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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
INVESTMENT TECHNOLOGY GROUP, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
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(1) Amount Previously Paid:
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(4) Date Filed:
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</TABLE>
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INVESTMENT TECHNOLOGY GROUP, INC.
380 MADISON AVENUE,
NEW YORK, NEW YORK 10017
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
----------------
To the Stockholders of Investment Technology Group, Inc.:
NOTICE IS HEREBY GIVEN that Investment Technology Group, Inc., a Delaware
corporation ("ITG"), will hold its annual meeting of stockholders at the New
York Helmsley Hotel, Murray Hill Room, 212 East 42(nd) Street, New York, New
York, on Tuesday, May 9, 2000 at 1:00 p.m. (local time), and any adjournments or
postponements thereof, for the following purposes:
(1) To elect six directors to our board of directors to serve until the next
annual meeting and until their successors have been duly elected and
qualified.
(2) To ratify the appointment of KPMG LLP as our independent auditors for
the 2000 fiscal year.
(3) To transact such other business as may properly come before the annual
meeting or any one or more adjournments thereof.
Our board of directors has fixed the close of business on March 24, 2000 as
the record date for determining the stockholders entitled to notice of and to
vote at the annual meeting. Only holders of record of ITG common stock at the
close of business on March 24, 2000 are entitled to notice of and to vote at the
annual meeting. A complete list of stockholders entitled to vote will be
available during normal business hours at our principal executive offices
located at 380 Madison Avenue, 4th Floor, New York, New York 10017 for a period
of ten days prior to the annual meeting for examination by any ITG stockholder
for purposes germane to the annual meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSED
SLATE OF DIRECTORS AND FOR THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS
OUR INDEPENDENT AUDITORS.
You are cordially invited to attend the annual meeting in person. Whether or
not you expect to attend the annual meeting, please sign and mail promptly the
enclosed proxy that is being solicited on behalf of our board of directors. A
return envelope that requires no postage if mailed in the United States is
enclosed for that purpose. The proxies of stockholders who attend the meeting in
person may be withdrawn and such stockholders may vote personally at the
meeting.
By Order of the Board of Directors,
/s/ Timothy H. Hosking
Timothy H. Hosking
Secretary
New York, New York
March 28, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
THE ANNUAL MEETING.......................................... 3
Date, Time and Place of the Annual Meeting............ 3
Matters to Be Considered at the Annual Meeting........ 3
Voting at the Annual Meeting; Record Date; Quorum..... 3
Proxies............................................... 3
Treatment of Broker Non-Votes and Abstentions at the
Annual Meeting....................................... 4
ELECTION OF DIRECTORS....................................... 5
Nominees to Board of Directors........................ 5
Other Executive Officers.............................. 6
Director Compensation................................. 7
Committees of the Board of Directors and Meetings..... 7
Executive Compensation................................ 9
Report of the Compensation Committee on Executive
Compensation......................................... 12
Performance Graph..................................... 14
Pension Plan.......................................... 14
SECURITY OWNERSHIP.......................................... 15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 16
Spin-off Expenses..................................... 16
Tax Sharing Agreement................................. 16
Jefferies Service Agreement........................... 16
Execution Agreement................................... 16
Clearing Agreement.................................... 16
Revenue Sharing Agreement............................. 16
Other................................................. 17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 17
RATIFICATION OF INDEPENDENT AUDITORS........................ 17
WHERE YOU CAN FIND MORE INFORMATION......................... 17
OTHER MATTERS; STOCKHOLDER PROPOSALS FOR THE 2001
ANNUAL MEETING OF ITG..................................... 19
</TABLE>
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THE ANNUAL MEETING
DATE, TIME AND PLACE OF THE ANNUAL MEETING
We will hold the annual meeting at 1:00 p.m. (local time), on Tuesday,
May 9, 2000, at the New York Helmsley Hotel, Murray Hill Room, 212 East 42(nd)
Street, New York, New York 10017.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
We will hold the annual meeting for the following purposes:
(1) To elect six directors to serve until the next annual meeting and until
their successors have been duly elected and qualified.
(2) To ratify the appointment of KPMG LLP as our independent auditors for
the 2000 fiscal year.
(3) To transact such other business as may properly come before the annual
meeting or any one or more adjournments thereof.
VOTING AT THE ANNUAL MEETING; RECORD DATE; QUORUM
On March 24, 2000, the record date for the annual meeting, there were
30,849,585 shares of our common stock outstanding and entitled to vote at the
annual meeting. Please note the following:
- Each stockholder of record on March 24, 2000 is entitled to cast one vote
per share.
- This vote may be cast at the annual meeting either in person or by
properly executed proxy.
- The presence, in person or by proxy, of the holders of a majority of our
outstanding common stock entitled to vote at the annual meeting is
necessary to constitute a quorum at the annual meeting.
- The election of directors will be determined by a plurality of the votes
cast. A properly executed proxy marked "FOR ALL NOMINEES EXCEPT" with
respect to the election of one or more directors will not be voted with
respect to the director or directors indicated, although it will be
counted for purposes of determining whether there is a quorum.
- For the ratification of the appointment of KPMG LLP as the independent
auditors for the 2000 fiscal year, the affirmative vote of the holders of
a majority of the shares represented in person or by proxy at the annual
meeting and entitled to vote will be required for approval. A
representative of KPMG LLP is expected to be in attendance at the annual
meeting with the opportunity to make a statement and respond to questions.
- On March 24, 2000, our directors and executive officers owned, in the
aggregate, 2,662,728 shares, or approximately 9%, of our common stock. Our
directors and officers have expressed their present intent to vote their
shares in favor of the proposals.
PROXIES
We are furnishing you this proxy statement in connection with the
solicitations of proxies by and on behalf of our board of directors for use at
the annual meeting. Proxies in the form enclosed, which are properly executed
and returned and not subsequently revoked, will be voted at the annual meeting.
These proxies will be voted in accordance with the directions specified thereon,
and otherwise in accordance with the judgment of the persons designated as
proxies. If no directions are indicated on a properly executed proxy, such proxy
will be voted in favor of the proposals.
If any other matters are properly presented at the annual meeting for
consideration, the persons named in the enclosed forms of proxy and acting
thereunder generally will have discretion to vote on
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such matters in accordance with their best judgment. Notwithstanding the
foregoing, proxies voting against a specific proposal may not be used by the
persons named in the proxies to vote for adjournment of the meeting for the
purpose of giving management additional time to solicit votes to approve such
proposal.
The grant of a proxy on the enclosed form does not preclude you from
attending the annual meeting and voting in person. You may revoke a proxy at any
time before it is voted. Proxies may be revoked by:
- delivering a written notice of revocation bearing a later date than the
proxy before the vote is taken at the annual meeting;
- duly executing a later dated proxy relating to the same shares of common
stock and delivering it as indicated below before the vote is taken at the
annual meeting; or
- attending the annual meeting and voting in person.
Attendance at the annual meeting will not in and of itself constitute a
revocation of a proxy. Any written notice of revocation or subsequent proxy must
be delivered to Equiserve, Raritan Center, 188 Fernwood Avenue, Edison, New
Jersey, 08837-3857; Attention Proxy Department, or Investment Technology
Group, Inc., 380 Madison Avenue, 4th Floor, New York, New York 10017, Attention:
Secretary, before the vote is taken at the annual meeting.
We will bear all expenses of our solicitation of proxies for the annual
meeting. In addition to solicitation by use of the mails, proxies may be
solicited from stockholders by our directors, officers and employees.
Solicitation may take place in person or by telephone, facsimile or other means
of communication. Such directors, officers and employees will not be
additionally compensated, but may be reimbursed for reasonable out-of-pocket
expenses in connection with such solicitation. Arrangements may be made with
brokerage houses, custodians, nominees and fiduciaries for forwarding of proxy
solicitation materials to beneficial owners of our common stock held of record
by such brokerage houses, custodians, nominees and fiduciaries. We will
reimburse such brokerage houses, custodians, nominees and fiduciaries for their
reasonable expenses incurred in doing so. We have retained Corporate Investor
Communications, Inc. to assist in soliciting proxies for a fee of $5,000 plus
reasonable expenses.
TREATMENT OF BROKER NON-VOTES AND ABSTENTIONS AT THE ANNUAL MEETING
All shares of our common stock represented by properly executed proxies
received prior to or at the annual meeting and not revoked will be voted in
accordance with the instructions indicated in such proxies. If no instructions
are indicated on a properly executed returned proxy, such proxies will be voted
FOR the approval of each of the matters set forth on the proxy card. It is not
expected that any matter other than those referred to herein will be brought
before the stockholders at the annual meeting. However, if other matters are
properly presented, the persons named as proxies will vote in accordance with
their best judgment with respect to such matters, unless authority to do so is
withheld in the proxy.
An automated system administered by our transfer agent will tabulate votes
cast by proxy at the annual meeting, and our transfer agent will tabulate votes
cast in person at the annual meeting. Brokers who hold shares in street name for
customers who are the beneficial owners of such shares are prohibited from
giving a proxy to vote such customers' shares with respect to any proposal in
the absence of specific instructions from such customers. Broker non-votes and
abstentions, tabulated separately, will be included in the determination of the
number of shares present at the annual meeting and whether a quorum is present.
Broker non-votes and abstentions will not be counted in determining whether a
nominee is elected. In determining whether any other proposal has been approved,
abstentions will be counted as votes against such proposal and broker non-votes
will not be counted as votes either for or against such proposal.
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ELECTION OF DIRECTORS
Under our bylaws, the board of directors is authorized to determine the
number of directors of our company. The number of directors to be elected at the
annual meeting has been fixed at six. Such directors will be elected to serve
until the next annual meeting of stockholders and until their successors shall
have been duly elected and qualified.
Each nominee listed below has consented to being a nominee and to serving as
a director if elected. In the event that any nominee shall be unable to serve as
a director (which is not now anticipated), proxies will be voted for substitute
nominees recommended by the board of directors or the board of directors may
elect to reduce the number of directors. All of the nominees for election as a
director are presently members of the board of directors.
NOMINEES TO BOARD OF DIRECTORS
The following information is submitted concerning the nominees for election
as directors.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Raymond L. Killian, Jr. 62 President, Chief Executive Officer and Chairman
of the Board of Directors
Frank E. Baxter 63 Director
Neal S. Garonzik 53 Director
William I Jacobs 58 Director
Robert L. King 49 Director
Mark A. Wolfson 47 Director
</TABLE>
Raymond L. Killian, Jr. has been the Chairman of our board of directors
since January 1997 and a director since March 1994. Mr. Killian served as the
President and Chief Executive Officer from March 1994 through January 1997 and
again since September 1998. He has directed the activities of our company since
1987. Mr. Killian was a director of Jefferies Group, Inc. ("Jefferies") from
January 1997 to January 1999, an Executive Vice President of Jefferies from 1985
to 1995, a director and an Executive Vice President of Jefferies & Company from
1985 to 1991 and served as National Sales Manager of Jefferies & Company from
1985 to 1990.
Frank E. Baxter has been a director since March 1994. Mr. Baxter has been
Chairman of Jefferies' board of directors since 1990, Chief Executive Officer of
Jefferies since 1987, and a director of Jefferies and Jefferies & Company since
1975. Mr. Baxter has previously served as President of Jefferies and
Jefferies & Company from January 1986 until December 1996. Prior to 1986,
Mr. Baxter served as Executive Vice President, National Sales Manager and New
York Branch Manager of Jefferies & Company and as the Managing Director of
Jefferies' UK Subsidiary.
Neal S. Garonzik has been a director since February 1999. Since
August 1999, Mr. Garonzik has been Vice Chairman of Chase Manhattan Corporation.
From 1980 until 1989 and 1993 until 1997 Mr. Garonzik was with Morgan Stanley,
most recently as a member of that firm's management committee and head of its
equity division. From 1989 to 1993, Mr. Garonzik was with SGK Partners, LP, of
which he was a founding general partner. From 1972 until 1980, he was a
securities salesman for Goldman, Sachs & Co., in Boston and in London.
William I Jacobs has been Senior Executive Vice President--Strategic
Ventures of MasterCard International, Inc. since February 1999 and was Executive
Vice President--Global Resources of MasterCard International, Inc. from 1995 to
1999. From 1993 to 1994, Mr. Jacobs served as a financial consultant to several
firms and universities. Mr. Jacobs was founder, Executive Vice President, Chief
Operating Officer and a director of Financial Security Assurance, a monoline
bond insurer, from 1985 to 1993 and, prior to 1985, the President and Managing
General Partner of S&B Insurance Services Company. Mr. Jacobs has been a
director of our company since June 1994.
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Robert L. King has been the President and Chief Executive Officer of
Corporate Express, Inc., a distributor of office and computer supplies since
1998. Mr. King has also been a director of Corporate Express, Inc. since 1983
and served as the President and Chief Operating Officer of Corporate
Express, Inc. from 1993 until 1998. Prior to 1993, Mr. King was employed by
FoxMeyer Corporation, a distributor of health and pharmaceutical products, where
he was Chief Executive Officer from 1989 to 1993, President from 1988 to 1993
and Chief Operating Officer from 1988 to 1989. Mr. King has been a director of
our company since June 1994.
Mark A. Wolfson has been a managing partner at Oak Hill Capital
Management Inc., a private investment company since 1998, and Vice President of
Keystone, Inc., the primary investment vehicle of Robert M. Bass, since 1995. He
is also a professor at the Graduate School of Business, Stanford University,
where he has been a faculty member since 1977, including a term as Associate
Dean from 1990 through 1993. He has also taught at the University of Chicago and
Harvard University. Mr. Wolfson has been a director of Integrated
Orthopaedics Inc. since 1997, a director of Caribbean Restaurants Holdings, LLC
since 1999, a director of eGain Communications Corporation since 1998, and a
director of Financial Engines since 2000. Mr. Wolfson has been a director of our
company since June 1994.
OTHER EXECUTIVE OFFICERS
The executive officers of our company are appointed by, and serve at the
discretion of, our board of directors. Other than Mr. Killian, for whom
information is provided above, the following sets forth information as to the
other executive officers of our company.
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Yossef A. Beinart 43 Managing Director
Angelo Bulone 34 Vice President and Controller
David C. Cushing 38 Managing Director
Christopher J. Heckman 39 Managing Director
Timothy H. Hosking 41 Managing Director, General Counsel and Secretary
Howard C. Naphtali 46 Managing Director and Chief Financial Officer
Robert J. Russel 45 Managing Director
Steven J. Sorice 39 Managing Director
</TABLE>
YOSSEF A. BEINART is a Managing Director. He joined our company in 1992 and
is responsible for research and development and technology matters. From 1988 to
1991, Mr. Beinart was vice president of development of Integrated Analytics
Corporation.
ANGELO BULONE has been Vice President and Controller since November 1998.
Mr. Bulone joined our company as the manager of internal and external financial
and regulatory accounting in April 1997. From 1993 to 1997, Mr. Bulone held the
position of vice president and controller at I/B/E/S International, Inc.
DAVID C. CUSHING is a Managing Director and the Managing Principal of our
proprietary asset management subsidiary. He joined our company in 1991 as a Vice
President of Sales and Trading and formed the research department in 1993, which
he was responsible for until the first quarter of 2000. From 1986 to 1991,
Mr. Cushing was a vice president in the equity derivatives and program trading
department at Lehman Brothers, Inc.
CHRISTOPHER J. HECKMAN is a Managing Director who, along with Mr. Sorice, is
responsible for sales, trading and research. He joined our company in
January 1991 as a sales trader and became manager of institutional sales and
trading in January 1997.
TIMOTHY H. HOSKING is a Managing Director and the General Counsel and
Secretary. He joined our company in June 1997 and is responsible for operations
and legal and regulatory matters. From
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1991 to 1997, Mr. Hosking worked for The Fremont Group, maintaining a variety of
positions, including general counsel of Fremont Partners, L.P., a private equity
partnership.
HOWARD C. NAPHTALI is a Managing Director and Chief Financial Officer. He
joined our company in April 1997 as Senior Vice President, Business Development
and was appointed as Managing Director and Chief Financial Officer on
February 29, 2000. From 1988 to 1997, Mr. Naphtali worked for Reuters
America Inc. where he served as Senior Vice President and Chief Financial
Officer as well as Senior Vice President and Chief Operating Officer of Quotron
Systems, Inc. (a wholly owned subsidiary of Reuters America Inc.).
ROBERT J. RUSSEL is a Managing Director and is leading our strategic
planning and business development efforts. Mr. Russel joined us as Senior Vice
President in November 1996. Prior to joining our company, Mr. Russel spent nine
years with Reuters in senior roles in a variety of departments including general
management, business development, technology, and marketing and sales.
STEVEN J. SORICE is a Managing Director who, along with Mr. Heckman, is
responsible for sales, trading and research. He joined our company in
September 1994 as the manager of broker-dealer trading. Prior to joining our
company, Mr. Sorice was with ESI Securities, L.P., where he was head of the
international desk, a vice president of sales and trading and a partner.
DIRECTOR COMPENSATION
Directors who are our employees are not compensated for serving as
directors. Directors who are not our employees receive an annual retainer fee of
$20,000, plus fees of $1,000 for attendance at each of five regular meetings of
the board of directors and $2,000 for attendance at each special meeting of the
board of directors. The chairman of each committee receives an annual retainer
of $3,000, and all committee members receive $750 for attendance at each meeting
of a committee of the board of directors. Directors of ITG are also reimbursed
for out-of-pocket expenses.
Under our Non-Employee Directors' Stock Option Plan adopted in 1995, we
grant an option to purchase 16,376 shares to each person who first becomes a
non-employee director at the time of initial election or appointment, and an
option to purchase 4,094 shares to each non-employee director on the 45th day
after each annual stockholders meeting. These options are granted with an
exercise price per share equal to 100% of the fair market value of a share on
the date of grant. Such options expire at the earliest of (1) five years after
the date of grant, (2) 12 months after death, disability or retirement after
reaching age 65 and (3) 60 days after an optionee ceases to serve as a director
for reasons other than death, disability or such retirement. Options become
exercisable three months after the date of grant, except that an option granted
to a director less than three months before a cessation of service for reasons
other than death, disability or retirement after reaching age 65 will not
thereafter become exercisable. Directors who are not our employees are eligible
to participate in this plan.
Each director may participate in our Charitable Gifts Matching Program
pursuant to which we match 100% of charitable contributions made by such
directors up to a maximum dollar amount of $2,000 per person per year. The
children of our directors may also participate (along with the children of all
employees of our company and Jefferies) in the Stephen A. Jefferies Educational
Grant Program which provides scholarship awards for secondary and post-secondary
education based on factors such as financial need, academic merit and personal
statements. All applications are presented to the selection committee
anonymously.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
Our board of directors held 10 meetings during 1999. Each incumbent member
of the board of directors who was a director during 1999 attended, during his
term of office, at least 75% of the total number of meetings of the board of
directors and committees thereof of which such director was a
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member. Our board of directors has an audit committee and a compensation
committee. In addition, in connection with our spin-off from Jefferies, our
board of directors formed a special committee. Our board of directors does not
have a nominating committee.
The current audit committee members are Mr. Jacobs, Chairman, Mr. Garonzik,
Mr. King and Mr. Wolfson. The audit committee is responsible for reviewing with
our independent auditors, the financial statements, the adequacy of our system
of internal accounting controls and the independent auditors' audit and review
programs and procedures. The audit committee also reviews the professional
services provided by our independent auditors and makes recommendations to the
board of directors as to the engagement or discharge of our auditors. During
1999, there were 2 meetings of the audit committee.
The current compensation committee members are Mr. Garonzik, Chairman,
Mr. Jacobs, Mr. King and Mr. Wolfson. The compensation committee is responsible
for developing and implementing compensation policies, plans and programs for
our executive officers and for the administration of our Amended and Restated
1994 Stock Option and Long-Term Incentive Plan. During 1999, there were 3
meetings of the compensation committee.
The special committee members were Mr. Jacobs and Mr. King. The special
committee was responsible for reviewing and negotiating the terms of our
spin-off from Jefferies. We paid each member of the special committee a retainer
of $20,000 and an additional $5,000 per month for their services on the
committee. In addition, we approved an indemnification agreement with the
members of the special committee.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the years indicated, each component of
compensation paid or awarded to, or earned by, each person who served as our
chief executive officer during 1999 and the six other most highly compensated
officers serving as of December 31, 1999 (collectively, the "Named Executive
Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION(1) OTHER SECURITIES
NAME AND PRINCIPAL -------------------------------- ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION(2) OPTIONS COMPENSATION(3)
------------------ -------- -------- ---------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Raymond L. Killian, Jr.(4) 1999 $250,000 $ 750,000 $14,920 -- $20,835
Chairman, President & 1998 300,000 1,672,477 53,624 -- 54,640
Chief Executive Officer 1997 300,000 475,957 6,483 -- 68,294
David C. Cushing 1999 225,000 480,500 14,415 98,000 17,600
Managing Director 1998 150,000 723,000 19,440 -- 25,984
1997 150,000 335,000 6,157 10,000 51,524
Christopher J. Heckman 1999 225,000 486,500 14,595 98,000 19,690
Managing Director 1998 225,000 704,000 21,120 -- 26,802
1997 225,000 260,567 6,091 12,500 28,781
Anthony Huck 1999 225,000 435,004 13,050 73,000 19,690
Senior Vice President 1998 225,000 577,000 17,310 -- 18,830
1997 225,000 262,190 -- -- 15,873
Joshua D. Rose 1999 300,000 357,000 12,960 25,000 24,200
Executive Vice President 1998 300,000 510,000 17,550 -- 16,445
1997 300,000 411,000 -- -- 49,735
Robert J. Russel 1999 275,000 347,000 11,910 70,000 22,489
Managing Director 1998 275,000 360,000 12,300 -- 20,107
1997 275,000 125,000 -- -- 15,872
Steven J. Sorice 1999 225,000 486,500 14,595 98,000 19,690
Managing Director 1998 225,000 704,000 21,120 -- 24,959
1997 225,000 262,190 5,862 12,500 26,149
</TABLE>
- ------------------------
(1) The amounts shown include cash and non-cash compensation earned by the Named
Executive Officers as well as amounts earned but deferred mandatorily (1999
and 1998) or at the election of those Named Executive Officers (1997).
(2) For 1999 and 1998, a portion of each of the Named Executive Officer's
compensation was mandatorily deferred and each such Named Executive Officer
was granted units representing our common stock with a fair market value
equal to 115% of such deferred amount. The following portions of their total
cash compensation are deferred: 5% of the first $100,000, 10% of the next
$100,000, 15% of the next $400,000, and 20% of total cash compensation in
excess of $600,000. The amounts in the table represent the value of the 15%
of additional units granted pursuant to the mandatory deferral described in
the preceding sentence. All units are generally settled by issuance of the
underlying common stock three years from the date of grant. Amounts for 1997
reflect a 15% discount on units representing shares of Jefferies' common
stock purchased by the Jefferies Group Capital Accumulation Plan for Key
Employees (the "Jefferies CAP") for the Named Executive Officer's account
with compensation that the Named Executive Officer had elected to defer.
For 1999, the amount of the 15% discount on units representing shares of ITG
common stock purchased by our company under the Stock Unit Award Program for
each Named Executive
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Officer's account was as follows: Mr. Killian: $9,000; Mr. Cushing: $14,415;
Mr. Heckman: $14,595; Mr. Huck: $13,050; Mr. Rose: $12,960; Mr. Russel:
$11,910 and Mr. Sorice: $14,595.
In addition to the amount noted above, Mr. Killian received $5,920 as
interest upon the balance of his 1998 bonus, which was paid in April 1999.
(3) The total amounts shown in the "All Other Compensation" column consist of
the following:
(a) In 1999, a matching contribution of $6,400 and a profit sharing
contribution of $6,400 to each Named Executive Officer under our
Retirement Savings Plan for 1999. Also in 1999, a contribution of $4,800
under our Money Purchase Pension Plan. In 1998 and 1997, a matching
contribution of $13,800 and $11,020 respectively, to each Named Executive
Officer under the Section 401(k) plan of Jefferies, with the exceptions
of Mr. Sorice's 1998 matching which was $12,650 and Mr. Rose's 1998
matching which was $12,144.
(b) For 1999, the amount of a 15% discount on units representing shares of
ITG common stock purchased by our Employee Stock Purchase Plan (the "ITG
ESPP") for the Named Executive Officer's account with compensation the
Named Executive Officer has elected to defer, as follows: Mr. Killian:
$3,235; Mr. Cushing: $0; Mr. Heckman: $2,090; Mr. Huck $2,090; Mr. Rose:
$6,600; Mr. Russel: $4,889 and Mr. Sorice: $2,090. For 1998, the 15%
discount on shares of ITG common stock purchased by the ITG ESPP. For
1997, a matching contribution under the Jefferies Employee Stock Purchase
Plan.
(c) In 1998, contributions of $2,683 and allocations of forfeitures of
$1,410 for each of the Named Executive Officers under the Jefferies
Profit Sharing Plan ("PSP"). In 1997, contributions of $4,011 and
allocations of forfeitures of $828 for each of the Named Executive
Officers. There were no such contributions or allocations in 1999.
(d) In 1998, Dividends and interest payments to the cash accounts of the
Named Executive Officers under the Jefferies CAP, paid as of
December 31, 1998, at a rate equal to the average rate Jefferies paid on
its margin accounts carrying credit balances as follows: Mr. Killian:
$6,918; Mr. Cushing: $1,181; Mr. Heckman: $1,149; Mr. Huck: $0;
Mr. Rose: $0; Mr. Russel: $0 and Mr. Sorice: $1,037. In 1997, dividends
and interest payments were as follows: Mr. Killian: $4,616; Mr. Cushing:
$3,067; Mr. Heckman: $1,180; Mr. Huck: $0; Mr. Rose: $2,924; Mr. Russel:
$0 and Mr. Sorice: $837. There were no such payments in 1999.
(e) An amount of "deemed interest" credited to each Jefferies CAP
participant for 1998, determined by multiplying (i) the daily weighted
average amount in the Jefferies CAP participant's Profit-Based Deferred
Compensation Account by (ii) an interest rate equal to the fully diluted
earnings per share (if any) of Jefferies common stock for that fiscal
year divided by the fair market value of a share at the end of the
preceding fiscal year. In 1998, the Named Executive Officers received the
following amounts of such "deemed interest": Mr. Killian: $29,821;
Mr. Cushing: $6,902; Mr. Heckman: $6,770; Mr. Huck: $0; Mr. Rose: $0;
Mr. Russel: $0 and Mr. Sorice: $6,233. In 1997, the Named Executive
Officers received the following amounts of such "deemed interest":
Mr. Killian: $44,206; Mr. Cushing: $28,985; Mr. Heckman: $11,729;
Mr. Huck: $0; Mr. Rose: $30,939; Mr. Russel: $0 and Mr. Sorice: $8,090.
There were no such payments in 1999.
(4) Mr. Killian served as President and Chief Executive Officer from 1994 to
1997 and again since September 1998.
10
<PAGE>
OPTION GRANTS TABLE
During 1999, the following option grants were made to the Named Executive
Officers.
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION GRANT DATE
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE PRESENT VALUE
- ---- ------------ ---------------- -------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Raymond L. Killian, Jr..................... -- -- -- -- --
David C. Cushing........................... 90,000 7.2% $37.97 5/24/2004 $1,703,700
8,000 0.6% $23.84 12/17/2004 $ 97,200
Christopher J. Heckman..................... 90,000 7.2% $37.97 5/24/2004 $1,703,700
8,000 0.6% $23.84 12/17/2004 $ 97,200
Anthony Huck............................... 70,000 5.6% $37.97 5/24/2004 $1,325,100
3,000 0.2% $23.84 12/17/2004 $ 36,450
Joshua D. Rose............................. 25,000 2.0% $37.97 5/24/2004 $ 473,250
Robert J. Russell.......................... 70,000 5.6% $37.97 5/24/2004 $1,325,100
Steven J. Sorice........................... 90,000 7.2% $37.97 5/24/2004 $1,703,700
8,000 0.6% $23.84 12/17/2004 $ 97,200
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table provides information on the number and value of options
held by the Named Executive Officers at December 31, 1999.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT 12/31/99 AT 12/31/99
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE (#) EXERCISABLE/UNEXERCISABLE ($)(1)
- ---- ------------ ------------ ----------------------------- --------------------------------
<S> <C> <C> <C> <C>
Raymond L. Killian, Jr..... 299,670 9,289,006 615,969/0 19,715,970/0
David C. Cushing........... 15,289 473,910 24,351/98,000 454,530/38,780
Christopher J. Heckman..... 10,766 303,852 20,943/102,913 362,650/96,297
Anthony Huck............... -- -- 19,651/77,913 313,257/72,059
Joshua D. Rose............. 60,914 1,888,177 239,735/25,000 5,339,431/0
Robert J. Russel........... 16,376 249,975 22,926/79,826 364,538/115,033
Steven J. Sorice........... 7,975 147,102 19,546/102,913 332,042/96,297
</TABLE>
- ------------------------
(1) At December 31, 1999, the closing bid price per share of our common stock on
the New York Stock Exchange was $28.6875, which was the price used to
determine the year-end value.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF OUR PREVIOUS
FILINGS UNDER THE SECURITIES ACT OR THE SECURITIES EXCHANGE ACT THAT MIGHT
INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART,
THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION AND
THE PERFORMANCE GRAPH INCLUDED HEREIN SHALL NOT BE INCORPORATED BY REFERENCE
INTO ANY SUCH FILINGS.
11
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation committee of the board of directors, the members of which
are Messrs. Garonzik, Jacobs, King and Wolfson, has furnished the following
report on executive compensation:
To: The board of directors and stockholders of Investment Technology
Group, Inc.
INTRODUCTION
The compensation committee of the board of directors is responsible for
developing and implementing compensation policies, plans and programs for our
executive officers to enhance our profitability, and thus stockholder value, by
providing for competitive levels of compensation, rewarding performance that
enhances profitability and encouraging long-term service. Each of the
compensation committee's members is a person who is not a current or former
employee of our company.
The principal components of ongoing compensation of executive officers are
salary, an annual bonus tied to performance and stock option awards providing
incentives and rewards for long-term service and performance. The compensation
committee's functions include reviewing salary levels for executive officers on
an annual basis, establishing and determining the level of performance targets
upon which payment of annual bonuses is conditioned and other terms of such
annual bonuses, granting stock options and otherwise administering our Amended
and Restated 1994 Stock Option and Long-Term Incentive Plan (the "1994 Option
Plan"). The compensation committee acts on behalf of our company in negotiating
the terms of employment agreements (including modifications to existing
employment agreements) with executive officers and advises and makes
recommendations to the board of directors regarding the approval of such
employment agreements and adoption of compensation and benefit plans (including
amendments to existing plans) in which executive officers and directors may
participate.
The compensation committee intends that compensation paid to the Chairman of
the board of directors, President and Chief Executive Officer and the other
executive officers named in the Summary Compensation Table not be subject to the
limitation on tax deductibility under Section 162(m) of the Internal Revenue
Code, as amended (the "Code"), so long as this can be achieved in a manner
consistent with the compensation committee's other objectives. Code
Section 162(m) generally eliminates a corporation's tax deduction in a given
year for payments to certain named executive officers in excess of $1 million,
unless such payments result from "qualified performance-based compensation." The
board of directors in 1997 adopted the Pay-for-Performance Incentive Plan in
order that annual incentive payments (bonuses) to executives which might,
together with salary, exceed $1 million in a given year, will qualify as
"performance- based compensation" that is fully deductible under Code
Section 162(m). The compensation committee has been advised that compensation
paid in 1999 will not be subject to the limitation on deductibility under Code
Section 162(m).
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Killian served as Chairman of the board of directors, President and
Chief Executive Officer throughout 1999. The base annual salary level, the
annual bonus level and other terms of the annual bonus specified below were
determined by the compensation committee in consultation with an outside
compensation consultant. Mr. Killian's base salary and target annual bonus were
set at a total of $1,500,000, an amount believed to be consistent with the
general practice of comparable companies for the chairman and chief executive
officer. Under this compensation package, the division of Mr. Killian's targeted
compensation in 1999 between annual base salary of $250,000, fixed bonus of
$62,500 per quarter to recognize Mr. Killian's level of experience, and a
performance based incentive bonus target
12
<PAGE>
of $1,000,000, was intended to link annual cash compensation to performance to a
degree generally similar to comparable companies reviewed in 1999.
Under the terms of Mr. Killian's compensation package governing the
performance based incentive bonus, the targeted annual bonus of $1,000,000 was
to be payable if our net after-tax profit reached $57 million (or approximately
31% above our 1998 net after-tax profit); this target was set by the
compensation committee based substantially on its assessment of our budget for
1999. The amount of the bonus was to be decreased below $1,000,000, down to
zero, by an amount equal to 8% of the shortfall of adjusted net after-tax profit
below the targeted amount, and was to be increased above $1,000,000, subject to
no upper limit, by an amount equal to 6% of the excess of adjusted net after-tax
profit above the targeted amount. Our company's net after-tax profit for 1999
failed to meet the $57 million target, but the compensation committee concluded
that the total cash compensation payable to Mr. Killian under this bonus
arrangement did not adequately compensate him for the significant and important
contributions made by him to our company during 1999. Accordingly, the
compensation committee decided to award Mr. Killian a discretionary bonus of
$500,000 and an option to purchase 16,632 shares of common stock of our company
at a strike price of $29.09 per share, which equals the fair market value of
shares of our company's common stock on January 14, 2000, as defined in our 1994
Option Plan. The payment of the $500,000 discretionary bonus, as well as the
$250,000 fixed bonus, was deferred until after Mr. Killian's retirement in a
deferred compensation account.
Mr. Killian is required to participate in our stock unit award program.
Under this program, executive officers and other key employees of our company
are required to defer receipt of a portion of their total cash compensation.
Participants are granted units representing our common stock with a fair market
value equal to 115% of the deferred compensation. The value of units in excess
of the value of deferred compensation is disclosed in the Summary Compensation
Table under the "Other Annual Compensation" column. In connection with our
spin-off from Jefferies the Jefferies CAP Plan was terminated and Jefferies'
liability associated with Mr. Killian's account under such plan was assumed by
our company and included in Mr. Killian's deferred compensation account.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
Our compensation program for other executive officers is reviewed annually
to provide amounts generally consistent with the range paid by companies in
similar industries, but without pegging such amounts to a specific percentile.
The targeted annual bonuses for 1999 were intended to provide more than half of
each executive officer's total annual cash compensation at the target level of
performance. This was intended to provide a strong link between pay and
performance.
The annual bonuses payable to the executive officers other than Mr. Killian
were payable out of a "bonus pool." The amount of the bonus pool was determined
based upon specified increases in client revenues (less certain costs), with the
total amount of the bonus pool increasing as specified levels of revenues are
achieved. Such executives are entitled to receive discretionary bonus payments
targeted to an allocation that is determined annually with respect to the bonus
pool. Our performance in 1999 resulted in bonus payouts that were well below
targeted levels.
The Committee authorized the grant of 501,282 options during 1999 to the
executive officers. The other executive officers are required to participate in
our stock unit award program.
13
<PAGE>
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on our common stock against the cumulative total return of the Russell
2000 Index and the mean of the Lipper Management Company Price Index and Nasdaq
Computer and Data Processing Services Stock Composite Indices, for the five-year
period ending December 31, 1999.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
31-DEC-94 30-DEC-95 31-DEC-96 31-DEC-97 31-DEC-98 31-DEC-99
<S> <C> <C> <C> <C> <C> <C>
Investment Technology Group, Inc. 100 137.14 285.19 415.05 919.9 697.82
Russell 2000 Index 100 126.21 144.84 174.56 168.54 201.61
Mean of Lipper Management Company Price and Nasdaq Computer
and Data Processing Services Stock Composite Index 100 146.16 194.37 282.71 606.05 900.54
</TABLE>
PENSION PLAN
All of our employees who were 21 years of age by December 31, 1997, whose
initial date of service was before January 1, 1998 and who had completed one
year of service with us were covered by the Jefferies Employees' Pension Plan
(the "Jefferies Pension Plan"), a defined benefit plan. However, benefit
accruals for ITG employees ceased as of February 15, 1999, and the entire
benefit of each ITG employee who was actually employed on December 31, 1998 was
fully vested at that time. Additionally, participants who had attained age 45
and were credited with at least 5 years of vesting service as of February 15,
1999 will receive enhanced benefits under the Jefferies Pension Plan. Now that
Jefferies has obtained approval from the Internal Revenue Service to distribute
amounts accrued under the Jefferies Pension Plan, ITG employees will be entitled
to receive distributions of their entire benefits under the Jefferies Pension
Plan in the near future. At the time benefit distributions from the Jefferies
Pension Plan are made available to ITG employees, ITG will pay to the Jefferies
Pension Plan approximately $1.5 million in order to cover the underfunding in
the Jefferies Pension Plan attributable to ITG employees.
As of December 31, 1999, the estimated lump sum benefit payable to each of
the Named Executive Officers was: Mr. Killian: $312,653; Mr. Cushing: $24,584;
Mr. Heckman: $29,781; Mr. Huck: $13,966; Mr. Rose: $61,928; Mr. Russel: $12,306;
and Mr. Sorice: $16,081. The benefits will be distributed under one of the
following forms of payment, as designated by the Named Executive Officer: single
lump sum distribution, either in cash (subject to 20% withholding and possible
penalty) or as a rollover to a qualified retirement plan; a single life annuity;
a 50% or 75% joint and survivor annuity, or a life annuity with 5, 10 or
15 years certain.
14
<PAGE>
SECURITY OWNERSHIP
The following table sets forth certain information, as of March 16, 2000,
regarding beneficial ownership of our common stock by (1) each director,
(2) each Named Executive Officer, (3) all directors and executive officers as a
group and (4) each person known by us to beneficially own 5% or more of our
common stock. Information regarding stockholders other than directors, executive
officers and employee benefit plans is based upon information contained in
Schedules 13D or 13G filed with the Securities and Exchange Commission ("SEC").
For the purpose of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares which such person or group has the right to
acquire within 60 days after such date, but such shares are not deemed to be
outstanding for the purposes of computing the percentage ownership of any other
person. Unless otherwise indicated in a footnote and subject to applicable
community property and similar statutes, each person listed as the beneficial
owner of the shares possesses sole voting and dispositive power with respect to
such shares. The mailing address of the parties listed below is our principal
business address unless otherwise indicated.
<TABLE>
<CAPTION>
SHARES OF ITG PERCENTAGE OF ITG
COMMON STOCK COMMON STOCK
BENEFICIALLY OWNED(1) BENEFICIALLY OWNED
--------------------- ------------------
<S> <C> <C>
Directors
Raymond L. Killian, Jr................................ 1,169,932 3.8%
Frank E. Baxter....................................... 1,553,946 4.5%
Neal S. Garonzik...................................... 46,425 *
William I Jacobs...................................... 50,785 *
Robert L. King........................................ 36,846 *
Mark A. Wolfson....................................... 82,800 *
Other Named Executive Officers
David C. Cushing...................................... 44,489 *
Christopher J. Heckman................................ 59,820 *
Anthony Huck.......................................... 30,792 *
Joshua D. Rose........................................ 321,663 1.0%
Robert J. Russel...................................... 63,649 *
Steven J. Sorice...................................... 49,746 *
All directors and executive officers as a group (14
persons).................................................. 3,412,136 11.1%
5% stockholders
Wellington Management Company, LLP(2)................. 1,822,900 5.9%
</TABLE>
- ------------------------
* Less than 1%.
(1) Beneficial ownership includes stock options that are exercisable at
March 16, 2000, or within 60 days thereafter, as follows: Mr. Killian:
455,969; Mr. Garonzik: 20,470; Mr. Jacobs: 20,470; Mr. King: 20,470;
Mr. Wolfson: 20,470; Mr. Cushing: 24,351; Mr. Heckman: 20,943; Mr. Huck:
19,651; Mr. Rose: 239,735; Mr. Russel; 22,926; Mr. Sorice: 19,546; and all
directors and executive officers as a group: 913,224.
(2) Based on a Schedule 13G filed on February 11, 2000 by Wellington Management
Company LLC in its capacity as investment adviser with respect to shares of
our common stock owned of record by Wellington's clients. Wellington's
clients have the right to receive, or the power to direct the receipt of,
dividends from, or the proceeds from the sale of, such shares of our common
stock. Wellington shares the power to vote or to direct the vote with
respect to 943,600 shares of our common stock and shares the power to
dispose of or to direct the disposition with respect to 1,822,100 shares of
our common stock.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Jefferies and its affiliates provided various services to us during 1999 as
described below. Prior to the spin-off from Jefferies on April 27, 1999, these
were related party transactions.
SPIN-OFF EXPENSES
Pursuant to the Agreement and Plan of Merger (the "Agreement") dated
March 17, 1999 between Jefferies and ITG, transaction expenses, as defined in
the Agreement, related to the spin-off were allocated and shared. Amounts paid
to Jefferies in 1999 were $4,600,000.
TAX SHARING AGREEMENT
During 1999, ITG was party to a tax sharing and indemnification agreement
with Jefferies dated as of March 17, 1999, which provided the method by which
the federal, state and local income or franchise tax liabilities of Jefferies
and ITG were to be allocated and the manner in which allocated liabilities were
to be paid. The aggregate amount we paid in 1999 under this agreement was
approximately $6.5 million.
JEFFERIES SERVICE AGREEMENT
Pursuant to a service agreement, Jefferies provided us specified
administrative services, at fixed monthly costs. Administrative services
included accounting, payroll, compliance services, personnel services, legal
services, data processing and telecommunications. All services were terminated
on December 31, 1998, except for certain personnel and accounting services that
were terminated as of May 31, 1999 and June 30, 1999, respectively. The costs of
such services to us prior to the spin-off date in 1999 were $161,000.
EXECUTION AGREEMENT
W&D Securities, Inc., a subsidiary of Jefferies, and ITG entered into a new
execution agreement with an initial term of January 2, 1999 to June 30, 2000,
pursuant to which W&D Securities, Inc. performed certain execution services for
us on the New York Stock Exchange and other exchanges. The cost of these
execution services was $5,046,000, prior to the spin-off in 1999, and were
primarily included in transaction processing expenses.
CLEARING AGREEMENT
Jefferies provided substantially all of our clearing services pursuant to a
Fully Disclosed Clearing Agreement dated as of January 1, 1999 ("Clearing
Agreement"), with an initial term of January 1, 1999 to June 30, 2000. The
aggregate cost of such services to us was $4,928,000 prior to the spin-off in
1999, and was included in transaction processing expenses. In addition, included
in revenues are financing costs resulting from temporary positions in securities
assumed in the normal course of business of $665,000 prior to the spin-off in
1999, paid to Jefferies.
REVENUE SHARING AGREEMENT
We paid to Jefferies an aggregate of $47,000 prior to the spin-off in 1999,
as compensation to Jefferies's account executives for introducing customers to
POSIT pursuant to a revenue sharing agreement. This agreement terminated
according to its terms on March 15, 1999. Jefferies has executed trades in an
agency capacity for certain of its customers using our services. Commission fees
of $756,000 prior to the spin-off in 1999 are included in our revenues.
16
<PAGE>
OTHER
Included in other general and administrative expenses are fees paid to
Jefferies International Limited of $35,000 prior to the spin-off in 1999, for
various broker and administrative services.
Pursuant to a software license agreement between Investment Technology Group
International Limited ("ITGIL") and Investment Technology Group SG Limited ("ITG
SG"), ITGIL invoiced ITG SG $1.7 million in 1999 for development services.
In 1999, ITG Inc. entered into a service agreement with our affiliates,
Investment Technology Group Limited and ITG Australia Ltd., under which
ITG Inc. provides introductory brokerage and related services. Fees for these
services are included in revenues and amounted to $846,000 and $134,000,
respectively.
In 1999, we received royalty revenue from our affiliates, ITG
Australia Ltd. and ITG SG in the amount of $14,000, and $389,000, respectively,
pursuant to software license agreements.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers, and persons who beneficially own more than 10% of our outstanding
common stock, to file with the SEC initial reports of beneficial ownership and
reports of changes in beneficial ownership of our common stock and other equity
securities of our company. Directors, executive officers and greater-than-10%
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. During 1999, a statement of changes in beneficial
ownership required to be filed by each of Robert J. Russel and David C. Cushing
was filed late. Based on a review of the copies of the forms furnished to us and
written representations from our executive officers and directors, all other
such persons subject to the reporting requirements of Section 16(a) filed the
required reports with respect to 1999 on a timely basis.
RATIFICATION OF SELECTION OF AUDITORS
KPMG LLP was our independent auditor for the year ended December 31, 1999.
On March 22, 2000, KPMG LLP was appointed by the audit committee to serve as our
independent auditors for 2000.
The ratification of the appointment of KPMG LLP is being submitted to the
stockholders at the annual meeting. If such appointment is not ratified, the
board of directors will consider the appointment of other accountants. The board
of directors recommends a vote "FOR" the ratification of the appointment of KPMG
LLP as our independent auditors for the 2000 fiscal year.
A representative of KPMG LLP, the independent auditors who audited our
consolidated financial statements for 1999, is expected to be present at the
meeting to respond to appropriate questions of stockholders and will have the
opportunity to make a statement if he or she so desires.
WHERE YOU CAN FIND MORE INFORMATION
As required by law, we file reports, proxy statements and other information
with the SEC. These reports, proxy statements and other information contain
additional information about our company. You can inspect and copy these
materials at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. You can obtain information about the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet Site that contains reports, proxy and information statements and other
information regarding companies that file electronically with the SEC. The SEC's
Internet address is http://www.sec.gov. You can also inspect these materials of
our company at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
17
<PAGE>
The SEC allows us to "incorporate by reference" information into this proxy
statement, which means that we can disclose important information by referring
you to another document filed separately with the SEC. Information incorporated
by reference is considered part of this proxy statement, except to the extent
that the information is superseded by information in this proxy statement.
This proxy statement incorporates by reference the information contained in
our Annual Report on Form 10-K for the year ended December 31, 1999 (SEC file
number 0-23644). We also incorporate by reference the information contained in
all other documents that we file with the SEC after the date of this proxy
statement and before the annual meeting. The information contained in any of
these documents will be considered part of this proxy statement from the date
these documents are filed.
Any statement contained in this proxy statement or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this proxy statement to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this proxy
statement.
If you are one of our stockholders and would like to receive a copy of any
document incorporated by reference into this proxy statement (which will not
include any of the exhibits to the document other than those exhibits that are
themselves specifically incorporated by reference into this proxy statement; any
other exhibits will be available upon request at cost), you should call or write
to Investment Technology Group, Inc., 380 Madison Avenue, 4th Floor, New York,
New York 10017, Attention: Timothy H. Hosking (telephone: (212) 588-4000). In
order to ensure timely delivery of the documents prior to the annual meeting,
you should make any such request not later than April 26, 2000.
You should rely only on the information contained in (or incorporated by
reference into) this proxy statement. We have not authorized anyone to give any
information different from the information contained in (or incorporated by
reference into) this proxy statement. This proxy statement is dated March 28,
2000. You should not assume that the information contained in this proxy
statement is accurate as of any later date, and the mailing of this proxy
statement to stockholders shall not mean otherwise.
18
<PAGE>
OTHER MATTERS; STOCKHOLDER PROPOSALS
FOR THE 2001 ANNUAL MEETING OF ITG
As of the date of this proxy statement, our board of directors knows of no
matters that will be presented for consideration at the annual meeting, other
than as described in this proxy statement. If any other matters shall properly
come before the annual meeting or any adjournments or postponements thereof and
shall be voted upon, the enclosed proxies will be deemed to confer discretionary
authority on the individuals named as proxies therein to vote the shares
represented by such proxies as to any such matters. The persons named as proxies
intend to vote or not vote in accordance with the recommendation of our board of
directors and management.
The deadline for submitting stockholder proposals for inclusion in ITG's
2000 annual meeting proxy materials was November 30, 1999 and, since no such
proposals were timely submitted, no stockholder proposals will be included in
ITG's 2000 annual meeting proxy materials. Stockholders of ITG who intend to
present proposals for consideration at the 2001 annual meeting of stockholders
are hereby advised that the Secretary of ITG must receive any such proposals no
later than the close of business on November 30, 2000, if any such proposal is
to be considered for inclusion in the 2001 annual meeting proxy materials of
ITG.
By Order of the Board of Directors,
/s/ Timothy H. Hosking
Timothy H. Hosking
Secretary
19
<PAGE>
x Please mark your
votes as in this
example. 2609
This proxy, when properly executed, will be voted in the manner directed by the
undersigned stockholder. If no direction is made, this proxy will be voted FOR
the proposed slate of directors and FOR Proposal 2.
The Board of Directors recommends a vote FOR items 1 and 2
1. Election of Directors. FOR WITHHELD
For, except vote withheld from the following nominee(s):
Nominees:
01. Frank E. Baxter
02. Neal S. Garonzik
03. William I Jacobs
04. Raymond L. Killian, Jr.
05. Robert L. King
06. Mark A. Wolfson
2. Ratification of the
appointment of KPMG LLP as the independent auditors
for the 2000 fiscal year. FOR AGAINST ABSTAIN
Mark box at right if an address change or comment has been noted on the reverse
side of this card.
The undersigned hereby acknowledges receipt of the Form 10-K and the Notice of
Annual Meeting of Stockholders and the Proxy Statement, and hereby revokes all
previously granted proxies.
SIGNATURE(S) DATE
FOLD AND DETACH HERE ONLY IF YOU ARE RETURNING YOUR VOTED PROXY CARD BY MAIL
INVESTMENT TECHNOLOGY GROUP, INC.
Dear Stockholder,
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the management and operation of your Company
that require your immediate attention and approval. These are discussed in
detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
<PAGE>
Your vote must be received prior to the Annual Meeting of Stockholders, May 9,
2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Timothy H. Hosking
Secretary
P
R
O
X
Y
PROXY CARD FOR ANNUAL MEETING OF STOCKHOLDERS
ON MAY 9, 2000
This proxy is solicited by the Board of Directors of the Company. The
undersigned hereby appoints Raymond L. Killian, Jr., Howard C. Naphtali and
Timothy H. Hosking, and each them, as proxies with full power of substitution,
to represent the undersigned and to vote all shares of Common Stock of
Investment Technology Group, Inc. held of record by the undersigned on March 24,
2000, or which the undersinged would otherwise be entitled to vote at the Annual
Meeting of Stockholders to be held on May 9, 2000, and any adjournment thereof,
upon all matters that may properly come before the meeting. All shares votable
by the undersigned will be voted by the proxies named above in the manner
specified on the reverse side of this card, and such proxies are authorized to
vote in their discretion on such other matters as may properly come before the
meeting.
Please sign this proxy exactly as your name(s) appear(s) on the books of the
Company. Joint owners should each sign personally. Trustees and other
fiduciaries should indicate the capacity in which they sign, and where more than
one name appears, a majority must sign. If a corporation, this signature should
be that of an authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
FOLD AND DETACH HERE
SEE REVERSE SIDE
