| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
| | A. | Second Amendment to Richard M. McVey Employment Agreement |
On November 6, 2018, MarketAxess Holdings Inc. (the “Company”) entered into the second amendment (the “McVey Amendment”) to the Company’s employment agreement (as amended, the “Employment Agreement”) with Richard M. McVey, the Company’s Chief Executive Officer and Chairman of the Company’s Board of Directors (the “Board”). Under the McVey Amendment, the term of Mr. McVey’s Employment Agreement is extended through January 15, 2025. The McVey Amendment also provides that Mr. McVey ceasing to continue as the Chief Executive Officer of the Company pursuant to a mutual agreement between Mr. McVey and the Company would not constitute “Good Reason” under the Employment Agreement. In consideration for entry into the McVey Amendment, Mr. McVey became entitled to receive certain equity retention awards, as described in further detail below.
The foregoing description does not purport to be a complete statement of the parties’ rights and obligations under the McVey Amendment. The above description is qualified in its entirety by reference to the form of the McVey Amendment which is filed as Exhibit 10.1 to this Current Report on Form8-K.
| | B. | Retention Awards for Chief Executive Officer and Chairman. |
In consideration for entering into the McVey Amendment, on November 6, 2018, the Compensation Committee of the Board (the “Committee”) approved retention awards for Mr. McVey, effective as of November 8, 2018, under the Company’s 2012 Incentive Plan (as amended from time to time, the “Incentive Plan”) consisting of a grant of 148,524 stock options, which number of options had a grant date value of $5.5 million as determined by an independent third party (the “Option Award”), and 37,742 performance shares, which number of performance shares had a grant date value of $5.5 million as determined by an independent third party (the “Performance Share Award”, and together with the Option Award, the “Retention Awards”).
Option Award
The exercise price with respect to 69,113 shares of the Company’s common stock underlying the Option Award is $257.78, and the exercise price with respect to the remaining 79,411 shares of Company’s common stock underlying the Option Award is $278.40, which are equal to 125% and 135%, respectively, of the fair market value of the Company’s common stock on the grant date. The options under the Option Award will vest and become exercisable on November 8, 2023, subject to Mr. McVey’s continued employment with the Company through such date. The options under the Option Award will expire on May 8, 2024 (the “Expiration Date”), unless terminated sooner in connection with a termination of Mr. McVey’s employment. In the event of a termination of Mr. McVey’s employment by the Company without Cause or by Mr. McVey for Good Reason, all then unvested options will vest and become exercisable and all of the options will be exercisable until the Expiration Date. In the event of Mr. McVey’s death or Disability, 50% of the then unvested options will vest and become exercisable and all then vested options will be exercisable until the earlier of two years from the date of such termination and the Expiration Date. Notwithstanding the foregoing, in the event that prior to January 1, 2020, (i) a Change in Control occurs, and (ii) Mr. McVey’s employment is terminated by the Company without Cause or by Mr. McVey for Good Reason, then the Option Award shall be an option to purchase 20% of the shares of Company’s common stock set forth above, and the option to purchase the remaining 80% of the shares of Company’s common stock shall be deemed forfeited and canceled.
Performance Share Award
The Performance Share Award provides that the number of performance shares earned by Mr. McVey will be based on the Company’s achievement of certain performance levels (each a “Performance Level”) of an average price per share of the Company’s common stock calculated based on the closing price of the Company’s common stock over any 20 consecutive trading days during the period commencing on November 8, 2018 and ending on November 8, 2023. The Performance Level with respect to 17,942 performance shares under the Performance Share Award is equal to $257.78, and the Performance Level with respect to the remaining 19,800 performance shares under the Performance Share Award is equal to $278.40, which is equal to 125% and 135%, respectively, of the fair market value of the common stock on the grant date. Within 60 days following the date of achievement of a Performance Level (an “Achievement Date”), the Committee will certify the achievement of the Performance Level, and on such Achievement Date, Mr. McVey will be issued a number of restricted shares of common stock (“Restricted Stock”) equal to the applicable number of performance shares earned. The Restricted Stock will vest on November 8, 2023, subject to Mr. McVey’s continued employment with the Company through such vesting date other than as described below.
