UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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EVERCORE PARTNERS INC.
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Performance, Compensation and Corporate Governance Review May 2017
2016 Was A Milestone Year in Evercore’s History 2. Total shareholder return for FY 2016 assumes dividends reinvested In connection with seeking your support for our stockholder proposals included in this year’s proxy statement, we wanted to review Evercore’s outstanding performance, incentive aligning compensation practices and corporate governance improvements In this presentation, all financial results, including revenue, income and EPS data, for all periods reflect non-GAAP Adjusted figures. A reconciliation to the equivalent GAAP amounts is available in Annex A to our 2017 Proxy Statement or, in the case of EPS data, in our quarterly earnings releases, which are available on the Investor Relations section at www.evercore.comResults2016 Advisory revenues of $1.07 billion up 27% versus FY 2015 and the highest in Evercore’s history1Adjusted EPS for FY 2016 grew 34% YoY on 18% revenue growth and 27% operating marginsMarketShare2016 market share of global Advisory Fee Pool of 6%, up from 5% at year-end 2015EVR ranks #7 globally among all firms that publicly report advisory revenues and higher in the U.S.Evercore ISI research ranked #3 in the U.S. (#2 on a weighted basis) by Institutional InvestorTalentJohn Weinberg joined as Executive Chairman and Chairman of the BoardA proven leader, deal maker and revenue generatorMr. Weinberg has already played a significant role in helping to shape our strategy and win key mandatesAdded 5 new Advisory SMDs in 2016, broadening our Strategic Shareholder Advisory and Activist Defense practice, establishing our European ECM Advisory practice and strengthening our Energy and Industrials PracticeIn 2017, we further announced the addition of three newly hired Advisory SMDs, as well as the promotion of four new Advisory SMDsEquities Research expands coverage with the addition of 2 Senior Analysts in Insurance and ChemicalsShareholderReturnShareholder return of 30% for 20162 with capital returned to shareholders growing to $226 million in FY 2016Share repurchase program results in a negative net burn rate
Financial Performance – Strong Growth Sustained annual growth with a CAGR of 25% or greater in net revenues, net income and earnings per share Investment banking business drives financial performance delivering 90% of revenues and a higher percentage of profits Adjusted Net Revenues ($ in millions) Adjusted Net Income ($ in millions)
TSR Total Return to Shareholders1 Our total shareholder returns over the last five years has outperformed key indices and our most direct competitors The Stock Performance graph and related table demonstrates the performance of an investment in our Class A common stock from March 30, 2012 onwards in comparison with the S&P 500 Index, the S&P (Financials) Index, and EVR’s publicly traded independent peers. The graph assumes $100 was invested at the opening of business on March 30, 2012 in each of our Class A common stock, the S&P 500 Index, the S&P (Financials) Index, GHL and LAZ. Shareholder returns for MC, HLI and PJT are based on $100 being invested on the dates of their IPOs, which were April 16, 2014, August 13, 2015 and October 1, 2015, respectively Shareholder return assumes that dividends were reinvested on the date of payment without payment of any commissions. The performance shown in the graph represents past performance and should not be considered an indication of future performance
Executive Compensation and Performance Y-o-Y growth in Total Shareholder Return (TSR) is based on TSR of 30% and 6% for the 2016 and 2015 calendar years, respectively. Pay and performance are aligned in a way that is favorable to stockholders For our executives who were NEOs in both 2015 and 2016, aggregate compensation in 2016 was essentially flat from 2015, while our financial results showed significantly greater improvements year over year. 2016 TSR/CompensationY-o-Y GrowthCommentsTSR30%400%1Investments in talent sustain growth and enable increasing returns to shareholdersRalph Schlosstein, CEO$6,500,0008%Compensation aligned with market w/ YoY growth materially below return to shareholdersJohn WeinbergExecutive Chairman–N/ASignificant investment ($118 million) over five years focused on sustaining industry-leading growth. The majority of this investment replaces the estimated deferred compensation from his previous employer that he forfeited by virtue of joining EvercoreRoger AltmanSenior Chairman$5,500,000(39%)Compensation continues to be significantly influenced by individual contribution to annual revenueAndrew SibbaldCEO Evercore International$7,380,00034%Compensation significantly influenced by individual contribution to annual revenueRobert WalshCFO$2,585,00010%Compensation aligned with market w/ YoY growth materially below return to shareholders
Evercore Compensation Policies What We Do Pay for Performance. We tie pay to performance for our revenue generating and client-facing executives. By doing this, we are linking such executives’ compensation to the performance of Evercore and their individual performance, and our executives are therefore motivated to conduct the business in a manner that produces superior returns over the long-term A Significant Portion of Annual Bonuses is in the form of Equity and is subject to Multi-Year Vesting. Annual bonus RSUs vest over a four-year period, which is longer than the standard deferral period for many banks. This also helps us to retain key employees because our NEOs each own considerable unvested interests in Evercore through previous grants of RSUs, which they forfeit if they voluntarily leave the firm prior to the vesting of such RSUs. As a result, we believe our NEOs have a demonstrable and significant interest in remaining with Evercore and increasing shareholder value over the long term Offset Equity Award Dilution. We monitor the potentially dilutive impact of the equity component of our compensation programs and offset that impact entirely through stock repurchases In all cases, RSUs are delivered as a component of the agreed upon compensation, and not in addition to that compensation. In other words, the amount of compensation always is determined first, with the mix of cash and RSUs determined subsequently What We Don’t Do No Guaranteed Bonuses. We do not provide guaranteed bonuses to any of our NEOs. Other than base salaries, none of our NEOs’ compensation for 2016 was guaranteed. Instead, all of their compensation was at risk based on performance No Hedging Transactions or Short Sales. Since we went public in 2006, we also have had an employee trading policy which, among other things, prohibits all employees from hedging the economic risk of their company stock ownership
Evercore Compensation Policies New Policies Claw-back Policy. We adopted a claw-back policy to recapture incentive compensation awarded to SMDs in the event of misconduct by that SMD or a restatement of the financial results of the Company due to material noncompliance with financial reporting requirements No Pledging. We adopted a policy prohibiting executive officers and directors from pledging their equity securities Director Resignation Policy. We adopted a director resignation policy that provides if a director receives more “withhold” votes than “for” votes, then that director must promptly tender his or her resignation, which may or may not be accepted by the Nominating and Governance Committee Move to Annual Say-on-Pay Following consultation with stockholders, we are recommending that stockholders approve a non-binding resolution that the Company move to annual Say-on-Pay votes beginning with the 2018 Annual Meeting
Corporate Governance Board and Tenure Our Chairman & CEO positions are split, and we have a lead independent director who presides over meetings of non-management directors 67% of our nominees for director have been determined to be independent under the applicable NYSE rules and company guidelines 100% of our committee members are independent directors Average director nominee tenure is less than six years. Our board is well balanced in regard to tenure, combining the institutional and strategic understanding and continuity of longer term directors with the fresh insights and diverse perspectives brought by newer directors Our non-management directors meet regularly without management present All non-management directors receive RSUs as part of their annual compensation and must comply with equity ownership guidelines Director Nominee Tenure Independent Director Nominees
Appendix
Overview of Mr. Schlosstein’s Compensation and Evercore’s TSR Shareholder friendly capital deployment. Consistently returning more than 100% of earnings to shareholders Dividend has grown 165% since 2008 Repurchased more than enough shares to offset the dilutive effect of bonus equity in each of the last 5 years On April 25, 2016, the Board refreshed the stock buyback program, authorizing the repurchase of up to 7.5 million shares for up to $450 million Mr. Schlosstein’s Compensation for 2016, 2015, 2014, 2013 and 2012 Long-Term Shareholder Returns Outpace Those of Our Publicly-Traded Competitors Return to investors calculated for the periods one and five year periods ending March 31, 2017; the return assumes that dividends are reinvestedTSR Compared to Direct Public Company Peers1One YearFive YearsEvercore54%200%S&P 500 (Financials)33%104%S&P 50017%87%Greenhill42%(14%)Houlihan Lokey42%N/ALazard27%107%Moelis48%N/APJT Partners47%N/A
The Initial Equity, Cash and Performance Awards are intended to provide a long term performance incentive at inception and, in part, replace forfeited deferred compensation: 100% of the sign-on awards are subject to delayed vesting (with 44% scheduled to vest in 2022 or later), 70% of the value of the awards depends on our long-term stock performance, and 50% of the value of the awards was subject to additional express performance criteria. The majority of these one-time sign-on awards replace the estimated deferred compensation from Mr. Weinberg’s previous employer that he forfeited by virtue of joining Evercore. Evercore’s New Executive Chairman: Principal Terms: Sign-On and Replacement Awards Awards generally vest upon a termination without “Cause”, due to death or disability or if Mr. Weinberg resigns for “Good Reason”Summary of TermsComponentDetailRecurringSign-on RSU Award900,000 RSUs (Grant Date Value of $58,842,000)Long-Term: Vests over 5 years ending in 2022:NoDecember 31, 2016 (18%)162,000March 1, 2018 (14%)126,000March 1, 2019 (14%)126,000March 1, 2020 (14%)126,000March 1, 2021 (14%)126,000March 1, 2022 (26%)234,000Tied to Employment: Forfeited if Mr. Weinberg leaves before a vesting eventAligned with Stockholders: Exposes Mr. Weinberg to downside stock riskSign-on Performance Award400,000 Class I-P Units (Grant Date Value of $24,412,000)Long-Term: 5 year cliff vesting in 2022 Tied to Employment: Forfeited if Mr. Weinberg leaves before a vesting eventAligned with Stockholders: Granted with stock price hurdles of $65 and $75 per share for 20 consecutive trading days (as shown below), which were met due to strong 2016-17 stock performance. Units derive value from underlying common stock, so expose Mr. Weinberg to downside stock risk even after meeting stock price hurdlesNoStock Price# of Class I-P Units Convertible to Class I Units (which are exchangeable for common stock)$65.00 - $74.99200,000$75.00 and greater200,000Sign-on Cash Award$35 million: Long-Term: $11 million vests on March 1, 2019 and $6 million vests annually on March 1 from 2020 to 2023Tied to Employment: Forfeited if Mr. Weinberg leaves before a vesting eventPerformance-Based Adjustments: Each tranche is adjustable down to 75% of the $35 million target or up to 200% of the target based on performance criteria to be established annually by the Compensation CommitteeNoGuaranteed BonusNo guaranteed bonus; portion of bonus will be deferredN/A