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

​

Focus Financial Partners 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)

Proposed maximum aggregate value of transaction:

​

(5)

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.

​

(1)

Amount Previously Paid:

​

(2)

Form, Schedule or Registration Statement No.:

​

(3)

Filing Party:

​

(4)

Date Filed:

​

 

 

(This page has been left blank intentionally.)

 

 TABLE OF CONTENTS

 

 

875 Third Avenue, 28th Floor
New York, NY 10022

 

 

DIRECTOR NOMINEES

The Board of Directors has nominated the two directors named below for election to the Board of Directors as Class III directors at the Annual Meeting and recommends “FOR” the election of each director nominee. Each nominee is currently a director of the Company. The following table provides summary information about each nominee, including committee assignments. See “Proposal One” on page 19 for additional information regarding the nominees.

●= Member

C = Chair

 

Focus Financial Partners 2021 Proxy Statement   13

 

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS

What is this proxy statement?

This proxy statement and the enclosed proxy card are being made available to you in connection with the solicitation of proxies by the Board of Directors (the “Board of Directors” or “Board”) of Focus Financial Partners Inc., a Delaware corporation (the  “Company,”  “Focus,”  “we,”  “us”  and  ”our”), for use at the 2021 Annual Meeting, or at any adjournments or postponements thereof. This proxy statement summarizes the information that you need to make an informed decision on the proposals to be considered at the Annual Meeting.

Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy solicitation materials, including this proxy statement, primarily via the internet rather than mailing paper copies of these materials to each stockholder. Beginning on April 15, 2021, we will mail to each stockholder a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) containing instructions on how to access the proxy materials, vote or request paper copies.

What is included in the proxy materials?

Our proxy solicitation materials include the Notice of Availability, this proxy statement (including the Notice of 2021 Annual Meeting of Stockholders and proxy card) and Focus’ Annual Report for the year ended December 31, 2020.

What proposals will be addressed at the Annual Meeting?

Stockholders will be asked to consider the following proposals at the Annual Meeting:

1.

To elect the two directors named in this proxy statement to serve as Class III directors on the Board until the 2024 Annual Meeting of Stockholders or until their successors are elected and qualified;

​

2.

To ratify the selection by our audit and risk committee of Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for the year ending December 31, 2021; and

​

3.

To conduct a non-binding advisory vote to approve the compensation of our named executive officers.

​

We will also consider any other business that properly comes before the Annual Meeting, although we are not currently aware of any business to be acted upon other than the matters discussed in this proxy statement.

How does the Board of Directors recommend that I vote?

Our Board of Directors unanimously recommends that stockholders vote “FOR” each nominee for director, “FOR” the ratification of the selection of Deloitte as our independent registered public accounting firm, and “FOR” the approval, on a non-binding advisory basis, of the compensation of our named executive officers.

Who may vote during the Annual Meeting?

Stockholders who owned shares of Focus’ Class A common stock, par value $0.01 per share (“Class A common stock”), and Class B common stock, par value $0.01 per share (“Class B common stock” and, together with the Class A common stock, the  “common stock”), as of the close of business on March 29, 2021 (the  “Record Date”) are entitled to attend and vote at the Annual Meeting. Each share of Focus’ Class A common stock and Class B common stock entitles the holder thereof to one vote. As of the Record Date, there were 55,114,842 shares of Class A common stock and 17,019,104 shares of Class B common stock issued and outstanding. There are no voting rights ceilings applied for any stockholders.

How many shares must be represented to hold the Annual Meeting?

In order for us to conduct the Annual Meeting, the holders of a majority in voting power of the outstanding shares of Class A common stock and Class B common stock entitled to vote at the meeting must be present in person or represented by proxy at the Annual Meeting. For the avoidance of doubt, abstentions (shares present at the Annual Meeting and marked “abstain”) and broker non-votes are treated as present for purposes of determining the presence or absence of quorum.

 

14   Focus Financial Partners 2021 Proxy Statement

 

Your shares are counted as present at the Annual Meeting if  (a) you attend the Annual Meeting, (b) you vote (either by mail, telephone or online) in advance of the Annual Meeting (even if you abstain from voting on any proposal) or at the Annual Meeting, or (c) your shares are registered in the name of a bank or brokerage firm (whether or not you provide voting instructions). On March 29, 2021, there were 55,114,842 shares of Class A common stock and 17,019,104 shares of Class B common stock outstanding and entitled to vote. Consequently, 36,066,974 shares of common stock must be present at the Annual Meeting to constitute a quorum.

How many votes do I have?

Each share of Class A common stock and Class B common stock is entitled to one vote on each matter that comes before the Annual Meeting. Information about the stock holdings of our directors, named executive officers and certain significant stockholders is contained in the section of this proxy statement entitled  “Security Ownership of Certain Beneficial Owners and Management.”

What is the difference between a stockholder of record and a beneficial owner of shares held in street name?

Stockholder of Record. If your shares are registered directly in your name with the Company’s transfer agent, American Stock Transfer & Trust Company, LLC, you are considered the stockholder of record with respect to those shares, and the Notice of Availability was sent directly to you by the Company.

Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a broker, bank, broker-dealer, custodian or other similar organization, then you are the beneficial owner of shares held in  “street name,” and the Notice of Availability was forwarded to you by that organization.  The organization holding your account is considered the stockholder of record for purposes of voting during the Annual Meeting. As a beneficial owner, you have the right to instruct that organization on how to vote the shares held in your account, but you must follow the instructions that organization has provided to you in order to vote or attend the Annual Meeting. Those instructions are contained in a “voting instruction form” provided to you by that organization.

What is the proxy card?

The proxy card enables you to appoint the persons listed on the proxy card, each as your representative at the Annual Meeting. By completing and returning the proxy card, you are authorizing the persons listed on the proxy card to vote your shares during the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend, it is strongly recommended that you complete and return your proxy card, or vote via telephone or online, before the Annual Meeting date in case your plans change. If a proposal comes up for vote during the Annual Meeting that is not on the proxy card, the representatives you have appointed as proxies will vote your shares, under your proxy, according to their best judgment.

You may request a printed copy of the proxy card by calling +1-888-PROXY-NA (+1-888-776-9962) in the United States or +1-718-921-8562 from foreign countries from any touch-tone telephone, or online at https://​us.astfinancial.com/OnlineProxyVoting/ProxyVoting/RequestMaterials.

How do I vote?

If you are a stockholder of record of the Company’s shares, there are three ways to vote:

•

Via Telephone or Online Prior to the Annual Meeting. You may vote your shares by telephone by calling +1-800-PROXIES (+1-800-776-9437) in the United States or +1-718-921-8500 from foreign countries from any touch-tone telephone and following the instructions. To vote your shares online, please visit the web address https://www.voteproxy.com. If you choose to vote online in advance of the Annual Meeting, have your Notice of Availability, or proxy card if you requested one, in hand when you access the website noted above and follow the instructions.

​

•

By Mail. You may vote by proxy by requesting printed copies of the proxy materials, filling out the proxy card and sending it back in the envelope provided.

​

•

During the Annual Meeting. You may attend and vote during the Annual Meeting if you pre-register and obtain an admission ticket by May 12, 2021. An admission ticket and a valid, government-issued photographic identification are required to enter the Annual Meeting.

​

 

Focus Financial Partners 2021 Proxy Statement   15

 

If you would like to attend the Annual Meeting, please follow the instructions under “How do I pre-register?” starting on this page 16 below to pre-register by May 12, 2021.

If you are a beneficial owner of shares held in street name, there are three ways to vote:

•

Via Telephone or Online Prior to the Annual Meeting. You may vote by submitting your vote in advance of the Annual Meeting by telephone or online if those options are made available to you by your broker, bank, broker-dealer, custodian or other similar organization, in accordance with the instructions on the voting instruction form provided to you by that organization. Although most banks, brokers and other nominees offer these voting alternatives, availability and specific procedures vary by institution.

​

•

By Mail. You may vote by filling out the voting instruction form and sending it back in the envelope provided by your broker, bank, broker-dealer, custodian or other similar organization that holds your shares.

​

•

During the Annual Meeting. You may attend and vote during the Annual Meeting if you pre-register and obtain an admission ticket by May 12, 2021; in addition, you will need to obtain a “legal proxy” from the organization holding your shares to vote at the Annual Meeting. An admission ticket and a valid, government-issued photographic identification are required to enter the Annual Meeting.

​

If you would like to attend the Annual Meeting, please follow the instructions under “How do I pre-register?” starting on this page 16 below to pre-register by May 12, 2021.

How do I pre-register?

Attendance at the Annual Meeting is limited to our stockholders (or their authorized representatives) as of the Record Date. An admission ticket and a valid, government-issued photographic identification are required to enter the Annual Meeting. In order to pre-register and obtain an admission ticket, please follow the instructions below by May 12, 2021.

•

Stockholder of Record. If you are a stockholder of record, you may pre-register and obtain an admission ticket by emailing us at annualmeetingregistration@focuspartners.com, and providing your name as it appears on your stock ownership record and your mailing address.

​

•

Authorized Representative of Stockholder of Record. If you are a stockholder of record and intend to appoint an authorized representative to attend the meeting on your behalf, you may pre-register and obtain an admission ticket by emailing us at annualmeetingregistration@focuspartners.com and providing your name as it appears on your stock ownership record and your mailing address, the name and mailing address of your authorized representative, and a signed authorization appointing such individual to be your authorized representative at the Annual Meeting.

​

•

Beneficial Owner of Shares Held in Street Name. If you are a beneficial owner of shares held in street name, you may pre-register and obtain an admission ticket by emailing us at annualmeetingregistration@focuspartners.com and providing your name, mailing address and evidence of your stock ownership as of the Record Date. A copy of your bank or brokerage statement showing your holdings as of the Record Date will suffice as evidence of ownership, or you can obtain a letter from the institution holding your shares. In addition, you will need to obtain a “legal proxy” from the organization holding your shares in order to vote at the Annual Meeting.

​

We intend to hold the Annual Meeting in person. However, we are actively monitoring the coronavirus (Covid-19) pandemic, and are sensitive to the public health and travel concerns our stockholders may have and the protocols that federal, state and local governments may impose. In the event it is not possible or advisable to hold the Annual Meeting in person, we will announce alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting partially or solely by means of remote communication. Please monitor the News & Events section of the investor relations section of our website at www.focusfinancialpartners.com for updated information. If you are planning to attend our meeting, please check the website ten days prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

 

16   Focus Financial Partners 2021 Proxy Statement

 

Will my shares be voted if I do not provide my proxy?

If you hold your shares directly in your own name, they will not be voted if you do not provide a proxy (either voting by telephone or online, or by filling out a proxy card) or attend the Annual Meeting and vote directly. Proxy cards that are signed and returned, but do not include voting instructions, will be voted by the proxy holders as recommended by the Board of Directors.

If you are a beneficial owner, your shares may be voted under certain circumstances if they are held in the name of a bank or brokerage firm. Banks and brokerage firms generally have the authority to vote shares absent instructions from their customers on certain “routine” matters, including the ratification of the selection of the independent registered public accounting firm. At the Annual Meeting, your shares may only be voted by your bank or brokerage firm without your voting instructions on Proposal Two.

Brokers are prohibited from exercising discretionary authority on non-routine matters. Proposals One and Three are considered non-routine matters, and therefore brokers cannot exercise discretionary authority regarding these proposals for beneficial owners who have not returned voting instructions to the brokers.  When brokers cannot exercise discretionary authority and do not receive voting instructions from beneficial owners, this results in  “broker non-votes,”  which are still counted for purposes of determining quorum, but which do not impact the outcome of Proposals One and Three.

What vote is required to elect directors?

Directors are elected by a plurality of the votes cast at the Annual Meeting. Neither abstentions nor broker non-votes will have a direct effect on this proposal, assuming that a quorum is present. There are no cumulative voting rights.

What vote is required to ratify the selection by the Company’s audit and risk committee of Deloitte as its independent registered public accounting firm for the year ended December 31, 2021?

Approval of the proposal to ratify the selection of Deloitte as the Company’s independent registered public accounting firm requires the affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the Annual Meeting. Abstentions (shares present at the Annual Meeting and marked “abstain”) will count as a vote against this proposal. There are not expected to be broker non-votes on this proposal as brokers can exercise discretionary authority regarding this proposal.

What vote is required to approve the compensation of our named executive officers?

Approval, on a non-binding advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority in voting power of the shares present in person or represented by proxy at the Annual Meeting. Abstentions (shares present at the Annual Meeting and marked “abstain”) will count as a vote against this proposal. Broker non-votes will be counted for purposes of determining quorum but will not impact the outcome of this proposal. As an advisory vote, this proposal is not binding. However, our Board and compensation committee, which is responsible for designing and administering our executive compensation program, value the opinions of our stockholders and will consider the outcome of the vote.

Can I change my vote after I have voted?

You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. If you are a stockholder of record, you may vote again by signing and returning a new proxy card, or by submitting a later vote via telephone or online, or by attending the Annual Meeting and voting at the Annual Meeting. Attending the Annual Meeting will not automatically revoke your proxy unless you vote again during the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation prior to the Annual Meeting to the attention of Focus’ Corporate Secretary at 875 Third Avenue, 28th Floor, New York, NY 10022.

If your shares are held of record by a broker, bank, broker-dealer, custodian or other similar organization, you must alert that institution that you wish to change your vote by following the procedures on the voting instruction form provided to you by such institution.

 

Focus Financial Partners 2021 Proxy Statement   17

 

Is my vote kept confidential?

Proxies, ballots and voting tabulations identifying stockholders are kept confidential to the extent possible and will not be disclosed except as may be necessary to meet legal requirements.

Where do I find the voting results of the Annual Meeting?

We will announce preliminary voting results at the Annual Meeting. The final voting results will be tallied by the inspector of election and published in a Current Report on Form 8-K, which Focus is required to file with the SEC within four business days following the Annual Meeting.

Who bears the cost of soliciting proxies?

Focus will bear the cost of soliciting proxies and will reimburse brokerage firms and others for expenses involved in forwarding proxy materials to beneficial owners or soliciting their execution. In addition to solicitations by mail, the Company, through its directors and officers, may solicit proxies in person, by telephone or by electronic means. Such directors and officers will not receive any special remuneration for these efforts.

Where can I obtain additional information about Focus?

Focus makes available free of charge, through its website at www.focusfinancialpartners.com, under Financials & Filings in the investor relations section, its annual report to stockholders, 2020 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statement, and form of proxy and all amendments to these reports no later than the day on which such materials are first sent to security holders or made public.

Focus will provide, without charge to a stockholder upon written request, a copy of Focus’ annual report to stockholders, 2020 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statement, and form of proxy and all amendments to those reports. Written requests for copies should be sent to the attention of Corporate Secretary, Focus Financial Partners Inc., 875 Third Avenue, 28th Floor, New York, NY 10022. Copies may also be accessed electronically via the SEC website at https://www.sec.gov. The Annual Report on Form 10-K for the year ended December 31, 2020 is not part of the proxy solicitation materials.

 

18   Focus Financial Partners 2021 Proxy Statement

 

PROPOSALS TO BE CONSIDERED BY STOCKHOLDERS
PROPOSAL ONE—ELECTION OF TWO CLASS III DIRECTORS

Our Amended and Restated Certificate of Incorporation provides for a Board of Directors classified into three classes as nearly equal in number as is reasonably possible, whose terms of office expire in successive years. Our Board of Directors now consists of eight directors as set forth below in the section entitled “Directors and Executive Officers,” and the terms of the current Class III directors, Dr. Morganroth and Mr. Muhtadie, expire at the Annual Meeting.

Our Board of Directors has nominated Dr. Morganroth and Mr. Muhtadie for reelection, as directors in Class III, based on the recommendation of the nominating, governance and sustainability committee, each to hold office until the Annual Meeting of Stockholders in 2024, or until their successors are elected and qualified or, if earlier, the directors’ death, disability, resignation, disqualification or removal.

 

Focus Financial Partners 2021 Proxy Statement   19

 

REQUIRED VOTE

The two nominees receiving the highest number of affirmative votes shall be elected as directors. You may withhold votes from any or all nominees.

RECOMMENDATION

Our Board of Directors recommends a vote “FOR” the election to the Board of Directors of each of the abovementioned nominees.

 

20   Focus Financial Partners 2021 Proxy Statement

 

 

 

 

DIRECTORS AND EXECUTIVE OFFICERS

The current directors and executive officers of Focus are as follows:

* = Nominated for election to the Board as a Class III director at the Annual Meeting.

(a) = Slated to serve until the 2022 Annual Meeting of Stockholders.

(b) = Slated to serve until the 2023 Annual Meeting of Stockholders.

Set forth below are the backgrounds of our executive officers and our directors who are not nominated for election to the Board at the Annual Meeting because they are assigned to Class I or Class II and, therefore, their terms continue until our Annual Meetings of Stockholders in 2022 and 2023, respectively.

 

 

 

 

2

Biographies of Ruediger Adolf and Rajini Sundar Kodialam provided on pages 24 and 25, respectively.

​

 

26   Focus Financial Partners 2021 Proxy Statement

 

CORPORATE GOVERNANCE

COMPOSITION OF OUR BOARD OF DIRECTORS

Our Board of Directors consists of eight members, including our Chief Executive Officer and Chief Operating Officer. Our directors are divided into three classes serving staggered three-year terms. Class I, Class II and Class III directors serve until our Annual Meetings of Stockholders in 2022, 2023 and 2021, respectively. Messrs. Adolf, Carey and Harrington are assigned to Class I, Mses. Kodialam and Mashinsky and Mr. Feliciani are assigned to Class II, and Dr. Morganroth and Mr. Muhtadie are assigned to Class III. At each Annual Meeting of Stockholders, directors will be elected to succeed the class of directors whose terms have expired. The Board continues to annually evaluate the use of a classified Board. The Board believes that such a structure provides stability and encourages directors to take a long-term perspective on Focus. The Board also feels that this is appropriate given the short period of time that Focus has been a public company and because of the share ownership and nomination rights of our private equity investors, as described below.

In connection with our initial public offering, we entered into nomination agreements with investment vehicles affiliated with Stone Point and KKR. Stone Point has the right to nominate two members of our Board of Directors for so long as it holds at least 50% of the interest it held, in the form of our Class A and Class B common stock on a combined basis, on the date of our initial public offering. Stone Point also has the right to nominate one member of our Board of Directors for so long as it holds 5% of our Class A and Class B common stock outstanding on a combined basis. Additionally, Stone Point has the right to nominate at least two directors, for so long as it has the right to nominate two directors, and then one director, for so long as it has the right to nominate one director, for service on our compensation committee. Stone Point also has the right to nominate one director, for so long as it has the right to nominate as least one director, for service on our nominating, governance and sustainability committee. Stone Point has nominated Messrs. Muhtadie and Carey to serve on our Board of Directors. KKR has the right to nominate one member of our Board of Directors for so long as it holds at least 5% of our Class A and Class B common stock outstanding on a combined basis. KKR has the right to nominate one director for service on our nominating, governance and sustainability committee and as an observer on our compensation committee, in each case, for so long as it has the right to nominate one director. KKR has nominated Mr. Harrington to serve on our Board of Directors.

Any replacement director nominated by Stone Point or KKR must be an employee or partner of Stone Point or KKR, respectively, of the same level of seniority within Stone Point or KKR as the initial directors designated by Stone Point or KKR, respectively, and must qualify as an independent director under the independence standards of NASDAQ and satisfy such other criteria set forth in the respective nomination agreement. In addition, the nomination agreements require Stone Point and KKR to vote their shares of Class A and Class B common stock in favor of our Chief Executive Officer and Rajini Sundar Kodialam (or such other officer of Focus designated by the Chief Executive Officer and approved by the Board of Directors if Ms. Kodialam is no longer a member of the Board of Directors) when nominated for election to our Board of Directors.

DIRECTOR INDEPENDENCE

The Board has reviewed the independence of our directors using the independence standards of NASDAQ, and, based on this review, it determined that Ms. Mashinsky and Messrs. Carey, Feliciani, Harrington, Morganroth, and Muhtadie are independent within the meaning of the NASDAQ listing standards currently in effect.

 

 

COMMITTEES OF THE BOARD OF DIRECTORS

We currently have the following standing committees: the audit and risk committee, the compensation committee, and the nominating, governance and sustainability committee.

The table below shows the current chair and membership of the Board and each standing Board committee, the independence status of each Board member and the number of Board and Board committee meetings held during fiscal year 2020.

C = Chair

● = Member

* = Non-Independent Director

** = Financial Expert

L = Lead Independent Director

During the year ended December 31, 2020, the Board of Directors held 8 meetings, the audit and risk committee held 7 meetings, the compensation committee held 4 meetings, and the nominating, governance and sustainability committee held 2 meetings. Each director then serving attended or participated in at least 75% of the meetings of the Board of Directors and the respective committees of which he or she was a member. We encourage all of our directors to attend our Annual Meetings of Stockholders. All directors then serving were present at the 2020 Annual Meeting of Stockholders.

Audit and Risk Committee

We have an audit and risk committee composed of Ms. Mashinsky and Messrs. Feliciani and Morganroth, with Mr. Feliciani currently acting as chair of the committee. Our Board of Directors has determined that Ms. Mashinsky and Messrs. Feliciani and Morganroth qualify as independent within the meaning of Rule 10A-3 under the Exchange Act and under NASDAQ independence requirements. Our Board of Directors has determined that Mr. Feliciani qualifies as an “audit committee financial expert” as defined under Item 407(d)(5)(ii) of Regulation S-K and has experience that results in his financial sophistication as defined under NASDAQ rules.

The audit and risk committee oversees, reviews, acts on and reports on various auditing and accounting matters to our Board of Directors, including: the selection of our independent accountants, the scope of our annual audits, the fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. In addition, the audit and risk committee oversees our compliance with legal and regulatory requirements.

The audit and risk committee also oversees management of the Company’s cybersecurity and data security risk, information technology systems, business continuity and resiliency and similar matters, as well as the Company’s assessments and reviews of such matters. In addition, the audit and risk committee monitors the Company’s status on cybersecurity risk and risk management policies.

A copy of the audit and risk committee charter is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com.

 

28   Focus Financial Partners 2021 Proxy Statement

 

Compensation Committee

We have a compensation committee composed of Ms. Mashinsky and Messrs. Carey and Muhtadie, with Mr. Muhtadie currently acting as chair of the committee. Ms. Mashinsky and Messrs. Carey and Muhtadie qualify as “Non-Employee Directors” for the purposes of Rule 16b-3 under the Exchange Act.

The compensation committee establishes salaries, incentives and other forms of compensation for officers and other employees. Our compensation committee also oversees our incentive compensation and benefit plans.

The compensation committee may delegate to its chair or other members such powers and authority as the committee deems to be appropriate, except such powers and authority required by law to be exercised by the whole committee. The compensation committee may also form and delegate authority and duties to subcommittees as it deems appropriate; provided that any subcommittee shall include those members of the committee serving pursuant to nomination agreements between the Company and any significant stockholders that may be in effect from time to time. Meetings may, at the discretion of the compensation committee, include members of management, other members of the Board, consultants or advisors, and such other persons as the compensation committee believes to be necessary or appropriate. The Chief Executive Officer will not be present during any deliberations or voting with respect to his or her compensation.

The compensation committee regularly reviews the services provided by its outside independent compensation consultant, Semler Brossy Consulting Group LLC (“Semler Brossy”), and believes that Semler Brossy is independent under applicable SEC rules in providing compensation consulting services. In making this determination, the committee considered, among other things, the factors delineated in Rule 10C-1 under the Exchange Act (“Rule 10C-1”), including the NASDAQ listing rules implementing Rule 10C-1, certain representations of Semler Brossy with respect to these factors and Semler Brossy’s conflict of interest policies. The compensation committee determined that the engagement of Semler Brossy did not raise any conflict of interest or other issues that compromise the independence of its relationship with the committee.

A copy of the compensation committee charter is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com.

Nominating, Governance and Sustainability Committee

We have a nominating, governance and sustainability committee composed of Ms. Mashinsky and Messrs. Harrington and Muhtadie, with Ms. Mashinsky currently acting as chair of the committee.

The nominating, governance and sustainability committee identifies, evaluates and recommends qualified nominees to serve on our Board of Directors, with consideration of nomination agreements that may be in place from time to time with significant stockholders, reviews and approves corporate governance guidelines and generally oversees our ESG initiatives. The committee also leads the Board’s annual review of Board performance, a biennial evaluation of individual directors’ performance and a review of the Company’s Corporate Governance Guidelines.​

A copy of the nominating, governance and sustainability committee charter is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com.

IDENTIFYING AND EVALUATING CANDIDATES FOR DIRECTOR

The nominating, governance and sustainability committee seeks advice on potential director candidates from current directors and executive officers when identifying and evaluating new candidates for director. The nominating, governance and sustainability committee may also direct management to engage third-party firms that specialize in identifying director candidates to assist with any search. The Board of Directors will consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next Annual Meeting of Stockholders (or, if applicable, a special meeting of stockholders). Our stockholders that wish to nominate a director for election to the Board should follow the procedures set forth in our bylaws.

 

Focus Financial Partners 2021 Proxy Statement   29

 

As set forth in our Corporate Governance Guidelines, the minimum qualifications for serving as a member of our Board of Directors are that a person demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of Focus and that a person have an impeccable record and reputation for honest and ethical conduct in both his or her professional and personal activities. In addition, nominees for director shall be selected on the basis of, among other things, experience, knowledge, skills, expertise, diversity, ability to make independent analytical inquiries, understanding of Focus’ business environment, willingness to devote adequate time and effort to Board responsibilities, and knowledge of the obligations of Focus set forth in any nomination agreements between Focus and any significant stockholders that may be in effect from time to time. The Board of Directors does not have a formal diversity policy but seeks nominees with distinct professional experience, knowledge, skills and expertise so that the Board as a whole has the range of skills and viewpoints necessary to fulfill its responsibilities.

BOARD LEADERSHIP STRUCTURE AND ROLE IN RISK OVERSIGHT

Our Board of Directors recognizes that the leadership structure and combination or separation of the Chief Executive Officer and Chairman roles is driven by the needs of the Company at any point in time. As a result, no policy exists requiring combination or separation of leadership roles and our governing documents do not mandate a particular structure.  This allows our Board of Directors the flexibility to establish the most appropriate structure for the Company at any given time.

Currently, our Chief Executive Officer is also our Chairman. The Board believes that, at this time, having a combined Chief Executive Officer and Chairman is the appropriate leadership structure for the Company. In making this determination, the Board considered, among other matters, Mr. Adolf’s experience as founder and the leader of Focus LLC, and believes that his experience and knowledge allow him to serve as both Chairman and Chief Executive Officer.  In addition, the Board believes that such structure promotes clearer leadership and direction for the Company and allows for a single, focused chain of command to execute our strategic initiatives and business plans.

Pursuant to our Corporate Governance Guidelines and charter of Lead Independent Director, as long as the offices of Chairman and Chief Executive Officer are held by the same person, a majority of the directors will appoint an independent director to act as the Board’s lead independent director (the “Lead Independent Director”). The specific duties and responsibilities of the Lead Independent Director, as well as the required qualifications and other details, are set forth in Focus’ charter of Lead Independent Director, a copy of which is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com. Responsibilities of the Lead Independent Director include the following:

 

30   Focus Financial Partners 2021 Proxy Statement

 

Because Mr. Adolf serves as both Chairman and Chief Executive Officer, our Board has appointed Mr. Muhtadie as Lead Independent Director. Our Board believes that its independence and oversight of management is maintained effectively through this structure, the composition of our Board, and sound corporate governance policies and practices.

In addition, our non-management directors meet in executive session at least quarterly. If the group of non-management directors includes any directors who are not independent, at least once per year an executive session comprising only of independent directors will be scheduled. Our Lead Independent Director is the presiding director at these meetings.

The Board, directed by the audit and risk committee, is actively involved in overseeing our risk management processes. The Board focuses on our general risk management strategy and ensures that appropriate risk mitigation procedures are implemented by management. Further, operational and strategic presentations by management to the Board include consideration of the challenges and risks of our businesses, and the Board and management actively engage in discussion on these topics. In addition, each of the Board’s committees considers risk within its area of responsibility.

 

Focus Financial Partners 2021 Proxy Statement   31

 

from, provisions of our Code of Business Conduct and Ethics and our Financial Code of Ethics by posting such information on our website at the address specified above.

ELECTION OF DIRECTORS; RESIGNATION POLICY

Focus has adopted a resignation policy in connection with its plurality voting standard in the election of directors. Pursuant to Focus’  Corporate Governance Guidelines, a director who fails to receive a majority of votes for re-election in an uncontested election must offer his or her resignation to the Board for its consideration. In addition, a director whose resignation is under consideration must abstain from participating in any recommendation or decision regarding that resignation. The nominating, governance and sustainability committee will make a recommendation to the Board as to whether to accept or reject the proposed resignation, or whether other action should be taken. The Board will act on the proposed resignation, taking into account the nominating, governance and sustainability committee’s recommendation, and will promptly and publicly disclose its decision regarding the resignation. If the proposed resignation is not accepted, the director will continue to serve until the next annual meeting of stockholders at which the director is up for re-election, and until the director’s successor is elected and qualified, or until the earlier of the director’s death, resignation or removal. A copy of the Corporate Governance Guidelines is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com.

STOCK OWNERSHIP GUIDELINES

The Board believes that directors and named executive officers more effectively represent Focus’ stockholders, whose interests they are charged with protecting, if they are stockholders themselves. The Board has therefore established stock ownership guidelines for directors and named executive officers, which are set forth in Focus’ Corporate Governance Guidelines. Within five years of joining the Board or Focus, as the case may be, each director and named executive officer is required to obtain, and must continue to hold during his or her tenure on the Board or with Focus, as the case may be, Focus equity with a value (which may be inclusive of the intrinsic value of incentive units, restricted common units or other equity awards (vested or unvested) granted as part of each such director’s or named executive officer’s regular compensation) equal to:

•

in the case of each non-employee director, at least five times such director’s annual cash retainer fees (based on the most recently completed year); however, this requirement will not apply for directors who are representatives of stockholders who have nominated such directors pursuant to a nomination agreement with Focus;

​

•

in the case of the Chief Executive Officer, at least six times his annual cash salary (based on the most recently completed year); and

​

•

in the case of each other named executive officer, at least four times his or her annual cash salary (based on the most recently completed year).

​

Any director or named executive officer not meeting his or her required ownership level at any time shall retain 50% of the Focus equity granted as part of such director’s or named executive officer’s compensation for service (determined on a net, after-tax basis) until such required ownership level is met and maintained. In addition, if any director or named executive officer falls below the required ownership level due solely to a decline in the value of Focus equity, then he or she will not be required to acquire additional Focus equity to reach the minimum ownership level, and will not be in violation of the minimum ownership requirements so long as he or she complies with the immediately preceding sentence until such time as he or she again reaches the required minimum ownership level. Furthermore, any Focus equity owned by a trust established by the relevant director or named executive officer for the benefit of his or her family members will be included for purposes of determining his or her compliance with the minimum ownership requirements. A copy of the Corporate Governance Guidelines is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com.

EVALUATION OF BOARD AND INDIVIDUAL DIRECTOR PERFORMANCE

Pursuant to Focus’ Corporate Governance Guidelines, the Board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively, and on a biennial basis, the performance of each individual director will also be evaluated. With respect to the Board’s annual self-evaluation, the

 

32   Focus Financial Partners 2021 Proxy Statement

 

nominating, governance and sustainability committee will receive comments from all directors and report annually to the Board with an assessment of the Board’s and each committee’s performance. The assessment will review the Board’s and each committee’s contribution to Focus and make note of areas in which the assessments indicate the Board or committee could improve.  With respect to the individual director evaluations, every two years, the Chairman of the Board, the chair of the nominating, governance and sustainability committee, and the Lead Independent Director will lead an evaluation process that may include a number of methods, including interviews, surveys or the use of outside consultants to solicit input. Each director will be evaluated and will receive feedback based on a variety of factors, including his or her participation in the Board’s work and overall contribution to the Board.  The outcomes of the evaluations will be shared with the nominating, governance and sustainability committee, which will then report to the Board with its findings. A copy of the Corporate Governance Guidelines is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com.

CYBERSECURITY, DATA AND OTHER RISK MANAGEMENT; PRIVACY

The Board provides oversight of our cybersecurity and data security risk management processes and procedures. The audit and risk committee remains responsible for assisting the Board with oversight of enterprise risk generally, including cybersecurity, information technology and business continuity and resiliency specifically. Pursuant to the audit and risk committee charter, the audit and risk committee provides oversight of the management of the Company’s cybersecurity risk, information technology systems, business continuity and resiliency and similar matters, as well as the Company’s assessments and reviews of such matters. Senior management of the Company reports quarterly to the Board at its regular meetings on the status of the Company’s cybersecurity risk, risk management policies and risk assessment initiatives.

Additionally, cybersecurity assessments are conducted of Focus and of each of our partner firms by an independent third-party. The recommendations contained in those assessments are then reviewed and thereafter expected to be implemented as appropriate. An annual cybersecurity monitoring program has also been implemented for our partner firms by an independent third-party. This program is based on the NIST standards and includes, among others, penetration and vulnerability testing, access controls and employee education. We also retain external vendors to perform penetration testing and vulnerability scanning with respect to Focus itself.

Focus also mandates cybersecurity and data security education and training for all of its employees. For example, all Focus and partner firm employees are required to take quarterly cybersecurity training modules. As part of our ongoing employee cybersecurity and data security training efforts, we also arrange for all employees to periodically receive simulated socially engineered  “phishing”  emails in order to test and improve their awareness. Employees who “click” or otherwise fail these tests receive immediate notifications and are required to undergo additional training.

Focus’ cybersecurity and data security risk program also provides for evolving targets and objectives and incorporates expertise and suggested best practices from external consultants and other outside experts. Focus and its partner firms also regularly monitor relevant guidance provided by applicable regulators, such as the SEC, which oversees our partner firms that are U.S. registered investment advisory firms. Focus remains committed to implementing leading data protection standards.

Our cybersecurity and data security risk program also delineates a structure with clear organizational roles and responsibilities. As described above, our audit and risk committee is responsible for governance by setting overall strategic direction with respect to cybersecurity and data security risk mitigation. A Focus IT steering committee is led by a senior member of management and is tasked with recommending policies, budgets and priorities relating to cybersecurity and data security risk mitigation for approval by senior management, and also for assessing the user experience and overseeing our cybersecurity and data security risk program generally. Focus has also engaged a virtual Chief Technology Officer, who is responsible for implementing and executing these policies, budgets and priorities, managing vendors, providing technical advice and managing our cybersecurity and data security risk program generally.

Focus also continues to enhance its vendor risk assessment, due diligence and engagement process (including its contracting process with vendors and the inclusion of updated contractual protections in vendor

 

Focus Financial Partners 2021 Proxy Statement   33

 

agreements) with the goal of better protecting confidential or sensitive information. Vendors that handle confidential or sensitive information for Focus are expected to go through an initial risk assessment, and thereafter, periodic assessments will generally be conducted depending on the risk profile for the relevant vendor (for example, based on the type of information being stored or processed by that vendor). In addition, we expect our vendors to implement adequate measures to ensure the security of confidential or sensitive information, which is articulated in our Vendor Code of Conduct. In accordance with our business principles and applicable laws, rules and regulations, including the laws, rules and regulations that apply to our partner firms, we have also implemented a number of physical and technical standards, procedures, tools and other safeguards for protecting the personal information of our employees, clients and other business partners, including data security and privacy policies and controls for handling personal data. For example, Focus has posted a formal privacy policy on its website that describes the types of personal information we may collect about users when they use the Focus website, the purposes for which we may use that information, and the circumstances in which we may share or disclose that information. In addition, the majority of Focus’ partner firms are regulated entities with their own mandated privacy policies.

We also have an information security incident response team tasked with handling cybersecurity and data security incidents. That team works with our internal and external resources as necessary with the goal of containing, mitigating and remediating cybersecurity or data security risks. In addition, we are implementing a new emergency notification system in an effort to provide prompt notification to potentially affected users of potential cybersecurity or data security incidents using appropriate means of transmission (for example, using text messages for potential issues impacting e-mail systems). Procedures are also in place for our partner firms to escalate issues to the IT steering committee or other appropriate Focus team members when any of our partner firms are potentially impacted by a cybersecurity or data security incident.

In addition, because the health of our employees, partner firms and other business partners is of paramount importance to us, in 2020 we adopted, and we continue to administer, updated policies and procedures in light of the coronavirus (Covid-19) pandemic. These include, among others, travel policies, rescheduled events and contingency plans while many of our employees continue to work remotely.

 

34   Focus Financial Partners 2021 Proxy Statement

 

ENVIRONMENTAL AND SOCIAL MATTERS

COMMITMENT TO ENVIRONMENTAL SUSTAINABILITY AND ADDRESSING CLIMATE CHANGE

Focus believes that a healthy environment is necessary for the well-being of Focus and its subsidiaries, including its partner firms, and their employees, their businesses and their partners, as well as our society. We continue to be committed to environmental responsibility in the conduct of our business and to utilizing resources responsibly to support the long-term sustainability of Focus and the environment in which we, our employees, our partners and our other stakeholders live and operate. Focus continues to be committed to providing a safe and healthful workplace, protecting the environment and conserving energy and natural resources. We are committed to seeking approaches that can reduce or offset the environmental impact of our corporate offices (including the reduction of greenhouse gas emissions) through advocating energy and waste management best practices and driving operating efficiencies. To achieve these goals, Focus has adopted a Policy on Environmental Sustainability and Climate Change. This Policy articulates our corporate objectives relating to environmental sustainability and climate change. As an example, our headquarters office in New York City features a number of design elements focused on sustainability.

In addition, as reflected in its charter, the nominating, governance and sustainability committee is responsible for assisting the Board in overseeing the Company’s initiatives, strategies, policies, programs and associated risks relating to sustainability, including with respect to ESG matters (such as climate-related risks and other sustainability-related risks), and making such recommendations to the Board and management with respect to those matters as the committee deems advisable. A copy of the nominating, governance and sustainability committee charter is available free of charge under Corporate Governance in the investor relations section of our website at www.focusfinancialpartners.com, and additional information regarding our commitment to environmental sustainability and climate change is available free of charge under Sustainability in the investor relations section of our website at www.focusfinancialpartners.com. The nominating, governance and sustainability committee formally met two times during the year ended December 31, 2020, and each director then serving on the committee attended or participated in each of such meetings, and additionally members had several other discussions throughout the year relating to new board members.

Additional information regarding our commitment to human rights, human capital development and information protection is available free of charge under Sustainability in the investor relations section of our website at www.focusfinancialpartners.com.

 

Focus Financial Partners 2021 Proxy Statement   35

 

POLICY REGARDING ETHICAL AND SUSTAINABLE INVESTING

Focus also encourages and facilitates the consideration of ESG factors by its partner firms in their investment decision processes. Focus’ partner firms are comprised of fiduciary wealth management firms that retain their entrepreneurial culture and independence as part of the Focus partnership. Accordingly, Focus partner firms each establish their own investment decision-making processes. Focus, however, encourages its partner firms to consider ESG factors, such as the environment and climate change, human rights, human capital development, health and safety, social opportunity, corporate governance and ethics, along with other appropriate factors, to assess the expected performance and risk over time of the investments they manage for clients. Accordingly, Focus has adopted a Policy Regarding Ethical and Sustainable Investing to reflect its commitment. Focus also assists its partner firms in these efforts through periodic presentations at its conferences and other educational opportunities and guidance, including virtual presentations and roundtable discussions that were held during 2020, in addition to providing access to other resources and best practices regarding sustainable investing. A copy of our Policy Regarding Ethical and Sustainable Investing is available free of charge under Sustainability in the investor relations section of our website at www.focusfinancialpartners.com.

EXPECTATIONS OF VENDORS

Focus has adopted a Vendor Code of Conduct that sets forth Focus’ minimum expectations for any vendor providing goods or services to Focus. The requirements of the Vendor Code of Conduct are consistent with Focus’  values and are applicable to all vendors. All vendors are expected to act with integrity and demonstrate a commitment to legal, ethical, safe, fair, environmentally responsible and inclusive business practices. Vendors are also expected to understand and operate in accordance with the requirements set forth in our Vendor Code of Conduct. A copy of our Vendor Code of Conduct is available free of charge under Sustainability in the investor relations section of our website at www.focusfinancialpartners.com.

POLITICAL PARTICIPATION; GOVERNMENT PAYMENTS

In accordance with U.S. federal law, Focus may not contribute corporate funds or make in-kind contributions to candidates for federal office or to national party committees. Focus also does not contribute corporate funds to candidates, political party committees, political action committees or any political organization exempt from federal income taxes under Section 527 of the Internal Revenue Code. In addition, Focus has elected not to spend corporate funds directly on independent expenditures, including electioneering communications, and does not currently engage in “grassroots lobbying” or support or oppose ballot initiatives. Focus does currently pay an annual membership fee to the Investment Adviser Association which, among other things, serves its members in part by representing the interests of SEC-registered investment advisory firms before Congress, the SEC, CFTC, and other regulators.

Focus does not make payments to the governments of any jurisdictions, other than payments of taxes, licensing and similar fees in the ordinary course of business. Focus has not to date received payments from the governments of any jurisdictions that represent grants, special tax relief or other financial benefits, or implicit or explicit government guarantees, deposit insurance or public bailouts.

ESG SUSTAINABILITY HIGHLIGHTS REPORT

As noted above, Focus and its subsidiaries, including its partner firms, remain committed to integrating ESG considerations into our business. This commitment is reflected in the policies, codes and procedures that govern how we operate, including as described above. We believe that managing ESG matters is fundamental to the business of Focus and its subsidiaries, including its partner firms, and we are committed to continuing to improve in these areas because they are critical to our long-term success and our ability to continue to create long-term value for all of our stakeholders. We recently issued our second ESG Sustainability Highlights Report that we will continue to update from time to time, which is available free of charge under Sustainability in the investor relations section of our website at www.focusfinancialpartners.com. We are committed to regularly communicating with our stakeholders in a transparent way about how we are addressing ESG matters, and publishing the ESG Sustainability Highlights Report is one way for us to do so. ESG information is also available on Focus’ website and in our various other reports and presentations, regulatory filings, press releases and other publications from time to time. The ESG Sustainability Highlights Report is intended to provide highlights and summaries of our work in managing ESG issues.

 

36   Focus Financial Partners 2021 Proxy Statement

 

 

•

Expanded Connectus Wealth Advisors to provide an additional acquisition model; and

​

•

Further enhanced and developed a number of value-add initiatives, including expansion of its Focus Client Solutions offering.

​

Compensation Objectives

The objectives of the compensation program for our executives, including our named executive officers, are to attract, motivate and retain talented individuals who are committed to achieving our long-term strategic objectives. Our compensation program is not only designed to align the incentives of our executives with our stockholders’ interests, but also to promote the achievement of key corporate performance measures as determined by the compensation committee each year.

Summary of Executive Compensation Practices

We strive to maintain judicious governance standards and compensation practices by regularly reviewing best practices. As in prior years, we incorporated many best practices into our 2020 executive compensation program, including the following:

What We Do

✓

Align our executive pay with long-term performance

​

✓

Align executives’ interests with those of stockholders

​

✓

Engage an independent compensation consultant, Semler Brossy, to assess our practices

​

✓

Structure compensation so that 79.6%−84% is performance based and at risk

​

✓

Grant 50% of annual awards of incentive compensation in the form of long-term equity-based awards with vesting schedules

​

✓

Require that all annual equity awards granted have a minimum of one year before any initial vesting, and four years for full vesting, subject to limited exceptions

​

✓

Maintain trading policies that:

​

•

Prohibit all employees from short selling Focus securities, entering into any derivative transactions with respect to Focus securities, or otherwise hedging the risk and rewards of Focus securities

​

•

Prohibit Section 16 officers and directors from pledging Focus securities

​

✓

Assess and mitigate risk in compensation plans, as described in our “Risk Assessment of Compensation Plans”

​

✓

Recommend an annual advisory vote on executive compensation in order to provide stockholders with a frequent opportunity to give feedback on compensation programs

​

✓

Review the independence of the compensation committee’s independent compensation consultant annually

​

✓

Enforce minimum equity ownership guidelines for all named executive officers

​

✓

Provide for limited perquisites for executives

​

What We Don’t Do

✗

Reprice incentive units or stock options without stockholder approval

​

✗

Offer cash buyouts of underwater incentive units or stock options

​

✗

Have supplemental retirement benefit arrangements with our NEOs

​

✗

Automatically increase salaries each year or make lock-step changes in compensation based on peer group compensation levels or metrics

​

✗

Pay guaranteed or multi-year cash bonuses

​

 

 

Pay-for-Performance Compensation Structure

The components of our 2020 executive compensation program consisted primarily of the following:

To help retain and motivate our named executive officers, our compensation committee aims to offer competitive compensation packages through a mix of cash (including variable, performance-based cash awards) and long-term, equity-based incentives. The compensation committee does not have any formal policies for allocating total compensation among the various components, other than that annual equity awards are set to be equal to the annual cash incentive award granted to each named executive officer pursuant to the terms of his or her respective Employment Agreement (defined below). The compensation committee uses its judgment, in consultation with Semler Brossy, to establish an appropriate balance of base salary and annual cash incentive awards and equity awards with delayed vesting. The balance may change from year to year based on corporate strategy, financial performance and non-financial objectives, among other considerations. For 2020, our named executive officers had a compensation mix with more than 79.6%−84% of annual executive compensation being performance based and “at risk.”

 

Focus Financial Partners 2021 Proxy Statement   39

 

Pay-for-Performance Compensation Structure for NEOs

Process for Determining Executive Compensation

Role of the Compensation Committee

The compensation committee oversees our executive compensation and employee benefit programs, and reviews and approves all compensation decisions relating to our NEOs. The compensation committee also approves its report for inclusion in this proxy statement and has reviewed and discussed this Compensation Discussion and Analysis with management.

The compensation committee reviews NEO base salaries annually.  The compensation committee has discretion to increase, but not decrease, each named executive officer’s base salary under the terms of his or her respective Employment Agreement. Such annual adjustments are based on factors that may include general competitiveness with peer and industry base salaries, any material increases in responsibilities and adjustments consistent with those made for all employees.

The compensation committee approves the amount of our annual incentive cash pool, and any and all awards to our NEOs from this pool. At the beginning of a typical year, the compensation committee determines the quantitative and qualitative criteria that it will use to determine the amount of the aggregate pool and individual NEO awards. The compensation committee makes final decisions regarding the incentive cash pool size and the individual participant amounts at the end of each year, with input from the Chief Executive Officer. The compensation committee sets target ranges in some cases above Employment Agreement provisions in the interests of providing proper incentives and considering the growth and competitive environment of the Company.

All equity awards are granted pursuant to the terms of the Focus Financial Partners 2018 Omnibus Incentive Plan (the “Omnibus Plan”), which has been in place since our initial public offering in July 2018 (see further description under the section below entitled “—2018 Omnibus Incentive Plan”). Other than a limited number of equity awards that can be made at the discretion of the Chief Executive Officer to non-named executive officers, the compensation committee approves all equity awards. The value of annual equity incentive grants made to our NEOs has in recent years equaled the value of the annual cash incentive compensation awarded to each NEO, with the number of equity units granted determined by a methodology established by the compensation committee.

Role of Independent Compensation Consultant

During the year ended December 31, 2020, the compensation committee engaged Semler Brossy as its independent compensation consultant to assist the committee with its responsibilities related to our executive

 

40   Focus Financial Partners 2021 Proxy Statement

 

officer and director compensation programs. A representative of Semler Brossy attends compensation committee meetings as requested and communicates with the chair and other members of the compensation committee between meetings. Semler Brossy provides no services to management or the compensation committee that are unrelated to the duties and responsibilities of the compensation committee, and the compensation committee makes all decisions regarding the compensation of our named executive officers and directors. Semler Brossy reports directly to the compensation committee, and all work conducted by Semler Brossy for us is on behalf of the compensation committee.

Role of our Chief Executive Officer and Senior Management

Our Chief Executive Officer and Chief Operating Officer regularly interact with the compensation committee and its chair to suggest and discuss executive compensation structure and programs. Our Chief Executive Officer makes recommendations for the annual cash and equity incentive awards for NEOs and other personnel (other than himself).

Use of Market Data and Peer Group Analysis

From time to time, Semler Brossy provides the compensation committee with market and peer group data for comparison purposes, such as to compare equity and pay mix practices. Semler Brossy does not provide, and the board does not utilize, regular compensation benchmarks in its compensation determinations. The firms included in the peer group used for these limited purposes in 2020 included: FTI Consulting, Evercore ISI, SEI Investments, FactSet, Morningstar, Resources Connection, PJT Partners, CRA International, MSCI, Houlihan Lokey, Moelis & Company, and Envestnet.

Risk Assessment of Compensation Plans

We believe that our compensation program does not encourage excessive or unnecessary risk taking. This is primarily due to the fact that our compensation programs are designed to encourage our named executive officers and other employees to focus on both short-term and long-term strategic goals, thereby creating an ownership culture and helping to align the interests of our employees and our stockholders. Accordingly, our compensation program is balanced between short-term and long-term incentives, each representing 50% of total incentive compensation.

Short-term incentive compensation is paid annually in cash and in a typical year is dependent on satisfying quantitative and qualitative factors established by the compensation committee. Long-term incentive compensation awarded to our named executive officers each year has been granted as equity-based awards (in the form of incentive units or restricted common units) that vest ratably over a four-year period. The value of the incentive units is entirely dependent on an increase in the price of our common stock, while the value of the restricted common units rises and falls in line with the price of our common stock. Overall, the equity grants create strong alignment with stockholders. Further, incentive units and restricted common units are not freely exchangeable into common stock, but subject to quarterly exchanges (once vested) and other limitations.

Additionally, the Board of Directors has adopted equity holding guidelines requiring our Chief Executive Officer to hold six times his salary in equity, and all other named executive officers four times their salaries in equity. The combination of annual performance-based compensation and long-term equity awards (which amount to 79.6%−84% of total annual compensation), in addition to holding requirements extending after vesting, creates substantial disincentives for any short-term risk taking. Overall, we believe that the balance within our compensation program results in an appropriate compensation structure for the Company and that the program does not pose risks that could have a material adverse effect on our business or financial performance.

2020 Executive Compensation Determinations

Base Salaries

Base salaries serve to provide fixed cash compensation to our named executive officers for performing their ongoing responsibilities. Initial base salaries for each of our NEOs were as set forth in each of their Employment Agreements.

 

 

The compensation committee reviewed our named executive officers’ base salaries based on the considerations outlined above and input from Semler Brossy. Based on this review, the compensation committee determined that it would increase our NEOs’ base salaries in 2020 by the 3% inflationary adjustment granted to Focus employees generally.

Annual Cash Incentive Awards

During the first quarter of 2020, there was a high level of uncertainty about the impact that the coronavirus (Covid-19) pandemic, which was then in its initial stages, would have on the Company. Additionally, financial markets were highly volatile. Accordingly, the compensation committee did not adopt quantitative and qualitative performance measures at that time as it had in prior years. Instead, the compensation committee decided to continue to monitor the Company’s performance, including the Company’s management and resilience in the face of the pandemic, throughout the course of the year.

In the fourth quarter of 2020, the compensation committee reviewed the performance of each NEO and the Company’s results overall. While the committee had not formally adopted a framework at the beginning of the year, it did evaluate each NEO and the Company’s performance against four criteria, similar to what it had adopted in 2019. As shown in the table below, applying this framework would have resulted in values of 0%, 200% and 168.95% for the first three quantitative criteria, based on estimated preliminary results available at that time.

For the fourth criteria, the compensation committee considered the following elements with no specific weighting as part of a qualitative assessment:

•

Management and resiliency of the Company through the pandemic

​

•

Significant improvement in investor relationship management

​

•

Strong M&A activity despite the challenges of the pandemic, including remote work and limited travel

​

•

Team leadership in attracting, retaining and building strong talent at the holding company

​

•

Satisfactory audit, Sarbanes-Oxley and balance sheet management

​

•

Strong legal and regulatory support

​

•

Strong partner relationship management

​

•

Progress on environmental, governance and sustainability initiatives

​

•

Value-added programs supporting partners and other business initiatives

​

The compensation committee reviewed the NEOs’ self-assessments and made its own independent assessment of performance against each of these elements. Based on these reviews and assessments and several discussions among the compensation committee members and management, the compensation committee approved a value of 150% for the qualitative criteria. The compensation committee noted the overall strong performance across a majority of the qualitative elements, especially with respect to management of the business during the uncertainty of the pandemic. Given the small size and cohesiveness of the senior leadership team, the compensation committee elected to develop one value for the qualitative criteria for all of the NEOs and did not develop separate values for each NEO.

 

 

The compensation committee considered that applying a four-criteria framework similar to prior years would have resulted in a total weighting factor of 129.74% as demonstrated in the table below (using preliminary results estimated at that time including share price). (For each metric below, if less than 75% of the target is achieved, no weighted value would result for that metric, and if more than 125% of the target is achieved, the maximum weighted value for that metric would result.)

This weighted value was then applied to the target bonus amount of each NEO, resulting in a cash incentive award equal to 129.74% of the target bonus. For Ms. Kodialam and Messrs. Adolf and Chang, the target bonus is 200% of base salary. For Messrs. Shanahan and McGranahan, the target bonus is 150% of base salary.

(1)

Amount used for Mr. Adolf’s bonus calculation included a $8,666 gross-up for certain expenses that Mr. Adolf pays directly, which is reflected in “All Other Compensation” in the Summary Compensation Table.

​

The application of this framework resulted in each NEO receiving a cash incentive award amount in 2020 that was at least 20% lower than the amount such NEO received in 2019. The Company’s actual final results exceeded the preliminary estimates used for calculating 2020 incentive awards, but no adjustments were made.

 

Focus Financial Partners 2021 Proxy Statement   43

 

Annual Long-Term Incentive Awards

The value of equity grants made to our NEOs with respect to fiscal 2020 performance was equal to the value of the actual cash incentive compensation awarded. For 2020, 25% of the equity grants to NEOs were made in the form of restricted common units, and 75% of the grants were in the form of incentive units. The number of restricted common units granted to our NEOs was determined based on the closing price of our Class A common stock on the date of grant, December 7, 2020, or $44.71.  The number of incentive units granted to our NEOs was determined using an equity valuation methodology based upon the Black-Scholes model, which was determined to be approximately $13.65 per unit. These valuation methods resulted in the number of restricted common units and incentive units being granted to our NEOs shown in the following table:

The restricted common units have no hurdle rate and will vest in four equal installments on each anniversary of the grant date. The incentive units were issued with a $44.71 hurdle rate (the closing price of Focus’ Class A common stock on the date of grant) and will vest in four equal installments on each anniversary of the grant date. The date of grant of the equity awards was the date of the compensation committee’s final approval of such awards, December 7, 2020, and it occurred within the Company’s open trading window pursuant to its trading policies.

Restricted common units are common units in Focus LLC subject to the specified vesting conditions.

Incentive units are profits interests in Focus LLC that are economically similar to stock options. They have no intrinsic value at the grant date and will obtain value only as the price of the underlying security rises above its hurdle amount.  They do not require the payment of an exercise price and do not have an expiration date. Holders obtain value by exercising rights to exchange such units (after vesting) for our Class A common stock.

Employment Agreements and Severance and Change in Control Benefits

We have entered into written Employment Agreements with each of our named executive officers that set forth the terms of each named executive officer’s employment. Each of our named executive officers is employed “at will.”  These arrangements are further described under the section below entitled “Employment Agreements.”

Our named executive officers are entitled to certain severance and change in control benefits. Such benefits arise upon termination of employment due to death, disability, for cause, without cause, good reason and in connection with a change of control or Company Sale (defined below). These arrangements are further described under the section below entitled “—Potential Payments Upon Termination or Change in Control.”

Each named executive officer is subject to a general non-competition and non-solicitation clause for periods of one year and two years, respectively, following termination of employment as well as general non-disparagement, non-disclosure and assignment-of-development clauses.

Due to the competitive nature of the financial services industry, the compensation committee believes these severance and change-in-control provisions are key components of our executive compensation program and are essential to Focus’ ability to recruit and retain talent.

 

44   Focus Financial Partners 2021 Proxy Statement

 

Other Benefits

Employee Benefits

We offer a comprehensive array of benefits to our employees, including our named executive officers. These benefits are offered in order to attract and retain employees. Subject to the terms of any applicable plans, policies or programs, each NEO is entitled to receive employee benefits, including any and all vacation, deferred compensation, retirement, disability, group life, accident and health insurance as we may provide from time to time to salaried employees generally, and such other benefits as the compensation committee may from time to time establish for the named executive officers. We also maintain term life insurance for each named executive officer for the benefit of such executive’s estate, and provide certain other disability and health benefits.

Retirement Benefits

We currently maintain a retirement plan intended to provide benefits under section 401(k) of the Internal Revenue Code whereby employees, including our named executive officers, are allowed to contribute a portion of their base salaries to a tax-qualified retirement account. We provide matching contributions in amounts determined annually by our management. The contributions made on behalf of our named executive officers for fiscal 2020 are disclosed in the notes to the Summary Compensation Table.

Outreach and Say on Pay Vote

We recognize the importance of executive compensation to our stockholders. We have an extensive, proactive program of investor outreach on these and other issues. We are routinely in contact with our existing stockholders and maintain an active dialog with prospective investors.

We held our first non-binding advisory vote on the compensation of our named executive officers at our 2020 Annual Meeting on June 3, 2020 and received the support of approximately 90% of stockholders voting, excluding broker non-votes. At this meeting, our stockholders also approved our Board of Directors recommendation to hold the vote on the compensation of our named executive officers annually. We value the opinions of our stockholders, and the compensation committee and the Board of Directors will consider the outcome of future stockholder advisory votes, including the vote which will take place at our 2021 Annual Meeting, when we make compensation decisions for our named executive officers. We have engaged with stockholders on a range of topics, including executive compensation, and we will continue such engagement as we strive to continually enhance our compensation programs.

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code generally limits the tax deductibility of compensation paid to certain executive officers to $1 million during any fiscal year. Compensation paid pursuant to certain grandfathered arrangements that are “performance based” within the meaning of Section 162(m) may be excluded from this limitation.

While the tax impact of any compensation arrangement is one factor to be considered, such impact is evaluated in light of the Company’s overall compensation philosophy and objectives, and the compensation committee maintains the flexibility to pay non-deductible incentive compensation if it determines it is in the best interest of the Company and its stockholders.

Other Compensation Practices and Policies

Anti-Hedging and Pledging Policies

Under our Insider Trading Policy, directors and named executive officers, as well as other employees, are prohibited from engaging in the following activities:

•

transactions in Company debt securities, whether or not those securities are convertible into Company common stock;

​

 

Focus Financial Partners 2021 Proxy Statement   45

 

•

pledging Company securities for loans or otherwise;

​

•

hedging or monetization transactions, whether direct or indirect, involving the Company’s securities;

​

•

short sales of Company securities;

​

•

transactions involving Company-based derivative securities, including those that effectively create short positions similar to short sales of Company securities;

​

•

short-term trading of Company securities purchased in the open market during the six months following the purchase; and

​

•

using standing and limit orders with respect to the Company’s securities that last longer than the trading day on which they are placed.

​

Stock Ownership Guidelines

To align the interests of our named executive officers with the interests of the Company’s other stockholders, our named executive officers must comply with stock ownership guidelines that we recently established. For information regarding these guidelines, please see the section entitled “Corporate Governance—Stock Ownership Guidelines” above.

 

46   Focus Financial Partners 2021 Proxy Statement

 

 

SUMMARY COMPENSATION TABLE

The following table provides information concerning compensation awarded to, earned by or paid to each of our named executive officers for all services rendered in all capacities during the last three years during which such individuals were named executive officers.

(1)

Beginning with 2019 (our first full year as a public company), our compensation committee instituted a more formulaic approach to our annual incentive compensation program. In calendar year 2019, the formula and performance measures were determined in the first quarter. Consequently, amounts that were historically disclosed in the Bonus column for periods prior to 2019 were disclosed in the Non-Equity Incentive Plan Compensation column for 2019. In 2020, our compensation committee continued to use a formulaic approach to our incentive compensation program. However, due to the high level of uncertainty about the impact of the coronavirus (Covid-19) pandemic and market volatility, the formulaic approach was not confirmed until the fourth quarter of 2020. Consequently, for 2020, all annual incentive amounts earned for the year are disclosed in the Bonus column. For more information, see the section entitled “Compensation Discussion and Analysis—Annual Cash Incentive Awards” above.

​

(2)

Each of the named executive officers received grants of restricted common units during fiscal year 2020 and various grants of incentive units during the last three fiscal years, as applicable. A description of these awards may be found in the footnotes of the Outstanding Equity Awards at 2020 Fiscal Year-End table and under the section below entitled “—Narrative Disclosure to Outstanding Equity Awards at 2020 Fiscal Year-End.”  With respect to the incentive units, we believe that, despite the fact that the incentive units do not require the payment of an exercise price, they are most similar economically to stock options, and as such, they are properly classified as  “options”  under the definition provided in Item 402(a)(6)(i) of Regulation S-K as an instrument with an  “option-like feature.”  Amounts disclosed in these four columns reflect a grant date fair value of the restricted common units and incentive units, as applicable, in accordance with FASB Accounting Standards Codification (“ASC”) Topic 718. Assumptions used to calculate the grant date values are described within the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 19, 2021.

​

(3)

On December 7, 2020, Mr. Adolf, Ms. Kodialam, Mr. Chang, Mr. Shanahan (including awards transferred to a trust established by him), and Mr. McGranahan received restricted common unit grants of 12,933, 8,403, 6,738, 5,648 and 5,054, respectively. These restricted common unit grants were issued pursuant to the Omnibus Plan (see further description under the section below entitled “—Omnibus Plan”).  These restricted common unit grants were issued in connection with annual compensation awards for fiscal year 2020 and will vest in four equal installments on each anniversary of December 7, 2020.

​

(4)

On December 7, 2020, Mr. Adolf, the Adolf Family Trust II, Ms. Kodialam, Mr. Chang, Mr. Shanahan (including awards transferred to a trust established by him) and Mr. McGranahan received incentive unit grants of 82,080, 45,000, 82,570, 66,212, 55,501 and 49,659, respectively. These incentive units were also issued pursuant to the Omnibus Plan and have a $44.71 hurdle rate (see further description under the section below entitled “—Omnibus Plan”).  These incentive units were issued in connection with annual compensation awards for fiscal year 2020 and will vest in four equal installments on each anniversary of December 7, 2020. These grants, along with the restricted common units granted during fiscal year 2020, are intended to be made in an amount equal to the value of the annual cash incentive bonus awarded to each named executive officer for performance during the same fiscal year, as reported in the non-equity incentive plan compensation or bonus column (as applicable) and based on a Black-Scholes valuation model. Because the value of the incentive units included in this column reflects the grant date fair value of the awards, determined pursuant to FASB ASC Topic 718, the amounts reflected in this column may differ from the cash amounts reported in the non-equity incentive plan compensation or bonus columns or the amounts in the cash incentive award earned column presented in the Compensation Discussion and Analysis.

​

(5)

Amounts in this column consist of the following items for the year ended December 31, 2020: (a) Company contributions made on each named executive officer’s behalf into the Focus Operating LLC 401(k) Retirement Plan in the amount of   $26,000 for each of Ms. Kodialam and Messrs. Adolf, Shanahan and McGranahan, and $19,500 for Mr. Chang; (b) Company-paid supplemental life insurance premiums (including tax gross-ups related thereto) of   $101,248 (consisting of   $45,920 in premiums and $55,328 of related tax gross-ups), $29,145 (consisting of   $14,727 in premiums and $14,418 of related tax-gross ups), $7,470 (consisting of   $3,451 in premiums and $4,019 of related tax gross-ups), $13,218 (consisting of   $6,699 in premiums and $6,519 of related tax gross-ups) and $10,823 (consisting of   $5,485 in premiums and $5,338 of related tax gross-ups) for Mr. Adolf, Ms. Kodialam, Mr. Chang, Mr. Shanahan and Mr. McGranahan, respectively; (c) the costs of certain disability insurance and executive health services; and (d) certain Medicare tax gross-ups paid to Mr. Adolf in the amount of   $42,696. These arrangements are further described under the section below entitled “—Employment Agreements.”

​

 

 

GRANTS OF PLAN-BASED AWARDS TABLE

The following table sets forth information regarding grants of plan-based awards made to our named executive officers during the year ended December 31, 2020.

​

(1)

On December 7, 2020, Mr. Adolf, Ms. Kodialam, Mr. Chang, Mr. Shanahan (including awards transferred to a trust established by him) and Mr. McGranahan received 12,933, 8,403, 6,738, 5,648 and 5,054 restricted common unit grants, respectively. These restricted common units were issued pursuant to the Omnibus Plan (see further description under the section below entitled “—2018 Omnibus Incentive Plan”). These restricted common units were issued in connection with annual compensation awards for fiscal year 2020 and will vest in four equal installments on each anniversary of December 7, 2020.

​

(2)

As noted in the Summary Compensation Table, we believe that, despite the fact that the incentive units do not require the payment of an exercise price, they are most similar economically to stock options, and as such, they are properly classified as “options” under the definition provided in Item 402(a)(6)(i) of Regulation S-K as an instrument with an “option-like feature.”

​

(3)

On December 7, 2020, Mr. Adolf and the Adolf Family Trust II received 82,080 and 45,000 incentive unit grants, respectively. On such date, Ms. Kodialam, Mr. Chang, Mr. Shanahan (including awards transferred to a trust established by him) and Mr. McGranahan received 82,570, 66,212, 55,501 and 49,659 incentive unit grants, respectively. These incentive units were issued pursuant to the Omnibus Plan and have a $44.71 hurdle rate (see further description under the section below entitled “—2018 Omnibus Incentive Plan”). These incentive units were issued in connection with annual compensation awards for fiscal year 2020 and will vest in four equal installments on each anniversary of December 7, 2020.

​

(4)

Amounts disclosed in this column reflect a grant date fair value of the restricted common units and incentive units, as applicable, in accordance with FASB ASC Topic 718. Assumptions used to calculate the grant date values are described within the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 19, 2021. The fair value of the incentive units received by Mr. Adolf and the Adolf Family Trust II is $1,141,792 and $625,982, respectively.

​

 

Focus Financial Partners 2021 Proxy Statement   49

 

NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE

Employment Agreements

Each of the named executive officers was party to an employment agreement during 2020 (each, including any applicable amendment, an “Employment Agreement,” and collectively, the “Employment Agreements”). Ms. Kodialam and Messrs. Adolf and Shanahan originally entered into employment agreements in 2013, and Mr. McGranahan originally entered into an employment agreement in 2015. Each of these employment agreements was amended and restated as of April 2017.  Mr. Chang originally entered into an employment agreement in April 2017, which was amended effective as of December 31, 2019. The narrative below summarizes the payments and benefits that each named executive officer is currently eligible to receive on an annual basis.

Base Salary

Each named executive officer’s base salary is a fixed component of compensation for each year for performing specific job duties and functions. The Employment Agreements provide for annual salaries of at least $800,000, $530,000, $425,000, $475,000 and $425,000 for Mr. Adolf, Ms. Kodialam, Mr. Chang, Mr. Shanahan and Mr. McGranahan, respectively. Base salary will be reviewed by the Board of Directors or the compensation committee periodically according to our normal compensation review standards. The Board or compensation committee (as applicable) has discretion to increase, but not decrease, each named executive officer’s base salary under the Employment Agreements. For 2020, the compensation committee approved cost-of-living adjustments, resulting in the following annual base salaries for our named executive officers: $882,675 for Mr. Adolf, $579,145 for Ms. Kodialam, $464,410 for Mr. Chang, $519,046 for Mr. Shanahan and $464,410 for Mr. McGranahan.

Annual Bonus

Each named executive officer is entitled to participate in our annual cash bonus plan that is applicable for the fiscal year in question. The annual cash bonus plan is typically structured to create a bonus pool for each individual fiscal year. The compensation committee makes final decisions regarding the bonus pool size and the individual participant amounts each year with input from the Chief Executive Officer, which may be more or less than the target range for the individual participant. Under the Employment Agreements, the annual target cash bonus opportunities for each of the named executive officers are as follows: 150% to 200% of Mr. Adolf’s base salary, 150% to 200% of Ms. Kodialam’s base salary, 150% to 200% of Mr. Chang’s base salary, 125% to 150% of Mr. Shanahan’s base salary and 125% to 150% of Mr. McGranahan’s base salary. For 2020, the target amounts were set at 200% for Ms. Kodialam and Messrs. Adolf and Chang, and 150% for Messrs. Shanahan and McGranahan. Actual payouts of the annual cash incentive awards were determined by the compensation committee by applying a formula as part of the year-end process.

Long-Term Incentive Compensation

Each named executive officer has also historically been eligible to participate in our incentive unit plan and, effective with the closing of our initial public offering, the Omnibus Plan. The number of restricted common units and incentive units granted to each named executive officer is determined annually in an amount collectively equal to the annual cash bonus awarded to the named executive officer for such year, as determined by the compensation committee by applying a formula as part of the year-end process. For more information, see the section entitled  “Compensation Discussion and Analysis—Annual Long-Term Incentive Awards”  above. The grant date fair value of the restricted common unit awards and the incentive unit awards provided to each named executive officer have been disclosed above in the “Stock Awards” and “Option Awards” columns, respectively, of the Summary Compensation Table.

Other Compensation Elements

Ms. Kodialam and Messrs. Adolf and Shanahan are each entitled to five weeks of vacation during each calendar year, and Messrs. Chang and McGranahan are each entitled to four weeks of vacation during each calendar year,

 

50   Focus Financial Partners 2021 Proxy Statement

 

in each such case, excluding paid holidays. Subject to the terms of any applicable plans, policies or programs, each named executive officer is entitled to receive employee benefits, including any and all vacation, deferred compensation, retirement, disability, group life, accident and health insurance as we may provide from time to time to salaried employees generally, and such other benefits as the compensation committee may from time to time establish for the named executive officers. We currently maintain a retirement plan intended to provide benefits under section 401(k) of the Internal Revenue Code where employees, including our named executive officers, are allowed to contribute a portion of their base salaries to a tax-qualified retirement account. We provide matching contributions in amounts determined pursuant to the retirement plan. For 2020, our plan provided for a Company matching contribution rate of 100% of the participant’s pre-tax contributions, up to the annual allowable U.S. Internal Revenue Service limits. The contributions made on behalf of our named executive officers for fiscal year 2020 are disclosed above in the notes to the Summary Compensation Table. We also provide supplemental term life insurance for each named executive officer for the benefit of such named executive officer’s estate, and provide certain other disability and health benefits.

2018 Omnibus Incentive Plan

In 2018, our Board of Directors adopted, and our sole stockholder prior to the initial public offering approved, the Omnibus Plan, which became effective upon the completion of our initial public offering. Pursuant to the Omnibus Plan, the employees, consultants and directors of the Company and its affiliates who perform services for us, including each of our named executive officers, may be eligible to receive awards. The description of the Omnibus Plan set forth below is a summary of the material features of the plan. This summary is qualified in its entirety by reference to the Omnibus Plan, a copy of which was filed as Exhibit 4.4 to our Registration Statement on Form S-8 filed with the Securities and Exchange Commission on July 31, 2018.

The Omnibus Plan provides for potential grants of the following awards with respect to shares of our Class A common stock, to the extent applicable: (i) incentive stock options qualified as such under U.S. federal income tax laws; (ii) non-qualified stock options or any other form of stock options; (iii) restricted stock awards; (iv) phantom stock awards; (v) restricted stock units; (vi) bonus stock; (vii) performance awards; (viii) annual cash incentive awards; (ix) any of the foregoing award types (other than incentive stock options) as awards related to Class A Units or other units of Focus LLC; (x) incentive units in Focus LLC, which are intended to constitute  “profits interests” within the meaning of Revenue Procedures 93-27 and 2001-43; and (xi) restricted common units in Focus LLC (collectively referred to as “awards”).

The compensation committee of our Board of Directors generally oversees the Omnibus Plan pursuant to its terms and all applicable federal, state or other rules or laws, except in the event that our Board of Directors chooses to take action under the Omnibus Plan. The compensation committee has the power to determine to whom and when awards will be granted and the amount of such awards (measured in cash, shares, stock options or units), proscribe and interpret the terms and provisions of each award agreement (the terms of which may vary), accelerate the vesting or exercise terms of an award, delegate duties under the Omnibus Plan and execute all other responsibilities permitted or required under the Omnibus Plan.

The maximum aggregate number of shares of Class A common stock that may be issued pursuant to awards under the Omnibus Plan after its effective date shall not exceed 6,000,000 shares (including such number of Focus LLC units or other securities which can be exchanged for or converted into shares). The reserve pool is subject to adjustment due to recapitalization or reorganization, or related to forfeitures or the expiration of awards, as provided under the Omnibus Plan. If the shares or units subject to any award are not issued or transferred, or cease to be issuable or transferable for any reason, including (but not exclusively) because shares or units are withheld or surrendered in payment of taxes, or any exercise of or purchase related to an award, or because an award is forfeited, terminated, expires unexercised, is settled in cash or is otherwise terminated without a delivery of shares or units, those shares or units will again be available for issue, transfer or exercise pursuant to awards under the Omnibus Plan to the extent allowable by law. The Omnibus Plan also contains a provision that will add an additional number of shares equal to the lesser of   (a) 3,000,000 shares, (b) 5% of the outstanding (vested and unvested) shares and Focus LLC units of the last day of the previous year, or (c) an amount determined by our Board of Directors, each year between 2019 and 2028.

 

 

OUTSTANDING EQUITY AWARDS AT 2020 FISCAL YEAR-END TABLE

The following table reflects information regarding outstanding equity-based awards held by our named executive officers as of December 31, 2020.