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. )
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2021
Notice of Annual Meeting of Stockholders
and Proxy Statement
April 1, 2021
Dear Cboe Stockholder:
We cordially invite you to attend the 20182021 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”) of Cboe Global Markets, Inc. to be held on Thursday, May 17, 2018,13, 2021, at 9:00 a.m., local time,Central time.
The Annual Meeting will be a completely virtual meeting of stockholders and there will be no physical meeting location. You will be able to attend the Annual Meeting, vote your shares and submit questions during the meeting via live audio webcast by visiting www.virtualshareholdermeeting.com/CBOE2021 and entering the 16-digit control number included in your proxy materials or on your proxy card. The live audio webcast of the fourth floor of our principal executive offices located at 400 South LaSalle Street, Chicago, Illinois, 60605.
At the Annual Meeting, you will be asked to do the following:
elect 1314 directors to the Board of Directors to hold office until the next Annual Meeting of Stockholders or until their respective successors have been elected and qualified;
approve, in a non-binding resolution, the compensation paid to our executive officers;
ratify the appointment of Deloitte & ToucheKPMG LLP as our independent registered public accounting firm for the 20182021 fiscal year; and
transact any other business that may properly come before the meeting and any adjournments and postponements of the meeting.
Enclosed with this letter are a formal notice of the Annual Meeting, a proxy statement, and a form of proxy.
Please carefully review the form of proxy that you receive to confirm that it reflects all of your shares of our stock. If you hold stock in different accounts, you may need to complete multiple proxy cards to vote all of your shares.
Whether or not you plan to attend the Annual Meeting via live audio webcast, it is important that your shares be represented and voted. Please submit your proxy by Internet or telephone, or complete, sign, date and return the enclosed proxy using the enclosed postage-paid envelope. The enclosed proxy, when returned properly executed, will be voted in the manner directed in the proxy.
We hope that you will participate in the Annual Meeting, either in personvia live audio webcast or by proxy.
| Sincerely, |
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Edward T. Tilly | |
| Chairman, President and Chief Executive Officer |
Cboe Global Markets, Inc.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 20182021 Annual Meeting of Stockholders (the "Annual Meeting"“Annual Meeting”) of Cboe Global Markets, Inc. will be held on Thursday, May 17, 2018,13, 2021, at 9:00 a.m., localCentral time.
The Annual Meeting will be a completely virtual meeting of stockholders. You will be able to attend the Annual Meeting, vote your shares and submit questions during the meeting via live audio webcast by visiting www.virtualshareholdermeeting.com/CBOE2021 and entering the 16-digit control number included in your proxy materials or on your proxy card. Online check-in to the Annual Meeting live audio webcast will begin at 8:45 a.m., Central time, onand you are encouraged to allow ample time to log in to the fourth floormeeting webcast and test your computer audio system. There will be no physical meeting location.
The purpose of our principal executive offices located at 400 South LaSalle Street, Chicago, Illinois, 60605, for the following purposes:
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You are entitled to vote atonline during the Annual Meeting and any adjournments or postponements of the meeting if you were a stockholder of record at the close of business on March 20, 2018. We also cordially invite you18, 2021. A list of stockholders of record will be open for examination by any stockholder for any purpose germane to attend the meeting.
Your vote is important. Whether or not you plan to attend, the meeting, please vote as soon as possible. For additional details, please see the information under the heading "How“How do I vote?"” in the attached proxy statement.
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Go to www.proxyvote.com | | | Go to www.virtualshareholdermeeting.com/CBOE2021 | | | Call toll free 1-800-690-6903 | | | Complete, sign, date and return the enclosed proxy using the enclosed postage-paid envelope | |
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| Patrick Sexton | |||||||||
April 1, 2021 | Corporate Secretary | |||||||||
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY
The notice of the Annual Meeting and proxy statement are available on the Investor Relations section of
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We are furnishing this Proxy Statement to you in connection with a solicitation of proxies by the Board of Directors of Cboe Global Markets, Inc., a Delaware corporation, for use at the Cboe Global Markets, Inc. 2021 Annual Meeting of Stockholders on Thursday, May 13, 2021 at 9:00 a.m., Central time, and at any adjournments or postponements thereof. The approximate date on which this Proxy Statement and the accompanying form of proxy are first being sent to stockholders is April 1, 2021.
Except as otherwise indicated, the terms “the Company,” “Cboe Global Markets,” “we,” “us” and “our” refer to Cboe Global Markets, Inc. When we use the term “Cboe Options” or “C1” we are referring to Cboe Exchange, Inc., a wholly owned subsidiary and predecessor entity of Cboe Global Markets. On February 28, 2017, we closed our acquisition of Bats Global Markets, Inc. (“Bats”). In 2020, we purchased Hanweck Associates, LLC (“Hanweck”) and the assets of FT Providers, LLC (“FT Options”), which are providers of risk analytics market data, the assets of Trade Alert, LLC (“Trade Alert”), a real-time alerts and order flow analysis service provider, European Central Counterparty N.V. (“EuroCCP”), an operator of a European clearinghouse, and TriAct Canada Marketplace LP (“MATCHNow”), an operator of an equities alternative trading system (“ATS”) in Canada. At the end of 2020, we also purchased BIDS Trading, L.P. (“BIDS Trading”), a registered broker-dealer and operator of the BIDS ATS in the U.S., which is not a registered national securities exchange or a facility thereof.
PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this Proxy Statement.Statement for the Cboe Global Markets, Inc. 2021 Annual Meeting of Stockholders (the “Annual Meeting”). It does not contain all of the information that you should consider in voting your shares of our common stock. Before voting, you should carefully read this entire Proxy Statement, as well as our 20172020 Annual Report to Stockholders included in this mailing, which includes a copy of our Annual Report on Form 10-K for the year ended December 31, 2017. The approximate date on which this Proxy Statement and the accompanying form of proxy are first being sent to stockholders is April 5, 2018.
Annual Meeting Information
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Meeting Date: | | May 13, 2021 | |||
Meeting Time: | | 9:00 a.m. | |||
Virtual Meeting | | www.virtualshareholdermeeting.com/CBOE2021 | |||
Record Date: | | March | |||
Stockholder Actions and Board of Directors Voting Recommendations
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Proposal | Board Voting | Page | ||
1 - Elect 14 directors to the Board of Directors | | FOR | | 5 |
2 - Approve, in a non-binding resolution, the compensation paid to our executive officers | | FOR | | 33 |
3 - Ratify the appointment of KPMG LLP (“KPMG”) as our independent registered public accounting firm for the 2021 fiscal year | | FOR | | 77 |
Business Highlights
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Cboe Global Markets 2021 Proxy Statement | 1 |
| Proposal | Board Voting Recommendation | Page Reference | |
| 1. | Elect 13 directors to the Board of Directors | FOR | |
| 2. | Approve, in a non-binding resolution, the compensation paid to our executive officers | FOR | |
| 3. | Approve the Cboe Global Markets, Inc. Employee Stock Purchase Plan | FOR | |
| 4. | Ratify the appointment of Deloitte & Touche LLP ("Deloitte") as our independent registered public accounting firm for the 2018 fiscal year | FOR | |
| 100% | 100% | 77% | 69% | 54% |
| ●●●●●●●●●●●●● | ●●●●●��●●●●●●● | ●●●●●●●●●●○○○ | ●●●●●●●●●○○○○ | ●●●●●●●○○○○○○ |
| Company's Mission | Strategy | Corporate Governance | Government Relations | Financial Markets |
| 100% | 92% | 77% | 62% | 46% |
| ●●●●●●●●●●●●● | ●●●●●●●●●●●●○ | ●●●●●●●●●●○○○ | ●●●●●●●●○○○○○ | ●●●●●●○○○○○○○ |
| Management | Independence | Risk Management | Fresh Perspective | Diversity |
Navigating COVID-19 Global Pandemic
Capitalized on increased engagement among retail investors, such that total options volume and total U.S. equities volume reached new all-time highs in 2020.
Successfully transitioned open outcry trading to all electronic trading when open outcry trading was temporarily suspended; then reopened the trading floor with a modified layout and stringent safety protocols in place.
Provided frequent communications to directors, employees, customers, regulators, critical vendors, technology equipment suppliers, data and disaster recovery centers, and other service providers.
Continued to operate our business and achieved solid results in 2020, while successfully shifting all global employees (except those deemed essential) to work from home on a temporary basis and implementing travel restrictions.
For additional information, see “Corporate Governance—Board Structure—Board Oversight of COVID-19 Global Pandemic”.
Returns to Stockholders
Cboe Global Markets and its Board of Directors are committed(“Board”) have demonstrated an ongoing commitment to a corporate mission and strategy designed to createcreating long-term stockholder value. Our mission is "to power your potential to stay ahead of an evolving market"value and is brought to life through: (1) relentless innovation to expand our diverse offering for investors around the world, (2) cutting-edge technology to connect customers to global markets, and (3) seamless solutions to enhance the customer experience through insights, education, data, analytics and more. Our strategy is to continue to define and lead the options and volatility space globally, develop unique products, form strategic alliances that leverage and complement our core business and expand our customer base.
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1As of December 31, 2017; including reinvested dividends
2 | Cboe Global Markets 2021 Proxy Statement |
Director Nominee Highlights1
The nominees for our Board exhibit an effective mix of qualifications, experiences and diversity. For additional information, see “Corporate Governance—Proposal 1- Election of Directors”.
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1Certain highlights are based on self-identified characteristics. | |
Cboe Global Markets 2021 Proxy Statement | 3 |
Corporate Governance Highlights
We are committed to good corporate governance, which promotes the long-term interests of stockholders and strengthens our Board of Directorsby providing for effective oversight and management accountability.of the Company. The following are highlights of our corporate governance framework, which is described in further detail in this Proxy Statement:
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13 of the 14 Director Nominees are Independent;
Stockholder Engagement Highlights
Cboe Global Markets and itsour Board of Directors are also committed to fostering long-term and institution-wide relationships with stockholders and maintaining their trust and goodwill. As a result, throughThrough a variety of engagement activities, in 2017 we interactedour discussions with stockholders representing, at the timecover a variety of the outreach, the following percentages oftopics, including our outstanding shares of common stock.
Executive Compensation Highlights
The design of our executive compensation program, including compensation practices and independent oversight, is intended to align management'smanagement’s interests with those of our stockholders, including:
Annual cash incentives were based on corporate performance (weighted 70%) and individual performance (weighted 30%);
Long-term incentive was comprised of 50% time-based restricted stock units and 50% performance-based restricted stock units;
Performance-based compensation with limits on all incentive award payouts;
No excessive perquisites;
Clawback provisions for cash incentives and equity awards; and
Mandatory stock ownership and holding guidelines.
Additional Information
Please see the information under the headings "Voting Instructions and Information" and "Stockholder Proposals" for“Other Items” or important information about this Proxy Statement, voting, the Annual Meeting, Cboe Global Markets documents available to stockholders, communications, and the deadlines to submit stockholder proposals for the 20192022 Annual Meeting of Stockholders. Additional questions may be directed to Investor Relations at investorrelations@Cboe.com or (312) 786-5600.786-7136.
4 | Cboe Global Markets 2021 Proxy Statement |
PROPOSAL ONE
Our Third Amended and Restated Certificate of Incorporation provides that our Board will consist of not less than 11 and not more than 23 directors. Our Board currently has 1415 directors. Each director is elected annually to serve until the next Annual Meeting of Stockholders or until his or her successor is elected or appointed and qualified, except in the event of earlier death, resignation or removal. There is no limit on the number of terms a director may serve on our Board.
General
At the Annual Meeting, our stockholders will be asked to elect the 1314 director nominees set forth below, each to serve until the 20192022 Annual Meeting of Stockholders. All of the director nominees have been recommended for election by our Nominating and Governance Committee and approved and nominated for election by our Board. The director nominees include two new nominees, James E. Parisi and Jill E. Sommers. In addition, with respect to Mr. Tilly, his employment agreement provides that the Company will nominate him as a director for stockholder approval at each annual meeting during his employment with us. All of the director nominees other than Mr. Parisi and Ms. Sommers, were elected as directors by stockholders at the 20172020 Annual Meeting of Stockholders.
Michael L. Richter is retiring as a director and not standing for reelection as directorsa director at the Annual Meeting. We thank themhim for theirhis dedicated service to the Cboe family. The Board intends to decreasereduce the total numbersize of directors constituting our entirethe Board to 13, reflecting its intent to fill two of14 directors following the three vacancies created by these three departures.
All of the nominees have indicated their willingness to serve if elected. If any nominee is unable or unwilling to serve as a director at the time of the Annual Meeting, then shares represented by properly executed proxies will be voted at the discretion of the persons named in those proxies for such other person as the Board may designate. We do not presently expect that any of the nominees will be unavailable. Your proxy for the Annual Meeting cannot be voted for more than 1314 nominees.
Qualifications and Experience
The Board believes that the skills, qualifications and experiences of the director nominees make them all highly qualified to serve on our Board, both individually and as providing complementary skills on our Board. OurBased on the self-identified characteristics of our directors, 7 of our director nominees also exhibitbring an effective mix of diverse perspectives. perspectives:
4 are women, Mses. Froetscher, Goodman, McPeek, and Sommers,
2 are African-Americans, Messrs. Farrow and Palmore, and
1 is Asian-American, Mr. Fong.
Cboe Global Markets 2021 Proxy Statement | 5 |
In addition, our Board'sBoard’s composition represents a balanced approach to director tenure and age, 8 of the 1314 nominees have tenures equal to or less than 10 5 years with an average tenure of approximately 7 years,and the ages range from 51 to 71, allowing the Board to benefit from the experience of longer-serving directors combined with fresh perspectives from newer directors. The following table shows the specific qualifications and experiences the Board and the Nominating and Governance Committee considered for each director.nominee.
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Director Qualifications and Experiences | Tilly | Sunshine | Farrow | Fitzpatrick | Fong | Froetscher | Goodman | Matturri | McPeek | Palmore | Parisi | Ratterman | Sommers | Tomczyk |
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Company’s Mission | | | | | | | | | | | | | | |
Understand and adhere to the Company's mission | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● |
Independence | | | | | | | | | | | | | | |
Satisfy the independence requirements of BZX | | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● |
Strategy | | | | | | | | | | | | | | |
Experience developing and executing strategy | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● |
Management | | | | | | | | | | | | | | |
Experience managing at a senior level | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● | ● |
Financial Markets | | | | | | | | | | | | | | |
Experience with our markets and the trading of derivatives and equities | ● | | ● | | | | | ● | ● | | ● | ● | ● | ● |
Government Relations | | | | | | | | | | | | | | |
Experience working in or with the government and regulators | ● | ● | ● | ● | ● | | | ● | ● | ● | ● | ● | ● | ● |
Corporate Governance | | | | | | | | | | | | | | |
Knowledge of corporate governance matters, including through service on other public company boards | ● | ● | ● | | ● | ● | ● | | ● | ● | ● | ● | | ● |
Risk Management | | | | | | | | | | | | | | |
Experience overseeing risk management | ● | ● | ● | ● | ● | ● | | ● | ● | ● | ● | ● | | ● |
Technology | | | | | | | | | | | | | | |
Experience in technology or cybersecurity | ● | | ● | | ● | | | | | | | ● | | ● |
Fresh Perspective | | | | | | | | | | | | | | |
Board tenure is equal to or less than five years | | | ● | ● | | ● | ● | | ● | ● | ● | ● |
Nominees
Set forth below is biographical information, as of March 18, 2021, for each of the directors nominated to serve on our Board for a one-year term until the 20192022 Annual Meeting of Stockholders, as well as the reasons why the Board believes each candidate is well suited to serve as a director. The terms indicated for service include the service on the board of Cboe Options prior to our demutualization and our initial public offering in 2010.
In addition, as indicated below, certain non-employee director nominees also serve on certain boards of directors and committees of Cboe Futures Exchange, LLC (“CFE”), Cboe SEF, LLC (“SEF”) and our securities exchanges, which include Cboe Options, Cboe C2 Exchange, Inc. (“C2”), Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc., Cboe EDGA Exchange, Inc., and Cboe EDGX Exchange, Inc., Cboe Futures Exchange, LLC ("CFE" (collectively, the “securities exchanges”) and Cboe SEF, LLC ("SEF"), each a wholly owned subsidiary..
6 | Cboe Global Markets 2021 Proxy Statement |
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Edward T. Tilly Chairman, President and CEO Age: 57 Committees:
| Background Mr. Tilly is our Chairman, President and Chief Executive Officer (“CEO”). Mr. Tilly has served as Cboe Global Markets’ President since January 2019, Chairman since February 2017 and as CEO and a director since May 2013. Prior to that, he served as our President and Chief Operating Officer from November 2011 to May 2013 and as Executive Vice Chairman from August 2006 until November 2011. He was a member of Cboe Options from 1989 until 2006, and served on its Board from 1998 through 2000, from 2003 through July 2006, and from 2013 to the present, including as Member Vice Chairman from 2004 through July 2006 and as Chairman from February 2017 to the present. Mr. Tilly currently serves on the boards of directors of our securities exchanges, Northwestern Memorial HealthCare, Working in the Schools and as Vice Chairman of the World Federation of Exchanges. He is also a member of the Commercial Club of Chicago and the Economic Club of Chicago and a former member of the board of directors and Chairman of CFE and SEF. He holds a B.A. degree in Economics from Northwestern University. Qualifications Mr. Tilly has a deep understanding of the Company and the operations of our exchanges from trading on Cboe Options, representing the interests of market participants and serving in our management. He also brings significant knowledge of the global securities, futures and foreign currency exchange industries. We believe that Mr. Tilly’s experience overseeing our risk management, working with the government and regulators, successfully developing and executing our strategic initiatives, as well as being Chairman, President and CEO of Cboe Global Markets, makes him well suited to serve on our Board. |
Cboe Global Markets 2021 Proxy Statement | 7 |
Eugene S. Sunshine Lead Director Independent Age: 71 Committees:
| Background Mr. Sunshine currently serves as our independent Lead Director and has served on the Board of Cboe Global Markets since our initial public offering in 2010 and of Cboe Options from 2003 to 2017. Mr. Sunshine retired from his position as Senior Vice President for Business and Finance at Northwestern University in August 2014, a position he had held since 1997. Prior to joining Northwestern, he was Senior Vice President for administration at The John Hopkins University. At both The John Hopkins University and Northwestern University, Mr. Sunshine was CFO. Prior to joining The John Hopkins University, Mr. Sunshine held numerous positions in New York State government, including state treasurer. He is currently a member of the boards of directors of Arch Capital Group Ltd., a publicly traded company, and Kaufman Hall and Associates. He is a former member of the board of directors of Bloomberg L.P., KeyPath Education and National Mentor Holdings. He holds a B.A. degree from Northwestern University and a Masters of Public Administration degree from the Maxwell School of Citizenship and Public Affairs at Syracuse University. Qualifications Mr. Sunshine has extensive financial skills from his education and professional experiences. He also has knowledge of the corporate governance issues facing boards from his experience serving on them. He has extensive connections in the Chicago area business community. We believe that these skills make him well suited to serve on our Board and as our Lead Director. |
8 | Cboe Global Markets 2021 Proxy Statement |
William M. Farrow III Independent Age: 66 Committees:
| Background Mr. Farrow has served on our Board since 2016. Mr. Farrow is the retired President and CEO of Urban Partnership Bank, a position he held from 2010 through 2017. Prior to that, he was the Managing Partner and CEO of FC Partners Group, LLC from 2007 to 2009, the Executive Vice President and Chief Information Officer of The Chicago Board of Trade from 2001 to 2007 and held various senior positions at Bank One Corporation. Mr. Farrow currently serves on the boards of directors of publicly traded companies Echo Global Logistics, Inc. and WEC Energy Group, Inc. and on the boards of directors of CoBank, Inc. and the NorthShore University Health Systems. He is also the owner of Winston and Wolfe LLC, a privately held technology development and advisory company. Mr. Farrow previously served on the boards of directors of the Federal Reserve Bank of Chicago and Urban Partnership Bank. Mr. Farrow holds a B.A. degree from Augustana College and a Masters of Management from Northwestern University’s Kellogg School of Management. Qualifications Mr. Farrow brings his experience as the retired President and CEO of a mission based community development financial institution to our Board. He has a strong understanding of information technology systems, including cybersecurity, and the financial services and banking industry. We believe that these experiences give Mr. Farrow an important skill set that makes him well suited to serve on our Board. |
Edward J. Fitzpatrick Independent Age: 54 Committees:
| Background Mr. Fitzpatrick has served on our Board since 2013. Mr. Fitzpatrick is currently Chief Financial Officer of Genpact Limited, a position he has held since July 2014. Prior to that, Mr. Fitzpatrick worked at Motorola Solutions, Inc. and its predecessors from 1998 through 2014 in various financial positions, including as its CFO from 2009 to 2013. Before joining Motorola, Mr. Fitzpatrick was an auditor at PricewaterhouseCoopers, LLP from 1988 to 1998. Mr. Fitzpatrick holds a B.S. degree in Accounting from Pennsylvania State University and an M.B.A. degree from The Wharton School at the University of Pennsylvania and earned his CPA certification in 1990. Qualifications Mr. Fitzpatrick brings his experience as the CFO of a publicly traded company to our Board. He has extensive experience with finance, public company responsibilities and strategic transactions. We believe that these experiences give Mr. Fitzpatrick an important skill set that makes him well suited to serve on our Board. |
Cboe Global Markets 2021 Proxy Statement | 9 |
Ivan K. Fong Independent Age: 59 Committees:
| Background Mr. Fong has served on our Board since December 2020. Mr. Fong is currently Senior Vice President, General Counsel and Secretary of 3M Company, a position he has held from June 2019. Prior to this position, he served as Senior Vice President, Legal Affairs and General Counsel of 3M Company from 2012 to 2019. Prior to joining 3M Company, Mr. Fong was General Counsel of the United States Department of Homeland Security from 2009 to 2012 and the Chief Legal Officer and Secretary of Cardinal Health, Inc. from 2005 to 2009. Mr. Fong holds an S.B. degree in Chemical Engineering and an S.M. degree in Chemical Engineering Practice from Massachusetts Institute of Technology, a J.D. degree from Stanford University, and a Bachelor of Civil Law from Oxford University. Qualifications Mr. Fong brings his experience as the general counsel of public companies, in private practice and as the former general counsel of a government department. He has extensive experience in corporate governance, government relations and the types of legal issues that public companies face, which we believe makes him well suited to serve on our Board. |
Janet P. Froetscher Independent Age: 61 Committees:
| Background Ms. Froetscher is President of The J.B. and M.K. Pritzker Family Foundation, a position she has held since April 2016, and has served on the Board of Cboe Global Markets since our initial public offering in 2010 and of Cboe Options from 2005 to 2017. Previously, she served as President and CEO of Special Olympics International from October 2013 until October 2015, President and CEO of the National Safety Council from 2008 until October 2013, President and CEO of the United Way of Metropolitan Chicago and in a variety of roles at the Aspen Institute, most recently as Chief Operating Officer. From 1992 to 2000, Ms. Froetscher was the executive director of the Finance Research and Advisory Committee of the Commercial Club of Chicago. She also currently serves on the board of trustees of National Louis University. Ms. Froetscher holds a B.A. degree from the University of Virginia and a Masters of Management from Northwestern University’s Kellogg School of Management. Ms. Froetscher is also a Henry Crown Fellow of the Aspen Institute. Qualifications Ms. Froetscher brings her experiences as the President of a family foundation and former CEO of public service entities to our Board. We believe that these experiences give her leadership, operational and community engagement skills that make her well suited to serve on our Board. |
10 | Cboe Global Markets 2021 Proxy Statement |
Jill R. Goodman Independent Age: 54 Committees:
| Background Ms. Goodman has served on our Board since 2012. Ms. Goodman is currently Managing Director of Foros, a strategic financial and mergers and acquisitions advisory firm, a position she has held since November 2013. Previously, she served as a Managing Director and Head, Special Committee and Fiduciary Practice—U.S. at Rothschild from 2010 to October 2013. From 1998 to 2010, Ms. Goodman was with Lazard in the Mergers & Acquisitions and Strategic Advisory Group, most recently as Managing Director. Ms. Goodman advises companies and special committees with regard to mergers and acquisitions. Ms. Goodman graduated magna cum laude from Rice University with a B.A. degree. She received her J.D. degree, with honors, from the University of Chicago Law School. Qualifications Ms. Goodman brings extensive experience in the boardroom to the Company. Her experiences, both as an investment banker and her corporate and securities legal background, bring a unique insight with which to consider our opportunities. We believe that these experiences give her knowledge and skills that make her well suited to serve on our Board. |
Alexander J. Matturri, Jr. Independent Age: 62 Committees:
| Background Mr. Matturri has served on our Board since December 2020. Mr. Matturri is the retired Chief Executive Officer of S&P Dow Jones Indices LLC (“S&P”), a position he held from July 2012 to June 2020. Prior to this position, he served as Executive Managing Director and Head of S&P Indices from 2007 to 2012. Prior to joining S&P, Mr. Matturri served as Senior Vice President and Director of Global Equity Index Management at Northern Trust Global Investments from 2003 to 2007. From 2000 to 2003 he was Director and Senior Index Investment Strategist at Deutsche Asset Management. Mr. Matturri holds a B.S. degree in Finance from Lehigh University and a J.D. degree from Syracuse University. Mr. Matturri holds the Chartered Financial Analyst designation. Qualifications As the retired CEO of a financial services industry company, Mr. Matturri has extensive knowledge of financial markets, products, and the financial services and banking industry. In particular, he has a close understanding of one of our most important licensing arrangements. We believe that these experiences make him well suited to serve on our Board. |
Cboe Global Markets 2021 Proxy Statement | 11 |
Jennifer J. McPeek Independent Age: 51 Committees:
| Background Ms. McPeek has served on our Board since August 2020. Ms. McPeek is an independent advisor to companies on value-based management and incentive design. Previously, she has served as the Chief Financial Officer of Russell Investments from 2018 to 2019. From 2009 to 2017, Ms. McPeek was with Janus Henderson Investors plc and its predecessor company Janus Capital Group Inc., serving as the Chief Financial Officer from 2013 to 2017, and as the Chief Operating and Strategy Officer post-merger in 2017. Prior to that, Ms. McPeek was with ING Investment Management, Americas from 2005 to 2009, where she was a member of the management committee and led the strategy function. Ms. McPeek currently serves on the board of directors of First American Funds, Inc., overseeing six money market funds. She graduated magna cum laude from Duke University with an A.B. degree in Mathematics and Economics and received her M.S. degree in Financial Engineering from the MIT Sloan School of Management. Ms. McPeek holds the Chartered Financial Analyst designation. Qualifications As the former CFO of privately held and publicly traded asset management companies, Ms. McPeek has extensive experience with finance, public company responsibilities, strategic transactions and knowledge of our industry. In addition, her service on another company board also gives Ms. McPeek experience with corporate governance and leadership skills. We believe that her experience makes her well suited to serve on our Board. |
12 | Cboe Global Markets 2021 Proxy Statement |
Roderick A. Palmore Independent Age: 69 Committees:
| Background Mr. Palmore is Senior Counsel at Dentons where he advises public and private corporations and their leadership suites on risk management and governance issues across practices and industry sectors. Mr. Palmore retired from his position as Executive Vice President, General Counsel and Chief Compliance and Risk Management Officer of General Mills, Inc. in February 2015 and has served on the Board of Cboe Global Markets since our initial public offering in 2010 and of Cboe Options from 2000 to 2017. Prior to joining General Mills in February 2008, he served as Executive Vice President and General Counsel of Sara Lee Corporation. Before joining Sara Lee, Mr. Palmore served in the U.S. Attorney’s Office in Chicago and in private practice. Mr. Palmore is currently a member of the board of directors of publicly traded company The Goodyear Tire & Rubber Company and has previously served as a member of the boards of directors of Express Scripts Holding Company, formerly a publicly traded company, Nuveen Investments, Inc. and the United Way of Metropolitan Chicago. Mr. Palmore holds a B.A. degree in Economics from Yale University and a J.D. degree from the University of Chicago Law School. Qualifications Through his experience as general counsel of public companies, in private practice and as an Assistant U.S. Attorney, Mr. Palmore has extensive experience in corporate governance and the legal issues facing the Company. In addition, his experience provides him with strong risk management skills. We believe that his experience makes him well suited to serve on our Board. |
Cboe Global Markets 2021 Proxy Statement | 13 |
James E. Parisi Independent Age: 56 Committees:
| Background Mr. Parisi has served on our Board since 2018. Mr. Parisi most recently served as the Chief Financial Officer of CME Group Inc. from November 2004 to August 2014, prior to which he held positions of increasing responsibility and leadership within CME Group Inc. from 1988, including as Managing Director & Treasurer and Director, Planning & Finance. Mr. Parisi is currently a member of the boards of directors of CFE, SEF, Wilco Holdings, Inc., the parent company of ATI Physical Therapy, Pursuant Health Inc. and Chairman of the Illinois Special Olympics Foundation Board and has previously served as a member of the board of directors of Cotiviti Holdings, Inc., formerly a publicly traded company. Mr. Parisi holds a B.S. degree in Finance from the University of Illinois and an M.B.A. degree from the University of Chicago. Qualifications As the retired CFO of a publicly traded company offering a diverse derivatives marketplace and as a member of the boards of directors of CFE and SEF, Mr. Parisi has extensive knowledge of our industry. His service on other company boards also gives Mr. Parisi experience with corporate governance and leadership skills. We believe that his experience makes him well suited to serve on our Board. |
Joseph P. Ratterman Independent Age: 54 Committees:
| Background Mr. Ratterman has served on our Board since 2017 in connection with the closing of the acquisition of Bats. Mr. Ratterman was one of Bats’ founders in 2005, and served as Chairman of Bats from 2015 until our acquisition of Bats. Mr. Ratterman also served as its Chairman from June 2007 until July 2012, as President from June 2007 until November 2014 and as CEO from June 2007 until March 2015. Mr. Ratterman is a member of the SEC’s Equity Market Structure Advisory Committee and a member of the board of directors of Axoni. Mr. Ratterman holds a B.S. degree in Mathematics and Computer Science from Central Missouri State University. Qualifications Mr. Ratterman, as the former Chairman and CEO of Bats, brings significant knowledge of Bats, a large component of the Company, and the securities and futures industry. In addition to serving at Bats, he has extensive experience in a similar capacity with another industry participant. We believe that his experience in our industry makes him well suited to serve on our Board. His experience allows him to provide our Board a unique perspective on our business, competition and regulatory concerns. |
14 | Cboe Global Markets 2021 Proxy Statement |
Jill E. Sommers Independent Age: 52 Committees:
| Background Ms. Sommers has served on our Board since 2018. Ms. Sommers is currently a senior advisor to Patomak Global Partners, a financial services consultancy group, a position she has held since 2014. Previously, Ms. Sommers served as a commissioner of the Commodities Futures Trading Commission (“CFTC”) from 2007 to 2013 and as a member of the boards of directors of the securities exchanges of Bats from 2013 through the time of our acquisition of Bats in 2017. Ms. Sommers is currently a member of the boards of directors of our securities exchanges, CFE, SEF and the Ethics and Compliance Initiative and a member of the advisory board of directors of Green Key Technologies. Ms. Sommers holds a B.A. degree in Political Science from the University of Kansas. Qualifications Ms. Sommers has a strong understanding of our business and the regulation of the financial and derivatives industries from her experience with the CFTC and as a member of the boards of directors of our securities exchanges, CFE and SEF. These skills, as well as her experience on other boards, make her well suited to serve on our Board. |
Cboe Global Markets 2021 Proxy Statement | 15 |
Fredric J. Tomczyk Independent Age: 65 Committees:
| Background Mr. Tomczyk has served on our Board since July 2019. He is the retired President and Chief Executive Officer of TD Ameritrade Holding Corporation, a position he held from October 2008 to October 2016. Prior to this position, he held positions of increasing responsibility and leadership with the TD organization from 1999. Mr. Tomczyk was also a member of the TD Ameritrade board of directors from 2006 to 2007 and 2008 to 2016. Prior to joining the TD organization in 1999, Mr. Tomczyk was President and Chief Executive Officer of London Life. He currently serves as a director of Genworth Financial Mortgage Insurance Company Canada, the operating subsidiary of Genworth MI Canada Inc., a publicly traded company, and is a member of the Cornell University Athletic Alumni Advisory Council. Mr. Tomczyk also served as a director of Knight Capital Group, Inc. and as a trustee of Liberty Property Trust, both formerly publicly traded companies, and as a director of the Securities Industry and Financial Markets Association. Mr. Tomczyk holds a B.S. degree in Applied Economics & Business Management from Cornell University and is a Fellow of the Institute of Chartered Accountants of Ontario. Qualifications As the retired President and CEO of a public financial services industry company, Mr. Tomczyk has extensive knowledge of the financial markets, technology and the financial services and banking industry. His service on TD Ameritrade’s and other company boards also gives Mr. Tomczyk experience with corporate governance and leadership skills. We believe that these experiences make him well suited to serve on our Board. |
Each director of the New York State Division of the Budget from 2000 to 2004. She has previously served as the chair of the New York Racing Association Oversight Board, as commissioner on the New York State Commission on Public Authority Reform, as chair of the Public Authorities Control Board and on the board of directors of several New York State public authorities. Ms. Stone holds a B.A. degree in Business Administration from Skidmore College.
The Board recommends that the stockholders vote
FOR each of the director nominees.
16 | Cboe Global Markets 2021 Proxy Statement |
Board Structure
Our Bylaws require that, at all times, no less than two-thirds of our directors will be independent. The Nominating and Governance Committee has affirmatively determined that all of our current directors, except Mr. Tilly, are independent under Nasdaq Global Select Market's ("Nasdaq") and BZX Exchange's ("BZX") listing standards for independence, except Mr. Tilly.independence. In addition, R. Eden MartinFrank E. English, Jr. and Susan M. Phillips,Carole E. Stone, who resigneddid not stand for reelection as directors effective February 28, 2017 in connection with the closing of the acquisition of Bats,2020, were determined to be independent. William J. Brodsky, who resigned as a director effective February 28, 2017 in connection with the closing of the acquisition of Bats, was determined not to be independent.
All of the directors on each of the Audit, Compensation, and Nominating and Governance Committees are independent. Each of these Committees (as defined below) reports to the Board as they deem appropriate, and as the Board may request.
Lead Director
The Board has an independent Lead Director, Mr. Boris.Sunshine. Our Corporate Governance Guidelines require that an independent director serve as our Lead Director. The Lead Director is elected by the Board, upon the recommendation of the Nominating and Governance Committee. In connection with Mr. Boris not standing for reelection as a director at the Annual Meeting, a new Lead Director is expected to be elected by the Board, upon the recommendation of the Nominating and Governance Committee. The Charter of the Lead Director, Appendix A to our Corporate Governance Guidelines, provides that the Lead Director'sDirector’s responsibilities include, among other items:
Chair all meetings of the non-employee and independent directors of the Board, including the executive sessions;
Approve agendas for Board meetings and consult with the Chairman on other matters pertinent to us and the Board;
Serve as a liaison between the Chairman and the independent Directors;
Approve meeting schedules to assure that there is sufficient time for discussion of all agenda items;
Advise and consult with the Chairman and CEO on the general scope and type of information to be provided in advance of Board meetings;
In collaboration with the Chairman and CEO, consult with the appropriate members of senior management about what information pertaining to our finances, operations, strategic alternatives, and compliance is to be sent to the Board; and
To perform other duties as the Board may determine.
Chairman and CEO Roles
Since 2017, in connection with the closing of the acquisition of Bats, we combined the roles of Chairman and CEO, with Mr. Tilly serving as the Chairman and CEO. Prior to that time, the roles of Chairman and CEO, were separated, with Mr. Brodsky serving as Chairman and Mr. Tilly serving as CEO.was also appointed President effective January 14, 2019. The Board carefully consideredconsiders its Board leadership structure and the benefits of continuity in leadership roles and determinedcontinues to believe that combining the combined roles of Chairman and CEO at this time enhances the Company'sCompany’s strategic alignment and supports Cboe Global Markets'Markets’ ability to deliver stockholder value.
Cboe Global Markets 2021 Proxy Statement | 17 |
The Board periodically reviews the leadership structure and may make changes in the future based upon what the Board believes to be in the best interests of the Company and stockholders at the time. At certain points in our history, the Chairman and CEO roles have been held by the same person, and at other times, the roles have been held by different individuals. Under our Bylaws, the Chairman may, but need not be, our CEO, and the Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and CEO in any way that is in the best interests of the Company and stockholders at a given point in time based upon then-prevailing circumstances. The Board believes that the decision as to who should serve in those roles, and whether the offices should be combined or separate, should be assessed periodically by the Board, and that the Board should not be constrained by a rigid policy mandate when making these determinations.
In addition, our Board has implemented the following elements in order to ensure independent oversight for us and for our Board:
requiring the Board to consist of at least two-thirds independent directors who meet regularly without management and solely with non-employee and independent directors,
establishing independent Audit, Compensation, and Nominating and Governance Committees, and
appointing an independent Lead Director.
Board Oversight of Human Capital
The Board recognizes that our business depends on associate productivity, development, and engagement. In particular, the Board and Compensation Committee each receives updates and reports on diversity and inclusion and associate engagement from management, including from the Company’s Chief Human Resources Officer. More specifically, the Compensation Committee has been delegated the responsibility to oversee the policies and strategies relating to talent, leadership, and culture, including diversity and inclusion. The Compensation Committee receives presentations throughout the year on human resources matters, including succession planning, diversity and inclusion initiatives, and associate engagement surveys. Further, summaries of the proceedings from prior Compensation Committee meetings are provided to the Board on a routine basis, including on a quarterly basis.
18 | Cboe Global Markets 2021 Proxy Statement |
Board Oversight of Risk
The Board is responsible for overseeing our risk management processes. The Board is responsible for overseeing both our general risk management strategy, the risk mitigation strategies employed by management, including adequacy of resources, and the significant risks facing us, including the risk mitigation strategies employed by management.competition, reputation and technology risks. The Board stays apprised of particular risk management matters in accordance with its general oversight responsibilities.
| |
Committee | Primary Areas of Risk Oversight |
ATS Oversight |
|
Audit |
|
Compensation |
|
Finance and Strategy |
|
Nominating and Governance |
|
Risk |
|
Cboe Global Markets 2021 Proxy Statement | 19 |
In addition to our Board, our management is responsible for daily risk management. In addition, representatives of each of our divisions attend periodicTo help achieve this goal, we have adopted an enterprise risk management meetings atframework that is supported by a three lines of defense approach, which an established matrix of identified risks is reviewed to evaluateinvolve the level of potential risks facing usBusiness, Risk Department, Enterprise Risk Management Committee, Compliance Department, Internal Audit Department, and to identify any new risks. This group, along with our Chief Risk Officer, provided informationthe Board and recommendations to the Audit Committee in 2017 as necessary and provides information and recommendations to the Risk Committee as necessary.Committees. We believe thisthe following division of risk management responsibilities is an effective approach for addressing the enterprise risks that we face.
| |
Line of Defense | Description |
First |
|
Second |
|
Third |
|
Board Oversight of Information Security
The Board recognizes that our business depends on the confidentiality, integrity, availability, performance, security, and reliability of our data and technology systems and devotes time and attention to the oversight of cybersecurity and information security risk. In particular, the Board and Risk Committee each receives updates and reports on information security from senior management, including from the Company’s Chief Compliance Officer, Chief Risk Officer, and Chief Information Security Officer. More specifically, the Risk Committee receives presentations from senior management throughout the year, including on a quarterly basis, on cybersecurity, including architecture and resiliency, incident management, business continuity and disaster recovery, significant information technology changes, data privacy, physical security, and information related to third-party assessments conducted by leading information security providers of the Company’s information security program. The Risk Committee also receives quarterly reports regarding the overall status of the Company’s information security strategy and program, including adequacy of staffing and resources, and reviews and approves any changes to the related information security charter. Further, summaries of the proceedings from prior Risk Committee meetings are provided to the Board on a routine basis, including on a quarterly basis.
20 | Cboe Global Markets 2021 Proxy Statement |
Board Oversight of COVID-19 Global Pandemic
The Board also oversaw risk in the wake of the COVID-19 global pandemic. Starting in early 2020, the Board held additional informational and special meetings to monitor developments around COVID-19 and to facilitate frequent communications with management. These Board meetings focused on updates regarding impacts to business continuity, associates, customers, regulators, trading behaviors and volumes, open outcry trading, market disruptions, demand for our products, market data, critical vendors, technology equipment suppliers, and data and disaster recovery centers. In addition, the Committees also monitored developments around COVID-19, in particular, the Audit Committee focused on adequacy and effectiveness of internal controls and procedures, the Compensation Committee focused on compensation matters and associate well-being and engagement, the Finance and Strategy Committee focused on liquidity and capital structure, and the Risk Committee focused on potential information security risks.
Board and Committee Meeting Attendance
There were 612 meetings of the Board during 2017. Each2020. Other than Mr. English due to health complications, each director attended at least 75% of the aggregate number of meetings of the Board and meetings of Committees of which the director was a member during 2017.
Independent Directors Meetings
Periodically, the independent directors meet separately in executive session without management. The Lead Director presides over these meetings. The independent directors met in executive session 46 times during 2017.
Annual Meeting Attendance
We encourage members of the Board to attend our annual meeting of stockholders. All of our current directors, who were then-serving on the Board, attended the 20172020 Annual Meeting of Stockholders. Meetings of the Board and its Committees are being held in conjunction with the Annual Meeting. We expect all current directorsdirector nominees will attend the Annual Meeting.
Committees of the Board
Overview
Our Board has the following six standing committees (each, a "Committee"“Committee” and collectively, the "Committees"“Committees”):
the ATS Oversight Committee,
the Audit Committee,
the Compensation Committee,
the Executive Committee,
the Finance and Strategy Committee,
the Nominating and Governance Committee, and
the Risk Committee.
Cboe Global Markets 2021 Proxy Statement | 21 |
Other than the members of the Executive Committee required to be on thesuch Committee pursuant to our Bylaws, each of the members of the Committees was recommended by the Nominating and Governance Committee for approval by the Board for service on that Committee. Each of the Committees has a charter of which the charters forand the Audit Committee, Compensation Finance and Strategy, Risk,Committee, and Nominating and Governance CommitteesCommittee charters are available on the Corporate Governance page of our Investor Relations section of our website at: http://ir.Cboe.com.
The following table is a listing of the composition of our standing Board Committees during 20172020 and as of March 20, 2018,18, 2021, including the number of meetings of each Committee during 2017.2020. The RiskATS Oversight Committee was establishedformed on December 19, 2017 and had no meetings during 2017.November 20, 2020.
| | | | | | | |
Director | ATS Oversight | Audit | Compensation | Executive | Finance and Strategy | Nominating and Governance | Risk |
Number of meetings | 2 | 10 | 7 | — | 6 | 9 | 5 |
Edward T. Tilly (1) | | | |
| | | |
Eugene S. Sunshine (1) | | | |
| |
| |
Frank E. English, Jr. (3) | | |
| |
|
| |
William M. Farrow, III | |
| |
| | |
|
Edward J. Fitzpatrick | | |
|
| | |
|
Ivan K. Fong | | | | | | |
|
Janet P. Froetscher | | |
| | |
|
|
Jill R. Goodman | | | |
|
|
| |
Alexander J. Matturri, Jr. | |
| | | | | |
Jennifer J. McPeek |
|
| | | | | |
Roderick A. Palmore | | | |
|
|
| |
James E. Parisi |
|
|
|
| | | |
Joseph P. Ratterman |
| | | |
| | |
Michael L. Richter | |
| | | | |
|
Jill E. Sommers | | | | |
|
| |
Carole E. Stone (3) | |
| |
| |
|
|
Fredric J. Tomczyk | | |
| |
| | |
(4)| Director | Audit | Compensation | Executive | Finance and Strategy | Risk | Nominating and Governance | |
| Number of meetings | 11 | 5 | — | 6 | — | 6 | |
| Edward T. Tilly (1) | X*(2) | ||||||
| William J. Brodsky (1) (3) | X*(2) | ||||||
| James R. Boris (1) | X | ||||||
| Frank E. English, Jr. | X | X | |||||
| William M. Farrow, III | X(4) | X(5) | |||||
| Edward J. Fitzpatrick | X* | X(4) | X | X | |||
| Janet P. Froetscher | X | X(5) | |||||
| Jill R. Goodman | X | X | |||||
| R. Eden Martin (6) | X(6) | ||||||
| Christopher T. Mitchell | X(4) | ||||||
| Roderick A. Palmore | X | X*(5) | X | ||||
| Susan M. Phillips (7) | X(7) | ||||||
| Joseph P. Ratterman | X(4) | ||||||
| Michael L. Richter | X(4) | X(5) | |||||
| Samuel K. Skinner | X* | X | X | ||||
| Carole E. Stone | X | X | X* | X | |||
| Eugene S. Sunshine | X | X | X* | ||||
= Chair 
= Member
| (1) | The Chairman, Mr. Tilly, and the Lead Director, Mr. Sunshine, are both members of the Executive |
| (2) |
| Joined the Committee on May |
| (3) | Mr. English and Ms. Stone stepped down as members of the Board and Committees in connection with the 2020 Annual Meeting of Stockholder on May 12, 2020. |
22 | Cboe Global Markets 2021 Proxy Statement |
| (4) | Stepped down as a member of the Committee on May 12, 2020. |
| (5) | Joined the Committee on December 17, 2020. |
| (6) | Joined the Committee upon its formation on |
| (7) | |
| Effective |
Audit Committee
The Audit Committee consists of 45 directors, all of whom are independent under Nasdaq and BZX listing rules, as well as under Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”). The Audit Committee consists exclusively of directors who are financially literate. In addition, Mr. FitzpatrickParisi has been designated as our audit committee financial expert and meets the SEC definition of that position.
The Audit Committee'sCommittee’s responsibilities include:
engaging our independent auditor and overseeing its compensation, work, and performance,
reviewing and discussing the annual and quarterly financial statements and related press releases with management and the independent auditor, and
reviewing transactions with related persons for potential conflict of interest situations.
The Audit Committee also meets with our independent auditor in executive session without management present and our independent auditor may communicate directly, as needed, with members of the Audit Committee and the Board at large.
Compensation Committee
The Compensation Committee consists of 54 directors, all of whom are independent under Nasdaq and BZX listing rules. The Compensation Committee has primary responsibility to approve or make recommendations to the Board for:
all elements and amounts of compensation for the executive officers, including any performance goals,
reviewing succession plans relating to the CEO and our other executive officers,
the adoption, amendment and termination of cash and equity-based incentive compensation plans,
approving any employment agreements, severance agreements, or change in control agreements with executive officers,
oversee the policies and
the level and form of non-employee director compensation and benefits.
Nominating and Governance Committee
Overview
The Nominating and Governance Committee consists of 5 directors, all of whom are independent under Nasdaq and BZX listing rules. The Nominating and Governance Committee'sCommittee’s responsibilities include making recommendations to the Board on:
persons for election as director,
Cboe Global Markets 2021 Proxy Statement | 23 |
a director to serve as Chairman of the Board and an independent director to serve as Lead Director,
any stockholder proposals and nominations for director,
the appropriate structure, operations and composition of the Board and its Committees,
the Board and Committee annual self-evaluation process, and
the contents of the Corporate Governance Guidelines, Code of Business Conduct and Ethics, and other corporate governance policies and programs.
The Nominating and Governance Committee is also responsible for overseeing environmental, social, and governance (“ESG”). For additional information, see “Corporate Governance—Corporate Social Responsibility”.
Criteria for Directors
We believe that each of the individuals serving on our Board has the necessary skills, qualifications and experiences to address the challenges and opportunities we face. The Nominating and Governance Committee is responsible for considering and recommending to the Board nominees for election as director, including considering each incumbent director'sdirector’s continued service on the Board. The Committee annually reviews the skills and characteristics required of all directors in the context of the current composition of the Board, our operating requirements, targeted skills and experiences, and the long-term interests of our stockholders. In evaluating incumbent and new potential director candidates, the Committee takes into consideration many factors, including the individual'sindividual’s educational and professional background, whether the individual has any special experience in a relevant area, personal accomplishments, and cultural experiences. In addition, the Committee may consider such other factors it deems appropriate when conducting its assessment of director candidates.
Diversity
While we do not currently have a formal diversity policy, our Corporate Governance Guidelines provide that the Nominating and Governance Committee will seek to recommend to the Board candidates for director with a diverse range of experiences, qualifications, and skills in order to provide varied insights and competent guidance regarding our operations, with a goal of having a Board that reflects diverse backgrounds, experience, and viewpoints. We believe that we benefit from having directors with a diversity of skills, characteristics, backgrounds, and cultural experiences.
Identifying and Evaluating New Directors
The Nominating and Governance Committee utilizes a variety of methods to identify, recruit, and evaluate potential new director candidates. The Committee considers various potential candidates for director, considering the criteria discussed above and qualifications of the individual candidate. Board nominees can be identified by current directors, management, third-party professional search firms, stockholders, or other persons. Prior to a potential new director’s nomination, the director candidate is planned to meet separately with the Chairman of the Board, the Chair of the Nominating and Governance Committee, and the independent Lead Director, who will each consider the potential director’s candidacy. New director candidates may also meet separately with other members of the Board. In addition, a background check is completed before a final recommendation is made to the Board. After a review and evaluation of a potential new director based on the criteria discussed above, the Nominating and Governance Committee will decide whether to recommend to the Board the candidate’s appointment as a director or nominee for election as a director, and the Board will decide whether to approve the candidate’s appointment as a director or a nominee.
24 | Cboe Global Markets 2021 Proxy Statement |
Onboarding New Directors
New directors participate in a robust all-day orientation program to familiarize themselves with the company and management. Our orientation program for new directors includes a discussion of a broad range of topics, including the background of the company, the Board and its governance model, subsidiary governance, regulatory oversight, strategy and business operations, financial statements and capital structure, the management team, key industry and competitive factors, the legal and ethical responsibilities of the Board, and other matters crucial to the ability of a new director to fulfill his or her responsibilities.
Retirement
Our Corporate Governance Guidelines provide that once an individual serving on our Board reaches age 71, the Board shall begin to discuss the retirement plan with respect to such director. The Board expects that no director shall be elected or reelected as a director once he or she reaches age 73. Any director who turns 73 while serving as a director may continue to serve for the remainder of their current term.
Cboe Global Markets 2021 Proxy Statement | 25 |
Annual Board and Committee Self-Evaluations
The Board believes that a robust annual evaluation process is a critical part of its governance practices. The Nominating and Governance Committee is responsible for establishing and overseeing the Board’s and Committees’ annual self-evaluations to determine whether the Board and the Committees are functioning effectively and to identify potential areas of improvement. The annual self-evaluation process includes the following:
Stage in Process | Board of Directors | Committees |
Determine Discussion Topics ↓ |
|
|
Discussions ↓ |
|
|
Feedback ↓ |
|
|
Reviews ↓ |
| |
Feedback Incorporated |
| |
Nominating and Governance Committee determines specific topics and subject areas to discuss with each director, such as roles, responsibilities, structure, skills, experience, background, composition, and effectiveness
In addition to the annual evaluation process, the Board and Committees meet in regular executive sessions, which provides the directors with opportunities to reflect and provide feedback on an ongoing basis to determine whether the Board and the Committees are functioning effectively and to identify potential areas of improvement.
26 | Cboe Global Markets 2021 Proxy Statement |
Stockholder Nominations
The Nominating and Governance Committee will consider stockholder recommendations for candidates for our Board and will consider those candidates using the same criteria applied to candidates suggested by management. Stockholders may recommend candidates for our Board by contacting the Corporate Secretary of Cboe Global Markets, Inc. at 400 South LaSalle Street, Chicago, Illinois 60605.
In addition, stockholders may formally nominate candidates for our Board to be considered at an annual meeting of stockholders through the process described below under the heading "Stockholder Proposals."
ATS Oversight Committee
The ATS Oversight Committee, formed on November 20, 2020, is responsible for, among other things, overseeing the business and Strategy Committee
Executive Committee
The Executive Committee has the authority to exercise the powers and authority of the Board when the convening of the Board is not practicable, except as limited by its charter, the Company'sCompany’s Bylaws and applicable law.
Finance and Strategy Committee
The Finance and Strategy Committee’s responsibilities include approving or making recommendations to the Board regarding the budget, capital allocation, strategic plans, and acquisition or investment opportunities.
Risk Committee
The Risk Committee established on December 19, 2017, is generally responsible for, among other things, overseeing the risk assessment and risk management of the Company, including risk related to cyber security,cybersecurity, information technology, and the Company'sCompany’s compliance with laws, regulations, and its policies.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee is a current or former officer or employee of ours. In addition, there are no compensation committee interlocks with other entities with respect to any member of the Compensation Committee.
Cboe Global Markets 2021 Proxy Statement | 27 |
Stockholder Engagement
Cboe Global Markets and its Board are committed to fostering long-term and institution-wide relationships with stockholders and maintaining their trust and goodwill. As a result, each year we interact with stockholders through a variety of engagement activities. These engagements routinely cover strategy and performance, corporate governance, executive compensation, and other current and emerging issues to help ensure that our Board and management understand and address the issues that are important to our stockholders.
Our key stockholder engagement activities in 20172020 included attending virtual investor and industry conferences, participating in informational fireside chats, conducting telephonic investor road shows, in major U.S. cities and hosting meetings attelephonic meetings. Some of these conferences also featured webcasts and replays of the presentations so that our corporate headquarters.stockholders could listen remotely. In 2017,2020, we engaged with holders of approximately 3635 percent of our common stock outstanding. This activity included heavy engagement with stockholders in connection with our acquisition of Bats.
In 2017,2020 and early 2021, we also conducted an outreach specifically focused on corporate governance, executive compensation, and proxy season trends and issues, targeting our top ten stockholders that represent nearly 50 percent of institutional holdings. Through this effort, we spoke with representatives representing nearly 28 represented approximately 45 percent of our common stock outstanding shares at the timeand engaged with holders of the outreach.approximately 20 percent of our common stock outstanding. Through these discussions we gaingained valuable feedback, and this feedback iswas shared with the Board and its relevant Committees and we takeCommittees. We also took steps to address any areas of improvement. These discussions also covered our executive compensation program.
In addition, our quarterly earnings calls are open to the general public and feature a live webcast. The Annual Meeting, to be held in Chicago, also includes a live webcast, so all of our stockholders may listen to the meeting remotely if they are unable to attend the meeting in person.
Communications with Directors
As provided in our Corporate Governance Guidelines, stockholders and other interested parties may communicate directly with our independent directors or the entire Board. Our policy and procedures regarding these communications are located in the Investor Relations section of our website at http://ir.Cboe.com.
CORPORATE SOCIAL RESPONSIBILITY
The Board recognizes that operating in a socially responsible manner helps promote the long-term interests of our stockholders, organization, associates, industry, and community. Our guiding principles help us deliver on our corporate mission and strategy, including good citizenship.
We believe that being a good citizen means that we hold ourselves accountable for the integrity of the markets and to the communities we serve, seek to help resolve conflicts and build consensus, inform those impacted before taking action, lead by example, and serve as part of the solution. We also seek to be good citizens to the communities we serve by being committed to being environmentally conscious. Additionally, being good citizens also means that we strive to support our associates and better serve our industry and community through our human capital development, volunteerism and policies.
28 | Cboe Global Markets 2021 Proxy Statement |
Additional information on our common stock, or any immediate family member of such person, mustapproach to ESG can be approved or ratified by the Committee in accordance with the terms of the policy. Other than as described below, since January 1, 2017, there were no transactions in which Cboe Global Markets or any of its subsidiaries was a party, in which the amount involved exceeded $120,000 and in which a director, a director nominee, an executive officer, a security holder known to own more than 5% of our common stock or an immediate family member of any of the foregoing had, or will have, a direct or indirect material interest.
| Name | Number of Shares of Common Stock(1) | Percent of Voting Common Stock | |
| Edward T. Tilly | 102,000 | * | |
| Christopher R. Concannon | 142,526 | * | |
| Alan J. Dean (2) | 75,052 | * | |
| Joanne Moffic-Silver | 82,561 | * | |
| Mark A. Hemsley | 97,654 | * | |
| Edward L. Provost (2) | 91,747 | * | |
| Gerald T. O'Connell (2) | 71,893 | * | |
| James R. Boris (3) (4) | 13,461 | * | |
| Frank E. English, Jr. | 4,214 | * | |
| William M. Farrow III | 2,766 | * | |
| Edward J. Fitzpatrick | 7,429 | * | |
| Janet P. Froetscher | 18,061 | * | |
| Jill R. Goodman | 10,214 | * | |
| Christopher T. Mitchell (4) | 8,808 | * | |
| Roderick A. Palmore | 17,761 | * | |
| James E. Parisi | - | * | |
| Joseph P. Ratterman (5) | 32,513 | * | |
| Michael L. Richter | 22,181 | * | |
| Samuel K. Skinner (4) | 18,061 | * | |
| Jill E. Sommers | - | * | |
| Carole E. Stone | 14,241 | * | |
| Eugene S. Sunshine | 18,061 | * | |
| All serving directors, nominees and executive officers as a group (25 persons) | 1,007,301 | * | |
| T. Rowe Price Associates, Inc. (6) | 14,037,419 | 12.46% | |
| The Vanguard Group (7) | 11,347,583 | 10.07% | |
| BlackRock, Inc. (8) | 8,088,983 | 7.18% | |
| FMR LLC (9) | 7,139,489 | 6.34% | |
Cboe Global Markets 2021 Proxy Statement | 29 |
Compensation Philosophy and Summary
Our director compensation program provides director fees that are generally designed to be paid at competitive levels that are near the median of director fees of our peer group, which is discussed in further detail below in the “Executive Compensation—Compensation Discussion and Analysis” section. This allows us to attract and retain individuals with the skills, qualifications, and experiences required to sit on our Board.
Annually, the Compensation Committee consideredreviews a review of competitive market data analysis for Boardnon-employee director compensation fromproduced by Meridian Compensation Partners, LLC (“Meridian”), our independent compensation consultants,consultant, and recommended thatrecommends changes to our director compensation program, if any, to the Board make changes to thefor approval.
For 2020, our director compensation program consisted of a mix of: cash and stock retainers, committee meeting attendance fees, committee chair retainers, and an additional Lead Director retainer.
2020 Elements of Director Compensation Program
The compensation of our non-employee directors is based upon a compensation year beginning and ending in May at the time of our Annual Meeting of Stockholders. The following table reflects the amount paid with respect to be set at competitive levels. In 2017,each component of our director compensation program for the Board term ending with our 2017the 2020 Annual Meeting of Stockholders we compensated our non-employee directors as follows:
Annual Fees | May 2019 — |
| May 2020 — | ||
Cash retainer | $ | 90,000 | | $ | 90,000 |
Stock retainer, value based on closing price on date of grant | $ | 130,000 | | $ | 145,000 |
Committee chair cash retainer | | | | | |
ATS Oversight | $ | — | | $ | 20,000 |
Audit | $ | 25,000 | | $ | 25,000 |
Compensation | $ | 15,000 | | $ | 15,000 |
Finance and Strategy | $ | 15,000 | | $ | 15,000 |
Nominating and Governance | $ | 15,000 | | $ | 15,000 |
Risk | $ | 20,000 | | $ | 20,000 |
Lead Director cash retainer, in addition to above cash and stock retainers | $ | 50,000 | | $ | 50,000 |
Meeting Fees | | | | | |
Committee meeting attendance fee per meeting attended | $ | 1,500 | | $ | 1,500 |
Lead Director meeting attendance fee per Committee meeting attended for the Company and for each subsidiary board of directors or committee meeting attended | $ | 1,500 | | $ | 1,500 |
30 | Cboe Global Markets 2021 Proxy Statement |
In early 2020, the Board increased the stock retainer to more closely align with our non-employee directors as follows:
2020 Director of the Board, who does not receive meeting fees, received the cash and stock retainer that the other directors received and an additional cash retainer of $150,000.
The compensation of our non-employee directors for the year ended December 31, 20172020 for their service is shown in the following table. The Risk Committee chair did not receive a cash retainer in 2017.
|
| Fees Earned or |
| Stock | | All other | | | | |||
Name | | Paid in Cash | | Awards(1) | | Compensation(2) | | Total | ||||
Eugene S. Sunshine (3) | | $ | 255,500 | | $ | 145,088 | | $ | 11,900 | | $ | 412,488 |
Frank E. English, Jr. (4) | | $ | 55,500 | | $ | — | | $ | — | | $ | 55,000 |
William M. Farrow, III | | $ | 132,500 | | $ | 145,088 | | $ | — | | $ | 277,588 |
Edward J. Fitzpatrick | | $ | 123,000 | | $ | 145,088 | | $ | — | | $ | 268,088 |
Ivan K. Fong (5) | | $ | 13,500 | | $ | 58,022 | | $ | — | | $ | 71,522 |
Janet P. Froetscher | | $ | 121,500 | | $ | 145,088 | | $ | 5,500 | | $ | 272,088 |
Jill R. Goodman | | $ | 127,500 | | $ | 145,088 | | $ | — | | $ | 272,588 |
Alexander J. Matturri, Jr. (5) | | $ | 13,500 | | $ | 58,022 | | $ | — | | $ | 71,522 |
Jennifer J. McPeek (5) | | $ | 50,569 | | $ | 108,119 | | $ | — | | $ | 158,688 |
Roderick A. Palmore | | $ | 127,500 | | $ | 145,088 | | $ | — | | $ | 272,588 |
James E. Parisi (6) | | $ | 197,250 | | $ | 145,088 | | $ | 10,000 | | $ | 352,338 |
Joseph P. Ratterman | | $ | 102,000 | | $ | 145,088 | | $ | — | | $ | 251,568 |
Michael L. Richter | | $ | 112,500 | | $ | 145,088 | | $ | 10,330 | | $ | 267,918 |
Jill E. Sommers (7) | | $ | 261,000 | | $ | 145,088 | | $ | — | | $ | 406,088 |
Carole E. Stone (4) | | $ | 74,000 | | $ | — | | $ | — | | $ | 74,000 |
Fredric J. Tomczyk | | $ | 105,000 | | $ | 145,088 | | $ | — | | $ | 250,088 |
| 2017 Director Compensation | ||||||||||||||||
| Name | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation | Total | ||||||||||||
| William J. Brodsky (2) (3) | $ | 170,000 | $ | — | $ | 63,503 | $ | 233,503 | ||||||||
| James R. Boris | $ | 208,088 | $ | 100,026 | $ | — | $ | 308,114 | ||||||||
| Edward J. Fitzpatrick | $ | 141,000 | $ | 100,026 | $ | — | $ | 241,026 | ||||||||
| Frank E. English, Jr. | $ | 108,500 | $ | 100,026 | $ | — | $ | 208,526 | ||||||||
| William M. Farrow, III | $ | 110,000 | $ | 100,026 | $ | — | $ | 210,026 | ||||||||
| Janet P. Froetscher | $ | 105,000 | $ | 100,026 | $ | — | $ | 205,026 | ||||||||
| Jill R. Goodman | $ | 109,000 | $ | 100,026 | $ | — | $ | 209,026 | ||||||||
| R. Eden Martin (2) | $ | 48,000 | $ | — | $ | — | $ | 48,000 | ||||||||
| Christopher T. Mitchell (4) | $ | 78,000 | $ | 121,734 | $ | — | $ | 199,734 | ||||||||
| Roderick A. Palmore | $ | 127,000 | $ | 100,026 | $ | — | $ | 227,026 | ||||||||
| Susan M. Phillips (2) | $ | 48,000 | $ | — | $ | — | $ | 48,000 | ||||||||
| Joseph P. Ratterman (4) | $ | 81,000 | $ | 121,734 | $ | — | $ | 202,734 | ||||||||
| Michael L. Richter (4) | $ | 89,500 | $ | 121,734 | $ | — | $ | 211,234 | ||||||||
| Samuel K. Skinner | $ | 120,500 | $ | 100,026 | $ | — | $ | 220,526 | ||||||||
| Carole E. Stone | $ | 136,000 | $ | 100,026 | $ | — | $ | 236,026 | ||||||||
| Eugene S. Sunshine | $ | 122,500 | $ | 100,026 | $ | — | $ | 222,526 | ||||||||
| (1) | The non-employee directors then-serving on the Board received an equity grant of restricted stock on May |
| (2) |
| (3) | The amount shown in the |
Cboe Global Markets 2021 Proxy Statement | 31 |
| (4) | Mr. English and Ms. Stone left the Board and Committees in |
| (5) | |
| Ms. McPeek and Messrs. |
| (6) | The amount shown in the Fees Earned or Paid in Cash column for Mr. Parisi also includes fees of $60,000 for his service as a member of the boards of directors of CFE and SEF. |
| (7) | The amount shown in the Fees Earned or Paid in Cash column for Ms. Sommers also includes fees of $160,500 for her service as a member of the boards of directors of our |
Director Stock Ownership and Holding Guidelines
The Compensation Committee has adopted stock ownership and holding guidelines, which provide that each non-employee director should own stock equal to threefive times the cash annual retainer for directors within three five years of joining the Board.Board or within four years of May 2019 for directors then-serving when the guidelines were updated in May 2019. For purposes of this ownership and holding requirement, (a) shares owned outright or in trust and (b) restricted stock, including shares that have been granted but are unvested, are included. In addition, each non-employee director is required to hold all of their shares until the guidelines are met, except for sales of shares to pay taxes with respect to the vesting or exercising of equity grants. Other than Mr. Farrow,Parisi, Ms. Sommers, Ms. McPeek, and Messrs. Fong and Matturri, who waswere first elected to our Board in 2016,2018, 2019 and, with respect to the last three, 2020, respectively, each of the non-employee incumbent directors has met the ownership requirement as of December 31, 2017.
Director Hedging and Pledging Policies
Under our Insider Trading Policy, our directors are prohibited from entering into transactions involving options to purchase or sell our common stock or other derivatives related to our common stock. Our Insider Trading Policy also prohibits directors from entering into any pledges or margin loans on shares of our common stock. None of the directors have existing hedges, pledges or margin loans on shares of our common stock.
32 | Cboe Global Markets 2021 Proxy Statement |
PROPOSAL 2 - ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
In accordance with Section 14A of the Exchange Act, the Board is providing our stockholders with an advisory vote to approve executive compensation. This advisory vote, commonly known as a “say-on-pay” vote, is a non-binding vote to approve the compensation paid to our named executive officers as disclosed in this proxy statement in accordance with SEC rules. The designBoard has adopted a policy of providing for annual “say-on-pay” votes in accordance with the results of our last stockholder advisory vote.
As discussed in the “Compensation Discussion and Analysis” section, our executive compensation program includingis designed to meet the following objectives:
attract and retain talented and dedicated executives,
motivate our executives to achieve corporate goals that create value for our stockholders, and
align the compensation of our executive officers with stockholder returns.
The Compensation Committee has implemented the following best practices applicable to our executive officers in order to achieve these objectives:
a high proportion of total compensation is in the form of performance-based compensation with limits on all incentive award payouts,
incentive awards include financial measures and independent oversight,a relative stock price performance goal,
stock ownership and holding guidelines,
double trigger change in control provisions in equity awards and for severance benefits in employment agreements and the Executive Severance Plan,
prohibition on hedging,
prohibition on pledging,
elimination of tax gross-up payments in the event of a change in control, and
clawbacks of incentive compensation.
We believe that the compensation paid to the named executive officers is intendedappropriate to align management'stheir interests with those of our stockholders to generate stockholder returns. Accordingly, the Board recommends that our stockholders vote in favor of the say-on-pay vote as set forth in the following non-binding resolution:
RESOLVED, that our stockholders approve, on an advisory basis, the compensation paid to our named executive officers, as disclosed in this Proxy Statement, including under the heading “Compensation Discussion and pay forAnalysis,” the accompanying compensation tables and the corresponding narrative discussion.
As this is an advisory vote, the outcome of the vote is not binding on us with respect to executive compensation decisions, including those relating to our performance.named executive officers. Our Compensation Committee and Board value the opinions of our stockholders. The Compensation Committee and Board will consider the results of the say-on-pay vote and evaluate whether any actions should be taken in the future.
Cboe Global Markets 2021 Proxy Statement | 33 |
Non-binding approval of our executive compensation program requires that a majority of the shares cast on this matter be cast in favor of the proposal. Abstentions and broker non-votes will not be counted as votes cast and therefore will not affect the vote.
The Board recommends that the stockholders vote FOR approval, in a non-binding resolution, of the compensation paid to our executive officers.
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis section is intended to provide our stockholders with an understanding of our compensation practices and philosophy, material elements of our executive compensation program, and the decisions made in 2020 with respect to the total compensation awarded to, earned by, or paid to each of the following 2020 “named executive officers” or “NEOs”:
Name | Title* |
Edward T. Tilly | Chairman, President and Chief Executive Officer |
Christopher A. Isaacson | Executive Vice President and Chief Operating Officer |
Brian N. Schell | Executive Vice President, Chief Financial Officer and Treasurer |
David Howson | Executive Vice President, President Europe |
Bryan Harkins | Executive Vice President, Head of Markets Division |
* | Titles are as of December 31, 2020. |
34 | Cboe Global Markets 2021 Proxy Statement |
This Compensation Discussion and Analysis section is organized as follows:
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Performance Affecting Fiscal 2020 Annual Incentive Pay Outcomes | 36 |
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Employee Benefit Plans, Severance, Change in Control and Employment-Related Agreements | 57 |
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Cboe Global Markets 2021 Proxy Statement | 35 |
Principal Components of 2020 Executive Compensation
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| Base Salary (16% of CEO’s target pay mix) |
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| Annual Incentive Bonus (26% of CEO’s target pay mix) |
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| Long-Term Equity Awards -Restricted Stock Units (29% of CEO’s target pay mix) |
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| -Performance Share Units (29% of CEO’s target pay mix) |
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Performance Affecting Fiscal 2020 Annual Incentive Pay Outcomes
| ||
2020 Adjusted Net Revenues1 | | 2020 Adjusted EBITDA1 |
$1,213 Million | | $865 Million |
| |
|
96% of Target Earned | | 124% of Target Earned |
Performance Affecting 2018-2020 PSU Pay Outcomes
| ||
3-Year Adjusted EPS1 | | 3-Year Relative TSR |
$15.02 | | 14th Percentile |
| |
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200% of Target PSUs Earned | | 0% of Target PSUs Earned |
1 Adjusted revenues less cost of revenues (“net revenues”), adjusted earnings before interest, taxes, depreciation, and amortization (“adjusted EBITDA”), and 3-year adjusted EPS are non-GAAP measures used by the Company and reconciliations to GAAP measures are provided in 2017 is a resultAppendix A.
36 | Cboe Global Markets 2021 Proxy Statement |
Compensation Governance Practices
What we do | What we | ||
| |||
| | Ä No hedging of Company stock by executives Ä No pledging of Company stock by executives Ä No tax gross-ups upon a change in control or otherwise | |
Ä No excessive use of employment contracts | |||
Ä No payouts for below threshold level for corporate performance | |||
Ä No excessive perquisites | |||
Ä No guaranteed annual incentive | |||
| payments | |||
Mitigate compensation risk| (1) | build upon core proprietary products, |
| (2) | leverage leading proprietary trading technology, |
| (3) | diversify business mix with growth of non-transactional revenue, |
| (4) | broaden geographic reach, and |
| (5) | expand product lines across asset classes. |
The following is a brief summary of our 20172020 business highlights as they relate to the ongoing commitment of our team and the Board to this strategy and the key performance metrics used in our performance-based compensation program as well as other business highlights.program.
Financial Results
| o | Net revenues of $1,254 million for 2020, up 10% from $1,137 million for 2019. |
| o | Diluted EPS of $4.27 for 2020, up 28% from $3.34 for 2019. |
Business Results
| o | Launched mini VIX futures and options on S&P 500 ESG Index. |
| o | Acquired and integrating information solutions companies Hanweck, FT Options, and Trade Alert, in furtherance of the Company’s strategy to increase non-transactional revenue. |
| | Cboe Global Markets 2021 Proxy Statement | 37 |
| o | Acquired MATCHNow, BIDS Trading, and EuroCCP to expand geographic reach and diversify product capabilities. |
| o | Started process to develop pan-European derivatives for a planned launch in 2021. |
Navigating COVID-19 Global Pandemic
| o | Capitalized on increased engagement among retail investors, such that total options volume and total U.S. equities volume reached new all-time highs in 2020. |
| o | Successfully transitioned open outcry trading to all electronic trading when open outcry trading was temporarily suspended; then reopened the trading floor with a modified layout and stringent safety protocols in place. |
| o | Provided frequent communications to directors, employees, customers, regulators, critical vendors, technology equipment suppliers, data and disaster recovery centers, and other service providers. |
| o | Continued to operate our business and achieved solid results in 2020, while successfully shifting all global employees (except those deemed essential) to work from home on a temporary basis and implementing travel restrictions. |
We believe that the performance of the Company demonstrates that management is keenly focused on obtaining short-term results, while positioningdriving the Company for sustainable long-term growth. We also continued our integration of Bats,growth and diversifying the Company’s business, while achieving our previously disclosed synergy goals.obtaining short-term results. Our business continued to generate strong cash flows from operations and we paid down debtwere able to return $520 million to stockholders through dividends and deployed capital to enhance stockholder returnsshare repurchases while retaining the flexibility to pursue new growth opportunities. To that end, in 2017:
in keeping with our goal of consistent and sustainable dividend growth, we increased our quarterly dividend by 8%17% to $0.27$0.42 per share;share and
we paid off $400repurchased 3.5 million of the $1.65 billionour outstanding shares of debt we incurredcommon stock under a share repurchase program for a total of $349 million.
Despite these solid results in the aggregate to finance our acquisition of Bats.
-21% over the past year;
-22% over the past three years.
Cboe Global Markets 2018 Proxy Statement 26
387% over the Company effective February 28, 2017 and Messrs. Provost's and O'Connell's last day with the Company was February 28, 2017. Information presented regarding total compensation awarded to, earned by or paid to Messrs. Concannon and Hemsley is from February 28, 2017 to December 31, 2017. Mr. Dean's last day with the Company was December 31, 2017. Ms. Moffic-Silver's last day with the Company was February 28, 2018.
Our executive compensation program is designed to attract and retain talented and dedicated executives who are instrumental in our achievement of key strategic business objectives. To meet these objectives, the Compensation Committee designed and implemented a program that pays a substantial portion of executive compensation based on corporate and individual performance.
The Compensation Committee believes that our executive compensation program plays a vital role in contributing to the achievement of key strategic business objectives that ultimately drive long-term business success. Accordingly, we designed our executive compensation program to focus our
38 | Cboe Global Markets 2021 Proxy Statement |
executives on achieving critical corporate financial and strategic goals, while taking steps to position the business for sustained growth in financial performance over time. The
Our executive compensation arrangements for Messrs. Concannon and Hemsley, which are set forth in their respective employment and offer letter agreements, were determined using the same methodology as used for eachprogram generally consists of the other named executive officers. These employmentfollowing elements, in addition to retirement, health, and offer letter agreements are described more fully below under "Severance, Change in Control and Employment-Related Agreements."welfare benefits:
Cboe Global Markets 2021 Proxy Statement | 39 |
The following charts are an approximate distribution ofshow the 2020 total target 2017 compensation mix for the Chairman and Chief Executive Officer and the other named executive officers as a group (excluding Messrs. Provostgroup. For the Chief Executive Officer and O'Connell).the other named executive officers, the majority of 2020 total target compensation is “at-risk” (i.e., linked to achievement of performance goals and/or the value is tied to our common stock price) and, further, the majority of “at-risk” pay is in the form of equity awards. Total target compensation is the sum of an executive officer's 2017officer’s 2020 base salary, target annual incentive opportunity and target value for long-term equity awards (i.e., RSUs and PSUs). The following does not reflect the Lag Grants (as defined below), Sign-on Grants (as defined below) nor the retirement benefits described below.
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Company’s Response to Stockholder Votes on Say-on-Pay and on Frequency of Stockholder Vote on Say-on-Pay
At the 20172020 Annual Meeting of Stockholders, our "say-on-pay"“say-on-pay” proposal received the support of over 95%93% of the votes cast for approval of our 20162019 executive compensation program as disclosed in our 20172020 Proxy Statement, and every year since going public in 2010, we have received over 85% stockholder support of our executive compensation programs.
The Compensation Committee has reviewed the results of the stockholder vote on our 20162019 executive compensation program and considered such results supportive of our executive compensation program and the Compensation Committee'sCommittee’s measured approach to modifying our compensation practices to enhance their alignment with stockholder interests. In addition, the Compensation Committee has determined that the vote result did not warrant any large-scale changes to our executive compensation program; however, the Compensation Committee continues to take steps, as described below, to help ensure our compensation practices remain aligned with best practices and stockholder interests.
The Board and Compensation Committee did not make any in-cycle changes to continue the annual frequency for holdingincentive program or long-term equity awards in 2020 as a stockholder vote on future "say-on-pay" proposals received the support of over 85%result of the votes cast. In connection with such result, the Board determined that a non-binding "say-on-pay" vote will be included annually, consistent with prior practice, in our future proxy materials until the next vote on frequency or until the Board elects to implement a different frequency for such advisory votes.COVID-19 global pandemic.
40 | Cboe Global Markets 2021 Proxy Statement |
The Board and Compensation Committee determine actual annual incentive bonus payouts based on achieved results measured against pre-established corporate and individual performance goals. As a result of our successful integration of Bats and larger focus on individual performance, at the beginning of 2020 the Compensation Committee removed the annual incentive award’s corporate performance synergy metric and redistributed its weighting to individual and other corporate performance metrics to better align the interests of our executives with our business strategy and stockholders. For 2020, the metrics and weightings were updated as follows:
9 | | |
2019 Metrics | | 2020 Metrics |
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o Achievement of Synergies | | o Achievement of Adjusted Net Revenue |
o Achievement of Net Revenue | | o Achievement of Adjusted EBITDA |
o Achievement of Adjusted EBITDA | | o Achievement of Business Unit Performance |
o Achievement of Business Unit Performance | | |
2020 Target Annual Pay Opportunities
The following chart shows the 2020 total target compensation for each named executive officer.
| | | | | | | | Target Long-Term | | | | ||||
| | | | | Target Annual | | Equity Awards | | | | |||||
Named Executive Officer(1) | | Base Salary | | Incentive Bonus |
| RSUs (2) | | PSUs (2) | | Total | |||||
Edward T. Tilly | | $ | 1,265 | | $ | 2,087 | | $ | 2,350 | | $ | 2,350 | | $ | 8,052 |
Christopher A. Isaacson | | $ | 650 | | $ | 975 | | $ | 875 | | $ | 875 | | $ | 3,375 |
Brian N. Schell | | $ | 525 | | $ | 735 | | $ | 750 | | $ | 750 | | $ | 2,760 |
David Howson (3) | | $ | 575 | | $ | 633 | | $ | 325 | | $ | 325 | | $ | 1,858 |
Bryan Harkins | | $ | 500 | | $ | 500 | | $ | 325 | | $ | 325 | | $ | 1,650 |
| (1) | All amounts are in thousands. |
| (2) | Represents the target equity award value used to calculate the number of shares to grant. |
| (3) | Mr. Howson receives his cash compensation in British pounds. The amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.37, which was the exchange rate as of December 31, 2020. |
This supplemental table is not required, but rather it is provided to demonstrate our named executive officers’ total target compensation opportunity for 2020. Please refer to the Summary Compensation Table below for complete disclosure of the total compensation of our named executive officers reported in accordance with the SEC disclosure requirements.
Executive Compensation Program Governance Cycle
Throughout the year, the Board and the Compensation Committee are heavily involved in reviewing, monitoring, and approving, as applicable, the executive compensation program. The Compensation Committee, composed of all independent directors, is responsible for reviewing the various components of the total compensation program for all executive officers. The Compensation Committee met 7 times in 2020. The Compensation Committee either approves or makes recommendations to the Board regarding compensation related decisions. Messrs. Tilly, Isaacson, and Schell generally attended portions of the 2020 meetings of the Compensation Committee to provide information and assistance, other than when the Compensation Committee discussed the respective executive’s compensation.
Cboe Global Markets 2021 Proxy Statement | 41 |
While specific topics may vary from meeting to meeting, the following illustration describes the general annual cycle of the Board’s and Compensation Committee’s activities.
Independent Compensation Consultant
For 2020, the Compensation Committee engaged Meridian as its independent compensation consultant to provide the Compensation Committee with advice and assistance related to the design of our executive compensation program.
Meridian reviews our executive compensation program and advises the Compensation Committee on best practices and plan design to help improve the program’s effectiveness and alignment with market practices. In addition, Meridian provides advice to the Compensation Committee on the Company’s compensation peer group and on the competitive positioning of the various components of the executive compensation program. Meridian consultants regularly attend meetings of the Compensation Committee. Meridian also meets with the Compensation Committee in executive session without management present and may communicate directly, as needed, with members of the Compensation Committee and the Board at large. Based on a review of its engagement of Meridian and consideration of factors set forth in SEC and BZX rules, the Compensation Committee determined that Meridian’s work did not raise any conflicts of interest and that it is independent from management.
42 | Cboe Global Markets 2021 Proxy Statement |
When reviewing compensation for the named executive officers, the Compensation Committee may consider tally sheets that detail the various elements of compensation for each executive. These tally sheets, developed with the assistance of Meridian, are used to evaluate the appropriateness of each named executive officer’s total compensation package, to compare each executive’s total compensation opportunity with his or her actual payout, to assess the level of holding power in unvested equity awards, and to help ensure that the compensation appropriately reflects the executive compensation program’s focus on pay for performance and alignment with stockholder interests.
Peer GroupsGroup and Comparative Data
For the 2020 compensation consultant,decisions, the Compensation Committee continued to use twoused a single peer groupsgroup from which to derive competitive market compensation data: (i) the Securities Exchange Peer Group and (ii) the Broader Financial and Technology Industry Peer Group.data. The Securities Exchange Peer Group24-company peer group was composed of sevenexchange holding companies, each with a heavy focus on our industry. The Broader Financial and Technology Industry Peer Group was composed of 18 companies, and included financial services firms, and technology-focused companies with corporate profiles similar to ours, with revenues ranging between one-third to three-timesours. Based on the Company's projectedthen-available fiscal year 2019 data, the Company’s annual revenue.revenue, market capitalization, and number of employees fell below the median of the peer group. The Compensation Committee utilizes this twoused the market data derived from the peer group model to derive meaningful compensation data due to our unique business model and to ensure that our target compensation is competitive. The Compensation Committee also uses this data as points of reference, rather than as the sole determining factorsfactor in setting compensation for our named executive officers.
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Peer Group | |||
Akamai Technologies, Inc. | |||
London Stock Exchange Group plc | |||
Broadridge Financial Solutions, Inc. | LPL Financial Holdings Inc. | |
Citrix Systems, Inc. | MarketAxess Holdings Inc. | |
CME Group Inc. | MSCI Inc. | |
Deutsche Borse AG | Nasdaq, Inc. | |
Equifax Inc. | SEI Investments Company | |
E*TRADE Financial Corporation | SS&C Technologies Holdings, Inc. | |
Euronet Worldwide, Inc. | Stifel Financial Corp. | |
FactSet Research Systems Inc. | Synopsys, Inc. | |
Fortinet, Inc. | TransUnion | |
Intercontinental Exchange, Inc. | Verisk Analytics, Inc. | |
Jack Henry & Associates, Inc. | Virtu Financial, Inc. | |
Following the 20172020 compensation decisions, and following the acquisition of Bats,Compensation Committee reviewed the peer group. The Committee approvedreviewed the following updates to the Broader Financialdata provided by Meridian and Technology Industry Peer Group:
Cboe Global Markets 2021 Proxy Statement | 43 |
2020 Elements of Executive Compensation
The base salary for our named executive officers is designed to be part of a competitive total compensation package when compared to both of our peer groups.group. Base salary provides our named executive officers with a measure of certainty within their total compensation package and provides a baseline for their target payout opportunity under the annual incentive plan. In setting base salary, in addition to considering market benchmark data derived from our peer group, data, the Compensation Committee also considered for each named executive officer the following factors:
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For 2017,2020, the Compensation Committee reviewed andapproved or made recommendations to the Board regarding the base salaries for each of the named executive officers, other than Messrs. Concannon and Hemsley, with input in part from Mr. Tilly regarding the individual performances of Messrs. Isaacson, Schell, Howson, and Harkins. Below are the base salary amounts at December 31, 2020 and 2019 for the named executive officers and the aggregate percent change.
| | 2019 Base | | 2020 Base | | Percent | ||||
Named Executive Officer | | Salary (1) | | Salary (1) | | Change | ||||
Edward T. Tilly | | $ | 1,265 | | $ | 1,265 | | 0 | % | |
Christopher A. Isaacson | | $ | 650 |
| $ | 650 | | 0 | % | |
Brian N. Schell | | $ | 521 |
| $ | 525 | | 1 | % | |
David Howson (2) | | $ | 492 |
| $ | 575 | | 17 | % | |
Bryan Harkins | | $ | 500 |
| $ | 500 | | 0 | % | |
| (1) | In thousands |
| (2) | Mr. Howson receives his cash compensation in British pounds. The 2020 amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.37, which was the exchange rate as of December 31, 2020. The 2019 amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.33, which was the exchange rate as of December 31, 2019. |
The base salary for Mr. Dean, Ms. Moffic-Silver, Mr. Provost and Mr. O'Connell. DueHowson increased due to the acquisition of Bats, our strong corporate performance in 2016, Mr. Tilly'shis assumption of additional responsibilities in leading a larger company,as the new Executive Vice President, President Europe and our goal of aligningto more closely align compensation with comparative peer group market data provided by Meridian, the base salary for Mr. Tilly increased 15% in February 2017. No changes were made to the base salaries for Mr. Dean, Ms. Moffic-Silver, Mr. Provost and Mr. O'Connell in 2017.
.Overview. The annual incentive, or bonus, component of the total compensation package paid to our named executive officers is intendeddesigned to reward performance relative to annual goals that were approved by the Board and Compensation Committee at the beginningachievement of the year. In the first quarter following the performance year, the Compensation Committee reviewskey corporate and individual performance for the yeargoals that drive our annual operating and makes recommendations to the Board for annual incentives to be paid to the named executive officers.financial results.
44 | Cboe Global Markets 2021 Proxy Statement |
The Compensation Committee established a target annual incentive opportunity for each of the named executive officers other than Messrs. Concannon and Hemsley, by considering market benchmark data derived from our two peer groups, in addition togroup and the following factors:
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The table below shows each named executive officer’s 2019 and 2020 target annual incentive opportunity, shown as a percentage of salary, and the executive officer's job responsibilities, experience, pay history and ability to affect our successchange in the upcoming year. With respect to Messrs. Concannon and Hemsley, for 2017, the Compensation Committee established apercentage points.
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| 2019 Target Annual | | 2020 Target Annual | | | | | | |||||
| | Incentive | | Incentive | | | | | | |||||
| | Opportunity as | | Opportunity as | | | | Change in | | |||||
| | Percentage of | | Percentage of | | | | Percentage | | |||||
Named Executive Officer | | Base Salary | | Base Salary | | | | Points | | |||||
Edward T. Tilly |
| 165 | % | | 165 | % | | 0 | pts | |||||
Christopher A. Isaacson |
| 150 | % | | 150 | % | | 0 | pts | |||||
Brian N. Schell |
| 140 | % | | 140 | % | | 0 | pts | |||||
David Howson |
| 90 | % | | 110 | % | | 20 | pts | |||||
Bryan Harkins |
| 100 | % | | 100 | % | | 0 | pts | |||||
The target annual incentive opportunity for each of the executive officers by considering comparative market data and the following factors: the executive officer's expected job responsibilities, experience, pay history at Bats and ability to affect our success in the upcoming year, following the start of their employment with us. The initial target annual incentive opportunities for Messrs. Concannon and Hemsley are set forth in their respective employment and offer letter agreements, which are described more fully below under "Severance, Change in Control and Employment-Related Agreements."
The Compensation Committee determines actual annual incentive bonus payouts based on achieved results measured against pre-established performance metrics.goals. The use of pre-established performance metrics and related goals creates an annual incentive plan that rewards our executive officers for superiorstrong performance, reduces payouts when performance does not meet target and eliminates payouts if performance does not meet threshold. In addition, the performance metrics and related goals create a more structured, formulaic annual incentive plan - plan—the executive officers know throughout the year what needs to be accomplished and what specific bonus dollar amounts can be earned at different performance levels.
The Company funds the annual incentive plan for our U.S. named executive officers from a bonus pool based on the achievement of a corporate performance metric. The Compensation Committee also establishes annual performance metrics for each named executive officer that include corporate metrics and non-financial individual goals. At the beginning of 2017, the Compensation Committee established the "bonus pool" based on a percentage of the Company's adjusted pre-tax net income and allocated a fixed proportion of any bonus pool formed to our named executive officers, other than Mr. Hemsley, whofollowing is a U.K. based employee, and Messrs. Provost and O'Connell. However,graphical depiction showing the Compensation Committee maintains discretion to adjust a named executive officer's allocable share of the bonus pool based on achieved performance against corporate performance metrics (achievement of synergies and revenues) weighted 70% in the aggregate and individual performance goals weighted 30%. In no event may the Compensation Committee award anformula used for determining annual incentive bonus in an amount greater than a named executive officer's allocable portionpayouts.
Cboe Global Markets 2021 Proxy Statement | 45 |
As more fully described below, for the bonus pool.
The Company will pay no annual incentive bonus if actual performance is below threshold. The following chart shows the aggregate bonus payout opportunity for each named executive officer at thesevarious performance levels. Mr. Hemsley receives his cash compensation in British pounds and his salary and bonus payout opportunity as reported below were converted to U.S. dollars using a rate of £1.00 to $1.35, which was the exchange rate as of December 31, 2017.
| | | | | Target Annual | | | | | | | | | | |
| | | | | Incentive | | | | | | | | | | |
| | | | | Opportunity as | | Annual Bonus Payout | ||||||||
| | Base | | Percentage of | | Opportunity (1) | |||||||||
Named Executive Officer |
| Salary (1) |
| Base Salary |
| Threshold |
| Target |
| Maximum | |||||
Edward T. Tilly | | $ | 1,265 |
| 165 | % | | $ | 365 | | $ | 2,087 | | $ | 4,175 |
Christopher A. Isaacson | | $ | 650 |
| 150 | % | | $ | 171 | | $ | 975 | | $ | 1,950 |
Brian N. Schell | | $ | 525 |
| 140 | % | | $ | 129 | | $ | 735 | | $ | 1,470 |
David Howson (2) | | $ | 575 |
| 110 | % | | $ | 111 | | $ | 633 | | $ | 1,266 |
Bryan Harkins | | $ | 500 |
| 100 | % | | $ | 88 | | $ | 500 | | $ | 1,000 |
| (1) | In thousands |
| (2) | Mr. Howson receives his cash compensation in British pounds. The amounts reported were converted to U.S. dollars using a rate of £1.00 to $1.37, which was the exchange rate as of December 31, 2020. |
| Named Executive Officer | Base Salary* | Target Annual Incentive Opportunity as Percentage of Base Salary | Annual Bonus Payout Opportunity* | ||
| Threshold | Target | Maximum | |||
| Edward T. Tilly | $1,150 | 165% | $569 | $1,898 | $3,511 |
| Christopher R. Concannon | $1,000 | 150% | $450 | $1,500 | $2,775 |
| Alan J. Dean | $525 | 140% | $221 | $735 | $1,360 |
| Joanne Moffic-Silver | $433 | 140% | $182 | $606 | $1,121 |
| Mark S. Hemsley | $659 | 95% | $186 | $621 | $1,149 |
| Edward L. Provost | $630 | 150% | $284 | $945 | $1,748 |
| Gerald T. O'Connell | $425 | 140% | $179 | $595 | $1,101 |
Corporate Performance.. TheFor the 2020 annual incentive plan, the Compensation Committee approved the following corporate performance metrics: (i) adjusted net revenue, (ii) adjusted EBITDA, and (iii) business unit performance. Given their corporate-wide responsibilities, business unit performance goals were not assigned to Messrs. Tilly or Isaacson. These performance metrics, achievement of synergies (30%) and achievement of revenue (40%),in the aggregate, are weighted 70% in the aggregate of each named executive officer'sofficer’s target annual incentive opportunity. The Compensation Committee approved these metrics for the following reasons:
to better align the interests of our executives with stockholders, and
to focus our executives on the integration of Bats through cost savings and growing our revenue. More specifically, these metrics focus and reward management's efforts to achieve key business strategy goals of synergies related to the transformational acquisition of Bats andlong-term growth by continuing to increase our revenue and earnings by increasing trading in our products.products,
to allocate a larger weighting to adjusted EBITDA growth because executives are able to influence it to a larger degree than revenue growth, and
to allocate different weightings of the corporate performance metrics based on whether an executive is a corporate or business unit leader, thereby driving the importance of certain metrics over which an executive has more impact.
46 | Cboe Global Markets 2021 Proxy Statement |
The following shows the corporate performance metrics and their relative weightings for 2020 for the named executive officers.
Named Executive Officer | | Adjusted Net Revenue | Adjusted EBITDA | | Business Unit Performance | |||
Edward T. Tilly | | 25 | % | 45 | % | | — | % |
Christopher A. Isaacson | | 25 | % | 45 | % | | — | % |
Brian N. Schell | | 25 | % | 35 | % | | 10 | % |
David Howson | | 15 | % | 15 | % | | 40 | % |
Bryan Harkins | | 15 | % | 15 | % | | 40 | % |
The Compensation Committee also established the following levels of the achievement of synergies and revenue for 2017 to be met with respect togoals at threshold, target, and maximum bonus payouts.performance levels and payouts with respect to the corporate performance metrics. The Compensation Committee used straight-line interpolation to determine amountspayouts for anyperformance results in between the threshold and target performance levels and in between the target and maximum performance levels. The following also showspercentage payout of target incentive opportunity for each of the metrics is 25% for threshold, 100% for target, and 200% for maximum.
For each named executive officer, the tables below show the corporate performance metric threshold, target, and maximum goals, actual performanceperformances and percentage payouts of target for 2017.
| Performance Metric | Weighting | Threshold | Target | Maximum | Actual |
| Corporate Performance Metrics | |||||
| Achievement of Synergies | 30% | $10 million | $15 million | $25 million | $25 million |
| Percentage Payout of Target | — | 50% | 100% | 150% | 150% |
| Achievement of Revenue | 40% | $916 million | $1,145 million | $1,374 million | $1,154 million |
| Percentage Payout of Target | — | 0% | 100% | 200% | 101% |
Messrs. Tilly’s and Isaacson’s 2020 Percentage Payout of Target
As officers with corporate-wide responsibilities, Messrs. Tilly’s and Isaacson’s 2020 annual incentive awards were subject to achievement of synergiesadjusted net revenue and adjusted EBITDA for the Company performance goals.
Performance Metrics |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (1) | | 25% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% |
Adjusted EBITDA (Company) (1) | | 45% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% |
* | In millions |
| (1) | Adjusted net revenue and adjusted EBITDA for the Company are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A. |
Mr. Schell’s 2020 Percentage Payout of Target
As the Executive Vice President, Chief Financial Officer and Treasurer and an officer with corporate wide responsibilities, Mr. Schell’s annual incentive award was subject to the achievement of adjusted net revenue and adjusted EBITDA for the Company and the finance, facilities and administrative
Cboe Global Markets 2021 Proxy Statement | 47 |
department budgetary goals. The specific goals for the department metrics are not disclosed for competitive purposes.
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Performance Metrics |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (1) | | 25% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% |
Adjusted EBITDA (Company) (1) | | 35% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% |
Finance, Facilities & Admin | | 10% | | $ | — (2) | | $ | — (2) | | $ | — (2) | | $ | — (2) | | 153% |
* | In millions |
| (1) | Adjusted net revenue and adjusted EBITDA for the Company are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A |
| (2) | Not disclosed for competitive purposes. |
Mr. Howson’s 2020 Percentage Payout of Target
As leader of our European business unit, Mr. Howson’s annual incentive award was primarily subject to the achievement of the European business unit and also subject to adjusted net revenue and adjusted EBITDA for the Company performance goals.
Performance Metrics (1) |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (2) | | 15% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% |
Adjusted EBITDA (Company) (2) | | 15% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% |
Adjusted Net Revenue (Europe) (3) | | 10% | | $ | 79 | | $ | 93 | | $ | 107 | | $ | 93 | | 98% |
Adjusted EBITDA (Europe) (3) | | 30% | | $ | 41 | | $ | 51 | | $ | 62 | | $ | 58 | | 151% |
* | In millions |
| (1) | European performance goals were converted to U.S. dollars using a rate of £1.00 to $1.28, which was the budgeted exchange rate. |
| (2) | Adjusted net revenue and adjusted EBITDA for the Company are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A. |
| (3) | Adjusted net revenue and adjusted EBITDA for the European business unit are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A. |
Mr. Harkins’ 2020 Percentage Payout of Target
As the leader of the markets business unit, Mr. Harkins’ annual incentive award was primarily subject to the achievement of the markets business unit and also subject to adjusted net revenue and adjusted EBITDA for the Company performance goals. The markets business unit performance is
48 | Cboe Global Markets 2021 Proxy Statement |
derived from the sum of the performances of the options, futures, North American (“NA”) equities, and global FX business units.
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Performance Metrics |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (1) | | 15% | | $ | 1,098 | | $ | 1,220 | | $ | 1,342 | | $ | 1,213 | | 96% |
Adjusted EBITDA (Company) (1) | | 15% | | $ | 710 | | $ | 836 | | $ | 961 | | $ | 865 | | 124% |
Options Adjusted Net Revenue (2) | | n/a | | $ | 524 | | $ | 617 | | $ | 709 | | $ | 632 | | n/a |
Futures Net Revenue | | n/a | | $ | 118 | | $ | 139 | | $ | 160 | | $ | 106 | | n/a |
NA Equities Adjusted Net Revenue (2) | | n/a | | $ | 268 | | $ | 315 | | $ | 362 | | $ | 324 | | n/a |
Global FX Net Revenue | | n/a | | $ | 48 | | $ | 56 | | $ | 65 | | $ | 58 | | n/a |
Adjusted Net Revenue (Markets) (2) | | 10% | | $ | 958 | | $ | 1,127 | | $ | 1,296 | | $ | 1,120 | | 97% |
Options Adjusted EBITDA (2) | | n/a | | $ | 355 | | $ | 444 | | $ | 533 | | $ | 476 | | n/a |
Futures Adjusted EBITDA (2) | | n/a | | $ | 68 | | $ | 85 | | $ | 102 | | $ | 57 | | n/a |
NA Equities Adjusted EBITDA (2) | | n/a | | $ | 184 | | $ | 230 | | $ | 276 | | $ | 247 | | n/a |
Global FX Adjusted EBITDA (2) | | n/a | | $ | 23 | | $ | 29 | | $ | 35 | | $ | 32 | | n/a |
Adjusted EBITDA (Markets) (2) | | 30% | | $ | 630 | | $ | 787 | | $ | 945 | | $ | 812 | | 116% |
* | In millions, numbers may not foot due to rounding |
| (1) | Adjusted net revenue and adjusted EBITDA for the Company are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A. |
| (2) | Adjusted net revenue and adjusted EBITDA for each respective business unit, as applicable, are non-GAAP measures used by the Company and reconciliations of actual performances to GAAP measures are provided in Appendix A. |
The achievement of adjusted net revenue, adjusted EBITDA, and business unit performances are measured as of December 31, 20172020. Minor adjustments to the Options and the target is $15 million of 2017 realized cost synergies that wasFutures business unit metrics were further reviewed and approved in February 2021 by the Board to better reflect organizational budgeting. In February 2021, the Board approved the actual performances of adjusted net revenues, adjusted EBITDA, and European and markets business units.
The actual adjusted net revenue and adjusted EBITDA results for the Company exclude our acquisitions completed in September 20162020 (MATCHNow, EuroCCP, TradeAlert, FT Options, and thereafter publicly disclosed.Hanweck). The achievementactual adjusted net revenue and adjusted EBITDA results for the European business unit exclude our EuroCCP acquisition and the related expenses in connection with the development of 2017our European derivatives. The actual adjusted net revenue is revenues less costand adjusted EBITDA results for the markets business unit exclude our TradeAlert, FT Options, and Hanweck acquisitions from the options business unit and our MATCHNow acquisition from the NA equities business unit. The actual performance results exclude our 2020 acquisitions in order to allow for a more comparable measure of revenues, other than royalties, measured as of December 31, 2017actual performance against the pre-established corporate performance metric goals, which were based on a combined company basis, which assumesthe 2020 annual budget that the acquisition of Bats occurred on January 1, 2017. The target 2017 revenues less cost of revenues, other than royalties, projection was presenteddeveloped prior to, and reviewed bydoes not include, the Board.
Individual Performance.For the 2017 realized cost synergies and revenue on a combined company basis. Revenues less cost of revenues, other than royalties, on a combined company basis is a non-GAAP measure used by the Company and a reconciliation to GAAP revenues is provided in Appendix B. For 2017, the unweighted payout percentage for corporate performance was approximately 131% of each named executive officer's target2020 annual incentive award opportunity, not including Messrs. Provost, Dean and O'Connell. The separation agreements for Messrs. Provost, Dean and O'Connell are described more fully below under "Severance, Change in Control and Employment-Related Agreements."
Cboe Global Markets 2021 Proxy Statement | 49 |
Early in 2017,2020, the Compensation Committee set the following corporate strategic goals for 2017:
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Goal | | Performance |
Build a strong performance culture that attracts, engages, develops and retains key talent | |
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Deploy our core strengths for the benefit of index and product partners | |
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Mergers and acquisitions performance | |
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Broaden geographic reach | |
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The Compensation Committee received input from Mr. Tilly regarding the individual performance of Mr. Concannon. The Compensation Committee also received input from Messrs. Tilly and Concannon regarding the individual performances and recommendations regarding incentive compensation of the other executive officers. The Compensation Committee, with input from the Board, also evaluated the individual performance of Messrs. Tilly and Concannon with respect to the following:Mr. Tilly.
50 | Cboe Global Markets 2021 Proxy Statement |
The table below shows Mr. Tilly’s individual goals and achieved performance highlights in 2020.
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Goal | | Performance |
Manage the Company and its affiliates to achieve the corporate strategic goals listed above | |
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Manage internal and external communications with the investment community, government and the public to promote integrity of the markets and/or products | |
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Manage business continuity in key departments as roles are being defined | |
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Work with the Compensation Committee and the Board to execute against the Company’s succession plan for all senior management positions | |
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The table below shows Mr. Isaacson’s individual goals and achieved performance highlights in 2020.
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Goal | | Performance |
Manage the Company and its affiliates to achieve the corporate strategic goals listed above | |
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Effectively communicate with the investment community and customers so as to cultivate a loyal stockholder base | |
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Manage the operation of the Company and its affiliates to ensure reliable and efficient service at a competitive cost | |
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Expense management is woven throughout the fabric of the Company and led to a 1.3% decrease in operating expenses compared to 2019
Cboe Global Markets 2021 Proxy Statement | 51 |
Maintain a high level of systems performance while driving innovation | |
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Assess risks to the Company and ensure they are monitored and minimized | |
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Ensure recruitment, retention and rewarding of key, top performing talent and institutional knowledge by maintaining overall engagement, including during integration of any mergers and acquisition | |
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Based on thesethe above factors and its deliberations, the Compensation Committee determined the payout percentage for individual performance the payout percentage of each named executive officer'sofficer’s target annual incentive award opportunity. Such individual performance payout percentages of targetpayouts ranged from 115% to 198%, not including Messrs. Provost, Dean120% of target.
52 | Cboe Global Markets 2021 Proxy Statement |
Actual Performance and O'Connell.Payouts. For 2020, the following table shows the combined payout percentage for corporate and individual performance of each named executive officer’s target annual incentive award opportunity. The "Non-Equity“Non-Equity Incentive Plan Compensation"Compensation” column of the Summary Compensation Table below reflects amounts paid under the annual incentive plan.
| | 2020 Target Annual | | |
| | Incentive | | 2020 Percentage |
| | Opportunity as | | Payout of |
| | Percentage of | | Target Incentive |
Named Executive Officer | | Base Salary | | Opportunity |
Edward T. Tilly | | 165% | | 116% |
Christopher A. Isaacson | | 150% | | 116% |
Brian N. Schell | | 140% | | 119% |
David Howson | | 110% | | 124% |
Bryan Harkins | | 100% | | 112% |
.Overview. The Compensation Committee strongly believes that a stock ownership culture enhances our long-term success. We have adopted the Second Amended and Restated Long-Term Incentive Plan, which was approved by stockholders at the 2016 Annual Meeting of Stockholders. Under the plan, the Compensation Committee may grant equity or cash awards, including restricted stock, restricted stock units, and options. Stock options were not featured in our long-term incentive program in 2017.
The Compensation Committee believes that equity awards assist us in meeting the following goals:
aligning the financial interests of our Board members and employeesexecutive officers with the interests of our stockholders;
aligning our Board and executive compensation with that of our peers in terms of vehiclecomponents and value;
providing competitive compensation to assist in retaining highly skilled and qualified Board members and executives; and
deferring a significant portion of total compensation to the future, providing strong retentive value and linking the ultimate value of the award to our future stock price.
2020 Grants. For 2020, the Company assumed the Bats Global Markets, Inc. 2009 Stock Option Plan (the "2009 Plan"), the Bats Global Markets, Inc. Third Amended and Restated 2012 Equity Incentive Plan (the "2012 Plan") and the Bats Global Markets, Inc. 2016 Omnibus Incentive Plan (the "2016 Plan", and collectively, the "Bats Plans"). Restricted stock and stock options were granted to Bats' employees under the Bats Plans and vest in equal annual installments over either three or four years. The stock options and some restricted stock granted under the Bats Plans are fully vested. Following Bats' initial public offering, no new awards could be made under the 2009 Plan and 2012 Plan. No awards have been made under the Bats Plans subsequent to our acquisition of Bats. We will not grant any additional awards under the Bats Plans; however, there are still awards outstanding under these plans. Information on the outstanding awards and shares of common stock reserved under the Bats Plans is provided more fully below under "Equity Compensation Plan Information."
Time-Based Restricted Stock UnitsUnits.. Time-based RSUs comprise 50% of the 2017 grant value and haveeach named executive officer’s 2020 total target long-term incentive award value. These RSUs are subject to a three-year vesting period, with one-third of the RSUs vesting on each of the first, second, and third anniversaries of the grant date. The vesting of these awards is not subject to performance conditions. The Compensation Committee granted time-based RSUs to align the interests of management with those of our stockholders and to provide a retention incentive.
Performance-Based Restricted Stock Units subject to Relative Total Stockholder Return ("PSUs-TSR")Units.. PSUs comprise the remaining 50% of the 2017 granteach named executive officer’s 2020 total target long-term incentive award value. AllAs described below, one-half of the PSU grants are subject to the achievement of relative total stockholder return ("TSR")TSR measured against pre-determined performance goals and one-half of PSU grants are subject to the achievement of EPS measured against pre-determined performance goals, both over a
Cboe Global Markets 2021 Proxy Statement | 53 |
three-year performance period. The number of PSUs-TSR that will vest atPSU grants cliff-vest following the endcompletion of the three-year performance period, will vary from 0% to 200% of the target number of PSUs-TSR granted to each named executive officer, based on our TSR relative to the extent performance goals are achieved.
| o | Performance-Based Restricted Stock Units subject to Relative Total Stockholder Return (“PSUs-TSR”). 25% of the 2020 total target long-term incentive award value is subject to the achievement of relative TSR measured against pre-determined performance goals over a three-year performance period. The number of PSUs-TSR that will vest at the end of the three-year performance period will vary from 0% to 200% of the target number of PSUs-TSR granted to each named executive officer, based on our TSR relative to the TSR for the S&P 500 Index during the three-year performance period. We calculate TSR as the increase in our stock price over the performance period plus reinvested dividends, divided by the stock price at the beginning of the performance period. The Compensation Committee selected the relative TSR performance metric to incent management to increase TSR for the benefit of stockholders, and believes that tying a portion of each executive’s compensation to TSR compared to a broad index encourages management to generate superior returns. |
| o | Performance-Based Restricted Stock Units subject to Earnings Per Share (“PSUs-EPS”). 25% of the 2020 total target long-term incentive award value is subject to the achievement of cumulative EPS measured against pre-determined performance goals over a three-year performance period. The number of PSUs-EPS that will vest at the end of the three-year performance period will vary from 0% to 200% of the target number of PSUs-EPS granted to each named executive officer, based on our cumulative EPS during the three-year performance period, as adjusted for certain extraordinary, unusual or non-recurring items. The Compensation Committee selected the cumulative EPS performance metric to encourage management to continue growing the business and increasing trading and listings on our exchanges. Because of the operating leverage inherent in our business, the Compensation Committee believes that EPS growth over the next three years is an appropriate performance measure for these awards. |
PSUs-TSR and PSUs-EPS are equally weighted to encourage management to maintain an equal focus on enhancing Company TSR and profitably grow the Company to increase TSR for the benefit of stockholders, and believes that tying a portion of each executive's compensation to TSR compared to a broad index encourages management to generate superior returns.
The Company will settle vested PSUsRSUs and RSUsPSUs in shares of the Company'sCompany’s common stock. For each vested RSU or PSU, the named executive officer will receive one share of our common stock. To receive shares earned under RSUs and PSUs, a named executive officer must be continuously employed during the applicable service period or performance period, subject to accelerationperiod. Vesting of RSUs and PSUs will be accelerated in the event of a change in control followed by a qualified termination or in the event of a participant'sparticipant’s earlier death, disability or qualified retirement.
The following table shows the target equity award value and number of the Bats acquisitiontime-based RSUs that were granted to each named executive officer on February 19, 2020. The target equity award value and the difficulty in setting a meaningful three year earnings perclosing share ("EPS") goal,price on February 11, 2020 were used to calculate the Compensation Committee did not grant in 2017number of shares that were granted on February 19, 2020.
Named Executive Officer | # of Shares |
| Target Value of Stock | |
Edward T. Tilly | 19,058 | | $ | 2,350,000 |
Christopher A. Isaacson | 7,096 | | $ | 875,000 |
Brian N. Schell | 6,083 | | $ | 750,000 |
David Howson | 2,636 | | $ | 325,000 |
Bryan Harkins | 2,636 | | $ | 325,000 |
The following table shows the target equity award value and number of PSUs subject(tied to the achievement ofTSR and EPS against pre-determined performance goals ("PSUs-EPS").performance) that were granted to each named executive officer on February 19, 2020 and the
54 | Cboe Global Markets 2021 Proxy Statement | ||
number of PSUs that would be paid at achievement of threshold, target, and maximum performance goals. The target equity award value and the closing share price on February 11, 2020 were used to calculate the number of shares that were granted on February 19, 2020.
| | | | # of Shares | | Target Value of Stock | |||||
| | | | Threshold | | Target | | Maximum | | | |
Named Executive Officer | | Performance Metric |
| (50% Payout) |
| (100% Payout) |
| (200% Payout) |
| | |
Edward T. Tilly | | 2020-2022 TSR |
| 4,765 |
| 9,529 |
| 19,058 | | $ | 1,175,000 |
| | 2020-2022 EPS | | 4,765 |
| 9,529 |
| 19,058 | | $ | 1,175,000 |
Christopher A. Isaacson | | 2020-2022 TSR |
| 1,774 |
| 3,548 |
| 7,096 | | $ | 437,500 |
| | 2020-2022 EPS | | 1,774 |
| 3,548 |
| 7,096 | | $ | 437,500 |
Brian N. Schell | | 2020-2022 TSR |
| 1,521 |
| 3,042 |
| 6,083 | | $ | 375,000 |
| | 2020-2022 EPS | | 1,521 |
| 3,042 |
| 6,083 | | $ | 375,000 |
David Howson | | 2020-2022 TSR |
| 659 |
| 1,318 |
| 2,636 | | $ | 162,500 |
| | 2020-2022 EPS | | 659 |
| 1,318 |
| 2,636 | | $ | 162,500 |
Bryan Harkins | | 2020-2022 TSR |
| 659 |
| 1,318 |
| 2,636 | | $ | 162,500 |
| | 2020-2022 EPS | | 659 |
| 1,318 |
| 2,636 | | $ | 162,500 |
| # of Shares | ||||||||
| Named Executive Officer | Award Date | Performance Metric | Threshold (50% Payout) | Target (100% Payout) | Maximum (200% Payout) | |||
| Edward T. Tilly | 2/19/2017 | 2017-2019 TSR | 9,329 | 18,657 | 37,314 | |||
| Christopher R. Concannon | 2/28/2017 | 2017-2019 TSR | 6,219 | 12,438 | 24,876 | |||
| Alan J. Dean | 2/19/2017 | 2017-2019 TSR | 2,612 | 5,224 | 10,448 | |||
| Joanne Moffic-Silver | 2/19/2017 | 2017-2019 TSR | 1,788 | 3,576 | 7,152 | |||
| Mark S. Hemsley | 2/28/2017 | 2017-2019 TSR | 1,854 | 3,707 | 7,414 | |||
| Edward L. Provost | 2/19/2017 | 2017-2019 TSR | 4,898 | 9,795 | 19,590 | |||
| Gerald T. O'Connell | 2/19/2017 | 2017-2019 TSR | 2,115 | 4,229 | 8,458 | |||
The following table displays the threshold, target, and maximum performance goals for the PSUs-TSRPSU awards granted in 2017,2020, measured over the performance period frombeginning on January 1, 2017 through2020 and ending on December 31, 2019.2022.
| | Threshold | | Target | | Maximum |
|
| (50% Payout) |
| (100% Payout) |
| (200% Payout) |
Relative TSR Compared to S&P 500 |
| 20th Percentile |
| 50th Percentile |
| 80th Percentile |
Cumulative EPS | | $15.36 | | $16.58 | | $17.88 |
For TSR percentile performance levels that fall between the valuesgoals shown above, the percentage of PSUs that vest will be determined by straight line interpolation, provided that no PSUs will vest if the TSR percentile performance does not equal or exceed the threshold amount.
2018 Proxy Statement
The TSR percentile attained was the 95th14th percentile, and so 200%which resulted in the vesting of 0% of the target number of PSUs-TSR vested forgranted to each applicable named executive officer.
The cumulative3- year adjusted EPS attained was $8.23, and so approximately 123%$15.02 1, which resulted in the vesting of 200% of the target number of PSUs-EPS vested forgranted to each applicable named executive officer.
(1) | The 3-year adjusted EPS is a non-GAAP measure used by the Company and a reconciliation to a GAAP measure is provided in Appendix A. |
The specific performance goals for the PSUs-TSR and PSUs-EPS for the 2015-20172018-2020 performance period were previously disclosed in our proxy statement covering 20152018 compensation. Messrs. Concannon and Hemsley did not receive
Cboe Global Markets 2021 Proxy Statement | 55 |
The table below shows the 2015 grantsnumber of equity awards. The 2015 grants of equity awards for Messrs. Provost and O'Connell were prorated for the portion of the performance period completed2018 PSUs that vested at the time of termination and subject to attainmentconclusion of the applicable performance goals through the full performance period vested in accordance with their separation agreements, which are described more fully below under "Severance, Change in Control and Employment-Related Agreements." Certain details of the PSUs vested based on achievement of 2015-2017 EPS and TSR performance goals and proration, with respect to Messrs. Provost and O'Connell, are as follows and do not include the dividend equivalent payments.
| # of Shares at Target (100% Payout) | ||||||
| Named Executive Officer | Award Date | Performance Metric | # of Shares Vested | |||
| Edward T. Tilly | 2/19/2015 | 2015-2017 EPS | 8,070 | 9,926 | ||
| 2/19/2015 | 2015-2017 TSR | 8,070 | 16,140 | |||
| Alan J. Dean | 2/19/2015 | 2015-2017 EPS | 3,132 | 3,852 | ||
| 2/19/2015 | 2015-2017 TSR | 3,132 | 6,264 | |||
| Joanne Moffic-Silver | 2/19/2015 | 2015-2017 EPS | 1,978 | 2,433 | ||
| 2/19/2015 | 2015-2017 TSR | 1,978 | 3,956 | |||
| Edward L. Provost | 2/19/2015 | 2015-2017 EPS | 5,347 | 4,735 | ||
| 2/19/2015 | 2015-2017 TSR | 5,347 | 7,700 | |||
| Gerald T. O'Connell | 2/19/2015 | 2015-2017 EPS | 2,744 | 2,430 | ||
| 2/19/2015 | 2015-2017 TSR | 2,744 | 3,951 | |||
| Named Executive Officer (1) | Base Salary | Target Annual Incentive Bonus | Target Long-Term Equity Awards | Total | |
| RSUs (2) | PSUs (2) | ||||
| Edward T. Tilly | $1,150 | $1,898 | $1,500 | $1,500 | $6,048 |
| Christopher R. Concannon | $1,000 | $1,500 | $1,000 | $1,000 | $4,500 |
| Alan J. Dean | $525 | $735 | $420 | $420 | $2,100 |
| Joanne Moffic-Silver | $433 | $606 | $288 | $288 | $1,615 |
| Mark S. Hemsley | $659 | $621 | $298 | $298 | $1,876 |
| Edward L. Provost | $630 | $945 | $788 | $788 | $3,151 |
| Gerald T. O'Connell | $425 | $595 | $340 | $340 | $1,700 |
| | | | | | | |
| | | | | # of Shares |
| |
| | | | | at Target | | # of Shares |
Named Executive Officer | | | Performance Metric |
| (100% Payout) |
| Vested |
Edward T. Tilly | | | 2018-2020 TSR |
| 7,025 |
| 0 |
| | | 2018-2020 EPS |
| 7,025 |
| 14,050 |
Christopher A. Isaacson | | | 2018-2020 TSR |
| 1,384 |
| 0 |
| | | 2018-2020 EPS |
| 1,384 |
| 2,768 |
Brian N. Schell | | | 2018-2020 TSR |
| 1,530 |
| 0 |
| | | 2018-2020 EPS |
| 1,530 |
| 3,060 |
Bryan Harkins | | | 2018-2020 TSR |
| 1,277 |
| 0 |
| | | 2018-2020 EPS |
| 1,277 |
| 2,554 |
Other Executive Compensation Table below for complete disclosure of the total compensation of our named executive officers reported in accordance with the SEC disclosure requirements.
The Compensation Committee adopted stock ownership and holding guidelines, shown below, specifying the levels of stock ownership that each named executive officer must maintain while employed by us. For purposes of this ownership requirement, (a) shares owned outright or in trust and (b) restricted stock or stock units, including shares or units with time-based or performance conditions that have been granted but are unvested, are included. counted toward the guidelines.
Each named executive officer has three five years to meet the guidelines from the date that such officer was appointed to his position or her position. In addition,within four years of May 2019 for named executive officers then-serving when the guidelines were updated in 2017 we revised our guidelines so that eachMay 2019. Each named executive officer is required to hold all of their shares until the guidelines are met, except for sales of shares to pay taxes with respect to the vesting or exercising of equity grants. EachAs of December 31, 2020, each named executive officer has met the applicable holding requirement based on his or her position with us. Messrs. Provost and O'Connell met the applicable holding requirements of four times base salary and two times base salary, respectively, as of February 28, 2017.
| | |
Named Executive Officer | | Holding Requirement |
Edward T. Tilly | | Six times base salary |
Christopher | | Four times base salary |
Brian N. Schell | | Three times base salary |
David Howson | | Three times base salary |
Bryan Harkins | | Three times base salary |
Hedging Policy
Our Insider Trading Policy prohibits our executive officers and all employees, except as set forth below, from entering into transactions involving options to purchase or sell our common stock or other derivatives related to our common stock.
None of the namedour executive officers havehas existing hedges on shares of our common stock.
Employees, other than our executive officers, may enter into the following types of security transactions on our common stock through the purchase or sale of exchange-traded options, provided that they otherwise comply with the remainder of our Insider Trading Policy:
covered calls (i.e., the writing of exchange-traded call options covering a number of shares less than or equal to the total number of unrestricted shares and vested shares owned by the call writer); and
56 | Cboe Global Markets 2021 Proxy Statement |
collars for hedging purposes (i.e., the sale of exchange-traded call options and the purchase of an equivalent number of put options, in each case, covering a number of shares less than or equal to the total number of unrestricted shares and vested shares owned by the holder).
As one of the world’s largest exchange holding companies, offering cutting-edge trading and investment solutions to investors around the world and owning the largest options exchange, we believe options are first and foremost incredibly useful and powerful risk mitigation tools that can help protect an investor’s financial portfolio. From buying puts to hedge the downside risk of owning a stock to writing covered calls to collect income, listed options strategies are protective tools employed by institutions, pension funds, and individual investors. As such, we believe that it is appropriate for our employees, other than our executive officers, to engage in the above mentioned selected hedging transactions, because
these strategies help empower our employees to preserve their investmentcapital and protect their financial future, while continuing to own our common stock and be invested in their workplace,
employees are required to comply with our Insider Trading Policy and other policies, which may include trade monitoring, receiving certain pre-approvals, and observing blackout periods when purchasing or selling options,
employees must wait generally one year until a portion of their equity grants vest before they are able to purchase or sell options on the related vested common stock,
the interests of our employees continue to be aligned with our stockholders through their continued ownership of our common stock and ability to retain their rights to voting and dividends as Cboe stockholders,
employees are able to collect income on their common stock from the sale of options without having to sell our stock, and
due to their continued ownership of our common stock, employees continue to be discouraged from excessive risk-taking that could negatively impact our business and stock price over time.
Pledging Policy
Our Insider Trading Policy prohibits our executive officers and all employees from entering into any pledges or margin loans on shares of our common stock. None of the namedour executive officers have existing pledges or margin loans on shares of our common stock.
Clawbacks
We maintain a clawback policy for the clawback ofcovering cash incentive payments and long-term incentives based on the provisions of the Dodd-Frank Act. The policy provides that we will attempt to recover incentive amounts paid to executive officers in the event of a restatement of our financial statements due to any material noncompliance with any financial reporting requirement. The policy has a three-year look-back and applies to both current and former executives, regardless of such executive'sexecutive’s involvement in the noncompliance. The equity award agreements contain provisions applying the clawback policy to equity grants.
Employee Benefit Plans, Severance, Change in Control and Employment-Related Agreements
We makeprovide medical, life, and disability plans availableinsurance coverage to all of our employees, and,including our named executive officers. In addition, for named executive officers and certain other employees, we provide participation in the Supplemental Executive Retirement Plan (“SERP”) and the Executive Retirement Plan (“ERP”), which are described more fully below under "Summary Compensation – “Summary Compensation—Non-Qualified Deferred Compensation Plans."Plans”. We offer these plansthis coverage in order to provide a
Cboe Global Markets 2021 Proxy Statement | 57 |
competitive benefits program, a level of protection for catastrophic events, and income during retirement. TheseThe SERP and ERP plans are defined contribution plans, and we do not provide any defined benefit retirement plans to our executive officers or employees. Effective January 1, 2017, the Company froze the Executive Retirement PlanERP to new executive officers and employees. In addition, as
As of December 31, 2017,2020, we had an employment agreementsagreement with Messrs.Mr. Tilly, and Concannon, an offer letter and employment agreement with Mr. Hemsley, separation agreements with Messrs. Dean, Provost and O'ConnellHowson, and an Executive Severance Plan for other executive officers in order to encourage retention, maintain a consistent management team to effectively run our operations, assist with retirementseparation proceedings, and allow executives to focus on our strategic business priorities. The employment agreements with Messrs. Tilly and Concannon, the offer letter agreement with Mr. HemsleyHowson and the Executive Severance Plan contain severance and change in control provisions and are described more fully below under "Severance,“Severance, Change in Control and Employment-Related Agreements."Agreements”. Any payments under the employment agreements offer letter agreement and the Executive Severance Plan upon a change in control will only occur if the named executive officer'sofficer’s employment is terminated without cause or he or she resigns for good reason during a set period following the change in control, known as a double trigger provision.
Tax and Accounting Considerations
The Compensation Committee considers the tax and accounting implications of compensation to us and the tax implications to our named executive officers. ToHistorically, to the extent possible, the Compensation Committee strove to provide compensation deductible under Section 162(m) of the Internal Revenue Code and, to that end, certified, as applicable, the level of attainment of the performance targets under the Second Amended and Restated Long-Term Incentive Plan annually in accordance with Section 162(m). Nonetheless, changes in tax laws or their interpretation and other outside factors may affect the deductibility of certain compensation payments. For example, the Tax Cuts and Jobs Act, which was signed into law December 22, 2017, limits the deductibility of compensation paid to our named executive officers to $1 million each year for taxable years beginning after December 31, 2017. Even though “performance-based” criteria is no longer relevant in determining whether compensation is deductible for tax purposes, the Compensation Committee plans to continue to apply such criteria in structuring future compensation arrangements. The Compensation Committee reserves the right to pay compensation that is not deductible for tax purposes when, in its judgment, such compensation is appropriate.
Compensation Committee Report
The Compensation Committee consists of Mr. Skinner,Fitzpatrick, Chair, Mr. English, Mr. Fitzpatrick, Ms. Froetscher, Mr. Parisi, and Mr. Sunshine,Tomczyk, each of whom the Board has determined isare independent under the applicable Nasdaq and BZX listing rules and our Corporate Governance Guidelines. The Compensation Committee has duties and powers as described in its written charter adopted by the Board. A copy of the charter can be found on our Investor Relations page at http://ir.Cboe.com.
The Compensation Committee has reviewed and discussed with management the disclosures contained in the foregoing section entitled "Compensation“Compensation Discussion and Analysis."Analysis”. Based on this review and discussion, the Compensation Committee recommended to the Board that the section entitled "Compensation“Compensation Discussion and Analysis"Analysis” be included in this Proxy Statement for the Annual Meeting.
Compensation Committee
Edward J. Fitzpatrick,
Janet P. Froetscher
James E. Parisi
Fredric J. Tomczyk
58 | Cboe Global Markets 2021 Proxy Statement |
Risk Assessment
We believe that any potential risks arising from our employee compensation policies and practices are not likely to have a material adverse effect on us. With assistance from Meridian, our independent compensation consultant, the Compensation Committee reviewed and discussed a risk assessment of our compensation policies and practices for all employees for 2017,2020, including non-executive officers, in its oversight capacity.
The Compensation Committee and management considered a number of factors, including the following factors, when reviewing potential risk from our employee compensation policies and practices:
Our compensation program is designed to provide a mix of both fixed and variable incentive compensation.
The variable (“at-risk”) portions of compensation are designed to reward both annual and long-term performance. We believe that this design mitigates any incentive for short-term risk-taking that could be detrimental to the Company'sCompany’s long-term best interests.
Our senior executives are subject to stock ownership and holding guidelines, which we believe provide incentives for our executives to consider the long-term interests of the Company and our stockholders and discourage excessive risk-taking that could negatively impact our stock price over time.
We include clawback provisions in our executives'executives’ cash incentive and equity incentive awards as a mechanism to recover compensation in the event of financial reporting wrongdoing.
We utilize an independent compensation consultant to provide the Compensation Committee with advice on best practices and the risks associated with various compensation policies.
Cboe Global Markets 2021 Proxy Statement | 59 |
SUMMARY COMPENSATION
The table below sets forth, for the years indicated below, the compensation earned by our named executive officers.
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Non-Equity | | | | | | | |
| | | | | | | | | | Stock | | Incentive Plan | | All Other | | | | |||
Name and Principal Position |
| Year |
| Salary |
| Bonus |
| Awards(1) |
| Compensation(2) |
| Compensation(3) |
| Total | ||||||
Edward T. Tilly | | 2020 | | $ | 1,265,000 | | $ | — | | $ | 4,700,084 | | $ | 2,413,017 | | $ | 684,310 | | $ | 9,062,411 |
Chairman, President and | | 2019 | | $ | 1,265,000 | | $ | — | | $ | 4,336,178 | | $ | 1,669,800 | | $ | 941,807 | | $ | 8,212,785 |
Chief Executive Officer | | 2018 | | $ | 1,265,000 | | $ | — | | $ | 3,237,079 | | $ | 3,219,374 | | $ | 731,684 | | $ | 8,453,137 |
Christopher A. Isaacson | | 2020 | | $ | 650,000 | | $ | — | | $ | 1,750,016 | | $ | 1,126,832 | | $ | 137,366 | | $ | 3,664,214 |
Executive Vice President | | 2019 | | $ | 650,000 | | $ | — | | $ | 1,260,406 | | $ | 1,430,575 | | $ | 201,031 | | $ | 3,542,012 |
and Chief Operating Officer | | 2018 | | $ | 540,000 | | $ | — | | $ | 637,761 | | $ | 2,236,384 | | $ | 147,587 | | $ | 3,561,732 |
Brian N. Schell | | 2020 | | $ | 525,000 | | $ | — | | $ | 1,500,313 | | $ | 870,136 | | $ | 101,763 | | $ | 2,997,212 |
Executive Vice President, | | 2019 | | $ | 521,000 | | $ | — | | $ | 1,310,893 | | $ | 581,376 | | $ | 142,845 | | $ | 2,556,114 |
Chief Financial Officer and | | 2018 | | $ | 521,000 | | $ | — | | $ | 704,928 | | $ | 1,122,984 | | $ | 68,845 | | $ | 2,417,757 |
Treasurer | | | | | | | | | | | | | | | | | | | | |
David Howson | | 2020 | | $ | 575,400 | | $ | — | | $ | 650,090 | | $ | 784,055 | | $ | — | | $ | 2,009,545 |
Executive Vice President, | | | | | | | | | | | | | | | | | | | | |
President Europe (4) | | | | | | | | | | | | | | | | | | | | |
Bryan Harkins | | 2020 | | $ | 500,000 | | $ | — | | $ | 650,090 | | $ | 558,625 | | $ | 23,320 | | $ | 1,732,035 |
Executive Vice President, | | 2019 | | $ | 500,000 | | $ | — | | $ | 902,414 | | $ | 365,750 | | $ | 24,020 | | $ | 1,792,184 |
Head of Markets | | | |
| | |
|
| |
| | |
| | |
| | |
| |
| Summary Compensation Table | ||||||||||||||||||||
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Non-Equity Incentive Plan Compensation(2) | All Other Compensation(3) | Total | |||||||||||||
| Edward T. Tilly | 2017 | $ | 1,150,000 | $ | — | $ | 6,070,988 | $ | 2,461,058 | $ | 737,887 | $ | 10,419,933 | |||||||
| Chairman and Chief | 2016 | $ | 1,000,000 | $ | — | $ | 2,714,536 | $ | 1,775,000 | $ | 464,047 | $ | 5,953,583 | |||||||
| Executive Officer (4) | 2015 | $ | 966,667 | $ | — | $ | 2,097,232 | $ | 1,305,750 | $ | 429,633 | $ | 4,799,282 | |||||||
| Christopher R. Concannon | 2017 | $ | 833,333 | $ | — | 4,179,168 | $ | 1,945,500 | $ | 38,187 | $ | 6,996,188 | ||||||||
| President and | ||||||||||||||||||||
| Chief Operating Officer (5) | ||||||||||||||||||||
| Alan J. Dean | 2017 | $ | 525,000 | $ | — | $ | 1,839,893 | $ | 843,045 | $ | 2,885,315 | $ | 6,093,253 | |||||||
| Executive Vice President and | 2016 | $ | 525,000 | $ | — | $ | 912,230 | $ | 735,000 | $ | 293,977 | $ | 2,466,207 | |||||||
| Chief Financial Officer (6) | 2015 | $ | 518,333 | $ | — | $ | 813,882 | $ | 639,818 | $ | 292,456 | $ | 2,264,489 | |||||||
| Joanne Moffic-Silver | 2017 | $ | 433,000 | $ | — | $ | 1,174,484 | $ | 877,171 | $ | 299,331 | $ | 2,783,986 | |||||||
| Executive Vice President, | 2016 | $ | 427,583 | $ | — | $ | 532,175 | $ | 535,477 | $ | 215,849 | $ | 1,711,084 | |||||||
| General Counsel and | 2015 | $ | 420,000 | $ | — | $ | 513,981 | $ | 426,545 | $ | 236,222 | $ | 1,596,748 | |||||||
| Corporate Secretary (7) | ||||||||||||||||||||
| Mark S. Hemsley | 2017 | $ | 544,377 | $ | — | 1,245,474 | $ | 741,816 | $ | 13,500 | $ | 2,545,167 | ||||||||
| Executive Vice President, | ||||||||||||||||||||
| President Europe (5) | ||||||||||||||||||||
| Edward L. Provost | 2017 | $ | 105,000 | $ | — | $ | 3,449,763 | $ | 180,653 | $ | 4,340,913 | $ | 8,076,329 | |||||||
| Former President and | 2016 | $ | 630,000 | $ | 16,500 | $ | 1,710,183 | $ | 1,118,250 | $ | 365,928 | $ | 3,840,861 | |||||||
| Chief Operating Officer (8) | 2015 | $ | 613,333 | $ | — | $ | 1,389,516 | $ | 822,623 | $ | 356,906 | $ | 3,182,378 | |||||||
| Gerald T. O'Connell | 2017 | $ | 70,833 | $ | — | $ | 1,489,431 | $ | 113,744 | $ | 2,604,364 | $ | 4,278,372 | |||||||
| Former Executive Vice | 2016 | $ | 425,000 | $ | 333,333 | $ | 738,369 | $ | 525,583 | $ | 324,137 | $ | 2,346,422 | |||||||
| President and | 2015 | $ | 425,000 | $ | 333,333 | $ | 713,111 | $ | 517,948 | $ | 255,939 | $ | 2,245,331 | |||||||
| Chief Information Officer (9) | ||||||||||||||||||||
| (1) | The amounts in the stock award column for |
| (2) | The amounts shown reflect awards to the named executive officers under our annual incentive plan. |
| (3) | The amounts shown represent |
60 | Cboe Global Markets 2021 Proxy Statement |
| (4) | Mr. |
2020 All Other Compensation Detail Table
| Qualified Defined | | Non-Qualified Defined | | | | | Matching Gift | |||
Name | Contributions(1) | | Contributions(2) | | Insurance(3) | | Program (4) | ||||
Edward T. Tilly | $ | 22,800 | | $ | 652,204 | | $ | 1,806 | | $ | 7,500 |
Christopher A. Isaacson | $ | 22,800 | | $ | 103,646 | | $ | 420 | | $ | 10,500 |
Brian N. Schell | $ | 22,800 | | $ | 65,657 | | $ | 1,806 | | $ | 11,500 |
David Howson | $ | — | | $ | — | | $ | — | | $ | — |
Bryan Harkins | $ | 22,800 | | $ | — | | $ | 420 | | $ | 100 |
| 2017 All Other Compensation Detail | |||||||||||||
| Name | Qualified Defined Contributions(1) | Non-Qualified Defined Contributions(2) | Insurance(3) | Other(4) | |||||||||
| Edward T. Tilly | $ | 21,600 | $ | 563,079 | $ | 966 | $ | 152,242 | |||||
| Christopher R. Concannon (5) | $ | 3,500 | $ | — | $ | 1,543 | $ | 33,144 | |||||
| Alan J. Dean | $ | 21,600 | $ | 321,922 | $ | 2,772 | $ | 2,539,021 | |||||
| Joanne Moffic-Silver | $ | 21,600 | $ | 223,725 | $ | 4,178 | $ | 49,828 | |||||
| Mark S. Hemsley (5) | $ | 13,500 | $ | — | $ | — | $ | — | |||||
| Edward L. Provost | $ | 21,600 | $ | 1,151,055 | $ | 889 | $ | 3,167,369 | |||||
| Gerald T. O'Connell | $ | 21,600 | $ | 525,910 | $ | 533 | $ | 2,056,321 | |||||
| (1) | The amounts shown are matching contributions to our qualified 401(k) plan, the Cboe Global Markets SMART Plan |
| (2) | The amounts shown are our contributions to the non-qualified defined contribution plans on behalf of each named executive officer, including contributions, as applicable, made to the Supplemental Executive Retirement Plan and Executive Retirement Plan. We matched 200% of such |
| (3) | Represents the amount attributable to taxable life insurance in excess of $50,000. |
| (4) | Amounts represent those provided through our Matching Gift Program that is available to full-time employees with typically at least one year of service and our non-employee directors. During 2020, we matched eligible gifts from a minimum of $50 to an aggregate maximum gift of $10,000 per employee or non-employee director, per calendar year. In |
Cboe Global Markets 2021 Proxy Statement | 61 |
2020 Grants of Plan-Based Awards Table
The 2020 grants of plan-based awards are as follows and are explained in more detail below:
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | All Other | | | |
| | | | | | | | | | | | | | | | | | | Stock | | | |
| | | | | | | | | | | | | | | | | | | Awards: | | Grant Date | |
| | | | Estimated Future Payouts Under | | | | | | | | Number of | | Fair Value of | ||||||||
| | | | Non-Equity Incentive Plan | | Estimated Future Payouts Under | | Shares of | | Stock and | ||||||||||||
| | | | Awards | | Equity Incentive Plan Awards | | Stock or | | Option | ||||||||||||
Name |
| Grant Date |
| Threshold |
| Target |
| Maximum |
| Threshold (#) |
| Target (#) |
| Maximum (#) |
| Units (#) |
| Awards | ||||
Edward T. Tilly |
| n/a | | $ | 365,269 | | $ | 2,087,250 | | $ | 4,174,500 |
| — |
| — |
| — | | — |
| | — |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 4,765 |
| 9,529 |
| 19,058 | | — | | $ | 1,147,673 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 4,765 |
| 9,529 |
| 19,058 | | — | | $ | 1,147,673 |
| | 2/19/2020 | | | — | | | — | | | — | | — | | — | | — | | 19,058 | | $ | 2,295,346 |
Christopher A. Isaacson |
| n/a | | $ | 170,625 | | $ | 975,000 | | $ | 1,950,000 |
| — |
| — |
| — | | — | | | — |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 1,774 |
| 3,548 |
| 7,096 | | — | | $ | 427,321 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 1,774 |
| 3,548 |
| 7,096 | | — | | $ | 427,321 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| — |
| — |
| — | | 7,096 | | $ | 854,642 |
Brian N. Schell |
| n/a | | $ | 128,625 | | $ | 735,000 | | $ | 1,470,000 |
| — |
| — |
| — | | — | | | — |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 1,521 |
| 3,042 |
| 6,083 | | — | | $ | 366,318 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 1,521 |
| 3,042 |
| 6,083 | | — | | $ | 366,318 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| — |
| — |
| — | | 6,083 | | $ | 732,637 |
David Howson (1) |
| n/a | | $ | 110,765 | | $ | 632,940 | | $ | 1,265,880 |
| — |
| — |
| — | | — | | | — |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 659 |
| 1,318 |
| 2,636 | | — | | $ | 158,740 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 659 |
| 1,318 |
| 2,636 | | — | | $ | 158,740 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| — |
| — |
| — | | 2,636 | | $ | 317,480 |
Bryan Harkins |
| n/a | | $ | 87,500 | | $ | 500,000 | | $ | 1,000,000 |
| — |
| — |
| — | | — | | | — |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 659 |
| 1,318 |
| 2,636 | | — | | $ | 158,740 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| 659 |
| 1,318 |
| 2,636 | | — | | $ | 158,740 |
|
| 2/19/2020 | |
| — | |
| — | |
| — |
| — |
| — |
| — | | 2,636 | | $ | 317,480 |
All of the equity incentive awards were made in restricted stock units, half of which are subject to performance conditions. Except as noted in the table above, the restricted stock unit awards that are not subject to performance conditions have a three-year vesting schedule under which one-third of
62 | Cboe Global Markets 2021 Proxy Statement |
the shares granted will vest each year on the anniversary of Plan-Based Awards
| 2017 Grants of Plan-Based Awards | ||||||||||||
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards | |||||||||
| Name | Grant Date | Threshold | Target | Maximum | Threshold (#) | Target (#) | Maximum (#) | |||||
| Edward T. Tilly | n/a | $569,250 | $1,897,500 | $3,510,375 | ||||||||
| 2/19/2017 (1) | 9,329 | 18,657 | 37,314 | $ | 1,500,023 | |||||||
| 2/19/2017 (1) | 18,657 | $ | 1,500,023 | |||||||||
| 2/19/2017 (2) | 31,095 | $ | 2,500,038 | |||||||||
| Christopher R. Concannon (3) | n/a | $450,000 | $1,500,000 | $2,775,000 | ||||||||
| 2/28/2017 (1) | 6,219 | 12,438 | 24,876 | $ | 970,164 | |||||||
| 2/28/2017 (1) | 12,438 | $ | 970,164 | |||||||||
| 2/28/2017 (4) | 24,876 | $ | 1,941,572 | |||||||||
| Alan J. Dean (5) | n/a | $220,500 | $735,000 | $1,359,750 | ||||||||
| 2/19/2017 (1) | 2,612 | 5,224 | 10,448 | $ | 420,010 | |||||||
| 2/19/2017 (1) | 5,224 | $ | 420,010 | |||||||||
| 2/19/2017 (2) | 10,448 | $ | 840,019 | |||||||||
| Joanne Moffic-Silver | n/a | $181,860 | $606,200 | $1,121,470 | ||||||||
| 2/19/2017 (1) | 1,788 | 3,576 | 7,152 | $ | 287,510 | |||||||
| 2/19/2017 (1) | 3,576 | $ | 287,510 | |||||||||
| 2/19/2017 (2) | 6,095 | $ | 490,038 | |||||||||
| Mark S. Hemsley (3) (6) | n/a | $186,177 | $620,589 | $1,148,090 | ||||||||
| 2/28/2017 (1) | 1,854 | 3,707 | 7,414 | $ | 289,146 | |||||||
| 2/28/2017 (1) | 3,707 | $ | 289,146 | |||||||||
| 2/28/2017 (4) | 7,413 | $ | 578,585 | |||||||||
| Edward L. Provost (5) | n/a | $47,250 | $157,500 | $291,375 | ||||||||
| 2/19/2017 (1) | 4,898 | 9,795 | 19,590 | $ | 787,518 | |||||||
| 2/19/2017 (1) | 9,795 | $ | 787,518 | |||||||||
| 2/19/2017 (7) | — | $ | 1,575,000 | |||||||||
| Gerald T. O'Connell (5) | n/a | $29,750 | $99,167 | $183,459 | ||||||||
| 2/19/2017 (1) | 2,115 | 4,229 | 8,458 | $ | 340,012 | |||||||
| 2/19/2017 (1) | 4,229 | $ | 340,012 | |||||||||
| 2/19/2017 (7) | — | $ | 680,000 | |||||||||
Half of the |
Cboe Global Markets 2021 Proxy Statement | 63 |
For all of the awards, vesting will accelerate upon death, disability, or the occurrence of a change in control.control and qualified termination. Vesting will also accelerate upon a qualified retirement, except that the restricted stock units subject to performance conditions accelerate pro ratapro-rata based on the number of days in employment during the performance period and subject to attainment of the applicable performance goals through the full performance period. UnvestedUnder certain scenarios, Mr. Tilly’s employment agreement provides that he will be entitled to full vesting of his restricted stock units subject to performance conditions. Mr. Tilly’s employment agreement is described more fully below under “Severance, Change in Control and Employment-Related Agreements”. Qualified retirement eligibility occurs upon attaining 55 years of age and 10 years of service. Unless retirement eligible, unvested portions of the restricted stock units will be forfeited if the executive officer terminates employment with us prior to the applicable vesting date. The restricted stock units are subject to non-compete, non-solicitation, and confidentiality covenants.
2020 Outstanding Equity Awards at Fiscal Year-End
The following table sets forth outstanding equity awards held by each named executive officer at December 31, 20172020 based on the market value of our common stock on December 31, 2017.2020.
64 | Cboe Global Markets 2021 Proxy Statement |
| Outstanding Equity Awards at December 31, 2017 | ||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($) | ||||||||||||||
| Edward T. Tilly | 5,380 | (1) | $ | 670,294 | ||||||||||||||||||
| 13,485 | (2) | $ | 1,680,096 | |||||||||||||||||||
| 31,095 | (3) | $ | 3,874,126 | |||||||||||||||||||
| 18,657 | (4) | $ | 2,324,476 | |||||||||||||||||||
| 8,070 | (5) | $ | 1,005,441 | |||||||||||||||||||
| 16,140 | (6) | $ | 2,010,883 | |||||||||||||||||||
| | | | | | | | | | | ||
| Stock Awards | |||||||||||
| | | | | Equity Incentive Plan Awards: | | Equity Incentive Plan Awards: | |||||
| | | | | Number of Unearned | | Market or Payout Value | |||||
| Number of Shares or | | Market Value of Shares | | Shares, Units or Other | | of Unearned Shares, Units | |||||
| Units of Stock That | | or Units of Stock | | Rights That Have | | or Other Rights That | |||||
Name | Have Not Vested (#) |
| That Have Not Vested |
| Not Yet Vested (#) |
| Have Not Yet Vested | |||||
Edward T. Tilly | 4,683 | (1) | | $ | 436,081 |
|
|
| | |
| |
| 15,088 | (2) | | $ | 1,404,995 |
|
|
| | |
| |
| 19,058 | (3) | | $ | 1,774,681 |
|
|
| | |
| |
| 0 | (4) | | $ | 0 |
| | | | | | |
| 14,050 | (5) | | $ | 1,308,336 |
| | | | | | |
| | | | | | | 11,316 | (6) | | $ | 1,053,746 | |
|
|
| |
|
|
| 5,658 | (7) | | $ | 526,873 | |
| | | | | | | 9,529 | (8) | | $ | 887,340 | |
| | | | | | | 4,765 | (9) | | $ | 443,670 | |
Christopher A. Isaacson | 923 | (1) | | $ | 85,950 |
|
|
| |
|
| |
| 4,386 | (2) | | $ | 408,424 |
| | | | | | |
| 7,096 | (3) | | $ | 660,780 |
| | | | | | |
| 0 | (4) | | $ | 0 |
| | | | | | |
| 2,768 | (5) | | $ | 257,756 | | | | | | | |
|
|
| |
|
|
| 3,289 | (6) | | $ | 306,272 | |
| | | | | | | 1,645 | (7) | | $ | 153,136 | |
| | | | | | | 3,548 | (8) | | $ | 330,390 | |
| | | | | | | 1,774 | (9) | | $ | 165,195 | |
Brian N. Schell | 1,020 | (1) | | $ | 94,982 | | | | | | | |
| 4,562 | (2) | | $ | 424,813 | | | | | | | |
| 6,083 | (3) | | $ | 566,449 |
| | | | | | |
| 0 | (4) | | $ | 0 |
| | | | | | |
| 3,060 | (5) | | $ | 284,947 |
| | | | | | |
|
|
| |
|
|
| 3,421 | (6) | | $ | 318,564 | |
|
|
| |
|
|
| 1,711 | (7) | | $ | 159,282 | |
| | | | | | | 3,042 | (8) | | $ | 283,271 | |
| | | | | | | 1,521 | (9) | | $ | 141,636 | |
David Howson | 454 | (1) | | $ | 42,276 |
|
|
| |
|
| |
| 1,482 | (2) | | $ | 138,004 |
|
|
| |
|
| |
| 2,636 | (3) | | $ | 245,464 |
|
|
| |
|
| |
| 4,105 | (10) | | $ | 382,258 | | | | | | | |
| | | | | | | 1,318 | (8) | | $ | 122,732 | |
| | | | | | | 659 | (9) | | $ | 61,366 | |
Bryan Harkins | 852 | (1) | | $ | 79,338 |
| | | | | | |
| 2,106 | (2) | | $ | 196,111 | | | | | | | |
| 2,636 | (3) | | $ | 245,464 | | | | | | | |
| 3,158 | (10) | | $ | 294,073 |
| | | | | | |
| 0 | (4) | | $ | 0 | | | | | | | |
| 2,554 | (5) | | $ | 237,828 | | | | | | | |
| | | | | | | 1,579 | (6) | | $ | 147,036 | |
|
|
| |
|
|
| 790 | (7) | | $ | 73,518 | |
| | | | | | | 1,318 | (8) | | $ | 122,732 | |
| | | | | | | 659 | (9) | | $ | 61,366 | |
| Outstanding Equity Awards at December 31, 2017 | ||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($) | ||||||||||||||
| 10,114 | (7) | $ | 1,260,103 | |||||||||||||||||||
| 20,228 | (8) | $ | 2,520,207 | |||||||||||||||||||
| 37,314 | (9) | $ | 4,648,951 | |||||||||||||||||||
| Christopher R. Concannon (10) | 122,281 | — | (11) | $ | 28 | 11/30/2024 | ||||||||||||||||
| 121,602 | 40,534 | (12) | $ | 28 | 11/30/2024 | |||||||||||||||||
| 17,776 | (13) | $ | 2,214,705 | |||||||||||||||||||
| 37,232 | (14) | $ | 4,638,744 | |||||||||||||||||||
| 20,996 | (15) | $ | 2,615,846 | |||||||||||||||||||
| 6,669 | (16) | $ | 830,847 | |||||||||||||||||||
| 24,876 | (17) | $ | 3,099,301 | |||||||||||||||||||
| 12,438 | (18) | $ | 1,549,650 | |||||||||||||||||||
| 24,876 | (9) | $ | 3,099,301 | |||||||||||||||||||
| Alan J. Dean (19) | 3,132 | (5) | $ | 390,216 | ||||||||||||||||||
| 6,264 | (6) | $ | 780,432 | |||||||||||||||||||
| 2,266 | (7) | $ | 282,321 | |||||||||||||||||||
| 4,532 | (8) | $ | 564,642 | |||||||||||||||||||
| 3,484 | (9) | $ | 434,072 | |||||||||||||||||||
| Joanne Moffic- Silver | 1,319 | (1) | $ | 164,334 | ||||||||||||||||||
| 2,643 | (2) | $ | 329,291 | |||||||||||||||||||
| 6,095 | (3) | $ | 759,376 | |||||||||||||||||||
| 3,576 | (4) | $ | 445,534 | |||||||||||||||||||
| 1,978 | (5) | $ | 246,439 | |||||||||||||||||||
| 3,956 | (6) | $ | 492,878 | |||||||||||||||||||
| 1,983 | (7) | $ | 247,062 | |||||||||||||||||||
| 3,966 | (8) | $ | 494,124 | |||||||||||||||||||
| 7,152 | (9) | $ | 891,068 | |||||||||||||||||||
| Mark S. Hemsley (10) | 14,039 | — | (20) | $ | 22 | 1/31/2020 | ||||||||||||||||
| 6,953 | (13) | $ | 866,291 | |||||||||||||||||||
| 11,526 | (14) | $ | 1,435,979 | |||||||||||||||||||
| 24,291 | (21) | $ | 3,026,471 | |||||||||||||||||||
| 3,955 | (15) | $ | 492,773 | |||||||||||||||||||
| 2,334 | (16) | $ | 290,761 | |||||||||||||||||||
| 7,413 | (17) | $ | 923,586 | |||||||||||||||||||
| 3,707 | (18) | $ | 461,855 | |||||||||||||||||||
| Outstanding Equity Awards at December 31, 2017 | ||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($) | ||||||||||||||
| 7,414 | (9) | $ | 923,710 | |||||||||||||||||||
| Edward L. Provost (19) | 3,843 | (5) | $ | 478,799 | ||||||||||||||||||
| 7,706 | (6) | $ | 960,091 | |||||||||||||||||||
| 2,468 | (7) | $ | 307,488 | |||||||||||||||||||
| 4,936 | (8) | $ | 614,976 | |||||||||||||||||||
| 1,056 | (9) | $ | 131,567 | |||||||||||||||||||
| Gerald T. O'Connell (19) | 1,978 | (5) | $ | 246,439 | ||||||||||||||||||
| 3,956 | (6) | $ | 492,878 | |||||||||||||||||||
| 1,066 | (7) | $ | 132,813 | |||||||||||||||||||
| 2,132 | (8) | $ | 265,626 | |||||||||||||||||||
| 456 | (9) | $ | 56,813 | |||||||||||||||||||
| (1) | Grant of restricted stock units not subject to performance conditions on February 19, |
Cboe Global Markets 2021 Proxy Statement | 65 |
| (2) | Grant of restricted stock units not subject to performance conditions on February 19, |
| (3) | Grant of restricted stock units |
| (4) |
Grant of restricted stock units on February 19, |
| Grant of restricted stock units on February 19, |
| Grant of restricted stock units on February 19, |
| (7) | Grant of restricted stock units on February 19, 2019 subject to a performance condition of total stockholder return relative to the S&P 500 Index for the period from January 1, |
| (8) | Grant of restricted stock units on February 19, 2020 subject to an earnings per share performance condition for the period from January 1, 2020 through December 31, 2022. Under Item 402 of Regulation S-K, these awards are shown at the target performance amount. These restricted stock units will be issued on or about February 19, 2023 upon determination of the achievement of the performance conditions. |
| (9) | Grant of restricted stock units |
| (10) |
| Grant of |
66 | Cboe Global Markets 2021 Proxy Statement | |
2020 Option Exercises and |
The following table sets forth the options exercised and equity awards that vested during 2017.2020.
| | | | | | | | ||
| Option Awards | | Stock Awards | ||||||
| Number of Shares | | Value Realized on | | Number of Shares | | Value Realized on | ||
Name | Acquired on Exercise (#) | | Exercise |
| Acquired on Vesting (#) |
| Vesting | ||
Edward T. Tilly | — | | $ | — |
| 60,423 |
| $ | 7,380,085 |
Christopher A. Isaacson | — | | $ | — |
| 28,090 |
| $ | 3,286,953 |
Brian N. Schell | — | | $ | — |
| 22,046 |
| $ | 2,547,247 |
David Howson | — | | $ | — |
| 4,104 |
| $ | 478,045 |
Bryan Harkins | — | | $ | — |
| 22,643 |
| $ | 2,607,126 |
2020 Non-Qualified Deferred Compensation Table
| | | | | | | | | | | | | | | | | | |
| | | | Executive | | Registrant | | Aggregate | | | | | | | ||||
| | | | Contributions | | Contributions | | Earnings | | Aggregate | | Aggregate | ||||||
| | | | in Last | | in Last | | in Last | | Withdrawals/ | | Balance at | ||||||
Name (1) | | | | FY (2) |
| FY (3) |
| FY (4) |
| Distributions |
| Last FYE | ||||||
Edward T. Tilly |
| SERP | | $ | 105,992 | | $ | 211,984 | | $ | | 11,268 | | $ | — | | $ | 3,461,899 |
|
| ERP | | $ | — | | $ | 440,220 | | $ | | 99,561 | | $ | — | | $ | 3,499,808 |
Christopher A. Isaacson |
| SERP | | $ | 647,788 | | $ | 103,646 | | $ | | 544,019 | | $ | — | | $ | 3,574,823 |
Brian N. Schell |
| SERP | | $ | 32,828 | | $ | 65,657 | | $ | | 68,972 | | $ | — | | $ | 426,435 |
Bryan Harkins |
| SERP | | $ | — | | $ | — | | $ | | — | | $ | — | | $ | — |
| 2017 Stock Vested | ||||
| Stock Awards | ||||
| Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||
| Edward T. Tilly | 44,595 | 4,533,527 | ||
| Christopher R. Concannon (1) | 46,890 | 5,836,596 | ||
| Alan J. Dean (2) | 35,185 | 3,998,595 | ||
| Joanne Moffic-Silver | 10,757 | 1,097,145 | ||
| Mark S. Hemsley (1) | 16,061 | 2,710,504 | ||
| Edward L. Provost (2) | 45,928 | 4,095,551 | ||
| Gerald T. O'Connell (2) | 22,047 | 1,982,838 | ||
| (1) |
| 2017 Non-Qualified Deferred Compensation (1) | ||||||||||||||||
| Name | Executive Contributions in Last FY(2) | Registrant Contributions in Last FY(3) | Aggregate Earnings in Last FY(4) | Aggregate Withdrawals/Distributions | Aggregate Balance at Last FYE | |||||||||||
| Edward T. Tilly | SERP | $ | 111,290 | $ | 222,579 | $ | 194,193 | $ | — | $ | 1,929,000 | |||||
| Exec Ret | $ | — | $ | 340,500 | $ | 10,924 | $ | — | $ | 1,849,980 | ||||||
| Alan J. Dean | SERP | $ | 60,541 | $ | 80,722 | $ | 347,598 | $ | — | $ | 1,663,178 | |||||
| Exec Ret | $ | — | $ | 212,500 | $ | 454,084 | $ | — | $ | 2,321,744 | ||||||
| Joanne Moffic-Silver | SERP | $ | 44,898 | $ | 59,864 | $ | 453,953 | $ | — | $ | 1,910,347 | |||||
| Exec Ret | $ | — | $ | 163,861 | $ | 767,835 | $ | — | $ | 3,205,401 | ||||||
| Edward L. Provost | SERP | $ | 1,384,337 | $ | 343,569 | $ | 932,552 | $ | — | $ | 5,836,723 | |||||
| Exec Ret | $ | — | $ | 807,485 | $ | 819,557 | $ | — | $ | 4,811,057 | ||||||
| Gerald T. O'Connell | SERP | $ | 1,051,021 | $ | 225,243 | $ | 234,196 | $ | — | $ | 2,847,253 | |||||
| Exec Ret | $ | — | $ | 300,667 | $ | 461,526 | $ | — | $ | 3,203,763 | ||||||
| Executive and registrant contributions include contributions during |
| (2) | The amount of executive contributions made by each named executive officer and reported in this column is included in each named executive |
| (3) | The amount of registrant contributions reported in this column for each named executive officer is also included in his |
| (4) | Earnings are based upon the investment fund selected by the named executive officer for each plan. |
Non-Qualified Defined Contribution Plans
We do not have a defined benefit retirement plan. We currently have two non-qualified defined contribution plans in which the named executive officers may, as applicable, participate: the Supplemental Executive Retirement Plan ("SERP") and the Executive Retirement Plan ("ERP").Plan. The investment options for these plans only include investment options that are available under the qualified plans.
The SERP is designed for employees whose level of compensation exceeds the IRS defined annual compensation limit ($270,000285,000 for 2017)2020). Under the SERP, we match deferral contributions made by executivesthe employee under the SERP with respect to compensation in excess of the IRS compensation limit. These contributions mirror those under the 401(k) plan. In 2017,2020, we matched employee contributions
Cboe Global Markets 2021 Proxy Statement | 67 |
up to 4% of the employee'semployee’s compensation, subject to statutory limitations. We matched 200% of such contributions. Mr. Hemsley,Howson, as a U.K. based employee, iswas not eligible to participate in the SERP.
Mr. Tilly is eligible to participate in the ERP. Our 20172020 contribution to the ERP was six percent6% of each participant'sparticipant’s base salary and annual incentive, and, in the future, we expect to make further contributions consistent with this formula. Effective January 1, 2017, the ERP is frozen to new executive officers and employees.
In 2020, Mr. Tilly participated in the age-based component of the ERP. In addition to the contribution to the ERP described in the preceding paragraph, under the age-based component, we contribute to each eligible employee'semployee’s account an amount equal to a percentage of the employee'semployee’s base salary and cash incentive, based on such employee'semployee’s age at the start of the year, as set forth in the table below.
| | | |
| | Contribution | |
Age of Participant | | Percentage | |
Under 45 | 1 | % | |
45 to 49 | 3 | % | |
50 to 54 | 6 | % | |
55 to 59 | 9 | % | |
60 to 64 | 11 | % | |
65 and over | None | | |
All of our contributions to non-qualified defined contribution plans vest 20% for each year of continuous service, identical to the qualified 401(k) plan. All of our participating named executive officers other than Messrs. Concannon and Hemsley, are fully vested in the plans.
68 | Cboe Global Markets 2021 Proxy Statement |
SEVERANCE, CHANGE IN CONTROL AND EMPLOYMENT-RELATED AGREEMENTS
As of December 31, 2020, we had an employment agreementsagreement with Messrs.Mr. Tilly, an offer letter and Concannonemployment agreement with Mr. Howson, and the rest of theother named executive officers are covered by either the Executive Severance Plan, separation agreements or offer letter agreements.Plan. The material terms of the agreements and the plan are discussed below.
Mr. Tilly'sTilly’s Employment Agreement
Under the Employment Agreement, as in effect on December 31, 2016, and as amended and restated on February 27, 201711, 2020 (the "Tilly Employment Agreement"“Employment Agreement”), Mr. Tilly serves as our Chairman, President and CEO. The Tilly Employment Agreement is scheduled to expire on December 31, 2019,2022, and thereafter will be automatically renewed for successive one-year terms (each, a “Renewal Period”) unless either the Company or Mr. Tilly gives notice not to renew the agreement at least 180 days prior to the expiration of the then current term.
The Tilly Employment Agreement provides for an annual base salary of $1,150,000.at least $1,265,000. Mr. Tilly is also eligible to receive cash and equity incentive awards, each in the sole discretion of the Board, except that for 2017 the Tilly Employment Agreement provides that Mr. Tilly will be eligible for a target annual incentive award opportunity of $1,897,500 and a target annual equity incentive award having a grant date value of $3,000,000.Board. Mr. Tilly is entitled to participate in all of our employee benefit and fringe benefit plans that are generally available to similarly situated members of senior management. Pursuant to the Tilly Employment Agreement, Mr. Tilly has agreed to certain non-compete and non-solicit provisions during the employment term and for two years thereafter, as well as indefinite confidentiality obligations.
Under the Tilly Employment Agreement, upon a termination of employment by the Company without cause or by Mr. Tilly for good reason, or if Mr. Tilly'sTilly’s employment is terminated due to death or disability, Mr. Tilly (or his estate, as applicable) will be entitled to receive the following:following (collectively, the “Benefits”): (i) accrued but unpaid base salary through the date of termination; (ii) a pro-rated bonus equal to the bonus that Mr. Tilly would have received for the calendar year in which termination occurs, based on actualtarget performance, pro-rated for the portion of the calendar year worked; (iii) a lump sum cash severance payment in an amount equal to the sum of (A) two times the annual base salary in effect on the date of termination and (B) two times the target bonus for the year of termination; (iv) a lump sum cash payment in an amount equal to the aggregate amount of all employer contributions Mr. Tilly would have received had his employment continued for a period of two years under the SMART Plan, the SERP and the ERP; and (vii)(v) Company-paid premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"(“COBRA”), or an amount equal to Mr. Tilly'sTilly’s COBRA premiums, sufficient to cover full family health care for a period of 18 months following the termination of employment and, at the end of such period, reimbursement of premiums for six additional months of coverage under a comparable individual health policy.
Mr. Tilly would also receive these same benefitsBenefits if he is terminated without cause or resigns for good reason within 1824 months after a change in control, except that he will be reimbursed for 18 months of individual health coverage following the expiration of his COBRA period, rather than six months.
In addition to the expiration ofBenefits, under the then current term.
The Employment Agreement also provides that upon a voluntary termination of employment by Mr. Tilly without good reason, Mr. Tilly (or his estate, as applicable) will be entitled to receive the following: (i) accrued but unpaid base salary through the date of termination; (ii) a pro-ratedif not already paid prior to termination, bonus equal to the bonus that Mr. ConcannonTilly would have received for the calendar year inprior to which termination occurs, based on actual performance, pro-rated for the portion of the calendar year worked (the "Pro-Rated Bonus");performance; (iii) a lump sum cash severance payment in an amount equal to (1) if the termination of employment occurs within 24 months immediately following the Effective Date, the sum of (A) two times the annual base salary in effectis on the date of termination and (B) two times the target bonus for the year of termination, or (2) if the termination of employment occurs after the 24-month period immediately following the Effective Date, the sum of (A) one times the annual base salary in effect on the date of termination and (B) one times the target bonus for the year of termination; (iv) a lump sum cash payment in an amount equal to (1) if the termination of employment occurs within 24 months immediately following the Effective Date, the aggregate amount of all employer contributions Mr. Concannon would have received had his employment continued for a period of two years under the SMART Plan and the SERP, or (2) if the termination of employment occurs after the 24-month period immediately following the Effective Date, the aggregate amount of all employer contributions Mr. Concannon would have received had his employment continued for a period of one year under the SMART Plan and the SERP; (v) acceleratedJanuary 1, 2023, full vesting of all outstanding equity awardsperformance based restricted stock units granted by Bats prior to the consummation of the acquisition of Bats and assumed pursuant to the related merger agreement (the "Bats Equity Acceleration"); (vi) accelerated vesting of any unvested portion of the Sign-on Grant; and (vii) Company-paid premiums for coverage under COBRA, or an amount equal to Mr. Concannon's COBRA premiums, sufficient to cover full family health care for a period of either (A) 18 months following the termination of employment, if the termination of employment occurs within the 24-month period immediately following the Effective Date, or (B) 12 months following the termination of employment, if the termination of employment occurs after the 24-month period immediately following the Effective Date. Mr. Concannon would also receive these same benefits if he is terminated without cause or resigns for good reason within 18 months after a change in control, except that with respect to clauses (iii), (iv) and (vii), Mr. Concannon will be entitled to the maximum amounts described above. If Mr. Concannon's employment is terminated due to death or disability, Mr. Concannon (or Mr. Concannon's estate, as applicable) will be entitled to receive (i) annual base salary through the date of termination; (ii) the Pro-Rated Bonus; and (iii) the Bats Equity Acceleration.
Cboe Global Markets 2021 Proxy Statement | 69 |
January 1, 2023, based on the portionlevel of actual performance achieved; and (iv) if termination is after the calendar yearcompletion of a Renewal Period, full vesting of outstanding performance based restricted stock units granted during whichsuch Renewal Period, based on the executive is employed by the Company. The plan also provides that we will require any successor to expressly assume and agree to maintain the plan.
Mr. Howson’s Offer Letter and Employment Agreement
We entered into an offer letter agreement with Mr. Hemsley,Howson, dated September 25, 2016December 19, 2019 (the "Offer“Offer Letter Agreement"Agreement”), pursuant to which he indicated his intent to enter intocontinue employment with us following our acquisition of Batsa promotion in exchange for the compensation specified therein.
Under Mr. Hemsley'sHowson’s Offer Letter Agreement, Mr. Hemsley, effective upon our acquisition of Bats on February 28, 2017, servesHowson would serve as our EVP, President, Europe.Cboe Europe Limited, effective January 1, 2020. Mr. Hemsley'sHowson’s Offer Letter Agreement provides for an initial annual base salary of 483,890420,000 GBP and an initial target annual bonus of 459,696462,000 GBP. Mr. Hemsley'sHowson’s Offer Letter Agreement also provides that Mr. HemsleyHowson will be eligible for an initial target annual equity incentive award having a grant date value of $596,000.
Mr. Hemsley agreed in his Offer Letter Agreement not to assert that the transition from his former position with Bats to his current positions with us, in connection with our acquisition of Bats, constitutes good reason for him to resign under his former employment agreement with Bats. In exchange for such agreement, we granted Mr. Hemsley an award of RSUs, also known as a Sign-on Grant, with a grant date value of $596,000 that will vest on the third anniversary of our acquisition of Bats, subject to his continuous employment with us through such vesting date. Mr. Hemsley is entitled to participate in all of our employee benefit and fringe benefit plans that are generally available to similarly situated members of senior management, other than the frozen ERP and the SERP. Pursuant to the Offer Letter Agreement, Mr. Hemsley further agreed to comply with the confidentiality, noncompetition, nonsolicitation and nondisparagement obligations in his employment agreement with Bats and agreed that those obligations will be for the benefit of both the Company and Bats.
Under the Howson Employment Agreement, upon a termination of Mr. Hemsley'sHowson’s employment by us without cause following 90 days' written notice, or by the executive for good reason, the terminated executive is entitled to: (i) one times his annual base salary; (ii) an amount equal to one times his target bonus; (iii) reimbursement for insurance premiums payable over twelve (12) months; and (iv) his pro rata bonus as of the date of termination based on actual performance. Upon a voluntary termination of Mr. Hemsley'sHowson’s employment without good reason, he is entitled to one times his annual base salary during such time that we elect to enforce his covenant not to compete.
Mr. HemsleyHowson is entitled to certain severance compensation and benefits upon a change in control. The Howson Employment Agreement provides that if, within the 24-month period occurring immediately after a change in control, the executive is terminated by us without cause or terminates his employment for good reason, he is entitled to: (i) two times his annual base salary; (ii) an amount equal to two times his (A) target annual bonus and (B) 15% of his annual base salary (as an approximate milestone bonus payment);bonus; (iii) reimbursement for twelve (12) months of insurance premiums payable in a lump sum; (iv) his pro rata bonus as of the date of termination based on target performance; and (v) accelerated vesting of all outstanding equity awards.
If Mr. HemsleyHowson retires, dies, or becomes disabled, or his employment is terminated for cause, the executive will not receive any cash severance benefits (except for any accrued obligations and the payment of the executive'sexecutive’s pro rata bonus based on actual performance as of the date of termination due to the executive's death or disability). Mr. HemsleyHowson may choose to continue medical and dental benefits through COBRA or his insurance at his own cost.
Under Mr. Hemsley'sthe Howson Employment Agreement, we are required to provide him with 90 days' writtenthe minimum statutory notice of termination of employment, except where termination is due to ill health or injury or events where an immediate termination is permitted under his Employment Agreement. In the event he is unable to work due to ill health or injury for an aggregate period of 130 working days in a 12-month period, his employment may be terminated with noticerequirements of the statutory minimum plus one week. During his notice period,Employment Rights Act which are applicable to the work carried out by Mr. HemsleyHowson in the UK.
Executive Severance Plan
Except as disclosed herein, the other named executive officers do not have employment agreements; however, the Compensation Committee believes it is appropriate to provide an Executive Severance Plan to encourage retention, maintain a consistent management team to effectively run our operations, and allow executives to focus on our strategic business priorities. As of December 31, 2020, the plan participants covered Messrs. Isaacson, Schell, Harkins, and other officers.
70 | Cboe Global Markets 2021 Proxy Statement |
Under the plan, a participant who experiences an involuntary termination (as defined in the plan, which includes termination by us without cause and by the executive for good reason) is entitled to receive the following severance benefits:
the participant’s accrued salary, unpaid expenses, accrued and unpaid vacation days through the date of termination, and any unpaid bonus earned in any year prior to the year in which the participant’s employment terminates,
an amount equal to a pro-rated bonus for the year of employment termination, based on target performance for such year,
a severance payment in an amount equal to the sum of the participant’s base salary and contractual benefits or, in our discretion, we may pay Mr. Hemsley his base salarytarget annual bonus, and other contractual benefits in lieu of all or part of any notice period.
COBRA premiums for 18 months.
Under the 2009 Plan, all stock options are fully vested. Unvested restricted stock and unvested stock options granted under the 2012 Plan and the 2016 Plan and held by Mr. Hemsley are subject to accelerated vesting upon the death or disabilityterms of the executiveplan, if the participant’s employment is terminated either by us for cause, or upon hisby the participant other than for good reason (each as defined in the plan), we will pay the participant any unpaid bonus and accrued benefits.
If the participant is terminated in connection with a change in control, which includes a termination without cause or a resignation for good reason that occurs within twelve (12)a period beginning six months followingbefore a change ofin control event, unless otherwise set forth in the Employment Agreement.
To help align with best practices, on February 11, 2021, the Board approved an amendment and restatement of the Executive Severance Plan, as discussed above, (ii) accelerated vestingwhich included the following changes:
(i) designating the Chief Executive Officer of outstanding RSUs, with the RSUs for 2016 service, also known as Lag Grants, paidCompany to determine from time to time the executive vice president (“EVP”) and senior vice president (“SVP”) participants in the form of cashplan;
(ii) establishing a severance multiplier for SVPs and (iii) accelerated vesting of any outstanding PSUs, prorated for the portion of the performance period completed at the time of termination and subject to attainment of the applicable performance goals. Mr. O'Connell was 65 years of age and, as such, was entitled to the accelerated vesting of his RSUs and PSUsall other participants (other than EVPs) in the manner described in clauses (ii)plan of one times the sum of a participant’s annual base salary and target annual bonus;
(iii) upon retirement. Mr. Provost was 64 years of age and otherwise would have become entitled toincreasing the accelerated vesting of his RSUs and PSUsseverance multiplier in the manner describedevent a participant is terminated in clauses (ii) and (iii) if he had retired on or after attaining age 65.
(iv) establishing a severance multiplier in clauses (ii)the event a participant is terminated in connection with a change in control for SVPs and (iii) if he had retired on or after attaining age 65.all other participants (other than EVPs) in the plan of one and a half times the sum of a participant’s annual base salary and target annual bonus;
(v) establishing company-paid premiums for COBRA for SVPs and all other participants (other than EVPs) in the plan of twelve (12) months;
(vi) increasing company-paid premiums for COBRA in the event a participant is terminated in connection with a change in control for EVP participants in the plan to twenty-four (24) months; and
(vii) establishing company-paid premiums for COBRA in the event a participant is terminated in connection with a change in control for SVPs and all other participants (other than EVPs) in the plan of eighteen (18) months.
As of February 11, 2021, the plan participants covered Messrs. Isaacson, Schell, Harkins, and other officers.
Cboe Global Markets 2021 Proxy Statement | 71 |
Severance Payments
The following table shows the potential additional payment to each officer pursuant to, for Messrs. Mr. Tilly his employment agreement, for Mr. Howson his offer letter and Concannon, their respective employment agreements,agreement, and for the other named executive officers, the Executive Severance Plan, and Offer Letter Agreement, as applicable, each discussed above, upon the termination of the executive'sexecutive’s employment by us without cause or by the executive for good reason (including following a change in control) and, upon the executive'sexecutive’s death or disability.disability, qualified retirement (if eligible), and by the executive without good reason. The
72 | Cboe Global Markets 2021 Proxy Statement |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | Cash | | Stock Vesting | | | | | | | | ||||
Name |
| |
| Salary |
| Incentive(6) |
| Acceleration(7) |
|
| Other(8) |
| Total | |||||||
Edward T. Tilly | | (1) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 8,806,265 | | | $ | 1,378,146 | | $ | 18,976,161 | ||
| | (2) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 8,806,265 | | | $ | 1,392,215 | | $ | 18,990,230 | ||
| | (3) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 8,806,265 | | | $ | 1,378,146 | | $ | 18,976,161 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 6,920,647 | | | $ | 0 | | $ | 6,920,647 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 6,920,647 | | | $ | 0 | | $ | 6,920,647 | ||
Christopher A. Isaacson | | (1) | | $ | 650,000 | | $ | 1,950,000 | | $ | 257,756 | | | $ | 34,519 | | $ | 2,892,275 | ||
| | (2) | | $ | 650,000 | | $ | 1,950,000 | | $ | 2,686,233 | | | $ | 34,519 | | $ | 5,320,752 | ||
| | (3) | | $ | 0 | | $ | 0 | | $ | 2,686,233 | | | $ | 0 | | $ | 2,686,233 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 257,756 | | | $ | 0 | | $ | 257,756 | ||
Brian N. Schell | | (1) | | $ | 525,000 | | $ | 1,470,000 | | $ | 284,947 | | | $ | 32,745 | | $ | 2,312,692 | ||
| | (2) | | $ | 525,000 | | $ | 1,470,000 | | $ | 2,574,861 | | | $ | 32,745 | | $ | 4,602,606 | ||
| | (3) | | $ | 0 | | $ | 0 | | $ | 2,574,861 | | | $ | 0 | | $ | 2,574,861 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 284,947 | | | $ | 0 | | $ | 284,947 | ||
David Howson | | (1) | | $ | 575,400 | | $ | 1,568,110 | | $ | 0 | | | $ | 8,412 | | $ | 2,151,922 | ||
| | (2) | | $ | 1,150,800 | | $ | 2,352,165 | | $ | 1,053,467 | | | $ | 8,412 | | $ | 4,564,844 | ||
| | (3) | | $ | 0 | | $ | 784,055 | | $ | 1,053,467 | | | $ | 0 | | $ | 1,837,522 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | ||
| | (5) | | $ | 575,400 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 575,400 | ||
Bryan Harkins | | (1) | | $ | 500,000 | | $ | 1,000,000 | | $ | 237,828 | | | $ | 34,519 | | $ | 1,772,347 | ||
| | (2) | | $ | 500,000 | | $ | 1,000,000 | | $ | 1,592,352 | | | $ | 34,519 | | $ | 3,126,871 | ||
| | (3) | | $ | 0 | | $ | 0 | | $ | 1,592,352 | | | $ | 0 | | $ | 1,592,352 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 237,828 | | | $ | 0 | | $ | 237,828 | ||
| Name | Salary | Cash Incentive(4) | Stock Vesting Acceleration | Equity Award | Other(5) | Total | ||||||||||||||
| Edward T. Tilly | (1) | $ | 2,330,000 | $ | 5,692,500 | $ | — | $ | — | $ | 1,669,054 | $ | 9,691,554 | |||||||
| (2) | $ | 2,330,000 | $ | 5,692,500 | $ | 13,892,408 | $ | — | $ | 1,669,054 | $ | 23,583,962 | ||||||||
| (3) | $ | 2,330,000 | $ | 5,692,500 | $ | 13,892,408 | $ | — | $ | 434,154 | $ | 22,349,062 | ||||||||
| Christopher R. Concannon | (1) | $ | 2,000,000 | $ | 4,500,000 | $ | 13,399,443 | $ | — | $ | 557,317 | $ | 20,456,760 | |||||||
| (2) | $ | 2,000,000 | $ | 4,500,000 | $ | 16,498,744 | $ | — | $ | 557,317 | $ | 23,556,061 | ||||||||
| (3) | $ | — | $ | 1,500,000 | $ | 13,399,443 | $ | — | $ | 157,317 | $ | 15,056,760 | ||||||||
| Joanne Moffic-Silver | (1) | $ | 866,000 | $ | 1,818,600 | $ | — | $ | — | $ | 24,517 | $ | 2,709,117 | |||||||
| (2) | $ | 866,000 | $ | 1,818,600 | $ | 3,131,071 | $ | — | $ | 24,517 | $ | 5,840,188 | ||||||||
| (3) | $ | — | $ | — | $ | 3,131,071 | $ | — | $ | — | $ | 3,131,071 | ||||||||
| Mark S. Hemsley | (1) | $ | 1,306,504 | $ | 1,861,768 | $ | 6,112,275 | $ | — | $ | — | $ | 9,280,547 | |||||||
| (2) | $ | 1,306,504 | $ | 1,861,768 | $ | 7,925,931 | $ | — | $ | — | $ | 11,094,203 | ||||||||
| (3) | $ | — | $ | 620,589 | $ | 7,925,931 | $ | — | $ | — | $ | 8,546,520 | ||||||||
Cboe Global Markets 2021 Proxy Statement | 73 |
| (1) | Represents amounts to be paid in connection with a termination of the |
| (2) | Represents amounts to be paid in connection with a termination of the |
| (3) | Represents amounts to be paid in connection with death or disability. |
| (4) | Represents amounts to be paid in connection with a qualified retirement. As of December 31, 2020, Messrs. Isaacson, Schell, Howson, and Harkins have not satisfied the retirement requirements of 55 years of age and 10 years of service. On March 1, 2021, Mr. Schell satisfied the retirement requirements of 55 years of age and 10 years of service. |
| Represents amounts to be paid in connection with a termination of the executive’s employment by the executive without good reason. |
| (6) | The amounts shown represent, in the aggregate, any unpaid bonus earned in any year prior to the year in which the |
| (7) | If a retirement-eligible executive terminates for any reason, other than death or disability or a termination of the executive’s employment by us without cause or by the executive for good reason following a change in control, they are assumed to have taken a retirement.Amounts for Mr. Tilly in rows 1, 4 and 5 include acceleration of vesting of certain equity awards, including full or pro-rata vesting of PSU awards, because he has satisfied, as of December 31, 2020, the retirement requirements of 55 years of age and 10 years of service. Amounts for Messrs. Tilly, Isaacson, Schell and Harkins in rows 1 and 5 assume satisfaction of the performance period for the 2018 PSU awards as of December 31, 2020, which were certified and issued subsequent to the end of 2020. The amounts shown are based on the market value of our common stock on December 31, 2020 and amounts that include PSU awards are shown at the target performance amount, other than 2018 PSU awards, which are shown at actual performance amount. |
| The amounts shown represent amounts contributed on behalf of the executive under our qualified and non-qualified defined contribution plans in connection with such |
74 | Cboe Global Markets 2021 Proxy Statement |
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, we are providing the following information about the relationship of the median of the annual total compensation of our employees (other than Mr. Tilly, our Chairman, President and Chief Executive Officer ("CEO"))Officer) and the annual total compensation of Mr. Tilly. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K.
For 2017,2020, the median of the annual total compensation of all employees of the Company (other than our CEO) was $144,616$177,330 and the annual total compensation of our CEO was $10,122,933,$9,062,411, as reported above in the "Total"“Total” column of our 20172020 Summary Compensation Table above, and excluding the value of the Lag Grants was $7,622,895.above. Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 7051 to 1.
We identified the median employee by reviewing the annual total compensation of all full-time, part-time, and temporary employees employed by us on October 2, 2017November 15, 2020 as reflected in our payroll records. Annual total compensation included salary, commissions, bonus, value of equity grants, and value of benefits received. In making this determination, we used our employee population size of 878944 employees as of October 2, 2017. The population size includesNovember 15, 2020, which excluded, under the non-U.S. de minimis exception to the pay ratio rule, all of our associates in Ecuador (approximately 13), Canada (approximately 5), Singapore (approximately 3), and Hong Kong (approximately 1), out of a total of 973 employees, outside of the United States and the employees of Bats, which we acquired during fiscal 2017 in a transaction that closed on February 28, 2017.or 97%. After identifying the median employee, we calculated annual total compensation for such employee using the same methodology we use for calculating total compensation for each of our named executive officers as set forth in the "Summary2020 Summary Compensation Table"Table above.
Cboe Global Markets 2021 Proxy Statement | 75 |
EQUITY COMPENSATION PLAN INFORMATION
The following is information about our equity compensation plans as of December 31, 2017.2020.
| | | | | | | | |
| | | | | | | | Number of securities |
| | Number of securities | | | | remaining available for | ||
| | to be issued upon | | | | future issuance under | ||
| | exercise of | | Weighted-average | | equity compensation plans | ||
| | outstanding options, | | exercise price of | | (excluding securities | ||
| | warrants and | | outstanding options, | | reflected in column | ||
Plan Category |
| rights(a) |
| warrants and rights(b) |
| (a))(c) | ||
Equity compensation plans approved by security holders |
| N/A | (1) | | N/A | (1) | | 4,345,708(2) |
Equity compensation plans not approved by security holders |
| — |
| | — |
| | — |
Total |
| — | (1) | | — | (1) | | 4,345,708(2) |
| (1) | The Company has grants of unvested restricted stock and restricted stock units covering a total of |
| (2) | Consists, as of December 31, 2020, of 3,653,276 shares of our common stock available for future issuance under the Second Amended and Restated Long-Term Incentive Plan and 692,432 shares of our common stock available for future issuance under the Employee Stock Purchase Plan. |
76 | Cboe Global Markets 2021 Proxy Statement |
KPMG, an independent registered public accounting firm, served as our independent registered public accounting firm for the year ended December 31, 2017,2020, and our Audit Committee has again selected DeloitteKPMG to serve as our independent registered public accounting firm for the 20182021 fiscal year. Representatives of DeloitteKPMG will be present at the Annual Meeting, will have the opportunity to make a statement if they so desire, and will be available to respond to appropriate questions.
Although stockholder ratification is not required by our Bylaws or otherwise, the Board, as a matter of good corporate governance, is requesting that stockholders ratify the selection of DeloitteKPMG as our independent registered public accounting firm for the 20182021 fiscal year. If stockholders do not ratify Deloitte,KPMG, the Audit Committee will reconsider its appointment.
The ratification of the appointment of DeloitteKPMG as our independent registered public accounting firm for the 20182021 fiscal year requires that a majority of the shares cast on this matter be cast in favor of the proposal. Your broker is permitted to vote your shares of common stock on this matter even when you have not given voting instructions. Abstentions will not be counted as votes cast and therefore will not affect the vote.
The Board and the Audit Committee recommend that stockholders vote
FOR ratification of the appointment ofFormer Independent Registered Public Accounting Firm
Following a competitive request for proposal process, on August 9, 2019, the Audit Committee approved the dismissal of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm, effective following the conclusion of the audits for us and our subsidiaries’ fiscal year ending December 31, 2019. On the same day, the Audit Committee approved the engagement of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
The reports of Deloitte on our consolidated financial statements for the year ended December 31, 2019 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles. During the year ended December 31, 2019, there were no disagreements with Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused them to make reference thereto in their reports. During the year ended December 31, 2019, there were no “reportable events” requiring disclosure pursuant to Item 304(a)(1)(v) of Regulation S-K.
We provided Deloitte with a copy of the Current Report on Form 8-K (the “Form 8-K”), which was later filed with the SEC on August 14, 2019, and requested that Deloitte provide us with a letter addressed to the SEC stating whether or not Deloitte agreed with the disclosure contained in the Form 8-K or, if not, stating the respects in which it did not agree. We received the requested letter from Deloitte and a copy of Deloitte’s letter was filed as Exhibit 16.1 to the Form 8-K.
Cboe Global Markets 2021 Proxy Statement | 77 |
Independent Registered Public Accounting Firm Fees
KPMG served as our independent registered public accounting firm for the year ended December 31, 2020 and is serving in such capacity for the 2021 fiscal year. The following table presents fees billed to us by Deloitte forKPMG in the years ended December 31, 20172020 and 2016:2019:
| | | | | |
| | 2020 |
| 2019 | |
Audit Fees | $ | 2,760,545 | | $ | — |
Audit-Related Fees | | 232,820 | |
| — |
Tax Fees | | 49,325 | |
| 176,998 |
All Other Fees | | — | |
| — |
Total | $ | 3,042,690 | | $ | 176,998 |
| 2017 | 2016 | |||||
| Audit Fees | $ | 1,549,900 | $ | 959,485 | ||
| Audit-Related Fees | 1,221,089 | 1,533,651 | ||||
| Tax Fees | 498,763 | 260,685 | ||||
| All Other Fees | — | — | ||||
| Total | $ | 3,269,752 | $ | 2,753,821 | ||
Audit Fees
consist of the aggregate fees billed, or expected to be billed, for professional services rendered by KPMG for the integrated audit of our annual consolidated financial statements and internal control over financial reporting, quarterly reviews of our unaudited condensed consolidated financial statements, and audits of various domestic and international subsidiaries.Audit-Related Fees consist of the aggregate fees billed, or expected to be billed, for assurance and related services rendered by KPMG, including services rendered in connection with certain regulatory requirements of our subsidiaries.
Tax Fees consist of the aggregate fees billed, or expected to be billed, for tax consulting services rendered by KPMG in various jurisdictions in which we operate.
KPMG did not serve as our independent registered public accounting firm for the year ended December 31, 2019 and therefore the fees billed for services rendered by KPMG with respect to the 2019 fiscal year were not required to be pre-approved by the Audit Committee.
Independent Registered Public Accounting Firm Fees for Deloitte
Deloitte served as our independent registered public accounting firm for the year ended December 31, 2019. The following table presents fees billed to us by KPMG in the years ended December 31, 2020 and 2019:
| | | | | |
| | 2020 |
| 2019 | |
Audit Fees | $ | 1,339,090 | | $ | 2,928,489 |
Audit-Related Fees | | 29,000 | |
| 26,594 |
Tax Fees | | 421,614 | |
| 341,428 |
All Other Fees | | — | |
| — |
Total | $ | 1,789,704 | | $ | 3,296,511 |
Audit Fees consist of the aggregate fees billed, or expected to be billed, for professional services rendered by Deloitte for the integrated audit of our annual consolidated financial statements and internal control over financial reporting, quarterly reviews of our unaudited condensed consolidated financial statements, and reviewaudits of our internal controls over financial reporting.
Audit-Related Fees
consist of the aggregate fees billed, or expected to be billed, for professional services rendered by Deloitte for assurance andTax Fees
consist of the aggregate fees billed, or expected to be billed, for professional services rendered by Deloitte Tax LLP and Deloitte LLP, affiliates of Deloitte, for tax compliance, tax advice, tax planning, and the preparation of federal and state tax filings.
78 | Cboe Global Markets 2021 Proxy Statement |
Pre-Approval Policies and Procedures
The Audit Committee of the Board has adopted policies and procedures for the pre-approval of services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services, and other services. Such policies and procedures provide that the Audit Committee shall pre-approve all auditing and permitted non-audit services (including the fees and terms thereof).
As permitted under the Sarbanes-Oxley Act of 2002 and its pre-approval policies and procedures, the Audit Committee has delegated certain pre-approval authority to its Chair and a majority of the Audit Committee members, one of which must be the Chair. The ChairAudit Committee member or members to whom such authority is delegated must then report any pre-approval decisions to the Audit Committee at the next scheduled Audit Committee meeting.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee assists the Board in its oversight of the integrity of our consolidated financial statements, compliance with legal and regulatory requirements and the performance of the internal audit function. Management is responsible for our internal controlscontrol over financial reporting and financial reporting process. Deloitte,KPMG, our independent registered public accounting firm for fiscal year 2020, is responsible for performing an independent audit of our consolidated financial statements and for issuing a report on these consolidated financial statements and on the effectiveness of our internal control over financial reporting.
In this context, the Audit Committee hereby reports as follows:
The Audit Committee has reviewed and discussed with management and DeloitteKPMG the audited consolidated financial statements.
The Audit Committee has discussed with DeloitteKPMG the matters required to be discussed by Statement on Auditing Standards No. 1301 (Communications with Audit Committees), as adopted bythe applicable requirements of the Public Company Accounting Oversight Board.
The Audit Committee has received the written disclosures and the letter from DeloitteKPMG required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding its conversationscommunications with the Audit Committee concerning independence and has discussed with DeloitteKPMG its independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 20172020 for filing with the SEC.
We selected KPMG as our independent registered public accounting firm for fiscal year 2021. The Board is recommending that stockholders ratify that selection at the Annual Meeting. See “Proposal 3—Ratification of Appointment of Independent Registered Public Accounting Firm” for more information.
Audit Committee
James E. Parisi, Chair
William M. Farrow III
Alexander J. Matturri, Jr.
Jennifer J. McPeek
Michael L. Richter
Cboe Global Markets 2021 Proxy Statement | 79 |
BENEFICIAL OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table lists the shares of our common stock that were beneficially owned as of March 18, 2021, or as of the date otherwise indicated below, and the percentage of our common stock beneficially owned, based on 107,125,123 shares outstanding on March 18, 2021, by each of:
our directors and nominees,
our named executive officers,
our directors and nominees, named executive officers, and other executive officers as a group, and
beneficial owners of more than 5% of our common stock.
| | | | | |
|
| Number of |
| Percent of |
|
| | Shares of | | Voting |
|
Name | | Common Stock(1) | | Common Stock |
|
Edward T. Tilly (2) |
| 230,623 |
| * | |
Christopher A. Isaacson | | 64,738 | | * | |
Brian N. Schell (3) | | 42,058 | | * | |
David Howson |
| 15,461 |
| * | |
Bryan Harkins |
| 35,753 |
| * | |
William M. Farrow III |
| 6,592 |
| * | |
Edward J. Fitzpatrick |
| 11,255 |
| * | |
Ivan K. Fong | | 648 | | | |
Janet P. Froetscher |
| 13,887 |
| * | |
Jill R. Goodman |
| 14,040 |
| * | |
Alexander J. Matturri, Jr. | | 648 | | * | |
Jennifer J. McPeek | | 2,225 | | * | |
Roderick A. Palmore |
| 21,587 |
| * | |
James E. Parisi |
| 3,826 |
| * | |
Joseph P. Ratterman (4) |
| 36,339 |
| * | |
Michael L. Richter |
| 22,171 |
| * | |
Jill E. Sommers |
| 3,826 |
| * | |
Eugene S. Sunshine |
| 21,887 |
| * | |
Fredric J. Tomczyk | | 9,652 |
| * | |
All serving directors, nominees, NEOs and other executive officers as a group (23 persons) (5) |
| 595,303 |
| * | |
The Vanguard Group (6) |
| 11,510,947 |
| 10.7 | % |
T. Rowe Price Associates, Inc. (7) |
| 10,356,063 |
| 9.7 | % |
BlackRock, Inc. (8) |
| 8,884,798 |
| 8.3 | % |
* Less than 1%.
80 | Cboe Global Markets 2021 Proxy Statement |
| (1) | Amounts include 1,482 shares, and 1,225 shares with respect to Ms. McPeek and 648 shares with respect of Messrs. Fong and Matturri, of unvested restricted common stock granted to each non-employee director pursuant to the Second Amended and Restated Long-Term Incentive Plan. The number of shares of unvested restricted common stock held by all directors as a group is 18,823. The restricted stock units granted to our executives, which do not entitle the holder to voting rights and are described in the “Executive Compensation—Summary Compensation” section of this proxy statement, are not included in this table. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act, pursuant to which a person or group of persons is deemed to have “beneficial ownership” of a security if that person has the right to acquire beneficial ownership of such security within 60 days. As such, amounts also include shares of common stock that the named executive officers and the other executive officers who are not named executive officers have or will have the right to acquire pursuant to restricted stock units that will become vested within 60 days following March 18, 2021. |
| (2) | Amount includes 48,363 shares of common stock that Mr. Tilly has the right to acquire and be issued within 60 days following March 18, 2021 upon the acceleration of vesting of certain restricted stock units in connection with a qualified retirement. |
| (3) | Amount includes 15,286 shares of common stock that Mr. Schell has the right to acquire and be issued within 60 days following March 18, 2021 upon the acceleration of vesting of certain restricted stock units in connection with a qualified retirement. On March 1, 2021, Mr. Schell satisfied the retirement requirements of 55 years of age and 10 years of service. |
| (4) | Consists of 1,482 shares of common stock held of record by Mr. Ratterman and 34,857 shares of common stock held of record by the Joseph P. and Sandra M. Ratterman Trust. Joseph P. Ratterman and Sandra M. Ratterman, as Trustees of the Joseph P. and Sandra M. Ratterman Trust dated September 15, 2008, or their Successors in Trust, may be deemed to share voting power and dispositive power over the shares held by the Trust. |
| (5) | Amount includes 1,292 shares of common stock that other executive officers have the right to acquire and be issued within 60 days following March 18, 2021 upon the vesting of restricted stock units and 6,535 shares of common stock that other executive officers have the right to acquire and be issued within 60 days following March 18, 2021 upon the acceleration of vesting of certain restricted stock units in connection with a qualified retirement. |
| (6) | Based on information set forth in a Schedule 13G/A filed with the SEC on February 10, 2021. The Schedule 13G/A reports that, as of December 31, 2020, The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355, has sole dispositive power with respect to 11,027,303 shares of common stock. In addition, The Vanguard Group has shared voting power with respect to 186,110 shares of common stock and shared dispositive power with respect to 483,644 shares of common stock. |
| (7) | Based on information set forth in a Schedule 13G/A filed with the SEC on February 16, 2021. The Schedule 13G/A reports that, as of December 31, 2020, T. Rowe Price Associates, Inc., 100 E. Pratt Street, Baltimore, MD 21202, has sole voting power with respect to 3,835,455 shares of common stock and sole dispositive power with respect to 10,356,063 shares of common stock. |
| (8) | Based on information set forth in a Schedule 13G/A filed with the SEC on January 29, 2021. The Schedule 13G/A reports that, as of December 31, 2020, BlackRock Inc., 55 East 52nd Street New York, NY 10055, has sole voting power with respect to 7,927,772 shares of common stock and sole dispositive power with respect to 8,884,798 shares of common stock. |
Cboe Global Markets 2021 Proxy Statement | 81 |
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our Audit Committee has responsibility for reviewing and approving all related party transactions. The Committee has adopted a related-party transactions approval policy. Under this policy, transactions between us and any executive officer, director or holder of more than 5% of our common stock, or any immediate family member of such person, must be approved or ratified by the heading "Relationships and Related Party Transactions"Committee in this Proxy Statement, we have incorporated by referenceaccordance with the information describedterms of the heading "Interests of Bats' Directors and Executive Officerspolicy. Except as noted below, since January 1, 2020, there were no transactions in the Merger" in the definitive joint proxy statement/prospectus dated December 9, 2016, filed bywhich Cboe Global Markets Inc. (formerlyor any of its subsidiaries was a party, in which the amount involved exceeded $120,000 and in which a director, a director nominee, an executive officer, a security holder known to own more than 5% of our common stock, or an immediate family member of any of the foregoing had, or will have, a direct or indirect material interest.
Thomas Sexton, who serves as CBOE Holdings, Inc.the Chief Executive Officer and President of the National Futures Association (“NFA”), is the brother of Patrick Sexton, our Executive Vice President, General Counsel and Corporate Secretary. Through December 31, 2020, the NFA performed regulatory functions on behalf of CFE pursuant to a regulatory services agreement with CFE. Starting January 1, 2021, these regulatory functions were moved in-house from the SECNFA. The Company paid the NFA approximately $730,000 in fiscal year 2020 for the performance of such services. Mr. Sexton recuses himself from matters relating to the NFA.
The Company has long-term business relationships with several providers of market indices and some of those providers may be or may have been affiliated with members of the Board. For example, Mr. Matturri, a member of the Board, is the retired Chief Executive Officer of S&P, and as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 12, 2016, as amended31, 2020, the Company is party to a license with S&P pursuant to which the Company has the exclusive right to offer exchange-listed options contracts in the United States on the S&P 500 Index, the S&P 100 Index, and supplemented from timethe S&P Select Sector Indices through December 31, 2033, with an exclusive license to time. This document may also betrade options on the S&P 500 Index through December 31, 2032. The Company believes that such relationships involved terms no less favorable to the Company than those that it believes would have been obtained freein the absence of charge, upon your oral or written request, by writing to: Cboe Global Markets, Inc., 400 South LaSalle Street, Chicago, Illinois, 60605, Attn: Investor Relations; by sending an e-mail to: investorrelations@cboe.com; or by calling (312) 786-5600 and asking for Investor Relations.
To the extent that this Proxy Statement is incorporated by reference into any other filing by Cboe Global Markets with the SEC under the Securities Act of 1933, as amended (the "Securities Act"“Securities Act”), or the Exchange Act, the information contained in the section of this proxy statement entitled "Report“Report of the Audit Committee"Committee” (to the extent permitted by the rules of the SEC) shall not be deemed to be “soliciting material” and will not be deemed incorporated, unless specifically provided otherwise in such filing. The information contained in the "Compensation“Compensation Committee Report"Report” shall not be deemed to be “soliciting material” and will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, other than Cboe Global Markets'Markets’ Annual Report on Form 10-K, except to the extent specifically provided otherwise in such filing.
STOCKHOLDER PROPOSALS
Any stockholder who, in accordance with SEC rules, wishes to present a proposal for inclusion in the proxy materials to be distributed in connection with next year'syear’s annual meeting must timely submit the proposal to the Corporate Secretary, Cboe Global Markets, Inc., 400 South LaSalle Street, Chicago, Illinois 60605. Stockholder proposals for inclusion in our proxy statement for the 20192021 Annual Meeting of Stockholders must be received on or before December 6, 20182, 2021 and must comply in all other respects with applicable SEC rules.
82 | Cboe Global Markets 2021 Proxy Statement |
Any stockholder who wishes to propose any business or nominate a person for election to the Board to be considered by the stockholders at the 20192022 Annual Meeting of Stockholders, which proposal or nomination would not be included in the Company'sCompany’s proxy statement, must notify the Corporate Secretary of Cboe Global Markets, Inc. in writing and provide the specified information described in our Bylaws concerning the proposed business or nominee. The notice must be delivered to or mailed to the address set forth in the preceding paragraph and received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the date of the Annual Meeting.
As a result, any notice given by a stockholder pursuant to these provisions of our Bylaws (and not pursuant to the SEC rules relating to stockholder proposals for inclusion in the proxy materials) must be received no earlier than 5:00 p.m., Eastern time, on January 17, 201913, 2022 and no later than 5:00 p.m., Eastern time, on February 16, 2019,12, 2022, unless our annual meeting date occurs more than 30 days before or more than 70 days after May 17, 2019,13, 2022, in which case the stockholder'sstockholder’s notice must be received not later than 5:00 p.m., Eastern time, on the tenth day following the day on which public announcement is first made of the date of the annual meeting. The requirements for such notice are set forth in our Bylaws, a copy of which can be obtained upon request directed to the Corporate Secretary at the address set forth above.
Why did I receive these proxy materials?
Our Board is asking for your proxy in connection with the Annual Meeting. By giving us your proxy, you authorize the proxyholders (Edward T. Tilly and Patrick Sexton) to vote your shares at the Annual Meeting according to the instructions that you provide. If the Annual Meeting is adjourned or postponed, your proxy will be used to vote your shares when the meeting reconvenes.
Our 2020 Annual Report to Stockholders, which includes a copy of our Annual Report on Form 10-K for the year ended December 31, 2020 (excluding exhibits), as filed with the Securities and Exchange Commission (the “SEC”), is being mailed to stockholders with this Proxy Statement.
Who can vote at the Annual Meeting?
You are entitled to vote your shares of our common stock if you were a stockholder at the close of business on March 18, 2021, the record date for the Annual Meeting. On that date, there were 107,106,300 shares of our common stock outstanding and 18,823 unvested restricted shares of our common stock outstanding, which have been granted to our directors and have voting rights at the Annual Meeting. Therefore, there are 107,125,123 shares of voting common stock outstanding, each of which entitles the holder to one vote for each matter to be voted on at the Annual Meeting. Our outstanding common stock is held by approximately 147 stockholders of record as of March 18, 2021. A list of stockholders of record will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the Annual Meeting at our principal executive offices at 400 South LaSalle Street, Chicago, Illinois, 60605, and online during the Annual Meeting live audio webcast.
Who is and is not a stockholder of record?
If you hold shares of common stock registered in your name at our transfer agent, Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”), you are a stockholder of record.
Cboe Global Markets 2021 Proxy Statement | 83 |
SECTION 1.PurposeIf you hold shares of common stock indirectly through a broker, bank, or similar institution, or are an employee or director who holds shares of restricted stock at Fidelity, you are not a stockholder of record, but instead hold in “street name”. Please see the information under the heading “. If I hold my shares in “street name” and do not provide voting instructions, can my broker still vote my shares?” for important information.
If you are a stockholder of record, Broadridge is sending these proxy materials to you directly. If you hold shares in street name, these materials are being provided to you either by the broker, bank, or similar institution through which you hold your shares.
What do I need to do to attend the Annual Meeting?
The purposeAnnual Meeting will be a completely virtual meeting of stockholders, which will be conducted via live audio webcast. The live audio webcast of the Annual Meeting will also be available for listening to the general public, but participation in the Annual Meeting, including voting shares and submitting questions, will be limited to stockholders. You are entitled to participate in the Annual Meeting only if you were a stockholder at the close of business on March 18, 2021, the record date for the Annual Meeting, or if you hold a valid proxy to vote at the Annual Meeting.
If you were a stockholder of record as of the close of business on March 18, 2021, or you hold a valid proxy for the Annual Meeting, you will be able to attend the Annual Meeting via live audio webcast, vote your shares, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/CBOE2021. To participate, you will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials.
If you were not a stockholder of record, but you hold shares in street name and you want to attend the Annual Meeting via live audio webcast, vote your shares, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/CBOE2021, you must obtain, from the broker, bank, or other organization that holds your shares, the information required, including a 16-digit control number, and you may be required to provide proof of beneficial ownership, such as your most recent account statement as of the record date, a copy of the voting instruction form provided by your broker, bank, trustee, or nominee, or other similar evidence of ownership.
If you are not a stockholder or if you have lost your 16-digit control number, you will be able to listen to the live audio webcast of the Annual Meeting by visiting www.virtualshareholdermeeting.com/CBOE2021, but you will not be able to vote or submit your questions during the meeting.
The Annual Meeting will begin promptly at 9:00 a.m., Central time. We encourage you to access the meeting prior to the start time. Online access will open at 8:45 a.m., Central time, and you should allow ample time to log in to the meeting live audio webcast and test your computer audio system.
We recommend that you carefully review the procedures needed to gain admission in advance. If you do not comply with the procedures described here for attending the Annual Meeting via live audio webcast, you will not be able to participate online.
Please contact Investor Relations at investorrelations@Cboe.com or (312) 786-7136 in advance of the Annual Meeting if you have questions about attending the Annual Meeting.
84 | Cboe Global Markets 2021 Proxy Statement |
If I am unable to attend the live audio webcast of the Annual Meeting, may I listen at a later date?
Yes, an audio replay of the Annual Meeting will be posted and publicly available on the Events and Presentations page of our Investor Relations website at http://ir.Cboe.com. This audio replay will cover the entire Annual Meeting, including each stockholder question addressed during the Annual Meeting.
What if during the check-in period or during the Annual Meeting I have technical difficulties or trouble accessing the virtual meeting live audio webcast?
During online check-in and continuing through the length of the virtual Annual Meeting, we will have technicians standing by to assist you with any technical difficulties you may have accessing the live audio webcast. If you encounter any difficulties accessing the Annual Meeting during the check-in or at meeting time, please call (800) 586-1548 (U.S.) or (303) 562-9288 (International).
Why is the Annual Meeting being conducted as a virtual meeting via live audio webcast?
We believe a virtual meeting format for the Annual Meeting may facilitate stockholder attendance, dialogue, and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. We will be able to engage with all stockholders as opposed to just those who can afford to travel to an in-person meeting. The virtual format will also allow stockholders to submit questions and comments during the meeting.
We are utilizing technology from Broadridge, a leading virtual meeting solution. The platform is expected to accommodate most, if not all, stockholders. Both we and Broadridge will test the platform technology before going “live” for the Annual Meeting.
How do I submit questions or comments for the Annual Meeting?
Stockholders can submit questions or comments online during the Annual Meeting via live audio webcast by visiting www.virtualshareholdermeeting.com/CBOE2021. We will answer timely submitted questions or comments on a matter to be voted on at the Annual Meeting before voting is closed on the matter. Then, we will address appropriate general questions or comments from stockholders regarding the Company. Questions or comments received during the Annual Meeting will be presented as submitted, uncensored and unedited, except that we may omit certain personal details for data protection issues or we may edit profanity or other inappropriate language. Questions or comments regarding general economic, political, or other views that are not directly related to the business of the meeting, that are of an individual concern to a stockholder or that are not an appropriate subject matter for general discussion, are not pertinent to the meeting and therefore will not be presented. If we receive substantially similar questions, we may group those questions together and provide a single response to avoid repetition.
Cboe Global Markets 2021 Proxy Statement | 85 |
How do I vote?
You may cast your vote in one of four ways:
By Internet before the Annual Meeting. The web address for Internet voting is www.proxyvote.com and is also on the enclosed proxy card. Internet voting is available 24 hours a day.
By Internet during the Annual Meeting. You may vote online during the Annual Meeting (see “What do I need to do to attend the Annual Meeting?”). However, even if you plan to participate in the Annual Meeting via live audio webcast, we recommend that you also vote by Internet as described above so that your votes will be counted if you later decide not to participate in the Annual Meeting.
By Telephone. The number for telephone voting is 1-800-690-6903 and is also on the enclosed proxy card. Telephone voting is available 24 hours a day.
By Mail. Mark the enclosed proxy card, sign and date it, and return it in the pre-paid envelope we have provided.
If you choose to vote by Internet before or during the Annual Meeting or by telephone, then you do not need to return the proxy card. To be valid, your vote by Internet before the Annual Meeting or telephone must be received by 11:59 p.m., Eastern time, on May 12, 2021 for shares held directly, the deadline specified on the proxy card. If you vote by Internet before the Annual Meeting or telephone and subsequently obtain a legal proxy from your account representative, then your prior vote will be revoked regardless of whether you vote that legal proxy.
The Internet and telephone voting procedures are designed to authenticate stockholders’ identities, allow stockholders to give their voting instructions, and confirm that stockholders’ instructions have been recorded properly. Stockholders voting by Internet or telephone should understand that, while we do not charge any fees for voting by Internet or telephone, there may nevertheless be costs that must be borne by you.
May I change my vote?
If you are a stockholder of record, you may revoke your proxy or change your vote at any time before it is voted at the Annual Meeting by:
submitting a new proxy by telephone or through the Internet, after the date of the earlier voted proxy,
returning a signed proxy card dated later than your last proxy,
submitting a written revocation to the Corporate Secretary of Cboe Global Markets, Inc. Employee Stock Purchase Plan (the "at 400 South LaSalle Street, Chicago, Illinois 60605, or
voting online during the Annual Meeting.
If you are a stockholder of record and need a new proxy card, to change your vote or otherwise, please contact the Corporate Secretary at the address above or via email at CorporateSecretary@Cboe.com.
If your bank, broker, or other nominee holds your shares in “street name,” you may revoke your proxy or change your vote only by following the separate instructions provided by your bank, broker, or nominee.
86 | Cboe Global Markets 2021 Proxy Statement |
If I submit a proxy by Internet, telephone or mail, how will my shares be voted?
If you properly submit your proxy by one of these methods, and you do not subsequently revoke your proxy, your shares of common stock will be voted in accordance with your instructions.
If you sign, date, and return your proxy card but do not give voting instructions, your shares of common stock will be voted as follows:
FOR the election of each of our director nominees,
FOR the advisory vote to approve the compensation paid to our executive officers,
FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for our 2021 fiscal year, and
otherwise in accordance with the judgment of the persons voting the proxy on any other matter properly brought before the Annual Meeting.
In addition, if you properly submit your proxy by one of these methods, and you do not subsequently revoke your proxy, and any other matters are properly presented at the Annual Meeting, your shares of common stock will be voted in accordance with the judgment of the persons voting the proxy on such matters. We are not aware of any other matters that will be considered at the Annual Meeting.
If I hold my shares in “street name” and do not provide voting instructions, can my broker still vote my shares?
Under the rules of various securities exchanges, brokers that have not received voting instructions from their customers 10 days prior to the meeting date may vote their customers’ shares in the brokers’ discretion on the proposal regarding the ratification of the appointment of KPMG as our independent registered public accounting firm for our 2021 fiscal year, because the rules of the exchanges currently deem this a “discretionary” matter. Absent instruction, brokers will not be able to vote on any of the other matters included in this Proxy Statement. If brokers exercise their discretion in voting on the proposal regarding the ratification of KPMG, a “broker non-vote” will occur as to the other matters presented for a vote at the Annual Meeting, unless you provide voting instructions.Plan")
What vote is required for adoption or approval of each matter?
Election of Directors. You may vote FOR or AGAINST each of the director nominees or you may ABSTAIN. Each nominee must receive the affirmative vote of a majority of the votes cast with respect to attract, retain, motivatehis or her election in order to be elected. Each nominee has tendered his or her resignation, contingent on failing to receive a majority of the votes cast in this election and reward employeesacceptance by the Board. In the event any director fails to receive a majority of votes cast, the Nominating and Governance Committee will consider and make a recommendation to the Board as to whether to accept the resignation.
Advisory Vote to Approve Executive Compensation. You may vote FOR or AGAINST the advisory proposal to approve our executive compensation or you may ABSTAIN. A majority of the shares of common stock cast must be voted FOR approval of the advisory proposal in order for it to pass. Votes cast FOR or AGAINST with respect to the proposal will be counted as shares cast on the proposal.
Ratification of the Appointment of our Independent Registered Public Accounting Firm. You may vote FOR or AGAINST the ratification of the appointment of our independent registered public accounting firm or you may ABSTAIN. A majority of the shares of common stock cast must be voted FOR ratification in order for it to pass. Votes cast FOR or AGAINST with respect to this matter will be counted as shares cast on the matter.
Cboe Global Markets 2021 Proxy Statement | 87 |
Abstentions and Broker Non-Votes. Abstentions and broker non-votes will not be considered a vote cast either for or against any of the matters being presented in this proxy statement. If you do not provide your broker with voting instructions, the broker cannot vote your shares on any matter other than the ratification of the appointment of our independent registered public accounting firm. A “broker non-vote” occurs when your broker submits a proxy for the meeting with respect to discretionary matters, but does not vote on non-discretionary matters because you did not provide voting instructions on these matters. In the case of a discretionary matter (i.e., the ratification of the appointment of our independent registered public accounting firm), your broker is permitted to vote your shares of common stock even when you have not given voting instructions (as described above under “If I hold my shares in “street name” and do not provide voting instructions, can my broker still vote my shares?”).
How many votes are required to transact business at the Annual Meeting?
A quorum is required to transact business at the Annual Meeting. The holders of a majority of the outstanding shares of our common stock as of March 18, 2021, present or represented by proxy and entitled to vote, will constitute a quorum for the transaction of business at the Annual Meeting. Abstentions and broker non-votes are treated as present for quorum purposes.
What happens if the meeting is postponed or adjourned?
Your proxy will remain valid and may be voted at the postponed or adjourned meeting. You will be able to change or revoke your proxy until it is voted.
How do I obtain more information about Cboe Global Markets, Inc.?
A copy of our 2020 Annual Report to Stockholders, which includes our Annual Report on Form 10-K, is enclosed with this Proxy Statement. The 2020 Annual Report, our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 filed with the SEC, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics ,and the charters for our Audit, Compensation, and Nominating and Governance Committees are available on our website at http://ir.Cboe.com. In addition, we intend to disclose any future amendments to certain provisions of our Code of Business Conduct and Ethics, or any waivers of such provisions, applicable to any principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions on our website at http://ir.Cboe.com.
These documents may also be obtained, free of charge, by writing to: Cboe Global Markets, Inc., a Delaware corporation (the "Company") and its Subsidiaries and Affiliates and strengthen the mutuality of interests between Company employees and the Company's stockholders400 South LaSalle Street, Chicago, Illinois 60605, Attn: Investor Relations; or by providing employees of the Company and its Designated Subsidiaries and Designated Affiliates withsending an opportunity to purchase Shares of the Company. The Plan includes two components: a Section 423 of the Code Component (the "423 Component") and a non-Section 423 of the Code Component (the "Non-423 Component"). The Company's intention is to have the 423 Component of the Plan qualifye-mail to: investorrelations@Cboe.com.
These documents, as an "Employee Stock Purchase Plan" under Section 423 of the Code. The provisions of the 423 Component shall, accordingly, be administered, interpreted and construed sowell as to extend and limit participation in a manner consistent with the requirements of that Section of the Code. In addition, the Plan authorizes the grant of options under the Non-423 Component thatother information about us, are also available on our website at http://ir.Cboe.com.
Information on our website does not qualify as an Employee Stock Purchase Plan under Section 423form a part of the Code; such options shall be granted pursuantthis Proxy Statement.
How do I sign up for electronic delivery of proxy materials?
This Proxy Statement and our 2020 Annual Report to rules, procedures or sub-plans adopted by the Committee designedStockholders are available on our website at http://ir.Cboe.com. If you would like to achieve tax, securities laws or other objectives for Eligible Employeeshelp reduce our costs of printing and the Company. Except as otherwise provided herein, the Non-423 Component will be operated and administeredmailing future materials, you can consent to access these documents in the same manner asfuture over the 423 Component.
88 | Cboe Global Markets 2021 Proxy Statement |
If you are a stockholder of record, you may sign up for this service by contacting our transfer agent in writing at Broadridge, 51 Mercedes Way, Edgewood, NY 11717 or calling (866) 540-7095. If you hold shares of common stock in “street name,” you can contact your account representative at the broker, bank, or similar institution through which you hold your shares for information regarding electronic delivery of future materials. Your consent to time byelectronic delivery will remain in effect until you revoke it.
Who pays the Committee in its sole discretion with respect to any Offering Period. Except as otherwise defined by the Committee from time to time in its sole discretion, "Eligible Compensation" for an Offering Period means wages and base salary received during such Offering Period by an Eligible Employee for services to the Employer. Except as otherwise determined by the Committee, Eligible Compensation shall not include commissions, overtime, severance pay, hiring and relocation bonuses, pay in lieu of vacation, sick leave, any other bonus, incentive or other special payments, any amounts realized from equity incentive awards, any amounts contributed by the Employer to any pension plan, any amounts paid by the Employer for other fringe benefits, such as health and welfare, hospitalization and group life insurance benefits, or perquisites, or pay in lieu of such benefits or any other form of compensation that may be paid from time to time to the Employee from the Employer. Eligible Compensation for Participants shall be pro-rated based upon the Eligible Compensation which he or she receives on each pay date during such Offering Period. The Stock Administrator shall have the discretion to determine the applicationexpenses of this definition to Employees outsideproxy solicitation?
The Company will pay the United States.
If you have any questions about the Employer,Annual Meeting or need additional copies of this Proxy Statement or additional proxy cards, please contact Morrow Sodali LLC at 470 West Avenue, Stamford, Connecticut 06902. Banks and brokerage firms may call (203) 658-9400 and stockholders may call toll-free at (800) 662-5200.
Who will count the vote?
The Company has engaged Broadridge to serve as the Boardinspector of elections for the Annual Meeting. As inspector of elections, Broadridge will tabulate the voting results.
What does it mean if I get more than one proxy or the Committee undervoting instruction card?
If your shares are registered in more than one name or in connectionmore than one account, you will receive more than one card. This may occur if you hold common stock in multiple accounts, such as with the Plan shall be deemed to have been duly given when (i) personally delivered, including electronic transmissiondifferent brokers in such formstreet name and as the Board or the Committee shall direct, or (ii) placed in the mail of the country of the sender in an envelope addressed to the last known address of the person to whom the notice is given.
Cboe Global Markets 2021 Proxy Statement | 89 |
In addition to disclosing results determined in accordance with U.S. generally accepted accounting principles ("GAAP"(“GAAP”), Cboe Global Markets, Inc. has disclosed certain non-GAAP measures of operating performance.performance in this Proxy Statement. These measures are not in accordance with, or a substitute for, GAAP, and may be different from or inconsistent with non-GAAP financial measures used by other companies. The non-GAAP measures provided in this Proxy Statement are adjusted net revenues, less cost ofadjusted EBITDA, 3-year adjusted EPS, Options, North American Equities and European Equities segments adjusted net revenues, and revenues less cost of revenues, other than royalties, on a combined company basis.Options, Futures, North American Equities, Global FX and European Equities segments adjusted EBITDAs. Management believes that the non-GAAP financial measures presented in this Proxy Statement provide athe appropriate means to determine compensation payouts under our annual incentive plan. Additionally, due to the transformative nature of the Bats acquisition, theThe Company also believes that providing a discussion of its revenues on a non-GAAP combined basisthese metrics provides management and investors an additional perspective on the Company'sCompany’s financial and operational performance and trends.
| |||
Twelve Months Ended | |||
(in millions) | December 31, 2020 | ||
Reconciliation of Net Revenue to Non-GAAP | |
| |
Net revenues | $ | 1,254.3 | |
Non-GAAP adjustments |
| | |
Acquisition revenues less cost of revenues |
| (41.4) | |
Adjusted Net Revenue | $ | 1,212.9 | |
| |||
|
| Twelve Months Ended | |
(in millions) | | December 31, 2020 | |
Reconciliation of Net Income Allocated to Common Stockholders to EBITDA and Adjusted EBITDA |
| ||
Net income allocated to common stockholders |
| $ | 467.0 |
Interest | |
| 37.6 |
Income tax provision | |
| 192.2 |
Depreciation and amortization | |
| 158.5 |
EBITDA | | $ | 855.3 |
| | | |
Non-GAAP adjustments not included in above line items | |
| |
Acquisition-related expenses | |
| 45.2 |
Provision for notes receivable | | | 6.7 |
Bargain purchase gain (1) | |
| (32.6) |
Acquisition EBITDA | | | (9.4) |
Adjusted EBITDA | | $ | 865.2 |
| (1) | This amount represents the bargain purchase gain related to the acquisition of EuroCCP on July 1, 2020. |
90 | Cboe Global Markets 2021 Proxy Statement |
| GAAP | Adjustments | Non-GAAP | |
Fiscal Year 2016 (in millions) | Cboe Historical (1) | Bats Historical (2) | Combined (1) |
| Revenues | $703.1 | $1,868.9 | $2,572.0 |
| Cost of revenues | $136.7 | $1,432.5 | $1,569.2 |
| Net revenue: | |||
| Net transaction fees | $462.4 | $191.3 | $653.7 |
| Access fees | $52.4 | $66.9 | $119.3 |
| Exchange services and other fees | $46.3 | $23.3 | $69.6 |
| Market data fees | $33.2 | $145.8 | $179.0 |
| Regulatory fees | $36.5 | $2.3 | $38.8 |
| Royalty fees | -$78.0 | - | -$78.0 |
| Other | $13.6 | $6.8 | $20.4 |
| Revenues less cost of revenues | $566.4 | $436.4 | $1,002.8 |
| GAAP | Adjustments | Non-GAAP | |
Fiscal Year 2017 (in millions) | Cboe Historical (1) | Bats Historical (2) | Combined (1) |
| Revenues | $2,229.1 | $272.9 | $2,502.0 |
| Cost of revenues | $1,233.5 | $201.0 | $1,434.5 |
| Net revenue: | |||
| Net transaction fees | $677.6 | $27.8 | $705.4 |
| Access fees | $106.8 | $11.9 | $118.7 |
| Exchange services and other fees | $74.8 | $5.0 | $79.8 |
| Market data fees | $164.5 | $25.7 | $190.2 |
| Regulatory fees | $31.5 | $0.5 | $32.0 |
| Royalty fees | -$86.2 | $0.0 | -$86.2 |
| Other | $26.6 | $1.0 | $27.6 |
| Revenues less cost of revenues | $995.6 | $71.9 | $1,067.5 |
| Royalty fees | -$86.2 | $0.0 | -$86.2 |
| Revenues less cost of revenues, other than royalties | $1,081.8 | $71.9 | $1,153.7 |
| |||
Thirty Six Months Ended | |||
(in millions, except per share amounts) | December 31, 2020 | ||
Reconciliation of 3-Year Net Income Allocated to Common Stockholders to Non-GAAP | |
| |
Net income allocated to common stockholders | $ | 1,261.8 | |
Non-GAAP adjustments |
| | |
Acquisition-related expenses (1) |
| 123.7 | |
Amortization of acquired intangible assets (2) |
| 423.8 | |
Provision for notes receivable (3) | | 30.1 | |
Bargain purchase gain | | (32.6) | |
Change in redemption value of noncontrolling interests |
| 1.8 | |
Change in contingent consideration | | 0.1 | |
Total Non-GAAP adjustments |
| 546.9 | |
Income tax expense related to the items above | | (138.1) | |
Tax provision re-measurements | | 3.7 | |
Impairment charges attributed to noncontrolling interests |
| (3.6) | |
Net income allocated to participating securities - effect on reconciling items |
| (2.2) | |
Adjusted 3-year net income allocated to common stockholders | $ | 1,668.5 | |
| | | |
Reconciliation of 3-Year Diluted EPS to Non-GAAP |
| | |
Diluted earnings per common share | $ | 11.37 | |
Per share impact of non-GAAP adjustments noted above |
| 3.65 | |
3-year Adjusted diluted earnings per common share | $ | 15.02 | |
| (1) | This amount includes professional fees and outside services, severance, facilities expenses, impairment charges and other costs related to the company’s acquisitions. |
| (2) | This amount represents the amortization of acquired intangible assets related to the company’s acquisitions. |
| (3) | This amount represents the provision for notes receivable, recorded in other expenses on the consolidated statements of income, associated with the funding for the development of the consolidated audit trail (“CAT”). |
Cboe Global Markets 2021 Proxy Statement | 91 |
| ||
Twelve Months Ended | ||
(in millions) | December 31, 2020 | |
Reconciliation of Options Segment Net Revenues to Non-GAAP | |
|
Net revenues | $ | 649.7 |
Non-GAAP adjustments |
| |
Acquisition revenues less cost of revenues |
| (17.3) |
Options Segment Adjusted Net Revenues | $ | 632.4 |
| |||||
| | ||||
(in millions) |
| Twelve Months Ended | |||
Reconciliation of Options Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | |||
Net income allocated to common stockholders | | $ | 278.6 | ||
Interest | | | — | ||
Income tax provision | | | 151.8 | ||
Depreciation and amortization | | | 30.9 | ||
EBITDA | | | 461.3 | ||
Acquisition-related costs | | | 12.9 | ||
Provision for notes receivable | | | 1.7 | ||
Net income allocated to participating securities | | | 0.7 | ||
Acquisition EBITDA | | | (1.0) | ||
Options Segment Adjusted EBITDA | | $ | 475.6 | ||
| |||||
| ||
Twelve Months Ended | ||
(in millions) | December 31, 2020 | |
Reconciliation of North American Equities Segment Net Revenues to Non-GAAP | |
|
Net revenues | $ | 326.6 |
Non-GAAP adjustments |
| |
Acquisition revenues less cost of revenues |
| (2.9) |
North American Equities Segment Adjusted Net Revenues | $ | 323.7 |
| |||
| | ||
(in millions) |
| Twelve Months Ended | |
Reconciliation of North American Equities Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | |
Net income allocated to common stockholders | | $ | 132.0 |
Interest | | | — |
Income tax provision | | | 27.3 |
Depreciation and amortization | | | 68.7 |
EBITDA | | | 228.0 |
Acquisition-related costs | | | 15.1 |
Provision for notes receivable | | | 5.0 |
Net income allocated to participating securities | | | 0.3 |
Acquisition EBITDA | | | (1.8) |
North American Equities Segment Adjusted EBITDA | | $ | 246.6 |
92 | Cboe Global Markets 2021 Proxy Statement |
v | | | |
(in millions) |
| Twelve Months Ended | |
Reconciliation of Futures Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | |
Net income allocated to common stockholders | | $ | 25.4 |
Interest | | | — |
Income tax provision | | | 28.3 |
Depreciation and amortization | | | 3.2 |
EBITDA | | | 56.9 |
Acquisition-related costs | | | — |
Futures Segment Adjusted EBITDA | | $ | 56.9 |
v | | | |
(in millions) |
| Twelve Months Ended | |
Reconciliation of Global FX Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | |
Net income allocated to common stockholders | | $ | 5.8 |
Interest | | | — |
Income tax provision | | | — |
Depreciation and amortization | | | 26.6 |
EBITDA | | | 32.4 |
Acquisition-related costs | | | — |
Global FX Segment Adjusted EBITDA | | $ | 32.4 |
| ||
Twelve Months Ended | ||
(in millions) | December 31, 2020 | |
Reconciliation of European Equities Segment Net Revenues to Non-GAAP | |
|
Net revenues | $ | 114.4 |
Non-GAAP adjustments |
| |
Acquisition revenues less cost of revenues |
| (21.1) |
European Equities Segment Adjusted Net Revenues | $ | 93.2 |
| |||
| | ||
(in millions) |
| Twelve Months Ended | |
Reconciliation of European Equities Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | |
Net income (loss) allocated to common stockholders | | $ | 46.7 |
Interest | | | 6.9 |
Income tax provision | | | 12.4 |
Depreciation and amortization | | | 29.1 |
EBITDA | | | 95.1 |
Bargain purchase gain | | | (32.0) |
Net income allocated to participating securities | | | 0.1 |
Acquisition EBITDA | | | (6.4) |
European derivatives development related expenses | | | 1.6 |
European Equities Segment Adjusted EBITDA | | $ | 58.4 |
Cboe Global Markets 2021 Proxy Statement | 93 |
