UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒ | |
Filed by a | |
Check the appropriate box: | |
| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material under §240.14a-12 |
Cboe Global Markets, Inc. | ||
(Name of Registrant as Specified In Its Charter) | ||
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||
Payment of Filing Fee (Check | ||
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| Fee paid previously with preliminary materials | |
◻ | Fee computed on table | |
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20192022
Notice of Annual Meeting of Stockholders
and Proxy Statement
April 4, 2019March 31, 2022
Dear Cboe Stockholder:
We cordially invite you to attend the 20192022 Annual Meeting of Stockholders (the “Annual Meeting”) of Cboe Global Markets, Inc. to be held on Thursday, May 16, 2019,12, 2022, 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/CBOE2022 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.Annual Meeting will also be available for listening to the general public.
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 20192022 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.
If you plan to attend the Annual Meeting in person, please note that you will be required to provide acceptable documentation to gain access to the meeting. See the information under the heading “What do I need to do to attend the Annual Meeting?” in the attached proxy statement. If you cannot attend the Annual Meeting in person, a live webcast of the Annual Meeting will be provided on the Investor Relations section of our website at http://ir.Cboe.com, however, please submit your vote in advance. See the information under the heading “Will the Annual Meeting be webcast?” in the attached proxy statement.
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 20192022 Annual Meeting of Stockholders (the “Annual Meeting”) of Cboe Global Markets, Inc. will be held on Thursday, May 16, 2019,12, 2022, 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/CBOE2022 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:Annual meeting is to:
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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 19, 2019. We also cordially invite you17, 2022. A list of stockholders of record will be open for examination by any stockholder for any purpose germane to attend the meeting.Annual Meeting for a period of 10 days prior to the Annual Meeting at our principal executive offices at 433 West Van Buren Street, Chicago, Illinois, 60607, and online during the Annual Meeting live audio webcast.
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 do I vote?” in the attached proxy statement.
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| | | Complete, sign, date and return the enclosed proxy using the enclosed postage-paid envelope | |
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| Patrick Sexton | ||||||||
March 31, 2022 | Corporate Secretary |
April 4, 2019
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 16, 2019:12, 2022:
The notice of the Annual Meeting and proxy statement are available on the Investor Relations sectionof our website at http://ir.Cboe.com/annual-proxy.ir.Cboe.com.
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Severance, Change in Control and Employment-Related Agreements | 68 |
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Appendix A—Reconciliation of Non-GAAP Financial Measures to GAAP Measures | |
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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. 20192022 Annual Meeting of Stockholders on Thursday, May 16, 201912, 2022 at 9:00 a.m., localCentral 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 4, 2019.March 31, 2022.
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,”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, (the “Effective Date”), 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. In 2021, we acquired Chi-X Asia Holdings Limited (“Chi-X Asia Pacific”), a holding company of alternative market operators and providers of innovative market solutions.
This summary highlights information contained elsewhere in this Proxy Statement for the Cboe Global Markets, Inc. 20192022 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 20182021 Annual Report to Stockholders included in this mailing, which includes a copy of our Annual Report on Form 10‑K10-K for the year ended December 31, 2018. 2021.
Annual Meeting Information
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Stockholder Actions and Board of Directors Voting Recommendations
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Proposal | Board Voting | Page | ||
1 - Elect | | FOR | |
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2 - Approve, in a non-binding resolution, the compensation paid to our executive officers | | FOR | |
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3 - Ratify the appointment of | | FOR | |
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Performance
Business Highlights
Achieved record 2018 full year financial results
Set new annual ADV highs for trading in Options, Index Options, SPX Options, VIX Futures and FX
Revenues less cost of revenues (“net revenues”) of $1,217 million for 2018, up 22% from $996 million for 2017, and up 14% from net revenues on a combined company basis of $1,068 million for 20171
Diluted earnings per share (“EPS”) of $3.76 for 2018, up 2% from $3.69 for 2017, and adjusted diluted EPS of $5.02 for 2018, up 41% from adjusted diluted EPS on a combined company basis of $3.57 for 20171
Adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) of $840 million for 2018, up 18% from adjusted EBITDA on a combined company basis of $709 million for 20171
Exited 2018 with run rate expense synergies of $57 million
Launched 24x5 trading for VIX and SPX options Began distributing real-time data via Cboe Global Cloud Launched Cboe Europe Derivatives Acquired Chi-X Asia Pacific, a market operator in Japan and Australia Launched Cboe Empowers, a community engagement program Established new Data and Access Solutions Division Launched mini-options on Russell 2000 Index Continued integration of prior acquisitions Continued navigation of COVID-19 pandemic For additional highlights, see “Executive Compensation—Compensation Discussion and Analysis” |
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Cboe Global Markets | 1 |
ReturnReturns 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. The ongoing commitment of our teamvalue and the Board of Directors to this strategy produced the following notable returns to stockholders.stockholders in 2021.
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Total Stockholder Return1 | |||||
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1As of December 31, 2021. Includes reinvestment of all dividends.
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2 | Cboe Global Markets 2022 Proxy Statement |
Director Nominee Highlights1
The nominees for our Board of Directors (the “Board”) exhibit an effective mix of skills, experience, diversityqualifications, experiences and fresh perspectives. You can finddiversity. For additional information, undersee “Corporate Governance—Proposal 1- Election of Directors”.
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1Certain highlights are based on self-identified characteristics. | |
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Cboe Global Markets | 3 |
Corporate Governance Highlights
We are committed to good corporate governance, which promotes the long-term interests of stockholders by providing for effective oversight and management of the Company. The following are highlights of our corporate governance framework. For additional information, see “Corporate Governance”:
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Commitment to | |
Stockholder Engagement Highlights
Cboe Global Markets and our Board are also committed to fostering long-term and institution-wide relationships with stockholders and maintaining their trust and goodwill. Through a variety of engagement activities and our 2021 Investor Day, our discussions with stockholders cover a variety of topics, including our performance, strategy, corporate governance, and executive compensation. For additional information, see “Corporate Governance—Stockholder Engagement”.
Executive Compensation Highlights
The design of our executive compensation program, including compensation practices and independent oversight, is intended to align management’s interests with those of our stockholders. The following are highlights of our 20182021 executive compensation program, which is described in further detail in this Proxy Statement under “Executive Compensation”:
Annual cash incentive wasincentives were based on corporate performance (weighted 75%70%) and individual performance (weighted 25%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 “Other Items” orfor 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 20202023 Annual Meeting of Stockholders. Additional questions may be directed to Investor Relations at investorrelations@Cboe.com or (312) 786‑5600.786-7559.
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4 | Cboe Global Markets |
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PROPOSAL 1 - ELECTION OF DIRECTORS
Board Composition
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 1314 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. ThereSubject to retirement, 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 20202023 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. 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 were elected as directors by stockholders at the 20182021 Annual Meeting of Stockholders.
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. 6Based on the self-identified characteristics of our directors, 7 of our director nominees 4 of whom are women and 2 of whom are racially diverse, bring 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.
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Cboe Global Markets 2022 Proxy Statement | 5 |
In addition, our Board’s composition represents a balanced approach to director tenure and age, 87 of the 1314 nominees have tenures equal to or less than 10 5 years and the ages range from 5052 to 73,72, allowing the Board to benefit from the experience of longer-serving directors combined with fresh perspectives from newer directors. The following table shows the
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specific qualifications and experiences the Board and the Nominating and Governance Committee considered for each nominee.
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Director Qualifications and Experiences | Tilly | Sunshine |
| Farrow | Fitzpatrick | Fong | Froetscher | Goodman | Matturri | McPeek | Palmore | Parisi | Ratterman |
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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 | ● | ● | ● | ● | ● | ● | ||||||||||||
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Technology | | | | | | | | | | | | | �� | | ||||
Experience in technology or cybersecurity | ● | | ● | | ● | | | | | | | ● | | ● | ||||
Fresh Perspective | | | | | | | | | | | | | | | ||||
Board tenure is equal to or less than five years | | | ● | | ● | ● | ||||||||||||
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Nominees
Set forth below is biographical information, as of March 17, 2022, for each of the directors nominated to serve on our Board for a one-year term until the 20202023 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 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. (collectively, the “securities exchanges”).
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Edward T. Tilly Chairman, President and CEO Age: 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, 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. |
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Eugene S. Sunshine
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Each director nominee must receive the affirmative vote of a majority of the votes cast with respect to his 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 acceptance 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. 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 each of the director nominees.
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Independence
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 Cboe BZX Exchange’s (“BZX”) and Nasdaq Global Select Market’s (“Nasdaq”) listing standards for independence. In addition, James R. Boris, Christopher T. Mitchell and Samuel K. Skinner, who did not stand for reelection as directors in 2018, were determined to be independent through May 17, 2018.
All of the directors on each of the Audit, Compensation and Nominating and Governance Committees are independent. Each of these Committees reports to the Board as they deem appropriate, and as the Board may request.
Lead Director
The Board has anIndependent
Age: 72
Committees:
Executive
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. Our Corporate Governance Guidelines requireSunshine 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 board of directors of Arch Capital Group Ltd., a publicly traded company. He is a former member of the board of directors of Bloomberg L.P., Kaufman Hall and Associates, 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 an independent directorthese skills make him well suited to serve on our Board and as our Lead Director.
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8 | Cboe Global Markets 2022 Proxy Statement |
William M. Farrow, III Independent Age: 67 Committees: Audit Executive Risk (Chair) | 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 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: 55 Committees: Compensation (Chair) Executive Risk | Background Mr. Fitzpatrick has served on our Board since 2013. Mr. Fitzpatrick is currently Senior Vice President and Senior Client Advisor of Genpact Limited, a position he has held since August 2021, and prior to that was its Chief Financial Officer from July 2014 to August 2021. Prior to joining Genpact Limited, 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 former CFO of publicly traded companies 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. |
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Cboe Global Markets 2022 Proxy Statement | 9 |
Ivan K. Fong Independent Age: 60 Committees: Nominating and Governance Risk | Background Mr. Fong has served on our Board since December 2020. Mr. Fong is currently Executive Vice President, General Counsel and Secretary of Medtronic plc, a position he has held from February 2022. Prior to this position, he served as Senior Vice President, Chief Legal and Policy Officer and Secretary of 3M Company from 2019 to January 2022 and as its Senior Vice President, Legal Affairs and General Counsel from 2012 to 2019. Prior to joining 3M Company, Mr. Fong was General Counsel of the U.S. Department of Homeland Security from 2009 to 2012 and Chief Legal Officer and Secretary of Cardinal Health, Inc. from 2005 to 2009. He has previously served as Deputy Associate Attorney General with the U.S. Department of Justice and was a partner with the law firm of Covington & Burling LLP. 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: 62 Committees: Compensation Nominating and Governance Risk | 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 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. |
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10 | Cboe Global Markets 2022 Proxy Statement |
Jill R. Goodman Independent Age: 55 Committees: Executive Finance and Strategy (Chair) Nominating and Governance | 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 currently serves on the boards of directors of Cover Genius, a global insurance technology company, and publicly traded company Genworth Financial, Inc. 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: 63 Committees: Audit | 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 is currently a member of the boards of directors of our securities exchanges. 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 and a member of the boards of directors of our securities exchanges, 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. |
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Cboe Global Markets 2022 Proxy Statement | 11 |
Jennifer J. McPeek Independent Age: 52 Committees: ATS Oversight | 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. |
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Roderick A. Palmore Independent Age: 70 Committees: Executive Finance and Strategy Nominating and Governance | 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
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. |
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James E. Parisi Independent Age: 57 Committees: ATS Oversight Compensation Executive | Background Mr. Parisi has served on our Board Qualifications As the retired CFO of a publicly traded company offering a diverse derivatives marketplace and as a former member of the boards of directors of CFE and SEF, Mr. Parisi has extensive knowledge of our industry. His service on other | |||||||||||||||||
Joseph P. Ratterman Independent Age: 55 Committees: ATS Oversight (Chair) Finance and | Background
Qualifications Mr. Ratterman, as the former Chairman and CEO
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 |
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Jill E. Sommers Independent Age: 53 Committees: Nominating and Governance Risk | 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 CFE, SEF, and the Ethics and Compliance Initiative and a member of the advisory board of directors of Green Key Technologies. She has also previously served as a member of the boards of directors of our securities exchanges. 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, as a member of the boards of directors of CFE and SEF and a former member of the boards of directors of our securities exchanges. These skills, as well as her experience on other boards, make her well suited to serve on our Board. |
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Fredric J. Tomczyk Independent Age: 66 Committees: Compensation Finance and Strategy | 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 the lead independent director of Sagan MI Canada Inc., a publicly traded company, and of its operating subsidiary Sagan Mortgage Insurance Company Canada 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 nominee must receive the affirmative vote of a majority of the votes cast with respect to his 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 acceptance 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. 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 each of the director nominees.
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Independence
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 BZX listing standards for independence. In addition, Michael L. Richter, who did not stand for reelection as a director in 2021, was determined to be independent through May 13, 2021.
In determining the independence of Mr. Ratterman, the Nominating and Governance Committee considered that Mr. Ratterman recently sold farmland to Mr. Isaacson, one of our executive officers, and that a family member of Mr. Isaacson has previously been under a contract to farm the same land. Mr. Isaacson is not a party to such farming contract and is not aware of its terms. The purchase of the farmland and the farming contract were each found to be consistent with ordinary market terms and did not involve businesses that compete with Cboe.
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. 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. The Charter of the Lead Director, Appendix A to our Corporate Governance Guidelines, provides that the Lead Director’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.
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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. Mr. Tilly was also appointed President effective January 14, 2019 and is expected to step down as President effective May 12, 2022 in connection with the appointment of David Howson to the role of President to be effective on the same day. The Board carefully considers its Board leadership structure and the benefits of continuity in leadership roles and continues to believe that the combined roles of Chairman and CEO at this time enhances the Company’s strategic alignment and supports Cboe Global Markets’ ability to deliver stockholder value.
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 and Succession Planning
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.
The Board further believes that providing for effective continuity of leadership is central to our long-term growth strategy. The succession planning process includes consideration of ordinary course succession and planning for situations where executives unexpectedly become unable to perform their duties. Executive succession planning is an ongoing process, reviewed and discussed on at least an annual basis by the Compensation Committee. The Compensation Committee reviews the Company’s organizational chart for potential successors. Summaries of these proceedings from prior Compensation Committee meetings are provided to the Board on a routine basis, including on a quarterly basis. The Board also reviews reports about executive succession and undergoes other relevant evaluations on an as needed basis.
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In addition, Board succession planning is evaluated regularly within the Nominating and Governance Committee, whose reports and other necessary action items are discussed and acted upon by the Board as a whole. For more information see “Committees of the Board—Nominating and Governance Committee” below.
Board Oversight of Environmental, Social, and Governance Matters
The Board recognizes that operating in a socially responsible manner helps promote the long-term interests of our stockholders, organization, associates, industry, and community. As such, the Board stays apprised of particular environmental, social, and governance (“ESG”) matters in accordance with its general oversight responsibilities. The Board has delegated to the Committees oversight over the following specific areas and all Committees report to the full Board on a routine basis, including on a quarterly basis, and when a matter rises to the level of a material or enterprise level. For more information about Committee responsibilities, see “Committees of the Board” below. For additional information regarding ESG, see “Corporate Governance—Corporate Social Responsibility”.
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Committee | Primary Areas of ESG Oversight |
Audit | ESG information contained in the annual and quarterly financial statements and related press releases |
Compensation | Compensation, talent, leadership, and culture, including diversity and inclusion |
Finance and Strategy | Potential ESG impacts of acquisitions |
Nominating and Governance | General oversight of ESG program Corporate governance practices |
Risk | Business and strategy risks, including ESG Environmental risks, including forces of nature and climate |
Board Oversight of Risk
The Board is responsible for overseeing our risk management processes. The Board is responsible for overseeing our general risk management strategy, the risk mitigation strategies employed by management, including adequacy of resources, and the significant risks facing us, including competition, reputation and technology risks. The Board stays apprised of particular risk management matters in accordance with its general oversight responsibilities. The Board has delegated to the Committees oversight over the following specific areas and all Committees report to the full Board on a routine basis, including on a quarterly basis, and when a matter rises to the level of a material or
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Cboe Global Markets 2022 Proxy Statement | 19 |
enterprise level risk. For more information about Committee responsibilities, see “Committees of the Board” below.
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Committee | Primary Areas of Risk Oversight |
ATS Oversight | Business and operation of BIDS Trading’s U.S. equities businesses Adequacy and effectiveness of separation protocols between Cboe Global Markets and BIDS Trading’s U.S. equities businesses |
Audit | Adequacy and effectiveness of internal controls and procedures Financial reporting and taxation |
Compensation | Compensation policies and procedures |
Finance and Strategy | Credit and capital structure Strategic challenges with business partners |
Nominating and Governance | Corporate governance practices |
Risk | Enterprise risk management Information security Operational risks relating to internal processes, people or systems, including information technology Compliance, environmental, legal and regulatory risks |
In addition to our Board, our management is responsible for daily risk management. To help achieve this goal, we have adopted an enterprise risk management framework that is supported by a three lines of defense approach, which involve the Business, Risk Management and Information Security Department, Enterprise Risk Management Committee, Compliance Department, Internal Audit
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Department, and the Board and Committees. We believe the following division of risk management responsibilities is an effective approach for addressing the enterprise risks that we face.
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Line of Defense | Description |
First | Our Business managers and associates, which |
Second | Compliance and Enterprise Risk Management Committee, composed of Enterprise Risk Management Committee, along with our Chief Risk Officer, |
Third | Internal Audit Department, which provides |
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.
Board Oversight of COVID-19 Global Pandemic
In 2021, the Board continued to oversee risks in the wake of the COVID-19 global pandemic. The Board monitored developments around COVID-19 and facilitated 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
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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 14 meetings of the Board during 2021. 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 2021.
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 9 times during 2021.
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 2021 Annual Meeting of Stockholders. Meetings of the Board and its Committees are being held in conjunction with the Annual Meeting. We expect all director nominees will attend the Annual Meeting.
Overview
Our Board has the following standing committees (each, a “Committee” and collectively, the “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.
Other than the members of the Executive Committee required to be on such 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 and the Audit Committee, Compensation Committee, and Nominating and Governance Committee charters are available on the Corporate Governance page of our Investor Relations section of our website at: http://ir.Cboe.com.
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The following table is a listing of the composition of our standing Committees during 2021 and as of March 17, 2022, including the number of meetings of each Committee during 2021.
Director | ATS Oversight | Audit | Compensation | Executive | Finance and Strategy | Nominating and Governance | Risk |
Number of meetings | 11 | 11 | 7 | — | 11 | 7 | 6 |
Edward T. Tilly (1) | | | | | | | |
Eugene S. Sunshine (1) | | | | | (2) | | |
William M. Farrow, III | | | | | |||
Edward J. Fitzpatrick | | | | | |||
Ivan K. Fong | | | | | | (3) | |
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 (4) | | (2) | | | | | (2) |
Jill E. Sommers | | | | | | (3) | |
Fredric J. Tomczyk | | | | | |
= Chair = Member
(1) | The Chairman, Mr. Tilly, and the Lead Director, Mr. Sunshine, are both members of the Executive Committee. Mr. Tilly is an invited guest to the meetings of each of the other standing Committees, other than the ATS Oversight Committee. Mr. Sunshine is an invited guest to the meetings of each of the other standing Committees. |
(2) | Stepped down as a member of the Committee on May 13, 2021. |
(3) | Joined the Committee on May 13, 2021. |
(4) | Mr. Richter stepped down as a member of the Board and
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Audit Committee
The Audit Committee consists of 4 directors, all of whom are independent under BZX listing rules, as well as under Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Audit Committee consists exclusively of directors who are financially literate. In addition, Mr. Parisi has been designated as our audit committee financial expert and meets the SEC definition of that position.
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Cboe Global Markets 2022 Proxy Statement | 23 |
The Audit Committee’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 4 directors, all of whom are independent under 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,
adopting, amending, and terminating cash and equity-based incentive compensation plans,
approving any employment agreements, severance agreements, or change in control agreements with executive officers,
overseeing the policies and strategies relating to talent, leadership, and culture, including diversity and inclusion, and
the level and form of non-employee director compensation and benefits.
For additional information, see “Corporate Governance—Board Structure—Board Oversight of Human Capital and Succession Planning”.
Nominating and Governance Committee
Overview
The Nominating and Governance Committee consists of 5 directors, all of whom are independent under BZX listing rules. The Nominating and Governance Committee’s responsibilities include making recommendations to the Board on:
persons for election as director,
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.
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The Nominating and Governance Committee is also responsible for general oversight of the ESG program. For additional information, see “Corporate Governance—Corporate Social Responsibility” and “Corporate Governance—Board Structure—Board Oversight of Environmental, Social, and Governance Matters”.
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’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’s educational and professional background, potential retirement plans, 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.
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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:
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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.
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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.
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.
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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. The Board undertakes ongoing evaluation of its members’ performance with respect to their capacity to serve and keeps note of director age for director planning purposes.
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 ↓ | 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 | Nominating and Governance Committee determines and distributes to each Committee a list of specific topics and subject areas to facilitate discussion about each Committee’s roles and responsibilities, structure, charter, policies, composition, and effectiveness |
Discussions ↓ | Chair of Nominating and Governance Committee and Lead Director interview each director in one-on-ones to discuss Board’s performance | Chair of each Committee facilitates discussion of Committee’s performance in executive session and in one-on-ones |
Feedback ↓ | Chair of Nominating and Governance Committee and Lead Director report results of discussions and recommendations to Nominating and Governance Committee for its consideration | Chair of each Committee reports results of Committee self-evaluation and recommendations to Nominating and Governance Committee for its consideration |
Reviews ↓ | Nominating and Governance Committee reviews results from Board and Committee self-evaluations and provides summary of assessments and recommendations to full Board Board discusses results and, if necessary, provides additional recommendations | |
Feedback Incorporated | Changes and enhancements, if any, are implemented to governance policies and practices |
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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.
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 LaSalle433 West Van Buren Street, Chicago, Illinois 60605.60607.
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.”“Other Items—Stockholder Proposals”.
ATS Oversight Committee
The ATS Oversight Committee is responsible for, among other things, overseeing the business and operations of BIDS Trading’s U.S. equities businesses, overseeing the adequacy and effectiveness of the information and other barriers established to maintain the separation of BIDS Trading’s U.S. equities businesses from Cboe Global Markets’ registered national exchange businesses, and helping to ensure that specified functions of those BIDS Trading’s U.S. equities businesses are independent of and not integrated with or otherwise linked to Cboe Global Markets’ registered national exchange businesses.
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’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 is generally responsible for, among other things, overseeing the risk assessment and risk management of the Company, including risk related to cybersecurity, information technology, and the Company’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.
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Cboe Global Markets 2022 Proxy Statement | 27 |
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 20182021 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 at our
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corporate headquarters.a 2021 Investor Day and telephonic meetings. Some of these conferences also featured webcasts and replays of the presentations so that our stockholders could listen remotely. In 2018,2021, we engaged with holders of approximately 4025% percent of our common stock outstanding.
In 20182021 and early 2019,2022, 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 45represented approximately 42 percent of institutional holdings.our common stock outstanding and engaged with holders of approximately 20 percent of our common stock outstanding. Through these discussions we gained valuable feedback, and this feedback was shared with the Board and its relevant Committees. We also took steps to address any areas of improvement, including by incorporating some of the disclosure suggestions into this Proxy Statement.
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.
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 of Directors 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.
BeingWe 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. More specifically, beingWe also seek to be good citizens to the communities we serve means that we areby 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.
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28 | Cboe Global Markets |
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Additional information on our approach to ESG can be found in the Cboe Global Markets, Inc. ESG Report located in the Corporate Social Responsibility section of our website at https://www.cboe.com/about/corporate-social-responsibility, which does not form a part of this Proxy Statement. Further, our 2021 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, 2021, also contains relevant additional information under “Part I—Item 1. Business—Human Capital Management”. See also herein “Corporate Governance—Board Structure—Board Oversight of Human Capital and Succession Planning” and “Corporate Governance—Board Structure—Board Oversight of Environmental, Social, and Governance Matters”.
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Cboe Global Markets 2022 Proxy Statement | 29 |
Compensation Philosophy and Summary
The cash and stock retainers, committee meeting attendance fees, committee chair retainers and additional Lead Director fee paid to our non-employee directors are designed to be part of a competitive totalOur director compensation package when compared to market practices. Theprogram provides director fees that are generally designed to be paid at competitive levels that are near the median of director fees of our peer groups,group, which areis discussed in further detail below in the “Executive Compensation — Compensation—Compensation Discussion and Analysis” section. Typically, early in each year,This allows us to attract and retain individuals with the skills, qualifications, and experiences required to sit on our Board.
Annually, the Compensation Committee considersreviews a review of competitive market data analysis for Boardnon-employee director compensation fromproduced by Meridian Compensation Partners, LLC (“Meridian”), our independent compensation consultant, and recommends changes to our director compensation program, if any, to the Board for approval.
For 2021, our director compensation program remained unchanged from 2020 and consisted of a mix of: cash and stock retainers, committee meeting attendance fees, committee chair retainers, and an additional Lead Director retainer.
2021 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.
2018 Elements of Director Compensation Program
The following table reflects the amount paid with respect to each component of our director compensation including any enhancements,program for the Board term ending with the 20182021 Annual Meeting of Stockholders and for the Board term ending with the Annual Meeting in 2019: 2022:
Annual Fees | May 2017 — |
| May 2018 — | May 2020 — |
| May 2021 — | ||||
Cash retainer | $ | 90,000 |
| $ | 90,000 | $ | 90,000 | | $ | 90,000 |
Stock retainer, value based on closing price on date of grant | $ | 100,000 |
| $ | 120,000 | $ | 145,000 | | $ | 145,000 |
Committee chair cash retainer |
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ATS Oversight | $ | 20,000 | | $ | 20,000 | |||||
Audit | $ | 25,000 |
| $ | 25,000 | $ | 25,000 | | $ | 25,000 |
Compensation | $ | 15,000 |
| $ | 15,000 | $ | 15,000 | | $ | 15,000 |
Finance and Strategy | $ | 15,000 |
| $ | 15,000 | $ | 15,000 | | $ | 15,000 |
Nominating and Governance | $ | 15,000 |
| $ | 15,000 | $ | 15,000 | | $ | 15,000 |
Risk | $ | 20,000 |
| $ | 20,000 | $ | 20,000 | | $ | 20,000 |
Lead Director cash retainer, in addition to above cash and stock retainers | $ | 150,000 |
| $ | 50,000 | $ | 50,000 | | $ | 50,000 |
Meeting Fees |
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Committee meeting attendance fee per meeting attended | $ | 1,500 |
| $ | 1,500 | $ | 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 | | $ | 1,500 |
In early 2018, the Board increased the stock retainer to more closely align with the Broader Financial and Technology Industry peer group compensation median. The Board also adjusted the stock retainer, and not the cash retainer, to better align with our peer groups’ pay mix and to continue to align our directors’ interests with our stockholders. In addition, following the creation of the Risk Committee in late 2017, the Board approved the Risk Committee chair cash retainer in early 2018.
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30 | Cboe Global Markets |
20182021 Director Compensation
The compensation of our non-employee directors for the year ended December 31, 20182021 for their service is shown in the following table.
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Name |
| Paid in Cash |
| Awards(1) | Total | | Paid in Cash | | Awards(1) | | Compensation(2) | | Total | |||||||
Eugene S. Sunshine |
| $ | 180,000 |
| $ | 120,085 | $ | 300,085 | | $ | 234,500 | | $ | 145,030 | | $ | 19,195 | | $ | 398,725 |
James R. Boris (3) |
| $ | 120,000 |
| $ | — | $ | 120,000 | ||||||||||||
William M. Farrow, III | | $ | 135,500 | | $ | 145,030 | | $ | 10,000 | | $ | 290,530 | ||||||||
Edward J. Fitzpatrick |
| $ | 131,000 |
| $ | 120,085 | $ | 251,085 | | $ | 124,500 | | $ | 145,030 | | $ | 5,000 | | $ | 274,530 |
Frank E. English, Jr. |
| $ | 111,000 |
| $ | 120,085 | $ | 231,085 | ||||||||||||
William M. Farrow, III |
| $ | 115,000 |
| $ | 120,085 | $ | 235,085 | ||||||||||||
Ivan K. Fong | | $ | 79,500 | | $ | 145,030 | | $ | 10,000 | | $ | 234,530 | ||||||||
Janet P. Froetscher |
| $ | 106,500 |
| $ | 120,085 | $ | 226,585 | | $ | 121,500 | | $ | 145,030 | | $ | 20,000 | | $ | 286,530 |
Jill R. Goodman |
| $ | 114,000 |
| $ | 120,085 | $ | 234,085 | | $ | 132,000 | | $ | 145,030 | | $ | — | | $ | 277,030 |
Christopher T. Mitchell(3) |
| $ | 46,500 |
| $ | — | $ | 46,500 | ||||||||||||
Alexander J. Matturri, Jr. (4) | | $ | 139,750 | | $ | 145,030 | | $ | 2,000 | | $ | 286,780 | ||||||||
Jennifer J. McPeek | | $ | 123,000 | | $ | 145,030 | | $ | — | | $ | 268,030 | ||||||||
Roderick A. Palmore |
| $ | 121,000 |
| $ | 120,085 | $ | 241,085 | | $ | 129,000 | | $ | 145,030 | | $ | 10,000 | | $ | 284,030 |
James E. Parisi |
| $ | 98,875 |
| $ | 120,085 | $ | 218,960 | | $ | 199,000 | | $ | 145,030 | | $ | 20,000 | | $ | 364,030 |
Joseph P. Ratterman |
| $ | 97,500 |
| $ | 120,085 | $ | 217,585 | | $ | 138,000 | | $ | 145,030 | | $ | 5,000 | | $ | 288,030 |
Michael L. Richter |
| $ | 105,000 |
| $ | 120,085 | $ | 225,085 | | $ | 55,500 | | $ | — | | $ | 10,000 | | $ | 65,500 |
Samuel K. Skinner (3) |
| $ | 55,500 |
| $ | — | $ | 55,500 | ||||||||||||
Jill E. Sommers (5) |
| $ | 93,625 |
| $ | 120,085 | $ | 213,710 | ||||||||||||
Carole E. Stone |
| $ | 134,000 |
| $ | 120,085 | $ | 254,085 | ||||||||||||
Jill E. Sommers (7) | | $ | 221,225 | | $ | 145,030 | | $ | 10,000 | | $ | 376,255 | ||||||||
Fredric J. Tomczyk | | $ | 115,500 | | $ | 145,030 | | $ | — | | $ | 260,530 |
(1) |
| The non-employee directors then-serving on the Board received an equity grant of restricted stock on May |
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(3) | The amount shown in the Fees Earned or Paid in Cash column for Mr. Sunshine also includes fees of |
(4) |
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| The amount shown in the Fees Earned or Paid in Cash column for Mr. Parisi also includes fees of |
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Cboe Global Markets 2022 Proxy Statement | 31 |
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(7) | The amount shown in the Fees Earned or Paid in Cash column for Ms. Sommers also includes fees of |
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. ParisiMs. McPeek and Ms. Sommers,Messrs. Fong and Matturri who were first elected to our Board in 2018,2020, each of the non-employee incumbent directors has met the ownership requirement as of December 31, 2018.
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Table of Contents2021.
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.
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32 | Cboe Global Markets |
PROPOSAL 2 - ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
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 Board 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 is 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 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 ofon 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 appropriate to align their 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 Analysis,” 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 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.
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Cboe Global Markets |
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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 20182021 with respect to the total compensation awarded to, earned by, or paid to each of the following 20182021 “named executive officers” or “NEOs”:
Name | Title* |
Edward T. Tilly | Chairman, President and Chief Executive Officer |
Christopher | Executive Vice President and Chief Operating Officer |
Brian N. Schell | Executive Vice President, Chief Financial Officer and Treasurer |
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| Executive Vice President, President Europe and Asia Pacific |
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* | Titles are as of December 31, 2021. |
*Titles are as of December 31, 2018.
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This Compensation Discussion and Analysis section is organized as follows:
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Performance Affecting Fiscal 2021 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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The design of our executive compensation program, including compensation practices and independent oversight, is intended to align management’s interests with those of our stockholders and pay for our performance. Compensation awarded in 2018 reflects another year of record results and our continued successful integration with Bats.
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Cboe Global Markets |
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Principal Components of 2021 Executive Compensation
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Base Salary (15% of CEO’s target pay mix) | |
| Fixed level of cash compensation based on performance, expertise, experience, and market value |
| Target annual incentive is based on percentage of base salary |
| Annual Incentive Bonus (25% of CEO’s target pay mix) |
| Provides variable cash compensation payout opportunities to the extent pre-established EBITDA and net revenue corporate and individual performance goals are met over one-year performance period |
| Individual performance goals include, among others, ESG related goals such as attracting, engaging, developing and retaining diverse talent, communicating with investors, promoting a culture of inclusion, succession planning, and overseeing a pipeline of diverse talent |
| Payouts range 0% to 200% of executive’s target bonus opportunity |
| Long-Term Equity Awards -Restricted Stock Units (30% of CEO’s target pay mix) |
Provides compensation in the form of Company shares to the extent three-year graded service period is met | |
| Aligns interests of our executives with those of our stockholders and encourages retention |
| -Performance Share Units (30% of CEO’s target pay mix) |
| Provides variable compensation in the form of Company shares to the extent pre-established relative total stockholder return (“TSR”) and earnings per share (“EPS”) goals are met over a 3-year period |
| Aligns the interests of our executives with stockholders, provides significant incentive for retention, and motivates our executives to focus on our long-term growth and increased stockholder value |
| Payouts range 0% to 200% of executive’s target number of PSUs |
Performance Affecting Fiscal 2021 Annual Incentive Pay Outcomes
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2021 Adjusted Net Revenues1 | | 2021 Adjusted EBITDA1 |
$1,459 Million | | $984 Million |
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157% of Target Earned | | 178% of Target Earned |
Performance Affecting 2019-2021 PSU Pay Outcomes
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3-Year Adjusted EPS1 | | 3-Year Relative TSR |
$16.05 | | 34th Percentile |
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0% of Target PSUs Earned | | 74% 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 Appendix A.
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36 | Cboe Global Markets 2022 Proxy Statement |
Compensation Governance Practices
What we do | What we don’t do | |
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Ä No pledging of Company stock by executives
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2018 Compensation Program Overview
Cboe Global Markets and its Board are committed to a corporate mission and strategy designed to create long-term stockholder value. Our strategy is to build one of the world’s largest global derivatives and securities networks to create value and drive growth by:
(1) | innovating to capture growing demand for trading products and data services, globally, |
(2) | integrating across our ecosystems to increase efficiency and better serve customers, and |
(3) | growing by accessing untapped addressable markets. |
The following is a brief summary of our 2018 executive compensation program.
Market-competitive base salary.
High proportion of named executive officers’ total compensation was composed of performance-based compensation.
Annual cash incentive for 2018 was based on corporate performance (weighted 75%) measured against pre-established adjusted EBITDA, net revenue and synergies goals and individual performance (weighted 25%) measured against pre-established individual strategic goals.
Long-term incentive for 2018 was comprised of 50% time-based restricted stock units (“RSUs”) and 50% performance-based restricted stock units (“PSUs”), with performance contingent on achievement of relative total shareholder return and earnings per share goals
Market competitive retirement, medical, life and disability arrangements that are generally available to all employees.
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The following is a brief summary of our 20182021 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
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Business Results
o | Launched 24x5 trading for VIX and |
o | Began distributing real-time data via Cboe Global Cloud. |
o | Launched Cboe Europe Derivatives. |
o | Acquired Chi-X Asia Pacific, a |
o | Launched Cboe Empowers, a community engagement program. |
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Cboe Global Markets 2022 Proxy Statement |
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Bats Acquisition Integration
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Business Segment Results
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o | Established new Data and Access Solutions Division. |
o | Launched mini-options on Russell 2000 Index. |
o | Continued integration of prior acquisitions. |
Navigating COVID-19 Global Pandemic
o | Successfully moved global headquarters to a new location; and nearing completion of a new trading floor buildout. |
o | Continued to provide 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 2021, while global employees (except those deemed essential) continued to work from home. |
We believe that the performance of the Company demonstrates that management is keenly focused on driving the Company for sustainable long-term growth and diversifying the Company’s business, while obtaining short-term results. Our business continued to generate strong cash flows from operations and we paid down debt, repurchased our stockwere able to return $275 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 2018: 2021:
in keeping with our goal of consistent and sustainable dividend growth, we increased our quarterly dividend by 15%14% to $0.31$0.48 per share and paid cash dividends of $130 million in 2018; $193 million; and
we paid down $25 million of outstanding debt; and
we repurchased 1.3 million822 thousand of our outstanding shares of common stock under a share repurchase program for a total of $141$81 million.
As a result of these business highlightssolid results in 2021 and capital allocation decisions, as of December 31, 2018,2021, we achieved a total stockholder return,returns, including reinvested dividends, of approximately 56%approximately:
42% over the past year;
39% over the past three years and approximately 101%years;
88% over the past five years. Despite record results in 2018, as of December 31, 2018, we achieved a total stockholder return, including reinvested dividends, of approximately -21% for 2018. years; and
502% over the past ten years.
Executive Compensation Program Practices
Compensation Philosophy and Summary
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 executives on achieving critical corporate financial and strategic goals, while taking steps to position the business for sustained growth in financial performance over time.
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38 | Cboe Global Markets |
Our executive compensation program generally consists of the following elements, in addition to retirement, health, and healthwelfare benefits:
The following table lists the various components included in total compensation for our executive officers and each element’s purpose. Later sections provide additional details regarding each component.
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The following charts show the approximate 20182021 total target compensation mix for the Chief Executive Officer and the other named executive officers as a group (excluding Ms. Moffic-Silver).group. For the Chief Executive Officer and the other named executive officers, the majority of 20182021 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
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awards. Total target compensation is the sum of an executive officer’s 20182021 base salary, target annual incentive opportunity and target value for long-term equity awards (i.e., RSUs and PSUs).
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Cboe Global Markets 2022 Proxy Statement | 39 |
Company’s Response to Stockholder Vote on Say‑on‑PaySay-on-Pay
At the 20182021 Annual Meeting of Stockholders, our “say-on-pay” proposal received the support of over 94%90% of the votes cast for approval of our 20172020 executive compensation program as disclosed in our 20182021 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 20172020 executive compensation program and considered such results supportive of our executive compensation program and the Compensation Committee’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 determine actual annual incentive bonus payouts based on achieved results measured against pre-established corporate and individual performance goals. As a result of our executives’ continued focus on the integration of Bats and a larger focus on growing our revenues and earnings, the Compensation Committee changed the annual incentive award’s corporate performance metrics in 2018 to better align the interests of our executives with our business strategy and with stockholders. For 2018, the metrics and weightings were updated as follows:
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Historically, the Compensation Committee approved granting PSUs that were one-half subject to relative total stockholder return goals and one-half subject to earnings per share goals. As a result of
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the Bats acquisition, the Compensation Committee determined not to grant PSUs subject to earnings per share goals in 2017, due to the difficulty in setting a meaningful long-term earnings per share goal immediately following the acquisition. Therefore, in 2017 the Compensation Committee approved granting all PSUs subject solely to the achievement of relative total stockholder return.
However, due to the continued successful integration of Bats and a better ability to set a meaningful long-term earnings per share goal, in 2018 the Compensation Committee approved granting PSUs (i) one-half subject to the achievement of relative total stockholder return measured against pre-determined performance goals over a three-year performance period and (ii) one-half subject to the achievement of earnings per share measured against pre-determined performance goals over a three-year performance period.
Following the 2018 compensation decisions, the Compensation Committee reviewed our two peer groups, the Securities Exchange Peer Group and the Broader Financial and Technology Industry Peer Group, and approved combining them into a single 25 company peer group that adds new companies and removes certain companies from each of those existing two peer groups. The Committee made this determination because, following the acquisition of Bats and our recent growth, the Company’s revenue, gross profit, market capitalization and number of employees grew to be more in-line with our larger securities exchange peers.
Further, in connection with the grants of equity awards in 2019, the award agreements provide that in the event of a Change in Control (as defined in the Second Amended and Restated Long-Term Incentive Plan (the “Plan”)), each award will be "double trigger" unless a successor entity cannot or will not provide a "replacement award" (as defined in the Plan). If a successor entity cannot or will not provide a replacement award, the award will accelerate and be deemed fully vested and exercisable and all vesting conditions on restricted stock units will lapse, with all performance conditions deemed satisfied at the greater of target or the level of performance actually achieved as of the Change in Control (with similar performance assumed to be achieved through the remainder of the performance period). If the successor entity, including the Company if it is the surviving entity, assumes, continues or replaces an outstanding award (each such assumed, continued or replacement award, a replacement award), then such replacement award shall remain outstanding and be governed by its respective terms. Upon termination of the Participant's employment for any reason other than cause or by Participant with good reason upon or within two years after a Change in Control, such replacement award will accelerate and become fully vested and/or exercisable, with all performance conditions deemed satisfied at the greater of target or the level of performance actually achieved as of the employment termination date (with similar performance assumed to be achieved through the remainder of the performance period).
20182021 Target Annual Pay Opportunities
The following chart shows the 20182021 total target compensation for each named executive officer.
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Named Executive Officer(1) |
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| Total | | Base Salary | | Incentive Bonus |
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Edward T. Tilly |
| $ | 1,265 |
| $ | 2,087 |
| $ | 1,650 |
| $ | 1,650 |
| $ | 6,652 | | $ | 1,265 | | $ | 2,087 | | $ | 2,474 | | $ | 2,474 | | $ | 8,300 |
Christopher R. Concannon |
| $ | 1,100 |
| $ | 1,650 |
| $ | 1,100 |
| $ | 1,100 |
| $ | 4,950 | |||||||||||||||
Christopher A. Isaacson | | $ | 650 | | $ | 975 | | $ | 938 | | $ | 938 | | $ | 3,500 | |||||||||||||||
Brian N. Schell |
| $ | 521 |
| $ | 729 |
| $ | 359 |
| $ | 359 |
| $ | 1,968 | | $ | 525 | | $ | 735 | | $ | 788 | | $ | 788 | | $ | 2,835 |
Christopher A. Isaacson |
| $ | 540 |
| $ | 810 |
| $ | 325 |
| $ | 325 |
| $ | 2,000 | |||||||||||||||
Mark S. Hemsley (3) |
| $ | 619 |
| $ | 681 |
| $ | 300 |
| $ | 300 |
| $ | 1,900 | |||||||||||||||
Joanne Moffic-Silver |
| $ | 433 |
| $ | 606 |
| $ | 288 |
| $ | 288 |
| $ | 1,615 | |||||||||||||||
David Howson (3) | | $ | 567 | | $ | 624 | | $ | 675 | | $ | 675 | | $ | 2,541 | |||||||||||||||
Patrick Sexton | | $ | 415 | | $ | 498 | | $ | 338 | | $ | 338 | | $ | 1,588 |
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This supplemental table is not required, but rather it is provided to demonstrate the link between performance and our named executive officers’ total directtarget compensation opportunity for 2018.2021. 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.
Role ofExecutive 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 67 times in 2018.2021. The Compensation Committee either approves or makes recommendations to the Board regarding compensation related decisions. To provide the Compensation Committee with advice and assistance related to the design of our executive compensation program, the Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”) as its independent compensation consultant. As described below in further detail, Meridian consultants regularly attend meetings of the Compensation Committee. In addition, Messrs. Tilly, ConcannonIsaacson, and Schell generally attended in 2018 portions of the 2021 meetings of the Compensation Committee to provide information and assistance, other than when the Compensation Committee discussed the respective executive’s compensation.
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40 | Cboe Global Markets 2022 Proxy Statement |
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 2021, the Compensation Committee engaged Meridian ouras 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 Company’s program’s effectiveness.effectiveness and alignment with market practices. In addition, the consultantMeridian provides advice to the Compensation Committee on the Company’s compensation peer groupsgroup and on the competitive positioning of the various components of the executive compensation program. The independent compensation consultantMeridian 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 the independent compensation consultantMeridian and consideration of factors set forth in SEC Nasdaq 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.
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Cboe Global Markets 2022 Proxy Statement | 41 |
When reviewing compensation for the named executive officers, the Compensation Committee considersmay 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 theeach 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 20182021 compensation decisions, the Compensation Committee used twoa peer groups from whichgroup and an executive compensation survey 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 Group23-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 20 companies, and included financial services firms, and technology-focused companies with corporate profiles similar to ours, with revenues ranging between one-third and three-timesours. Based on the then-available fiscal year 2020 data, the Company’s projected annual revenue.revenue, market capitalization, and number of employees fell below the median of the peer group. The
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Compensation Committee utilized this two peer group modelsimilar size to derive meaningful compensation data due to our unique business model and to ensure that each named executive officer’s target total compensation is competitive.Cboe. The Compensation Committee used thisthe market data derived from the peer group and the survey as points of reference, rather than as the sole determining factor in setting compensation for our named executive officers.
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Following the 2018 compensation decisions, the Compensation Committee reviewed the two peer groups. The Committee reviewed the data provided by Meridian and compared our corporate performance to our peer groups in the areas of revenues, gross profit, market capitalization and number of employees. The Committee also considered business descriptions, complexity of business, company locations and other qualitative factors. Following the acquisition of Bats and our recent growth, the Company’s revenue, gross profit, market capitalization and number of employees grew, and now fall closer to the median revenue, gross profit, market capitalization and number of employees of the industry-specific Securities Exchange Peer Group. As a result, the Committee approved combining the two groups into a single peer group that adds new companies and removes certain companies of the existing Securities Exchange Peer Group and the Broader Financial and Technology Industry Peer Group. With respect to the updated single peer group, the Company’s annual revenue falls slightly below the median of the peer group, gross profit falls below the median of the peer group, market capitalization falls at the median of the peer group and number of
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employees falls below the median of the peer group. The following is the updated 25 company single peer group:
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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. |
| SEI Investments Company |
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E*TRADE Financial Corporation | Stifel Financial Corp. |
Euronet Worldwide, Inc. | Synopsys, Inc. |
FactSet Research Systems Inc. | TransUnion |
Fortinet, Inc. | Verisk Analytics, Inc. |
Intercontinental Exchange, Inc. | Virtu Financial, Inc. |
Jack Henry & Associates, Inc. | |
Following the 2021 compensation decisions, the Compensation Committee reviewed the peer group. The following companies were addedCommittee reviewed the data provided by Meridian and removedcompared our corporate performance to our peer group in the areas of revenues, gross profit, market capitalization, and number of employees. The Committee also considered business descriptions, complexity of business and other qualitative factors. The Committee approved one change to the peer group, removing E*TRADE Financial Corporation because the company was acquired. The change decreased the number of peers from the existing 23 to 22 companies.Securities Exchange Peer Group and the Broader Financial and Technology Industry Peer Group:
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2018
2021 Elements of Executive Compensation Program
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 and comparative market data, the Compensation Committee also considered for each named executive officer the following factors:
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For 2018,2021, the Compensation Committee approved or made recommendations to the Board regarding the base salaries for each of the named executive officers, with input in part from Mr. Tilly regarding the individual performances of Messrs. Concannon,Isaacson, Schell, IsaacsonHowson, and Hemsley and Ms. Moffic-Silver.Sexton. Below are the base salary amounts at December 31, 20182021 and 2017, and February 28, 2018 and December 31, 2017, with respect to Ms. Moffic-Silver,2020 for the named executive officers and the aggregate percent change.
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| 2017 Base |
| 2018 Base |
| Percent | ||||||||||||||||||
| | 2020 Base | | 2021 Base | | Percent | ||||||||||||||||||
Named Executive Officer |
| Salary (1) |
| Salary (1) |
| Change | | Salary (1) | | Salary (1) | | Change | ||||||||||||
Edward T. Tilly |
| $ | 1,150 |
| $ | 1,265 |
| 10 | % | | $ | 1,265 | | $ | 1,265 | | 0 | % | ||||||
Christopher R. Concannon |
| $ | 1,000 |
| $ | 1,100 |
| 10 | % | |||||||||||||||
Christopher A. Isaacson | | $ | 650 |
| $ | 650 | | 0 | % | |||||||||||||||
Brian N. Schell |
| $ | 500 |
| $ | 521 |
| 4 | % | | $ | 525 |
| $ | 525 | | 0 | % | ||||||
Christopher A. Isaacson |
| $ | 500 |
| $ | 540 |
| 8 | % | |||||||||||||||
Mark S. Hemsley (2) |
| $ | 659 |
| $ | 619 |
| -6 | % | |||||||||||||||
Joanne Moffic-Silver |
| $ | 433 |
| $ | 433 |
| 0 | % | |||||||||||||||
David Howson (2) | | $ | 575 |
| $ | 567 | | -1 | % | |||||||||||||||
Patrick Sexton | | $ | 400 |
| $ | 415 | | 4 | % |
(1) |
| In thousands |
(2) |
| Mr. |
The base salariessalary for Messrs. Tilly and ConcannonMr. Sexton increased due to the continued successful integration with Bats, our strong corporate performance in 2017, their assumptions of additional responsibilities in leading a larger company, and to more closely align their compensation with comparative market data provided by Meridian. Mr. Schell’s base salary increase of 3% was approved in February 2018 and then an increase of approximately 1.5% was approved in July 2018 due to his assumption of additional responsibilities and duties, successful migration of our financial processing systems and to align compensation more closely align compensation with comparative market data provided by Meridian. The base salary for Mr. Isaacson increased due to his department’s continued successful integration with Bats, his additional responsibilities in leading a larger department and to more closely align compensation with comparative market data provided by Meridian. data.
Overview.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 or 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 approves or makes recommendations to the Board for annual incentives to be paid to the named executive officers.financial results.
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Cboe Global Markets 2022 Proxy Statement | 43 |
The Compensation Committee established a target annual incentive opportunity for each of the named executive officers by considering market benchmark data derived from our two peer groups, in addition togroup, comparative market data, and the following factors:
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The table below shows each named executive officer’s 20172020 and 20182021 target annual incentive opportunity, shown as a percentage of salary, and the change in percentage points.
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| 2018 Target Annual |
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| | Incentive | | Incentive | | | | | | |||||||||||||||||||
| | Opportunity as | | Opportunity as | | | | Change in | | |||||||||||||||||||
| | Percentage of | | Percentage of | | | | Percentage | | |||||||||||||||||||
Named Executive Officer |
| Base Salary |
| Base Salary |
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| Points |
| | Base Salary | | Base Salary | | | | Points | | ||||||||||
Edward T. Tilly |
| 165 | % |
| 165 | % |
| 0 | pts |
| 165 | % | | 165 | % | | 0 | pts | ||||||||||
Christopher R. Concannon |
| 150 | % |
| 150 | % |
| 0 | pts | |||||||||||||||||||
Christopher A. Isaacson |
| 150 | % | | 150 | % | | 0 | pts | |||||||||||||||||||
Brian N. Schell |
| 140 | % |
| 140 | % |
| 0 | pts |
| 140 | % | | 140 | % | | 0 | pts | ||||||||||
Christopher A. Isaacson |
| 140 | % |
| 150 | % |
| 10 | pts | |||||||||||||||||||
Mark S. Hemsley |
| 95 | % |
| 110 | % |
| 15 | pts | |||||||||||||||||||
Joanne Moffic-Silver |
| 140 | % |
| 140 | % |
| 0 | pts | |||||||||||||||||||
David Howson |
| 110 | % | | 110 | % | | 0 | pts | |||||||||||||||||||
Patrick Sexton |
| 119 | % | | 120 | % | | 1 | pts |
Mr. Isaacson’sThe target annual incentive opportunity for Mr. Sexton increased due to his role in the continued successful integration with Bats, hisassumption of additional responsibilities in leading a larger department and to align compensation more closely align Mr. Isaacson’s target annual incentive opportunity with comparative market practice. Mr. Hemsley’s target annual incentive opportunity increased due to his leadership in managing the strong European business segment performance, his additional responsibilities in managing the impact of Brexit, navigating MIFID II and to more closely align Mr. Hemsley’s target annual incentive opportunity with comparative market practice.data.
The Compensation Committee determines actual annual incentive bonus payouts based on achieved results measured against pre-established performance 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 structured, formulaic annual incentive 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 following is a graphical depiction ofshowing the formula used for determining annual incentive bonus payouts.
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44 | Cboe Global Markets 2022 Proxy Statement |
As more fully described below, for the 20182021 annual incentive plan the Compensation Committee approved two types of performance metrics: (i) corporate performance metrics (weighted 75%70%) and (ii) individual performance metrics (weighted 25%30%). The Compensation Committee established goals at threshold, target, and maximum performance levels with respect to the corporate performance metrics. However, given the nature of the individual performance metrics, the Compensation Committee did not set a range of individual performance levels. Rather, the Compensation Committee determined each named executive officer’s payout (expressed as a percentage of target annual incentive award opportunity) based on the assessment of the executive officer’s actual performance measured against pre-established individual performance goals.
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The Company will pay no annual incentive bonus if actual performance is below threshold. The following chart shows the bonus payout opportunity for each named executive officer at thesevarious performance levels.
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| | | | | Incentive | | | | | | | | | | ||||||||||||||||
| | | | | Opportunity as | | Annual Bonus Payout | |||||||||||||||||||||||
| | Base | | Percentage of | | Opportunity (1) | ||||||||||||||||||||||||
Named Executive Officer |
| Salary (1) |
| Base Salary |
| Threshold |
| Target |
| Maximum |
| Salary (1) |
| Base Salary |
| Threshold |
| Target |
| Maximum | ||||||||||
Edward T. Tilly |
| $ | 1,265 |
| 165 | % |
| $ | 157 |
| $ | 2,087 |
| $ | 4,018 | | $ | 1,265 |
| 165 | % | | $ | 365 | | $ | 2,087 | | $ | 4,175 |
Christopher R. Concannon |
| $ | 1,100 |
| 150 | % |
| $ | 124 |
| $ | 1,650 |
| $ | 3,176 | |||||||||||||||
Christopher A. Isaacson | | $ | 650 |
| 150 | % | | $ | 171 | | $ | 975 | | $ | 1,950 | |||||||||||||||
Brian N. Schell |
| $ | 521 |
| 140 | % |
| $ | 55 |
| $ | 729 |
| $ | 1,404 | | $ | 525 |
| 140 | % | | $ | 129 | | $ | 735 | | $ | 1,470 |
Christopher A. Isaacson |
| $ | 540 |
| 150 | % |
| $ | 61 |
| $ | 810 |
| $ | 1,559 | |||||||||||||||
Mark S. Hemsley (2) |
| $ | 619 |
| 110 | % |
| $ | 34 |
| $ | 681 |
| $ | 1,328 | |||||||||||||||
Joanne Moffic-Silver |
| $ | 433 |
| 140 | % |
| $ | 46 |
| $ | 606 |
| $ | 1,167 | |||||||||||||||
David Howson (2) | | $ | 567 |
| 110 | % | | $ | 109 | | $ | 624 | | $ | 1,247 | |||||||||||||||
Patrick Sexton | | $ | 415 |
| 120 | % | | $ | 87 | | $ | 498 | | $ | 996 |
(1) |
| In thousands |
(2) |
| Mr. |
In connection with Mr. Concannon’s voluntary termination of employment for a reason other than good reason effective January 14, 2019, he was not eligible to receive a 2018 annual incentive plan payout. His employment agreement is described more fully below under “Severance, Change in Control and Employment-Related Agreements.”
Corporate Performance.. For the 20182021 annual incentive plan, the Compensation Committee approved the following corporate performance metrics: (i) synergies, (ii)adjusted net revenue, (iii)(ii) adjusted EBITDA, and (iv)(iii) business unit performance. Given their corporate-wide responsibilities, business unit performance goals were not assigned to Messrs. Tilly or Isaacson. These performance metrics, in the aggregate, are weighted 75%70% of each named executive officer’s target annual incentive opportunity. The Compensation Committee approved these metrics for the following reasons:
to align the interests of our executives with stockholders, and
to focus our executive officers on the continued integration of Bats through cost savings, increasing revenues and earnings and enhancing specific business unit performance. 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 and to focusexecutives on long-term growth by continuing to increase our revenue and earnings by increasing trading in our products. These metrics alsoproducts,
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. metrics over which an executive has more impact.
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Cboe Global Markets 2022 Proxy Statement | 45 |
The following shows the corporate performance metrics and their relative weightings for 20182021 for the named executive officers.
Named Executive Officer | Synergies |
| Net Revenue | Adjusted EBITDA |
| Business Unit Performance | | Adjusted Net Revenue | Adjusted EBITDA | | Business Unit Performance | |||||||
Edward T. Tilly | 15 | % |
| 10 | % | 40 | % |
| 10 | % | | 25 | % | 45 | % | | — | % |
Christopher R. Concannon | 15 | % |
| 10 | % | 40 | % |
| 10 | % | ||||||||
Christopher A. Isaacson | | 25 | % | 45 | % | | — | % | ||||||||||
Brian N. Schell | 15 | % |
| 10 | % | 40 | % |
| 10 | % | | 25 | % | 35 | % | | 10 | % |
Christopher A. Isaacson | 15 | % |
| 10 | % | 40 | % |
| 10 | % | ||||||||
Mark S. Hemsley | 10 | % |
| 10 | % | 10 | % |
| 45 | % | ||||||||
Joanne Moffic-Silver | 15 | % |
| 10 | % | 40 | % |
| 10 | % | ||||||||
David Howson | | 15 | % | 15 | % | | 40 | % | ||||||||||
Patrick Sexton | | 25 | % | 35 | % | | 10 | % |
The Compensation Committee also established goals at threshold, target, and maximum performance levels and payouts to be met 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 percentage payout of target incentive opportunity for each of the metrics other than synergies, is
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0% 25% for threshold, 100% for target, and 200% for maximum. The percentage payout of target incentive opportunity for
For each named executive officer, the achievement of synergies is 50% for threshold, 100% for target and 150% for maximum.
With respect to all executive officers the following showstables below show the corporate performance metric threshold, target, and maximum goals, actual performances and percentage payouts of target for 2018. Mr. Concannon’s percentage payout2021. The tables below also show each officer’s 2021 Percentage Payout of target was 0%. Target based on achieved performance.
Messrs. Tilly’s and Isaacson’s 2021 Percentage Payout of Target
As officers with corporate-wide responsibilities, Messrs. Tilly’s and Isaacson’s 2021 annual incentive awards were subject to achievement of adjusted net revenue and adjusted EBITDA for the Company performance goals.
Corporate Performance Metrics |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage Payout of Target | ||||
Synergies |
| $ | 38 |
| $ | 50 |
| $ | 75 |
| $ | 57 |
| 114% |
Net Revenue |
| $ | 1,056 |
| $ | 1,112 |
| $ | 1,167 |
| $ | 1,217 |
| 200% |
Adjusted EBITDA (1) |
| $ | 633 |
| $ | 745 |
| $ | 856 |
| $ | 840 |
| 186% |
Performance Metrics |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (1) | | 25% | | $ | 1,242 | | $ | 1,380 | | $ | 1,518 | | $ | 1,459 | | 157% |
Adjusted EBITDA (Company) (1) | | 45% | | $ | 749 | | $ | 881 | | $ | 1,013 | | $ | 984 | | 178% |
* In millions
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(1) | Adjusted net revenue and adjusted EBITDA for the Company |
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46 | Cboe Global Markets 2022 Proxy Statement |
With respect
Mr. Schell’s 2021 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 Messrs. Tillythe achievement of adjusted net revenue and Concannon,adjusted EBITDA for the following showsCompany and the business unit performance metric threshold, targetfinance, facilities and maximumadministrative department budgetary goals. The specific goals actual performance and percentage payout of target for 2018. Mr. Concannon’s percentage payout of target was 0%. the department metrics are not disclosed for competitive purposes.
Business Unit Performance Metric |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage Payout of Target | ||||
Adjusted EBITDA (1) |
| $ | 558 |
| $ | 745 |
| $ | 931 |
| $ | 840 |
| 152% |
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Performance Metrics |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (1) | | 25% | | $ | 1,242 | | $ | 1,380 | | $ | 1,518 | | $ | 1,459 | | 157% |
Adjusted EBITDA (Company) (1) | | 35% | | $ | 749 | | $ | 881 | | $ | 1,013 | | $ | 984 | | 178% |
Finance | | 3% | | $ | — (2) | | $ | — (2) | | $ | — (2) | | $ | — (2) | | 113% |
Facilities & Admin | | 7% | | $ | — (2) | | $ | — (2) | | $ | — (2) | | $ | — (2) | | 151% |
* In millions
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(1) | Adjusted net revenue and adjusted EBITDA for the Company |
(2) | Not disclosed for competitive purposes. |
Mr. Howson’s 2021 Percentage Payout of Target
As leader of our European and Asia Pacific business units, 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. Mr. Howson’s award was not subject to the achievement of the Asia Pacific business unit, because the acquisition of Chi-X Asia Pacific was completed in the second half of 2021.
Performance Metrics (1) |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (2) | | 15% | | $ | 1,242 | | $ | 1,380 | | $ | 1,518 | | $ | 1,459 | | 157% |
Adjusted EBITDA (Company) (2) | | 15% | | $ | 749 | | $ | 881 | | $ | 1,013 | | $ | 984 | | 178% |
Adjusted Net Revenue (Europe) (3) | | 10% | | $ | 109 | | $ | 128 | | $ | 147 | | $ | 167 | | 200% |
Adjusted EBITDA (Europe) (3) | | 30% | | $ | 36 | | $ | 45 | | $ | 54 | | $ | 91 | | 200% |
* | In millions |
With respect to Mr. Hemsley, the following shows the business unit performance metric weightings, threshold, target and maximum goals, actual performances and percentage payouts of target for 2018, in each case as converted to U.S. dollars using a rate of £1.00 to $1.28, which was the exchange rate as of December 31, 2018.
Business Unit Performance Metrics |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Net Revenue (Europe) |
| 15% |
| $ | 75 |
| $ | 83 |
| $ | 91 |
| $ | 95 |
| 200% |
Adjusted EBITDA (Europe) (1) |
| 30% |
| $ | 38 |
| $ | 45 |
| $ | 52 |
| $ | 56 |
| 200% |
* In millions
(1) |
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(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 |
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Cboe Global Markets 2022 Proxy Statement | 47 |
The business unit performance metrics
Mr. Sexton’s 2021 Percentage Payout of Target
As the Executive Vice President, General Counsel and Corporate Secretary, Mr. Sexton’s annual incentive award was subject to the achievement of adjusted net revenue and adjusted EBITDA for Messrs. Schellthe Company and Isaacson and Ms. Moffic-Silver were the finance, technology and legal department budgets, respectively, and the percentage payouts of target for 2018 were 150%, 136% and 141%, respectively. Specificbudgetary goals. The specific goals for thesethe department metrics are not disclosed for competitive purposes.
| | | | | | | | | | | | | | | | |
Performance Metrics |
| Weighting |
| Threshold* |
| Target* |
| Maximum* |
| Actual* |
| Percentage | ||||
Adjusted Net Revenue (Company) (1) | | 25% | | $ | 1,242 | | $ | 1,380 | | $ | 1,518 | | $ | 1,459 | | 157% |
Adjusted EBITDA (Company) (1) | | 35% | | $ | 749 | | $ | 881 | | $ | 1,013 | | $ | 984 | | 178% |
Legal | | 10% | | $ | — (2) | | $ | — (2) | | $ | — (2) | | $ | — (2) | | 110% |
* | 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. |
The achievement of synergies is measured as of December 31, 2018 and the target of $50 million of 2018 run rate expense synergies, which includes $17 million of incremental synergies, was reviewed by the Board in February 2018 and thereafter publicly disclosed. The achievement of 2018adjusted net revenue, which is revenues less cost of revenues, adjusted EBITDA, and business unit performance
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performances are measured as of December 31, 2018. The target 20182021. In February 2022, the Board approved the actual performances of adjusted net revenues, adjusted EBITDA, department budgets, and the European business unitunit.
The actual adjusted net revenue and adjusted EBITDA results for the Company exclude our divestiture of ETF.com and our acquisition of Chi-X Asia Pacific. The actual performance projectionsresults exclude our divestiture and acquisition in order to allow for a more comparable measure of actual performance against the pre-established corporate performance metric goals, which were presentedbased on the 2021 annual budget that was developed prior to, and reviewed bydoes not include, the Board as part ofdivestiture and the Company’s annual budgeting process. Adjustments to the synergies, adjusted EBITDA and certain of the business unit performance projections were further reviewed in February 2019 by the Board to account for organizational changes that occurred during 2018. In February 2019, we publicly disclosed the actual performance of 2018 run rate expense synergies, net revenues, adjusted EBITDA and European business unit performance.
For 2018, the payout percentage for corporate performance of each named executive officer’s target annual incentive award opportunity ranged from 167% to 187%, other than for Mr. Concannon, which was 0%. acquisition.
Individual Performance.. For the 20182021 annual incentive plan, individual performance goals were 25%comprised 30% of each named executive officer’s target annual incentive opportunity. Based upon data and analysis on each goal as provided by management,the level of achievement for the individual performance goals, the Compensation Committee determined the payout percentage of target annual incentive award opportunity for individual performance for each named executive officer.
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48 | Cboe Global Markets 2022 Proxy Statement |
Early in 2018,2021, the Compensation Committee set the following corporate strategic goals for 2018:
drive growth through product innovation, leading edge, state ofand considered the art technology and seamless trading solutions;
widen global access and distribution;
grow highest margin proprietary index suite; and
build strongfollowing achieved performance culture through effective pay for performance processes.
As discussed above in “2018 Business Highlights,” overall, we substantially performed on our targeted 2018 strategic goals.2021:
| | |
Goal | | Performance |
Build and continue to strengthen a strong performance culture that attracts, engages, develops and retains diverse talent | | Completed and analyzed employee engagement survey and started to implement leadership trainings, such as Cboe Leads Held routine succession planning meetings to determine appropriate talent pipeline, including a focus on diverse talent Increased focus on and tracking of the employment and hiring of diverse talent |
Deploy our core strengths for the mutual benefit of index and product partners, customers, and investors | | Continued product innovation with the launch of mini-options on the Russell 2000 Index Launched 24x5 trading on VIX and SPX options Started distributing real-time data via Cboe Global Cloud Provided world class education on our products through virtual conferences |
Growth initiative performance, organic and inorganic | | Reviewed mergers and acquisition performance and strategy Acquired companies that accelerated diversification of geographic and asset class offerings Focused on growing organic revenue and recurring non-transaction revenue Established new Data and Access Solutions Division to help integrate Cboe’s suite of data solutions, analytics and indices, with its market data services offerings |
Broaden geographic reach | | Launched pan-European derivatives in 2021 Acquired companies that increased geographic presence in Asia Pacific region |
The Compensation Committee received input from Mr. Tilly regarding the individual performances and recommendations regarding incentive compensation of the executive officers. The Compensation Committee, with input from the Board, also evaluated the individual performance of Mr. Tilly with respect to the following:Tilly.
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Cboe Global Markets 2022 Proxy Statement | 49 |
The table below shows Mr. Tilly’s individual goals and achieved performance highlights in 2018 were to:2021.
| | |
Goal | | Performance |
Manage the Company and its affiliates to achieve the corporate strategic goals listed above | | As discussed above and in “2021 Business Highlights,” overall, substantially performed on targeted 2021 strategic goals |
Manage internal and external communications through a revitalized investor relations strategy to positively impact the investment community, government and the public to promote integrity of the markets and confidence in our innovation superiority and products | | Engaged with holders of approximately 25% percent of our common stock outstanding at virtual investor and industry conferences, and by participating in informational fireside chats, conducting telephonic investor road shows, and hosting telephonic meetings Hosted first ever Investor Day, with nearly 200 analysts participating Met with government officials ranging from U.S. Congressional representatives to SEC and CFTC officials |
Manage business continuity with scalable, efficient growth in key departments | | Held routine succession planning meetings to determine appropriate talent pipeline and retention risk |
Execute against the Company’s succession plan with heightened focus on diversity | | Held succession planning meetings with Compensation Committee and Board Identified and developed a successor talent bench across critical positions |
manage the Company and its affiliates to achieve the corporate strategic goals listed above;
manage communications with the investment community so as to cultivate a loyal stockholder base; and
work with the Compensation Committee and the Board in continuing to develop and enhance the Company’s succession plan for all senior management positions. The succession plan will identify and qualify multiple potential successors for each senior management position.
table below shows Mr. Concannon’s individual performance was not evaluated, because, in connection with Mr. Concannon’s voluntary termination of employment, he was not eligible to receive a 2018 annual incentive plan payout. Mr. Concannon’sIsaacson’s individual goals and achieved performance highlights in 2018 were to:
achieve the corporate strategic goals listed above;
manage communications with the investment community so as to cultivate a loyal stockholder base;
manage the operation of the Company and its affiliates to ensure reliable and efficient service at a competitive cost;
2021.
| | |
Goal | | Performance |
Manage the Company and its affiliates to achieve the corporate strategic goals listed above | | As discussed above and in “2021 Business Highlights,” overall, substantially performed on targeted 2021 strategic goals |
Effectively communicate with the investment community, customers, and the public so as to cultivate a loyal stockholder and customer base | | Engaged with holders of approximately 25% percent of our common stock outstanding at virtual investor and industry conferences, and by participating in informational fireside chats, conducting telephonic investor road shows, and hosting telephonic meetings Hosted first ever Investor Day, with nearly 200 analysts participating Continued open dialogue with customers |
Manage the operation of the Company and its affiliates to ensure reliable and efficient service at a competitive cost | | Prudent expense growth to help fuel revenue growth Continued seamless work from home for global associate base without business disruption |
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50 | Cboe Global Markets |
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maintain a high level of systems performance during the migration to the Bats technology platform;
maintain high levels of customer interaction as integration with Bats is completed; and
Maintain a high level of systems performance and availability while driving innovation Integrating our information solutions acquisitions, Hanweck, FT Options, and Trade Alert, MATCHNow, BIDS Trading, and Chi-X Asia Pacific Seamless 24x5 launch of VIX and SPX options trading with immediate usage Started distributing real-time data via Cboe Global Cloud 100% uptime across 20 of our 23 markets, including all Cboe’s regulated exchanges globally in 2021, a year marked by continued volatility, volume, and system messaging Assess risks to the Company and ensure they are monitored and minimized Reviewed and analyzed enterprise risk management program on a periodic basis with key Company leaders and the Risk Committee, including emerging risks due to COVID-19 global pandemic, human capital, supply chain disruption, and numerous acquisitions Implemented new global risk framework that includes enhancements to the articulation of risk tolerance and risk appetite Implemented additional metrics that are updated on a recurring basis to help inform our risk profile Integrated newly acquired entities into our enterprise risk management program Ensure recruitment, retention and rewarding of key, top performing, diverse talent and institutional knowledge by maintaining overall engagement and innovation, including during integration of any mergers and acquisition Held routine succession planning meetings to determine appropriate talent pipeline, including focus on recruitment and retention of key, diverse talent through the integration of several acquisitions and organic growth in 2021 Continued to maintain high associate retention, despite highly competitive job market Based on the above factors and its deliberations, the Compensation Committee determined the payout percentage for individual performance achieve retention of key talent and institutional knowledge by maintaining overall engagement during migration to the Bats technology platform. the payout percentage of each named executive officer’s target annual incentive award opportunity. Such individual performance payout percentages of targetpayouts ranged from 100%110% to 130%, other than for Mr. Concannon, which was 0%. of target.
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Cboe Global Markets 2022 Proxy Statement | 51 |
Actual Performance.Performance and Payouts. For 2018,2021, 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 Incentive Plan Compensation” column of the Summary Compensation Table below reflects amounts paid under the annual incentive plan.
In connection with Mr. Concannon’s voluntary termination of employment in early 2019, he was not eligible to receive a 2018 annual incentive plan payout. His employment agreement is described more fully below under “Severance, Change in Control and Employment-Related Agreements.”
Pursuant to the release agreement for Ms. Moffic-Silver, which is described more fully below under “Severance, Change in Control and Employment-Related Agreements,” she was entitled to a prorated 2018 annual incentive plan payout for the performance period completed at the time of termination based on actual performance.
|
| 2018 Target Annual |
|
| ||||
|
| Incentive |
| 2018 Percentage | ||||
|
| Opportunity as |
| Payout of | ||||
|
| Percentage of |
| Target Incentive | ||||
| | 2021 Target Annual | | | ||||
| | Incentive | | 2021 Percentage | ||||
| | Opportunity as | | Payout of | ||||
| | Percentage of | | Target Incentive | ||||
Named Executive Officer |
| Base Salary |
| Opportunity | | Base Salary |
| Opportunity |
Edward T. Tilly |
| 165% |
| 154% | | 165% | | 152% |
Christopher R. Concannon |
| 150% |
| 0% | ||||
Christopher A. Isaacson | | 150% | | 152% | ||||
Brian N. Schell |
| 140% |
| 154% | | 140% | | 149% |
Christopher A. Isaacson |
| 150% |
| 153% | ||||
Mark S. Hemsley |
| 110% |
| 172% | ||||
Joanne Moffic-Silver |
| 140% |
| 151% | ||||
David Howson | | 110% | | 169% | ||||
Patrick Sexton | | 120% | | 145% |
Technology Platform Migration Cash Incentive Plan
Mr. Isaacson's Offer Letter Agreement, described more fully below under “Severance, Change in Control and Employment-Related Agreements” provides that Mr. Isaacson is eligible for additional cash incentive awards of up to $1,500,000 in the aggregate if he achieves the successful migrations of CFE, C2 and C1 to the Bats technology platform during the three-year period following our acquisition of Bats. As a result of the successful migrations of CFE and C2 to the Bats technology platform on February 25, 2018 and May 14, 2018, respectively, the Compensation Committee, awarded Mr. Isaacson two cash awards in the aggregate amount of $1,000,000. The “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table reflects these cash awards paid to Mr. Isaacson.
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,
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restricted stock units, and options. Stock options were not featured in our long-term incentive program in 2018. 2021.
The Compensation Committee believes that equity awards assist us in meeting the following goals:
aligning the financial interests of our Board members and executive officers with the interests of our stockholders;
aligning our Board and executive compensation with that of our peers in terms of components 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.
In connection with our acquisition of Bats, 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.”
20182021 Grants. The Compensation Committee andFor 2021, the Board granted equity awards in early 2018 for the 2018 service year and they were awarded at the target long-term incentive value for each executive. The Compensation Committee set each named executive officer’s 2021 target long-term incentive value based on comparative peer group market data and individual performance. Once the Compensation Committee set the target long-term incentive value for each named executive officer, one-half of the target value was granted in the form of time-based RSUs and one-half of the target value was granted in the form of PSUs.
Time-Based Restricted Stock Units. Time-based RSUs comprise 50% of the 2018each named executive officer’s 2021 total target long-term incentive award value and havevalue. 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. PSUs comprise the remaining 50% of the 2018each named executive officer’s 2021 total target long-term incentive award value. As described below, one-half of PSU grants are subject to the achievement of relative total stockholder return (“TSR”)TSR measured against pre-determined relative performance goals and one-half of PSU grants are subject to the achievement of earnings per share (“EPS”)EPS measured against pre-determined performance goals, both over a
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52 | Cboe Global Markets 2022 Proxy Statement |
three-year performance period. The PSU grants cliff-vest following the completion of the three-year performance period, to the extent performance goals are achieved.
o | Performance-Based Restricted Stock Units subject to Relative Total Stockholder Return (“PSUs-TSR”). 25% of the |
|
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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 |
The Compensation Committee equally weighted PSUs-TSR and PSUs-EPS so thatare equally weighted to encourage management willto maintain an equal focus on enhancing Company TSR and profitably grow the Company to increase EPS.
The Company will settle vested RSUs and PSUs in shares of the Company’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’s earlier death, disability or qualified retirement. Messrs. Tilly, Schell, and Sexton are entitled to acceleration of vesting in full of RSU awards and full or pro-rata vesting of PSU awards, as applicable, because they have satisfied, as of December 31, 2021, the retirement requirements of 55 years of age and 10 years of service.
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Cboe Global Markets 2022 Proxy Statement | 53 |
The following table shows the target grant date fairequity award value and number of time-based RSUs that were granted to each named executive officer on February 19, 2018. 2021. The target equity award value and the closing share price on February 11, 2021 were used to calculate the number of shares that were granted on February 19, 2021.
Named Executive Officer | # of Shares |
| Target Grant Date Fair Value of Stock | # of Shares |
| Target Value of Stock | ||
Edward T. Tilly | 14,049 |
| $ | 1,650,000 | 28,113 | | $ | 2,474,000 |
Christopher R. Concannon | 9,366 |
| $ | 1,100,000 | ||||
Christopher A. Isaacson | 10,654 | | $ | 938,000 | ||||
Brian N. Schell | 3,059 |
| $ | 359,275 | 8,949 | | $ | 788,000 |
Christopher A. Isaacson | 2,768 |
| $ | 325,000 | ||||
Mark S. Hemsley | 2,555 |
| $ | 300,000 | ||||
Joanne Moffic-Silver | 408 |
| $ | 44,220 | ||||
David Howson | 7,671 | | $ | 675,000 | ||||
Patrick Sexton | 3,836 | | $ | 337,500 |
The following table shows the target grant date fairequity award value and number of PSUs (tied to TSR and EPS performance) that were granted to each named executive officer on February 19, 20182021 and the 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, 2021 were used to calculate the number of shares that were granted on February 19, 2021.
|
|
| | | | # of Shares | | Target Value of Stock | |||||
| | | | Threshold | | Target | | Maximum | | | |
Named Executive Officer | | Performance Metric |
| (50% Payout) |
| (100% Payout) |
| (200% Payout) |
| | |
Edward T. Tilly | | 2021-2023 TSR |
| 7,028 |
| 14,057 |
| 28,113 | | $ | 1,237,000 |
| | 2021-2023 EPS | | 7,028 |
| 14,057 |
| 28,113 | | $ | 1,237,000 |
Christopher A. Isaacson | | 2021-2023 TSR |
| 2,664 |
| 5,327 |
| 10,654 | | $ | 469,000 |
| | 2021-2023 EPS | | 2,664 |
| 5,327 |
| 10,654 | | $ | 469,000 |
Brian N. Schell | | 2021-2023 TSR |
| 2,237 |
| 4,475 |
| 8,949 | | $ | 394,000 |
| | 2021-2023 EPS | | 2,237 |
| 4,475 |
| 8,949 | | $ | 394,000 |
David Howson | | 2021-2023 TSR |
| 1,918 |
| 3,836 |
| 7,671 | | $ | 337,500 |
| | 2021-2023 EPS | | 1,918 |
| 3,836 |
| 7,671 | | $ | 337,500 |
Patrick Sexton | | 2021-2023 TSR |
| 959 |
| 1,918 |
| 3,836 | | $ | 168,750 |
| | 2021-2023 EPS | | 959 |
| 1,918 |
| 3,836 | | $ | 168,750 |
goals. With respect to Ms. Moffic-Silver, the amounts do not reflect proration for the portion of the performance period completed at the time of termination.
|
|
|
| # of Shares |
| Target Grant Date Fair Value of Stock | |||||
|
|
|
| Threshold |
| Target |
| Maximum |
| ||
Named Executive Officer |
| Performance Metric |
| (50% Payout) |
| (100% Payout) |
| (200% Payout) |
| ||
Edward T. Tilly |
| 2018-2020 TSR |
| 3,512 |
| 7,025 |
| 14,049 |
| $ | 825,000 |
|
| 2018-2020 EPS |
| 3,512 |
| 7,025 |
| 14,049 |
| $ | 825,000 |
Christopher R. Concannon |
| 2018-2020 TSR |
| 2,342 |
| 4,683 |
| 9,366 |
| $ | 550,000 |
|
| 2018-2020 EPS |
| 2,342 |
| 4,683 |
| 9,366 |
| $ | 550,000 |
Brian N. Schell |
| 2018-2020 TSR |
| 765 |
| 1,530 |
| 3,059 |
| $ | 179,638 |
|
| 2018-2020 EPS |
| 765 |
| 1,530 |
| 3,059 |
| $ | 179,638 |
Christopher A. Isaacson |
| 2018-2020 TSR |
| 692 |
| 1,384 |
| 2,768 |
| $ | 162,500 |
|
| 2018-2020 EPS |
| 692 |
| 1,384 |
| 2,768 |
| $ | 162,500 |
Mark S. Hemsley |
| 2018-2020 TSR |
| 639 |
| 1,278 |
| 2,555 |
| $ | 150,000 |
|
| 2018-2020 EPS |
| 639 |
| 1,278 |
| 2,555 |
| $ | 150,000 |
Joanne Moffic-Silver |
| 2018-2020 TSR |
| 612 |
| 1,224 |
| 2,448 |
| $ | 143,750 |
|
| 2018-2020 EPS |
| 612 |
| 1,224 |
| 2,448 |
| $ | 143,750 |
The following table displays the threshold, target, and maximum performance goals for the PSU awards granted in 2018,2021, measured over the performance period frombeginning on January 1, 2018 through2021 and ending on December 31, 2020.2023.
|
| Threshold |
| Target |
| Maximum | ||||||
|
| (50% Payout) |
| (100% Payout) |
| (200% Payout) | ||||||
| | Threshold | | Target | | Maximum | ||||||
|
| (50% Payout) |
| (100% Payout) |
| (200% Payout) | ||||||
Relative TSR Compared to S&P 500 |
| 20th Percentile |
| 50th Percentile |
| 80th Percentile |
| 20th Percentile |
| 50th Percentile |
| 80th Percentile |
Cumulative EPS |
| $12.57 |
| $13.48 |
| $14.49 | | $17.28 | | $18.83 | | $20.48 |
For performance levels that fall between the goals shown above, the percentage of PSUs that vest will be determined by straight line interpolation, provided that no PSUs will vest if the performance does not equal or exceed the threshold amount.
Pursuant to the terms
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54 | Cboe Global Markets 2022 Proxy Statement |
2019 in connection with his voluntary termination of employment.
The 2018 time-based RSU grant for Ms. Moffic-Silver vested in 2018 in accordance with her release agreement. In addition, in accordance with her release agreement, Ms. Moffic-Silver became entitled to accelerated vesting of any outstanding PSUs, including the 2016, 2017 and 2018 grants of PSUs, prorated for the portion of the performance period completed at the time of termination and subject to attainment of the applicable performance goals through the full performance period. The release agreement is described more fully below under “Severance, Change in Control and Employment-Related Agreements.”
2016 PSU Grants Vested. In early 2019, the The Compensation Committee determined, with respect toapproved the 2016 grants of PSUs awardedgrant on February 19, 2016,2019 of PSUs (“2019 PSUs”) to our named executive officers, except for Mr. Howson, who was not then an executive officer and did not receive grants of 2019 PSUs. The 2019 PSUs were subject to the achievement of TSR and EPS measured against the pre-determined performance goals, both over a three-year performance period frombeginning on January 1, 2016 through2019 and ending on December 31, 2018. 2021. In early 2022, the Compensation Committee determined that the following performance was achieved resulting in the indicated payout:
The TSR percentile attained was the 77th34th percentile, and so 200%which resulted in the vesting of 74% of the target number of PSUs-TSR vested forgranted to each applicable named executive officer.
The cumulative3- year adjusted EPS as adjusted, attained was $10.11, and so approximately 200%$16.05 1, which resulted in the vesting of 0% 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 2016‑20182019-2021 performance period were previously disclosed in our proxy statement covering 20162019 compensation. Messrs. Concannon, Schell, Isaacson and Hemsley did not receive the 2016 grants of equity awards.
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The 2016 grantstable below shows the number of equity awards for Ms. Moffic-Silver were prorated for the portion of the performance period completed2019 PSUs that vested at the time of separation and subject to attainmentconclusion of the applicable performance goals through the full performance period vested in accordance with her release agreement, which is described more fully below under “Severance, Change in Controlfor each applicable named executive officer and Employment-Related Agreements.” Certain details of the PSUs that vested based on achievement of 2016‑2018 TSR and EPS performance goals for Mr. Tilly and, as pro-rated with respect to Ms. Moffic-Silver, are as follows and dodoes not include the dividend equivalent payments.
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|
|
| # of Shares |
|
| |||||||
|
|
| at Target |
| # of Shares | |||||||
| | | | | | | | |||||
| | | | | # of Shares |
| | |||||
| | | | | at Target | | # of Shares | |||||
Named Executive Officer | Performance Metric |
| (100% Payout) |
| Vested | | | Performance Metric |
| (100% Payout) |
| Vested |
Edward T. Tilly | 2016-2018 TSR |
| 10,114 |
| 20,228 | | | 2019-2021 TSR |
| 11,316 |
| 8,363 |
| 2016-2018 EPS |
| 10,114 |
| 20,228 | |||||||
Joanne Moffic-Silver | 2016-2018 TSR |
| 1,983 |
| 2,858 | |||||||
| 2016-2018 EPS |
| 1,983 |
| 2,858 | |||||||
| | | 2019-2021 EPS |
| 11,316 |
| 0 | |||||
Christopher A. Isaacson | | | 2019-2021 TSR |
| 3,289 |
| 2,431 | |||||
| | | 2019-2021 EPS |
| 3,289 |
| 0 | |||||
Brian N. Schell | | | 2019-2021 TSR |
| 3,421 |
| 2,529 | |||||
| | | 2019-2021 EPS |
| 3,421 |
| 0 | |||||
Patrick Sexton | | | 2019-2021 TSR |
| 1,513 |
| 1,119 | |||||
| | | 2019-2021 EPS |
| 1,513 |
| 0 |
Other Executive Compensation Program Considerations
Stock Ownership and Holding Guidelines
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 counted toward the guidelines.
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Cboe Global Markets 2022 Proxy Statement | 55 |
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.within four years of May 2019 for named executive officers then-serving when the guidelines were updated in May 2019. Each named executive officer is required to hold all shares until the guidelines are met, except for sales of shares to pay taxes with respect to the vesting or exercising of equity grants. As of December 31, 2018,2021, each named executive officer has met the applicable holding requirement based on his position with us. Ms. Moffic-Silver met the applicable holding requirements of two times base salary as of February 28, 2018.
| | |
Named Executive Officer | | Holding Requirement |
Edward T. Tilly | |
|
Christopher | | Four times base salary |
Brian N. Schell | |
|
| |
|
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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 our 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
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,
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56 | Cboe Global Markets 2022 Proxy Statement |
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.
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 our executive officers have existing pledges or margin loans on shares of our common stock.
The Compensation Committee hasWe 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
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applies to both current and former executives, regardless of such executive’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, 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 – Compensation—Non-Qualified Deferred Compensation Plans.”Plans”. We offer these plansthis coverage in order to provide a 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.
As of December 31, 2018,2021, we had an employment agreementsagreement with Messrs.Mr. Tilly, and Concannon,an offer letter agreements with Messrs. Schell, Isaacson and Hemsley, a releaseemployment agreement with Ms. Moffic-SilverMr. Howson, 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 separation proceedings, and allow executives to focus on our strategic business priorities. The employment agreements with Messrs. Tilly and Concannon, offer letter agreements with Messrs. Schell, Isaacson and HemsleyHowson and the Executive Severance Plan contain severance and change in control provisions and are described more fully below under “Severance, Change in Control and Employment-Related Agreements.”Agreements”. Any payments under the employment agreements, offer letter agreements and the Executive Severance Plan upon a change in control will only occur if the named executive officer’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.
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Cboe Global Markets 2022 Proxy Statement | 57 |
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. Historically, 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,However, 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. Eveneven 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.
The Compensation Committee consists of Mr. Fitzpatrick, Chair, Mr. English, Ms. Froetscher, Mr. Parisi, and Mr. Parisi,Tomczyk, each of whom the Board has determined are independent under BZX and Nasdaq 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.
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The Compensation Committee has reviewed and discussed with management the disclosures contained in the foregoing section entitled “Compensation Discussion and Analysis.”Analysis”. Based on this review and discussion, the Compensation Committee recommended to the Board that the section entitled “Compensation Discussion and Analysis” be included in this Proxy Statement for the Annual Meeting.
Compensation Committee
Edward J. Fitzpatrick, Chair
Frank E. English, Jr.
Janet P. Froetscher
James E. Parisi
Fredric J. Tomczyk
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, the Compensation Committee reviewed and discussed a risk assessment of our compensation policies and practices for all employees for 2018,2021, 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’s long-term best interests.
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58 | Cboe Global Markets 2022 Proxy Statement |
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’ 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.
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Cboe Global Markets | 59 |
20182021 Summary Compensation Table
The table below sets forth, for the years indicated below, the compensation earned by our named executive officers.
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Name and Principal Position |
| Year |
| Salary |
| Bonus |
| Awards(1) |
| Compensation(2) |
| Compensation(3) |
| Total | ||||||
Edward T. Tilly |
| 2018 |
| $ | 1,265,000 |
| $ | — |
| $ | 3,237,079 |
| $ | 3,219,374 |
| $ | 731,684 |
| $ | 8,453,137 |
Chairman and Chief |
| 2017 |
| $ | 1,150,000 |
| $ | — |
| $ | 6,070,988 |
| $ | 2,461,058 |
| $ | 737,887 |
| $ | 10,419,933 |
Executive Officer (4) |
| 2016 |
| $ | 1,000,000 |
| $ | — |
| $ | 2,714,536 |
| $ | 1,775,000 |
| $ | 464,047 |
| $ | 5,953,583 |
Christopher R. Concannon |
| 2018 |
| $ | 1,100,000 |
| $ | — |
| $ | 2,157,973 |
| $ | 0 |
| $ | 99,633 |
| $ | 3,357,606 |
President and Chief |
| 2017 |
| $ | 833,333 |
| $ | — |
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| 4,179,168 |
| $ | 1,945,500 |
| $ | 38,187 |
| $ | 6,996,188 |
Operating Officer(5, 6) |
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Brian N. Schell |
| 2018 |
| $ | 521,000 |
| $ | — |
| $ | 704,928 |
| $ | 1,122,984 |
| $ | 68,845 |
| $ | 2,417,757 |
Executive Vice President, |
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Chief Financial Officer and |
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Treasurer |
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Christopher A. Isaacson |
| 2018 |
| $ | 540,000 |
| $ | — |
| $ | 637,761 |
| $ | 2,236,384 |
| $ | 147,587 |
| $ | 3,561,732 |
Executive Vice President, |
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Chief Information Officer (7) |
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Mark S. Hemsley |
| 2018 |
| $ | 619,379 |
| $ | — |
| $ | 588,566 |
| $ | 1,175,272 |
| $ | — |
| $ | 2,383,217 |
Executive Vice President, |
| 2017 |
| $ | 544,377 |
| $ | — |
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| 1,245,474 |
| $ | 741,816 |
| $ | 13,500 |
| $ | 2,545,167 |
President Europe(6, 8) |
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Joanne Moffic-Silver |
| 2018 |
| $ | 72,167 |
| $ | — |
| $ | 336,673 |
| $ | 147,552 |
| $ | 3,207,150 |
| $ | 3,763,542 |
Former Executive Vice |
| 2017 |
| $ | 433,000 |
| $ | — |
| $ | 1,174,484 |
| $ | 877,171 |
| $ | 299,331 |
| $ | 2,783,986 |
President, General Counsel |
| 2016 |
| $ | 427,583 |
| $ | — |
| $ | 532,175 |
| $ | 535,477 |
| $ | 215,849 |
| $ | 1,711,084 |
and Corporate Secretary(9) |
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| | | | | | | | | | Stock | | Incentive Plan | | All Other | | | | |||
Name and Principal Position |
| Year |
| Salary |
| Bonus |
| Awards(1) |
| Compensation(2) |
| Compensation(3) |
| Total | ||||||
Edward T. Tilly | | 2021 | | $ | 1,265,000 | | $ | — | | $ | 5,348,882 | | $ | 3,179,926 | | $ | 852,750 | | $ | 10,646,558 |
Chairman, President | | 2020 | | $ | 1,265,000 | | $ | — | | $ | 4,700,084 | | $ | 2,413,017 | | $ | 684,310 | | $ | 9,062,411 |
and Chief Executive Officer | | 2019 | | $ | 1,265,000 | | $ | — | | $ | 4,336,178 | | $ | 1,669,800 | | $ | 941,807 | | $ | 8,212,785 |
Christopher A. Isaacson | | 2021 | | $ | 650,000 | | $ | — | | $ | 2,027,030 | | $ | 1,485,413 | | $ | 142,567 | | $ | 4,305,010 |
Executive Vice President | | 2020 | | $ | 650,000 | | $ | — | | $ | 1,750,016 | | $ | 1,126,832 | | $ | 137,366 | | $ | 3,664,214 |
and Chief Operating Officer | | 2019 | | $ | 650,000 | | $ | — | | $ | 1,260,406 | | $ | 1,430,575 | | $ | 201,031 | | $ | 3,542,012 |
Brian N. Schell | | 2021 | | $ | 525,000 | | $ | — | | $ | 1,702,739 | | $ | 1,091,607 | | $ | 128,500 | | $ | 3,447,846 |
Executive Vice President, | | 2020 | | $ | 525,000 | | $ | — | | $ | 1,500,313 | | $ | 870,136 | | $ | 101,763 | | $ | 2,997,212 |
Chief Financial Officer and Treasurer | | 2019 | | $ | 521,000 | | $ | — | | $ | 1,310,893 | | $ | 581,376 | | $ | 142,845 | | $ | 2,556,114 |
David Howson | | 2021 | | $ | 567,000 | | $ | — | | $ | 1,459,587 | | $ | 1,055,025 | | $ | 675 | | $ | 3,082,287 |
Executive Vice President, | | 2020 | | $ | 575,400 | | $ | — | | $ | 650,090 | | $ | 784,055 | | $ | — | | $ | 2,009,545 |
President Europe and Asia Pacific (4) | | | | | | | | | | | | | | | | | | | | |
Patrick Sexton | | 2021 | | $ | 415,000 | | $ | — | | $ | 729,837 | | $ | 720,473 | | $ | 54,006 | | $ | 1,919,316 |
Executive Vice President, | | | | | | | | | | | | | | | | | | | | |
General Counsel and Corporate Secretary | | | |
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(1) |
| The amounts in the stock award column for |
Assumptions used in the calculation of these amounts are included in the footnotes to our 2018 consolidated financial statements, which are included in our Annual Report on Form 10‑K for the year ended December 31, 2018 filed with the SEC.
(2) |
| The amounts shown reflect awards to the named executive officers under our annual incentive plan. The amount shown for Mr. Isaacson also includes |
(3) |
| The amounts shown represent |
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60 | Cboe Global Markets |
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(4) |
| Mr. |
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20182021 All Other Compensation Detail Table
| Qualified Defined |
| Non-Qualified Defined |
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| Qualified Defined | | Non-Qualified Defined | | | | | Matching Gift | |||||||||||||||||
Name | Contributions(1) |
| Contributions(2) |
| Insurance(3) |
| Program (4) |
| Other(5) | Contributions(1) | | Contributions(2) |
| Insurance(3) | | Program (4) | |||||||||
Edward T. Tilly | $ | 22,000 |
| $ | 707,878 |
| $ | 1,806 |
| $ | — |
| $ | — | $ | 23,200 | | $ | 822,744 | | $ | 1,806 | | $ | 5,000 |
Christopher R. Concannon | $ | 22,000 |
| $ | 76,667 |
| $ | 966 |
| $ | — |
| $ | — | |||||||||||
Christopher A. Isaacson | $ | 23,200 | | $ | 118,947 | | $ | 420 | | $ | — | ||||||||||||||
Brian N. Schell | $ | 22,000 |
| $ | 38,379 |
| $ | 966 |
| $ | 7,500 |
| $ | — | $ | 23,200 | | $ | 88,412 | | $ | 1,806 | | $ | 15,082 |
Christopher A. Isaacson | $ | 22,000 |
| $ | 117,667 |
| $ | 420 |
| $ | 7,500 |
| $ | — | |||||||||||
Mark S. Hemsley(6) | $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — | |||||||||||
Joanne Moffic-Silver | $ | 22,000 |
| $ | 229,046 |
| $ | 533 |
| $ | — |
| $ | 2,955,571 | |||||||||||
David Howson (5) | $ | — | | $ | — | | $ | — | | $ | 675 | ||||||||||||||
Patrick Sexton | $ | 23,200 | | $ | 29,000 | | $ | 1,806 | | $ | — |
(1) |
| The amounts shown are matching contributions to our qualified 401(k) plan, the Cboe Global Markets SMART Plan (“SMART Plan”), on behalf of each of the officers listed. In |
(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 employee’s contributions. These plans are described more fully below under “Non-Qualified Defined Contribution |
(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 |
(5) | The amount reported was converted to U.S. dollars using a rate of £1.00 to $1.35, which was the exchange rate as of December31, 2021. |
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Cboe Global Markets 2022 Proxy Statement | 61 |
2021 Grants of Plan-Based Awards Table
The 2021 grants of plan-based awards are as follows and are explained in more detail below:
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| | | | | | | | | | | | | | | | | | Awards: | | Grant Date | |
| | | Estimated Future Payouts | | Estimated Future Payouts | | Number | | Fair Value of | ||||||||||||
| | | Under Non-Equity Incentive | | Under Equity Incentive | | of Shares | | Stock and | ||||||||||||
| Approval | Grant | Plan Awards | | Plan Awards | | of Stock | | Option | ||||||||||||
| Date | Date | Threshold |
| Target |
| Maximum |
| Threshold |
| Target |
| Maximum |
| or Units |
| Awards | ||||
Name | (1) | (1) | ($) | | ($) | | ($) | | (#) | | (#) | | (#) | | (#) | | ($) (2) | ||||
Edward T. Tilly | 2/11/2021 | n/a | $ | 365,269 | | $ | 2,087,250 | | $ | 4,174,500 | | — | | — |
| — | | — |
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| 2/11/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| 7,028 |
| 14,057 |
| 28,113 | | — | | $ | 1,588,441 |
| 2/11/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| 7,028 |
| 14,057 |
| 28,113 | | — | | $ | 1,236,016 |
| 2/11/2021 | 2/19/2021 | | — | | | — | | | — | | — | | — | | — | | 28,113 | | $ | 2,473,944 |
Christopher A. Isaacson | 2/11/2021 | n/a | $ | 170,625 | | $ | 975,000 | | $ | 1,950,000 |
| — |
| — |
| — | | — | | | — |
| 2/11/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| 2,664 |
| 5,327 |
| 10,654 | | — | | $ | 601,951 |
| 2/11/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| 2,664 |
| 5,327 |
| 10,654 | | — | | $ | 468,776 |
| 2/11/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| — |
| — |
| — | | 10,654 | | $ | 937,552 |
Brian N. Schell | 2/10/2021 | n/a | $ | 128,625 | | $ | 735,000 | | $ | 1,470,000 |
| — |
| — |
| — | | — | | | — |
| 2/10/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| 2,237 |
| 4,475 |
| 8,949 | | — | | $ | 505,675 |
| 2/10/2021 | 2/19/2021 |
| — | |
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| — |
| 2,237 |
| 4,475 |
| 8,949 | | — | | $ | 393,800 |
| 2/10/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| — |
| — |
| — | | 8,949 | | $ | 787,512 |
David Howson (3) | 2/10/2021 | n/a | $ | 109,148 | | $ | 623,700 | | $ | 1,247,400 |
| — |
| — |
| — | | — | | | — |
| 2/10/2021 | 2/19/2021 |
| — | |
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| 1,918 |
| 3,836 |
| 7,671 | | — | | $ | 433,468 |
| 2/10/2021 | 2/19/2021 |
| — | |
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| — |
| 1,918 |
| 3,836 |
| 7,671 | | — | | $ | 337,568 |
| 2/10/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| — |
| — |
| — | | 7,671 | | $ | 675,048 |
Patrick Sexton | 2/10/2021 | n/a | $ | 87,150 | | $ | 498,000 | | $ | 996,000 |
| — |
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| — | | — | | | — |
| 2/10/2021 | 2/19/2021 |
| — | |
| — | |
| — |
| 959 |
| 1,918 |
| 3,836 | | — | | $ | 216,734 |
| 2/10/2021 | 2/19/2021 |
| — | |
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| 959 |
| 1,918 |
| 3,836 | | — | | $ | 168,784 |
| 2/10/2021 | 2/19/2021 |
| — | |
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| — |
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| — | | 3,836 | | $ | 337,568 |
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(2) | Represents the grant date aggregate fair value of the awards of RSUs and PSUs-EPS that were effective on and granted on February19, 2021, as computed in accordance with stock-based compensation accounting rules(Financial Standards Accounting Board ASC Topic 718) and for PSUs-TSR that were effective on and granted on February19, 2021, as computed in accordance with the Monte Carlo valuation model method. Assumptions used in the calculation of these amounts are included in the footnotes to our 2021 consolidated financial statements, which are included in our Annual Report on Form10‑K for the year ended December 31, 2021 filed with the SEC. |
(3) | Mr. |
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2018 Grants of Plan-Based Awards Table
The 2018 grants of plan-based awards are as follows and are explained in more detail below:
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Name |
| Grant Date |
| Threshold |
| Target |
| Maximum |
| Threshold (#) |
| Target (#) |
| Maximum (#) |
| Units (#) |
| Awards | ||||
Edward T. Tilly |
| n/a |
| $ | 156,544 |
| $ | 2,087,250 |
| $ | 4,017,956 |
| — |
| — |
| — |
| — |
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| 2/19/2018 |
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| — |
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| — |
| 3,512 |
| 7,025 |
| 14,049 |
| — |
| $ | 825,000 |
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| 3,512 |
| 7,025 |
| 14,049 |
| — |
| $ | 825,000 |
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| — |
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| — |
| — |
| — |
| — |
| 14,049 |
| $ | 1,650,000 |
Christopher R. Concannon (1) |
| n/a |
| $ | 123,750 |
| $ | 1,650,000 |
| $ | 3,176,250 |
| — |
| — |
| — |
| — |
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| — |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 2,342 |
| 4,683 |
| 9,366 |
| — |
| $ | 550,000 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 2,342 |
| 4,683 |
| 9,366 |
| — |
| $ | 550,000 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| — |
| — |
| — |
| 9,366 |
| $ | 1,100,000 |
Brian N. Schell |
| n/a |
| $ | 54,705 |
| $ | 729,400 |
| $ | 1,404,095 |
| — |
| — |
| — |
| — |
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| — |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 765 |
| 1,530 |
| 3,059 |
| — |
| $ | 179,638 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 765 |
| 1,530 |
| 3,059 |
| — |
| $ | 179,638 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| — |
| — |
| — |
| 3,059 |
| $ | 359,275 |
Christopher A. Isaacson |
| n/a |
| $ | 60,750 |
| $ | 810,000 |
| $ | 1,559,250 |
| — |
| — |
| — |
| — |
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| — |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 692 |
| 1,384 |
| 2,768 |
| — |
| $ | 162,500 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 692 |
| 1,384 |
| 2,768 |
| — |
| $ | 162,500 |
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| 2/19/2018 |
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| — |
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| — |
| — |
| — |
| — |
| 2,768 |
| $ | 325,000 |
Mark S. Hemsley(2) |
| n/a |
| $ | 34,045 |
| $ | 680,900 |
| $ | 1,327,755 |
| — |
| — |
| — |
| — |
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| — |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 639 |
| 1,278 |
| 2,555 |
| — |
| $ | 150,000 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 639 |
| 1,278 |
| 2,555 |
| — |
| $ | 150,000 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| — |
| — |
| — |
| 2,555 |
| $ | 300,000 |
Joanne Moffic-Silver (3) |
| n/a |
| $ | 45,465 |
| $ | 606,200 |
| $ | 1,166,935 |
| — |
| — |
| — |
| — |
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| — |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 612 |
| 1,224 |
| 2,448 |
| — |
| $ | 143,750 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| 612 |
| 1,224 |
| 2,448 |
| — |
| $ | 143,750 |
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| 2/19/2018 |
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| — |
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| — |
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| — |
| — |
| — |
| — |
| 408 |
| $ | 44,220 |
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All of the equity incentive awards were made in restricted stock units, half of which are subject to performance conditions. TheExcept 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 the shares granted will vest each year on the anniversary of the grant date. Dividend equivalent payments are made on these restricted stock units.
Half of the restricted stock units subject to performance conditions, or 25% of the total restricted stock units, have a performance condition under which the number of units that will ultimately be awarded will vary from 0% to 200% of the original grant, based on our total stockholder return (calculated 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) relative to the total stockholder returns for the S&P 500 Index during the performance period. The remaining half of the performance share units, or 25% of the total restricted stock units, have a performance condition under which the number of units that will ultimately be awarded will vary from 0% to 200% of the original grant, based on our
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cumulative earnings per share during the performance period. Dividend equivalent payments on these restricted stock units accrue and are paid out in shares upon vesting. The restricted stock units subject to performance conditions cliff-vest following the completion of the three-year performance period and are issued following the determination of the achievement of the performance conditions.
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. Under 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 once satisfying 65 years of age and 5 years of service for grants awarded before 2017 and once satisfying 55 years of age and 10 years of service for grants awarded in and after 2017. With respect to Mr. Hemsley, grants awarded before 2018 did not provide for qualified retirement eligibility, however, for grants awarded in and after 2018, qualified retirement eligibility occurs once satisfyingupon 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.
Messrs. Tilly, Schell, and Sexton are entitled to acceleration of vesting in full of RSU awards and full or pro-rata vesting of PSU awards, as applicable, because they have satisfied, as of December 31, 2021, the retirement requirements of 55 years of age and 10 years of service.
| | |
Cboe Global Markets | 63 |
20182021 Outstanding Equity Awards at Fiscal Year-End Table
The following table sets forth outstanding equity awards held by each named executive officer at December 31, 20182021 based on the market value of our common stock on December 31, 2018.2021.
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Name |
| Exercisable |
| Unexercisable |
| Price |
| Date |
| Vested (#) |
| Vested |
| Vested (#) |
| Vested | ||||||
Edward T. Tilly |
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| 6,743 | (1) |
| $ | 659,668 |
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| 20,730 | (2) |
| $ | 2,028,016 |
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| 12,438 | (2) |
| $ | 1,216,810 |
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| 14,049 | (3) |
| $ | 1,374,414 |
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| 20,228 | (4) |
| $ | 1,978,906 |
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| 20,228 | (5) |
| $ | 1,978,906 |
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| 18,657 | (6) |
| $ | 1,825,214 |
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| 7,025 | (7) |
| $ | 687,256 |
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| 7,025 | (8) |
| $ | 687,256 |
Christopher R. |
| 122,281 |
| — | (10) |
| $ | 28 |
| 11/30/2024 |
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Concannon(9, 19) |
| 162,136 |
| — | (10) |
| $ | 28 |
| 11/30/2024 |
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| 18,616 | (11) |
| $ | 1,821,203 |
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| 10,498 | (12) |
| $ | 1,027,019 |
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| 4,446 | (13) |
| $ | 434,952 |
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| 24,876 | (14) |
| $ | 2,433,619 |
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| 8,292 | (15) |
| $ | 811,206 |
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| 9,366 | (3) |
| $ | 916,276 |
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| 12,438 | (6) |
| $ | 1,216,810 |
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| 4,683 | (7) |
| $ | 458,138 |
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| 4,683 | (8) |
| $ | 458,138 |
Brian N. Schell (9) |
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| 2,364 | (11) |
| $ | 231,270 |
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| 1,049 | (12) |
| $ | 102,624 |
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| 23,396 | (13) |
| $ | 2,288,831 |
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| 4,975 | (14) |
| $ | 486,704 |
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| 4,146 | (15) |
| $ | 405,603 |
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| 3,059 | (3) |
| $ | 299,262 |
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| 1,530 | (7) |
| $ | 149,680 |
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| 1,530 | (8) |
| $ | 149,680 |
Christopher A. Isaacson (9) |
| 30,000 |
| — | (16) |
| $ | 22 |
| 01/31/2020 |
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| 2,379 | (11) |
| $ | 232,738 |
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| 1,053 | (12) |
| $ | 103,015 |
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| 2,234 | (13) |
| $ | 218,552 |
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| 22,671 | (17) |
| $ | 2,217,904 |
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| 6,219 | (14) |
| $ | 608,405 |
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| 2,074 | (15) |
| $ | 202,899 |
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| 2,768 | (3) |
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| 270,793 |
| 3,110 | (6) |
| $ | 304,251 |
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| 1,384 | (7) |
| $ | 135,397 |
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| 1,384 | (8) |
| $ | 135,397 |
Mark S. Hemsley(9) |
| 14,039 |
| — | (16) |
| $ | 22 |
| 01/31/2020 |
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| 5,763 | (11) |
| $ | 563,794 |
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| 16,194 | (17) |
| $ | 1,584,259 |
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| 1,978 | (12) |
| $ | 193,508 |
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| 1,556 | (13) |
| $ | 152,223 |
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| 7,413 | (14) |
| $ | 725,214 |
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| 2,472 | (15) |
| $ | 241,836 |
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| 2,555 | (3) |
| $ | 249,956 |
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| 3,707 | (6) |
| $ | 362,656 |
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| 1,277 | (7) |
| $ | 124,929 |
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| 1,277 | (8) |
| $ | 124,929 |
Joanne Moffic-Silver (18) |
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| 2,858 | (4) |
| $ | 279,598 |
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| 2,858 | (5) |
| $ | 279,598 |
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| 1,383 | (6) |
| $ | 135,299 |
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| 65 | (7) |
| $ | 6,359 |
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| 65 | (8) |
| $ | 6,359 |
| | | | | | | | | | | ||
| 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 | 7,544 | (1) | | $ | 983,738 |
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| 12,706 | (2) | | $ | 1,656,862 |
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| 28,113 | (3) | | $ | 3,665,935 |
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| 8,710 | (4) | | $ | 1,135,784 |
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| 0 | (5) | | $ | 0 |
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| | | | | | | 19,058 | (6) | | $ | 2,485,163 | |
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| 9,529 | (7) | | $ | 1,242,582 | |
| | | | | | | 14,057 | (8) | | $ | 1,833,033 | |
| | | | | | | 28,114 | (9) | | $ | 3,666,066 | |
Christopher A. Isaacson | 2,193 | (1) | | $ | 285,967 |
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| 4,731 | (2) | | $ | 616,922 |
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| 10,654 | (3) | | $ | 1,389,282 |
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| 2,533 | (4) | | $ | 330,303 | | | | | | | |
| 0 | (5) | | $ | 0 | | | | | | | |
| | | | | | | 7,096 | (6) | | $ | 925,318 | |
| | | | | | | 3,548 | (7) | | $ | 462,659 | |
| | | | | | | 5,327 | (8) | | $ | 694,641 | |
| | | | | | | 10,654 | (9) | | $ | 1,389,282 | |
Brian N. Schell | 2,281 | (1) | | $ | 297,442 | | | | | | | |
| 4,056 | (2) | | $ | 528,902 | | | | | | | |
| 8,949 | (3) | | $ | 1,166,950 |
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| 2,634 | (4) | | $ | 343,474 | | | | | | | |
| 0 | (5) | | $ | 0 | | | | | | | |
| | | | | | | 6,084 | (6) | | $ | 793,354 | |
| | | | | | | 3,042 | (7) | | $ | 396,677 | |
| | | | | | | 4,475 | (8) | | $ | 583,540 | |
| | | | | | | 8,950 | (9) | | $ | 1,167,080 | |
David Howson | 741 | (1) | | $ | 96,626 |
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| 1,758 | (2) | | $ | 229,243 |
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| 7,671 | (3) | | $ | 1,000,298 |
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| 4,105 | (10) | | $ | 535,292 | | | | | | | |
| | | | | | | 2,636 | (6) | | $ | 343,734 | |
| | | | | | | 1,318 | (7) | | $ | 171,867 | |
| | | | | | | 3,836 | (8) | | $ | 500,214 | |
| | | | | | | 7,672 | (8) | | $ | 1,000,429 | |
Patrick Sexton | 1,009 | (1) | | $ | 131,574 | | | | | | | |
| 1,690 | (2) | | $ | 220,376 | | | | | | | |
| 3,836 | (3) | | $ | 500,214 |
| | | | | | |
| 1,166 | (4) | | $ | 152,046 | | | | | | | |
| 0 | (5) | | $ | 0 | | | | | | | |
| | | | | | | 2,536 | (6) | | $ | 330,694 | |
| | | | | | | 1,268 | (7) | | $ | 165,347 | |
| | | | | | | 1,918 | (8) | | $ | 250,107 | |
| | | | | | | 3,836 | (9) | | $ | 500,214 |
(1) |
| Grant of restricted stock units not subject to performance conditions on February 19, |
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64 | Cboe Global Markets |
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(2) |
| Grant of restricted stock units not subject to performance conditions on February 19, |
(3) |
| Grant of restricted stock units not subject to performance conditions on February 19, |
(4) |
| Grant of restricted stock units on February 19, |
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(5) | Grant of restricted stock units on February 19, 2019 subject to an earnings per share performance condition for the period from January 1, 2019 through December 31, |
(6) | 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 maximum performance amount. These restricted stock units |
(7) |
| Grant of restricted stock units on February 19, |
(8) |
| Grant of restricted stock units on February 19, |
(9) |
| Grant of restricted stock units on February 19, |
(10) |
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Pursuant to the merger agreement, each award of restricted Bats common stock (“Bats restricted stock”) of the executive that was unvested immediately prior to the Effective Time was assumed by us and converted into an award of restricted shares of our common stock, subject to the same terms and conditions (including vesting schedule) that applied to the applicable Bats restricted stock immediately prior to the Effective Time (but taking into account any changes, including any acceleration of vesting of such Bats restricted stock, occurring by reason provided for in the merger agreement). The number of shares of our common stock subject to each such converted award of Bats restricted stock equals the number of shares of Bats common stock subject to the corresponding Bats restricted stock award multiplied by 0.4452.
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| Grant of restricted stock units not subject to performance conditions on February |
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Cboe Global Markets 2022 Proxy Statement |
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20182021 Option Exercises and Stock Vested Table
The following table sets forth the options exercised and equity awards that vested during 2018.2021.
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| 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 | — |
| $ | — |
| 55,804 |
| $ | 6,315,554 |
Christopher R. Concannon | — |
| $ | — |
| 53,259 |
| $ | 5,732,355 |
Brian N. Schell | — |
| $ | — |
| 19,620 |
| $ | 2,393,023 |
Christopher A. Isaacson | 26,159 |
| $ | 2,095,231 |
| 19,138 |
| $ | 2,354,451 |
Mark S. Hemsley | — |
| $ | — |
| 24,803 |
| $ | 2,873,500 |
Joanne Moffic-Silver (1) | — |
| $ | — |
| 20,684 |
| $ | 2,333,391 |
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| | | | | | | | ||
| 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 | — | | $ | — |
| 33,203 |
| $ | 3,108,072 |
Christopher A. Isaacson | — | | $ | — |
| 8,363 |
| $ | 787,598 |
Brian N. Schell | — | | $ | — |
| 8,514 |
| $ | 800,324 |
David Howson | — | | $ | — |
| 2,073 |
| $ | 199,464 |
Patrick Sexton | — | | $ | — |
| 4,136 |
| $ | 387,719 |
20182021 Non-Qualified Deferred Compensation Table
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| Executive |
| Registrant |
| Aggregate |
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|
| Contributions |
| Contributions |
| Earnings |
| Aggregate |
| Aggregate | ||||||||||||||||||||||||||
|
| in Last |
| in Last |
| in Last |
| Withdrawals/ |
| Balance at | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | |||||||||||||||||||
| | | | Executive | | Registrant | | Aggregate | | | | | | | ||||||||||||||||||||||
| | | | Contributions | | Contributions | | Earnings | | Aggregate | | Aggregate | ||||||||||||||||||||||||
| | | | in Last | | in Last | | in Last | | Withdrawals/ | | Balance at | ||||||||||||||||||||||||
Name (1) |
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|
| FY (2) |
| FY (3) |
| FY (4) |
| Distributions |
| Last FYE |
| |
| FY (2) |
| FY (3) |
| FY (4) |
| Distributions |
| Last FYE | ||||||||||||
Edward T. Tilly |
| SERP |
| $ | 137,276 |
| $ | 274,551 |
| $ |
| (26,008) |
| $ | — |
| $ | 2,311,819 |
| SERP | | $ | 135,521 | | $ | 271,041 | | $ | | 413 | | $ | — | | $ | 3,868,874 |
|
| ERP |
| $ | — |
| $ | 433,327 |
| $ |
| 37,989 |
| $ | — |
| $ | 2,321,295 | ||||||||||||||||||
Christopher R. Concannon |
| SERP |
| $ | 47,917 |
| $ | 76,667 |
| $ |
| 1,010 |
| $ | — |
| $ | 125,594 | ||||||||||||||||||
|
| ERP | | $ | — | | $ | 551,703 | | $ | | 433 | | $ | — | | $ | 4,051,943 | ||||||||||||||||||
Christopher A. Isaacson |
| SERP | | $ | 743,416 | | $ | 118,947 | | $ | | 306,751 | | $ | — | | $ | 4,743,937 | ||||||||||||||||||
Brian N. Schell |
| SERP |
| $ | 19,189 |
| $ | 38,379 |
| $ |
| (4,230) |
| $ | — |
| $ | 53,338 |
| SERP | | $ | 44,206 | | $ | 88,412 | | $ | | 146,460 | | $ | — | | $ | 705,514 |
Christopher A. Isaacson |
| SERP |
| $ | 234,417 |
| $ | 117,667 |
| $ |
| (69,789) |
| $ | — |
| $ | 783,294 | ||||||||||||||||||
Joanne Moffic-Silver |
| SERP |
| $ | 40,460 |
| $ | 53,947 |
| $ |
| (48,004) |
| $ | — |
| $ | 1,956,751 | ||||||||||||||||||
|
| ERP |
| $ | — |
| $ | 175,099 |
| $ |
| (79,735) |
| $ | — |
| $ | 3,300,764 | ||||||||||||||||||
Patrick Sexton |
| SERP | | $ | 36,250 | | $ | 29,000 | | $ | | 145,555 | | $ | — | | $ | 799,644 |
(1) |
| 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 officer’s compensation reported in the 2021 Summary Compensation Table under the column labeled |
(3) |
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| 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.plan.
The SERP is designed for employees whose level of compensation exceeds the IRS defined annual compensation limit ($275,000290,000 for 2018)2021). 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.
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66 | Cboe Global Markets 2022 Proxy Statement |
These contributions mirror those under the 401(k) plan. In 2018,2021, we matched employee contributions up to 4% of the employee’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 and Ms. Moffic-Silver was, eligible to participate in the ERP. Our 20182021 contribution to the ERP was 6% of each participant’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. Messrs. Concannon,Isaacson, Schell, IsaacsonHowson, and HemsleySexton are not eligible to participate in the Executive Retirement Plan.ERP.
In 2018,2021, Mr. Tilly and Ms. Moffic-Silver 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’s account an amount equal to a percentage of the employee’s base salary and cash incentive, based on such employee’s age at the start of the year, as set forth in the table below.
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| | Contribution | ||
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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.
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Cboe Global Markets | 67 |
SEVERANCE, CHANGE IN CONTROL AND EMPLOYMENT-RELATED AGREEMENTS
As of December 31, 2018,2021, 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, a release agreement or offer letter agreements.Plan. The material terms of the agreements and the plan are discussed below.
Mr. Tilly’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“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 at least $1,150,000. As further discussed in “Executive Compensation—Compensation Discussion and Analysis,” Mr. Tilly’s base salary increased to $1,265,000 in 2018.$1,265,000. Mr. Tilly is also eligible to receive cash and equity incentive awards, each in the sole discretion of the 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’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 (v) Company-paid premiums for coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), or an amount equal to Mr. Tilly’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.
Mr. Concannon’s Employment Agreement
In connection with Mr. Concannon’s voluntary termination of employment for a reason other than good reason, his employment with the Company terminated effective January 14, 2019, and accordingly his employment agreement described below is no longer in effect, though he presently remains subject to certain non-competition, non-solicitation, confidentiality and other covenants.
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Under the Employment Agreement dated as of February 27, 2017 (the “Concannon Employment Agreement”), Mr. Concannon, effective upon our acquisition of Bats on February 28, 2017, served as our President and Chief Operating Officer through January 14, 2019. The Concannon Employment Agreement was scheduled to expire on December 31, 2019, and thereafter would have been automatically renewed for successive one-year terms unless either the Company or Mr. Concannon gave notice not to renew the agreement at least 180 days prioraddition to the expiration ofBenefits, under the then current term.
The Concannon Employment Agreement provided for an annual base salary of at least $1,000,000. As further discussed in “Executive Compensation—Compensation Discussion and Analysis,” Mr. Concannon’s base salary increased to $1,100,000 in 2018. Mr. Concannon was also eligible to receive cash and equity incentive awards, each in the sole discretion of the Board. In addition, the Concannon Employment Agreement provided for a special one-time grant of RSUs with a grant date value of $2,000,000, also known as the Sign-on Grant, which would have vested in full upon the third anniversary of the Effective Date (February 28, 2020) provided that Mr. Concannon remained in continuous employment through such date (subject to accelerated vesting as described below). Mr. Concannon was entitled to participate in all of our employee benefit and fringe benefit plans that were generally available to similarly situated members of senior management, other than the frozen ERP. Pursuant to the Concannon Employment Agreement, Mr. Concannon 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 Concannon Employment Agreement, upon a termination of employment by the Company without cause or by Mr. ConcannonTilly for good reason, Mr. Concannon would have beenTilly (or his estate, as applicable) will be also entitled to receive full vesting of outstanding performance based restricted stock units based on the level of actual performance achieved.
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; (iii) if termination is on or after January 1, 2023, full vesting of outstanding performance pro-ratedbased restricted stock units granted prior to
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68 | Cboe Global Markets 2022 Proxy Statement |
January 1, 2023, based on the level of actual performance achieved; and (iv) if termination is after the completion of a Renewal Period, full vesting of outstanding performance based restricted stock units granted during such Renewal Period, based on the level of actual applicable performance achieved.
Mr. Howson’s Offer Letter and Employment Agreement
We entered into an offer letter agreement with Mr. Howson, dated December 19, 2019 (the “Offer Letter Agreement”), pursuant to which he indicated his intent to continue employment with us following a promotion in exchange for the portioncompensation specified therein.
Under Mr. Howson’s Offer Letter Agreement, Mr. Howson would serve as our President, Cboe Europe Limited, effective January 1, 2020. Mr. Howson’s Offer Letter Agreement provides for an initial annual base salary of 420,000 GBP and an initial target annual bonus of 462,000 GBP. Mr. Howson’s Offer Letter Agreement also provides that Mr. Howson will be eligible for an initial target annual equity incentive award having a grant date value of $650,000.
Mr. Howson continues to be eligible for the severance and other change in control benefits under his employment agreement with Bats Global Markets Holdings, Inc., a wholly owned subsidiary of the calendar year workedCompany, dated December 17, 2015 (the “Pro-Rated Bonus”“Howson Employment Agreement”); (iii). The Howson Employment Agreement expired on December 31, 2018, and thereafter automatically renews for successive one-year terms unless either the Company or Mr. Howson gives notice not to renew the agreement at least 90 days prior to the expiration of the then current term.
Under the Howson Employment Agreement, upon a lump sum cash severance payment intermination of Mr. Howson’s employment by us without cause 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 (1) if the terminationone times his target bonus; (iii) reimbursement for insurance premiums payable over twelve (12) months; and (iv) his pro rata bonus as of employment occurred within 24 months immediately following the Effective Date, 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, or (2) if thebased on actual performance. Upon a voluntary termination of Mr. Howson’s employment occurred after the 24‑month period immediately following the Effective Date, the sum of (A)without good reason, he is entitled to one times thehis annual base salary during such time that we elect to enforce his covenant not to compete.
Mr. Howson is entitled to certain severance compensation and benefits upon a change in effect oncontrol. 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 target annual 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 and (B) one times thebased on target bonus for the year of termination; (iv) a lump sum cash payment in an amount equal to (1) if the termination of employment occurred 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 Planperformance; and the SERP, or (2) if the termination of employment occurred 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) accelerated vesting of all outstanding equity awards granted by Bats prior toawards.
If Mr. Howson retires, dies, becomes disabled, or his employment is terminated for cause, the consummationexecutive will not receive any cash severance benefits (except for any accrued obligations and the payment of the acquisitionexecutive’s pro rata bonus based on actual performance as 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 occurred within the 24‑month period immediately following the Effective Date, or (B) 12 months following the termination of employment, if the termination of employment occurred after the 24‑month period immediately following the Effective Date. Mr. Concannon would have also received these same benefits if he was terminated without cause or resigned for good reason within 18 months after a change in control, except that with respect to clauses (iii), (iv) and (vii), Mr. Concannon would have been entitled to the maximum amounts described above. If Mr. Concannon’s employment was terminated due to death or disability, Mr. Concannon (or Mr. Concannon’s estate, as applicable) would have been entitled to
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receive (i) annual base salary through the date of termination; (ii)termination due to the Pro-Rated Bonus;executive's death or disability). Mr. Howson may choose to continue medical and (iii)dental benefits through COBRA or his insurance at his own cost.
Under the Bats Equity Acceleration. AsHowson Employment Agreement, we are required to provide him with the minimum statutory notice requirements of the Employment Rights Act which are applicable to the work carried out by Mr. Concannon terminated his employment for a reason other than good reason effective January 14, 2019, he was entitled to receive accrued but unpaid annual base salary throughHowson in the date of his termination. 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. In 2018,The Chief Executive Officer of the Company determines from time to time the executive vice president (“EVP”) and senior
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Cboe Global Markets 2022 Proxy Statement | 69 |
vice president (“SVP”) participants in the plan. As of December 31, 2021, the plan participants covered Ms. Moffic-Silver, as well asMessrs. Isaacson, Schell, Sexton, and other officers. The plan also covers Messrs. Schell, Isaacson and Hemsley effective as of February 28, 2019, that is, 24 months after our acquisition of Bats when they cease to be eligible for change in control severance benefits under their employment agreements with Bats (as described below).
Under the plan, an executivea 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 executive’sparticipant’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 executive’sparticipant’s employment terminates,
an amount equal to a pro-rated bonus for the year of employment termination, based on target performance for such year, (or, in the case of Ms. Moffic-Silver, based on actual performance for such year),
a severance payment in an amount equal to the sum of the executive’sparticipant’s base salary and target annual bonus, (or, in the case of Ms. Moffic-Silver, two times the sum of her base salary and target annual bonus), and
COBRA premiums for 18 months.
In connection with her separation frommonths for EVP participants in the Company,plan and 12 months for SVP and all other participants (other than EVPs) in the Board took action to provide the foregoing severance benefits to Ms. Moffic-Silver. Ms. Moffic-Silver also agreed to certain non-compete and non-solicitation provisions during her employment and for a period of two years following termination of her employment.plan.
Under the terms of the plan, if the executive’sparticipant’s employment is terminated either by us for cause, or by the executiveparticipant other than for good reason (each as defined in the plan), we will pay the executiveparticipant any unpaid bonus and accrued benefits.
If the executiveparticipant is terminated in connection with a change in control, which includes a termination without cause or a resignation for good reason that occurs within a period beginning six months before a change in control and ending two years after, such executiveparticipant will receive the following severance benefits listed above. 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 two times, with respect to EVP participants in the plan and, and one and a half times, with respect to SVP and all other participants (other than EVPs) in the plan, the sum of the participant’s base salary and target annual bonus, and
COBRA premiums for 24 months for EVP participants in the plan and 18 months for SVP and all other participants (other than EVPs) in the plan.
The plan also provides that we will require any successor to expressly assume and agree to maintain the plan.
Offer Letter Agreements
We entered into offer letter agreements with Messrs. Schell, Isaacson and Hemsley, dated February 27, 2017, September 25, 2016 and September 25, 2016, respectively (the “Offer Letter Agreements”), pursuant to which they indicated their intent to enter into employment with us following our acquisition of Bats in exchange for the compensation specified therein.
Under Mr. Schell’s Offer Letter Agreement, Mr. Schell, effective upon our acquisition of Bats on February 28, 2017, initially served as our Deputy Chief Financial Officer. Mr. Schell now serves as
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our Executive Vice President, Chief Financial Officer and Treasurer. Mr. Schell's Offer Letter Agreement provided in 2017 for an initial annual base salary of $500,000 and an initial target annual bonus of $600,000, pro-rated for 2017. Mr. Schell’s Offer Letter Agreement also provided that Mr. Schell would be eligible in 2017 for an initial target annual equity incentive award having a grant date value of $500,000.
Under Mr. Isaacson's Offer Letter Agreement, Mr. Isaacson, effective upon our acquisition of Bats on February 28, 2017, serves as our Executive Vice President, Chief Information Officer. Mr. Isaacson's Offer Letter Agreement provided in 2017 for an initial annual base salary of $500,000 and an initial target annual bonus of $700,000. Mr. Isaacson's Offer Letter Agreement also provided that Mr. Issacson would be eligible in 2017 for an initial target annual equity incentive award having a grant date value of $500,000. We also agreed to pay Mr. Isaacson pursuant to the Technology Platform Migration Cash Incentive Plan cash incentive awards of up to $1,500,000 in the aggregate if he achieves certain performance milestones during the three-year period following our acquisition of Bats.
Under Mr. Hemsley’s Offer Letter Agreement, Mr. Hemsley, effective upon our acquisition of Bats on February 28, 2017, serves as our Executive Vice President, President Europe. Mr. Hemsley’s Offer Letter Agreement provided in 2017 for an initial annual base salary of 483,890 GBP and an initial target annual bonus of 459,696 GBP. Mr. Hemsley’s Offer Letter Agreement also provided that Mr. Hemsley would be eligible in 2017 for an initial target annual equity incentive award having a grant date value of $596,000.
Each of Messrs. Schell, Isaacson and Hemsley agreed in their Offer Letter Agreements not to assert that the transition from their former positions with Bats to their current positions with us, in connection with our acquisition of Bats, constitutes good reason for them to resign under their former employment agreements with Bats. In exchange for such agreements, in 2017 we granted Messrs. Schell, Isaacson and Hemsley awards of RSUs, also known as Sign-on Grants, with grant date values of $400,000, $500,000 and $596,000, respectively, that will vest on the third anniversary of our acquisition of Bats (February 28, 2020), subject to their continuous employment with us through such vesting date. Mr. Isaacson will become immediately fully vested in these RSUs if his employment with us terminates prior to the third anniversary of the completion of our acquisition of Bats due to either a termination by us without cause or a resignation by him for good reason (as such terms are defined in Mr. Isaacson's former employment agreement with Bats (as modified by his Offer Letter Agreement)). Messrs. Schell, Isaacson and Hemsley are 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, and with respect to Mr. Hemsley, the SERP. Pursuant to the Offer Letter Agreements, Messrs. Schell, Isaacson and Hemsley further agreed to comply with the confidentiality, noncompetition, nonsolicitation and nondisparagement obligations in their employment agreements with Bats and agreed that those obligations will be for the benefit of both the Company and Bats.
Messrs. Schell, Isaacson and Hemsley continue to be eligible for the severance and other change in control benefits under their respective employment agreements with Bats, each dated December 17, 2015, and each as modified by the respective Offer Letter Agreement (collectively, the “Employment Agreements”), including the accelerated vesting of their Bats equity awards assumed in the acquisition (but not any Company awards granted after the acquisition of Bats). As discussed above, 24 months after the Effective Date (February 28, 2019), Messrs. Schell, Isaacson and Hemsley will become eligible for coverage under the Executive Severance Plan in lieu of any right to severance or other termination-related benefits under their Employment Agreements.
Under the Employment Agreements, upon a termination of Messrs. Schell’s, Isaacson’s or Hemsley’s employment by us without cause, following 90 days’ written notice in the case of Mr. Hemsley, or by the respective 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) the cost of COBRA
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premiums (or, in the case of Mr. Hemsley, 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 Messrs. Schell’s, Isaacson’s or Hemsley’s employment without good reason, each is entitled to one times his annual base salary prorated for such time that we elect to enforce the executive’s covenant not to compete.
Messrs. Schell, Isaacson and Hemsley are each entitled to certain severance compensation and benefits upon a change in control. The Employment Agreements provide 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); (iii) the cost of 12 months of COBRA premiums (or, in the case of Mr. Hemsley, reimbursement for 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 the respective executive retires, dies or becomes disabled, or his employment is terminated for cause, the executive will not receive any cash severance benefits (except for the payment of the executive’s pro rata bonus based on actual performance as of the date of termination due to the executive’s death or disability). Messrs. Schell, Isaacson and Hemsley, or applicable covered spouse or dependents, may choose to continue medical and dental benefits through COBRA or his insurance at his own cost.
Under Mr. Hemsley’s Employment Agreement, we are required to provide him with 90 days’ written 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 notice of the statutory minimum plus one week. During his notice period, Mr. Hemsley is entitled to base salary and contractual benefits or, in our discretion, we may pay Mr. Hemsley his base salary and other contractual benefits in lieu of all or part of any notice period.
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 Messrs. Schell, Isaacson and Hemsley are subject to accelerated vesting upon the death or disability of the executive or upon his termination without cause within twelve (12) months following a change of control event, unless otherwise set forth in the Employment Agreements.
Release Agreement
Ms. Moffic-Silver separated from the Company effective as of February 28, 2018. In connection with her termination of employment, she became entitled to: (i) the severance benefits payable under the terms of the Executive Severance Plan, as discussed above, (ii) accelerated vesting in full of any outstanding RSUs held by her and (iii) accelerated vesting of any outstanding PSUs held by her prorated for the portion of the performance period completed at the time of termination and subject to attainment of the applicable performance goals through the full performance period. Ms. Moffic Silver was 65 years of age and, as such, was entitled to the accelerated vesting of her RSUs and PSUs in the manner described in clauses (ii) and (iii) upon retirement.
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 Offer Letter Agreements,Executive Severance Plan, each discussed above, upon the termination of the executive’s employment by us without cause or by the executive for good reason (including following
|
|
a change in control), upon the executive’s death or disability, qualified retirement (if eligible), and by the executive without good reason. The amounts shown assume that the termination or event occurred on December 31, 2018.2021. Mr. HemsleyHowson receives his cash compensation in British pounds. The amounts reported below were converted to U.S. dollars using a rate of £1.00 to $1.28$1.35, which was the exchange rate as of December 31, 2018. 2021. Numbers may not foot due to rounding.
| ||
70 | Cboe Global Markets |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | Cash | | Stock Vesting | | | | | | | | ||||
Name |
| |
| Salary |
| Incentive(6) |
| Acceleration(7) |
| | Other(8) |
| Total | |||||||
Edward T. Tilly | | (1) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 13,593,548 | | | $ | 590,510 | | $ | 22,975,808 | ||
| | (2) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 13,593,548 | | | $ | 885,765 | | $ | 23,271,063 | ||
| | (3) | | $ | 2,530,000 | | $ | 6,261,750 | | $ | 13,593,548 | | | $ | 590,510 | | $ | 22,975,808 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 10,317,769 | | | $ | 0 | | $ | 10,317,769 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 10,317,769 | | | $ | 0 | | $ | 10,317,769 | ||
Christopher A. Isaacson | | (1) | | $ | 650,000 | | $ | 1,950,000 | | $ | 330,303 | | | $ | 28,224 | | $ | 2,958,527 | ||
| | (2) | | $ | 1,300,000 | | $ | 2,925,000 | | $ | 4,937,074 | | | $ | 56,449 | | $ | 9,218,523 | ||
| | (3) | | $ | 0 | | $ | 0 | | $ | 4,937,074 | | | $ | 0 | | $ | 4,937,074 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 330,303 | | | $ | 0 | | $ | 330,303 | ||
Brian N. Schell | | (1) | | $ | 525,000 | | $ | 1,470,000 | | $ | 3,253,631 | | | $ | 30,707 | | $ | 5,279,338 | ||
| | (2) | | $ | 1,050,000 | | $ | 2,205,000 | | $ | 4,297,202 | | | $ | 61,413 | | $ | 7,613,615 | ||
| | (3) | | $ | 0 | | $ | 0 | | $ | 4,297,202 | | | $ | 0 | | $ | 4,297,202 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 3,253,631 | | | $ | 0 | | $ | 3,253,631 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 3,253,631 | | | $ | 0 | | $ | 3,253,631 | ||
David Howson | | (1) | | $ | 567,000 | | $ | 1,678,725 | | $ | 0 | | | $ | 13,803 | | $ | 2,259,528 | ||
| | (2) | | $ | 1,134,000 | | $ | 2,302,425 | | $ | 3,205,623 | | | $ | 13,803 | | $ | 6,655,851 | ||
| | (3) | | $ | 0 | | $ | 1,055,025 | | $ | 3,205,623 | | | $ | 0 | | $ | 4,260,648 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 0 | ||
| | (5) | | $ | 567,000 | | $ | 0 | | $ | 0 | | | $ | 0 | | $ | 567,000 | ||
Patrick Sexton | | (1) | | $ | 415,000 | | $ | 996,000 | | $ | 1,390,955 | | | $ | 30,707 | | $ | 2,832,662 | ||
| | (2) | | $ | 830,000 | | $ | 1,494,000 | | $ | 1,835,119 | | | $ | 61,413 | | $ | 4,220,532 | ||
| | (3) | | $ | 0 | | $ | 0 | | $ | 1,835,119 | | | $ | 0 | | $ | 1,835,119 | ||
| | (4) | | $ | 0 | | $ | 0 | | $ | 1,390,955 | | | $ | 0 | | $ | 1,390,955 | ||
| | (5) | | $ | 0 | | $ | 0 | | $ | 1,390,955 | | | $ | 0 | | $ | 1,390,955 |
The following table does not include the potential payments payable to Ms. Moffic-Silver because she separated from the Company effective February 28, 2018. Except as discussed above, Ms. Moffic-Silver received no additional payments or benefits in connection with her separation.
|
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| |||
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| Cash |
| Stock Vesting |
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| ||||||
Name |
|
|
| Salary |
| Incentive(6) |
| Acceleration (7) |
|
| Other(8) |
| Total | |||||||||
Edward T. Tilly |
| (1) |
| $ | 2,530,000 |
| $ | 6,261,750 |
| $ | 6,294,219 |
|
| $ | 1,809,042 |
| $ | 16,895,011 | ||||
|
| (2) |
| $ | 2,530,000 |
| $ | 6,261,750 |
| $ | 8,478,633 |
|
| $ | 1,809,042 |
| $ | 19,079,425 | ||||
|
| (3) |
| $ | 2,530,000 |
| $ | 6,261,750 |
| $ | 8,478,633 |
|
| $ | 1,809,042 |
| $ | 19,079,425 | ||||
|
| (4) |
| $ | 0 |
| $ | 0 |
| $ | 6,294,219 |
|
| $ | 0 |
| $ | 6,294,219 | ||||
|
| (5) |
| $ | 0 |
| $ | 0 |
| $ | 6,294,219 |
|
| $ | 0 |
| $ | 6,294,219 | ||||
Christopher R. Concannon (9) |
| (1) |
| $ | 2,200,000 |
| $ | 4,950,000 |
| $ | 5,717,769 |
|
| $ | 622,949 |
| $ | 13,490,718 | ||||
|
| (2) |
| $ | 2,200,000 |
| $ | 4,950,000 |
| $ | 9,978,342 |
|
| $ | 622,949 |
| $ | 17,751,291 | ||||
|
| (3) |
| $ | 0 |
| $ | 1,650,000 |
| $ | 9,978,342 |
|
| $ | 0 |
| $ | 11,628,342 | ||||
|
| (4) |
| $ | 0 |
| $ | 0 |
| $ | 0 |
|
| $ | 0 |
| $ | 0 | ||||
|
| (5) |
| $ | 0 |
| $ | 0 |
| $ | 0 |
|
| $ | 0 |
| $ | 0 | ||||
Brian N. Schell |
| (1) |
| $ | 1,042,000 |
| $ | 2,344,500 |
| $ | 2,622,672 |
|
| $ | 298,529 |
| $ | 6,307,701 | ||||
|
| (2) |
| $ | 1,042,000 |
| $ | 2,344,500 |
| $ | 4,113,601 |
|
| $ | 298,529 |
| $ | 7,798,630 | ||||
|
| (3) |
| $ | 0 |
| $ | 729,400 |
| $ | 4,113,601 |
|
| $ | 0 |
| $ | 4,843,001 | ||||
|
| (4) |
| $ | 0 |
| $ | 0 |
| $ | 0 |
|
| $ | 0 |
| $ | 0 | ||||
|
| (5) |
| $ | 521,000 |
| $ | 0 |
| $ | 0 |
|
| $ | 0 |
| $ | 521,000 | ||||
Christopher A. Isaacson |
| (1) |
| $ | 1,080,000 |
| $ | 2,592,000 |
| $ | 2,771,278 |
|
| $ | 319,332 |
| $ | 6,762,610 | ||||
|
| (2) |
| $ | 1,080,000 |
| $ | 2,592,000 |
| $ | 4,428,420 |
|
| $ | 319,332 |
| $ | 8,419,752 | ||||
|
| (3) |
| $ | 0 |
| $ | 810,000 |
| $ | 4,428,420 |
|
| $ | 0 |
| $ | 5,238,420 | ||||
|
| (4) |
| $ | 0 |
| $ | 0 |
| $ | 0 |
|
| $ | 0 |
| $ | 0 | ||||
|
| (5) |
| $ | 540,000 |
| $ | 0 |
| $ | 0 |
|
| $ | 0 |
| $ | 540,000 | ||||
Mark S. Hemsley |
| (1) |
| $ | 1,306,504 |
| $ | 2,351,707 |
| $ | 2,826,979 |
|
| $ | 0 |
| $ | 6,485,190 | ||||
|
| (2) |
| $ | 1,306,504 |
| $ | 2,351,707 |
| $ | 4,323,256 |
|
| $ | 0 |
| $ | 7,981,467 | ||||
|
| (3) |
| $ | 0 |
| $ | 718,577 |
| $ | 4,323,256 |
|
| $ | 0 |
| $ | 5,041,833 | ||||
|
| (4) |
| $ | 0 |
| $ | 0 |
| $ | 333,242 |
|
| $ | 0 |
| $ | 333,242 | ||||
|
| (5) |
| $ | 653,252 |
| $ | 0 |
| $ | 333,242 |
|
| $ | 0 |
| $ | 986,494 |
| | |
Cboe Global Markets 2022 Proxy Statement | 71 |
(1) |
| Represents amounts to be paid in connection with a termination of the executive’s employment by us without cause or by the executive for good reason. |
(2) |
| Represents amounts to be paid in connection with a termination of the executive’s employment by us without cause or by the executive for good reason following a change in control. |
(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, 2021, Messrs. Isaacson and Howson have not satisfied the retirement requirements of 55 years of age and 10 years of service. |
(5) |
| 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 executive’s employment terminates, a pro-rated target bonus amount, a pro-rated actual bonus amount with respect to Mr. Howson, and a bonus payment in an amount equal to one or two times target |
(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 Messrs. Tilly, Schell, and |
(8) |
| The amounts shown represent amounts contributed on behalf of |
| |||
72 |
|
|
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) 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 2018,2021, the median of the annual total compensation of all employees of the Company (other than our CEO) was $159,496$165,355 and the annual total compensation of our CEO was $8,453,137,$10,646,558, as reported in the “Total” column of our 20182021 Summary Compensation Table 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 5364 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 1, 2018November 15, 2021 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 8521,000 employees as of October 1, 2018.November 15, 2021, which excluded, (i) under the non-U.S. de minimis exception to the pay ratio rule, all of our associates in Canada (approximately 27), Singapore (approximately 5), and Hong Kong (approximately 1), out of a total of 1,033 employees, or 3%, and (ii) under the business acquisition exception, all of our associates acquired as a result of the Chi-X Asia Pacific acquisition in July 2021. 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 20182021 Summary Compensation Table above.
| | |
Cboe Global Markets | 73 |
EQUITY COMPENSATION PLAN INFORMATION
The following is information about our equity compensation plans as of December 31, 2018.2021.
|
|
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
| 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 | ||||||||||
| | | | | | | | | ||||||||
| | | | | | | | 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) |
| rights(a) |
| warrants and rights(b) |
| (a))(c) | ||||
Equity compensation plans approved by security holders |
| N/A | (1) |
| N/A | (1) |
| 4,208,806 |
| N/A | (1) | | N/A | (1) | | 3,981,307(2) |
Equity compensation plans not approved by security holders |
| — |
|
| — |
|
| — |
| — |
| | — |
| | — |
Total |
| — | (1) |
| — | (1) |
| 4,208,806 |
| — | (1) | | — | (1) | | 3,981,307(2) |
(1) |
| The Company has grants of unvested restricted stock and restricted stock units covering a total of |
(2) | Consists, as of December 31, 2021, of 3,326,229 shares of our common stock available for future issuance under the Second Amended and Restated Long-Term Incentive Plan and 655,078 shares of our common stock available for future issuance under the Employee Stock Purchase Plan. |
In connection with our acquisition of Bats, the Company assumed the Bats Plans. No awards were made under the Bats Plans subsequent to our acquisition of Bats. On March 1, 2017, we reserved 1,305,918 shares of our common stock for issuance under the Bats Plans. As of December 31, 2018, 369,483 shares of our common stock were covered by outstanding and unexercised options granted under the Bats Plans, which awards had a weighted average exercise price of $26.40 and all of which were exercisable as of December 31, 2018. Additionally, as of December 31, 2018, 217,642 shares of our common stock were covered by outstanding restricted stock awards granted under the Bats Plans. These shares are not included in the table above. We will not grant any future awards under the Bats Plans.
| ||
74 | Cboe Global Markets |
|
PROPOSAL 3 - RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
Deloitte,KPMG, an independent registered public accounting firm, served as our independent registered public accounting firm for the year ended December 31, 2018,2021, and our Audit Committee has again selected DeloitteKPMG to serve as our independent registered public accounting firm for the 20192022 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 20192022 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 20192022 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 of DeloitteKPMG as our independent registered public accounting firm for the 20192022 fiscal year.
Independent Registered Public Accounting Firm Fees
KPMG served as our independent registered public accounting firm for the years ended December 31, 2021 and 2020 and is serving in such capacity for the 2022 fiscal year. The following table presents fees billed to us by Deloitte forKPMG in the years ended December 31, 20182021 and 2017:2020:
|
|
|
|
|
| |||||
|
| 2018 |
| 2017 | ||||||
| | | | | | |||||
| | 2021 |
| 2020 | ||||||
Audit Fees | $ | 2,411,095 |
| $ | 2,181,144 | $ | 3,116,542 | | $ | 2,908,889 |
Audit-Related Fees |
| 370,527 |
|
| 589,845 | | 251,046 | |
| 216,461 |
Tax Fees |
| 293,999 |
|
| 498,763 | | 42,060 | |
| 33,285 |
All Other Fees |
| — |
|
| — | | — | |
| — |
Total | $ | 3,075,621 |
| $ | 3,269,752 | $ | 3,409,648 | | $ | 3,158,635 |
Audit Fees consist of the aggregate fees billed, or expected to be billed, for professional services rendered by DeloitteKPMG 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, for professional services by Deloitte for assurance and audit services relatedor expected to audits of the employee benefit plan and Cboe Political Action Committee, services related to our acquisition of Bats and notes offerings, and other assurance services.
Tax Fees consist of the aggregate feesbe billed, for professionaltax consulting 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.KPMG in various jurisdictions in which we operate.
| | |
Cboe Global Markets | 75 |
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.
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, is responsible for performing an independent audit of our consolidated financial statements and the effectiveness of our internal control over financial reporting and for issuing a reportreports 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.statements and the effectiveness of our internal control over financial reporting.
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.Board (United States) (“PCAOB”) and the SEC.
The Audit Committee has received the written disclosures and the lettercommunications 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 auditedconsolidated financial statements and our assertions related to the effectiveness of our internal control over financial reporting, along with KPMG’s audit opinions thereon, be included in our Annual Report on Form 10‑K10-K for the year ended December 31, 20182021 for filing with the SEC.
We selected KPMG as our independent registered public accounting firm for fiscal year 2022. 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
CaroleJames E. Stone,Parisi, Chair
William M. Farrow, III
James E. ParisiAlexander J. Matturri, Jr.
Michael L. RichterJennifer J. McPeek
| ||
76 | Cboe Global Markets |
|
BENEFICIAL OWNERSHIP OF MANAGEMENT AND DIRECTORS
The following table lists the shares of our common stock that were beneficially owned as of March 19, 2019,17, 2022, or as of the date otherwise indicated below, and the percentage of our common stock beneficially owned, based on 111,704,556106,188,545 shares outstanding on March 19, 2019,17, 2022, 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) |
| 206,887 |
| * |
|
Christopher R. Concannon (3) |
| 413,178 |
| * |
|
Brian N. Schell |
| 46,069 |
| * |
|
Christopher A. Isaacson (4) |
| 94,644 |
| * |
|
Mark A. Hemsley (5) |
| 105,127 |
| * |
|
Joanne Moffic-Silver (6) |
| 82,311 |
| * |
|
Frank E. English, Jr. |
| 3,137 |
| * |
|
William M. Farrow III |
| 3,874 |
| * |
|
Edward J. Fitzpatrick |
| 8,537 |
| * |
|
Janet P. Froetscher |
| 19,169 |
| * |
|
Jill R. Goodman |
| 11,322 |
| * |
|
Roderick A. Palmore |
| 18,869 |
| * |
|
James E. Parisi |
| 1,108 |
| * |
|
Joseph P. Ratterman (7) |
| 33,621 |
| * |
|
Michael L. Richter |
| 23,289 |
| * |
|
Jill E. Sommers |
| 1,108 |
| * |
|
Carole E. Stone |
| 15,349 |
| * |
|
Eugene S. Sunshine |
| 19,169 |
| * |
|
All serving directors, nominees, NEOs and other executive officers as a group (23 persons) (8) |
| 1,178,940 |
| 1.06 | % |
T. Rowe Price Associates, Inc.(9) |
| 15,538,694 |
| 13.91 | % |
The Vanguard Group(10) |
| 11,607,501 |
| 10.39 | % |
BlackRock, Inc.(11) |
| 7,829,908 |
| 7.01 | % |
FMR LLC (12) |
| 5,919,806 |
| 5.30 | % |
| | | | | |
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| Number of |
| Percent of |
|
| | Shares of | | Voting |
|
Name | | Common Stock(1) | | Common Stock |
|
Edward T. Tilly (2) |
| 222,537 |
| * | |
Christopher A. Isaacson | | 58,583 | | * | |
Brian N. Schell (3) | | 33,298 | | * | |
David Howson |
| 19,185 |
| * | |
Patrick Sexton (4) |
| 24,500 |
| * | |
William M. Farrow, III |
| 7,868 |
| * | |
Edward J. Fitzpatrick |
| 12,531 |
| * | |
Ivan K. Fong | | 1,924 | | | |
Janet P. Froetscher |
| 10,163 |
| * | |
Jill R. Goodman |
| 15,316 |
| * | |
Alexander J. Matturri, Jr. | | 1,924 | | * | |
Jennifer J. McPeek | | 3,501 | | * | |
Roderick A. Palmore |
| 22,863 |
| * | |
James E. Parisi |
| 5,102 |
| * | |
Joseph P. Ratterman (5) |
| 37,615 |
| * | |
Jill E. Sommers |
| 5,102 |
| * | |
Eugene S. Sunshine |
| 23,163 |
| * | |
Fredric J. Tomczyk | | 10,928 |
| * | |
All serving directors, nominees, NEOs and other executive officers as a group (21 persons) (6) |
| 537,715 |
| * | |
The Vanguard Group (7) |
| 12,196,048 |
| 11.5 | % |
BlackRock, Inc. (8) |
| 9,910,418 |
| 9.3 | % |
T. Rowe Price Associates, Inc. (9) |
| 7,028,195 |
| 6.6 | % |
* Less than 1%.
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Cboe Global Markets | 77 |
(1) |
| Amounts include |
(2) |
| Amount includes |
(3) |
| Amount includes |
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(4) |
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(5) |
| Consists of |
(6) |
| Amount includes |
(7) |
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(8) | Based on information set forth in a Schedule 13G/A filed with the SEC on February 3, 2022. The Schedule 13G/A reports that, as of December 31, 2021, BlackRock Inc., 55 East 52nd Street New York, NY 10055, has sole voting power with respect to 8,809,907 shares of common stock and sole dispositive power with respect to 9,910,418 shares of common stock. |
(9) | Based on information set forth in a Schedule 13G/A filed with the SEC on February 14, |
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Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Exchange Act requires that our executive officers, directors and persons who own more than 10% of our common stock file reports of ownership and changes in ownership on
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78 | Cboe Global Markets 2022 Proxy Statement |
Forms 3, 4 and 5 with the SEC.Securities and Exchange Commission (the “SEC”). Executive officers, directors and greater-than-10% stockholders, if any, are required by regulation to furnish us with copies of all Forms 3, 4 and 5 that they file.
Based on our review of the copies of those forms, any amendments that we have received and written representations from our executive officers and directors, we believe that all executive officers and directors and the owners of more than 10% of our common stock complied with all of the filing requirements applicable to them with respect to transactions during the year ended December 31, 2018.2021, except for Mr. Sexton’s inadvertently late by one business day Form 4 filing filed on May 27, 2021.
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 Committee in accordance with the terms of the policy. Except as noted below, sinceSince January 1, 2018,2021, 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.
Thomas Sexton, who serves asThe 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 President ofas disclosed in the National Futures Association (“NFA”),Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company is the brother of Patrick Sexton, our Executive Vice President, General Counsel and Corporate Secretary. The NFA performs many regulatory functions on behalf of CFE, our subsidiary,party to a license with S&P pursuant to a regulatory services agreementwhich 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 the S&P Select Sector Indices through December 31, 2033, with CFE.an exclusive license to trade options on the S&P 500 Index through December 31, 2032. The Company paidbelieves that such relationships involved terms no less favorable to the NFA approximately $684,000Company than those that it believes would have been obtained in fiscal year 2018 for the performanceabsence of such services. Mr. Sexton recuses himself from matters relating to the NFA. affiliation.
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”), or the Exchange Act, the information contained in the section of this proxy statement entitled “Report of the Audit 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 Committee 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’ Annual Report on Form 10‑K,10-K, except to the extent specifically provided otherwise in such filing.
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’s annual meeting must timely submit the proposal to the Corporate Secretary, Cboe Global Markets, Inc., 400 South LaSalle433 West Van Buren Street, Chicago,
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Illinois 60605.60607. Stockholder proposals for inclusion in our proxy statement for the 2020 2023
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Cboe Global Markets 2022 Proxy Statement | 79 |
Annual Meeting of Stockholders must be received on or before December 6, 20191, 2022 and must comply in all other respects with applicable SEC rules.
Our Bylaws allow any stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding shares of common stock continuously for at least 3 years, to nominate and include in our proxy statement for the 2023 Annual Meeting of Stockholders director nominees constituting up to the greater of 2 individuals and 20% of the total number of directors then in office, provided that the stockholder(s) and nominee(s) satisfy the requirements specified in our Bylaws. The stockholder(s) must notify the Corporate Secretary of Cboe Global Markets, Inc. in writing and provide the specified information described in our Bylaws concerning the proposed nominee(s). The notice must be delivered to the address set forth in the paragraph above and received at our principal executive offices not less than 120 days nor more than 150 days prior to the first anniversary of the date that we first distributed this proxy statement to stockholders, which is March 31, 2022. As a result, notice of director nominations submitted under these requirements must be received no earlier than the open of business on November 1, 2022 and no later than the close of business on December 1, 2022, unless our annual meeting date occurs more than 30 days before or after May 12, 2023, in which case the stockholder’s notice must be received no earlier than 150 days before such annual meeting and no later than the later of 120 days before such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by us. 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.
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 20202023 Annual Meeting of Stockholders, which proposal or nomination would not be included in the Company’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 above 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, 202012, 2023 and no later than 5:00 p.m., Eastern time, on February 16, 2020,11, 2023, unless our annual meeting date occurs more than 30 days before or more than 70 days after May 16, 2020,12, 2023, in which case the stockholder’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 20182021 Annual Report to Stockholders, which includes a copy of our Annual Report on Form 10‑K10-K for the year ended December 31, 20182021 (excluding exhibits), as filed with the Securities and Exchange Commission (the “SEC”),SEC, is being mailed to stockholders with this Proxy Statement.
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80 | Cboe Global Markets 2022 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 19, 2019,17, 2022, the record date for the Annual Meeting. On that date, there were 111,581,466106,171,957 shares of our common stock outstanding and 123,09016,588 unvested restricted shares of our common stock outstanding, which have been granted to our employees and directors and have voting rights at the Annual Meeting. Therefore, there are 111,704,556106,188,545 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 260133 stockholders of record as of March 19, 2019.17, 2022. 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 433 West Van Buren Street, Chicago, Illinois, 60607, 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, Computershare,Broadridge Corporate Issuer Solutions, Inc. (“Broadridge”), you are a stockholder of record.
If 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.”name”. Please see the information under the heading “If I hold my
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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, ComputershareBroadridge 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?
AttendanceThe Annual 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 17, 2022, the record date for the Annual Meeting, or if you hold a valid proxy to vote at the Annual Meeting is generally limited to our stockholders and their authorized representatives. All stockholders must bring an acceptable formMeeting.
If you were a stockholder of identification, such as a driver’s license, in order to attend the Annual Meeting in person. In addition, if you hold shares of common stock in street name and would like to attend the Annual Meeting, you will need to bring an account statement or other acceptable evidence of ownership of sharesrecord as of the close of business on March 19, 2019, the record date17, 2022, or you hold a valid proxy for the Annual Meeting.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/CBOE2022. 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 vote your shares in person at the Annual Meeting, you must bring a legal proxy signed by your bank, broker or nominee to the Annual Meeting.
Any representative of a stockholder who wishes to attend the Annual Meeting via live audio webcast, vote your shares, and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/CBOE2022, you must present acceptable documentation evidencing hisobtain, from the broker, bank, or her authority, acceptableother 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 byownership.
If you are not a stockholder or if you have lost your 16-digit control number, you will be able to listen to the stockholderlive audio webcast of common stock as described above and an acceptable form of identification. We reserve the right to limit the number of representatives for any stockholder who may attend the Annual Meeting.Meeting by visiting www.virtualshareholdermeeting.com/CBOE2022, but you will not be able to vote or submit your questions during the meeting.
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Cboe Global Markets 2022 Proxy Statement | 81 |
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) 786‑5600786-7559 in advance of the Annual Meeting if you have questions about attending the Annual Meeting, including regarding the required documentation. Meeting.
If you planI am unable to attend the Annual Meeting, please provide adequate time to pass through the security process necessary to gain access to the meeting room.
Willlive audio webcast of the Annual Meeting, be webcast?may I listen at a later date?
Yes. A live webcastYes, an audio replay of the Annual Meeting will be providedposted and publicly available on the Investor Relations section of our website at http://ir.Cboe.com. On the Events and Presentations page of our Investor Relations website click on “Listenat 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 Webcast”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. If you miss
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/CBOE2022. 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, you can viewthat are of an individual concern to a replay ofstockholder or that are not an appropriate subject matter for general discussion, are not pertinent to the webcast on that site. Please note that youmeeting and therefore will not be ablepresented. If we receive substantially similar questions, we may group those questions together and provide a single response to vote your shares or ask questions via the webcast. Please submit your vote in advanceavoid repetition.
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82 | Cboe Global Markets 2022 Proxy Statement |
How do I vote?
You may cast your vote in one of four ways:
By Internet.Internet before the Annual Meeting. The web address for Internet voting is www.investorvote.com/Cboewww.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 1‑800‑652‑VOTE (8683)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.
At the Annual Meeting.You may vote in person at the Annual Meeting (see “What do I need to do to attend the Annual Meeting?”).
If you choose to vote by Internet by telephonebefore or atduring the Annual Meeting or by telephone, then you do not need to return the proxy card. To be valid, your vote by Internet telephonebefore the Annual Meeting or mailtelephone must be received by 11:59 p.m., Eastern time, on May 15, 2019,11, 2022 for shares held directly, the deadline specified on the proxy card. If you vote by Internet before the Annual Meeting or telephone and
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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. at 400 South LaSalle433 West Van Buren Street, Chicago, Illinois 60605,60607, or
appearing in person and voting atonline 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.
To vote in person at the Annual Meeting, you must attend the meeting and cast your vote in accordance with the voting provisions established for the Annual Meeting. Attendance at the Annual Meeting without voting in accordance with the voting procedures does not, by itself, revoke a proxy. If your bank, broker or other nominee holds your shares and you want to attend and vote your shares at the Annual Meeting, you must bring a legal proxy signed by your bank, broker or nominee to the Annual Meeting.
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Cboe Global Markets 2022 Proxy Statement | 83 |
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 DeloitteKPMG as our independent registered public accounting firm for our 20192022 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
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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 DeloitteKPMG as our independent registered public accounting firm for our 20192022 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 Deloitte,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.
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 his 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 acceptance 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.
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84 | Cboe Global Markets 2022 Proxy Statement |
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 19, 2019,17, 2022, present in person 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.
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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 20182021 Annual Report to Stockholders, which includes our Annual Report on Form 10‑K,10-K, is enclosed with this Proxy Statement. The 20182021 Annual Report, our Annual Report on Form 10‑K10-K for the fiscal year ended December 31, 20182021 filed with the SEC, our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and,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., 400 South LaSalle433 West Van Buren Street, Chicago, Illinois 60605,60607, Attn: Investor Relations; or by sending an e-mail to: investorrelations@Cboe.com.
These documents, as well as other information about us, are also available on our website at http://ir.Cboe.com.
Information on our website does not form a part of this Proxy Statement.
How do I sign up for electronic delivery of proxy materials?
This Proxy Statement and our 20182021 Annual Report to Stockholders are available on our website at http://ir.Cboe.com. If you would like to help reduce our costs of printing and mailing future materials, you can consent to access these documents in the future over the Internet rather than receiving printed copies in the mail.
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Cboe Global Markets 2022 Proxy Statement | 85 |
If you are a stockholder of record, you may sign up for this service by contacting our transfer agent in writing at www.computershare.com.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 electronic delivery will remain in effect until you revoke it.
Who pays the expenses of this proxy solicitation?
The Company will pay the expenses of the preparation of our proxy materials and the solicitation of proxies by the Company for the Annual Meeting. Certain of our directors, officers or employees may make solicitations in person, telephonically, electronically, or by other means of communication. We have also engaged Morrow Sodali LLC to assist in the solicitation and distribution of proxies. Our directors, officers, and employees will receive no additional compensation for any such solicitation, and we will pay Morrow Sodali LLC a fee of $8,500 for its services, as well as reimbursements for certain expenses. We will request that banks, brokerage houses, and other custodians, nominees, and fiduciaries forward all of our solicitation materials to the beneficial owners of the shares that they hold of record. We will reimburse these record holders for customary clerical and mailing expenses incurred by them in forwarding these materials to customers.
If you have any questions about the Annual Meeting or need additional copies of this Proxy Statement or additional proxy cards, please contact Morrow Sodali LLC at 470 West Avenue,333 Ludlow St, 5th Floor, Stamford, Connecticut 06902. Banks and brokerage firms may call (203) 658‑9400658-9400 and stockholders may call toll-free at (800) 662-5200.
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Who will count the vote?
The Company has engaged ComputershareBroadridge to serve as the inspector of elections for the Annual Meeting. As inspector of elections, ComputershareBroadridge will tabulate the voting results.
What does it mean if I get more than one proxy or voting instruction card?
If your shares are registered in more than one name or in more than one account, you will receive more than one card. This may occur if you hold common stock in multiple accounts, such as with different brokers in street name and as the record holder with Computershare.Broadridge. Please complete and return all of the proxy or voting instruction cards that you receive (or vote by telephone or through the Internet all of the shares on all of the proxy or voting instruction cards received) to ensure that all of your shares are voted.
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86 | Cboe Global Markets |
APPENDIX APPENDIX A—RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES
In addition to disclosing results determined in accordance with U.S. generally accepted accounting principles (“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, on a combined company basis, adjusted diluted EPS on a combined company basis, adjusted EBITDA, European equities3-year adjusted EPS, and Europe segment adjusted EBITDAnet revenues, and Europe segment adjusted EBITDA on a combined company basis.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. The Company also believes that providing a discussion of these metrics provides management and investors an additional perspective on the Company’s financial and operational performance and trends.
The non-GAAP unaudited combined financial measures have been prepared by recording combined adjustments to the historical consolidated financial statements of Cboe Global Markets, Inc. The combined financial measures for the twelve months ended December 31, 2017 have been prepared as if the Bats acquisition closed on January 1, 2017. The combined financial measures are not necessarily indicative of the financial position or results of operations that would have occurred had the transaction been effected on the assumed date. Additionally, future results may vary significantly from the results reflected in the combined financial measures.
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| Twelve Months Ended | ||
(in millions, except per share amounts) |
| December 31, 2017 | ||
Reconciliation of revenues less cost of revenues to non-GAAP: |
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Revenue less cost of revenues |
| $ | 995.6 |
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Non-GAAP adjustments |
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| 71.9 | (1) |
Combined revenue less cost of revenues |
| $ | 1,067.5 |
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Reconciliation of net income allocated to common stockholders to non-GAAP: |
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Net income allocated to common stockholders |
| $ | 396.7 |
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Non-GAAP adjustments |
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| (129.5) | (2) |
Non-GAAP expense adjustments as detailed below |
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| 130.5 |
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Adjusted combined net income allocated to common stockholders |
| $ | 397.7 |
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Adjusted combined diluted EPS |
| $ | 3.57 |
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Non-GAAP Adjustments: |
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Compensation and benefits |
| $ | 9.1 |
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Amortization of acquired intangible assets |
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| 169.8 |
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Other |
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| 1.4 |
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Total non-GAAP expense adjustments |
| $ | 180.3 |
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Tax effect |
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| (53.6) |
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Total non-GAAP adjustments, net of tax |
| $ | 130.5 |
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Twelve Months Ended | |||
(in millions) | December 31, 2021 | ||
Reconciliation of Net Revenue to Non-GAAP | |
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Net revenues | $ | 1,476.1 | |
Non-GAAP adjustments |
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Acquisition revenues less cost of revenues |
| (16.7) | |
Adjusted Net Revenue | $ | 1,459.4 |
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| Twelve Months Ended | |
(in millions) | | December 31, 2021 | |
Reconciliation of Net Income Allocated to Common Stockholders to EBITDA and Adjusted EBITDA |
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Net income allocated to common stockholders |
| $ | 527.3 |
Interest | |
| 47.4 |
Income tax provision | |
| 227.1 |
Depreciation and amortization | |
| 167.4 |
EBITDA | | $ | 969.2 |
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Non-GAAP adjustments not included in above line items | |
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Acquisition-related expenses | |
| 15.6 |
Impairment of investment | | | 5.0 |
Change in contingent consideration | |
| (2.7) |
Acquisition EBITDA | | | (3.6) |
Adjusted EBITDA | | $ | 983.5 |
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Cboe Global Markets 2022 Proxy Statement |
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| Twelve Months Ended | Thirty Six Months Ended | ||||
(in millions, except per share amounts) | December 31, 2018 | December 31, 2021 | ||||
Reconciliation of Net Income Allocated to Common Stockholders to Non-GAAP |
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Reconciliation of 3-Year Net Income Allocated to Common Stockholders to Non-GAAP | |
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Net income allocated to common stockholders | $ | 422.1 | $ | 1,367.0 | ||
Non-GAAP adjustments |
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Acquisition-related expenses (1) |
| 30.0 |
| 109.3 | ||
Amortization of acquired intangible assets (2) |
| 160.6 |
| 389.8 | ||
Provision for notes receivable (3) | | 30.1 | ||||
Bargain purchase gain (4) | | (32.6) | ||||
Change in redemption value of noncontrolling interests |
| 1.3 |
| 0.5 | ||
Change in fair value of contingent consideration |
| 0.1 | ||||
Tax provision re-measurements |
| (0.4) | ||||
Impairment of investments | | 5.0 | ||||
Change in contingent consideration | | (2.7) | ||||
Total Non-GAAP adjustments |
| 191.6 |
| 499.4 | ||
Income tax expense related to the items above |
| (49.4) | | (120.5) | ||
Tax provision re-measurements | | 18.7 | ||||
Release of tax reserves | | (5.4) | ||||
Impairment charges attributed to noncontrolling interests |
| (3.6) | ||||
Net income allocated to participating securities - effect on reconciling items |
| (0.9) |
| (1.7) | ||
Adjusted net income allocated to common stockholders | $ | 563.4 | ||||
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Reconciliation of Diluted EPS to Non-GAAP |
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Adjusted 3-year net income allocated to common stockholders | $ | 1,753.9 | ||||
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Reconciliation of 3-Year Diluted EPS to Non-GAAP |
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Diluted earnings per common share | $ | 3.76 | $ | 12.53 | ||
Per share impact of non-GAAP adjustments noted above |
| 1.26 |
| 3.52 | ||
Adjusted diluted earnings per common share | $ | 5.02 | ||||
3-year Adjusted diluted earnings per common share | $ | 16.05 |
(1) |
| This amount includes professional fees and outside services, severance, facilities expenses, impairment charges and other costs related to the company’s |
(2) |
| This amount represents the amortization of acquired intangible assets |
(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”). |
(4) | This amount represents the bargain purchase gain related to the acquisition of EuroCCP on July 1, 2020. |
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Twelve Months Ended | ||
(in millions) | December 31, 2021 | |
Reconciliation of Europe and Asia Pacific Segment Net Revenues to Non-GAAP | |
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Net revenues | $ | 183.9 |
Non-GAAP adjustments |
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Acquisition revenues less cost of revenues |
| (16.7) |
Europe Segment Adjusted Net Revenues | $ | 167.2 |
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(in millions) |
| Twelve Months Ended | |
Reconciliation of Europe and Asia Pacific Segment Net Income Allocated to Common Stockholders to Non-GAAP | | | |
Net income (loss) allocated to common stockholders | | $ | 18.6 |
Interest | | | 12.4 |
Income tax provision | | | 26.5 |
Depreciation and amortization | | | 35.1 |
EBITDA | | | 92.6 |
Acquisition-related costs | | | 1.4 |
IFRS adjustments | | | (1.1) |
Acquisition EBITDA | | | (3.6) |
European expenses related to transferred lease | | | 1.7 |
Europe Segment Adjusted EBITDA | | $ | 91.0 |
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