Employee Shareholders Agreement
A substantial majority of our employee stockholders entered into the Employee Shareholders Agreement upon the completion of the IPO,
pursuant to which they granted an irrevocable voting proxy with respect to the shares of our Common Stock they have acquired from us, and any shares they may acquire from us in the future, to the Employee Shareholders Committee. The employee
stockholders who are party to the agreement beneficially own in the aggregate approximately 13% of Common Stock and voting power and the unvested restricted shares as of March 18, 2022. Any shares of our Common Stock that we may issue in the future
to our employees, including under the 2018 Plan, will be subject to the Employee Shareholders Agreement. Shares held by an employee stockholder will cease to be subject to the Employee Shareholders Agreement upon termination of
employment by such employee stockholder (including by death).
The members of the Employee Shareholders Committee must be our employees
and holders of shares subject to the agreement. The Employee Shareholders Committee is currently composed of David C. Brown (Chief Executive Officer and Chairman of the Board), Michael D. Policarpo, (President, Chief Financial Officer and Chief
Administrative Officer) and Kelly S. Cliff (President, Investment Franchises). Employee stockholders holding shares representing a majority of the shares subject to the Employee Shareholders Agreement will be entitled to remove and replace the
Employee Shareholders Committee members (other than the Chief Executive Officer). Each member of the Employee Shareholders Committee is entitled to indemnification from us in his or her capacity as a member of the Employee Shareholders Committee.
The Employee Shareholders Committee has the sole right to determine how to vote all shares subject to the Employee Shareholders
Agreement, and such shares will be voted in accordance with the majority decision of those three members. Subject to its obligations under the Shareholders Agreement, the Employee Shareholders Committee may in its discretion vote, or abstain
from voting, all or any of the shares subject to the Employee Shareholders Agreement on any matter on which holders of shares of our Common Stock are entitled to vote, including, but not limited to, the election of directors to our Board of
Directors, amendments to our certificate of incorporation or bylaws, changes to our capitalization, a merger or consolidation, a sale of substantially all of our assets, and a liquidation, dissolution or winding up.
Indemnification Agreements
We have
entered into indemnification agreements with each of our directors, executive officers and members of the Employee Shareholders Committee. The indemnification agreements and our amended and restated certificate of incorporation and bylaws require us
to indemnify our directors and executive officers to the fullest extent not prohibited by Delaware law. Subject to certain limitations, our amended and restated certificate of incorporation and bylaws also require us to advance expenses incurred by
our directors and officers.
Investment Advisory Agreements
Victory Capital Management Inc. (VCM) has agreements to serve as the investment adviser of the Victory Funds and VictoryShares, our
ETF brand, in each case with which certain of our employees are affiliated. Under the terms of the investment advisory agreements with the Victory Funds and the VictoryShares, the continuation of which is subject to annual review and approval by the
board of the Victory Funds and VictoryShares, VCM earns investment management fees based on a percentage of AUM, as delineated in the respective investment advisory agreements and disclosed in the prospectus for each Victory Fund and each of the
VictoryShares. The gross amount earned from advising the Victory Funds and the VictoryShares was $305.8 million for the year ended December 31, 2021.
VCM has agreed to waive its management fee and/or reimburse expenses for certain of the share classes of certain of the Victory Funds and for
certain of the VictoryShares, to the extent their respective expenses exceed certain levels. In addition, VCM may decide to voluntarily reduce additional fees or reimburse any Victory Fund or any of the VictoryShares for other expenses. The amount
VCM waived or reimbursed for the Victory Funds and the VictoryShares was $22.4 million for the year ended December 31, 2021.
VCM
also has an agreement to serve as the investment adviser of the separate series of USAA Mutual Funds Trust (the USAA Mutual Funds), with which certain of our employees are affiliated. Under the terms of the investment advisory
agreement with the USAA Mutual Funds, the continuation of which is subject to the annual review and approval by the board of the USAA Mutual Funds Trust, VCM earns investment management fees based on a percentage of AUM, which for certain equity and
fixed income funds are subject to a performance fee adjustment depending on the investment performance, better or worse, of those funds relative to their specified benchmark indexes, as delineated in the investment advisory agreement and disclosed
in the prospectus for each USAA Mutual Fund. For the year ended December 31, 2021, the gross amount earned from advising the USAA Mutual Funds was $283.6 million, which included an unfavorable performance fee adjustment of
$5.8 million.
VCM pays a portion of its investment management fees to unaffiliated investment advisers for services they provide as sub-advisers to certain of the USAA Mutual Funds. In addition, VCM has agreed to waive its management fee and/or reimburse expenses for each share class of the USAA Mutual Funds to the extent their respective
expenses exceed certain levels. VCM may also decide to voluntarily reduce additional fees or reimburse any USAA Mutual Fund for other expenses. The amount VCM waived or reimbursed for the USAA Mutual Funds was $19.4 million for the year ended
December 31, 2021.
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