0001144204-08-059221.txt : 20081024 0001144204-08-059221.hdr.sgml : 20081024 20081024145028 ACCESSION NUMBER: 0001144204-08-059221 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20081208 FILED AS OF DATE: 20081024 DATE AS OF CHANGE: 20081024 EFFECTIVENESS DATE: 20081024 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HIGHBURY FINANCIAL INC CENTRAL INDEX KEY: 0001335249 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 203187008 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-51682 FILM NUMBER: 081139703 BUSINESS ADDRESS: STREET 1: 999 EIGHTEENTH STREET STREET 2: SUITE 3000 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 303-893-2899 MAIL ADDRESS: STREET 1: 999 EIGHTEENTH STREET STREET 2: SUITE 3000 CITY: DENVER STATE: CO ZIP: 80202 DEF 14A 1 v129591_def14a.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A*
(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant

Filed by a Party other than the Registrant

Check the appropriate box:

Preliminary Proxy Statement

Confidential, For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

HIGHBURY FINANCIAL INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)

Title of each class of securities to which transaction applies:

(2)

Aggregate number of securities to which transaction applies:

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)

Proposed maximum aggregate value of transaction:

(5)

Total fee paid:

Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing Party:

(4)

Date Filed:

HIGHBURY FINANCIAL INC.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

To Our Stockholders:

You are cordially invited to attend the Annual Meeting of Stockholders of Highbury Financial Inc. (“Highbury”) which will be held at the principal executive offices of Highbury, 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202, on Monday, December 8, 2008 at 9:00 a.m. local time.

Details of the business to be conducted at the Annual Meeting are given in the attached Notice of 2008 Annual Meeting of Stockholders and Proxy Statement.

Whether or not you attend the Annual Meeting, it is important that your shares be represented and voted at the meeting. Therefore, I urge you to submit your proxy by signing, dating and returning the enclosed proxy card in the enclosed envelope. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy.

On behalf of the Board of Directors, I would like to express our appreciation for your continued interest in the affairs of Highbury. I look forward to greeting as many of our fellow stockholders as possible.


		Sincerely,

		Richard S. Foote, President and Chief Executive Officer

October 24, 2008

HIGHBURY FINANCIAL INC.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

NOTICE OF 2008 ANNUAL MEETING OF STOCKHOLDERS

To Our Stockholders:

You are cordially invited to attend the Annual Meeting of the Stockholders of Highbury Financial Inc. at 9:00 a.m., local time, on December 8, 2008, at 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202. At this meeting, you will be asked to consider and vote upon the following:

(1)

The election of one director to our Board of Directors to serve for a term of three years or until his successor is duly elected and qualified;

(2)

Approval of the Highbury Financial Inc. 2008 Equity Incentive Plan;

(3)

Approval of the Highbury Financial Inc. 2008 Executive Long Term Incentive Plan; and

(4)

The transaction of other business as may come properly before the meeting or any meetings held upon adjournment of the meeting.

Our Board of Directors has fixed the close of business on October 24, 2008 as the record date for the determination of stockholders entitled to vote at the meeting or any meetings held upon adjournment of the meeting. Only record holders of our common stock at the close of business on that day will be entitled to vote. A copy of our 2007 Annual Report on Form 10-K is enclosed with this notice, but is not part of the proxy soliciting material.

We invite you to attend the meeting and vote in person. If you cannot attend, to assure that you are represented at the meeting, please sign and return the enclosed proxy card as promptly as possible in the enclosed postage prepaid envelope. If you attend the meeting, you may vote in person, even if you previously returned a signed proxy.


		By Order of the Board of Directors,

		R. Bradley Forth, Secretary and Chief Financial Officer

October 24, 2008

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

What is the purpose of the Annual Meeting?

The purpose of our Annual Meeting is for the stockholders to consider and vote upon the election of a director, the approval of the Highbury Financial Inc. 2008 Equity Incentive Plan (the “Equity Incentive Plan”), the approval the Highbury Financial Inc. 2008 Executive Long Term Incentive Plan (the “Long Term Incentive Plan”) and such other matters as may properly come before the meeting.

Where will the meeting be held?

The 2008 Annual Meeting will be held on Monday, December 8, 2008 at 9:00 a.m. (local time), at 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202.

Who is soliciting my vote?

The Board of Directors of Highbury (“Board”) is soliciting your proxy to vote at the Annual Meeting. This proxy statement and form of proxy were first mailed to stockholders on or about October 24, 2008. Your vote is important. We encourage you to vote as soon as possible after carefully reviewing this proxy statement. We have engaged Morrow & Co., Inc. to assist us in the solicitation of proxies. The fee for these services will be $3,500 in addition to out-of-pocket expenses.

What am I voting on?

You are voting on the following items:

(1) The election of Richard S. Foote to the Board to serve until the 2011 annual meeting of stockholders;

(2) Approval of the Equity Incentive Plan; and

(3) Approval of the Long Term Incentive Plan.

What are the voting recommendations of the Board?

The Board recommends the following votes:

• FOR the election of the director nominee;

• FOR approval of the Equity Incentive Plan; and

• FOR approval of the Long Term Incentive Plan.

Will any other matters be voted on?

The Board does not intend to present any other matters at the meeting. We do not know of any other matters that will be brought before the stockholders for a vote at the Annual Meeting. If any other matter is properly brought before the Annual Meeting, your signed proxy card gives authority to Richard S. Foote and R. Bradley Forth as proxies, with full power of substitution (“Proxies”), to vote on such matters in their discretion.

Who is entitled to vote?

Stockholders of record as of the close of business on October 24, 2008 (the “Record Date”) are entitled to vote at the Annual Meeting.

How many votes do I have?

You will have one vote for every share of Highbury common stock that you owned at the close of business on the Record Date. You are not entitled to cumulate your vote. On the Record Date, there were 9,126,628 shares of common stock outstanding.

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

Many stockholders hold their shares through a broker or bank rather than directly in their own names. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

Stockholder of Record

If your shares are registered directly in your name with Highbury’s transfer agent, Continental Stock Transfer & Trust Company, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you by Highbury.

Beneficial Owner

If your shares are held in a stock brokerage account or by a bank, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you by your bank or broker, which is considered the stockholder of record of these shares. As the beneficial owner, you have the right to direct your bank or broker how to vote and are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote these shares in person at the Annual Meeting unless you bring with you a legal proxy from the stockholder of record. Your bank or broker has enclosed a voting instruction card for you to use for providing directions for how to vote your shares.

How do I vote?

If you are a stockholder of record, there are two ways to vote:

• By completing and mailing your proxy card; or

• By written ballot at the Annual Meeting.

If you return your proxy card but you do not indicate your voting preferences, the Proxies will vote your shares FOR proposals 1, 2 and 3.

If your shares are held in street name, you should follow the voting directions provided by your bank or broker. You may complete and mail a voting instruction card to your bank or broker or, in most cases, submit voting instructions by the Internet or telephone to your bank or broker. If you provide specific voting instructions by mail, the Internet or telephone, your shares should be voted by your bank or broker as you have directed.

We will distribute written ballots at the Annual Meeting to any stockholder who wants to vote. If you hold your shares in street name, you must request a legal proxy from your bank or broker to vote at the Annual Meeting.

Can I change my vote or revoke my proxy?

Yes. If you are a stockholder of record, you can change your vote or revoke your proxy any time before the Annual Meeting by:

•

Returning a later-dated proxy card;

•

Sending written notice of revocation to Richard S. Foote, President and Chief Executive Officer, at Highbury’s address of record, which is 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202; or

•

Completing a written ballot at the Annual Meeting.

How are votes counted?

Votes are counted by the inspector of election designated by the Board.

Who pays for soliciting proxies?

Highbury will pay for the cost of preparing, assembling, printing and mailing this proxy statement and the accompanying form of proxy to our stockholders, as well as the cost of soliciting proxies relating to the meeting. We may request banks and brokers to solicit their customers, on whose behalf such banks and brokers hold our common stock in street name. We will reimburse these banks and brokers for their reasonable out-of-pocket expenses for these solicitations. Our officers, directors and employees may

supplement these solicitations of proxies by telephone, facsimile, e-mail and personal solicitation. We will pay no additional compensation to our officers, directors or employees for these activities.

What is the quorum requirement of the Annual Meeting?

A majority of the outstanding shares on the Record Date, represented in person or by proxy at the Annual Meeting, constitutes a quorum for voting on items at the Annual Meeting. If you vote, your shares will be part of the quorum. Abstentions and broker non-votes will be counted in determining the quorum. On the Record Date, there were 9,126,628 shares of common stock outstanding and eight holders of record of common stock. A majority of common stock, or 4,563,315 shares, will constitute a quorum.

What are broker non-votes?

Broker non-votes occur when holders of record, such as banks and brokers holding shares on behalf of beneficial owners, do not receive voting instructions from the beneficial holders at least ten days before the Annual Meeting.

Broker non-votes will not affect the outcome of the matters being voted on at the Annual Meeting, assuming that a quorum is obtained.

What vote is required to approve each proposal?

Proposal No. 1 — The candidate who receives a plurality of the votes cast in the election of the director will be elected. Votes against a candidate and votes withheld from voting for a candidate will have no effect on the election.

Proposal No. 2 — Approval of the Equity Incentive Plan requires the affirmative vote of a majority of shares of our common stock present, or represented, and entitled to vote at the Annual Meeting. Abstentions, but not broker non-votes, will count as votes cast and will have the effect of a vote against the proposal.

Proposal No. 3 — Approval of the Long Term Incentive Plan requires the affirmative vote of a majority of shares of our common stock present, or represented, and entitled to vote at the Annual Meeting. Abstentions, but not broker non-votes, will count as votes cast and will have the effect of a vote against the proposal.

Who can attend the Annual Meeting?

All Highbury stockholders as of the close of business on the Record Date may attend.

What do I need to do to attend the Annual Meeting?

If you are a stockholder of record, your proxy card is your admission ticket to the Annual Meeting. If you own shares in street name, you will need to ask your broker or bank for an admission ticket in the form of a legal proxy. You will need to bring the legal proxy with you to the Annual Meeting. If you do not receive the legal proxy in time, bring your most recent brokerage statement with you to the Annual Meeting. We can use your statement to verify your ownership of our common stock and admit you to the Annual Meeting; however, you will not be able to vote your shares at the Annual Meeting without a legal proxy.

What does it mean if I get more than one proxy card?

It means you own shares in more than one account. You should vote the shares on each of your proxy cards.

I own my shares indirectly through my broker, bank, or other nominee, and I receive multiple copies of the annual report, proxy statement, and other mailings because more than one person in my household is a beneficial owner. How can I change the number of copies of these mailings that are sent to my household?

If you and other members of your household are beneficial owners, you may eliminate this duplication of mailings by contacting your broker, bank, or other nominee. Duplicate mailings in most cases are wasteful for us and inconvenient for you, and we encourage you to eliminate them whenever you can. If you have eliminated duplicate mailings, but for any reason would like to resume them, you must contact your broker, bank, or other nominee.

Multiple stockholders live in my household, and together we received only one copy of this year’s annual report and proxy statement. How can I obtain my own separate copy of those documents for the Annual Meeting?

You may pick up copies in person at the Annual Meeting or download them from our Internet web site, http://www.highburyfinancial.com (click on the link to Annual Meeting materials on the Investor Information page). If you want copies mailed to you and are a beneficial owner, you must request them from your broker, bank, or other nominee. If you want copies mailed and are a stockholder of record, we will mail them promptly if you request them from our corporate office by phone at (303) 357-4802 or by mail to 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202, attention: Investor Relations. We cannot guarantee you will receive mailed copies before the Annual Meeting.

Where can I find the voting results of the Annual Meeting?

We plan to announce preliminary voting results at the Annual Meeting and publish final results in a Form 8-K furnished after the Annual Meeting.

What is the deadline for consideration of stockholder proposals?

Because our Annual Meeting is being held more than 30 days after the anniversary of last year’s annual meeting, the submission of a stockholder proposal or nomination of a person for election as a director for consideration at the Annual Meeting (but not for inclusion of the proposal in our proxy statement) will be considered untimely unless it is received by us on or before the close of business on November 3, 2008 and is otherwise in compliance with the requirements set forth in the by-laws.

If a proposal is presented by a stockholder at our Annual Meeting for which we did not receive notice on or before October 10, 2008 (the last day by which a proposal could be submitted for inclusion in this proxy statement), then the proxy holders designated by the Board may exercise their discretionary voting authority with regard to such matter. In addition, if the Board determines that a proposal was not properly brought before the meeting in accordance with the requirements described above, the Chairman of the Board may declare that the matter will not be considered at the Annual Meeting.

A stockholder who wants to present a proposal at the 2009 annual meeting and have it included in our proxy statement for that meeting must submit the proposal in writing at our offices at 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202, Attention: Corporate Secretary, on or before June 26, 2009. Applicable Securities and Exchange Commission, or SEC, rules and regulations govern the submission of stockholder proposals and our consideration of them for inclusion in next year’s proxy statement.

with respect to which such notice is to be tendered is held within 30 days before or after such anniversary date, we must receive notice of such proposal no earlier than September 9, 2009, and no later than October 9, 2009. The notice must contain the information required by our by-laws. You may obtain a print copy of our by-laws upon request from our corporate secretary at Highbury Financial Inc., 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202. In addition, any person presiding at the meeting may exclude any matter that is not properly presented in accordance with these requirements.

Who can help answer my questions?

If you have questions about the Annual Meeting or if you need additional copies of the proxy statement or the enclosed proxy card you should contact:

Highbury Financial Inc.
999 Eighteenth Street, Suite 3000
Denver, CO 80202
Tel: (303) 357-4802

You may also obtain additional information about Highbury from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

HIGHBURY FINANCIAL INC.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

PROXY STATEMENT

GENERAL INFORMATION

We are sending you this proxy statement on or about October24, 2008 in connection with the solicitation of proxies by our Board. The proxies are for use at our 2008 Annual Meeting of Stockholders, which we will hold at 9:00 a.m., local time, on Monday, December 8, 2008 at 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202. The proxies will remain valid for use at any meetings held upon adjournment of that meeting. The record date for the meeting is the close of business on October 24, 2008. All holders of record of our common stock on the record date are entitled to notice of the meeting and to vote at the meeting and any meetings held upon adjournment of that meeting. Our principal executive offices are located at 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202, and our telephone number is (303) 357-4802.

A proxy form is enclosed. Whether or not you plan to attend the meeting in person, please date, sign and return the enclosed proxy as promptly as possible, in the postage prepaid envelope provided, to ensure that your shares will be voted at the meeting. You may revoke your proxy at any time prior to its use by filing with our president and chief executive officer an instrument revoking it or a duly executed proxy bearing a later date or by attending the meeting and voting in person.

Unless you instruct otherwise in the proxy, any proxy, if not revoked, will be voted at the meeting:

•

FOR our Board’s nominee for director;

•

FOR approval of the Equity Incentive Plan;

•

FOR approval of the Long Term Incentive Plan; and

•

By the proxy holders designated by the Board with regard to all other matters, in their discretion.

Our only voting securities are the outstanding shares of our common stock. At the record date, we had 9,126,628 shares of common stock outstanding and eight stockholders of record. If the stockholders of record present in person or represented by their proxies at the meeting hold at least a majority of our outstanding shares of common stock, a quorum will exist for the transaction of business at the meeting. Stockholders of record who abstain from voting, including brokers holding their customers’ shares who do not receive instructions from their customers and cause abstentions to be recorded, are counted as present for quorum purposes. In accordance with Delaware law, a list of stockholders entitled to vote will be available at the meeting.

For each share of common stock you hold on the record date, you are entitled to one vote on all matters that we will consider at this meeting. You are not entitled to cumulate your votes. Brokers holding shares of record for their customers generally are not entitled to vote on certain matters unless their customers give them specific voting instructions. If the broker does not receive specific instructions, the broker will note this on the proxy form or otherwise advise us that it lacks voting authority. The votes that the brokers would have cast if their customers had given them specific instructions are commonly called “broker non-votes.”

The voting requirements for the proposals we will consider at the meeting are:

•

Election of Directors. The candidate who receives a plurality of the votes cast in the election of the director will be elected. Votes against a candidate and votes withheld from voting for a candidate will have no effect on the election.

•

Equity Incentive Plan. Approval of the Equity Incentive Plan requires the affirmative vote of a majority of shares of our common stock present, or represented, and entitled to vote at the annual meeting. Abstentions, but not broker non-votes, count as votes cast and have the effect of a vote against the proposal.

•

Long Term Incentive Plan. Approval of the Long Term Incentive Plan requires the affirmative vote of a majority of shares of our common stock present, or represented, and entitled to vote at the annual meeting. Abstentions, but not broker non-votes, count as votes cast and have the effect of a vote against the proposal.

We will pay for the cost of preparing, assembling, printing and mailing this proxy statement and the accompanying form of proxy to our stockholders, as well as the cost of soliciting proxies relating to the meeting. We have requested banks and brokers to solicit their customers who beneficially own our common stock in names of nominees. We will reimburse these banks and brokers for their reasonable out-of-pocket expenses relating to these solicitations. Our officers, directors and employees may supplement the original solicitation of proxies by mail with telephone and personal solicitation. We will pay no additional compensation to our officers, directors and employees for these activities.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

We are asking our stockholders to elect one member to serve on our Board for a term of office consisting of three years or until his successor is elected and qualified. Our Board has nominated the individual named below for election as director. The nominee has agreed to serve as a director if elected.

The nominee is currently serving as one of our directors. The term of office of the nominee expires on the date of the Annual Meeting. Richard S. Foote has served on our Board since inception.

The persons named as proxies in the accompanying form of proxy have advised us that at the meeting they will vote for the election of the nominee named below, unless a contrary direction is indicated. If the nominee becomes unavailable for election to our Board for any reason, the persons named as proxies have discretionary authority to vote for an alternative nominee designated by our Board of Directors.

No arrangement or understanding exists between the nominee and any other person or persons pursuant to which the nominee was or is to be selected as a director. The nominee does not have a family relationship with any of our executive officers or other directors.

Information Concerning Nominees to Our Board

The director nominee, his age and present position with Highbury, are as follows:


Name	Age	Position with the Company
Richard S. Foote	45	President, Chief Executive Officer and Director

Richard S. Foote, CFA has been our president and chief executive officer and a member of our Board since our inception. Mr. Foote has been a managing director of Berkshire Capital Securities LLC, or Berkshire Capital, a New York based investment banking firm, since its formation in May 2004 and a managing director, principal and vice president of Berkshire Capital Corporation, the predecessor firm to Berkshire Capital, since 1994. Since 1994, Mr. Foote has advised on 30 completed mergers and acquisitions of financial services companies, including high net worth managers, institutional investment managers, mutual fund managers, real estate managers, brokerage firms, investment banks and capital markets firms with aggregate client assets under management of approximately $131 billion and aggregate transaction value of approximately $2.2 billion. Mr. Foote is a director of Berkshire Capital and serves on its compensation committee, commitment committee and technology committee. From 1991 through 1994, Mr. Foote was a co-founder and partner of Knightsbridge Capital Partners, a partnership engaged in investment banking and merchant banking activities. From 1985 to 1991, Mr. Foote was a vice president, an associate, and an analyst in the investment banking division of PaineWebber Incorporated, primarily working on mergers, acquisitions and the issuance of equity and debt securities. Mr. Foote was graduated from Harvard College, cum laude, in 1985 with an A.B. in Economics. Mr. Foote is a CFA charterholder and a member of the CFA Institute, the New York Society of Security Analysts, the Pension Real Estate Association and the National Council of Real Estate Investment Fiduciaries.

Our Board recommends that the stockholders vote FOR Proposal No. 1 to elect Mr. Foote as a director for a three year term.

Information About Our Non-Nominee Directors and Officers

The directors and officers of Highbury who are not nominees for election at the 2008 Annual Meeting, their ages and present positions with Highbury, are as follows:


Name	Age	Position with the Company
R. Bruce Cameron	52	Chairman of the Board
Aidan J. Riordan	36	Director
R. Bradley Forth	29	Executive Vice President, Chief Financial Officer and Secretary

R. Bruce Cameron, CFA has been our chairman of the board since our inception. Mr. Cameron has been the president and chief executive officer of Berkshire Capital, since its formation in May 2004. Mr. Cameron co-founded Berkshire Capital Corporation in 1983 as the first independent investment bank covering the financial services industry, with a focus on investment management and capital markets firms. Mr. Cameron and his partners have advised on approximately 230 mergers and acquisitions of financial services companies, including high net worth managers, institutional investment managers, mutual fund managers, real estate managers, brokerage firms, investment banks and capital markets firms with aggregate client assets under management of nearly $444 billion and aggregate transaction value in excess of $10.2 billion. Mr. Cameron is the managing member of Broad Hollow LLC, an entity formed for the purpose of facilitating the investments in us made by our founding shareholders, which owns 776,250 shares of our common stock and 75,000 of our units. Prior to forming Berkshire Capital Corporation, Mr. Cameron was an associate director of Paine Webber Group Inc.’s Strategic Planning Group from 1981 through 1983. Mr. Cameron began his career at Prudential Insurance Company from 1978 through 1980, working first in the Comptroller’s Department and then in the Planning & Coordination Group. Mr. Cameron was graduated from Trinity College, where he received a B.A. in Economics, and from Harvard Business School, where he received an M.B.A. Mr. Cameron also attended the London School of Economics. Mr. Cameron is a CFA charterholder and is on the membership committee of the New York Society of Security Analysts. Mr. Cameron is a director of Capital Counsel LLC in New York City, a high net worth investment management firm he advised when it was established. Mr. Cameron is a Fellow of the Life Management Institute. He is also a past trustee of the Securities Industry Institute.

R. Bradley Forth, CFA has been our executive vice president, chief financial officer and secretary since our inception. Mr. Forth has been a vice president and an associate at Berkshire Capital since its formation in May 2004 and an associate and an analyst at Berkshire Capital Corporation since 2001. Mr. Forth has advised on 19 mergers and acquisitions of financial services companies with aggregate transaction value of approximately $1.3 billion. He was graduated from Duke University in 2001 with a B.S. in Economics and a B.A. in Chemistry. Mr. Forth is a CFA charterholder and a member of the CFA Institute and the New York Society of Security Analysts.

Aidan J. Riordan has been a member of our board of directors since May 2007. Mr. Riordan is a Partner at Calvert Street Capital Partners, Inc. (“CSCP”), a Baltimore-based private equity investment firm focused on middle-market manufacturing and service companies. Previously, he was an Associate with Castle Harlan, Inc., a New York-based middle-market private equity partnership from 2000 to 2003. Mr. Riordan also served as an Associate for Berkshire Capital Corporation from 1994 to 1998. He holds a Bachelor of Arts degree in Economics from the University of Pennsylvania and a Masters in Business Administration degree in Finance from Columbia Business School. Mr. Riordan currently serves on the boards of directors for two CSCP portfolio companies: Universal Millennium, a printing and graphics services company, and ADAPCO, a distributor of specialty chemicals and equipment.

No arrangement or understanding exists between any of our officers or directors and any other person or persons pursuant to which the officer or director was or is to be selected as an officer or director. There are no family relationships among any of our officers and directors.

Number and Terms of Directors

Highbury’s Board has three directors and is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term. The term of office of the first class of directors, consisting of Russell L. Appel, expired on the first annual meeting of stockholders held on November 27, 2006. Mr. Appel was re-elected for a three-year term but resigned on November 21, 2007. The term of office of the second class of directors, consisting of R. Bruce Cameron and Aidan J. Riordan, expired on the second annual meeting of stockholders held on October 29, 2007. Messrs. Cameron and Riordan were re-elected at our second annual meeting for a three year term which will expire on the date of our 2010 annual meeting. The term of office of the third class of directors, consisting of Richard S. Foote, will expire on the date of our Annual Meeting.

Independence of Directors

Highbury currently does not have, and is not required to have, a majority of independent directors. Should Highbury decide to list on a securities exchange, we will be required to adhere to the independence requirements of that exchange. We believe that only one of our current three directors, Mr. Riordan, would meet the independence requirements applicable to companies listed on The Nasdaq Capital Market, including those applicable to audit, compensation and nominating committee members. Our other two directors, Messrs. Cameron and Foote, would not meet the director independence requirements of The Nasdaq Capital Market. Highbury’s entire board of directors, including Messrs. Cameron and Foote who are not independent directors, carries out the functions customarily undertaken by audit, compensation and nominating committees.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires Highbury’s officers and directors, and persons who beneficially own more than 10% of Highbury’s common stock, to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC. Such persons are required by the SEC regulations to furnish us with copies of all Forms 3, 4 and 5 that they file. Based on our review of the Forms 3, 4 and 5 filed by such persons, we believe that all Section 16(a) filing requirements applicable to Highbury’s officers, directors and greater than 10% beneficial owners were complied with as of October 15, 2008, with the following exceptions. The Form 3 filed by Aidan Riordan, one of our directors, on August 17, 2007 was filed after the applicable filing period. The Form 4 filed by Mr. Riordan on August 17, 2007 incorrectly stated the number of shares acquired and beneficially owned by Mr. Riordan. An amended Form 4 was filed with the SEC on March 25, 2008. Based on the Form 4 filed by Jack Silver on October 26, 2007, a beneficial owner of more than 10% of Highbury’s outstanding common stock, there are three transactions included on the Form 4 that were not reported within the applicable time period. A total of three transactions reported on the Form 3 filed September 17, 2007 and the Form 4 filed February 12, 2008 by Potomac Capital Management LLC, a former beneficial owner of more than 10% of Highbury’s outstanding common stock, appear to have been reported after the expiration of the applicable filing period. The transaction reported on the Form 4 filed on May 6, 2008 by Potomac Capital Management LLC was filed after the applicable filing period. The transaction reported on the Form 3 filed on February 26, 2008 by Nisswa Master Fund Ltd., a beneficial owner of more than 10% of Highbury’s outstanding common stock was filed after the expiration of the applicable filing period. On February 14, 2008, Woodbourne Partners LP filed five separate Form 4s each reporting a separate transaction from August 2007. Each of these Woodbourne Partners LP Form 4s was filed after the applicable filing period.

Code of Ethics

Our Board has adopted a Code of Ethics for our officers and directors. The text of this Code of Ethics may be found on our website at http://www.highburyfinancial.com. Amendments to and waivers from the Code of Ethics that require disclosure under applicable SEC rules will be posted on our website.

Information Regarding Our Board of Directors and Its Committees

Our Board met 14 times during fiscal 2007. Each of our directors attended all of the meetings of the Board during fiscal 2007. Our directors are encouraged, but not required, to attend the annual stockholders’ meeting. All of our directors either attended our 2007 Annual Meeting in person or participated by telephone.

Audit Committee. Highbury has not established an audit committee and has not adopted a written charter. Highbury’s entire Board currently carries out the functions customarily undertaken by the Audit Committee. Highbury’s Board has determined that R. Bruce Cameron and Richard S. Foote each qualifies as an “audit committee financial expert” as that term is defined under Item 407(d)(5)(ii) of Regulation S-K of the Securities and Exchange Act of 1934, as amended. However, since Messrs. Cameron and Foote are officers of Highbury, neither is “independent” as that term is defined under The Nasdaq Capital Market listing requirements.

Compensation Committee. Highbury’s entire Board currently carries out the functions customarily undertaken by the Compensation Committee and has not adopted a written charter related to compensation. The Board believes it is appropriate for Highbury not to have a compensation committee because no executive officer or director of Highbury has ever received any compensation for services rendered since Highbury’s inception on July 13, 2005. Awards made under the Equity Incentive Plan or Long Term Incentive Plan, if any, will be made by a Compensation Committee comprised solely of outside directors.

Nominating Committee. Highbury’s entire Board currently carries out the functions customarily undertaken by the Nominating Committee. Our Board does not have a formal policy for selection of nominees and does not have a written charter.

The Board believes it is appropriate for Highbury not to have a nominating committee because potential nominees are recommended by a majority vote of the directors and each director on the Board participates in the consideration of all director nominees. The Board identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to Highbury’s business and who are willing to continue in service are considered for re-nomination. If any member of the Board up for re-election at an upcoming annual meeting of stockholders does not wish to continue in service and if the Board determines that it is appropriate to replace the retiring member, the Board identifies the desired skills and experience of a new nominee. The Board believes that potential directors should possess sound judgment, understanding of the business issues affecting Highbury, integrity and the highest personal and professional ethics. In searching for potential Board nominees, the Board seeks directors who have a range of business, management and civic experience appropriate for the Board to discharge its responsibilities. In the case of both incumbent and new directors, the Board seeks persons who are able to devote significant time and effort to Board responsibilities.

The Board will consider potential nominees brought to its attention by any director or officer of Highbury. It also will evaluate recommendations for director nominees proposed by a stockholder who (i) is a stockholder of record at the time such stockholder submits the written recommendation discussed below to Highbury regarding a proposed nominee, (ii) is entitled to vote for the election of directors at the annual meeting and (iii) follows the other procedures set forth in our by-laws. A recommendation for a director nominee submitted by a qualifying stockholder must be received by Highbury no less than 60 days and no more than 90 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, if the annual meeting with respect to which such recommendation is to be made is not held within 30 days before or after such anniversary date, to be timely, the recommendation by the stockholder must be received no later than the close of business on the 10th day following the day on which notice of the date of the meeting or public disclosure thereof was given or made. Any stockholder recommendation for a director nominee must be submitted to Highbury’s Secretary in writing, and must include:

•

the name and address of the stockholder, the class of stock and number of shares held by the stockholder, any arrangements between the stockholder and any other person regarding the nomination and a statement by the stockholder that he/she is a stockholder of record and that such stockholder is entitled to vote for the election of directors;

•

the candidate’s name, age, contact information and current principal occupation or employment;

•

the candidate’s resume, which will include a description of the candidate’s qualifications and business experience during, at a minimum, the last five years, including his/her principal occupation or employment and the name and principal business of any corporation or other organization in which the candidate was employed; and

•

all other information that is required to be disclosed in a solicitation of proxies for the election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including the nominee’s written consent to being named as a nominee and to serving as a director if elected).

The Board will evaluate recommendations for director nominees submitted by directors, management or qualifying stockholders in the same manner, using the criteria stated above. All directors and director nominees will submit a completed form of directors’ and officers’ questionnaire as part of the nominating process.

Legal Proceedings

During the past five years, none of the directors or executive officers has been involved in any legal proceedings that are material to the evaluation of their ability or integrity. No officer or director is currently involved in any material proceeding in which he or any associate of his is adverse to Highbury or any of its subsidiaries or has a material interest adverse to Highbury’s interests.

EXECUTIVE COMPENSATION

Executive and Director Compensation

No executive officer or director of Highbury has ever received any compensation for services rendered since Highbury’s inception on July 13, 2005, including during the fiscal year ended December 31, 2007. No compensation of any kind, including finder’s and consulting fees, has been paid by us to any of our initial stockholders, including our officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with our first acquisition. However, these individuals were reimbursed for out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations, and Berkshire Capital receives $10,000 per month for office space and general and administrative services. In addition, we have engaged Berkshire Capital to act as our non-exclusive financial advisor in connection with possible future acquisitions. See “Certain Relationships And Related Transactions — Financial Advisor Engagement.”

Compensation Committee Interlocks and Insider Participation

Highbury’s entire Board currently carries out the functions customarily undertaken by the Compensation Committee. Two members of Highbury’s Board, Messrs. Cameron and Foote, were executive officers of Highbury during the fiscal year ended December 31, 2007. In addition, Messrs. Cameron and Foote are executive officers of, and serve on the compensation committee of Berkshire Capital. For a description of certain transactions between us and Messrs. Cameron and Foote, see “Certain Relationships and Related Transactions — Agreements Related to Share Issuances to Related Parties.” For a description of certain transactions between us and Berkshire Capital, which will benefit Messrs. Cameron and Foote to the extent of their interest in Berkshire Capital, see “Certain Relationships and Related Transactions — Office Services Agreement” and “— Financial Advisor Engagement.” During the fiscal year ended December 31, 2007, none of Highbury’s officers or employees participated in deliberations of Highbury’s Board concerning executive officer compensation.

COMPENSATION COMMITTEE REPORT

Because none of the Company’s named executive officers received any compensation from the Company for the fiscal year ended December 31, 2007, the Company has not included a Compensation Discussion and Analysis, as described in Regulation S-K Item 402(b), in its Annual Report on Form 10-K for such period. Accordingly, the Board has neither reviewed and discussed such a Compensation Discussion and Analysis with management nor made any recommendation regarding the inclusion of such a Compensation Discussion and Analysis in the Company’s Annual Report on Form 10-K or in its Proxy Statement on Schedule 14A.

Respectfully submitted by:
R. Bruce Cameron
Richard S. Foote
Aidan J. Riordan

* * *

The foregoing Compensation Committee Report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in any previous or future documents filed by the Company with the SEC under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates the Report by reference in any such document.

AUDIT COMMITTEE REPORT

The Board oversees the auditing procedures of Highbury, receives and accepts the reports of Highbury’s internal systems of accounting and management controls and selects and appoints auditors for Highbury.

The Board approved the independent accountants engaged to conduct the independent audit for fiscal year 2007. The Board met with management and the independent accountants to review and discuss the December 31, 2007 consolidated financial statements. The Board also discussed with the independent accountants the matters required by Statement on Auditing Standards No. 61, as amended (Communication with Audit Committees). In addition, the Board reviewed written disclosures from the independent accountants required by the Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and discussed with the independent accountants their firm’s independence.

Based upon the Board’s discussions with management and the independent accountants and the Board’s review of the representations of management and the independent accountants, the Board included the audited consolidated financial statements in Highbury’s Annual Report on Form 10-K for the year ended December 31, 2007 filed with the Securities and Exchange Commission.

Respectfully submitted by:
R. Bruce Cameron
Richard S. Foote
Aidan J. Riordan

***

The foregoing Audit Committee Report shall not be deemed to be “soliciting material” or “filed” or incorporated by reference in any previous or future documents filed by the Company with the SEC under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates the Report by reference in any such document.

The firm of J.H. Cohn LLP, or Cohn, which we retained on January 24, 2008, currently acts as our principal accountant. The decision to engage Cohn was approved by our Board. Cohn managed and supervised the audit of our consolidated financial statements for the 2007 fiscal year and was exclusively responsible for the opinion rendered in connection with the audit of our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

The firm of Goldstein Golub Kessler LLP, or GGK, acted as our principal accountant from our inception through January 23, 2008, at which time we were notified that the partners of GGK became partners of McGladrey & Pullen, LLP pursuant to a limited asset purchase agreement. As reported on a Current Report on Form 8-K filed on January 28, 2008 with the SEC, on January 23, 2008, we dismissed GGK as our principal accountant and declined to appoint McGladrey & Pullen LLP as its replacement due to a potential conflict of interest.

The audit reports of GGK on the financial statements of the Company for the fiscal year ended December 31, 2006 and the period from July 13, 2005 (inception) through December 31, 2005 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the financial statements for the period ended December 31, 2005 included a going concern explanatory paragraph.

During the period from July 13, 2005 (inception) through December 31, 2005 and the fiscal year ended December 31, 2006 and through the period ending January 28, 2008, there were: (i) no disagreements between the Company and GGK on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of GGK, would have caused GGK to make reference to the subject matter of the disagreement in their reports on the Company’s financial statements for such years, and (ii) no reportable events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

In accordance with SEC regulations, the Company provided Cohn and GGK with a copy of the disclosure in this proxy statement regarding the change of principal accountants. Previously, the Company had provided GGK with a copy of the disclosures in its Form 8-K filed January 28, 2008 prior to filing it with the SEC and requested that GGK furnish it with a letter addressed to the SEC stating whether or not GGK agreed with the Company’s statements. A copy of the letter dated January 28, 2008 furnished by GGK in response to that request was filed as Exhibit 99.1 to the Form 8-K filed January 28, 2008.

During the period from July 13, 2005 (inception) through December 31, 2005 and the fiscal year ended December 31, 2006 and through the period ending January 28, 2008 the Company did not consult with Cohn on (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that may be rendered on the Company’s financial statements, and Cohn did not provide either a written report or oral advice to the Company that Cohn concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; or (ii) any matter that was the subject of any disagreement, as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions, or a reportable event within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.

The following is a summary of fees paid or to be paid to Cohn, GGK and RSM for services rendered in fiscal years ended December 31, 2007 and 2006.

Audit Fees. During the fiscal year ended December 31, 2007, we incurred $97,817 in fees for services provided by GGK in connection with our Quarterly Reports on Form 10-Q for the first three quarters of the 2007 fiscal year, filing of registration statements, our proxy filing for the annual stockholder meeting and consultation regarding accounting for potential acquisition transactions. During the fiscal year ended December 31, 2007, we incurred $140,584 in fees for services provided by Cohn in connection with our Annual Report on Form 10-K for fiscal year ended December 31, 2007.

During the fiscal year ended December 31, 2006, we incurred $221,598 in fees for services provided by GGK principally in connection with our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006, our Quarterly Reports on Form 10-QSB for the first three quarters of the 2006 fiscal year, our proxy filings in connection with the acquisition consummated on November 30, 2006 and the financial statements included in the Current Report on Form 8-K filed following the consummation of the acquisition of the mutual fund business of ABN AMRO.

Tax Fees. In 2007, we paid RSM $28,025 in connection with the preparation of our 2006 tax returns and tax consultation. In 2006, we paid RSM $2,500 in connection with the preparation of our 2005 tax returns.

We have not paid any fees to Cohn, GGK or RSM for services that fall under the categories “Audit Related Fees” or “All Other Fees,” as such categories are defined in the rules promulgated by the SEC.

Pre-Approval of Fees. Our entire Board is responsible for appointing, setting compensation, and overseeing the work of the independent auditor. In recognition of this responsibility, the Board has established a policy to pre-approve all audit and permissible non-audit services provided by the independent auditor. Other than the Audit Fees and services discussed above, no services were provided by, and, therefore, we did not incur any fees for services provided by, Cohn in fiscal year 2007 or GGK in fiscal years 2006 and 2007.

Auditor Attendance at Annual Meeting. Representatives of Cohn will not be present at the 2008 Annual Meeting. However, representatives of Cohn will be available to respond to appropriate questions by telephone if necessary.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information as of October 15, 2008 in respect of beneficial ownership of Highbury’s common stock by each director, by each named executive officer and by all directors and executive officers of Highbury as a group, and each person known by us, as a result of such person’s public filings with the SEC and the information contained therein, to be the beneficial owner of more than 5% of Highbury’s outstanding shares of common stock. The percentages of common stock beneficially owned are based on 9,126,628 shares of common stock outstanding as of October 15, 2008 adjusted for each holders’ exercisable warrants, if any.

Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them.


Name and Address of Beneficial Owner⁽¹⁾	Amount and Nature of Beneficial Ownership		Approximate Percentage of Outstanding Common Stock
R. Bruce Cameron⁽²⁾		1,223,751		13.1	%
Broad Hollow LLC⁽³⁾		1,001,250		10.8	%
Richard S. Foote⁽⁴⁾		667,500		7.2	%
R. Bradley Forth⁽⁵⁾		111,249		1.2	%
Aidan J. Riordan⁽⁶⁾		3,450		<0.1	%
Wellington Management Company, LLP⁽⁷⁾		3,592,248		32.0	%
Jack Silver⁽⁸⁾		2,804,200		23.5	%
Nisswa Master Fund Ltd.⁽⁹⁾		1,597,659		15.8	%
Woodbourne Partners, L.P.⁽¹⁰⁾		1,368,000		15.0	%
Talon Opportunity Partners, L.P.⁽¹¹⁾		997,000		10.8	%
Second Curve Capital, LLC⁽¹²⁾		1,000,000		10.3	%
North Star Investment Management Corp.⁽¹³⁾		855,300		9.4	%
Fairview Capital⁽¹⁴⁾		697,000		7.6	%
Ionic Capital Partners LP⁽¹⁵⁾		650,300		6.7	%
Potomac Capital Management LLC⁽¹⁶⁾		528,628		5.5	%
All executive officers and directors as a group (four individuals)⁽²⁾⁽⁴⁾⁽⁵⁾		2,005,950		21.3	%

(1)

Unless otherwise noted, the business address of each stockholder listed in this table is c/o Berkshire Capital Securities LLC, 535 Madison Avenue, 19th Floor, New York, New York 10022.

(2)

Includes 851,250 shares owned of record by Broad Hollow LLC and 150,000 shares issuable upon exercise of warrants held by Broad Hollow LLC that are now exercisable that are attributed to Mr. Cameron, according to Section 13(d) of the Exchange Act, due to his position as the managing member of Broad Hollow LLC, and 33,334 shares issuable upon exercise of warrants held by Mr. Cameron that are now exercisable.

(3)

Includes 150,000 shares issuable upon exercise of warrants that are now exercisable.

(4)

Includes 100,000 shares issuable upon exercise of warrants that are now exercisable.

(5)

The business address of Mr. Forth is c/o Highbury Financial Inc., 999 Eighteenth Street, Suite 3000, Denver, CO 80202. Includes 16,666 shares issuable upon exercise of warrants that are now exercisable. These share numbers include 21,563 shares held by Mr. Forth, which are subject to a call in favor of Broad Hollow LLC, if Mr. Forth’s employment by Berkshire Capital is terminated for certain reasons before November 30, 2008.

(6)

The business address of Mr. Riordan is c/o Highbury Financial Inc., 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202.

(7)

As reported in the Schedule 13G/A filed with the SEC on February 14, 2008 by Wellington Management Company, LLP. The business address of Wellington Management Company, LLP is 75 State Street, Boston, MA 02109. Wellington Management, in its capacity as investment adviser, may be deemed to beneficially own 3,592,248 shares of common stock which are held of record by clients of Wellington Management. This number includes 2,103,300 shares issuable upon exercise of warrants that are now

exercisable. The Schedule 13G does not disclose the natural persons that would be deemed the control persons of Wellington Management Company, LLP. Based on a Form ADV filed by Wellington Management Company, LLP, with the SEC on July 10, 2008 the control persons of Wellington Management Company, LLP are Saul Pannell, John Ryan, Perry Traquina, Cynthia Clarke, Selwyn Notelovitz, James Hoffman, Karl Bandtel, Jean Hynes, Edward Steinborn, Lucius Hill, Phillip Perelmuter and Brendan Swords.

(8)

As reported in the Form 4, filed on December 26, 2007, and Schedule 13D/A, filed December 27, 2007, with the SEC by Jack Silver. The business address of Mr. Silver is c/o SIAR Capital LLC, 660 Madison Avenue, New York, New York 10021. The 2,804,200 shares beneficially owned by Mr. Silver includes 2,804,200 shares of common stock issuable upon exercise of warrants that are now exercisable of which (a) 2,404,200 are held by Sherleigh Associates Profit Sharing Plan, a trust of which Jack Silver is the trustee and (b) 400,000 are held by Sherleigh Associates Defined Benefit Plan, a trust of which Mr. Silver is the trustee.

(9)

As reported in the Schedule 13G/A filed with the SEC on February 12, 2008 and the Form 4 filed with the SEC on April 2, 2008 by Brian Taylor, Pine River Capital Management L.P., and Nisswa Master Fund Ltd and a Schedule 13G filed with the SEC on July 10, 2008 by Brian Taylor, Pine River Capital Management L.P., and Nisswa Acquisition Master Fund Ltd. The business address of each of these persons is c/o Pine River Capital Management L.P., 601 Carlson Parkway, Suite 330, Minnetonka, MN 55305. Includes 1,013,900 shares issuable upon exercise of warrants that are now exercisable. Brian Taylor and Pine River Capital Management L.P. have shared voting power and shared dispositive power over 1,013,900 warrants; and Nisswa Master Fund Ltd. has shared voting power and shared dispositive power over 659,400 of these 1,013,900 warrants. Brian Taylor, Pine River Capital Management L.P. and Nisswa Acquisition Master Fund Ltd. have shared voting and dispositive power over 583,759 shares.

(10)

As reported in a Schedule 13G/A filed with the SEC on February 14, 2008 by Woodbourne Partners L.P., Clayton Management Company and John D. Weil and a Form 4 filed with the SEC on May 1, 2008 by Woodbourne Partners L.P. The business address of Woodbourne Partners, L.P. is 200 North Broadway, Suite 825, St. Louis, Missouri 63102. The controlling person of Woodbourne Partners, L.P. is Clayton Management Company, its General Partner, and Mr. John Weil is the President and controlling person of Clayton Management Company. Mr. Weil and Clayton Management Company have sole voting and dispositive power over 1,368,000 shares.

(11)

As reported in the Schedule 13G/A filed with the SEC on June 9, 2008 by Talon Opportunity Partners, L.P., Talon Opportunity Managers, L.L.C. and Talon Asset Management, LLC. The business address of each of these entities is One North Franklin, Suite 900, Chicago, Illinois 60606. Talon Opportunity Partners, L.P., Talon Opportunity Managers, L.L.C., the general partner of Talon Opportunity Partners, L.P. and Talon Asset Management, LLC, the manager of Talon Opportunity Managers. L.L.C., have shared voting power and shared dispositive power with respect to 917,000 shares and 80,000 shares underlying warrants that are now exercisable. The shares reported herein by Talon Asset Management, LLC are held on behalf of Talon Opportunity Partners, L.P., as manager of Talon Opportunity Managers, L.L.C., the general partner of Talon Opportunity Partners, L.P. From time to time, Talon Opportunity Partners, L.P. may make distributions of partnership income to limited partners, none of which has an interest relating to more than 5% of the class. The Schedule 13G does not disclose the natural persons that would be deemed the control persons of Talon Asset Management, LLC. Based on a Form ADV filed by Talon Asset Management, LLC with the SEC on March 4, 2008, the control persons of Talon Asset Management, LLC are Terry Diamond, Alan Wilson, Barbara Rumminger, Sophia Erskine, Edwin Ruthman, William Wolf, Bruce Beerbower, Talon Asset Management Inc., Diamond JJJD Enterprises, LLC, David Kelson, Evan Dreyfuss, Janice Coker, Brian Washkoviak, Jamie Schwartz, John Diamond and Jennifer Diamond. Includes 80,000 shares issuable upon exercise of warrants that are now exercisable.

(12)

As reported in a Schedule 13F filed with the SEC on August 15, 2008 by Second Curve Capital, LLC, Thomas K. Brown and Second Curve Opportunity Fund, LP. The business address of each of these persons is 405 Lexington Avenue, 52nd Floor, New York, NY 10174. Second Curve Capital, LLC and Thomas Brown have shared voting power and shared dispositive power with respect to these shares which include 600,000 shares issuable upon exercise of warrants that are now exercisable.

(13)

As reported in a Schedule 13F filed with the SEC on July 23, 2008 by North Star Investment Management Corp. and a Schedule 13G/A filed with the SEC on May 1, 2008 by North Star Investment Management Corp. and Peter G. Contos II, North Star Investment Management Corp. has sole voting and dispositive power over 322,400 of these shares. The business address of North Star Investment Management Corp. is 20 North Wacker Drive, Suite 1416, Chicago, Illinois 60606. As reported in a Schedule 13G filed with the SEC on May 1, 2008 by Kuby Gottlieb Special Value Fund, LP and Peter G. Contos II, Kuby Gottlieb Special Value Fund, LP has sole voting and dispositive power over 532,900 of these shares. The business address of Kuby Gottlieb Special Value Fund, LP is 20 North Wacker Drive, Suite 1416, Chicago, Illinois 60606.

(14)

As reported in the Schedule 13G filed with the SEC on September 17, 2008 by Fairview Capital, Fairview Capital Investment Management, LLC, Andrew F. Mathieson, Scott W. Clark and Darlington Partners, L.P. The business address of each of the reporting persons is 300 Drakes Landing Road, Suite 250, Greenbrae, CA 94904. Fairview Capital Investment Management, LLC is an investment adviser. It is the general partner and investment adviser of Darlington Partners, L.P. Fairview Capital is the manager of Fairview Capital Investment Management, LLC. Mr. Mathieson is the controlling shareholder and President of Fairview Capital. Mr. Clark is a member and portfolio manager of Fairview Capital Investment Management, LLC. The reporting persons have shared voting and dispositive power over 694,000 shares and Mr. Clark has sole voting and dispositive power over the other 3,000 shares. Each of Fairview Capital Investment Management, LLC, Fairview Capital, Mr. Mathieson and Mr. Clark disclaims beneficial ownership of the Stock, except to the extent of that person’s pecuniary interest therein. Darlington Partners, L.P. disclaims beneficial ownership of the shares.

(15)

As reported in the Schedule 13G filed with the SEC on September 4, 2008 by Ionic Capital Partners LP, Ionic Capital Management LLC and Ionic Capital Master Fund Ltd. The business address of Ionic Capital Partners LP and Ionic Capital Management LLC is 366 Madison Avenue, 9th Floor, New York, New York 10017. The business address of Ionic Capital Master Fund Ltd. is Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand Cayman KY1-9002, Cayman Islands. Includes 650,300 shares issuable upon exercise of warrants that are now presently exercisable. Shares reported for Ionic Capital Master Fund Ltd. reflect shares of common stock issuable upon the exercise of warrants held of record by Ionic Capital Master Fund Ltd. Shares reported for Ionic Capital Partners LP consist of the shares reported for Ionic Capital Master Fund Ltd. and shares of common stock issuable upon the exercise of warrants held of record by another private investment fund of which Ionic Capital Partners LP is the investment adviser. Ionic Capital Partners LP has voting and investment control over such shares, but disclaims beneficial ownership of the shares reported herein except to the extent of its pecuniary interest therein. Shares reported for Ionic Capital Management LLC reflect shares reported for Ionic Capital Partners LP, of which Ionic Capital Management LLC is the general partner, and in such capacity may be deemed to have voting and investment control over such shares. Ionic Capital Management LLC disclaims beneficial ownership of all such shares except to the extent of its pecuniary interest therein.

(16)

As reported in the Schedule 13F filed with the SEC on August 12, 2008 by Potomac Capital Management Inc. and the Form 4 filed with the SEC on May 6, 2008 by Potomac Capital Management LLC. The business address of Potomac Capital Management LLC is 825 Third Avenue, 33rd Floor, New York, New York 10022. Includes 417,500 shares issuable upon exercise of warrants that are now exercisable. Potomac Capital Partners, LP owns shares of common stock and warrants. Potomac Capital Management LLC is the general partner of this entity. Potomac Capital International Ltd and Pleiades Investment Partners R LP each own warrants. Potomac Capital Management, Inc. is the investment manager of both entities. Mr. Solit is the managing member of Potomac Capital Management LLC.

Certain Relationships and Related Transactions

Agreements Related to Share Issuances to Related Parties

Prior to the consummation of our initial public offering, we issued a total of 1,500,000 shares of common stock to our initial stockholders including 150,000 shares to R. Bruce Cameron, our Chairman of the Board, 450,000 shares to Richard S. Foote, our President, Chief Executive Officer and Director, 75,000 shares to R. Bradley Forth, our Executive Vice President, Chief Financial Officer and Secretary and 675,000 shares to Broad Hollow LLC, of which Mr. Cameron is the managing member. Subsequent to the issuance of the 1,500,000 shares, we authorized a stock dividend of 0.15 shares of common stock for each outstanding share of common stock.

All of the shares of our common stock referred to above were placed in escrow with Continental Stock Transfer & Trust Company as escrow agent, until the earliest of (i) January 31, 2009, (ii) our liquidation and (iii) the consummation of a liquidation, merger, stock exchange, stock purchase or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property subsequent to our consummating a business combination with a target business.

During the escrow period, the holders of these shares will not be able to sell or transfer their securities except among our initial stockholders, to their spouses and children or trusts established for their benefit, by virtue of the laws of decent and distribution, upon the death of any initial stockholder or pursuant to a qualified domestic relations order but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow.

The holders of the majority of these shares are entitled to make up to two demands that we register these shares and any warrants they may own, pursuant to an agreement signed on January 31, 2006. The holders of the majority of these shares can elect to exercise these registration rights at any time after the date on which their shares of common stock are released from escrow. In addition, these stockholders have certain “piggy-back” registration rights on registration statements filed subsequent to such date. We will bear the expenses incurred in connection with the filing of any such registration statements. These shares may also be eligible for resale after they are released from escrow pursuant to Rule 144 under the Securities Act of 1933, as amended.

Our initial stockholders purchased an aggregate of 166,667 units for an aggregate purchase price of $1 million in a private placement contemporaneously with our initial public offering. The shares and warrants comprising such units may be sold, assigned or transferred by them, subject to applicable securities laws. The holders of a majority of the units purchased in the private placement are entitled to make up to two demands that Highbury register the shares, warrants and shares underlying the warrants comprising such units at any time. In addition, the initial stockholders have certain “piggy-back” registration rights with respect to such securities on registration statements filed by Highbury. We will bear the expenses incurred in connection with the filing of any of the foregoing registration statements. These units, and the underlying shares and warrants, may also be eligible for resale pursuant to Rule 144 under the Securities Act of 1933, as amended.

Office Services Agreement

Commencing on January 25, 2006, Berkshire Capital made available to us such office space and certain general and administrative services as we required from time to time. On November 30, 2006, we entered into a new office services agreement with Berkshire Capital which provided for a monthly fixed fee for office services of $7,500. On October 31, 2007, we replaced the November 30, 2006 agreement with a new office services agreement with Berkshire Capital which provides for a monthly fixed fee of $10,000 for office and secretarial services including use and access to our office in Denver, Colorado and those other office facilities of Berkshire Capital as we may reasonably require. In addition, certain employees of Berkshire Capital will provide us with financial reporting support on a daily basis. The term of the agreement is indefinite. Either party may terminate the office service agreement at any time with six months’ notice to the other party. R. Bruce Cameron, our Chairman of the Board, Richard S. Foote, our President, Chief Executive Officer and Director, and R. Bradley Forth, our Executive Vice President, Chief Financial Officer and Secretary are employees and equity owners of Berkshire Capital. As a result of these affiliations, these individuals will benefit from the transaction to the extent of their interest in Berkshire Capital. However, this arrangement is solely for our benefit and is not intended to provide any of our executive officers compensation in lieu of a salary. We believe, based on rents and fees for similar services, that the fee charged by Berkshire Capital is at least as favorable as we could have obtained from an unaffiliated third party. This agreement was ratified in accordance with our Related Person Policy described below.

Financial Advisor Engagement

We have engaged Berkshire Capital to act as our non-exclusive financial advisor in connection with possible acquisitions. In such capacity, Berkshire Capital will assist us in structuring, negotiating and completing acquisitions of targets identified by us and acknowledged by both us and Berkshire Capital as being subject to Berkshire Capital’s engagement. If we enter into an agreement to acquire such a target company

during the term of Berkshire Capital’s engagement or within two years thereafter, and such acquisition is completed, then we will pay Berkshire Capital a success fee at closing equal to the greater of (a) the sum of 3.0% of the first $15 million of the aggregate consideration in such transaction and 1.0% of the aggregate consideration in such transaction in excess of $15 million, and (b) $600,000. Upon the execution of a definitive agreement with respect to an acquisition, we will pay Berkshire Capital $200,000 which will be credited against the success fee. We will also reimburse Berkshire Capital for its reasonable expenses in performing its services under the engagement letter and will indemnify Berkshire Capital for liabilities it incurs in performing such services, unless such liabilities are attributable to Berkshire Capital’s gross negligence or willful misconduct. R. Bruce Cameron, our Chairman of the Board, Richard S. Foote, our President, Chief Executive Officer and Director, and R. Bradley Forth, our Executive Vice President, Chief Financial Officer and Secretary are employees and equity owners of Berkshire Capital. As a result of these affiliations, these individuals will benefit from the transaction to the extent of their interest in Berkshire Capital. We believe, based on discussions with other investment banks, that the terms of our engagement of Berkshire Capital are at least as favorable as we could have obtained from an unaffiliated third party. This transaction was approved in accordance with our Related Person Policy described below.

Conflicts of Interest

Our public stockholders should be aware of the following potential conflicts of interest. Our officers and directors are not required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating management time among various business activities. Furthermore, Messrs. Cameron, Foote and Forth, our executive officers, are affiliated with Berkshire Capital. Berkshire Capital’s clients may compete with us for acquisitions in the financial services industry, and Berkshire Capital may have a duty to present certain acquisition opportunities to its clients before it presents them to us.

Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons

Our Board has adopted certain written policies and procedures for the review, approval and ratification of related person transactions, which we refer to as our Related Person Policy. Among other things, our Related Person Policy provides that any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we (including any of our subsidiaries) were, are or will be a participant and the amount involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest, must be reported to our Board prior to the consummation or amendment of the transaction. A related person, as defined in our Related Person Policy, means any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer of the Company or a nominee to become a director of the Company; any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee or more than 5% beneficial owner, and any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee or more than 5% beneficial owner; and any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership interest. Our Board reviews these related person transactions and considers all of the relevant facts and circumstances available to the Board, including (if applicable) but not limited to: the benefits to us; the availability of other sources of comparable products or services; the terms of the transaction; and the terms available to unrelated third parties or to employees generally. The Board may approve only those related person transactions that are in, or are not inconsistent with, the best interests of us and of our stockholders, as the Board determines in good faith. At the beginning of each fiscal year, the Board will review any previously approved or ratified related person transactions that remain ongoing and have a remaining term of more than six months. The Board will consider all of the relevant facts and circumstances and will determine if it is in the best interests of us and our stockholders to continue, modify or terminate these related person transactions.

The transactions described in this Item under the caption “— Agreements Related to Share Issuances to Related Parties” were not approved or ratified in accordance with our Related Person Policy, which was not in effect at the time such transactions were consummated. Because all of our directors had an interest in such transactions, it was not possible to have them approved or ratified by disinterested directors.

PROPOSAL NO. 2

APPROVAL OF HIGHBURY FINANCIAL INC.
2008 EQUITY INCENTIVE PLAN

We are requesting that the stockholders vote in favor of approving Highbury’s 2008 Equity Incentive Plan (the “Equity Incentive Plan”), which was adopted by the Board on October 21, 2008, subject to shareholder approval. Below is a summary of the principal provisions of the Equity Incentive Plan. The summary does not purport to be exhaustive, and is qualified by the full text of the plan, a copy of which is attached to this proxy statement as Exhibit 10.1.

Purpose. The Equity Incentive Plan is intended to retain and reward highly qualified employees, executive officers, consultants, and directors of Highbury and its affiliates, and to encourage their ownership of Common Stock.

Administration. The Equity Incentive Plan is administered by the compensation committee of the Board. If there is no compensation committee of the Board (which there presently is not), the Equity Incentive Plan shall be administered by a committee consisting solely of directors of Highbury who qualify as “outside directors” under Section 162(m) of the Internal Revenue Code of 1986 (the “Code”). The compensation committee or such other committee of outside directors is referred to in this proxy statement as the “Committee”. Subject to the provisions of the Equity Incentive Plan, the Committee has discretion to determine the employees, executive officers, consultants or directors who will receive awards and the form of the awards. Further, the Committee has complete authority to interpret the Equity Incentive Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the respective award agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Equity Incentive Plan. Awards may be granted under the Equity Incentive Plan prior to October 21, 2018.

Eligibility. Awards may be granted to any employee or executive officer of or consultant to Highbury or any of its affiliates and to non-employee members of the Board or of any board of directors (or similar governing authority) of any affiliate. Highbury and its affiliates have approximately 38 employees, one consultant and four executive officers and members of their boards of directors who are not employees, for a total of 43 people who would be eligible currently to participate in the Equity Incentive Plan.

Shares Subject to the Equity Incentive Plan. The shares issued or to be issued under the Equity Incentive Plan are authorized but unissued shares of Highbury’s common stock (the “Common Stock”). The fair market value of a share of Common Stock, as of October 22, 2008 was $2.75, based on the closing sale price reported on such date on the OTC Bulletin Board.

Maximum Number of Shares Available for Awards Other Than Qualified Performance-Based Awards. The maximum number of shares of Common Stock available for awards under the Equity Incentive Plan, other than those awards intended to qualify as Qualified Performance-Based Awards (as defined below), is 10% multiplied by the sum of (x) and (y), where (x) is that number of shares of Common Stock issued and outstanding as of September 30, 2008, and (y) is the lesser of (i) the number of warrants to purchase Common Stock that were issued and outstanding as of September 30, 2008, and (ii) the number of warrants to purchase Common Stock that were issued and outstanding as of September 30, 2008 and that have been exercised as of the last day of the last possible performance period under the Equity Incentive Plan (which cannot expire later than twenty years after the date of adoption of the Equity Incentive Plan) ((x) plus (y) together, the “Initial Shares”).

Maximum Number of Shares Available for Qualified Performance-Based Awards. The maximum number of shares of Common Stock (or their cash equivalent) available for awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code (“Qualified Performance-Based Awards”) is the number of “Base Shares” calculated as of the last day of the last performance period to expire under the Plan (which cannot expire later than October 21, 2028). This maximum is also reduced by the Initial Shares and by any shares that are subject to, or have been issued pursuant to, awards under the Equity Incentive Plan other than Qualified Performance-Based Awards. The “Base Shares” are the Initial Shares, increased annually, on a compounded basis, by the least of (i) 4.855%, the 2008 burn rate cap for

non-Russell 3000 diversified financial companies, the industry group with which Highbury has the most in common, as published by RiskMetrics Group and adjusted for full value awards, (ii) the future burn rate cap applicable to Highbury published by RiskMetrics Group, and (iii) any lower rate recommended by the President and Chief Executive Officer of Highbury and approved by the Committee (the “Burn Rate Cap”). The number of shares of Common Stock available for Qualified Performance-Based Awards shall also be subject to reduction if the “CAGR” for all performance periods under the Equity Incentive Plan is less than 30%. “CAGR” means the compound annual growth rate in “Cash Net Income Per Share” over a performance period, expressed as a percentage. “Cash Net Income Per Share” means, with respect to any year, the quotient obtained by dividing (i) net income before amortization, intangible-related deferred taxes, affiliate depreciation and other non-cash expenses (including, without limitation, any charges related to the Equity Incentive Plan or any other equity-based or cash-based incentive compensation plan of Highbury), as determined by the Committee based on the audited financial statements of Highbury for such year, by (ii) the daily weighted average number of shares of Common Stock outstanding during such year, determined on a diluted basis using the treasury stock method to determine the number of Common Stock share equivalents issuable pursuant to any dilutive securities, excluding any shares of Common Stock issued or issuable pursuant to awards under this Equity Incentive Plan or under any other equity-based compensation plan of Highbury.

The following table sets forth examples of the maximum number of shares of Common Stock which may be issued or issuable under the Equity Incentive Plan as Qualified Performance-Based Awards based on specified, hypothetical CAGR and Burn Rate Cap scenarios. These examples are for illustration purposes only and do not constitute a projection of the actual CAGR that will be achieved or a forecast of the anticipated Burn Rate Cap during any performance period. Further, there can be no assurance that the maximum number, or any number, of shares of Common Stock will be issued as Qualified Performance-Based Awards.

The table assumes that (i) there is one performance period of ten years commencing on January 1, 2009 and ending on December 31, 2018, (ii) no awards are issued under the Plan other than Qualified Performance-Based Awards, (iii) the Burn Rate Cap specified in the table is applicable during each year of the performance period and (iv) the maximum number of shares of Common Stock which may be issued will be reduced by linear interpolation for CAGR between of 0% and 30% during the applicable performance periods (although there is no requirement in the Equity Incentive Plan that linear interpolation shall be applied).

Maximum Number of Shares


		Burn Rate Cap
CAGR⁽¹⁾		2.4275%			4.8550%			2.4275%			4.8550%
		No Warrants Exercised⁽²⁾						All Warrants Exercised⁽³⁾
0%	Maximum Number of Shares⁽⁴⁾		0.0			0.0			0.0			0.0
	Adjusted CAGR⁽⁵⁾		0.0	%		0.0	%		0.0	%		0.0	%
15%	Maximum Number of Shares⁽⁴⁾		1.2			2.8			3.1			7.0
	Adjusted CAGR⁽⁵⁾		13.5	%		12.0	%		13.5	%		12.0	%
30%	Maximum Number of Shares⁽⁴⁾		2.5			5.5			6.3			14.0
	Adjusted CAGR⁽⁵⁾		26.9	%		24.0	%		26.9	%		24.0	%

(1)

Without giving effect to issuances of shares of Common Stock which may be issued under the Equity Incentive Plan.

(2)

Assumes that none of the 13,983,708 warrants to purchase Common Stock outstanding on September 30, 2008 are exercised by the end of the performance period.

(3)

Assumes all 13,983,708 warrants to purchase Common Stock outstanding on September 30, 2008 are exercised by the end of the performance period.

(4)

All totals are in millions of shares and are rounded to the nearest 100,000 shares. Includes the number of shares determined by reference to the cash equivalent for any awards that settle in cash.

(5)

Adjusted to reflect the issuance of the maximum number of shares of Common Stock which may be issued under the Equity Incentive Plan as Qualified Performance-Based Awards.

Additional Limitations. The maximum Qualified Performance-Based Award payment to any participant for a performance period is 50% of the maximum number of shares of Common Stock (or their cash equivalent at the date of settlement) that may be issued under the Equity Incentive Plan for Qualified Performance-Based Awards. Further, in no event shall the number of shares of Common Stock covered by awards granted to any one individual in any calendar year exceed 50% of the aggregate number of shares of Common Stock subject to the Equity Incentive Plan.

Types of Awards. Awards under the Equity Incentive Plan may include Incentive Stock Options, Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Qualified Performance-Based Awards, including Performance Stock Units, and Stock Grants, as described below. Each award will be evidenced by an instrument in such form as the Committee may prescribe, setting forth applicable terms such as the exercise price and term of any Stock Option or applicable forfeiture conditions or performance requirements for any Restricted Stock, Restricted Stock Units, Performance Units or Performance Stock Units. Except as noted below, all relevant terms of any award will be set by the Committee in its discretion.

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Incentive Stock Options and Nonstatutory Stock Options (together, “Stock Options”) are rights to purchase Common Stock of Highbury. A Stock Option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Committee may determine. A Stock Option may be exercised by the recipient giving written notice to Highbury, specifying the number of shares with respect to which the Stock Option is then being exercised, and accompanied by payment of an amount equal to the exercise price of the shares to be purchased. The purchase price may be paid by cash or check, or, with the approval of the Committee, by delivery to Highbury of shares of Common Stock held by the optionee, by net cashless exercise, by promissory note, or through a formal cashless exercise program authorized by Highbury.

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Incentive Stock Options may be granted only to eligible employees of Highbury or any parent or subsidiary corporation of Highbury, and must have an exercise price of not less than 100% of the fair market value of Highbury’s Common Stock on the date of grant (110% for Incentive Stock Options granted to any 10% stockholder of Highbury). In addition, the term of an Incentive Stock Option may not exceed ten years (five years, if granted to any 10% stockholder). In the case of an Incentive Stock Option, the amount of the aggregate fair market value of Common Stock (determined at the time of grant) with respect to which Incentive Stock Options are exercisable for the first time by an employee during any calendar year (under all such plans of Highbury and its parent and subsidiary corporations) may not exceed $100,000.

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Nonstatutory Stock Options are not subject to the limitations on exercise price and term that apply to Incentive Stock Options.

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Stock Appreciation Rights (“SARs”) are rights to receive (without payment to Highbury) cash, Common Stock or a combination thereof, as determined by the Committee, based on the increase in the value of the number of shares of Common Stock specified in the SAR. The base price (above which any appreciation is measured) will in no event be less than 50% of the fair market value of Highbury’s Common Stock on the date of grant of the SAR or, if the SAR is granted in tandem with a Stock Option (that is, so that the recipient has the opportunity to exercise either the Stock Option or the SAR, but not both), the exercise price under the associated Stock Option.

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Awards of Restricted Stock are grants or sales of Common Stock which are subject to a risk of forfeiture, such as a requirement of continued performance of services for a stated term or the achievement of individual or Company performance goals. Awards of Restricted Stock will include the right to vote and to receive any dividends on the shares pending vesting (or forfeiture), unless the Committee otherwise determines. Any risk of forfeiture may be waived or terminated at any time by the Committee.

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Awards of Restricted Stock Units and Performance Units are grants of rights to receive either shares of Common Stock (in the case of Restricted Stock Units that are not Performance Stock Units) or

the appreciation over a base value (as specified by the Committee) of a number of shares of Common Stock (in the case of Performance Units) subject to satisfaction of service or performance requirements established by the Committee in connection with the award. Such awards may include the right to the equivalent of any dividends on the shares covered by the award, subject to satisfaction of the applicable service or performance requirements. With respect to Restricted Stock Units, any risk of forfeiture may be waived or terminated at any time by the Committee.

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Qualified Performance-Based Awards are awards which vest subject to satisfaction of stated performance criteria, and which are intended to provide “performance based-compensation” under Section 162(m) of the Code. Section 162(m) of the Code limits Highbury’s federal income tax deduction for compensation paid to certain specified senior executives in any taxable year to $1,000,000, but excludes from that limit “performance-based compensation.” Qualified Performance-Based Awards may be in the form of Stock Options, Restricted Stock, Restricted Stock Units (including Performance Stock Units) or Performance Units, but in each case will be subject to satisfaction of one or more of the performance goals selected by the Committee for a performance period.

The Committee will select performance periods over which the attainment of the performance goals will be measured for purposes of determining a participant’s right to an award. The performance periods may be of varying and overlapping durations, as selected by the Committee, and no performance period may be longer than ten years. Within 90 days of the commencement of each performance period selected by the Committee (or, if earlier, before the expiration of the first 25% of the performance period), the Committee will designate the targeted goals for selected performance criteria during the performance period for each participant, which may vary between individual participants or group of participants.

The performance goals will be established by the Committee based on the selected performance criteria and may be applied to an individual, to Highbury as a whole, or to a division, business unit or subsidiary of Highbury, either individually, alternatively, or in any combination. The performance goals may be measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, by comparison to previous years’ results or to a designated comparison group, in each case as determined by the Committee.

The performance criteria which may be selected by the Committee are limited to: (i) EBITDA, defined as earnings before interest, taxes, depreciation, amortization and other non-cash expenses (including, without limitation, any charges related to the Equity Incentive Plan or any other equity-based or cash-based incentive compensation plan of Highbury), (ii) “cash net income,” defined as net income before amortization, intangible-related deferred taxes, affiliate depreciation and other non-cash expenses (including, without limitation, any charges related to the Equity Incentive Plan or any other equity-based or cash-based incentive compensation plan of Highbury), (iii) cash flow (before or after dividends), (iv) cash net income (as defined above) per share, calculated based on diluted average shares of Common Stock outstanding for any measurement period using the treasury stock method to determine the number of common share equivalents issuable pursuant to any dilutive securities, excluding any shares of Common Stock issued or issuable pursuant to awards under the Equity Incentive Plan or under any other equity-based compensation plan of Highbury, (v) stock price, (vi) return on equity, (vii) stockholder return or total stockholder return, (viii) return on capital (including, without limitation, return on total capital or return on invested capital), (ix) return on investment, (x) return on assets or net assets, (xi) market capitalization, (xii) economic value added, (xiii) debt leverage (debt to capital), (xiv) revenue, (xv) sales or net sales, (xvi) backlog, (xvii) income, pre-tax income or net income, (xviii) operating income or pre-tax profit, (xix) operating profit, net operating profit or economic profit, (xx) gross margin, operating margin or profit margin, (xxi) return on operating revenue or return on operating assets, (xxii) cash from operations, (xxiii) operating ratio, (xxiv) operating revenue, (xxv) market share improvement, (xxvi) general and administrative expenses and (xxvii) customer service. The performance criteria may be measured on the basis of generally accepted accounting principles, as used in the United States (“GAAP”), or on a non-GAAP basis.

No payment or other amount will be available to a recipient of a Qualified Performance-Based Award except upon the Committee’s determination that the particular goal or goals established by the Committee for the criteria (from among those specified above) selected by the Committee have been satisfied. To the extent consistent with Section 162(m) of the Code (in the case of Qualified Performance-Based Awards), the Committee may appropriately adjust any evaluation of performance against a performance goal to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) certain other extraordinary, unusual, non-recurring or non-comparable items.

Qualified Performance-Based Awards in the form of Stock Options must have an exercise price which is not less than 100% of the fair market value of the Common Stock on the date of grant.

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Performance Stock Units are awards of Restricted Stock Units that are also Qualified Performance-Based Awards. Performance Stock Units are settled, at the option of the grantee, in either cash or shares of Common Stock or a combination thereof.

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Stock Grants are grants of shares of Common Stock not subject to restrictions or other forfeiture conditions. Stock Grants may be awarded only in recognition of significant contributions to the success of Highbury or its affiliates, in lieu of compensation otherwise already due, or in other limited circumstances which the Committee deems appropriate.

Effect of Termination of Employment or Other Association. Unless the Committee determines otherwise in connection with any particular award under the Equity Incentive Plan, in the event that a participant’s employment or other association with Highbury or an affiliate ends for any reason, any outstanding Stock Options and SARs will generally terminate 90 days following the recipient’s termination of employment or other association with Highbury, and any other outstanding award will be forfeited or otherwise subject to return to or repurchase by Highbury on the terms specified in the applicable award agreement. However, in the case of Performance Stock Units, if a participant’s employment or other association with Highbury or an affiliate terminates prior to the end of a performance period due to (i) termination for any reason within 24 months following a change of control of Highbury, (ii) total and permanent disability, (iii) death, (iv) involuntary termination without cause, or (v) voluntary termination for good reason, the participant (or, in the event of death, the participant’s estate), will forfeit only that proportion of his Performance Stock Units that reflects the number of days in the performance period remaining after the date of termination as a percentage of the total number of days in the performance period, and will be entitled, at the end of the performance period and subject to achievement of the performance goals, to a prorated award as set forth in the award agreement.

Transferability. In general, no award under the Equity Incentive Plan may be transferred by the recipient, and during the life of the recipient all rights under an award may be exercised only by the recipient or his or her legal representative. However, the Committee may approve the transfer, without consideration, of an award of a Nonstatutory Option or Restricted Stock to certain family members.

Effect of Certain Corporate Events. In the event of any change in the outstanding shares of Common Stock as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other distribution with respect to such shares of Common Stock, or an extraordinary cash distribution on Common Stock, a corporate separation or other reorganization or liquidation, an appropriate and proportionate adjustment will be made to (i) the maximum numbers and kinds of shares subject to the Equity Incentive Plan and the Equity Incentive Plan limits, (ii) the numbers and kinds of shares or other securities subject to the then outstanding awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Stock Options or SARs (without change in the aggregate purchase price as to which Stock Options or SARs remain exercisable), and (iv) the repurchase price of each share of Restricted Stock then subject to a risk of forfeiture in the form of a Company repurchase right. The Committee shall make adjustments in the terms and conditions of, and the criteria included in, awards in recognition of unusual or nonrecurring events affecting Highbury or the financial statements of Highbury or of changes in applicable

laws, regulations, or accounting principles, if and to the extent the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Equity Incentive Plan.

Effect of Change of Control. In the event of a change of control of Highbury, except as set out in the award agreement or prohibited by applicable law, outstanding Stock Options and SARs that are not subject to the achievement of performance goals will become exercisable in full, any risk of forfeiture (other than a performance-based risk of forfeiture) with respect to any Restricted Stock and Restricted Stock Units will lapse, and all performance goals with respect to Restricted Stock and Restricted Stock Units will be deemed to have been satisfied with respect to a pro rata number of shares based on the length of time elapsed within the performance period as of the date of the change of control. However, none of the foregoing shall apply to a Qualified Performance-Based Award except to the extent that it would not cause the compensation payable pursuant to such award to fail to qualify as “performance-based compensation” under Section 162(m) of the Code.

Dissolution or Liquidation. Upon dissolution or liquidation of Highbury, other than as part of an acquisition or similar transaction, any risk of forfeiture with respect to any outstanding awards other than Stock Options and SARs will lapse, and all performance goals with respect to such outstanding awards will be deemed to have been satisfied, unless otherwise provided in the applicable award agreement or any other agreement between the grantee and Highbury.

Certain Transactions. In the event of any merger, consolidation, share exchange transaction involving Common Stock, sale or transfer of all or substantially all of Highbury’s assets, or liquidation or dissolution of Highbury, the Committee may provide for any one or more of the following actions with respect to outstanding Stock Options or SARs: (i) assumption or substitution by the acquiring entity of all outstanding Stock Options and SARs, (ii) termination upon the occurrence of the transaction of all outstanding Stock Options and SARs which are not exercised within a period specified by the Committee, (iii) acceleration of vesting of outstanding Stock Options and SARs prior to or upon the occurrence of the transaction, (iv) cash out of the outstanding Stock Options and SARs based on the acquisition price, net of the exercise price of such awards and any applicable cash withholdings, or (v) in the event of a liquidation or dissolution of Highbury, conversion of the outstanding Stock Options and SARs into a right to receive liquidation proceeds, net of the exercise price of such awards and any applicable cash withholdings. As to outstanding awards other than Stock Options or SARs, upon the occurrence of a transaction other than a liquidation or dissolution of the Company which is not part of another form of transaction, the repurchase and other rights of Highbury under each award shall inure to the benefit of the Highbury’s successor and shall, unless the Committee determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such transaction.

Amendments or Termination. The Board may amend or terminate the Equity Incentive Plan at any time, and the Committee may amend any award at any time. However, no modification of the Equity Incentive Plan or of any award may impair the rights (including the terms of any performance goal or performance period under any Qualified Performance-Based Award) of any holder of an outstanding award without his or her consent, unless such amendment is required or advisable for Highbury to satisfy Section 409A of the Code or any other legal requirement. Further, no Stock Option may be repriced without the approval of the stockholders of Highbury.

Summary of Tax Consequences. The following is a brief and general discussion of the United States federal income tax consequences to recipients of awards granted under the Equity Incentive Plan. This summary is not comprehensive and is based upon laws and regulations in effect on October 24, 2008. Such laws and regulations are subject to change. This summary is intended for the information of shareholders considering how to vote and not as tax guidance to participants in the Equity Incentive Plan. Participants in the Equity Incentive Plan should consult their own tax advisors as to the tax consequences of participation.

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Nonstatutory Stock Options. Generally, there are no federal income tax consequences to the participants upon grant of Nonstatutory Stock Options. Upon the exercise of such an Option, the participant will recognize ordinary income in an amount equal to the amount by which the fair

market value of the Common Stock acquired upon the exercise of such Option exceeds the exercise price, if any. A sale of Common Stock so acquired will give rise to a capital gain or loss equal to the difference between the fair market value of the Common Stock on the exercise and sale dates.

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Incentive Stock Options. Except as noted at the end of this paragraph, there are no federal income tax consequences to the participant upon grant or exercise of an Incentive Stock Option. If the participant holds shares of Common Stock purchased pursuant to the exercise of an Incentive Stock Option for at least two years after the date the Option was granted and at least one year after the exercise of the Option, the subsequent sale of Common Stock will give rise to a long-term capital gain or loss to the participant and no deduction will be available to Highbury. If the participant sells the shares of Common Stock within two years after the date an Incentive Stock Option is granted or within one year after the exercise of the Option, the participant will recognize ordinary income in an amount equal to the difference between the fair market value at the exercise date and the Option exercise price, and any additional gain or loss will be a capital gain or loss. However, some participants may have to pay alternative minimum tax in connection with exercise of an Incentive Stock Option.

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Restricted Stock. A participant will generally recognize ordinary income on receipt of an award of Restricted Stock when his or her rights in that award become substantially vested, in an amount equal to the amount by which the then fair market value of the Common Stock acquired exceeds the price he or she has paid for it, if any. Recipients of Restricted Stock may, however, within 30 days of receiving an award of Restricted Stock, choose to have any applicable risk of forfeiture disregarded for tax purposes by making an “83(b) election.” If the participant makes an 83(b) election, he or she will have to report compensation income equal to the difference between the value of the shares and the price paid for the shares, if any, at the time of the transfer of the Restricted Stock. Such a participant will not recognize income upon the subsequent vesting of the Restricted Stock.

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Stock Appreciation Rights. A participant will generally recognize ordinary income on receipt of cash or other property pursuant to the exercise of an award of Stock Appreciation Rights.

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Restricted Stock Units, Performance Units, Performance Stock Units and Stock Grants. A participant will generally recognize ordinary income on receipt of any shares of Common Stock, cash or other property in satisfaction of any of these awards under the Equity Incentive Plan.

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Potential Deferred Compensation. For purposes of the foregoing summary of federal income tax consequences, we have assumed that (a) no award under the Equity Incentive Plan will be considered “deferred compensation,” as that term is defined for purposes of federal tax legislation governing nonqualified deferred compensation arrangements, Section 409A of the Code, or (b) if any award were considered to any extent to constitute deferred compensation subject to Section 409A, its terms would comply with the requirements of that statute (in general, by limiting any flexibility in the time of exercise or other payment). For example, the award of an SAR with an exercise price of less than 100% of the market value of Highbury’s Common Stock at the date of grant would constitute deferred compensation subject to Section 409A. If an award under the Equity Incentive Plan includes deferred compensation subject to Section 409A but the terms of the award do not comply with the requirements of the statute, then any deferred compensation component of the award will be taxable when it is earned and vested (even if not then payable) and the recipient will be subject to a 20% additional tax.

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Code Section 162(m) Limitations on Highbury’s Tax Deduction. In general, whenever a recipient is required to recognize ordinary income in connection with an award, Highbury will be entitled to a corresponding tax deduction. However, Highbury will not be entitled to deductions in connection with awards under the Equity Incentive Plan to certain senior executive officers to the extent that the amount of deductible income in a year to any such officer resulting from the award, together with his or her other compensation from Highbury, exceeds the $1 million dollar limitation of Section 162(m) of the Code. Compensation which qualifies as “performance-based” is not subject to this limitation, however. Consequently, compensation payable pursuant to Qualified Performance-Based Awards should not be subject to the deduction limitations of Section 162(m) of the Code.

Plan Benefits. We have not granted any awards under the Equity Incentive Plan, nor have we agreed to grant any awards to specific individuals under the Plan. Because awards under the Equity Incentive Plan are subject to the discretion of the Committee, future awards are undeterminable.

PROPOSAL NO. 3

APPROVAL OF HIGHBURY FINANCIAL INC.
2008 EXECUTIVE LONG TERM INCENTIVE PLAN

We are requesting that the stockholders vote in favor of approving Highbury’s 2008 Executive Long Term Incentive Plan (the “Long Term Incentive Plan”), which was adopted by the Board on October 21, 2008, subject to shareholder approval.

A component of Highbury’s overall compensation strategy is to pay its employees and officers for delivering measurable results. The Board also believes that Highbury’s ability to attract and retain key executive officers is significantly strengthened by its ability to offer an incentive bonus plan that rewards exceptional performance that supports Highbury’s objectives. The purpose of the Long Term Incentive Plan is to provide eligible executive officers of Highbury who are designated by Highbury’s compensation committee with incentive cash payments based upon their level of achievement of financial, business and other performance criteria.

If approved by Highbury’s stockholders, the Long Term Incentive Plan would permit the payment of cash bonuses that may qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). Generally, under Section 162(m) of the Code, the federal income tax deductibility of compensation paid to Highbury’s chief executive officer and each of the next three most highly compensated executive officers (other than its chief financial officer) will be limited to $1,000,000 in any year. However, Highbury can deduct compensation in excess of that amount if it qualifies as “performance-based compensation.” The Board believes that it is in the best interests of Highbury and its stockholders to ensure that incentive compensation payable to its executive officers is deductible by Highbury for federal income tax purposes.

In order to qualify as “performance-based compensation,” the material terms of the performance goals under which such compensation may be paid must be disclosed to and approved by the stockholders of Highbury. You are being asked to approve the Long Term Incentive Plan and should read and understand the terms of the Long Term Incentive Plan before you vote. Below is a summary of the principal provisions of the Long Term Incentive Plan. The summary does not purport to be exhaustive and is qualified by the full text of the Long Term Incentive Plan, a copy of which is attached to this proxy statement as Exhibit 10.2.

Administration. The Long Term Incentive Plan is administered by the compensation committee of the Board. If there is no compensation committee of the Board (which there presently is not), the Long Term Incentive Plan shall be administered by a committee consisting solely of directors of Highbury who qualify as “outside directors” under Section 162(m) of the Code. The compensation committee or such other committee of outside directors is referred to in this proxy statement as the “Committee.” The Committee will be responsible for administering the Long Term Incentive Plan, and shall have full discretionary authority to construe and interpret the terms of the plan, determine the manner and time of payment of any bonuses awarded, adopt rules and regulations necessary for the proper administration of the plan, designate the executive officers eligible to participate in the plan, and set the targeted goals for selected performance criteria.

Eligibility. The individuals eligible to participate in the Long Term Incentive Plan are those executive officers of Highbury who are designated by the Committee in its sole discretion. No executive officer of Highbury is automatically entitled to participate in the Long Term Incentive Plan. Highbury currently has three executive officers who would be eligible to participate in the Long Term Incentive Plan.

Performance Periods. The Committee will select performance periods over which the attainment of one or more performance goals or other business objectives will be measured for purposes of determining a participant’s right to, and the payment of, any bonus under the Long Term Incentive Plan. The performance periods may be of varying and overlapping durations, as selected by the Committee. However, no performance period may end prior to December 31, 2010 or after December 31, 2029, and no more than one performance period with respect to any one participant may expire during any period of twelve months. Within 90 days of the commencement of each performance period selected by the Committee (or, if earlier, before the expiration of the first 25% of the performance period), the Committee will designate the targeted goals for selected

performance criteria during the performance period and the applicable bonus formula for each participant, which may vary between individual participants or group of participants.

Performance Goals. The performance goals will be established by the Committee based on the selected performance criteria and may be applied to an individual, to Highbury as a whole, or to a division, business unit or subsidiary of Highbury, either individually, alternatively, or in any combination. The performance goals may be measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, by comparison to previous years’ results or to a designated comparison group, in each case as determined by the Committee.

Performance Criteria. The performance criteria which may be selected by the Committee are limited to: (i) EBITDA, defined as earnings before interest, taxes, depreciation, amortization and other non-cash expenses (including, without limitation, any charges related to the Long Term Incentive Plan or any other equity-based or cash-based incentive compensation plan of Highbury), (ii) “cash net income,” defined as net income before amortization, intangible-related deferred taxes, depreciation and other non-cash expenses (including, without limitation, any charges related to the Long Term Incentive Plan and any other equity-based or cash-based incentive compensation plan of Highbury), (iii) cash flow (before or after dividends), (iv) cash net income per share, calculated based on diluted average shares outstanding for any measurement period using the treasury stock method to determine the number of common share equivalents issuable pursuant to any dilutive securities, excluding any shares of Common Stock issued or issuable pursuant to awards under Highbury’s Equity Incentive Plan or any under other equity-based compensation plan of Highbury, (v) fair market value or other stock price, (vi) return on equity, (vii) stockholder return or total stockholder return, (viii) return on capital (including, without limitation, return on total capital or return on invested capital), (ix) return on investment, (x) return on assets or net assets, (xi) market capitalization, (xii) economic value added, (xiii) debt leverage (debt to capital), (xiv) revenue, (xv) sales or net sales, (xvi) backlog, (xvii) income, pre-tax income or net income, (xviii) operating income or pre-tax profit, (xix) operating profit, net operating profit or economic profit, (xx) gross margin, operating margin or profit margin, (xxi) return on operating revenue or return on operating assets, (xxii) cash from operations, (xxiii) operating ratio, (xxiv) operating revenue, (xxv) market share improvement, (xxvi) general and administrative expenses and (xxvii) customer service. The performance criteria may be measured on the basis of generally accepted accounting principles, as used in the United States (“GAAP”), or on a non-GAAP basis.

Calculation of Bonus Amount. After the end of each performance period, the Committee will determine and certify the extent to which the targeted goals for the selected performance criteria applicable to each participant were achieved or exceeded for the performance period, and will determine each participant’s bonus by applying the bonus formula to the level of actual performance achieved. To the extent consistent with Section 162(m) of the Code, the Committee may appropriately adjust any evaluation of performance against a performance goal to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) certain other extraordinary, unusual, non-recurring or non-comparable items.

Limitations on Bonus Amounts. The aggregate bonus payable under the Long Term Incentive Plan to any participant in any calendar year (the “Maximum Bonus Per Year”) may not exceed an amount equal to the product of (i) the difference, if any, between Highbury’s daily weighted average market capitalization during the last calendar year of the performance period and the greater of (A) Highbury’s daily weighted average market capitalization during the twenty consecutive trading days ending on or immediately prior to December 31 of the year immediately preceding the beginning of the performance period, and (B) $100 million, and (ii) 1%. For ease of reference, Highbury’s market capitalization as of October 22, 2008 was approximately $25.1 million. The aggregate amount of bonuses payable to all participants in any calendar year may not exceed twice the Maximum Bonus Per Year. The aggregate amount of all bonuses payable to any one participant with respect to all performance periods under the Long Term Incentive Plan may not exceed the Maximum Bonus Per Year multiplied by twenty (the maximum number of possible performance periods with respect to any one participant over the life of the plan). The aggregate amount of all bonuses payable to all participants with respect to all performance periods under the Long Term Incentive Plan may not exceed twice such amount. Market capitalization will be calculated based on the aggregate number of shares of Common

Stock of Highbury issued and outstanding, including share equivalents outstanding under the treasury stock method for derivative instruments (e.g., convertible securities, warrants and options).

Effect of Termination of Employment or Other Association. A participant must generally be an active employee or consultant of the Company or an affiliate on the last day of an applicable performance period in order to receive a bonus for the performance period. However, if the participant’s employment or other association with Highbury terminates prior to the end of a performance period due to (i) termination for any reason within 24 months following a change of control of Highbury, (ii) total and permanent disability, (iii) death, (iv) involuntary termination without cause, or (v) voluntary termination for good reason, the participant (or, in the event of death, the participant’s estate) will receive a bonus with respect to such performance period, prorated through the termination date, subject to satisfaction of the applicable performance goals for the performance period.

Effective Date. The Long Term Incentive Plan will become effective as of January 1, 2009, subject to its approval by the stockholders of Highbury.

Amendment and Termination. The Board may amend, suspend or terminate the Long Term Incentive Plan at any time, and the Committee may amend any bonus award at any time. However, no modification of the plan or of any award may impair the rights (including the terms of any bonus formula, performance goal or performance period) of any participant without his or her consent, unless such amendment is required or advisable for Highbury to satisfy Section 409A of the Code or any other legal requirement. No amendment or termination of the Long Term Incentive Plan or any bonus award may increase the amount of compensation payable under any bonus award or cause any bonus to fail to qualify as “performance-based compensation” under Section 162(m) of the Code. The Long Term Incentive Plan will terminate automatically on December 31, 2029, unless earlier terminated by the Board. Unless expressly provided by the Board, no termination of the Long Term Incentive Plan may affect the terms of any bonus award outstanding on the date of termination.

Long Term Incentive Plan Benefits. We have not granted any awards under the Long Term Incentive Plan, nor have we agreed to grant any awards to specific individuals under the plan. Because awards under the Long Term Incentive Plan are determined in the sole discretion of the Committee, the amounts of future awards are undeterminable.

MISCELLANEOUS

Stockholder Proposals

Any stockholder proposal intended to be presented at the 2009 Annual Meeting of Stockholders must be received by Highbury not later than June 26, 2009 for inclusion in our proxy statement and form of proxy for that meeting. Such proposals should be directed to the attention of Secretary, Highbury Financial Inc., 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202. Applicable SEC rules and regulations govern the submission of stockholder proposals and our consideration of them for inclusion in next year’s proxy statement.

A stockholder who wants to present a proposal at the 2009 annual meeting (but not to include the proposal in our proxy statement) or to nominate a person for election as a director must comply with the requirements set forth in our by-laws. Our by-laws require, among other things, that our corporate secretary receive written notice from the record holder of intent to present such proposal or nomination no less than 60 days and no more than 90 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, if the annual meeting with respect to which such notice is to be tendered is not held within 30 days before or after such anniversary date, to be timely, notice by the stockholder must be received no later than the close of business on the 10^th day following the day on which notice of the date of the meeting or public disclosure thereof was given or made. Therefore, if the annual meeting with respect to which such notice is to be tendered is held within 30 days before or after such anniversary date, we must receive notice of such proposal no earlier than September 9, 2009, and no later than October 9, 2009. The notice must contain the information required by our by-laws. You may obtain a print copy of our by-laws upon request from our corporate secretary at Highbury Financial Inc., 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202. Any person presiding at the meeting may exclude any matter that is not properly presented in accordance with these requirements.

Stockholder Communication with Our Board

Any communications from stockholders to our Board must be addressed in writing and mailed to the attention of the Board of Directors, c/o Corporate Secretary, Highbury Financial Inc., 999 Eighteenth Street, Suite 3000, Denver, Colorado 80202. The Corporate Secretary will compile the communications, summarize lengthy or repetitive communications and forward these communications to the directors, in accordance with the judgment of our Chairman of the Board. Any matter relating to our financial statements, accounting practices or internal controls should be addressed to Richard S. Foote.

Other Matters

We do not intend to bring before the meeting for action any matters other than those specifically referred to in this proxy statement, and we are not aware of any other matters which are proposed to be presented by others. If any other matters or motions should properly come before the meeting, the persons named in the proxy intend to vote on any such matter in accordance with their best judgment, including any matters or motions dealing with the conduct of the meeting.

Annual Report on Form 10-K

A copy of Highbury’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007 is being mailed to each stockholder together with this proxy statement.

Highbury files reports, proxy statements and other information with the SEC as required by the Securities Exchange Act of 1934, as amended. You may read and copy reports, proxy statements and other information filed by Highbury with the SEC at the SEC public reference room located in Washington, D.C. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You may also obtain copies of the materials described above at prescribed rates by writing to the SEC, 100 F Street N.E., Washington, D.C. 20549. You may access information on Highbury at the SEC web site containing reports, proxy statements and other information at: http://www.sec.gov.

Information and statements contained in this proxy statement, or any annex to this proxy statement incorporated by reference in this proxy statement, are qualified in all respects by reference to the copy of the relevant contract or other annex filed as an exhibit to this proxy statement or incorporated in this proxy statement by reference.

If you would like additional copies of this document, or if you have questions about the Annual Meeting, you should contact:

Richard S. Foote
Highbury Financial Inc.
999 Eighteenth Street, Suite 3000
Denver, CO 80202
Tel: (303) 357-4802

PROXY

Highbury Financial Inc.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF HIGHBURY FINANCIAL INC.

The undersigned appoints Richard S. Foote or R. Bradley Forth as proxies with full power to act without the other and each with the power to appoint a substitute, and hereby authorizes either of them to represent and to vote, as designated on the reverse side, all shares of common stock of Highbury Financial Inc. (“Highbury”) held of record by the undersigned on October 24, 2008, at the Annual Meeting of Stockholders to be held on December 8, 2008, or any postponement or adjournment thereof.

At their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting in accordance with SEC rules.

THIS PROXY REVOKES ALL PRIOR PROXIES GIVEN BY THE UNDERSIGNED.

THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED “FOR” PROPOSAL NUMBER 1, PROPOSAL NUMBER 2 AND PROPOSAL NUMBER 3. THE HIGHBURY BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSALS SHOWN ON THE REVERSE SIDE.

HIGHBURY MAY POSTPONE THE ANNUAL MEETING TO SOLICIT ADDITIONAL VOTES IN THE EVENT THAT A QUORUM IS NOT PRESENT OR UNDER OTHER CIRCUMSTANCES IF DEEMED ADVISABLE BY THE HIGHBURY BOARD OF DIRECTORS.

(continued and to be signed on reverse side)

PROXY

THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED “FOR” PROPOSAL NUMBER 1, PROPOSAL NUMBER 2, AND PROPOSAL NUMBER 3. THE HIGHBURY BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOLLOWING PROPOSALS.

Election of Directors.


	FOR the nominee listed below	WITHHOLD AUTHORITY to vote for the nominee listed below
Nominee:
Richard S. Foote	o	o

Approval of the Highbury Financial Inc. 2008 Equity Incentive Plan.


FOR o		AGAINST o		ABSTAIN o

Approval of the Highbury Financial Inc. 2008 Executive Long Term Incentive Plan.


FOR o		AGAINST o		ABSTAIN o

MARK HERE FOR ADDRESS CHANGE AND NOTE AT RIGHT

PLEASE MARK, DATE AND RETURN THIS PROXY PROMPTLY.

ANY VOTES RECEIVED AFTER A MATTER HAS BEEN VOTED UPON WILL NOT BE COUNTED.


Signature		Signature		Date

Sign exactly as name appears on this proxy card. If shares are held jointly, each holder should sign. Executors, administrators, trustees, guardians, attorneys and agents should give their full titles. If stockholder is a corporation, sign in full name by an authorized officer.

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EXHIBIT 10.1

HIGHBURY FINANCIAL INC.

2008 EQUITY INCENTIVE PLAN

HIGHBURY FINANCIAL INC.


	Page
1. Purpose		1
2. Definitions		1
3. Term of the Plan		6
4. Stock Subject to the Plan		6
5. Administration		7
6. Authorization of Grants		7
7. Specific Terms of Awards		8
8. Adjustment Provisions		13
9. Change of Control		15
10. Settlement of Awards		15
11. Reservation of Stock		17
12. Limitation of Rights in Stock; No Special Service Rights		17
13. Unfunded Status of Plan		17
14. Nonexclusivity of the Plan		17
15. Termination and Amendment of the Plan		18
16. Notices and Other Communications		18
17. Governing Law		18

HIGHBURY FINANCIAL INC.

2008 EQUITY INCENTIVE PLAN

1. Purpose

This Plan is intended to encourage ownership of Stock by employees, executive officers, consultants and directors of the Company and its Affiliates and to provide additional incentive for them to promote the success of the Company’s business through the grant of Awards of or pertaining to shares of the Company’s Stock. The Plan is intended to be an incentive stock option plan within the meaning of Section 422 of the Code, but not all Awards are required to be Incentive Options.

2. Definitions

As used in this Plan, the following terms shall have the following meanings:

2.1. Accelerate, Accelerated, and Acceleration, means: (a) when used with respect to an Option or Stock Appreciation Right, that as of the time of reference the Option or Stock Appreciation Right will become exercisable with respect to some or all of the shares of Stock for which it was not then otherwise exercisable by its terms; (b) when used with respect to Restricted Stock or Restricted Stock Units, that the Risk of Forfeiture otherwise applicable to the Stock or Units shall expire with respect to some or all of the shares of Restricted Stock or Units then still otherwise subject to the Risk of Forfeiture; and (c) when used with respect to Performance Stock Units or Performance Units, that the applicable Performance Goals shall be deemed to have been met as to some or all of the Units.

2.2. Affiliate means any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under common control with the Company.

2.3. Anniversary Date means the last day of each full calendar year following the adoption of the Plan by the Board.

2.4. Award means any grant or sale pursuant to the Plan of Options, Stock Appreciation Rights, Performance Units, Restricted Stock, Restricted Stock Units (including Performance Stock Units), or Stock Grants.

2.5. Award Agreement means an agreement between the Company and the recipient of an Award, setting forth the terms and conditions of the Award.

2.6. Base Shares means, as of each Anniversary Date, the sum of (i) the Initial Shares, including warrants to purchase Stock issued and outstanding as of September 30, 2008 that are exercised after such Anniversary Date and on or before the last day of the applicable Performance Period, and (ii) the aggregate number of Burn Rate Shares determined for all years prior to, but not including the year of, such Anniversary Date.

2.7. Board means the Company’s Board of Directors.

2.8. Burn Rate has the meaning set forth in RiskMetrics Group’s “ISS Governance Services — US Corporate Governance Policy — 2008 Updates,” dated November 19, 2007, and shall be calculated in a manner consistent with the policy set forth in such publication, as modified from time to time by RiskMetrics Group or its successor.

2.9. “Burn Rate Cap” for any calendar year means the least of (i) the Burn Rate equal to the mean plus one standard deviation for non-Russell 3000 diversified financial companies published by RiskMetrics Group for 2008, as adjusted for full value awards based on the historical volatility of the Company’s Stock price, (i.e., 4.855%), (ii) the Burn Rate equal to the mean plus one standard deviation for diversified financial companies meeting the Russell 3000 or non-Russell 3000 criteria, as applicable, published by RiskMetrics Group (or any successor) for any other year of the Plan, as adjusted for full value awards, and (iii) any lower Burn Rate recommended by the President and Chief Executive Officer of the Company and approved by the Committee.

2.10. Burn Rate Shares means, as of each Anniversary Date, that number of shares of Stock equal to the product of (i) the Burn Rate Cap applicable to the year in which such Anniversary Date falls, and (ii) the Base Shares determined as of such Anniversary Date, but taking into account all Initial Shares, including warrants to purchase Stock issued and outstanding as of September 30, 2008 that are exercised after such Anniversary Date and on or before the last day of the applicable Performance Period.

2.11. “CAGR” means the compound annual growth rate in Cash Net Income per Share over a Performance Period, expressed as a percentage in accordance with the following formula, where X is the number of years in the Performance Period:

the Xth root of (Cash Net Income per Share for the Xth year of the Performance Period divided by the Cash Net Income per Share for the calendar year immediately prior to beginning of the Performance Period) minus 1.

2.12. “Cash Net Income per Share” shall mean, with respect to any year during a Performance Period, the quotient obtained by dividing (i) net income before amortization, intangible-related deferred taxes, affiliate depreciation and other non-cash expenses (including, without limitation, any charges related to the Plan or any other equity-based or cash-based incentive compensation plan of the Company), as determined by the Committee based on the audited financial statements of the Company for such year, by (ii) the daily weighted average number of shares of Stock outstanding during such year, determined on a diluted basis using the treasury stock method to determine the number of common share equivalents issuable pursuant to any dilutive securities, excluding any shares of Stock issued or issuable pursuant to Awards granted under the Plan or under any other equity-based compensation plan of the Company.

2.13. Cause means the Participant’s (i) refusal or neglect to perform substantially his employment-related duties, (ii) theft, fraud, embezzlement, falsification of Company, subsidiary or client documents, misappropriation of funds or other assets of the Company or any of its subsidiaries, willful misconduct, or breach of fiduciary duty or duty of loyalty, (iii) conviction of or entering a plea of guilty or nolo contendere to a crime constituting a felony, or willful violation of any law, rule or regulation (other than a traffic violation or similar offense or violation outside of the course of employment which in no way adversely affects the Company, any of its subsidiaries or their reputation or the ability of the Participant to perform his employment-related duties or to represent the Company or any of its subsidiaries), (iv) breach of any written covenant or agreement with the Company or any of its subsidiaries not to disclose any information pertaining to the Company or any of its subsidiaries or not to compete or interfere with the Company or any of its subsidiaries, or (v) refusal or failure to implement any lawful instruction issued by the Board.

2.14. Change of Control means the occurrence of any of the following after the date of the adoption of the Plan by the Board:

(a) a Transaction (as defined in Section 8.4), unless securities possessing more than 50% of the total combined voting power of the survivor’s or acquiror’s outstanding securities (or the securities of any parent thereof) are held by a person or persons who held securities possessing more than 50% of the total combined voting power of the Company’s outstanding securities immediately prior to that transaction, or

(b) any person or group of persons (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended and in effect from time to time) directly or indirectly acquires, including but not limited to by means of a merger or consolidation, beneficial ownership (determined pursuant to Securities and Exchange Commission Rule 13d-3 promulgated under the said Exchange Act) of securities possessing more than 20% of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s stockholders that the Board does not recommend such stockholders accept, other than (i) the Company or an Affiliate, (ii) an employee benefit plan of the Company or any of its Affiliates, (iii) a

trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, or (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or

(c) over a period of 36 consecutive months or less, there is a change in the composition of the Board such that a majority of the Board members (rounded up to the next whole number, if a fraction) ceases, by reason of one or more proxy contests for the election of Board members or otherwise, to be composed of individuals who either (i) have been Board members continuously since the beginning of that period, or (ii) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in the preceding clause (i) who were still in office at the time that election or nomination was approved by the Board; or

(d) a majority of the Board votes in favor of a decision that a Change of Control has occurred.

2.15. Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from time to time thereunder.

2.16. Committee means the Compensation Committee of the Board, which in general is responsible for the administration of the Plan, as provided in Section 5 of this Plan. For any period during which no such committee is in existence “Committee” shall mean the “outside directors,” within the meaning of applicable Internal Revenue Service regulations under Section 162 of the Code, of the Board, and all authority and responsibility assigned to the Committee under the Plan shall be exercised, if at all, by such outside director or directors of the Board.

2.17. Company means Highbury Financial Inc., a corporation organized under the laws of the State of Delaware.

2.18. Covered Employee means an employee who is a “covered employee” within the meaning of Section 162(m) of the Code.

2.19. Disability means a total and permanent disability that causes a Participant to be eligible to receive long term disability benefits under the long term disability plan maintained by the Company. If the Company does not maintain a long term disability plan, Disability means a permanent and total disability as defined in Section 22(e)(3) of the Code. In the event of a dispute, the determination whether a Participant has suffered a Disability shall be made by the Committee in its sole discretion and may be supported by the advice of a physician competent in the area to which such Disability relates.

2.20. Final Shares means the number of Base Shares determined as of the Anniversary Date that is the last day of the last Performance Period to expire under this Plan, plus the number of Burn Rate Shares calculated as of such Anniversary Date.

2.21. GAAP means generally acceptable accounting principles as used in the United States.

2.22. Good Reason means the occurrence of any of the following conditions arising without the consent of the Participant which are not cured by the Company within thirty (30) days following written notice thereof by the Participant to the Company, which is given to the Company within ninety (90) days following the initial existence of the condition:

(a) A material diminution in the Participant’s base compensation or in the Participant’s opportunity to earn incentive compensation.

(b) A material diminution in the Participant’s authority, duties, or responsibilities.

(c) A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required to report, including a requirement that the Participant, if such Participant is a member of the Board, report to a corporate officer instead of reporting directly to the Board.

(d) A material change in the geographic location at which the Participant must perform the services.

(e) Any other action or inaction that constitutes a material breach by the Company of an employment agreement, if any, between the Company and the Participant.

2.23. Grant Date means the date as of which an Option is granted, as determined under Section 7.1(a).

2.24. Incentive Option means an Option which by its terms is to be treated as an “incentive stock option” within the meaning of Section 422 of the Code.

2.25. Initial Shares, as determined as of any date, means (i) that number of shares of Stock issued and outstanding as of September 30, 2008 plus (ii) that number of warrants to purchase Stock issued and outstanding as of September 30, 2008 that have been exercised as of the last day of the applicable Performance Period.

2.26. Market Value means the value of a share of Stock on a particular date determined by such methods or procedures as may be established by the Committee. Unless otherwise determined by the Committee, the Market Value of a share of Stock as of any date is: (i) if the Stock is listed on any national securities exchange, the closing price for the Stock as reported on the primary national securities exchange on which the Stock is then listed for that date or, if no closing price is reported for that date, the closing price on the next preceding date for which a closing price was reported; (ii) if the Stock is not listed on any national securities exchange but is traded in the over-the-counter market bulletin board or pink sheets on a last sale basis, the closing sale price reported on such date, or, if there is no such sale on that date then on the last preceding date on which such a sale was reported; and (iii) if the Stock is not listed on an exchange or traded in the over-the-counter market, or representative quotes are not otherwise available, the amount determined by the Board in good faith to be the fair market value per share of Stock on such date, on a fully diluted basis.

2.27. Nonstatutory Option means any Option that is not an Incentive Option.

2.28. Option means an option to purchase shares of Stock.

2.29. Optionee means a Participant to whom an Option shall have been granted under the Plan.

2.30. Participant means any holder of an outstanding Award under the Plan.

2.31. Performance Criteria means the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period, which may be measured on a GAAP or non-GAAP basis, as determined by the Committee. The Performance Criteria used to establish Performance Goals are limited to: (i) EBITDA, defined as earnings before interest, taxes, depreciation, amortization and other non-cash expenses (including, without limitation, any charges related to the Plan or any other equity-based or cash-based incentive compensation plan of the Company), (ii) “cash net income,” defined as net income before amortization, intangible-related deferred taxes, affiliate depreciation and other non-cash expenses (including, without limitation, any charges related to the Plan or any other equity-based or cash-based incentive compensation plan of the Company), (iii) cash flow (before or after dividends), (iv) cash net income (as defined above) per share, calculated based on diluted average shares of Stock outstanding for any measurement period using the treasury stock method to determine the number of common share equivalents issuable pursuant to any dilutive securities, excluding any shares of Stock issued or issuable pursuant to Awards under the Plan or under any other equity-based compensation plan of the Company, (v) stock price, (vi) return on equity, (vii) stockholder return or total stockholder return, (viii) return on capital (including, without limitation, return on total capital or return on invested capital), (ix) return on investment, (x) return on assets or net assets, (xi) market capitalization, (xii) economic value added, (xiii) debt leverage (debt to capital), (xiv) revenue, (xv) sales or net sales, (xvi) backlog, (xvii) income, pre-tax income or net income, (xviii) operating income or pre-tax profit, (xix) operating profit, net operating profit or economic profit, (xx) gross margin, operating margin or profit margin, (xxi) return on operating revenue or return on operating assets, (xxii) cash from operations, (xxiii) operating ratio, (xxiv) operating revenue, (xxv) market share improvement, (xxvi) general and administrative expenses and (xxvii) customer service.

2.32. Performance Goals means, for a Performance Period, the written goal or goals established by the Committee for the Performance Period based upon the Performance Criteria. The Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, subsidiary, or an individual, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or Affiliate, either individually, alternatively or in any combination, and measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee. The Committee will, in the manner and within the time prescribed by Section 162(m) of the Code in the case of Qualified Performance-Based Awards, objectively define the manner of calculating the Performance Goal or Goals it selects to use for such Performance Period for such Participant. To the extent consistent with Section 162(m) of the Code (in the case of Qualified Performance-Based Awards), the Committee may appropriately adjust any evaluation of performance against a Performance Goal to exclude any of the following events that occurs during a performance period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary, unusual, non-recurring or non-comparable items (A) as described in Accounting Principles Board Opinion No. 30, (B) as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Annual Report to stockholders for the applicable year, or (C) publicly announced by the Company in a press release or conference call relating to the Company’s results of operations or financial condition for a completed quarterly or annual fiscal period.

2.33. Performance Period means the one or more periods of time, which may be of varying and overlapping durations, selected by the Committee, over which the attainment of one or more Performance Goals or other business objectives will be measured for purposes of determining a Participant’s right to, and the payment of, a Qualified Performance-Based Award. No Performance Period may be of more than ten (10) years’ duration.

2.34. Performance Stock Unit means a Restricted Stock Unit that is awarded pursuant to a Qualified Performance-Based Award and which shall be settled, at the option of the Participant, in cash or shares of Stock or a combination thereof.

2.35. Performance Unit means a right granted to a Participant under Section 7.5, to receive cash, Stock or other Awards, the payment of which is contingent on achieving Performance Goals or other business objectives established by the Committee.

2.36. Plan means this 2008 Equity Incentive Plan of the Company, as amended from time to time, and including any attachments or addenda hereto.

2.37. Qualified Performance-Based Awards means Awards intended to qualify as “performance-based compensation” under Section 162(m) of the Code.

2.38. Restricted Stock means a grant or sale of shares of Stock to a Participant subject to a Risk of Forfeiture.

2.39. Restricted Stock Units means rights to receive shares of Stock at the close of a Restriction Period, subject to a Risk of Forfeiture.

2.40. Restriction Period means the period of time, established by the Committee in connection with an Award of Restricted Stock or Restricted Stock Units, during which the shares of Restricted Stock or Restricted Stock Units are subject to a Risk of Forfeiture described in the applicable Award Agreement.

2.41. Risk of Forfeiture means a limitation on the right of the Participant to retain Restricted Stock or Restricted Stock Units, including a right of the Company to reacquire shares of Restricted Stock at less than their then Market Value, arising because of the occurrence or non-occurrence of specified events or conditions.

2.42. “Russell 3000” means the Russell 3000 Index as published by Russell Investments. In the event the Russell 3000 Index is not published for the ten days preceding a relevant determination, the Committee may select a different basis for determining the Burn Rate Cap.

2.43. Stock means common stock, par value $0.0001 per share, of the Company, and such other securities as may be substituted for Stock pursuant to Section 8.

2.44. Stock Appreciation Right means a right to receive any excess in the Market Value of shares of Stock (except as otherwise provided in Section 7.2(c)) over a specified exercise price.

2.45. Stock Grant means the grant of shares of Stock not subject to restrictions or other forfeiture conditions.

2.46. Ten Percent Owner means a person who owns, or is deemed within the meaning of Section 422(b)(6) of the Code to own, stock possessing more than 10% of the total combined voting power of all classes of stock of the Company (or any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code). Whether a person is a Ten Percent Owner shall be determined with respect to an Option based on the facts existing immediately prior to the Grant Date of the Option.

3. Term of the Plan

Unless the Plan shall have been earlier terminated by the Board, Awards may be granted under this Plan at any time in the period commencing on the date of adoption of the Plan by the Board and ending immediately prior to the tenth anniversary of the earlier of the adoption of the Plan by the Board and approval of the Plan by the Company’s stockholders. Awards granted pursuant to the Plan within that period shall not expire solely by reason of the termination of the Plan. Awards of Incentive Options granted prior to stockholder approval of the Plan are expressly conditioned upon such approval, but in the event of the failure of the stockholders to approve the Plan shall thereafter and for all purposes be deemed to constitute Nonstatutory Options.

4. Stock Subject to the Plan

4.1. Awards Other Than Qualified Performance-Based Awards. The number of shares of Stock issued or issuable pursuant to Awards of Options (including Incentive Options), Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Performance Units that are not intended to qualify as Qualified Performance-Based Awards shall not exceed 10% multiplied by the sum of (a) and (b), where:

(a) is that number of shares of Stock issued and outstanding as of September 30, 2008, and

(b) is the lesser of (i) that number of warrants to purchase Stock that were issued and outstanding as of September 30, 2008, and (ii) that number of warrants to purchase Stock that were issued and outstanding as of September 30, 2008 and that have been exercised as of the determination date.

4.2. Qualified Performance-Based Awards. The number of shares of Stock issued or issuable pursuant to Qualified Performance-Based Awards under the Plan shall not exceed the Final Shares minus (i) the Initial Shares, determined as of the Anniversary Date that is the last day of the last Performance Period to expire under this Plan, and (ii) the number of shares of Stock, if any, that, as of the last day of the last Performance Period to expire under this Plan, have been issued pursuant to Awards described in Section 4.1 or are subject to outstanding Awards described in Section 4.1. The number of shares of Stock issued or issuable pursuant to Qualified Performance-Based Awards under the Plan shall also be subject to reduction if the CAGR for all Performance Periods under the Plan is less than 30%.

4.3. Application of Limitations. For purposes of applying the foregoing limitations, (a) if any Option or Stock Appreciation Right expires, terminates, or is cancelled for any reason without having been exercised in full, or if any other Award is forfeited by the recipient or repurchased at less than its Market Value, the shares not purchased by the Optionee or which are forfeited by the recipient or repurchased shall again be available for Awards to be granted under the Plan and (b) if any Option is exercised by delivering previously owned shares in payment of the exercise price therefor, only the net number of shares, that is, the number of shares issued minus the number received by the Company in payment of the exercise price, shall be considered to

have been issued pursuant to an Award granted under the Plan. In addition, settlement of any Award shall not count against the foregoing limitations except to the extent settled in the form of Stock. Shares of Stock issued pursuant to the Plan may be either authorized but unissued shares or shares held by the Company in its treasury.

5. Administration

The Plan shall be administered by the Committee; provided, however, that at any time and on any one or more occasions the Board may itself exercise any of the powers and responsibilities assigned the Committee under the Plan and when so acting shall have the benefit of all of the provisions of the Plan pertaining to the Committee’s exercise of its authorities hereunder; and provided further that the Committee may delegate to the President and Chief Executive Officer the authority to grant Awards hereunder to employees who are not Covered Employees and to consultants in accordance with such guidelines as the Committee shall set forth at any time or from time to time. Subject to the provisions of the Plan, the Committee shall have complete authority, in its discretion, to make or to select the manner of making all determinations with respect to each Award to be granted by the Company under the Plan including the employee, executive officer, consultant or director to receive the Award and the form of Award. In making such determinations, the Committee may take into account the nature of the services rendered by the respective employees, executive officers, consultants, and directors, their present and potential contributions to the success of the Company and its Affiliates, and such other factors as the Committee in its discretion shall deem relevant. Subject to the provisions of the Plan, the Committee shall also have complete authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the respective Award Agreements (which need not be identical), and to make all other determinations necessary or advisable for the administration of the Plan. The Committee’s determinations made in good faith on matters referred to in the Plan shall be final, binding and conclusive on all persons having or claiming any interest under the Plan or an Award made pursuant hereto.

6. Authorization of Grants

6.1. Eligibility. The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Awards, either alone or in combination with any other Awards, to any employee or executive officer of or consultant to one or more of the Company and its Affiliates or to any non-employee member of the Board or of any board of directors (or similar governing authority) of any Affiliate. However, only employees of the Company, and of any parent or subsidiary corporations of the Company, as defined in Sections 424(e) and (f), respectively, of the Code, shall be eligible for the grant of an Incentive Option. Further, in no event shall the number of shares of Stock covered by Options or other Awards granted to any one person in any one calendar year exceed 50% of the aggregate number of shares of Stock subject to the Plan.

6.2. General Terms of Awards. Each grant of an Award shall be subject to all applicable terms and conditions of the Plan (including but not limited to any specific terms and conditions applicable to that type of Award set out in the following Section), and such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have any rights with respect to an Award, unless and until such Participant shall have complied with the applicable terms and conditions of such Award (including if applicable delivering a fully executed copy of any agreement evidencing an Award to the Company).

6.3. Effect of Termination of Employment, Etc.

(a) Except as set forth in Section 6.3(b) and (c) with respect to Performance Stock Units, unless the Committee shall provide otherwise with respect to any Award, if the Participant’s employment or other association with the Company and its Affiliates ends for any reason, including because of the Participant’s employer ceasing to be an Affiliate, (i) any outstanding Option or Stock Appreciation Right of the Participant shall cease to be exercisable in any respect not later than ninety (90) days following that event and, for the period it remains exercisable following that event, shall be exercisable only to the extent exercisable at the date of that event, and (ii) any other outstanding Award of the Participant shall be forfeited or otherwise subject to return to or repurchase by the Company on the terms specified in the

applicable Award Agreement. Military or sick leave or other bona fide leave shall not be deemed a termination of employment or other association, provided that it does not exceed the longer of ninety (90) days or the period during which the absent Participant’s reemployment rights, if any, are guaranteed by statute or by contract.

(b) In the case of Performance Stock Units, in the event that the Participant’s employment or other association with the Company and all its Affiliates terminates before the end of a Performance Period other than within the twenty-four (24) month period following a Change of Control due to (i) voluntary termination without Good Reason, or (ii) involuntary termination for Cause, all Performance Stock Units shall be forfeited and cancelled effective as of the date on which the Participant’s employment or other association with the Company terminates (the “Termination Date”).

(c) In the case of Performance Stock Units, subject to more favorable terms set forth in the applicable Award Agreement, in the event that the Participant’s employment or other association with the Company and all its Affiliates terminates before the end of a Performance Period due to (A) termination for any reason within twenty-four (24) months following a Change of Control, (B) Disability, (C) death, (D) involuntary termination without Cause or (E) voluntary termination for Good Reason:

(i) the Participant shall, upon the Termination Date, immediately forfeit that fraction of the Performance Stock Units that is equal to the quotient of (A) the number of days in the Performance Period remaining after the Termination Date, and (B) the total number of days in the Performance Period; and

(ii) following the end of the Performance Period, and subject to the achievement of the applicable Performance Goal or Goals within the applicable Performance Period, as determined by the Committee, the Participant shall be entitled to receive settlement of his remaining Performance Stock Units as set forth in the Award Agreement.

6.4. Non-Transferability of Awards. Except as otherwise provided in this Section 6.4, Awards shall not be transferable, and no Award or interest therein may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. All of a Participant’s rights in any Award may be exercised during the life of the Participant only by the Participant or the Participant’s legal representative. However, the Committee may, at or after the grant of an Award of a Nonstatutory Option, or shares of Restricted Stock, provide that such Award may be transferred by the recipient to a family member; provided, however, that any such transfer is without payment of any consideration whatsoever and that no transfer shall be valid unless first approved by the Committee, acting in its sole discretion. For this purpose, “family member” means any child, stepchild, grandchild, parent, stepparent, spouse or sibling, including adoptive relationships, a trust in which the foregoing persons have more than fifty (50) percent of the beneficial interests, a foundation in which the foregoing persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than fifty (50) percent of the voting interests.

7. Specific Terms of Awards

7.1. Options.

(a) Date of Grant. The granting of an Option shall take place at the time specified in the Award Agreement. Only if expressly so provided in the applicable Award Agreement shall the Grant Date be the date on which the Award Agreement shall have been duly executed and delivered by the Company and the Optionee.

(b) Exercise Price. The price at which shares of Stock may be acquired under each Incentive Option shall be not less than 100% of the Market Value of Stock on the Grant Date, or not less than 110% of the Market Value of Stock on the Grant Date if the Optionee is a Ten Percent Owner. The price at which shares may be acquired under each Nonstatutory Option shall not be so limited solely by reason of this Section.

(c) Option Period. No Incentive Option may be exercised on or after the tenth anniversary of the Grant Date, or on or after the fifth anniversary of the Grant Date if the Optionee is a Ten Percent Owner. The Option period under each Nonstatutory Option shall not be so limited solely by reason of this Section.

(d) Exercisability. An Option may be immediately exercisable or become exercisable in such installments, cumulative or non-cumulative, as the Committee may determine. In the case of an Option not otherwise immediately exercisable in full, the Committee may Accelerate such Option in whole or in part at any time; provided, however, that in the case of an Incentive Option, any such Acceleration of the Option would not cause the Option to fail to comply with the provisions of Section 422 of the Code or the Optionee consents to the Acceleration.

(e) Method of Exercise. An Option may be exercised by the Optionee giving written notice, in the manner provided in Section 16, specifying the number of shares with respect to which the Option is then being exercised. The notice shall be accompanied by payment in the form of cash or check payable to the order of the Company in an amount equal to the exercise price of the shares to be purchased or, subject in each instance to the Committee’s approval, acting in its sole discretion, and to such conditions, if any, as the Committee may deem necessary to avoid adverse accounting effects to the Company,

(i) by delivery to the Company of shares of Stock having a Market Value equal to the exercise price of the shares to be purchased, or

(ii) by surrender of the Option as to all or part of the shares of Stock for which the Option is then exercisable in exchange for shares of Stock having an aggregate Market Value equal to the difference between (1) the aggregate Market Value of shares underlying the surrendered portion of the Option, and (2) the aggregate exercise price under the Option for the surrendered portion of the Option, or

(iii) unless prohibited by applicable law, by delivery to the Company of the Optionee’s executed promissory note in the principal amount equal to the exercise price of the shares to be purchased and otherwise in such form as the Committee shall have approved.

If the Stock is traded on an established market, payment of any exercise price may also be made through and under the terms and conditions of any formal cashless exercise program authorized by the Company entailing the sale of the Stock subject to an Option in a brokered transaction (other than to the Company). Receipt by the Company of such notice and payment in any authorized or combination of authorized means shall constitute the exercise of the Option. Within thirty (30) days thereafter but subject to the remaining provisions of the Plan, the Company shall deliver or cause to be delivered to the Optionee or his agent a certificate or certificates for the number of shares then being purchased. Such shares shall be fully paid and nonassessable.

(f) Limit on Incentive Option Characterization. An Incentive Option shall be considered to be an Incentive Option only to the extent that the number of shares of Stock for which the Option first becomes exercisable in a calendar year do not have an aggregate Market Value (as of the date of the grant of the Option) in excess of the “current limit.” The current limit for any Optionee for any calendar year shall be $100,000 minus the aggregate Market Value at the date of grant of the number of shares of Stock available for purchase for the first time in the same year under each other Incentive Option previously granted to the Optionee under the Plan, and under each other incentive stock option previously granted to the Optionee under any other incentive stock option plan of the Company and its Affiliates, after December 31, 1986. Any shares of Stock which would cause the foregoing limit to be violated shall be deemed to have been granted under a separate Nonstatutory Option, otherwise identical in its terms to those of the Incentive Option.

(g) Notification of Disposition. Each person exercising any Incentive Option granted under the Plan shall be deemed to have covenanted with the Company to report to the Company any disposition of such shares prior to the expiration of the holding periods specified by Section 422(a)(1) of the Code and, if and to the extent that the realization of income in such a disposition imposes upon the Company federal,

state, local or other withholding tax requirements, or any such withholding is required to secure for the Company an otherwise available tax deduction, to remit to the Company an amount in cash sufficient to satisfy those requirements.

7.2. Stock Appreciation Rights.

(a) Tandem or Stand-Alone. Stock Appreciation Rights may be granted in tandem with an Option (at or, in the case of a Nonstatutory Option, after, the award of the Option), or alone and unrelated to an Option. Stock Appreciation Rights in tandem with an Option shall terminate to the extent that the related Option is exercised, and the related Option shall terminate to the extent that the tandem Stock Appreciation Rights are exercised.

(b) Exercise Price. Stock Appreciation Rights shall have an exercise price of not less than fifty percent (50%) of the Market Value of the Stock on the date of the grant of the Award, or in the case of Stock Appreciation Rights in tandem with Options, the exercise price of the related Option.

(c) Other Terms. Except as the Committee may deem inappropriate or inapplicable in the circumstances, Stock Appreciation Rights shall be subject to terms and conditions substantially similar to those applicable to a Nonstatutory Option. In addition, an Stock Appreciation Right related to an Option which can only be exercised during limited periods following a Change of Control may entitle the Participant to receive an amount based upon the highest price paid or offered for Stock in any transaction relating to the Change of Control or paid during the thirty (30) day period immediately preceding the occurrence of the Change of Control in any transaction reported in the stock market in which the Stock is normally traded.

7.3. Restricted Stock.

(a) Purchase Price. Shares of Restricted Stock shall be issued under the Plan for such consideration, in cash, other property or services, or any combination thereof, as is determined by the Committee.

(b) Issuance of Certificates. Each Participant receiving a Restricted Stock Award, subject to subsection (c) below, shall be issued a stock certificate in respect of such shares of Restricted Stock. Such certificate shall be registered in the name of such Participant, and, if applicable, shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award substantially in the following form:

The transferability of this certificate and the shares represented by this certificate are subject to the terms and conditions of the Highbury Financial Inc. 2008 Equity Incentive Plan and an Award Agreement entered into by the registered owner and Highbury Financial Inc. Copies of such Plan and Agreement are on file in the offices of Highbury Financial Inc.

(c) Escrow of Shares. The Committee may require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Participant deliver a stock power, endorsed in blank, relating to the Stock covered by such Award.

(d) Restrictions and Restriction Period. During the Restriction Period applicable to shares of Restricted Stock, such shares shall be subject to limitations on transferability and a Risk of Forfeiture arising on the basis of such conditions related to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

(e) Rights Pending Lapse of Risk of Forfeiture or Forfeiture of Award. Except as otherwise provided in the Plan or the applicable Award Agreement, at all times prior to lapse of any Risk of Forfeiture applicable to, or forfeiture of, an Award of Restricted Stock, the Participant shall have all of the rights of a stockholder of the Company, including the right to vote, and the right to receive any dividends with respect to, the shares of Restricted Stock. The Committee, as determined at the time of Award, may

permit or require the payment of cash dividends to be deferred and, if the Committee so determines, reinvested in additional Restricted Stock to the extent shares are available under Section 4.

(f) Lapse of Restrictions. If and when the Restriction Period expires without a prior forfeiture of the Restricted Stock, the certificates for such shares shall be delivered to the Participant promptly if not theretofore so delivered.

7.4. Restricted Stock Units.

(a) Character. Each Restricted Stock Unit shall entitle the recipient to a share of Stock (or cash equivalent, in the case of Performance Stock Units) at the close of such Restriction Period as the Committee may establish and subject to a Risk of Forfeiture arising on the basis of such conditions relating to the performance of services, Company or Affiliate performance or otherwise as the Committee may determine and provide for in the applicable Award Agreement. Any such Risk of Forfeiture may be waived or terminated, or the Restriction Period shortened, at any time by the Committee on such basis as it deems appropriate.

(b) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be made in shares of Stock in a single lump sum following the close of the applicable Restriction Period; provided, however, that payment of Performance Stock Units shall be made, at the option of the Participant, in shares of Stock or in cash or a combination thereof. At the discretion of the Committee, Participants may be entitled to receive payments equivalent to any dividends declared with respect to Stock referenced in grants of Restricted Stock Units but only following the close of the applicable Restriction Period and then only if the underlying Stock shall have been earned. Unless the Committee shall provide otherwise, any such dividend equivalents shall be paid, if at all, without interest or other earnings.

7.5. Performance Units.

(a) Character. Each Performance Unit shall entitle the recipient to the value of a specified number of shares of Stock, over the initial value for such number of shares, if any, according to a formula established by the Committee at the time of grant, at the close of a specified Performance Period to the extent specified business objectives, including but not limited to Performance Goals, shall have been achieved.

(b) Earning of Performance Units. The Committee shall set Performance Goals or other business objectives in its discretion which, depending on the extent to which they are met within the applicable Performance Period, will determine the number of shares of Stock into which Performance Units will be converted or the value that will be paid to the Participant. After the applicable Performance Period has ended, the holder of Performance Units shall be entitled to receive the number of shares of Stock or the payout of the value of the Performance Units earned by the Participant over the Performance Period, determined as a function of the extent to which the corresponding Performance Goals or other business objectives have been achieved.

(c) Form and Timing of Payment. Payment of earned Performance Units shall be made in a single lump sum following the close of the applicable Performance Period. At the discretion of the Committee, Participants may be entitled to receive any dividends declared with respect to Stock which have been earned in connection with grants of Performance Units which have been earned, but not yet distributed to Participants. The Committee may permit or, if it so provides at grant require, a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Stock that would otherwise be due to such Participant by virtue of the satisfaction of any requirements or goals with respect to Performance Units. If any such deferral election is required or permitted, the Committee shall establish rules and procedures for such payment deferrals.

7.6. Stock Grants. Stock Grants shall be awarded solely in recognition of significant contributions to the success of the Company or its Affiliates, in lieu of compensation otherwise already due and in such other limited circumstances as the Committee deems appropriate. Stock Grants shall be made without forfeiture conditions of any kind.

7.7. Qualified Performance-Based Awards.

(a) Purpose. The purpose of this Section 7.7 is to provide the Committee the ability to qualify Awards as “performance-based compensation” under Section 162(m) of the Code. If the Committee, in its discretion, decides to grant an Award as a Qualified Performance-Based Award, the provisions of this Section 7.7 will control over any contrary provision contained in the Plan. In the course of granting any Award, the Committee may specifically designate the Award as intended to qualify as a Qualified Performance-Based Award. However, no Award shall be considered to have failed to qualify as a Qualified Performance-Based Award solely because the Award is not expressly designated as a Qualified Performance-Based Award, if the Award otherwise satisfies the provisions of this Section 7.7 and the requirements of Section 162(m) of the Code and the regulations promulgated thereunder applicable to “performance-based compensation.”

(b) Authority. All grants of Awards intended to qualify as Qualified Performance-Based Awards and determination of terms applicable thereto shall be made by the Committee or, if not all of the members thereof qualify as “outside directors” within the meaning of applicable IRS regulations under Section 162 of the Code, a subcommittee of the Committee consisting of such of the members of the Committee as do so qualify. Any action by such a subcommittee shall be considered the action of the Committee for purposes of the Plan.

(c) Applicability. This Section 7.7 will apply only to those Covered Employees, or to those persons who the Committee determines are reasonably likely to become Covered Employees in the period covered by an Award, selected by the Committee to receive Qualified Performance-Based Awards. The Committee may, in its discretion, grant Awards to Covered Employees that do not satisfy the requirements of this Section 7.7.

(d) Discretion of Committee with Respect to Qualified Performance-Based Awards. Options may be granted as Qualified Performance-Based Awards in accordance with Section 7.1, except that the exercise price of any Option intended to qualify as a Qualified Performance-Based Award shall in no event be less that the Market Value of the Stock on the date of grant. Each Award intended to qualify as a Qualified Performance-Based Award, such as Restricted Stock, Restricted Stock Units (including Performance Stock Units), or Performance Units, shall be subject to satisfaction of one or more Performance Goals. The Committee will have full discretion to select the length of any applicable Restriction Period or Performance Period, the kind and/or level of the applicable Performance Goal, and whether the Performance Goal is to apply to the Company, a subsidiary of the Company or any division or business unit or to the individual. Any Performance Goal or Goals applicable to Qualified Performance-Based Awards shall be objective, shall be established not later than the earlier of ninety (90) days after the beginning of any applicable Performance Period or the expiration of twenty five percent (25%) of the Performance Period, provided that the achievement of targeted goals under the selected Performance Criteria for the Performance Period is substantially uncertain at such time (or at such other date as may be required or permitted for “performance-based compensation” under Section 162(m) of the Code) and shall otherwise meet the requirements of Section 162(m) of the Code, including the requirement that the outcome of the Performance Goal or Goals be substantially uncertain (as defined in the regulations under Section 162(m) of the Code) at the time established.

(e) Payment of Qualified Performance-Based Awards. A Participant will be eligible to receive payment under a Qualified Performance-Based Award which is subject to achievement of a Performance Goal or Goals only if the applicable Performance Goal or Goals are achieved within the applicable Performance Period, as determined by the Committee.

(f) Maximum Award Payable. The maximum Qualified Performance-Based Award payment to any one Participant under the Plan for a Performance Period is 50% of the total number of shares of Stock issuable under the Plan pursuant to Qualified Performance-Based Awards, as set forth in Section 4.2 above, or, if the Qualified Performance-Based Award is paid in cash, 50% of the total number of shares of Stock issuable under the Plan pursuant to Qualified Performance-Based Awards, as set forth in Section 4.2, multiplied by the Market Value of the Stock as of the date the Qualified Performance-Based Award is paid.

(g) Limitation on Adjustments for Certain Events. No adjustment of any Qualified Performance-Based Award pursuant to Section 8 shall be made except on such basis, if any, as will not cause such Award to provide other than “performance-based compensation” within the meaning of Section 162(m) of the Code.

7.8. Awards to Participants Outside the United States. The Committee may modify the terms of any Award under the Plan granted to a Participant who is, at the time of grant or during the term of the Award, resident or primarily employed outside of the United States in any manner deemed by the Committee to be necessary or appropriate in order that the Award shall conform to laws, regulations, and customs of the country in which the Participant is then resident or primarily employed, or so that the value and other benefits of the Award to the Participant, as affected by foreign tax laws and other restrictions applicable as a result of the Participant’s residence or employment abroad, shall be comparable to the value of such an Award to a Participant who is resident or primarily employed in the United States. The Committee may establish supplements to, or amendments, restatements, or alternative versions of the Plan for the purpose of granting and administrating any such modified Award. No such modification, supplement, amendment, restatement or alternative version may increase the share limit of Section 4.

8. Adjustment Provisions

8.1. Adjustment for Corporate Actions. All of the share numbers set forth in the Plan reflect the capital structure of the Company as of September 30, 2008. If subsequent to that date the outstanding shares of Stock (or any other securities covered by the Plan by reason of the prior application of this Section) are increased, decreased, or exchanged for a different number or kind of shares or other securities, or if additional shares or new or different shares or other securities are distributed with respect to shares of Stock, as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution with respect to such shares of Stock, an appropriate and proportionate adjustment will be made in (i) the maximum numbers and kinds of shares provided in Section 4, (ii) the numbers and kinds of shares or other securities subject to the then outstanding Awards, (iii) the exercise price for each share or other unit of any other securities subject to then outstanding Options and Stock Appreciation Rights (without change in the aggregate purchase price as to which such Options or Rights remain exercisable), and (iv) the repurchase price of each share of Restricted Stock then subject to a Risk of Forfeiture in the form of a Company repurchase right.

8.2. Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. In the event of any corporate action not specifically covered by the preceding Section, including but not limited to an extraordinary cash distribution on Stock, a corporate separation or other reorganization or liquidation, the Committee shall make such adjustment of outstanding Awards and their terms, if any, as it, in its sole discretion, deems equitable and appropriate in the circumstances. The Committee shall make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in this Section) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, if and to the extent the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

8.3. Related Matters. Any adjustment in Awards made pursuant to Section 8.1 or 8.2 shall be determined and made, if at all, by the Committee, acting in its sole discretion, and shall include any correlative modification of terms, including of Option exercise prices, rates of vesting or exercisability, Risks of Forfeiture, applicable repurchase prices for Restricted Stock, and Performance Goals and other financial objectives which the Committee may deem necessary or appropriate so as to ensure the rights of the Participants in their respective Awards are not substantially diminished nor enlarged as a result of the adjustment and corporate action other than as expressly contemplated in this Section 8. No fraction of a share shall be purchasable or deliverable upon exercise, but in the event any adjustment hereunder of the number of shares covered by an Award shall cause such number to include a fraction of a share, such number of shares shall be adjusted to the nearest smaller whole number of shares. No adjustment of an Option exercise price per share pursuant to this Section 8 shall result in an exercise price which is less than the par value of the Stock.

8.4. Transactions.

(a) Definition of Transaction. In this Section 8.4, “Transaction” means (1) any merger or consolidation of the Company with or into another entity as a result of which all of the Stock of the Company is converted into or exchanged for the right to receive cash, securities or other property or is cancelled, (2) any exchange of all of the Stock of the Company for cash, securities or other property, (3) any sale, transfer, or other disposition of all or substantially all of the Company’s assets to one or more other persons in a single transaction or series of related transactions or (4) any liquidation or dissolution of the Company.

(b) Treatment of Options and Stock Appreciation Rights. In a Transaction, the Committee may take any one or more of the following actions as to all or any (or any portion of) outstanding Options and Stock Appreciation Rights (together, “Rights”).

(1) Provide that such Rights shall be assumed, or substantially equivalent rights shall be provided in substitution therefor, by the acquiring or succeeding entity (or an affiliate thereof).

(2) Upon written notice to the holders, provide that the holders’ unexercised Rights will terminate immediately prior to the consummation of such Transaction unless exercised within a specified period following the date of such notice.

(3) Provide that outstanding Rights shall become exercisable in whole or in part prior to or upon the Transaction.

(4) Provide for cash payments, net of applicable tax withholdings, to be made to holders equal to the excess, if any, of (A) the acquisition price times the number of shares of Stock subject to a Right (to the extent the exercise price does not exceed the acquisition price) over (B) the aggregate exercise price for all such shares of Stock subject to the Right, in exchange for the termination of such Right. For this purpose, “acquisition price” means the amount of cash, and market value of any other consideration, received in payment for a share of Stock surrendered in a Transaction.

(5) Provide that, in connection with a liquidation or dissolution of the Company, Rights shall convert into the right to receive liquidation proceeds net of the exercise price thereof and any applicable tax withholdings.

(6) Any combination of the foregoing.

For purposes of paragraph (1) above, a Right shall be considered assumed, or a substantially equivalent right shall be considered to have been provided in substitution therefore, if following consummation of the Transaction the Right confers the right to purchase or receive the value of, for each share of Stock subject to the Right immediately prior to the consummation of the Transaction, the consideration (whether cash, securities or other property) received as a result of the Transaction by holders of Stock for each share of Stock held immediately prior to the consummation of the Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Stock); provided, however, that if the consideration received as a result of the Transaction is not solely common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof), the Committee may provide for the consideration to be received upon the exercise of Right to consist of or be based on solely common stock (or its equivalent) of the acquiring or succeeding entity (or an affiliate thereof) equivalent in value to the per share consideration received by holders of outstanding shares of Stock as a result of the Transaction.

(c) Treatment of Restricted Stock and Other Awards. As to outstanding Awards other than Options or Stock Appreciation Rights, upon the occurrence of a Transaction other than a liquidation or dissolution of the Company which is not part of another form of Transaction, the repurchase and other rights of the Company under each such Award shall inure to the benefit of the Company’s successor and shall, unless the Committee determines otherwise, apply to the cash, securities or other property which the Stock was converted into or exchanged for pursuant to such Transaction in the same manner and to the same extent as they applied to the Award. Upon the occurrence of a Transaction involving a liquidation or dissolution

of the Company which is not part of another form of Transaction, except to the extent specifically provided to the contrary in the instrument evidencing any Award or any other agreement between a Participant and the Company, all Risks of Forfeiture and Performance Goals, where otherwise applicable to any such Awards, shall automatically be deemed terminated or satisfied, as applicable.

(d) Related Matters. In taking any of the actions permitted under this Section 8.4, the Committee shall not be obligated to treat all Awards, all Awards held by a Participant, or all Awards of the same type, identically. Any determinations required to carry out the foregoing provisions of this Section 8.4, including but not limited to the market value of other consideration received by holders of Stock in a Transaction and whether substantially equivalent Rights have been substituted, shall be made by the Committee acting in its sole discretion.

9. Change of Control

Except as otherwise provided below, upon the occurrence of a Change of Control:

(a) any and all Options and Stock Appreciation Rights not already exercisable in full and not based on the achievement of Performance Goals shall Accelerate with respect to 100% of the shares for which such Options or Stock Appreciation Rights are not then exercisable;

(b) any Risk of Forfeiture applicable to Restricted Stock and Restricted Stock Units which is not based on achievement of Performance Goals shall lapse with respect to 100% of the Restricted Stock and Restricted Stock Units still subject to such Risk of Forfeiture immediately prior to the Change of Control; and

(c) all outstanding Awards of Restricted Stock and Restricted Stock Units conditioned on the achievement of Performance Goals or other business objectives and the target payout opportunities attainable under outstanding Performance Units shall be deemed to have been satisfied as of the effective date of the Change of Control as to a pro rata number of shares based on the assumed achievement of all relevant Performance Goals or objectives and the length of time within the Performance Period which has elapsed prior to the Change of Control. All such Awards of Performance Units and Restricted Stock Units shall be paid to the extent earned to Participants in accordance with their terms within thirty (30) days following the effective date of the Change of Control.

None of the foregoing shall apply, however, (i) in the case of a Qualified Performance-Based Award specifically designated as such by the Committee at the time of grant (except to the extent that such Award would continue to qualify as qualified performance based compensation as described in Section 162(m)(4)(C) of the Code and applicable guidance thereunder), (ii) in the case of any Award pursuant to an Award Agreement requiring other or additional terms upon a Change of Control (or similar event), or (iii) if specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges.

10. Settlement of Awards

10.1. In General. Options and Restricted Stock shall be settled in accordance with their terms. All other Awards may be settled in cash, Stock, or other Awards, or a combination thereof, as determined by the Committee at or after grant and subject to any contrary Award Agreement; provided however that Performance Stock Units shall be settled in cash, shares of Stock, or a combination thereof at the election of the Participant. The Committee may not require settlement of any Award in Stock pursuant to the immediately preceding sentence to the extent issuance of such Stock would be prohibited or unreasonably delayed by reason of any other provision of the Plan.

10.2. Violation of Law. Notwithstanding any other provision of the Plan or the relevant Award Agreement, if, at any time, in the reasonable opinion of the Company, the issuance of shares of Stock covered by an Award may constitute a violation of law, then the Company may delay such issuance and the delivery of a certificate for such shares until (i) approval shall have been obtained from such governmental agencies, other than the Securities and Exchange Commission, as may be required under any applicable law, rule, or regulation and (ii) in the case where such issuance would constitute a violation of a law administered by or a regulation of the Securities and Exchange Commission, one of the following conditions shall have been satisfied:

(a) the shares are at the time of the issue of such shares effectively registered under the Securities Act of 1933; or

(b) the Company shall have determined, on such basis as it deems appropriate (including an opinion of counsel in form and substance satisfactory to the Company) that the sale, transfer, assignment, pledge, encumbrance or other disposition of such shares or such beneficial interest, as the case may be, does not require registration under the Securities Act of 1933, as amended or any applicable State securities laws.

The Company shall make all reasonable efforts to bring about the occurrence of said events.

10.3. Corporate Restrictions on Rights in Stock. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the charter, certificate or articles, and by-laws, of the Company.

10.4. Investment Representations. The Company shall be under no obligation to issue any shares covered by any Award unless the shares to be issued pursuant to Awards granted under the Plan have been effectively registered under the Securities Act of 1933, as amended, or the Participant shall have made such written representations to the Company (upon which the Company believes it may reasonably rely) as the Company may deem necessary or appropriate for purposes of confirming that the issuance of such shares will be exempt from the registration requirements of that Act and any applicable state securities laws and otherwise in compliance with all applicable laws, rules and regulations, including but not limited to that the Participant is acquiring the shares for his or her own account for the purpose of investment and not with a view to, or for sale in connection with, the distribution of any such shares.

10.5. Registration. If the Company shall deem it necessary or desirable to register under the Securities Act of 1933, as amended or other applicable statutes any shares of Stock issued or to be issued pursuant to Awards granted under the Plan, or to qualify any such shares of Stock for exemption from the Securities Act of 1933, as amended or other applicable statutes, then the Company shall take such action at its own expense. The Company may require from each recipient of an Award, or each holder of shares of Stock acquired pursuant to the Plan, such information in writing for use in any registration statement, prospectus, preliminary prospectus or offering circular as is reasonably necessary for that purpose and may require reasonable indemnity to the Company and its officers and directors from that holder against all losses, claims, damage and liabilities arising from use of the information so furnished and caused by any untrue statement of any material fact therein or caused by the omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances under which they were made. In addition, the Company may require of any such person that he or she agree that, without the prior written consent of the Company or the managing underwriter in any public offering of shares of Stock, he or she will not sell, make any short sale of, loan, grant any option for the purchase of, pledge or otherwise encumber, or otherwise dispose of, any shares of Stock during the 180 day period commencing on the effective date of the registration statement relating to the underwritten public offering of securities. Without limiting the generality of the foregoing provisions of this Section 10.5, if in connection with any underwritten public offering of securities of the Company the managing underwriter of such offering requires that the Company’s directors and officers enter into a lock-up agreement containing provisions that are more restrictive than the provisions set forth in the preceding sentence, then (a) each holder of shares of Stock acquired pursuant to the Plan (regardless of whether such person has complied or complies with the provisions of clause (b) below) shall be bound by, and shall be deemed to have agreed to, the same lock-up terms as those to which the Company’s directors and officers are required to adhere; and (b) at the request of the Company or such managing underwriter, each such person shall execute and deliver a lock-up agreement in form and substance equivalent to that which is required to be executed by the Company’s directors and officers.

10.6. Placement of Legends; Stop Orders; Etc. Each share of Stock to be issued pursuant to Awards granted under the Plan may bear a reference to the investment representation made in accordance with Section 10.4 in addition to any other applicable restriction under the Plan, the terms of the Award and that no registration statement has been filed with the Securities and Exchange Commission in respect to such shares of Stock. All certificates for shares of Stock or other securities delivered under the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations, and other requirements of any stock exchange upon which the Stock is then listed, and any applicable

federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

10.7. Tax Withholding. Whenever shares of Stock are issued or to be issued pursuant to Awards granted under the Plan, the Company shall have the right to require the recipient to remit to the Company an amount sufficient to satisfy federal, state, local or other withholding tax requirements if, when, and to the extent required by law (whether so required to secure for the Company an otherwise available tax deduction or otherwise) prior to the delivery of any certificate or certificates for such shares. The obligations of the Company under the Plan shall be conditional on satisfaction of all such withholding obligations and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the recipient of an Award. However, in such cases Participants may elect, subject to the approval of the Committee, acting in its sole discretion, to satisfy an applicable withholding requirement, in whole or in part, by having the Company withhold shares to satisfy their tax obligations. Participants may only elect to have Shares withheld having a Market Value on the date the tax is to be determined equal to the minimum statutory total tax which could be imposed on the transaction. All elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to any restrictions or limitations that the Committee deems appropriate.

11. Reservation of Stock

The Company shall at all times during the term of the Plan and any outstanding Awards granted hereunder reserve or otherwise keep available such number of shares of Stock as will be sufficient to satisfy the requirements of the Plan (if then in effect) and the Awards and shall pay all fees and expenses necessarily incurred by the Company in connection therewith.

12. Limitation of Rights in Stock; No Special Service Rights

A Participant shall not be deemed for any purpose to be a stockholder of the Company with respect to any of the shares of Stock subject to an Award, unless and until a certificate shall have been issued therefor and delivered to the Participant or his agent. Any Stock to be issued pursuant to Awards granted under the Plan shall be subject to all restrictions upon the transfer thereof which may be now or hereafter imposed by the Certificate of Incorporation and the By-laws of the Company. Nothing contained in the Plan or in any Award Agreement shall confer upon any recipient of an Award any right with respect to the continuation of his or her employment or other association with the Company (or any Affiliate), or interfere in any way with the right of the Company (or any Affiliate), subject to the terms of any separate employment or consulting agreement or provision of law or corporate articles or by-laws to the contrary, at any time to terminate such employment or consulting agreement or to increase or decrease, or otherwise adjust, the other terms and conditions of the recipient’s employment or other association with the Company and its Affiliates.

13. Unfunded Status of Plan

The Plan is intended to constitute an “unfunded” plan for incentive compensation, and the Plan is not intended to constitute a plan subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or payments with respect to Options, Stock Appreciation Rights and other Awards hereunder, provided, however, that the existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

14. Nonexclusivity of the Plan

Neither the adoption of the Plan by the Board nor the submission of the Plan to the stockholders of the Company shall be construed as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including without limitation, the granting of stock options and restricted stock other than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

15. Termination and Amendment of the Plan

15.1. Termination or Amendment of the Plan. The Board may at any time terminate the Plan or make such modifications to the Plan as it shall deem advisable. Unless the Board otherwise expressly provides, no termination or amendment of the Plan shall affect the terms of any Award outstanding on the date of such termination or amendment.

15.2. Termination or Amendment of Outstanding Awards. The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, provided that the Award as amended is consistent with the terms of the Plan. Also within the limitations of the Plan, the Committee may modify, extend or assume outstanding Awards or may accept the cancellation of outstanding Awards or of outstanding stock options or other equity-based compensation awards granted by another issuer in return for the grant of new Awards for the same or a different number of shares and on the same or different terms and conditions (including but not limited to the exercise price of any Option). Furthermore, the Committee may at any time (a) offer to buy out for a payment in cash or cash equivalents an Award previously granted or (b) authorize the recipient of an Award to elect to cash out an Award previously granted, in either case at such time and based upon such terms and conditions as the Committee shall establish.

15.3. Limitations on Amendments, Etc. No amendment or modification of the Plan by the Board, or of an outstanding Award by the Committee, shall impair the rights (including, without limitation, the terms of any Performance Goal or Performance Period under any Qualified Performance-Based Award) of the recipient of any Award outstanding on the date of such amendment or modification or such Award, as the case may be, without the Participant’s consent; provided, however, that no such consent shall be required if the Board or Committee, as the case may be, determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the Award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code. No Option may be amended or modified to effect the repricing of such Option without the approval of the stockholders of the Company.

16. Notices and Other Communications

Any notice, demand, request or other communication hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by first class registered, certified or overnight mail, postage prepaid, or telecopied with a confirmation copy by regular, certified or overnight mail, addressed or telecopied, as the case may be, (i) if to the recipient of an Award, at his or her residence address last filed with the Company and (ii) if to the Company, at its principal place of business, addressed to the attention of its Treasurer, or to such other address or telecopier number, as the case may be, as the addressee may have designated by notice to the addressor. All such notices, requests, demands and other communications shall be deemed to have been received: (i) in the case of personal delivery, on the date of such delivery; (ii) in the case of mailing, when received by the addressee; and (iii) in the case of facsimile transmission, when confirmed by facsimile machine report.

17. Governing Law

The Plan and all Award Agreements and actions taken thereunder shall be governed, interpreted and enforced in accordance with the laws of the State of Delaware, without regard to the conflict of laws principles thereof.

EX-10.2 7 v129591_ex10-2.htm

EXHIBIT 10.2

HIGHBURY FINANCIAL INC.

2008 EXECUTIVE LONG TERM INCENTIVE PLAN

1. Purpose. The purpose of this Plan is to provide certain executive officers of the Company with incentive compensation based upon the level of achievement of financial, business and other performance criteria. This Plan is intended to permit the payment of bonuses that may qualify as performance-based compensation under Code Section 162(m).

2. Definitions. As used in this Plan, the following terms shall have the following meanings:

(a) Affiliate means any corporation, partnership, limited liability company, business trust, or other entity controlling, controlled by or under common control with the Company.

(b) Board means the Board of Directors of the Company.

(c) Bonus means a cash payment made pursuant to this Plan with respect to a particular Performance Period, determined pursuant to Section 6 below.

(d) Bonus Formula means, as to any Performance Period, the formula established by the Committee pursuant to Section 5 in order to determine the Bonus amounts, if any, to be paid to Participants based upon the level of achievement of the selected Performance Goals. The formula may differ from Participant to Participant. The Bonus Formula shall be of such a nature that an objective third party having knowledge of all the relevant facts could determine whether targeted Performance Goals have been achieved.

(e) Cause means the Participant’s (i) refusal or neglect to perform substantially his employment-related or other duties with respect to the Company, (ii) theft, fraud, embezzlement, falsification of Company, subsidiary or client documents, misappropriation of funds or other assets of the Company or any of its subsidiaries, willful misconduct, or breach of fiduciary duty or duty of loyalty, (iii) conviction of or entering a plea of guilty or nolo contendere to a crime constituting a felony, or willful violation of any law, rule or regulation (other than a traffic violation or similar offense or violation outside of the course of employment or other association with the Company which in no way adversely affects the Company, any of its subsidiaries or their reputation or the ability of the Participant to perform his duties to the Company or to represent the Company or any of its subsidiaries), (iv) breach of any written covenant or agreement with the Company or any of its subsidiaries not to disclose any information pertaining to the Company or any of its subsidiaries or not to compete or interfere with the Company or any of its subsidiaries, or (v) refusal or failure to implement any lawful instruction issued by the Board.

(f) Change of Control shall have the meaning set forth in the Company’s 2008 Equity Incentive Plan.

(g) Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto, and any regulations issued from time to time thereunder.

(h) Committee means the Compensation Committee of the Board, which in general is responsible for the administration of the Plan, as provided in Section 4 of this Plan. For any period during which no such committee is in existence, “Committee” shall mean the “outside directors,” within the meaning of applicable Internal Revenue Service regulations under Section 162 of the Code, of the Board, and all authority and responsibility assigned to the Committee under the Plan shall be exercised, if at all, by such outside directors of the Board.

(i) Company means Highbury Financial Inc.

(j) Disability means a total and permanent disability that causes a Participant to be eligible to receive long term disability benefits under the long term disability plan maintained by the Company. If the Company does not maintain a long term disability plan, Disability means a permanent and total disability as defined in Section 22(e)(3) of the Code. In the event of a dispute, the determination whether

a Participant has suffered a Disability shall be made by the Committee in its sole discretion and may be supported by the advice of a physician competent in the area to which such Disability relates.

(k) GAAP means generally acceptable accounting principles as used in the United States.

(l) Good Reason means the occurrence of any of the following conditions arising without the consent of the Participant which are not cured by the Company within thirty (30) days following written notice thereof by the Participant to the Company, which is given to the Company within ninety (90) days following the initial existence of the condition:

(1) A material diminution in the Participant’s base compensation or in the Participant’s opportunity to earn incentive compensation.

(2) A material diminution in the Participant’s authority, duties, or responsibilities.

(3) A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required to report, including a requirement, if the Participant is a member of the Board, that the Participant report to a corporate officer instead of reporting directly to the Board.

(4) A material change in the geographic location at which the Participant must perform the services.

(5) Any other action or inaction that constitutes a material breach by the Company of an employment, consulting or similar agreement, if any, between the Company and the Participant.

(m) Market Value means the value of a common share of the Company’s stock on a particular date determined by such methods or procedures as may be established by the Committee. Unless otherwise determined by the Committee, the Market Value of a common share as of any date is: (i) if the common shares of the Company are listed on any national securities exchange, the closing price for a common share as reported on the primary national securities exchange on which the common shares are then listed for that date or, if no closing price is reported for that date, the closing price on the next preceding date for which a closing price was reported; (ii) if the common shares of the Company are not listed on any national securities exchange but are traded in the over-the-counter market bulletin board or pink sheets on a last sale basis, the closing sale price reported on such date, or, if there is no such sale on that date then on the last preceding date on which such a sale was reported; and (iii) if the common shares of the Company are not listed on an exchange or traded in the over-the-counter market, or representative quotes are not otherwise available, the amount determined by the Board in good faith to be the fair market value per common share on such date, on a fully diluted basis.

(n) Participant means, with respect to a Performance Period, an executive officer of the Company who is selected by the Committee in writing to participate in the Plan with respect to such Performance Period.

(o) Performance-Based Compensation means compensation that qualifies as “performance-based compensation” within the meaning of Code Section 162(m).

(p) Performance Criteria mean the criteria that the Committee selects for purposes of establishing the Performance Goal or Performance Goals for a Participant for a Performance Period, which may be measured on a GAAP or non-GAAP basis, as determined by the Committee. The Performance Criteria used to establish Performance Goals are limited to: (i) EBITDA defined as earnings before interest, taxes, depreciation, amortization and other non-cash expenses (including, without limitation, any charges related to the Plan or any other equity-based or cash-based incentive compensation plan of the Company), (ii) “cash net income,” defined as net income before amortization, intangible-related deferred taxes, depreciation and other non-cash expenses (including, without limitation, any charges related to the Plan and any other equity-based or cash-based incentive compensation plan of the Company), (iii) cash flow (before or after dividends), (iv) cash net income (as defined above) per share, calculated based on diluted average shares outstanding for any measurement period using the treasury stock method to determine the number of common share equivalents issuable pursuant to any dilutive securities, excluding any common shares issued or issuable pursuant to awards under the 2008 Equity Incentive Plan or under any other

equity-based compensation plan of the Company, (v) Market Value or other stock price, (vi) return on equity, (vii) stockholder return or total stockholder return, (viii) return on capital (including, without limitation, return on total capital or return on invested capital), (ix) return on investment, (x) return on assets or net assets, (xi) market capitalization, (xii) economic value added, (xiii) debt leverage (debt to capital), (xiv) revenue, (xv) sales or net sales, (xvi) backlog, (xvii) income, pre-tax income or net income, (xviii) operating income or pre-tax profit, (xix) operating profit, net operating profit or economic profit, (xx) gross margin, operating margin or profit margin, (xxi) return on operating revenue or return on operating assets, (xxii) cash from operations, (xxiii) operating ratio, (xxiv) operating revenue, (xxv) market share improvement, (xxvi) general and administrative expenses and (xxvii) customer service.

(q) Performance Goals means, for a Performance Period, the written goal or goals established by the Committee for the Performance Period based upon the Performance Criteria. The Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, subsidiary, or an individual, either individually, alternatively or in any combination, applied to either the Company as a whole or to a business unit or affiliate, either individually, alternatively or in any combination, and measured either quarterly, annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparison group, in each case as specified by the Committee. The Committee will, in the manner and within the time prescribed by Section 162(m) of the Code, objectively define the manner of calculating the Performance Goal or Goals it selects to use for such Performance Period for such Participant. The Performance Goals may differ from Participant to Participant and from Bonus to Bonus.

(r) Performance Period means the one or more periods of time, which may be of varying and overlapping durations, selected by the Committee, over which the attainment of one or more Performance Goals or other business objectives will be measured for purposes of determining a Participant’s right to, and the payment of, any Bonus; provided, however, that:

(1) no Performance Period may end prior to December 31, 2010;

(2) no Performance Period may end after December 31, 2029; and

(3) no more than one Performance Period with respect to any one Participant may expire during any period of twelve (12) months.

(s) Plan means this Highbury Financial Inc. 2008 Executive Long Term Incentive Plan, as it may be amended from time to time.

(t) Predetermination Date means, for a Performance Period, (i) the earlier of 90 days after commencement of the Performance Period or the expiration of 25% of the Performance Period, provided that the achievement of targeted goals under the selected Performance Criteria for the Performance Period is substantially uncertain at such time; or (ii) such other date by which a performance goal must be pre-established pursuant to Code Section 162(m).

3. Eligibility. The individuals eligible to participate in the Plan for a given Performance Period shall be executive officers of the Company who are designated by the Committee, in writing, in its sole discretion. No person shall be automatically entitled to participate in the Plan.

4. Plan Administration.

(a) The Committee shall be responsible for the requirements for qualifying compensation as Performance-Based Compensation. Subject to the limitations on Committee discretion imposed under Code Section 162(m), the Committee shall have such powers as may be necessary to discharge its duties hereunder. The Committee shall be responsible for the general administration and interpretation of this Plan and for carrying out its provisions, including the full discretionary authority to construe and interpret the terms of this Plan, determine the manner and time of payment of any Bonuses, prescribe forms and procedures for purposes of Plan participation and distribution of Bonuses, adopt rules and regulations and

take such actions as it deems necessary or desirable for the proper administration of this Plan. The Committee may delegate its administrative tasks to Company employees or others as appropriate for proper administration of this Plan.

(b) Any interpretation, rule or decision by the Committee or its delegate(s) that is not inconsistent with the provisions of this Plan shall be conclusive and binding on all persons, and shall be given the maximum deference permitted by law.

5. Bonus Awards.

(a) The Committee may grant from time to time and at any time prior to the termination of the Plan one or more Bonus awards to any eligible individual. Each grant of a Bonus award shall be subject to all applicable terms and conditions of the Plan and such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee may prescribe. No prospective Participant shall have any rights with respect to a Bonus award unless and until such Participant shall have complied with the applicable terms and conditions of such Bonus award, including if applicable delivering a fully executed copy of any agreement evidencing an award to the Company.

(b) Bonus awards shall be granted prior to the Predetermination Date for a Performance Period and shall be evidenced in a writing, which shall set forth the following terms:

(1) the Performance Period;

(2) the positions or names of the individuals who will be Participants for the Performance Period;

(3) the applicable Performance Goals for each Participant for selected Performance Criteria during the Performance Period, which may be for an individual Participant or a group of Participants; and

(4) the applicable Bonus Formula for each Participant, which may be for an individual Participant or a group of Participants.

6. Determination of Amount of Bonus.

(a) Calculation. After the end of each Performance Period, the Committee shall certify in writing (to the extent required under Code Section 162(m)) the extent to which the Performance Goals applicable to each Participant for the Performance Period were achieved or exceeded. The Bonus for each Participant shall be determined by applying the Bonus Formula to the level of actual performance that has been certified by the Committee.

(b) Adjustment. To the extent consistent with Section 162(m) of the Code, the Committee may appropriately adjust any evaluation of performance against a Performance Goal to exclude any of the following events that occurs during a Performance Period: (i) asset write-downs, (ii) litigation, claims, judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results, (iv) accruals for reorganization and restructuring programs and (v) any extraordinary, unusual, non-recurring or non-comparable items (A) as described in Accounting Principles Board Opinion No. 30, (B) as described in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Annual Report to stockholders for the applicable year, or (C) publicly announced by the Company in a press release or conference call relating to the Company’s results of operations or financial condition for a completed quarterly or annual fiscal period. Without limiting the generality of the foregoing, where evaluation of achievement of a Performance Goal is based in part upon the number of common shares or other securities of the Company outstanding from time to time, such as cash net income per share, if, subsequent to the date on which the Committee grants a Bonus award, the outstanding common shares of the Company (or other applicable securities of the Company) are increased, decreased, or exchanged for a different number or kind of securities, or if additional securities or new or different securities are distributed with respect to such securities, as a result of a reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split, or other similar distribution with respect to such securities, the Committee shall make

an appropriate and proportionate adjustment in the numbers and kinds of common shares or other securities subject to the then outstanding Bonus awards.

(c) Maximum Bonus Amount. The aggregate amount of any Bonus payable to any one Participant in any calendar year with respect to all Performance Periods shall not exceed an amount equal to the product of (i) the difference, if any, between the Company’s daily weighted average market capitalization during the last calendar year of the Performance Period and the greater of (A) the Company’s daily weighted average market capitalization during the twenty consecutive trading days ending on or immediately prior to December 31 of the year immediately preceding the beginning of the Performance Period, and (B) one hundred million dollars ($100,000,000), and (ii) one percent (1%). The aggregate amount of Bonuses payable to all Participants in any calendar year with respect to all Performance Periods shall not exceed twice such amount. The aggregate amount of all Bonuses payable to any one Participant with respect to all Performance Periods under the Plan shall not exceed the amount determined pursuant to the first sentence of this Section 6(c) multiplied by twenty (20), the maximum number of possible Performance Periods with respect to any one Participant over the life of the Plan. The aggregate amount of all Bonuses payable to all Participants with respect to all Performance Periods under the Plan shall not exceed twice such amount. Market capitalization will be calculated based on the aggregate number of common shares of the Company issued and outstanding, including common share equivalents outstanding under the treasury stock method for derivative instruments (e.g., convertible securities, warrants and options).

7. Payment of Bonuses.

(a) Timing of Distributions. The Company shall distribute amounts payable to Participants as soon as is administratively practicable following the determination and written certification of the Committee for a Performance Period, but in any event within the two month period immediately following the end of the Performance Period; provided, however, that, if any Bonus fails to qualify as Performance-Based Compensation, and the Company’s deduction with respect to all or any part of such Bonus is restricted by Section 162(m), the Committee may delay any such payment to a future tax year of the Company in which the Company’s deduction for such payment would no longer be restricted by application of Code Section 162(m); and further provided that such delay in payment is made in accordance with Treasury Regulations Sections 1.409A-1(b)(4)(ii) or 1.409A-2(b)(7)(i).

(b) Payment. Except as set forth in paragraph (c) below, the payment of a Bonus, if any (as determined by the Committee at the end of the Performance Period), with respect to a specific Performance Period requires that the Participant be in active service with the Company or an Affiliate on the last day of the applicable Performance Period. At no time before the last day of the applicable Performance Period shall any Participant accrue any vested interest or right whatsoever under this Plan except as otherwise stated in this Plan.

(c) Certain Terminations. Notwithstanding paragraph (b) above, if a Participant’s employment or other association with the Company terminates prior to the last day of a Performance Period due to (i) termination for any reason within the twenty-four (24) month period following a Change of Control of the Company, (ii) Disability, (iii) death, (iv) involuntary termination without Cause, or (v) voluntary termination for Good Reason, the Participant (or in the event of death, the Participant’s estate) shall receive a Bonus with respect to such Performance Period, subject to achievement of the Performance Goals for such Performance Period as certified by the Committee, prorated through the Participant’s termination date, at such time, subject to such terms and conditions, and calculated in such manner, as the Committee may prescribe consistent with the requirements of Section 162(m) of the Code.

8. Section 409A. This Plan is generally expected to provide Bonus payments that qualify as short-term deferrals exempt from the requirements of Section 409A of the Code. In the event any amount payable under this Plan does not qualify for treatment as a exempt short-term deferral, it is intended that such amount will be paid in a manner that will satisfy the requirements of Section 409A(a)(2), (3) and (4) of the Code and applicable Internal Revenue Service guidance and, to the extent necessary to achieve compliance, shall be modified, replaced, or terminated at the discretion of the Committee.

9. Termination and Amendment.

(a) Termination and Amendment. The Board may at any time terminate the Plan or make such modifications to the Plan as it shall deem advisable. Unless the Board otherwise expressly provides, no termination or amendment of the Plan shall affect the terms of any Bonus award outstanding on the date of such termination or amendment. To the extent required under applicable law, including Code Section 162(m), Plan amendments shall be subject to stockholder approval.

(b) Termination or Amendment of Outstanding Awards. The Committee may amend the terms of any Bonus award theretofore granted, prospectively or retroactively, provided that the Bonus award as amended is consistent with the terms of the Plan.

(c) Limitations on Amendments, Etc. No amendment or modification of the Plan by the Board, or of an outstanding Bonus award by the Committee, shall impair the rights (including, without limitation, the terms of any Bonus Formula, Performance Goal or Performance Period), of the recipient of any Bonus award outstanding on the date of such amendment or modification or such Bonus award, as the case may be, without the Participant’s consent; provided, however, that no such consent shall be required if the Board or Committee, as the case may be, determines in its sole discretion and prior to the date of any Change of Control that such amendment or alteration either is required or advisable in order for the Company, the Plan or the award to satisfy any law or regulation, including without limitation the provisions of Section 409A of the Code. Notwithstanding the foregoing, no amendment, alteration, suspension or discontinuation of the Plan or any Bonus award shall be made which would (y) increase the amount of compensation payable pursuant to any Bonus, or (z) cause compensation that is, or may become, payable hereunder to fail to qualify as Performance-Based Compensation.

10. Withholding. Distributions pursuant to this Plan shall be subject to all applicable taxes and contributions required by law to be withheld in accordance with procedures established by the Company.

11. No Additional Participant Rights. The selection of an individual for participation in this Plan shall not give such Participant any right to be retained in the employ of or in any other position with the Company, and the right of the Company to dismiss such Participant or to terminate any arrangement pursuant to which any such Participant provides services to the Company, with or without cause, is specifically reserved. No person shall have claim to a Bonus under this Plan, except as otherwise provided for herein, or to continued participation under this Plan. There is no obligation for uniformity of treatment of Participants under this Plan. The benefits provided for Participants under this Plan shall be in addition to and shall in no way preclude other forms of compensation to or in respect of such Participants. It is expressly agreed and understood that a Participant’s employment or other service arrangement with the Company is terminable at the will of either party and, if such Participant is a party to an employment or consulting contract with the Company, in accordance with the terms and conditions of the Participant’s agreement.

12. Successors. All obligations of the Company with respect to Bonuses granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.

13. Funding. Each Bonus under this Plan shall be paid solely from general assets of the Company. This Plan is unfunded and unsecured; nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right to payment of a Bonus other than as an unsecured general creditor with respect to any payment to which he or she may be entitled.

14. Nonassignment. The rights of a Participant under this Plan shall not be assignable or transferable by the Participant except by will or the laws of descent and distribution.

15. Severability. If any portion of this Plan is deemed to be in conflict with local law, that portion of the Plan, and that portion only, will be deemed void under local law. All other provisions of the Plan will remain in effect. Furthermore, if any provision of this Plan would cause Bonuses not to constitute Performance-Based Compensation, that provision shall be severed from, and shall be deemed not to be a part of, the Plan, but the other provisions hereof shall remain in full force and effect.

16. Governing Law. This Plan and all actions taken hereunder shall be governed by the laws of the State of Delaware, without regard to the conflict of laws principles thereof.

17. Effective Date and Term of Plan. This Plan shall be effective as of January 1, 2009, contingent upon approval of the Plan by the stockholders of the Company at the next Company annual stockholders’ meeting following the date that the Board adopts this Plan in accordance with Code Section 162(m) and the regulations thereunder. This Plan shall terminate on December 31, 2029, unless earlier terminated pursuant to Section 9 hereof; provided, however, that, unless the Board otherwise expressly provides, no termination of the Plan shall affect the terms of any Bonus award outstanding on the date of such termination.

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

SCHEDULE 14A* (Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )

HIGHBURY FINANCIAL INC.

HIGHBURY FINANCIAL INC.999 Eighteenth Street, Suite 3000Denver, Colorado 80202

To Our Stockholders:

HIGHBURY FINANCIAL INC.999 Eighteenth Street, Suite 3000Denver, Colorado 80202

NOTICE OF 2008 ANNUAL MEETING OF STOCKHOLDERS

To Our Stockholders:

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

HIGHBURY FINANCIAL INC.999 Eighteenth Street, Suite 3000Denver, Colorado 80202

PROXY STATEMENT GENERAL INFORMATION

PROPOSAL NO. 1 ELECTION OF DIRECTORS

Information Concerning Nominees to Our Board

Information About Our Non-Nominee Directors and Officers

Number and Terms of Directors

Independence of Directors

Section 16(a) Beneficial Ownership Reporting Compliance

Code of Ethics

Information Regarding Our Board of Directors and Its Committees

Legal Proceedings

EXECUTIVE COMPENSATION

Executive and Director Compensation

Compensation Committee Interlocks and Insider Participation

COMPENSATION COMMITTEE REPORT

AUDIT COMMITTEE REPORT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Certain Relationships and Related Transactions

Agreements Related to Share Issuances to Related Parties

Office Services Agreement

Financial Advisor Engagement

Conflicts of Interest

Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons

PROPOSAL NO. 2 APPROVAL OF HIGHBURY FINANCIAL INC. 2008 EQUITY INCENTIVE PLAN

Maximum Number of Shares

PROPOSAL NO. 3 APPROVAL OF HIGHBURY FINANCIAL INC. 2008 EXECUTIVE LONG TERM INCENTIVE PLAN

MISCELLANEOUS

Stockholder Proposals

Stockholder Communication with Our Board

Other Matters

Annual Report on Form 10-K

PROXY

Highbury Financial Inc. 999 Eighteenth Street, Suite 3000 Denver, Colorado 80202

ANNUAL MEETING OF STOCKHOLDERS

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF HIGHBURY FINANCIAL INC.

PROXY

THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTIONS ARE GIVEN, THIS PROXY WILL BE VOTED “FOR” PROPOSAL NUMBER 1, PROPOSAL NUMBER 2, AND PROPOSAL NUMBER 3. THE HIGHBURY BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE FOLLOWING PROPOSALS.

ANY VOTES RECEIVED AFTER A MATTER HAS BEEN VOTED UPON WILL NOT BE COUNTED.

Sign exactly as name appears on this proxy card. If shares are held jointly, each holder should sign. Executors, administrators, trustees, guardians, attorneys and agents should give their full titles. If stockholder is a corporation, sign in full name by an authorized officer.

HIGHBURY FINANCIAL INC. 2008 EQUITY INCENTIVE PLAN

HIGHBURY FINANCIAL INC.

TABLE OF CONTENTS

HIGHBURY FINANCIAL INC.

2008 EQUITY INCENTIVE PLAN

1. Purpose

2. Definitions

3. Term of the Plan

4. Stock Subject to the Plan

5. Administration

6. Authorization of Grants

7. Specific Terms of Awards

8. Adjustment Provisions

9. Change of Control

10. Settlement of Awards

11. Reservation of Stock

12. Limitation of Rights in Stock; No Special Service Rights

13. Unfunded Status of Plan

14. Nonexclusivity of the Plan

15. Termination and Amendment of the Plan

16. Notices and Other Communications

17. Governing Law

HIGHBURY FINANCIAL INC. 2008 EXECUTIVE LONG TERM INCENTIVE PLAN

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A*
(Rule 14a-101)

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )

HIGHBURY FINANCIAL INC.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

HIGHBURY FINANCIAL INC.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

HIGHBURY FINANCIAL INC.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

PROXY STATEMENT

GENERAL INFORMATION

PROPOSAL NO. 1

ELECTION OF DIRECTORS

PROPOSAL NO. 2

APPROVAL OF HIGHBURY FINANCIAL INC.
2008 EQUITY INCENTIVE PLAN

PROPOSAL NO. 3

APPROVAL OF HIGHBURY FINANCIAL INC.
2008 EXECUTIVE LONG TERM INCENTIVE PLAN

Highbury Financial Inc.
999 Eighteenth Street, Suite 3000
Denver, Colorado 80202

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF HIGHBURY FINANCIAL INC.

HIGHBURY FINANCIAL INC.

2008 EQUITY INCENTIVE PLAN

HIGHBURY FINANCIAL INC.

2008 EXECUTIVE LONG TERM INCENTIVE PLAN