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.          )

February 28, 201427, 2015

To the Stockholders of
Waddell & Reed Financial, Inc.:

        Waddell & Reed Financial, Inc.'s 20142015 Annual Meeting of Stockholders will be held in the William T. Morgan Auditorium at the principal executive offices of the Company, 6300 Lamar Avenue, Overland Park, Kansas 66202 at 10:00 a.m., local time, on Wednesday, April 16, 2014.15, 2015.

        At the annual meeting, we will ask you to (1) elect Sharilyn S. Gasaway, Alan W. KosloffThomas C. Godlasky, Dennis E. Logue and Jerry W. Walton,Michael F. Morrissey, who have been nominated by the Board, as Class III directors, (2) consider and vote uponconduct an advisory vote to approve named executive officer compensation, (3) approve an amendment and restatement of the Waddell & Reed Financial, Inc. 2003 Executive Incentive Plan, as amended and restated, to (i) increase the individual annual limits with respect to awards, (ii) extend the term of the plan to December 31, 2019, and (iii) resubmit for stockholder approval the eligible employees and business criteria under the plan for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code, (4) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the 20142015 fiscal year, and (5)(4) transact such other business as may properly come before the annual meeting or any adjournments or postponements thereof. The accompanying formal notice and Proxy Statement further discuss the matters that will be presented for a stockholder vote.

        We have also enclosed our 20132014 Annual Report, which is not a part of the proxy soliciting materials. If you have any questions or comments about the matters discussed in the Proxy Statement or about the operations of the Company, we will be pleased to hear from you. It is important that your shares be voted at the annual meeting. If you are unable to attend the annual meeting in person and wish to have your shares voted, you may vote by telephone, Internet or by filling in, signing and dating the enclosed proxy card and returning it in the accompanying envelope as promptly as possible.

        We hope that you will take this opportunity to meet with us to discuss the results and operations of the Company for the 20132014 fiscal year.

		Sincerely,
		Henry J. Herrmann Chairman of the Board and Chief Executive Officer

WADDELL AND REED FINANCIAL, INC.
6300 Lamar Avenue
Overland Park, Kansas 66202
(913) 236-2000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on April 16, 201415, 2015

To the Stockholders of
Waddell & Reed Financial, Inc.:

        I am pleased to give you notice that the 20142015 Annual Meeting of Stockholders of Waddell & Reed Financial, Inc. (the "Company") will be held in the William T. Morgan Auditorium at the principal executive offices of the Company, 6300 Lamar Avenue, Overland Park, Kansas 66202 on Wednesday, April 16, 2014,15, 2015, at 10:00 a.m., local time.

        At the annual meeting, you will be asked to:

1.

Elect Sharilyn S. Gasaway, Alan W. KosloffThomas C. Godlasky, Dennis E. Logue and Jerry W. Walton,Michael F. Morrissey, who have been nominated by the Board, as Class III directors to hold office until the 20172018 Annual Meeting of Stockholders or until their respective successors are duly elected and qualified.Stockholders.

2.

Consider and vote uponConduct an advisory vote to approve named executive officer compensation.

3.

Approve an amendment and restatement of the Waddell & Reed Financial, Inc. 2003 Executive Incentive Plan, as amended and restated, to (i) increase the individual annual limits with respect to awards, (ii) extend the term of the plan to December 31, 2019, and (iii) resubmit for stockholder approval the eligible employees and business criteria under the plan for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code.

4.

Ratify the appointment of KPMG LLP as the Company's independent registered public accounting firm for the 2015 fiscal year ending December 31, 2014.year.

5.4.

Transact such other business as may properly come before the annual meeting or any adjournments or postponements thereof.

        These matters are more fully discussed in the accompanying Proxy Statement.

        The Board of Directors has fixed Wednesday, February 19, 2014,18, 2015, at the close of business, as the record date for the determination of stockholders entitled to notice of, and to vote at, the annual meeting.

        All stockholders are cordially invited to attend the annual meeting in person. However, if you are unable to attend in person and wish to have your shares voted,YOU MAY VOTE BY TELEPHONE, INTERNET OR BY FILLING IN, SIGNING AND DATING THE ENCLOSED PROXY CARD OR VOTING INSTRUCTION FORM AND RETURNING IT IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Regardless of how you deliver your proxy, you may revoke your proxy before it is voted by timely submitting to the Secretary of the Company a written revocation or a proxy bearing a later date, or by attending the annual meeting and giving verbal notice of your intention to vote in person.

        The annual meeting for which this notice is given may be adjourned or postponed from time to time without further notice other than announcement at the annual meeting or any adjournments or postponements thereof.

		BY ORDER OF THE BOARD OF DIRECTORS
		Wendy J. Hills Senior Vice President, General Counsel & Secretary

        The accompanying Proxy Statement is dated February 28, 201427, 2015 and is first being mailed to stockholders on or about March 7, 2014.6, 2015.

WADDELL & REED FINANCIAL, INC.

PROXY STATEMENT

        This Proxy Statement is furnished in connection with the solicitation of proxies by Waddell & Reed Financial, Inc. (the "Company"), on behalf of its Board of Directors (the "Board"), for the 20142015 Annual Meeting of Stockholders.Stockholders (the "Annual Meeting"). This Proxy Statement is dated February 28, 201427, 2015 and, together with the related proxy card, is being mailed to stockholders on or about March 7, 2014.6, 2015.

QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS AND
THE ANNUAL MEETING

When And Where Is Theand where is the Annual Meeting?

        The annual meetingAnnual Meeting will be held in the William T. Morgan Auditorium at the Company's principal executive offices located at 6300 Lamar Avenue, Overland Park, Kansas 66202 at 10:00 a.m., local time, on Wednesday, April 16, 2014.15, 2015.

What Matters Will Be Voted Upon At Thematters will be voted upon at the Annual Meeting?

        At the annual meetingAnnual Meeting you will be asked to:

•

Elect Thomas C. Godlasky, Dennis E. Logue and Michael F. Morrissey, who have been nominated by the nominees Sharilyn S. Gasaway, Alan W. Kosloff and Jerry W. WaltonBoard, as Class III directors to hold office for a term of three years, expiring atuntil the close of the2018 Annual Meeting of Stockholders in 2017.Stockholders.



•

Consider and vote uponConduct an advisory vote to approve named executive officer compensation.



•

Approve an amendment and restatement (the "Amendment") of the Waddell & Reed Financial, Inc. 2003 Executive Incentive Plan, as amended and restated, to (i) increase the individual annual limits with respect to awards, (ii) extend the term of the plan to December 31, 2019, and (iii) resubmit for stockholder approval the eligible employees and business criteria under the plan for purposes of complying with the requirements of Section 162(m) of the Internal Revenue Code.



•

Ratify the appointment of KPMG LLP ("KPMG") as the Company's independent registered public accounting firm for the 20142015 fiscal year.



•

Transact such other business as may properly come before the annual meetingAnnual Meeting or any adjournments or postponements thereof.

What Constitutes A Quorum?constitutes a quorum?

        The presence, either in person or by proxy, of the holders of at least a majority of the voting power of our issued and outstanding shares of Class A common stock is required to constitute a quorum for the transaction of business at the annual meeting.Annual Meeting. Abstentions and broker non-votes, which are described in more detail below, are counted as shares present at the annual meetingAnnual Meeting for purposes of determining whether a quorum exists.

Who Is Entitled To Vote?is entitled to vote?

        Only stockholders of record of the Company's Class A common stock at the close of business on Wednesday, February 19, 2014,18, 2015, which is the "record date," are entitled to notice of, and to vote at, the annual meeting.Annual Meeting. Shares that may be voted include shares that are held (1) directly by the stockholder of record, and (2) beneficially through a broker, bank or other nominee. Each share of our Class A common stock is entitled to one vote on each matter submitted for a vote at the annual meeting.Annual Meeting.

        As of the record date, there were approximately 84,856,62183,564,556 shares of our Class A common stock issued and outstanding and entitled to be voted at the annual meeting.Annual Meeting. Any shares held in treasury on the record date are not considered outstanding and will not be voted.

What Is The Difference Between Holding Shares As A "Registered Owner" And As A "Beneficial Owner"is the difference between holding shares as a "registered owner" and as a "beneficial owner"?

        Most of the Company's stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some distinctions between registered shares and those owned beneficially:

•

Registered Owners – If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A. ("Computershare"), you are the stockholder of record. As the stockholder of record, you have the right to grant your voting proxy directly to the Company or to vote in person at the annual meeting.Annual Meeting.



•

Beneficial Owners – If your shares are held in a brokerage account, bank or by another nominee, you are the "beneficial owner" of shares held in street name. As the beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote or to vote in person at the annual meeting.Annual Meeting. However, since you are not a stockholder of record, you may not vote these shares in person at the annual meetingAnnual Meeting unless you obtain a "legal proxy" from your broker, bank or other nominee (who is the stockholder of record), giving you the right to vote the shares.

What Stockholder Approval Is Necessary For Approval Of The Proposals?stockholder approval is necessary for approval of the proposals?

•

Election of Directors

        The election of directors requires the affirmative vote of a plurality of the shares of our Class A common stock cast at the annual meeting.Annual Meeting. This means that the three Class III director nominees receiving the most votes will be elected. For purposes of this vote, neither a vote to abstain, withholding your vote (or a direction to a broker or other nominee to do so) nor a broker non-vote (as described below) will be counted as votes cast, and therefore, will have no effect on the outcome of the election of directors.

        Under our Director Resignation Policy, any nominee for director in an uncontested election who receives a greater number of "withheld" votes than "for" votes is required to tender his or her resignation for consideration by the Board. For more detail on this policy, see "Corporate Governance" below.

•

Advisory Vote on Named Executive Officer Compensation

        The advisory vote to approve named executive officer compensation requires the affirmative vote of a majority of the shares of our Class A common stock cast at the annual meeting.Annual Meeting. For purposes of this vote, neither a vote to abstain (or a direction to a broker or other nominee to do so) nor a broker non-vote (as described below) will be counted as a vote cast, and therefore, will have no effect on this vote. This vote is advisory and non-binding on the Board, the Compensation Committee and the Company.

•

Approval of the Amendment to the Executive Incentive Plan

        Under current New York Stock Exchange (the "NYSE") rules, the approval of the Amendment to the Executive Incentive Plan, which is set forth on Appendix A to this Proxy Statement, requires the affirmative vote of a majority of the shares of our Class A common stock cast at the annual meeting. For purposes of this vote, a vote to abstain (or a direction to a broker or other nominee to do so) will be counted as a vote cast and will have the effect of a negative vote. A broker non-vote (as described below) will not be counted as a vote cast and will have no effect on this vote.

•

Ratification of the Appointment of the Company's Independent Registered Public Accounting Firm

        The ratification of the Audit Committee's appointment of KPMG as the Company's independent registered public accounting firm for the 2015 fiscal year requires the affirmative vote of a majority of the shares of our Class A common stock cast at the annual meeting.Annual Meeting. For purposes of this vote, a vote to abstain (or a direction to a

broker or other nominee to do so) is not counted as a vote cast, and therefore, will have no effect on this vote. Stockholder ratification is not required for the appointment of KPMG because the Audit Committee has the responsibility of appointing the Company's independent registered public accounting firm. However, we are submitting the proposal to solicit the opinion of our stockholders.

        As of the record date, directors and executive officers of the Company beneficially owned an aggregate of approximately 3,183,0552,973,565 shares of Class A common stock representing 3.8%approximately 3.6% of our Class A common stock issued and outstanding, and therefore, 3.8%3.6% of the voting power entitled to vote at the annual meeting.Annual Meeting. The Company believes that its directors and executive officers currently intend to vote their shares (1) FOR the election of Sharilyn S. Gasaway, Alan W. KosloffThomas C. Godlasky, Dennis E. Logue and Jerry W. WaltonMichael F. Morrissey as Class III directors, (2) FOR the approval, on an advisory basis, of the compensation paid to

our named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, (3) FOR the approval of the Amendment of the Executive Incentive Plan, and (4)(3) FOR the ratification of KPMG as the Company's independent registered public accounting firm for the 20142015 fiscal year.

May I Vote My Shares In Person At Thevote my shares in person at the Annual Meeting?

        If you are the registered owner of shares, you have the right to vote these shares in person at the annual meeting.Annual Meeting.

        If you are the beneficial owner of shares, you may vote these shares in person at the annual meetingAnnual Meeting if you have requested and received a legal proxy from your broker, bank or other nominee (the stockholder of record) giving you the right to vote the shares at the annual meeting,Annual Meeting, complete such legal proxy and present it to the Company at the annual meeting.Annual Meeting.

        Even if you plan to attend the annual meeting,Annual Meeting, we recommend that you submit your proxy card or voting instructions so that your vote will be counted if you later decide not to attend the annual meeting.Annual Meeting.

How Cancan I Vote My Shares Without Attending Thevote my shares without attending the Annual Meeting?

        If you are the registered owner of shares, you may instruct the named proxy holders on how to vote your shares by completing, signing, dating and timely returning the enclosed proxy card in the postage pre-paid envelope provided with this Proxy Statement, or by using the Internet voting site or the toll-free telephone number listed on the proxy card. Specific instructions for using the Internet and telephone voting systems are on the proxy card. The Internet and telephone voting systems will be available until 11:59 p.m. Central Daylight Time, on Tuesday, April 15, 201414, 2015 (the day before the annual meeting)Annual Meeting).

        If you are the beneficial owner of shares held in street name, you may instruct your broker, bank or other nominee on how to vote your shares. Your nominee has enclosed with this Proxy Statement a voting instruction card for you to use in directing your nominee on how to vote your shares. The instructions from your nominee will indicate if Internet or telephone voting is available and, if so, will provide details regarding how to use those systems.

If My Shares Are Held Inmy shares are held in "Street Name," Will My Broker, Bank Or Other Nominee Vote My Shares For Me?will my broker, bank or other nominee vote my shares for me?

        Brokers, banks and other nominees who do not have instructions from their "street name" customers may not use their discretion in voting their customers' shares on "non-routine" matters. The proposal to elect Sharilyn S. Gasaway, Alan W. KosloffThomas C. Godlasky, Dennis E. Logue and Jerry W. WaltonMichael F. Morrissey as Class III directors and the advisory vote to approve named executive officer compensation and the proposal to approve the Amendment to the Executive Incentive Plan are non-routine matters and, therefore, shares of our Class A common stock held in "street name" will not be voted with respect to these proposals without voting instructions from the beneficial owners. However, the proposal to ratify the appointment of KPMG as the Company's independent registered public accounting firm is considered a routine matter and, therefore, if beneficial owners fail to give voting instructions, nominees will have discretionary authority to vote shares of our Class A common stock with

respect to this proposal. You should follow the instructions provided by your nominee in directing your nominee on how to vote your shares.

What Is A Broker Non-Vote?is a "broker non-vote"?

        Generally, a "broker non-vote" occurs when a broker, bank or other nominee that holds shares in "street name" for customers is precluded from exercising voting discretion on a particular proposal because (1) the beneficial owner has not instructed the nominee how to vote, and (2) the nominee lacks discretionary voting power to vote such shares. Under NYSENew York Stock Exchange ("NYSE") rules, a nominee does not have discretionary voting power with respect to the approval of "non-routine" matters absent specific voting instructions from the beneficial owners of such shares.

        The proposal to elect Sharilyn S. Gasaway, Alan W. KosloffThomas C. Godlasky, Dennis E. Logue and Jerry W. WaltonMichael F. Morrissey as Class III directors and the advisory vote to approve named executive officer compensation and the proposal to approve the Amendment to the Executive Incentive Plan are "non-routine" matters. If you are the beneficial owner of shares of the Company's Class A common stock, your nominee will send you directions on how you can instruct them to vote. If you do not provide voting instructions, your nominee will not vote your shares on these proposals.

How Will My Proxy Be Voted?will my proxy be voted?

        Shares represented by a properly executed proxy (in paper form, by Internet or by telephone) that is timely received, and not subsequently revoked, will be voted at the annual meetingAnnual Meeting or any adjournments or postponements thereof in the manner directed on the proxy. Henry J. Herrmann and Alan W. Kosloff are named as proxy holders in the proxy form and have been designated by the Board to represent you and vote your shares at the annual meeting.Annual Meeting. All shares represented by a properly executed proxy on which no choice is specified will be voted (1) FOR the election of Sharilyn S. Gasaway, Alan W. KosloffThomas C. Godlasky, Dennis E. Logue and Jerry W. WaltonMichael F. Morrissey as Class III directors, (2) FOR the approval, on an advisory basis, of the compensation paid to our named executive officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, (3) FOR the approval of the Amendment of the Executive Incentive Plan, (4) FOR the ratification of the appointment of KPMG as the Company's independent registered public accounting firm for the 20142015 fiscal year, and (5)(4) in accordance with the proxy holders' best judgment as to any other business that properly comes before the annual meeting.Annual Meeting.

        This Proxy Statement is considered to be voting instructions for the trusteestrustee of the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan, the Torchmark Corporation Savings and Investment Plan, and the Liberty National Life Insurance Company 401(k) Plan for our Class A common stock allocated to individual accounts under those plans.that plan. If account information is the same, participants in the plan (whowho are also stockholders of record)record will receive a single proxy representing all of their shares. If a plan participant does not submit a proxy to us, the trusteestrustee of the plan in whichwill vote the shares are allocated to his or her individualthe participant's account will vote such shares in the same proportion as the total shares in suchthe plan for which directions have been received.

May I Revoke My Proxyrevoke my proxy and Change My Vote?change my vote?

        Yes. You may revoke your proxy and change your vote prior to the vote at the annual meeting.Annual Meeting.

        If you are the registered owner of shares, you may revoke your proxy and change your vote with respect to those shares by (1) timely submitting a later-dated proxy, a later-dated vote by telephone or later-dated vote via the Internet (which automatically revokes the earlier proxy), (2) giving timely notice of your changed vote to us in writing mailed to the attention of Wendy J. Hills, Secretary, at our principal executive offices, or (3) attending the annual meetingAnnual Meeting and giving verbal notice of your intention to vote in person.

        If you are the beneficial owner of shares held in street name, you may revoke your proxy and change your vote with respect to those shares (1) by submitting new voting instructions to your broker, bank or other nominee in accordance with their voting instructions, or (2) if you have obtained a legal proxy from your nominee giving you the right to vote your shares, by attending the meeting,Annual Meeting, presenting the completed proxy to the Company and voting in person.

        You should be aware that simply attending the annual meetingAnnual Meeting will not in and of itself constitute a revocation of your proxy.

Who Will Count The Votes?will count the votes?

        Our transfer agent, Computershare, will tabulate and certify the votes. A representative of the transfer agentComputershare will serve as the inspector of election.election at the Annual Meeting.

Who Will Pay The Costswill pay the costs of Soliciting Proxies?soliciting proxies?

        The costs of soliciting proxies pursuant to this Proxy Statement will be borne by the Company. Proxies will be solicited initially by mail. Further solicitation may be made in person or by telephone, electronic mail or facsimile. The Company will bear the expense of preparing, printing and mailing this Proxy Statement and accompanying materials to our stockholders. Upon request, the Company will reimburse brokers, banks or other nominees for reasonable expenses incurred in forwarding copies of the proxy materials relating to the annual meetingAnnual Meeting to the beneficial owners of our Class A common stock.

        The Company has retained Georgeson Inc., an independent proxy solicitation firm ("Georgeson"), to assist in soliciting proxies from stockholders. Georgeson will receive a fee of approximately $10,000 as compensation for its services and will be reimbursed for its out-of-pocket expenses. The Company has agreed to indemnify Georgeson against certain liabilities arising under the federal securities laws.

What Other Business Will Be Presentedother business will be presented at the Annual Meeting?

        As of the date of this Proxy Statement, the Board knows of no other business that may properly be, or is likely to be, brought before the annual meeting.Annual Meeting. If any other matters should arise at the annual meeting,Annual Meeting, the persons named as proxy holders, Henry J. Herrmann and Alan W. Kosloff, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting.Annual Meeting. If, for any unforeseen reason, any of the Class III director nominees are not available to serve as a director, the named proxy holders will vote your proxy for such other director candidate or candidates as may be nominated by the Board.

What Are The Deadlines To Nominate Directorsare the deadlines to nominate directors or to Propose Other Business For Considerationpropose other business for consideration at the 20152016 Annual Meeting of Stockholders?

•

Stockholder Proposals to be Considered for Inclusion in the Company's Proxy Materials

        In order for a stockholder proposal to be eligible to be included in the Company's proxy statement and proxy card for the 20152016 Annual Meeting of Stockholders, the proposal must (1) be received by the Company at its principal executive offices, 6300 Lamar Avenue, Overland Park, Kansas 66202, Attn: Secretary, on or before November 7, 2014,6, 2015, and (2) concern a matter that may be properly considered and acted upon at the annual meeting in accordance with applicable laws, regulations and the Company's Bylaws and policies, and must otherwise comply with Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").

•

Director Nominations and Other Business to be Brought Before the 20152016 Annual Meeting of Stockholders

        Notice of any director nomination or the proposal of other business that you intend to present at the 20152016 Annual Meeting of Stockholders, but do not intend to have included in the Company's proxy statement and form of proxy relating to the 20152016 Annual Meeting of Stockholders, must be received by the Company at its principal executive offices, 6300 Lamar Avenue, Overland Park, Kansas 66202, Attn: Secretary, not earlier than the close of business on December 17, 201416, 2015 and not later than the close of business on January 6, 2015.5, 2016. In the event that the date of the 20152016 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after the anniversary date of the 20142015 Annual Meeting of Stockholders, the notice must be delivered to the Company not earlier than the 120^th day prior to the 20152016 Annual Meeting of Stockholders and not later than the later of the 100^th day prior to such annual meeting or the 10^th day following the day on which public announcement of the date of such annual meeting is first made by the Company. In addition, your notice must include the information required by the Company's Bylaws with respect to each director nomination or proposal of other business that you intend to present at the 20152016 Annual Meeting of Stockholders.

Where Cancan I Find The Voting Results Offind the voting results of the Annual Meeting?

        The Company will publish final voting results of the annual meetingAnnual Meeting in a Current Report on Form 8-K within four business days after the annual meeting.Annual Meeting.

What Shouldshould I Do Ifdo if I Receive More Than One Set Of Voting Materials?receive more than one set of voting materials?

        You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and multiple proxy or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a separate voting instruction card for each brokerage account. If you are a registered owner and your shares are registered in more than one name, you will receive more than one proxy card. Please vote each proxy and voting instruction card that you receive.

What Is Householding?is "householding"?

        In an effort to reduce printing costs and postage fees, the Company has adopted a practice approved by the Securities and Exchange Commission (the "SEC") called "householding." Under this practice, certain stockholders who have the same address and last name will receive only one copy of this Proxy Statement and the Company's Annual Report on Form 10-K, unless one or more of these stockholders notifies the Company that he or she wishes to continue receiving individual copies. Stockholders who participate in householding will continue to receive separate proxy cards.

        If you share an address with another stockholder and received only one copy of this Proxy Statement and the Company's Annual Report on Form 10-K, and you would like to request a separate copy of these materials, or you do not wish to participate in householding in the future, please (1) mail such request to Waddell & Reed Financial, Inc. Attn: Investor Relations Department, 6300 Lamar Avenue, Overland Park, Kansas 66202, or (2) contact our Investor Relations Department toll-free at (800) 532-2757. The Company will promptly deliver a separate copy of this Proxy Statement and the Company's Annual Report on Form 10-K upon receipt of such request. Similarly, stockholders sharing an address that are receiving multiple copies of the Company's proxy materials may request that they receive a single copy of those materials in the future by contacting the Company at the address and phone number above.

What Dodo I Need To Do Now?need to do now?

        First, read this Proxy Statement and Appendix A carefully. Then, if you are a registered owner, you should, as soon as possible, submit your proxy by either executing and timely returning the proxy card or by voting electronically via the Internet or by telephone. If you are the beneficial owner of shares held in street name, then you should follow the voting instructions of your broker, bank or other nominee. Your shares will be voted in accordance with the directions you specify. If you submit an executed proxy card to

April 2000, she served as the Compliance Officer of WRIMCO. Prior to joining the Company in June 1998, Ms. Hills was associated with the law firm of Klenda, Mitchell, Austerman and Zuercher LLC, in Wichita, Kansas.

        Alan W. Kosloff has been a Director of the Company since January 2003 and Lead Independent Director since January 2010. Prior thereto, he served as Chairman of the Board from May 2005 through December 2009. He has served as Chairman of Kosloff & Partners, LLC, Kansas City, Missouri, a consulting and investment firm since April 1996. Previously, he served as Chairman of Jones & Mitchell, Olathe, Kansas, an imprinted and licensed sportswear company from October 1997 to March 2005 and as Chairman, Chief Executive Officer and President of American Marketing Industries, Inc., Kansas City, Missouri, an apparel manufacturing, distribution and marketing firm from 1976 to 1995.Mr. Kosloff is a nominee for director.Kosloff's term on the Board expires in 2017.

        Mr. Kosloff has over 3839 years of experience in executive management, investment, sales and marketing roles, including as President and Chief Executive Officer of American Marketing Industries, Inc. and founder of Kosloff & Partners, LLC. Mr. Kosloff provides the Board the benefit of his substantial financial, management and operational expertise, including with respect to marketing and distribution efforts, corporate governance, strategic planning and corporate strategy. As Lead Independent Director, Mr. Kosloff has offered valuable insights with respect to strategic planning, executive succession planning and executive development, corporate governance and stockholder communications.

        Dennis E. Logue has been a Director of the Company since January 2002. He has served as Chairman of the Board of Ledyard Financial Group, Inc., a bank holding company located in Hanover, New Hampshire, since August 2005. Additionally, Mr. Logue has served as an Emeritus Professor of Management at the Amos Tuck School, Dartmouth College since August 2005. He served as Dean of the Michael F. Price College of Business at the University of Oklahoma from July 2001 to September 2005. Prior thereto, Mr. Logue held numerous business-oriented professorships, most recently at the Amos Tuck School, Dartmouth College from July 1974 to June 2001. He has also worked as a consultant and expert witness on various financial matters since 1974. Mr. Logue has served as a director of Abraxas Petroleum Corporation, San Antonio, Texas, a natural gas and crude oil exploration, development and production company since April 2003 and of ALCO Stores, Inc., Dallas, Texas, a general merchandise retailer sincefrom May 2005. 2005 through September 2014.Mr. Logue's term on the Board expires in 2015.Logue is a nominee for director.

        Mr. Logue is highly accomplished in the field of business management and financial academia, having taught in the areas of managerial economics and finance, corporate governance, financial markets and international finance for 4142 years and published over 90 books and articles in the areas of economics, pension plans, corporate and international finance, and capital markets. His past leadership roles in the academic world allow him to bring a wide range of experience and new insights to his service on the Board. As a founding director of Ledyard National Bank, Mr. Logue also has substantial expertise in the areas of the financial services industry, executive management and operations.

        Michael F. Morrissey.    Mr. Morrissey has been a director of the Company since July 2010. He has been a director of Ferrellgas Partners, L.P., a propane gas marketing and distribution company in Overland Park, Kansas since 1999 and of Westar Energy, Inc., an electric service company based in Topeka, Kansas since 2003. Mr. Morrissey retired in September 1999 after serving 24 years, including 17 years as a partner, with Ernst & Young LLP, an auditing and financial services firm. Prior to that,thereto, Mr. Morrissey worked for five years for another major accounting firm and six years for a motor truck manufacturer. Mr. Morrissey has been a Certified Public Accountant since 1972. Mr. Morrissey has also served as a director of Blue Cross

Blue Shield of Kansas City, a Kansas City, Missouri health insurance company, since 2006; of J.E. Dunn Construction Group, Inc., a private construction business located in Kansas City, Missouri, since 2000; of Balance Innovations, Inc., an office management technology company located in Lenexa, Kansas, since 2008; and a special advisor to the audit committee of the Dairy Farmers of America, a farmer-owned milk marketing cooperative located in Kansas City, Missouri since 2000.from 2000 through August 2014. Mr. Morrissey

also serves as a director or trustee for numerous non-profit, civic, and charitable organizations.Mr. Morrissey's term on the Board expires in 2015.Morrissey is a nominee for director.

        Mr. Morrissey's qualifications to serve as a director include his substantial experience as the Chairman or member of the audit committee of other public companies, his many years of experience as an audit partner of a major accounting firms,firm, and his extensive experience as a director of other large companies, both public and private. Mr. Morrissey brings to the Board significant audit and accounting expertise and a deep understanding of financial statements, corporate finance, risk management and internal audit functions. Mr. Morrissey's knowledge and experience gained as a board member of various public and private companies, as well as not-for profit, civic and charitable organizations provide the Board with a wide range of experience and insights regarding Board actions. Mr. Morrissey is also a Certified Public Accountant.

        James M. Raines has been a Director of the Company since July 1998. He has served as President of James M. Raines and Company, San Antonio, Texas, an investment banking firm since September 1988 and served as a director of Clear Channel Outdoor Holdings, Inc., a San Antonio, Texas outdoor advertising company from November 2005 to May 2010. Mr. Raines' term on the Board expires in 2016.

        Mr. Raines' 2728 years of experience in the investment banking business gives him valuable perspectives on financial and strategic matters, as well as expertise in capital markets and securities distribution. He has provided investment banking and financial advisory services, including with respect to merger and acquisition and capital raising functions, for numerous public and private companies covering a diverse range of businesses, which provides him with a broad perspective that is an asset to the Board. Additionally, Mr. Raines' tenure on the Board provides him with an important depth of knowledge regarding the Company's business, strategy and culture. His experience in investment banking has been particularly useful when the Board considers its capital and liquidity needs and potential acquisitions.

Ronald C. Reimer has been a Director of the Company since March 2001. He is currently retired and is active in advising the boards of several charitable organizations on investment oversight and fund management. Mr. Reimer has served as a director for Prairie Star Bancshares, Inc., a privately-held bank in Olathe, Kansas since November 2000. He served on the Board of Advisors of Truman Medical Center Hospital, Kansas City, Missouri ("TMC") from September 2002 to September 2009. He also served on the Board of Directors, and as the Secretary and Treasurer, of the TMC Charitable Foundation from June 2003 to September 2009 and was associated with the TMC Professional and General Liability Self-Insurance Trust, including terms as Chairman of the Finance and Management Committee, from November 2001 to September 2009. Previously, Mr. Reimer co-founded Reimer and Koger Associates, an investment counseling firm in Merriam, Kansas in 1973 and served as its President until his retirement in 1988. He also earned the Chartered Financial Analyst designation in 1968. Pursuant to the Company's Bylaws, Mr. Reimer's term on the Board will expire at the close of the 2014 Annual Stockholder Meeting on April 16, 2014.

Mr. Reimer has long-term experience and wide-ranging expertise in the investment management business and mutual fund industry. As an entrepreneur, Mr. Reimer co-founded an investment management firm of which he served as President for 15 years. Additionally, Mr. Reimer served as Vice President and portfolio manager for WRIMCO early in his career, which provides him with unique insight into the Company's investment operations and strategies, as well as its culture and employee base. His significant expertise with regard to the areas of the investment management process, mutual fund operations, private investment consulting, finance and executive management enable him to provide strategic direction and growth expertise to

the Company. Mr. Reimer is also one of three directors to have earned the Chartered Financial Analyst designation.

        Philip J. Sanders has been Senior Vice President and Chief Investment Officer of the Company since February 2011. He has served as Chief Investment Officer of WRIMCO and IICO since August 2010, as Senior Vice President of WRIMCO since July 2000 and as Senior Vice President of IICO since April 2003. Prior thereto, he served as Vice President of WRIMCO from January 1999 to July 2000. He is also a Vice President of the Waddell & Reed Advisors Group of Mutual Funds, Ivy Funds and Ivy Funds Variable Insurance Portfolios, all of which are mutual funds managed by the Company. Mr. Sanders joined the Company as a mutual fund portfolio manager in August 1998.

        Michael D. Strohm has been Senior Vice President of the Company since January 1999 and Chief Operations Officer since March 2001. In addition, he has served as President of Waddell & Reed Services Company, a transfer agent subsidiary of the Company, since June 1999 as Chief Executive Officer of WRI since December 2001 and as Chief Operating Officer thereofof WRI since March 2005. Prior thereto, he served as Chief Executive Officer of WRI from December 2001 to July 2014, President of WRI from December 2001 to March 2005 and as its Senior Vice President of WRI from January 1994 to December 2001. Mr. Strohm joined the Company in June 1972.

John E. Sundeen, Jr.    has been Senior Vice President of the Company since July 1999 and Chief Administrative Officer —– Investments since January 2006. Previously, he served as Chief Financial Officer from July 1999 to June 2004 and as Treasurer of the Company from July 1999 to January 2006. He has served as Executive Vice President and Chief Administrative Officer of WRIMCO and of IICO since June 2004. Previously, he served as Senior Vice President of WRIMCO from January 1996 to June 2004 and as Head of Fixed Income within the Investment Management Division thereof from January 1994 to June 1999. Mr. Sundeen joined the Company in June 1983.

        Jerry W. Walton has been a Director of the Company since April 2000. Mr. Walton currently serves as a business consultant to Hunt Ventures, a group of private companies located in Rogers, Arkansas. Mr. Walton served as Executive Vice President of Finance and Administration and Chief Financial Officer of J.B. Hunt Transport Services, Inc., a transportation provider in Lowell, Arkansas, from October 1991 until September 2009. Prior thereto, Mr. Walton served as a managing partner and a tax partner with KPMG, with whom he had been employed since 1968.Mr. Walton is a nominee for directorWalton's term on the Board expires in 2017.

.

        Mr. Walton brings extensive financial, operational and executive management expertise to the Board having served as the Executive Vice President and Chief Financial Officer of J.B. Hunt Transport Services, Inc., one of the largest transportation logistics companies in North America. Mr. Walton also has significant public accounting experience, including in the areas of accounting, finance and tax, and direct experience in the areas of information and technology services, treasury functions, real estate, human resources and risk management. As a long-time director, Mr. Walton offers a breadth of knowledge about issues affecting the Company and its industry, as well as with respect to its financial statements, balance sheet management, budgeting process and executive compensation. Mr. Walton is also a Certified Public Accountant (retired).

        There are no family relationships among any of the Company's executive officers, directors or nominees for director.

Security Ownership of Management

        The following table reflects information regarding beneficial ownership of the Company's Class A common stock by each of its current directors (including all nominees for director), the current named executive officers set forth in the Summary Compensation Table and all other executive officers, and by all such persons as a group, as of February 19, 2014.18, 2015. Unless otherwise indicated in the footnotes below, "beneficially owned" means the sole power to vote or direct the voting of a security and the sole power to dispose or direct the disposition of a security.

CORPORATE GOVERNANCE

        We believe that good corporate governance helps to ensure that the Company is managed for the long-term benefit of our stockholders, and we continually review and consider our corporate governance policies and practices, the SEC's corporate governance rules and regulations, and the corporate governance listing standards of the NYSE, the stock exchange on which our Class A common stock is traded.

        You can access and print the charters of our Audit Committee, Compensation Committee and Corporate Governance Committee, as well as our Corporate Governance Guidelines, Corporate Code of Business Conduct and Ethics, Whistleblower Policy and other Company policies and procedures required by applicable law, regulation or NYSE corporate governance listing standards on the "Corporate Governance" link in the dropdown menu on the "Our Firm" tab of the "Investor Relations" section of our website atwww.waddell.com.

Director Independence

        The Board is composed of a majority of directors who satisfy the criteria for independence under the NYSE corporate governance listing standards. In determining independence, each year the Board affirmatively determines, among other items, whether the directors have noany direct or indirect material relationship with the Company or any of its subsidiaries pursuant to the NYSE corporate governance listing standards. When assessing the "materiality" of a director's relationship with the Company, if any, the Board considers all relevant facts and circumstances, not merely from the director's standpoint, but from that of the persons or organizations with which the director has an affiliation. Material relationships can include commercial, banking, industrial, consulting, legal, accounting, charitable and familial relationships. The Board also considers any other relationship that could interfere with the exercise of independence or judgment in carrying out the duties of a director.

        Applying these independence standards, the Board determined that Sharilyn S. Gasaway, Thomas C. Godlasky, Alan W. Kosloff, Dennis E. Logue, Michael F. Morrissey, James M. Raines Ronald C. Reimer and Jerry W. Walton are all independent directors.

        After due consideration, the Board has determined that none of these non-management directors have a material relationship with the Company or any of its subsidiaries (either directly or indirectly as a partner, stockholder or officer of an organization that has a relationship with the Company or any of its subsidiaries) and they all meet the criteria for independence under the NYSE corporate governance listing standards.

Board Composition and Director Qualifications

        The Corporate Governance Committee periodically assesses the appropriate size and composition of the Board, and whether any vacancies on the Board are expected. In the event that vacancies are anticipated or otherwise arise, the Corporate Governance Committee will review and assess potential director candidates. The Corporate Governance Committee utilizes various methods for identifying and evaluating candidates for director. Candidates may come to the attention of the Corporate Governance Committee through recommendations of Board members, management, stockholders or professional search firms. Generally, director candidates should, at a minimum:

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Possess relevant business and financial expertise and experience, including an understanding of financial statements;



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Have the highest character and integrity and a reputation for working constructively with others;



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Have sufficient time to devote to Board meetings and consultation on Board matters; and



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Be free of conflicts of interest that violate applicable law or interfere with director performance.

        In addition, the Corporate Governance Committee will consider for recommendation director candidates who possess the following qualities and skills, among others:

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The capacity and desire to represent the interests of the Company's stockholders as a whole and not primarily a special interest group or constituency;



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Diverse backgrounds with respect to business experience, professional expertise, individual perspectives, gender and ethnicity that support Board dynamics and effectiveness;



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High level of leadership experience and sound business judgment;



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Highly accomplished in their respective field, with superior credentials and recognition;



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The ability to contribute to the mix of skills, core competencies, diversity and qualifications of the Board through notable or significant achievements or expertise in one or more of the following areas: accounting and finance, mergers and acquisitions, investment management, law, financial academia, strategic planning and executive leadership development;



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Service as a senior officer of, or a trusted advisor to senior management of, a publicly-held company; and



•

Knowledge of the critical aspects of the Company's business and operations.

        The director qualifications above are general in nature and may be modified by the Board or the Corporate Governance Committee from time to time as the Board or the Corporate Governance Committee deems appropriate.

        In considering candidates for director nominee, the Corporate Governance Committee generally assembles all information regarding a candidate's background and qualifications, evaluates a candidate's mix of skills and qualifications, and determines the contribution the candidate could be expected to make to the overall functioning of the Board. The Board seeks independent directors who represent a diverse mix of perspectives, backgrounds and experiences that will enhance the quality of the Board's deliberations and decisions. The Corporate Governance Committee does not have a separate policy regarding gender, ethnicity or other similar diversity criteria in identifying candidates for director nominee, but rather evaluates diversity in a broad sense, recognizing the benefits of gender and ethnic diversity, but also considering the breadth of perspectives, backgrounds and experiences that directors and candidates for director nominee may bring to the Board. In its assessment of the Board's composition as a whole, the Corporate Governance Committee considers whether the Board reflects the appropriate overall balance of independence, sound judgment, business specialization, technical skills, diversity and other desired qualities.

Director Resignation Policy

        Our Corporate Governance Guidelines include a Director Resignation Policy underpursuant to which any director nominee in an uncontested election who receives a greater number of "withheld" votes than "for" votes will, within five business days following the certification of the stockholder vote, tender his or her resignation to the Chairman of the Board for consideration by the Board. A director whose resignation is under consideration shall abstain from participating in any recommendation or decision regarding that resignation.

        The Board will promptly make a determination whether to accept, reject or otherwise act with respect to the tendered resignation. In making this determination, the Board may consider all factors that it deems relevant, including the underlying reasons why stockholders "withheld" votes for election from such director (if ascertainable), the length of service and qualifications of the director whose resignation has been tendered, the director's contributions to the Company, whether by accepting such resignation the Company will no longer be in compliance with any applicable law, rule, regulation or governing document,

and whether or not accepting the resignation is in the best interests of the Company and its stockholders. The Board may also consider a range of possible alternatives concerning the director's tendered resignation, including acceptance of the resignation, rejection of the resignation, or rejection of the resignation coupled with a commitment to seek to address and cure the underlying reasons reasonably believed by the Board to have substantially resulted in the "withheld" votes.

        The Board shall act on the tendered resignation and shall publicly disclose its decision regarding the resignation within 120 days after the results of the election are certified. If the Board does not accept the resignation, the director shall continue to serve until the end of his or her term and until the director's successor is elected and qualified, or until his or her earlier resignation or removal.

Director Recommendations by Stockholders

        In addition to recommendations from Board members, management or professional search firms, the Corporate Governance Committee will consider director candidates properly submitted by stockholders who individually or as a group have beneficially owned at least two percent of the outstanding shares of the Company's Class A common stock for at least one year prior to the date the recommendation is submitted. The manner in which the Corporate Governance Committee evaluates candidates recommended by stockholders is generally the same as any other candidate, although the Corporate Governance Committee will also seek and consider information concerning any relationship between a stockholder recommending a candidate and the candidate to determine whether the candidate will represent the interests of all stockholders.

        Stockholders must submit director candidate recommendations in writing by certified mail to the Company's Secretary not less than 120 days prior to the first anniversary of the date of the proxy statement relating to the Company's previous annual meeting. Accordingly, for the 20152016 Annual Meeting of Stockholders, director candidates must be submitted to the Company's Secretary by October 31, 2014.30, 2015. Director candidates submitted by stockholders must contain at least the following information:

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The name and address of the recommending stockholder;



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The number of shares of the Company's Class A common stock beneficially owned by the recommending stockholder and the dates such shares were purchased;acquired;



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The name, age, business address and residence of the candidate;



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The principal occupation or employment of the candidate for the past five years;



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A description of the candidate's qualifications to serve as a director, including financial expertise, and why the candidate does or does not qualify as "independent" under the NYSE corporate governance listing standards;



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The number of shares of the Company's Class A common stock beneficially owned by the candidate, if any; and



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A description of the arrangements or understandings between the recommending stockholder and the candidate, if any, or any other person pursuant to which the recommending stockholder is making the recommendation.

        In addition, the recommending stockholder and the candidate must submit, with the recommendation, a signed statement agreeing and acknowledging that:

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The candidate consents to being a director candidate and, if nominated and elected, he/she will serve as a director representing all of the Company's stockholders in accordance with applicable laws and the Company's Certificate of Incorporation and Bylaws;

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The candidate, if elected, will comply with the Company's Corporate Governance Guidelines and any other applicable rule, regulation, policy or standard of conduct applicable to the Board and its individual members;



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The recommending stockholder will maintain beneficial ownership of at least two percent of the Company's issued and outstanding Class A common stock through the date of the annual meeting for which the candidate is being recommended for nomination and that, upon such candidate's nomination and election to the Board, the recommending stockholder intends to maintain such ownership throughout the candidate's term as director; and



•

The recommending stockholder and the candidate will promptly provide any additional information requested by the Corporate Governance Committee and/or the Board to assist in the consideration of the candidate, including a completed and signed Questionnaire for Directors and Officers on the Company's standard form and an interview with the Corporate Governance Committee or its representative.

        For a complete list of the information that must be included in director recommendations submitted by stockholders, please see the "Policy Regarding Director Recommendations By Stockholders" by clicking on the "Corporate Governance" link in the dropdown menu on the "Our Firm" tab of the "Investor Relations" section of our website atwww.waddell.com. The Corporate Governance Committee will consider all director candidates submitted through its established processes, and will evaluate each of them, including incumbents, based on the same criteria. However, the Corporate Governance Committee may prefer incumbent directors and director candidates who they know personally or that have relevant industry experience and in-depth knowledge of the Company's business and operations.

        The policies and procedures above are intended to provide flexible guidelines for the effective functioning of the Company's director nomination process. The Board intends to review these policies and procedures periodically and anticipates that modifications may be necessary from time to time as the Company's needs and circumstances change.

Communications with the Board

        Stockholders and all other interested parties may communicate with the Board, Board committees, the independent or non-management directors, each as a group, and individual directors by submitting their communications in writing to the attention of the Company's Secretary. All communications must identify the recipient, the author, state whether the author is a stockholder of the Company, and be forwarded to the following address:

Waddell & Reed Financial, Inc.
6300 Lamar Avenue
Overland Park, KS 66202
Attn: Secretary

        The directors of the Company, including the non-management directors, have directed the Secretary not to forward to the intended recipient any communications that are reasonably determined in good faith by the Secretary to relate to improper or irrelevant topics or are substantially incomplete.

Board Meetings

        The Board held foursix meetings during the 20132014 fiscal year and acted by unanimous written consent on one occasion.year. All directors attended at least 75% of the Board meetings. The Company has adopted a Director Attendance Policy to stress the importance of attendance, director preparedness, and active and effective participation at Board, and Board committee and stockholder meetings. All of the directors attended the 20132014 Annual Meeting of Stockholders and the 2013 Annual Meeting of Directors.Stockholders.

        Additionally, in 2013, the non-management/independent directors held at least four executive sessions with Mr. Alan W. Kosloff serving as chairman of each of these executive sessions.

Board Leadership Structure and Role in Risk Oversight

        The Board believes that it should have the flexibility to make determinations as to whether the same individual should serve as both the Chief Executive Officer and the Chairman of the Board, taking into account changing needs and circumstances of both the Company and the Board over time. In determining the appropriate leadership structure, the Board considers, among other things, the current composition of the Board, the role of the Lead Independent Director, and challenges and opportunities specific to the Company. In prior years, the Company has had the same and different individuals serving as its Chief Executive Officer and Chairman of the Board at different points in time. Currently, Mr. Herrmann serves as the Company's Chief Executive Officer and Chairman of the Board, while Mr. Kosloff, an independent director, serves as our Lead Independent Director. The Board believes that its current leadership structure is appropriate given the efficiencies of having a single individual fulfill both roles, the benefit of having a single source of leadership and authority for the Board, and Mr. Herrmann's extensive experience as a leader in the asset management industry and intimate knowledge of the Company's strategy and daily operations. Mr. Herrmann consults with Mr. Kosloff, as Lead Independent Director, on Board matters and issues facing the Company. Mr. Kosloff serves as the principal liaison between the Chairman of the Board and the independent directors, advises the Chairman of the Board with respect to agenda items, and presides over executive sessions of the non-management/independent directors at regularly scheduled Board meetings, as well as presides over Board meetings in the event the Chairman of the Board is unable to attend.

        The Board's oversight responsibility with respect to risk management is primarily discharged through the Audit Committee. Pursuant to applicable NYSE rules, the Audit Committee's charter addresses the duties and responsibilities of the Audit Committee to review with management the Company's risk assessment and risk management policies, including steps taken to mitigate such risks. The Audit Committee's risk oversight responsibilities are principally addressed through a comprehensive enterprise risk assessment conducted and prepared by the head of our Internal Audit Department, who, along with senior management, is responsible for the identification and assessment of internal and external risks that could materially impact the Company's operations, monitoring identified risks and taking appropriate steps to mitigate such risks. Specifically, the head of our Internal Audit Department leads an annual comprehensive enterprise risk assessment, which is based on input from the Company's Risk Assessment Committee, comprised of division heads and members of senior management, and uses an established risk management framework to identify and characterize various risks based on the significance of their potential impact on the Company's operations and reputation and the likelihood of occurrence. Such risks include internal and external financial, operational, strategic, technological, market, legal and regulatory risks. The Audit Committee reviews and discusses the Company's risk assessment and risk management policies annually. The head of Internal Audit and the external auditor provide regular reports to the Audit Committee regarding the internal and external audit plans and the results of on-going audits, as well as a report on Sarbanes-Oxley compliance. To ensure candid and complete reporting, the Audit Committee meets in separate executive sessions with management, the head of our Internal Audit Department and the external auditors at least twice annually.

        Each standing committee, including the Audit Committee, reports its actions to the full Board at least annually and the Board receives financial and operational reports from senior management, including updates regarding legal, regulatory and compliance matters from the General Counsel, at each meeting, which enables coordination of the risk oversight function. The risk oversight function is also supported by our Chief Executive Officer and Chairman of the Board, whose industry leadership, tenure and experience provide a deep understanding of the risks that the Company faces. Collectively, these processes are intended to provide the Board as a whole with an in-depth understanding of risks faced by the Company

and enables the Board to provide direction to the Audit Committee and senior management with respect to its approach to identifying, assessing, monitoring and mitigating material risks. The Board believes that the combination of a single Chairman of the Board and Chief Executive Officer, who has an integral role

in our day-to-day risk management processes, a Lead Independent Director, the Audit Committee, and an experienced senior management team provide the appropriate leadership to assist in effective risk oversight by the Board.

Risk Analysis of Compensation Policies and Practices

        The Compensation Committee assessed, with the assistance of management, the Company's compensation policies and practices to determine whether these policies and practices create risks that are reasonably likely to have a material adverse effect on the Company.

        This assessment included a review of the Company's executive and broad-based employee compensation programs, the identification of potential risks that could result from such policies and practices, the identification of factors and controls that mitigate those risks, and an analysis of the potential risks against mitigating factors and controls and the Company's business strategies and objectives. Based on this assessment, the Compensation Committee concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. In its assessment and conclusion, the Compensation Committee considered the following design features, among others:

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Overall compensation levels are competitive with the market.



•

The use of multiple financial performance measures that are quantifiable and measurable.



•

The use of performance goals that are reasonable in light of past performance and market conditions.



•

Oversight by a Compensation Committee comprised of independent, non-employee directors with the ability to use negative discretion in determining compensation levels.



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The use of long-term equity incentive awards, which comprise a significant portion of total annual incentive compensation and is paid in the form of restricted stock that typically vests over a four-year period, and our stock ownership requirements align the long-term interests of our named executive officers with those of our stockholders.



•

The ability of management to exercise discretion to reduce payouts, including in connection with extraordinary or unanticipated events.



•

Multiple internal controls and approval processes intended to prevent manipulation of performance.

20132014 Audit, Compensation and Corporate Governance Committees

        The Board has an Audit Committee, a Compensation Committee and a Corporate Governance Committee. Committee members are elected annually by the Board and serve until their successors are elected and qualified or until their earlier death, retirement, resignation or removal. The functions of each committee are described in detail in its respective charter, which is available on the "Corporate Governance" page under the "Our Firm" tab on the "Investor Relations" section of the Company's website atwww.waddell.com.

        For 2013,2014, upon the recommendation of the Corporate Governance Committee, the Board appointed the following members to serve on these committees:

•

Audit Committee, comprised of Sharilyn S. Gasaway, Dennis E. Logue, Michael F. Morrissey and Jerry W. Walton. Mr. Morrissey served as Chairman of the Audit Committee in 2013.2014.



•

Compensation Committee, comprised of Alan W. Kosloff, Michael F. Morrissey, James M. Raines and Jerry W. Walton. Mr. Walton served as Chairman of the Compensation Committee in 2013.2014.

•

Corporate Governance Committee, comprised of Sharilyn S. Gasaway, Thomas C. Godlasky, Alan W. Kosloff, Dennis E. Logue, Michael F. Morrissey, James M. Raines, Ronald C. Reimer (who retired immediately following the 2014 Annual Meeting of Stockholders) and Jerry W. Walton. Mr. Kosloff served as Chairman of the Corporate Governance Committee in 2013.2014.

        Additionally, as Lead Independent Director, Mr. Kosloff served as an advisory member of the Audit Committee.

        Audit Committee.    The Audit Committee (1) appoints, terminates, retains, compensates and oversees the work of the independent registered public accounting firm, (2) pre-approves all audit, review and attest services and permitted non-audit services provided by the independent registered public accounting firm, (3) oversees the performance of the Company's internal audit function, (4) evaluates the qualifications, performance and independence of the independent registered public accounting firm, (5) reviews external and internal audit reports and management's responses thereto, (6) oversees the integrity of the financial reporting process, system of internal accounting controls, and financial statements and reports of the Company, (7) oversees the Company's compliance with legal and regulatory requirements, (8) reviews the Company's annual and quarterly financial statements, including disclosures made in "Management's Discussion and Analysis of Financial Condition and Results of Operations" set forth in periodic reports filed with the SEC, (9) discusses with management earnings press releases, (10) meets with management, the internal auditors, the independent auditors and the Board, (11) provides the Board with information and materials as it deems necessary to make the Board aware of significant financial, accounting and internal control matters of the Company, (12) oversees the receipt, investigation, resolution and retention of all complaints submitted under the Company's Whistleblower Policy, (13) produces an annual report for inclusion in the Company's proxy statement, and (14) otherwise complies with its responsibilities and duties as stated in the Company's Audit Committee Charter.

        The Board has determined that all threefour members of the Audit Committee satisfy the independence and other requirements for audit committee membership of the NYSE corporate governance listing standards and SEC requirements. The Board has also determined that Ms. Gasaway and Messrs. Logue, Morrissey and Walton are audit committee financial experts as defined by the SEC. The Board determined that these members acquired the attributes of an audit committee financial expert through their experience in preparing, auditing, analyzing or evaluating financial statements containing accounting issues as generally complex as the Company's financial statements; actively supervising one or more persons engaged in such activities; and their experience of overseeing or assessing the performance of companies and public accountants with respect to the preparation, auditing or evaluation of financial statements. In 2013,2014, the Audit Committee met six times. All of the members attended at least 75% of the Audit Committee meetings. For additional information concerning the Audit Committee, see "Audit Committee Report" below.

        Compensation Committee.    The Compensation Committee (1) determines and approves the compensation of the Company's senior executive officers, including the Chief Executive Officer, (2) reviews and approves the annual performance goals and objectives and rewards outstanding performance of the Company's senior executive officers, including the Chief Executive Officer, (3) establishes and certifies the achievement of performance goals, (4) oversees the Company's incentive compensation and other equity-based compensation plans, (5) reviews and approves compensation recommendations for the Company's non-management directors, (6) assesses the adequacy and competitiveness of the Company's executive and director compensation programs, (7) reviews and discusses with management the "Compensation Discussion & Analysis" and recommends whether such analysis should be included in the Company's proxy statement filed with the SEC, (8) produces an annual report on executive compensation for inclusion in the Company's proxy statement, and (9) otherwise complies with its responsibilities and duties as stated in the Company's Compensation Committee Charter.

        Pursuant to its charter, the Compensation Committee may appoint subcommittees for any purpose that the Compensation Committee deems appropriate and delegate to such subcommittees such power

and authority as the Compensation Committee deems appropriate; however, (1) no subcommittee shall consist of fewer than two members, and (2) the Compensation Committee may not delegate to a subcommittee any power or authority required by any law, regulation or corporate governance listing standard to be exercised by the Compensation Committee as a whole. At this time, the Compensation Committee does not intend to delegate its powers and authority to any subcommittee in the foreseeable future.

        The agenda for meetings of the Compensation Committee is determined by its Chairman with the assistance of the Chairman of the Board and the Company's Secretary. Compensation Committee meetings are regularly attended by several of the Company's officers, including the Chief Executive Officer. Independent advisors and the Company's legal, accounting and human resources departments support the Compensation Committee in fulfilling its responsibilities. The Compensation Committee has sole authority under its charter to retain, compensate and terminate independent advisors as it deems necessary to assist in the fulfillment of its responsibilities. For more detail on the Compensation Committee, including its role, see "Compensation Discussion & Analysis" and also "Compensation Committee Report" below.

        None of the individuals serving on the Compensation Committee has ever been an officer or employee of the Company. The Board has determined that all of the members of the Compensation Committee satisfy the independence requirements of the NYSE corporate governance listing standards and SEC requirements. Additionally, all of the members of the Compensation Committee qualify as "non-employee directors" for purposes of SEC requirements, and as "outside directors" for purposes of Section 162(m) of the Internal Revenue Code.

        The Compensation Committee met four times in 20132014 to discuss, among other items, the salaries, bonuses and other compensation of the senior executive officers and other key employees of the Company, including the Chief Executive Officer and Chairman of the Board. The Compensation Committee also acted by unanimous written consent on two occasions in 2013. All of the members attended at least 75% of the Compensation Committee meetings.

        Corporate Governance Committee.    The Corporate Governance Committee (1) annually reviews the Company's Corporate Governance Guidelines, (2) assists the Board in identifying, screening and recruiting qualified individuals to become Board members, (3) proposes nominations for Board membership and committee membership, (4) assesses the composition of the Board and its committees, (5) oversees the performance of the Board and committees thereof, and (6) otherwise complies with its responsibilities and duties as stated in the Company's Corporate Governance Committee Charter.

        The Board has determined that all of the members of the Corporate Governance Committee satisfy the independence requirements of the NYSE corporate governance listing standards. The Corporate Governance Committee met two times in 2013.2014. All of the members attended at least 75% of the Corporate Governance Committee meetings.

        Pursuant to the respective charter of the Audit, Compensation and Corporate Governance Committee, each committee may appoint subcommittees for any purpose that the committee deems appropriate and delegate to such subcommittees such power and authority as the committee deems appropriate; however, (1) no subcommittee shall consist of fewer than two members, and (2) the committee may not delegate to a subcommittee any power or authority required by any law, regulation or corporate governance listing standard to be exercised by the committee as a whole.

Compensation of Directors

        The Compensation Committee reviews annual compensation for directors who are not officers or employees of the Company or its subsidiaries (the "Outside Directors"). The Company uses a combination of cash and equity compensation to attract and retain qualified candidates to serve on the Board. All amounts are pro ratedpro-rated if a director joins the Board after the commencement of the directors' fiscal year. Outside Directors are not compensated for the execution of written consents in lieu of Board and committee meetings.

        In setting Outside Director compensation, the Compensation Committee considers the significant amount of time that directors spend in fulfilling their duties to the Company, as well as the skill level required of Board members. The Compensation Committee also periodically (typically every other year)

reviews competitive compensation data and analysis provided by Frederic W. Cook and Co., Inc. ("FWC"), the Compensation Committee's

independent compensation consultant. In determining Outside Director compensation for 2013,2014, the Compensation Committee retained FWC to provide competitive compensation data and analysis of our Outside Director compensation, including retainers, meeting fees and equity compensation awards, as compared to that paid to the non-employee directors of the Company's peer group. The companies included in this peer group are listed in "Peer Group Analysis" in the "Compensation Discussion & Analysis" below. In determining Outside Director compensation for 2013,2014, the Compensation Committee considered the current compensation structure for Outside Directors, market trends with respect to director compensation, including committee retainers vs. individual meeting fees, and Company stock performance. The Compensation Committee then determined that 20132014 cash and equity compensation for Outside Directors would remain flat with 2012unchanged from 2013 levels. The Board, upon the recommendation of the Compensation Committee, approves annual compensation for Outside Directors.

Cash Compensation

        For 2013,2014, Outside Directors received the following cash compensation (paid in January of each year or upon election to the Board):

•

An annual retainer of $55,500, other than the Lead Independent Director, who received an annual retainer of $110,000;



•

Meeting fees of $2,000 for each Board meeting attended; and



•

Meeting fees of $1,500 for each committee meeting attended, other than the Chairman of each committee, who received fees of $3,000 per committee meeting.

        The Company also reimburses the Outside Directors for travel and lodging expenses, if any, incurred in attending meetings.

Outside Directors may annually elect to convert all or a portion of their annual cash compensation into restricted shares of our Class A common stock under the Company's 1998 Non-Employee Director Stock Award Plan, as amended and restated.

        In December 2014, the Compensation Committee, after considering competitive compensation data from FWC and the other factors described above, increased the annual retainer for Outside Directors (other than the Lead Independent Director) to $70,000, effective January 1, 2015. The Board ratified and approved the increase to the annual retainer.

Equity Compensation

        Equity awards for Outside Directors are intended to provide deferred tax benefits to Outside Directors, increase their beneficial ownership in the Company andto more closely align their interests with those of our stockholders. Pursuant to the Stock Incentive Plan, Outside Directors are granted 5,000 restricted shares of the Company's Class A common stock upon their initial election to the Board. Following the first year of service, Outside Directors are granted $125,000 in restricted stock ($207,500 in restricted stock for the Lead Independent Director) based on the closing market price on the grant date, which is the first business day of January unless otherwise determined by the Board. Accordingly, Ms. Gasaway and Messrs. Godlasky, Logue, Morrissey, Raines Reimer and Walton were each granted 3,4591,931 shares of restricted stock, and Mr. Kosloff was granted 5,7423,205 shares of restricted stock, on January 2, 2013.2014. Due to his retirement from the Board after the 2014 Annual Meeting of Stockholders in accordance with the mandatory retirement age provision in the Company's Bylaws, Mr. Reimer received a pro-rated grant of 563 shares of restricted stock for his service on the Board in 2014. Restricted shares granted to Outside Directors do not have a purchase price, generally vest in 33¹/3% increments annually beginning on the second anniversary of the grant date, and are subject to accelerated vesting upon a change of control, death or disability. Mr. Reimer's 20132014 restricted stock award containscontained a one yearthree-month vesting schedule due to his impending retirement from service on the Board in 2014 pursuant to the mandatory retirement age provision in the Company's Bylaws.2014. Dividends are paid on awards of restricted stock at the same rate asthat is paid to all stockholders generally.

Other Personal Benefits

        In addition to the compensation outlined above, Outside Directors also receive the following benefits:

•

At their election, Outside Directors and their spouses are eligible to participate in the Company's group health insurance plan, which is generally available to all Company employees; a portion of the Outside Directors' premiums are paid for by the Company. Ms. Gasaway and Messrs. Godlasky, Kosloff, Raines, Reimer and Walton made this election for 2013.2014.



•

On certain occasions, an Outside Director's spouse may accompany the Outside Director on Company aircraft when the director is attending Board or committee meetings; no incremental cost is incurred by the Company in these instances. The value of these benefits (calculated pursuant to Internal Revenue Service guidelines) is imputed as income to the Outside Director and included as taxable income on their Form 1099-MISC.



•

The Company maintains director and officer insurance coverage and provides Outside Directors with special indemnification rights in the form of an indemnification agreement that exceeds the general rights provided under our Certificate of Incorporation and Bylaws.



•

The Company also provides individual or family travel insurance policies for Outside Directors, as well as the senior executive officers, at a nominal cost.



•

Outside Directors receive occasional perquisites or personal benefits of reasonable value, such as commemorative items in connection with their Board service, holiday gifts and recreational benefits or other services and amenities when attending off-site Board meetings.

        The following table reflects the compensation paid to our Outside Directors for 2013.2014.

20132014 Director Compensation

Code of Business Conduct and Ethics

        The Board has adopted a Corporate Code of Business Conduct and Ethics that applies to all of the Company's directors, officers and employees. The purpose and role of this code is to focus our directors, officers and employees on areas of ethical risk, provide guidance to help them recognize and deal with ethical issues, provide mechanisms to report unethical or unlawful conduct, and to help enhance and formalize our culture of integrity, honesty and accountability. As required by applicable law, the Company will post on the "Corporate Governance" page under the "Our Firm" tab on the "Investor Relations" section of its website atwww.waddell.com any amendments or waivers of any provision of this code made for the benefit of executive officers or directors of the Company.

Corporate Governance Guidelines

        The Board has adopted Corporate Governance Guidelines to assist it in exercising its responsibilities to the Company and its stockholders. The guidelines address, among other items, director responsibilities, Board committees, non-employee director compensation and stock ownership guidelines.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Exchange Act requires each director, officer and any individual beneficially owning more than 10% of the Company's Class A common stock to file with the SEC reports of security ownership and reports on subsequent changes in ownership. These reports are generally due within two business days of the transaction giving rise to the reporting obligation.

        To the Company's knowledge, all required Section 16(a) filings were timely and correctly made by reporting persons during 20132014, except that due to an administrative errors, Mr. Bloss did not timely file one report reporting two reportable transactionserror, each of Messrs. Sanders and Mr. SandersStrohm did not timely file one report reporting one reportable transaction.

Certain Relationships and Related Transactions

        The Corporate Governance Committee is charged with the responsibility of reviewing and pre-approving all "related-person transactions" (as defined in SEC regulations), and periodically reassessing any related-person transaction entered into by the Company to ensure its continued appropriateness. This responsibility is set forth in the Company's Corporate Code of Business Conduct and Ethics.

        Kurt A. Sundeen, the brother of John E. Sundeen, Jr., our Senior Vice President and Chief Administrative Officer – Investments, is an employee of the Company. For the 20132014 fiscal year, Kurt Sundeen received an aggregate salary and bonus of $244,500,$275,000, a matching contribution of $10,037$10,400 under the Company's 401(k) and Thrift Plan, and participated in the Company's active employee flexible benefits plans, which are generally available to all Company employees. Additionally, the Company awarded Mr. K. Sundeen 2,3622,100 shares of restricted stock in April 20132014 with a grant date fair value of $102,015$159,516 calculated in accordance with ASC 718.

        Laura D. DeMaria, the sister-in-law of Michael D. Strohm, our Senior Vice President and Chief Operations Officer, is an employee of the Company. For the 20132014 fiscal year, Ms. DeMaria received an

aggregate salary and bonus of $152,200,$159,310, a matching contribution of $6,081$6,372 under the Company's 401(k) and Thrift Plan, and participated in the Company's active employee flexible benefits plans, which are generally available to all Company employees. Additionally, the Company awarded Ms. DeMaria 638389 shares of restricted stock in April 20132014 with a grant date fair value of $27,555$29,548 calculated in accordance with ASC 718.

        The Corporate Governance Committee has reviewed and ratified the employment of Mr. K. Sundeen and Ms. DeMaria in accordance with Company policy. The Company does not view John E. Sundeen, Jr. or Michael D. Strohm as having a beneficial interest in these employment relationships that is material to them, nor does Mr. J. Sundeen or Mr. Strohm believe that he has a direct or indirect material interest in the employment relationship of his brother or sister-in-law, respectively.

Compensation Committee Interlocks and Insider Participation

        During the 20132014 fiscal year, none of the Company's executive officers served on the board of directors of any entities whose directors or officers serve as a director of the Company. No current or past executive officers of the Company serve on the Compensation Committee.

PRINCIPAL STOCKHOLDERS OF THE COMPANY

        The following table reflects all persons known to be the beneficial owner of more than 5% of the Company's Class A common stock as of December 31, 2013.February 18, 2015. Unless otherwise indicated in the footnotes below, "beneficially owned" means the sole power to vote or direct the voting of a security and the sole power to dispose or direct the disposition of a security.

COMPENSATION COMMITTEE REPORT

        Notwithstanding anything to the contrary set forth in any filings of Waddell & Reed Financial, Inc. (the "Company") under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act") that might incorporate future filings by reference, including this Proxy Statement, in whole or in part, the following Compensation Committee Report shall not be incorporated by reference into any such filings, and shall not be deemed soliciting material or filed under the Securities Act or the Exchange Act.

        The Compensation Committee has reviewed and discussed the Compensation Discussion & Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion & Analysis be included in this Proxy Statement.

Waddell & Reed Financial, Inc. Compensation Committee

20132014 Members

Jerry W. Walton, Chairman
Alan W. Kosloff
Michael F. Morrissey
James M. Raines

COMPENSATION DISCUSSION & ANALYSIS

        The following information contains statements regarding future individual and company performance measures, targets and other goals. These goals are disclosed in the limited context of the Company's executive compensation program and should not be understood to be statements of management's expectations or estimates of results or other guidance. The Company specifically cautions investors not to apply these statements to other contexts.

Introduction

        This Compensation Discussion & Analysis, among other things, provides an overview of our executive compensation program, sets forth the objectives and elements of our executive compensation program, and describes the 20132014 executive compensation decisions with respect to our six named executive officers for 2014, which includes our Chief Executive Officer, Chief Financial Officer, and theour next three most highly compensated executive officers whom we referand our former Chief Financial Officer, Daniel P. Connealy, who retired in June 2014. Unless the context requires to collectively as the "namedcontrary, references to "executive officers" in this proxy statement include our named executive officers."officers, and references to "current named executive officers" means the named executive officers, excluding Mr. Connealy.

Executive Summary

        The intellectual capital of our employees is collectively the most important asset of our firm. We invest in people – we hire qualified people, train them, motivate them to give their best thinking to the Company and our clients, and compensate them in a manner designed to motivate and retain them. As an asset manager, our financial results are primarily based upon the strength of our investment performance, the success of our marketing and distribution organization, and careful management of our expenses, all of which are directly dependent upon our people and the intellectual capital they bring to bear.

        We believe that the quality, expertise and commitment of our named executive officers are critical to enhancing the long-term value of the Company. To this end, a core objective in designing our executive compensation program is to deliver competitive total direct compensation (i.e., base salary, annual cash incentive award and annual equity incentive award), upon the achievement of financial performance and individual contributions, that will attract, motivate and retain a high-performance executive team. The compensation awarded to our named executive officers is substantially dependent on corporate financial performance, as well as individual performance and contributions, which drives the creation of sustainable long-term stockholder value.

        While the economic and market environmentsComing off consecutive years of 2012 were dominated by uncertainty surrounding an election year and thedouble-digit growth in U.S. "fiscal cliff," the global equity markets and particularly the U.S. equity market, performed well across 2013 as measured by an increase of more than 30%high correlation among asset classes, investors favored passively managed index and exchange-traded funds over actively managed funds in 2014 – a trend that has accelerated in the S&P 500 Index. Duringpast few years. A combination of factors related to our two largest funds, Ivy Asset Strategy and Ivy High Income, contributed to net outflows in those products, both of which have driven growth in the year, U.S. corporate profitability remainedfirm's assets under management and overall financial results in recent years. Despite these challenges and slow global economic growth in 2014, our

senior management team was able to deliver strong there were some signs of economic progress in parts of Europe and Japan that have been distressed for some time, and the Federal Reserve indicated a possible change in its stance on quantitative easing. Throughout the year, investors slowly returned to equity investments as the U.S. economy gradually gained momentum and the Federal Reserve maintained its accommodative monetary policy. The mutual fund industry followed suit with increased inflows to equity funds, although the average investor remained somewhat risk-averse. Again in 2013, our named executive officers leveraged our strength as an active asset manager to adjust to macroeconomic developments and record a number of significant and record-breaking achievementsfinancial results for the Company that advanced the long-term interests of our stockholders.during 2014. Key highlights of the Company's 2013our 2014 performance (from continuing operations) include the following:

•

Our stock closed out 2013 at $65.12, resulting in total return of 91.9% for the year.



•

Earnings per share of $2.96,$3.71, a 32%25% increase over 20122013 and new all-time high.



•

Assets under management set a new high-water mark at $126.5 billion, a 31% increase from 2012.Net income increased 24% to an all-time high of $313.3 million compared to 2013.



•

Operating revenues were $1.4$1.6 billion, a 17% increase from last year's previous record high.

titled officer positions, if available. In evaluating competitive compensation information of the peer group, the Committee does not target our executives' compensation to be paid at a specific percentile or limit its overall evaluation of competitive compensation to a particular percentile, but does take into consideration, on a non-formulaic basis, various differences between the Company and the comparison companies, including measures such as market capitalization, number of employees, assets under management, revenues, income and profitability (income per $1 billion of assets under management).

        The Committee also reviews competitive compensation information obtained from McLagan Partners'Investment Management Survey (the "McLagan Survey"), a widely used and definitive source for compensation information for a significant number of public and private investment management and advisory firms. It provides detailed analyses of compensation for a greater depth of investment management employees than is available for our public peers and is specifically focused on the asset management industry. Confidentiality obligations to McLagan Partners and to its survey participants prevent us from disclosing the firms included in the surveys. In addition, the McLagan Survey maintains the confidentiality of individual company pay practices from other participants. The Committee reviewed the results of the McLagan Survey to account for differences in the scale and scope of operations of participant companies, evaluate the overall competitive position of the Company, as well as its position by business unit and by officer title, and to make comparisons on an officer by officer basis, where sufficient market data was available and an appropriate match of position and responsibilities could be made.

        The Committee considers the compensation information derived from the peer group and the McLagan Survey equally relevant and important, with neither source of information being a determining factor in setting executive compensation levels.

Management's Role in the Compensation Setting Process and Other Considerations

        Our Chief Executive Officer, Henry J. Herrmann, regularly attends Committee meetings and advises the Committee regarding, among other things, the design and effectiveness of the Company's performance measures, the general competitiveness of our compensation program, information on the Company's business strategies and objectives, financial results and other measures of corporate performance, and historical context regarding the link between the Company's strategic goals and various elements of compensation. The Committee also requests Mr. Herrmann to evaluate the performance of the senior

executive officers who report directly to him, including the other named executive officers, and to make recommendations to the Committee regarding their base salary levels and the form and amount of their annual cash incentive award and equity incentive award. In 2013,2014, Mr. Herrmann did not make any recommendations with respect to his base salary or performance-based incentive awards.

        Mr. Herrmann's recommendations are based on his subjective evaluations regarding the individual performance and contributions of each of the other named executive officers in furthering the Company's success, building stockholder value and executing individual responsibilities, which may include:

•

Individual performance and contributions to financial and operational measures;



•

Operational management, such as project milestones and process improvements;



•

Internal working and reporting relationships that promote collaboration and teamwork;



•

Leadership, including the ability to develop and motivate employees and personal development; and



•

Individual expertise, skills and knowledge relevant to each executive's position and responsibilities, the potential to assume increased responsibilities, and long-term value to the Company.

        With respect to Mr. Herrmann's position and responsibilities, the Committee considers his company-wide oversight and management, execution and success of the Company's business and strategic initiatives, during the difficult economic environment that has persisted over the past four years, the Company's financial and operating results, the creation of stockholder value, leadership of the investment management process, his years of industry experience, the size and complexity of the Company's business, and effective leadership of the Company's management team.

        The Committee does not assign individual weight or particular emphasis to any of the above factors; the emphasis placed on any specific factor or individual contribution may vary by named executive officer.

        Our Chief Financial Officer, Daniel P. Connealy,Brent K. Bloss, regularly attends Committee meetings and advises the Committee as necessary regarding the Company's financial results or accounting rules that are relevant to incentive compensation or other matters that come before the Committee, and provides the Committee with historical and prospective compensation information relevant to their determinations. Additionally, our General Counsel and Secretary, Wendy J. Hills, also regularly attends Committee meetings and provides advice regarding legal and corporate governance matters, details regarding our stock award and incentive compensation plans, and other requested information related to Committee discussions.

Analysis of 20132014 Compensation

        The Committee's focus is to set competitive pay levels on an annual basis, and to ensure a significant portion of compensation is performance-based. Consistent with the philosophy that a majority of total direct compensation should be "at risk," the current named executive officers received, on average, approximately 16% of their total direct compensation for 20132014 in base salary and approximately 84% in variable incentive compensation (based on the grant date fair value of 20132014 equity incentive awards).

20132014 Operating Environment

        The high levels of concern over political andDespite slow global economic uncertainty that served as an overhang on global marketsgrowth in 2012 were substantially alleviated2014 resulting from geopolitical tensions, a slowdown in 2013 following the U.S. presidential election and the resolution of the "fiscal cliff." During the year,China, challenging economic conditions continued to improve in the U.S., as well asJapan, Europe, Latin America and Russia, weaker-than-expected growth in parts of Europeemerging markets and Japan. The Federal Reserve maintained its monetary policy on quantitative easing, improving economic conditions and corporate performance. The global equity markets, in particular developed markets, saw strong growth, withdeclining oil prices, the S&P 500 Index increasing 30% forestablished a record high in 2014 and ended 2014 up 14%. Although the year. However, emergingU.S. markets suffered throughperformed well overall, there was volatility in certain sectors, including natural resources. Coming off consecutive years of double-digit growth in U.S. equity markets and high correlation among asset classes, investors favored passively managed index and exchange-traded funds over actively managed funds in 2014 – a volatile year, partially becausetrend that has accelerated in the past few years. A combination of uncertainty regardingfactors related to our two largest funds, Ivy Asset

Strategy and Ivy High Income, contributed to net outflows in those products, both of which have driven growth in the Federal Reserve's plan to potentially scale back asset purchases. Investors remained somewhat risk-aversefirm's assets under management and under-investedoverall financial results in equities, but began to exhibit an appetite for re-risking their portfolios following the improving global equity markets.recent years.

        Despite ongoing global and market challenges in 2013,2014, the Company produced strong financial results through the resilience of our investment management skill,skills, the strength of our distribution model and a deep, diversified product line-up. We achieved record levels of net income, earnings per share, operating revenues and operating margin. It was our seventh consecutive year of increases in earnings per share. Record cash flow from operations allowed us to return $246.3 million to stockholders through dividends and stock repurchases, while ending the year with $809.9 million of cash and investments. This performance allowed us to increase our dividend payout rate to stockholders by 26.5% for 2015.

•

Our 8.8% organic growth rate contributed to year-end assets under management of $126.5 billion for 2013, an all-time high. Long-term performance of our mutual funds was solidcompetitive with 84%60%, 73%72% and 80%66% of our equity funds and 56%, 65% and 63% of all mutual fund assets and 84%, 74% and 81% of all equity assetsfunds outperforming their Lipper peer group average on a one, three and five-year basis, respectively. Additionally,Waddell & Reed Advisors Funds ranked No. 1 and Ivy Funds ranked No. 13 in terms of performance for the 10-year rankings in the annual survey of "Best Mutual Fund Families" as ranked and published byBarron's; for the sixthyear ended December 31, 2014. For the seventh consecutive year, Ivy Funds landed in the top five fund families for the five-year rankings; for the fifth consecutive year, Ivy Funds appeared in the top five in the 10-year rankings. The Waddell & Reed Advisors Funds family ranked among the top 10 fund families overin the one-, three-and five-year periods.period for six of the last seven years.



•

AnnualDespite a decrease in sales of $29.8 billion increased 28% over 2012 led byand increase in redemptions in our Wholesale channel's efforts, which contributed $21.4 billion, a 34% improvement over 2012channel, driven by outflows in our two largest funds, our Advisors channel and new record high. The Wholesale

channel continued to make meaningful progress in product sales diversification, with 20 strategies with more than $1 billion in total assets and 7 with more than $500 million in total assets by year end.Institutional channels saw increased flows. Our Advisors channel achieved sales of $5.2$5.5 billion, its highest level to date and a 16%6% increase from 2012,2013, while maintaining an 8.9%a long-term redemption rate of 8.3%, less than half of the 25.7%24.7% industry average. Advisor productivity improved 19%18% to an all-time high of $214,600approximately $254,000 per advisor. Our Institutional channel's $3.1$3.4 billion in sales improved 14%9.1% from 2012,2013, and institutional assets under management of $15.8$17.8 billion, an increase of 34%12.5% from 2012,2013, marks a new year-end record level of assets.level. We continue to look for ways to broaden our Institutional search activity was robust,product offerings, both as a sub-advisor and we continued to see demand for products long marketed in that channel, plus growing demand for strategies that are relatively new to the channel.

traditional defined benefit and defined contribution business.



•

The breadth and quality of our product line, and our flexibility and expertise in marketing it, were central to our success in 2013. While the mutual fund industry saw increased flows into equity funds2014. We continued to make meaningful progress in 2013,product sales diversification, with 20 strategies with more than $1 billion in total assets and seven strategies with more than $500 million in total assets by year end. We offer 14 different strategies in our broad product line allowed us to adapt to investor sentiment that remained somewhat equity-averse and help investors navigate a variety of market hurdles. This was evidenced by a 28% increaseInstitutional channel, including four with more than $1 billion in combined sales across all distribution channels to $29.8 billion, the highest sales record to date. Those same channels experienced a 264% increase in net inflows last year from 2012. Although a broad return to equities highlighted overall industry sales in 2013, we experienced strong sales in virtually all asset classes — ranging from our asset allocation funds (such as Asset Strategy and Balanced) to fixed-income (High Income) and pure equity funds (Science & Technology and Mid-Cap Growth).total assets.

        Throughout the challenging financial markets, particularly with respect to ongoing growth challenges in much of the world and uncertainty tied to the Federal Reserve's quantitative easing monetary policy, we produced significant accomplishments in 2013. Management demonstrated its capacity to perform well by leveraging its investment management and marketing skills, which translated into record levels of net income, earnings per share, both operating revenues and income, and sustained organic growth for the eighth consecutive year. Strong performance across several other financial and operational measures included a 32% increase in earnings per share (our sixth consecutive year of increases), further expansion in our operating margin, and a 21% increase in our dividend payout rate to stockholders.        We continue to work hard to ensure our firm's ability to compete, succeed and – most important – serve investors well across the many different market cycles and business challenges that companies in our business inevitably face.

Base Salary

        We provide our named executive officers with a base level of monthly income for the expertise, skills, knowledge and experience they offer to our management team. Base salaries are reviewed annually by the Committee.

        Mr. Herrmann did not receive a salary increase for 20132014 and has not received a salary increase since 2008. The Committee reviewed the base salary of each named executive officer for 20132014 and, based on a determination that salary levels were sufficiently competitive and on Mr. Herrmann's recommendations, the Committee approved a merit increase in salary of approximately 7% for Mr. Connealy in recognition of the increased efficiencies and improved reporting capabilities achieved by the finance department. The Committee did not increase base salaries for the other named executive officers for 2013.2014, except for a merit increase in salary of approximately 15% for Mr. Bloss in recognition of his increased responsibilities after being appointed Chief Financial Officer in March 2014.

        For a further description of the base salaries paid to the named executive officers in 2013,2014, please refer to the Summary Compensation Table below.

Annual Performance-Based Incentive Awards

        Our named executive officers are eligible to receive annual performance-based incentive awards under the Executive Incentive Plan. These incentive awards, granted from cash and restricted stock bonus pools, provide an incentive for consistent annual performance in building stockholder value, align our

executives' interests with that of our stockholders, and encourage retention and a long-term commitment to the Company, all of which are reinforced by the vesting provisions of our equity incentive awards. The size of the bonus pools are determined upon the achievement of pre-established performance goals that are set by the Committee in the first quarter of each year.

        The Committee has discretion to designate the senior executive officers of the Company that are eligible to receive such incentive awards, as well as to set the percentage of the incentive bonus pools each participant is entitled to earn upon achievement of the performance goals, as discussed below. Notwithstanding the foregoing, the Committee may, in its discretion, award compensation that is not contingent upon the achievement of performance goals or reduce or eliminate entirely the amount of incentive awards payable to any participant upon attainment of the performance goals, but any such reduction may not increase the awards of another participant. In the event the Committee awards compensation that is not contingent upon the achievement of performance goals, the award may not be deductible by the Company under Section 162(m) of the Internal Revenue Code ("Section 162(m)").

        Determination of Bonus Pools.    Since 2003, performance-based incentive awards have been based on bonus pool formulas established under the Executive Incentive Plan. For 2013,2014, the size of the bonus pool available for cash incentive awards was based upon 6% of the Company's 20132014 "adjusted operating income," defined as net income increased by interest expense; federal, state and local income taxes; executive cash incentive awards; extraordinary or non-recurring losses; and losses from publicly-disclosed acquisitions in 20132014 (of which there were none) and decreased by extraordinary or non-recurring gains, and gains from publicly-disclosed acquisitions (of which there were none), for a total of $24,856,500.$30,930,300.

        Operating income is used by the Company and investors as a measure of the Company's underlying profitability and fluctuates with the Company's performance, which in turn creates a bonus pool that moves with the Company's performance. It is adjusted in order to provide a measure of performance that reflects the influence and contributions of each executive on a relatively equal basis and excludes items that, for example, may be disproportionately influenced by the business decisions of one executive more than others, or that are not indicative of our business and economic trends. This results in a measure of our executive officers' management of the Company's operating business as a whole. In setting the discretionary 6% threshold, the Committee considered industry practice, recommendations of the compensation consultant regarding the performance measure, the number of executive officers participating in the Executive Incentive Plan, historical operating results, the need to have the ability to reward extraordinary performance, when and if achieved, and cash incentive awards granted in prior years.

        Similar to prior years, equity incentive awards were based upon the attainment of a 40% "adjusted return on equity" or "adjusted ROE" defined as stockholders' equity increased by executive cash incentive awards, extraordinary or non-recurring losses, and losses from publicly-disclosed acquisitions in 20132014 (of which there were none), and decreased by extraordinary or non-recurring gains, and gains from publicly-disclosed acquisitions in 20132014 (of which there were none). The Company's adjusted ROE in 20132014 was 69%70%. Return on equity is a measure of how well the Company uses stockholders' equity to generate net income. Upon the attainment of a 40% adjusted ROE, 420,000600,000 shares of the Company's Class A common stock were eligible for issuance from the restricted stock bonus pool. In setting the discretionary 40% threshold and the maximum 420,000600,000 share level, the Committee considered adjusted return on equity for the industry, the number of senior executive officers participating in the Executive Incentive Plan, historical equity incentive awards, the need to have the ability to reward extraordinary performance, when and if achieved, and the expected difficulty of achieving the desired results.

        The number of shares of the Company's Class A common stock available for issuance from the restricted stock bonus pool increased from 420,000 shares in 2013 to 600,000 shares in 2014. The Committee annually reviews the discretionary maximums and thresholds of 6%, of adjusted operating income, 40% adjusted ROE and 420,000600,000 shares of the Company's Class A common stock when it sets the performance goals, and did so in February 20132014 for 20132014 awards, subjectively determining that these amounts reflect industry standards, adequately fund potential bonuses, and provide sufficient capacity to reward extraordinary performance, when and if achieved. Additionally, the Committee believes that these amounts are reasonable and fair to the Company and all stakeholders.

        Percentage Allocations.    The maximum percentage of the bonus pools that each executive is eligible to receive is based on the Committee's subjective judgment and primarily determined relative to each individual's scope of authority and complexity of responsibilities. The Committee also takes into consideration internal equity within the bonus structures and the overall compensation structure of individual positions, such as commissions, current stock holdings or dividends.

        As the Company's Chief Executive Officer, Mr. Herrmann has comprehensive oversight and management responsibilities across the entire organization and is held primarily responsible for the Company's financial results. Our investment management division, which Messrs. Avery and Sanders oversee, and our distribution organization, which Mr. Butch oversees, represent the two business units with the most influence on our success and the creation of stockholder value. Messrs. Avery and Sanders also serve as portfolio managers for mutual funds collectively representing approximately 44%38% of the Company's assets at year end, and various institutional accounts for which they are eligible to receive cash commissions as described below under "Portfolio Manager Revenue Sharing."

        For 2013,2014, the Committee designated Messrs. Herrmann, Connealy,Bloss, Avery, Butch and Sanders eligible to earn 25%, 10%, 25%, 20% and 20%, respectively, of the cash bonus pool and 25%, 10%, 25%, 20% and 20%, respectively, of the restricted stock pool, consistent with the philosophy that individuals with greater roles and the ability to directly impact the Company's performance goals and long-term results should bear a greater proportion of the risk if our performance measures are not achieved.

        Use of Negative Discretion.    Pursuant to Section 162(m) and the Executive Incentive Plan, the Committee may exercise its discretion to pay actual bonus amounts that are less than the maximum amounts that the named executive officers are eligible to receive upon the achievement of the objective pre-established performance goals determined by the Committee. The maximum cash or equity incentive award that each named executive officer is eligible to receive, calculated as the percentage of the bonus pools assigned to each named executive officer, is not an expectation of actual bonus amounts that will be paid to the named executive officers, but a cap on the range of compensation ($0 to the maximum amount) that an individual may be paid while maintaining the tax deductibility of the bonus as "performance-based" compensation for purposes of Section 162(m). The maximum incentive award amount may be awarded under extraordinary circumstances or for extraordinary performance, although the Committee more often determines incentive awards that are less than the maximum amount the named executive officer is eligible to earn. This provides the Committee with the flexibility to compensate executives for truly exceptional performance without paying more than is necessary to incentivize and retain our named executive officers. The Committee believes that this bonus structure is in the best interests of stockholders because it enables the most prudent use of Company assets by maximizing the deductibility of performance-based compensation while empowering the Committee to pay only those amounts it determines are necessary to appropriately compensate executives.

        20132014 Performance-Based Incentive Awards.    In determining 20132014 incentive compensation awards, the Committee considered the Company's performance for the year and Mr. Herrmann's recommendations based on his assessment of the other named executive officers' individual performance and contributions.

        The Committee accepted Mr. Herrmann's recommendations with respect to 20132014 cash incentive awards for the other current named executive officers, and awarded Messrs. Herrmann, Connealy, Avery,Bloss, Butch and Sanders awards of $3,300,000, $1,500,000, $1,750,000,$350,000, $1,200,000 and $600,000, respectively. Mr. Avery, in consultation with Mr. Herrmann, recommended to the Committee that he not receive a cash incentive award in 2014 due to the relative underperformance of the Ivy Asset Strategy fund in 2014. The Committee accepted this recommendation. Mr. Connealy did not receive a cash incentive award for 2014 due to his retirement in June 2014. The cash incentive awards for Messrs. Herrmann, AveryButch and ButchSanders remained the same in 2013 increased an average of 15.6% over 2012. The Committee determined that, based on his previously announced decision to retire in 2014,2014. Mr. Connealy would not receive an equity incentive award for 2013 and increased hisBloss' cash incentive award which amounted to an increase of 150%increased by 27% from that of 2012. The award for Mr. Sanders in 2013 increased 100% from that of 2012 in order to provide more competitive compensation related to his Chief InvestmentFinancial Officer position. The Committee believed that these cash incentive award amounts were appropriate in

recognition of strong Company performance, including a number of record-setting operational metrics, and individual performance and contributions as described below.

        The Committee also accepted Mr. Herrmann's recommendations with respect to equity incentive awards for the other current named executive officers, and awarded Messrs. Herrmann, Connealy,Bloss, Avery, Butch and Sanders awards of 65,000, 33,000, 50,000, 0, 40,000, 35,00045,000 and 30,00045,000 shares of restricted stock, respectively. Mr. Connealy did not receive an equity incentive award in 2014 due to his retirement from the Company in June 2014. The Committee believes that equity incentive awards must be sufficient in size to provide a strong, long-term performance and retention incentive for executives, and to increase their vested interest in the Company. These equity incentive awards vest in 33¹/3% increments annually, beginning on the second anniversary of the grant date. The Committee granted these equity incentive awards pursuant to the Executive Incentive Plan from the shares reserved for issuance under the Stock Incentive Plan, as reported in the 20132014 Grant of Plan-Based Awards Table below.

        The 20132014 equity incentive awards for Messrs. Herrmann, Bloss, Avery and Butch and Sanders were reducedincreased by 50%29% to 38% from 20122013 share amount levels based on the determination to grant equity compensation awards for 2013 equal in2014 at levels that approximated the value toof equity incentive awards for 2012.2013. The 91.9% increase23.50% decrease in the Company's stock price during 2014 resulted in a 50% reductionan increase in the number of shares granted to each current named executive officer. On average,Generally, the aggregate value of equity incentive awards for 2014 remained flat or decreased by 6.5%slightly compared to 2013 for each of the named executive officers, other than Mr. Connealy,Sanders, who did not receive anreceived a 15% increase in the value, and 50% increase in the number of shares, of his 2014 equity incentive award duecompared to 2013. Mr. Sanders' equity incentive award increased in 2014 to align his retirement from the Company in 2014.award with that of Mr. Butch for internal equity among our executive team. The Committee believed that these equity incentive awards were appropriate consistent with the same rationale the Committee followed in determining cash incentive awards.

        The 20132014 annual incentive compensation awards described above reflect the Committee's determination to (1) reward the named executive officers for the degree to which outstanding corporate and executive performance, continued during 2013, particularly with respect to (i) our overall strong financial performance, including a number of record-setting metrics, (ii) the marked increase of assets under management to the highest level in Company history,including net income, earnings per share, operating revenues and (iii) the Company's sustained gross sales momentum and competitive investment performance,operating margin and (2) reflect, as appropriate, differences in the named executive officers' scope of authority and responsibilities, the assumption of additional responsibilities, and an appropriate balance of total direct compensation between cash and equity.

        Mr. Herrmann discussed with the Committee the following individual performance considerations that impacted his award recommendations:

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Mr. ConnealyBloss:  Mr. ConnealyBloss directs the finance division and oversees all financial matters for the Company, including financial performance, corporate performance measurement, andtreasury management, strategic planning and budgeting. He also oversees investor relations. Mr. Connealy'sBloss' financial leadership was essential in maintaining cost controls throughout the organization, which helped the Company reachachieve earnings per share of $3.71, its highest level of earnings per share in its history, during 2013. This continued focus on cost controls also helped the Companyand improve its operating margin to 28.1%30.3%, compared to 25.8%28.1% in fiscal year 2012. During the second half of 2013, the Company's operating margin reached a corporate goal of 30% set by management coming out of the global financial crisis in 2009.2013. Mr. ConnealyBloss administered the Company's capital management initiatives during the year, including the return of nearly $168.2$246.3 million to shareholders through a combination of sharestock repurchases and

regular dividends, resulting in a payout ratio of 66.2%78.6% for the fiscal year. Mr. Connealy directed the successful closing of the Company's sale of its Legend subsidiaries in January of 2013. Mr. ConnealyBloss also oversaw several IT initiatives during 20132014 to further improve the Company's reporting processes, management reporting capabilities, and enhance the Company's forecast and budget system.



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Mr. Avery:  Mr. Avery was appointed President of the Company in 2011 and is charged with overall responsibility of the investment management division. Under Mr. Avery's leadership, our investment team successfully navigated what became the sixth consecutive year of challenging market environments. Relative long-term performance remained competitive, with over 84%, 73%

division and 80% of mutual fund assets under management outperforming their Lipper peer group average on a one-, three- and five-year basis, respectively, while performance of our equity funds was strong with 84%, 74% and 81% of our equity assets outperforming their Lipper peer group average on a one, three and five-year basis, respectively. Mr. Avery also has significant investment responsibilities throughout the organization, managing or co-managing over 20 investment products, including fivefour mutual funds, the most notable of which is our flagship Ivy Asset Strategy fund, which composes 27%composed 22% of our total assets under management at December 31, 2014, and 11 funds of funds and portfolios within the Ivy VIP Pathfinder and InvestEd families. ThoseDespite competitive relative long-term performance evidenced by 60%, 72% and 66% of our equity funds and 56%, 65% and 63% of all funds includesurpassing their Lipper peers in performance on a one, three new VIP Pathfinder Managed Volatility portfolios introduced in August. In addition to his investment management responsibilities, Mr. Avery continues to play a key role in marketingand five-year basis, the Company's funds through collaboration with our wholesalers. Mr. Avery spent his 33^rd year withrelative performance of the firm in 2013, and his flagship Ivy Asset Strategy Fund returned 24.32% (Class A)fund was down in 2013, ranking second among 128 distinct portfolios2014, resulting in the fund's Morningstar World Allocation peer category.significant outflows from that fund.





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Mr. Butch:  Mr. Butch is responsible for all aspects of the Company's distribution strategies and initiatives for the Wholesale, Advisor and Institutional channels, including sales, marketing, product development, and management of the Company's broker/dealer subsidiaries and their strategic relationships with key business partners. In 2012, Mr. Butch assumed responsibility for the Institutional channel, in addition to his responsibilities for the Advisors and Wholesale channels, giving him executive management responsibility for all three distribution channels. Mr. Butch has demonstrated superior management skills in leading the growth in the Wholesale channel, as well as with respect to the increasing complexity of our retail distribution model. Under his leadership, distribution success continued to excel in 2013. In the Wholesale channel, the2014. The Company's continuing focus on product sale diversification efforts resulted in 20 strategies with more than $1 billion in total assets and 7seven strategies with more than $500 million in total assets by year end. In the Advisors channel, sales volume reached $5.2$5.5 billion, the highest level in Company history, and productivity per advisor reached $214,600,approximately $245,000, an all-time high and 19%18% improvement over 2012.2013. The redemption rate for this channel remains consistently low, at 8.9%8.3% in 2013,2014, significantly below industry standard levels, lending to superior long-term profitability. The Institutional channel achieved an increase in sales to $3.4 billion, a 9.1% increase over 2013. Mr. Butch also led the developmentintroduction of a comprehensive branding strategytwo new funds, Ivy Emerging Markets Local Currency Debt fund and campaign forIvy Mid Cap Income Opportunities fund, to the Ivy Funds, launchedmarket in 2014. In addition, Mr. Butch directed the first quarter of 2011, and contributed to strengthening the Ivy Funds' identity and further supporting business development among its key constituenciestransaction with Emerging Managers Group in 2013.2014 that broadened our distribution network internationally.



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Mr. Sanders:  Appointed Senior Vice President and Chief Investment Officer in February 2011,  Mr. Sanders works in partnership with Mr. Avery and oversees our investment management division on a day-to-day basis, including the development of strong investment professionals and the direction of investment processes and organizational capabilities to support our long-term investment strategies. His roleUnder his direction and guidance as Chief Investment Officer, continued to expand in 2013 with the assumption of more administrative responsibilities in that role. Under Mr. Sanders' direction and guidance, our team of portfolio managers, analysts and traders employedemploys a collaborative, research-based investment process that providedprovides a strong foundation throughout 2013.for our success. In 2014, Mr. Sanders successfully implemented portfolio manager changes after the departure of two portfolio managers from the Company. Mr. Sanders also has multiple investment responsibilities, including the co-management of three of the Company's mutual funds and numerous institutional accounts, for which he serves as portfolio manager, all of which comprise approximately $9.5$8.2 billion, or 7.5%6.6%, of our total assets under management. He is also extensively involved in proposals for new business and the on-going marketing process and servicing of institutional accounts in the large-cap growth arena, which include domestic and international accounts.

        The Committee believes that the levels of cash and equity incentive compensation awarded in 20132014 appropriately reflect corporate performance and individual contributions and maintain a high level of incentive for retention and future performance, which is consistent with the Company's executive compensation objectives. This determination is guided by a basic formulaic process, but also involves the exercise of discretion and subjective judgment by the Committee taking into account the above referenced

information. For a further description of the incentive awards paid to each of the named executive officers in 2013,2014, please refer to the Summary Compensation Table below.

Deferred Compensation

        Shortly after our initial public offering in 1998, the Company determined that the retirement benefits that previously had been offered to certain executive officers under the benefit plans of our former parent company were insufficient. Based on this determination, the Company adopted the Supplemental Executive Retirement Income Plan, as amended and restated (the "SERP") to supplement retirement benefits provided by the Waddell & Reed Financial, Inc. 401(k) and Thrift Plan, as amended and restated (the "401(k) Plan") and the Waddell & Reed Financial, Inc. Retirement Income Plan, as amended and restated (the "Pension Plan"), to retain executive talent and to maintain a competitive total compensation package. At the time of adoption, three executives were eligible to participate in the SERP; Mr. Herrmann is the only participant who remains with the Company and participates in the SERP. In 2007, the Committee determined that retirement benefits payable under the Pension Plan and SERP were sufficient to provide Mr. Herrmann with adequate retirement income, and that therefore, no non-formula discretionary contribution would be made by the Company in future years.

        In addition, the Company administers the Portfolio Managers Deferred Compensation Plan, as amended and restated (the "Portfolio Managers Plan"). Designated portfolio managers and assistant portfolio managers are required to defer 30% of their annual cash bonus into selected hypothetical investment vehicles, which must include one or more of the mutual funds or series of mutual funds managed by the participant, and may include other equity or fixed income funds managed by the Company. Participants' accounts are annually credited (or charged) with an amount equal to the performance of the selected hypothetical investment vehicles since the last preceding year. Messrs. Avery and Sanders participated in the Portfolio Managers Plan as portfolio managers in years prior to 2011.

        For a description of material plan provisions and further information on SERP benefits payable to Mr. Herrmann and benefits payable to Mr. Sanders under the Portfolio Managers Plan, please refer to "Nonqualified Deferred Compensation Plans" below.

Retirement Benefits

        We provide retirement benefits to all of our employees, including the named executive officers, through the Pension Plan and the 401(k) Plan. These plans are designed in combination, along with the SERP, to provide an appropriate level of replacement income upon retirement.

        In 2013,2014, the Company made matching contributions equal to $10,200 for each of the named executive officers under the 401(k) Plan. For a description of material provisions of the Pension Plan, please refer to "Pension Benefits" below.

Portfolio Manager Revenue Sharing

        Portfolio managers who manage institutional accounts with certain investment styles are eligible to participate in revenue sharing arrangements in recognition of their direct role in the sales process in the institutional sales market, as well as their continued role in client service throughout the life of the account. Under these arrangements, participating portfolio managers are eligible to receive a percentage, which decreases over a number of years, of the management fees earned by the Company, allocated among multiple portfolio managers who manage accounts of the same investment style. Specifically, participants share in up to 20% of the management fees generated during the first year, up to 15% during the second year and up to 5% thereafter for (1) new accounts owned by institutional clients, (2) contributions to such accounts equal to 20% or more of the account's market value at the time of such contribution, and (3) accounts with daily or weekly net contributions that aggregate, on the anniversary date of the account,

to 10% or more of the account's market value. The percentage amount that participants are eligible to receive varies by investment style.

        Messrs. Avery and Sanders received revenue sharing compensation in 20132014 related to their portfolio management responsibilities in 20132014 as described in footnote 4(k)4(g) of the Summary Compensation Table below.

Personal Benefits and Other Perquisites

        The named executive officers are eligible to participate in the Company's active employee flexible benefits plans, which include medical, vision, life insurance, long-term disability coverage, and post-retirement medical benefits until age 65 and are generally available to all Company employees. Additionally, all of the Company's employees are entitled to vacation, sick leave and other paid holidays, and may be eligible for severance payments under a severance pay plan further described below. The Committee believes that the Company's commitment to provide the employee benefits summarized above recognizes that the health and well-being of the Company's employees contribute directly to a productive and successful work life that enhances results for the Company and its stockholders.

        The Company provides all full-time employees with (1) life insurance coverage equal to two times the sum of the employee's current base salary plus the prior year's bonus/commissions, up to a maximum of $2 million in coverage, and (2) long-term disability coverage equal to 60% of the employee's current base salary, plus the prior year's incentive compensation, up to a maximum annual benefit of $90,000 ($240,000 for designated senior executives based on job grade). However, Mr. Herrmann's life insurance coverage under the Company's general program is limited to $50,000 and is supplemented by an endorsement style split-dollar insurance policy, to provide Mr. Herrmann with competitive benefits and replace coverage that is not offered to him under the Company's group life insurance program. This policy is owned, and the premiums are paid, by the Company (with the beneficiary selected by Mr. Herrmann in the event of his death prior to a termination of his service) and is governed by an agreement that entitles Mr. Herrmann to elect to have the policy transferred to him following a termination of the agreement (other than due to death), provided that Mr. Herrmann pays to the Company the greater of the aggregate premiums that the Company has paid on the policy or the then net cash surrender value of the policy. In the event the policy remains in force until Mr. Herrmann's death, the Company is entitled to receive the greater of the then current net cash surrender value of the policy or the total of all Company-paid premiums to date. Mr. Herrmann is not entitled to any interest in the cash surrender value of this policy.

        For further information on the premiums paid on Mr. Herrmann's insurance policy, please refer to the Summary Compensation Table below.

        In addition to the personal benefits discussed above, the named executive officers receive the following perquisites:

Company Aircraft

        Pursuant to the Company's Aircraft Policy, the named executive officers and other management employees are provided use of Company aircraft for business purposes. Additionally, pursuant to an executive security program established by the Committee and approved by the Board, the Company encourages Mr. Herrmann to use Company aircraft for personal as well as business travel when practicable. The other named executive officers are provided use of Company aircraft for personal travel in limited circumstances.

        From time to time, executives may be accompanied by family members invited to attend business functions, which is deemed "personal use" of the Company aircraft by the Internal Revenue Service for tax purposes. Although the Company does not incur any incremental costs for such "personal use," the taxable value of such use, calculated pursuant to Internal Revenue Service guidelines, is imputed as income to the

named executive officers. We provide tax gross-up reimbursements relating to taxable values imputed to the named executive officers for such "personal use" of Company aircraft. The methodology used to

determine the Company's incremental cost for personal aircraft usage is described in footnote 4(d)4(a) of the Summary Compensation Table below.

Financial Services

        The Company provides each named executive officer with an allowance for financial counseling services, which may include financial, estate and/or tax planning, and tax preparation assistance. The Committee believes providing this perquisite allows the named executive officers to more efficiently manage their time and financial affairs and to focus more time and attention on the Company's business issues.

Other Perquisites

        The Company also provides the named executive officers (1) reimbursement of country club membership dues, (2) an annual executive physical, (3) travel insurance policies for the named executive officers and, at their election, their immediate family members, and (4) access to tickets to various sporting, civic, cultural, charity and entertainment events if the event tickets are not otherwise being used for business purposes. For further information on perquisites received by the named executive officers in 2013,2014, please refer to the "All Other Compensation" column of the Summary Compensation Table below.

        The Committee has determined to offer the above-described personal benefits and perquisites in order to attract and retain the named executive officers by offering compensation opportunities that are competitive with the Company's peers. The Committee believes these benefits and perquisites provide a more tangible incentive than an equivalent amount of cash compensation. In determining total compensation payable to the named executive officers for 2013,2014, the Committee considered these benefits and perquisites. However, as these benefits and perquisites represent a relatively insignificant portion of the named executive officers' total compensation, they did not materially influence the Committee's decision in setting such officers' total compensation.

Equity Compensation Program in General

        The Company maintains an equity compensation program for key employees, including the named executive officers, in order to attract and retain employees who contribute to the Company's success, to provide incentives that enhance job performance, and to enable those persons to participate in the long-term success of the Company. In recent years, these awards have been in the form of restricted stock.

        Restricted stock awards typically vest in 33¹/3% increments annually, beginning on the second anniversary of the grant date. As disclosed in prior years' proxy statements, a limited number of awards have been granted that vest in 20%, 50% or 100% increments annually, beginning on the first anniversary of the grant date. All restricted stock awards are classified in the Company's financial statements as equity awards.

        The Committee has approved, and will continue to approve, all grants of equity compensation. Although Company management, including the Chief Executive Officer, makes recommendations to the Committee from time to time on the form and amount of equity incentive awards to be granted to Company employees, such awards are approved by the Committee; the Committee does not expect to delegate such approval authority to the Company's executive officers or any subcommittee in the foreseeable future. Additionally, the Committee determines the grant date of all equity incentive awards; the Company's executive officers may not unilaterally select the grant date of awards. In February 2013,2014, at the same time the Committee approved the 20132014 performance goals, the Committee set the grant date for the named executive officers' 20132014 equity incentive awards as December 2013.2014. The 20132014 equity incentive awards for the named executive officers were granted on December 31, 2013,2014, the last day of the

The Committee believes it is appropriate and in the best interests of our stockholders to ensure that Mr. Herrmann will receive a payment equal to his base salary and annual bonus and to receive the benefit continuation that he would, but for his termination, have received during a fixed period following the change in control. Pursuant to the terms of the agreement, this period is three years, which the Committee believes is appropriate because it provides a substantial, but not an excessive, payment to Mr. Herrmann if he incurs a qualifying termination following a change in control.

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Additional Retirement Benefits:  The Agreement also provides a lump sum cash payment equal to the excess of the actuarial equivalent of the benefits he would have received under the Company's Pension Plan and SERP had his employment with the Company continued for three years after the date of termination over the actuarial equivalent of his benefits actually paid or payable under such plans. The period during which these benefits are provided is the same fixed period described above with respect to cash severance and benefits continuation. Pursuant to the same rationale as described above, the Committee believes it is appropriate to provide to Mr. Herrmann an approximation of the tax-qualified and non-qualified retirement benefits he would have received had he continued employment with the Company for the same three yearthree-year period of time determined to be appropriate by the Committee.



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Extended Exercise Period for Options:  Pursuant to the Agreement, all vested equity-based awards granted under the Company's stock incentive plans will be exercisable for the remainder of their respective terms. Our stock option awards generally remain exercisable for a period of three months following a termination of employment with "cause" (as defined below) by the Company. All of Mr. Herrmann's outstanding stock options were exercised prior to December 31, 2009.



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Tax Gross-Up Payment:  The Agreement provides for a tax gross-up payment in the event Mr. Herrmann is subject to the excise tax imposed on certain "excess parachute payments." The Committee believes that the tax gross-up provisions of the Agreement are appropriate to ensure that Mr. Herrmann receives the full value of the payments and benefits available under the Agreement. The Committee believes that the Agreement is structured to provide balanced and appropriate post-change in control severance benefits that eliminate any potential tension between the interests of our Chief Executive Officer and our stockholders. The imposition of the punitive taxes imposed by Section 4999 of the Internal Revenue Code on "excess parachute payments" significantly and adversely upsets that balance. Therefore, the Committee believes it is necessary, in order to satisfy its objectives in entering into the Agreement, to shield Mr. Herrmann from the negative tax consequences imposed on "excess parachute payments."

        For a further description of the Agreement and potential payments thereunder, see "Potential Payments Upon Termination or Change Inin Control" below.

Executive Compensation in 20142015

        In December 2013,2014, Mr. Herrmann recommended to the Committee that executive salaries for 20142015 remain flat with 20132014 levels for the other current named executive officers.officers, except for Messrs. Bloss and Butch, who received 6.7% and 5.0% increases, respectively, in base salary to better align their salaries with their responsibilities and internal compensation equity within the Company. The Committee accepted Mr. Herrmann's recommendations, and also did not increase Mr. Herrmann's base salary for 2014.2015.

        On February 12, 2014,2015, the Committee approved the 20142015 performance goals pursuant to which performance-based incentive awards may be awarded to senior executive officers participating in the Executive Incentive Plan. Any such awards will be based on a cash bonus pool equal to 6% of our adjusted operating income and a 600,000 share restricted stock bonus pool that will be calculated in the same manner as awards granted for 2013.2014. Participants in the Executive Incentive Plan will be eligible to receive allocations ranging from 10% to 25% of the cash bonus pool and 10% to 25% of the restricted stock bonus pool, as determined by the Committee. See "Analysis of 20132014 Compensation" above for further information on the methodology under which 20142015 awards will be calculated.

        The foregoing discussion primarily describes the compensation philosophies, principles and practices the Committee utilized in setting executive compensation for the 20132014 fiscal year. In the future, as the Committee continues to review each element of the executive compensation program, these philosophies, principles and practices may change.

EXECUTIVE COMPENSATION

Summary Compensation

        The following table summarizes total compensation awarded, paid or earned by our named executive officers who served in such capacities during 2011, 2012, 2013 and 2013.2014.

        The named executive officers were not entitled to receive payments characterized as "Bonus" payments for the 2011, 2012, 2013 and 20132014 fiscal years. Amounts reflected under "Non-Equity Incentive Plan Compensation" are performance-based cash incentive awards determined by the Compensation Committee in December of the respective year, based on performance goals set in February of the respective year.

        The current named executive officers' aggregate base salaries accounted for, on average, approximately 15%16% of their total compensation for 2013.2014.

SUMMARY COMPENSATION TABLE

        The direct costs of executive financial, tax or estate planning; country club membership dues; convention allowance; the value of personal use of corporate aircraft (based upon SIFL rates); tax gross-up reimbursements; service awards; retirement gifts; and Mr. Herrmann's split-dollar life insurance policy are imputed to the named executive officers, as applicable, and included as taxable income on their Form W-2s.

Grants of Plan-Based Awards

        The following table reflects estimated possible payouts under incentive plans to the named executive officers during 2013.2014. The Company's cash and equity incentive awards are granted to participants in the Executive Incentive Plan based upon pre-established performance goals set annually by the Compensation Committee with a performance period equal to the fiscal year for which the performance goals are set. The Executive Incentive Plan is an annual plan; both cash and equity incentive awards are determined, and generally paid (in the case of cash incentive awards) and granted (in the case of equity incentive awards), in the same fiscal year that such awards were earned.

        The named executive officers are eligible to earn a maximum cash and equity incentive award for the fiscal year, calculated as certain percentages of the cash bonus pool and the restricted stock bonus pool assigned to each named executive officer. For 2013,2014, Messrs. Herrmann, Connealy,Bloss, Avery, Butch and Sanders were eligible to receive a maximum of 25%, 10%, 25%, 20% and 20%, respectively, of the cash bonus pool and 25%, 10%, 25%, 20% and 20%, respectively, of the restricted stock bonus pool. Mr. Connealy was not eligible for incentive compensation in 2014 due to his retirement in June 2014.

        Dividends are paid on awards of restricted stock at the same rate as is paid to all stockholders generally. Pursuant to ASC 718, the right to receive dividends is included in the calculation of the grant date fair value of the equity incentive awards set forth in the following table.

        For more detailed information regarding awards paid to the named executive officers, please refer to "Analysis of 20132014 Compensation" set forth in the "Compensation Discussion & Analysis" above.

20132014 GRANTS OF PLAN-BASED AWARDS TABLE

Outstanding Equity Awards Atat Fiscal Year-End

        The following table reflects outstanding stock options and shares of restricted stock held by the named executive officers as of December 31, 2013,2014, the value of which is determined based on the number of shares of restricted stock granted and the $65.12$49.82 closing market price of the Company's Class A common stock on December 31, 2013.2014.

20132014 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE