☐ | 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 |
☒ | 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. |
WISDOMTREE, INC.
Notice of 2023 Annual Meeting of Stockholders
We cordially invite you to attend the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of WisdomTree, 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 attending the Annual Meeting.
DATE AND TIME:
June 16, 2023 at 10:00 a.m., Eastern Time |
MEETING ADDRESS:
250 West 34th Street, 2nd Floor New York, NY 10119 |
RECORD DATE:
April 27, 2023 |
MAILING DATE:
On or about May 1, 2023 |
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 and three Class III members of our Board of Directors |
FOR | 24 | |||
2 |
Ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023 |
FOR
|
39
| |||
3 |
Vote on an advisory resolution to approve the compensation of our named executive officers |
FOR
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42
| |||
4 |
Ratify the adoption by our Board of Directors of the Stockholder Rights Agreement, dated March 17, 2023, by and between the Company and Continental Stock Transfer & Trust Company |
FOR | 43 |
In addition, stockholders are asked to transact any other business that may properly come before the meeting or any postponements or adjournments thereof.
WISDOMTREE, INC. | 2023 PROXY STATEMENT
HOW TO VOTE
Please follow the easy instructions on your proxy card or voting instruction form to vote in any of the following ways:
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VOTE BY INTERNET You may vote electronically by locating the control number on your WHITE proxy card or voting instruction form and accessing the website indicated therein. | ||
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VOTE BY MAIL If you received printed proxy materials, you may submit your vote by completing, signing, and dating each proxy card or voting instruction form received and returning it in the prepaid envelope. | |||
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VOTE AT THE MEETING Stockholders of record, or beneficial owners with a legal proxy from their bank, broker or other nominee, can also vote at the Annual Meeting. Please find instructions below regarding attendance. |
A list of the stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose germane to the Annual Meeting on a reasonably accessible electronic network for a period of ten (10) days prior to the Annual Meeting date. Please email Marci Frankenthaler, Secretary, at mfrankenthaler@wisdomtree.com if you wish to examine the stockholder list prior to the Annual Meeting.
As you may be aware, we have received notice from ETFS Capital Limited, a Jersey company (“ETFS Capital”), which owns approximately 10.2% of our common stock, expressing the intention of ETFS Capital to nominate three director candidates for election to our Board of Directors at the Annual Meeting at which three Class II and three Class III directors are to be elected (the “ETFS Capital Nominees”). We do not endorse the election of any of the ETFS Capital Nominees as directors. You may receive proxy solicitation materials from ETFS Capital or other persons or entities affiliated with ETFS Capital, including an opposition proxy statement and proxy card. Please be advised that we are not responsible for the accuracy of any information provided by or relating to ETFS Capital contained in any proxy solicitation materials filed or disseminated by ETFS Capital or any other statements that they may otherwise make.
Our Board of Directors does not endorse any of the ETFS Capital Nominees and unanimously recommends that you vote “FOR” the six WisdomTree nominees proposed by our Board of Directors using the WHITE proxy card and vote “WITHHOLD” on the ETFS Capital Nominees.
Our Board of Directors strongly urges you NOT to sign or return any proxy card or voting instruction form that ETFS Capital may send to you. If you do sign a proxy card or voting instruction form sent to you by ETFS Capital, however, you have the right to change your vote by using the enclosed WHITE proxy card or voting instruction form. Only the latest dated, signed proxy card or voting instruction form you vote will be counted.
PLEASE NOTE THAT THIS YEAR, YOUR PROXY CARD LOOKS DIFFERENT. IT HAS MORE NAMES ON IT THAN THERE ARE SEATS UP FOR ELECTION, UNDER NEW REQUIREMENTS CALLED A “UNIVERSAL PROXY CARD.” THIS MEANS THE COMPANY’S PROXY CARD IS REQUIRED TO LIST THE ETFS CAPITAL NOMINEES IN ADDITION TO YOUR BOARD’S NOMINEES. WE RECOMMEND THAT YOU MARK YOUR CARD CAREFULLY AND ONLY VOTE “FOR” THE WISDOMTREE NOMINEES AND PROPOSALS RECOMMENDED BY YOUR BOARD AND “WITHHOLD” ON THE ETFS CAPITAL NOMINEES.
Your vote is extremely important no matter how many shares you own. Whether or not you expect to attend the Annual Meeting, please vote and submit your proxy card or voting instruction form over the Internet or by mail.
By order of the Board of Directors,
Marci Frankenthaler, Secretary
WISDOMTREE, INC. | 2023 PROXY STATEMENT
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on June 16, 2023.
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, 2022 are available on our investor relations website at: https://ir.wisdomtree.com/company-information/annual-reports-proxy.
This proxy statement contains information about the 2023 annual meeting of stockholders of WisdomTree, Inc. Proxy materials will be first sent to stockholders on or about May 1, 2023. |
IMPORTANT
Your vote at this year’s Annual Meeting is especially important, no matter how many or how few shares you own. Please sign and date the enclosed WHITE proxy card and return it in the enclosed postage-paid envelope promptly, or follow the instructions set forth on the enclosed WHITE proxy card to vote over the Internet.
All stockholders are invited to attend the Annual Meeting. Whether or not you expect to attend the Annual Meeting, we respectfully urge you to vote over the Internet or sign, date and return the enclosed WHITE proxy card as promptly as possible. Stockholders who execute a proxy card may nevertheless attend the Annual Meeting, revoke their proxy and vote their shares during the Annual Meeting. “Street name” stockholders who wish to vote their shares during the Annual Meeting will need to obtain a legal proxy from the bank, broker or other nominee in whose name their shares are registered. The instructions for voting over the Internet are provided on your proxy card.
ETFS Capital has nominated three individuals for election as directors at the Annual Meeting in opposition to the nominees recommended by our Board of Directors. THE BOARD OF DIRECTORS STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD OR VOTING INSTRUCTION FORM THAT YOU MAY RECEIVE FROM ETFS CAPITAL OR ANY PERSON OTHER THAN THE COMPANY EVEN AS A PROTEST VOTE AGAINST ETFS CAPITAL OR ANY OF ETFS CAPITAL’S NOMINEES. IF YOU HAVE PREVIOUSLY SIGNED A PROXY CARD SENT TO YOU BY ETFS CAPITAL, YOU MAY REVOKE IT AND VOTE FOR YOUR BOARD OF DIRECTORS’ NOMINEES AND IN ACCORDANCE WITH THE BOARD OF DIRECTORS’ RECOMMENDATIONS ON THE OTHER MATTERS TO BE VOTED ON AT THE ANNUAL MEETING BY SUBMITTING A LATER-DATED PROXY ELECTRONICALLY BY FOLLOWING THE INSTRUCTIONS ON THE ENCLOSED WHITE PROXY CARD, OR BY SIGNING, MARKING, DATING AND MAILING THE ENCLOSED WHITE PROXY CARD IN THE POSTAGE-PAID ENVELOPE PROVIDED. Any proxy card you sign and return from ETFS Capital for any reason could invalidate previous WHITE proxy cards sent by you to support our Board of Directors.
Only your latest dated, signed proxy card or voting instruction form will be counted. Any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this proxy statement.
IMPORTANT! PLEASE VOTE THE WHITE PROXY CARD TODAY “FOR” THE WISDOMTREE NOMINEES AND “WITHHOLD” ON THE ETFS CAPITAL NOMINEES!
WE URGE YOU NOT TO SIGN ANY PROXY CARD OR VOTING INSTRUCTION FORM SENT TO YOU BY ETFS CAPITAL.
Remember, you can vote your shares over the Internet.
Please follow the easy instructions on the enclosed WHITE proxy card.
If you have any questions or need assistance in voting your shares, please contact our proxy solicitor:
Innisfree M&A Incorporated 501 Madison Avenue, 20th Floor New York, NY 10022 Stockholders and All Others Call Toll Free: (877) 750-5836 Banks and Brokers Call: (212) 750-5833 |
WISDOMTREE, INC. | 2023 PROXY STATEMENT
Table of Contents
WISDOMTREE, INC. | 2023 PROXY STATEMENT
Table of Contents
Unless otherwise indicated, references to “the Company,” “we,” “us,” “our” and “WisdomTree” mean WisdomTree, Inc. and its subsidiaries.
WISDOMTREE, INC. | 2023 PROXY STATEMENT
WISDOMTREE, INC. | 250 WEST 34th STREET, 3rd FLOOR | NEW YORK, NY 10119
Proxy Statement for the 2023 Annual Meeting of Stockholders
TO BE HELD ON JUNE 16, 2023
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 2022 performance, please review our Annual Report on Form 10-K for the year ended December 31, 2022, a copy of which is available on our investor relations website at https://ir.wisdomtree.com/sec-filings/annual-reports.
This proxy statement and our annual report is first being mailed on or about May 1, 2023 to stockholders entitled to vote at the Annual Meeting.
ABOUT OUR COMPANY
WisdomTree, Inc. is a global financial innovator, offering a well-diversified suite of exchange-traded products (“ETPs”), models and solutions. We empower investors to shape their future and support financial professionals to better serve their clients and grow their businesses. We leverage the latest financial infrastructure to create products that provide access, transparency and an enhanced user experience. Building on our heritage of innovation, we are also developing next-generation digital products and structures, including digital or blockchain-enabled mutual funds and tokenized assets, as well as our blockchain-native digital wallet, WisdomTree Prime™.
CORPORATE PERFORMANCE HIGHLIGHTS
Strong Performance
• | 2022 was marked by many achievements in advancing our long-term strategic objectives, including successfully broadening our ETP business and advancing our early mover strategic expansion into digital assets and blockchain-enabled finance. The year was also one of heightened volatility, with major market indices operating near bear market territory, resulting in negative market movement, reducing our assets under management (“AUM”) by almost $8 billion and our revenues by approximately $20 million. However, we overcame this challenging market backdrop, having generated over $12 billion of net inflows in 2022 and achieving a 16% annualized pace of organic flow growth – the best of all publicly traded U.S. asset managers and our strongest flowing year since 2015. This performance largely offset the impact of negative market movement on our revenues, which were essentially unchanged as compared to the prior year. |
• | Our AUM as of December 31, 2022 was $82.0 billion, an all-time high. The last quarter of 2022 marked the ninth consecutive quarter of organic growth. |
• | Our models strategy is succeeding as we continue to expand both the number of model partners and the number of models on their platforms. Continued success in winning advisor mindshare should lead to model flows that are recurring in nature and stackable on top of our current inflow profile. |
• | We have advanced our strategic expansion into digital assets and blockchain-enabled finance. In 2022, we tokenized real-world assets like physical gold (i.e., gold tokens) and U.S. dollars. We also achieved key milestones with the Securities and Exchange Commission (the “SEC”) declaring effective the registration of 10 blockchain-enabled funds, allowing us to lay claim to the deepest exposures in the digital wrapper. WisdomTree Prime™, our blockchain-native wallet developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets, is on track for a nationwide rollout targeted in 2023. The Financial Industry Regulatory Authority approved our limited purpose broker-dealer, WisdomTree Securities, Inc., to operate as a mutual fund retailer, which |
WISDOMTREE, INC. | 2023 PROXY STATEMENT 1
Proxy Summary
will allow it to facilitate transactions in digital or blockchain-enabled mutual funds offered in the WisdomTree Prime mobile application. As an early mover in digital assets and blockchain-enabled financial services, we are ahead of the curve and establishing ourselves as a leader in this space. |
• | Our recent achievements and our ability to overcome adverse market conditions was reflected in our stock price performance in relation to our peers. Our total shareholder return, or TSR (as described in the Compensation Discussion and Analysis section of this proxy statement in the subsection titled “2022 Incentive Compensation Program and Results”), ranking was 2nd among a peer group of 13 publicly traded asset managers. |
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 three years, we also have repurchased 13.9 million shares of our common stock for an aggregate cost of $69.1 million. |
• | In February 2023, we partially re-financed $175.0 million of our convertible notes maturing in June 2023 by issuing $130.0 million of convertible notes maturing in June 2028. The remaining outstanding notes will be settled no later than maturity. |
Environmental, Social and Governance (ESG) Leadership
• | Environmental, social and governance (“ESG”) principles are a significant part of our global approach and tie 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 that screen out government-owned companies, which we believe can, at times, have poor corporate governance and environmental considerations. |
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 engagements.
Our vision is to be the leader in the best structures and executions in financial services, including ETPs and digital assets.
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. |
2 WISDOMTREE, INC. | 2023 PROXY STATEMENT
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.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 3
Proxy Summary
Included below are highlights of our ESG programs and practices. Our Corporate Social Responsibility Report, available on our investor relations website at https://resources.wisdomtree.com/corporate-social-responsibility/, 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.
• 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.
• Since 2022, we have been 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, 2023, we offer in Europe 20 ETPs that are categorized as Article 8 products under the EU Sustainable Finance Disclosures Regulation (“SFDR”) and one ETP that is categorized as an Article 9 product under the 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. Article 9 products have sustainable investment as their objective. | |
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 assistance 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 2022 Best Places to Work in Money Management by Pension & Investments for the third consecutive year and six years total, and were selected as the top firm 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 third consecutive year and a 2022 Best Workplace for Women for medium-sized companies by Great Place to Work. | |
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. In 2022, we contributed to the Equal Justice Initiative for Black History Month, Bigs & Littles NYC Mentoring for Women’s History Month, and the Trevor Project for Pride Month, among many others. Our U.S. WIN members also held an event in collaboration with Clean the World, an organization that collects and recycles discarded soap and plastic amenity bottles from participating hospitality partners, during which our employees packed 1,000 hygiene kits that were donated to Tillary Street Women’s Shelter.
• 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 operates under our “Remote First” policy where employees can choose to work from home or from the office, based on their role. In keeping with “Remote First,” we maintain a smaller office footprint, which we believe has enhanced our efficiency and sustainability and will continue to do so 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. |
4 WISDOMTREE, INC. | 2023 PROXY STATEMENT
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 | ||||||||||||||||
Class II Nominees |
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Lynn S. Blake |
58 | Female | White | ✓ | 2022 |
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M |
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Daniela Mielke |
57 | Female | White | ✓ | 2022 | Nuvei Corporation; The Bancorp, Inc.; FTAC Athena Acquisition Corp. |
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Win Neuger |
73 | Male | White | ✓ | 2013 |
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M | C | |||||||||
Class III Nominees |
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Shamla Naidoo |
58 | Female | Asian; Black or African American | ✓ | N/A | StoneBridge Acquisition Corporation |
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Frank Salerno |
63 | Male | White | ✓ | 2005 |
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C |
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Jonathan Steinberg |
58 | Male | White |
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1988 |
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Continuing Directors |
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Anthony Bossone |
52 | Male | White | ✓ | 2009 |
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C* | M |
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Smita Conjeevaram |
62 | Female | Asian | ✓ | 2021 | McGrath RentCorp; SkyWest, Inc.; SS&C Technologies Holdings, Inc. |
M* |
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M | |||||||||
Harold Singleton III |
61 | Male | Black | ✓ | 2022 |
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M* |
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* | Financial Expert M = Member C = Chair |
Gender
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Demographic Background
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Tenure
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Independence
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WISDOMTREE, INC. | 2023 PROXY STATEMENT 5
Proxy Summary
The following Board Diversity Matrix presents self-disclosed diversity statistics of our director nominees and continuing directors.
BOARD DIVERSITY MATRIX (AS OF MAY 1, 2023)
Total Number of Director Nominees and Continuing |
9 |
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Part I: Gender Identity |
Female | Male | Non-Binary | Declined to Disclose | ||||||||||||
Number of Director Nominees and Continuing Directors based on gender identity |
4 | 5 | — | — | ||||||||||||
Part II: Demographic Background |
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African American or Black |
— | 1 | — | — | ||||||||||||
Alaskan Native or Native American |
— | — | — | — | ||||||||||||
Asian |
1 | — | — | — | ||||||||||||
Hispanic or Latinx |
— | — | — | — | ||||||||||||
Native Hawaiian or Pacific Islander |
— | — | — | — | ||||||||||||
White |
2 | 4 | — | — | ||||||||||||
Two or More Races or Ethnicities |
1 | — | — | — | ||||||||||||
LGBTQ+ |
— | — | — | — | ||||||||||||
Did Not Disclose Demographic Background |
— | — | — | — |
DIRECTOR QUALIFICATIONS AND EXPERIENCE
The following table provides an overview of the specific skills, experiences and areas of knowledge of our director nominees and continuing directors 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 | Mielke | Naidoo | Neuger | Salerno | Singleton | Steinberg | |||||||||
Accounting/Financial Reporting |
|
⚫ | ⚫ | ⚫ |
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⚫ | ⚫ | ⚫ |
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Corporate Governance |
⚫ | ⚫ | ⚫ |
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⚫ | ⚫ | ⚫ | ⚫ | |||||||||
Global Business |
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⚫ | ⚫ | ⚫ | ⚫ | ⚫ |
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⚫ | ⚫ | |||||||||
Legal and Regulatory |
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⚫ | ⚫ |
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⚫ |
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Financial Services/Asset Management |
⚫ | ⚫ | ⚫ | ⚫ |
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⚫ | ⚫ | ⚫ | ⚫ | |||||||||
Executive Leadership |
⚫ | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | ⚫ | |||||||||
Other Public Company Experience |
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⚫ | ⚫ | ⚫ |
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⚫ |
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Risk Management |
⚫ | ⚫ |
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⚫ | ⚫ |
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ETF |
⚫ | ⚫ |
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⚫ | ⚫ | ⚫ | ⚫ | |||||||||
Information Technology |
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⚫ | ⚫ |
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6 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Proxy Summary
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 standing 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 99% aggregate attendance rate in 2022. | |
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. | |
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 regular executive management succession planning reviews, as well as succession planning discussions at the Compensation Committee level. | |
Proxy Access |
Stockholders that meet certain requirements can have their director nominees included in our proxy statement. | |
Board Effectiveness |
| |
Robust Self-Assessments |
The Board and each committee complete 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, 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. |
WISDOMTREE, INC. | 2023 PROXY STATEMENT 7
Proxy Summary
EXECUTIVE COMPENSATION
2022 Highlights
In 2022, we made the following enhancements to our executive compensation program:
• | greater weight was ascribed to quantitative performance metrics such that the achievement of quantitative metrics determined 75% of the executive incentive compensation pool and the remaining 25% was determined by the Compensation Committee based on qualitative results, representing a shift from the prior 50%-50% quantitative-qualitative mix applicable to 2021 compensation; |
• | all Named Executive Officers, or NEOs, received a greater percentage of incentive compensation in the form of equity, including an equity payout of 60% for our CEO compared to 52% in 2021, of which 50% consisted of performance-based restricted stock units and 50% consisted 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 U.S. federal securities laws; and |
• | our Board of Directors and stockholders 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 was 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. |
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 “2022 Incentive Compensation Program and Results,” the 2022 funded payout percentage for this performance metric was 224.9% 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; |
• | PRSUs granted for 2022 performance in January 2023 to our CEO and Chief Operating (“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 that vested in January 2022 and January 2023 was 0% and 76.92%, respectively. |
Changes to be Effective in 2023
We made the following enhancements to our incentive compensation program that will take effect prospectively beginning in 2023:
• | New performance metric. We introduced an additional performance metric, “Annualized Run Rate Revenue (“RRR”) from Flows” which will be computed by multiplying net flows of each of our ETPs by its expense ratio. This metric will be weighted equally with our Net Inflows metric (9.375% in each case) and represents a financial measure (revenue associated with flows) derived from a non-financial measure (net flows). We believe this new metric is a meaningful enhancement to our incentive compensation program as the composition of our flows impacts the magnitude of the change to our operating revenues. |
• | Adjustment to payout curve. We adjusted the payout curve for financial metrics (revenues, adjusted operating income and adjusted operating margin) to be computed using two to one leverage instead of one to one leverage. For example, if actual performance is 98% of target, the payout will be 96% (i.e., 100%, minus (2% x 2)), and if actual performance is 102% of target, the payout will be 104% (i.e., 100%, plus (2% x 2)). This enhancement was made to further align pay and performance by reducing the payout when below target and further increasing the payout when above target. |
8 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Proxy Summary
• | Severance Plan and Amended Employment Agreements. See “Employment Agreements and Severance Plan” below for a description of our Severance Plan and Restrictive Covenant Agreement (each defined below) applicable to our Chief Financial Officer (“CFO”), and the amendment to employment agreements with each of our CEO, COO, Chief Administrative Officer (“CAO”) and Head of Europe (“HoE”) that we entered into in April 2023. |
2022 Total Compensation Pay Mix
The following charts reflect the elements of 2022 total compensation for (i) our CEO and (ii) our other NEOs who were serving in their respective positions as of December 31, 2022 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.
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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
|
× No dividends will be paid with respect to unvested awards under the 2022 Equity Plan
× No pledging, hedging, short sales or derivative transactions
× No excessive perks
× No excessive risk taking
× No excise tax gross-ups |
WISDOMTREE, INC. | 2023 PROXY STATEMENT 9
General Information for Stockholders About the Annual Meeting
WHO IS SOLICITING MY VOTE?
The Board of Directors of WisdomTree, Inc. is soliciting your vote for the 2023 Annual Meeting of Stockholders (“Annual Meeting”).
HOW DO I ATTEND THE ANNUAL MEETING, AND MAY I ASK QUESTIONS?
The Annual Meeting will be held on June 16, 2023, at 10:00 a.m. Eastern Time at 250 West 34th Street, 2nd Floor, New York, NY 10119. Any stockholder may attend the Annual Meeting. If you choose to do so, please bring your proxy card and valid picture identification.
If your shares of common stock are held in a brokerage account or by a bank or other nominee, you are considered the beneficial owner of shares held in street name, and this proxy statement is being forwarded to you by your broker or nominee. As a result, your name does not appear on our list of stockholders. If your stock is held in street name, in addition to a voting instruction form and picture identification, you should bring with you a letter or account statement showing that you were the beneficial owner of the Company stock on the record date, in order to be admitted to the Annual Meeting.
Even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting.
HOW MANY VOTES CAN BE CAST BY ALL STOCKHOLDERS?
149,263,168 shares of our common stock were outstanding and entitled to be voted on April 27, 2023, 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 four matters scheduled for a vote:
• | Proposal 1: Election of three Class II members and three Class III 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, 2023 (the “Auditor Ratification Proposal”); |
• | Proposal 3: Vote on an advisory resolution to approve the compensation of our named executive officers (the “Executive Compensation Proposal”); and |
• | Proposal 4: Ratification of the adoption by the Board of the Stockholder Rights Agreement, dated March 17, 2023, by and between the Company and Continental Stock Transfer & Trust Company (the “Rights Agreement Proposal”). |
HOW MANY VOTES ARE REQUIRED TO APPROVE EACH PROPOSAL?
Director Election Proposal. Under our by-laws, in a contested election, such as this year’s election, the directors must be elected by a plurality of the votes cast. This means that the six director nominees receiving the most “for” votes from the holders of shares present at the meeting or represented by proxy and entitled to vote on the election of directors will be elected. Votes “withheld” will have no effect on the Director Election Proposal. Broker non-votes, if any, will also have no effect.
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General Information for Stockholders About the Annual Meeting
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, 2023. Abstentions and broker non-votes, if any, will have no effect on 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, if any, will have no effect on this proposal.
Rights Agreement Proposal. The affirmative vote of a majority of votes cast is necessary for the approval of the Stockholder Rights Agreement. Abstentions and broker non-votes, if any, will have no effect on this proposal.
WHAT ARE “BROKER 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”), 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 the Annual Meeting is the subject of a contested solicitation, to the extent ETFS Capital delivers its proxy materials to a given stockholder, all proposals at the Annual Meeting are considered “non-routine.” Moreover, if the proposals being voted on at the Annual Meeting are considered non-routine, and 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 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.
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. Votes withheld, abstentions and broker non-votes will be counted as present for quorum purposes.
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.
WILL THERE BE A PROXY CONTEST AT THE ANNUAL MEETING?
We have received notice from ETFS Capital, which owns approximately 10.2% of our common stock, expressing the intention of ETFS Capital to nominate three director candidates for election to our Board of Directors at the Annual Meeting at which three Class II and three Class III directors are to be elected (the “ETFS Capital Nominees”). We do not
WISDOMTREE, INC. | 2023 PROXY STATEMENT 11
General Information for Stockholders About the Annual Meeting
endorse the election of any of the ETFS Capital Nominees as directors. You may receive proxy solicitation materials from ETFS Capital or other persons or entities affiliated with ETFS Capital, including an opposition proxy statement and proxy card. Please be advised that we are not responsible for the accuracy of any information provided by or relating to ETFS Capital contained in any proxy solicitation materials filed or disseminated by ETFS Capital or any other statements that they may otherwise make.
You may receive multiple mailings from ETFS Capital. You will also likely receive multiple mailings from the Company prior to the date of the Annual Meeting, so that our stockholders have our latest proxy information and materials to vote. Proxy cards provided by the Company will be WHITE. Please see “What should I do if I receive a proxy card from ETFS Capital?” and “What does it mean if I receive more than one WHITE proxy card or voting instruction form?” below for more information.
WHAT SHOULD I DO IF I RECEIVE A PROXY CARD FROM ETFS CAPITAL?
Our Board does not endorse any of the ETFS Capital Nominees and strongly urges you NOT to sign or return any proxy card or voting instruction form that you may receive from ETFS Capital or any person other than the Company.
HOW DO I VOTE?
For the Director Election Proposal you may either vote “For” or “Withhold.” For each of the other proposals, you may either vote “For” or “Against” or abstain from voting.
The Board of Directors recommends that you vote:
• | “FOR” each of the Company’s director nominees to be elected to the Board named in the Director Election Proposal; |
• | “FOR” the Auditor Ratification Proposal; |
• | “FOR” the Executive Compensation Proposal; and |
• | “FOR” the Rights Agreement 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,” “withheld,” 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 attending the Annual Meeting or vote by proxy over the Internet or by returning an executed proxy card. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You still may attend the Annual Meeting and vote during the Annual Meeting even if you have already voted by proxy.
• | To vote using a traditional proxy card, 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. |
• | To vote over the Internet, simply follow the instructions and use the control number included on your proxy card. |
• | If you 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
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General Information for Stockholders About the Annual Meeting
follow the instructions and mail the voting instruction form or vote over the Internet to ensure that your vote is counted. To vote by 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.
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 and mailing your proxy card, over the Internet, or by 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 by completing and mailing the voting instruction form or voting over the Internet, 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 the Annual Meeting is the subject of a contested solicitation, to the extent ETFS Capital delivers its proxy materials to a given stockholder, all proposals at the Annual Meeting are considered “non-routine.” Moreover, if the proposals being voted on at the Annual Meeting are considered non-routine, and 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 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.
WHAT IF I RETURN A PROXY CARD OR VOTING INSTRUCTION FORM OR OTHERWISE VOTE BUT DO NOT MAKE SPECIFIC CHOICES?
If you return a signed and dated proxy card or voting instruction form without marking voting selections, your shares will be voted, as applicable:
• | “FOR” each of the Company’s director nominees to be elected to the Board named in the Director Election Proposal; |
• | “FOR” the Auditor Ratification Proposal; |
• | “FOR” the Executive Compensation Proposal; and |
• | “FOR” the Rights Agreement Proposal. |
WHAT HAPPENS IF I RETURN A UNIVERSAL PROXY CARD BUT GIVE VOTING INSTRUCTIONS FOR MORE THAN SIX NOMINEES?
If you are a stockholder of record and you vote “FOR” more than six nominees on your WHITE proxy card, your votes on the Director Election Proposal will be invalid and will not be counted. If you are a beneficial holder and you vote “FOR” more than six nominees on your WHITE voting instruction form, your votes on the Director Election Proposal will be invalid and will not be counted.
WHAT HAPPENS IF I RETURN A UNIVERSAL PROXY CARD BUT GIVE VOTING INSTRUCTIONS FOR FEWER THAN SIX NOMINEES?
If you are a stockholder of record and you vote “FOR” with respect to fewer than six nominees on your WHITE proxy card, your shares will only be voted “FOR” those nominees you have so marked. If you are a beneficial holder and you vote “FOR” with respect to fewer than six nominees on your WHITE voting instruction form, your shares will only be voted “FOR” those nominees you have so marked.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 13
General Information for Stockholders About the Annual Meeting
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 WHITE proxy card and any additional soliciting materials furnished to stockholders by or on behalf of the Company, will be borne by the Company. Copies of solicitation material will be furnished to banks, brokerage firms, 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 2022 Annual Report, which includes our Form 10-K for the year ended December 31, 2022, 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 (“Innisfree”) to solicit proxies from stockholders in connection with the Annual Meeting. Innisfree expects that approximately 30 of its employees will assist in the solicitation of proxies. For these and related advisory services, we will pay Innisfree a fee not to exceed approximately $1.125 million plus costs and expenses. In addition, Innisfree and certain related persons will be indemnified against certain liabilities arising out of or in connection with the engagement.
We estimate that our additional out-of-pocket expenses beyond those normally associated with soliciting proxies for the Annual Meeting as a result of the potential proxy contest will be $6 million in the aggregate, of which approximately $2 million has been incurred to date. Such additional solicitation costs are expected to include the fees incurred to retain Innisfree as our proxy solicitor, as discussed above, fees of outside legal, financial and public relations advisors to advise the Company in connection with a possible contested solicitation of proxies, increased mailing costs, such as the costs of additional mailings of solicitation materials to stockholders, including printing costs, mailing costs and the reimbursement of reasonable expenses of banks, brokerage firms and other agents incurred in forwarding solicitation materials to beneficial owners, as described above, and the costs of retaining an independent inspector of election.
WHAT DOES IT MEAN IF I RECEIVE MORE THAN ONE WHITE PROXY CARD OR VOTING INSTRUCTION FORM?
You may receive more than one set of these proxy materials, including multiple copies of this proxy statement and multiple WHITE proxy cards or voting instruction forms. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one WHITE proxy card. To ensure that all of your shares are voted, please vote using each WHITE proxy card or voting instruction form you receive or, if you vote over the Internet, you will need to enter each of your control numbers. Remember, you may vote over the Internet or by signing, dating and returning the WHITE proxy card in the postage-paid envelope provided, or by voting at the Annual Meeting.
As previously noted, ETFS Capital has provided us with a notice indicating that it intends to nominate three director candidates for election as directors at the Annual Meeting at which three Class II and three Class III directors are to be elected. As a result, you may receive proxy cards from both the Company and ETFS Capital. To ensure that stockholders have our latest proxy information and materials to vote, the Board may conduct multiple mailings prior to the date of the Annual Meeting, each of which will include a WHITE proxy card. The Board encourages you to vote each WHITE proxy card you receive.
THE BOARD STRONGLY URGES YOU TO REVOKE ANY PROXY CARD OR VOTING INSTRUCTION FORM YOU MAY HAVE RETURNED WHICH YOU RECEIVED FROM ETFS CAPITAL.
THE BOARD STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD OR VOTING INSTRUCTION FORM THAT YOU MAY RECEIVE FROM ETFS CAPITAL, EVEN AS A PROTEST VOTE AGAINST ETFS CAPITAL OR ETFS CAPITAL’S NOMINEES.
14 WISDOMTREE, INC. | 2023 PROXY STATEMENT
General Information for Stockholders About the Annual Meeting
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 over the Internet. |
• | You may send a timely written notice that you are revoking your proxy to our Secretary, Marci Frankenthaler, at WisdomTree, Inc., 250 West 34th Street, 3rd Floor, New York, NY 10119. |
• | You may attend the Annual Meeting and vote. 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.
WHAT IS THE DEADLINE TO PROPOSE ACTIONS FOR CONSIDERATION OR TO NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS AT THE 2024 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 2024 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 2024 annual meeting of stockholders made under Rule 14a-8 by January 2, 2024. Any proposal of business must be mailed to Marci Frankenthaler, Secretary, WisdomTree, Inc., 250 West 34th Street, 3rd Floor, New York, NY 10119. We also encourage you to submit any such proposals by email to mfrankenthaler@wisdomtree.com.
Requirements for director nominations to be considered for inclusion in our proxy materials
Our by-laws permit a stockholder, or a group of up to 20 stockholders, who meet the eligibility requirements of our by-laws to utilize our “proxy access” by-law provision. “Proxy access” can be used to nominate up to the greater of two nominees or 25% of the total number of directors who are members of the Board as of the date that the stockholder(s) notifies us of the intent to utilize proxy access (the “proxy access notice”). Director nominations submitted under this by-law provision must be delivered to us no earlier than January 2, 2024, and no later than February 1, 2024. The proxy
WISDOMTREE, INC. | 2023 PROXY STATEMENT 15
General Information for Stockholders About the Annual Meeting
access notice must comply with the requirements in our by-laws. To be eligible to utilize our proxy access by-law provision, the stockholder(s) must have continuously owned at least 3% of our outstanding common stock for at least three years as of the date of the proxy access notice. Consistent with standard market practice, proxy access is only available to eligible stockholders who acquired our common stock in the ordinary course of business and not with the intent to change or influence control at WisdomTree and who do not presently have such intent.
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 2024 annual meeting of stockholders must be delivered to our Secretary no earlier than February 17, 2024 and no later than March 18, 2024, unless the date of the 2024 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 must be mailed to Marci Frankenthaler, Secretary, WisdomTree, Inc., 250 West 34th Street, 3rd Floor, New York, NY 10119. We also encourage you to submit any such proposal of business or nomination by email to mfrankenthaler@wisdomtree.com.
In addition, because our by-laws require a stockholder to include a statement that it intends to solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the election of directors in support of director nominees other than the Company’s nominees, a stockholder must effectively provide the notice required under Rule 14a-19 by the same deadline noted above to submit a notice of nomination at an annual meeting of stockholders.
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) 750-5836.
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.
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General Information for Stockholders About the Annual Meeting
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 https://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 https://ir.wisdomtree.com/sec-filings.
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.
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, 2022, 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, 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.
HOW CAN I OBTAIN ELECTRONIC ACCESS TO THE PROXY MATERIALS?
This proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2022 are available on our investor relations website at https://ir.wisdomtree.com/company-information/annual-reports-proxy.
IMPORTANT
ETFS Capital may send you solicitation materials in an effort to solicit your vote to elect up to three of the ETFS Capital Nominees to the Board at the Annual Meeting at which three Class II and three Class III directors are to be elected. THE BOARD STRONGLY URGES YOU NOT TO SIGN OR RETURN ANY PROXY CARD OR VOTING INSTRUCTION FORM THAT YOU MAY RECEIVE FROM ETFS CAPITAL OR ANY PERSON OTHER THAN THE COMPANY.
Your vote at this year’s Annual Meeting is especially important, no matter how many or how few shares you own. Please vote using the enclosed WHITE proxy card and vote “FOR” the six WisdomTree nominees.
Only your latest dated, signed proxy card or voting instruction form will be counted. Any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this proxy statement.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 17
Background of the Solicitation
The following chronology summarizes the key contacts between the Company and ETFS Capital. This summary does not purport to catalogue every conversation of or among members of the Board, the Company’s management, the Company’s advisors, or representatives of ETFS Capital and their advisors relating to the solicitation.
Board Composition and Refreshment
The Board and the Company’s Nominating and Governance Committee (for purposes of this section, the “Nominating Committee”) continually seek to identify, evaluate and recommend candidates to become members of the Board with the goal of creating a balance of knowledge, experience and diversity. 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 the Company’s business in the context of the needs of the Board, as further discussed in “Director Criteria, Qualifications and Experience.” In addition, director nominees are selected to have complementary, rather than overlapping, skill sets. Through this skills-based approach, the Nominating Committee focuses on reviewing the skill set of our then-existing directors and adding directors to our Board who would bring new perspectives and broaden the experience of the Board. The Nominating Committee actively seeks to identify candidates who would strengthen the ability of our Board to offer practical business advice and strategic guidance to management and fulfill its fiduciary duties to stockholders. The Nominating Committee believes having personal knowledge of or exposure to a potential candidate is important in understanding the potential candidate’s skill set and qualifications and how the potential candidate would interact with others on the Board.
Accordingly, the Board proactively added five new independent and diverse directors to the Board since January 2021. Smita Conjeevaram, an experienced financial services executive with a background in fintech, disruptive technologies and financial innovation and a track record of success in guiding companies through significant growth, was added in January 2021. Harold Singleton III, an executive with more than 30 years of experience in the investment and portfolio management industries and expertise spanning global markets and environmental, social and governance (“ESG”) strategies, was added in January 2022. Daniela Mielke, a seasoned executive with decades of experience as an executive, founder, board member and advisor to fintech, commerce, payment processing and finance companies, was added to the Board in September 2022. As discussed below, pursuant to the Cooperation Agreement with ETFS Capital, the Board agreed to increase its size by two directors to a total of nine directors and appoint Lynn S. Blake and Deborah A. Fuhr as independent members of the Board (the “2022 Group Designees”), effective on May 25, 2022. Ms. Blake’s qualifications to serve on the Board 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.
The ETFS Acquisition and Standstill Period
In April 2018, Graham Tuckwell and his affiliate, ETFS Capital, became stockholders of the Company as a result of the Company’s acquisition of ETFS Capital’s European exchange-traded commodity, currency and leveraged-and-inverse business in exchange for cash and shares of the Company’s common stock and Series A non-voting convertible preferred stock (the “ETFS Acquisition”). In connection with the ETFS Acquisition, the Company assumed an obligation for fixed payments to ETFS Capital of physical gold bullion equating to 9,500 ounces of gold per year through March 31, 2058, and thereafter reduced to 6,333 ounces of gold per year continuing into perpetuity (the “Contractual Gold Payments”). Also in connection with the ETFS Acquisition, the Company and ETFS Capital entered into an Investor Rights Agreement, pursuant to which, among other things, Mr. Tuckwell and ETFS Capital agreed to be subject to lock-up, standstill and voting restrictions. In addition, the Company and Mr. Tuckwell entered into a noncompete agreement that prohibited Mr. Tuckwell from directly or indirectly engaging in any business competitive with the Company or soliciting or hiring employees of the Company for a period of two years.
On April 11, 2018, Mr. Tuckwell and ETFS Capital filed a Schedule 13G with the SEC reporting passive beneficial ownership of 9.9% of the Company’s outstanding common stock.
From April 2018 through January 2022, the Company held at least 30 meetings and calls with Mr. Tuckwell, covering a broad range of topics, including the Company’s business, financial performance and strategy for the future.
18 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Background of the Solicitation
In June 2020, Mr. Tuckwell informed the Company that he was disappointed in the Company’s operating results and suggested that the Board consider removing Jonathan Steinberg as Chief Executive Officer and appointing Mr. Tuckwell as a director. The Board rejected Mr. Tuckwell’s suggestions to remove Mr. Steinberg and appoint Mr. Tuckwell.
On April 11, 2021, the standstill provisions under the Investor Rights Agreement expired.
The 2022 Group Campaign and Nominations
On January 18, 2022, at Mr. Tuckwell’s request, Frank Salerno, the non-executive Chair of the Board, and Win Neuger, an independent director of the Board, spoke with Mr. Tuckwell. Mr. Tuckwell requested that the Company make certain Board and management changes, including, among others, to appoint Mr. Tuckwell to the Board. Mr. Tuckwell also requested that Mr. Steinberg be replaced as the Company’s Chief Executive Officer. Mr. Tuckwell indicated that if such changes were not made, he intended to nominate candidates for election as directors at the Company’s 2022 annual meeting of stockholders (the “2022 Annual Meeting”) and wage a proxy contest.
On January 24, 2022, Mr. Tuckwell and ETFS Capital filed a Schedule 13D with the SEC, converting their previously filed Schedule 13G to a Schedule 13D and disclosing beneficial ownership of 10.5% of the Company’s outstanding common stock (the “Schedule 13D”).
On March 10, 2022, Mr. Tuckwell, ETFS Capital and Lion Point Capital, LP (“Lion Point,” together with ETFS Capital and the other participants in ETFS Capital’s 2022 proxy solicitation, the “2022 Group”) filed with the SEC an amended Schedule 13D to disclose that they entered into a group agreement in connection with their collective efforts to seek changes to the composition of the Board and management of the Company. The amended Schedule 13D disclosed that the 2022 Group beneficially owned in the aggregate 13.6% of the Company’s outstanding common stock. Mr. Tuckwell and ETFS Capital reported combined beneficial ownership of 10.5% of the Company’s outstanding common stock.
On March 13, 2022, the Board unanimously adopted a narrowly tailored, limited duration stockholder rights plan (the “2022 Stockholder Rights Plan”).
On March 22, 2022, the 2022 Group filed an amended Schedule 13D with the SEC disclosing its intent to nominate three candidates to stand for election to the Board at the 2022 Annual Meeting: Mr. Tuckwell, Lynn S. Blake and Deborah A. Fuhr.
From March 29 through May 4, 2022, two members of the Board, Mr. Salerno and Ms. Conjeevaram, with input and authorization from the Board, had 13 meetings with the 2022 Group regarding potential settlement of the proxy contest. As a result of their discussions, the parties reached a final definitive cooperation agreement, exchanged signature pages and had planned to announce publicly the cooperation agreement on May 4, 2022.
On May 4, 2022, a representative of the 2022 Group sent an email to Mr. Salerno and Ms. Conjeevaram stating that the 2022 Group would not sign the cooperation agreement and that the 2022 Group instead would be issuing a press release announcing its intention to file proxy materials for a contested 2022 Annual Meeting. Moments later, the 2022 Group issued a press release and open letter to the Board, which discussed the 2022 Group’s views regarding the nature of the cooperation agreement and the discussions with the Company.
On May 5, 2022, the Company issued a press release responding to the 2022 Group’s May 4, 2022 press release and providing its views regarding the discussions that had taken place between representatives of the Company and the 2022 Group regarding the cooperation agreement.
On May 25, 2022, following further discussions between the Company and the 2022 Group, the Company entered into a Cooperation Agreement with the 2022 Group (the “Cooperation Agreement”). Pursuant to the Cooperation Agreement, the Company agreed to increase the size of the Board by two directors to a total of nine directors and appoint Mses. Blake and Fuhr as independent members of the Board, with Ms. Blake to be appointed to the Compensation Committee and Ms. Fuhr to be appointed to the Nominating Committee of the Board. Additionally, the Board formed a four-member Operations and Strategy Committee of the Board (for purposes of this section, the “Operations Committee”) to make
WISDOMTREE, INC. | 2023 PROXY STATEMENT 19
Background of the Solicitation
formal recommendations to the Board on matters including (i) operational improvement opportunities, (ii) Company strategy and (iii) if the Operations Committee so determined, management changes. The members of the Operations Committee were the 2022 Group Designees along with two other independent directors of the Board.
Under the Cooperation Agreement, the Company also agreed to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation at the 2022 Annual Meeting to declassify the Board and provide for the annual election of directors over a two-year period starting at the 2022 Annual Meeting, which was approved by our stockholders at the 2022 Annual Meeting held on July 15, 2022. Pursuant to the Cooperation Agreement, the Company also agreed to terminate the 2022 Stockholder Rights Plan, which was terminated on June 2, 2022. The 2022 Group also agreed to abide by customary standstill provisions and voting commitments.
The 2022 Group Cooperation Period
Between August 10, 2022 and December 13, 2022, the Operations Committee met numerous times as a group, with management and with the Board, including 15 management presentations, and in doing so conducted a thorough, independent review of the Company’s efficiency and operations, M&A and digital assets strategies, capital deployment, budget process, global sales, models, product development and compensation and culture.
On August 16, 2022, the 2022 Group made a presentation to the non-management members of the Board, which included the 2022 Group’s recommendations for operational improvements.
On November 1, 2022, the 2022 Group made a second presentation to the non-management members of the Board regarding the 2022 Group’s views on the Company’s digital assets strategy.
On November 22, 2022, the Board held a meeting in which the Operations Committee presented its recommendations to the Board.
On December 15, 2022, the Board held a meeting in which it discussed and commenced voting on the recommendations of the Operations Committee.
On December 16, 2022, ETFS Capital and Mr. Tuckwell filed an amendment to their Schedule 13D disclosing that they were no longer members of a group with Lion Point.
On December 18, 2022, the Board continued its prior meeting to discuss the recommendations of the Operations Committee and concluded voting on such recommendations.
On December 21, 2022, the Board issued a letter to stockholders, which described the Company’s 2022 accomplishments and the work of the Operations Committee. The Board announced that it unanimously supported the Company’s management team and the current strategy and plan for stockholder value creation. The letter also announced that, as recommended by the Operations Committee, the Operations Committee would be dissolved by December 31, 2022.
On February 3, 2023, the Company announced it was in negotiations with the World Gold Council (the “WGC”) to settle its obligation to pay the portion of the Contractual Gold Payments that is ultimately received by the WGC.
The 2023 ETFS Capital Campaign and Nominations
On March 9, 2023, ETFS Capital requested from the Company the Company’s form of director and officer questionnaire and form of stockholder nominee representation and agreement, which are required for stockholders to submit director nominations as referenced in the Company’s by-laws, and which were subsequently provided by the Company.
Also on March 9, 2023, Martyn James, a managing director of ETFS Capital, contacted Mr. Singleton and requested a one-on-one conversation with Mr. Singleton.
On March 10, 2023, Messrs. Singleton and James had a discussion in which Mr. James informed Mr. Singleton that ETFS Capital intended to nominate candidates for election as directors to the Board at the upcoming Annual Meeting in opposition to the nominees recommended by the Board. Mr. James noted that ETFS Capital intended to make these nominations despite ETFS Capital’s interest in reaching a settlement with the Company to avoid a proxy contest. Mr. Singleton responded that he would inform the Board of their conversation.
20 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Background of the Solicitation
On March 13, 2023, the Board met together with members of Company management and the Company’s advisors to discuss the recent interactions with ETFS Capital. The Board discussed the recent discussion with ETFS Capital, the history of the interactions between the Company and ETFS Capital, the fact that the standstill period under the Cooperation Agreement would expire on March 17, 2023 and that ETFS Capital intended to nominate a competing slate of directors for election at the Annual Meeting. In light of these factors, among others, the Board also discussed the possibility of approving, following the expiration of the standstill period, a limited duration, narrowly tailored stockholders rights plan substantially similar to the rights plan adopted by the Board the previous year. The Board also authorized Mr. Singleton to inform ETFS Capital that the Board was updated on the discussion between ETFS Capital and Mr. Singleton and that the Board welcomed engagement with stockholders.
Later on March 13, 2023, Mr. Singleton informed Mr. James that he had updated the Board about their discussion and that the Board welcomed stockholder engagement.
On March 15, 2023, Mr. James contacted Mr. Singleton requesting to speak again in the next few days, either with only Mr. Singleton or along with other Board members.
Between March 15, 2023 and April 12, 2023, members of the Nominating Committee, as well as other members of the Board and members of Company management, interviewed Shamla Naidoo, among other potential director candidates sourced in consultation with a corporate director search firm.
On March 17, 2023, the standstill provisions under the Cooperation Agreement expired.
Later on March 17, 2023, the Board met together with members of Company management and the Company’s advisors to further discuss and consider the situation with ETFS Capital. The Board received an update on ETFS Capital’s request for a follow-up discussion with the Company. The Board also discussed steps that could be taken to avoid a proxy contest with ETFS Capital. Following discussion, the Board authorized Mr. Singleton, Mr. Salerno and Ms. Conjeevaram to have discussions with ETFS Capital. Following further discussion, and in consideration of the matters discussed at this meeting and the prior March 13, 2023 Board meeting, the Board unanimously approved the Company’s entry into a limited duration, narrowly tailored stockholders rights agreement substantially similar to the rights plan adopted by the Board the previous year. The Company then announced the adoption of the limited duration stockholder rights plan.
On March 17, 2023, Mr. Singleton contacted Mr. James and informed him that he along with Mr. Salerno and Ms. Conjeevaram would be open to meeting with ETFS Capital and that although the Board had adopted a stockholder rights plan, the Board was open to settlement discussions with ETFS Capital to avoid a proxy contest.
On March 24, 2023, Ms. Conjeevaram, Mr. Salerno and Mr. Singleton had a discussion with Messrs. James and Tuckwell. Messrs. James and Tuckwell reiterated that ETFS Capital intended to nominate director candidates and was prepared for a proxy contest. Messrs. James and Tuckwell also demanded that the Company make a settlement proposal that included the resignation of three incumbent directors and the addition of three unidentified ETFS Capital director candidates to the Board. The Company directors requested that ETFS Capital disclose the identities of the candidates so that the Board could properly evaluate their respective experience, qualifications and skill sets consistent with the Board’s customary approach to evaluating potential Board members. Messrs. James and Tuckwell responded that ETFS Capital would not reveal the identities of its director candidates until a settlement framework with the Company was in place. Mr. Tuckwell also demanded that the Company and ETFS Capital work to resolve the matter of the Contractual Gold Payments simultaneously with proxy contest settlement discussions.
On March 29, 2023, the Board met together with members of Company management and the Company’s advisors to receive an update on the discussion with ETFS Capital and to further review and consider ETFS Capital’s demands. Following discussion, the Board formulated a response to ETFS Capital and authorized Mr. Singleton, Mr. Salerno and Ms. Conjeevaram to continue discussions with, and convey the Board’s views to, ETFS Capital. Also at this meeting, the Board unanimously approved the formation of a committee of the Board to manage and oversee matters related to the Annual Meeting, including a potential proxy contest with ETFS Capital (the “Committee”). The Board appointed Ms. Conjeevaram, Mr. Salerno, Mr. Singleton, Mr. Steinberg and Mr. Neuger as members of the Committee.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 21
Background of the Solicitation
On March 31, 2023, Ms. Conjeevaram, Mr. Salerno and Mr. Singleton had a discussion with Messrs. James and Tuckwell, in which they informed Messrs. James and Tuckwell that while the Board was open to discussion of a potential settlement and would consider any director candidates that ETFS Capital proposed in a timely manner, the Board did not believe it was in the best interest of all of the Company’s stockholders for the Company to present an initial settlement proposal without a better understanding of what ETFS Capital sought to achieve and the identities of ETFS Capital’s proposed director candidates. As such, the Company directors informed Messrs. James and Tuckwell that the Board could not accept ETFS Capital’s previously proposed condition that it would not reveal the identities of its director candidates until a settlement framework with the Company was in place. The Company directors asked ETFS Capital to make an initial proposal for the Board to consider. Messrs. James and Tuckwell responded that their new proposed settlement framework consisted of the resignation of four incumbent directors to be replaced by three directors selected by ETFS Capital and one director mutually agreeable to ETFS Capital and the Company. Messrs. James and Tuckwell also questioned why the Company engaged with the WGC on the Contractual Gold Payments matter, but not with ETFS Capital. The Company directors explained that the Contractual Gold Payments were not germane to a potential proxy contest, or to any settlement discussion, and that the other stockholders of the Company did not share ETFS Capital’s financial interest in the Contractual Gold Payments. Mr. Salerno reminded Mr. Tuckwell that the Company’s management had engaged in discussions with him regarding the Contractual Gold Payments in the past and Mr. Tuckwell had rebuffed the Company’s offer. The Company directors then added that Mr. Tuckwell should discuss the Contractual Gold Payments with Company management.
On April 4, 2023, Bryan Edmiston, the Company’s Chief Financial Officer, and R. Jarrett Lilien, the Company’s President and Chief Operating Officer, had a meeting with Mr. Tuckwell and James Hyett, Chief Financial Officer of ETFS Capital, to discuss the Contractual Gold Payments.
On April 5, 2023, Mr. James contacted Mr. Singleton to inquire about the Board’s response to ETFS Capital’s latest proposed settlement framework, to reiterate that ETFS Capital would consider the Company’s request to share the identities of ETFS Capital’s nominees subject to making progress on a settlement framework, and requested confirmation on whether the Company would extend its advance notice deadline for nomination of directors.
On April 6, 2023, as authorized by the Committee, Mr. Singleton responded to Mr. James that the Board remained open to engaging in additional discussions and continued to be willing to consider ETFS Capital’s director candidates if ETFS Capital chose to share their names with the Board. Mr. Singleton informed Mr. James that ETFS Capital’s latest proposed framework represented unnecessary and excessive change that would introduce excessive risk to stockholders given the significant level of Board refreshment already completed over the last few years. Mr. Singleton also informed Mr. James that the Board did not see a reason to extend the advance notice deadline for nominating directors.
On April 7, 2023, Mr. James contacted Mr. Singleton and inquired how many of the Company’s four incumbent directors up for election at the Annual Meeting would the Board agree not to re-nominate as part of a potential settlement agreement, the names of such incumbent directors, and at a minimum whether one of those directors would be Mr. Salerno. In addition, Mr. James stated his belief that ETFS Capital had sufficient votes to remove all four incumbent directors up for election.
Later on April 7, 2023, as authorized by the Committee, Mr. Singleton responded to Mr. James that the Board remained open to engaging in additional settlement discussions with ETFS Capital, and as the Board previously indicated, continued to be willing to consider ETFS Capital’s director nominees if ETFS Capital chose to share their names with the Board.
On April 12, 2023, ETFS Capital delivered to the Company a notice (the “Nomination Notice”) of ETFS Capital’s intention to nominate three candidates to stand for election to the Board at the Annual Meeting: Bruce E. Aust, Tonia Pankopf and Graham Tuckwell AO (the “ETFS Capital Nominees”). Until that date, ETFS Capital had not previously disclosed the names of Mr. Aust and Ms. Pankopf to the Company. Also on April 12, 2023, ETFS Capital issued an open letter to the Board and a press release announcing its nomination of the ETFS Capital Nominees and disclosing its letter to the Board.
Later on April 12, 2023, the Company issued a press release confirming its receipt of the Nomination Notice.
On April 14, 2023, ETFS Capital filed an amendment to its Schedule 13D disclosing the Nomination Notice and its recent letter to the Board.
22 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Background of the Solicitation
Also on April 14, 2023, ETFS Capital’s counsel delivered to the Company a purported demand letter to inspect a list of the Company’s stockholders and related documents, pursuant to Section 220 of the Delaware General Corporation Law (the “Stockholder List Demand Letter”).
Also on April 14 and 16, 2023, Messrs. Edmiston and Lilien had a meeting with Messrs. Tuckwell and Hyett to discuss further the Contractual Gold Payments.
On April 17, 2023, Messrs. Edmiston and Lilien had interactions with both Mr. Tuckwell and the WGC regarding the Contractual Gold Payments.
Later on April 17, 2023, the Nominating Committee met to consider potential new director candidates and the nomination of candidates for election at the Annual Meeting. The Nominating Committee discussed its evaluation of the ETFS Capital Nominees. Following its review and evaluation of the ETFS Capital Nominees, the Nominating Committee unanimously determined not to recommend that the ETFS Capital Nominees be included in the Board’s slate of director nominees for the Annual Meeting. The Nominating Committee also discussed the feedback and interviews regarding potential new director candidates interviewed by the Nominating Committee and other members of the Board. Following discussion, the Nominating Committee determined to recommend that the following nominees be included in the Board’s slate of director nominees for the Annual Meeting: Lynn S. Blake, Daniela Mielke and Win Neuger as Class II directors, and Shamla Naidoo, Frank Salerno and Jonathan Steinberg as Class III directors.
Later on April 17, 2023, the Board met, together with members of management and advisors, to discuss the nomination of directors at the Annual Meeting, among other matters. The Nominating Committee discussed its review and evaluation of the ETFS Capital Nominees and other potential new director candidates. Following discussion, the Nominating Committee made its recommendation of nominees to be included in the Board’s slate of director nominees for the Annual Meeting. Following discussion and its review and evaluation of the potential candidates, the Board nominated Lynn S. Blake, Daniela Mielke and Win Neuger as director nominees to stand for election as Class II directors, and Shamla Naidoo, Frank Salerno and Jonathan Steinberg to stand for election as Class III directors. The Board also discussed steps that could be taken to avoid the expense and distraction of a potential proxy contest with ETFS Capital.
On April 19, 2023, the Company filed a preliminary proxy statement with the SEC, and issued a press release announcing the same.
On April 20, 2023, Mr. James and Steph Poulier, Senior Legal Counsel for ETFS Capital, met with Mr. Lilien and Bryan Governey, General Counsel of WisdomTree Europe, together with the WGC, to have further discussions regarding the Contractual Gold Payments.
On April 21, 2023, the Company’s counsel responded to the Stockholder List Demand Letter and identified deficiencies in the Stockholder List Demand Letter, including that it did not state a proper purpose under Delaware law and did not comply with the proxy rules. The Company indicated it would be willing to provide the requested materials consistent with Delaware law and the applicable proxy rules, provided ETFS Capital first addressed the aforementioned deficiencies.
On April 24, 2023, ETFS Capital filed its preliminary proxy statement with the SEC in connection with the Annual Meeting, and issued a press release announcing the same.
On April 26, 2023, ETFS Capital’s counsel responded to the Company’s counsel via letter in which ETFS Capital attempted to address certain deficiencies in its Stockholder List Demand Letter.
On April 28, 2023, the Company’s counsel responded to ETFS Capital’s counsel’s April 26, 2023 letter via email.
On April 29, 2023, ETFS Capital’s counsel responded via email to the Company’s counsel’s April 28, 2023 email.
On May 1, 2023, the Company filed this definitive proxy statement with the SEC.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 23
Proposal 1
Election of Directors
Our Amended and Restated 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 as of the date of the Annual Meeting. In accordance with Delaware law and our Amended and Restated Certificate of Incorporation and by-laws, our Board of Directors is divided into three staggered classes. The classified board structure is in the process of being phased out over a two-year period that started at the 2022 annual meeting of stockholders and will conclude at the 2024 annual meeting of stockholders. The Class II and Class III directors are up for election, each for a one-year term, at the Annual Meeting.
The Nominating and Governance Committee recommended, and the Board of Directors nominated, the following six director nominees to be included in the Board’s slate to stand for election at the Annual Meeting: Lynn S. Blake, Daniela Mielke and Win Neuger as Class II directors, and Shamla Naidoo, Frank Salerno and Jonathan Steinberg as Class III directors. Each of these nominees will serve for a one-year term until the 2024 annual meeting of stockholders and until his or her successor is duly elected and qualified. The Board of Directors determined, upon the recommendation of the Nominating and Governance Committee, that Ms. Fuhr, a Class III director, not be included in the Board’s slate of nominees for the Annual Meeting.
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 the 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.
We have received notice from ETFS Capital, which together with the other participants in its solicitation, owns approximately 10.2% of our common stock, expressing the intention of ETFS Capital to nominate three director candidates for election to our Board at the Annual Meeting at which three Class II directors and three Class III directors are standing for election. Our Board does not endorse any of the ETFS Capital Nominees and urges you NOT to sign or return any proxy card or voting instruction form that may be sent to you by ETFS Capital. If you have already voted using ETFS Capital’s proxy card or voting instruction form, you have every right to change your vote by using the WHITE proxy card or voting instruction form or by voting over the Internet or by attending the Annual Meeting and voting during the Annual Meeting. Only the latest dated, valid proxy that you submit will be counted—any proxy may be revoked at any time prior to its exercise at the Annual Meeting by following the instructions under “Can I change my vote or revoke my proxy?” If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, Innisfree, toll free at (877) 750-5836.
In the event that ETFS Capital withdraws its nominees, abandons its solicitation or fails to comply with the universal proxy rules, any votes cast in favor of ETFS Capital’s nominees will be disregarded and not be counted, whether such vote is provided on the Company’s WHITE proxy card or ETFS Capital’s proxy card.
Although the Company is required to include all nominees for election on its universal proxy card, for additional information regarding ETFS Capital’s nominees and any other related information, please refer to ETFS Capital’s proxy statement. You may receive solicitation materials from ETFS Capital, including proxy statements and proxy cards. WisdomTree is not responsible for the accuracy or completeness of any information provided by or relating to ETFS Capital or its nominees contained in solicitation materials filed or disseminated by or on behalf of ETFS Capital or any other statements ETFS Capital may make. Stockholders will be able to obtain, free of charge, copies of all proxy statements, any amendments or supplements thereto and any other documents (including the WHITE proxy card) when filed by the applicable party with the SEC in connection with the Annual Meeting at the SEC’s website (https://www.sec.gov).
24 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Proposal 1
CLASS II DIRECTOR NOMINEES
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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 Global 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 (SASB), 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.
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Age 58
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Director since May 2022 |
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Committees
• Compensation
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Daniela Mielke
Daniela Mielke is Managing Partner of Commerce Technology Advisors, LLC, a privately held firm which she founded in April 2016, and which provides consulting services to technology, financial services and private equity companies on organic and inorganic growth strategies including building payment businesses and using artificial intelligence. From February 2018 to December 2020, she served as the Chief Executive Officer, North America of RS2 Inc., one of the leading providers of payment processing services in Europe and Asia Pacific. From September 2013 to April 2016, Ms. Mielke was Chief Strategy and Product Officer at Vantiv, Inc., which was at the time the largest merchant acquirer in the United States. From May 2010 to September 2013, she was VP, Head of Global Strategy and Market Intelligence for PayPal Inc. Ms. Mielke co-founded a-connect in 2001, a consulting firm which provides consulting services to financial service and other clients, and rejoined in 2007 until 2009 to establish and direct new operations for the West Coast and lead its global marketing function. From 2002 to 2007, Ms. Mielke served as VP of Product and SVP of Strategy and Market Intelligence at Visa International. From 1998 to 2002, Ms. Mielke was an Engagement Manager for McKinsey & Company, a worldwide management consulting firm. She currently serves on the Board of Directors of FTAC Athena Acquisition Corp. (NASDAQ: FTAA), a SPAC, since February 2021, and Nuvei Corporation (TSX: NVEI and NVEI.U), a global payment technology provider, since August 2020. She also has been a director of The Bancorp, Inc. (NASDAQ: TBBK), a bank holding company, and its subsidiary bank, The Bancorp Bank, since August 2019. Ms. Mielke also currently serves on the Board of Directors of FINCA International, a global NGO dedicated to alleviating poverty. Ms. Mielke received her bachelor’s degree in Hotel and Restaurant Management from the École hôtelière de Lausanne, an M.B.A. in International Management from the IMD Business School and an M.S. in Economics from the University of Fribourg. Ms. Mielke is also NACD (National Association of Corporate Directors) Directorship Certified.
Qualifications
We believe that Ms. Mielke’s qualifications to serve on the Board of Directors include her decades of experience as an executive, founder, board member and advisor to fintech, commerce, payment processing and finance companies.
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Age 57
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Director since September 2022 |
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Committees
• None
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WISDOMTREE, INC. | 2023 PROXY STATEMENT 25
Proposal 1
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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 73
|
Director since July 2013 |
|||||
Committees
• Compensation
• Nominating and Governance (Chair)
|
CLASS III DIRECTOR NOMINEES
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Shamla Naidoo
Shamla Naidoo has served as Head of Cloud Strategy and Innovation of Netskope Inc., a private company providing global cybersecurity services, since June 2021. From August 2015 to June 2021, she served as the Global Chief Information Security Officer and Information Technology Risk Managing Partner of International Business Machines Corp., or IBM, a global technology company. From May 2011 to August 2015, she served as Chief Information Security Officer of Starwood Hotels and Resorts Worldwide, a hospitality company now owned by Marriott International, Inc., and in 2009, she led the Technology, Physical and Intellectual Property protection function for Bridgewater Associates, an investment management firm. From 2007 to 2008, Ms. Naidoo served as Vice President, Chief Information Security Officer and Chief Information Officer at WellPoint, Inc. (now known as Elevance Health, Inc.), a health benefits company. She also served as Senior Vice President, Chief Information Security Officer and Head of Worldwide Technology Risk for Northern Trust Corporation, a financial services company, from 2005 to 2007, as Vice President, Security/Technology Architecture and Compliance of ABN AMRO Bank N.V., a bank headquartered in the Netherlands, from 2001 to 2005, and as Vice President, Technology, Chief Information Officer of Leo Burnett Technology Group, a communications agency, from 2000 to 2001. Prior to Leo Burnett, Ms. Naidoo held various roles with the U.S. consulting division of Spherion Corporation, a staffing and recruiting firm, Anglo American plc, a global mining company, South African Petroleum Refineries, an international oil refinery, and South African Druggists, a pharmaceutical company.
Ms. Naidoo currently serves as a director of StoneBridge Acquisition Corporation (NASDAQ: APAC), a SPAC. She is also on the Board of Directors of Reference Point LLC, a private consulting company, and the Board of Directors of QBE North America, a division of QBE Insurance Group Ltd., a publicly-traded insurance company headquartered in Australia. She has been an Adjunct Professor at the University of Illinois Chicago School of Law since 2010, where she develops and teaches courses on information technology, security and privacy law, and she has been a faculty member at the Institute for Applied Network Security since 2021. She frequently speaks at the American Bar Association and formerly served as the Committee Chair on Legal Technology for the Illinois State Bar Association. Ms. Naidoo received a diploma in Management Information Systems from the South African Institute of Management, bachelor’s degrees in Information Systems and in Economics from the University of South Africa, and a J.D. from the John Marshall Law School (now the University of Illinois Chicago School of Law). She is admitted to practice law in Illinois and Washington, D.C.
Qualifications
We believe Ms. Naidoo’s qualifications to serve on the Board of Directors include her expertise in cybersecurity and digital innovation and her experience serving on a public company board of directors. | |||||||
Age 58 |
Director since N/A |
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26 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Proposal 1
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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 63
|
Director since July 2005 |
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Chair of the Board
Committees
• Compensation (Chair)
|
|
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 from October 1988 to November 2004. Mr. Steinberg is responsible for the creation and development of WisdomTree’s proprietary index methodology. He also served as Editor-in-Chief of Individual Investor and Ticker, two magazines formerly published by the Company. 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. He is the author of Midas Investing, published by Times Books, a division of Random House, Inc., in 1996. Since May 2022, Mr. Steinberg has served on the Board of Directors of Fnality International Limited, a financial technology firm based in the United Kingdom. He received the EY Entrepreneur of the Year 2015 New York Award and the ETF.com Lifetime Achievement Award for 2015. Mr. Steinberg is a frequent speaker at conferences on topics related to digital assets and blockchain-enabled finance and has appeared on CNBC, Bloomberg and Fox Business on numerous occasions. 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 58
|
Director since October 1988 |
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Committees
• None
|
REQUIRED VOTE
The directors must be elected by a plurality of votes cast. Votes “withheld” will have no effect on the Director Election Proposal. Broker non-votes, if any, also will have no effect.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” EACH OF THE ABOVE-MENTIONED NOMINEES
(PROPOSAL NO. 1 ON YOUR PROXY CARD)
WISDOMTREE, INC. | 2023 PROXY STATEMENT 27
Proposal 1
CONTINUING DIRECTORS
Class I Directors Whose Terms Expire in 2024
|
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 52
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Director since January 2009 |
|||||
Committees
• Audit (Chair)
• Compensation
|
|
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. Ms. Conjeevaram is currently a member of the audit committee of each of these firms. 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 62
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Director since January 2021 |
|||||
Committees
• Audit
• Nominating and Governance
|
28 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Proposal 1
|
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 also serves on the Board of Directors of the Hershey Trust Company. 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 61
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Director since January 2022 |
|||||
Committees
• Audit
|
EXECUTIVE OFFICERS
Bryan Edmiston, 47, 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, 54, 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, 61, 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
WISDOMTREE, INC. | 2023 PROXY STATEMENT 29
Proposal 1
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, 48, 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, 33, 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 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. 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, 43, 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, 65, 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 Co-Chairperson of the Advisory Board of WFUV.org, an NPR-affiliated FM radio station in New York. He 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.
30 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Corporate Governance
BOARD COMPOSITION
Our Board of Directors currently consists of nine members. In accordance with our Amended and Restated 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. On July 15, 2022, at the 2022 annual meeting of stockholders, our stockholders approved an amendment to our Amended and Restated Certificate of Incorporation to phase out the classification of the Board of Directors over a two-year period commencing at the 2022 annual meeting of stockholders. Accordingly, Class II directors were elected at the 2022 annual meeting of the stockholders to serve a one-year term, and until our 2024 annual meeting of stockholders, each class of directors will be elected for a one-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 and Class III directors and in 2024 for Class I directors. At our 2024 annual meeting of stockholders and each annual meeting of stockholders thereafter, the Board of Directors will be fully declassified and each director will be elected to serve one-year terms.
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, Daniela Mielke and Win Neuger |
• | Class III: Deborah A. Fuhr, Frank Salerno and Jonathan Steinberg. The Board of Directors determined, upon the recommendation of the Nominating and Governance Committee, that Ms. Fuhr not be included in the Board’s slate of nominees for the Annual Meeting. |
Our Amended and Restated 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 until the Board of Directors is declassified.
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 their 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.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 31
Corporate Governance
BOARD MEETINGS
During 2022, the Board of Directors held 37 meetings and acted by unanimous written consent on six occasions. Each director attended at least 75% of all Board meetings and meetings of the Board committees on which the director serves. Our policy is for all of our directors to attend our annual meeting of stockholders. All of our directors attended our 2022 annual meeting of stockholders.
BOARD INDEPENDENCE
NYSE 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 of our directors are independent under the NYSE listing standards 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 NYSE 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, 2022 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.
32 WISDOMTREE, INC. | 2023 PROXY STATEMENT
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 2022, each of the Audit Committee, Compensation Committee and Nominating and Governance Committee reviewed its respective charter and adopted amendments to comply with the requirements of the NYSE in connection with the transfer of the listing of our common stock to the NYSE in November 2022. Charters for each of the Audit Committee, Compensation Committee and Nominating and Governance Committee are available on our investor relations website at https://ir.wisdomtree.com/corporate-governance/governance-documents.
In May 2022, as described in the “Background of the Solicitation” section above, pursuant to the terms the Cooperation Agreement we entered into with ETFS Capital, Graham Tuckwell, and the other members of the 2022 Group in connection with their notice of intention to nominate certain individuals for election as directors at our 2022 annual meeting of stockholders, the Board of Directors also formed an Operations and Strategy Committee to evaluate the Company’s operations and corporate strategy, and upon the recommendation of the Operations and Strategy Committee and the Board of Directors’ agreement with such recommendation, the committee was dissolved on December 31, 2022. Committee membership is limited to independent directors as defined under the listing standards of the NYSE. 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;
• monitor the design and implementation of our internal audit function;
• 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*
• Harold Singleton III*
Mr. Singleton joined the committee in May 2022.
* Designated as an “audit committee financial expert” as defined under the applicable rules of the SEC.
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Number of Meetings in 2022: 8
Action by Unanimous Consent in 2022: 0
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WISDOMTREE, INC. | 2023 PROXY STATEMENT 33
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 2022: 9
Action by Unanimous Consent in 2022: 2
| ||
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;
• review, and recommend any changes to, the Company’s Corporate Governance Guidelines;
• obtain directors’ comments on, and report to the Board with, an assessment of the Board of Directors’ performance; 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
• Deborah A. Fuhr
Ms. Conjeevaram joined the committee in January 2022.
Ms. Fuhr joined the committee in May 2022. The Board of Directors determined, upon the recommendation of this committee, that Ms. Fuhr not be included in the Board’s slate of nominees for the Annual Meeting.
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Number of Meetings in 2022: 5
Action by Unanimous Consent in 2022: 1 | ||
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Operations and Strategy Committee |
| |
Committee Responsibilities:
• review the Company’s ongoing operations and corporate strategy; and
• make formal recommendations to the Board on matters including operational improvement opportunities, Company strategy, management changes, if the Committee so determines, and whether to continue to the Committee after November 25, 2022.
This committee was dissolved on December 31, 2022. |
Members:
• Smita Conjeevaram, Chair
• Lynn S. Blake
• Anthony Bossone
• Deborah A. Fuhr | |
Number of Meetings in 2022: 14
|
34 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Corporate Governance
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Bossone, Neuger and Salerno and Ms. Blake served as members of the Compensation Committee during 2022. None of the members of the Compensation Committee was an officer or employee of ours during 2022 or has ever served as one of our officers and none had any relationship with us or any of our subsidiaries during 2022 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.
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.
During 2022, the corporate governance guidelines were amended to comply with the requirements of the NYSE in connection with the transfer of the listing of our common stock to the NYSE in November 2022. The corporate governance guidelines are available on our investor relations website at https://ir.wisdomtree.com/corporate-governance/governance-documents.
BOARD AND COMMITTEE SELF-ASSESSMENTS
The Board conducts an annual self-assessment to determine whether it and its committees are functioning effectively. The Nominating and Governance Committee receives comments from all directors and executive officers and reports annually to the Board 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 BUSINESS CONDUCT AND ETHICS
We have adopted a code of business conduct and ethics that applies to all our employees, officers and directors, including those officers responsible for financial reporting. Our code of business conduct and ethics is available on our investor relations website at https://ir.wisdomtree.com/corporate-governance/governance-documents. We intend to disclose any amendments to this code, or any waivers of its requirements, on our website.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 35
Corporate Governance
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 |
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 and restricted stock unit 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 time-based restricted stock awards and time-based and performance-based restricted stock unit 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, 2022, 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, David Yates, Lynn S. Blake, Smita Conjeevaram, Deborah A. Fuhr, Daniela Mielke and Harold Singleton III. Messrs. Edmiston, Marinof, Peck and Yates and Ms. Frankenthaler became executive officers within the last four years, and Mses. Blake, Conjeevaram, Fuhr and Mielke and Mr. Singleton 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.
36 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Corporate Governance
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 2022 as approved by the Board of Directors:
Board Service |
||||
Annual Cash Retainer(1) |
$ | 100,000 | ||
Annual Restricted Stock or Deferred Restricted Stock Unit Award(2) |
$ | 100,000 | ||
Chair of the Board Cash Retainer |
$ | 110,000 |
Committee Service(1) |
Chair | Member | ||||||
Audit |
$ | 25,000 | $ | 12,500 | ||||
Compensation |
$ | 40,000 | $ | 15,000 | ||||
Nominating and Governance |
$ | 15,000 | $ | 7,500 | ||||
Operations and Strategy |
$ | 12,500 | $ | 7,500 |
(1) | Annual cash retainers for Board and committee service are paid quarterly based on service during the prior quarter. |
(2) | Annual equity award consisting of restricted stock under the 2016 Equity Plan or 2022 Equity Plan and/or, at the non-employee directors’ election, deferred restricted stock units (“DRSUs”) issued pursuant to the Non-Employee Directors’ Deferred Compensation Program under the 2022 Equity Plan. The restricted stock or DRSUs are 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 and vest one year from the grant date, subject to certain exceptions. The award is valued at $100,000 on the grant date based on the closing price of our common stock on the grant date. The shares of common stock underlying the DRSUs are payable on a one-for-one basis, upon the earliest of (i) a date determined by the director (if any), (ii) a “separation from service” (as defined in Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) and (iii) a Sale Event (as defined in the 2022 Equity Plan), so long as such Sale Event also constitutes a “change in the ownership or effective control” of the Company or a “change in the ownership of a substantial portion of the assets” of the Company (as such terms are defined in Section 409A of the Code). A director who is appointed to the Board outside of the annual meeting of stockholders will receive a prorated amount of the annual award. |
The following table sets forth compensation paid to our non-employee directors in 2022. All of our directors are reimbursed for out-of-pocket expenses for attending meetings. Directors who are also employees of WisdomTree are not entitled to any compensation for their services as a director.
Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($)(1) | Total ($) | |||||||||
Lynn S. Blake(2) |
44,158 | 106,294 | (3) | 182,952 | ||||||||
Anthony Bossone |
143,750 | 99,996 | (4) | 247,496 | ||||||||
Smita Conjeevaram |
123,471 | 99,996 | (5) | 231,592 | ||||||||
Susan Cosgrove(6) |
115,211 | — | (6) | 85,109 | ||||||||
Deborah A. Fuhr(7) |
41,522 | 106,294 | (8) | 178,441 | ||||||||
Bruce Lavine(9) |
30,458 | — | (9) | 3,583 | ||||||||
Daniela Mielke(10) |
2,740 | 81,365 | (10) | 109,105 | ||||||||
Win Neuger |
124,354 | 99,996 | (5) | 226,225 | ||||||||
Frank Salerno |
250,000 | 99,996 | (4) | 349,996 | ||||||||
Harold Singleton III(11) |
73,502 | 139,993 | (11) | 241,620 |
(1) | Represents the grant date fair value of shares of restricted stock and DRSUs, computed in accordance with Financial Accounting Standards Board (“FASB”), Accounting Standard Codification (“ASC”), Topic 718. |
(2) | Ms. Blake was appointed to our Board of Directors on May 25, 2022. |
(3) | Represents 1,073 shares of restricted stock with a grant date fair value of $6,298 awarded to Ms. Blake upon her appointment as a non-employee director on May 25, 2022 and 19,762 DRSUs with a grant date fair value of $99,996 awarded on July 25, 2022. |
WISDOMTREE, INC. | 2023 PROXY STATEMENT 37
Corporate Governance
(4) | Represents the grant date fair value of 19,762 DRSUs awarded on July 25, 2022. |
(5) | Represents the grant date fair value of 19,762 shares of restricted stock awarded on July 25, 2022. |
(6) | Ms. Cosgrove resigned from our Board of Directors on September 15, 2022. Upon her resignation, the vesting of 3,410 shares of the 19,762 shares of restricted stock held by Ms. Cosgrove was accelerated, which shares were originally scheduled to vest on July 25, 2023. |
(7) | Ms. Fuhr was appointed to our Board of Directors on May 25, 2022. The Board of Directors determined, upon the recommendation of the Nominating and Governance Committee, that Ms. Fuhr not be included in the Board’s slate of nominees for the Annual Meeting. |
(8) | Represents 1,073 shares of restricted stock with a grant date fair value of $6,298 awarded to Ms. Fuhr upon her appointment as a non-employee director on May 25, 2022 and 19,762 shares of restricted stock with a grant date fair value of $99,996 awarded on July 25, 2022. |
(9) | 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. |
(10) | Ms. Mielke was appointed to our Board of Directors on September 15, 2022, effective September 21, 2022. In connection with her appointment, 16,639 DRSUs with a grant date fair value of $81,365 were awarded on September 21, 2022. |
(11) | Mr. Singleton III was appointed to our Board of Directors on January 21, 2022. In connection with his appointment, 6,932 shares of restricted stock with a grant date fair value of $39,997 were awarded on January 21, 2022. In addition, 19,762 DRSUs with a grant date fair value of $99,996 were awarded on July 25, 2022. |
38 WISDOMTREE, INC. | 2023 PROXY STATEMENT
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, 2023. Ernst & Young LLP acted as our independent registered public accounting firm for the year ended December 31, 2022. 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, 2022 and 2021 (in thousands):
|
2022 | 2021 | ||||||
Audit Fees(1) |
$ | 1,512 | $ | 1,360 | ||||
Audit-Related Fees(2) |
45 | 44 | ||||||
Tax Fees |
— | — | ||||||
All Other Fees |
— | — | ||||||
Total Fees |
$ | 1,557 | $ | 1,404 |
(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, 2022 and 2021. |
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.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 39
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, 2023. Abstentions and broker non-votes, if any, will have no effect on 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)
40 WISDOMTREE, INC. | 2023 PROXY STATEMENT
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, 2022 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, 2022 for filing with the Securities and Exchange Commission.
No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), through any general statement incorporating by reference in its entirety the proxy statement in which this Report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed to be “soliciting material” or to be “filed” under either the Securities Act or the Exchange Act.
Members of the Audit Committee*
Anthony Bossone (Chair) | Smita Conjeevaram | Harold Singleton III |
* | Mr. Singleton joined the Audit Committee in May 2022. |
WISDOMTREE, INC. | 2023 PROXY STATEMENT 41
Proposal 3
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 2023 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 2024.
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, if any, 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. 3 ON YOUR PROXY CARD)
42 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Proposal 4
Ratification of the Adoption by Our Board of Directors of the Stockholder Rights Agreement
You are being asked to ratify the adoption by the Board of the Stockholder Rights Agreement, dated March 17, 2023 (the “Rights Agreement”), by and between the Company and Continental Stock Transfer & Trust Company, as Rights Agent. Stockholder ratification of the Rights Agreement is not required by applicable law, or by our Amended and Restated Certificate of Incorporation, by-laws, or other governing documents. Nonetheless, the Board has determined to request stockholder ratification of the adoption of the Rights Agreement to determine the viewpoint of stockholders as to the advisability of the Rights Agreement and as a matter of good corporate governance. The Rights Agreement is intended to protect WisdomTree and its stockholders from efforts by a single stockholder or group of stockholders to obtain control of WisdomTree without paying a control premium. If stockholders do not ratify the adoption of the Rights Agreement, it will expire automatically at the close of business on the day after the Annual Meeting.
Background of the Rights Agreement
The Board adopted the Rights Agreement on March 17, 2023. The Rights Agreement contains a number of recognized stockholder protections, including: (i) the term of the Rights Agreement is one year, unless it is not approved by stockholders at the Annual Meeting, in which case it will expire automatically on the day after the Annual Meeting; (ii) the ownership trigger threshold is bifurcated in that for a “flip-in” or “flip-over” event it has been set at ten percent (10%) of our common stock for certain stockholders and twenty percent (20%) in the case of passive stockholders or “13G Investors” as defined below; (iii) no dead-hand, slow-hand, no-hand or similar features that would limit the ability of a future board of directors of the Company to redeem the Rights (as defined below) or otherwise make the Rights Agreement non-applicable to a particular transaction; and (iv) a stockholder redemption feature that, pursuant to the terms of the Rights Agreement, provides that if the Company receives a Qualifying Offer (as defined below) and the Board has not redeemed the outstanding Rights or exempted such Qualifying Offer from the terms of the Rights Agreement or called a special meeting of stockholders for the purpose of voting on whether to exempt such Qualifying Offer from the terms of the Rights Agreement (the “Special Meeting”), in each case by the end of the 90 business days following the commencement of such Qualifying Offer, and such offer remains a Qualifying Offer, the holders of record of 10% of our common stock may request that the Board call a special meeting of stockholders to vote on a resolution authorizing the exemption of the Qualifying Offer from the terms of the Rights Agreement.
The Board adopted the Rights Agreement in response to stockholder activism concerns. Specially, the Board considered that at the time of the adoption of the Rights Agreement: (i) ETFS Capital was the Company’s third largest stockholder, owning approximately 10.2% of the Company’s common stock; (ii) ETFS Capital ran a proxy contest at the Company’s 2022 annual meeting of stockholders, had informed a WisdomTree director on March 10, 2023 that it planned to run a proxy contest at the Annual Meeting, and on March 9, 2023 had taken initial steps required under the Company’s by-laws to prepare an advance notice of nomination by requesting a director questionnaire and form of representation and agreement from the Company; (iii) in 2022, ETFS Capital formed a “group” with Lion Point Capital, LP (“Lion Point”) and ETFS Capital and Lion Point subsequently submitted an advance notice of nomination and threatened to run a proxy contest at the 2022 annual meeting of stockholders, which was ultimately settled under the Cooperation Agreement; (iv) Mr. Tuckwell and other representatives of ETFS Capital had several times over the course of the past two years expressed a different strategic vision for the Company, including indicating in multiple direct engagements with the Company in the fall of 2022 that the Company should no longer pursue its digital assets strategy; (v) two members of the Board were appointed to the Board pursuant to the Cooperation Agreement with ETFS Capital and Lion Point and such persons were nominated by ETFS Capital and Lion Point in their 2022 notice of nomination; and (vi) following the expiration of the standstill period under the Cooperation Agreement on March 17, 2023, in the absence of a stockholder rights agreement, ETFS Capital could acquire more shares of the Company’s common stock in the open market and/or form a “group” with another stockholder, as it did in 2022.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 43
Proposal 4
The Rights Agreement is intended to protect WisdomTree and its stockholders from efforts by a single stockholder or group of stockholders to obtain control of WisdomTree without paying a control premium. The Rights Agreement is similar to other rights agreements adopted by publicly held companies and is intended to promote the fair and equal treatment of all stockholders and to allow stockholders to realize the long-term value of their investment.
In making the decision to adopt the Rights Agreement, the Board consulted with its legal and financial advisors and carefully considered, among other things, the arguments for and against adopting such an agreement and the threat of stockholder activism posed by ETFS Capital. In light of the foregoing and for the reasons set forth below, on March 17, 2023, the Board declared a dividend of (i) one preferred stock purchase right (a “Right”) for each outstanding share of common stock of the Company and (ii) 1,000 Rights for each outstanding share of Series A Non-Voting Convertible Preferred Stock of the Company (the “Series A Preferred Stock”), to stockholders of record as of the close of business on March 28, 2023 (for purposes of this section, the “Record Date”). In addition, one Right will automatically attach to each share of common stock of the Company and 1,000 Rights will automatically attach to each share of Series A Preferred Stock, in each case, issued between the Record Date and the earlier of the Distribution Date (as defined below) and the expiration date of the Rights. Each Right entitles the registered holder to purchase from the Company a unit consisting of one ten-thousandth of a share (a “Unit”) of Series B Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”) at a cash exercise price of $32.00 per Unit (the “Exercise Price”), subject to adjustment. The initial issuance of the Rights had no accounting or financial reporting impact and had no effect on our earnings per share.
On March 17, 2023, the Company and Continental Stock Transfer & Trust Company, LLC, as Rights Agent, entered into the Rights Agreement. In connection with the adoption of the Rights Agreement, and in order to set forth the rights, powers, and preferences of the Preferred Stock that are issuable pursuant to the Rights Agreement, the Company filed a Certificate of Designation for the Series B Junior Participating Cumulative Preferred Stock with the Secretary of State of the State of Delaware on March 17, 2023.
Reasons for the Rights Agreement
In light of the reasons set forth below, the Board believes that having the Rights Agreement in place is in the best interest of all of our stockholders:
• | Deter a Creeping Acquisition of Control. As noted above, ETFS Capital currently beneficially owns approximately 10.2% of our outstanding common stock. The Rights Agreement is designed to prevent the creeping acquisition of control of the Company that does not result in a premium being paid to all stockholders. The Board does not believe that ETFS Capital or any other investor should be able to increase their ownership level above the ownership thresholds set forth in the Rights Agreement through open market or privately negotiated purchases that may allow them, or any other investor to gain control of the Company without paying a fair price to all stockholders. |
• | Better Ability for the Board to Respond to Unsolicited Acquisition Proposals. The Rights Agreement is intended to enable the Board, as elected representatives of the stockholders, to be better positioned to respond to an unsolicited acquisition proposal. It is also intended to ensure that all stockholders are treated fairly in an acquisition of the Company. The Rights Agreement does not prevent parties from making an unsolicited offer for, or acquisition of, the Company at a full and fair price and on fair terms. It does, however, give the Board the ability to defend stockholders against abusive or coercive takeover tactics by a potential acquirer that could be used to gain control of the Company without the acquirer paying all stockholders a fair price for their shares. |
• | Encourages Good Faith Negotiations. The Rights Agreement is intended to induce potential acquirers to negotiate in good faith with the Board and thereby strengthens the Board’s bargaining position for the benefit of all stockholders by providing the Board with the opportunity, flexibility and additional time to: (i) determine whether any proposed transaction is in the best interests of all of our stockholders; (ii) attempt to negotiate better terms for any such transaction that, if accepted, would result in a transaction that the Board determines to be in the best interests of all of our stockholders; (iii) achieve a fair price for the stockholders that is consistent with the intrinsic value of the Company and its long-term prospects; (iv) reject any transaction that the Board determines to be inadequate; and (v) consider alternative transactions and opportunities. The existence of the Rights Agreement does not diminish the responsibility of the Board to consider acquisition proposals in a manner consistent with the Board’s fiduciary duties to stockholders. |
44 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Proposal 4
• | Control of a Sale Process. The Rights Agreement is intended to enable the Board to better manage and control an auction of the Company or other sale process to the extent the Board may, in the future, decide to consider strategic alternatives or sell the Company. It enhances the Board’s ability to protect a negotiated transaction from uninvolved third parties once the auction or other sale process is completed. It also may be effective in providing the Board sufficient time to evaluate a proposed transaction and, if necessary, seek alternative courses of action to maximize stockholder value. |
• | Deters an Acquirer from Seeking Control By Opportunistically Taking Advantage of Adverse Market Conditions. The Rights Agreement is also intended to deter an acquirer from taking advantage of adverse market conditions, short-term declines in share prices, or anticipated improvements in operating results before such improvements are fully reflected in the market price of our common stock, and from acquiring control of the Company at a price that does not reflect our intrinsic value or long-term prospects. |
Summary of the Rights Agreement
The following is a summary of the terms of the Rights Agreement. All capitalized terms not defined in this summary have the meanings ascribed to such terms in the Rights Agreement. This summary and each statement contained in this summary is qualified in its entirety by reference to the complete text of the Rights Agreement, which is attached as Appendix A to this proxy statement and incorporated herein by reference. We urge you to carefully read the Rights Agreement in its entirety as the discussion below is only a summary.
Rights Dividend
Pursuant to the terms of the Rights Agreement, the Board of Directors declared a dividend distribution of (i) one Right for each outstanding share of common stock, par value $0.01 per share, of the Company and (ii) 1,000 Rights for each outstanding share of Series A Non-Voting Convertible Preferred Stock, par value $0.01 per share, of the Company, to stockholders of record as of the close of business on March 28, 2023. In addition, one Right will automatically attach to each share of Common Stock and 1,000 Rights will automatically attach to each share of Series A Preferred Stock, in each case, issued between the Record Date and the earlier of the Distribution Date (as defined below) and the expiration date of the Rights. Each Right entitles the registered holder thereof to purchase from the Company a unit consisting of one ten-thousandth of a share of Series B Junior Participating Cumulative Preferred Stock, par value $0.01 per share, of the Company at a cash exercise price of $32.00 per Unit, subject to adjustment, under certain conditions specified in the Rights Agreement and summarized below.
Distribution Date
Initially, the Rights are not exercisable and are attached to and trade with all shares of Common Stock and Series A Preferred Stock outstanding as of, and issued subsequent to, the Record Date. The Rights will separate from the Common Stock and Series A Preferred Stock and will become exercisable upon the earlier of (i) the close of business on the tenth calendar day following the first public announcement that a person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial ownership of 10% (or 20% in the case of a person or group which, together with all affiliates and associates of such person or group, is the beneficial owner of shares of Common Stock of the Company representing less than 20% of the shares of Common Stock of the Company then outstanding, and which is entitled to file, and files, a statement on Schedule 13G pursuant to Rule 13d-1(b) or Rule 13d-1(c) of the General Rules and Regulations under the Exchange Act, as in effect at the time of the first public announcement of the declaration of the Rights dividend with respect to the shares of Common Stock beneficially owned by such person or group) or more of the outstanding shares of Common Stock, other than as a result of repurchases of stock by the Company or certain inadvertent actions by a stockholder (the date of such announcement being referred to as the “Stock Acquisition Date”), or (ii) the close of business on the tenth business day (or such later day as the Board of Directors may determine) following the commencement of a tender offer or exchange offer that could result upon its consummation in a person or group becoming an Acquiring Person (the earlier of such dates being herein referred to as the “Distribution Date”). A person or group who beneficially owned 10% or more (or 20% or more in the case of passive stockholders) of the Company’s outstanding Common Stock prior to the first public announcement by the Company of the adoption of the Rights Agreement will not be deemed an Acquiring Person so long as they do not acquire beneficial ownership of any
WISDOMTREE, INC. | 2023 PROXY STATEMENT 45
Proposal 4
additional shares of Common Stock at a time when they still beneficially own 10% or more (or 20% or more in the case of passive stockholders) of such Common Stock, subject to certain exceptions as set forth in the Rights Agreement.
For purposes of the Rights Agreement, beneficial ownership is defined to include ownership of securities that are subject to a derivative transaction and acquired derivative securities. Swaps dealers unassociated with any control intent or intent to evade the purposes of the Rights Agreement are excepted from such imputed beneficial ownership.
Until the Distribution Date (or earlier redemption, exchange or expiration of the Rights), (i) the Rights will be evidenced by the Common Stock or Series A Preferred Stock certificates (or, with respect to any uncertificated shares of Common Stock or Series A Preferred Stock registered in book entry form (“Book Entry Shares”), by notation in book entry) and will be transferred with and only with such shares of Common Stock or Series A Preferred Stock, (ii) new Common Stock or Series A Preferred Stock certificates or Book Entry Shares issued after the Record Date will contain a notation incorporating the Rights Agreement by reference, and (iii) the surrender for transfer of any certificates for Common Stock or Series A Preferred Stock or Book Entry Shares will also constitute the transfer of the Rights associated with the Common Stock or Series A Preferred Stock represented thereby.
As soon as practicable after the Distribution Date, one or more certificates evidencing Rights (the “Right Certificates”) will be mailed to holders of record of Common Stock and Series A Preferred Stock as of the close of business on the Distribution Date and, thereafter, the separate Right Certificates alone will represent the Rights. Except as otherwise determined by the Board of Directors, only shares of Common Stock or Series A Preferred Stock issued prior to the Distribution Date will be issued with Rights.
Subscription and Merger Rights
In the event that a Stock Acquisition Date occurs, proper provision will be made so that each holder of a Right (other than an Acquiring Person or its associates or affiliates, whose Rights shall become null and void) will thereafter have the right to receive upon exercise, in lieu of a number of shares of Preferred Stock, that number of shares of Common Stock of the Company (or, in certain circumstances, including if there are insufficient shares of Common Stock to permit the exercise in full of the Rights, Units of Preferred Stock, other securities, cash or property, or any combination of the foregoing) having a market value of two times the Exercise Price of the Right (such right being referred to as the “Subscription Right”). In the event that, at any time following the Stock Acquisition Date, (i) the Company consolidates with, or merges with and into, any other person, and the Company is not the continuing or surviving corporation, (ii) any person consolidates with the Company, or merges with and into the Company and the Company is the continuing or surviving corporation of such merger and, in connection with such merger, all or part of the shares of Common Stock are changed into or exchanged for stock or other securities of any other person or cash or any other property, or (iii) 50% or more of the Company’s assets or earning power is sold, mortgaged or otherwise transferred, each holder of a Right (other than an Acquiring Person or its associates or affiliates, whose Rights shall become null and void) will thereafter have the right to receive, upon exercise, common stock of the acquiring company having a market value equal to two times the Exercise Price of the Right (such right being referred to as the “Merger Right”). The holder of a Right will continue to have the Merger Right whether or not such holder has exercised the Subscription Right. Rights that are or were beneficially owned by an Acquiring Person may (under certain circumstances specified in the Rights Agreement) become null and void.
Until a Right is exercised, the holder will have no rights as a stockholder of the Company (beyond those as an existing stockholder), including the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for shares of Common Stock, other securities of the Company, other consideration or for common stock of an acquiring company.
Exchange Feature
At any time after a person becomes an Acquiring Person, the Board of Directors may, at its option, exchange all or any part of the then outstanding and exercisable Rights for shares of Common Stock at an exchange ratio of one share of Common Stock for each Right, subject to adjustment as specified in the Rights Agreement. Notwithstanding the foregoing, the Board of Directors generally will not be empowered to effect such exchange at any time after any person becomes the beneficial owner of 50% or more of the Common Stock of the Company.
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Proposal 4
Adjustments
The Exercise Price payable, and the number of shares of Common Stock or other securities or property issuable, upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders of the Preferred Stock are granted certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock, or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Exercise Price will be required until cumulative adjustments amount to at least 1% of the Exercise Price. The Company is not obligated to issue fractional shares. If the Company elects not to issue fractional shares, in lieu thereof an adjustment in cash will be made based on the fair market value of the Preferred Stock on the last trading date prior to the date of exercise.
Redemption
The Rights may be redeemed in whole, but not in part, at a price of $0.01 per Right (payable in cash, Common Stock or other consideration deemed appropriate by the Board of Directors) by the Board of Directors only until the earlier of (i) the time at which any person becomes an Acquiring Person or (ii) the expiration date of the Rights Agreement. Immediately upon the action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and thereafter the only right of the holders of Rights will be to receive the redemption price.
Amendment
The Rights Agreement may be amended by the Board of Directors in its sole discretion at any time prior to the time at which any person becomes an Acquiring Person. After such time the Board of Directors may, subject to certain limitations set forth in the Rights Agreement, amend the Rights Agreement only to cure any ambiguity, defect or inconsistency, to shorten or lengthen any time period, or to make changes that do not adversely affect the interests of Rights holders (excluding the interests of an Acquiring Person or its associates or affiliates).
Expiration Date
The Rights are not exercisable until the Distribution Date and will expire at the close of business on March 16, 2024; provided that if the Company’s stockholders have not ratified the Rights Agreement by the close of business on the first day after the Annual Meeting (including any adjournments or postponements thereof), the Rights will expire at such time, in each case, unless previously redeemed or exchanged by the Company.
Qualifying Offer
The Rights Agreement provides the holders of the Common Stock with the ability to exempt an offer to acquire, or engage in another business combination transaction involving, the Company that is deemed a “Qualifying Offer” (as defined in the Rights Agreement) from the terms of the Rights Agreement. A Qualifying Offer is, in summary, an offer determined by a majority of the independent members of the Board to have specific characteristics that are generally intended to preclude offers that are coercive, abusive or highly contingent. Among those characteristics are that it be: (i) a fully financed all-cash tender offer or an exchange offer offering shares of common stock of the offeror, or a combination thereof, for any and all of the Common Stock; and (ii) an offer that is otherwise in the best interests of the Company’s stockholders. The Rights Agreement provides additional characteristics necessary for an acquisition offer to be deemed a “Qualifying Offer,” including if the consideration offered in a proposed transaction is stock of the acquiror.
Pursuant to the Rights Agreement, if the Company receives a Qualifying Offer and the Board has not redeemed the outstanding Rights or exempted such Qualifying Offer from the terms of the Rights Agreement or called a Special Meeting for the purpose of voting on whether to exempt such Qualifying Offer from the terms of the Rights Agreement, in each case by the end of the 90 business day period following the commencement of such Qualifying Offer, provided such offer
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Proposal 4
remains a Qualifying Offer during such period, the holders of 10% of the Common Stock may request that the Board call a Special Meeting to vote on a resolution authorizing the exemption of the Qualifying Offer from the terms of the Rights Agreement. If such a Special Meeting is not held by the 90th business day following the receipt of such a request from stockholders to call a Special Meeting, the Qualifying Offer will be deemed exempt from the terms of the Rights Agreement on the 10th business day thereafter.
Certain Anti-Takeover Effects
The Rights Agreement is intended to protect stockholders from coercive or otherwise unfair takeover tactics that would allow a third party to gain control of the Company without paying stockholders an appropriate control premium. The Board believes that the adoption of the Rights Agreement for the reasons described above is in the best interests of the Company and all of its stockholders. In making your voting decision, stockholders should consider that, while the Rights Agreement is not intended to prevent a takeover of the Company, it does have a potential anti-takeover effect.
Generally, the Rights Agreement works by causing substantial dilution to any person or group (other than specified exempt persons) that acquires 10% (or 20% in the case of a 13G Investor) or more of the shares of common stock (which includes for this purpose stock referenced in derivative transactions and securities) without the approval of the Board. As a result, the overall effect of the Rights Agreement and the issuance of the Rights may be to render more difficult or discourage a merger, tender or exchange offer or other business combination involving the Company that is not approved by the Board. These provisions are not intended to prevent parties from making an unsolicited offer for or acquisition of the Company at a full and fair price and on fair terms. In addition, neither the Rights Agreement nor the Rights should interfere with any merger, tender or exchange offer or other business combination approved by the Board. However, these provisions apply even if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our Board determines is not in the best interests of the Company and all of its stockholders.
Effect of Stockholders Not Ratifying the Rights Agreement
None of the Amended and Restated Certificate of Incorporation, the by-laws, or applicable law requires stockholder ratification of the adoption of the Rights Agreement. However, the Board considers a proposal for stockholders to ratify the adoption of the Rights Agreement a matter of good corporate governance. If stockholders do not ratify the adoption of the Rights Agreement, it will expire automatically at the close of business on the day after the Annual Meeting.
REQUIRED VOTE
The affirmative vote of a majority of votes cast is necessary to ratify the adoption of the Rights Agreement. Abstentions and broker non-votes, if any, will have no effect on this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF THE ADOPTION BY OUR BOARD OF DIRECTORS OF THE STOCKHOLDER RIGHTS AGREEMENT
(PROPOSAL NO. 4 ON YOUR PROXY CARD)
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Executive Compensation
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, 2022. 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) | Lynn S. Blake | Anthony Bossone | Win Neuger |
COMPENSATION DISCUSSION AND ANALYSIS
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Executive Compensation
Introduction
This Compensation Discussion and Analysis describes the comprehensive information regarding our compensation programs and policies for our CEO, our CFO and the next three highest compensated named executive officers for the year ended December 31, 2022. We collectively refer to these executive officers as the NEOs.
Name |
Title | |
Jonathan Steinberg |
Chief Executive Officer (CEO or PEO) | |
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) |
We believe we provide a competitive total compensation opportunity for our NEOs through a combination of base salary, cash incentive bonuses, equity incentive 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 2022 compensation results. |
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 2022 annual meeting of stockholders, our say-on-pay proposal received support from stockholders, with 91% of the shares voted casting a vote in favor of the proposal. We regularly engage with our stockholders on a variety of business matters and are committed to continuously evaluating our executive compensation program in light of feedback received from stockholders and ensuring that our executive compensation disclosures are transparent and our executive compensation programs align the interests of our executive officers with those of our stockholders. The Compensation Committee considered the outcome of stockholder engagement, as well as the results of the stockholders’ advisory vote at our 2022 annual meeting and, in light of the strong support for our compensation programs evidenced by our say-on-pay results, decided to maintain our general approach to executive compensation. This includes the following enhancements previously disclosed in our proxy statement for our 2022 annual meeting that were implemented in 2022:
• | greater weight was ascribed to quantitative performance metrics such that the achievement of quantitative metrics determined 75% of the executive incentive compensation pool and the remaining 25% was determined by the Compensation Committee based on qualitative results, representing a shift from the prior 50%-50% quantitative-qualitative mix applicable to 2021 compensation; |
• | all NEOs received a greater percentage of incentive compensation in the form of equity, including an equity payout of 60% for our CEO compared to 52% in 2021, of which 50% consisted of performance-based restricted stock units and 50% consisted 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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Executive Compensation
• | our Board of Directors 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 was 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. |
Executive Summary
Business Overview
2022 was a unique and exciting year for WisdomTree. While operating in a challenging macroenvironment, we successfully broadened and grew our ETP business and advanced our early mover strategic expansion into digital assets and blockchain-enabled finance.
We recently completed our tenth consecutive quarter of net inflows, and we see opportunities for continued organic growth in our ETP business. With over $12 billion of net inflows in 2022, we have achieved a 16% annualized pace of organic flow growth – the best of all publicly traded U.S. asset managers and our strongest flowing year since 2015. Our success over the past year has been driven by strong breadth and depth of global flows, with inflows into seven of our eight major product categories. We launched 18 new ETPs globally in 2022 and have new products in the pipeline for the upcoming year, which we expect to serve as another lever of future growth. Our AUM as of March 31, 2023 was $90.7 billion, having generated over $6.3 billion of additional net inflows through March 31 2023 and having benefited from market appreciation. Our products are well positioned for the rotation to value, driven by rising interest rates and an inflationary environment and have delivered outstanding performance.
Our models strategy is succeeding as we continue to expand both the number of model partners and the number of models on their platforms. We are focused on partner platforms such as Merrill Lynch, Morgan Stanley and others, as well as being an outsourced solution for smaller registered investment advisers and independent broker-dealers to make model portfolios easier to trade through our Portfolio & Growth Solutions program that we launched in April 2022. Continued success in winning advisor mindshare should lead to model flows that are recurring in nature and stackable on top of our current inflow profile.
We also have advanced our strategic expansion into digital assets and blockchain-enabled finance. Our digital assets strategy is a natural extension of our core business that we believe will bring us new, diversified and high-growth revenue streams. In 2022, we tokenized real-world assets like physical gold (i.e., gold tokens) and U.S. dollars. We also achieved key milestones with the SEC declaring effective the registration of 10 blockchain-enabled funds, allowing us to lay claim to the deepest exposures in the new digital wrapper. Looking ahead, WisdomTree Prime™, our blockchain-native wallet developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets, is on track for a nationwide rollout targeted in 2023. The Financial Industry Regulatory Authority approved our limited purpose broker-dealer, WisdomTree Securities, Inc., to operate as a mutual fund retailer, which will allow it to facilitate transactions in digital or blockchain-enabled mutual funds offered in the WisdomTree Prime mobile application. As an early mover in digital assets and blockchain-enabled financial services, we are ahead of the curve and establishing ourselves as a leader in this space.
Overall, we have a strong foundation for growth with our scalable business model, excellent product positioning and performance, a broad and growing managed models business and innovative approach to digital assets and blockchain-enabled finance. We are well positioned to continue on our growth trajectory and identify further opportunities to expand our business and reach a greater addressable market.
In addition, 2022 was an important one for our WisdomTree team. We are proud to have been named 2022 Best Places to Work in Money Management by Pension & Investments for the third consecutive year, and this year securing the top ranking for firms in the 100-499 employees category. We were also named Best Workplace for medium-sized companies in the U.K. for the third consecutive year and a 2022 Best Workplace for Women for medium-sized companies by Great Place to Work. We achieved overall positive results from our 2022 global employee engagement survey, which we believe has contributed to our strong performance this year, as well as to our continued ability to attract and retain top talent, evidenced by our employee retention rate of 88% in 2022.
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Executive Compensation
Compensation Overview
2022 Highlights. 2022 was marked by many achievements in advancing our long-term strategic objectives, fostered by an employee-centric culture that is contributing to our success. It was also a year of heightened volatility with major market indices operating near bear market territory, resulting in negative market movement reducing our AUM by almost $8 billion and our revenues by approximately $20 million. However, we overcame this challenging market backdrop by generating net inflows of $12.2 billion during the year ended December 31, 2022, representing 16% annualized organic flow growth – the best of all publicly traded U.S. asset managers, and our strongest flowing year since 2015. This performance largely offset the impact of negative market movement on our revenues, which were essentially unchanged as compared to the prior year.
Our ability to overcome adverse market conditions was reflected in our stock price performance in relation to our peers. Our total shareholder return (“TSR”) ranking was 2nd among a peer group of 13 publicly traded asset managers.
Actual quantitative performance of our incentive compensation pool was 156.1% of target, which was largely driven by net inflows and our relative TSR ranking. However, in recognition of the challenging market conditions and the resulting adverse impact on our revenues, operating income and operating margin, the Compensation Committee in consultation with Frederic W. Cook & Co. (“FWC”), the Compensation Committee’s independent compensation consultant, exercised negative discretion, setting the qualitative amount at 78.4% of target. This resulted in a total incentive compensation pool approved by the Compensation Committee that was 136.7% of the target amount for 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 TSR is a performance metric included in our performance-based incentive compensation program for our NEOs. The 2022 funded payout percentage for this performance metric was 224.9% of target. See “2022 Incentive Compensation Program and Results” below; |
• | long-term incentive compensation is granted entirely in the form of equity, the value of which 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 2022 performance in January 2023 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 |
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Executive Compensation
• | the payout on PRSUs that vested in January 2022 and January 2023 was 0% and 76.92%, respectively, of the target number of PRSUs based on the TSR of our common stock relative to the respective TSRs of the stocks of the Traditional Asset Manager Peer Group (defined below), each measured over a three-year period from the grant date, as determined by an independent valuation specialist. See “Components of Compensation – Performance Based Restricted Stock Units (PRSUs)” below. |
2023 Compensation Program Updates. We made the following enhancements to our incentive compensation program that will take effect prospectively beginning in 2023:
• | New performance metric. We introduced an additional performance metric, “Annualized Run Rate Revenue (“RRR”) from Flows” which will be computed by multiplying net flows of each of our ETPs by its expense ratio. This metric will be weighted equally with our Net Inflows metric (9.375% in each case) and represents a financial measure (revenue associated with flows) derived from a non-financial measure (net flows). We believe this new metric is a meaningful enhancement to our incentive compensation program as the composition of our flows impacts the magnitude of the change to our operating revenues. |
• | Adjustment to payout curve. We adjusted the payout curve for financial metrics (revenues, adjusted operating income and adjusted operating margin) to be computed using two to one leverage instead of one to one leverage. For example, if actual performance is 98% of target, the payout will be 96% (i.e. 100%, minus (2% x 2)), and if actual performance is 102% of target, the payout will be 104% (i.e. 100%, plus (2% x 2)). This enhancement was made to further align pay and performance by reducing the payout when below target and further increasing the payout when above target. |
• | Severance Plan and Amended Employment Agreements. See “Employment Agreements and Severance Plan” below for a description of our Severance Plan and Restrictive Covenant Agreement (each defined below) applicable to our CFO, and the amendment to employment agreements with each of our CEO, COO, CAO and HoE that we entered into in April 2023. |
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, ranging 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, WisdomTree Prime™, a blockchain-native wallet developed for saving, spending and investing in both native crypto assets and tokenized versions of mainstream financial assets (e.g., physical gold). This new mobile application will allow retail consumers to purchase, sell and exchange dollar tokens, gold tokens, other digital assets and blockchain assets, such as digital or blockchain-enabled funds, made available in the mobile application.
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 strategy related to digital assets and blockchain-enabled financial services, including WisdomTree Prime™; |
• | introduce new revenue streams and generate improved financial results; and |
• | employ the industry’s most talented, professional and dedicated people at all levels. |
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Executive Compensation
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, the employee should receive higher rewards. Likewise, where individual performance and/or Company performance falls short of expectations, the programs should deliver lower levels of compensation. However, 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. |
• | 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 equity 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 our corporate strategies and business objectives.
Components of Compensation
We have established the following components of compensation to satisfy our compensation objectives:
• | base salary; |
• | incentive compensation, consisting of a combination of cash and long-term equity awards; |
• | benefit programs; and |
• | severance and change of control benefits for NEOs. |
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Executive Compensation
These components provide competitive compensation packages that recognize and reward 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 awards.
Incentive Compensation
Incentive compensation consists of two components: cash and long-term equity awards.
Cash. The cash component of incentive compensation 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 Awards. Because short-term performance does not by itself accurately reflect our overall performance or the return realized by our stockholders, we grant equity awards to our employees as a long-term incentive. We believe that providing equity ownership:
• | serves to align the interests of our employees with our stockholders by creating an ownership culture and a direct link between compensation and stockholder return; |
• | creates a significant, long-term interest for our employees to contribute to our success; |
• | 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 2022 performance in January 2023 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 relative 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 2022 performance in January 2023 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.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 55
Executive Compensation
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. We refer to this peer group as the “Traditional Asset Manager Peer Group,” which for the years ended December 31, 2022, 2021 and 2020, was comprised of the following companies that generally are covered by analysts who also provide coverage on our Company:
• Alliance Bernstein Holding L.P.
• Affiliated Managers Group, Inc.
• Artisan Partners Asset Management Inc.
• Franklin Resources, Inc.
• Blackrock, Inc.
• BrightSphere Investments Group Inc. |
• Federated Hermes, Inc.
• Invesco Ltd.
• Janus Henderson Group plc
• T. Rowe Price Group, Inc.
• Virtus Investment Partners, Inc.
• Victory Capital Holdings, Inc. |
Eaton Vance Corp. and Waddell & Reed Financial, Inc. were included in the peer group during the year ended December 31, 2020, but were removed from the peer group as they were acquired during the year ended December 31, 2021.
The TSR for each member of the Traditional Asset Manager Peer Group is derived from the average per-share value of the publicly traded common stock of each peer group member for the 90-calendar day period ending on the grant date and vest date and includes the impact of dividends. With respect to the PRSUs granted for 2022 performance in January 2023, 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 awards. Accordingly, we granted a greater proportion of incentive compensation in equity to our NEOs as compared to our other employees. See “2022 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.
56 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Executive Compensation
Severance and Change of Control Benefits
In accordance with the terms of the employment agreements with our CEO, COO and CAO, the Severance Plan in effect for our CFO in 2023 and the amendment to the employment agreement in effect for our HoE in 2023, each as described below, 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.
Our NEOs also 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 accelerated vesting of unvested equity awards and specified cash severance payments and benefits. In addition, if a change of control occurs within 12 months following the NEO’s involuntary termination without cause or voluntary termination for good reason, all unvested time-based equity awards will accelerate and vest on the effective date of the change of control and unvested equity awards subject to performance-based vesting (currently, PRSUs), will vest in accordance with the terms of the applicable award agreement. Further, if a change of control occurs during the employment of our NEOs, all unvested time-based equity awards held by our CEO, COO and CAO will accelerate and vest on the effective date of the change of control and unvested equity awards subject to performance-based vesting (currently, PRSUs) of our NEOs will vest in accordance with the terms of the applicable award agreement.
We have provided more detailed information about these severance and change of control benefits, along with estimates of value under various circumstances, in the table below under “Potential Payments Upon Termination or Change of Control” and under the heading “Employment Agreements and Severance Plan” below.
Our goal in providing severance and change of 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 of 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.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 57
Executive Compensation
Our NEOs play a critical 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.
Use of Compensation Consultant
The Compensation Committee has retained FWC, an independent 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 NYSE 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.
At the beginning of the year, the Compensation Committee, working with FWC, reviews the appropriateness of the companies included in the industry peer group that we refer to as the “Compensation Peer Group.” The Compensation 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 this peer group based on metric changes of the peer group average relative to
58 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Executive Compensation
WisdomTree. Relevant metrics considered by the Compensation Committee include AUM, financial metrics, number of employees and market capitalization. The 2022 CEO Compensation Peer Group, which is unchanged from the prior year, is set forth below:
• | Alliance Bernstein Holding L.P. |
• | Artisan Partners Asset Management Inc. |
• | B. Riley Financial, Inc. |
• | Blucora, Inc. |
• | BrightSphere Investments Group Inc. |
• | Cohen & Steers, Inc. |
• | Diamond Hill Investment Group, Inc. |
• | Donnelley Financial Solutions, Inc. |
• | Greenhill & Co., Inc. |
• | Hercules Capital, Inc. |
• | Main Street Capital Corporation |
• | Moelis & Company |
• | Pzena Investment Management, Inc. |
• | Silvercrest Asset Management Group Inc. |
• | Victory Capital Holdings, Inc. |
• | Virtus Investment Partners, Inc. |
• | Westwood Holdings Group, Inc. |
2022 Incentive Compensation Program and Results
We maintain a performance-based incentive compensation program for our NEOs. A portion of the awards under the incentive compensation program are paid in cash and a portion are in the form of equity awards (restricted stock subject to time-based vesting and PRSUs subject to performance-based vesting). 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 2022, the achievement of quantitative metrics determined 75% of our total incentive compensation pool with the remaining 25% 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.
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 300% 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 is capped at 250% of target. |
• | Relative total shareholder return – our stock performance relative to the Traditional Asset Manager Peer Group and a measure of value generated for our stockholders. The TSR for each member of the Traditional Asset Manager Peer Group was derived from the average per-share value of the publicly traded common stock of each peer group member for the 90-calendar day period ending on January 1, 2022 (beginning of period) and December 31, 2022 (end of period) and includes the impact of dividends. The funded payout is capped at 250% of target. |
WISDOMTREE, INC. | 2023 PROXY STATEMENT 59
Executive Compensation
The table below discloses the threshold, target and maximum payouts for each performance metric:
($ in thousands) |
Quantitative Metrics | Payouts | ||||||||||||||||||||||
Performance Metrics |
Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||||||||||||||
Net inflows |
$0 | $ | 5,000,000 | $ | 15,000,000 | $ | 0 | $ | 2,301 | $ | 6,903 | |||||||||||||
Total revenues |
$0 | $ | 325,100 | $ | 812,750 | $ | 0 | $ | 1,726 | $ | 4,315 | |||||||||||||
Adjusted operating income (excluding bonus) |
$0 | $ | 110,300 | $ | 275,750 | $ | 0 | $ | 1,726 | $ | 4,315 | |||||||||||||
Adjusted operating margin (excluding bonus) |
0 | % | 33.9 | % | 84.75 | % | $ | 0 | $ | 1,726 | $ | 4,315 | ||||||||||||
Relative total shareholder return |
13 of 13 | 7 of 13 | 1 of 13 | $ | 0 | $ | 1,726 | $ | 4,315 | |||||||||||||||
Total |
|
|
|
|
|
|
|
|
|
$ | 0 | $ | 9,205 | $ | 24,163 |
The table below discloses actual performance and the funded payout of the incentive compensation pool:
($ in thousands) Performance Metrics |
Weight | Target | Target Payout |
2022 Actuals |
Funded % |
Funded Payout |
||||||||||||||||||
Net inflows |
18.750 | % | $ | 5,000,000 | $ | 2,301 | $ | 12,181,000 | 243.6 | % | $ | 5,606 | ||||||||||||
Total revenues(2) |
14.063 | % | $ | 325,100 | $ | 1,726 | $ | 303,300 | 93.3 | %(1) | $ | 1,610 | ||||||||||||
Adjusted operating income (excluding bonus)(2)(3) |
14.063 | % | $ | 110,300 | $ | 1,726 | $ | 100,800 | 91.4 | %(1) | $ | 1,577 | ||||||||||||
Adjusted operating margin (excluding bonus)(2)(3) |
14.063 | % | 33.9 | % | $ | 1,726 | 33.2 | % | 98.1 | %(1) | $ | 1,692 | ||||||||||||
Relative total shareholder return |
14.063 | % | 7 of 13 | $ | 1,726 | 2 of 13 | 224.9 | % | $ | 3,882 | ||||||||||||||
Total – Performance: |
75.00 | % |
|
|
|
$ | 9,205 |
|
|
|
156.1 | % | $ | 14,367 | ||||||||||
Total – Qualitative: |
25.00 | % |
|
|
|
$ | 3,068 |
|
|
|
78.4 | % | $ | 2,406 | ||||||||||
Total – Pool: |
|
|
|
|
|
|
$ | 12,273 |
|
|
|
|
|
|
$ | 16,773 | ||||||||
Funding percentage: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
136.7 | % |
(1) | Computed using a linear scale. |
(2) | 2022 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 an increase to revenues of $1,908 and a decrease to adjusted operating income of $1,428. |
(3) | 2022 Actuals exclude $4,459 of expenses incurred in response to an activist campaign. |
Actual quantitative performance was 156.1% of target. The Compensation Committee in consultation with FWC exercised negative discretion, setting the qualitative amount at 78.4% of target after considering our overall performance including the achievements summarized in the Executive Summary above, as well as the magnitude of the performance-based payout. This resulted in the incentive compensation plan being funded at 136.7% of target.
In recommending and determining the amount of incentive compensation and total compensation for our NEOs, our CEO and Compensation Committee primarily used their business judgment and considered:
• | individual performance; |
• | the contribution of our NEOs in achieving the strategic initiatives described above; |
60 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Executive Compensation
• | retention; |
• | tenure at the firm; |
• | historical compensation; |
• | compensation survey data from McLagan and our publicly traded asset manager peer group; and |
• | guidance from FWC. |
See “2022 Total Compensation” below for further information regarding actual compensation paid to our NEOs.
2022 Total Compensation
The table below reflects the total compensation awarded for 2022 performance to our NEOs who were serving in their respective positions as of December 31, 2022 in the manner that the Compensation Committee used to evaluate total compensation. This table supplements the Summary Compensation Table below, which is presented in a different format as required by the SEC:
|
Base Salary |
Incentive Target |
Funded %(1) |
Incentive Compensation |
Total Compensation |
Incentive Compensation | |||||||||||||||||||||||||||||||||||||||
($ in thousands) NEO |
Short-Term Cash |
Restricted Stock |
PRSUs(2) | Total | |||||||||||||||||||||||||||||||||||||||||
Jonathan Steinberg – CEO |
$550 | $4,350 | 137% | $5,976 | $6,526 | $2,390 | $1,793 | $1,793 | $5,976 | ||||||||||||||||||||||||||||||||||||
Bryan Edmiston – CFO |
$375 | $ 775 | 142% | $1,100 | $1,475 | $ 550 | $ 413 | $ 137 | $1,100 | ||||||||||||||||||||||||||||||||||||
R. Jarrett Lilien – COO |
$450 | $2,785 | 143% | $3,981 | $4,431 | $1,791 | $1,095 | $1,095 | $3,981 | ||||||||||||||||||||||||||||||||||||
Alexis Marinof – HoE(3) |
$359 | $1,038 | 110% | $1,141 | $1,500 | $ 570 | $ 428 | $ 143 | $1,141 | ||||||||||||||||||||||||||||||||||||
Peter M. Ziemba – CAO |
$375 | $1,125 | 136% | $1,525 | $1,900 | $ 763 | $ 572 | $ 190 | $1,525 |
(1) | Mr. Steinberg’s funded percentage of 137% was set equal to the overall funding percentage of the total incentive compensation pool, as set forth in the table immediately above. Mr. Lilien’s funded percentage was set at 143% to derive total compensation equal to approximately two-thirds of Mr. Steinberg’s total compensation. Mr. Marinof’s funded percentage was set at 110%, taking into consideration flow trends of our European listed products in relation to our U.S. listed products. Mr. Edmiston’s and Mr. Ziemba’s funded percentages of 142% and 136%, respectively, considered individual performance during the year. |
(2) | 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. |
(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 $1.2382 to £1. |
WISDOMTREE, INC. | 2023 PROXY STATEMENT 61
Executive Compensation
The following charts reflect the elements of total compensation for our NEOs who were serving in their respective positions as of December 31, 2022 as a percentage of their total compensation based on the chart above:
Risk Analysis of Compensation Policies and Programs
The Compensation Committee has reviewed our overall compensation policies and believes that these policies do not encourage excessive and unnecessary risk-taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on the Company. The design of the compensation policies and programs encourages employees to remain focused on both our short- and long-term goals. For example, while the cash bonus plan measures performance on an annual basis, a portion of the equity awards typically vest in equal installments over 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:
• | Stock Ownership Guidelines. Our stock ownership guidelines require our CEO, all other executive officers and our non-employee directors to maintain an ongoing ownership position in our common stock with a dollar value equal to six times base salary for our CEO, three times base salary for all other executive officers and five times base retainer for our non-employee directors. Additional details about our stock ownership guidelines are described in this proxy statement under the heading “Stock Ownership Guidelines;” |
• | Insider Trading Policy. Our Insider Trading Policy strictly prohibits 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 |
62 WISDOMTREE, INC. | 2023 PROXY STATEMENT
Executive Compensation
• | Clawback Policy. Our clawback policy provides that 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 U.S. federal securities laws. In light of the SEC’s adoption of final clawback rules in October 2022 and the NYSE’s issuance of its proposed rule in February 2023, we intend to update our clawback policy to comply with applicable NYSE listing rules when effective. |
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 NEOs, 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 and Severance Plan
In 2022, the compensation paid to our CEO, COO, CAO and HoE was governed by employment agreements. In 2023, we made the following changes to our NEOs’ executive compensation arrangements. Specifically, in April 2023:
• | our CFO became an eligible participant under the WisdomTree, Inc. Executive Severance Plan adopted by the Compensation Committee on February 23, 2023 (“Severance Plan”) and entered into an Employee Confidentiality, Assignment and Restrictive Covenant Agreement (“Restrictive Covenant Agreement”), which contains employee confidentiality, assignment of inventions and non-solicitation of employees provisions, as well as certain non-competition provisions; |
• | we and our HoE entered into an amendment to his employment agreement, which provides for similar benefits as provided under the Severance Plan (with the exception of payments upon termination for cause or voluntary resignation without good reason) and contains the provisions of the Restrictive Covenant Agreement, in each case as may be applicable and permitted under the laws of the United Kingdom; and |
• | we and each of our CEO, COO and CAO entered into an amendment to each of their employment agreements to provide for the following changes, which align with the terms of the Severance Plan and the Restrictive Covenant Agreement: (i) replace the employee confidentiality, assignment of inventions and non-solicitation of employees provisions, primarily to include expanded definitions applicable to certain non-competition provisions; and (ii) expand the definition of a change of control to include a “Change in Control Event” within the meaning of the 2022 Equity Plan. |
The material terms of these employment agreements, as amended, the Severance Plan and the Restrictive Covenant Agreement are described in this proxy statement under the heading “Employment Agreements and Severance Plan.”
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.
WISDOMTREE, INC. | 2023 PROXY STATEMENT 63
Year (1) |
Summary Compensation Table Total for PEO ($) |
Compensation Actually Paid to PEO ($) (2) |
Average Summary Compensation Table Total for Other NEOs ($) |
Average Summary Compensation Actually Paid to Other NEOs ($) (2) |
Value of Initial Fixed $100 Investment Based On: |
Net Income/(Loss) (thousands) ($) (4) |
Company- Selected Measure |
|||||||||||||||||||||||||
TSR ($) |
Peer Group TSR ($) (3) |
TSR Percentile Ranking – Traditional Asset Manager Peer Group (5) |
||||||||||||||||||||||||||||||
2022 |
nd | |||||||||||||||||||||||||||||||
2021 |
th | |||||||||||||||||||||||||||||||
2020 |
( |
) | th |
(1) | The PEO and Other NEOs for the applicable years were as follows: |
• |
2022: |
• |
2021: Mr. Steinberg served as our PEO and Messrs. Edmiston, Lilien, Marinof, Ziemba and Amit Muni, our former CFO, served as the Other NEOs. Mr. Edmiston was appointed to serve as our CFO effective June 1, 2021 in connection with Mr. Muni’s resignation as CFO to accept alternative employment effective May 31, 2021. |
• |
2020: Mr. Steinberg served as our PEO and Messrs. Muni, Lilien, Marinof and Ziemba served as the Other NEOs. |
(2) | Represents the Summary Compensation Table totals reported for the PEO and the average of the Other NEOs for each year subject to the following adjustments in accordance with Item 402(v)(2)(iii) of Regulation S-K to calculate “compensation actually paid”: |
|
2022 |
2021 |
2020 |
|||||||||||||||||||||
|
PEO |
Average for Other NEOs |
PEO |
Average for Other NEOs |
PEO |
Average for Other NEOs |
||||||||||||||||||
Summary Compensation Table – Total |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Deduction for amounts reported under “Stock Awards” column of the Summary Compensation Table (a) |
($ | ) | ($ | ) | ($ | ) | ($ | ) | ($ | ) | ($ | ) | ||||||||||||
Equity Award Adjustments (b) |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||
Compensation Actually Paid |
$ | $ | $ | $ | $ | $ |
(a) | Compensation actually paid excludes the amounts reported in the Stock Awards column from the relevant year’s Summary Compensation Table total. |
(b) | The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the fair value as of the end of the applicable fiscal year of unvested equity awards granted in that year; (ii) the change in fair value during the applicable fiscal year of equity awards granted in prior years that remained outstanding and unvested at the end of the applicable fiscal year; and (iii) the change in fair value during the applicable fiscal year through the vesting date of equity awards granted in prior years that vested during the applicable fiscal year, less the fair value at the end of the prior year of awards granted prior to the applicable fiscal year that failed to meet |
applicable vesting conditions during the listed year. Equity values are calculated in accordance with FASB ASC Topic 718, including Monte Carlo simulations used to value outstanding PRSUs as of the end of the applicable fiscal year. The equity award adjustments are set forth in the table below: |
Year |
Year End Fair Value of Outstanding and Unvested Equity Awards Granted in Applicable Year ($) |
Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years ($) |
Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year ($) |
Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year ($) |
Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year ($) |
Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation ($) |
Total Equity Award Adjustments ($) | ||||||||||||||||||||||||||||
Equity Award Adjustments – PEO |
|||||||||||||||||||||||||||||||||||
2022 |
— | ( |
) | — | |||||||||||||||||||||||||||||||
2021 |
( |
) | — | — | |||||||||||||||||||||||||||||||
2020 |
— | ( |
) | — | |||||||||||||||||||||||||||||||
Equity Award Adjustments – Average for Other NEOs |
|||||||||||||||||||||||||||||||||||
2022 |