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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.   )
Filed by the Registrant  ☒
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))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12
Cowen Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

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:
(2)
Aggregate number of securities to which transaction applies:
(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):
(4)
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Total fee paid:

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 Schedule and the date of its filing.
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Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
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Filing Party:
(4)
Date Filed:

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2021 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
 

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May 21, 2021
Dear Fellow Stockholder:
You are cordially invited to attend the 2021 Annual Meeting of Stockholders of Cowen Inc. to be held on June 24, 2021, at 10:00 a.m. Eastern Daylight Time. The Annual Meeting will be conducted online only, via live webcast.
The information regarding matters to be voted upon at the Annual Meeting is set out in the attached Notice of Annual Meeting of Stockholders and Proxy Statement.
It is important that your shares be represented at the Annual Meeting, regardless of the number of shares you hold or whether you plan to attend the virtual meeting. I urge you to read the accompanying proxy statement and vote your shares as soon as possible. The proxy card contains instructions on how to cast your vote.
2020 IN REVIEW
Much has been written about 2020 and its painful experiences. Perhaps the most enduring lesson of the year for Cowen as a whole is this: 2020 demonstrated that we thrive as an organization by helping others to fulfill their strategic goals and financial objectives. To put it simply: we only win when we help others win. We are mindful of the fact that our success is dependent on the success of all our stakeholders and we realize that when we do well at Cowen, it enables us to do more good for others. That is a big part of what motivates us every day.
Despite the myriad challenges in 2020, the Cowen team rose to the occasion, delivering our best operating and financial results on record. We generated revenues of more than $1.5 billion and the highest ever economic operating income of over $330 million. We handled record trading volumes, executed multiple complex transactions and advisory assignments and raised meaningful assets under management, all while more than 90% of our team was working remotely. Our growth was strong in all of our operating segments, with full-year revenues up 108% in investment banking and 41% in markets, while investment management fees rose 40% and incentive income climbed 87% versus full-year 2019. Even with the remote operating environment we remained highly engaged with our clients. Our total conference attendance actually rose 25% in 2020 despite the shift to virtual events.
Total annual shareholder return was almost 67% in 2020, and 2021 is off to an even stronger start. Cowen’s Board implemented a quarterly cash dividend in February 2020 and has increased the size of the dividend twice since then. Long-term shareholders have also been rewarded for placing their trust in Cowen: Annualized three-year return through the end of 2020 was over 24%, while annualized 5-year total shareholder return was more than 11%.
 

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Now, as we look forward to the balance of 2021, we are excited about what the future holds. We are committed to living our core values of Vision, Empathy, Sustainability and Tenacious Teamwork, which have served us well over the past year and act as our enduring guideposts as we help our clients to reach their goals.
We are grateful for the trust and confidence you place in us as shareholders, and we thank you for your continuing support.
Sincerely,
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JEFFREY M. SOLOMON
Chair and Chief Executive Officer
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OUR CORE VALUES
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2020 PERFORMANCE HIGHLIGHTS
In the face of adversity and disruption, the Cowen team delivered record operating and financial results in 2020. This performance is the direct result of years of careful strategic planning and targeted investments in our team and capabilities as well as fostering a culture of collaboration. Cowen’s culture is key to the outcomes we deliver to clients and driving long-term value for stakeholders.
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NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
In light of the coronavirus, or COVID-19, outbreak, for the safety of all of our stockholders, members of our Board of Directors and management, our Board of Directors has determined that the 2021 Annual Meeting will be held in a virtual meeting format only, via the Internet, with no physical in-person meeting. If you plan to participate in the 2021 Annual Meeting, please see “Questions and Answers About the Annual Meeting and Voting” in the attached proxy statement.
PURPOSE

To elect eight members to the Board of Directors of Cowen Inc., each for a one-year term.

To conduct an advisory vote to approve the compensation of the named executive officers disclosed in the attached proxy statement (“say-on-pay” vote).

To ratify the appointment of KPMG LLP as the independent registered public accounting firm for Cowen Inc. for the fiscal year ending December 31, 2021.

To approve an increase in the shares available for issuance under the 2020 Equity Incentive Plan.

To consider one stockholder proposal, if properly presented at the meeting (the “Stockholder Proposal”).

To transact such other business as may properly come before the meeting or any adjournments or postponements thereof.
DATE
Thursday, June 24, 2021
TIME
10:00 AM ET
ACCESS
Our 2021 Annual Meeting of Stockholders can be accessed virtually at http://www.meetingcenter.io/206079842
RECORD DATE
May 14, 2021
You are eligible to vote if you were a stockholder of record on this date.
INSPECTION OF LIST OF STOCKHOLDERS OF RECORD
A list of the stockholders of record as of May 14, 2021 will be available via a secure link that will be provided during the 2021 Annual Meeting. The link will provide a protected PDF version of the list of stockholders of record as of May 14, 2021.
By Order of the Board of Directors
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OWEN S. LITTMAN
Secretary
May 21, 2021
Important Notice Regarding the Availability of Proxy Materials for the 2021 Annual Meeting of Stockholders to Be Held on June 24, 2021. The Proxy Statement and Annual Report to stockholders are also available at
www.cowen.com/annualreports.html
 

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YOUR VOTE IS IMPORTANT!
Whether or not you plan to attend the meeting, please submit your proxy card or voting instructions promptly so that we can be assured of having a quorum present at the meeting and so that your shares may be voted in accordance with your wishes. Most stockholders have a choice of voting over the Internet, by telephone or by using a traditional proxy card. Please refer to the attached proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.
 

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PROPOSAL 1 –  ELECTION OF DIRECTORS
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DIRECTOR NOMINEES 2
KEY FACTS ABOUT OUR BOARD 2
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EXECUTIVE OFFICERS OF THE COMPANY 23
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COMPENSATION DISCUSSION AND ANALYSIS 24
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Annual Report to Stockholders and Form 10-K 65
Householding 65
Other Matters 66
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PROXY STATEMENT
2021 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 24, 2021
The Board of Directors, or the Board, of Cowen Inc., Cowen or the Company, is soliciting proxies for use at the annual meeting of stockholders to be held on June 24, 2021, or the annual meeting, to be conducted online only, via live webcast. There will be no physical location for stockholders to attend in person. Stockholders may attend the annual meeting by logging in at www.meetingcenter.io/206079842. The password for the annual meeting is COWN2021. This proxy statement and the enclosed proxy card are first being mailed or given to stockholders on or about May 21, 2021.
 
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PROPOSAL 1
ELECTION OF DIRECTORS

The Board recommends a vote “FOR” the election of the director nominees
Jeffrey M. Solomon, Brett H. Barth, Katherine E. Dietze, Gregg A. Gonsalves, Steven Kotler, Lawrence E. Leibowitz, Margaret L. Poster and Douglas A. Rediker have been nominated for re-election to the Board to serve until our 2022 annual meeting of stockholders or until their successors are elected and qualified. Each of the nominees has agreed to serve as a director if elected. If, for any reason, any nominee becomes unable to serve before the annual meeting occurs, the persons named as proxies may vote your shares for a substitute nominee selected by our Board. If all director nominees are elected at our Annual Meeting, the Board will consist of eight directors.
KEY FACTS ABOUT OUR DIRECTOR NOMINEES
Cowen is committed to ensuring that is comprised of individuals that bring diverse backgrounds, experiences and perspectives.
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Each nominee to our Board brings valuable capabilities to the Board. The Board believes that the nominees as a group have the experience and skills in areas such as business management, strategic development, corporate governance, leadership development, investment management, investment banking, finance and risk management and other relevant experience required to build a Board that is effective and responsive to the needs of the Company. In addition, the Board believes that each of our eight director nominees possesses sound judgment, integrity, high standards of ethics and a commitment to representing the long-term interests of our stockholders.
Set forth below is biographical information for each of the members of our Board of Directors. All ages are as of May 14, 2021.
 
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JEFFREY M. SOLOMON, 55
CHAIR AND CEO
Director Since: 2011
Other US-Listed Company Directorships

Current: None

Former (Past 5 Years): None
RELEVANT SKILLS

Executive Leadership and Management

Risk Oversight

Corporate Strategy and Business Development

Social Responsibility Oversight
As Chair and CEO, Mr. Solomon provides the Board with institutional knowledge of all aspects of the Cowen’s businesses, in-depth knowledge of its business and affairs, management’s perspective on those matters and an avenue of communication between the Board and senior management.
CAREER HIGHLIGHTS

Cowen Inc. (merged with Ramius in 2009)

Chair (2019 — Present) and CEO (2017 — Present)

Prior to his appointment as CEO, Mr. Solomon held the following positions at the Company:

President

CEO of Cowen and Company

Chief Operating Officer

Head of Investment Banking

Co-Portfolio Manager, Ramius
OTHER EXPERIENCE AND COMMUNITY INVOLVEMENT

Vice Chair and an inaugural member, Securities and Exchange Commission’s Small Business Capital Formation Advisory Committee which provides advice and recommendations on Commission rules, regulations and policy matters related to small businesses, including smaller public companies.

Member, American Securities Association

Member, Executive Committee, Partnership for NYC

UJA Federation of New York

Director

Co-Chair, King David Society

Director, Foundation for Jewish Camp

Past Member, Committee on Capital Markets Regulation, an independent and nonpartisan 501(c)(3) research organization dedicated to improving the regulation of U.S. capital markets
EDUCATION

Graduate of University of Pennsylvania
 
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BRETT BARTH, 49
INDEPENDENT LEAD DIRECTOR
Director Since: 2018
Cowen Committees
Compensation (Chair)
Nominating & Corporate Governance
Other US-Listed Company
Directorships
Golden Arrow Merger Corp.
Former (Past 5 Years): None
RELEVANT SKILLS

Financial Services

Executive Leadership and Management

Corporate Governance

Investment Management
Mr. Barth has extensive experience vetting investment opportunities across the asset class spectrum and through a range of market environments, working with both traditional and alternative investment managers. At BBR, Mr. Barth co-manages the firm and oversees the company’s investment approach and implementation. His professional background has provided him with extensive expertise in investment and wealth management.
CAREER HIGHLIGHTS

BBR Partners, private wealth management advisory firm (2000 — present)

Co-Founder and Co-CEO

Member, Executive Committee

Member, Investment Committee

Prior to BBR, Mr. Barth was a member of Goldman Sachs Equity Capital Markets Group in New York and Hong Kong
OTHER EXPERIENCE AND COMMUNITY INVOLVEMENT

University of Pennsylvania

Trustee

Member, Board of Overseers of the Graduate School of Education

Past Chair, Penn Fund, undergraduate annual giving program

Past Inaugural Chair, Undergraduate Financial Aid Leadership Council

UJA-Federation of New York

Member, Board and Executive Committee

Co-chair, Annual Campaign

Member, endowment’s Investment Committee

Past recipient, Alan C. Greenberg Young Leadership Award
EDUCATION

Graduate of University of Pennsylvania
 
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KATHERINE E. DIETZE, 63
INDEPENDENT DIRECTOR
Director Since: 2011
Cowen Committees

Audit (Chair)
Other US-Listed Company Directorships

Current: Matthews International

Former (Past 5 Years): Liberty Property Trust
RELEVANT SKILLS

Audit and Financial Expertise

Financial Services

Risk Oversight

Corporate Governance
Through her leadership roles at Credit Suisse First Boston as well as public company boards, Ms. Dietze gained significant experience and perspective in investment banking management and corporate governance. Ms. Dietze spent over 20 years in the financial services industry prior to her retirement in 2005.
CAREER HIGHLIGHTS

Credit Suisse First Boston

Global Chief Operating Officer, Investment Banking Division (2003 — 2005)

Managing Director, Telecommunications Group (1996 — 2003)

Ms. Dietze formerly held the following positions:

Co-Head, Telecommunications, Investment Banking, Solomon Brothers

Director and Audit Chair, LaBranche (acquired by Cowen in 2011)
EDUCATION

Graduate of Brown University

MBA, Columbia Graduate School of Business
 
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GREGG A. GONSALVES, 53
INDEPENDENT DIRECTOR
Director Since: 2020
Cowen Committees

Audit

Nominating & Corporate Governance
Other US-Listed Company Directorships

Current: Cedar Realty Trust (Chair)

Former (Past 5 Years): None
RELEVANT SKILLS

Audit and Financial Expertise

Financial Services

Social Responsibility Oversight

Corporate Governance
Mr. Gonsalves’ professional background has provided him with extensive experience in investment banking and real estate. His service on the board of directors of other public companies and not-for-profit entities, including his role as Chair of The Jackie Robinson Foundation, has provided him expertise and insight into matters such as corporate governance, social responsibility oversight and strategy.
CAREER HIGHLIGHTS

Advisory Partner, Integrated Capital, a leading, hotel-focused, private real estate advisory and investment firm (2013 — present)

Mr. Gonsalves formerly held the following positions at Goldman Sachs:

Partner, Real Estate Mergers & Acquisitions

Partner, Industrial Group

Various positions within investment banking, mergers and acquisitions
OTHER EXPERIENCE AND COMMUNITY INVOLVEMENT

Chairman, The Jackie Robinson Foundation

Chairman, Cedar Realty Trust, a publicly traded retail REIT

Director, RREEF America REIT II, a private, open-end core real estate fund

Director, POP Tracker LLC, a private company focused on providing proof of performance to the out-of-home advertising industry
EDUCATION

Graduate of Columbia University

MBA, Harvard Business School
 
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STEVEN KOTLER, 74
INDEPENDENT DIRECTOR
Director Since: 2010*
Cowen Committees

Audit

Nominating & Corporate Governance (Chair)
Other US-Listed Company Directorships

Current: None

Former (Past 5 Years): None
RELEVANT SKILLS

Audit and Financial Expertise

Corporate Governance

Financial Services

Executive Leadership and Management
Through his leadership positions at Gilbert Global, Mr. Kotler gained extensive experience in leading an international financial institution and expertise in private equity.
CAREER HIGHLIGHTS

Vice Chair, Gilbert Global Equity Partners, a private equity firm (2000 — present)

Mr. Kotler formerly held the following positions at Schroder & Co. (predecessor firm, Wertheim & Co.)

President & Chief Executive Officer

Group Managing Director

Global Head of Investment and Merchant Banking
OTHER EXPERIENCE AND COMMUNITY INVOLVEMENT

Director, CPM Holdings, international agricultural process equipment company (private)

Co-Chair, Birch Grove Capital, an asset management firm

Member, Council on Foreign Relations

Former Council President, The Woodrow Wilson International Center for Scholars (1999 — 2002)

Former Governor, American Stock Exchange

Former Member, The New York City Partnership

Former Member, Infrastructure and Housing Task Force, Chamber of Commerce

Former Board of Trustee, Columbia Preparatory School

Former Board of Overseers, California Institute of the Arts.
EDUCATION

Graduate of City College of New York
*
Previously served as a director of Cowen Holdings from September 2006 until June 2007
 
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LAWRENCE E. LEIBOWITZ, 61
INDEPENDENT DIRECTOR
Director Since: 2018
Cowen Committees

Compensation
Other US-Listed Company Directorships

Current: None

Former (Past 5 Years): None
RELEVANT SKILLS

Financial Services

Private Equity

Technology

Executive Leadership and Management
Mr. Leibowitz is an experienced finance and technology entrepreneur who specializes in business transformation and capital markets. Combined with his past service on the board of directors of other public companies and current service on the board of directors of private companies, Mr. Leibowitz provides extensive capital markets knowledge, including trading microstructure, regulation, asset management and quantitative methods.
CAREER HIGHLIGHTS

NYSE Euronext

Former Member of the Board of Directors and Chief Operating Officer (2010 — 2013)

Head of Global Equities Markets

Mr. Leibowitz formerly held the following positions

Chief Operating Officer, Americas Equities, UBS

Co-head, Schwab Soundview Capital Markets

CEO, Redibook

Founding Partner, Bunker Capital

Managing Director and Head of Quantitative Trading and Equities Technology, CS First Boston
OTHER EXPERIENCE AND COMMUNITY INVOLVEMENT

Vice Chairman, XCHG Xpansiv, an intelligent commodities exchange focusing on renewable energy products (private)

Director, NYDIG Trust and NYDIG Execution Services, a custodian and broker for digital currencies that is regulated by the NY Department of Finance (private)

Director, various other private companies in the data management and digital law businesses

Director, Giving Compass, a non-profit technology platform which helps charitable givers and philanthropists find resources and information to guide their efforts
EDUCATION

Graduate of Princeton University
 
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MARGARET L. POSTER, 69
INDEPENDENT DIRECTOR
Director Since: 2019
Cowen Committees

Audit

Compensation

Nominating & Corporate Governance
Other US-Listed Company Directorships

Current: None

Former (Past 5 Years): None
RELEVANT SKILLS

Audit Committee Financial Expert

Risk Oversight

Corporate Strategy

Corporate Governance
Ms. Poster’s professional background, including her leadership role at Willkie Farr & Gallagher LLP, has provided her with significant experience and insight in risk management, strategic planning and operations, human capital and talent development and financial reporting.
CAREER HIGHLIGHTS

Chief Operating Officer, Willkie Farr & Gallagher LLP (1991 — 2018)

Prior to Willkie, Farr & Gallagher LLP, Ms. Poster held the following positions

President of Workbench, Inc

Chief Financial Officer, Barnes & Noble Bookstores Inc.

Chief Financial Officer, Jewelry & Sporting Good Division at W.R. Grace & Co.
OTHER EXPERIENCE AND COMMUNITY INVOLVEMENT

Executive Managing Director, co-Lead Legal Sector Advisory Group, Cushman & Wakefield

Former Director, Generation Citizen

Former Trustee, Blythdale Childrens’ Hospital
EDUCATION

Graduate of University of Vermont

MBA, Harvard Business School

Certified Public Accountant
 
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DOUGLAS A. REDIKER, 61
INDEPENDENT DIRECTOR
Director Since: 2015
Cowen Committees

Compensation
Other US-Listed Company Directorships

Current: None

Former (Past 5 Years): None
RELEVANT SKILLS

Global Business and Operations

Financial Markets

Corporate Governance

Executive Leadership and Management
Mr. Rediker has extensive experience on global macro matters such as global finance, sovereign wealth funds and other issues surrounding the relationship between international economic policy, financial markets, global capital flows and foreign policy. His professional background has provided him with extensive expertise and insight in capital markets, the economy and global governance.
CAREER HIGHLIGHTS

Founder and Executive Chairman, International Capital Strategies, LLC, a policy and markets advisory boutique (2012 — present)

Mr. Rediker formerly held the following positions:

Member of the Executive Board of the International Monetary Fund, representing the United States

Senior investment banker and private equity investor at Salomon Brothers, Merrill Lynch and Lehman Brothers

Attorney with Skadden Arps in New York and Washington, D.C.
OTHER EXPERIENCE AND COMMUNITY INVOLVEMENT

Non-Resident Senior Fellow, The Brookings Institution

Member, World Economic Forum (WEF) Global Future Council on Geopolitics

Member, US Council on Foreign Relations

Former Member, Executive Board, International Monetary Fund

Former Visiting Fellow, Peterson Institute for International Economics

Former Senior Fellow and Director, global Strategic Finance Initiative, New America Foundation
EDUCATION

Graduate of Vassar College

JD, Fordham University School of Law

Harvard Kennedy School
 
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JEF­FREY M.
SOLOMON
BRETT H.
BARTH
KATHERINE E.
DIETZE
GREGG A.
GON­SALVES
STEVEN
KOTLER
LAWRENCE E.
LEI­BOWITZ
MAR­GARET L.
POSTER
DOU­GLAS A.
REDIKER
KEY SKILLS
Audit & Financial Expertise
Corporate Strategy & Business Development
Corporate Governance / Ethics
Executive Leadership & Management
Financial Services
Global Business & Operations
Investment Banking
Investment Management
Talent Development / Compensation
Institutional Markets
Risk Oversight
Social Responsibility
Sustainability
Technology
KEY EXPERIENCES
CEO, President or COO
CFO or Other Financial Expert
Private Company Management & Governance
Public Company Management & Governance
Non-Profit
DEMOGRAPHICS
Gender
Male
Female
Race / Ethnicity
African American / Black
Asian / Pacific Islander
Hispanic / LatinX
Native American
White / Caucasian
Other
Age
At May 14, 2021 55 49 63 53 74 61 69 61
BOARD TENURE
Years on Board 10 3 10 1 11 3 2 6
OTHER PUBLIC COMPANY BOARDS
Number of Public Boards 0 1 1 1 0 0 0 0
 
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INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Our Board believes that good corporate governance is important to ensure that Cowen Inc. is managed for the long-term benefit of its stockholders. This section describes key corporate governance guidelines and practices that our Board has adopted. Complete copies of our Corporate Governance Guidelines, the charters of our Audit, Compensation, Nominating and Corporate Governance Committees and our Code of Ethics and Business Conduct are available on the investor relations section of our website, www.cowen.com. Alternatively, you can request a copy of these documents by writing to Cowen Inc., Attn: Secretary, 599 Lexington Avenue, New York, NY, 10022.
CORPORATE GOVERNANCE GUIDELINES
Our Board has adopted corporate governance guidelines to assist in the exercise of its duties and responsibilities and to serve the best interests of the Company and our stockholders. These guidelines, which provide a framework for the conduct of the Board’s business, provide that:

the Board’s goal is to oversee and direct management in building long-term value for the Company’s stockholders;

a majority of the members of the Board shall be independent directors;

the independent directors shall meet regularly in executive session;

directors have access to management and, as appropriate, to the Company’s outside advisors;

our Chief Financial Officer, our Chief Operating Officer and our General Counsel attend all scheduled Board meetings as do the heads of the Company’s business lines, which is critical to the Company’s succession planning;

the Board regularly reviews with management the Company’s financial performance, strategy and business plans;

both our directors and our executive officers are required to own a minimum amount of Company common stock;

new directors participate in an orientation program and all directors are expected to participate in continuing director education on an ongoing basis; and

at least annually, the Board and its committees conduct self-evaluations to determine whether it and they are functioning effectively.
DIRECTOR INDEPENDENCE
Our Corporate Governance Guidelines require that a majority of the Board be composed of directors who meet the independence criteria establish by NASDAQ Stock Market, Inc. Marketplace Rules. Under applicable NASDAQ Stock Market rules, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making its determination, the Board considers all relevant facts and circumstances, both with respect to the director and with respect to any persons or organizations with which the director has an affiliation, including immediate family members.
Our Board has determined that neither Ms. Dietze nor Ms. Poster, nor Messrs. Barth, Gonsalves, Kotler, Leibowitz or Rediker currently has a relationship that would interfere with the exercise of independent judgment
 
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in carrying out the responsibilities of a director and that each of these directors is an “independent director” as defined under Rule 4200(a)(15) of the NASDAQ Stock Market, Inc. Marketplace Rules.
Mr. Solomon cannot be considered an independent director under NASDAQ Stock Market rules because Mr. Solomon serves as our Chief Executive Officer. Therefore, the Board has determined that seven of our eight director nominees are independent.
BOARD LEADERSHIP STRUCTURE
Mr. Solomon serves in the combined roles of Chair and Chief Executive Officer. We believe that Mr. Solomon’s combined service as Chair and Chief Executive Officer provides the Company with (i) a unified strategic and operating focus, (ii) the benefit of clarity in the management structure of the organization, and (iii) consistency of communications to stockholders, customers, regulators and other constituencies. This structure also best assures that the leader of the organization is closely connected with both the Company’s senior level managers and the Board and is therefore better able to appreciate and balance the perspectives of both groups. To establish a liaison between the non-management directors and the Chair and Chief Executive Officer and thus facilitate effective communication between them, as well as to facilitate the deliberations of the non-management directors in executive session, the Board also appoints a lead director who is independent. This position is currently held by Mr. Barth. As lead director, Mr. Barth:

presides over all meetings of the Board at which the Chair is not present;

provides oversight and advice to the Chief Executive Officer regarding corporate strategy;

conducts performance appraisals of the Chief Executive Officer (together with the Compensation Committee);

reviews Board meeting schedules and agendas to ensure that appropriate matters are covered and that there is sufficient time for discussion of all agenda items;

presides at executive sessions of the Board;

serves as a liaison between the Chair and the independent directors;

recommends to the Chief Executive Officer the retention of consultants who report directly to the Board;

approves information sent to the Board and requests additional information, as required; and

is primarily responsible, subject to advice and assistance from the General Counsel, for monitoring communications from stockholders and other interested parties and providing copies or summaries of such communications to the other directors as he deems appropriate.
DIRECTOR STOCK OWNERSHIP GUIDELINES
The Company adopted stock ownership guidelines in 2013 that require directors to hold Company stock or restricted stock units, or RSUs, that have a value equal to at least three times the amount of annual fees paid to non-employee directors (excluding committee chair fees) within the later of the adoption of the policy or five years of being appointed to the Board. All of our directors are in compliance with these ownership guidelines. Ms. Poster, who was appointed to the Board in 2019 and Mr. Gonsalves, who was appointed to the Board in 2020 have three years and four years, respectively, in which to acquire Company stock or RSUs to meet the ownership requirements.
THE BOARD’S ROLE IN RISK OVERSIGHT
It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has oversight responsibility of the processes established to report and monitor systems
 
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for material risks applicable to the Company and reviews the Company’s enterprise risk management. Our Board’s oversight of our risk management processes is effected primarily through our Audit Committee. Our Audit Committee periodically meets with senior executives responsible for risk oversight to review and discuss the material risks facing the Company, including operational, market, credit, liquidity, legal and regulatory risks, and to assess whether management has reasonable controls in place to address these risks. The Audit Committee is also responsible for ensuring that management has established processes and an enterprise risk management framework and governance structures designed to identify, bring to the Board’s and/or the Audit Committee’s attention, and appropriately manage, monitor, control and report exposures to the major risks affecting Cowen. In addition to the Audit Committee, the Compensation Committee separately reviews and discusses with management whether our compensation arrangements are consistent with effective controls and sound risk management. The Board evaluates the Company’s risk profile on a quarterly basis.
BOARD AND COMMITTEE OVERSIGHT OF CERTAIN KEY RISKS
Technology and Cyber-Risk Oversight
Our Board is briefed on firm-wide technology and cybersecurity risk management and the overall technology and cybersecurity environment by management and through updates from the Audit Committee on their in-depth Committee-level reviews on a quarterly basis.
The Board coordinates with the Audit Committee to ensure active Board- and Committee-level oversight of the Company’s technology and cyber risk profile, technology and cyber strategies, and information security initiatives. The Audit Committee reviews technology and cyber risks, as well as the Company’s risk mitigation processes and internal control procedures to protect sensitive business information, and receives regular reports from the Head of Risk, Chief Financial Officer and the Chief Operating Officer on the Company’s technology and cybersecurity programs.
COVID-19 Oversight
During 2020, the Board and the Audit Committee dedicated significant time and attention to overseeing the Company’s management of key risks related to the COVID-19 pandemic, receiving frequent updates at both the Board and Committee level from the CEO and other senior leaders on the Company’s pandemic response and framework for the management and mitigation of related key risks across the business.
The CEO, Chief Operating Officer, Chief Financial Officer, Head of Internal Audit and General Counsel, as well as other members of the Company’s Management Committee, presented regular and in-depth reviews of the Company’s assessment of key risks and approach to pandemic risk management to the Board and Audit Committee. Through these updates, the Board and Audit Committee reviewed and discussed a broad range of topics with management, including: measures to protect the health, wellness and safety of the Company’s employees and return to office planning; the impact of the transition to a work-from-home model on technology, cybersecurity, operations, regulatory compliance and business continuity planning; strategies to ensure continued delivery of products and services and execution of the Company’s long-term strategy; and financial scenario planning for managing the Company’s balance sheet and liquidity.
By exercising ongoing oversight and providing advice on the Company’s pandemic response and business continuity planning, the Board and the Audit Committee helped support management’s development of a strategy to mitigate the immediate and potential long-term impacts of COVID-19, protect the health, wellness and safety of the Company’s employees and continue to execute on strategic initiatives to deliver value to stockholders.
 
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ESG Oversight
The Board views oversight and effective management of environmental, social and governance, or ESG, related risks and opportunities as essential to the Company’s ability to execute its strategy and achieve long-term sustainable growth. As such, the Nominating and Corporate Governance Committee receives quarterly updates on a variety of ESG topics, including sustainability and governance-related matters. The Board also receives quarterly updates on the Company’s ESG products and offerings.
In addition to oversight by the Board, the Board coordinates with each Board Committee to ensure active and ongoing Committee-level oversight of the Company’s management of ESG related risks and opportunities.
Human Capital Management Oversight
The Board views effective human capital management as critical to the Company’s ability to execute its strategy.
As a result, the Board is updated by the CEO, Head of Human Resources, Head of Inclusion and Diversity and other members of senior leadership on a broad range of human capital management topics, including culture, talent and performance management, diversity and inclusion, compensation and benefits, workplace health and safety, and employee engagement and retention.
At the management level, our Head of Human Resources, who is a member of the Company’s Management Committee, is responsible for leading the development and execution of the Company’s human capital management strategy, working together with other senior leaders across the Company. Among other things, this includes promoting an inclusive and performance-driven workplace culture; managing the Company’s initiatives to attract, recruit, develop and retain the high-quality talent needed to ensure the Company is equipped with the right skill sets and intellectual capital to deliver on current and future business needs; and overseeing the design of the Company’s compensation, benefits and wellness programs. In connection with these responsibilities, the Head of Human Resources also partners with our Diversity and Inclusion team on the development and execution of the Company’s diversity, equity and inclusion roadmap and works closely with the CEO on the development of the talent succession pipeline for the Company’s senior officers.
RISK ASSESSMENT OF COMPENSATION POLICIES AND PRACTICES
At least annually, the Compensation Committee oversees a risk review of the various components of our compensation program. In 2020, the Committee and determined that the Company’s compensation plans, programs and policies do not encourage excessive risk taking and are not reasonably likely to have a material adverse effect on the Company.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES
The Company views ESG practices as essential components of Company performance and the successful implementation of our Outperform strategy. As a result, ESG considerations inform our governance mechanisms for effective Board oversight and impact how we manage our businesses on a day to day basis and over the longer term.
Company ESG Leadership
Our ESG leadership structure at the Board and management levels reflects our focus on ESG issues and commitment to provide value to our stockholders. Our diversity and inclusion functions are managed by our Head of Inclusion and Diversity and her team. The Head of Inclusion and Diversity updates the Board regarding the Company’s diversity and inclusion efforts and activities on a quarterly basis. The Company’s Chief of
 
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Staff, and members of the Management Committee, manage the Company’s ESG reporting and regularly update the Board and Audit Committee on our strategy, activities and progress.
Sustainability
Sustainability is a core value of the Company. Our investment banking team has executed among the most prominent sustainability transactions in 2020. The Company’s investment banking business announced a new joint advisory effort with Intrepid Partners focused on Energy Innovation and Transition in December 2020. Through Cowen Sustainable Investments, the Company has partnered with a team with decades of experience in cross-asset sustainability-focused investments. Cowen has added ESG-focused research products and events to the Company’s research platform and recently initiated ESG ratings for the companies covered by our research analysts. In addition, Cowen Investment Management now requires that all Cowen-branded investment strategies integrate ESG factors into their individual investment process.
Diversity and Inclusion
At Cowen, inclusion and diversity are catalysts for success and innovation in everything we do. The Board seeks diversity in viewpoint and experiences in its membership. Since 2019, the two new members added to our Board of eight are diversity candidates. At the management level, our ability to attract and retain a diverse and inclusive workforce is critical to our long-term strategy, driving business growth and innovation and empowering our people to achieve their full potential. The Company established a business team dedicated to inclusion and diversity in 2020. The Head of Inclusion and Diversity regularly updates the Board regarding the Company’s diversity initiatives. The Company regularly conducts Leadership Roundtables, which are open to all employees, led by Mr. Solomon, our CEO, designed to advance important conversations related to diversity and inclusion. This reinforces our internal diversity, equity and inclusion.
BOARD MEETINGS AND ATTENDANCE
Our Board met six times from January 1, 2020 through December 31, 2020. Each director attended at least 85% of the aggregate number of Board meetings and the number of meetings held by all committees on which he or she then served.
DIRECTOR ATTENDANCE AT ANNUAL MEETING OF STOCKHOLDERS
Our Corporate Governance Guidelines provide that directors are invited and encouraged to attend the annual meeting of stockholders. Two of our directors attended the 2020 virtual annual meeting of stockholders.
COMMITTEES OF THE BOARD
Our Board has established three standing committees  —  Audit, Compensation, and Nominating and Corporate Governance  —  each of which operates under a charter that has been approved by our Board. Current copies of each committee’s charter are posted on the investor relations section of our website, www.cowen.com. Alternatively, you can request a copy of these documents by writing to Cowen Inc., Attn: Secretary, 599 Lexington Avenue, New York, NY, 10022.
 
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COWEN BOARD COMMITTEES MEMBERSHIP
NAME
Audit
Nominating and
Corporate Governance
Compensation
BRETT H. BARTH
INDEPENDENT LEAD DIRECTOR
KATHERINE E. DIETZE
INDEPENDENT
GREGG GONSALVES
INDEPENDENT
STEVEN KOTLER
INDEPENDENT
LAWRENCE E. LEIBOWITZ
INDEPENDENT
MARGARET POSTER
INDEPENDENT
FINANCIAL EXPERT
DOUG REDIKER
INDEPENDENT

Committee member

Committee chair
Audit Committee
The Audit Committee’s responsibilities include:

being directly responsible for the appointment, compensation, retention and oversight of the work of our independent registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company;

reviewing the performance of the independent registered public accounting firm and making the decision to replace or terminate the independent registered public accounting firm or the lead partner;

evaluating the independence of the registered public accounting firm;

reviewing and discussing with management and the independent registered public accounting firm and the head of the Company’s internal audit department all critical accounting policies and practices;

reviewing the adequacy and effectiveness of the Company’s accounting and internal control policies and procedures;

discussing our risk management policies;

reviewing and discussing with the independent registered public accounting firm the results of the year-end audit of the Company;

establishing and implementing policies and procedures for the Audit Committee’s review and approval or disapproval of proposed related party transactions; and

preparing the audit committee report required by SEC rules, which is included on page 50 of this proxy statement.
Our Audit Committee met six times from January 1, 2020 through December 31, 2020. Our Board has determined that Ms. Poster is an “audit committee financial expert” as defined by applicable SEC rules.
 
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Compensation Committee
The Compensation Committee’s responsibilities include:

annually reviewing the goals and objectives of the Company’s executive compensation plans;

annually reviewing the Company’s executive compensation plans in light of the Company’s goals and objectives;

annually evaluating the Chief Executive Officer’s and other executive officers’ performance and determining and approving the Chief Executive Officer’s and other executive officers’ compensation levels based on such evaluation;

overseeing and administering our equity and incentive compensation plans, with the oversight of the full Board;

reviewing executive and employee compensation plans from a risk perspective to help ensure that compensation arrangements do not encourage excessive risk taking;

annually reviewing the compensation process of the Company’s equity research personnel to ensure compliance with applicable laws, rules and regulations;

reviewing and discussing annually with management our “Compensation Discussion and Analysis,” which begins on page 24 of this proxy statement; and

preparing the Compensation Committee report required by SEC rules, which begins on page 39 of this proxy statement.
The processes and procedures followed by our Compensation Committee in considering and determining executive compensation are described below in the “Compensation Discussion and Analysis” section beginning on page 24 of this proxy statement.
Our Compensation Committee met six times from January 1, 2020 through December 31, 2020.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee’s responsibilities include:

assisting in identifying, recruiting and interviewing director candidates, including persons suggested by stockholders;

reviewing the background and qualifications of individuals being considered as director candidates;

recommending to the Board the director nominees for election;

annually reviewing with the Board the composition of the Board as a whole;

recommending to the Board the size and composition of each standing committee of the Board;

annually reviewing committee assignments and the policy with respect to the rotation of committee memberships and/or chairpersonships;

making recommendations on the frequency and structure of Board meetings;

monitoring the functioning of the committees of the Board;

approving annual Board compensation;

annually reviewing the Corporate Governance Guidelines and recommending any changes to the Board; and
 
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overseeing the self-evaluation of the Board as a whole and the self-evaluation of each Board committee.
The processes and procedures followed by the Nominating and Corporate Governance Committee in identifying and evaluating director candidates are described below under the heading “Director Nomination Process” on page 20 of this proxy statement.
Our Nominating and Corporate Governance Committee met four times from January 1, 2020 through December 31, 2020.
Our Board has determined that all of the members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are independent as defined under the rules of the NASDAQ Stock Market, and the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, or the Exchange Act, as applicable.
EXECUTIVE AND DIRECTOR COMPENSATION PROCESSES
For a discussion of our process relating to named executive officer compensation, please see “Compensation Discussion and Analysis” included elsewhere in this proxy statement.
The Nominating and Corporate Governance Committee is responsible for periodically reviewing the level and form of compensation of our non-employee directors, including how such compensation compares to director compensation of companies of comparable size, industry and complexity, and for making recommendations to the Board with respect to such compensation. For a description of the annual compensation paid to each non-employee director, please see “Compensation Program for Non-Employee Directors” below.
The Board has delegated to a New Hire Retention Award Committee limited authority to grant equity awards under our existing equity compensation plans. Mr. Solomon was the sole member of the New Hire Retention Award Committee in 2020. The New Hire Retention Award Committee may only grant equity awards in connection with the hiring of new employees, the retention of existing employees and in connection with significant promotions. The New Hire Retention Award Committee may not grant or modify awards to named executive officers or certain other senior employees. Subject to aggregate and individual share limitations established by the Board, the New Hire Retention Award Committee has the authority to determine the recipient of the award as well as the type and amount of the award.
DIRECTOR NOMINATION PROCESS
The process to be followed by our Nominating and Corporate Governance Committee to identify and evaluate director candidates includes requests to Board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the Nominating and Corporate Governance Committee and the Board. In addition, our bylaws contain provisions for stockholders to recommend persons for nomination as a director and, subject to certain conditions, to nominate director candidates for inclusion in our proxy statement, as set forth in this proxy statement under “Stockholder Proposals for the 2022 Annual Meeting.”
In considering whether to recommend any particular candidate for inclusion in the Board’s slate of recommended director nominees, our Nominating and Corporate Governance Committee will apply the criteria set forth in the Nominating and Corporate Governance Committee’s charter and in our Corporate Governance Guidelines. These criteria include the candidate’s experience, knowledge or skills useful to the oversight of the Company’s business, and the nominee’s reputation for honesty and ethical conduct in his or her personal and professional activities, including specific business and financial expertise currently desired on the Board, experience as a director of a public company, geography, age, gender and ethnic diversity. Additional factors which the Committee may consider include time availability in light of other commitments, potential conflicts of interest, material
 
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relationships with the Company and independence from management and the Company. The Nominating and Corporate Governance Committee will not assign specific weights to particular criteria and no particular criterion is a prerequisite for each prospective nominee. Our Board believes that the backgrounds and qualifications of its Directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow it to fulfill its responsibilities. Our Corporate Governance Guidelines require that if there is a significant change in a Director’s primary job responsibilities, that director must notify the Board and the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee may recommend to the Board that the director tender his or her resignation. In addition, our Corporate Governance Guidelines require that upon attaining the age of 80 years, and annually thereafter, a director is required to notify the Nominating and Corporate Governance Committee that he or she is willing to not stand for re-election at the immediately succeeding Annual Meeting of Stockholders. The Nominating and Corporate Governance Committee will review the director’s continuation on the Board, in light of all the circumstances, and, at its meeting to determine nominees for election to the Board, the Nominating and Corporate Governance Committee will determine whether such director should be nominated to stand for re-election at the Company’s immediately succeeding Annual Meeting.
PROCEDURES FOR CONTACTING THE BOARD OF DIRECTORS
Our Board will give appropriate attention to written communications that are submitted by stockholders, and will respond if and as appropriate. Our Lead Director, with the assistance of our General Counsel, is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he considers appropriate.
Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the General Counsel considers to be important for the directors to know. In general, communications relating to corporate governance and corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we receive repetitive or duplicative communications.
Stockholders who wish to send communications on any topic to our Board should address such communications to the Board of Directors, c/o Secretary, Cowen Inc., 599 Lexington Avenue, New York, NY, 10022.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the code on our website, www.cowen.com. In addition, we intend to post on our website all disclosures that are required by law or NASDAQ Stock Market listing standards concerning any amendments to, or waivers from, any provision of the code. You may also request a copy of the code by writing to Cowen Inc., Attn: Secretary, 599 Lexington Avenue, New York, NY 10022.
 
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Director Compensation Table
The following table sets forth compensation information for our non-employee directors for the year ended December 31, 2020.
Director
Fees Earned
Paid in Cash
($)
Stock
Awards
($)(1)
All Other
Compensation
($)(2)
Total
Brett H. Barth(3)
270,000 1,098 271,098
Katherine E. Dietze
115,000 115,000 230,000
Gregg A. Gonsalves(4)
133,334 100,000 233,334
Steven Kotler
105,000 105,000 210,000
Lawrence E. Leibowitz
50,000 150,000 200,000
Margaret L. Poster
100,000 100,000 499 200,499
Douglas A. Rediker(3)
200,000 200,000
(1)
Represents the aggregate grant date fair value calculated in accordance with generally accepted accounting principles, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. For information on the valuation assumptions with respect to awards made, refer to the Company’s Share-Based Compensation and Employee Ownership Plans Note in its financial statements included in its Form 10-K for the year ended December 31, 2020, as filed with the SEC on March 3, 2021. As of December 31, 2021, all outstanding stock awards held by our directors are fully vested.
(2)
Represents dividend equivalents paid on delivered RSUs.
(3)
In 2020, Messrs. Barth and Rediker elected to receive 100% of their director compensation in RSUs. Please see “Narrative Disclosure Relating to Director Compensation Table” below for additional information regarding non-employee director compensation in 2020.
(4)
Mr. Gonsalves received $33,334 for his Board service from April 2020 through June 2020.
NARRATIVE DISCLOSURE RELATING TO DIRECTOR COMPENSATION TABLE
In 2020, each of our non-employee directors received annual compensation of  $200,000. Mr. Barth, the Company’s Lead Director, received additional compensation of  $50,000. Ms. Dietze, the Chair of the Audit Committee received additional compensation of  $30,000 per annum. Mr. Barth, the Chair of the Compensation Committee, received additional compensation of  $20,000 per annum, and Mr. Kotler, the Chair of the Nominating and Corporate Governance Committee received additional compensation of  $10,000 per annum. For 2020, a minimum of 50% of a director’s compensation was paid in the form of RSUs. In addition, each director was entitled to elect to receive any amount in excess of 50% of 2020 compensation in the form of RSUs. The RSUs were valued using the volume-weighted average price for the 30-day period prior to our 2020 annual meeting of stockholders. RSUs are vested and not subject to forfeiture; however, except in the event of death, the underlying shares of Class A common stock will not be delivered to the holder for at least one year from the date of grant. Dividend equivalent cash payments are made to our Directors upon the delivery of the underlying shares of Class A common stock. These equity awards are intended to further align the interests of our directors with those of our stockholders. Directors who also are employed as executive officers of the Company receive no additional compensation for their service as a director.
In 2021, each of our independent directors will receive annual compensation of  $250,000. The compensation increase reflects the more active role the Board continues to take in Company affairs coupled with the added complexity of the Company’s business and is an effective recruiting tool for new directors. The Lead Director will continue to receive additional compensation of  $50,000. The Chair of the Audit Committee will receive additional compensation of   $35,000 per annum. The Chair of the Compensation Committee will receive additional compensation of   $25,000 per annum and the Chair of the Nominating and Corporate Governance Committee will receive additional compensation of   $20,000 per annum. A minimum of 50% of each director’s compensation
 
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will continue to be paid in the form of RSUs. In addition, each director will be entitled to elect to receive any amount in excess of 50% of 2021 compensation in the form of RSUs.
EXECUTIVE OFFICERS OF THE COMPANY
Biographies of the current executive officers of the Company are set forth below, excluding Mr. Solomon’s biography, which is included under “Directors of the Company” above. Each executive officer serves at the discretion of the Board.
JOHN HOLMES. Age 57. Mr. Holmes serves as Chief Operating Officer and serves as a member of the Management Committee of Cowen. Mr. Holmes previously served as the Company’s Chief Administrative Officer and was appointed an executive officer in May 2013. Mr. Holmes was the Head of Technology and Operations at Cowen following the merger between Cowen and Company and Cowen Investment Management (formerly Ramius). Mr. Holmes joined Cowen Investment Management in June 2006 as Global Head of Operations. Prior to joining Cowen Investment Management, Mr. Holmes was Global Head of the Equity Product Team at Bank of America Securities. Mr. Holmes has also held senior operations management positions at Deutsche Bank, Credit Lyonnais and Kidder Peabody. His experience includes treasury, foreign exchange, equity, fixed income & derivative operations. Mr. Holmes is NASD licensed as a General Securities Representative, General Securities Principal and a Financial & Operations Principal.
STEPHEN A. LASOTA. Age 58. Mr. Lasota serves as Chief Financial Officer of Cowen and serves as a member of the Management Committee of Cowen. Mr. Lasota was appointed Chief Financial Officer in November 2009. Prior to the consummation of the business combination of Cowen Holdings and Cowen Investment Management (formerly Ramius) in November 2009, Mr. Lasota was the Chief Financial Officer of Cowen Investment Management and a Managing Director of the company. Mr. Lasota began working at Cowen Investment Management in November 2004 as the Director of Tax and was appointed Chief Financial Officer in May 2007. Prior to joining Cowen Investment Management, Mr. Lasota was a Senior Manager at PricewaterhouseCoopers LLP.
OWEN S. LITTMAN. Age 48. Mr. Littman serves as General Counsel and Secretary of Cowen and serves as a member of the Management Committee of Cowen. Mr. Littman was appointed General Counsel and Secretary in July 2010. Following the consummation of the business combination of Cowen Holdings and Cowen Investment Management (formerly Ramius) in November 2009, Mr. Littman was appointed Deputy General Counsel, Assistant Secretary and Managing Director of Cowen and General Counsel and Secretary of Cowen Investment Management. Mr. Littman began working at Cowen Investment Management in October 2005 as its senior transactional attorney and was appointed General Counsel in February 2009. Prior to joining Cowen Investment Management, Mr. Littman was an associate in the Business and Finance Department of Morgan, Lewis & Bockius LLP.
 
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PROPOSAL 2
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

The Board recommends a vote “FOR” the approval, on an advisory (non-binding) basis, of the compensation paid to our named executive officers
We provide our stockholders with the annual opportunity to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers. Accordingly, the Company is seeking your vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Please note that your vote is advisory and therefore will not be binding on the Board, the Compensation Committee or the Company. However, we intend to take the voting results into consideration when making future decisions regarding executive compensation.
As discussed in the Company’s “Compensation Discussion and Analysis,” we seek to closely align the interests of named executive officers with those of the Company’s stockholders. In addition, a substantial portion of the total compensation for each named executive officer is delivered on a pay-for-performance basis and is determined in light of general economic and specific company, industry and competitive conditions. As such, we believe our compensation program provides the right balance of competitive pay and meaningful incentives to align our executives’ interests with the interests of our stockholders and enable us to retain talented executives to support our business objectives.
The Board unanimously supports the Company’s executive compensation program and recommends that stockholders vote in favor of the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2021 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure, is hereby APPROVED.”
The Board unanimously recommends a vote “FOR” the approval, on an advisory (non-binding) basis, of the compensation paid to our named executive officers, as disclosed in this proxy statement.
COMPENSATION DISCUSSION AND ANALYSIS
In addition to performing the roles and responsibilities described under “Committees of the Board —  Compensation Committee” above, our Compensation Committee, which is composed entirely of independent directors, determined the 2020 compensation of our named executive officers:

Jeffrey M. Solomon, Chief Executive Officer;

Stephen A. Lasota, Chief Financial Officer;

John Holmes, Chief Operating Officer; and

Owen S. Littman, General Counsel and Secretary.
The above named executive officers represented all of our executive officers as of December 31, 2020.
 
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To assist stockholders in finding important information within this Compensation Discussion and Analysis, we call your attention to the following sections:
Advisory Vote on Executive Compensation and Stockholder Engagement 25
2020 Performance Overview 27
Key Features of Our Compensation Program 28
Compensation Philosophy and Objectives 28
Compensation Determinations for 2020 30
Compensation Program and Payments 33
Setting Compensation 36
Relationship of Compensation Policies and Practices to Risk Management 37
Clawback Policy 37
Executive Officer Stock Ownership Guidelines 38
Anti-Hedging Policy 38
Tax and Accounting Impact and Policy 38
ADVISORY VOTE ON EXECUTIVE COMPENSATION AND STOCKHOLDER ENGAGEMENT
2020 Stockholder Outreach
While the Company received stockholder approval for both the Advisory Say on Pay vote and the 2020 Equity Plan vote in 2020, in both cases the vote resulted in a narrow majority (55.7% and 51.2%, respectively). In light of these results, we undertook a robust outreach campaign to solicit stockholder feedback on our compensation policies and our equity plans in the fall of 2020. We contacted our top 30 stockholders, who hold an estimated 75% of our outstanding Class A common stock, which represents in excess of 85% of our outside stockholder base.
We received requests for engagement from 7 of the 30 stockholders, representing approximately 45% of our outside stockholder base.
Our outreach team, comprised of our Chief Financial Officer, our General Counsel, and our Head of Investor Relations, held virtual meetings with all of the stockholders who requested engagement.
 
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Compensation Practice Changes in Response to Stockholder Feedback
Following our stockholder outreach initiative, the outreach team discussed the feedback received from our stockholders with the Compensation Committee. Additionally, the Compensation Committee obtained feedback, advice and recommendations on improvements to our compensation program from its independent compensation consultant, Pay Governance LLC. The Compensation Committee also reviewed the Company’s performance, the compensation practices of its peers and other materials regarding executive compensation. The Compensation Committee has introduced the following changes to our executive compensation program, partly in response to feedback received from our stockholders:
What We Heard from Stockholders
Action Taken by Company Management and the
Compensation Committee
While stockholders did not express any specific concerns with the levels of compensation paid to our named executive officers, stockholders noted that more details on Cowen’s compensation process and how the pool of compensation for management is determined would be helpful in demonstrating to stockholders that the compensation process is tied to performance and not entirely discretionary. We have enhanced the description in the “Compensation and Philosophy and Objectives” section below to provide a more robust and detailed discussion related to the Compensation Committee’s determinations related to firmwide compensation as well as the compensation of our named executive officers.
Stockholders agree that Return on Common Equity, or ROCE, is an appropriate criterion for performance-based compensation but some stockholders indicated that they would like to see some form of total shareholder return, or TSR, as an additional measure used in the determination of performance-based compensation. The Company added a TSR modifier as a component of Performance Shares awarded in 2020.
Stockholders also expressed a preference for our named executive officers to receive a greater amount of their compensation in the form of performance-based awards. As part of 2020 compensation, we increased substantially the dollar value of Performance Shares issued to our Chief Executive Officer relative to 2019 award values. In addition, we increased the grant date value of Performance Share awards issued to each of our named executive officers relative to 2019 award values.
Stockholders were supportive of the removal of the evergreen provision from the 2010 Equity and Incentive Plan in the 2020 Equity Incentive Plan approved at the 2020 Annual Meeting of Stockholders. The Company plans to present an amended and restated equity and incentive plan for stockholder approval at its 2021 Annual Meeting of Stockholders. The amended and restated equity and incentive plan will not include an evergreen provision.
 
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2020 PERFORMANCE OVERVIEW
The following 2020 financial performance highlights were considered by our Compensation Committee when determining named executive officer compensation for 2020:
[MISSING IMAGE: tm2112746d1-bc_perform4c.jpg]

Record 2020 investment banking Economic Proceeds of  $729.2 million were up 108% due to higher underwriting and strategic advisory activity.

2020 brokerage revenues increased 42%, due to an increase in Institutional Brokerage, primarily Special Situation and electronic trading commission revenue and an increase in Institutional Services, primarily Prime Brokerage.

2020 management fees of  $58.2 million increased 44%, primarily due to the healthcare royalty business and our healthcare investment business.

Incentive income rose 87% to $83.4 million in 2020. This increase was primarily related to an increase in performance fees from our healthcare investments business and our activist strategy.

2020 compensation and benefits costs were $860.8 million compared to $532.4 million in 2019. The increase was due to higher 2020 revenues offset only partially by a lower economic compensation-to-proceeds ratio. The economic compensation-to-proceeds ratio was 55.6%, a decrease from 57% in the prior year period.

As of December 31, 2020, the Company had assets under management of  $12.5 billion, an increase of $1.1 billion from December 31, 2019.

As of December 31, 2020, the Company had book value of  $30.34 per common share, up from book value of  $24.77 per common share at December 31, 2019.

During 2020, the Company repurchased 3,139,751 shares for $47.3 million, or an average price of $15.07 per share under the Company’s existing share repurchase program. In addition, the Company acquired approximately $15.1 million of shares as a result of net share settlements relating to the vesting of equity awards or 866,784 shares at an average price of  $17.48 per share.
 
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The Company established a quarterly dividend payment on its Class A common stock in February of 2020 with a dividend payment of  $0.04 per share. The Company increased the quarterly dividend payment to $0.08 per share in October 2020.
Please refer to the Company’s Segment Reporting Note in its financial statements included on pages F-70 to F-71 of its Form 10-K for the year ended December 31, 2020, as filed with the SEC, for reconciliations of the non-GAAP financial measures above to their most directly comparable GAAP measures.
KEY FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM
What We Do

We pay for performance through a careful quarterly and year-end review of the Company’s financial results, stockholder return and individual performance.

We consider peer groups in establishing compensation.

The Compensation Committee considers firm-wide initiatives related to the Company’s culture, including those related to diversity and inclusion, in its compensation determinations.

We granted performance share awards, or PSAs, to named executive officers in February 2021. The PSAs are earned based on forward-looking performance metrics that consider long-term performance from 2021 through 2023. We introduced a TSR modifier to the PSAs awarded in February 2021 in response to the stockholder feedback received in 2020.

We have implemented stock ownership guidelines for our directors and executive officers.

We have double-trigger equity vesting in the event of a change in control.

We require our named executive officers to comply with reasonable restrictive covenants.

We subject our deferred bonus awards to named executive officers to a clawback policy.

We seek to maintain a conservative compensation risk profile.

The Compensation Committee retains an independent compensation consultant.

We have an anti-hedging policy, and, during 2020, all executive officers were in compliance with this policy.
What We Don’t Do

We do not pay dividend equivalents on unvested RSUs or PSAs.

We do not pay tax gross-ups on our limited perquisites.

We do not provide “single-trigger” equity vesting in the event of a change in control.

We do not provide golden parachute excise tax gross-ups.

We do not provide minimum guaranteed bonuses to our named executive officers.
COMPENSATION PHILOSOPHY AND OBJECTIVES
We are focused on building long-term value for the Company. Our named executive officers, who collectively own approximately 3.9% of our outstanding shares, are financially, strategically and philosophically aligned with our stockholders. Our intention is to base the compensation of our named executive officers on the performance of the Company, with total compensation of our named executive officers increasing or decreasing along with the performance of the Company.
 
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To this end, when Mr. Solomon became our Chief Executive Officer at the beginning of 2018, he emphasized the objective of the Company generating a mid-teens pre-tax Return on Common Equity, or ROCE, by the end of 2020. The Company not only achieved, but far exceeded this goal for the year ended December 31, 2020. Our plan is to compensate our named executive officers in a manner that will incent them to meet or exceed pre-tax ROCE in the mid-teens on a consistent basis, which we believe will create long-term value for our stockholders.
Accordingly, as we think about compensation for our named executive officers, our approach aims to treat our named executive officers fairly when taking into account the Company’s performance while also ensuring their retention given other opportunities that might be available to them.
Specifically, our compensation programs, including compensation of our named executive officers, are designed to achieve the following objectives:

Pay for Performance. A significant portion of the total compensation paid to each named executive officer is variable and is directly tied to the Company’s Economic Operating Income. The amount of compensation available to be paid to our named executive officers is determined based on: (i) determination of the management committee compensation pool based on the Company’s performance as described in more detail below; (ii) the performance of the Company on an absolute basis and through a comparison of our results to competitor firms; (iii) an evaluation of each named executive officer’s contribution to the Company, including contributions related to the revenue and profitability of the Company as well as teamwork and leadership; and (iv) specific performance against individual qualitative goals.

Align Named Executive Officers’ Interests with Stockholders’ Interests. Our Compensation Committee reviews each named executive officer’s performance as well as the Company’s financial results in the context of the market environment when determining year-end, performance-related compensation allotted from the management committee compensation pool. In addition, our Compensation Committee evaluated the Company’s performance compared to the performance of its peers and also considered an analysis of competitive compensation levels of named executive officers at the Company’s peer firms that was conducted by Pay Governance LLC, the independent compensation consultant to the Compensation Committee. Our Compensation Committee believes year-end, performance-related compensation should be delivered in a combination of short-term and long-term instruments. We believe that deferred cash, equity and equity-related instruments align the interests of our named executive officers with those of our stockholders, help retain key talent, and ensure that our named executive officers are focused on the long-term performance of the Company. In connection with fiscal 2020 bonus payments, Messrs. Lasota, Holmes and Littman received a portion of their bonus in cash and a portion in PSAs. Mr. Solomon received a portion of his bonus in cash, RSUs, PSAs and deferred cash. The Compensation Committee believes that the payment of a significant portion of an employee’s compensation in the form of performance-based awards properly aligns the employee’s interests with those of the Company’s stockholders and effectively mitigates any risks associated with the Company’s compensation practices.

Recruiting and Retention. We operate in an intensely competitive industry, and we believe that our success is closely related to our recruiting and retention of highly talented employees and a strong management team. We try to keep our compensation program generally competitive with industry practices so that we can continue to recruit and retain talented executive officers and employees.
 
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The chart below illustrates the factors considered by the Compensation Committee in its compensation determinations
[MISSING IMAGE: tm2112746d2-fc_compen4c.jpg]
2020 COMPENSATION DETERMINATIONS
As noted above, compensation for our named executive officers is made from our management committee compensation pool. The following is a summary of the process for determining the 2020 management committee compensation pool:
Actions Taken at the Beginning of 2020

In consultation with the Compensation Committee, at the beginning of 2020, the Company established a targeted Economic Income compensation-to-revenue ratio for the year of between 56% and 57%.

The Company has set a goal of achieving mid-teens pre-tax ROCE on a consistent basis and this objective was reviewed with the Compensation Committee at the beginning of 2020. ROCE is calculated by taking the sum of the Company’s Adjusted Economic Operating Income divided by the average Common Equity of the Company during the fiscal year (with the average Common Equity for the fiscal year calculated by adding the Common Equity at the beginning of the fiscal year and the Common Equity at the end of the fiscal year and dividing by two).

Also at the beginning of the year, we established compensation guidelines for revenues generated by each of the Company’s businesses. With respect to areas of the firm that do not generate revenue, such as research and business operations, the Company set a targeted budget for compensation in these areas based on expected revenues for the year.
Actions Taken During the Course of 2020

During the year, the Compensation Committee met on a quarterly basis to review, among other things, the Company’s performance relative to the targeted Economic Income compensation-to-revenue ratio for the year.

Quarterly meetings with the Compensation Committee also provided an opportunity to discuss any changing dynamics in the markets that may affect positively or negatively the Company’s expected revenues and related compensation accruals.
 
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Actions Taken at the End of 2020 to Determine Compensation

At the end of 2020, compensation pools for investment banking, markets and investment management were finalized based on the revenue guidelines established at the beginning of the year, with some modifications made based on the Company’s overall strong performance for the year in each of these areas. The compensation pool for research was finalized by making adjustments to the budget established at the beginning of the year to account for higher revenues than were expected at the beginning of the year. The compensation pool for business operations was also increased from its budgeted amount to account for the Company’s overall strong performance.

Once the compensation pools were finalized, the Compensation Committee considered the amount of compensation to be included in the pool for the members of the Company’s management committee, which includes the Company’s named executive officers. This pool was determined with reference to (i) the Economic Income compensation-to-revenue ratio and (ii) the overall Economic Operating Income to Stockholders.

The Compensation Committee approved an Economic Income compensation-to-revenue ratio for 2020 of 55.6%, which was below the range established by the Compensation Committee at the beginning of 2020.

Management and the Compensation Committee believe that the compensation pool for members of the Company’s management committee, which includes the Company’s named executive officers, should be directly tied to the Company’s operating performance. Accordingly, the Compensation Committee has determined guidelines that the management committee’s participation in the Company’s Economic Operating Income should be a percentage of the total amount of Economic Operating Income, with the management committee’s incremental participation decreasing as Economic Operating Income increases.

The Company’s ROCE for the 2020 fiscal year was approximately 42.6%, well in excess of the mid-teens ROCE that the Company targeted at the beginning of the year.

As discussed further below, final compensation decisions for the Company’s named executive officers are made at the discretion of the Compensation Committee out of the available management committee compensation pool. We believe this discretionary approach to compensation is consistent with common market practice in the financial services sector, but as noted above, the pool from which discretionary compensation is determined is tied directly to the Company’s operating performance for the year. Further, although the size of incentive compensation awards is based on current fiscal year results, a portion of it is delivered in the form of equity awards that vest over time to encourage retention and further link executive pay with longer-term stock performance. In addition, a portion of incentive compensation is also delivered in the form of performance-based awards whose future value is uncertain, ultimately depending on the performance of the Company over the relevant measurement period.
The Compensation Committee considered the following collective and individual factors in the determinations made for each named executive officer in 2020:

Benefits of the Long-term Partnership Among the Named Executive Officers. One of the key factors to the Company’s resilience during difficult times and the positioning of the Company for success over the long term has been the partnership among the Company’s named executive officers. Messrs. Solomon, Holmes, Lasota and Littman have worked together as a team for almost 15 years. During that time, they have faced significant challenges together such as the financial crisis of 2008. They helped navigate Cowen Investment Management (formerly Ramius LLC) through the financial crisis which then led to the negotiation and execution of the business combination with the Company in 2009.
 
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Messrs. Solomon, Holmes, Lasota and Littman have been instrumental in the transformation of the Company’s business. They have worked collaboratively on the recruitment and retention of key employees and managers across the platform and oversaw the acquisition and integration of 13 businesses. These efforts helped position the Company for its strong performance in 2020 and the expectation of achieving long-term value for its stockholders in the future.
The Covid-19 pandemic presented significant challenges in 2020 with extreme market volatility in March 2020 and the need to move quickly to a fully remote working environment. Messrs. Solomon, Holmes, Lasota and Littman’s collective efforts and leadership contributed significantly to the Company’s ability to manage the difficulties presented by the pandemic and achieve strong operating performance in 2020.
The Compensation Committee recognizes the importance of having and retaining an experienced management team like the one the Company has and, in 2020, this took on even more significance with the Covid-19 pandemic.

Revenue Generation and Drivers of Profitability. As noted below, each of our named executive officers plays an important role in revenue generation and driving profitability While this may not always be the case with a company’s named executive officers, it is the case with ours. Our named executive officers are not compensated directly based on the revenue they generate or, with respect to Messrs. Holmes, Lasota and Littman, the profitability directly attributable to their teams in business operations, but the Compensation Committee does take this into account when determining compensation for the named executive officers. The Compensation Committee also considered the following individual factors in the determinations made for each named executive officer in 2020:

Jeffrey Solomon. Mr. Solomon’s compensation reflected his significant contributions regarding the Company’s record revenue and profitability. Mr. Solomon’s compensation also reflected the enhancements to the Company’s culture and diversity and inclusion initiatives, even in a year impacted by the Covid-19 pandemic. The Committee recognized Mr. Solomon’s leadership in the Company’s successful navigation through the market volatility in early 2020 and throughout the balance of 2020 where the Company’s businesses performed well with virtually all employees working remotely as a result of the Covid-19 pandemic. Mr. Solomon helped to bring numerous clients into the Company by providing investment banking advice. Mr. Solomon also worked closely with clients in the Company’s markets division, research division and investment management division. Mr. Solomon also played a key role in capitalizing on the Company’s long-term strategy to scale businesses that will drive margin and greater operating consistency.

John Holmes. Mr. Holmes’s compensation reflected significant contributions related to the fast and effective operational response as the Covid-19 pandemic unfolded and his efforts throughout the year to ensure that employees were able to work productively while working remotely. During the periods of high market volatility in early 2020, Mr. Holmes played a leading role in managing the Company’s prime broker relationships which allowed the Company to mitigate potential losses. In addition, Mr. Holmes oversaw the introduction of multiple new revenue-generating products across the Company, established new custodial relationships and leveraged and expanded clearing and settlement capabilities to enhance product offerings. Mr. Holmes also oversaw implementation of the Company’s strategy to transition its correspondent clearing business off of the Company’s platform.

Stephen Lasota. Mr. Lasota’s compensation reflected significant contributions related to the continued enhancement of the Company’s financial reporting, despite the challenges of employees working remotely as a result of the Covid-19 pandemic. Mr. Lasota played a leading role in managing the Company’s financing sources during the periods of high market volatility in early 2020, which allowed the Company to mitigate potential losses. Mr. Lasota also plays a significant role in the Company’s
 
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revenue-generating captive reinsurance business. Mr. Lasota oversaw the completion of the merger of the Company’s two largest broker-dealers, substantially increasing net capital.

Owen Littman. Mr. Littman’s compensation reflected significant contributions related his efforts to ensure that the Company was complying with its legal, regulatory and corporate governance obligations as the Covid-19 pandemic unfolded. Mr. Littman’s contributions also reflected the continued enhancement of the Company’s compliance structure, including technology used to increase efficiency, and management of the Company’s outstanding litigation and regulatory matters. Mr. Littman has played and continues to play a critical role in assessing the areas where the Company can legally work with clients in the cannabis sector and those efforts have led to significant revenue-opportunities for the Company. Mr. Littman also plays a significant role in the Company’s revenue generating captive reinsurance business. Mr. Littman played a leading role in the Company’s acquisition of the investment banking business of MHT Partners. Mr. Littman also oversaw the Legal and Compliance strategic hiring process to support the Company’s growing business lines in the international markets.
At meetings held on December 17, 2020, January 7, 2021 and February 4, 2021 and numerous executive sessions following these meetings, the Compensation Committee considered and discussed management’s compensation recommendations for our named executive officers other than the Chief Executive Officer. After the Compensation Committee determined the management compensation pool for 2020 as described above, the Compensation Committee then considered the named executive officers’ collective and individual contributions to the Company’s strategic initiatives and leadership in 2020; historical compensation information for each named executive officer; the Company’s desire to retain and incentivize its named executive officers; the recommendations of Mr. Solomon, our Chief Executive Officer, regarding total compensation of our named executive officers (other than himself); the financial performance of the Company during 2020 compared to comparable public companies and other companies in the securities industry; a review of public filings and other market data regarding total compensation paid by certain peer investment banks and asset management companies; and base salary, cash bonus, equity awards and all other compensation paid by the compensation peer group. Upon consideration of these factors the Compensation Committee approved the Chief Executive Officer’s recommendations for the named executive officers and determined the total pay for our Chief Executive Officer, Mr. Solomon.
COMPENSATION PROGRAM AND PAYMENTS
Base Salary
The purpose of base salary is to provide a set amount of cash compensation for each named executive officer that is not variable in nature and is generally competitive with market practices. We seek to limit the base salaries of our named executive officers such that a significant amount of their total compensation is contingent upon the performance of the Company and the named executive officer during the fiscal year. This was consistent with standard practice within the securities and asset management industries and we believe this allowed us to reward performance.
In 2020 Mr. Solomon received a base salary of  $1,000,000 and each of Messrs. Lasota, Holmes and Littman received a base salary of $700,000.
Annual Cash Bonus
The Compensation Committee approved annual cash bonus amounts for each of our named executive officers after review and consideration of the above factors and within the scope and confines of the established management committee compensation pool.
 
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Annual cash bonuses are determined based on an informed judgment with final amounts determined at the discretion of the Committee within the confines of the established management committee compensation pool. This is consistent with our view that a significant portion of compensation paid is to be based on the performance of the Company and of each named executive officer.
In 2020, Mr. Solomon received a cash bonus of  $13,000,000, Mr. Lasota received a cash bonus of  $4,847,295, Mr. Holmes received a cash bonus of  $5,347,295 and Mr. Littman received a cash bonus of  $4,847,295.
Deferred Compensation
The annual bonus is typically paid partially in cash, partially in deferred cash and partially in equity. The deferred cash and equity components of the annual bonus are paid in lieu of, not in addition to, a cash payment and are subject to service-based vesting conditions. The Compensation Committee believes that the practice of paying a portion of each named executive officer’s annual bonus in the form of deferred cash and equity awards is consistent with compensation practices at our peer companies and is a useful tool to continue aligning the long-term interests of our named executive officers with the interests of our stockholders.
After determining the aggregate cash values of annual bonuses payable to each of our named executive officers in respect of fiscal 2020, the Compensation Committee considered the percentage of the annual bonus compensation that each of our named executive officers would receive in the form of deferred awards. Jeffrey Solomon, our Chief Executive Officer, developed a proposal for the allocation of annual bonus compensation among the cash and PSAs awarded to Messrs. Holmes, Lasota and Littman. The Compensation Committee discussed and ultimately approved the proposal and established an allocation of deferred cash, PSA and RSU awards for Mr. Solomon. The Compensation Committee awarded Mr. Solomon RSUs and deferred cash in addition to the PSAs awarded to the other named executive officers because (i) his compensation was significantly higher than that of the other named executive officers and (ii) in general, the Company deferred less in 2020 as a result of the Company’s strong performance.
Deferred Cash Awards
Deferred cash awards relating to fiscal 2020 annual bonuses were awarded to our named executive officers in February 2021. Only Mr. Solomon received a deferred cash award in the amount of  $ 4,624,860. Mr. Solomon’s deferred cash award will vest with respect to 25% on November 15, 2021, 25% on November 15, 2022, 25% on November 15, 2023 and 25% on November 15, 2024.
Restricted Stock Units (“RSUs”)
RSUs relating to fiscal 2020 annual bonuses were awarded to our named executive officers in February 2021. RSUs will vest with respect to 25% on December 1, 2021, 25% on December 1, 2022, 25% on December 1, 2023 and 25% on December 1, 2024. To eliminate the impact that a short-term significant price change in the market value of our Class A common stock may have on the number of RSUs that are intended to be delivered to an employee, the Compensation Committee approved valuing the RSU grants using the volume-weighted average price for the 30 trading days ended January 13, 2021, which was the day prior to the date that compensation was first communicated to the Company’s employees. The grant date value of the RSUs equaled $26.32 per share. In 2020, Mr. Solomon received an award of 175,717 RSUs. Messrs. Holmes, Lasota and Littman received 100% of their deferred compensation in the form of PSAs.
Performance Share Awards (“PSAs”)
In 2020, the Compensation Committee determined that the relative mix of performance share awards, or PSAs, to other compensation granted to the named executive officers should be higher than in 2019, and each named executive officer should receive a higher dollar amount of PSAs compared to what they received in
 
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2019. In February 2021, the Company entered into a performance shares award agreement, or PSA Agreement, with each of our named executive officers. Under the terms of the PSA Agreement, each named executive officer was awarded PSAs, based on the attainment of certain performance metrics. Mr. Solomon received 66,500  PSAs, and each of Messrs. Lasota, Holmes and Littman received 17,200 PSAs. The grant date value of the PSA awards represents 175% of Mr. Solomon’s base salary and approximately 65% of each of Messrs. Lasota, Holmes and Littman’s base salary. The Compensation Committee approved valuing the PSA grants using the same grant date value as the RSUs, or $26.32 per share. The PSAs awarded are subject to a three-year performance period and are scheduled to vest on December 31, 2023. At the end of the performance period, the PSAs will be multiplied by an applicable percentage (set forth below) based on the Company’s AROCE. If the Company’s performance is below the specified threshold, no shares will be delivered to the named executive officers. The resulting number of attained RSUs will then be subject to a multiplier based on the Company’s total shareholder return, or TSR, relative to other companies in the S&P SmallCap 600 Financial Sector Index, or the Index.
AROCE will be calculated by (i) taking the sum of the Company’s Adjusted Economic Operating Income during each of the fiscal years during the Performance Period divided by the average Common Equity of the Company during each such fiscal year (with the average Common Equity for each fiscal year calculated by adding the Common Equity at the beginning of such fiscal year and the Common Equity at the end of such fiscal year and dividing by two) and (ii) dividing such sum by three.
At the end of the performance period, the PSAs will be multiplied by the percentages set forth below based on the Company’s AROCE with respect to such performance period:
AROCE Performance Scale
Performance Level*
3-Year AROCE**
Payout Rate***
Below Threshold
Below 8%
0% Payout
Threshold
8%
50% Payout
Target
10%
100% Payout
Above Target
12%
150% Payout
Maximum (capped)
Greater than 15%
200% Payout
*
Payout for performance between the Threshold and the Maximum will be interpolated.
**
While the Company’s ROCE in 2020 was substantially above the Target rate, the Compensation Committee sets the AROCE Performance Scale based on the objective of achieving consistent pre-tax mid-teen ROCE returns over the three year performance period covered by the PSAs. Accordingly, there may be outliers in performance, both positive and negative, during the three year performance period, but the PSAs are structured to reward the Company’s executive officers for meeting the pre-tax mid-teen ROCE return over the long-term, which we believe leads to long-term shareholder value creation.
***
Payout in excess of 120% for the 2020 PSAs will be settled in cash.
The number of PSAs that become vested and settled at the end of the performance period will equal the product of the preliminary PSAs and the applicable total shareholder return (TSR) modifier, as set forth below, determined based on the Company’s TSR during the performance period versus the TSR of the companies comprising the Index (adjusted as set forth in the award agreement), as of the first day of each performance period for the same period.
3-Year TSR Modifier
Relative TSR Position
Modifier*
25th percentile and below
0.9
50th percentile
1.0
75th percentile and above
1.1
 
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*
The relative TSR and resulting modifier will be interpolated between the 25th percentile and below and the 75th percentile. The relative TSR position will be calculated using the following formula where N is the total number of companies in the Index including the Company and R is the Company’s ranking compared to the Index: N-R/N-1.
FREQUENCY OF SAY-ON-PAY VOTE
Consistent with the preference expressed by our stockholders at our 2017 Annual Meeting of Stockholders, the Board decided that the Company will include an advisory vote to approve the compensation of our named executive officers in our proxy materials every year until the next required advisory vote to approve the frequency of an advisory vote on executive compensation, which will occur no later than our 2023 annual meeting.
Setting Compensation
The Compensation Committee is responsible for approving the compensation paid to our named executive officers as well as certain other highly compensated employees. In making compensation determinations, the Compensation Committee reviews information presented to them by the Company’s management, compensation peer group information and the recommendations of an independent compensation consultant engaged by the Compensation Committee. The Compensation Committee also reviews our compensation-to-revenue ratio on a quarterly basis and may adjust the targeted compensation-to-revenue ratio in order to maintain the Company’s compensation philosophy of aligning the interests of our named executive officers and our stockholders.
Involvement of Executive Officers
Mr. Solomon, our Chief Executive Officer, in consultation with our Chief Financial Officer, our General Counsel, our Chief Operating Officer and employees in our Human Resources department, assists the Compensation Committee in making compensation determinations. These individuals prepare information that is provided to, and reviewed by, the Compensation Committee and the Chief Executive Officer makes recommendations to the Compensation Committee for their consideration. Such information and recommendations include, among other things, recommendations for the percentage of the Company’s Economic Operating Income that should be allocated to the management committee compensation pool, the compensation that should be received by the named executive officers (other than himself) and certain other highly compensated employees; financial information regarding the Company that should be reviewed in connection with compensation decisions; the firms to be included in a compensation peer group; and the evaluation and compensation process to be followed by the Compensation Committee. Our Chief Executive Officer is often invited to participate in Compensation Committee meetings; however, he recuses himself from all discussions regarding his own compensation.
Compensation Consultant
The Compensation Committee exercised its sole authority pursuant to its charter to directly engage Pay Governance LLC. Pay Governance LLC was retained by the Compensation Committee to provide advice, analysis, and assessment of alternatives related to the amount and form of executive compensation. Pay Governance LLC prepared certain Compensation Committee presentation materials (including the peer group data described below) during November and December 2020 and early 2021 at the request of the Compensation Committee. The Compensation Committee meets with Pay Governance LLC from time to time without management present.
The Compensation Committee has assessed the independence of Pay Governance LLC pursuant to SEC and NASDAQ rules and concluded that no conflict of interest exists that would prevent Pay Governance LLC from independently representing the Compensation Committee. The Compensation Committee reviewed and was satisfied with Pay Governance LLC’s policies and procedures to prevent or mitigate conflicts of interest and that
 
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there were no business or personal relationships between members of the Compensation Committee and the individuals at Pay Governance LLC supporting the Compensation Committee.
Compensation Peer Group
The Compensation Committee, with the assistance of its independent compensation consultant, annually identifies a compensation peer group of firms with which we compete for executive talent. Our peer group includes investment banks with revenues and market capitalizations similar to ours as well as companies with significant asset management operations. In making compensation decisions for 2020, our Compensation Committee reviewed compensation information for similarly titled individuals at comparable companies gathered from public filings made in 2020 related to 2019 annual compensation and from subscriptions for other market data. At the request of the Compensation Committee, Pay Governance LLC provides the Compensation Committee with compensation data from other firms of similar size. For 2020, Pay Governance provided the Compensation Committee with peer group compensation data of B. Riley Financial, Evercore Partners Inc., Greenhill & Co., Inc., Houlihan Lokey, Inc., Jefferies Group, JMP Group, Lazard Ltd., Moelis & Company, Oppenheimer & Co. Inc., Piper Sandler Companies, PJT Partners, Raymond James Financial, and Stifel Financial Corp. The Compensation Committee believes that information regarding pay practices at comparable companies is useful in two respects. First, as discussed above, we recognize that our pay practices must be competitive in our marketplace. By understanding the compensation practices and levels of the Company’s peer group, we enhance our ability to attract and retain highly skilled and motivated executives, which is fundamental to the Company’s success. Second, this data is one of the many factors the Compensation Committee considers in assessing the reasonableness of compensation. Accordingly, the Compensation Committee reviewed trends among these peer firms and considered this data when determining our named executive officers’ 2020 annual bonuses and other compensation, but did not utilize the peer firm compensation as a sole benchmark for determining executive compensation.
RELATIONSHIP OF COMPENSATION POLICIES AND PRACTICES TO RISK MANAGEMENT
The Board has discussed whether our compensation policies are reasonably likely to have a material adverse effect on our results. The Board noted that, consistent with our performance-based model, many of our employees receive a significant portion of their compensation through discretionary compensation tied to their individual or business unit performance, or a combination thereof. The Board noted that a lower portion of the Company’s revenues are derived from proprietary trading businesses and that a significant portion of many employees’ compensation is provided in the form of deferred compensation that vests over time, which has the effect of tying the individual employee’s long-term financial interest to the firm’s overall success. The Board believes that this helps mitigate the risks inherent in our business.
The Board noted that our risk management team continuously monitors our various business groups, the level of risk they are taking and the efficacy of potential risk mitigation strategies. Senior management also monitors risk and the Board is provided with data relating to risk at each of its regularly scheduled meetings. The Head of Risk meets regularly with the Board to present his views and to respond to questions. For these reasons, the Board believes that our overall compensation policies and practices are not likely to have a material adverse effect on us.
CLAWBACK POLICY
In March 2015, the Company adopted a clawback policy that allows the Company to recover incentive compensation from any executive officer if that executive officer engages in intentional misconduct that caused or contributed to a restatement of the Company’s financial results. In the event of a restatement, a committee consisting of the non-management members of the Board (the “Independent Director Committee”) will review the
 
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performance-based compensation and annual bonus compensation paid in the form of both cash and equity under the Company’s equity and incentive plans to any such executive (the “Awarded Compensation”). If the Independent Director Committee determines, in good faith, that the amount of such performance-based compensation or annual bonus actually paid or awarded to any such executive officer would have been a lower amount had it been calculated based on such restated financial statements (the “Actual Compensation”) then the Independent Director Committee shall, subject to certain exceptions, seek to recover for the benefit of the Company the after-tax portion of the difference between the Awarded Compensation and the Actual Compensation.
EXECUTIVE OFFICER STOCK OWNERSHIP GUIDELINES
The Company adopted stock ownership guidelines on March 18, 2015 that require the Company’s executive officers to hold Company stock or RSUs within the later of the adoption of the policy or five years of being designated as an executive officer. All named executive officers are in compliance with the stock ownership guidelines, which are set forth below.
Chief Executive Officer
8× Base Salary
$ 8,000,000
Other Executive Officers
3× Base Salary
$ 2,100,000
ANTI-HEDGING POLICY
In order to support alignment between the interests of stockholders and employees, the Company maintains an anti-hedging policy that prohibits the “short sale” of Company securities. The policy prohibits employees from trading in options, warrants, puts and calls or similar instruments on Company securities. We allow directors and executive officers to hold up to 50% of their Company stock in a margin account. During 2020, all named executive officers were in compliance with this policy.
PERQUISITES
The Company provides certain perquisites, including reimbursement of group term life and long-term disability insurance and tax and financial planning expenses to certain members of senior management, including Messrs. Solomon, Lasota and Holmes.
EMPLOYMENT AGREEMENTS
Each of our named executive officers is party to an employment agreement with the Company. The Compensation Committee views the employment agreements as an important tool in achieving our compensation objective of recruiting and retaining talented employees and a strong management team. The severance and change-in-control arrangements provided by the employment agreements are intended to retain our named executive officers and to provide consideration for certain restrictive covenants that apply following a termination of employment. None of our named executive officers have minimum guaranteed bonuses in their employment agreements.
TAX AND ACCOUNTING IMPACT AND POLICY
The financial and income tax consequences to the Company of individual executive compensation elements are important considerations for the Compensation Committee when analyzing the overall design and mix of compensation. The Compensation Committee seeks to balance an effective compensation package for our named executive officers with an appropriate impact on reported earnings and other financial measures.
In designing our compensation and benefit programs, we review and consider the accounting implications of our decisions, including the accounting treatment of amounts awarded or paid to our executives.
 
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In general, Section 162(m) of the Code generally denies a publicly held corporation a deduction for federal income purposes for compensation in excess of  $1 million per year paid to certain “covered employees.” As in prior years, the Compensation Committee will continue to take into account the tax and accounting implications (including with respect to the expected lack of deductibility under the revised Section 162(m)) when making compensation decisions, but reserves its right to make compensation decisions based on other factors as well if the Compensation Committee determines it is in its best interests to do so. The Compensation Committee may, from time to time, design programs that are intended to further our success, including by enabling us to continue to attract, retain, reward and motivate highly-qualified executives that may not be deductible as a result of the limitations on deductibility under Section 162(m).
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and has recommended to the Board the inclusion of the Compensation Discussion and Analysis in the Form 10-K and in the definitive proxy statement for our 2021 Annual Meeting of Stockholders.
Compensation Committee of the Board of Directors of Cowen Inc.
Brett H. Barth, Chair
Lawrence E. Leibowitz
Margaret L. Poster
Douglas A. Rediker
Summary Compensation Table
The following table sets forth compensation information for our named executive officers in 2020.
Name & Principal
Position
Year
Salary
($)
Bonus
($)(1)
Stock
Awards
($)(2)
All Other
Compensation
($)
Total
($)
Jeffrey M. Solomon
Chief Executive
Officer
2020 1,000,000 13,000,000 3,157,115 1,833,388(3) 18,990,503
2019 950,000 1,300,000 3,588,250 1,640,563 7,478,814
2018 950,000 1,875,000 1,053,481 1,210,376 5,088,857
Stephen A. Lasota
Chief Financial Officer
2020 700,000 4,847,295 899,110 373,870(3) 6,820,275
2019 700,000 1,212,500 854,236 353,358 3,120,094
2018 500,000 1,625,000 396,485 311,652 2,833,137
John Holmes
Chief Operating Officer
2020 700,000 5,347,295 927,220 386,842(3) 7,361,357
2019 700,000 927,220 926,630 361,137 3,235,267
2018 500,000 1,675,000 515,193 311,652 3,001,845
Owen S. Littman
General Counsel and Secretary
2020 700,000 4,847,295 899,110 366,686(3) 6,818,910
2019 700,000 1,212,500 890,424 351,955 3,154,879
2018 500,000 1,650,000 396,485 311,652 2,858,137
(1)
The amounts in this column reflect cash bonuses paid to the named executive officers in 2021 from the bonus pool established in respect of performance during the 2020 year.
(2)
The entries in the stock awards column reflect the aggregate grant date value of the RSU and PSA awards granted in 2020 in connection with 2019 performance in accordance with FASB ASC 718, disregarding for this purpose the estimate of forfeitures related to service-based vesting conditions. The value of the PSA awards reflects the grant date value of the awards based on the target level of performance, which is less than the maximum possible value. The grant date value of the PSA awards assuming that the highest level of the applicable performance conditions will be achieved is $1,774,440 for Mr. Solomon and $1,117,240 for Messrs. Lasota, Holmes and Littman, respectively. For information on the valuation assumptions with respect to awards made, refer to the Company’s Share-Based Compensation and Employee Ownership Plans Note in its financial statements included in its Form 10-K for the year ended December 31, 2020, as filed with the SEC.
 
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TABLE OF CONTENTS
 
(3)
Other compensation includes:
Other Compensation ($)
Jeffrey M.
Solomon
Stephen A.
Lasota
John
Holmes
Owen S.
Littman
Vested Deferred Cash Awards
1,773,575 363,983 380,698 369,802
Dividend Equivalents
10,572 2,692 2,753 2,703
Tax and Financial Planning
49,241 7,195 3,391
GRANTS OF PLAN BASED AWARDS
The following table provides information regarding grants of compensation-related, plan based awards made to the named executive officers during fiscal year 2020. These awards are also included in the Summary Compensation Table above.
Corporate
Action
Date
Threshold
(#)
Target
(#)
Maximum
(#)
Estimated
Future
Payouts
Under
Equity
Incentive
Plan Awards(1)
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(2)
Grant Date
Fair Value
of Stock
Awards
($)(3)
Jeffrey M. Solomon
2/19/2020
1/16/2020
129,931 2,269,895
7/1/2020
2/10/2020
27,000 54,000 108,000 887,220
Stephen A. Lasota
2/19/2020
1/16/2020
19,490 340,490
7/1/2020
2/10/2020
17,000 34,000 68,000 558,620
John Holmes
2/19/2020
1/16/2020