PROXY STATEMENT
SUMMARY
This summary highlights selected information appearing elsewhere in this proxy statement and does not contain all the information that you
should consider in making a decision with respect to the proposals described in this proxy statement. You should read this summary in its entirety, together with the more detailed information in this
proxy statement, as well as our Annual Report on Form l0-K for the year ended December 31, 2016, which is available without charge, except for exhibits
to the report, by (i) writing to Oppenheimer Holdings Inc., 85 Broad Street, 22nd Floor, New York, New York 10004, Attention: Secretary, (ii) calling 1-800-221-5588, or
(iii) emailing us with your request at info@opco.com.
Unless otherwise provided in this proxy statement, references to the "Company," "Oppenheimer Holdings," "we," "us," and "our" refer to Oppenheimer
Holdings Inc., a Delaware corporation.
Oppenheimer Holdings Inc.
The Company is a holding company which, through its subsidiaries, is a leading middle-market investment bank and full service financial services
firm. Through our operating subsidiaries, we provide a broad range of financial services, including retail securities brokerage, institutional sales and trading, investment banking (both corporate and
public finance), research, market-making, and investment advisory and asset management services. We own, directly or through subsidiaries, Oppenheimer & Co. Inc., a
New York-based securities broker-dealer, Oppenheimer Asset Management Inc., a New York-based investment advisor, Freedom Investments Inc., a discount securities
broker-dealer based in New Jersey, Oppenheimer Trust Company, a Delaware limited purpose bank, and OPY Credit Corp., a dealer in syndicated loans. The Company also has subsidiaries operating in the
United Kingdom, Isle of Jersey, Switzerland, Israel, and Hong Kong, China. The telephone number and address of our registered office is (212) 668-8000 and 85 Broad Street, New
York, NY10004.
This
proxy statement is dated March 24, 2017 and is first being mailed to stockholders on or about March 27, 2017.
Set
forth below in a question and answer format is general information regarding the Annual Meeting of Stockholders, or the Meeting, to which this proxy statement relates.
Questions and Answers about the Matters to be Acted Upon
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Q.
-
What is the purpose of the Meeting?
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A.
-
The purpose of the Meeting is to elect nine directors, to ratify the appointment of our auditors for 2017 and authorize the Audit Committee to
fix the auditors' remuneration, to approve, in an advisory (non-binding) vote, the Company's executive compensation, to approve, in an advisory (non-binding) vote, that a stockholder vote to approve
the Company's executive compensation should occur every 1, 2, or 3 years, to authorize the issue of up to 1,000,000 shares of Class A non-voting common stock to the Oppenheimer
Holdings Inc. 2014 Incentive Plan, and to transact such other business as is proper at the Meeting.
-
Q.
-
Where will the Meeting be held?
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A.
-
The Meeting will be held at 85 Broad Street, New York, NY 10004 in the 22nd Floor Conference Center on Monday, May 8, 2017, at
the hour of 4:30 P.M. (New York time).
1
-
Q.
-
Who is soliciting my vote?
-
A.
-
Our management is soliciting your proxy to vote at the Meeting. This proxy statement and form of proxy were first mailed to our stockholders
on or about March 27, 2017. Your vote is important. We encourage you to vote as soon as possible after carefully reviewing this proxy statement and all information accompanying this proxy
statement.
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Q.
-
Who is entitled to vote at the Meeting?
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A.
-
The record date for the determination of stockholders entitled to receive notice of the Meeting is March 17, 2017. In accordance with
the provisions of the General Corporation Law of the State of Delaware, or the DGCL, we will prepare a list of the holders of our Class B voting common stock, or the Class B
Stockholders, as of the record date. Class B Stockholders named in the list will be entitled to vote their Class B voting common stock, or Class B Stock, on the matters to be
voted on at the Meeting.
-
Q.
-
What am I voting on?
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A.
-
The Class B Stockholders are entitled to vote on the following proposals:
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(1)
-
The
election of E. Behrens, T.M. Dwyer, W. Ehrhardt, P.M. Friedman, M.A.M. Keehner, A.G. Lowenthal, R.S. Lowenthal, A.W. Oughtred and E.K. Roberts as
directors;
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(2)
-
The
ratification of the appointment of Deloitte & Touche LLP as our auditors for 2017 and the authorization of the Audit Committee to fix the auditors'
remuneration;
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(3)
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The
approval, in an advisory (non-binding) vote, of the Company's executive compensation;
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(4)
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The
approval, in an advisory (non-binding) vote, that a stockholder vote to approve the Company's executive compensation (Matter 3 above) should occur every 1, 2 or
3 years;
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(5)
-
The
authorization of the issue of up to 1,000,000 shares of Class A non-voting common stock to the Oppenheimer Holdings Inc. 2014 Incentive Plan; and
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(6)
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Any
other business as may be proper to transact at the Meeting.
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Q.
-
What are the voting recommendations of the Board of Directors?
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A.
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The Board of Directors recommends the following votes:
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FOR
the election of the nominated directors;
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-
FOR
the ratification of the appointment of Deloitte & Touche LLP as our auditors
for 2017 and the authorization of our Audit Committee to fix the auditors' remuneration;
-
-
FOR
the approval, in an advisory (non-binding) vote, of the Company's executive compensation;
-
-
FOR
the approval, in an advisory (non-binding) vote, that a stockholder vote to approve the
Company's executive compensation (Matter 3 above) should occur every 3 years; and
-
-
FOR
the authorization of the issue of up to 1,000,000 shares of Class A non-voting
common stock to the Oppenheimer Holdings Inc. 2014 Incentive Plan.
-
Q.
-
Will any other matters be voted on?
-
A.
-
The Board of Directors does not intend to present any other matters at the Meeting. The Board of Directors does not know of any other matters
that will be brought before our Class B Stockholders for a vote at the Meeting. If any other matter is properly brought before the Meeting, your signed proxy card gives authority to A.G.
Lowenthal and D.P. McNamara, as proxies, with full power of substitution, to vote on such matters at their discretion.
2
-
Q.
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How many votes do I have?
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A.
-
Class B Stockholders are entitled to one vote for each share of Class B Stock held as of the close of business on the record
date.
-
Q.
-
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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A.
-
Many stockholders hold their shares through a broker or bank rather than directly in their own names. As summarized below, there are some
distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If your shares are registered directly in your name with our transfer agent, you are considered, with
respect to those shares, the
stockholder of record
, and these proxy materials are being sent directly to you by us. You may vote the shares registered
directly in your name by completing and mailing the proxy card or by written ballot at the Meeting.
Beneficial Owner
If your shares are held in a stock brokerage account or by a bank, you are considered the beneficial owner
of shares held in street name, and these proxy materials are being forwarded to you by your bank or broker, which is considered the stockholder of record of those shares. As the beneficial owner, you
have the right to direct your bank or broker how to vote and are also invited to attend the Meeting. However, since you are not the stockholder of record, you may not vote those shares in person at
the Meeting unless you bring with you a legal proxy from the stockholder of record. Your bank or broker has enclosed a voting instruction card providing directions for how to vote your shares.
-
Q.
-
How do I vote?
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A.
-
If you are a Class B Stockholder of record, there are two ways to vote:
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-
By completing and depositing your proxy with our transfer agent at least 48 hours prior to the commencement of the Meeting; or
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-
By written ballot at the Meeting.
If
you are a Class B Stockholder and you return your proxy card but you do not indicate your voting preferences, the proxies will vote your shares
FOR
Matters 1, 2, 3 and 5, and with respect to
Proposal 4, the proxy will vote to approve, in an advisory (non-binding) vote, that a stockholder vote to
approve the Company's executive compensation (Matter 3 above) be presented every 3 years, and will use their discretion on any other matters that are submitted for stockholder vote at the
Meeting.
Class B
Stockholders who are not stockholders of record and who wish to file proxies should follow the instructions of their intermediary with respect to the procedure to be followed.
Generally, Class B Stockholders who are not stockholders of record will either: (i) be provided with a proxy executed by the intermediary, as the stockholder of record, but otherwise
uncompleted and the beneficial owner may complete the proxy and return it directly to our transfer agent; or (ii) be provided with a request for voting instructions by the intermediary, as the
stockholder of record, and then the intermediary must send to our transfer agent an executed proxy form completed in accordance with any voting instructions received by it from the beneficial owner
and may not vote in the event that no instructions are received.
-
Q.
-
Can I change my vote or revoke my proxy?
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A.
-
A Class B Stockholder who has given a proxy has the power to revoke it prior to the commencement of the Meeting by depositing an
instrument in writing executed by the Class B Stockholder or by the stockholder's attorney-in-fact either (i) at our registered office at any time up to and including the last business
day preceding the day of the Meeting or any adjournments thereof or (ii) with our Secretary on the day of the Meeting or any adjournments thereof or in any other manner permitted by law. A
stockholder who has given a proxy has the power to revoke it after the commencement of the Meeting
3
as
to any matter on which a vote has not been cast under the proxy by delivering a written notice of revocation to our Secretary. A stockholder who has given a proxy may also revoke it by signing a
form of proxy bearing a later date and returning such proxy to our Secretary prior to the commencement of the Meeting.
-
Q.
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How are votes counted?
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A.
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We will appoint an Inspector of Election at the Meeting. The Inspector of Election is typically a representative of our transfer agent. The
Inspector of Election will collect all proxies and ballots and tabulate the results.
-
Q.
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Who pays for soliciting proxies?
-
A.
-
We will bear the cost of soliciting proxies from our Class B Stockholders. It is planned that the solicitation will be initially by
mail, but proxies may also be solicited by our employees. These persons will receive no additional compensation for such services but will be reimbursed for reasonable out-of-pocket expenses.
Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries for the forwarding of solicitation materials to the beneficial owners of shares held of record by
these persons, and we will reimburse them for their reasonable out-of-pocket expenses. The cost of such solicitation, estimated to be approximately $2,000, will be borne by us.
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Q.
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What is the quorum requirement of the Meeting?
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A.
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A quorum for the consideration of Matters 1, 2, 3, 4 and 5 shall be Class B Stockholders present in person or by proxy representing not
less than a majority of the outstanding Class B Stock.
-
Q.
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What are broker non-votes?
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A.
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Broker non-votes occur when holders of record, such as banks and brokers holding shares on behalf of beneficial owners, do not receive voting
instructions from the beneficial holders at least ten days before the Meeting. Broker non-votes and abstentions will not affect the outcome of the matters being voted on at the Meeting, assuming that
a quorum is obtained.
-
Q.
-
What vote is required to approve each proposal?
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A.
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Matter No. 1, election of directors. The election of each of the directors nominated requires the affirmative vote, in person or by
proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present.
Matter
No. 2, appointment of auditors. The ratification of the appointment of the auditors for 2017 and the authorization of the Audit Committee to fix the auditors' remuneration requires the
affirmative vote, in person or by proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present.
Matter
No. 3, the approval, in an advisory (non-binding) vote, of the Company's executive compensation, requires the affirmative vote, in person or by proxy, of a simple majority of the
Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present.
Matter
No. 4, a vote in an advisory (non-binding) proposal that a shareholder vote to approve executive compensation (Matter 3 above) should occur every 1, 2 or 3 years. This requires
the affirmative vote, in person or by proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present; and
Matter
No. 5, the authorization of the issue of up to 1,000,000 shares of Class A non-voting common stock to the Oppenheimer Holdings Inc. 2014 Incentive Plan requires the
affirmative vote, in person or by proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present.
4
Mr. Albert G. Lowenthal, our Chairman and Chief Executive Officer, owns 96.4% of the Class B Stock and intends to vote all of such Class B Stock in favor
of each of Matters 1, 2, 3, and 5 and intends to vote for 3 years with respect to Matter 4. As a result, each of the matters before the Meeting is expected to be approved. See "Security
Ownership of Certain Beneficial Owners and Management."
-
Q.
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Who can attend the Meeting?
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A.
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All registered holders of our Class A non-voting common stock (Class A Stock), or the Class A Stockholders, and
Class B Stockholders, their duly appointed representatives, our directors and our auditors are entitled to attend the Meeting.
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Q.
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What does it mean if I get more than one proxy card?
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A.
-
It means that you own shares in more than one account. You should vote the shares on each of your proxy cards.
-
Q.
-
I own my shares indirectly through my broker, bank, or other nominee, and I receive multiple copies of the proxy statement, and other mailings
because more than one person in my household is a beneficial owner. How can I change the number of copies of these mailings that are sent to my household?
-
A.
-
If you and other members of your household are beneficial owners, you may eliminate this duplication of mailings by contacting your broker,
bank, or other nominee. Duplicate mailings in most cases are wasteful for us and inconvenient for you, and we encourage you to eliminate them whenever you can. If you have eliminated duplicate
mailings, but for any reason would like to resume them, you must contact your broker, bank, or other nominee.
-
Q.
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Multiple stockholders live in my household, and together we received only one copy of this proxy statement. How can I obtain my own separate
copy of this document for the Meeting?
-
A.
-
You may pick up copies in person at the Meeting or download them from our Internet web site,
www.opco.com
(click
on the link to the Investor Relations page). If you want copies mailed to you and are a beneficial owner, you must request them from your broker, bank, or other nominee. If you want copies mailed to
you and are a stockholder of record, we will mail them promptly if you request them from our corporate office by phone at (212) 668-8000 or by mail to 85 Broad Street, New York,
NY 10004, Attention: Secretary. We cannot guarantee you will receive mailed copies before the Meeting.
-
Q.
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Where can I find the voting results of the Meeting?
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A.
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We are required to file the voting results in a Current Report on Form 8-K which you can find within four business days of the Meeting
on the EDGAR website at www.sec.gov.
-
Q.
-
Who can help answer my questions?
-
A.
-
If you have questions about the Meeting or if you need additional copies of the proxy statement or the enclosed proxy card, you should
contact:
D.P.
McNamara, Secretary
Oppenheimer Holdings Inc.
85 Broad Street, 22nd Floor
New York, NY 10004
(212) 668-8000
You
may also obtain additional information about us from documents filed with the Securities and Exchange Commission by following the instructions in the section entitled
"
Where You Can Find More Information
."
5
THE MEETING
Solicitation of Proxies
This proxy statement is forwarded to our Class A Stockholders and Class B Stockholders in connection with the solicitation of
proxies by our management from the Class B Stockholders for use at our Annual Meeting of Stockholders to be held on Monday, May 8, 2017 at the hour of 4:30 P.M. (New York time) at
85 Broad Street, New York, NY 10004 in the 22nd Floor Conference Center and at any adjournments thereof for the purposes set forth in the Notice of Meeting, which accompanies this proxy
statement. This proxy statement is dated March 24, 2017 and is first being mailed to stockholders on or about March 27, 2017.
The
record date for the determination of stockholders entitled to receive notice of the Meeting is March 17, 2017. In accordance with the provisions of the DGCL, we will prepare a
list of the Class B Stockholders as of the record date. Class B Stockholders named in the list will be entitled to vote the Class B Stock owned by them on all matters to be voted
on at the Meeting.
It
is planned that the solicitation will be initially by mail, but proxies may also be solicited by our employees. The cost of such solicitation, estimated to be approximately $2,000,
will be borne by us.
No
person is authorized to give any information or to make any representations other than those contained in this proxy statement and, if given or made, such information or
representations should not be relied upon as having been authorized by us. The delivery of this proxy statement shall not, under any circumstances, create an implication that there has not been any
change in the information set forth herein since the date of this proxy statement. Except as otherwise stated, the information contained in this proxy statement is given as of March 10, 2017.
We
have distributed copies of the Notice of Meeting, this proxy statement, and form of proxy for use by the Class B Stockholders to intermediaries such as clearing agencies,
securities dealers, banks and trust companies or their nominees for distribution to our non-registered stockholders whose shares are held by or in the custody of such intermediaries. Intermediaries
are required to forward these documents to non-registered Class B Stockholders. Our Annual Report on Form 10-K for the year ended December 31, 2016 is available without charge,
except for exhibits to the report, by (i) writing to Oppenheimer Holdings Inc., 85 Broad Street, 22nd Floor, New York, New York 10004, Attention: Secretary,
(ii) calling 1-800-221-5588, or (iii) emailing us with your request at info@opco.com. The solicitation of proxies from non-registered Class B Stockholders will be carried out by
the intermediaries or by us if the names and addresses of Class B Stockholders are provided by the intermediaries. Non-registered Class B Stockholders who wish to file proxies should
follow the instructions of their intermediary with respect to the procedure to be followed. Generally, non-registered Class B Stockholders will either: (i) be provided with a proxy
executed by the intermediary, as the registered stockholder, but otherwise uncompleted and the non-registered holder may complete the proxy and return it directly to our transfer agent; or
(ii) be provided with a request for voting instructions by the intermediary, as the registered stockholder, and then the intermediary must send to our transfer agent an executed proxy form
completed in accordance with any voting instructions received by it from the non-registered holder and may not vote in the event that no instructions are received.
Class A Stock and Class B Stock
We have authorized and issued Class A Stock and Class B Stock which are equal in all respects except that the holders of
Class A Stock, as such, are not entitled to vote at meetings of our stockholders except as entitled to vote by law or pursuant to our Certificate of Incorporation. Class A Stockholders
are not entitled to vote the Class A Stock owned or controlled by them on the matters identified in the Notice of Meeting to be voted on.
6
Generally,
Class A Stockholders are afforded the opportunity to receive notices of all meetings of stockholders and to attend and speak at such meetings. Class A
Stockholders are also afforded the opportunity to receive all informational documentation sent to the Class B Stockholders.
Class B
Stockholders are entitled to one vote for each share of Class B Stock held as of the record date for the Meeting.
Appointment and Revocation of Proxies
Each of Albert G. Lowenthal and Dennis P. McNamara (the "Management Nominees") has been appointed by the Board of Directors to serve as the
proxy for the Class B Stockholders at the Meeting.
Class B
Stockholders have the right to appoint persons, other than the Management Nominees, who need not be stockholders, to represent them at the Meeting. To exercise this right,
the Class B Stockholder may insert the name of the desired person in the blank space provided in the form of proxy accompanying this proxy statement or may submit another form of proxy.
Proxies
must be deposited with our transfer agent, Computershare Shareholder Services LLC (formerly Bank of New York Mellon Shareholder Services), at its address at Computershare,
PO Box 30170, College Station, TX 77842-3170, no later than 48 hours prior to the commencement of the Meeting in order for the proxies to be used at the Meeting.
Class B
Stock represented by properly executed proxies will be voted by the Management Nominees on any ballot that may be called for, unless the Class B Stockholder has
directed otherwise, (i) for the election of each of the nominated directors (Matter 1 in the Notice of Meeting), (ii) for the ratification of the appointment of the auditors for 2017 and
authorization of the Audit Committee to fix the remuneration of the auditors (Matter 2 in the Notice of Meeting), (iii) for the approval, in an advisory (non-binding) vote, of the Company's
executive compensation (Matter 3 in the Notice of Meeting), (iv) for the approval, in an advisory (non-binding) vote, that a stockholder vote to approve the Company's executive compensation
(Matter 3 above) should occur every 3 years (Matter 4 in the Notice
of Meeting), and (v) for the authorization of the issue of up to 1,000,000 shares of Class A non-voting common stock to the Oppenheimer Holdings Inc. 2014 Incentive Plan (Matter 5
in the Notice of Meeting).
Each
form of proxy confers discretionary authority with respect to amendments or variations to matters identified in the Notice of Meeting to which the proxy relates and other matters
which may properly come before the Meeting. Management knows of no matters to come before the Meeting other than the matters referred to in the Notice of Meeting. However, if matters which are not
known to management should properly come before the Meeting, the proxies will be voted on such matters in accordance with the best judgment of the person or persons voting the proxies.
A
Class B Stockholder who has given a proxy has the power to revoke it prior to the commencement of the Meeting by depositing an instrument in writing executed by the
Class B Stockholder or by the stockholder's attorney-in-fact either at our registered office at any time up to and including the last business day preceding the day of the Meeting, or any
adjournments thereof, or with our Secretary on the day of the Meeting or any adjournments thereof or in any other manner permitted by law. A Class B Stockholder who has given a proxy may also
revoke it by signing a form of proxy bearing a later date and returning such proxy to our Secretary prior to the commencement of the Meeting. In addition, a Class B Stockholder who has given a
proxy has the power to revoke it after the commencement of the Meeting as to any matter on which a vote has not been cast under the proxy by delivering written notice of revocation to our Secretary.
Abstentions
and broker non-votes will have no effect with respect to the matters to be acted upon at the Meeting, assuming that a quorum is obtained.
7
MATTER NO. 1
ELECTION OF DIRECTORS
Director Nomination Process
Our Bylaws provide that our Board of Directors consists of no less than three and no more than eleven directors to be elected annually. The term
of office for each director is from the date of the meeting of stockholders at which the director is elected until the close of the next annual meeting of stockholders or until his or her successor is
duly elected or appointed, unless his or her office is earlier vacated, in accordance with our Bylaws.
The
Nominating and Corporate Governance Committee of the Board has recommended, and the directors have determined, that nine directors are to be elected at the Meeting. Management does
not contemplate that any of the nominees named below will be unable to serve as a director, but, if such an event should occur for any reason prior to the Meeting, the Management Nominees reserve the
right to vote for another nominee or nominees in their discretion.
The
following sets out information with respect to the proposed nominees for election as directors as recommended by the Nominating and Corporate Governance Committee, in accordance with
the Nominating and Corporate Governance Committee Charter (available at www.opco.com). The Nominating and Corporate Governance Committee has reported that it is satisfied that each of the nominees is
fully able and fully committed to serve the best interests of our stockholders. The election of the persons nominated for election as directors requires the affirmative vote of a simple majority of
the Class B Stock voted at the Meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE PERSONS NOMINATED FOR ELECTION AS A DIRECTOR.
The following table, and the notes thereto, provide information regarding our director nominees and executive officers.
(1)
8
Nominees for Election as a Director
|
|
|
E. Behrens
Age: 47
Independent
|
|
Mr. Behrens joined the Board in 2016. Since 2008, Mr. Behrens has been affiliated with SEACOR Holdings Inc., a global provider of equipment and services supporting the offshore oil and gas and marine transportation industries, and he
has been its Senior Vice President of Business Development since 2009. Since April 2012, he has been Chairman of the Board of Trailer Bridge, Inc., a Jones Act container company. Additionally, he served as a Board member of Penford Corporation
from 2013 to 2015 and is presently a Board member of Continental Insurance Group, Ltd. Mr. Behrens is also an officer and director of numerous SEACOR Holdings Inc. entities. From 2006 to 2007, he was a Portfolio Manager and Partner at
Level Global Investors, a New York-based hedge fund. Mr. Behrens has a B.A. degree from the University of Chicago. The Company believes that Mr. Behrens' qualifications to serve on the Board include the extensive experience that he has
gained through his key roles with several other significant businesses, including his experience as a Board Chairman, as well as his demonstrated management, financial and business development skills and acumen. He is a member of the Compliance,
Nominating and Corporate Governance and Special Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 100%
|
|
|
Board
|
|
6 of 6
|
|
|
Compliance
|
|
2 of 2
|
|
|
Nominating and Corporate Governance
|
|
3 of 3
|
|
|
Special
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|
6 of 6
|
|
|
|
T.M. Dwyer
Age: 55
Independent
|
|
Mr. Dwyer joined the Board in 2016. He is the founder, former CEO and Chairman of Entitle Direct Group, Inc., a title insurance company. Prior to founding Entitle Direct Group, Inc. in 2006, Mr. Dwyer served as Managing Director
at the investment banking firm of Greenhill & Company from 2002 to 2005, specializing in the insurance industry. He previously held a similar position at Donaldson, Lufkin & Jenrette as a Managing Director specializing in the
insurance sector from 1993 to 2001. Mr. Dwyer was also a Vice President at Salomon Brothers Inc. from 1987 to 1993, and he was a certified public accountant with Arthur Andersen & Co. in Illinois from 1983 to 1985. He has over
30 years of experience in the financial services industry, and brings significant financial, accounting and insurance knowledge to the Company, as well as demonstrable entrepreneurial, compliance and advisory skills. Mr. Dwyer has an MBA
from the University of Chicago and a Bachelor of Science in Accountancy from the University of Illinois. He is a member of the Audit, Compensation and Special Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 100%
|
|
|
Board
|
|
6 of 6
|
|
|
Audit
|
|
2 of 2
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|
|
Compensation
|
|
2 of 2
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Special
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6 of 6
|
9
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W. Ehrhardt
Age: 73
Independent
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|
Mr. Ehrhardt joined the Board in 2008. He is a retired senior audit partner formerly with Deloitte & Touche LLP, New York with over 30 years of professional experience primarily in the banking and securities and insurance
industries. While in the practice of public accounting, Mr. Ehrhardt supervised the audits of the firm's largest multinational financial services clients. In addition, Mr. Ehrhardt participated in numerous firm-wide initiatives relating to
the audit practice and related quality control matters and served as Partner in Charge of the Tri-State Financial Services Assurance and Advisory Practice. Mr. Ehrhardt is a Certified Public Accountant and a member of the AICPA.
Mr. Ehrhardt brings strong accounting and financial skills and experience to the Company which is important to the oversight of the Company's financial reporting and enterprise and operational risk management. Mr. Ehrhardt is the Lead
Director and a member of the Audit, Compensation, Compliance and Special Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 100%
|
|
|
Board
|
|
9 of 9
|
|
|
Audit
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|
5 of 5
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Compensation
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7 of 7
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Compliance
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6 of 6
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Special
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13 of 13
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P.M. Friedman
Age: 61
Independent
|
|
Mr. Friedman joined the Board in 2015. Mr. Friedman spent 27 years at Bear Stearns & Co. Inc. from 1981 to 2008, most recently holding the position of Chief Operating Officer of the Fixed Income Division. From 2008
to 2009, Mr. Friedman was a Managing Director responsible for business development at Mariner Investment Group, LLC. From 2009 to 2015, Mr. Friedman was Senior Managing Director and Chief Operating Officer of Guggenheim
Securities LLC. Mr. Friedman brings an extensive amount of operational and risk management experience to the Company as well as a deep knowledge of the financial services industry. Mr. Friedman is a Certified Public Accountant, and he
is Chairman of our Compliance Committee and a member of the Compensation, Nominating and Corporate Governance and Special Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 100%
|
|
|
Board
|
|
9 of 9
|
|
|
Compensation
|
|
7 of 7
|
|
|
Compliance
|
|
3 of 3
|
|
|
Nominating and Corporate Governance
|
|
6 of 6
|
|
|
Special
|
|
13 of 13
|
10
|
|
|
M.A.M. Keehner
Age: 73
Independent
|
|
Mr. Keehner joined the Board in 2008. At present, he is an Adjunct Professor of Finance and Economics and a Faculty Leader at the Sanford C. Bernstein & Co. Center for Leadership and Ethics at Columbia Business School and a
consultant. Mr. Keehner has a long history of financial services industry management and professional experience. Previously, Mr. Keehner served in various capacities at Kidder Peabody Group for more than 20 years, leaving in 1994 as a
member of its Executive and Audit Committees and Board of Directors, as well as Executive Managing Director of Kidder, Peabody and Co., Inc. in charge of its domestic brokerage system. Earlier positions included President of Kidder, Peabody
International Corporation and President and CEO of KP Exploration Inc., Kidder's oil and gas exploration arm, and management of several investment banking groups. Mr. Keehner's industry and academic backgrounds bring strong industry,
finance and governance skills and knowledge of executive compensation practices to our Board, important to the oversight of the Company's financial reporting and enterprise and operational risk management. Mr. Keehner is Chairman of our
Compensation Committee and a member of our Audit, Nominating and Corporate Governance and Special Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance: 98%
|
|
|
Board
|
|
9 of 9
|
|
|
Audit
|
|
5 of 5
|
|
|
Compensation
|
|
7 of 7
|
|
|
Nominating and Corporate Governance
|
|
6 of 6
|
|
|
Special
|
|
12 of 13
|
|
|
|
A.G. Lowenthal
Age: 71
Not Independent
|
|
Mr. Lowenthal joined the Board in 1985. Mr. Lowenthal is Chairman of the Board and Chief Executive Officer of the Company, positions he has held since 1985. Mr. Lowenthal has worked in the securities industry since 1967.
Mr. Lowenthal's extensive experience in the securities industry and as Chief Executive of our Company gives him unique insights into the Company's challenges, opportunities and operations. Since his arrival at the Company, Mr. Lowenthal has
built the Company through acquisition and organic growth taking stockholders' equity from $5 million to $513 million at December 31, 2016. Mr. Lowenthal is R.S. Lowenthal's father.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance 100%
|
|
|
Board
|
|
9 of 9
|
11
|
|
|
R.S. Lowenthal
Age: 40
Not Independent
|
|
Mr. Lowenthal joined the Board in May 2013. Mr. Lowenthal joined the Company in 1999, became Managing Director of the Company's Taxable Fixed Income business in 2007 and assumed responsibility for oversight of the Company's Public Finance
and Municipal Trading departments in 2012. He is currently a Senior Managing Director and Head of Oppenheimer & Co. Inc.'s Investment Banking and Global Fixed Income businesses. Mr. Lowenthal is Chairman of the
Oppenheimer & Co. Inc. Management Committee and Co-Chairman of its Risk Management Committee and is a member of several other internal committees. Mr. Lowenthal has an undergraduate degree from Washington University in
St. Louis and an MBA from Columbia University. Mr. Lowenthal's insights into the business of the Company provide perspective to the Board discussions important to the oversight of the Company's financial reporting and enterprise and
operational risk management. Mr. Lowenthal is A.G. Lowenthal's son.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance 100%
|
|
|
Board
|
|
9 of 9
|
|
|
|
A.W. Oughtred
Age: 74
Independent
|
|
Mr. Oughtred joined the Board in 1979. Mr. Oughtred, now retired, was Counsel from January 1, 2009 to May 31, 2009 and prior to December 31, 2008 a Partner at Borden Ladner Gervais LLP (law firm). Mr. Oughtred
practiced corporate law. Mr. Oughtred brings strong governance, legal, business and financial industry knowledge to our Board, important to the oversight of the Company's financial reporting, enterprise and operational risk management and
governance policy. Mr. Oughtred is a director of CI Financial Corp., the shares of which are listed on the Toronto Stock Exchange, and Belmont House. Mr. Oughtred is certified as an Institute of Corporate Directors (Canada) certified
director (ICD.D). Mr. Oughtred is Chairman of our Special and Nominating and Corporate Governance Committees and a member of the Compensation and Compliance Committees.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance 100%
|
|
|
Board
|
|
9 of 9
|
|
|
Compensation
|
|
7 of 7
|
|
|
Nominating and Corporate Governance
|
|
6 of 6
|
|
|
Compliance
|
|
6 of 6
|
|
|
Special
|
|
13 of 13
|
12
|
|
|
E.K. Roberts
Age: 65
Independent
|
|
Ms. Roberts joined the Board in 1977. Ms. Roberts, now retired, was President, Treasurer and principal financial and accounting officer of the Company from 1977 to March 28, 2013. Ms. Roberts is a Chartered Professional
Accountant and a member of the Institute of Chartered Accountants of Ontario. Ms. Roberts' many years with the Company bring a historical perspective to Board discussions and she also brings strong accounting and financial skills and experience
to the Company, which is important to the oversight of the Company's financial reporting and enterprise and operational risk management. Ms. Roberts is Chairman of the Audit Committee.
|
|
|
|
|
|
|
|
Board and Committees
|
|
Attendance
Overall attendance 100%
|
|
|
Board
|
|
9 of 9
|
|
|
Audit
|
|
2 of 2
|
Notes:
-
(1)
-
There
is no Executive Committee of the Board of Directors. Mr. Dwyer, Mr. Ehrhardt, Mr. Keehner and Ms. Roberts are members of the Audit
Committee. Messrs. Behrens, Friedman, Keehner and Oughtred are members of the Nominating and Corporate Governance Committee. Messrs. Dwyer, Ehrhardt, Friedman, Keehner and Oughtred are
members of the Compensation Committee. Messrs. Behrens, Ehrhardt, Friedman and Oughtred are members of the Compliance Committee. Messrs. Behrens, Dwyer, Ehrhardt, Friedman, Keehner and
Oughtred are members of the Special Committee.
None
of the nominees has been involved in any events within the past 10 years that could be considered material to an evaluation of the director.
13
Executive Officers
Our executive officers consist of A.G. Lowenthal, our Chairman and Chief Executive Officer, whose background is described above, and
Mr. Alfano, our Chief Financial Officer and principal financial and accounting officer, whose background is described below.
|
|
|
J. Alfano
Age: 47
|
|
Mr. Alfano has been Executive Vice President and the Chief Financial Officer of Oppenheimer & Co. Inc. since April 2006 and Chief Financial Officer of Oppenheimer Holdings Inc. since May 2011. Mr. Alfano also serves
on several of the firm's committees including the Management, Risk Management, Market, Credit, Liquidity and New Product Committees. Prior to joining Oppenheimer, Mr. Alfano was an audit partner with Deloitte & Touche LLP where he
spent 14 years in Deloitte's securities industry practice serving clients by providing audit and business advisory services out of their New York, Tokyo and Seattle offices. Mr. Alfano has an undergraduate degree from Michigan State
University and an MBA from Columbia University. Mr. Alfano is a member of the Financial Management Society of the Securities Industry and Financial Markets Association (SIFMA), the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants, and sits on the AICPA Stockbrokerage and Investment Banking Expert Panel.
|
Board Leadership Structure
The Board believes that the Company's Chief Executive Officer is best situated to serve as Chairman of the Board because he is the director most
familiar with the Company's business strategy, history and capabilities, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy.
Independent directors and management add different perspectives and roles in strategy development. The Company's independent directors bring experience, oversight and expertise from outside the
Company and, in some cases, outside the industry, while the Chief Executive Officer brings Company-specific and industry-specific experience and expertise. The Board believes that the combined role of
Chairman and Chief Executive Officer facilitates strategy development and execution, and enhances the flow of information between management and the Board, which are essential to effective governance.
One
of the key responsibilities of the Board of Directors is to develop strategic direction and hold management accountable for the execution of strategy once it is developed. The Board
believes the combined role of Chairman and Chief Executive Officer, together with an independent Lead Director
having the duties described below, is in the best interest of stockholders because it provides the appropriate balance between strategy development and independent oversight of management for our
Company. The Board's administration of its oversight function is described in greater detail below under "
Risk Management
."
Lead Director
W. Ehrhardt, an independent director who serves on the Audit, Compensation, Compliance and Special Committees, was selected by the Board to
serve as the Lead Director for all meetings of the non-management directors held in executive session. The role of the Lead Director is to assure the independence of the Board from management. The
Lead Director has the responsibility of presiding at all executive sessions of the Board, consulting with the Chairman and Chief Executive Officer on Board and committee meeting agendas, acting as a
liaison between management and the non-management directors, including maintaining frequent contact with the Chairman and Chief Executive Officer and advising him on the efficiency of Board meetings,
and facilitating teamwork and communication between the non-management directors and management, as well as additional responsibilities that may be assigned to the Lead Director by the Board.
14
Executive Sessions
Pursuant to the Company's Corporate Governance Guidelines, non-management directors of the Board meet on a regularly scheduled basis and
otherwise as the independent directors determine without the presence of management. The Lead Director chairs these sessions. An executive session took place, in camera, at every scheduled Board
meeting held in 2016. To ensure strong communication with the Chief Executive Officer, the independent directors may meet with the CEO alone as the independent directors determine.
Board of Directors and Committee Meetings Held
During 2016, the following numbers of Board and committee meetings were held:
|
|
|
|
|
Board of Directors
|
|
|
9
|
|
Audit Committee
|
|
|
5
|
|
Compensation Committee
|
|
|
7
|
|
Compliance Committee
|
|
|
6
|
|
Nominating and Corporate Governance
|
|
|
6
|
|
Special Committee
|
|
|
13
|
|
Meeting Attendance
Pursuant to the Company's policies on meeting attendance, all directors should strive to attend all meetings of the Board and the committees of
which they are members. Last year there were nine meetings of the Board. We are pleased that all but one of our nine directors attended 100% of the total meetings of the Board and committees of the
Board in 2016.
In
addition to participation at Board and committee meetings, our directors discharge their responsibilities throughout the year through personal meetings and other communications,
including considerable telephone contact with the Chairman and Chief Executive Officer and other members of senior management and each other regarding matters of interest and concern to the Company.
It is our policy that our directors attend our stockholders meetings and, at the last Annual Meeting of Stockholders held on May 9, 2016, all of the directors nominated attended.
Risk Management
The Board, as a whole and also at the committee level, has an active role in overseeing the management of the Company's strategic, operational,
financial and compliance risks. The Board regularly reviews information regarding the Company's credit, liquidity, cybersecurity systems, and operations, as well as the risks associated with each. The
Company's Compensation Committee is responsible for overseeing the Company's executive compensation arrangements and assuring that financial incentives for management and employees are appropriate and
mitigate against, rather than encourage, employees taking excessive risk exposure with firm capital. Please see "
Compensation Policies and Risk
" on
page 53 for further information. The Audit Committee oversees management of operational and financial risks. The Company also has a number of internal risk-oversight committees and functions.
The Company's Compliance Committee is responsible for overseeing the Company's compliance function and the management of compliance and regulatory risk. The Company's internal Risk Management
Committee (composed of management employees) is charged with assessing, reviewing and monitoring the risk environment in which the Company operates, and reports its findings and considerations to the
Audit Committee at each regularly scheduled quarterly meeting and more frequently, as needed. The Nominating and Corporate Governance Committee manages risks associated with the governance of the
Company, including the composition, responsibilities and independence of the Board of Directors and ethical and regulatory issues including conflicts of interest. While each committee is responsible
for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks.
15
Corporate Governance
Our Class A Stock is listed on the NYSE. We are subject to the corporate governance listing standards of the NYSE, the applicable rules
of the Securities and Exchange Commission (the "SEC"), the provisions of the Sarbanes-Oxley Act of 2002 and the applicable rules of the Dodd-Frank Wall Street Reform and Consumer Protection Act
("Dodd-Frank").
Our
Nominating and Corporate Governance Committee, Compensation Committee, Audit Committee, Special Committee, Compliance Committee and our Board of Directors continue to monitor
regulatory
changes and best practices in corporate governance and consider amendments to our practices and policies as appropriate.
Our
Corporate Governance Guidelines, and all committee charters, as well as our Code of Conduct and Business Ethics for Directors, Officers and Employees and our Whistleblower Policy,
are posted on our website at www.opco.com.
Board of Directors
The fundamental responsibility of the Board of Directors is to oversee the management of our business with a view to maximizing stockholder
value and ensuring corporate conduct in a legal and ethical manner through a system of corporate governance and internal controls appropriate to our business. The Board of Directors has adopted a
statement of Corporate Governance Guidelines to which it adheres. We have a Code of Conduct and Business Ethics for Directors, Officers and Employees which is posted on our
website
www.opco.com
. No waivers were granted in 2016 or to date in 2017 under the Code of Conduct and Business Ethics for any directors, officers or
employees.
In
fulfilling its mandate, the Board's responsibilities include:
-
-
monitoring and overseeing the Company's strategic planning;
-
-
monitoring the performance of the Company's business, evaluating opportunities and risks, and controlling risk;
-
-
monitoring systems for audit, internal control and information management systems;
-
-
developing, together with the Chief Executive Officer, a clear position description for the Chief Executive Officer, which includes delineating
management's responsibilities and developing or approving the corporate goals and objectives that the Chief Executive Officer is responsible for meeting;
-
-
monitoring the performance of senior management of the Company, including the Chief Executive Officer;
-
-
overseeing the monitoring of compliance with applicable regulatory requirements, as well as assessing reports related to the Company's
compliance and supervision programs, reviewing findings and communications from regulators, including reports related to regulatory examinations, and assessing the adequacy of the Company's responses
thereto;
-
-
succession planning for senior management and directors;
-
-
remuneration of the executive officers and reviewing the general compensation policies of the Company;
-
-
governance, including composition and effectiveness of the Board;
-
-
monitoring compliance with the regulatory compliance policies and related regulatory requirements of the Company's subsidiaries;
16
-
-
monitoring compliance with the Code of Conduct and Business Ethics (the "Code of Conduct") adopted by the Board;
-
-
considering and approving, if determined by the Board to be advisable, any waiver from the Code of Conduct granted to directors or senior
management of the Company; and
-
-
reviewing the implementation of significant regulatory initiatives, including those related to anti-money laundering.
Director Independence
Seven of our current nine directors are independent as required by the NYSE Corporate Governance Rules. To be considered independent under these
rules, the Board of Directors must determine that a director has no direct or indirect material relationship with us. The Board of Directors determined that Messrs. Behrens, Dwyer, Ehrhardt,
Friedman, Keehner and Oughtred and Ms. Roberts are independent directors, and that Mr. A.G. Lowenthal, our Chairman of the Board of Directors and Chief Executive Officer, and
Mr. R.S. Lowenthal, Senior Managing Director and Head of Oppenheimer & Co. Inc.'s Global Fixed Income and Investment Banking businesses and son of Mr. A.G.
Lowenthal, are not independent.
The
Board of Directors has not adopted formal categorical standards to assist in determining independence. The Board has considered the types of relationships that could be relevant to
the independence of a director of the Company. These relationships are described in Schedule A to the Company's Corporate Governance Guidelines, which are posted on our website at
www.opco.com
. The
Board of Directors has considered the relationship of each director and has made a determination that seven of our current nine directors are independent at this time.
At
each regular Board and Audit Committee meeting, the independent directors are afforded an opportunity to meet and have met in the absence of management. During 2016, five of the nine
board meetings were regular meetings and at each of these meetings the independent directors met in the absence of management. Additionally, at regular meetings of the Audit Committee (five regular
meetings annually), the members of the Audit Committee, all of whom are independent, are afforded the opportunity to meet with the independent auditors and the managers of the Company's Internal Audit
Group in the absence of management. Members of the Compliance Committee are afforded the opportunity to meet with the managers of the Company's compliance functions, in the absence of management.
The
independent directors and the directors that are not independent understand the need for directors to be independent-minded and to assess and question management initiatives and
recommendations from an independent perspective. The Board of Directors' Lead Director, Mr. W. Ehrhardt, is an independent director who, among other things, chairs sessions of the independent
directors.
Orientation and Continuing Education
The Nominating and Corporate Governance Committee of the Board of Directors, as required by its charter, is responsible for the orientation of
new directors to our business and overseeing the continuing education needs of all directors.
The
Board of Directors encourages the directors to maintain the skill and knowledge necessary to meet their obligations as directors. This includes support for director attendance at
continuing education sessions and making available newsletters and other written materials. Our directors understand the need to maintain their knowledge and skills and avail themselves of director
education literature and programs.
Board and Committee Assessments
The Board conducts a self-evaluation annually to determine whether it and its Committees are functioning effectively.
17
Board Committees
The Board has established an Audit Committee, a Compensation Committee, a Compliance Committee, a Nominating and Corporate Governance Committee,
and a Special Committee. The Audit, Compensation, Compliance, Nominating and Corporate Governance, and Special Committees are composed entirely of independent directors, as defined under the NYSE
Listed Company Manual and the Company's Corporate Governance Guidelines. The charters of each committee (except the Special Committee which has no charter) are available on the Company's website at
www.opco.com
.
Audit Committee
The Board of Directors has an Audit Committee composed of four independent directors, the duties of which are set forth below.
The
Board of Directors has adopted a written charter for the Audit Committee, a copy of which is posted on our website at
www.opco.com
. The Audit
Committee:
-
-
has sole authority and responsibility to nominate independent auditors for ratification by stockholders and to approve all audit engagement
fees and terms (see Matter 2);
-
-
reviews annual, quarterly and all legally required public disclosure documents containing financial information that are submitted to the Board
of Directors;
-
-
reviews the nature, scope and timing of the annual audit carried out by the external auditors and reports to the Board of Directors;
-
-
evaluates the external auditors' performance for the preceding fiscal year and reviews their fees and makes recommendations to the Board of
Directors;
-
-
pre-approves the audit, audit related and non-audit services provided by our independent auditors and the fee estimates for such services;
-
-
reviews internal financial control policies, procedures and risk management and reports to the Board of Directors;
-
-
meets regularly with business unit leaders to understand their risk management procedures;
-
-
meets with the external auditors quarterly to review quarterly and annual financial statements and reports and to consider material matters
which, in the opinion of the external auditors, should be brought to the attention of the Board of Directors and the stockholders;
-
-
reviews and directs the activities of our internal audit department, meets regularly with internal audit, legal and compliance personnel and
risk management committee representatives, and reports to the Board of Directors;
-
-
reviews accounting principles and practices;
-
-
reviews management reports with respect to litigation, capital expenditures, tax matters and corporate administration charges and reports to
the Board of Directors;
-
-
reviews related party transactions;
-
-
reviews changes in accounting policies with the external auditors and management and reports to the Board of Directors;
-
-
reviews and approves changes to or waivers of our Code of Conduct and Business Ethics for Senior Executive, Financial and Accounting Officers;
and
-
-
annually reviews the Audit Committee Charter and recommends and makes changes thereto as required.
18
All
of the members of the Audit Committee are financially literate. The Board of Directors has determined that the Audit Committee includes two financial experts and that
Messrs. W. Ehrhardt and Ms. Roberts, the financial experts, are independent as defined in Rule 10 A-3(b) of the Exchange Act and Section 303A.02 of the NYSE's Listed
Company Manual. Mr. Ehrhardt is a Certified Public Accountant and a member of the AICPA. Ms. Roberts is a Chartered Professional Accountant and a member of the Institute of Chartered
Accountants of Ontario. Currently, none of the members of the Audit Committee simultaneously serves on the audit committee of any other public company.
Compensation Committee
The Board of Directors has adopted a Compensation Committee Charter, a copy of which is posted on our website at
www.opco.com
. Pursuant to its charter, the Compensation Committee's objective is to provide a competitive compensation program with strong and direct links between
corporate objectives and financial performance, individual performance and compensation, mindful of the Company's corporate risk management objectives. The Compensation Committee has five members, all
of whom are independent.
The
Compensation Committee:
-
-
makes recommendations to the Board of Directors with respect to our compensation policies;
-
-
monitors developments in compensation-related regulations and industry practice, and makes recommendations to the Board of Directors, as
appropriate;
-
-
reviews recommendations made by the Chief Executive Officer with respect to the salary, bonus and benefits paid and provided to our senior
management (except those for the Chief Executive Officer, which it handles directly) and makes recommendations to the Board of Directors with respect to the compensation of senior management including
the Chief Executive Officer;
-
-
authorizes grants of stock options and stock awards and recommends modifications to our incentive compensation plans;
-
-
grants certain compensation awards to our senior management based on criteria linked to the performance of the individual and/or our Company;
-
-
annually develops and administers the Performance-Based Compensation Agreement between the Company and Mr. A.G. Lowenthal, and the
performance formula for Mr. R.S. Lowenthal, and will continue to do so for other senior executives, when appropriate;
-
-
reviews compensation arrangements for risk-taking personnel to ensure that they do not encourage excessive risk-taking;
-
-
reviews compensation arrangements for Compliance Department personnel;
-
-
reviews our compensation arrangements for our independent directors and makes recommendations on changes thereto when appropriate;
-
-
reviews and provides oversight of the Company's Compensation Recovery Policy and make recommendations on changes thereto when appropriate;
-
-
monitors compliance with the criteria of our performance-based awards or grants;
-
-
makes awards under and administers our Stock Appreciation Rights Plan; and
-
-
reviews and approves our Compensation Discussion and Analysis.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee Charter, a copy of which is posted on our website at
www.opco.com
, provides that the Nominating and Corporate Governance Committee is
19
responsible
for ensuring that our Board of Directors is composed of directors who are fully able and fully committed to serve the best interests of our stockholders. Factors considered by the
Nominating and Corporate Governance Committee in assessing director performance and, when needed, recruiting new directors include skills, character, judgment, experience, ethics, integrity and
compatibility with the existing Board of Directors.
The
Nominating and Corporate Governance Committee has four members, all of whom are independent. The duties of this Committee are set out as
follows:
-
-
identify individuals qualified to become Board members;
-
-
recommend additions to the Board and persons to fill vacancies on the Board;
-
-
ensure that the Board is kept up to date with respect to the regulatory environment relevant to governance issues;
-
-
maintain an orientation program for new directors and oversee the continuing education needs of directors;
-
-
oversee the evaluation of the Board and management;
-
-
make recommendations to assure the efficiency of Board meetings;
-
-
develop, review and make recommendations with respect to our Corporate Governance Guidelines; and
-
-
review and approve governance reports for publication in our management proxy statement and Annual Report on Form 10-K.
The
Nominating and Corporate Governance Committee will give appropriate consideration to board nominees recommended by Class B Stockholders. Nominees recommended by Class B
Stockholders will be evaluated in the same manner as other nominees. Class B Stockholders who wish to submit nominees for director for consideration by the Nominating and Corporate Governance
Committee for election at our Annual Meeting of Stockholders to be held in 2018 may do so by submitting in writing such nominee's name, in compliance with the procedures and along with the other
information required by our Bylaws and Regulation 14A under the Exchange Act (including such nominee's written consent to being named in the proxy statement as a nominee and to serving as a
director if elected), to our Secretary, at 85 Broad Street, 22
nd
Floor, New York, NY 10004 within the time frames set forth under the heading "
Stockholder
Proposals
."
The
Nominating and Corporate Governance Committee is responsible for the recruitment and nomination of persons for Board positions, and to make recommendations to the Board for the
appointment of directors to fill vacancies on the Board. In recruiting, nominating and appointing directors, the Nominating and Corporate Governance Committee
considers:
-
-
judgment, character, expertise, skills and knowledge useful to the oversight of the Company's business;
-
-
diversity of viewpoints, backgrounds, experiences and other demographics;
-
-
business or other relevant experience (including previous board experience); and
-
-
the extent to which the interplay of the individual's expertise, skills, knowledge and experience with that of other members of the Board will
build a board that is effective, collegial and responsive to the needs of the Company.
The
Nominating and Corporate Governance Committee is also responsible for initially assessing, against the Company's standards for directors' independence, whether a candidate would be
independent and whether continuing directors continue to be independent and advising the Board of that assessment.
20
Special Committee
On February 19, 2015, the Board of Directors of the Company formed a Special Committee of the Board in order to engage an independent law
or consulting firm to conduct a review of the Company's subsidiaries, Oppenheimer & Co. Inc. and Oppenheimer Asset Management Inc.'s, broker-dealer and investment adviser
compliance processes and related internal controls and governance processes, and provide recommendations to the Special Committee on how to improve any of the foregoing. On February 19, 2015,
the Special Committee agreed to engage an independent law firm to conduct the aforementioned review. The Special Committee's function is to interact with the independent law firm and oversee the
implementation of the law firm's recommendations. The Special Committee oversaw the implementation of various of the independent law firm's recommendations in 2015 and 2016. In January 2016, the
Special Committee oversaw the process of hiring a new overall Chief Compliance Officer for the Company's subsidiaries. The independent law firm's review is continuing and the Special Committee will
continue to oversee the implementation of its recommendations in 2017. The Special Committee has six members, all of whom are independent.
Compliance Committee
The Board of Directors formed a Compliance Committee in July 2015, the Charter for which is posted on our website at www.opco.com. Pursuant to
its charter, the Compliance Committee has been charged with assisting the Board of Directors with oversight of the Company's compliance function, including the Company's compliance management system
and the Company's compliance with applicable laws, rules and regulations governing its financial services businesses. The Compliance Committee is composed of four independent directors, meets
quarterly, or more frequently if necessary, and its responsibilities and authority include the following:
-
-
overseeing the Company's policies, procedures, programs, and training relating to compliance and supervision;
-
-
reviewing the status of the Company's compliance with applicable Federal and state securities and other laws and the rules and regulations of
any SRO and internal policies, procedures and controls;
-
-
receiving and overseeing the assessment of internal and external data and reports relating to the Company's compliance and supervision
programs;
-
-
creating criteria for the Chief Compliance Officer, the AML Officer and other senior officers at the Company's subsidiaries, as appropriate;
-
-
assuring the independence of the Chief Compliance Officers of the Company's subsidiaries, including assuring that the Chief Compliance Officers
report to the Compliance Committee outside the presence of management at every meeting of the Compliance Committee and at such other times as the Compliance Committee may request or direct;
-
-
reviewing and evaluating findings and communications from regulators and the adequacy of the Company's responses to regulators;
-
-
receiving periodic reports, no less than quarterly, from the Chief Compliance and other compliance Officers, the AML Officer and/or the General
Counsel of the Company's subsidiaries;
-
-
receiving periodic reports from the Company's Ombudsman;
-
-
overseeing the resourcing of compliance functions at the Company, including staffing, systems and monitoring;
-
-
periodically reviewing the Company's customer complaint and conflict of interest intake and resolution function, in light of risk of violation
of Federal and state laws and related risks to customers;
21
-
-
requesting reports from the Chief Compliance and other compliance Officers, the AML Officer, the General Counsel and management at the
Company's subsidiaries regarding the preparation, implementation and updating of the Company's compliance and supervision policies, procedures, programs, training and controls;
-
-
receiving and, when appropriate, meeting to discuss reports on any annual or periodic examinations conducted by governmental agencies and SROs,
including requiring a copy of any report (and supporting notes and schedules) prepared by such agencies or SROs in connection with any such examination to be submitted to the Compliance Committee;
-
-
ensuring that the full Board receives reports and materials as necessary from time to time regarding significant compliance issues;
-
-
ordering, directing and overseeing any annual or periodic independent compliance audit that the Compliance Committee deems necessary or
appropriate; and
-
-
undertaking such other activities as are necessary or incidental to carrying out the foregoing duties and responsibilities.
ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
In response to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, we
are providing Class B Stockholders with an opportunity to cast an advisory (non-binding) vote on the compensation of our named executive officers identified in the
"
Summary Compensation Table
" on page 39 ("Named Executives"), commonly referred to as a "say on pay" vote. Your vote is advisory and will not be
binding on our Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when making future executive compensation recommendations. It was determined at
our 2011 Annual Meeting that this advisory vote take place every three years. The first advisory vote took place at our 2011 Annual Meeting and endorsed the referenced compensation. The second
advisory vote took place at our 2014 Annual Meeting and endorsed the referenced compensation. You are also being asked to vote on the frequency of this advisory vote at our 2017 Annual Meeting (see
Matter No. 4).
Our
compensation policy is designed to recruit, motivate, reward and retain the high performing executive talent required to create superior long-term stockholder returns; reward
executives for short-term performance as well as growth in enterprise value over the long-term; provide a competitive compensation package relative to peers and competitors; and ensure effective
utilization and development of talent by employing appropriate management processes, such as performance appraisal and management development.
Stockholders
are encouraged to read the Compensation Discussion and Analysis (CD&A) section of this proxy statement (found on page 39), which describes our compensation policies
and practices. The Compensation Committee and the Board of Directors believe that the policies and practices described in the CD&A provide a compensation framework which enables us to retain and
appropriately reward the executive officers that we believe are critical to our long-term success, while linking that compensation to our corporate objectives and performance.
For
example:
-
-
our Named Executives do not generally have employment agreements;
-
-
our Named Executives do not receive supplemental retirement benefits;
-
-
other than access to one parking place, our Named Executives do not receive any perquisites that are not generally available to all employees;
-
-
our incentive compensation is reviewed annually by the Compensation Committee to ensure that we are not encouraging undue risk-taking and we
are aligning executive compensation with the strategic objectives and performance of the Company;
-
-
our Chief Executive Officer's annual salary and incentive compensation is established by the Compensation Committee which is composed of
independent directors;
-
-
a substantial portion of our Chief Executive Officer's compensation is driven by performance goals which are established annually by the
Compensation Committee from a broad array of financial, performance and strategic parameters; and
-
-
we have approved a compensation recovery policy which provides for the recovery, under certain circumstances, of all of the incentive
compensation received by our executive officers (currently our Chairman and Chief Executive Officer and Chief Financial Officer), as well as cash bonuses and any profits realized from the sale of
securities of the Company during the twelve month period following the issuance in the case of a restatement of our financial statements, the unvested incentive compensation other officers and
employees designated by the Compensation Committee received during the three fiscal years prior to a restatement of our financial statements, and a
32
This
Matter No. 3, commonly known as a "Say-on-Pay" proposal, gives you, as a Class B Stockholder, an opportunity to endorse or not endorse the compensation we pay to our
Named Executives on an advisory basis, for the following resolution:
RESOLVED
THAT:
The
compensation paid to Oppenheimer Holdings Inc.'s named executive officers, as disclosed pursuant to the Securities and Exchange Commission's compensation disclosure rules,
including the Compensation Discussion and Analysis, compensation tables and narrative discussion set forth on pages 39 to 54 of this Proxy Statement, is hereby approved.
To
be effective this resolution must be passed by the affirmative vote of a simple majority of the votes cast by the Class B Stockholders at the meeting. Mr. Lowenthal owns
96.4% of the Class B Stock and has informed the Company he intends to vote all of such Class B Stock in favor of the proposal. See "Security Ownership of Certain Beneficial Owners and
Management."
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY
STATEMENT.
33
MATTER NO. 4
ADVISORY (NON-BINDING) VOTE ON FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
In response to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, we
are providing Class B Stockholders with an opportunity to cast an advisory (non-binding) vote on how frequently we should seek an advisory vote on the compensation of our Named Executives,
commonly referred to as a "say on pay" vote, as provided in Matter No. 3.
Dodd-Frank
and Section 14A of the Exchange Act requires us, not less frequently than once every six years, to submit a proposal allowing our Class B Stockholders to vote,
in an advisory, non-binding vote, on whether the frequency of a vote on executive compensation will occur every 1, 2 or 3 years. As a Class B Stockholder of the Company, you are being
provided the opportunity to vote on the frequency of the vote on executive compensation.
Your
vote is advisory and will not be binding upon our Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering the
frequency of submitting to Class B Stockholders a resolution to afford Class B Stockholders the opportunity to vote on executive compensation.
The
Company's Board of Directors recommends that Class B Stockholders vote "FOR" the resolution to have a vote on executive compensation every 3 years. The Company's
compensation programs and policies have remained consistent over many years and, therefore, your Board does not believe that a more frequent vote on executive compensation would provide a benefit.
The
accompanying form of proxy provides for four choices (every 1, 2 or 3 years, or abstain). Class B Stockholders are voting on one of these periods, and are not voting to
approve or disapprove the Company's recommendation.
The
frequency of the Class B Stockholder vote on executive compensation (every 1, 2 or 3 years) will be determined by a plurality of votes cast "FOR" the year receiving the
highest number of votes, even if such votes do not constitute a majority. Abstentions will not be counted as votes cast either for or against the proposal. Mr. Lowenthal owns 96.4% of the
Class B Stock and has informed the Company he intends to vote all of such Class B Stock in favor of holding a vote on executive compensation every 3 years. See
"
Security Ownership of Certain Beneficial Owners and Management
."
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE "3 YEAR" FREQUENCY OPTION ON FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION.
34
MATTER NO. 5
2014 INCENTIVE PLAN
The matter referred to below involves the approval of the issue of up to 1,000,000 additional shares of Class A Stock to the Oppenheimer
Holdings Inc. 2014 Incentive Plan to or for the benefit of employees of the Company and its subsidiaries as part of their compensation. It is a requirement of the New York Stock
Exchange, Inc. (the "NYSE") that this matter be approved by the Class B Stockholders.
Issue of Class A Stock to the Oppenheimer Holdings Inc. 2014 Incentive Plan
On May 9, 2005, the Class A and Class B Stockholders approved the Oppenheimer & Co. Inc. Employee
Share Plan (the "ESP") for employees of the Company and its subsidiaries (including executive officers) providing up to 750,000 shares of Class A Stock to be issued from treasury as part of
employee compensation. On May 14, 2007, the Class B Stockholders approved the Company's 2006 Equity Incentive Plan (the "EIP") providing up to 800,000 shares of Class A Stock to
be issued from treasury as part of employee compensation. The ESP and the EIP are collective referred to herein as the "Prior Plans". On May 5, 2008, the Class B Stockholders approved
the issue of an additional 380,000 shares of Class A Stock to the Prior Plans. On May 9, 2011, the Class B Stockholders approved the issue of an additional 500,000 shares of
Class A Stock to the Prior Plans. On May 10, 2013, the Class B Stockholders approved the issue of an additional 1,250,000 shares of Class A Stock to the Prior Plans. On
May 12, 2014, the Class B Stockholders approved the Oppenheimer Holdings Inc. 2014 Incentive Plan (the "OIP"), which amended, restated and replaced the Prior Plans. The purpose of
the OIP is to assist the Company and its operating subsidiaries to attract, retain and provide incentives to key management employees, including executive officers. The Compensation
Committee may grant stock awards and restricted stock awards pursuant to the OIP which are accounted for as equity awards and valued at grant date fair value. OIP awards typically require the
completion of a service period and are subject to three or five year cliff vesting, as determined by the Compensation Committee. Dividends may or may not accrue during the service period, depending on
the terms of individual OIP awards. The Company delivers the underlying shares of Class A Stock to the employee at the end of the applicable vesting period so long as such employee continues to
be an employee of the Company or one of its operating subsidiaries from shares of Class A Stock held in the Company's treasury.
The
award of Class A Stock under the OIP is a significant component of the Company's compensation program for key employees of the Company and its subsidiaries. The award of stock
to key employees is intended to align their interests with those of the Class A Stockholders. Accordingly, the number of shares of Class A Stock underlying existing share-based
arrangements together with shares of Class A Stock reserved for future arrangements as a percentage of the Company's issued Class A Stock might be perceived as being relatively high. The
Board and the Compensation Committee have adopted a policy of maintaining the percentage of reserved stock for share-based awards to not more than 20% of the number of issued shares of Class A
Stock. The current percentage of shares of Class A Stock underlying existing share-based arrangements together with shares of Class A Stock reserved for future arrangements as a
percentage of the Company's issued Class A Stock at March 10, 2017 is 11% (19% upon the approval of this Matter No. 5). A discussion of the Company's share-based plans is
presented in note 15 to our consolidated financial statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K for the year ended
December 31, 2016 which is available without charge, except for exhibits to the report, by (i) writing to Oppenheimer Holdings Inc., 85 Broad Street,
22
nd
Floor, New York, New York 10004, Attention: Secretary, (ii) calling 1-800-221-5588, or (iii) emailing us with your request at
info@opco.com
.
As
of March 10, 2017, the Company has outstanding stock awards of 1,354,397 shares of Class A Stock (of which 1,186,380 shares were awarded pursuant to the OIP) as part of
employee compensation which is designed both to reward past performance, to induce potential employees to accept employment and to retain key employees. It is anticipated that a further 1,000,000
shares of Class A Stock will be required for the
35
OIP
for the next several years. As discussed in the Compensation Discussion and Analysis, the Company has limited its use of stock option awards in favor of stock awards, substantially all subject to
vesting provisions.
Accordingly,
Class B Shareholders are being asked to consider and, if deemed advisable, pass the resolution which appears below authorizing the issue of up to an additional
1,000,000 Class A Shares to the OIP.
RESOLVED
THAT:
1. The
issue by the Board of Directors of the Company, from time to time, of up to an aggregate of 1,000,000 shares of Class A non-voting stock of the Company to the
Oppenheimer Holdings Inc. 2014 Incentive Plan be and it is hereby authorized.
2. The
proper officers and directors of the Company be and they hereby are authorized and directed to take all such action and execute all such documents as are necessary to
implement the terms of the foregoing resolution.
To
be effective, these resolutions must be passed by the affirmative vote of a simple majority of the votes cast by the Class B Stockholders at the Meeting. Abstentions will not
be counted as votes for or against the proposal. A.G. Lowenthal owns 96.4% of the Class B Stock and has informed the Company he intends to vote all of such Class B Stock in favor of the
proposal. See "
Security Ownership of Certain Beneficial Owners and Management
."
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ISSUE OF UP TO 1,000,000 SHARES OF CLASS A STOCK TO THE OPPENHEIMER HOLDINGS INC. 2014
INCENTIVE PLAN.
36
EXECUTIVE COMPENSATION AND RELATED INFORMATION
2016 Company Performance
Revenue for the year ended December 31, 2016 was $857.8 million, a decrease of 4.5% compared to the year 2015. The Company
reported a net loss for the year ended December 31, 2016 of $1.2 million or $0.09 per share compared to a net income of $2.0 million or $0.14 per share in 2015.
During
the past year, the Company's short-term performance failed to meet our goals. However, we realized certain achievements as we continued to invest in building the Oppenheimer
franchise:
-
-
We completed the asset sale of Oppenheimer Multifamily Housing and Healthcare Finance, Inc. in order to focus on our core businesses.
This resulted in a profit on the sale and closing out our participation in the commercial mortgage business.
-
-
We continued to focus on managing expenses, which were down in 2016, mostly due to lower litigation and regulatory costs as well as lower
operating costs.
-
-
We significantly enhanced all major governance and compliance processes by adding new public company directors, senior personnel, streamlining
reporting lines, reorganizing business and compliance functions, replacing manual processes with more efficient technology.
-
-
We enhanced our internal communications platform to articulate and emphasize a firm-wide culture of compliance.
-
-
We invested in new employees and in programs across the Company to recruit, engage, motivate and retain employees.
-
-
We revised elements of our branch level compensation and introduced the Branch Control Officer position to separate compliance roles from
branch leadership and sales management.
-
-
We put in place our enhanced Unified Managed Account platform at Oppenheimer Asset Management Inc., which has enhanced our margins and
allows financial advisors the ability to easily add additional investment managers into a single account for simplified position reporting along with sophisticated re-balancing and modeling
capability.
-
-
We continued to purchase failed Auction Rate Securities from our clients holding such securities and significantly lowered our exposure to
these issues, all in accordance with regulatory orders from 2010. We currently have no outstanding litigation relating to auction rate securities.
-
-
We invested in over 50 technology initiatives focused on compliance, operations and business-line functions, and cybersecurity enhancements.
-
-
We substantially revamped and improved all aspects of corporate marketing both internally and externally to enhance our business, to provide
better client experience and in order to present a more competitive and compelling face for our company to the industry and investing community.
-
-
We put in place new leadership in investment banking focused on identifying and recruiting senior level investment bankers.
-
-
We made significant progress in debt capital markets with significantly increased revenues from the issuance of emerging market debt on behalf
of both sovereign and private issuers.
2016 Compensation Highlights
The Compensation Committee of the Board (the "Compensation Committee") and the Board of Directors believe that the policies and practices
described in the following Compensation Discussion and Analysis ("CD&A") provide a compensation framework which enables us to retain and appropriately reward
37
the
executive officers that we believe are critical to our long-term success, while linking that compensation to our corporate objectives and performance.
For
example:
-
-
our Named Executives do not generally have employment agreements;
-
-
our Named Executives do not receive supplemental retirement benefits;
-
-
other than access to one parking space, our Named Executives do not receive any perquisites that are not generally available to all employees;
-
-
our incentive compensation practices are reviewed annually by the Compensation Committee to ensure that we are not encouraging undue
risk-taking and we are aligning executive compensation with the strategic objectives and performance of the Company;
-
-
our Chief Executive Officer's annual salary and incentive compensation are established by the Compensation Committee, which is composed of
independent directors;
-
-
a substantial portion of our Chief Executive Officer's compensation is driven by performance goals which are established annually by the
Compensation Committee from a broad array of financial, performance and strategic parameters and capped pursuant to a contractual arrangement; and
-
-
we have approved a compensation recovery policy which provides for the recovery, under certain circumstances, of all of the incentive
compensation received by our executive officers (currently our Chairman and Chief Executive Officer and Chief Financial Officer), as well as cash bonuses and any profits realized from the sale of
securities of the Company during the twelve month period following the issuance in the case of a restatement of our financial statements, the unvested incentive compensation other officers and
employees designated by the Compensation Committee received during the three fiscal years prior to a restatement of our financial statements, and a portion of the unvested incentive compensation paid
to our executive officers and other designated officers and employees in the case of material misconduct or other violative behavior.
Some
highlights of our 2016 compensation decisions include the following:
-
-
Base salaries paid to senior executive officers in 2016 were not increased from 2015 levels;
-
-
Our methodologies track short-term performance and annual bonuses for our Named Executives slightly decreased compared to 2015;
-
-
On January 26, 2017, the Company awarded a total of 343,500 shares of restricted Class A Stock to our employees, each of which
will cliff vest in three years. These awards will be expensed over the applicable three year period; and
-
-
On February 23, 2017, the Company awarded a total of 64,100 shares of restricted Class A Stock to our employees, each of which
will cliff vest in three years. These awards will be expensed over the applicable three year period.
The
foregoing 2016 Company Performance and Compensation Highlights do not purport to be complete and are subject to, and qualified in their entirety by reference to, the CD&A set forth
below which should be read in its entirety for a full and complete understanding of our compensation policies and practices as well as the compensation awarded to, earned by, or paid to our executive
officers for 2016 as well as to our Annual Report on Form 10-K for the year ended December 31, 2016.
38
Compensation Discussion and Analysis
Introduction
The following CD&A describes the material elements of compensation for our named executive officers identified in the
"
Summary Compensation Table
" (the "Named Executives"). The Compensation Committee, which is comprised entirely of independent directors, makes
recommendations to the Board for the total compensation (that is the base salary, annual bonus, stock options and stock awards) of our senior executive officers, including the Named Executives. The
Compensation Committee's determination of the total compensation of our Chief Executive Officer is subject, in part, to the Performance-Based Compensation Agreement, amended and restated effective
May 11, 2015, between the Company and our Chief Executive Officer, for which we received stockholder approval on May 11, 2015.
Certain
processes and procedures of the Compensation Committee are discussed below including its role in dealing with the Chief Executive Officer's compensation and the compensation of
the other Named Executives. The Compensation Committee considers recommendations from the Chief Executive Officer with respect to the compensation of the Named Executives (other than the Chief
Executive Officer), as it does on compensation matters such as year-end incentive compensation and stock awards for all of our other employees.
The
day-to-day design and administration of health benefits, the deferred compensation plans and the 401(k) plan and other employee benefit plans and policies applicable to salaried
U.S.-based employees in general are handled by our Human Resources, Finance and Legal Departments.
For
the purposes of determining 2016 executive compensation, the Compensation Committee did not retain independent compensation consultants, although the Compensation Committee may
retain compensation consultants when it deems necessary, and it does rely upon Equilar Inc. as a reference source for comparable financial and compensation data.
Objectives and Policies
The Compensation Committee's objective is to provide a competitive compensation program with strong and direct links between corporate
objectives and financial performance, individual performance and compensation, mindful of our corporate risk management objectives. Our compensation policy with respect to our Named Executives,
including the Chief Executive Officer, has the following objectives:
-
-
recruit, motivate, reward and retain the high performing executive talent required to create superior long-term stockholder returns;
-
-
reward executives for short-term performance as well as for growth in enterprise value over the long-term;
-
-
provide a competitive compensation package relative to peers and competitors; and
-
-
ensure effective utilization and development of talent by employing appropriate management processes, such as performance appraisals.
Our
compensation program for senior executive officers, including the Named Executives, consists of the following key elements: a base salary, an annual bonus, grants of share-based
compensation (typically stock awards) and, in the case of the Chief Executive Officer, annual performance-based compensation pursuant to his Performance-Based Compensation Agreement. The Compensation
Committee also used a performance-based compensation arrangement for R.S. Lowenthal, another senior executive officer whose compensation is likely to be in excess of $1 million. The goal of the
Compensation Committee is to provide a compensation structure which will enable us to retain and appropriately reward the executive officers that we believe are critical to our long-term success. The
Compensation Committee also reviews compensation arrangements to ensure that a portion of the Named Executives' compensation is directly related to corporate
39
performance,
appropriate risk management and other factors that directly and indirectly influence stockholder value.
The
Compensation Committee regularly evaluates the benefits of referring to a "peer group" of public companies to guide its decision making process with respect to compensation and did
so in 2016. The Compensation Committee does not view the Company as having many true peers, given the Company's size, business model and mix of businesses as well as a trend of consolidation in the
financial services industry which continued in 2016, and a continuing trend of companies electing to become or remain privately held. Many companies that might otherwise be considered to be a part of
the Company's peer group are either units of much larger bank holding companies or smaller companies that are not wholly comparable to our business. However, the Compensation Committee recognizes the
value of using peer group insights to further its understanding of certain industry compensation practices and the competitive market for executive talent. In 2016, we reviewed the compensation
practices for senior executives of a wide range of economically-comparable or activity-comparable financial services enterprises.
The
Compensation Committee also reviewed the compensation practices of a subset of these peer group companies, including Piper Jaffrey, Stifel Financial, Raymond James Financial,
Ladenburg
Thalmann Financial Services, LPL Financial Holdings, Cowen Group, Greenhill & Co. and JMP Group to provide a context for broad parameters of its 2016 compensation decisions for
our Chief Executive Officer, but the determination of the amounts granted and the form of grant was set with reference to our own business model and substantially governed by the annual goals
established under the Performance-Based Compensation Agreement with the Chief Executive Officer described further below. The Compensation Committee also used these peer group companies and broad
studies of companies similar to our Company in revenue as well as other financial services companies to set a context for our decisions on non-employee director compensation practices. See
"
Director Compensation
."
The
Compensation Committee does not employ a formal benchmarking strategy or rely upon specific peer-derived targets. The Compensation Committee has not chosen to engage an independent
outside compensation consultant for purposes of determining 2016 executive compensation, believing it can better relate business model performance parameters to our executive compensation than someone
unfamiliar with our specific business. However, the Compensation Committee has engaged Equilar Inc., which we believe to be an unbiased source of compensation related information, to provide it
with data sources and comparisons with respect to the compensation practices of other registered U.S. companies.
The
Compensation Committee believes potential incentive compensation (annual bonus and share-based awards) should generally comprise between 50% to 95% of total annual compensation for
the Named Executives because:
-
-
these executive officers are in positions to influence corporate strategy and execution;
-
-
tying the majority of total compensation to incentive payments helps ensure focus on our goals;
-
-
their compensation is "at risk" and will thus depend upon our Company producing financial results that warrant such payments;
-
-
the volatile nature of our market-driven businesses should be reflected in our compensation practices; and
-
-
our share-based compensation generally cliff vests after three or five years and therefore aligns the executive officer with a continuing
interest in enterprise value.
The
Compensation Committee makes recommendations to the Board with respect to total compensation including an annual bonus and grants equity awards, if appropriate, for our Named
Executives and other senior executives. The Compensation Committee does not necessarily grant share-based awards to employees, including the Named Executives, on an annual basis. It considers the
performance of the employee and the number of outstanding share-based awards already awarded to the
40
employee
when determining total compensation in any year and the degree to which the employee already has (or may have) a long-term interest in the Company's success. Upon the vesting of an employee's
share-based awards, the Compensation Committee also considers whether or not to grant new awards to the employee and on what terms such awards will be made. All share-based awards are priced at fair
value at the grant date and are typically conditioned upon the employee's continued employment with the Company for a significant period of time.
The
Compensation Committee believes that, as stockholders, the Named Executives, and other senior executives and selected employees will be motivated to consistently deliver financial
results that build wealth for all stockholders over the long-term, and it currently uses share-based awards to accomplish that objective. The Compensation Committee is cognizant of the impact of the
accounting guidance on our financial results and strives to balance the granting of stock options and other forms of stock-based incentives with the other objectives of executive compensation set
forth above. Since the adoption of accounting guidance on Share-Based Payment, on January 1, 2006, requiring us to expense stock options, we have granted only a very limited number of stock
options and none to the Named Executives. At March 10, 2017, we had stockholder approval to award 1,465,908 shares of Class A Stock pursuant to our share-based awards plans (11% of our
outstanding Class A Stock), of which 1,354,397 shares of Class A Stock are the subject of current share-based compensation arrangements and subject to vesting requirements. Of these
shares of Class A Stock, awards for 343,500 shares of Class A Stock were granted in January 2016. In January 2011, we established a compensation recovery ("clawback") policy which
permits us to recover certain incentive compensation in specified circumstances. See discussions under "
Stock Option Grants
,"
"
Stock Awards
" and "
Compensation Recovery Policy
" below.
Compensation
arrangements for most of our senior executive officers (other than the Chief Executive Officer) generally involve a significant component of remuneration which is contingent
on our Company's performance and the performance of the individual senior executive officers; an annual
cash bonus (which permits individual performance to be evaluated and recognized on an annual basis) and share-based awards (which directly link a portion of their compensation to stock price
appreciation realized by our stockholders). The Compensation Committee believes that this approach best serves the interests of stockholders by enabling us to structure compensation in a way that
meets the requirements of the highly competitive environment in which we operate, while ensuring that senior executive officers are compensated in a manner that advances both our short and long-term
interests and those of our stockholders. For the Chief Executive Officer's compensation arrangements, see discussion under "
Chief Executive Officer
Compensation
" below.
The
Compensation Committee, like the Board as a whole and management, recognizes the importance and need to continue the enhancement of the Company's compliance culture and policies and
the effectiveness thereof to enhance the overall profitability and endurance of the franchise. To this end the Compensation Committee will, in setting compensation in 2017 for senior executive
officers, including the Named Executives, and other executives and employees in positions with compliance responsibilities, emphasize compliance as a part of the review of such employee's
compensation.
Consideration of Say-On-Pay Votes
We conducted an advisory stockholder vote on executive compensation on May 12, 2014 and are doing so again this year. The results of the
2014 vote were to affirm our compensation practices as disclosed in the 2013 Compensation Discussion and Analysis and attendant tables and narrative and the compensation paid to our Named Executives.
The Compensation Committee considered the 2014 vote and may consider the results of the vote at the Meeting and future annual meetings when establishing current and future year's executive
compensation arrangements, but notes that the stockholder votes are non-binding and, in the future, the Compensation Committee and Board may choose not to take the results of the votes into account.
41
Performance evaluation and total compensation element timing
Our executive compensation program for the Chief Executive Officer and other senior executive officers involves performance-related incentive
compensation and long-term compensation elements paid in a mix of cash bonuses and stock awards. It has been our practice to determine the aggregate cash bonus pool available to our Chief Executive
Officer and other senior executives on or before December 31st of the fiscal year-end in which the performance was delivered for accounting and tax purposes. However, our practice is to
consider and make any long-term equity-related awards to our Chief Executive Officer and other senior executives in the first 60 days of the following year, based upon their performance in the
prior fiscal year.
While
we believe our process and timing of making performance-related judgments on annual total compensation is sound, reasonable and consistent with industry standards, it does not
correspond to the proscribed accounting period standards for compensation expenses nor for compensation disclosure. Elements of the total compensation for our Chief Executive Officer and other senior
executives are thus recorded in different accounting years and are not captured in the proscribed tables in this proxy statement or in our financial statements in a manner which accurately reflects
the Compensation Committee's judgments about performance for the fiscal year. Because of this disparity,
we have made a practice of disclosing any equity-related awards and their terms that are granted in the first sixty days of the following year for our Named Executives and our employees taken as a
whole in our proxy statements. We do this so that stockholders can see the Compensation Committee's judgments about total compensation and how it relates to the Company's and the executives' prior
year's performance by combining cash bonuses and salary for the relevant fiscal year plus any stock awards granted in the first sixty days of the following year. Similarly, stockholders should be
aware that our equity awards have contained for some time now, vesting provisions which means that our executives will not receive that portion of their incentive compensation for a significant period
of time, and then only if they continue to be employed by the Company. For additional information, please see "
Realized Pay For Fiscal 2016
" below.
Determination of 2016 Compensation
The Compensation Committee, with recommendations from the Chief Executive Officer, makes recommendations to the Board with respect to all
compensation for each Named Executive for 2016 (other than the Chief Executive Officer, which compensation is based upon the Compensation Committee's own judgments). For a discussion-of the
compensation for the Chief Executive Officer, see the section entitled "
Chief Executive Officer Compensation
" below.
The
Compensation Committee makes recommendations to the Board with respect to each Named Executive's annual salary and annual bonus and makes grants of share-based awards by reference to
the executive's position, responsibilities and performance. Some of the factors considered by the Compensation Committee are:
-
-
the position's responsibilities relative to our total earnings, use of invested capital, degree of firm capital at risk and the generation of
earnings and cash flows,
-
-
the position's impact on key strategic initiatives, and
-
-
the executive's performance and contributions to the management of the Company.
The
Chief Executive Officer assessed each Named Executive's (other than the Chief Executive Officer's), as well as other senior officers' performance under our performance assessment
criteria, and the Compensation Committee assessed the Chief Executive Officer's performance according to these same criteria and the parameters established under the Performance-Based Compensation
Agreement with our Chief Executive Officer. See discussion under "
Chief Executive Officer Compensation
" below. In addition, the Compensation Committee
has determined to use performance-based compensation arrangements that meet the requirements for deductible compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), for Named Executives who are likely to earn in excess of $1 million and for
42
whom
quantitative measurements of performance are feasible. The Compensation Committee established such objectives for R.S. Lowenthal in 2014, 2015 and 2016.
Our
performance assessment criteria rate performance (as appropriate in different competencies) is as follows:
-
-
strategic thinking;
-
-
integrity;
-
-
building and facilitating a corporate culture of ethical and responsible behavior;
-
-
compliance with regulatory requirements and Company policies, as well as maintaining good standing with regulators;
-
-
managing employee performance and morale;
-
-
financial responsibility;
-
-
achievement focus;
-
-
leadership;
-
-
risk management;
-
-
forward planning, business judgment and organization;
-
-
customer satisfaction and relationship building;
-
-
profitability of business unit, if applicable;
-
-
conflict resolution; and
-
-
communication skills.
Base Salary.
The base salary of our Chief Executive Officer is set by the Compensation Committee. Salaries paid to senior executive
officers are
reviewed annually by the Compensation Committee considering recommendations made by the Chief Executive Officer, based on his assessment of the nature of the position, and the skills, experience and
performance of each senior executive officer, as well as salaries paid by comparable companies in our industry. The Compensation Committee then makes recommendations to the Board of Directors with
respect to base salaries. Base salaries paid to senior executive officers in 2016 were not increased from 2015 levels.
Annual Cash Bonus.
Bonuses paid to our senior executive officers are reviewed annually by the Compensation Committee considering
recommendations made
by the Chief Executive Officer based on his assessment of the performance of the Company, the individual contribution of each senior executive officer to that performance and their competencies. The
Compensation Committee then makes recommendations to the Board of Directors with respect to annual cash bonuses. Senior executive officers, including the Chief Executive Officer, may be offered the
right to elect to defer a portion of their annual bonus and performance-based compensation under our Executive Deferred Compensation Plan, a non-qualified unfunded plan. Since 2013, no officer has
been given the option to make such a deferral. See "
Executive Deferred Compensation Plans
" below.
Stock Option Grants.
Under the OIP, our senior executive officers and employees may be granted stock options by the Compensation
Committee based upon
a variety of considerations, including the performance of the specific options and the date of the last grant made to the officer or employee, as well as considerations relating to the contribution.
In addition, stock option grants may be awarded as a retention tool for new employees. Due to the relatively high cost of expensing stock option awards under applicable accounting guidance, we have
limited our use of this form of award in favor of stock awards.
43
Stock Awards.
Under the OIP, our and our subsidiaries' executive officers and employees are granted stock awards by the Compensation
Committee based
upon recommendations from the Chief Executive Officer (except for the Chief Executive Officer himself) and other considerations relating to the contribution and performance of the specific award
recipient. The Compensation Committee independently considers and grants stock awards to the Chief Executive Officer where it deems them appropriate. In addition, stock awards may be given as an
inducement to employment for new employees or as a retention tool for existing employees. Stock awards are generally subject to a significant vesting period and we believe that these awards are useful
in retaining and motivating our executive personnel. On February 24, 2016, the Company awarded a total of 355,833 restricted shares of Class A Stock to current employees, of which 98,333
shares will cliff vest in three years and 257,500 shares will cliff vest in five years. These awards will be expensed over the applicable three or five year period. Of those awards, 16,667 shares were
awarded to Mr. Whaley, 10,000 shares each were awarded to Mr. Alfano and Mr. R.S. Lowenthal, and 20,000 shares were awarded to Mr. McKigney. There was no award in
February 2016 to Mr. A.G. Lowenthal. On January 26, 2017, the Company awarded a total of 343,500 shares of restricted Class A Stock to our employees, each of which will
cliff vest in three years. These awards will be expensed over the applicable three year period. Of those awards, Mr. Alfano was awarded 8,500 shares, Mr. McKigney was awarded 10,000
shares, Mr. Whaley was awarded 15,000 shares, Mr. R.S. Lowenthal was awarded 15,000 shares and Mr. A.G. Lowenthal was awarded 67,000 shares. Additionally, on
February 23, 2017, the Company awarded a total of 64,100 shares of restricted Class A Stock to our employees, each of which will cliff vest in three years. These awards will be expensed
over the three year period. Our Named Executives did not receive any awards in February.
No Backdating or Spring Loading.
We do not backdate stock awards or grant them retroactively. In addition, we generally make our stock
awards at
regular times each year. We do not plan to coordinate grants of stock awards so that they are made before the announcement of favorable information, or after the announcement of unfavorable
information. Our stock awards are granted by the Compensation Committee at fair market value on a fixed date or event (such as the first regular meeting of the Board of Directors following an
employee's hire), with all required approvals obtained in advance of or on the actual grant date. All grants of stock awards to employees are made by the Compensation Committee.
Fair Market Value.
Fair market value has been consistently determined, as required by the OIP, as the share closing price on the NYSE
on the grant
date.
Stock Ownership and Trading Policy.
Directors are expected to accumulate and hold at least 6,000 shares of the Company's Class A
non-voting
common stock and have three years to achieve that position. All sitting directors either meet that criteria, or are on a track to do so. There are no such ownership requirements for the Named
Executives or other employees. The Company prohibits our executive officers and directors (and their immediate family members and affiliates) from short selling, dealing in publicly-traded options, or
dealing in any other type of derivative security related to its Class A Stock.
Negative Discretion.
Notwithstanding anything to the contrary in the Company's incentive compensation plans and equity-based plans, the
Compensation
Committee may, in its sole discretion, reduce or eliminate the bonus amount or grant or award otherwise payable to any participant for a particular performance period at any time prior to the payment
of bonuses or grants or awards to participants for such performance period, consistent with the strictures of Section 162(m) of the Code, as applicable.
Compensation Recovery Policy.
In January 2011, the Compensation Committee recommended and the Company established a compensation
recovery policy,
subsequently updated in March of 2017, that affects incentive compensation paid to its executive officers and certain other officers and employees determined by the Compensation Committee to be
covered by such policy. In the case of material noncompliance as a result of misconduct with respect to any financial reporting requirement that results in a restatement of the Company's financial
statements, the Company is required to recover the amount of incentive compensation that was paid to its executive officers (including cash bonuses, as well as proceeds from the sale of the Company's
stock for the period of twelve months after the period of such restatement in
44
the
case of our Chairman and Chief Executive Officer and Chief Financial Officer) and may also require, if determined by the Compensation Committee, that other covered officers and employees forfeit
certain unvested stock awards. The policy further provides that to the extent that an executive officer or covered employee engages in a continued failure of the performance of their job function,
engages in misconduct that materially affects the Company or materially violates Company policies, the Company may require that executive officers or other covered employees forfeit some or all of
these awards if compensation recovery was indicated. The Compensation Committee and the Company will, under certain circumstances, consider compensation for the three year period preceding a
restatement of its financial statements.
Stock
awards made subsequent to July 2010 have an agreement by the beneficiary of such award to such clawback provisions as are described in the immediately preceding paragraph. All
senior executives and other employees holding restricted stock awards are subject to such provisions. The Company is awaiting final rulemaking by the SEC with respect to other policies that may affect
a broader employee population with respect to clawback or reduction of cash bonuses with respect to years in which there are events that include fraud, misconduct, restatement of financial results or
revaluation of owned assets resulting in losses by the Company in periods subsequent to the payment of cash bonuses and stock awards and will implement such other policies as SEC rulemaking may
require. Until such time as any new policies are developed and implemented by the Company, the Company will not hesitate to pursue recourse against any employee in the case of employee fraud or
misconduct.
Executive Deferred Compensation Plan.
The Executive Deferred Compensation Plan, or EDCP, provides for voluntary deferral of year-end
bonuses by our
senior executives, which deferral option may or may not be offered in a given year. These voluntary deferrals can be deferred on a tax-free basis until a specified future time and are not subject to
vesting. We do not make contributions to the EDCP for the Named Executives and other senior level executives. The option to defer the year-end compensation into the EDCP has not been offered since
2007, but may be reinstated in future years at the Company's discretion. Further description of the Company's deferred compensation arrangements can be found in note 15 to our consolidated
financial statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K for the year ended December 31, 2016.
Stock Appreciation Rights.
The Company has awarded stock appreciation rights ("OARs") to certain employees (none of whom are the Named
Executives) as
part of their compensation package based on a formula reflecting gross production, length of service and client assets. These awards are granted once per year in January with respect to the prior
year's production. The OARs vest five years from the grant date and are settled in cash on vesting. Further description of the OARs can be found in note 15 of our consolidated financial
statements for the year ended December 31, 2016 included in our Annual Report on Form 10-K for the year ended December 31, 2016.
Benefits.
The Named Executives who are U.S.-based salaried employees participate in a variety of benefits designed to enable us to
attract and retain
our workforce in a competitive marketplace. We help ensure a productive and focused workforce through a healthcare program and our other benefits. Deferred compensation and 401(k) plans help
employees, especially long-service employees, save and prepare financially for retirement. The Named Executives receive the same benefits as all full-time employees and no others beyond those
described in this CD&A. Our qualified 401(k) Plan allowed employees to contribute up to $18,000 for 2016 plus an additional $6,000 for employees over age 50. Employees may continue to retain their
401(k) Plan account after they leave us so long as their account balance is $5,000 or more. We do not sponsor a pension plan for our employees.
Perquisites.
We provide one perquisite to our Chief Executive Officer: Mr. A.G. Lowenthal has a Company-paid parking arrangement.
The primary
purpose of this parking arrangement is to minimize distractions from the executive's attention to important corporate matters. Perquisites are quantified in the "
Summary
Compensation Table
" below and detailed in the "
All Other Compensation Table
" below.
45
We
do not provide the Named Executives with any other perquisites, such as split-dollar life insurance, reimbursement for legal counseling for personal matters, or tax reimbursement
payments. We do not provide loans to executive officers, other than margin loans in margin accounts with us in connection with the purchase of securities (including our securities), which margin
accounts are substantially on the same terms, including interest rates and collateral, as those prevailing from time to time for comparable transactions with non-affiliated persons and do not involve
more than the normal risk of collectability. See "
Certain Relationships and Related Party Transactions
," below.
Separation and Change in Control Arrangements.
Our Named Executives are not eligible for benefits and payments if employment terminates
in a
separation or if there is a change in control.
Chief Executive Officer Compensation
Mr. A.G. Lowenthal, our Chairman of the Board and Chief Executive Officer, is paid an annual base salary set by the Compensation
Committee, plus annual performance-based compensation under the Performance-Based Compensation Agreement and, at the discretion of the Compensation Committee, is eligible for additional bonuses and/or
grants of stock options and restricted stock. Our Chief Executive Officer's incentives are substantially all quantitative measures driving off the Company's core business model and designed to bring
executive incentives, performance and compensation into a close relationship.
On
May 11, 2015, Class B Stockholders ratified the Company's Amended and Restated Performance-Based Compensation Agreement with Mr. A.G. Lowenthal, which was
effective May 11, 2015. The purpose of the Performance-Based Compensation Agreement is to allow the Compensation Committee to set the annual terms under which Mr. A.G. Lowenthal's annual
performance-based
compensation is to be calculated during the term thereof. Mr. A.G. Lowenthal's role in determining our success or failure has a very significant bearing on our ultimate results and financial
condition because of the nature of his responsibilities as Chief Executive Officer. Therefore, the Compensation Committee has determined that a high proportion of his annual compensation should be
subject to variability on both the upside and the downside to reflect our Company's results and those of key performance indices.
The
Performance-Based Compensation Agreement includes a limitation on the maximum performance award available to Mr. A.G. Lowenthal in any single year for which it is effective.
The Compensation Committee may also set a lesser "cap" on Mr. A.G. Lowenthal's total performance award under the Performance-Based Compensation Agreement which can be less than the maximum of
$10 million under the Performance-Based Compensation Agreement. In March 2016, the Compensation Committee established performance goals under the Performance-Based Compensation Agreement
entitling Mr. A.G. Lowenthal to a Performance Award under the Performance-Based Compensation Agreement for the year 2016 of an aggregate of up to $5 million unless one or more of the
targets established in clauses (c), (e) and/or (f) below are achieved, in which case the maximum is $7.5 million.
The
Performance Award established by the Compensation Committee was determined by the application of a formula based on the following components (as defined in the annual Compensation
Committee resolution establishing the CEO performance award for 2016): (a) an amount equal to 3% of the amount by which the Company's total revenue less interest income for the year ending
December 31, 2016 exceeds $846,000,000; plus (b) an amount equal to: (i) $500,000 if the Company's profit before income taxes for the year ending December 31, 2016 is equal
to $1,000,000 or more; plus (ii) 8% of the amount by which the Company's profit before income taxes for the year ending December 31, 2016 is greater than $1,000,000 and less than
$6,500,000; plus (iii) 4% of the amount by which the Company's profit before income taxes for the year ending December 31, 2016 is $6,500,000 or more; plus (iv) $1,000,000 should
the Company succeed in the disposition of one or more of the corporate assets of its commercial mortgage banking business segment which operates as OMHHF; provided that the 2016 pre-tax net income
effect of all such OMHHF dispositions together equals or exceeds $10,000,000; plus (c) an amount equal to the product of (i) $1,200,000 multiplied by (ii) the difference (stated
as a whole integer or fraction thereof)
46
between
61% and any lesser percentage which would be obtained by dividing (1) the sum of those items included in the Company's compensation and related expenses for the year ending
December 31, 2016 by (2) the Company's total revenue less interest income for the year ending December 31, 2016; plus (d) an amount related to Annual Total Stockholder
Return which shall be equal to the product of (i) the difference between the closing market price of one share of the Company's Class A Stock on January 4, 2016 of $16.45 (as such
market price may be adjusted for any stock splits occurring during fiscal 2016) and the closing market price of one share of the Company's Class A Stock on December 31, 2016 plus the
amount of all dividends paid on one share of the Company's Class A Stock during the year ending December 31, 2016, divided by (ii) the closing market price of one share of the
Company's Class A Stock on January 4, 2016 of $16.45; multiplied by the amount of $1,727,000 and stated in
dollars, but in no event to exceed $1,250,000; plus (e) an amount equal to $500,000 if the profit before income taxes for the Company's capital markets segment for the year ending
December 31, 2016 equals or exceeds $17 million; plus an amount equal to: (i) $250,000 if the revenue per employee for the Company's investment banking segment for the year ending
December 31, 2016 equals or exceeds $600,000; plus (ii) $250,000 if the revenue per employee for the Company's institutional equity segment for the year ending December 31, 2016
equals or exceeds $475,000; plus (iii) $750,000 if the Company's assets under administration increase by $1,200,000,000 or more for the year ending December 31, 2016; plus (f) an
amount equal to (i) $250,000 if the Company's pre-tax return on stockholders' equity for the year ending December 31, 2016 equals or exceeds 8.75%; plus (ii) $100,000 for each
half-percent (or portion thereof) by which the Company's pre-tax return on stockholders' equity for the year ending December 31, 2016 exceeds 8.30%; provided that the Performance Award Amount
for the 2016 Performance Year shall not exceed $5,000,000 unless one or more of the targets established in clauses (c), (e) and/or (f) above have been achieved for fiscal 2016,
whereupon the Performance Award Amount shall be equal to (x) the amounts calculated for clauses (c), (e) and (f) plus the lesser of $5,000,000 or the sum of (a),
(b) and (d) (if less than $5,000,000); provided, further, that in no circumstances shall the total Performance Award Amount for the 2016 Performance Year exceed $7,500,000.
The
application of the 2016 formula as set out above produced a Performance Award for Mr. A.G. Lowenthal of $1,271,911 for fiscal 2016.
In
March 2017, the Compensation Committee continued Mr. A.G. Lowenthal's base salary for 2017 at $500,000, unchanged from 2016.
Compensation Arrangement for R.S. Lowenthal
In March 2016, the Compensation Committee also determined pursuant to Article IX of the OIP and for purposes of complying with the
requirements of Section 162(m) of the Code to establish an Individual Target Award (consisting of a formula) for determining the Performance-Based Award for the fiscal year ending
December 31, 2016 (the "Performance Period") for Mr. R.S. Lowenthal, Senior Managing Director and Head of Oppenheimer & Co. Inc.'s Fixed Income business (including
Municipal Finance, the "Fixed Income Division"). The Performance Award established by the Compensation Committee was to be determined by the application of a formula such that (i) if the
revenues of the Fixed Income Division exceeded $75,000,000 for the Performance Period and if the total direct compensation and benefits for all the members of the Fixed Income Division for the
Performance Period (excluding Mr. R.S. Lowenthal's salary and benefits for the Performance Period and all indirect compensation expenses for all the members of the Fixed Income Division
allocated to the Fixed Income Division)(collectively, the "2016 Total Compensation") was less than 56% of the revenues of the Fixed Income Division and other profit centers reporting to
Mr. R.S. Lowenthal for the Performance Period (the "2016 Revenues"), then Mr. R.S. Lowenthal would be entitled to a Performance-Based Award in an amount equal to 1.5% of the 2016
Revenues; plus (ii) an amount of $100,000 if Mr. R.S. Lowenthal continued in the Chairmanship of each of the Oppenheimer & Co. Inc. Management Committee and
the Oppenheimer & Co. Inc. Risk Management Committee throughout
2016; plus (iii) for all new financial advisors hired by Oppenheimer & Co. Inc. in calendar 2016 whose documented prior trailing
47
12 months
production was at or above $300,000, the sum of all such prior trailing 12 months productions by such new hires less the sum of all prior trailing 12 months productions
of all financial advisors with the same production level or better leaving Oppenheimer & Co. (for reasons of joining a new employer, retirement without leaving an adequate successor or
death) during the same 2016 period with the same production levels or above multiplied by 1.5%; plus (iv) an amount related to Annual Total Stockholder Return equal to the product of
(i) the difference between the closing market price of one share of the Company's Class A Stock on January 4, 2016 of $16.45 (as such market price may be adjusted for any stock
splits occurring during fiscal 2016) and the closing market price of one share of the Company's Class A Stock on December 31, 2016 plus the amount of all dividends paid on one share of
the Company's Class A Stock during the year ending December 31, 2016, divided by (ii) the closing market price of one share of the Company's Class A Stock on
January 4, 2016 of $16.45 multiplied by the amount of $863,500 and stated in dollars, but in no event to exceed $625,000; provided that such Performance-Based Award should not exceed $2,400,000
for fiscal year 2016.
The
application of the 2016 formula as set out above produced a Performance Award for Mr. R.S. Lowenthal of $1,726,554 for fiscal 2016 which was paid to him in cash. In
view of the performance during 2016 of the Fixed Income Division, and the Performance Award noted above, the Compensation Committee awarded Mr. R.S. Lowenthal a stock award of 15,000 shares of
the Company's Class A Stock on January 26, 2017, based on that day's closing price of the Class A Stock on the NYSE of $18.75, in recognition of his ongoing and potential future
contributions to the Company. The award, which vests on January 25, 2020, is subject to Mr. R.S. Lowenthal being continuously employed by the Company until that date.
U.S. Internal Revenue Code Section 162(m)
Section 162(m) of the Code generally disallows a tax deduction for annual compensation (other than compensation that qualifies as
performance-based compensation within the meaning of Section 162(m)) in excess of $1 million paid to our Chief Executive Officer, Mr. R.S. Lowenthal and our three other most
highly compensated executive officers whose compensation is required to be disclosed in this proxy statement. The Performance-Based Compensation Agreements for the Chief Executive Officer and
Mr. R.S. Lowenthal were ratified and approved by the Class B Stockholders so that they would satisfy the requirements for performance-based compensation.
To
the extent consistent with our general compensation objectives, the Compensation Committee considers the potential effect of Section 162(m) on compensation paid to our
executive officers. However, the Compensation Committee reserves the right to award and recommend the awarding of non-deductible compensation in any circumstances it deems appropriate. Further,
because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding our efforts
to qualify, that the compensation paid by us to our executive officers will in fact satisfy the requirements for the exemption from the Section 162(m) deduction limit.
48
SUMMARY COMPENSATION TABLE
For the Year Ended December 31, 2016
The following table sets forth the total annual compensation paid or accrued by us to or for the account of our Chief Executive Officer and our
Chief Financial Officer for the three years ended December 31, 2016. In an effort to prove more complete disclosure, the table lists the next three most highly paid executive officers of our
principal subsidiaries, Oppenheimer & Co. Inc. and Oppenheimer Asset Management Inc., whose total cash compensation for the year ended December 31, 2016 exceeded
$100,000.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
(a)(5)
|
|
(b)
|
|
(c)
|
|
(d)(1)
|
|
(e)(2)
|
|
(f)(2)
|
|
(g)(1)
|
|
(h)(3)
|
|
(i)(4)
|
|
(j)
|
|
A. G. Lowenthal
|
|
|
2016
|
|
$
|
500,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
596,795
|
|
$
|
5,750
|
|
$
|
1,102,545
|
|
Chairman, CEO and Director
|
|
|
2015
|
|
$
|
500,000
|
|
$
|
|
|
$
|
858,138
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
5,750
|
|
$
|
1,363,888
|
|
of the Company and
|
|
|
2014
|
|
$
|
500,000
|
|
$
|
|
|
$
|
2,750,320
|
|
$
|
|
|
$
|
700,000
|
|
$
|
|
|
$
|
5,750
|
|
$
|
3,956,070
|
|
Oppenheimer & Co. Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. J. Alfano
|
|
|
2016
|
|
$
|
275,000
|
|
$
|
500,000
|
|
$
|
122,800
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
897,800
|
|
CFO of the Company and
|
|
|
2015
|
|
$
|
275,000
|
|
$
|
600,000
|
|
$
|
136,927
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,011,927
|
|
Executive Vice President and
|
|
|
2014
|
|
$
|
275,000
|
|
$
|
700,000
|
|
$
|
95,014
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,070,014
|
|
CFO of Oppenheimer & Co. Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.S. Lowenthal
|
|
|
2016
|
|
$
|
200,000
|
|
$
|
|
|
$
|
122,800
|
|
$
|
|
|
$
|
1,726,554
|
|
$
|
|
|
$
|
|
|
$
|
2,049,354
|
|
Director of the Company and
|
|
|
2015
|
|
$
|
200,000
|
|
$
|
|
|
$
|
262,858
|
|
$
|
|
|
$
|
1,850,000
|
|
$
|
|
|
$
|
23,443
|
|
$
|
2,336,301
|
|
Senior Managing Director and
|
|
|
2014
|
|
$
|
200,000
|
|
$
|
|
|
$
|
94,028
|
|
$
|
|
|
$
|
1,960,863
|
|
$
|
|
|
$
|
32,736
|
|
$
|
2,287,627
|
|
Head of Oppenheimer & Co. Inc.'s Fixed Income and Investment Banking businesses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
B. McKigney
|
|
|
2016
|
|
$
|
225,000
|
|
$
|
600,000
|
|
$
|
245,600
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,070,600
|
|
President of Oppenheimer
|
|
|
2015
|
|
$
|
225,000
|
|
$
|
500,500
|
|
$
|
402,464
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
1,127,964
|
|
Asset Management Inc.
|
|
|
2014
|
|
$
|
225,000
|
|
$
|
435,000
|
|
$
|
32,055
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
692,055
|
|
M. Whaley
|
|
|
2016
|
|
$
|
193,750
|
|
$
|
500,000
|
|
$
|
204,671
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
898,421
|
|
Executive Vice President,
|
|
|
2015
|
|
$
|
200,000
|
|
$
|
500,000
|
|
$
|
231,877
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
931,877
|
|
Private Client Services, of
|
|
|
2014
|
|
$
|
200,000
|
|
$
|
438,500
|
|
$
|
51,247
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
689,747
|
|
Oppenheimer & Co. Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes to Summary Compensation Table:
-
(1)
-
The
Bonus and Non-Equity Incentive Plan Compensation amounts are not reduced by the Named Executive's election, if any, to defer receipt of bonuses into the EDCP or
an election to convert a portion of his or her bonus into the purchase of Class A Stock. None of these conditions applied in 2016.
-
(2)
-
The
values of stock options (granted under the EIP) and stock awards (granted under the ESP, EIP or OIP) represent the grant date fair value of awards granted in the
fiscal year. The underlying assumptions and methodology used to value our stock options and stock awards are described in note 15 to our consolidated financial statements for the year ended
December 31, 2016 included in our Annual Report on Form 10-K for the year ended December 31, 2016 which is available without charge, except for exhibits to the report, by
(i) writing to Oppenheimer Holdings Inc., 85 Broad Street, 22nd Floor, New York, New York 10004, Attention: Secretary, (ii) calling 1-800-221-5588, or (iii) emailing
us with your request at
info@opco.com
. Details of stock options and stock awards held by the Named Executives appear in the "
Outstanding Equity
Awards Table
" and notes thereto appearing below. Awards granted in January of any given year reflect the performance of the Named Executive for the prior year. All future awards
will be granted under the OIP.
-
(3)
-
We
have a nonqualified deferred compensation plan into which senior executives, including the U.S. Named Executives, could elect to defer some or all of their
year-end bonuses. No above-market earnings were recorded. Details about the earnings from the EDCP appear below in the "
Nonqualified Deferred Compensation
Table
."
-
(4)
-
See
the chart below "
All Other Compensation Table
" for a description of the
amounts appearing in column (i). All other compensation includes perquisites and commission income."
-
(5)
-
The
three executive officers of Oppenheimer & Co. Inc. and Oppenheimer Asset Management Inc. appearing in the table are not officers of
Oppenheimer Holdings Inc. and they do not, except for R.S. Lowenthal who became a director of the Company in May 2013, perform any policy making functions for Oppenheimer Holdings Inc.
49
All Other Compensation Table
For the Year Ended December 31, 2016
|
|
|
|
|
|
|
|
Name
|
|
Parking
|
|
Commissions
|
|
|
|
(a)
|
|
(b)
|
|
A.G. Lowenthal
|
|
$
|
5,750
|
|
$
|
|
|
J.J. Alfano
|
|
$
|
|
|
$
|
|
|
R.S. Lowenthal
|
|
$
|
|
|
$
|
|
|
B. McKigney
|
|
$
|
|
|
$
|
|
|
M. Whaley
|
|
$
|
|
|
$
|
|
|
Notes to All Other Compensation Table:
-
(a)
-
We
have one parking space at 85 Broad Street, New York, NY which is included in the terms of the lease for the head-office premises. A.G. Lowenthal uses this space.
The cost ascribed to the parking space reflects current commercial terms.
Grants of Plan-Based Awards
For the Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards
|
|
|
|
|
|
|
|
Grant Date Fair
Value of Stock
and Option
Awards
($)
|
|
Name
|
|
Grant Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(i)
|
|
(l)
|
|
A.G. Lowenthal (1)
|
|
|
1/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
31,690
|
|
$
|
584,997
|
|
A.G. Lowenthal (1)
|
|
|
2/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
13,795
|
|
$
|
273,141
|
|
A.G. Lowenthal (1)
|
|
|
2/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.G. Lowenthal (1)
|
|
|
1/26/2017
|
|
|
|
|
|
|
|
|
|
|
|
67,000
|
|
$
|
1,256,250
|
|
R.S. Lowenthal (2)
|
|
|
1/29/2015
|
|
|
|
|
|
|
|
|
|
|
|
9,524
|
|
$
|
167,908
|
|
R.S. Lowenthal (2)
|
|
|
2/26/2015
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
$
|
94,950
|
|
R.S. Lowenthal (2)
|
|
|
2/24/2016
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
$
|
122,800
|
|
R.S. Lowenthal (2)
|
|
|
1/26/2017
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
$
|
281,250
|
|
-
(1)
-
Mr. A.G.
Lowenthal's compensation is subject to an Amended and Restated Performance-Based Compensation Agreement effective May 11, 2015 under which the
Compensation Committee may establish annual limits not to exceed $7.5 million. The Performance-Based Compensation Agreement covers years through May 2025. The application of the 2016 formula
produced a Performance Award for Mr. A.G. Lowenthal of $1,271,911 for the 2016 fiscal year (exclusive of salary). Also see "
Chief Executive Officer
Compensation
" above.
-
(2)
-
Mr. R.S.
Lowenthal's compensation is subject to an Individual Target Award (consisting of a formula) for determining a Performance-Based Cash Award for the
2016 fiscal year established by the Compensation Committee. Under the formula established in March 2016, R.S. Lowenthal was awarded $1,726,554 in cash bonus for the 2016 fiscal year (exclusive of
salary), which amount is reflected in column (g) of the "
Summary Compensation Table
." Also see "
Compensation Arrangement for
R.S. Lowenthal
" above.
50
Outstanding Equity Awards Table
As of December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
Equity Incentive
Plan Awards:
Number
of Securities
Underlying
Unexercised
Unearned
Options
(#)
|
|
Option
Exercise
Price
($)
|
|
Option
Expiry
Date
|
|
Number of
Shares or
Units of Stock
That Have
Not Vested
(#)
|
|
Market Value
of Shares or
Units of Stock
That Have
Not Vested
($) (13)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or
Other Rights
That Have
Not Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
($)
|
|
(a)
|
|
(b)
|
|
(c) (1)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h) (5)
|
|
(i)
|
|
(j)
|
|
A.G. Lowenthal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52,500
|
(1)
|
$
|
976,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124,000
|
(2)
|
$
|
2,306,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,690
|
(3)
|
$
|
589,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,795
|
(4)
|
$
|
256,587
|
|
|
|
|
|
|
|
J. J. Alfano
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(5)
|
$
|
93,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
(6)
|
$
|
148,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,200
|
(7)
|
$
|
40,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
(8)
|
$
|
37,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,381
|
(9)
|
$
|
44,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(10)
|
$
|
93,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(12)
|
$
|
186,000
|
|
|
|
|
|
|
|
R.S. Lowenthal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
(5)
|
$
|
65,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,500
|
(6)
|
$
|
158,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,400
|
(7)
|
$
|
81,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,524
|
(9)
|
$
|
177,146
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(10)
|
$
|
93,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(12)
|
$
|
186,000
|
|
|
|
|
|
|
|
B. McKigney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(6)
|
$
|
93,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500
|
(7)
|
$
|
27,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667
|
(9)
|
$
|
31,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(10)
|
$
|
93,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(11)
|
$
|
232,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
(12)
|
$
|
372,000
|
|
|
|
|
|
|
|
M. Whaley
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,500
|
(5)
|
$
|
65,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(6)
|
$
|
93,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,275
|
(7)
|
$
|
23,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
(8)
|
$
|
18,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,381
|
(9)
|
$
|
44,287
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
(10)
|
$
|
186,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,667
|
(12)
|
$
|
310,006
|
|
|
|
|
|
|
|
Notes to Outstanding Equity Awards Table:
-
(1)
-
Stock
awards to the Named Executives were granted on January 25, 2012 and vest on February 10, 2017, subject to the individuals being employed by the
Company on the vesting date.
-
(2)
-
Stock
awards to the Named Executives were granted on January 29, 2014 and vest on January 28, 2017, subject to the individuals being employed by the
Company on the vesting date or death, if earlier.
-
(3)
-
Stock
awards to the Named Executives were granted on January 29, 2015 and vest on January 28, 2018, subject to the individuals being employed by the
Company on the vesting date.
-
(4)
-
Stock
awards to the Named Executives were granted on February 26, 2015 and vest on February 25, 2018, subject to the individuals being employed by the
Company on the vesting date.
-
(5)
-
Stock
awards to the Named Executives were granted on February 23, 2012 and vest on February 22, 2017, subject to the individuals being employed by the
Company on the vesting date.
-
(6)
-
Stock
awards to the Named Executives were granted on February 25, 2013 and vest on February 24, 2018, subject to the individuals being employed by the
Company on the vesting date.
-
(7)
-
Stock
awards to the Named Executives were granted on January 29, 2014 and vest on January 28, 2019, subject to the individuals being employed by the
Company on the vesting date.
-
(8)
-
Stock
awards to the Named Executives were granted on February 27, 2014 and vest on February 26, 2019, subject to the individuals being employed by the
Company on the vesting date.
-
(9)
-
Stock
awards to the Named Executives were granted on January 29, 2015 and vest on January 28, 2020, subject to the individuals being employed by the
Company on the vesting date.
-
(10)
-
Stock
awards to the Named Executives were granted on February 26, 2015 and vest on February 25, 2020, subject to the individuals being employed by the
Company on the vesting date.
51
-
(11)
-
Stock
awards to the Named Executives were granted on July 29, 2015 and vest on July 28, 2020, subject to the individuals being employed by the Company
on the vesting date.
-
(12)
-
Stock
awards to the Named Executives were granted on February 24, 2016 and vest on February 23, 2021, subject to the individuals being employed by the
Company on the vesting date.
-
(13)
-
The
market value is based on the closing price of the Class A Stock on the NYSE on December 31, 2016 of $18.60.
On
January 26, 2017, the Named Executives were awarded 110,500 shares, which vest on January 25, 2020, subject to the individuals being employed by the Company on the
vesting date.
Option Exercises and Stock Vested
For the Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value Realized
on Exercise ($)
|
|
Number of Shares
Acquired
on Vesting (#)
|
|
Value Realized
on Vesting ($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
A. G. Lowenthal
|
|
|
|
|
|
|
|
|
130,160
|
|
$
|
2,084,040
|
|
J.J. Alfano
|
|
|
|
|
|
|
|
|
6,303
|
|
$
|
142,900
|
|
R.S. Lowenthal
|
|
|
|
|
|
|
|
|
3,313
|
|
$
|
107,175
|
|
B. McKigney
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
M. Whaley
|
|
|
|
|
|
|
|
|
4,706
|
|
$
|
107,175
|
|
Nonqualified Deferred Compensation
For the Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last
Fiscal Year ($)
|
|
Registrant
Contributions
in Last
Fiscal Year ($)
|
|
Aggregate
Earnings
in Last
Fiscal Year ($)
|
|
Aggregate
Balance
at 12/31/16 ($)
|
|
(a)
|
|
(b)
|
|
(c)(2)
|
|
(d)(2)
|
|
(f)(2)
|
|
A. G. Lowenthal (1)(3)
|
|
|
|
|
|
|
|
$
|
661,307
|
|
$
|
11,753,885
|
|
J.J. Alfano
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
R.S. Lowenthal
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
B. McKigney
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
M. Whaley
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
|
-
(1)
-
The
Named Executives did not make a contribution in 2016 to our Nonqualified Deferred Compensation Plan.
-
(2)
-
We
do not make contributions to the EDCP with respect to the voluntary deferrals. The aggregate balances shown in column (e) of the table above represent
amounts that the Named Executives earned as year-end bonuses but elected to defer (included as part of the amount in column (g), if any, of the "
Summary Compensation
Table
" above), plus earnings (or losses). Such earnings (or losses) for fiscal 2016 are reflected in column (d) of the "
Nonqualified Deferred
Compensation Table
" represents appreciation based on investments selected by the Named Executives. Account balances are invested in phantom investments selected by the Named
Executives from a menu of deemed investment choices. Participants may change their deemed investment choices quarterly. When participants elect to defer amounts into the EDCP, they also elect when the
amounts will ultimately be paid out to them. Distributions may either be made in a specific future year or at a time that begins after retirement. In accordance with Section 409A of the Code,
in general, distribution schedules cannot be accelerated (other than for hardship) and, to delay distribution, the participant must make such an election at least one year before distribution would
otherwise have commenced and the new distribution must be delayed a minimum of five years after distribution would have initially begun. The deferred amount is a liability of the Company and subject
to the risks of the business.
-
(3)
-
All
of the amounts contributed by Mr. Lowenthal to our Nonqualified Deferred Compensation Plan were previously reported as compensation to him in the
"
Summary Compensation Table
" for the applicable year.
52
Realized pay for fiscal 2016
To supplement the SEC required disclosure in the "
Summary Compensation Table
" set forth on
page 49 we have included the following additional table which shows the total compensation actually realized by each Named Executive for fiscal 2016.
The
Company believes that this table is useful to stockholders as it reflects the compensation actually realized for 2016 by the Named Executives. The Summary Compensation table, as
calculated under SEC rules, includes several items that are driven by accounting, actuarial and timing assumptions, which are not necessarily reflective of compensation actually realized by an
executive in any particular reporting year.
Our
Company's pay practices are not well reflected in these SEC-mandated tables because we used long-term (three to five year cliff vesting) stock awards to recognize and reward
executive performance accomplishments beyond their annual cash bonuses (but typically within their performance matrices, where we use them) to ensure a strong relationship between our senior
executives' ongoing performance and ongoing stockholder value creation. In the "
Summary Compensation Table
", these
stock awards are part of Total Compensation in the year of the award and are valued on the award date, even though they typically cliff-vest three to five years after the award date and will be valued
at vesting at the then market price of our stock. For additional information, please see "
Performance evaluation and total compensation element timing
"
in the "
Compensation Discussion and Analysis
", above.
Realized
pay for salary, bonus/non-equity incentive plan compensation and stock awards for fiscal 2016 was equal to 234% of the values shown in the "
Summary
Compensation Table
" for our Chief Executive Officer and between 77% and 102% for our other Named Executives. The table below shows realized compensation for fiscal 2016 for
each Named Executive.
Realized Pay for Fiscal 2016 Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Salary
|
|
Bonus
|
|
Vested
Stock
Awards
|
|
Vested
Stock
Options
|
|
Non-Equity
Incentive Plan
Compensation
|
|
Total
|
|
% of
Reported
|
|
|
|
(a)
|
|
(b)(1)
|
|
(c)(2)
|
|
(d)(2)
|
|
(e)(1)
|
|
(f)
|
|
(g)(3)
|
|
A.G. Lowenthal
|
|
$
|
500,000
|
|
$
|
|
|
$
|
2,084,040
|
|
$
|
|
|
$
|
|
|
$
|
2,584,040
|
|
|
234
|
%
|
J.J. Alfano
|
|
$
|
275,000
|
|
$
|
500,000
|
|
$
|
142,900
|
|
$
|
|
|
$
|
|
|
$
|
917,900
|
|
|
102
|
%
|
R.S. Lowenthal
|
|
$
|
200,000
|
|
$
|
|
|
$
|
107,175
|
|
$
|
|
|
$
|
1,726,554
|
|
$
|
2,033,729
|
|
|
99
|
%
|
B. McKigney
|
|
$
|
225,000
|
|
$
|
600,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
825,000
|
|
|
77
|
%
|
M. Whaley
|
|
$
|
193,750
|
|
$
|
500,000
|
|
$
|
107,175
|
|
$
|
|
|
$
|
|
|
$
|
800,925
|
|
|
89
|
%
|
Notes to Realized Pay for 2016 Table
-
(1)
-
Reflects
amounts earned based on fiscal 2016 performance.
-
(2)
-
Reflects
the aggregate value of stock awards and stock options that vested during fiscal 2016. The value of vested stock awards is calculated by multiplying the
number of shares vested by the closing price of our Class A Stock on the vesting date.
-
(3)
-
Represents
the percentage of Total Compensation in the Realized Pay for Fiscal 2016 Table to Total Compensation (column j) in the Summary Compensation Table.
Compensation Policies and Risk
The Compensation Committee, the Board as a whole and senior management believe that the Company's compensation policies and practices are not
likely to have a material adverse effect on the Company. The Company is necessarily in the business of taking risks to facilitate its customer-oriented businesses and certain proprietary trading
activities. As a result, there is no assurance that the Company will not sustain trading or other losses in pursuing its businesses. However, in that context, we believe our compensation policies,
together with our control systems and risk management procedures, generally act as
53
mitigation
against, rather than an encouragement of, employees taking excessive risk exposure with firm capital.
A
substantial portion of the Company's incentive compensation practices are related to employees situated in departments that do not create firm financial risk in conducting their
advisory-style businesses. Other commitment and underwriting-related activities (which do involve firm-level risk) are regularly monitored by the firm's Commitment Committee, and such risks are
further mitigated by the practice of paying modest salaries and year-end-only bonuses to the managers and employees in these activities.
For
groups in the firm which do take frequent firm risk positions in conducting their businesses, the Company employs various risk controls, trading reserves and compensation hold-back
policies which are designed to protect the firm against excessive risk-taking with firm capital. These include generally conservative position limits, monthly and quarterly compensation hold-back
and/or charge-backs as well as year-end carry-over policies for groups that are compensated on monthly or quarterly intervals. In addition, for some trading groups, mark-down policies are imposed that
are designed to prevent holding stale or unsalable inventories; and for others, compensation accrual at settlement date rather than trade date is utilized where appropriate. We also employ strict
price monitoring policies for
reviewing trading positions and the monitoring of all such prices by a group reporting directly to the Chief Financial Officer outside the control of interested individual department heads.
Our
senior department managers in areas which place firm capital at risk are paid salaries and year-end-only bonuses from the aggregate results of their departments, a mitigating factor
against excessive risk-taking within their areas of responsibility. We also have a substantial mitigating effect against excessive risk-taking by our employees due to our Chief Executive Officer's
incentive compensation arrangement which is annual, includes diverse criteria for any incentive payments and includes an annual cap on any earned incentive payment amount.
Our
Compensation and Audit Committees coordinate their activities and oversight where compensation and risk activities intersect and, since February 2009, the Board has conducted ongoing
risk-oriented reviews of firm operating units presented by management concurrently with most Audit Committee meetings, and conducted annual Compensation Committee reviews of each of these specific
risk/compensation practices. Please see "
Risk Management
" on page 15 for further information.
This
concludes our Compensation Discussion and Analysis.
Security Ownership of Certain Beneficial Owners and Management
Our authorized capital includes 99,665 shares of Class B Stock, all of which were issued and outstanding, and 50,000,000 of shares of
Class A Stock, of which 13,275,963 shares of Class A Stock were issued and outstanding, and 50,000,000 shares of Preferred Stock, none of which were outstanding as of March 10,
2017.
The
following table sets forth certain information regarding the beneficial ownership of each class of our stock as of March 10, 2017 with respect to (i) each person known
by us to beneficially own, or exercise control or discretion over, more than 5% (except as otherwise indicated) of any class of our stock, (ii) each of our directors and nominees for director,
(iii) each of our executive officers named in the "
Summary Compensation Table
" set forth herein and (iv) our directors, nominees for
director and executive officers as a group. The address of each beneficial owner for which an address is not otherwise indicated is: c/o Oppenheimer Holdings Inc., 85 Broad Street, New
York, NY 10004.
For
purposes of the table, beneficial ownership is determined pursuant to Rule 13d-3 of the Exchange Act, pursuant to which a person or group of persons is deemed to have
"beneficial ownership" of stock which such person or group has the right to acquire within 60 days after March 10, 2017. The percentage of shares deemed outstanding is based on
13,275,963 shares of Class A Stock and 99,665
shares of Class B Stock outstanding as of March 10, 2017. In addition, for purposes of computing the percentage of Class A
54
Stock
owned by each person, the percentage includes all Class A Stock issuable upon the exercise of outstanding options held by such persons within 60 days after March 10, 2017.
There
are no outstanding rights to acquire beneficial ownership of any Class B Stock.
Mr. A.G. Lowenthal has advised us that he intends to vote all of the Class B Stock owned and controlled by him for each of the matters referred to
in the Notice of Meeting to be voted on at the Meeting.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Stock
|
|
Class B Stock
|
|
Name of Beneficial Owner
|
|
Shares
|
|
%
|
|
Shares
|
|
%
|
|
Hotchkis & Wiley Capital Management, LLC (1)
|
|
|
1,236,758
|
|
|
9.3
|
%
|
|
|
|
|
|
|
Executive Officers, Directors, and Others:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.G. Lowenthal (2)
|
|
|
3,154,929
|
|
|
23.8
|
%
|
|
96,077
|
|
|
96.4
|
%
|
J. J. Alfano (3)
|
|
|
54,819
|
|
|
*
|
|
|
60
|
|
|
*
|
|
W. Ehrhardt (3)
|
|
|
14,350
|
|
|
*
|
|
|
|
|
|
|
|
M.A.M. Keehner (3)
|
|
|
14,350
|
|
|
*
|
|
|
|
|
|
|
|
R. S. Lowenthal (4)
|
|
|
34,366
|
|
|
*
|
|
|
140
|
|
|
*
|
|
A.W. Oughtred (3)
|
|
|
15,150
|
|
|
*
|
|
|
|
|
|
|
|
E.K. Roberts (5)
|
|
|
214,607
|
|
|
1.6
|
%
|
|
120
|
|
|
*
|
|
P.M. Friedman (3)
|
|
|
1,000
|
|
|
*
|
|
|
|
|
|
|
|
E. Behrens (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.M. Dwyer (3)
|
|
|
4,000
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers and Directors as a group (10 persons)
|
|
|
3,507,571
|
|
|
26.4
|
%
|
|
96,397
|
|
|
96.7
|
%
|
-
*
-
Less
than 1%
-
(1)
-
Based
solely on Schedule 13G filed with the SEC on February 10, 2017 by Hotchkis & Wiley Capital Management, LLC. The address of their
business office is 725 South Figueroa St., 39th Floor, Los Angeles, CA 90017.
-
(2)
-
With
respect to the Class A Stock, A.G. Lowenthal is the sole general partner of Phase II Financial L.P., a New York limited partnership, which
is the record holder of 3,141,193 shares of Class A Stock. Mr. Lowenthal holds 13,736 shares of Class A Stock through the Oppenheimer 401(k) Plan. With respect to the
Class B Stock, Phase II Financial Inc., a Delaware corporation wholly-owned by Mr. Lowenthal, is the holder of record of all such shares.
-
(3)
-
Stock
is held directly.
-
(4)
-
R.S.
Lowenthal owns 30,847 shares of Class A Stock directly and 3,519 shares of Class A Stock through the Oppenheimer 401(k) Plan. R.S.
Lowenthal owns 303,357 shares of Class A Stock indirectly through Phase II Financial L.P., 174,000 shares of Class A Stock indirectly through the R.S. Lowenthal Family
Trust and 150,000 shares of Class A Stock indirectly through the A.R. Lowenthal Family Trust. R.S. Lowenthal is a limited partner in Phase II Financial L.P. and the
aforementioned trusts, which are included in the total number of shares of Class A Stock reported by A.G. Lowenthal in (2) above.
-
(5)
-
E.K.
Roberts owns 7,142 shares of Class A Stock directly and 207,465 shares of Class A Stock indirectly through E.K. Roberts Holdco Inc., an
Ontario corporation owned 100% by E.K. Roberts.
There
are no arrangements, known to us, the operation of which may at a subsequent date result in a change of control of our Company.
All
shares of Class A Stock authorized under the EIP, the ESP and the OIP have been approved by the Class B Stockholders or are subject to approval at the Meeting (See
Matter No. 5). Descriptions of the 2006 Equity Incentive Plan, the Employee Share Plan and the 2014 Incentive Plan appear in note 15 of our consolidated financial statements for the year
ended December 31, 2016 included in our Annual Report on Form 10-K for the year ended December 31, 2016.
55
Class A
Stock authorized for issuance under such share-based plans as of March 10, 2017 is as follows:
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
Number of
shares of Class A
Stock to be issued
upon exercise of
outstanding options
or upon vesting of
restricted stock or
stock awards
|
|
Weighted average
exercise price of
outstanding
awards
|
|
Number of
shares of Class A
Stock remaining
available for
future issuance
|
|
2006 Equity Incentive Plan
|
|
|
5,927
|
|
$
|
22.72
|
|
|
|
|
Employee Share Plan
|
|
|
162,090
|
|
$
|
18.99
|
|
|
|
|
2014 Incentive Plan
|
|
|
1,186,380
|
|
$
|
18.02
|
|
|
111,511
|
|
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a
registered class of our equity securities, to file by specific dates with the SEC initial reports of ownership and reports of changes in ownership of our equity securities. Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file. We are required to report in this proxy statement any
failure of our directors and executive officers and greater than ten percent stockholders to file by the relevant due date any of these reports during or for the preceding fiscal year (or, to the
extent not previously disclosed, any prior fiscal year).
To
our knowledge, based solely on review of copies of such reports furnished to us during and for the fiscal year ended December 31, 2016 and representations made to us by such
persons, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent stockholders were complied with. All other Section 16(a) filings
requirements are currently up to date.
Stock Buy-Back
On September 15, 2015, the Company announced that its Board of Directors approved a share repurchase program that authorizes the Company
to purchase up to 665,000 shares of the Company's Class A Stock, representing approximately 5% of its 13,348,369 then issued and outstanding shares of Class A Stock ("New Program"). This
authorization replaces the share repurchase program covering up to 675,000 shares of the Company's Class A Stock, which was announced on October 7, 2011 ("Previous Program"), pursuant to
which 322,177 shares of the Company's Class A Stock were repurchased and canceled prior to December 31, 2014. During the nine months ended September 30, 2015, the Company
purchased and canceled an additional 328,844 shares of Class A Stock for a total consideration of $6.6 million ($20.12 per share) under the Previous Program. The 23,979 remaining shares
available under the Previous Program have been replaced by the shares available under the New Program. During the fourth quarter of 2015, the Company purchased and canceled an aggregate of 94,882
shares of Class A Stock for a total consideration of $1.6 million ($17.20 per share) under the New Program.
During
the year ended December 31, 2016, the Company purchased and canceled an aggregate of 260,862 shares of Class A Stock for a total consideration of $3.9 million
($15.09 per share) under the New Program. As of December 31, 2016, 309,256 shares were available to be purchased under the New Program.
Any
such share purchases will be made by the Company from time to time in the open market at the prevailing open market price using cash on hand, in compliance with the applicable rules
and regulations of the New York Stock Exchange and federal and state securities laws and the terms of the Company's senior secured debt. All shares purchased will be canceled. The share repurchase
program is expected to continue indefinitely. The timing and amounts of any purchases will be based on market conditions and other factors including price, regulatory requirements and capital
availability. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of Class A Stock. Depending on market conditions and other factors,
these repurchases may be commenced or suspended from time to time without prior notice.
56