DEF 14A of StepStone Group Inc.
Filed Jul 25, 2023 · FY20230001193125-23-193497
Nominees for Election to a One-Year Term Expiring at the 2024 Annual Meeting of Stockholders
Nominees for Election to a One-Year Term Expiring at the 2024 Annual Meeting of Stockholders Scott W. Hart has served as the Chief Executive Officer of the Company and Partnership since January 2022 and as a member of our board of directors since September 2020. Mr. Hart has also served as the Co-Chief Executive Officer of the Company and the Partnership between August 2019 and December 2021. He also is a member of the Partnership’s Global Executive Committee, Private Equity Executive Committee, Private Equity Investment Committee and Private Equity Portfolio and Risk Management Committee. He has held a number of responsibilities over time, managing a number of important client relationships, serving as Co-Head of Private Equity Co-Investments between January 2013 to October 2019 and helping with opening the firm’s London office. Prior to joining the Partnership in 2007, Mr. Hart was an Associate at TPG Capital, LP from 2005 to 2007. While at TPG, Mr. Hart focused on evaluating, executing and monitoring investments for a private equity fund, as well as helping to develop views on investment thesis, valuation, financing and exit strategy. From 2003 to 2005, Mr. Hart worked as an Analyst at Morgan Stanley in the Consumer & Retail group, where he performed financial and strategic analysis on acquisitions, leveraged buy-outs, divestitures, and debt and equity capital markets transactions. Mr. Hart received his BBA from the University of Notre Dame. Mr. Hart brings to our board of directors his extensive experience in private markets investments and the perspective of our Chief Executive Officer. David F. Hoffmeister has served as a member of our board of directors since September 2020. He served as the Senior Vice President and Chief Financial Officer of Life Technologies Corporation, a global life sciences company, from 2008 to 2014 when it was acquired by Thermo Fisher Scientific Inc. From 2004 to 2008, he served as Chief Financial Officer of Invitrogen Corporation, which merged with Applied Biosystems in 2008 to form Life Technologies Corporation. Prior to joining Invitrogen, Mr. Hoffmeister spent 20 years with McKinsey & Company as a senior partner serving clients in the healthcare, private equity and chemical industries on issues of strategy and organization. Before joining McKinsey & Company, he held financial positions at GTE Corp. and W.R. Grace and Co. Mr. Hoffmeister currently serves on the boards of directors of Celanese Corporation (since 2006), Glaukos Corporation (since 2014) and ICU Medical, Inc. (since 2018). He also serves on the boards of directors of Kaiser Foundation Hospitals and Kaiser Foundation Health Plan, Inc. Mr. Hoffmeister received his BS from the University of Minnesota and his MBA from the University of Chicago. Mr. Hoffmeister brings to our board of directors his strong finance background, experience as a chief financial officer of a global biotechnology company and as a senior partner of a global managing consulting firm advising on strategic matters, and public company board and audit committee experience. Anne L. Raymond has served as a member of our board of directors since September 2020. She has had a 35-year career in real estate finance and investment management. From 2000 to 2017, she held senior leadership positions and served on the firmwide Investment Committees at Crow Holdings—a privately-owned real estate investment and development firm with a 70-year history and proven track record of performance. She retired in 2017 as President of Crow Holdings Capital, a Registered Investment Advisor managing capital on behalf of global investors in private equity real estate funds and diversified investment portfolios on behalf of ultra-high-net-worth families. In addition, from 2000 to 2017, she was Managing Director of Crow Family Holdings—owner of national development companies Trammell Crow Residential and Crow Holdings Industrial. Prior to her tenure at Crow Holdings, from 1995 to 1998, she served as Executive Vice President and Chief Financial Officer at Wyndham International, Inc., an upscale and luxury hotel and resort company—leading its initial public offering in 1996. Ms. Raymond currently serves on the boards of directors of Crow Holdings and Trammell Crow Residential Company, as well as DFW Teach for America and Lone Star Big Brothers Big Sisters. She is also a member of American Enterprise Institute’s National Council and the Executive Advisory Council of the George W. Bush Presidential Center. Ms. Raymond received her BS from the University of Missouri. Ms. Raymond brings to our board of directors her extensive experience in private market investments in real estate and other asset classes, in addition to her financial acumen.
Directors Continuing in Office Until the 2024 Annual Meeting of Stockholders
Directors Continuing in Office Until the 2024 Annual Meeting of Stockholders Monte M. Brem has served as Chairperson of our board of directors since November 2019 (including as Executive Chairman of the Company since January 2022). He has resigned as Executive Chairman effective July 31, 2023 and, effective August 1, 2023, he will provide consulting services to the Company as Executive Advisor. Previously, he served as the Partnership’s Chief Executive Officer since he co-founded StepStone in January 2007 until he became its Co-Chief Executive Officer in August 2019, serving through December 2021. He is a member of our global private equity team and is involved in various management activities. From 2002 to 2005, prior to co-founding StepStone, Mr. Brem served as Managing Director and Principal and eventually President at Pacific Corporate Group LLC, a private equity investment firm that oversaw approximately $15 billion of commitments from institutional clients. Earlier in his career, Mr. Brem was an Associate at the law firm of Gibson, Dunn & Crutcher LLP, where he focused on complex corporate transactions and corporate governance matters. Mr. Brem received his B.A. from San Diego State University and his J.D. and MBA from the University of San Diego. He is a member of the state bar of California (inactive status). Mr. Brem brings to our board of directors his extensive experience in private markets investments, deep familiarity with our business and the perspective of our former Co-Chief Executive Officer. Valerie G. Brown has served as a member of our board of directors since April 2021. From 2016 to 2019, Ms. Brown served as Executive Chairman of the Board of Directors of Advisor Group, Inc., a network of independent investment advisors. Prior to that, she was Chief Executive Officer of Cetera Financial Group, a network of independent retail investment advisors, from 2010 to 2014. Prior to joining Cetera Financial Group, Ms. Brown held a number of executive and senior leadership positions at ING Group and ING North America, as well as Taco Bell Worldwide. Ms. Brown currently serves on the Board of Directors of Advisor Group, AmWINS Group, Inc., a wholesale distributor of specialty insurance products and services, Jackson Hole Airport and Protect Our Water Jackson Hole. Ms. Brown received her B.S. in Chemical Engineering from Oregon State University and her MBA from Stanford University. Ms. Brown brings to our board of directors a wealth of experience in the financial services and wealth management industries, in addition to her financial acumen.
Directors Continuing in Office Until the 2025 Annual Meeting of Stockholders
Directors Continuing in Office Until the 2025 Annual Meeting of Stockholders Jose A. Fernandez has served as the Company’s Co-Chief Operating Officer since November 2019 and as a member of our board since September 2020. He co-founded the Partnership in 2007 as Partner, General Counsel and Chief Compliance Officer. He served as the Partnership’s General Counsel and Chief Compliance Officer until October 2010 when he was succeeded by Jason Ment so that he could focus on his business role. In March 2017, he became the Partnership’s Chief Operating Officer. He served in that role until sharing that role with Mr. Ment as Co-Chief Operating Officer in July 2018. He is also involved in StepStone’s Environmental, Social and Governance activities, as well as diversity initiatives, in addition to various investment activities. Prior to co-founding the Partnership in 2007, Mr. Fernandez served as Managing Director and General Counsel at Pacific Corporate Group LLC, a privately held investment advisory firm, from 2004 to 2006, where he was responsible for all legal and compliance activities, as well as research on emerging managers. From 2001 to 2004, Mr. Fernandez was an Associate at the law firm of Latham & Watkins LLP. At Latham & Watkins, Mr. Fernandez was a member of the Private Equity/Investment Fund Practice Group where he organized and represented private equity, venture capital, and buy-out funds. From 1997 to 2001, Mr. Fernandez was an Associate at the law firm of Curtis, Mallet-Prevost, Colt & Mosle LLP. Mr. Fernandez received his BA from the University of Michigan and his JD from Stanford Law School. Mr. Fernandez brings to our board of directors his extensive experience in private markets investments and his deep understanding of our operations. Thomas Keck has served as a member of our board of directors since September 2020. Mr. Keck co-founded the Partnership in 2007 as Partner and leads the Partnership’s global research and portfolio management activities, and the development of StepStone Private Market Intelligence. He is also involved in our responsible investment and risk management initiatives. Prior to co-founding the Partnership in 2007, from 2005 to 2006, Mr. Keck was a managing director at Pacific Corporate Group LLC, a private equity investment firm that oversaw over $15 billion of private equity commitments for institutional investors. From 2000 to 2005, Mr. Keck was a principal with Blue Capital Management L.L.C., a middle market buyout firm, and from 1997 to 2000, he was a consultant at McKinsey & Company. Mr. Keck formerly served on the board of directors for Porter Athletic Equipment Company, and currently serves on the board of Trio Health, Inc. He also currently serves on the Research Advisory Council of the Institute for Private Capital, as well as the Private Equity Advisory Council of the University of Chicago Booth School of Business. Mr. Keck received his BA from George Washington University and his MBA from the University of Chicago Booth School of Business. He served in the U.S. Navy as a Naval Flight Officer, receiving numerous decorations flying EA-6Bs off the USS Nimitz (CVN-68) from 1988 to 1995. Mr. Keck brings to our board of directors extensive experience in private market investments. Michael I. McCabe has served as our Head of Strategy since November 2019 and as a member of our board of directors since September 2020. Mr. McCabe has served as Head of Strategy of the Partnership since May 2017. He has been Partner of the Partnership since October 2010. He is a member of the private equity team and is involved with various investment and risk management activities. Prior to joining the Partnership in 2010, Mr. McCabe served as a Vice President at Hamilton Lane Advisors L.L.C., where he was the co-head of secondary and co-investment funds from 2005 to 2008. From 1995 to 2005, Mr. McCabe served as Director at CEMEX S.A.B de C.V., a publicly held company, where he focused on due diligence and financial analysis of capital investments, as well as strategic mergers and acquisitions. Mr. McCabe received a BA from Drexel University and an MBA from Columbia University. Mr. McCabe brings to our board of directors his extensive experience in private markets investments and his deep knowledge of our strategies. Steven R. Mitchell has served as a member of our board of directors since September 2020, and has served as a director of the Partnership since its founding in January 2007. Mr. Mitchell has served as the Chief Executive Officer of Argonaut Private Capital L.P., a private equity investment firm, since July 2016, and from November 2004 to July 2016, he was the Managing Director of Argonaut Private Equity, LLC, a private equity investment firm. Prior to joining Argonaut Private Equity, LLC, Mr. Mitchell was a principal in both Radical Incubation, a private equity investment firm, and 2929 Entertainment, LLC, a media company. Mr. Mitchell currently serves on the board of directors of Aspen Aerogels, Inc., a public company listed on the New York Stock Exchange and Alkami Technology, Inc. a public company listed on the Nasdaq. He also currently serves on the boards of directors of several privately owned companies. From 1996 to 1999, Mr. Mitchell was a corporate attorney at Gibson, Dunn & Crutcher LLP. Mr. Mitchell received his BBA from Baylor University and his JD from the University of San Diego School of Law. Mr. Mitchell brings to our board of directors his public company board experience and his experience with private investments.
Compensation Committee
| • | recommending the amount and form of non-employee director compensation; and |
Fiscal 2023 Director Compensation
Fiscal 2023 Director Compensation Our policy is to pay director compensation only to directors whom we deem independent. We have adopted a program for compensating our independent directors with a combination of cash and equity. Annual Retainer. Prior to September 14, 2022, the date of our 2022 annual meeting of stockholders, all independent directors were eligible to receive a $128,750 annual retainer for serving as a member of the board of directors. As of September 14, 2022, all independent directors were eligible to receive a $150,000 annual retainer. After the Annual Meeting, the annual retainer for all independent directors will be increased to $175,000. All annual retainers are pro-rated for any partial year of service. Fifty percent of the annual retainer is payable in the form of restricted stock units (“RSUs”) and the remaining fifty percent is payable, at the election of such director, in the form of cash or RSUs. Audit Committee Chair Retainer. In addition to the annual retainer, prior to September 14, 2022, the chair of the Audit Committee was eligible to receive an additional $15,450 annual retainer. As of September 14, 2022, the chair of the Audit Committee was eligible to receive an additional $25,000 annual retainer. Fifty percent of such retainer is payable in the form of RSUs and the remaining fifty percent is payable, at the election of the director, in the form of cash or RSUs. RSUs. All RSUs granted to directors vest in full based on continuous service as a member of the board of directors through the earlier of 12 months following the date of grant and the date of our next annual meeting of stockholders. All members of the board of directors are reimbursed for reasonable costs and expenses incurred in attending meetings of our board of directors. The table below describes the compensation provided to our non-executive officer directors in fiscal 2023. The table excludes Messrs. Fernandez, McCabe and Hart because they each served as executive officers during fiscal 2023 but did not receive separate compensation for their additional service as directors during that time period. In accordance with the director compensation program, on September 14, 2022, the board of directors approved the RSU grants to each independent director.
Fiscal 2023 Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | | Monte Brem(2) | — | — | 2,407,602(3) | 2,407,602 | | Valerie G. Brown | — | 149,985(4) | — | 149,985 | | David F. Hoffmeister | — | 174,992(4) | — | 174,992 | | Thomas Keck(5) | — | — | 3,434,299(6) | 3,434,299 | | Steven R. Mitchell(7) | — | — | — | — | | Anne L. Raymond | — | 149,985(4) | — | 149,985 |
Fiscal 2023 Director Compensation
| (1) Amounts in this column represent the aggregate grant date fair value of RSUs granted during fiscal 2023, calculated in accordance with FASB ASC Topic 718 based on the closing price per share of Class A common stock on September 14, 2022, the date of grant, of $28.91. For additional information regarding the assumptions underlying this calculation, please read Note 10 to our consolidated financial statements for the fiscal year ended March 31, 2023 located in our Annual Report on Form 10-K for such fiscal year. As of March 31, 2023, each non-executive director held the following unvested RSUs: Mr. Brem: 0; Ms. Brown: 5,188; Mr. Hoffmeister: 6,053; Mr. Keck: 0; Mr. Mitchell: 0; and Ms. Raymond: 5.188. |
Fiscal 2023 Director Compensation
| (2) Mr. Brem is a partner of the Partnership, and thus, is not eligible for compensation under our director compensation program. The amounts reported in this table represent the compensation he received from the Partnership for fiscal 2023 and excludes any distributions received in respect of his equity ownership interests in the Partnership. Mr. Brem, MMAR HNL, LLC and the Company have entered into a consulting agreement, effective August 1, 2023, pursuant to which Mr. Brem will serve as Executive Advisor, |
Fiscal 2023 Director Compensation
| providing consulting services as reasonably requested by the board and/or the Chief Executive Officer of the Partnership and the Company, in exchange for which he will receive cash consulting fees of $250,000 per year, payable in monthly installments. |
Fiscal 2023 Director Compensation
| (3) Consists of $294,231 in salary, cash payments received in respect of carried interest allocations of $2,096,335, life and disability insurance premiums of $8,036 and 401(k) company contributions of $9,000. |
Fiscal 2023 Director Compensation
| (4) Ms. Brown, Mr. Hoffmeister and Ms. Raymond elected to receive 100% of their annual retainers in the form of RSUs. The number of RSUs granted was determined based on the closing price per share of Class A common stock on September 14, 2022 of $28.91, rounded down to the next whole share. |
Fiscal 2023 Director Compensation
| (5) Mr. Keck is a partner of the Partnership, and thus, is not eligible for compensation under our director compensation program. The amounts reported in this table represent the compensation he received from the Partnership for fiscal 2023 and excludes any distributions received in respect of his equity ownership interests in the Partnership. |
Fiscal 2023 Director Compensation
| (6) Consists of $294,231 in salary, $900,000 as a calendar year 2022 cash bonus, cash payments received in respect of carried interest allocations of $2,222,212, life and disability insurance premiums of $9,591 and 401(k) company contributions of $8,265. |
Fiscal 2023 Director Compensation
| (7) Mr. Mitchell is not eligible for compensation under our director compensation program and did not receive any compensation from us during fiscal 2023. |
PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 1—ELECTION OF DIRECTORS There are three Class III directors whose term of office expires at the Annual Meeting. Our Nominating and Corporate Governance Committee has recommended, and our board has approved, Scott W. Hart, David F. Hoffmeister and Anne L. Raymond as nominees for election as Class III directors at the Annual Meeting. If elected at the Annual Meeting, each nominee will serve until the 2024 Annual Meeting of Stockholders and until his or her successor has been duly elected and qualified, or, if sooner, until his or her earlier death, resignation, retirement, disqualification or removal. Information concerning these nominees and other continuing directors appears under the “—Composition of the Board of Directors” above. Each nominee was appointed to our board prior to or in connection with our initial public offering. We have no reason to believe that any of the nominees will be unavailable or, if elected, will decline to serve. If any nominee becomes unable or unwilling to stand for election as a director, proxies will be voted for any substitute as designated by our board, or alternatively, our board may leave a vacancy on our board or reduce the size of our board. Each director is elected by a plurality of the votes cast. “Plurality” means that the three nominees who receive the largest number of votes cast “For” such nominees are elected as directors. Stockholders may vote “For” any or all of the nominees or “Withhold” with respect any or all of the nominees named in this Proposal 1. Any shares voted “Withhold” and broker non-votes, if any, are not considered votes cast for the foregoing purpose and will have no effect on the outcome of the election.
PROPOSAL 1—ELECTION OF DIRECTORS
| FOR | OUR BOARD RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES NAMED ABOVE. |
Compensation Philosophy and Determination Process
| • | annual incentive compensation in the form of cash bonuses; |
Compensation Philosophy and Determination Process
| • | long-term incentive compensation in the form of RSUs and carried interest awards; and |
Annual Incentive Compensation
Annual Incentive Compensation Beginning in calendar year 2022, the Compensation Committee has recommended, and the board of directors has approved, a transition for Mr. Hart’s annual incentive compensation to be determined based on performance against corporate goals and objectives established at the beginning of calendar year 2022 relating to (i) financial and investment performance, including fee-related earnings (“FRE”), FRE margin, fee-earning assets under management (“FEAUM”) and adjusted net income per share, (ii) team and culture management, including with a view to diversity, equity and inclusion and environmental, social and governance considerations, (iii) client relationship management, and (iv) enumerated strategic priorities for 2022, including entering into a new option agreement with personnel associated with StepStone Private Wealth, our retail platform, which was completed in November 2022. Based on a holistic assessment of these goals and objectives, the Compensation Committee recommended and the board of directors approved Mr. Hart’s bonus for the 2022 calendar year of $900,000. The other NEOs were eligible to receive an annual bonus for calendar year 2022 based on the approval of the Compensation Committee. In December 2022, in consideration of each NEO’s performance and StepStone’s performance during calendar year 2022, the Compensation Committee approved, the following bonuses for the 2022 calendar year: $750,000 for Mr. Randel and $900,000 for Messrs. Ment, Fernandez and McCabe.
Long-Term Incentive Compensation
Long-Term Incentive Compensation Restricted Stock Units. During fiscal 2023, we granted RSU awards under our 2020 Long-Term Incentive Plan (the “2020 LTIP”) to each of our NEOs, other than to Mr. Fernandez. On February 14, 2023, Mr. Hart received 20,711 RSUs, Mr. Ment received 13,807 RSUs, and Messrs. Randel and McCabe each received 3,452 RSUs. All of the RSUs vest in equal annual installments over four years. The Compensation Committee and the board of directors believe that a four-year vesting period encourages our NEOs to take a longer-term view of our overall performance and stockholder value, while also providing a key retention incentive. Due to his significant equity ownership, during fiscal 2023, Mr. Fernandez did not receive an award of RSUs. Carried Interest. We receive an allocation of performance-based fees, commonly referred to as “carried interest,” from limited partners in our investment funds and separately managed accounts for which we act as both investment adviser and general partner or managing member (the “StepStone Funds”) and we hold an equity interest. Approximately 50% of carried interest allocation revenue is awarded to certain employees, including our NEOs, as a form of long-term incentive compensation, fostering alignment of interest with our clients and investors, and retaining key investment professionals. Ownership of carried interest by our named executive officers may be subject to a range of vesting conditions, including continued employment and forfeiture upon occurrence of certain specified events post-termination, thus serving as an important employment retention mechanism. Carried interest awards to employees have historically vested over eight years; however, awards granted in April 2020 and thereafter vest over five years. Each carried interest award is subject to accelerated vesting in connection with certain qualifying terminations, as described under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—Carried Interest” below. Each of our NEOs received cash distributions attributable to carried interest awards in fiscal 2023 which are reflected in the “All Other Compensation” column of the Summary Compensation Table below.
Other Benefits and Perquisites
Other Benefits and Perquisites Retirement Benefits. We offer eligible employees, including our NEOs, the opportunity to participate in our tax-qualified 401(k) plan. Employees can contribute an amount that cannot exceed 100% of their eligible compensation up to the Internal Revenue Service’s annual limits on either a before-tax or after-tax basis into the 401(k) plan. We make a non-discretionary non-matching contribution to the plan on behalf of all eligible employees equal to 3% of their eligible pay. All company contributions are immediately 100% vested. Health and Welfare Benefits. Our NEOs participate in the same health and welfare benefit programs offered to our broader employee populations. In addition, we provide our NEOs and other senior employees with enhanced life and disability insurance benefits for which the Company pays the premiums. Termination Benefits. As described under “Executive Compensation Tables—Potential Payments Upon Termination or Change in Control” below, StepStone is not party to any employment, severance or change in control arrangements with our NEOs; however, the outstanding equity awards held by our NEOs and each NEO’s carried interest awards are eligible for accelerated vesting in connection with certain termination or change in control events. Historically, we have not viewed severance arrangements for executive officers as necessary due to existing carried interest and other long-term equity holdings amongst our executive officers. Perquisites and Other Compensation. We believe that our executive compensation program provides appropriate compensatory levels without the need for excessive perquisites and benefits. As a result, none of our NEOs received any perquisites in excess of $10,000 during fiscal 2023. We do, however, provide certain limited tax reimbursements for unitholders of the Partnership who provide services to the Partnership, including our NEOs, who own less than one percent of the outstanding units of the Partnership. Such individuals are eligible to receive a self-employment tax make-whole payment in the amount of self-employment tax payable by the individual that would not have been payable by the individual if the individual had the status of an employee of the Partnership for tax purposes.
Summary Compensation Table
Summary Compensation Table The following table sets forth the compensation earned by or granted to our Named Executive Officers during the fiscal years ended March 31, 2021, 2022 and 2023.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | | Scott W. Hart | 2023 | $294,231 | $900,000 | $599,998 | $1,801,027 | $3,595,256 | | Chief Executive Officer and Director | 2022 | $300,000 | $900,000 | $200,015 | $4,810,723 | $6,210,738 | | | 2021 | $262,500 | $900,000 | $— | $478,376 | $1,640,876 | | Johnny D. Randel | 2023 | $294,231 | $750,000 | $100,004 | $962,251 | $2,106,486 | | Chief Financial Officer | 2022 | $262,500 | $750,000 | $99,990 | $2,543,541 | $3,656,031 | | Jason P. Ment | 2023 | $294,231 | $900,000 | $399,989 | $1,364,105 | $2,958,325 | | President and Co-Chief Operating Officer | 2022 | $262,500 | $850,000 | $200,015 | $3,701,307 | $5,013,822 | | | 2021 | $250,000 | $850,000 | $1,196,820 | $535,220 | $2,832,040 | | Jose A. Fernandez | 2023 | $294,231 | $900,000 | $— | $2,206,008 | $3,400,239 | | Co-Chief Operating Officer and Director | 2022 | $300,000 | $900,000 | $— | $5,104,188 | $6,304,188 | | Michael McCabe | 2023 | $294,231 | $900,000 | $100,004 | $3,049,343 | $4,343,578 | | Head of Strategy and Director | 2022 | $300,000 | $900,000 | $99,990 | $7,705,295 | $9,005,285 | | | 2021 | $275,000 | $767,578 | $— | $1,299,266 | $2,341,844 |
Summary Compensation Table
| (1) Amounts in this column for fiscal 2023 represent the value of an annual cash bonus paid in December 2022 in respect of the executive’s performance during calendar year 2022, as described in more detail under “Compensation Discussion and Analysis—Elements of Compensation—Annual Incentive Compensation” above. |
Summary Compensation Table
| (2) Amounts in this column for fiscal 2023 represent the aggregate grant date fair value of RSUs granted under our 2020 LTIP, calculated in accordance with FASB ASC Topic 718, based on the closing price per share of Class A common stock on February 14, 2023, the date of grant, of $28.97. For additional information regarding the assumptions underlying this calculation, please read Note 10 to our consolidated financial statements for the fiscal year ended March 31, 2023 located in our Annual Report on Form 10-K for such fiscal year. |
Summary Compensation Table
| (3) Amounts in this column for fiscal 2023 include cash payments received in respect of carried interest allocations, life and disability insurance premiums, 401(k) company contributions, and self-employment make-whole tax payments for each NEO, each as set forth in the following table: |
Summary Compensation Table
| Name | Carried Interest Cash Payments ($) | Insurance Premiums ($) | 401(k) Company Contributions ($) | Self- Employment Make- Whole Tax Payments ($) | | Scott W. Hart | $1,787,115 | $5,647 | $8,265 | $— | | Johnny D. Randel | $944,141 | $9,845 | $8,265 | $— | | Jason P. Ment | $1,319,359 | $5,219 | $8,265 | $31,262 | | Jose A. Fernandez | $2,189,945 | $7,798 | $8,265 | $— | | Michael McCabe | $3,033,065 | $8,013 | $8,265 | $— |
Grants of Plan-Based Awards Table
Grants of Plan-Based Awards Table The following table includes information regarding RSUs granted to Named Executive Officers under the 2020 LTIP during fiscal 2023.
Grants of Plan-Based Awards Table
| Name | Grant Date | Approval Date | All Other Stock Awards: Number of Shares of Stock or Units (#)(1) | Grant Date Fair Value of Stock and Option Awards ($)(2) | | Scott W. Hart | 2/14/23 | 12/20/22 | 20,711 | $599,998 | | Johnny D. Randel | 2/14/23 | 12/20/22 | 3,452 | $100,004 | | Jason P. Ment | 2/14/23 | 12/20/22 | 13,807 | $399,989 | | Jose A. Fernandez | | | — | $— | | Michael McCabe | 2/14/23 | 12/20/22 | 3,452 | $100,004 |
Grants of Plan-Based Awards Table
| (1) Amounts in this column represent RSUs granted to the NEOs under the 2020 LTIP, which vest in equal annual installments on each of February 14, 2024, 2025, 2026 and 2027, subject to continued employment through the applicable vesting date. |
Grants of Plan-Based Awards Table
| (2) Amounts in this column represent the aggregate grant date fair value of RSUs granted under the 2020 LTIP, calculated in accordance with FASB ASC Topic 718, based on the closing price per share of Class A common stock on February 14, 2023, the date of grant, of $28.97. For additional information regarding the assumptions underlying this calculation, please read Note 10 to our consolidated financial statements for the fiscal year ended March 31, 2023 located in our Annual Report on Form 10-K for such fiscal year. |
Outstanding Equity Awards as of March 31, 2023
Outstanding Equity Awards as of March 31, 2023 In connection with the reorganization during our IPO, we reclassified the Partnership’s interests held by certain partners as Class B units and B2 units. Two of our NEOs, Messrs. Hart and Ment, hold unvested Class B2 units. The following table reflects information regarding outstanding unvested Class B2 units and RSUs held by our Named Executive Officers as of March 31, 2023.
Outstanding Equity Awards as of March 31, 2023
| | | Stock Awards | | | Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Scott W. Hart | | | | | Restricted Stock Units(2) | 2/14/23 | 20,711 | $502,656 | | Restricted Stock Units(2) | 2/14/22 | 4,358 | $105,769 | | Class B2 units(3) | 6/1/18 | 86,651 | $2,103,020 | | Johnny D. Randel | | | | | Restricted Stock Units(2) | 2/14/23 | 3,452 | $83,780 | | Restricted Stock Units(2) | 2/14/22 | 2,179 | $52,884 | | Restricted Stock Units(4) | 9/18/20 | 15,650 | $379,826 | | Jason P. Ment | | | | | Restricted Stock Units(2) | 2/14/23 | 13,807 | $335,096 | | Restricted Stock Units(2) | 2/14/22 | 4,358 | $105,769 | | Restricted Stock Units(4) | 9/18/20 | 33,244 | $806,832 | | Class B2 units(3) | 6/1/18 | 101,102 | $2,453,746 | | Jose A. Fernandez | — | — | — | | Michael McCabe | | | | | Restricted Stock Units(2) | 2/14/23 | 3,452 | $83,780 | | Restricted Stock Units(2) | 2/14/22 | 2,179 | $52,884 |
Outstanding Equity Awards as of March 31, 2023
| (1) The market value in this column is based on the closing trading price of $24.27 per share as of March 31, 2023 for our Class A common stock listed on the Nasdaq Global Select Market. |
Outstanding Equity Awards as of March 31, 2023
| (2) These RSUs vest in equal annual installments on each of the first four anniversaries of the grant date, subject to continued employment through the applicable vesting date. |
Outstanding Equity Awards as of March 31, 2023
| (3) These restricted Class B2 units vest in approximately equal quarterly installments on each September 1, December 1, March 1 and June 1 through June 1, 2024, subject to continued employment through the applicable vesting date. Upon the final vesting date of the Class B2 units, they will automatically convert into Class B units, which will be exchangeable on a one-for-one basis for shares of Class A common stock or, at our election, for cash. |
Outstanding Equity Awards as of March 31, 2023
| (4) These RSUs vest in equal annual installments on each of September 30, 2023 and 2024, subject to continued employment through the applicable vesting date. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table reflects Class B2 units and RSUs held by our Named Executive Officers which vested during fiscal 2023. None of our NEOs hold any outstanding stock option awards.
Option Exercises and Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Scott W. Hart | | | | Restricted Stock Units | 1,453 | $42,093 | | Class B2 units | 69,354 | $1,945,845 | | Johnny D. Randel | | | | Restricted Stock Units | 8,551 | $212,823 | | Jason P. Ment | | | | Restricted Stock Units | 18,076 | $449,523 | | Class B2 units | 80,919 | $2,270,321 | | Jose A. Fernandez | — | — | | Michael McCabe | 726 | $21,032 |
Option Exercises and Stock Vested
| (1) The value of Class B2 units and RSUs is determined based on the closing trading price of a share of Class A common stock on the applicable vesting date. |
Pension Benefits and Nonqualified Deferred Compensation
Pension Benefits and Nonqualified Deferred Compensation Our NEOs do not participate in any defined benefit pension plans or nonqualified deferred compensation plans.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control
Quantification of Potential Payments
Quantification of Potential Payments The table below sets forth the aggregate amounts that would have been payable to each Named Executive Officer with respect to the Class B2 units and RSUs, as described above, assuming the applicable termination event or change in control occurred on March 31, 2023. Carried interest is paid based on the price at which the StepStone Funds are able to sell or otherwise realize value from their investments; it is inherently uncertain and any yet unrealized carried interest amounts may not be paid for several years after carried interest is fully vested, if at all. Because of this uncertainty we do not provide a calculation of carried interest payment amounts that would be payable following the NEO’s retirement, death or disability on March 31, 2023. As of March 31, 2023, only Mr. Fernandez was retirement-eligible for purposes of the carried interest and outstanding RSUs, however Mr. Fernandez does not have any outstanding RSUs or unvested Class B2 units. As a result, he is not included in the table below.
Quantification of Potential Payments
| Name | Retirement ($)(1) | Death or Disability ($) | Qualifying Termination in Connection with a Change in Control ($) | Change in Control ($) | | Scott W. Hart | | | | | | Class B2 units(2) | — | — | — | $2,103,020 | | Restricted Stock Units(3) | — | $608,425 | $608,425 | — | | Johnny D. Randel | | | | | | Restricted Stock Units(3) | — | $516,490 | $516,490 | — | | Jason P. Ment | | | | | | Class B2 units(2) | — | — | — | $2,453,746 | | Restricted Stock Units(3) | — | $1,247,696 | $1,247,696 | — | | Michael McCabe | | | | | | Restricted Stock Units(3) | — | $136,664 | $136,664 | — |
Quantification of Potential Payments
| (1) Amounts in this column represent the value, as of March 31, 2023, of RSUs that would continue to vest and settle following the NEO’s retirement. |
Quantification of Potential Payments
| (2) Amounts in this row reflect Class B2 units that would become vested upon the occurrence of the applicable event, valued based on the closing trading price of $24.27 per share as of March 31, 2023 for our Class A common stock listed on the Nasdaq Global Select Market. |
Quantification of Potential Payments
| (3) Amounts in this row reflect RSUs that would become vested upon occurrence of the applicable event based on the closing trading price of $24.27 per share as of March 31, 2023 for our Class A common stock listed on the Nasdaq Global Select Market. |
CEO PAY RATIO
CEO PAY RATIO The fiscal 2023 total compensation of the median compensation of all our employees who were employed as of January 1, 2023, other than Mr. Hart, our Chief Executive Officer, was $154,875; Mr. Hart’s fiscal 2023 total compensation was $3,595,256; and the ratio of these amounts was 1-to-23. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described below. For these purposes, we identified the median compensated employee using each employee’s calendar year 2022 base salary, cash bonus earned for calendar year 2022 and the grant date fair value of RSUs granted in February 2023, which we annualized for any employee who did not work for the entire year unless designated as a temporary, seasonal or other non-permanent employee on our payroll records (including interns). We identified our employee population as of January 1, 2023 based on our payroll records or based on our treatment of employees for U.S. tax or local tax reporting purposes. We did not exclude any non-U.S. employees. The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
Pay versus Performance Table
Pay versus Performance Table As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” and certain financial performance of the Company. For further information concerning the Company’s pay for performance philosophy and how the Company aligns executive compensation with the Company’s performance, see the “Compensation Discussion and Analysis” above.
Pay versus Performance Table
| Year | Summary Compensation Table Total for Mr. Hart ($) (1) | Summary Compensation Table Total for Mr. Brem ($) (1) | Compensation Actually Paid to Mr. Hart ($) (2) | Compensation Actually Paid to Mr. Brem ($) (3) | Average Summary Compensation Table Total for Non-PEO NEOs ($) (4) | Average Compensation Actually Paid to Non-PEO NEOs ($) (5) | Value of Initial Fixed $100 Investment Based On: | | Net Income ($ in thousands) (8) | Fee- Related Earning s ($ in thousands) (9) | | | | | | | | | TSR ($) (6) | Peer Group TSR ($) (7) | | | | 2023 | $3,595,256 | N/A | $2,353,504 | N/A | $3,202,157 | $2,688,046 | $101.29 | $138.32 | $(45,275) | $156,158 | | 2022 | $6,210,738 | $6,044,087 | $5,884,459 | $6,044,087 | $5,994,832 | $5,911,642 | $134.05 | $153.12 | $484,281 | $122,242 | | 2021 | $1,640,876 | $2,740,522 | $8,816,974 | $2,740,522 | $2,586,942 | $7,349,794 | $141.36 | $140.46 | $314,593 | $89,484 |
Pay versus Performance Table
| (1) Messrs. Hart and Brem served as Co-Chief Executive Officers during fiscal 2021 and fiscal 2022 until January 1, 2022, at which point Mr. Brem transitioned to Executive Chairman and Mr. Hart became the sole Chief Executive Officer. The dollar amounts reported in these column s represent the amounts reported for Messrs. Hart and Brem as total compensation in our Summary Compensation Table for each of the corresponding fiscal years. See “Executive Compensation Tables—Summary Compensation Table.” |
Pay versus Performance Table
| (2) The dollar amounts reported in this column represent the “compensation actually paid” to Mr. Hart, as computed in accordance with Item 402(v) of Regulation S-K and do not reflect the total compensation actually realized or received by Mr. Hart. In accordance with these rules, these amounts reflect total compensation as reported in the Summary Compensation Table for each fiscal year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
Pay versus Performance Table
| | 2023 | 2022 | 2021 | | Summary Compensation Table Total | $3,595,256 | $6,210,738 | $1,640,876 | | Less, value of “Stock Awards” reported in Summary Compensation Table | $(599,998) | $(200,015) | — | | Plus, year-end fair value of outstanding and unvested equity awards granted in the year | $506,798 | $192,983 | — | | Plus (less), year over year change in fair value of outstanding and unvested equity awards granted in prior years | $(796,483) | $(344,771) | $7,176,098 | | Plus (less), year over year change in fair value of equity awards granted in prior years that vested in the year | $(352,069) | $25,524 | — | | Compensation Actually Paid to Mr. Hart | $2,353,504 | $5,884,459 | $8,816,974 |
Pay versus Performance Table
| (3) The dollar amounts reported in this column represent the “compensation actually paid” to Mr. Brem, as computed in accordance with Item 402(v) of Regulation S-K and do not reflect the total compensation actually realized or received by Mr. Brem. No adjustments were made to Mr. Brem’s total compensation as reported in the Summary Compensation Table in order to determine “compensation actually paid” because Mr. Brem did not hold or receive any outstanding equity awards during the applicable fiscal years. |
Pay versus Performance Table
| (4) The dollar amounts reported in this column represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group (excluding Messrs. Hart and Brem) as total compensation in our Summary Compensation Table for each of the corresponding fiscal years. The names |
Pay versus Performance Table
| of each of the NEOs included for these purposes is as follows: (i) for fiscal 2023 and fiscal 2022, Messrs. Randel, Ment, Fernandez and McCabe and (ii) for fiscal 2021, Messrs. Ment and McCabe. |
Pay versus Performance Table
| (5) The dollar amounts reported in this column represent the “compensation actually paid” to the NEOs as a group (excluding Messrs. Hart and Brem), as computed in accordance with Item 402(v) of Regulation S-K. In accordance with these rules, these amounts reflect total compensation as reported in the Summary Compensation Table for each fiscal year, adjusted as shown below. Equity values are calculated in accordance with FASB ASC Topic 718, and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |
Pay versus Performance Table
| | 2023 | 2022 | 2021 | | Average Summary Compensation Table Total | $3,202,157 | $5,994,832 | $2,586,942 | | Less, average value of “Stock Awards” reported in Summary Compensation Table | $(149,999) | $(99,999) | $(598,410) | | Plus, average year-end fair value of outstanding and unvested equity awards granted in the year | $126,699 | $96,483 | $1,174,879 | | Plus (less), average year over year change in fair value of outstanding and unvested equity awards granted in prior years | $(337,248) | $(133,021) | $4,186,383 | | Plus (less), average year over year change in fair value of equity awards granted in prior years that vested in the year | $(153,563) | $53,347 | — | | Average Compensation Actually Paid to Non-PEO NEOs | $2,688,046 | $5,911,642 | $7,349,794 |
Pay versus Performance Table
| (6) Total Shareholder Return (TSR) is calculated by dividing (a) the sum of (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the Company’s share price at the end of each fiscal year shown and the beginning of the measurement period, and the beginning of the measurement period by (b) the Company’s share price at the beginning of the measurement period. The beginning of the measurement period for each year in the table is September 16, 2020, the date of the Company’s initial public offering. |
Pay versus Performance Table
| (7) The peer group used for this purpose is the following published industry index: Dow Jones US Asset Managers Index. |
Pay versus Performance Table
| (8) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable year. |
Pay versus Performance Table
| (9) The dollar amounts reported represent the amount of FRE for the applicable year. FRE is a non-GAAP performance measure and is comprised of net management and advisory fees, less adjusted expenses which are operating expenses other than (a) performance fee-related compensation, (b) equity-based compensation for awards granted prior to and in connection with our IPO, profits interests issued by our non-wholly owned subsidiaries, and unrealized mark-to-market changes in the fair value of the profits interests issued in connection with the Private Wealth Transaction, (c) amortization of intangibles, and (d) certain other items that we believe are not indicative of our core operating performance, including charges associated with acquisitions and corporate transactions, contract terminations and employee severance. FRE is presented before income taxes. |
Analysis of the Information Presented in the Pay versus Performance Table
Analysis of the Information Presented in the Pay versus Performance Table In accordance with SEC rules, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance Table.