Oppenheimer Holdings DEF 14A 2012
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the registrant x
Filed by a party other than the registrant ¨
Check the appropriate box:
Oppenheimer Holdings Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)
Payment of filing fee (Check the appropriate box):
OPPENHEIMER HOLDINGS INC.
85 Broad Street
New York, NY 10004
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2012
To our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of OPPENHEIMER HOLDINGS INC., a Delaware corporation (the Company), will be held at 85 Broad Street, New York, NY 10004 in the 22nd Floor Meeting Room on Monday, May 14, 2012, at the hour of 4:30 P.M. (New York time) for the following purposes:
Holders of Class A non-voting stock of the Company are entitled to attend and speak at the Annual Meeting of Stockholders and any adjournments thereof. Holders of Class A non-voting common stock are not entitled to vote with respect to the matters referred to above.
Only holders of Class B voting common stock of record at the close of business on March 23, 2012 are entitled to vote at the Annual Meeting of Stockholders and any adjournments thereof. Holders of Class B voting common stock who are unable to attend the meeting in person are requested to date, sign and return the enclosed form of proxy for use by holders of Class B voting common stock.
A copy of the Companys 2011 Annual Report to Stockholders, which contains its financial statements for the year ended December 31, 2011, accompanies this Notice and the attached proxy statement.
By Order of the Board of Directors,
Dennis P. McNamara
New York, New York
March 26, 2012
OPPENHEIMER HOLDINGS INC.
This summary highlights selected information appearing elsewhere in this proxy statement and does not contain all the information that you should consider in making a decision with respect to the proposals described in this proxy statement. You should read this summary together with the more detailed information in this proxy statement as well as our 2011 Annual Report to Stockholders in their entirety.
Unless otherwise provided in this proxy statement, references to the Company, Oppenheimer Holdings, we, us, and our refer to Oppenheimer Holdings Inc., a Delaware corporation.
Oppenheimer Holdings Inc.
The Company is a holding company which, through its subsidiaries, is a leading middle-market investment bank and full service investment firm. Through our operating subsidiaries, we provide a broad range of financial services, including retail securities brokerage, institutional sales and trading, investment banking (both corporate and public finance), research, market-making, and investment advisory and asset management services. We own, directly or through subsidiaries, Oppenheimer & Co. Inc., a New York-based securities broker-dealer, Oppenheimer Asset Management, a New York-based investment advisor, Freedom Investments Inc., a discount securities broker-dealer based in New Jersey, Oppenheimer Trust Corporation, a New Jersey limited purpose bank, Oppenheimer Multifamily Housing and Healthcare Finance, Inc. (formerly Evanston Financial Corporation), a Federal Housing Administration approved mortgage corporation based in Pennsylvania, and OPY Credit Corp., a dealer in syndicated loans. The Company also has subsidiaries operating in the United Kingdom, Israel and Hong Kong. The telephone number and address of our registered office is (212) 668-8000 and 85 Broad Street, New York, NY 10004.
This proxy statement is dated March 26, 2012 and is first being mailed to stockholders on or about March 29, 2012.
Set forth below in a question and answer format is general information regarding the Annual Meeting of Stockholders, or the Meeting, to which this proxy statement relates.
Questions and Answers about the Matters to be Acted Upon
Stockholder of Record If your shares are registered directly in your name with our transfer agent, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you by us. You may vote the shares registered directly in your name by completing and mailing the proxy card or by written ballot at the Meeting.
Beneficial Owner If your shares are held in a stock brokerage account or by a bank, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your bank or broker, which is considered the stockholder of record of those shares. As the beneficial owner, you have the right to direct your bank or broker how to vote and are also invited to attend the Meeting. However, since you are not the stockholder of record, you may not vote those shares in person at the Meeting unless you bring with you a legal proxy from the stockholder of record. Your bank or broker has enclosed a voting instruction card providing directions for how to vote your shares.
If you are a Class B Stockholder and you return your proxy card but you do not indicate your voting preferences, the proxies will vote your shares FOR Proposals 1, 2 and 3 and will use their discretion on any other matters that are submitted for stockholder vote at the Meeting.
Class B Stockholders who are not stockholders of record and who wish to file proxies should follow the instructions of their intermediary with respect to the procedure to be followed. Generally, Class B Stockholders who are not stockholders of record will either: (i) be provided with a proxy executed by the intermediary, as the stockholder of record, but otherwise uncompleted and the beneficial owner may complete the proxy and return it directly to our transfer agent; or (ii) be provided with a request for voting instructions by the intermediary, as the stockholder of record, and then the intermediary must send to our transfer agent an executed proxy form completed in accordance with any voting instructions received by it from the beneficial owner and may not vote in the event that no instructions are received.
Matter No. 2, appointment of auditors. The ratification of the appointment of the auditors and the authorization of the Audit Committee to fix the auditors remuneration requires the affirmative vote, in person or by proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present.
Matter No. 3, amendment to the Companys 2006 Equity Incentive Plan. The ratification of the amendment to the Companys 2006 Equity Incentive Plan requires the affirmative vote, in person or by proxy, of a simple majority of the Class B Stock voted at the Meeting if a quorum, or a majority of the Class B Stock, is present.
Mr. Albert G. Lowenthal, our Chairman and Chief Executive Officer, owns 96.4% of the Class B Stock and intends to vote all of such Class B Stock in favor of each of Matters 1, 2 and 3. As a result, each of the matters before the Meeting is expected to be approved. See Security Ownership of Certain Beneficial Owners and Management.
125 Broad Street
New York, NY 10004
You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled Where You Can Find More Information.
Solicitation of Proxies
This proxy statement is forwarded to our Class A Stockholders and Class B Stockholders in connection with the solicitation of proxies by our management from the Class B Stockholders for use at our Annual Meeting of Stockholders to be held on Monday, May 14, 2012, at the hour of 4:30 P.M. (New York time) at 85 Broad Street, New York, NY 10004 in the 22nd Floor Meeting Room and at any adjournments thereof for the purposes set forth in the Notice of Meeting, which accompanies this proxy statement. This proxy statement is dated March 26, 2012 and is first being mailed to stockholders on or about March 29, 2012.
The record date for the determination of stockholders entitled to receive notice of the Meeting is March 23, 2012. In accordance with the provisions of the DGCL, we will prepare a list of the Class B Stockholders as of the record date. Class B Stockholders named in the list will be entitled to vote the Class B Stock on all matters to be voted on at the Meeting.
It is planned that the solicitation will be initially by mail, but proxies may also be solicited by our employees. The cost of such solicitation, estimated to be approximately $2,000, will be borne by us.
No person is authorized to give any information or to make any representations other than those contained in this proxy statement and, if given or made, such information or representations should not be relied upon as having been authorized by us. The delivery of this proxy statement shall not, under any circumstances, create an implication that there has not been any change in the information set forth herein since the date of this proxy statement. Except as otherwise stated, the information contained in this proxy statement is given as of March 1, 2012.
We have distributed copies of our 2011 Annual Report to Stockholders, the Notice of Meeting, this proxy statement, and form of proxy for use by the Class B Stockholders to intermediaries such as clearing agencies, securities dealers, banks and trust companies or their nominees for distribution to our non-registered stockholders whose shares are held by or in the custody of such intermediaries. Intermediaries are required to forward these documents to non-registered Class B Stockholders. The solicitation of proxies from non-registered Class B Stockholders will be carried out by the intermediaries or by us if the names and addresses of Class B Stockholders are provided by the intermediaries. Non-registered Class B Stockholders who wish to file proxies should follow the instructions of their intermediary with respect to the procedure to be followed. Generally, non-registered Class B Stockholders will either: (i) be provided with a proxy executed by the intermediary, as the registered stockholder, but otherwise uncompleted and the non-registered holder may complete the proxy and return it directly to our transfer agent; or (ii) be provided with a request for voting instructions by the intermediary, as the registered stockholder, and then the intermediary must send to our transfer agent an executed proxy form completed in accordance with any voting instructions received by it from the non-registered holder and may not vote in the event that no instructions are received.
Class A Stock and Class B Stock
We have authorized and issued Class A Stock and Class B Stock which are equal in all respects except that the holders of Class A Stock, as such, are not entitled to vote at meetings of our stockholders except as entitled to vote by law or pursuant to our Certificate of Incorporation. Class A Stockholders are not entitled to vote the Class A Stock owned or controlled by them on the matters identified in the Notice of Meeting to be voted on.
Generally, Class A Stockholders are afforded the opportunity to receive notices of all meetings of stockholders and to attend and speak at such meetings. Class A Stockholders are also afforded the opportunity to receive all informational documentation sent to the Class B Stockholders.
Class B Stockholders are entitled to one vote for each share of Class B Stock held as of the record date for the Meeting.
Appointment and Revocation of Proxies
Each of Albert G. Lowenthal and Elaine K. Roberts (the Management Nominees) has been appointed by the Board of Directors to serve as the proxy for the Class B Stockholders at the Meeting.
Class B Stockholders have the right to appoint persons, other than the Management Nominees, who need not be stockholders, to represent them at the Meeting. To exercise this right, the Class B Stockholder may insert the name of the desired person in the blank space provided in the form of proxy accompanying this proxy statement or may submit another form of proxy.
Proxies must be deposited with our transfer agent, Computershare Shareholder Services LLC (formerly Bank of New York Mellon Shareholder Services), at its address 480 Washington Blvd. AIMS 074-29-135, Jersey City, NJ 07310, no later than two business days prior to the commencement of the Meeting in order for the proxies to be used at the Meeting. If you do not deposit your proxy with the transfer agent at least 48 hours prior to the commencement of the Meeting, your proxy will not be used.
Class B Stock represented by properly executed proxies will be voted by the Management Nominees on any ballot that may be called for, unless the Class B Stockholder has directed otherwise, (i) for the election of the nominated Directors (Matter 1 in the Notice of Meeting), (ii) for the ratification of the appointment of auditors and authorization of the Audit Committee to fix the remuneration of the auditors (Matter 2 in the Notice of Meeting), and (iii) for the ratification of an amendment to the Companys 2006 Equity Incentive Plan (Matter 3 in the Notice of Meeting).
Each form of proxy confers discretionary authority with respect to amendments or variations to matters identified in the Notice of Meeting to which the proxy relates and other matters which may properly come before the Meeting. Management knows of no matters to come before the Meeting other than the matters referred to in the Notice of Meeting. However, if matters which are not known to management should properly come before the Meeting, the proxies will be voted on such matters in accordance with the best judgment of the person or persons voting the proxies.
A Class B Stockholder who has given a proxy has the power to revoke it prior to the commencement of the Meeting by depositing an instrument in writing executed by the Class B Stockholder or by the stockholders attorney-in-fact either at our registered office at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, or with our Secretary on the day of the Meeting or any adjournment thereof or in any other manner permitted by law. A Class B Stockholder who has given a proxy may also revoke it by signing a form of proxy bearing a later date and returning such proxy to our Secretary prior to the commencement of the Meeting. In addition, a Class B Stockholder who has given a proxy has the power to revoke it after the commencement of the Meeting as to any matter on which a vote has not been cast under the proxy by delivering written notice of revocation to our Secretary.
Abstentions and broker non-votes will have no effect with respect to the matters to be acted upon at the Meeting, assuming that a quorum is obtained.
MATTER NO. 1
ELECTION OF DIRECTORS
Director Nomination Process
Our Bylaws provide that our Board of Directors consists of no less than three and no more than eleven directors to be elected annually. The term of office for each director is from the date of the meeting of stockholders at which the director is elected until the close of the next annual meeting of stockholders or until his or her successor is duly elected or appointed, unless his or her office is earlier vacated in accordance with our Bylaws.
The Nominating and Corporate Governance Committee of the Board has recommended and the directors have determined that seven directors are to be elected at the Meeting. Management does not contemplate that any of the nominees named below will be unable to serve as a director, but, if such an event should occur for any reason prior to the Meeting, the Management Nominees reserve the right to vote for another nominee or nominees in their discretion. Mr. Burton Winberg has decided not to stand for re-election as a director for personal reasons. The Company honors his service as a director since 1979 and will miss his considerable contributions to the Board.
The following sets out information with respect to the proposed nominees for election as directors as recommended by the Nominating and Corporate Governance Committee, in accordance with the Nominating and Corporate Governance Committee Charter (available at www.opco.com). The Nominating and Corporate Governance Committee has reported that it is satisfied that each of the nominees is fully able and fully committed to serve the best interests of our stockholders. The election of the directors nominated requires the affirmative vote of a simple majority of the Class B Stock voted at the Meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR EACH OF THE DIRECTORS NOMINATED FOR ELECTION.
Director Nominees and Executive Officers
The following table, and the notes thereto, provide information regarding our director nominees and executive officers.
Nominees for Election as a Director
Our executive officers consist of Mr. Lowenthal, our Chairman and Chief Executive Officer, and Ms. Roberts, our President, Treasurer and principal financial and accounting officer, whose backgrounds are described above, and Mr. Alfano, our Chief Financial Officer, whose background is described below.
Board Leadership Structure
The Board believes that the Companys Chief Executive Officer is best situated to serve as Chairman of the Board because he is the director most familiar with the Companys business strategy, history and capabilities, and most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. Independent directors and management add different perspectives and roles in strategy development. The Companys independent directors bring experience, oversight and expertise from outside the Company and, in some cases, outside the industry, while the Chief Executive Officer brings Company-specific and industry-specific experience and expertise. The Board believes that the combined role of Chairman and Chief Executive Officer facilitates the strategy development and execution, and enhances the flow of information between management and the Board, which are essential to effective governance.
One of the key responsibilities of the Board of Directors is to develop strategic direction and hold management accountable for the execution of strategy once it is developed. The Board believes the combined role of Chairman and Chief Executive Officer, together with an independent Lead Director having the duties described below, is in the best interest of stockholders because it provides the appropriate balance between strategy development and independent oversight of management for our Company.
K.W. McArthur, an independent director who serves on the Audit Committee, was selected by the Board to serve as the Lead Director for all meetings of the non-management directors held in executive session. The role of the Lead Director is to assure the independence of the Board from management. The Lead Director has the responsibility of presiding at all executive sessions of the Board, consulting with the Chairman and Chief Executive Officer on Board and committee meeting agendas, acting as a liaison between management and the non-management directors, including maintaining frequent contact with the Chairman and Chief Executive Officer and advising him on the efficiency of the Board meetings, facilitating teamwork and communication between the non-management directors and management, as well as additional responsibilities that may be assigned to the Lead Director by the Board.
Pursuant to the Companys Corporate Governance Guidelines, non-management directors of the Board meet on a regularly scheduled basis and otherwise as the independent directors determine without the presence of management. The Lead Director, Mr. K.W. McArthur, chairs these sessions. An executive session took place, in camera, at every scheduled Board meeting held in 2011. To ensure strong communication with the Chief Executive Officer, the independent directors may meet with the CEO alone as the independent directors determine.
Board of Directors and Committee Meetings Held
During 2011, the following numbers of Board and committee meetings were held:
There is no Executive Committee of the Board of Directors.
Last year there were thirteen meetings of the Board. We are pleased that all of our then eight directors attended 100% of the total meetings of the Board and committees of the Board in 2011.
In addition to participation at Board and committee meetings, our directors discharge their responsibilities throughout the year through personal meetings and other communications, including considerable telephone contact with the Chairman and Chief Executive Officer and other members of senior management and each other regarding matters of interest and concern to the Company. It is our policy that our directors attend our stockholders meetings and at the last Annual Meeting of Stockholders held on May 9, 2011, six of the then eight directors attended.
The Board, as a whole and also at the committee level, has an active role in overseeing the management of the Companys strategic, operational, financial and compliance risks. The Board regularly reviews information regarding the Companys credit, liquidity and operations, as well as the risks associated with each. The Companys Compensation Committee is responsible for overseeing the Companys executive compensation arrangements and assuring that financial incentives for management and employees are appropriate and mitigate against, rather than encourage, employees to take excessive risk exposure with firm capital. The Audit Committee oversees management of compliance, operational and financial risks. The Company also has a number of internal risk-oversight committees and functions. The Companys internal Risk Management Committee is charged with assessing, reviewing and monitoring the risk environment in which the Company operates, and reports its findings and considerations to the Audit Committee at each regularly scheduled quarterly meeting and more frequently, as needed. The Nominating and Corporate Governance Committee manages risks associated with the governance of the Company, including the composition, responsibilities and independence of the Board of Directors and ethical and regulatory issues including conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks.
Our Class A Stock is listed on the NYSE. We are subject to the corporate governance listing standards of the NYSE, the applicable rules of the Securities and Exchange Commission (the SEC), the provisions of the Sarbanes-Oxley Act of 2002 and the applicable rules of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).
Our Nominating and Corporate Governance Committee, Compensation Commmittee, Audit Committee and our Board of Directors continue to monitor regulatory changes and best practices in corporate governance and consider amendments to our practices and policies as appropriate.
Our Corporate Governance Guidelines, and all committee charters, as well as our Code of Conduct and Business Ethics for Directors, Officers and Employees and our Whistleblower Policy, are posted on our website at www.opco.com.
Mandate and Duties of the Board of Directors
The fundamental responsibility of the Board of Directors is to oversee the management of our business with a view to maximizing stockholder value and ensuring corporate conduct in a legal and ethical manner through a system of corporate governance and internal controls appropriate to our business. The Board of Directors has adopted a statement of Corporate Governance Guidelines to which it adheres. We have a Code of Conduct and Business Ethics for Directors, Officers and Employees which is posted on our website www.opco.com. No waivers were granted in 2011 or to date in 2012 under the Code of Conduct and Business Ethics for any directors, officers or employees.
In fulfilling its mandate, the Boards responsibilities include:
Six of our current eight directors are independent (and five of the seven individuals nominated for election as directors at the Meeting will be independent) as required by the NYSE Corporate Governance Rules. To be considered independent under these rules, the Board of Directors must determine that a director has no direct or indirect material relationship with us. The Board of Directors determined that Messrs. Crystal, Ehrhardt, Keehner, McArthur and Oughtred (the non-management Directors) are independent directors, and that Mr. Lowenthal, our Chairman of the Board of Directors and Chief Executive Officer, and Ms. Roberts, our President, Treasurer and principal financial and accounting officer, are not independent. Mr. Winberg, who was determined to be an independent director, is not standing for re-election to the Board of Directors for personal reasons.
The Board of Directors has not adopted formal categorical standards to assist in determining independence. The Board has considered the types of relationships that could be relevant to the independence of a director of the Company. These relationships are described in Schedule A to the Companys Corporate Governance Guidelines which are posted on our website at www.opco.com. The Board of Directors has considered the relationship of each non-management/officer director and has made a determination that the six of our current non-management/officer directors are independent (five of our nominees).
Until November 30, 2008, Mr. Crystal was Counsel to the law firm of Thelen LLP, which firm provided legal services to us. In view of the professional ethical standards which govern his conduct, the fact that less than one percent of the annual revenues of his former firm were derived from us, and that Mr. Crystal receives no direct compensation from us other than his directors compensation, we believe his former relationship with us is not
material for purposes of determining that he is an independent director. Mr. Crystal has been Counsel to the law firm of Seyfarth Shaw LLP since December 1, 2008. Seyfarth Shaw LLP does not have a significant relationship with us. Mr. Crystal is Mr. Lowenthals first cousin. Because the two are not immediate family members within the meaning of the New York Stock Exchange (NYSE) Listed Company Manual or the standards of the Securities Exchange Act of 1934, as amended (the Exchange Act), and, for the reasons set forth above, we do not believe this relationship is material for purposes of determining that he is an independent director.
At each regular Board and Audit Committee meeting, the independent directors are afforded an opportunity to meet in the absence of management. During 2011, five meetings of the independent directors were held in the absence of management. Additionally, at regular meetings of the Audit Committee (five regular meetings annually), the members of the Audit Committee, all of whom are independent, are afforded the opportunity to meet with the auditors in the absence of management.
The independent directors and the directors that are not independent understand the need for directors to be independent-minded and to assess and question management initiatives and recommendations from an independent perspective. The Board of Directors Lead Director, Mr. K.W. McArthur, is an independent director who, among other things, chairs sessions of the independent directors.
Orientation and Continuing Education
The Nominating and Corporate Governance Committee of the Board of Directors, as required by its charter, is responsible for the orientation of new directors to our business and overseeing the continuing education needs of all directors.
The Board of Directors encourages the directors to maintain the skill and knowledge necessary to meet their obligations as directors. This includes support for director attendance at continuing education sessions and making available newsletters and other written materials. Our directors understand the need to maintain their knowledge and skills and avail themselves of director education literature and programs.
Board and Committee Assessments
The Board conducts a self-evaluation annually to determine whether it and its Committees are functioning effectively.
The Board has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The Audit, Compensation, and Nominating and Corporate Governance Committees are composed entirely of independent directors, as defined under the NYSE Listed Company Manual and the Companys Corporate Governance Guidelines. The charters of each committee are available on the Companys website at www.opco.com.
The Board of Directors has an Audit Committee composed of four independent directors, the duties of which are set forth below.
The Board of Directors has adopted a written charter for the Audit Committee, a copy of which is posted on our website at www.opco.com. The Audit Committee:
All of the members of the Audit Committee are financially literate. The Board of Directors has determined that the Audit Committee includes two financial experts and that Messrs. W. Ehrhardt and K.W. McArthur, the financial experts, are independent as defined in Rule 10 A-3(b) of the Exchange Act and Section 303A.02 of the NYSEs Listed Company Manual. Mr. Ehrhardt is a Certified Public Accountant and a member of the AICPA. Mr. McArthur is a member of the Institute of Chartered Accountants of British Columbia. Currently, none of the members of the Audit Committee simultaneously serves on the audit committee of any other public company.
The Board of Directors has adopted a Compensation Committee Charter, a copy of which is posted on our website at www.opco.com. Pursuant to its charter, the Compensation Committees objective is to provide a competitive compensation program with strong and direct links between corporate objectives and financial performance, individual performance and compensation, mindful of the Companys corporate risk management objectives. All members of the Compensation Committee are independent.
The Compensation Committee:
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee Charter, a copy of which is posted on our website at www.opco.com, provides that the Nominating and Corporate Governance Committee is responsible for ensuring that our Board of Directors is composed of directors who are fully able and fully committed to serve the best interests of our stockholders. Factors considered by the Nominating and Corporate Governance Committee in assessing director performance and, when needed, recruiting new directors include character, judgment, experience, ethics, integrity and compatibility with the existing Board of Directors.
The Nominating and Corporate Governance Committee has three members, all of whom are independent. The duties of this Committee are set out as follows:
The Nominating and Corporate Governance Committee will give appropriate consideration to nominees recommended by Class B Stockholders. Nominees recommended by Class B Stockholders will be evaluated in the same manner as other nominees. Class B Stockholders who wish to submit nominees for director for consideration by the Nominating and Corporate Governance Committee for election at our 2013 Annual Meeting of Stockholders may do so by submitting in writing such nominees name, in compliance with the procedures and along with the other information required by our Bylaws and Regulation 14A under the Exchange Act (including such nominees written consent to being named in the proxy statement as a nominee and to serving as a director if elected), to our Secretary, at 85 Broad Street, New York, NY 10004 within the time frames set forth under the heading Stockholder Proposals.
The following table describes director compensation for the year ended December 31, 2011 paid to the directors other than Mr. Lowenthal and Ms. Roberts, who receive no compensation in connection with their service on our Board of Directors.
2011 DIRECTOR COMPENSATION TABLE
Notes to 2011 Director Compensation Table:
In 2011, the directors were paid directors fees of $264,875 in the aggregate. Directors are reimbursed for travel and related expenses incurred in attending board and committee meetings. The directors who are not our employees are also entitled to the automatic grant of stock options under our 2006 Equity Incentive Plan pursuant to a formula set out in the plan. Reference is made to the table under Director Stock Options, below. Directors who are our employees are not entitled to receive compensation for their service as directors.
The Company has not made contributions to any tax exempt organizations in which an independent director serves as an executive officer.
We operate in a challenging marketplace in which our success depends upon, among other things, our ability to attract and retain non-employee directors of the highest caliber. The Board believes that we must offer a competitive non-employee director compensation program if we are to successfully attract and retain the best possible candidates for these important positions of responsibility. Accordingly, we reviewed our practices against those of our peers and general trends in director compensation and, on December 14, 2011, the Board of Directors approved changes in non-employee director compensation as follows:
In addition, the Board approved an amendment to the Companys 2006 Equity Incentive Plan which has the effect, if approved by our stockholders at the Meeting, of replacing a program of automatic stock option grants to non-employee directors with a program of annual restricted stock awards. See Matter No. 3.
The Board also approved a Compensation Committee recommendation that, upon the approval of Matter No. 3, our minimum director stock retention expectation be increased to 6,000 shares held directly or beneficially (including grants under the aforementioned stock award program and prior grants of options), with a three-year grace period for new and existing directors to achieve such retention levels.
Director Stock Options
Under our 1996 and 2006 Equity Incentive Plans, non-employee directors were and are entitled to automatic option grants of 5,000 shares of Class A Stock for each full year of service up to a maximum of options on 25,000 shares of Class A Stock in any five year period.
The following table describes non-employee director options held at December 31, 2011 as well as the grant date fair value of options granted in 2011 and numbers of unvested options outstanding, as applicable.
Notes to Director Stock Options Table:
On January 3, 2012, subject to stockholder approval of an amendment to the Companys 2006 Equity Incentive Plan, the independent directors were each granted stock awards of 2,200 shares of Class A Stock. These awards vest in the amount of 25% on each of July 1, 2012, July 1, 2013, July 1, 2014 and July 1, 2015.
Directors and Officers Insurance
We carry liability insurance for our directors and officers and the directors and officers of our subsidiaries. Between November 30, 2010 and November 30, 2011, our aggregate insurance coverage was $30 million with a $2.5 million deductible and an aggregate annual premium of $719,300. The coverage was renewed for a further year effective November 30, 2011 at an aggregate annual premium of $709,135 and includes Side A coverage in the amount of $2.5 million.
Under our Bylaws, we are obligated to indemnify our and our subsidiaries directors and officers to the maximum extent permitted by the DGCL. We have entered into an indemnity agreement with each of our directors providing for such indemnities.
Stock Ownership of Board Members
For information on the beneficial ownership of securities of the Company by directors and executive officers, see Security Ownership of Certain Beneficial Owners and Management below.
Compensation Committee Interlocks and Insider Participation
Messrs. Ehrhardt, Keehner and Winberg served as members of the Compensation Committee for the fiscal year ending December 31, 2011. None of the members of the Compensation Committee is or has ever been one of our officers or employees or been a party to a transaction with our Company. No interlocking relationship exists between our Board of Directors or Compensation Committee and the board of directors or compensation committee of any other entity.
REPORT OF THE AUDIT COMMITTEE
As required by our Audit Committee Charter, the Audit Committee reports as follows:
The Audit Committee oversees our financial reporting process on behalf of the Board of Directors. It meets with management and our internal audit group and independent auditors regularly and reports the results of its activities to the Board of Directors. In this connection, the Audit Committee has done the following with respect to fiscal 2011:
Based on the foregoing, the Audit Committee recommended to the Board of Directors our audited financial statements for the year ended December 31, 2011 prepared in accordance with GAAP be included in our 2011 Annual Report to Stockholders and in the Annual Report on Form 10-K for the year ended December 31, 2011.
Members of the Audit Committee Reporting
William Ehrhardt Chairman
Michael A.M. Keehner
Kenneth W. McArthur
REPORT OF THE COMPENSATION COMMITTEE
As required by our Compensation Committee Charter, the Compensation Committee reports as follows:
Under its charter, the Compensation Committee is required to discharge the Board of Directors responsibilities relating to compensation of our senior executive officers and to report on its practices to our stockholders in our annual proxy statement. The Compensation Committee Charter can be found on our website at www.opco.com. The Compensation Committee, comprised of independent directors, reviewed and discussed the following Compensation Discussion and Analysis with our management. In reaching its conclusions, the members of the Compensation Committee were aware of the recent focus of the media, the government and the general population on the compensation of executives and employees of financial service companies. The Compensation Committee believes that our practices align pay practices with corporate objectives and performance and do not encourage excessive risk-taking, and that the 2011 compensation payments made to executives and employees were substantially so aligned. Based on their review and discussions, the Compensation Committee approved and recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
Members of the Compensation Committee Reporting
Michael A.M. Keehner Chairman
The Report of the Compensation Committee set forth in this proxy statement shall not be deemed to be soliciting material or to be filed with the SEC or subject to Regulation 14A or 14C under the Exchange Act or to the liabilities of Section 18 of the Exchange Act. In addition, it shall not be deemed incorporated by reference by any statement that incorporates this proxy statement by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference.
REPORT OF THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
As required by the Nominating and Corporate Governance Committees Charter, the Nominating and Corporate Governance Committee reports as follows:
Members of the Nominating and Corporate Governance Committee
Richard Crystal Chairman
Michael A.M. Keehner
MATTER NO. 2
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed PricewaterhouseCoopers LLP for reappointment as our independent registered public accounting firm or auditors for the 2012 fiscal year. The Audit Committee intends to fix the remuneration of the auditors. The ratification of the appointment of auditors and the authorization of the Audit Committee to fix the remuneration of the auditors require the affirmative vote of a simple majority of the Class B Stock voted at the Meeting.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the Meeting and will be given the opportunity to make a statement, if they desire, and to respond to appropriate questions.
To be effective, these matters must be authorized by the affirmative vote of a simple majority of the votes cast by the Class B Stockholders at the Meeting. Abstentions will not be counted as votes for or against the proposal. Mr. Lowenthal owns 96.4% of the Class B Stock and has informed the Company he intends to vote all of such Class B Stock in favor of the proposal. See Security Ownership of Certain Beneficial Owners and Management.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP FOR FISCAL 2012 AND FOR THE AUTHORIZATION OF THE AUDIT COMMITTEE TO FIX THE AUDITORS REMUNERATION.
Principal Accounting Fees and Services
PricewaterhouseCoopers LLP has served as our independent registered public accounting firm since 1993. PricewaterhouseCoopers LLP has advised us that neither the firm nor any of its members or associates has any direct financial interest or any material indirect financial interest in us or any of our affiliates other than as our auditor.
Audit Fees, Audit-Related Fees and Tax Fees. The fees billed to us and our subsidiaries by PricewaterhouseCoopers LLP during the years 2011 and 2010 in connection with services provided in such year were as follows:
The 2011 audit fees include the fees for the audit of our annual consolidated financial statements for the year 2011 and the review of the quarterly financial statements included in the Forms 10-Q filed by us and the interim reports to stockholders sent to stockholders during the year. Audit fees also include the separate entity audits of Oppenheimer Europe Ltd. (formerly Oppenheimer E.U. Ltd.) and Oppenheimer Investments Asia Limited. During 2011, PricewaterhouseCoopers LLP provided tax compliance services for us in the U.S. and Canada. In addition, during 2011, PricewaterhouseCoopers LLP performed the audit services required for the production of SSAE 16 Reports (formerly SAS 70 Reports) for both Oppenheimer & Co. Inc. and Oppenheimer Trust Company as well as an AT 101 Report for Oppenheimer Trust Company. In addition, as a requirement of the SEC Investment Advisory Custody Rule, as amended, we hired PricewaterhouseCoopers LLP to perform the mandated examinations
The Audit Committee has the sole authority and responsibility to appoint independent auditors for ratification by stockholders, and to recommend to stockholders that independent auditors be removed. The Audit Committee has appointed PricewaterhouseCoopers LLP as our auditors for ratification by the stockholders at the Meeting.
The Audit Committee recommends and the Board of Directors approves all audit engagement fees and terms in addition to all non-audit engagements and engagement fees submitted by independent auditors. The process begins prior to the commencement of the audit. The fees described above were 100% pre-approved.
MATTER NO. 3
AMENDMENT TO THE 2006 EQUITY INCENTIVE PLAN
On May 14, 2007, the Companys stockholders approved the Oppenheimer Holdings Inc. 2006 Equity Incentive Plan (the Plan) for officers, directors and key employees of the Company and its subsidiaries providing up to 800,000 shares of Class A Stock to be issued from treasury as part of compensation. The purpose of the Plan is to provide additional compensation incentives for high levels of performance and productivity of key employees, officers and directors of the Company and its subsidiaries. Pursuant to the Plan, the Compensation Committee may grant options to purchase Class A Stock, Class A Stock awards and restricted Class A Stock awards to officers, directors and key employees of the Company and its subsidiaries. In addition, stock options were granted automatically to the Companys non-employee directors annually on a formula basis through 2011 pursuant to the Plan.
On December 14, 2011, our Board of Directors approved an amendment to the Plan, subject to ratification by the Class B Stockholders at the Meeting, which deletes the provision granting our outside directors automatic grants of stock options annually on a formula basis and provides a replacement provision providing for annual stock awards for our outside directors by an administrative committee composed of the Secretary of the Company and the head of Human Resources of Oppenheimer & Co. Inc. As discussed in the Compensation Discussion and Analysis, the Company has limited its use of stock option awards in favor of stock awards. The initial directors award was 2,200 shares of Class A Stock which was granted to non-employee directors on January 3, 2012, subject to ratification of the Plan amendment by Class B Stockholders, which shares vest 25% on July 1, 2012 and 25% on July 1 of each of the following three years, subject to certain exceptions described in the resolution below.
The award of Class A Stock under the Plan is a significant component of the Companys compensation program for key employees and non-employee directors of the Company. The award of stock to directors, like key employees, is intended to align their interests with those of the Class A Stockholders. The Board and the Compensation Committee have adopted a policy of maintaining the percentage of reserved stock for share-based awards to not more than 20% of the number of issued shares of Class A Stock. The current percentage of shares of Class A Stock underlying existing share-based arrangements together with shares of Class A Stock reserved for future arrangements as a percentage of the Companys issued Class A Stock at March 1, 2012 is 7.1% (including the initial directors awards discussed above). A discussion of the Companys share-based plans is presented in note 13 to our consolidated financial statements for the year ended December 31, 2011 included in our 2011 Annual Report to Stockholders which accompanies this proxy statement.
As of March 1, 2012, the Company has outstanding stock awards and stock options to purchase 100,003 shares pursuant to the Plan including 13,200 shares awarded to our non-employee directors. Such stock awards and stock options are intended to strengthen the Companys ability to attract and retain outstanding key employees, officers and directors upon whose judgment, initiative and efforts its continued success, growth and development is dependent.
Class B Stockholders are being asked to consider and, if deemed advisable, ratify the resolution which appears below authorizing the amendment of the Plan to delete the provision granting our outside directors automatic grants of stock options annually on a formula basis and to provide a replacement provision providing for annual stock awards for our outside directors by an administrative committee all as more particularly described in the resolution below.
BE IT RESOLVED that Section 8 of the Plan is hereby revoked and that a new Section 8, as stated below, is adopted in its place:
8. Grant of Stock Award to Non-Employee Directors
An award of Class A Shares shall be granted to Non-Employee Directors, including members of the Committee, as follows:
To be effective, the above resolution must be ratified by the affirmative vote of a simple majority of the votes cast by the Class B Stockholders at the Meeting. Abstentions will not be counted as votes for or against the proposal. Mr. Lowenthal owns 96.4% of the Class B Stock and has informed the Company he intends to vote all of such Class B Stock in favor of the proposal. See Security Ownership of Certain Beneficial Owners and Management.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE AMENDMENT TO THE 2006 EQUITY INCENTIVE PLAN DESCRIBED ABOVE.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Compensation Discussion and Analysis
The Compensation Committee of the Board (the Compensation Committee) and the Board of Directors believe that the policies and practices described in the following Compensation Discussion and Analysis (CD&A) provide a compensation framework which enables us to retain and appropriately reward the executive officers that we believe are critical to our long-term success, while linking that compensation to our corporate objectives and performance.
Some highlights of our 2011 compensation decisions include the following:
The foregoing 2011 Compensation Highlights do not purport to be complete and are subject to, and qualified in their entirety by reference to, the CD&A set forth below which should be read in its entirety for a full and complete understanding of our compensation policies and practices as well as the compensation awarded to, earned by, or paid to our executive officers for 2011.
The following CD&A describes the material elements of compensation for our named executive officers identified in the Summary Compensation Table, or the Named Executives. The Compensation Committee, which is comprised entirely of independent directors, makes recommendations to the Board for the total compensation (that is the base salary, annual bonus, stock options and stock awards) of our senior executive officers, including the Named Executives. The Compensation Committees determination of the total compensation of our Chief Executive Officer is subject, in part, to the Performance-Based Compensation Agreement, amended and restated January 1, 2010, between the Company and our Chief Executive Officer, for which we received stockholder approval on May 10, 2010.
Certain processes and procedures of the Compensation Committee are discussed below including its role in dealing with the Chief Executive Officers compensation and the compensation of the other Named Executives. The Compensation Committee considers recommendations from the Chief Executive Officer with respect to the compensation of Named Executives (other than the Chief Executive Officer), as it does on compensation matters such as year-end incentive compensation and stock awards for all of our other employees.
The day-to-day design and administration of health benefits, the deferred compensation plans and the 401(k) plan and other employee benefit plans and policies applicable to salaried U.S.-based employees in general are handled by our Human Resources, Finance and Legal Departments.
For the purposes of determining 2011 executive compensation, the Compensation Committee did not retain independent compensation consultants although the Compensation Committee may retain compensation consultants when it deems necessary.
Objectives and Policies
The Compensation Committees objective is to provide a competitive compensation program with strong and direct links between corporate objectives and financial performance, individual performance and compensation, mindful of our corporate risk management objectives. Our compensation policy with respect to our Named Executives, including the Chief Executive Officer, has the following objectives:
Our compensation program for senior executive officers, including the Named Executives, consists of the following key elements: a base salary, an annual bonus, grants of share-based compensation (typically stock awards) and, in the case of the Chief Executive Officer, performance-based compensation pursuant to the Performance-Based Compensation Agreement. The goal of the Compensation Committee is to provide a compensation structure which will enable us to retain and appropriately reward the executive officers that we believe are critical to our long-term success. The Compensation Committee also reviews compensation arrangements to ensure that a portion of the Named Executives compensation is directly related to corporate performance, appropriate risk management and other factors that directly and indirectly influence stockholder value.
The Compensation Committee evaluated whether to use a peer group of public companies to guide its decision making process with respect to 2011 compensation. The Compensation Committee does not view the Company as having many true peers, given the Companys size, business model and mix of businesses as well as consolidation in the financial services industry. Many companies that might otherwise be considered to be a part of the Companys peer group are either much larger bank holding companies or smaller companies or not wholly comparable to our business. However, the Compensation Committee recognizes the value of using a peer group to further its understanding of certain industry compensation practices and the competitive market for executive talent. We selected and reviewed compensation practices of the following companies with some comparable attributes to
the Company for various compensation purposes during the 2011 year: E-Trade Financial, Gleacher & Company, Greenhill & Co., Jeffries Group, KBW, Inc., Knight Capital Group, Inc., Lazard, Piper Jaffray, Stifel Financial and Raymond James Financial. The Compensation Committee reviewed the compensation practices of a subset of these peer group companies to provide a context for its 2011 compensation decisions for our Chief Executive Officer, but the determination of the amounts granted was partially subjective and partially governed by the Performance-Based Compensation Agreement with the Chief Executive Officer described further below. The Compensation Committee also used these peer group companies and broad studies of companies similar to our Company in revenue as well as other financial services companies to set a context for our decisions on non-employee Director Compensation practices. See Director Compensation. The Compensation Committee does not employ a formal benchmarking strategy or rely upon specific peer-derived targets.
The Compensation Committee believes potential incentive compensation (annual bonus and, to a lesser extent, share-based awards) should generally comprise between 60% to 95% of total compensation for the Named Executives because:
The Compensation Committee makes recommendations to the Board with respect to total compensation including an annual bonus and grants equity awards, if appropriate, for our Named Executives and other senior executives. The Compensation Committee does not necessarily grant share-based awards to employees, including the Named Executives, on an annual basis. It considers the performance of the employee and the number of outstanding share-based awards already awarded to the employee when determining total compensation in any year and the degree to which the employee already has (or may have) a long-term interest in the Companys success. Upon the vesting of an employees share-based awards, the Compensation Committee also considers whether or not to grant new awards to the employee and on what terms such awards will be made. All share-based awards are priced at fair value at the grant date and are typically conditioned upon the employees continued employment with the Company for a significant period of time.
The Compensation Committee believes that, as stockholders, the Named Executives, other senior executives and selected employees will be motivated to consistently deliver financial results that build wealth for all stockholders over the long-term, and it currently uses share-based awards to accomplish that objective. The Compensation Committee is cognizant of the impact of the accounting guidance on our financial results and will strive to balance the granting of stock options and other forms of stock-based incentives with the other objectives of executive compensation set forth above. Since the adoption of accounting guidance on Share-Based Payment, on January 1, 2006, requiring us to expense stock options, we have granted only a very limited number of stock options and none to the Named Executives. We also have a policy that share-based compensation awards outstanding not exceed 20% of the outstanding Class A Stock, which, together with the relatively small number of such shares outstanding, also restricts the Compensation Committees ability to make share-based awards. At March 1, 2012, we had stockholder approval to award 1,297,313 shares of Class A Stock pursuant to our share-based awards plans (9.5% of our outstanding Class A Stock), of which 881,403 shares of Class A Stock are the subject of current share-based compensation arrangements and subject to vesting requirements. In January 2011, we established a compensation recovery (claw-back) policy which permits us to recover certain incentive stock-based awards in specified circumstances. See discussions under Stock Option Grants, Stock Awards and Compensation Recovery Policy below.
Compensation arrangements for our senior executive officers (other than the Chief Executive Officer) generally involve a significant component of remuneration which is contingent on our Companys performance and that of the senior executive officer: an annual cash bonus (which permits individual performance to be recognized on an annual basis, and which is based, in significant part, on an evaluation of the contribution made to the Company by the officer) and share-based awards (which directly link a portion of their compensation to stock price appreciation and dividends realized by our stockholders). The Compensation Committee believes that this approach best serves
the interests of stockholders by enabling us to structure compensation in a way that meets the requirements of the highly competitive environment in which we operate, while ensuring that senior executive officers are compensated in a manner that advances both our short and long-term interests and those of our stockholders. For the Chief Executive Officers compensation arrangements, see discussion under Chief Executive Officer Compensation below.
Consideration of Say-On-Pay Votes
We conducted an advisory stockholder vote on executive compensation on May 9, 2011. The results of that vote were to affirm our compensation practices as disclosed in the 2011 Compensation Discussion and Analysis and attendant tables and narrative and the compensation paid to our Named Executives and to approve our recommendation for a three year interval for repeating this vote. The Compensation Committee considered and will consider the results of that vote when establishing current and future years executive compensation arrangements, but notes that the stockholder vote is non-binding and in the future the Compensation Committee and Board may choose whether or not to take the results of the vote into account.
Performance evaluation and total compensation element timing
Our executive compensation program for the Chief Executive Officer and other senior executive officers involves performance-related incentive compensation and long-term compensation elements paid in a mix of cash bonuses and stock awards. It has been our practice to determine the aggregate cash bonus pool available to our Chief Executive Officer and other senior executives on or before December 31st of the fiscal year-end in which the performance was delivered for accounting and tax purposes. However, our practice is to consider and make any long-term equity-related awards to our Chief Executive Officer and other senior executives in the first 60 daysof the following year, based upon their performance in the prior fiscal year.
While we believe our process and timing of making performance-related judgments on annual total compensation is sound and reasonable and consistent with industry standards, it does not correspond to the proscribed accounting period standards for compensation expenses nor for compensation disclosure. Elements of the total compensation for our Chief Executive Officer and other senior executives are recorded in different accounting years and thus are not captured in the proscribed tables in this proxy statement or in our financial statements in a manner which accurately reflects the Compensation Committees judgments about performance for the fiscal year. Because of this disparity, we have made a practice of always disclosing any equity-related awards that are granted in the first sixty days of the following year for our Named Executives and our employees taken as a whole in our proxy statements. We do this so that stockholders can see the Compensation Committees judgments about total compensation and how it relates to the Companys and the executives prior years performance by combining cash bonuses and salary for the relevant fiscal year plus any stock awards granted in the first sixty days of the following year.
Determination of 2011 Compensation
The Compensation Committee, with recommendations from the Chief Executive Officer, makes recommendations to the Board with respect to all compensation for each Named Executive for 2011 (other than the Chief Executive Officer, which compensation it based upon the Committees own judgments). For a discussion of the compensation for the Chief Executive Officer, see the section entitled Chief Executive Officer Compensation below.
The Compensation Committee makes recommendations to the Board with respect to each Named Executives annual salary and annual bonus and makes grants of share-based awards by reference to the executives position, responsibilities and performance. Some of the factors considered by the Compensation Committee are:
The Chief Executive Officer assessed each Named Executives (other than the Chief Executive Officers) as well as other senior officers performance under our performance assessment criteria, and the Compensation Committee assessed the Chief Executive Officers performance according to these same criteria and the parameters established under the Performance-Based Compensation Agreement with our Chief Executive Officer. See discussion under Chief Executive Officer Compensation below.
Our performance assessment criteria rate performance in different competencies as follows:
Base Salary. The salary of our Chief Executive Officer is set by the Compensation Committee. Salaries paid to senior executive officers are reviewed annually by the Compensation Committee considering recommendations made by the Chief Executive Officer, based on his assessment of the nature of the position, and the skills, experience and performance of each senior executive officer, as well as salaries paid by comparable companies in our industry. The Compensation Committee then makes recommendations to the Board of Directors with respect to base salaries. Base salaries paid to senior executive officers in 2011 were not increased from 2010 levels.
Annual Bonus. Bonuses paid to our senior executive officers are reviewed annually by the Compensation Committee considering recommendations made by the Chief Executive Officer based on his assessment of the performance of the Company, his assessment of the individual contribution of each senior executive officer to that performance and their compentencies. The Compensation Committee then makes recommendations to the Board of Directors with respect to annual cash bonuses. Annual bonuses for our senior executive officers were lower in 2011 by approximately 32% compared to 2010 in response to the Companys drop in profitability in 2011 compared to 2010. Senior executive officers, including the Chief Executive Officer, may be offered the right to elect to defer a portion of their annual bonus and performance-based compensation under our Executive Deferred Compensation Plan, a non-qualified unfunded plan. In 2009, 2010 and 2011, no officer was given the option to make such a deferral. See Stock Awards below.
Stock Option Grants. Under our 2006 Equity Incentive Plan, or EIP, our senior executive officers and employees may be granted stock options or restricted stock awards by the Compensation Committee based upon a variety of considerations, including the performance of the specific optionee and the date of the last grant made to the officer or employee, as well as considerations relating to the contribution. In addition, stock option grants may be awarded as a retention tool for new employees. Due to the relatively high cost of expensing stock option awards under applicable accounting guidance, we have limited our use of this form of award in favor of stock awards.
Stock Awards. Under either our Employee Share Plan, or ESP, or under the EIP, our and our subsidiaries executive officers and employees (other than the Chief Executive Officer) are granted stock awards by the Compensation Committee based upon recommendations from the Chief Executive Officer and other considerations relating to the contribution and performance of the specific award recipient. In addition, stock awards may be given as an inducement to employment for new employees or as a retention tool for existing employees. Stock awards are generally subject to a significant vesting period and we believe that these awards are useful in retaining our key executive personnel. On January 27, 2011, we awarded 291,000 shares of restricted Class A Stock to our employees under the EIP and the ESP, including 40,000 to Mr. Lowenthal and 10,000 each to Mr. Alfano, Mr. Okin and Ms. Roberts all subject to five-year vesting. On January 25, 2012, we awarded 52,500 shares of restricted Class A Stock to Mr. Lowenthal which vests on February 10, 2017. On February 23, 2012, we awarded 76,000 shares of restricted Class A Stock to our employees, including 5,000 each to Mr. Alfano and Mr. Okin and 3,500 to Ms. Roberts all subject to five year vesting.
No Backdating or Spring Loading. We do not backdate options or grant options retroactively. In addition, we do not plan to coordinate grants of options so that they are made before the announcement of favorable information, or after the announcement of unfavorable information. Our options are granted by the Compensation Committee at fair market value on a fixed date or event (such as the first regular meeting of the Board of Directors following an employees hire), with all required approvals obtained in advance of or on the actual grant date. All grants of options to employees are made by the Compensation Committee.
Fair Market Value. Fair market value has been consistently determined, as required by the EIP, as the share closing price on the NYSE on the grant date.
Compensation Recovery Policy. In January 2011, the Compensation Committee recommended and the Company established a compensation recovery policy that affects incentive compensation paid to its designated executive officers. This policy requires that the Company recover from any current or former executive officer share-based incentive compensation (including stock awards) and cash bonuses in the case of our Chairman and President if the amount of such incentive compensation was based on subsequently discovered fraud or misconduct. In addition, in the case of a restatement of the Companys financial statements (whether or not due to fraud or misconduct), the Company is required to recover the amount of share-based incentive compensation that was paid to its designated executive officers (and cash bonuses in the case of our Chairman, President and Chief Financial Officer) in excess of what would have been paid based on the restated financial results. Many of our executive officers have stock awards which vest over time. Individual executive officers could face the forfeiture of some or all of these awards if compensation recovery was necessary. The Company will look at the three-year period preceding a restatement of its financial statements to determine the amount of compensation recovery, if any.
Stock awards made subsequent to July 2010 contain an agreement by the beneficiary of such award to such clawback provisions as are described in the immediately preceding paragraph. As of March 1, 2012, thirty-two of our senior executives and other employees held restricted stock awards subject to such provisions. The Company is awaiting final rulemaking by the SEC with respect to other policies that may affect a broader employee population with respect to clawback or reduction of cash bonuses with respect to years in which there are events that include fraud, misconduct, restatement of financial results or revaluation of owned assets resulting in losses by the Company in periods subsequent to the payment of cash bonuses and stock awards.
Executive Deferred Compensation Plans. The Executive Deferred Compensation Plan, or EDCP, was established with a dual purpose. The EDCP, together with its sister plan, the Deferred Incentive Plan, or DIP, is maintained to offer certain high-performing financial advisors bonuses which require a mandatory deferral subject to vesting provisions. The EDCP also provides for voluntary deferral of year-end bonuses by our senior executives, which deferral option may or may not be offered in a given year. These voluntary deferrals can be deferred on a tax-free basis until a specified future time, are not subject to vesting and we do not make contributions to the EDCP for the Named Executives and other senior level executives. Mr. Lowenthal has made voluntary deferrals into the EDCP in past years. The option to defer the year end compensation into the EDCP has not been offered since 2007, but may be reinstated in future years at the Companys discretion. In addition, the Company is maintaining a deferred compensation plan on behalf of certain employees (none of whom are Named Executives) who were formerly employed by CIBC World Markets Corp. Further description of the EDCP, the DIP and the deferred plan for former employees of CIBC World Markets Corp. can be found in note 13 to our consolidated financial statements for the year ended December 31, 2011 included in our 2011 Annual Report to Stockholders which accompanies this proxy statement.
Stock Appreciation Rights. The Company has awarded stock appreciation rights (OARs) to certain employees (none of whom are the Named Executives) as part of their compensation package based on a formula reflecting gross production, length of service and client assets. These awards are granted once per year in January with respect to the prior years production. The OARs vest five years from the grant date and are settled in cash on vesting. Further description of the OARs can be found in note 13 to our consolidated financial statements for the year ended December 31, 2011 included in our 2011 Annual Report to Stockholders which accompanies this proxy statement.
Benefits. The Named Executives who are U.S.-based salaried employees participate in a variety of benefits designed to enable us to attract and retain our workforce in a competitive marketplace. We help ensure a productive and focused workforce through reliable and competitive health and other benefits. Deferred compensation and 401(k) plans help employees, especially long-service employees, save and prepare financially for retirement. The Named Executives receive the same benefits as all full-time employees. Our qualified 401(k) Plan allowed employees to contribute up to $16,500 for 2011 plus an additional $5,000 for employees over age 50. Employees may continue to retain their 401(k) Plan account after they leave us so long as their account balance is $5,000 or more. At age 70.5, minimum distributions must begin. Ms. Roberts, who is a Canadian-based salaried employee, only receives health benefits.
We do not sponsor a pension plan for our employees.
Perquisites. We provide one perquisite to certain senior executives: Mr. Lowenthal, Mr. Okin and Ms. Roberts have Company-paid parking arrangements. The primary purpose of these parking arrangements is to minimize distractions from the executives attention to important corporate matters. Perquisites are quantified in the Summary Compensation Table below and detailed in the All Other Compensation Table below.
We do not provide the Named Executives with any other perquisites, such as split-dollar life insurance, reimbursement for legal counseling for personal matters, or tax reimbursement payments. We do not provide loans to executive officers, other than margin loans in margin accounts with us in connection with the purchase of securities (including our securities), which margin accounts are substantially on the same terms, including interest rates and collateral, as those prevailing from time to time for comparable transactions with non-affiliated persons and do not involve more than the normal risk of collectability. See Certain Relationships and Related Party Transactions below.
Separation and Change in Control Arrangements. Our Named Executives are not eligible for benefits and payments if employment terminates in a separation or if there is a change in control.
Chief Executive Officer Compensation
Mr. A.G. Lowenthal, our Chairman of the Board and Chief Executive Officer, is paid an annual base salary set by the Compensation Committee, plus performance-based compensation under the Performance-Based Compensation Agreement and, at the discretion of the Compensation Committee, is eligible for bonuses and grants of stock options and restricted stock.
On May 10, 2010, Class B Stockholders ratified the Companys Performance-Based Compensation Agreement with Mr. Lowenthal, which was effective January 1, 2010. The purpose of the Performance-Based Compensation Agreement is to allow the Compensation Committee to set the annual terms under which Mr. Lowenthals annual performance-based compensation is to be calculated during the term thereof. Mr. Lowenthals role in determining our success or failure has a very significant bearing on our ultimate results and financial condition because of the nature of his position as Chief Executive Officer. Therefore, the Compensation Committee has determined that a high proportion of his compensation should be subject to variability on both the upside and the downside to reflect our Companys results.
The Performance-Based Compensation Agreement includes a limitation on the maximum performance award available to Mr. Lowenthal in any single year for which it is effective. The Compensation Committee may also set a cap on Mr. Lowenthals total performance award under the Performance-Based Compensation Agreement which can be less than the maximum under the Performance-Based Compensation Agreement. In March 2011, the Compensation Committee established performance goals under the Performance-Based Compensation Agreement entitling Mr. Lowenthal to a Performance Award under the Performance-Based Compensation Agreement for the
year 2011 of an aggregate of up to $5 million unless targets established in clauses (c) or (d) below are achieved, in which case the maximum is $7.5 million. The performance award was determined by the application of a formula based on the following components: (a) an amount equal to 3% of the amount by which our total revenue less interest income for the year ended December 31, 2011 exceeds $1.001 billion; plus (b) (i) $1 million if our consolidated profit before income taxes for the year ended December 31, 2011 is equal to $72.5 million or more; plus (ii) 8% of the amount by which our consolidated profit before income tax for the year ended December 31, 2011 is greater than $72.5 million and less than $100 million; plus (iii) 4% of the amount by which our consolidated profit before income tax for the year ended December 31, 2010 is greater than $100 million; plus (c) an amount equal to $1.2 million times the difference between 61% and any lesser percentage of total compensation cost (as defined in the annual Compensation Committee Resolution establishing the CEO performance award for 2011) as a percentage of total revenue less interest income for the year ended December 31, 2011; plus (d) $1 million if the profit before income taxes of the Companys capital markets segment exceeds $35 million for the year ended December 31, 2011; plus (e) the excess of the closing price of the Class A Stock on the NYSE (the Market Value) of one share of Class A Stock at December 31, 2011 over $35.00 per share multiplied by 100,000 shares; plus (f) $1 million if our consolidated pre-tax return on stockholders equity for the year ended December 31, 2011 equals or exceeds 20.5% plus $560,000 for each percentage (or portion thereof) by which our pre-tax return on stockholders equity for the year ended December 31, 2011 exceeds 20.5%. The application of the 2011 formula as set out above produced a performance award of $nil in cash for fiscal 2011. In March 2011, the Compensation Committee continued Mr. Lowenthals base salary for 2011 at $500,000, unchanged from 2010.
In view of several important accomplishments during 2011, the Compensation Committee awarded Mr. Lowenthal a stock award of 52,500 shares of Class A Stock on January 25, 2012, based on that days closing price of the Class A Stock on the NYSE of $19.31. The award, which vests on February 10, 2017, is subject to Mr. Lowenthal being continuously employed by the Company until that date.
U.S. Internal Revenue Code Section 162(m)
Section 162(m) of the Code generally disallows a tax deduction for annual compensation (other than compensation that qualifies as performance-based compensation within the meaning of Section 162(m)) in excess of $1 million paid to our Chief Executive Officer and our two other most highly compensated executive officers, other than the Chief Executive Officer, the President and the Chief Financial Officer, whose compensation is required to be disclosed in this proxy statement. Messrs. Okin and Robinson are not subject to Section 162(m) because they are not executive officers of the Company and we are not required to disclose their compensation. The Performance-Based Compensation Agreement for the Chief Executive Officer was ratified and approved by the Class B Stockholders so that it would satisfy the requirements for performance-based compensation.
To the extent consistent with our general compensation objectives, the Compensation Committee considers the potential effect of Section 162(m) on compensation paid to our executive officers. However, the Compensation Committee reserves the right to award and recommend the awarding of non-deductible compensation in any circumstances it deems appropriate. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding our efforts to qualify, that the compensation paid by us to our executive officers will in fact satisfy the requirements for the exemption from the Section 162(m) deduction limit.
SUMMARY COMPENSATION TABLE
For the Year Ended December 31, 2011
The following table sets forth the total annual compensation paid or accrued by us to or for the account of our Chief Executive Officer, our President and Treasurer and our Chief Financial Officer, for the three years ended December 31, 2011, our only executive officers whose total cash compensation exceeded $100,000 for the year ended December 31, 2011. In an effort to provide more complete disclosure, the table also lists the next two most highly paid executive officers of our principal subsidiaries, Oppenheimer & Co. Inc. and Oppenheimer Asset Management, whose total cash compensation for the year ended December 31, 2011 exceeded $100,000. The two executive officers of Oppenheimer & Co. Inc. and Oppenheimer Asset Management appearing in the table below are not officers of Oppenheimer Holdings Inc., and they do not perform policy making functions for Oppenheimer Holdings Inc.
Notes to Summary Compensation Table:
All Other Compensation Table For the Year Ended December 31, 2011
Grants of Plan-Based Awards Table For the Year Ended December 31, 2011
Outstanding Equity Awards Table As of December 31, 2011
Notes to Outstanding Equity Awards Table:
On January 25, 2012, we awarded 52,500 shares of restricted Class A Stock to Mr. Lowenthal which vests on February 10, 2017. On February 23, 2012, we awarded 5,000 shares of restricted Class A Stock each to Mr. Alfano and Mr. Okin and 3,500 to Ms. Roberts all subject to five year vesting.
Options Exercised and Stock Vested For the Year Ended December 31, 2011
Nonqualified Deferred Compensation Table For the Year Ended December 31, 2011
Notes to Nonqualified Deferred Compensation Table:
Potential Payments Upon Termination or Change-in-Control
None of the Named Executives (nor any other senior executives or employees) have arrangements with us which would result in potential payments upon termination or which would result in potential payments upon a change-in-control.
Compensation Policies and Risk
The Compensation Committee, the Board as a whole and senior management believe that the Companys compensation policies and practices are not likely to have a material adverse effect on the Company. The Company is necessarily in the business of taking risks to facilitate its customer-oriented businesses and certain proprietary trading activities. As a result, there is no assurance that the Company will not sustain trading or other losses in pursuing its businesses. However, in that context, we believe our compensation policies, together with our control systems and risk management procedures, generally act as mitigation against, rather than an encouragement of, employees taking excessive risk exposure with firm capital.
A substantial portion of the Companys incentive compensation practices are related to employees situated in departments who do not use firm financial risk in conducting their advisory-style businesses. Other commitment and underwriting-related activities (which do involve firm-level risk) are regularly monitored by the firms Commitment Committees, and such risks are further mitigated by the practice of paying modest salaries and year-end-only bonuses to the managers and employees in these activities.
For groups in the firm which do take frequent firm risk positions in conducting their businesses, the Company employs various risk controls, trading reserves and compensation holdback policies which are designed to protect the firm against excessive risk-taking with firm capital. These include generally conservative position limits, monthly and quarterly compensation hold-back and/or charge-backs as well as year-end carry-over policies for groups that are compensated on monthly or quarterly intervals. In addition, for some trading groups, mark-down policies are imposed that are designed to prevent holding stale or unsalable inventories; and for others, compensation accrual at settlement date rather than trade date is utilized where appropriate. We also employ strict price monitoring policies for reviewing trading positions and the monitoring of all such prices by a group reporting directly to the CFO outside the control of interested individual department heads.
Our senior department managers in areas which place firm capital at risk are paid salaries and year-end-only bonuses from the aggregate results of their departments, a mitigating factor against excessive risk-taking within their areas of responsibility. We also have a substantial mitigating effect against excessive risk-taking by our employees due to our Chief Executive Officers incentive compensation arrangement which is annual, includes diverse criteria for any incentive payments and includes a cap on any earned incentive payment amount.
Our Compensation and Audit Committees coordinate their activities and oversight where compensation and risk activities intersect and, since February 2009, the Board has conducted ongoing risk-oriented reviews of firm operating units presented by management concurrently with most Audit Committee meetings.
Security Ownership of Certain Beneficial Owners and Management
Our authorized capital includes 99,680 shares of Class B Stock, all of which are issued and outstanding, and 50,000,000 of shares of Class A Stock, of which 13,589,062 shares of Class A Stock were issued and outstanding, and 50,000,000 shares of Preferred Stock none of which were outstanding as of March 1, 2012.
The following table sets forth certain information regarding the beneficial ownership of each class of our stock as of March 1, 2012, with respect to (i) each person known by us to beneficially own, or exercise control or discretion over, more than 5% (except as otherwise indicated) of any class of our stock, (ii) each of our directors and nominees for director, (iii) each of our executive officers named in the Summary Compensation Table set forth herein and (iv) our directors, nominees for director and executive officers as a group. The address of each beneficial owner for which an address is not otherwise indicated is: c/o Oppenheimer Holdings Inc., 85 Broad Street, New York, NY 10004.
For purposes of the table, beneficial ownership is determined pursuant to Rule 13d-3 of the Exchange Act, pursuant to which a person or group of persons is deemed to have beneficial ownership of stock which such person or group has the right to acquire within 60 days after March 1, 2012. The percentage of shares deemed outstanding is based on 13,589,062 shares of Class A Stock and 99,680 shares of Class B Stock outstanding as of March 1, 2012. In addition, for purposes of computing the percentage of Class A Stock owned by each person, the percentage includes all Class A Stock issuable upon the exercise of outstanding options held by such persons within 60 days after March 1, 2012.
There are no outstanding rights to acquire beneficial ownership of any Class B Stock.
There are no arrangements, known to us, the operation of which may at a subsequent date result in a change of control of our Company.
All Class A Stock authorized under the EIP and ESP have been approved by the Class B Stockholders. Descriptions of the 2006 Equity Incentive Plan and the Employee Share Plan appear in note 13 of our consolidated financial statements for the year ended December 31, 2011 included in our 2011 Annual Report to Stockholders which accompanies this proxy statement. Class A Stock authorized for issuance under such share-based plans as of March 1, 2012 is as follows:
We issued warrants for the purchase of 1,000,000 shares of Class A Stock at a price of $48.62 per share exercisable five years from closing of the CIBC Acquisition to Canadian Imperial Bank of Commerce in connection with the January 14, 2008 acquisition.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file by specific dates with the SEC initial reports of ownership and reports of changes in ownership of our equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file. We are required to report in this proxy statement any failure of our directors and executive officers and greater than ten percent stockholders to file by the relevant due date any of these reports during or for the preceding fiscal year (or, to the extent not previously disclosed, any prior fiscal year).
To our knowledge, based solely on review of copies of such reports furnished to us during and for the fiscal year ended December 31, 2011 and representations made to us by such persons, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent stockholders were complied with the exception of Mr. Crystal who filed a Form 5 for 2010 on February 16, 2011, two days past the due date. All Section 16(a) filing requirements are currently up to date.
On October 7, 2011, the Company announced its intention to purchase up to 675,000 shares of its Class A non-voting common stock in compliance with the rules and regulations of the New York Stock Exchange and the Securities and Exchange Commission and the terms of its senior secured debt. The 675,000 shares represented approximately 5% of its then 13,572,265 issued and outstanding shares of Class A non-voting common stock. Any such purchases will be made by the Company in the open market at the prevailing open market price using cash on hand. All shares purchased will be cancelled. The repurchase program is expected to continue indefinitely. The repurchase program does not obligate the Company to repurchase any dollar amount or number of Class A non-voting common shares. Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. No shares were purchased in 2011 under this program.
In January 2012, the Company purchased 99,900 shares of its Class A Stock at the cost of $15.52 per share. These shares have been cancelled.
Certain Relationships and Related Party Transactions
Indebtedness of Directors and Executive Officers
The following sets out information with respect to the aggregate indebtedness of our directors and executive officers under securities purchase and other programs. On December 31, 2011 and since that date, none of our directors and the executive officers were or have been indebted to us, except as follows:
Indebtedness Of Directors And Executive Officers Under (1) Securities Purchase And (2) Other Programs
During the year 2011, certain of our directors, executive officers and senior officers of Oppenheimer & Co., our subsidiary, maintained margin accounts with Oppenheimer & Co. in connection with the purchase of securities (including our securities). These margin accounts are substantially on the same terms, including interest rates and collateral, as those prevailing from time to time for comparable transactions with non-affiliated persons and do not involve more than the normal risk of collectability.
Other Relationships and Transactions
Robert Lowenthal, the son of A.G. Lowenthal, our Chairman of the Board and Chief Executive Officer, is the Senior Managing Director of Oppenheimer & Co.s Taxable Fixed Income Trading Department and is compensated on the same basis as other senior managing directors of our capital markets departments.
Andrew Crystal, the brother of R. Crystal, one of our directors, and the first cousin of A.G. Lowenthal, our Chairman of the Board and Chief Executive Officer, is an Oppenheimer & Co. financial advisor and is compensated on the same basis as other Oppenheimer & Co. financial advisors.
Our Code of Conduct and Business Ethics for Directors, Officers and Employees contains prohibitions and restrictions on our directors, executive officers and other employees from entering into or becoming involved in situations which could give rise to conflicts of interest with us. Our directors, senior executives and employees and our subsidiaries are required to avoid investments or other interests and associations that interfere, might interfere or might be perceived to interfere, with the independent exercise of judgment in our best interests.
Our directors, senior executives and employees may not advance their personal interests at our expense nor may they personally take or benefit from opportunities arising from their employment with us.
The DGCL, which governs our Company, provides that certain registered or beneficial holders of shares entitled to vote at a meeting of stockholders may, in accordance with the provisions of the DGCL, submit a notice to us of a proposal that the holder wishes to be considered by the stockholders entitled to vote at a meeting of stockholders. In order for any stockholder proposal to be included in the proxy statement for the next annual meeting of stockholders of the Company following the Meeting, the proposal must be submitted to the Company at its office at 85 Broad Street, New York, NY 10004 (Attention: Secretary) prior to February 3, 2013.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Holders of Class A and Class B Stock or other interested parties may communicate with the Board of Directors, including the Lead Director or our independent directors as a group, including to request copies of our Annual Report on Form 10-K for the year ended December 31, 2011, which includes our financial statements and management discussion and analysis, by e-mail to firstname.lastname@example.org (Attention: Board of Directors) or by mail to:
Oppenheimer Holdings Inc.
Board of Directors
c/o The President
125 Broad Street
New York, NY 10004
All such correspondence will be forwarded to the Lead Director or to any individual director or directors to whom the communication is or are directed, unless the communication is unduly hostile, threatening, illegal, does not reasonably relate to us or our business or is similarly inappropriate. Our President has the authority to discard or disregard inappropriate communications or to take other reasonable actions with respect to any such inappropriate communications.
WHERE YOU CAN FIND MORE INFORMATION
A copy of our 2011 Annual Report to Stockholders is being mailed with this proxy statement to each stockholder of record as of the close of business on March 23, 2012. A stockholder may also request a copy of our Annual Report on Form 10-K for the year ended December 31, 2011 without charge except for exhibits to the report, by writing to Oppenheimer Holdings Inc., 125 Broad Street, New York, New York 10004, Attention: Secretary. Exhibits will be provided upon written request and payment of a reasonable fee.
You may read and copy our reports, proxy statements and other information at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of our reports, proxy statement and other information by mail from the Public Reference Section of the SEC at prescribed rates. To obtain information on the operation of the Public Reference Room, you can call the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers, including Oppenheimer Holdings Inc., that file electronically with the SEC. The address of the SECs Internet website is http://www.sec.gov.
Additional information relating to us is available on our website at www.opco.com.
You should rely only on the information contained in this proxy statement to vote on the proposals set forth herein. The Company has not authorized anyone to provide you with information that is different from what is contained in this proxy statement. This proxy statement is dated March 26, 2012. You should not assume that the information contained in this proxy statement is accurate as of any date other than March 1, 2012, and neither the availability of this proxy statement via the Internet nor the mailing of this proxy statement to stockholders shall create any implication to the contrary.
Our Board of Directors is aware of no other matters, except for those incident to the conduct of the Meeting, that are to be presented to Class B Stockholders for formal action at the Meeting. If, however, any other matters properly come before the Meeting or any adjournments thereof, it is the intention of the persons named in the proxy to vote the proxy in accordance with their judgment.
By Order of the Board of Directors,
Dennis P. McNamara,
March 26, 2012
EXHIBIT A PROXY CARD
OPPENHEIMER HOLDINGS INC.
Class B Voting Stock
Proxy, Solicited by Management, for the Annual Meeting of Stockholders, May 14, 2012
The undersigned holder of Class B voting stock of Oppenheimer Holdings Inc. hereby appoints Mr. A.G. Lowenthal and Ms. E.K. Roberts or instead of either of them as nominee, with full power of substitution, to attend, vote and otherwise act for the undersigned at the Annual Meeting of Stockholders of Oppenheimer Holdings Inc. to be held on May 14, 2012 and at any adjournment thereof to the same extent and with the same power as if the undersigned were personally present at the said Meeting or adjournment or adjournments thereof and hereby revokes any proxy previously given; provided that the undersigned stockholder specifies and directs the persons above named that the Class B Voting Common Stock registered in the name of the undersigned shall be:
(or if no specification is made, VOTED FOR) the election of the above-named directors. (Matter 1 in the Notice of Meeting).
(or if no specification is made, VOTED FOR) the appointment of PricewaterhouseCoopers LLP as auditors for 2012 and the authorization of the Audit Committee to fix the remuneration of the auditors. (Matter 2 in the Notice of Meeting).
(or if no specification is made, VOTED FOR) a resolution authorizing an amendment to the Oppenheimer Holdings Inc. 2006 Equity Incentive Plan as set forth in the proxy statement. (Matter 3 in the Notice of Meeting).
DATED , 2012