ITG announces new capital plans
ITG announces new capital plans and confirms receipt of notice of nomination of directors
ITG (NYSE:ITG) or the “Company”, an independent execution and research broker, today provided stockholders with an update on the Company’s review of its capital allocation policies, announcing that its Board of Directors has approved a plan to significantly increase the Company’s share repurchase levels and to form a board-level committee to continue reviewing ITG’s overall capital allocation framework. ITG also confirmed that it has received notice from Philadelphia Financial Management of San Francisco, LLC and Voce Capital Management LLC announcing their intent to nominate three candidates to stand for election to the ITG Board of Directors at the Company’s 2015 Annual Meeting of Stockholders. ITG stockholders are not required to take any action at this time.
ITG issued the following statement:
Board Director Nominations: ITG welcomes communication and input from its stockholders, and has been engaged in discussions with its stockholders, including Philadelphia Financial Management for many months, and with Voce Capital since their recent mid-February investment in ITG. As a result of those discussions, the ITG Board of Directors determined to make the capital plan changes that it is announcing today. Also as a result of those discussions, the ITG Board informed Philadelphia Financial and Voce Capital that it would welcome the addition of one of the three candidates included in the nomination notice delivered by Philadelphia Financial and Voce Capital, to the Board.
ITG Chairman of the Board, Maureen O’Hara, noted that “We respect and listen to our stockholders, and we always seek to act in their best interests, which is why we are announcing today’s capital actions and why we were willing to add one of the proposed new directors to our Board. It is unfortunate that Philadelphia Financial and Voce Capital determined that disproportionate board representation was a necessary condition to their willingness to work with the Board. We look forward to continuing our engagement with all of our shareholders and optimizing our capital allocation to enable significant return of capital to shareholders. We are also committed to maintaining a healthy balance sheet that will allow ITG to continue to grow its businesses in North America, Europe and Asia-Pacific.”
ITG’s Board of Directors is composed of eight highly qualified and experienced directors, all of whom are independent other than ITG’s Chief Executive Officer, and all of whom are active, engaged and committed to enhancing stockholder value.
“Over the last several quarters we have demonstrated the strength of our operating model and geographic diversification. During this time we have had productive discussions with a number of our stockholders, and we greatly appreciate the input we have received,” said Bob Gasser, ITG’s Chief Executive Officer and President. “ITG’s Board is committed to delivering shareholder value, including the thoughtful investment of capital and the thoughtful return of capital over the long term.”
Capital Allocation Update. With respect to its most recent actions regarding ITG’s capital plans, the ITG Board has determined to use free cash flow as a metric for assessing share repurchase capacity, which under ITG’s definition is calculated as GAAP net income increased by non-cash stock-based compensation charges, depreciation and amortization, and reduced by capital expenditures and capitalized software. For the full year 2014, ITG’s free cash flow by this definition was $75.5 million. In 2014, ITG repurchased 2.7 million shares of common stock for a total of $48.2 million.
The Company is now providing guidance that it will target share repurchases to free cash flow, whereas previously, ITG had targeted its share repurchase levels to net income, which includes various non-cash charges.
In addition, the Company intends to allocate an additional $15 million above free cash flow for share repurchases during fiscal 2015.
The ultimate amount, timing and methods of share repurchases will be subject to certain factors, including: corporate activity which may necessitate alternative uses of capital; regulatory requirements; share price, and market and business conditions.
The ITG Board has also determined it will form a new board-level capital committee. The new capital committee will be responsible for reviewing the Company’s allocation and use of capital in and among its various businesses and geographies and make recommendations to the full Board of further capital optimization strategies.
ITG is reviewing the notice of nominations submitted by Philadelphia Financial and Voce Capital, and the Nominating and Corporate Governance Committee and the Board will review the nominations and associated materials included in the notice from Philadelphia Financial Management and Voce Capital and consider the nominations in due course. The Board will present its recommendation regarding director nominees in ITG’s definitive proxy statement and other materials, to be filed with the Securities and Exchange Commission and mailed to all stockholders eligible to vote at the 2015 Annual Meeting.
J.P. Morgan Securities, LLC is serving as financial advisor to ITG and Wachtell, Lipton, Rosen & Katz is serving as legal advisor to the Company.
No Stockholder Action Required at This Time
Source: ITG
