Annual Report of Employee Stock Plans (11-k)

Date : 06/14/2018 @ 2:37PM
Source : Edgar (US Regulatory)
Stock : Oppenheimer Holdings Class A (DE) (OPY)
Quote : 29.2  -0.29 (-0.98%) @ 3:59PM

Annual Report of Employee Stock Plans (11-k)



Oppenheimer & Co. Inc. 401(k) Plan


Financial Report
December 31, 2017





        


Oppenheimer & Co. Inc. 401(k) Plan
 
 
 
 
 
 


Contents
 
 
 
Report Letter
1-2

 
 
Statement of Net Assets Available for Plan Benefits
3

 
 
Statement of Changes in Net Assets Available for Plan Benefits
4

 
 
Notes to Financial Statements
5-10

 
 
Schedule of Assets Held at End of Year
Schedule 1

 
 


        



Report of Independent Registered Public Accounting Firm
To the Plan Administrator and Plan Participants
Oppenheimer & Co. Inc.
401(k) Plan


Opinion on the Financial Statements
We have audited the accompanying statement of net assets available for plan benefits of the Oppenheimer & Co. Inc. 401(k) Plan (the “Plan”) as of December 31, 2017 and 2016 and the related statement of changes in net assets available for plan benefits for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets of the Plan as of December 31, 2017 and 2016, and the changes in net assets for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis of Opinion

The Plan’s management is responsible for these financial statements. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.





1




To the Plan Administrator and Plan Participants
Oppenheimer & Co. Inc.
401(k) Plan

Report on Supplemental Information
The supplemental information in the accompanying schedule of assets held at end of year as of December 31, 2017 has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with Department of Labor’s Rules and Regulations for Reporting under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
We have served as the Plan’s auditor since 2007.


/s/ Plante & Moran, PLLC
Flint, Michigan
June 14, 2018


2



Oppenheimer & Co. Inc. 401(k) Plan
 
 
 
 
 
 


Statement of Net Assets Available for Plan Benefits
 
 December 31
 
December 31
 
2017
 
2016
 
 
 
 
Assets
 
 
 
Participant-directed investments:
 
 
 
Money market funds
$
37,776,801

 
$
37,396,714

Mutual funds
332,604,023

 
281,884,736

Oppenheimer Holdings Inc. - Common stock
21,179,424

 
19,200,222

Cash surrender value of life insurance policies
436,527

 
417,667

 
 
 
 
     Total investments at fair value
391,996,775

 
338,899,339

 
 
 
 
Contributions receivable - Employer
1,430,039

 
902,348

Cash
27

 
145,268

Participant notes receivable
6,854,417

 
7,435,583

 
 
 
 
 Net Assets Available for Plan Benefits
$
400,281,258

 
$
347,382,538

See Notes to Financial Statements.

3



Oppenheimer & Co. Inc. 401(k) Plan
 
 
 
 
 
 


Statement of Changes in Net Assets Available for Plan Benefits
 
 Year Ended December 31
 
Year Ended December 31
 
2017
 
2016
Additions
 
 
 
Contributions:
 
 
 
Employees
$
21,746,306

 
$
21,409,811

Employer
1,369,319

 
1,149,770

Rollover
2,840,659

 
798,554

 
 
 
 
Total contributions
25,956,284

 
23,358,135

 
 
 
 
Investment income:
 
 
 
Interest and dividends
21,503,906

 
14,458,630

Net realized and unrealized gain
42,700,153

 
7,574,873

 
 
 
 
Total investment income
64,204,059

 
22,033,503

 
 
 
 
Interest from participant notes receivable
315,103

 
327,340

 
 
 
 
Total additions
90,475,446

 
45,718,978

 
 
 
 
Deductions
 
 
 
Benefits paid to participants and beneficiaries
37,455,092

 
28,263,714

Administrative expenses
109,914

 
84,266

Life insurance premiums
11,720

 
9,376

 
 
 
 
Total deductions
37,576,726

 
28,357,356

 
 
 
 
Net Increase in Net Assets Available for Plan Benefits
52,898,720

 
17,361,622

 
 
 
 
Net Assets Available for Plan Benefits
 
 
 
Beginning of year
347,382,538

 
330,020,916

 
 
 
 
End of year
$
400,281,258

 
$
347,382,538

 
 
 
 
See Notes to Financial Statements.



4



Oppenheimer & Co. Inc. 401(k) Plan
 
 
Notes to Financial Statements
December 31, 2017 and 2016




Note 1 - Description of the Plan
The following description of the Oppenheimer & Co. Inc. 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General - The Plan is a defined contribution plan covering all eligible employees of Oppenheimer & Co. Inc. (the "Company"). Employees of the Company who are at least 18 years of age shall be eligible to make elective deferrals into the Plan upon date of hire. Participants who are at least 18 years of age and who have completed one year of service and are employed on the last day of the Plan year shall be eligible to receive a discretionary contribution from the Company.
During the Plan years ended December 31, 2017 and 2016, as permitted under the plan agreement, the Plan adopted a new formula used in computing the discretionary contributions from the Company.
Contributions - Employees may make salary deferral contributions up to 50 percent of compensation subject to tax deferral limitations established by the Internal Revenue Code. Participants who have reached the age of 50 by the end of the Plan year may also make catch-up contributions to the maximum allowed by the Plan. Participants may also make contributions to the Plan in the form of a rollover of funds from another qualified plan (excluding any after-tax contributions) or IRAs.
The Company may contribute to the Plan a discretionary amount (the “Employer Discretionary Contribution”). The Employer Discretionary Contribution is determined by Oppenheimer Holdings Inc.’s Board of Directors and is subject to guidelines set forth in the Plan agreement.
Employer Discretionary Contributions, including amounts allocated for rebates received, for the year ended December 31, 2017 were determined as follows:
1.1% of the first $30,000 of a participant’s eligible compensation
1% of the next $10,000 of a participant’s eligible compensation
0.43% of the next $25,000 of a participant’s eligible compensation
0.35% of the next $35,000 of a participant’s eligible compensation
0.1% of the next $65,000 of a participant’s eligible compensation





5



Oppenheimer & Co. Inc. 401(k) Plan
 
 
Notes to Financial Statements
December 31, 2017 and 2016




Note 1 - Description of the Plan (Continued)
Employer Discretionary Contributions, including amounts allocated for rebates received, for the year ended December 31, 2016 were determined as follows:
0.9% of the first $30,000 of a participant’s eligible compensation
0.85% of the next $10,000 of a participant’s eligible compensation
0.34% of the next $25,000 of a participant’s eligible compensation
0.3% of the next $35,000 of a participant’s eligible compensation
0.085% of the next $65,000 of a participant’s eligible compensation
The Plan receives rebates of certain mutual fund stockholder service fees. These rebates are placed in a non-settlor account. All amounts in the Plan's non-settlor account will be allocated to participants based on the formula outlined above.
To the extent that the total amount in the Plan's non-settlor account is less than the amount to be allocated, the Company will make up the shortfall. For the year ended December 31, 2017, the total Employer Discretionary Contribution was $1,492,725 of which $62,686 was allocated from rebate amounts and the remaining was contributed by the Company. For the year ended December 31, 2016, the total Employer Discretionary Contribution was $1,279,645, of which $377,297 was allocated from rebate amounts and the remaining was contributed by the Company.
Vesting - All participants are immediately and fully vested in all Employee Elective Deferrals and rollovers and the income derived from the investment of such contributions.
Participants will be vested in Employer Discretionary Contributions plus the income thereon upon the completion of service with the Company or an affiliate at the following rate:
Years of Service
 
Vested Percentage
 
 
 
Less than 2 years
 
0
%
 
 
 
2 years but less than 3
 
20
%
 
 
 
3 years but less than 4
 
40
%
 
 
 
4 years but less than 5
 
60
%
 
 
 
5 years but less than 6
 
80
%
 
 
 
6 years or more
 
100
%
All years of service with the Company or an affiliate are counted to determine a participant’s nonforfeitable percentage.


6



Oppenheimer & Co. Inc. 401(k) Plan
 
 
Notes to Financial Statements
December 31, 2017 and 2016




Note 1 - Description of the Plan (Continued)
At December 31, 2017 and 2016, forfeited non-vested accounts totaled $105,774 and $123,406, respectively. These accounts were used to reduce employer contributions for the 2017 and 2016 Plan years.
Notwithstanding the vesting schedule specified above, a participant shall be 100 percent vested in his or her Employer Discretionary Contribution upon the attainment of normal retirement age, death, or disability if still employed with the Company or an affiliate upon the occurrence of one of these events.
Participant Accounts - Each participant's account is credited with the participant’s contribution and allocations of the Company's contributions and Plan earnings. The benefit to which a participant is entitled is the benefit that can be provided from the participant's vested account. Participants may direct the investments of their account balances into various investment options offered by the Plan.
Participant’s may invest in Company Stock under the Plan to a maximum of fifty percent (50%) of their future contributions and current account balance as of January 1, 2016 and a maximum of twenty-five percent (25%) as of January 1, 2017, subject, however, to a Participant’s ability to affirmatively waive such restriction only with respect to the investment of their current account balance of January 1, 2016 (or January 1, 2017, as applicable).
Payment of Benefits - Payment of vested benefits under the Plan will be made in the event of a participant’s termination of employment, death, retirement, or financial hardship and may be paid in either a lump-sum distribution or over a certain period of time as determined by IRS rules or by participant election.
Termination - While it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in the plan document and the Employee Retirement Income Security Act of 1974 (ERISA). Upon termination of the Plan, participants become 100 percent vested in their accounts.
Participant Notes Receivable - Active participants may borrow from their account balances and must be adequately collateralized using not more than 50 percent of the participant’s vested account balance. Interest is stated at a reasonable rate determined on the note date. The notes receivable and interest repayments are reinvested in accordance with the participant’s current investment selection.
Administrative Expenses - Administrative expenses of the Plan are paid by the Plan as provided in the Plan document.


7



Oppenheimer & Co. Inc. 401(k) Plan
 
 
Notes to Financial Statements
December 31, 2017 and 2016




Note 1 - Description of the Plan (Continued)
Party-in-interest Transactions Certain plan assets are in investments of Oppenheimer Holdings Inc. Oppenheimer Holdings Inc. is the parent company of the Plan and, therefore, these transactions qualify as party-in-interest transactions as defined under ERISA guidelines.
Note 2 - Summary of Significant Accounting Policies
Investment Valuation - The Plan's investments are stated at fair value. Life insurance contracts are valued at fair value based on the cash surrender value of the policies. All other investments are valued based on quoted market prices. See Note 4 for additional information.
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
Participant Notes Receivable - Participant notes receivable are recorded at their unpaid principal balances plus any accrued interest. Participant notes receivable are written off when deemed uncollectible.
Benefit Payments - Benefits are recorded when paid.
Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Risk and Uncertainties - The Plan invests in various securities including mutual funds and Oppenheimer Holdings Inc. common stock. Investment securities, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility.
Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statement of net assets available for Plan benefits.
Note 3 - Tax Status
The Plan has received a determination letter from the Internal Revenue Service indicating that the Plan, as designed, is qualified for tax-exempt treatment under the applicable section of the Internal Revenue Code. Accordingly, no provision for income taxes has been made in the accompanying statements.

8



Oppenheimer & Co. Inc. 401(k) Plan
 
 
Notes to Financial Statements
December 31, 2017 and 2016




Note 3 - Tax Status (Continued)
The plan administration believes the Plan is no longer subject to tax examinations for years prior to 2014.
Note 4 - Fair Value
Accounting standards require certain assets and liabilities be reported at fair value in the financial statements and provide a framework for establishing that fair value. The framework for determining fair value is based on a hierarchy that prioritizes the inputs and valuation techniques used to measure fair value.
The following tables present information about the Plan’s assets measured at fair value on a recurring basis at December 31, 2017 and 2016.
Level 1 - In general, fair values determined by Level 1 inputs use quoted prices in active markets for identical assets that the Plan has the ability to access.
Level 2 - Fair values determined by Level 2 inputs use other inputs that are observable, either directly or indirectly. These Level 2 inputs include quoted prices for similar assets in active markets and other inputs such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3 - Level 3 inputs are unobservable inputs, including inputs that are available in situations where there is little, if any, market activity for the related asset. These Level 3 fair value measurements are based primarily on management’s own estimates using pricing models, discounted cash flow methodologies, or similar techniques taking into account the characteristics of the asset.
In instances where inputs used to measure fair value fall into different levels in the above fair value hierarchy, fair value measurements in their entirety are categorized based on the lowest level input that is significant to the valuation. The Plan’s assessment of the significance of particular inputs to these fair value measurements requires judgment and considers factors specific to each asset.







9



Oppenheimer & Co. Inc. 401(k) Plan
 
 
Notes to Financial Statements
December 31, 2017 and 2016




Note 4 - Fair Value (Continued)
 
 
 
 
 
 
 
Assets at Fair Value as of December 31, 2017
 
 
 
 
 
 
 
 
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Balance at December 31, 2017
 
 
 
 
 
 
 
Mutual funds
 
$
332,604,023

 
$

 
$
332,604,023

Common stock - Oppenheimer Holdings Inc.
 
21,179,424

 

 
21,179,424

Money market funds
 
37,776,801

 

 
37,776,801

Cash surrender value life insurance policies
 

 
436,527

 
436,527

 
 
 
 
 
 
 
         Total investments at fair value
 
$
391,560,248

 
$
436,527

 
$
391,996,775

 
 
 
 
 
 
 
Assets at Fair Value as of December 31, 2016
 
 
 
 
 
 
 
 
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Balance at December 31, 2016
 
 
 
 
 
 
 
Mutual funds
 
$
281,884,736

 
$

 
$
281,884,736

Common stock - Oppenheimer Holdings Inc.
 
19,200,222

 

 
19,200,222

Money market funds
 
37,396,714

 

 
37,396,714

Cash surrender value life insurance policies
 

 
417,667

 
417,667

 
 
 
 
 
 
 
         Total investments at fair value
 
$
338,481,672

 
$
417,667

 
$
338,899,339

The Plan’s policy is to recognize transfers between levels of the fair value hierarchy as of the beginning of the reporting period. There were no significant transfers between levels of the fair value hierarchy during 2017 and 2016.

10



Oppenheimer & Co. Inc. 401(k) Plan
 
 
 
 
 
 


Schedule of Assets Held at End of Year
Form 5500, Schedule H, Item 4i
EIN 13-5657518, Plan Number 001
December 31, 2017
(a)(b)
Identity of Issuer, Borrower,
Lessor, or Similar Party
(c)
Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value
(d)
Cost
 (e)
Current Value
 
 
 
 
 Oppenheimer Holdings Inc.
Oppenheimer Holdings Inc. - Common stock**
*
$
21,179,424

 Federated
Governmental Obligations Institutional - Money market fund
*
37,769,094

 Deutsche Money Market Inst
Deutsche Money Market Institutional - Money market fund
*
7,707

 Artisan Investments
Artisan Mid Cap Fund - Mutual fund
*
18,405,898

 American Funds
Growth Fund of America - Mutual fund
*
37,452,240

 Columbia
Columbia Dividend Fund A - Mutual fund
*
9,222,536

 Columbia
Columbia Large Cap Index - Mutual fund
*
27,528,134

 Blackrock
Blackrock Infl Protected Bond I - Mutual fund
*
4,832,959

 American Funds
EuroPacific Growth Fund - Mutual fund
*
33,339,880

 First Eagle
First Eagle Global Fund - Mutual fund
*
19,482,143

 Invesco
Invesco Small Cap Growth Fund - Mutual fund
*
15,357,227

 Invesco
Invesco Real Estate Fund - Mutual fund
*
12,918,478

 IVA
IVA Worldwide Fund - Mutual fund
*
14,994,248

 Victory
Victory Integrity Small Value - Mutual fund
*
19,043,086

 JPMorgan
JPMorgan Core Bond Fund - Mutual fund
*
7,262,510

 Loomis Sayles
Loomis Sayles Bond Fund - Mutual fund
*
12,301,148

 MFS Investment Management
MFS International New Discovery Fund - Mutual fund
*
13,483,861

 Oakmark
Oakmark Equity & Income Fund - Mutual fund
*
9,393,535

 Oppenheimer Funds Inc.
Oppenheimer Developing Markets - Mutual fund
*
13,590,647

Janus Henderson
Janus Henderson Mid Cap Value - Mutual fund
*
4,038,340

 Vanguard
Vanguard Interim Term Treasury - Mutual fund
*
11,911,743

 Wells Fargo
Wells Fargo Adv Growth Admin - Mutual fund
*
14,516,759

 Washington Mutual
Washington Mutual Investors Fund - Mutual fund
*
33,528,651

 Insurance contracts
Policy Number 4000364
*
123,222

 
Policy Number 4000306
*
112,686

 
Policy Number 4000338
*
25,482

 
Policy Number 4000370
*
146,036

 
Policy Number 4000353
*
17,950

 
Policy Number 4000347
*
11,151

 Participants**
Participant notes receivable, with interest rates ranging from 4.25 percent to 9.00 percent
-
6,854,417

 
Total
 
$
398,851,192

 *Cost information not required
 
 
 **Party-in-interest, as defined by ERISA
 
 

Schedule 1



Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the registration statement (No. 333-129390) on Form S-8 of our report dated June 14, 2018 appearing in the annual report on Form 11-K of Oppenheimer & Co. Inc. 401(k) Plan as of December 31, 2017 and 2016 and for the year ended December 31, 2017.

                            

/s/ Plante & Moran, PLLC
Flint, Michigan
June 14, 2018





        

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