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The following Shareholder Support Rankings compare the 2012 vote addressed in the article with the company’s 2011 voting results.
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Financial Times, May 9, 2012 article
May 9, 2012 11:58 pm Shareholders reject Knight pay policies By Telis Demos in New York Knight Capital, the US trading group, has seen shareholders reject its executive pay policies, the latest in a string of challenges by investors. Nearly three-quarters of voting shareholders at Knight, the New Jersey-based trading and market making firm, failed to support the group’s “say on pay” resolution in a non-binding, advisory vote. Knight joined Citigroup and seven other US companies that failed to win support in “say on pay” votes this year through May 2. That is out of 461 votes held among the Russell 3000, according to a survey by Semler Brossy, an executive pay consultancy. Financials have been a particular focus of shareholder concern globally. Barclays in the UK and UBS in Switzerland have been targets. Many banks and other capital markets groups have struggled to grow earnings as transaction volumes and capital markets activity has been slow amid investor fear of European default or economic slowdown. In the US, pay policies have been only narrowly approved at NYSE Euronext, Bank of New York Mellon, Janus Capital, Greenhill & Co and Lazard. These groups saw between 50 per cent and 70 per cent support for management’s plans. Only 7 per cent of companies received that low level of support, according to the Semler Brossy survey. Nearly three-quarters received 90 per cent support or better. ISS, the proxy advisory, had recommended voting against Knight’s pay proposal, citing “a pay-for-performance disconnect”. A report by ISS said that Thomas Joyce, chief executive, was last year paid 2.5 times the chiefs in a peer group assembled by ISS, while Knight’s stock underperformed versus the Russell 3000 index on a one-, three- and five-year basis. Mr Joyce was paid $6.3m in 2011, according to ISS. That included his $750,000 salary, plus non-equity incentives and restricted stock grants. ISS’s peer group included Nasdaq OMX, Oppenheimer, Stifel Financial, Legg Mason, American Capital and several regional banks. Knight said in a statement: “Knight’s board and management take seriously the advisory vote on executive compensation and will work during the coming year to address this matter.” In its proxy letter to shareholders before the vote, Knight said that Mr Joyce received a bonus due to “management efforts, including his ability to successfully address management transition across several of the company’s business units”. Knight has undergone lay-offs, largely as a result of slow retail stock trading activity. But it has been expanding into new asset classes, such as bonds and mortgage securities, that are starting to drive an uptick in its volume. Patrick O’Shaughnessy, an analyst at Raymond James, recently upgraded Knight’s stock to a “strong buy”. Knight shares have risen 10.6 per cent so far in 2012, to $13.07. “Knight will realise significant earnings improvement over the next year related to growth in the firm’s institutional brokerage and electronic execution segments,” he wrote in a report last month.
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