PROXY STATEMENT
SUMMARY
This summary highlights selected information appearing elsewhere in this proxy statement and does not contain all the information that you
should consider in making a decision with respect to the proposals described in this proxy statement. You should read this summary in its entirety, together with the more detailed information in this
proxy statement, as well as our Annual Report on Form l0-K for the year ended December 31, 2017, which is available without charge, except for exhibits
to the report, by (i) writing to Oppenheimer Holdings Inc., 85 Broad Street, 22nd Floor, New York, New York 10004, Attention: Secretary, (ii) calling
1-800-221-5588, (iii) emailing us with your request at info@opco.com or (iv) through our webiste at
www.opco.com/investor-relations/index.aspx.
Unless otherwise provided in this proxy statement, references to the "Company," "Oppenheimer Holdings," "we," "us," and "our" refer to Oppenheimer
Holdings Inc., a Delaware corporation.
Oppenheimer Holdings Inc.
The Company is a holding company which, through its subsidiaries, is a leading middle-market investment bank and full service financial services
firm. Through our operating subsidiaries, we provide a broad range of financial services, including retail securities brokerage, institutional sales and trading, investment banking (both corporate and
public finance), research, market-making, and investment advisory and asset management services. We own, directly or through subsidiaries, Oppenheimer & Co. Inc., a
New York-based securities broker-dealer, Oppenheimer Asset Management Inc., a New York-based investment advisor, Freedom Investments Inc., a discount securities
broker-dealer based in New Jersey, Oppenheimer Trust Company, a Delaware limited purpose bank, and OPY Credit Corp., a dealer in syndicated loans. The Company also has subsidiaries operating in
the United Kingdom, Isle of Jersey, Switzerland, Israel, and Hong Kong, China. The telephone number and address of our registered office is (212) 668-8000 and 85 Broad Street, New York,
NY10004.
This
proxy statement is dated March 23, 2018 and is first being mailed to our Class B voting stockholders and made available to all our stockholders on or about
March 26, 2018.
Set
forth below in a question and answer format is general information regarding the Annual Meeting of Stockholders, or the Meeting, to which this proxy statement relates.
Questions and Answers about the Matters to be Acted Upon
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Q.
-
What is the purpose of the Meeting?
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A.
-
The purpose of the Meeting is to elect eight directors, to ratify the appointment of our auditors for 2018 and authorize the Audit Committee
to fix the auditors' remuneration, and to transact such other business as is proper at the Meeting.
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Q.
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Where will the Meeting be held?
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A.
-
The Meeting will be held at 85 Broad Street, New York, NY 10004 in the 22nd Floor Conference Center on Monday, May 14, 2018, at
the hour of 4:30 P.M. (New York time).
-
Q.
-
Who is soliciting my vote?
-
A.
-
Our management is soliciting your proxy to vote at the Meeting. This proxy statement and form of proxy were first mailed to our Class B
voting stockholders and made available to all of our stockholders on or
1
about
March 26, 2018. Your vote is important. We encourage you to vote as soon as possible after carefully reviewing this proxy statement and all information accompanying this proxy statement.
-
Q.
-
Who is entitled to vote at the Meeting?
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A.
-
The record date for the determination of stockholders entitled to receive notice of the Meeting is March 16, 2018. Only holders of
Class B voting common stock ("Class B Stock") on the record date are entitled to vote at the Meeting and any adjournments thereof. In accordance with the provisions of the General
Corporation Law of the State of Delaware, or the DGCL, we will prepare a list of the holders of our Class B Stock (the "Class B Stockholders") as of the record date. Class B
Stockholders named in the list will be entitled to vote their Class B Stock on the matters to be voted on at the Meeting. Holders of Class A non-voting common stock ("Class A
Stock") of the Company are entitled to attend and speak at the Meeting and any adjournments thereof. However, holders of Class A Stock (the "Class A Stockholders") are not entitled to
vote with respect to the matters referred to above.
-
Q.
-
What am I voting on?
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A.
-
The Class B Stockholders are entitled to vote on the following proposals:
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(1)
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The
election of E. Behrens, T.M. Dwyer, W. Ehrhardt, P.M. Friedman, T.A. Glasser, A.G. Lowenthal, R.S. Lowenthal and A.W. Oughtred as directors;
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(2)
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The
ratification of the appointment of Deloitte & Touche LLP as our auditors for 2018 and the authorization of the Audit Committee to fix the auditors'
remuneration; and
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(3)
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Any
other business as may be proper to transact at the Meeting.
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Q.
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What are the voting recommendations of the Board of Directors?
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A.
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The Board of Directors recommends the following votes:
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-
FOR
the election of the nominated directors; and
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-
FOR
the ratification of the appointment of Deloitte & Touche LLP as our auditors
for 2018 and the authorization of our Audit Committee to fix the auditors' remuneration;
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Q.
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Will any other matters be voted on?
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A.
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The Board of Directors does not intend to present any other matters at the Meeting. The Board of Directors does not know of any other matters
that will be brought before our Class B Stockholders for a vote at the Meeting. If any other matter is properly brought before the Meeting, your signed proxy card gives authority to A.G.
Lowenthal and D.P. McNamara, as proxies, with full power of substitution, to vote on such matters at their discretion.
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Q.
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How many votes do I have?
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A.
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Class B Stockholders are entitled to one vote for each share of Class B Stock held as of the close of business on the record
date.
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Q.
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What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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A.
-
Many stockholders hold their shares through a broker or bank rather than directly in their own names. As summarized below, there are some
distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If your shares are registered directly in your name with our transfer agent, you are considered, with
respect to those shares, the
stockholder of record
, and these proxy materials are being made directly available to you by us. You may vote the shares
registered directly in your name by completing and mailing the proxy card or by written ballot at the Meeting.
2
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank, you are considered the beneficial owner
of shares held in street name, and these proxy materials are being forwarded to you by your bank or broker, which is considered the stockholder of record of those shares. As the beneficial owner, you
have the right to direct your bank or broker how to vote and are also invited to attend the Meeting. However, since you are not the stockholder of record, you may not vote those shares in person at
the Meeting unless you bring with you a legal proxy from the stockholder of record. Your bank or broker has enclosed a voting instruction card providing directions for how to vote your shares.
-
Q.
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How do I vote?
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A.
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If you are a Class B Stockholder of record, there are two ways to vote:
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-
By completing and depositing your proxy with our transfer agent at least 48 hours prior to the commencement of the Meeting; or
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-
By written ballot at the Meeting.
If
you are a Class B Stockholder and you return your proxy card but you do not indicate your voting preferences, the proxies will vote your shares
FOR
Matters 1 and 2, and will use their discretion on
any other matters that are submitted for stockholder vote at the Meeting.
Class B
Stockholders who are not stockholders of record and who wish to file proxies should follow the instructions of their intermediary with respect to the procedure to be followed.
Generally, Class B Stockholders who are not stockholders of record will either: (i) be provided with a proxy executed by the intermediary, as the stockholder of record, but otherwise
uncompleted and the beneficial owner may complete the proxy and return it directly to our transfer agent; or (ii) be provided with a request for voting instructions by the intermediary, as the
stockholder of record, and then the intermediary must send to our transfer agent an executed proxy form completed in accordance with any voting instructions received by it from the beneficial owner
and may not vote in the event that no instructions are received.
-
Q.
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Can I change my vote or revoke my proxy?
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A.
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A Class B Stockholder who has given a proxy has the power to revoke it prior to the commencement of the Meeting by depositing an
instrument in writing executed by the Class B Stockholder or by the stockholder's attorney-in-fact either (i) with our transfer agent, Computershare Inc., at any time up to and
including the last business day preceding the day of the Meeting or any adjournments thereof or (ii) with our Secretary on the day of the Meeting or any adjournments thereof or in any other
manner permitted by law. A stockholder who has given a proxy has the power to revoke it after the commencement of the Meeting as to any matter on which a vote has not been cast under the proxy by
delivering a written notice of revocation to our Secretary. A stockholder who has given a proxy may also revoke it by signing a form of proxy bearing a later date and returning such proxy to our
Secretary prior to the commencement of the Meeting.
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Q.
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How are votes counted?
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A.
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We will appoint an Inspector of Election at the Meeting. The Inspector of Election is typically a representative of our transfer agent. The
Inspector of Election will collect all proxies and ballots and tabulate the results.
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Q.
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Who pays for soliciting proxies?
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A.
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We will bear the cost of soliciting proxies from our Class B Stockholders. It is planned that the solicitation will be initially by
mail, but proxies may also be solicited by our employees. These persons will receive no additional compensation for such services but will be reimbursed for reasonable out-of-pocket expenses.
Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of shares
3
held
of record by these persons, and we will reimburse them for their reasonable out-of-pocket expenses. The cost of such solicitation, estimated to be approximately $2,000, will be borne by us.
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Q.
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What is the quorum requirement of the Meeting?
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A.
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A quorum for the consideration of Matters 1 and 2 shall be Class B Stockholders present in person or by proxy representing not less
than a majority of the outstanding Class B Stock.
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Q.
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What are broker non-votes?
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A.
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Broker non-votes occur when holders of record, such as banks and brokers holding shares on behalf of beneficial owners, do not receive voting
instructions from the beneficial holders at least ten days before the Meeting. Broker non-votes and abstentions will not affect the outcome of the matters being voted on at the Meeting, assuming that
a quorum is obtained.
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Q.
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What vote is required to approve each proposal?
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A.
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Matter No. 1, election of directors. The election of each of the directors nominated requires the affirmative vote, in person or by
proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present; and
Matter
No. 2, appointment of auditors. The ratification of the appointment of the auditors for 2018 and the authorization of the Audit Committee to fix the auditors' remuneration requires the
affirmative vote, in person or by proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present.
Mr. A.G. Lowenthal, our Chairman and Chief Executive Officer, owns 96.4% of the Class B Stock and intends to vote all of such Class B Stock in favor of
each of Matters 1 and 2. As a result, each of the matters before the Meeting is expected to be approved. See "Security Ownership of Certain Beneficial Owners and
Management."
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Q.
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Who can attend the Meeting?
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A.
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All registered Class A Stockholders, Class B Stockholders, their duly appointed representatives, our directors and our auditors
are entitled to attend the Meeting.
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Q.
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What does it mean if I get more than one proxy card?
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A.
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It means that you own shares in more than one account. You should vote the shares on each of your proxy cards.
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Q.
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I own my shares indirectly through my broker, bank, or other nominee, and I receive multiple copies of the proxy statement, and other mailings
because more than one person in my household is a beneficial owner. How can I change the number of copies of these mailings that are sent to my household?
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A.
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If you and other members of your household are beneficial owners, you may eliminate this duplication of mailings by
contacting your broker, bank, or other nominee. Duplicate mailings in most cases are wasteful for us and inconvenient for you, and we encourage you to eliminate them whenever you can. If you have
eliminated duplicate mailings, but for any reason would like to resume them, you must contact your broker, bank, or other nominee.
-
Q.
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Multiple stockholders live in my household, and together we received only one copy of this proxy statement. How can I obtain my own separate
copy of this document for the Meeting?
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A.
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You may pick up copies in person at the Meeting or download them from our Internet web site,
www.opco.com
(click on the link to the About Us/Investor Relations page). If you want copies mailed to you and are a beneficial owner, you must request them from your
broker, bank, or other nominee. If you want copies mailed to you and are a stockholder of record, we will mail them promptly if you request
4
them
from our corporate office by phone at (212) 668-8000, by email at info@opco.com, through our website at
www.opco.com/investor-relations/index.aspx
or by mail
to 85 Broad Street, New York, NY 10004, Attention: Secretary. We cannot guarantee you will receive mailed copies before the Meeting.
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Q.
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Where can I find the voting results of the Meeting?
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A.
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We are required to file the voting results in a Current Report on Form 8-K which you can find within four business days of the Meeting
on the EDGAR website at www.sec.gov.
-
Q.
-
Who can help answer my questions?
-
A.
-
If you have questions about the Meeting or if you need additional copies of the proxy statement or the enclosed proxy card, you should
contact:
D.P.
McNamara, Secretary
Oppenheimer Holdings Inc.
85 Broad Street, 22nd Floor
New York, NY 10004
(212) 668-8000
info@opco.com
You
may also obtain additional information about us from documents filed with the Securities and Exchange Commission by following the instructions in the section entitled
"
Where You Can Find More Information
."
5
THE MEETING
Solicitation of Proxies
This proxy statement is made available or forwarded to our Class A Stockholders and Class B Stockholders in connection with the
solicitation of proxies by our management from the Class B Stockholders for use at our Annual Meeting of Stockholders (the "Meeting") to be held on Monday, May 14, 2018 at the hour of
4:30 P.M. (New York time) at 85 Broad Street, New York, NY 10004 in the 22nd Floor Conference Center and at any adjournments thereof for the purposes set forth in the Notice of Meeting,
which accompanies this proxy statement. This proxy statement is dated March 23, 2018 and is first being mailed to our Class B Stockholders on or about March 26, 2018.
The
record date for the determination of stockholders entitled to receive notice of the Meeting is March 16, 2018. In accordance with the provisions of the DGCL, we will prepare a
list of the Class B Stockholders as of the record date. Class B Stockholders named in the list will be entitled to vote the Class B Stock owned by them on all matters to be voted
on at the Meeting.
It
is planned that the solicitation of Class B Stockholders will be initially by mail, but proxies may also be solicited by our employees. The cost of such solicitation, estimated
to be approximately $2,000, will be borne by us.
No
person is authorized to give any information or to make any representations other than those contained in this proxy statement and, if given or made, such information or
representations should not be relied upon as having been authorized by us. The delivery of this proxy statement shall not, under any circumstances, create an implication that there has not been any
change in the information set forth herein since the date of this proxy statement. Except as otherwise stated, the information contained in this proxy statement is given as of March 9, 2018.
We
have distributed copies of the Notice of Meeting, this proxy statement, and form of proxy for use by the Class B Stockholders to intermediaries such as clearing agencies,
securities dealers, banks and trust companies or their nominees for distribution to our non-registered stockholders whose shares are held by or in the custody of such intermediaries. Intermediaries
are required to forward these documents to non-registered Class B Stockholders. Our Annual Report on Form 10-K for the year ended December 31, 2017 is available without charge,
except for exhibits to the report, by (i) writing to Oppenheimer Holdings Inc., 85 Broad Street, 22nd Floor, New York, New York 10004, Attention: Secretary, (ii) calling
1-800-221-5588, (iii) emailing us with your request at info@opco.com or (iv) through our website at
www.opco.com/investor-relations/index.aspx
. The solicitation of proxies from non-registered
Class B Stockholders will be carried out by the
intermediaries or by us if the names and addresses of Class B Stockholders are provided by the intermediaries. Non-registered Class B Stockholders who wish to file proxies should follow
the instructions of their intermediary with respect to the procedure to be followed. Generally, non-registered Class B Stockholders will either: (i) be provided with a proxy executed by
the intermediary, as the registered stockholder, but otherwise uncompleted and the non-registered holder may complete the proxy and return it directly to our transfer agent; or (ii) be provided
with a request for voting instructions by the intermediary, as the registered stockholder, and then the intermediary must send to our transfer agent an executed proxy form completed in accordance with
any voting instructions received by it from the non-registered holder and may not vote in the event that no instructions are received.
Class A Stock and Class B Stock
We have authorized and issued Class A Stock and Class B Stock which are equal in all respects except that the holders of
Class A Stock, as such, are not entitled to vote at meetings of our
stockholders except as entitled to vote by law or pursuant to our Certificate of Incorporation. Class A Stockholders are not entitled to
6
vote
the Class A Stock owned or controlled by them on the matters identified in the Notice of Meeting to be voted on.
Generally,
Class A Stockholders are afforded the opportunity to receive notices of all meetings of stockholders and to attend and speak at such meetings. Class A
Stockholders are also afforded the opportunity to obtain all informational documentation sent to the Class B Stockholders.
Class B
Stockholders are entitled to one vote for each share of Class B Stock held as of the record date for the Meeting.
Appointment and Revocation of Proxies
Each of Albert G. Lowenthal and Dennis P. McNamara (the "Management Nominees") has been appointed by the Board of Directors to serve as the
proxy for the Class B Stockholders at the Meeting.
Class B
Stockholders have the right to appoint persons, other than the Management Nominees, who need not be stockholders, to represent them at the Meeting. To exercise this right,
the Class B Stockholder may insert the name of the desired person in the blank space provided in the form of proxy accompanying this proxy statement or may submit another form of proxy.
Proxies
must be deposited with our transfer agent, Computershare Inc., at its address at Computershare Investor Services, PO Box 50500, Louisville, Kentucky 40233, no later
than the last business day preceding the day of the Meeting or with our Secretary on the day of the Meeting in order for the proxies to be used at the Meeting.
Class B
Stock represented by properly executed proxies will be voted by the Management Nominees on any ballot that may be called for, unless the Class B Stockholder has
directed otherwise, (i) for the election of each of the nominated directors (Matter 1 in the Notice of Meeting), and (ii) for the ratification of the appointment of the auditors for 2018
and authorization of the Audit Committee to fix the remuneration of the auditors (Matter 2 in the Notice of Meeting).
Each
form of proxy confers discretionary authority with respect to amendments or variations to matters identified in the Notice of Meeting to which the proxy relates and other matters
which may properly come before the Meeting. Management knows of no matters to come before the Meeting other than the matters referred to in the Notice of Meeting. However, if matters which are not
known to management should properly come before the Meeting, the proxies will be voted on such matters in accordance with the best judgment of the person or persons voting the proxies.
A
Class B Stockholder who has given a proxy has the power to revoke it prior to the commencement of the Meeting by depositing an instrument in writing executed by the
Class B Stockholder or by the stockholder's attorney-in-fact either with our transfer agent at any time up to and including the last business day preceding the day of the Meeting, or any
adjournments thereof, or with our Secretary on the day of the Meeting or any adjournments thereof or in any other manner permitted by law. A Class B Stockholder who has given a proxy may also
revoke it by signing a form of proxy bearing a later date and returning such proxy to our Secretary prior to the commencement of the Meeting. In addition, a Class B Stockholder who has given a
proxy has the power to revoke it after the commencement of the Meeting as to any matter on which a vote has not been cast under the proxy by delivering written notice of revocation to our Secretary.
Abstentions
and broker non-votes will have no effect with respect to the matters to be acted upon at the Meeting, assuming that a quorum is obtained.
7
MATTER NO. 1
ELECTION OF DIRECTORS
Director Nomination Process
Our Bylaws provide that our Board of Directors consists of no less than three and no more than eleven directors to be elected annually. The term
of office for each director is from the date of the meeting of stockholders at which the director is elected until the close of the next annual meeting of stockholders or until his or her successor is
duly elected or appointed, unless his or her office is earlier vacated, in accordance with our Bylaws.
The
Nominating and Corporate Governance Committee of the Board has recommended, and the directors have determined, that eight directors are to be elected at the Meeting. Two of our
current directors, Mr. Keehner and Ms. Roberts, have advised that they do not wish to stand for re-election to the Board. One person, Ms. Glasser, who has not previously served as
a director, has been nominated to join the Board in May 2018. Management does not contemplate that any of the nominees named below will be unable to serve as a director, but, if such an event should
occur for any reason prior to the Meeting, the Management Nominees reserve the right to vote for another nominee or nominees in their discretion.
The
following sets out information with respect to the proposed nominees for election as directors as recommended by the Nominating and Corporate Governance Committee, in accordance with
the Nominating and Corporate Governance Committee Charter (available at www.opco.com). The Nominating and Corporate Governance Committee has reported that it is satisfied that each of the nominees is
fully able and fully committed to serve the best interests of our stockholders. The election of the persons nominated for election as directors requires the affirmative vote of a simple majority of
the Class B Stock voted at the Meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE PERSONS NOMINATED FOR ELECTION AS A DIRECTOR.
The following table, and the notes thereto, provide information regarding our director nominees and executive officers.
(1)
8
Nominees for Election as a Director
|
|
|
E. Behrens
Age: 48
Independent
|
|
Mr. Behrens joined the Board in 2016. Mr. Behrens is currently the Managing Member of B Capital Advisors LLC, an investment firm. He also serves as a board member of Sidewinder Drilling LLC, a land based oil rig operator, and
SEACOR Marine Holdings Inc., an offshore oil and gas provider, positions he has held since 2017. From 2009 to 2017, Mr. Behrens was a Senior Vice President with SEACOR Holdings Inc., a global provider of equipment and services
supporting the offshore oil and gas and marine transportation industries that he initially joined in 2008. From 2012 to 2017, he was Chairman of the Board of Trailer Bridge, Inc., a Jones Act container company. Additionally, he served as a board
member of Penford Corporation from 2013 to 2015, a board member of Global Marine Systems from 2014 to 2015, and a board member of Continental Insurance Group, Ltd. from 2016 until 2017. From 2006 to 2007, he was a Portfolio Manager and Partner
at Level Global Investors, a New York-based hedge fund. Mr. Behrens has a B.A. degree from the University of Chicago. The Company believes that Mr. Behrens' qualifications to serve on the Board include the extensive experience that he has
gained through his key roles with several other significant businesses, including his experience as a Board Chairman, as well as his demonstrated management, financial and business development skills and acumen. He is a member of the Compliance and
Nominating and Corporate Governance Committees.
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|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 100%
|
|
|
Board
|
|
9 of 9
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|
|
Compliance
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5 of 5
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|
|
Nominating and Corporate Governance
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|
7 of 7
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|
T.M. Dwyer
Age: 56
Independent
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|
Mr. Dwyer joined the Board in 2016. He is the founder, former CEO and Chairman of Entitle Direct Group, Inc., a title insurance company. Prior to founding Entitle Direct Group, Inc. in 2006, Mr. Dwyer served as Managing Director
at the investment banking firm of Greenhill & Company from 2002 to 2005, specializing in the insurance industry. He previously held a similar position at Donaldson, Lufkin & Jenrette as a Managing Director specializing in the
insurance sector from 1993 to 2001. Mr. Dwyer was also a Vice President at Salomon Brothers Inc. from 1987 to 1993, and he was a certified public accountant with Arthur Andersen & Co. in Illinois from 1983 to 1985. He has over
30 years of experience in the financial services industry, and brings significant financial, accounting and insurance knowledge to the Company, as well as demonstrable entrepreneurial, compliance and advisory skills. Mr. Dwyer has an MBA
from the University of Chicago and a Bachelor of Science in Accountancy from the University of Illinois. He is a member of the Audit, Compensation and Compliance Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
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Attendance
Overall attendance: 100%
|
|
|
Board
|
|
9 of 9
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Audit
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5 of 5
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Compensation
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6 of 6
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Compliance
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2 of 2
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9
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W. Ehrhardt
Age: 74
Independent
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|
Mr. Ehrhardt joined the Board in 2008. He is a retired senior audit partner formerly with Deloitte & Touche LLP, New York with over 30 years of professional experience primarily in the banking and securities and insurance
industries. While in the practice of public accounting, Mr. Ehrhardt supervised the audits of the firm's largest multinational financial services clients. In addition, Mr. Ehrhardt participated in numerous firm-wide initiatives relating to
the audit practice and related quality control matters and served as Partner in Charge of the Tri-State Financial Services Assurance and Advisory Practice. Mr. Ehrhardt is a Certified Public Accountant and a member of the AICPA.
Mr. Ehrhardt brings strong accounting and financial skills and experience to the Company which is important to the oversight of the Company's financial reporting and enterprise and operational risk management. Mr. Ehrhardt is the Lead
Director and a member of the Audit, Compensation and Compliance Committees.
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Board and Committees
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Attendance
Overall attendance: 100%
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Board
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9 of 9
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Audit
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5 of 5
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Compensation
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6 of 6
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Compliance
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5 of 5
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P.M. Friedman
Age: 62
Independent
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|
Mr. Friedman joined the Board in 2015. Mr. Friedman spent 27 years at Bear Stearns & Co. Inc. from 1981 to 2008, most recently holding the position of Chief Operating Officer of the Fixed Income Division. From 2008
to 2009, Mr. Friedman was a Managing Director responsible for business development at Mariner Investment Group, LLC. From 2009 to 2015, Mr. Friedman was Senior Managing Director and Chief Operating Officer of Guggenheim
Securities LLC. Mr. Friedman brings an extensive amount of operational and risk management experience to the Company as well as a deep knowledge of the financial services industry. Mr. Friedman is a Certified Public Accountant, and he
is Chairman of our Compliance Committee and a member of the Compensation and Nominating and Corporate Governance Committees.
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|
|
|
|
|
|
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Board and Committees
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Attendance
Overall attendance: 100%
|
|
|
Board
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9 of 9
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Compensation
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6 of 6
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Compliance
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5 of 5
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Nominating and Corporate Governance
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7 of 7
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10
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T.A. Glasser
Age: 58
Independent
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|
Ms. Glasser has been nominated to join the Board in May 2018. Ms. Glasser, a Principal with Financial Risk Group, Inc. since 2017, has a 30-year track record advising clients in the areas of risk, data and analytics. She joined the
Financial Risk Group after consulting independently with Briter Consulting, LLC, a family-owned consulting firm, from 2016 through 2017. Prior to this, Ms. Glasser was a Managing Director at JPMorgan Chase from 2013 to 2016, initiating Capital
Stress Testing Analytics for the Corporate Office and, as Chief Data Officer for Asset Management, establishing the Chief Data Office. Ms. Glasser served as the first Deputy Director of the Office of Financial Research (US Treasury), delivering
data, standards, analytics and technology to support the Financial Stability Oversight Council from 2011 to 2013. As Chief Risk Officer, she established the Chief Risk Office for Bunge Limited from 2007 to 2010. Ms. Glasser led and
established teams in risk and analytics at Credit Suisse from 2002 to 2005, and at Merrill Lynch from 1987 through 1998 and 2001. She developed and delivered financial services for IBM, from 2002 to 2005, and KPMG Consulting, from 1999 through 2000.
She began her career as an Assistant Professor of Finance at Rutgers University from 1984 to 1986 and Bentley College from 1986 to 1987. She has a PhD and MA in Economics from Fordham University and has a BS in Business Administration from Fairleigh
Dickinson University. Ms. Glasser brings extensive experience in risk management to the Board.
|
|
|
|
A.G. Lowenthal
Age: 72
Not Independent
|
|
Mr. Lowenthal joined the Board in 1985. Mr. Lowenthal is Chairman of the Board and Chief Executive Officer of the Company, positions he has held since 1985. Mr. Lowenthal has worked in the securities industry since 1967.
Mr. Lowenthal's extensive experience in the securities industry and as Chief Executive of our Company gives him unique insights into the Company's challenges, opportunities and operations. Since his arrival at the Company, Mr. Lowenthal has
built the Company through acquisition and organic growth taking stockholders' equity from $5 million to $524 million at December 31, 2017. Mr. Lowenthal is R.S. Lowenthal's father.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 100%
|
|
|
Board
|
|
9 of 9
|
|
|
|
R.S. Lowenthal
Age: 41
Not Independent
|
|
Mr. Lowenthal joined the Board in May 2013. Mr. Lowenthal joined the Company in 1999, became Managing Director of the Company's Taxable Fixed Income business in 2007 and assumed responsibility for oversight of the Company's Public Finance
and Municipal Trading departments in 2012. He is currently a Senior Managing Director and Head of Oppenheimer & Co. Inc.'s Investment Banking and Global Fixed Income businesses. Mr. Lowenthal is Chairman of the
Oppenheimer & Co. Inc. Management Committee and Co-Chairman of its Risk Management Committee and is a member of several other internal committees. Mr. Lowenthal has an undergraduate degree from Washington University in
St. Louis and an MBA from Columbia University. Mr. Lowenthal's insights into the business of the Company provide perspective to the Board discussions important to the oversight of the Company's financial reporting and enterprise and
operational risk management. Mr. Lowenthal is A.G. Lowenthal's son.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 100%
|
|
|
Board
|
|
9 of 9
|
11
|
|
|
A.W. Oughtred
Age: 75
Independent
|
|
Mr. Oughtred joined the Board in 1979. Mr. Oughtred, now retired, was Counsel from January 1, 2009 to May 31, 2009 and prior to December 31, 2008 a Partner at Borden Ladner Gervais LLP (law firm). Mr. Oughtred
practiced corporate law. Mr. Oughtred brings strong governance, legal, business and financial industry knowledge to our Board, important to the oversight of the Company's financial reporting, enterprise and operational risk management and
governance policy. Mr. Oughtred is certified as an Institute of Corporate Directors (Canada) certified director (ICD.D). Mr. Oughtred is Chairman of our Nominating and Corporate Governance Committees and a member of the Compensation and
Compliance Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 96%
|
|
|
Board
|
|
8 of 9
|
|
|
Compensation
|
|
6 of 6
|
|
|
Nominating and Corporate Governance
|
|
7 of 7
|
|
|
Compliance
|
|
5 of 5
|
Notes:
-
(1)
-
There
is no Executive Committee of the Board of Directors. Mr. Dwyer, Mr. Ehrhardt, Mr. Keehner (until May 2018) and Ms. Roberts (until
May 2018) are members of the Audit Committee. Messrs. Dwyer, Ehrhardt, Friedman, Keehner (until May 2018) and Oughtred are members of the Compensation Committee. Messrs. Behrens, Dwyer,
Ehrhardt, Friedman, Keehner (until May 2018) and Oughtred are members of the Compliance Committee. Messrs. Behrens, Friedman, Keehner (until May 2018) and Oughtred are members of the Nominating
and Corporate Governance Committee. The Special Committee of the Board of Directors was dissolved and disbanded on May 8, 2017 and the Compliance Committee assumed responsibility for completing
any outstanding work, any unfinished committee matters and continuing the work for which the Special Committee was originally formed.
None
of the nominees has been involved in any events within the past 10 years that could be considered material to an evaluation of the director.
12
Executive Officers
Our executive officers consist of Mr. A.G. Lowenthal, our Chairman and Chief Executive Officer, whose background is described above, and
Mr. Alfano, our Chief Financial Officer and principal financial and accounting officer, whose background is described below.
|
|
|
J. Alfano
Age: 48
|
|
Mr. Alfano has been Executive Vice President and the Chief Financial Officer of Oppenheimer & Co. Inc. since April 2006 and Chief Financial Officer of Oppenheimer Holdings Inc. since May 2011. Mr. Alfano also serves
on several of the firm's committees including the Management, Risk Management, Market, Credit, Liquidity and New Product Committees. Prior to joining Oppenheimer, Mr. Alfano was an audit partner with Deloitte & Touche LLP where he
spent 14 years in Deloitte's securities industry practice serving clients by providing audit and business advisory services out of their New York, Tokyo and Seattle offices. Mr. Alfano has an undergraduate degree from Michigan State
University and an MBA from Columbia University. Mr. Alfano is a member of the Financial Management Society of the Securities Industry and Financial Markets Association (SIFMA), the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants. Mr. Alfano served as a member of the AICPA Stockbrokerage and Investment Banking Expert Panel for the last nine years.
|
Board Leadership Structure
The Board believes that the Company's Chief Executive Officer is best situated to serve as Chairman of the Board because he is the director most
familiar with the Company's business strategy, history and capabilities, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy.
Independent directors and management add different perspectives and roles in strategy development. The Company's independent directors bring experience, oversight and expertise from outside the
Company and, in some cases, outside the industry, while the Chief Executive Officer brings Company-specific and industry-specific experience and expertise. The Board believes that the combined role of
Chairman and Chief Executive Officer facilitates strategy development and execution, and enhances the flow of information between management and the Board, which are essential to effective governance.
One
of the key responsibilities of the Board of Directors is to develop strategic direction and hold management accountable for the execution of strategy once it is developed. The Board
believes the combined role of Chairman and Chief Executive Officer, together with an independent Lead Director having the duties described below, is in the best interest of stockholders because it
provides the appropriate balance between strategy development and independent oversight of management for our Company. The Board's administration of its oversight function is described in greater
detail below under "
Risk Management
."
Lead Director
Mr. W. Ehrhardt, an independent director who serves on the Audit, Compensation and Compliance Committees, was selected by the Board to
serve as the Lead Director for all meetings of the non-management directors held in executive session. The role of the Lead Director is to assure the independence of the Board from management. The
Lead Director has the responsibility of presiding at all executive sessions of the Board, consulting with the Chairman and Chief Executive Officer on Board and committee meeting agendas, acting as a
liaison between management and the non-management directors, including maintaining frequent contact with the Chairman and Chief Executive Officer and advising him on the efficiency of Board meetings,
and facilitating teamwork and communication between the
non-management directors and management, as well as additional responsibilities that may be assigned to the Lead Director by the Board.
13
Executive Sessions
Pursuant to the Company's Corporate Governance Guidelines, non-management directors of the Board meet on a regularly scheduled basis and
otherwise as the independent directors determine without the presence of management. The Lead Director chairs these sessions. An executive session took place, in camera, at every scheduled Board
meeting held in 2017. To ensure strong communication with the Chief Executive Officer, the independent directors may meet with the CEO alone as the independent directors determine.
Board of Directors and Committee Meetings Held
During 2017, the following numbers of Board and committee meetings were held:
|
|
|
|
|
Board of Directors
|
|
|
9
|
|
Audit Committee
|
|
|
5
|
|
Compensation Committee
|
|
|
6
|
|
Compliance Committee
|
|
|
5
|
|
Nominating and Corporate Governance
|
|
|
7
|
|
Meeting Attendance
Pursuant to the Company's policies on meeting attendance, all directors should strive to attend all meetings of the Board and the committees of
which they are members. Last year there were nine meetings of the Board. We are pleased that all but one of our nine directors attended 100% of the total meetings of the Board and committees of the
Board in 2017.
In
addition to participation at Board and committee meetings, our directors discharge their responsibilities throughout the year through personal meetings and other communications,
including considerable telephone contact with the Chairman and Chief Executive Officer and other members of senior management and each other regarding matters of interest and concern to the Company.
It is our policy that our directors attend our stockholders meetings and, at the last Annual Meeting of Stockholders held on May 8, 2017, all of the directors nominated attended.
Risk Management
The Board, as a whole and also at the committee level, has an active role in overseeing the management of the Company's strategic, operational,
financial and compliance risks, including risks related to cybersecurity. The Board regularly reviews information regarding the Company's credit, liquidity, cybersecurity systems, and operations, as
well as the risks associated with each. The Company's Compensation Committee is responsible for overseeing the Company's executive compensation arrangements and assuring that financial incentives for
management and employees are appropriate and mitigate against, rather than encourage, employees taking excessive risk exposure with firm capital. Please see "
Compensation
Policies and Risk
" on page 50 for further information. The Audit Committee oversees management of operational and financial risks. The Company also has a number of
internal risk-oversight committees and functions. The Company's Compliance Committee is responsible for overseeing the Company's compliance function and the management of compliance and regulatory
risk. The Company's internal Risk Management Committee (composed of management employees) is charged with assessing, reviewing and monitoring the risk environment in which the Company operates,
including risks related to cybersecurity, and reports its findings and considerations to the Audit Committee at each regularly scheduled quarterly meeting and more frequently, as needed. The
Nominating and Corporate Governance Committee manages risks associated with the governance of the Company, including the composition, responsibilities and independence of the Board of Directors and
ethical and regulatory issues including conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of
Directors is regularly informed through committee reports about such risks,
14
including
receiving updates and reports from the Company's Chief Information Officer and his staff regarding risks related to cybersecurity.
Corporate Governance
Our Class A Stock is listed on the NYSE. We are subject to the corporate governance listing standards of the NYSE, the applicable rules
of the Securities and Exchange Commission (the "SEC"), the provisions of the Sarbanes-Oxley Act of 2002 and the applicable rules of the Dodd-Frank Wall Street Reform and Consumer Protection Act
("Dodd-Frank").
Our
Nominating and Corporate Governance Committee, Compensation Committee, Audit Committee, Compliance Committee and our Board of Directors continue to monitor regulatory changes and
best practices in corporate governance and consider amendments to our practices and policies as appropriate.
Our
Corporate Governance Guidelines, and all committee charters, as well as our Code of Conduct and Business Ethics for Directors, Officers and Employees and our Whistleblower Policy,
are posted on our website at www.opco.com.
Board of Directors
The fundamental responsibility of the Board of Directors is to oversee the management of our business with a view to maximizing stockholder
value and ensuring corporate conduct in a legal and ethical manner through a system of corporate governance and internal controls appropriate to our business. The Board of Directors has adopted a
statement of Corporate Governance Guidelines to which it adheres. We have a Code of Conduct and Business Ethics for Directors, Officers and Employees which is posted on our
website
www.opco.com
. No waivers were granted in 2017 or to date in 2018 under the Code of Conduct and Business Ethics for any directors, officers or
employees.
In
fulfilling its mandate, the Board's responsibilities include:
-
-
monitoring and overseeing the Company's strategic planning;
-
-
monitoring the performance of the Company's business, evaluating opportunities and risks, and controlling risk;
-
-
monitoring systems for audit, internal control and information management systems;
-
-
developing, together with the Chief Executive Officer, a clear position description for the Chief Executive Officer, which includes delineating
management's responsibilities and developing or approving the corporate goals and objectives that the Chief Executive Officer is responsible for meeting;
-
-
monitoring the performance of senior management of the Company, including the Chief Executive Officer;
-
-
overseeing the monitoring of compliance with applicable regulatory requirements, as well as assessing reports related to the Company's
compliance and supervision programs, reviewing findings and communications from regulators, including reports related to regulatory examinations, and assessing the adequacy of the Company's responses
thereto;
-
-
succession planning for senior management and directors;
-
-
remuneration of the executive officers and reviewing the general compensation policies of the Company;
-
-
governance, including composition and effectiveness of the Board;
15
-
-
monitoring compliance with the regulatory compliance policies and related regulatory requirements of the Company's subsidiaries;
-
-
monitoring compliance with the Code of Conduct and Business Ethics (the "Code of Conduct") adopted by the Board;
-
-
considering and approving, if determined by the Board to be advisable, any waiver from the Code of Conduct granted to directors or senior
management of the Company; and
-
-
reviewing the implementation of significant regulatory initiatives, including those related to anti-money laundering.
Director Independence
Seven of our current nine directors are independent as required by the NYSE Corporate Governance Rules and six of our eight nominees are
independent. To be considered independent under these rules, the Board of Directors must determine that a director has no direct or indirect material relationship with us. The Board of Directors
determined that Messrs. Behrens, Dwyer, Ehrhardt, Friedman, Keehner and Oughtred and Ms. Roberts are independent directors, and that Mr. A.G. Lowenthal, our Chairman of the Board
of Directors and Chief Executive Officer, and Mr. R.S. Lowenthal, Senior Managing Director and Head of Oppenheimer & Co. Inc.'s Global Fixed Income and Investment Banking
businesses and son of Mr. A.G. Lowenthal, are not independent. Mr. Keehner and Ms. Roberts,
who were determined to be independent directors, have advised that they do not wish to stand for re-election to the Board of Directors. The Board of Directors has determined that Ms. Glasser,
who has not previously served as a director, is independent in accordance with NYSE Corporate Governance Rules.
The
Board of Directors has not adopted formal categorical standards to assist in determining independence. The Board has considered the types of relationships that could be relevant to
the independence of a director of the Company. These relationships are described in Schedule A to the Company's Corporate Governance Guidelines, which are posted on our website at
www.opco.com
. The Board of Directors has considered the relationship of each director and has made a determination that seven of our current nine directors are independent
at this time and that six of our eight nominees are independent.
At
each regular Board and Audit Committee meeting, the independent directors are afforded an opportunity to meet and have met in the absence of management. During 2017, five of the nine
board meetings were regular meetings and at each of these meetings the independent directors met in the absence of management. Additionally, at regular meetings of the Audit Committee (five regular
meetings annually), the members of the Audit Committee, all of whom are independent, are afforded the opportunity to meet with the independent auditors and the managers of the Company's Internal Audit
Group in the absence of management. Members of the Compliance Committee are afforded the opportunity to meet with the managers of the Company's compliance functions in the absence of management.
The
independent directors and the directors that are not independent understand the need for directors to be independent-minded and to assess and question management initiatives and
recommendations from an independent perspective. The Board of Directors' Lead Director, Mr. Ehrhardt, is an independent director who, among other things, chairs sessions of the independent
directors.
Orientation and Continuing Education
The Nominating and Corporate Governance Committee of the Board of Directors, as required by its charter, is responsible for the orientation of
new directors to our business and overseeing the continuing education needs of all directors.
The
Board of Directors encourages the directors to maintain the skill and knowledge necessary to meet their obligations as directors. This includes support for director attendance at
continuing education sessions
16
and
making available newsletters and other written materials. Our directors understand the need to maintain their knowledge and skills and avail themselves of director education literature and
programs.
Board and Committee Assessments
The Board conducts a self-evaluation annually to determine whether it and its Committees are functioning effectively.
Board Committees
The Board has established an Audit Committee, a Compensation Committee, a Compliance Committee and a Nominating and Corporate Governance
Committee. The Audit, Compensation, Compliance and Nominating and Corporate Governance Committees are composed entirely of independent directors, as defined under the NYSE Listed Company Manual and
the Company's Corporate Governance Guidelines. The charters of each committee are available on the Company's website at
www.opco.com
.
Audit Committee
The Board of Directors has an Audit Committee composed of four independent directors, the duties of which are set forth below.
The
Board of Directors has adopted a written charter for the Audit Committee, a copy of which is posted on our website at
www.opco.com
. The Audit
Committee:
-
-
has sole authority and responsibility to nominate independent auditors for ratification by stockholders and to approve all audit engagement
fees and terms (see Matter 2);
-
-
reviews annual, quarterly and all legally required public disclosure documents containing financial information that are submitted to the Board
of Directors;
-
-
reviews the nature, scope and timing of the annual audit carried out by the external auditors and reports to the Board of Directors;
-
-
evaluates the external auditors' performance for the preceding fiscal year and reviews their fees and makes recommendations to the Board of
Directors;
-
-
pre-approves the audit, audit related and non-audit services provided by our independent auditors and the fee estimates for such services;
-
-
reviews internal financial control policies, procedures and risk management and reports to the Board of Directors;
-
-
meets regularly with business unit leaders to understand their risk management procedures;
-
-
meets with the external auditors quarterly to review quarterly and annual financial statements and reports and to consider material matters
which, in the opinion of the external auditors, should be brought to the attention of the Board of Directors and the stockholders;
-
-
reviews and directs the activities of our internal audit department, meets regularly with internal audit, legal and compliance personnel and
risk management committee representatives, and reports to the Board of Directors;
-
-
reviews accounting principles and practices;
-
-
reviews management reports with respect to litigation, capital expenditures, tax matters and corporate administration charges and reports to
the Board of Directors;
-
-
reviews related party transactions;
17
-
-
reviews changes in accounting policies with the external auditors and management and reports to the Board of Directors;
-
-
reviews and approves changes to or waivers of our Code of Conduct and Business Ethics for Senior Executive, Financial and Accounting Officers;
and
-
-
annually reviews the Audit Committee Charter and recommends and makes changes thereto as required.
All
of the members of the Audit Committee are financially literate. The Board of Directors has determined that the Audit Committee includes three financial experts and that
Mr. Dwyer, Mr. Ehrhardt and Ms. Roberts, the financial experts, are independent as defined in Rule 10 A-3(b) of the Exchange Act and Section 303A.02 of the NYSE's
Listed Company Manual. Mr. Dwyer is a Certified Public Accountant. Mr. Ehrhardt is a Certified Public Accountant and a member of the American Institute of Certified Public Accountants.
Ms. Roberts is a Chartered Professional Accountant and a member of the Institute of Chartered Accountants of Ontario. Currently, none of the members of the Audit Committee simultaneously serves
on the audit committee of any other public company. Ms. Roberts, currently the Chair of the Audit Committee, has advised that she does not wish to stand for re-election to the Board of
Directors. Accordingly, a new Chair of the Audit Committee will be selected by the Board upon the recommendation of the Nominating and Corporate Governance Committee following the Meeting.
Compensation Committee
The Board of Directors has adopted a Compensation Committee Charter, a copy of which is posted on our website at
www.opco.com
. Pursuant to its charter, the Compensation Committee's objective is to provide a competitive compensation program with strong and direct links between
corporate objectives and financial performance, individual performance and compensation, mindful of the Company's corporate risk management objectives. The Compensation Committee has five members, all
of whom are independent.
The
Compensation Committee:
-
-
makes recommendations to the Board of Directors with respect to our compensation policies;
-
-
monitors developments in compensation-related regulations and industry practice, and makes recommendations to the Board of Directors, as
appropriate;
-
-
reviews recommendations made by the Chief Executive Officer with respect to the salary, bonus and benefits paid and provided to our senior
management (except those for the Chief Executive Officer and Mr. R.S. Lowenthal, which it handles directly) and makes recommendations to the Board of Directors with respect to the compensation
of senior management;
-
-
authorizes grants of stock options and stock awards and recommends modifications to our incentive compensation plans;
-
-
grants certain compensation awards to our senior management based on criteria linked to the performance of the individual and/or our Company;
-
-
annually develops and administers the Performance-Based Compensation Agreement between the Company and Mr. A.G. Lowenthal, and the
performance formula for Mr. R.S. Lowenthal, and will continue to do so for other senior executives, when appropriate;
-
-
reviews compensation arrangements for risk-taking personnel to ensure that they do not encourage excessive risk-taking;
-
-
reviews compensation arrangements for Compliance Department personnel;
-
-
reviews our compensation arrangements for our independent directors and makes recommendations on changes thereto when appropriate;
18
-
-
reviews and provides oversight of the Company's Compensation Recovery Policy and makes recommendations on changes thereto when appropriate;
-
-
monitors compliance with the criteria of our performance-based awards or grants;
-
-
makes awards under and administers our 2014 Incentive Plan and our Stock Appreciation Rights Plan; and
-
-
reviews and approves our Compensation Discussion and Analysis.
Mr. Keehner,
currently the Chair of the Compensation Committee, has advised that he does not wish to stand for re-election to the Board of Directors. Accordingly, a new Chair of
the Compensation
Committee will be selected by the Board upon the recommendation of the Nominating and Corporate Governance Committee following the Meeting.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee Charter, a copy of which is posted on our website at
www.opco.com
, provides that the Nominating and Corporate Governance Committee is responsible for ensuring that our Board of Directors is composed of directors who are
fully able and fully committed to serve the best interests of our stockholders. Factors considered by the Nominating and Corporate Governance Committee in assessing director performance and, when
needed, recruiting new directors include skills, character, judgment, experience, ethics, integrity and compatibility with the existing Board of Directors.
The
Nominating and Corporate Governance Committee has four members, all of whom are independent. The duties of this Committee are set out as
follows:
-
-
determine the qualifications, qualities, skills and other expertise required to be a director, and develop, and recommend to the Board for its
approval, criteria to be considered in selecting nominees for director;
-
-
identify and screen qualified individuals for Board positions;
-
-
recommend additions to the Board and persons to fill vacancies on the Board;
-
-
ensure that the Board is kept up to date with respect to the regulatory environment relevant to governance issues;
-
-
maintain an orientation program for new directors and oversee the continuing education needs of directors;
-
-
oversee the evaluation of the Board and management;
-
-
make recommendations to assure the efficiency of Board meetings;
-
-
develop, review and make recommendations with respect to our Corporate Governance Guidelines; and
-
-
review and approve governance reports for publication in our management proxy statement and Annual Report on Form 10-K.
The
Nominating and Corporate Governance Committee will give appropriate consideration to board nominees recommended by Class B Stockholders. Nominees recommended by Class B
Stockholders will be evaluated in the same manner as other nominees. Class B Stockholders who wish to submit nominees for director for consideration by the Nominating and Corporate Governance
Committee for election at our Annual Meeting of Stockholders to be held in 2019 may do so by submitting in writing such nominee's name, in compliance with the procedures and along with the other
information required by our Bylaws and Regulation 14A under the Exchange Act (including such nominee's written consent to being named in the
19
proxy
statement as a nominee and to serving as a director if elected), to our Secretary, at 85 Broad Street, 22
nd
Floor, New York, NY 10004 within the time frames set forth under
the heading "
Stockholder Proposals
."
The
Nominating and Corporate Governance Committee is responsible for the recruitment and nomination of persons for Board positions, and for making recommendations to the Board for the
appointment of directors to fill vacancies on the Board. In recruiting, nominating and appointing directors, the Nominating and Corporate Governance Committee
considers:
-
-
judgment, character, expertise, skills and knowledge useful to the oversight of the Company's business;
-
-
diversity of viewpoints, backgrounds, experiences and other demographics;
-
-
business or other relevant experience (including previous board experience); and
-
-
the extent to which the interplay of the individual's expertise, skills, knowledge and experience with that of other members of the Board will
build a board that is effective, collegial and responsive to the needs of the Company.
The
Nominating and Corporate Governance Committee is also responsible for initially assessing, against the Company's standards for directors' independence, whether a candidate would be
independent and whether continuing directors continue to be independent and advising the Board of that assessment.
Special Committee
On February 19, 2015, the Board of Directors of the Company formed a Special Committee of the Board in order to engage an independent law
or consulting firm to conduct a review of the Company's subsidiaries, Oppenheimer & Co. Inc. and Oppenheimer Asset Management Inc.'s, broker-dealer and investment adviser
compliance processes and related internal controls and governance processes, and to provide recommendations to the Special Committee on how to improve any of the foregoing. On February 19,
2015, the Special Committee agreed to engage an independent law firm to conduct the aforementioned review. The Special Committee's function was to interact with the independent law firm and oversee
the implementation of the law firm's recommendations. The Special Committee oversaw the implementation of various of the independent law firm's recommendations in 2015 and 2016. In January 2016, the
Special Committee oversaw the process of hiring a new Global Chief Compliance Officer and a Director of Regulatory Affairs for the Company's subsidiaries. The Special Committee was dissolved and
disbanded on May 8, 2017 and the Compliance Committee assumed responsibility for completing any outstanding work, any unfinished committee matters and continuing the work for which the Special
Committee was originally formed. Mr. Dwyer and Mr. Keehner, members of the Special Committee who were not members of the Compliance Committee, joined the Compliance Committee upon the
Special Committee's dissolution.
Compliance Committee
The Board of Directors formed a Compliance Committee in July 2015, the Charter for which is posted on our website at
www.opco.com
. Pursuant to its charter, the Compliance Committee has been charged with assisting the Board of Directors with oversight of the Company's compliance function,
including the Company's compliance management system and the Company's compliance with applicable laws, rules and regulations governing its financial services businesses. The Compliance Committee is
composed of six independent directors, meets quarterly, or more frequently if necessary, and its responsibilities and authority include the following:
-
-
overseeing the Company's policies, procedures, programs, and training relating to compliance and supervision;
-
-
reviewing the status of the Company's compliance with applicable Federal and state securities and other laws and the rules and regulations of
any SRO and internal policies, procedures and controls;
20
-
-
receiving and overseeing the assessment of internal and external data and reports relating to the Company's compliance and supervision
programs;
-
-
creating criteria for the Chief Compliance Officer, the Anti-Money Laundering ("AML") Officer and other senior officers at the
Company's subsidiaries, as appropriate;
-
-
assuring the independence of the Chief Compliance Officer including assuring that the Chief Compliance Officer reports to the Compliance
Committee outside the presence of management at least quarterly and at such other times as the Compliance Committee may request or direct;
-
-
reviewing and evaluating findings and communications from regulators and the adequacy of the Company's responses to regulators;
-
-
receiving periodic reports, no less than quarterly, from the Chief Compliance and other compliance officers, the AML Officer and/or the General
Counsel of the Company's subsidiaries;
-
-
receiving periodic reports from the Company's Ombudsman;
-
-
overseeing the resourcing of compliance functions at the Company, including staffing, systems and monitoring;
-
-
periodically reviewing the Company's customer complaint and conflict of interest intake and resolution function, in light of risk of violation
of Federal and state laws and related risks to customers;
-
-
requesting reports from the Chief Compliance and other compliance officers, the AML Officer, the General Counsel and management at the
Company's subsidiaries regarding the preparation, implementation and updating of the Company's compliance and supervision policies, procedures, programs, training and controls;
-
-
receiving and, when appropriate, meeting to discuss reports on any annual or periodic examinations conducted by governmental agencies and SROs,
including requiring a copy of any report (and supporting notes and schedules) prepared by such agencies or SROs in connection with any such examination to be submitted to the Compliance Committee;
-
-
ensuring that the full Board receives reports and materials as necessary from time to time regarding significant compliance issues;
-
-
ordering, directing and overseeing any annual or periodic independent compliance audit that the Compliance Committee deems necessary or
appropriate; and
-
-
undertaking such other activities as are necessary or incidental to carrying out the foregoing duties and responsibilities.
21
EXECUTIVE COMPENSATION AND RELATED INFORMATION
2017 Company Performance
Revenue for the year ended December 31, 2017 was $920.3 million, an increase of 7.3% compared to the year 2016. The Company
reported net income for the year ended December 31, 2017 of $22.8 million or $1.72 basic net income per share compared to a net loss of $1.2 million or $0.09 basic net loss per
share in 2016.
During
the past year, the Company's financial performance improved, along with its progress on a number of strategic initiatives. Our performance was helped by a strong and rising equity
market,
increased short term interest rates and significantly lower legal and consulting costs. In addition:
-
-
We continued to focus on managing expenses, which were down in 2017, although compensation costs rose in line with higher levels of revenue.
-
-
We continued to enhance major governance and compliance processes by adding senior personnel, streamlining reporting lines, reorganizing
business and compliance functions, and replacing manual processes with more efficient technology.
-
-
We continued to emphasize a firm-wide culture of ethics and compliance.
-
-
We invested in new employees and emphasized programs across the Company to recruit new sources of revenue, as well as to motivate and retain
existing valued employees.
-
-
We finalized the implementation of our enhanced Unified Managed Account platform at Oppenheimer Asset Management Inc., which has
enhanced our margins and provided a significant stream of income for these accounts, as well as giving financial advisors the ability to easily add additional investment managers into a single account
for simplified position reporting along with sophisticated re-balancing and modeling capability.
-
-
We revised elements of our financial advisor compensation grid to encourage high levels of productivity.
-
-
We further enhanced our processes surrounding the Branch Control Officer position, including hiring Regional Compliance Officers in various
areas of the country, in order to further assess branch compliance and our ability to control branch operations.
-
-
We continued our installation of the Vestmark technology platform to allow us to provide enhanced client reporting on managed accounts, as well
as higher levels of surveillance capabilities.
-
-
We continued to purchase failed Auction Rate Securities from our clients holding such securities and significantly lowered our exposure to
these issues, all in accordance with regulatory orders from 2010. We currently have no outstanding litigation relating to auction rate securities.
-
-
We invested in over 50 technology initiatives focused on compliance, operations and business-line functions, including investing in
cybersecurity enhancements.
-
-
We substantially revamped and improved all aspects of corporate marketing, both internally and externally, to enhance our business, to provide
better client experience and in order to present a more competitive and compelling face for our Company to the industry and investing community.
-
-
Our new leadership in investment banking successfully focused on identifying and recruiting senior level investment bankers. We began to see
significant new business from these new resources and are encouraged by the enhanced pipeline of business.
32
-
-
We made significant progress in debt capital market underwriting in our penetration of Emerging Market issuers with significantly increased
revenues from this source. However, lower volatility and lower client engagement resulted in lower revenues from fixed income overall.
-
-
The strong equity market was particularly impactful on the results of several of our alternative investment hedge funds. These results provided
higher management fees and a significant contribution from our participation in incentive fees, which were quite significant during the period. Most of these fees are calculated and earned only at the
end of the calendar year (December 31st).
2017 Compensation Highlights
The Compensation Committee and the Board of Directors believe that the policies and practices described in the following Compensation Discussion
and Analysis provide a compensation framework which enables us to retain and appropriately reward the executive officers that we believe are critical to our long-term success, while linking that
compensation to our corporate objectives and performance.
For
example:
-
-
our Named Executives do not generally have employment agreements;
-
-
our Named Executives do not receive supplemental retirement benefits;
-
-
our Named Executives do not receive any perquisites that are not generally available to all employees, other than access to one parking space
for our CEO;
-
-
our incentive compensation practices are reviewed annually by the Compensation Committee to ensure that we are not encouraging undue
risk-taking and we are aligning executive compensation with the strategic objectives and performance of the Company;
-
-
our Chief Executive Officer's annual salary and incentive compensation are established by the Compensation Committee, which is composed of
independent directors;
-
-
a substantial portion of our Chief Executive Officer's compensation is driven by performance goals which are established annually by the
Compensation Committee from a broad array of financial, performance and strategic parameters and capped pursuant to a contractual arrangement; and
-
-
we have approved a compensation recovery policy which provides, under certain circumstances, for the recovery, in the event of a restatement of
our financial statements (as a result of misconduct) due to a material noncompliance of the Company with any financial reporting requirement under the securities laws, of (i) all of the
incentive compensation received by our executive officers (currently our Chairman and Chief Executive Officer and Chief Financial Officer), as well as cash bonuses and any profits realized from the
sale of securities of the Company during the twelve month period following the first public issuance or filing with the SEC (whichever comes first) of the final document embodying such financial
reporting requirement and (ii) the unvested incentive compensation received by any other officers and employees designated by the Compensation Committee during the three fiscal years prior to a
restatement of our financial statements. Additionally, in the case of material misconduct or other violative behavior, our policy requires the recovery of some or all of the unvested incentive
compensation granted to our executive officers and other designated officers and employees.
Some
highlights of our 2017 compensation decisions include the following:
-
-
The Company's 2017 financial performance improved from 2016 and accordingly our 2017 general bonus allocations were modestly higher than 2016;
-
-
Base salaries paid to senior executive officers in 2017 were not increased from 2016 levels;
33
-
-
Our methodologies to track short-term performance and annual bonuses for our Named Executives modestly increased compared to 2016; and
-
-
On January 30, 2018, the Company awarded a total of 281,919 restricted shares of Class A Stock to our employees. Of these
restricted shares, 126,240 shares will cliff vest in three years and 155,679 will cliff vest in five years. These awards will be expensed over the applicable three or five year vesting period.
The
foregoing 2017 Company Performance and Compensation Highlights do not purport to be complete and are subject to, and qualified in their entirety by reference to, the Compensation
Discussion and Analysis set forth below which should be read in its entirety for a full and complete understanding of our compensation policies and practices as well as the compensation awarded to,
earned by, or paid to our executive officers for 2017 as well as to our Annual Report on Form 10-K for the year ended December 31, 2017.
Compensation Discussion and Analysis
The following pages include our Compensation Discussion and Analysis.
Introduction
The following Compensation Discussion and Analysis describes the material elements of compensation for our named executive officers identified
in the "
Summary Compensation Table
" (the "Named Executives"). The Compensation Committee, which is comprised entirely of independent directors, makes
recommendations to the Board for the total compensation (that is the base salary, annual bonus, stock options and stock awards) of our senior executive officers, including the Named Executives. The
Compensation Committee's determination of the total compensation of our Chief Executive Officer is subject, in part, to the Performance-Based Compensation Agreement, amended and restated effective
May 11, 2015, between the Company and our Chief Executive Officer, for which we received stockholder approval on May 11, 2015.
Certain
processes and procedures of the Compensation Committee are discussed below including its role in dealing with the Chief Executive Officer's compensation and the compensation of
the other Named Executives. The Compensation Committee considers recommendations from the Chief Executive Officer with respect to the compensation of the Named Executives (other than the Chief
Executive Officer), as it does on compensation matters such as aggregate year-end allocation of incentive compensation and stock awards for all of our other employees.
The
day-to-day design and administration of health benefits, the deferred compensation plans and the 401(k) plan and other employee benefit plans and policies applicable to salaried
U.S.-based employees in general are handled by our Human Resources, Finance and Legal Departments.
For
the purposes of determining 2017 compensation for the Named Executives, the Compensation Committee did not retain independent compensation consultants, although the Compensation
Committee reserves the right to retain compensation consultants when it deems necessary, and it relies upon Equilar Inc. as a reference source for comparable financial and compensation data.
Objectives and Policies
The Compensation Committee's objective is to provide a competitive compensation program with strong and direct links between corporate
objectives and financial performance, individual performance and
34
compensation,
mindful of our corporate risk management objectives. Our compensation policy with respect to our Named Executives, including the Chief Executive Officer, has the following
objectives:
-
-
recruit, motivate, reward and retain the high performing executive talent required to create superior long-term stockholder returns;
-
-
reward executives for short-term performance as well as for growth in enterprise value over the long-term;
-
-
provide a competitive compensation package relative to peers and competitors; and
-
-
ensure effective utilization and development of talent by employing appropriate management processes, such as performance appraisals.
Our
compensation program for senior executive officers, including the Named Executives, consists of the following key elements: a base salary, an annual bonus, grants of share-based
compensation (typically stock awards) and, in the case of the Chief Executive Officer, annual performance-based compensation pursuant to his Performance-Based Compensation Agreement. The Compensation
Committee also used a performance-based compensation arrangement for Mr. R.S. Lowenthal, another senior executive officer whose compensation is likely to be in excess of $1 million. The
goal of the Compensation Committee is to provide a compensation structure which will enable us to retain and appropriately reward the senior executive officers that we believe are critical to our
long-term success. The Compensation Committee also reviews compensation arrangements to ensure that a portion of the Named Executives' compensation is directly related to corporate performance,
appropriate risk management and other factors that directly and indirectly influence stockholder value.
The
Compensation Committee regularly evaluates the benefits of referring to a "peer group" of public companies to guide its decision making process with respect to compensation and did
so in 2017. The Compensation Committee does not view the Company as having many true peers, given the Company's size, business model and mix of businesses as well as a trend of consolidation in the
financial services industry which continued in 2017, and a continuing trend of companies electing to become or remain privately held. Many companies that might otherwise be considered to be a part of
the Company's peer group are either units of much larger bank holding companies or smaller companies that are not wholly comparable to our business. However, the Compensation Committee recognizes the
value of using peer group insights to further its understanding of certain industry compensation practices and the competitive market for executive talent. In 2017, we reviewed the compensation
practices for senior executives of a wide range of economically-comparable or activity-comparable financial services enterprises.
The
Compensation Committee also reviewed the compensation practices of a subset of these peer group companies, including Piper Jaffrey, Stifel Financial, Raymond James Financial,
Ladenburg Thalmann Financial Services, Cowen Group and JMP Group to provide a context for broad parameters of its 2017 compensation decisions for our Chief Executive Officer, but the determination of
the amounts granted and the form of grant was set with reference to our own business model and substantially governed by the annual goals established under the Performance-Based Compensation Agreement
with the Chief Executive Officer described further below. The Compensation Committee also used these peer group companies and broad studies of companies similar to our Company in revenue as well as
other financial services companies to set a context for our decisions on non-employee director compensation practices. See "
Director Compensation
."
The
Compensation Committee does not employ a formal benchmarking strategy or rely upon specific peer-derived targets. The Compensation Committee has not chosen to engage an independent
outside compensation consultant for purposes of determining 2017 executive compensation, believing it can better relate business model performance parameters to our executive compensation than someone
unfamiliar with our specific business. However, the Compensation Committee has engaged Equilar Inc., which we
35
believe
to be an unbiased source of compensation-related information, to provide it with data sources and comparisons with respect to the compensation practices of other registered U.S. companies.
The
Compensation Committee believes potential incentive-based compensation (e.g., annual bonus and share-based awards) should generally comprise between 50% to 95% of total annual
compensation for the Named Executives because:
-
-
these executive officers are in positions to influence corporate strategy and execution;
-
-
tying the majority of total compensation to incentive payments helps ensure focus on our goals;
-
-
their compensation is "at risk" and will thus depend upon our Company producing financial results that warrant such payments;
-
-
the volatile nature of our market-driven businesses should be reflected in our compensation practices; and
-
-
our share-based compensation generally cliff vests after three or five years and therefore aligns the executive officer with a continuing
interest in enterprise value.
The
Compensation Committee makes recommendations to the Board with respect to total compensation including an annual bonus and grants share-based awards, if appropriate, for our Named
Executives and other senior executives. The Compensation Committee does not necessarily grant share-based awards to employees, including the Named Executives, on an annual basis. It considers the
performance of the employee and the number of outstanding share-based awards already awarded to the employee when determining total compensation in any year and the degree to which the employee
already has (or may have) a long-term interest in the Company's success. Upon the vesting of an employee's share-based awards, the Compensation Committee also considers whether or not to grant new
share-based awards to the employee and on what terms such awards will be made. All share-based awards are priced at fair market value on the grant date and are typically conditioned upon the
employee's continued employment with the Company for a significant period of time.
The
Compensation Committee believes that, as stockholders, the Named Executives, other senior executives and selected employees will be motivated to consistently deliver financial
results that build wealth for all stockholders over the long-term, and it currently uses share-based awards often with regular awards and a series of overlapping vesting periods to accomplish that
objective. The Compensation Committee is cognizant of the impact of the accounting guidance on our financial results and strives to balance the granting of stock options and other forms of stock-based
incentives with the other objectives of executive compensation set forth above. Since the adoption of accounting guidance on Share-Based Payment, on January 1, 2006, requiring us to expense
stock options, we have granted only a very limited number of stock options and none to the Named Executives. At March 9, 2018, we had 1,390,199 shares of Class A Stock which are the
subject of current share-based compensation arrangements (of which 281,919 were issued in January 2018) and subject to vesting requirements and 832,479 shares available for issuance to executives and
select employees. In January 2011, we established a compensation recovery ("clawback") policy which permits us to recover certain incentive-based compensation in specified circumstances. See
discussions under "
Stock Option Grants
," "
Stock Awards
" and "
Compensation
Recovery Policy
" below.
Compensation
arrangements for most of our senior executive officers (other than the Chief Executive Officer) generally involve a significant component of remuneration which is contingent
on our Company's performance and the individual performance of each senior executive officer; an annual cash bonus (which permits individual performance to be evaluated and recognized on an annual
basis) and share-based awards (which directly link a portion of their compensation to stock price appreciation realized by our stockholders). The Compensation Committee believes that this approach
best serves the interests of stockholders by enabling us to structure compensation in a way that meets the requirements of the highly competitive environment in which we operate, while ensuring that
senior executive officers are compensated in a manner that advances both our short and long-term interests and those of our stockholders. For the Chief Executive Officer's compensation arrangements,
see discussion under "
Chief Executive Officer Compensation
" below.
36
The
Compensation Committee, like the Board and management as a whole, recognizes the importance and need to continue the enhancement of the Company's compliance culture and policies and
the effectiveness thereof to enhance the overall profitability and endurance of the franchise. To this end the Compensation Committee will, in setting compensation in 2018 for senior executive
officers, including the Named Executives, and other executives and employees in positions with compliance responsibilities, emphasize compliance as a part of the review of such employee's
compensation.
Consideration of Say-On-Pay Votes
We conducted an advisory stockholder vote on executive compensation on May 12, 2014 and on May 8, 2017. The results of the 2014
and 2017 votes were to affirm our compensation practices as disclosed in the 2013 and 2016 Compensation Discussion and Analysis and attendant tables and narratives and the compensation paid to our
Named Executives. The Compensation Committee considered the 2014 and 2017 votes and may consider the results of those votes at future annual meetings when establishing current and future year's
executive compensation arrangements, but notes that the stockholder votes are non-binding and, in the future, the Compensation Committee and Board may choose not to take the results of the votes into
account when establishing executive compensation arrangements.
Performance evaluation and total compensation timing
Our executive compensation program for the Chief Executive Officer and other senior executive officers involves performance-related incentive
compensation and long-term compensation elements paid in a mix of cash bonuses and stock awards. It has been our practice to determine the aggregate cash bonus pool available to our Chief Executive
Officer and other senior executives on or before December 31st of the fiscal year-end in which the performance was delivered for accounting and tax purposes. However, our practice is to
consider and make any long-term share-based awards to our Chief Executive Officer and other senior executives in the first 60 days of the following year, based upon their performance in the
prior fiscal year.
While
we believe our process and timing of making performance-related judgments on annual total compensation is sound, reasonable and consistent with industry standards, it does not
correspond to the proscribed accounting period standards for compensation expenses nor for compensation disclosure. Elements of the total compensation for our Chief Executive Officer and other senior
executives are thus recorded in different accounting years and are not captured in the proscribed tables in this proxy statement or in our financial statements in a manner which accurately reflects
the Compensation Committee's judgments about performance for the fiscal year. Because of this disparity, we have made a practice of disclosing any share-based awards and their terms that are granted
in the first sixty days of the following year for our Named Executives and our employees taken as a whole in our proxy statements. We do this so that stockholders can see the Compensation Committee's
judgments about total compensation and how total compensation relates to the Company's and the executives' prior year's performance by combining cash bonuses and salary for the relevant fiscal year
plus any stock awards granted in the first sixty days of the following year. Similarly, stockholders should be aware that our share-based awards contain three or five years vesting provisions which
means that our executives will not receive that portion of their incentive compensation for a significant period of time, and then only if they continue to be employed by the Company. For additional
information, please see "
Realized Pay For Fiscal 2017
" below.
Determination of 2017 Compensation
The Compensation Committee, with recommendations from the Chief Executive Officer, makes recommendations to the Board with respect to all
compensation for each Named Executive for 2017 (other than the Chief Executive Officer, which compensation is based upon the Compensation Committee's own judgments). For a discussion of the
compensation for the Chief Executive Officer, see the section entitled "2017
Chief Executive Officer Compensation
" below.
37
The
Compensation Committee makes recommendations to the Board with respect to each Named Executive's annual salary and annual bonus and makes grants of share-based awards by reference to
the executive's position, responsibilities and performance. Some of the factors considered by the Compensation Committee are:
-
-
the position's responsibilities relative to our total earnings, use of invested capital, degree of firm capital at risk and the generation of
earnings and cash flows,
-
-
the position's impact on key strategic initiatives, and
-
-
the executive's performance and contributions to the management of the Company.
The
Chief Executive Officer assessed each Named Executive's (other than the Chief Executive Officer's), as well as other senior officers' performance, under our performance assessment
criteria, and the Compensation Committee assessed the Chief Executive Officer's performance according to these same criteria and the parameters established under the Performance-Based Compensation
Agreement with our Chief Executive Officer. See discussion under "2017
Chief Executive Officer Compensation
" below. In addition, the Compensation
Committee has determined to use performance-based compensation arrangements that meet the requirements in effect prior to December 22, 2017 (see the section entitled
"
U.S. Internal Revenue Code Section 162(m)
" below) for deductible compensation under Section 162(m) of the Internal Revenue Code of 1986,
as amended (the "Code"), for Named Executives who are likely to earn in excess of $1 million and for whom quantitative measurements of performance are feasible. The Compensation Committee
established such objectives for Mr. R.S. Lowenthal in 2014, 2015, 2016 and 2017.
Our
performance assessment criteria rate performance (as appropriate in different competencies) as follows:
-
-
strategic thinking;
-
-
integrity;
-
-
building and facilitating a corporate culture of ethical and responsible behavior;
-
-
compliance with regulatory requirements and Company policies, as well as maintaining good standing with regulators;
-
-
managing employee performance and morale;
-
-
financial responsibility;
-
-
achievement focus;
-
-
leadership;
-
-
risk management;
-
-
forward planning, business judgment and organization;
-
-
customer satisfaction and relationship building;
-
-
profitability of business unit, if applicable;
-
-
conflict resolution; and
-
-
communication skills.
Base Salary.
The base salary of our Chief Executive Officer and Mr. R.S. Lowenthal is set by the Compensation Committee.
Salaries paid
to senior executive officers are reviewed annually by the Compensation Committee considering recommendations made by the Chief Executive Officer, based on his assessment of the nature of the position,
and the skills, experience and performance of each senior executive
38
officer,
as well as salaries paid by comparable companies in our industry. The Compensation Committee then makes recommendations to the Board of Directors with respect to base salaries. Base salaries
paid to such senior executive officers in 2017 were not increased from 2016 levels.
Annual Cash Bonus.
Bonuses paid to our senior executive officers are reviewed annually by the Compensation Committee considering
recommendations made
by the Chief Executive Officer based on his assessment of the performance of the Company, the individual contribution of each senior executive officer to such performance and their competencies,
provided, however, that the Compensation Committee does not review recommendations made by the Chief Executive Officer with respect to Mr. R.S. Lowenthal, who is paid pursuant to a
compensation formula. The Compensation Committee then makes recommendations to the Board of Directors with respect to annual cash bonuses. Senior executive officers, including the Chief Executive
Officer, may be offered the right to elect to defer a portion of their annual bonus and performance-based compensation under our Executive Deferred Compensation Plan, a non-qualified unfunded plan.
However, since 2013, no officer has been given the option to make such a deferral. See "
Executive Deferred Compensation Plans
" below.
Stock Option Grants.
Under the Oppenheimer Holdings Inc. 2014 Incentive Plan (the "OIP"), our senior executive officers and
employees may be
granted stock options by the Compensation Committee based upon a variety of considerations, including the performance of the specific option recipients and the date of the last grant made to the
officer or employee, as well as considerations relating to the contribution. In addition, stock option grants may be awarded as a retention tool for new employees. Due to the relatively high cost of
expensing stock option awards under applicable accounting guidance, we have limited our use of this form of award in favor of stock awards.
Stock Awards.
Under the OIP, our and our subsidiaries' executive officers and employees are granted stock awards by the Compensation
Committee based
upon recommendations from the Chief Executive Officer (except for the Chief Executive Officer himself and Mr. R.S. Lowenthal) and other considerations relating to the contribution and
performance of the specific award recipient. The Compensation Committee independently considers and grants stock awards to the Chief Executive Officer where it deems them appropriate. In addition,
stock awards may be given as an inducement to employment for new employees or as a retention tool for existing employees. Stock awards are generally subject to a significant vesting period and we
believe that these awards are useful in retaining and motivating our executive personnel. On January 26, 2017, the Company awarded a total of 343,500 restricted shares of Class A Stock
to our employees, each of which will cliff vest in three years. These awards will be
expensed over the three year period. Of those awards, Mr. Alfano was awarded 8,500 shares, Mr. McKigney was awarded 10,000 shares, Mr. Whaley was awarded 15,000 shares,
Mr. R.S. Lowenthal was awarded 15,000 shares and Mr. A.G. Lowenthal was awarded 67,000 shares. Additionally, on February 23, 2017, the Company awarded a total of
64,100 restricted shares of Class A Stock to our employees, each of which will cliff vest in three years. These awards will be expensed over the three year period. Our Named Executives did not
receive any awards in February 2017. On January 30, 2018, the Company awarded a total of 281,919 restricted shares of Class A Stock to our employees. Of these restricted shares, 126,240
shares will cliff vest in three years and 155,679 shares will cliff vest in five years. These awards will be expensed over the applicable three or five year vesting period. Of those awards,
Mr. Alfano was awarded 7,000 shares, Mr. McKigney, Mr. Whaley and Mr. R.S. Lowenthal were each awarded 5,000 shares and Mr. A.G. Lowenthal was awarded
46,429 shares as part of the product of his 2017 compensation formula. On January 31, 2018, Mr. A.G. Lowenthal was awarded an additional 9,100 shares. This award cliff vests in
five years and will be expensed over the five year vesting period.
No Backdating or Spring Loading.
We do not backdate stock awards or grant them retroactively. In addition, we generally make our stock
awards at
regular times each year. We do not plan to coordinate grants of stock awards so that they are made before the announcement of favorable information, or after the announcement of unfavorable
information. Our stock awards are granted by the Compensation Committee
39
at
fair market value on a fixed date or event (such as the first regular meeting of the Board of Directors following an employee's hire), with all required approvals obtained in advance of or on the
actual grant date. All grants of stock awards to employees are made by the Compensation Committee.
Fair Market Value.
Fair market value has been consistently determined, as required by the OIP, as the share closing price on the NYSE
on the grant
date.
Stock Ownership and Trading Policy.
Directors are expected to accumulate and hold at least 6,000 shares of the Company's Class A
non-voting
common stock and have three years to achieve that position. All sitting directors either meet that criteria, or are on a track to do so. There are no such ownership requirements for the Named
Executives or other employees. The Company prohibits our executive officers and directors (and their immediate family members and affiliates) from short selling, dealing in publicly-traded options, or
dealing in any other type of derivative security related to our Class A Stock.
Negative Discretion.
Notwithstanding anything to the contrary in the Company's incentive compensation plans and equity-based plans, the
Compensation
Committee may, in its sole discretion, reduce or eliminate the bonus amount or grant or award otherwise payable to any participant for a particular performance period at any time prior to the payment
of bonuses or grants or awards to participants for such performance period, consistent with the strictures of Section 162(m) of the Code, as applicable.
Compensation Recovery Policy.
In January 2011, the Compensation Committee recommended and the Company established a compensation
recovery policy,
subsequently updated in March of 2017, that affects incentive compensation paid to its executive officers and certain other officers and employees determined by the Compensation Committee to be
covered by such policy. In the case of material noncompliance as a result of misconduct with respect to any financial reporting requirement that results in a restatement of the Company's financial
statements, the Company is required to recover the amount of incentive compensation that was paid to its executive officers (including cash bonuses, as well as proceeds from the sale of the Company's
stock for the period of twelve months after the period of such restatement in the case of our Chairman and Chief Executive Officer and Chief Financial Officer) and may also require, if determined by
the Compensation Committee, that other covered officers and employees forfeit certain unvested stock awards. The policy further provides that, to the extent that an executive officer or covered
employee engages in a continued failure of the performance of their job function, or engages in misconduct that materially affects the Company or materially violates Company policies, the Company may
require that executive officers or other covered employees forfeit some or all of these awards if compensation recovery was indicated. The Compensation Committee and the Company will, under certain
circumstances, consider compensation for the three year period preceding a restatement of its financial statements.
Beneficiaries
that have received stock awards subsequent to July 2010 have an agreement whereby such awards are subject to such clawback provisions as are described in the immediately
preceding paragraph. All senior executives and other employees holding restricted stock awards are subject to such provisions. The Company is awaiting final rulemaking by the SEC with respect to other
policies that may affect a broader employee population with respect to clawback or reduction of cash bonuses with respect to years in which there are events that include fraud, misconduct, restatement
of financial results or revaluation of owned assets resulting in losses by the Company in periods subsequent to the payment of cash bonuses and stock awards and will implement such other policies as
SEC rulemaking may require. Until such time as any new policies are developed and implemented by the Company, the Company will not hesitate to pursue recourse against any employee in the case of
employee fraud or misconduct.
Executive Deferred Compensation Plan.
The Executive Deferred Compensation Plan, or EDCP, provides for voluntary deferral of year-end
bonuses by our
senior executives, which deferral option may or may not be offered in a given year. These voluntary deferrals can be deferred on a tax-free basis until a specified future time and are not subject to
vesting. We do not make contributions to the EDCP for the
Named Executives and other senior level executives. The option to defer the year-end compensation into the
40
EDCP
has not been offered since 2007, but may be reinstated in future years at the Company's discretion. Further description of the Company's deferred compensation arrangements can be found in
note 14 to our consolidated financial statements for the year ended December 31, 2017 included in our Annual Report on Form 10-K for the year ended December 31, 2017.
Stock Appreciation Rights.
The Company has awarded stock appreciation rights ("OARs") to certain employees (none of whom are the Named
Executives) as
part of their compensation package based on a formula reflecting gross production, length of service and client assets. These awards are granted once per year in January with respect to the prior
year's production. The OARs vest five years from the grant date and are settled in cash on vesting. Further description of the OARs can be found in note 14 of our consolidated financial
statements for the year ended December 31, 2017 included in our Annual Report on Form 10-K for the year ended December 31, 2017.
Benefits.
The Named Executives who are U.S.-based salaried employees participate in a variety of benefits designed to enable us to
attract and retain
our workforce in a competitive marketplace. We help ensure a productive and focused workforce through a healthcare program and our other benefits. Deferred compensation and 401(k) plans help
employees, especially long-service employees, save and prepare financially for retirement. The Named Executives receive the same benefits as all full-time employees and no others beyond those
described in this Compensation Discussion and Analysis. Our qualified 401(k) Plan allowed employees to contribute up to $18,000 for 2017 plus an additional $6,000 for employees over age 50.
Employees may continue to retain their 401(k) Plan account after they leave us so long as their account balance is $5,000 or more. We do not sponsor a pension plan for our employees.
Perquisites.
We provide one perquisite to our Chief Executive Officer: Mr. A.G. Lowenthal has a Company-paid parking
arrangement. The
primary purpose of this parking arrangement is to minimize distractions from the executive's attention to important corporate matters. Perquisites are quantified in the
"
Summary Compensation Table
" below and detailed in the "
All Other Compensation Table
" below.
We
do not provide the Named Executives with any other perquisites, such as split-dollar life insurance, reimbursement for legal counseling for personal matters, or tax reimbursement
payments. We do not provide loans to executive officers, other than margin loans in margin accounts with us in connection with the purchase of securities (including our securities), which margin
accounts are substantially on the same terms, including interest rates and collateral, as those prevailing from time to time for comparable transactions with non-affiliated persons and do not involve
more than the normal risk of collectability. See "
Certain Relationships and Related Party Transactions
," below.
Separation and Change in Control Arrangements.
Our Named Executives are not eligible for benefits and payments if employment terminates
in a
separation or if there is a change in control.
2017 Chief Executive Officer Compensation
Mr. A.G. Lowenthal, our Chairman of the Board and Chief Executive Officer, is paid an annual base salary set by the Compensation
Committee, plus annual performance-based compensation under the Performance-Based Compensation Agreement and, at the discretion of the Compensation Committee, is eligible for additional bonuses and/or
grants of stock options and restricted stock. Our Chief Executive Officer's incentives are substantially all quantitative measures driving off the Company's core business model and designed to bring
executive incentives, performance and compensation into a close relationship.
On
May 11, 2015, Class B Stockholders ratified the Company's Amended and Restated Performance-Based Compensation Agreement with Mr. A.G. Lowenthal, which was
effective May 11, 2015. The purpose of the Performance-Based Compensation Agreement is to allow the Compensation Committee to set the annual terms under which Mr. A.G. Lowenthal's
annual performance-based compensation is to be calculated during the term thereof. Mr. A.G. Lowenthal's role in determining our success or failure has a very significant bearing on our
ultimate results and financial condition because of the nature of his
41
responsibilities
as Chief Executive Officer. Therefore, the Compensation Committee has determined that a high proportion of his annual compensation should be subject to variability to reflect our
Company's results and those of key performance indices.
The
Performance-Based Compensation Agreement includes a limitation on the maximum performance award available to Mr. A.G. Lowenthal in any single year for which it is
effective. The Compensation Committee may also set a lesser "cap" on Mr. A.G. Lowenthal's total performance award under the Performance-Based Compensation Agreement which can be less
than the maximum of $10 million under the Performance-Based Compensation Agreement. In March 2017, the Compensation Committee established performance goals under the Performance-Based
Compensation Agreement entitling Mr. A.G. Lowenthal to a Performance Award under the Performance-Based Compensation Agreement for the year 2017 up to $5 million in the aggregate
unless one or more of the targets established in clauses (c), (e) and/or (f) below are achieved, in which case the maximum is $7.5 million.
The
Performance Award established by the Compensation Committee was determined by the application of a formula based on the following components (as defined in the annual Compensation
Committee resolution establishing the CEO performance award for 2017): (a) an amount equal to 3% of the amount by which the Company's total revenue less interest income consisting solely of
customer margin interest revenues and FDIC funds fees (collectively "Specified Interest Income") for the year ending December 31, 2017 exceeds $812,000,000 plus 1% of the amount by which
Specified Interest Income for the year ending December 31, 2017 is greater than $62,000,000 and less than $93,000,000; plus (b) an amount equal to: (i) $500,000 if the Company's
profit before income taxes for the year ending December 31, 2017 is equal to $3,000,000 or more; plus (ii) 8% of the amount by which the Company's profit before income taxes for the year
ending December 31, 2017 is greater than $3,000,000 and less than $4,500,000; plus (iii) 4% of the amount by which the Company's profit before income taxes for the year ending
December 31, 2017 is greater than $4,500,000 and less than $5,500,000 or more; plus (iv) 1% of the amount by which the Company's profit before income taxes for the year ending
December 31, 2017 is greater than $5,500,000 up to $6,500,000; plus (c) an amount equal to the product of (i) $1,200,000 multiplied by (ii) the difference (stated as a
whole integer or fraction thereof) between 63% and any lesser percentage which would be obtained by dividing (1) the sum of those items included in the Company's compensation and related
expenses for the year ending December 31, 2017 by (2) the Company's total revenue less interest income for the year ending December 31, 2017; plus (d) an amount related to
Annual Total Stockholder Return which shall be equal to the product of (i) the difference between the closing market price of one share of the Company's Class A Stock computed as the
10 day closing average for the period ending on January 3, 2017 (as such market price may be adjusted for any stock splits occurring during fiscal 2017) and the closing market price of
one share of the Company's Class A Stock computed as of the 10 day closing average for the period ending on December 31, 2017 plus the amount of all dividends paid on one share of
the Company's Class A Stock during the year ending December 31, 2017, divided by (ii) the closing market price of one share of the Company's Class A Stock computed as the
10 day closing average for the period ending on January 3, 2017; multiplied by the amount of $1,727,000 and stated in dollars, but in no event to exceed $1,250,000; plus (e) an
amount equal to $400,000 if the profit before income taxes for the Company's capital markets segment for the year ending December 31, 2017 equals or exceeds $1 million; plus an amount
equal to: (i) $250,000 if the revenue per employee for the Company's investment banking segment for the year ending December 31, 2017 equals or exceeds $450,000; plus
(ii) $250,000 if the revenue per employee for the Company's institutional equity segment for the year ending December 31, 2017 equals or exceeds $475,000; plus (iii) $750,000 if
the Company's assets under administration increase by $1,550,000,000 or more for the year ending December 31, 2017; plus (iv) $250,000 if the revenue per employee for the Company's
private client division for the year ending December 31, 2017 equals or exceeds $350,000 plus (f) an amount equal to (i) $250,000 if the Company's pre-tax return on stockholders'
equity for the year ending December 31, 2017 equals or exceeds 8.75%; plus (ii) $100,000 for each half-percent (or portion thereof) by which the Company's pre-tax return on stockholders'
equity for the year ending December 31, 2017 exceeds 8.30%; provided that the Performance Award Amount for the 2017
42
Performance
Year shall not exceed $5,000,000 unless one or more of the targets established in clauses (c), (e) and/or (f) above have been achieved for fiscal 2017, whereupon the
Performance Award Amount shall be equal to (x) the amounts calculated for clauses (c), (e) and (f) plus the lesser of $5,000,000 or the sum of (a), (b) and
(d) (if less than $5,000,000); provided, further, that in no circumstances shall the total Performance Award Amount for the 2017 Performance Year exceed $7,500,000.
The
application of the 2017 formula as set out above produced a Performance Award for Mr. A.G. Lowenthal that the Compensation Committee directed be paid of $1,200,000 in
cash and 46,429 shares of the Company's Class A Stock, the cash value of which was $1,279,118.90 at the date of grant based on the closing price of the Class A Stock on the NYSE on
January 30, 2018 of $27.55, which award will "cliff" vest in five years from the date of grant.
In
March 2018, the Compensation Committee continued Mr. A.G. Lowenthal's base salary for 2018 at $500,000, unchanged from 2017.
2017 Compensation Arrangement for R.S. Lowenthal
In March 2017, the Compensation Committee also determined pursuant to Article IX of the OIP and for purposes of complying with the
requirements of Section 162(m) of the Code to establish an Individual Target Award (consisting of a formula) for determining the Performance-Based Award for the fiscal year ending
December 31, 2017 (the "Performance Period") for Mr. R.S. Lowenthal, Senior Managing Director and Head of Oppenheimer & Co. Inc.'s Investment Banking and
Fixed Income business (including Municipal Finance, the "Fixed Income Division"). The Performance Award established by the Compensation Committee was to be determined by the application of a formula
such that (i) 2% of gross revenue from equity capital markets transactions credited to the Company for the year ending December 31, 2017 so long as such revenues are greater than
$10,000,000 and less than $20,000,000 plus (ii) 4% of gross revenue from equity capital markets transactions credited to the Company for the year ending December 31, 2017 so long as such
revenues are equal to or greater than $20,000,000; plus (b) an amount equal to 5% of the gross revenue of the Company's debt capital markets division for the year ending December 31,
2107; plus (c) an amount equal to 2% of the amount by which the gross revenue of the Company's public finance division for the year ending December 31, 2017 is greater than $2,000,000;
plus (d) an amount equal to (i) 2% of the gross revenue from the Company's M&A, investment banking advisory and other investment banking division fee-based transactions for the year
ending December 31, 2017 up to $30,000,000 plus (ii) 4% of the amount by which the gross revenue from such transactions for the year ending December 31, 2017 is greater than
$30,000,000; plus (e) an amount equal to .005 times the total revenue of the Company's global fixed income division for the year ending December 31, 2017; plus (f) $150,000 if
there are no cumulative losses net of commission credits for the year ending December 31, 2017 for the Company's fixed income trading; plus (g) $25,000 for each managing director hired
for the Company's public finance division and with a start date during the year ending December 31, 2017; plus (h) an amount equal to (i) $30,000 for each managing director hired
for the Company's investment banking division and with a start date during the year ending December 31, 2017 plus (ii) $50,000 for each such managing director whose documented production
for the year ending December 31, 2017 is in excess of his compensation for the year ending December 31, 2017; plus (i) $50,000 for each .01 improvement in the efficiency staffing
ratio for the Company's investment banking division for the year ended December 31, 2017 (calculated as analysts + associates + directors divided by executive
directors + managing directors) over the efficiency staffing ratio for such division for the year ended December 31, 2016 of 1.66; plus (j) an amount related to Annual
Total Stockholder Return ("ATSR") which shall be equal to the product of (i) the difference between the closing market price of one share of the Company's Class A Stock computed as the
10 day closing average for the period ending on January 3, 2017 of $18.895 (as such market price may be adjusted for any stock splits occurring during fiscal 2017) and the closing market
price of one share of the Company's Class A Stock computed as the 10 day closing average for the period ending on December 31, 2017 plus the amount of all dividends paid on one
share of the Company's Class A Stock during the year ending December 31, 2017, divided by (ii) the closing
43
market
price of one share of the Company's Class A Stock computed as the 10 day closing average for the period ending on January 3, 2017 of $18.895; multiplied by the amount of
$863,500 and stated in dollars, but in no event to exceed $1,250,000 provided, the Performance-Based Award of (a) through (i) above shall not exceed $3,000,000 for fiscal year 2017.
The
application of the 2017 formula as set out above produced a Performance Award for Mr. R.S. Lowenthal of $3,000,000 for fiscal year 2017, which was paid to him in cash.
In
view of the performance during 2017 of the Investment Banking and Fixed Income Division, and the Performance Award noted above, the Compensation Committee awarded
Mr. R.S. Lowenthal a stock award of 5,000 shares of the Company's Class A Stock on January 30, 2018, based on that day's closing price of the Class A Stock on the
NYSE of $27.55 in recognition of his ongoing and potential future contributions to the Company. The award, which vests on January 29, 2023, is subject to Mr. R.S. Lowenthal being
continuously employed by the Company until that date.
CEO Pay Ratio
We believe that executive pay must be consistent and internally equitable in order to motivate employees to perform in ways that create and
enhance shareholder value. We are committed to internal pay equity, and the Compensation Committee monitors the relationship between the pay that our executive officers receive and the pay that our
non-executive employees receive. The Compensation Committee reviewed a comparison of our CEO's annual total compensation in 2017 to that of all other employees for the same period. The compensation
for our CEO was approximately 42 times the median pay of our domestic employees.
Our
CEO to median employee ratio is calculated in accordance with SEC requirements pursuant to Item 402(u) of Regulation S-K. We identified the median employee by examining
the 2017 total cash compensation for all individuals, excluding our CEO, who were employed by us on December 31, 2017, the last day of our payroll year and who had been employed by us for the
entire fiscal 2017 year. We included all employees, whether employed on a full-time, part-time or seasonal basis, except for those employees employed by non-U.S. subsidiaries, which make up
less than 5% of our employee population. We did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time
employees that were not employed by us for all of 2017. We believe that the use of total cash compensation for all employees is a consistently applied compensation measure because we do not widely
distribute annual equity awards to employees. Approximately four percent (4%) of our employees receive annual equity awards.
After
identifying the median employee based on total cash compensation, we calculated annual total compensation for such employee using the same methodology that we use for our named
executive officers as set forth in the "
2017 Summary Compensation Table
" on page 46. The annual total compensation for 2017 was $4,188,098 for
our CEO and $100,000 for our median employee.
As
illustrated in the table below, our 2017 CEO to median employee pay ratio is 42:1.
|
|
|
|
|
|
|
|
|
|
CEO to Median Employee Pay Ratio
|
|
|
|
CEO
|
|
Median Employee
|
|
Base Salary
|
|
$
|
500,000
|
|
$
|
95,000
|
|
Stock awards
|
|
$
|
1,169,820
|
|
$
|
0
|
|
Non-equity Incentive Plan Compensation
|
|
$
|
1,200,000
|
|
$
|
5,000
|
|
Nonqualified Deferred Compensation Earnings (1)
|
|
$
|
1,312,528
|
|
$
|
0
|
|
All Other Compensation
|
|
$
|
5,750
|
|
$
|
0
|
|
Total
|
|
$
|
4,188,098
|
|
$
|
100,000
|
|
-
(1)
-
These
amounts are attributable to a change in the value of each individual's defined benefit pension account balance and do not represent earned or paid
compensation. Values are dependent on many variables, including years of service, earnings, and actuarial assumptions.
44
U.S. Internal Revenue Code Section 162(m)
Section 162(m) of the Code ("Section 162(m)") generally limits the tax deductibility of annual compensation in excess of
$1,000,000 paid to our Chief Executive Officer, Mr. R.S. Lowenthal and our three other most highly compensated executive officers whose compensation is required to be disclosed in this
proxy statement, subject to an exception for qualified performance-based compensation that was eliminated by recent tax reform legislation under the Tax Cuts and Jobs Act (the "TCJA"), beginning
January 1, 2018. The TCJA also expanded the scope of "covered employees" whose compensation may be subject to this deduction limit by, among other things, now treating the principal financial
officer as a covered employee.
To
the extent consistent with our general compensation objectives, in 2017, as well in prior years, the Compensation Committee considered the potential effect of Section 162(m) on
compensation paid to our executive officers. Historically, we have structured certain components of our compensation program in a manner intended to be performance-based under Section 162(m),
such as the Performance-Based Compensation Agreement for the Chief Executive Officer, although the Compensation Committee may have granted non-deductible compensation if it considered it appropriate
and in the best interest of the Company. Whether under Section 162(m) as in effect before or after the enactment of TCJA, the Compensation Committee reserves the right to award and recommend
the awarding of non-deductible compensation in any circumstances it deems appropriate.
As
a result of the passage of TCJA, the Company will no longer be able to deduct annual compensation in excess of $1,000,000, other than certain amounts that are paid pursuant to binding
contracts in effect prior to November 2, 2017 which were not materially modified after this date. The Compensation Committee and the Board of Directors believe that there are substantial
benefits to be derived from defined performance-based compensation for key executives. In the future, the Compensation Committee expects to grant compensation, including compensation tied to
performance, that may not be deductible for federal income tax purposes.
45
SUMMARY COMPENSATION TABLE
For the Year Ended December 31, 2017
The following table sets forth the total annual compensation paid or accrued by us to or for the account of our Chief Executive Officer and our
Chief Financial Officer for the three years ended December 31, 2017. In an effort to provide more complete disclosure, the table lists the next three most highly paid executive officers of our
principal subsidiaries, Oppenheimer & Co. Inc. and Oppenheimer Asset Management Inc., whose total cash compensation for the year ended December 31, 2017 exceeded
$100,000.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
(a)(5)
|
|
(b)
|
|
(c)
|
|
(d)(1)
|
|
(e)(2)
|
|
(f)(2)
|
|
(g)(1)
|
|
(h)(3)
|
|
(i)(4)
|
|
(j)
|
|
A. G. Lowenthal
|
|
|
2017
|
|
$
|
500,000
|
|
$
|
|
|
$
|
1,169,820
|
|
$
|
|
|
$
|
1,200,000
|
|
$
|
1,312,528
|
|
$
|
5,750
|
|
$
|
4,188,098
|
|
Chairman, CEO and Director
|
|
|
2016
|
|
$
|
500,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
596,795
|
|
$
|
5,750
|
|
$
|
1,102,545
|
|
of the Company and
|
|
|
2015
|
|
$
|
500,000
|
|
$
|
|
|
$
|
858,138
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
5,750
|
|
$
|
1,363,888
|
|
Oppenheimer & Co. Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. J. Alfano
|
|
|
2017
|
|
$
|
275,000
|
|
$
|
750,000
|
|
$
|
148,410
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,173,410
|
|
CFO of the Company and
|
|
|
2016
|
|
$
|
275,000
|
|
$
|
500,000
|
|
$
|
122,800
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
897,800
|
|
Executive Vice President and
|
|
|
2015
|
|
$
|
275,000
|
|
$
|
600,000
|
|
$
|
136,927
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,011,927
|
|
CFO of Oppenheimer & Co. Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.S. Lowenthal
|
|
|
2017
|
|
$
|
200,000
|
|
$
|
|
|
$
|
261,900
|
|
$
|
|
|
$
|
3,000,000
|
|
$
|
|
|
|
|
|
$
|
3,461,900
|
|
Director of the Company and
|
|
|
2016
|
|
$
|
200,000
|
|
$
|
|
|
$
|
122,800
|
|
$
|
|
|
$
|
1,726,554
|
|
$
|
|
|
$
|
|
|
$
|
2,049,354
|
|
Senior Managing Director and
|
|
|
2015
|
|
$
|
200,000
|
|
$
|
|
|
$
|
262,858
|
|
$
|
|
|
$
|
1,850,000
|
|
$
|
|
|
$
|
23,443
|
|
$
|
2,336,301
|
|
Head of Oppenheimer & Co. Inc.'s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Income and Investment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banking businesses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. McKigney
|
|
|
2017
|
|
$
|
225,000
|
|
$
|
850,000
|
|
$
|
174,600
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,249,600
|
|
President of Oppenheimer
|
|
|
2016
|
|
$
|
225,000
|
|
$
|
600,000
|
|
$
|
245,600
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,070,600
|
|
Asset Management Inc.
|
|
|
2015
|
|
$
|
225,000
|
|
$
|
500,500
|
|
$
|
402,464
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,127,964
|
|
M. Whaley
|
|
|
2017
|
|
$
|
175,000
|
|
$
|
750,000
|
|
$
|
261,900
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,186,900
|
|
Executive Vice President,
|
|
|
2016
|
|
$
|
193,750
|
|
$
|
500,000
|
|
$
|
204,671
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
898,421
|
|
Private Client Services, of
|
|
|
2015
|
|
$
|
200,000
|
|
$
|
500,000
|
|
$
|
231,877
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
931,877
|
|
Oppenheimer & Co. Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to Summary Compensation Table:
-
(1)
-
The
Bonus and Non-Equity Incentive Plan Compensation amounts are not reduced by the Named Executive's election, if any, to defer receipt of bonuses into the EDCP or
an election to convert a portion of his or her bonus into the purchase of Class A Stock. None of these conditions applied in 2017.
-
(2)
-
The
values of stock options (granted under the OIP) and stock awards (granted under the ESP, EIP or OIP) represent the grant date fair value of awards granted in the
fiscal year. The underlying assumptions and methodology used to value our stock options and stock awards are described in note 14 to our consolidated financial statements for the year ended
December 31, 2017 included in our Annual Report on Form 10-K for the year ended December 31, 2017 which is available without charge, except for exhibits to the report, by
(i) writing to Oppenheimer Holdings Inc., 85 Broad Street, 22nd Floor, New York, New York 10004, Attention: Secretary, (ii) calling 1-800-221-5588, or (iii) emailing
us with your request at info@opco.com. Details of stock options and stock awards held by the Named Executives appear in the "
Outstanding Equity Awards
Table
" and notes thereto appearing below. Awards granted in January of 2018 (which awards are not included in this table) when added to the prior year's cash bonus and salary,
taken together, yield the total annual compensation awarded for the performance of the Named Executive for 2017. All future awards will be granted under the OIP.
-
(3)
-
We
have a nonqualified deferred compensation plan into which senior executives, including the U.S. Named Executives, could elect to defer some or all of their
year-end bonuses. No above-market earnings were recorded. Details about the earnings from the EDCP appear below in the "
Nonqualified Deferred Compensation
Table
."
-
(4)
-
See
the chart below "
All Other Compensation Table
" for a description of the
amounts appearing in column (i). All other compensation includes perquisites and commission income.
-
(5)
-
The
three executive officers of Oppenheimer & Co. Inc. and Oppenheimer Asset Management Inc. appearing in the table are not officers of
Oppenheimer Holdings Inc. and they do not, except for R.S. Lowenthal who became a director of the Company in May 2013, perform any policy making functions for Oppenheimer Holdings Inc.
46
All Other Compensation Table
For the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
Name
|
|
Parking
|
|
Commissions
|
|
|
|
(a)
|
|
(b)
|
|
A.G. Lowenthal
|
|
$
|
5,750
|
|
$
|
|
|
J.J. Alfano
|
|
$
|
|
|
$
|
|
|
R.S. Lowenthal
|
|
$
|
|
|
$
|
|
|
B. McKigney
|
|
$
|
|
|
$
|
|
|
M. Whaley
|
|
$
|
|
|
$
|
|
|
Notes to All Other Compensation Table:
-
(a)
-
We
have one parking space at 85 Broad Street, New York, NY which is included in the terms of the lease for the head-office premises. A.G. Lowenthal uses this space.
The cost ascribed to the parking space reflects current commercial terms.
Grants of Plan-Based Awards
For the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards
|
|
|
|
|
|
|
|
Grant Date Fair
Value of Stock
and Option
Awards
($)
|
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(i)
|
|
(l)
|
|
A.G. Lowenthal (1)
|
|
|
2/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
A.G. Lowenthal (1)
|
|
|
1/26/2017
|
|
|
|
|
|
|
|
|
|
|
|
67,000
|
|
$
|
1,256,250
|
|
A.G. Lowenthal (1)
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
46,429
|
|
$
|
1,183,475
|
|
A.G. Lowenthal (1)
|
|
|
1/31/2018
|
|
|
|
|
|
|
|
|
|
|
|
9,100
|
|
$
|
231,504
|
|
R.S. Lowenthal (2)
|
|
|
2/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
$
|
122,800
|
|
R.S. Lowenthal (2)
|
|
|
1/26/2017
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
$
|
281,250
|
|
R.S. Lowenthal (2)
|
|
|
1/30/2018
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
$
|
127,450
|
|
Notes to Grants of Plan-Based Awards Table:
-
(1)
-
Mr. A.G.
Lowenthal's compensation is subject to an Amended and Restated Performance-Based Compensation Agreement effective May 11, 2015 under which the
Compensation Committee may establish annual limits not to exceed $7.5 million. The Performance-Based Compensation Agreement covers years through May 2025. The application of the 2017 formula
produced a Performance Award for Mr. A.G. Lowenthal that the Compensation Committee directed be paid of $1,200,000 in cash and 46,429 shares of the Company's Class A Stock, which award
will "cliff" vest in five years from the date of grant. Also see "
2017 Chief Executive Officer Compensation
" above.
-
(2)
-
Mr. R.S.
Lowenthal's compensation is subject to an Individual Target Award (consisting of a formula) for determining a Performance-Based Cash Award for the
2017 fiscal year established by the Compensation Committee. Under the formula established in March 2017, R.S. Lowenthal was awarded $3,000,000 in cash for the 2017 fiscal year (exclusive of salary),
which amount is reflected in column (g) of the "
Summary Compensation Table
." Also see "
2017 Compensation Arrangement for
R.S. Lowenthal
" above.
47
Outstanding Equity Awards Table
As of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity Incentive
Plan Awards:
Number
of Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiry
Date
|
|
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)
|
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($) (13)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or
Other Rights
That Have
Not Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
($)
|
|
(a)
|
|
(b)
|
|
(c) (1)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h) (5)
|
|
(i)
|
|
(j)
|
|
A.G. Lowenthal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,000
|
(1)
|
$
|
1,795,600
|
|
|
|
|
|
|
|
J. J. Alfano
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,200
|
(2)
|
$
|
58,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(3)
|
$
|
53,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,381
|
(4)
|
$
|
63,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(5)
|
$
|
134,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(7)
|
$
|
268,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500
|
(8)
|
$
|
227,800
|
|
|
|
|
|
|
|
R.S. Lowenthal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,400
|
(2)
|
$
|
117,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,524
|
(4)
|
$
|
255,243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(5)
|
$
|
134,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(7)
|
$
|
268,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(8)
|
$
|
402,000
|
|
|
|
|
|
|
|
B. McKigney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500
|
(2)
|
$
|
40,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667
|
(4)
|
$
|
44,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(5)
|
$
|
134,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(6)
|
$
|
335,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(7)
|
$
|
536,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(8)
|
$
|
268,000
|
|
|
|
|
|
|
|
M. Whaley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,275
|
(2)
|
$
|
34,170
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
(3)
|
$
|
26,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,381
|
(4)
|
$
|
63,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(5)
|
$
|
268,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
(7)
|
$
|
446,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
(8)
|
$
|
402,000
|
|
|
|
|
|
|
|
Notes to Outstanding Equity Awards Table:
-
(1)
-
Stock
awards to the Named Executives were granted on January 26, 2017 and vest on January 25, 2020, subject to the individuals being employed by the
Company on the vesting date or death, if earlier.
-
(2)
-
Stock
awards to the Named Executives were granted on January 29, 2014 and vest on January 28, 2019, subject to the individuals being employed by the
Company on the vesting date.
-
(3)
-
Stock
awards to the Named Executives were granted on February 27, 2014 and vest on February 26, 2019, subject to the individuals being employed by the
Company on the vesting date.
-
(4)
-
Stock
awards to the Named Executives were granted on January 29, 2015 and vest on January 28, 2020, subject to the individuals being employed by the
Company on the vesting date.
-
(5)
-
Stock
awards to the Named Executives were granted on February 26, 2015 and vest on February 25, 2020, subject to the individuals being employed by the
Company on the vesting date.
-
(6)
-
Stock
awards to the Named Executives were granted on July 29, 2015 and vest on July 28, 2020, subject to the individuals being employed by the Company
on the vesting date.
-
(7)
-
Stock
awards to the Named Executives were granted on February 24, 2016 and vest on February 23, 2021, subject to the individuals being employed by the
Company on the vesting date.
-
(8)
-
Stock
awards to the Named Executives were granted on January 26, 2017 and vest on January 25, 2020, subject to the individuals being employed by the
Company on the vesting date.
-
(9)
-
The
market value is based on the closing price of the Class A Stock on the NYSE on December 31, 2017 of $26.80.
On
January 30, 2018, the Named Executives (excluding Mr. A.G. Lowenthal) were awarded an aggregate of 22,000 shares of Class A Stock, which vest on
January 29, 2023, subject to the individuals being employed by the Company on the vesting date.
On
January 30, 2018, Mr. A.G. Lowenthal was awarded 46,429 shares of Class A Stock, which vest on January 29, 2023, subject to him being employed by the
Company on the vesting date or death, if earlier.
48
On
January 31, 2018, Mr. A.G. Lowenthal was awarded 9,100 shares of Class A Stock, which vest on January 30, 2023, subject to him being employed by the
Company on the vesting date or death, if earlier.
Option Exercises and Stock Vested
For the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized
on Exercise ($)
|
|
Number of Shares
Acquired
on Vesting (#)
|
|
Value Realized
on Vesting ($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
A. G. Lowenthal
|
|
|
|
|
|
|
|
|
115,937
|
|
$
|
4,228,142
|
|
J.J. Alfano
|
|
|
|
|
|
|
|
|
8,193
|
|
$
|
301,850
|
|
R.S. Lowenthal
|
|
|
|
|
|
|
|
|
5,301
|
|
$
|
290,175
|
|
B. McKigney
|
|
|
|
|
|
|
|
|
3,151
|
|
$
|
136,000
|
|
M. Whaley
|
|
|
|
|
|
|
|
|
5,333
|
|
$
|
194,975
|
|
Nonqualified Deferred Compensation
For the Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last
Fiscal
Year ($)
|
|
Registrant
Contributions
in Last
Fiscal
Year ($)
|
|
Aggregate
Earnings
in Last
Fiscal Year ($)
|
|
Aggregate
Balance
at 12/31/17 ($)
|
|
(a)
|
|
(b)
|
|
(c)(2)
|
|
(d)(2)
|
|
(f)(2)
|
|
A. G. Lowenthal (1)(3)
|
|
|
|
|
|
|
|
$
|
1,841,803
|
|
$
|
12,283,161
|
|
J.J. Alfano
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
R.S. Lowenthal
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
B. McKigney
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
M. Whaley
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
-
(1)
-
The
Named Executives did not make a contribution in 2017 to our Nonqualified Deferred Compensation Plan.
-
(2)
-
We
do not make contributions to the EDCP with respect to voluntary deferrals. The aggregate balances shown in column (e) of the table above represent amounts
that the Named Executives earned as year-end bonuses but elected to defer (included as part of the amount in column (g), if any, of the "
Summary Compensation
Table
" above), plus earnings (or losses). Such earnings (or losses) for fiscal 2017 are reflected in column (d) of the "
Nonqualified Deferred
Compensation Table
" and represent appreciation based on investments selected by the Named Executives. Account balances are invested in phantom investments selected by the Named
Executives from a menu of deemed investment choices. Participants may change their deemed investment choices quarterly. When participants elect to defer amounts into the EDCP, they also elect when the
amounts will ultimately be paid out to them. Distributions may either be made in a specific future year or at a time that begins after retirement. In accordance with Section 409A of the Code,
in general, distribution schedules cannot be accelerated (other than for hardship) and, to delay distribution, the participant must make such an election at least one year before distribution would
otherwise have commenced and the new distribution must be delayed a minimum of five years after distribution would have initially begun. The deferred amount is a liability of the Company and subject
to the risks of the business.
-
(3)
-
All
of the amounts contributed by Mr. Lowenthal to our Nonqualified Deferred Compensation Plan were previously reported as compensation to him in the
"
Summary Compensation Table
" for the applicable year.
49
Realized pay for fiscal 2017
To supplement the SEC required disclosure in the "
Summary Compensation Table
" set forth on
page 46 we have included the following additional table which shows the total compensation actually realized by each Named Executive for fiscal 2017.
The
Company believes that this table is useful to stockholders as it reflects the compensation actually realized for 2017 by the Named Executives. The "
Summary
Compensation Table"
, as calculated under SEC rules, includes several items that are driven by accounting, actuarial and timing assumptions, which are not necessarily reflective
of compensation actually realized by an executive in any particular reporting year.
Our
Company's pay practices are not well reflected in these SEC-mandated tables because we used long-term (three to five year cliff vesting) stock awards to recognize and reward
executive performance accomplishments beyond their annual cash bonuses (but typically within their performance matrices, where we use them) to ensure a strong relationship between our senior
executives' ongoing performance and ongoing stockholder value creation. In the "
Summary Compensation Table
", these
stock awards are part of Total Compensation in the year of the award and are valued on the award date, even though they typically cliff-vest three to five years after the award date and will be valued
at vesting at the then market price of our stock. For additional information, please see "
Performance evaluation and total compensation element timing
"
in the "
Compensation Discussion and Analysis
", above.
Realized
pay for salary, bonus/non-equity incentive plan compensation and stock awards for fiscal 2017 was equal to 142% of the values shown in the "
Summary
Compensation Table
" for our Chief Executive Officer and between 94% and 113% for our other Named Executives. The table below shows realized compensation for fiscal 2017 for
each Named Executive.
Realized Pay for Fiscal 2017 Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Salary
|
|
Bonus
|
|
Vested
Stock
Awards
|
|
Vested
Stock
Options
|
|
Non-Equity
Incentive Plan
Compensation
|
|
Total
|
|
% of
Reported
|
|
|
|
(a)
|
|
(b)(1)
|
|
(c)(2)
|
|
(d)(2)
|
|
(e)(1)
|
|
(f)
|
|
(g)(3)
|
|
A.G. Lowenthal
|
|
$
|
500,000
|
|
$
|
|
|
$
|
4,228,142
|
|
$
|
|
|
$
|
1,200,000
|
|
$
|
5,928,142
|
|
|
142
|
%
|
J.J. Alfano
|
|
$
|
275,000
|
|
$
|
750,000
|
|
$
|
301,850
|
|
$
|
|
|
$
|
|
|
$
|
1,326,850
|
|
|
113
|
%
|
R.S. Lowenthal
|
|
$
|
200,000
|
|
$
|
|
|
$
|
290,175
|
|
$
|
|
|
$
|
3,000,000
|
|
$
|
3,490,175
|
|
|
101
|
%
|
B. McKigney
|
|
$
|
225,000
|
|
$
|
850,000
|
|
$
|
136,000
|
|
$
|
|
|
$
|
|
|
$
|
1,211,000
|
|
|
97
|
%
|
M. Whaley
|
|
$
|
175,000
|
|
$
|
750,000
|
|
$
|
194,975
|
|
$
|
|
|
$
|
|
|
$
|
1,119,975
|
|
|
94
|
%
|
Notes to Realized Pay for 2017 Table
-
(1)
-
Reflects
amounts earned based on fiscal 2017 performance.
-
(2)
-
Reflects
the aggregate value of stock awards and stock options that were awarded in prior years and vested during fiscal 2017 and are shown here to present a clear
picture of total currently earned executive compensation. The value of vested stock awards is calculated by multiplying the number of shares vested by the closing price of our Class A Stock on
the vesting date.
-
(3)
-
Represents
the percentage of Total Compensation in the Realized Pay for Fiscal 2017 Table to Total Compensation (column j) in the Summary Compensation Table.
Compensation Policies and Risk
The Compensation Committee, the Board as a whole and senior management believe that the Company's compensation policies and practices are not
likely to have a material adverse effect on the Company. The Company is necessarily in the business of taking risks to facilitate its customer-oriented businesses and certain proprietary trading
activities. As a result, there is no assurance that the Company will not sustain trading or other losses in pursuing its businesses. However, in that context, we believe our
50
compensation
policies, together with our control systems and risk management procedures, generally act as mitigation against, rather than an encouragement of, employees taking excessive risk exposure
with firm capital.
A
substantial portion of the Company's incentive compensation practices are related to employees situated in departments that do not create firm financial risk in conducting their
advisory-style businesses. Other commitment and underwriting-related activities (which do involve firm-level risk) are regularly monitored by the firm's Commitment Committees, and such risks are
further mitigated by the practice of paying modest salaries and year-end-only bonuses to the managers and employees in these activities.
For
groups in the firm which do take frequent firm risk positions in conducting their businesses, the Company employs various risk controls, trading reserves and compensation hold-back
policies which are designed to protect the firm against excessive risk-taking with firm capital. These include generally conservative position limits, monthly and quarterly compensation hold-back
and/or charge-backs as well as year-end carry-over policies for groups that are compensated on monthly or quarterly intervals. In addition, for some trading groups, mark-down policies are imposed that
are designed to prevent holding stale or unsalable inventories; and for others, compensation accrual at settlement date rather than trade date is utilized where appropriate. We also employ strict
price monitoring policies for
reviewing trading positions and the monitoring of all such prices by a group reporting directly to the Chief Financial Officer outside the control of interested individual department heads.
Our
senior department managers in areas which place firm capital at risk are paid salaries and year-end-only bonuses from the aggregate results of their departments, a mitigating factor
against excessive risk-taking within their areas of responsibility. We also have a substantial mitigating effect against excessive risk-taking by our employees due to our Chief Executive Officer's
incentive compensation arrangement which is annual, includes diverse criteria for any incentive payments and includes an annual cap on any earned incentive payment amount.
Our
Compensation and Audit Committees coordinate their activities and oversight where compensation and risk activities intersect and, since February 2009, the Board has conducted ongoing
risk-oriented reviews of firm operating units presented by management concurrently with most Audit Committee meetings, and conducted annual Compensation Committee reviews of each of these specific
risk/compensation practices. Please see "
Risk Management
" on page 14 for further information.
This
concludes our Compensation Discussion and Analysis.
Security Ownership of Certain Beneficial Owners and Management
Our authorized capital includes 99,665 shares of Class B Stock, all of which were issued and outstanding, and 50,000,000 of shares of
Class A Stock, of which 13,141,103 shares of Class A Stock were issued and outstanding, and 50,000,000 shares of Preferred Stock, none of which were outstanding as of March 9,
2018.
The
following table sets forth certain information regarding the beneficial ownership of each class of our stock as of March 9, 2018 with respect to (i) each person known
by us to beneficially own, or exercise control or discretion over, more than 5% (except as otherwise indicated) of any class of our stock, (ii) each of our directors and nominees for director,
(iii) each of our executive officers named in the "
Summary Compensation Table
" set forth herein and (iv) our directors, nominees for
director and executive officers as a group. The address of each beneficial owner for which an address is not otherwise indicated is: c/o Oppenheimer Holdings Inc., 85 Broad Street, New
York, NY 10004.
For
purposes of the table, beneficial ownership is determined pursuant to Rule 13d-3 of the Exchange Act, pursuant to which a person or group of persons is deemed to have
"beneficial ownership" of stock which such person or group has the right to acquire within 60 days after March 9, 2018. The percentage of shares deemed outstanding is based on 13,141,103
shares of Class A Stock and 99,665 shares of Class B
51
Stock
outstanding as of March 9, 2018. In addition, for purposes of computing the percentage of Class A Stock owned by each person, the percentage includes all Class A Stock
issuable upon the exercise of outstanding options held by such persons within 60 days after March 9, 2018.
There
are no outstanding rights to acquire beneficial ownership of any Class B Stock.
Mr. A.G. Lowenthal has advised us that he intends to vote all of the Class B Stock owned and controlled by him for each of the matters referred to
in the Notice of Meeting to be voted on at the Meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Stock
|
|
Class B Stock
|
|
Name of Beneficial Owner Ownership as of March 9, 2018
|
|
Shares
|
|
%
|
|
Shares
|
|
%
|
|
Hotchkis & Wiley Capital Management, LLC (1)
|
|
|
978,315
|
|
|
7.4
|
%
|
|
|
|
|
|
|
Executive Officers, Director Nominees and Others:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.G. Lowenthal (2)
|
|
|
3,178,832
|
|
|
24.2
|
%
|
|
96,089
|
|
|
96.4
|
%
|
J. J. Alfano (3)
|
|
|
59,861
|
|
|
*
|
|
|
60
|
|
|
*
|
|
W. Ehrhardt (3)
|
|
|
17,225
|
|
|
*
|
|
|
|
|
|
|
|
M.A.M. Keehner (3)
|
|
|
17,225
|
|
|
*
|
|
|
|
|
|
|
|
R. S. Lowenthal (4)
|
|
|
39,753
|
|
|
*
|
|
|
140
|
|
|
*
|
|
A.W. Oughtred (3)
|
|
|
23,150
|
|
|
*
|
|
|
|
|
|
|
|
E.K. Roberts (5)
|
|
|
219,382
|
|
|
1.7
|
%
|
|
120
|
|
|
*
|
|
P.M. Friedman (3)
|
|
|
2,875
|
|
|
*
|
|
|
|
|
|
|
|
E. Behrens (3)
|
|
|
875
|
|
|
*
|
|
|
|
|
|
|
|
T.M. Dwyer (3)
|
|
|
4,875
|
|
|
*
|
|
|
|
|
|
|
|
T.A. Glasser (6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers, Director Nominees and Others as a group (11 persons)
|
|
|
3,564,053
|
|
|
27.1
|
%
|
|
96,409
|
|
|
96.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
*
-
Less
than 1%
-
(1)
-
Based
solely on Schedule 13G filed with the SEC on February 13, 2018 by Hotchkis & Wiley Capital Management, LLC. The address of their
business office is 725 South Figueroa St., 39th Floor, Los Angeles, CA 90017.
-
(2)
-
With
respect to the Class A Stock, A.G. Lowenthal holds 48,935 shares directly and is also the sole general partner of Phase II Financial L.P.,
a New York limited partnership, which is the record holder of 3,129,897 shares of Class A Stock. Mr. Lowenthal holds 14,129 shares of Class A Stock through the Oppenheimer 401(k)
Plan. With respect to the Class B Stock, Phase II Financial Inc., a Delaware corporation wholly-owned by Mr. Lowenthal ("Phase II"), is the holder of record of all
such shares. In the event of Mr. Lowenthal's death or incapacity, control of Phase II would pass to Mr. Lowenthal's spouse.
-
(3)
-
Stock
is held directly.
-
(4)
-
R.S.
Lowenthal owns 36,148 shares of Class A Stock directly and 3,605 shares of Class A Stock through the Oppenheimer 401(k) Plan. R.S. Lowenthal owns
303,357 shares of Class A Stock indirectly through Phase II Financial L.P., 174,000 shares of Class A Stock indirectly through the R.S. Lowenthal Family Trust and 150,000
shares of Class A Stock indirectly through the A.R. Lowenthal Family Trust. R.S. Lowenthal is a limited partner in Phase II Financial L.P. and the aforementioned trusts,
which are included in the total number of shares of Class A Stock reported by A.G. Lowenthal in (2) above.
-
(5)
-
E.K.
Roberts owns 11,917 shares of Class A Stock directly and 207,465 shares of Class A Stock indirectly through E.K. Roberts Holdco Inc., an
Ontario corporation owned 100% by E.K. Roberts.
-
(6)
-
Nominee
for director at the Meeting.
There
are no arrangements, known to us, the operation of which may at a subsequent date result in a change of control of our Company.
All
shares of Class A Stock authorized under the EIP, the ESP and the OIP have been approved by the Class B Stockholders. Descriptions of the 2006 Equity Incentive Plan,
the Employee Share Plan and the 2014
52
Incentive
Plan appear in note 14 of our consolidated financial statements for the year ended December 31, 2017 included in our Annual Report on Form 10-K for the year ended
December 31, 2017.
Class A
Stock authorized for issuance under such share-based plans as of March 9, 2018 is as follows:
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Number of
shares of Class A
Stock to be issued
upon exercise of
outstanding options
or upon vesting of
restricted stock or
stock awards
|
|
Weighted average
exercise price of
outstanding
awards
|
|
Number of
shares of Class A
Stock remaining
available for
future issuance
|
|
2006 Equity Incentive Plan
|
|
|
2,976
|
|
$
|
23.49
|
|
|
|
|
Employee Share Plan
|
|
|
27,925
|
|
$
|
23.49
|
|
|
|
|
2014 Incentive Plan
|
|
|
1,359,298
|
|
$
|
20.10
|
|
|
832,479
|
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a
registered class of our equity securities, to file by specific dates with the SEC initial reports of ownership and reports of changes in ownership of our equity securities. Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file. We are required to report in this proxy statement any
failure of our directors and executive officers and greater than ten percent stockholders to file by the relevant due date any of these reports during or for the preceding fiscal year (or, to the
extent not previously disclosed, any prior fiscal year).
To
our knowledge, based solely on review of copies of such reports furnished to us during and for the fiscal year ended December 31, 2017 and representations made to us by such
persons, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent stockholders were complied with, except for a missed Form 4 filing for
Mr. R.S. Lowenthal with respect to the vesting of certain shares of restricted Class A Stock in February 2017, which was then rectified by the filing of a Form 5. All other
Section 16(a) filings requirements are currently up to date.
Stock Buy-Back
On May 5, 2017, the Company announced that its board of directors approved a share repurchase program that authorizes the Company to
purchase up to 650,000 shares of the Company's Class A Stock, representing approximately 5% of its 13,178,571 then issued and outstanding shares of Class A Stock. This authorization
supplemented the 40,734 shares that remained authorized and available under the Company's previous share repurchase program covering up to 665,000 shares of the Company's Class A Stock, which
was announced on September 15, 2015, for a total of 690,734 shares of Class A Stock authorized and available for repurchase.
During
the year ended December 31, 2017, the Company purchased and canceled an aggregate of 450,350 shares of Class A Stock for a total consideration of $7.5 million
($16.57 per share). As of December 31, 2017, 508,906 shares of Class A Stock were available to be purchased under this program.
Any
such share purchases will be made by the Company from time to time in the open market at the prevailing open market price using cash on hand, in compliance with the applicable rules
and regulations of the New York Stock Exchange and federal and state securities laws and the terms of the Company's senior secured debt. All shares purchased will be canceled. The share repurchase
program is expected to continue indefinitely. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital
availability. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of Class A Stock. Depending on market conditions and other factors,
these repurchases may be commenced or suspended from time to time without prior notice.
53