I'd like to ask that the meeting come to order. Good morning. My name is Frank Salerno, and I am Chairman of the Board of WisdomTree Investment. It is with great pleasure that I welcome you this morning to our twenty twenty Annual Stockholders Meeting, which is being held virtually. Before we begin the official business of this meeting, I would like to note that in 2019, we made important strides positioning the business for sustainable growth.
Our diversification efforts and investment in distribution over recent years continue to benefit results with positive net flows and asset growth in 2019 across key asset classes. Mindful of our precious resources and with an eye towards maximizing long term growth and shareholder value, we divested our Canadian franchise and pursued an exit from our investment in AdvisorEngine. We leaned into model portfolios in our collaboration with professor Jeremy Siegel and made a minority investment in Securrency, a blockchain financial services infrastructure firm. We entered 2020 with significant momentum. However, the spread of COVID-nineteen across the globe upended capital markets and temporarily shut down large segments of the global economy.
Operationally, we were prepared, and our business is running smoothly with the remote workforce. We have the most modern infrastructure as well as a business model that leverages the strength of the largest and best capitalized financial services firms. We are committed to the health and well-being of our employees and the franchise, and we are responsibly managing costs. WisdomTree remains differentiated, confident and well positioned on the right side of secular trends. And despite the challenging environment, we are seeing encouraging signs that our investments are paying off.
I would like to turn the meeting over to Jonathan.
Good morning, everyone. I am Jonathan Steinberg, CEO of WisdomTree Investment. It is a pleasure to welcome our stockholders to our annual meeting. Our meeting today will consist of two phases. First, we will take care of the formal business at hand, which is described in the proxy statement for this meeting.
A copy of the agenda is on our annual meeting web portal. Following adjournment of the formal proceedings, I will take questions. You may post your questions online at any time, and I will address them at the end of the meeting. Only WisdomTree stockholders who have entered their 16 digit control number to participate in this meeting will be able to ask questions. Proceeding to the formal business, I would like to introduce our directors who are with us today.
Our outside directors, in addition to our Chairman, Frank Salerno, are Tony Bassone, Susan Cosgrove, Bruce Levine and Winduger. In addition, I would like to acknowledge our executive officers: Jared Lillian, President and Chief Operating Officer Stu Bell, Chief Operating Officer at WisdomTree Asset Management Martij Frankenthaler, Chief Legal Officer and Secretary Alexis Marinov, Head of WisdomTree Europe Amit Muni, CFO Jeremy Schwartz, Global Head of Research and Peter Zemba, Chief Administrative Officer. Our independent auditor, the firm of Ernst and Young, is represented at this meeting by Eyal Steinfeld and Lindsay Hill. Our outside counsel, the firm is represented by Jocelyn Morell. Thank you.
Let's proceed to the formal business of the meeting. Marcy Frankenthaler, our secretary, will act as secretary of this meeting.
Mister Steinberg, I present to you the affidavit of distribution of Joanne Vogel of Broadridge Financial Solutions, Inc, dated 05/06/2020. This affidavit states that commencing on 04/29/2020, notice of the meeting was mailed to all stockholders of record at the close of business on 04/24/2020. I also present you a list of the stockholders of record as of the close of business on April 24. A duplicate record has been on file at the company's principal place of business for the last ten days immediately prior to the date of this meeting and has been available for inspection by any stockholder during that period at any time during normal business hours.
Thank you, Marci. If any stockholder would like to ask a question or make a statement during the formal part of this meeting, please post your question or comment online in accordance with the online instructions. I request that your comments be briefed to allow other stockholders the opportunity to comment and that the comments be directly related to the proposals under consideration. I hereby appoint Henry Farrell to act as inspector of elections for this meeting. He will tabulate the voting the inspector of elections has signed in his oath of office.
We have a quorum present.
Mister Steinberg, of the 156,424,840 shares of common stock entitled to vote at the meeting, at least the majority of the shares are represented either in person or by proxy, and therefore, a quorum is present.
Thank you. We may now proceed to transact the business for which this meeting has been called. Let me briefly describe the voting procedures. Stockholders who have previously turned in their proxy or voted by any of the other available means described in proxy statement and do not want to change their vote, do not need to take any further action. Your vote will be counted.
It is now 11:06. If you are eligible to vote and have not submitted your proxy or if you want to change your vote, the polls are open. You can cast your vote via the annual meeting web portal during the meeting until the polls are closed. The first item of business is the election of directors. At this meeting, we will be voting on two nominees for class three directors to serve for the term of three years as stated in the proxy statement.
In accordance to the bylaws, your directors have nominated Frank Salerno and Jonathan Steinberg to be elected to serve as class three directors. The company's bylaws require that a stockholder provide advanced notice to the company of a stockholder's intent to nominate persons or directors. No such notice was received. Accordingly, I declare the nominations for directors closed. The board of directors unanimously recommended that stockholders vote in favor of these nominees.
I move for their election.
I second the motion.
Anyone who is voting by electronic means, please do so now. The second item of business is the ratification of Ernst and Young as the company's independent registered public accounting firm for the fiscal year ending 12/31/2020. The audit committee of the Board of Directors, which is comprised entirely of independent directors, appointed Ernst and Young as the company's independent registered public accounting firm to audit the company's financial statements for the fiscal year ending 12/31/2020. Stockholder ratification is not required by the company's bylaws. However, the Board of Directors is submitting this to stockholders for ratification as a matter of good corporate governance.
If the stockholders do not approve the selection of Ernst and Young as the company's independent registered public accounting firm, the audit committee will reconsider the appointment.
I move for ratification.
I second the motion. Anyone who is voting by electronic means, please do so now. The third item of business is the vote on an advisory resolution to approve the compensation of the company's named executive officers as disclosed in the proxy statement pursuant to item four zero two of regulation s dash k. The board of directors unanimously recommended that stockholders vote in favor of this proposal. I move to approve on an advisory basis the compensation of the company's named executive officers as disclosed in the proxy statement pursuant to Item four zero two of Regulation S K.
I second the motion.
Anyone who is voting by electronic means, please do so now. We will now close the polls. It is 11:09 on 06/18/2020, and the polls for each matter to be voted on at this meeting are now closed. No additional proxies or votes and no changes or revocations will be accepted. I will now ask the inspector of elections to report on the voting results.
I remind everyone that these results are based on the votes received prior to the meeting and that the final number will be verified and reported by the inspector of elections and recorded in the minutes. Is the inspector prepared to announce the preliminary voting results?
Yes. Yes. With regards to proposal one, a majority of the votes cast have been voted in favor of the election of the persons nominated. With regards to proposal two, a majority of the votes cast have been voted in favor ratification of the appointment of Ernst and Young as the company's independent registered accounting firm for the fiscal year ending 12/31/2020. With regards to proposal three, a majority of the votes have been voted in favor of an advisory resolution to approve the compensation of the company's named executive officers.
Thank you. The final results will be included in our our reports filed with the SEC. There being no other matters for consideration at this meeting, I will entertain a motion to adjourn this meeting.
I so move.
Second the motion. The formal part of this meeting is now adjourned. At this time, I would like to give everyone a chance to ask questions. Miss Frankenthaler, please recite our cautionary statement.
Following answers may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. A number of factors could cause actual results to differ materially from the results discussed in forward looking statements, including, but not limited to, the risks set forth in the Risk Factors section in WisdomTree's annual report on Form 10 ks for the year ended December 3139, and quarterly report on Form 10 Q for the quarter ended 03/31/2020. WisdomTree assumes no duty and does not undertake to update any forward looking statements. Hi. This is Marcy Frankenthaler, and I will respond.
I will read the first question and then provide an answer to it. The first question is, I really like virtual shareholder meetings as it makes it easier to attend. Out of curiosity, how many are attending this meeting? We have a small number of shareholders attending our virtual meeting but welcome shareholders to attend our virtual meetings in the future. And we've been holding virtual meetings for a long time so this is something that we very much like to engage in.
Our next question is and I will read it. Can you give us an idea of how you think about operating margins percentages range as business builds AUM to 75,000,000,000? Thank you. Amit, will you take this question?
Yes. Hi. This is Amit Muni. You know, while we do not give guidance forward looking guidance on operating margins, just some things to think about generally, you know, there is a lot of operating leverage in our business as our AUM continues to scale. Because of our business model, the way our expenses are built, they will decline as a percentage of our revenues as our revenues increase, particularly around compensation, gross margins, and our other a AUM variable costs.
So as AUM scales, we do expect to see increases in our operating margin.
Next question. After current financing and buyback executed, more how should we look at how aggressive or not the company might continue the buyback program this year?
Hi. You know, when we think about our capital generally, we wanna make sure that we we make an we have cash available so that we can make investments in our business, whether organic or inorganic opportunities. Second is to return capital to our shareholders through dividends and buybacks. And third, we do have debt and to make sure that we do have enough cash to eventually pay that off at the end of three years. Currently, you know, we we just did a very large buyback in connection with our convertible debt offering.
And so I think how we allocate between those three buckets will be about how our AUM continues to scale from here. If we continue to see AUM rise, cash earnings increase, we may consider changing how we allocate that capital to increase buybacks. But that'll all again depend upon how our AUM earnings power scales from here.
Our next question is, as the industry consolidates with only a few firms dominating the market, how does a small firm like WisdomTree compete and grow profitably?
Thank you. John Steinberg, I'll take that one. You know, it requires great passionate teammates workforce, and great coordination amongst the members, which I think we really have. It also requires great products, and that we as an organization move with speed and urgency and focus. But bottom line is you have to grow your assets, and you really have to be very focused on your cost structure.
But that's a recent example. At the end of last year, WisdomTree launched a thematic fund, an emerging cloud fund, WCLD, and that fund year to date is up 45%. It's the best performing technology fund in The United States. We've raised over $250,000,000 year to date in The United States, but we've also launched it in the usage structure in Europe and showing great coordination between our global franchise. And there we've raised another $100,000,000 But basically, that is how we tackle the issues of growing in a very competitive business.
Marcy, next question.
Next question. The SEC seems to have a just say no attitude towards Bitcoin ETF. Would it not be easier to do one with Ethereum, which does not have the dubious background or use cases of Bitcoin? And the second part of that question is also what makes the WisdomTree Bitcoin ETF different from the others the SEC has flushed?
Thank you for the question. So one, I think the news media has recently sort of misrepresented our recent filing. What we have, we have a broad commodity fund that we will be launching in the 40 act. And as part of that, broad exposure to commodities, we're seeking the ability to have up to five percent of our assets in Bitcoin futures. Now I don't know if the SEC is forever going to be a a no to Bitcoins, but we think it would be additive and of investor interest.
And so we will do our best to work with the SEC to alleviate any concerns that they might have. In terms of their overall feeling towards Bitcoin versus other instruments like Erythium, I think that their concern is on broadly digital assets, crypto assets and expect that there would be they would not be any more favorable upon an Erythium launch as it would be to a Bitcoin launch. And I'm not sure that there would be great investor demand for that. So we have to balance what we can investor desire with what the SEC will allow. Marcia, there is another question.
There is one final question. Can you please give us an update on partnership progress with Securrency?
Yes. So as Frank mentioned at the opening of his comments, WisdomTree made a minority investment in a blockchain infrastructure company, financial service infrastructure company called Securrency, and we made that investment with an eye towards bringing to market asset management onto the blockchain as we see there could be substantial customer benefits for doing so. This is cutting edge in terms of new product structure, and we have to work very, very carefully and closely with the SEC and other regulators, which we are more than prepared to do. When you think that WisdomTree launched our first funds in 02/2006, we were thirteen years behind State Street who launched the first ETF. With digital assets on the blockchain, WisdomTree has an opportunity to be first.
We're truly amongst the very first with these, but there is no guarantee on time frame. We do have to work with the regulators. But we do see that we could improve upon this existing structure, ETFs. And that's really one of the mantras for WisdomTree from a product development standpoint is to always try to envision what would be the best structure to compete. And our strategy team and others at the company have determined that this is an important direction.
And so that's what we are trying to accomplish. Marcia, are there any other questions?
We had one additional question came in. If you can provide an update on how SEGAL model portfolios are doing in terms of interest inflows.
So thank you for that question. You know, we really have been working since the very beginning of WisdomTree back in 2004 with professor Siegel, and he is an intimate part of our research investment committee, product development, and we have expanded that relationship to model portfolios. There has been that was only very recently launched the the Siegel portfolios, but we have gotten a tremendous amount of interest. Now we aren't breaking out, at least at this point, assets flows into those models, but I will say that models are a key initiative for the firm. Models have been growing.
Model asset AUM is at record highs, and they were growing in the first quarter. But I do believe we'll have some positive substantial updates around specifically the CECL models on upcoming earnings calls. Thank you.
There are no further questions, so I'm going to turn it back over to the operator.