DEF 14A: StepStone Group Inc. Announces Annual Meeting of Stockholders, Outlines Key Proposals

StepStone Group Inc. will hold its Annual Meeting of Stockholders virtually on September 10, 2024, to vote on director elections, auditor ratification, executive compensation, and a share issuance proposal.

Summary

• StepStone Group Inc. is holding its Annual Meeting of Stockholders on September 10, 2024, virtually.
• Stockholders will vote on electing five director nominees, ratifying Ernst & Young LLP as the independent accounting firm, approving executive compensation on an advisory basis, and approving the issuance of Class A common stock under the Option Agreement.
• The board recommends voting for all director nominees, ratifying the auditor, approving executive compensation, and approving the share issuance.
• Holders of Class A common stock have one vote per share, while Class B common stock holders have five votes per share.
• As of July 1, 2024, Class B common stock holders control approximately 77.2% of the voting power.
• The company is considered a controlled company under Nasdaq rules and has elected not to comply with certain corporate governance requirements.
• The notice, proxy statement, and annual report are available online at www.proxydocs.com/STEP.

Sentiment

Score: 7

Explanation: The document is primarily factual and informative, outlining the agenda and proposals for the annual meeting. The tone is professional and forward-looking, with a focus on corporate governance and shareholder engagement. The inclusion of ESG initiatives and DEI efforts further contributes to a positive sentiment.

Positives

• The company is committed to incorporating ESG factors across its operational decision making and internal policies.
• The company has a global DEI Committee comprising senior and mid-level members from across the organization to evaluate current diversity efforts, lead new initiatives to improve DEI at the firm, and continue to improve upon our policies and culture.
• The company is focused on the firm's carbon footprint as it seeks to maintain carbon neutrality within its operations as a stated firm goal.
• The company encourages and supports community engagement through a global-and-local approach and is driven by community involvement teams at many of its offices.

Negatives

• The company is considered a controlled company under Nasdaq rules and has elected not to comply with certain corporate governance requirements, including having a majority of independent directors and independent compensation and nominating committees.
• The issuance of shares of Class A common stock pursuant to the Option Agreement will have a dilutive effect on the existing stockholders, including on the voting power and economic rights of the existing stockholders, and may result in a decline in the price of our Class A common stock or in greater price volatility.

Risks

• The company's obligations under the Tax Receivable Agreements could have a substantial negative effect on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control.
• The company may not be able to recoup payments made under the Tax Receivable Agreements, which could adversely affect the company's financial condition and liquidity.
• The company's ability to make payments under the Tax Receivable Agreements is dependent on the ability of the Partnership to make distributions to the company, which is subject to restrictions in the agreements governing the company's debt.
• The company may be required to use cash instead of SSG Units to fulfill its obligations under the Option Agreement if stockholders do not approve the Nasdaq Proposal, which may limit the company's flexibility in managing its capital.

Future Outlook

The company anticipates that future RSU awards will have a grant date in March, aligning more closely with StepStone's fiscal year.

Industry Context

The document provides insights into StepStone's corporate governance practices, executive compensation structure, and financial performance metrics, which are relevant for understanding its competitive positioning within the asset management industry.

Comparison to Industry Standards

• The document mentions the Dow Jones US Asset Managers Index as a peer group for Total Shareholder Return (TSR) comparison.
• The document also references a Peer Set of U.S.-listed alternative asset managers for determining the Peer Median Multiple, which is used in calculating the Purchase Multiple for the Option Agreement.
• The document lists specific companies in the Peer Set, including those with substantial activity in multiple private market asset classes and a market capitalization of at least $1.5 billion.

Corporate Governance

Related Party Transactions

• One of our directors, Steven Mitchell, is a controlling stockholder and serves on the investment committee of Argonaut Private Capital, LP, which manages several private equity investment funds.
• Each of Thomas Bradley, David Jeffrey and Mark Maruszewski, are non-executive officer partners of the Partnership who hold more than 5% of the Class B common stock of the Company and received compensation and partnership distributions from the Partnership in excess of $120,000 since April 1, 2023.
• Certain persons, including our employees and partners of the Partnership, and directors of the Company, have the opportunity to invest their personal capital in the StepStone Funds on the same terms and conditions as other unaffiliated clients and investors, except that these investments are generally not subject to management fees or carried interest and in some cases feature arrangements that result in a net effective reduced management fee.
• Each of C. Ashton Newhall and James Lim were sellers in the Greenspring Acquisition and, following the Greenspring Acquisition, became more than 5% beneficial owners of our Class A common stock and partners in the Partnership and have received compensation and partnership distributions from the Partnership in excess of $120,000 since April 1, 2023.
• The company has entered into an Exchanges Tax Receivable Agreement with certain partners of the Partnership and a Reorganization Tax Receivable Agreement with the Direct StepStone Stockholders and certain directors, executive officers and beneficial owners of more than 5% of our Class A common stock or Class B common stock received payments pursuant to the Tax Receivable Agreement.

Stakeholder Impact

• Shareholders are asked to vote on key proposals that will impact the company's governance, executive compensation, and capital structure.
• Employees may be impacted by the Clawback Policy, which allows the company to recover excess incentive-based compensation in the event of an accounting restatement.
• Executive officers are subject to compensation decisions that are tied to the company's performance and shareholder value.
• The company's commitment to ESG factors and community engagement may impact employees, customers, and the broader community.

Next Steps

• Stockholders are encouraged to vote on the proposals outlined in the proxy statement.
• The company will hold its Annual Meeting of Stockholders on September 10, 2024.
• The board of directors and the Compensation Committee will review and consider the results of the Say-on-Pay vote when making future compensation decisions for the NEOs.
• The company will conduct its next Say-on-Pay vote at its 2025 annual meeting of stockholders.

Key Dates

Keywords

Annual Meeting, Proxy Statement, Stockholders, Board of Directors, Executive Compensation, Director Election, Ernst & Young, Class A Common Stock, Class B Common Stock, Option Agreement, Nasdaq, Corporate Governance, ESG, Tax Receivable Agreement, StepStone Group