Slide 1: Wise Up WisdomTree
WISE UP WISDOMTREE P ROX Y CO N T E S T F O R B OA R D C H A N G E AT W I S D O M T R E E , I N C . ( N YS E : W T ) CONFIDENTIAL. May 18, 2023
Slide 2: Disclaimer
DISCLAIMER The materials contained herein (the “Materials”) represent the opinions of ETFS Capital Limited and the other participants named in its proxy solicitation (collectively, the “ETFS Group” or “we”) and are based on publicly available information with respect to WisdomTree, Inc. (the “Compan
Slide 3: Table of Contents
TABLE OF CONTENTS Executive Summary 04 Failure to Perform 60 History of Poor Capital Allocation 76 WisdomTree PRIME is unlikely to create value 82 Poor Governance Track Record 102 Pay for Performance Disconnect 122 Our Nominees and Plan 142 EXECUTIVE SUMMARY HOW WISDOMTREE FAILED FAILED CAPITAL ALLO
Slide 4: About ETFS Capital
ABOUT ETFS CAPITAL ETFS Capital is the largest stockholder of WisdomTree with c. 18% of the total stock capital equating to approx. $210m at the current stock price ETFS Capital is a venture capital firm and not an activist investor. It has never engaged in any sort of activist campaign Background
Slide 5: WisdomTree Today
WISDOMTREE TODAY WisdomTree is the only pure-play publicly listed ETF issuer globally, no other ETF issuers see any benefit being listed. WisdomTree allows investors to invest in the wider growth of the ETF industry. Total AUM (March 31, 2023) Jonathon Steinberg, CEO, (4Q2014 Earnings Call) –
Slide 6: Engagement Timeline
ENGAGEMENT TIMELINE WisdomTree Share Price Performance $14.0 Announced new ETFS Capital present to the Completed the acquisition of ETFS Capital Group and direct-to-consumer Board regarding extremely poor ETF Securities. ETFS Capital the Company entered into and Mr. Tuckwell enter into product 'Wisd
Slide 7: Why We Are Here
WHY WE ARE HERE ETFS Capital is the largest stockholder of WisdomTree (“the Company”) with over $210m of our own capital invested in the Company. We are deeply concerned with WisdomTree’s long history of stockholder value destruction, its failure to improve operating margins, and the continued g
Slide 8: Why Is Change Needed?
WHY IS CHANGE NEEDED? WisdomTree’s long history of A history of poor capital Governance failures, a pay-for underperformance and allocation, failed investments and performance disconnect and stockholder value destruction unrealistic future plans flawed Board refreshment Total Stockholder Return (T
Slide 9: WisdomTree Has Failed to Create Shareholder Value
WISDOMTREE HAS FAILED TO CREATE SHAREHOLDER VALUE Russell 2000: 122 S&P U.S. BMI: 121 WT: 48 While a $100 invested in WisdomTree five years ago is worth $48 today, a $100 invested in BlackRock would be worth $157 Source: WisdomTree 2022 10-K EXECUTIVE SUMMARY HOW WISDOMTREE FAILED FAILED CAPITAL ALL
Slide 10: Significant Stockholder Value Destruction per Proxy Statements and 10-K
ACCORDING TO DISCLOSURES IN PROXY STATEMENTS AND THEIR 10-K, THERE HAS BEEN SIGNIFICANT STOCKHOLDER VALUE DESTRUCTION “We have not created stockholder value for a while.” - Mr. Steinberg, CEO (4Q2019 Earnings Call) WisdomTree 2020 Definitive Proxy WisdomTree 2021 Definitive Proxy WisdomTree 2022 10-
Slide 11: Underperforming Benchmarks and Peers Over 1, 3, 5 and 10 Years
WHEN ETFS CAPITAL AND LION POINT CAPITAL INITIATED THEIR CAMPAIGN IN 2022, WISDOMTREE WAS GROSSLY UNPERFORMING ITS BENCHMARK INDICES AND PEERS OVER 1, 3, 5 AND 10 YEARS 1-Year TSR 3-Year TSR 5-Year TSR 10-Year TSR Source: Bloomberg. TSR Data runs through the close of trading on January 24, 2022, whi
Slide 12: Long Term Stockholder Value Destruction Continued into 2023
WISDOMTREE’S TRACK RECORD OF LONG TERM STOCKHOLDER VALUE DESTRUCTION CONTINUED INTO 2023 WHICH PROMPTED ETFS CAPITAL TO NOMINATE A HIGHLY QUALIFIED SLATE OF DIRECTORS 5-Year TSR 10-Year TSR As of 12 April 2023 As of 12 April 2023 223.9% 170.8% 154.1% 154.5% 67.2% 51.1% 20.2% 21.5% (23.6%) (10.4%) S&
Slide 13: Underperformance Despite $611M ETF Securities Acquisition
…WISDOMTREE’S PERFORMANCE IS PARTICULARLY DISAPPOINTING CONSIDERING IT SPENT $611M ON THE ACQUISITION OF ETF SECURITIES, WHICH WAS PROMISED TO ‘DRIVE LONG- TERM STOCKHOLDER VALUE’ What WisdomTree promised Reality: WisdomTree failed to generate promised gains TSR from Close of ETF Securities Acquisit
Slide 14: $1.4BN of Stockholder Value Destruction Since 2018
SINCE 2018, WISDOMTREE’S LONG-TENURED DIRECTORS AND THE MANAGEMENT HAVE OVERSEEN APPROX. $1.4BN OF STOCKHOLDER VALUE DESTRUCTION Stockholder Value Destroyed Millions 611 47 1,718 Value Destroyed 1,443 933 Source: SEC Filings, ETFS Capital analysis EXECUTIVE SUMMARY HOW WISDOMTREE FAILED FAILED CAPIT
Slide 15: Only Pure-Play ETF Company in Industry with Strong Tailwinds
WISDOMTREE IS THE ONLY PURE-PLAY ETF COMPANY IN AN INDUSTRY WITH STRONG TAILWINDS US ETF Market Growth EUR ETF Market Growth 5 yr CAGR – 13.7% 5 yr CAGR – 13.4% 10 yr CAGR – 17.1% 10 yr CAGR – 14.4% Source: ETFGI A rising tide should lift all boats, yet WisdomTree has been left behind EXECUTIVE SUMM
Slide 16: Failed to Execute, Slower Than Market Growth
…. BUT FAILED TO EXECUTE, RESULTING IN SLOWER THAN MARKET GROWTH WisdomTree’s AUM growth has lagged the … and the US market market growth in Europe* *2018 is the base year to account for ETF Securities acquisition. Year-end data Note: Year-end data WisdomTree has failed to benefit from strong indust
Slide 17: Lowest Net Inflows Among Peers in Last Five Years
AND THE LOWEST NET INFLOWS AMONG PEERS IN THE LAST FIVE YEARS US Flows ($m) 2018-2022 42,927 35,947 19,161 12,446 ProShares Global X VanEck WisdomTree WisdomTree’s competitors have maintained inflows through varying market cycles highlighting the strength of their products as compared to WisdomTree’
Slide 18: Competitors Consistently Achieved Robust Inflows
IN COMPARISON, WISDOMTREE’S COMPETITORS HAVE CONSISTENTLY ACHIEVED ROBUST INFLOWS $m VanEck US Flows Wisdom Tree US Flows 10,000 7,880 ($m) 8,000 6,000 5,074 4,195 14,572 4,000 2,000 828 1,183 4,950 0 20,000 ProShares US Flows (654) (1,253) 14,926 15,000 (5,169) 11,572 10,834 10,000 2018 2019 2020 2
Slide 19: Significantly Higher Organic Growth
… AND SIGNIFICANTLY HIGHER ORGANIC GROWTH WisdomTree defines ‘Organic Growth’, as the annual net inflows divided by the opening AUM Organic Growth (YoY) WisdomTree is the only peer to suffer negative Organic Growth Global X VanEck ProShares WisdomTree WisdomTree had the lowest Organic Growth a
Slide 20: Loss of Market Share in Issuer Rankings
WISDOMTREE’S LOSS OF MARKET SHARE IS REFLECTED IN DETERIORATING ISSUER RANKINGS US ISSUER RANKING BY AUM WisdomTree falls out of the top 10 Rank 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1st iShares iShares iShares iShares iShares iShares iShares iShares iShares iShares 2nd State Street Stat
Slide 21: Focus on AUM and Flows to Confuse Stockholders
DESPITE LOSING MARKET SHARE, WISDOMTREE CONTINUES TO FOCUS ON ‘AUM’ AND ‘FLOWS’ IN AN ATTEMPT TO CONFUSE STOCKHOLDERS 1-day market reaction proves AUM or WisdomTree Comments on Organic Growth flows DO NOT drive stockholder value “WisdomTree’s business has never been stronger; we’ve had ten consecuti
Slide 22: Analysts Agree Flows and AUM Are Not Key Drivers
WALL STREET ANALYSTS AGREE THAT ‘FLOWS’ AND AUM ARE NOT KEY DRIVERS OF STOCKHOLDER VALUE “Since 4Q 2019, WT’s blended fee rate has declined “The recent fund flows have been primarily in roughly in line with large public peers (-17% vs. -16% “Combined with market appreciation, all eight of low-
Slide 23: ETF Issuance Is a Highly Scalable Business
ETF ISSUANCE IS A HIGHLY SCALABLE BUSINESS, AS ACKNOWLEDGED BY WISDOMTREE “There is a lot of operating leverage in our business as “But I would say as we’ve seen in the past in our business our AUM continues to scale. Because of our business [as] the AUM scales, there is tremendous operating model t
Slide 24: Promised Revenue and Margin Growth
…AS PROMISED TO INVESTORS WITH CLAIMS OF IMPROVED REVENUE AND MARGIN GROWTH WisdomTree claiming margins will increase 2Q2022: Earnings Presentation 1Q2023: Earnings Presentation WisdomTree’s failure to meet promised goals has completely eroded management’s credibility among investors Source: WisdomT
Slide 25: Case Study: ETF Securities Australia
CASE STUDY: REVENUE GROWTH AND PROFITABILITY AT ETF SECURITIES AUSTRALIA ETF Securities Australia AUM increased 4.7x from 2017 to 2021, until its sale in June 2022 The AUM growth was accompanied by strong EBITDA growth and EBITDA margin of 36% Growth in AUM EBITDA and EBITDA Margin $5.0 4.7 EBITDA E
Slide 26: Failed to Achieve Operating Leverage
WISDOMTEE HAS FAILED TO ACHIEVE OPERATING LEVERAGE AS REFLECTED IN DISAPPOINTING REVENUE GROWTH AND OPERATING MARGIN – THE KEY VALUE DRIVERS Over last five years, despite 50% jump in AUM, revenue increased by only 10% and operating margin contracted by 11.2% WisdomTree has failed to translate AUM an
Slide 27: Failure to Translate AUM Growth into Operating Income
RECENT METRICS SUGGEST CONTINUED FAILURE TO TRANSLATE AUM GROWTH INTO OPERATING INCOME WisdomTree Claims Reality Despite +100% increase in AUM since 2018: “WisdomTree’s momentum has accelerated in 2023 as the first quarter of the year was the third best quarter of net inflows in company history.” –
Slide 28: $77 Million Operating Income Gap 2015 vs 2022
THE FAILURE TO ACHIEVE OPERATING LEVERAGE IS CLEARLY VISIBLE IN THE $77 MILLION GAP IN OPERATING INCOME WHEN COMPARING 2015 TO 2022 – YEARS OF COMPARABLE REVENUE ATTAINMENT As the Company acknowledges, ETF issuance is a massively scalable business Millions Revenue vs Operating Income model i.e. as
Slide 29: Q1 2023 Results Show Continued Failure
Q12023 RESULTS SUGGEST CONTINUED FAILURE TO ADDRESS PERFORMANCE CONCERNS WE FLAGGED LAST YEAR “As WisdomTree’s largest individual stockholder, I have a great interest in the Company’s success… My hope and expectation is that the changes announced today will be the start of the process of improvement
Slide 30: Lagging Operating Margins Despite Record AUM
WITH LAGGING OPERATING MARGINS DESPITE RECORD AUM Reality Quarterly Revenue and Adj. Operating Margin 100 30.0% 95 25.7% Adjusted operating margin fell to the lowest point since 2018 in 4Q2022. 23.1% 25.0% Management is being disingenuous by highlighting quarterly 90 20.5% 21.4% improvement in 1Q2
Slide 31: Low-Fee Fixed Income Growth and Compensation Costs
WE BELIEVE GROWTH IN ‘LOW-FEE’ FIXED INCOME PRODUCT AND FAILURE TO MANAGE COMPENSATION COSTS ARE LARGELY RESPONSIBLE FOR WISDOMTREE’S INABILITY TO ACHIEVE OPERATING LEVERAGE USFR - a low-fee Fixed Income WisdomTree’s compensation and benefits expense increased 31% vs. 10% rise in ETF - accounted for
Slide 32: Recent TSR Improvement Attributed to Stockholder Pressure
GIVEN WISDOMTREE’S LACKLUSTER OPERATING PERFORMANCE, WE ATTRIBUTE THE RECENT TSR IMPROVEMENT TO INVESTOR ANTICIPATION OF FURTHER STOCKHOLDER PRESSURE IN 2023 TSR: Adoption of Poison Pill in March 2023 to Announcement of Q12023 Earnings March 17, 2023 – April 28, 2023 11.0% 5.8% 4.2% 4.1% 2.6% S&P 15
Slide 33: Positive Market Reaction to 2023 Nomination
AS REFLECTED IN THE POSITIVE 1-DAY MARKET REACTION TO ETFS CAPITAL’S NOMINATION IN 2023 1-day market reaction to ETFS Capital nomination 2.46% -0.17% -0.67% -0.72% -1.23% S&P 1500 Asset Russell 2000 Proxy Peers Traditional Asset WisdomTree Management & (Median) Management Custody Banks Peers (Median
Slide 34: Effect of Our Campaign in 2022
AND THE EFFECT OF OUR CAMPAIGN IN 2022 TSR from Sch. 13D Filing to Settlement As a result of entering into a Cooperation Agreement with ETFS Jan. 24, 2022 – May 25, 2022 Capital and Lion Point Capital, the Company: 3.4% Added two new independent directors to the Board Formed an Operations and St
Slide 35: Gold-Payable Deal Positively Impacted Share Price
AND MORE RECENTLY, ETFS CAPITAL’S CLOSING OF THE GOLD-PAYABLE DEAL POSITIVELY IMPACTED WISDOMTREE’S SHARE PRICE ETFS Capital agreeing to cancel the Company’s gold payment obligations at a $65 Million discount to the 2022 valuation is an accretive benefit for all WisdomTree stockholders Close at "By
Slide 36: History of Poor Capital Allocation
THE COMPANY’S HISTORY OF FINANCIAL AND TSR UNDERPERFORMANCE IS ONLY ECLIPSED BY ITS TRACK RECORD OF POOR CAPITAL ALLOCATION WisdomTree has made 5 small to medium size investments since 2016 and failed to create significant value from any of them Years Investment Core to ETF Business Amount Inv Amoun
Slide 37: Case Study 1: Advisor Engine
CASE STUDY 1: ADVISOR ENGINE In our view, WisdomTree misled stockholders from 2016-2019, highlighting Advisor Engine’s ‘strong’ pipeline and ‘new customer’ wins before announcing an exit in 2020 How did long-tenured directors, Mr. Salerno and Mr. Neuger, hold management accountable for promising
Slide 38: Case Study 2: Securrency
CASE STUDY 2: SECURRENCY – A QUESTIONABLE INVESTMENT What WisdomTree Delivered… More And the Future Could Be a Complete What WisdomTree Promised Impairments Loss "...our investment in Securrency, positions WisdomTree to According to 2022 10-K statement, be a true leader in digital assets" WisdomTree
Slide 39: WisdomTree Prime: Biggest Wager in Unfamiliar Area
AGAINST A BACKDROP OF POOR EXECUTION AND STOCKHOLDER VALUE DESTRUCTION, MANAGEMENT HAS EMBARKED ON ITS BIGGEST WAGER IN AN AREA IT KNOWS NOTHING ABOUT: WISDOMTREE (WT) PRIME Mr. Steinberg (3Q2022 Earnings Call) – “I believe that over the next five years we will be recognized as a DeFi business that
Slide 40: WT Prime Must Compete with Better-Resourced Companies
IN ORDER TO BE A VIABLE, WT PRIME WILL HAVE TO COMPETE WITH COMPANIES WITH SIGNIFICANTLY MORE RESOURCES AND A MASSIVE HEAD START IN TERMS OF CUSTOMERS AND MARKETING SPEND WT Prime Expected Competition What WT Prime Must Overcome to One App, Endless Possibilities Succeed: PayPal/ Chime Fidelity Venmo
Slide 41: Checkered Record for Launching WT Prime
WISDOMTREE TRACK HAS A CHECKERED RECORD FOR LAUNCHING WT PRIME WisdomTree Plan Reality “WisdomTree Prime is currently in beta testing and remains on track for a national rollout towards the end of Q1 next year. … digital assets will begin generating revenue in 2023 without a significant uptick in co
Slide 42: Analysts Are Skeptical of WT Prime Success
ANALYSTS ARE SKEPTICAL OF WT PRIME SUCCESS… Northcoast Research Northcoast Research Morgan Stanley “We need to be convinced that WisdomTree Prime will “WisdomTree Prime Will Have to Prove Us Wrong actually go live on time and reach the level of success While WisdomTree Prime’s launch has been pushed
Slide 43: Restriction of Stockholder Rights
POOR LEADERSHIP HAS ALSO BEEN EXEMPLIFIED IN THE RESTRICTION OF STOCKHOLDER RIGHTS TO WHICH STOCKHOLDER PRESSURE APPEARS TO HAVE BEEN THE ONLY BACKSTOP Stockholder pressure appears to have been the only remedy to expand stockholder rights under an entrenched regime that has resisted change and accou
Slide 44: Control of Board Leadership by Long-Tenured Directors
CONTROL OF BOARD LEADERSHIP POSITIONS WITH LONG-TENURED DIRECTORS Change has been resisted by recycling long-tenured non-diverse directors among key leadership positions WisdomTree has been able to create the illusion of refreshment and maintain the status quo by keeping new Board members out of k
Slide 45: Stockholder Involvement Responsible for Board Diversity
STOCKHOLDER INVOLVEMENT IS RESPONSIBLE FOR BOARD DIVERSITY 2018 ETFS Capital has always sought a refreshed and diverse Board 2018 Stockholder Meeting: Before ETFS Capital 2022 Stockholder Meeting: After ETFS Capital Johnathan Johnathan Frank Salerno Win Neuger Anthony Bossone Frank Salerno Win Neuge
Slide 46: Board's Response to Refreshment Demands Disingenuous
WE BELIEVE THAT THE BOARD’S RESPONSE TO REFRESHMENT DEMANDS HAS BEEN DISINGENUOUS Two recently appointed female directors have left the Board within the last ten months. Talent loss under suspicious circumstances o Ms. Cosgrove, who joined the Board in April 2019, resigned in September 2022 after
Slide 47: Violation of Good Faith Cooperation
THIS DISINGENUOUS APPROACH HAS LED TO AN UNPRECEDENTED VIOLATION OF GOOD FAITH COOPERATION Having only served less then 1 year, Ms. Fuhr did not have a reasonable chance to Ms. Fuhr has not been re-nominated by establish herself on the board. WisdomTree in its slate of 2023 nominees – The Compan
Slide 48: Board's Replacement Candidate Largely Underqualified
AND THE BOARD’S REPLACEMENT CANDIDATE IS LARGELY UNDERQUALIFIED To us, Ms. Naidoo is a baffling choice as a WisdomTree nominee as she has NO relevant ETF experience, NO relevant financial services/asset management experience, and NO relevant prior public board service Ms. Naidoo’s experience is pr
Slide 49: Compensation Committee Has Been a Primary Enabler
THE COMPENSATION COMMITTEE HAS BEEN A PRIMARY ENABLER We believe the incumbent-controlled Compensation Committee has not only failed to align pay with performance, but has promoted management’s lack of accountability by driving excessive compensation growth amid extensive stockholder value destructi
Slide 50: Pay Grossly Misaligned with Performance
PAY HAS BEEN GROSSLY MISALIGNED WITH PERFORMANCE Over the last five years, Mr. Steinberg has received over $20m in compensation during which time he has destroyed over $920m in stockholder value We believe the mark of a good CEO is the amount of value he/she has created for stockholders over time
Slide 51: CEO Securing His Future at Stockholders' Expense
AND THE CEO HAS BEEN WORKING TO SECURE HIS FUTURE AT THE EXPENSE OF STOCKHOLDERS Instead of working constructively with stockholders, we believe Mr. Steinberg took steps to ensure that if his seat was challenged and lost, his windfall would be guaranteed Recently, the Board expanded the change of
Slide 52: CEO and Chairman Net Sellers of Stock
EVEN LEADERSHIP LACKS CONFIDENCE IN ITS ABILITY TO CREATE STOCKHOLDER VALUE AS BOTH THE CEO AND CHAIRMAN HAVE BEEN NET SELLERS OF WISDOMTREE STOCK Since 2012, Mr. Steinberg and Mr. Salerno have been net sellers of shares – how confident are they in the Company’s prospects and their leadership abilit
Slide 53: Management-Proposed Board Lacks Critical Skills
THE MANAGEMENT-PROPOSED BOARD LACKS CRITICAL SKILLS WisdomTree continues to promote underqualified directors. Verify No Prior Non-Entrenched Prior ETF Issuer experience Tenure Prior Board Prior ETF Financial Services/ Stockholder Current Board Members Controversies (<10 Years (Years) Experience Is
Slide 54: Incumbent Slate Should Be Rejected
THE INCUMBENT SLATE SHOULD BE REJECTED The incumbent slate will not deliver the necessary change for WisdomTree stockholders. Frank Salerno Win Neuger Shamla Naidoo • Board Chair • Nominating and Governance • New Nominee • Compensation Committee Chair Committee Chair • Replaces ETF industry expert –
Slide 55: The Choice Is Obvious
THE CHOICE IS OBVIOUS The ETFS Capital slate will deliver a new sense of accountability to a board run by incumbents who have failed in their management oversight duties and lack the requisite leadership skills to foster good governance Incumbents ETFS Capital Nominees Competing Directors Frank Sale
Slide 56: Nominees' Focus: Efficiencies, Pay Alignment, WT Prime
IF ELECTED, OUR NOMINEES WILL FOCUS ON OPERATIONAL EFFICIENCIES, ALIGN EXECUTIVE COMPENSATION WITH PERFORMANCE, AND EVALUATE STRATEGIC RATIONALE FOR WT PRIME INVESTMENT We believe the Board should be refreshed to bring independent directors with ETF experience. The Board and management should fo
Slide 57: Our Nominees: Bruce Aust
OUR NOMINEES CAN DELIVER CHANGE: BRUCE AUST Mr. Aust retired from Nasdaq Inc. in October 2019 after 21 years. Before becoming Vice Chairman of Nasdaq, Mr. Aust served as Executive Vice President from 2003 to 2014. In this position, he led Nasdaq’s new listings, capital market business, global busi
Slide 58: Our Nominees: Tonia Pankopf
OUR NOMINEES CAN DELIVER CHANGE: TONIA PANKOPF Ms. Pankopf brings 28 years of investment experience in researching and valuing equity and debt corporate securities and managing capital market transactions for domestic and international public and private companies. She has held Vice President an
Slide 59: Our Nominees: Graham Tuckwell
OUR NOMINEES CAN DELIVER CHANGE: GRAHAM TUCKWELL Founder and Chairman of ETFS Capital Limited (2018 - present). Executive Chairman of ETF Securities Australia Limited (2019 – 2022). Under Mr. Tuckwell’s guidance, Assets under Management increased by 470%. Founder and CEO of ETF Securities Limi
Slide 60: Failure to Benefit from Industry Tailwinds and Lack of Product Innovation
FAILURE TO BENEFIT FROM INDUSTRY TAILWINDS AND LACK OF PRODUCT INNOVATION
Slide 61: Highlights
HIGHLIGHTS 01. WisdomTree has failed to capitalize on positive industry tailwinds 02. WisdomTree’s inflows have significantly lagged growth in the ETF industry 03. WisdomTree has failed to develop new products resulting in high degree of volatility in inflows, which largely were triggered by externa
Slide 62: Only Pure-Play ETF Company in Industry with Strong Tailwinds
WISDOMTREE IS THE ONLY PURE-PLAY ETF COMPANY IN AN INDUSTRY WITH STRONG TAILWINDS US ETF Market Growth EUR ETF Market Growth 5 yr CAGR – 13.7% 5 yr CAGR – 13.4% 10 yr CAGR – 17.1% 10 yr CAGR – 14.4% Source: ETFGI A rising tide should lift all boats, yet WisdomTree has been left behind EXECUTIVE SUMM
Slide 63: Inflows into Exchange Traded Products from Mutual Funds
… PRIMARILY ON ACCOUNT OF MASSIVE INFLOWS INTO EXCHANGE TRADED PRODUCTS FROM TRADITIONAL MUTUAL FUNDS 70% 50% 30% 10% 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 EXECUTIVE SUMMARY HOW WISDOMTREE FAILED FAILED CAPITAL ALLOCATION WT PRIME IS THE WRONG BET POOR GOVERNANCE TRACK RECORD POOR COMPEN
Slide 64: CEO Rightly Predicted Industry Growth
INTERESTINGLY, JONATHAN STEINBERG, CEO, RIGHTLY PREDICTED THE INDUSTRY GROWTH Had WisdomTree simply kept pace with the growth of the ETF market, its AUM should be $171bn against the $91bn currently Jonathan Steinberg (4Q2014 Earnings Call) – “I expect the ETF industry to average at least $250bn to
Slide 65: Slower Than Market Growth for WisdomTree
…. BUT FAILED TO EXECUTE, RESULTING IN SLOWER THAN MARKET GROWTH FOR WISDOMTREE WisdomTree’s AUM growth has lagged … and the US market the market growth in Europe WisdomTree has failed to benefit from strong industry tailwinds resulting in sub-par AUM growth Source: WisdomTree IR Dropout, ETFGI EXEC
Slide 66: Loss of Market Share in Issuer Rankings
WISDOMTREE’S LOSS OF MARKET SHARE IS REFLECTED IN DETERIORATING ISSUER RANKINGS US ISSUER RANKING BY AUM WisdomTree falls out of the top 10 Rank 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 1st iShares iShares iShares iShares iShares iShares iShares iShares iShares iShares 2nd State Street Stat
Slide 67: Significantly Higher Organic Growth
… AND SIGNIFICANTLY HIGHER ORGANIC GROWTH WisdomTree defines ‘Organic Growth’, as the annual net inflows divided by the opening AUM Organic Growth (YoY) WisdomTree is the only peer to suffer negative Organic Growth Global X VanEck ProShares WisdomTree WisdomTree had the lowest Organic Growth a
Slide 68: Competitors Consistently Achieved Robust Inflows
IN COMPARISON, WISDOMTREE’S COMPETITORS HAVE CONSISTENTLY ACHIEVED ROBUST INFLOWS VanEck US Flows $m Wisdom Tree US Flows 10,000 7,880 ($m) 8,000 6,000 5,074 4,195 14,572 4,000 2,000 828 1,183 4,950 0 20,000 ProShares US Flows (654) (1,253) 14,926 15,000 (5,169) 11,572 10,834 10,000 2018 2019 2020 2
Slide 69: Failed Product Development Strategy
WISDOMTREE’S INABILITY TO KEEP ABREAST OF MARKET GROWTH IS LARGELY DUE TO A FAILED PRODUCT DEVELOPMENT STRATEGY In our view, a strong ETF Issuer is one that consistently launches $150m+ AUM products proving (i) client acceptance; and (ii) financial viability of that product Within the last 5 yea
Slide 70: Inflows Concentrated in 1-2 Products
... RESULTING IN A PORTFOLIO WHERE INFLOWS BECOME CONCENTRATED IN 1-2 PRODUCTS INSTEAD OF WELL DIVERSIFIED PRODUCT MIX 2013 Flows Concentration 2014 Flows Concentration 2015 Flows Concentration 2022 Flows Concentration HEDJ & DXJ HEDJ & DXJ HEDJ and DXJ USFR 72% 93% 99% 92% WisdomTree has experien
Slide 71: Increased Portfolio Volatility
…. LEADING TO INCREASED PORTFOLIO VOLATILITY HEDJ DJX Launched in January 2009 Launched in June 2006 Did not generate meaningful AUM until 2013 Did not generate meaningful AUM until 2013 Inflows peaked 2015 Inflows peaked in 2015 Cumulative outflows since 2016: $16.8bn Cumulative out
Slide 72: Large Revenue and Income Swings
.. AND LARGE REVENUE AND INCOME SWINGS Impact of DXJ and HEDJ on Revenue and Operating Income Volatility Operating income Total revenues 350 299 300 Revenue declined 24% 250 228 219 200 184 $m 149 150 137 Operating Income declined 64% 100 74 52 56 49 50 0 2013 2014 2015 2016 2017 DXJ and HEDJ AUM pe
Slide 73: USFR Likely to Meet Same Fate as Rates Fall
WE BELIEVE USFR IS LIKELY TO MEET THE SAME FATE AS INTEREST RATES ARE UNLIKELY TO REMAIN AT ELEVATED LEVELS INDEFINITELY The Fed is forecasting for rates to peak at the end of 2024 and fall consistently through 2025 and 2026. Will investors still park cash in USFR if rate expectations fall? Can USFR
Slide 74: Lack of Product Innovation and Reluctance to Work with Experts
WISDOMTREE’S LACK OF PRODUCT INNOVATION CAN BE PARTIALLY ATTRIBUTED TO ITS RELUCTANCE TO WORK WITH INDUSTRY EXPERTS AND PIONEERS Background WisdomTree’s crypto offering was their first venture into the crypto/DEFI space WisdomTree had an early mover advantage over 3 of its competitors but is now
Slide 75: Management's Overestimation of Its Own Abilities
… AND MANAGEMENT’S OVERESTIMATION OF ITS OWN ABILITIES WisdomTree continues to make sweeping positive statements about how its capabilities, which we believe are unfounded For instance, Mr. Lilien, President and COO stated (4Q2021 Earnings Call) – “On product we remain committed to being an indu
Slide 76: Failed Capital Allocation Strategy
FAILED CAPITAL ALLOCATION STRATEGY
Slide 77: Highlights
HIGHLIGHTS 01. We believe there is a lack of focus on the core business 02. By investing outside of its core expertise, management has made VC type investments in start-ups and embarked on highly ambitious WT Prime, which is unlikely to garner meaningful traction given significantly larger and well-
Slide 78: Current VC-Type Investments Outside Core Expertise
CURRENT VC-TYPE INVESTMENTS OUTSIDE CORE EXPERTISE WisdomTree made three investments directly related to their core business. All 3 Created Year Investment Core Impairments? Significant of these investments failed. Value? WisdomTree is now investing in businesses outside of their core expertise.
Slide 79: Written Off Investments
WRITTEN OFF INVESTMENTS Written Amount Period % Written Off WisdomTree Promises Outcome off? Invested “AdvisorEngine will be an important component of our efforts to grow ETF market stock and five months into the Advisor Engine 2016-2020 Yes $58m 84% relationship we are increasing confident in the i
Slide 80: Case Study 1: Advisor Engine
CASE STUDY 1: ADVISOR ENGINE WisdomTree appears to have misled stockholders from 2016-2019, highlighting Advisor Engine’s ‘strong’ pipeline and ‘new customer’ wins before announcing an exit in 2020 How did long-tenured directors, Mr. Salerno and Mr. Neuger, hold management accountable for promis
Slide 81: Case Study 2: Questrade
CASE STUDY 2: QUESTRADE (CANADIAN BUSINESS) Year Value AUM WisdomTree bought Questrade, a Canadian ETF issuer, $2.1m with $77.4m AUM in 2017 Purchase 2017 $2.1m $77.4m WisdomTree successfully increased the AUM by over 10x to $777m by 2020 Operating Loss 2018-2020 7.1m Questrade incurred cumula
Slide 82: WT Prime Is Unlikely to Create Value
WT PRIME IS UNLIKELY TO CREATE VALUE
Slide 83: Highlights
HIGHLIGHTS 01. After over a year of delays WT Prime is very basic and still in beta testing with limited access to products despite claims that it will be ready to launch. 02. WT Prime does not fit WisdomTree's business model and the company has failed to articulate a clear rational behind the inves
Slide 84: WisdomTree (WT) Prime
WISDOMTREE (WT) PRIME Source: 4Q2021 Earnings Call EXECUTIVE SUMMARY HOW WISDOMTREE FAILED FAILED CAPITAL ALLOCATION WT PRIME IS THE WRONG BET POOR GOVERNANCE TRACK RECORD POOR COMPENSATION OUR NOMINEES AND PLAN 84
Slide 85: Prime Overview
PRIME OVERVIEW WT Prime claims that blockchain native financial services app with the following functionality: o Digital wallet built on blockchain technology to trade and store digital assets and funds o A set of curated/limited digital assets and funds will be available and including; o Blockcha
Slide 86: Why Doesn't WT Prime Fit with WisdomTree?
WHY DOESN’T WT PRIME FIT WITH WISDOMTREE? 01. WisdomTree runs a B2B model in its core ETF business, and has spent years building its expertise and distribution network. 02. WT Prime is a B2C business which is not WisdomTree’s expertise and has no existing consumer userbase or distribution network 03
Slide 87: WisdomTree Lacks Key Elements to Launch WT Prime
WISDOMTREE CLEARLY LACKS KEY ELEMENTS TO SUCCESSFULLY LAUNCH AND GROWTH WT PRIME Mr. Steinberg (3Q2022 Earnings Call) – “I believe that over the next five years we will be recognized as a DeFi business that has an ETF business” Management want to achieve this through WT Prime, a mass market consumer
Slide 88: Concern #1: Competing with Better-Resourced Companies
OUR CONCERN #1: IN ORDER TO BE A VIABLE, WT PRIME WILL HAVE TO COMPETE WITH COMPANIES WITH SIGNIFICANTLY MORE RESOURCES AND A MASSIVE HEAD START IN TERMS OF CUSTOMERS AND MARKETING SPEND WT Prime Expected Competition What WT Prime Must Overcome to One App, Endless Possibilities Succeed: PayPal/ Chim
Slide 89: Concern #2: Failed to Articulate Business Rationale
OUR CONCERN #2: WISDOMTREE FAILED TO ARTICULATE THE BUSINESS RATIONALE FOR WT PRIME Answer – “Jonathan L. Steinberg: Will, why don't you start?” [CEO did not Michael J. Cyprys (Morgan Stanley, 4Q2021 earnings call): answer] “Maybe just circling back to WisdomTree Prime, I was hoping you could elabor
Slide 90: Concern #3: Lacks Relevant Expertise and Experience
OUR CONCERN #3: WISDOMTREE LACKS RELEVANT EXPERTISE AND EXPERIENCE Answer – “Jonathan L. Steinberg: Very exciting question for us. Will, why don't you Michael J. Cyprys (Morgan Stanley, 4Q2021 earnings call): start?” [CEO did not answer] “And just maybe another follow-up there on the WisdomTree Prim
Slide 91: Lack of Related Expertise and Experience
LACK OF RELATED EXPERTISE AND EXPERIENCE This is a big leap into a new business model (B2C) and sector (Digital Assets) where the existing business doesn’t have advantages and there are no Crypto Experience? Digital Asset Experience? internal expertise. Board No No WisdomTree has failed to recog
Slide 92: WT Prime Senior Management Lacks Required Experience
WT PRIME SENIOR MANAGEMENT DOESN’T HAVE THE EXPERIENCE REQUIRED How has the Board approved and supported this initiative when there is no expertise across the business? None of the senior digital assets team members have prior digital asset experience. Even if the junior members were to have dig
Slide 93: Digital Asset Team Lacks Relevant Experience
WISDOMTREE’S DIGITAL ASSET TEAM CLEARLY LACKS RELEVANT EXPERIENCE Source: LinkedIn EXECUTIVE SUMMARY HOW WISDOMTREE FAILED FAILED CAPITAL ALLOCATION WT PRIME IS THE WRONG BET POOR GOVERNANCE TRACK RECORD POOR COMPENSATION OUR NOMINEES AND PLAN 93
Slide 94: Concern #4: High Security Risk
OUR CONCERN #4: HIGH SECURITY RISK Answer – “Jonathan L. Steinberg: Will, I think you should start and touch on Keith Housum (Northcoast Research, 4Q2021 earnings call): Securrency as well.” [CEO did not answer] “…As I think about the areas that the Prime will be involved in, it seems like the Answe
Slide 95: Concern #5: No Cohesive Distribution Strategy
OUR CONCERN #5: NO COHESIVE DISTRIBUTION STRATEGY Answer – “Jonathan L. Steinberg: Will, again, do you want to start?” [CEO did Michelle Foley (Morgan Stanley, 1Q2023 earnings call): not answer] “My question is about the distribution of WisdomTree Prime. How have you been trying to Answer – “Will Pe
Slide 96: WT Prime Will Require Minimum Marketing Spend of Hundreds of Millions
… AND WT PRIME WILL LIKELY REQUIRE A MINIMUM MARKETING SPEND OF SEVERAL HUNDRED MILLION DOLLARS WHICH IT DOESN’T HAVE Amongst the peer group that WT has stated to be future competitors for Average no. of users of new entrants: 6 million Prime; the three newest entrants (Revolut, Robinhood and Chim
Slide 97: Revolut Comparison
REVOLUT COMPARISON On the 4Q2022 Earnings Call, Mr. Peck said they aspire to be like Revolut – “Aspirationally, I'd highlight someone like Revolut as a competitor here.” Investable Crypto Crypto Launch on Raised/Spent Users Assets platform That statement is worrying given Revolut have: o An extr
Slide 98: Traditional Finance Players Serve Basic Crypto Investors
THERE ARE TRADITIONAL FINANCE PLAYERS WHO SERVICE BASIC CRYPTO INVESTORS Prime doesn’t have enough to lure retail investors away from their incumbent platforms Traditional Finance Players and Specialist Crypto Providers have already saturated the market. Traditional Finance Competitors Investment
Slide 99: Analysts Are Skeptical of WisdomTree Prime Success
ANALYSTS ARE SKEPTICAL OF WISDOMTREE PRIME SUCCESS… Northcoast Research Northcoast Research Morgan Stanley “We need to be convinced that WisdomTree Prime will “WisdomTree Prime Will Have to Prove Us Wrong actually go live on time and reach the level of success While WisdomTree Prime’s launch has bee
Slide 100: WT Prime Roll-Out Disappointing with No Transparency on Milestones
WT PRIME ROLL-OUT HAS BEEN DISAPPOINTING WITH NO TRANSPARENCY ON MILESTONES THAT INVESTORS CAN USE TO ASSESS SUCCESS Will Peck, Head of Digital Assets (4Q2022 Earnings Call) – “So we're not disclosing any KPIs or metrics today on that, but it's certainly [indiscernible] confident we can Proposed C
Slide 101: WT Prime Conclusion
WT PRIME CONCLUSION WT Prime is unlikely to generate meaningful value even in the unlikely event that it does succeed Is WT Prime going to be successful? o It is highly unlikely that WT Prime can be successful. To give it any chance of success would require investment way in excess of WisdomTree’s
Slide 102: Poor Governance Track Record
POOR GOVERNANCE TRACK RECORD
Slide 103: Highlights
HIGHLIGHTS 01. WisdomTree has a long history of poor governance and weak oversight. 02. A legacy of diminished stockholder rights to avoid accountability and preserve the status quo. True refreshment has been resisted by recycling long-tenured non-diverse directors among key leadership positions. 03
Slide 104: History of Poor Governance
HISTORY OF POOR GOVERNANCE WisdomTree has a long history of poor governance and weak oversight. stockholders should consider the following board actions when determining if change is warranted: Failing to re-nominate a settlement director without explanation and selecting a replacement nominee tha
Slide 105: Restriction of Stockholder Rights
POOR LEADERSHIP HAS ALSO BEEN EXEMPLIFIED IN THE RESTRICTION OF STOCKHOLDER RIGHTS TO WHICH STOCKHOLDER PRESSURE APPEARS TO HAVE BEEN THE ONLY BACKSTOP Stockholder pressure appears to have been the only remedy to expand stockholder rights under an entrenched regime that has resisted change and accou
Slide 106: Stockholder Involvement Responsible for Recent Board Changes
STOCKHOLDER INVOLVEMENT RESPONSIBLE FOR RECENT BOARD CHANGES 2018 ETFS Capital has always sought a refreshed and diverse Board 2018 Stockholder Meeting 2022 Stockholder Meeting Johnathan Johnathan Frank Salerno Win Neuger Anthony Bossone Frank Salerno Win Neuger Anthony Bossone Steinberg (CEO) Stein
Slide 107: Control of Board Leadership by Long-Tenured Directors
CONTROL OF BOARD LEADERSHIP POSITIONS WITH LONG-TENURED DIRECTORS Change has been resisted by recycling long-tenured non-diverse directors among key leadership positions WisdomTree has been able to create the allusion of refreshment and maintain the status quo by keeping new Board members out of k
Slide 108: Adoption of Poison Pill When Faced with Proxy Contest
ADOPTION OF POISON PILL WHEN FACED WITH A PROXY CONTEST Not renominating a settlement candidate should come as no surprise to stockholders given the company’s track record in negotiations Actions During In the Best Has 2022 Campaign 2023 Campaign Settlement Interest of WisdomTree ETFS Capital and Li
Slide 109: Efforts to Undermine Stockholder-Induced Board Changes
THE EFFORTS TO UNDERMINE STOCKHOLDER-INDUCED BOARD CHANGES Two recently appointed female directors have left the Board within the last ten months. o Susan Cosgrove, who joined the Board in April 2019, resigned in September 2022 Talent loss under suspicious circumstances after just over three years
Slide 110: Violations of Good Faith Cooperation
VIOLATIONS OF GOOD FAITH COOPERATION Having only served less then 1 year, Ms. Fuhr did not have a reasonable chance to Ms. Fuhr has not been re-nominated by establish herself on the board. WisdomTree in its slate of 2023 nominees – The Company has provided NO substantive rationale for this baffl
Slide 111: Replacing an ETF Expert with Someone Without ETF Experience
REPLACING AN ETF EXPERT WITH SOMEONE WITH NO ETF OR RELEVANT EXPERIENCE Ms. Fuhr is an established and unparalleled voice in the ETF/ETP space Managing Partner and Founder of ETFGI LLP, an independent research, event, and consultancy firm covering the global ETFs and ETPs industry Previously, Ms
Slide 112: Board's Replacement Candidate Largely Underqualified
AND THE BOARD’S REPLACEMENT CANDIDATE IS LARGELY UNDERQUALIFIED To us Ms. Naidoo is a baffling choice as a WisdomTree nominee as she has NO relevant ETF experience, NO relevant financial services/asset management experience, and NO relevant prior public board service Ms. Naidoo’s experience is pri
Slide 113: Questionable Track Record: Mr. Steinberg (CEO)
QUESTIONABLE TRACK RECORD: Mr. STEINBERG (CEO) The fate of WisdomTree has been entrusted to someone with a questionable track-record NO. Mr. Steinberg attended The Wharton School of Business at the University of Pennsylvania, Wharton Grad? but never finished despite his father being a prominent dono
Slide 114: Questionable Track Record: Win Neuger
QUESTIONABLE TRACK RECORD: WIN NEUGER A truly independent Board is one that is free from potential conflicts of interest from past ties In his book Griftopia, Matt Taibbi laid a substantial portion of the liquidity crisis at AIG directly on Mr. Neuger's doorstep. According to Taibbi, in Mr. Neuger's
Slide 115: Weak Leadership and Questionable Ties
WEAK LEADERSHIP AND QUESTIONABLE TIES A truly independent Board is one that is free from potential conflicts of interest from past ties Frank Salerno Win Neuger Board Chairman Nominating and Governance Committee Chairman “Mr. Salerno spent 18 years <1981 – 1999> with Bankers Trust Company in various
Slide 116: Recent Refreshment Efforts Point to Questionable Ties
EVEN RECENT EFFORTS OF "REFRESHMENT" POINT TO QUESTIONABLE TIES The Nominating & Governance Committee is responsible for identifying new directors for appointment to the Board. Mr. Neuger was chair of the Nominating & Governance at the time Mr. Singleton was appointed. Harold Singleton III Win Neuge
Slide 117: CEO Stock Sales vs Purchases
CEO STOCK SALES VS PURCHASES Since 2012, CEO Mr. Steinberg has been a net seller of stock CEO Stock Sales and Purchases1 Jonathan Steinberg 2.1 2.5 1.0 0.9 0.5 0.5 0.5 0.8 CEO -0.6 -1.1 -0.8 -0.9 -1.3 -1.3 -1.3 -1.3 -1.4 -1.3 -1.5 -1.5 -1.7 -1.7 -1.7 -1.7 -1.7 -1.7 -1.7 -7.8 -10.8-10.9 Executive s
Slide 118: Chairman Stock Sales vs Purchases
CHAIRMAN STOCK SALES VS PURCHASES Chairman Mr. Salerno has also been a net seller of WisdomTree stock since 2012 Stock Sales and Purchases Frank Salerno Chairman of the Board Compensation Committee Chairman 0.0 -0.1 0.0 0.0 0.0 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.2 -0.1 -0.1 -0.1 -0.2 -0.2 -0
Slide 119: Stock Sales vs Purchases and Leadership
WEAK LEADERSHIP AND QUESTIONABLE PRACTICES – STOCK SALES VS PURCHASES Directors who buy stock generally believe the value of the Company will increase; when the CEO and Chairman are net sellers, what message is conveyed to the market? We believe that the CEO and Chairman have been poor leadership
Slide 120: Declining Ownership Interest
DECLINING OWNERSHIP INTEREST Being a net seller of WisdomTree stock has resulted in an overall declining trend in the Chairman’s ownership – further compromising his ability to hold the CEO accountable Chairman Salerno’s stock Ownership of WisdomTree Stock 0.7% Frank Salerno 0.5% 0.4% Chairman of th
Slide 121: Poor Governance Is Why Additional Change Is Needed Now
THE BOARD’S TRACK RECORD OF POOR GOVERNANCE IS THE REASON WHY ADDITIONAL CHANGE IS NEEDED NOW It is clear to us the incumbent board as constituted cannot be trusted to deliver the change that stockholders desperately need. The board has proven that it will not act in the best interest of stockhold
Slide 122: Pay for Performance Disconnect
PAY FOR PERFORMANCE DISCONNECT
Slide 123: Highlights
HIGHLIGHTS 01. Over the last five years, CEO has received over $20m in compensation during which time he has destroyed over $921m in stockholder value. 02. CEO pay has continued to increase while stock price has fell 57% show cases the compensation's committee and program's failure to provide proper
Slide 124: CEO Received $20 Million for Destroying $920 Million of Value
CEO RECEIVED $20 MILLION IN COMPENSATION FOR DESTROYING $920 MILLION OF STOCKHOLDER VALUE Over the last five years, Mr. Steinberg has received over $20m in compensation during which time he has destroyed over $920m in stockholder value We believe the mark of a good CEO is the amount of value he/sh
Slide 125: CEO Pay Increased 177% While Stock Price Fell 57%
CEO PAY INCREASED 177% WHILE STOCK PRICE FELL 57% CEO pay has grown by 177.7% as the stock price declined by 56.6% over the last five years 5-Year Growth in CEO Compensation 177.7% 5-Year Growth in Stock Price -56.6% $6.1 M $5.4 M $12.55 $4.3 M $2.9 M $5.45 $2.0 M 2018 Pay 2019 Pay 2020 Pay 2021 Pay
Slide 126: CEO Pay Raises Regardless of Value Destruction
CEO RECEIVED PAY RAISES REGARDLESS OF STOCKHOLDER VALUE DESTRUCTION The failure in the Compensation program is that CEO pay rises regardless of declining and/or negative TSR Rising Pay amid declining and/or negative TSR $7.0 60.0% $6.1 M $5.4 M $5.0 $4.3 M 40.0% $2.9 M $3.0 $2.0 M 20.0% $1.0 $3.1 M
Slide 127: Misalignment of Pay and Performance: WisdomTree Is an Outlier
MISALIGNMENT OF PAY AND PERFORMANCE: WISDOMTREE IS AN OUTLIER WisdomTree is an outlier relative to peers in 5-year growth in CEO pay vs. 5-year Total Stockholder Return (TSR) 5-Year Growth in CEO Compensation 177.7% Outpaced growth in CEO Pay is misaligned with 5-Year TSR -51.7% negative TSR 200.0%
Slide 128: Misalignment of Pay and Performance
MISALIGNMENT OF PAY AND PERFORMANCE Significant pay increases have been associated with declines in and/or negative TSR CEO Pay vs. TSR Performance (Pay in Millions as reported) Effective compensation schemes 140.0% $7.0 consider TSR in a meaningful Pay increased by 208.8% while $6.1 way 120.0% TS
Slide 129: Poor Compensation Structure
POOR COMPENSATION STRUCTURE CEO pay has been weighted more heavily towards Cash than Equity, despite stockholder’s preference for majority equity (at-risk) pay schemes CEO Compensation Mix (Pay in Millions as reported) Stockholders prefer that CEO pay is weighted more heavily towards Equity than C
Slide 130: Poor Incentive Alignment
POOR INCENTIVE ALIGNMENT Annual incentives have been paid out above 100% despite negative and/or lagging annual TSR CEO Annual Bonus Payout vs. TSR Performance Receiving +100% of target payout when TSR is negative 156.4% 160.0% 136.7% When executives are rewarded with annual incentive payouts that
Slide 131: Poor Incentive Alignment
POOR INCENTIVE ALIGNMENT Components of Pay $6.1 The annual bonus is an unusually large $5.4 component of CEO pay at 39.2% on average $4.3 over the last five years 28.6% 54.8% $2.9 46.6% Stockholders prefer that the annual bonus at maximum equates to 3x salary, whereas in 2021 $2.0 43.7% 42.8% 36
Slide 132: ISS Recommended Against Say-on-Pay
POOR INCENTIVE ALIGNMENT Institutional Shareholder Services Inc. (“ISS”) has recommended stockholders vote AGAINST say-on- pay for two consecutive years 2022 The lack of disclosure of predetermined goals and targets coupled with the rampant use of Committee discretion to determine incentives, has
Slide 133: Poor Compensation Disclosure and Transparency
POOR COMPENSATION DISCLOSURE AND TRANSPARENCY Unlike most public companies, WisdomTree delays its reporting of long-term equity grants in its Summary Compensation Disclosure WisdomTree does not report the stock awards that Summary Compensation Disclosure correspond with the fiscal year in the Summ
Slide 134: Jonathan Steinberg's Big Compensation Plan
JONATHAN STEINBERG’S BIG COMPENSATION PLAN Instead of working constructively with stockholders, it appears Mr. Steinberg took steps to ensure that if his seat was challenged and lost, his windfall would be guaranteed Recently, the Board expanded the change of control provisions that Previous Defin
Slide 135: Jonathan Steinberg's Big Pay Plan (Contd.)
JONATHAN STEINBERG’S BIG PAY PLAN (CONTD.) What Mr. Steinberg stands to gain – and stockholders lose – with proper refreshment If the Board is refreshes with another candidate in 2024, Mr. Change in Control Payments1 Steinberg stands to gain over $4m in accelerated equity awards 2022 2023 Jonathan
Slide 136: Compensation Committee Has Been a Primary Enabler
THE COMPENSATION COMMITTEE HAS BEEN A PRIMARY ENABLER We believe the incumbent-controlled Compensation Committee has not only failed to align pay with performance, but has promoted management’s lack of accountability by driving excessive compensation growth amid extensive stockholder value destructi
Slide 137: Poorly Selected Peers: Executive Compensation
POORLY SELECTED PEERS: EXECUTIVE COMPENSATION In an effort to maximize Executive Pay and Conceal Underperformance, the Compensation Committee has pursued an overly complex process of selecting three peer groups with limited disclosure. Peer Group Proxy Peer Group Traditional Asset Manager Peer Group
Slide 138: Poorly Selected Peers: TSR Underperformance
POORLY SELECTED PEERS: TSR UNDERPERFORMANCE Despites the company’s best-efforts to select peers seemingly to conceal underperformance, WisdomTree has underperformed all peers in each of the last five years with the exception of 2022. As the 40 companies selected from the S&P US BMI Index was not dis
Slide 139: Poorly Selected Peers: Compensation Peer Group
POORLY SELECTED PEERS: THE COMPENSATION PEER GROUP Historically Wisdom Tree has selected outsized peers which inflates benchmarking and results in higher pay Peer Size Mutliples 5.0x 4.0x The majority peers selected in 2022 were: 3.0x Market Cap More than double the Company’s Revenue; and More t
Slide 140: Poorly Selected Peers: Compensation Peer Group
POORLY SELECTED PEERS: THE COMPENSATION PEER GROUP Additionally, many of the peers are not participants in the ETF space and thus lack relevance based on core business and focus 2022 Compensation Peer Group Core Business Relevant Peer Wisdom Tree Investments ETPs Sponsor/Investment Management -- All
Slide 141: Poorly Selected Peers: Traditional Asset Manager Peer Group
POORLY SELECTED PEERS: THE TRADITIONAL ASSET MANAGER PEER GROUP (THE TSR PEERS) The Traditional Asset Manager Peer Group used for TSR comparisons, far exceeds WisdomTree’s 5-year trading range, and the company still grossly underperformed. Peer Trading Range 5-Yr TSR $0 – $50 $50 – $300 $3
Slide 142: Our Nominees and Plan
OUR NOMINEES AND PLAN
Slide 143: Management-Proposed Board Lacks Critical Skills
THE MANAGEMENT-PROPOSED BOARD LACKS CRITICAL SKILLS WisdomTree continues to promote underqualified directors. Verify No Prior Non-Entrenched Prior ETF Issuer experience Tenure Prior Board Prior ETF Financial Services/ Stockholder Current Board Members Controversies (<10 Years (Years) Experience Is
Slide 144: ETFS Nominees
ETFS NOMINEES We believe our nominees have the requisite skills and experience to deliver real change, if elected. Nominee Experience Overview Core Skills • 21 years at Nasdaq overseeing and advising listed companies serving in several executive roles and retiring as Vice Chairman • Executive and St
Slide 145: Meet Our Nominees: Bruce Aust
MEET OUR NOMINEES: BRUCE AUST Bruce Aust retired from Nasdaq Inc. in October 2019 after 21 years. Before becoming Vice Chairman of Nasdaq, Aust served as Executive Vice President from 2003 to 2014. In this position, he led Nasdaq’s new listings, capital market business, global business development
Slide 146: Our Nominees Will Deliver Change: Tonia Pankopf
OUR NOMINEES WILL DELIVER CHANGE: TONIA PANKOPF Ms. Pankopf brings 28 years of investment experience in researching and valuing equity and debt corporate securities and managing capital market transactions for domestic and international public and private companies. She has held Vice President a
Slide 147: Our Nominees Can Deliver Change: Graham Tuckwell
OUR NOMINEES CAN DELIVER CHANGE: GRAHAM TUCKWELL Founder and Chairman of ETFS Capital Limited (2018 - present). Executive Chairman of ETF Securities Australia Limited (2019 – 2022). Under Mr. Tuckwell’s guidance, Assets under Management increased by 470%. Founder and CEO of ETF Securities Limi
Slide 148: We Urge Stockholders to Reject the Incumbent Slate
WE URGE STOCKHOLDERS TO REJECT THE INCUMBENT SLATE We believe the Incumbent Slate will not deliver the necessary change for WisdomTree stockholders. Frank Salerno Win Neuger Shamla Naidoo • Board Chair • Nominating and Governance • New Nominee • Compensation Committee Chair Committee Chair • Replace
Slide 149: The Choice Should Be Clear
THE CHOICE SHOULD BE CLEAR We believe the ETFS Capital slate will deliver a new sense of accountability to a board run by incumbents who have failed in their management oversight duties and lack the requisite leadership skills to foster good governance Incumbents ETFS Capital Nominees Competing Dire
Slide 150: Change Is Necessary
CHANGE IS NECESSARY Our commitment to WisdomTree is undeniable as having over $210m of capital invested in the Company’s stock, we are inherently tied to the company’s growth and prosperity. As pioneers in the ETF industry, we have attempted to share tried and tested ideas to help heal the busin
Slide 151: Vote for Real Change
VOTE FOR REAL CHANGE We urge stockholders to vote for real change on the Gold Proxy Card 1. For additional campaign details, visit www.WiseUpWT.com EXECUTIVE SUMMARY HOW WISDOMTREE FAILED FAILED CAPITAL ALLOCATION WT PRIME IS THE WRONG BET POOR GOVERNANCE TRACK RECORD POOR COMPENSATION OUR NOMINEES
Slide 152: Appendix
APPENDIX Confidential. May 18, 2023
Slide 153: Poor Governance: Minimal Expertise to Challenge Management
POOR GOVERNANCE: MINIMAL EXPERTISE TO CHALLENGE MANAGEMENT Experience matters, particularly when selecting a board of directors. In conversations with ETFS Capital, Mr. Salerno (Chairman) stated that ETF experience was not a pre-requisite to being on the Board, and that such expertise lies with ma
Slide 154: Three-Year TSR Focus Is Disingenuous
APPENDIX: WISDOMTREE’S FOCUS ON THREE-YEAR TSR IS DISINGENUOUS. IT IGNORES THE COMPANY’S LONG TERM UNDERPERFORMANCE WHILE USING A LOW POINT IN HISTORY (POST-COVID) TO CALCULATE RETURNS WT’s share price fell 30% vs 15% for its peers (Feb. 1 ,2020 to April 28, 2020) WT’s 3-Yr TSR is based on April 28,
Slide 155: Stockholder Involvement Responsible for Recent Board Changes
STOCKHOLDER INVOLVEMENT RESPONSIBLE FOR RECENT BOARD CHANGES 2018 J. Steinberg F. Salerno A. Bossone W. Neuger M. Steinhardt B. Lavine S. Begleiter B. Shea (CEO) 1988 (Chair) 2005 2009 2013 2004 2007 2011 Joined April 2018 2019 Prior to the ETFS Capital becoming a M. Steinhardt Retired Oct 2019 S.
Slide 156: Addressing WisdomTree's Claims About Prior Litigation Against ETFS Capital
ADDRESSING WISDOMTREE’S CLAIMS ABOUT PRIOR LITIGATION AGAINST ETFS CAPITAL Summary of facts ETFS Capital (previously ETF Securities) and Mr. Tuckwell were involved in litigation in the Royal Courts of Jersey in 2020 (Channel Islands). ETFS Capital was at this time (and still remains) a private,