SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
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Federated Investors, Inc. |
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FEDERATED INVESTORS, INC.
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779
INFORMATION STATEMENT
March 11, 2015
INTRODUCTION
This
Information Statement is furnished to the shareholders (the Shareholders) of Federated Investors, Inc. (Federated, or the Company) by its Board of Directors (the Board) in connection with the Annual
Meeting of the Shareholders to be held on Thursday, April 23, 2015 in the Fayette Room of the Westin Convention Center Hotel, 1000 Penn Avenue, Pittsburgh, Pennsylvania, 15222 at 4:00 p.m. local time (the Annual Meeting). Action
will be taken at the Annual Meeting for: (i) the election of directors; and (ii) any other business that properly comes before the meeting.
Federated has shares of both Class A Common Stock, no par value per share (the Class A Common Stock), and Class B Common
Stock, no par value per share (the Class B Common Stock), issued and outstanding. The Class B Common Stock is listed on the New York Stock Exchange (NYSE) under the symbol FII. Except under certain limited
circumstances, the entire voting power of Federated is vested in the holder of the outstanding shares of the Class A Common Stock. All of the outstanding shares of Class A Common Stock are held by a Voting Shares Irrevocable Trust, dated
May 31, 1989 (the Voting Trust), and will be voted in person at the Annual Meeting. Accordingly, Federated is not soliciting proxies for the Annual Meeting, but is providing this Information Statement to its Shareholders in
accordance with Rule 14c-2 (17 C.F.R. §240.14c-2) under the Securities Exchange Act of 1934, as amended (the Exchange Act).
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This Information Statement is being mailed and/or furnished to the Shareholders on or about March 11, 2015. Federateds 2014 Annual
Report to Shareholders (the 2014 Annual Report) accompanies this Information Statement.
SHAREHOLDERS SHARING THE SAME
ADDRESS.
Federated has adopted a procedure called householding, which has been approved by the Securities and Exchange
Commission (SEC). Under this procedure, Federated will deliver only one copy of its 2014 Annual Report and this Information Statement to multiple Shareholders who share the same address and last name unless contrary instructions have
been received from an affected Shareholder. Federated will deliver promptly upon written or oral request a separate copy of the 2014 Annual Report and this Information Statement to any Shareholder at a shared address to which a single copy of either
of these documents was delivered. To receive a separate copy of the 2014 Annual Report or this Information Statement, please contact: Corporate Communications, Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, PA 15222-3779 or call
1-800-341-7400.
If you are a Shareholder, share an address and last name with one or more other Shareholders and would like to revoke
your householding consent, or you are a Shareholder and are eligible for householding and would like to participate in householding, please contact: Broadridge, ATTN: Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or call
1-800-542-1061.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF THE 2014 ANNUAL REPORT AND
INFORMATION STATEMENT FOR THE SHAREHOLDER MEETING TO BE HELD ON APRIL 23, 2015.
THIS INFORMATION STATEMENT AND THE 2014 ANNUAL REPORT ARE AVAILABLE ON THE
INTERNET AT http://corp.federatedinvestors.com.
TABLE OF CONTENTS
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VOTING SECURITIES |
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BOARD OF DIRECTORS AND ELECTION OF DIRECTORS |
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Meetings and Committees of the Board |
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Audit Committee |
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Audit Committee Report |
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Compensation Committee |
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Compensation Risk |
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Corporate Governance |
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Communications with the Board |
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Board Leadership Structure |
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Risk Oversight |
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Nomination of Directors |
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Compensation of Directors |
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2014 Director Compensation Table |
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Compensation Committee Report |
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EXECUTIVE COMPENSATION |
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Compensation Discussion and Analysis |
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Board Process |
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2014 Summary Compensation Table |
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2014 Grants of Plan-Based Awards Table |
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2014 Outstanding Equity Awards at Fiscal Year End Table |
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2014 Option Exercises and Stock Vested Table |
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Employment Agreements and Change-of-Control Agreements |
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Transactions with Related Persons |
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Conflict of Interest Policies and Procedures |
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SECURITY OWNERSHIP |
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Class A Common Stock |
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Class B Common Stock |
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Section 16(a) Beneficial Ownership Reporting Compliance |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
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AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES |
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VOTING SECURITIES
Only the holder of record of Class A Common Stock at the close of business on February 23, 2015 will be entitled to vote at the
Annual Meeting or any adjournment or adjournments thereof. On that date, 9,000 shares of Class A Common Stock were outstanding, all of which were held by the Voting Trust, the three trustees of which are Federateds Chairman of the Board,
Mr. John F. Donahue, his wife, and his son, Mr. J. Christopher Donahue, who is Federateds President, Chief Executive Officer and a member of the Board, for the benefit of certain members of the family of John F. Donahue.
Accordingly, Federated qualifies as a controlled company under Section 303A of the New York Stock Exchange Listed Company Manual (the NYSE Rules) and qualifies for and relies upon exemptions available to controlled
companies under the NYSE Rules. A controlled company is not required to comply with certain requirements of the NYSE Rules, such as the requirements of NYSE Rules 303A.01 (requiring a majority of independent directors), 303A.04
(requiring a nominating committee consisting entirely of independent directors) and 303A.05 (requiring a compensation committee consisting entirely of independent directors).
The presence of the holder of the Class A Common Stock, constituting all of the votes that all Shareholders are entitled to cast on the
election of directors, will constitute a quorum for the transaction of business at the Annual Meeting. Any business transacted at the Annual Meeting shall be authorized upon receiving the affirmative vote of a majority of the votes cast by all
Shareholders entitled to vote thereon. Under the terms of the Voting Trust, the trustees are authorized to vote the shares owned by the Voting Trust, and as a result, all of the outstanding shares of Class A Common Stock will be voted in person
at the Annual Meeting. Each share of Class A Common Stock is entitled to one vote. Directors will be elected by a plurality of the votes cast. Cumulative voting is not allowed. The trustees of the Voting Trust have advised Federated that they
intend to vote in favor of all the directors nominated by the Board.
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BOARD OF DIRECTORS AND ELECTION OF DIRECTORS
The Board currently consists of six members. The current directors of Federated are: Messrs. John F. Donahue, J. Christopher Donahue, Michael
J. Farrell, David M. Kelly, John W. McGonigle, and Ms. Marie Milie Jones. Under Federateds bylaws, directors are elected at each annual meeting and each director holds office until the expiration of the term of one year for which he or
she was elected and until a successor is elected and qualified.
The Board has nominated Messrs. John F. Donahue, J. Christopher Donahue,
Michael J. Farrell, David M. Kelly, John W. McGonigle and Ms. Marie Milie Jones for election as directors. All of the nominees for director have previously served as members of the Board.
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John F. Donahue Age
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Mr. John F. Donahue is a co-founder of Federated. He has served as director and Chairman of Federated since Federateds initial public
offering in May 1998. He is a director or trustee of 33 investment companies managed by subsidiaries of Federated. Mr. Donahue is the father of J. Christopher Donahue who serves as President, Chief Executive Officer and director of Federated and
Thomas R. Donahue who serves as Vice President, Treasurer and Chief Financial Officer of Federated.
In determining that Mr. John F. Donahue should serve as a director of Federated, the Board identified his role as a co-founder of the Company and the wealth of
knowledge he possesses with respect to the Company and the investment management industry as a whole, along with his general executive management experience. |
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J. Christopher Donahue Age
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Mr. J. Christopher Donahue has served as director, President and Chief Executive Officer of Federated since 1998. He also serves as a
director, trustee or officer of various Federated subsidiaries. He is President of 33 investment companies managed by subsidiaries of Federated. He is also director or trustee of 36 investment companies managed by subsidiaries of Federated. Mr.
Donahue is the son of John F. Donahue who serves as Chairman and director of Federated and the brother of Thomas R. Donahue who serves as Vice President, Treasurer, and Chief Financial Officer of Federated.
In determining that Mr. J. Christopher Donahue should serve as a director of Federated,
the Board identified his wealth of knowledge of Federated and its subsidiaries as Chief Executive Officer of the Company, his legal background, his knowledge of the investment management industry and his general executive management
experience. |
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Michael J. Farrell Age
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Mr. Michael J. Farrell was elected to the Board in August 1998. He has been the President of Farrell & Co., a merchant banking firm
specializing in heavy manufacturing companies, since 1982. Additionally, he served as Chief Executive Officer of Standard Steel, LLC, a vertically integrated manufacturer and marketer of forged steel railway wheels and axles, from July 2001 until
its acquisition in August 2011, at which time he resigned from the company. He has also served in executive capacities for MK Rail Corporation, Motor Coils Manufacturing Co. and Season-All Industries. Mr. Farrell is a Certified Public Accountant.
Prior to his resignation on March 4, 2014, Mr. Farrell was a member of the Board of Directors of TriState Capital Holdings, Inc.
In determining that Mr. Michael J. Farrell should serve as a director of Federated, the Board identified his extensive background in finance as President of a
merchant banking firm and his general executive management experience. |
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David M. Kelly
Age 73 |
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Mr. David M. Kelly was elected to the Board in April 2004. He retired in 2007 as Chairman, Chief Executive Officer, and President of Matthews
International Corporation, a designer, manufacturer, and marketer of memorialization products and caskets for the cemetery and funeral home industries. Mr. Kelly is a member of the Board of Directors of Mestek, Inc., Elliott Turbomachinery, Inc.,
and Mesa Laboratories, Inc. In determining that Mr. David M. Kelly should serve as a
director of Federated, the Board identified his knowledge and experience in corporate oversight as a member of several boards of directors, leadership background as Chief Executive Officer of Matthews International Corporation and his general
executive management experience. |
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John W. McGonigle Age 76 |
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Mr. John W. McGonigle has been a director of Federated since 1998. He has served as Executive Vice President, Chief Legal Officer and
Secretary of Federated since 1998 and as Vice Chairman since 2003. Mr. McGonigle is also Chairman of Federated International Management Limited, a wholly owned subsidiary of Federated. He also is a director or trustee of certain other subsidiaries
of Federated. Mr. McGonigle is a trustee of three investment companies managed by a subsidiary of Federated. Mr. McGonigle is also Secretary of 36 registered investment companies managed by subsidiaries of Federated and Executive Vice President
of 36 of those registered investment companies. In determining that Mr. John W.
McGonigle should serve as a director of Federated, the Board identified his extensive knowledge of the Company and its subsidiaries and the regulations affecting them as Chief Legal Officer of the Company, his knowledge of the investment management
industry as a whole and his general executive management experience. |
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Marie Milie Jones Age 52 |
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Ms. Marie Milie Jones was elected to the Board in April 2014. Since June 2011, Ms. Jones has been a founding partner of JonesPassodelis PLLC, a law firm that concentrates in, among other areas, civil rights and employment law,
commercial litigation, and professional liability law. In addition, from 1987 until June 2011, she practiced law at Meyer, Darragh, Buckler, Bebeneck & Eck P.L.L.C., where she was elected partner in 1993 and managing partner in 1998. |
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In determining that Ms. Marie Milie Jones should serve as a director of Federated, the Board identified her extensive legal and management experience as a law firm partner, managing partner and founding partner, as well as her
experience serving as a board member for Duquesne University, where she has been Chairman of the Board since 2009, and for St. Vincents Seminary Board of Regents. |
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The Board has determined that Messrs. Farrell and Kelly and Ms. Jones, are
independent as defined by the NYSE Rules applicable to controlled companies such as Federated. In making this determination, the Board considered all relevant facts and circumstances. Messrs. Farrell and Kelly and
Ms. Jones have no relationship with Federated that impacts their independence.
Mr. Edward G. OConnor served as a director of
Federated from April 2001 until April 2014. Mr. OConnor was not re-nominated for election as director of Federated in April 2014 because he reached the maximum age permitted for an independent director under Federateds Corporate
Governance Guidelines, which was then 73 years. In addition to previously being a member of the Board, Mr. OConnor also was formerly the chairman of the Compliance Committee and a member of the Audit Committee and Compensation Committee.
The Board had previously determined that Mr. OConnor was independent as defined by the NYSE Rules applicable to controlled companies such as Federated. Mr. OConnor also did not have a relationship with
Federated that impacted his independence.
Meetings and Committees of the Board
In 2014, the Board met on six occasions. The Board has an Audit Committee, Compensation Committee and Compliance Committee. The Board does not
have a Nominating Committee; the Board as a whole performs this function. During 2014, all directors attended at least seventy-five percent of the meetings of the Board and the committees on which they serve.
Audit Committee
The
Audit Committee currently consists of Messrs. Michael J. Farrell and David M. Kelly and Ms. Marie Milie Jones, none of whom is a current or former officer or employee of Federated. Mr. Farrell is Chairman of the Audit Committee. The Board
has adopted a written charter for the Audit Committee. The Board has determined that the members of the Audit Committee are independent as defined by the NYSE Rules applicable to audit committee members of a controlled
company.
The Audit Committee is responsible for monitoring the integrity of the financial statements of Federated, the independent
registered public accounting firms qualifications and independence, the performance of Federateds internal audit function and independent registered public accounting firm, and Federateds compliance with related applicable legal
and regulatory requirements. The Audit Committee has the sole authority to appoint or replace the independent registered public accounting firm and is directly responsible for the compensation and oversight of the work of the independent registered
public accounting firm. In performing its responsibilities, the Audit Committee reviews the audit plans of Federateds internal auditors and the independent registered public accounting firm and monitors their progress during the year. In
discharging its responsibilities, the Audit Committee is entitled to rely upon the reports, findings and representations of Federateds internal auditors, independent registered public accounting firm, legal counsel and responsible officers. In
2014, the Audit Committee met on five occasions.
The Board has determined that Messrs. Kelly and Farrell are audit committee
financial experts as defined under federal securities laws.
Audit Committee Report
The Audit Committee oversees Federateds financial reporting process on behalf of the Board. Management has the primary responsibility
for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee has met to review and discuss the audited financial statements in the 2014 Annual
Report with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity and completeness of disclosures in the financial statements.
The Audit Committee discussed with the independent registered public accounting firm, who is responsible for expressing an opinion on the
conformity of those audited financial statements with U.S. generally accepted accounting principles, their judgments as to the quality, not just the acceptability, of Federateds accounting principles as applied to the financial statements and
such other matters as are required to be discussed with the Audit Committee under standards of the Public Company Accounting Oversight Board (United States) (PCAOB). In addition, the Audit Committee has received from the independent
registered public accounting firm the written disclosures required by Rule 3526 of the PCAOB, Communication with Audit Committees Concerning Independence, relating to the independent registered public accounting firms independence from
management and Federated, and has discussed with the independent registered public accounting firm their independence. The Audit Committee has considered whether the provisions of non-audit services by the independent registered public accounting
firm are compatible with maintaining their independence.
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The Audit Committee discussed with Federateds internal auditors and independent registered
public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and independent registered public accounting firm, with and without management present, to discuss the results of
their examinations, their evaluations of Federateds internal controls, and the overall quality of Federateds financial reporting.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that
the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2014, for filing with the SEC. The Audit Committee also selected Federateds independent registered public accounting firm for
the fiscal year ending December 31, 2015.
Respectfully Submitted:
Michael J. Farrell, Audit Committee Chairman
David M. Kelly, Audit Committee Member
Marie Milie Jones, Audit Committee Member
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Compensation Committee
The Compensation Committee, which operates pursuant to a written charter, consists of Messrs. Michael J. Farrell and David M. Kelly and
Ms. Marie Milie Jones. Mr. Farrell is Chairman of the Compensation Committee. The Compensation Committee establishes performance measures and certifies achievement, recommends and approves compensation levels of executive officers, awards
share-based compensation, works with senior management on benefit and compensation programs for Federated employees, and monitors local and national compensation trends to ensure that Federateds compensation program is competitive within the
mutual fund industry. The Compensation Committee has delegated its full power and authority under the Federated Investors, Inc. Stock Incentive Plan, as amended, (the Stock Incentive Plan) to the Chief Executive Officer with respect to
all employees other than those subject to Section 16 of the Exchange Act. Currently, the following employees are subject to Section 16 of the Exchange Act: Brian P. Bouda, Gordon J. Ceresino, John F. Donahue, J. Christopher Donahue, Thomas
R. Donahue, John B. Fisher, Eugene F. Maloney, John W. McGonigle, Richard A. Novak and Thomas E. Territ. In 2014, the Compensation Committee met on three occasions.
As members of the Compensation Committee, Messrs. Farrell and Kelly and Ms. Jones, are deemed to be outside directors for purposes of
Section 162(m) of the Internal Revenue Code and non-employee directors as defined in Rule 16b-3 of the Exchange Act.
Compensation
Risk
The Compensation Committee collaborates with Federateds management in reviewing the material terms of Federateds
compensation policies and programs for all employees, and evaluates the intended behaviors each is designed to incent to ensure that such policies and programs do not encourage excessive risk-taking that could result in a material, adverse impact to
the Company. The Compensation Committee believes that Federateds compensation policies and programs do not give rise to risks reasonably likely to have a material adverse effect on the Company.
Corporate Governance
To address
corporate governance matters and communicate its business standards, Federated has adopted Corporate Governance Guidelines and a Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics applies to directors, officers and
employees of Federated. Copies of these materials as well as Charters for the Audit, Compensation, and Compliance Committees are available on Federateds website at FederatedInvestors.com by first clicking on About
Federated and then Corporate Governance. The information is also available in print upon written request.
On
January 22, 2015, the Board amended Federateds Corporate Governance Guidelines to change the maximum age permitted for an independent director from 73 years to 75 years.
Under Federateds policies, the directors are expected to attend the Annual Meeting. All of the directors attended the 2014 Annual
Meeting.
8
Communications with the Board
Independent members of the Board have regularly scheduled executive sessions without management participation. Mr. David M. Kelly presides
over these meetings. In order that shareholders and other interested parties may make their concerns known to the independent directors as well as to the Audit Committee, Compliance Committee, and the full Board, the Board has established a
telephone messaging system and an internet-based anonymous incident reporting system. All messages will be forwarded to Federateds Chief Compliance Officer (CCO) for review, who will prepare a summary of such communications for the
independent directors, the Audit Committee, the Compliance Committee, or the full Board as appropriate. Information concerning the use of the messaging system and the reporting system can be obtained on Federateds website at
FederatedInvestors.com by first clicking on About Federated and then Corporate Governance.
Board Leadership Structure
Since 1998, the roles of Chairman and Chief Executive Officer have been held separately. Mr. John F. Donahue serves as
Chairman and Mr. J. Christopher Donahue serves as Chief Executive Officer. The Board does not have a policy with respect to whether the Chairman should be an independent director, an affiliated director or a member of Company management. The
Companys policy as to whether the role of Chief Executive Officer and Chairman should be separate is to adopt the practice that best serves the Companys and Shareholders interests at any particular time. Currently, the Company
believes the separation of the roles of Chairman and Chief Executive Officer best serves the Companys and Shareholders interests as the Chairman, John F. Donahue, provides guidance to the Chief Executive Officer, leads the Board, and
brings a wealth of business, industry and management experience as a co-founder of the Company, while the Chief Executive Officer, Mr. J. Christopher Donahue, is best suited to oversee the overall strategic management of the Company and
communicate the same to the Board. Additionally, the Board has currently designated Mr. David M. Kelly as Lead Independent Director. In that capacity, he chairs all executive sessions of the independent directors and serves as a liaison
between the independent directors and management. The Board believes this leadership structure is appropriate because it effectively allocates authority, responsibility and oversight between management and the non-management directors.
Risk Oversight
The Board has oversight
responsibility for risk management, focusing on significant risks facing Federated, including operational, financial, legal, compliance and macro-economic risks. The Board and its committees work closely with management to monitor risk and it is
managements responsibility to manage risk and bring to the Boards attention material risks to the Company. The Board has delegated responsibility to certain Board committees for the oversight of specific risks as follows:
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The Compliance Committee is responsible for monitoring and reviewing significant legal, compliance and regulatory matters involving Federated. It accomplishes this by receiving regular reports from Federateds
Chief Risk Officer (CRO) and CCO, and meeting in executive session with these individuals as necessary. |
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The Audit Committee is responsible for monitoring and reviewing Federateds policies and procedures relating to the financial reporting process, including the internal control process. It also monitors the
Companys internal audit function, the work performed by the independent registered public accounting firm and the Companys compliance with related applicable legal and regulatory requirements. It accomplishes these tasks by receiving
regular reports from Federateds Chief Audit Executive (CAE), as well as from Federateds independent registered public accounting firm. It also meets in regular executive sessions with the CAE and the independent registered
public accounting firm. |
In addition, the Board as a whole receives regular reports on significant legal and regulatory
matters from Federateds General Counsel.
Federated maintains several departments which focus on risk assessment and mitigation. It
maintains an Enterprise Wide Risk Management department (Risk Management) headed by the CRO. Risk Management implements the processes established to report and monitor material risks to the Company. The CRO reports directly to the
Compliance Committee of the Board on a quarterly basis and the full Board as appropriate. The CRO reports to the Compliance Committee on significant enterprise risks such as regulatory, compliance and business risks as well as top investment-related
risks that could impact the investment products under management by Federated. The CRO also provides the Compliance Committee with regular updates on enterprise risk initiatives being conducted by Risk Management.
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Federated also maintains a Compliance Department headed by the CCO. The function of the Compliance Department and
the role of the CCO are intended to operate in a manner consistent with Rule 38a-1 under the Investment Company Act of 1940 and Rule 206 (4)-7 of the Investment Advisers Act of 1940, respectively. The Compliance Departments primary
responsibility is to assure that compliance and ethical standards are in place within Federated and that policies and procedures have been adopted and implemented that are reasonably designed to prevent violation of federal securities laws and
regulations. The CCO, like the CRO, reports directly to the Compliance Committee on significant compliance issues and initiatives on a quarterly basis and the full Board as appropriate.
Federated also maintains an Internal Audit Department headed by the CAE. The function of the Internal Audit Department is to provide an internal assessment of
business processes, including assessments of Federateds internal controls over the financial reporting process. It also provides consulting services to Federated business units to better allow such units to assess and monitor risk relating to
their business processes. The CAE reports directly to the Audit Committee on significant internal audit-related issues, as well as on the progress of managements review of the internal controls over financial reporting on a quarterly basis.
Each of the CCO, CAE, CRO and General Counsel have the authority to contact the Board directly at any time to discuss risk-related matters if they deem
it necessary. In addition, Federated fosters effective communications among its various departments by maintaining an internal compliance committee that meets at least quarterly and consists of the CCO, CAE, CRO and General Counsel. This committee
presents a formal mechanism for these department heads to discuss compliance- and risk-related matters at Federated.
Federated believes that the division
of risk management responsibilities described above is an effective approach for addressing the risks facing Federated and that the Board leadership structure, described above, supports this approach.
Nomination of Directors
Under the NYSE
Rules, Federated is not required to have a nominating committee because it is considered a controlled company for purposes of these rules. In light of this fact, Federated believes that it is appropriate not to have a nominating
committee and, therefore, does not have a nominating committee charter in reliance on the NYSE Rules exemption. Federateds current practice is for the Board as a whole to perform the functions of a nominating committee.
The Board does not currently consider director candidates recommended by Shareholders and does not have a formal policy with regard to
consideration of director candidates recommended by Shareholders. Federated believes that it is appropriate not to have such a policy because of its status as a controlled company under the NYSE Rules.
The Board seeks candidates who possess the background, skills, experience, expertise, integrity, and degree of commitment necessary to make a
significant contribution to the Board. In connection with its evaluation of a nominee, the Board takes into account all applicable laws, rules, regulations and listing standards and considers other relevant factors as it deems appropriate, including
the current composition of the Board, the balance of management and independent directors, the need for Audit Committee expertise, and its evaluation of other prospective nominees. Although the Board does not have a formal policy regarding the
consideration of diversity in identifying nominees for director, the Board believes directors should be selected so that the Board is a diverse body. In order to achieve this result, the Board seeks nominees who reflect differences of viewpoint,
professional experience, education, skill and other individual qualities and attributes that it believes will strengthen the Board as a whole. Nominees for directorship are recommended to the Board by Federateds Chief Executive Officer and its
other directors. An invitation to join the Board will generally be extended by Federateds Chief Executive Officer and its Chairman of the Board.
Compensation of Directors
Members of the
Board who are also employees of Federated do not receive compensation for their service as directors. For their service as directors, non-management directors receive (i) $50,000 per year; (ii) $5,000 per year for each Board Committee
Membership; (iii) $2,500 per year for Compliance or Compensation Committee Chairmanship or Lead Independent Director/ $7,500 per year for Audit Committee Chairmanship (each of the aforementioned payable in quarterly installments);
(iv) $1,500 per attendance at a special meeting of the Board payable when such meetings occur; and (v) 1,700 shares of unrestricted Class B Common Stock annually pursuant to Federateds Stock Incentive Plan. On February 19, 2015,
the Compensation Committee recommended to the Board, and the Board approved, an increase in the number of shares of unrestricted Class B Common Stock to be awarded annually to non-management directors beginning in 2015 from 1,700 shares to 1,900
shares. Federated also paid the premiums for term life insurance and travel/accident insurance for each of Messrs. Farrell and Kelly, and Ms. Jones, which, in the aggregate, cost Federated approximately $230 in 2014.
10
Director Compensation Table
The following table sets forth compensation information for the fiscal year ended December 31, 2014 for Federateds non-management
directors.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 DIRECTOR COMPENSATION TABLE |
|
Name (1) |
|
Fees earned or paid in cash ($) |
|
|
Stock awards ($)(2) |
|
|
All other compensation ($)(3) |
|
|
Total ($) |
|
Michael J. Farrell |
|
|
75,000 |
|
|
|
50,694 |
|
|
|
815 |
|
|
|
126,509 |
|
David M. Kelly |
|
|
68,750 |
|
|
|
50,694 |
|
|
|
270 |
|
|
|
119,714 |
|
Marie Milie Jones |
|
|
41,841 |
|
|
|
50,694 |
|
|
|
225 |
|
|
|
92,760 |
|
Edward G. OConnor |
|
|
33,750 |
|
|
|
|
|
|
|
90 |
|
|
|
33,840 |
|
(1) |
The compensation of Messrs. John F. Donahue and J. Christopher Donahue is set forth in the 2014 Summary Compensation Table. Mr. John W. McGonigle is an executive officer of Federated, however, since
Mr. McGonigle is not a Named Executive Officer for 2014, as defined in the following Compensation Discussion and Analysis, his executive compensation is not included in the 2014 Summary Compensation Table. Messrs. John F. Donahue, J.
Christopher Donahue, and McGonigle do not receive any additional compensation for services provided as a director of Federated. |
Ms. Marie Milie Jones and Mr. Edward G. OConnor each served as a director for only a portion of the fiscal year ended
December 31, 2014. Therefore, the compensation listed for each reflects the period each served, rather than a full years fees.
(2) |
The amounts in this column reflect the grant date fair value of 1,700 shares of unrestricted Class B Common Stock granted to each of Messrs. Farrell and Kelly, and Ms. Jones, as non-management directors in 2014
pursuant to the Stock Incentive Plan. The grant date fair value reflects the closing price of $29.82 for Federated Class B Common Stock on the NYSE on April 24, 2014. Mr. OConnor did not receive a grant of unrestricted Class B Common
Stock in 2014. As of December 31, 2014, each of Messrs. Farrell and Kelly, and Ms. Jones, had the following number of stock options outstanding: Michael J. Farrell: 12,000, David M. Kelly: 15,000, and Marie Milie Jones: 0. As of
December 31, 2014, Mr. OConnor had no stock options outstanding. These stock options were granted in 2009 or earlier. There have been no stock options granted since that time. |
(3) |
The amounts in this column reflect imputed income for Federated-provided life and travel/accident insurance. |
11
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included herein with management. Based on this
review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Information Statement.
Respectfully Submitted:
Michael J. Farrell,
Compensation Committee Chairman
David M. Kelly, Compensation Committee Member
Marie Milie Jones, Compensation Committee Member
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and Objectives
The investment management business is highly competitive and experienced professionals have significant career mobility. Federateds
ability to attract, retain and properly motivate highly qualified professionals is a critical factor in maintaining Federateds competitive position within the investment management industry and ensuring Federateds future success.
Accordingly, Federateds compensation program is comprised of competitive levels of cash compensation together with equity and other components that are consistent with Shareholder interests. Federateds compensation program is designed to
reward outcomes related to a variety of factors including Federateds revenues, earnings, earnings on a per share basis, and return on equity and payout ratio. Additional consideration is given to Federateds investment and financial
performance as measured against other similar companies within the investment management industry and the performance of Federateds stock. Federateds Chief Executive Officer, Chief Financial Officer and its three other most highly
compensated executive officers are referred to herein as the Named Executive Officers.
Allocation Among Compensation Components
As previously noted, each component of Federateds compensation program is designed to be competitive within the investment management
industry and to align the interests of Federateds executive officers with those of Federateds Shareholders. The final determination on setting compensation for executive officers rests with the Compensation Committee. The Compensation
Committee takes a holistic approach to assessing and determining the components of each executive officers total compensation. The Compensation Committee receives input and recommendations from, and works collaboratively with, Federateds
Chief Executive Officer in analyzing information relating to company and individual performance. The Compensation Committee not only considers a variety of factors relating to Company performance including Federateds Operating Profits (as
defined hereinafter), revenues, earnings per share and stock performance, but also considers industry compensation trends among companies in Federateds peer group, as discussed below. The Compensation Committee also reviews investment
performance and financial performance on a comparative basis, as well as the effectiveness of marketing and sales efforts. The Compensation Committee subjectively considers a number of different individual and corporate performance factors, but
gives no specific weighting to any such factor. Each component of compensation is reviewed independently each year, taking into consideration both Company and individual results as well as comparative peer group information.
Peer Group. In 2014, Federated engaged Deloitte Consulting (Deloitte), a nationally recognized consulting firm with
expertise in executive compensation practices and program design, to conduct a study of the compensation of executive officers at Federated and eleven of Federateds peers within the investment management industry. The Compensation Committee
has reviewed Federateds relationships with, and the services provided by, Deloitte and has not identified any conflicts of interest.
Federateds peer group selected for purposes of Deloittes study included Affiliated Managers Group, Inc.; AllianceBernstein Holding
LP; BlackRock, Inc.; Calamos Asset Management, Inc.; Eaton Vance Corp.; Franklin Resources, Inc.; INVESCO Ltd.; Janus Capital Group, Inc.; Legg Mason, Inc.; T. Rowe Price Group, Inc.; and Waddell & Reed Financial, Inc. In selecting this
peer group, Federated used the size criteria of approximately one-half to two times Federated in one or more of the following metrics: revenue, assets under management, net income and market capitalization. The peer group data used for purposes of
Deloittes study is generally gathered from publicly disclosed documents of those companies. Therefore, these results will typically only relate to the five most highly compensated executive officers of a given company.
12
Information prepared by Deloitte was provided to the Compensation Committee to assist it in its efforts to determine appropriate levels of compensation. While the Compensation Committee considers
the peer data provided by Deloitte in setting executive compensation, Federated does not benchmark to a specified percentile of this peer group.
Base Salary. Base salaries are intended to form a competitive percentage of total cash compensation. Federateds objective in
paying a base salary is to provide its executive officers with a level of assured cash compensation that is commensurate with their position, expertise and accomplishments. In establishing base salaries, the Compensation Committee considers
performance assessments and recommendations provided by Federateds Chief Executive Officer with respect to executive officers other than himself. The Compensation Committee also gives consideration to Federateds financial results from
the prior year as well as the base salaries paid for comparable positions by companies in Federateds peer group. The Compensation Committee did not increase executive officers 2014 base salaries consistent with Federateds
company-wide effort to control expenses in 2014.
Bonuses. Bonuses paid under the Federated Investors, Inc. Annual Incentive Plan
(Annual Incentive Plan) are designed to reward executive officers for the successful attainment of annual results that are consistent with Federateds long-term growth and development. Each year, the Compensation Committee
establishes one or more performance goals that must be attained for bonuses to be awarded under the Annual Incentive Plan. The performance period over which the performance goals are measured may be a calendar year, or other period of 12 months or
less, for which a participants performance is measured as established in the discretion of the Compensation Committee. In 2014, the Compensation Committee required that Federated attain operating profits of $56.5 million for the nine month
period ending September 30, 2014 for bonuses to be awarded. For purposes of the Annual Incentive Plan performance goal, operating profits are defined, for the applicable performance period, as total revenue less distributions to non-controlling
(minority) interests and less total expenses (including net nonoperating income/expenses and income taxes and excluding amortization of intangibles, impairment losses and debt expenses) as reflected in Federateds audited or unaudited financial
statements (Operating Profits). Achievement of the performance goal is a condition for payment of a bonus under the Annual Incentive Plan. For the nine-month period ended September 30, 2014, Federated had Operating Profits of
approximately $118.12 million. The maximum amount that may be awarded to each executive officer in a given year under the Annual Incentive Plan is $6 million. Achievement of the performance goal, however, does not serve to ensure the award of a
bonus under the Annual Incentive Plan. The Compensation Committee has the discretion, in appropriate circumstances, to reduce or eliminate a bonus even if a performance goal is achieved. The awards are payable under the Annual Incentive Plan
promptly after the Compensation Committee has determined that the performance goal, and any other material terms, have been achieved (but in no event later than 2
1⁄2 months after the close of the fiscal year in which the performance period ends).
In addition to the Operating Profits threshold for bonuses under the Annual Incentive Plan, in determining awards for 2014 under the Annual
Incentive Plan, the Compensation Committee considered a variety of factors including Federateds Operating Profits, revenues, earnings, earnings on a per share basis and return on equity and payout ratio. Also taken into consideration by the
Compensation Committee was the performance of Federateds stock, Federateds investment and financial performance as measured against other similar companies within the investment management industry, and the performance assessment and
recommendations made by Federateds Chief Executive Officer with respect to executive officers other than himself. The Compensation Committee also considered the Companys relative performance in challenging market conditions, the
Companys effective expense management and the Companys market share.
The Compensation Committee, as noted above, also
considers individual performance factors.
Individual factors the Compensation Committee considered when determining J. Christopher
Donahues 2014 bonus award included executive leadership with respect to overall management of the Company, and executive leadership in responding to current and emerging regulatory issues.
Individual factors the Compensation Committee considered when determining Thomas R. Donahues 2014 bonus award included breadth of
operational responsibility beyond traditional Chief Financial Officer duties, and executive leadership with respect to financial reporting, industry initiatives, and acquisitions.
Individual factors the Compensation Committee considered when determining John B. Fishers 2014 bonus award included executive leadership
with respect to investment management, product performance and depth and breadth of fund knowledge.
Individual factors the Compensation
Committee considered when determining Thomas E. Territs 2014 bonus award included executive leadership with respect to product sales, sales results and communications with fund shareholders.
13
Individual factors the Compensation Committee considered when determining John F. Donahues
2014 bonus award included strategic vision, executive leadership among senior staff, relationship with mutual fund boards, and industry expertise.
The Compensation Committee gives no specific weighting to any of the aforementioned individual and corporate performance factors and considers
each of them on a subjective basis. For 2014, consistent with past practice, the Compensation Committee, in the exercise of its discretion under the Annual Incentive Plan, reduced the amount of the bonus award from the maximum amount eligible to be
attained by an executive officer.
Equity Compensation. For 2014 Annual Incentive Plan bonus awards, executives under the age of
sixty-two on the date of the award generally receive eighty percent in cash and twenty percent in the form of restricted stock (Bonus Restricted Stock), and may elect to receive seventy percent in cash and thirty percent in Bonus
Restricted Stock. For 2014, executive officers aged sixty-two or older on the date of the award, who receive bonus awards under the Annual Incentive Plan may elect to receive 100% of such awards in cash, may elect to receive eighty percent in cash
and twenty percent in Bonus Restricted Stock or may elect to receive seventy percent in cash and thirty percent in Bonus Restricted Stock. Bonus Restricted Stock is awarded at eighty-five percent of fair market value, which is based on the closing
price of Federated Class B Common Stock on the NYSE on the award date and generally vests over a three-year period. Bonus Restricted Stock awards are made at eighty-five percent of fair market value in recognition of the risk of forfeiture and the
delay in receiving awards earned under the Annual Incentive Plan. The Company believes that the Bonus Restricted Stock portion of the award serves to further align the interests of executive officers with those of the Shareholders.
In 2014, the Compensation Committee also granted periodic restricted stock (Periodic Restricted Stock) awards to executive
officers under the Stock Incentive Plan. In determining whether Periodic Restricted Stock awards are appropriate and, if so, the size of such an award, the Compensation Committee holistically considers any outstanding and unvested stock options and
restricted stock the executive officer holds as well as the value of equity compensation as a component of total compensation. In making its decision, the Compensation Committee also considers on a subjective basis factors such as the executive
officers performance, changes in his or her responsibilities, promotions and general industry practices. Periodic Restricted Stock awards, for which executive officers pay the Company $3.00 per share, generally vest over a ten-year period,
which Federated believes serves to align the long-term interests of executive officers with those of Federateds Shareholders. The timing of Periodic Restricted Stock grants is driven by the Compensation Committees assessment of the need
to compensate executive officers, not by Federateds stock price. Grants are made only during open periods in which the Company has not implemented trading restrictions. Please refer to footnotes (1) and (2) of the 2014
Summary Compensation Table and footnotes (2), (3) and (4) of the 2014 Outstanding Equity Awards at Fiscal Year End Table, and the Narrative Disclosure to 2014 Summary Compensation Table and 2014 Grants of Plan-Based Awards Table, for
further information relating to the Companys awards of Bonus Restricted Stock and Periodic Restricted Stock to Named Executive Officers.
Federated does not currently award stock options to its executive officers (or its other employees).
Perquisites and Other Benefits. Federated provides a limited number of perquisites and other benefits to its executive officers that
are intended to encourage the health and wellness of its executive officers and to reduce the time and attention that they must spend on non-Federated issues.
Certain executive officers are eligible for reimbursement for the initiation fees and dues associated with membership in golf and/or social
clubs that have a business purpose. Such memberships provide executive officers with an appropriate forum for entertaining clients and interacting with the community. During 2014, one executive officer was provided the use of a company car and seven
executive officers were provided with on-site parking at Federateds headquarters. Executive officers are permitted to use Federateds corporate aircraft for a limited amount of personal use when the corporate aircraft is not being
utilized for business purposes. Such personal use of the corporate aircraft must be pre-approved by the Chief Executive Officer or Chief Financial Officer. Personal use of the corporate aircraft by an executive officer results in taxable income to
the executive officer determined in accordance with Internal Revenue Service regulations. For security and efficiency reasons, the Chairman, Chief Executive Officer and Chief Financial Officer are required to use the corporate aircraft for business
and personal use to the greatest reasonable extent.
Executive officers are entitled to receive medical, life and disability coverage and
other corporate benefits available to most of Federateds other employees. A grandfathered group of executive officers also receives supplemental executive medical coverage. Executive officers are also provided an annual physical, at their
option.
Executive officers are eligible to participate in the Federated Investors, Inc. Profit Sharing/401(k) Plan, which is made
available to substantially all of Federateds employees.
14
Board Process
The Compensation Committee receives input and recommendations from, and works collaboratively with, Federateds Chief Executive Officer in
analyzing information relating to Company and individual performance. As discussed above, the Compensation Committee also considers a variety of factors when determining annual salary and awards of bonuses under the Annual Incentive Plan or awards
of Periodic Restricted Stock under the Stock Incentive Plan. The Compensation Committee not only considers a variety of factors relating to Company performance including Federateds Operating Profits, revenues, earnings per share and stock
performance, but also considers industry compensation trends among companies in Federateds peer group as provided in the aforementioned study conducted by Deloitte. The Compensation Committee also reviews investment performance and financial
performance on a comparative basis, as well as the effectiveness of marketing and sales efforts. Although the Compensation Committee considers a number of different individual and corporate performance factors, no specific weighting is given to any
such factor. Because Federated is a controlled company and does not solicit proxies, consents or authorizations from shareholders relating to the Annual Meeting of the Shareholders, Federated is not required to hold, and, therefore,
consideration is not given to the results of, a shareholder advisory vote on executive compensation pursuant to Section 14A of the Exchange Act.
15
Summary Compensation Table
The following table sets forth compensation information for the fiscal years ended December 31, 2014, 2013 and 2012 for Federateds
Named Executive Officers.
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|
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|
|
|
2014 SUMMARY COMPENSATION TABLE |
|
Name &
Principal Position |
|
Year |
|
|
Salary ($) |
|
|
Stock Awards ($) (1) |
|
|
Non-Equity Incentive Plan Compensation ($) (2) |
|
|
All Other Compensation ($) (3) |
|
|
Total ($) |
|
J. Christopher Donahue
President and Chief
Executive Officer |
|
|
2014 2013
2012 |
|
|
|
787,500 787,500
787,500 |
|
|
|
847,078 1,418,065
1,149,225 |
|
|
|
1,662,500 1,680,000
1,820,000 |
|
|
|
361,166 347,471
533,627 |
|
|
|
3,658,244 4,233,036
4,290,352 |
|
|
|
|
|
|
|
|
Thomas R. Donahue
Chief Financial Officer and President,
FII Holdings, Inc. |
|
|
2014 2013
2012 |
|
|
|
720,000 720,000
720,000 |
|
|
|
1,189,295 1,171,009
937,463 |
|
|
|
1,260,000 1,260,000
1,330,000 |
|
|
|
363,330 318,015
566,613 |
|
|
|
3,532,625 3,469,024
3,554,076 |
|
|
|
|
|
|
|
|
John B. Fisher
Vice President and President and Chief
Executive Officer, Federated Advisory
Companies |
|
|
2014 2013
2012 |
|
|
|
635,000 635,000
621,000 |
|
|
|
1,106,945 1,065,121
837,463 |
|
|
|
1,960,000 1,880,000
1,920,000 |
|
|
|
281,986 283,232
671,329 |
|
|
|
3,983,931 3,863,353
4,049,792 |
|
|
|
|
|
|
|
|
Thomas E. Territ
Vice President and President,
Federated Securities Corp. |
|
|
2014 2013
2012 |
|
|
|
500,000 500,000
500,000 |
|
|
|
1,071,653 1,294,525
790,394 |
|
|
|
1,840,000 1,760,000
1,575,000 |
|
|
|
247,840 245,548
526,454 |
|
|
|
3,659,493 3,800,073
3,391,848 |
|
|
|
|
|
|
|
|
John F. Donahue
Chairman |
|
|
2014 2013
2012 |
|
|
|
810,000 810,000
810,000 |
|
|
|
|
|
|
|
1,800,000 1,800,000
1,800,000 |
|
|
|
87,331 95,469
75,376 |
|
|
|
2,697,331 2,705,469
2,685,376 |
|
(1) |
The amounts in this column reflect the aggregate grant date fair value of restricted stock awards for the fiscal years ended December 31, 2014, 2013 and 2012 calculated in accordance with U.S. generally accepted
accounting principles applicable to stock compensation. Additional information regarding Restricted Stock awards can be found in the 2014 Grants of Plan-Based Awards Table. The calculation methodology for the valuation of Periodic Restricted Stock
and Bonus Restricted Stock awards is set forth in Note 1(p) of Federateds Consolidated Financial Statements contained in Federateds Annual Report on Form 10-K for the fiscal year ended December 31, 2014. |
(2) |
The table below is provided to assist the reader in understanding the total bonus earned by each Named Executive Officer under the Annual Incentive Plan (Total Bonus) and the percentage of such Total Bonus
allocated to Bonus Restricted Stock (% BRS) for each of the fiscal years ended December 31, 2014, 2013 and 2012. |
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 Annual Incentive Plan |
|
|
2013 Annual Incentive Plan |
|
|
2012 Annual Incentive Plan |
|
|
|
Total Bonus ($) |
|
|
% BRS |
|
|
Total Bonus ($) |
|
|
% BRS |
|
|
Total Bonus ($) |
|
|
% BRS |
|
J. Christopher Donahue |
|
|
2,375,000 |
|
|
|
30 |
|
|
|
2,400,000 |
|
|
|
30 |
|
|
|
2,600,000 |
|
|
|
30 |
|
Thomas R. Donahue |
|
|
1,800,000 |
|
|
|
30 |
|
|
|
1,800,000 |
|
|
|
30 |
|
|
|
1,900,000 |
|
|
|
30 |
|
John B. Fisher |
|
|
2,450,000 |
|
|
|
20 |
|
|
|
2,350,000 |
|
|
|
20 |
|
|
|
2,400,000 |
|
|
|
20 |
|
Thomas E. Territ |
|
|
2,300,000 |
|
|
|
20 |
|
|
|
2,200,000 |
|
|
|
20 |
|
|
|
2,250,000 |
|
|
|
30 |
|
John F. Donahue |
|
|
1,800,000 |
|
|
|
0 |
|
|
|
1,800,000 |
|
|
|
0 |
|
|
|
1,800,000 |
|
|
|
0 |
|
16
While the cash portion of the Total Bonus paid in 2015 for fiscal year 2014 is reported in the
Non-Equity Incentive Plan Compensation column of the 2014 Summary Compensation Table, the portion of the fiscal year 2014 Total Bonus received in the form of Bonus Restricted Stock in 2015 is not represented. Rather, the Bonus Restricted
Stock received in 2014 for fiscal year 2013 Total Bonus is represented in the Stock Awards column for fiscal year 2014. The grant date fair value of the Bonus Restricted Stock received in 2014, 2013 and 2012 under the Annual Incentive
Plan for fiscal years 2013, 2012 and 2011, respectively, was based on the NYSE closing prices of $28.01, $23.38 and, $20.35, respectively, on the relevant grant dates. The closing price of the Class B Common Stock on December 31, 2014 was
$32.93. Bonus Restricted Stock is awarded at eighty-five percent of fair market value on the date of grant.
(3) |
With respect to Mr. J. Christopher Donahue, the amount listed for the fiscal year ended December 31, 2014 reflects matching contributions under Federateds 401(k) Plan, company-provided parking, spousal
travel and an annual physical. In addition, Federated paid the premium for long-term disability insurance. It also includes club dues of $25,193, life insurance premium of $44,899, medical insurance premium of $52,891, dividends on restricted stock
of $185,570 and $36,561 that reflects the aggregate incremental cost to Federated of personal use of the corporate aircraft. The aggregate incremental cost to Federated of personal use of the corporate aircraft is determined on a per flight basis
and includes the cost of fuel, landing and storage fees, crew-related expenses and other miscellaneous variable costs. |
With
respect to Mr. Thomas R. Donahue, the amount listed for the fiscal year ended December 31, 2014 reflects matching contributions under Federateds 401(k) Plan, company-provided parking, club dues, spousal travel and an annual
physical. In addition, Federated paid the premium for long-term disability insurance. It also includes a life insurance premium of $44,079, a medical insurance premium of $69,922, dividends on restricted stock of $191,313 and $30,204 that reflects
personal use of the corporate aircraft.
With respect to Mr. Fisher, the amount listed for the fiscal year ended December 31,
2014 reflects matching contributions under Federateds 401(k) Plan, company-provided parking, club dues, spousal travel, personal use of the corporate aircraft and an annual physical. In addition, Federated paid the premium for long-term
disability insurance and a portion of the premiums for life, accidental death and medical insurance. It also includes dividends received on restricted stock of $238,006.
With respect to Mr. Territ, the amount listed for the fiscal year ended December 31, 2014 reflects matching contributions under
Federateds 401(k) Plan, company-provided parking, club dues, spousal travel and an annual physical. In addition, Federated paid premiums for long-term disability and portions of the premiums for life, accidental death and medical insurance. It
also includes dividends received on restricted stock of $208,515.
With respect to Mr. John F. Donahue, the amount listed for the
fiscal year ended December 31, 2014 reflects use of a company car and personal use of the corporate aircraft. In addition, Federated paid the premium for long-term disability insurance. It also includes a life insurance premium of $22,017 and a
medical insurance premium of $58,042.
17
Grants of Plan-Based Awards
The following table sets forth information concerning cash bonuses and restricted stock awards granted to the Named Executive Officers during
the fiscal year ended December 31, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2014 GRANTS OF PLAN-BASED AWARDS TABLE |
|
|
|
|
|
|
|
|
|
Estimated future payouts under non-equity incentive plan awards |
|
|
Estimated future payouts under equity incentive plan awards |
|
All other stock awards: number of shares of stock or units (#) (4) |
|
|
Grant date fair value of stock and option awards ($) (5) |
|
Name |
|
Grant Date |
|
|
Approval Date (1) |
|
|
Threshold ($) |
|
Target ($) (2) |
|
|
Maximum ($) |
|
|
Threshold (#) |
|
Target (#) (3) |
|
|
Maximum (#) |
|
|
J. Christopher Donahue |
|
|
3/7/14 |
|
|
|
1/22/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,242 |
|
|
|
847,078 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,662,500 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas R. Donahue |
|
|
3/7/14
|
|
|
|
1/22/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,681 |
|
|
|
635,295
|
|
|
|
|
11/18/14 |
|
|
|
10/23/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
554,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,260,000 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John B. Fisher |
|
|
3/7/14
|
|
|
|
1/22/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,741 |
|
|
|
552,945
|
|
|
|
|
11/18/14 |
|
|
|
10/23/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
554,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,960,000 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas E. Territ |
|
|
3/7/14
|
|
|
|
1/22/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,481 |
|
|
|
517,653
|
|
|
|
|
11/18/14 |
|
|
|
10/23/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
|
|
|
554,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,840,000 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Donahue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,800,000 |
|
|
|
6,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Compensation Committee approval date. |
(2) |
With respect to Messrs. J. Christopher Donahue and Thomas R. Donahue, the amounts in this column reflect seventy percent of the bonus each received in 2015 under the Annual Incentive Plan for fiscal year 2014. The
remaining thirty percent for 2014 was received in 2015 in the form of Bonus Restricted Stock. With respect to Messrs. Fisher and Territ, the amounts in this column reflect eighty percent of the bonus each received in 2015 under the Annual Incentive
Plan for fiscal year 2014. The remaining twenty percent for 2014 was received in 2015 in the form of Bonus Restricted Stock. |
(3) |
The amounts reflected in this column represent Periodic Restricted Stock received in 2014 under the Stock Incentive Plan for a purchase price of $3 per share. |
(4) |
The amounts reflected in this column represent Bonus Restricted Stock received in 2014 attributed to the allocated portion of the 2013 bonus under the Annual Incentive Plan, which is generally subject to a three-year
vesting period. |
(5) |
The calculation methodology for the valuation of Periodic Restricted Stock and Bonus Restricted Stock awards is set forth in Note 1(p) of Federateds Consolidated Financial Statements contained in Federateds
Annual Report on form 10-K for the fiscal year ended December 31, 2014. Named Executive Officers pay the Company $3.00 per share for Periodic Restricted Stock awards. |
18
Narrative Disclosure to 2014 Summary Compensation Table and 2014 Grants of Plan-Based Awards Table
Bonus Restricted Stock awards included in the Stock Awards column of the 2014 Summary Compensation Table were granted
in partial payment of the 2013 bonus awards and generally vest in equal one-third amounts over a three-year period. The Bonus Restricted Stock is awarded at eighty-five percent of fair market value. The Bonus Restricted Stock is granted under the
Annual Incentive Plan. See the discussion under the captions Bonuses and Equity Compensation in the Compensation Discussion and Analysis above for further information regarding the terms of the Annual Incentive Plan. The Bonus Restricted Stock grant
date fair value is reflected under the Grant date fair value of stock and option awards column of the 2014 Grants of Plan-Based Awards Table.
On November 18, 2014, each of Messrs. Thomas R. Donahue, Fisher and Territ received an award of 20,000 shares of Periodic Restricted
Stock under the Stock Incentive Plan, which awards are reflected in the Estimated future payouts under equity incentive plan awards column of the 2014 Grants of Plan-Based Awards Table. Each such award is governed by an accompanying 2014
Restricted Stock Award Agreement, which specifies that the shares are subject to forfeiture should a certain performance measurement not be attained. In order to satisfy the performance measurement, Federated must have Operating Profits of at least
$60.0 million for the nine-month period ending September 30, 2015. Such awards are also subject to confidentiality and non-competition obligations. Recipients pay the Company $3.00 per share for Periodic Restricted Stock awards and are entitled
to receive dividends on the shares which are the same as those paid on unrestricted Class B Common Stock. Periodic Restricted Stock awards granted in 2014 vest over a ten-year period with restrictions lapsing fifty percent on each of approximately
the awards fifth- and tenth-year anniversaries, except in the case of a recipients death or separation from employment due to disability, in which case should death or separation from employment due to disability occur prior to the fifth
vesting date, the stock vests in accordance with the vesting schedule and all unvested shares at the time of death or disability are forfeited and sold back to Federated for the purchase price ($3.00/share) or should death or separation from
employment due to disability occur on or after the fifth vesting date, all of the unvested shares become vested shares upon such separation from employment or death.
Federated makes a matching contribution under the Federated Investors, Inc. Profit Sharing/401(k) Plan in an amount equal to 100% of the first
2% that each participant defers and 50% of the next 4% of deferral contributions, and these amounts are included in the All Other Compensation column of the 2014 Summary Compensation Table.
19
Outstanding Equity Awards at Fiscal Year End
The following table sets forth information concerning unvested restricted stock awards held by the Named Executive Officers as of
December 31, 2014. The Named Executive Officers held no stock options as of December 31, 2014.
2014 OUTSTANDING EQUITY AWARDS
AT FISCAL YEAR END TABLE
|
|
|
|
|
|
|
|
|
Name |
|
Stock Awards |
|
Grant Date |
|
|
Number of shares or units of stock that have not vested
(#) |
|
Market value of shares or units of stock that have not vested
($) (1) |
J. Christopher
Donahue |
|
|
11/18/2009 11/18/2010 11/18/2011
3/2/2012
11/16/2012
3/4/2013
11/18/2013
3/7/2014 |
(2)
(2) (2) (3)
(2) (3) (2)
(3) |
|
12,500
20,000 21,250
13,586 18,000
26,167 19,000
30,242 |
|
411,625
658,600 699,763
447,387 592,740
861,679 625,670
995,869 |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
160,745 |
|
5,293,333 |
|
|
|
|
|
|
|
|
|
Thomas R. Donahue |
|
|
8/17/2007 11/18/2008 11/18/2009
11/18/2010
11/18/2011
3/2/2012
11/16/2012
3/4/2013
11/18/2013
3/7/2014
11/18/2014 |
(4)
(2) (2) (2)
(2) (3) (2)
(3) (2) (3)
(2) |
|
10,000
11,250 12,500
20,000 21,250
10,117 18,000
19,122 19,000
22,681 20,000 |
|
329,300
370,463 411,625
658,600 699,763
333,153 592,740
629,687 625,670
746,885 658,600 |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
183,920 |
|
6,056,486 |
|
|
|
|
|
|
|
|
|
John B. Fisher |
|
|
4/4/2006 8/17/2007 11/18/2008
11/18/2009
11/18/2010
11/18/2011
3/2/2012
11/16/2012
3/4/2013
11/18/2013
3/7/2014
11/18/2014 |
(4)
(4) (2) (2)
(2) (2) (3)
(2) (3) (2)
(3) (2) |
|
35,000
16,000 18,000
12,500 20,000
21,250 8,479
18,000 16,103
19,000 19,741
20,000 |
|
1,152,550
526,880 592,740
411,625 658,600
699,763 279,213
592,740 530,272
625,670 650,071
658,600 |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
224,073 |
|
7,378,724 |
|
|
|
|
|
|
|
|
|
Thomas E. Territ |
|
|
7/1/2005 4/4/2006 8/17/2007
11/18/2008
11/18/2009
11/18/2010
11/18/2011
3/2/2012
11/16/2012
3/4/2013
11/18/2013
3/7/2014
11/18/2014 |
(4)
(4) (4) (2)
(2) (2) (2)
(3) (2) (3)
(2) (3) (2) |
|
1,800
17,500 10,000
11,250 12,500
20,000 21,250
7,708 18,000
22,644 19,000
18,481 20,000 |
|
59,274
576,275 329,300
370,463 411,625
658,600 699,763
253,824 592,740
745,667 625,670
608,579 658,600 |
Total |
|
|
|
|
|
200,133 |
|
6,590,380 |
|
|
|
|
|
|
|
|
|
John F. Donahue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
(1) |
The amounts in this column reflect a December 31, 2014 closing price of $32.93 for Federated Class B Common Stock on the NYSE. |
(2) |
These Periodic Restricted Stock awards vest over a 10-year period from the grant date, with 5% vesting in years 1-4 and years 6-9 and 30% vesting in years 5 and 10. Vested shares are considered restricted until they are
released releases occur in years 5 (first half of shares released) and 10 (second half of shares released). Vesting schedules for the awards shown above are as follows: |
|
|
|
Grant Date: |
|
Vesting Schedule (vesting percentages are applied to original shares
awarded): |
11/18/2008 |
|
5% on or about November 1, 2015, 2016, and 2017; 30% on November 1, 2018 |
11/18/2009 |
|
5% on or about November 1, 2015, 2016, 2017, and 2018; 30% on November 1, 2019 |
11/18/2010 |
|
5% on or about November 1, 2016, 2017, 2018, and 2019; 30% on November 2, 2015 and November 16, 2020 |
11/18/2011 |
|
5% on or about November 1, 2015, 2017, 2018 and 2019; 5% on November 16, 2020; 30% on November 1, 2016 and November 16, 2021 |
11/16/2012 |
|
5% on or about November 1, 2015, 2016, 2018, and 2019; 5% on or about November 16, 2020 and 2021; 30% on November 1, 2017 and November 16, 2022 |
11/18/2013 |
|
5% on or about November 1, 2015, 2016, 2017, and 2019; 5% on or about November 16, 2020, 2021, and 2022; 30% on November 1, 2018 and November 17, 2023 |
11/18/2014 |
|
5% on or about November 1, 2015, 2016, 2017 and 2018; 5% on or about November 16, 2020, 2021, 2022, and 2023; 30% on November 1, 2019 and November 18, 2024. |
|
(3) These Bonus Restricted Stock awards vest over a 3-year period in equal annual installments.
Vested shares under these plans are released upon vesting. Vesting schedules for the awards shown above are as follows: |
|
|
Grant Date: |
|
Vesting Schedule: |
3/2/2012 |
|
Two-thirds of this award has already vested; remaining one-third to vest on March 4, 2015 |
3/4/2013 |
|
One-third of this award has already vested; remaining two thirds to vest in equal installments on March 4, 2015 and March 4, 2016 |
3/7/2014 |
|
Vests in three equal annual installments on each of March 4, 2015, March 4, 2016, and March 3, 2017. |
|
(4) These restricted stock awards are structured identically to the 10-year November awards
described in footnote (2). Vesting schedules for these awards are as follows: |
|
|
Grant Date: |
|
Vesting Schedule (vesting percentages are applied to original shares
awarded): |
7/1/2005 |
|
30% on June 24, 2015 |
4/4/2006 |
|
5% on March 27, 2015; 30% on March 25, 2016 |
8/17/2007 |
|
5% on or about August 1, 2015, and 2016; 30% on August 1, 2017 |
21
Option Exercises and Stock Vested
The following table sets forth information concerning restricted stock held by the Named Executive Officers that vested during the fiscal year
ended December 31, 2014. No options were exercised by the Named Executive Officers during the fiscal year ended December 31, 2014.
2014 OPTION EXERCISES AND STOCK VESTED TABLE
|
|
|
|
|
|
|
|
|
|
|
Stock Awards |
|
Name |
|
Number of shares acquired on vesting (#) |
|
|
Value realized on vesting ($) (1) |
|
J. Christopher Donahue |
|
|
57,040 |
|
|
|
1,599,098 |
|
Thomas R. Donahue |
|
|
47,251 |
|
|
|
1,322,805 |
|
John B. Fisher |
|
|
53,782 |
|
|
|
1,503,109 |
|
Thomas E. Territ |
|
|
49,403 |
|
|
|
1,382,499 |
|
John F. Donahue |
|
|
|
|
|
|
|
|
(1) |
The value realized on vesting of stock awards is equal to the difference between the closing market price of Class B Common Stock on the NYSE on the date of vesting and the purchase price paid by the Named Executive
Officer, if any, multiplied by the number of shares that vested. |
Employment Agreements and Change-of-Control Agreements
Federated generally does not have employment agreements or change-of-control agreements with its executive officers. The only employment
agreements Federated currently has in place with Named Executive Officers are those with Mr. John B. Fisher and Mr. Thomas E. Territ.
On December 28, 1990, Mr. Fisher entered into an employment agreement (the 1990 Employment Agreement) with Federated
Investors, a predecessor of Federated, in connection with his employment by Federated Investors as an officer and employee. The 1990 Employment Agreement is still in effect. Under the terms of the 1990 Employment Agreement, Mr. Fisher is
subject to certain restrictions with regard to confidentiality and competition. Mr. Fisher is not permitted to disclose confidential information that he receives in the course of or as a result of his employment. Additionally, upon termination
of his employment, Mr. Fisher is prohibited from directly or indirectly competing with Federated for a period of two years. Furthermore, upon termination of his employment, Mr. Fisher agrees not to directly or indirectly solicit employees
of Federated to terminate their employment or contractual relationships with Federated. On July 6, 1983, Mr. Territ entered into an employment agreement (the 1983 Employment Agreement) with Federated Securities Corp., a
subsidiary of Federated, in connection with his employment by Federated Securities Corp. as a sales representative. The 1983 Employment Agreement is still in effect. Under the terms of the 1983 Employment Agreement, Mr. Territ is subject to
certain restrictions with regard to confidentiality and competition. Mr. Territ is not permitted to disclose confidential information he receives in the course of or as a result of his employment. Additionally, upon termination of his
employment, Mr. Territ is prohibited from directly or indirectly competing with Federated for a period of two years. Furthermore, upon termination of his employment, Mr. Territ agrees not to directly or indirectly solicit employees of
Federated to terminate their employment or contractual relationships with Federated.
The only agreements Federated currently has in place
with Named Executive Officers that contain a change-of-control provision are the respective 2006 Restricted Stock Award Agreements entered into with Mr. John B. Fisher and Mr. Thomas E. Territ on April 4, 2006 under the
Stock Incentive Plan pursuant to which Mr. Fisher received 100,000 shares of Restricted Stock and Mr. Territ received 50,000 shares of Restricted Stock. Under the terms of the respective Agreements, the shares awarded vest over a ten-year
period with restrictions lapsing on fifty percent of the award on each of approximately the awards fifth- and tenth-year anniversaries. In certain circumstances where there is a change of control (as described below), the vesting of the shares
is accelerated. For this to occur, a combination of events must take place: (a) there must be a change in ownership of fifty-one percent or greater of the Class A Common Stock of Federated; and (b) one of the following must
22
occur (i) Mr. Fishers or Mr. Territs employment agreement is terminated other than for cause (as defined in the Agreements) by Federated or its successor
during the six-month period before or the first two-year period following a change in ownership or (ii) a constructive termination (as defined in the Agreement) occurs prior to the occurrence of events which would permit a termination for
cause during the first two-year period following a change of ownership. If this double-trigger provision is satisfied, then any portion of the award not vested will fully vest. Assuming that the aforementioned events occurred on
December 31, 2014, thereby satisfying the double-trigger provision, the shares of Restricted Stock awarded to Messrs. Fisher and Territ pursuant to the respective 2006 Restricted Stock Award Agreements that were not vested would
have become fully vested with an approximate value of $1,152,550 for Mr. Fisher and $576,275 for Mr. Territ, which would include $105,000 Mr. Fisher paid for his shares and $52,500 Mr. Territ paid for his shares. Such events,
however, did not occur.
23
TRANSACTIONS WITH RELATED PERSONS
During 2014, Mr. Richard B. Fisher, a co-founder of Federated and father of Mr. John B. Fisher, Vice President of
Federated, was employed by Federated as Vice Chairman. Mr. Richard B. Fisher was provided a salary of eight hundred thousand dollars for his services throughout the year.
24
CONFLICT OF INTEREST POLICIES AND PROCEDURES
Federated maintains a Code of Business Conduct and Ethics (the Code). The Code applies to each director, officer and employee of
Federated (each a Covered Person). The Code specifically addresses a variety of conflicts of interest, including transactions with related persons. The Code also sets forth guidance for Covered Persons with regard to general conflict of
interest scenarios where an individuals private interests interfere in any way with the interests of Federated as a whole. Federated relies on the integrity and undivided loyalty of Covered Persons to maintain the highest level of objectivity
in performing their duties.
Covered Persons are expected to avoid any situation in which personal interests conflict, or have the
appearance of conflicting, with those of Federated. Covered Persons are responsible for avoiding any misconduct or perceived conflicts of interest. Accordingly, employees are expected to use prudent behavior and discretion in all transactions and
relationships and are required to make prompt and complete disclosure of any possible or probable conflict of interest to their direct supervisor or manager, human resources, or the Internal Compliance Committee, as defined hereinafter.
Non-management directors are also expected to make appropriate disclosures to the Board and to take appropriate steps to recuse themselves from Board decisions with respect to transactions or other matters involving Federated as to which they are
interested parties or with respect to which a real or apparent conflict of interest exists. As a general rule, Covered Persons should never receive a payment or anything of value in exchange for a decision involving Federateds business, with
limited exceptions for token gifts of nominal value. Additionally, Covered Persons generally may not have any direct or indirect financial interest in, or any business relationship with, a person or entity that does business with Federated or is a
competitor of Federated. This policy does not apply to an arms-length purchase of goods or services for personal or family use or to the ownership of less than five percent of the shares of a publicly traded company. Other arms-length business
relationships with Federated and/or the Federated Funds may be permissible provided such business relationships are disclosed to, reviewed and approved by the Internal Compliance Committee (as detailed below). Furthermore, Covered Persons should not
engage in outside jobs or activities that compete with Federated in any way. Except in certain limited circumstances, any employee who is invited to join the board of directors or to serve as an officer of another organization must obtain the
approval of the Internal Compliance Committee. The Code requires directors who are invited to serve on other boards to promptly notify Federateds Chief Executive Officer and Chairman.
The Code is administered by an Internal Compliance Committee, which consists of Federateds General Counsel, Chief Compliance Officer,
Chief Risk Officer and Chief Audit Executive. As previously discussed, the Code requires Covered Persons to disclose to the Internal Compliance Committee any personal activities or financial interests that could negatively influence, or give the
appearance of negatively influencing, their judgment or decisions. The Internal Compliance Committee then determines if there is a conflict and, if so, how to resolve it without compromising the interests of Federated, the Federated Funds or other
accounts, as applicable. When necessary, the Internal Compliance Committee will bring matters to the Chief Legal Officer, senior staff or the Board for final resolution.
A copy of the Code is available on Federateds website at FederatedInvestors.com by first clicking on About
Federated and then Corporate Governance.
25
SECURITY OWNERSHIP
Class A Common Stock
The following
table sets forth certain information regarding beneficial ownership of Federateds Class A Common Stock by each person who is known by Federated to own beneficially more than five percent of the outstanding shares of Class A Common
Stock as of February 27, 2015.
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial Owner |
|
Shares Beneficially Owned |
|
|
Percent of Class |
|
Voting Shares Irrevocable Trust
dated May 31, 1989 |
|
|
9,000 |
|
|
|
100.0 |
% |
c/o The Beechwood Company, L.P.
Suite 850
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3716 |
|
|
|
|
|
|
|
|
All of the outstanding shares of Class A Common Stock are held by the Voting Trust, the trustees of which
are Mr. John F. Donahue, his wife, and his son, Mr. J. Christopher Donahue, for the benefit of certain members of the family of John F. Donahue. Under the terms of the Voting Trust, the trustees are authorized to vote shares held by
the Voting Trust and the trustees additionally may sell, transfer or otherwise dispose of shares owned by the Voting Trust. The entire voting power of Federated is vested in the holder of the outstanding shares of Class A Common Stock, except
as otherwise provided in the Restated Articles of Incorporation of Federated or as required by applicable law. The address for the trustees of the Voting Trust is the same address shown in the above table.
26
Class B Common Stock
The following table sets forth certain information regarding beneficial ownership of Federateds Class B Common Stock as of
February 27, 2015 by (i) each of the current directors of Federated, (ii) the Named Executive Officers of Federated, and (iii) all executive officers and current directors of Federated as a group. As of February 27, 2015
there were 104,736,378 shares of Class B Common Stock outstanding.
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner |
|
Shares Beneficially Owned (1)(2) |
|
|
Percent of Class |
|
J. Christopher Donahue (3) |
|
|
3,146,975 |
|
|
|
3.0 |
% |
John W. McGonigle (4) |
|
|
3,454,411 |
|
|
|
3.3 |
% |
Thomas R. Donahue (5) |
|
|
1,983,699 |
|
|
|
1.9 |
% |
John F. Donahue (6) |
|
|
1,078,724 |
|
|
|
1.0 |
% |
John B. Fisher (7) |
|
|
500,380 |
|
|
|
|
* |
Thomas E. Territ |
|
|
345,224 |
|
|
|
|
* |
Michael J. Farrell (8) |
|
|
67,400 |
|
|
|
|
* |
David M. Kelly (9) |
|
|
41,500 |
|
|
|
|
* |
Marie Milie Jones |
|
|
1,700 |
|
|
|
|
* |
All executive officers and current directors as a group (13 persons) |
|
|
10,884,656 |
|
|
|
10.4 |
% |
(1) |
Calculated pursuant to Rule 13d-3(d) of the Exchange Act. Unless stated below, each such person has sole voting and investment power with respect to all such shares. |
(2) |
Does not include an aggregate of 30,654 shares of Class B Common Stock allocated to the accounts of directors and executive officers who are participants in the Federated Investors, Inc. Profit Sharing/401(k) Plan.
|
(3) |
Includes 592,766 shares for which Mr. J. Christopher Donahue has the power to sell, transfer or otherwise dispose under powers of attorney (Mr. J. Christopher Donahue disclaims beneficial ownership of all
of the 592,766 shares for which he has powers of attorney); 75,073 shares for which Mr. J. Christopher Donahue is a custodian of shares under the Uniform Transfer for Minors Act (Mr. J. Christopher Donahue disclaims beneficial ownership of all
of the 75,073 shares for which he acts as custodian); 341,542 shares owned by The Beechwood Company, L.P. (formerly Comax Partners Limited Partnership), a limited partnership of which Beechmax, Inc. is general partner, Mr. J. Christopher
Donahue is a trustee of the Trust for the Benefit of the Family of J. Christopher Donahue which is a shareholder of Beechmax, Inc. (Mr. J. Christopher Donahue disclaims beneficial ownership of approximately 340,961 shares owned by The Beechwood
Company, L.P.); and 82 shares owned by AWOL, Inc., Mr. J. Christopher Donahue is a trustee of the Trust for the Benefit of the Family of J. Christopher Donahue which is a shareholder of AWOL, Inc. (Mr. J. Christopher Donahue disclaims beneficial
ownership of all 82 shares owned by AWOL, Inc.). |
(4) |
Includes 1,954,878 shares owned by Fairview Partners, L.P., a limited partnership of which 713 Investment Corporation is the sole general partner; 199,533 shares owned by 713 Investment Partners, L.P., a limited
partnership of which 713 Investment Corporation is the sole general partner (Mr. McGonigle and his wife are shareholders and directors of 713 Investment Corporation); 942,695 shares owned by the John W. McGonigle Revocable Trust; and 357,305
shares owned by the Mary Ita McGonigle Revocable Trust. Mr. McGonigle disclaims beneficial ownership of all shares in which he does not have a pecuniary interest. |
27
(5) |
Includes 4,409 shares owned by Mrs. Thomas R. Donahue; 4,800 shares for which Mr. Thomas R. Donahue is a custodian of shares under the Uniform Transfer for Minors Act (Mr. Thomas R. Donahue disclaims
beneficial ownership of all of the 4,800 shares for which he acts as custodian); 131,035 shares which Mr. Thomas R. Donahue has the power to sell, transfer or otherwise dispose under a power of attorney (Mr. Thomas R. Donahue disclaims
beneficial ownership of all of the 131,035 shares for which he holds powers of attorney); 715,550 shares owned by Maxfund Partners, L.P., a limited partnership of which Maxfund, Inc. is the general partner, Mr. Thomas R. Donahue is a
shareholder of Maxfund, Inc. (Mr. Thomas R. Donahue disclaims beneficial ownership of approximately 688,710 shares owned by the Maxfund Partners, L.P.); 341,542 shares owned by The Beechwood Company, L.P. (formerly Comax Partners Limited
Partnership), a limited partnership of which Beechmax, Inc. is general partner, Mr. Thomas R. Donahue is a trustee of the Trust for the Benefit of the Family of Thomas R. Donahue which is a shareholder of Beechmax, Inc. (Mr. Thomas R.
Donahue disclaims beneficial ownership of approximately 335,907 shares owned by The Beechwood Company, L.P.); 152,178 shares owned by an immediate family member living in his household (Mr. Thomas R. Donahue disclaims beneficial ownership of all
152,178 shares); and 82 shares owned by AWOL, Inc., Mr. Thomas R. Donahue is a trustee of the Trust for the Benefit of the Family of Thomas R. Donahue which is a shareholder of AWOL, Inc. (Mr. Thomas R. Donahue disclaims beneficial
ownership of all 82 shares owned by AWOL, Inc.). |
(6) |
Includes 458,385 shares owned by Richmond Farm L.P., a Pennsylvania limited partnership, of which Mr. John F. Donahue has controlling interest (Mr. John F. Donahue disclaims beneficial ownership of approximately
454,382 shares owned by Richmond Farm L.P.); 38,821 shares owned by Comax Land Company of Florida; 5,819 shares owned by John F. Donahue Revocable Trust; 5,819 shares owned by Rhodora J. Donahue Revocable Trust; and 569,880 shares owned by the John
F. Donahue and Rhodora J. Donahue Joint Revocable Trust. |
(7) |
Includes 40,000 shares held by Rosewood Limited Partnership, a limited partnership of which Mr. Fisher is a general partner. Mr. Fisher disclaims beneficial ownership of all shares in which he does not have a
pecuniary interest. |
(8) |
Includes 12,000 stock options which are currently exercisable; 20,000 shares owned by the Farrell Family Partnership 2nd, a limited partnership of which Mr. Farrell is the sole owner of the corporate general
partner; and 7,500 shares owned by the Michael J. Farrell Charitable Remainder Unit Trust. Mr. Farrell disclaims beneficial ownership of all shares in which he does not have a pecuniary interest. |
(9) |
Includes 12,000 stock options which are currently exercisable. |
28
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, Federateds directors, its executive officers and any persons beneficially owning more
than ten percent of Federateds Class A Common Stock and Class B Common Stock are required to report their ownership of Federateds Class A and Class B Common Stock and any changes in that ownership to the SEC and to the NYSE.
Specific due dates for these reports have been established and Federated is required to report in this Information Statement any failure to file by these dates. Based on a review of any Forms 3 and 4 (and amendments) furnished to Federated during,
and Forms 5 (and amendments) furnished to Federated with respect to, the fiscal year ending December 31, 2014, all reports required by Section 16(a) of the Exchange Act during the fiscal year were timely filed.
29
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP served as the independent registered public accounting firm for 2014 and continues to serve as the independent
registered public accounting firm for Federated. Representatives of Ernst & Young LLP will be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to respond to
appropriate questions.
The following fees are for services rendered by Ernst & Young LLP for the audit of Federateds
financial statements for the fiscal years ended December 31, 2014 and December 31, 2013, the audit of internal control over financial reporting for the fiscal years ended December 31, 2014 and December 31, 2013, the review of the
financial statements in Federateds Forms 10-Q for the fiscal years ended December 31, 2014 and 2013, and other billings for services rendered to Federated:
|
|
|
|
|
|
|
|
|
|
|
2014 |
|
|
2013 |
|
Audit Fees: |
|
$ |
1,947,052 |
|
|
$ |
1,880,277 |
|
Audit-Related Fees: |
|
$ |
96,115 |
|
|
$ |
110,059 |
|
Fees for audit-related services primarily include due diligence, agreed upon procedures, audits of the employee benefit plan and other
attest services. |
|
|
|
|
|
|
|
|
Tax Fees: |
|
$ |
184,646 |
|
|
$ |
160,591 |
|
Fees for tax services primarily include international tax compliance, tax advice and tax planning. |
|
|
|
|
|
|
|
|
All Other Fees: |
|
$ |
197,114 |
|
|
$ |
112,230 |
|
Fees for other services primarily include certain Federated-sponsored product-related tax assistance, portfolio scanner services and
audits. |
|
|
|
|
|
|
|
|
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a policy for pre-approval of all audit, audit-related, tax and other services, classified as All Other
Services, to be performed by Federateds independent registered public accounting firm, subject to the de minimus exception for non-audit services described in Section 10A(i)(1) subparagraph (B) of the Exchange Act. The policy was
adopted in order to ensure that the provision of these services does not impair the auditors independence. The Audit Committee annually, or more frequently (if necessary), reviews and pre-approves the services that may be provided by the
independent registered public accounting firm. Unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee. The Audit
Committee will revise the list of general pre-approved services from time to time, based upon subsequent determinations. The term of the general pre-approval is twelve months from the date of pre-approval, unless specifically provided otherwise. The
Audit Committee will waive the pre-approval requirement with respect to the provision of non-audit services if: (i) the aggregate amount of all such non-audit services provided constitutes not more than five percent of the total amount of fees
paid by Federated to its independent registered public accounting firm during the fiscal year in which the services are provided; (ii) such services were not recognized by Federated at the time of engagement of the independent registered public
accounting firm to be non-audit services; and (iii) such services are promptly brought to the attention of the Audit Committee (or its delegate) and approved prior to the completion of the audit. The Audit Committee has delegated pre-approval
authority to the Chairman of the Audit Committee. The Chairman of the Audit Committee reports any pre-approval decisions to the Audit Committee at its scheduled meetings. All fees paid to Ernst & Young LLP for the years ended
December 31, 2014 and 2013 were pre-approved by the Audit Committee in accordance with this policy.
30
31
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Federated Investors, Inc.
2015 ©Federated Investors, Inc.
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