UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the
Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
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CME GROUP INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules
14a-6(i)(1)
and
0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
0-11
(set forth the amount on which the filing fee is calculated and state how it
was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS
Wednesday, May 9, 2018
10:00 a.m. Central Time
Auditorium at CME Groups headquarters
20 South Wacker Drive
Chicago, Illinois 60606
March 20, 2018
Dear Shareholder:
You are invited to attend the 2018 annual meeting of shareholders of CME Group Inc.
Shareholders will vote on the following items:
Item 1:
To
elect fourteen directors that we refer to as Equity directors.
Item 2:
To ratify the appointment of Ernst &
Young LLP as our independent registered public accounting firm for 2018.
Item 3:
To approve, by advisory vote, the compensation
of our named executive officers.
Item 4:
To elect three
Class B-1
directors, two
Class B-2
directors and one
Class B-3
director.
Item 5:
To elect five members to each of the
Class B-1,
Class B-2
and
Class B-3
nominating committees.
Your vote is
important.
You are eligible to vote if you were a shareholder of record at the close of business on March 12, 2018.
Please ensure that your shares are
represented at the meeting by promptly voting. Additional voting instructions begin on
page
66
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If you or your legal proxy holder plan to attend the meeting in person, you must follow the admission
procedures described on
page
65
. All attendees must have photo identification and proof of ownership of our stock as of the record date. Please note seating is limited and will be granted on a first come basis. You should allow
sufficient time to clear security.
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If you are unable to attend the meeting, please join the live webcast on our Investor Relations website at
http://investor.cmegroup.com/investor-relations
under Events.
By
order of the board of directors,
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Terrence A. Duffy
Chairman and Chief Executive Officer
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Kathleen M. Cronin
Senior Managing Director,
General Counsel & Corp. Secretary
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Summary Information
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This summary highlights key elements of our proxy statement. For more complete information, you should review the
entire proxy statement along with our 2017 Annual Report.
The year 2017 was one of growth and achievement for CME Group. Total volume was more than 4.1 billion contracts traded, which generated $1.8 billion in cash
earnings. In 2017, we reached record average daily volume of 16.3 million contracts, up 4% from 2016, despite a lower volatility environment.
Year-end
open interest was up 5% from the end of 2016, and we
reached an
all-time
high record open interest during the year of 129.1 million contracts on June 14, 2017. The following are additional key performance metrics from 2017:
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Record Average
Daily Volume
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Increase in Electronic Options Average Daily Volume
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Aggregate Value of Declared Dividends
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Increase in CME Globex Volume
Originating
Outside U.S.
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16.3 million contracts
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25%
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$2.1
billion
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10%
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For a more detailed discussion on our financial performance, see our
2017 Annual Report
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ANNUAL MEETING PROPOSALS AND BOARD
RECOMMENDATIONS
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Proposal
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Board Recommendation
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Item 1:
Election of Equity Directors
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FOR each of the nominees
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Item 2:
Ratification of Ernst & Young as our Auditors
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FOR
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Item 3:
Approval, by advisory vote, on the compensation of our named executive officers
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FOR
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Item 4:
Election of
Class B-1,
Class B-2
and
Class B-3
Directors
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No recommendation
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Item 5:
Election of
Class B-1,
Class B-2
and
Class B-3
Nominating Committee Members
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No recommendation
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Beginning on or after March 20, 2018, we distributed to our shareholders (1) a copy of the proxy statement, 2017 Annual Report
and proxy card(s) or voting instruction form, (2) an Important Notice Regarding the Availability of Proxy Materials, with instructions to access the proxy materials and vote online or (3) for shareholders who have elected to receive
materials electronically, an email with instructions on how to access the materials and vote online.
Additional information regarding the logistics of the annual
meeting is available beginning on
page
65
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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1
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Table of Contents
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The board of directors of CME Group Inc. is providing this proxy statement in connection with the annual meeting of shareholders to be held on Wednesday, May 9,
2018, at 10:00 a.m. Central Time, in the auditorium at CME Groups corporate headquarters, 20 South Wacker Drive, Chicago, Illinois. The terms the company, we, us and our refer to CME Group and
its subsidiaries. Shares of our Class A common stock are listed on the Nasdaq Global Select Market
(NASDAQ)
under the trading symbol CME. Our principal offices are located at 20 South Wacker Drive, Chicago,
Illinois 60606. Our phone number is 312.930.1000.
Further information about CME Group can be found at http://www.cmegroup.com. Information made available on
our website does not constitute a part of this proxy statement. Additional information regarding the availability of materials referenced in this proxy statement is available on
page
71
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2
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 1Election of Equity Directors
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You are being asked to vote on the election of fourteen Equity director nominees to hold office until the 2019
annual meeting.
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OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
FOR
THE EQUITY DIRECTOR NOMINEES
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Our directors are elected each year. Each directors term will last until the 2019 annual meeting and until his or her successor is
duly elected and qualified.
We have implemented a majority vote standard for the Equity directors, except in the event of a contested election.
The Equity directors are nominated by the board based on the recommendation of the nominating committee for election by our Class A and Class B shareholders
voting together
(Equity directors)
under
Item 1
. All Equity director nominees, except for Ms. Lucas, are presently CME Group directors. An additional six directors will be elected by our Class B shareholders
(Class B
directors)
under
Item 4.
We have no reason to believe that any of the nominees will be unable or unwilling to serve if elected.
Effective as of the annual
meeting, Messrs. Melamed and Sandner, two long-time members of the board, will retire. The company sincerely thanks them for their years of leadership and their historic contributions to our business, the industry and our community.
The biographies for the Equity director nominees begin on
page 5
and for the Class B director nominees on
page 20
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References to terms of our board of directors in their biographies include service on the board of CME Group (formerly known as Chicago Mercantile Exchange Holdings Inc.)
from its formation in 2001 and service on the board of its wholly-owned subsidiary, Chicago Mercantile Exchange Inc.
(CME)
. CME Group became a public company in December 2002. The boards of our other exchange subsidiaries: Board of Trade of
the City of Chicago, Inc.
(CBOT)
, New York Mercantile Exchange, Inc.
(NYMEX)
and
Commodity Exchange, Inc.
(COMEX)
also are composed of the same members as the CME Group board of directors. Ages are as of March 12,
2018. Information on public directorships is for the past five years.
DIRECTOR NOMINATIONS AND QUALIFICATIONS
The policy of the board of directors is to remain an interactive, independent, thoughtful, highly qualified and collegial combination of individuals with
diverse knowledge, skills and experience, so that the directors, working together, possess the competencies required to effectively carry out the boards responsibilities.
In considering candidates for the board, the nominating committee, composed entirely of directors who are independent under applicable listing standards, considers the
entirety of each candidates credentials. With respect to the nomination of continuing directors for
re-election,
the individuals contributions to the board are also considered. In assessing new
candidates for the board, we do not have specific minimum qualifications that an individual must meet to be considered. The board and its nominating committee seek members having the characteristics essential for effectiveness as a member of our
board, including but not limited to:
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Integrity, objectivity, sound judgment and leadership;
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The relevant expertise and experience required to offer advice and guidance to the Chairman and Chief Executive Officer and other members of senior management;
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The ability to make independent analytical inquiries;
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The ability to collaborate effectively and contribute productively to the boards discussions and deliberations;
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A commitment to enhancing long-term shareholder value;
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An understanding of the companys business, strategy and challenges;
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The willingness and ability to devote adequate time and effort to board responsibilities and to serve on committees at the request of the board;
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Is not a
Disqualified Person
(as defined in our corporate governance principles); and
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Whether the individual meets the composition requirements of the Commodity Futures Trading Commission
(CFTC)
and the applicable listing standards.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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3
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ITEM 1Election of Equity Directors
(Continued)
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On an annual basis, the governance committee and the nominating committee meet jointly to assess the current and future
needs of the board and will make recommendations to the board in the event they identify a need to recruit for an additional member of the board. The board believes it is essential that its members represent diverse viewpoints. In addition to the
foregoing criteria, the nominating committee is committed to ensuring each pool of qualified candidates from which board nominees are chosen includes candidates who bring racial and/or gender diversity.
The nominating committee may solicit candidates from its current directors and, if deemed appropriate, retain for a fee recruiting professionals to identify and evaluate
candidates. The nominating committee also will consider a nominee for Equity director recommended by shareholders if the recommendation is submitted in writing, accompanied by a description of the proposed nominees qualifications, and other
relevant biographical information and evidence of consent of the proposed nominee to serve as a director if elected. Recommendations should be addressed to the nominating committee, Attention: Corporate Secretary, CME Group Inc., 20 South Wacker
Drive, Chicago, Illinois 60606. In considering a shareholder recommendation, the nominating committee may seek input from an independent advisor, legal counsel and/or other directors, as appropriate, and will reach a conclusion using its standard
criteria. A copy of our nominating committees charter is available on our website.
Ms. Lucas was identified by certain members of our nominating
committee. Mr. Siegel is currently a
Class B-1
director and is being included on the slate as an Equity director as he brings with him extensive knowledge and experience relating to the governance
and oversight of our clearing house.
In February 2017, the board approved amendments to its bylaws primarily to implement proxy access to permit a
shareholder, or a group of up to 20 shareholders, owning three percent or more of the companys outstanding common stock continuously for at least three years to nominate and include in the companys proxy materials director candidates
constituting up to the greater of two individuals or 20% of the number of Equity directors, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the bylaws.
The holders of the
Class B-1,
Class B-2
and
Class B-3
common stock elect members of nominating committees for their respective class, which are responsible for nominating candidates for election by their class. See
Item 5
beginning on
page 23
for more information. Our certificate of incorporation requires that director candidates for election by a class of Class B common stock own, or be recognized under our rules as the owner of, at least one share of that class.
For more information concerning our current directors qualifications, see the
Director Attributes
table on
page 8
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REQUIRED VOTE
Each
Equity director candidate must receive a number of FOR votes that exceed the number of AGAINST votes to be elected.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 1Election of Equity Directors
(Continued)
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EQUITY DIRECTORS UP FOR ELECTION AT THE 2018 ANNUAL MEETING
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Terrence A. Duffy
Age:
59
Director since:
1995
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The Honorable Mr. Duffy has served as our Chairman and Chief Executive Officer since November 2016. Previously, he served as our Executive Chairman &
President since 2012 and as our Executive Chairman since 2006, when he became an officer of the company. He served as Chairman of the board since 2002 and as our Vice Chairman from 1998 until 2002. Mr. Duffy has been a member of our board since
1995. He was President of TDA Trading, Inc. from 1981 to 2002 and has been a member of CME since 1981. Mr. Duffy was appointed by President Bush and confirmed by the U.S. Senate in 2003 as a member of the Federal Retirement Thrift Investment
Board, a position he held until 2013. Mr. Duffy currently serves as
Co-Chair
of the Mayo Clinic Greater Chicago Leadership Council. He is a Vice Chairman of the CME Group Foundation, whose mission is to
enhance economic opportunity, health and education, especially for disadvantaged youth. He is also a member of the Economic Club of Chicago, the Executives Club of Chicago and the Presidents Circle of the Chicago Council on Global
Affairs. Since 2003, Mr. Duffy has been recognized as one of the top 100 Irish Business Leaders by Irish America Magazine. Mr. Duffy attended the University of Wisconsin-Whitewater. In 2007, he received a Doctor of Humane Letters from
DePaul University.
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Timothy S. Bitsberger
Age:
58
Director since:
2008
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Mr. Bitsberger has served as Managing Director and Portfolio Specialist on the Account Management Team at The TCW Group since March 2017, where he is responsible for
communicating investment strategies, performance and outlook to clients. Previously, he served as Managing Director, Official Institutions FIG Coverage Group of BNP PNA, a subsidiary of BNP Paribas, from December 2010 to November 2015, as a senior
consultant with Booz Allen Hamilton from May 2010 to November 2010 and was with BancAccess Financial from December 2009 to April 2010. He also served as Senior Vice President and Treasurer of Freddie Mac from 2006 to 2008. Mr. Bitsberger
also was with the U.S. Treasury Department from 2001 to 2005, serving first as their Deputy Assistant Secretary for federal finance and more recently as the Assistant Secretary for financial markets. He was confirmed by the U.S. Senate as the
Assistant Secretary in 2004.
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Charles P. Carey
Age:
64
Director since:
2007
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Previous Public Directorship:
BM&FBOVESPA S.A.
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Mr. Carey served as our Vice Chairman from 2007 to 2010 in connection with our merger with CBOT Holdings, Inc. Prior to our merger, Mr. Carey served as Chairman
of CBOT since 2003, as Vice Chairman from 2000 to 2002, as First Vice Chairman during 1993 and 1994 and as a board member of CBOT from 1997 to 1999 and from 1990 to 1992. Mr. Carey is a principal in the firms of Henning & Carey Trading
Co. and HC Technologies LLC (formerly known as Henning-Carey Proprietary Trading LLC). He has been a member of CBOT since 1978 and was a member of the MidAmerica Commodity Exchange from 1976 to 1978. Mr. Carey previously served on the board of
CBOT Holdings, Inc. until our merger in 2007. Mr. Carey serves as a Vice Chairman of the CME Group Foundation.
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Dennis H. Chookaszian
Age:
74
Director since:
2004
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Public Directorships:
Career Education Corporation
Maxar Technologies (solely listed in
Canada)
Pillarstone Capital REIT (registered securities only)
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Previous Public Directorships:
Allscripts Healthcare Solutions, Inc.
LoopNet,
Inc.
Prism Technologies Group, Inc.
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Mr. Chookaszian served as Chairman of the Financial Accounting Standards Advisory Council from 2007 to 2011. From 1999 until 2001, Mr. Chookaszian served as
Chairman and CEO of mPower, Inc., a financial advice provider focused on the online management of 401(k) plans. Mr. Chookaszian served as Chairman and CEO of CNA Insurance Companies from 1992 to 1999. During his
27-year
career with CNA, Mr. Chookaszian held several management positions at the business unit and corporate levels, including President and COO from 1990 to 1992 and CFO from 1975 to 1990.
Mr. Chookaszian is a registered certified public accountant.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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5
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ITEM 1Election of Equity Directors
(Continued)
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Ana Dutra
Age:
53
Director since:
2015
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Ms. Dutra has served as the President and CEO of The Executives Club of Chicago, a world-class senior executives organization focused on the development,
innovation and networking of current and future business and community leaders, since September 2014. Ms. Dutra formerly served as CEO of Mandala Global Advisors, a global management consulting company, from 2013 to September 2014. Prior to
that she was a Proxy Officer and CEO of Korn/Ferry Consulting from 2007 until 2013. Ms. Dutra serves as a director of Greeley and Hansen, Humantelligence, the International Womens Forum, Lurie Childrens Hospital of Chicago, Chicago
Philharmonic Society, Governor State University and Academy for Urban School Leadership and is a member of the Kellogg Alumni Advisory Board, the Economic Club of Chicago, the Committee of 200 and the Chicago Council on Global Affairs. She
previously served as a director of the Executives Club of Chicago.
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Martin J. Gepsman
Age:
65
Director since:
1994
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Mr. Gepsman served as Secretary of the board from 1998 to 2007. He has been a member of CME for more than 30 years. Mr. Gepsman has also been an independent
broker and trader since 1985.
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Larry G. Gerdes
Age:
69
Director since:
2007
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Previous Public Directorships:
Access Plans, Inc.
Transcend Services, Inc.
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Mr. Gerdes has served as our Lead Director since August 2017. He has served as CEO of Pursuant Health (formerly known as SoloHealth), a private health-care company
in Atlanta since February 2014, as its Executive Chairman of the board since November 2013, as its Chairman since 2012 and as a board member since 2007. He also has served as a general partner of Sand Hill Financial Company, a venture capital
partnership, since 1983. Mr. Gerdes is also a general partner of Gerdes Huff Investments. Mr. Gerdes formerly served as Chairman and CEO of Transcend Services, Inc., concluding with the sale of that company in April 2012, and as a director
of Access Plans, Inc. from 2001 until its sale in June 2012. Mr. Gerdes is a major shareholder and President of Friesland Farms, LLC. Mr. Gerdes is a member of the Deans Advisory Council for The Kelley School of Business at Indiana
University and serves as trustee for Monmouth College. Mr. Gerdes previously served on the board of CBOT Holdings, Inc. until our merger in 2007.
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Daniel R. Glickman
Age:
73
Director since:
2001
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Mr. Glickman served as our Lead Director from August 2014 to August 2017. Mr. Glickman has served as Executive Director of the Aspen Institutes
Congressional Program since 2011 and as Vice President of the Aspen Institute since 2012. Mr. Glickman also has served as Senior Fellow for the Bipartisan Policy Center since 2010. From 2004 to 2010, Mr. Glickman served as Chairman and CEO
of the Motion Picture Association of America, Inc. Mr. Glickman previously served as Director of the Institute of Politics at Harvard Universitys John F. Kennedy School of Government from 2002 to 2004 and served as Senior Advisor in the
law firm of Akin, Gump, Strauss, Hauer & Feld, from 2001 to 2004. He also served as U.S. Secretary of Agriculture from 1995 through 2001 and as a member of the U.S. Congress, representing a district in Kansas, from 1977 through 1995.
Mr. Glickman serves as
co-chair
of the global agriculture and development initiative of the Chicago Council on Global Affairs, as a board member of the Foundation for Food and Agriculture Research
(established in the 2014 Farm Bill by Congress) and Chairman of the International Advisory Board of APCO Worldwide (a public relations firm based in Washington, DC). Mr. Glickman also serves on a number of
non-profit
advisory boards with a focus on agriculture and food supply and is a strategic advisor to the Russell Group.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 1Election of Equity Directors
(Continued)
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Deborah J. Lucas
Age:
59
Director since:
n/a
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Ms. Lucas has served as the Sloan Distinguished Professor of Finance at the MIT Sloan School of Management since 2011 and as the Director of the MIT Golub Center for
Finance and Policy from 2012. Her current research focuses on government financial institutions and financial policy, and she teaches courses on fixed income securities and derivatives. She serves on advisory boards for the Federal Reserve Bank of
New York, the Urban Institute, and the Census Bureau. She is a trustee of the NBER pension plans, an associate editor for several academic journals, and a member of the Shadow Open Market Committee and the Financial Economics Roundtable. Previous
appointments include assistant and associate director at the Congressional Budget Office; professor at Northwestern Universitys Kellogg School; chief economist at the Congressional Budget Office, and senior staff economist at the Council of
Economic Advisers. She has been a director on several corporate and
non-profit
boards.
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Alex J. Pollock
Age:
75
Director since:
2004
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Mr. Pollock has served as the Distinguished Senior Fellow and Director of Financial Systems Studies at the R Street Institute in Washington, DC since January 2016.
He previously served as Resident Fellow of the American Enterprise Institute in Washington, DC from 2004 to January 2016 and as President and CEO of the Federal Home Loan Bank of Chicago from 1991 through 2004. He was previously President and CEO of
Community Federal Savings. Mr. Pollock serves on the
non-profit
board of Great Lakes Higher Education Corporation and on the Board of the Great Books Foundation. Mr. Pollock served as our Lead
Director from August 2012 through August 2014.
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Terry L. Savage
Age:
73
Director since:
2003
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Ms. Savage is a nationally-syndicated financial columnist, author and President of Terry Savage Productions, Ltd., which provides speeches, columns and videos on
personal finance for corporate and association meetings, publications and national television programs and networks. Ms. Savage is a registered investment advisor and commodity trading advisor. She was a member of CME from 1975 to 1980.
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William R. Shepard
Age:
71
Director since:
1997
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Mr. Shepard has been a member of CME for more than 40 years. Previously, he served as our Second Vice Chairman from 2002 to 2007. Mr. Shepard is founder and
President of Shepard International, Inc., a futures commission merchant.
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Howard J. Siegel
Age:
61
Director since:
2000
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Mr. Siegel has been a member of CME since 1977. In 1978, Mr. Siegel began his trading career at Moccatta Metals in their Class B arbitrage operations and
served as an order filler until 1980. From there, he went on to fill orders and trade cattle from 1980 until 1982. At that time, Mr. Siegel became a partner and an officer in a futures commission merchant that cleared at CME until selling his
ownership interest in 1990. For more than 30 years, Mr. Siegel has been an independent trader on our CME exchange. He continues to actively trade electronically in our agricultural product suite. Mr. Siegel is the Secretary and Treasurer
of the CME Group Foundation. He also serves on our risk committee,
co-chairs
our clearing house risk committee and is the chair of our interest rate swaps committee.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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7
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ITEM 1Election of Equity Directors
(Continued)
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Dennis A. Suskind
Age:
75
Director since:
2008
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Public Directorships:
Bridgehampton National Bank
(Vice Chairman)
Navistar, Inc.
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Previous
Directorship:
Liquid Holdings Group, Inc.
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Mr. Suskind is a retired General Partner of Goldman Sachs & Co. During his tenure in trading, Mr. Suskind served as Vice Chairman of NYMEX, Vice Chairman of COMEX, a
member of the board of the Futures Industry Association, a member of the board of International Precious Metals Institute, a member of the boards of the Gold and Silver Institutes in Washington, DC and was an inaugural member of the Future Industry
Associations Hall of Fame. He is the President of the board of the Hampton Classic Horse Show and of the board of the Stein Eriksen Lodge Hotel. He previously served as the President of the Arthur Ashe Institute for Urban Health for fifteen
years. He also served on the board of NYMEX Holdings, Inc. until our merger in 2008.
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DIRECTOR ATTRIBUTES
We believe all our board members have an inquisitive and objective perspective, practical wisdom and mature judgment. In addition, the following highlights the key
characteristics the board believes qualifies its Equity director nominees and current Class B directors to serve the interests of our shareholders. This summary, however, is not meant to be a complete description of all the skills and
attributes of our board members. Additional details on our individual directors and director nominees are set forth in their individual biographies. The Class B nominees are nominated by a separate nominating committee. Therefore, the board has
not assessed the attributes of the Class B nominees who are not currently members of the board.
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ATTRIBUTE
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DIRECTOR AND DIRECTOR NOMINEES WITH ATTRIBUTES
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Industry Experience
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Possesses an understanding of our markets as a result of trading our products, serving as an officer of a firm which trades
our products or working in the financial services industry.
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Terrence A. Duffy
Jeffrey M. Bernacchi
Timothy S. Bitsberger
Charles P. Carey
Elizabeth A. Cook
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Martin J. Gepsman
Gedon Hertshten
Ronald A. Pankau
Alex J. Pollock
Terry L. Savage
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William R. Shepard
Howard J. Siegel
Dennis A. Suskind
David J. Wescott
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Government Relations/Regulatory/Public Policy
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Experience interacting with our regulators
and members of government or prior service in government.
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Terrence A. Duffy
Timothy S. Bitsberger
Charles P. Carey
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Daniel R. Glickman
Deborah J. Lucas
Ronald A. Pankau
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Alex J. Pollock
Dennis A. Suskind
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Management Experience
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Experience as a chief executive officer, president or senior vice president of a company or a significant subsidiary,
operating division or business unit.
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Terrence A. Duffy
Timothy S. Bitsberger
Dennis H. Chookaszian
Ana Dutra
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Larry G. Gerdes
Daniel
R. Glickman
Gedon Hertshten
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Ronald A. Pankau
Alex J. Pollock
Dennis A. Suskind
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Financial Expertise
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Experience as a chief financial officer or
similar financial oversight experience and meets the definition of a financial committee expert.
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Dennis H. Chookaszian
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Larry G. Gerdes
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Professional Accreditations
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Possesses an advanced degree.
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Jeffrey M. Bernacchi
Dennis H. Chookaszian
Ana Dutra
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Larry G. Gerdes
Daniel
R. Glickman
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Deborah J. Lucas
Alex J. Pollock
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Risk Management Experience
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Experience in overseeing risk management processes and procedures.
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Charles P. Carey
Dennis H. Chookaszian
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Gedon Hertshten
William R. Shepard
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Dennis A. Suskind
David J. Wescott
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Other Public Company Directorship
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Experience serving as a director of another publicly traded company.
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Charles P. Carey
Dennis H. Chookaszian
Larry G. Gerdes
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Daniel R. Glickman
Gedon Hertshten
Deborah J. Lucas
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Alex J. Pollock
Terry L. Savage
Dennis A. Suskind
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8
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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Corporate Governance
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CME Group is committed to good corporate governance. By aligning our governance approach with best practices, our
company is able to strengthen board and management accountability, promote long-term shareholder value and sustain continued success.
The board of directors has
established corporate governance principles which provide a framework for our effective governance. Our governance committee regularly reviews trends and best practices in corporate governance. The office of the secretary advises our board of
directors and management in an effort to strengthen existing governance practices and develop new policies that make us a better company. Below is an overview of the companys governance highlights and materials.
GOVERNANCE HIGHLIGHTS
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Annual election of directors
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Majority voting for Equity directors
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Proxy access bylaw provision for Equity director positions
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Commitment to the inclusion of qualified diverse candidates in any searches for director nominees
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Confidential shareholder voting
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Quarterly executive sessions of independent directors
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Board and committee evaluations and individual peer director evaluations
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Active risk oversight by the full board, a risk committee and other committees with oversight responsibilities based on areas of focus and expertise
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Independent lead director
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Policy restricting the pledging of shares of our Class A common stock
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Orientation for newly elected board members
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CORPORATE GOVERNANCE
MATERIALS
You can access the following governance materials by visiting
http://investor.cmegroup.com/investor-relations
under Corporate
Governance.
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Corporate Governance Principles
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Board of Directors Conflict of Interest Policy
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Employee Code of Conduct
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Charters for committees composed solely of board members
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Guide to Conducting Business for Third Parties of CME Group
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Each of these documents is also available in print upon
written request made to the Office of the Secretary, CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606.
Our employee code of conduct is applicable
to all our employees, including our Chairman and Chief Executive Officer, our Chief Financial Officer and our other senior financial officers.
DIRECTOR ATTENDANCE
The board held seven meetings during 2017. All incumbent directors attended more than 75% of the combined total meetings of the full board and the committees on which he
or she served during 2017, except for Mr. Wescott.
We strongly encourage, but do not require, our directors to attend the annual meeting. Last year, 18 of the
20 directors on the board at that time attended the annual meeting of shareholders.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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9
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Corporate Governance
(Continued)
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DIRECTOR INDEPENDENCE
The experience and diversity of our directors has been, and continues to be, critical to our success. Our corporate governance principles require that the board be
composed of at least a majority of independent directors. Additionally, in accordance with applicable listing standards, the members of our audit, compensation, governance and nominating committees must be independent. For a director to be
considered independent, the board must affirmatively determine that the director has no direct or indirect material relationship with CME Group. The board has adopted
categorical independence standards
, which are attached to this proxy
statement as
Appendix A
, to assist it in making its determinations regarding independence. These standards conform to and exceed the independence criteria specified in the listing standards of NASDAQ. They specify the criteria by which the
independence of our directors will be determined, including relationships and transactions between each director, director nominee, any member of his or her immediate family, his or her affiliates, charitable organizations with which he or she is
affiliated, and us.
The board believes all of its
non-executive
directors act independently of, and effectively monitor and
oversee the actions of, management. Based on our categorical independence standards, at its meeting held in February 2018, the governance committee made a preliminary assessment of the independence of the directors and director nominees and based on
such assessment made a recommendation to our board regarding their independence. Some of our directors are members of our exchanges, which provides them with access to our open outcry markets, lower trading fees, the ability to vote on certain
matters relating to the operation of our open outcry markets and, for members of CME, the ability to elect six of our directors. Directors who are members of our exchanges may make payments directly to us or indirectly to us through our clearing
firms in connection with their trading activity on an exchange. To ensure that such payments did not exceed the monetary thresholds set forth in the listing standards of NASDAQ, the governance committee reviewed the directors and their
affiliated clearing firms trading activities and relationships with our exchanges as part of its independence determination. The governance committee and the board noted that all payments relating to trading fees were made in the ordinary
course of our business, were on terms consistent with those prevailing at the time for corresponding transactions by similarly situated unrelated third parties and were not in excess of the applicable payment thresholds.
After considering information provided by our current directors and other nominees in our annual questionnaires, the payments made to us relating to trading activities,
as well as additional information gathered by our office of the secretary, the governance committee recommended and the board determined that all current directors and nominees for Equity and Class B director be classified as independent with
the exception of the following:
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Mr. Duffy based on his employment relationship with CME Group.
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Mr. Melamed based on his consulting relationship with CME Group.
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Mr. Sandner based on the consulting arrangement that will take effect upon his retirement from the board.
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PUBLIC DIRECTORS
As the parent company of four self-regulatory organizations, we are required to ensure we
meet the core principles of the CFTC which, among other things, require that we have processes and procedures to address potential conflicts of interest that may arise in connection with the operation of our exchanges. Significant representation of
individuals who do not have relationships with our exchanges, referred to as
public directors
in the CFTC regulations, play an important role in our processes to address potential conflicts of interest. The board has assessed
which directors would be considered public directors based upon their lack of relationship with our exchanges and the industry per the CFTC regulations. The following individuals meet the definition of public director:
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Timothy S. Bitsberger
Dennis
H. Chookaszian
Ana Dutra
Larry G.
Gerdes
Daniel R. Glickman
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Deborah J. Lucas
Alex J.
Pollock
Terry L. Savage
Dennis A.
Suskind
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Additionally, our market regulation oversight committee is composed solely of public directors.
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10
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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Corporate Governance
(Continued)
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BOARD LEADERSHIP STRUCTURE
Mr. Duffy has served as our Chairman and Chief Executive Officer since November 2016. Our board leadership structure includes an independent Lead Director and our
active board members of which more than a majority are considered independent. Mr. Gerdes has served as our independent Lead Director since August 2017 when he succeeded Mr. Glickman who held the position from August 2014. The independent
Lead Director is appointed by the board based on the recommendation of the governance committee for a
one-year
term and has the following responsibilities:
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Presides at meetings of the board if the Chairman is unavailable and at executive sessions of the boards independent directors.
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Presides at the boards annual evaluation of the Chairmans achievement of his goals and objectives.
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Communicates to the Chairman the results of meetings at which he presides.
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Receives direct communications from directors and/or shareholders in cases where the Chairman is unavailable or where direct communication with the Chairman may not be appropriate.
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Confers with the Chairman, in the Chairmans discretion, in regards to board agendas, scheduling and information distribution.
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Has the authority to call a special meeting of the board in accordance with our bylaws.
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Our governance documents provide
the board with the flexibility to select the appropriate leadership structure for CME Group. In making leadership determinations, the board considers many factors, including the specific needs of the business and what is in the best interests of our
shareholders. A combined Chairman and Chief Executive Officer position provides us with a single leader who communicates the companys business and strategy to our shareholders, customers, employees, regulators and the public. The board
believes its current leadership structure allows it to effectively operate, represent the rights of our shareholders and create long-term value and provides a well-functioning and effective balance between strong management leadership and
appropriate safeguards and oversight by an independent Lead Director and
non-employee
board members. The board reserves the right to make changes to its governance structure in the future as it deems
appropriate.
BOARDS ROLE IN RISK OVERSIGHT
While senior management has primary responsibility for managing the companys risk on a
day-to-day
basis, the board has the responsibility for overseeing our risk management activities and the overall programs designed to identify, assess, manage and
monitor risks and opportunities, such as the companys Enterprise Risk Management (
ERM
) program. The board oversees the business of the company, including the risk management programs and results, to ensure that the long-term interests
of the shareholders are being served. The board has an active role, as a whole and also at the committee level, in overseeing management of our risks, with its focus on the risks facing the company.
Our business exposes us to clearing, compliance, financial, operational, reputational and strategic risks. Our ERM program promotes and facilitates the evolution and
alignment of consistent and transparent risk management practices at CME Group. Through the ERM program, we take a comprehensive approach to risk management and endeavor, in an ongoing manner, to ensure the enterprise risks are identified, assessed,
measured, prioritized and updated.
The risk committee is primarily responsible for reviewing, assessing and providing oversight of our risk management practices with
respect to those risks enumerated in its charter and assisting the board in its oversight of the effectiveness of our policies and processes to identify, manage and plan for risks. The risk committee approves the ERM framework, the risk universe and
reviews and recommends to the board the various levels of acceptable appetite for managing key risks associated with the companys business and strategy. The risk committee also receives regular quarterly reports on the control functions
relating to information security, compliance and business continuity.
In addition to the risk committee, the board also assigns oversight of risks to other
committees, such as the clearing house oversight and compensation committees. This structure is designed to increase the effectiveness of our boards oversight by taking into account the background and experience of the various board
committees, including their interactions with management. Each committee reports on its activities to the full board. The appendix to the charter of the risk committee provides additional detail on the allocation of risk oversight responsibilities
to the various committees. The charter for the risk committee is available on our website.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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11
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Corporate Governance
(Continued)
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Our universe of risks is reported to the board and senior management on a quarterly basis along with updates of any
developments that could affect our risk profile or other aspects of our business. Risk management and mitigation is ongoing, and the importance assigned to identified risks can change and new risks can emerge during the year as the company develops
and implements its strategy.
Our ultimate objective is to help preserve and protect our enterprise value and to help increase the likelihood of achieving our
objectives while maintaining or enhancing our reputation. In doing so, the board understands it may not be practicable or cost-effective to eliminate or mitigate certain risks, that it may be necessary to accept certain risks to achieve our goals
and objectives and that the processes, procedures and controls employed to address certain risks may be limited in their effectiveness.
EXECUTIVE SESSIONS
Our corporate governance principles require our independent directors to meet in executive session (without management and
non-independent
directors) on a quarterly basis. These sessions are chaired by the independent Lead Director. The chair of the executive session may, at his discretion, invite our Chairman and Chief Executive
Officer, other
non-independent
directors or other members of management to participate in a portion of such executive session, as appropriate.
ANNUAL ASSESSMENT OF BOARD, COMMITTEE AND INDIVIDUAL DIRECTOR PERFORMANCE
As provided in our corporate governance principles, the board annually reviews its own performance, structure and processes in order to assess how effectively it is
functioning. The assessment is implemented and administered by the governance committee through an annual board self-evaluation survey. Our process also includes individual peer director evaluations. All of our board established committees, except
for the executive committee, conduct an annual self-assessment.
REPORTING CONCERNS TO THE AUDIT COMMITTEE
We have engaged an independent, third party, EthicsPoint, for the purpose of receiving complaints, including complaints relating to accounting, internal
control over financial reporting or auditing matters. Concerns received via EthicsPoint relating to financial matters are automatically referred to the chairman of the audit committee and will be handled in accordance with the procedures adopted by
the audit committee. A copy of these procedures is available on our website.
CONTACTING THE BOARD OF DIRECTORS
Shareholders may contact the board of directors, including a committee of the board or the independent directors as a group, by using the following
address:
CME Group Inc.
Attn: Board of Directors c/o Office of the Secretary
20 South Wacker Drive
Chicago, Illinois 60606
Email:
directors@cmegroup.com
All communications received will be compiled by
the office of the secretary and submitted to the governance committee on a quarterly basis or more frequently as appropriate. Emails received via
directors@cmegroup.com
are screened for junk commercial email and general solicitations. If a
communication does not involve an ordinary business matter as described below and if a particular director is named, the communication will be forwarded to that director.
In order to expedite a response to ordinary business matters, the governance committee has authorized management to receive, research and respond, if appropriate, on
behalf of our directors, including a particular director or its
non-executive
directors, to any communication regarding a product of an exchange or transactions by a clearing firm or a member of an exchange,
referred to as an
ordinary business matter.
Any director may review any such communication or response thereto.
SHAREHOLDER ENGAGEMENT
Shareholders who invest in our company and elect the board of directors are entitled to open and meaningful information about
our business, strategies, corporate governance and senior management compensation practices so they can make informed decisions and knowledgeably participate in the proxy voting process. The board thoughtfully considers the opinions expressed by
shareholders through their votes, periodic meetings and other communications and believes that shareholder engagement leads
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12
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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Corporate Governance
(Continued)
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to enhanced governance practices. These engagements may cover governance, compensation and other matters to ensure that management and the board understand and address the issues that are
important to our shareholders.
As owners of our company, you are encouraged to contact us through our provided communication channels to provide your feedback. If
you have a corporate governance or compensation matter that you would like to discuss with the board or a particular committee, you may send an email to
officeofthesecretary@cmegroup.com
.
BOARD COMMITTEES
The
responsibilities of each committee composed entirely of board members are summarized in this proxy statement and described in more detail in each committees written charter. Copies of these charters are available on our website. In addition,
the board has established clearing house risk committees, which are designed to include key market participants as members.
In the following descriptions, the
chairman is designated with a C, the independent members are designated with an I, public directors are identified with a P and audit committee financial experts with an F. Members of the
committee are as of the date of the proxy statement.
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Audit Committee
NUMBER OF MEETINGS IN 2017: 11
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The audit committee is a separately-designated standing committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended
(Exchange Act)
,
and assists the board in fulfilling its oversight responsibilities with respect to the integrity of our financial statements, the qualifications and independence of our independent registered public accounting
firm, the performance of our internal audit functions and our external auditors and the effectiveness of our internal control over financial reporting.
The committee performs this function by monitoring our financial reporting process and internal control over financial reporting and by assessing the audit efforts of the
external and internal auditors. The committee has ultimate authority and responsibility to appoint, retain, compensate, evaluate, and where appropriate, replace the external auditors.
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Dennis H. Chookaszian (C,I,P,F)
Jeffrey M. Bernacchi (I)
Larry G.
Gerdes (I,P,F)
Terry L. Savage (I,P)
Dennis A. Suskind (I,P)
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Clearing House Oversight Committee
NUMBER OF MEETINGS IN 2017: 7
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The clearing house oversight committee was created in May 2016. The purpose of the committee is to provide oversight of the risk management activities and the senior
management of the clearing house, including oversight with respect to the effectiveness of the risk management program.
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William R. Shepard (C,I)
Ana Dutra
(I,P)
Martin J. Gepsman (I)
Alex J. Pollock (I,P)
Howard J. Siegel (I)
Dennis A. Suskind (I,P)
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Compensation Committee
NUMBER OF MEETINGS IN 2017: 6
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The compensation committee assists the board in fulfilling its responsibilities in connection with the compensation of board members and senior management and oversees
the compensation programs for our employees. It performs this function by establishing and overseeing our compensation programs, approving compensation for our executive officers, recommending to the board the compensation of board members who do
not serve as our officers, overseeing the administration of our equity award plans and approving the filing of the
Compensation Discussion
and Analysis
section, in accordance with applicable rules and regulations of the
SEC, in our proxy statements.
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Larry G. Gerdes (C,I,P)
Timothy S.
Bitsberger (I,P)
Ana Dutra (I,P)
Martin J. Gepsman (I)
Daniel R. Glickman (I,P)
William R. Shepard (I)
Howard J.
Siegel (I)
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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13
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Corporate Governance
(Continued)
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Executive Committee
NUMBER OF MEETINGS IN 2017: 1
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The executive committee exercises the authority of the board when the board is not in session, except in cases where action of the entire board is required by our
articles of incorporation, bylaws or applicable law. The committee may also review and provide counsel to management regarding material policies, plans or proposals prior to submission of such items to the board.
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Terrence A. Duffy (C)
Charles P.
Carey (I)
Daniel R. Glickman (I,P)
Leo Melamed
Ronald A. Pankau (I)
Alex J. Pollock (I,P)
John F.
Sandner
Terry L. Savage (I,P)
William R. Shepard (I)
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Finance Committee
NUMBER OF MEETINGS IN 2017: 4
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The finance committee assists the board in fulfilling its oversight responsibilities with respect to our financial policies, strategies, capital structure and annual
operating and capital budget.
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William R. Shepard (C,I)
Charles P.
Carey (I)
Dennis H. Chookaszian (I,P)
Larry G. Gerdes (I,P)
Ronald A. Pankau (I)
Alex J. Pollock (I,P)
Dennis A.
Suskind (I,P)
David J. Wescott (I)
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Governance Committee
NUMBER OF MEETINGS IN 2017
:
8
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The governance committee assists the board by making recommendations on our corporate governance practices. The committee reviews and recommends changes to our corporate
governance principles and other policies in the area of corporate governance and establishes a culture of compliance and ethics within the organization through its oversight of the boards governance policies and the employee code of
conduct.
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Daniel R. Glickman (C,I,P)
Dennis H.
Chookaszian (I,P)
Larry G. Gerdes (I,P)
Alex J. Pollock (I,P)
Terry L. Savage (I,P)
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Market Regulation Oversight Committee
NUMBER OF MEETINGS IN 2017:
6
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The market regulation oversight committee assists the board with its oversight of the operation of our four exchanges that are self-regulatory organizations. The
committee provides independent oversight of the policies and programs of such regulatory functions and their senior management and compliance officers to ensure effective administration of our self-regulatory responsibilities.
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Timothy S. Bitsberger (C,I,P)
Ana
Dutra (I,P)
Daniel R. Glickman (I,P)
Alex J. Pollock (I,P)
Dennis A. Suskind (I,P)
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Nominating Committee
NUMBER OF MEETINGS IN 2017: 9
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The nominating committee reviews qualifications of potential candidates for Equity director and recommends to the board the slate for election at our annual meetings.
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Alex J. Pollock (C,I,P)
Martin J.
Gepsman (I)
Larry G. Gerdes (I,P)
Daniel R. Glickman (I,P)
William R. Shepard (I)
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14
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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Corporate Governance
(Continued)
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Risk Committee
NUMBER OF MEETINGS IN 2017: 7
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The primary purpose of the risk committee is to review, assess and provide oversight of the companys risk management practices and to assist the board in its
oversight of the effectiveness of the companys policies and processes to identify, manage and plan for its clearing, compliance, financial, operational, reputational and strategic risks as described in more detail on
page
11
.
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Dennis A. Suskind (C,I,P)
Jeffrey M.
Bernacchi (I)
Timothy S. Bitsberger (I,P)
Dennis H. Chookaszian (I,P)
Elizabeth A. Cook (I)
Larry G. Gerdes (I,P)
Ronald A.
Pankau (I)
Howard J. Siegel (I)
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Strategic Steering Committee
NUMBER OF MEETINGS IN 2017
:
5
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The strategic steering committee assists and provides guidance to management and the board in fulfilling its responsibilities to oversee our long-range direction,
corporate strategy and competitive position. The committee analyzes market trends, growth patterns and the impact of innovations that may create opportunity or risk for us.
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Leo Melamed (C)
William R. Shepard
(Vice C,I)
Terrence A. Duffy
Charles P. Carey (I)
Martin J. Gepsman (I)
Gedon Hertshten (I)
John F. Sandner
(I)
Howard J. Siegel (I)
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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15
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ITEM 2Ratification of the Appointment of Ernst & Young LLP
as
our Independent Registered Public Accounting Firm for 2018
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You are being asked to vote on the ratification of the appointment of Ernst & Young to serve as our
independent registered public accounting firm for 2018. Ernst & Young served as our accounting firm for 2017.
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OUR BOARD RECOMMENDS THAT YOU VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2018
|
The audit committee has appointed Ernst & Young as CME Groups independent registered public accounting firm for
2018. We are not required to have the shareholders ratify the selection of Ernst & Young as our independent auditor. We nonetheless are doing so because we believe it is a matter of good corporate practice. If the shareholders do not ratify
the selection, the audit committee will reconsider whether or not to retain Ernst & Young, but may choose to retain such independent auditor. Even if the selection is ratified, the audit committee, in its discretion, may change the
appointment at any time during the year if it determines that such a change would be in the best interest of CME Group and its shareholders. Representatives of Ernst & Young will be present at the annual meeting, will have the opportunity
to make a statement, and will be available to respond to appropriate questions by shareholders. In connection with the audit of our 2017 financial statements, we entered into an engagement letter with Ernst & Young, which sets forth the
terms by which Ernst & Young would perform audit services for us and which did not include any limitations of liability for punitive damages. We expect to enter into a similar engagement letter with Ernst & Young for 2018.
Ernst & Young has served as the companys auditor since 2002. In accordance with its charter, the audit committee considers annually whether there should be
a rotation of the independent auditor. The audit committee has determined that it is in the interest of the company and its shareholders to continue the engagement with Ernst & Young and recommends that shareholders ratify the appointment.
THE AUDIT COMMITTEE HAS
PRE-APPROVAL
PROCESSES FOR
NON-AUDIT
SERVICES
The audit committee is responsible for the appointment, retention, compensation
and oversight of our independent registered public accounting firm. The audit committee has adopted policies and procedures for
pre-approving
all services (audit and
non-audit)
performed by our independent registered public accounting firm. In accordance with such policies and procedures, the audit committee is required to
pre-approve
all audit and
non-audit
services to be performed by the independent registered public accounting firm in order to ensure that the provision of such services
is in accordance with the rules and regulations of the SEC and does not impair the registered public accounting firms independence. Under the policy,
pre-approval
is generally provided for up to one
year, any
pre-approval
is detailed as to the particular service or category of services and is subject to a specific budget. In addition, the audit committee may
pre-approve
additional services on a
case-by-case
basis. The audit committee has delegated specific
pre-approval
to the chairperson of the audit committee, provided the estimated fee of the proposed service does not exceed $100,000. The chairperson also has the authority to approve any actual or expected cost
overruns relating to any
pre-approved
services provided the additional fees do not exceed $100,000. The chairperson must report any decisions made pursuant to these delegations to the audit committee at its
next scheduled meeting. Periodically, but not less than quarterly, our controller provides the audit committee with a report of audit and
non-audit
services provided and expected to be provided by the
independent registered public accounting firm. A copy of our audit and
non-audit
services policy is available on our website.
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16
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 2Ratification of the Appointment of Ernst & Young LLP as
our
Independent Registered Public Accounting Firm for 2018
(Continued)
|
PRINCIPAL ACCOUNTANT FEES AND
SERVICES
Fees paid to Ernst & Young for each of the last two fiscal years are listed in the following table.
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Service Provided
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2017
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2016
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Audit
(1)
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$
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3,530,038
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$
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3,549,975
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Audit-Related Fees
(2)
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160,000
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54,171
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Tax Fees
(3)
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293,488
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675,490
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All Other Fees
(4)
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Total
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$
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3,983,526
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$
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4,279,636
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(1)
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Fees for professional services rendered for the integrated audit of the consolidated financial statements of CME Group and, as required, audits of various domestic and international subsidiaries and other agreed-upon
procedures.
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(2)
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Fees for assurance and related services, including consultation on accounting and internal control matters, financial compliance reports and agreed-upon procedures not required by regulation.
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(3)
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Fees for services rendered for tax return preparation, tax advice and other international, federal and state projects. In 2017 and 2016, tax compliance and preparation fees were $43,342 and $316,978, respectively.
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(4)
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Fees for services not included in the foregoing categories.
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The audit committee has considered whether the provision of
non-audit
services is compatible with maintaining the registered public accounting firms independence. All of the projects included in the foregoing fee table were
pre-approved
by the audit committee in accordance with our audit and
non-audit
services policy.
AUDIT COMMITTEE FINANCIAL EXPERTS
The board has determined that Messrs. Chookaszian and Gerdes each meet the SECs definition of an audit committee financial expert.
REQUIRED VOTE
This item must receive a FOR vote from the holders of a majority of the shares of our Class A and Class B common stock present in person or
represented by proxy and entitled to vote on this matter at the annual meeting, voting together as a single class, to be approved.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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17
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Report of the Audit Committee
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ROLES AND RESPONSIBILITIES.
The audit committee reviews CME Groups financial reporting process on behalf of the board. Management has the primary responsibility for establishing and maintaining adequate internal financial
controls, for preparing the financial statements and for the public reporting process. Ernst & Young, our companys independent registered public accounting firm for 2017, is responsible for expressing opinions on the conformity of the
companys audited financial statements with generally accepted accounting principles and on the companys internal control over financial reporting. A copy of the audit committee charter, which has been adopted by our board of directors
and further describes the role of the audit committee in overseeing our financial reporting process, is on our website under Investor RelationsCorporate GovernanceBoard Committees.
REQUIRED DISCLOSURES AND DISCUSSION.
The audit committee has reviewed and
discussed with management and Ernst & Young the audited financial statements for the year ended December 31, 2017 and Ernst & Youngs evaluation of the companys internal control over financial reporting. The
committee has also discussed with Ernst & Young the matters that are required to be discussed under the Public Company Accounting Oversight Board
(PCAOB)
standards. Ernst & Young has provided to the committee the written
disclosures and the PCAOB-required letter regarding its communications with the audit committee concerning independence, and the committee has discussed with Ernst & Young that firms independence. The committee has concluded that
Ernst & Youngs provision of audit and
non-audit
services to CME Group is compatible with Ernst & Youngs independence.
AUDIT COMMITTEE RECOMMENDS INCLUDING THE FINANCIAL STATEMENTS IN THE ANNUAL REPORT.
Based on the review and discussions referred to above, the audit committee recommended to the board that the audited financial statements for the year ended December 31, 2017 be included in our 2017 Annual Report on
Form
10-K
for filing with the SEC. This report is provided by the following independent directors, who currently comprise the audit committee:
Dennis H. Chookaszian,
Chairman
Jeffrey M. Bernacchi
Larry G. Gerdes
Terry L. Savage
Dennis A. Suskind
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18
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 3Advisory Vote on the
Compensation
of our Named Executive Officers
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You are being asked to vote on a
non-binding
advisory proposal on our
executive compensation program for our named executive officers as described in our Compensation Discussion and Analysis beginning on page 29 and Executive Compensation tables beginning on page 46.
OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE
FOR
THE
ADVISORY PROPOSAL ON
THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
FACTORS TO CONSIDER
The board and the compensation committee are committed to sound governance practices and recognize the interest our shareholders have expressed on CME Groups
executive compensation program. As part of that commitment, and pursuant to Section 14A of the Exchange Act, our shareholders are being asked to approve an advisory resolution on the compensation of the named executive officers, as reported in
this proxy statement.
This proposal, commonly known as the
say-on-pay
proposal, gives you the opportunity to endorse our 2017 executive compensation program and policies for the named executive officers through a vote FOR the approval of the following resolution:
RESOLVED, that the shareholders of CME Group approve, on an advisory basis, the compensation of CME Groups named executive officers, as disclosed
pursuant to the compensation disclosure rules of the SEC in the proxy statement for the CME Group 2018 annual shareholders meeting (which disclosure includes the Compensation Discussion and Analysis, the Executive Compensation tables and any related
material).
This vote is not intended to address any specific item of compensation, but rather our overall compensation policies and procedures relating to the
named executive officers. Accordingly, your vote will not directly affect or otherwise limit any existing compensation or award arrangement of any of the named executive officers. Because your vote is advisory, it will not be binding on the board.
The board and the compensation committee, however, will take into account the outcome of the
say-on-pay
vote when considering future compensation
arrangements.
REQUIRED VOTE
This item must receive a FOR vote from the holders of a majority of the shares of our Class A and Class B common stock present in person or
represented by proxy and entitled to vote on this matter at the annual meeting, voting together as a single class, to be approved.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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19
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ITEM 4Election of Class
B-1,
Class
B-2
and Class
B-3
Directors
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Our
Class B-1
shareholders are being asked to vote for three
Class B-1
directors, our
Class B-2
shareholders are being asked to vote for two
Class B-2
directors and our
Class B-3
shareholders are being asked to vote for one
Class B-3
director. Each Class B directors term will last until the 2019 annual meeting and until
his or her successor is duly elected and qualified.
OUR BOARD IS NOT PROVIDING ANY RECOMMENDATION AS TO HOW OUR CLASS B SHAREHOLDERS
SHOULD VOTE ON THE ELECTION OF CLASS
B-1,
CLASS
B-2
AND CLASS
B-3
DIRECTORS
If you own more than one share of
Class B-1,
Class B-2
or
Class B-3
common stock, you must vote each class of your
Class B-1
shares,
Class B-2
shares and/or
Class B-3
shares the same way. You may not split your vote. If you do
so, your vote will be invalid.
CLASS B DIRECTOR NOMINEES
Ages of the nominees are as of March 12, 2018, and the nominees trading badge symbol is shown in parenthesis.
CLASS
B-1
DIRECTOR NOMINEES (Class
B-1
Shares only)
Vote FOR up to
three
nominees to be elected to the board of
directors.
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Jeffrey M. Bernacchi
(JMB)
Director
since:
2009
Age:
59
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Mr. Bernacchi, a CME, CBOT, and NYMEX member, is an active independent trader of our markets and has been President and owner of JMB Trading Corp. since 1980 and
managing member of Celeritas Capital, LLC since 2008. He serves on our risk and audit committees. He has participated in numerous risk management educational programs and as a long-time market participant has significant market risk management
experience. Mr. Bernacchi is a member of the Federal Reserve Bank of Chicagos Working Group on Financial Markets, PRMIA (Professional Risk Managers International Association), and ISACA, formerly known as the Information Systems
Audit and Control Association. Mr. Bernacchi is also a member of Hyde Park Angels, a leading Chicago-based angel investment group.
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Gedon Hertshten
(GHF)
Director since:
2017
Age:
65
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Mr. Hertshten started his career in the derivatives industry as an independent trader at the CBOT in 1978 and has been involved in the industry ever since. Following
his successful trading career on various exchanges, he founded GH Financials Ltd. in 1993 in London, which operates two subsidiaries located in Chicago and Hong Kong. GH Financials is now a leading global provider of clearing and settlement services
and is a clearing member of CME, CBOT, NYMEX and COMEX as well as other exchanges around the globe. Mr. Hertshten served on the board of directors of the LIFFE exchange in London from 1997 to 2005. In 2005, Mr. Hertshten founded the
Hertshten Group, which is a growing global company with more than 600 employees involved in three areas: proprietary trading; commercial real estate investments, and insurance business. Today, Mr. Hertshten focuses on expanding the Hertshten
Groups global reach and developing new business ventures.
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William W. Hobert
(WH)
Prior service as a director:
2015-2017
Age:
54
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Mr. Hobert founded WH Trading, LLC, a proprietary options and futures trading firm, in 1998. WH Trading serves as a market maker and liquidity provider in
numerous asset classes at CME in both its open outcry and electronically traded markets. From 1988 to 1994, Mr. Hobert worked for Cooper-Neff and Associates as an FX options market maker on the floor of CME and in
over-the-counter
markets. In 1994, he founded Hobert Trading Inc. which is currently a member of WH Trading, LLC.
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REQUIRED VOTE
The three nominees for
Class B-1
director receiving the highest number of FOR votes will be elected.
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20
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 4Election of Class
B-1,
Class
B-2
and Class
B-3
Directors
(Continued)
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CLASS
B-2
DIRECTOR NOMINEES
(Class
B-2
shares only)
Vote FOR up to
two
nominees to be elected to the board of
directors.
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Patrick W. Maloney
(PAT)
Director since:
n/a
Age:
56
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Mr. Maloney has been a member of CME since 1985. Mr. Maloney has served as an independent floor broker in the Eurodollar option pit from 2007 to present.
Mr. Maloney has served on numerous CME functional committees: pit committee 1997-1999, nominating committee 1995-1996, arbitration committee 1994-1995, booth space committee 1992-1996 and floor practices committee 1995-1997. Mr. Maloney
currently serves on our political action committee.
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Ronald A. Pankau
(PAN)
Director since:
2011
Age:
61
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Mr. Pankau has been an independent trader since 1981. He serves as the treasurer and secretary of our political action committee. He also is a member of our finance,
executive and risk committees. He has participated in numerous risk management educational programs and as a long-time market participant has significant market risk management experience. Mr. Pankau also serves on our business conduct and pit
supervision committees. He is the owner and CEO of JH Best and Sons, a steel fabricating plant.
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David J. Wescott
(COT)
Director since:
2003
1989-1996
Age:
60
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Mr. Wescott has been a member of CME for more than 30 years. He is an investor in TradeForecaster Global Markets, an algorithmic trading and technology company. He
is also a founder and partner in Nirvana Technology Solutions, a hosting company for the trading community through data center
co-location,
technology consulting, and
24-hour
technology support. He has served as President of The Wescott Group LTD since 1991 and Managing Partner of The Dowd/Wescott Group LTD since 2006. Mr. Wescott has served, chaired, vice chaired, or
co-chaired
on several board and functional committees at CME and served as a past member of the CFTC Regulatory Coordination Advisory Committee under former Chairwoman Wendy Gramm. Mr. Wescott also devotes
significant time to individual business opportunities.
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James J. Zellinger
(JZZ)
Director since:
n/a
Age:
71
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Mr. Zellinger has been a member of CME and CBOT since 1984. He has 53 years of experience in all phases of the futures industryoperations, trading, risk and
sales42 of them at the executive level. Mr. Zellinger is presently Senior Vice President of Wedbush, a futures commission merchant and securities broker dealer. Mr. Zellinger is a former General Partner of Hennessey and Associates
and a former Vice President of Operations at Globex Corporation, where he was instrumental in setting procedures still in effect at CMEs Global Command Center. In addition to holding executive positions at Merrill Lynch, TransMarket, and
Advantage Futures, Mr. Zellinger has served on numerous operations related exchange committees and is currently a member of the business conduct committee.
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REQUIRED VOTE
The two nominees for
Class B-2
director receiving the highest number of FOR votes will be elected.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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21
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ITEM 4Election of Class
B-1,
Class
B-2
and Class
B-3
Directors
(Continued)
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CLASS
B-3
DIRECTOR NOMINEES
(Class
B-3
shares only)
Vote FOR
one
nominee to be elected to the board of
directors.
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Elizabeth A. Cook
(LZY)
Director since:
2015
Age: 56
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Ms. Cook has been a member of CME since 1983, starting her career in 1978 as a runner for Clayton Brokerage Inc. She is a member of the boards risk committee. Ms.
Cook actively participates as co-chair of the CME arbitration and floor conduct committees and serves on the board of the CME gratuity fund. In addition, she serves on CMEs membership and business conduct committees and continues her
involvement as a CME PAC member. Ms. Cook is the founder and owner of MiCat Group LLC, a firm specializing in option execution services focusing on equities, FX and interest rates. She also serves as president of Lucky Star LLC, a commercial
property management company. Ms. Cook is also on the board of Women in Listed Derivatives. Her external activities include National Association of Corporate Directors Governance Fellow, Private Directors Association, The Navy Seal Foundation,
Ambassador for The ALS Association Greater Chicago Chapter and Honor Flight Chicago Director of Special Events.
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Georgi Z. Komon Gold
(GK)
Director since:
n/a
Age: 68
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Ms. Komon Gold has been a member of CME for 35 years. Ms. Komon Gold is the founder and managing partner of Mark IV Brokerage LLC, an active Eurodollar options
group founded in 2002, and a founding partner of Smart Confirm clearing software. Prior to Mark IV Brokerage, Ms. Komon Gold was an active independent floor broker in the Eurodollar option pit and owner of GK Trading Group from 1985 to 2002.
She has served on numerous CME committees, including Eurodollar options, arbitration, CME PAC, membership,
Class B-3
nominating and education. Ms. Komon Gold also taught option trading courses for
CME from 1985-1996. Ms. Komon Gold serves on the advisory board of the Solomon Fund for underprivileged children and is also actively involved with the Juvenile Diabetes Foundation and the search for a cure. She is a member of the Chicago
Council on Global Affairs, 100 Women in Finance, Harvard Alumni Club and the Harvard Club of Chicago.
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REQUIRED VOTE
The nominee for
Class B-3
director receiving the highest number of FOR votes will be elected.
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22
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 5Election of Class B-1, Class B-2 and Class
B-3
Nominating Committees
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Our bylaws provide that holders of our
Class B-1,
Class B-2
and
Class B-3
shares elect the members of their respective Class B nominating committees. The Class B nominating committees are not committees of
our board of directors and serve only to nominate the slate of Class B directors for their respective classes. Each Class B nominating committee is composed of five members who serve for a term of one year. The existing members are
responsible for selecting up to 10 candidates to stand for election as members of a particular Class B nominating committee. The five nominees with the greatest number of votes will serve on the applicable committee. Ages of the nominees are as
of March 12, 2018.
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OUR BOARD IS NOT PROVIDING ANY RECOMMENDATION AS TO HOW OUR CLASS B SHAREHOLDERS
SHOULD VOTE ON THE ELECTION OF CLASS
B-1,
CLASS
B-2
AND CLASS
B-3
NOMINATING COMMITTEES
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NOMINEES FOR 2019 CLASS
B-1
NOMINATING
COMMITTEE
Vote FOR up to
five
nominees to be elected to the
Class B-1
Nominating Committee.
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Thomas A. Bentley (TAB), 62
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Mr. Bentley has been a member of CME since 1981. Over his trading career, he has been a floor broker in live cattle since 1981 and a floor trader. Mr. Bentley
trades through RCG Group and participates in the CME agriculture/live cattle markets. He also has participated in the Eurodollar and S&P futures markets. Mr. Bentley is a former member of the CME board of directors and has served on many
CME exchange committees, including arbitration, nominating and membership. He owns one CME membership.
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Bradley S. Glass (BRAD), 53
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Mr. Glass has been a member of CME since 1987. Over his
30-year
trading career, he has been a local floor trader in many
markets, including currencies, Eurodollar, NASDAQ, pork bellies and lean hogs. He specializes in back months and spread market making for many futures products and has recently transitioned to the screen. Mr. Glass currently trades through
Dorman Trading and participates in the CME agricultural, equity and interest rate markets. Mr. Glass has served on numerous CME exchange committees, including clearing house operations, membership and arbitration. He owns one CME
membership.
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Joseph H. Gressel (GPC), 68
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Mr. Gressel has been a member of CME since 1976. Mr. Gressel trades through Gressel Produce & Commodities LLC. Over his trading career, he has been an
electronic trader participating in the precious metals, CME agricultural and S&P markets. Mr. Gressel is the Chairman of Gressel Produce, engaging in electronic market making mainly in dairy. He also is involved in precious metals
trading of both futures and options. Mr. Gressel owns one CME membership and two GEM memberships.
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Mark S. Kobilca (HTR), 63
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Mr. Kobilca has been a member of CME since 1979. Over his trading career, he has been a trader, order filler and local trader on the floor. Mr. Kobilca trades
through Dowd Wescott; participates in the live cattle, feeder cattle and lean hogs markets and also trades options on livestock. He owns one CME membership and one GEM membership.
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Gary T. Lark (GTX), 66
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Mr. Lark has been a member of CME since 1977. During the last five years, his primary business was trading commodity futures (mostly agricultural products), working
with commercial accounts and managing outside accounts. Mr. Lark trades through Phillip Capital and participates in the live cattle, feeder cattle and bonds markets. Mr. Lark has served on the business conduct, probable cause, live cattle
and live cattle pit committees. He owns one CME membership.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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23
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ITEM 5Election of Class
B-1,
Class
B-2
and Class
B-3
Nominating Committees
(Continued)
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W. Winfred (Fred) Moore II (FMOR), 68
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Mr. Moore has been a member of CME since 1977. During his trading career, his primary business has been trading futures and options in agricultural commodities for
his own account. Mr. Moore also facilitates commercial customer business in live cattle and feeder cattle with an emphasis in the options market. He has been a broker, floor trader, electronic trader and local trader. He trades through
F-Mor,
Inc. and participates in the live cattle, feeder cattle and hogs markets. He has served on the live cattle and business conduct committees and as chairman of the feeder cattle committee. He owns one CME
membership.
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William L. Polovin (BPO), 47
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Mr. Polovin has been a member of CME since 1994. During his trading career, he has been a floor broker, floor trader and a local. Mr. Polovin has been a floor
broker in hog options since 1997, a floor trader as a hog options local since 1994 and an electronic trader. Mr. Polovin specializes in lean hog option trading with participation in the live cattle and feeder cattle option markets.
Mr. Polovin trades through INTL FC Stone Financial Inc. He has served on the lean hogs and agricultural options pit committees. He is the recognized owner of one CME membership.
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James V. Sauter (TCP), 60
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Mr. Sauter has been a member of CME since 1982. During his trading career, he has been a floor broker and local in the feeder cattle pit. He has traded cattle
spreads and feeder cattle crushes. Mr. Sauter currently electronically trades cattle, feeder cattle and financial products through Advantage. Mr. Sauter has served on the feeder cattle committee and as Vice Chairman on the feeder cattle
pit committee. He owns one CME membership.
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Michael J. Small (SML), 57
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Mr. Small has been a member of CME since 1985. Over his trading career, he has been an order filler in the 2
nd
option live cattle pit. Mr. Small trades through INTL FC Stone Financial Inc. and Trean and participates in the CME agricultural markets. Mr. Small has served on the live cattle futures pit committee and the CME/CBOT floor conduct
committee. He owns one CME membership.
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Michael G. Sundermeier (MIK), 58
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Mr. Sundermeier has been a member since 1981. During his trading career, he was a broker, floor trader, electronic trader and local. Mr. Sundermeier retired
from professional trading in 2011. His current primary business is part owner of a Culvers restaurant in Fort Mill, South Carolina and general stock investing. He trades agricultural futures and options on futures. Mr. Sundermeier served on the
pit and live cattle committees. He owns one CME membership.
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REQUIRED VOTE
The five nominees for the
Class B-1
nominating committee receiving the highest number of FOR votes will be
elected.
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24
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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ITEM 5Election of Class
B-1,
Class
B-2
and Class
B-3
Nominating Committees
(Continued)
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NOMINEES FOR 2019 CLASS
B-2
NOMINATING COMMITTEE
Vote FOR up to
five
nominees to be elected to the
Class B-2
Nominating Committee.
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Frank D. Catizone (FDC), 58
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Mr. Catizone has been a member of CME since 1986. During his trading career, he was a floor broker in the Eurodollar quadrant and an electronic trader.
Mr. Catizone currently trades through Dowd Wescott and participates in the Eurodollar and S&P mini products. He served on the LIBOR pit committee for 10 years and the nominating committee. He owns one IMM membership.
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Richard J. Duran (RJD), 69
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Mr. Duran has been a member of CME since 1979. Over his trading career, he has been an active trader, speculator and investor. He currently trades through Mocho
Trading, a high frequency trading group. Mr. Duran was previously a trader and broker on the exchange floor and a partner in a clearing firm. He has served on numerous CME exchange committees, including the nominating and membership committees.
He owns one IMM membership.
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Yra G. Harris (YRA), 64
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Mr. Harris has been a member of CME since 1977. During his trading career, he has been actively trading for his personal account as well as a blogger and consultant
on industry matters. He currently participates in currencies, metals and all interest rate markets. Mr. Harris was previously a local and electronic trader as well as a floor trader and broker. He currently trades through Shepard International.
Mr. Harris previously served as a member of the CME board of directors for six years and chaired many CME committees. In addition, he was a member of many CME exchange committees, including strategic planning, CME GLOBEX and business conduct.
He owns one IMM membership.
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Patrick J. Lahey (XDE), 39
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Mr. Lahey has been a member of CME since 2015 and a member of CBOT since 2013. He previously was a member of the CME from 2002 to 2003 when he traded Eurodollar
options on the CME floor. During his
18-year
trading career, he has been a senior trader and partner in WH Tradings Chicago office where he chairs the firms risk and futures committees.
Mr. Lahey was previously the managing director of the WH Trading London office. He currently participates in the CME FX, interest rates and agricultural markets. Mr. Lahey is an electronic proprietary trader. He is the recognized owner of
one IMM membership.
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Patrick J. Mulchrone (PJM), 60
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Mr. Mulchrone has been a member of CME since 1980. During his trading career, he has been a self-employed partner and electronic trader at Advantage Futures. He
currently trades through Advantage Futures, LLC and participates in the currencies, Eurodollar and treasuries markets. Mr. Mulchrone has served on many CME exchange committees over the past 30 years, including the disciplinary and nominating
committees and is a former member of the CME board. He owns one CME membership, one IMM membership, one IOM membership and one GEM membership.
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Stuart A. Unger (UNG), 70
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Mr. Unger has been a member of CME since 1975. During his trading career, he has developed and promoted futures business through Price Futures Group, which consists
of brokers, branch offices and GIBs (Guaranteed Introducing Brokers). This business includes the futures industry worldwide with coordination targeting agriculture business, speculative, commercial and hedging type business. Mr. Unger has been
a broker, floor trader and local. He currently trades through Price Futures Group. Mr. Unger participates in the cattle, Eurodollar and LIBOR markets. Mr. Unger has served on many CME exchange committees, including the nominating, floor
practice and LIBOR pit committees. He owns one IMM membership.
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Barry D. Ward (BDW), 54
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Mr. Ward has been a member of CME since 1990. During his trading career, he has traded for his personal account and was involved with proprietary trading groups as
both an equity owner and as a trader. Mr. Ward is a Managing Director at TJM Holdings, LLC. He currently participates in the Eurodollar futures and
E-Mini
S&P markets. Mr. Ward has served on the
nominating and pit committees and was Pit Vice Chairman from 1998-2004. He owns one IMM membership.
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REQUIRED VOTE
The five nominees for the
Class B-2
nominating committee receiving the highest number of FOR votes will be
elected.
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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25
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ITEM 5Election of Class
B-1,
Class
B-2
and Class
B-3
Nominating Committees
(Continued)
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NOMINEES FOR 2019 CLASS
B-3
NOMINATING COMMITTEE
Vote FOR up to
five
nominees to be elected to the
Class B-3
Nominating Committee.
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John F. Connors Jr.
(CON), 48
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Mr. Connors has been a member of CME since 2010. During his trading career, he has been a floor trader in the cattle, hog, feeder cattle and lumber options.
Mr. Connors is the owner of PJ Trading LLC. He has served on the agricultural option pit committee for two years. Mr. Connors owns one IOM membership.
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Joel P. Glickman (GLK), 62
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Mr. Glickman has been a member of CME since 1983. He has 15 years of experience as a floor broker in the S&P and 24 years of experience as a local trader on CME
Globex. Mr. Glickman is the principal of an electronic trading group trading primarily
E-mini
S&P and
5-
and
10-year
treasury notes. He has served on numerous committees. Mr. Glickman owns one IOM membership.
|
|
|
Spencer K. Hauptman (SPNC), 39
|
|
|
Mr. Hauptman has been a member of CME since 2002. Since May 2009, he has been a partner at Apex Brokerage Group, a brokerage group that executes customer orders in
the Eurodollar options pit. He clears through Shatkin Arbor. Mr. Hauptman owns one IOM membership.
|
|
|
Kevin P. Heaney (FROG), 40
|
|
|
Mr. Heaney has been a member and seat owner since 2006. He is currently a partner at Galt Street Capital, LLC. He has previously been a partner/managing member of
Constitution Capital where he executed orders in the Eurodollar options pit. He has been on the
Class B-3
nominating committee since 2017. He owns one IOM membership.
|
|
|
Robert J. Kevil Jr. (REV), 37
|
|
|
Mr. Kevil has been a member of CME since 2006. During his trading career, he has been a broker in the feeder cattle, live cattle, hog and lumber options pits. He
currently works with Rossi Services Inc. Mr. Kevil owns one IOM membership.
|
|
|
Stephen J. Leuer (LURE), 54
|
|
|
Mr. Leuer has been a member of CME since 1987. During his trading career, he has been a floor based broker and trader specializing in S&P futures and options.
Mr. Leuer has been a broker, floor trader and electronic trader. He currently trades through
X-Change
Financial Access, LLC. He participates in the S&P futures, S&P options and
E-mini
S&P options. Mr. Leuer owns two IOM memberships.
|
|
|
Kimberly Marinaro
|
|
|
Ms. Marinaro started at the CME in 1992 working on the trading floor as a business manager for several brokerage groups after graduating from University of Illinois
Urbana-Champaign. During her career, she has worked as Director of Marketing and Sales for the FX team for R.J. OBrien and has served as the financial officer and business manager for 10 plus broker associations. Ms. Marinaro currently manages
the business operations of trading groups as well as broker associations. Ms. Marinaro owns one IOM membership and one GEM membership.
|
|
|
Thomas G. Rossi (SSI), 54
|
|
|
Mr. Rossi has been a member of CME since 1986. During his trading career, he has executed customer orders in the live cattle option, feeder cattle option and hog
option pits. Mr. Rossi currently fills orders in the agricultural options pit. He has served as vice chairman of the live cattle options pit committee since 1998. Mr. Rossi owns one IOM membership.
|
|
|
Richard S. Turim (RST), 66
|
|
|
Mr. Turim has been a member of CME since 1982. During his trading career, he has traded S&P 500 futures. Mr. Turim was a broker, a local and electronic
trader. He clears through FC Stone. He has served on various committees, including the pit committee. Mr. Turim owns one IOM membership.
|
|
|
REQUIRED VOTE
The five nominees for the
Class B-3
nominating committee receiving the highest number of FOR votes will be
elected.
|
|
|
|
|
26
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Committee Matters
|
This section provides an overview of the role and responsibility of our compensation committee. We have an executive
compensation program that is designed to tie pay to performance, balance rewards with prudent business decisions and risk management, and focus on both annual and long-term performance for the benefit of our shareholders. In designing our program,
we also take into consideration our unique role in the financial services industry.
OUR COMPENSATION COMMITTEE PROVIDES OVERSIGHT OF
OUR COMPENSATION PROGRAM FOR OUR SENIOR MANAGEMENT GROUP
The compensation committee is composed of seven independent directors. The primary
responsibilities of the compensation committee are to review and approve compensation arrangements for our senior management group (our Chairman and Chief Executive Officer and the other members of our management team), to review and recommend
compensation arrangements for the board of directors, to adopt incentive compensation plans in which senior management is eligible to participate and to oversee matters relating to employee compensation, employee benefit plans and employee incentive
programs. A complete description of the committees responsibilities may be found in its charter, a copy of which is on our website.
There were six meetings of
the committee in 2017. The committee typically meets in executive session for a portion of each regular committee meeting and may include members of management as appropriate. The committee provides regular reports to the board of directors on its
activities.
THE COMMITTEE CONSIDERS THE RECOMMENDATIONS OF OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER IN APPROVING COMPENSATION FOR OUR
OTHER EXECUTIVE OFFICERS
The committee is solely responsible for approving the compensation of our executive officers. The committee, however, takes into
consideration the recommendations of our Chairman and Chief Executive Officer in approving compensation for executive officers other than himself.
THE COMMITTEE DELEGATES AUTHORITY TO OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER ON A LIMITED BASIS SUBJECT TO
PRE-ESTABLISHED
CRITERIA
Subject to
pre-established
guidelines for individual awards and aggregate value limitations, the committee delegates authority to
the individual in the role of Chief Executive Officer to approve salary increases, equity awards and annual cash bonus awards for employees other than the executive officers. The committee reviews annual reports on the use of such delegation.
OUR PROGRAM IS DESIGNED TO CREATE LONG-TERM SHAREHOLDER VALUE WHILE DISCOURAGING EXCESSIVE RISK TAKING
We realize that it is not possible to grow and enhance long-term shareholder value without assuming some level of risk. This is true whether we decide to make an
acquisition, introduce a new product or change our corporate strategy. Our compensation program is designed to provide appropriate incentives for creating long-term shareholder value and delivering on our financial and strategic goals while
discouraging excessive risk taking.
Several elements of our program, which are discussed in more detail in the
Compensation Discussion and Analysis
section
beginning on
page
29
, are designed to promote the creation of long-term value and thereby discourage behavior that leads to excessive risk taking. The following are the key elements of our program designed to address compensation risk:
|
|
|
We utilize a mix of both fixed and variable compensation. Our fixed pay is intended to provide a stable income.
|
|
|
|
A significant portion of our senior management group compensation is composed of long-term equity incentives and the senior management group is also subject to company stock ownership guidelines based on their level of
responsibility.
|
|
|
|
Our annual cash bonus plan for our senior management group and other senior employees as currently in effect will not pay out in the event we fail to achieve cash earnings at or above the threshold level of performance.
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
27
|
|
|
|
|
|
|
Compensation Committee Matters
(Continued)
|
|
|
|
We set maximum guidelines for annual incentive and long-term incentive awards, thereby establishing and communicating potential payouts.
|
|
|
|
All compensation of our senior management group is subject to the approval of the compensation committee, which includes the ability to decrease an award for failure to perform or inappropriate risk taking.
|
|
|
|
We have adopted a recoupment policy, whereby employees at the level of managing director and above may be required to repay any previously granted annual bonus awards to the extent that all or a portion of such
individuals award was not actually earned due to a restatement of our financial results with the outcome being the achievement of the related performance metric was less than previously reported.
|
|
|
|
We prohibit all of our employees and board members from engaging in any derivative transactions in our securities (hedging the economic risk of their ownership of our stock) and have adopted a policy restricting the
pledging of our Class A shares by our board members and executive officers.
|
|
|
|
As discussed below, the committee engages its independent compensation consultant to advise on executive compensation best practices and to provide counsel as it considers executive compensation programs and
arrangements, as it deems appropriate.
|
OUR COMPENSATION COMMITTEE HAS ITS OWN INDEPENDENT COMPENSATION CONSULTANT
The committee has engaged Meridian Compensation Partners, LLC to serve as its independent advisor. During 2017, Meridian provided information on trends in
executive compensation as well as general executive compensation advice.
Management also engages its own consultants to provide advice as it relates to compensation
programs. Specifically in 2017, management engaged Exequity LLP to provide information on executive compensation practices and technical guidance on executive compensation matters.
Such consultant may attend compensation committee meetings and provide advice to the compensation committee. The committee at its discretion may also include its
independent advisor in such reviews and decision-making processes, meeting either jointly or separately from management and managements consultant.
The
committee has assessed the independence of the advisors it engaged in 2017 relative to the factors identified by the SEC and NASDAQ.
OUR
COMPENSATION COMMITTEE IS COMPOSED OF INDEPENDENT MEMBERS WITH LIMITED RELATIONSHIPS WITH THE COMPANY (COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION)
During 2017, none of the members of the compensation committee served at any time as an officer or employee of CME Group or received any compensation from us other than
in the capacity as a member of the board or a committee thereof or compensation for service on the board of one of our wholly-owned subsidiaries. Except as described below regarding Mr. Shepard, none of the members of the compensation
committee has any relationship with us other than service as a director or member of one of our exchanges or as an employee of one of our clearing or member firms. Mr. Shepard owns a minority interest in one of our clearing firms, which made
net payments to us of approximately $115 million, and he owns a minority interest in a trading firm that made indirect payments to us through its clearing firm in excess of $120,000 in connection with trading activity conducted on our exchanges
in 2017. Such fees are consistent with those prevailing at the time for corresponding activity by other similarly situated unrelated third parties. No member of the compensation committee is, or was during 2017, an executive officer of another
entity, one of whose board or compensation committee members served as an executive officer of the company.
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|
|
|
|
28
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
|
This discussion provides you with a detailed description of our compensation program for our named executive
officers. It also provides an overview of our compensation philosophy and our policies and programs, which are designed to achieve our compensation objectives, and an overview of our program as it relates to other members of our management team.
These individuals along with our named executive officers are referred to as our senior management group.
KEY TOPICS COVERED IN OUR
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
Opportunity for Shareholder Feedback, below
|
|
|
|
Executive Summary,
page 30
|
|
|
|
Chief Executive Officer Total Pay vs. Performance,
page 32
|
|
|
|
Philosophy and Objectives,
page 33
|
|
|
|
Principal Elements of our Compensation Program,
page 36
|
|
|
|
2017 Named Executive Officer Bonus Awards,
page 38
|
|
|
|
2017 Named Executive Officer Equity Awards,
page 40
|
|
|
|
Stock Ownership Guidelines, Hedging Policy, Tally Sheets and Recoupment Policy,
page 43
|
|
2017 NAMED EXECUTIVE OFFICERS
|
Terrence A. Duffy,
Chairman and Chief Executive Officer
|
John W. Pietrowicz,
Chief Financial Officer
|
Bryan T. Durkin,
President
|
Sean P. Tully,
Global Head of Financial and OTC Products
|
Kevin D. Kometer,
Chief Information Officer
|
Kimberly S. Taylor,
Former President Clearing and Post-Trade Services
|
For the biographies of our current executive officers, including the named executive officers, please see
Item 1. Business
Employees Executive Officers
beginning
on
page
14
of our 2017 Annual Report on Form
10-K,
filed with the SEC on February 28, 2018.
Opportunity for shareholder feedback
The compensation committee
carefully considers feedback from our shareholders regarding the compensation program for our senior management group. We believe the changes made in recent years to enhance the performance orientation of our program have been well received by
shareholders, as evidenced by our
say-on-pay
vote results.
At our 2017
annual meeting of shareholders, approximately 95% of shareholders voted FOR the approval of our
non-binding
advisory vote approving the compensation of our named executive officers.
Shareholders who wish to directly communicate with members of the compensation committee may do so using
directors@cmegroup.com
as discussed on
page
12
of this proxy statement.
You should read this section in conjunction with the advisory vote we are conducting on the compensation of our named
executive officers under
Item
3
on
page
19
as it contains information that is relevant to your voting decision.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
29
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
EXECUTIVE SUMMARY
Our business
CME Group is where the world comes to manage
risk. Through its exchanges, CME Group offers the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural products
and metals. CME Group provides electronic trading globally on its CME Globex platform. The company also offers clearing and settlement services across asset classes for exchange-traded and
over-the-counter
derivatives through its clearing house, CME Clearing. CME Groups products and services are designed to provide businesses around the world with the means to effectively manage
risk. We also provide hosting, connectivity and customer support for electronic trading through our
co-location
services. Our CME Direct platform offers
side-by-side
trading of exchange-listed and privately negotiated markets. We provide clearing and settlement services for exchange-traded contracts, as well as for cleared swaps, and provide regulatory
reporting solutions for market participants through our global repository services in the United States, United Kingdom, Canada and Australia. Finally, we offer a wide range of market data servicesincluding live quotes, delayed quotes,
market reports and a comprehensive historical data service.
For more information on our business, see
Business
and
Managements Discussion and
Analysis of Financial Condition and Results of Operations
in our
2017 Annual Report
and the business highlights in the
Summary Information
on
page
1
.
2017 compensation highlights for our named executive officers
The compensation committee took the following compensation actions with respect to our named executive officers during 2017 or related to 2017 performance:
|
|
|
Awarded base salary increases to certain named executive officers to better align their compensation to market competitive levels as described on
page
37
.
|
|
|
|
Awarded bonuses to our named executive officers based on our achievement of 2017 cash earnings at 106.4% of the target goal as described beginning on
page
38
. For 2017, we set a cash earnings goal that
required significant effort on behalf of our management.
|
|
|
|
Certified results for the September 2014 and March 2015 awards of performance shares based on net income margin growth relative to the diversified financial services index of the S&P 500 and total shareholder return
relative to the S&P 500 for the 2015-2017 performance period. Due to outstanding achievement against both goals, 183.3% of the target number of shares were earned and became vested in March 2018 as described on
page 41
.
|
|
|
|
Awarded performance-granted restricted shares to Mr. Duffy based on the companys 2017 relative total shareholder return achievement at the 75.2
percentile
of the S&P 500. This award is time-vested and the number of shares subject to the award was determined based on the achievement of the performance targets and granted in March 2018. The performance-granted restricted shares are described on
page
42
.
|
|
|
|
Awarded equity grants to our named executive officers in September 2017 to enable longer-term retention while also increasing the focus on longer-term value creation. The 2017 equity awards were comprised of 50%
time-vested restricted stock and 50% performance shares, as described on
page
40
.
|
|
|
|
Awarded performance shares to our named executive officers in September 2017 with goals tied to our growth in net income margin as compared to the diversified financial services index of the S&P 500 and total
shareholder return as compared to the S&P 500 measured over a three-year period (2018-2020), as described on
page
40
.
|
|
|
|
In 2017, at least 50% of target total compensation for each of our named executive officers was considered performance-based, as it was directly tied to cash earnings, relative net income margin growth or relative stock
performance goals.
|
|
|
|
Approved terms of a retirement agreement with Ms. Taylor, our former President Clearing and Post-Trade Services. Ms. Taylor retired from the company on December 31, 2017. The details of the retirement
agreement can be found on
page
54
.
|
|
|
|
|
|
30
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Key elements of the program are designed to ensure pay for performance
Our overall goals and philosophy are complemented by several specific elements that are designed to align the compensation for our senior management group with
performance and position the company for creating long-term shareholder value including:
|
|
|
Our annual bonus is tied to our generation of cash earnings. To the extent we fail to achieve cash earnings at the threshold level, representing 25% below the target, no bonuses would be paid to our senior management
group. The bonus opportunities for our named executive officers are set forth on
page
38
. We believe the cash earnings metric is a key component to measuring our growth and contributes directly to deriving value for our shareholders as
it is the metric used for determining our regular quarterly dividend payments.
|
|
|
|
The aggregate amount of our bonus pool is subject to an overall cap when we achieve cash earnings at the maximum level, representing 20% above the established target. We believe this cap provides transparency to our
investors as to our compensation exposure and the expected expense is accrued on a quarterly basis based on actual cash earnings performance.
|
|
|
|
In addition to verifying the annual achievement of cash earnings for purposes of our bonus program, our compensation committee also considers other elements of our performance, such as our net income, total shareholder
return, earnings per share and return on equity, as appropriate.
|
|
|
|
Our annual long-term incentive awards for our senior management group are comprised of 50% time-vested restricted shares and 50% performance shares. The performance shares have a three-year performance period with
growth in net income margin relative to the diversified financial services index of the S&P 500 and total shareholder return relative to the S&P 500 as the performance metrics. These performance metrics, when combined with the cash earnings
performance metric in our annual bonus plan, focus our senior management group on financial and operational measures of success and shareholder results. The annual equity award opportunities for our named executive officers are set forth on
page
40
.
|
|
|
|
Our senior management group is subject to stock ownership guidelines as discussed on
page 43
.
|
|
|
|
To ensure alignment with our shareholders, we have a policy that prohibits all employees and board members from engaging in any hedging or other derivative transactions with respect to CME Group stock as well as a
policy which restricts pledging of our Class A common stock by our board members and executive officers.
|
Overview of pay and
performance alignment
One of the guiding principles of our compensation program is to focus on achievement that benefits us and our shareholders. In support
of that objective, a significant portion of the pay package for our named executive officers is delivered in the form of stock-based compensation, the value of which rises and falls in alignment with our stock performance.
The following graphic depicts the alignment of the total pay of the individual serving as Chief Executive Officer at the end of the applicable year with our total
shareholder return and cash earnings achievement for each of the last five years (Mr. Gill for
2013 - 2015
and Mr. Duffy for 2016 - 2017). Total shareholder return
(TSR)
is shown on a
year-over-year, indexed basis. Specifically, an investment of $100 (with reinvestment of all dividends) is assumed to have been made in our Class A common stock on December 31, 2013 and its performance is tracked through December 31,
2017.
Chief Executive Officer pay, as depicted in the following graphic, is the sum of reported pay elements set forth in the
Summary Compensation Table
for
each of the last five years except for the values of stock option, restricted stock, and performance share awards which are included as follows:
|
|
|
The value of stock option awards is shown as (1) the value realized at exercise for any options exercised during the year as reported in the
Option Exercises and Stock Vested
table, and (2) the value of
all outstanding,
in-the-money
stock options at year end measured as the positive difference between our stock price at year end minus the option exercise price.
|
|
|
|
The value of restricted stock awards is shown as (1) the value realized on vesting for any shares that vested during the year as reported in the
Option Exercises and Stock Vested
table, and (2) the
value of all outstanding restricted shares at year end measured using our stock price at year end.
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
31
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
|
|
|
The value of performance share awards is shown as (1) the value realized on vesting for any earned shares that vested during the year as reported in the
Option Exercises and Stock Vested
table, and
(2) the market value of the shares actually earned at the completion of the performance period but have not yet vested, as reported in the
Outstanding Equity Awards at Fiscal Year End
table, and as certified by the committee based on
achievement of the performance goals.
|
While the
Summary Compensation Table
discloses the fair value of stock option, restricted stock and
performance share awards on the grant date in the manner required by the SEC (for purposes of allocating the accounting expense over the requisite service period), we feel those values do not reflect the value actually received as a result of actual
stock and financial performance. We believe the value of stock option, restricted stock and performance share awards as shown in this section better reflects the true alignment of our Chief Executive Officers pay with our stock performance. As
the graphic shows, our Chief Executive Officers total actual pay plus the unrealized value of his outstanding equity awards at year end has been aligned with TSR over the last five years, which accords with the primary objectives of our
executive compensation program.
On balance, Chief Executive Officer pay shows alignment with both stock performance and cash earnings given the focus on these
measures in our incentive opportunities.
|
|
|
|
|
32
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Chief Executive Officer Total Pay
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
|
2014
|
|
|
2015
|
|
|
2016
|
|
|
2017
|
|
Summary Compensation
Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
$
|
1,000,000
|
|
|
$
|
1,500,000
|
|
|
$
|
1,500,000
|
|
Non-Equity
Incentive Plan Compensation
|
|
$
|
1,106,564
|
|
|
$
|
1,176,000
|
|
|
$
|
1,599,309
|
|
|
$
|
2,898,443
|
|
|
$
|
3,467,511
|
|
Change in Pension Value
|
|
$
|
|
|
|
$
|
71,395
|
|
|
$
|
24,903
|
|
|
$
|
36,555
|
|
|
$
|
42,850
|
|
All Other Compensation
|
|
$
|
146,073
|
|
|
$
|
175,103
|
|
|
$
|
229,541
|
|
|
$
|
343,641
|
|
|
$
|
418,210
|
|
Option Exercises and Stock
Vested
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards: Value Realized on
Exercise
|
|
$
|
2,054,210
|
|
|
$
|
3,564,950
|
|
|
$
|
1,876,521
|
|
|
$
|
655,385
|
|
|
$
|
|
|
Restricted Stock Awards: Value Realized
on Vesting
|
|
$
|
1,072,870
|
|
|
$
|
1,091,866
|
|
|
$
|
1,350,293
|
|
|
$
|
1,803,676
|
|
|
$
|
3,931,664
|
|
Performance Stock Awards: Value Realized
on Vesting
|
|
$
|
83,976
|
|
|
$
|
100,229
|
|
|
$
|
128,784
|
|
|
$
|
3,753,218
|
|
|
$
|
3,804,071
|
|
Total Actual Pay
|
|
$
|
5,463,693
|
|
|
$
|
7,179,543
|
|
|
$
|
6,209,351
|
|
|
$
|
10,990,918
|
|
|
$
|
13,164,306
|
|
Outstanding Equity Awards at Fiscal
Year End
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards: Unrealized Gain
|
|
$
|
6,505,734
|
|
|
$
|
3,735,145
|
|
|
$
|
2,556,803
|
|
|
$
|
|
|
|
$
|
|
|
Restricted Stock Awards: Market Value of
Shares That Have Not Vested
|
|
$
|
2,647,633
|
|
|
$
|
3,181,560
|
|
|
$
|
2,917,139
|
|
|
$
|
5,092,356
|
|
|
$
|
6,053,043
|
|
Performance Stock Awards: Market Value of
Performance Shares Earned but Not Vested
|
|
$
|
313,055
|
|
|
$
|
235,809
|
|
|
$
|
2,812,768
|
|
|
$
|
3,517,714
|
|
|
$
|
4,193,096
|
|
Performance Stock Awards: Value of
Performance-based Restricted Stock Earned but Granted after Year End
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
750,000
|
|
|
$
|
15,000
|
|
Total Unrealized Value of Outstanding
Equity Awards
(1)
|
|
$
|
9,716,422
|
|
|
$
|
7,152,514
|
|
|
$
|
8,286,710
|
|
|
$
|
9,360,070
|
|
|
$
|
10,261,139
|
|
Percent Change in Total Unrealized
Value of Outstanding Equity Awards
|
|
|
|
%
|
|
|
(26
|
)%
|
|
|
16
|
%
|
|
|
13
|
%
|
|
|
10
|
%
|
Change in Total Unrealized Value of
Outstanding Equity Awards
|
|
$
|
|
|
|
$
|
(2,563,908
|
)
|
|
$
|
1,134,196
|
|
|
$
|
1,073,360
|
|
|
$
|
901,069
|
|
Chief Executive Officer
|
|
|
Gill
|
|
|
|
Gill
|
|
|
|
Gill
|
|
|
|
Duffy
|
|
|
|
Duffy
|
|
(1)
|
These values do not reflect compensation delivered each year but rather a snapshot of the value of all unexercised stock options, unvested restricted shares, and unvested but earned performance shares as of each year
end. The type of equity award granted impacts the timeframe for realizing the value: stock options may be outstanding for up to 10 years given the
10-year
option term, restricted shares may be outstanding for
up to four years given the four-year vesting schedule, and performance shares, which have been tied to either a
one-
or three-year performance period, are included as outstanding only when they are deemed
earned at the completion of the performance period. Stock options and restricted stock are included in each year end snapshot until the year in which the option is exercised or the restricted shares vest, at which point the actual value received is
reported in the Total Actual Pay section above. In 2012, we began granting performance shares tied to a three-year performance period and time-vested restricted stock to our senior management group and ceased granting stock options.
|
PHILOSOPHY AND OBJECTIVES OF OUR COMPENSATION PROGRAM
The elements of our executive compensation program are designed to:
|
|
|
Pay for performance.
Focus on company and individual achievement for the benefit of CME Group and its shareholders through the incorporation of a significant portion of annual compensation for our senior
management group that varies based on company and individual performance.
|
|
|
|
Reward growth and profitability without undue risk.
Motivate and reward our employees to achieve results in support of our strategic initiatives and to encourage profitability and growth while discouraging
excessive risk taking.
|
|
|
|
Hire and retain top caliber executives.
Our compensation and benefits program is competitively designed to attract and retain the best talent.
|
|
|
|
Align with shareholder value.
The interests of our senior management group are linked to those of our shareholders through the risks and rewards of the ownership of our stock. The overall design of the
program, while competitive, should also be at a reasonable cost to our shareholders.
|
Our program is designed to be consistent with best
practices
The compensation committee designs our compensation program to motivate our senior management group to lead our entire company toward achieving
short- and long-term financial and strategic goals, in addition to increasing shareholder value, all without encouraging excessive risk taking. The committee continually evaluates what it considers to be best practices in executive
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
33
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
compensation, and modifies our program to support our strategies and provide an appropriate balance of risk and reward. The following highlights our current compensation practices that we believe
drive performance and focus our senior management group on the creation of long-term value:
|
|
|
We tie pay to performance. In 2017, at least 50% of the target total compensation opportunity for our named executive officers was tied to specific cash earnings, relative net income margin growth or relative total
shareholder return performance goals.
|
|
|
|
We set objective targets tied to company performance for our cash bonus that must be met at the threshold level in order to fund the bonus pool.
|
|
|
|
We mitigate undue risk, including utilizing caps on potential payouts and clawback provisions.
|
|
|
|
We have reasonable post-employment and change of control provisions.
|
|
|
|
We use employment contracts on a limited basis. Contracts are generally structured to include a three- to five-year term, do not provide for excessive severance payments or include golden parachute tax gross
ups.
|
|
|
|
We have adopted stock ownership guidelines and restrictions on hedging and pledging transactions to ensure our executives interests are linked to those of our shareholders.
|
|
|
|
We provide only modest perquisites.
|
|
|
|
Our compensation committee reviews the reasonableness of our compensation by reviewing tally sheets and wealth accumulation reports.
|
USE OF COMPETITIVE DATA AND COMPARISON PRACTICES
Benchmarking practices
We are a complex organization that seeks
to attract talent from a broad group of companies primarily located in the financial services industry and within the technology sector. Because no individual company or single group of companies is exactly comparable to CME Group, when reviewing
competitive data, we consider a broad set of data from a number of sources. We believe that reviewing a combination of published survey compensation data in addition to publicly available compensation data (e.g. proxy statements) provides a valid
reference point for the range of pay among companies with whom we compete for executive talent.
We broadly target compensation opportunities at the median (50
th
percentile) of the market, in total and for each component of pay for target performance levels. However, we believe that benchmarking does not provide a complete basis for establishing
compensation. Therefore, we do not use the market statistics rigidly, nor do we apply any specific formula to the data. We also review the range of values around the median, including the 25
th
and
75
th
percentiles.
We use the competitive compensation data for several purposes as it relates to the named
executive officers and other employees. We use it to assess the competitiveness of total compensation for individual members of senior management and other employees on an annual basis, and we use it to develop and evaluate total compensation
programs and guidelines for senior management and other employees on a more ad hoc basis. When making decisions about senior management pay we analyze compensation relative to the market median levels, and may make adjustments for market conditions
and special considerations as appropriate in the context of our pay for performance philosophy. The compensation committee, within its discretion, may make alterations based on its evaluation of the benchmarking data, as it deems appropriate, to
ensure that our senior management compensation is performance-based and competitive in nature.
CME Group compensation peer group
In September 2017, the committee conducted a review of our peer group companies with the goal of ensuring the peers remain relevant and comparable in terms of size and
industry. Following this review, the committee approved changes to the peer group, including the removal of Dun & Bradstreet Corporation and Yahoo Inc. and the addition of CBOE Holdings Inc. and E*Trade
|
|
|
|
|
34
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Financial Corporation. The following peer group was used for benchmarking our program for senior management and members of our board in late 2017.
|
|
|
CBOE Holdings Inc.
|
|
Equifax Inc.
|
E*Trade Financial Corporation
|
|
Fiserv Inc.
|
Franklin Resources Inc.
|
|
IntercontinentalExchange Inc.
|
Invesco Ltd.
|
|
MasterCard Inc.
|
Moodys Corp.
|
|
Nasdaq OMX Group Inc.
|
Northern Trust Corp.
|
|
Paychex Inc.
|
Schwab (Charles) Corp.
|
|
S&P Global, Inc.
|
T. Rowe Price Group Inc.
|
|
TD AMERITRADE Holding Corp.
|
Western Union Co.
|
|
|
In selecting the peer group for executive compensation purposes, we targeted the following industries: exchanges, financial services,
technology, transaction services and other technology-driven financial companies. We selected companies within these sectors of similar size as measured by revenue and market capitalization. The companies within the peer group generally range
between 0.5 and 2.5 times CME Group in terms of revenues or market capitalization. At the time of the committees annual review of our peer group in 2017, CME Group was positioned at the 31
st
percentile of the peer group on revenue and at the 88
th
percentile on market capitalization.
Comparison of Chief Executive Officer pay to other named executive officers
The differences between the allocation of compensation of the individual serving in the role of Chief Executive Officer and the other named executive officers are
primarily the result of the differences in the role and responsibilities of the individual within the organization, the level of competitive demand for the individuals talent in the industry and the results of our benchmarking studies for
similarly situated positions in the marketplace. We have not adopted a policy whereby the compensation of the individual serving in the role of Chief Executive Officer or any other named executive officer must be a certain multiple higher or lower
than any of the other named executive officers. As previously discussed, we broadly target total compensation levels at the median (50
th
percentile) of our peer group.
Role of individual performance in the program
While
consideration of compensation data to ensure that our compensation is competitive is a critical component of compensation decisions, individual performance is factored into setting compensation in the following ways:
|
|
|
Base salary adjustments are based on an assessment of the individuals performance in the preceding year, changes in his or her responsibilities as well as a comparison with market data for comparable positions in
our peer group and within the industry.
|
|
|
|
Our incentive targets for annual bonus and equity opportunities are based on the individuals role and responsibilities in the organization in achieving our annual goals as well as the competitive market data for
similarly situated positions in the marketplace.
|
|
|
|
Individual performance and the achievement of specific goals is taken into consideration by the compensation committee in determining whether to use its discretion in approving annual bonuses and equity awards at, above
or below the target level.
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
35
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
PRINCIPAL ELEMENTS OF OUR COMPENSATION PROGRAM
The principal components of our executive compensation program and the purpose of each component are presented in the following table.
|
|
|
|
|
|
|
Compensation Component
|
|
Key Characteristics
|
|
Purpose
|
|
Where Reported in More Detail
|
Base Salary
|
|
Fixed compensation component. Reviewed annually, and adjusted, if and when appropriate.
|
|
Intended to compensate the
executive competitively with the
market based upon their job
duties and level of responsibility.
|
|
Summary Compensation Table
on
page
46
under Base Salary and
described on
page
37
.
|
Performance-Based Bonus
|
|
Variable compensation component. Opportunity based upon our performance measured by cash earnings. Individual awards based on bonus opportunities and individual performance.
|
|
Intended to motivate and reward
the executives contribution to
achieving our short-term/annual
goals.
|
|
Summary Compensation Table
under
Non-Equity
Incentive Plan
Compensation,
Grants of
Plan-
Based Awards
on
page
48
under
Estimated Future Payouts Under
Non-Equity
Incentive Plan
Awards and described on
page
37
.
|
Long-Term Incentives
|
|
Variable compensation component. Amounts actually realized will depend upon company financial/stock performance. Individual awards based on equity opportunities and individual
performance.
|
|
Intended to motivate and reward
the executives contribution to
achieving our long-term
objectives and increasing
shareholder value and to serve as
a retention
mechanism.
|
|
Summary Compensation Table
under Stock Awards,
Grants of
Plan-Based Awards
under the
columns referencing
equity
awards,
Option Exercises and
Stock
Vested
on
page
51
and
described on
page
39
.
|
Health and Welfare Plans and Retirement Plans
|
|
Fixed component of pay.
|
|
Intended to provide benefits that
promote employee health and
support employees in attaining
financial security.
|
|
Summary Compensation Table
under Change in Pension Value
and
Non-Qualified
Deferred
Compensation Earnings and All
Other Compensation,
Pension
Benefits
on
page
51
and
Non-Qualified
Deferred
Compensation
on
page
42
.
|
Post-Employment Compensation
|
|
Fixed compensation component.
|
|
Intended to provide a temporary
income source following
termination (other than for cause)
including in the case of a
change-in-control
to ensure
continuity of management during
that event.
|
|
Potential Payments to Named
Executive Officers
on
page
53
and
described on
page
43
.
|
We do not maintain formal targets for the allocation of total compensation through each of the foregoing elements. We believe that members
of our senior management who have more direct responsibility for the performance of CME Group should have a greater percentage of their compensation tied to the performance of CME Group. In accordance with this philosophy:
|
|
|
Base salary should decrease as a percentage of overall compensation as employees gain more responsibility with more direct influence over our performance.
|
|
|
|
Employees in positions that most directly influence performance should have a larger percentage of their compensation tied to CME Groups performance through equity awards with a portion of the equity awards tied
to corporate performance goals.
|
|
|
|
Actual awards of incentive compensation should be closely aligned with the performance of CME Group.
|
|
|
|
|
|
36
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
The following are the approximate average percentages the elements represent out of the total compensation for our named
executive officers for 2017 as set forth in the
Summary Compensation Table:
|
|
|
|
|
|
|
Base Salary
|
|
Annual Cash Bonus
(1)
|
|
Annual Equity
(2)
|
|
Other
Compensation
(3)
|
14%
|
|
22%
|
|
54%
|
|
10%
|
(1)
|
Annual cash bonus is composed of amounts listed in the
Summary Compensation Table
under
Non-Equity
Incentive Plan Compensation.
|
(2)
|
Annual equity value shown is composed of amounts listed in the
Summary Compensation Table
under Stock Awards.
|
(3)
|
Other compensation is composed of amounts listed in the
Summary Compensation Table
under Change in Pension Value and
Non-Qualified
Deferred Compensation
Earnings and All Other Compensation columns.
|
Description of each element of compensation
Base salary
We generally target base salary at the 50
th
percentile of the competitive market relative to each positions duties and level of responsibility. Each year the compensation committee reviews the base salaries of the senior management
group taking into consideration their total compensation. In general, the evaluation of base salaries involves a review of a variety of factors:
|
|
|
The nature and responsibility of the position.
|
|
|
|
The impact, contribution, expertise and experience of the individual.
|
|
|
|
Competitive market information regarding salaries to the extent available and relevant.
|
|
|
|
The importance of retaining the individual along with the competitiveness of the market for the individuals talent and services.
|
|
|
|
Recommendations of the Chairman and Chief Executive Officer (except in the case of his own compensation).
|
Mr. Pietrowicz received a base salary increase from $450,000 to $500,000 effective January 1, 2017, and from $500,000 to $550,000 effective January 1,
2018, to better align his compensation with market levels. Mr. Durkins salary was increased from $700,000 to $800,000 effective January 1, 2017, and from $800,000 to $900,000 effective January 1, 2018, in connection with his
responsibilities as President. Mr. Kometer received a salary increase effective January 1, 2017 from $425,000 to $450,000 to better align his compensation with market levels.
Bonus
Our annual bonus program is designed to provide incentives to the named
executive officers and other members of senior management to drive annual performance based on our strategic goals as approved by the board. In support of our
pay-for-performance
philosophy, the bonus plan is only funded when we achieve cash earnings at or above the threshold level. We use cash earnings as our funding metric
because we believe it provides a transparent view of CME Groups performance during the year. Cash earnings is also the metric used in our dividend policy, which provides that our dividend target for our regular quarterly dividends is set at
approximately 50% to 60% of the prior years cash earnings.
On an annual basis, the cash earnings target is approved by our compensation committee. The cash
earnings target is established to motivate our named executive officers toward operational excellence and superior financial performance and is designed to be challenging to meet, while remaining achievable with concentrated effort and focus. Annual
bonuses will only be paid to our senior management group to the extent we achieve cash earnings at or above the threshold level, which was set at 75% of the target performance goal for 2017. The annual bonus pool is subject to a cap when we achieve
cash earnings at the maximum level, which is set at 120% of the established target goal. It is anticipated that the achievement of the maximum level of cash earnings would be exceptional, requiring extraordinary effort on the part of our senior
management.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
37
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Our cash earnings are calculated using the following formula for the purpose of the annual bonus.
|
Cash Earnings Calculation for Annual Bonus
|
Net Income
+ Depreciation
+ Stock-Based
Compensation*
+ Amortization on Purchased Intangibles*
- Capital Expenditures
=
Cash Earnings
+/- Net Interest Expense*
= Bonus Incentive Plans Cash Earnings Target as approved by compensation committee
*Adjusted on an after tax basis
|
The following shows our cash earnings goals and actual achievement for 2017 for purposes of our annual bonus program:
|
|
|
|
|
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
|
$1.236 billion
|
|
$1.648 billion
|
|
$1.977 billion
|
|
$1.754 billion
|
The compensation committee has discretion to make equitable adjustments to the cash earnings performance calculation to reflect effects of
external events outside the control of our senior management group, such as unforeseen litigation or changes in accounting or taxation standards. Such adjustments may also reflect effects of unusual or significant strategic events that are within
the control of our senior management that were not contemplated at the time the goal was established and that were undertaken with an expectation of improving our long-term financial performance, such as acquisitions or strategic relationships. In
2017, the committee approved adjustments for certain
non-performance
items, such as deferred tax and foreign exchange fluctuation impacts, consistent with prior practice.
2017 bonus awards
Annual bonus opportunities are based upon CME Groups
achievement of cash earnings and are awarded in consideration of the individuals performance during the year. The committee approved the bonuses for the named executive officers for 2017 based on our achievement of cash earnings and in
recognition of the previously discussed accomplishments set forth on
page
1
.
The table below shows the payout opportunities and actual bonus
payments for 2017 as well as a comparison to actual 2016 cash bonuses for the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Named Executive Officer Bonus Awards
|
|
Name
|
|
Bonus
Plan
Target as
% of
Salary
|
|
|
Bonus
Plan
Target
|
|
|
Bonus
Plan
Maximum
as%
of Salary
|
|
|
Bonus Plan
Maximum
|
|
|
2017
Annual
Bonus
as % of
Salary
|
|
|
2017
Annual
Bonus
(1)
|
|
|
2016
Annual
Bonus
|
|
|
Percentage
Change
(2)
|
|
Terrence A. Duffy
|
|
|
175
|
%
|
|
$
|
2,625,000
|
|
|
|
350
|
%
|
|
$
|
5,250,000
|
|
|
|
231
|
%
|
|
$
|
3,467,511
|
|
|
$
|
2,898,443
|
|
|
|
20
|
%
|
John W. Pietrowicz
|
|
|
100
|
%
|
|
|
500,000
|
|
|
|
200
|
%
|
|
|
1,000,000
|
|
|
|
132
|
%
|
|
|
659,208
|
|
|
|
581,179
|
|
|
|
13
|
|
Bryan T. Durkin
|
|
|
125
|
%
|
|
|
1,000,000
|
|
|
|
250
|
%
|
|
|
2,000,000
|
|
|
|
165
|
%
|
|
|
1,317,781
|
|
|
|
904,056
|
|
|
|
46
|
|
Sean P. Tully
|
|
|
100
|
%
|
|
|
450,000
|
|
|
|
200
|
%
|
|
|
900,000
|
|
|
|
132
|
%
|
|
|
594,431
|
|
|
|
579,192
|
|
|
|
3
|
|
Kevin D. Kometer
|
|
|
100
|
%
|
|
|
450,000
|
|
|
|
200
|
%
|
|
|
900,000
|
|
|
|
132
|
%
|
|
|
593,795
|
|
|
|
548,891
|
|
|
|
8
|
|
Kimberly S. Taylor
(3)
|
|
|
100
|
%
|
|
|
700,000
|
|
|
|
200
|
%
|
|
|
1,400,000
|
|
|
|
|
%
|
|
|
|
|
|
|
904,056
|
|
|
|
N/A
|
|
(1)
|
Under the terms of our bonus program, bonus awards are calculated utilizing base salary paid during the applicable plan year.
|
(2)
|
Messrs. Pietrowicz, Durkin and Kometer received base salary increases effective January 1, 2017 as discussed on
page
37
. Messrs. Duffy and Durkin received an increase to their annual bonus target
opportunity effective January 1, 2017 as discussed on
page 39
. No other named executive officers received increases to base salary or bonus target opportunities in 2017.
|
(3)
|
As a result of her retirement, Ms. Taylor did not receive a bonus payment with respect to 2017.
|
Our 2017 actual
annual cash earnings results were 106.4% of the target level performance. As such, bonuses for the named executive officers were approved by the committee at approximately 132% of their individual bonus target opportunities. The
|
|
|
|
|
38
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
bonuses for all named executive officers, other than Ms. Taylor, were delivered at the level determined by cash earnings performance, without any additional discretion applied by the
committee.
Effective in 2017, Mr. Duffys target bonus opportunity was increased to 175% of his base salary as a result of his revised employment
agreement. Mr. Durkins target bonus opportunity was increased to 125% of his base salary in connection with the increased responsibilities related to his role as President. The details of the revised employment agreement for
Mr. Duffy can be found beginning on
page
53
.
Equity
Long-term grants of equity are important to reflect an alignment with shareholder value creation and a competitive mix of long- and short-term incentives. Our equity
program is designed to reward and encourage the success and contributions of our employees, including our named executive officers, which leads to value creation for CME Group and our shareholders.
Since 2012, the annual equity awards for members of our senior management group have been delivered in the form of performance shares and time-vested restricted stock.
This mix of equity vehicles enables us to focus employees on stock performance, provides for employee retention and directly aligns employee interests with shareholder value creation.
Equity grant practices
The following is a summary of our equity grant
practices and the role of the committee in approving awards:
|
|
|
Our annual equity awards are granted on September 15
th
or in the event the 15
th
is not a business day, the
closest business day thereto.
|
|
|
|
At a meeting prior to the annual grant date, the committee approves the awards for the senior management group based upon the target equity opportunities and recommendations from the Chairman and Chief Executive Officer
using a
pre-set
calculation of a percentage of base salary and a recent closing price. Actual awards are granted based on the previously approved calculation and the closing price on the actual grant date. The
committee receives a report of the actual awards at a subsequent meeting.
|
|
|
|
The committee has delegated authority to the individual in the role of Chief Executive Officer to approve annual,
sign-on,
retention and initiative-based equity awards to
employees below our senior management group other than our chief accounting officer, within parameters set by the committee. The committee is provided with an annual report on awards granted under such delegated authority.
|
|
|
|
Our Omnibus Stock Plan and our Director Stock Plan prohibit the granting of options or stock appreciation rights below the market value on the date of grant, the repricing of existing awards, and payment of dividends on
performance-based shares prior to the achievement of performance goals. Dividends relating to outstanding shares of unvested time-based restricted stock are accrued and paid out at vesting.
|
The equity targets for our named executive officers were established based upon a review of the nature of the responsibility of the position of the executive within CME
Group, the competitive market data derived through our benchmarking practices and the ability of the employee to impact the overall growth and performance of CME Group based upon his or her role within the company. As discussed in more detail on
page
34
, we generally target total compensation in the 50
th
percentile of our peer group. Through competitive compensation analysis, we compare equity compensation on a standalone
basis as well as part of an executives overall total compensation.
The committee has the discretion to adjust the annual equity awards to distinguish for
individual performance. The annual equity awards for the named executive officers were made at the target levels for 2017 and were comprised of 50% performance shares and 50% time-vested restricted stock.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
39
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
The table below shows the annual equity award opportunities for our named executive officers and actual awards made in
2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Named Executive Officer Equity Awards
|
|
Name
|
|
Annual
Equity Award
Target as
% of
Base Salary
|
|
|
Annual
Equity
Award Target
|
|
|
Actual
Annual
Equity Award
as % of
Target
|
|
|
Actual
Annual Equity
Award
(1)
|
|
Terrence A. Duffy
|
|
|
350%
|
|
|
$
|
5,250,000
|
|
|
|
100%
|
|
|
$
|
5,250,000
|
|
John W. Pietrowicz
|
|
|
300%
|
|
|
|
1,500,000
|
|
|
|
100%
|
|
|
|
1,500,000
|
|
Bryan T. Durkin
|
|
|
300%
|
|
|
|
2,400,000
|
|
|
|
100%
|
|
|
|
2,400,000
|
|
Sean P. Tully
|
|
|
300%
|
|
|
|
1,350,000
|
|
|
|
100%
|
|
|
|
1,350,000
|
|
Kevin D. Kometer
|
|
|
300%
|
|
|
|
1,350,000
|
|
|
|
100%
|
|
|
|
1,350,000
|
|
Kimberly S. Taylor
|
|
|
300%
|
|
|
|
2,100,000
|
|
|
|
100%
|
|
|
|
2,100,000
|
|
(1)
|
The valuation methods used for award determination reflected above differ from those used in the
Summary Compensation Table
.
|
In connection with Mr. Duffys revised employment agreement related to his expanded role as Chairman and Chief Executive Officer, his equity award target
opportunity was increased to 350% of base salary effective for 2017. The details of Mr. Duffys employment agreement can be found beginning on
page
53
.
Performance shares tied to 2018-2020 performance
The September 2017
performance share award criteria were divided with 50% based on growth in net income margin relative to the diversified financial services index of the S&P 500 and 50% based on total shareholder return relative to the S&P 500, measured over
2018 through 2020. Following the three-year performance period, the award will be settled in unrestricted shares of stock, based upon achievement of the following performance metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Relative Net Income Margin
Growth Performance
% of Target Award Earned
|
|
|
|
Relative TSR Performance
% of Target Award
Earned
|
Below
25th Percentile
|
|
25th Percentile
|
|
50th Percentile
|
|
75th Percentile
|
|
|
|
Below 25th
Percentile
|
|
25th Percentile
|
|
50th Percentile
|
|
75th Percentile
|
0
|
|
50%
|
|
100%
|
|
200%
|
|
|
|
0
|
|
50%
|
|
100%
|
|
200%
|
The details of the performance share awards granted in September 2017 tied to 2018-2020 growth in net income margin relative to the
diversified financial services index of the S&P 500 and total shareholder return relative to the S&P 500 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Performance Shares Awarded in 2017
|
|
Name
|
|
Award Date
|
|
|
Performance Metric
|
|
Performance Share Payout
Opportunity (in Shares)
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
Terrence A. Duffy
|
|
|
9/15/2017
|
|
|
2018-2020 Net Income Margin Growth
|
|
|
4,999
|
|
|
|
9,997
|
|
|
|
19,994
|
|
|
|
|
9/15/2017
|
|
|
2018-2020 TSR
|
|
|
4,999
|
|
|
|
9,997
|
|
|
|
19,994
|
|
John W. Pietrowicz
|
|
|
9/15/2017
|
|
|
2018-2020 Net Income Margin Growth
|
|
|
1,428
|
|
|
|
2,856
|
|
|
|
5,712
|
|
|
|
|
9/15/2017
|
|
|
2018-2020 TSR
|
|
|
1,428
|
|
|
|
2,856
|
|
|
|
5,712
|
|
Bryan T. Durkin
|
|
|
9/15/2017
|
|
|
2018-2020 Net Income Margin Growth
|
|
|
2,285
|
|
|
|
4,570
|
|
|
|
9,140
|
|
|
|
|
9/15/2017
|
|
|
2018-2020 TSR
|
|
|
2,285
|
|
|
|
4,570
|
|
|
|
9,140
|
|
Sean P. Tully
|
|
|
9/15/2017
|
|
|
2018-2020 Net Income Margin Growth
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
|
|
|
9/15/2017
|
|
|
2018-2020 TSR
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
Kevin D. Kometer
|
|
|
9/15/2017
|
|
|
2018-2020 Net Income Margin Growth
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
|
|
|
9/15/2017
|
|
|
2018-2020 TSR
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
Kimberly S. Taylor
|
|
|
9/15/2017
|
|
|
2018-2020 Net Income Margin Growth
|
|
|
2,000
|
|
|
|
3,999
|
|
|
|
7,998
|
|
|
|
|
9/15/2017
|
|
|
2018-2020 TSR
|
|
|
2,000
|
|
|
|
3,999
|
|
|
|
7,998
|
|
|
|
|
|
|
40
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Performance shares tied to 2015-2017 performance
Certain members of our senior management group received performance share awards in September 2014 and March 2015 for the performance period 2015 through 2017, with 50%
based on growth in net income margin relative to the diversified financial services index of the S&P 500 and 50% based on total shareholder return relative to the S&P 500. The company achieved
67
th
percentile growth in net income margin relative to the diversified financial services index of the S&P 500 for the performance period, exceeding the target goal of 50
th
percentile. The company achieved 93
rd
percentile total shareholder return relative to the S&P 500 for the performance period, exceeding the
target goal of 50
th
percentile and the maximum goal of 75
th
percentile. Performance on both of these metrics resulted in an above-target payout
of 183.3% of the total target performance shares being earned.
The following table shows total payout opportunities of the previously granted annual performance
shares tied to 2015 through 2017 performance based on the range of performance against the established metrics, and actual shares earned when performance was certified by the committee in early 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual Performance Shares Tied to 2015-2017 Performance
|
|
|
|
|
|
|
|
|
Performance Share Payout
Opportunity (in Shares)
|
|
|
Actual Shares
Earned
|
|
Name
|
|
Award Date
|
|
|
Performance Metric
(1)
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Terrence A. Duffy
|
|
|
9/15/2014
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
3,915
|
|
|
|
7,830
|
|
|
|
15,660
|
|
|
|
13,050
|
|
|
|
|
9/15/2014
|
|
|
2015-2017 TSR
|
|
|
3,915
|
|
|
|
7,830
|
|
|
|
15,660
|
|
|
|
15,660
|
|
John W. Pietrowicz
(2)
|
|
|
9/15/2014
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
840
|
|
|
|
1,680
|
|
|
|
3,360
|
|
|
|
2,800
|
|
|
|
|
9/15/2014
|
|
|
2015-2017 TSR
|
|
|
840
|
|
|
|
1,680
|
|
|
|
3,360
|
|
|
|
3,360
|
|
|
|
|
3/16/2015
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
341
|
|
|
|
681
|
|
|
|
1,362
|
|
|
|
1,135
|
|
|
|
|
3/16/2015
|
|
|
2015-2017 TSR
|
|
|
341
|
|
|
|
681
|
|
|
|
1,362
|
|
|
|
1,362
|
|
Bryan T. Durkin
|
|
|
9/15/2014
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
2,193
|
|
|
|
4,385
|
|
|
|
8,770
|
|
|
|
7,308
|
|
|
|
|
9/15/2014
|
|
|
2015-2017 TSR
|
|
|
2,193
|
|
|
|
4,385
|
|
|
|
8,770
|
|
|
|
8,770
|
|
Sean P. Tully
(2)
|
|
|
9/15/2014
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
685
|
|
|
|
1,370
|
|
|
|
2,740
|
|
|
|
2,283
|
|
|
|
|
9/15/2014
|
|
|
2015-2017 TSR
|
|
|
685
|
|
|
|
1,370
|
|
|
|
2,740
|
|
|
|
2,740
|
|
|
|
|
3/16/2015
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
328
|
|
|
|
656
|
|
|
|
1,312
|
|
|
|
1,093
|
|
|
|
|
3/16/2015
|
|
|
2015-2017 TSR
|
|
|
328
|
|
|
|
656
|
|
|
|
1,312
|
|
|
|
1,312
|
|
Kevin D. Kometer
|
|
|
9/15/2014
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
1,371
|
|
|
|
2,741
|
|
|
|
5,482
|
|
|
|
4,568
|
|
|
|
|
9/15/2014
|
|
|
2015-2017 TSR
|
|
|
1,371
|
|
|
|
2,741
|
|
|
|
5,482
|
|
|
|
5,482
|
|
Kimberly S. Taylor
|
|
|
9/15/2014
|
|
|
2015-2017 Net Income Margin Growth
|
|
|
2,193
|
|
|
|
4,385
|
|
|
|
8,770
|
|
|
|
7,308
|
|
|
|
|
9/15/2014
|
|
|
2015-2017 TSR
|
|
|
2,193
|
|
|
|
4,385
|
|
|
|
8,770
|
|
|
|
8,770
|
|
(1)
|
The committee certified performance results associated with the annual awards tied to 2015-2017 performance on March 12, 2018. Based on the committees certification, the
pre-established
goals were achieved above the target levels established for each metric, resulting in 183.3% of the target shares to be paid. These shares became vested on March 15, 2018.
|
(2)
|
Under our equity program, eligible employees, including members of our senior management group, typically receive annual equity awards in September of each year. Employees promoted to the senior management group after
the September awards are made are eligible for a prorated promotional award in March. Messrs. Pietrowicz and Tully received awards in March 2015 as a result of promotion.
|
Initiative-based equity awards
In addition to annual equity awards, certain
members of senior management may be eligible to receive initiative-based equity awards based upon their contributions to select key corporate initiatives. Participation in such awards is at the recommendation of the individual serving in the role of
Chief Executive Officer, subject to approval by the compensation committee. We did not grant any such initiative-based awards to our named executive officers in 2017.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
41
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
Performance-based grant of restricted stock
In lieu of participation in our initiative-based equity program, Mr. Duffy is eligible to receive an annual grant of time-vested restricted stock with a value of up
to 100% of his base salary based upon the achievement of outstanding performance as measured based on cash earnings and total shareholder return over the prior year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding Cash Earnings Performance Award
|
|
|
|
|
Outstanding TSR Performance Award
|
|
|
For each 0.1%
Above 120%
of Goal
|
|
At or Above
130% of
Goal
|
|
|
|
|
|
|
For each 0.1%
Above 75th
Percentile
|
|
At or Above
85th
Percentile
|
Value of Performance Award as % of base salary
|
|
0.5%
|
|
50%
|
|
|
|
|
|
Value of Performance Award as % of base salary
|
|
0.5%
|
|
50%
|
For 2017, our actual cash earnings performance was 106.4% of the target goal and our total shareholder return performance was at the 75.2
percentile of the S&P 500. As a result of the outstanding performance on relative total shareholder return in 2017, the committee approved an award of time-vested restricted shares for
Mr. Duffy, which was granted on March 15, 2018 with a value of 1% of his base salary, and will vest over a four-year period, with 25% vesting one year after the grant date and 25% vesting on each anniversary date thereafter.
The following table shows the total payout opportunity of these performance-granted time-vested restricted stock awards based on the range of performance against the
established metrics, and the actual number of shares granted after performance results were certified by the committee in early 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 Performance-Based Grants of Restricted Stock
|
|
Name
|
|
Award Date
|
|
|
Performance Metric
|
|
Performance Share Payout
Opportunity (in Shares)
|
|
|
Actual Shares
Earned
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Terrence A. Duffy
(1)
|
|
|
N/A
|
|
|
2017 Cash Earnings
|
|
|
44
|
|
|
|
N/A
|
|
|
|
4,536
|
|
|
|
|
|
|
|
|
3/15/2018
|
|
|
2017 TSR
|
|
|
44
|
|
|
|
N/A
|
|
|
|
4,536
|
|
|
|
92
|
|
(1)
|
The compensation committee certified performance results associated with the 2017 cash earnings goal and the 2017 TSR performance relative to the S&P 500 goal on February 7, 2018 and approved the award to be
granted on March 15, 2018. Based on the committees certification, the
pre-established
goal associated with the TSR performance was achieved, and 2% of the maximum TSR payout opportunity was earned.
|
Performance-granted restricted shares were awarded to Mr. Duffy on March 15, 2017 associated with the 2016 achievement of total shareholder
return performance at the 85.4 percentile of the S&P 500. The committee certified the performance and approved the award of time-vested restricted shares on February 8, 2017. This award of 6,012 shares has a four-year vesting schedule, with
25% vesting one year after the grant date and 25% vesting on each anniversary thereafter.
Health and Welfare Plans and Retirement Plans
All eligible employees, including the named executive officers, participate in our benefit programs. We provide health and wellness benefits, including medical and dental
coverage, disability insurance benefits based on
two-thirds
of base salary and life insurance benefits based on three times base salary. In addition, employees are eligible to participate in our qualified
retirement plans, which consist of our 401(k) savings plan and our cash balance pension plan.
In addition to the qualified retirement plans, employees whose pay
exceeds the compensation limits for qualified benefit plans set by the Internal Revenue Service participate in a
non-qualified
deferred compensation plan which provides for make-whole
contributions. For more information on our deferred compensation plans, see
Non-Qualified
Deferred Compensation Plans
beginning on
page
52
.
Qualified and
non-qualified
retirement benefits provided to the named executive officers are set forth in the following tables:
Pension Benefits
and the
Non-Qualified
Deferred Compensation Plans
on
pages
51
and
52
,
respectively.
PERQUISITES AND OTHER PERSONAL BENEFITS
We
provide limited perquisites and other personal benefits to our senior management that we believe are moderate and consistent with our overall compensation program. We provide monthly parking benefits to a subset of our senior management
|
|
|
|
|
42
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
group, including Mr. Duffy and Ms. Taylor until her retirement from the company. Additionally, all of our senior level employees are entitled to an annual physical examination. The
aggregate value of all perquisites received by each named executive officer in 2017 did not exceed $10,000. To the extent that perquisites result in imputed income to the individual, we do not provide
gross-up
payments to cover the personal income tax due on such imputed income.
POST-EMPLOYMENT COMPENSATION
Our employment contracts contain reasonable provisions and ensure continuity of leadership
Our philosophy is to enter into employment contracts and retention agreements on a very selective basis in light of the particular facts and circumstances involved in the
individual employment relationship, such as whether the employment arrangement would be necessary to recruit and/or retain necessary talent with compensation terms that we believe are in accordance with our overall compensation program. Employment
agreements typically are for a period of three to five years, include
non-compete
and
non-solicitation
provisions, do not provide for cash severance payments in excess
of two times annual base salary, do not provide for
gross-up
payments (except in connection with certain self-insured supplemental life insurance payments that would be paid to Mr. Duffys
beneficiaries under his agreement) and include a requirement that the executive execute a release agreement before becoming entitled to receive severance payments. All contractual compensation terms within the employment agreements for our senior
management group are reviewed and approved by the compensation committee. We believe that our existing employment contract with Mr.Duffy contains compensation terms in line with our overall compensation program and philosophy. A description of the
agreement is set forth in the section entitled
Potential Payments Upon Termination or
Change-in-ControlEmployment
Agreements and other Compensation Arrangements
with Named Executive Officers
beginning on
page
53
.
We have reasonable
change-in-control
and other termination provisions
Change-in-control
provisions assist us with retention during rumored and actual change of
control activity when management continuity is key to preserving the value of the business. We also provide other severance benefits in connection with terminations other than for misconduct. We believe these benefits allow us to facilitate changes
with key employees, as needed, and to ensure minimal disruption to the business in exchange for
non-competition
and
non-solicitation
benefits for CME Group along with a
general release.
A description of our severance policies and practices and the estimated amounts that would be payable to our named executive officers under certain
circumstances are set forth under the section entitled
Potential
Payments Upon Termination or
Change-in-Control
beginning on
page
53
.
OTHER COMPENSATION POLICIES
We
have established stock ownership guidelines to ensure alignment of interests with our shareholders
The committee has established the following stock
ownership guidelines for the members of our senior management group:
|
|
|
The Chairman and Chief Executive Officer: shares with a value equal to at least a multiple of five times base salary.
|
|
|
|
Other named executive officers: shares with a value equal to at least a multiple of three times their respective base salary.
|
Each individual has five years from the date of hire or promotion to achieve their ownership guideline. As of the 2017 review, all of our named executive officers had
satisfied the guidelines.
The compensation committee monitors compliance with these stock ownership guidelines on an annual basis. Generally, shares that are deemed
owned for purposes of Section 16 of the SEC regulations are counted towards satisfaction of these guidelines. Shares are valued based upon the greater of (i) the fair market value at the time of the assessment and (ii) the
actual value at the time of acquisition or, in the case of restricted stock or performance shares, at the time of vesting.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
43
|
|
|
|
|
|
|
Compensation Discussion and Analysis
(Continued)
|
We prohibit derivative transactions and hedging of ownership risk of our securities and have adopted a
policy restricting the pledging of our Class A shares
To ensure alignment of interests between our employees and board members and our shareholders and
to further ensure that such individuals share in the risks and rewards of the ownership of our stock, we prohibit our employees and members of the board from engaging in any derivative or hedging transactions relative to their ownership of our
stock. The board also has adopted a policy prohibiting pledging of our Class A shares. In connection with the adoption of the policy, the board elected to grandfather in the existing pledging arrangements of certain directors based on the fact
that:
|
|
|
The aggregate number of shares pledged was significantly less than 0.1% of our outstanding Class A common stock.
|
|
|
|
The secured parties each had undertaken not to sell such pledged shares during any period in which the board members were restricted from trading under our compliance policies.
|
|
|
|
The board members agreed to own shares not subject to any pledging arrangement with a value that meets their applicable stock ownership guidelines.
|
|
|
|
The pledging arrangements were related to such individuals derivatives trading activities at CME Group.
|
Since the
approval of the policy, only one of the grandfathered arrangements remains in existence.
Our compensation committee and board annually review the
total compensation of our senior management
To ensure the committee members are informed of the potential compensation levels of our senior management group,
the committee reviews on an annual basis all components of their compensation package and total compensation. This review includes annual base salary, annual cash bonus, value of annual equity awards,
in-the-money
value of all historic equity grants including monetized gains, the value of retirement contributions under our qualified and
non-qualified
plans, and
potential
change-in-control
payments. The committee provides an annual report on the results of this review to the board during an executive session. For more
information on the operation of our compensation committee see
page
27
.
We have implemented a recoupment policy
In furtherance of our philosophy to ensure the interests of our senior management are aligned with those of our shareholders, effective as of 2010, the compensation
committee recommended and the board approved a recoupment policy. This policy provides the board with the discretion to recoup annual bonus payments to our employees at the level of managing director and above in the event of a financial
restatement, the effect of which is that such incentive payments were not otherwise earned by an individual under our bonus programs based upon the restated calculation of our cash earnings or any other performance metric in effect at the time. In
July 2015, the SEC proposed rules to implement the recoupment provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. We plan to amend our recoupment policy as necessary to comply with the final rules.
|
|
|
|
|
44
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Compensation Committee Report
|
The compensation committee reviewed and discussed the
Compensation Discussion and Analysis
with our management.
After such discussions, the committee recommended to the board of directors that the
Compensation Discussion and Analysis
be included in this proxy statement and incorporated by reference into our 2017 Annual Report on
Form 10-K.
The Compensation Committee2017
Larry G. Gerdes,
Chairman
Timothy S. Bitsberger
Ana Dutra
Martin J. Gepsman
Daniel R. Glickman
William R. Shepard
Howard J. Siegel
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|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
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45
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|
Executive Compensation
|
SUMMARY COMPENSATION TABLE
The following table provides information regarding the compensation earned during the year ended December 31, 2017 by our named executive officers. In 2017,
salary
accounted for approximately 14% of the total compensation of the named executive officers as a whole and
non-equity
incentive plan compensation
accounted for
approximately 22% of such total compensation.
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Name and Principal Position
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Year
|
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|
Salary ($)
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|
|
Stock
Awards
($)
(1)
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|
Non-Equity
Incentive
Plan
Compensation
($)
(2)
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|
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
($)
(3)
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|
|
All Other
Compensation
($)
(4)
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Total ($)
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|
Terrence A. Duffy
Chairman and
Chief Executive
Officer
(5)
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|
2017
|
|
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|
1,500,000
|
|
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|
6,714,284
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|
|
|
3,467,511
|
|
|
|
42,850
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|
|
|
418,210
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|
|
|
12,142,855
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2016
|
|
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|
1,500,000
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|
|
|
4,969,693
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|
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2,898,443
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36,555
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343,641
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9,748,332
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2015
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|
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|
1,250,000
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|
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|
2,580,113
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|
1,999,136
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25,465
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294,475
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6,149,189
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John W. Pietrowicz
Chief Financial Officer
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2017
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500,000
|
|
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|
1,704,004
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|
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|
659,208
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|
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|
50,652
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|
|
|
81,157
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|
|
|
2,995,021
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2016
|
|
|
|
450,000
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|
|
|
1,490,732
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|
581,179
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38,343
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|
88,608
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2,648,862
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2015
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|
450,000
|
|
|
|
1,233,922
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715,839
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18,443
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76,140
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2,494,344
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Bryan T. Durkin
President
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2017
|
|
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800,000
|
|
|
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2,726,645
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|
|
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1,317,781
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|
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97,322
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|
|
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151,323
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|
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5,093,071
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2016
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700,000
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|
2,319,131
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|
904,056
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96,904
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162,834
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4,182,925
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2015
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700,000
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|
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|
1,444,783
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1,119,517
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26,564
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150,270
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3,441,134
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Sean P. Tully
Global Head of Financial and
OTC
Products
(6)
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2017
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|
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450,000
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|
|
|
1,533,699
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594,431
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33,094
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75,450
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2,686,674
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2016
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450,000
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|
|
|
1,490,732
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|
|
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579,192
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|
|
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26,421
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74,654
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2,620,999
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Kevin D. Kometer
Chief Information Officer
(7)
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2017
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450,000
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|
|
1,533,699
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|
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593,795
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62,664
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|
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72,301
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2,712,459
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Kimberly S. Taylor
Former President Clearing &
Post-Trade Services
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2017
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700,000
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2,385,701
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|
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68,085
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|
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2,031,782
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5,185,568
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2016
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700,000
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|
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2,319,131
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904,056
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53,303
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165,776
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4,142,266
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2015
|
|
|
|
700,000
|
|
|
|
1,444,783
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|
|
|
1,119,517
|
|
|
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20,988
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140,715
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3,426,003
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|
(1)
|
The amounts reflected in the Stock Awards column reflect the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board ASC Topic 718 without giving effect to estimated
forfeitures. See note 15 of the notes to consolidated financial statements of CME Group Inc. and subsidiaries for more details on the assumptions made in the valuation of stock awards. The fair value of the restricted stock grants was calculated
using the closing price on March 15, 2017 of $124.74 and September 15, 2017 of $131.29. The fair value of performance shares based on TSR relative to the S&P 500 was calculated using a value of $188.01 for December 31, 2017, which
was derived from a Monte-Carlo simulation. The fair value of performance shares based on growth in net income margin relative to the diversified financial services index within the S&P 500 was calculated using the closing price on
December 29, 2017 of $146.05. This column includes the following aggregate amounts with respect to performance share awards granted to our named executive officers in 2017 based on achievement of target performance levels: Mr. Duffy:
$3,339,598; Mr. Pietrowicz: $954,075; Mr. Durkin: $1,526,654; Mr. Tully: $858,868; Mr. Kometer: $858,868, and Ms. Taylor: $1,335,906. Assuming the maximum performance levels were achieved with respect to performance share
awards, the aggregate value of performance share awards granted to our named executive officers in 2017 is as follows: Mr. Duffy: $4,799,660; Mr. Pietrowicz: $1,371,194; Mr. Durkin: $2,194,103; Mr. Tully: $1,234,363;
Mr. Kometer: $1,234,363, and Ms. Taylor: $1,919,960.
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(2)
|
The amounts included in the
Non-Equity
Incentive Plan Compensation column reflect awards to the named executive officers under our bonus plans, which are discussed on
page
37
under the Bonus heading. No other bonuses were paid.
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(3)
|
The amounts reflected in the Change in Pension Value and
Non-Qualified
Deferred Compensation Earnings column reflect only the change in the pension value during the
particular year. Under our
non-qualified
deferred compensation plans, participants may invest in one or more market investments that are available from time to time. This is the only return that they receive
and, therefore, no above-market earnings are reflected in this table. For more information on our deferred compensation plans, see the section entitled
Non-Qualified
Deferred Compensation Plans
on
page
52
.
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46
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|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
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|
|
|
Executive Compensation
(Continued)
|
(4)
|
Amounts included in the All Other Compensation column for 2017 are as follows:
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401(k)
Company
Contribution
|
|
|
Supplemental
Plan
(8)
|
|
|
Other
(9)
|
|
|
Total
|
|
Terrence A. Duffy
|
|
$
|
7,950
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|
|
$
|
408,460
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|
|
$
|
1,800
|
|
|
$
|
418,210
|
|
John W. Pietrowicz
|
|
|
8,013
|
|
|
|
71,794
|
|
|
|
1,350
|
|
|
|
81,157
|
|
Bryan T. Durkin
|
|
|
4,558
|
|
|
|
144,965
|
|
|
|
1,800
|
|
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151,323
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|
Sean P. Tully
|
|
|
8,100
|
|
|
|
66,135
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|
|
|
1,215
|
|
|
|
75,450
|
|
Kevin D. Kometer
|
|
|
7,375
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|
|
|
63,711
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|
|
|
1,215
|
|
|
|
72,301
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|
Kimberly S. Taylor
|
|
|
7,938
|
|
|
|
132,965
|
|
|
|
1,890,879
|
|
|
|
2,031,782
|
|
(5)
|
As discussed under the section entitled
Potential Payments upon Termination or
Change-in-ControlEmployment
Agreements and other
Compensation Arrangements with Named Executive Officers
on
page
53
, we have agreed to self-insure supplemental life and long-term disability coverage for Mr. Duffy and to gross up his beneficiaries for any additional taxes
incurred as a result of the supplemental life coverage. Because no actual payments were made or liabilities incurred as a result of this coverage, no amounts have been included in Mr. Duffys compensation in respect of such coverage.
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(6)
|
Mr. Tully was not a named executive officer prior to 2016.
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(7)
|
Mr. Kometer was not a named executive officer prior to 2017.
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(8)
|
The items included in the Supplemental Plan column are 401(k) make-whole and pension make-whole contributions. Make-whole contributions are company contributions for individuals whose compensation has
exceeded the statutory compensation limit identified in Section 401(a)(17) of the Code and thus must be excluded from consideration in qualified retirement plans.
|
(9)
|
The items included in the Other column include life insurance premiums paid by us for the benefit of the named executive officer and payments made to Ms. Taylor in connection with her retirement.
Ms. Taylor was paid the following termination-related payments: $100,000 upon signing of the retirement agreement, $1,750,000 severance payment pursuant to her retirement agreement and $39,079 for an accrued and unused vacation balance in
accordance with company policy. The terms of Ms. Taylors retirement agreement are discussed in detail under
Taylor Retirement Agreement
on
page
54
.
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|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
47
|
|
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|
|
|
|
Executive Compensation
(Continued)
|
GRANTS OF PLAN-BASED AWARDS
The following table shows the possible payouts to our named executive officers in 2017 for awards made under the Amended and Restated CME Group Incentive Plan for Named
Executive Officers (Messrs. Duffy, Durkin, Tully, Kometer and Ms. Taylor) and our bonus plan for other employees (Mr. Pietrowicz) and the equity awards granted under our Omnibus Stock Plan in 2017. For additional information on our equity
and bonus programs, see the section of this proxy statement entitled
Compensation Discussion and Analysis
.
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|
Name
|
|
Type of
Award
(1)
|
|
Grant
Date
|
|
Approval
Date
|
|
Estimated Future Payouts Under
Non-Equity
Incentive Plan Awards
(2)
|
|
|
Estimated Future Payouts
Equity Incentive Plan Awards
(3)
|
|
|
All Other
Stock Awards:
Number of
Shares of
Stock
|
|
|
Grant Date
Fair Value of
Stock
Awards
|
|
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
|
Terrence A. Duffy
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
$
|
984,375
|
|
|
$
|
2,625,000
|
|
|
$
|
5,250,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RS
|
|
3/15/17
|
|
2/8/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,012
|
|
|
$
|
749,937
|
|
|
|
PS-TSR
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,999
|
|
|
|
9,997
|
|
|
|
19,994
|
|
|
|
|
|
|
|
1,879,536
|
|
|
|
PS-NI
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,999
|
|
|
|
9,997
|
|
|
|
19,994
|
|
|
|
|
|
|
|
1,460,062
|
|
|
|
RS
|
|
9/15/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,992
|
|
|
|
2,624,750
|
|
John W. Pietrowicz
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
187,500
|
|
|
|
500,000
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,428
|
|
|
|
2,856
|
|
|
|
5,712
|
|
|
|
|
|
|
|
536,957
|
|
|
|
PS-NI
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,428
|
|
|
|
2,856
|
|
|
|
5,712
|
|
|
|
|
|
|
|
417,119
|
|
|
|
RS
|
|
9/15/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,712
|
|
|
|
749,928
|
|
Bryan T. Durkin
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
375,000
|
|
|
|
1,000,000
|
|
|
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,285
|
|
|
|
4,570
|
|
|
|
9,140
|
|
|
|
|
|
|
|
859,206
|
|
|
|
PS-NI
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,285
|
|
|
|
4,570
|
|
|
|
9,140
|
|
|
|
|
|
|
|
667,449
|
|
|
|
RS
|
|
9/15/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,140
|
|
|
|
1,199,991
|
|
Sean P. Tully
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
168,750
|
|
|
|
450,000
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
|
|
|
|
|
|
483,374
|
|
|
|
PS-NI
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
|
|
|
|
|
|
375,495
|
|
|
|
RS
|
|
9/15/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,140
|
|
|
|
674,831
|
|
Kevin D. Kometer
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
168,750
|
|
|
|
450,000
|
|
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
|
|
|
|
|
|
483,374
|
|
|
|
PS-NI
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,286
|
|
|
|
2,571
|
|
|
|
5,142
|
|
|
|
|
|
|
|
375,495
|
|
|
|
RS
|
|
9/15/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,140
|
|
|
|
674,831
|
|
Kimberly S. Taylor
|
|
Bonus
|
|
n/a
|
|
n/a
|
|
|
262,500
|
|
|
|
700,000
|
|
|
|
1,400,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PS-TSR
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
3,999
|
|
|
|
7,998
|
|
|
|
|
|
|
|
751,852
|
|
|
|
PS-NI
|
|
12/31/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000
|
|
|
|
3,999
|
|
|
|
7,998
|
|
|
|
|
|
|
|
584,054
|
|
|
|
RS
|
|
9/15/17
|
|
9/6/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,996
|
|
|
|
1,049,795
|
|
(1)
|
Bonus refers to 2017 annual bonus opportunity,
PS-TSR
refers to performance shares tied to total shareholder return relative to the S&P 500,
PS-NI
refers to performance shares tied to growth in net income margin relative to the diversified financial services index within the S&P 500 and RS refers to time-vested restricted
stock awards. Performance shares are granted at the target level and adjusted based on actual performance.
|
(2)
|
The amounts shown in the Threshold, Target and Maximum columns reflect the bonus opportunity for our named executive officers based upon their annual bonus target as discussed on
page
38
under the 2017 bonus awards heading and are dependent upon the level of cash earnings achieved.
|
(3)
|
Under our equity program, eligible employees, including members of our senior management group, typically receive annual equity awards in September of each year. Employees promoted to the senior management group after
the September awards are made are eligible for a prorated promotional award in March. On September 6, 2017, our compensation committee met and approved our annual equity awards for our executive officers based on our
pre-established
formulas under our equity program as described on
page
39
. These awards of performance shares and time-vested restricted stock were made on September 15, 2017. The amounts in the
Threshold, Target and Maximum columns reflect the performance share opportunity awarded in 2017 tied to total shareholder return relative to the S&P 500 during 2018-2020, and growth in net income margin
relative to the diversified financial services index within the S&P 500 during 2018-2020.
|
|
|
|
|
|
48
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Executive Compensation
(Continued)
|
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The following table summarizes the number of securities underlying outstanding plan awards as of December 31, 2017 for each named executive officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares
of Stock
That Have Not
Vested
(1)
|
|
|
Market
Value of
Shares of
Stock That
Have Not
Vested
(2)
|
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or Other
Rights
That
have
Not Vested
(1)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units
or Other
Rights
That Have
Not Vested
(2)
|
|
Terrence A. Duffy
|
|
|
12/31/2017
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
9,998
|
(3)
|
|
$
|
1,460,208
|
|
|
|
|
9/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,992
|
|
|
|
2,919,832
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,012
|
|
|
|
878,053
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,296
|
(4)
|
|
|
1,503,731
|
|
|
|
|
9/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,441
|
|
|
|
2,255,158
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,562
|
(5)
|
|
|
958,380
|
|
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,710
|
(6)
|
|
|
4,193,096
|
|
John W. Pietrowicz
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,856
|
(3)
|
|
|
417,119
|
|
|
|
|
9/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,712
|
|
|
|
834,238
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,088
|
(4)
|
|
|
451,002
|
|
|
|
|
9/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,632
|
|
|
|
676,504
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,362
|
(5)
|
|
|
344,970
|
|
|
|
|
9/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,362
|
|
|
|
344,970
|
|
|
|
|
|
|
|
|
|
|
|
|
3/16/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
682
|
|
|
|
99,606
|
|
|
|
2,497
|
(7)
|
|
|
364,687
|
|
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,160
|
(6)
|
|
|
899,668
|
|
|
|
|
9/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
840
|
|
|
|
122,682
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2011
|
|
|
|
5,000
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2010
|
|
|
|
12,060
|
|
|
|
54.30
|
|
|
|
9/15/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2010
|
|
|
|
1,740
|
|
|
|
62.83
|
|
|
|
3/15/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2009
|
|
|
|
4,160
|
|
|
|
56.87
|
|
|
|
9/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryan T. Durkin
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,570
|
(3)
|
|
|
667,449
|
|
|
|
|
9/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,140
|
|
|
|
1,334,897
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,804
|
(4)
|
|
|
701,624
|
|
|
|
|
9/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,206
|
|
|
|
1,052,436
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,676
|
(5)
|
|
|
536,880
|
|
|
|
|
9/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,674
|
|
|
|
536,588
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,078
|
(6)
|
|
|
2,348,192
|
|
|
|
|
9/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,192
|
|
|
|
320,142
|
|
|
|
|
|
|
|
|
|
Sean P. Tully
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,572
|
(3)
|
|
|
375,641
|
|
|
|
|
9/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,140
|
|
|
|
750,697
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,088
|
(4)
|
|
|
451,002
|
|
|
|
|
9/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,632
|
|
|
|
676,504
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,838
|
(5)
|
|
|
268,440
|
|
|
|
|
9/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,838
|
|
|
|
268,440
|
|
|
|
|
|
|
|
|
|
|
|
|
3/16/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
656
|
|
|
|
95,809
|
|
|
|
2,405
|
(7)
|
|
|
351,250
|
|
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,023
|
(6)
|
|
|
733,609
|
|
|
|
|
9/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
685
|
|
|
|
100,044
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2011
|
|
|
|
4,120
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
49
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(1)
|
|
|
Option
Exercise
Price
|
|
|
Option
Expiration
Date
|
|
|
Number of
Shares
of Stock
That Have Not
Vested
(1)
|
|
|
Market
Value of
Shares of
Stock That
Have
Not
Vested
(2)
|
|
|
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or Other
Rights
That
have
Not Vested
(1)
|
|
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or Other
Rights
That Have
Not Vested
(2)
|
|
Kevin D. Kometer
|
|
|
12/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,572
|
(3)
|
|
|
375,641
|
|
|
|
|
9/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,140
|
|
|
|
750,697
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,918
|
(4)
|
|
|
426,174
|
|
|
|
|
9/15/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,374
|
|
|
|
638,823
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,232
|
(5)
|
|
|
325,984
|
|
|
|
|
9/15/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,232
|
|
|
|
325,984
|
|
|
|
|
|
|
|
|
|
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,050
|
(6)
|
|
|
1,467,803
|
|
|
|
|
9/15/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,370
|
|
|
|
200,089
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2011
|
|
|
|
5,720
|
|
|
|
54.37
|
|
|
|
9/15/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2010
|
|
|
|
10,420
|
|
|
|
54.30
|
|
|
|
9/15/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2009
|
|
|
|
7,180
|
|
|
|
56.87
|
|
|
|
9/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/15/2008
|
|
|
|
3,825
|
|
|
|
67.36
|
|
|
|
9/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6/16/2008
|
|
|
|
5,100
|
|
|
|
83.88
|
|
|
|
6/16/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly S. Taylor
(8)
|
|
|
12/31/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,676
|
(5)
|
|
|
536,880
|
|
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,078
|
(6)
|
|
|
2,348,192
|
|
(1)
|
Subject to acceleration or termination in certain circumstances, stock option and restricted stock awards generally vest over a four-year period, with 25% vesting one year after the grant date with an additional 25%
vesting on each anniversary date thereafter. Performance awards and special awards may have differing vesting schedules specific to the award purpose.
|
(2)
|
Market value was determined using the closing price on December 29, 2017 of $146.05.
|
(3)
|
Reflects performance shares awarded in September 2017 tied to TSR relative to the S&P 500 during 2018-2020, and growth in net income margin relative to the diversified financial services index within the S&P 500
during 2018-2020, which will vest in full, if earned, following the completion of the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
(4)
|
Reflects performance shares awarded in September 2016 tied to TSR relative to the S&P 500 during 2017-2019, and growth in net income margin relative to the diversified financial services index within the S&P 500
during 2017-2019, which will vest in full, if earned, following the completion of the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
(5)
|
Reflects performance shares awarded in September 2015 tied to TSR relative to the S&P 500 during 2016-2018, and growth in net income margin relative to the diversified financial services index within the S&P 500
during 2016-2018, which will vest in full, if earned, following the completion of the three-year performance period; payout value shown assumes achievement of the threshold performance level.
|
(6)
|
Reflects performance shares awarded in September 2014 tied to TSR relative to the S&P 500 during 2015-2017, and growth in net income margin relative to the diversified financial services index within the S&P 500
during 2015-2017. Payout value shown reflects actual performance results whereby 200% of target TSR shares and 166.67% of target growth in net income margin shares were earned. These performance shares vested in March 2018.
|
(7)
|
Reflects performance shares awarded in March 2015 tied to TSR relative to the S&P 500 during 2015-2017, and growth in net income margin relative to the diversified financial services index within the S&P 500
during 2015-2017. Payout value shown reflects actual performance results whereby 200% of target TSR shares and 166.67% of target growth in net income margin shares were earned. These performance shares vested in March 2018.
|
(8)
|
The outstanding awards included in the table above for Ms. Taylor consist of unvested performance share awards as of December 31, 2017. Pursuant to the terms of Ms. Taylors retirement agreement, her
outstanding performance share awards that would have otherwise vested if she had remained with the company through the
18-month
period immediately following her retirement date remain eligible to vest and will
vest or be forfeited based on actual performance results. Also, pursuant to the terms of her agreement, unvested restricted shares that would have otherwise vested during such
18-month
period were to become
vested at December 31, 2017 upon Ms. Taylors execution of a release of claims in favor of the company and are included in the
Option Exercises
and Stock Vested Table
. The terms of Ms. Taylors agreements are
discussed in more detail under
Potential Payments upon Termination or
Change-in-Control
Employment Agreements and other Compensation Arrangements with
Named Executive Officers
on
page
53
and
Taylor Retirement Agreement
on
page
54
.
|
|
|
|
|
|
50
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Executive Compensation
(Continued)
|
OPTION EXERCISES AND STOCK VESTED
The following table summarizes stock option exercises by our named executive officers and the vesting of their stock awards in 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on Exercise
|
|
|
Value Realized
on Exercise
|
|
|
Number of Shares
Acquired on Vesting
|
|
|
Value Realized
on Vesting
|
|
Terrence A. Duffy
|
|
|
|
|
|
$
|
|
|
|
|
59,202
|
(1)
|
|
$
|
7,735,735
|
|
John W. Pietrowicz
|
|
|
5,175
|
|
|
|
291,974
|
|
|
|
10,768
|
|
|
|
1,371,542
|
|
Bryan T. Durkin
|
|
|
9,200
|
|
|
|
138,368
|
|
|
|
22,901
|
|
|
|
2,910,780
|
|
Sean P. Tully
|
|
|
|
|
|
|
|
|
|
|
6,066
|
|
|
|
781,917
|
|
Kevin D. Kometer
|
|
|
4,125
|
|
|
|
57,131
|
|
|
|
11,297
|
|
|
|
1,440,372
|
|
Kimberly S. Taylor
|
|
|
54,025
|
|
|
|
4,271,357
|
|
|
|
31,331
|
(2)
|
|
|
4,141,982
|
|
(1)
|
Includes 11,514 restricted shares that became vested on December 31, 2017 pursuant to the terms of Mr. Duffys employment agreement, discussed in more detail on
page
53
.
|
(2)
|
Includes 8,430 restricted shares that became vested on December 31, 2017 pursuant to the terms of Ms. Taylors retirement agreement, subject to a release of claims in favor of the company. The value of
these shares was determined using the closing stock price on December 29, 2017 of $146.05. The terms of Ms. Taylors agreement are discussed in more detail under
Taylor Retirement Agreement
on
page
54
.
|
PENSION BENEFITS
We maintain
a
non-contributory
defined benefit cash balance pension plan for eligible employees. To be eligible, an employee must have completed a continuous
12-month
period of
employment with us and have reached the age of 21. Our funding goal is to have the pension plan 100% funded on a projected benefit obligation basis, while also satisfying any minimum required contributions and maximizing tax deductible contribution
requirements.
Participants are fully vested in their accounts after three years of service. Once an employee becomes a participant in the pension plan, their
notional pension account is credited with an amount equal to an
age-based
percentage of that individuals earnings plus the greater of 4% interest or the December yield on
one-year
constant maturity yield for U.S. Treasury notes. During 2017, the pension plan interest rate was 4%. The pension account is portable and vested balances may be paid out in a lump sum when participants
end their employment with us. Alternatively, upon retirement, a participant may elect to receive the balance in the account in the form of one of various monthly annuities.
The following is the schedule of employer contributions based on age and percentage of pensionable pay (including base salary, regular annual bonuses and merit lump sum
payments) under our pension plan. Pensionable pay is limited by the Code, which imposed a limit of $270,000 in 2017:
|
|
|
|
|
Age
|
|
Employer Contribution Percentage
|
|
Under 30
|
|
|
3
|
%
|
3034
|
|
|
4
|
|
3539
|
|
|
5
|
|
4044
|
|
|
6
|
|
4549
|
|
|
7
|
|
5054
|
|
|
8
|
|
55 or greater
|
|
|
9
|
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
51
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
The following table below sets forth the estimated payments under our pension plan for our named executive officers upon
retirement based upon the present value of the benefits expected to be paid in the future.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of Years
Credited Service
|
|
|
Present Value of
Accumulated Benefit
(1)
|
|
|
Payments During
Last Fiscal Year
|
|
Terrence A. Duffy
|
|
|
10
|
|
|
$
|
267,948
|
|
|
$
|
|
|
John W. Pietrowicz
|
|
|
13
|
|
|
|
296,119
|
|
|
|
|
|
Bryan T. Durkin
|
|
|
35
|
(2)
|
|
|
837,165
|
|
|
|
|
|
Sean P. Tully
|
|
|
5
|
|
|
|
123,944
|
|
|
|
|
|
Kevin D. Kometer
|
|
|
20
|
|
|
|
409,546
|
|
|
|
|
|
Kimberly S. Taylor
|
|
|
28
|
|
|
|
514,855
|
|
|
|
|
|
(1)
|
In calculating the present value of the accumulated benefit, the following assumptions were used: assumed retirement age of 65; discount rate of 3.7% as of December 31, 2017; and projected future investment
crediting rate assumption of 4% as of December 31, 2017. The normal retirement age as defined in our pension plan is 65 years of age with 5 years of service. Under the terms of our pension plan, years of service for purposes of the plan are
credited beginning on the first day of the calendar quarter on or after attaining one year of service with CME Group. Therefore, years of credited service under the plan are less than an employees actual period of service with CME Group.
|
(2)
|
Includes Mr. Durkins prior service with the CBOT and benefits previously accrued under the legacy CBOT pension plan.
|
NON-QUALIFIED
DEFERRED COMPENSATION PLANS
All of our senior level employees, including our named executive officers, are eligible to defer up to 50% of their annual base salary and up to 100% of their bonus into
our Senior Management Supplemental Deferred Savings Plan. The contributions made by our named executive officers under this plan in 2017 are shown in the table below under Executive Contributions. Deferrals may be invested in one or more
market-based investments offered by the plan from time to time at the choice of the individual. The return on their investment choice is the only return they will receive on the contributions under the plan. We do not provide any guaranteed rate of
return. There is no limitation on their ability to change investments. Distributions will be on a fixed date, at termination or six months after termination depending upon the time of the distribution election and the requirements of applicable law.
The deferred savings plan also includes 401(k) make-whole and pension make-whole contributions. Make-whole contributions are company contributions for individuals
whose compensation has exceeded the statutory compensation limit identified in the Code and thus must be excluded from consideration in qualified retirement plans. These amounts are included in the table below under Registrant
Contributions. In addition to the Senior Management Supplemental Deferred Savings Plan, some named executive officers below may have a balance in the Supplemental Executive Retirement Plan, which is a legacy CME Group nonqualified plan that
was frozen on January 1, 2006. Though no further contributions were made to this plan since that time, there are still returns on investments within this plan that are included in the table below. The aggregate balance at year end in
the table below includes any balance the named executive officer may have in this plan as well as the Senior Management Supplemental Deferred Savings Plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Contributions in
Last Fiscal
Year
(1)
|
|
|
Registrant
Contributions in
Last Fiscal
Year
(2)
|
|
|
Aggregate
Earnings in
Last Fiscal
Year
(3)
|
|
|
Aggregate
Withdrawals/
Distributions
|
|
|
Aggregate
Balance at
12/31/17
|
|
Terrence A. Duffy
|
|
$
|
|
|
|
$
|
408,460
|
|
|
$
|
96,416
|
|
|
$
|
|
|
|
$
|
3,302,929
|
|
John W. Pietrowicz
|
|
|
220,151
|
|
|
|
71,794
|
|
|
|
264,805
|
|
|
|
103,551
|
|
|
|
1,733,630
|
|
Bryan T. Durkin
|
|
|
|
|
|
|
144,965
|
|
|
|
193,362
|
|
|
|
|
|
|
|
1,482,089
|
|
Sean P. Tully
|
|
|
|
|
|
|
66,135
|
|
|
|
36,643
|
|
|
|
|
|
|
|
281,378
|
|
Kevin D. Kometer
|
|
|
|
|
|
|
63,711
|
|
|
|
187,104
|
|
|
|
|
|
|
|
1,087,780
|
|
Kimberly S. Taylor
|
|
|
366,014
|
|
|
|
132,965
|
|
|
|
1,090,712
|
|
|
|
|
|
|
|
7,476,851
|
|
(1)
|
All amounts included under Executive Contributions are also included in the Salary or
Non-Equity
Incentive Plan Compensation columns of the
Summary Compensation Table
on
page
46
.
|
|
|
|
|
|
52
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Executive Compensation
(Continued)
|
(2)
|
The amounts included under the Registrant Contributions column consist of: 401(k) make-whole and pension make-whole contributions and are included in the All Other Compensation column of the
Summary Compensation Table.
|
(3)
|
Aggregate Earnings are based on the investment selection of the individuals from one or more market-based investments that the plan offers from time to time and are the only return on contributions made by
the named executive officer and CME Group. Aggregate Earnings represent amounts earned on contributions made in 2017 as well as prior contributions. Such earnings are not included in the
Summary Compensation Table
because they
were not above market.
|
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE-IN-CONTROL
In 2017, we had an employment agreement in place with Mr. Duffy. The contractual
commitments under this agreement are summarized in the following table. For our named executive officers other than Mr. Duffy, their employment relationships are governed by our policies and practices that we have in place for other employees
from time to time, including members of senior management. In addition, for the named executive officers other than Mr. Duffy, their post-employment benefits are governed by the Senior Management Severance Protection Agreements that were put in
place in 2016 and described on
page
55
.
In addition, as described on
page
54
, we entered into a retirement agreement with Ms. Taylor in 2017 governing her retirement from the company. Estimated termination
payments to our named executive officers under our employment and severance protection agreements and general policies are shown in the table beginning on
page
56
.
Employment Agreements and other Compensation Arrangements with Named Executive Officers
Duffy Employment Agreement
As discussed in the
Compensation
Discussion and Analysis
section
,
our philosophy is to enter into employment contracts or other agreements on a very selective basis in light of the particular facts and circumstances involved in the individual employment relationship. The
following is a summary of the key terms of our employment agreement with Mr. Duffy, which was most recently amended on December 7, 2016. The summary is qualified in its entirety by the complete text of the employment agreement which was
filed with the SEC on a Current Report on Form
8-K
on December 9, 2016.
Agreement Term:
December 31, 2020.
Minimum Base Salary:
$1,500,000 per year.
Annual Bonus and Equity Compensation:
Effective January 1, 2016, the annual target opportunity under our bonus incentive plan was increased to 150% of
base salary paid in the plan year. Effective January 1, 2016, for our equity incentive plan, the annual target grant date value opportunity was increased to 300% of base salary.
Effective January 1, 2017, the annual target opportunity under our bonus incentive plan was increased to 175% of base salary paid in the plan year. Effective
January 1, 2017, for our equity incentive plan, the annual target grant date value opportunity was increased to 350% of base salary.
Termination
Provisions:
In the event of a termination of employment by the company without cause, as defined in the agreement, in addition to his accrued benefits, the executive is entitled to a
one-time
lump sum severance payment equal to two times his then current base salary, subject to the executives timely execution and delivery of a general release. Additionally, upon such a termination all outstanding unvested time-vesting equity awards
that were granted after November 4, 2010 will automatically vest and in the case of stock options and stock appreciation rights will remain exercisable for a period of four years from the date of termination (but not beyond the maximum term of
the award). Also upon such a termination, all outstanding performance-based equity awards shall become vested or be forfeited solely based on actual performance measured over the full performance term.
In the event of executives death or disability, as defined in the agreement, all unvested time-vesting equity awards granted after November 4, 2010 will vest
and in the case of stock options and stock appreciation rights will remain exercisable for a period of four years from the date of the event (but not beyond the maximum term of the award) and all performance-based equity awards shall become vested
at the target level and become payable within 30 days following the date of death or termination for disability.
Change of Control:
In the event
of a change of control, as defined in the agreement, prior to termination of employment, all of the executives unvested time-vesting equity awards shall become vested and all of the executives performance-based equity awards shall become
vested or be forfeited solely based on actual performance measured over the full performance term (unless a more
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
53
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
favorable treatment is provided in the agreement evidencing the particular award or applies to the award pursuant to the operation of the applicable plan under which the award was granted, in
which case such more favorable treatment will apply). If executive is involuntarily terminated without cause within 60 days prior to a change of control, all of his unvested time-vesting equity awards that would have been outstanding had he been
employed on the date of the change of control will become vested and all performance-based equity awards shall become vested or be forfeited solely based on actual performance measured over the full performance term (unless a more favorable
treatment is provided in the agreement evidencing the particular award or applies to the award pursuant to the operation of the applicable plan under which the award was granted, in which case such more favorable treatment will apply).
Non-Compete
Provision:
The agreement also contains a provision prohibiting the executive during the term of
his employment, and for one year thereafter, from being employed in an executive or managerial capacity by, or providing, whether as an employee, partner, independent contractor, consultant or otherwise, any services of an executive or managerial
nature, or any services similar to those provided by him to the company, to a competing business.
Treatment of Equity at Expiration:
On
December 31, 2017, all outstanding unvested time-vesting equity awards granted to the executive after November 4, 2010 and before November 11, 2015 became vested and all of performance-based equity awards shall become vested or be
forfeited solely based on actual performance measured over the full performance term, in connection with the executives timely execution and delivery of a general release.
If employed by the company on December 31, 2020, all outstanding unvested time-vesting equity awards granted to the executive after November 11, 2015 will vest
and all of performance-based equity awards shall become vested or be forfeited solely based on actual performance measured over the full performance term, which vesting is subject to executives timely execution and delivery of a general
release.
Additional Benefits:
In the event of executives disability or following any termination of employment by him voluntarily or by the
company without cause, the executive will also be entitled to receive insurance and health benefits until the earlier to occur of (i) the fourth anniversary of the expiration or termination, as applicable, or (ii) the date the executive is
covered by comparable insurance and health benefits.
In the event that life insurance coverage results in taxable income to executives beneficiaries, CME Group
will provide a gross up.
Taylor Retirement Agreement
In
November 2017, we entered into a retirement agreement with Ms. Taylor, our former President Clearing and Post-Trade Services, governing her retirement from the company. Pursuant to the agreement, Ms. Taylor remained employed with the
company through December 31, 2017. She received her base salary though her retirement date, payment of any accrued and unused vacation, a payment of $100,000 upon the signing of the retirement agreement, and a severance payment of $1,750,000
following her departure. Ms. Taylors outstanding restricted stock grants that would have otherwise vested if she had remained with the company through the
18-month
period immediately following her
retirement date became vested and she will continue to vest in any performance-vesting awards during such
18-month
period based on actual performance results. In addition, during the
18-month
period following her retirement, the company will provide paid healthcare coverage. The severance payment, continued health care coverage and the vesting of Ms. Taylors equity awards were subject
to execution of a release of claims in favor of the company.
The description above is only a summary of the terms of the retirement agreement and is qualified in its
entirety by the complete text of the retirement agreement which was filed with the SEC on a Current Report on Form
8-K
on November 30, 2017.
|
|
|
|
|
54
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Executive Compensation
(Continued)
|
Severance Protection Agreements
In December 2016, the committee approved enhancements to the severance benefits offered to our named executive officers (other than Mr. Duffy who is party to the
agreement described above) to better align severance benefits with competitive levels, strengthening leadership continuity during organizational change. We entered into severance protection agreements with the named executive officers other than
Mr. Duffy which provide for the following benefits in the event of a termination without cause (as defined in the agreement) through December 31, 2018, subject to the executive executing a release of claims in favor of the company:
|
|
|
a lump sum severance payment equal to 150% of the executives annual base salary;
|
|
|
|
accelerated vesting of time-vesting restricted shares scheduled to vest during the
18-month
period following termination;
|
|
|
|
continued eligibility to vest in performance shares for which the performance period ends during the
18-month
period following termination (with vesting to be based on actual
performance results);
|
|
|
|
company payment of COBRA premiums for 18 months following termination; and,
|
|
|
|
six months of outplacement services.
|
The description above is only a summary of the terms of the severance protection
agreements and is qualified in its entirety by the complete text of the form agreement filed with the SEC on a Current Report on Form
8-K
on December 9, 2016.
Other CME Policies and Practices
The following is a summary of
our other plans in place that provide for benefits upon termination of employment and/or in the event of a change of control.
Annual Performance Bonuses.
In accordance with the terms of our bonus plans, in the event an employee dies or becomes disabled, he or she or his or her beneficiaries will be entitled to receive a pro rata bonus, subject to actual performance.
Equity Plans.
We make equity grants to our employees under the Omnibus Stock Plan. All of the outstanding awards for our named executive officers follow the
terms and conditions of the Omnibus Stock Plan. The terms of the employment agreement for Mr. Duffy governs his equity awards.
In the event of death, the
employees beneficiaries would vest in any outstanding equity awards, with outstanding performance shares vesting at the target level. In the event of termination due to disability, outstanding restricted stock awards become vested and
outstanding performance shares become vested at the target level. Awards automatically vest upon a change of control (as defined in the Omnibus Stock Plan), with performance shares vesting at the greater of actual performance at the time of the
change of control or the target level.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
55
|
|
|
|
|
|
|
Executive Compensation
(Continued)
|
POTENTIAL PAYMENTS TO NAMED EXECUTIVE OFFICERS
The following table sets forth the estimated benefits and payments upon termination of our named executive officers as of
year-end,
under various circumstances. These payments assume a termination or change of control effective upon December 31, 2017 in accordance with their contractual provisions in effect at such time.
Unless otherwise specified, payments and benefits that would be generally available to all employees, including accrued benefits, are not included in the amounts below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Due to:
|
|
|
|
Involuntary
for Cause
|
|
|
Voluntary
|
|
|
Voluntary for
Good Reason
|
|
|
Involuntary
Not for Cause
|
|
|
Change In
Control
|
|
|
Death
|
|
|
Disability
|
|
Terrence A. Duffy
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,000,000
|
|
|
$
|
3,000,000
|
|
|
$
|
3,000,000
|
|
|
$
|
|
|
|
$
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
|
|
|
|
|
|
|
|
18,090,191
|
|
|
|
18,090,191
|
|
|
|
18,090,191
|
|
|
|
18,090,191
|
|
|
|
18,090,191
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
|
|
|
|
149,365
|
|
|
|
149,365
|
|
|
|
149,365
|
|
|
|
149,365
|
|
|
|
|
|
|
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,467,511
|
|
|
|
3,467,511
|
|
Total:
|
|
$
|
|
|
|
$
|
149,365
|
|
|
$
|
21,239,556
|
|
|
$
|
21,239,556
|
|
|
$
|
21,239,556
|
|
|
$
|
21,557,702
|
|
|
$
|
21,557,702
|
|
John W. Pietrowicz
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
750,000
|
|
|
$
|
750,000
|
|
|
$
|
|
|
|
$
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,783,129
|
|
|
|
5,768,537
|
|
|
|
5,768,537
|
|
|
|
5,768,537
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
659,208
|
|
|
|
659,208
|
|
Total:
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,533,129
|
|
|
$
|
6,518,537
|
|
|
$
|
6,427,745
|
|
|
$
|
6,427,745
|
|
Bryan T. Durkin
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,200,000
|
|
|
$
|
1,200,000
|
|
|
$
|
|
|
|
$
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,694,631
|
|
|
|
9,403,867
|
|
|
|
9,403,867
|
|
|
|
9,403,867
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,655
|
|
|
|
34,655
|
|
|
|
|
|
|
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,317,781
|
|
|
|
1,317,781
|
|
Total:
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,929,286
|
|
|
$
|
10,638,522
|
|
|
$
|
10,721,648
|
|
|
$
|
10,721,648
|
|
Sean P. Tully
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
675,000
|
|
|
$
|
675,000
|
|
|
$
|
|
|
|
$
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,364,696
|
|
|
|
5,165,935
|
|
|
|
5,165,935
|
|
|
|
5,165,935
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,655
|
|
|
|
34,655
|
|
|
|
|
|
|
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
594,431
|
|
|
|
594,431
|
|
Total:
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,074,351
|
|
|
$
|
5,875,590
|
|
|
$
|
5,760,366
|
|
|
$
|
5,760,366
|
|
Kevin D. Kometer
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
675,000
|
|
|
$
|
675,000
|
|
|
$
|
|
|
|
$
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,883,173
|
|
|
|
5,638,114
|
|
|
|
5,638,114
|
|
|
|
5,638,114
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,413
|
|
|
|
31,413
|
|
|
|
|
|
|
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
593,795
|
|
|
|
593,795
|
|
Total:
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,589,586
|
|
|
$
|
6,344,527
|
|
|
$
|
6,231,909
|
|
|
$
|
6,231,909
|
|
Kimberly S. Taylor
(5)
|
|
|
|
|
Total Cash Severance
(1)
|
|
$
|
|
|
|
$
|
1,750,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Value of Equity Subject to Accelerated Vesting
(2)
|
|
|
|
|
|
|
4,652,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuation of Health & Welfare Benefits
(3)
|
|
|
|
|
|
|
11,126
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Accrued Pay and Benefits
(4)
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
|
|
|
$
|
6,513,987
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
(1)
|
Cash severance represents contractual amount for Mr. Duffy in accordance with his employment agreement. Cash severance for Mr. Pietrowicz, Mr. Durkin, Mr. Tully and Mr. Kometer is pursuant to
the terms of their severance protection agreements. Cash severance for Ms. Taylor reflects the payment she received pursuant to her retirement agreement.
|
(2)
|
Amounts shown for the Value of Equity Subject to Accelerated Vesting are based on the applicable stock plan, severance plan and contractual provisions in place and include accelerated vesting of outstanding
options, restricted stock and performance shares as applicable. For purposes of this analysis, for performance awards tied to performance periods ending on or before December 31, 2017, the actual number of shares earned was used in the
calculations for applicable scenarios; for outstanding performance awards tied to performance beyond 2017, the target number of shares was used in the calculations. The values were determined using the closing price on December 29, 2017 of
$146.05.
|
(3)
|
Amounts shown for the Continuation of Health and Welfare Benefits reflect our contractual agreements with named executive officers in effect during 2017. Mr. Pietrowicz does not participate in the
companys medical plans and therefore is not eligible for continued coverage through COBRA. Mr. Duffys continuing benefits do not reflect the additional amounts that CME Group may incur in connection with the self-insurance of
certain benefits as previously described because such amounts were granted for the purposes of providing Mr. Duffy with the disability insurance benefits based on
two-thirds
of base salary (subject to
plan maximums) and life insurance benefits based on three times base salary (subject to plan maximums) consistent with benefits provided to other employees on a broad basis.
|
|
|
|
|
|
56
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Executive Compensation
(Continued)
|
(4)
|
Amounts shown for the Other Accrued Pay and Benefits in event of death or disability include accrued bonus payments pursuant to our bonus plans based on actual bonus amounts for 2017. The amount shown for
the Other Accrued Pay and Benefits in the event of voluntary termination for Ms. Taylor reflects a payment she received pursuant to her retirement agreement.
|
(5)
|
Ms. Taylor retired from the company on December 31, 2017. Amounts received pursuant to her retirement agreement are included above and discussed in detail under
Taylor Retirement Agreement
on
page
54
.
|
CHIEF EXECUTIVE OFFICER PAY RATIO
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation
S-K,
for 2017:
|
|
|
the median of the annual total compensation of our employees (other than Mr. Duffy, who serves in the role of Chief Executive Officer) was $134,962;
|
|
|
|
the annual total compensation of Mr. Duffy, as reported in the
Summary Compensation Table
, was $12,142,855; and
|
|
|
|
as a result, the annual total compensation of Mr. Duffy is estimated to be 90 times that of the median of the annual total compensation of our employees (other than Mr. Duffy).
|
To complete this calculation, we selected a measurement date of December 31, 2017, our fiscal
year-end.
As of that date, our
global employee population consisted of approximately 2,900 staff, with 75% (2,184) of these employees working in the United States and the remaining 25% (722) working in our various
non-U.S.
locations
(Australia, Brazil, Canada, China, Hong Kong, India, Japan, Singapore, South Korea and the United Kingdom).
Under the de minimis exemption adjustment
permitted under the SEC rules, we excluded the following countries and employee counts from our median employee determination: Australia (1), Brazil (2), Canada (1), China (2), Hong Kong (15), Japan (3), Singapore (48) and South Korea (3). Our
employee population, after taking the de minimis exemption into account, consisted of approximately 2,830 individuals.
To identify the median
employee, we aggregated actual base salary earnings in 2017, overtime earnings paid in 2017 for employees eligible to earn overtime, bonus awards earned in 2017 and paid in March 2018 and the grant date value of any equity awards granted in
2017. The sum of these amounts served as our consistently applied compensation measure,
we used in identifying the median employee. We did not apply a cost of living adjustment to the data.
The total annual compensation for the median employee was determined using the
Summary Compensation Table
methodology, which included the change in
pension value for the median employee and 401(k) contributions made by the firm in 2017.
This pay ratio is a reasonable estimate calculated in a manner consistent
with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median employee and calculating the pay ratio based on that employees annual total compensation allow companies
to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio
reported above, as other companies may have differing employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
57
|
|
|
|
|
|
|
Director Compensation
|
Our directors play a critical role in guiding our strategic direction and overseeing management. Developments in
corporate governance and financial reporting have resulted in an increased demand for highly qualified directors. We provide compensation commensurate with our directors workload, risk and opportunity costs. In addition, to satisfy our
self-regulatory responsibilities, we have established a number of functional exchange committees of which certain of our directors are members. Our compensation program for our
non-executive
directors is
designed to compensate our directors based on their respective levels of board participation and responsibilities, including service on board committees and functional exchange committees. Our
non-executive
directors who served on the boards of certain of our regulated subsidiaries also received compensation for such service in 2017.
Similar to our philosophy on
management pay, we generally target the 50
th
percentile of the competitive market for compensation of the board of directors. We also review the range of values around the median, including the 25
th
and 75
th
percentiles. The primary components of our board member compensation package consist of an annual cash stipend, committee meeting fees,
an annual equity stipend, chairperson retainers for our
non-executive
chairs, additional meeting fees for certain committee chairs and a stipend for our independent Lead Director.
Non-executive
board members are eligible to participate in our Director Deferred Compensation Plan.
Our most recent review showed
that the median of our total compensation for our individual
non-executive
directors fell below the 50
th
percentile of our peer group. (See
page
35
for the companies within our peer group.) No changes to the boards compensation were recommended in connection with the review. The committee plans to conduct similar reviews in the future. The board last approved changes to its
overall compensation program in 2014.
The compensation of our board members is set forth in the table entitled
Director Compensation Table
on
page
59
.
FEES AND COMPENSATION PLANS FOR CME GROUP
NON-EXECUTIVE
DIRECTORS
The compensation committee is responsible for reviewing and recommending to the board the compensation for the
non-executive
directors of CME Group. Only
non-executive
directors receive compensation for their service as a director. Our
non-executive
director compensation includes:
|
|
|
|
|
Annual Stipends
|
|
|
|
Annual cash stipend
(1)
|
|
$
|
60,000
|
|
Annual retainer for
non-executive
directors serving as a committee chair
|
|
$
|
20,000
|
|
Annual equity stipend
(2)
|
|
$
|
100,000
|
|
Annual Lead Director stipend
|
|
$
|
25,000
|
|
Meeting Fees
|
|
|
|
Meeting fees for audit, clearing house oversight, compensation, executive, finance, governance, market regulation oversight, nominating and
risk
(3)
|
|
$
|
1,500
|
|
Additional meeting fee for
non-executive
directors serving as chair of the foregoing committees
|
|
$
|
500
|
|
Meeting fee for the strategic steering, clearing house risk, interest rate swap risk and credit default swap risk committees and for other
functional exchange committees
(3)
|
|
$
|
1,000
|
|
(1)
|
Directors have the option to elect to receive some or the entire portion of their annual cash stipend, which is paid
pro-rata
on a monthly basis, in shares of stock valued at the
closing price on the date of grant. If a director who elects to receive additional stock leaves the board prior to the next annual meeting, such director will be responsible for repaying us for the amount of the unearned stipend that otherwise would
have been paid in cash.
|
(2)
|
Shares received are granted under our Director Stock Plan and are not subject to any vesting restrictions.
|
(3)
|
The fee for telephonic participation in a regularly scheduled CME Group board committee meeting is 50% of that for
in-person
participation. However, it is within the discretion of
the particular committee chairman to determine if it is appropriate to pay the full meeting fee, taking into consideration the members ability to participate based upon the particular circumstances. It is within the discretion of a committee
to create a subcommittee to address a specific issue and to determine whether members of such subcommittee should receive fees up to the amount of the regular committee meeting fee for their participation in such subcommittee.
|
Non-executive
directors may participate in our Director Deferred Compensation Plan in the market investments that the plan offers
from time to time. The return on the investments selected by the directors is the only return they will receive on their deferred compensation. We do not provide any pension, health benefit or other benefit programs to our
non-executive
directors.
|
|
|
|
|
58
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Director Compensation
(Continued)
|
The following table provides information regarding the compensation earned during the year ended December 31, 2017
by each of our current directors, except for Mr. Duffy. The compensation for Mr. Duffy as a named executive officer is set forth in the
Summary Compensation Table
on
page
46
.
DIRECTOR COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Fees Earned or
Paid in Cash
(1)
|
|
|
Stock
Awards
(2)
|
|
|
All Other
Compensation
|
|
|
Total
|
|
Jeffrey M. Bernacchi
|
|
$
|
86,500
|
|
|
$
|
100,033
|
|
|
$
|
|
|
|
$
|
186,533
|
|
Timothy S. Bitsberger
|
|
|
101,667
|
|
|
|
100,033
|
|
|
|
|
|
|
|
201,700
|
|
Charles P. Carey
|
|
|
22,530
|
|
|
|
160,003
|
|
|
|
|
|
|
|
182,533
|
|
Dennis H. Chookaszian
|
|
|
125,500
|
|
|
|
100,033
|
|
|
|
|
|
|
|
225,533
|
|
Elizabeth A. Cook
|
|
|
47,530
|
|
|
|
160,003
|
|
|
|
|
|
|
|
207,533
|
|
Ana Dutra
|
|
|
44,530
|
|
|
|
160,003
|
|
|
|
|
|
|
|
204,533
|
|
Martin J. Gepsman
(3)
|
|
|
122,047
|
|
|
|
100,033
|
|
|
|
|
|
|
|
222,080
|
|
Larry G. Gerdes
|
|
|
81,696
|
|
|
|
160,003
|
|
|
|
|
|
|
|
241,699
|
|
Daniel R. Glickman
|
|
|
129,417
|
|
|
|
100,033
|
|
|
|
|
|
|
|
229,450
|
|
Gedon Hertshten
(4)
|
|
|
2,030
|
|
|
|
160,003
|
|
|
|
|
|
|
|
162,033
|
|
William W. Hobert
(5)
|
|
|
8,700
|
|
|
|
|
|
|
|
|
|
|
|
8,700
|
|
Leo Melamed
|
|
|
88,000
|
|
|
|
100,033
|
|
|
|
300,000
|
(6)
|
|
|
488,033
|
|
William P. Miller II
(5)
|
|
|
47,583
|
|
|
|
|
|
|
|
|
|
|
|
47,583
|
|
James E. Oliff
(3)(7)
|
|
|
41,500
|
|
|
|
|
|
|
|
|
|
|
|
41,500
|
|
Ronald A. Pankau
|
|
|
89,000
|
|
|
|
100,033
|
|
|
|
|
|
|
|
189,033
|
|
Alex J. Pollock
|
|
|
50,280
|
|
|
|
160,003
|
|
|
|
|
|
|
|
210,283
|
|
John F. Sandner
|
|
|
68,000
|
|
|
|
100,033
|
|
|
|
|
|
|
|
168,033
|
|
Terry L. Savage
|
|
|
94,500
|
|
|
|
100,033
|
|
|
|
|
|
|
|
194,533
|
|
William R. Shepard
|
|
|
74,530
|
|
|
|
160,003
|
|
|
|
|
|
|
|
234,533
|
|
Howard J. Siegel
|
|
|
73,530
|
|
|
|
160,003
|
|
|
|
|
|
|
|
233,533
|
|
Dennis A. Suskind
|
|
|
162,500
|
|
|
|
100,033
|
|
|
|
|
|
|
|
262,533
|
|
David J. Wescott
|
|
|
28,280
|
|
|
|
160,003
|
|
|
|
|
|
|
|
188,283
|
|
(1)
|
The amounts reflected in the Fees Earned or Paid in Cash consist of annual cash stipends, cash payments made due to share rounding of the stock award, committee meeting fees (board, functional and
subcommittee) and annual retainers for the committee chairs, including amounts deferred under our Director Deferred Compensation Plan. Board committee and functional committee meeting fees and fees for service on one of our subsidiary boards are
subject to an overall cap of $100,000 per year.
|
(2)
|
The amounts reflected in the Stock Awards column reflect the aggregate grant date fair value computed in accordance with the Financial Accounting Standards Board ASC Topic 718. See note 15 of the notes to
consolidated financial statements of CME Group Inc. and subsidiaries for more details on the assumptions made in the valuation of stock awards. The value of 2017 stock awards was calculated using the closing price on June 26, 2017 of $123.65.
The awards represent our annual grant to our
non-executive
board members, which are not subject to any vesting restrictions. Awards in excess of $100,033 are due to the directors election to receive
additional shares in lieu of all or a portion of his or her annual cash stipend. No other awards were made to our
non-executive
board members in 2017. See the table entitled
Directors, Director Nominees and
Executive Officers
on
page
61
for the complete stock ownership of our board members.
|
(3)
|
Includes fees earned for service on one of our subsidiary boards.
|
(4)
|
Mr. Gedon was elected to the board as of the 2017 annual shareholders meeting held on May 24, 2017.
|
(5)
|
Individuals term on the board of directors ended as of the 2017 annual shareholders meeting held on May 24, 2017.
|
(6)
|
Consists of consulting fees. Does not include amounts reimbursed by CME Group for Mr. Melameds expenses submitted in connection with his consulting arrangement described on
page
60
.
|
(7)
|
Mr. Oliff resigned from the board as of April 6, 2017.
|
DIRECTOR STOCK PLAN
Our Director Stock Plan provides for the issuance of up to 625,000 shares of Class A common stock (subject to adjustment in the event of a merger, reorganization or
similar corporate event involving us) through awards of
non-qualified
stock options, restricted stock and shares of common stock. The plan is administered by the compensation committee, which has the
responsibility for recommending to the board the annual equity stipend for our
non-executive
directors.
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
59
|
|
|
|
|
|
|
Director Compensation
(Continued)
|
STOCK OWNERSHIP GUIDELINES
Our
non-executive
board members are subject to stock ownership guidelines valued at two times the total annual retainer
(representing 5.3 times the cash portion of the retainer, or $320,000). Each member has five years from May 2008 or election to the board, whichever is later, to achieve this stock ownership guideline. As of the 2017 review, all of our board members
with five or more years of board service had satisfied the guideline.
CONTRACTUAL RELATIONSHIPS WITH CERTAIN DIRECTORS
Mr.
Melamed.
We have two written consulting agreements with Mr. Melamed. One applies during the time he serves on our
board and the other applies upon his retirement from the board on May 9, 2018 with a term through the end of his lifetime.
In accordance with the terms of the
written agreement in effect during his board service, Mr. Melamed will provide us with consulting services relating to the financial services industry and related matters within Mr. Melameds areas of expertise. For these services,
Mr. Melamed will receive $300,000 per annum plus all reasonable and necessary
out-of-pocket
travel and other expenses incurred in connection with the consulting
services and up to $190,000 annually for
non-travel
expenses, including office and secretarial expenses. Under the agreement, Mr. Melamed may not, without our prior written consent, render services to any
competitor or otherwise compete with us throughout the term of the agreement and for one year thereafter. Mr. Melamed also receives compensation for his service on our board.
Under the terms of the written agreement that will take effect on May 9, 2018 until his death or until his termination of the agreement, Mr. Melamed will provide us
with similar consulting services and will receive $300,000 per annum plus reimbursement for all reasonable and necessary
out-of-pocket
travel and other expenses incurred
relating to his service. We will also provide office and secretarial support during the term of the agreement. Mr. Melamed may not render services to any competitor or otherwise compete with us during the term of the agreement without our prior
written consent. In the event the agreement is terminated during Mr. Melameds lifetime he will continue to be subject to the
non-compete
provisions for one year after such termination.
For the
two-year
period following Mr. Melameds retirement from the board as of May 9, 2018, he will receive additional
compensation for his consulting services in the amount of $1 million per year.
Mr.
Sandner.
For the first two
years following Mr. Sandners retirement from the board as of May 9, 2018, Mr. Sandner will serve as a consultant to the board for which he will receive compensation of $1 million per year.
We also have an employment agreement with Mr. Duffy, which is previously described in the section entitled
Potential Payments upon Termination or
Change-in-Control
on
page
53
.
|
|
|
|
|
60
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Security Ownership of CME Group Common Stock
|
The following tables show the amount of common stock owned by each of our directors, director nominees and by each
executive officer who is not also a director named in the
Summary Compensation Table
on
page
46
of this proxy statement, and by all directors and executive officers as a group and the amount of common stock beneficially
owned by individuals owning more than five percent of our Class A common stock as of March 12, 2018 unless otherwise noted. In general, beneficial ownership includes those shares over which a person has the power to vote, or
the power to transfer, and stock options that are currently exercisable or will become exercisable within 60 days of March 12, 2018. Except as otherwise noted, the persons named in the table below have sole voting and investment power with
respect to all shares shown as beneficially owned by them. None of our directors, director nominees or executive officers beneficially own more than one percent of any class of common stock. Shares have been rounded to the nearest full amount.
Directors, Director Nominees and Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class of Common Stock
|
|
Name of Beneficial Owner
(1)
|
|
A
|
|
|
B-1
|
|
|
B-2
|
|
|
B-3
|
|
|
B-4
|
|
Terrence A. Duffy
(2)
|
|
|
99,239
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
Jeffrey M. Bernacchi
(3)
|
|
|
60,194
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy S. Bitsberger
|
|
|
9,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles P. Carey
(4)
|
|
|
32,339
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
|
|
1
|
|
Dennis H. Chookaszian
(5)
|
|
|
13,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Elizabeth A. Cook
(6)
|
|
|
20,933
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Ana Dutra
|
|
|
3,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin J. Gepsman
(7)
|
|
|
43,011
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
1
|
|
Larry G. Gerdes
|
|
|
32,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel R. Glickman
(8)
|
|
|
15,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Georgi Z. Komon Gold
(9)
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Gedon Hertshten
(10)
|
|
|
133,600
|
|
|
|
4
|
|
|
|
4
|
|
|
|
4
|
|
|
|
2
|
|
William W. Hobert
(11)
|
|
|
117,673
|
|
|
|
3
|
|
|
|
6
|
|
|
|
7
|
|
|
|
|
|
Deborah J. Lucas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patrick W. Maloney
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Leo Melamed
(12)
|
|
|
10,537
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Ronald A. Pankau
(13)
|
|
|
3,809
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
Alex J. Pollock
(14)
|
|
|
20,425
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John F. Sandner
|
|
|
127,383
|
|
|
|
3
|
|
|
|
2
|
|
|
|
4
|
|
|
|
1
|
|
Terry L. Savage
(15)
|
|
|
15,833
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William R. Shepard
(16)
|
|
|
193,731
|
|
|
|
5
|
|
|
|
5
|
|
|
|
2
|
|
|
|
1
|
|
Howard J. Siegel
|
|
|
83,239
|
|
|
|
1
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
Dennis A. Suskind
|
|
|
5,059
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David J. Wescott
(17)
|
|
|
74,565
|
|
|
|
1
|
|
|
|
1
|
|
|
|
3
|
|
|
|
1
|
|
James J. Zellinger
(18)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John W. Pietrowicz
(19)
|
|
|
55,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bryan T. Durkin
|
|
|
67,417
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sean P. Tully
(19)
|
|
|
35,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin D. Kometer
(19)
|
|
|
69,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kimberly S. Taylor
(20)
|
|
|
57,367
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The address for all persons listed in the table is CME Group Inc., 20 South Wacker Drive, Chicago, IL 60606.
|
(2)
|
Includes 495 Class A shares and 1
Class B-4
share to which Mr. Duffy shares joint ownership and has voting power.
|
(3)
|
Includes 1
Class B-1
share assigned to one of our members firms in connection with our exchange rules.
|
(4)
|
Mr. Carey owns 3,198 Class A shares indirectly through a trust. He also owns 29,141 Class A shares and 1 share of
Class B-1,
1 share of
Class B-2,
1 share of
Class B-3
and 1 share of
Class B-4
indirectly through a trading firm for purposes of meeting
certain share requirements established by the rules of our derivatives exchanges for member fee purposes.
|
(5)
|
Includes 12,934 Class A shares held in the name of Mr. Chookaszians spouse.
|
(6)
|
All Class A shares held in trust.
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
61
|
|
|
|
|
|
|
Security Ownership of CME Group Common Stock
(Continued)
|
(7)
|
Includes 495 Class A shares and 1
Class B-4
share to which Mr. Gepsman shares joint ownership and has voting power. Includes 17,950 Class A shares that have
been used as a capital contribution to a limited liability company which is a holding company to one of our clearing firms.
|
(8)
|
Includes 2,100 Class A shares held in trust.
|
(9)
|
Ms. Gold has pledged 4,000 Class A shares to secure a personal loan. As a
Class B-3
director nominee, Ms. Gold is not currently subject to the boards
policy prohibiting the pledging of Class A shares.
|
(10)
|
Mr. Hertshten owns 33,544 Class A shares directly. He also owns 100,056 Class A shares and all Class B shares through a firm in which he is the owner.
|
(11)
|
Mr. Hobert owns 77,673 Class A shares directly. He also owns 40,000 Class A shares, 2
Class B-1
shares, 6
Class B-2
shares and 7
Class B-3
shares held through a firm of which Mr. Hobert is a majority shareholder.
|
(12)
|
Class B-2
share held in trust.
|
(13)
|
Includes 1
Class B-2
share assigned to one of our member firms in connection with our exchange rules.
|
(14)
|
Includes 2,719 Class A shares held in the name of Mr. Pollocks spouse.
|
(15)
|
All Class A shares held in trust.
|
(16)
|
Includes 495 Class A shares and 1
Class B-4
share as to which Mr. Shepard shares joint ownership and has voting power. All shares held in trust.
|
(17)
|
Does not include ownership of 495 shares of Class A common stock of which beneficial ownership is in dispute.
|
(18)
|
Mr. Zellinger is the recognized owner of 1
Class B-2
share that is owned by his employer. He does not beneficially own such
Class B-2
share.
|
(19)
|
Class A shares for Mr. Pietrowicz, Mr. Tully and Mr. Kometer include an aggregate of 22,960, 4,120 and 16,140 stock options, respectively, that are currently exercisable or would be exercisable
within 60 days of March 12, 2018.
|
(20)
|
Ms. Taylor retired from the company as of December 31, 2017. Her estimated ownership is reflected as of such date.
|
Directors and Executive Officers as a Group (32 persons)
|
|
|
|
|
|
|
|
|
Class of Common Stock
|
|
Total Shares
|
|
|
Percent of Class A
(1)
|
|
Class A
(2)
|
|
|
1,516,875
|
|
|
|
*
|
|
Class B-1
|
|
|
17
|
|
|
|
2.7
|
%
|
Class B-2
|
|
|
15
|
|
|
|
1.8
|
%
|
Class B-3
|
|
|
17
|
|
|
|
1.3
|
%
|
Class B-4
|
|
|
8
|
|
|
|
1.9
|
%
|
Total Classes (A & B)
|
|
|
1,516,945
|
|
|
|
*
|
|
(1)
|
Based on 340,405,998 shares of Class A common stock; 625 shares
Class B-1
common stock; 813 shares of
Class B-2
common
stock; 1,287 shares of
Class B-3
common stock, and 413 shares of
Class B-4
common stock outstanding as of March 12, 2018.
|
(2)
|
Total shares of Class A common stock include an aggregate of 120,430 options to purchase shares of Class A common stock that are currently exercisable or become exercisable within 60 days of March 12,
2018.
|
Shareholders Owning More Than Five Percent
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Class A Shares
|
|
|
Percent of Vote as
a Single
Class
(1)
|
|
Capital World Investors
(2)
|
|
|
31,327,058
|
|
|
|
9.2
|
%
|
BlackRock, Inc.
(3)
|
|
|
26,871,311
|
|
|
|
7.9
|
%
|
The Vanguard Group
(4)
|
|
|
24,090,982
|
|
|
|
7.1
|
%
|
State Street Corporation
(5)
|
|
|
17,519,760
|
|
|
|
5.1
|
%
|
(1)
|
Percentage is based on the aggregate of 340,409,136 shares of Class A and Class B common stock outstanding as of March 12, 2018, voting together as a single class. Other than with respect to the election
of Class B directors and some matters relating to trading rights associated with Class B shares, holders of both classes of common stock will vote together as a single class on all matters to be presented to a vote of shareholders, unless
otherwise required by law.
|
(2)
|
Capital World Investors, a division of Capital Research and Management Company, filed a Schedule 13G/A on February 14, 2018, which states that its address is 333 South Hope Street, Los Angeles, CA 90071, and that
it has sole voting power of 31,301,443 shares of Class A common stock and sole dispositive power of 31,327,058 shares of Class A common stock.
|
(3)
|
BlackRock, Inc. filed a Schedule 13G/A on January 29, 2018, which states that its address is 55 East 52nd Street, New York, NY 10055, and that it has sole voting power of 22,875,899 shares of Class A common
stock and sole dispositive power of 26,871,311 shares of Class A common stock.
|
(4)
|
The Vanguard Group filed a Schedule 13G/A on February 8, 2018, which states that its address is 100 Vanguard Blvd., Malvern, PA 19355, and that it has sole voting power of 476,414 shares of Class A common
stock, shared voting power of 78,182 shares of Class A common stock, sole dispositive power of 23,549,388 shares of Class A common stock and shared dispositive power of 541,594 shares of Class A common stock.
|
(5)
|
State Street Corporation filed a Schedule 13G on February 14, 2018, which states that its address is State Street Financial Center, One Lincoln Street, Boston, MA 02111, and that it has shared voting power and
shared dispositive power of 17,519,760 shares of Class A common stock.
|
|
|
|
|
|
62
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
|
|
|
Other Business
|
CERTAIN BUSINESS RELATIONSHIPS WITH RELATED PERSONS
Our audit committee has adopted a written policy for the review of related party transactions. A copy of our related party transaction approval policy is available on our
website. Related party transactions are transactions in which we are a participant, the amount involved exceeds $120,000, and a related party has or will have a direct or indirect material interest. Related parties consist of our directors
(including nominees for election as directors), executive officers, holders of more than five percent of our outstanding Class A common stock, and the immediate family members of these individuals, as defined in the policy. Our Office of the
Secretary, in consultation with management and outside counsel, as appropriate, will review potential related party transactions to determine if they are subject to our related party transactions policy. Certain transactions, including compensation
and ordinary course trading activity on any of our exchanges, are considered
pre-approved
and thus do not require specific approval under the policy.
In determining whether to approve a related party transaction, the audit committee will consider, among other factors, the fairness of the proposed transaction, whether
there are compelling business reasons to proceed, and whether the transaction would impair the independence of a
non-management
director or present an improper conflict of interest for a director or executive
officer, taking into account the size of the transaction, the overall financial position of the related person, the direct or indirect nature of his or her interest in the transaction, the ongoing nature of any proposed relationship, and any other
factors the committee deems relevant. The policy also provides that certain engagements by us of a large firm in which an immediate family of a director or executive officer is a general partner of such firm will not be considered a related party
transaction; provided certain factors are met, including that such family member did not have any involvement in the selection or engagement process, does not receive any compensation or credit in connection with the engagement other than that
provided to the other unaffiliated partners and that no other facts or circumstances exist suggesting that the immediate family member has any direct or indirect material interest in the transaction.
We do not consider the amounts involved in the transactions described in this section to be material to our business or material in relation to the businesses of such
other companies or the interests of the individuals involved. We recognize the need for transparency and additional disclosure regarding transactions between an issuer and its insiders. However, we do not believe that these disclosures should be a
substitute for the overall independence test for determining whether a material relationship exists.
Transactions Relating to Trading Activity in 2017
We are a unique organization stemming from our evolution from a member-owned organization to a public company. In connection with such transition, we
recognized the need to maintain the deep industry knowledge of members of our trading community as board members. As a result, some of our board members continue to participate in our markets from which we derive revenue. Payments relating to
trading activity include clearing and transaction fees, market data and information services fees and connection fees. A substantial portion of our clearing and transaction fees is received directly from our clearing firms which include charges for
trades executed and cleared on behalf of their customers some of whom may be members of our board or Class B director nominees. Payments received directly by clearing firms in which a board member or Class B director nominee has a
significant affiliation are based upon our financial records. Other payments, which are not derived from our financial records because they are processed indirectly through a clearing firm, are set forth below but the actual amounts are not
included.
|
|
|
Mr. Bernacchi made payments to us indirectly through his clearing firm in excess of $120,000.
|
|
|
|
Mr. Carey is a principal of two member firms that made aggregate payments to us indirectly through their clearing firm in excess of $120,000.
|
|
|
|
Mr. Hertshten is the owner of a clearing firm that made net payments to us of approximately $72 million and the owner of a member firm that made net payments to us in excess of $120,000.
|
|
|
|
Mr. Hobert owns a majority interest in one of our member firms that made payments to us indirectly through its clearing firm in excess of $120,000.
|
|
|
|
Mr. Shepard owns a minority interest in one of our clearing firms that made net payments to us of approximately $115 million and owns a trading firm that made payments to us indirectly through its clearing
firm in excess of $120,000.
|
|
|
|
|
|
|
|
Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
|
|
63
|
|
|
|
|
|
|
Other Business
(Continued)
|
|
|
|
Mr. Wescott is part owner in one of our member firms that made payments to us indirectly through its clearing firm in excess of $120,000.
|
The fees we charge our customers, including any of our board members, are based on published fee schedules and no benefits or discounts are provided to our board members
that are not otherwise made available to similarly situated customers. We, therefore, do not believe that such transactions impair the independence of such individuals and any potential conflicts are handled appropriately under our director conflict
of interest policy, a copy of which is available on our website. Our other board members and director nominees who participate in our markets also incur trading fees but such fees were below $120,000 during 2017. The foregoing transactions relating
to trading activity are considered
pre-approved
under the audit committees related party transaction approval policy.
Employment of Family Members
An
in-law
of Mr. Pankau is employed by us in a
non-officer
position. The employment relationship occurred prior to Mr. Pankaus service on our board. The
employee received aggregate compensation in 2017 of approximately $300,000 (part of which included an annual equity award) and other benefits provided to employees at the same level. The compensation is in accordance with our standard compensation
practices applicable to similarly-situated employees. The audit committee previously ratified this related party transaction and receives annual reports on the compensation arrangements as part of its review of ongoing related party transactions.
Sub-Leasing
Arrangement
Mr. Sandner
sub-leases
his office space from us. In 2017, we received lease payments of approximately $140,000. The original
sub-lease
was negotiated on an arms length basis and was on terms consistent with our overall master lease and other existing leases at the location at the time of execution. The audit committee reviewed and
approved the original
sub-leasing
relationship. The term of the original
sub-lease
was extended in 2015. The audit committee ratified the extension in 2016.
CHARITABLE AND CIVIC CONTRIBUTIONS
We believe that it is both a responsibility and a privilege to give back to the global communities where we live and work. Through our charitable programs and
foundations, we are able to put change in motion that will positively impact the lives of those in need. Through our corporate foundation, CME Group Community Foundation, we made charitable grants focused on the locations where we do business and
provided support to three primary areas of concern: children in need, education, and health and human services. Certain members of our board also serve on the CME Group Foundation. The CME Group Foundation was endowed by the Chicago Mercantile
Exchange Trust. Our board members and executive officers may have affiliations with organizations that have received donations from these foundations. None of the donations made by these foundations were deemed to impact the independence of any of
our board members or director nominees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors and persons who own more than 10% of a registered class of our equity
securities to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file. Based
solely on our review of the copies of the forms we have received during 2017, all of our officers and directors complied with their Section 16(a) filing requirements during 2017. In connection with an examination of Mr. Sandners
transactions, it was identified that a gift made by Mr. Sandner in 2016 was not timely reported on a Form 5. A Form 5 was filed in February 2018 to report the gift.
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WHEN AND WHERE IS THE ANNUAL MEETING?
The annual meeting of shareholders of CME Group will be held at 10:00 a.m., Central Time, on Wednesday, May 9, 2018, in the auditorium at CME Group, located at 20
South Wacker Drive, Chicago, Illinois.
WHO MAY ATTEND THE ANNUAL MEETING?
All holders of Class A and Class B common stock on March 12, 2018, the record date for the annual meeting, are entitled to notice of and are invited to
attend the annual meeting.
ARE THERE ANY RULES FOR ADMISSION TO THE ANNUAL MEETING?
Yes.
You are entitled to attend the annual meeting only if you were, or you hold a valid legal proxy naming you to act for, one of our shareholders on the
record date. Please note that seating is limited and admission will be accepted on a first-come, first-served basis.
If you plan to attend the meeting, you should
register in advance. Please go to the shareholder meeting registration link at
www.proxyvote.com
and follow the instructions provided. You will need the
16-digit
control number located on
your proxy card, voter instruction form or notice. Please print your registration confirmation and bring it with you to the meeting along with valid picture identification, such as a drivers license or passport. If you do not have a printed
registration confirmation, we must be able to confirm:
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Your identity by reviewing a valid form of photo identification, such as a drivers license; and
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You were a registered shareholder or held your shares in street name on the record date by:
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verifying your name and stock ownership against our list of registered shareholders; or
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reviewing other evidence of your stock ownership that shows your current name and address, such as a copy of your most recent brokerage or bank statement or your notice of internet availability of proxy materials for
the 2018 annual meeting
(internet notice)
, if you hold your shares in street name; or
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You are validly acting as proxy:
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for a registered shareholder as of the record date, by reviewing a written legal proxy granted to you and signed by the registered shareholder; or
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for a street name holder as of the record date, by reviewing a written legal proxy from a brokerage firm or bank holding the shares to the street name holder that is assignable, and a written legal proxy to you signed
by the street name holder, together with a brokerage or bank statement or internet notice showing the street name holders shares as described above.
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If you do not have a valid
form of picture identification and proof that you owned, or are legally authorized to act as proxy for someone who owned, shares of our common stock on March 12, 2018, you will not be admitted to the meeting.
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At the entrance to the meeting, we will verify that your name appears in our stock records or we will inspect your brokerage or bank
statement or internet notice, as your proof of ownership and any written proxy you present as the representative of a shareholder. We will decide
in our sole discretion
whether the documentation you present for admission to the meeting meets
the requirements described above. If you hold your shares in a joint account, both owners can be admitted to the meeting if proof of joint ownership is provided and you both follow the admission procedures described above. Please allow ample time
for these admission procedures.
Shareholders will not be allowed to use cameras (including cell phones with photographic capabilities), recording devices or other
electronic devices at the meeting.
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General Information About the Meeting
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WILL THE ANNUAL MEETING BE WEBCAST?
Yes. A live webcast of the annual meeting will be provided from our Investor Relations section of our website
www.cmegroup.com
. Go to Investor Relations, click on
Events and Presentations and then click on listen to webcast for the CME Group Inc. 2018 Annual Meeting of Shareholders. If you miss the meeting, you can view a replay of the webcast on that site. Please note that you will not be able to vote your
shares or ask questions via the webcast. If you plan to view the webcast, please submit your vote in advance.
WHAT COMPANY SPONSORED
PROPOSALS ARE THE CLASS A AND CLASS B SHAREHOLDERS BEING ASKED TO VOTE ON, COLLECTIVELY AS A SINGLE CLASS?
Holders of all classes of Class A and
Class B common stock of CME Group (voting together as a single class) are being asked to vote on the following:
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Item
1:
The election of fourteen Equity directors.
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Item
2:
The ratification of the appointment of Ernst & Young as our independent registered public
accounting firm for 2018.
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Item
3:
An advisory vote on the compensation of our named executive officers, referred to as the
say-on-pay
proposal.
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WHAT PROPOSALS
ARE THE CLASS B SHAREHOLDERS BEING ASKED TO VOTE ON?
Under
Item 4
, our Class B shareholders are being asked to vote on the following:
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Class
B-1
Shareholders:
The election of three
Class B-1
directors.
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Class
B-2
Shareholders:
The election of two
Class B-2
directors.
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Class
B-3
Shareholders:
The election of one
Class B-3
director.
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Under
Item 5
, our Class B shareholders are being asked to vote on the following:
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Class
B-1
Shareholders:
The election of five members of the
Class B-1
nominating committee.
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Class
B-2
Shareholders:
The election of five members of the
Class B-2
nominating committee.
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Class
B-3
Shareholders:
The election of five members of the
Class B-3
nominating committee.
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WHO IS ENTITLED TO VOTE?
You may vote if you owned shares of Class A or Class B common stock of CME Group as of the close of business on March 12, 2018, the record date for the
annual meeting. The number of shares outstanding of each of our classes of common stock as of March 12, 2018 was as follows:
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Class
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Shares Outstanding
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Class A
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340,405,998
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Class B-1
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625
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Class B-2
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813
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Class B-3
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1,287
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Class B-4
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413
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There were 2,706 holders of record of our Class A common stock and 1,589 holders of record of our Class B common stock on such
date.
All shares of Class A and Class B common stock are entitled to one vote per share. Class A and Class B shareholders will vote together as
a single class on all Items, except for
Items 4
and
5
. The respective class of Class B shares will vote as a single class in regards to
Items 4
and
5
.
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HOW DO I VOTE?
Shareholders of
record
(shareholders having an account at Computershare, our transfer agent) have the following ways to cast their vote:
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Via the Internet
by voting electronically over the Internet by going to
www.proxyvote.com
. You will need to reference the control number on your proxy card when voting. If you wish to vote by
the Internet, you may vote until 10:59 p.m., Central Time, on Tuesday, May 8, 2018.
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By mail
by submitting the proxy card in the envelope provided. Be sure to allow sufficient time for delivery.
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By calling
1-800-690-6903
(owners of Class
A shares
only)
You will need to reference the control number on your proxy card when voting. If you wish to vote by telephone, you may vote until 10:59 p.m., Central Time, on Tuesday, May 8, 2018. Due to the fact that the
Class B proposals are contested, automated telephone voting will not be available for Class B shareholders.
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By calling
1-855-928-4491
(owners of Class B shares only)
Broadridge, as our inspector of election, is providing
CME Group an additional service to facilitate voting by our Class B shareholders. Class B shareholders who are unable to locate their
16-digit
control number may call to speak to a proxy specialist
to cast their votes over the phone by providing information in confirmation of their identity. All calls will be recorded and voting confirmations will be sent by mail to the address of record.
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In person
by voting your proxy card at the annual meeting.
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For holders in
street name
(shareholders holding through a bank or broker), your proxy materials include a voting instruction form from the institution holding your shares. The availability of internet or telephone voting will depend upon the institutions voting
processes. You may also vote in person at the annual meeting if you obtain a legal proxy from the institution holding your shares. Please contact the institution holding your shares for more information.
Your vote is important. Whether or not you plan to attend the annual meeting, we urge you to vote your shares promptly by returning your proxy card and/or voting
instruction card or casting your vote by telephone or over the Internet. Voting early will not affect your right to change your vote and/or to attend the meeting.
WHAT IS A SHAREHOLDER OF RECORD?
A shareholder
of record or registered shareholder is a shareholder whose ownership of CME Group stock is reflected directly on the books and records of our transfer agent, Computershare. If you hold stock through a bank, broker or other intermediary, you hold
your shares in street name and are not a shareholder of record. For shares held in street name, the record owner of your shares is your bank, broker or other intermediary. We only have access to ownership records for the registered shares.
Therefore, if you are not a registered shareholder, you will need to bring additional documentation to evidence your stock ownership as of the record date, such as a copy of your brokerage account statement showing ownership as of the record date, a
letter from your broker, bank or other nominee or a copy of your voting instruction card in order to be admitted to the annual meeting.
WHAT DOES IT MEAN IF I RECEIVED MORE THAN ONE PROXY/VOTING INSTRUCTION CARD?
This means that you have multiple accounts holding CME Group shares. Shares with different registrations cannot be combined and as a result, you may receive more than one
card. For example, shares held through your broker cannot be combined with shares held at our transfer agent, Computershare. Additionally, our Class B shares are not combined with our Class A shares. Therefore, if you own both Class A
and Class B shares you will receive more than one proxy card.
If you receive more than one proxy/voting instruction card, you must vote each card to ensure
that all shares you own are voted.
WHAT IF I RETURN MY PROXY CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?
If you sign, date and return the proxy card without indicating your instructions on how to vote your shares, the proxies will vote your shares as follows:
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FOR
the election of the fourteen Equity director nominees.
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General Information About the Meeting
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FOR
the appointment of Ernst & Young as our independent registered public accounting firm for 2018.
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FOR
the approval of the compensation of our named executive officers, on an advisory basis, as described in this proxy statement.
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ABSTAIN
from voting for the Class B directors, if applicable.
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ABSTAIN
from voting for the Class B nominating committees, if applicable.
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If any other matter is
presented at the annual meeting, your proxies will vote in accordance with their best judgment. At the time this proxy statement went to press, we knew of no matters to be addressed at the annual meeting beyond those described in this proxy
statement.
CAN I CHANGE MY MIND AFTER I VOTE?
For shareholders of record:
You may change or revoke your vote by submitting a written notice of revocation directed to the Corporate Secretary, CME
Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606 or by submitting another proxy card or by voting electronically, by telephone or at the annual meeting.
For holders in street name:
You may change or revoke your voting instructions by following the specific directions provided to you by your bank, broker or
intermediary.
Your most recent vote is the one that is counted.
IS MY VOTE CONFIDENTIAL?
All proxies, ballots and tabulations that identify the vote of a particular shareholder will be kept
confidential, except as necessary to allow the inspectors of election to certify the voting results or to meet legal requirements. Representatives of Broadridge will act as the inspector of election and will count the votes.
Comments written on proxy cards or ballots may be provided by Broadridge to our Corporate Secretary, Kathleen M. Cronin, with the name and address of the
shareholder. Each comment will be provided without reference to the vote of the shareholder, unless the vote is mentioned in the comment or unless disclosure of the vote is necessary in order to understand the comment. At our request, the inspector
of election may provide us with a list of shareholders who have not voted and periodic status reports on the aggregate vote. These status reports may include breakdowns of vote totals by different types of shareholders, although it is expected that
we will not be able to determine how individual shareholders voted.
HOW ARE VOTES COUNTED?
In order for us to conduct the meeting, a minimum number of votes entitled to be cast by the holders of all outstanding common stock as of March 12, 2018, must be
present in person or represented by proxy. This is referred to as a quorum.
For proposals brought before the holders of all classes of common stock, voting together
without regard to class, at least
one-third
of the votes entitled to be cast by such holders must be present at the meeting to establish a quorum.
For proposals brought before the holders of
Class B-1,
Class B-2
and
Class B-3
common stock, each voting separately as a class, at least
one-third
of the votes entitled to be cast by the holders of each such class must be present at the
meeting to establish a quorum.
Proxies marked withhold or abstain are counted as present for establishing a quorum. Additionally, because we
have one routine item on the agendathe ratification of our independent registered public accounting firmbroker
non-votes
received on the other proposals also will be counted for
purposes of establishing a quorum for proposals brought before the holders of all classes of common stock, voting together without regard to class. A broker
non-vote
occurs when a broker does not vote on some
matter on the proxy card because the broker does not have discretionary voting power for that particular proposal under the rules of NASDAQ and has not received instructions from the beneficial owner.
To ensure that there will be a quorum for all proposals to be voted on, please vote before the annual meeting and allow your shares to be represented at the meeting by
your proxies. Voting before the annual meeting will not prevent you from voting in person at the meeting. If you vote in person at the meeting, your previous vote will be revoked automatically.
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HOW MANY VOTES ARE REQUIRED FOR APPROVAL FOR EACH PROPOSAL?
Assuming that a quorum is present for the particular proposal, the following describes the votes required to approve each proposal.
Item 1:
Fourteen Equity directors have been nominated for election at the annual meeting. Our bylaws require that, in uncontested elections, each Equity director
be elected by the majority of votes cast with respect to such director. This means that the number of shares voted for an Equity director nominee must exceed the number of votes cast against that nominee in order for that
nominee to be elected. Only votes for or against are counted as votes cast with respect to an Equity director. Abstentions and broker
non-votes
will have no effect. If a nominee who
currently is serving as a director does not receive the affirmative vote of at least a majority of the votes cast, Delaware law provides that the director would continue to serve on the board as a holdover director. However, under our
corporate governance principles, each holdover director is required to tender his or her resignation to the board. Under the principles, the governance committee shall make a recommendation to the board as to whether to accept or reject the tendered
resignation, or whether other action should be taken. The governance committee and the board, in making their decisions, may consider any factor or other information that they deem relevant. The board shall act on the tendered resignation, taking
into account the governance committees recommendation, and shall publicly disclose its decision regarding the resignation within ninety (90) days after the results of the election are certified. If the resignation is not accepted, the
director will continue to serve until the next annual meeting of shareholders and until the directors successor is elected and qualified.
Items 2 and 3:
The affirmative vote of a majority of the shares of our Class A and Class B common stock present in person or represented by proxy and entitled to vote on the matter is necessary for approval. Abstentions will have the same effect as a
vote against an item. Because
Item 2
is considered a routine matter, broker
non-votes
are not expected to occur with respect to that item. Broker
non-votes
will have no effect on
Item 3
.
Item 4:
The three nominees for
Class B-1
director, the two nominees for
Class B-2
director and the one nominee for
Class B-3
director receiving
the highest number of for votes will be elected. Abstentions will have no effect on these items because they are not considered votes cast. All Class B shares are held in registered form.
Item 5:
The five nominees for the
Class B-1
nominating committee, the five nominees for the
Class B-2
nominating committee and the five nominees for the
Class B-3
nominating committee receiving the highest number of for votes will be elected.
Abstentions will have no effect on these items because they are not considered votes cast. All Class B shares are held in registered form.
WHO PAYS FOR THE SOLICITATION OF PROXIES?
The solicitation is being conducted by CME Group which pays for the cost of soliciting
proxies. Proxies will be solicited on behalf of the board of directors. This solicitation is being made by mail and over the Internet, but also may be made by telephone or in person. We have hired D.F. King for $13,500, plus
out-of-pocket
expenses, to assist in the solicitation. We will reimburse brokerage firms and other custodians, nominees and fiduciaries for their
out-of-pocket
expenses for sending proxy materials to shareholders and obtaining their vote. Additionally, nominees for Class B director may make solicitations to our
shareholders. Such nominees are responsible for the costs incurred in connection with their individual solicitation efforts.
WHEN ARE
SHAREHOLDER PROPOSALS DUE FOR THE 2019 ANNUAL MEETING?
To be considered for inclusion in the 2019 proxy statement, shareholder proposals must be received
in writing at our principal executive offices no later than November 20, 2018. You should be aware that your proposal must comply with the SEC regulations regarding inclusion of shareholder proposals in company-sponsored proxy materials.
Similarly, in order for you to raise a proposal from the floor during next years meeting, we must have timely received written notice of the proposal. In accordance
with our bylaws, to be timely, a shareholders notice must be delivered to our corporate secretary not earlier than the close of business on January 9, 2019 (the 120
th
day) and not later
than the close of business on February 8, 2019 (the 90
th
day) prior to the anniversary of the 2018 annual meeting; provided, however, that in the event that the date of the 2019 annual
meeting is more than 30 days before or more than 60 days after May 9, 2019, to be timely, notice must be delivered not earlier than the open of business on the 120
th
day prior to the actual
date of the 2019 annual meeting and
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not later than the close of business on the later of the 90
th
day prior to the actual date of the 2019 annual meeting or, if the first public
announcement of the date of the 2019 annual meeting is less than 100 days prior to the date of the meeting, the 10
th
day following the day on which public announcement of the date of the 2019
annual meeting is first made by CME Group. Your notice of the proposal must contain the information required under our bylaws in order to be considered.
In
addition, to be considered at the 2019 annual meeting, proxy access nominations of Equity directors must comply with the requirements and conditions of our proxy access bylaw, including the delivery of proper notice to our Corporate Secretary not
earlier than the open of business on October 21, 2018 (the 150
th
day) and not later than the close of business on November 20, 2018 (the
120
th
day) prior to the first anniversary of the date we first distributed this proxy statement to shareholders.
Shareholder proposals and proxy access nominations should be sent by mail directed to the Corporate Secretary (Kathleen M. Cronin), CME Group Inc., 20 South
Wacker Drive, Chicago, Illinois 60606 or by fax to her attention at 312.930.4556.
ARE THERE ANY MATTERS TO BE VOTED ON AT THE MEETING THAT
ARE NOT INCLUDED IN THE PROXY STATEMENT?
At the time this proxy statement went to press, we knew of no matters to be addressed at the annual meeting
beyond those described in this proxy statement. If any other matter is presented at the annual meeting, your proxies will vote in accordance with their best judgment.
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We intend to announce preliminary voting results by press release following the annual meeting and will file the final results in a current report on Form
8-K
within four business days of the meeting as required by SEC regulations.
IF I RECEIVED PAPER COPIES
OF MATERIALS, CAN I RECEIVE FUTURE PROXY MATERIALS ONLINE?
Yes. If you chose this option, you will not receive paper copies of the proxy materials in the
mail. Choosing this option will save us printing and mailing costs and may benefit the environment.
If you hold shares in your name (instead of through a broker or
other nominee), you can choose this option by following the instructions provided when you vote over the Internet at
www.proxyvote.com
and, when prompted, indicate that you agree to receive or access shareholder communications electronically.
If you hold your shares through a broker or other nominee, you should follow the instructions regarding electronic delivery, if any, provided by your broker or other nominee.
If you choose to receive your proxy materials electronically, then prior to next years annual meeting you will receive an email notification when the proxy
materials are available for your online review. Your choice for electronic distribution will remain in effect indefinitely, unless you revoke your choice.
WHY DID I RECEIVE A NOTICE BY MAIL WITHOUT PRINTED COPIES OF THE PROXY MATERIALS?
As permitted by rules adopted by the SEC, we are
making this proxy statement and our 2017 Annual Report available to our shareholders electronically via the Internet. Beginning on or after March 20, 2018, we distributed a notice containing instructions on how to access this proxy statement
and our 2017 Annual Report and vote over the Internet. If you received a notice by mail, you will not receive a printed copy of the materials in the mail. Instead, the notice instructs you on how to access and review all of the important information
contained in the materials. The notice also instructs you on how you may submit your proxy over the Internet. If you received a notice by mail and would like to receive a printed copy of these materials, you should follow the instructions for
requesting such materials included in the notice.
WHY DID MEMBERS OF MY HOUSEHOLD ONLY RECEIVE ONE SET OF PROXY MATERIALS BUT MORE THAN
ONE PROXY CARD?
We have adopted a procedure approved by the SEC called householding. Under this procedure, shareholders of record who have the
same address and last name and do not participate in the electronic delivery of proxy materials will receive only one
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copy of our proxy materials unless one or more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure reduces our printing costs and postage
fees. Shareholders who participate in householding will continue to receive separate proxy cards.
If you participate in householding and wish to receive separate
copies of the proxy materials, or if you receive multiple copies of proxy materials and wish to receive only one copy, please go to
www.computershare.com/investor.
After the login, go to My Profile and
select Communication Preference to choose your preferred method (post or email) of delivery for Shareholder Meeting Materials.
Beneficial
shareholders can request information about householding from their banks, brokers or other holders of record.
CAN I GET ADDITIONAL COPIES
OF PROXY MATERIALS?
Yes. Additional copies of our 2017 Annual Report and this proxy statement are available free of charge upon written request to
Shareholder Relations, Attention: Ms. Beth Hausoul, CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606.
WHERE CAN I FIND
INFORMATION ON CME GROUPS CORPORATE GOVERNANCE POLICIES AND OTHER MATERIALS REFERENCED IN THIS PROXY STATEMENT?
Copies of our governance materials
and other policies referenced in this proxy statement and the charters of all of our committees comprised entirely of board members are available at http://investor.cmegroup.com/investor-relations under Corporate Governance.
You
may also request hard copies of such materials by sending a request to Shareholder Relations, Attention: Ms. Beth Hausoul, CME Group Inc., 20 South Wacker Drive, Chicago, Illinois 60606.
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Appendix A
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CATEGORICAL INDEPENDENCE STANDARDS
A director who satisfies the independence requirements of the applicable listing standards and meets all of the following categorical standards shall be presumed to be
independent:
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The director does not (directly or indirectly as a partner, shareholder or officer of another company) provide consulting, legal or financial advisory services to the company or the companys present or former
auditors.
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Neither the director nor any member of his or her immediate family is a significant shareholder in the companys Class A Common Stock or Class B Common Stock. For purposes of this categorical standard, a
shareholder shall be considered significant if the ownership of shares of Class A Common Stock is greater than five percent (5%) of the outstanding Class A Common Stock or if the ownership of shares of any series of Class B Common
Stock is greater than five percent (5%) of the outstanding Class B Common Stock in such series.
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Neither the director nor any member of his or her immediate family serves as an executive officer of a civic or charitable organization that receives financial contributions from CME, CBOT, NYMEX or the CME Group
Community Foundation (excluding payments pursuant to a matching gift program) or the CME Group Foundation in excess of $200,000 or five percent (5%) of that entitys total annual charitable receipts and other revenues, whichever is greater, per
year. The Board shall also consider whether any charitable donations made to a civic or charitable organization in which a director or member of his or her immediate family serves as a director, trustee or employed fundraiser impact the particular
directors independence; provided, however, donations less than $200,000 per year shall be presumed to be insignificant and, therefore, not impact such directors independence.
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In addition, the Board of Directors has determined that a director who acts as a floor broker, floor trader, employee or officer of a futures commission merchant,
clearing member firm or other similarly situated person that intermediates transactions in or otherwise uses CME Group products and services shall be presumed to be independent, if he or she otherwise satisfies all of the above
categorical standards and the independence requirements of the applicable listing standards and such transactions are made in the ordinary course of business of the company on terms consistent with those prevailing at the time for corresponding
transactions by similarly situated, unrelated third parties.
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72
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Notice of Annual Meeting of Shareholders
and 2018 Proxy Statement
|
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 8, 2018. Have
your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any telephone telephone
to transmit your voting instructions up until 10:59 P.M., Central Time, on May 8, 2018. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the meeting, go to the Register for Meeting link at
www.proxyvote.com
.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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E37587-P03747
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KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
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The Board of Directors recommends votes FOR Proposals 1, 2 and 3.
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1.
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Election of Equity Directors
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Fourteen will be elected to the Board of Directors
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For
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Against
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Abstain
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1a.
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Terrence A. Duffy
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☐
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☐
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☐
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1b.
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Timothy S. Bitsberger
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☐
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☐
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☐
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1c.
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Charles P. Carey
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☐
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☐
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☐
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1d.
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Dennis H. Chookaszian
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☐
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☐
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☐
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1e.
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Ana Dutra
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☐
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☐
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☐
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1f.
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Martin J. Gepsman
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☐
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☐
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☐
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1g.
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Larry G. Gerdes
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☐
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☐
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☐
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1h.
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Daniel R. Glickman
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☐
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☐
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☐
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1i.
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Deborah J. Lucas
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☐
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☐
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☐
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1j.
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Alex J. Pollock
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☐
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☐
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☐
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1k.
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Terry L. Savage
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☐
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☐
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☐
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1l.
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William R. Shepard
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☐
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☐
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☐
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1m.
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Howard J. Siegel
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☐
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☐
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☐
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1n.
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Dennis A. Suskind
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☐
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☐
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☐
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For
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Against
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Abstain
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2.
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Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2018.
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☐
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☐
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☐
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3.
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Advisory vote on the compensation of our named executive officers.
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☐
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☐
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☐
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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|
If you plan to attend the meeting on May 9, 2018, you should register in advance.
Please go to the Register for Meeting link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration confirmation and bring
it with you to the meeting along with valid picture identification.
Please note that seating is limited and
admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a drivers license or passport with their registration confirmation.
Seating will begin at 9:00 a.m. and the meeting will begin at 10:00 a.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be
required to enter through a security checkpoint before being granted access to the meeting.
YOUR VOTE IS IMPORTANT!
Please take a moment to vote your shares of Class A common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR THREE EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting:
The Notice and Proxy Statement and CME Group 2017 Annual Report are available at www.proxyvote.com.
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E37588-P03747
|
|
This Proxy is being solicited by the Board of Directors of CME Group Inc. (CME
Group) for the Annual Meeting of Shareholders on Wednesday, May 9, 2018.
The undersigned hereby appoint(s)
Terrence A. Duffy and Bryan T. Durkin with full power to act alone and with full power of substitution, as proxy of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 10:00 a.m., Central Time, on
Wednesday, May 9,
2018, in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class A
common stock of CME Group, held of record by such shareholder(s) as of the
close of business on March 12, 2018, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE FOR
PROPOSALS 1, 2 AND 3 AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The proposals are fully set forth in the Proxy Statement related to
the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on
the reverse side to vote on any item. If you wish to vote in accordance with the recommendations of the company,
please sign the reverse side; no boxes need to be checked.
20 S. WACKER DRIVE
CHICAGO, IL 60606
VOTE BY INTERNET -
www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 8, 2018. Have
your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the meeting, go to the Register for Meeting link at
www.proxyvote.com
.
|
|
|
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
|
|
|
|
|
|
E37589-P03747
|
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
|
|
|
|
|
DETACH AND RETURN THIS PORTION ONLY
|
CME GROUP INC.
The Board of Directors recommends votes FOR Proposals 1, 2 and 3.
|
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|
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1.
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Election of Equity Directors
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|
|
|
|
|
|
|
|
Fourteen will be elected to the Board of Directors
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
1a.
|
|
Terrence A. Duffy
|
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☐
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☐
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☐
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1b.
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Timothy S. Bitsberger
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☐
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☐
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☐
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1c.
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Charles P. Carey
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☐
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☐
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☐
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1d.
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Dennis H. Chookaszian
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☐
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☐
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☐
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1e.
|
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Ana Dutra
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☐
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☐
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|
☐
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1f.
|
|
Martin J. Gepsman
|
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|
|
☐
|
|
☐
|
|
☐
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1g.
|
|
Larry G. Gerdes
|
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☐
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☐
|
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☐
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1h.
|
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Daniel R. Glickman
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☐
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☐
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☐
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1i.
|
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Deborah J. Lucas
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☐
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☐
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☐
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1j.
|
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Alex J. Pollock
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☐
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☐
|
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☐
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1k.
|
|
Terry L. Savage
|
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☐
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☐
|
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☐
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1l.
|
|
William R. Shepard
|
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|
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☐
|
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☐
|
|
☐
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1m.
|
|
Howard J. Siegel
|
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|
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☐
|
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☐
|
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☐
|
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1n.
|
|
Dennis A. Suskind
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
2.
|
|
Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2018.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
3.
|
|
Advisory vote on the compensation of our named executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
The Board of Directors is not providing recommendations on Proposals 4 and 5.
|
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4.
|
|
Election of Three Class B-1 Directors
|
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Vote FOR up to
three
nominees to be elected to the Board of Directors.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
4a.
|
|
Jeffrey M. Bernacchi (JMB)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
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|
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4b.
|
|
Gedon Hertshten (GHF)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
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|
4c.
|
|
William W. Hobert (WH)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
5.
|
|
Election of 2019 Class B-1 Nominating Committee
|
|
|
|
|
|
|
|
|
Vote FOR up to
five
nominees to be elected to the Class B-1 Nominating Committee.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
5a.
|
|
Thomas A. Bentley (TAB)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5b.
|
|
Bradley S. Glass (BRAD)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5c.
|
|
Joseph H. Gressel (GPC)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5d.
|
|
Mark S. Kobilca (HTR)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
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|
5e.
|
|
Gary T. Lark (GTX)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
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|
|
5f.
|
|
W. Winifred (Fred) Moore II (FMOR)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
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|
|
5g.
|
|
William L. Polovin (BPO)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5h.
|
|
James V. Sauter (TCP)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5i
|
|
Michael J. Small (SML)
|
|
☐
|
|
☐
|
|
☐
|
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5j
|
|
Michael G. Sundermeier (MIK)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
|
Date
|
|
|
|
Signature (Joint Owners)
|
|
Date
|
|
|
If you plan to attend the meeting on May 9, 2018, you should register in advance.
Please go to the Register for Meeting link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration confirmation and bring
it with you to the meeting along with valid picture identification.
Please note that seating is limited and
admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a drivers license or passport with their registration confirmation.
Seating will begin at 9:00 a.m. and the meeting will begin at 10:00 a.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be
required to enter through a security checkpoint before being granted access to the meeting.
YOUR VOTE IS IMPORTANT!
Please take a moment to vote your shares of Class B-1 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR TWO EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting:
The Notice and Proxy Statement and CME Group 2017 Annual Report are available at www.proxyvote.com.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E37590-P03747
|
|
This Proxy is being solicited by the Board of Directors of CME Group Inc. (CME
Group) for the Annual Meeting of Shareholders on Wednesday, May 9, 2018.
The undersigned hereby appoint(s)
Terrence A. Duffy and Bryan T. Durkin with full power to act alone and with full power of substitution, as proxy of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 10:00 a.m., Central Time, on
Wednesday, May 9,
2018, in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-1
common stock of CME Group, held of record by such shareholder(s) as of the
close of business on March 12, 2018, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE FOR
PROPOSALS 1, 2 AND 3 AND TO ABSTAIN FROM PROPOSALS 4 AND 5 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
The proposals are fully set forth in the Proxy Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on the reverse side to vote on any item.
VOTE BY INTERNET -
www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 8, 2018. Have
your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the meeting, go to the Register for Meeting link at
www.proxyvote.com
.
|
|
|
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
|
|
|
|
|
|
E37591-P03747
|
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
|
|
|
|
|
DETACH AND RETURN THIS PORTION ONLY
|
CME GROUP INC.
The Board of Directors recommends votes FOR Proposals 1, 2 and 3.
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of Equity Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourteen will be elected to the Board of Directors
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
1a.
|
|
Terrence A. Duffy
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1b.
|
|
Timothy S. Bitsberger
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1c.
|
|
Charles P. Carey
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1d.
|
|
Dennis H. Chookaszian
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1e.
|
|
Ana Dutra
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1f.
|
|
Martin J. Gepsman
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1g.
|
|
Larry G. Gerdes
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1h.
|
|
Daniel R. Glickman
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1i.
|
|
Deborah J. Lucas
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1j.
|
|
Alex J. Pollock
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1k.
|
|
Terry L. Savage
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1l.
|
|
William R. Shepard
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1m.
|
|
Howard J. Siegel
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1n.
|
|
Dennis A. Suskind
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
2.
|
|
Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2018.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
3.
|
|
Advisory vote on the compensation of our named executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors is not providing a recommendation on Proposals 4 and 5.
|
|
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|
|
|
|
|
|
|
|
|
4.
|
|
Election of Two Class B-2 Directors
|
|
|
|
|
|
|
|
|
|
|
Vote FOR up to
two
nominees to be elected to the Board of Directors.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
4a.
|
|
Patrick W. Maloney (PAT)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
4b.
|
|
Ronald A. Pankau (PAN)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
4c.
|
|
David J. Wescott (COT)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
4d.
|
|
James J. Zellinger (JZZ)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
5.
|
|
Election of 2019 Class B-2 Nominating Committee
|
|
|
|
|
|
|
|
|
Vote FOR up to
five
nominees to be elected to the Class B-2 Nominating Committee.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
5a.
|
|
Frank D. Catizone (FDC)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5b.
|
|
Richard J. Duran (RJD)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5c.
|
|
Yra G. Harris (YRA)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5d.
|
|
Patrick J. Lahey (XDE)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5e.
|
|
Patrick J. Mulchrone (PJM)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5f.
|
|
Stuart A. Unger (UNG)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5g.
|
|
Barry D. Ward (BDW)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
|
Date
|
|
|
|
Signature (Joint Owners)
|
|
Date
|
|
|
If you plan to attend the meeting on May 9, 2018, you should register in advance.
Please go to the Register for Meeting link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration confirmation and bring
it with you to the meeting along with valid picture identification.
Please note that seating is limited and
admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a drivers license or passport with their registration confirmation.
Seating will begin at 9:00 a.m. and the meeting will begin at 10:00 a.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be
required to enter through a security checkpoint before being granted access to the meeting.
YOUR VOTE IS IMPORTANT!
Please take a moment to vote your shares of Class B-2 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR TWO EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting:
The Notice and Proxy Statement and CME Group 2017 Annual Report are available at www.proxyvote.com.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E37592-P03747
|
|
This Proxy is being solicited by the Board of Directors of CME Group Inc. (CME
Group) for the Annual Meeting of Shareholders on Wednesday, May 9, 2018.
The undersigned hereby appoint(s)
Terrence A. Duffy and Bryan T. Durkin with full power to act alone and with full power of substitution, as proxy of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 10:00 a.m., Central Time, on
Wednesday, May 9,
2018, in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-2
common stock of CME Group, held of record by such shareholder(s) as of the
close of business on March 12, 2018, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE FOR
PROPOSALS 1, 2 AND 3 AND TO ABSTAIN FROM PROPOSALS 4 AND 5 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
The proposals are fully set forth in the Proxy Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on the reverse side to vote on any item.
VOTE BY INTERNET -
www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 8, 2018. Have
your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the meeting, go to the Register for Meeting link at
www.proxyvote.com
.
|
|
|
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
|
|
|
|
|
|
E37593-P03747
|
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
|
|
|
|
|
DETACH AND RETURN THIS PORTION ONLY
|
CME GROUP INC.
The Board of Directors recommends votes FOR Proposals 1, 2 and 3.
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of Equity Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourteen will be elected to the Board of Directors
|
|
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
1a.
|
|
Terrence A. Duffy
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1b.
|
|
Timothy S. Bitsberger
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1c.
|
|
Charles P. Carey
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1d.
|
|
Dennis H. Chookaszian
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1e.
|
|
Ana Dutra
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1f.
|
|
Martin J. Gepsman
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1g.
|
|
Larry G. Gerdes
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1h.
|
|
Daniel R. Glickman
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1i.
|
|
Deborah J. Lucas
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1j.
|
|
Alex J. Pollock
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1k.
|
|
Terry L. Savage
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1l.
|
|
William R. Shepard
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1m.
|
|
Howard J. Siegel
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
1n.
|
|
Dennis A. Suskind
|
|
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
2.
|
|
Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2018.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
3.
|
|
Advisory vote on the compensation of our named executive officers.
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board of Directors is not providing recommendations on Proposals 4 and 5.
|
|
|
|
|
|
|
|
|
|
|
|
4.
|
|
Election of One Class B-3 Director
|
|
|
|
|
|
|
|
|
|
|
Vote FOR up to
one
nominee to be elected to the Board of Directors.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
4a.
|
|
Elizabeth A. Cook (LZY)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
4b.
|
|
Georgi Z. Komon Gold (GK)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
5.
|
|
Election of 2019 Class B-3 Nominating Committee
|
|
|
|
|
|
|
|
|
Vote FOR up to
five
nominees to be elected to the Class B-3 Nominating Committee.
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
|
|
|
5a.
|
|
John F. Connors Jr. (CON)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5b.
|
|
Joel P. Glickman (GLK)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5c.
|
|
Spencer K. Hauptman (SPNC)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5d.
|
|
Kevin P. Heaney (FROG)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5e.
|
|
Robert J. Kevil Jr. (REV)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5f.
|
|
Stephen J. Leuer (LURE)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5g.
|
|
Kimberly Marinaro
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5h.
|
|
Thomas G. Rossi (SSI)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
5i.
|
|
Richard S. Turim (RST)
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN WITHIN BOX]
|
|
Date
|
|
|
|
Signature (Joint Owners)
|
|
Date
|
|
|
If you plan to attend the meeting on May 9, 2018, you should register in advance.
Please go to the Register for Meeting link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration confirmation and bring
it with you to the meeting along with valid picture identification.
Please note that seating is limited and
admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a drivers license or passport with their registration confirmation.
Seating will begin at 9:00 a.m. and the meeting will begin at 10:00 a.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be
required to enter through a security checkpoint before being granted access to the meeting.
YOUR VOTE IS IMPORTANT!
Please take a moment to vote your shares of Class B-3 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR TWO EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting:
The Notice and Proxy Statement and CME Group 2017 Annual Report are available at www.proxyvote.com.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
E37594-P03747
|
|
This Proxy is being solicited by the Board of Directors of CME Group Inc. (CME
Group) for the Annual Meeting of Shareholders on Wednesday, May 9, 2018.
The undersigned hereby appoint(s)
Terrence A. Duffy and Bryan T. Durkin with full power to act alone and with full power of substitution, as proxy of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 10:00 a.m., Central Time, on
Wednesday, May 9,
2018, in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-3
common stock of CME Group, held of record by such shareholder(s) as of the
close of business on March 12, 2018, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE FOR
PROPOSALS 1, 2 AND 3 AND TO ABSTAIN FROM PROPOSALS 4 AND 5 LISTED ON THE REVERSE SIDE AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
The proposals are fully set forth in the Proxy Statement related to the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on the reverse side to vote on any item.
VOTE BY INTERNET -
www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic delivery of information up until 10:59 P.M., Central Time, on May 8, 2018. Have
your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY MAIL
Mark, sign and date your proxy card and return
it in the postage-paid envelope we have provided or return it to CME Group Inc., c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by CME Group Inc. in mailing proxy materials, you can consent to
receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the internet. To sign up for electronic delivery, please follow the instructions above to vote using the internet and, when prompted, indicate that
you agree to receive or access proxy materials electronically in future years.
SHAREHOLDER MEETING REGISTRATION:
To vote and/or attend the meeting, go to the Register for Meeting link at
www.proxyvote.com
.
|
|
|
|
|
|
|
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
|
|
|
|
|
|
E37595-P03747
|
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
|
|
|
|
|
|
DETACH AND RETURN THIS PORTION ONLY
|
|
|
|
|
|
|
|
The Board of Directors recommends votes FOR Proposals 1, 2 and 3.
|
|
|
|
|
|
1.
|
|
Election of Equity Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fourteen will be elected to the Board of Directors
|
|
For
|
|
Against
|
|
Abstain
|
|
|
|
|
|
1a.
|
|
Terrence A. Duffy
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1b.
|
|
Timothy S. Bitsberger
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1c.
|
|
Charles P. Carey
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1d.
|
|
Dennis H. Chookaszian
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1e.
|
|
Ana Dutra
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1f.
|
|
Martin J. Gepsman
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1g.
|
|
Larry G. Gerdes
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1h.
|
|
Daniel R. Glickman
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1i.
|
|
Deborah J. Lucas
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1j.
|
|
Alex J. Pollock
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1k.
|
|
Terry L. Savage
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1l.
|
|
William R. Shepard
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1m.
|
|
Howard J. Siegel
|
|
☐
|
|
☐
|
|
☐
|
|
|
|
|
|
1n.
|
|
Dennis A. Suskind
|
|
☐
|
|
☐
|
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☐
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For
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Against
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Abstain
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2.
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Ratification of the appointment of Ernst & Young as our independent registered public accounting firm for 2018.
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3.
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Advisory vote on the compensation of our named executive officers.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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If you plan to attend the meeting on May 9, 2018, you should register in advance.
Please go to the Register for Meeting link at
www.proxyvote.com
and follow the instructions provided. You will need the 16 digit number located on the other side of this card. Please print your registration confirmation and bring
it with you to the meeting along with valid picture identification.
Please note that seating is limited and
admission will be accepted on a first-come, first-served basis. On the day of the meeting, each shareholder will be required to present valid picture identification such as a drivers license or passport with their registration confirmation.
Seating will begin at 9:00 a.m. and the meeting will begin at 10:00 a.m. The use of cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the meeting. You will be
required to enter through a security checkpoint before being granted access to the meeting.
YOUR VOTE IS IMPORTANT!
Please take a moment to vote your shares of Class B-4 common stock of CME Group Inc. for the upcoming Annual Meeting of Shareholders. PLEASE REVIEW THE PROXY STATEMENT AND SEE REVERSE SIDE FOR TWO EASY WAYS TO VOTE.
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting:
The Notice and Proxy Statement and CME Group 2017 Annual Report are available at www.proxyvote.com.
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E37596-P03747
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This Proxy is being solicited by the Board of Directors of CME Group Inc. (CME
Group) for the Annual Meeting of Shareholders on Wednesday, May 9, 2018.
The undersigned hereby appoint(s)
Terrence A. Duffy and Bryan T. Durkin with full power to act alone and with full power of substitution, as proxy of such shareholder(s), to attend the Annual Meeting of CME Group to be held at 10:00 a.m., Central Time, on
Wednesday, May 9,
2018, in the auditorium at CME Group, located at 20 South Wacker Drive, Chicago, IL, and any postponement or adjournment thereof, and to vote all shares of
Class B-4
common stock of CME Group, held of record by such shareholder(s) as of the
close of business on March 12, 2018, upon the proposals as designated on the reverse side.
This proxy will be voted as specified by the shareholder(s). IF NO SUCH DIRECTION IS GIVEN, YOUR PROXIES WILL HAVE THE AUTHORITY TO VOTE FOR
PROPOSALS 1, 2 AND 3 AND IN THE DISCRETION OF THE PROXY HOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The proposals are fully set forth in the Proxy Statement related to
the Annual Meeting, receipt of which is hereby acknowledged.
Please mark this proxy as indicated on
the reverse side to vote on any item. If you wish to vote in accordance with the recommendations of the company,
please sign the reverse side; no boxes need to be checked
.
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