LPL Financial Holdings
LPL Financial Holdings Inc. (Form: DEF 14A, Received: 04/11/2017 08:32:18)
UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of 
the Securities Exchange Act of 1934 (Amendment No.          )
 
Filed by the Registrant   x
Filed by a Party other than the Registrant   o
Check the appropriate box:
o     Preliminary Proxy Statement
o     Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x    Definitive Proxy Statement
o     Definitive Additional Materials
o     Soliciting Material under §240.14a-12 
 
LPL Financial Holdings Inc.
 
(Name of Registrant as Specified In Its Charter)
 
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
x
 
No fee required.
o
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 
(1)
 
Title of each class of securities to which transaction applies: 
 
 
(2)
 
Aggregate number of securities to which transaction applies: 
 
 
(3)
 
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): 
 
 
(4)
 
Proposed maximum aggregate value of transaction: 
 
 
(5)
 
Total fee paid: 
o
 
Fee paid previously with preliminary materials.
o
 
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
 
(1)
 
Amount Previously Paid: 
 
 
(2)
 
Form, Schedule or Registration Statement No.: 
 
 
(3)
 
Filing Party: 
 
 
(4)
 
Date Filed: 




 
 
 
 
 
LPLLOGO541LARGEBLUE17.JPG
 
 
Notice of Annual Meeting
of Stockholders &
2017 Proxy Statement

Member FINRA/SIPC


LPLLOGO541LARGEBLUE17.JPG
75 State Street, Boston, MA 02109-1827 

April 11, 2017

Dear Fellow Stockholders:
It is my pleasure to invite you to attend the 2017 Annual Meeting of Stockholders of LPL Financial Holdings Inc. The meeting will be held on Wednesday , May 17, 2017 , at 12:00 p.m. , local time, at our offices located at 75 State Street, Boston, Massachusetts 02109. Holders of record of our common stock as of March 20, 2017 are entitled to notice of and to vote at the 2017 Annual Meeting.
The Notice of Annual Meeting of Stockholders and the proxy statement that follow describe the business to be conducted at the meeting.
If you were a stockholder of record as of March 20, 2017, you will receive a printed copy of the proxy card by mail, and you may mark, date, sign, and mail the proxy card in the envelope provided, or vote over the Internet or by telephone. You will find voting instructions in the proxy statement and on the proxy card.
YOUR VOTE IS VERY IMPORTANT. PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
You are welcome to attend the annual meeting. However, even if you plan to attend, please vote your shares promptly to ensure they are represented at the meeting. If you decide to attend the meeting and wish to change your proxy, you may do so automatically by voting in person at the meeting.
We ask you to RSVP if you intend to attend the annual meeting. Please refer to page 1 of the accompanying proxy statement for further information concerning attendance at the annual meeting.
On behalf of the Board of Directors, I thank you for your continued support of LPL Financial Holdings Inc.
 
 
Sincerely,
 
 
CHAIRSIGNATURE17.JPG
 
 
James S. Putnam
Chair




LPLLOGO541LARGEBLUE17.JPG
75 State Street, Boston, MA 02109-1827 
Notice of Annual Meeting of Stockholders
 
 
Time and Date
12:00 p.m., local time, on Wednesday, May 17, 2017
 
 
Location
LPL Financial Holdings Inc.
75 State Street
Boston, Massachusetts 02109
 
 
Items of Business
(1) Elect the nine nominees named in the proxy statement to the Board of Directors of LPL Financial Holdings Inc. (the “Company”);
(2) Ratify the appointment of Deloitte & Touche LLP by the Audit Committee of the Board of Directors as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017;
(3) Hold an advisory vote on executive compensation;
(4) Hold an advisory vote on the frequency of future executive compensation advisory votes; and
(5) Consider and act upon any other business properly coming before the 2017 annual meeting of stockholders (the “Annual Meeting”) and at any adjournment or postponement thereof.
 
 
Record Date
Stockholders of record as of 5:00 p.m. Eastern Time on March 20, 2017 (the “Record Date”) will be entitled to vote at the Annual Meeting and any postponements or adjournments thereof.
Information relating to the matters to be considered and voted on at the Annual Meeting is set forth in the proxy statement accompanying this Notice.
Cameras and electronic recording devices are not permitted at the Annual Meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SUBMIT YOUR PROXY BY FOLLOWING THE INSTRUCTIONS SET FORTH IN THE FOLLOWING MATERIALS. YOU MAY VOTE YOUR SHARES AND SUBMIT A PROXY THROUGH THE INTERNET OR BY TELEPHONE AS DESCRIBED HEREIN OR BY SIGNING AND RETURNING A PROXY CARD.
 
 
By Order of the Board of Directors,
 
 
SECRETARYSIGNATURE17.JPG
 
 
Gregory M. Woods
Secretary
Boston, Massachusetts 
April 11, 2017
THE PROXY STATEMENT AND THE FORM OF PROXY ARE FIRST BEING SENT OR GIVEN TO STOCKHOLDERS ON OR ABOUT APRIL 17, 2017.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 17, 2017 : THE PROXY STATEMENT, THE PROXY CARD, AND LPL FINANCIAL HOLDINGS INC.’S 2016 ANNUAL REPORT ON FORM 10-K ARE AVAILABLE AT WWW.LPL.COM.



Proxy Statement Summary
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.
2017 Annual Meeting of Stockholders
 
 
Time and Date
12:00 p.m., local time, on Wednesday, May 17, 2017
 
 
Location
LPL Financial Holdings Inc. (the “Company”)
75 State Street
Boston, Massachusetts 02109
 
 
Record Date
5:00 p.m. Eastern Time on March 20, 2017
 
 
Voting
Shareholders as of the Record Date are entitled to one vote per share on each matter to be voted upon at the Annual Meeting.
 
 
Entry
Everyone attending the Annual Meeting will be required to present both proof of ownership of the Company’s common stock and valid picture identification, such as a driver’s license or passport. If your shares are held in the name of a bank, broker, or other holder of record, you will need a recent brokerage account statement or letter from your bank, broker, or other holder reflecting stock ownership as of the Record Date. If you do not have both proof of ownership of the Company’s common stock and valid picture identification, you may not be admitted to the Annual Meeting.
 
 
Voting Proposals
Proposal
Board Recommendation
Page Reference
Proposal 1: Election of Directors
FOR all nominees
Proposal 2: Ratification of the Appointment of Deloitte & Touche LLP by the Audit Committee of the Board of Directors as Our Independent Registered Public Accounting Firm
FOR
Proposal 3: Advisory Vote on Executive Compensation
FOR
Proposal 4: Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation
EVERY YEAR


LPLLOGO541LARGEBLUE17.JPG
Table of Contents



Table of Contents
General Information About Corporate Governance and the Board of Directors
Proposal 4: Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation
 
 



LPLLOGO541LARGEBLUE17.JPG
General Information


LPL FINANCIAL HOLDINGS INC.
Proxy Statement
2017 Annual Meeting of Stockholders
General Information
Introduction
This proxy statement and the accompanying Notice of Annual Meeting of Stockholders are being furnished to the holders of common stock, $0.001 par value per share (the “Common Stock”), of LPL Financial Holdings Inc., a Delaware corporation (the “Company”), in connection with the solicitation of proxies on behalf of the board of directors of the Company (the “Board” or the “Board of Directors”) for use at the 2017 annual meeting of stockholders (the “Annual Meeting”) and any adjournment or postponement thereof. The Annual Meeting will be held on Wednesday , May 17, 2017 , at the offices of LPL Financial Holdings Inc., 75 State Street, Boston, Massachusetts 02109 at 12:00 p.m. , local time.
 
 
 
 
Stockholders who wish to attend the Annual Meeting in person must follow the instructions under the section below entitled “Attending the Annual Meeting.”
 
 
 
 
The Company expects to mail this proxy statement and the accompanying proxy to its stockholders on or about April 17, 2017. The Company's 2016 annual report on Form 10-K (the "Annual Report"), including financial statements audited by Deloitte & Touche LLP, its independent registered public accounting firm, is being sent to each of the Company's stockholders simultaneously with this proxy statement. The notice of Annual Meeting, this proxy statement, the Annual Report and the proxy card are also available on the Internet at www.envisionreports.com/LPLA. This web site does not use "cookies" to track or identify visitors to the web site.
As a stockholder of the Company as of 5:00 p.m. Eastern Time on March 20, 2017 (the “Record Date”), you are invited to attend the Annual Meeting and are entitled to and requested to vote on the items of business described in this proxy statement.
 
Record Date, Shares Outstanding, and Quorum
On the Record Date, there were 90,846,421 outstanding shares of Common Stock. Only stockholders of record as of the Record Date will be entitled to vote at the Annual Meeting. A list of stockholders of record entitled to vote will be available at the meeting. In addition, you may contact our corporate secretary, at our address as set forth above, to make arrangements to review a copy of the stockholder list at our offices, for any purpose germane to the meeting, between the hours of 9:00 a.m. and 5:00 p.m., local time, on any business day from May 3, 2017 up to the time of the Annual Meeting.
The presence in person or by proxy of a majority of shares of Common Stock outstanding and entitled to vote at the Annual Meeting will constitute a quorum at the Annual Meeting. Both abstentions and broker non-votes will be counted as present in determining the presence of a quorum. A “broker non-vote” is a proxy from a broker or other nominee indicating that such person has not received instructions from the beneficial owner on a particular matter with respect to which the broker or other nominee does not have discretionary voting power. Brokers have the discretion to vote their clients’ proxies only on routine matters. At our Annual Meeting, only the ratification of our auditors is a routine matter. Each share of Common Stock is entitled to one vote.
Attending the Annual Meeting
We invite all stockholders to attend the Annual Meeting. If you are a record holder of our Common Stock, which means that your shares are represented by ledger entries in your own name directly registered with our transfer agent, Computershare Shareowner Services, you must bring valid picture identification with you to the Annual Meeting to allow us to verify your ownership. If your Common Stock is held in “street name,” which means that the shares are held for your benefit in the name of a broker, bank, or other intermediary, you must bring a brokerage account statement or letter from your broker, bank, or other intermediary reflecting stock ownership in order to be admitted to the Annual Meeting.

2017 Proxy Statement | 1

LPLLOGO541LARGEBLUE17.JPG
General Information


Please note that if you hold your Common Stock in street name, you may not vote your shares in person unless you obtain a legal proxy from your broker, giving you the right to vote the shares at the Annual Meeting.If you do not have both proof of ownership of Common Stock and valid picture identification, you may not be admitted to the Annual Meeting .
 
 
 
 
 
If you plan to attend the Annual Meeting, please be sure to RSVP via email to lplfinancialannualmeeting@lpl.com. Please include your name and phone number in your response. A confirmation, including driving directions and additional meeting information, will be emailed to registered participants.
 
 
 
 
 
 
 
 
 
 
Items of Business to be Voted upon at Annual Meeting
 
 
 
n
To elect all of the nine nominees named in this proxy statement to the Board of Directors for a one-year term
 
 
 
n
To ratify the appointment of Deloitte & Touche LLP by the Audit Committee of the Board of Directors as our independent registered public accounting firm for the fiscal year ending December 31, 2017;
 
 
 
n
To hold an advisory vote on executive compensation;
 
 
 
n
To hold an advisory vote on the frequency of future executive compensation advisory votes; and
 
 
 
n
To consider and act upon any other business properly coming before the Annual Meeting and at any adjournment or postponement thereof.
 
 
 
 
 
 
Manner of Voting
If you are a record holder of our Common Stock, you may vote in one of the following ways:
:
By Internet:    by following the Internet voting instructions included in the proxy card at any time up until 11:59 p.m., Eastern Time, on May 16, 2017 .
+
By Mail:    by marking, dating, and signing your printed proxy card (if received by mail) in accordance with the instructions on it and returning it by mail in the pre-addressed reply envelope provided with the proxy materials for receipt prior to the Annual Meeting.
 
(
By Telephone:    by following the telephone voting instructions included in the proxy card at any time up until 11:59 p.m., Eastern Time, on May 16, 2017 .
I
In Person:     by voting your shares in person at the Annual Meeting (if you satisfy the admission requirements, as described above). Even if you plan to attend the Annual Meeting, we encourage you to vote in advance by Internet, telephone, or mail so that your vote will be counted in the event you later decide not to attend the Annual Meeting.

2 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
General Information


 
 
 
 
If your shares are held in street name through a broker, bank, or other intermediary, your broker, bank, or other intermediary should give you instructions for voting your shares. In these cases, you may vote by Internet, telephone, or mail, as instructed by your broker, bank, or other intermediary. You may also vote in person if you obtain a legal proxy from your broker, giving you the right to vote the shares at the Annual Meeting.
 
 
 
 
Shares of Common Stock represented by properly executed proxy cards received by the Company in time for the meeting will be voted in accordance with the instructions specified in the proxies. If you submit a proxy but do not indicate any voting instructions, your shares will be voted “FOR” the election as a director of each nominee named in this proxy
 
statement; “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm; “FOR” the proposal regarding an advisory vote on executive compensation; and “EVERY YEAR for the advisory vote on the frequency of future executive compensation advisory votes.
Our management and Board of Directors know of no other matters to be brought before the Annual Meeting. If other matters are properly presented to the stockholders for action at the Annual Meeting or any adjournments or postponements thereof, it is the intention of the proxy holders named in the proxy card to vote in their discretion on all matters on which the shares of Common Stock represented by such proxy are entitled to vote.
Voting Requirements
 
 
 
 
 
 
Proposal One—Election of Directors
 
 
Our bylaws provide that a nominee for director will be elected if the number of votes properly cast “for” such nominee’s election exceeds the number of votes properly cast “against” such nominee’s election; however, if the number of persons properly nominated for election to the Board of Directors exceeds the number of directors to be elected, the directors will be elected by the plurality of the votes properly cast. A vote to abstain or a broker non-vote will have no direct effect on the outcome of the election of directors.
 
 
 
 
 
 
 
 
 
 
 
 
Proposal Two—Ratification of Appointment of Deloitte & Touche LLP
 
 
The proposal to ratify the appointment of Deloitte & Touche LLP will be determined by a majority of the votes cast on the matter affirmatively or negatively in person or by proxy at the Annual Meeting. A vote to abstain or a broker non-vote will have no direct effect on the outcome of the proposal.
 
 
 
 
 
 
 
 
 
 
 
 
Proposal Three—Advisory Vote on Executive Compensation
 
 
Because the proposal to approve, on an advisory basis, the compensation awarded to named executive officers for the fiscal year ended December 31, 2016 is a non-binding, advisory vote, there is no required vote that would constitute approval. The vote is advisory and non-binding in nature but our Compensation and Human Resources Committee (the “Compensation Committee”) will take into account the outcome of the vote when considering future executive compensation arrangements. A vote to abstain or a broker non-vote will have no direct effect on the outcome of the proposal.
 
 
 
 
 
 
 
 
 
 
 
 
Proposal Four—Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation
 
 
Because the proposal to approve, on an advisory basis, the frequency of future advisory votes on executive compensation is a non-binding, advisory vote, there is no required vote that would constitute approval. The vote is advisory and non-binding in nature but our Compensation Committee will take into account the outcome of the vote when determining the frequency of future advisory votes on executive compensation. A vote to abstain or a broker non-vote will have no direct effect on the outcome of the proposal.
 
 
 
 
 
 

2017 Proxy Statement | 3

LPLLOGO541LARGEBLUE17.JPG
General Information


Revocation of Proxies
If you submit a proxy, you are entitled to revoke your proxy at any time before it is exercised in one of the following ways: by attending the Annual Meeting and voting in person, by submitting a duly executed proxy bearing a later date, or by sending written notice of revocation to our corporate secretary at LPL Financial Holdings Inc., 75 State Street, Boston, Massachusetts 02109. A stockholder of record who voted through the Internet or by telephone may also change his or her vote with a timely and valid later Internet or telephone vote, as the case may be. Any stockholder of record as of the Record Date attending the Annual Meeting may vote in person whether or not a proxy has previously been given, but the presence (without further action) of a stockholder at the Annual Meeting will not constitute revocation of a previously given proxy. If you hold your shares in street name and would like to change your voting instructions, please follow the instructions provided to you by your broker, bank, or other intermediary.
Solicitation of Proxies
The Board of Directors of LPL Financial Holdings Inc. is soliciting proxies. Copies of proxy materials and the Annual Report will be supplied to brokers, dealers, banks and voting trustees, or their nominees, for the purpose of soliciting proxies from beneficial owners, and we will reimburse such record holders for their reasonable expenses. Stockholders who elect to vote through the Internet or by telephone may incur costs such as telecommunication and internet access charges for which the stockholder is solely responsible. The telephone and Internet voting facilities for stockholders of record will close at 11:59 p.m. Eastern Time on May 16, 2017 . The Company will otherwise pay the expenses of solicitation of proxies.
 
Householding
Only one copy of the proxy statement and Annual Report is being delivered to multiple stockholders sharing an address, unless we have received contrary instructions from one or more of the stockholders. We will undertake to deliver promptly, upon written or oral request, a separate copy of the proxy statement and/or Annual Report to a stockholder at a shared address to which single copies of the proxy statement and Annual Report were delivered. You may make a written or oral request by sending a written notification to our corporate secretary at LPL Financial Holdings Inc., 75 State Street, Boston, Massachusetts 02109, or by calling our offices at (617) 423-3644, extension 0, and providing your name, your shared address, and the address to which we should direct the additional copies of the proxy statement and Annual Report. Multiple stockholders sharing an address who have received one copy of the proxy statement and Annual Report and would prefer us to mail each stockholder a separate copy of future mailings should contact us at the address or telephone number above. Additionally, if current stockholders with a shared address received multiple copies of the proxy statement and Annual Report and would prefer us to mail one copy of future mailings to stockholders at the shared address, please notify us at the address or telephone number above.

4 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
General Information About Corporate
Governance and the Board of Directors

General Information About Corporate Governance and the Board of Directors
We believe that good corporate governance is important to ensure that we are managed for the long-term benefit of our stockholders. In support of that philosophy, we have adopted many leading corporate governance practices, including those summarized below and elsewhere in this proxy statement.
BOARD PRACTICES
Independence
A majority of our directors must be independent. Currently, all of our directors other than our chief executive officer are independent, and all of our committees consist exclusively of independent directors.
Non-executive Chair
We currently separate the offices of chair of the Board and chief executive officer of the Company. The current chair of our Board, James S. Putnam, is an independent director.
Director Tenure Policies
It is our policy that any director who begins service after January 1, 2014 and reaches the age of 75 will retire effective at the end of his or her term. In addition, a director is required to offer to tender his or her resignation for consideration by the Board upon retirement from or any change in the principal occupation or principal background association held when such director originally joined the Board.
Director Overboarding Policy
Any director who is not serving as chief executive officer of a public company is expected to serve on no more than four public company boards (including our Board), and any director serving as chief executive officer of a public company is expected to serve on no more than three public company boards (including the board of his or her own company).
Committee Membership
The Board appoints members of its committees on an annual basis, with the Nominating and Governance Committee reviewing and recommending committee membership.
Board Self-evaluations
The Board conducts an annual of evaluation of its performance, operations, size and composition, with the Nominating and Governance Committee overseeing the evaluation process, which also encompasses the Board’s committees.
Board Refreshment
Our Board’s composition represents a balanced approach to director tenure, allowing the Board to benefit from the experience of longer-serving directors combined with fresh perspectives from newer directors. We have added five independent directors since 2013, including the new nominee we are recommending for election at the Annual Meeting.
Diversity of Relevant Experiences
Our goal is a balanced and diverse Board, with members whose skills, background and experience are complementary and, together, cover the spectrum of areas that impact our business.
Annual Management Succession Planning Review
Our Board and the Compensation Committee conduct an annual review of management development and succession planning.
STOCKHOLDER RIGHTS
Annual Election of Directors
All directors are elected annually, which reinforces our Board’s accountability to our stockholders.
Majority Voting Standard for
Director Elections
Our bylaws mandate that directors be elected under a “majority voting” standard in uncontested elections. Any director who does not receive more votes “for” his or her election than votes “against” must tender his or her resignation and, if our Board accepts the resignation, step down from our Board.
Single Voting Class
LPL Financial Holdings Inc.’s common stock is the only class of voting shares outstanding.
COMPENSATION PRACTICES
Follow Leading Practices
See “ Compensation Discussion and Analysis—Compensation Policies and Practices .” Beginning in 2017, we have incorporated performance-based awards into our long term equity incentive program for executive officers.

2017 Proxy Statement | 5

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


Proposal 1: Election of Directors
As of April 11, 2017 , our Board of Directors consisted of nine directors: eight independent directors and our chief executive officer. One of our directors, John J. Brennan, requested that the Board not nominate him to stand for re-election at the Annual Meeting.
As previously reported, Mark S. Casady retired as chair of the Board and a director effective March 3, 2017. The Board appointed James S. Putnam as chair of the Board effective upon Mr. Casady’s retirement. Our current chief executive officer, Dan H. Arnold, was appointed to the Board on January 3, 2017 upon Mr. Casady’s retirement as our chief executive officer.
Based on the recommendation of the nominating and governance committee of the Board (the “Nominating and Governance Committee”), our Board has selected William F. Glavin, Jr. as a new nominee to stand for election at the Annual Meeting. Accordingly, nine director nominees are standing for election at the Annual Meeting, each of whom has been nominated by our Board based on the recommendation of the Nominating and Governance Committee. Each director nominee would hold office until our annual meeting of stockholders in 2018 and until his or her respective successor has been elected.
The Nominating and Governance Committee conducts an annual evaluation of, among other things, the Board’s size, composition, and performance, in connection with our ongoing efforts to ensure that the Board has the appropriate mix of expertise, skills, perspectives, and competencies. In discussing these matters, the Board considered whether to nominate an additional director.
In doing so, the Board evaluated candidates according to the principles set forth in the corporate governance guidelines applicable to the Company (the “Corporate Governance Guidelines”). The Board sought an individual with an established record of significant experience in our industry and accomplishments in areas relevant to our strategies. Further, the Board looked for a candidate with integrity, independence of thought and judgment, forthrightness, analytical skills, and a commitment to the Company and the interests of all stockholders. In addition, the Board expects any additional director to satisfy the equity ownership guidelines applicable to non-employee directors and to demonstrate the ability to devote significant time and attention to our Board.
 
As part of the process of considering Mr. Glavin as a potential nominee to the Board, members of the Board met with Mr. Glavin both in person and telephonically. After the course of this evaluation process, the Nominating and Governance Committee determined that Mr. Glavin’s background, skills, and industry experience, among other factors, would make him a valuable addition to our Board.
As described in detail below, all our nominees have considerable professional and business expertise. The recommendation of our Board of Directors is based on its carefully considered judgment that the experience, qualifications, attributes, and skills of our nominees qualify them to serve on our Board of Directors.
If any of our nominees is unable or unwilling to serve on our Board of Directors, the shares represented by your proxy will be voted for the election of such other person as may be nominated by our Board of Directors. In addition, in full compliance with all applicable state and federal laws and regulations, we will file an amended proxy statement and proxy card that, as applicable, (1) identifies the alternate nominee(s), (2) discloses that any such nominee has consented to being named in the revised proxy statement and to serve if elected, and (3) includes the disclosure required by Item 7 of Schedule 14A with respect to any such nominee. We know of no reason why any nominee would be unable or unwilling to serve. All nominees have consented to be named in this proxy statement and to serve if elected.
Director Qualifications and Experience
We seek a Board that, as a whole, possesses the experiences, skills, backgrounds, and qualifications appropriate to function effectively in light of the Company’s current and evolving business circumstances. It is the policy of the Board that directors should possess strong personal and professional ethics, integrity, and values; be business savvy and genuinely interested in the Company; and be committed to representing the long-term interests of our stockholders. Although we do not have a formal policy regarding diversity, our goal is a balanced and diverse Board, with members whose skills, background and experience are complementary and, together, cover the spectrum of areas that impact our business.

6 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


Since 2013, our Board of Directors will have added five new independent directors: Anne M. Mulcahy, H. Paulett Eberhart, Viet D. Dinh, Marco (“Mick”) W. Hellman, and William F. Glavin, Jr., with Mr. Glavin being nominated for election at this Annual Meeting. Through the addition of these directors, the Board of Directors gains seasoned leaders, as well as particularly relevant experience related to our industry, strategic planning, oversight and execution, business innovation, technology, accounting, risk management, legal affairs, and government matters. The addition of these directors also reflects our balanced approach to director tenure, allowing the Board to benefit from the experience of longer-serving directors as well as fresh perspectives from newer directors:
Tenure on Board
Number of
Director Nominees
More than 9 years
3
Less than 6 years
6
The average tenure for our director nominees is five years.
 
Policy with Respect to the Consideration of Director Candidates Recommended or Nominated by Stockholders
The Nominating and Governance Committee will consider director candidates recommended by stockholders in accordance with our bylaws. For a stockholder to make any nomination for election to the Board of Directors at an annual meeting, the stockholder must provide notice and certain information about the recommending stockholder and the nominee to the Company, which notice must be delivered to, or mailed and received at, the Company’s principal executive offices:
(i)
no later than the close of business on the 90 th calendar day nor earlier than the close of business on the 120 th calendar day, prior to the anniversary date of the prior year’s annual meeting; or
(ii)
if there was no annual meeting in the prior year or if the date of the current year’s annual meeting is more than 30 days before or after the anniversary date of the prior year’s annual meeting, on or before 10 days after the day on which the date of the current year’s annual meeting is first disclosed in a public announcement.
Submissions must be in writing and addressed to the Nominating and Governance Committee, care of the Company’s corporate secretary. Electronic submissions will not be considered.

2017 Proxy Statement | 7

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


Board of Director Nominees
The name, age, and a description of the business experience, principal occupation, and past employment and directorships of each of the nominees during the last five years are set forth below. In addition, we have summarized the particular experience, qualifications, attributes, and skills that led the Board of Directors, including our Nominating and Governance Committee, to determine that each nominee should serve as a director.
 
 
 
 
 
Dan H. Arnold
BACKGROUND
 
 
 
 
Age 52
Director Since 2017
Mr. Arnold has served as our chief executive officer and a director since January 2017. Mr. Arnold has served as our president since March 2015, with responsibility for our primary client-facing functions and long-term strategy for growth. Mr. Arnold served as our chief financial officer from November 2012 to March 2015 and was responsible for formulating financial policy, leading our capital management efforts, and ensuring the effectiveness of the organization’s financial functions. Prior to 2012, he was managing director, head of strategy, with responsibility for long-term strategic planning for the firm, product and platform development, and strategic investments, including acquisitions. He has also served as divisional president of our Institution Services business. Mr. Arnold joined the Company in January 2007 following our acquisition of UVEST Financial Services Group, Inc., a broker-dealer and investment adviser that provided services to banks, credit unions, and other financial institutions. Prior to joining us, Mr. Arnold worked at UVEST for 13 years, serving most recently as president and chief operating officer. Mr. Arnold earned a B.S. in electrical engineering from Auburn University and holds an M.B.A. in finance from Georgia State University.
 
 
 
 
 
QUALIFICATIONS
 
 
 
 
 
Mr. Arnold’s pertinent qualifications include his unique perspective and insights into our operations as our current president and chief executive officer, including knowledge of our business relationships, competitive and financial positioning, senior leadership, and strategic opportunities and challenges; operating, business and management experience as the chief financial officer, president, and now chief executive officer of a public company; and expertise in the financial industry and in particular brokerage and investment advisory services.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
None
Past 5 Years
Optimum Fund Trust
 
 
 
 
 
 
 
 
 

8 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


 
 
 
 
 
Viet D. Dinh
BACKGROUND
 
 
 
 
Age 49
Director Since 2015
Independent
Mr. Dinh is a partner of Kirkland & Ellis LLP, a global law firm. From 2003 to September 2016, Mr. Dinh was a partner of Bancroft PLLC, a law and strategic consulting firm that he founded. He was appointed Associate Professor of Law in 1996, Professor of Law in 2001, and Professorial Lecturer in Law and Distinguished Lecturer in Government in 2014 at Georgetown University, where he specializes in corporations and constitutional law. In addition, he has acted as General Counsel and Corporate Secretary of Strayer Education, Inc., an education services holding company, since 2010 through Strayer’s engagement of Bancroft PLLC and Kirkland & Ellis LLP. Mr. Dinh received his A.B. from Harvard College and his J.D. from Harvard Law School, where he was a Class Marshal and an Olin Research Fellow in Law and Economics.
 
Committees
Nominating and Governance Committee (Chair)
 
 
 
QUALIFICATIONS
 
 
 
 
 
Mr. Dinh’s pertinent qualifications include his legal expertise, particularly in matters of corporate law, and broad experience in counseling corporations and their leaders on a range of transactional, compliance and corporate governance issues; representation of numerous boards, committees and independent directors of public companies; strong ties to Washington, D.C. and contacts within the U.S. government, which are helpful in light of the highly regulated nature of our industry and our advocacy efforts; and corporate governance expertise, underscored by his current and former service on the boards and committees of other public companies.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
Revlon, Inc.
Twenty-First Century Fox, Inc.
Past 5 Years
None
 
 
 
 
 
 
 
 
 

2017 Proxy Statement | 9

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


 
 
 
 
 
H. Paulett Eberhart
BACKGROUND
 
 
 
 
Age 63
Director Since 2014
Independent
Ms. Eberhart currently serves as chair and chief executive officer of HMS Ventures, a privately-held business involved with technology services and the acquisition and management of real estate. From January 2011 through March 2014, she served as president and chief executive officer of CDI Corp. (“CDI”), a provider of engineering and information technology outsourcing and professional staffing services, and served as an advisor to CDI until December 2014. Ms. Eberhart also served as chair and chief executive officer of HMS Ventures from January 2009 until January 2011. She served as president and chief executive officer of Invensys Process Systems, Inc. (“Invensys”), a process automation company, from January 2007 to January 2009. From 1978 to 2004, she was an employee of Electronic Data Systems Corporation (“EDS”), an information technology and business process outsourcing company, and held roles of increasing responsibility over time, including senior level financial and operating roles at the company, including as president of Americas of EDS from 2003 until March 2004 and senior vice president of EDS and president of solutions consulting from 2002 to 2003. She is a Certified Public Accountant and received her B.S. from Bowling Green State University.
 
Committees
Audit Committee
 
 
 
QUALIFICATIONS
 
 
 
 
 
Ms. Eberhart’s pertinent qualifications include her wealth of accounting and financial experience, as well as managerial experience, through her numerous years of service as an executive officer for EDS, Invensys and CDI, as well as various other operating and financial positions during her 26 years at EDS; strong knowledge of the intersection of technology, data and finance industries ; and knowledge and experience gained through her service on the boards of other public companies, including risk oversight experience in chairing the governance and risk committee of the board of directors of Anadarko Petroleum Corporation and financial oversight experience in chairing the audit committee of Ciber Corporation.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
Anadarko Petroleum Corporation
Ciber Corporation
Valero Corporation
Past 5 Years
Cameron International Corporation
 
 
 
 
 
 
 
 
 

10 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


 
 
 
 
 
William F. Glavin Jr.
BACKGROUND
 
 
 
 
Age 58
Director Nominee
Independent
Mr. Glavin served as chair of OppenheimerFunds, Inc., a global asset management firm (“OppenheimerFunds”), from 2009 until 2015, as chief executive officer from 2009 until 2014, and as president from 2009 until 2013. OppenheimerFunds is a majority owned subsidiary of MassMutual Financial Group (“MassMutual”), a mutual life insurance company, at which Mr. Glavin held several senior executive positions prior to joining OppenheimerFunds. He served as co-chief operating officer of MassMutual from 2007 to 2008, executive vice president, U.S. Insurance Group of MassMutual from 2006 to 2008, president and chief executive officer of Babson Capital Management LLC, an asset management firm and subsidiary of MassMutual, from 2005 until 2006 and chief operating officer of Babson from 2003 to 2005. Prior to joining MassMutual, Mr. Glavin was president and chief operating officer of Scudder Investments, an asset management firm, from 2000 to 2003. Mr. Glavin serves as a director of MM Asset Management Holding LLC and Barings LLC, which are subsidiaries of MassMutual. Mr. Glavin received his B.A. in Economics and Accounting from The College of Holy Cross.
 
 
 
 
 
QUALIFICATIONS
 
 
 
 
 
Mr. Glavin’s pertinent qualifications include his experience over the course of a 25-year career in the financial services industry, including as a chief executive officer and chief operating officer; extensive experience in strategic planning and talent management, in part based on his success in leading Oppenheimer through a period of significant market turbulence; a deep understanding of financial product distribution, compliance and operations, including technology demands in the financial services industry; and experience overseeing broker-dealers, including MassMutual's broker-dealer MML Investor Services, LLC.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
None
Past 5 Years
None
 
 
 
 
 
 
 
 
 


2017 Proxy Statement | 11

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


 
 
 
 
 
Marco (Mick) W. Hellman
BACKGROUND
 
 
 
 
Age 55
Director Since 2016
Independent
Mr. Hellman is the managing member, founder and managing partner of HMI Capital, LLC (“HMI Capital”), a private investment firm. Mr. Hellman founded HMI Capital in November 2008. Since 2009, he has also served as a senior advisor to Hellman & Friedman, a private equity firm. Previously, Mr. Hellman held various positions at Hellman & Friedman, including managing director and member of the investment committee. Between 1999 and 2009, Mr. Hellman served as chair of the board of directors of Blackbaud, Inc., a publicly traded software company listed on the NASDAQ. Mr. Hellman holds a B.A. from the University of California at Berkeley and an M.B.A. from Harvard University.
 
 
 
 
 
QUALIFICATIONS
 
 
 
 
 
Mr. Hellman’s pertinent qualifications include his high level of financial literacy and investor orientation gained through his extensive investment experience, including his roles at HMI Capital and Hellman & Friedman; knowledge and experience gained through his service on other boards; expertise in the financial services industry, based on his over 25 years of experience in the sector; and experience in the technology industry, based on his almost 20 years of experience in the sector and his time as board chair at Blackbaud, Inc., a publicly traded software company.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
None
Past 5 Years
None
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Anne M. Mulcahy
BACKGROUND
 
 
 
 
Age 64
Director Since 2013
Independent
Ms. Mulcahy served as chair of the board of trustees of Save The Children Federation, Inc., a non-profit organization dedicated to creating lasting change in the lives of children throughout the world, from March 2010 to February 2017. She previously served as chair of the board of Xerox Corporation (“Xerox”), a global business services and document technology provider, from January 2002 to May 2010, and chief executive officer of Xerox from August 2001 to July 2009. Prior to serving as a chief executive officer, Ms. Mulcahy was president and chief operating officer of Xerox. Ms. Mulcahy received a B.A. from Marymount College of Fordham University.
 
Committees
Compensation Committee (Chair)
Nominating and Governance Committee
 
 
 
QUALIFICATIONS
 
 
 
 
 
Ms. Mulcahy’s pertinent qualifications include her extensive experience in all areas of business management and strategic execution as she led Xerox through a transformational turnaround; valuable insights into organizational and operational management issues, including business innovation, financial management and talent development; and leadership roles in business trade associations and public policy activities, which provide the Board of Directors with additional expertise in the area of organizational effectiveness.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
Graham Holdings Company
Target Corporation
Johnson & Johnson
Past 5 Years
None
 
 
 
 
 
 
 
 
 

12 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


 
 
 
 
 
James S. Putnam
BACKGROUND
 
 
 
 
Age 62
Director Since 2005
Independent
Mr. Putnam has served as chair of the Board of Directors since March 2017 and served as our lead director from June 2016 until March 2017. Mr. Putnam has been the chief executive officer of Global Portfolio Advisors (“GPA”), formerly a global brokerage clearing services provider that sold substantially all of its operations in 2014, since September of 2004. Mr. Putnam has served on the board of directors of GPA since 1998. Prior to his tenure with GPA, Mr. Putnam was employed by LPL Financial beginning in 1983 where he held several positions, culminating in managing director of national sales, responsible for branch development, attraction, retention, and management of LPL Financial advisors. He was also responsible for marketing and all product sales. Mr. Putnam received a B.A. from Western Illinois University.
 
Committees
Audit Committee
 
 
 
QUALIFICATIONS
 
 
 
 
 
Mr. Putnam’s pertinent qualifications include his unique historical perspective and insights into our operations as our former managing director of national sales; operating, business and management experience as the chief executive officer at GPA; and expertise in the financial industry and deep familiarity with our advisors.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
None
Past 5 Years
None
 
 
 
 
 
 
 
 
 
 
 
 
 
 
James S. Riepe
BACKGROUND
 
 
 
 
Age 73
Director Since 2008
Independent
Mr. Riepe served as our lead director from February 2014 to June 2016. Mr. Riepe is a senior advisor and retired vice chair of the board of directors of T. Rowe Price Group, Inc. (“TRP”), a global investment management firm, where he worked for nearly 25 years. Previously, he served on TRP’s management committee, oversaw TRP’s mutual fund activities and served as chair of the T. Rowe Price Mutual Funds. He served as chair of the board of governors of the Investment Company Institute and was a member of the board of governors of the National Association of Securities Dealers (now FINRA) and chaired its Investment Companies Committee. Mr. Riepe is a member of the board of directors of UTI Asset Management Company of India and the Baltimore Equitable Society. He also served as chair of the board of trustees of the University of Pennsylvania from which he earned a B.S. and an M.B.A.
 
Committees
Audit Committee
Compensation Committee
 
 
 
QUALIFICATIONS
 
 
 
 
 
Mr. Riepe’s pertinent qualifications include his high level of financial literacy and operating and management experience, gained through his executive management positions and role as vice chair of the board of directors of TRP; expertise in the financial industry, underscored by his over 35 years of experience in investment management and his prior roles as a member of the board of governors of FINRA and as chair of the board of governors of the Investment Company Institute; and knowledge and experience gained through service on the board of other public companies.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
Genworth Financial Inc.
Past 5 Years
The NASDAQ OMX Group, Inc.
 
 
 
 
 
 
 
 
 

2017 Proxy Statement | 13

LPLLOGO541LARGEBLUE17.JPG
Proposal 1: Election of Directors


 
 
 
 
 
Richard P. Schifter
BACKGROUND
 
 
 
 
Age 64
Director Since 2005
Independent
Mr. Schifter is a senior advisor of TPG, a leading global private investment firm. He was a partner at TPG from 1994 through 2013. Prior to joining TPG, Mr. Schifter was a partner at the law firm of Arnold & Porter in Washington, D.C., where he specialized in bankruptcy law and corporate restructuring. He joined Arnold & Porter in 1979 and was a partner from 1986 through 1994. Mr. Schifter currently serves on the board of overseers of the University of Pennsylvania Law School. Mr. Schifter received a B.A. with distinction from George Washington University and a J.D. cum laude from the University of Pennsylvania Law School in 1978.
 
Committees
Nominating and Governance Committee
 
 
 
QUALIFICATIONS
 
 
 
 
 
Mr. Schifter’s pertinent qualifications include his high level of financial literacy gained through his investment experience as a TPG partner; experience on other company boards and board committees; and nearly 15 years of experience as a corporate attorney with an internationally-recognized law firm.
 
 
 
 
OTHER PUBLIC COMPANY BOARDS
 
 
 
 
 
 
 
Current
American Airlines Group
EverBank Financial Corp.
Past 5 Years
Republic Airways Holdings, Inc.
American Beacon Advisors, Inc.
 
 
 
 
 
 
 
 
 
In the vote on the election of the director nominees, stockholders may:
Vote FOR any of the nominees;
Vote AGAINST any of the nominees; or
ABSTAIN from voting as to any of the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF
EACH OF THE ABOVE-NAMED NOMINEES AS A DIRECTOR.

14 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Information Regarding Board and Committee Structure


Information Regarding Board and Committee Structure
During 2016 , the Board of Directors held 14 meetings, of which nine were held by conference call. Each of our incumbent directors, other than Mr. Schifter, attended at least 75% of the aggregate of (i) the total number of meetings of the Board of Directors during 2016 and (ii) the total number of meetings held by all committees of the Board on which the director served during 2016 . Mr. Schifter did not attend at least 75% of such meetings as a result of his recusal, at the Board’s request, from certain meetings during the year. Excluding these meetings, Mr. Schifter attended more than 75% of the aggregate total number of meetings of the Board of Directors and Board committees on which he served that were held in 2016. In light of the circumstances relating to Mr. Schifter’s meeting attendance in 2016, and the absence of any attendance issues in prior years, the Board does not have any concerns regarding Mr. Schifter’s future attendance at the Board and Board committee meetings.
Our Corporate Governance Guidelines provide that each director who is nominated for election is expected to attend the Annual Meeting. Eight out of the nine directors who served on the Board at the time of the 2016 annual meeting of stockholders attended such meeting.
 
Corporate Governance Guidelines, Committee Charters, and Code of Conduct
We believe that good corporate governance is important to ensure that we are managed for the long-term benefit of our stockholders. Our Board of Directors has adopted a set of Corporate Governance Guidelines to set clear parameters for the operation of our Board. Our Board of Directors has also adopted charters for its audit committee (the “Audit Committee”), Nominating and Governance Committee, and Compensation Committee. We have adopted a Code of Conduct that applies to, among others, our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions.
Copies of our Annual Report, committee charters, Corporate Governance Guidelines, and Code of Conduct are available, free of charge, by writing to us at the following address:
LPL Financial Holdings Inc.
75 State Street
Boston, MA 02109
Attn: Investor Relations
Our Annual Report, committee charters, Corporate Governance Guidelines, and Code of Conduct are also available on our website at www.lpl.com. If we make substantive amendments to, or grant waivers from, the Code of Conduct for certain of our executive officers, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

2017 Proxy Statement | 15

LPLLOGO541LARGEBLUE17.JPG
Information Regarding Board and Committee Structure


 
 
 
 
 
Corporate Governance Highlights
 
 
In the course of our regular review of our corporate governance policies and compensation practices, we have implemented several important measures that are designed to promote long-term shareholder value:
 
 
n
Our Board consists of a single class of directors elected on an annual basis who may be removed with or without cause. Accordingly, our stockholders are able to register their views on the performance of all directors on an annual basis, enhancing the accountability of our Board to our stockholders.
 
 
n
We currently separate the offices of the chair of the Board and chief executive officer of the Company, although the Board maintains the flexibility to select the chair of the Board and its leadership structure, from time to time, based on the criteria that it deems to be in the best interests of the Company and its stockholders.
 
 
n
Our bylaws provide for a majority voting standard in uncontested director elections. We also have adopted a director resignation policy in our Corporate Governance Guidelines pursuant to which a director who does not receive support from holders of a majority of shares voted in an uncontested election must tender his or her resignation and, if our Board accepts the resignation, step down from our Board. This makes director elections more meaningful for our stockholders and promotes accountability.
 
 
n
We seek an advisory vote on our compensation practices annually, which underscores the careful consideration we give to our stockholders’ views on our compensation practices.
 
 
n
We have established a compensation claw-back policy that provides for the recoupment of incentive compensation in the event of certain financial restatements and stock ownership guidelines for executive officers that set minimum ownership requirements at a multiple of base salary.
 
 
n
We have adopted robust stock ownership guidelines for directors, which provide that within five years of the date of his or her election to the Board, each non-employee director must maintain ownership of shares of Common Stock equal to five times the cash portion of the annual base retainer then in effect for our non-employee directors.
 
 
n
Our Insider Trading Policy prohibits our executives from pledging and hedging our Common Stock, in order to further the alignment between stockholders and our executives that our equity awards are designed to create.
 
 
 
 
 
Director Independence
The listing standards of The NASDAQ Global Select Market (“NASDAQ”) require that, subject to specified exceptions, each member of a listed company’s audit, nominating and governance, and compensation and human resources committees be independent. Rule 5605(a)(2) of the listing rules of NASDAQ further provides that a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and compensation committee members are also subject to heightened independence criteria under NASDAQ rules.
After its evaluation of director independence, the Board of Directors has affirmatively determined that Messrs. Brennan, Dinh, Hellman, Putnam, Riepe, and Schifter and Mses. Eberhart and Mulcahy are independent directors under the applicable rules of NASDAQ, and Mr. Glavin will qualify as an independent director if elected. Messrs. Brennan,
 
Putnam, and Riepe and Ms. Eberhart are independent directors as such term is defined in Rule 10A-3(b)(1) under the Exchange Act, and Messrs. Brennan and Riepe and Ms. Mulcahy are independent under the heightened criteria applicable to compensation committee members. In accordance with listing standards of NASDAQ, a majority of our directors are independent.
Board Composition and Leadership Structure of the Board of Directors
Our business and affairs are managed under the direction of the Board of Directors. As of April 11, 2017 , our Board of Directors was composed of nine directors. Under our Amended and Restated Certificate of Incorporation, the number of directors shall not be fewer than three or more than 15. The authorized number of directors may be changed only by resolution of the Board of Directors.
The Board does not have a fixed policy regarding the separation of the offices of chair of the Board and chief executive officer and believes that it should maintain the flexibility to select the chair of the Board and its Board leadership structure, from time to time, based on the criteria that it deems to be in the best interests of the Company and its stockholders. At this

16 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Information Regarding Board and Committee Structure


time, the offices of the chair of the Board and the chief executive officer are separated, with Mr. Putnam having succeeded Mr. Casady as chair effective upon Mr. Casady’s retirement on March 3, 2017. Prior to having appointed an independent chair, the Board of Directors had established the position of lead director, with responsibilities for performing many of the functions that an independent chair would perform for the Company. Mr. Riepe served as lead director from February 2014 to June 2016, and Mr. Putnam served as lead director from June 2016 until his appointment as non-executive chair on March 3, 2017.
At this time, the Company believes that having a separate chief executive officer and chair allows Mr. Arnold to focus on his role as president and chief executive officer and increases the Board’s independence from management, leading to effective monitoring and oversight. As non-executive chair, Mr. Putnam serves as a key source of communication between the independent directors and the chief executive officer, establishes the agenda for each meeting of the Board and coordinates the agenda for and leads meetings of the independent directors.
Board Committees
The current standing committees of the Board of Directors are the Audit Committee, the Nominating and Governance Committee, and the Compensation Committee, each with the composition and responsibilities described below. The members of each committee were recommended by the Nominating and Governance Committee, appointed by the Board of Directors, and will serve until their successors are elected and qualified, unless they are removed earlier or resign. In addition, from time to time, special committees may be established under the direction of the Board of Directors when necessary to address specific issues. Each of the standing committees of our Board is chaired by an independent director. Our Nominating and Governance Committee intends to reassess the composition of the standing committees of the Board in connection with the election of directors at the Annual Meeting.
Audit Committee
Our Audit Committee is composed of the following members: John J. Brennan, H. Paulett Eberhart, James S. Putnam, and James S. Riepe. Mr. Brennan serves as the Chair of the Audit Committee.
Each of our Audit Committee members is independent under the listing standards of NASDAQ and under Rule 10A-3 of the Exchange Act. None of our Audit Committee members is an employee of ours or any of our subsidiaries, nor simultaneously serves on the audit committees of more than three public
 
companies, including ours. All of our Audit Committee members meet the requirements for financial literacy and are able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, and cash flow statement. Our Board has affirmatively determined that Mr. Brennan and Ms. Eberhart qualify as audit committee financial experts under the applicable rules and regulations of the SEC.
 
 
 
 
 
Our Audit Committee is responsible for, among other things, appointing, overseeing, and replacing, if necessary, the independent auditor and assisting the Board in overseeing:
 
 
n
the integrity of the Company’s financial statements;
 
 
n
the integrity of the accounting and financial reporting processes of the Company;
 
 
n
enterprise risk management, including the Company’s compliance with legal and regulatory requirements;
 
 
n
the Company’s independent auditor’s qualifications and independence; and
 
 
n
the performance of the Company’s independent auditor and internal audit function.
 
 
 
 
 
The Audit Committee reviews and discusses our annual and quarterly financial statements, our disclosures in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual and quarterly reports filed with the SEC, and our earnings announcements prior to their release. The Audit Committee also reviews matters related to the Company’s related party transaction policy, the operations of the Company’s Business Technology Services department and the Company’s whistle-blower policy. For additional information on the Audit Committee’s role in our enterprise risk management framework, please see “ — Risk Management and Compensation Policies and Practices .”
The Audit Committee has authority under its charter to obtain advice and assistance from outside legal counsel, accounting, or other outside advisors as deemed appropriate to perform its duties and responsibilities.
Our Audit Committee met eight times during 2016 .

2017 Proxy Statement | 17

LPLLOGO541LARGEBLUE17.JPG
Information Regarding Board and Committee Structure


Nominating and Governance Committee
Our Nominating and Governance Committee is composed of the following members: John J. Brennan, Viet D. Dinh, Anne M. Mulcahy, and Richard P. Schifter. Mr. Dinh serves as chair of the Nominating and Governance Committee, which recommended individuals for election as directors of the Company at the Annual Meeting. Each member of our Nominating and Governance Committee is independent under the listing standards of NASDAQ.
 
 
 
 
 
The Nominating and Governance Committee is responsible for:
 
 
n
identifying, evaluating, and recruiting qualified persons to serve on our Board of Directors;
 
 
n
selecting, or recommending to the Board for selection, nominees for election as directors;
 
 
n
reviewing and recommending the composition of the Board’s standing committees;
 
 
n
reviewing and assessing the Company’s corporate governance guidelines; and
 
 
n
evaluating the performance, operations, size, and composition of our Board of Directors.
 
 
 
 
 
The Nominating and Governance Committee has authority under its charter to engage such independent legal, accounting and other advisors as it deems necessary or appropriate to carry out its responsibilities. In 2016, Russell Reynolds Associates, a director search firm, assisted the Nominating and Governance Committee in identifying, evaluating, and recruiting potential director candidates.
Our Nominating and Governance Committee met seven times during 2016 . Our Board as a whole also considered the identification, recruitment and nomination of director candidates.
Compensation and Human Resources Committee
Our Compensation and Human Resources Committee (“Compensation Committee”) is composed of the following members: John J. Brennan, Anne M. Mulcahy, and James S. Riepe. Ms. Mulcahy serves as the chair of the Compensation Committee. Each member of our Compensation Committee is independent under the listing standards of NASDAQ, including the heightened standards that apply to compensation committee members. The Compensation Committee is composed entirely of “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code and “non-employee directors” within the meaning of Rule 16b-3 under the Exchange Act.
 
 
 
 
 
 
The Compensation Committee is responsible for:
 
 
n
reviewing and approving goals and objectives relevant to executive officer compensation and evaluating the performance of executive officers in light of those goals and objectives;
 
 
n
reviewing and approving executive officer compensation;
 
 
n
reviewing and approving the chief executive officer’s compensation based upon the Compensation Committee’s evaluation of the chief executive officer’s performance;
 
 
n
making recommendations to the Board regarding the adoption of new incentive compensation and equity-based plans, and administering our existing incentive compensation and equity-based plans;
 
 
n
making recommendations to the Board regarding compensation of our directors;
 
 
n
reviewing and approving the general design and terms of any significant non-executive compensation and benefits plans; and
 
 
n
reviewing our significant policies, practices, and procedures concerning human resource-related matters.
 
 
 
 
 
The Compensation Committee has authority under its charter to access such internal and external resources, including retaining legal, financial, or other advisors, as the Compensation Committee deems necessary or appropriate to fulfill its responsibilities. In 2016 , the Compensation Committee engaged an independent compensation consultant, Meridian Compensation Partners, LLC (the “Compensation Consultant”), to advise on compensation matters and provide experiential guidance on what is considered fair and competitive practice in our industry, primarily with respect to the compensation of our executive officers.
The Compensation Committee has the authority to delegate to subcommittees of the Compensation Committee any responsibilities of the full committee. The Compensation Committee may also delegate to a committee of one or more directors, or one or more of our executive officers, subject to certain restrictions, the power to grant stock options, restricted stock units, or other equity awards, and amend the terms of such awards, pursuant to our equity plans. References to the Compensation Committee in this proxy statement also refer to its subcommittees and its delegates, where applicable.
Our Compensation Committee met five times during 2016 .

18 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Information Regarding Board and Committee Structure


Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is or has been an officer or employee of ours or any of our subsidiaries. None of our executive officers serves or has served as a member of the board of directors, compensation committee, or other board committee performing equivalent functions of any entity that has one or more executive officers serving as one of our directors or on our Compensation Committee.
Risk Management and Compensation Policies and Practices
We employ an enterprise risk management (“ERM”) framework that is intended to address key risks and responsibilities, enable us to execute our business strategy, and protect our firm and its franchise. Our framework is designed to promote clear lines of risk management accountability and a structured escalation process for key risk information and events. In addition to the ERM framework, we have written policies and procedures that govern the conduct of business by our employees and independent financial advisors, and the terms and conditions of our relationships with financial product manufacturers.
Our risk management governance approach is discussed in our Annual Report under “Item 7A. Quantitative and Qualitative Disclosures about Market Risk Risk Management.” This approach includes the Board of Directors, the Audit Committee, and the Compensation Committee, as well as the Company’s Risk Oversight Committee (the “ROC”) and its subcommittees, the Company’s Internal Audit department, the Company’s Governance, Risk and Compliance department, and business line management.
Role of the Audit Committee . In addition to its other responsibilities, the Audit Committee reviews our policies with respect to risk assessment and risk management, as well as our major financial risk exposures and the steps management has undertaken to control them. The Audit Committee generally provides reports to the Board at each of the Board’s regularly scheduled quarterly meetings.
The Audit Committee has mandated that the ROC oversee our risk management activities, including those of our subsidiaries. The chair of the ROC provides reports to the Audit Committee at each of the Audit Committee’s regularly scheduled quarterly meetings and, as necessary or requested, to the Board. The reports generally cover topics addressed by the ROC at its meetings since the immediately preceding report. If warranted, matters of material risk
 
are escalated to the Audit Committee or Board more frequently. In addition, our Internal Audit department provides independent verification of the effectiveness of the Company’s internal controls by conducting risk assessments and audits designed to identify and cover important risk categories. Our Internal Audit department provides regular reports to the ROC and reports to the Audit Committee at least as often as quarterly.
Role of the Compensation Committee . In addition to its other responsibilities, the Compensation Committee assesses whether our compensation arrangements encourage inappropriate risk-taking, and whether risks arising from our compensation arrangements are reasonably likely to have a material adverse effect on the Company.
Our Compensation Committee has reviewed and evaluated the philosophy and standards on which our compensation practices have been developed and implemented across our Company. It is our belief that our compensation practices do not encourage inappropriate actions by our executive officers and are not reasonably likely to have a material adverse effect on the Company. Specifically, we believe that our compensation practices and process avoid:
a compensation mix overly weighted toward annual bonus awards;
an excessive focus on short-term equity incentive awards that could cause behavior to drive short-term stock price gains in lieu of long-term value creation; and
unreasonable financial goals or thresholds that could encourage efforts to generate near-term revenue with an adverse impact on long-term success.
We believe that our current business process and planning cycle fosters the following behaviors and controls that serve to mitigate the potential for adverse risk caused by the action of our executive officers:
defined processes for developing strategic and annual operating plans, approval of capital investments, internal controls over financial reporting, and other financial, operational, and compliance policies and practices;
annual review of corporate objectives aligns these goals with our annual operating and strategic plans, achieves the proper risk reward balance, and does not encourage unnecessary or excessive risk taking;

2017 Proxy Statement | 19

LPLLOGO541LARGEBLUE17.JPG
Information Regarding Board and Committee Structure


review of peer group practices and compensation surveys to develop compensation strategy and practices;
annual incentive awards based on a review of a variety of metrics, including both financial performance and strategic achievements, reducing the potential to concentrate on one metric as the basis of an annual incentive award;
mix of fixed and variable, annual and long-term, and cash and equity compensation is designed to encourage strategies and actions that are in our long-term best interests;
discretionary authority is maintained by the Compensation Committee to adjust annual bonus funding and payments, which reduces business risk associated with our cash bonus program;
long-term equity incentive awards, including performance-based awards, vest over a period of time, and as a result of the longer time horizon to receive the value of an equity award, the prospect of short-term or risky behavior is mitigated; and
 
inclusion of stock ownership requirements for all executive officers, a “clawback” policy, and anti-hedging policies that help to mitigate excessive risk-taking.
 
 
 
 
 
Communicating with the
Board of Directors
 
 
Any stockholder who wishes to contact a member of our Board of Directors may do so by writing to the following address:
 
 
Board of Directors
c/o Secretary
LPL Financial Holdings Inc.
75 State Street
Boston, MA 02109
 
 
Communications will be distributed to the chair of the Board or the other members of the Board as appropriate depending on the facts and circumstances outlined in the communication received.
 
 
 
 
 

20 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Board of Director Compensation


Board of Director Compensation
For 2016, our director compensation policy provided that each of our non-employee directors would receive an annual service retainer of $195,000. Of this amount, $65,000 would be paid in a lump sum in cash (subject to the director’s election to receive this amount in shares of our Common Stock as described below) and $130,000 would be paid in the form of restricted shares of our Common Stock granted under our Amended and Restated 2010 Omnibus Equity Incentive Plan (the “2010 Plan”).
The following table sets forth additional annual service retainers under our director compensation policy that a committee member would receive for his or her additional duties during 2016 :
 
Chair
 
Each Other Member
Audit Committee
$
20,000

 
$
10,000

Compensation Committee
$
15,000

 
$
7,500

Nominating and
     Governance Committee
$
10,000

 
$
5,000

For 2016, our director compensation policy also provided that we would pay the lead director an additional annual service retainer of $25,000 in connection with his additional duties on the Board. The retainers for committee and lead director service were paid in cash in installments following the end of each quarter of service. Mr. Casady did not receive additional compensation for his service as a director prior to his retirement from the Board, and Mr. Arnold will not receive additional compensation for his service as a director.
As noted above, each of our non-employee directors was granted an annual award of restricted stock having a value of $130,000 (based on the average of the closing price of our Common Stock for the trailing thirty consecutive trading days including the date of grant). The awards vest in full on May 11, 2017, which is the first anniversary of the business day that immediately followed our 2016 annual meeting of stockholders, generally subject to the director’s continued service through that date. We believe these equity grants serve to further align our directors’ interests with the interests of our stockholders.
 
In May 2015, we amended our director compensation policy to allow non-employee directors to make an election to be issued, in lieu of the cash portion of their annual retainer, a number of fully vested shares of our Common Stock. For 2016, the number of fully vested shares was determined by dividing $65,000 by the average of the closing price of our Common Stock for the trailing thirty consecutive trading days, including the date such shares are issued.
In November 2015, we adopted the LPL Financial Holdings Inc. Non-Employee Director Deferred Compensation Plan (the “Deferred Plan”). Under the Deferred Plan and beginning in 2016, non-employee directors may make an annual election to defer the receipt of the equity portion, or both the equity and cash portion, of their annual retainer for board service. For directors who make such a deferral election, a book-entry account is established and credited with a number of deferred stock units granted under our 2010 Plan equal in value to the shares and, if so elected by the director, the cash, that would otherwise be granted or paid absent such deferral election, with each deferred stock unit representing the right to receive a share of our Common Stock. Such shares will be paid only upon a director’s separation from service or a change in control, as defined in the Deferred Plan.
In February 2017, after a review of the director compensation practices of our peer group, we amended our director compensation policy to, among other things, provide for an additional annual service retainer for the non-executive chair of $120,000.
Our equity ownership guidelines for non-employee directors provide that within five years of the date of his or her election to the Board, each non-employee director must maintain ownership of shares of Common Stock equal to five times the cash portion of the annual service retainer then in effect for our non-employee directors, not including any committee retainers. All shares owned outright and beneficially owned by such non-employee director, including all shares of unvested restricted stock, are counted in determining compliance with such minimum ownership requirement. Neither vested nor unvested stock options are counted, however. As of April 11, 2017 , each of our non-employee directors who has served for at least five years satisfied the minimum ownership requirement.

2017 Proxy Statement | 21

LPLLOGO541LARGEBLUE17.JPG
Board of Director Compensation


The following table sets forth the compensation received from us by each non-employee director for service on the Board for the fiscal year ended December 31, 2016 . In addition to the payments disclosed in the table below, our directors were reimbursed for reasonable out-of-pocket expenses incurred in connection with their attendance at Board and committee meetings.
Name
Fees Earned
or Paid in Cash
($)
Stock
Awards
($) (1)(2)
Total
($)
Richard W. Boyce
$
2,699

(3)
$

 
$
2,699

John J. Brennan
$
94,664

(4)
$
124,328

(5)
$
218,992

Viet D. Dinh
$
70,914

(4)(6)
$
124,328

(5)
$
195,242

H. Paulett Eberhart
$
75,000

 
$
124,328

 
$
199,328

Marco (Mick) W. Hellman
$
62,164

(4)
$
124,328

 
$
186,492

Anne M. Mulcahy
$
82,164

(4)
$
124,328

 
$
206,492

James S. Putnam
$
84,664

(4)(8)
$
124,328

(5)
$
208,992

James S. Riepe
$
92,164

(4)(8)
$
124,328

(5)
$
216,492

Richard P. Schifter
$
68,414

(4)(6)
$
124,328

(5)
$
192,742

CHARTBODCOMPMIX17.JPG
(1)
The amounts shown in this column represent the aggregate grant date fair value of restricted stock awards granted to our non-employee directors in 2016 . The amounts shown in this column do not include the value of any fully vested shares of Common Stock that certain of our non-employee directors elected to receive in lieu of the cash portion of the annual service retainer. Such amounts are shown in the column “ Fees Earned or Paid in Cash” . The aggregate grant date fair value of the restricted stock awards, as determined under FASB ASC Topic 718, was determined by multiplying the number of shares underlying the award by $35.85, which was the closing price of our Common Stock on the grant date. For information regarding the number of shares of restricted stock held by each non-employee director as of December 31, 2016 , see the column “ Restricted Stock Awards” in the table in footnote 2 below.
(2)
The following table shows the aggregate number of stock options and shares of restricted stock held by each of our non-employee directors as of December 31, 2016 . All stock options reported in the table below were vested in full as of December 31, 2016 . All restricted stock awards reported in the table below will vest in full on May 11, 2017.
Name
 
Stock Option Awards
(#)
 
Restricted Stock Awards
(#)
John J. Brennan
 

 
3,468

Viet D. Dinh
 

 
3,468

H. Paulett Eberhart
 

 
3,468

Marco (Mick) W. Hellman (7)
 

 

Anne M. Mulcahy
 

 
3,468

James S. Putnam
 

 
3,468

James S. Riepe
 
31,500

 
3,468

Richard P. Schifter
 

 
3,468

(3)
Mr. Boyce retired from the Board effective May 10, 2016. This amount represents the prorated portion of his retainer for service on the Compensation Committee during 2016.
(4)
This amount includes the value of fully vested shares of Common Stock that the director elected to receive in lieu of the cash portion of the director’s annual service retainer. The aggregate grant date fair value of these shares, as determined under FASB ASC Topic 718, was determined by multiplying the number of shares underlying the award by $35.85, which was the closing price of our Common Stock on the grant date. Other than shares held by Mr. Hellman and Ms. Mulcahy, these shares are subject to a written deferral election under the Deferred Plan pursuant to which the director elected to defer receipt of the cash portion of the annual service retainer.
(5)
These stock awards are subject to a written deferral election under the Deferred Plan pursuant to which the director elected to defer receipt of the equity portion of the annual service retainer.
(6)
Mr. Dinh succeeded Mr. Schifter as chair of the Nominating and Governance Committee in March 2016. Amounts for Messrs. Dinh and Schifter include the prorated portions of their retainers for service as chair of the Nominating and Governance Committee during 2016.
(7)
Mr. Hellman was awarded 1,734 shares of Common Stock and 3,468 shares of restricted stock in December 2016. Mr. Hellman assigned these awards to HMI Capital, LLC.
(8)
Mr. Putnam succeeded Mr. Riepe as lead director in June 2016. Amounts for Messrs. Putnam and Riepe include the prorated portions of their retainers for service as lead director during 2016.

22 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


Compensation Discussion and Analysis
Executive Summary
This Compensation Discussion and Analysis (“CD&A”) describes the actions taken by our Compensation Committee with respect to 2016 compensation for our executive officers, including our named executive officers (“NEOs”). Under SEC rules, our NEOs for 2016 are:
Executive
Title
Mark S. Casady (1)
Former Chief Executive Officer
Matthew J. Audette
Chief Financial Officer
Dan H. Arnold (1)
President and Chief Executive Officer
Tracy E. Calder (2)
Managing Director, Deputy Chief Risk Officer
Thomas Gooley
Managing Director, Service, Trading and Operations
(1)
Mr. Casady served as our chief executive officer until January 3, 2017 when Mr. Arnold, our president, was appointed as our chief executive officer. Mr. Casady continued to serve as chair of the Board and a director until his retirement on March 3, 2017.
(2)
Ms. Calder commenced employment with us as managing director, deputy chief risk officer on January 25, 2016.
Summary of 2016 Operating Performance
The following summary of the Company’s operating performance is intended to provide additional context for the Compensation Committee’s evaluation of the Company’s performance against its 2016 goals for compensation-related purposes. Adjusted EBITDA was the primary metric considered by the Compensation Committee in evaluating the Company’s financial performance in 2016. The Compensation Committee also considered the Company’s gross profit and expense management results, and their effect on the Company’s Adjusted EBITDA results. Adjusted EBITDA and gross profit are non-GAAP financial measures that are described below under “ Non-GAAP Financial Measures .”
The Company reported strong business and financial results in 2016 . It experienced one of its best recruiting years ever, as measured by recruited gross dealer concessions, and made significant progress during the year on service, technology and preparations for the Department of Labor (“DOL”) fiduciary rule. Total brokerage and advisory assets at year-end were $509 billion, up 7% from the prior year, and the full-year production retention rate was 97%, excluding the impact of an institutional client that was acquired by a bank with its own broker-dealer. This asset growth contributed to the Company’s gross profit of $1.4 billion in 2016, which was a 3% increase over 2015. The Company’s focus on expense management enabled us to make significant business investments while also lowering our rate of expense growth. This low expense growth improved our operating leverage, as EBITDA and earnings per share grew year-over-year by 12% and 22%, respectively. For additional discussion and analysis of the Company’s 2016 performance, please refer to the Annual Report.
As further discussed below, after taking into account the Company’s overall performance against financial and non-financial goals for 2016, the Compensation Committee determined that the 2016 bonus pool would be funded at above-target levels, and the annual cash bonus awards to our NEOs (as well to our other executives and employees) would generally be paid at target, or above target levels for high performing employees. This approach is consistent with our compensation philosophy and past practice.

2017 Proxy Statement | 23

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


A 3% increase in gross profit, combined with disciplined expense management, generated operating leverage as Adjusted EBITDA increased 7% year-over-year.
 
GRAPHADJUSTEDEBITDA17.JPG
Gross profit increased to $1.4 billion in 2016, primarily due to an increase in the Company’s cash sweep revenue, partially offset by decreases in commissions and advisory revenues.
 
GRAPHGROSSPROFIT17.JPG
Total brokerage and advisory assets were $509.4 billion as of December 31, 2016, a 7% increase from the prior year-end balance of $475.6 billion. Total brokerage and advisory net new assets were $5.9 billion for 2016, compared to $9.1 billion in the same period in 2015.

 
GRAPHTOTBROKERAGEADVISORY17.JPG

24 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


As of December 31, 2016, advisory assets under custody (which are a component of total brokerage and advisory assets) had grown to $211.6 billion, up 13% from the prior year, and represented 41.5% of total brokerage and advisory assets at year-end.


 
GRAPHADVISORYASSETS17.JPG
As of December 31, 2016, brokerage assets (which are also a component of total brokerage and advisory assets) had grown to $297.8 billion, up 3% from the prior year.
 
GRAPHBROKERAGEASSETS17.JPG
Capital was returned to stockholders through a share repurchase program and dividends. In 2016, $114.1 million of capital was returned to shareholders, including $89.1 million of dividends and $25.0 million of share repurchases (representing 634,651 shares).
 
GRAPHCAPITALRETURNEDSH17.JPG


2017 Proxy Statement | 25

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


 
 
 
 
 
Compensation Philosophy
 
 
Under the oversight of our Compensation Committee, our executive compensation program rewards sustained favorable financial and operating performance. Our executive compensation program is designed to align our executives’ compensation to the performance of the Company while avoiding practices that may create unwarranted risk.
The design and operation of our executive compensation program reflect the following basic objectives:
 
 
n
aligning the interests of our executive officers with the interests of our Company and its stockholders;
 
 
n
linking our executive officers’ compensation to the achievement of both short-term and long-term strategic and operational goals; and
 
 
n
attracting, motivating, and retaining highly qualified executive officers who are passionate about the mission of our Company.
 
 
We seek to achieve these objectives through the following guiding compensation principles:
 
 
n
paying compensation that is competitive with that offered for similar positions with our peer companies;
 
 
n
striking an appropriate balance between current and long-term compensation as well as cash and equity compensation;
 
 
n
linking short-term and long-term total compensation largely to objective and, to the extent possible, quantifiable performance measures;
 
 
n
rewarding Company and business unit performance, as well as individual performance and potential; and
 
 
n
using equity-based compensation for a significant portion of total compensation.
 
 
 
 
 
 
 
 
 
 
Compensation Governance
 
 
In order to implement this philosophy, and to promote strong governance and alignment with stockholder interests, we do  the following:
 
 
ü
maintain a pay mix that is heavily performance-based;
 
 
ü
maintain stock ownership guidelines for executives;
 
 
ü
maintain a compensation recoupment policy in the event of a restatement of our financial statements;
 
 
ü
retain an independent compensation consultant engaged by, and reporting directly to, our Compensation Committee;
 
 
ü
benchmark executive compensation against peers with which we compete for talent;
 
 
ü
conduct annual risk assessments of our executive compensation policies and practices;
 
 
ü
hold an annual shareholder “say on pay” vote; and
 
 
ü
hold Compensation Committee executive sessions without management present.
 
 
In addition, we do not  do the following:
 
 
û
re-price stock options without stockholder approval;
 
 
û
permit hedging transactions or short sales by executives;
 
 
û
permit pledging or holding company stock in a margin account by executives;
 
 
û
enter into individual employment agreements; or
 
 
û
provide excise tax gross-ups to executives.
 
 
 
 
 

Over the last several years, we have made changes to our compensation practices to bring them into greater alignment with our peer companies, strengthen the alignment of compensation paid with Company performance, and provide greater transparency for our employees and investors. These practices are discussed below under “ —Compensation Policies and Practices .”

26 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


Components of Compensation
The core components of our executive compensation program are:
Base salary;
Annual cash bonus awards;
Long-term equity incentive awards; and
Severance and change-in-control benefits.
Our Compensation Committee retains flexibility to determine the appropriate level and mix of the various compensation components consistent with our business needs. The mix of compensation elements is intended to provide our NEOs with a competitive total pay package that rewards recent results and drives long-term corporate performance. The annual cash bonus awards compensate NEOs based upon annual Company and individual performance. We also have a long-term equity incentive program designed to provide equity compensation primarily linked to longer-term Company performance while aligning the interests of our executives with the interests of our stockholders.
CHARTAVGNEOCOMPMIX17.JPG
 
Annual Cash Bonus Awards
 
Base Salary
 
 
 
 
 
Long-Term Incentives
 
Other
Retirement of Mr. Casady as Chief Executive Officer and Appointment of Mr. Arnold as President and Chief Executive Officer
Mr. Casady’s Arrangements
In December 2016, the Company announced that Mr. Casady would retire from his position as chief executive officer, effective January 3, 2017. In connection with his retirement, Mr. Casady was entitled to an annual cash bonus award for 2016 in accordance with the terms of the Company’s annual cash bonus plan (the “Bonus Plan”), payable in March 2017, based on the Compensation Committee’s assessment of his contribution to the Company’s performance in 2016. As previously disclosed, during
 
the period between January 3, 2017 and March 3, 2017, Mr. Casady provided transition services to the Company, in consideration for which he continued to receive payment of his salary and benefits, and continued vesting in his unvested equity-based awards. Mr. Casady did not receive any severance in connection with his retirement. Because Mr. Casady satisfied the definition of "retirement" under the provisions of his equity awards, all unvested equity awards held by him became fully vested as of March 3, 2017.
Mr. Arnold’s Arrangements
Mr. Arnold, our president, was appointed as our chief executive officer, effective January 3, 2017. Mr. Arnold was also appointed to the Board at that time.
In connection with Mr. Arnold’s appointment as chief executive officer, the Board approved an increase in his annual base salary to $800,000 and a target annual cash bonus opportunity of 225% of annual base salary, each effective as of January 3, 2017. In addition, the Board approved a target annual long-term incentive compensation award opportunity for Mr. Arnold with a grant date value of 350% of annual base salary, with 50% of such award to consist of stock options and 50% of such award to consist of performance-based share units. Mr. Arnold continues to be eligible for the Executive Severance Plan (as described below). The Board approved these arrangements at the recommendation of our Compensation Committee, which based its recommendation on a review of peer group data and practices, advice from the Compensation Consultant, and the Compensation Committee’s assessment of Mr. Arnold’s role, experience, and tenure with the Company.
In recognition of the substantial additional responsibilities that Mr. Arnold assumed, and his expected contributions to the Company, the Board granted Mr. Arnold a one-time special incentive award consisting of time-based restricted stock units (“RSUs”) having a grant date fair value of $1.5 million. These RSUs were granted on February 13, 2017 and vest as to one-third of the RSUs on each of the third, fourth and fifth anniversaries of the date of grant.
Base Salary
We pay our NEOs base salaries in order to provide a level of competitive and stable income. The base salaries of our NEOs are set based on the responsibilities of the individual, taking into account the individual’s skills, experience, and prior compensation levels, as well as market compensation levels for our peer group. Our Compensation Committee reviews base salaries for our NEOs on an annual basis, although salary changes may not occur

2017 Proxy Statement | 27

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


with that frequency. Rather, base salaries are generally increased when individual performance, job scope, or market compensation data indicate that an increase is warranted. As the responsibilities of our NEOs increase, the Compensation Committee generally reflects compensation adjustments through increases in cash bonus opportunity and the size of equity awards rather than through adjustments to base salary.
With regard to our NEOs’ base salaries for 2016:
The base salaries of Messrs. Audette, Casady, and Gooley were unchanged from 2015;
Mr. Arnold received an increase in base salary from $625,000 to $675,000 effective March 6, 2016; and
Ms. Calder’s 2016 base salary was set at the time she joined us in January 2016.
In determining that the salaries remained appropriate for Messrs. Audette, Casady, and Gooley, our Compensation Committee considered, among other things, the competitiveness and mix of the total compensation opportunities for Messrs. Audette, Casady, and Gooley based on benchmarking data prepared by the Compensation Consultant . This benchmarking data consisted of peer group compensation data, as disclosed in the peers’ most recent proxy statements (the “Benchmarking Data”).
In determining the 2016 base salary increase for Mr. Arnold, the Compensation Committee considered the Benchmarking Data as well as his performance as our president, including his leadership of the Company’s Advisor and Institution Solutions business unit, which was responsible for business development, existing advisor and institution growth, enhancing the client experience, research, corporate strategy, and sponsor relationships.
Ms. Calder’s base salary, as well as her target incentive compensation opportunities, cash signing bonus and sign-on grant of RSUs, reflected the results of our negotiations in recruiting Ms. Calder to join us from J.P. Morgan Securities LLC, where she served as managing director, chief compliance officer.
The 2016 salaries for all of our named executive officers appear in the Summary Compensation Table that follows this CD&A.
Annual Cash Bonus Awards
We provide annual cash bonus awards in order to tie a significant portion of the overall cash compensation of each NEO to annually-established, key short-term corporate objectives, and financial goals of the Company. See “ —Goals, Objectives and Performance Evaluation ” below for a description of
 
these objectives and goals and our 2016 performance against them. The Compensation Committee believes that the NEOs, as key members of the Company’s leadership team, share responsibility for supporting the goals and performance of the Company.
At the beginning of each year, t he Compensation Committee establishes:
An objective corporate performance threshold (the achievement of which is the primary condition to the funding of the bonus pool under the Bonus Plan);
Each NEO’s target and maximum award amounts;
Additional financial and non-financial corporate performance goals (on which the level of funding of the bonus pool, and the payment of annual cash bonus awards, if any, will be based); and
General guidelines that provide a potential range of bonus pool funding based on the level of achievement of the Company’s financial performance goals. 
Before establishing the 2016 bonus guidelines, the Compensation Committee assessed its approach to annual incentive compensation. With the assistance of the Compensation Consultant, the Compensation Committee considered peer group practices with regard to the number and types of financial performance metrics used in annual incentive plans, as well as typical plan payout designs. Relative to peers’ practices, our approach to annual cash bonus awards provides more discretion to our Compensation Committee. The Compensation Committee believes that this level of discretion is appropriate given the variety of factors that can affect the Company’s Adjusted EBITDA results, including prevailing interest rates and equity market performance. The Company’s Adjusted EBITDA results were the primary metric considered by the Compensation Committee in evaluating the Company’s financial performance in 2016.

28 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


Each NEO’s individual target award amount is set by the Compensation Committee by reference to market compensation for comparable positions within our peer group as well as the nature of the NEO’s role and responsibilities. In setting the targets, the Compensation Committee generally emphasizes executives’ contributions to the Company’s overall performance rather than focusing only on their individual business or function. We believe therefore that our cash bonuses provide a significant incentive to our NEOs to work towards achieving our overall Company objectives.
If the Compensation Committee determines that the threshold corporate performance goal has been achieved and therefore a bonus pool under the Bonus Plan will be funded, the Compensation Committee then evaluates the Company’s and each NEO’s performance against the additional, previously established goals, taking into account discussions with management and the Compensation Consultant, and determines whether and to what extent the bonuses are paid. See “ —Goals, Objectives and Performance Evaluation .”
Our Compensation Committee generally has the discretion to pay bonuses above (subject to the pre-established maximums for each NEO) or below the established targets based upon their assessment of Company performance, each NEO’s performance and potential, and other considerations. In determining actual bonus payouts, the Compensation Committee generally considers an individual performance modifier of ±30% in the case of executives in revenue-generating positions and ±15% in the case of executives in non-revenue-generating positions. In general, cash bonuses paid under the Bonus Plan are intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code.
 
In 2016, the Company’s objective performance threshold was based on the Company’s Credit Agreement EBITDA results. For a description of Credit Agreement EBITDA, see “— Non-GAAP Financial Measures ” below. The funding guidelines established by the Compensation Committee at the beginning of the year for the 2016 bonus pool were based on the Company’s Adjusted EBITDA results; however, the payout opportunities reflected in these guidelines were used by the Compensation Committee only as a general guide. In determining the actual level of bonus pool funding, the Compensation Committee considered the Company’s overall performance against its pre-established overall corporate goals and gave consideration to additional factors, such as market factors affecting the Company’s earnings results, as well as a subjective “degree of difficulty” analysis with respect to the various corporate goals.
Our chief executive officer and chief financial officer met with the Compensation Committee in December  2016 and January 2017 to discuss our actual performance compared to our pre-established 2016 corporate objectives. For 2016, the Compensation Committee determined that the Company’s Credit Agreement EBITDA was sufficient to fund a cash bonus pool and that overall corporate performance exceeded the corporate objectives to which the awards were subject, as further described below under “   Goals, Objectives and Performance Evaluation .” Based primarily on this assessment of the Company’s performance, the Compensation Committee exercised its discretion to award annual cash bonuses under the Bonus Plan to our NEOs above each executive’s target award amount for 2016 (subject to the pre-established maximums for each NEO).
The table below includes the target annual cash bonus award established for each of our NEOs at the beginning of 2016 , as well as the actual cash bonus awarded to each of our NEOs for 2016, as determined by the Compensation Committee:
NEO
Target Award
 
Target Award as a Percentage of Base Salary
 
Cash Bonus Awarded
 
Cash Bonus
Awarded as a
Percentage of
Target Award
Mark S. Casady
$
2,475,000

 
275%
 
$
2,500,000

 
101%
 
Matthew J. Audette
$
1,050,000

 
175%
 
$
1,218,000

 
116%
 
Dan H. Arnold
$
1,181,250

 
175%
 
$
1,400,000

 
119%
 
Tracy E. Calder (1)
$
373,770

(1)
84.6%  (1)
 
$
425,000

(2)
114%
 
Thomas Gooley
$
750,000

 
150%
 
$
910,000

 
121%
 
(1) Ms. Calder’s annual target award is $400,000, or 90.5% of her base salary. Ms. Calder’s target award for 2016 was prorated for the portion of the year following the commencement of her employment with the Company.
(2) Ms. Calder also received a sign-on bonus in the amount of $497,000 upon joining the Company in January 2016.

2017 Proxy Statement | 29

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


GRAPHANNCASHBONUSAWARDS17.JPG
Long-Term Equity Incentive Awards
The purposes of our long-term equity incentive program are to promote the achievement of corporate goals that drive long-term stockholder value, to align the interests of our executive officers and other key employees with our shareholders and to retain key executives. We provide long-term compensation to our NEOs through equity awards under our stockholder-approved equity plans, and we believe that our long-term equity incentive program is critical to our efforts to hire and retain the best talent in the financial services industry.
At the beginning of each year, the Compensation Committee establishes long-term equity incentive award targets for all eligible executives after reviewing the recommendations of management and the information, including the Benchmarking Data, provided by the Compensation Consultant. Annual target award amounts are based on an executive’s position, including job scope and base salary, after consideration of the Benchmarking Data and prior years’ awards to the executive. For our NEOs, the targets established by our Compensation Committee for 2016 ranged from 72% to 350% of base salary.
After the conclusion of the year, the Compensation Committee determines the actual amounts of the annual long-term incentive (“LTI”) award to be granted to each of our NEOs based on the target award previously set by the Compensation Committee as well as the NEO’s individual performance both during the year and over time, leadership responsibilities and potential, and retention considerations. Based upon such considerations, the NEO’s actual LTI award may vary from the target amount previously established. Unlike our annual cash bonus awards, the actual amount of executives’ LTI awards are generally not based on annual Company performance, although the value of those LTI awards depends on the Company’s longer-term performance.
 
Since 2012, our long-term equity incentive awards have included RSUs and stock options. Equity grants to our chief executive officer have consisted only of stock options, in order to align to stock appreciation on an absolute basis, while equity grants to our other NEOs have consisted of 70% stock options and 30% RSUs.
During 2016, the Compensation Committee assessed its approach to long-term equity incentives. With the assistance of the Compensation Consultant, the Compensation Committee considered peer practices with regard to the number and types of equity award vehicles and the mix of equity award vehicles and, in the case of performance-based awards, market performance metrics, performance periods, and payout opportunities. Based on its assessment, the Compensation Committee has incorporated performance-based awards as part of the Company’s long-term equity incentive program for 2017. In February 2017, the Compensation Committee approved performance share units (“PSUs”) as a form of LTI to be incorporated into the Company’s 2017 awards for all managing directors and above, including the NEOs. We believe this aligns with our pay-for-performance goals and puts appropriate focus on long-term alignment and pay relative both to market peers and shareholder returns.
Beginning in 2017, equity grants to our president and chief executive officer will consist of 50% PSUs and 50% stock options (by grant date value), and equity grants to our other NEOs will consist of 40% PSUs, 30% stock options, and 30% RSUs. We believe that this blended approach provides appropriate incentives for long-term shareholder value creation while also serving as a retention tool for the Company.
PSUs are eligible to become earned PSUs based on the Company’s total shareholder return (“TSR”) relative to the TSR of a predetermined comparator group over a three-year performance period (the “Performance Period”). The number of earned PSUs

30 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


is based on a relative ranking between the 25th and 80th percentile of the comparator group’s TSR results. Based on our relative performance, the number of earned PSUs can range between 50% (threshold) and 200% (maximum) of the target award as shown below:
Performance Level
Relative TSR Percentile Rank (based on comparator group)
 
Common Shares Earned (as a % of Target)
 
Maximum
80 th
 
200%
 
Target
50 th
 
100%
 
Threshold
25 th
 
50%
 
Below Threshold
Below 25 th
 
0%
 
The number of earned PSUs is capped at 100% of the target award if the Company’s TSR is negative during the Performance Period. The beginning and ending share price for TSR calculations will be based on the average historical 30-day closing price per share prior to (and including) the beginning and end of the Performance Period. Earned PSUs become vested on the later of the third anniversary of the grant date and the date on which the Compensation Committee certifies achievement of the performance criteria associated with the award and determines the number of PSUs that have become earned under the award agreement.
Our stock option and RSU grants vest over time, generally in equal annual installments over three years. Unvested stock options, RSUs, and PSUs generally are forfeited if an NEO voluntarily leaves the Company other than upon retirement. In the event of retirement, the vesting of an NEO’s stock options and RSUs will generally accelerate in full, stock options will generally remain exercisable for a period of two years following termination, and PSUs will generally remain outstanding and eligible to become earned PSUs in accordance with the terms of the
 
award. For awards granted since the beginning of 2014, “retirement” means the termination of employment other than for cause following either:
attainment of age 65 and completion of five years of continuous service with the Company; or
attainment of age 55 and completion of ten years of continuous service with the Company.
For awards granted prior to 2014, “retirement” means the termination of employment other than for cause following attainment of the age of 65 and completion of five years of continuous service with the Company. Mr. Casady is the only NEO who has satisfied the age and service requirements that apply to awards granted since the beginning of 2014.
In granting equity awards beginning in February 2016 (based on 2015 performance), the Compensation Committee calculated the number of shares underlying an award using a price per share equal to the average historical 30-day closing price per share of our Common Stock inclusive of the grant date. In making this decision, the Compensation Committee was mindful of our stock price volatility, our “burn rate” in granting awards and the potential dilutive effect to stockholders of our equity awards. Beginning in 2017, this approach was also used for PSU awards.
The Compensation Committee also updated the fixed valuation ratio used in granting stock options. In granting awards in February 2016, the Committee used a 3.5:1 ratio of stock options for each share of Common Stock, compared to the 3:1 ratio used in granting equity awards in March 2015 (for 2014 performance). In making this change, the Compensation Committee primarily sought to move option values incrementally closer to the estimated fair value of our stock options calculated using the Black-Scholes model.
The table below reflects the target LTI award established for each of our NEOs for 2016 , as well as the actual LTI award granted to our NEOs for 2016 performance, as determined by the Compensation Committee:
Executive
 
2016 Annual Base Salary
 
LTI Target % of Base Salary
 
LTI Target $
 
LTI $
Granted (1)
Mark S. Casady (2)
 
$
900,000

 
350%
 
$
3,150,000

 
$

Matthew J. Audette
 
$
600,000

 
175%
 
$
1,050,000

 
$
1,050,000

Dan H. Arnold (3)
 
$
800,000

 
350%
 
$
2,800,000

 
$
2,800,000

Tracy E. Calder
 
$
442,000

 
72%
 
$
320,000

 
$
320,000

Thomas Gooley
 
$
500,000

 
150%
 
$
750,000

 
$
787,500


2017 Proxy Statement | 31

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


(1)
These LTI awards were granted on March 13, 2017 for services provided during fiscal year 2016 . Mr. Arnold received 50% of his LTI award as PSUs and 50% as stock options. The remaining NEOs received 40% of their awards as PSUs, 30% as stock options and 30% as RSUs. PSUs are eligible to become earned and vested based on the achievement of performance criteria over a three-year period, as described above. The stock options and RSUs are scheduled to vest ratably over a three-year period. In calculating the number of shares underlying stock options to be awarded, we divided the value of the grant by a number equal to: the average historical 30-day closing price per share of our Common Stock, inclusive of the date of grant, divided by 3.5. However, the exercise price of any such option is equal to the closing price of our Common Stock on the date of grant. In calculating the number of RSUs and PSUs awarded, we divided the value of the grant by a number equal to the average historical 30-day closing price per share of our Common Stock inclusive of the date of grant.
(2)
Mr. Casady retired from the Company effective as of March 3, 2017 and accordingly did not receive an LTI award in 2017.
(3)
Mr. Arnold’s LTI award was based on his base salary and LTI target in effect on March 13, 2017 (the grant date), which were $800,000 and 350%, respectively.
GRAPHLTIAWARDS17.JPG
NEO LTI awards granted on March 13, 2017 by the Compensation Committee were based on 2016 targets as well as an NEO’s individual performance during 2016, leadership responsibilities, and potential, as well as retention considerations. In determining Mr. Arnold’s LTI award amount for 2016, the Compensation Committee conducted a two-step analysis:
First, with the assistance of the Compensation Consultant, the Compensation Committee benchmarked Mr. Arnold’s target total compensation (annual base salary, target annual cash bonus award and target annual LTI award) against the Company’s peer group and determined a competitive total compensation package, including LTI.
Second, in light of his role, experience, and tenure with the Company, as well as the desirability of his skill set, the Compensation Committee sought to reinforce the alignment of Mr. Arnold’s compensation with stockholder value creation over the long-term and granted a target LTI award for the year, consisting of stock options that are scheduled to vest ratably over three years and PSUs that generally cliff vest at the end of a three-year performance period, subject
 
to achievement of certain performance criteria during such period.
The Board also granted Mr. Arnold an additional 38,809 RSUs on February 13, 2017, in recognition of his promotion to chief executive officer. These RSUs vest over a five-year period, with one-third vesting on each of the third, fourth, and fifth anniversary of the date of grant. The Board approved this vesting schedule to encourage retention over a longer period than is the typical period for vesting associated with time-based awards.
LTI award amounts for Messrs. Audette and Gooley and Ms. Calder were primarily based on competitive market practices among the Company’s peer group, as well as other factors such as potential, retention, leadership responsibilities and individual performance.
The LTI awards described in the table above and Mr. Arnold’s RSU award were all granted in 2017 and therefore are not reflected in our Summary Compensation table or Grants of Plan-Based Awards table. In accordance with SEC rules, the equity awards shown in our Summary Compensation table and Grants of Plan-Based Awards table appearing elsewhere in this proxy statement reflect LTI awards that were granted during calendar year 2016. The awards shown in such tables include the LTI awards

32 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


granted in February 2016 for services performed in 2015.
In addition to our annual LTI awards, the Compensation Committee made certain one-time grants to our NEOs in 2016. Pursuant to the terms of her employment offer letter, in connection with her commencement of employment, Ms. Calder was granted 32,241 RSUs on February 25, 2016, which grant was intended to compensate her for equity awards that she forfeited when she left her previous employer. On June 13, 2016, Mr. Gooley was granted 2,928 RSUs and 23,907 stock options with an exercise price of $24.38, the closing price per share of our Common Stock on the date of grant. This grant was made in connection with Mr. Gooley’s anniversary of employment with the Company and in recognition of his leadership in improving the Company’s service and operations. Each of these LTI awards granted to Ms. Calder and Mr. Gooley, which are reflected in our Summary Compensation table and Grants of Plan-Based Awards table, vests ratably over three years.
In addition, Messrs. Audette, Arnold, and Gooley each received a one-time grant of 3,111 RSUs on February 25, 2016 in connection with our Compensation Committee’s decision to discontinue our automobile perquisite program (described below). These RSUs vest in full on the third anniversary of their grant date.
Additional Compensation Elements
Severance and Change-in-Control Benefits
Our Executive Severance Plan enables us to offer a form of protection to our executive officers in the event their employment with us is involuntarily terminated by the Company or is terminated for good reason by the executive (each, a “qualifying termination”). We believe that providing these benefits helps us compete for executive talent and may help us retain current key employees. All of our NEOs (other than Mr. Casady, who retired as chief executive officer effective January 3, 2017) are eligible for severance benefits under the Executive Severance Plan.
Executive Perquisites
In February 2016, our Compensation Committee approved a new executive financial services policy, pursuant to which the Company’s executive officers are eligible to receive annual reimbursement of up to $15,000 for qualifying personal financial planning services. During 2016, we also provided our NEOs with a perquisite in the form of either use of a leased automobile or an automobile allowance (the “Automobile Program”). However, in February 2016, our Compensation Committee decided to phase out
 
the Automobile Program; in lieu of such program, Messrs. Audette, Arnold and Gooley each received a one-time grant of RSUs, as described above.
Other Compensation Components
401(k) Plan. We maintain a retirement savings plan (the “401(k) Plan”), for the benefit of all eligible employees, including our NEOs. Under the terms of the 401(k) Plan, employees may elect to make pre-tax 401(k) and Roth 401(k) contributions up to the statutorily prescribed limit. After one year of service, we match employee contributions on a pay period basis. For 2016 , we provided a match in an amount equal to 65% of an employee's elective deferral up to 8% of his or her eligible compensation. An employee’s interests in his or her contributions are 100% vested when contributed. We provide this benefit to all of our eligible employees, and it is provided to our NEOs on the same basis as all other eligible employees.
Nonqualified Deferred Compensation. Mr. Arnold, previously an executive of our wholly-owned indirect subsidiary, UVEST Financial Services Group, Inc. (“UVEST”), participates in the UVEST Executive Nonqualified “Excess” Plan (the “UVEST Plan”). The UVEST Plan allows certain highly compensated or management employees to defer up to 100% of their current compensation, which includes for this purpose base salary, service bonus, performance-based compensation, and commissions. Distributions of deferred amounts may be made only upon a qualifying distribution event, which, depending on the individual’s election, may be a separation from service, disability (as defined in the UVEST Plan), death, a change-in-control event (as defined in the UVEST Plan), an unforeseeable emergency, or a specified date, or may be the earliest of one or more of these events. At the time an election is made to defer compensation under the UVEST Plan, participants may choose, with respect to each potential qualifying distribution event, to receive amounts in either a lump sum or in equal annual installments over a number of years (but not to exceed five years). Deferred amounts are credited with an investment return determined as if the amounts were invested in one or more investment funds made available by the UVEST Plan and selected by a participant. The UVEST Plan is intended to be a nonqualified deferred compensation plan operated in compliance with Section 409A of the Internal Revenue Code. The amounts of compensation Mr. Arnold elected to defer under the UVEST Plan in 2016 are described in the table below titled “ Nonqualified Deferred Compensation for the Year Ended December 31, 2016 .”

2017 Proxy Statement | 33

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


Goals, Objectives and Performance Evaluation
Our NEOs are primarily responsible for ensuring that the Company achieves its annual and long-term goals. At the beginning of 2016, our Board of Directors determined, with the input of the chief executive officer and the management team, the corporate goals and objectives for the year, including with regard to the Company’s financial performance. In evaluating incentive compensation at the end of the year, our Compensation Committee considered the Company’s overall performance against these corporate goals and objectives, including its Adjusted EBITDA results. The Compensation Committee determined that the Company generally performed well against its 2016 goals and objectives in light of its strong financial results and performance in key business indicators, although the Company’s net new advisory assets fell below expectations. See “ Executive Summary—Summary of 2016 Operating Performance ” for additional information about our 2016 performance, including our Adjusted EBITDA results. In making its evaluation, the Compensation Committee considered objective and subjective factors, and exercised its discretion to grant annual cash bonus awards above each NEO’s target award amount.
 
2016 Goal
 
Performance
 
 
 
 
 
 
 
Drive LPL business growth by adding new advisors and helping existing advisors thrive
 
We had a record recruiting year in 2016, as measured by recruited gross dealer concessions, which also exceeded our target for 2016. We also increased our advisor count by 323 from 14,054 to 14,377 over the course of the year. Our production retention rate was 97%, excluding the departure of an institutional client that was acquired by a bank with its own broker-dealer, up from 96% in 2015. Our net new advisory assets were below plan for 2016, although we experienced steady improvement throughout the year.
 
 
 
 
 
 
 
Deliver key technology portfolio focusing on ClientWorks, regulatory commitments, advisory platform, and service solutions
 
We met or exceeded our annual goals for stability, security, and portfolio delivery. We also met our key goal with regard to ClientWorks: availability to 100% of our advisors prior to year-end.
 
 
 
 
 
 
 
Provide high levels of service experience for clients
 
Our overall client service experience improved in 2016 due to implementation of several key service center initiatives along with an increased focus on metrics and accountability. We made progress in improving processes and policies, including inbound call support, proactive services, and the creation of specialized service teams. We also improved in key areas of focus related to operational efficiency, service support and technology. In addition, key performance indicators, including average speed to answer, exceeded target performance.
 
 
 
 
 
 
 
Achieve G&A target through expense management and operational efficiency
 
Full-year expenses were favorable to budget due to strong expense management. Core G&A, a non-GAAP metric, was $700 million, representing less than a 1% growth rate year-over-year.
 
 
 
 
 
 
 
Manage risk through successful DOL fiduciary rule implementation and the completion of multi-year GRC and Legal efforts
 
The Company made measurable progress with its DOL fiduciary rule implementation plans. Compliance testing programs and execution of key controls and related initiatives were completed on target.
 
 
 
 
 
 
 
Be the destination of choice for employees and business partners by promoting a workplace that empowers diverse teams to work well together for clients and investors
 
Our employee engagement index was below the year-end target. This was primarily caused by workplace dynamics, including a decision to not generally grant merit increases in base compensation. The Company exceeded its retention target for top talent, however.
 
As we look forward to 2017 , the Board of Directors has recommitted our management team to goal categories that are generally consistent with those adopted in 2016 .

34 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


Non-GAAP Financial Measures
We believe that presenting certain non-GAAP measures by excluding or including certain items can be helpful to investors and analysts who may wish to use some or all of this information to analyze the Company’s current performance, prospects, and valuation. We use this non-GAAP information internally to evaluate operating performance and to formulate the budget for future periods. We believe that the non-GAAP measures and metrics discussed below are appropriate for evaluating the performance of the Company.
Gross Profit. Gross Profit is calculated as net revenues less commission and advisory expenses and brokerage, clearing, and exchange fees. All other expense categories, including depreciation and amortization, are considered general and administrative in nature. Because the Company’s Gross Profit amounts do not include any depreciation and amortization expense, the Company considers its Gross Profit amounts to be non-GAAP measures that may not be comparable to those of others in its industry. We believe that Gross Profit can be useful to investors because it shows the Company’s core operating performance before indirect costs that are general and administrative in nature.
Core G&A. Core G&A consists of total operating expenses, which were $3.7 billion for the year ended December 31, 2016, excluding the following expenses: commission and advisory, regulatory charges, promotional, employee share-based compensation, depreciation and amortization, amortization of intangible assets, and brokerage, clearing, and exchange. We present Core G&A because we believe Core G&A reflects the corporate operating expense categories over which we can generally exercise a measure of control, compared with expense items over which we either cannot exercise control, such as commission and advisory expenses, or which we view as a promotional expense necessary to support advisor growth and retention, including conferences and transition assistance. Core G&A is not a measure of the Company’s total operating expenses as calculated in accordance with GAAP. The Company does not provide an outlook for its total operating expenses because it contains expense components, such as commission and advisory expenses, that are market-driven and over which the Company cannot exercise control. Set forth below is a reconciliation of the Company's total operating expenses to Core G&A for the year ended December 31, 2016.
 
Adjusted EBITDA. Adjusted EBITDA is defined as EBITDA (net income plus interest expense, income tax expense, depreciation and amortization), further adjusted to exclude certain non-cash charges and other adjustments. We believe that Adjusted EBITDA can be a useful financial metric in assessing our historical operating performance from period to period by excluding certain items that we believe are not representative of our core business. Set forth below is a reconciliation of the Company's net income to Adjusted EBITDA for the years ended December 31, 2016, 2015, and 2014.
Credit Agreement EBITDA. Credit Agreement EBITDA is defined in the Company’s credit agreement (“Credit Agreement”) as “Consolidated EBITDA,” which is Consolidated Net Income (as defined in the Credit Agreement) plus interest expense, tax expense, depreciation and amortization and further adjusted to exclude certain non-cash charges and other adjustments, including unusual or non-recurring charges and gains. We present Credit Agreement EBITDA because we believe that it can be a useful financial metric in understanding the Company’s debt capacity and covenant compliance under its Credit Agreement.
Gross Profit, Core G&A, Adjusted EBITDA, and Credit Agreement EBITDA are not measures of the Company’s financial performance under GAAP and should not be considered as an alternative to net income or earnings per share or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of profitability or liquidity. In addition, Adjusted EBITDA and Credit Agreement EBITDA can differ significantly from company to company depending on, among other things, long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate, and capital investments.
You can find additional related information, including a reconciliation of the Company's net income to Credit Agreement EBITDA for the year ended December 31, 2016, within our Annual Report, under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—How We Evaluate Our Business.”

2017 Proxy Statement | 35

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


Set forth below is a reconciliation of Core G&A to the Company's total operating expenses for the twelve months ended December 31, 2016 (in thousands):
Core G&A
$
699,868

Regulatory charges
17,461

Promotional
148,612

Employee share-based compensation
20,352

Total G&A
886,293

Commissions and advisory
2,600,624

Depreciation & amortization
75,928

Amortization of intangible assets
38,035

Brokerage, clearing and exchange
54,509

Total operating expense
$
3,655,389

Set forth below is a reconciliation of the Company's net income to Adjusted EBITDA for the twelve months ended December 31, 2016, 2015, and 2014 (in thousands):
 
2016
 
2015
 
2014
Net income
$
191,931

 
$
168,784

 
$
178,043

Non-operating interest expense
96,478

 
59,136

 
51,538

Provision for income taxes
105,585

 
113,771

 
116,654

Depreciation and amortization
75,928

 
73,383

 
57,977

Amortization of intangible assets
38,035

 
38,239

 
38,868

EBITDA
507,957

 
453,313

 
443,080

EBITDA Adjustments:
 
 
 
 
 
Employee share-based compensation expense (1)
20,352

 
23,296

 
21,246

Acquisition and integration related expenses (2)

 
50

 
1,414

Restructuring and conversion costs (3)

 
11,976

 
34,783

Debt amendment and extinguishment costs (4)

 

 
4,361

Other (5)

 
481

 
11,623

Adjusted EBITDA
$
528,309

 
$
489,116

 
$
516,507

(1)
Represents share-based compensation expenses for equity awards granted to employees, officers, and directors. Such awards are measured based on the grant-date fair value and recognized over the requisite service period of the individual awards, which generally equals the vesting period.
(2)
Represents acquisition and integration costs resulting from various acquisitions.
(3)
Represents organizational restructuring charges, conversion, and other related costs primarily resulting from the expansion of our Service Value Commitment initiative. Results for 2015 also include charges related to the restructuring of the business of our subsidiary, Fortigent Holdings Company, Inc.
(4)
Represents expenses incurred resulting from the early extinguishment and repayment of amounts outstanding on our prior senior secured credit facilities, including the accelerated recognition of unamortized debt issuance costs that had no future economic benefit, as well as various other charges incurred in connection with the repayment under prior senior secured credit facilities and the establishment of new or amended senior secured credit facilities.
(5)
Results for the year ended December 31, 2014 include approximately $9.6 million in parallel rent, property tax, common area maintenance expenses, and fixed asset disposals incurred in connection with our relocation to our San Diego office building.

36 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


How Compensation Decisions Were Made
Role of Compensation Committee
Our Compensation Committee is composed entirely of directors who meet the NASDAQ standards for independence, including the heightened standards applicable to Compensation Committee members. The Compensation Committee is responsible for establishing our human resources policies, including our compensation philosophy, and overseeing our executive compensation policies and program. Our Compensation Committee reviews and gives final approval of the total compensation payable to each of our NEOs, as well as the structure and implementation of the Company’s overall compensation programs. In establishing total target compensation levels for our NEOs, the Compensation Committee, with input from the Compensation Consultant, determines the ranges of market compensation that it believes will enable us to effectively compete for and retain high-performing, qualified executives. The Compensation Committee’s charter sets forth the Compensation Committee’s responsibilities.
CEO Assessment Process
At the beginning of each year, the Compensation Committee sets individualized annual goals for our chief executive officer based on the corporate goals approved by our Board and additional feedback from our non-employee directors. Previous individualized goals have included achievement of financial results, providing strategic vision and leadership, leading organizational development, and effective management of external relationships.
At the end of each year, the Compensation Committee requests that our chief executive officer prepare a written self-evaluation of performance against the year’s corporate and individualized goals. The chair of our Compensation Committee then distributes the completed self-evaluation to each non-employee director, who completes an assessment of the chief executive officer’s performance relative to the individualized goals. In addition, our chief human capital officer facilitates a group assessment of the chief executive officer’s performance by the members of our management committee. Our chief human capital officer provides a summary of the group assessment to our Compensation Committee, which then considers the chief executive officer’s self-evaluation, the results of the non-employee directors’ assessments, and the results of the group assessment in evaluating the chief executive officer’s performance and, together with input from the Compensation Consultant, in evaluating the chief executive officer’s compensation for the year. The
 
assessment materials are also discussed with the full Board in an executive session led by the chair of the Compensation Committee, and after such discussion, feedback and compensation decisions are provided to the chief executive officer by the chair of the Compensation Committee.
Role of Executive Officers
At the beginning of each year, our executive officers develop the corporate goals and objectives that they believe should be achieved for the Company to be successful, which are reviewed with the Compensation Committee and the Board for the purpose of establishing how executive performance will be assessed. These objectives are derived largely from the Company’s annual financial and strategic planning sessions, and are prioritized and aligned with the Company’s long-term strategic plan. The objectives include both quantitative financial measurements and qualitative strategic and operational goals. The chief executive officer and the chief financial officer provide quarterly reports to the Compensation Committee assessing the Company’s performance against the corporate goals and objectives.
Our chief executive officer annually reviews the individual performance of each of his direct reports, including the NEOs (but excluding himself), and provides the Compensation Committee with evaluations of each such direct report as well as recommendations regarding such person’s base salary level, annual cash bonus, and LTI award. Our chief human capital officer also attends Compensation Committee meetings and assists the Compensation Committee and the chief executive officer in recommending the final compensation levels for our NEOs. Both the chief executive officer and the chief human capital officer leave the meetings during discussions of compensation actions affecting them personally.
Role of Compensation Consultant
Our Compensation Committee has the authority to engage its own advisors to assist it in carrying out its responsibilities. The Compensation Committee has engaged the Compensation Consultant to advise on compensation matters and provide experiential guidance on what is considered fair and competitive practice in our industry, primarily with respect to the compensation of our executive officers. In 2016 , the Compensation Consultant worked directly with the Compensation Committee and management to develop recommendations for compensation levels for our executive officers. In addition, the Compensation Consultant provided competitive compensation program and policy data as well as

2017 Proxy Statement | 37

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


information concerning compensation plan design. Finally, the Compensation Consultant conducted a risk assessment of the Company’s executive compensation policies and practices.
The Compensation Committee has assessed the independence of the Compensation Consultant pursuant to SEC rules and has determined that the work provided by the Compensation Consultant did not raise a conflict of interest.
Benchmarking
We believe that a competitive pay package is a critical tool in our efforts to attract and retain qualified executives. During 2016 , the Compensation Committee engaged the Compensation Consultant to prepare an analysis to benchmark and assess our overall compensation program and practices against marketplace standards. This included a review of our peer group, to which no changes were made in 2016. The Compensation Committee’s purpose in requesting this analysis was to ensure that the Company’s executive compensation practices are competitive with our peers. Working with the Compensation Consultant, the Compensation Committee reviewed the total compensation that each of our named executive officers is eligible to receive against the compensation levels of comparable positions within our peer group.
The companies within our peer group consisted of:
n
Alliance Data Systems,
Corp.
n
Fidelity National
Information Systems
n
Ameriprise Financial, Inc.
n
Fiserv, Inc.
n
Broadridge Financial
Solutions, Inc.
n
Raymond James
Financial, Inc.
n
Charles Schwab & Co.,
Inc.
n
SEI Investments
Company
n
DST Systems, Inc.
n
Stifel Financial Corp.
n
E*Trade Financial Corp.
n
TD Ameritrade Inc.
n
Eaton Vance Corp.
n
Waddell & Reed Inc.
Our goal is to ensure that we continue to measure our compensation practices against organizations that compete with us for key executives, that are considered important benchmarks in our industry, and that are comparable in size and scope to our business. As companies comprising our peer group change due to merger, acquisition, market capitalization, or business model, the Compensation Committee will consider appropriate changes to the group.
 
For the year ended December 31, 2016 , revenue and market capitalization were as follows (in billions):
 
Revenue
 
Market Capitalization
Peer Group (Median)
$
3.1

 
$
9.7

LPL Financial Holdings Inc.
$
4.0

 
$
3.1

Compensation Policies and Practices
No Employment Agreements
We do not have individual employment agreements with any of our executive officers, including our named executive officers, although we have a practice of entering into offer letters with new executive officers that generally lay out the expected terms and conditions of their employment, including potential levels of compensation. Our executives serve at the will of the Board, and their rights to severance benefits following a termination of employment, if any, will be determined under our Executive Severance Plan, which applies uniformly to our executives at the managing director level and above.
Executive Severance Plan
Under our Executive Severance Plan, participants who experience a qualifying termination are eligible to receive continued payment of base salary for one year, an amount equal to the most recent annual bonus paid or payable to the executive and a subsidy of COBRA continuation benefits for one year.
Additional benefits, including possible accelerated vesting of time-based equity and equity-based awards, are described elsewhere in this proxy statement under “ Potential Payments upon Termination or Change-in-Control for the Year Ended December 31, 2016 .”
Stock Ownership Guidelines
We have adopted stock ownership guidelines that are intended to better align the interests of our executive officers with the interests of our stockholders. Each executive at the managing director level and above (which includes our NEOs) is required to achieve and maintain ownership of our Common Stock at a threshold equal to three times his or her base salary, while our CEO is required to achieve and maintain a threshold equal to six times his base salary. Generally, executive officers have five years from the time they become an executive officer to meet the minimum ownership requirements. The after-tax spread value of all vested stock options, as well as all outstanding shares, held by the executive count as shares for purposes of satisfying the minimum ownership requirement. Unvested stock options,

38 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


unvested PSUs and unvested RSUs do not count. Our stock ownership guidelines may be found on our website at www.lpl.com.
As of April 11, 2017 , Mr. Arnold was the only NEO who satisfied the minimum stock ownership requirement pursuant to our guidelines, Messrs. Audette and Gooley and Ms. Calder each joined the Company within the last five years, and Mr. Casady was no longer subject to the guidelines. Under the stock ownership guidelines, an NEO is not required to purchase additional shares to satisfy the ownership requirement in the event of a decline in the Company’s stock price, but the NEO is generally prohibited from selling or transferring shares until the minimum ownership requirement has been achieved.
Anti-Hedging and Anti-Pledging Policy
We believe that hedging transactions may permit executives to own Company securities obtained through our executive compensation program or otherwise without the full risks and rewards of ownership. When that occurs, an executive may no longer have the same objectives as the Company’s other stockholders. As a result, we have adopted a policy, included within our Insider Trading Policy, which prohibits executives from hedging or engaging in monetization transactions, including through the use of puts and call options, collars, exchange funds, prepaid variable forwards, and equity swaps. We also prohibit executives from holding Company securities in a margin account, because a margin or foreclosure sale may occur when an executive is aware of material nonpublic information or otherwise not permitted to trade.
Rule 10b5-1 Plan Policy
The Company has adopted a policy (the “10b5-1 Policy”) for all executive officers and directors of the Company who adopt Rule 10b5-1 plans for trading in Company securities. The 10b5-1 Policy is designed to prevent inadvertent violations of the federal securities laws when implementing Rule 10b5-1 plans.
Annual Compensation Risk Assessment
The Compensation Committee annually reviews our executive compensation policies and practices to ensure that they do not encourage unnecessary and excessive risks. The Compensation Consultant provided a “comfort letter” in connection with the 2016 review, the results of which are discussed elsewhere in this proxy statement under “ Information Regarding Board and Committee Structure—Risk Management and Compensation Policies and Practices .”
 
Say-on-Pay Feedback from Stockholders
In 2011, we held an advisory vote on the frequency with which our executive compensation program would be submitted to our stockholders for an advisory vote, commonly referred to as a “say-on-pay” vote. Our stockholders recommended that say-on-pay votes occur every three years. In light of developing market practices, however, our Compensation Committee determined in 2014 that it would be advisable to hold say-on-pay votes on the compensation of our named executive officers on an annual basis. Each year, the Compensation Committee carefully considers the results of the prior year’s advisory vote as it reviews and determines the total compensation packages for our NEOs in the current year. In 2016, we received support for our executive compensation program at our 2016 annual meeting of stockholders, as 80% of the total votes cast on the advisory vote on say-on-pay voted to approve the proposal. At the Annual Meeting, we will hold another advisory vote on the frequency with which our executive compensation program will be submitted to our stockholders for an advisory vote. The Board is recommending that say-on-pay votes occur every year, consistent with our current practice.
Equity Grant Practices
The exercise price of each stock option awarded under our 2010 Plan is the closing price of the Common Stock on the date of grant. For equity grants in March 2017, the Compensation Committee determined the number of shares underlying the awards as follows.
in the case of stock options, by dividing the value of the award by a number equal to: the 30-day trailing average closing price per share of our Common Stock divided by 3.5; and
in the case of RSUs and PSUs, by dividing the value of the award by the 30-day trailing average closing price per share of our Common Stock.
In accordance with Delaware law, for 2016, the Board delegated to a committee, the sole member of which was Mr. Casady, who was then chair of the Board and chief executive officer of the Company (the “Equity Committee”), the authority to grant to an eligible participant under the 2010 Plan, other than an executive officer:
stock options to purchase up to a number of shares of Common Stock as determined by dividing $500,000 by a number equal to either (i) the closing price per share of the Common Stock on the date of grant divided by 3.5 or (ii) the

2017 Proxy Statement | 39

LPLLOGO541LARGEBLUE17.JPG
Compensation Discussion and Analysis


average of the closing price per share of the Common Stock for the trailing 30 consecutive trading days inclusive of the date of grant divided by 3.5; and
RSUs, with any individual grant limited to a number of RSUs determined by dividing $500,000 by a number equal to either (i) the closing price per share of Common Stock on the date of grant or (ii) the average closing price per share of the Common Stock for the trailing 30 consecutive trading days inclusive of the date of grant.
The stock options and RSUs granted pursuant to this delegated authority vest, in the discretion of the Equity Committee, either (i) ratably over three years or (ii) in full on the second or third anniversary of the grant date. Options granted pursuant to this delegated authority prior to December 17, 2013 vest either (i) ratably over four or five years or (ii) in full on the second or third anniversary of the grant date.
Effective February 24, 2017, Mr. Arnold is the sole member of the Equity Committee.
In addition, the Compensation Committee has delegated to our chief human capital officer the authority to grant to an employee of the Company, other than an executive officer:
stock options to purchase up to a number of shares of Common Stock as determined by dividing $500,000 by a number equal to: the average of the closing price per share of the Common Stock for the trailing 30 consecutive trading days inclusive of the date of grant divided by 3.5; and
RSUs, with any individual grant limited to the number of RSUs determined by dividing $500,000 by a number equal to the average closing price share of the Common Stock for the trailing 30 consecutive trading days inclusive of the date of grant.
The stock options and RSUs currently granted pursuant to this delegated authority vest ratably over three years, and, in addition to the individual limits described above, the total aggregate number of shares of Common Stock underlying stock options and RSUs granted by the chief human capital officer in any fiscal year may not exceed one million shares. Stock options granted pursuant to this delegated authority prior to December 17, 2013 vest ratably over four or five years.
 
162(m) Policy and Bonus Plan and PSUs
Pursuant to Section 162(m) of the Internal Revenue Code, compensation in excess of $1 million that is paid to certain executive officers is not deductible unless it qualifies as “performance-based compensation.” Our Compensation Committee believes that, in establishing the cash and equity incentive compensation programs for the Company’s executive officers, the potential deductibility of the compensation payable under those programs should be only one of a number of relevant factors taken into consideration. From time to time, the Compensation Committee may, and reserves the right to, award or approve compensation that is not deductible under Section 162(m) in order to provide competitive levels of total compensation to our executive officers in a manner designed to incentivize achievement of our strategic goals and objectives.
Our annual cash bonus awards to executive officers are generally granted under the Bonus Plan and intended to qualify as “performance-based compensation” under Section 162(m). Within the first 90 days of the annual performance period, the Compensation Committee establishes our objective performance criteria for the period and grants eligible participants a maximum potential award under the Bonus Plan based on that performance criteria. Following the conclusion of the performance period, the Compensation Committee certifies whether the objective performance criteria were satisfied. If satisfied, the Compensation Committee may exercise discretion to determine the actual amount of the annual cash bonus awards to be paid to each participant under the Bonus Plan, subject to the pre-established maximums for each participant. Our PSUs are also intended to qualify as “performance-based compensation” under Section 162(m).  See “— Long-Term Equity Incentive Awards ” for a description of our PSUs.

40 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Report of the Compensation and Human Resources
Committee of the Board of Directors


Report of the Compensation and Human Resources Committee of the Board of Directors
The following independent directors, who constitute the Compensation Committee, have reviewed the Compensation Discussion and Analysis with our management and recommended that it be included in this proxy statement.
 
 
Anne M. Mulcahy, Chair
John J. Brennan
James S. Riepe
 
 
April 11, 2017

2017 Proxy Statement | 41

LPLLOGO541LARGEBLUE17.JPG
Compensation of Named Executive Officers


Compensation of Named Executive Officers
Except where otherwise noted, the equity awards shown in the Summary Compensation table and Grants of Plan-Based Awards table for the fiscal year 2016 were granted in February 2016 in respect of services performed in 2015 . Please refer to the Compensation Discussion and Analysis included in last year’s proxy statement for a discussion of these awards. Equity awards in respect of services performed in 2016 that were granted in 2017 do not appear in the Summary Compensation Table or Grants of Plan-Based Awards table in accordance with SEC rules. Please refer to the Compensation Discussion and Analysis in this proxy statement for a discussion of these awards.
 
The tables in the following sections of this proxy statement provide information required by the SEC regarding compensation paid to or earned by our NEOs. The footnotes to these tables provide important information to explain the values presented in the tables and are an important part of our disclosures.
Summary Compensation Table for Year Ended December 31, 2016
The following table sets forth information concerning the total compensation for the years ended December 31, 2016 , 2015 , and 2014 for the NEOs:
Name and
Principal Position
Year
 
Salary
($)
 
Bonus
($)
 
Stock
Awards
($)(1)
 
Option
Awards
($)(1)
 
Non-Equity
Incentive Plan
Compensation
($)(2)
 
All Other
Compensation
($)(3)
 
Total
($)
Mark S. Casady
Former CEO
2016
 
900,000

 

 

 
1,844,706

 
2,500,000

 
39,559

 
5,284,265

2015
 
900,000

 

 

 
3,519,400

 
1,237,500

 
52,475

 
5,709,375

2014
 
885,479

(4)

 

 
3,079,998

 
1,485,000

 
71,440

 
5,521,917

Matthew J. Audette (5)  
Chief Financial Officer
2016
 
600,000

 

 
273,192

(6)
430,431

 
1,218,000

 
80,417

 
2,602,040

2015
 
156,164

 
250,000

(7)
714,465

(8)
141,983

(8)
273,315

(9)
174,377

 
1,710,304

Dan H. Arnold
President, CEO
2016
 
666,120

(10)

 
282,202

(6)
448,364

 
1,400,000

 
103,182

 
2,899,868

2015
 
606,644

(11)

 
157,673

 
223,148

 
820,313

 
37,542

 
1,845,320

2014
 
542,740

(12)

 
648,473

 
419,980

 
536,250

 
51,087

 
2,198,530

Tracy E. Calder (13)
Deputy Chief Risk Officer
2016
 
413,016

(14)
497,000

(15)
671,113

(16)
131,178

 
425,000

 
276,011

 
2,413,318

Thomas Gooley (17)
Managing Director, Service,
Trading and Operations
2016
 
500,000

 

 
225,875

(6)
327,841

 
910,000

 
341,050

 
2,304,766

(1)
Represents aggregate grant date fair value of RSUs and stock options computed in accordance with FASB ASC Topic 718. RSUs are valued using the closing price of the Common Stock on the date of grant. We use the Black-Scholes model to estimate our compensation cost for stock option awards. The underlying valuation assumptions for stock option awards are further disclosed in Note 14 , Share-Based Compensation , to our consolidated financial statements in our Annual Report and Note 15, Share-Based Compensation , to our consolidated financial statements filed with our annual reports on Form 10-K for the years ended December 31, 2015 and 2014 . Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.
(2)
Represents the dollar value of annual cash bonus awards earned under the Bonus Plan by each NEO.
(3)
See “ All Other Compensation” table below for additional information.
(4)
Mr. Casady began the year with a base salary of $800,000, but received an increase in salary to $900,000 during the year.
(5)
Mr. Audette joined the Company on September 28, 2015.
(6)
Includes a one-time grant of 3,111 RSUs on February 25, 2016 in connection with our Compensation Committee’s decision to discontinue the Automobile Program.
(7)
Represents a signing bonus paid to Mr. Audette in connection with his commencement of employment.
(8)
Represents sign-on grants of stock options and RSUs to Mr. Audette in connection with his commencement of employment.
(9)
Pursuant to the terms of his employment offer with the Company, Mr. Audette received an annual cash bonus for 2015 equal to his prorated target bonus amount.
(10)
Mr. Arnold began the year with a base salary of $625,000, but received an increase in salary to $675,000 during the year.

42 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation of Named Executive Officers


(11)
Mr. Arnold began the year with a base salary of $550,000, but received an increase in salary to $600,000 and then to $625,000 during the year.
(12)
Mr. Arnold began the year with a base salary of $500,000, but received an increase in salary to $550,000 during the year.
(13)
Ms. Calder joined the Company on January 25, 2016.
(14)
Ms. Calder’s base salary for the year was $442,000, but was prorated for a start date of January 25, 2016.
(15)
Represents a signing bonus paid to Ms. Calder in connection with her commencement of employment.
(16)
Includes a sign-on grant of RSUs to Ms. Calder in connection with her commencement of employment.
(17)
Mr. Gooley joined the Company on June 25, 2015. Mr. Gooley was not a named executive officer in 2015. His compensation is therefore only disclosed for the year ended December 31, 2016.
All Other Compensation
The following table sets forth information concerning All Other Compensation in the table above for the years ended December 31, 2016 , 2015 , and 2014 for the NEOs:
Name
Year
 
Automobile Lease and Related Expenses (1)
($)
 
Taxable Travel and Related Expenses
($)
 
Taxable Relocation and Related Expenses
($)
 
Reimbursement for Certain Taxes and Tax Planning Services( 2)
($)
 
401(k) Employer Match
($)
Total
($)
Mark S. Casady
2016
 
2,216

 
23,563

(3)

 

 
13,780

39,559

 
2015
 
38,695

 

 

 

 
13,780

52,475

 
2014
 
39,259

 
18,661

(4)

 

 
13,520

71,440

Matthew J. Audette
2016
 
14,000

 

 
62,917

(5)
3,500

 

80,417

 
2015
 
10,500

 
22,946

 
140,931

(5)

 

174,377

Dan H. Arnold
2016
 
28,692

 
60,710

(3)

 

 
13,780

103,182

 
2015
 
23,762

 

 

 

 
13,780

37,542

 
2014
 
23,832

 
13,735

(4)

 

 
13,520

51,087

Tracy E. Calder
2016
 

 
34,847

(3)
238,089

(6)
3,075

 

276,011

Thomas Gooley
2016
 
14,000

 
14,267

(3)
292,392

(7)
15,000

 
5,391

341,050

(1)
The Company determined to phase out its Automobile Program in 2016. Mr. Arnold’s automobile perquisite terminated in October 2016, and Messrs. Audette and Gooley’s automobile perquisites terminated in May 2016.
(2)
Consists of reimbursements received under the Company’s executive financial services policy.
(3)
Consists of hotel, air travel, and conference expenses, and related tax gross-up payments, related to the attendance in 2016 of the NEO, and in the case of Messrs. Casady and Arnold and Ms. Calder, the NEO’s spouse at a conference hosted by the Company outside of the United States for its top-producing financial advisors. Tax gross-up payments of $10,049, $36,812, $11,970, and $6,788 were made to Messrs. Casady and Arnold and Ms. Calder and Mr. Gooley, respectively.
(4)
Consists of hotel, air travel and conference expenses, and related tax gross-up payments, related to the attendance in 2014 of the NEO and the NEO’s spouse at a conference hosted by the Company outside of the United States for its top-producing financial advisors. Tax gross-up payments of $6,093 and $4,663 were made to Messrs. Casady and Arnold, respectively.
(5)
Includes tax gross-up payments of $29,936 and $52,962 made to Mr. Audette in 2016 and 2015, respectively, related to relocation expenses.
(6)
Includes tax gross-up payments of $103,776 made to Ms. Calder in 2016 related to relocation expenses.
(7)
Includes tax gross-up payments of $139,775 made to Mr. Gooley in 2016 related to relocation expenses.

2017 Proxy Statement | 43

LPLLOGO541LARGEBLUE17.JPG
Compensation of Named Executive Officers


GRAPHNEOCOMPMIX17.JPG

 
Annual Cash Bonus Awards
 
 
Base Salary
 
 
 
 
 
 
Long-Term Incentives
 
 
Other


CHARTCEOCOMPMIX17.JPG CHARTNEOCOMPMIXEXCLCEO17.JPG

44 | 2017 Proxy Statement

LPLLOGO541LARGEBLUE17.JPG
Compensation of Named Executive Officers


2016 Grants of Plan-Based Awards
The following table provides additional information about non-equity and equity-based awards granted to our NEOs during the year ended December 31, 2016 :
Name
Grant Date
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)
All Other Stock Awards: Shares of Stock or Units
(#)(2)
All Other Option Awards: Securities Underlying Options
(#)(3)
Exercise or
Base Price
of Option Awards
($)
Grant Date Fair Value of Stock and Option Awards
($)(4)
Target
Maximum
Mark S. Casady
 
$
2,475,000

$
5,000,000

 
 
 
 
 
 
 
 
2/25/2016
 
 

 
403,329

 
$
19.85

 
$
1,844,706

Matthew J. Audette
 
$
1,050,000

$
2,500,000

 
 
 
 
 
 
 
2/25/2016
 
 
3,111

(5)

 
$

 
$
56,770

 
2/25/2016
 
 
11,530

 

 
$

 
$
216,422

 
2/25/2016
 
 

 
94,110

 
$
19.85

 
$
430,431

Dan H. Arnold
 
$
1,181,250

$
2,500,000

 
 
 
 
 
 
 
 
2/25/2016
 
 
3,111

(5)

 
$

 
$
56,770

 
2/25/2016
 
 
12,010

 

 
$

 
$