DEF 14C: Federated Hermes Details Director Nominees, Executive Pay, and Corporate Governance in Schedule 14C Filing

Sentiment:

Schedule 14C Information Statement 13 March 2024 4:06 PM

Federated Hermes files a Schedule 14C information statement detailing director nominees, executive compensation, related person transactions, and corporate governance policies in preparation for its annual shareholder meeting.

Summary

Federated Hermes has filed an information statement related to its upcoming Annual Meeting of Shareholders scheduled for April 25, 2024.
The document outlines the election of directors, corporate governance practices, executive compensation, and related person transactions.
The Board of Directors has nominated seven individuals for election as directors: Joseph C. Bartolacci, J. Christopher Donahue, Thomas R. Donahue, Michael J. Farrell, John B. Fisher, Karen L. Hanlon, and Marie Milie Jones.
The document details the compensation of directors and executive officers, including base salary, bonuses, stock awards, and other benefits.
The filing also discusses the company's policies and procedures for related person transactions and conflicts of interest.
Federated Hermes qualifies as a controlled company under NYSE rules, exempting it from certain corporate governance requirements.
The company has adopted an Incentive Compensation Recovery Policy as required by NYSE rules.
The document includes information on security ownership, including Class A and Class B Common Stock.
Ernst & Young LLP served as the independent registered public accounting firm for Federated Hermes for 2023.
The Audit Committee has adopted a policy for pre-approval of all audit, audit-related, tax and other services to be performed by Federated Hermes independent registered public accounting firm.

Sentiment

Score: 7

Explanation: The document is primarily informational and factual, with a neutral to slightly positive tone. It highlights the company's commitment to corporate governance, ethical conduct, and employee well-being.

Positives

The company has a majority of independent directors, even though it is not required under NYSE rules.
Federated Hermes has implemented a diversity and inclusion strategy to foster a respectful workplace.
The company offers a variety of benefits to employees, including flexible work arrangements, education assistance, and paid parental leave.
The company supports cultural, educational, and human services organizations in the communities where it operates.
The company has established an internal oversight committee known as the ISDG to oversee Federated Hermes' information and data governance matters.

Risks

The document mentions risks related to investment, business, operational, financial, legal, cybersecurity, compliance, and macro-economic factors.
The company's reliance on the integrity and undivided loyalty of Covered Persons to maintain the highest level of objectivity in performing their duties.

Future Outlook

The document does not provide specific forward-looking statements or guidance, but it outlines the company's strategies for sustainable growth and long-term investment performance.

Management Comments

The trustees of the Voting Trust have advised Federated Hermes that they intend to vote in favor of all the directors nominated by the Board.
The Board believes that combining the roles of Chairman, President and Chief Executive Officer best serves the interests of the Company and its Shareholders.
The goal at Federated Hermes is to deliver superior risk-adjusted returns by endeavoring to set the standard for responsible, active investment management.

Industry Context

The document references the competitive nature of the investment management business and the importance of attracting and retaining talented professionals. It also mentions the company's peer group, which includes other major players in the industry such as BlackRock, Franklin Templeton, and T. Rowe Price.

Comparison to Industry Standards

The document compares Federated Hermes' executive compensation practices to those of its peers in the investment management industry, including Affiliated Managers Group, Inc.; AllianceBernstein Holding LP; Artisan Partners; BlackRock, Inc.; Franklin Templeton; Invesco Ltd.; Janus Henderson Group PLC; T. Rowe Price Group, Inc.; Victory Capital Management and Virtus Investment Partners.
The document references the NYSE Rules and the Dodd-Frank Act, indicating compliance with industry regulations and standards.
The document mentions the International Ethics Standards Board for Accountants International Code of Ethics Section 600, indicating compliance with international standards.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Board Expansion	The Board approved expanding the Board to seven members effective upon the election of directors at the Annual Meeting.	April 25, 2024	The expansion of the board may bring in new perspectives and expertise.
Incentive Compensation Recovery Policy	The Company adopted the Recovery Policy, as required by the NYSE Rules.	October 2023	The policy allows Federated Hermes to recover incentive compensation paid to executive officers that was awarded based on financial results that are later restated.

Related Party Transactions

The Compensation Committee has reviewed any related party transactions involving compensation (e.g., base salary, bonus, restricted stock, benefits, etc.) paid to any related party who is an employee of the Company for potential conflicts of interest and determined that any such transactions are not inconsistent with the interests of the Company and its Shareholders.
During 2023, Mr. Richard H. Donahue, son of Mr. Thomas R. Donahue, Chief Financial Officer of Federated Hermes, was employed by Federated Hermes as a Director Corporate Budgeting and FP&A Sales. Mr. Richard H. Donahue was provided compensation in the amount of approximately One-Hundred-Ninety-Four Thousand dollars and received a Periodic Restricted Stock award with a grant date value of One-Hundred-Seventeen Thousand Two-Hundred and Eighty dollars.

Stakeholder Impact

The document outlines the company's commitment to delivering superior risk-adjusted returns for its shareholders.
The company's diversity and inclusion strategy aims to create a respectful workplace for its employees.
The company supports cultural, educational, and human services organizations in the communities where it operates, benefiting local communities.

Next Steps

Shareholders are invited to submit questions in advance of the Annual Meeting.
The Board will elect directors at the Annual Meeting on April 25, 2024.

Key Dates

Date	Description
May 31, 1989	Date of the Voting Shares Irrevocable Trust.
December 28, 1990	Date of Mr. John B. Fisher's employment agreement.
October 22, 1990	Date of Mr. Uhlman's employment agreement.
October 25, 2018	The Compensation Committee adopted a UK Sub-Plan to the Stock Incentive Plan.
March 14, 2022	Federated Hermes acquisition of the remaining approximately 10% interest in FHL.
October 2022	The SEC issued final rules implementing the Dodd-Frank Act requirements.
June 2023	The SEC approved the NYSE's proposed listing standards.
October 2023	The Company adopted the Recovery Policy, as required by the NYSE Rules.
December 31, 2023	Management assessed the effectiveness of Federated Hermes internal control over financial reporting.
February 22, 2024	The Board approved expanding the Board to seven members effective upon the election of directors at the Annual Meeting.
February 26, 2024	Record date for the Annual Meeting.
March 1, 2024	Date for security ownership information.
March 13, 2024	Date the Information Statement is first being mailed and/or furnished to the Shareholders.
April 25, 2024	Date of the Annual Meeting of Shareholders.

Keywords

executive compensation, corporate governance, director nominees, related party transactions, incentive compensation, risk management, security ownership, Federated Hermes, Annual Meeting

Disclaimer:The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.