UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported):
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November 11, 2015
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CME Group Inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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001-31553
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36-4459170
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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20 South Wacker Drive, Chicago, Illinois
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60606
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code:
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312-930-1000
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Not Applicable
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Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On November 11, 2015, the Compensation Committee of the Board of Directors (the "Board") of CME Group Inc. (the "Company") recommended and the Board approved revised employment agreements with Terrence A. Duffy, the Company’s Executive Chairman & President, and Phupinder S. Gill, the Company’s Chief Executive Officer.
The following is a summary of the key terms of each agreement, which replace Mr. Duffy’s existing agreement dated as of February 5, 2014, and Mr. Gill’s existing agreement dated as of February 5, 2014. A copy of the new employment agreements for Mr. Duffy and Mr. Gill are attached to this report as Exhibit 10.1 and 10.2, respectively, and are incorporated herein by reference as though each was fully set forth herein. The description below is only a summary of the terms of the employment agreements and is qualified in its entirety by the complete text of the new employment agreements themselves.
Duffy Employment Agreement
Under the terms of his agreement, Mr. Duffy’s minimum annual base salary is $1,250,000, which shall increase as of January 1, 2016 for the term of the agreement to $1,500,000. During the term of the agreement, Mr. Duffy shall be eligible to participate in the Company’s bonus incentive plan for its named executive officers and in the Company’s equity incentive plan with terms consistent with the Company’s other most senior executives. Commencing as of January 1, 2016, Mr. Duffy’s target bonus opportunity under such incentive plan shall be 150% of his annual base salary earned and his target grant date value equity award opportunity shall be 300% of his annual base salary. Actual awards granted under such plans shall be approved by the Compensation Committee. Mr. Duffy is also entitled to employee benefits consistent with programs in place for other senior executives of the Company, including life insurance and long-term disability coverage.
In the event of a termination of Mr. Duffy’s employment by the Company without cause, as defined in the agreement, in addition to his accrued benefits, Mr. Duffy is entitled to a one time lump sum severance payment equal to two times his then current base salary, which payments are subject to Mr. Duffy’s timely execution and delivery of a general release. Additionally, upon such a termination all of Mr. Duffy’s 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). All of Mr. Duffy’s 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 a change of control, as defined in the agreement, prior to termination of Mr. Duffy’s employment, all of Mr. Duffy’s unvested time-vesting equity awards shall become vested and all of Mr. Duffy’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 Mr. Duffy 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 of Mr. Duffy’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).
In the event of Mr. Duffy’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 of Mr. Duffy’s performance-based equity awards shall vest at the target level of performance and become payable within thirty (30) days following the date of death or such termination of employment.
In the event of Mr. Duffy’s disability or following any termination of Mr. Duffy’s employment by him voluntarily or by the Company without cause, Mr. Duffy 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 Mr. Duffy is covered by comparable insurance and health benefits.
The agreement also contains provisions prohibiting Mr. Duffy 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 Mr. Duffy to the Company, to a competing business.
If Mr. Duffy is employed by the Company on December 31, 2017, all outstanding unvested time-vesting equity awards granted to Mr. Duffy after November 4, 2010 and prior to November 11, 2015 will vest and all of Mr. Duffy’s 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 Mr. Duffy’s timely execution and delivery of a general release.
At the expiration of the term of the agreement on December 31, 2020, if Mr. Duffy is employed by the Company, all outstanding unvested time-vesting equity awards granted to Mr. Duffy after November 11, 2015 will vest and all of Mr. Duffy’s 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 Mr. Duffy’s timely execution and delivery of a general release.
All equity awards granted to Mr. Duffy prior to November 4, 2010 will continue to be governed by the terms and conditions of such awards at the time of grant.
Mr. Duffy’s agreement will expire on December 31, 2020, unless sooner terminated by the Company or Mr. Duffy.
Gill Employment Agreement
Under the terms of his agreement, Mr. Gill’s minimum annual base salary is $1,000,000, which shall increase as of January 1, 2016 for the term of the agreement to $1,250,000. Mr. Gill is eligible to participate in the Company’s bonus incentive plan for its named executive officers and in the Company’s equity incentive plan with terms consistent with the Company’s other most senior executives. Commencing as of January 1, 2016, Mr. Gill’s target bonus opportunity under such incentive plan shall be 150% of his annual base salary earned and his target grant date value equity award opportunity shall be 250% of his annual base salary. Actual awards granted under such plans shall be approved by the Compensation Committee. Mr. Gill is also entitled to employee benefits consistent with programs in place for other senior executives of the Company.
In the event of a termination of Mr. Gill’s employment by the Company without cause, as defined in the agreement, in addition to his accrued benefits, Mr. Gill is entitled to a one time lump sum severance payment equal to two times his then current base salary, which payments are subject to Mr. Gill’s timely execution and delivery of a general release. Additionally, upon such a termination all of Mr. Gill’s 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). All of Mr. Gill’s 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 a change of control, as defined in the agreement, prior to termination of Mr. Gill’s employment, all of Mr. Gill’s unvested time-vesting equity awards shall become vested and all of Mr. Gill’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 Mr. Gill 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 of Mr. Gill’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).
In the event of Mr. Gill’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 of Mr. Gill’s performance-based equity awards shall vest at the target level of performance and become payable within thirty (30) days following the date of death or such termination of employment.
In the event of Mr. Gill’s disability or following any termination of Mr. Gill’s employment by him voluntarily or by the Company without cause, Mr. Gill 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 Mr. Gill is covered by comparable insurance and health benefits.
The agreement also contains provisions prohibiting Mr. Gill 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 Mr. Gill to the Company, to a competing business.
If Mr. Gill is employed by the Company on December 16, 2016, all outstanding unvested time-vesting equity awards granted to Mr. Gill after August 5, 2009 and prior to November 11, 2015 will vest and all of Mr. Gill’s 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 Mr. Gill’s timely execution and delivery of a general release.
At the expiration of the term of the agreement on December 31, 2019, if Mr. Gill is employed by the Company, all outstanding unvested time-vesting equity awards granted to Mr. Gill after November 11, 2015 will vest and all of Mr. Gill’s 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 Mr. Gill’s timely execution and delivery of a general release.
All equity awards granted to Mr. Gill prior to August 5, 2009 will continue to be governed by the terms and conditions of such awards at the time of grant.
Mr. Gill’s agreement will expire on December 31, 2019, unless sooner terminated by the Company or Mr. Gill.
Item 9.01 Financial Statements and Exhibits.
A copy of the employment agreements for Mr. Duffy and Mr. Gill are attached to this report as Exhibit 10.1 and 10.2, respectively, and are incorporated herein by reference as though each was fully set forth herein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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CME Group Inc.
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November 12, 2015
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By:
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Kathleen M. Cronin
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Name: Kathleen M. Cronin
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Title: Senior Managing Director, General Counsel & Assistant Corporate Secretary
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Exhibit Index
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Exhibit No.
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Description
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10.1
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Agreement, effective as of November 11, 2015, by and between CME Group Inc. and Terrence A. Duffy.
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10.2
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Agreement, effective as of November 11, 2015, by and between CME Group Inc. and Phupinder Gill.
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AGREEMENT
THIS AGREEMENT, effective as of November 11, 2015 (Effective Date) by and between CME Group
Inc. (Employer or CME), a Delaware corporation, having its principal place of business at 20
South Wacker Drive, Chicago, Illinois, and Terrence A. Duffy (Executive).
R E C I T A L S:
WHEREAS, Employer wishes to continue to retain the services of Executive in the capacity of
Executive Chairman of the Employers Board of Directors (the Board) and President, upon the terms
and conditions hereinafter set forth and Executive wishes to continue such employment; and
WHEREAS, Employer and Executive wish to supersede the Agreement entered into by them and
effective as of February 5, 2014 and agree to be bound by the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties mutually
agree as follows:
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Employment. Subject to the terms of the Agreement, Employer hereby agrees to employ
Executive during the Agreement Term (as hereinafter defined) as Executive Chairman and
President and Executive hereby accepts such employment. Executive shall perform such duties
as have been associated with the office of Executive Chairman since the Executive assumed the
duties of Executive Chairman in 2006 and such other duties commensurate with such position as
Executive and the Board may mutually agree. In addition, Executive shall directly manage and
oversee the Government Relations, Corporate Marketing and Communications functions of Employer
and other such functions as the Board may approve from time to time. During the Agreement
Term, Employers Chief Executive Officer shall report to Executive, with responsibility for
the approval of the Chief Executive Officers annual goals, performance review and retention
or termination by the Board. Executive shall devote his full time, ability and attention to
the business of Employer during the Agreement Term. During the Agreement Term, Executive
shall comply with the Companys share ownership guidelines as in effect from time to time.
Executive will be nominated as a member of the Board during the Agreement Term. |
Nothing in the Agreement shall preclude Executive from participating in the affairs of any
governmental, educational or other charitable institution and serving as a member of the
board of directors of a corporation, except for a competitor of Employer, provided Executive
notifies the Governance Committee of the Board prior to his participating in any such
activities and as long as the Governance Committee does not determine that any such
activities interfere with or diminish Executives obligations under the Agreement.
Executive shall be entitled to retain all fees and other compensation derived from such
activities, in addition to the compensation and other benefits payable to him under the
Agreement, but shall disclose such fees to Employer.
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Agreement Term. Executive shall be employed hereunder for a term which expires on
December 31, 2020 (Agreement Term). The Agreement Term shall be subject to early
termination as set forth herein. |
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(a) |
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Annual Base Salary. During the Agreement Term, Employer shall pay to
Executive a base salary at a rate not less than $1,250,000 per year (Base Salary),
payable in accordance with the Employers normal payment schedule. As of January 1,
2016, during the Agreement Term, Executives Base Salary shall increase to $1,500,000
per year. |
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(b) |
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Bonuses. During the Agreement Term, Executive shall be eligible to
participate in the Employers Annual Incentive Plan (the AIP) as in effect from time
to time. Commencing as of January 1, 2016, Executives target bonus opportunity under
the AIP shall be 150% of the base salary paid in the plan year. For the avoidance of
doubt, the Compensation Committee of the Board retains the discretion to determine the
actual bonus amount to be paid for each plan year, subject to the terms of the AIP. |
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Equity Compensation. During the Agreement Term, Executive shall be
eligible to participate in the CME Group Inc. Amended and Restated Omnibus Stock Plan
(Plan) as in effect from time to time. As of January 1, 2016, Executives target
grant date value opportunity under the Plan shall be 300% of Base Salary. For the
avoidance of doubt, the Compensation Committee of the Board retains the discretion to
determine the actual grant date value for each plan year, subject to the terms of the
Plan. |
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Change of Control Provisions. In the event of a Change of Control (as defined in
the Plan) that occurs prior to Executives termination of employment with the Employer, all
options and time-vesting restricted shares previously granted to Executive, whether during the
Agreement Term or otherwise, will have vesting accelerated so as to become 100% vested;
provided, however that any awards granted following the Effective Date the vesting of which is
contingent upon the attainment of performance goals shall have the continued employment
requirement applicable to such award waived and shall become vested or shall be forfeited
solely based on the 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). Thereafter, the options will
continue to be subject to the terms, definitions and provisions of the Plan and any related
option agreement. If Executive is involuntarily terminated without Cause within sixty (60)
days prior to a Change of Control, all unvested options and time-vesting restricted shares
which would have been outstanding had Executive been employed on the date of Change of Control
become 100% vested; provided, however that any awards granted following the Effective Date the
vesting of which is contingent upon the attainment of performance goals shall have the
continued employment requirement applicable to such award waived and shall become vested or
shall 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). Employer shall
cause the Plan and all future grants thereunder to permit Executive to transfer awards granted
thereunder for estate and tax planning purposes to members of Executives immediate family or
to one or more trusts for the benefit of such family members, partnerships in which such
family members are the only partners, or corporations in which such family members are the
only stockholders. |
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Benefits. Executive shall be entitled to insurance, vacation and other employee
benefits commensurate with his position in accordance with Employers policies for executives
in effect from time to time. Executive acknowledges receipt of a summary of Employers
employee benefits policies in effect as of the date of this Agreement. In addition, Employer
shall provide Executive with life insurance and long-term disability coverage consistent with
the programs in place for other executives of Employer (which is currently equal to two-thirds
of Executives Base Salary upon Executives disability (up until age 65) and three times
Executives Base Salary in the form of life insurance provided or underwritten by Employer).
In the event that the provision of life insurance coverage results in taxable income to
Executives beneficiaries upon his death, Employer shall pay an additional amount sufficient
to put Executives beneficiaries in the same after-tax position as if the life insurance
benefits had been provided under an insured life insurance plan. |
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Expense Reimbursement. During the Agreement Term, Employer shall reimburse
Executive, in accordance with Employers policies and procedures, for all proper expenses
incurred by him in the performance of his duties hereunder. |
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Termination. Executives employment as Executive Chairman and President, shall
terminate upon the occurrence of any of the following events. Upon any termination of
Executives employment for any reason, Executive agrees to resign and shall be deemed to have
resigned as a member of the Board. |
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Death. Upon the death of Executive, this Agreement shall automatically
terminate and all rights of Executive and his heirs, executors and administrators to
compensation and other benefits under this Agreement shall cease, except that (i)
compensation which shall have accrued to the date of death, including accrued Base
Salary, and other employee benefits to which Executive is entitled upon his death,
shall be paid or provided in accordance with the terms of the plans and programs of
CME, (ii) all stock option, SAR, time-vesting restricted stock and time vesting
restricted stock unit awards granted after November 4, 2010 will become fully vested
(and in the case of option and SAR awards shall remain exercisable for 48 months
following termination (but not beyond the maximum term of the award)) and (iii) all
equity or equity-based awards the vesting of which is contingent upon the attainment of
performance goals shall vest at target level of performance and become payable within
thirty (30) days following the date of death. |
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Disability. Employer may, at its option, terminate this Agreement upon
written notice to Executive if Executive, because of physical or mental incapacity or
disability, fails to perform the essential functions of his position required of him
hereunder for a continuous period of 90 days or any 120 days within any 12-month
period. Upon such termination, all obligations of Employer hereunder shall cease,
except that (i) compensation which shall have accrued to the date of disability,
including accrued Base Salary, and other employee benefits to which Executive is
entitled upon his disability, shall be paid or provided in accordance with the terms of
the plans and programs of CME, (ii) all stock option, SAR, time-vesting restricted
stock and time-vesting restricted stock unit awards granted after November 4, 2010 will
become fully vested (and in the case of option and SAR awards shall remain exercisable
for 48 months following termination (but not beyond the maximum term of the award)),
(iii) all equity or equity-based awards the vesting of which is contingent upon the
attainment of performance goals shall vest at target level of performance and become
payable within thirty (30) days following the date of such termination of employment;
and (iv) Executive shall be entitled to the medical benefits described in Section 7(f).
In the event of any dispute regarding the existence of Executives disability
hereunder, the matter shall be resolved by a majority of the independent directors on
the Board. |
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Cause. Employer may, at its option, terminate Executives employment
under this Agreement for Cause. As used in this Agreement, the term Cause shall mean
any one or more of the following: |
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any refusal by Executive to perform his duties and
responsibilities under this Agreement, as determined after investigation by the
Board. Executive, after having been given written notice by Employer, shall
have seven (7) days to cure such refusal; |
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(2) |
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any intentional act of fraud, embezzlement, theft or
misappropriation of Employers funds by Executive, as determined after
investigation by the Board, or Executives admission or conviction of a felony
or of any crime involving moral turpitude, fraud, embezzlement, theft or
misrepresentation; |
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any gross negligence or willful misconduct of Executive
resulting in a financial loss or liability to the Employer or damage to the
reputation of Employer, as determined after investigation by the Board; |
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any breach by Executive of any one or more of the covenants
contained in Section 8, 9 or 10 hereof; or |
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(5) |
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any violation of any rule, regulation or guideline imposed by
CME or a regulatory or self regulatory body having jurisdiction over Employer,
as determined after investigation by the Board. |
The exercise of the right of CME to terminate this Agreement pursuant to this
Section 7(c) shall not abrogate any other rights or remedies of CME in respect of
the breach giving rise to such termination.
If Employer terminates Executives employment for Cause, Executive shall be entitled
to accrued Base Salary through the date of the termination of his employment, other
employee benefits to which Executive is entitled upon his termination of employment
with Employer, in accordance with the terms of the plans and programs of CME. Upon
termination for Cause, Executive will forfeit any unvested or unearned compensation
and long-term incentives, unless otherwise specified in the terms of the plans and
programs of CME.
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Termination Without Cause. Upon 30 days prior written notice to
Executive, the Board of Directors, by vote of a majority of the independent directors
may terminate this Agreement for any reason other than a reason set forth in paragraphs
(a), (b) or (c) of this Section 7. If, during the Agreement Term, the employment of
Executive hereunder is terminated by Employer for any reason other than a reason set
forth in subsections (a), (b) or (c) of this Section 7: |
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(1) |
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Executive shall be entitled to receive accrued Base Salary
through the date of the termination of his employment, and other employee
benefits to which Executive is entitled upon his termination of employment with
Employer, in accordance with the terms of the plans and programs of Employer; |
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(2) |
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subject to Executives execution and delivery prior to the
Release Deadline (as defined below) of a general release in a form and of a
substance satisfactory to Employer, Executive shall be entitled to receive a
one time lump sum severance payment equal to two times Executives annual Base
Salary, which shall be paid within 14 days of the later of the delivery of such
general release to Employer or the date on which such general release becomes
irrevocable. For purposes hereof, the Release Deadline means the deadline
prescribed by Employer for the execution of the general release described in
this paragraph (d)(2) of Section 7, which deadline shall in no event be later
than 60 days following the date Executives employment terminates; |
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(3) |
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subject to Executives execution and delivery prior to the
Release Deadline (as defined below) of a general release in a form and of a
substance satisfactory to Employer, (i) all stock option, SAR, time-vesting
restricted stock and time-vesting restricted stock unit awards granted after
November 4, 2010 shall become fully vested (and in the case of option and SAR
awards shall remain exercisable for 48 months following termination (but not
beyond the maximum term of the award)) and (ii) all equity or equity-based
awards the vesting of which is contingent upon the attainment of performance
goals shall have the continued employment requirement applicable to such award
waived and shall become vested or shall be forfeited solely based on actual
performance measured over the full performance term; and |
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(4) |
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Executive shall be entitled to the medical benefits described
in Section 7(f). |
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(e) |
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Voluntary Termination. |
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(1) |
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Upon 90 days prior written notice to CME (or such shorter
period as may be permitted by CME), Executive may voluntarily terminate his
employment with CME prior to the end of the Agreement Term for any reason. If
Executive voluntarily terminates his employment pursuant to this subsection
(e), he shall be entitled to receive accrued Base Salary through the date of
the termination of his employment and other employee benefits to which
Executive is entitled upon his termination of employment with CME, in
accordance with the terms of the plans and programs of CME. |
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(2) |
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In addition, if Executive voluntarily terminates his employment
during the Agreement Term within the 30 day period immediately following a
material diminution of Executives title, duties, power or authority without
Executives written consent, then such termination of employment will be
treated as a termination of employment without Cause under Section 7(d) hereof.
For the avoidance of doubt, if Executive is nominated for service on the Board
in accordance with Employers by-laws, but is not elected to the Board by
Employers shareholders and Executives management title, duties, power and
authority are not otherwise materially diminished, Executive shall not be
entitled to terminate his employment under this Section 7(e)(2). |
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(f) |
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Upon a termination of Executives employment described in Section 7(b), 7(d),
7(e) or 7(h), Executive shall be entitled to elect to continue coverage for himself and
his eligible dependents, for up to 48 months following employment termination, under
the medical and dental plans of Employer in which Executive was participating
immediately prior to such employment termination. Executives monthly cost for such
coverage shall be (i) the applicable COBRA premium for such coverage (which cost shall
be applicable during the eighteen (18) month period following termination) and (ii) the
monthly premium cost paid by Employer for Executives coverage (which cost shall be
applicable following expiration of the 18 month COBRA period). Upon or prior to the
commencement of each 12 month period during the 48 month continuation period, Executive
shall inform Employer whether Executive elects to continue coverage in accordance with
this Section 7(f) for such 12 month period. In the event that Executive elects to
continue such coverage following a termination described in Section 7(b) or 7(d),
Employer shall pay to Executive an amount, in a lump sum within 30 days following the
commencement of such 12 month period, equal to 150% of Executives total potential
monthly cost for such coverage for such 12 month period (based upon the rates in effect
at the time of such election). No payment will be made if (and to the extent)
Executive does not elect to continue coverage. Notwithstanding the foregoing timing
requirements, with respect to the initial 12 month period, payment of the lump sum
amounts payable under this Section 7(f) up to the maximum amount allowed for de minimis
payments under IRS Code Section 409A (Section 409A) shall be paid within fourteen
(14) days of termination of Executives employment. The remainder of the lump sum
amounts with respect to the first 12 month period, if any, shall be paid six (6) months
after the date Executive terminates employment. Notwithstanding anything in this
Section 7(f) to the contrary, (i) Executives continued coverage under such plans shall
end upon the date, if any, when Executive obtains comparable coverage (as compared to
the coverage provided under the applicable plans of Employer) from a subsequent
employer of Executive or Executives spouse. . |
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(g) |
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All awards of options and shares granted prior to November 4, 2010 shall be
governed by the terms and conditions of such awards at the time of grant. |
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(h) |
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Notwithstanding any other provision of this Agreement, if Executive is employed
by Employer on December 31, 2017 then, subject to Executives execution and delivery
prior to December 31, 2017 of a general release in a form and of a substance
satisfactory to Employer, all then-outstanding equity or equity-based awards granted
after November 4, 2010 and prior to the Effective Date shall be treated in the manner
described in clauses (3)(i) and (3)(ii) of Section 7(d) (as applicable) except to the
extent that the application of such treatment would result in the imposition of tax on
an Executive pursuant to IRS Code Section 409A (in which case such treatment will occur
upon the earliest date which will not result in the imposition of such tax). Executive
acknowledges that the application of this Section 7(h) may result in the imposition of
taxes on Executive with respect to equity or equity-based awards at the time of vesting
and agrees to pay to Employer any withholding amounts with respect to such awards at
the time determined by the Employer. In addition, if Executive is employed by Employer
on December 31, 2017 and his employment terminates on or after December 31, 2017 other
than for any reason set forth in the definition of Cause under Section 7(c) hereof,
Executive shall be entitled following such termination to the medical benefits
described in Section 7(f). |
Furthermore, notwithstanding any other provision of this Agreement, if Executive is
employed by Employer on December 31, 2020 then, subject to Executives execution and
delivery prior to December 31, 2020 of a general release in a form and of a
substance satisfactory to Employer, all then-outstanding equity or equity-based
awards granted after the Effective Date shall be treated in the manner described in
clauses (3)(i) and (3)(ii) of Section 7(d) (as applicable) except to the extent that
application of such treatment would result in the imposition of tax on Executive
pursuant to IRS Code Section 409A (in which case such treatment will occur upon the
earliest date which will not result in the imposition of such tax). Executive
acknowledges that the application of this Section 7(h) may result in the imposition
of taxes on Executive with respect to equity or equity-based awards at the time of
vesting and agrees to pay Employer any withholding amounts with respect to such
awards at the time determined by the Employer.
8. |
|
Confidential Information and Non-Compete. Executive acknowledges that the successful
development of CMEs services and products, including CMEs trading programs and systems,
current and potential customer and business relationships, and business strategies and plans
requires substantial time and expense. Such efforts generate for CME valuable and proprietary
information (Confidential Information) which gives CME a business advantage over others who
do not have such information. Confidential information includes, but is not limited to the
following: trade secrets, technical, business, proprietary or financial information of CME not
generally known to the public, business plans, proposals, past and current prospect and
customer lists, trading methodologies, systems and programs, training materials, research data
bases and computer software; but shall not include information or ideas acquired by Executive
prior to his employment with CME if such pre-existing information is generally known in the
industry and is not proprietary to CME. |
|
(a) |
|
Executive shall not at anytime during the Agreement Term or
thereafter, make use of or disclose, directly or indirectly to any competitor
or potential competitor of CME, or divulge, disclose or communicate to any
person, firm, corporation, or other legal entity in any manner whatsoever, or
for his own benefit and that of any person or entity other than Employer, any
Confidential Information. This subsection shall not apply to the extent
Executive is required to disclose Confidential Information to any regulatory
agency or as otherwise required by law; provided, however, that Executive will
promptly notify Employer if Executive is requested by any entity or person to
divulge Confidential(b) Information, and will use his best efforts to
ensure that Employer has sufficient time to intervene and/or object to such
disclosure or otherwise act to protect its interests. Executive shall not
disclose any Confidential Information while any such objection is pending. |
|
(c) |
|
Executive agrees that during the Agreement Term and for a
period of one (1) year following the termination of Executives employment with
CME for any reason, Executive shall not (i) be employed in an executive or
managerial capacity by, or (ii) provide, 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 Executive to
CME or any subsidiary or affiliate company (any such entity, a CME Group
entity) during Executives employment with any CME Group entity, to any
Competing Business. For the purposes of this Agreement, Competing Business
shall mean any business that is engaged in the same business or businesses of
any CME Group entity (including any prospective business in which any CME Group
entity is planning to engage). Executive acknowledges and agrees that the
restrictions contained in this Section 8(b) are reasonable and necessary to
protect CMEs legitimate interests in its customer and employee relationships,
goodwill and Confidential Information. |
|
(d) |
|
Upon termination for any reason, Executive shall return to
Employer all records, memoranda, notes, plans, reports, computer tapes and
equipment, software and other documents or data which constitute Confidential
Information which he may then possess or have under his control (together with
all copies thereof) and all credit cards, keys and other materials and
equipment which are Employers property that he has in his possession or
control. |
|
(e) |
|
If, at any time of enforcement of this Section 8, a court holds
that the restrictions stated herein are unreasonable, the parties hereto agree
that a maximum period, scope or geographical area reasonable under the
circumstances shall be substituted for the stated period, scope or area and
that the court shall be allowed to revise the restrictions contained herein to
cover the maximum period, scope and area permitted by law. |
|
(a) |
|
General. Executive acknowledges that Employer invests
in recruiting and training, and shares Confidential Information with, its
employees. As a result, Executive acknowledges that Employers employees are
of special, unique and extraordinary value to Employer. |
|
(b) |
|
Non-solicitation. Executive further agrees that for a
period of one (1) year following the termination of his employment with CME for
any reason he shall not in any manner, directly or indirectly, induce or
attempt to induce any employee of CME to terminate or abandon his or her
employment with CME for any purpose whatsoever. |
|
(c) |
|
Reformation. If, at any time of enforcement of this
Section 9, a court holds that the restrictions stated herein are unreasonable,
the parties hereto agree that the maximum period, scope or geographical area
reasonable under the circumstances shall be substituted for the stated period,
scope or area and that the court shall be allowed to revise the restrictions
contained herein to cover the maximum period, scope and area permitted by law. |
10. |
|
Intellectual Property. During the Agreement Term, Executive shall disclose to CME
and treat as confidential information all ideas, methodologies, product and technology
applications that he develops during the course of his employment with CME that relates
directly or indirectly to CMEs business. Executive hereby assigns to CME his entire right,
title and interest in and to all discoveries and improvements, patentable or otherwise, trade
secrets and ideas, writings and copyrightable material, which may be conceived by Executive or
developed or acquired by him during his employment with CME, which may pertain directly or
indirectly to the business of the CME. Executive shall at any time during or after the
Agreement Term, upon CMEs request, execute, acknowledge and deliver to CME all instruments
and do all other acts which are necessary or desirable to enable CME to file and prosecute
applications for, and to acquire, maintain and enforce, all patents, trademarks and copyrights
in all countries with respect to intellectual property developed or which was being developed
during Executives employment with CME. |
11. |
|
Remedies. Executive agrees that given the nature of CMEs business, the scope and
duration of the restrictions in paragraphs 8, 9 and 10 are reasonable and necessary to protect
the legitimate business interests of CME and do not unduly interfere with Executives career
or economic pursuits. Executive recognizes and agrees that a breach of any or all of the
provisions of Sections 8, 9 and 10 will constitute immediate and irreparable harm to CMEs
business advantage, for which damages cannot be readily calculated and for which damages are
an inadequate remedy. Accordingly, Executive acknowledges that CME shall therefore be
entitled to seek an injunction or injunctions to prevent any breach or threatened breach of
any such section. Such injunctive relief shall not be Employers sole remedy. Executive
agrees to reimburse CME for all costs and expenses, including reasonable attorneys fees and
costs, incurred by CME in connection with the successful enforcement of its rights under
Sections 8, 9 and 10 of this Agreement. |
12. |
|
Survival. Sections 7(h), 8, 9, 10, 11 and 13 of this Agreement (and, as applicable,
the provisions referenced herein) shall survive and continue in full force and effect in
accordance with their respective terms, notwithstanding any termination of the Agreement. |
13. |
|
Arbitration. Except with respect to Sections 8, 9, and 10, any dispute or
controversy between CME and Executive, whether arising out of or relating to this Agreement,
the breach of this Agreement, or otherwise, shall be settled by arbitration in Chicago,
Illinois, in accordance with the following: |
|
(a) |
|
Arbitration hearings will be conducted by the American Arbitration Association
(AAA). Except as modified herein, arbitration hearings will be conducted in accordance
with AAAs rules. |
|
(b) |
|
State and federal laws contain statutes of limitation which prescribe the time
frames within which parties must file a law suit to have their disputes resolved
through the court system. These same statutes of limitation will apply in determining
the time frame during which the parties must file a request for arbitration. |
|
(c) |
|
If Executive seeks arbitration, Executive shall submit a filing fee to the AAA
in an amount equal to the lesser of the filing fee charged in the state or federal
court in Chicago, Illinois. The AAA will bill Employer for the balance of the filing
and arbitrators fees. |
|
(d) |
|
The arbitrator shall have the same authority to award (and shall be limited to
awarding) any remedy or relief that a court of competent jurisdiction could award,
including compensatory damages, attorney fees, punitive damages and reinstatement.
Employer and Executive may be represented by legal counsel or any other individual at
their own expense during an arbitration hearing. |
|
(e) |
|
Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. |
|
(f) |
|
Except as necessary in court proceedings to enforce this arbitration provision
or an award rendered hereunder, or to obtain interim relief, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration hereunder
without the prior written consent of CME and Executive. |
14. |
|
Notices. All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed given when (i) delivered personally or by overnight courier
to the following address of the other party hereto (or such other address for such party as
shall be specified by notice given pursuant to this Section) or (ii) sent by facsimile to the
following facsimile number of the other party hereto (or such other facsimile number for such
party as shall be specified by notice given pursuant to this Section), with the confirmatory
copy delivered by overnight courier to the address of such party pursuant to this Section 14: |
If to CME, to:
Board of Directors
c/o Chairman of the Governance Committee
CME Group Inc.
20 South Wacker Drive
Chicago, IL 60606
(312) 930-3100
With a copy to:
Kathleen M. Cronin
Managing Director, General Counsel and Corporate Secretary
CME Group Inc.
20 South Wacker Drive
Chicago, IL 60606
(312) 930-3488
If to Executive, to:
Terrence A. Duffy
[redacted]
15. |
|
Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect
under applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of any other
provision of this Agreement or the validity, legality or enforceability of such provision in
any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never been contained
herein. |
16. |
|
Entire Agreement. This Agreement constitutes the entire Agreement and understanding
between the parties with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or between the parties, written or
oral, which may have related in any manner to the subject matter hereof, including, without
limitation, the Agreement, signed as of November 9, 2010 and effective as of November 4, 2010,
as amended as of April 6, 2011, and the Agreement effective as of April 18, 2012, and the
Agreement effective as of February 5, 2014 (the Predecessor Agreements). No other agreement
or amendment to this Agreement shall be binding upon either party including, without
limitation, any agreement or amendment made hereafter unless in writing, signed by both
parties. Executive acknowledges that each of the parties has participated in the preparation
of this Agreement and for purposes of principles of law governing the construction of the
terms of this Agreement, no party shall be deemed to be the drafter of the same. |
17. |
|
Successors and Assigns. This Agreement shall be enforceable by Executive and his
heirs, executors, administrators and legal representatives, and by CME and its successors and
assigns. |
18. |
|
Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Illinois without regard to principles of conflict of
laws. |
19. |
|
Acknowledgment. Executive acknowledges that he has read, understood, and accepts the
provisions of this Agreement. |
20. |
|
IRS Code Section 409A. The intent of the parties is that payments and benefits under
this Agreement comply with Section 409A, to the extent subject thereto, and accordingly, to
the maximum extent permitted, this Agreement shall be interpreted and administered to be in
compliance therewith. Notwithstanding anything contained herein to the contrary, Executive
shall not be considered to have terminated employment with Employer for purposes of any
payments under this Agreement which are subject to Section 409A until Executive would be
considered to have incurred a separation from service from Employer within the meaning of
Section 409A. Each amount to be paid or benefit to be provided under this Agreement shall be
construed as a separate identified payment for purposes of Section 409A, and any payments
described in this Agreement that are due within the short term deferral period as defined in
Section 409A shall not be treated as deferred compensation unless applicable law requires
otherwise. Without limiting the foregoing and notwithstanding anything contained herein to
the contrary, to the extent required in order to avoid accelerated taxation and/or tax
penalties under Section 409A, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this Agreement during the six-month period immediately
following Executives separation from service shall instead be paid on the first business day
after the date that is six months following Executives separation from service (or, if
earlier, Executives death). To the extent required to avoid accelerated taxation and/or tax
penalties under Section 409A, amounts reimbursable to Executive under this Agreement shall be
paid to Executive on or before the last day of the year following the year in which the
expense was incurred and the amount of expenses eligible for reimbursement (and in-kind
benefits provided to Executive) during any one year may not effect amounts reimbursable or
provided in any subsequent year. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
|
|
|
CME Group Inc.
By: /s/ Larry Gerdes
|
|
Terrence A. Duffy
/s/ Terrence A. Duffy |
|
|
|
Larry Gerdes
Chairman, Compensation Committee
|
|
|
|
|
|
AGREEMENT
THIS AGREEMENT, effective as of November 11, 2015 (Effective Date) by and between CME Group
Inc. (Employer or CME), a Delaware corporation, having its principal place of business at 20
South Wacker Drive, Chicago, Illinois, and Phupinder Gill (Executive).
R E C I T A L S:
WHEREAS, Employer wishes to continue to retain the services of Executive in the capacity of
Chief Executive Officer, upon the terms and conditions hereinafter set forth and Executive wishes
to continue such employment; and
WHEREAS, Employer and Executive wish to supersede the Agreement entered into by them and
effective as of February 5, 2014 and agree to be bound by the terms of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties mutually
agree as follows:
1. |
|
Employment. Subject to the terms of the Agreement, Employer hereby agrees to employ
Executive during the Agreement Term (as hereinafter defined) as Chief Executive Officer and
Executive hereby accepts such employment. Executives duties shall include, but not be
limited to, the performance of all duties associated with managing and/or overseeing the day
to day functions of CME-wide operations (but not including Government Relations, Corporate
Marketing and Communications, which shall be the direct responsibility of Employers Executive
Chairman and President) and such other duties as are the responsibility of Employers chief
executive officer pursuant to applicable law or regulation. Executive shall report to
Employers Executive Chairman and President, with approval of Executives annual goals,
performance review and retention or termination by Employers Board of Directors (the
Board). Executive will provide such business and professional services in the performance
of his duties that are consistent with Executives position, and as shall reasonably be
assigned to him by the Executive Chairman and President or the Board. Executive shall devote
his full time, ability and attention to the business of Employer during the Agreement Term.
During the Agreement Term, Executive shall comply with the Companys share ownership
guidelines as in effect from time to time. To the extent provided in Employers by-laws,
Executive will be nominated as a member of the Board during the Agreement Term. |
Nothing in the Agreement shall preclude Executive from participating in the affairs of any
governmental, educational or other charitable institution and serving as a member of the
board of directors of a corporation, except for a competitor of Employer, provided Executive
notifies the Governance Committee of the Board prior to his participating in any such
activities and as long as the Governance Committee does not determine that any such
activities interfere with or diminish Executives obligations under the Agreement.
Executive shall be entitled to retain all fees and other compensation derived from such
activities, in addition to the compensation and other benefits payable to him under the
Agreement, but shall disclose such fees to Employer.
2. |
|
Agreement Term. Executive shall be employed hereunder for a term which expires on
December 31, 2019 (Agreement Term). The Agreement Term shall be subject to early
termination as set forth herein. |
|
(a) |
|
Annual Base Salary. During the Agreement Term, Employer shall pay to
Executive a base salary at a rate not less than $1,000,000 per year (Base Salary),
payable in accordance with the Employers normal payment schedule. As of January 1,
2016, during the Agreement Term, Executives Base Salary shall increase to $1,250,000
per year. |
|
(b) |
|
Bonuses. During the Agreement Term, Executive shall be eligible to
participate in the Employers Annual Incentive Plan (the AIP) as in effect from time
to time. Commencing as of January 1, 2016, Executives target bonus opportunity under
the AIP shall be 150% of the base salary paid in the plan year. For the avoidance of
doubt, the Compensation Committee of the Board retains the discretion to determine the
actual bonus amount to be paid for each plan year, subject to the terms of the AIP. |
|
(c) |
|
Equity Compensation. During the Agreement Term, Executive shall be
eligible to participate in the CME Group Inc. Amended and Restated Omnibus Stock Plan
(Plan) as in effect from time to time. As of January 1, 2016, Executives target
grant date value opportunity under the Plan shall be 250% of Base Salary. For the
avoidance of doubt, the Compensation Committee of the Board retains the discretion to
determine the actual grant date value for each plan year, subject to the terms of the
Plan. |
4. |
|
Change of Control Provisions. In the event of a Change of Control (as defined in
the Plan) that occurs prior to Executives termination of employment with the Employer, all
options and time-vesting restricted shares previously granted to Executive, whether during the
Agreement Term or otherwise, will have vesting accelerated so as to become 100% vested;
provided, however that any awards granted following the Effective Date the vesting of which is
contingent upon the attainment of performance goals shall have the continued employment
requirement applicable to such award waived and shall become vested or shall be forfeited
solely based on the 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). Thereafter, the options will
continue to be subject to the terms, definitions and provisions of the Plan and any related
option agreement. If Executive is involuntarily terminated without Cause within sixty (60)
days prior to a Change of Control, all unvested options and time-vesting restricted shares
which would have been outstanding had Executive been employed on the date of Change of Control
become 100% vested; provided, however that any awards granted following the Effective Date the
vesting of which is contingent upon the attainment of performance goals shall have the
continued employment requirement applicable to such award waived and shall become vested or
shall 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). Employer shall
cause the Plan and all future grants thereunder to permit Executive to transfer awards granted
thereunder for estate and tax planning purposes to members of Executives immediate family or
to one or more trusts for the benefit of such family members, partnerships in which such
family members are the only partners, or corporations in which such family members are the
only stockholders. |
5. |
|
Benefits. Executive shall be entitled to insurance, vacation and other employee
benefits commensurate with his position in accordance with Employers policies for executives
in effect from time to time. Executive acknowledges receipt of a summary of Employers
employee benefits policies in effect as of the date of this Agreement. |
6. |
|
Expense Reimbursement. During the Agreement Term, Employer shall reimburse
Executive, in accordance with Employers policies and procedures, for all proper expenses
incurred by him in the performance of his duties hereunder. |
7. |
|
Termination. Executives employment as Chief Executive Officer, shall terminate upon
the occurrence of any of the following events. Upon any termination of Executives employment
for any reason, Executive agrees to resign and shall be deemed to have resigned as a member of
the Board, if he then is a member of the Board. |
|
(a) |
|
Death. Upon the death of Executive, this Agreement shall automatically
terminate and all rights of Executive and his heirs, executors and administrators to
compensation and other benefits under this Agreement shall cease, except that (i)
compensation which shall have accrued to the date of death, including accrued Base
Salary, and other employee benefits to which Executive is entitled upon his death,
shall be paid or provided in accordance with the terms of the plans and programs of
CME, (ii) all stock option, SAR, time-vesting restricted stock and time vesting
restricted stock unit awards granted after August 5, 2009, will become fully vested
(and in the case of option and SAR awards shall remain exercisable for 48 months
following termination (but not beyond the maximum term of the award)) and (iii) all
equity or equity-based awards the vesting of which is contingent upon the attainment of
performance goals shall vest at target level of performance and become payable within
thirty (30) days following the date of death. |
|
(b) |
|
Disability. Employer may, at its option, terminate this Agreement upon
written notice to Executive if Executive, because of physical or mental incapacity or
disability, fails to perform the essential functions of his position required of him
hereunder for a continuous period of 90 days or any 120 days within any 12-month
period. Upon such termination, all obligations of Employer hereunder shall cease,
except that (i) compensation which shall have accrued to the date of disability,
including accrued Base Salary, and other employee benefits to which Executive is
entitled upon his disability, shall be paid or provided in accordance with the terms of
the plans and programs of CME, (ii) all stock option, SAR, time-vesting restricted
stock and time-vesting restricted stock unit awards granted after August 5, 2009 will
become fully vested (and in the case of option and SAR awards shall remain exercisable
for 48 months following termination (but not beyond the maximum term of the award)),
(iii) all equity or equity-based awards the vesting of which is contingent upon the
attainment of performance goals shall vest at target level of performance and become
payable within thirty (30) days following the date of such termination of employment;
and (iv) Executive shall be entitled to the medical benefits described in Section 7(f).
In the event of any dispute regarding the existence of Executives disability
hereunder, the matter shall be resolved by a majority of the independent directors on
the Board. |
|
(c) |
|
Cause. Employer may, at its option, terminate Executives employment
under this Agreement for Cause. As used in this Agreement, the term Cause shall mean
any one or more of the following: |
|
(1) |
|
any refusal by Executive to perform his duties and
responsibilities under this Agreement, as determined after investigation by the
Board. Executive, after having been given written notice by Employer, shall
have seven (7) days to cure such refusal; |
|
(2) |
|
any intentional act of fraud, embezzlement, theft or
misappropriation of Employers funds by Executive, as determined after
investigation by the Board, or Executives admission or conviction of a felony
or of any crime involving moral turpitude, fraud, embezzlement, theft or
misrepresentation; |
|
(3) |
|
any gross negligence or willful misconduct of Executive
resulting in a financial loss or liability to the Employer or damage to the
reputation of Employer, as determined after investigation by the Board; |
|
(4) |
|
any breach by Executive of any one or more of the covenants
contained in Section 8, 9 or 10 hereof; |
|
(5) |
|
any violation of any rule, regulation or guideline imposed by
CME or a regulatory or self regulatory body having jurisdiction over Employer,
as determined after investigation by the Board. |
The exercise of the right of CME to terminate this Agreement pursuant to this
Section 7(c) shall not abrogate any other rights or remedies of CME in respect of
the breach giving rise to such termination.
If Employer terminates Executives employment for Cause, Executive shall be entitled
to accrued Base Salary through the date of the termination of his employment, other
employee benefits to which Executive is entitled upon his termination of employment
with Employer, in accordance with the terms of the plans and programs of CME. Upon
termination for Cause, Executive will forfeit any unvested or unearned compensation
and long-term incentives, unless otherwise specified in the terms of the plans and
programs of CME.
|
(d) |
|
Termination Without Cause. Upon 30 days prior written notice to
Executive, the Board of Directors, by vote of a majority of the independent directors
may terminate this Agreement for any reason other than a reason set forth in paragraphs
(a), (b) or (c) of this Section 7. If, during the Agreement Term, the employment of
Executive hereunder is terminated by Employer for any reason other than a reason set
forth in subsections (a), (b) or (c) of this Section 7: |
|
(1) |
|
Executive shall be entitled to receive accrued Base Salary
through the date of the termination of his employment, and other employee
benefits to which Executive is entitled upon his termination of employment with
Employer, in accordance with the terms of the plans and programs of Employer; |
|
(2) |
|
subject to Executives execution and delivery prior to the
Release Deadline (as defined below) of a general release in a form and of a
substance satisfactory to Employer, Executive shall be entitled to receive a
one time lump sum severance payment equal to two times Executives annual Base
Salary, which shall be paid within 14 days of the later of the delivery of such
general release to Employer or the date on which such general release becomes
irrevocable. For purposes hereof, the Release Deadline means the deadline
prescribed by Employer for the execution of the general release described in
this paragraph (d)(2) of Section 7, which deadline shall in no event be later
than 60 days following the date Executives employment terminates; |
|
(3) |
|
subject to Executives execution and delivery prior to the
Release Deadline (as defined below) of a general release in a form and of a
substance satisfactory to Employer, (i) all stock option, SAR, time-vesting
restricted stock and time-vesting restricted stock unit awards granted after
August 5, 2009 shall become fully vested (and in the case of option and SAR
awards shall remain exercisable for 48 months following termination (but not
beyond the maximum term of the award)) and (ii) all equity or equity-based
awards the vesting of which is contingent upon the attainment of performance
goals shall have the continued employment requirement applicable to such award
waived and shall become vested or shall be forfeited solely based on actual
performance measured over the full performance term; and |
|
(4) |
|
Executive shall be entitled to the medical benefits described
in Section 7(f). |
1
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(e) |
|
Voluntary Termination. |
|
(1) |
|
Upon 90 days prior written notice to CME (or such shorter
period as may be permitted by CME), Executive may voluntarily terminate his
employment with CME prior to the end of the Agreement Term for any reason. If
Executive voluntarily terminates his employment pursuant to this subsection
(e), he shall be entitled to receive accrued Base Salary through the date of
the termination of his employment and other employee benefits to which
Executive is entitled upon his termination of employment with CME, in
accordance with the terms of the plans and programs of CME. |
|
(2) |
|
In addition, if Executive voluntarily terminates his employment
during the Agreement Term within the 30 day period immediately following a
material diminution of Executives title, duties, power or authority without
Executives written consent, then such termination of employment will be
treated as a termination of employment without Cause under Section 7(d) hereof. |
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(f) |
|
Upon a termination of Executives employment described in Section 7(b), 7(d),
7(e) or 7(h), Executive shall be entitled to elect to continue coverage for himself and
his eligible dependents, for up to 48 months following employment termination, under
the medical and dental plans of Employer in which Executive was participating
immediately prior to such employment termination. Executives monthly cost for such
coverage shall be (i) the applicable COBRA premium for such coverage (which cost shall
be applicable during the eighteen (18) month period following termination) and (ii) the
monthly premium cost paid by Employer for Executives coverage (which cost shall be
applicable following expiration of the 18 month COBRA period). Upon or prior to the
commencement of each 12 month period during the 48 month continuation period, Executive
shall inform Employer whether Executive elects to continue coverage in accordance with
this Section 7(f) for such 12 month period. In the event that Executive elects to
continue such coverage, Employer shall pay to Executive an amount, in a lump sum within
30 days following the commencement of such 12 month period, equal to 150% of
Executives total potential monthly cost for such coverage for such 12 month period
(based upon the rates in effect at the time of such election). No payment will be made
if (and to the extent) Executive does not elect to continue coverage. Notwithstanding
the foregoing timing requirements, with respect to the initial 12 month period, payment
of the lump sum amounts payable under this Section 7(f) up to the maximum amount
allowed for de minimis payments under IRS Code Section 409A (Section 409A) shall be
paid within fourteen (14) days of termination of Executives employment. The remainder
of the lump sum amounts with respect to the first 12 month period, if any, shall be
paid six (6) months after the date Executive terminates employment. Notwithstanding
anything in this Section 7(f) to the contrary, Executives continued coverage under
such plans shall end upon the date, if any, when Executive obtains comparable coverage
(as compared to the coverage provided under the applicable plans of Employer) from a
subsequent employer of Executive or Executives spouse. |
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(g) |
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All awards of options and shares granted prior to August 5, 2009 shall be
governed by the terms and conditions of such awards at the time of grant. |
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(h) |
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Notwithstanding any other provision of this Agreement, if Executive is employed
by Employer on December 31, 2016 then, subject to Executives execution and delivery
prior to December 31, 2016 of a general release in a form and of a substance
satisfactory to Employer, all then-outstanding equity or equity-based awards granted
after August 5, 2009 and prior to the Effective Date shall be treated in the manner
described in clauses (3)(i) and (3)(ii) of Section 7(d) (as applicable) except to the
extent that the application of such treatment would result in the imposition of tax on
an Executive pursuant to IRS Code Section 409A (in which case such treatment will occur
upon the earliest date which will not result in the imposition of such tax). Executive
acknowledges that the application of this Section 7(h) may result in the imposition of
taxes on Executive with respect to equity or equity-based awards at the time of vesting
and agrees to pay to Employer any withholding amounts with respect to such awards at
the time determined by the Employer. In addition, if Executive is employed by Employer
on December 31, 2016 and his employment terminates on or after December 31, 2016 other
than for any reason set forth in the definition of Cause under Section 7(c) hereof,
Executive shall be entitled following such termination to the medical benefits
described in Section 7(f). |
Furthermore, notwithstanding any other provision of this Agreement, if Executive is
employed by Employer on December 31, 2019 then, subject to Executives execution and
delivery prior to December 31, 2019 of a general release in a form and of a
substance satisfactory to Employer, all then-outstanding equity or equity-based
awards granted after the Effective Date shall be treated in the manner described in
clauses (3)(i) and (3)(ii) of Section 7(d) (as applicable) except to the extent that
application of such treatment would result in the imposition of tax on Executive
pursuant to IRS Code Section 409A (in which case such treatment will occur upon the
earliest date which will not result in the imposition of such tax). Executive
acknowledges that the application of this Section 7(h) may result in the imposition
of taxes on Executive with respect to equity or equity-based awards at the time of
vesting and agrees to pay Employer any withholding amounts with respect to such
awards at the time determined by the Employer.
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8. |
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Confidential Information and Non-Compete. Executive acknowledges that
the successful development of CMEs services and products, including CMEs trading
programs and systems, current and potential customer and business relationships, and
business strategies and plans requires substantial time and expense. Such efforts
generate for CME valuable and proprietary information (Confidential Information)
which gives CME a business advantage over others who do not have such information.
Confidential information includes, but is not limited to the following: trade secrets,
technical, business, proprietary or financial information of CME not generally known to
the public, business plans, proposals, past and current prospect and customer lists,
trading methodologies, systems and programs, training materials, research data bases
and computer software; but shall not include information or ideas acquired by Executive
prior to his employment with CME if such pre-existing information is generally known in
the industry and is not proprietary to CME. |
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(a) |
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Executive shall not at anytime during the Agreement Term or thereafter, make
use of or disclose, directly or indirectly to any competitor or potential competitor of
CME, or divulge, disclose or communicate to any person, firm, corporation, or other
legal entity in any manner whatsoever, or for his own benefit and that of any person or
entity other than Employer, any Confidential Information. This subsection shall not
apply to the extent Executive is required to disclose Confidential Information to any
regulatory agency or as otherwise required by law; provided, however, that Executive
will promptly notify Employer if Executive is requested by any entity or person to
divulge Confidential Information, and will use his best efforts to ensure that Employer
has sufficient time to intervene and/or object to such disclosure or otherwise act to
protect its interests. Executive shall not disclose any Confidential Information while
any such objection is pending. |
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(b) |
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Executive agrees that during the Agreement Term and for a period of one (1)
year following the termination of Executives employment with CME for any reason,
Executive shall not (i) be employed in an executive or managerial capacity by, or (ii)
provide, 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 Executive to CME or any subsidiary or affiliate company (any such
entity, a CME Group entity) during Executives employment with any CME Group entity,
to any Competing Business. For the purposes of this Agreement, Competing Business
shall mean any business that is engaged in the same business or businesses of any CME
Group entity (including any prospective business in which any CME Group entity is
planning to engage). Executive acknowledges and agrees that the restrictions contained
in this Section 8(b) are reasonable and necessary to protect CMEs legitimate interests
in its customer and employee relationships, goodwill and Confidential Information. |
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(c) |
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Upon termination for any reason, Executive shall return to Employer all
records, memoranda, notes, plans, reports, computer tapes and equipment, software and
other documents or data which constitute Confidential Information which he may then
possess or have under his control (together with all copies thereof) and all credit
cards, keys and other materials and equipment which are Employers property that he has
in his possession or control. |
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(d) |
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If, at any time of enforcement of this Section 8, a court holds that the
restrictions stated herein are unreasonable, the parties hereto agree that a maximum
period, scope or geographical area reasonable under the circumstances shall be
substituted for the stated period, scope or area and that the court shall be allowed to
revise the restrictions contained herein to cover the maximum period, scope and area
permitted by law. |
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(a) |
|
General. Executive acknowledges that Employer invests in recruiting
and training, and shares Confidential Information with, its employees. As a result,
Executive acknowledges that Employers employees are of special, unique and
extraordinary value to Employer. |
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(b) |
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Non-solicitation. Executive further agrees that for a period of one
(1) year following the termination of his employment with CME for any reason he shall
not in any manner, directly or indirectly, induce or attempt to induce any employee of
CME to terminate or abandon his or her employment with CME for any purpose whatsoever. |
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(c) |
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Reformation. If, at any time of enforcement of this Section 9, a court
holds that the restrictions stated herein are unreasonable, the parties hereto agree
that the maximum period, scope or geographical area reasonable under the circumstances
shall be substituted for the stated period, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period, scope
and area permitted by law. |
10. |
|
Intellectual Property. During the Agreement Term, Executive shall disclose to CME
and treat as confidential information all ideas, methodologies, product and technology
applications that he develops during the course of his employment with CME that relates
directly or indirectly to CMEs business. Executive hereby assigns to CME his entire right,
title and interest in and to all discoveries and improvements, patentable or otherwise, trade
secrets and ideas, writings and copyrightable material, which may be conceived by Executive or
developed or acquired by him during his employment with CME, which may pertain directly or
indirectly to the business of the CME. Executive shall at any time during or after the
Agreement Term, upon CMEs request, execute, acknowledge and deliver to CME all instruments
and do all other acts which are necessary or desirable to enable CME to file and prosecute
applications for, and to acquire, maintain and enforce, all patents, trademarks and copyrights
in all countries with respect to intellectual property developed or which was being developed
during Executives employment with CME. |
11. |
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Remedies. Executive agrees that given the nature of CMEs business, the scope and
duration of the restrictions in paragraphs 8, 9 and 10 are reasonable and necessary to protect
the legitimate business interests of CME and do not unduly interfere with Executives career
or economic pursuits. Executive recognizes and agrees that a breach of any or all of the
provisions of Sections 8, 9 and 10 will constitute immediate and irreparable harm to CMEs
business advantage, for which damages cannot be readily calculated and for which damages are
an inadequate remedy. Accordingly, Executive acknowledges that CME shall therefore be
entitled to seek an injunction or injunctions to prevent any breach or threatened breach of
any such section. Such injunctive relief shall not be Employers sole remedy. Executive
agrees to reimburse CME for all costs and expenses, including reasonable attorneys fees and
costs, incurred by CME in connection with the successful enforcement of its rights under
Sections 8, 9 and 10 of this Agreement. |
12. |
|
Survival. Sections 7(h), 8, 9, 10, 11 and 13 of this Agreement (and, as applicable,
the provisions referenced herein) shall survive and continue in full force and effect in
accordance with their respective terms, notwithstanding any termination of the Agreement. |
13. |
|
Arbitration. Except with respect to Sections 8, 9 and 10, any dispute or controversy
between CME and Executive, whether arising out of or relating to this Agreement, the breach of
this Agreement, or otherwise, shall be settled by arbitration in Chicago, Illinois, in
accordance with the following: |
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(a) |
|
Arbitration hearings will be conducted by the American Arbitration Association
(AAA). Except as modified herein, arbitration hearings will be conducted in accordance
with AAAs rules. |
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(b) |
|
State and federal laws contain statutes of limitation which prescribe the time
frames within which parties must file a law suit to have their disputes resolved
through the court system. These same statutes of limitation will apply in determining
the time frame during which the parties must file a request for arbitration. |
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(c) |
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If Executive seeks arbitration, Executive shall submit a filing fee to the AAA
in an amount equal to the lesser of the filing fee charged in the state or federal
court in Chicago, Illinois. The AAA will bill Employer for the balance of the filing
and arbitrators fees. |
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(d) |
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The arbitrator shall have the same authority to award (and shall be limited to
awarding) any remedy or relief that a court of competent jurisdiction could award,
including compensatory damages, attorney fees, punitive damages and reinstatement.
Employer and Executive may be represented by legal counsel or any other individual at
their own expense during an arbitration hearing. |
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(e) |
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Judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. |
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(f) |
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Except as necessary in court proceedings to enforce this arbitration provision
or an award rendered hereunder, or to obtain interim relief, neither a party nor an
arbitrator may disclose the existence, content or results of any arbitration hereunder
without the prior written consent of CME and Executive. |
14. |
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Notices. All notices and other communications required or permitted hereunder shall
be in writing and shall be deemed given when (i) delivered personally or by overnight courier
to the following address of the other party hereto (or such other address for such party as
shall be specified by notice given pursuant to this Section) or (ii) sent by facsimile to the
following facsimile number of the other party hereto (or such other facsimile number for such
party as shall be specified by notice given pursuant to this Section), with the confirmatory
copy delivered by overnight courier to the address of such party pursuant to this Section 14: |
If to CME, to:
Terrence Duffy
Executive Chairman and President
CME Group Inc.
20 South Wacker Drive
Chicago, IL 60606
(312) 930-3100
With a copy to:
Kathleen M. Cronin
Managing Director, General Counsel and Corporate Secretary
CME Group Inc.
20 South Wacker Drive
Chicago, IL 60606
(312) 930-3488
If to Executive, to:
Phupinder Gill
[redacted]
15. |
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Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in any respect
under applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of any other
provision of this Agreement or the validity, legality or enforceability of such provision in
any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never been contained
herein. |
16. |
|
Entire Agreement. This Agreement constitutes the entire Agreement and understanding
between the parties with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or between the parties, written or
oral, which may have related in any manner to the subject matter hereof, including, without
limitation, the Amended and Restated Agreement, effective as of August 5, 2009, as amended as
of April 6, 2011, and the Agreement effective as of April 18, 2012, and the Agreement
effective as of February 5, 2014 (the Predecessor Agreements). No other agreement or
amendment to this Agreement shall be binding upon either party including, without limitation,
any agreement or amendment made hereafter unless in writing, signed by both parties.
Executive acknowledges that each of the parties has participated in the preparation of this
Agreement and for purposes of principles of law governing the construction of the terms of
this Agreement, no party shall be deemed to be the drafter of the same. |
17. |
|
Successors and Assigns. This Agreement shall be enforceable by Executive and his
heirs, executors, administrators and legal representatives, and by CME and its successors and
assigns. |
18. |
|
Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Illinois without regard to principles of conflict of
laws. |
19. |
|
Acknowledgment. Executive acknowledges that he has read, understood, and accepts the
provisions of this Agreement. |
20. |
|
IRS Code Section 409A. The intent of the parties is that payments and benefits under
this Agreement comply with Section 409A, to the extent subject thereto, and accordingly, to
the maximum extent permitted, this Agreement shall be interpreted and administered to be in
compliance therewith. Notwithstanding anything contained herein to the contrary, Executive
shall not be considered to have terminated employment with Employer for purposes of any
payments under this Agreement which are subject to Section 409A until Executive would be
considered to have incurred a separation from service from Employer within the meaning of
Section 409A. Each amount to be paid or benefit to be provided under this Agreement shall be
construed as a separate identified payment for purposes of Section 409A, and any payments
described in this Agreement that are due within the short term deferral period as defined in
Section 409A shall not be treated as deferred compensation unless applicable law requires
otherwise. Without limiting the foregoing and notwithstanding anything contained herein to
the contrary, to the extent required in order to avoid accelerated taxation and/or tax
penalties under Section 409A, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this Agreement during the six-month period immediately
following Executives separation from service shall instead be paid on the first business day
after the date that is six months following Executives separation from service (or, if
earlier, Executives death). To the extent required to avoid accelerated taxation and/or tax
penalties under Section 409A, amounts reimbursable to Executive under this Agreement shall be
paid to Executive on or before the last day of the year following the year in which the
expense was incurred and the amount of expenses eligible for reimbursement (and in-kind
benefits provided to Executive) during any one year may not effect amounts reimbursable or
provided in any subsequent year. |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
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CME Group Inc.
By: /s/ Larry Gerdes
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Phupinder Gill
/s/ Phupinder Gill |
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|
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Larry Gerdes
Chairman, Compensation Committee
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