UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Investment Technology Group, Inc. |
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Investment Technology Group, Inc.
380 Madison Avenue,
New York, New York 10017
Notice of Annual Meeting of Stockholders
To Be Held May 6, 2008
To the Stockholders of Investment Technology Group, Inc.:
NOTICE IS HEREBY GIVEN that Investment Technology Group, Inc., a Delaware corporation ("ITG" or the "company"), will hold its annual meeting of stockholders at ITG's principal executive offices at 380 Madison Avenue, 4th Floor, New York, New York 10017, on Tuesday, May 6, 2008 at 1:00 p.m. (local time), and any adjournments or postponements thereof, for the following purposes:
Our board of directors has fixed the close of business on March 10, 2008 as the record date for determining the stockholders entitled to notice of, and to vote at, the annual meeting. Only holders of record of ITG® common stock at the close of business on March 10, 2008 are entitled to notice of, and to vote at, the annual meeting. A complete list of stockholders entitled to vote will be available during normal business hours at our principal executive offices located at 380 Madison Avenue, 4th Floor, New York, New York 10017 for a period of ten days prior to the annual meeting for examination by any ITG stockholder for purposes germane to the annual meeting.
Our board of directors unanimously recommends that you vote FOR the proposed slate of directors, FOR the ratification of the appointment of KPMG LLP as our independent auditors and FOR the re-approval of the Amended and Restated Investment Technology Group, Inc. Pay-For-Performance Incentive Plan. You are cordially invited to attend the annual meeting in person. Whether or not you expect to attend the annual meeting, please sign and mail promptly the enclosed proxy that is being solicited on behalf of our board of directors. A return envelope that requires no postage if mailed in the United States is enclosed for that purpose. Alternatively, you may vote via telephone or via the Internet as directed on the enclosed proxy card. The proxies of stockholders who attend the meeting in person may be withdrawn and such stockholders may vote personally at the meeting.
By Order of the Board of Directors, | ||
P. Mats Goebels Secretary |
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New York, New York March 27, 2008 |
Important Notice Regarding the Availability of Proxy Materials for the Stockholders' Meeting To Be Held on May 6, 2008:
A copy of the enclosed 2008 proxy statement is also available at www.proxyvote.com.
This proxy statement is being delivered to stockholders on or about March 28, 2008.
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THE ANNUAL MEETING | 3 | |||
Date, Time and Place of the Annual Meeting | 3 | |||
Matters to Be Considered at the Annual Meeting | 3 | |||
Voting at the Annual Meeting; Record Date; Quorum | 3 | |||
Proxies | 3 | |||
Treatment of Broker Non-Votes and Abstentions at the Annual Meeting | 4 | |||
Annual Report to Stockholders, Corporate Governance Guidelines, Code of Business Conduct and Ethics and Committee Charters | 5 | |||
ELECTION OF DIRECTORS | 5 | |||
Nominees to Board of Directors | 6 | |||
Executive Officers and Certain Significant Employees | 7 | |||
EXECUTIVE AND DIRECTOR COMPENSATION | 10 | |||
Compensation Discussion and Analysis | 10 | |||
Executive Compensation | 20 | |||
Summary Compensation Table | 20 | |||
Grants of Plan-Based Awards | 23 | |||
Options Exercised and Stock Vested for 2007 for Named Executive Officers | 25 | |||
Non-qualified Deferred Compensation | 26 | |||
Outstanding Equity Awards for Named Executive Officers at December 31, 2007 | 27 | |||
Severance and Change-in-Control Arrangements | 29 | |||
Director Compensation | 35 | |||
CORPORATE GOVERNANCE | 38 | |||
Board Meetings and Committees | 38 | |||
The compensation committee | 39 | |||
Code of Ethics | 40 | |||
Compensation Committee Interlocks and Insider Participation | 41 | |||
NYSE Certification | 41 | |||
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION | 42 | |||
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 42 | |||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS | 44 | |||
EQUITY COMPENSATION PLAN INFORMATION | 45 | |||
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE | 45 | |||
REPORT OF THE AUDIT COMMITTEE | 46 | |||
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS | 47 | |||
Fees to our Independent Auditor | 47 | |||
Pre-approval of Services by the External Auditor | 47 | |||
PROPOSAL TO RE-APPROVE THE INVESTMENT TECHNOLOGY GROUP, INC. PAY-FOR-PERFORMANCE INCENTIVE PLAN | 48 | |||
CONTACTING THE BOARD OF DIRECTORS | 50 | |||
WHERE YOU CAN FIND MORE INFORMATION | 50 | |||
OTHER MATTERS; STOCKHOLDER PROPOSALS FOR THE 2009 ANNUAL MEETING OF ITG | 52 | |||
APPENDIX AAMENDED AND RESTATED PAY-FOR-PERFORMANCE INCENTIVE PLAN | A-1 |
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Date, Time and Place of the Annual Meeting
We will hold the annual meeting at 1:00 p.m. (eastern daylight time), on Tuesday, May 6, 2008, at our principal executive offices at 380 Madison Avenue, 4th Floor, New York, New York 10017.
Matters to Be Considered at the Annual Meeting
We will hold the annual meeting for the following purposes:
Voting at the Annual Meeting; Record Date; Quorum
On March 10, 2008, the record date for the annual meeting, there were 43,686,066 shares of our common stock outstanding and entitled to vote at the annual meeting. Please note the following:
Proxies
We are furnishing you this proxy statement in connection with the solicitation of proxies by and on behalf of our board of directors for use at the annual meeting. Proxies in the form enclosed, or as directed via the telephone or via the Internet, which are properly completed and received and not subsequently revoked, will be voted at the annual meeting. These proxies will be voted in accordance
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with the directions specified thereon, and otherwise in accordance with the judgment of the persons designated as proxies. In the case of written proxies, if no directions are indicated on a properly executed proxy, such proxy will be voted in favor of the proposals.
If any other matters are properly presented at the annual meeting for consideration, the persons named in the enclosed forms of proxy and acting thereunder generally will have discretion to vote on such matters in accordance with their best judgment. Notwithstanding the foregoing, proxies voting against a specific proposal may not be used by the persons named in the proxies to vote for adjournment of the meeting for the purpose of giving management additional time to solicit votes to approve such proposal.
The grant of a proxy does not preclude you from attending the annual meeting and voting in person. You may revoke a proxy at any time before it is voted. Proxies may be revoked by:
In the case of proxies related to shares held under our Employee Stock Ownership Plan, such revocation or later dated proxy must be received no later than April 30, 2008. Attendance at the annual meeting will not enable you to revoke a previously delivered proxy with respect to shares held under our Employee Stock Ownership Plan.
Attendance at the annual meeting will not in and of itself constitute a revocation of a proxy. You must vote at the annual meeting to revoke a previously delivered proxy not otherwise revoked in accordance with the procedures below.
Any written notice of revocation or subsequent proxy must be delivered to Broadridge Financial Solutions, Inc., 51 Mercedes Way, Edgewood, NY 11717, or Investment Technology Group, Inc., 380 Madison Avenue, 4th Floor, New York, New York 10017, Attention: Secretary, no later than May 5, 2008.
We will bear all expenses of our solicitation of proxies for the annual meeting. In addition to solicitation by use of the mails, our directors, officers and employees may solicit proxies from stockholders. Solicitation may take place in person or by telephone, facsimile or other means of communication. Such directors, officers and employees will not be additionally compensated, but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. Arrangements may be made with brokerage houses, custodians, nominees and fiduciaries for forwarding of proxy solicitation materials to beneficial owners of our common stock held of record by such brokerage houses, custodians, nominees and fiduciaries. We will reimburse such brokerage houses, custodians, nominees and fiduciaries for their reasonable expenses incurred in doing so. We have retained The Altman Group to assist in soliciting proxies for a fee of approximately $6,000 plus reasonable expenses.
Treatment of Broker Non-Votes and Abstentions at the Annual Meeting
All shares of our common stock represented by properly completed proxies received prior to or at the annual meeting and not revoked will be voted in accordance with the instructions indicated in such proxies. In the case of written proxies, if no instructions are indicated on a properly executed returned proxy, such proxies will be voted FOR the approval of each of the matters set forth on the proxy card. It is not expected that any matter other than those referred to herein will be brought before the stockholders at the annual meeting. However, if other matters are properly presented, the persons
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named as proxies will vote in accordance with their best judgment with respect to such matters, unless authority to do so is withheld in the proxy.
An automated system administered by Broadridge Financial Solutions, Inc. will tabulate votes cast by proxy via telephone and the Internet, and Broadridge will also tabulate votes cast by proxy via mail and in person at the annual meeting. Brokers who hold shares in street name for customers who are the beneficial owners of such shares are prohibited from giving a proxy to vote such customers' shares with respect to any proposal in the absence of specific instructions from such customers. Broker non-votes, withheld votes and abstentions, tabulated separately, will be included in the determination of the number of shares present at the annual meeting and whether a quorum is present. Broker non-votes and withheld votes will not be counted in determining whether a nominee is elected. Broker non-votes will not be counted in determining whether our appointment of independent auditors is ratified, whether the Amended and Restated Investment Technology Group, Inc. Pay-for-Performance Incentive Plan is re-approved, or whether any other management or stockholder proposal is approved but with respect to these proposals, abstentions have the effect of a vote against such proposals.
Annual Report to Stockholders, Corporate Governance Guidelines, Code of Business Conduct and Ethics and Committee Charters
A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2007 is enclosed. Our 2007 Annual Report on Form 10-K is also available through our website at http://investor.itg.com, under Investor Information and SEC Filings and at www.proxyvote.com.
Our Corporate Governance Guidelines and our Code of Business Conduct and Ethics, which govern our directors, officers and employees, and the charters for each of our audit committee, compensation committee and nominating and corporate governance committee are available on our website at http://www.itg.com/investors/guidelines.php. You may also obtain a copy of such documents by writing to: Investment Technology Group, Inc., 380 Madison Avenue, 4th Floor, New York, New York 10017, Attn: Investor Relations.
The number of directors to be elected at the annual meeting has been fixed at seven by our board of directors. Such directors will be elected to serve until the next annual meeting of stockholders or until their successors have been duly elected and qualified.
Each nominee listed below has been nominated for election by the nominating and corporate governance committee of our board of directors and has consented to serve as a director if elected. In the event that any nominee shall be unable to serve as a director (which is not now anticipated), proxies will be voted for substitute nominees recommended by the board of directors or the board of directors may elect to reduce the number of directors. All of the nominees for election as a director are presently members of the board of directors.
The board of directors has determined that Messrs. Burdett, Jones, King, O'Hara, Steck and Ms. O'Hara are "independent" within the meaning of the NYSE listing standards. Ms. O'Hara and Mr. O'Hara are not related. Our board of directors' policies for determining director independence are available on our website at http://www.itg.com/investors/director_independence.php.
Ms. O'Hara has been our chairman since May 2007.
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Nominees to Board of Directors
The following information is submitted concerning the nominees for election as directors.
Name |
Age |
Position |
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J. William Burdett | 68 | Director | ||
Robert C. Gasser | 43 | Director, President and Chief Executive Officer | ||
Timothy L. Jones | 52 | Director | ||
Robert L. King | 57 | Director | ||
Kevin J.P. O'Hara | 46 | Director | ||
Maureen O'Hara | 54 | Chairman | ||
Brian J. Steck | 61 | Director |
J. William Burdett has been a director since July 2001 and was a non-executive director of ITG Australia Ltd., a subsidiary of ITG from December 2006 until April 2007. In 2006, Mr. Burdett joined the board of IRESS Market Technology Ltd., a leading provider of market data, financial planning and order routing services to the equities markets in Australia, New Zealand and Canada. From 1988 until March 2001, Mr. Burdett was Chairman and Chief Executive Officer of the Burdett Buckeridge Young Group ("BBY"), which is comprised of the two Australian broker/dealer companies: BBY and Australian Clearing Services. From 1970 until 1987, Mr. Burdett was a partner and director of A.C. Goode & Co., one of the largest stock-brokering/investment banking companies in Australia. Mr. Burdett was a non-executive director of BBY and ITG Australia Ltd. from November 2000 through November 2002.
Robert C. Gasser has been a director and the President and Chief Executive Officer of the company since October 4, 2006. Mr. Gasser was Chief Executive Officer of NYFIX, Inc. ("NYFIX"), a global electronic trade execution firm, from November 2005 to September 2006. From 2001 to 2005, Mr. Gasser served as Chief Executive Officer of NYFIX Millennium LLC, a subsidiary of NYFIX, and President of NYFIX Transaction Services Inc. and NYFIX Clearing Corporation. Mr. Gasser was Head of U.S. Equity Trading at JP Morgan from 1999 to 2001.
Timothy L. Jones has been a director since March 2005. Since October 2007, Mr. Jones has been Chief Executive Officer and director of the Personal Accounts Delivery Authority, an advisory non-departmental public body of the Department for Work and Pensions within the United Kingdom government. From December 2002 to January 2005, Mr. Jones was the Chief Executive Officer of Simpay Limited, a mobile phone payment system company. In November 2004, Mr. Jones joined the board of Groves Malthouse Management Limited, a real estate management company. Mr. Jones co-founded Purseus, a company developing a new architecture for correspondent banking, and was Chief Executive Officer of Purseus from April 2000 to November 2002. Prior to that, for 17 years, Mr. Jones was at National Westminster Bank PLC where he held various positions in the Operations, Information Technology Strategy and Policy, Mondex, Electronic Markets and Retail Banking Services divisions, eventually becoming a Managing Director in 1996 and Chief Executive of the retail banking division in 1999.
Robert L. King has been a director since June 1994. Since July 2005, Mr. King has been the Chief Executive Officer and a Director of Click Sales, Inc., an online retailer of digital download products. From October 2001 through May 2004, Mr. King was the Chairman and Chief Executive Officer of Requisite Technology, Inc., which helps companies to create, organize, and manage product and service information for efficient web-based finding, buying, and selling. Mr. King is currently a Director of Clarity Imaging Technologies, Inc. and Office Source. Mr. King was the President and Chief Executive Officer of Corporate Express, Inc., a distributor of office and computer supplies, from 1998 to 2001. Mr. King has also been a director of Corporate Express, Inc. and served as the President and Chief Operating Officer of Corporate Express, Inc. from 1993 until 1998. Prior to 1993, Mr. King was
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employed by FoxMeyer Corporation, a distributor of health and pharmaceutical products, where he was Chief Executive Officer from 1989 to 1993, President from 1988 to 1993, and Chief Operating Officer from 1988 to 1989.
Kevin J. P. O'Hara has been a director since January 2007. From May 2006 to July 2007, Mr. O'Hara served as the Chief Administrative Officer and Chief Strategy Officer of CBOT Holdings, Inc. Previously, he served as Chief Administrative Officer, General Counsel and Corporate Secretary of Archipelago Holdings, Inc. from 1999 to 2006 and served as Executive Vice President and Co-General Counsel of NYSE Group, Inc. in 2006. Prior to joining Archipelago, Mr. O'Hara worked in Romania and Lithuania from 1995 to 1999 on the development of legal, regulatory and technology infrastructure of emerging capital markets. He served as Senior Attorney in Bucharest, Romania, for Financial Markets International, Inc. and Project Director in Vilnius, Lithuania, and project Manager on other regional projects while based in the United States for the Pragma Corporation. Prior to his international experience, Mr. O'Hara worked in the Division of Enforcement of the U.S. Securities and Exchange Commission in Washington, D.C., as Senior Counsel from 1994 to 1995 and as Staff Attorney from 1991 to 1993. In 1993, Mr. O'Hara served as Special Assistant United States Attorney at the U.S. Department of Justice. From 1988 to 1991, he practiced corporate and commercial litigation at the Chicago law firm of Ross & Hardies, now McGuire Woods Ross & Hardies. He previously served from 2003 to 2005 on the board of managers of White Cap Trading, L.L.C., an institutional agency broker.
Maureen O'Hara has been a director since January 2003 and chairman since May 2007. She served as lead director from January 2005 until her appointment as chairman in May 2007. Ms. O'Hara is the Robert W. Purcell Professor of Finance at the Johnson Graduate School of Management, Cornell University. She holds degrees from the University of Illinois (B.S. Economics) and Northwestern University (M.S. Economics and Ph.D. Finance). In December 2006, Ms. O'Hara joined the board of directors of NewStar Financial Inc. Ms. O'Hara joined the faculty at Cornell in 1979. She has had visiting appointments at UCLA, the London Business School, the University of New South Wales, Cambridge University, and Hong Kong University of Science and Technology. Ms. O'Hara's research focuses on issues in market microstructure, and she is the author of numerous journal articles as well as the book Market Microstructure Theory (Blackwell: 1995). In addition, Ms. O'Hara publishes widely on a broad range of topics in finance, including banking, law and finance, and experimental economics. She has served as President of the Western Finance Association and recently served as President of the American Finance Association.
Brian J. Steck has been a director since September 2004. Mr. Steck is currently President and Director of St. Andrews Financial Corp., a private financial and investment company and he has served as an advisor to Harris Bank since 2005. Mr. Steck also serves as Chairman of the Board of Purolator Courier and as a director of Dundee Precious Metals Inc. and CMA (Canadian Medical Association) Holdings Inc. Mr. Steck was Chairman and CEO of Nesbitt Burns Inc. and its subsidiaries from 1990 until his retirement in 1999. He was also Vice-Chairman of the Bank of Montreal, responsible for wealth management and investment banking from 1992 to 1999. Mr. Steck is past Chairman of the Investment Dealers Association of Canada, the Canadian Securities Institute, the Canadian District of the Securities Industry Association of America, and past Governor of the Toronto Stock Exchange.
Executive Officers and Certain Significant Employees
The executive officers of our company are appointed by, and serve at the discretion of, our board of directors. Other than Mr. Gasser, for whom information is provided above, the following sets forth information as to the other executive officers and certain significant employees of our company, each of
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whom are also members of the company's executive committee. Except for Messrs. Goldstein and Wright, the individuals noted below are executive officers of the company.
Name |
Age |
Position |
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Ian Domowitz | 56 | Managing Director | ||
P. Mats Goebels | 41 | Managing Director, General Counsel and Secretary | ||
Peter A. Goldstein | 44 | Managing Director and Global Head of Human Resources | ||
Alasdair Haynes | 48 | Managing Director and Chief Executive Officer of ITG International | ||
Christopher J. Heckman | 47 | Managing Director | ||
Anthony J. Huck | 44 | Managing Director | ||
David L. Meitz | 44 | Managing Director | ||
Howard C. Naphtali | 54 | Managing Director and Chief Financial Officer | ||
James Mark Wright | 48 | Managing Director and Global Head of Product Management |
Ian Domowitz is a Managing Director responsible for our networking and analytical and research products. He joined ITG in April 2001. Mr. Domowitz was the Mary Jean and Frank P. Smeal Professor of Finance at Pennsylvania State University from June 1998 to April 2001, and a Professor at Northwestern University from September 1982 to May 1998.
P. Mats Goebels is a Managing Director and General Counsel and Secretary. He joined our company in 1998 and is responsible for all legal and regulatory matters. Mr. Goebels was a corporate attorney at the New York offices of Sullivan & Cromwell from 1995 to 1998, and of Weil, Gotshal & Manges from 1991 to 1995. Mr. Goebels is a managing member of Sunrise Associates LLC.
Peter A. Goldstein is a Managing Director and Global Head of Human Resources. Prior to joining ITG in September 2007, Mr. Goldstein was the Global Head of Human Resources for RREEF, the Alternative Investments Division of Deutsche Bank. Mr. Goldstein began his career in 1987 at Laventhol & Horwath and subsequently spent nine years in human resources at JPMorgan, both in the United States and abroad.
Alasdair Haynes is a Managing Director and Chief Executive Officer of ITG International. In 1998, Mr. Haynes joined the company as Chief Executive Officer of Investment Technology Group Europe Limited ("ITG Europe") following a 20-year career in investment banking working in London, Paris and Singapore. Prior to joining ITG, he held the position of Director and Head of Global Equity Derivatives at HSBC and has held senior positions with Bankers Trust, UBS and Morgan Grenfell. Mr. Haynes is a Director of FIX Protocol Limited which aims to improve the global trading process by defining, managing and promoting an open protocol for real-time, electronic communication between industry participants. Mr. Haynes is also a Director of TurningPoint Transition Management (Pty) Ltd., an independent private company providing specialist advice and skills to the South African fund industry.
Christopher J. Heckman is a Managing Director responsible for the POSIT® suite of products, sales and trading coverage teams and business development. He joined our company in January 1991 as a sales trader and became manager of institutional sales and trading in January 1997. Prior to joining ITG, Mr. Heckman worked in the program trading area at Salomon Brothers.
Anthony J. Huck is a Managing Director, responsible for algorithmic and portfolio trading, transition services, international sales and derivatives in the United States and Canada. He joined ITG in 1994 as a Vice President responsible for Portfolio Trading. From 1990 to 1994, Mr. Huck managed domestic and international customer program trading in the Equity Derivatives Group at Nomura Securities International.
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David L. Meitz is a Managing Director responsible for Software Development, Technology and Trading Support Services, and Information Security/Business Continuity. He joined our company in July 2002 from Reuters America, Inc. where he held the position of Executive Vice President since 1995. Mr. Meitz previously held technology and customer service management positions at Citibank, N.A. and Quotron Systems, Inc., a wholly-owned subsidiary of Reuters America, Inc.
Howard C. Naphtali is a Managing Director and Chief Financial Officer. He joined our company in April 1997 and was appointed as Managing Director and Chief Financial Officer in 2000. From 1988 to 1997, Mr. Naphtali worked for Reuters America, Inc. where he served as Senior Vice President and Chief Financial Officer as well as Senior Vice President and Chief Operating Officer of Quotron Systems, Inc., a wholly-owned subsidiary of Reuters.
James Mark Wright is a Managing Director and the Global Head of Product Management. He joined ITG in 1992 as Vice President of Software Development and has held several roles at ITG since then, including manager of the software development organization for ITG and chief information officer of the company.
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EXECUTIVE AND DIRECTOR COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
EXECUTIVE SUMMARY
Our compensation committee is responsible for reviewing and approving the compensation policies, plans and programs for (among others) our "named executive officers", including the chief executive officer, the chief financial officer and the three most highly compensated executive officers (other than our chief executive officer and chief financial officer) who were serving as executive officers as of December 31, 2007.
While the committee reviews our compensation programs every year, the principal components of our named executive officers' compensation are the same as last year's:
OBJECTIVES OF ITG'S EXECUTIVE COMPENSATION PROGRAMS
Our executive compensation programs have five key objectives:
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COMPENSATION DECISION FACTORS
Benchmarking
Each year, the compensation committee commissions one or more benchmarking studies for the executive officer positions to help inform the compensation committee's decisions and monitor our executive compensation programs.
As in previous years, a benchmarking study was conducted by the compensation committee's independent consultant, PricewaterhouseCoopers LLP, to help the committee set total cash compensation opportunities for the named executive officers (except for Mr. Haynes and Mr. Domowitz, each of whose annual incentive compensation was not formula-based and whose 2007 compensation was based on industry survey data as described below, and Mr. Gasser whose 2007 compensation was based on his employment agreement). Total cash compensation opportunities encompass base salary and annual incentive compensation opportunity under our Amended and Restated Pay-for-Performance Incentive Plan (described below) for 2007. The benchmarking study used by the compensation committee reviewed comparisons on a three year average basis to executive total cash compensation levels at five public-company peer organizations (Ameritrade Holding Corporation, Jefferies Group Inc., Knight Capital Group Inc., NASDAQ Stock Market Inc. and NYSE Group), as well as industry survey data provided to the independent consultant. We made a few changes in the peer group for purposes of setting the total cash compensation levels for 2007Instinet was dropped from last year's peer group because it was acquired, and NYSE Group was added because it was a comparable peer organization for which public data became available. While these peer companies differ from ITG in terms of business model, we utilized them for benchmarking purposes because we believed that, at the time, they were the closest public companies to ITG in terms of complexity and market focus. We utilized the industry data surveys because they provided data on the financial services and securities brokerage industries with whom we compete for talent.
The peer group's compensation data was not size-adjusted due to the small sample size of the peer group. However, ITG's relative small size was a factor in the compensation committee's application of the data, as were the differences between ITG's mix of business and the business mix of the peer companies. Survey position matches were selected by the company with the assistance of its compensation consultant to reflect the responsibilities and scope of ITG's management positions.
In October 2007, PricewaterhouseCoopers LLP conducted another study, based on industry survey data, including position matching data, provided by McLagan Partners and Hewitt Associates, that was used to validate Mr. Domowitz's and Mr. Haynes' total compensation (including cash and equity compensation). When reviewing Mr. Domowitz's and Mr. Haynes' compensation, the compensation committee considered each of their roles versus internal peers, their respective market expertise, and market competitive remuneration when compared to the position benchmark analysis prepared by PricewaterhouseCoopers LLP. Based on this analysis, both Mr. Domowitz's and Mr. Haynes' total compensation (including cash and equity compensation) was targeted between the 50th and 75th percentile of our market comparisons. Mr. Domowitz's compensation is reflective of the achievement of his performance objectives in 2007 in the growth of our research and analytical and routing network products. Mr. Haynes' compensation is reflective of the achievement of his performance objectives in 2007 in the growth of both our European and Asia Pacific businesses.
In the beginning of 2008, the compensation committee commissioned an additional benchmarking study by McLagan Partners to review and expand our peer group, assist in approving the total compensation for Messrs. Naphtali and Huck (including the equity awards that were granted to them in early 2008 (as discussed below)) and more generally to help better inform the committee's future decisions and evaluate our existing executive compensation programs. The benchmarking study performed in 2008 reviewed executive compensation levels for comparable named executive officer levels at twelve public-company peer organizations (CME Group, Inc., eSpeed, Inc., GFI Group Inc.,
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IntercontinentalExchange Inc., Knight Capital Group Inc., MarketAxess Holdings, Inc., NASDAQ Stock Market, NYFIX Inc., NYMEX Holdings Inc., NYSE Euronext, Options Xpress Holdings Inc. and Tradestation Group Inc.) as well as comparable position data. We intend to use these peer companies going forward, as opposed to the five public-company peer organizations used in the prior benchmarking study, because we believe that they are a more appropriate peer group against which to benchmark key executive pay in terms of business focus and revenues. In addition, eight of these peer companies currently list the company as a compensation peer. To help finalize Messrs. Naphtali's and Huck's total compensation in respect of 2007, the compensation committee also considered the benchmarking study from earlier in the year and survey data provided by McLagan Partners in addition to the study performed in 2008.
Based on the benchmarking studies and surveys described above, we reached the overall conclusion that the 2007 executive compensation programs are consistent with our compensation objectives and guiding principles, and are in the best interests of our stockholders. Key reasons for this conclusion include: first, that competitive benchmarking indicates that our executive compensation levels are within a normal range of competitive practice; and second, that total compensation is highly dependent on company and business unit performance. Specific conclusions of these benchmarking studies include the following:
Other Factors Considered
The benchmarking studies and industry surveys are just one element considered by the compensation committee in setting compensation levels. As discussed throughout this compensation discussion and analysis, in addition to the studies and surveys, the compensation committee considers such additional factors as:
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ANALYSIS OF ITG'S EXECUTIVE COMPENSATION PROGRAMS
Base Salary Program
Base salary levels are established based on a comparison to the competitive market level of base salaries for each executive's position and responsibilities. The base salaries of the named executive officers for 2007, which are disclosed in the Summary Compensation Table below, represent a small portion of an executive officer's total compensation package consistent with our objective to emphasize pay-for-performance and long-term incentives. The compensation committee did not adjust the base salaries of our named executive officers in 2007, based on a comparison to the competitive market level of base salaries for each executive's position and responsibilities, and our intention to link increases in compensation primarily to performance.
Annual Cash Incentive Program
Our annual bonus program for our named executive officers (except for Messrs. Domowitz and Haynes as described below), the Amended and Restated Pay-For-Performance Incentive Plan ("Pay-For-Performance Incentive Plan"), is formula-based and designed to reward our executives based on the financial growth of the company or the business unit or units for which such executive has key responsibilities. The formulas are recommended to the compensation committee by our chief executive officer and chief financial officer based on a budget analysis and approved by the compensation committee during the first quarter of the year. For 2007, the annual incentive for Mr. Naphtali, which is reflected in the Summary Compensation Table below, was based on a formula tied to ITG's adjusted 2007 pre-tax operating income because our compensation committee believed that this measure is strongly linked to stockholder value. For 2007, the annual incentive for Mr. Huck was based 80% on a formula linked to net revenues of the businesses in which he most directly plays a leadership role, and 20% based on adjusted 2007 pre-tax operating income for our institutional broker-dealer in Canada because these are the components of ITG pre-tax operating income over which he has the greatest control.
The 2007 annual incentive targets for Mr. Gasser under the Pay-For-Performance Incentive Plan were negotiated in his employment agreement when he joined the company in 2006. As stipulated in his employment agreement, Mr. Gasser's annual incentive opportunity for 2007 ranged from $393,750 if the company's adjusted pre-tax operating income for 2007 was $80,000,000 to $1,575,000 if the company's adjusted pre-tax operating income for 2007 was $130,000,000 or more. As shown in the Summary Compensation Table below, Mr. Gasser received an annual incentive of $1,575,000 in return for the company's 2007 adjusted pre-tax operating income of $188,868,000, which was 145% of the performance target of $130,000,000.
The following three paragraphs provide details on the annual cash incentive formulas for each other named executive officer (except for Mr. Domowitz and Mr. Haynes, each of whose annual cash incentive compensation was not formula-based), including the range of performance and incentive formulas for 2007.
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Mr. Naphtali's annual cash incentive opportunity for 2007 ranged from 0.6% to 0.8% of the company's adjusted pre-tax operating income ("operating income") depending on the growth in operating income over 2007 with the 0.8% level requiring at least a 28% growth. Because our operating income increased by 26% in 2007, Mr. Naphtali earned and was paid a bonus of $1,416,511, equal to 0.75% of operating income.
Mr. Huck's annual cash incentive opportunity for 2007 was based on two performance measures. 80% was based primarily on net revenue growth of the company's broker-dealer businesses in the U.S. and Canada ("net revenue"), and 20% was based on adjusted pre-tax operating income of the company's institutional broker-dealer in Canada.
Because the net revenues grew 16% and operating income grew 36%, Mr. Huck earned a bonus level of $858,866 equal to 0.29% of net revenues over a predetermined net revenue threshold and $766,006 relating to operating income, for a total of $1,624,872. However, the compensation committee exercised negative discretion to pay Mr. Huck a lower amount because of internal pay equity reasons, industry survey data and a comparison of Mr. Huck's prior years' compensation. As disclosed in the Summary Compensation Table below, the bonus paid to Mr. Huck was $1,450,000.
The compensation committee certifies the performance results and approves bonus payments during the first quarter of the following year, following completion of our audited financial statements. The compensation committee also has the ability to exercise negative discretion with respect to the approval of bonuses, which it did not exercise for 2007 except for Mr. Huck as discussed above.
Mr. Domowitz does not participate in the Pay-for-Performance Incentive Plan because the business for which he is responsible is not fully conducive to measurement using the financial metrics available under that plan. For 2007, Mr. Domowitz's bonus was based on the compensation committee's subjective evaluation of his performance. In particular, the compensation committee determined that the amount of Mr. Domowitz's bonus was appropriate based on his fulfillment of business objectives related to the growth of our research and analytical and routing network products, comparisons to competitive market levels of incentive awards and internal peer equity levels.
As a non-U.S. based officer, Mr. Haynes does not participate in the Pay-for-Performance Incentive Plan. For 2007, Mr. Haynes' bonus was based on the compensation committee's subjective evaluation of his performance and the performance of his business unit. This approach was used for Mr. Haynes because the emerging-business status of his business unit makes formula-based financial metrics a less useful way to evaluate his performance. Specifically, the compensation committee reviewed internal peer equity levels, comparisons to competitive market levels of incentive awards and his fulfillment of business objectives related to the growth of our European and Asia Pacific businesses in determining the appropriate amount of Mr. Haynes' bonus.
See "Impact of Regulatory Requirements" below for a discussion of tax considerations related to our annual incentive plan.
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Amended and Restated Investment Technology Group, Inc. Stock Unit Award Program Subplan ("SUA Program")
Under our SUA Program, each participant in the program (including the named executive officers other than Mr. Haynes) could irrevocably elect, on an annual basis, to forgo the receipt of a portion of their 2007 total cash compensation and receive units representing shares of our common stock on a one for one basis with a fair market value equal to 120% of the forgone compensation. The compensation that is deferred is deducted from the executive's annual cash incentive compensation, which for the first three quarters of the year, is estimated and (but for the executive's deferral election) pre-paid on a quarterly basis. The matching units that represent the additional 20% of the forgone compensation vest on the third anniversary of the grant date, provided the participant remains employed by the company through such date. The remaining units representing the foregone compensation are vested as of the grant date. All vested units are delivered in shares of ITG common stock on the third anniversary of the date of grant. (Prior to the amendment of the SUA Program in April 2006, participation was mandatory and participants received common stock with a fair market value equal to 130% of forgone compensation. The matching units that represent the additional 30% of the forgone compensation vest and are settled as follows: half of the matching stock units vest and are settled on the third anniversary of the grant date and the other half vest and are settled on the sixth anniversary of the grant date. The remaining units representing the foregone compensation are vested as of the grant date and half are settled on the third anniversary of the grant date and the other half are settled on the sixth anniversary of the grant date.)
We believe that the SUA Program encourages our executives to align their economic interests with those of our stockholders, by providing a vehicle for investing a portion of compensation in our stock. It also promotes executive retention and encourages long-term service, because of the vesting schedule on the matching units. The three year vesting schedule is consistent with the vesting schedule of the majority of our other equity-based awards. The 20% match and three year vesting schedule are also consistent with several companies that have these types of programs.
Non-SUA Equity Awards
In 2006, we granted to our named executive officers stock options that vest based on continued employment with the company for three years from the grant date and restricted share awards that vest based on the achievement of pre-established performance objectives. The restricted share awards vest, in whole or in part, three years after their grant date, if our cumulative three year pre-tax income (as adjusted by the compensation committee for certain non-recurring items) meets or exceeds certain thresholds and the grantee has been continuously employed by us through such date. Mr. Haynes also received, in 2006, a restricted share award that vests based on continued employment with the company for three years from the grant date to better align his total pay within internal pay equity levels and market rates.
We grant stock options and restricted share awards to reward our executives based on absolute growth in our stock price and our multi-year operational performance tied to financial growth objectives. We determine the amount of stock option and restricted share awards granted so that, assuming our performance targets are achieved, the executive would recognize equal value from each type of award because the compensation committee considers the performance objectives to be equally important.
In May 2007, our shareholders approved the 2007 Omnibus Equity Compensation Plan. Equity awards granted in 2008 and during the term of this plan will be administered under this plan. Prior to 2007, we had generally granted options and restricted stock awards in the middle of the year. In 2007, the compensation committee determined that such grants should instead be made early in the subsequent fiscal yearwhen the prior year's annual cash incentive compensation is paidto
15
underscore that such equity awards, although earned (or forfeited) in future years, should be viewed by the recipient as part of his or her total compensation opportunity for the prior year. This change in timing allows us to better evaluate the amount of equity awards to be issued to ensure that such amount, combined with all other compensation for the prior year, is aligned with our compensation objectives. Accordingly, we did not grant any non-SUA equity awards to our named executive officers in 2007. However, in early 2008, the compensation committee granted stock options that vest after three years of continued employment with the company and restricted share awards that vest based on the achievement of performance objectives. In determining the size of each named executive officer's award in early 2008, the compensation committee considered a number of factors, including (i) the company's challenging multi-year targets, (ii) relative grant levels among the company's other executive officers, (iii) the levels of grants that the executive received in prior years and (iv) competitive total compensation levels.
Pursuant to his employment agreement (described below), in 2006, Mr. Gasser received a restricted stock unit award of 31,250 units (which represent shares of our common stock on a one for one basis), which number of restricted stock units represents 25,000 units for the 2007 calendar year. Given that 100% of the company's pre-tax operating income objective was met during the 12-month period from October 1, 2006 through September 30, 2007, 10,417 units vested on October 31, 2007 and the remaining units will vest in two equal installments on October 4, 2008 and October 4, 2009, respectively if Mr. Gasser remains employed through the applicable vesting date. In addition, during 2006, Mr. Gasser was granted a nonqualified stock option to purchase a number of shares of the company's common stock equal to a Black Scholes value for the option of $1,156,000, which represents $925,000 for the 2007 calendar year. One-third of this option became exerciseable on October 4, 2007 and the remainder becomes exercisable in two equal annual installments on October 4, 2008 and October 4, 2009, respectively, provided Mr. Gasser has remained continuously employed by the company on such dates.
On January 1, 2008, our executives vested in 100% of their performance-based restricted share awards that were granted in 2005. This vesting percentage was based on the achievement of $446,100,000 in adjusted pre-tax operating income over the 20052007 three-year period, which was 155% of the performance target of $287,000,000. These results were certified by the compensation committee.
Share Retention Program
We do not impose stock ownership requirements on our executive officers. Instead, we require executive officers to retain a portion of the shares received upon exercise of options granted after March 2003 (when the compensation committee approved this program). The company expects that this requirement further aligns the interests of senior management with the interests of stockholders and lessens any appearance of an incentive for management to seek to cause unsustainable short-term increases in our stock price. Under this retention program, each executive officer may not sell more than 50% of the number of "Net Shares" acquired upon the exercise of stock options for three years following the date of option exercise, regardless of whether the individual remains in our employ (except as described below). "Net Shares" is defined as the shares received upon exercise of an option after payment of any taxes and exercise price. (The executive officer is not obligated to retain the shares actually acquired pursuant to the option exercise, so long as the executive retains a number of shares from his or her other ITG stock holdings equal to the number of Net Shares.) In the event of a change in control, termination due to death or permanent disability or involuntarily not-for-cause termination, the trading restrictions lapse immediately because the objectives of the share retention program no longer apply in these circumstances.
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Executive Perquisites
It is our policy not to provide executive perquisites and special benefits unless they are reasonable and business-related. Perquisites for each named executive officer, other than Mr. Domowitz, totaled less than the disclosure threshold of $10,000. More specifically, and as disclosed in the "All Other Compensation" column of the Summary Compensation Table, the company provided an apartment to Mr. Domowitz in Boston (paying both rent and utilities). Mr. Domowitz's residence is in New York, but his position responsibilities required him to split his time between New York and Boston. The rent and utilities amount, together with additional related tax payments, were included as income in 2007 for Mr. Domowitz.
Retirement Benefits
Our named executive officers, other than Mr. Haynes, participate in our tax-qualified Retirement Savings Plans on the same basis as all other U.S.-based full-time employees. We do not maintain any supplemental executive retirement plans.
Mr. Haynes participates in ITG Europe's Retirement Plan on the same basis as all other employees of such affiliate.
Severance and Change-in-Control Agreements
The company maintains change-in-control agreements for all named executive officers. Mr. Gasser is eligible for change-in-control benefits pursuant to the terms of his employment agreement described below. All other named executive officers are eligible for change-in-control benefits that were approved by the compensation committee in 2006 after extensive discussion, competitive research, and financial modeling. They are designed to achieve the following objectives:
The compensation committee believes that in the absence of these change-in-control agreements, the company would be vulnerable to competitive raiding of key executive talent. The compensation committee also believes that these agreements balance the important stockholder objectives of ensuring a stable executive team and minimizing costs in the event of a change in control.
To receive these severance benefits, the affected executive must sign a release that waives his or her right to bring suit against us or our successor for wrongful discharge or any other employment related matters. The agreements (which are described in greater detail below under the heading "Severance and Change-in-Control Arrangements") were intended by the compensation committee to provide benefits that reflect industry practices and include the following:
17
Mr. Gasser's severance and change-in-control benefits were set as a result of negotiations as described below under the heading "Employment Arrangements" and "Severance and Change-in-Control Arrangements".
In addition, under pre-existing agreements, all unvested equity awards vest immediately upon a change in control, with performance-based awards vesting at the 100% level.
ITG has no plans or agreements in place regarding executive severance benefits upon a termination that is unrelated to a change in control, with the exception of the ones described below in the "Employment Arrangements" and "Severance and Change-in-Control Arrangements" sections. In the event of the termination of a named executive officer not covered by an employment arrangement, severance benefits (if any) are negotiated as deemed necessary or advisable by the compensation committee.
Employment Arrangements
The company has provided two named executive officers with employment agreements, Mr. Gasser, the President and Chief Executive Officer and Mr. Haynes, the Chief Executive Officer of ITG International. In addition, the company has provided Mr. Domowitz with severance benefits pursuant to his offer letter.
On September 15, 2006, Mr. Gasser entered into an employment agreement with us and he began employment as our President and Chief Executive Officer on October 4, 2006. In connection with our search for a new chief executive officer, the compensation committee, in consultation with the search committee, an executive search firm and outside counsel, determined that it needed to offer Mr. Gasser a market competitive compensation package to join us which, of necessity, needed to include a meaningful incentive to forgo certain compensation opportunities offered by his prior employer. Therefore, the compensation committee formulated and structured the compensation package based on survey data, our historical compensation practices and packages in place for our prior chief executive officer and executive officers generally. It also took into account Mr. Gasser's level of experience in his prior position. Based on the foregoing considerations, the compensation committee developed a compensation package generally consisting of three elements: (i) a base salary, (ii) a guaranteed cash bonus for 2006 and cash bonuses for 2007 and 2008 tied to our attainment of pre-tax operating income objectives, and (iii) stock-based incentive awards that were granted in 2006 (representing awards for 2006 and 2007) and 2008. The compensation committee determined the level for each element of compensation based on its current practices for executives generally and its long-standing philosophy in providing market competitive compensation. It also structured the bonuses in a manner that it believes reflects the contributions that Mr. Gasser can make to our results. The severance and change-in-control provisions of Mr. Gasser's employment agreement are generally consistent with the provisions included in our standard change-in-control agreements in place for our other executive officers, except that Mr. Gasser may voluntarily resign for any reason or no reason within the thirty day window following the six-month anniversary of a change in control and receive severance benefits. This provision was provided to reflect the unique position of a former chief executive officer of a public company that is acquired. See "Severance and Change-in-Control Arrangements" below for a more detailed description
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of Mr. Gasser's severance and change-in-control provisions. The final terms of Mr. Gasser's employment agreement were the product of arms-length negotiations between us (including the search committee and the compensation committee) and our advisors and Mr. Gasser and his advisors, prior to Mr. Gasser's commencement of employment with us.
Consistent with typical practice for European executives, on November 17, 1998, Mr. Haynes entered into an employment agreement with ITG Europe, to serve as the chief executive officer of ITG Europe. The company continues to believe that the terms of this agreement provide appropriate severance, the details of which are described in the "Severance and Change-in Control Arrangements" section below in the event of certain terminations of employment.
Similarly, upon joining the company on March 16, 2001, Mr. Domowitz and the company entered into a standard offer letter at that time for his position which provides for the severance benefits described in the "Severance and Change in Control Arrangements" section below.
IMPACT OF REGULATORY REQUIREMENTS
In making executive compensation decisions, the compensation committee is mindful of the impact of regulatory requirements on those decisions. In particular, regulatory requirements affect the compensation committee's decisions in the following ways:
The company believes that tax deductibility of compensation is an important factor, but not the sole factor, in setting executive compensation policy or in rewarding superior executive performance. Accordingly, although the company generally intends to avoid the loss of a tax deduction due to Section 162(m), it reserves the right to pay amounts that are not deductible in appropriate circumstances. In establishing our annual bonus awards and equity grants for, or relating to, 2007, the company considered the tax and accounting implications of the awards and grants, but determined the awards and grants primarily by their effectiveness in providing maximum alignment with the key strategic objectives identified above.
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We and our compensation committee regularly consider ways to improve the ability of our executive compensation programs to meet our objectives. We believe that our executive compensation programs in 2007 were consistent with our objectives, and are in the best interests of our stockholders. Key reasons for this conclusion include the following:
Executive Compensation
Summary Compensation Table
The following table sets forth the compensation for 2006 and 2007 paid or awarded to, or earned by, our named executive officers (except for Mr. Domowitz who was not a named executive officer in 2006).
Name and Principal Position |
Year |
Salary ($)(1) |
Bonus ($)(1) |
Stock Awards ($)(2) |
Option Awards ($)(3) |
Non-Equity Incentive Plan Compensation (1)(4) |
All Other Compensation ($)(5) |
Total ($) |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
||||||||
Robert C. Gasser, President and Chief Executive Officer |
2007 2006 |
750,000 250,000 |
(7) (7) |
520,000 |
(8) |
449,596 115,156 |
385,073 92,901 |
1,575,000 |
(8) |
18,000 |
3,177,669 978,057 |
|||||
Howard C. Naphtali, Managing Director and Chief Financial Officer |
2007 2006 |
500,000 500,000 |
|
231,685 152,115 |
156,074 428,596 |
1,416,511 1,201,245 |
27,000 30,800 |
2,331,270 2,312,756 |
||||||||
Anthony J. Huck, Managing Director |
2007 2006 |
500,000 500,000 |
|
189,009 106,668 |
122,356 394,878 |
1,450,000 1,112,320 |
27,000 30,800 |
2,288,365 2,144,666 |
||||||||
Alasdair Haynes, Managing Director and Chief Executive Officer of ITG International(6) |
2007 2006 |
350,298 322,106 |
1,561,326 1,058,347 |
262,397 205,985 |
66,280 149,201 |
|
45,539 39,338 |
2,285,840 1,774,977 |
||||||||
Ian Domowitz Managing Director |
2007 | 500,000 | 1,200,000 | 177,306 | 66,658 | | 233,897 | 2,177,861 |
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information relating to the units granted during 2007 under the SUA Program, see the Grants of Plan-Based Awards Table and the narrative discussion following the Grants of Plan-Based Awards Table.
Name |
Company Contributions to Defined Contribution Plans |
Company Payment of Rent and Utilities (including any tax gross-ups) |
|||||
---|---|---|---|---|---|---|---|
Robert C. Gasser | $ | 18,000 | * | | |||
Howard C. Naphtali | $ | 27,000 | * | | |||
Anthony J. Huck | $ | 27,000 | * | | |||
Alasdair Haynes | $ | 45,539 | ** | | |||
Ian Domowitz | $ | 27,000 | * | $ | 206,897 | *** |
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22
The table set forth below lists each grant or award made in 2007 to any of the named executive officers under any of the company's equity and non-equity incentive plans.
|
|
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards |
All Other Stock Awards: Number of Shares of Stock or Units (#)(2) |
All Other Option Awards: Number of Securities Underlying Options (#) |
|
|
|
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
|
Exercise or Base Price of Option Awards ($/SH) |
|
|
||||||||||||||||||||
Name |
Grant Date |
Threshold ($) |
Target ($) |
Maximum ($) |
Threshold (#) |
Target (#) |
Maximum (#) |
Grant Date Fair Value ($) (3) |
Closing Price on Grant Date |
|||||||||||||||
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
(k) |
(l) |
(m) |
||||||||||||
Robert C. Gasser | 4/16/07 4/16/07 8/15/07 8/15/07 11/15/07 11/15/07 |
393,750 |
|
1,575,000 |
|
|
|
2,702 540 2,670 534 2,639 528 |
* * * |
|
|
105,000 21,000 103,100 20,620 108,533 21,707 |
39.02 39.02 |
|||||||||||
Howard C. Naphtali |
1/16/07 1/16/07 4/16/07 4/16/07 8/15/07 8/15/07 11/15/07 11/15/07 |
|
|
|
|
|
|
1,565 313 1,662 332 1,762 352 1,943 389 |
* * * * |
|
|
67,399 13,480 64,560 12,912 68,012 13,602 79,901 15,980 |
43.65 43.65 39.02 39.02 |
|||||||||||
Anthony J. Huck |
1/16/07 1/16/07 4/16/07 4/16/07 8/15/07 8/15/07 11/15/07 11/15/07 |
|
|
|
|
|
|
1,961 392 2,155 431 1,970 394 2,565 513 |
* * * * |
|
|
84,452 16,890 83,713 16,743 76,044 15,209 105,459 21,092 |
43.65 43.65 39.02 39.02 |
|||||||||||
Alasdair Haynes |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ian Domowitz |
1/16/07 1/16/07 4/16/07 4/16/07 7/13/07 7/13/07 10/15/07 10/15/07 12/31/07 12/31/07 |
|
|
|
|
|
|
1,389 278 915 183 1,018 204 1,003 201 3,608 722 |
* * * * * |
|
|
59,805 11,961 35,540 7,108 45,540 9,108 42,206 8,441 171,714 34,343 |
43.65 43.65 39.02 39.02 |
|||||||||||
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Discussion and Analysis above. The amount that Mr. Gasser actually received is reflected in the Summary Compensation Table above.
Pay-For-Performance Incentive Plan
For each named executive officer (other than Messrs. Domowitz and Haynes), during the first quarter of 2007, the compensation committee specified an award under the Pay-For-Performance Incentive Plan and performance objectives upon which payment of the award would be conditioned. Although the compensation committee has no discretion to increase the amounts of awards previously established under the Pay-For-Performance Incentive Plan, the plan permits the compensation committee to reduce the amount of or cancel final awards, in view of business strategy, performance of comparable organizations, economic and business conditions, personal performance of the participant, or otherwise. The compensation committee may also provide that income of a business unit may be adjusted downward to reflect specified charges, expenses, and other amounts, or adjust or modify awards and performance objectives in recognition of unusual or nonrecurring events, in response to changes in applicable laws, regulations, accounting principles, or other circumstances, or specify performance periods for awards less than one year. If a participant ceases to be employed due to death, disability, or retirement (including early retirement with the approval of the compensation committee), the compensation committee will determine the amount payable as a final award achieved or resulting from the portion of the performance year completed at the date employment ceased (which may be a pro rata payment of the final award, determined at the end of the performance year), except that no payout shall be made if it is duplicative of severance payments. If a participant's employment terminates during a performance year for any other reason, no final award will be paid to the participant. During the first quarter of 2008, the compensation committee determined the extent to which awards have been earned and performance objectives achieved, and the amounts therefore payable to each named executive officer.
SUA Program
Under our SUA Program, each named executive officer may elect, on an annual basis, to forgo the receipt of a portion of their total cash compensation (15% of the total cash compensation between $200,000 and $300,000 and 20% of total cash compensation over $300,000) and receive units
24
representing our common stock with a fair market value equal to 120% of such forgone compensation. 16.67% of the stock units vest on the third anniversary of the grant, provided that the participant is continuously employed by ITG through such time. The remaining stock units are vested immediately. All vested units are delivered in shares of ITG common stock on the third anniversary of the grant. Upon settlement of each SUA award, the executive receives dividend equivalents, if any, accrued with respect to such award.
The number of units granted under the SUA Program in 2007 was determined based upon the amount of compensation deferred divided by (a) the average of the high and low prices per share of our common stock on the NYSE on the last trading day of the prior calendar quarter for grants in the first and second quarters of 2007 and (b) the closing price per share of our common stock on the NYSE on the grant date for grants in the third and fourth quarters of 2007.
For 2007, Mr. Gasser elected to forgo $316,633 of cash compensation and received 8,011 stock units; Mr. Naphtali elected to forgo $279,872 and received 6,932 stock units; Mr. Huck elected to forgo $349,668 and received 8,651 stock units; and Mr. Domowitz elected to forgo $354,805 and received 7,933 stock units.
Options Exercised and Stock Vested for 2007 for Named Executive Officers
|
Option Awards |
Stock Awards |
||||||
---|---|---|---|---|---|---|---|---|
Name |
Number of Shares Acquired Upon Exercise (#) |
Value Realized Upon Exercise ($)(1) |
Number of Shares Acquired Upon Vesting (#)(2)(3) |
Value Realized Upon Vesting ($)(4) |
||||
(a) |
(b) |
(c) |
(d) |
(e) |
||||
Robert C. Gasser | | | 18,429 | 753,551 | ||||
Howard C. Naphtali | 105,895 | 1,582,600 | 8,373 | 342,532 | ||||
Anthony J. Huck | 61,228 | (5) | 746,987 | 10,090 | 412,667 | |||
Alasdair Haynes | 23,763 | 670,256 | | | ||||
Ian Domowitz | 47,525 | 1,557,394 | 9,233 | 411,434 |
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Awards Table are as follows: Mr. Gasser $317,079; Mr. Naphtali: $281,078; Mr. Huck: $351,191; and Mr. Domowitz: $355,783.
Non-qualified Deferred Compensation
Name |
Executive contributions in last FY ($)(1) |
Aggregate earnings in last FY ($)(2) |
Aggregate withdrawals / distributions ($)(3) |
Aggregate balance at last FYE ($)(4) |
||||
---|---|---|---|---|---|---|---|---|
(a) |
(b) |
(c) |
(d) |
(e) |
||||
Robert C. Gasser | 316,633 | 64,207 | | 380,840 | ||||
Howard C. Naphtali | 279,872 | 154,595 | (186,502 | ) | 1,467,964 | |||
Anthony J. Huck | 349,668 | 155,825 | (205,324 | ) | 1,458,655 | |||
Alasdair Haynes | | | | | ||||
Ian Domowitz | 354,805 | 109,693 | (185,973 | ) | 1,263,530 |
For a description of the material factors of the SUA Program, see the description under "SUA Program" following the Grants of Plan-Based Awards Table.
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Outstanding Equity Awards for Named Executive Officers at December 31, 2007
|
Option Awards |
Stock Awards |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Number of securities underlying unexercised Options (#) Exercisable |
Number of securities underlying unexercised Options (#) Unexercisable |
Equity Incentive Plans: Number of securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Expiration Date |
Number of shares or units of Stock held that have not vested (#) |
Market value of nonvested shares or units of Stock held that have not vested ($) |
Incentive Plans: Number of nonvested shares, units or other rights held (#) |
Incentive Plans: Market or payout value of nonvested shares, units or other rights held ($) |
|||||||||
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
|||||||||
Robert C. Gasser | | | | | | 20,833 | (a) | 991,442 | | | ||||||||
23,285 | (1) | 46,571 | (2) | | 44.22 | 10/4/2011 | | | | | ||||||||
| | | | | 540 | (b) | 25,721 | | | |||||||||
| | | | | 534 | (c) | 25,416 | | | |||||||||
| | | | | 528 | (d) | 25,122 | | | |||||||||
Howard C. Naphtali |
|
|
|
|
|
265 |
(e) |
12,611 |
|
|
||||||||
| | | | | 254 | (f) | 12,071 | | | |||||||||
| | | | | 369 | (g) | 17,552 | | | |||||||||
| | | | | 304 | (h) | 14,468 | | | |||||||||
| | | | | 409 | (i) | 19,470 | | | |||||||||
| | | | | 358 | (j) | 17,037 | | | |||||||||
| | | | | 496 | (k) | 23,607 | | | |||||||||
| | | | | 789 | (l) | 37,529 | | | |||||||||
| | | | | 651 | (m) | 30,964 | | | |||||||||
| | | | | 482 | (n) | 22,924 | | | |||||||||
| | | | | 860 | (o) | 40,913 | | | |||||||||
| | | | | 291 | (p) | 13,848 | | | |||||||||
| | | | | 305 | (q) | 14,491 | | | |||||||||
| | | | | 359 | (r) | 17,069 | | | |||||||||
| | | | | 313 | (s) | 14,899 | | | |||||||||
| | | | | 332 | (b) | 15,815 | | | |||||||||
| | | | | 352 | (c) | 16,766 | | | |||||||||
| | | | | 389 | (d) | 18,494 | | | |||||||||
| | | | | 10,000 | (v) | 475,900 | | | |||||||||
| | | | | | | 4,800 | (x) | 228,432 | |||||||||
47,525 | (3) | | | 12.50 | 5/21/09 | | | | | |||||||||
| 27,000 | (4) | | 25.38 | 8/1/10 | | | | | |||||||||
| 12,800 | (5) | | 45.30 | 8/31/11 | | | | | |||||||||
Anthony J. Huck |
|
|
|
|
|
264 |
(e) |
12,547 |
|
|
||||||||
| | | | | 252 | (f) | 12,008 | | | |||||||||
| | | | | 383 | (g) | 18,227 | | | |||||||||
| | | | | 293 | (h) | 13,944 | | | |||||||||
| | | | | 406 | (i) | 19,322 | | | |||||||||
| | | | | 357 | (j) | 16,990 | | | |||||||||
| | | | | 486 | (k) | 23,108 | | | |||||||||
| | | | | 723 | (l) | 34,409 | | | |||||||||
| | | | | 622 | (m) | 29,607 | | | |||||||||
| | | | | 461 | (n) | 21,958 | | | |||||||||
| | | | | 650 | (o) | 30,928 | | | |||||||||
| | | | | 243 | (p) | 11,550 | | | |||||||||
| | | | | 269 | (q) | 12,799 | | | |||||||||
| | | | | 296 | (r) | 14,088 | | | |||||||||
| | | | | 392 | (s) | 18,670 | | | |||||||||
| | | | | 431 | (b) | 20,507 | | | |||||||||
| | | | | 394 | (c) | 18,746 | | | |||||||||
| | | | | 513 | (d) | 24,410 | | | |||||||||
| | | | | 5,000 | (v) | 237,950 | | | |||||||||
| | | | | | | 4,800 | (x) | 228,432 | |||||||||
47,525 | (3) | | | 12.50 | 5/21/09 | | | | | |||||||||
| 16,000 | (4) | | 25.38 | 8/1/10 | | | | | |||||||||
| 12,800 | (5) | | 45.30 | 8/31/11 | | | | |
27
|
Option Awards |
Stock Awards |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name |
Number of securities underlying unexercised Options (#) Exercisable |
Number of securities underlying unexercised Options (#) Unexercisable |
Equity Incentive Plans: Number of securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Expiration Date |
Number of shares or units of Stock held that have not vested (#) |
Market value of nonvested shares or units of Stock held that have not vested ($) |
Incentive Plans: Number of nonvested shares, units or other rights held (#) |
Incentive Plans: Market or payout value of nonvested shares, units or other rights held ($) |
|||||||||
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
|||||||||
Alasdair Haynes | | | | | | 7,000 | (v) | 333,130 | | | ||||||||
| | | | | | | 4,300 | (x) | 204,637 | |||||||||
| | | | | | | | | ||||||||||
| 21,500 | (4) | | 25.38 | 8/1/10 | | | | | |||||||||
| 10,800 | (5) | | 45.30 | 8/31/11 | | | | | |||||||||
| | | | | 10,000 | (w) | 475,900 | | | |||||||||
Ian Domowitz |
|
|
|
|
|
116 |
(e) |
5,520 |
|
|
||||||||
| | | | | 131 | (f) | 6,234 | | | |||||||||
| | | | | 504 | (g) | 23,985 | | | |||||||||
| | | | | 217 | (h) | 10,334 | | | |||||||||
| | | | | 307 | (i) | 14,590 | | | |||||||||
| | | | | 271 | (j) | 12,874 | | | |||||||||
| | | | | 666 | (k) | 31,706 | | | |||||||||
| | | | | 717 | (l) | 34,136 | | | |||||||||
| | | | | 622 | (m) | 29,607 | | | |||||||||
| | | | | 461 | (n) | 21,958 | | | |||||||||
| | | | | 699 | (o) | 33,267 | | | |||||||||
| | | | | 243 | (p) | 11,550 | | | |||||||||
| | | | | 152 | (q) | 7,233 | | | |||||||||
| | | | | 191 | (r) | 9,086 | | | |||||||||
| | | | | 278 | (s) | 13,221 | | | |||||||||
| | | | | 183 | (b) | 8,706 | | | |||||||||
| | | | | 204 | (t) | 9,686 | | | |||||||||
| | | | | 201 | (j) | 9,551 | | | |||||||||
| | | | | 722 | (u) | 34,343 | | | |||||||||
| | | | | 6,000 | (v) | 285,540 | | | |||||||||
| | | | | | | 4,300 | (x) | 204,637 | |||||||||
| 21,500 | (4) | | 25.38 | 8/1/10 | | | | | |||||||||
| 10,800 | (5) | | 45.30 | 8/31/11 | | | | |
Footnotes (1)-(5): The options disclosed in columns (b) and (c) became or become, to the extent the named executive officer remains employed through the applicable vesting date, fully exercisable on the following dates: (1) 10/4/2007; (2) half of this amount will vest on 10/4/2008 and the other half will vest on 10/4/2009; (3) 1/1/2007; (4) 8/1/2008; and (5) 8/31/2009.
Footnote (a): These units, which represent the remainder of Mr. Gasser's performance-based restricted stock unit award granted in 2006, were earned on September 30, 2007 and will vest in equal installments on October 4, 2008 and October 4, 2009, respectively if Mr. Gasser remains employed through the applicable vesting date. The market value of the award was determined using a per share value of the company's common stock of $47.59 (which was the closing price per share on December 31, 2007).
Footnotes (b)-(u): The restricted stock units held by the named executive officers pursuant to the SUA Program, and the corresponding market value, are disclosed in columns (g) and (h) and vest in full on the following dates provided the named executive officer remains employed through the applicable vesting date: (b) 4/16/2010; (c) 8/15/2010; (d) 11/15/2010; (e) 7/15/2009; (f) 10/15/2009; (g) 1/15/2010; (h) 4/15/2010; (i) 7/15/2010; (j) 10/15/2010; (k) 1/15/2011; (l) 4/15/2011; (m) 7/15/2011; (n) 10/14/2011; (o) 1/17/2012; (p) 4/17/2009; (q) 7/17/2009; (r) 10/16/2009; (s) 1/16/2010; (t) 7/13/2010; (u) 12/31/2010. The market value of the awards was determined using a per share value of the company's common stock of $47.59 (which was the closing price per share on December 31, 2007).
28
Footnotes (v): These performance-based restricted share awards were earned as of December 31, 2007 and vest January 1, 2008.
Footnote (w): Mr. Haynes' time-based restricted share award vests on 1/3/2009. The market value of the award was determined using a per share value of the company's common stock of $47.59 (which was the closing price per share on December 31, 2007).
Footnote (x): These performance-based restricted share awards vest on January 1, 2009 provided the performance criteria is met as of December 31, 2008. The amounts shown represent the number of unearned unvested restricted share awards that would be earned assuming the three-year cumulative pre-tax operating income objective is achieved at the 100% performance level. The executive must remain employed through the performance period in order to vest in the award. The market value of the award was determined using a per share value of the company's common stock of $47.59 (which was the closing price per share on December 31, 2007).
Severance and Change-in-Control Arrangements
Change-in-Control Agreements
On May 9, 2006, the compensation committee authorized the entry into change-in-control agreements with the following named executive officers: Messrs. Naphtali, Huck, Haynes and Domowitz. On November 26, 2007, the compensation committee ratified amendments to these change-in-control agreements to reflect certain modifications necessary to comply with the requirements of section 409A of the Code. Each change-in-control agreement provides for the payment of benefits if the executive's employment is terminated within eighteen months following a change in control, either by the company not for cause (and not due to the executive's death or disability) or by the executive for good reason. In addition, if the executive's employment is terminated by the company other than for cause within six months prior to the date of a change in control and it is reasonably demonstrated that the termination arose in connection with, or in anticipation of, the change in control, the benefits set forth below will be paid to the executive.
"Good reason" is defined to include (i) a material reduction in the executive's primary functional authorities, duties or responsibilities (other than any such reduction resulting merely from an acquisition of the company and its existence as a subsidiary or division of another entity); (ii) relocation of the executive's principal job location of more than 35 miles; (iii) material reductions in the executive's base salary or participation in annual incentive compensation plans, other than certain across the board reductions; and (iv) a material breach of the change-in-control agreement by the company (including the company decreasing the executive's base salary and target annual cash incentives by more than 10%).
"Cause" is defined to include (i) the executive's willful failure to substantially perform his duties with the company (other than any as a result of the executive's disability); (ii) the executive's gross negligence in the performance of his duties which results in material financial harm to the company; (iii) the executive's conviction of, or guilty plea, to any felony or any other crime involving the personal enrichment of the executive at the expense of the company; (iv) the executive's willful engagement in conduct that is demonstrably and materially injurious to the company, monetarily or otherwise; or (v) the executive's willful material violation of any provision of the company's code of conduct.
"Change in control" is deemed to occur (i) if any person, other than the company or a person related to the company, is or becomes the beneficial owner of 35% percent or more of the total voting power of all the then-outstanding voting securities; (ii) if a majority of the members of the company's incumbent board of directors cease to be board members; (iii) upon consummation of a merger, consolidation, recapitalization, or reorganization of the company or similar transaction affecting the capital structure of the company; (iv) upon consummation of the sale by the company of all or
29
substantially all of the company's assets; or (v) if the stockholders of the company approve a plan of complete liquidation of the company.
The benefits payable are base salary, together with unused accrued vacation, through the date of termination, pro-rata target annual bonus for the year of termination, and two times the sum of the executive's annual base salary in effect immediately prior to the date of termination or the date of the change in control, whichever is higher, plus the average of the executive's annual bonuses for the three years immediately preceding the year of termination of employment. Such amounts are payable in a lump sum within ten business days after the date of termination of employment. In addition, the company will continue to provide the executive and his or her dependents with health benefits and will pay to the executive an amount in cash equal to the premium cost that the company would have paid to maintain disability and life insurance coverage for the executive and his or her dependents for up to two years following the date of termination. If any payment under a change in control agreement is subject to an excise tax imposed by Section 4999 of the Internal Revenue Code, the amounts payable will be reduced to a level at which no amount is subject to the excise tax, provided that no reduction will be made if the net after-tax benefit, taking into account income, employment and excise taxes, to which the executive would otherwise be entitled without the reduction would be greater than the net after-tax benefit to the executive resulting from receipt of the payments with such reduction. However, in this case, the executive will be responsible for all excise tax payments. In the event of a dispute under a change-in-control agreement, the company will reimburse the executive for reasonable legal fees and expenses incurred in the dispute if the executive prevails on any material claim or defense in the dispute.
The following table sets forth the estimated total payments, as well as each component of compensation outlined above or in the footnotes to the table below and taken into account in determining the total amounts payable in connection with a change in control, that would have been due to each of the named executive officers had a change in control and a qualifying termination of employment occurred on December 31, 2007, assuming a per share value of the company's common stock of $47.59 (which was the closing price per share on December 31, 2007).
Name |
Total Cash Severance |
Value of Additional Welfare Benefits(1) |
Acceleration of Vesting of Stock Options, Restricted Share Awards (including "Unearned" Performance-Based Awards) and SUA Awards(2) |
Acceleration of Vesting of "Earned" Performance-Based Restricted Share Awards(2)(3) |
Total Change in Control Payments |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Howard C. Naphtali | $ | 2,591,583 | $ | 37,079 | $ | 1,217,941 | $ | 475,900 | $ | 4,322,503 | |||||
Ian Domowitz | $ | 2,363,648 | $ | 25,221 | $ | 1,034,469 | $ | 285,540 | $ | 3,708,878 | |||||
Anthony J. Huck | $ | 2,511,565 | $ | 37,079 | $ | 966,920 | $ | 237,950 | $ | 3,753,514 | |||||
Alasdair Haynes | $ | 2,056,136 | $ | 11,894 | $ | 1,182,784 | $ | 333,130 | $ | 3,583,944 |
30
and its subsidiaries.) The amounts in this column reflect the spread value of options, the face value of restricted share (including SUA) awards and payout of performance awards, not already earned, at 100% levels.
In the event that a change in control occurred on December 31, 2007 and there was no subsequent qualifying termination of employment, the total change in control payment for each named executive officer would be the amounts set forth in "Acceleration of Vesting of Stock Options, Restricted Share Awards (including "Unearned" Performance-Based Awards) and SUA Awards" and "Acceleration of Vesting of "Earned" Performance-Based Restricted Share Awards".
Employment Agreement with Mr. Gasser
On September 15, 2006, Mr. Gasser entered into an employment agreement with the company to serve as the Chief Executive Officer and President of the company. The agreement provides that the term of Mr. Gasser's employment will begin on October 4, 2006 and end on December 31, 2009, with automatic one-year extensions, unless terminated earlier by either party upon 90 days written notice. The agreement provides that if his employment with the company is terminated by the company without cause (as defined below), if he terminates employment with the company for good reason, or if the company elects not to renew the agreement, in each case, prior to a change in control (as defined below) of the company, the company will pay to Mr. Gasser an amount equal to Mr. Gasser's base salary payable through his termination date and a pro-rated portion of the bonus compensation Mr. Gasser would have actually earned for the calendar year in which his date of termination occurs (to be paid as and when bonuses are payable to other executives for that year). The company will also pay to Mr. Gasser an amount, payable in accordance with the company's normal payroll practices, equal to the sum of (i) Mr. Gasser's base salary at the rate then in effect on the date of his termination and (ii) an amount equal to the average annual bonus paid or payable to Mr. Gasser with respect to the three calendar years preceding the calendar year of his termination. For purposes of the foregoing calculation, Mr. Gasser's bonus with respect to the 2006 calendar year will be deemed to be $1,575,000. All outstanding equity awards held by Mr. Gasser that are not vested as of his date of termination, will continue to vest as if he had remained employed by the company through the first anniversary of his date of termination and any performance objectives applicable to such awards will be deemed satisfied as of his termination date. All outstanding options held by Mr. Gasser that are vested as of the termination date will remain exercisable until the earlier of the first anniversary of Mr. Gasser's date of termination or the expiration of the option term in accordance with the terms of the company's Amended and Restated 1994 Stock Option and Long-term Incentive Plan or the company's 2007 Omnibus Equity Compensation Plan, as applicable, or any successor plan thereto. Any outstanding options that vest during the one-year period following his termination date will remain exercisable until the earlier of the one-year period following the applicable vesting date or the expiration of the option term. The company will also continue to maintain and provide to Mr. Gasser continued medical coverage at the level in effect on his date of termination for one year after his date of termination.
The following table sets forth the estimated total payments, as well as each component of compensation outlined above and taken into account in determining the total amounts payable that would have been due to Mr. Gasser had a qualifying termination of employment occurred on
31
December 31, 2007, assuming a per share value of the company's common stock of $47.59 (which was the closing price per share on December 31, 2007).
Name |
Total Cash Severance |
Value of Additional Welfare Benefits(1) |
Continued Vesting of Stock Options and Restricted Share Awards(2) |
Total Severance Payments |
||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert C. Gasser | $ | 2,325,000 | $ | 18,729 | $ | 574,193 | $ | 2,917,922 |
The agreement further provides that if Mr. Gasser's employment is terminated by the company without cause, by Mr. Gasser for good reason (which includes the right of Mr. Gasser to terminate his employment for any reason or no reason within the 30 day period following the six month anniversary of a change in control), or if the company elects not to renew the agreement, in each case, on or after a change in control of the company, the company will pay to Mr. Gasser the same severance benefits he would have received if his employment was terminated by the company without cause or by Mr. Gasser for good reason prior to a change in control of the company, except that the cash payment is made in a lump sum, all outstanding equity awards held by Mr. Gasser as of the date of his termination (to the extent not fully vested as of the date of termination) will become fully vested and exercisable in accordance with the terms of the company's Amended and Restated 1994 Stock Option and Long-term Incentive Plan or the company's 2007 Omnibus Equity Compensation Plan, as applicable, or any successor plan thereto, and continued medical coverage for Mr. Gasser will run until the earlier of the end of the two-year period following Mr. Gasser's date of termination or the date on which Mr. Gasser is eligible to receive medical coverage through subsequent employment. The agreement provides that if any payment, coverage or benefit provided to him is subject to the excise tax under section 4999 of the Code, Mr. Gasser will have the amounts payable to him and benefits he will receive reduced so that no amounts he would receive would be subject to the excise tax under section 4999 of the Code if such reduction would result in him receiving a greater amount on an after-tax basis than if no reduction had occurred.
The following table sets forth the estimated total payments, as well as each component of compensation outlined above and taken into account in determining the total amounts payable in connection with a change in control, that would have been due to Mr. Gasser had a change in control and a qualifying termination of employment occurred on December 31, 2007, assuming a per share value of the company's common stock of $47.59 (which was the closing price per share on December 31, 2007).
Name |
Total Cash Severance |
Value of Additional Welfare Benefits(1) |
Acceleration of Vesting of Stock Options and SUA Awards(2) |
Acceleration of Vesting of "Earned" Performance-Based Restricted Share Awards(2)(3) |
Total Change in Control Payments |
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Robert C. Gasser | $ | 2,325,000 | $ | 37,458 | $ | 233,181 | $ | 991,442 | $ | 3,587,081 |
32
In the event that a change in control occurred on December 31, 2007 and there was no subsequent qualifying termination of employment, the total change in control payment for Mr. Gasser would be the amount set forth in "Acceleration of Vesting of Stock Options and SUA Awards" and "Acceleration of Vesting of "Earned" Performance-Based Restricted Share Awards".
All severance benefits are conditioned on Mr. Gasser's execution and non-revocation of a release.
If Mr. Gasser's employment is terminated on account of his death, permanent disability, voluntary resignation other than for good reason or by the company for cause, Mr. Gasser will be entitled to receive only his base salary through his date of termination, reimbursement of all reimbursable expenses incurred by him prior to such termination, and all other accrued, but unpaid benefits under the company's benefit plans and programs. In addition, if Mr. Gasser's employment is terminated on account of his death or permanent disability, all outstanding equity awards held by Mr. Gasser as of the date of termination will become fully vested and exercisable in accordance with the terms of the company's Amended and Restated 1994 Stock Option and Long-term Incentive Plan or the company's 2007 Omnibus Equity Compensation Plan, as applicable, or any successor plan thereto.
The agreement provides that during the term of Mr. Gasser's employment with the company, and for the one-year period after Mr. Gasser's termination of employment, Mr. Gasser can not (i) compete against the company, (ii) solicit in any way the employees of the company or its subsidiaries to terminate their employment, or (iii) solicit in any way the customers, suppliers, clients, brokers, licensees or other business relations of the company or its subsidiaries to cease doing business with the company or its subsidiaries.
Prior to a change in control, "good reason" is defined to include (i) the material diminution of Mr. Gasser's duties, responsibilities, powers or authorities; (ii) the removal of Mr. Gasser from his office as Chief Executive Officer; (iii) the failure to obtain a written assumption of the employment agreement by any person acquiring all or substantially all of the assets of the company; (iv) a reduction by the company of Mr. Gasser's salary, (v) the company does not renew the term of agreement; (vi) breach by the company of its material obligations under the terms of the agreement; or (vii) relocation of Mr. Gasser's principal place of business to a location more than fifty (50) miles from its current location. On or after a change in control, "good reason" means, (i) (A) the removal of Mr. Gasser from his office as Chief Executive Officer, or (B) a material reduction of his primary functional authorities, duties, or responsibilities as President and Chief Executive Officer of the company from those in effect immediately prior to the change in control or the assignment of duties to him inconsistent with those of President and Chief Executive Officer of the company; (ii) the company's requiring Mr. Gasser to be based at a location in excess of fifty (50) miles from the location of his principal job location or office immediately prior to the change in control; (iii) a reduction of Mr. Gasser's salary or a reduction in his target annual compensation in excess of ten percent; (iv) the failure of the company to continue in effect, or the failure to continue Mr. Gasser's participation on substantially the same basis in, any of the company's annual incentive compensation plans in which he participates prior to the change in control unless such failure applies to all plan participants generally;
33
(v) the failure of the company to obtain the assumption of the obligations contained herein by any successor; (vi) breach by the company of its material obligations under the terms of the agreement; (vii) written notice to Mr. Gasser not to renew the term of the agreement or (viii) Mr. Gasser terminates employment during the thirty day period immediately following the six month anniversary of a change in control for any reason or no reason.
"cause" is defined to include (i) Mr. Gasser's willful failure to substantially perform his duties with the company; (ii) gross negligence in the performance of Mr. Gasser's duties which results in material financial harm to the company; (iii) Mr. Gasser's conviction of, or guilty plea to, any crime involving his personal enrichment at the expense of the company, or any felony; (iv) Mr. Gasser's willful engagement in conduct that is demonstrably and materially injurious to the company, monetarily or otherwise; or (v) Mr. Gasser's willful violation of any material provision of the company's code of conduct.
"change in control" is deemed to occur (i) if any person, other than the company or a person related to the company, is or becomes the beneficial owner of 35% percent or more of the total voting power of all the then-outstanding voting securities; (ii) if a majority of the members of the company's incumbent board of directors cease to be board members; (iii) upon consummation of a merger, consolidation, recapitalization, or reorganization of the company or similar transaction affecting the capital structure of the company; (iv) upon consummation of the sale by the company of all or substantially all of the company's assets; or (v) if the stockholders of the company approve a plan of complete liquidation of the company.
Employment Arrangement with Mr. Domowitz
Mr. Domowitz and the company are parties to an offer letter dated March 16, 2001. Under the offer letter, if Mr. Domowitz's employment is terminated for any reason and the company elects to prohibit Mr. Domowitz, for a period of twelve months after he leaves the company, from engaging in any business, or any business in competition with the business, carried on by the company, then the company will continue to pay Mr. Domowitz his then current base salary and bonus during the twelve-month period immediately following his termination of employment. The following table sets forth the estimated total payments that would have been due to Mr. Domowitz had a qualifying termination of employment occurred on December 31, 2007.
Name |
Total Cash Severance |
Total Severance Payments |
||||
---|---|---|---|---|---|---|
Ian Domowitz | $ | 1,700,000 | $ | 1,700,000 |
Employment Agreement with Mr. Haynes
Mr. Haynes and ITG Europe are parties to an employment agreement, dated November 17, 1998. The agreement continues until either Mr. Haynes or ITG Europe gives at least twelve months written notice to terminate the agreement or when Mr. Haynes reaches age 65. In addition, ITG Europe may terminate the agreement, without further obligation to Mr. Haynes, if he (i) breaches the agreement, (ii) is guilty of dishonesty, gross misconduct or willful neglect in the performance of his responsibilities, (iii) becomes bankrupt or makes any formal arrangement or composition with his creditors, (iv) is convicted of a criminal offense which adversely affects ITG Europe, (v) is guilty of any conduct that brings ITG Europe or affiliates of ITG Europe into disrepute, (vi) through his own default, ceases to be a director of ITG Europe or is otherwise prohibited or disqualified form serving as a director or (vii) is unable to perform his duties as a result of disability. If ITG Europe terminates the agreement without twelve month's notice for any other reason, then Mr. Haynes would be entitled to severance, payable in a lump sum, in the amount of his salary plus the cost to ITG of providing any benefits
34
(including any bonus) which Mr. Haynes would have received for the remainder of the twelve month notice period.
The following table sets forth the estimated total payments, as well as each component of compensation outlined above and taken into account in determining the total amounts payable that would have been due to Mr. Haynes had a qualifying termination of employment occurred on December 31, 2007.
Name |
Total Cash Severance |
Value of Additional Welfare Benefits(1) |
Total Severance Payments |
||||||
---|---|---|---|---|---|---|---|---|---|
Alasdair Haynes | $ | 1,428,262 | $ | 5,947 | $ | 1,434,209 |
Director Compensation
Each of our non-employee directors, other than our chairman, receives an annual retainer of $60,000, payable in quarterly installments. Our chairman receives an annual retainer of $90,000, payable in quarterly installments. Under our Amended and Restated Directors' Retainer Fee Subplan, adopted in 2002, the annual retainer fee is payable, at the election of each director, either in (i) cash, (ii) ITG common stock with a value equal to the retainer fee on the grant date, or (iii) under a deferred compensation plan which provides deferred share units with a value equal to the retainer fee on the grant date which convert to freely sellable shares when the director retires from our board of directors. Directors who are our employees are not compensated for serving as directors.
Each non-employee director also receives fees of $1,000 for attendance at each regular meeting of the board of directors and $2,000 for any special board meetings. Board committee chair annual retainers are $9,000 for the audit committee chair, $7,000 for the compensation committee chair, and $5,000 for all other board committee chairs. All committee members receive $1,000 for attendance at each meeting of a committee of the board of directors. Directors of the company are also reimbursed for out-of-pocket expenses.
Under our Amended and Restated Directors' Equity Subplan adopted in January 2006, we will grant newly appointed non-employee directors stock options valued at $100,000 and restricted share unit awards valued at $100,000 at, or near, the time of appointment to the board of directors. In addition, non-employee directors will be granted stock options valued at $36,000 and restricted share units valued at $36,000 annually, on the forty-fifth day following each of our annual meetings of stockholders. These options are granted with an exercise price per share equal to 100% of the fair market value of a share of our common stock on the NYSE on the date of grant. Such options expire at the earliest of (1) five years after the date of grant, (2) 12 months after death, disability or retirement after reaching age 65, and (3) 60 days after an optionee ceases to serve as a director for reasons other than death, disability or such retirement. Options and restricted share units vest and become exercisable in equal installments on the first, second and third anniversaries of the date of grant. Vesting accelerates upon a change in control of the company or if the director ceases to serve as a non-employee director due to his or her death or disability. Only directors who are not our employees are eligible to participate in this plan.
Each director may participate in our Charitable Gifts Matching Program pursuant to which we match 100% of the charitable contributions made by such directors up to a maximum dollar amount of $2,000 per person per year.
35
Mr. Raymond L. Killian, Jr., who served as the chairman of our board of directors until May 2007 did not receive any director compensation in 2007.
The following table sets forth the total director compensation in 2007, as well as each component of compensation outlined above.
Name |
Fees earned or paid in cash ($)(1)(2) |
Stock Awards ($)(2)(4) |
Option Awards ($)(2)(4) |
Total ($) |
||||
---|---|---|---|---|---|---|---|---|
(a) |
(b) |
(c) |
(d) |
(e) |
||||
J. William Burdett | 87,000 | 18,289 | 38,615 | 143,904 | ||||
William I Jacobs(3) | 102,000 | 18,289 | 38,615 | 158,904 | ||||
Robert L. King | 89,000 | 18,289 | 38,615 | 145,904 | ||||
Maureen O'Hara | 129,000 | 18,289 | 38,615 | 185,904 | ||||
Kevin O'Hara | 76,167 | 38,112 | 38,049 | 152,328 | ||||
Brian J. Steck | 84,000 | 18,289 | 68,390 | 170,679 | ||||
Timothy Jones | 89,000 | 18,289 | 88,861 | 196,150 |
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Name |
Grant Date |
Number of Options(a) |
Number of Shares(a) |
Fair Value at date of grant |
|||||
---|---|---|---|---|---|---|---|---|---|
J. William Burdett | 6/22/07 6/22/07 |
2,441 |
838 |
$ $ |
36,000 36,000 |
||||
William I Jacobs |
6/22/07 6/22/07 |
2,441 |
838 |
$ $ |
36,000 36,000 |
||||
Robert L. King |
6/22/07 6/22/07 |
2,441 |
838 |
$ $ |
36,000 36,000 |
||||
Maureen O'Hara |
6/22/07 6/22/07 10/1/07 7/2/07 4/2/07 1/3/07 |
2,441 |
838 516 516 577 524 |
(b) (b) (b) (b) |
$ $ $ $ $ $ |
36,000 36,000 22,500 22,500 22,500 22,500 |
|||
Kevin O'Hara |
6/22/07 6/22/07 1/17/07 1/17/07 10/1/07 7/2/07 4/2/07 |
2,441 6,231 |
838 2,303 344 344 670 |
(b) (b) (b) |
$ $ $ $ $ $ $ |
36,000 36,000 100,000 100,000 15,000 15,000 26,167 |
|||
Brian J. Steck |
6/22/07 6/22/07 10/1/07 7/2/07 4/2/07 1/3/07 |
2,441 |
838 344 344 385 349 |
(b) (b) (b) (b) |
$ $ $ $ $ $ |
36,000 36,000 15,000 15,000 15,000 15,000 |
|||
Timothy L. Jones |
6/22/07 6/22/07 10/1/07 7/2/07 4/2/07 1/3/07 |
2,441 |
838 344 344 385 349 |
(b) (b) (b) (b) |
$ $ $ $ $ $ |
36,000 36,000 15,000 15,000 15,000 15,000 |
37
Board Meetings and Committees
Our board of directors held five regular meetings and seven special meetings during 2007. Each member of the board of directors attended, during their term of office, at least 75% of the total number of meetings of the board of directors. Board members are expected to attend our annual stockholders' meetings. At our 2007 annual stockholders' meeting, all members of the board of directors and nominees for election to the board were present. Our non-management directors meet regularly in executive sessions without any management directors present. Our chairman, Ms. O'Hara, presided over such executive sessions in 2007. Our board of directors has an audit committee, a compensation committee, a nominating and corporate governance committee and a technology committee. Each committee of the board of directors is authorized to obtain advice and assistance from internal or external legal, accounting or other advisors as it determines necessary to carry out its duties and any expenses in connection with such advice or assistance will be borne by the company.
The current audit committee members are Mr. King (Chairman), Mr. Jones and Ms. O'Hara. The audit committee is appointed by the board to be directly responsible for the appointment, compensation and oversight of the work of ITG's independent auditor and for assisting the board in oversight of (1) the integrity of the financial statements of the company, (2) the compliance by the company with legal and regulatory requirements, (3) the independent auditors' qualifications and independence and (4) the performance of the company's internal audit function and independent auditors. These functions are described more fully under "Report of the Audit Committee". Our board of directors has determined that Mr. King, Chairman of the audit committee, is a "financial expert" as defined in the Securities Exchange Act of 1934. During 2007, there were six meetings of the audit committee. Each director serving as a member of the audit committee during 2007 attended at least 75% of such meetings that took place while such member was on the committee.
The current compensation committee members are Ms. O'Hara (Chairperson), Mr. Burdett, Mr. O'Hara, and Mr. Steck. As determined by the board, all four directors meet the independence requirements of the NYSE, Section 162(m) of the Code, as amended, and Section 16 of the Securities Exchange Act of 1934, as amended. In addition, no compensation committee member is either a current or former employee of the company. The compensation committee is appointed by the board to discharge its responsibilities relating to compensation of our directors and executive officers. The compensation committee has overall responsibility for approving and evaluating the director and executive officer compensation plans, policies and programs of the company as further described below. During 2007, there were seven meetings of the compensation committee. Each director serving as a member of the compensation committee during 2007 attended at least 75% of such meetings that took place while such member was on the committee.
The current nominating and corporate governance committee members are Mr. King (Chairman), Mr. Burdett, Ms. O'Hara and Mr. Steck. The nominating and corporate governance committee is appointed by the board (1) to identify individuals qualified to become board members, and to select, or to recommend that the board select, the director nominees for the next annual meeting of stockholders; (2) to develop and recommend to the board the corporate governance guidelines applicable to the company; (3) to oversee a review by the board of its performance and the performance of its committees and of management's performance; and (4) to recommend to the board director nominees for each committee, including the nominating and corporate governance committee.
The nominating and corporate governance committee will consider nominees recommended by stockholders. In evaluating candidates, the committee considers the attributes of the candidate (including skills, experience, international versus domestic background, diversity, age, and legal and regulatory requirements) and the needs of the board, and will review all candidates in the same manner, regardless of the source of the recommendation. Stockholders who wish to submit nominees
38
for director consideration by the nominating and corporate governance committee may do so by submitting such nominees' names in writing, in compliance with the procedures and along with the other information required by our by-laws, to Investment Technology Group, Inc., Attn: Secretary, 380 Madison Avenue, 4th Floor, New York, New York 10017. During 2007, there were two meetings of the nominating and corporate governance committee. All committee members were in attendance at such meetings. The nominating and corporate governance committee operates under a charter, which is posted in the "Corporate Governance" section of our website at http://www.itg.com/investors/nominating_charter.php.
The current technology committee members are Mr. Jones (Chairman), Mr. King and Mr. O'Hara. The technology committee members are appointed by the board to review and assess the development of our technology and to advise the board and management on matters involving our technology and the acquisition of technology. During 2007, there was one meeting of the technology committee. All committee members were in attendance at such meeting.
The compensation committee
The compensation committee has overall responsibility for approving and evaluating our director and executive officer compensation plans, policies and programs. Members of the compensation committee are appointed by the board, on the recommendation of the nominating and corporate governance committee. The compensation committee members may be removed and replaced by the board.
The compensation committee operates under a charter, which is posted in the "Corporate Governance" section of our website at http://www.itg.com/investors/compensation_charter.php.
The compensation committee's authority and responsibilities include the following:
39
The company's executives prepared agendas for each meeting in consultation with the compensation committee's chairperson. Compensation committee members generally received agendas and discussion materials in advance.
In early 2007, the compensation committee engaged PricewaterhouseCoopers LLP as a compensation consultant. In December 2007, the compensation committee engaged McLagan Partners as a compensation consultant. The compensation committee retains the sole ability to hire and fire the consultants and considers the consultants to be independent. At the direction of the company, services provided by the consultants included top management peer group analysis, review of compensation philosophy, competitive compensation benchmarking of executive officer positions, industry research on competitive design of compensation and employment programs, presentation and analysis of compensation design alternatives and other technical advice. The consultants did not provide recommendations on compensation decisions for individual executive officers.
At the compensation committee's request, from time to time members of management attend portions of compensation committee meetings. During 2007, they included the Chief Executive Officer, Chief Financial Officer, General Counsel and Global Head of Human Resources. On an annual basis, the Chief Executive Officer presents a summary of his performance appraisal of each member of our executive committee, along with his compensation recommendations.
In addition, on an annual basis, the compensation committee reviews each executive officer's total compensation package as well as each individual element of the compensation package. The 2007 review included comparisons to competitive levels of compensation, as well as year-over-year comparisons. The compensation committee concluded that total compensation levels, as well as individual elements of compensation, for all executive officers were consistent with the objectives and guiding principles of our executive compensation programs in light of our performance, business unit performance, individual performance and competitive practice.
At each compensation committee meeting, the compensation committee had the opportunity to call for an executive session. No members of management, consultants or other outsiders attended executive sessions. Among other topics, discussions and decisions regarding Chief Executive Officer compensation took place during these executive sessions.
The compensation committee took the following key actions at its meetings in 2007:
Code of Ethics
Our board of directors has adopted a Code of Business Conduct and Ethics governing the conduct of our directors, officers and employees, including our chief executive officer, chief financial officer and principal accounting officer. A copy of the Code of Business Conduct and Ethics is available on our
40
website at http://www.itg.com/investors/conduct_ethics.php. We intend to disclose future amendments to, or waivers from, the Code of Business Conduct and Ethics on our website within two business days following the date of any such amendment or waiver.
Compensation Committee Interlocks and Insider Participation
During 2007, the members of the compensation committee were Maureen O'Hara (Chairperson), J. William Burdett, William I Jacobs and Brian J. Steck. The compensation committee was, and continues to be, comprised entirely of independent directors.
NYSE Certification
The chief executive officer of ITG made an unqualified certification to the NYSE with respect to the firm's compliance with the NYSE corporate governance listing standards in June of 2007.
41
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act or the Securities Exchange Act that might incorporate future filings, including this proxy statement, in whole or in part, the following report of the compensation committee on executive compensation shall not be incorporated by reference into any such filings.
The compensation committee has discussed the Compensation Discussion and Analysis with management and approved its inclusion in this proxy statement and through incorporation by reference in the 2007 Annual Report on Form 10-K.
Compensation Committee
Maureen
O'Hara, Chairperson
J. William Burdett
Kevin O'Hara
Brian J. Steck
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Raymond L. Killian, Jr., our former chief executive officer, was a director of the company until May 8, 2007. Raymond L. Killian, Jr.'s son, Michael G. Killian, is a sales trader in our Boston regional office. Michael Killian's annual cash compensation in 2007 was $215,753. Mr. Killian also participates in company benefit plans on the same basis as other similarly situated employees. The company's cost of those benefits was $39,126 in 2007. Stephen Killian, also Raymond L. Killian, Jr.'s son, is a product manager at our New York headquarters who joined the company in September 2007. Stephen Killian's prorated annual cash compensation in 2007 was $97,756. Mr. Killian also participates in company benefit plans on the same basis as other similarly situated employees. The company's prorated cost of those benefits was $4,191 in 2007.
In 2007, the board adopted a written policy on Procedures for the Review of Related Person Transactions. Under this policy, each director, director nominee and executive officer of the company is required to notify the company's General Counsel in writing of any direct or indirect material interest that such person or an immediate family member has in a Related Person Transaction (as defined below). The General Counsel shall submit to the audit committee (or any designated member) the Related Person Transaction for review and the audit committee (or any designated member) shall approve or disapprove the Related Person Transaction.
A "Related Person Transaction" means any transaction which is currently proposed, or has been in effect at any time since the beginning of the company's most recent fiscal year in which the company was or is to be a participant, the amount exceeds $120,000 and a related person (as defined in the policy and which includes a director, director nominee or executive officer of the company or any of their immediate family members) has or will have a direct or indirect material interest. The types of transactions that are covered by this policy include: legal, investment banking, consulting, or management services provided to the company by a related person or a business entity with which the related person is affiliated; sales, purchases and leases of real or personal property between the company and a related person or a business entity with which a related person is affiliated; contributions by the company to a civic or charitable organization for which a related person serves as an executive officer; or indebtedness or guarantees of indebtedness involving the company and a related person or a business entity with which the related person is affiliated.
The standards to be applied pursuant to this policy in determining approval include whether the Related Person Transaction is fair and reasonable to the company and consistent with the best interests of the company, the business purpose of the transaction, whether the transaction is entered into on an arms-length basis on terms fair to the company and whether such a transaction would violate any
42
provisions of the company's Code of Business Conduct and Ethics. All Related Person Transactions are required to be disclosed to the audit committee of the company's board of directors and any material Related Person Transaction is required to be disclosed to the full board of directors.
Each of Michael Killian's and Stephen Killian's employment for 2007 was approved, or ratified, by the audit committee and compensation committee in accordance with the terms of the policy.
To help ensure a smooth transition for the company and Mr. Gasser (who, at the time, had recently joined the company as chief executive officer), on December 19, 2006 Mr. Raymond L. Killian Jr.'s employment agreement was amended to extend the term of his employment through March 31, 2007. To reflect Mr. Killian's reduced role with the company, the amended agreement provided that in lieu of the compensation contemplated by the terms of Mr. Killian's original agreement, and any other cash or equity compensation for which Mr. Killian was eligible, Mr. Killian's compensation of $863,162 for the period from January 1, 2007 to March 31, 2007 was 25% of the cash compensation paid to Mr. Killian by the company for the 2006 calendar year. In addition, Mr. Killian continued to be entitled to an apartment in New York City through March 31, 2007.
On February 27, 2007, the company and Raymond L. Killian, Jr. entered into an advisor arrangement. The advisor arrangement began on April 1, 2007 and will continue until March 31, 2009. Under this arrangement, during the term of the agreement, Mr. Killian will perform transitional and other advisory services for the company in exchange for a consulting fee of $100,000 per month during the term. In addition, on or around April 1, 2009, assuming Mr. Killian satisfactorily performs his duties under the agreement, as determined by the board in its reasonable good faith judgment, the company will pay to Mr. Killian a one time lump sum severance payment of $600,000. In addition, the company will reimburse Mr. Killian for reasonable business expenses. Mr. Killian and his spouse will also be entitled to continued medical benefits for the remainder of their lives. These payments would be made to Mr. Killian if the company terminated the arrangement without cause or upon the change in control of the company. In the case of a change in control, payment will be made in a lump sum as soon as reasonably practicable following the occurrence of the change in control. Mr. Killian is subject to restrictive covenants, such as confidentiality, non-competition and non-solicitation provisions.
43
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGERS
The following table sets forth certain information, as of March 3, 2008, regarding beneficial ownership of our common stock by (1) each director, (2) each named executive officer, (3) all directors and executive officers as a group and (4) each person known by us to beneficially own 5% or more of our common stock. For the purpose of this table, a person or group of persons is deemed to have "beneficial ownership" of any shares which such person or group has the right to acquire within 60 days after March 3, 2008, but such shares are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person. Unless otherwise indicated in a footnote and subject to applicable community property and similar statutes, each person listed as the beneficial owner of the shares possesses sole voting and dispositive power with respect to such shares. The mailing address of the parties listed below is our principal business address unless otherwise indicated.
Directors |
Shares of ITG Common Stock Beneficially Owned |
Percentage of ITG Common Stock Beneficially Owned |
|||
---|---|---|---|---|---|
Robert C. Gasser. | 61,386 (1,2,3,6 | ) | * | ||
J. William Burdett | 28,305 (1,3 | ) | * | ||
William I Jacobs | 50,736 (1,3 | ) | * | ||
Timothy L. Jones | 34,800 (1,3,5 | ) | * | ||
Robert L. King | 6,382 (1,3 | ) | * | ||
Kevin J.P. O'Hara | 6,880 (1,3,5 | ) | * | ||
Maureen O'Hara | 39,493 (1,3,5 | ) | * | ||
Brian J. Steck | 36,707 (1,3,5 | ) | * | ||
Named Executive Officers (Other than Mr. Gasser) |
|||||
Ian Domowitz | 45,704 (2 | ) | * | ||
Alasdair Haynes | 14,857 (3 | ) | * | ||
Anthony J. Huck | 97,388 (1,2,4,7 | ) | * | ||
Howard C. Naphtali | 155,034 (1,2,4 | ) | * | ||
All directors and executive officers as a group (16 persons) | 711,613 (1,2,3,4,5,6 | ) | 1.6 | % |
44
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2007 with respect to the shares of common stock that may be issued to our employees and directors under our existing equity compensation plans.
Plan Category |
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |
Weighted- Average Exercise Price of Outstanding Options |
Weighted Average Grant Price of Outstanding Restricted Stock |
Weighted Average Grant Price of Stock Unit Awards |
Number of Securities Remaining Available for Future Grants Under Equity Compensation Plans(b) |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity compensation plans approved by security holders(a) | 2,204,394 | $ | 24.86 | $ | 36.38 | $ | 28.35 | 2,656,059 | ||||||
Equity compensation plans not approved by security holders | | | | | | |||||||||
Total | 2,204,394 | $ | 24.86 | $ | 36.38 | $ | 28.35 | 2,656,059 |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our outstanding common stock, to file with the SEC initial reports of beneficial ownership and reports of changes in beneficial ownership of our common stock and other equity securities of our company. Directors, executive officers and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based on a review of the copies of the forms furnished to us and written representations from our executive officers and directors, all persons subject to the reporting requirements of Section 16(a) otherwise filed the required reports with respect to 2007 on a timely basis, except as set forth in the next paragraph and that, due to an administrative error, a Form 4 report relating to a single SUA Program grant was filed one day late on July 18, 2007 for each of Messrs. Bulone, Domowitz, Goebels and Meitz.
D.E. Shaw Laminar Portfolios, L.L.C. and its affiliates D. E. Shaw Synoptic Portfolios 2, L.L.C., D. E. Shaw & Co., L.P., D. E. Shaw & Co., L.L.C., and David E. Shaw (together, "D.E. Shaw") became subject to Section 16 filings as a beneficial owner of 10% of the outstanding class of ITG common stock on November 8, 2007. D.E. Shaw timely filed a Form 3 on November 19, 2007, except that the Form was amended on November 20, 2007 to add as a filing person D. E. Shaw Synoptic Portfolios 2, L.L.C. D.E. Shaw made purchases of ITG common stock on November 9, 12, 13, 14, and 15, 2007, and made sales on November 15, 2007, which it reported on a late Form 4 filed November 20, 2007. The total number of transactions reported on those dates was 180, and the total number of late reports for those transactions was at least two. D.E. Shaw ceased to be subject to Section 16 reporting with respect to ITG common stock on November 15, 2007.
45
Notwithstanding anything to the contrary set forth in any of our previous filings under the Securities Act or the Securities Exchange Act that might incorporate future filings, including this proxy statement, in whole or in part, the following report of the audit committee included herein shall not be incorporated by reference into any such filings.
At the time of this report, the audit committee of ITG's board of directors was composed of four non-employee directors. The board of directors determined during 2007 that each of those directors satisfied independence requirements, financial literacy and other criteria established by NYSE listing standards. Our audit committee charter is available on our website at http://www.itg.com/investors/committee_charters.php. This charter complies with requirements imposed upon audit committees under the Sarbanes-Oxley Act and under the NYSE listing standards.
The audit committee is directly responsible for the appointment, compensation and oversight of the work of ITG's independent auditor and for assisting the board in oversight of (1) the integrity of the financial statements of the company, (2) the compliance by the company with legal and regulatory requirements, (3) the independent auditor's qualifications and independence, and (4) the performance of the company's internal audit function and independent auditors. Management has the primary responsibility for ITG's consolidated financial statements and the reporting process, including the internal control systems. ITG's independent auditors are responsible for auditing the consolidated financial statements and expressing an opinion on the conformity of those consolidated audited financial statements with accounting principles generally accepted in the United States of America.
KPMG LLP ("KPMG") served as ITG's independent auditor for 2007, and the audit committee has recommended that KPMG be elected in that capacity for 2008. See "Ratification of Selection of Independent Auditors".
The audit committee has considered whether the provision of certain limited non-audit functions provided by KPMG is compatible with maintaining KPMG's independence and concluded that performing such functions does not affect KPMG's independence in performing its function as auditor of ITG. It is the audit committee's policy for the full audit committee to review, in advance, the proposed provision of non-audit services by KPMG.
The audit committee has reviewed and discussed with management ITG's audited consolidated financial statements for the year ended December 31, 2007. It has also discussed with KPMG the matters required to be discussed by Statement on Auditing Standards No. 114, The Auditor's Communication with Those Charged with Governance. The audit committee has received the written disclosures and the letter from KPMG required by Independence Standards Board Standard No. 1, and has discussed with KPMG its independence. As the result of such review and discussions, the audit committee recommended to the board of directors that the audited consolidated financial statements be included in ITG's Annual Report on Form 10-K for the year ended December 31, 2007.
Audit Committee
William I
Jacobs, Chairman(1)
Timothy L. Jones
Robert L. King
Maureen O'Hara
46
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
KPMG was our independent auditor for the years ended December 31, 2007 and 2006. On February 20, 2008, KPMG was appointed by the audit committee to serve as our independent auditor for 2008.
The ratification of the appointment of KPMG is being submitted to the stockholders at the annual meeting. If such appointment is not ratified, the board of directors will consider the appointment of other accountants.
The board of directors unanimously recommends a vote "FOR" the ratification of the appointment of KPMG as our independent auditor for the 2008 fiscal year.
A representative of KPMG, the independent auditor who audited our consolidated financial statements for 2007, is expected to be present at the annual meeting to respond to appropriate questions of stockholders and will have the opportunity to make a statement if he or she so desires.
Fees to our Independent Auditor
The following table presents fees for professional services rendered by KPMG for the audit of our annual financial statements for the years ended December 31, 2007 and 2006, and fees billed for audit related services, tax services and all other services rendered by KPMG for such periods.
|
2007 |
2006 |
|||||
---|---|---|---|---|---|---|---|
|
(Dollars in thousands) |
||||||
Audit fees(1) | $ | 1,801 | $ | 1,718 | |||
Audit-related fees | | | |||||
Tax fees(2) | 80 | 177 | |||||
All other fees | | | |||||
Total | $ | 1,881 | $ | 1,895 | |||
Pre-approval of Services by the External Auditor
The audit committee has adopted a policy for pre-approval of audit and permitted non-audit services by our external auditor. The audit committee will consider annually and, if appropriate, approve the provision of audit services by its external auditor and consider and, if appropriate, pre-approve the provision of certain defined audit and non-audit services. The audit committee will also consider on a case-by-case basis and, if appropriate, approve specific engagements that are not otherwise pre-approved.
Any proposed engagement that does not fit within the definition of a pre-approved service may be presented to the audit committee for consideration at its next regular meeting or, if earlier consideration is required, to the audit committee or one or more of its members. The member or members to whom such authority is delegated shall report any specific approval of services at its next regular meeting. The audit committee will regularly review summary reports detailing all services being provided to ITG by its external auditor.
47
PROPOSAL TO RE-APPROVE THE INVESTMENT TECHNOLOGY GROUP, INC. PAY-FOR-PERFORMANCE INCENTIVE PLAN
At our 1997 Annual Stockholders' Meeting, the stockholders approved the adoption of the company's Pay-For-Performance Incentive Plan (the "Plan"). The stockholders reapproved the Plan at the 2003 Annual Stockholders' Meeting. The purpose of the Plan is to assist the company in attracting, retaining, and rewarding company executive officers through payment of competitive levels of compensation, and motivating such employees to expend greater efforts in promoting the growth and annual profitability of the company and its subsidiaries and other business units. Under Code Section 162(m), we are required to periodically submit the Plan for stockholder re-approval to assure the tax deductibility of certain compensation paid to the named executive officers, as described below.
We seek to compensate our executive officers in large part through annual cash incentives the payment of which is directly related to performance. As discussed above in Compensation Discussion and Analysis under "Impact of Regulatory Requirements", Code Section 162(m) generally disallows the company's tax deduction for compensation to the named executive officers in excess of $1 million in any year. Under Code Section 162(m), however, compensation that qualifies as "performance-based compensation" is excluded from the $1 million deductibility cap, and therefore remains fully deductible.
We believe that the design and implementation of the Plan will continue to permit compensation resulting from annual incentive awards made under the Plan to qualify as "performance-based compensation" and therefore remain fully deductible under Code Section 162(m), even though payments under the Plan may represent compensation to a named executive officer in excess of $1 million. We are seeking stockholder re-approval of the Plan in order to meet the requirement of Code Section 162(m) that the Plan be periodically re-submitted to stockholders for consideration. For purposes of Code Section 162(m), stockholder approval of the Plan relates particularly to the eligibility, per-person award limitations, and the business criteria incorporated in annual incentive awards, as discussed below. In the event that stockholders fail to approve the Plan (including these material terms), the Plan will be terminated, awards granted to date under the Plan (discussed below) will be cancelled and the company will not be allowed a tax deduction for compensation to the named executive officers in excess of $1 million in any year. If the stockholders do not approve the Plan, the compensation committee may adopt, or may not adopt, another cash bonus plan for the benefit of such individuals.
The following is a brief description of the material terms of the Plan. Such description is qualified in its entirety by reference to the full text of the Plan, a copy of which is attached hereto as Annex A.
Under the Plan, the compensation committee is authorized to select for participation those key employees who have company-wide responsibilities, who are in charge of a business unit, or whose performance can be expected to have a substantial effect on the results of a business unit. For purposes of the Plan, a "business unit" is defined to mean the company as a whole or any department, division, subsidiary, or other business unit or function of the company for which operational financial results are available. The Plan does not preclude the compensation committee from granting annual incentive awards or other compensation apart from the Plan; in this regard, the compensation committee expects to make annual incentive awards and pay bonuses to those executives who are unlikely to receive cash compensation in excess of $1 million in a given year apart from the Plan.
For each participant, the compensation committee will specify an award and performance objectives upon which payment of the award will be conditioned. The performance objectives will be based on (i) "business unit income," meaning the pre-tax net income of the participant's business unit (from which the compensation committee may specify that certain amounts are to be subtracted, such as bonuses under the Plan or otherwise, one-time gains, restructuring charges, impairment of goodwill and intangibles, capital charges, taxes and/or general and administrative expenses), (ii) the revenues of the participant's business unit, or (iii) the participant's business unit's economic value added ("EVA"), a
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measure of the amount of the business unit's after-tax income that exceeds the cost of the capital used by the business unit during the performance period. In establishing a performance objective based on EVA, the compensation committee will determine the average cost of capital (stated as a percentage); this cost of capital will be multiplied by the amount of capital actually used by the business unit. Generally, awards and performance objectives will relate to a specified year, although shorter performance periods may be specified for a participant.
An award generally will provide for payment of either a specified percentage or percentages of business unit income, revenues, and/or EVA, or an amount specified or determined by formula in some other manner but conditioned upon achievement of such specified percentage or percentages of business unit income, revenues, and/or EVA. The compensation committee may require a threshold amount of such income, revenues, or EVA to be achieved before any portion of an award will become payable, and may express performance objectives by way of a comparison with like measures of business unit performance in one or more prior periods or like measures of performance of comparable companies or business units thereof. In all cases, the terms of the performance objective must be such that, at the time the performance objective is set, its achievement is substantially uncertain.
The Plan imposes certain limitations on the amount that may be paid in respect of annual incentive awards, including annual per-person limitations. The maximum percentages of business unit income, revenues, and EVA that may be potentially payable under an award in any performance year to a single participant, and to all participants granted awards with respect to a single business unit, is 30% of business unit income, 10% of business unit revenues, and 25% of EVA.
In administering the Plan, the compensation committee has the power and authority to construe and interpret the Plan, define terms, implement rules and regulations, and make all determinations relating to the Plan. Although the compensation committee has no discretion to increase the amounts of previously established awards, the Plan permits the compensation committee to reduce the amount of or cancel final awards, in view of business strategy, performance of comparable organizations, economic and business conditions, personal performance of the participant, or other performance considerations. The compensation committee may agree in advance not to exercise such discretion. The compensation committee may also provide that income of a business unit may be adjusted downward to reflect specified charges, expenses, and other amounts, or adjust or modify awards and performance objectives in recognition of unusual or nonrecurring events, in response to changes in applicable laws, regulations, accounting principles, or other circumstances, or specify performance periods for awards less than one year.
At the end of each performance year, the compensation committee must determine the extent to which awards have been earned and performance objectives achieved, and the amounts therefore payable to each participant, setting forth these determinations in writing. Awards are non-transferable.
The Plan permits interim payments, but requires that the participant repay the company to the extent that such interim payments exceed the amount of the final award payment for a performance year. Payment of an award may be deferred by the participant if deferral plans are maintained by the company if and to the extent permitted by the compensation committee. If a participant ceases to be employed due to death, disability, or retirement (including early retirement with the approval of the compensation committee), the compensation committee will determine the amount payable as a final award achieved or resulting from the portion of the performance year completed at the date employment ceased (which may be a pro rata payment of the final award, determined at the end of the performance year), except that no payout shall be made if it is duplicative of severance payments. If a participant's employment terminates during a performance year for any other reason, no final award will be paid to the participant.
The board of directors may amend, modify, suspend, or terminate the Plan. Such changes will be subject to stockholder approval if and to the extent required by law, regulation, NYSE rule, or to
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comply with Code Section 162(m). These provisions do not necessarily require stockholder approval for all Plan amendments that might increase the cost of the Plan.
For federal income tax purposes, payments under the Plan will constitute ordinary income to participants at the time payment is received by the participant. If compensation under the Plan qualifies as "performance-based compensation" under Code Section 162(m), as the company believes will be the case, the company will be entitled to a tax deduction equal to the amount of any payments to a participant, whether or not such payments exceed $1 million in a given year.
The amounts payable under the Plan for 2008 cannot be determined until after the 2008 fiscal year is completed and achievement of the various corporate and management business objective performance goals are determined. Accordingly, the benefits or amounts of awards, if any, that will be received by named executive officers are not yet determinable.
Vote Required for Approval
The proposal to approve the Plan requires for its approval the affirmative vote of a majority of the shares present in person or represented by proxy at the annual meeting and entitled to vote on this proposal. Any abstentions will have the effect of votes against the proposal.
The board of directors unanimously recommends a vote "FOR" the proposal to re-approve the Investment Technology Group, Inc. Pay-for-Performance Incentive Plan.
CONTACTING THE BOARD OF DIRECTORS
You, or any interested party, may communicate with our board of directors, including our non-management directors and the chairman of the audit committee, by sending a letter to the ITG Board of Directors, P.O. Box 3481, Grand Central Station, New York, New York 10163. Any complaints or concerns relating to ITG's accounting, internal accounting controls or auditing matters will be referred to the chairman of the audit committee. Other concerns will be referred to the chairman of the board with a copy to the chairman of the nominating and corporate governance committee. Any complaints or concerns may be reported anonymously or confidentially. ITG strictly prohibits any retaliation for reporting a possible violation of law, ethics, or firm policy regardless of whom the report concerns.
WHERE YOU CAN FIND MORE INFORMATION
As required by law, we file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information contain additional information about our company. You can inspect and copy these materials at the SEC's Public Reference Room at 100 Fifth Street, N.W., Room 1580, Washington, D.C. 20549. You can obtain information about the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet Site that contains reports, proxy and information statements and other information regarding companies that file electronically with the SEC. The SEC's Internet address is http://www.sec.gov. You can also inspect these materials of our company at the offices of the NYSE, 20 Broad Street, New York, New York 10005 and on our website at http://www.itg.com/investors.
The SEC allows us to "incorporate by reference" information into this proxy statement, which means that we can disclose important information by referring you to another document filed separately with the SEC. Information incorporated by reference is considered part of this proxy statement, except to the extent that the information is superseded by information in this proxy statement.
This proxy statement incorporates by reference the information contained in our Annual Report on Form 10-K for the year ended December 31, 2007 (SEC file number 001-32722). We also
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incorporate by reference the information contained in all other documents that we file with the SEC after the date of this proxy statement and before the annual meeting. The information contained in any of these documents will be considered part of this proxy statement from the date these documents are filed.
Any statement contained in this proxy statement or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this proxy statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this proxy statement.
If you are one of our stockholders and would like to receive a copy of any document referred to in this proxy statement, you should call or write to Investment Technology Group, Inc., 380 Madison Avenue, 4th Floor, New York, New York 10017, Attention: Investor Relations (telephone: (800) 991-4484). In order to ensure timely delivery of the documents prior to the annual meeting, you should make any such request not later than April 30, 2008.
You should rely only on the information contained in (or incorporated by reference into) this proxy statement. We have not authorized anyone to give any information different from the information contained in (or incorporated by reference into) this proxy statement. This proxy statement is dated March 27, 2008. You should not assume that the information contained in this proxy statement is accurate as of any later date, and the mailing of this proxy statement to stockholders shall not mean otherwise.
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OTHER MATTERS; STOCKHOLDER PROPOSALS
FOR THE 2009 ANNUAL MEETING OF ITG
As of the date of this proxy statement, our board of directors knows of no matters that will be presented for consideration at the annual meeting, other than as described in this proxy statement. If any other matters shall properly come before the annual meeting or any adjournments or postponements thereof and shall be voted upon, the enclosed proxies will be deemed to confer discretionary authority on the individuals named as proxies therein to vote the shares represented by such proxies as to any such matters. The persons named as proxies intend to vote or not vote in accordance with the recommendation of our board of directors and management.
Stockholders who, in accordance with SEC Rule 14a-8, wish to present proposals for inclusion in the proxy materials to be distributed by us in connection with our 2009 Annual Meeting must submit their proposals to our Secretary on or before November 27, 2008. As the rules of the SEC make clear, simply submitting a proposal does not guarantee its inclusion.
In accordance with our by-laws, in order to be properly brought before the 2009 Annual Meeting, a stockholder's notice of the matter the stockholder wishes to present must be delivered to Investment Technology Group, Inc., 380 Madison Avenue, 4th Floor, New York, New York, 10017, Attention: Secretary, not less than 90 nor more than 120 days prior to the first anniversary of the date of this year's annual meeting. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of our by-laws (and not pursuant to the SEC's Rule 14a-8) must be received no earlier than January 6, 2009 and no later than February 5, 2009.
By Order of the Board of Directors, | ||
P. Mats Goebels Secretary |
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AMENDED AND RESTATED
INVESTMENT TECHNOLOGY GROUP, INC.
PAY-FOR-PERFORMANCE INCENTIVE PLAN
The purpose of this Pay-For-Performance Incentive Plan (the "Plan") is to assist Investment Technology Group, Inc. (the "Company") and its subsidiaries in attracting, retaining, and rewarding, by payment of competitive levels of compensation, employees who occupy key positions relating to the Company and specified business units, and motivating such employees to expend greater efforts in promoting the growth and annual profitability of the Company and its subsidiaries, through the award of annual incentives.
In addition to the terms defined in Section 1 hereof, the following terms used in the Plan shall have the meanings set forth below:
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Period, and for any such Participant, the Performance Period shall be the portion of the fiscal year (or such other period established by the Committee) subsequent to such grant, as determined by the Committee, in each case, in compliance with section 162(m) of the Code.
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the Plan). The Committee may specify in the Performance Objectives a target amount of Business Unit Income, Revenues, or EVA of such Business Unit required before any or specified parts of the Award will become payable, and may express the Performance Objectives by way of a comparison with like measures of Business Unit performance in one or more prior periods or similar measures of performance of other companies or businesses; provided, however, that the Committee shall include such terms in the case of a Performance Objective based on Revenues as may be necessary so that achievement of the Performance Objective is substantially uncertain. The Committee shall, in its sole discretion, establish Awards and Performance Objectives, subject to Section 4(c). Performance Objectives shall be objective and shall otherwise meet the requirements of section 162(m)(4)(C) of the Code and regulations thereunder (including Treasury Regulation 1.162-27(e)(2)). Performance Objectives may differ for Awards to different Participants. Only the business criteria specified in this Section 4(b) may be used in establishing Performance Objectives upon which the maximum amount of final payment of an Award is conditioned, although the Committee may consider other measures of performance as a basis for reducing such amount (including under Section 4(d)). To the extent consistent with section 162(m)(4)(C) of the Code and regulations thereunder (including Treasury Regulation 1.162-27(e)(2)), the Committee may do the following:
A-3
A-4
A-5
As approved by the Compensation Committee and adopted by the Board of Directors on March 26, 1997.
Amended by the Board of Directors on June 30, 2000.
Amended and Restated by the Board of Directors on March 19, 2003.
Amended and Restated by the Board of Directors effective February 7, 2008.
A-6
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VOTE BY INTERNET - www.proxyvote.com |
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Use the Internet to transmit your voting instructions
up until 11:59 p.m. Eastern Time, on May 5, 2008, except proxies
submitted for shares held in the Companys Employee Stock Ownership Plan must
be received by 11:59 p.m., Eastern Time, on April 30, 2008. Have
your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form. |
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VOTE BY PHONE - 1-800-690-6903 |
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Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time, on May 5, 2008, except proxies submitted for shares held in the Companys Employee Stock Ownership Plan must be received by 11:59 p.m., Eastern Time, on April 30, 2008. Have your proxy card in hand when you call and then follow the instructions. |
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VOTE BY MAIL |
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Investment Technology Group, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESTMENT TECHNOLOGY GROUP |
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Proposals
The Board of Directors recommends a |
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Withold |
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For All |
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To withhold authority to vote for any individual nominee(s), mark For All Except and write the number(s) of the nominee(s) on the line below. |
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Vote on Directors |
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1. Election of Directors:
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Nominees: |
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01) J. William Burdett |
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05) Kevin J.P. OHara |
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02) Robert C. Gasser |
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06) Maureen OHara |
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03) Timothy L. Jones |
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07) Brian J. Steck |
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04) Robert L. King |
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Vote on Proposals |
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Ratification of the appointment of KPMG LLP as the independent auditors for the 2008 fiscal year. |
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Reapproval of the Amended and Restated Investment Technology Group, Inc. Pay-For-Performance Incentive Plan. |
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Non-Voting Items |
For address changes and/or comments, please check this box and write them on |
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the back where indicated |
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Please indicate if you plan to attend this meeting. |
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below |
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The undersigned hereby acknowledges receipt of the Annual Report on Form 10-K for the fiscal year ended December 31, 2007 and the Notice of Annual Meeting of Stockholders and the Proxy Statement, and hereby revokes all previously granted proxies. Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
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Signature [PLEASE SIGN WITHIN BOX] |
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Your vote must be received prior to the Annual Meeting of Stockholders, and no later than May 5, 2008. However, if this proxy relates to shares held by you in the Investment Technology Group, Inc. Employee Stock Ownership Plan, your vote must be received by April 30, 2008 to enable the trustee of the plan to vote in the manner directed by you. Attendance at the annual meeting will not enable you to revoke a previously delivered proxy with respect to shares held under our Employee Stock Ownership Plan.
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting to be held on May 6, 2008: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. |
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Proxy INVESTMENT TECHNOLOGY GROUP |
This proxy is solicited by the Board of Directors of the Company. The shareholder signing on the reverse of this proxy card appoints each of Robert C. Gasser, Howard C. Naphtali and P. Mats Goebels as proxies with full power of substitution, to represent the undersigned and to vote all shares of Common Stock of Investment Technology Group, Inc. held of record by the undersigned on March 10, 2008, or which the undersigned would otherwise be entitled to vote at the Annual Meeting of Stockholders to be held on May 6, 2008, and any adjournment thereof, upon all matters that may properly come before the meeting. All shares votable by the undersigned will be voted by the proxies named above in the manner specified on the reverse side of this card, and such proxies are authorized to vote in their discretion on such other matters as may properly come before the meeting.
If this proxy relates to shares held in the Investment Technology Group, Inc. Employee Stock Ownership Plan, then, when properly executed, it shall constitute instructions to the plan trustee to vote in the manner directed herein.
Address Changes/Comments: ________________________________________________________________________________ __________________________________________________________________________________________________________ |
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be voted on reverse side.)