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ITEM 1—Election of Equity Directors
(Continued)
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Dennis A.
Suskind
Age:
73
Director since:
2008
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Public Directorship:
Bridgehampton National Bank
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Mr. Suskind joined J. Aron & Company in 1961 where he served as Executive Vice President and was responsible for the worldwide precious metal trading
operations. In 1980, Mr. Suskind became a general partner of Goldman Sachs, upon its acquisition of J. Aron & Company, until his retirement in 1990. During his tenure in trading metals, Mr. Suskind served as Vice Chairman of
NYMEX, Vice Chairman of COMEX, a member of the board of the Futures Industry Association, a member of the board of International Precious Metals Institute, and a member of the boards of the Gold and Silver Institutes in Washington, D.C.
Mr. Suskind currently serves as Vice Chairman of the Board of Bridgehampton National Bank. Mr. Suskind previously served on the board of NYMEX Holdings, Inc. until our merger in 2008.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
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9
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ITEM 1—Election of Equity Directors
(Continued)
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DIRECTOR ATTRIBUTES
We believe all of our board members have an inquisitive and objective perspective, practical wisdom and mature judgment. In addition, the following highlights the
key characteristics the board believes qualifies its current members to serve the interests of our shareholders. This summary, however, is not meant to be a complete description of all of the skills and attributes of our board members. Additional
details on our individual directors and director nominees are set forth in their individual biographies. The Class B nominees are nominated by a separate nominating committee. Therefore, the board has not made an assessment of the attributes of the
Class B nominees who are not currently members of the board other than whether they may be classified as independent.
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ATTRIBUTE
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DIRECTORS AND DIRECTOR NOMINEES WITH
ATTRIBUTES
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Industry Experience
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Possesses an understanding of our markets as a result of trading our products,
serving as an officer of a firm which trades our products or working in the financial services industry.
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Terrence A. Duffy
Phupinder S. Gill
Jeffrey M. Bernacchi
Timothy S. Bitsberger
Charles P. Carey
Elizabeth A. Cook
Martin J. Gepsman
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William W. Hobert
Leo Melamed
William P. Miller II
James E. Oliff
Ronald A. Pankau
Alex J. Pollock
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John F. Sandner
Terry L. Savage
William R. Shepard
Howard J. Siegel
Dennis A. Suskind
David J. Wescott
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Independence
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Satisfies applicable standards of independence.
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Jeffrey M. Bernacchi
Timothy S. Bitsberger
Charles P. Carey
Dennis H. Chookaszian
Bradley S. Cohen
Elizabeth A. Cook
Michael J. Downs
Ana Dutra
Martin J. Gepsman
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Larry G. Gerdes
Daniel R. Glickman
William W. Hobert
Patrick W. Maloney
William P. Miller II
Douglas M. Monieson
James E. Oliff
Ronald A. Pankau
Jeremy J. Perlow
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Alex J. Pollock
Terry L. Savage
William R. Shepard
Howard J. Siegel
Dennis A. Suskind
David J. Wescott
James J. Zellinger
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CFTC Public Director
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Satisfies the CFTC definition of public director.
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Timothy S. Bitsberger
Ana Dutra
Larry G. Gerdes
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Daniel R. Glickman
William P. Miller II
Alex J. Pollock
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Terry L. Savage
Dennis A. Suskind
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Government Relations/Regulatory/Public Policy
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Experience interacting with our regulators and members of government or prior
service in government.
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Terrence A. Duffy
Timothy S. Bitsberger
Charles P. Carey
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Daniel R. Glickman
Leo Melamed
William P. Miller II
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Ronald A. Pankau
Alex J. Pollock
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Management Experience
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Experience as a chief executive officer, president or senior vice president of a
company or a significant subsidiary, operating division or business unit.
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Terrence A. Duffy
Phupinder S. Gill
Timothy S. Bitsberger
Dennis H. Chookaszian
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Ana Dutra
Larry G. Gerdes
Daniel R. Glickman
James E. Oliff
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Ronald A. Pankau
Alex J. Pollock
Dennis A. Suskind
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Financial Expertise
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Experience as a chief financial officer or similar financial oversight
experience.
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Dennis H. Chookaszian
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Larry G. Gerdes
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William P. Miller II
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Professional Accreditations
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Possesses an advanced degree.
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Jeffrey M. Bernacchi
Dennis H. Chookaszian
Ana Dutra
Larry G. Gerdes
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Daniel R. Glickman
Leo Melamed
William P. Miller II
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James E. Oliff
Alex J. Pollock
John F. Sandner
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Risk Management Experience
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Experience in overseeing risk management processes and procedures.
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Jeffrey M. Bernacchi
Charles P. Carey
Phupinder S. Gill
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Dennis H. Chookaszian
Leo Melamed
William P. Miller II
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John F. Sandner
William R. Shepard
David J. Wescott
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Other Public Company Directorship
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Experience serving as a director of another publicly traded company.
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Phupinder S. Gill
Charles P. Carey
Dennis H. Chookaszian
Larry G. Gerdes
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Daniel R. Glickman
William P. Miller II
James E. Oliff
Alex J. Pollock
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John F. Sandner
Terry L. Savage
Dennis A. Suskind
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10
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|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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Corporate Governance
|
CME Group is committed to good corporate governance. By aligning our governance approach with best practices, our company is able to strengthen board and management accountability, promote long-term shareholder
value and sustain continued success.
The board of directors has established corporate governance principles which provide a framework for our
effective governance. Our governance committee regularly reviews trends and best practices in corporate governance. They advise our board of directors and management in an effort to strengthen existing governance practices and develop new policies
that make us a better company. Below is an overview of the Company’s governance highlights and materials.
GOVERNANCE HIGHLIGHTS
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•
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Annual election of directors
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•
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Majority voting for directors
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•
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Confidential shareholder voting
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•
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Quarterly executive sessions of independent directors
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•
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Board and committee evaluations and individual peer director evaluations
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•
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Active risk oversight by the full board, a stand-alone risk committee and other committees with oversight responsibilities based on areas of focus and expertise
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•
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Independent lead director
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•
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More than 80 percent of the board is considered independent and approximately thirty-five percent is considered “public” directors under applicable
CFTC regulations
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•
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Policy restricting the pledging of shares of our Class A common stock
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•
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Orientation for newly elected board members
|
CORPORATE GOVERNANCE MATERIALS
You can access the following governance materials by visiting
http://investor.cmegroup.com/investor-relations
under “Corporate Governance.”
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•
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Corporate Governance Principles
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•
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Board of Directors Conflict of Interest Policy
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•
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Employee Code of Conduct
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•
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Charters for all Board Committees
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•
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Guide to Conducting Business for Third Parties of CME Group
|
Each of these documents is also available in print upon written request made to the Office of the Secretary, CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606.
Our employee code of conduct is applicable to all of our employees, including our Executive Chairman & President, Chief Executive Officer and other senior
financial officers.
DIRECTOR ATTENDANCE
The board held eight meetings during 2015. All directors attended at least 75% of the combined total meetings of the full board and the committees on which he or
she served.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
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|
11
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Corporate Governance
(Continued)
|
We strongly encourage, but do not require, our directors to attend the annual meeting. Last year, 23 of the 24 directors on the board at that time attended the annual meeting of shareholders.
DIRECTOR INDEPENDENCE
The experience and diversity of our directors has been, and continues to be, critical to our success. Our corporate governance principles require that the board be
composed of at least a majority of independent directors. Additionally, in accordance with applicable listing standards, the members of our audit, compensation, governance and nominating committees must be independent. For a director to be
considered independent, the board must affirmatively determine that the director has no direct or indirect material relationship with CME Group. The board has adopted
categorical independence standards
, which are attached to this proxy
statement as
Appendix A
, to assist the board in making its determinations regarding independence. These standards conform to and exceed the independence criteria specified in the listing standards of the NASDAQ. They specify the criteria by
which the independence of our directors will be determined, including relationships and transactions between each director, director nominee, any member of his or her immediate family, his or her affiliates, charitable organizations with which he or
she is affiliated, and us.
The board believes that all of its non-executive directors act independently of, and effectively monitor and oversee the
actions of, management. Based on our categorical independence standards, at its meeting held in February 2016, the governance committee made a preliminary assessment of the independence of the directors and director nominees and based on such
assessment made a recommendation to our board regarding their independence. Some of our directors are members of our exchanges, which provides them with access to our open outcry trading floors, lower trading fees, the ability to vote on certain
matters relating to the operation of our trading floors and, for members of CME, the ability to elect six of our directors. Directors who are members of our exchanges may make payments directly to us or indirectly to us through our clearing firms in
connection with their trading activity on an exchange. To ensure that such payments did not exceed the monetary thresholds set forth in the listing standards of the NASDAQ, the governance committee reviewed the directors’ and their affiliated
clearing firms’ trading activities and relationships with our exchanges as part of its independence determination. The governance committee and the board noted that all payments relating to trading fees were made in the ordinary course of our
business, were on terms consistent with those prevailing at the time for corresponding transactions by similarly situated unrelated third parties and were not in excess of the applicable payment thresholds.
After considering information provided by the directors and director nominees in their annual questionnaires, the payments made to us relating to trading activities
of directors and director nominees who are members of an exchange, as well as additional information gathered by our Office of the Secretary, the governance committee recommended and the board determined which directors and nominees should be
classified as independent. All of our directors and director nominees with the exception of the following have been classified as independent.
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•
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Employment Relationships:
Messrs. Duffy and Gill are employees of CME Group.
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•
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Consulting Arrangements:
Mr. Melamed has a consulting relationship with CME Group. Mr. Sandner had a consulting relationship with us
during the last three years. Mr. Sandner’s agreement expired as of December 31, 2013 and we would expect him to be considered independent as of the third anniversary of such expiration.
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•
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Strategic Partnership and Cross-Investment:
Mr. Pinto served as the director representative of BM&FBOVESPA from February 2011 until April
6, 2016. BM&FBOVESPA previously owned approximately 4% of our outstanding Class A shares and we own approximately 4% of its shares. We have an equity investment agreement with BM&FBOVESPA and have agreed to work together as global
preferred strategic partners to advance our mutual interests in globalizing our respective businesses through jointly identifying and pursuing opportunities for strategic investments and partnerships with other international exchanges.
|
The list of our independent directors and director nominees is set forth on
page
10
.
PUBLIC DIRECTORS
As the parent company of four self-regulatory organizations, we are required to ensure we meet the core principles of the CFTC which, among other things, require
that we have processes and procedures to address potential conflicts of interest that may arise in connection with the operation of our exchanges. Significant representation of individuals who do not have relationships
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|
|
12
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Corporate Governance
(Continued)
|
with our exchanges, referred to as
“public directors”
in the CFTC regulations, play an important role in our processes to address potential conflicts of interest. The board has
assessed which directors would be considered public directors based upon their lack of relationship with our exchanges and the industry per the CFTC regulations. The list of our public directors is set forth on
page
10
.
Additionally, our market regulation oversight committee is composed solely of public directors.
BOARD LEADERSHIP STRUCTURE
Our board leadership structure consists of an Executive
Chairman (who is also our President), a CEO, a lead independent director and our active board members of which more than a majority are considered independent. Mr. Duffy serves as our Executive Chairman & President. Mr. Gill is
our Chief Executive Officer. Mr. Glickman currently holds our lead independent director position. The lead independent director is appointed by the board based on the recommendation of the governance committee for a one-year term and has the
following responsibilities:
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•
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Presides at meetings of the board if the Chairman is unavailable and at executive sessions of the board’s independent directors.
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•
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Presides at the board’s annual evaluation of the Chairman’s achievement of his goals and objectives.
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•
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Communicates to the Chairman the results of meetings at which he presides.
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•
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Receives direct communications from directors and/or shareholders in cases where the Chairman is unavailable or where direct communication with the Chairman may
not be appropriate.
|
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•
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Confers with the Chairman, in the Chairman’s discretion, in regard to board agendas, scheduling and information distribution.
|
Our governance documents provide the board with the flexibility to select the appropriate leadership structure for CME Group. In making leadership determinations,
the board considers many factors, including the specific needs of the business and what is in the best interests of our shareholders.
The board believes
its current structure allows it to effectively operate, represent the rights of our shareholders and create long-term value and provides a well-functioning and effective balance between strong management leadership and appropriate safeguards and
oversight by non-employee board members. The board reserves the right to make changes to its governance structure in the future as it deems appropriate.
BOARD’S ROLE IN RISK OVERSIGHT
While senior management has primary responsibility for managing risk, the board has responsibility for risk oversight. The board oversees the business of the
Company, including senior management performance and risk management, to assure that the long-term interests of the shareholders are being served. The board has an active role, as a whole and also at the committee level, in overseeing management of
our risks, with its focus on the top risks facing the Company. CME Group has established an enterprise risk management
(ERM)
program to promote and facilitate the process to evolve, align and sustain sound risk management practices at CME
Group. Through the ERM program, top enterprise risks are identified, assessed, measured, prioritized and updated. We manage risks in four broad categories: strategic, financial, operational and reputational. Legal and compliance risks are managed as
sub-risks within operational and reputational. The ERM program is dynamic and ongoing.
Effective as of August 2014, the board formed a new risk
committee. The risk committee has primary oversight responsibility over the ERM program, including approval of the enterprise risk management framework and reviewing and recommending to the board the various levels of acceptable key risks underlying
the company’s business and strategy. Among its areas of focus are risks relating to information technology, information security, business continuity and compliance. In addition to the risk committee, the board also assigns risks to multiple
committees. This oversight structure is designed to increase the effectiveness of our board’s oversight by taking into account the background and experience of the various board committees, including their interactions with management. Each
committee reports on its activities to the full board. The appendix to the charter of the risk committee provides additional detail on the allocation of risk oversight responsibilities to the various committees. The charter for the risk committee is
available on our website.
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|
|
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|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
13
|
|
|
|
|
|
|
|
|
Corporate Governance
(Continued)
|
At the management level, the ERM program is led by our Senior Director, Enterprise Risk Management who reports to our Managing Director, Global Chief Compliance Officer and is supported by a risk management team
composed of senior employees.
Top risks are assigned ratings, tracked and reported to the board and senior management on a quarterly basis along with
updates of any developments that could affect our risk profile or other aspects of our business. As appropriate, action plans are developed to mitigate risks as part of our strategic planning and budget process. Risk management is ongoing, and the
importance assigned to identified risks can change and new risks can emerge during the year as the Company develops and implements its strategy.
Our
ultimate objective is to help preserve and protect our enterprise value and to help increase the likelihood of achieving our financial, operational and strategic objectives while maintaining or enhancing our reputation. In doing so, the board
understands it may not be practicable or cost-effective to eliminate or mitigate certain risks, that it may be necessary to bear certain risks to achieve the Company’s goals and objectives and that the processes, procedures and controls
employed to address certain risks may be limited in their effectiveness.
EXECUTIVE SESSIONS
Our corporate governance principles require our independent directors
to meet in executive session (without management and non-independent directors) on a quarterly basis. These sessions are chaired by the lead director. The chair of the executive session may, at his or her discretion, invite our Executive
Chairman & President, CEO, other non-independent directors or other members of management to participate in a portion of such executive session, as appropriate.
ANNUAL ASSESSMENT OF BOARD, COMMITTEE AND INDIVIDUAL DIRECTOR PERFORMANCE
As provided in our corporate governance principles, the board annually reviews its own performance, structure and processes in order to assess how effectively it is
functioning. The assessment is implemented and administered by the governance committee through an annual board self-evaluation survey. Our process also includes individual peer director evaluations and the audit, compensation, finance, governance,
market regulation oversight, nominating and risk committees each conduct an annual self-assessment.
REPORTING CONCERNS TO THE AUDIT COMMITTEE
We have engaged an independent, third party,
EthicsPoint, for the purpose of receiving complaints, including complaints relating to accounting, internal control over financial reporting or auditing matters. Concerns received via EthicsPoint relating to financial matters are automatically
referred to the chairman of the audit committee and will be handled in accordance with the procedures adopted by the audit committee. A copy of these procedures is available on our website.
CONTACTING THE BOARD OF DIRECTORS
Shareholders may contact the board of directors, including a committee of the board or the independent directors as a group, by using the following address:
CME Group Inc
.
Attn: Board of Directors c/o Office of the Secretary
20 South Wacker Drive
Chicago, Illinois 60606
Email:
directors@cmegroup.com
All communications received
will be compiled by the Office of the Secretary and submitted to the governance committee on a quarterly basis or more frequently as appropriate. Emails received via
directors@cmegroup.com
are screened for junk commercial email and general
solicitations. If a communication does not involve an ordinary business matter as described below and if a particular director is named, the communication will be forwarded to that director.
In order to expedite a response to ordinary business matters, the governance committee has authorized management to receive, research and respond, if appropriate, on behalf of our directors, including a particular
director or its non-executive directors, to any communication regarding a product of an exchange or transactions by a clearing firm or a member of an exchange, referred to as an
“ordinary business matter.”
Any director may review
any such communication or response thereto.
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14
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Corporate Governance
(Continued)
|
SHAREHOLDER ENGAGEMENT
Shareholders who invest in our company and elect the board of directors are entitled to open and meaningful information about our business, strategies, corporate governance and senior management compensation
practices so they can make informed decisions and knowledgeably participate in the proxy voting process. As owners of our company, you are encouraged to contact us through our provided communication channels to provide your feedback.
From time to time, when we have a matter of governance that we would like to discuss with our shareholders we will reach out to them for their input. For example,
last year when we were considering the implementation of an exclusive forum bylaw provision, we sought input from our top shareholders prior to submitting the proposal to all of our shareholders. Additionally, to the extent we receive communications
from our shareholders regarding governance matters, such communications are discussed with our governance committee.
Shareholder engagement through
participation in our annual meeting is important to us. In 2015, the quorum at our meeting was approximately 80% of our total Class A and Class B shares outstanding.
We will continue to promote greater communication with our shareholders to better understand their views on current and trending corporate governance practices.
BOARD COMMITTEES
The board of directors has the following committees comprised entirely of board members: audit; compensation; executive; finance; governance; market regulation
oversight; nominating; risk, and strategic steering. The responsibilities of each committee are summarized in this proxy statement and described in more detail in each committee’s written charter. Copies of these charters are available on our
website. In addition, the board has established three clearing house risk committees to oversee our clearing risk management functions, which are designed to include key market participants as members.
In the following descriptions of the board committee composition in the right column, the chairman is designated with a “C”, the independent members are
designated with an “I” and public directors are indicated with a “P.” Members of the committee are as of the date of the proxy statement.
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AUDIT
COMMITTEE
NUMBER OF MEETINGS IN 2015: 8
|
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|
The audit committee is a separately-designated standing committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended
(Exchange Act)
, and assists the board in fulfilling its oversight responsibilities with respect to the integrity of our financial statements, the qualifications and independence of our independent registered public accounting firm,
the performance of our internal audit functions and our external auditors and the effectiveness of our internal control over financial reporting.
The committee performs this function by monitoring our financial reporting process and internal control over financial reporting and by assessing the audit efforts
of the external and internal auditors. The committee has ultimate authority and responsibility to appoint, retain, compensate, evaluate, and where appropriate, replace the external auditors.
|
|
• Dennis H. Chookaszian (C,I)
• Jeffrey M. Bernacchi (I)
• Larry G. Gerdes (I,P)
• William P. Miller II (I,P)
• Terry L. Savage (I,P)
• Dennis A. Suskind (I,P)
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
15
|
|
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|
|
|
|
|
|
Corporate Governance
(Continued)
|
|
|
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|
COMPENSATION
COMMITTEE
NUMBER OF MEETINGS IN 2015: 8
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|
The compensation committee assists the board in fulfilling its responsibilities in connection with the compensation of board members and senior management and oversees the compensation programs for our employees.
It performs this function by establishing and overseeing our compensation programs, approving compensation for our executive officers, recommending to the board the compensation of board members who are not officers of us, overseeing the
administration of our equity award plans and approving the filing of the
Compensation Discussion and Analysis
section in accordance with applicable rules and regulations of the SEC for inclusion in our proxy statements.
|
|
• Larry G. Gerdes (C,I,P)
• Timothy S. Bitsberger (I,P)
• Martin J. Gepsman (I)
• Daniel R. Glickman (I,P)
• William R. Shepard (I)
• Howard J. Siegel (I)
• Dennis A. Suskind (I,P)
|
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EXECUTIVE
COMMITTEE
NUMBER OF MEETINGS IN 2015: 2
|
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|
The executive committee exercises the authority of the board when the board is not in session, except in cases where action of the entire board is required by our articles of incorporation, bylaws or applicable
law. The committee may also review and provide counsel to management regarding material policies, plans or proposals prior to submission of such items to the board. The executive committee is also responsible for conducting the annual performance
evaluation of our CEO and presenting its conclusions to the board during an executive session.
|
|
• Terrence A. Duffy (C)
• Phupinder S. Gill
• Charles P. Carey (I)
• Daniel R. Glickman (I,P)
• Leo Melamed
• Ronald A. Pankau (I)
• Alex J. Pollock (I,P)
• John F. Sandner
• William R. Shepard (I)
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FINANCE
COMMITTEE
NUMBER OF MEETINGS IN 2015: 4
|
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|
The finance committee assists the board in fulfilling its oversight responsibilities with respect to our financial policies, strategies, capital structure and annual operating and capital budget.
|
|
• William R. Shepard (C,I)
• Charles P. Carey (I)
• Dennis H. Chookaszian (I)
• Larry G. Gerdes (I,P)
• William P. Miller II (I,P)
• Ronald A. Pankau (I)
• Alex J. Pollock (I,P)
• Dennis A. Suskind (I,P)
• David J. Wescott (I)
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GOVERNANCE
COMMITTEE
NUMBER OF MEETINGS IN 2015: 5
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The governance committee assists the board by making recommendations on our corporate governance practices. The committee reviews and recommends changes to our
corporate governance principles and other policies in the area of corporate governance and establishes a culture of compliance and ethics within the organization through its oversight of board governance policies and the employee code of
conduct.
|
|
• Daniel R. Glickman (C,I,P)
• Dennis H. Chookaszian (I)
• Alex J. Pollock (I,P)
• Terry L. Savage (I,P)
|
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|
16
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Corporate Governance
(Continued)
|
|
|
|
|
|
MARKET REGULATION
OVERSIGHT COMMITTEE
NUMBER OF MEETINGS IN 2015: 7
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|
The market regulation oversight committee assists the board with its oversight of matters relating to our operation of four exchanges that are self-regulatory organizations. The committee provides independent
oversight of the policies and programs of our regulatory functions relating to our operations of designated contract markets, designated clearing organizations, a swap execution facility, global repository services and their senior management and
compliance officers to ensure effective administration of our self-regulatory responsibilities.
|
|
• William P. Miller II (C,I,P)
• Timothy S. Bitsberger (I,P)
• Ana Dutra (I,P)
• Alex J. Pollock (I,P)
• Terry L. Savage (I,P)
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NOMINATING
COMMITTEE
NUMBER OF MEETINGS IN 2015: 4
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The nominating committee reviews qualifications of potential candidates for Equity director and recommends to the board the slate for election at our annual meetings.
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• Alex J. Pollock (C,I,P)
• Martin J. Gepsman (I)
• Larry G. Gerdes (I,P)
• William R. Shepard (I)
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RISK
COMMITTEE
NUMBER OF MEETINGS IN 2015: 9
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The risk committee was established in August 2014. The risk committee reviews, assesses and provides oversight of the Company’s risk management practices, the integrity and adequacy of its ERM Program and the
Compliance and Ethics
(C&E)
Program as described in more detail on
page
13
. In addition, the committee assists the board in its oversight of the effectiveness of the Company’s policies and processes to identify, manage
and plan for its strategic, financial, operational and reputational risks under its ERM Program and C&E Program. The committee approves the ERM framework and reviews and recommends to the board the various levels of acceptable key risks
underlying the company’s business and strategy.
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• Dennis A. Suskind (C,I,P)
• Jeffrey M. Bernacchi (I)
• Timothy S. Bitsberger (I,P)
• Dennis H. Chookaszian (I)
• Elizabeth A. Cook (I)
• Larry G. Gerdes (I,P)
• Howard J. Siegel (I)
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STRATEGIC STEERING
COMMITTEE
NUMBER OF MEETINGS IN 2015: 5
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The strategic steering committee assists and provides guidance to management and the board in fulfilling its responsibilities to oversee our long-range direction,
corporate strategy and competitive position. The committee analyzes market trends, growth patterns and the impact of innovations that may create opportunity or risk for us.
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• Leo Melamed (C)
• William R. Shepard (Vice C,I)
• Terrence A. Duffy
• Phupinder S. Gill
• Charles P. Carey (I)
• Martin J. Gepsman (I)
• William W. Hobert (I)
• James E. Oliff (I)
• John F. Sandner
• Howard J.Siegel (I)
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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17
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ITEM 2—Ratification of the Appointment of Ernst &
Young LLP as
our Independent Registered Public Accounting Firm for
2016
|
You are being asked to vote on the ratification of the appointment of Ernst & Young to serve as our independent registered public accounting firm for
2016. Ernst & Young served as our accounting firm for 2015.
OUR BOARD RECOMMENDS THAT YOU VOTE “
FOR
” THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG
AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM FOR 2016.
The audit committee has appointed Ernst & Young as CME Group’s independent registered public
accounting firm for 2016. We are not required to have the shareholders ratify the selection of Ernst & Young as our independent auditor. We nonetheless are doing so because we believe it is a matter of good corporate practice. If the
shareholders do not ratify the selection, the audit committee will reconsider whether or not to retain Ernst & Young, but may choose to retain such independent auditor. Even if the selection is ratified, the audit committee, in its
discretion, may change the appointment at any time during the year if it determines that such a change would be in the best interests of CME Group and its shareholders. Representatives of Ernst & Young will be present at the annual meeting,
will have the opportunity to make a statement, and will be available to respond to appropriate questions by shareholders. In connection with the audit of our 2015 financial statements, we entered into an engagement letter with Ernst &
Young, which sets forth the terms by which Ernst & Young would perform audit services for us and which did not include any limitations of liability for punitive damages. We expect to enter into a similar engagement letter with
Ernst & Young for 2016.
THE AUDIT COMMITTEE HAS
PRE-APPROVAL PROCESSES FOR NON-AUDIT SERVICES
The audit committee is responsible for the appointment, retention, compensation and oversight
of our independent registered public accounting firm. The audit committee has adopted policies and procedures for pre-approving all services (audit and non-audit) performed by our independent registered public accounting firm. In accordance with
such policies and procedures, the audit committee is required to pre-approve all audit and non-audit services to be performed by the independent registered public accounting firm in order to ensure that the provision of such services is in
accordance with the rules and regulations of the SEC and does not impair the registered public accounting firm’s independence. Under the policy, pre-approval is generally provided for up to one year, any pre-approval is detailed as to the
particular service or category of services and is subject to a specific budget. In addition, the audit committee may pre-approve additional services on a case-by-case basis. The audit committee has delegated specific pre-approval to the chairperson
of the audit committee provided the estimated fee of the proposed service does not exceed $100,000. The chairperson must report any decisions to the audit committee at its next scheduled meeting. Periodically, but not less than quarterly, our
controller provides the audit committee with a report of audit and non-audit services provided and expected to be provided by the independent registered public accounting firm. A copy of our audit and non-audit services policy is available on our
website.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Fees paid to Ernst & Young for each of the last two fiscal years are listed in the following table.
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Service Provided
|
|
2015
|
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|
2014
|
|
|
Audit
(1)
|
|
$
|
2,752,674
|
|
|
$
|
2,938,306
|
|
|
Audit-Related
Fees
(2)
|
|
|
—
|
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—
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Tax Fees
(3)
|
|
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650,052
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809,388
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|
|
All Other
Fees
(4)
|
|
|
8,363
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|
|
—
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Total
|
|
$
|
3,411,089
|
|
|
$
|
3,747,694
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(1)
|
Fees for professional services rendered for the integrated audit of the consolidated financial statements of CME Group and, as required, audits of various domestic and
international subsidiaries and other agreed-upon procedures.
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(2)
|
Fees for assurance and related services, including internal control and financial compliance reports and agreed-upon procedures not required by regulation.
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(3)
|
Fees for services rendered for tax return preparation, tax advice and other international, federal and state projects. In 2015, tax compliance and preparation fees were $352,246.
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(4)
|
Fees for services not included in the foregoing categories, which includes permitted requlatory advisory services.
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18
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|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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ITEM 2—Ratification of the Appointment of Ernst & Young LLP as
our
Independent Registered Public Accounting Firm for 2016
(Continued)
|
The audit committee has considered whether the provision of non-audit
services is compatible with maintaining the registered public accounting firm’s independence. All of the projects included in the above fee table were pre-approved by the audit committee in accordance with our audit and non-audit services
policy. In providing their pre-approval, the audit committee approves the proposed fees for the particular engagement. Any services exceeding pre-approved cost levels will require specific additional pre-approval by the audit committee unless such
additional costs are less than the lessor of (i) $25,000 and (ii) 10% of the original cost estimate of the services previously approved. Any such cost overruns will be included as an informational item at the next audit committee meeting.
AUDIT COMMITTEE FINANCIAL EXPERTS
The board has determined that Messrs. Chookaszian, Gerdes and Miller meet the SEC’s definition of an audit committee financial expert.
Mr. Chookaszian
Mr. Chookaszian is
considered to have each of the attributes of an audit committee financial expert based upon his prior service as CFO of CNA for 15 years, through his supervision of the CFO for nine years when he was CEO of CNA and CEO of mPower, and through his
service as a public accountant for eight years with Deloitte and Touche. Mr. Chookaszian has been a member of our audit committee since 2004 and previously served as chairman of the Financial Accounting Standards Advisory Council, the group
that provides advice to the Financial Accounting Standards Board
(FASB)
on their agenda and the effectiveness of accounting standards. Mr. Chookaszian also teaches a course on Corporate Governance and Accounting Standards and Controls at
the University of Chicago Booth School of Business, Cheung Kong University in China, and the Indian Institute of Professional Management in India. Throughout his career, he has served on the audit committee of seven other public and private
organizations. He is also a member of the XBRL Advisory Council, which is the group that provides advice to the International Accounting Standards Board on the development of XBRL standards. He also currently serves on the Financial Crisis Advisory
Group that provides advice to the G20 and to world-wide standards setters and regulators on the financial reporting issues related to the financial crisis and needed corrective actions. He has served in the past on numerous accounting related boards
including the American Institute of CPAs
(AICPA)
Insurance Companies Accounting Standards Committee, the AICPA Group of 100, several FASB task forces, the Statement on Auditing Standards 99 task force on Internal Control Fraud Standards, and
the Public Oversight Board Blue Ribbon Panel on Audit Effectiveness.
Mr. Gerdes
Mr. Gerdes is considered to have each of the attributes of an audit committee financial expert based upon his service as the CEO of a public company for more
than 15 years, which included oversight of the CFO, and his service in the role of CFO for 10 years, six of which were at a public company. Mr. Gerdes has a Bachelor’s of Science and a Masters of Business Administration in Finance, which
included courses in accounting. Mr. Gerdes has been a member of our audit committee since joining our board in 2007. He has served on the audit committees of four other public companies over the past 15 years. Mr. Gerdes also is the
founder of Gerdes Huff Investments.
Mr. Miller
Mr. Miller is considered to have each of the attributes of an audit committee financial expert primarily based upon his background and experience in preparing, modeling and analyzing financial statements in
accordance with generally accepted accounting principles, which required him to develop and assess projected financial estimates, accruals and reserves. Mr. Miller has also been responsible for internal audit and compliance functions at
Commonfund Group. Mr. Miller currently serves as chairman of the audit committee for American Axle and Manufacturing and has served as Chairman of the audit and risk management committee of the Dubai International Financial Exchange, Chairman
of the audit and risk management committee of the BTOP 50, and Chairman of the audit committee of the New York Futures Exchange, a subsidiary of the New York Stock Exchange. Mr. Miller has served as a member of the PCAOB Standing Advisory Group
and has testified before both the U.S. Congress and FASB on accounting and disclosure matters. Mr. Miller holds the Chartered Financial Analyst
(CFA)
designation and is a member of the CFA Institute. Mr. Miller has a Master’s
of Business Administration from the Wharton Graduate Division of the University of Pennsylvania. He has served as a member of our audit committee since 2003.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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19
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Report of the Audit Committee
|
REQUIRED VOTE
Must receive a “FOR”
vote from the holders of a majority of the shares of our Class A and Class B common stock present in person or represented by proxy and entitled to vote on this matter at the annual meeting, voting together as a single class.
ROLES AND
RESPONSIBILITIES.
The audit committee reviews CME Group’s financial reporting process on behalf of the board. Management has the primary responsibility for establishing and maintaining
adequate internal financial controls, for preparing the financial statements and for the public reporting process. Ernst & Young, our company’s independent registered public accounting firm for 2015, is responsible for expressing
opinions on the conformity of the company’s audited financial statements with generally accepted accounting principles and on the company’s internal control over financial reporting. A copy of the audit committee charter, which has been
adopted by our board of directors and further describes the role of the audit committee in overseeing our financial reporting process, is on our website under Investor Relations-Corporate Governance-Board Committees.
REQUIRED DISCLOSURES AND DISCUSSION.
The
audit committee has reviewed and discussed with management and Ernst & Young the audited financial statements for the year ended December 31, 2015 and Ernst & Young’s evaluation of the company’s internal control over
financial reporting. The committee has also discussed with Ernst & Young the matters that are required to be discussed under PCAOB standards. Ernst & Young has provided to the committee the written disclosures and the
PCAOB-required letter regarding its communications with the audit committee concerning independence, and the committee has discussed with Ernst & Young that firm’s independence. The committee has concluded that Ernst &
Young’s provision of audit and non-audit services to CME Group is compatible with Ernst & Young’s independence.
COMMMITTEE RECOMMENDS INCLUDING THE FINANCIAL STATEMENTS IN THE ANNUAL REPORT.
Based on the review and discussions referred to above, the
committee recommended to the board that the audited financial statements for the year ended December 31, 2015 be included in our annual report on Form 10-K for 2015 for filing with the SEC. This report is provided by the following independent
directors, who currently comprise the committee:
Dennis H. Chookaszian,
Chairman
Jeffrey M. Bernacchi
Larry G. Gerdes
William P. Miller II
Terry L. Savage
Dennis A. Suskind
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20
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|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
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ITEM 3—Advisory Vote on the
Compensation
of our Named Executive Officers
|
You are being asked to vote on a non-binding advisory proposal on our executive compensation program for our named executive officers as described in our Compensation Discussion and Analysis beginning on page 34
and Executive Compensation tables beginning on page 50.
OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
“
FOR
” THE ADVISORY PROPOSAL ON
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
The board and the compensation committee are committed to sound governance practices and recognize the interest our shareholders have expressed on CME Group’s
executive compensation program. As part of that commitment, and pursuant to Section 14A of the Exchange Act, our shareholders are being asked to approve an advisory resolution on the compensation of the named executive officers, as reported in
this proxy statement. We plan to include these advisory resolutions on an annual basis.
This proposal, commonly known as the “say on pay”
proposal, gives you the opportunity to endorse our 2015 executive compensation program and policies for the named executive officers through a vote “FOR” the approval of the following resolution:
RESOLVED, that the shareholders of CME Group approve, on an advisory basis, the compensation of CME Group’s named executive officers, as
disclosed pursuant to the compensation disclosure rules of the SEC in the proxy statement for the CME Group 2016 annual shareholders meeting (which disclosure includes the Compensation Discussion and Analysis, the Executive Compensation tables and
any related material).
This vote is not intended to address any specific item of compensation, but rather our overall compensation policies and
procedures relating to the named executive officers. Accordingly, your vote will not directly affect or otherwise limit any existing compensation or award arrangement of any of the named executive officers. Because your vote is advisory, it will not
be binding on the board. The board and the compensation committee, however, will take into account the outcome of the “say on pay” vote when considering future compensation arrangements.
Next year, we will seek a separate shareholder advisory vote to determine the frequency of future say-on-pay proposals in accordance with applicable SEC rules.
REQUIRED VOTE
Must receive a
“FOR” vote from the holders of a majority of the shares of our Class A and Class B common stock present in person or represented by proxy and entitled to vote on this matter at the annual meeting, voting together as a single class to
be deemed approved.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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21
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ITEM 4—Election of Class B-1, Class B-2 and Class B-3 Directors
|
Our Class B-1 shareholders are being asked to vote for three Class B-1 directors, our Class B-2 shareholders are being asked to vote for two Class B-2 directors and our Class B-3 shareholders are being asked to
vote for one Class B-3 director. Each Class B director’s term will last until the 2017 annual meeting and until his or her successor is duly elected and qualified.
OUR BOARD IS NOT PROVIDING ANY RECOMMENDATION AS TO HOW OUR CLASS B SHAREHOLDERS SHOULD VOTE ON THE ELECTION OF CLASS
B-1, CLASS B-2 AND CLASS B-3 DIRECTORS.
If you own more than one share of Class B-1, Class B-2 or Class B-3 stock, you must vote each
class of your Class B-1 shares, Class B-2 shares and/or Class B-3 shares the same way. You may not split your vote. If you do so, your vote will be invalid.
CLASS B DIRECTOR NOMINEES
Ages of the nominees are as of March 22, 2016 and the
nominee’s trading badge symbol is shown in parenthesis.
CLASS B-1
DIRECTOR NOMINEES (Class B-1 Shares only)
Vote “FOR” up to
three
nominees to be elected to the Board of Directors.
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Jeffrey M. Bernacchi
(JMB)
Director since:
2009
Age:
57
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Mr. Bernacchi, a CME, CBOT, and NYMEX member, is an active independent trader of our markets and has been President and owner of JMB Trading Corp. since 1980 and
managing member of Celeritas Capital, LLC since 2008. He serves on our board Risk and Audit committees. Mr. Bernacchi is also a member of Professional Risk Managers’ International Association, ISACA, formerly known as the Information Systems
Audit and Control Association and of Hyde Park Angels, a leading Chicago-based angel investment group. Mr. Bernacchi also serves as an independent board member of Prism Analytical Technologies.
|
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Michael J. Downs
(BMR)
Director since:
n/a
Age:
59
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|
Mr. Downs has been a member of CME since 1983. Over his trading career, he has traded CME products electronically from both an office and the trading floor. Mr.
Downs trades through ADM and participates in CME agricultural markets. Mr. Downs has served on the CME business conduct and probable cause committees for seven years and on the Class B-1 Nominating Committee from 2005-2015.
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|
William W. Hobert
(WH)
Director since:
2015
Age:
52
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|
Mr. Hobert founded WH Trading, LLC, a proprietary options and futures trading firm, in 1998. WH Trading serves as a market maker and liquidity provider in numerous
asset classes at CME in both its open outcry and electronically traded markets. From 1988 to 1994, Mr. Hobert worked for Cooper-Neff and Associates as an FX options market maker on the floor of CME and in over-the-counter markets. In 1994, he
founded Hobert Trading Inc. which is currently a member of WH Trading, LLC.
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22
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Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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ITEM 4—Election of Class B-1, Class B-2 and Class B-3
Directors
(Continued)
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|
Douglas M. Monieson
(DMON)
Director since:
n/a
Age:
50
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|
Doug Monieson, a second generation trader, has been an active futures trader since 1992. He is a member of CME, CBOT, NYMEX and COMEX and began his career as a
floor trader and was an early adopter of electronic trading. Mr. Monieson is a founding member of the NSDQ100 futures pit. In addition, he served as the NSDQ100 Pit Vice-Chairmen from 1996 to 2001, and is a member of the CME PAC and Pit
Supervision Committees. He is Chairman of the Board of Hyde Park Angels, a Chicago based angel investment group and is an active investor in the Chicago’s startup community. He is an experienced board member with nominating,
governance and compensation expertise. He is Associate Director of the Alternative Finance Institute at the University of Chicago and part of a global team that published the first global benchmark study on alternative finance. The study was done in
conjunction with Cambridge University,Tsinghua University in China and was sponsored by the CME Group Foundation. He has a B.A. in Economics University of Michigan and M.B.A. in Finance from the University of Chicago.
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Jeremy J. Perlow
(JAIR)
Director since:
n/a
Age:
48
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Mr. Perlow has been a member of CME since 1988. He has been the owner and principal trader of JAIR Trading since 1990. During his 27-year career, he has
participated in the agricultural, FX and dairy markets. He continues to actively trade on the floor and electronically. Mr. Perlow is a managing member of Apollo Group. He is also a member of the National Introducing Brokers Association. He has
served on the CME communications and CME new technology committees.
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Howard J. Siegel
(EGLE)
Director since:
2000
Age:
59
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Mr. Siegel has been a member of CME since 1977. In 1978, Mr. Siegel began his trading career at Moccatta Metals in their Class B arbitrage operations and served as
an order filler until 1980. From there, he went on to fill orders and trade cattle from 1980 until 1982. At that time, Mr. Siegel became a partner and an officer in a futures commission merchant that cleared at CME until selling his ownership
interest in 1990. For more than 30 years, Mr. Siegel has been an independent trader on our CME exchange. He continues to actively trade today in our agricultural product suite on the floor and electronically. Mr. Siegel is the Secretary and
Treasurer of the CME Group Foundation.
|
VOTE REQUIRED
The three nominees for Class B-1 director receiving the highest number of “FOR” votes will be elected.
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|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
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23
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ITEM 4—Election of Class B-1, Class B-2 and Class B-3
Directors
(Continued)
|
CLASS B-2 DIRECTOR NOMINEES (Class B-2 shares only)
Vote “FOR”
two
nominees to be elected to the Board of Directors.
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Patrick W. Maloney
(PAT)
Director since:
n/a
Age:
54
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Mr. Maloney has been a member of CME since 1985. Mr. Maloney has served as an independent floor broker in the Eurodollar option pit from 2007 to present. Mr.
Maloney has served on numerous CME functional committees: pit committee 1997-1999, nominating committee 1995-1996, arbitration committee 1994-1995, booth space committee 1992-1996 and floor practices committee 1995-1997. Mr. Maloney currently
serves on our political action committee.
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Ronald A. Pankau
(PAN)
Director since:
2011
Age:
59
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Mr. Pankau has been an independent trader since 1981. He serves as the Treasurer and Secretary of our political action committee. He also is a member of the
Board’s finance and executive committees and CME’s business conduct committee, pit supervision and arbitration committees. He is the owner and CEO of JH Best and Sons, a steel fabricating plant.
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David J. Wescott
(COT)
Director since:
2003
1988-1995
Age:
59
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Mr. Wescott has been a member of CME for more than 25 years. He is a founder and partner in TradeForecaster Global Markets, an algorithmic trading and technology
company. He has served as President of The Wescott Group Ltd. since 1991 and Managing Partner of the Dowd/Wescott Group since 2006. Mr. Wescott is currently a Managing Partner of DWG Futures. Mr. Wescott has served on numerous functional committees
at CME.
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James J. Zellinger
(JZZ)
Director since:
n/a
Age:
70
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Mr. Zellinger has 50 years of experience in the following phases of the futures industry: operations, trading, risk and sales, 35 of them at the executive level. He
is presently Senior Vice President of Wedbush Securities, a futures commission merchant and securities broker dealer. Mr. Zellinger is a former General Partner of Hennessy and Associates and as former Vice President of Operations at Globex Corp. was
instrumental in setting procedures still in effect at CME’s Global Command Center. In addition to holding executive positions at Merrill Lynch, TransMarket, and Advantage Futures, Mr. Zellinger has served on numerous operations related exchange
committees and is currently a member of the CME business conduct committee.
|
VOTE REQUIRED
The two nominees for Class
B-2 director receiving the highest number of “FOR” votes will be elected.
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24
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|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
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ITEM 4—Election of Class B-1, Class B-2 and Class B-3
Directors
(Continued)
|
CLASS B-3 DIRECTOR NOMINEES (Class B-3 shares only)
Vote “FOR”
one
nominee to be elected to the Board of Directors.
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Bradley P. Cohen
(BPC)
Director since:
n/a
Age:
53
|
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Mr. Cohen has been a member of CME since 1988 trading as an independent local, primarily in the S&P 500 pit. In 2006, he spent eight months trading in the crude
oil pit at NYMEX. He was managing partner of Gendex trading, a proprietary trading firm specializing in hiring and training new traders from 1992 to 2008. He serves on the board of Aspiritech, an autistic employment non-profit organization. He has
served as managing partner in Snippets Mini Cuts, a kid’s hair salon with four locations, since 1997 and a managing partner of Surfside Palmas Resorts, a property management company in Puerto Rico, since 2015.
|
|
Elizabeth A. Cook
(LZY)
Director since:
2015
Age:
55
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|
Ms. Cook has been a member of CME since 1982. She was an independent floor broker in FX futures from 1982-1985, FX options from 1985-2001 and in the Eurodollar
options market from 2002 to present. Ms. Cook is presently owner of MiCat Group LLC, specializing in option execution services. She was previously the owner of LZY Options LLC and Cook-Matteson Group LLC. Since 1988, she has served on numerous
functional committees which include financial options, Eurodollar options, membership, floor conduct, business conduct, arbitration and is a member of the board Risk Committee. Ms. Cook is an active member of the CME PAC and volunteers for Honor
Flight Chicago and The ALS Association.
|
VOTE REQUIRED
The nominee for Class B-3 director receiving the highest number of
“FOR” votes will be elected.
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|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
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|
25
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ITEM 5—Election of Class B-1, Class B-2 and Class
B-3
Nominating Committees
|
Our bylaws provide that holders of our Class B-1, Class B-2 and Class B-3 shares elect the members of their respective Class B nominating committees. The Class B nominating committees are not committees of our
board of directors and serve only to nominate the slate of Class B directors for their respective classes. Each Class B nominating committee is composed of five members who serve for a term of one year. The existing members are responsible for
selecting up to 10 candidates to stand for election as members of a particular Class B nominating committee. The five nominees with the greatest number of votes will serve on the applicable committee. Ages of the nominees are as of March 22,
2016.
OUR BOARD IS NOT PROVIDING ANY RECOMMENDATION AS TO HOW OUR CLASS B SHAREHOLDERS SHOULD VOTE ON THE ELECTION OF CLASS
B-1, CLASS B-2 AND CLASS B-3 NOMINATING COMMITTEES.
NOMINEES
FOR 2017 CLASS B-1 NOMINATING COMMITTEE
Vote “FOR” up to
five
nominees to be elected to the Class B-1 Nominating
Committee.
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|
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William C. Bauman
(WCB)
Age:
68
|
|
Mr. Bauman has been a member of CME since 1978. He handles customer accounts, as well as trades for his own account. Mr. Bauman has been a broker, floor trader and electronic trader. He currently
trades through RJ O’Brien and participates in the cattle feeders and corn markets. Mr. Bauman has served on the live hog, pork products, live cattle, new products and nominating committees. He owns one IOM membership and is the recognized owner
of a CME.
|
|
Thomas A. Bentley
(TAB)
Age:
60
|
|
Mr. Bentley has been a member of CME since 1981. Over his trading career, he has been a floor broker in live cattle since 1981 and a floor trader. Mr. Bentley trades through RCG Group and
participates in the CME Ags—Live Cattle markets. He has also participated in the Eurodollar and S&P futures markets. Mr. Bentley served as a member of the CME board of directors for two years and has served on many CME committees,
including arbitration, nominating and membership. He owns one CME membership.
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|
Bradley S. Glass
(BRAD)
Age:
51
|
|
Mr. Glass has been a member of CME since 1987. Over his 30 year trading career, he has been a local floor trader in many markets, including: currencies, euro dollars, NASDAQ, pork bellies and lean hogs. He
specializes in back months and spread market making for many futures products and has recently transitioned to the screen. Mr. Glass currently trades through Dorman Trading and participates in the CME agriculture, equity and interest rate
markets. Mr. Glass has served on numerous CME functional committees, including the clearing house operations, membership and arbitration committees. He owns one CME membership.
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|
Joseph H. Gressel
(GPC)
Age:
66
|
|
Mr. Gressel has been a member since 1976. Mr. Gressel trades through Gressel Produce & Commodities LLC. Over his trading career, he has been an electronic trader participating in the precious
metals, CME Ags and S&P markets. Mr. Gressel is the Chairman of Gressel Produce, engaging in electronic market making mainly in dairy. He is also involved in precious metals trading of both futures and options. Mr. Gressel owns one CME
membership and two GEM memberships.
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|
Mark S. Kobilca
(HTR)
Age:
61
|
|
Mr. Kobilca has been a member of CME since 1979. Over his trading career, he has been a trader, order filler and local trader on the floor. Mr. Kobilca
trades through Dowd Wescott and currently participates in the live cattle, feeder cattle and lean hogs markets and also trades options on the meats. He owns one CME membership and one GEM membership.
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26
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Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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ITEM 5—Election of Class B-1, Class B-2 and Class B-3
Nominating Committees
(Continued)
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Gary T. Lark
(GTX)
Age:
64
|
|
Mr. Lark has been a member of CME since 1977. During the last five years, his primary business was trading commodity futures (mostly Ags), working with commercial accounts and managing outside accounts.
Mr. Lark trades through Phillip Capital and participates in the live cattle, feeder cattle and bonds markets. Mr. Lark has served on the business conduct, probable cause, live cattle and live cattle pit committees. He owns one CME
membership.
|
|
W. Winfred (Fred) Moore II
(FMOR)
Age:
66
|
|
Mr. Moore has been a member of CME since 1977. During his trading career, his primary business has been trading futures and options in agricultural commodities for his own account. Mr. Moore also facilitates
commercial customer business in live cattle, feeder cattle with an emphasis in the options market. He has been a broker, floor trader, electronic trader and local trader. He trades through F-Mor, Inc. and participates in the live cattle, feeder
cattle and hogs markets. He has served on the live cattle committee, business conduct committee and as chairman of the feeder cattle committee. He owns one CME membership.
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|
William J. Rinn III
(WJR)
Age:
56
|
|
Mr. Rinn has been a member since 1989. He is an independent floor trader. Mr. Rinn owns one CME seat and one IOM seat.
|
|
Michael J. Small
(SML)
Age:
55
|
|
Mr. Small has been a member of CME since 1985. Over his trading career, he has been an order filler, 2
nd
option live cattle pit. Mr. Small trades through FC Stone and Trean and participates in the CME agricultural markets.
Mr. Small has served on the live cattle futures pit committee and the CME/CBOT floor conduct committee. He owns one CME membership.
|
|
Michael G. Sundermeier
(MIK)
Age:
56
|
|
Mr. Sundermeier has been a member since 1981. During his trading career, he was a broker, floor trader, electronic trader and local. Mr. Sundermeier retired from
professional trading in 2011. His current primary business is part owner of Culvers restaurant in Fort Mill, S.C. and general stock investing. He trades agriculture futures and agriculture options. Mr. Sundermeier served on the pit and live cattle
committees. He owns one CME seat.
|
VOTE REQUIRED
The five nominees for the Class B-1 nominating committee receiving the highest
number of “FOR” votes will be elected.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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27
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ITEM 5—Election of Class B-1, Class B-2 and Class B-3
Nominating Committees
(Continued)
|
NOMINEES FOR 2017 CLASS B-2 NOMINATING COMMITTEE
Vote “FOR” up to
five
nominees to be elected to the Class B-2 Nominating Committee.
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|
|
Richard J. Duran
(RJD)
Age:
67
|
|
Mr. Duran has been a member of CME since 1979. Over his trading career, he has been an active trader, speculator and investor. He currently trades through Mocho Trading, a high frequency trading group. Mr. Duran
was previously a trader and broker on the exchange floor and a partner in a clearing firm. He has served on numerous CME functional committees, including the nominating and membership committees. He owns one IMM membership.
|
|
Yra G. Harris
(YRA)
Age:
62
|
|
Mr. Harris has been a member of CME since 1977. During his trading career, he has been actively trading for his personal account as well as a blogger and consultant on industry matters. He currently
participates in currencies, metals and all interest rate markets. Mr. Harris was previously a local and electronic trader as well as a floor trader and broker. He currently trades through Shepard International. Mr. Harris served as a
member of the CME board of directors for six years and chaired many CME committees. In addition, he was a member of many CME functional committees, including strategic planning, CME Globex and business conduct. He owns one IMM membership and two
CBOT AM memberships.
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|
Patrick J. Lahey
(XDE)
Age:
37
|
|
Mr. Lahey has been a member of CME since 2015 and a member of CBOT since 2013. He was previously a member of CME from 2002 to 2003. During his trading career, he has been a senior trader and partner in WH
Trading’s Chicago office where he chairs the firm’s risk and futures committees. Mr. Lahey was previously the managing director of the WH Trading London office. He currently participates in the CME FX, interest rates and agricultural
markets. Mr. Lahey is an electronic proprietary trader. He is the recognized owner of one IMM membership.
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|
Patrick J. Mulchrone
(PJM)
Age:
58
|
|
Mr. Mulchrone has been a member of CME since 1980. During his trading career, he has been a self-employed partner and electronic trader at Advantage Futures. He currently trades through Advantage Futures, LLC
and participates in the currencies, Eurodollar and treasuries markets. Mr. Mulchrone has served on many CME functional committees over the past 30 years, including the disciplinary and nominating committees and is a former member of the CME
board. He owns one CME membership, one IMM membership, one IOM membership and one GEM membership.
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|
Stuart A. Unger
(UNG)
Age:
68
|
|
Mr. Unger has been a member of CME since 1975. During his trading career, he has developed and promoted futures business through Price Futures Group which
consists of brokers, branch offices and GIBs (Guaranteed Introducing Brokers). This business includes the futures industry worldwide with coordination targeting agriculture business, speculative, commercial and hedging type business. Mr. Unger
has been a broker, floor trader and local. He currently trades through Price Futures Group. Mr. Unger participates in the cattle, Eurodollar and LIBOR markets. Mr. Unger has served on many CME functional committees, including the
nominating, floor practice and LIBOR pit committees. He owns one IMM membership.
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28
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Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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ITEM 5—Election of Class B-1, Class B-2 and Class B-3
Nominating Committees
(Continued)
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|
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|
Gregory J. Veselica
(GV)
Age:
61
|
|
Mr. Veselica has been a member since 1979. During his trading career, he has served as a managing director of Buttonwood Trading LLC, trading manager and independent trader. Mr. Veselica is a local and
electronic trader. He currently trades through PNT Financial LLC. Mr. Veselica participates in the Eurodollar futures and NYMEX energy futures markets. Over the span of 30 years, he has participated in many different CME functional committees,
including the probable cause and the product development committees. He owns one IMM membership.
|
|
Barry D. Ward
(BDW)
Age:
52
|
|
Mr. Ward has been a member of CME since 1990. During his trading career, he has traded his personal account and was involved with proprietary trading groups as
both an equity owner and as a trader. Mr. Ward is a Managing Director at TJM Holdings, LLC. He currently participates in the Eurodollar futures and E-Mini S&P markets. Mr. Ward has served on the
Class B-2
nominating and pit committees and was Pit Vice Chairman from 1998-2004. He owns one IMM membership.
|
VOTE REQUIRED
The five nominees for the Class B-2 nominating committee receiving the highest number of “FOR” votes will be elected.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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29
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ITEM 5—Election of Class B-1, Class B-2 and Class B-3
Nominating Committees
(Continued)
|
NOMINEES FOR 2017 CLASS B-3 NOMINATING COMMITTEE
Vote “FOR” up to
five
nominees to be elected to the Class B-3 Nominating Committee.
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|
|
J. Kenny Carlin
(JKC)
Age:
56
|
|
Mr. Carlin has been a member of CME since 1985. He is an independent floor broker. Mr. Carlin owns one IOM membership.
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|
Adam M. Clayman
(AMC)
Age:
55
|
|
Mr. Clayman has been a member of CME since 1981. He has been a broker, floor trader and local trader. Mr. Clayman participates in the Eurodollar futures, CME agricultural, bonds and stock indices markets. He owns
one IOM membership.
|
|
Bryan P. Cooley
(COOL)
Age:
56
|
|
Mr. Cooley has been a member of CME since 1994. During his trading career, he has been a broker and order filler. He currently participates in the equities markets. Mr. Cooley has been a member of the CME
Group PAC for five years and has also served on the nominating and arbitration committees. He owns one IOM membership.
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|
Lester E. Crockett Jr.
(LCT)
Age:
49
|
|
Mr. Crockett has been a member of CME since 1989. During his trading career, he has traded SF/DM options and Eurodollar options. He currently trades through Lupo Futures, LLC and participates in the Eurodollar
options and Eurodollar futures markets. Mr. Crockett has been a floor trader, electronic trader and local trader. He has served on the nominating committee, pit committee and has been the co-chairman of the Eurodollar options pit. He owns one
IOM membership.
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|
Mario J. Florio
(MRO)
Age:
44
|
|
Mr. Florio has been a member of CME since 1994. He is an independent floor trader. Mr. Florio owns one IOM membership.
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|
Christopher P. Gaffney
(GAF)
Age:
55
|
|
Mr. Gaffney has been a member of CME since 1983. During his trading career, he has been a floor broker and a trader in the S&P 500 futures. Mr. Gaffney has been a member of the nominating committee.
He owns one IOM membership.
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|
David P. Gaughan
(VAD)
Age:
45
|
|
Mr. Gaughan has been a member of CME since 1994. During his trading career, he has been a local in the S&P 500 futures market. Mr. Gaughan owns one IOM membership.
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|
Joel P. Glickman
(GLK)
Age:
60
|
|
Mr. Glickman has been a member of CME since 1983. He has 15 years of experience as a floor broker in the S&P and 24 years experience as a local trader on Globex. Mr. Glickman is the principal of an
electronic trading group trading primarily
E-mini
S&P and 5 and 10 year treasury notes. He has served on numerous committees. Mr. Glickman owns one IOM membership.
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|
Jayne A. Valio
(JAV)
Age:
56
|
|
Ms. Valio has been a member of CME since 1985. During her trading career, she has been a broker in the currency options market. Ms. Valio has served on
the pit committee and arbitration committee. She owns one IOM membership.
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30
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Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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ITEM 5—Election of Class B-1, Class B-2 and Class B-3
Nominating Committees
(Continued)
|
|
|
|
Paul D. Zirpolo
(ZIR)
Age:
57
|
|
Mr. Zirpolo has been a member of CME since 1987. During his trading career, he has traded Live Cattle futures/options, Lean Hog futures/options and S&P 500
futures/options. Mr. Zirpolo trades through Trean Group. Mr. Zirpolo has been a floor trader, electronic trader and local. He owns one CME membership and one IOM membership.
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VOTE REQUIRED
The five nominees for the Class B-3 nominating committee receiving the highest number of “FOR” votes will be elected.
|
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|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
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|
31
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Compensation Committee Matters
|
This section provides an overview of the role and responsibility of our compensation committee. We have an executive compensation program that is designed to tie pay to performance, balance rewards with prudent
business decisions and risk management, and focus on both annual and long-term performance for the benefit of our shareholders. In designing our program, we also take into consideration our unique role in the financial services industry.
OUR COMPENSATION COMMITTEE PROVIDES OVERSIGHT OF OUR COMPENSATION PROGRAM FOR OUR SENIOR MANAGEMENT GROUP
The compensation committee is comprised of seven independent directors. The primary responsibilities of the compensation committee are to review and approve
compensation arrangements for our senior management group (our Executive Chairman & President, CEO and the other members of our executive team), to review and recommend compensation arrangements for the board of directors, to adopt
incentive compensation plans in which senior management is eligible to participate and to oversee matters relating to employee compensation, employee benefit plans and employee incentive programs. A complete description of the committee’s
responsibilities may be found in its charter, a copy of which is on our website.
There were eight meetings of the committee in 2015. The committee
typically meets in executive session for a portion of each regular committee meeting and may include members of management as appropriate. The committee provides regular reports to the board of directors on its activities.
THE COMMITTEE CONSIDERS THE RECOMMENDATIONS OF OUR EXECUTIVE CHAIRMAN & PRESIDENT AND CEO IN APPROVING COMPENSATION FOR OUR SENIOR
MANAGEMENT GROUP
The committee is solely responsible for approving the compensation of our senior management group. The committee, however, takes
into consideration the recommendations of our Executive Chairman & President and CEO in approving compensation for other members of our senior management group.
THE COMMITTEE DELEGATES AUTHORITY TO OUR CEO ON A LIMITED BASIS SUBJECT TO PRE-ESTABLISHED CRITERIA
Subject to pre-established guidelines for individual awards and aggregate value limitations, the committee delegates authority to the CEO to approve equity awards and annual cash bonus awards for employees other
than the Executive Chairman & President, members of our executive team and our chief accounting officer. The committee reviews annual reports on the use of such delegation.
OUR PROGRAM IS DESIGNED TO CREATE LONG-TERM SHAREHOLDER VALUE WHILE DISCOURAGING EXCESSIVE RISK TAKING
We realize that it is not possible to grow and enhance long-term shareholder value without assuming some level of risk. This is true whether we decide to make an acquisition, introduce a new product or change our
corporate strategy. Our compensation program is designed to create appropriate incentive for creating long-term shareholder value and delivering on our financial and strategic goals while discouraging excessive risk taking.
Several elements of our program, which are discussed in more detail in the
Compensation Discussion and Analysis
section beginning on
page
34
, are designed to promote the creation of long-term value and thereby discourage behavior that leads to excessive risk taking. The following are the key elements of our program designed to address compensation risk:
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•
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|
We utilize a mix of both fixed and variable compensation. Our fixed base pay is intended to provide a steady income.
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•
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|
A significant portion of our senior management group compensation is composed of long-term equity incentives and the senior management group is also subject to
company stock ownership guidelines based on their level of responsibility.
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•
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|
Our annual cash bonus plan for our senior management group and other senior employees will not pay out in the event we fail to achieve cash earnings at or above
the threshold level of performance.
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•
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|
We set maximum guidelines for annual incentive and long-term incentive awards, thereby establishing and communicating potential payouts.
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32
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Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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Compensation Committee Matters
(Continued)
|
|
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•
|
|
All compensation of our senior management group is subject to the approval of the compensation committee, which includes the ability to decrease an award for
failure to perform or inappropriate risk taking.
|
|
|
•
|
|
We have adopted a recoupment policy, whereby employees at the level of managing director and above may be required to repay any previously granted annual bonus
awards to the extent that all or a portion of such individual’s award was not actually earned due to a restatement of our financial results with the outcome being the achievement of the related performance metric was less than previously
reported.
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•
|
|
We prohibit all of our employees and board members from engaging in any derivative transactions in our securities (hedging the economic risk of their ownership
of our stock) and have adopted a policy restricting the pledging of our Class A shares by our board members and executive officers.
|
OUR COMPENSATION COMMITTEE HAS ITS OWN INDEPENDENT COMPENSATION CONSULTANT
The committee has
engaged Meridian Compensation Partners, LLC to serve as its independent advisor. During 2015, Meridian advised the committee regarding the revised employment agreements with our Executive Chairman & President and CEO. Meridian also provided
information on trends in executive compensation as well as general executive compensation advice. In late 2015, Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates also provided legal counsel to the committee regarding the
revised employment agreements.
Management also engages its own consultants to provide advice as it relates to compensation programs. Specifically in
2015, management engaged Exequity LLP to provide information on executive compensation practices and technical guidance on general executive compensation matters.
Such consultants may attend compensation committee meetings and provide advice to the compensation committee. The committee at its discretion may also include its independent advisor in such reviews and
decision-making processes, meeting either jointly or separately from management and management’s consultant.
The committee has assessed the
independence of the advisors it engaged in 2015 relative to the factors identified by the SEC and NASDAQ and determined they are independent and without conflict of interest.
OUR COMMITTEE IS COMPOSED OF INDEPENDENT MEMBERS WITH LIMITED RELATIONSHIPS WITH THE COMPANY—COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATON
During 2015, none of the members of the committee served at any time as an officer or employee of CME Group or received any compensation from us other than in his
capacity as a member of the board or a committee thereof or compensation for service on the board of one of our wholly-owned subsidiaries. Except as described below regarding Mr. Shepard, none of the members of the compensation committee has
any relationship with us other than service as a director or member of one of our exchanges or as an employee of one of our clearing or member firms. Mr. Shepard owns a minority interest in one of our clearing firms, which made net payments to
us of approximately $92 million, and he owns a minority interest in a trading firm that made indirect payments to us through its clearing firm in excess of $120,000 in connection with trading activity conducted on our exchanges in 2015. Such fees
are consistent with those prevailing at the time for corresponding activity by other similarly situated unrelated third parties. No member of the compensation committee is, or was during 2015, an executive officer of another entity, one of whose
board or compensation committee members served as an executive officer of the Company.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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33
|
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Compensation Discussion and Analysis
|
This discussion provides you with a detailed description of our compensation program for our named executive officers. It also provides an overview of our compensation philosophy and our policies and programs,
which are designed to achieve our compensation objectives, and an overview of our program as it relates to other members of our executive team. These individuals along with our named executive officers are referred to as our senior management
group.
KEY TOPICS COVERED IN OUR CD&A
|
|
•
|
|
Opportunity for Shareholder Feedback,
below
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•
|
|
Executive Summary,
page 35
|
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|
•
|
|
CEO Total Pay vs. Performance,
page
36
|
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•
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|
Philosophy and Objectives,
page 38
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•
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Principle Elements of our Compensation Program,
page
40
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•
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2015 Named Executive Officer Bonus Awards,
page 43
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•
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2015 Named Executive Officer Equity Awards,
page 44
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•
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Stock Ownership Guidelines, Hedging Policy, Tally Sheets and Recoupment Policy,
page
47
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2015 NAMED EXECUTIVE OFFICERS
|
|
Phupinder S. Gill,
Chief Executive Officer
|
|
John W. Pietrowicz,
Chief
Financial Officer
|
|
Terrence A. Duffy,
Executive Chairman & President
|
|
Bryan T. Durkin,
Chief
Commercial Officer
|
|
Kimberly S. Taylor,
President Global Operations, Technology & Risk
|
For the biographies of our currently serving named executive officers and our other executive officers, please see
Item 1.
Business—Employees—Senior Leadership Team and Executive Officers beginning
on
page
15
of our Annual Report on Form 10-K, filed with the SEC on February 26, 2016.
Opportunity for shareholder feedback
The
compensation committee carefully considers feedback from our shareholders regarding the compensation program for our senior management group. We believe the changes made in recent years to enhance the performance orientation of our program have been
well received by shareholders, as evidenced by our “say on pay” vote results.
At our 2015 annual meeting of shareholders, approximately 97% of
shareholders voted FOR the approval of our non-binding advisory vote on the compensation of our named executive officers. We plan to continue to hold annual advisory votes on executive compensation, which is consistent with the outcome of the
shareholder advisory vote in 2011 on the frequency of such votes. Next year, we will seek a separate shareholder advisory vote to determine the frequency of our future say-on-pay votes in accordance with applicable SEC rules.
Shareholders who wish to directly communicate with members of the compensation committee may do so using
directors@cmegroup.com
as discussed on
page
14
of this proxy statement.
You should read this section in conjunction with the advisory vote we are conducting on the compensation of our
named executive officers under
Item 3
on
page
21
as it contains information that is relevant to your voting decision.
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34
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Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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Compensation Discussion and Analysis
(Continued)
|
EXECUTIVE SUMMARY
Our business
As the operator of a global derivatives marketplace, we offer the widest range of global benchmark products across all major asset classes based on interest rates,
equity indexes, foreign exchange, energy, agricultural commodities and metals. We bring buyers and sellers together through our CME Globex electronic trading platform across the globe and our open outcry trading facilities in Chicago and New York
City, and provide hosting, connectivity and customer support for electronic trading through our co-location services. We provide clearing and settlement services for exchange-traded contracts, as well as for cleared swaps, and provide regulatory
reporting solutions for market participants through our global repository services in the United States, United Kingdom, Canada and Australia. Finally, we offer a wide range of market data services—including live quotes, delayed quotes, market
reports and a comprehensive historical data service—and continue to expand into the index services business. For more information on our business, see
Business
and
Management’s
Discussion and Analysis of Financial
Condition and Results of Operations
in our
2015 annual report
and the business highlights in the
Summary Information
on
page 1.
2015 compensation highlights for our named executive officers
The compensation committee took the following compensation actions with respect to our named executive officers during 2015 or related to 2015 performance:
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•
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|
Entered into revised employment agreements with Messrs. Duffy and Gill in November 2015. The details of the revised employment agreements for Messrs. Duffy and
Gill can be found beginning on
page
57
.
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•
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|
Awarded a base pay increase to Mr. Pietrowicz and a promotional equity award in early 2015 in connection with his appointment to CFO as described on
pages
41
and
51
, respectively.
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•
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|
Awarded bonuses to our named executive officers based on our achievement of 2015 cash earnings at 110.8% of the target goal as described beginning on
page
42
. For 2015, we continued to set a cash earnings goal that required significant effort on behalf of our management in the continued challenging environment.
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•
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|
Certified results for the September 2012 award of performance shares tied to 2013-2015 cash earnings growth on a per share basis and total shareholder return
relative to the S&P 500. Due to outstanding achievement against both goals, 200% of the target number of shares were earned and became vested in March 2016 as described on
page 45.
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•
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|
Awarded performance shares to our senior management group in September 2015 with goals tied to our growth in net income margin as compared to the diversified
financial services index of the S&P 500 and total shareholder return as compared to the S&P 500 measured over a three-year period (2016-2018), as described on
page 44.
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•
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|
In 2015, 50% of target total compensation for our named executive officers was considered performance-based, as it was directly tied to cash earnings, relative
net income margin growth or relative stock performance goals.
|
Key elements of the program are designed to ensure pay for
performance
Our overall goals and philosophy are complemented by several specific elements that are designed to align the compensation for our
senior management group with performance and position the Company for creating long-term shareholder value including:
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•
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|
Our annual bonus is tied to our generation of cash earnings. To the extent we fail to achieve cash earnings at the threshold level, representing 25% below the
target, no bonuses would be paid to our senior management group. The bonus opportunities for our named executive officers are set forth on
page
43
. We believe the cash earnings metric is a key component to measuring our growth and
contributes directly to deriving value for our shareholders as it is the metric used for determining our regular quarterly dividend payments.
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•
|
|
The aggregate amount of our bonus pool is subject to an overall cap when we achieve cash earnings at the maximum level, representing 20% above the established
target. We believe this cap provides transparency to our investors as to our compensation exposure and the expected expense is accrued on a quarterly basis based on actual cash earnings performance.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
35
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
|
|
•
|
|
In addition to verifying the annual achievement of cash earnings for purposes of our bonus program, our compensation committee also considers other elements of
our performance, such as our net income, total shareholder return, earnings per share and return on equity, as appropriate.
|
|
|
•
|
|
Our annual long-term incentive awards for our senior management group are comprised of 50% time-vested restricted shares and 50% performance shares. The
performance shares have a three-year performance period with growth in net income margin relative to the diversified financial services index of the S&P 500 and total shareholder return relative to the S&P 500 as the performance metrics. We
also have used performance shares for key longer-term growth initiatives to focus select leaders on the achievement of financial metrics and/or operational milestones associated with our most critical growth initiatives. The annual equity award
opportunities for our named executive officers are set forth on
page
44
.
|
|
|
•
|
|
Our senior management group is subject to stock ownership guidelines as discussed on
page 47
.
|
|
|
•
|
|
To ensure alignment with our shareholders, we have a policy that prohibits all employees and board members from engaging in any hedging or other derivative
transactions with respect to CME Group stock as well as a policy which restricts pledging of our Class A common stock by our board members and executive officers.
|
Overview of pay and performance alignment
One of the guiding principles of our compensation
program is to focus on achievement that benefits us and our shareholders. In support of that objective, a significant portion of the pay package for our CEO, Mr. Gill, and each of the other named executive officers is delivered in the form of
stock-based compensation, the value of which rises and falls in alignment with our stock performance.
The following graphic depicts the alignment of the
total pay of the individual serving as CEO at the end of the applicable year with our total shareholder return and cash earnings achievement for each of the last five years. Total shareholder return
(TSR)
is shown on a year-over-year, indexed
basis. Specifically, an investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock on December 31, 2011 and its performance is tracked through December 31, 2015.
CEO pay, as depicted in the following graphic, is the sum of reported pay elements set forth in the
Summary Compensation Table
for each of the last five
years except for the values of stock option, restricted stock, and performance share awards which are included as follows:
|
|
•
|
|
The value of stock option awards is shown as (1) the value realized at exercise for any options exercised during the year as reported in the
Option
Exercises and Stock Vested
table, and (2) the value of all outstanding, in-the-money stock options at year end measured as the difference between our stock price at year end minus the option exercise price.
|
|
|
•
|
|
The value of restricted stock awards is shown as (1) the value realized on vesting for any shares that vested during the year as reported in the
Option
Exercises and Stock Vested
table, and (2) the value of all outstanding restricted shares at year end measured using our stock price at year end.
|
|
|
•
|
|
The value of performance share awards is shown as (1) the value realized on vesting for any earned shares that vested during the year as reported in the
Option Exercises and Stock Vested
table, and (2) the market value of the shares actually earned at the completion of the performance period but have not yet vested, as reported in the
Outstanding Equity Awards at Fiscal Year End
table, and as certified by the committee based on achievement of the performance goals.
|
While the
Summary Compensation Table
discloses the fair value of stock option, restricted stock and performance share awards on the grant date in the manner required by the SEC (for purposes of allocating the accounting expense over the requisite service period), we feel those values
do not reflect the value actually received as a result of actual stock and financial performance. We believe the value of stock option, restricted stock and performance share awards as shown in this section better reflects the true alignment of our
CEO’s pay with our stock performance. As the graphic shows, our CEO’s total actual pay plus the unrealized value of his outstanding equity awards at year end has been aligned with TSR over the last five years, which accords with the
primary objectives of our executive compensation program.
|
|
|
|
|
|
|
|
36
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
On balance, CEO pay shows alignment with both stock performance and cash earnings given the focus on these measures in our incentive opportunities.
CEO Total Pay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011
|
|
|
2012
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
1,000,000
|
|
|
$
|
937,692
|
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
Non-Equity Incentive Plan Compensation
|
|
$
|
1,568,179
|
|
|
$
|
609,047
|
|
|
$
|
1,106,564
|
|
|
$
|
1,176,000
|
|
|
$
|
1,599,309
|
|
|
Change in Pension Value
|
|
$
|
51,907
|
|
|
$
|
66,481
|
|
|
$
|
—
|
|
|
$
|
71,395
|
|
|
$
|
24,903
|
|
|
All Other Compensation
|
|
$
|
284,230
|
|
|
$
|
153,094
|
|
|
$
|
146,073
|
|
|
$
|
175,103
|
|
|
$
|
229,541
|
|
|
Option Exercises and Stock Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards: Value Realized on Exercise
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,054,210
|
|
|
$
|
3,564,950
|
|
|
$
|
1,876,521
|
|
|
Restricted Stock Awards: Value Realized on Vesting
|
|
$
|
979,143
|
|
|
$
|
609,212
|
|
|
$
|
1,072,870
|
|
|
$
|
1,091,866
|
|
|
$
|
1,350,293
|
|
|
Performance Stock Awards: Value Realized on Vesting
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
83,976
|
|
|
$
|
100,229
|
|
|
$
|
128,784
|
|
|
Total Actual Pay
|
|
$
|
3,883,459
|
|
|
$
|
2,375,526
|
|
|
$
|
5,463,693
|
|
|
$
|
7,179,543
|
|
|
$
|
6,209,351
|
|
|
Outstanding Equity Awards at Fiscal Year End
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards: Unrealized Gain
|
|
$
|
6,287,878
|
|
|
$
|
3,500,295
|
|
|
$
|
6,505,734
|
|
|
$
|
3,735,145
|
|
|
$
|
2,556,803
|
|
|
Restricted Stock Awards: Market Value of Shares That Have Not Vested
|
|
$
|
3,759,341
|
|
|
$
|
1,849,455
|
|
|
$
|
2,647,633
|
|
|
$
|
3,181,560
|
|
|
$
|
2,917,139
|
|
|
Performance Stock Awards: Market Value of Performance Shares Earned but Not Vested
|
|
$
|
—
|
|
|
$
|
269,564
|
|
|
$
|
313,055
|
|
|
$
|
235,809
|
|
|
$
|
2,812,768
|
|
|
Performance Stock Awards: Value of Performance-based Restricted Stock Earned but Granted after Year-End
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Total Unrealized Value of Outstanding Equity Awards
(1)
|
|
$
|
10,047,219
|
|
|
$
|
5,619,314
|
|
|
$
|
9,716,422
|
|
|
$
|
7,152,514
|
|
|
$
|
8,286,710
|
|
|
Percent Change in Total Unrealized Value of Outstanding Equity Awards
|
|
|
—
|
%
|
|
|
(44
|
)%
|
|
|
73
|
%
|
|
|
(26
|
)%
|
|
|
16
|
%
|
|
Change in Total Unrealized Value of Outstanding Equity Awards
|
|
$
|
—
|
|
|
$
|
(4,427,905
|
)
|
|
$
|
4,097,108
|
|
|
$
|
(2,563,908
|
)
|
|
$
|
1,134,196
|
|
|
CEO Name
|
|
|
Donohue
|
|
|
|
Gill
|
|
|
|
Gill
|
|
|
|
Gill
|
|
|
|
Gill
|
|
|
(1)
|
These values do not reflect compensation delivered each year but rather a snapshot which includes the value of all unexercised stock options, unvested restricted
shares, and unvested but earned performance shares as of each year end. The type of equity award granted impacts the timeframe for realizing the value: stock options may be outstanding for up to 10 years given the 10-year option term, restricted
shares may be outstanding for up to four years given the four-year vesting
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
37
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
|
|
schedule, and performance shares, which have been tied to either a one- or three-year performance period, are included as outstanding only when they are deemed earned at the completion of the
performance period. Stock options and restricted stock are included in each year-end snapshot until the year in which the option is exercised or the restricted shares vest, at which point the actual value received is reported in the Total Actual Pay
section above. In 2012 we granted performance shares tied to a three-year performance period and restricted stock to our senior management group and ceased granting stock options. The value of these three-year performance shares has begun to be
reflected in the analysis above in 2015 with the completion of the 2013-2015 performance period and is reported in the Total Unrealized Value of Outstanding Equity Awards section.
|
PHILOSOPHY AND OBJECTIVES OF OUR COMPENSATION PROGRAM
The elements of our executive compensation program are designed to:
|
|
•
|
|
Pay for performance.
Focus on company and individual achievement for the benefit of CME Group and its shareholders through the incorporation of a
significant portion of annual compensation for our senior management group that varies based on company and individual performance.
|
|
|
•
|
|
Reward growth and profitability without undue risk.
Motivate and reward our employees to achieve results in support of our strategic initiatives
and to encourage profitability and growth while discouraging excessive risk taking.
|
|
|
•
|
|
Hire and retain top caliber executives.
Our compensation and benefits program is competitively designed to attract and retain the best talent.
|
|
|
•
|
|
Align with shareholder value.
The interests of our senior management group are linked to those of our shareholders through the risks and rewards of
the ownership of our stock. The overall design of the program, while competitive, should also be at a reasonable cost to our shareholders.
|
Our program is designed to be consistent with best practices
The compensation committee designs
our compensation program to motivate our senior management group to lead our entire company toward achieving short- and long-term financial and strategic goals, in addition to increasing shareholder value, all without encouraging excessive risk
taking. The committee continually evaluates what it considers to be best practices in executive compensation, and modifies our program to support our strategies and provide an appropriate balance of risk and reward. The following highlights our
current compensation practices that we believe drive performance and focus our senior management group on the creation of long-term value:
|
|
•
|
|
We tie pay to performance. In 2015, approximately 50% of the target total compensation opportunity for our named executive officers was tied to specific cash
earnings, relative net income margin growth or relative total shareholder return performance goals.
|
|
|
•
|
|
We set objective targets tied to company performance for our cash bonus that must be met at the threshold level in order to fund the bonus pool.
|
|
|
•
|
|
We mitigate undue risk, including utilizing caps on potential payouts and clawback provisions.
|
|
|
•
|
|
We have reasonable post-employment and change of control provisions.
|
|
|
•
|
|
We use employment contracts on a limited basis. Contracts are generally structured to include a three- to five-year term, do not provide for excessive severance
payments or include “golden parachute” tax gross ups.
|
|
|
•
|
|
We have adopted stock ownership guidelines and restrictions on hedging and pledging transactions to ensure our executives’ interests are linked to those of
our shareholders.
|
|
|
•
|
|
We provide only modest perquisites.
|
|
|
•
|
|
Our compensation committee reviews the reasonableness of our compensation by reviewing “tally” sheets and wealth accumulation reports.
|
|
|
|
|
|
|
|
|
38
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
USE OF COMPETITIVE DATA AND COMPARISON PRACTICES
Benchmarking practices
We are a complex organization that seeks to attract talent from a broad group of companies primarily located in the financial services industry
and within the technology sector. Because no individual company or single group of companies is exactly comparable to CME Group, when reviewing competitive data, we consider a broad set of data from a number of sources. We believe that reviewing a
combination of published survey compensation data in addition to publicly available compensation data (e.g. proxy statements) provides a valid reference point for the range of pay among companies with whom we compete for executive talent.
We broadly target compensation opportunities at the median (50
th
percentile) of the market, in total and for each component of pay for target performance levels. However, we believe that
benchmarking does not provide a complete basis for establishing compensation. Therefore, we do not use the market statistics rigidly, nor do we apply any specific formula to the data. We also review the range of values around the median, including
the 25
th
and 75
th
percentiles.
We use the
competitive compensation data for several purposes as it relates to the named executive officers and other employees. We use it to assess the competitiveness of total compensation for individual members of senior management and other employees on an
annual basis and we use it to develop and evaluate total compensation programs and guidelines for senior management and other employees on a more ad hoc basis. When making decisions about senior management pay, we analyze compensation relative to
the market median levels, and may make adjustments for market conditions and special considerations as appropriate in the context of our pay for performance philosophy. The compensation committee, within its discretion, may make alterations based on
its evaluation of the benchmarking data, as it deems appropriate, to ensure that our senior management compensation is performance-based and competitive in nature.
CME Group compensation peer group
The following 17 companies served as our peer group for
benchmarking our program for our senior management and members of our board of directors in 2015.
|
|
|
|
|
Dun & Bradstreet Corp.
|
|
Equifax Inc.
|
|
Fiserv Inc.
|
|
Franklin Resources Inc.
|
|
IntercontinentalExchange Inc.
|
|
Invesco Ltd.
|
|
MasterCard Inc.
|
|
McGraw Hill Financial Inc.
|
|
Moody’s Corp.
|
|
Nasdaq OMX Group Inc.
|
|
Northern Trust Corp.
|
|
Paychex Inc.
|
|
Schwab (Charles) Corp.
|
|
T. Rowe Price Group Inc.
|
|
TD AMERITRADE Holding Corp.
|
|
Western Union Co.
|
|
Yahoo Inc.
|
|
|
In selecting the peer group for executive compensation purposes, we targeted the following industries:
exchanges, financial services, technology, transaction services and other technology-driven financial companies. We selected companies within these sectors of similar size as measured by revenue and market capitalization. The companies within the
peer group are generally between 0.5 and 2.5 times CME Group in terms of revenues or market capitalization. At the time of review in 2015, CME Group was positioned at the 25
th
percentile of the peer group on revenue and at the 90
th
percentile on market capitalization.
Comparison of CEO pay to other named executive officers
The differences
between the allocation of compensation of our CEO and the other named executive officers are primarily the result of the differences in the role and responsibilities of the individual within the organization, the level of competitive demand for the
individual’s talent in the industry and the results of our benchmarking studies for similarly situated positions in the marketplace. We have not adopted a policy whereby the compensation of the CEO or any other named executive officer must be a
certain multiple higher or lower than any of the other named executive officers. As previously discussed, we broadly target total compensation levels at the median (50
th
percentile) of our peer group.
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
39
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Role of individual performance in the program
While consideration of benchmarking data to ensure
that our compensation is competitive is a critical component of compensation decisions, individual performance is factored into setting compensation in the following ways:
|
|
•
|
|
Base salary adjustments are based on an assessment of the individual’s performance in the preceding year, changes in his or her responsibilities as well as
a comparison with market data for comparable positions in our peer group and within the industry.
|
|
|
•
|
|
Our incentive targets for annual bonus and equity opportunities are based on the individual’s role and responsibilities in the organization in achieving our
annual goals as well as the competitive market data for similarly situated positions in the marketplace.
|
|
|
•
|
|
Individual performance and the achievement of specific goals is taken into consideration by the compensation committee in determining whether to use its
discretion in approving annual bonuses and equity awards at, above or below the target level.
|
PRINCIPAL ELEMENTS
OF OUR COMPENSATION PROGRAM
The principal components of our executive compensation program and the purpose of each component are presented in the
following table.
|
|
|
|
|
|
|
|
|
Compensation Component
|
|
Key Characteristics
|
|
Purpose
|
|
Where Reported in More Detail
|
|
Base Pay
|
|
Fixed compensation component. Reviewed annually, and adjusted, if and when appropriate.
|
|
Intended to compensate the
executive fairly based upon their
job duties and level of
responsibility.
|
|
Summary Compensation Table
on
page
50
under “Salary” and
described on
page
41
.
|
|
Performance-Based Bonus
|
|
Variable compensation component. Opportunity based upon our performance measured by cash earnings. Annual target levels set to encourage significant
effort and growth. Individual awards based on bonus opportunities and individual performance.
|
|
Intended to motivate and reward
the executive’s contribution to
achieving our short-term/annual
goals.
|
|
Summary Compensation Table
under “Non-Equity Incentive
Compensation,”
Grants of
Plan-
Based Awards
on
page
51
under
“Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards” and described on
page
41
.
|
|
Long-Term Incentives
|
|
Variable compensation component. Amounts actually realized will depend upon company financial and stock performance. Individual awards based on equity
opportunities and individual performance.
|
|
Intended to motivate and reward
the executive’s contribution to
achieving our long-term
objectives and increasing
shareholder
value and to serve as
a retention mechanism.
|
|
Summary Compensation Table
under “Stock Awards”,
Grants of
Plan-Based Awards
under
the
columns referencing equity
awards,
Option Exercises and
Stock Vested
on
page
54
and
described on
page
43
.
|
|
Health and Welfare Plans and Retirement Plans
|
|
Fixed component of pay.
|
|
Intended to provide benefits that
promote employee health and
support employees in attaining
financial security.
|
|
Summary Compensation Table
under “Change in Pension Value
and Non-Qualified
Deferred
Compensation Earnings” and “All
Other Compensation,”
Pension
Benefits
on
page
54
and
Non-
Qualified Deferred Compensation
on
page
55
.
|
|
Post-Employment Compensation
|
|
Fixed compensation component.
|
|
Intended to provide a temporary
income source following
termination (other than for cause)
including in the case of a change
in
control to ensure continuity of
management during that event.
|
|
Potential Payments to Named
Executive Officers
on
page
59
and
described on
page
47
.
|
|
|
|
|
|
|
|
|
40
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
We do not maintain formal targets for the allocation of total compensation through each of the foregoing elements. We believe that members of our senior management group, who have more direct responsibility for the
performance of CME Group, should have a greater percentage of their compensation tied to the performance of CME Group. In accordance with this philosophy:
|
|
•
|
|
Base salary should decrease as a percentage of overall compensation as employees gain more responsibility with more direct influence over our performance.
|
|
|
•
|
|
Employees in positions that most directly influence performance should have a larger percentage of their compensation tied to CME Group’s performance
through equity awards with a portion of the equity awards tied to corporate performance goals.
|
|
|
•
|
|
Actual awards of incentive compensation should be closely aligned with the performance of CME Group.
|
The following are the approximate average percentages the elements represent out of the total compensation for our named executive officers for 2015 as set forth in
the
Summary Compensation Table:
|
|
|
|
|
|
|
|
|
Base Salary
|
|
Annual Cash Bonus
(1)
|
|
Annual Equity
(2)
|
|
Other Compensation
(3)
|
|
20%
|
|
32%
|
|
43%
|
|
5%
|
|
(1)
|
Annual cash bonus is composed of amounts listed in the
Summary Compensation Table
under “Non-Equity Incentive Plan Compensation.”
|
|
(2)
|
Annual equity value shown is composed of amounts listed in the
Summary Compensation Table
under “Stock Awards.”
|
|
(3)
|
Other compensation is composed of amounts listed in the
Summary Compensation Table
under “Change in Pension Value and Non-Qualified Deferred Compensation
Earnings” and “All Other Compensation” columns.
|
Description of each element of compensation
Base pay
We
generally target base pay at the 50
th
percentile of the competitive market
relative to each position’s duties and level of responsibility. Each year the compensation committee reviews the base salaries of the senior management group taking into consideration their total compensation. In general, the evaluation of base
salaries involves a review of a variety of factors:
|
|
•
|
|
The nature and responsibility of the position.
|
|
|
•
|
|
The impact, contribution, expertise and experience of the individual.
|
|
|
•
|
|
Competitive market information regarding salaries to the extent available and relevant.
|
|
|
•
|
|
The importance of retaining the individual along with the competitiveness of the market for the individual’s talent and services.
|
|
|
•
|
|
Recommendations of the Executive Chairman & President and CEO (except in the case of their own compensation).
|
In general, the compensation committee considers salary increases for the senior management group on an annual basis. In early 2015, the committee approved a base
salary increase for Mr. Pietrowicz in recognition of his promotion to CFO. In November 2015, the committee approved salary increases for Messrs. Duffy and Gill in connection with their revised employment agreements. Effective January 1,
2016, Mr. Duffy’s base salary increased from $1,250,000 to $1,500,000 and Mr. Gill’s base salary increased from $1,000,000 to $1,250,000. The details of the revised employment agreements for Messrs. Duffy and Gill can be found
beginning on
page
57
.
Bonus
Our
annual bonus program is designed to focus the named executive officers and other members of senior management on the accomplishment of specific goals. In support of our philosophy, the performance-based bonus awards only pay out when we achieve cash
earnings at or above the threshold level. We use this metric because we believe it provides a transparent view of CME Group’s performance during the year. Cash earnings is also the metric used in our dividend policy. Our dividend policy
provides that our dividend target for our regular quarterly dividends is set at approximately 50% to 60% of the prior year’s cash earnings.
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
41
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
The cash earnings target is approved by our board of directors as part of our annual planning process and is also approved by the compensation committee as the performance metric for annual bonus opportunities
(adjusted to eliminate the impact of certain non-operating items). During the annual planning process, members of our senior management group undergo a detailed process to develop our annual operating budget and our revenue and growth expectations
which are used to formulate the projected cash earnings target for the following year. In setting the goals for the upcoming year, it is expected that such goals will be set at levels that require significant achievement on the part of our senior
management group taking into consideration CME Group’s current circumstances and the overall state of the industry. The 2015 cash earnings target for our bonus program was set at $1.335 billion.
Annual bonuses will only be paid to our senior management group to the extent we achieve cash earnings at or above the threshold level, which was set at 75% of the
target performance goal for 2015. The annual bonus pool is subject to a cap when we achieve cash earnings at the maximum level, which is set at 120% of the established target goal.
Our cash earnings are calculated using the following formula for purpose of the annual bonus.
|
|
|
Cash Earnings Calculation for Annual Bonus
|
|
Net Income
+ Depreciation
+
Stock Based Compensation*
+ Amortization on Purchased Intangibles*
- Capital Expenditures
= Cash Earnings
+/- Net Interest Expense*
= Bonus Incentive Plans Cash Earnings
Target as approved by compensation committee
*Adjusted on an after tax basis
|
The following shows our cash earnings goals and actual achievement for 2015 for purposes of our annual bonus program:
|
|
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
|
|
$1.001 billion
|
|
$1.335 billion
|
|
$1.602 billion
|
|
$1.479 billion
|
The compensation committee has discretion to make equitable adjustments to the cash earnings performance calculation to reflect
effects of external events outside the control of our senior management group, such as unforeseen litigation or changes in accounting or taxation standards. Such adjustments may also reflect effects of unusual or significant strategic events that
are within the control of our senior management that were not contemplated at the time the goal was established and that were undertaken with an expectation of improving our long-term financial performance, such as acquisitions or strategic
relationships. In 2015, the committee approved adjustments for certain non-performance items, such as deferred tax and foreign exchange fluctuation impacts, consistent with prior practice.
2015 bonus awards
Annual bonus opportunities are based upon CME Group’s achievement of cash earnings and
are awarded in consideration of the individual’s performance during the year. The committee approved the bonuses for the named executive officers for 2015 based on our achievement of cash earnings and in recognition of the previously discussed
accomplishments set forth on
page 1.
|
|
|
|
|
|
|
|
42
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
The table below shows the payout opportunities and actual bonus payments for 2015 as well as a comparison to actual 2014 cash bonuses for the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Named Executive Officer Bonus
Awards
|
|
|
Name
|
|
Bonus
Plan
Target as
%
of
Salary
|
|
|
Bonus
Plan
Target
(1)
|
|
|
Bonus
Plan
Maximum
as %
of Salary
|
|
|
Bonus Plan
Maximum
(1)
|
|
|
2015
Annual
Bonus
as % of
Salary
|
|
|
2014
Annual
Bonus
|
|
|
2015 Annual
Bonus
(1)
|
|
|
Percentage
Change
|
|
|
Phupinder S. Gill
|
|
|
100
|
%
|
|
$
|
1,038,462
|
|
|
|
200
|
%
|
|
$
|
2,076,923
|
|
|
|
154.0
|
%
|
|
$
|
1,176,000
|
|
|
$
|
1,599,309
|
|
|
|
36
|
%
|
|
John W. Pietrowicz
|
|
|
100
|
%
|
|
|
464,808
|
|
|
|
200
|
%
|
|
|
929,616
|
|
|
|
154.0
|
%
|
|
|
456,831
|
|
|
|
715,839
|
|
|
|
57
|
|
|
Terrence A. Duffy
|
|
|
100
|
%
|
|
|
1,298,077
|
|
|
|
200
|
%
|
|
|
2,596,154
|
|
|
|
154.0
|
%
|
|
|
1,470,000
|
|
|
|
1,999,136
|
|
|
|
36
|
|
|
Bryan T. Durkin
|
|
|
100
|
%
|
|
|
726,923
|
|
|
|
200
|
%
|
|
|
1,453,847
|
|
|
|
154.0
|
%
|
|
|
817,773
|
|
|
|
1,119,517
|
|
|
|
37
|
|
|
Kimberly S. Taylor
|
|
|
100
|
%
|
|
|
726,923
|
|
|
|
200
|
%
|
|
|
1,453,847
|
|
|
|
154.0
|
%
|
|
|
817,773
|
|
|
|
1,119,517
|
|
|
|
37
|
|
|
(1)
|
Under the terms of our bonus program, bonus awards are calculated from base salary paid during the applicable plan year. The 2015 amounts above reflect 27 bi-weekly payroll
periods during the year.
|
Our 2015 actual annual cash earnings results were 110.8% of the target level performance. As such, bonuses for
the named executive officers were approved by the committee at approximately 154% of their individual bonus target opportunities. The bonuses for all named executive officers were delivered at the level determined by cash earnings performance,
without any additional discretion applied by the committee.
Effective in 2016, Messrs. Duffy and Gill will have target bonus opportunities of 150% of
their base salaries as a result of their revised employment agreements. The details of the revised employment agreements for Messrs. Duffy and Gill can be found beginning on
page 57.
Equity
Long-term grants of equity are important to reflect an alignment with shareholder value creation and a
competitive mix of long- and short-term incentives. Our equity program is designed to reward and encourage the success and contributions of our employees, including our named executive officers, which leads to value creation for CME Group and our
shareholders.
Since 2012, the annual equity awards for members of our senior management group have been delivered in the form of performance shares and
time-vested restricted stock. This mix of equity vehicles enables us to focus employees on stock performance, provides for employee retention and directly aligns employee interests with shareholder value creation.
Equity grant practices
The following is a summary of our
equity grant practices and the role of the committee in approving awards:
|
|
•
|
|
Our annual equity awards are granted on September 15
th
or in the event the 15
th
is not a business day, the closest business day thereto.
|
|
|
•
|
|
At a meeting prior to the annual grant date, the committee approves the awards for the senior management group based upon the target equity opportunities and
recommendations from the Executive Chairman & President and CEO using a pre-set calculation of a percentage of base salary and a recent closing price. Actual awards are granted based on the previously approved calculation and the closing
price on the actual grant date. The committee receives a report of the actual awards at a subsequent meeting.
|
|
|
•
|
|
The committee has delegated authority to the CEO to approve annual, sign-on, retention and initiative-based equity awards to employees below our senior
management group other than our chief accounting officer, within parameters set by the committee. The CEO provides the committee with an annual report on awards granted under such delegated authority.
|
|
|
•
|
|
Our Omnibus Stock Plan and our Director Stock Plan prohibit the granting of options or stock appreciation rights below the market value on the date of grant, the
repricing of existing awards, and payment of dividends on performance based shares prior to the achievement of performance goals. Dividends relating to outstanding shares of unvested time-based restricted stock are accrued and paid out at vesting.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
43
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
In September 2015, the annual grants for our senior management group were comprised of 50% performance shares and 50% time-vested restricted
stock. The equity targets for our named executive officers were established based upon a review of the nature of the responsibility of the position of the executive within CME Group, the competitive market data derived through our benchmarking
practices and the ability of the employee to impact the overall growth and performance of CME Group based upon his or her role within the company. As discussed in more detail on
page 39
, we generally target total compensation in the 50
th
percentile of our peer group. Through our benchmarking process, we compare equity
compensation on a standalone basis as well as part of an executive’s overall total compensation.
The committee has the discretion to adjust the
annual equity awards to distinguish for individual performance. The annual equity awards for the named executive officers were made at the target levels for 2015.
The table below shows the annual equity award opportunities for our named executive officers and actual awards made in 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Named Executive Officer Equity Awards
|
|
|
Name
|
|
Annual
Equity Award
Target as
%
of
Base Salary
|
|
|
Annual
Equity
Award
Target
|
|
|
Actual
Annual
Equity Award
as %
of
Target
|
|
|
Actual
Annual Equity
Award
(1)
|
|
|
Phupinder S. Gill
|
|
|
200%
|
|
|
$
|
2,000,000
|
|
|
|
100%
|
|
|
$
|
2,000,000
|
|
|
John W.
Pietrowicz
(2)
|
|
|
200%
|
|
|
|
900,000
|
|
|
|
100%
|
|
|
|
900,000
|
|
|
Terrence A. Duffy
|
|
|
200%
|
|
|
|
2,500,000
|
|
|
|
100%
|
|
|
|
2,500,000
|
|
|
Bryan T. Durkin
|
|
|
200%
|
|
|
|
1,400,000
|
|
|
|
100%
|
|
|
|
1,400,000
|
|
|
Kimberly S. Taylor
|
|
|
200%
|
|
|
|
1,400,000
|
|
|
|
100%
|
|
|
|
1,400,000
|
|
|
(1)
|
The valuation methods used for award determination reflected above differ from those used in the
Summary Compensation Table
.
|
|
(2)
|
As CFO, Mr. Pietrowicz’s annual equity award target was 200% of salary for 2015. Under the terms of our equity program, Mr. Pietrowicz received a pro rata equity
award in March 2015 in connection with his promotion to CFO in late 2014, the value of which is not included in the above 2015 equity award table as it was meant to augment his 2014 award, however the pro rata award is reported in the
Grants of
Plan-Based Awards Table
on
page
51
.
|
In connection with their revised employment agreements, the equity award target
opportunities for Messrs. Duffy and Gill were increased from 200% of base salary to 300% and 250% of base salary, respectively, to be effective in 2016. The details of the revised employment agreements for Messrs. Duffy and Gill can be found
beginning on
page
57
. In late 2015, the committee approved an increase in the annual equity award target opportunity for the remaining named executive officers from 200% to 250% of base salary to be effective with 2016 awards. This
adjustment will better align total compensation with market levels with a focus on longer-term value creation.
Performance shares tied to 2016-2018
performance
The September 2015 performance share award criteria were divided with 50% based on growth in net income margin relative to the
diversified financial services index of the S&P 500 and 50% based on total shareholder return relative to the S&P 500, measured over 2016 through 2018. Following the three-year performance period, the award will be settled in unrestricted
shares of stock, based upon achievement of the following performance metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative
Net Income Margin Growth Performance
% of Target Award Earned
|
|
|
|
Relative TSR
Performance
% of Target Award Earned
|
Below
25th
Percentile
|
|
25th Percentile
|
|
50th Percentile
|
|
75th Percentile
|
|
|
|
Below 25th
Percentile
|
|
25th Percentile
|
|
50th Percentile
|
|
75th Percentile
|
|
0
|
|
50%
|
|
100%
|
|
200%
|
|
|
|
0
|
|
50%
|
|
100%
|
|
200%
|
|
|
|
|
|
|
|
|
44
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
The details of the performance share awards granted in September 2015 tied to 2016-2018 growth in net income margin relative to the diversified financial services index of the S&P 500 and total shareholder
return relative to the S&P 500 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
Performance Shares Awarded in 2015
|
|
|
|
|
|
|
|
|
|
Performance Share Payout Opportunity
(in Shares)
|
|
|
Name
|
|
Award Date
|
|
|
Performance Metric
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Phupinder S. Gill
|
|
|
9/15/2015
|
|
|
2016-2018 Net Income Margin Growth
|
|
|
2,625
|
|
|
|
5,250
|
|
|
|
10,500
|
|
|
|
|
|
9/15/2015
|
|
|
2016-2018 TSR
|
|
|
2,625
|
|
|
|
5,250
|
|
|
|
10,500
|
|
|
John W. Pietrowicz
|
|
|
9/15/2015
|
|
|
2016-2018 Net Income Margin Growth
|
|
|
1,181
|
|
|
|
2,362
|
|
|
|
4,724
|
|
|
|
|
|
9/15/2015
|
|
|
2016-2018 TSR
|
|
|
1,181
|
|
|
|
2,362
|
|
|
|
4,724
|
|
|
Terrence A. Duffy
|
|
|
9/15/2015
|
|
|
2016-2018 Net Income Margin Growth
|
|
|
3,281
|
|
|
|
6,562
|
|
|
|
13,124
|
|
|
|
|
|
9/15/2015
|
|
|
2016-2018 TSR
|
|
|
3,281
|
|
|
|
6,562
|
|
|
|
13,124
|
|
|
Bryan T. Durkin
|
|
|
9/15/2015
|
|
|
2016-2018 Net Income Margin Growth
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
|
|
|
|
9/15/2015
|
|
|
2016-2018 TSR
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
|
Kimberly S. Taylor
|
|
|
9/15/2015
|
|
|
2016-2018 Net Income Margin Growth
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
|
|
|
|
9/15/2015
|
|
|
2016-2018 TSR
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
Performance shares granted in 2012 tied to 2013-2015 performance
Members of our senior management group received performance share awards in September 2012 for the performance period 2013 through 2015, with
50% based on cash earnings growth measured on a per share basis and 50% based on total shareholder return relative to the S&P 500. The company achieved a compound annual growth rate of 2.5% on cash earnings on a per share basis for 2013 through
2015 as compared to 2010 through 2012, exceeding the target performance goal of .2% and the maximum goal of 1.3%. The company achieved 80
th
percentile total shareholder return relative to the S&P 500 for the performance period, exceeding the target goal of
50
th
percentile and the maximum goal of 75
th
percentile. Performance on both of these metrics resulted in a maximum payout, or 200%
of the total target performance shares being earned.
The following table shows total payout opportunities of the previously granted annual performance
shares tied to 2013 through 2015 performance based on the range of performance against the established metrics, and actual shares earned when performance was certified by the committee in early 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Performance Shares Tied to
2013-2015 Performance
|
|
|
|
|
|
|
|
|
|
Performance Share Payout
Opportunity (in Shares)
|
|
|
|
|
|
Name
|
|
Award Date
|
|
|
Performance Metric
(1)
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Actual Shares
Earned
|
|
|
Phupinder S. Gill
|
|
|
9/14/2012
|
|
|
2013-2015 Cash Earnings Growth
|
|
|
3,715
|
|
|
|
7,429
|
|
|
|
14,858
|
|
|
|
14,858
|
|
|
|
|
|
9/14/2012
|
|
|
2013-2015 TSR
|
|
|
3,715
|
|
|
|
7,429
|
|
|
|
14,858
|
|
|
|
14,858
|
|
|
John W. Pietrowicz
|
|
|
9/14/2012
|
|
|
2013-2015 Cash Earnings Growth
|
|
|
929
|
|
|
|
1,857
|
|
|
|
3,714
|
|
|
|
3,714
|
|
|
|
|
|
9/14/2012
|
|
|
2013-2015 TSR
|
|
|
929
|
|
|
|
1,857
|
|
|
|
3,714
|
|
|
|
3,714
|
|
|
Terrence A. Duffy
|
|
|
9/14/2012
|
|
|
2013-2015 Cash Earnings Growth
|
|
|
4,643
|
|
|
|
9,286
|
|
|
|
18,572
|
|
|
|
18,572
|
|
|
|
|
|
9/14/2012
|
|
|
2013-2015 TSR
|
|
|
4,643
|
|
|
|
9,286
|
|
|
|
18,572
|
|
|
|
18,572
|
|
|
Bryan T. Durkin
|
|
|
9/14/2012
|
|
|
2013-2015 Cash Earnings Growth
|
|
|
2,229
|
|
|
|
4,457
|
|
|
|
8,914
|
|
|
|
8,914
|
|
|
|
|
|
9/14/2012
|
|
|
2013-2015 TSR
|
|
|
2,229
|
|
|
|
4,457
|
|
|
|
8,914
|
|
|
|
8,914
|
|
|
Kimberly S. Taylor
|
|
|
9/14/2012
|
|
|
2013-2015 Cash Earnings Growth
|
|
|
2,229
|
|
|
|
4,457
|
|
|
|
8,914
|
|
|
|
8,914
|
|
|
|
|
|
9/14/2012
|
|
|
2013-2015 TSR
|
|
|
2,229
|
|
|
|
4,457
|
|
|
|
8,914
|
|
|
|
8,914
|
|
|
(1)
|
The committee certified performance results associated with the annual awards tied to 2013-2015 performance on February 3, 2016. Based on the committee’s certification,
the pre-established goals were achieved above the maximum performance goals established for each metric, resulting in 200% of the target shares to be paid. These shares became vested on March 15, 2016.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
45
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Initiative-based performance shares
In addition to annual equity awards, certain members of our senior
management group may be eligible to receive performance share awards based upon their contributions to select key corporate initiatives. Participation in such awards is at the recommendation of the Executive Chairman & President and CEO,
subject to approval by the compensation committee. Under this program, awards are earned based on performance against initiative-specific operational milestones or financial goals as certified by the committee.
We did not grant any such initiative-based performance shares to members of our senior management group in 2015, but previous awards made to members of our senior
management group were tied to 2015 performance goals. Ms. Taylor received an award in 2012 associated with her responsibility to one of our strategic initiatives which had a goal tied to 2015 performance.
The following table shows total payout opportunities of the previously granted initiative-based performance shares tied to 2015 performance based on the range of
performance against the established metrics, and actual shares earned when performance was certified by the committee in early 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initiative-Based Performance
Share Opportunity Tied to 2015 Performance
|
|
|
|
|
|
|
|
|
|
Performance Share Payout
Opportunity (in
Shares)
|
|
|
Actual Shares
Earned
|
|
|
Name
|
|
Award Date
|
|
|
Performance Metric
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
|
Kimberly S.
Taylor
(1)
|
|
|
12/14/2012
|
|
|
2015 Key Strategic Initiative
|
|
|
718
|
|
|
|
1,435
|
|
|
|
2,870
|
|
|
|
1,776
|
|
|
(1)
|
The committee certified performance results associated with the initiative-based awards tied to 2015 performance goals on February 3, 2016. Based on the committee’s
certification, the pre-established goal associated with Ms. Taylor’s award was achieved above the target level, resulting in 123.8% of the target shares to be paid. These shares became vested on March 15, 2016.
|
Performance-based grant of restricted stock
In lieu of participation in our initiative-based performance share program, Messrs. Duffy and Gill are eligible to receive an annual grant of time-vested restricted stock with a value of up to 100% of their base
salary based upon the achievement of outstanding performance as measured based on cash earnings and total shareholder return over the prior year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Cash Earnings Performance Award
|
|
|
|
Outstanding TSR Performance
Award
|
|
|
|
For each 0.1%
Above 120%
of Goal
|
|
At or Above
130% of
Goal
|
|
|
|
|
|
For each 0.1%
Above 75th
Percentile
|
|
At or Above
85th
Percentile
|
|
Value of Performance Award as % of base salary
|
|
0.5%
|
|
50%
|
|
|
|
Value of Performance Award as % of base salary
|
|
0.5%
|
|
50%
|
For 2015, our actual cash earnings performance was 110.8% of the target goal and our total shareholder return
performance was at the 73
rd
percentile of the S&P 500. As a result, no
shares were granted to Messrs. Duffy and Gill under this program based on 2015 performance.
Health and Welfare Plans and Retirement Plans
All eligible employees, including the named executive officers, participate in our benefit programs. We provide health and wellness benefits,
including medical and dental coverage, disability insurance benefits based on two-thirds of base pay and life insurance benefits based on three times base pay. In addition, employees are eligible to participate in our qualified retirement plans,
which consist of our 401(k) savings plan and our cash balance pension plan.
In addition to the qualified retirement plans, employees whose pay exceeds
the compensation limits for qualified benefit plans set by the Internal Revenue Service participate in a non-qualified deferred compensation plan which provides for “make-whole” contributions. For more information on our deferred
compensation plans, see
Non-Qualified Deferred Compensation Plans
beginning on
page 55
.
Qualified and non-qualified retirement benefits
provided to the named executive officers are set forth in the following tables:
Pension Benefits
and the
Non-Qualified Deferred Compensation Plans
on
pages 54
and
55,
respectively.
|
|
|
|
|
|
|
|
46
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
PERQUISITES AND OTHER PERSONAL BENEFITS
We provide limited perquisites and other personal
benefits to our senior management that we believe are moderate and consistent with our overall compensation program. We provide monthly parking benefits to a subset of our senior management group, including Messrs. Duffy and Gill. Additionally, all
of our senior level employees are entitled to an annual physical examination. The aggregate value of all perquisites received by each named executive officer in 2015 did not exceed $10,000. To the extent that perquisites result in imputed income to
the individual, we do not provide gross-up payments to cover the personal income tax due on such imputed income.
POST-EMPLOYMENT
COMPENSATION
Our employment contracts contain reasonable provisions and ensure continuity of leadership
Our philosophy is to enter into employment contracts and retention agreements on a very selective basis in light of the particular facts and circumstances involved
in the individual employment relationship, such as whether the employment arrangement would be necessary to recruit and/or retain necessary talent with compensation terms that we believe are in accordance with our overall compensation program. Our
employment agreements typically are for a period of three to five years, include non-compete and non-solicitation provisions, do not provide for cash severance payments in excess of three times annual base salary, do not provide for gross-up
payments (except in connection with certain self-insured supplemental life insurance payments that would be paid to Mr. Duffy’s beneficiaries under his agreement) and include a requirement that the executive execute a release agreement
before becoming entitled to receive severance payments. All contractual compensation terms within the employment agreements for our senior management group are reviewed and approved by the compensation committee. We believe that our existing
employment contracts contain compensation terms in line with our overall compensation program and philosophy. A description of the employment agreements we have with Messrs. Duffy and Gill is set forth in the section entitled
Potential Payments
Upon Termination or Change-in-Control—Employment Agreements and other Compensation Arrangements with Named Executive Officers
beginning on
page 57.
We have reasonable change-in-control and other termination provisions
Change-in-control
provisions assist us with retention during rumored and actual change of control activity when management continuity is key to preserving the value of the business. We also provide other severance benefits in connection with terminations other than
for misconduct. We believe these benefits allow us to facilitate changes with key employees, as needed, and to ensure minimal disruption to the business in exchange for non-competition and non-solicitation benefits for CME Group along with a general
release.
A description of our severance policies and practices and the estimated amounts that would be payable to our named executive officers under
certain circumstances are set forth under the section entitled
Potential Payments Upon Termination or Change-in-Control
beginning on
page 56.
OTHER COMPENSATION POLICIES
We have established stock ownership guidelines to
ensure alignment of interests with our shareholders
The committee has established the following stock ownership guidelines for the members of
our senior management group:
|
|
•
|
|
The Executive Chairman & President and CEO: shares with a value equal to at least a multiple of five times base pay.
|
|
|
•
|
|
Other members of the senior management group: shares with a value equal to at least a multiple of three times their respective base pay.
|
Each individual has five years from the date of hire or promotion to achieve their ownership guideline. As of the 2015 review, all of
our named executive officers had satisfied the guidelines.
The compensation committee monitors compliance with these stock ownership guidelines on an
annual basis. Generally shares that are deemed “owned” for purposes of Section 16 of the SEC regulations are counted towards satisfaction of these guidelines. Shares are valued based upon the greater of (i) the fair market value
at the time of the assessment and (ii) the actual value at the time of acquisition or, in the case of restricted stock or performance shares, at the time of vesting.
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
47
|
|
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
We prohibit derivative transactions and hedging of ownership risk of our securities and have adopted a policy restricting the pledging of our Class A shares
To ensure alignment of interests between our employees and board members and our shareholders and to further ensure that such individuals share in the risks and
rewards of the ownership of our stock, we prohibit our employees and members of the board from engaging in any derivative or hedging transactions relative to their ownership of our stock. The board also has adopted a policy prohibiting pledging of
our Class A shares. In connection with the adoption of the policy, the board elected to grandfather in the existing pledging arrangements of Messrs. Gepsman and Melamed based on the fact that:
|
|
•
|
|
The aggregate number of shares pledged was approximately 23,000 shares, which is significantly less than 0.1% of our outstanding Class A common stock.
|
|
|
•
|
|
The secured parties have each undertaken not to sell such pledged shares during any period in which our board members are restricted from trading under our
compliance policies.
|
|
|
•
|
|
These board members have agreed to own shares not subject to any pledging arrangement with a value that meets their applicable stock ownership guidelines.
|
|
|
•
|
|
The pledging arrangements were related to such individual’s derivatives trading activities at CME Group.
|
Our compensation committee and board annually review the total compensation of our senior management
To ensure the committee members are informed of the potential compensation levels of our senior management group, the committee reviews on an annual basis all
components of their compensation package and total compensation. This review includes annual base pay, annual cash bonus, value of annual equity awards, in-the-money value of all historic equity grants including monetized gains, the value of
retirement contributions under our qualified and non-qualified plans, and potential change-in-control payments. The committee provides an annual report on the results of this review to the board during an executive session. No changes to our program
were made as a result of the most recent annual review. For more information on the operation of our compensation committee see
page 32.
We have implemented a recoupment policy
In
furtherance of our philosophy to ensure the interests of our senior management are aligned with those of our shareholders, effective as of 2010, the compensation committee recommended and the board approved a recoupment policy. This policy provides
the board with the discretion to recoup annual bonus payments to our employees at the level of managing director and above in the event of a financial restatement, the effect of which is that such incentive payments were not otherwise earned by an
individual under our bonus programs based upon the restated calculation of our cash earnings or any other performance metric in effect at the time. In July 2015, the SEC proposed rules to implement the recoupment provisions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act. We plan to amend our recoupment policy as necessary to comply with the final rules.
|
|
|
|
|
|
|
|
48
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Compensation Committee Report
|
The compensation committee reviewed and discussed the
Compensation Discussion and Analysis
with our management. After such discussions, the committee recommended to the board of directors that the
Compensation Discussion and Analysis
be included in this proxy statement and incorporated by reference into our annual report on Form 10-K.
The
Compensation Committee—2015
Larry G. Gerdes,
Chairman
Timothy S. Bitsberger
Martin J. Gepsman
Daniel R. Glickman
William R. Shepard
Howard J. Siegel
Dennis A. Suskind
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
49
|
|
|
|
|
|
|
|
|
Executive Compensation
|
SUMMARY COMPENSATION TABLE
The following table provides information regarding the compensation
earned during the year ended December 31, 2015 by our named executive officers. In 2015, “
salary”
accounted for approximately 20% of the total compensation of the named executive officers as a whole and “
non-equity
incentive compensation”
accounted for approximately 32% of such total compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
|
Salary ($)
|
|
|
Stock
Awards
($)
(1)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(2)
|
|
|
Change
in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)
(3)
|
|
|
All
Other
Compensation
($)
(4)
|
|
|
Total ($)
|
|
|
Phupinder S. Gill
CEO
|
|
|
2015
|
|
|
|
1,000,000
|
|
|
|
2,064,248
|
|
|
|
1,599,309
|
|
|
|
24,903
|
|
|
|
229,541
|
|
|
|
4,918,001
|
|
|
|
|
2014
|
|
|
|
1,000,000
|
|
|
|
2,946,077
|
|
|
|
1,176,000
|
|
|
|
71,395
|
|
|
|
175,103
|
|
|
|
5,368,575
|
|
|
|
|
2013
|
|
|
|
1,000,000
|
|
|
|
1,896,717
|
|
|
|
1,106,564
|
|
|
|
—
|
|
|
|
146,073
|
|
|
|
4,149,354
|
|
|
John W. Pietrowicz
CFO
(5)
|
|
|
2015
|
|
|
|
450,000
|
|
|
|
1,233,922
|
|
|
|
715,839
|
|
|
|
18,443
|
|
|
|
76,140
|
|
|
|
2,494,344
|
|
|
|
|
2014
|
|
|
|
392,308
|
|
|
|
1,240,634
|
|
|
|
456,831
|
|
|
|
47,371
|
|
|
|
37,531
|
|
|
|
2,174,675
|
|
|
Terrence A. Duffy
Executive Chairman &
President
(6)
|
|
|
2015
|
|
|
|
1,250,000
|
|
|
|
2,580,113
|
|
|
|
1,999,136
|
|
|
|
25,465
|
|
|
|
294,475
|
|
|
|
6,149,189
|
|
|
|
|
2014
|
|
|
|
1,250,000
|
|
|
|
3,682,839
|
|
|
|
1,470,000
|
|
|
|
39,941
|
|
|
|
217,583
|
|
|
|
6,660,363
|
|
|
|
|
2013
|
|
|
|
1,250,000
|
|
|
|
2,370,760
|
|
|
|
1,383,206
|
|
|
|
15,947
|
|
|
|
204,613
|
|
|
|
5,224,526
|
|
|
Bryan T. Durkin
Chief Commercial Officer
|
|
|
2015
|
|
|
|
700,000
|
|
|
|
1,444,783
|
|
|
|
1,119,517
|
|
|
|
26,564
|
|
|
|
150,270
|
|
|
|
3,441,134
|
|
|
|
|
2014
|
|
|
|
700,000
|
|
|
|
1,845,492
|
|
|
|
817,773
|
|
|
|
120,684
|
|
|
|
90,470
|
|
|
|
3,574,419
|
|
|
|
|
2013
|
|
|
|
600,000
|
|
|
|
1,138,058
|
|
|
|
663,939
|
|
|
|
—
|
|
|
|
103,022
|
|
|
|
2,505,019
|
|
|
Kimberly S. Taylor
President Global Operations
Technology &
Risk
|
|
|
2015
|
|
|
|
700,000
|
|
|
|
1,444,783
|
|
|
|
1,119,517
|
|
|
|
20,988
|
|
|
|
140,715
|
|
|
|
3,426,003
|
|
|
|
|
2014
|
|
|
|
700,000
|
|
|
|
1,845,492
|
|
|
|
817,773
|
|
|
|
69,336
|
|
|
|
100,823
|
|
|
|
3,533,424
|
|
|
|
|
2013
|
|
|
|
600,000
|
|
|
|
1,138,058
|
|
|
|
663,939
|
|
|
|
—
|
|
|
|
78,979
|
|
|
|
2,480,976
|
|
|
(1)
|
The amounts reflected in the “Stock Awards” column reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board ASC
Topic 718 without giving effect to estimated forfeitures. The fair value of the 2015 restricted stock grants was calculated using the closing price on March 16, 2015 of $100.06 and September 15, 2015 of $95.24 (the respective grant dates).
The fair value of performance shares based on TSR relative to the S&P 500 shown in 2015 was calculated using a value of $147.70 for March 16, 2015 and $112.11 for December 31, 2015 (the respective grant dates), which was derived from a
Monte-Carlo simulation. The fair value of performance shares based on growth in net income margin relative to the diversified financial services index within the S&P 500 shown in 2015 was calculated using the closing price on March 16, 2015
of $100.06 and December 31, 2015 of $90.60.
|
|
(2)
|
The amounts included in the “Non-Equity Incentive Plan Compensation” column reflect awards to the named executive officers under our bonus plans, which are discussed on
page
41
under the “Bonus” heading. No other bonuses were paid.
|
|
(3)
|
The amounts reflected in the “Change in Pension Value and Non-Qualified Deferred Compensation Earnings” column reflect only the change in the pension value during the
particular year. Under our non-qualified deferred compensation plans, participants may invest in one or more market investments that are available from time to time. This is the only return that they receive and, therefore, no above-market earnings
are reflected in this table. For more information on our deferred compensation plans, see the section entitled
Non-Qualified Deferred Compensation Plans
on
page 55
.
|
|
(4)
|
Amounts included in the “All Other Compensation” column for 2015 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
Company
Contribution
|
|
|
Supplemental
Plan
(7)
|
|
|
Other
(8)
|
|
|
Total
|
|
|
Phupinder S. Gill
|
|
$
|
8,100
|
|
|
$
|
219,425
|
|
|
$
|
2,016
|
|
|
$
|
229,541
|
|
|
John W. Pietrowicz
|
|
|
8,092
|
|
|
|
66,838
|
|
|
|
1,210
|
|
|
|
76,140
|
|
|
Terrence A. Duffy
|
|
|
8,100
|
|
|
|
285,115
|
|
|
|
1,260
|
|
|
|
294,475
|
|
|
Bryan T. Durkin
|
|
|
4,685
|
|
|
|
143,569
|
|
|
|
2,016
|
|
|
|
150,270
|
|
|
Kimberly S. Taylor
|
|
|
7,658
|
|
|
|
131,041
|
|
|
|
2,016
|
|
|
|
140,715
|
|
|
(5)
|
Mr. Pietrowicz was not a named executive officer prior to 2014.
|
|
(6)
|
As discussed under the section entitled
Potential Payments upon Termination or Change-in-Control—Employment Agreements and other Compensation Arrangements with Named
Executive Officers
on
page 57
, we have agreed to self-insure supplemental life and long-term disability coverage for Mr. Duffy and to gross up his beneficiaries for any additional taxes incurred as a result of the supplemental life
coverage. Because no actual payments were made or liabilities incurred as a result of this coverage, no amounts have been included in Mr. Duffy’s compensation in respect of such coverage.
|
|
(7)
|
The items included under the “Supplemental Plan” column are 401(k) make-whole and pension make-whole contributions. Make-whole contributions are company contributions
for individuals whose compensation has exceeded the statutory compensation limit identified in Section 401(a)(17) of the Internal Revenue Code and thus must be excluded from consideration in qualified retirement plans.
|
|
|
|
|
|
|
|
|
50
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
|
(8)
|
The items included in the
“Other”
column include life insurance premiums paid by us for the benefit of the named executive officer as well as tax equalization
payments made for business-related travel as applicable. There were no tax equalization payments made to our named executive officers in 2015 for business-related travel.
|
GRANTS OF PLAN-BASED AWARDS
The following table shows the possible payouts to our named
executive officers in 2015 for awards made under our Incentive Plan for Named Executive Officers (Messrs. Gill, Duffy and Durkin and Ms. Taylor) and our bonus plan for other employees (Mr. Pietrowicz) and the equity awards granted under our
Omnibus Stock Plan in 2015. For additional information on our equity and bonus programs, see the section of this proxy statement entitled
Compensation Discussion and Analysis
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
(2)
|
|
|
Estimated Future Payouts
Equity Incentive Plan Awards
(3)
|
|
|
All Other
Stock Awards:
Number of
Shares of
Stock
|
|
|
Grant
Date
Fair Value of
Stock
Awards
|
|
|
Name
|
|
Type of
Award
(1)
|
|
Grant
Date
|
|
Approval
Date
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
|
Phupinder S. Gill
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
$
|
389,423
|
|
|
$
|
1,038,462
|
|
|
$
|
2,076,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,625
|
|
|
|
5,250
|
|
|
|
10,500
|
|
|
|
|
|
|
|
588,578
|
|
|
|
|
PS-NI
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,625
|
|
|
|
5,250
|
|
|
|
10,500
|
|
|
|
|
|
|
|
475,650
|
|
|
|
|
RS
|
|
9/15/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,500
|
|
|
|
1,000,020
|
|
|
John W. Pietrowicz
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
174,303
|
|
|
|
464,808
|
|
|
|
929,616
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
3/16/15
|
|
2/4/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
341
|
|
|
|
681
|
|
|
|
1,362
|
|
|
|
|
|
|
|
100,584
|
|
|
|
|
PS-NI
|
|
3/16/15
|
|
2/4/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
341
|
|
|
|
681
|
|
|
|
1,362
|
|
|
|
|
|
|
|
68,141
|
|
|
|
|
RS
|
|
3/16/15
|
|
2/4/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,364
|
|
|
|
136,482
|
|
|
|
|
PS-TSR
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,181
|
|
|
|
2,362
|
|
|
|
4,724
|
|
|
|
|
|
|
|
264,804
|
|
|
|
|
PS-NI
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,181
|
|
|
|
2,362
|
|
|
|
4,724
|
|
|
|
|
|
|
|
213,997
|
|
|
|
|
RS
|
|
9/15/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,724
|
|
|
|
449,914
|
|
|
Terrence A. Duffy
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
468,779
|
|
|
|
1,298,077
|
|
|
|
2,596,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,281
|
|
|
|
6,562
|
|
|
|
13,124
|
|
|
|
|
|
|
|
735,666
|
|
|
|
|
PS-NI
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,281
|
|
|
|
6,562
|
|
|
|
13,124
|
|
|
|
|
|
|
|
594,517
|
|
|
|
|
RS
|
|
9/15/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,124
|
|
|
|
1,249,930
|
|
|
Bryan T. Durkin
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
272,596
|
|
|
|
726,923
|
|
|
|
1,453,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
|
|
|
|
|
|
412,004
|
|
|
|
|
PS-NI
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
|
|
|
|
|
|
332,955
|
|
|
|
|
RS
|
|
9/15/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,348
|
|
|
|
699,824
|
|
|
Kimberly S. Taylor
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
272,596
|
|
|
|
726,923
|
|
|
|
1,453,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
|
|
|
|
|
|
412,004
|
|
|
|
|
PS-NI
|
|
12/31/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,838
|
|
|
|
3,675
|
|
|
|
7,350
|
|
|
|
|
|
|
|
332,955
|
|
|
|
|
RS
|
|
9/15/15
|
|
9/9/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,348
|
|
|
|
699,824
|
|
|
(1)
|
“Bonus” refers to 2015 annual bonus opportunity, “PS-TSR” refers to performance shares tied to total shareholder return relative to the S&P 500,
“PS-NI” refers to performance shares tied to growth in net income margin relative to the diversified financial services index within the S&P 500 and “RS” refers to time-vesting restricted stock awards. Performance shares are
granted at the target level and adjusted based on actual performance.
|
|
(2)
|
The amounts shown in the “Threshold,” “Target” and “Maximum” columns reflect the bonus opportunity for our named executive officers based upon their
annual bonus target as discussed on
page
42
under the “2015 bonus awards” heading and are dependent upon the level of cash earnings achieved.
|
|
(3)
|
Under our equity program, eligible employees, including members of our senior management group, typically receive annual equity awards in September of each year. Employees
promoted to the senior management group after the September awards are made are eligible for a prorated promotional award in March. On February 4, 2015, our compensation committee met and approved the pro rata promotional award for
Mr. Pietrowicz in connection with his promotion to CFO, which was made on March 16, 2015. For the pro rata promotional award, the amounts in the “Threshold,” “Target” and “Maximum” columns reflect the
performance share opportunity awarded in March 2015 tied to total shareholder return relative to the S&P 500 during 2015-2017, and growth in net income margin relative to the diversified financial services index within the S&P 500 during
2015-2017. On September 9, 2015, our compensation committee met and approved our annual equity awards for our executive officers based on our pre-established formulas under our equity program as described on
page 43
. These awards of
performance shares and time-vested restricted stock were made on September 15, 2015. The amounts in the “Threshold,” “Target” and “Maximum” columns reflect the performance share opportunity awarded in 2015 tied to
total shareholder return relative to the S&P 500 during 2016-2018, and growth in net income margin relative to the diversified financial services index within the S&P 500 during 2016-2018.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
51
|
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table summarizes the number of
securities underlying outstanding plan awards as of December 31, 2015 for each named executive officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Grant Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares
of Stock
That Have Not
Vested
(1)
|
|
|
Market
Value of
Shares
of
Stock That
Have Not
Vested
(2)
|
|
|
Equity
Incentive
Plan Awards:
Number
of
Unearned
Shares,
Units or Other
Rights
That have
Not
Vested
(1)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or Other
Rights
That Have
Not Vested
(2)
|
|
|
Phupinder S. Gill
|
|
|
12/31/2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
5,250
|
(3)
|
|
$
|
475,650
|
|
|
|
|
|
9/15/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,500
|
|
|
|
951,300
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/31/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,264
|
(4)
|
|
|
567,518
|
|
|
|
|
|
9/15/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9,396
|
|
|
|
851,278
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/20/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,050
|
(5)
|
|
|
276,330
|
|
|
|
|
|
3/14/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,487
|
|
|
|
225,322
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/31/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,050
|
(6)
|
|
|
276,330
|
|
|
|
|
|
9/16/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,100
|
|
|
|
552,660
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/23/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,858
|
(7)
|
|
|
1,346,135
|
|
|
|
|
|
12/31/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,858
|
(8)
|
|
|
1,346,135
|
|
|
|
|
|
9/14/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,715
|
|
|
|
336,579
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/5/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
569
|
(9)
|
|
|
51,551
|
|
|
|
|
|
12/31/2011
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
761
|
(10)
|
|
|
68,947
|
|
|
|
|
|
9/15/2011
|
|
|
|
17,080
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2010
|
|
|
|
31,120
|
|
|
|
54.30
|
|
|
|
9/15/2020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2009
|
|
|
|
20,080
|
|
|
|
56.87
|
|
|
|
9/15/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/16/2008
|
|
|
|
19,500
|
|
|
|
83.88
|
|
|
|
6/16/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/15/2007
|
|
|
|
9,950
|
|
|
|
110.54
|
|
|
|
6/15/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
John W. Pietrowicz
|
|
|
12/31/2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
2,362
|
(3)
|
|
$
|
213,997
|
|
|
|
|
|
9/15/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,724
|
|
|
|
427,994
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/16/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,364
|
|
|
|
123,578
|
|
|
|
681
|
(11)
|
|
|
61,699
|
|
|
|
|
|
12/31/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,680
|
(4)
|
|
|
152,208
|
|
|
|
|
|
9/15/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,520
|
|
|
|
228,312
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/20/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
763
|
(5)
|
|
|
69,128
|
|
|
|
|
|
3/14/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,484
|
(12)
|
|
|
315,650
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/31/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
763
|
(6)
|
|
|
69,128
|
|
|
|
|
|
9/16/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,524
|
|
|
|
138,074
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/23/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,714
|
(7)
|
|
|
336,488
|
|
|
|
|
|
12/31/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,714
|
(8)
|
|
|
336,488
|
|
|
|
|
|
9/14/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
929
|
|
|
|
84,167
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/5/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
166
|
(9)
|
|
|
15,040
|
|
|
|
|
|
12/31/2011
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
222
|
(10)
|
|
|
20,113
|
|
|
|
|
|
9/15/2011
|
|
|
|
5,000
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2010
|
|
|
|
12,060
|
|
|
|
54.30
|
|
|
|
9/15/2020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/15/2010
|
|
|
|
1,740
|
|
|
|
62.83
|
|
|
|
3/15/2020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2009
|
|
|
|
4,160
|
|
|
|
56.87
|
|
|
|
9/15/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/16/2008
|
|
|
|
5,175
|
|
|
|
83.88
|
|
|
|
6/16/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/15/2007
|
|
|
|
4,625
|
|
|
|
110.54
|
|
|
|
6/15/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/15/2006
|
|
|
|
3,900
|
|
|
|
88.13
|
|
|
|
6/15/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/15/2006
|
|
|
|
500
|
|
|
|
86.09
|
|
|
|
3/15/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
52
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Grant Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares
of Stock
That Have Not
Vested
(1)
|
|
|
Market
Value of
Shares
of
Stock That
Have Not
Vested
(2)
|
|
|
Equity
Incentive
Plan Awards:
Number
of
Unearned
Shares,
Units or Other
Rights
That have
Not
Vested
(1)
|
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares, Units or
Other Rights
That Have
Not
Vested
(2)
|
|
|
Terrence A. Duffy
|
|
|
12/31/2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
6,562
|
(3)
|
|
$
|
594,517
|
|
|
|
|
|
9/15/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,124
|
|
|
|
1,189,034
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/31/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,830
|
(4)
|
|
|
709,398
|
|
|
|
|
|
9/15/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,745
|
|
|
|
1,064,097
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/20/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,812
|
(5)
|
|
|
345,367
|
|
|
|
|
|
3/14/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,111
|
|
|
|
281,857
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/31/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,812
|
(6)
|
|
|
345,367
|
|
|
|
|
|
9/16/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,624
|
|
|
|
690,734
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/23/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,572
|
(7)
|
|
|
1,682,623
|
|
|
|
|
|
12/31/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
18,572
|
(8)
|
|
|
1,682,623
|
|
|
|
|
|
9/14/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,643
|
|
|
|
420,656
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/5/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
712
|
(9)
|
|
|
64,507
|
|
|
|
|
|
12/31/2011
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
953
|
(10)
|
|
|
86,342
|
|
|
|
|
|
9/15/2011
|
|
|
|
5,340
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/15/2007
|
|
|
|
27,550
|
|
|
|
110.54
|
|
|
|
6/15/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/15/2006
|
|
|
|
17,375
|
|
|
|
105.90
|
|
|
|
12/15/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Bryan T. Durkin
|
|
|
12/31/2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
3,675
|
(3)
|
|
$
|
332,955
|
|
|
|
|
|
9/15/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,348
|
|
|
|
665,729
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/31/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,385
|
(4)
|
|
|
397,281
|
|
|
|
|
|
9/15/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,576
|
|
|
|
595,786
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/20/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,830
|
(5)
|
|
|
165,798
|
|
|
|
|
|
12/31/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,830
|
(6)
|
|
|
165,798
|
|
|
|
|
|
9/16/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,660
|
|
|
|
331,596
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/23/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,914
|
(7)
|
|
|
807,608
|
|
|
|
|
|
12/31/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,914
|
(8)
|
|
|
807,608
|
|
|
|
|
|
9/14/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,229
|
|
|
|
201,947
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/5/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
409
|
(9)
|
|
|
37,055
|
|
|
|
|
|
12/31/2011
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
548
|
(10)
|
|
|
49,649
|
|
|
|
|
|
9/15/2011
|
|
|
|
12,280
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2010
|
|
|
|
22,380
|
|
|
|
54.30
|
|
|
|
9/15/2020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2009
|
|
|
|
11,960
|
|
|
|
56.87
|
|
|
|
9/15/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/16/2008
|
|
|
|
11,600
|
|
|
|
83.88
|
|
|
|
6/16/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/14/2007
|
|
|
|
9,200
|
|
|
|
109.72
|
|
|
|
9/14/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Kimberly S. Taylor
|
|
|
12/31/2015
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
3,675
|
(3)
|
|
$
|
332,955
|
|
|
|
|
|
9/15/2015
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,348
|
|
|
|
665,729
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
12/31/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,385
|
(4)
|
|
|
397,281
|
|
|
|
|
|
9/15/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,576
|
|
|
|
595,786
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/20/2014
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,830
|
(5)
|
|
|
165,798
|
|
|
|
|
|
12/31/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,830
|
(6)
|
|
|
165,798
|
|
|
|
|
|
9/16/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,660
|
|
|
|
331,596
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5/23/2013
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,914
|
(7)
|
|
|
807,608
|
|
|
|
|
|
12/31/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,914
|
(8)
|
|
|
807,608
|
|
|
|
|
|
12/14/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,776
|
(13)
|
|
|
160,906
|
|
|
|
|
|
9/14/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,229
|
|
|
|
201,947
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
3/5/2012
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
355
|
(9)
|
|
|
32,163
|
|
|
|
|
|
12/31/2011
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
475
|
(10)
|
|
|
43,035
|
|
|
|
|
|
9/15/2011
|
|
|
|
10,680
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2010
|
|
|
|
19,460
|
|
|
|
54.30
|
|
|
|
9/15/2020
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
9/15/2009
|
|
|
|
8,360
|
|
|
|
56.87
|
|
|
|
9/15/2019
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/16/2008
|
|
|
|
8,125
|
|
|
|
83.88
|
|
|
|
6/16/2018
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/15/2007
|
|
|
|
7,400
|
|
|
|
110.54
|
|
|
|
6/15/2017
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
6/15/2006
|
|
|
|
7,400
|
|
|
|
88.13
|
|
|
|
6/15/2016
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
53
|
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
|
(1)
|
Subject to acceleration or termination in certain circumstances, stock option and restricted stock awards generally vest over a four-year period, with 25% vesting one year after
the grant date with an additional 25% vesting on each anniversary date thereafter. Performance awards and special awards may have differing vesting schedules specific to the award purpose.
|
|
(2)
|
Market value was determined using the closing price on December 31, 2015 of $90.60.
|
|
(3)
|
Reflects performance shares awarded in September 2015 tied to TSR relative to the S&P 500 during 2016-2018, and growth in net income margin relative to the diversified
financial services index within the S&P 500 during 2016-2018, which will vest in full, if earned, following the completion of the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
|
(4)
|
Reflects performance shares awarded in September 2014 tied to TSR relative to the S&P 500 during 2015-2017, and growth in net income margin relative to the diversified
financial services index within the S&P 500 during 2015-2017, which will vest in full, if earned, following the completion of the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
|
(5)
|
Reflects performance shares awarded in September 2013 tied to cash earnings growth measured on a per share basis during 2014-2016, which will vest in full, if earned, following
the completion of the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
|
(6)
|
Reflects performance shares awarded in September 2013 tied to TSR relative to the S&P 500 during 2014-2016, which will vest in full, if earned, following the completion of
the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
|
(7)
|
Reflects performance shares awarded in September 2012 tied to cash earnings growth measured on a per share basis during 2013-2015, which vested in full following the completion
of the three-year performance period; payout value shown reflects actual performance results whereby 200% of target shares were earned. These became vested in March 2016.
|
|
(8)
|
Reflects performance shares awarded in September 2012 tied to TSR relative to the S&P 500 during 2013-2015, which vested in full following the completion of the three-year
performance period; payout value shown reflects actual performance results for 2015 whereby 200% of target shares were earned. These became vested in March 2016.
|
|
(9)
|
Reflects performance shares awarded in September 2011 earned based on the achievement of cash earnings during 2012; payout value shown reflects actual performance results whereby
65.8% of the target shares were earned. Twenty-five percent of the earned shares vested in March 2013 with the remaining vesting annually over the next three years, subject to continued employment.
|
|
(10)
|
Reflects performance shares awarded in September 2011 earned based on the achievement of TSR relative to the S&P 500 during 2012; payout value shown reflects actual
performance results whereby 88% of the target shares were earned. Twenty-five percent of the earned shares vested in March 2013 with the remaining vesting annually over the next three years, subject to continued employment.
|
|
(11)
|
Reflects performance shares awarded in March 2015 tied to TSR relative to the S&P 500 during 2015-2017, and growth in net income margin relative to the diversified financial
services index within the S&P 500 during 2015-2017, which will vest in full, if earned, following the completion of the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
|
(12)
|
Reflects time-vesting restricted shares awarded in March 2014 for purposes of retention. The award vested over two years, with 50% vesting in March 2015 and 50% vesting in March
2016.
|
|
(13)
|
Reflects performance shares awarded in December 2012 tied to initiative-specific operational milestones and financial goals, which vested in full following each of the completion
of the performance period(s), subject to continued employment; payout value shown reflects actual performance results for 2015 whereby 123.8% of target shares were earned. These became vested in March 2016.
|
OPTION EXERCISES AND STOCK VESTED
The
following table summarizes stock option exercises by our named executive officers and the vesting of their stock awards in 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Number of Shares
Acquired on Exercise
|
|
|
Value Realized
on Exercise
|
|
|
Number of Shares
Acquired on Vesting
|
|
|
Value Realized
on Vesting
|
|
|
Phupinder S. Gill
|
|
|
55,025
|
|
|
$
|
1,876,521
|
|
|
|
15,521
|
|
|
$
|
1,479,077
|
|
|
John W. Pietrowicz
|
|
|
4,000
|
|
|
|
169,712
|
|
|
|
8,153
|
|
|
|
783,173
|
|
|
Terrence A. Duffy
|
|
|
30,875
|
|
|
|
337,309
|
|
|
|
19,402
|
|
|
|
1,848,924
|
|
|
Bryan T. Durkin
|
|
|
11,250
|
|
|
|
535,725
|
|
|
|
9,698
|
|
|
|
923,614
|
|
|
Kimberly S. Taylor
|
|
|
13,000
|
|
|
|
645,710
|
|
|
|
12,116
|
|
|
|
1,158,266
|
|
PENSION BENEFITS
We maintain a non-contributory defined benefit cash balance pension plan for eligible employees. To be eligible, an employee must have completed a continuous 12-month period of employment with us and have reached
the age of 21. Our funding goal is to have the pension plan 100% funded on a projected benefit obligation basis, while also satisfying any minimum required contributions and maximizing tax deductible contribution requirements. Participants are fully
vested in their accounts after three years of service. Once an employee becomes a participant in the pension plan, their notional pension account is credited with an amount equal to an age-based percentage of that individual’s earnings plus the
greater of 4% interest or the December yield on
|
|
|
|
|
|
|
|
54
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
one-year constant maturity yield for U.S. Treasury notes. During 2015, the pension plan interest rate was 4%. The pension account is portable and vested balances may be paid out when participants
end their employment with us. Alternatively, upon retirement, a participant may elect to receive the balance in the account in the form of one of various monthly annuities.
The following is the schedule of employer contributions based on age and percentage of pensionable pay (including base pay, regular annual bonuses and merit lump sum payments) under our pension plan. Pensionable
pay is limited by the Internal Revenue Service Code, which imposed a limit of $265,000 in 2015:
|
|
|
|
|
|
|
Age
|
|
Employer Contribution Percentage
|
|
|
Under 30
|
|
|
3
|
%
|
|
30–34
|
|
|
4
|
|
|
35–39
|
|
|
5
|
|
|
40–44
|
|
|
6
|
|
|
45–49
|
|
|
7
|
|
|
50–54
|
|
|
8
|
|
|
55 or greater
|
|
|
9
|
|
The following table below sets forth the estimated payments under our pension plan for our named executive officers upon retirement
based upon the present value of the benefits expected to be paid in the future.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Years
Credited Service
|
|
|
Present Value of
Accumulated
Benefit
(1)
|
|
|
Payments During
Last Fiscal Year
|
|
|
Phupinder S. Gill
|
|
|
26
|
|
|
$
|
428,230
|
|
|
$
|
—
|
|
|
John W. Pietrowicz
|
|
|
11
|
|
|
|
207,124
|
|
|
|
—
|
|
|
Terrence A. Duffy
|
|
|
8
|
|
|
|
188,544
|
|
|
|
—
|
|
|
Bryan T. Durkin
|
|
|
33
|
(2)
|
|
|
642,939
|
|
|
|
—
|
|
|
Kimberly S. Taylor
|
|
|
26
|
|
|
|
393,467
|
|
|
|
—
|
|
|
(1)
|
In calculating the present value of the accumulated benefit, the following assumptions were used: assumed retirement age of 65; discount rate of 4.6% as of December 31,
2015; and projected future investment crediting rate assumption of 4% as of December 31, 2015. The normal retirement age as defined in our pension plan is 65 years of age with 5 years of service. Under the terms of our pension plan, years of
service for purposes of the plan are credited beginning on the first day of the calendar quarter on or after attaining one year of service with CME Group. Therefore, years of credited service under the plan are less than an employee’s actual
period of service with CME Group.
|
|
(2)
|
Includes Mr. Durkin’s prior service with CBOT and benefits previously accrued under the legacy CBOT pension plan.
|
NON-QUALIFIED DEFERRED COMPENSATION PLANS
All of our senior level employees, including our named executive officers, are eligible to defer up to 50% of their annual base salary and up to 100% of their bonus
into our Senior Management Supplemental Deferred Savings Plan. The contributions made by our named executive officers under this plan in 2015 are shown in the table below under “Executive Contributions.” Deferrals may be invested in one or
more market-based investments offered by the plan from time to time at the choice of the individual. The return on their investment choice is the only return they will receive on the contributions under the plan. We do not provide any guaranteed
rate of return. There is no limitation on their ability to change investments. Distributions will be on a fixed date, at termination or six months after termination depending upon the time of the distribution election and the requirements of
applicable law.
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
55
|
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
The deferred savings plan also includes 401(k) make-whole and pension make-whole contributions. Make-whole contributions are company contributions for individuals whose compensation has exceeded the statutory
compensation limit identified in the Internal Revenue Service code and thus must be excluded from consideration in qualified retirement plans. These amounts are included in the table below under “Registrant Contributions.” In addition to
the Senior Management Supplemental Deferred Savings Plan, some named executive officers below may have a balance in the Supplemental Executive Retirement Plan, which is a legacy CME Group nonqualified plan that was frozen on January 1, 2006.
Though no further contributions were made to this plan since that time, there are still returns on investments within this plan that are included in the table below. The aggregate balance at year-end in the table below includes any balance the named
executive officer may have in this plan as well as the Senior Management Supplemental Deferred Savings Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Contributions in
Last Fiscal Year
(1)
|
|
|
Registrant
Contributions in
Last Fiscal Year
(2)
|
|
|
Aggregate
Earnings in
Last Fiscal Year
(3)
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
Aggregate
Balance at
12/31/15
|
|
|
Phupinder S. Gill
|
|
$
|
—
|
|
|
$
|
219,425
|
|
|
$
|
44,269
|
|
|
$
|
—
|
|
|
$
|
6,394,385
|
|
|
John W. Pietrowicz
|
|
|
183,929
|
|
|
|
66,839
|
|
|
|
(5,274
|
)
|
|
|
102,787
|
|
|
|
939,820
|
|
|
Terrence A. Duffy
|
|
|
—
|
|
|
|
285,115
|
|
|
|
16,095
|
|
|
|
—
|
|
|
|
2,398,123
|
|
|
Bryan T. Durkin
|
|
|
—
|
|
|
|
143,569
|
|
|
|
(9,565
|
)
|
|
|
—
|
|
|
|
912,125
|
|
|
Kimberly S. Taylor
|
|
|
472,494
|
|
|
|
131,041
|
|
|
|
(68,973
|
)
|
|
|
—
|
|
|
|
4,934,785
|
|
|
(1)
|
All amounts included under “Executive Contributions” are also included in the “Salary” or “Non-Equity Incentive Plan Compensation” columns of the
Summary Compensation Table
on
page 50.
|
|
(2)
|
The amounts included under the “Registrant Contributions” column consist of: 401(k) make-whole and pension make-whole contributions and are included in the “All
Other Compensation” column of the
Summary Compensation Table.
|
|
(3)
|
“Aggregate Earnings” are based on the investment selection of the individuals from one or more market-based investments that the plan offers from time to time and are
the only return on contributions made by the named executive officer and CME Group. “Aggregate Earnings” represent amounts earned on contributions made in 2015 as well as prior contributions. Such earnings are not included in the
Summary Compensation Table
because they were not above market.
|
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
We have existing employment agreements with two of our named executive officers: Messrs. Duffy and Gill. These contractual
commitments are summarized below. For Mr. Pietrowicz, Mr. Durkin and Ms. Taylor, their employment relationships are governed by our policies and practices that we have in place for other employees from time to time, including members
of senior management. Estimated termination payments to our named executive officers under our employment agreements and general policies are shown in the table beginning on
page 57.
|
|
|
|
|
|
|
|
56
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
Employment Agreements and other Compensation Arrangements with Named Executive Officers
As
discussed in the
Compensation Discussion and Analysis
section
,
our philosophy is to enter into employment contracts and retention agreements on a very selective basis in light of the particular facts and circumstances involved in the
individual employment relationship. The following is a summary of the key terms of our employment agreements with Messrs. Duffy and Gill, which were most recently amended and restated effective as of November 11, 2015 and is qualified in its
entirety by the complete text of the employment agreements which were filed with the SEC on a current report on Form 8-K on November 12, 2015.
|
|
|
|
|
|
|
|
|
Duffy
|
|
Gill
|
|
Agreement Term
|
|
Extended from December 31, 2017 to December 31, 2020.
|
|
Extended from December 31, 2016 to December 31, 2019.
|
|
Minimum Base Salary
|
|
Effective January 1, 2016, minimum base salary was increased from $1,250,000 to $1,500,000.
|
|
Effective January 1, 2016, minimum base salary was increased from $1,000,000 to
$1,250,000.
|
|
Annual Bonus and Equity Compensation
|
|
For 2015, participated in our annual bonus and equity incentive plans under similar terms as our other
most senior executives.
Effective January 1, 2016, the annual target opportunity
under our bonus incentive plan was increased to 150% of base salary paid in the plan year. Effective January 1, 2016, for our equity incentive plan, the annual target grant date value opportunity was increased to 300% of base salary.
|
|
For 2015, participated in our annual bonus and equity
incentive plans under similar terms as our other most senior executives.
Effective
January 1, 2016, the annual target opportunity under our bonus incentive plan was increased to 150% of base salary paid in the plan year. Effective January 1, 2016, for our equity incentive plan, the annual target grant date value opportunity was
increased to 250% of base salary.
|
|
Termination Provisions
|
|
In the event of a termination of employment by the Company without cause, as defined in the agreement, in
addition to his accrued benefits, the executive is entitled to a one time lump sum severance payment equal to two times his then current base salary, subject to the executive’s timely execution and delivery of a general release. Additionally,
upon such a termination all outstanding unvested time-vesting equity awards that were granted after November 4, 2010 will automatically vest and in the case of stock options and stock appreciation rights will remain exercisable for a period of four
years from the date of termination (but not beyond the maximum term of the award). Also upon such a termination, all outstanding performance-based equity awards shall become vested or be forfeited solely based on actual performance measured over the
full performance term.
In the event of executive’s death or disability, as
defined in the agreement, all unvested time-vesting equity awards granted after November 4, 2010 will vest and in the case of stock options and stock appreciation rights will remain exercisable for a period of four years from the date of the event
(but not beyond the maximum term of the award) and all performance-based equity awards shall become vested at the target level and become payable within 30 days following the date of death or termination for disability.
|
|
In the event of a termination of employment by the
Company without cause, as defined in the agreement, in addition to his accrued benefits, the executive is entitled to a one time lump sum severance payment equal to two times his then current base salary, subject to the executive’s timely
execution and delivery of a general release. Additionally, upon such a termination all outstanding unvested time-vesting equity awards that were granted after August 5, 2009 will automatically vest and in the case of stock options and stock
appreciation rights will remain exercisable for a period of four years from the date of termination (but not beyond the maximum term of the award). Also upon such a termination, all outstanding performance-based equity awards shall become vested or
be forfeited solely based on actual performance measured over the full performance term.
In the event of executive’s death or disability, as defined in the agreement, all unvested time-vesting equity awards granted after August 5, 2009 will vest and in the case of stock options and stock
appreciation rights will remain exercisable for a period of four years from the date of the event (but not beyond the maximum term of the award) and all performance-based equity awards shall become vested at the target level and become payable
within 30 days following the date of death or termination for disability.
|
|
Change of Control
|
|
In the event of a change of control, as defined in the agreement, prior to
termination of employment, all of the executive’s unvested time-vesting equity awards shall become vested and all of the executive’s performance-based equity awards shall become vested or be forfeited solely based on actual performance
measured over the full performance term (unless a more favorable treatment is provided in the agreement evidencing the particular award or applies to the award pursuant to the operation of the applicable plan under which the award was granted, in
which case such more favorable treatment will apply). If executive is involuntarily terminated without cause within 60 days prior to a change of control, all of his unvested time-vesting equity awards that would have been outstanding had he been
employed on the date of the change of control will become vested and all performance-based equity awards shall become vested or be forfeited solely based on actual performance measured over the full performance term (unless a more favorable
treatment is provided in the agreement evidencing the particular award or applies to the award pursuant to the operation of the applicable plan under which the award was granted, in which case such more favorable treatment will
apply).
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
57
|
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
|
|
|
|
|
|
|
|
|
Duffy
|
|
Gill
|
|
Non-Compete Provision
|
|
The agreements also contain provisions prohibiting the executive during the term of
his employment, and for one year thereafter, from being employed in an executive or managerial capacity by, or providing, whether as an employee, partner, independent contractor, consultant or otherwise, any services of an executive or managerial
nature, or any services similar to those provided by him to the Company, to a competing business.
|
|
Treatment of Equity at Expiration
|
|
If employed by the Company on December 31, 2017, all outstanding unvested time-vesting equity awards
granted to the executive after November 4, 2010 and before
November 11, 2015 will vest and all of performance-based equity awards shall become vested or be forfeited solely based on actual performance measured over the full performance term,
which vesting is subject to executive’s timely execution and delivery of a general release.
If employed by the Company on December 31, 2020, all outstanding unvested time-vesting equity awards granted to the executive after November 11, 2015 will vest and all of performance-based equity awards shall
become vested or be forfeited solely based on actual performance measured over the full performance term, which vesting is subject to executive’s timely execution and delivery of a general release.
|
|
If employed by the Company on December 31, 2016, all
outstanding unvested time-vesting equity awards granted to the executive after August 5, 2009 and before
November 11, 2015 will vest and all of performance-based equity awards shall become vested or be forfeited solely based on actual performance
measured over the full performance term, which vesting is subject to executive’s timely execution and delivery of a general release.
If employed by the Company on December 31, 2019, all outstanding unvested time-vesting equity awards granted to the executive after November 11, 2015 will vest and
all of performance-based equity awards shall become vested or be forfeited solely based on actual performance measured over the full performance term, which vesting is subject to executive’s timely execution and delivery of a general
release.
|
|
Additional Benefits
|
|
In the event of executive’s disability or following any termination of employment by him voluntarily
or by the Company without cause, the executive will also be entitled to receive insurance and health benefits until the earlier to occur of (i) the fourth anniversary of the expiration or termination, as applicable, or (ii) the date the executive is
covered by comparable insurance and health benefits.
In the event that life
insurance coverage results in taxable income to executive’s beneficiaries, CME Group will provide a gross up.
|
|
In the event of executive’s disability or following any termination of employment by him
voluntarily or by the Company without cause, executive will also be entitled to receive insurance and health benefits until the earlier to occur of (i) the fourth anniversary of the expiration or termination, as applicable, or (ii) the date the
executive is covered by comparable insurance and health benefits.
|
Other CME Policies and Practices
The following is a summary of our other plans in place that provide for benefits upon termination of employment and/or in the event of a change of control.
Annual Performance Bonuses.
In accordance with the terms of our bonus plans, in the event an employee dies or becomes disabled, he or she or his or her beneficiaries will be entitled to receive
a pro rata bonus.
Severance Plans.
The compensation committee has adopted a written severance policy for termination
due to job elimination, reduction in force, or in limited circumstances, performance.
|
|
|
|
|
Severance Pay for Senior Employees
|
|
2 weeks per year of service, 6 week minimum, up to 39 weeks
|
|
Severance Pay for Other Exempt Employees
|
|
2 weeks per year of service, 4 week minimum, up to 26 weeks
|
|
Severance Pay for Non-Exempt Employees
|
|
1 week per year of service, 4 week minimum, up to 26 weeks
|
Additionally, the plan provides for COBRA coverage and outplacement services as well as acceleration of any outstanding unvested
stock options and restricted shares that would have otherwise vested during the severance pay period.
Equity Plans.
We make equity
grants to our employees under the Omnibus Stock Plan. All of the outstanding awards for our named executive officers follow the terms and conditions of the Omnibus Stock Plan. The terms of the employment agreements for Messrs. Duffy and Gill also
govern their equity awards.
In the event of death, the employee’s beneficiaries would vest in any outstanding equity awards, with
outstanding performance shares vesting at the target level. In the event of termination due to disability, outstanding restricted stock awards become vested and outstanding performance shares become vested at the target level. Awards automatically
vest upon a change of control (as defined in the Omnibus Stock Plan), with performance shares granted prior to May 23, 2012 vesting at the maximum level and performance shares granted after May 23, 2012 vesting at the greater of actual
performance at the time of the change of control or the target level.
|
|
|
|
|
|
|
|
58
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
In connection with our mergers with CBOT Holdings, Inc. and NYMEX Holdings, Inc., we acquired their equity plans. Following the mergers, no new awards were granted under these plans and only a small number of
awards under the CBOT plan remain outstanding.
POTENTIAL PAYMENTS TO NAMED EXECUTIVE OFFICERS
The following table sets forth the estimated benefits and payments upon termination of our named executive officers as of year-end, under various circumstances.
These payments assume a termination or change of control effective upon December 31, 2015 in accordance with their contractual provisions in effect at such time. Unless otherwise specified, payments and benefits that would be generally
available to all employees, including accrued benefits, are not included in the amounts below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Due to:
|
|
|
|
|
Involuntary
for Cause
|
|
|
Voluntary
|
|
|
Voluntary for
Good Reason
|
|
|
Involuntary
Not for Cause
|
|
|
Change In
Control
|
|
|
Death
|
|
|
Disability
|
|
|
Phupinder S. Gill
|
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,000,000
|
|
|
$
|
2,000,000
|
|
|
$
|
2,000,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
8,921,382
|
|
|
|
8,921,382
|
|
|
|
8,921,382
|
|
|
|
8,921,382
|
|
|
|
8,921,382
|
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
—
|
|
|
|
78,535
|
|
|
|
78,535
|
|
|
|
78,535
|
|
|
|
78,535
|
|
|
|
—
|
|
|
|
78,535
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,599,309
|
|
|
|
1,599,309
|
|
|
Total:
|
|
$
|
—
|
|
|
$
|
78,535
|
|
|
$
|
10,999,917
|
|
|
$
|
10,999,917
|
|
|
$
|
10,999,917
|
|
|
$
|
10,520,691
|
|
|
$
|
10,599,226
|
|
|
John W. Pietrowicz
|
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
207,692
|
|
|
$
|
207,692
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,054,675
|
|
|
|
3,158,044
|
|
|
|
3,158,044
|
|
|
|
3,158,044
|
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
10,088
|
|
|
|
10,088
|
|
|
|
—
|
|
|
|
—
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
715,839
|
|
|
|
715,839
|
|
|
Total:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,272,455
|
|
|
$
|
3,375,824
|
|
|
$
|
3,873,883
|
|
|
$
|
3,873,883
|
|
|
Terrence A. Duffy
|
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,500,000
|
|
|
$
|
2,500,000
|
|
|
$
|
2,500,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
11,151,773
|
|
|
|
11,151,773
|
|
|
|
11,151,773
|
|
|
|
11,151,773
|
|
|
|
11,151,773
|
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
—
|
|
|
|
133,451
|
|
|
|
133,451
|
|
|
|
133,451
|
|
|
|
133,451
|
|
|
|
—
|
|
|
|
133,451
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,999,136
|
|
|
|
1,999,136
|
|
|
Total:
|
|
$
|
—
|
|
|
$
|
133,451
|
|
|
$
|
13,785,224
|
|
|
$
|
13,785,224
|
|
|
$
|
13,785,224
|
|
|
$
|
13,150,909
|
|
|
$
|
13,284,360
|
|
|
Bryan T. Durkin
|
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
525,000
|
|
|
$
|
525,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,434,694
|
|
|
|
5,620,643
|
|
|
|
5,620,643
|
|
|
|
5,620,643
|
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
17,201
|
|
|
|
17,201
|
|
|
|
—
|
|
|
|
—
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,119,517
|
|
|
|
1,119,517
|
|
|
Total:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,976,895
|
|
|
$
|
6,162,844
|
|
|
$
|
6,740,160
|
|
|
$
|
6,740,160
|
|
|
Kimberly S. Taylor
|
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
525,000
|
|
|
$
|
525,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,584,093
|
|
|
|
5,770,042
|
|
|
|
5,770,042
|
|
|
|
5,770,042
|
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,401
|
|
|
|
5,401
|
|
|
|
—
|
|
|
|
—
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,119,517
|
|
|
|
1,119,517
|
|
|
Total:
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,114,494
|
|
|
$
|
6,300,443
|
|
|
$
|
6,889,559
|
|
|
$
|
6,889,559
|
|
|
(1)
|
Cash severance amounts represent contractual amounts for Messrs. Duffy and Gill in accordance with their contracts in effect at the end of 2015. Estimated cash severance amounts
for Mr. Pietrowicz, Mr. Durkin and Ms. Taylor are based upon our severance policy for senior leaders of CME Group. As of December 31, 2015, Mr. Pietrowicz had 12 years of service, Mr. Durkin had 33 years of service, and
Ms. Taylor had 27 years of service for purposes of the policy.
|
|
(2)
|
Amounts shown for the “Value of Equity Subject to Accelerated Vesting” are based on the applicable stock plan, severance plan and contractual provisions in place and
include accelerated vesting of outstanding options, restricted stock and performance shares as applicable. For purposes of this analysis, for performance awards tied to performance periods ending on or before December 31, 2015, the actual
number of shares earned was used in the calculations for applicable scenarios; for outstanding performance awards tied to performance beyond 2015, the target number of shares was used in the calculations. Unless specifically provided for in
contractual agreements, outstanding performance awards do not receive accelerated vesting in the case of involuntary termination. The values were determined using the closing price on December 31, 2015 of $90.60.
|
|
(3)
|
Amounts shown for the “Continuation of Health and Welfare Benefits” reflect our contractual agreements with Messrs. Duffy and Gill in effect during 2015 to provide them
with certain continuing benefits, and include the amount of COBRA coverage under our severance policy for Messrs. Pietrowicz and Durkin and Ms. Taylor, which is available to all employees. Mr. Duffy’s continuing benefits do not
reflect the additional amounts that CME Group may incur in connection with the self-insurance of certain benefits as previously described because such amounts were granted for the purposes of providing Mr. Duffy with the disability insurance
benefits based on two-thirds of base pay and life insurance benefits based on three times base pay consistent with benefits provided to other employees on a broad basis.
|
|
(4)
|
Amounts shown for the “Other Accrued Pay and Benefits” in event of death or disability include accrued bonus payments pursuant to our bonus plans based on actual bonus
amounts for 2015.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
59
|
|
|
|
|
|
|
|
|
Director Compensation
|
Our directors play a critical role in guiding our strategic direction and overseeing management. Developments in corporate governance and financial reporting have resulted in an increased demand for highly
qualified directors. We provide compensation commensurate with our directors’ workload, risk and opportunity costs. In addition, to satisfy our self-regulatory responsibilities, we have established a number of functional committees of which
certain of our directors are members. Our compensation program for our non-executive directors is designed to compensate our directors based on their respective levels of board participation and responsibilities, including service on board
committees and functional committees. Our non-executive directors who serve on the boards of certain of our regulated subsidiaries also receive compensation for such service.
Similar to our philosophy on management pay, we generally target the 50
th
percentile of the competitive market for compensation of the board of directors. We also review the range of values around the
median, including the 25
th
and
75
th
percentiles. The primary components of our board member compensation
package consist of an annual cash stipend, committee meeting fees, an annual equity stipend, committee chairperson retainers for our audit, compensation, finance, governance, market regulation oversight, nominating and risk committees and a stipend
for our lead director. Non-executive board members are eligible to participate in our Director Deferred Compensation Plan.
Our most
recent review showed that the median of our total for our individual non-executive directors fell below the 50
th
percentile of our peer group. (See
page
39
for the companies within our peer group.) No changes to the board’s compensation were recommended at the time of the review. The committee plans to
conduct similar reviews in the future. The board last approved changes to its compensation program in 2014.
The compensation of our board members is set
forth in the table entitled
Director Compensation Table
on
page
61
.
FEES AND BENEFIT PLANS FOR CME GROUP
NON-EXECUTIVE DIRECTORS
The compensation committee is responsible for reviewing and recommending to the board the compensation for the non-executive
directors of CME Group. Only non-executive directors receive compensation for their service as a director. Our non-executive director compensation includes:
|
|
|
|
|
|
|
Annual Stipends
|
|
|
|
|
Annual cash
stipend
(1)
|
|
$
|
60,000
|
|
|
Annual retainer for chairs of audit, compensation, finance, governance, market regulation oversight,
nominating and risk committees
|
|
$
|
20,000
|
|
|
Annual equity
stipend
(2)
|
|
$
|
100,000
|
|
|
Annual lead director stipend
|
|
$
|
25,000
|
|
|
Meeting Fees
|
|
|
|
|
CME Group board committee meeting fee for audit, compensation, executive, finance, governance, market
regulation oversight, nominating and risk committees
(3)
|
|
$
|
1,500
|
|
|
Additional meeting fee for serving as chair of audit, compensation, finance, governance, market
regulation oversight, nominating and risk committees
|
|
$
|
500
|
|
|
Meeting fee for members of the strategic steering committee and any functional exchange committee
(3)
|
|
$
|
1,000
|
|
|
(1)
|
Directors have the option to elect to receive some or the entire portion of their annual cash stipend, which is paid pro-rata on a monthly basis, in shares of stock valued at the
closing price on the date of grant. If a director who elects to receive additional stock leaves the board prior to the next annual meeting, such director will be responsible for repaying us for the amount of the unearned stipend that otherwise would
have been paid in cash.
|
|
(2)
|
Shares received are granted under our Director Stock Plan and are not subject to any vesting restrictions.
|
|
(3)
|
The fee for telephonic participation in a regularly scheduled CME Group board committee meeting is 50% of that for in-person participation. However, it is within the discretion
of the Executive Chairman & President for executive committee meetings and within the discretion of the particular chairman of our other committees to determine if it is appropriate to pay the full meeting fee, taking into consideration the
member’s ability to participate based upon the particular circumstances. It is within the discretion of a committee to create a subcommittee to address a specific issue and to determine whether members of such subcommittee should receive fees
up to the amount of the regular committee meeting fee for their participation in such subcommittee.
|
Non-executive directors may
participate in our Director Deferred Compensation Plan in the market investments that the plan offers from time to time. The return on the investments selected by the directors is the only return they will receive on their deferred compensation. We
do not provide any pension, health benefit or other benefit programs to our non-executive directors.
|
|
|
|
|
|
|
|
60
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Director Compensation
(Continued)
|
The following table provides information regarding the compensation earned during the year ended December 31, 2015 by each of the directors, except for Messrs. Duffy and Gill. The compensation for Messrs.
Duffy and Gill as our named executive officers is set forth in the
Summary Compensation Table
on
page
50
.
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Fees Earned or
Paid in
Cash
(1)
|
|
|
Stock
Awards
(2)
|
|
|
All
Other
Compensation
|
|
|
Total
|
|
|
Jeffrey M. Bernacchi
|
|
$
|
88,500
|
|
|
$
|
100,016
|
|
|
$
|
—
|
|
|
$
|
188,516
|
|
|
Timothy S. Bitsberger
|
|
|
99,000
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
199,016
|
|
|
Charles P. Carey
|
|
|
20,717
|
|
|
|
159,988
|
|
|
|
—
|
|
|
|
180,705
|
|
|
Dennis H. Chookaszian
|
|
|
123,345
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
223,361
|
|
|
Elizabeth
Cook
(3)
|
|
|
47,270
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
147,286
|
|
|
Ana Dutra
|
|
|
36,500
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
136,516
|
|
|
Martin J.
Gepsman
(4)
|
|
|
147,249
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
247,265
|
|
|
Larry G. Gerdes
|
|
|
84,528
|
|
|
|
159,988
|
|
|
|
—
|
|
|
|
244,516
|
|
|
Daniel R.
Glickman
(5)
|
|
|
100,764
|
|
|
|
130,002
|
|
|
|
—
|
|
|
|
230,766
|
|
|
J. Dennis
Hastert
(6)
|
|
|
47,333
|
|
|
|
—
|
|
|
|
—
|
|
|
|
47,333
|
|
|
William W.
Hobert
(3)
|
|
|
1,528
|
|
|
|
159,988
|
|
|
|
—
|
|
|
|
161,516
|
|
|
Bruce F.
Johnson
(7)
|
|
|
33,600
|
|
|
|
—
|
|
|
|
—
|
|
|
|
33,600
|
|
|
Leo Melamed
|
|
|
71,000
|
|
|
|
100,016
|
|
|
|
300,000
|
(8)
|
|
|
471,016
|
|
|
William P. Miller II
|
|
|
111,000
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
211,016
|
|
|
James E.
Oliff
(4)
|
|
|
117,012
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
217,028
|
|
|
Ronald A. Pankau
|
|
|
81,500
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
181,516
|
|
|
Edemir Pinto
(9)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Alex J. Pollock
|
|
|
37,278
|
|
|
|
159,988
|
|
|
|
—
|
|
|
|
197,266
|
|
|
John F. Sandner
|
|
|
70,500
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
170,516
|
|
|
Terry L. Savage
|
|
|
93,000
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
193,016
|
|
|
William R. Shepard
|
|
|
48,460
|
|
|
|
159,988
|
|
|
|
—
|
|
|
|
208,448
|
|
|
Howard J. Siegel
|
|
|
90,783
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
190,799
|
|
|
Dennis A. Suskind
|
|
|
124,750
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
224,766
|
|
|
David J. Wescott
|
|
|
70,250
|
|
|
|
100,016
|
|
|
|
—
|
|
|
|
170,266
|
|
|
Steven E.
Wollack
(7)
|
|
|
32,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,500
|
|
|
(1)
|
The amounts reflected in the “Fees Earned or Paid in Cash” consist of annual cash stipends, committee meeting fees (board, functional and subcommittee) and annual
retainers for the chairs of the audit, compensation, finance, governance, market regulation oversight, nominating and risk committees, including amounts deferred under our Director Deferred Compensation Plan. Board committee and functional committee
meeting fees and fees for service on one of our subsidiary boards are subject to an overall cap of $100,000 per year.
|
|
(2)
|
The amounts reflected in the “Stock Awards” column reflect the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board ASC
Topic 718. Actual value of stock awards in 2015 was calculated using the closing price on June 25, 2015 of $94.00. The awards represent our annual grant to our non-executive board members. The annual equity stipends granted to our non-executive
directors are not subject to any vesting restrictions. See the table entitled
Directors, Director Nominees and Executive Officers
on
page
63
for the complete stock ownership of our board members. No other awards were made to our
non-executive board members in 2015. Awards valued at $100,016 are due to share rounding and awards in excess of $100,016 are due to the director’s election to receive additional shares in lieu of all or a portion of his or her annual cash
stipend.
|
|
(3)
|
Joined the board on May 20, 2015.
|
|
(4)
|
Includes fees earned for service on one of our subsidiary boards.
|
|
(5)
|
Mr. Glickman chairs our governance committee and serves as our lead director.
|
|
(6)
|
Resigned from the board on May 28, 2015.
|
|
(7)
|
Retired from the board effective May 20, 2015.
|
|
(8)
|
Consists of consulting fees. Does not include amounts reimbursed by CME Group for Mr. Melamed’s expenses submitted in connection with his consulting arrangement
described on
page 62
.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
61
|
|
|
|
|
|
|
|
|
Director Compensation
(Continued)
|
|
(9)
|
We have an equity ownership agreement with BM&FBOVESPA, in which we have an approximate 4 percent stake in BM&FBOVESPA, and BM&FBOVESPA had an approximate 4 percent
stake in our Class A common stock. Mr. Pinto served as the BM&FBOVESPA board representative in accordance with the terms of the agreement. As Mr. Pinto’s service was in connection with the companies’ contractual
commitments, he did not receive compensation from us for his services on our board. Mr. Pinto resigned from the board as of April 6, 2016.
|
DIRECTOR STOCK PLAN
Our Director Stock Plan provides for the issuance of up to 625,000 shares
of Class A common stock (subject to adjustment in the event of a merger, reorganization or similar corporate event involving us) through awards of non-qualified stock options, restricted stock and shares of common stock. The plan is
administered by the compensation committee, which has the responsibility for recommending to the board the annual equity stipend for our non-executive directors.
STOCK OWNERSHIP GUIDELINES
Our non-executive board members are subject to stock ownership
guidelines valued at two times the total annual retainer (representing 5.3 times the cash portion of the retainer, or $320,000). Each member has five years from May 2008 or election to the board, whichever is later, to achieve this stock ownership
guideline. As of the 2015 review, all of our board members with five or more years of board service had satisfied the guideline.
CONTRACTUAL RELATIONSHIPS WITH CERTAIN DIRECTORS
Mr. Melamed.
We have two consulting agreements with Mr. Melamed. One applies during the time he serves on our board and the other applies upon his retirement from the board with a
term through the end of his lifetime.
In accordance with the terms of the agreement in effect during his board service, Mr. Melamed
will provide us with consulting services relating to the financial services industry and related matters within Mr. Melamed’s areas of expertise. For these services, Mr. Melamed will receive $300,000 per annum plus all reasonable and
necessary out-of-pocket travel and other expenses incurred in connection with the consulting services and up to $190,000 annually for non-travel expenses, including office and secretarial expenses. Under the agreement, Mr. Melamed may not,
without our prior written consent, render services to any competitor or otherwise compete with us throughout the term of the agreement and for one year thereafter. Mr. Melamed also receives compensation for his service on our board.
Under the terms of the agreement in effect upon Mr. Melamed’s retirement from the board until his death or until his termination of the agreement,
Mr. Melamed will provide us with similar consulting services and will receive $300,000 per annum plus reimbursement for all reasonable and necessary out-of-pocket travel and other expenses incurred relating to his service. We will also provide
office and secretarial support during the term of the agreement. Mr. Melamed may not render services to any competitor or otherwise compete with us during the term of the agreement without our prior written consent. In the event the agreement
is terminated during Mr. Melamed’s lifetime he will continue to be subject to the non-compete provisions for one year after such termination.
We also have employment agreements with Messrs. Duffy and Gill, which are described above in the section entitled
Potential Payments upon Termination or
Change-in-Control
on
page
56
.
|
|
|
|
|
|
|
|
62
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Security Ownership of CME Group Common Stock
|
The following tables show the amount of common stock owned by each of our directors, director nominees and by each executive officer who is not also a director named in the
Summary Compensation Table
on
page 50
of this proxy statement, and by all directors and executive officers as a group and the amount of common stock beneficially owned by individuals owning five percent or more of our Class A common stock as of March 22, 2016.
In general, “beneficial ownership” includes those shares over which a person has the power to vote, or the power to transfer, and stock options that are currently exercisable or will become exercisable within 60 days of March 22,
2016. Except as otherwise noted, the persons named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. None of our directors, director nominees or executive officers beneficially
own more than one percent of any class of common stock. Shares have been rounded to the nearest full amount.
Directors, Director Nominees
and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class of Common Stock
|
|
|
Name of Beneficial Owner
(1)
|
|
A
|
|
|
B-1
|
|
|
B-2
|
|
|
B-3
|
|
|
B-4
|
|
|
Terrence A.
Duffy
(2)(3)
|
|
|
140,942
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
Phupinder S.
Gill
(2)
|
|
|
231,791
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Jeffrey M.
Bernacchi
(4)
|
|
|
64,998
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Timothy S. Bitsberger
|
|
|
9,449
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Charles P.
Carey
(5)
|
|
|
29,327
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
Dennis H.
Chookaszian
(6)
|
|
|
11,859
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Bradley P. Cohen
|
|
|
500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
Elizabeth A.
Cook
(7)
|
|
|
18,564
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
Michael J. Downs
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Ana Dutra
|
|
|
1,064
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Martin J.
Gepsman
(8)
|
|
|
42,527
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
1
|
|
|
Larry G. Gerdes
|
|
|
29,592
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Daniel R.
Glickman
(9)
|
|
|
14,865
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
William W.
Hobert
(10)
|
|
|
115,846
|
|
|
|
3
|
|
|
|
6
|
|
|
|
7
|
|
|
|
—
|
|
|
Patrick W. Maloney
|
|
|
—
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
Leo Melamed
(11)
|
|
|
15,953
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
William P. Miller II
|
|
|
11,949
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Douglas M. Monieson
|
|
|
4,500
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
James E.
Oliff
(12)
|
|
|
35,686
|
|
|
|
1
|
|
|
|
2
|
|
|
|
—
|
|
|
|
1
|
|
|
Ronald A.
Pankau
(13)
|
|
|
3,707
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
Jeremy J. Perlow
|
|
|
100
|
|
|
|
1
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Edemir
Pinto
(14)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Alex J.
Pollock
(15)
|
|
|
17,412
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
John F. Sandner
|
|
|
147,334
|
|
|
|
3
|
|
|
|
2
|
|
|
|
4
|
|
|
|
1
|
|
|
Terry L.
Savage
(16)
|
|
|
13,949
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
William R.
Shepard
(17)
|
|
|
187,129
|
|
|
|
5
|
|
|
|
5
|
|
|
|
2
|
|
|
|
1
|
|
|
Howard J. Siegel
|
|
|
80,226
|
|
|
|
1
|
|
|
|
—
|
|
|
|
1
|
|
|
|
—
|
|
|
Dennis A. Suskind
|
|
|
11,024
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
David J.
Wescott
(18)
|
|
|
72,196
|
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
1
|
|
|
James E.
Zellinger
(19)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
John W.
Pietrowicz
(2)
|
|
|
79,153
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Bryan T.
Durkin
(2)
|
|
|
132,401
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Kimberly S.
Taylor
(2)
|
|
|
176,714
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
The address for all persons listed in the table is CME Group Inc., 20 South Wacker Drive, Chicago, IL 60606.
|
|
(2)
|
Class A shares for Mr. Duffy, Mr. Gill, Mr. Pietrowicz, Mr. Durkin and Ms. Taylor include an aggregate of 44,925; 97,730; 36,660; 67,420 and 61,425
stock options, respectively, that are currently exercisable or would be exercisable within 60 days of March 22, 2016.
|
|
(3)
|
Includes 495 Class A shares and one Class B-4 share to which Mr. Duffy shares joint ownership and has voting power.
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
|
|
|
63
|
|
|
|
|
|
|
|
|
Security Ownership of CME Group Common Stock
(Continued)
|
|
(4)
|
Includes one Class B-1 share assigned to one of our members firms in connection with our exchange rules.
|
|
(5)
|
All shares owned directly by Henning & Carey Trading of which Mr. Carey is a principal.
|
|
(6)
|
Includes 10,795 shares held in the name of Mr. Chookaszian’s spouse.
|
|
(7)
|
All shares held in trust.
|
|
(8)
|
Includes 495 Class A shares and one Class B-4 share to which Mr. Gepsman shares joint ownership and has voting power. Includes 17,950 Class A shares that have been
used as a capital contribution to a limited liability company which is a holding company to one of our clearing firms.
|
|
(9)
|
Includes 2,100 Class A shares held in trust.
|
|
(10)
|
Includes 40,000 Class A shares, two Class B-1 shares, six Class B-2 shares and seven Class B-3 shares owned directly by WH Trading LLC. Mr. Hobert is a majority
shareholder of WH Trading LLC.
|
|
(11)
|
Class B-2 share held in trust. Includes 7,325 Class A shares that are pledged in connection with a margin account relating to Mr. Melamed’s futures trading
business.
|
|
(12)
|
Includes one Class B-1 and one Class B-2 as to which Mr. Oliff shares joint ownership and over which he has voting power and one Class B-4 share as to which Mr. Oliff
shares joint ownership, but over which he does not have voting power. All shares held in trust.
|
|
(13)
|
Includes one Class B-2 share assigned to one of our member firms in connection with our exchange rules.
|
|
(14)
|
Mr. Pinto served as the board representative of BM&FBOVESPA until April 6, 2016. Mr. Pinto did not receive compensation for his service on our board and, therefore,
did not receive any equity under our Director Stock Program.
|
|
(15)
|
Includes 2,300 Class A shares held in the name of Mr. Pollock’s spouse.
|
|
(16)
|
All Class A shares held in trust.
|
|
(17)
|
Includes 495 Class A shares and one Class B-4 share as to which Mr. Shepard shares joint ownership and has voting power.
|
|
(18)
|
Does not include ownership of 495 shares of Class A common stock of which beneficial ownership is in dispute.
|
|
(19)
|
Under our rules, Mr. Zellinger is the recognized owner of a Class B-2 share but is not considered the beneficial owner.
|
Directors and Executive Officers as a Group (36 persons)
|
|
|
|
|
|
|
|
|
|
|
Class of Common Stock
|
|
Total Shares
|
|
|
Percent of Class A
(2)
|
|
|
Class A
(2)
|
|
|
2,078,538
|
|
|
|
*
|
|
|
Class B-1
|
|
|
18
|
|
|
|
2.9
|
%
|
|
Class B-2
|
|
|
18
|
|
|
|
2.2
|
%
|
|
Class B-3
|
|
|
20
|
|
|
|
1.6
|
%
|
|
Class B-4
|
|
|
6
|
|
|
|
1.5
|
%
|
|
Total Class A & B
|
|
|
2,078,600
|
|
|
|
*
|
|
|
(1)
|
Based on 338,629,498 shares of Class A common stock; 625 shares Class B-1 common stock; 813 shares of Class B-2 common stock; 1,287 shares of Class B-3 common stock; and 413
shares of Class B-4 common stock outstanding as of March 22, 2016.
|
|
(2)
|
Total shares of Class A common stock include an aggregate of 469,430 options to purchase shares of Class A common stock that are currently exercisable or become
exercisable within 60 days of March 22, 2016.
|
Shareholders Owning Five Percent or More
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Class A Shares
|
|
|
Percent of Vote as
a Single
Class
(1)
|
|
|
Capital World
Investors
(2)
|
|
|
33,703,658
|
|
|
|
10.0
|
%
|
|
BlackRock,
Inc.
(3)
|
|
|
25,593,256
|
|
|
|
7.6
|
%
|
|
The Vanguard
Group
(4)
|
|
|
19,025,727
|
|
|
|
5.6
|
%
|
|
(1)
|
Percentage is based on all shares outstanding in each class of Class A and Class B common stock as of March 22, 2016 voting together. Other than with respect to the
election of Class B directors and some matters relating to trading rights associated with Class B shares, holders of both classes of common stock will vote together as a single class on all matters to be presented to a vote of shareholders, unless
otherwise required by law.
|
|
(2)
|
Capital World Investors filed a Schedule 13G/A on February 12, 2016, which states that its address is 333 South Hope Street, Los Angeles, CA 90071, and that it has sole
voting power and sole dispositive power of 33,703,658 shares of Class A common stock.
|
|
(3)
|
BlackRock, Inc. filed a Schedule 13G/A on February 10, 2016, which states that is address is 55 East 52nd Street, New York, NY 10055, and that it has sole voting power of
22,522,973 shares of Class A common stock and sole dispositive power of 25,593,256 shares of Class A common stock.
|
|
(4)
|
The Vanguard Group filed a Schedule 13G on February 11, 2016, which states that its address is 100 Vanguard Blvd., Malvern, PA 19355, and that it has sole voting power of
616,986 shares of Class A common stock, shared voting power of 31,800 shares of Class A common stock, sole dispositive power of 18,372,969 shares of Class A common stock and shared dispositive power of 652,758 shares of Class A
common stock.
|
|
|
|
|
|
|
|
|
64
|
|
Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
|
|
|
|
|
|
|
|
Other Business
|
CERTAIN BUSINESS RELATIONSHIPS WITH RELATED PERSONS
Our audit
committee has adopted a written policy for the review of related party transactions. A copy of our related party transaction approval policy is available on our website. Related party transactions are transactions in which we are a participant, the
amount involved exceeds $120,000, and a related party has or will have a direct or indirect material interest. Related parties consist of our directors (including nominees for election as directors), executive officers, holders of more than five
percent of our outstanding Class A common stock, and the immediate family members of these individuals, as defined in the policy. Our Office of the Secretary, in consultation with management and outside counsel, as appropriate, will review
potential related party transactions to determine if they are subject to our related party transactions policy. Certain transactions, including compensation and ordinary course trading activity on any of our exchanges, are considered pre-approved
and thus do not require specific approval under the policy.
In determining whether to approve a related party transaction, the audit committee will
consider, among other factors, the fairness of the proposed transaction, whether there are compelling business reasons to proceed, and whether the transaction would impair the independence of a non-management director or present an improper conflict
of interest for a director or executive officer, taking into account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of his or her interest in the transaction, the ongoing nature of
any proposed relationship, and any other factors the committee deems relevant. The policy also provides that certain engagements by us of a large firm in which an immediate family of a director or executive officer is a general partner of such firm
will not be considered a related party transaction; provided certain factors are met, including that such family member did not have any involvement in the selection or engagement process, does not receive any compensation or credit in connection
with the engagement other than that provided to the other unaffiliated partners and that no other facts or circumstances exist suggesting that the immediate family member has any direct or indirect material interest in the transaction.
We do not consider the amounts involved in the transactions described in this section to be material to our business or material in relation to the businesses of
such other companies or the interests of the individuals involved. We recognize the need for transparency and additional disclosure regarding transactions between an issuer and its insiders. However, we do not believe that these disclosures should
be a substitute for the overall independence test for determining whether a material relationship exists.
Transactions Relating to Trading
Activity in 2015
We are a unique organization stemming from our evolution from a member-owned organization to a public company. In connection
with such transition, we recognized the need to maintain the deep industry knowledge of members of our trading community as board members. As a result, some of our board members continue to participate in our markets from which we derive revenue.
Payments relating to trading activity include clearing and transaction fees, market data and information services fees and connection fees. A substantial portion of our clearing and transaction fees is received directly from our clearing firms which
include charges for trades executed and cleared on behalf of their customers some of whom may be members of our board or Class B director nominees. Payments received directly by clearing firms in which a board member or Class B director nominee has
a significant affiliation are based upon our financial records. Other payments, which are not derived from our financial records because they are processed indirectly through a clearing firm, are set forth below but the actual amounts are not
included.
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Mr. Bernacchi made payments to us indirectly through his clearing firm in excess of $120,000.
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Mr. Carey is a principal of two member firms that made payments to us indirectly through their clearing firm in excess of $120,000.
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Mr. Hobert owns a majority interest in one of our member firms that made payments to us indirectly through its clearing firm in excess of $120,000.
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Mr. Moniesen made payments to us indirectly through his clearing firm in excess of $120,000.
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Mr. Shepard owns a minority interest in one of our clearing firms that made net payments to us of approximately $92 million and owns a minority interest in
a trading firm that made payments to us indirectly through its clearing firm in excess of $120,000.
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Mr. Wescott is part owner in one of our member firms that made payments to us indirectly through its clearing firm in excess of $120,000.
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The fees we charge our customers, including any of our board members, are based on published fee schedules and no benefits or
discounts are provided to our board members that are not otherwise made available to similarly situated customers. We, therefore, do not believe that such transactions impair the independence of such individuals and any potential conflicts are
handled appropriately under our director conflict of interest policy, a copy of which is available on our website. Our other board members and director nominees who participate in our markets also incur trading fees but such fees were below $120,000
during 2015. The foregoing transactions relating to trading activity are considered pre-approved under the audit committee’s related party transaction approval policy.
BM&FBOVESPA Strategic Partnership
Mr. Pinto served as a member of our board of
directors from February 2011 to April 6, 2016. Mr. Pinto is the CEO of BM&FBOVESPA. CME Group has an equity ownership agreement with BM&FBOVESPA, in which CME Group has an approximately four percent stake in BM&FBOVESPA, and
BM&FBOVESPA had an approximately four percent stake in CME Group. Mr. Pinto served as the BM&FBOVESPA board representative in accordance with the terms of the agreement until he resigned on April 6, 2016. CME Group continues to hold a
seat on the BM&FBOVESPA board of directors, which is filled by one of our board members. The companies also have in place commercial agreements. During 2015, CME Group received payments of approximately $4.0 million, net of any withholding
taxes, in connection with its commercial agreements with BM&FBOVESPA. These commercial arrangements were entered into prior to Mr. Pinto’s appointment to the board, were negotiated on an arm’s length basis and were approved by the
board of directors of CME Group. As the arrangements were entered into prior to Mr. Pinto’s appointment, the transactions were not submitted to the audit committee for its approval in accordance with its policy on related party
transactions.
Employment of Family Members
An in-law of Mr. Pankau is employed by us in a non-officer position. The employment relationship occurred prior to Mr. Pankau’s service on our board. The employee received aggregate compensation in
2015 of approximately $305,000 (part of which included an annual equity award) and other benefits provided to employees at the same level. The compensation is in accordance with our standard compensation practices applicable to similarly-situated
employees. The audit committee previously ratified this related party transaction and receives annual reports on the compensation arrangements as part of its review of ongoing related party transactions.
Sub-Leasing Arrangement
Mr. Sandner
sub-leases his office space from us. In 2015, we received lease payments of approximately $142,000. The sub-lease was negotiated on an arm’s length basis and is on terms consistent with our overall master lease and other existing leases at the
location at the time of execution. The audit committee reviewed and approved the sub-leasing relationship.
CHARITABLE AND CIVIC CONTRIBUTIONS
We believe that it is both a responsibility and a privilege to give back to the global communities where we live and work. Through our charitable programs and foundations, we are able to put change in motion that
will positively impact the lives of those in need. Through our corporate foundation, CME Group Community Foundation, we made charitable grants focused on the locations where we do business and provided support to three primary areas of concern:
children in need, education, and health and human services. Certain members of our board also serve on the CME Group Foundation. The CME Group Foundation was endowed by the Chicago Mercantile Exchange Trust. Our board members and executive officers
may have affiliations with organizations that have received donations from these foundations. None of the donations made by these foundations were deemed to impact the independence of any of our board members or director nominees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership with
the SEC. Officers, directors and greater than
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10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. Based solely on our review of the copies of the forms we have
received during 2015, all of our officers and directors complied with their Section 16(a) filing requirements, with the exception of a sale transaction by Mr. Oliff conducted pursuant to a pre-arranged trading plan that inadvertently was
not reported timely to the Company for preparation of the Form 4 filing.
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WHEN AND WHERE IS THE ANNUAL MEETING?
The annual meeting of shareholders of CME Group will be
held at 3: 30 p.m., Central Time, on Wednesday, May 18, 2016, in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, Illinois.
WHO MAY ATTEND THE ANNUAL MEETING?
All holders of Class A and Class B common stock on
March 22, 2016, the record date for the annual meeting, are entitled to notice of and are invited to attend the annual meeting.
ARE THERE ANY RULES FOR ADMISSION TO THE ANNUAL MEETING?
Yes.
You are entitled to attend the annual meeting only if you were, or you hold a valid legal proxy naming you to act for, one of our shareholders on the record date. Please note that seating
is limited and admission will be accepted on a first-come, first-served basis.
If you plan to attend the meeting, you should register in
advance. Please go to the “shareholder meeting registration” link at
www.proxyvote.com
and follow the instructions provided. You will need the 16-digit control number located on your proxy card, voter instruction form or notice.
Please print your registration confirmation and bring it with you to the meeting along with valid picture identification, such as a driver’s license or passport. If you do not have a printed registration confirmation, we must be able to
confirm:
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Your identity by reviewing a valid form of photo identification, such as a driver’s license; and
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You were a registered shareholder or held your shares in street name on the record date by:
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verifying your name and stock ownership against our list of registered shareholders; or
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reviewing other evidence of your stock ownership that shows your current name and address, such as a copy of your most recent brokerage or bank statement or your
notice of internet availability of proxy materials for the 2016 annual meeting (internet notice), if you hold your shares in street name; or
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You are validly acting as proxy:
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for a registered shareholder as of the record date, by reviewing a written legal proxy granted to you and signed by the registered shareholder; or
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for a street name holder as of the record date, by reviewing a written legal proxy from a brokerage firm or bank holding the shares to the street name holder
that is assignable, and a written legal proxy to you signed by the street name holder, together with a brokerage or bank statement or internet notice showing the street name holder’s shares as described above.
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If you do not have a valid form of picture identification
and proof that you owned, or are legally authorized to act as proxy for someone who owned, shares of our common stock on March 22, 2016, you will not be admitted to the meeting.
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At the entrance to the meeting, we will verify that your name appears in our stock records or we will inspect your brokerage or bank
statement or internet notice, as your proof of ownership and any written proxy you present as the representative of a shareholder. We will decide
in our sole discretion
whether the documentation you present for admission to the meeting meets
the requirements described above. If you hold your shares in a joint account, both owners can be admitted to the meeting if proof of joint ownership is provided and you both follow the admission procedures described above. Please allow ample time
for these admission procedures.
Shareholders will not be allowed to use cameras (including cell phones with photographic capabilities), recording
devices or other electronic devices at the meeting.
WILL THE ANNUAL MEETING BE WEBCAST?
Yes. A live webcast of the annual meeting will be provided from our Investor Relations section of our website
www.cmegroup.com
. Go to Investor Relations,
click on Events and Presentations and then click on listen to webcast for the CME
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Group Inc. 2016 Annual Meeting of Shareholders. If you miss the meeting, you can view a replay of the webcast on that site. Please note that you will not be able to vote your shares or ask
questions via the webcast. If you plan to view the webcast, please submit your vote in advance.
WHAT COMPANY SPONSORED PROPOSALS ARE
THE CLASS A AND CLASS B SHAREHOLDERS BEING ASKED TO VOTE ON, COLLECTIVELY AS A SINGLE CLASS?
Holders of all classes of Class A and Class B
common stock of CME Group (voting together as a single class) are being asked to vote on the following:
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Item 1:
The election of seventeen
Equity directors.
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Item 2:
The ratification of the
appointment of Ernst & Young as our independent registered public accounting firm for 2016.
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Item 3:
An advisory vote on the
compensation of our named executive officers, referred to as the “Say on Pay” proposal.
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WHAT PROPOSALS
ARE THE CLASS B SHAREHOLDERS BEING ASKED TO VOTE ON?
Our Class B-1 shareholders are being asked to vote for three Class B-1 directors, our Class B-2
shareholders are being asked to vote for two Class B-2 directors and our Class B-3 shareholders are being asked to vote for one Class B-3 director. The candidates for each respective class are described in
Item 4
. In addition, holders of
Class B-1, Class B-2 and Class B-3 shares are being asked to vote on the election of five members to their respective Class B-1, Class B-2 and Class B-3 nominating committees,
Item 5
.
WHO IS ENTITLED TO VOTE?
You may vote if
you owned shares of Class A or Class B common stock of CME Group as of the close of business on March 22, 2016, the record date for the annual meeting. The number of shares outstanding of each of our classes of common stock as of
March 22, 2016 was as follows:
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Class
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Shares Outstanding
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Class A
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338,629,498
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Class B-1
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625
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Class B-2
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813
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Class B-3
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1,287
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Class B-4
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413
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There were
2,849 holders of record of our Class A common stock and 1,564 holders of record of our Class B common stock
on such date.
All shares of Class A and Class B common stock are entitled to one vote per share. Class A and Class B shareholders will vote
together as a single class on all Items, except for
Items 4
and
5
. The respective class of Class B shares will vote as a single class in
Items 4
and
5
.
HOW DO I VOTE?
Shareholders of
record
(shareholders having an account at
Computershare, our transfer agent) have the following ways to cast their vote:
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Via the Internet
—by voting electronically over the Internet by going to
www.proxyvote.com
. You will need to reference the control
number on your proxy card when voting. If you wish to vote by the Internet, you may vote until 10:59 p.m., Central Time, on Tuesday, May 17, 2016.
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By mail
—by submitting the proxy card in the envelope provided. Be sure to allow sufficient time for delivery.
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By telephone (owners of Class A shares only)
—by calling 1-800-690-6903. You will need to reference the control number on your proxy card
when voting. If you wish to vote by telephone, you may vote until 10:59 p.m., Central Time, on Tuesday, May 17, 2016. Due to the fact that the Class B proposals are contested, automated telephone voting will not be available for Class B
shareholders.
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By call center (owners of Class B shares only)
—Broadridge, as our inspector of election, is providing CME Group an additional service to
facilitate voting by our Class B shareholders. Class B shareholders who are unable to locate their 16-digit control number may call 855-928-4491 to speak to a proxy specialist to cast their votes over the phone by providing information in
confirmation of their identity. All calls will be recorded and voting confirmations will be sent by mail to the address of record.
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In person
—by voting your proxy card at the annual meeting.
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For holders in
street name
(shareholders holding through a bank or broker), your proxy materials include a voting instruction form from the institution holding your shares. The availability of
internet or telephone voting will depend upon the institution’s voting processes. You may also vote in person at the annual meeting if you obtain a legal proxy from the institution holding your shares. Please contact the institution holding
your shares for more information.
Your vote is important. Whether or not you plan to attend the annual meeting, we urge you to vote your shares
promptly by returning your proxy card and/or voting instruction card or casting your vote by telephone or over the Internet. Voting early will not affect your right to change your vote and/or to attend the meeting.
WHAT IS A SHAREHOLDER OF RECORD?
A
shareholder of record or registered shareholder is a shareholder whose ownership of CME Group stock is reflected directly on the books and records of our transfer agent, Computershare. If you hold stock through a bank, broker or other intermediary,
you hold your shares in street name and are not a shareholder of record. For shares held in street name, the record owner of your shares is your bank, broker or other intermediary. We only have access to ownership records for the registered shares.
Therefore, if you are not a registered shareholder, you will need to bring additional documentation to evidence your stock ownership as of the record date, such as a copy of your brokerage account statement showing ownership as of the record date, a
letter from your broker, bank or other nominee or a copy of your voting instruction card in order to be admitted to the annual meeting.
WHAT DOES IT MEAN IF I RECEIVED MORE THAN ONE PROXY/VOTING INSTRUCTION CARD?
This means that you have multiple accounts holding CME Group shares. Shares with different registrations cannot be combined and as a result, you may receive more than one card. For example, shares held through your
broker cannot be combined with shares held at our transfer agent, Computershare. Additionally, our Class B shares are not combined with our Class A shares. Therefore, if you own both Class A and Class B shares you will receive more than
one proxy card.
If you receive more than one proxy/voting instruction card, you must vote each card to ensure that all shares you own are voted.
WHAT IF I RETURN MY PROXY CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?
If you sign, date and return the proxy card without indicating your instructions on how to vote your shares, the proxies will vote your shares as follows:
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“FOR”
the election of the seventeen Equity directors nominees.
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“FOR”
the appointment of Ernst & Young as our independent registered public accounting firm for 2016.
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“FOR”
the advisory resolution approving the compensation of our named executive officers as described in this proxy statement.
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“ABSTAIN”
from voting for the Class B directors, if applicable.
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“ABSTAIN”
from voting for the Class B nominating committees, if applicable.
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If any other matter is presented at the annual meeting, your proxies will vote in accordance with their best judgment. At the time this proxy statement went to
press, we knew of no matters to be addressed at the annual meeting beyond those described in this proxy statement.
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CAN I CHANGE MY MIND AFTER I VOTE?
For shareholders of record:
You may
change or revoke your vote by submitting a written notice of revocation directed to the Corporate Secretary, CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606 or by submitting another proxy card, voting electronically or by telephone or
by voting at the annual meeting.
For holders in street name:
You may change or revoke your voting instructions by
following the specific directions provided to you by your bank, broker or intermediary.
Your most recent vote is the one that is counted.
IS MY VOTE CONFIDENTIAL?
All
proxies, ballots and tabulations that identify the vote of a particular shareholder will be kept confidential, except as necessary to allow the inspectors of election to certify the voting results or to meet legal requirements. Representatives of
Broadridge will act as the inspector of election and will count the votes.
Comments written on proxy cards or ballots may be provided by Broadridge to
our Corporate Secretary, Kathleen M. Cronin, with the name and address of the shareholder. Each comment will be provided without reference to the vote of the shareholder, unless the vote is mentioned in the comment or unless disclosure of the vote
is necessary in order to understand the comment. At our request, the inspector of election may provide us with a list of shareholders who have not voted and periodic status reports on the aggregate vote. These status reports may include breakdowns
of vote totals by different types of shareholders, although it is expected that we will not be able to determine how individual shareholders voted.
HOW ARE VOTES COUNTED?
In order for us to conduct the meeting, a minimum number of votes
entitled to be cast by the holders of all outstanding stock as of March 22, 2016, must be present in person or represented by proxy. This is referred to as a quorum.
For proposals brought before the holders of all classes of common stock, voting together without regard to class, at least one-third of the votes entitled to be cast by such holders must be present at the meeting
to establish a quorum.
For proposals brought before the holders of Class B-1, Class B-2 and Class B-3 common stock, each voting separately as a class,
at least one-third of the votes entitled to be cast by the holders of each such class must be present at the meeting to establish a quorum.
Proxies
marked “withhold” or “abstain” are counted as present for establishing a quorum. Additionally, because we have one routine item on the agenda—the ratification of our independent registered public accounting
firm—“broker non-votes” received on the other proposals also will be counted for purposes of establishing a quorum for proposals brought before the holders of all classes of common stock, voting together without regard to class. A
broker non-vote occurs when a broker does not vote on some matter on the proxy card because the broker does not have discretionary voting power for that particular proposal under the rules of NASDAQ and has not received instructions from the
beneficial owner.
To ensure that there will be a quorum for all proposals to be voted on, please vote before the annual meeting and allow your shares to
be represented at the meeting by your proxies. Voting before the annual meeting will not prevent you from voting in person at the meeting. If you vote in person at the meeting, your previous vote will be revoked automatically.
HOW MANY VOTES ARE REQUIRED FOR APPROVAL FOR EACH PROPOSAL?
Assuming that a quorum is present for the particular proposal, the following describes the votes required to approve each proposal.
Item 1:
Seventeen Equity directors have been nominated for election at the annual meeting. Our bylaws require that, in uncontested elections, each director be elected by the majority of votes cast with
respect to such director. This means that the number of shares voted “for” a director nominee must exceed the number of votes cast “against” that nominee in order for that nominee to be elected. Only votes “for” or
“against” are counted as votes cast with respect to an Equity director. Abstentions and
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broker non-votes will have no effect. If a nominee who currently is serving as a director does not receive the affirmative vote of at least a majority of the votes cast, Delaware law provides
that the director would continue to serve on the board as a “holdover director.” However, under our corporate governance principles, each holdover director is required to tender his or her resignation to the board. Under the principles,
the governance committee shall make a recommendation to the board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The governance committee and the board, in making their decisions, may consider
any factor or other information that they deem relevant. The board shall act on the tendered resignation, taking into account the governance committee’s recommendation, and shall publicly disclose its decision regarding the resignation within
ninety (90) days after the results of the election are certified. If the resignation is not accepted, the director will continue to serve until the next annual meeting of shareholders and until the director’s successor is elected and
qualified.
Items 2 and 3:
The affirmative vote of a majority of the shares of our Class A and Class B common stock present in person or
represented by proxy and entitled to vote on the matter is necessary for approval. Because Item 2 is considered a “routine” matter, broker non-votes are not expected to occur with respect to that item. Broker non-votes and abstentions
will have no effect on Item 3.
Item 4:
The three nominees for Class B-1 director, the two nominees for Class B-2 director and the one
nominee for Class B-3 director receiving the highest number of “for” votes will be elected. Abstentions will have no effect on these items because they are not considered votes cast. All Class B shares are held in registered form.
Item 5:
The five nominees for the Class B-1 nominating committee, the five nominees for the Class B-2 nominating committee and the five
nominees for the Class B-3 nominating committee receiving the highest number of “for” votes will be elected. Abstentions will have no effect on these items because they are not considered votes cast. All Class B shares are held in
registered form.
WHO PAYS FOR THE SOLICITATION OF PROXIES?
The solicitation is being conducted by CME Group which pays for the cost of soliciting proxies. Proxies will be solicited on behalf of the board of directors. This solicitation is being made by mail and over the
Internet, but also may be made by telephone or in person. We have hired D.F. King for $11,500 plus out-of-pocket expenses, to assist in the solicitation. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their
out-of-pocket expenses for sending proxy materials to shareholders and obtaining their vote. Additionally, nominees for Class B director may make solicitations to our shareholders. Such nominees are responsible for the costs incurred in connection
with their individual solicitation efforts.
WHEN ARE SHAREHOLDER PROPOSALS DUE FOR THE 2017 ANNUAL MEETING?
To be considered for inclusion in the 2017 proxy statement, shareholder proposals must be received in writing at our principal executive offices no later than
December 10, 2016. You should be aware that your proposal must comply with the SEC regulations regarding inclusion of shareholder proposals in company-sponsored proxy materials.
Similarly, in order for you to raise a proposal from the floor during next year’s meeting, we must have timely received written notice of
the proposal. In accordance with our bylaws, to be timely, a shareholder’s notice must be delivered to our corporate secretary not earlier than the close of business on January 18, 2017 (the
120
th
day) and not later than the close of business on February 17, 2017
(the 90
th
day) prior to the anniversary of the 2016 annual meeting (May 18,
2016); provided, however, that in the event that the date of the 2017 annual meeting is more than 30 days before or more than 60 days after May 18, 2017, to be timely, notice must be delivered not earlier than the close of business on the
120
th
day prior to the actual date of the 2017 annual meeting and not later
than the close of business on the later of the 90
th
day prior to the actual
date of the 2017 annual meeting or, if the first public announcement of the date of the 2017 annual meeting is less than 100 days prior to the date of the meeting, the 10
th
day following the day on which public announcement of the date of the 2017 annual meeting is first made by CME Group. Your
notice of the proposal must contain the information required under our bylaws in order to be considered.
Shareholder proposals should be sent by mail
directed to the Corporate Secretary (Kathleen M. Cronin), CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606 or by fax to her attention at 312.930.4556.
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ARE THERE ANY MATTERS TO BE VOTED ON AT THE MEETING THAT ARE NOT INCLUDED IN THE PROXY STATEMENT?
At the time this proxy statement went to press, we knew of no matters to be addressed at the annual meeting beyond those described in this proxy statement. If any other matter is presented at the annual meeting,
your proxies will vote in accordance with their best judgment.
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We intend to announce preliminary voting results by press release following the annual meeting and will file the final results in a current report
on Form 8-K within four business days of the meeting as required by SEC regulations.
IF I RECEIVED PAPER COPIES OF MATERIALS, CAN I
RECEIVE FUTURE PROXY MATERIALS ONLINE?
Yes. If you chose this option you will not receive paper copies of the proxy materials in the mail. Choosing
this option will save us printing and mailing costs and may benefit the environment.
If you hold shares in your name (instead of through a broker or
other nominee), you can choose this option by following the instructions provided when you vote over the Internet at
www.proxyvote.com
and, when prompted, indicate that you agree to receive or access shareholder communications electronically.
If you hold your shares through a broker or other nominee, you should follow the instructions regarding electronic delivery, if any, provided by your broker or other nominee.
If you choose to receive your proxy materials electronically, then prior to next year’s annual meeting you will receive an email notification when the proxy materials are available for your online review. Your
choice for electronic distribution will remain in effect indefinitely, unless you revoke your choice.
WHY DID I RECEIVE A NOTICE BY
MAIL WITHOUT PRINTED COPIES OF THE PROXY MATERIALS?
As permitted by rules adopted by the SEC, we are making this proxy statement and our 2015 annual
report available to our shareholders electronically via the Internet. On or about April 8, 2016, we mailed a notice containing instructions on how to access this proxy statement and our 2015 annual report and vote over the Internet. If you
received a notice by mail, you will not receive a printed copy of the materials in the mail. Instead, the notice instructs you on how to access and review all of the important information contained in the materials. The notice also instructs you on
how you may submit your proxy over the Internet. If you received a notice by mail and would like to receive a printed copy of these materials, you should follow the instructions for requesting such materials included in the notice.
WHY DID MEMBERS OF MY HOUSEHOLD ONLY RECEIVE ONE SET OF PROXY MATERIALS BUT MORE THAN ONE PROXY CARD?
We have adopted a procedure approved by the SEC called “householding.” Under this procedure, shareholders of record who have the same address and last
name and do not participate in the electronic delivery of proxy materials will receive only one copy of our proxy materials unless one or more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure
reduces our printing costs and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards.
If you
participate in householding and wish to receive separate copies of the proxy materials, or if you receive multiple copies of proxy materials and wish to receive only one copy, please go to
www.computershare.com/investor.
After the login, go
to “My Profile” and select “Communication Preference” to choose your preferred method (post or email) of delivery for Shareholder Meeting Materials.
Beneficial shareholders can request information about householding from their banks, brokers or other holders of record.
CAN I GET ADDITIONAL COPIES OF PROXY MATERIALS?
Yes. Additional copies of our 2015 annual
report and this proxy statement are available free of charge upon written request to Shareholder Relations, Attention: Ms. Beth Hausoul, CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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General Information About the Meeting
(Continued)
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WHERE CAN I FIND INFORMATION ON CME GROUP’S CORPORATE GOVERNANCE POLICIES AND OTHER MATERIALS REFERENCED IN THIS PROXY STATEMENT?
Copies of our governance materials and other policies referenced in this proxy statement and the charters of all of our board committees are available at http://investor.cmegroup.com/investor-relations under
“Corporate Governance.” You may also request hard copies of such materials by sending a request to Shareholder Relations, Attention: Ms. Beth Hausoul, CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606.
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74
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Notice of Annual Meeting of Shareholders
and 2016 Proxy
Statement
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Appendix A
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CATEGORICAL INDEPENDENCE STANDARDS
A director who satisfies the independence requirements of the applicable listing standards and meets all of the following categorical standards shall be presumed to be “independent”:
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The director does not (directly or indirectly as a partner, shareholder or officer of another company) provide consulting, legal or financial advisory services
to the Company or the Company’s present or former auditors.
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Neither the director nor any member of his or her immediate family is a significant shareholder in the Company’s Class A Common Stock or Class B Common
Stock. For purposes of this categorical standard, a shareholder shall be considered significant if the ownership of shares of Class A Common Stock is greater than five percent (5%) of the outstanding Class A Common Stock or if the
ownership of shares of any series of Class B Common Stock is greater than five percent (5%) of the outstanding Class B Common Stock in such series.
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Neither the director nor any member of his or her immediate family serves as an executive officer of a civic or charitable organization that receives financial
contributions from CME, CBOT, NYMEX or the CME Group Community Foundation (excluding payments pursuant to a matching gift program) or the CME Group Foundation in excess of $200,000 or five percent (5%) of that entity’s total annual
charitable receipts and other revenues, whichever is greater, per year. The Board shall also consider whether any charitable donations made to a civic or charitable organization in which a director or member of his or her immediate family serves as
a director, trustee or employed fundraiser impact the particular director’s independence; provided, however, donations less than $200,000 per year shall be presumed to be insignificant and, therefore, not impact such director’s
independence.
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In addition, the Board of Directors has determined that a director who acts as a floor broker, floor trader, employee or
officer of a futures commission merchant, clearing member firm or other similarly situated person that intermediates transactions in or otherwise uses CME Group products and services shall be presumed to be “independent,” if he or she
otherwise satisfies all of the above categorical standards and the independence requirements of the applicable listing standards and such transactions are made in the ordinary course of business of the Company on terms consistent with those
prevailing at the time for corresponding transactions by similarly situated, unrelated third parties.
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Notice of Annual Meeting of Shareholders
and 2016 Proxy Statement
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75
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VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 17, 2016. Have your
proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone
to transmit your voting instructions up until 10:59 P.M., Central Time, on May 17, 2016. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the meeting, go to “shareholder meeting registration” link at www.proxyvote.com.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS:
E00999-P74933
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
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CME GROUP INC.
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The Board of Directors recommends votes “FOR” Proposals 1, 2 and 3.
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1.
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Election of Equity Directors
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Seventeen will be elected to the Board of Directors
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For
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Against
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Abstain
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1a.
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Terrence A. Duffy
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For
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Against
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Abstain
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1b.
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Phupinder S. Gill
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1n.
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John F. Sandner
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1c.
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Timothy S. Bitsberger
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1o.
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Terry L. Savage
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¨
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1d.
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Charles P. Carey
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1p.
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William R. Shepard
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¨
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¨
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1e.
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Dennis H. Chookaszian
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1q.
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Dennis A. Suskind
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¨
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1f.
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Ana Dutra
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2.
3.
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Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for
2016.
Advisory vote on the compensation of our named executive officers.
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1g.
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Martin J. Gepsman
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1h.
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Larry G. Gerdes
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1i.
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Daniel R. Glickman
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1j.
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Leo Melamed
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1k.
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William P. Miller II
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¨
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¨
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1l.
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James E. Oliff
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1m.
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Alex J. Pollock
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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If you plan to attend the meeting on May 18, 2016, you should register in advance.
Please go to the “shareholder meeting registration” link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration
confirmation and bring it with you to the meeting along with valid picture identification.
Please note that seating
is limited and admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a driver’s license or passport with their registration
confirmation. Seating will begin at 2:30 p.m. and the meeting will begin at 3:30 p.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You
will be required to enter through a security check point before being granted access to the meeting.
YOUR VOTE IS
IMPORTANT!
Please take a moment to vote your shares of Class A common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR THREE EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting:
The Notice and Proxy Statement and CME Group 2015 Annual Report are available at www.proxyvote.com.
E01000-P74933
This Proxy is being solicited by the Board of Directors of CME Group Inc. (“CME
Group”) for the Annual Meeting of Shareholders on Wednesday, May 18, 2016.
The undersigned hereby appoint(s)
Terrence A. Duffy and Phupinder S. Gill with full power to act alone and with full power of substitution, as proxies of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 3:30 p.m., Central Time, on Wednesday, May 18, 2016,
in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class A
common stock of CME Group, held of record by such shareholder(s) as of the close of
business on March 22, 2016, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE “FOR” PROPOSALS
1, 2 AND 3 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The proposals are fully set forth in the Proxy
Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this
proxy as indicated on the reverse side to vote on any item. If you wish to vote in accordance with the recommendations of the company,
please sign the reverse side; no boxes need to be checked.
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20 S. WACKER DRIVE
CHICAGO, IL 60606
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VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 17, 2016. Have your
proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would
like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the
meeting, go to “shareholder meeting registration” link at www.proxyvote.com.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E01001-P74933 KEEP THIS
PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION ONLY
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CME GROUP INC.
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The Board of Directors recommends votes “FOR” Proposals 1, 2 and 3.
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1.
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Election of Equity Directors
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Seventeen will be elected to the Board of Directors
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For
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Against
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Abstain
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1a.
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Terrence A. Duffy
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1b.
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Phupinder S. Gill
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¨
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1c.
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Timothy S. Bitsberger
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¨
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1d.
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Charles P. Carey
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¨
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1e.
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Dennis H. Chookaszian
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¨
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1f.
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Ana Dutra
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1g.
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Martin J. Gepsman
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1h.
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Larry G. Gerdes
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1i.
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Daniel R. Glickman
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1j.
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Leo Melamed
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1k.
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William P. Miller II
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1l.
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James E. Oliff
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1m.
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Alex J. Pollock
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1n.
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John F. Sandner
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1o.
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Terry L. Savage
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¨
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1p.
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William R. Shepard
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¨
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¨
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1q.
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Dennis A. Suskind
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¨
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¨
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2.
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Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2016.
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3.
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Advisory vote on the compensation of our named executive officers.
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¨
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¨
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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The Board of Directors is not providing recommendations on Proposals 4 and 5.
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4.
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Election of Three Class B-1 Directors
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Vote “FOR” up to
three
nominees to be elected to the Board of Directors.
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For
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Against
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Abstain
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4a.
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Jeffrey M. Bernacchi (JMB)
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4b.
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Michael J. Downs (BMR)
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4c.
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William W. Hobert (WH)
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4d.
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Douglas M. Monieson (DMON)
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4e.
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Jeremy J. Perlow (JAIR)
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4f.
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Howard J. Siegel (EGLE)
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¨
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¨
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¨
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5.
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Election of 2017 Class B-1 Nominating Committee
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Vote “FOR” up to
five
nominees to be elected to the Class
B-1
Nominating Committee.
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For
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Against
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Abstain
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5a.
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William C. Bauman (WCB)
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¨
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¨
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¨
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5b.
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Thomas A. Bentley (TAB)
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¨
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¨
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¨
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5c.
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Bradley S. Glass (BRAD)
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¨
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¨
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¨
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5d.
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Joseph H. Gressel (GPC)
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¨
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¨
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¨
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5e.
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Mark S. Kobilca (HTR)
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¨
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¨
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¨
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5f.
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Gary T. Lark (GTX)
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¨
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¨
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¨
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5g.
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W. Winfred Moore II (FMOR)
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¨
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¨
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¨
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5h.
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William J. Rinn III (WJR)
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¨
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¨
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¨
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5i.
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Michael J. Small (SML)
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¨
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¨
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¨
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5j.
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Michael G. Sundermeier (MIK)
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¨
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¨
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¨
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Signature (Joint Owners)
|
|
Date
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|
|
If you plan to attend the meeting on May 18, 2016, you should register in advance.
Please go to the “shareholder meeting registration” link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration
confirmation and bring it with you to the meeting along with valid picture identification.
Please note that seating
is limited and admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a driver’s license or passport with their registration
confirmation. Seating will begin at 2:30 p.m. and the meeting will begin at 3:30 p.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You
will be required to enter through a security check point before being granted access to the meeting.
YOUR VOTE IS
IMPORTANT!
Please take a moment to vote your shares of Class B-1 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR TWO EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting:
The Notice and Proxy Statement and CME Group 2015 Annual Report are available at www.proxyvote.com.
E01002-P74933
This Proxy is being solicited by the Board of Directors of CME Group Inc. (“CME
Group”) for the Annual Meeting of Shareholders on Wednesday, May 18, 2016.
The undersigned hereby appoint(s)
Terrence A. Duffy and Phupinder S. Gill with full power to act alone and with full power of substitution, as proxies of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 3:30 p.m., Central Time, on Wednesday, May 18, 2016,
in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-1
common stock of CME Group, held of record by such shareholder(s) as of the close
of business on March 22, 2016, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE “FOR”
PROPOSALS 1, 2 AND 3 AND TO “ABSTAIN” FROM PROPOSALS 4 AND 5 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
The proposals are fully set forth in the Proxy Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on the reverse side to vote on any item.
|
|
|
|
|
|
|
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 17, 2016. Have your
proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would
like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the
meeting, go to “shareholder meeting registration” link at www.proxyvote.com.
|
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|
|
|
|
|
|
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|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS
FOLLOWS:
E01003-P74933 KEEP THIS
PORTION FOR YOUR RECORDS
DETACH
AND RETURN THIS PORTION ONLY
|
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|
CME GROUP INC.
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The Board of Directors recommends votes “FOR” Proposals 1, 2 and 3.
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1.
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Election of Equity Directors
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Seventeen will be elected to the Board of Directors
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For
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Against
|
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Abstain
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1a.
|
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Terrence A. Duffy
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¨
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¨
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¨
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1b.
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Phupinder S. Gill
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¨
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¨
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¨
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The Board of Directors is not providing a recommendation on Proposals 4 and 5.
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1c.
|
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Timothy S. Bitsberger
|
|
¨
|
|
¨
|
|
¨
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1d.
|
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Charles P. Carey
|
|
¨
|
|
¨
|
|
¨
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4.
|
|
Election of Two Class B-2 Directors
|
|
|
|
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|
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1e.
|
|
Dennis H. Chookaszian
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
Vote “FOR” up to
two
nominees to be elected to the Board of Directors.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
1f.
|
|
Ana Dutra
|
|
¨
|
|
¨
|
|
¨
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|
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4a. Patrick W. Maloney (PAT)
|
|
¨
|
|
¨
|
|
¨
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|
|
1g.
|
|
Martin J. Gepsman
|
|
¨
|
|
¨
|
|
¨
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|
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4b. Ronald A. Pankau (PAN)
|
|
¨
|
|
¨
|
|
¨
|
|
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|
|
1h.
|
|
Larry G. Gerdes
|
|
¨
|
|
¨
|
|
¨
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|
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4c. David J. Wescott (COT)
|
|
¨
|
|
¨
|
|
¨
|
|
|
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|
|
1i.
|
|
Daniel R. Glickman
|
|
¨
|
|
¨
|
|
¨
|
|
|
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|
|
4d. James J. Zellinger (JZZ)
|
|
¨
|
|
¨
|
|
¨
|
|
|
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|
|
1j.
|
|
Leo Melamed
|
|
¨
|
|
¨
|
|
¨
|
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1k.
|
|
William P. Miller II
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
5.
|
|
Election of 2017 Class B-2 Nominating Committee
|
|
|
|
|
|
|
|
|
|
|
|
1l.
|
|
James E. Oliff
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
Vote “FOR” up to
five
nominees to be elected to the Class B-2 Nominating Committee.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
1m.
|
|
Alex J. Pollock
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
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|
|
1n.
|
|
John F. Sandner
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
5a. Richard J. Duran (RJD)
|
|
¨
|
|
¨
|
|
¨
|
|
|
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|
|
1o.
|
|
Terry L. Savage
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
5b. Yra G. Harris (YRA)
|
|
¨
|
|
¨
|
|
¨
|
|
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|
|
1p.
|
|
William R. Shepard
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
5c. Patrick J. Lahey (XDE)
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
1q.
|
|
Dennis A. Suskind
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
5d. Patrick J. Mulchrone (PJM)
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
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|
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|
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5e. Stuart A. Unger (UNG)
|
|
¨
|
|
¨
|
|
¨
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|
|
|
|
|
|
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|
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|
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|
|
5f. Gregory J. Veselica (GV)
|
|
¨
|
|
¨
|
|
¨
|
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|
|
2.
|
|
Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2016.
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
5g. Barry D. Ward (BDW)
|
|
¨
|
|
¨
|
|
¨
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|
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3.
|
|
Advisory vote on the compensation of our named executive
officers.
|
|
¨
|
|
¨
|
|
¨
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|
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|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
|
Date
|
|
|
|
Signature (Joint Owners)
|
|
Date
|
|
|
If you plan to attend the meeting on May 18, 2016, you should register in advance.
Please go to the “shareholder meeting registration” link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration
confirmation and bring it with you to the meeting along with valid picture identification.
Please note that seating
is limited and admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a driver’s license or passport with their registration
confirmation. Seating will begin at 2:30 p.m. and the meeting will begin at 3:30 p.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You
will be required to enter through a security check point before being granted access to the meeting.
YOUR VOTE IS
IMPORTANT!
Please take a moment to vote your shares of Class B-2 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR TWO EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting:
The Notice and Proxy Statement and CME Group 2015 Annual Report are available at www.proxyvote.com.
E01004-P74933
This Proxy is being solicited by the Board of Directors of CME Group Inc. (“CME
Group”) for the Annual Meeting of Shareholders on Wednesday, May 18, 2016.
The undersigned hereby appoint(s)
Terrence A. Duffy and Phupinder S. Gill with full power to act alone and with full power of substitution, as proxies of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 3:30 p.m., Central Time, on Wednesday, May 18, 2016,
in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-2
common stock of CME Group, held of record by such shareholder(s) as of the close
of business on March 22, 2016, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE “FOR”
PROPOSALS 1, 2 AND 3 AND TO “ABSTAIN” FROM PROPOSALS 4 AND 5 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
The proposals are fully set forth in the Proxy Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on the reverse side to vote on any item.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VOTE BY INTERNET -
www.proxyvote.com
|
|
|
|
|
|
|
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 17, 2016. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form.
|
|
|
|
|
|
|
|
|
|
|
|
|
VOTE BY MAIL
|
|
|
|
|
|
|
|
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
|
|
|
|
|
|
|
|
|
|
|
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
|
|
|
|
|
|
|
|
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign
up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
|
|
|
|
|
|
|
|
|
|
|
|
|
SHAREHOLDER MEETING REGISTRATION:
|
|
|
|
|
|
|
|
To vote and/or attend the meeting, go to “shareholder meeting registration” link at www.proxyvote.com.
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E01005-P74933
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
|
|
|
|
|
|
|
|
|
|
|
|
|
CME GROUP INC.
|
|
|
|
|
|
|
The Board of Directors recommends votes “FOR” Proposals 1, 2 and 3.
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of Equity Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seventeen will be elected to the Board of Directors
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
|
|
1a.
|
|
Terrence A. Duffy
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1b.
|
|
Phupinder S. Gill
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1c.
|
|
Timothy S. Bitsberger
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1d.
|
|
Charles P. Carey
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1e.
|
|
Dennis H. Chookaszian
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1f.
|
|
Ana Dutra
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1g.
|
|
Martin J. Gepsman
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1h.
|
|
Larry G. Gerdes
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1i.
|
|
Daniel R. Glickman
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1j.
|
|
Leo Melamed
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1k.
|
|
William P. Miller II
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1l.
|
|
James E. Oliff
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1m.
|
|
Alex J. Pollock
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1n.
|
|
John F. Sandner
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1o.
|
|
Terry L. Savage
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1p.
|
|
William R. Shepard
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
1q.
|
|
Dennis A. Suskind
|
|
¨
|
|
¨
|
|
¨
|
|
|
|
|
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2.
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Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2016.
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¨
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¨
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¨
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3.
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Advisory vote on the compensation of our named executive officers.
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¨
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¨
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¨
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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The Board of Directors is not providing recommendations on PROPOSALS 4 and 5.
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4.
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Election of One Class B-3 Director
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Vote “FOR”
one
nominee to be elected to the Board of Directors.
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For
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Against
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Abstain
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4a.
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Bradley P. Cohen (BPC)
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¨
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¨
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¨
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4b.
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Elizabeth A. Cook (LZY)
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¨
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¨
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¨
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5.
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Election of 2017 Class B-3 Nominating Committee
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Vote “FOR” up to
five
nominees to be elected to the Class
B-3
Nominating Committee.
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For
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Against
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Abstain
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5a.
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J. Kenny Carlin (JKC)
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¨
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¨
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¨
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5b.
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Adam M. Clayman (AMC)
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¨
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¨
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¨
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5c.
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Bryan P. Cooley (COOL)
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¨
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¨
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¨
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5d.
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Lester E. Crockett Jr. (LCT)
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¨
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¨
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¨
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5e.
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Mario J. Florio (MRO)
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¨
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¨
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¨
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5f.
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Christopher P. Gaffney (GAF)
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¨
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¨
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¨
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5g.
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David P. Gaughan (VAD)
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¨
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¨
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¨
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5h.
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Joel P. Glickman (GLK)
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¨
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¨
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¨
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5i.
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Jayne A. Valio (JAV)
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¨
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¨
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¨
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5j.
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Paul D. Zirpolo (ZIR)
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¨
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¨
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¨
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Signature (Joint Owners)
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Date
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If you plan to attend the meeting on May 18, 2016, you should register in advance.
Please go to the “shareholder meeting registration” link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration
confirmation and bring it with you to the meeting along with valid picture identification.
Please note that seating
is limited and admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a driver’s license or passport with their registration
confirmation. Seating will begin at 2:30 p.m. and the meeting will begin at 3:30 p.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You
will be required to enter through a security check point before being granted access to the meeting.
YOUR VOTE IS
IMPORTANT!
Please take a moment to vote your shares of Class B-3 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR TWO EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting:
The Notice and Proxy Statement and CME Group 2015 Annual Report with 10-K Wrap are available at www.proxyvote.com.
E01006-P74933
This Proxy is being solicited by the Board of Directors of CME Group Inc. (“CME
Group”) for the Annual Meeting of Shareholders on Wednesday, May 18, 2016.
The undersigned hereby appoint(s)
Terrence A. Duffy and Phupinder S. Gill with full power to act alone and with full power of substitution, as proxies of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 3:30 p.m., Central Time, on Wednesday, May 18, 2016,
in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-3
common stock of CME Group, held of record by such shareholder(s) as of the close
of business on March 22, 2016, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE “FOR”
PROPOSALS 1, 2 AND 3 AND TO “ABSTAIN” FROM PROPOSALS 4 AND 5 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
The proposals are fully set forth in the Proxy Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on the reverse side to vote on any item.
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 17, 2016. Have your
proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the meeting, go to “shareholder meeting registration” link at www.proxyvote.com.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR
BLACK INK AS FOLLOWS:
E01007-P74933
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
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CME GROUP INC.
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The Board of Directors recommends votes “FOR” Proposals 1, 2 and 3.
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1.
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Election of Equity Directors
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Seventeen will be elected to the Board of Directors
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For
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Against
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Abstain
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1a.
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Terrence A. Duffy
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¨
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¨
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¨
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For
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Against
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Abstain
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1b.
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Phupinder S. Gill
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¨
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¨
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¨
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1n.
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John F. Sandner
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¨
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¨
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¨
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1c.
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Timothy S. Bitsberger
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¨
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¨
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¨
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1o.
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Terry L. Savage
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¨
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¨
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¨
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1d.
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Charles P. Carey
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¨
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¨
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¨
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1p.
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William R. Shepard
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¨
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¨
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¨
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1e.
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Dennis H. Chookaszian
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¨
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¨
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¨
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1q.
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Dennis A. Suskind
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¨
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¨
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¨
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1f.
|
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Ana Dutra
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¨
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¨
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¨
|
|
2.
3.
|
|
Ratification of the appointment of Ernst &
Young as our independent registered public accounting firm for 2016.
Advisory vote on
the compensation of our named executive officers.
|
|
¨
¨
|
|
¨
¨
|
|
¨
¨
|
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1g.
|
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Martin J. Gepsman
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¨
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¨
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¨
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1h.
|
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Larry G. Gerdes
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¨
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¨
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¨
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1i.
|
|
Daniel R. Glickman
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¨
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¨
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¨
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1j.
|
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Leo Melamed
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¨
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¨
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¨
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1k.
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William P. Miller II
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¨
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¨
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¨
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1l.
|
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James E. Oliff
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¨
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¨
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¨
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1m.
|
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Alex J. Pollock
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¨
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¨
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¨
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|
Signature [PLEASE SIGN WITHIN BOX]
|
|
Date
|
|
|
|
|
|
|
|
Signature (Joint Owners)
|
|
Date
|
|
|
|
|
|
|
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|
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|
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|
|
If you plan to attend the meeting on May 18, 2016, you should register in advance.
Please go to the “shareholder meeting registration” link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration
confirmation and bring it with you to the meeting along with valid picture identification.
Please note that seating
is limited and admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a driver’s license or passport with their registration
confirmation. Seating will begin at 2:30 p.m. and the meeting will begin at 3:30 p.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You
will be required to enter through a security check point before being granted access to the meeting.
YOUR VOTE IS
IMPORTANT!
Please take a moment to vote your shares of Class B-4 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR THREE EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting:
The Notice and Proxy Statement and CME Group 2015 Annual Report are available at www.proxyvote.com.
E01008-P74933
This Proxy is being solicited by the Board of Directors of CME Group Inc. (“CME
Group”) for the Annual Meeting of Shareholders on Wednesday, May 18, 2016.
The undersigned hereby appoint(s)
Terrence A. Duffy and Phupinder S. Gill with full power to act alone and with full power of substitution, as proxies of such shareholder(s), to at tend the Annual Meeting of CME Group to be held at 3:30 p.m., Central Time, on Wednesday, May 18,
2016, in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-4
common stock of CME Group, held of record by such shareholder(s) as of the
close of business on March 22, 2016, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE “FOR”
PROPOSALS 1, 2 AND 3 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The proposals are fully set forth in the
Proxy Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark
this proxy as indicated on the reverse side to vote on any item. If you wish to vote in accordance with the recommendations of the company,
please sign the reverse side; no boxes need to be checked.
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