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