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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.      )

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Virtu Financial, Inc.

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LOGO

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Notice is hereby given that the 2020 annual meeting of stockholders (the "Annual Meeting") of Virtu Financial, Inc., a Delaware corporation (the "Company", "Virtu" or "we"), will be held on Friday, June 5, 2020 at 9:00 a.m. (Eastern Time). Due to the emerging public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our employees and stockholders, the Annual Meeting will be held in a virtual meeting format only. You can attend the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting, by visiting www.virtualshareholdermeeting.com/VIRT2020. You will need to have your 16-Digit Control Number included on your Notice or your proxy card (if you received a printed copy of the proxy materials) to join the Annual Meeting.

We are holding the meeting for the following purposes:

    1.
    To elect four directors to our board of directors, each to serve as a Class II director for a term of three years expiring at the annual meeting of stockholders to be held in 2023 and until such director's successor has been duly elected and qualified;

    2.
    To approve, on an advisory basis, the compensation of our named executive officers as disclosed in the accompanying proxy statement;

    3.
    To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;

    4.
    To approve an amendment to the Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan to increase the number of shares authorized for issuance thereunder; and

    5.
    To transact any other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

Only stockholders of record as of the close of business on April 7, 2020 (the "Record Date") will be entitled to attend or vote at the Annual Meeting or any adjournment or postponement thereof.

To make it easy to vote, Internet and telephone voting are available. The instructions for voting are on the proxy card.

If you hold your shares through a bank, broker or other holder of record, please follow the voting instructions you received from the holder of record.

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote your shares as soon as possible. Please mark, sign, date and return the accompanying proxy card or voting instruction form in the postage-paid envelope or instruct us by telephone or via the Internet as to how you would like your shares voted. Instructions are included on the proxy card and voting instruction form.

    By Order of the Board of Directors

 

 

/s/ ROBERT GREIFELD

Robert Greifeld
Chairman

New York, New York
April 24, 2020

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING TO BE HELD ON JUNE 5, 2020: Virtu's Proxy Statement and Annual Report on Form 10-K for the fiscal year ended December 31, 2019 are also available at https://materials.proxyvote.com/928254.


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PROXY STATEMENT SUMMARY

  1

PROPOSAL 1: ELECTION OF DIRECTORS

  4

CORPORATE GOVERNANCE

  13

PROPOSAL 2: ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS

  20

EXECUTIVE COMPENSATION

  21

COMPENSATION COMMITTEE REPORT

  21

COMPENSATION DISCLOSURE AND ANALYSIS

  21

CEO PAY RATIO DISCLOSURE

  37

COMPENSATION OF DIRECTORS

  38

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  39

INFORMATION REGARDING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

  40

PROPOSAL 4: AMENDMENT TO THE VIRTU FINANCIAL, INC. AMENDED AND RESTATED 2015 MANAGEMENT INCENTIVE PLAN

  42

AUDIT COMMITTEE REPORT

  51

STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  52

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

  56

DELINQUENT SECTION 16(a) REPORTS

  64

ADDITIONAL INFORMATION

  65

GENERAL INFORMATION

  67

ANNEX A: AMENDED VIRTU FINANCIAL, INC. AMENDED AND RESTATED 2015 MANAGEMENT INCENTIVE PLAN

  72

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Proxy Statement Summary

Virtu Financial, Inc.
One Liberty Plaza
165 Broadway
New York, New York 10006

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting. For more complete information regarding the Company's 2019 fiscal year performance, please review the Company's 2019 Annual Report on Form 10-K (the "2019 Annual Report").

DATE:   Friday, June 5, 2020   LOCATION   Virtual Annual Meeting accessible at
TIME:   9:00 a.m. (Eastern Time)   OF ANNUAL   www.virtualshareholdermeeting.com/VIRT2020
        MEETING:    

Voting Matters

Items of Business
  Board Recommendation

1

 

To elect four directors to our board of directors, each to serve as a Class II director for a term of three years expiring at the annual meeting of stockholders to be held in 2023 and until such director's successor has been duly elected and qualified.

 

GRAPHIC
 
FOR
each Nominee

2

 

To approve, on an advisory basis, the compensation of our named executive officers as disclosed in the accompanying proxy statement.

 

GRAPHIC
 
FOR

3

 

To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.

 

GRAPHIC
 
FOR

4

 

To approve an amendment to the Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan to increase the number of shares authorized for issuance thereunder.

 

GRAPHIC
 
FOR

How to Vote

You may vote using any of the following methods:


GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC

INTERNET

 

TELEPHONE

 

MAIL

 

VIRTUAL ANNUAL MEETING

Visit www.proxyvote.com to vote via the Internet.

 

Call toll-free 1-800-690-6903 in the United States or from foreign countries from any touch-tone telephone and follow the instructions.

 

Follow the instructions in your proxy materials.

 

All stockholders as of the close of business on the Record Date can vote electronically at the virtual Annual Meeting.

GRAPHIC     2020 Proxy Statement

 

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PROXY STATEMENT SUMMARY

Directors and Executive Officers

The following table sets forth certain information about our directors and executive officers as of the date of this proxy statement.

                Committee Membership
Name and Primary Occupation   Director or
Officer
Since
  Age   Independent   Audit   Compensation   Nominating
and Corporate
Governance
  Risk

Vincent Viola
Founder and Chairman Emeritus

 

2015

 

64

 

 

 

 

 

 

 

 

 

 

Douglas A. Cifu
Chief Executive Officer and Director

 

2013

 

54

 

 

 

 

 

 

 

 

 

 

Robert Greifeld
Chairman of the Board of Directors

 

2017

 

62

 

GRAPHIC

 

 

 

GRAPHIC

 

GRAPHIC

 

 

William F. Cruger, Jr.
Director

 

2015

 

61

 

GRAPHIC

 

GRAPHIC

 

 

 

 

 

 

Virginia Gambale
Director

 

2020

 

60

 

GRAPHIC

 

 

 

 

 

 

 

 

Joseph J. Grano, Jr.
Director

 

2017

 

72

 

GRAPHIC

 

GRAPHIC

 

 

 

 

 

 

Glenn Hutchins
Director

 

2017

 

64

 

GRAPHIC

 

 

 

 

 

 

 

GRAPHIC

John D. Nixon
Director

 

2015

 

64

 

GRAPHIC

 

 

 

GRAPHIC

 

GRAPHIC

 

 

Christopher C. Quick
Director

 

2016

 

62

 

GRAPHIC

 

GRAPHIC

 

 

 

 

 

GRAPHIC

John F. (Jack) Sandner
Director

 

2015

 

78

 

GRAPHIC

 

GRAPHIC

 

GRAPHIC

 

 

 

 

David J. Urban
Director

 

2018

 

56

 

GRAPHIC

 

 

 

 

 

 

 

GRAPHIC

Michael T. Viola
Director

 

2016

 

33

 

 

 

 

 

 

 

GRAPHIC

 

GRAPHIC

Stephen Cavoli
Executive Vice President, Markets

 

2017

 

51

 

 

 

 

 

 

 

 

 

 

Brett Fairclough
Executive Vice President and
Chief Operating Officer

 

2019

 

37

 

 

 

 

 

 

 

 

 

 

Alexander M. Ioffe
Executive Vice President and
Chief Financial Officer

 

2019

 

53

 

 

 

 

 

 

 

 

 

 
GRAPHIC Member GRAPHIC Audit Committee Financial Expert

2

 

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PROXY STATEMENT SUMMARY

Board Composition

GRAPHIC

Governance Highlights

WHAT WE DO   WHAT WE DON'T DO
GRAPHIC   Pay-for-performance: A portion of the compensation program for named executive officers is designed to encourage the executives to remain focused on both our short-term and long-term operational success and to reward outstanding individual performance.   GRAPHIC   No IRC Section 280G or 409A tax gross-ups: We do not provide tax gross-ups under our change in control provisions or deferred compensation programs.
GRAPHIC   Align Incentives with Stockholders: Our executive compensation program is designed to focus our named executive officers on our key strategic, financial and operational goals that will translate into long-term value-creation for our stockholders.   GRAPHIC   No supplemental retirement plans: We do not maintain any supplemental retirement plans.
GRAPHIC   Limited perquisites: We provide limited, reasonable perquisites that we believe are consistent with our overall compensation philosophy.        

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Proposal 1: Election of Directors

At the Annual Meeting, stockholders will vote to elect the four nominees named in this proxy statement as Class II directors. Each of the Class II directors elected at the Annual Meeting will hold office until the 2023 annual meeting of stockholders and until his successor has been duly elected and qualified. Our board of directors has nominated Douglas A. Cifu, Joseph J. Grano, Jr., Robert Greifeld and John F. (Jack) Sandner to serve as Class II directors for terms expiring at the 2023 annual meeting of stockholders and until each of their successors has been duly elected and qualified. The persons named as proxies will vote to elect Messrs. Cifu, Grano, Greifeld and Sandner unless a stockholder indicates that his or her shares should be withheld with respect to one or more of such nominees.

In the event that any nominee for Class II director becomes unavailable or declines to serve as a director at the time of the Annual Meeting, the persons named as proxies will vote the proxies in their discretion for any nominee who is designated by the current board of directors to fill the vacancy. All the nominees are currently serving as directors and we do not expect that the nominees will be unavailable or will decline to serve.

Our board of directors recommends that you vote FOR each of the
nominees for our board of directors in this proposal 1.

4

 

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PROPOSAL 1: ELECTION OF DIRECTORS

Directors

Set forth below is a brief biography of each of our directors and executive officers.

On September 4, 2019, the Company announced the resignation of Joseph Molluso as Chief Financial Officer of the Company effective September 30, 2019, and named Alexander M. Ioffe to serve as the Company's Chief Financial Officer effective as of the same date. For additional information, please see the Current Report on Form 8-K filed by the Company with the SEC on September 6, 2019.

On September 4, 2019, the Company announced the appointment of Brett Fairclough to serve as the Company's Chief Operating Officer and Global Head of Business Development, effective as of the same date. For additional information, please see the Current Report on Form 8-K filed by the Company with the SEC on September 6, 2019.

On January 29, 2020, the Company announced the appointment of Virginia Gambale to serve as a Class III director of the Company, effective January 28, 2020. For additional information, please see the Current Report on Form 8-K filed by the Company with the SEC on January 29, 2020.

Class I Directors

The term of the following four Class I directors will expire at the 2022 Annual Meeting.

William F.
Cruger, Jr.
  Independent Director
Age: 61
  Board Committees:

Audit

  Director Since:
2015

BACKGROUND:

Mr. Cruger became a member of our board of directors in April 2015 and has been a member of the board of directors of Virtu Financial LLC ("Virtu Financial"), which is a subsidiary of the Company and was the entity through which we conducted our business prior to our initial public offering, since February 2015. He was most recently Vice Chairman of Investment Banking at J.P. Morgan and Co., where he was responsible for key client relationships on a global basis. Previously, Mr. Cruger held a number of senior positions at J.P. Morgan, including Managing Director in the Financial Institutions group from 1996 to 2011. During this time, he also oversaw the rationalization of the firm's private equity investments in trading platforms and related ventures at Lab Morgan from 2000 to 2001. Prior to this, Mr. Cruger ran the firm's investment banking practices in Japan from 1991 to 1996, Latin America from 1989 to 1991 and Emerging Asia from 1984 to 1988. He has an M.B.A. from Columbia University and a B.A. from Clark University. Mr. Cruger currently serves on the board of MarketAxess Holdings Inc. and People's United Financial, Inc., and has previously served on the boards of Archipelago Holdings, Inc., CreditTrade, Inc. and Capital IQ, Inc.

QUALIFICATIONS:

Mr. Cruger's extensive experience in financial markets and financial leadership adds significant value to our board of directors.

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PROPOSAL 1: ELECTION OF DIRECTORS

 

Glenn
Hutchins
  Independent Director
Age: 64
  Board Committees:

Risk

  Director Since:
2017

BACKGROUND:

Mr. Hutchins became a member of our board of directors in July 2017. Mr. Hutchins is Chairman of North Island, an investment firm based in New York, New York. He is also co-founder of Silver Lake Partners, a technology investment firm based in New York, New York and Menlo Park, California, which was founded in 1999, and where Mr. Hutchins served as co-CEO until 2011 and as Managing Director from 1999 until 2011. Prior to that, Mr. Hutchins was Senior Managing Director at The Blackstone Group from 1994 to 1999. Mr. Hutchins served as Chairman of the Board of SunGard Data Systems Inc., a software and technology services company, from 2005 until 2015, as Chairman of the Board of Instinet, Inc., and as a director of Nasdaq, Inc. He is currently a Director of AT&T, Co-Chairman of the Brookings Institution and CARE, on the Executive Committee of the Boston Celtics Basketball Team and the Obama Foundation, and a board member of the Federal Reserve Bank of New York, the New York Presbyterian Hospital and the Center for American Progress. Previously, Mr. Hutchins served as a Special Advisor in the White House on economic and health-care policy from 1993 to 1994 and as Senior Advisor on the transition of the federal administration from 1992 to 1993. He holds an A.B. from Harvard College, an M.B.A. from Harvard Business School and a J.D. from Harvard Law School.

QUALIFICATIONS:

Mr. Hutchins' qualifications to serve on our board of directors include his extensive experience and expertise in the technology and financial sectors, his public policy experience and his strong strategic focus.

 

Christopher C. Quick   Independent Director
Age: 62
  Board Committees:

Audit

Risk

  Director Since:
2016

BACKGROUND:

Mr. Quick became a member of our board of directors in April 2016. Mr. Quick has more than 30 years of experience in the securities and financial services industries. He is the former CEO of Banc of America Specialist, Inc., a wholly owned subsidiary of Bank of America Corporation and member firm of the New York Stock Exchange ("NYSE"). He is also a past Vice Chairman of Global Wealth and Investment Management with Bank of America. From 1982 to 2004, he served as Chairman and Chief Executive Officer of Q&R Specialist, JJC Specialist and Fleet Specialists where he remained following the firm's acquisition by Bank of America Corporation. He is a member of the board of directors of Mutual of America. He is also a former member of the NYSE Board of Directors and the board of directors of KCG Holdings, Inc. ("KCG"). Mr. Quick received a B.S. in Finance from Fairfield University in 1979.

QUALIFICATIONS:

Mr. Quick's qualifications to serve on our board of directors include his significant experience in the financial services and securities industries, including in the specialist business, and in senior leadership roles and his substantial experience with post-merger and acquisition integration matters.

6

 

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PROPOSAL 1: ELECTION OF DIRECTORS

Vincent
Viola
  Director
Age: 64
  Board Committees:

None

  Director Since:
2017

BACKGROUND:

Mr. Viola is our founder and has served as a member and Chairman Emeritus of our board of directors since July 2017. From November 2013 until July 2017, Mr. Viola served as our Executive Chairman and Chairman of our board of directors. He previously served as Chief Executive Officer and Chairman of the board of directors of Virtu and its predecessors since April 2008. Mr. Viola is one of the nation's foremost leaders in electronic trading. He was the founder of Virtu Financial Operating LLC ("Virtu East") in 2008, a founder of Madison Tyler Holdings, LLC ("Madison Tyler Holdings") in 2002 and is the former Chairman of the New York Mercantile Exchange ("NYMEX"). Mr. Viola started his career in the financial services industry on the floor of the NYMEX and became Vice Chairman from 1993 to 1996 and Chairman from 2001 to 2004. Mr. Viola graduated from the U.S. Military Academy at West Point in 1977. He later graduated from the U.S. Army Airborne, Infantry and Ranger Schools and served in the 101st Airborne Division. In 1983, he graduated from New York Law School.

QUALIFICATIONS:

Mr. Viola's extensive business experience in the financial services industry provides our board of directors with valuable knowledge and experience in the electronic trading and market making business. In addition, as our founder, Mr. Viola has successfully led Virtu since its inception and provides our board of directors with valuable insight regarding strategic decisions and the future direction of our Company.

Class II Directors

The term of the following four Class II directors will expire at the Annual Meeting. Messrs. Cifu, Grano, Greifeld and Sandner are the only nominees for election at the Annual Meeting, for a term that will expire at the 2023 annual meeting of stockholders and until each of their successors has been duly elected and qualified.

Douglas A.
Cifu
  Director
Age: 54
  Board Committees:
None
  Director Since:
2013

BACKGROUND:

Mr. Cifu has been our Chief Executive Officer and a member of our board of directors since November 2013. He previously served as Virtu's President and Chief Operating Officer and has served on its board of directors or the boards of its predecessors since co-founding the firm in April 2008. Prior to co-founding Virtu, Mr. Cifu was a partner at the international law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP, where he practiced corporate law from 1990 to 2008. Mr. Cifu also previously served on the board of directors of Independent Bank Group, Inc., a regional bank holding company. Mr. Cifu completed his J.D. at Columbia Law School in 1990 and received his B.A. from Columbia University in 1987, from which he graduated
magna cum laude.

QUALIFICATIONS:

Mr. Cifu's experience as a corporate attorney provides us with valuable insight regarding acquisitions, debt financings, equity financings and public markets.

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PROPOSAL 1: ELECTION OF DIRECTORS

Joseph J.
Grano, Jr.
  Independent Director
Age: 72
  Board Committees:

Audit

  Director Since:
2017

BACKGROUND:

Mr. Grano, Jr. became a member of our board of directors in October 2017. Mr. Grano has more than 30 years of experience in the securities and financial services industries. Mr. Grano currently serves as the Principal Partner of the JJG Family Office, which primarily engages in advisory services. From 2001 to 2004, he was Chairman and CEO of UBS Financial Services Inc. (formerly UBS PaineWebber), where he was instrumental in helping to bring about the merger of PaineWebber with UBS in 2000, and from 1994 to 2001 he served as President of the PaineWebber Group. Prior to joining PaineWebber, he held various senior management positions with Merrill Lynch & Co., including Director of National Sales. Mr. Grano also serves as senior advisor to SkyBridge Capital, a global alternative investment firm, and served previously as Chairman of the Board of Governors of the National Association of Securities Dealers (NASD) (predecessor to the Financial Industry Regulatory Authority (FINRA)), and was formerly a member of the NASD's Executive Committee. In addition to his industry experience, Mr. Grano serves as a member of the City University of New York's Business Leadership Council and Chairman of the Corporate Advisory Board of Law Enforcement Against Drugs, and from 2002 until 2005 served as the Chairman of the Homeland Security Advisory Council. He has also previously served as the Vice Chairman of the Queens College Foundation Board of Trustees, and has previously sat on the board of directors of the YMCA of Greater New York and on the board of Lenox Hill Hospital, among his other civic and philanthropic endeavors. Mr. Grano also previously served as Captain in the U.S. Special Forces (Green Berets). Mr. Grano holds Honorary Doctorate of Law degrees from Pepperdine University and Babson College as well as Honorary Doctor of Humane Letters degrees from Queens College, City University of New York and Central Connecticut State University. In addition, he holds an Honorary Doctor of Business Administration degree from the University of New Haven.

QUALIFICATIONS:

Mr. Grano's previous senior leadership roles in the financial securities industry and public company experience provide a valuable insight regarding strategic decisions and add value to our board of directors.

 

Robert
Greifeld
  Independent Director
Age: 62
  Board Committees:

Compensation

N&CG

  Director Since:
2017

BACKGROUND:

Mr. Greifeld became a member and the Chairman of our board of directors in July 2017. Mr. Greifeld is a co-founder of North Island LLC ("North Island") and Cornerstone Investment Capital. He previously served as Chairman of the board of directors of The Nasdaq Stock Market LLC ("NASDAQ") from January 2017 until May 2017 and as Chief Executive Officer of NASDAQ from 2003 to 2016. During his tenure, Mr. Greifeld led NASDAQ through a series of complex, innovative acquisitions that extended the company's footprint from a single U.S. equity exchange to a global exchange and technology solutions provider, nearly quadrupling revenue, growing annual operating profits by more than 24 times and achieving a market value of over $11 billion. Mr. Greifeld is a member of the Economic Club of New York and the NYU Stern Board of Overseers. He is founder and Chairman of the USA Track & Field Foundation, which supports emerging athletes and inner-city youth athletics. Mr. Greifeld holds a Master's in Business from New York University, Stern School of Business, and a B.A. in English from Iona College.

QUALIFICATIONS:

Mr. Greifeld's previous industry leadership service adds significant value to our board of directors.

8

 

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PROPOSAL 1: ELECTION OF DIRECTORS

John F. (Jack)
Sandner
  Independent Director
Age: 78
  Board Committees:

Audit

Compensation

  Director Since:
2015

BACKGROUND:

Mr. Sandner became a member of our board of directors in April 2015 and has been a member of Virtu Financial's board of directors since November 2011. Mr. Sandner served as a member of the board of directors of CME Group Inc. from 1978 to 2018, and as Chairman of the board for 13 years. He also served as Special Policy Advisor from 1998 to 2005. Presently Mr. Sandner serves as a consultant to CME Group. Mr. Sandner served as Chairman of E*TRADE Futures LLC from 2003-2013. Mr. Sandner previously served as President and CEO of RB&H Financial Services, L.P., a futures commission merchant and clearing firm of CME Group from 1985 to 2003. Mr. Sandner currently serves on the board of the National Futures Association and serves on the Board of Ryan Specialty Group. Mr. Sandner previously served on the board of Echo Global Logistics, Inc. and previously served on the board of Click Commerce Inc.

QUALIFICATIONS:

Mr. Sandner's extensive business experience in the electronic market making business and his previous service on the boards of other public companies adds significant value to our board of directors.

Class III Directors

The term of the following three Class III directors will expire at the 2021 Annual Meeting of Stockholders.

Virginia
Gambale
  Independent Director
Age: 60
  Board Committees:
None
  Director Since:
2020

BACKGROUND:

Ms. Gambale became a member of our board of directors in January 2020. Ms. Gambale is Managing Partner of Azimuth Partners LLC, a technology advisory firm facilitating the growth and adoption of emerging technologies for financial services, consumer and technology companies. Prior to starting Azimuth Partners in 2003, Ms. Gambale was an Investment Partner at Deutsche Bank Capital and ABS Ventures from 1999 to 2003. Prior to that, Ms. Gambale held the position of Chief Information Officer at Bankers Trust Alex Brown and Merrill Lynch. Ms. Gambale currently serves as a Director for JetBlue Airways Corp. (NASDAQ:JBLU), First Derivatives plc (LSE:FDP.L), and Regis Corp. (NYSE:RGS), is an Advisory Board member of Nutanix, Inc. (NASDAQ:NTNX) and serves on the NACD Risk Oversight Advisory Council. She has also served on numerous international public and private boards including Piper Jaffray Companies, Synchronoss Technologies, Motive, Inc., Workbrain and IQ Financial, among others. Ms. Gambale holds a B.S. from New York Institute of Technology-Old Westbury.

QUALIFICATIONS:

Ms. Gambale's previous experience in senior leadership positions in finance and technology and previous services on the boards of other public companies adds significant value to our board of directors. Ms. Gambale's nomination to the board of directors was recommended by the Nominating and Corporate Governance Committee of the board of directors.

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PROPOSAL 1: ELECTION OF DIRECTORS

John D.
Nixon
  Independent Director
Age: 64
  Board Committees:

Compensation

N&CG

  Director Since:
2015

BACKGROUND:

Mr. Nixon became a member of our board of directors in May 2015. Mr. Nixon has more than 30 years of international experience in the interdealer broker industry with ICAP plc ("ICAP") and, previously, with Tullett Prebon. He served as a non-executive director of ICAP from 1998 to 2002 and served as executive director from May 2008 until his retirement in March 2015. Mr. Nixon was a member of ICAP's Global Executive Management Group from 2003 to 2015 with responsibility during that period for business divisions and strategic acquisitions. He represented the ICAP Americas businesses to the ICAP board, was chairman of the i-Swap business and had been responsible for the implementation of the ICAP Swap Execution Facility. Mr. Nixon holds a degree in Commerce from Queen's University, Ontario. In addition to serving on our board, Mr. Nixon serves as our representative on the board of Eris Exchange Holdings, LLC, as a Senior Advisor to Teneo Holdings and as a senior financial services advisor to Temasek USA.

QUALIFICATIONS:

Mr. Nixon's extensive business experience in the interdealer broker industry as well as his operational and strategic expertise in the financial services industry adds significant value to our board of directors.

 

David J.
Urban
  Independent Director
Age: 56
  Board Committees:

Risk

  Director Since:
2018

BACKGROUND:

Mr. Urban became a member of our board of directors in December 2018. Mr. Urban is President of the American Continental Group, a leading bi-partisan government affairs and strategic consulting firm which provides strategic consulting services across the financial services and technology sectors, among others, where he has held various positions of increasing seniority for 17 years. Mr. Urban also previously served as an adjunct professor at the H. John Heinz III School of Public Policy and Management at Carnegie Mellon University. Mr. Urban previously served as the Chief of Staff for a United States Senator from 1997 to 2002, and from 1994 to 1997 was an attorney in private practice. From 1986 through 1991, Mr. Urban served as an artillery officer in the United States Army's 101 Airborne Division. Mr. Urban currently serves as a Director for FSD Pharma (NASDAQ: HUGE) and various other private technology focused companies. Mr. Urban holds a Bachelor of Science degree from the United States Military Academy at West Point, a Master of Government Administration degree from the University of Pennsylvania and a Juris Doctor from the Temple University School of Law.

QUALIFICATIONS:

Mr. Urban's governmental relations experience and his previous industry leadership service adds significant value to our board of directors.

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PROPOSAL 1: ELECTION OF DIRECTORS

Michael T.
Viola
  Director
Age: 33
  Board Committees:

N&CG

Risk

  Director Since:
2016

BACKGROUND:

Mr. Viola became a member of our board of directors in April 2016. Mr. Viola previously served the Company in a variety of roles since 2011, most recently as a senior trader focused on foreign exchange products and global commodities. Mr. Viola currently serves as the President of the Viola family's private investment office, located in New York City. In addition, Mr. Viola is a member of the board of directors of Independent Bank Group, Inc., which he joined in February 2013, as well as several other private companies and non-profit organizations.

QUALIFICATIONS:

Mr. Viola's significant experience in electronic market making and his experience as the director of another public company adds significant value to our board of directors.

Executive Officers

Stephen
Cavoli
  EVP
Age: 51
      Officer Since:
2017

BACKGROUND:

Mr. Cavoli has been our Executive Vice President, Markets since December 2017, and previously served as our Senior Vice President, Strategy and Market Development since September 2015. Prior to joining Virtu, Mr. Cavoli was a Managing Director at Morgan Stanley in the electronic trading group, where he served in various roles from April 2004 to September 2015. Mr. Cavoli previously held positions at Instinet where he focused on U.S. equities trading and execution. Mr. Cavoli graduated from the U.S. Military Academy at West Point in 1992 and has served as an Infantry Officer in the United States Army.

 

Brett
Fairclough
  COO
Age: 37
      Officer Since:
2019

BACKGROUND:

Mr. Fairclough was appointed our Executive Vice President, Chief Operating Officer and Global Head of Business Development in September 2019. Mr. Fairclough has been an employee of the Company and its predecessors since 2007, previously serving as the Company's Managing Director of Asia Pacific and Chief Executive Officer of Virtu Singapore Pte. Ltd., the Company's Singapore-based subsidiary, since 2014. Prior to that, he served as Chief Compliance Officer of the Company's broker-dealer subsidiaries. He has also worked closely with exchanges and other industry participants to foster the growth and development of securities markets globally. Mr. Fairclough received a B.A. from the University of California at Los Angeles.

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PROPOSAL 1: ELECTION OF DIRECTORS

 

Alexander M.
Ioffe
  CFO
Age: 53
      Officer Since:
2019

BACKGROUND:

Mr. Ioffe was appointed our Executive Vice President and Chief Financial Officer in September 2019. Mr. Ioffe has more than 18 years of experience in financial services, including most recently as the Chief Financial Officer of the broker-dealer subsidiary of Interactive Brokers Group, Inc. (Nasdaq: IBKR), where he served from 2003 until coming to Virtu in 2019. At IBKR, Mr. Ioffe participated in the substantial growth of the brokerage business, drove automation in the accounting and financial regulatory functions, played a key role in the company's initial public offering and managed public reporting and investor relations thereafter. Mr. Ioffe previously served in senior financial roles at Datek Online Holding Corp. from 2000 to 2002 and Bertelsmann from 1994 to 1998, and as an information technology consultant at Accenture from 1989 to 1994. Mr. Ioffe received a B.S. in Mechanical Engineering from Lehigh University and an M.B.A. from Columbia University.

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Corporate Governance

Board Composition

Our board of directors consists of 12 directors. In accordance with our amended and restated certificate of incorporation and bylaws, the number of directors on our board of directors will be determined from time to time by the board of directors but shall not be less than three persons nor more than 20 persons.

Each director is to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. Vacancies and newly created directorships on the board of directors may be filled at any time by the remaining directors. In addition, at any point prior to the occurrence of the time at which TJMT Holdings LLC (the "Founder Member"), an affiliate of Mr. Vincent Viola, our founder and Chairman Emeritus, or any of its affiliates or permitted transferees, no longer beneficially own shares representing 25% of our issued and outstanding common stock (the "Triggering Event"), vacancies on the board of directors may also be filled by the affirmative vote of a majority of our outstanding shares of common stock.

Until the Triggering Event occurs, any director may be removed with or without cause by the affirmative vote of a majority of our outstanding shares of common stock. Thereafter, directors may be removed only for cause by the affirmative vote of at least 75% of our outstanding shares of common stock. At any meeting of the board of directors, except as otherwise required by law, a majority of the total number of directors then in office will constitute a quorum for all purposes.

Our amended and restated certificate of incorporation provides that the board of directors is divided into three classes of directors, with staggered three-year terms, with the classes to be as nearly equal in number as possible. As a result, approximately one-third of the board of directors will be elected each year.

Controlled Company Status

The Founder Member currently controls more than 50% of our combined voting power, and as a result, we are considered a "controlled company" for the purposes of NASDAQ rules and corporate governance standards. As a "controlled company," we are permitted and may from time to time elect (and have elected) not to comply with certain NASDAQ corporate governance requirements, including those that would otherwise require our board of directors to have a majority of independent directors and require that we establish either a Compensation or Nominating and Corporate Governance Committee each composed entirely of independent directors, or otherwise ensure that the compensation of our executive officers and nominees for directors is determined or recommended to the board of directors by the independent members of the board of directors.

Director Independence

Our board of directors has determined that Messrs. Cruger, Grano, Greifeld, Hutchins, Nixon, Quick, Sandner and Urban and Ms. Gambale are each "independent directors", as such term is defined by the applicable rules and regulations of NASDAQ.

Family Relationships of Directors and Executive Officers

Other than Michael T. Viola, who is the son of Vincent Viola, our founder and Chairman Emeritus, none of the current directors or officers, or nominees for director, is related to any other officer or director of the Company or to any nominee for director.

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CORPORATE GOVERNANCE

Board of Directors Leadership Structure

We currently separate the roles of chairman of the board of directors and chief executive officer. Mr. Greifeld serves as chairman of our board of directors. This structure enables the board of directors to effectively exercise its role in oversight of Virtu while allowing our Chief Executive Officer to focus on the management of the day-to-day conduct of our business. The board may review and change its leadership structure in the future.

Board of Directors Role in Risk Oversight

It is the duty of our board of directors to serve as a prudent fiduciary for stockholders and to oversee the management of our Company.

Our Risk Committee, under powers delegated to it by our board of directors, is responsible for overseeing areas of risk that are not the primary responsibility of another committee of our board of directors or retained for oversight of the full board, including (i) cybersecurity, information security and information technology risk, (ii) trading, capital and liquidity risk and (iii) enterprise risk.

Our Audit Committee, under powers delegated to it by our board of directors, is also responsible for discussing with management the major financial, legal, compliance and other significant risks. Our Audit Committee works directly with members of senior management and our internal audit team to review and assess (i) the adequacy of the Company's internal controls, including significant deficiencies in the design or operation of internal controls that could adversely affect the Company's ability to record, process, summarize and report financial data, and management's response and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting. In addition, the Audit Committee meets as appropriate (i) as a committee to discuss our risk management policies and exposures and (ii) with our independent auditors to review our internal control environment and potential significant risk exposures.

Our Compensation Committee oversees the management of risks relating to our executive compensation programs and employee benefit plans. In fulfilling its duties, the Compensation Committee reviews at least annually our executive compensation programs, meets regularly with management to understand the financial, human resources and stockholder implications of compensation decisions and reports as appropriate to our board of directors.

The Nominating and Corporate Governance Committee oversees the management of risks relating to our corporate governance structure and director selection process.

Our board of directors as a whole also engages in the oversight of risk in various ways. It sets goals and standards for our employees, officers and directors. During the course of each year, our board of directors reviews the structure and operation of various of our departments and functions. In these reviews, our board of directors discusses with management material risks affecting those departments and functions and management's approach to mitigating those risks. Our board of directors also reviews and approves management's operating plans and any risks that could affect the results of those operating plans. In its review and approval of Annual Reports on Form 10-K (including any amendments thereto), our board of directors reviews our business and related risks, including as described in the "Business," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the reports. The Audit Committee reviews these risks quarterly in connection with the preparation of Quarterly Reports on Form 10-Q.

When our board of directors reviews particular transactions and initiatives that require its approval, or that otherwise merit its involvement, it generally includes related analysis and risk mitigation plans among the matters addressed with senior management. The day-to-day identification and management of risk is the responsibility of our management. As the market environment, industry practices, regulatory requirements and our business evolve, we expect that senior management and our board of directors will respond with appropriate risk mitigation strategies and oversight.

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CORPORATE GOVERNANCE

Board and Committee Meetings; Annual Meeting Attendance

During the year ended December 31, 2019:

    the board of directors held five meetings and acted by written consent seven times;

    the Audit Committee held nine meetings and acted by written consent three times;

    the Risk Committee held five meetings and did not act by written consent;

    the Nominating and Corporate Governance Committee held one meeting and did not act by written consent; and

    the Compensation Committee held two meetings and acted by written consent four times.

In the year ended December 31, 2019, no member of our board of directors attended fewer than 75% of the aggregate of: (i) the total number of meetings of the board of directors (held during the period for which he or she has been a director) and (ii) the number of meetings held by all committees of the board of directors (during the periods that he or she served on such committees).

According to our Corporate Governance Guidelines, our directors are expected to attend the annual meeting of stockholders, meetings of the board of directors and meetings of committees on which they serve and to spend the time needed, and meet as frequently as necessary, to properly discharge their responsibilities. Four of our directors attended our 2019 annual meeting of stockholders. Directors are expected to review meeting materials prior to board of director and committee meetings and, when possible, should communicate in advance of meetings any questions or concerns that they wish to discuss so that management will be prepared to address the same. Each director's attendance at, and preparation for, board of director meetings and meetings of committees on which they serve shall be considered by the Nominating and Corporate Governance Committee when recommending director nominees.

Board Committees

Our board of directors has four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Risk Committee. Under the rules of NASDAQ, the membership of the Audit Committee is required to consist entirely of independent directors. As a controlled company (see "Controlled Company Status" on page 13 of this proxy statement), we are not required to have fully independent Compensation and Nominating and Corporate Governance Committees. The following is a brief description of our committees.

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CORPORATE GOVERNANCE


AUDIT
COMMITTEE

Members
William F. Cruger, Jr.
Christopher C. Quick
John F. (Jack) Sandner
Joseph J. Grano, Jr.

Number of Meetings
Held in 2019: 9


 


The Audit Committee's responsibilities include:

We have a separately designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the United States Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our Audit Committee assists the board of directors in monitoring the audit of our financial statements, our independent auditors' qualifications and independence, the performance of our audit function and independent auditors and our compliance with legal and regulatory requirements. Our Audit Committee has direct responsibility for the appointment, compensation, retention (including termination) and oversight of our independent auditors, and our independent auditors report directly to the Audit Committee. Our Audit Committee also reviews and approves related party transactions as required by the rules of NASDAQ. Our board of directors has adopted a written charter for the Audit Committee, which is available on our corporate website at ir.virtu.com/corporate-governance/default.aspx. The information on our website is not part of this proxy statement.

Messrs. Cruger, Quick, Sandner and Grano are the members of our Audit Committee. The board of directors has determined that Mr. Cruger qualifies as an "audit committee financial expert" as such term is defined in Item 407(d)(5)(ii) of Regulation S-K under the Securities Act of 1933, as amended (the "Securities Act") and that each of Messrs. Cruger, Quick, Sandner and Grano is "independent" for purposes of Rule 10A-3 of the Exchange Act and under the listing standards of NASDAQ. The designation of "audit committee financial expert" does not impose on Mr. Cruger any duties, obligations or liabilities that are greater than are generally imposed on members of our Audit Committee and our board of directors.

There were five regular meetings and four special meetings of the Audit Committee held during 2019.

        

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CORPORATE GOVERNANCE


COMPENSATION
COMMITTEE

Members
Robert Greifeld
John D. Nixon
John F. (Jack) Sandner

Number of Meetings
Held in 2019: 2


 


The Compensation Committee's responsibilities include:

Our Compensation Committee reviews and recommends policies relating to compensation and benefits of our directors and employees and is responsible for approving the compensation of our Chief Executive Officer and other executive officers. Our Chief Executive Officer annually reviews the performance of each of the other executive officers relative to individual and corporate annual performance goals established for the year. The Chief Executive Officer then presents his compensation recommendations based on these reviews to the Compensation Committee. Once the Compensation Committee has reviewed and evaluated executive performance, recommendations are made to the board of directors for approval. The board of directors subsequently approved 2019 director and executive compensation arrangements based on the Compensation Committee's recommendations, the recommendations of the Compensation Committee's compensation consultant (described below) and the collective judgment of the board's members. Our board of directors has adopted a written charter for the Compensation Committee, which is available on our corporate website at ir.virtu.com/corporate-governance/default.aspx. The information on our website is not part of this proxy statement.

Pursuant to the written charter of the Compensation Committee, the Compensation Committee may form and delegate authority to subcommittees when appropriate, provided that the subcommittees are composed entirely of directors who satisfy the applicable independence requirements of the Company's corporate governance guidelines and the rules and regulations of NASDAQ, including any applicable "controlled company" exemption. Additionally, pursuant to its written charter, the Compensation Committee has the sole authority to retain and terminate a compensation consultant and to approve the consultant's fees and all other terms of the engagement. In 2017, 2018 and 2019, at the recommendation of the Company's management, the Compensation Committee engaged F.W. Cook as its independent compensation consultant to determine and recommend the amount and form of compensation for the Company's Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Executive Vice Presidents, evaluating and making recommendations with respect to the remuneration of the members of our board of directors and the Company's Chief Executive Officer.

Our Compensation Committee also administers the issuance of awards under the Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan (as amended from time to time, the "2015 Plan").

Messrs. Nixon, Sandner and Greifeld are the members of our Compensation Committee. Because we are a "controlled company" under the rules of NASDAQ (see "Controlled Company Status" on page 13 of this proxy statement), our Compensation Committee is not required to be fully independent, although if such rules change in the future or we no longer meet the definition of a controlled company under the current rules, we will adjust the composition of the Compensation Committee to the extent necessary in order to comply with such rules.

There were two regular meetings of the Compensation Committee held during 2019.

        

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CORPORATE GOVERNANCE


NOMINATING AND
CORPORATE
GOVERNANCE
COMMITTEE

Members
Robert Greifeld
John Nixon
Michael Viola

Number of Meetings
Held in 2019: 1


 


The Nominating and Corporate Governance Committee's responsibilities include:

Our Nominating and Corporate Governance Committee selects or recommends that the board of directors select candidates for election to our board of directors, develops and recommends to the board of directors corporate governance guidelines that are applicable to us and oversees board of director and management evaluations. In addition, our Nominating and Corporate Governance Committee recommends to our board of directors for approval director nominees, consistent with our director qualifications criteria and any obligations under certain contractual arrangements. Our board of directors has adopted a written charter for the Nominating and Corporate Governance Committee, which is available on our corporate website at ir.virtu.com/corporate-governance/default.aspx. The information on our website is not part of this proxy statement.

Messrs. Greifeld, Nixon and Michael Viola are the members of our Nominating and Corporate Governance Committee. Because we are a "controlled company" under the rules of NASDAQ (see "Controlled Company Status" on page 13 of this proxy statement), our Nominating and Corporate Governance Committee is not required to be fully independent, although if such rules change in the future or we no longer meet the definition of a controlled company under the current rules, we will adjust the composition of the Nominating and Corporate Governance Committee accordingly in order to comply with such rules. Mr. Michael Viola is not independent.

There was one regular meeting of the Nominating and Corporate Governance Committee held during 2019.

        

Policy Regarding Director Nominations

Our Nominating and Corporate Governance Committee utilizes a broad approach for identification of director nominees and may seek recommendations from our directors, officers or stockholders and/or engage a search firm. In evaluating and determining whether to ultimately recommend a person as a candidate for election as a director, the Nominating and Corporate Governance Committee evaluates all factors that it deems appropriate, including the number of current directors, as well as the qualifications set forth in our Corporate Governance Guidelines, including the highest personal and professional ethics, integrity, high performance standards and history of achievements, and ability to provide wise and thoughtful counsel on a broad range of issues. It also takes into account specific characteristics and expertise that it believes will enhance the diversity of knowledge, expertise, background and personal characteristics of our board of directors. Specifically, the Nominating and Corporate Governance Committee charter provides that, in performing its responsibilities for identifying, recruiting and recommending candidates to the board of directors, the Nominating and Corporate Governance Committee shall actively seek to include in each candidate search qualified candidates who reflect diverse backgrounds, including diversity of gender, race and ethnicity.

The Nominating and Corporate Governance Committee may engage a third party to conduct or assist with this evaluation. Ultimately, the Nominating and Corporate Governance Committee seeks to recommend to the board of directors those nominees whose specific qualities, experience and expertise will augment the current board of directors' composition and whose past experience evidences that they will: (1) dedicate sufficient time, energy and attention to ensure the diligent performance of board duties; (2) comply with the duties and responsibilities set forth in our Corporate Governance Guidelines and in our bylaws; (3) comply with all duties of care, loyalty and confidentiality applicable to them as directors of publicly traded corporations organized in Delaware; and (4) adhere to our Code of Conduct and Ethics.

In its discretion, the Nominating and Corporate Governance Committee will also consider recommendations of qualified nominees by stockholders by evaluating the same factors as described above.

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CORPORATE GOVERNANCE

In addition to the board process described above, our bylaws permit stockholders to nominate directors for election at an annual meeting of stockholders. To nominate a director, the stockholder must meet certain deadlines established by our by-laws and provide certain information required by our bylaws. For a description of the process for nominating directors in accordance with our bylaws, see "Additional Information" on page 65 of this proxy statement.


RISK
COMMITTEE

Members
Christopher C. Quick
Glenn Hutchins
David Urban
Michael T. Viola

Number of Meetings
Held in 2019: 5


 


The Risk Committee's responsibilities include:

Our Risk Committee was established in 2017 and assists our board of directors in its oversight of the Company's risk management activities, with particular focus on (i) cybersecurity, information security and information technology risk, (ii) trading, capital and liquidity risk, and (iii) enterprise risk. Our Risk Committee also oversees and receives reports from the Company's Chief Risk Officer on the Company's risk assessment and risk management activities and may conduct or oversee stress testing or scenario testing. Our board of directors has adopted a written charter for the Risk Committee, which is available on our corporate website at ir.virtu.com/corporate-governance/default.aspx. The information on our website is not part of this proxy statement.

Messrs. Hutchins, Quick, Urban and Michael Viola are the members of our Risk Committee. Our Risk Committee is not required to be fully independent, although if our Risk Committee becomes subject to any such independence requirement in the future, we will adjust the composition of the Risk Committee accordingly in order to comply with such requirement.

There were five meetings of the Risk Committee held during 2019.

        

Communication with the Board of Directors

Any stockholder or other interested parties who would like to communicate with our board of directors, the independent directors as a group or any specific member or members of our board of directors should send such communications to the attention of our Secretary, at Virtu Financial, Inc., One Liberty Plaza, 165 Broadway, New York, New York 10006. Communications should contain instructions on which member or members of the board of directors the communication is intended for, if applicable. In general, such communication will be forwarded to the intended recipients. However, the Secretary may, in his discretion, decline to forward any communications that are abusive, threatening or otherwise inappropriate.

Compensation Committee Interlocks and Insider Participation

During the year ended December 31, 2019, no member of the Compensation Committee was one of our officers or employees. None of our executive officers serves on the Compensation Committee or board of directors of any other company of which any of the members of our Compensation Committee or any of ours directors is an executive officer.

Code of Conduct and Ethics

We have adopted a code of conduct and ethics applicable to our employees, officers and directors. A copy of that code is available on our corporate website at ir.virtu.com/corporate-governance/default.aspx. We expect that any amendments to the code, or any waivers of its requirements, will be disclosed on our website. The information on our website is not part of this proxy statement.

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Proposal 2: Advisory Vote to Approve Compensation of Named Executive Officers

In accordance with the requirements of Section 14A of the Exchange Act and Exchange Act Rule 14a-21(a), we are including in this proxy statement a separate resolution to approve, in a non-binding, stockholder advisory vote, the compensation paid to our named executive officers as disclosed in "Executive Compensation" below (the "say-on-pay" vote).

While the results of the say-on-pay vote are non-binding and advisory in nature, our board of directors and Compensation Committee intend to consider the results of this vote in making future compensation decisions.

Our board of directors currently intends to conduct advisory votes on executive compensation every year. As a result, our next advisory say-on-pay vote will take place at our annual meeting of stockholders in 2021.

The language of the resolution is as follows:

"RESOLVED, that the compensation paid to the Company's named executive officers for the fiscal year ended December 31, 2019, as discussed pursuant to the compensation disclosure rules of the SEC, including the compensation discussion and analysis, the summary compensation table and the related compensation tables and narrative in this proxy statement, is hereby APPROVED, on an advisory basis."

In considering their vote, stockholders are encouraged to read the compensation discussion and analysis, the accompanying compensation tables, and the related narrative disclosure included in this proxy statement.

Our board of directors recommends that you vote "FOR" the approval, on an advisory basis, of the compensation of our named executive officers.

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Executive Compensation

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the disclosures contained in the following "Compensation Discussion and Analysis." Based on this review and discussion, the Compensation Committee recommended to the Board that the section entitled "Compensation Discussion and Analysis" be included in this proxy statement for the Annual Meeting.

Members of the Compensation Committee
John D. Nixon (Chair)
Robert Greifeld
John F. Sandner

COMPENSATION DISCLOSURE AND ANALYSIS

This compensation discussion and analysis discusses our executive compensation programs for our named executive officers in respect of our fiscal year ended December 31, 2019, which we refer to herein as "fiscal year 2019," and includes a discussion of our compensation objectives and philosophy and the material elements of compensation earned by, awarded, or paid, to our named executive officers in fiscal year 2019. This section also describes processes we use in reaching compensation decisions and is intended to amplify and provide context for understanding the amounts in the tabular disclosure that follows. In addition, we highlight certain attributes of our program, provide a summary of certain key compensation decisions during fiscal year 2019 and describe our intended compensation approach.

Our named executive officers for fiscal year 2019 were as follows:

Douglas A. Cifu   Chief Executive Officer
Alexander M. Ioffe   Executive Vice President and Chief Financial Officer(1)
Brett Fairclough   Chief Operating Officer(2)
Stephen Cavoli   Executive Vice President, Markets
Joseph Molluso   Former Executive Vice President and Chief Financial Officer(3)
(1)
Mr. Ioffe was appointed Executive Vice President and Chief Financial Officer effective September 30, 2019.

(2)
Mr. Fairclough was appointed Chief Operating Officer effective September 4, 2019.

(3)
Mr. Molluso voluntarily departed the Company on October 1, 2019.

Compensation Program Objectives

Our primary objective with respect to executive compensation is to provide competitive compensation and benefits to attract, retain, motivate and reward the highest quality executive officers. Accordingly, we attempt to ensure that compensation provided to executive officers remains competitive relative to the compensation paid to similarly situated executives. A further objective of our compensation program is to provide variable pay opportunities through cash bonuses and restricted stock awards that reward our officers based on achievement of both individual and Company financial results. In addition, we aim to establish compensation plans that align the performance of our executive officers with the Company's objectives and the creation of long-term stockholder value, such as the reward of equity compensation which ties a portion of our executive compensation to the performance of our common stock. We believe an appropriate mix of an executive officer's pay should be variable and performance-based in order to focus the executive officer on both our short-term and long-term strategic objectives.

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EXECUTIVE COMPENSATION

The overall level of total compensation for our named executive officers is intended to be reasonable in relation to, and competitive with, the compensation paid to executives in the industries in which we compete for talent, subject to variation for factors such as the individual's experience, performance, duties and scope of responsibilities, prior contributions and future potential contributions to our business. Our compensation plans are designed to align with business strategies, taking into account external market conditions and internal equity issues. With these principles in mind, we structure our compensation program as competitive total pay packages that we believe enable us to attract, retain and motivate executives with the skill and knowledge that we require, and to ensure the stability of our management team, which is vital to the success of our business.

Key features of our compensation policies and practices that aim to drive performance and align with stockholder interests are highlighted below:

    Pay-for-performance:  A portion of the compensation program for named executive officers is designed to encourage our executives to remain focused on both our short-term and long-term operational success and to reward outstanding individual performance.

    Align incentives with stockholders:  Our executive compensation program is designed to focus our named executive officers on our key strategic, financial and operational goals that will translate into long-term value-creation for our stockholders.

    Limited perquisites:  We provide limited, reasonable perquisites that we believe are consistent with our overall compensation philosophy.

    No IRC Section 280G or 409A tax gross-ups:  We do not provide tax gross-ups under our change in control provisions or deferred compensation programs.

    No supplemental retirement plans:  We do not maintain any supplemental retirement plans.

The Process of Setting Executive Compensation

The Compensation Committee participates in an annual evaluation of the performance of our CEO and the Compensation Committee determines and approves the CEO's compensation level based on this evaluation. In determining the long-term incentive component of CEO compensation, the Compensation Committee will also consider, among such other factors, the Company's performance, stockholder returns, the value of similar incentive awards to chief executive officers at comparable companies and the awards given to the CEO in past years. Our CEO reviews each named executive officer's compensation package, other than his own, annually in light of the performance of each officer. The conclusions reached and recommendations made based on these reviews, including those with respect to salary adjustments and annual award amounts, are then presented to the Compensation Committee and/or our board of directors for review and approval.

Specifically, the Compensation Committee determines and approves the compensation packages of the CEO and approves the compensation packages of each other named executive officer, giving significant deference to the views and recommendations of the CEO. The CEO is not present during voting or deliberations relating to his own compensation.

Committee's Compensation Consultant

The Compensation Committee has previously engaged an independent compensation consultant, F.W. Cook (the "Committee's consultant"), to assist it in carrying out its responsibilities. The Committee's consultant has previously provided the Compensation Committee with guidance to consider when making the compensation decisions for the CEO and when considering the recommendations made with respect to the other named executive officers. The Compensation Committee has the sole authority to retain or terminate consultants to assist it in the evaluation of director, chief executive officer and other executive compensation. The Compensation Committee has the sole authority to determine the terms of engagement and the extent of funding necessary for payment of compensation to any consultant retained to advise the Compensation Committee. Except for compensation recommendations regarding our Executive Vice President and our Chief Operating Officer, the Committee's consultant did not provide any services to the Compensation Committee or management in fiscal year 2019.

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EXECUTIVE COMPENSATION

Elements of Compensation for 2019 and Why We Chose to Pay Each Element

The primary elements of our executive compensation program are base salary, annual cash bonuses, equity-based compensation and certain employee benefits and perquisites. Brief descriptions of each principal element of our executive compensation program are summarized in the following table and described in more detail below.

Compensation Element
  Brief Description
  Objectives

Base Salary

  Fixed compensation   Provide a competitive, fixed level of cash compensation to attract and retain talented and skilled executives

Annual Cash Bonus

  Variable, performance-based cash compensation earned based on financial and individual performance   Retain and motivate executives to achieve or exceed financial goals and company objectives

Annual Equity Awards

  Equity and equity-based compensation that is subject to vesting based on (i) continued employment and (ii) for certain named executive officers, achievement of pre-established financial and operational goals   The mix of equity and equity-based awards with time-based vesting assists in retention of key talent while also rewarding executives for exceptional performance

Employee Benefits and Perquisites

  Participation in all broad-based employee health and welfare programs and retirement plans   Aid in retention of key executives in a highly competitive market for talent by providing an overall competitive benefits package

Consistent with and in promotion of the compensation program objectives detailed above, a significant percentage of total compensation is allocated to performance incentives in order to motivate the named executive officers to achieve the business goals set by the Company and reward the officers for achieving such goals. There is no pre-established policy or target for allocating compensation between long-term and currently paid out compensation, between cash and non-cash compensation, among different forms of non-cash compensation, or among named executive officers. Rather, we look at an executive's goals and responsibilities to determine the appropriate level and mix of incentive compensation.

Base Salary.    We provide executive officers with a base salary to compensate them for services rendered during the fiscal year. This process also enables us to attract and retain an appropriate caliber of talent for the position and to provide a base level of monthly income that is not subject to our performance risk. We conduct a review of base salaries annually, and during such a review we generally consider each named executive officer's individual past performance, the scope of the role and responsibilities of the executive officer within our organization and the performance of the organization as a whole. We also review the officer's compensation relative to that of our other officers and to the market for officers of similar expertise and experience. Base salaries for our named executive officers were not increased in fiscal year 2019, although the annual base salary for each of Messrs. Cavoli and Fairclough were increased for fiscal year 2020 to $500,000 from $400,000 and $160,452, respectively.

Variable Incentive Compensation.    We award variable incentive compensation to reward performance achievements with a time horizon of one year or less. We provide this opportunity to attract and retain an appropriate caliber of talent for the position and to motivate executives to achieve our annual business goals. We review variable incentive compensation awards annually to determine award payments for the last completed fiscal year, as well as to establish award opportunities for the current fiscal year.

To determine the actual variable incentive compensation amounts, the Compensation Committee reviews quantitative and qualitative criteria. With respect to both types of criteria, attainment of any specific level of performance or specific qualitative goal does not determine the amount of the bonus, except as discussed below regarding Mr. Cifu's annual bonus. Other than as set forth below with respect to Mr. Cifu's annual bonus, no

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pre-determined single performance metric is disproportionately weighted in making the determination of a named executive officer's variable incentive compensation payout, which provides discretion to our Compensation Committee to adjust the actual amount paid in respect of variable incentive compensation to reward financial performance and individual performance in the context of our growing and dynamic business.

The amount of the variable incentive compensation award can be paid in a mixture of cash and/or equity, as determined by the Compensation Committee each year. This provides the Compensation Committee with more flexibility, under differing market and financial conditions and depending upon the strategic direction of the firm, to easily vary the mix of compensation without the need to focus on the form (cash or stock) but rather the value being delivered coupled with the proper incentives for our named executive officers to create short- and long-term stockholder value. Generally, the mixture of cash and equity-based compensation is determined by the aggregate variable incentive compensation payable for the applicable year. For each of Messrs. Cifu, Fairclough and Cavoli, the mixture of cash and equity for 2019 variable incentive compensation was 40% paid in cash, 24% paid in fully vested common stock and the remaining 36% paid in the form of restricted stock units that vest ratably over a three-year period. For Mr. Ioffe, 50% of his 2019 variable incentive compensation was paid in cash, 20% was paid in fully vested common stock and the remaining 30% was paid in the form of restricted stock units that vest ratably over a three-year period. We use awards of fully vested common stock and restricted stock units as a long-term incentive vehicle because it aligns the interests of executives with those of stockholders, supports a pay-for-performance culture, fosters employee stock ownership, and focuses the management team on increasing value for the stockholders and on the organization's long-term performance.

In fiscal year 2019, in accordance with the terms of his employment agreement, Mr. Cifu was eligible to earn an annual bonus with a target bonus opportunity equal to $2,500,000 and a maximum bonus opportunity equal to $5,000,000. Eighty percent (80%) of the annual bonus was based on the achievement of select quantitative goals based on the Company's adjusted net trading income, cash operating expenses and achieved synergies as compared to budgeted amounts in fiscal year 2019 and 20% of the annual bonus was based on the achievement of qualitative goals. For fiscal year 2019, the threshold to earn the target performance-based portion of the annual bonus was achievement of budgeted adjusted net trading income of $1.298 billion, budgeted cash operating expenses of $592 million and budgeted annualized cash synergies of $80 million, and the threshold to earn the maximum performance-based portion of the annual bonus was achievement of outperformance of each of the foregoing metrics by 35% in each case weighting adjusted net trading income at 40% and each of cash operating expenses and annualized cash synergies at 30%. The quantitative goals and weightings were determined in consideration of the strategic importance of the acquisition and integration of Investment Technology Group, Inc., which closed on March 1, 2019 (the "ITG Acquisition"), as well as the market environment and opportunity. Based on the Company's actual performance of $975 million of adjusted net trading income, cash operating expenses of $543 million and annualized cash synergies of $105 million, Mr. Cifu earned approximately 66% (i.e., $2,656,000) of the performance-based portion of his annual bonus, and the Compensation Committee determined that Mr. Cifu earned approximately 84% (i.e., $844,000) of the qualitative portion of his annual bonus.

The amounts paid to the Company's other executive officers in 2019 were contractually guaranteed. Accordingly, for fiscal year 2019, the amount of variable incentive compensation form of payments to our named executive officers is described in the table below:

Name
  Cash
  Restricted
Stock Units

  Common Stock
  Total 2019
Variable
Incentive
Compensation

 

Douglas A. Cifu

  $ 1,400,000   $ 1,246,000   $ 840,000   $ 3,500,000  

Alexander M. Ioffe(1)

  $   $   $   $  

Brett Fairclough(2)

  $   $   $   $  

Stephen Cavoli(3)

  $   $   $   $  

Joseph Molluso

  $   $   $   $  
(1)
For the year 2019, pursuant to the terms of his employment agreement, Mr. Ioffe received a guaranteed annual bonus in the amount of $1,500,000, 50% of which was paid in cash, 30% of which was paid in restricted stock units vesting in three annual installments and 20% of which was paid in common stock.

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(2)
For the year 2019, pursuant to the terms of his employment agreement, Mr. Fairclough received a guaranteed annual bonus in the amount of $1,540,000, 40% of which was paid in cash, 36% of which was paid in restricted stock units vesting in three annual installments and 24% of which was paid in common stock.

(3)
For the year 2019, pursuant to the terms of his employment agreement, Mr. Cavoli received a guaranteed annual bonus in the amount of $1,300,000, 40% of which was paid in cash, 36% of which was paid in restricted stock units vesting in three annual installments and 24% of which was paid in common stock.

Annual Equity Awards

Cifu Equity Award

In fiscal year 2019, in accordance with the terms of his employment agreement, Mr. Cifu received a grant of 150,000 restricted shares of Class A common stock that are earned based on the percentage of budgeted adjusted EBITDA achieved in fiscal year 2019: 50% of the shares are earned if 70% of budgeted adjusted EBITDA is achieved and 100% of the shares are earned if 75% of budgeted adjusted EBITDA is achieved. For fiscal year 2019, our budgeted adjusted EBITDA was $732 million and we achieved less than 70% of such amount. Accordingly, the restricted shares granted to Mr. Cifu in fiscal year 2019 were not earned. The Compensation Committee believes this award incentivizes Mr. Cifu to achieve key financial goals of the Company and aligns his long-term interests with those of our stockholders.

Ioffe Equity Award

In fiscal year 2019, as a sign-on incentive and in accordance with the terms of his employment agreement, Mr. Ioffe received a grant of 185,887 RSUs vesting in three equal annual installments on September 30, 2020, September 30, 2021 and September 30, 2022. The Compensation Committee believes this award aligns Mr. Ioffe's long-term interests with those of our stockholders.

Employee Benefits and Perquisites

We provide a number of benefit plans to all eligible employees, including our named executive officers. These benefits include programs such as medical, dental, life insurance, business travel accident insurance, short- and long-term disability coverage and a 401(k) defined contribution plan.

While perquisites help to provide our named executive officers a benefit with a high perceived value at a relatively low cost, we do not generally view perquisites as a material component of our executive compensation program. In the future, we may provide additional or different perquisites or other personal benefits in limited circumstances, such as where we believe doing so is appropriate to assist an executive in the performance of his or her duties, to make our named executive officers more efficient and effective and for recruitment, motivation and/or retention purposes.

Severance Protection

We have previously entered into employment agreements with Messrs. Cifu and Ioffe that provide for certain severance payments and benefits in the event that such executive's employment is terminated under specified conditions, and in February 2020 we entered into new employment agreements with Messrs. Cavoli and Fairclough that provide for such payments and benefits under specified conditions. In addition, the vesting of a portion of the executive's equity award or awards accelerates in connection with qualifying terminations of employment. We believe that these severance benefits are appropriate to remain competitive in our executive retention efforts, recognizing that such benefits are commonly offered by employers competing for similar executive talent. See "Potential Payments upon Termination of Employment or Change in Control" for additional information.

Taxation of Executive Compensation

For income tax purposes, public companies may not deduct any portion of compensation that is in excess of $1 million paid in a taxable year to certain "covered employees," including our named executive officers, under Section 162(m) of the Internal Revenue Code of 1986, as amended ("Section 162(m)"). Following recent changes to Section 162(m) or related rules in late 2019, deductibility for 2019 compensation may only be permitted in certain limited cases and for future periods may not be permitted at all.

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Nevertheless, even if Section 162(m) were to apply to compensation paid to our named executive officers, our board of directors believes that it should not be constrained by the requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") if those requirements would impair flexibility in compensating our named executive officers in a manner that can best promote our corporate objectives. We intend to continue to compensate our executive officers in a manner consistent with the best interests of our stockholders and reserve the right to award compensation that may not be deductible under Section 162(m) where the Company believes it is appropriate to do so.

Section 409A of the Code requires that "nonqualified deferred compensation" be deferred and paid under plans or arrangements that satisfy the requirements of the statute with respect to the timing of deferral elections, timing of payments and certain other matters. Failure to satisfy these requirements can expose employees and other service providers to accelerated income tax liabilities, penalty taxes and interest on their vested compensation under such plans. Accordingly, as a general matter, it is our intention to design and administer our compensation and benefits plans and arrangements for all of our employees and other service providers, including our named executive officers, so that they are either exempt from, or satisfy the requirements of, Section 409A.

SUMMARY COMPENSATION TABLE

The following table sets forth the cash and non-cash compensation paid by the Company during the years ended December 31, 2017, December 31, 2018 and December 31, 2019 to its named executive officers.

Name and Principal Position
  Year
  Salary
($)

  Bonus
($)

  Stock
Awards
($)

  Non-Equity
Incentive Plan
Compensation
($)

  All Other
Compensation
($)

  Total
($)

 

Douglas A. Cifu

    2019   $ 1,000,000   $ 360,000 (1) $ 2,100,000 (2) $ 1,040,000 (3) $ 98,172 (4) $ 4,598,172  

Chief Executive Officer

    2018   $ 1,000,000   $ 400,000 (1) $ 5,298,240 (2) $ 2,000,000 (3) $ 71,367 (4) $ 8,769,607  

    2017   $ 1,000,000   $ 1,000,000   $ 1,500,000 (2)       $ 72,854 (4) $ 3,572,854  

Alex Ioffe

    2019   $ 127,397 (5) $ 750,000 (1) $ 3,750,000 (6)     $ 20,000 (7) $ 4,647,397  

Chief Financial Officer

                                           

Brett Fairclough

    2019   $ 160,452   $ 616,000 (1) $ 924,000 (8)     $ 419,991 (9) $ 2,120,443  

Chief Operating Officer

                                           

Stephen Cavoli

    2019   $ 400,000   $ 520,000 (1) $ 780,000 (10)         $ 1,700,000  

Executive Vice President, Markets

    2018   $ 400,000   $ 480,000 (1) $ 320,000 (10)         $ 1,200,000  

    2017   $ 400,000   $ 400,000               $ 800,000  

Joseph Molluso

    2019   $ 375,342               $ 1,250,000 (11) $ 1,625,342  

Former Executive Vice President

    2018   $ 500,000   $ 700,000   $ 4,993,812 (12)         $ 6,193,812  

and Chief Financial Officer

    2017   $ 500,000   $ 700,000   $ 1,050,000 (12)         $ 2,250,000  
(1)
This amount represents the cash component of the portion of each executive's annual bonus that was based on the achievement of qualitative goals. For Mr. Cifu, this was 40% for fiscal year 2019 and 50% for fiscal year 2018, for Mr. Fairclough this was 40% for fiscal year 2019, and for Mr. Cavoli, this was 40% for fiscal year 2019 and 40% for fiscal year 2018. The remainder in each year was paid in the form of restricted stock units and fully vested shares of our Class A common stock which are reflected in the "Stock Awards" column in the table above. In addition, this amount includes the 50% cash component of Mr. Ioffe's 2019 guaranteed sign on bonus award, described further below under "Employment Agreement with Mr. Ioffe".

(2)
This amount represents the grant date fair value calculated in accordance with FASB ASC Topic 718 with respect to (i) the grant of restricted stock units (ii) fully vested shares of our Class A common stock and (iii) in fiscal year 2018, restricted shares. Although restricted shares were granted in fiscal year 2019, no amount is reported because achievement of the performance conditions was not deemed probable, however, if the maximum performance had been achieved the grant date fair value calculated in accordance with FASB ASC Topic 718 would have been $3,771,000. As noted above, the restricted shares granted to Mr. Cifu in fiscal year 2019 were not earned. Assumptions used in calculating these amounts are described in Note 19 of the Company's audited financial statements for the fiscal year ended December 31, 2019, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in Note 17 of the Company's audited financial statements for the fiscal year ended December 31, 2018, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, in Note 16 of the Company's audited financial statements for the fiscal year ended December 31, 2017, and are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. The grant of restricted stock units and fully vested shares of our Class A common stock relate to the settlement of Mr. Cifu's 2019 annual bonus, 2018 annual bonus and 2017 annual bonus, respectively, however, the awards were actually granted in fiscal years 2020, 2019 and 2018, respectively.

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(3)
This amount represents the cash component of the portion of Mr. Cifu's annual bonus that was based on achievement of performance goals, which was 60% for fiscal year 2019 and 50% for fiscal year 2018. The remainder in each year was paid in the form of restricted stock units and fully vested shares of our Class A common stock which are reflected in the "Stock Awards" column in the table above.

(4)
This amount represents the cost of providing transportation services to Mr. Cifu.

(5)
Mr. Ioffe's employment with the Company commenced on September 30, 2019, and as a result the amount reported is a prorated portion of his $500,000 base salary.

(6)
This amount represents the grant date fair value calculated in accordance with FASB ASC Topic 718 with respect to (i) the grant of restricted stock units and (ii) fully vested shares of our Class A common stock. Assumptions used in calculating these amounts are described in Note 19 of the Company's audited financial statements for the fiscal year ended December 31, 2019 and are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

(7)
This amount reflects Mr. Ioffe's legal expenses associated with the completion of his employment agreement that were paid directly by the Company pursuant to the terms of his employment agreement.

(8)
This amount represents the grant date fair value calculated in accordance with FASB ASC Topic 718 with respect to (i) the grant of restricted stock units and (ii) fully vested shares of our Class A common stock. Assumptions used in calculating these amounts are described in Note 19 of the Company's audited financial statements for the fiscal year ended December 31, 2019 and are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. The grant of restricted stock units and fully vested shares of our Class A common stock relate to the settlement of Mr. Fairclough's 2019 annual bonus, however, the awards were actually granted in fiscal year 2020.

(9)
This amount represents $80,000 paid as a housing allowance to Mr. Fairclough following his repatriation to the United States in 2019, in addition to certain tax benefits to which Mr. Fairclough is entitled for the year ended 2019 based on the difference between the actual foreign taxes due during the period and the hypothetical U.S. taxes that would have been applicable prior to his relocation. The amount shown includes the tax repayment that Mr. Fairclough received in fiscal year 2019, however, the actual amount owed was not calculable as of December 31, 2019, therefore the Company may pay Mr. Fairclough additional amounts or certain amounts may be required to be repaid to the Company.

(10)
This amount represents the grant date fair value calculated in accordance with FASB ASC Topic 718 with respect to (i) the grant of restricted stock units and (ii) fully vested shares of our Class A common stock. Assumptions used in calculating these amounts are described in Note 19 of the Company's audited financial statements for the fiscal year ended December 31, 2019, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in Note 17 of the Company's audited financial statements for the fiscal year ended December 31, 2018 and are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The grant of restricted stock units and fully vested shares of our Class A common stock relate to the settlement of Mr. Cavoli's 2019 annual bonus and 2018 annual bonus, respectively, however, the awards were actually granted in fiscal years 2020 and 2019, respectively.

(11)
This amount reflects the amount paid to Mr. Molluso in connection with his voluntary departure from the Company.

(12)
This amount represents the grant date fair value calculated in accordance with FASB ASC Topic 718 with respect to (i) the grant of restricted stock units and (ii) fully vested shares of our Class A common stock. Assumptions used in calculating these amounts are described in Note 19 of the Company's audited financial statements for the fiscal year ended December 31, 2019, included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, in Note 17 of the Company's audited financial statements for the fiscal year ended December 31, 2018 and are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. The grant of restricted stock units and fully vested shares of our Class A common stock relate to the settlement of Mr. Molluso's 2019 annual bonus and 2018 annual bonus, respectively, however, the awards were actually granted in fiscal years 2020 and 2019, respectively.

GRANTS OF PLAN-BASED AWARDS IN 2019 FISCAL YEAR

The following table presents information with respect to each award made to our named executive officers in 2019.

          Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards
    Estimated Possible Payouts
Under Equity Incentive
Plan Awards
    All Other
Stock
Awards:
Number of
Shares of
    Grant Date
Fair Value
of Stock
 
Name and Type of Award
  Grant
Date

  Threshold
($)

  Target
($)

  Maximum
($)

  Threshold
(#)

  Target
(#)

  Maximum
(#)

  Stock Units
(#)(4)

  Awards
($)

 

Douglas A. Cifu

                                                       

Annual Bonus(1)

              2,500,000     5,000,000                      

Restricted Shares(2)

    2/28/2019                 75,000         150,000          

Alex Ioffe

                                                       

Restricted Stock Units(3)

    10/2/2019                             185,887     3,000,000  
(1)
This bonus, to the extent earned, is settled 50% in cash, 30% in restricted shares that vest in three equal annual installments and 20% in fully vested common stock.

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(2)
See "Cifu Equity Award" above for further discussion on the performance and vesting conditions applicable to these shares, which were not earned. As noted in footnote (2) of the Summary Compensation Table, the grant date fair value of the restricted shares under FASB ASC Topic 718 was $0 based on the probable outcome of achievement of the performance conditions.

(3)
These restricted stock units vest in three equal installments on September 30, 2020, September 30, 2021 and September 30, 2022.

(4)
The Company made certain equity grants in 2019 that are not reportable in this table because they were awarded in settlement of the named executive officers' 2018 annual bonus. Those equity grants are reflected in the Summary Compensation Table above under the heading "Stock Awards" for fiscal year 2019.

Employment Agreements and Restrictive Covenant Agreements

Employment Agreement with Mr. Cifu

On November 15, 2017, we entered into a new employment agreement with Mr. Cifu, which amends and supersedes the terms of his prior employment agreement dated April 14, 2015, pursuant to which Mr. Cifu will continue to serve as our Chief Executive Officer and report to our board of directors. Mr. Cifu's duties, responsibilities and permitted activities are substantially identical to his original employment agreement. During the term, Mr. Cifu's principal place of employment is in our principal office in New York, New York. Mr. Cifu's employment agreement further provides that to the extent such activities do not significantly interfere with the performance of his duties, service and responsibilities, Mr. Cifu is permitted to manage his personal, financial and legal affairs, serve on civic or charitable boards and committees and, to the extent approved by our board of directors, serve on corporate boards and committees; provided that Mr. Cifu is permitted to continue to be engaged in, or provide services to, certain specified businesses and activities (including, but not necessarily limited to, his role as the Vice Chairman and Alternate Governor of the Florida Panthers, a National Hockey League franchise), and to become engaged in, or provide services to, any other business or activity in which Mr. Vincent Viola, our Founder and Chairman Emeritus, is permitted to become engaged in, to the extent that Mr. Cifu's level of participation in such businesses or activities is consistent with his participation in the aforementioned specified businesses or activities prior to the effective date of the employment agreement.

The employment agreement has an initial term of five years ending on November 15, 2022, with automatic renewals for successive one-year terms thereafter unless either we or the executive provides notice of non-renewal at least ninety days in advance of the expiration of the then-current term. However, if a change in control of the Company occurs at a time when there are less than two years remaining in the term, the term will automatically be extended so that the expiration date is two years from the effective date of the change in control.

Under the employment agreement, Mr. Cifu's base salary is $1,000,000 and Mr. Cifu is eligible to earn an annual bonus with a target bonus opportunity equal to $2,500,000 and a maximum bonus opportunity equal to $5,000,000. Eighty percent (80%) of the annual bonus will be based on the achievement of quantitative targets composed of specific components of the Company's annual budget and 20% of the annual bonus will be based on the achievement of qualitative goals. To the extent earned, a maximum of 50% of the annual bonus will be paid in cash, 30% of the annual bonus will be paid in the form of restricted stock units or restricted shares of Class A common stock of the Company that vest in three equal annual installments and the remaining 20% will be paid in the form of fully vested shares of Class A common stock.

The employment agreement provides that, commencing with calendar year 2018, Mr. Cifu is eligible to receive an equity award at the beginning of each calendar year during the term (each such award to any executive, an "annual equity grant"). It is our board of directors' current intention that the annual equity grant will be in the form of 150,000 restricted shares of Class A common stock that are subject to performance and service conditions. The number of shares earned under each annual equity grant will be based on the percentage of budgeted EBITDA achieved in the applicable calendar year, with a minimum of 50% of shares earned upon at least 70% achievement and 100% of shares earned upon at least 75% achievement. To the extent any shares of Class A common stock are earned with respect to an applicable annual equity grant, 50% of such shares will vest on the last day of the calendar year to which such award relates and the remaining 50% will vest on the last day of the subsequent calendar year, subject to Mr. Cifu's continued employment through each applicable vesting date.

The employment agreement further provides that Mr. Cifu is entitled to participate in all of the Company's benefit plans and programs, and to receive perquisites, commensurate with his position, that are provided by the Company from time to time to senior executives generally, and to receive director and officer indemnification and insurance protection. In addition, during the term, Mr. Cifu will be provided a car and driver consistent with past practice.

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EXECUTIVE COMPENSATION

The employment agreement includes an acknowledgment that Mr. Cifu continues to be bound by the confidentiality and restrictive covenant provisions set forth in the Amended and Restated Virtu Financial LLC Agreement, which provides for confidentiality and non-disparagement restrictions, as well as non-compete and non-solicitation restrictions until the third anniversary on which Mr. Cifu ceases to be an officer, director or employee of the Company. The employment agreement also provides that the Company will pay as incurred, to the fullest extent permitted by law, all legal fees and expenses that Mr. Cifu incurs as a result of any contest (regardless of the outcome) by the Company, Mr. Cifu or others of the validity or enforceability of, or liability under, any provision of the employment agreement or any guarantee of performance of the employment agreement that arises in connection with or following a change in control, plus interest on any delayed payment at the applicable federal rate under Section 7872 of the Code.

The employment agreement for Mr. Cifu provides for severance upon certain terminations of employment as described below under "Potential Payments Upon Termination of Employment or Change in Control."

Employment Agreement with Mr. Ioffe

Virtu East entered into an employment agreement with Mr. Ioffe on August 28, 2019, pursuant to which Mr. Ioffe serves as our Executive Vice President and Chief Financial Officer and reports to our Chief Executive Officer. Mr. Ioffe's employment agreement further provides that to the extent such activities do not significantly interfere with the performance of his duties, service and responsibilities, Mr. Ioffe is permitted to manage his personal, financial and legal affairs, and serve on civic or charitable boards and committees.

Under the employment agreement, Mr. Ioffe's base salary is $500,000 and Mr. Ioffe was entitled to receive a guaranteed bonus for the year ended December 31, 2019 in the amount of $1,500,000, paid 50% in cash and 50% in restricted stock units and common shares of Class A common stock. The agreement further provides that Mr. Ioffe is eligible to earn annual bonuses for the years ended December 31, 2020, December 31, 2021 and December 31, 2022, with target bonus opportunities equal to $1,750,000, $1,500,000, and $1,500,000, respectively, and maximum bonus opportunities equal to $2,500,000 in each such year. The amounts actually earned will be based on the achievement of annual performance targets established in the sole and absolute discretion of the Compensation Committee together with the Chief Executive Officer. To the extent earned, the annual bonus will be paid in a mix of cash, restricted stock units and fully vested shares of Class A common stock in accordance with the Company's incentive and equity plans as in effect from time to time.

The employment agreement also provided for a special long-term equity award in the form of restricted stock units valued in an amount equal to $3,000,000 divided by a per share issue price calculated based on a trailing volume weighted average price of the Company's Class A common stock. The RSUs are subject to time vesting and vest in equal annual installments on each of the first three anniversaries of the grant date.

The employment agreement also provides that, commencing with calendar year 2020, Mr. Ioffe is eligible to receive an annual equity grant as determined by the Compensation Committee together with the Company's Chief Executive Officer. It is the current intention of the Board that such annual equity grant will be in the form of restricted shares of the Company's Class A common stock. Fifty percent of such annual equity grant shall vest on the last day of the calendar year to which such award relates and the remaining 50% shall vest on the last day of the subsequent calendar year, subject in all cases to continued employment through the applicable vesting date.

The employment agreement further provides that Mr. Ioffe is entitled to participate in all of the Company's benefit plans and programs, and to receive perquisites, commensurate with his position, that are provided by the Company from time to time to senior executives generally, and to receive director and officer indemnification and insurance protection.

The employment agreement for Mr. Ioffe provides for severance upon certain terminations of employment as described below under "Potential Payments Upon Termination of Employment or Change in Control."

Prior Employment Agreement with Mr. Fairclough

Virtu East entered into an employment agreement with Mr. Fairclough on April 17, 2019 on an "at will" employment basis in connection with his return to the United States from Singapore. The employment agreement provided for a salary of $160,452 per year. In addition, the employment agreement provides for eligibility to earn an annual cash bonus, as determined at the sole discretion of Virtu East.

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EXECUTIVE COMPENSATION

In connection with his employment agreement, Mr. Fairclough entered into a restrictive covenant agreement that provides for confidentiality and non-disparagement restrictions and that he will not engage in any business that competes with Virtu or its affiliates, and he will not solicit or hire employees, consultants or members of Virtu East, its subsidiaries or its affiliates during his employment and for a period of 36 months thereafter. He is also subject to similar restrictive covenants under the limited liability company agreement of Virtu Employee Holdco (as amended and restated, "Virtu Employee Holdco Limited Liability Company Agreement") with a three-year post-employment period. Additionally, in connection with his relocation from Singapore, Mr. Fairclough and the Company entered into a letter agreement and supplemental letter agreement regarding certain benefits and relocation support related to his expatriate assignment and relocation.

Current Employment Agreement with Mr. Fairclough

Virtu East entered into a new employment agreement with Mr. Fairclough on February 26, 2020, which amends and supersedes the terms of his prior employment agreement dated April 17, 2019, pursuant to which Mr. Fairclough will continue to serve as our Chief Operating Officer and report to our Chief Executive Officer. During the term, Mr. Fairclough's principal place of employment is in our principal office in New York, New York. Mr. Fairclough's employment agreement further provides that to the extent such activities do not significantly interfere with the performance of his duties, service and responsibilities, Mr. Fairclough is permitted to manage his personal, financial and legal affairs, serve on civic or charitable boards and committees and, to the extent approved by our board of directors, serve on corporate boards and committees.

The employment agreement has an initial term of four years ending on February 26, 2024, with automatic renewals for successive one-year terms thereafter unless either we or the executive provides notice of non-renewal at least ninety days in advance of the expiration of the then-current term. However, if a change in control of the Company occurs at a time when there is less than one year remaining in the term, the term will automatically be extended so that the expiration date is one year from the effective date of the change in control.

Under the employment agreement, Mr. Fairclough's base salary is $500,000 and Mr. Fairclough is eligible to earn an annual bonus with a target bonus opportunity equal to $1,500,000 and a maximum bonus opportunity equal to $2,500,000. Eighty percent (80%) of the annual bonus will be based on the achievement of quantitative targets set by the Company's Chief Executive Officer together with the Compensation Committee and 20% of the annual bonus will be based on the achievement of qualitative goals set by the Company's Chief Executive Officer together with the Compensation Committee. To the extent earned, the annual bonus will be paid in a mix of cash, restricted stock units and fully vested shares of Class A common stock in accordance with the Company's incentive and equity plans as in effect from time to time.

The employment agreement also provided for a special long-term equity award in the form of 150,000 restricted shares of Class A common stock that are subject to performance and service conditions, which was issued on February 27, 2020. The number of shares earned under each annual equity grant will be based on the percentage of budgeted EBITDA achieved in each of the three calendar years during the vesting period, with a minimum of 50% of shares earned upon at least 70% achievement and 100% of shares earned upon at least 75% achievement. To the extent any shares of Class A common stock are earned with respect to an applicable calendar year, such shares will vest on the last day of such calendar year to which such award relates.

The employment agreement further provides that Mr. Fairclough is entitled to participate in all of the Company's benefit plans and programs, and to receive perquisites, commensurate with his position, that are provided by the Company from time to time to senior executives generally, and to receive director and officer indemnification and insurance protection.

The employment agreement includes an acknowledgment that Mr. Fairclough continues to be bound by the confidentiality and restrictive covenant provisions set forth in his original agreement, which provides for confidentiality and non-disparagement restrictions, as well as non-compete and non-solicitation restrictions until the thirty-six month anniversary of the date on which Mr. Fairclough ceases to be an officer or employee of the Company.

The employment agreement for Mr. Fairclough provides for severance upon certain terminations of employment as described below under "Potential Payments Upon Termination of Employment or Change in Control."

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EXECUTIVE COMPENSATION

Prior Employment Agreement with Mr. Cavoli

Virtu East entered into an employment agreement with Mr. Cavoli on June 24, 2015 on an "at will" employment basis. The employment agreement provided for a salary of $400,000 per year. In addition, the employment agreement provides for eligibility to earn an annual cash bonus, as determined at the sole discretion of Virtu East. The employment agreement also provided for a grant of restricted stock units with the number of restricted stock units to be granted determined by dividing $2,000,000 by the closing price of the Company's Class A common stock on Mr. Cavoli's start date of September 28, 2015, and provided that Mr. Cavoli is eligible to participate in all benefit programs of Virtu East available to similarly situated employees.

In connection with his employment agreement, Mr. Cavoli entered into a restrictive covenant agreement that provides for confidentiality and non-disparagement restrictions and that he will not engage in any business that competes with Virtu or its affiliates, and he will not solicit or hire employees, consultants or members of Virtu East, its subsidiaries or its affiliates during his employment and for a period of 18 months thereafter.

Current Employment Agreement with Mr. Cavoli

Virtu East entered into a new employment agreement with Mr. Cavoli on February 26, 2020, which amends and supersedes the terms of his prior employment agreement dated June 24, 2015, pursuant to which Mr. Cavoli will continue to serve as our Executive Vice President, Markets and report to our Chief Executive Officer. During the term, Mr. Cavoli's principal place of employment is in our principal office in New York, New York. Mr. Cavoli's employment agreement further provides that to the extent such activities do not significantly interfere with the performance of his duties, service and responsibilities, Mr. Cavoli is permitted to manage his personal, financial and legal affairs, serve on civic or charitable boards and committees and, to the extent approved by our board of directors, serve on corporate boards and committees.

The employment agreement has an initial term of three years ending on February 26, 2023, with automatic renewals for successive one-year terms thereafter unless either we or the executive provides notice of non-renewal at least ninety days in advance of the expiration of the then-current term. However, if a change in control of the Company occurs at a time when there is less than one year remaining in the term, the term will automatically be extended so that the expiration date is one year from the effective date of the change in control.

Under the employment agreement, Mr. Cavoli's base salary is $500,000 and Mr. Cavoli is eligible to earn an annual bonus with a target bonus opportunity equal to $1,500,000 and a maximum bonus opportunity equal to $2,500,000. Eighty percent (80%) of the annual bonus will be based on the achievement of quantitative targets set by the Company's Chief Executive Officer together with the Compensation Committee and 20% of the annual bonus will be based on the achievement of qualitative goals set by the Company's Chief Executive Officer together with the Compensation Committee. To the extent earned, the annual bonus will be paid in a mix of cash, restricted stock units and fully vested shares of Class A common stock in accordance with the Company's incentive and equity plans as in effect from time to time.

The employment agreement also provided for a special long-term equity award in the form of 150,000 restricted shares of Class A common stock that are subject to performance and service conditions, which was issued on February 27, 2020. The number of shares earned under each annual equity grant will be based on the percentage of budgeted EBITDA achieved in each of the three calendar years during the vesting period, with a minimum of 50% of shares earned upon at least 70% achievement and 100% of shares earned upon at least 75% achievement. To the extent any shares of Class A common stock are earned with respect to an applicable calendar year, such shares will vest on the last day of such calendar year to which such award relates.

The employment agreement further provides that Mr. Cavoli is entitled to participate in all of the Company's benefit plans and programs, and to receive perquisites, commensurate with his position, that are provided by the Company from time to time to senior executives generally, and to receive director and officer indemnification and insurance protection.

The employment agreement includes an acknowledgment that Mr. Cavoli continues to be bound by the confidentiality and restrictive covenant provisions set forth in his original agreement, which provides for confidentiality and non-disparagement restrictions, as well as non-compete and non-solicitation restrictions until the eighteen-month anniversary of the date on which Mr. Cavoli ceases to be an officer or employee of the Company.

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EXECUTIVE COMPENSATION

The employment agreement for Mr. Cavoli provides for severance upon certain terminations of employment as described below under "Potential Payments Upon Termination of Employment or Change in Control."

Employment Agreement with Mr. Molluso

Virtu East entered into an employment agreement with Mr. Molluso on August 7, 2013 on an "at will" employment basis. The employment agreement provided for a salary of $500,000 per year and a starting bonus of $600,000 (which would have been required to be repaid upon a termination for "cause" (as defined in his employment agreement) or certain violations of his restrictive covenants). In addition, the employment agreement provided for eligibility to earn an annual cash bonus, as determined at the sole discretion of Virtu East. The employment agreement also provided for a grant of Class A-2 profits interests in Virtu Employee Holdco with the number of Class A-2 profits interests to be granted determined by dividing $6,000,000 by the most recent valuation of a Class A-2 capital interest of Virtu Financial. In connection with our initial public offering, Mr. Molluso's Class A-2 profits interests in Virtu Employee Holdco were reclassified into common units of Virtu Employee Holdco and are currently 100% vested. Mr. Molluso was eligible to participate in all benefit programs of Virtu East available to similarly situated employees.

In connection with his employment agreement, Mr. Molluso entered into a restrictive covenant agreement that provided for confidentiality and non-disparagement restrictions and that he will not engage in any business that competes with Virtu or its affiliates, and he will not solicit or hire employees, consultants or members of Virtu East, its subsidiaries or its affiliates during his employment and for a period of three years thereafter. He is also subject to similar restrictive covenants under the Virtu Employee Holdco Limited Liability Company Agreement.

OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR-END

The following table provides information about each of the outstanding awards of options to purchase our common stock and restricted stock units held by each named executive officer as of December 31, 2019.

    Option Awards     Stock Awards  

Name

    Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
    Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
    Option
Exercise
Price
($)
    Option
Expiration
Date
    Equity
Incentive Plan
Awards:
Number of
Unvested
Stock Awards
(#)
    Equity
Incentive Plan
Awards:
Market Value
of Unvested
Stock Awards
($)(1)
 

Douglas A. Cifu

    100,000         $ 19.00     4/15/2025          

                    32,116 (2) $ 513,535  

                            54,045 (3) $ 864,180  

Brett Fairclough

    75,000       $ 19.00     4/15/2025              

                            6,066 (2) $ 96,995  

                            8,557 (3) $ 136,826  

Alex Ioffe

                         

                            185,877 (4) $ 2,972,333  

                            27,789 (5) $ 444,346  

Stephen Cavoli

                    7,206 (3) $ 115,224  

Joseph Molluso

                         
(1)
Market value is based on the closing price of a share of our Class A common stock on 12/31/2019 (the last trading day of Fiscal 2019) equal to $15.99.

(2)
These restricted stock units will vest ratably on each of January 23, 2020 and January 23, 2021.

(3)
These restricted stock units will vest ratably on each of January 23, 2020, January 23, 2021 and January 23, 2022.

(4)
These restricted stock units will vest ratably on each of September 30, 2020, September 30, 2021 and September 30, 2022.

(5)
These restricted stock units will vest ratably on each of December 26, 2020, December 26, 2021 and December 26, 2022.

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EXECUTIVE COMPENSATION

OPTION EXERCISES AND STOCK VESTED
DURING 2019 FISCAL YEAR

The following table sets forth as to each of the named executive officers information on exercises of options to purchase our common stock, the vesting of restricted shares of our common stock, and the vesting of restricted stock units during 2019.

    Option Awards     Stock Awards  

Name

    Number of Shares
Acquired on
Exercise
(#)
    Value Realized on
Exercise
($)
    Number of Shares
Acquired on
Vesting
(#)(5)
    Value Realized on
Vesting
($)
 

Douglas A. Cifu(1)

            75,000   $ 1,932,000  

Brett Fairclough(2)

            6,158 (5) $ 130,131  

Alex Ioffe

                 

Stephen Cavoli(3)

            23,442 (5) $ 427,582  

Joseph Molluso(4)

            67,004 (5) $ 1,665,316  
(1)
For Mr. Cifu, this includes 75,000 shares of restricted stock vested on December 31, 2019, at a closing price of $15.99.

(2)
For Mr. Fairclough, this includes the vesting of 3,033 RSUs on January 23, 2019, at a closing price of $26.43, and the vesting of 3,125 RSUs on December 26, 2019, at a closing price of $15.99.

(3)
For Mr. Cavoli, this includes the vesting of 23,442 RSUs on August 24, 2019, at a closing price of $22.35.

(4)
For Mr. Molluso, this includes the vesting of 27,004 RSUs on January 23, 2019, at a closing price of $26.43 and the vesting of 40,000 RSUs on March 21, 2019, at a closing price of $23.79.

(5)
The number of shares delivered upon vesting of the executive's stock awards were reduced by a number of shares with a market value equal to the applicable tax withholding amounts on their awards. As a result, the actual shares acquired by Messrs. Fairclough, Cavoli and Molluso upon the vesting and settlement of their stock awards was 4,963, 15,271 and 33,166, respectively.

POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
OR CHANGE IN CONTROL

Severance Benefits

Under Mr. Cifu's employment agreement, if Mr. Cifu's employment is terminated by us without cause (as defined in the employment agreement), due to death or disability (as defined in the employment agreement), by the executive for good reason (as defined in the employment agreement), or due to the expiration of the term on the expiration date as a result of the Company's delivery of a notice of non-renewal of the term, then in addition to receiving his accrued amounts, Mr. Cifu will receive, subject to the execution of a release of claims: (A) severance pay in an aggregate amount equal to the greater of (x) one times his base salary and (y) an amount equal to the total amount of base salary that would otherwise have been payable through the remainder of the term (the "Cifu Severance Amount"); (B) continued health, dental, vision and life insurance benefits under the terms of our benefit plans for (x) twelve months or (y) the period from termination of employment through the remainder of the term, whichever is longer (the "Benefits Continuation Period"); and following the Benefits Continuation Period, continued participation in the Company's health, dental, vision and life insurance until the earlier of (i) Mr. Cifu's independents reaching the age of 26, (ii) Mr. Cifu or his spouse becoming eligible for Medicare, or (iii) Mr. Cifu becoming eligible for comparable coverage under another employer's benefit plans, subject to Mr. Cifu's payment of the full cost of such benefits; (C) continued eligibility to earn shares of Class A common stock under his then-current annual equity grant, and to the extent earned, a pro rata portion of such shares shall be deemed vested on the last day of the calendar year to which such award relates (the "Cifu Equity Acceleration"); (D) accelerated vesting of any earned but unvested shares of Class A common stock under the annual equity grant granted in the year prior to the year of termination; and (E) 150,000 shares of fully vested Class A common stock.

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EXECUTIVE COMPENSATION

Under Mr. Ioffe's employment agreement, if Mr. Ioffe's employment is terminated by us without cause (as defined in the employment agreement), due to death or disability (as defined in the employment agreement) or by the executive for good reason (as defined in the employment agreement), then in addition to receiving his accrued amounts, subject to the execution of a release of claims: (A) Mr. Ioffe will receive severance pay in an aggregate amount equal to twelve months' of base salary and any unpaid guaranteed bonuses (the "Ioffe Severance Amount"); (B) Mr. Ioffe will receive continued health, dental, vision and life insurance benefits under the terms of our benefit plans for twelve months; and (C) the next scheduled vesting installment under Mr. Ioffe's sign-on equity award, prorated for the elapsed portion of the calendar year, together with the full next installment of such award (if any) shall be deemed accelerated and vested.

As of December 31, 2019, Mr. Fairclough was not entitled to any payments or benefits in connection with the termination of his employment under his prior employment agreement. However, under Mr. Fairclough's current employment agreement, if Mr. Fairclough's employment is terminated by us without cause (as defined in the employment agreement), due to death or disability (as defined in the employment agreement), by the executive for good reason (as defined in the employment agreement), or due to the expiration of the term on the expiration date as a result of the Company's delivery of a notice of non-renewal of the term, then in addition to receiving his accrued amounts, subject to the execution of a release of claims: (A) Mr. Fairclough will receive severance pay in an aggregate amount equal to the greater of (x) one times his base salary and (y) an amount equal to the total amount of base salary that would otherwise have been payable through the remainder of the term (the "Fairclough Severance Amount"); (B) Mr. Fairclough will receive continued health, dental, vision and life insurance benefits under the terms of our benefit plans for twelve months; and (C) the next scheduled vesting installment under Mr. Fairclough's special equity award prorated for the elapsed portion of the calendar year, together with the full next installment of such award (if any) shall be deemed accelerated and vested.

As of December 31, 2019, Mr. Cavoli was not entitled to any payments or benefits in connection with the termination of his employment under his prior employment agreement. However, under Mr. Cavoli's current employment agreement, if Mr. Cavoli's employment is terminated by us without cause (as defined in the employment agreement), due to death or disability (as defined in the employment agreement), by the executive for good reason (as defined in the employment agreement), or due to the expiration of the term on the expiration date as a result of the Company's delivery of a notice of non-renewal of the term, then in addition to receiving his accrued amounts, subject to the execution of a release of claims: (A) Mr. Cavoli will receive severance pay in an aggregate amount equal to the greater of (x) one times his base salary and (y) an amount equal to the total amount of base salary that would otherwise have been payable through the remainder of the term (the "Cavoli Severance Amount"); (B) Mr. Cavoli will receive continued health, dental, vision and life insurance benefits under the terms of our benefit plans for twelve months; and (C) the next scheduled vesting installment under Mr. Cavoli's special equity award prorated for the elapsed portion of the calendar year, together with the full next installment of such award (if any) shall be deemed accelerated and vested.

As of December 31, 2019, Mr. Molluso was not entitled to any payments or benefits in connection with the termination of his employment under his prior employment agreement. However, in connection with Mr. Molluso's resignation from the Company, an agreement was reached pursuant to which Mr. Molluso was paid $1,250,000 in exchange for his continued service through a transition period and a release and waiver of all claims.

Severance Benefits Upon a Change in Control Termination

If Mr. Cifu is terminated at any time within sixty days before, or 24 months following, a change in control, then Mr. Cifu is entitled to the payments and benefits described above, however (1) in lieu of the Cifu Severance Amount, Mr. Cifu will be entitled to receive two and a half times the sum of (x) his base salary and (y) the annual bonus (including any amounts deferred or satisfied through the grant of equity awards) most recently awarded to Mr. Cifu for a completed fiscal year of the Company; (2) the Benefits Continuation Period will be extended to (x) 24 months or (y) the period from termination of employment through the remainder of the term, whichever is longer; and (3) in lieu of the Cifu Equity Acceleration, Mr. Cifu will be entitled to a pro rata portion of all of the shares underlying his then-current annual equity grant, which shall be deemed vested on the last day of the calendar year to which such award relates.

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EXECUTIVE COMPENSATION

If Mr. Ioffe is terminated in anticipation of, or within 12 months following, a change in control, then Mr. Ioffe is entitled to the payments and benefits described above, however in addition to the Ioffe Severance Amount, Mr. Ioffe will be entitled to the sum of (x) his target bonus amount for such year prorated based on the elapsed portion of the year plus (y) an amount equal to the highest of (i) the target bonus for the year of termination, or if no such target has been set, the most recent target amount, (ii) the prior year's actual discretionary bonus paid and (iii) the average of the two preceding years' actual discretionary bonus paid.

As of December 31, 2019, Mr. Fairclough was not entitled to any payments or benefits in connection with a change in control under his prior employment agreement. However, under Mr. Fairclough's current agreement, if Mr. Fairclough is terminated at any time in anticipation of, or within 12 months following, a change in control, then Mr. Fairclough is entitled to the payments and benefits described above, however, in lieu of the Fairclough Severance Amount, Mr. Fairclough will be entitled to an amount equal to two times the sum of (x) his base salary then in effect plus (y) the prior year's actual discretionary bonus paid to him.

As of December 31, 2019, Mr. Cavoli was not entitled to any payments or benefits in connection with a change in control under his prior employment agreement. However, under Mr. Cavoli's current agreement, if Mr. Cavoli is terminated at any time in anticipation of, or within 12 months following, a change in control, then Mr. Cavoli is entitled to the payments and benefits described above, however in lieu of the Cavoli Severance Amount, Mr. Cavoli will be entitled to an amount equal to two times the sum of (x) his base salary then in effect plus (y) the prior year's actual discretionary bonus paid to him.

For purposes of the employment agreements with Messrs. Cifu, Ioffe, Fairclough and Cavoli, "change in control" generally means (i) the acquisition by any person of beneficial ownership of 30% or more (on a fully diluted basis) of either (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote in the election of directors, but excluding acquisitions by the Company, Vincent Viola and his permitted transferees and their respective affiliates or any employee benefit plan sponsored by the Company or any of its affiliates, (ii) a change in the composition of the board of directors such that members of the board of directors during any consecutive 12-month period cease to constitute a majority of the board of directors, (iii) the approval by the stockholders of the Company of a plan of complete dissolution or liquidation of the Company, or (iv) the consummation of a reorganization, recapitalization, merger, consolidation, statutory share exchange or similar form of corporate transaction involving the Company or sale, transfer or other disposition of all or substantially all of the business or assets of the Company to an entity that is not an affiliate of the Company.

If any payments to Messrs. Cifu, Ioffe, Fairclough and Cavoli are determined to be so-called "golden parachute" payments subject to the excise tax under Section 4999 of the Code, then such payments will be reduced to the extent such reduction would result in the executive retaining a greater net after-tax amount than he would have retained had he received the full amount of the payments and paid the applicable excise tax.

Estimated Payments Upon Termination of Employment or Change in Control

Assuming each named executive officer's (other than Mr. Molluso) termination of employment occurred on December 31, 2019 or a change in control occurred on December 31, 2019, the dollar value of the payments and other benefits to be provided to each of the named executive officers are estimated in the table below.

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EXECUTIVE COMPENSATION

Mr. Molluso voluntarily departed the Company on October 1, 2019 and the amounts shown in the table below reflect the actual payments he received in connection with such termination.

Name
  Death,
Disability,
Termination
Without Cause
or for Good
Reason ($)

  Death,
Disability,
Termination
Without Cause
or for Good
Reason 60 Days
Prior to or
24 Months
Following a
Change in
Control ($)

  Non-Renewal by
the Company ($)

  Non-Renewal
by the
Company
60 Days Prior
to or 24 Months
Following a
Change in
Control ($)

  Resignation
without Good
Reason ($)

 

Douglas A. Cifu

                               

Severance

  $ 3,308,219 (1) $ 14,931,507 (2) $ 3,308,219 (1) $ 14,931,507 (2)    

Restricted Stock

  $ 2,398,500 (3) $ 2,398,500 (3) $ 2,398,500 (3) $ 2,398,500 (3)    

Stock Options

                     

Alex Ioffe

                               

Severance

  $ 575,000 (4) $ 3,575,000 (5)            

RSUs

  $ 1,243,222 (6) $ 1,243,222 (6)            

Stock Options

                     

Brett Fairclough

                               

Severance

                     

Stock Options

                     

Stephen Cavoli

                               

Severance

                     

Stock Options

                     

Joseph Molluso

                               

Severance

                  $ 1,250,000 (7)

RSUs

                     

Stock Options

                     
(1)
Represents a cash severance payment of an amount equal to (i) base salary continuation and (ii) continued health, dental, vision and life insurance benefits through the remainder of the employment term (i.e., November 15, 2022).

(2)
Represents a cash severance payment of an amount equal to (i) 2.5 times the sum of (a) executive's base salary and (b) the most recently awarded annual bonus (which was $4,800,000) and (ii) continued health, dental, vision and life insurance benefits through the remainder of the employment term (i.e., November 15, 2022).

(3)
Represents the value of (i) accelerated vesting of a pro rata portion of all of the shares underlying his then-current annual equity grant based on shares earned, which was none, and (ii) a grant of 150,000 shares of Class A common stock.

(4)
Represents a cash severance payment of an amount equal to base salary continuation, payment of any unpaid guaranteed bonuses for the year, which was none, and continued health, dental, vision and life insurance benefits for twelve months.

(5)
Represents a cash severance payment of an amount equal to the sum of (i) base salary continuation and continued health, dental, vision and life insurance benefits for twelve months, (ii) the target bonus for year 2019 prorated for a full year and (iii) the target bonus for 2019.

(6)
Represents the value of (i) accelerated vesting of a pro rata portion of the first installment of his sign-on equity grant and (ii) accelerated vesting of the entire second installment of his sign-on equity grant.

(7)
Represents a negotiated cash payment in connection with Mr. Molluso's voluntary departure from the Company and continued services provided to the Company prior to his departure.

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CEO Pay Ratio Disclosure

As required by Section 953(b) of the Dodd-Frank Act, we are providing the following information about the relationship of the annual total compensation of our Chief Executive Officer, Mr. Douglas A. Cifu, and the annual total compensation of our median employee. For the year ended December 31, 2019:

    The median of the annual total compensation of all employees of our Company (other than our Chief Executive Officer) was $177,848;

    The annual total compensation of our Chief Executive Officer was $4,598,172 (as disclosed in the Summary Compensation Table herein); and

    Based on this information, the ratio of the annual total compensation of our Chief Executive Officer to the median employee was 26 to 1.

To determine the median of the annual total compensation of all employees of the Company (other than our Chief Executive Officer), we identified our total employee population as of December 31, 2019, which consisted of approximately 1,065 individuals, 14 of which were temporary employees.

We determined the median based on each employee's annual base pay as of December 31, 2019, plus the variable incentive compensation award they received in 2020 for the 2019 performance year. Variable incentive compensation consisted of cash bonuses and/or the fair value of stock awards granted under the Virtu Financial, Inc. Amended and Restated Management Incentive Plan and the Investment Technology Group, Inc. 2007 Omnibus Equity Compensation Plan (which was assumed in connection with the ITG Acquisition) at the grant date. The annual total compensation of the median employee presented above is a reasonable estimate calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. The SEC's rules for identifying the median compensated employee and calculating the pay ratio based on that employee's annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

Hedging Policy

The Company's Securities Trading Policy discourages speculative hedging transactions, but permits directors, officers and employees of the Company to enter into long-term (six-month or longer) hedging transactions relating to shares of common stock or stock options of the Company, subject to pre-clearance pursuant to the Securities Trading Policy.

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Compensation of Directors

The compensation payable to our non-employee directors consists of the following:

    an award of restricted stock units valued at $135,000 at the time of grant upon re-election at each subsequent annual meeting of stockholders. The restricted stock units vest on the one-year anniversary of the date of grant;

    an annual cash retainer of $75,000, with no additional fees paid for board and committee meetings attended;

    an annual cash retainer of $150,000 for the non-executive chairman of the board of directors, $25,000 for the chair of the Audit Committee, $20,000 for the chair of the Compensation Committee, $20,000 for the chair of the Nominating and Corporate Governance Committee and $20,000 for the chair of the Risk Committee; and

    an annual cash retainer of $10,000 for members of the Audit Committee, $7,500 for members of the Compensation Committee, $7,500 for members of the Nominating and Corporate Governance Committee, and $7,500 for members of the Risk Committee.

After four years of service, non-employee directors must maintain a minimum stock ownership equal to $225,000.

The following table sets forth compensation earned by our directors during the year ended December 31, 2019.

Name
  Fees Earned or
Paid in Cash ($)(1)

  Equity
Award(s) ($)(2)(3)

  All Other
Compensation ($)

  Total ($)
 

Douglas A. Cifu

                 

William F. Cruger, Jr

  $ 100,000   $ 135,000       $ 235,000  

Virginia Gambale(4)

                 

Joseph J. Grano, Jr.

  $ 85,000   $ 135,000       $ 220,000  

Robert Greifeld

  $ 240,000   $ 135,000       $ 375,000  

Glenn Hutchins

  $ 95,000   $ 135,000       $ 230,000  

John D. Nixon

  $ 95,625   $ 135,000       $ 230,625  

Christopher C. Quick

  $ 92,500   $ 135,000       $ 227,500  

John F. (Jack) Sandner

  $ 95,625   $ 135,000       $ 223,964  

David Urban

  $ 75,000   $ 135,000       $ 210,000  

Michael T. Viola

  $ 82,500   $ 135,000       $ 217,500  

Vincent Viola

                 
(1)
The amounts reported in this column represent the fees allocable to Fiscal 2019.

(2)
The amounts reported in this column represents the grant date fair value calculated in accordance with FASB ASC Topic 718 with respect to the grant of restricted stock units. Assumptions used in calculating these amounts are described in Note 19 of the Company's audited financial statements for the fiscal year ended December 31, 2019 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

(3)
As of December 31, 2019, Messrs. Cruger, Grano, Greifeld, Hutchins, Nixon, Quick, Sandner, Urban and Michael Viola each held 6,325 unvested restricted stock units of the Company, while Ms. Gambale held no outstanding equity awards. In addition, as of December 31, 2019, Vincent Viola held 693,750 stock options of the Company and Michael Viola held 15,000 stock options of the Company, in each case all of which were vested and exercisable. For outstanding equity awards held by Mr. Cifu, please see "Outstanding Equity Awards at 2019 Fiscal Year-End" above.

(4)
Ms. Gambale was appointed to our Board of Directors on January 29, 2020

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Proposal 3: Ratification of Appointment of Independent Registered Public Accounting Firm

Our Audit Committee has appointed PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. Stockholder ratification of the appointment of PricewaterhouseCoopers LLP is not required by law. The ratification of the appointment of PricewaterhouseCoopers LLP requires the affirmative vote of a majority in voting power of shares of stock present or represented by proxy and entitled to vote thereon at the Annual Meeting. If the stockholders do not ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee will reconsider the appointment. Even if the stockholders ratify the appointment of PricewaterhouseCoopers LLP, the Audit Committee retains the discretion to appoint a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of Virtu and its stockholders.

Representatives of PricewaterhouseCoopers LLP are expected to attend the Annual Meeting, will have an opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.

The board of directors recommends that you vote FOR the ratification of PricewaterhouseCoopers LLP as our independent auditor for the fiscal year ending December 31, 2020.

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Information Regarding Independent Registered Public Accounting Firm

PricewaterhouseCoopers LLP has served as the Company's independent registered public accounting firm since 2018. As discussed below under the caption "Change in Accountants", previously, Deloitte & Touche LLP served as the Company's independent registered public accounting firm since 2011.

The Audit Committee has the discretion to appoint a different independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interest of the Company and our stockholders.

A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting, will have an opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.

Change in Accountants

The Audit Committee conducted a competitive process to determine the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018. The Audit Committee invited several firms to participate in this process, including Deloitte & Touche LLP, which firm audited the Company's financial statements for each fiscal year since 2011, up to and including the fiscal year ending December 31, 2017.

On June 4, 2018, the Audit Committee appointed PricewaterhouseCoopers LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2018. On June 4, 2018, the Company dismissed Deloitte & Touche LLP as the Company's independent registered public accounting firm.

The reports of Deloitte & Touche LLP on the Company's financial statements for each of the two fiscal years ending December 31, 2017 and 2016 did not contain an adverse opinion or a disclaimer of opinion, nor were the reports on the Company's financial statements qualified or modified as to uncertainty, audit scope or accounting principles. In the fiscal years ending December 31, 2017 and 2016 and in the subsequent interim period through June 4, 2018, there were no "disagreements" (as that term is described in Item 304(a)(1)(iv) of Regulation S-K) between the Company and Deloitte & Touche LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Deloitte & Touche LLP, would have caused Deloitte & Touche LLP to make reference to the subject matter of such disagreements in connection with its report on the Company's financial statements for such years. In the fiscal years ending December 31, 2017 and 2016, and in the subsequent interim period through June 4, 2018, there were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

During the fiscal years ending December 31, 2017 and 2016 and the subsequent period through June 4, 2018, neither the Company or anyone on its behalf consulted with PricewaterhouseCoopers LLP with respect to (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements, and neither a written report nor oral advice was provided to the Company that PricewaterhouseCoopers LLP concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (b) any matter that was either the subject of a "disagreement" or a "reportable event" (as such terms are defined in Item 304(a)(1) of Regulation S-K).

The Company provided Deloitte & Touche LLP and PricewaterhouseCoopers LLP with a copy of the disclosures contained in this "Change in Accountants" section of the proxy statement.

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INFORMATION REGARDING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Pre-Approval Policy

The policy of our Audit Committee is to review in advance, and pre-approve all audit or non-audit services to be provided by the Company's independent or other registered public accounting firm and to approve all related fees and other terms of engagement.

All of the audit-related, tax and all other services provided by PricewaterhouseCoopers LLP to us since their appointment in 2018, and by Deloitte & Touche LLP to us subsequent to our initial public offering in 2016 and until their dismissal in 2018, were approved by our Audit Committee, and none of such services were approved pursuant to the exception provided by Rule 2-01(c)(7)(i)(C) under Regulation S-X. All non-audit services provided subsequent to our initial public offering in 2016 were reviewed with the Audit Committee, which in each case concluded that the provision of such services by the relevant independent registered public accounting firm was compatible with the maintenance of that firm's independence in the conduct of its auditing functions.

Audit Fees

The following table presents aggregate fees billed to us for services rendered by our current independent registered public accounting firm, PricewaterhouseCoopers LLP, for the fiscal years ended December 31, 2019 and December 31, 2018.

 
  2019
  2018
 

Audit fees

  $ 6,798,303   $ 3,086,096  

Audit-related fees

  $ 410,970      

Tax fees

  $ 1,468,232   $ 435,163  

Total

  $ 8,677,505   $ 3,521,259  

Audit Fees

This category includes the aggregate fees during 2019 and 2018 for audit services provided by our independent registered public accounting firm for the fiscal years ending December 31, 2019 and December 31, 2018, including for the audits of our annual consolidated financial statements, and reviews of each of the quarterly financial statements included in our Quarterly Reports on Form 10-Q, as well as audits of the consolidated financial statements of various of our regulated and foreign operating subsidiaries. In 2019, these amounts include fees associated with the audit of various regulated and foreign operating subsidiaries acquired in the ITG Acquisition.

Audit-Related Fees

This category includes the aggregate fees during 2019 and 2018 for services related to the performance of the audits and reviews described in the preceding paragraph that are not included in the Audit Fees category. In 2019, these amounts include fees associated with assurance services provided in respect of certain businesses acquired in the ITG Acquisition. This category also includes any fees associated with (i) accounting consultation and due diligence related to certain transactions, (ii) services rendered in connection with our registration statements and (iii) the preparation and review of documents related to our securities offerings.

Tax Fees

This category includes the aggregate fees during 2019 and 2018 for professional tax services provided by the independent registered public accounting firm or its affiliates, including for tax compliance and tax advice. In 2019, these amounts include fees associated with tax services provided in respect of various regulated and foreign operating subsidiaries acquired in the ITG Acquisition.

All Other Fees

There were no other fees during 2019 and 2018.

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Proposal 4: Amendment to the Virtu Financial, Inc. Amended and Restated 2015 Management Incentive Plan

The Board has previously adopted and our stockholders have previously approved the Virtu Financial Amended and Restated 2015 Management Incentive Plan (the "2015 Incentive Plan"). Subject to the approval of our stockholders, the Board on April 22, 2020 adopted an amendment (the "Amendment") to the 2015 Incentive Plan. In this proposal, we are asking our stockholders to approve the 2015 Incentive Plan, as proposed to be amended by the Amendment.

The Amendment makes the following key changes to the 2015 Incentive Plan:

    Increases the number of shares of the Company's Class A common stock available for future issuance under the 2015 Incentive Plan by 5,000,000 shares to a total of 21,000,000 shares.

We expect the 5,000,000 additional shares to be sufficient funding under the 2015 Incentive Plan for approximately three years, based upon the closing stock price of $23.97 on April 9, 2020. Our Board believes that equity compensation plays an important role in our compensation program, for retention purposes and to attract new employees by aligning the interests of the participants in our compensation programs with those of our stockholders, and therefore, it is essential for our Company to have a sufficient number of reserved shares available for issuance under our equity compensation plans, and without the additional shares, our Company would not be in a position to do so. These additional shares are necessary from a strategic and operational perspective in order to attract and retain the talent necessary for our business to be successful.

Our Board believes that the proposed increase will provide a sufficient number of available shares of our Class A common stock for future granting needs to help our Company achieve the purposes of the 2015 Incentive Plan. Our Board reviewed our historical and prospective usage of equity to determine the number of shares we will most likely require for future compensation purposes for the next three years. This review took into account shares remaining in the 2015 Incentive Plan, potential shares that may become issuable in the future based on performance, including year-to-date accruals under our current programs, and the effect of new hires as our Company continues to grow. Our Board also considered our prospective equity usage relative to our peers.

If the stockholders do not approve this Proposal 4, the Amendment will not become effective, the proposed additional shares will not become available for issuance under the 2015 Incentive Plan, and the 2015 Incentive Plan will continue as in effect prior to the Amendment, subject to previously authorized share limits.

Summary of Sound Governance Features of the 2015 Incentive Plan

The Board and the Compensation Committee believe the 2015 Incentive Plan, as amended by the Amendment, contains several features that are consistent with the interests of our stockholders and sound corporate governance practices, including the following:

    No "evergreen" provision. The number of shares of our Class A common stock available for issuance under the 2015 Incentive Plan is fixed and does not adjust based upon the number of shares outstanding.

    Will not be excessively dilutive to our stockholders. Subject to adjustment, the maximum number of shares of our Class A common stock authorized and reserved for issuance under the 2015 Incentive Plan will increase from 16,000,000 to 21,000,000.

    No liberal change in control definition. The change in control definition in the 2015 Incentive Plan is not a "liberal" definition and, for example, would not be achieved merely upon stockholder approval of a

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      transaction. A change in control (or the approval of a plan of complete dissolution or liquidation) must actually occur in order for the change in control provisions in the 2015 Incentive Plan to be triggered.

    No repricing without stockholder approval. The 2015 Incentive Plan prohibits the repricing of outstanding stock options or SARs (as defined below) without stockholder approval.

A copy of the Amendment and a full text of the 2015 Incentive Plan is attached as Annex A to this Proxy Statement. Except for the change outlined above, there are no other changes to the terms and provisions of the 2015 Incentive Plan. The 2015 Incentive Plan was amended by our Board on April 22, 2020 and is subject to the approval of our stockholders at the Annual Meeting. The Amendment to the 2015 Incentive Plan was approved by our Board.

Summary of the 2015 Incentive Plan Features

The following is a summary of the material terms and conditions of the 2015 Incentive Plan assuming that the proposed amendment under the 2015 Incentive Plan is approved by stockholders at the Annual Meeting. Except for the foregoing, there are no other changes to the terms and provisions of the 2015 Incentive Plan. This summary is qualified in its entirety by reference to the 2015 Incentive Plan and the Amendment attached as Annex A to this proxy statement. You are encouraged to read the 2015 Incentive Plan and the Amendment in its entirety.

Administration.    The Compensation Committee (or subcommittee thereof, if necessary for Section 162(m) of the Code) will administer the 2015 Incentive Plan. The Compensation Committee will have the authority to determine the terms and conditions of any agreements evidencing any awards granted under the 2015 Incentive Plan and to adopt, alter and repeal rules, guidelines and practices relating to the 2015 Incentive Plan. The Compensation Committee will have full discretion to administer and interpret the 2015 Incentive Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.

Eligibility.    Any current or prospective employees, directors, officers, consultants or advisors of our Company or its affiliates who are selected by the Compensation Committee will be eligible for awards under the 2015 Incentive Plan. The Compensation Committee will have the sole and complete authority to determine who will be granted an award under the 2015 Incentive Plan. As of April 13, 2020, we had approximately 1,009 employees and officers eligible to participate in the 2015 Incentive Plan, as well as 11 non-employee directors.

Number of Shares Authorized.    The 2015 Incentive Plan provides for an aggregate of 21,000,000 shares of our Class A common stock. No more than 21,000,000 shares of our Class A common stock may be issued with respect to incentive stock options under the 2015 Incentive Plan. No participant may be granted awards of options and stock appreciation rights with respect to more than 1,000,000 shares of our Class A common stock in any 12-month period. No more than 1,000,000 shares of our Class A common stock may be granted under the 2015 Incentive Plan with respect to any performance compensation awards to any participant during a performance period (or with respect to each year if the performance period is more than one year). The maximum amount payable to any participant under the 2015 Incentive Plan for any single year during a performance period for a cash denominated award is $10,000,000 (with respect to each year if the performance period is more than one year). The maximum amount (based on the grant-date fair market value) of awards that may be granted under the 2015 Incentive Plan in any single fiscal year to any non-employee director is $300,000. This limitation on awards to non-employee directors does not apply in respect of restricted stock units issued to a non-employee director in lieu of payment of cash director compensation or board or committee fees, nor in respect of any one-time initial equity grant upon a non-employee director's appointment to our board of directors. Shares of our Class A common stock subject to awards are generally unavailable for future grant; provided that in no event shall such shares increase the number of shares of our Class A common stock that may be delivered pursuant to incentive stock options granted under the 2015 Incentive Plan. If any award granted under the 2015 Incentive Plan expires, terminates, is canceled or forfeited without being settled or exercised, or if a stock appreciation right is settled in cash or otherwise without the issuance of shares, shares of our Class A common subject to such award will again be made available for future grant. In addition, if any shares are surrendered or tendered to pay the exercise price of an

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award or to satisfy withholding taxes owed, such shares will again be available for grant under the 2015 Incentive Plan.

Change in Capitalization.    If there is a change in our Company's corporate capitalization in the event of a stock or extraordinary cash dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of our Class A common stock or Class B common stock or other relevant change in capitalization or applicable law or circumstances, such that the Compensation Committee determines that an adjustment to the terms of the 2015 Incentive Plan (or awards thereunder) is necessary or appropriate, then the Compensation Committee may make adjustments in a manner that it deems equitable. Such adjustments may be to the number of shares reserved for issuance under the 2015 Incentive Plan, the number of shares covered by awards then outstanding under the 2015 Incentive Plan, the limitations on awards under the 2015 Incentive Plan, the exercise price of outstanding options and such other equitable substitution or adjustments as it may determine appropriate.

Awards Available for Grant.    The Compensation Committee may grant awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights ("SARs"), restricted stock awards, restricted stock units, other stock-based awards, performance compensation awards (including cash bonus awards), other cash-based awards or any combination of the foregoing. Awards may be granted under the 2015 Incentive Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by our Company or with which our Company combines (which are referred to herein as "Substitute Awards").

Stock Options.    The Compensation Committee will be authorized to grant options to purchase shares of our Class A common stock that are either "qualified," meaning they are intended to satisfy the requirements of Section 422 of the Code for incentive stock options, or "non-qualified," meaning they are not intended to satisfy the requirements of Section 422 of the Code. All options granted under the 2015 Incentive Plan shall be non-qualified unless the applicable award agreement expressly states that the option is intended to be an "incentive stock option." Options granted under the 2015 Incentive Plan will be subject to the terms and conditions established by the Compensation Committee. Under the terms of the 2015 Incentive Plan, the exercise price of the options will not be less than the fair market value of our Class A common stock at the time of grant (except with respect to Substitute Awards). Options granted under the 2015 Incentive Plan will be subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum term of an option granted under the 2015 Incentive Plan will be ten years from the date of grant (or five years in the case of a qualified option granted to a 10% shareholder), provided that, if the term of a non-qualified option would expire at a time when trading in the shares of our Class A common stock is prohibited by our Company's insider trading policy, the option's term shall be automatically extended until the 30th day following the expiration of such prohibition (as long as such extension shall not violate Section 409A of the Code). Payment in respect of the exercise of an option may be made in cash, by check, by cash equivalent and/or shares of our Class A common stock valued at the fair market value at the time the option is exercised (provided that such shares are not subject to any pledge or other security interest), or by such other method as the Compensation Committee may permit in its sole discretion, including: (i) in other property having a fair market value equal to the exercise price and all applicable required withholding taxes, (ii) if there is a public market for the shares of our Class A common stock at such time, by means of a broker-assisted cashless exercise mechanism or (iii) by means of a "net exercise" procedure effected by withholding the minimum number of shares otherwise deliverable in respect of an option that are needed to pay the exercise price and all applicable required withholding taxes. Any fractional shares of Class A common stock will be settled in cash.

Stock Appreciation Rights.    The Compensation Committee will be authorized to award SARs under the 2015 Incentive Plan. SARs will be subject to the terms and conditions established by the Compensation Committee. A SAR is a contractual right that allows a participant to receive, either in the form of cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the 2015 Incentive Plan may include SARs and SARs may also be awarded to a participant independent of the grant of an option. SARs granted in connection with an option shall be subject to terms similar to the option corresponding to such SARs, including with respect to vesting and expiration. Except as otherwise provided by the Compensation Committee (in the case of Substitute Awards or SARs granted in tandem with previously granted options), the strike price per share of our Class A common stock for each SAR shall not be less than 100% of the

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fair market value of such share, determined as of the date of grant. The remaining terms of the SARs shall be established by the Compensation Committee and reflected in the award agreement.

Restricted Stock.    The Compensation Committee will be authorized to grant restricted stock under the 2015 Incentive Plan, which will be subject to the terms and conditions established by the Compensation Committee. Restricted stock is Class A common stock that generally is non-transferable and is subject to other restrictions determined by the Compensation Committee for a specified period. Any accumulated dividends will be payable at the same time as the underlying restricted stock vests.

Restricted Stock Unit Awards.    The Compensation Committee will be authorized to award restricted stock unit awards, which will be subject to the terms and conditions established by the Compensation Committee. A restricted stock unit award, once vested, may be settled in common shares equal to the number of units earned, or in cash equal to the fair market value of the number of vested shares, at the election of the Compensation Committee. Restricted stock units may be settled at the expiration of the period over which the units are to be earned or at a later date selected by the Compensation Committee. To the extent provided in an award agreement, the holder of outstanding restricted stock units shall be entitled to be credited with dividend equivalent payments upon the payment by our Company of dividends on shares of our Class A common stock, either in cash or (at the sole discretion of the Compensation Committee) in shares of our Class A common stock having a fair market value equal to the amount of such dividends, and interest may, at the sole discretion of the Compensation Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Compensation Committee, which accumulated dividend equivalents (and interest thereon, if applicable) shall be payable at the same time as the underlying restricted stock units are settled.

Other Stock-Based Awards.    The Compensation Committee will be authorized to grant awards of unrestricted shares of our Class A common stock, rights to receive grants of awards at a future date, or other awards denominated in shares of our Class A common stock under such terms and conditions as the Compensation Committee may determine and as set forth in the applicable award agreement.

Performance Compensation Awards.    The Compensation Committee may grant any award under the 2015 Incentive Plan in the form of a "Performance Compensation Award" (including cash bonuses) intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code by conditioning the number of shares earned or vested, or any payout, under the award on the satisfaction of certain "Performance Goals." The Compensation Committee may establish these Performance Goals with reference to one or more of the following:

    net earnings or net income (before or after taxes);

    basic or diluted earnings per share (before or after taxes);

    net revenue or net revenue growth;

    gross revenue or gross revenue growth, gross profit or gross profit growth;

    net operating profit (before or after taxes);

    return measures (including, but not limited to, return on investment, assets, capital, gross revenue or gross revenue growth, invested capital, equity or sales);

    cash flow measures (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), which may but are not required to be measured on a per-share basis;

    earnings before or after taxes, interest, depreciation, and amortization (including EBIT and EBITDA);

    gross or net operating margins;

    productivity ratios;

    share price (including, but not limited to, growth measures and total shareholder return);

    expense targets or cost reduction goals, general and administrative expense savings;

    operating efficiency;

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    objective measures of customer satisfaction;

    working capital targets;

    measures of economic value added or other "value creation" metrics;

    enterprise value;

    stockholder return;

    client retention;

    competitive market metrics;

    employee retention;

    objective measures of personal targets, goals or completion of projects (including, but not limited to, succession and hiring projects, completion of specific acquisitions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional or project budgets);

    system-wide revenues;

    cost of capital, debt leverage year-end cash position or book value;

    strategic objectives, development of new product lines and related revenue, sales and margin targets, or international operations; or

    any combination of the foregoing.

Any of the above Performance Goal elements can be stated as a percentage of another Performance Goal or used on an absolute, relative or adjusted basis to measure the performance of our Company and/or its affiliates or any divisions, operation or business units, product lines, asset classes, brands, administrative departments or combination thereof, as the Compensation Committee deems appropriate. Performance Goals may be compared to the performance of a group of comparator companies or a published or special index that the Compensation Committee deems appropriate or, stock market indices. The Compensation Committee may provide for accelerated vesting of any award based on the achievement of Performance Goals. Any award that is intended to qualify as "performance-based compensation" under Section 162(m) of the Code will be granted, and Performance Goals for such an award will be established, by the Compensation Committee in writing not later than 90 days after the commencement of the performance period to which the Performance Goals relate, or such other period required under Section 162(m) of the Code. Before any payment is made in connection with any award intended to qualify as performance-based compensation under Section 162(m) of the Code, the Compensation Committee must certify in writing that the Performance Goals established with respect to such award have been achieved. In determining the actual amount of an individual participant's Performance Compensation Award for a performance period, the Compensation Committee may reduce or eliminate the amount of the Performance Compensation Award earned consistent with Section 162(m) of the Code.

The Compensation Committee may also specify adjustments or modifications (to the extent it would not result in adverse results under Section 162(m) of the Code) to be made to the calculation of a Performance Goal for such performance period, based on and in order to appropriately reflect the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring items and/or in management's discussion and analysis of financial condition and results of operations appearing in our Company's annual report to shareholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific, unusual or nonrecurring events, or objectively determinable category thereof; (viii) foreign exchange gains and losses; (ix) discontinued operations and nonrecurring charges; and (x) a change in our Company's fiscal year.

Unless otherwise provided in the applicable award agreement, a participant shall be eligible to receive payment in respect of a performance compensation award only to the extent that (i) the Performance Goals for such period are achieved; and (ii) all or some of the portion of such participant's performance compensation award has been

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earned for the performance period based on the application of the "Performance Formula" (as defined in the 2015 Incentive Plan) to such Performance Goals.

Effect of a Change in Control.    Unless otherwise provided in an award agreement, or any applicable employment, consulting, change in control, severance or other agreement between a participant and our Company, in the event of a change of control, if a participant's employment or service is terminated by our Company other than for cause (and other than due to death or disability) within the 12-month period following a change in control, then the Compensation Committee may provide that (i) all then-outstanding options and SARs will become immediately exercisable as of such participant's date of termination with respect to all of the shares subject to such option or SAR; and/or (ii) the restricted period shall expire as of such participant's date of termination with respect to all of the then-outstanding shares of restricted stock or restricted stock units (including, without limitation, a waiver of any applicable Performance Goals); provided that any award whose vesting or exercisability is otherwise subject to the achievement of performance conditions, the portion of such award that shall become fully vested and immediately exercisable shall be based on the assumed achievement of target performance as determined by the Compensation Committee and prorated for the number of days elapsed from the grant date of such award through the date of termination. In addition, the Compensation Committee may in its discretion and upon at least 10 days' notice to the affected persons, cancel any outstanding award and pay the holders, in cash, securities or other property (including of the acquiring or successor company), or any combination thereof, the value of such awards based upon the price per share of the Company's common stock received or to be received by other shareholders of the Company in the event. Notwithstanding the above, the Compensation Committee shall exercise such discretion over any award subject to Section 409A of the Code at the time such award is granted.

Nontransferability.    Each award may be exercised during the participant's lifetime by the participant or, if permissible under applicable law, by the participant's guardian or legal representative. No award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution unless the Compensation Committee permits the award to be transferred to a permitted transferee (as defined in the 2015 Incentive Plan).

Amendment.    The 2015 Incentive Plan will have a term of 10 years. The board of directors may amend, suspend or terminate the 2015 Incentive Plan at any time, subject to stockholder approval if necessary to comply with any tax, NASDAQ or other applicable regulatory requirement. No amendment, suspension or termination will materially and adversely affect the rights of any participant or recipient of any award without the consent of the participant or recipient.

The Compensation Committee may, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award theretofore granted or the associated award agreement, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any option theretofore granted will not to that extent be effective without the consent of the affected participant, holder or beneficiary; and provided further that, without stockholder approval, (i) no amendment or modification may reduce the option price of any option or the strike price of any SAR, (ii) the Compensation Committee may not cancel any outstanding option and replace it with a new option (with a lower exercise price) or cancel any SAR and replace it with a new SAR (with a lower strike price) or other award or cash in a manner that would be treated as a repricing (for compensation disclosure or accounting purposes), and (iii) the Compensation Committee may not take any other action considered a repricing for purposes of the shareholder approval rules of the applicable securities exchange on which our common shares are listed. However, stockholder approval is not required with respect to clauses (i), (ii), and (iii) above with respect to certain adjustments on changes in capitalization. In addition, none of the requirements described in the preceding clauses (i), (ii), and (iii) can be amended without the approval of our stockholders.

U.S. Federal Income Tax Consequences

The following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of awards under the 2015 Incentive Plan and the disposition of shares acquired pursuant to

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the exercise or settlement of such awards and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant.

Stock Options.    The Code requires that, for treatment of an option as an incentive stock option, shares of our Common Stock acquired through the exercise of an incentive stock option cannot be disposed of before the later of (i) two years from the date of grant of the option, or (ii) one year from the date of exercise. Holders of incentive stock options will generally incur no federal income tax liability at the time of grant or upon exercise of those options. However, the spread at exercise will be an "item of tax preference," which may give rise to "alternative minimum tax" liability for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to us for federal income tax purposes in connection with the grant or exercise of the incentive stock option. If, within two years following the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of an incentive stock option disposes of those shares, the participant will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by us for federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code for compensation paid to executives designated in those Sections. Finally, if an incentive stock option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the incentive stock option in respect of those excess shares will be treated as a non-qualified stock option for federal income tax purposes. No income will be realized by a participant upon grant of an option that does not qualify as an incentive stock option ("a non-qualified stock option"). Upon the exercise of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over the option exercise price paid at the time of exercise and the participant's tax basis will equal the sum of the compensation income recognized and the exercise price. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections. In the event of a sale of shares received upon the exercise of a non-qualified stock option, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss and will be long-term gain or loss if the holding period for such shares is more than one year.

SARs.    No income will be realized by a participant upon grant of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the payment received in respect of the SAR. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Restricted Stock.    A participant will not be subject to tax upon the grant of an award of restricted stock unless the participant otherwise elects to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock becomes transferable or is no longer subject to a substantial risk of forfeiture, the participant will have taxable compensation equal to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares, if any, unless the participant made an election under Section 83(b) of the Code to be taxed at the time of grant. If the participant made an election under Section 83(b), the participant will have taxable compensation at the time of grant equal to the difference between the fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any. If the election is made, the participant will not be allowed a deduction for amounts subsequently required to be returned to the Company. (Special rules apply to the receipt and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Securities Exchange Act of 1934, as amended). The Company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable

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compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Restricted Stock Units.    A participant will not be subject to tax upon the grant of a restricted stock unit award. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit award, the participant will have taxable compensation equal to the fair market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award.

The Company will be able to deduct the amount of taxable compensation to the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.

Section 162(m).    The Tax Cuts and Jobs Act of 2017 ("Tax Act") generally eliminated the ability to deduct compensation qualifying for the "performance-based compensation" exception under Code Section 162(m) for tax years commencing after December 31, 2017. Code Section 162(m) imposes a $1 million limit on the amount that a public company may deduct for compensation paid to "covered employees" (as determined under Code Section 162(m)). For 2017 and prior taxable years, an exception to this deduction limit applied to "performance-based compensation," such as stock options and other equity awards that satisfied certain criteria. Under the Tax Act, the performance-based pay exception to Code Section 162(m) was eliminated, but a transition rule may allow the exception to continue to apply to certain performance-based compensation payable under written binding contracts that were in effect on November 2, 2017. The Amendment is not intended to affect the ability of awards previously granted under the 2015 Incentive Plan to qualify for grandfathered status under the Code Section 162(m) transition rules if they otherwise would. However, no assurance can be given that such awards will, in fact, be exempt.

New Plan Benefits

The Company has not approved any awards that are conditioned upon stockholder approval of the 2015 Incentive Plan. Other than with respect to annual restricted stock unit awards to our non-employee directors, awards under the 2015 Incentive Plan will be determined by our board of directors (or committee thereof) in its discretion. It is, therefore, not possible to predict the awards that will be made to particular officers in the future under the 2015 Incentive Plan. For information regarding grants made in 2019 to our named executive officers under the 2015 Plan, see the Summary Compensation Table above.

Non-Employee Directors.    The 2015 Incentive Plan authorizes the grant of equity-based awards to non-employee directors pursuant to our director compensation program as in effect from time to time, as described under the heading "Compensation of Directors." Historically, our non-employee directors have received annual equity grants under the 2015 Incentive Plan in accordance with our director compensation program. The table below sets forth the aggregate grant date fair value of annual equity-based awards that all non-employee directors as a group are expected to receive in fiscal 2020 pursuant to our director compensation program as currently in effect.

Name and Position
  Dollar Value
  Number of Units
 

All current non-executive officer directors as a group(1)

  $ 135,000      
(1)
The number of RSUs granted to non-executive director nominees on the 2020 Annual Meeting date cannot be determined at this time since the grant value will be converted to a number of RSUs using our closing stock price on the 2020 Annual Meeting date.

In accordance with SEC rules, the table below indicates the aggregate number of stock options granted under the 2015 Incentive Plan since its adoption to each NEO, all current executive officers as a group, all current directors (other than executive officers) as a group, and all current employees (other than executive officers) as a group. No stock options have been granted since 2015. As of April 13, 2020, there were 3,000,650 shares of our Class A common stock subject to stock options under the 2015 Incentive Plan, with a weighted average exercise price of

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$19.00 and a weighted average remaining term of 5.0 years. As of April 13, 2020, the closing price of our Common Stock was $24.27 per share.

Name
  Title
  Stock Options
 
Named Executive Officers:            
Douglas A. Cifu   Chief Executive Officer   $ 400,000  
Alexander M. Ioffe   Executive Vice President and Chief Financial Officer      
Brett Fairclough   Chief Operating Officer   $ 100,000  
Stephen Cavoli   Executive Vice President, Markets      
Joseph Molluso   Former Executive Vice President and Chief Financial Officer   $ 45,000  
All executive officers as a group (5 persons)       $ 545,000  
All directors (other than executive officers) as a group (11 persons)       $ 2,835,000  
All employees (other than executive officers) as a group (140 persons)       $ 5,848,000  

    (a)     (b)