Item 10.
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Directors, Executive Officers and Corporate Governance
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Directors and Executive Officers
The Board of Directors of the Company (the Board of
Directors or the Board) currently consists of ten (10) directors (Directors), nine of whom are non-employee Directors. The Board of Directors has determined that all current Directors, except for Thomas M. Joyce,
our Chairman and Chief Executive Officer, are independent within the meaning of the SEC and NYSE director independence standards, as currently in effect.
The Board of Directors believes that an effective board consists of a diverse group of individuals who bring a variety of complementary skills, backgrounds and experiences. The Companys Nominating and
Corporate Governance Committee (NCGC) and Board of Directors consider the skills and experiences of the Directors in the broader context of the Boards overall composition, with a view toward constituting a board that has the best
skill set, background and experience to oversee the Companys business. As stated in the Companys Corporate Governance Guidelines, this assessment includes a consideration of diversity of age, professional experience (including skills and
industry background), gender, ethnic background and country of citizenship. The NCGC regularly reviews the composition of the Board of Directors in light of our evolving business requirements and its assessment of the Board of Directors
performance to ensure that the Board of Directors has the appropriate mix of skills, backgrounds and experiences needed for the broad set of challenges that it confronts.
The following table sets forth certain information concerning the Directors of the Company as of April 1, 2013:
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Name
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Age
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Position
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Thomas M. Joyce
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58
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Chairman of the Board and Chief Executive Officer
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William L. Bolster
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69
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Lead Director
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Martin J. Brand
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38
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Director
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James W. Lewis
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71
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Director
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James T. Milde
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52
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Director
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Matthew Nimetz
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73
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Director
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Christopher C. Quick
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55
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Director
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Daniel F. Schmitt
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61
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Director
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Laurie M. Shahon
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61
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Director
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Fredric J. Tomczyk
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57
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Director
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Thomas M. Joyce
(58), Chairman of the Board and Chief Executive Officer of the
Company, has more than 30 years of experience in the securities industry. Mr. Joyce has been Chairman of the Board of the Company since December 2004 and has served as a Director since October 2002. He has been Chief Executive Officer of the
Company since May 2002. From December 2001 to May 2002, Mr. Joyce was the Global Head of Trading at Sanford C. Bernstein & Co. Prior to that, Mr. Joyce held a variety of leadership roles in the Global Institutional Equity business
during his 15 years at Merrill Lynch & Co., where his last position was Head of Global Equity eCommerce from 1999 through 2001. Mr. Joyce is currently a member of the Board of Directors of the Securities Industry and Financial Markets
Association (SIFMA) and is a former member of the Board of Directors of NASDAQ. In addition, he currently serves on the Board of Directors of Special Olympics Connecticut, Inc., The Alfred E. Smith Memorial Foundation Inc. and the Ronald
McDonald House
®
New York. Mr. Joyce received his A.B. in Economics from Harvard College in 1977.
Mr. Joyces qualifications to serve on the Board of Directors include his significant experience in the securities industry, his senior leadership roles in global organizations, including as Chief Executive Officer of Knight, and his
detailed knowledge of, and unique perspective and insight regarding, the strategic and operational opportunities and challenges facing the Company and its businesses.
4
William L. Bolster
(69), Lead Director of the Company, has served on the Board since
November 2003. Mr. Bolster worked for various publicly-held companies for over 30 years, including General Electric/NBC, where his most recent position was Chairman and Chief Executive Officer of CNBC International from July 2001 to November
2003. Prior thereto, he was President of CNBC from January 1996 until July 2001. Previously, Mr. Bolster was President and General Manager of WNBC-TV in New York. Mr. Bolster received a B.A. in Business Administration from Loras College in
1967. Mr. Bolsters qualifications to serve on the Board of Directors include his experience in a senior leadership role at a large global corporation, his in-depth knowledge and understanding of trends in the economy based on his years of
experience covering such matters at a global news and media organization, and his experience in the important role of Lead Director of the Company.
Martin J. Brand
(38), Director of the Company, has served on the Board since August 2012. Mr. Brand is a Managing Director at The Blackstone Group (Blackstone), a leading
investment and advisory firm. He joined Blackstone in 2003 in the London office and in 2005 transferred to the New York office. Prior to Blackstone, Mr. Brand was a derivatives trader in the FICC division of Goldman Sachs in New York and Tokyo.
He also worked at McKinsey & Company in London. Mr. Brand currently serves as a Director of Bayview Financial, Travelport, Performance Food Group, Orbitz Worldwide, Exeter Finance and PBF Energy. In addition, he is on the Advisory
Board of the Hudson Union Society. Mr. Brand received a B.A. in Mathematics and Computation from Oxford University in 1998, as well as an M.B.A. from Harvard Business School in 2003. He currently serves on the Board of Directors of the Harvard
Business School Club of New York. Mr. Brands qualifications to serve on the Board of Directors include his experience as a director of other publicly-traded companies, extensive financial expertise, broad-based international experience
and experience with a private equity firm.
James W. Lewis
(71), Director of the Company, has served on the Board since
January 2009. Mr. Lewis is the former Chairman of Vietnam Partners, LLC. Prior to founding Vietnam Partners, LLC in 2003, he was a Managing Director at Morgan Stanley where he spent 17 years working in senior positions across equities, fixed
income and asset management. Mr. Lewis also served for a period of time as chairman of that firms risk management committee. He is also a former member of the NYSE. Mr. Lewis currently serves as a director at Geometry Group LLC and
its affiliate Investarit AG and is a founder of Shamrock Asset Management LLC. In addition, he is a member of the Advisory Councils at the University of Chicago Booth School of Business, Miami University (Ohio) and Fordham University and of the
Finance Committee at Jazz at Lincoln Center. Mr. Lewis received a B.S. from Miami University (Ohio) in 1963 and an M.B.A. in Finance from the University of Chicago in 1970. Mr. Lewis qualifications to serve on the Board of Directors
include his significant experience in the securities and financial services industries, his experience as the founder and Chairman of an investment banking and advisory services firm, and his experience as a director of other companies in the
securities and financial services industries.
James T. Milde
(52), Director of the Company, has served on the Board since
May 2005. Mr. Milde has over 25 years of broad corporate experience. He is currently President of Summit Advisors, a management consulting firm, and also serves as PresidentFinancial Services and Insurance for Keane Consulting, a
subsidiary of NTT Data, Inc. From February 2006 to September 2007, he was the Senior Vice President and Chief Information Officer of United Rentals, Inc. Mr. Milde previously served as the Senior General Manager, Chief Information Officer for
Sony Electronics, Inc., from January 2002 to January 2006, where he was responsible for all facets of information technology, supply chain and software-related ventures across the United States. Prior thereto, Mr. Milde served as the Senior
Vice President, Chief Information Officer for The Pepsi Bottling Group from 1999 to February 2002. He received a B.A. in Economics and Finance from St. Lawrence University in 1982 and an M.B.A. from Clarkson University in 1984. He currently serves
on the Clarkson University Board of Trustees. Mr. Mildes qualifications to serve on the Board of Directors include his significant corporate experience in senior leadership roles at a broad range of companies and his significant knowledge
and understanding of matters related to information technology, an important area for the Company and its businesses.
5
Matthew Nimetz
(73), Director of the Company, has served on the Board since August 2012.
Mr. Nimetz is an Advisory Director and former Managing Director at General Atlantic LLC (General Atlantic), a leading global growth equity firm. He served as Managing Director and Chief Operating Officer of General Atlantic from
2000 through 2011. Prior to that, he was a partner and former chair of Paul, Weiss, Rifkind, Wharton & Garrison in New York, where he practiced corporate, securities, financing and international law from 1980 to 2000. Mr. Nimetz has
served the public in a number of capacities, including as a Staff Assistant to President Lyndon Johnson, a law clerk to U.S. Supreme Court Justice John M. Harlan, an Under Secretary of State and Counselor to the U.S. Department of State, and as a
Special Envoy to President Bill Clinton to help mediate international disputes. He currently serves as a member of the Council on Foreign Relations and a trustee of the National Committee on American Foreign Policy. Mr. Nimetz received a B.A.
in Political Science from Williams College in 1960 and an M.A. in Philosophy, Politics and Economics from Balliol College, Oxford University in 1962, where he was a Rhodes Scholar. In addition, he earned a J.D. from the Harvard Law School in 1965,
where he was president of the Harvard Law Review. Mr. Nimetz qualifications to serve on the Board of Directors include his significant experience in corporate, securities, financing and international law, his service and experience in
several governmental capacities and his significant role and experience with a private equity firm.
Christopher C. Quick
(55), Director of the Company, has served on the Board since January 2009. Mr. Quick is the former CEO of Banc of America Specialist, Inc., a wholly-owned subsidiary of Bank of America Corporation and member firm of the NYSE. He is also a past
Vice Chairman of Global Wealth and Investment Management with Bank of America. Mr. Quick has spent his entire career in the specialist business and was instrumental in various mergers and acquisitions as the industry underwent a period of
consolidation. From 1982 to 2004, he served as Chairman and Chief Executive Officer of Q&R Specialist, JJC Specialist and Fleet Specialists where he remained following the firms acquisition by Bank of America Corporation. He is a member of
the Board of Directors of The Alfred E. Smith Memorial Foundation Inc. and on the Board of Trustees for The Boys Club of New York, Catholic Relief Services, Fairfield University and Mutual of America. He is also a former member of the NYSE Board of
Directors. Mr. Quick received a B.S. in Finance from Fairfield University in 1979. Mr. Quicks qualifications to serve on the Board of Directors include his significant experience in the financial services and securities industries,
including in the specialist business, in senior leadership roles and his substantial experience with post-merger and acquisition integration matters.
Daniel F. Schmitt
(61), Director of the Company, has served on the Board since May 2012. Mr. Schmitt has more than 38 years of audit experience and spent over 29 years as a partner with KPMG LLP
primarily in the financial services industry, before retiring in September 2011. During his tenure at KPMG LLP, Mr. Schmitt served as the Area Professional Practice Partner for KPMGs Northeast Area and served on the firms National
Professional Practice Committee and the Area Leadership Team. He most recently served as the Global Lead Audit Partner for Bank of NY Mellon. Mr. Schmitt previously was the partner in charge of Risk Management/Professional Practice for
KPMGs Western Area and served in KPMGs New York, San Francisco and Providence/Boston Office practices during his career. He was also an SEC Reviewing Partner, and has served as a college relations partner and a KPMG national training
instructor. Mr. Schmitt is a member of the American Institute of Certified Public Accountants. He received a B.S. in Accounting from Bryant University (formerly Bryant College) in 1973 and has served as past Chairman of The Alumni Association,
Trustee and Member of the Accounting Department Advisory Board. Mr. Schmitts qualifications to serve on the Board of Directors include his substantial auditing and accounting background as a certified public accountant, extensive
experience with, and knowledge of, the financial services industry, his strong background regarding SEC financial reporting and his prior service as lead partner to numerous large diversified financial services clients and other large SEC issuers.
Laurie M. Shahon
(61), Director of the Company, has served on the Board since July 2006. Ms. Shahon is the President
of Wilton Capital Group, a private direct investment firm she founded in
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1994 that makes principal investments in later-stage ventures and medium-sized buyouts. She previously held investment banking positions with Morgan Stanley and Salomon Brothers. Ms. Shahon
received an A.B. in English and Political Science from Wellesley College in 1974 and an M.B.A. in Finance and International Business from Columbia University in 1976. She is a former Adjunct Professor of Finance at Columbia Business School.
Ms. Shahon has served on the boards of several public companies over the past 20 years, including The Bombay Company, Inc., Eddie Bauer Holdings, Inc. and Kitty Hawk, Inc. Ms. Shahons qualifications to serve on the Board of Directors
include her significant experience in the financial services and securities industries, her experience as the founder of a private direct investment firm, and her experience as a director of other publicly-traded companies.
Fredric J. Tomczyk
(57), Director of the Company, has served on the Board since August 2012. Mr. Tomczyk is the President and
Chief Executive Officer of TD Ameritrade Holding Corporation, a leading brokerage serving retail investors and independent registered investment advisors. Mr. Tomczyk started working with TD Ameritrade in 2006. After first serving as a member
of the board of directors and later as chief operating officer, he assumed the role of President and Chief Executive Officer of TD Ameritrade in October 2008. Mr. Tomczyk joined TD Bank Group in 2000 and has served as Vice Chair of corporate
operations, Executive Vice President of retail distribution for TD Canada Trust, and President and Chief Executive Officer of wealth management for TD Bank. Prior to TD Bank, he was President and Chief Executive Officer of London Life. He is a
Fellow of the Institute of Chartered Accountants of Ontario. Mr. Tomczyk received a B.S. in Applied Economic and Business Management from Cornell University in 1977. He currently serves on Cornells undergraduate business program advisory
council. Mr. Tomczyks qualifications to serve on the Board of Directors include his significant experience in the securities industry, his senior leadership role as President and Chief Executive Officer of TD Ameritrade Holding
Corporation, a publicly traded company, and his significant management background in the financial services industry.
Board of Directors and its
Committees
During 2012, the Board of Directors met thirty three (33) times and took action by unanimous written consent on two
occasions. The Companys independent Directors also met at regularly scheduled executive sessions on at least a quarterly basis. Mr. Bolster serves as the Companys Lead Director.
7
The Company had, as standing committees throughout 2012, a Finance and Audit Committee, a Compensation
Committee and a NCGC. The Company also formed a Risk Committee in October 2012. The committee membership and meetings during the last fiscal year and the function of each of the standing committees are described below. As an executive officer of the
Company, Mr. Joyce does not serve as a member of any Board committees. In 2012, all Directors attended more than 90% of the Boards meetings and more than 95% of the meetings of any committees of the Board of Directors of which they were
members. Although the Company does not have a formal policy requiring Director attendance at the Companys Annual Meeting of Stockholders, all of our Directors at that time, except for Daniel Schmitt as nominee for Director, attended the 2012
Annual Meeting of Stockholders (the 2012 Annual Meeting).
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Name of Director
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Finance and Audit
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Compensation
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Nominating and
Corporate
Governance
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Risk
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Non-Employee Directors:
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William L. Bolster
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Member
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Member
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Chairperson
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-
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Martin J. Brand
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-
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James W. Lewis
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Member
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Member
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-
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Thomas C. Lockburner
(1)
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Former Chairperson
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Former Member
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-
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James T. Milde
(2)
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-
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Member
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Member
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Chairperson
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Matthew Nimetz
(2)
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-
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-
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Member
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Christopher C. Quick
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-
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Member
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Member
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-
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Daniel F. Schmitt
(1)
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Chairperson
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-
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Member
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-
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Laurie M. Shahon
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-
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Chairperson
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Member
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Fredric J. Tomczyk
(2)
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-
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-
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-
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Member
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Number of Meetings in 2012
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16
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17
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3
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1
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(1)
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Mr. Schmitt became Chairperson of the Finance and Audit Committee and a member of the NCGC on May 9, 2012. Thomas Lockburner served as Chairperson of the Finance and
Audit Committee and a member of the NCGC until May 9, 2012, at which time he retired from the Board.
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(2)
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The Risk Committee was formed on October 16, 2012 and the members were named at such time. The Chairperson was named on November 16, 2012.
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Finance and Audit Committee
The current
members of the Finance and Audit Committee (the F&A Committee) are Messrs. Schmitt, Bolster and Lewis, each of whom is independent within the meaning of the NYSE director independence standards, as currently in effect, and each of
whom satisfied the NYSE financial literacy requirements. Thomas Lockburner served as the Chairman of the F&A Committee until May 9, 2012, the date of our 2012 Annual Meeting, at which time he retired from the Board. Mr. Schmitt became
the Chairperson of the F&A Committee upon his election to the Board at the 2012 Annual Meeting. The Board of Directors has determined in its business judgment that Mr. Lockburner was, and each current member is, in compliance with the
independence, experience and financial literacy requirements set forth by the NYSE, The Sarbanes-Oxley Act of 2002 and rules adopted by the SEC pursuant to The Sarbanes-Oxley Act of 2002, as currently in effect. The Board of Directors has also
determined in its business judgment that Mr. Lockburner (through the date of the 2012 Annual Meeting) and Mr. Schmitt (after the date of the 2012 Annual Meeting) are each an audit committee financial expert as defined under SEC
rules. The SEC provides that an audit committee financial expert does not have additional duties, obligations or liabilities and is not considered an expert under the Securities Act of 1933, as amended.
The F&A Committee held sixteen (16) meetings during 2012 and did not take any action by unanimous written consent. The F&A Committee
operates under a written charter, which was most recently amended by the Board of Directors on October 18, 2011, a current copy of which is available
8
through the Knight corporate website at www.knight.com in the Corporate Governance section of Investor Relations. The F&A Committee of the Board of Directors assists
the Companys Board of Directors in fulfilling its oversight of: (1) the integrity of the financial statements and its risk and control environment; (2) the qualification of, and relationship with, the independent registered public
accounting firm; (3) the Companys internal audit function; (4) compliance with applicable legal and regulatory requirements; and (5) compliance with the Companys Code of Business Conduct and Ethics. The F&A Committee
also (A) reviews and makes recommendations to the Board regarding: (i) any proposed material capital formation plans, including planned issuances of equity securities and debt instruments, and stock repurchase programs; and
(ii) certain acquisitions, investments, new business ventures, and divestitures by the Company; and (B) annually reviews and approves the Companys: (x) treasury investment policy outlining the general investment objectives of
the Company and the specific instruments for which investments are permitted; (y) liquidity risk management policy; and (z) contingency funding plan.
Compensation Committee
The current members of the Compensation Committee are Ms. Shahon
and Messrs. Bolster, Milde and Quick, each of whom is independent within the meaning of the NYSEs independence standards, as currently in effect. Ms. Shahon is the Chairperson of the Compensation Committee. The Compensation Committee is
governed by a written charter, which was most recently amended by the Board of Directors on April 1, 2011, a current copy of which is available on our corporate website at
www.knight.com
in the Corporate Governance section of
Investor Relations. During 2012, the Compensation Committee held seventeen (17) meetings and took action by unanimous written consent on one occasion.
The Compensation Committee has responsibility for approving and evaluating executive officer compensation, incentive compensation and equity-based plans, policies and programs of the Company and its subsidiaries.
The Compensation Committee also evaluates the performance of the Companys Chief Executive Officer, and, based on such evaluation, reviews and approves his annual salary, cash incentive bonus and long-term equity incentive bonus. The
Compensation Committee is also responsible for producing an annual report on executive compensation and assisting management in the preparation of a compensation discussion and analysis. Additionally, the Compensation Committee may retain and/or
terminate outside compensation consulting firms to assist in the evaluation of executive officer compensation. The Compensation Committee also has the authority to obtain advice and assistance from internal or external legal, accounting, and other
advisors.
Additionally, the Compensation Committee provides assistance to the Board of Directors by setting performance-based
compensation criteria for the Companys Chief Executive Officer and other key executives, certifying the results of such performance at the end of the annual performance period and awarding the resulting performance-based compensation to such
key executives. The Compensation Committee also is responsible for making equity grants to such key executives resulting from such performance-based compensation.
Nominating and Corporate Governance Committee
All of the current members of the Board, except
for Messrs. Joyce, Brand, Nimetz and Tomczyk, serve on the NCGC. Mr. Bolster is the Chairman of the NCGC. Mr. Schmitt joined the NCGC upon his election to the Board at the 2012 Annual Meeting. Each member of our NCGC is independent within
the meaning of the NYSEs independence standards, as currently in effect. The NCGC is governed by a written charter, which was most recently amended by the Board of Directors on May 25, 2010, a current copy of which is available on our
corporate website at
www.knight.com
in the Corporate Governance section of Investor Relations. A primary function of the NCGC is to identify and recommend to the Board individuals qualified to serve as Directors of the
Company, consistent with the
9
criteria included in the charter of the NCGC and our Corporate Governance Guidelines. The NCGC also considers nominee recommendations from stockholders of the Company. In connection with the
identification and recommendation of nominees, the NCGC reviews the skills, backgrounds and experiences of Board members, as well as the composition of the Board as a whole, with a view toward constituting a Board that has the best skill set,
background and experience to oversee the Companys business. As stated in the Companys Corporate Governance Guidelines, this assessment includes a consideration of independence and diversity of age, professional experience (including
skills and industry background), gender, ethnic background and country of citizenship, as well as the ability of current and prospective directors to devote sufficient time to performing their duties in an effective manner. Other functions of the
NCGC include: (i) recommending the size of, and Directors to serve on, committees of the Board; (ii) advising the Board with respect to matters of Board composition and procedures; (iii) developing and recommending to the Board a set
of corporate governance principles applicable to the Company and overseeing corporate governance matters generally; and (iv) overseeing the annual evaluation of the Companys management and the Board. The NCGC held three (3) meetings
in 2012 and did not take any action by unanimous written consent.
Risk Committee
The current members of the Risk Committee are Messrs. Milde, Nimetz and Tomczyk, each of whom is independent within the meaning of the NYSEs
independence standards, as currently in effect. Mr. Milde is the Chairperson of the Risk Committee. The Risk Committee was formed on October 16, 2012 and is governed by a written charter, which was adopted on such date by the Board of
Directors, a current copy of which is available on our corporate website at
www.knight.com
in the Corporate Governance section of Investor Relations. The primary purpose of the Risk Committee is to assist the Board in
its oversight responsibilities relating to the identification, monitoring and assessment of the key risks of the Company, including the significant policies, procedures and practices employed in risk management. The Risk Committee held one
(1) meeting in 2012 and did not take any action by unanimous written consent.
Compensation Committee Interlocks and Insider Participation
No executive officer of the Company serves as a member of the board of directors or compensation committee of any public entity that
has one or more executive officers serving as a member of the Companys Board of Directors or Compensation Committee.
Section 16(a)
Beneficial Ownership Reporting Compliance
The Companys executive officers and Directors are required under Section 16(a)
of the Securities Exchange Act to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and NYSE. Copies of these reports must also be furnished to the Company. Based solely upon its review of copies of such reports
furnished to the Company through the date hereof, or written representations that no reports were required to be filed, the Company believes that during the fiscal year ended December 31, 2012, all Section 16(a) filing requirements
applicable to its officers and Directors were complied with in a timely manner.
Purchases and sales of our equity securities by such
persons are published on our corporate website at
www.knight.com
in the Investor Center section. The information on our corporate website is not incorporated by reference into this Form 10-K/A.
Corporate Governance
Board Leadership Structure
The Board does not have a fixed policy regarding the separation of the offices of Chairman and Chief Executive Officer and believes
that it should maintain flexibility. The Board currently combines the positions of Chairman of the Board and Chief Executive Officer. The Board of Directors believes
10
that Mr. Joyces service as both Chairman of the Board of Directors and Chief Executive Officer enhances the effectiveness of the Board and is in the best interest of the Company and
its stockholders at this time. Because of his position, Mr. Joyce possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company and its businesses and is therefore well-positioned to develop agendas
that ensure that the Boards time and attention are focused on the most critical matters. His combined role enables decisive leadership and decision-making, ensures clear accountability, and enhances the Companys ability to communicate
its message and strategy clearly and consistently to the Companys stockholders, employees, customers and suppliers, particularly during times of turbulent economic and industry conditions.
Each of the current Directors other than Mr. Joyce is independent, and the Board believes that the independent Directors provide effective
oversight of management, including through the Committees of the Board of Directors described herein. Moreover, in addition to feedback provided during the course of Board meetings, the independent Directors have regular executive sessions. The Lead
Director, currently Mr. Bolster, also plays an important role in the Companys corporate governance structure. The Lead Directors responsibilities include: presiding at meetings of the Board of Directors at which the Chairman is not
present, including executive sessions of the independent Directors; serving as liaison between the Chairman and the independent Directors; convening meetings of the independent Directors; consulting with the Chairman on matters relating to Board
performance and corporate governance; providing the Chairman with input regarding agenda items for Board and Committee meetings; and coordinating with the Chairman regarding information to be provided to the independent Directors in performing their
duties. The Board of Directors believes that the role of the independent Directors and Lead Director combined with the Companys overall corporate governance policies and practices appropriately and effectively complement the combined Chairman
of the Board/Chief Executive Officer structure. The Board evaluates this structure periodically, including the appointment of the Lead Director.
Board Risk Oversight
Management has a
process embedded throughout the Company to identify, analyze, manage and report on all significant risks facing the Company. In performance of risk oversight, the Board and its committees receive reports and regularly meet with the Companys
Chief Executive Officer and other senior managers on significant risks facing the Company, including enterprise, financial, operational, legal, regulatory and strategic risks. The independent Board members also discuss the Companys significant
risks when they meet in executive session without management.
In addition to oversight of enterprise and strategic risk by the Board of
Directors, each of the Board committees reviews with management significant risks related to the committees area of responsibility and reports to the Board on such risks, which include:
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The Compensation Committees review of risks related to Company-wide compensation and management resources;
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The Finance and Audit Committees review of risks relating to the financial statements and financial reporting processes, as well as key liquidity risks and
risks arising from related person transactions, and the guidelines, policies and processes for monitoring and managing those risks;
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The Risk Committees review of risk management, as well as the Companys risk appetite and tolerance and key risks, including credit risk, market risk,
operational risk, compliance risk and reputational risk; and
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The Nominating and Corporate Governance Committees review of risks related to the Companys governance structure and processes and succession
planning.
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11
Identification and Evaluation of Director Candidates
The NCGC believes that the minimum qualifications for serving as a director are that a nominee demonstrate, by significant accomplishment in his or
her field, an ability to make a meaningful contribution to the Boards oversight of the business and affairs of the Company and for the nominee to have an impeccable record and reputation for honest and ethical conduct in both his or her
professional and personal activities. In this regard, the NCGC examines a candidates specific experiences and skills, time availability in light of other commitments, potential conflicts of interest and independence from management and the
Company. Annex A to our Nominating and Corporate Governance Committee Charter lists criteria for nomination to our Board. Also, our Corporate Governance Guidelines list specific qualification rules for all of our Board members and nominees.
The NCGC identifies potential nominees by asking current Directors and executive officers to notify the NCGC if they become aware of
persons meeting the criteria described above. The NCGC also, from time to time, engages firms that specialize in identifying director candidates. As described below, the NCGC will also consider candidates recommended by stockholders.
Once a person has been identified by the NCGC as a potential candidate, the NCGC may collect and review publicly available information regarding the
person to assess whether the person should be considered further. If the NCGC determines that the candidate warrants further consideration, the NCGC contacts the person. Generally, if the person expresses a willingness to be considered and to serve
on the Board, the NCGC requests information from the candidate, reviews the persons accomplishments and qualifications, conducts due diligence, including background checks, and conducts one or more interviews with the candidate. The NCGC
members may also contact one or more references provided by the candidate or may contact other members of the business community or other persons who may have greater first-hand knowledge of the candidates accomplishments and qualifications.
All information regarding the candidate is then provided to the NCGC for review and consideration. The NCGCs evaluation process does not vary based on whether or not a candidate is recommended by a stockholder.
Stockholder Recommendations for Director Nominees
The NCGC will consider director candidates recommended by stockholders for nomination to the Board. In considering candidates submitted by stockholders, the NCGC will take into consideration the needs of the Board
and the qualifications of the candidate. Stockholders may make recommendations at any time, but nomination of candidates for election to the Board at the annual meeting of stockholders must be received not less than 90 days nor more than 120 days
prior to the anniversary date of the immediately preceding Annual Meeting of Stockholders. To nominate a candidate for election to the Board, a stockholder must submit the nomination in writing and must include the following information (as more
fully described in the Companys Amended and Restated By-Laws): (a) as to the stockholder (i) the name and address of the stockholder, such beneficial owner (if any) and any of their respective affiliates or associates or others
acting in concert with the stockholder, (ii) the number of shares of the Companys Class A Common Stock (the Common Stock) which are owned beneficially or of record by such stockholder, such beneficial owner and their
respective affiliates or associates or others acting in concert with them, (iii) disclosure of any derivative instrument and certain other economic interests in the Company directly or indirectly owned beneficially by such stockholder, the
beneficial owner, if any, or any affiliates or associates or others acting in concert with them, (iv) information related to proxies and voting commitments of such persons, (v) a brief description of all arrangements or understandings
between such stockholder (and their respective affiliates or associates) and each proposed nominee, (vi) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice,
(vii) a completed copy of the questionnaire noted in clause (b)(v) below and (viii) any other information relating to such person that would be required pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the
Exchange Act); and (b) as to each proposed nominee (i) the name, age,
12
business address and residence of the proposed nominee, (ii) the principal occupation or employment of the proposed nominee, (iii) the number of shares of Common Stock owned by the
proposed nominee, if any, (iv) the proposed nominees consent to be named as a Director if selected by the NCGC and nominated by the Board, (v) a completed directors questionnaire with respect to the background and qualification
of such person and executed written representation and agreement related to voting commitments, compensation, corporate governance compliance and other matters, (vi) a description of all direct and indirect compensation and other material
monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such stockholder, if any, and their respective affiliates and associates, and each proposed nominee,
and his or her respective affiliates or associates, including all information required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K of the Exchange Act, and (vii) any other information relating to such proposed nominee
that would be required pursuant to Section 14 of the Exchange Act. The stockholder nomination, and accompanying information described above, must be sent to the Corporate Secretary at Knight Capital Group, Inc., 545 Washington Boulevard, Jersey
City, New Jersey 07310.
Corporate Governance Guidelines
The NCGC is responsible for overseeing the Corporate Governance Guidelines and reporting and making recommendations to the Board concerning governance matters. Among other matters, the Corporate Governance
Guidelines include the following items concerning the Board of Directors: (i) independent Directors will comprise a majority of the Board; (ii) disqualifying factors preventing a Board candidate or Director from serving or continuing to
serve on the Board, absent a waiver by a majority of the Board; and (iii) qualifications for non-employee and employee Board members.
Stockholder and Interested Parties Communications
The Board has established a process to receive communications from stockholders and interested parties. Stockholders and interested parties may contact any member (or all members) of the Board, any Board committee
or any chair of any such committee by mail. To communicate with the Board of Directors, any individual or group of Directors or Board committee members, correspondence should be addressed to the Board of Directors or any such individual Directors or
group or Board committee members by either name or title. All such correspondence should be sent to the Corporate Secretary at Knight Capital Group, Inc., 545 Washington Boulevard, Jersey City, New Jersey 07310. To communicate with any of our
Directors electronically, stockholders or interested parties may send an electronic message to
boardofdirectors@knight.com
.
All
communications received as set forth in the preceding paragraph will be opened by our General Counsel for the sole purpose of determining whether the contents represent a message to our Directors. Any contents that are not in the nature of
advertising, promotions of a product or service, or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board or any group of Directors or Board committee members, our General Counsel will
make sufficient copies of the contents to send to each Director who is a member of the group or committee to which the envelope or e-mail is addressed.
13
Executive Officers
Executive officers serve at the discretion of the Board of Directors. The following table sets forth certain information concerning the executive officers of the Company as of April 1, 2013 (none of whom has a
family relationship with another executive officer):
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|
|
|
|
|
|
Name
|
|
Age
|
|
|
Position
|
Thomas M. Joyce
|
|
|
58
|
|
|
Chairman of the Board and Chief Executive Officer
|
Steven Bisgay
|
|
|
46
|
|
|
Executive Vice President, Chief Operating Officer and Chief Financial Officer
|
George Sohos
|
|
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46
|
|
|
Senior Managing Director, Head of Market Making
|
Alan Lhota
|
|
|
50
|
|
|
Senior Managing Director, Co-Head of Institutional Fixed Income
|
Robert K. Lyons
|
|
|
53
|
|
|
Senior Managing Director, Co-Head of Institutional Fixed Income
|
Leonard J. Amoruso
|
|
|
47
|
|
|
Executive Vice President, General Counsel
|
Joseph C. Mazzella
|
|
|
46
|
|
|
Senior Managing Director, Head of Institutional Equities
|
For selected biographical information with respect to Mr. Joyce, please refer above to the biographical
information of our Directors. Selected biographical information with respect to the other executive officers is set forth below.
Steven Bisgay
(46), Executive Vice President, Chief Operating Officer and Chief Financial Officer of the Company, has more than 20
years of experience in the securities and financial services industries. Mr. Bisgay has been the Chief Operating Officer of the Company since September 2012 and was named Executive Vice President in May 2012. He has been Chief Financial Officer
of the Company since August 2007. Prior to these appointments, Mr. Bisgay was the Managing Director, Business Development for the Company since November 2005. Previously, Mr. Bisgay was the Group Controller for the Company since June 2003
and the Director of Internal Audit for the Company since June 2001. Mr. Bisgay is a certified public accountant and was employed in the Financial Services Industry Practice at the accounting firm of PricewaterhouseCoopers LLP from 1989 to 2001,
most recently as a Senior Manager. Mr. Bisgay served on the Board of Managers of Direct Edge Holdings LLC from July 2007 to December 2008. He currently is on the Board of the Financial Management Society of SIFMA. Mr. Bisgay received a
B.S. in Accounting from Binghamton University in 1989 and an M.B.A. from Columbia University in 2000.
George Sohos
(46),
Senior Managing Director, Head of Market Making of the Company, oversees the Companys global market making activities. Mr. Sohos has been Head of Market Making since March 2011. Prior to his appointment, Mr. Sohos was a member of the
senior management team for the Companys electronic trading group since 2005, where his primary responsibilities involved work related to the Companys U.S. and European client trading strategies. Mr. Sohos has worked at the Company
since 2000. Prior to joining the Company, Mr. Sohos worked as a software engineer at IBM Corporation and as a senior scientist at Enviro Engineering. Mr. Sohos received a B.S. in Mathematics from Panepistimion Patron in Greece in 1988 and
a Ph.D. in Applied Mathematics from the University of Arizona in 1994.
Alan Lhota
(50), Senior Managing Director, Co-Head
of Institutional Fixed Income, is responsible for co-managing and expanding the Companys institutional fixed income business. He has over 25 years of experience in the securities industry. Mr. Lhota has been Co-Head of Institutional
Fixed Income since April 2011. Previously, Mr. Lhota was Head of U.S. High Yield, Distressed and Bank Loan Sales for the Company since June 2009. Prior thereto, he led the High Yield team at RBS Greenwich Capital Markets, Inc. from June 2007 to
March 2009. From December 1999 to March 2007, Mr. Lhota handled High Yield sales in the U.S. and U.K. at UBS Securities LLC. Mr. Lhota attended Worcester Polytechnic University. Mr. Lhotas employment with the Company is expected
to terminate in 2013 in connection with the consummation of the disposition of the Companys institutional fixed-income sales and trading business.
14
Robert K. Lyons
(53), Senior Managing Director, Co-Head of Institutional Fixed Income,
is responsible for co-managing and expanding the Companys institutional fixed income business. He has over 25 years of experience in the securities industry. Mr. Lyons has been Co-Head of Institutional Fixed Income since April 2011.
Previously, Mr. Lyons was head of the Companys Capital Markets group since joining the Company in February 2010. Mr. Lyons is a former Vice Chairman of Investment Banking at Merrill Lynch & Co. where he spent over 20 years.
Previously at Merrill Lynch & Co., Mr. Lyons served as Global Head of Capital Markets and before that he was Head of the Americas Capital Markets. Mr. Lyons received a B.A. in Economics from Hamilton College in 1982 and an M.B.A.
from the University of Chicago in 1987. Mr. Lyons employment with the Company is expected to terminate in 2013 in connection with the consummation of the disposition of the Companys institutional fixed-income sales and trading
business.
Leonard J. Amoruso
(47), Executive Vice President, General Counsel, oversees all legal, compliance, regulatory
and market structure matters for the Company. Mr. Amoruso was named Executive Vice President in May 2012 and has been General Counsel of the Company since May 2007. Prior thereto, Mr. Amoruso was the Senior Managing Director and Chief
Compliance Officer of the Company since June 2003. From October 1999 to June 2003, Mr. Amoruso served as Chief Compliance Officer and Assistant General Counsel of the Companys wholly-owned subsidiary, Knight Securities, L.P (now operating
as Knight Capital Americas LLC). Prior to joining the Company, Mr. Amoruso spent a decade with FINRAs District 10 office in New York, most recently as Deputy Director. Mr. Amoruso serves on numerous industry committees and is a
frequent speaker at industry conferences. He also currently serves on the Board of Managers of Direct Edge Holdings LLC, the Board of Directors of EDGEA Exchange, Inc. and the Board of Directors of EDGEX Exchange, Inc. Mr. Amoruso received a
B.B.A. in Banking, Finance and Investments from Hofstra University in 1986 and a J.D. from Hofstra University School of Law in 1989.
Joseph C. Mazzella
(46), Senior Managing Director, Head of Institutional Equities, is responsible for leading the Companys
global sales and trading team serving institutional clients. He has over 25 years of experience in the securities industry. Mr. Mazzella was named head of Institutional Equities in October 2011. Prior thereto, he was Global Head of Trading
since March 2010. He joined the Company in October 2003 as Head of Listed Block Trading. Previously, Mr. Mazzella spent more than a decade at Merrill Lynch, most recently as a Managing Director for Listed Trading.
Item 11.
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Executive Compensation
|
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (CD&A) explains aspects of our executive
compensation program for our named executive officers. For 2012, our Named Executive Officers and their titles were as follows:
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Thomas M. Joyce, Chairman of the Board and Chief Executive Officer;
|
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Steven Bisgay, Executive Vice President, Chief Operating Officer and Chief Financial Officer;
|
|
|
|
George Sohos, Senior Managing Director, Head of Market Making;
|
|
|
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Alan Lhota, Senior Managing Director, Co-Head of Institutional Fixed Income; and
|
|
|
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Robert K. Lyons, Senior Managing Director, Co-Head of Institutional Fixed Income.
|
The Companys executive compensation program is designed to retain, motivate, reward and recruit the talent needed to achieve growth and
long-term success. Accordingly, in designing the executive compensation program, we focused on the following objectives: (i) aligning long-term economic interests of our executives with stockholders interests; (ii) providing balanced
incentives for achieving short-term and long-term business goals and objectives; and (iii) providing competitive compensation and benefits.
15
Executive Summary and Recap of Significant 2012 Events
At our annual meeting of stockholders in May 2012, 31.55% of our stockholders approved our advisory Say-on-Pay resolution regarding
2011 executive compensation described in our 2012 proxy statement. The Company, the Board and the Compensation Committee of the Board of Directors (the Compensation Committee) pay careful attention to communications received from
stockholders regarding executive compensation, including the non-binding advisory vote. The Compensation Committee took into consideration the Say-on-Pay vote as well as feedback received from institutional shareholders and evaluated our
policies, processes and approach to executive compensation. In connection with its evaluation of executive compensation following the Say-on-Pay vote, the Committee retained an executive compensation firm, Pay Governance LLC, to provide advice and
guidance on executive compensation matters for 2012 and going forward. Although the Company and Committee intended to structure executive compensation awarded in 2012 to better reflect our stockholders philosophies regarding compensation,
certain events described below played a significant role in the compensation decisions made in 2012.
On August 1, 2012, the Company
experienced a technology issue at the open of trading at the NYSE, which resulted in a pre-tax loss to the Company of approximately $458 million (the August 1 Trading Loss) and reduced trading volumes handled by the Company
following such event. In connection with the August 1 Trading Loss, the Companys leaders, including the Named Executive Officers, actively pursued strategic and financing alternatives to strengthen the Companys capital base,
resulting in the Company, on August 6, 2012, entering into a Securities Purchase Agreement (the Purchase Agreement), with nine investors (the Investors) pursuant to which, among other things, the Company sold 400,000
shares of Series A-1 Cumulative Perpetual Convertible preferred stock, par value $0.01 per share (the Preferred Stock), in a private placement to the Investors in exchange for immediate aggregate cash consideration of $400,000,000 (the
Investment). As a result of the Investment, the Company experienced a change-in-control for purposes of some of its equity-based executive compensation arrangements. The change-in-control would have accelerated vesting of
certain equity awards and/or triggered rights under certain agreements with Messrs. Joyce, Bisgay and Sohos; however, Messrs. Joyce, Bisgay and Sohos executed waivers of such accelerated vesting and/or rights in August 2012, pursuant to which they
irrevocably forfeited benefits they would have otherwise received as a result of the Investment.
During and after the August 1
Trading Loss and Investment, the Company faced difficult circumstances. This was further exacerbated in late 2012 when the Company became the subject of public speculation regarding a potential sale. Throughout this period of time, the
Companys leaders spent considerable time and effort in addition to their day-to-day functions focusing on (i) stabilizing the employee workforce, (ii) client retention and/or re-engagement, and (iii) ensuring the financial
stability of the Company, including maintaining sufficient liquidity and the confidence of counterparties and creditors. Additionally, the August 1 Trading Loss resulted in a pre-tax loss for the Company for 2012. This led to no payout under
the Companys 2009 Executive Incentive Plan (EIP) and forfeiture of Mr. Joyces discretionary January 2012 RSU grant.
16
The Company and GETCO, among other parties, executed the Merger Agreement on December 19, 2012
setting forth the terms and conditions of the Mergers. As part of these efforts to retain employees in light of the unprecedented difficulties the Company faced in 2012, and in recognition of the efforts of the Named Executive Officers to help the
Company recover a substantial portion of its business following the August 1 Trading Loss, limit the amount of turnover in its workforce, and maintain financial stability, the Company, with the knowledge and support of the Compensation
Committee, and the consent of GETCO, (i) entered into a letter agreement with Mr. Joyce amending the terms of his employment agreement with the Company, (ii) recognized the efforts of certain Named Executive Officers by providing
discretionary bonuses outside of the EIP related to the 2012 performance year, and (iii) acknowledged that employees are entitled to receive accelerated vesting of certain outstanding equity awards upon the consummation of the transactions
contemplated by the Merger Agreement. Pay Governance provided advice on certain of the above matters.
Additionally, due to the
Investment and the resulting dilution of existing Knight stockholders, outstanding employee equity awards lost most of their retentive value. The Company had originally planned to seek stockholder approval to increase the number of authorized shares
available for grant under the Companys 2010 Equity Incentive Plan (the 2010 Plan) at its 2013 Annual Meeting of Stockholders, three years after initial approval of the 2010 Plan, because the Company would have depleted (as
forecast) most of the shares available for grant under the existing 2010 Plan after payment of 2012 annual incentive compensation in early 2013. However, as the value of a share of Company Common Stock had been reduced due to the August 1
Trading Loss and the Investment and resulting dilution, the shares available for grant under the 2010 Plan were insufficient to satisfy the Companys anticipated incentive equity compensation needs for 2012 and beyond. In order to obtain
additional shares available for grant under the 2010 Plan to provide equity-based awards as a tool to retain employees, in December 2012, the Company obtained stockholder approval to increase the number of shares authorized to be granted under the
Companys 2010 Plan and amend certain other provisions, including an amendment to require a qualifying termination of employment in connection with a future change-in-control before vesting provisions in new awards accelerate, also known as
double-trigger accelerated vesting.
The Company has continued to take significant actions with respect to its business in
2013, including taking certain corporate actions designed to reduce operating expenses. The Company has also entered into an agreement to sell its institutional fixed-income sales and trading business to Stifel Financial Corp. It is anticipated that
Mr. Lhota and Mr. Lyons will cease to be employed by the Company upon the closing of the disposition of the institutional fixed-income sales and trading business.
Compensation Approval Process
The Compensation Committee is responsible for approving and
evaluating the executive compensation program. The Compensation Committee in the past has retained compensation consultants with respect to executive compensation matters. These consultants have acted at the sole direction of the Compensation
Committee. The retention and, where appropriate, termination of compensation consultants are at the Compensation Committees sole discretion, and such decisions are made without the participation of any officer or other member of the
Companys management. Although the Company pays the compensation of these consultants, the Compensation Committee, in its sole discretion, approves the fees and any other terms related to their engagement. In the last five years, these
compensation consultants have not performed, and do not currently provide, any services to management or the Company. The Compensation Committee retained Deloitte Consulting LLP for executive compensation matters prior to 2010. As noted above,
subsequent to the annual meeting of stockholders in May 2012, the Committee retained Pay Governance LLC to provide advice
17
and guidance on executive compensation matters for 2012 and going forward. Pay Governance was consulted upon by the Compensation Committee in determining 2012 compensation and other compensation
matters.
To determine competitive market compensation for the 2012 performance year for our Named Executive
Officers and other members of executive management, the Companys management, in December 2012, considered comparative market data provided by the compensation consultant retained by the Company, Towers Watson. Towers Watson reports to, and
acts at the sole direction of, the Companys management. The Companys management approves the fees to Towers Watson and any other terms related to Towers Watsons engagement. Using publicly available information contained in proxy
statements related to the 2011 performance year, Towers Watson provided a comparative analysis of the compensation of named executive officers at other peer public financial services companies. In addition, Towers Watson used its proprietary
database to compare non-public compensation information related to the 2011 performance year for individuals having similar roles at leading global competitors, or divisions or subsidiaries within such global companies, as applicable. For the public
company comparisons, for 2012, the peer group consisted of: Interactive Brokers Group, Inc.; Investment Technology Group, Inc.; Jefferies Group, Inc.; NASDAQ OMX Group, Inc.; and NYSE Euronext. For the non-public information comparisons, for 2012,
the comparative group consisted of: Bank of America Corporation; Barclays Capital; Citigroup Inc.; Credit Suisse Group; Deutsche Bank Group; The Goldman Sachs Group, Inc.; HSBC Bank plc; JPMorgan Chase & Co.; Morgan Stanley; and UBS AG. The
peer group and the comparative group remained the same as the groups compared in 2011. To determine the appropriate total compensation for its Named Executive Officers, the Company generally averages the total compensation paid to (i) named
executive officers at other peer financial services companies and (ii) individuals having similar roles at leading large global competitors, or divisions or subsidiaries within such global companies, as applicable, who are not deemed named
executive officers, and strives to be at approximately the 75
th
percentile of
such average. As further described herein, this data is one of the factors used to establish competitive compensation levels for each Named Executive Officer and other members of executive management. This information was subsequently communicated
in summary fashion by Mr. Joyce to the Compensation Committee. The Compensation Committee also reviewed comparative data obtained in the marketplace with input from Pay Governance.
Our Compensation Committee generally sets incentive compensation for our Named Executive Officers in accordance with the terms of our EIP, although
it retains discretion to pay additional amounts as appropriate. The EIP is our stockholder-approved plan in which each of our Named Executive Officers and other executive officers subject to Section 16 of the Exchange Act participate so that
the cash and equity-based awards paid to our Named Executive Officers are intended to not be subject to the $1 million limit on deductible pay to Named Executive Officers pursuant to Section 162(m) of the Internal Revenue Code (Section
162(m)). During the first quarter of each fiscal year, the Compensation Committee establishes annual performance criteria for each Named Executive Officer, including the Chief Executive Officer, and determines the formula to be used for
calculation of each Named Executive Officers maximum incentive compensation payout pursuant to Section 162(m). Even if the Named Executive Officers achieve the Section 162(m) performance criteria, the Compensation Committee retains
negative discretion to reduce the award based upon a variety of factors, including, but not limited to, the assessment of an individuals performance and the attainment of other Company and/or business unit performance objectives.
The Compensation Committee may use any objectives and guidelines it deems appropriate in exercising negative discretion and also receives substantial input from the Chief Executive Officer regarding the amount to be paid to the other
Named Executive Officers.
At the end of the performance period, the Compensation Committee certifies whether the pre-established
Section 162(m) performance criteria were met and determines the maximum payout permitted based on the actual level of achievement versus the performance criteria. Prior to
18
determining incentive compensation for each of the Named Executive Officers other than the Chief Executive Officer, the Chief Executive Officer reviews with the Compensation Committee a variety
of factors, including: (i) the performance of the Company and/or business unit the Named Executive Officer oversees for the fiscal year; (ii) the executive officers contribution to the Companys and/or business unit performance,
partly taking into account the Named Executive Officers attainment of broad performance objectives, as determined in the sole discretion of our Chief Executive Officer; (iii) a comparison with pay levels of comparable positions in the
marketplace; (iv) market conditions; and (v) extraordinary or unusual corporate events occurring in the applicable fiscal year. If it agrees with the recommendation of the Chief Executive Officer, the Compensation Committee approves such
incentive compensation amounts earned pursuant to the EIP (which may in no event exceed the maximum payouts derived from the Section 162(m) formula established by the Compensation Committee). The Compensation Committee and Mr. Joyce retain
the right to pay executives, including participants in the EIP, additional amounts outside of the EIP.
For the 2012 performance year,
the pre-established Section 162(m) performance criteria were based on the Companys consolidated and/or business unit 2012 pre-tax operating income. Due to the August 1 Trading Loss and other unprecedented events of 2012, none of
these performance criteria for 2012 were achieved. As such, for the 2012 performance year no awards were made pursuant to the EIP. All incentive awards granted to the Named Executive Officers with respect to 2012 were made outside of the EIP and the
Company may not be entitled to a tax deduction for such awards to the extent that they result in 2012 compensation for any Named Executive Officer in excess of $1 million. Compensation that was paid in the form of commissions as well as all
compensation that was awarded to the Chief Financial Officer, however, is expected to be fully deductible for tax purposes. Given the significance of each Named Executive Officers work related to the retention of the Companys employees
and clients and ensuring the Companys financial stability during and following the August 1 Trading Loss and throughout the process that led to the Merger Agreement with GETCO, the Compensation Committee determined that such compensation
to the Named Executive Officers for 2012 be paid outside of the EIP as it was appropriate and in the best interests of the Company.
Compensation
Components
The Companys executive officer compensation program generally consists of three key elements: base salary (or
commissions, if applicable), annual incentive compensation, including annual performance-based incentive compensation, and long-term equity-based awards. Consistent with market practices in the financial services industry, most of the compensation
of each Named Executive Officer, except for Messrs. Lhota and Lyons, consists of incentive compensation. Incentive compensation consists of annual performance-based incentives, which are generally paid in cash. Additionally, from time to time, the
Company may grant long-term equity incentives to Named Executive Officers, which may be subject to continued service conditions and/or forfeiture unless certain specified performance criteria are met. Allocation of the Chief Executive Officers
compensation between annual cash and long-term equity incentives is determined by the Compensation Committee or by contractual agreement. The Chief Executive Officer, in consultation with the Compensation Committee, determines this allocation for
the other Named Executive Officers and other members of executive management. Generally, the Companys executive compensation programs are designed so that executives will receive a mix of annual cash incentives (generally representing
approximately 60% of total incentive compensation) and long-term equity incentives (generally representing approximately 40% of total incentive compensation), each of which is described below.
Salaries and Commissions
In
general, salaries are intended to make up the smallest portion of overall executive compensation. Base salaries of executive officers are fixed at the beginning of each year and typically are not changed during the year except for promotions,
changes in responsibility or changes in industry practice. Base salaries are reviewed annually by the Compensation Committee and adjusted from time
19
to time to realign salaries with market levels, individual performance and industry practice. The Compensation Committee also considers salaries relative to those of others within the Company and
may, on occasion, make adjustments to salaries or other elements of total compensation, such as annual and long-term incentive opportunities, where a failure to make such an adjustment would result in a compensation imbalance that the Compensation
Committee deems inappropriate and may also result in a retention risk. For 2012, Messrs. Lhotas and Lyonss base salaries were increased from $250,000 to $500,000 in January 2012 in order to maintain their salaries in line with those of
the other Named Executive Officers (except for Mr. Joyce) and market and competitive practices. When determining incentive compensation, the Compensation Committee takes into consideration any increases in salary made during a performance
period. Commissions paid to Messrs. Lhota and Lyons for 2012 were generally shared evenly based on management overrides on revenues from certain credit-related fixed income trading desks and revenues generated from transactions by the capital
markets group.
Performance-Based Annual Awards
Each of our Named Executive Officers participates in the EIP, which provides for annual incentive compensation based on the achievement of performance goals and objectives and which is designed to: (1) advance
the interests of the Company and its stockholders by providing incentives in the form of periodic bonus awards to certain key employees who contribute significantly to strategic and performance objectives, and the growth, of the Company; and
(2) further align the interests of the Companys key employees with the interests of the stockholders by awarding bonuses based on Company, division and/or subsidiary performance criteria. With respect to each Named Executive Officer,
baseline Section 162(m) performance goals are set by the Compensation Committee. As to Named Executive Officers other than the Chief Executive Officer, additional broad performance objectives are established by the Chief Executive Officer in
consultation with the Compensation Committee and are one of the factors used to reduce the maximum award determined by the achievement of the baseline Section 162(m) performance objectives. The particular performance goals or objectives reflect
those measures which the Company views as key indicators of successful performance.
Mr. Joyces annual incentive opportunity
related to the 2012 performance year was conditioned upon the achievement of certain consolidated pre-tax operating income targets of the Company, as set by the Compensation Committee in March 2012 and in accordance with the bonus opportunity
formula agreed to in March 2009 between Mr. Joyce and the Compensation Committee as an amendment to his employment agreement covering the years 2009 through 2012. The pre-tax operating income targets for Mr. Joyce were as follows:
(i) pre-tax operating income less than $0, no incentive bonus or (ii) pre-tax operating income in excess of $0, incentive bonus equal to the greater of: (a) 3% of the first $350 million of pre-tax operating income plus 1.5% of pre-tax
operating income in excess of $350 million, and (b) $3 million. In determining pre-tax operating income targets for a performance year, the Compensation Committee may exclude non-operating and extraordinary items, if any. As a result of
the Company having a pre-tax operating loss for 2012 based primarily due to the August 1 Trading Loss, Mr. Joyce was not eligible for, and did not receive, an incentive bonus under the EIP.
In addition, the Compensation Committee approved a discretionary award outside of the EIP to Mr. Joyce in January 2012 (related to the 2011
performance year) of additional incentive compensation in the amount of $1,000,000. Such award was payable $250,000 in cash and $750,000 in RSUs (resulting in the issuance of 57,252 RSUs). The RSUs were subject to three year ratable vesting and were
subject to forfeiture in the event the Company did not achieve pre-tax operating income of at least $50 million in 2012. As the Company did not achieve pre-tax operating income of at least $50 million in 2012 such performance condition was not met
and the discretionary RSU award was forfeited as of December 31, 2012.
In connection with the execution of the Merger Agreement
between the Company and GETCO on December 19, 2012, the Company, with the knowledge and consent of GETCO, entered into a letter
20
agreement (the Letter Agreement) with Mr. Joyce to amend Mr. Joyces employment agreement with the Company, and the bonus opportunity formula agreed to in March 2009.
The Letter Agreement provides for the extension of the term of the employment agreement with Mr. Joyce to expire on the earlier of (1) the closing of the merger with GETCO and (2) December 31, 2014; provided, however, that upon
the closing of the merger with GETCO, Mr. Joyce will be entitled to a lump sum cash retention payment of $7.5 million in lieu of his right to receive the severance payments and benefits he would otherwise be entitled to receive under his
employment agreement in the event of a termination by the Company other than for cause or a resignation by Mr. Joyce for good reason. Upon the completion of the Mergers, the employment agreement will, except for certain
provisions of the Letter Agreement that specifically survive, immediately terminate.
With respect to the other Named Executive Officers,
in addition to the Section 162(m) pre-tax income goals established by the Compensation Committee, Mr. Joyce is actively involved, in consultation with the Compensation Committee, in the determination of broad performance objectives.
Mr. Joyce meets with the Companys executives to determine, and then set, broad performance objectives for the upcoming year based on the Companys annual business plan and budget forecasts. The objectives chosen are a mix of
qualitative and quantitative factors and often require subjective judgment to determine the level of achievement. Mr. Joyce reviews with the Compensation Committee these broad performance objectives and explains why these broad performance
objectives were selected. At the end of the year, the Compensation Committee certifies that the Section 162(m) pre-tax income goals have been met and determines the maximum payout permitted based on the actual level of achievement of the
pre-tax income goals. Mr. Joyce also informs the Compensation Committee as to his assessment regarding whether the broad performance objectives that were set have been met and the rationale for the proposed incentive compensation for each Named
Executive Officer, which is based on a variety of factors (described below), including the attainment of the broad performance objectives. The overall incentive compensation for each executive is then recommended by Mr. Joyce to the
Compensation Committee for approval.
For 2012, these broad performance objectives were:
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a.
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Achievement related to business objectives and initiatives;
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b.
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Overall performance of the relevant business unit or discipline, including performance versus budget and the market environment;
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c.
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Revenues for the business unit overseen;
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d.
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Pre-tax income and/or margins for the business unit overseen;
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|
f.
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Achievement of compliance goals (regulatory, legal and financial);
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g.
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Customer satisfaction;
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h.
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Employee satisfaction;
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i.
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Expense management; and
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j.
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Management effectiveness.
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For Mr. Bisgay,
items (a), (b), (e), (f), (g), (h), (i) and (j) were applicable. For Messrs. Sohos, Lhota and Lyons, all of the items noted above were applicable. Item (a) objectives for Mr. Bisgay included the continued enhancement of the
Companys financial reporting infrastructure, particularly in regards to the reverse mortgage business of the Company, the bolstering of Treasury department activities, including enhancing the liquidity profile and overall liquidity management
program within the Company,
21
and the enhancement of the Companys overall risk management infrastructure. For Mr. Sohos, item (a) objectives related to the electronic trading groups continued ability to
launch new products and expand into new markets and asset classes, in addition to the strengthening of existing and new client relationships. Messrs. Lhota and Lyons item (a) objectives related to continued improvement in the performance
of the fixed income business, including reductions to the cost structure of the business, in addition to the strengthening of existing and new client relationships. For items (b), (c) and (d), 2012 performance was compared to 2011 results along
with 2012 budgets and goals set with the Board of Directors in October 2011 at the Boards annual strategy meeting, as subsequently revised, and with financial results and market conditions within the securities industry. For item (e),
objectives were based on the establishment of effective risk management policies and procedures (Mr. Bisgay), in addition to effective monitoring of trading, liquidity and credit risk (all Named Executive Officers), all based on the evaluation of
the Companys internal risk committee. As to item (f), objectives included regulatory examination performance (including the amount of any regulatory fines) for the business unit or discipline the Named Executive Officers oversees and
compliance with internal policies and procedures. Items (g) and (h) were assessed through both formal and informal surveys. As to item (i), objectives related to achievement of expense efficiencies, expense controls and expense
rationalization. Item (j) objectives related to personnel development, resource allocation and retention of employees. As there were no specific target or threshold levels of achievement established for these
objectives, the determination as to whether such achievement was met was made in the sole discretion of our Chief Executive Officer.
In
addition to the broad-based performance objectives listed above, the Compensation Committee considered each Named Executive Officers efforts in assisting the Company during and after the August 1 Trading Loss. These efforts, under very
challenging circumstances, included: (i) ensuring stability of the Companys workforce; (ii) constant work to retain and/or re-engage customers of the Company who reduced or ceased business with the Company after the announcement of
the August 1 Trading Loss; and (iii) ensuring the financial stability of the Company, including maintaining sufficient liquidity and the confidence of counterparties and creditors. As a result of the efforts of the Named Executive Officers
and others within the organization, the Company was able to recover a substantial portion of its business following the August 1 Trading Loss, limit the amount of turnover in its workforce, and maintain financial stability. The Company also
considered the Named Executive Officers work in maintaining the stability of the workforce and the business following the public headlines during the last few months of 2012 of a potential sale or business combination of the Company which
created considerable uncertainty throughout the workforce around the future of the Company, and created additional challenges with certain customers and counterparties.
Each of the factors discussed above was considered in determining each executives 2012 compensation and none were dispositive. Accordingly, each Named Executive Officers incentive compensation for 2012
was determined using an approach that considered, in the context of a competitive marketplace, a variety of factors, including: (i) the performance of the Company and/or business unit the Named Executive Officer oversaw during 2012;
(ii) the executives contribution to that performance, partly taking into account the Named Executive Officers attainment of the broad performance objectives, as determined in the sole discretion of our Chief Executive Officer;
(iii) the performance of the executive during the extraordinary events that occurred in 2012; (iv) a comparison with pay levels of comparable positions in the marketplace; and (v) market conditions. Given the significance of factor
(iii) to the Companys overall business in 2012, it received more weighting than the other factors for 2012. For 2012, actual total compensation paid to Messrs. Bisgay, Sohos, Lhota, and Lyons was below the comparable pay levels determined
from the Towers Watson comparative analysis that the Company strived to reach (as noted in subsection (iv) above and in the Compensation Approval Process section herein). Such 2012 incentive compensation was awarded as a mix of cash and RSUs in
January 2013 generally in line with the mix described herein.
22
Long-Term Incentives
The Company believes that the most effective means to encourage long-term performance by our executive officers is to create an ownership culture. This philosophy is implemented through the granting of equity-based
awards that vest based on continued employment. For the past few years, equity-based awards that vest based on continued employment have consisted of RSUs and/or stock options. The Company primarily uses RSUs as it believes they more accurately
reflect the pattern of equity-based awards that prevail in its peer group and in the external market generally.
Annual grants of stock
options and/or RSUs to our executive officers that are part of the executives annual incentive compensation are approved at a regularly scheduled meeting of the Compensation Committee held during January of each year, and the grant date is the
last business day of January, the same day equity-based awards are made to all other eligible Company employees as part of their annual incentive compensation. The Compensation Committee may also make occasional grants during the year to executives,
current employees and new employees and has delegated to the Companys Chief Executive Officer the authority, subject to certain established limitations and ratification by the Compensation Committee, to make limited equity grants to current
and new employees, other than executive officers, of the Company. These grants are typically associated with retention, promotion, acquisitions and hiring. No such grants were made to Named Executive Officers in 2012. The exercise price for stock
option grants is typically the average of the high and low price of a share of the Common Stock as quoted on the NYSE on the date preceding the date of grant.
2012 and 2011 Compensation Awards
In January 2013 and January 2012, based primarily on the
factors discussed above, the Compensation Committee approved the following annual incentive awards paid under the EIP (for 2011) and discretionary bonuses paid outside of the EIP (for 2012), to certain of the Named Executive Officers for their
performance in fiscal years 2012 and 2011, respectively:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Performance Year
|
|
|
Cash Award ($)
|
|
|
Value of RSU
Awards ($)
(1)
|
|
|
Total ($)
(2)
|
|
Thomas M. Joyce
(3)
|
|
|
2012
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
2011
|
|
|
|
3,968,321
|
|
|
|
2,645,547
|
|
|
|
6,613,868
|
|
|
|
|
|
|
Steven Bisgay
|
|
|
2012
|
|
|
|
1,650,000
|
|
|
|
1,100,000
|
|
|
|
2,750,000
|
|
|
|
|
2011
|
|
|
|
1,485,000
|
|
|
|
990,000
|
|
|
|
2,475,000
|
|
|
|
|
|
|
George Sohos
(4)
|
|
|
2012
|
|
|
|
2,878,947
|
|
|
|
1,919,298
|
|
|
|
4,798,245
|
|
|
|
|
2011
|
|
|
|
4,285,000
|
|
|
|
2,856,667
|
|
|
|
7,141,667
|
|
|
|
|
|
|
Alan Lhota
|
|
|
2012
|
|
|
|
721,630
|
|
|
|
481,087
|
|
|
|
1,202,716
|
|
|
|
|
2011
|
|
|
|
500,000
|
|
|
|
571,561
|
|
|
|
1,071,561
|
|
|
|
|
|
|
Robert K. Lyons
(5)
|
|
|
2012
|
|
|
|
780,385
|
|
|
|
520,257
|
|
|
|
1,300,641
|
|
(1)
|
The number of RSUs granted to each Named Executive Officer is determined by taking the aggregate value of the RSU award to the Named Executive Officer and dividing it by the
average of the high and low price of a share of the Common Stock as quoted on the NYSE on the date preceding the date of grant.
|
(2)
|
Total excludes salaries, and in the case of Messrs. Lhota and Lyons, sales commissions for 2012 of $1,047,284 and $949,359, respectively, and for Mr. Lhota, sales
commissions for 2011 of $1,956,105.
|
(3)
|
Includes a $1,000,000 discretionary award paid outside of the EIP to Mr. Joyce in January 2012 in consideration of his 2011 performance. The award consisted of $250,000 in
cash and 57,252 RSUs with a grant date fair value of $750,000. Such award of RSUs was forfeited on December 31, 2012 as the applicable performance condition was not met.
|
23
(4)
|
Excludes a special April 2011 discretionary grant to Mr. Sohos of 250,000 RSUs with a grant date fair value of $3,292,500.
|
(5)
|
Mr. Lyons first became a Named Executive Officer because of his compensation in 2012 and, as such, only compensation information for the 2012 performance year is provided.
|
The value of equity awards in the above table differs from the value of equity awards disclosed in the Summary
Compensation Table, as the Summary Compensation Table, prepared in accordance with SEC regulations, reports the grant date fair value of equity awards that were granted at any time during each fiscal year computed in accordance with FASB ASC Topic
718. For 2012, the Summary Compensation Table reflects RSU grants that were made in 2012 in respect of 2011 performance. The Summary Compensation Table
does not
reflect the value of the above RSU awards made by the Company to its Named
Executive Officers in January 2013 in respect of 2012 performance as under current SEC regulations the fair value of such awards will be reported as 2013 compensation in next years Summary Compensation Table.
Employment Agreements
For many years, the
Company has followed the practice of entering into a written employment agreement with its Chief Executive Officer. Consistent with this practice, the Company entered into an employment agreement with Mr. Joyce in December 2008 (as amended, the
Current Agreement), under which Mr. Joyce continued to be employed by the Company as its Chief Executive Officer and continued to serve as Chairman of the Board. The Current Agreement became effective as of December 31, 2008
and, as amended by the Letter Agreement, continues through the earlier of (i) the consummation of the transactions contemplated by the GETCO merger agreement and (ii) December 31, 2014. In negotiating the terms of the Current
Agreement, the Compensation Committee considered Mr. Joyces experience, his performance with the Company since he became the Chief Executive Officer, his prior compensation, and, with assistance from Deloitte, its independent compensation
consultant, the prevailing market practice with respect to CEO compensation.
In connection with the execution of the Merger Agreement
between the Company and GETCO on December 19, 2012, the Company entered into a Letter Agreement with Mr. Joyce to amend the Current Agreement, and the bonus opportunity formula agreed to in March 2009. The Letter Agreement extends the end
of the term of the Current Agreement until the earlier of (i) the consummation of the transactions contemplated by the GETCO merger agreement and (ii) December 31, 2014 (it was set to expire on December 31, 2012) and it provides
that upon the closing of the merger with GETCO, Mr. Joyce will be entitled to a lump sum cash retention payment of $7.5 million in lieu of his right to receive the severance payments and benefits he would otherwise be entitled to receive under
his Current Agreement in the event of a termination by the Company other than for cause or a resignation by Mr. Joyce for good reason. Upon the completion of the Mergers, the Current Agreement will, except for certain
provisions of the Current Agreement that specifically survive, immediately terminate. For a description of the Current Agreement and the Letter Agreement, see the heading entitled Employment Agreement with Mr. Joyce herein.
No other Named Executive Officer of the Company had an employment agreement with the Company as of December 31, 2012.
Perquisites and Other Benefits
Generally,
the Company does not believe it is necessary for the attraction or retention of management talent to provide our executives with a substantial amount of compensation in the form of perquisites. Accordingly, we do not have a formal perquisite policy,
although the Compensation Committee periodically reviews perquisites for our Named Executive Officers. In 2012, pursuant to the terms of the previously executed Current Agreement, the Company provided Mr. Joyce with a vehicle and driver and/or
a third party car service for commuting to and from the Companys various office
24
locations and reimbursed Mr. Joyce for the associated payment of taxes related to such perquisite. The Company also reimbursed Mr. Joyce for a golf club membership in 2012, which was
used primarily for business purposes. No material perquisites were provided to any of the other Named Executive Officers.
The Company
also maintains employee benefit programs for our executives and other employees. Our Named Executive Officers generally participate in our employee health and welfare benefits on the same basis as all employees. In addition to these generally
available benefits, our Named Executive Officers are eligible to participate in nonqualified deferred compensation plans which are intended to provide a vehicle to defer compensation in excess of the amounts that are legally permitted to be deferred
under the Companys tax-qualified 401(k) savings plan and to provide a vehicle to defer annual cash bonus payments (subject to minimum and maximum deferral limitations). Mr. Joyce was the only Named Executive Officer to defer compensation
in 2012.
Tax Deductibility under Section 162(m) and Accounting Considerations
Under Section 162(m), the Company may not be able to deduct certain forms of compensation in excess of $1 million paid to any of the Named
Executive Officers (other than the Chief Financial Officer) that are employed by the Company at year-end. Compensation which is performance-based is not subject to this statutory maximum on deductibility. The Compensation Committee
believes that it is generally in the Companys best interests to satisfy the requirements for deductibility under Section 162(m). However, notwithstanding this general policy, the Compensation Committee also believes there may be
circumstances in which the Companys interests are best served by maintaining flexibility in the way compensation is provided, whether or not compensation is fully deductible under Section 162(m). For the 2012 performance year, due to the
August 1 Trading Loss and other unprecedented events of 2012, none of the performance criteria set for each Named Executive Officer were achieved. As such, for the 2012 performance year no awards were made pursuant to the EIP. All incentive
awards granted to the Named Executive Officers with respect to 2012 were made outside of the EIP and the Company may not be entitled to a tax deduction for such awards to the extent that they result in 2012 compensation for any Named Executive
Officer in excess of $1 million. Compensation that was paid in the form of commissions as well as all compensation that was awarded to the Chief Financial Officer, however, is expected to be fully deductible for tax purposes. Given the significance
of each Named Executive Officers work related to the retention of the Companys employees and clients and ensuring the Companys financial stability during and following the August 1 Trading Loss and throughout the process that
led to the Merger Agreement with GETCO, the Compensation Committee determined that such compensation to the Named Executive Officers for 2012 be paid outside of the EIP as it was appropriate and in the best interests of the Company.
In making decisions about executive compensation, the Company also considers how various elements of compensation will affect our financial
reporting, including the impact of FASB Accounting Standards Codification Topic 718, CompensationStock Compensation for awards of equity instruments.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, comprised
of independent Directors, reviewed and discussed the above CD&A with the Companys management. Based on the review and its discussions, the Compensation Committee recommended to the Board of Directors that the CD&A be included in this
Form 10-K/A.
Compensation Committee
Laurie M. Shahon, Chairperson
William L. Bolster
James T. Milde
Christopher C. Quick
25
COMPENSATION OF THE NAMED EXECUTIVE OFFICERS
The following table sets forth information regarding compensation paid for the fiscal years ended December 31, 2012, 2011 and 2010, respectively,
for the Companys Chief Executive Officer, the Companys Chief Financial Officer and the Companys three other most highly paid executive officers (the Named Executive Officers):
Summary Compensation Table
For Fiscal Years Ended December 31, 2012, 2011 and 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
(1)
|
|
|
Stock
Awards
($)
(2)
(3)
|
|
|
Option
Awards ($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
(4)
|
|
|
All Other
Compensation
($)
(5)
|
|
|
Total ($)
|
|
Thomas M. Joyce
|
|
|
2012
|
(6)
|
|
|
750,000
|
|
|
|
250,000
|
|
|
|
2,645,547
|
|
|
|
-
|
|
|
|
-
|
|
|
|
102,650
|
|
|
|
3,748,197
|
|
Chairman of the Board and Chief Executive Officer
(7)
(8)
|
|
|
2011
|
|
|
|
750,000
|
|
|
|
-
|
|
|
|
1,799,593
|
|
|
|
-
|
|
|
|
3,718,321
|
|
|
|
101,995
|
|
|
|
6,369,909
|
|
|
|
2010
|
|
|
|
750,000
|
|
|
|
-
|
|
|
|
2,620,516
|
|
|
|
-
|
|
|
|
2,699,390
|
|
|
|
96,872
|
|
|
|
6,166,778
|
|
Steven Bisgay
|
|
|
2012
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
990,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,000
|
|
|
|
1,498,000
|
|
Executive Vice President, Chief Financial Officer, and Chief Operating Officer
|
|
|
2011
|
|
|
|
375,000
|
|
|
|
-
|
|
|
|
991,000
|
|
|
|
-
|
|
|
|
1,485,000
|
|
|
|
8,000
|
|
|
|
2,859,000
|
|
|
|
2010
|
|
|
|
250,000
|
|
|
|
-
|
|
|
|
780,000
|
|
|
|
-
|
|
|
|
1,259,000
|
|
|
|
8,000
|
|
|
|
2,297,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Sohos
|
|
|
2012
|
|
|
|
500,000
|
|
|
|
-
|
|
|
|
2,856,667
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,000
|
|
|
|
3,364,667
|
|
Senior Managing Director, Head of Market Making
|
|
|
2011
|
(9)
|
|
|
358,333
|
|
|
|
-
|
|
|
|
4,388,112
|
|
|
|
-
|
|
|
|
4,285,000
|
|
|
|
8,000
|
|
|
|
9,039,445
|
|
|
|
2010
|
(10)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Alan Lhota
|
|
|
2012
|
(11)
|
|
|
1,547,284
|
|
|
|
-
|
|
|
|
571,561
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,000
|
|
|
|
2,126,845
|
|
Senior Managing Director, Co-Head of Institutional Fixed Income
|
|
|
2011
|
(11)
|
|
|
2,156,105
|
|
|
|
-
|
|
|
|
200,000
|
|
|
|
-
|
|
|
|
500,000
|
|
|
|
8,000
|
|
|
|
2,864,105
|
|
|
|
2010
|
(10)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Robert K. Lyons
|
|
|
2012
|
(12)
|
|
|
1,449,359
|
|
|
|
-
|
|
|
|
730,587
|
|
|
|
-
|
|
|
|
-
|
|
|
|
8,000
|
|
|
|
2,187,946
|
|
Senior Managing Director, Co-Head of Institutional Fixed Income
|
|
|
2011
|
(10)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2010
|
(10)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
Represents cash paid outside of the Companys EIP to Mr. Joyce in January 2012 in respect of fiscal year 2011 performance.
|
(2)
|
Represents the aggregate grant date fair value of RSUs, computed in accordance with FASB ASC Topic 718, disregarding for this purpose the estimate of forfeitures related to
service-based vesting conditions.
|
(3)
|
Except as noted in Footnote 9 below, RSUs generally vest in equal installments on each of the first three anniversaries of the grant date, subject to acceleration upon a
change-in-control.
|
(4)
|
Represents cash earned for fiscal years 2011 and 2010, respectively, by the Named Executive Officers under the Companys EIP. Subject to voluntary deferrals, the amounts
were paid in January 2012 and 2011, respectively. The Company sponsors a voluntary deferred compensation plan, under which certain senior employees can voluntarily elect to defer receipt of all or a portion of their cash bonus. Mr. Joyce
elected to defer $500,000 of his cash award for fiscal year 2011 which is included in the above table.
|
(5)
|
All other compensation includes an $8,000 matching contribution in the applicable year with respect to each Named Executive Officers participation in the Companys tax
qualified 401(k) savings plan.
|
(6)
|
2012 amounts include a $1,000,000 discretionary award paid to Mr. Joyce in January 2012, outside of the EIP. The award consisted of $250,000 in cash and 57,252 RSUs with a
grant date fair value of $750,000. As the Company did not achieve pre-tax operating income of at least $50 million in 2012 such performance condition was not met and the RSU award was forfeited as of December 31, 2012.
|
(7)
|
In addition to Footnote (5), all other compensation for Mr. Joyce in 2012, 2011 and 2010 consists of $63,486, $62,829 and $58,368, respectively, related to providing a
vehicle and driver and/or a third party car service for Mr. Joyces commute to, and from, the Companys various office locations, tax reimbursements of $31,985, $30,686 and $30,024, respectively, related to such perquisite and a
Company paid gym membership of $480 in 2011 and 2010. The compensation value attributed to providing a vehicle and driver to Mr. Joyce equals the estimated incremental cost to the Company of the Company employed drivers time relating to
Mr. Joyces commute as well as the incremental cost to the Company of the additional operating expenses associated with the Company owned vehicle used for such commute. Also included in the compensation value is the actual cost to the
Company of third party car services in cases where such car services are provided for Mr. Joyces commute. The amount of the tax reimbursement is the amount of compensation paid to Mr. Joyce to reimburse him for his tax liability on
the value of this perquisite. All of the above items were contractually agreed to pursuant to the previously executed Current Agreement.
|
(8)
|
The Company reimbursed Mr. Joyce for a golf club membership, which was used primarily for business purposes, in 2012, 2011 and 2010. Although Mr. Joyce is not
restricted to using this membership solely for business purposes, during 2012, 2011 and 2010 this membership was used primarily for business purposes and therefore there was no incremental cost to the Company.
|
(9)
|
Mr. Sohos 2011 stock award comprises RSUs with a grant date fair value of $1,095,612 which were granted in January 2011 with respect to his 2010
compensation, and a special grant of 250,000 RSUs with a grant date fair value of $3,292,500 which were granted on April 13, 2011 and were subject to forfeiture in the event the Company did not achieve pre-tax income for 2011 of at
|
26
|
least $50 million. As the Company achieved pre-tax income in 2011 of at least $50 million, the special RSU grant will vest on April 13, 2014.
|
(10)
|
Messrs. Sohos and Lhota first became Named Executive Officers because of their compensation in 2011 and, in accordance with SEC regulations, only compensation information for
2012 and 2011 is provided in the Summary Compensation Table. Mr. Lyons first became a Named Executive Officer because of his compensation in 2012 and, in accordance with SEC regulations, only compensation information for 2012 is provided in the
Summary Compensation Table.
|
(11)
|
Mr. Lhotas 2012 salary comprises base salary of $500,000 and sales commissions of $1,047,284 earned during 2012. Mr. Lhotas 2011 salary comprises base
salary of $200,000 and sales commissions of $1,956,105 earned during 2011.
|
(12)
|
Mr. Lyonss 2012 salary comprises base salary of $500,000 and sales commissions of $949,359 earned during 2012.
|
The following table provides information on equity and non-equity awards granted in 2012 to each of the Companys Named Executive Officers.
There can be no assurance that all of the amounts disclosed below will vest because certain of the awards are subject to vesting conditions (performance based and/or service based).
Grants of Plan-Based Awards
For Fiscal Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant Date
|
|
|
Estimated Future Payouts Under Non-
Equity Incentive Plan
Awards
|
|
|
All Other Stock
Awards:
Number of
Shares of Stock
or Units (#)
(1)
|
|
|
Grant
Date
Fair Value of
Stock and
Option
Awards ($)
|
|
|
|
Threshhold
($)
|
|
|
Target
($)
|
|
|
Maximum ($)
|
|
|
|
Thomas M. Joyce
|
|
|
1/1/2012
|
|
|
|
3,000,000
|
|
|
|
(2
|
)
|
|
|
15,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1/31/2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
201,951
|
(3)
|
|
|
3,395,547
|
|
|
|
|
|
|
|
|
Steven Bisgay
|
|
|
1/1/2012
|
(4)
|
|
|
-
|
|
|
|
1,750,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1/31/2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,573
|
|
|
|
990,000
|
|
|
|
|
|
|
|
|
George Sohos
|
|
|
1/1/2012
|
(4)
|
|
|
-
|
|
|
|
3,000,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1/31/2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
218,067
|
|
|
|
2,856,667
|
|
|
|
|
|
|
|
|
Alan Lhota
|
|
|
1/1/2012
|
(4)
|
|
|
-
|
|
|
|
750,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
1/31/2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
43,631
|
|
|
|
571,561
|
|
|
|
|
|
|
|
|
Robert K. Lyons
|
|
|
1/1/2012
|
(4)
|
|
|
-
|
|
|
|
800,000
|
|
|
|
-
|
|
|
|
55,770
|
|
|
|
730,587
|
|
|
|
|
1/31/2012
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
Represents RSU awards granted pursuant to the 2010 Equity Incentive Plan during 2012 but which were awarded with respect to the Named Executive Officers performance during
2011. Except as noted in Footnote (3) below, these RSU awards generally vest in three equal installments on January 31, 2013, 2014 and 2015.
|
(2)
|
Mr. Joyces 2012 annual incentive opportunity was conditioned upon the achievement of certain 2011 consolidated pre-tax operating income targets of the Company as
follows: (i) pre-tax operating income less than $0, no incentive bonus or (ii) pre-tax operating income in excess of $0, incentive bonus equal to the greater of (a) 3% of the first $350 million of pre-tax operating income plus 1.5% of
pre-tax operating income in excess of $350 million, and (b) $3 million.
|
(3)
|
Of this amount, 57,252 RSUs were subject to forfeiture in the event the Company did not achieve pre-tax operating income of at least $50 million in 2012. As the Company did not
achieve pre-tax operating income of at least $50 million in 2012 such performance condition was not met and the RSU award for 57,252 RSUs was forfeited as of December 31, 2012.
|
(4)
|
Target incentive awards were not established for 2012. In accordance with SEC disclosure rules, the amounts disclosed in this table are representative of estimated value of the
cash awards granted to these Named Executive Officers for 2012. Actual awards earned in 2012 are disclosed in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.
|
Employment Agreements with Named Executive Officers
Employment Agreement with Mr. Joyce
In December 2008, the Company entered into the
Current Agreement with Mr. Joyce under which Mr. Joyce will continue to be employed by the Company as its Chief Executive Officer and continue to serve as Chairman of the Board until, as amended by the Letter Agreement (described herein),
the
27
earlier of (i) the consummation of the transactions contemplated by the GETCO merger agreement and (ii) December 31, 2014. The Investment would have constituted a change-in-
control for purposes of the Current Agreement, which would have automatically extended the term of the Current Agreement through the second anniversary of the change-in-control; however, Mr. Joyce waived the change-in-control provisions
in the Current Agreement solely related to the Investment on August 16, 2012.
Pursuant to the terms of the Current Agreement,
Mr. Joyce will receive an annual base salary of $750,000. Mr. Joyce will also be eligible for an annual bonus based on the achievement of performance targets and other terms and conditions established by the Compensation Committee (the
Annual Bonus). Prior to its amendment in March 2009, the Current Agreement provided that for the 2010 calendar year the Annual Bonus could be no greater than $10 million, and for each of the 2011 and 2012 calendar years the Annual Bonus
could be no greater than $11 million. These caps were changed in March 2009 to reflect the $15 million cap under the Companys 2009 Executive Incentive Plan and otherwise as part of the changes made to Mr. Joyces bonus opportunity
formula for 2010 through 2012. The Annual Bonus will be payable sixty percent (60%) in cash and forty percent (40%) in restricted stock or RSUs. The portion of the Annual Bonus that is paid in, or based on, Company shares will vest ratably
over a three-year period, subject to accelerated vesting and distribution upon certain specified terminations of employment. Under certain circumstances, the Current Agreement allows the Company to demand repayment of an annual bonus that was paid
or awarded to Mr. Joyce based on a calculation of the measure on which the bonus was based that is later determined to have been overstated. Mr. Joyce may also receive payments in addition to those earned pursuant to the EIP. For example,
as previously discussed, the Compensation Committee decided to award Mr. Joyce additional incentive compensation in January 2012 of $1,000,000 related to 2011 performance. Such award was payable $250,000 in cash and $750,000 in RSUs (resulting
in the issuance of 57,252 RSUs). The RSU award was to vest ratably over three years, and was subject to forfeiture in the event the Company did not achieve pre-tax operating income of at least $50 million in 2012. As the Company did not achieve
pre-tax operating income of at least $50 million in 2012 such performance condition was not met and the RSU award was forfeited as of December 31, 2012.
In addition, the Current Agreement provided for equity awards pursuant to the Companys 2006 Equity Incentive Plan (the 2006 Plan) in the form of RSUs for a total of 1.5 million shares
(collectively, the Incentive Award). The first 500,000 shares of the Incentive Award (the First Tranche) vested in four equal installments on December 31, 2009, 2010, 2011 and 2012, respectively, upon a performance
condition having been met. The second 500,000 shares of the Incentive Award (the Second Tranche) generally provided for vesting upon the Companys per share price closing at or above $25 per share for ten consecutive trading days or
15 trading days during any 20-day trading period, provided that if such condition was not met by December 31, 2012, the Second Tranche would be forfeited. The third 500,000 shares of the Incentive Award (the Third Tranche) generally
provided for vesting upon the Companys per share price closing at or above $30 per share for ten consecutive trading days or 15 trading days during any 20-day trading period, provided that if such condition was not met by December 31,
2012, the Third Tranche would be forfeited. Under certain circumstances (including, with respect to the Second and Third Tranche, a requirement that the performance conditions are met), the Incentive Awards will vest on a change-in-control of the
Company. As the Companys share price did not reach the required levels during the performance condition period, the Second Tranche and Third Tranche were each forfeited on December 31, 2012.
Pursuant to the Current Agreement, Mr. Joyce agreed not to sell, pledge, encumber or otherwise transfer 80% of the aggregate number of vested
shares originally subject to the Incentive Award that remain after satisfaction of tax withholding obligations until December 31, 2012.
Under the Current Agreement, Mr. Joyce also is generally eligible to receive retirement benefits, fringe benefits and insurance coverage that are no less favorable than those generally made available to other
senior executives of the Company. Mr. Joyce will also be entitled to a car and driver for his
28
daily commute between his home and the Companys various office locations plus a tax gross-up attributable thereto, and reimbursement of his annual dues for a golf club membership.
The severance payments and benefits that Mr. Joyce is entitled to receive upon certain terminations of his employment are set forth
herein, under the heading Termination and Change in Control Agreements.
In connection with its entry into the Merger
Agreement with GETCO, the Company and Mr. Joyce executed the Letter Agreement on December 19, 2012, which amended the Current Agreement. The Letter Agreement extends the end of the term of the Current Agreement until the earlier of
(i) the consummation of the transactions contemplated by the GETCO Merger Agreement and (ii) December 31, 2014 (the Current Agreement was set to expire on December 31, 2012) and it entitles Mr. Joyce to a $7,500,000
retention payment upon the consummation of the Mergers in lieu of his right to receive the severance payments and benefits to which he would otherwise be entitled under the Current Agreement in the event of a termination by the Company other than
for cause or a resignation by Mr. Joyce for good reason.
Employment Agreements with Other Named
Executive Officers
The Company was not a party to individual employment agreements with any currently employed Named Executive
Officer other than Mr. Joyce as of December 31, 2012.
Equity Plans and Agreements
Until May 2010, equity awards to the Named Executive Officers were historically made under the following Company equity plans: the Knight Capital
Group, Inc. 1998 Long-Term Incentive Plan (the 1998 Plan), the Knight Capital Group, Inc. 2003 Equity Incentive Plan (the 2003 Plan) and the 2006 Plan (collectively, the Historical Stock Plans). At the
Companys 2010 Annual Meeting of Stockholders, the Companys stockholders approved the Knight Capital Group, Inc. 2010 Equity Incentive Plan (the 2010 Plan, collectively with the Historical Stock Plans and the Amended 2010 Plan
(defined below), the Stock Plans). As a result of the establishment of the 2010 Plan, the 2010 Plan replaced the Historical Stock Plans for future equity grants and no additional grants will be made under the Historical Stock Plans (but
the terms and conditions of any outstanding equity grants under the Historical Stock Plans were not affected).
As discussed above, the
Investment significantly reduced the retentive value of the outstanding employee equity awards. Therefore, at a special meeting of the Companys stockholders on December 27, 2012, the Company sought approval of, and the Companys
stockholders approved, the Amended and Restated 2010 Equity Incentive Plan (the Amended 2010 Plan) to increase the number of shares authorized for grant under the 2010 Plan and amend certain provisions of the 2010 Plan to reflect current
market practices. Key changes to the 2010 Plan that were adopted in the Amended 2010 Plan included: (i) an amendment to require a qualifying termination of employment before vesting provisions in new awards accelerate in the event of a
change-in-control, also known as double-trigger accelerated vesting; (ii) an amendment to the modification provision to require stockholder approval before (x) SARs may be repriced, replaced, regranted through cancellation or
modified if such change would reduce the exercise price for the shares underlying such SAR and (y) options or SARs may be exchanged for cash if such exchange would reduce the exercise price for the shares underlying such option or SAR;
(iii) an amendment to limit the number of shares subject to awards granted to each non-employee member of the Companys Board during any calendar year to 200,000; and (iv) an extension of the time after which no awards may be granted
under the Amended 2010 Plan to ten years from the date the stockholders approved the Amended 2010 Plan.
The Stock Plans are administered
by the Compensation Committee, and allow for the grant of options, stock appreciation rights (2006 Plan and Amended 2010 Plan only), restricted stock and RSUs (collectively, the awards), as defined by the Stock Plans. In addition to
overall limitations on the
29
aggregate number of awards that may be awarded under the Stock Plans, the Stock Plans limit the number of awards that may be granted to a single individual as well as limit the amount of options,
stock appreciation rights (2006 Plan and Amended 2010 Plan only) or shares of restricted stock or RSUs that may be awarded. The Compensation Committee has delegated to Mr. Joyce the ability to make limited equity grants to new hires or
employees, for promotions or retention purposes, except for grants to executive officers. Restricted share and RSU awards generally vest ratably over three years. The Companys policy is to grant options for the purchase of shares of Common
Stock at not less than fair market value, which the Stock Plans define as the average of the high and low sales price on the date prior to the grant date. Options generally vest ratably over a three-year or four-year period and expire on the fifth
or tenth anniversary of the grant date, pursuant to the terms of the applicable option award agreement. The Company generally has the right to fully vest executives in their awards upon retirement (except for certain awards to Mr. Joyce) and in
certain other circumstances. Generally, retirement is defined (effective March 31, 2009) as a voluntary termination of employment by an employee or a termination without cause by the Company of an employees employment (i) after no
less than five full years of service as an employee of the Company (regardless whether such service is continuous), (ii) with the employee having achieved or exceeded 50 years of age at the time of departure, and (iii) with the employee
entering into a two year non-compete agreement in a form acceptable to the Company. Pursuant to FASB ASC Topic 718, upon an executive becoming retirement-eligible, the expense associated with any unvested RSUs and options is accelerated so that such
awards are fully expensed as of the date of the executives retirement eligibility. Under the retirement definition applicable to awards after March 31, 2009, none of the Named Executive Officers (except for certain awards to
Mr. Joyce) currently satisfy the requirements of such definition. Unvested awards granted before September 1, 2010 are generally canceled if employment is terminated for any reason before the end of the relevant vesting period, except as
discussed above and in the Termination and Change in Control Agreements section below. For annual incentive awards granted after September 1, 2010 and up to September 30, 2011, full vesting is given where an employee has been
terminated without Cause by the Company. For all other awards granted after September 1, 2010 and up to September 30, 2011, unvested awards are generally canceled if employment is terminated for any reason before the end of the relevant
vesting period, except as discussed above and in the Termination and Change in Control Agreements section below. Effective October 1, 2011, for all awards granted after such date, unless otherwise provided for in the applicable
award agreement, full vesting will be given where an employee has been terminated without cause by the Company. The change to provide full vesting upon a termination without cause for all awards granted on or after October 1, 2011 (unless
otherwise provided for in the applicable award agreement) was made to align the Companys policy with that of industry practice.
The Investment triggered a change-in-control in certain of the Companys outstanding equity awards under the 2006 Plan, 2003 Plan
and 1998 Plan, which would have accelerated the vesting of such awards to certain Named Executive Officers. The affected Named Executive Officers (all Named Executive Officers other than Messrs. Lhota and Lyons) waived the change-in-control
provisions in their equity awards in August 2012. Such awards vested in accordance with their terms in January 2013.
30
The following table shows the number of shares covered by exercisable and unexercisable options and
unvested RSUs held by the Companys Named Executive Officers at December 31, 2012.
Outstanding Equity Awards
At December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options
(#) Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
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 ($)
(1)
|
|
Thomas M. Joyce
|
|
|
92,810
|
(2)
|
|
|
-
|
|
|
|
14.59
|
|
|
|
12/31/2013
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
220,820
|
(3)
|
|
|
-
|
|
|
|
17.97
|
|
|
|
1/31/2017
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,143
|
(4)
|
|
|
193,552
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,694
|
(5)
|
|
|
300,786
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
144,699
|
(6)
|
|
|
507,893
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
57,252
|
(7)
|
|
|
200,955
|
|
|
|
|
|
|
|
|
Steven Bisgay
|
|
|
45,000
|
(8)
|
|
|
-
|
|
|
|
10.24
|
|
|
|
11/10/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,414
|
(4)
|
|
|
57,613
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
47,190
|
(5)
|
|
|
165,637
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
75,573
|
(6)
|
|
|
265,261
|
|
|
|
|
|
|
|
|
George Sohos
|
|
|
18,333
|
(8)
|
|
|
|
|
|
|
10.24
|
|
|
|
11/10/2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
25,000
|
(9)
|
|
|
|
|
|
|
7.90
|
|
|
|
8/15/2015
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
21,043
|
(4)
|
|
|
73,861
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,171
|
(5)
|
|
|
183,120
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
218,067
|
(6)
|
|
|
765,415
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
250,000
|
(10)
|
|
|
877,500
|
|
|
|
|
|
|
|
|
Alan Lhota
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,524
|
(5)
|
|
|
33,429
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
43,631
|
(6)
|
|
|
153,145
|
|
|
|
|
|
|
|
|
Robert K. Lyons
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,189
|
(5)
|
|
|
7,683
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
55,770
|
(6)
|
|
|
195,753
|
|
(1)
|
Market value amounts reflect a closing price per share of the Companys Common Stock on December 31, 2012 of $3.51 as quoted on the NYSE.
|
(2)
|
Option became fully vested on December 31, 2006.
|
(3)
|
Option became fully vested on January 31, 2010.
|
(4)
|
RSU vested one-third on January 31, 2011, one-third on January 31, 2012 and one-third on January 31, 2013.
|
(5)
|
RSU vested one-third on January 31, 2012, one-third on January 31, 2013 and the remaining one-third will vest on January 31, 2014.
|
(6)
|
RSU vested one-third on January 31, 2013, and will vest one-third on January 31, 2014 and the remaining one-third will vest on January 31, 2015.
|
(7)
|
RSU was subject to forfeiture in the event the Company did not achieve pre-tax operating income of at least $50 million in 2012. As the Company did not achieve pre-tax operating
income of at least $50 million in 2012 such performance condition was not met and the RSU was forfeited as of December 31, 2012.
|
(8)
|
Option became fully vested on November 10, 2007.
|
(9)
|
Option became fully vested on August 15, 2008.
|
(10)
|
As a result of the Company having earned pre-tax income in 2011 exceeding $50 million, the RSU will vest on April 13, 2014.
|
31
The table below shows the number of shares of Common Stock acquired during 2012 by the Named Executive
Officers upon the exercise of options or through the vesting of RSUs.
Options Exercised and Stock Vested
For Fiscal Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares Acquired
on Exercise (#)
|
|
|
Value Realized
on Exercise ($)
|
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
|
Value Realized on
Vesting ($)
|
|
Thomas M. Joyce
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
308,350
|
|
|
|
2,832,635
|
|
Steven Bisgay
(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
50,961
|
|
|
|
666,060
|
|
George Sohos
(3)
|
|
|
-
|
|
|
|
-
|
|
|
|
57,071
|
|
|
|
745,918
|
|
Alan Lhota
(4)
|
|
|
-
|
|
|
|
-
|
|
|
|
4,762
|
|
|
|
62,239
|
|
Robert K. Lyons
(5)
|
|
|
-
|
|
|
|
-
|
|
|
|
1,095
|
|
|
|
14,312
|
|
(1)
|
Comprises the following: 183,350 shares acquired having a fair market value of $13.07 on date of vesting and 125,000 shares acquired having a fair market value of $3.49 on date
of vesting.
|
(2)
|
Comprises 50,961 shares acquired having a fair market value of $13.07 on date of vesting.
|
(3)
|
Comprises 57,071 shares acquired having a fair market value of $13.07 on date of vesting.
|
(4)
|
Comprises 4,762 shares acquired having a fair market value of $13.07 on date of vesting.
|
(5)
|
Comprises 1,095 shares acquired having a fair market value of $13.07 on date of vesting.
|
Pension Benefits
The Company does not have in place any defined benefit pension plans.
Non-Qualified Deferred Compensation
The following table shows the earnings and account balances for the Named Executive Officers in the Knight Vanguard Voluntary Deferred Compensation Plan (the Deferral Program). The Deferral Program is
unfunded and unsecured. The Deferral Program allows participants who are senior officers (including all Named Executive Officers) to defer all or a portion of their cash compensation for a minimum of three years.
Non-Qualified Deferred Compensation
For Fiscal Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in Last
Fiscal Year ($)
(1)
|
|
|
Aggregate Earnings
in Last Fiscal Year
($)
(2)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate Balance
at Last FYE ($)
|
|
Thomas M. Joyce
(3)
|
|
|
500,000
|
|
|
|
3,628
|
|
|
|
177,776
|
|
|
|
500,181
|
|
Steven Bisgay
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
George Sohos
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Steven J. Sadoff
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Alan Lhota
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Robert K. Lyons
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
Mr. Joyce elected to defer $500,000 of his fiscal 2011 year-end cash award, which would have otherwise been paid in January 2012.
|
(2)
|
Deferral accounts are credited with earnings based on an executives deemed investment in a fund or funds selected by the executive from a group of
externally managed mutual funds (including equity and bond mutual funds) which mirror those available to all employees under our tax-qualified 401(k) savings plan. The executives contributions are credited to a book-keeping account for the
executive, and the balance of this account is adjusted to reflect the gains or losses that would have been obtained if the contributions had actually been invested in the applicable externally managed
|
32
|
mutual fund. There is no markup over the market rates of return that would have been obtained on investments in the externally managed institutional funds. Accordingly, the amount of earnings
(loss) reflected in this column does not represent above-market or preferential earnings, and, therefore, these amounts have not been included in the Summary Compensation Table.
|
(3)
|
Mr. Joyces 2012 distribution represents the distribution of $178,720 contributed in 2010 relating to fiscal 2009 compensation, adjusted for losses thereon.
Mr. Joyces December 31, 2012 balance comprises $500,000 contributed in 2012 relating to fiscal 2011 compensation, adjusted for earnings thereon. All previously deferred amounts were disclosed in the Summary Compensation Table for the
applicable fiscal year.
|
Termination and Change in Control Agreements
As discussed above, the Company entered into the Letter Agreement with Mr. Joyce on December 19, 2012, which entitles Mr. Joyce to a
$7,500,000 retention payment upon the consummation of the Mergers in lieu of his right to receive the severance payments and benefits to which he would otherwise be entitled under the Current Agreement in the event of a termination by the Company
other than for cause or a resignation by Mr. Joyce for good reason. The severance payments and benefits under Mr. Joyces Current Agreement remain in effect until such retention payment is paid to
Mr. Joyce.
The Company has not entered into change of control agreements with any of the other Named Executive Officers. However,
equity awards to the Named Executive Officers, along with those to other Company employees, under the terms of the Stock Plans are generally subject to special provisions upon the occurrence of a defined change-in-control transaction.
Under the Stock Plans (except for the Amended 2010 Plan as described below), upon a change-in-control: (i) any award carrying a right to exercise that was not previously exercisable and vested shall become fully exercisable and vested; and
(ii) the restrictions, deferral limitations, payment conditions, and forfeiture conditions applicable to any other award granted under these plans shall lapse and such awards shall be deemed fully vested, and any performance conditions imposed
with respect to awards shall be deemed to be fully achieved. On December 27, 2012, the Companys stockholders approved the Amended 2010 Plan, which included, among other things, an amendment to require a qualifying termination of
employment before vesting provisions in awards granted after such date accelerate in the event of a change-in-control, also known as double-trigger accelerated vesting.
As required by SEC rules, the following table was prepared as though a change-in-control occurred on December 31, 2012 using the share price of
the Common Stock as of that day. There can be no assurance that a change-in-control would produce the same or similar results as those described if it occurred on any other date or at any other price. None of the below grants provide for
double-trigger accelerated vesting upon a change-in-control.
Calculation of Potential Payments upon Change in Control
At December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
shares whose
vesting would be
accelerated
upon a change
in
control
|
|
|
Value of shares
whose vesting
would be
accelerated
upon a
change
in control ($)
(1
)
|
|
|
Number of
options whose
vesting would be
accelerated
upon a change
in
control
|
|
|
Value of options
whose vesting
would be
accelerated upon
a change in
control
($)
|
|
Thomas M. Joyce
|
|
|
342,788
|
|
|
|
1,203,186
|
|
|
|
-
|
|
|
|
-
|
|
Steven Bisgay
|
|
|
139,177
|
|
|
|
488,511
|
|
|
|
-
|
|
|
|
-
|
|
George Sohos
|
|
|
541,281
|
|
|
|
1,899,896
|
|
|
|
-
|
|
|
|
-
|
|
Alan Lhota
|
|
|
53,155
|
|
|
|
186,574
|
|
|
|
-
|
|
|
|
-
|
|
Robert K. Lyons
|
|
|
57,959
|
|
|
|
203,436
|
|
|
|
-
|
|
|
|
-
|
|
(1)
|
Value of RSUs is calculated based upon the closing price of the Common Stock on December 31, 2012 of $3.51 per share as quoted on the NYSE.
|
33
Termination Payments
Under the Current Agreement, if Mr. Joyces employment is terminated by the Company other than for cause or other than by reason of his death or disability, or upon resignation by
Mr. Joyce for good reason, in each case prior to the expiration of the Current Agreement, Mr. Joyce will be entitled to, among other things, (i) vesting, and, if applicable, delivery of the shares underlying any unvested
shares granted to Mr. Joyce in connection with (A) his Annual Bonus award, and (B) awards granted in respect of annual bonuses for periods that commenced prior to the effective date of the Current Agreement, (ii) vesting and
exercisability of any stock options granted in respect of annual bonuses for periods that commenced prior to the effective date of the Current Agreement, (iii) vesting, and, if applicable, exercisability or delivery of (A) the unvested
portion of the First Tranche, and (B) any time-based awards granted to Mr. Joyce prior to the effective date of his Current Agreement, (iv) a cash payment equal to $5 million, (v) a pro-rata bonus for the year of termination
determined based on actual performance of the Company (assuming termination on December 31, 2012, Mr. Joyce would not have been entitled to any pro-rata bonus on account of the Companys performance in 2012), and
(vi) reimbursement of certain premiums Mr. Joyce pays for continued health coverage for a period of one year, having a value of approximately $25,000. If, however, the GETCO Mergers had been consummated as of December 31, 2012,
Mr. Joyce would have received the $7.5 million retention payment provided in the Letter Agreement on the closing of the Mergers and would not have been entitled to any payments upon a termination by the Company other than for cause
or upon resignation by Mr. Joyce for good reason.
Since the Mergers were not consummated as of December 31, 2012,
the aggregate amount Mr. Joyce would have been entitled to as a result of such a termination on such date was $6,228,186, which includes $1,203,186 with respect to the accelerated vesting of his equity awards, the $5,000,000 cash payment, $0 in
respect of his 2012 Annual Bonus, and $25,000 for reimbursement of certain premiums for continued health coverage. Mr. Joyces right to such vesting, payment and benefits are generally conditioned upon his execution of a customary release
of all claims against the Company and his agreement not to solicit or hire current or certain former employees of the Company for six months after his termination. Good reason is defined generally under the Current Agreement to include
(i) the assignment of duties materially inconsistent with Mr. Joyces position or duties, (ii) a material diminution in the authorities, duties or responsibilities of Mr. Joyce, (iii) requiring Mr. Joyce to report
to someone other than the Board of Directors, (iv) relocation increasing Mr. Joyces one-way commute by more than 30 miles, or (iv) any other action or inaction that constitutes a material breach by the Company of the Current
Agreement or the performance targets and other terms or conditions established by the Compensation Committee with respect to the Annual Bonus. Certain notice and cure periods must be satisfied before Mr. Joyce would be able to resign for
good reason. The severance payments and benefits under Mr. Joyces Current Agreement remain in effect until such retention payment is paid to Mr. Joyce.
In the event that any payment under the Current Agreement is subject to the excise tax for parachute payments under Section 280G of
the Internal Revenue Code of 1986, the Company will indemnify Mr. Joyce on an after-tax basis for any such excise tax (including any interest or penalties incurred with respect to such excise tax), provided that the Company may reduce the
applicable payment due to Mr. Joyce by up to 10% if such reduction will avoid the excise tax. If Mr. Joyces employment had been terminated as of December 31, 2012, the Company does not believe that any payments under the Current
Agreement would have been subject to this excise tax, and, as such, the Company would have had no obligation to reimburse Mr. Joyce for any excise tax. If the GETCO Mergers are consummated, the Section 280G provision in the Current
Agreement will no longer apply.
Each Named Executive Officer, other than Mr. Joyce, participates in the Companys severance
policy that it has established for all of its employees. The Companys severance policy is formulaic, based on the employees title and length of service with the Company, but will not exceed a maximum of 26 weeks of severance. Severance
amounts are calculated by using the employees base salary
34
only and are made in exchange for a release of claims against the Company. Bonus compensation is generally not considered when determining severance amounts. Under the Companys severance
policy, if any of the Named Executive Officers employment, other than that of Mr. Joyce, was terminated as of December 31, 2012 in a manner which would have made such officer eligible for severance, such officer would have received
the following severance amounts based on his base salary and years of service as of such date: Messrs. Bisgay and Sohos: $250,000; and Messrs. Lhota and Lyons: $115,385. The Company reserves the right to offer additional payments to terminated
employees if it is determined to be in the Companys best interests.
Unless otherwise determined by the Company and set forth in an
equity grant agreement, outstanding equity awards generally vest upon death or disability. In addition, certain outstanding equity awards generally vest on retirement (see the heading Equity Plans and Agreements for the Companys
policy regarding retirement eligibility). No Named Executive Officer, except for Mr. Joyce in connection with certain awards, was retirement-eligible as of December 31, 2012. For RSUs granted as part of the equity component of the annual
discretionary bonus awards after September 1, 2010, such equity awards will be given accelerated vesting upon a termination without cause by the Company. Equity awards granted in January 2012 to the Named Executive Officers related to the
annual discretionary bonus award for the 2011 performance year provide for accelerated vesting in the event of a termination without cause by the Company. See the Outstanding Equity Awards table for a schedule of outstanding, unvested equity awards
held by each of our Named Executive Officers. Except as provided herein, unvested equity awards are canceled if employment is terminated before the end of the relevant vesting period.
Other than in respect of accelerated vesting of equity awards as described above, none of the Named Executive Officers were entitled to any
compensation or benefits on a voluntary termination of employment, death, or disability as of December 31, 2012 that is different than the compensation and benefits provided to Company employees generally.
Risk Assessment of Overall Compensation Program
The Company has reviewed its compensation policies as generally applicable to its employees and believes that they are not likely to have a material adverse effect on the Company. The design of the
Companys compensation policies and programs is intended to encourage its employees to remain focused on both the short-term and long-term goals of the Company. For example, while our cash awards measure performance both individually and
company-wide on an annual basis, and do not have any associated restrictions after payment, our equity awards typically vest over a number of years. We believe this practice encourages our employees to focus on sustained stock price appreciation,
thus limiting the potential detriment of excessive risk-taking.
COMPENSATION OF DIRECTORS
As a current officer of the Company, Mr. Joyce receives no remuneration for serving on the Board of Directors.
The Director compensation policy in effect for 2012 was as follows: Each of the independent Directors (or their designated representative) received
an annual retainer fee of $50,000, except for the Lead Director who received $75,000. Each Director (or their designated representative) also received a meeting fee of $1,500 for Board of Directors meetings attended. In addition, Committee
Chairpersons received: (i) $30,000 for the Chairperson of the Finance and Audit Committee; and (ii) $15,000 for the Chairperson of the Compensation Committee. Members of the Finance and Audit Committee and the Compensation Committee
received an annual fee of $10,000 and $5,000, respectively, and meeting fees of $1,500 and $1,000, respectively. Risk Committee members received a meeting fee of $1,000 for the one meeting held in 2012. No fees were paid to the Chairperson of the
NCGC, and no meeting fees were paid for the two NCGC meetings held in 2012 as they were held in conjunction with
35
meetings of the Board of Directors (otherwise a fee of $1,000 per meeting attended would have been paid to the members). In the event that during the year a Director is elected to the Board, a
Director announces his intent to retire and not seek re-election, or a Director is named a Chairperson of a Board committee, retainer and Chairperson fees are pro-rated. Effective April 8, 2013, the Board modified its Director compensation
policy to provide for the payment of (i) an annual fee to the Risk Committee Chairperson of $30,000, (ii) an annual fee to members of the Risk Committee of $10,000, and (iii) meeting fees of $1,500.
Each newly elected independent Director is also granted RSUs valued at $100,000 on the date of grant, which grant will have four (4) year
cliff-vesting. In addition, on the first business day following each annual meeting of our stockholders, each continuing independent Director, as part of his or her annual compensation, will be granted RSUs having a value of $80,000, which grant
will have three (3) year cliff-vesting. The number of RSUs granted is determined by dividing the value of the award amount by the average of the high and low sales price of the Common Stock on the date prior to the grant date (as defined
in the Stock Plans). Directors may elect to defer settlement of all or a portion of these RSUs which will convert into freely sellable shares when the Director retires from the Board of Directors.
Annual retainer and Committee Chairperson fees are paid on January 1
st
of each year (pro-rated for new or retiring directors or changes to a Committee Chairperson during the year). Each Director may
elect to defer all or a portion of cash compensation from annual retainer fees into the Knight Vanguard Voluntary Deferred Compensation Plan. Any amounts deferred will be paid at the end of the elected deferral period plus or minus the return on the
underlying plan assets. Directors may also elect to receive all or a portion of cash compensation from annual retainer fees in the form of vested RSUs and may defer settlement of all or a portion of such vested RSUs, which will convert into freely
sellable shares when the Director retires from the Board of Directors.
In connection with the Investment and in accordance with the
terms of the Purchase Agreement, the Company agreed to appoint three new members to the Board of Directors within one month following the Investment, including an individual selected by one of the Investors, Blackstone Capital Partners VI, L.P.
(Blackstone), an individual selected by General Atlantic, which is an affiliate of an Investor, and an individual proposed by the Board and acceptable to one of the Investors, Jefferies & Company, Inc. (Jefferies).
Blackstone selected Martin J. Brand as its representative to be appointed to the Board, General Atlantic selected Matthew Nimetz as its representative to be appointed to the Board, and the Company proposed, and Jefferies informed the Company that
such proposal was acceptable to it, that Fredric J. Tomczyk be appointed to the Board. On August 27, 2012, the Board expanded the size of the Board by three members and appointed Messrs. Brand, Nimetz and Tomczyk to serve as directors of the
Company, in each case effective immediately, until his respective successor is duly elected and qualified or until his earlier resignation, removal, death or incapacity. As a result of the conversion by Jefferies of all of its Preferred Stock into
Common Stock on August 29, 2012 and the mandatory conversion of the remaining Preferred Stock into Common Stock on February 28, 2013, the above rights have been terminated and are no longer in effect; however, Messrs. Brand, Nimetz and
Tomczyk remain on the Board. Director compensation related to Messrs. Brands and Tomczyks service on the Board are paid to Blackstone Management L.L.C. and TD Ameritrade Holding Corporation, respectively.
In addition to annual retainer fees and meeting fees, in 2012 each independent Director received, following the date of our 2012 Annual Meeting of
Stockholders, RSUs having a value of $80,000, which grants have three (3) year cliff vesting. RSU awards to Directors fully vest upon termination of service. The number of RSUs granted was determined by dividing the value of the award amount by
the average of the high and low sales price of the Common Stock on the date prior to the grant date.
All Directors are reimbursed for
out-of-pocket expenses incurred in the performance of their services for the Company. The Company also extends coverage to Directors under the Companys directors and officers indemnity insurance policies.
36
COMPENSATION OF DIRECTORS
As described more fully below, this chart summarizes the annual compensation for the Companys non-employee Directors during 2012.
Director Compensation
For
Fiscal Year Ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned or
Paid in Cash
($)
(1)(2)
|
|
|
Stock Awards
($)
(
3)
|
|
|
Option Awards
($)
(4)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
William L. Bolster
(5)
|
|
|
186,500
|
|
|
|
80,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
266,500
|
|
Martin J. Brand
(6)
(7)
|
|
|
38,350
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
138,350
|
|
James W. Lewis
(8)
|
|
|
164,500
|
|
|
|
80,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
244,500
|
|
Thomas C. Lockburner
(9)
|
|
|
42,915
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
42,915
|
|
James T. Milde
(10)
|
|
|
137,500
|
|
|
|
80,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
217,500
|
|
Matthew Nimetz
(6)
(11)
|
|
|
28,850
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
128,850
|
|
Christopher C. Quick
(12)
|
|
|
123,500
|
|
|
|
80,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
203,500
|
|
Daniel F. Schmitt
(13)
|
|
|
115,303
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
215,303
|
|
Laurie M. Shahon
(14)
|
|
|
162,500
|
|
|
|
80,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
242,500
|
|
Fredric J. Tomczyk
(6)
(15)
|
|
|
37,850
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
137,850
|
|
(1)
|
The term of office for Directors begins immediately following election at the Companys annual meeting of stockholders (typically held in May) and ends upon the election of
Directors at the next annual meeting of stockholders held the following year, which does not coincide with the Companys fiscal year. Cash retainers and committee chair fees are awarded at the beginning of each fiscal year, which results in the
payments covering periods of time that do not coincide with the term of office. All cash retainer and committee chairperson fee payments made during fiscal 2012 are reported in the table irrespective of the term of office to which the payment
applies. In the event that during the year a Director is elected to the Board, a Director announces his intent to retire and not seek re-election, or a Director is named a Chairperson of a Board committee, retainer and Chairperson fees are
pro-rated.
|
(2)
|
Meeting fees are determined based on the number of Board and committee meetings attended during each fiscal year. Meeting fees included in the table represent fees paid for
meetings attended during fiscal 2012.
|
(3)
|
During 2012, each continuing Director (Messrs. Bolster, Lewis, Milde and Quick and Ms. Shahon) was granted an award of 6,173 RSUs with a grant date fair value of $80,000.
Each RSU award will vest on May 10, 2015 and, unless deferred, will be settled on May 10, 2015 (or, if earlier, six months following the directors separation from service for any reason). As these RSU awards are considered to be
retirement eligible, in accordance with FASB ASC Topic 718 the full value of each RSU award was recognized as an expense upon grant.
|
(4)
|
There were no grants of options to, or forfeitures by, any of the Companys Directors during 2012.
|
(5)
|
As of December 31, 2012, Mr. Bolster held options to acquire 60,000 shares of Common Stock, all of which were vested, and 17,668 unvested RSUs.
|
(6)
|
Messrs. Brand, Nimetz and Tomczyk were unanimously elected to the Companys Board of Directors on August 27, 2012.
|
(7)
|
Director compensation related to Mr. Brands service on the Board is paid to Blackstone Management L.L.C. Upon Mr. Brands appointment to the Board on
August 27, 2012, Blackstone Management L.L.C. received a grant of 35,461 RSUs having a grant date value of $100,000. This RSU award will vest on August 27, 2016.
|
(8)
|
As of December 31, 2012, Mr. Lewis held 23,907 unvested RSUs.
|
(9)
|
Mr. Lockburner retired from the Board on May 9, 2012. At the time of his retirement, Mr. Lockburner held options to acquire 80,000 options and 36,656 RSUs.
Pursuant to the terms of the RSUs, and previous deferral elections made by Mr. Lockburner, settlement of such RSUs was made six months following his retirement from the Board.
|
37
(10)
|
As of December 31, 2012, Mr. Milde held options to acquire 50,000 shares of Common Stock, all of which were vested, and 17,668 unvested RSUs.
|
(11)
|
Mr. Nimetz was appointed to the Board by General Atlantic. Upon his appointment to the Board on August 27, 2012, Mr. Nimetz received a grant of 35,461 RSUs having
a grant date value of $100,000. This RSU award will vest on August 27, 2016 and, unless deferred, will settle on August 27, 2016 (or, if earlier, six months following his separation from service for any reason). As this RSU award is
considered to be retirement eligible, in accordance with FASB ASC Topic 718 the full value of this RSU award was recognized as an expense upon grant.
|
(12)
|
As of December 31, 2012, Mr. Quick held 23,907 unvested RSUs.
|
(13)
|
Mr. Schmitt was unanimously elected to the Companys Board of Directors on May 9, 2012. Upon his election as a Director of the Company, he received a grant of
7,771 RSUs having a grant date value of $100,000. This RSU award will vest on May 9, 2016 and, unless deferred, will settle on May 9, 2016 (or, if earlier, six months following his separation from service for any reason). As this RSU award
is considered to be retirement eligible, in accordance with FASB ASC Topic 718 the full value of this RSU award was recognized as an expense upon grant. As of December 31, 2012, Mr. Schmitt held 7,771 unvested RSUs.
|
(14)
|
As of December 31, 2012, Ms. Shahon held options to acquire 35,000 shares of Common Stock, all of which were vested, and 26,853 unvested RSUs.
|
(15)
|
Director compensation related to Mr. Tomczyks service on the Board is paid to TD Ameritrade Holding Corporation. Upon Mr. Tomczyks appointment to the Board
on August 27, 2012, TD Ameritrade Holding Corporation received a grant of 35,461 RSUs having a grant date value of $100,000. This RSU award will vest on August 27, 2016.
|