administrative Officer (CAO)

Amit Muni

   Former Chief Financial Officer, whose employment ended on May 31, 2021

We believe we provide a competitive total compensation opportunity for our NEOs 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

 

 

our 2021 compensation results.

Changes in Executive Management

Effective May 31, 2021, Amit Muni resigned as CFO to accept alternative employment. He received his base salary through the separation date. Bryan Edmiston was appointed to serve as our CFO effective June 1, 2021.

Consideration of Results of Say-on-Pay Vote

Each year, we provide our stockholders with the opportunity to cast an advisory vote on compensation paid to our NEOs (“say-on-pay”). At the 2021 annual meeting of stockholders, our say-on-pay proposal received support from stockholders, with 79% of the shares voted casting a vote in favor of the proposal. The Compensation Committee considered the results of the stockholders’ advisory vote at our 2021 annual meeting and made the enhancements to our compensation program summarized in the Executive Summary below. The Compensation Committee intends to review the outcome of this year’s say-on-pay proposal in its evaluation and determination of executive compensation for fiscal year 2022.

Executive Summary

Business Overview

Our business has generated significant positive momentum while executing against our long-term strategic initiatives. We have benefited from the expansion and diversification of our product line-up, our Advisor Solutions program, investments in technology-enabled and research-driven solutions, the transformation of our distribution reach and investments in our managed models business. Our AUM as of December 31, 2021 was $77.5 billion, an all-time high. The breadth and depth of our flows and products is increasing and we generated $4.7 billion of net inflows in 2021, representing an annualized organic growth rate of 7%. Our U.S. products have generated positive net inflows for the last six consecutive quarters ended December 31, 2021. In Europe, our UCITS business has grown at an annualized organic

 

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growth rate of 105% in 2021, has generated positive net inflows for the last seven consecutive quarters and had AUM of $3.7 billion as of December 31, 2021. Revenues and operating income have increased 22% and 62%, respectively, in 2021 as compared to 2020.

We have been positioning ourselves to expand beyond our existing ETP business by leveraging blockchain technology, digital assets and principles of decentralized finance (“DeFi”) to deliver transparency, choice and inclusivity to customers and consumers around the world. We are expanding our offerings to include a new financial services mobile application, branded WisdomTree Prime, a digital wallet that is native to the blockchain and being developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets (e.g., blockchain-enabled investment funds). We are also planning to launch asset- and fund-tokenization products beginning with a dollar token, gold token and digital short term treasury fund, which will be available on multiple public and permissioned blockchains, leveraging federal and state regulated entities. As we pursue our digital assets strategy, we are embracing a concept we refer to as “responsible DeFi,” which we believe upholds foundational principles of regulation in this innovative and quickly evolving space. We believe our expansion into digital assets will complement our existing core competencies in a holistic manner, diversify our revenue streams and contribute to our growth.

Advancements made in pursuit of our digital assets initiative include the following:

 

 

the expansion of our dedicated team focused on developing new investment products, indexes and strategies that provide exposure to digital assets, along with new blockchain-enabled products and services globally;

 

 

the development of a new financial services mobile application, branded WisdomTree Prime, a digital wallet that is native to the blockchain;

 

 

the launch of a crypto index offering digital assets exposure to separately managed accounts in collaboration with Ritholtz Wealth Management LLC, OnRamp Invest LLC and Gemini Trust Company, LLC;

 

 

our collaboration with OnRamp Invest and Gemini to support a new digital asset variable annuity product by Federal Life through the development of our +Crypto model portfolio;

 

 

the WisdomTree Enhanced Commodity Strategy Fund (GCC) becoming the first U.S. listed ETF to provide exposure to crypto assets through bitcoin futures;

 

 

the launch of five crypto ETPs in Europe;

 

 

our investments in Securrency, Inc. and Onramp Invest; and

 

 

various digital asset and blockchain-related regulatory filings and applications pending in the U.S.

Additional accomplishments in 2021 include:

 

 

the termination of the lease for our principal executive office in New York City and a reduction in our office footprint in London. These actions were taken in response to our adoption of a “remote first” approach to work, a strategy we embraced after soliciting feedback from our employees. The virtual work environment has led to efficiencies, increased transparency and further collaboration throughout our business. It is also contributing to future cost savings, which for the year ending December 31, 2022 are anticipated to be approximately $3.5 million when compared to our actual occupancy and depreciation expense recognized during the year ended December 31, 2020;

 

 

the issuance of $150 million of convertible senior notes due 2026, providing capital for organic and inorganic growth initiatives and the return of approximately $54.0 million to our stockholders through stock repurchases and our ongoing quarterly cash dividend; and

 

 

the launch of nine new U.S. listed ETPs and 14 European listed ETPs.

In addition to these achievements, we were named a 2021 Best Places to Work in Money Management by Pension & Investments for the second consecutive year and five years total. We were one of the top five within the category for managers with 100-499 employees. We were also named Best WorkPlace for medium-sized companies in the U.K. for a second consecutive year.

 

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Compensation Overview

2021 Highlights. 2021 was marked by many achievements in advancing our long-term strategic objectives, fostered by an employee-centric culture that is contributing to our success. In accordance with our performance-based incentive compensation plan, the Compensation Committee approved a total incentive compensation pool for our NEOs that was 115% of the targeted amount for 2021, a funding level aligned with our non-executive incentive plan.

We regularly engage with our stockholders on a variety of business matters and are committed to continuously evaluating our executive compensation program and disclosures to ensure transparency and alignment with stockholder interests. In response to the 79% support we received on our say-on-pay proposal from our stockholders in 2021, we have made the following refinements to our executive compensation program over the past year:

 

 

significantly reduced the overall level of discretion exercised by the Compensation Committee in relation to the payout resulting from our executive incentive compensation program;

 

 

aligned our CEO’s incentive compensation with the overall funding level of the executive incentive compensation pool; and

 

 

provided additional transparency pertaining to:

 

   

incentive compensation targets for each NEO;

 

   

performance weightings for all quantitative metrics; and

 

   

long-term incentive mix for equity granted in 2022.

Impact of Total Shareholder Return on NEO Compensation. A significant portion of our executive compensation program is linked to shareholder return, as follows:

 

 

relative total shareholder return, or TSR, is a performance metric included in our performance-based incentive compensation program for our NEOs. The 2021 funded payout percentage for this performance metric was 50% of target. See “2021 Incentive Compensation Program and Results” below;

 

 

long-term incentive compensation is granted entirely in the form of equity, which value is explicitly linked to TSR, and is comprised of both restricted stock awards and relative TSR-based performance-based restricted stock units, or PRSUs;

 

 

PRSUs granted for 2021 performance in January 2022 to our CEO and COO represent 50% of each of their respective long-term equity awards granted. PRSUs granted to our other NEOs represent 25% of each of their respective long-term equity awards granted; and

 

 

the payout on PRSUs granted in January 2019 and vesting in January 2022 was zero.

Changes to be effective in 2022. In addition, we made the following enhancements to our incentive compensation program that will take effect prospectively beginning in 2022:

 

 

greater weight has been ascribed to quantitative performance metrics such that the achievement of quantitative metrics will determine 75% of the executive incentive compensation pool and the remaining 25% will be determined by the Compensation Committee based on qualitative results, representing a shift from the prior 50%-50% quantitative-qualitative mix;

 

 

all NEOs will receive a greater percentage of incentive compensation in the form of equity, including an anticipated equity payout of 60% for our CEO compared to 52% in 2021, of which 50% will consist of performance-based restricted stock units and 50% will consist of time-based restricted stock awards;

 

 

the Compensation Committee adopted a compensation clawback policy, pursuant to which we may recoup all or a portion of the value of any cash or equity incentive compensation provided to any current or former executive officers and certain other employees in the event that our financial statements are restated due to material noncompliance with any financial reporting requirement under the securities law; and

 

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our Board of Directors has adopted a new 2022 Equity Plan, which provides, among other things, that dividends on unvested time-based equity awards granted under the 2022 Equity Plan will not be paid when declared as is the case under the 2016 Equity Plan, but instead will accrue and not be paid unless and until the award vests. As a result, no dividends will be paid with respect to unvested awards under the 2022 Equity Plan. As described in Proposal 5 in this proxy statement, we are seeking stockholder approval of the 2022 Equity Plan at this Annual Meeting.

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 ETP 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 ETPs.

Competition in the digital assets industry on a global basis is also increasing, and ranges from large, established financial incumbents to smaller, early-stage financial technology providers and companies. As mentioned above, we have been positioning ourselves to expand beyond our existing ETP business by introducing new revenue streams and expanding our offerings to include a new financial services mobile application, branded WisdomTree Prime, a digital wallet that is native to the blockchain and being developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets (e.g., blockchain-enabled investment funds). We also are planning to launch asset- and fund-tokenization products beginning with a dollar token, gold token and digital short term treasury fund, which will be available on multiple public and permissioned blockchains, leveraging federal and state regulated entities.

We believe our long-term success depends on our ability to:

 

 

innovate and introduce new products through traditional ETPs;

 

 

grow organically by increasing our ETP inflows and generating strong after-fee performance track records;

 

 

successfully implement our digital assets strategy;

 

 

introduce new revenue streams and generate improved financial results; and

 

 

employ the industry’s most talented, professional and dedicated people at all levels.

The primary objectives of our compensation programs are to:

 

 

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 interests of all of 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 a top-tier performer, he or she should receive higher rewards. Likewise, where individual performance falls short of expectations and/or our financial performance declines, the programs should deliver lower levels of compensation. In addition, the objectives of pay-for-performance and retention must be balanced. Even in periods of temporary downturns in our performance, our programs should continue to ensure that our successful, high-achieving employees remain motivated and committed to us.

 

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Every employee should be a stakeholder aligned with our stockholders. 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 equity ownership throughout our organization to align our employees’ interests with our stockholders. Accordingly, our equity awards are long-term in nature and our employees receive equity awards as part of their year-end compensation.

 

 

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 at-risk and tied to our long-term performance because they are more able to impact our results.

 

 

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. Our success has been based on the coordinated efforts of all our employees working towards common goals, not on the efforts of any one individual. As such, our compensation programs should be applied across the organization, accounting for differences in job responsibilities and marketplace considerations. Perquisites are rare and limited to those that are important to our employees’ ability to carry out their responsibilities safely and effectively.

 

 

Align with long-term success. 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 competitive compensation packages that 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 for certain NEOs.

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 NEOs, allowing them a degree of certainty to attract and retain them. While base salaries are an important component in the overall compensation package, we believe the majority of our NEOs’ compensation should be earned through cash and equity incentive compensation.

Annual Incentive Compensation. Annual 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;

 

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creates a significant, long-term interest for our employees to contribute to our success;

 

 

aids in the retention of employees in a highly competitive market for talent; and

 

 

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 most heavily weighted toward long-term equity incentives, followed by our COO, and then our other NEOs. Long-term equity awards consist of restricted stock awards and PRSUs.

Restricted Stock

Restricted stock awards vest in equal annual installments over three years commencing on the first anniversary of the grant date. The number of shares of restricted stock 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. Restricted stock awards granted for 2021 performance in January 2022 to our CEO and COO represent 50% of each such NEO’s long-term equity awards. Restricted stock awards granted to our other NEOs represent 75% of each such NEO’s long-term equity awards.

Performance Based Restricted Stock Units (PRSUs)

Our PRSUs cliff vest at the end of three years if certain pre-determined TSR levels are achieved. The number of PRSUs granted to our NEOs was determined by dividing the dollar value of such awards by the grant date fair market value of the PRSUs as determined by an independent valuation consultant. PRSUs granted for 2021 performance in January 2022 to our CEO and COO represent 50% of each of their respective long-term equity awards granted. PRSUs granted to our other NEOs represent 25% of each of their respective long-term equity awards granted.

While a target number of PRSUs was 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 target number of PRSUs granted. With respect to the PRSUs granted for 2021 performance in January 2022, 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.

 

 

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 for performance at or above the 85th percentile.

 

 

If our absolute TSR is negative, the number of PRSUs vesting is capped at 100% of target regardless of the relative TSR percentile.

As stated above in the section titled “Our Compensation Philosophy and Objectives,” those individuals with greater levels of authority and responsibility receive 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 compared to our other employees. See “2021 Total Compensation” below for further information regarding actual compensation paid to our NEOs.

Benefits and Perquisites. As stated above in the section titled “Our Compensation Philosophy and Objectives,” our NEOs and Compensation Committee agree that perquisites should be rare and limited to those that are important to our employees’ ability to carry out their responsibilities safely and effectively. Our NEOs 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 a 401(k) plan with a Company matching contribution of up to 50% of eligible employee contributions.

 

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Severance Benefits. Certain of 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 CEO, COO and CAO 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 acceleration of unvested equity awards and cash severance payments and benefits. In addition, if a change of control occurs within 12 months following the CEO, COO or CAO’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 performance of our NEOs 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 NEOs. The Compensation Committee also discusses the overall performance and compensation of our NEOs 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 of Directors under which equity grants are made, and 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 the other NEOs, 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 NEOs 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 management to annually review and reassess the adequacy of its charter, proposing changes as necessary to our Board of Directors for approval.

Our NEOs 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 NEOs 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 philosophy and objectives.

Our 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.

 

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Use of Compensation Consultant

The Compensation Committee has retained Frederic W. Cook & Co. (“FWC”), 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 FWC’s services. However, the Compensation Committee retains the sole authority to direct, terminate or continue FWC’s services. The Compensation Committee has confirmed the independence of FWC 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 NEOs. 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 to 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 FWC, reviews the appropriateness of the companies included in the industry peer group at the beginning of the year. The peer group median is used to determine the target compensation of the CEO and as a reference point for the other NEOs. 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. Given the consolidation of companies within our peer group over recent years, in 2021 we expanded our peer group to include eight additional financial services companies to ensure statistical validity of data used to assist in the determination of compensation. The 2021 peer group is set forth below:

 

  Alliance Bernstein Holding L.P.

 

  Artisan Partners Asset Management Inc.

 

  B. Riley Financial, Inc.(1)

 

  Blucora, Inc.(1)

 

  BrightSphere Investments Group Inc.

 

  Cohen & Steers, Inc.

 

  Diamond Hill Investment Group, Inc.

 

  Donnelley Financial Solutions, Inc.(1)

 

  Greenhill & Co., Inc.(1)

 

  Hercules Capital, Inc.(1)

 

 

  Main Street Capital Corporation(1)

 

  Moelis & Company(1)

 

  Pzena Investment Management, Inc.

 

  Silvercrest Asset Management Group Inc.(1)

 

  Victory Capital Holdings, Inc.

 

  Virtus Investment Partners, Inc.

 

  Westwood Holdings Group, Inc.
 

 

 

 

 

(1)

Represents new companies added to the peer group for 2021.

 

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2021 Incentive Compensation Program and Results

We maintain a performance-based incentive compensation program for our NEOs. The program is designed to determine the proper level of funding for the incentive compensation pool relative to achieving certain quantitative metrics and qualitative results that incentivize growth. For 2021, the achievement of quantitative metrics determined 50% of our total incentive compensation pool with the remaining 50% determined by 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. For 2022, these percentages have been modified to 75% quantitative and 25% qualitative in order to ascribe more weight to quantitative performance metrics.

Actual plan performance is summarized below. The quantitative metrics chosen were considered important performance measurements that our Board of Directors and investors use to measure the health of our business and relative success:

 

 

Net inflows – derived using broad industry data for the asset management and ETP industry as well as consideration for historical actual performance and analyst expectations. The funded payout is capped at 250% of target.

 

 

Financial metrics – our total revenues, adjusted operating income and adjusted operating margin which is derived from internal planning activities. We define “adjusted operating income” as operating income, calculated in accordance with GAAP, excluding bonus expense, and we define “adjusted operating margin” as adjusted operating income divided by revenue. The funded payout for these metrics is uncapped (a cap of 250% was introduced for 2022).

 

 

Relative total shareholder return – our stock performance relative to twelve other publicly traded asset managers and which measures value generated for our stockholders. The funded payout is capped at 250% of target.

 

($ in thousands)

Performance Metrics

  Weight     Target    

Target

Payout

    2021
Actuals
   

Funded

%

   

Funded

Payout

 

Net inflows

    9.375   $ 3,909,000     $ 958     $ 4,661,000       119.2   $ 1,143  

Total revenues(1)

    9.375   $ 278,000     $ 958     $ 303,900       109.3   $ 1,048  

Operating income (excluding bonus)(1)

    9.375   $ 94,000     $ 958     $ 123,500       131.4   $ 1,259  

Operating margin (excluding bonus)(1)

    9.375     33.8   $ 958       40.6     120.1   $ 1,151  

Relative total shareholder return

    12.50     7 of 13   $ 1,278       10 of 13       50.0   $ 639  

Total – Performance:

    50.00    

 

 

 

 

 

  $ 5,111      

 

 

 

 

 

   

 

 

 

 

 

  $ 5,239 (2) 

Total – Qualitative:

    50.00    

 

 

 

 

 

  $ 5,111      

 

 

 

 

 

   

 

 

 

 

 

  $ 6,517  

Total – Pool:

   

 

 

 

 

 

   

 

 

 

 

 

  $ 10,222      

 

 

 

 

 

   

 

 

 

 

 

  $ 11,756  

Funding percentage:

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

 

 

    115

 

(1)

2021 Actuals have been adjusted to account for the impact of foreign exchange fluctuations on targets set at the beginning of the year related to our international operations. These adjustments, which had a negligible impact on the Funded Payout, include a reduction to revenues of $446 and an increase to operating income of $822.

(2)

The net inflows and relative total shareholder return payouts range from 0% to 250% of target. Payouts associated with the financial metrics are uncapped (a cap of 250% was introduced for 2022) and could technically be zero in a circumstance where we earn zero revenues or operating income.

Actual quantitative performance was 102.5% of target. The qualitative amount was determined by the Compensation Committee in consultation with FWC and considered our overall performance including the achievements summarized in the Executive Summary above. This resulted in the incentive compensation plan being funded at 115% of target, a funding level aligned with our non-executive incentive plan.

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;

 

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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 FWC.

See “2021 Total Compensation” below for further information regarding actual compensation paid to our NEOs.

2021 Total Compensation

The table below reflects the total compensation awarded for 2021 performance to our NEOs who were serving in their respective positions as of December 31, 2021 in the manner that the Compensation Committee used to evaluate total compensation. This table supplements the Summary Compensation Table below, which is presented in a different format as required by the SEC:

 

 

 

 

Base

Salary

 

Incentive

Target

 

Funded

%

 

Incentive

Compensation

  Total
Compensation
  Incentive Compensation

($ in thousands)

NEO

  Short-Term
Cash
  Restricted
Stock
  PRSUs(1)   Total

Jonathan Steinberg – CEO

      $550         $4,162         115%         $4,787         $5,337         $2,291         $1,248         $1,248         $4,787  

Bryan Edmiston – CFO(2)

      $294         $   392         129%         $   504         $   798         $   293         $   158         $     53         $   504  

R. Jarrett Lilien – COO

      $425         $2,168         110%         $2,381         $2,806         $1,367         $   507         $   507         $2,381  

Alexis Marinof – HoE(3)

      $399         $   972         110%         $1,069         $1,468         $   695         $   280         $     94         $1,069  

Peter M. Ziemba – CAO

      $375         $1,175         110%         $1,294         $1,669         $   841         $   340         $   113         $1,294  

 

(1)

PRSUs granted to our CEO and COO represent 50% of the long-term equity awards granted. PRSUs granted to our other NEOs represent 25% of the long-term equity awards granted.

(2)

Mr. Edmiston was appointed to serve as our CFO on June 1, 2021, at which time his base salary was increased from $250 to $325 and his incentive target was increased from $275 to $475. His base salary and incentive target reported in the table have been prorated based on his current and former roles held in 2021.

(3)

Mr. Marinof’s compensation is paid in British pounds. Amounts reflected in the table are reported in U.S. dollars using the average exchange rate of $1.3761.

 

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The following charts reflect the elements of total compensation for our NEOs who were serving in their respective positions as of December 31, 2021 as a percentage of their total compensation based on the chart above:

 

LOGO

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 three years and 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 have implemented the following policies to manage risk:

 

 

we maintain stock ownership guidelines for executive officers and directors as described in this proxy statement under the heading “Stock Ownership Guidelines”;

 

 

our Insider Trading Policy was recently amended to strictly 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 Prohibiting Short Sales, Derivatives, Hedging and Pledging”; and

 

 

the Compensation Committee recently adopted a clawback policy, pursuant to which we may recoup all or a portion of the value of any cash or equity incentive compensation provided to any current or former executive officers and certain other employees in the event that our financial statements are restated due to material noncompliance with any financial reporting requirement under the securities laws.

 

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Tax and Accounting Considerations

We evaluate the effect of accounting and tax treatment of particular forms of compensation on an ongoing basis and make modifications to compensation policies in response where appropriate. Under current U.S. tax rules, compensation paid to our NEOs in excess of $1,000,000 is generally not deductible by us. In designing our executive compensation program and determining the compensation of our executive officers, including our named executive officers, our compensation committee considers a variety of factors, including the potential impact of the $1,000,000 deduction limit. While the Compensation Committee is mindful of the benefit of the full deductibility of compensation, it believes that stockholder interests are best served if the Compensation Committee retains maximum flexibility to design executive compensation programs that meet stated business objectives. Accordingly, while considering tax deductibility as a factor in determining executive compensation, the Compensation Committee may not limit such compensation to levels that will be deductible.

Employment Agreements

The compensation paid to certain of 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 NEOs is reasonable and appropriate. The Compensation Committee believes that our compensation program gives our NEOs 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.

 

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SUMMARY COMPENSATION TABLE

The following table sets forth certain information with respect to compensation earned during the years indicated below by each NEO.

 

Name and Principal Position

  Year     Salary ($)     Bonus
($)
(1)
    Stock
Awards ($)
(2)
    All Other
Compensation ($)
(3)
    Total ($)  

Jonathan Steinberg

    2021       550,000       2,291,000       1,463,175       13,000       4,317,175  

Chief Executive Officer

    2020       550,000       1,325,000       993,637       13,000       2,881,637  

 

    2019       550,000       1,918,000       3,579,809       12,500       6,060,309  

Bryan Edmiston(4)

    2021       293,750       293,000       69,998       9,750       666,498  

Chief Financial Officer

           

R. Jarrett Lilien

    2021       425,000       1,367,314       805,021       13,000       2,610,335  

President and Chief Operating Officer

    2020       425,000       891,000       240,707       13,000       1,569,707  

 

    2019       375,000       1,000,000       715,959       12,500       2,103,459  

Alexis Marinof(5)

    2021       399,069       694,931       353,815       50,549       1,498,364  

Head of Europe

    2020       372,273       537,870       200,209       48,396       1,158,748  

 

    2019       250,137       376,804       92,397       32,518       751,856  

Peter M. Ziemba

    2021       375,000       840,550       340,893       13,000       1,569,443  

Senior Advisor to the CEO and

    2020       375,000       551,000       182,936       13,000       1,121,936  

Chief Administrative Officer

    2019       375,000       760,000       775,624       12,500       1,923,124  

Amit Muni(6)

    2021       156,250       —         379,821       5,404       541,475  

Former Chief Financial Officer

    2020       375,000       614,000       163,679       12,500       1,165,179  
 

 

    2019       375,000       680,000       701,046       12,500       1,768,546  
(1)

Amounts reported for 2021 reflect bonuses earned in 2021 and paid in 2022; amounts reported for 2020 reflect bonuses earned in 2020 and paid in 2021; and amounts reported for 2019 reflect bonuses earned in 2019 and paid in 2020.

(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 FASB ASC 718. The grant date fair value for time-based restricted stock awards is based on the closing price of our common stock on the date of grant. The grant date fair value for PRSUs is calculated using a Monte-Carlo simulation for the award on the grant date and such grant date fair values are set forth in the Grants of Plan-Based Awards table below. The assumptions we used in the valuation of the equity awards are set forth in note 19 of the notes to our annual consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. The value of the PRSUs granted to our NEOs in 2021 assuming the highest level of performance is achieved is $1,601,356 for Mr. Steinberg, $881,043 for Mr. Lilien, $203,215 for Mr. Marinof, $195,790 for Mr. Ziemba and $218,142 for Mr. Muni.

(3)

Represents employer contributions to the 401(k) Retirement Plan (and the U.K. pension scheme in respect of Mr. Marinof).

(4)

Mr. Edmiston became our Chief Financial Officer on June 1, 2021. Compensation details for 2019 and 2020 are not disclosed as he was not a NEO during those years. He served as Chief Accounting Officer from April 2018 to May 2021 and as Director – Financial Reporting and Accounting Policy from September 2016 to May 2021.

(5)

Mr. Marinof is paid compensation in British pounds. Amounts reflected herein are reported in U.S. dollars using the average exchange rates of $1.3761, $1.2837 and $1.2773 for the years 2021, 2020 and 2019, respectively.

(6)

Mr. Muni resigned from his position as Chief Financial Officer on May 31, 2021. Accordingly, all of his shares of restricted stock and PRSUs that had not vested as of his termination date were forfeited.

 

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CEO PAY RATIO

Our compensation and benefits philosophy and the overall structure of our compensation and benefits programs are broadly similar across the organization to encourage and reward all employees who contribute to 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 2021, the annual total compensation of our median employee, determined in accordance with the amounts presented in the “Total” column of the Summary Compensation Table, was $181,999. Our CEO’s annual total compensation, as reported in the Total column of the Summary Compensation Table, was $4,317,175. Based on this information, the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee is 24 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, 2021, which represented 240 global full-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 2021 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 an average exchange rate for the full year.

GRANTS OF PLAN-BASED AWARDS

The following table sets forth certain information with respect to stock awards granted to our NEOs during the year ended December 31, 2021.

 

Name

  

Grant Date

     Estimated Future Payouts Under
Equity Incentive Plan Awards
    All Other
Stock Awards:
Number of
Shares of
Stock or Units (#)
   

Grant

Date Fair
Value of
Stock and
Option
Awards ($)(1)

 
   Threshold (#)      Target (#)      Maximum (#)  

Jonathan Steinberg

     1/25/2021        61,686        123,371        246,742       —         800,678  

 

     1/25/2021        —          —          —         123,370       662,497  

Bryan Edmiston

     1/25/2021        —          —          —         13,035       69,998  

R. Jarrett Lilien

     1/25/2021        33,939        67,877        135,754       —         440,522  

 

     1/25/2021        —          —          —         67,877       364,499  

Alexis Marinof

     1/25/2021        7,828        15,656        31,312       —         101,607  

 

     1/25/2021        —          —          —         46,966       252,207  

Peter M. Ziemba

     1/25/2021        7,542        15,084        30,168       —         97,895  

 

     1/25/2021        —          —          —         45,251       242,998  

Amit Muni(2)

     1/25/2021        8,403        16,806        33,612       —         109,071  
 

 

     1/25/2021        —          —          —         50,419       270,750  
(1)

Amounts reported represent accounting grant date fair value of awards made to our NEOs in 2021 for services performed in the prior year and are computed in accordance with FASB ASC Topic 718.

(2)

Mr. Muni resigned from his position as Chief Financial Officer on May 31, 2021. Accordingly, all of his shares of restricted stock and PRSUs that had not vested as of his termination date were forfeited.

 

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth certain information with respect to outstanding stock awards held by our NEOs at December 31, 2021:

 

 

 

    

 

     Stock Awards  

Name

   Grant
Date
     Number of
Shares or
Units of Stock
That Have
Not Vested
(#)
(1)
     Market Value
of Shares or
Units of Stock
That Have Not
Vested
($)
(2)
     Equity Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or Other
Rights That
Have
Not Vested
(#)
(3)
     Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned
Shares, Units or
Other Rights
That Have
Not Vested
($)
(4)
 

Jonathan Steinberg

     1/25/19        149,534        915,148        56,075        343,179  

 

     1/25/20        144,085        881,800        27,016        165,338  

 

     1/25/21        123,370        755,024        61,686        377,518  

Bryan Edmiston

     1/25/21        13,035        79,774        —          —    

R. Jarrett Lilien

     1/25/19        29,907        183,031        11,215        68,636  

 

     1/25/20        34,904        213,612        6,545        40,055  

 

     1/25/21        67,877        415,407        33,939        207,707  

Alexis Marinof

     1/25/19        4,797        29,358        —          —    

 

     1/25/20        29,032        177,676        5,444        33,317  

 

     1/25/21        46,966        287,432        7,828        47,907  

Peter M. Ziemba(5)

     1/25/19        32,400        198,288        12,150        74,358  

 

     1/25/20        26,527        162,345        4,974        30,441  

 

     1/25/21        45,251        276,936        7,542        46,157  

Amit Muni

    

 

 

 

 

 

     —          —          —          —    
(1)

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 employment. See “Potential Payments upon Termination or Change in Control” for a description of the accelerated or continued vesting provisions upon termination, retirement or change in control.

(2)

The market value of such holdings is based on the closing price of $6.12 per share of our common stock as reported on December 31, 2021.

(3)

These unvested PRSUs cliff vest three years from the grant date. The number of shares of common stock to be issued will be determined based on the TSR of our common stock relative to the respective TSRs of companies in our peer group, each measured over a three-year period from the grant date. The number of shares of common stock above reflect threshold amounts (i.e., 50% of target), and the number of shares of common stock to be issued upon vesting of the PRSUs will range between 0% to 200% of target. The amounts reported are based on achieving threshold performance as our 2019, 2020 and 2021 relative TSR performance did not exceed the threshold level. See “Potential Payments upon Termination or Change in Control” for a description of the accelerated or continued vesting provisions upon termination, retirement or change in control.

(4)

The amounts reported are based on achieving threshold performance as our 2019, 2020 and 2021 relative TSR performance did not exceed the threshold level.

(5)

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).

 

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OPTION EXERCISES AND STOCK VESTED

The following table sets forth, for each NEO, all share-based incentive plan awards that vested and were exercised during the year ended December 31, 2021.

 

     Option Awards      Stock Awards  

Name

   Number of
Shares
Acquired on
Exercise (#)
     Value
Realized on
Exercise ($)
(1)
     Number of
Shares
Acquired on
Vesting (#)
     Value
Realized on
Vesting  ($)
(2)
 

Jonathan Steinberg

     —          —          259,793        1,395,088  

Bryan Edmiston

     —          —          11,529        61,911  

R. Jarrett Lilien

     —          —          48,314        259,446  

Alexis Marinof

     —          —          20,238        108,678  

Peter M. Ziemba

     —          —          57,127        306,772  

Amit Muni

     75,000        20,843        53,572        287,682  
(1)

The value realized on exercise of stock options was calculated by subtracting the option exercise price from the market price to obtain the value realized per share, and multiplying the value realized per share by the number of shares acquired upon exercise. The market price was determined to be the closing price of our common stock on the date of exercise.

(2)

Amounts in this column were calculated by multiplying the number of shares that vested by the closing price of our common stock on the vesting date. If the vesting date was a weekend or holiday, the prior business day was used to value the shares.

EMPLOYMENT AGREEMENTS

CEO, COO and CAO

We have entered into employment agreements with each of Jonathan Steinberg, R. Jarrett Lilien and Peter M. Ziemba to serve for an indefinite term, and on an “at will” basis. The terms of the employment agreements for each of these NEOs are substantially identical except for the annual base salary payable to each of them, which for Messrs. Steinberg, Lilien and Ziemba is $550,000, $425,000 and $375,000, respectively. Each of these NEOs is eligible to receive such incentive compensation as may be determined by the Board of Directors or Compensation Committee and to participate in our standard benefit plans. The employment agreements contain employee confidentiality, assignment of inventions and non-solicitation of employees provisions, as well as non-competition provisions which are applicable as described below. In addition, if a “change of control” (as defined in the employment agreements) occurs, all equity awards will vest on the effective date of the change of control. Each of these NEOs also is entitled to the following benefits in the event of the termination of his employment:

Termination Without Cause or Resignation for Good Reason. The employment agreements provide that if we terminate the NEO’s employment for any reason, we will pay the NEO 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 NEO’s employment other than due to his death or “disability,” or for “cause” (each as defined in the employment agreements) or (ii) the NEO resigns for “good reason” (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 and (B) complies with a three-month restrictive covenant from the date of termination, we will pay the NEO:

 

 

one year’s base salary, which we refer to as Annual Base Salary;

 

 

a pro rata portion of an amount equal to 50% of the incentive compensation that the NEO would have received in the year of termination based upon our performance, which we refer to as Termination Year Cash Incentive Compensation; and

 

 

50% of the average incentive compensation paid to the NEO in the preceding three years, which we refer to as Average Cash Incentive Compensation.

 

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The Termination Year Cash Incentive Compensation will be paid when we pay incentive compensation for the termination year to non-terminated senior executives. The Annual Base Salary and Average Cash Incentive Compensation will be paid in substantially equal installments over a 12-month period. The NEO also may elect to have us pay for COBRA insurance coverage for a one-year period following the date of termination. The employment agreements also provide that any equity award that would have vested in the 12-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 of our Company 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 the NEO’s Involuntary Termination within 18 months after a change of control, and the NEO’s (i) entry into and non-revocation of a release agreement and (ii) compliance with a 12-month restrictive covenant from the date of termination, we will pay the NEO 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 NEO 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 NEO also may elect to have us pay for COBRA insurance coverage for a 21-month period following the date of termination. In addition, any new equity awards granted within 18 months after a change of control that would have vested in the 21-month period that immediately follows the date of termination will vest immediately.

Termination for Cause or Voluntary Resignation Without Good Reason. If we terminate the NEO’s employment for cause or he voluntarily resigns without good reason, we may elect to enforce a three-month restrictive covenant in consideration for which we will pay the NEO: (i) 25% of the Annual Base Salary; (ii) an amount equal to 12.5% of the Average Cash Incentive Compensation; and (iii) an amount equal to 25% of the value of any equity awards that would have vested in the one-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 NEO also may elect to have us pay for COBRA insurance coverage for a three-month period following the date of termination.

Head of Europe

We have entered into an employment agreement with Alexis Marinof for an indefinite term. His current base salary is £290,000 ($399,069 using the average exchange rate of $1.3761 for 2021) 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.

 

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Table of Contents

Executive Compensation

 

 

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

As described above under “Employment Agreements,”

 

 

all of our NEOs except Bryan Edmiston and 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;

 

 

Bryan Edmiston is an “employee at will” and, except for vesting of PRSUs upon an Involuntary Termination or change of control, is not entitled to payments and benefits in the event of termination of employment for any reason; and

 

 

Alexis Marinof is entitled to payments and benefits in the event of a termination for any reason other than his death or disability or for cause.

This section is intended to discuss post-employment payments to our NEOs, assuming the termination from employment occurred on December 31, 2021. 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, 2021 was zero and is therefore not reflected in the table below.

 

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Executive Compensation

 

 

 

Name

   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

     3,858,259 (1)      523,731 (2)      5,199,453 (3) 

Acceleration of Unvested Equity Awards

     1,607,718 (4)      401,929 (5)      2,551,973 (6) 

Total

     5,465,977       925,660       7,751,426  

Bryan Edmiston

      

Severance Arrangements

     —         —         —    

Acceleration of Unvested Equity Awards

     —         —         —    

Total

     —         —         —    

R. Jarrett Lilien

      

Severance Arrangements

     1,832,445 (1)      274,590 (2)      2,560,466 (3) 

Acceleration of Unvested Equity Awards

     428,302 (4)      107,076 (5)      812,051 (6) 

Total

     2,260,747       381,666       3,372,517  

Alexis Marinof

      

Severance Arrangements

     97,817 (7)      —         97,817 (7) 

Acceleration of Unvested Equity Awards

     —         —         —    

Total

     97,817       —         97,817  

Peter M. Ziemba

      

Severance Arrangements

     1,425,775 (1)      219,165 (2)      2,011,646 (3) 

Acceleration of Unvested Equity Awards(8)

     371,766 (4)      92,941 (5)      637,569 (6) 

Total

     1,797,541       312,106       2,649,215  

Amit Muni(9)

      

Severance Arrangements

     —         —         —    

Acceleration of Unvested Equity Awards

     —         —         —    

Total

     —         —         —    
(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 Average Cash Incentive Compensation; and (iii) the value of COBRA benefits for three months. The amounts are only payable if we elect to enforce a three-month restrictive covenant as described under “Employment Agreements.”

(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 the 12-month period following the date of termination based on the closing price of our common stock of $6.12 on December 31, 2021. In addition, if a change of control occurs within 12 months after the date of termination, all unvested equity awards will vest on the effective date of the change of control. The dollar value of all equity awards that would vest upon a change of control in the 12-month period following the date of termination based on the closing price of our common stock of $6.12 on December 31, 2021 is as follows: Mr. Steinberg: $2,551,973; Mr. Lilien: $812,051; and Mr. Ziemba: $637,569.

(5)

Represents 25% of the dollar value of restricted stock that would have vested in the one-year period following the date of termination based on the closing price of our common stock of $6.12 on December 31, 2021.

(6)

Represents the dollar value of restricted stock that immediately vests upon a change of control based on the closing price of our common stock of $6.12 on December 31, 2021. In addition, any new equity awards granted within 18 months after a change of control that would have vested in the 21-month period immediately following the date of termination will vest immediately.

(7)

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 $1.3492 at December 31, 2021.

(8)

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).

(9)

Mr. Muni resigned from his position as Chief Financial Officer on May 31, 2021 and he did not receive any severance payments or benefits upon his resignation.

 

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Table of Contents

Proposal 5

Approval of the 2022 Equity Plan

We have long had in effect stock-based incentive plans that have allowed us to grant employees, officers, non-employee directors and other key persons various types of equity-based awards. These programs reflect the Board of Directors’ belief that encouraging stock ownership serves to attract, retain and motivate these individuals by providing a direct financial interest in our continued success. The Board of Directors also believes that equity-based compensation closely aligns employees’ interests with those of our stockholders and provides a strong incentive for plan participants to remain in our service.

On March 31, 2022, the Board of Directors, upon the recommendation of the Compensation Committee, adopted the new 2022 Equity Plan (“2022 Plan”), subject to stockholder approval. A copy of the 2022 Plan is attached as Appendix B to this proxy statement and is incorporated herein by reference. The following description of the 2022 Plan is qualified in its entirety by reference to Appendix B. We are asking you to approve the 2022 Plan. Approving the 2022 Plan would further the Board’s objectives by allowing us to continue to grant long-term equity compensation for approximately five years.

If the 2022 Plan is not approved, we do not expect to have sufficient shares available to meet our anticipated long-term equity compensation needs for 2022 under the 2016 Equity Plan (the “Prior Plan”). Prior to approval of the 2022 Plan by stockholders, awards may be made under the 2022 Plan subject to approval of the 2022 Plan by stockholders. Following stockholder approval of the 2022 Plan, no further awards will be made under the Prior Plan, but the Prior Plan will continue to govern outstanding awards made thereunder.

If the 2022 Plan is approved by stockholders, we will have 16,000,000 shares of common stock authorized for issuance thereunder, less one share for every share granted under the Prior Plan after March 31, 2022. The 2022 Plan provides for certain increases and decreases in the number of shares available for grant, as described below under “Shares Subject to the 2022 Plan.” The 16,000,000 shares are inclusive of, and not in addition to, the 2,304,326 shares of common stock remaining available for future grants under the Prior Plan as of March 31, 2022.

OVERVIEW

The 2022 Plan provides us with the flexibility to develop and deliver a long-term equity incentive program that is competitive, attracts and retains key talent, and meets current and evolving compensation practices. Additionally, the 2022 Plan contains key features to protect the interests of our stockholders, which include the following:

 

 

No “Evergreen.” The maximum number of shares of common stock to be issued under the 2022 Plan is 16,000,000, less one share for every share granted under the Prior Plan after March 31, 2022; there is no annual increase in the number of shares available for issuance under the 2022 Plan.

 

 

No Dividends Paid on Unvested Awards for All Equity Award Types. Under the 2022 Plan, no dividends or dividend equivalents are paid on any unvested awards. Dividends on unvested restricted stock awards granted under the 2022 Plan will not be paid when declared, but instead will accrue and not be paid unless and until the restricted stock award vests. Dividend equivalent rights granted as a component of an award of restricted stock units may be paid only if and when the related award becomes vested.

 

 

No Liberal Share Recycling of Stock Options or Stock Appreciation Rights. Under the 2022 Plan, shares withheld or delivered to satisfy the exercise price or tax obligations with respect to stock options and stock appreciation rights are not added back to the number of shares available for grant under the 2022 Plan. In addition, upon the exercise of a stock appreciation right that is settled in shares of common stock, the full number of shares underlying the award will be charged to the reserved pool and shares of common stock repurchased on the open market are not added to the number of shares reserved under the 2022 Plan.

 

 

Director Compensation Limit. The value of all equity awards made under the 2022 Plan and all other cash compensation we pay to any non-employee director in any calendar year may not exceed $750,000.

 

 

Minimum Vesting Periods. Minimum vesting periods are generally required for grants of all awards under the 2022 Plan.

 

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Proposal 5

 

 

 

 

No Discount Stock Options or Stock Appreciation Rights. The exercise price of stock options and stock appreciation rights must equal at least 100% of the fair market value of the underlying common stock on the date of grant, subject to certain limited exceptions.

 

 

No “Liberal” Change in Control Definition. The change in control definition in the 2022 Plan is not “liberal” and, for example, would not occur merely upon stockholder approval of a transaction. A change in control must actually occur in order for the change in control provisions in the 2022 Plan to be triggered.

 

 

No Repricing. Without stockholder approval, the exercise price of stock options and stock appreciation rights will not be reduced and stock options and stock appreciation rights will not be otherwise repriced through cancellation and re-grant or cancellation in exchange for cash or other awards or otherwise.

 

 

No Dividend Equivalent Rights on Stock Options or Stock Appreciation Rights. Under the 2022 Plan, no dividend equivalent rights may be granted with respect to stock options or stock appreciation rights.

 

 

Stockholder Approval Required for All Material Amendments. Any material amendment to the 2022 Plan is subject to approval by our stockholders.

DETERMINATION OF THE NUMBER OF SHARES SUBJECT TO THE 2022 PLAN

As of March 31, 2022, we had 146,560,232 shares of common stock issued and outstanding. The market value of one share of our common stock on March 31, 2022 on the Nasdaq Global Select Market, as determined by reference to the closing sale price, was $5.87.

In setting and recommending to stockholders the number of shares reserved under the 2022 Plan, the Board considered a number of factors. These factors, among others, included:

 

 

Prior Plan equity awards. The following table sets forth the number of time-based restricted shares (“RSAs”), time-based restricted stock units (“RSUs”) granted and the number of performance-based restricted stock units (“PRSUs”) earned in each of the last three fiscal years under the Prior Plan. In addition, the table provides the weighted average number of shares of common stock outstanding in the year indicated. No other equity-based awards were granted during these periods:

 

Fiscal Year

   Number of RSAs
Granted
     Number of RSUs
Granted
     Number of PRSUs
Earned
(1)
     Weighted Average Number of
Shares of Common Stock
Outstanding
 

2021

     1,642,266        31,170        —          143,847,000  

2020

     1,653,186        32,901        —          148,682,000  

2019

     2,794,703        35,283        —          151,823,000  
  (1)

With respect to PRSUs in the table above, we calculate the share usage rate based on the applicable number of shares earned each year. For reference, the PRSUs granted (target amounts) during the foregoing three-year period were as follows: 257,043 shares in 2021, 117,013 shares in 2020, and 270,872 shares in 2019.

 

 

Three-Year Average Burn Rate. Our three-year average burn rate (2019-2021) of approximately 2.08% is lower than the ISS industry category burn rate threshold of 4.22%. Burn rate is defined as the number of shares subject to RSAs and RSUs granted and PRSUs earned in a year divided by the weighted average common shares outstanding for that year. In accordance with the policies of certain institutional investors, our full-value equity awards are subject to a multiplier of 1.5 for purposes of calculating the burn rate;

 

 

Plan Duration. The 2022 Plan is expected to cover awards for more than five years based on historical grant practices and the recent trading price of our common stock; and

 

 

Potential dilution or “overhang.” The Board also considered the potential dilution or “overhang” that would result from adopting the 2022 Plan, including the policies of certain institutional investors and major proxy advisory firms. Total overhang is calculated as all outstanding awards plus remaining shares available for grant, divided by total shares outstanding plus all outstanding awards and remaining shares available for grant.

 

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Proposal 5

 

 

 

The following table sets forth certain information as of March 31, 2022, unless otherwise noted, with respect to our equity compensation plans:

 

   

Stock Options/SARs Outstanding

     —    

Weighted-Average Exercise Price of Outstanding Stock Options/SARs

     —    

Weighted-Average Remaining Term of Outstanding Stock Options/SARS

     —    

Total Stock-Settled Full-Value Awards Outstanding

     4,242,541  

Proposed share reserve under the 2022 Plan(1)

     16,000,000  

Basic common shares outstanding as of March 31, 2022

     146,560,232  
  (1)

The proposed share reserve is subject to reduction for any awards granted under the Prior Plan after March 31, 2022. As of March 31, 2022, there were 2,304,326 shares available for future grant under the Prior Plan. Upon stockholder approval of the 2022 Plan, no further awards will be made under the Prior Plan.

 

   

Total overhang under the Prior Plan as of December 31, 2021 was 5.0%. Our overhang as of December 31, 2021, on a pro forma basis assuming that the 16,000,000 share reserve under the 2022 Plan was authorized as of December 31, 2021, would have been 12.0%.

 

   

The Board also considered total overhang under the Prior Plan as of March 31, 2022, which was 4.3%. The overhang as of March 31, 2022, on a pro forma basis assuming that the 16,000,000 share reserve under the 2022 Plan was authorized as of March 31, 2022, would have been 12.1%.

SHARES SUBJECT TO THE 2022 PLAN

Under the 2022 Plan, there are 16,000,000 shares available for awards, subject to the following decreases and increases. The number of shares available under the 2022 Plan will be:

 

 

reduced by one share for each share subject to an award granted under the Prior Plan after March 31, 2022;

 

 

increased by any stock options or awards that are forfeited, cancelled, cash-settled or otherwise terminated;

 

 

increased by the number of shares underlying awards other than a stock option or stock appreciation right that are tendered to or held back by us to satisfy tax withholding requirements; and

 

 

increased on the same basis as set forth in the preceding two items with respect to awards under the Prior Plan, if such awards were outstanding after March 31, 2022.

In addition,

 

 

substitute awards, which are awards granted in assumption of, or in substitution or exchange for, awards previously granted by a company that we may acquire or with which we may combine, will not reduce or increase the shares available under the 2022 Plan;

 

 

shares tendered or withheld to satisfy the exercise price or tax withholding obligations upon exercise of a stock option or stock appreciation right granted under the 2022 Plan or the Prior Plan will not be added to the number of shares reserved under the 2022 Plan; and

 

 

the 2022 Plan requires the Compensation Committee to make appropriate adjustments to the number of shares of common stock that are subject to the 2022 Plan, to certain limits in the 2022 Plan, and to any outstanding awards to reflect stock dividends, stock splits, extraordinary cash dividends and similar events.

LIMITATIONS ON GRANTS

 

 

No more than 16,000,000 shares may be issued in the form of incentive stock options; and

 

 

Notwithstanding the foregoing limitation, the maximum grant date fair value of all awards granted under the 2022 Plan and all other cash fees we pay to any one non-employee director in any calendar year may not exceed $750,000.

 

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Proposal 5

 

 

 

SUMMARY OF THE 2022 PLAN

Plan Administration

The 2022 Plan is administered by the Compensation Committee. The Compensation Committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of the 2022 Plan. The Compensation Committee may delegate to a committee consisting of one or more of our officers, including our CEO, the authority to grant awards to employees who are not subject to the reporting and other provisions of Section 16 of the Exchange Act and not members of the delegated committee, subject to certain limitations and guidelines.

Eligibility

Persons eligible to participate in the 2022 Plan are those officers and other employees, non-employee directors and consultants of the Company and its affiliates as selected from time to time by the Compensation Committee in its discretion. As of March 31, 2022, 277 individuals were eligible to participate in the 2022 Plan, which includes eight executive officers, 245 employees who are not executive officers, six non-employee directors and 18 consultants.

Types of Awards

Stock Options. The 2022 Plan permits the granting of (i) options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”) and (ii) options that do not so qualify. Options granted under the 2022 Plan will be non-qualified options if they fail to qualify as incentive stock options or exceed the annual limit on incentive stock options. Incentive stock options may only be granted to employees of the Company and its subsidiaries. Non-qualified options may be granted to any persons eligible to receive incentive options and to non-employee directors and consultants. To qualify as incentive options, options must meet additional federal tax requirements, including a $100,000 limit on the value of shares subject to incentive options that first become exercisable by a participant in any one calendar year.

The term of each stock option will be fixed by the Compensation Committee and may not exceed ten years from the date of grant. The 2022 Plan provides that any option intended to be an incentive stock option that is granted to an optionee who owns more than 10% of our common stock must have a term of no more than five years from the date of grant.

The exercise price of each stock option will be determined by the Compensation Committee, but may not be less than 100% of the fair market value of the common stock on the date of grant (110% in the case of an incentive stock option granted an optionee who owns more than 10% of our common stock), except in the limited circumstances of (i) stock options granted pursuant to a transaction described in and in a manner consistent with Section 424(a) of the Code, (ii) stock options granted to individuals not subject to U.S. income tax on the date of grant or (iii) if the stock option is otherwise compliant with Section 409A. The 2022 Plan defines “fair market value” by reference to market quotations of our common stock on the Nasdaq Global Select Market, The New York Stock Exchange or other national securities exchange where our common stock is listed or traded on the date of grant.

Upon exercise of stock options, the option exercise price must be paid in full either in cash, by certified or bank check or other instrument acceptable to the Compensation Committee or by delivery (or attestation to the ownership) of shares of common stock that are not then subject to any restrictions under any Company plan. Subject to applicable law, the exercise price may also be delivered to us by a broker pursuant to irrevocable instructions to the broker from the optionee. In addition, non-qualified options may be exercised using a net exercise feature, which reduces the number of shares issued to the optionee by the number of shares with a fair market value equal to the exercise price.

The Compensation Committee will determine at what time or times each option may be exercised. Options may be made exercisable in installments. In general, unless otherwise permitted by the Compensation Committee, no option granted under the 2022 Plan is transferable by the optionee other than by will or by the laws of descent and distribution, and options may be exercised during the optionee’s lifetime only by the optionee, or by the optionee’s legal representative or guardian in the case of the optionee’s incapacity.

 

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Proposal 5

 

 

 

Stock Appreciation Rights. The Compensation Committee may award stock appreciation rights subject to such conditions and restrictions as the Compensation Committee may determine. Stock appreciation rights entitle the recipient to shares of common stock equal to the value of the appreciation in the stock price over the exercise price. The exercise price may not be less than the fair market value of the common stock on the date of grant, except in the limited circumstances of (i) stock appreciation rights granted pursuant to a transaction described in and in a manner consistent with Section 424(a) of the Code, (ii) stock appreciation rights granted to individuals not subject to U.S. income tax on the date of grant or (iii) if the stock appreciation right is otherwise compliant with Section 409A. The maximum term of a stock appreciation right is ten years.

Restricted Stock. The Compensation Committee may award shares of common stock to participants subject to such conditions and restrictions as the Compensation Committee may determine. These conditions and restrictions may include the achievement of pre-established performance goals and/or continued employment or other service relationship through a specified restricted period. During the vesting period, restricted stock awards may be credited with dividends but dividends payable with respect to a restricted stock award, including regular cash dividends, shall not be paid unless and until the awards vests.

Restricted Stock Units. The Compensation Committee may award restricted stock units to any participants. Restricted stock units are ultimately payable in the form of shares of common stock (or cash to the extent explicitly provided for in the relevant award certificate) and may be subject to such conditions and restrictions as the Compensation Committee may determine. These conditions and restrictions may include the achievement of pre-established performance goals and/or continued employment or service relationship with us through a specified vesting period. In the Compensation Committee’s sole discretion, it may permit a participant to make an advance election to receive a portion of his or her future cash compensation otherwise due in the form of a restricted stock unit award, subject to the participant’s compliance with the procedures established by the Compensation Committee and requirements of Section 409A of the Code.

Unrestricted Stock Awards. The Compensation Committee may also grant (or sell at par value or such higher price as determined by the Compensation Committee) shares of common stock that are free from any restrictions under the 2022 Plan. Unrestricted stock may be granted to any participant in recognition of past services or other valid consideration and may be issued in lieu of cash compensation due to such participant.

Dividend Equivalent Rights. The Compensation Committee may grant dividend equivalent rights, which entitle the recipient to receive credits for dividends that would be paid if the recipient had held specified shares of common stock. Dividend equivalent rights may be granted as a component of an award of restricted stock units or as a freestanding award and will be paid only if the related award becomes vested. Dividend equivalent rights may be settled in cash, shares of common stock or a combination of cash and common stock, in a single installment or installments, as specified in the award. Dividend equivalent rights may not be granted with respect to any stock options or stock appreciation rights.

Cash-Based Awards. The Compensation Committee may grant cash bonuses under the 2022 Plan to participants. The cash bonuses may be subject to the achievement of pre-established performance goals.

Minimum Vesting Condition

The minimum vesting period for each equity award granted under the 2022 Plan must be at least one year, provided (i) that up to 5% of the shares authorized for issuance under the 2022 Plan may be utilized for unrestricted stock awards or other equity awards with a minimum vesting period of less than one year and (ii) annual awards to non-employee directors that occur in connection with our annual meeting of stockholders may vest on the date of our next annual meeting of stockholders that is at least 50 weeks after the immediately preceding year’s annual meeting. In addition, the Compensation Committee may grant equity awards that vest within one year (a) if such awards are granted as substitute awards in replacement of other awards (or awards previously granted by an entity being acquired (or assets of which are being acquired)) that were scheduled to vest within one year or (b) if such awards are being granted in lieu of fully vested cash compensation.

Prohibition on Repricing

Other than as permitted under the 2022 Plan to appropriately reflect changes in our capital structure or in connection with a change in control, without stockholder approval, the Compensation Committee is prohibited from reducing the

 

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Proposal 5

 

 

 

exercise price of outstanding stock options or stock appreciation rights, effecting repricing through cancelling and re-granting or cancelling stock options or stock appreciation rights in exchange for cash or other awards, or taking any action with respect to a stock option or stock appreciation right that would be treated as a repricing under Nasdaq rules.

Change in Control Provisions

The 2022 Plan provides that upon the effectiveness of a “sale event,” as defined in the 2022 Plan, all awards under the 2022 Plan will automatically terminate, unless the parties to the sale event agree that such awards will be assumed, continued or substituted by the successor entity. In the event of such termination, we will have the option (in our sole discretion) to make or provide for the payment, in cash or in kind, to the participants holding stock options and stock appreciation rights, of an amount equal to the difference between the sale price multiplied by the number of shares of common stock subject to outstanding stock options and stock appreciation rights and the aggregate exercise price of all such outstanding stock options and stock appreciation rights, or each participant will be permitted, within a specified period of time prior to the consummation of the sale event, to exercise all outstanding stock options and stock appreciation rights (to the extent then exercisable) held by such participant. We will also have the option (in our sole discretion) to make or provide for a payment, in cash or in kind, to the participants holding other awards in an amount equal to the sale price multiplied by the number of vested shares of common stock under such awards. Notwithstanding the foregoing, and except as otherwise provided by the Compensation Committee in the award agreement, the Compensation Committee, in its discretion, may determine to accelerate the vesting of all outstanding awards with time-based vesting, conditions and restrictions or with conditions and restrictions relating to the attainment of performance goals, immediately prior to, or during a specified period of time following, the effective time of a sale event or a “change in control event,” as defined in the 2022 Plan, or to the extent specified in the relevant award certificate.

Equitable Adjustments

The 2022 Plan requires the Compensation Committee to make appropriate adjustments to the number of shares of common stock that are subject to the 2022 Plan, to certain limits in the 2022 Plan, and to any outstanding awards under the 2022 Plan to reflect any reorganization, recapitalization, reclassification, stock dividend, extraordinary cash dividend, stock split, reverse stock split or other similar event.

Clawback Policy

Awards under the 2022 Plan will be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with (i) any clawback, forfeiture or similar policy that we may have in effect from time to time and (ii) applicable law. Further, to the extent that the participant receives any amount in excess of the amount that the participant should otherwise have received under the terms of an award for any reason (including, without limitation, by reason of a financial restatement, mistake in calculations or other administrative error), the participant will be required to repay any such excess amount to us.

Tax Withholding

Participants in the 2022 Plan are responsible for the payment of any federal, state or local taxes that we are required by law to withhold upon the exercise of stock options or stock appreciation rights or vesting of other awards. The Compensation Committee may require our tax withholding obligations to be satisfied, in whole or in part, by withholding shares of common stock to be issued pursuant to any award. The Compensation Committee may also require our tax withholding obligation to be satisfied, in whole or in part, by an arrangement whereby a certain number of shares of common stock issued pursuant to any award are immediately sold and proceeds from such sale are remitted to us in an amount that would satisfy the withholding amount due.

Amendments and Termination

The Board may at any time amend or discontinue the 2022 Plan and the Compensation Committee may at any time amend or cancel any outstanding award for the purpose of satisfying changes in the law or for any other lawful purpose.

 

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However, no such action may materially and adversely affect any rights under any outstanding award without the holder’s consent. To the extent required under Nasdaq rules, any amendments that materially change the terms of the 2022 Plan will be subject to stockholder approval. Amendments also will be subject to approval by our stockholders if and to the extent determined by the Compensation Committee to be required by the Code to preserve the qualified status of incentive stock options.

Effective Date

The Board approved the 2022 Plan on March 31, 2022, and the 2022 Plan will become effective on the date it is approved by stockholders. Awards of incentive stock options may be granted under the 2022 Plan until March 31, 2032. No other awards may be granted under the 2022 Plan after the date that is 10 years from the date of stockholder approval. If the 2022 Plan is not approved by stockholders, the Prior Plan will continue in effect until it expires, and awards may be granted under the Prior Plan, in accordance with its terms.

NEW PLAN BENEFITS

Because the grant of awards under the 2022 Plan is within the discretion of the Compensation Committee, we cannot determine the dollar value or number of shares of common stock that will in the future be received by or allocated to any participant in the 2022 Plan. Accordingly, in lieu of providing information regarding benefits that will be received under the 2022 Plan, the following table provides information concerning the RSAs, RSUs and PRSUs (target amount) that were granted to the following persons and groups during 2021: each NEO; all current executive officers, as a group; all current directors who are not executive officers, as a group; and all employees who are not executive officers, as a group. No equity-based awards other than RSAs, RSUs and PRSUs were granted during 2021.

 

 

 

   RSAs      RSUs      PRSUs  

Name and Position

   Dollar
Value ($)
(1)
     Number
(#)
     Dollar
Value ($)
(1)
     Number
(#)
     Dollar
Value ($)
(1)
     Number
(#)
 

Jonathan Steinberg, CEO

     662,497        123,370        —          —          800,678        123,371  

Bryan Edmiston, CFO

     69,998        13,035        —          —          —          —    

R. Jarrett Lilien, COO

     364,499        67,877        —          —          440,522        67,877  

Alexis Marinof, HoE

     252,207        46,966        —          —          101,607        15,656  

Peter M. Ziemba, CAO

     242,998        45,251        —          —          97,895        15,084  

Amit Muni, Former CFO(2)

     270,750        50,419        —          —          109,071        16,806  

All current executive officers, as a group

(8 individuals)

     1,999,192        372,289        —          —          1,559,138        240,237  

All current directors who are not executive officers, as a group (6 individuals)(3)

     539,180        85,421        —          —          —          —    

All current employees who are not executive officers, as a group(4)

     5,427,386        1,002,214        166,772        30,718        —          —    
(1)

Calculated based on the grant date fair value for the respective awards. The grant date fair value for RSAs and RSUs is based on the closing price of our common stock on the date of grant. The grant date fair value for PRSUs (target amount) is calculated using a Monte-Carlo simulation for the award on the grant date and such grant date fair values are set forth in the Grants of Plan-Based Awards table on page 53 of this proxy statement. The assumptions we used in the valuation of the equity awards are set forth in Note 19 of the notes to our annual consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021.

(2)

Mr. Muni resigned from his position as Chief Financial Officer on May 31, 2021. Accordingly, all of his RSAs and PRSUs that had not vested as of his termination date were forfeited.

(3)

Represents annual award of shares of common stock with a value of $100,000 granted at the meeting of the Board of Directors immediately following the 2021 annual meeting of stockholders to all non-employee directors serving on that date.

(4)

Represents 156 current employees who received RSAs and two current employees who received RSUs during 2021. As of March 31, 2022, there were 245 employees who are not executive officers who are eligible to receive awards under the 2022 Plan.

 

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Proposal 5

 

 

 

FEDERAL TAX CONSEQUENCES UNDER THE 2022 PLAN

The following is a summary of the principal federal income tax consequences of certain transactions under the 2022 Plan. It does not describe all federal tax consequences under the 2022 Plan, nor does it describe state or local tax consequences.

Incentive Options. No taxable income is generally realized by the optionee upon the grant or exercise of an incentive option. However, the exercise of an incentive option will give rise to an item of tax preference that may result in alternative minimum tax liability for the optionee. If shares of common stock issued to an optionee pursuant to the exercise of an incentive option are sold or transferred after two years from the date of grant and after one year from the date of exercise, then (i) upon the sale of such shares, any amount realized in excess of the exercise price (the amount paid for the shares) will be taxed to the optionee as a long-term capital gain, and any loss sustained will be a long-term capital loss, and (ii) we will not be entitled to any deduction for federal income tax purposes.

If shares of common stock acquired upon the exercise of an incentive option are disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), generally (i) the optionee will realize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of the shares of common stock at exercise (or, if less, the amount realized on a sale of such shares of common stock) over the exercise price thereof, and (ii) we will be entitled to deduct such amount. Special rules apply where all or a portion of the exercise price of the incentive option is paid by tendering shares of common stock.

If an incentive option is exercised at a time when it no longer qualifies for the tax treatment described above, the option is treated as a non-qualified option. Generally, an incentive option will not be eligible for the tax treatment described above if it is exercised more than three months following termination of employment (or one year in the case of termination of employment by reason of disability). In the case of termination of employment by reason of death, the post-termination exercise period limits described above do not apply.

Non-Qualified Options. No income is realized by the optionee at the time the option is granted. Generally (i) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the exercise price and the fair market value of the shares of common stock on the date of exercise, and we receive a tax deduction for the same amount, and (ii) at disposition, the appreciation or depreciation between the date of exercise and the date of disposition is treated as either short-term or long-term capital gain or loss depending on how long the shares of common stock have been held. Special rules apply where all or a portion of the exercise price of the non-qualified option is paid by tendering shares of common stock. Upon exercise, the optionee will also be subject to Social Security taxes on the excess of the fair market value over the exercise price of the option.

Other Awards. We generally will be entitled to a tax deduction in connection with other awards under the 2022 Plan in an amount equal to the ordinary income realized by the participant at the time the participant recognizes such income. Participants typically are subject to income tax and recognize such tax at the time that an award is exercised, vests, is settled or becomes non-forfeitable, unless the award provides for a further deferral.

Internal Revenue Code Section 162(m). Section 162(m) of the Code generally limits to $1 million the amount that a publicly held corporation is allowed each year to deduct for the compensation paid to each of the corporation’s chief executive officer, the corporation’s chief financial officer and certain other current and former executive officers of the corporation.

Parachute Payments. The vesting of any portion of an option or other award that is accelerated due to the occurrence of a change in control (such as a sale event) may cause a portion of the payments with respect to such accelerated awards to be treated as “parachute payments” as defined in the Code. Any such parachute payments may be non-deductible to us, in whole or in part, and may subject the recipient to a non-deductible 20 percent federal excise tax on all or a portion of such payment (in addition to other taxes ordinarily payable).

 

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Proposal 5

 

 

 

REQUIRED VOTE

The affirmative vote of a majority of votes cast on this proposal is required for the approval of the 2022 Plan. Abstentions and broker non-votes will have no effect on this proposal.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE 2022 EQUITY PLAN

(PROPOSAL NO. 5 ON YOUR PROXY CARD)

 

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Proposal 5

 

 

 

EQUITY COMPENSATION PLAN INFORMATION

The table below sets forth information with respect to shares of common stock that may be issued under our equity compensation plans as of December 31, 2021. 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(1)

(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

  605,676 (3)    N/A   3,984,854

Equity compensation plans not approved by securityholders

     

Total

  605,676   N/A   3,984,854
(1)

There were no outstanding options or warrants as of December 31, 2021.

(2)

Represents shares available for issuance under our Prior Plan as of December 31, 2021.

(3)

Includes 54,990 shares issuable upon the vesting of RSUs and 550,686 shares issuable upon the vesting of PRSUs under our Prior Plan, with the actual number of shares to be issued upon vesting of the PRSUs to range between 0% to 200% of this number. There are no options outstanding under the Prior Plan.

As of March 31, 2022, we had the following equity awards outstanding under the Prior Plan: 3,526,697 RSAs, 47,656 RSUs and 668,188 PRSUs. There were no stock options outstanding under the Prior Plan.

The number of shares of our common stock that may be issued with respect to awards granted under the 2022 Plan on or after March 31, 2022 is 16,000,000, subject to decrease and increase as described above under “Shares Subject to the 2022 Plan.” The 16,000,000 shares are inclusive of, and not incremental to, the 2,304,326 shares of common stock remaining available for future grants under the Prior Plan as of March 31, 2022. Upon the adoption of the 2022 Plan by stockholders, awards may no longer be granted under the Prior Plan.

 

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Proposal 6

Approval of an Amendment to Our Amended and Restated Certificate of Incorporation to Declassify Our Board

Our Board of Directors has approved an amendment to our Charter to phase out the classification of the Board of Directors over a two-year period commencing at the Annual Meeting. We refer to this proposal as the “Declassification Amendment Proposal.” Our Board currently consists of nine directors divided into three classes (Class I, Class II and Class III), and directors in each class are elected to serve three-year staggered terms that expire in successive years.

Supporters of board classification believe that staggered boards promote continuity, stability and a long-term orientation among directors, as well as protect a company from an unsolicited, hostile takeover proposal in which the entire board could otherwise be replaced all at once in a single election. Although these are important benefits, there is a strong sentiment that classified boards reduce stockholders’ ability to hold directors accountable because a classified structure does not enable stockholders to evaluate all directors’ performances annually. Moreover, classified boards arguably limit the most effective method by which stockholders can influence corporate governance policies and hold management accountable. Proponents of declassified boards also contend that a classified structure can work as an impediment to value enhancing bids and are associated with a reduction in a company’s valuation, while declassified boards promote board diversity and refreshment and provide companies with the flexibility and agility to modify board composition in response to evolving skill set and expertise needs.

In light of the foregoing considerations, having a declassified board composed of annually elected directors is viewed as a corporate governance best practice. Accordingly, the general governance trend has been towards declassification, with 87.5% of S&P 500 companies and 64.4% of S&P 600 companies having annually elected boards. Institutional stockholders and proxy advisory firms also strongly support declassification. For example, both Institutional Shareholder Services Inc. (ISS) and Glass, Lewis & Co. generally recommend voting in favor of proposals to repeal classified boards and to elect all directors annually.

Our Nominating and Governance Committee and Board of Directors regularly consider a broad range of corporate governance matters and are committed to adopting governance practices that are beneficial to the Company and our stockholders. In reaching its determination and in connection with the approval of the Cooperation Agreement with the Investor Group, our Board carefully weighed the merits of retaining the classified board structure versus declassifying our Board and considered the growing support for and trend towards the annual election of directors. Our Board ultimately concluded that the benefits to our stockholders of annual elections for each director outweigh the benefits of keeping our Board classified. Consequently, our Board concluded that the Declassification Amendment Proposal is in the best interests of the Company and our stockholders, and has unanimously recommended that our stockholders vote in favor of the Declassification Amendment Proposal.

If the Declassification Amendment Proposal is approved at the Annual Meeting, our classified board structure would be phased out, and the annual election of the entire Board would be phased in over a two-year period commencing at the Annual Meeting and concluding at the 2024 annual meeting of stockholders. Thus, if the Declassification Amendment Proposal is approved, from and after the 2024 annual meeting of stockholders, all members of our Board would be elected at the same time to serve an annual (one-year) term.

If our stockholders approve the Declassification Amendment Proposal (i) our Class II directors will be elected at the Annual Meeting for a term of office expiring at the 2023 annual meeting of stockholders, (ii) the Class II and Class III directors will be elected at the 2023 annual meeting of stockholders for terms of office expiring at the 2024 annual meeting of stockholders, and (iii) the Class I, Class II and Class III directors will be elected at the 2024 annual meeting of stockholders and each annual meeting thereafter, for terms of office expiring at the next annual meeting.

 

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If our stockholders approve the Declassification Amendment Proposal, the proposed amendment would not affect the term of any director currently serving in a class who was elected prior to the Annual Meeting, each of whom will complete his or her three-year term expiring at the 2023 annual meeting of stockholders or the 2024 annual meeting of stockholders, as applicable. If the proposed amendment is approved, director-nominees elected at the 2023 annual meeting of stockholders would be elected for a one-year term to expire at the 2024 annual meeting of stockholders. Director-nominees elected at the 2024 annual meeting of stockholders and all subsequent annual meetings would also be elected to serve for an annual term expiring at the immediately following annual meeting.

Under Delaware law, members of a classified board of directors may be removed only for cause unless otherwise provided in the corporation’s certificate of incorporation. Currently, our Charter provides that our directors can be removed only for cause, and only by the affirmative vote of the holders of capital stock representing at least seventy-five percent (75%) of shares of capital stock outstanding and entitled to vote. If the Declassification Amendment Proposal is approved by our stockholders, our Charter would also be amended to provide that from and after the 2024 annual meeting of stockholders, directors may be removed, with or without cause and only by the affirmative vote of the holders of capital stock representing at least seventy-five percent (75%) of shares of capital stock outstanding and entitled to vote.

The amendment to our Charter to implement the Declassification Amendment Proposal is set forth in the certificate of amendment to our Charter, which is attached as Appendix A to this proxy statement. If the Declassification Amendment Proposal is approved by our stockholders, we will promptly file the certificate of amendment to our Charter attached hereto as Appendix A during the Annual Meeting. If the Declassification Amendment Proposal is not approved by our stockholders, our Board will remain classified. This description of the proposed amendment to Article V of our Charter is only a summary and is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the proposed amendment set forth in the certificate of amendment to our Charter attached hereto as Appendix A.

REQUIRED VOTE

The affirmative vote of holders of at least seventy-five percent (75%) of shares of common stock issued and outstanding as of the record date is required to approve the Declassification Amendment Proposal. Abstentions and broker non-votes will have the effect of votes “against” this proposal.

 

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” AN AMENDMENT TO OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO DECLASSIFY OUR BOARD

(PROPOSAL NO. 6 ON YOUR PROXY CARD)

 

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

STOCK OWNERSHIP TABLE

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 in Section 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 named 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 Rule 13d-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 voting 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., 250 West 34th Street, 3rd Floor, New York, NY 10119. We have based our calculation of the percentage of beneficial ownership on 146,519,365 shares of our common stock outstanding as of the record date, including shares of restricted stock issued to our employees and directors but not yet vested.

 

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

 

 

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 upon 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

 

 

 

 

 

 

Bryan Edmiston(1)

  71,117   *

Marci Frankenthaler(2)

  111,932   0.1

R. Jarrett Lilien(3)

  595,230   0.4

Alexis Marinof(4)

  135,452   0.1

William Peck(5)

  91,565   0.1

Jonathan Steinberg(6)

  8,292,256   5.7

David Yates(7)

  68,919   *

Peter M. Ziemba(8)

  1,025,612   0.7

Former Executive Officer

 

 

 

 

 

 

Amit Muni(9)

  596,812   0.4

Directors

 

 

 

 

 

 

Lynn S. Blake(10)

  1,073     *  

Anthony Bossone (11)

  590,942   0.4

Smita Conjeevaram (12)

  22,921   *

Susan Cosgrove (13)

  60,781   *

Deborah A. Fuhr(14)

  1,073     *  

Win Neuger (15)

  103,758   0.1

Frank Salerno (16)

  264,228   0.2